U.S. v. 50.50 Acres of Land

• Citation: 931 F.2d 1349
• Decision Date: 01 May 1991
• Docket Number: Nos. 89-56299,90-55024 and 90-55109,s. 89-56299
• Parties: UNITED STATES of America, Plaintiff-Appellant-Cross-Appellee, v. 50.50 ACRES OF LAND, et al., Defendants-Appellees-Cross-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1349

931 F.2d 1349

UNITED STATES of America, Plaintiff-Appellant-Cross-Appellee, v. 50.50 ACRES OF LAND, et al., Defendants-Appellees-Cross-Appellants.

Nos. 89-56299, 90-55024 and 90-55109.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Feb. 12, 1991.

Decided May 1, 1991.

William B. Lazarus, U.S. Dept. of Justice, Washington, D.C., for plaintiff-appellant-cross-appellee.

Jerrold A. Fadem and Ann Kelly, Fadem, Berger & Norton, Los Angeles, Cal., for defendants-appellees-cross-appellants.

Appeal from the United States District Court for the Central District of California.

Before FERGUSON, HALL and RYMER, Circuit Judges.

FERGUSON, Circuit Judge:

The government appeals the district court's award of interest and costs in an eminent domain proceeding. The landowners cross-appeal, contending that the district court erred in denying them attorney fees as the prevailing party and in refusing to include severance damages as part of its just compensation award.

I.

The United States brought a condemnation action to take property located in Oxnard, California, at the request of the Department of the Air Force for the Point Mugu Air National Guard Base. The land taken consisted of five contiguous tracts, numbered 101 through 105, totaling 188.07 acres, which were part of a larger vegetable farming operation. On March 22 and 23, 1987, the government filed declarations of taking for the five tracts and deposited with the court its estimated valuation of each of the properties. ¹ The landowners ² contested the government's valuation of the taken property. On July 31, 1987, the district court ordered the cases consolidated.

The government's taking left a remainder parcel, Tract 107, of 27 acres which was owned by the landowners. ³ A packing plant was located on 14 acres, while the other 13 acres were used as crop land. On September 30, 1987, the parties stipulated that the United States would pay the landowners' costs of relocating certain water lines and tile drainage lines, which ran across the taken tracts to the packing plant.

A six-day bench trial was held in late January 1989 to determine the just compensation due the landowners. The highest value for the taking attested to at trial by the government's expert witness was $3,467,000.00. The highest value attested to at trial by the landowners' appraiser was $5,530,000.00. At trial, the landowners contended that the market value of the remainder parcel was diminished by the government's taking of the other tracts. Their valuation testimony included this alleged reduction in value, i.e., severance damages. The landowners also requested that the court award interest on monies deposited for Tracts 101 and 105 because of the government's opposition to disbursement motions for those tracts. They requested that interest be set at the market rate.

On May 26, 1989, the district court entered its findings of fact and conclusions of law. In September, 1989, it issued a revised judgment order. The court found that the value of the land on the date of taking was $23,000 per acre. Therefore, it awarded $4,325,781 for the value of the land taken. In addition, the court found that improvements on the taken land were worth $160,000. In refusing to award severance damages, the court rejected the landowners' assertion that the value of the remainder tract had been adversely affected by the taking. Finally, the court awarded interest of 9% per annum on the award from the date of taking.

The government timely appealed the court's judgment of interest and the landowners cross-appealed on the issue of severance damages. On November 13, 1989, the court entered an order awarding the landowners costs. On the same day, the court denied the landowners' request for attorney fees under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. Sec. 2412, finding that the government's position had been "substantially justified." The government appeals the award of costs, while the landowners cross-appeal the denial of attorney fees.

II.

The government appeals the district court's order that interest be paid on all deposits from the date of deposit to the date of disbursement. ⁴ It asserts that the Declaration of Taking Act, 40 U.S.C. Sec. 258a, explicitly prohibits such an award.

The interpretation of a statute is a question of law which is reviewed de novo. See, e.g., Saratoga Sav. Loan Ass'n v. Federal Home Loan Bank Bd., 879 F.2d 689, 691 (9th Cir.1989). Mixed questions of law and fact that implicate constitutional rights are also reviewed de novo. Wood v. Sunn, 865 F.2d 982, 986 (9th Cir.1988).

