Katzin v. United States , 2014 U.S. Claims LEXIS 142 ( 2014 )

In the United States Court of Federal Claims
No. 12-384L
(Filed: April 8, 2014)
) Takings claim; proposed amendment of
RICHARD LEWIS KATZIN, et al., ) answer to add the defense of laches;
) timeliness; futility; assertion of
Plaintiff, ) extraordinary circumstances
)
v. )
)
UNITED STATES, )
)
Defendant. )
)
Roberto E. Berríos Falcón, San Juan, Puerto Rico for plaintiffs. With him on the brief
were Nancie G. Marzulla and Roger J. Marzulla, Marzulla Law, LLC, Washington, D.C.
Emily M. Meeker, Natural Resources Section, Environment and Natural Resources
Division, United States Department of Justice, Washington, D.C., for defendant. With her on the
briefs were Robert G. Dreher, Acting Assistant Attorney General, Environment and Natural
Resources Division, and Lary Cook Larson, Attorney, Natural Resources Section, Environment
and Natural Resources Division, United States Department of Justice, Washington, D.C.
OPINION AND ORDER
This takings case concerns a plot of land located in Culebra Island, Puerto Rico and turns
in part on events that occurred more than 100 years ago. Pending before the court is defendant’s
motion for leave to file its first amended answer (“Def.’s Mot.”), ECF No. 34, filed on February
17, 2014. The government originally filed its answer to plaintiffs’ complaint on October 11,
2012. Answer, ECF No. 10. Pursuant to Rule 15(a) of the Rules of the United States Court of
Federal Claims (“RCFC”), the government seeks to amend its answer to include the affirmative
defense of laches. Def.’s Mot. at 1. Plaintiffs (“the Katzin plaintiffs”) oppose the motion on
grounds that the amendment would result in undue prejudice to the plaintiffs, fails to provide fair
notice, and would be futile. Pls.’ Opp’n to Def.’s Mot. to Amend Answer (“Pls.’ Opp’n”) at 1-3,
ECF No. 35. The case is currently in discovery. See Am. Scheduling Order (Feb. 3, 2014), ECF
No. 33. This motion has been fully briefed and is ready for disposition.
BACKGROUND
This property dispute is over a 2.25 acre plot of land located on a peninsula in the La Pelá
Bay area of Culebra Island, Puerto Rico. Pls.’ Opp’n at 3 & Ex. B; Def.’s Reply in Support of its
Mot. for Leave to File Am. Answer (“Def.’s Reply”) Exs. 3 at US-KATZ-009943 (map) & 8
(map), ECF Nos. 37-1 & 37-2. The Katzin plaintiffs allege ownership over the plot of land and
argue that communications in 2006 by a government employee to the contrary resulted in
projected purchasers of the land rescinding a contract to buy the land. Pls.’ Opp’n at 3. The
government argues that the United States Navy purchased the plot in question as a gun mount in
1903 and that the United States has continually claimed ownership of the area since that time.
Def.’s Reply at 2. 1 Plaintiffs filed their complaint on June 15, 2012 and an amended complaint
on September 24, 2012, seeking compensation for the taking of the property and the rescinded
contract. Pls.’ Opp’n at 3. In its answer filed on October 11, 2012, the government put forward
an affirmative defense of statute of limitations. Def.’s Reply at 2. On December 4, 2012, the
court issued a scheduling order setting deadlines for discovery. Scheduling Order, Dec. 4, 2012,
ECF No. 13. This scheduling order has been amended a number of times, most recently on
February 3, 2014. Am. Scheduling Order, Feb. 3, 2014, ECF No. 33. Under that amended order,
fact discovery closed on March 28, 2014, expert disclosures and exchange of expert reports are
due on April 25, 2014, expert discovery is scheduled to close on May 23, 2014, and any motions
for summary judgment are to be submitted by June 30, 2014. Id.
ANALYSIS
RCFC 15 provides that “a party may amend its pleading [more than 21 days after service
of the pleading or more than 21 days after a responsive pleading or certain motions are filed]
only with the opposing party’s written consent or the court’s leave. The court should freely give
leave when justice so requires.” RCFC 15(a)(2). The text of RCFC 15(a) mirrors, in all
pertinent respects, that found in Fed. R. Civ. P. 15(a), and consequently application of Fed. R.
Civ. P. 15(a) is highly persuasive in this court. See AEY, Inc. v. United States, 114 Fed. Cl. 619,
625 (2014) (citing Mitsui Foods, Inc. v. United States, 867 F.2d 1401, 1403-04 (Fed Cir. 1989)).
