Vaizburd v. U.S., 03-5154.

• Decision Date: 01 October 2004
• Docket Number: No. 03-5154.,03-5154.
• Parties: Linda VAIZBURD and Arkady Vaizburd, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

384 F.3d 1278

Linda VAIZBURD and Arkady Vaizburd, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.

No. 03-5154.

United States Court of Appeals, Federal Circuit.

DECIDED: October 1, 2004.

Appeal from the United States Court of Federal Claims, Eric Bruggink, J Roger J. Marzulla, Defenders of Property Rights, of Washington, DC, argued for plaintiffs-appellants. With him on the brief was Nancie G. Marzulla.

Kathryn E. Kovacs, Appellate Section, Environment and Natural Resources Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With her on the brief were Thomas L. Sansonetti, Assistant Attorney General; and Richard A. Barrett.

Before RADER, Circuit Judge, FRIEDMAN, Senior Circuit Judge, and DYK, Circuit Judge.

Opinion for the court filed by Circuit Judge DYK. Opinion dissenting in part filed by Senior Circuit Judge FRIEDMAN.

DYK, Circuit Judge.

The appellants, Linda and Arkady Vaizburd ("the Vaizburds"), seek compensation for a physical taking of an easement. The Court of Federal Claims concluded that the government's sand deposit on the Vaizburds' property constituted the physical taking of a permanent easement, but it denied recovery on the ground that the Vaizburds failed to establish any decline in the fair market value of their property. Vaizburd v. United States, 57 Fed.Cl. 221 (2003). We agree with the Court of Federal Claims that the Vaizburds have not established that they are entitled to recover compensation for a decline in the market value of their property. However, we vacate the Court of Federal Claims' decision and remand for further consideration of the Vaizburds' claim that they are entitled to recover on a cost of cure theory.

BACKGROUND

The Sea Gate Community ("Sea Gate") is a gated community on the southern side of Coney Island in Brooklyn, New York that includes seaside homes facing a private beach. The Vaizburds purchased their waterfront home on Oceanview Avenue in the Sea Gate Community for $320,000 in 1989. As part of the purchase, the Vaizburds acquired a seaward lot in the back of their home. This lot was completely submerged at the time of purchase. The Vaizburds' home is referred to as Lot-3 and the submerged lot is Lot-103.

In the early 1990s the Army Corps of Engineers (the "Corps") launched a project to replenish sand on Coney Island beaches (the "Coney Island project"), which had severely eroded over the years. By 1995, when the initial stage of the Coney Island project was completed, the Corps had deposited approximately three million cubic yards of sand on the Coney Island beaches. Meanwhile, since the mid 1990s, Oceanview Avenue lots in Sea Gate, including the Vaizburds' Lot-3 and Lot-103, experienced sand accretion. It is uncontested that this sand accretion was caused by the Coney Island project and that sand simultaneously diminished from the beach as it accumulated on the Oceanview Avenue lots. Oceanview Avenue residents affected by this sand accretion repeatedly complained to the Corps. By 2000, the Vaizburds' previously submerged property was covered in sand, forming a beach of sorts, and sand had also accumulated on Lot-3. On March 20, 2000, the Vaizburds brought suit in the Court of Federal Claims, alleging that the accumulation of sand resulting from the Coney Island project constituted a compensable taking of easements on Lot-3 and Lot-103 and seeking $20,000,000 in damages.

After trial, the Court of Federal Claims concluded that a taking had occurred. The court found that "[t]here [was] no question that the result of the Corps' actions [was] the continuing presence of sand on the plaintiffs' property"; that "[i]t [was] the inevitable and recurring result of official government action in maintaining the Coney Island beaches"; and that "[t]he Corps ha[d] imposed an easement for the deposition of sand onto both lots 103 and 3." Vaizburd, 57 Fed.Cl. at 228. The court also found that sand accretion on the Vaizburds' property was "unattractive" and that the Vaizburds "have paid to have sand removed at least once from their backyard." Id. at 226.

Despite the Court of Federal Claims' conclusion that the Vaizburds "satisfied every element of a claim for the taking of an easement to deposit sand," id. at 233, it denied takings compensation because "there [was] no apparent damage" to the Vaizburds' property. Id. The court held that the Vaizburds were required to show actual damages because nominal damages were not available as "the waiver of sovereign immunity [for takings claims under the Tucker Act] does not extend to nominal or exemplary damages." Id. The court concluded that the Vaizburds "failed ... to prove that the presence of this sand has diminished the value of their property" and that "[t]hey cannot, therefore, prove a compensable taking." Id.