Since 1931, the Declaration of Taking Act has prescribed a procedure by which the United States may exercise its eminent domain power. 40 U.S.C. Sec. 258a. In relevant part, the Act states:

Upon the filing [of] said declaration of taking and of the deposit in the court, to the use of the persons entitled thereto, of the amount of the estimated compensation stated in said declaration, title to said lands ... shall vest in the United States of America, ... and the right to just compensation for the same shall vest in the persons entitled thereto; ... [interest shall be paid on any deficiency determined after judgment]; but interest shall not be allowed on so much thereof as shall have been paid into the court.

Id. (emphasis added). The Supreme Court has stated that the statute serves a dual purpose.

First, to give the Government immediate possession of the property and to relieve it of the burden of interest accruing on the sum deposited from the date of taking to the date of judgment.... Secondly, to give the former owner, if his title is clear, immediate cash compensation to the extent of the Government's estimate of the value of the property.

United States v. Miller, 317 U.S. 369, 381, 63 S.Ct. 276, 283, 87 L.Ed. 336 (1943). This court has held that the statute expressly prohibits interest awards on any amount deposited with the court at the time of taking. United States v. Blankinship, 543 F.2d 1272, 1275 (9th Cir.1976); see also Atlantic Coast Line R. Co. v. United States, 132 F.2d 959, 962 (5th Cir.1943) (no interest on deposit when owners never applied for disbursement).

However, we have never addressed the situation at issue here. Other courts have recognized that, under some circumstances, the Constitution requires payment of interest on amounts deposited despite the Declaration of Taking Act's prohibition. The Fifth Circuit found the government liable for interest for the period during which it moved for and received an order freezing the distribution of the deposit pending its appeal. Bishop v. United States, 288 F.2d 525 (5th Cir.1961). Referring to the interest restriction in the Declaration of Taking Act, the Bishop court found that when the government's actions frustrate the Act's purpose, interest must be charged. Id. at 528-29. The court held that it was acceptable for the government to oppose distribution in order to protect its rights, but interest would accrue during that period. Id. at 528. See also United States v. 15.03 Acres of Land, etc., 253 F.2d 698 (2d Cir.1958) (when government secured an ex parte order prohibiting distribution pending its appeal, it effectively withdrew the deposit and was thus obligated to pay interest while stay order was in effect).

In addition, the Third Circuit has found that government action short of an actual motion to halt distribution will require payment of interest on deposited funds. In United States v. 355.70 Acres of Land, etc., 327 F.2d 630 (3rd Cir.1964), the court found that the government had not fulfilled its duty under the Declaration of Taking Act, because it had imposed upon the court and the parties the cumbersome task of allocating the deposit among separately owned parcels. Id. at 632. Therefore, the government was obligated to pay interest for the delay in disbursement to the property owners.

355.70 Acres distinguished an earlier case which did not award interest on deposited monies, United States v. 53 1/4 Acres of Land, etc., 176 F.2d 255 (2d Cir.1949), noting that case dealt with "conflicting ownership claims within individual parcels." 355.70 Acres, 327 F.2d at 633. In 53 1/4 Acres, on the other hand, the court found that the "delay in payment [was not] caused by the government but ... by the multiplicity and nature of the interest for which claimants were entitled to be paid...." 53 1/4 Acres, 176 F.2d at 259.

We adopt the reasoning of our sister circuits that the government may be obligated to pay interest on deposited monies only if disbursement of the funds is delayed by government action. Absent affirmative acts of delay, the government may not be required to pay interest for the period between its deposit and the landowner's disbursement motion or for the period between the court's disbursement order and the actual distribution by the court registry. See Bishop, 288 F.2d at 528; 53 1/4 Acres, 176 F.2d at 259; cf. Atlantic Coast Line R. Co., 132 F.2d at 962-63 (no interest awarded where landowners failed to make application for the money deposited by the government). Here, the district court clearly erred by finding the government liable for interest from the date of deposit to the date of disbursement.

The government concedes that it held up the distribution of the funds in Tract 105 for 21 days due to its concern that all interested parties had not been notified. The landowners assert that the government's opposition to the Tract 105 disbursement effectively froze all of the deposits, thereby justifying an interest award on all deposits. There is no factual basis to this contention. While the landowners insist on characterizing the deposited monies as a lump sum, the cases were not consolidated until after the disbursements were made. The government's opposition to disbursement for specific tracts only delayed the entire amount because the landowners chose to deal with the...