While the trial court has discretion in granting or denying leave to amend, particular reasons
“such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to
cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by
virtue of allowance of the amendment, futility of amendment, etc.,” counsel against granting
leave to amend. Foman v. Davis, 371 U.S. 178, 182 (1962).
1
The government also seeks to amend Paragraph 55 of its original answer, which bears on
the events underlying the government’s claim to the property. Def.’s Mot. at 5. Originally in
that paragraph, the government stated:
Defendant admits that the document referred to in [P]aragraph 55 was a
conditional promise of purchase and sale between Mr. Mulero and the United
States Navy, executed on July 29, 1903. Defendant further admits that it has not
produced a formal deed of sale related to this property, or yet identified such a
document in the Registry of Property of Puerto Rico, Fajardo Section. Defendant
denies the remainder of the allegations in [P]aragraph 55.
Answer ¶ 55. The government wishes to amend this statement to state: “Defendant lacks
sufficient knowledge to form a belief as to the allegations in the first sentence of [P]aragraph 55
and, therefore, denies these allegations. Defendant denies the allegations in the second sentence
of [P]aragraph 55.” Def.’s Mot. Ex. 1 ¶ 55. The Katzin plaintiffs had been notified of this
proposed amendment in May 2013, id. at 5, and did not oppose this change in their response to
the government’s motion.
2
The affirmative defense of laches is an equitable defense that applies when “a party
through neglect or delay fails to diligently pursue a claim.” Lankster v. United States, 87 Fed.
Cl. 747, 755 (2009) (internal citations omitted). The laches defense requires proof that “(1) the
plaintiff delayed filing suit for an unreasonable and inexcusable length of time from the time the
plaintiff knew or reasonably should have known of its claim against the defendant, and (2) that
the delay . . . operated to the prejudice or injury of the defendant.” Id. (internal quotation marks
and citations omitted). The government argues that laches is potentially applicable in this case
because plaintiffs knew or should have known of the government’s claim of title to the land as
far back as the 1980s and plaintiffs’ failure to bring a claim earlier has prejudiced the
government because witnesses have died and memories have faded. Def.’s Reply at 4.
The Katzin plaintiffs argue that leave to amend should be denied for a number of reasons.
First, they claim that the amendment is untimely because all the facts for a potential laches
defense were available to the government at the time it filed its answer, Pls.’ Opp’n at 6-10, and
allowing the amendment now would result in undue prejudice against them because it would
require additional discovery just as the period for conducting discovery is closing, id. at 10-12.
The government asserts there was no undue delay because the relevant facts were not available
to it when it filed its answer. Def.’s Reply at 6. In prior cases, undue delay was found when a
party had waited several years before seeking an amendment. See, e.g., Cencast Servs., L.P. v.
United States, 729 F.3d 1352, 1364 (Fed. Cir. 2013) (upholding trial court’s decision to deny
leave to amend after 15 years had passed); Bank of Am. v. United States, 217 Ct. Cl. 731, 732
(1978) (per curiam) (approving denial of leave to amend an answer to assert an offset where six
years had passed since the complaint was filed); Rockwell Automation, Inc. v. United States, 70
Fed. Cl. 114, 121-24 (2006) (finding undue delay where government waited eight years after
discovery had been reopened and then closed to seek amendment of its answer). Any delay in
this case does not rise to that level. The case itself is less than two years old, and basic discovery
is still underway, although fact discovery has closed within the past few days.
The government also argues that plaintiffs can show no prejudice because they had the
opportunity to conduct additional fact discovery between the time this motion was filed and the
scheduled close of fact discovery on March 28, 2014. Def.’s Reply at 7. Courts generally do not
find the burden of conducting additional discovery sufficient to deny leave to amend a pleading.
See, e.g., Cooke v. United States, 79 Fed. Cl. 741, 743 (2007) (“Plaintiff’s need to conduct
additional discovery is reasonable and regrettable[] but is not sufficient justification to cut off
[d]efendant’s right to assert its affirmative defenses.”). Here, sufficient time still is available for
plaintiffs to address a new defense before motions for summary judgment are due, even if fact
discovery has to be reopened.
The Katzin plaintiffs additionally object that the proposed amendment fails to provide
adequate notice as required by RCFC 8(c). Pls.’ Opp’n at 12-14. 2 They argue that the
government provides only a “bare assertion” that their claim is barred by laches without
2
RCFC 8(c) is written in conformity with Fed. R. Civ. P. 8. Rules Committee Notes to
RCFC 8, 2008 Revision. Both rules require that “in responding to a pleading, a party must
affirmatively state any avoidance or affirmative defense, including . . . laches.” See RCFC
8(c)(1); Fed. R. Civ. P. 8(c)(1).