Indispensable to a market value analysis is a determination of the date of the taking. The court recognized that "[t]he date of taking is problematic in this case because the erosion and deposition were a gradual process with cumulative effects of varying magnitude." Id. at 230. The court rejected both the Vaizburds' dates (a before-date of September 1995 and an after-date of October 1995) and the government's dates (a before-date of April 1996, and an after-date of June 1998, assuming a taking sometime in the interim), setting the date instead at December 31, 1995, when "the process of accretion had sufficient impact, i.e., impeded the plaintiffs' access to the water, and was sufficiently noticeable and recurring to constitute a taking." Id.

The parties agreed on the after-value of the Vaizburds' property and differed simply as to the before-value.¹ Id. at 231. The Vaizburds' appraisal, prepared by Mr. Vaizburd himself, valued the property at $16,229,520 before the taking. Id. The Court of Federal Claims rejected this appraisal, explaining that this figure represented an "exaggerated view of the value" of the property (purchased only six years earlier for $320,000) and was based exclusively on a comparison of two other homes that were not "comparable" properties. Id. These other homes were in different neighborhoods of Brooklyn and were "superior" properties. Id. The court then considered the government's valuation, concluding that it was properly based on comparable house sales in the Sea Gate community.² Id. at 232. The government appraiser concluded that "[t]he before and after values were both $315,000." Id. The court explained that "the only possible relevant line of attack" against the government's appraisal was that the "after values were not as high as they would have been, but for the taking." Id. at 233. The court, however, noted that this argument was "not advanced by the plaintiffs, and, in any event, there [was] no evidence to support it." Id. at 233. Accepting the government's appraisal as based on a proper comparison of "the best comparable[ ]... house sales along Oceanview Avenue," id. at 232, the court held that the Vaizburds had not proven that the market value of their property diminished as a result of sand accretion.

Finally, the court refused to award compensation based on a cost of cure approach, i.e., it declined to award the costs of sand removal. The court stated:

We do not have sufficient evidence from which to fashion a remedy from the costs related to sand removal: Costs to cure and other elements resultant from the taking are only admissible on the issue of just compensation if they are tied to their effect upon fair market value. Normally they would not be independent elements of compensation, in other words, unless it can be shown that the reduced after value assumes some continuing mitigation cost.

Id. at 233 n. 9 (internal quotation marks and citations omitted). This passage is unclear as to whether the court held either: (1) that as a legal matter cost of cure is only relevant to the extent that it affects the overall market value of the taken property; or (2) that the Vaizburds failed to supply sufficient evidence of cost of cure to support compensation under such a theory.

The court summarized the implications of its decision as follows: "This means only that the plaintiffs cannot recover on these or any other identical facts. This also means, however, that the government does not own an easement. At a minimum, this suggests that, if the facts change, a new claim would not be barred." Id. at 233 n. 12.

The Vaizburds filed a motion for reconsideration, which was denied on July 28, 2003. The Vaizburds timely appealed, and we have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).

DISCUSSION

We review the Court of Federal Claims legal conclusions without deference, and we review the court's factual findings for clear error. Ferreiro v. United States, 350 F.3d 1318, 1324 (Fed.Cir.2003).

I

Government action that causes sand accretion, flooding, or accumulation of other materials on a landowner's property may constitute a physical taking. See, e.g., Pumpelly v. Green Bay & Miss. Canal Co., 80 U.S. (13 Wall) 166, 181, 20 L.Ed. 557 (1871).³ However, "[n]ot every `invasion' of private property resulting from government activity amounts to an appropriation" that is compensable as a taking. Ridge Line, Inc. v. United States, 346 F.3d 1346, 1355 (Fed.Cir.2003).⁴ In order to warrant compensation as a taking (as distinguished from a tort), the governmentally induced invasion must meet a two-part test. First, a property owner must prove that the asserted government invasion of property interests allegedly effecting a taking "was the predictable result of the government action," either because it was "the direct or necessary result" of the act or because it was "within contemplation of or reasonably to be anticipated by the government." Id. at 1356; see also, e.g., Sanguinetti, 264 U.S. at 150, 44 S.Ct. 264; John Horstmann Co. v. United States, 257 U.S. 138, 146, 42 S.Ct. 58, 66 L.Ed. 171 (1921); Barnes, 538 F.2d at 871; Ey...