3
sufficient factual support. Pls.’ Opp’n at 14. 3 While “bare bones conclusory allegations” are
insufficient under Rule 8, generally pleaded defenses are sufficient “as long as the pleading gives
the plaintiff fair notice of the nature of the defense.” Codest Eng’g v. Hyatt Int’l Corp., 954 F.
Supp. 1224, 1228 (N.D. Ill. 1996). The amendment proposed here, coupled with recitations in
the government’s motion, provides sufficient notice to the Katzin plaintiffs of the nature of the
government’s affirmative defense. In addition, as the government points out, fair notice is not a
factor generally considered by courts when determining whether to grant or deny leave to amend
a pleading. Def.’s Reply at 9; see also First Fed. Sav. Bank of Hegewisch v. United States, 52
Fed. Cl. 774, 789 (2002) (discussing RCFC 8 in connection with a plaintiff’s motion to strike the
government’s affirmative defenses).
The Katzin plaintiffs further argue that it is futile for the government to raise laches when
the complaint was filed within the period allowed by the statute of limitations. Pls.’ Opp’n at 15.
As they point out, “[b]ecause laches is an equitable doctrine, in actions at law for which ‘a
limitation on the period for bringing suit has been set by statute, laches will not generally be
invo[k]ed to shorten the statutory period.’” Pls.’ Opp’n at 15 (quoting Lankster, 87 Fed. Cl. at
755 (2009) (in turn quoting Advanced Cardiovascular Sys., Inc. v. SciMed Life Sys., Inc., 988
F.2d 1157, 1161 (Fed. Cir. 1993))); see also Hernandez, Kroone & Assocs., Inc. v. United States,
95 Fed. Cl. 395, 399-400 (2010) (granting the government’s motion to strike the plaintiff
counter-defendant’s defense of laches on the basis that the claims were raised within the statute
of limitations). Nonetheless, a showing of extraordinary circumstances can provide sufficient
justification to allow a laches defense within the statutory period. See Six v. United States, 71
Fed. Cl. 671, 681 (2006) (“Absent ‘extraordinary circumstances,’ . . . the court generally refuses
to invoke the doctrine of laches to dismiss claims whose limitation period has been set by statute
and has not run.” (citing Advanced Cardiovascular Sys., 988 F.2d at 1161)). The government
counters by noting the extraordinary background of this case. Def.’s Reply at 9. The facts of
this case are indeed unusual, and the chain of events preceding the claim may well deserve
detailed examination. The court accordingly will not foreclose the possibility that the
government might be able to show extraordinary circumstances justifying application of laches.
Finally, the Katzin plaintiffs contend that the proposed amendment is futile because their
takings claim depends on interpretations of land records more than a century old, some of which
are in Spanish, rather than witness testimony. Pls.’ Opp’n at 15-18. 4 The government responds
3
Part of the Katzin plaintiffs’ argument is based upon a federal district judge’s suggestion
that district courts have been moving toward requiring that affirmative defenses pled under Rule
8 must satisfy the pleading standards for complaints set forth in Bell Atlantic Corp. v. Twombly,
550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009). See Pls.’ Opp’n at 13-14
(citing Amy St. Eve & Michael A. Zuckerman, The Forgotten Pleading, 7 Fed. Cts. L. Rev. 152,
166 (2013)). Plaintiffs fail to demonstrate why this higher standard has not been met in this
instance.
4
Apparently, “the last survey . . . performed on [the] property on behalf of the
[g]overnment [before the dispute arose] was done under the Spanish Crown in the Nineteenth
Century.” Pls.’ Opp’n Ex. B at US-KATZ-000739 (Letter from Edward M. Borges, counsel, to
James Pulliam, Regional Director, Fish and Wildlife Service (Mar. 6, 1987)). A surveyor
employed by the Fish and Wildlife Service, Lynn Robinson, was reportedly researching title
4
that this argument is irrelevant because even if the resolution of the claims is determined by land
records, witness testimony is relevant to defenses of laches or the statute of limitations. Def.’s
Reply at 9. In determining futility of an amendment, “courts do not engage in an extensive
analysis of the merits of the proposed amendment[]” but instead “decide whether a party’s
proposed amendment is facially meritless and frivolous.” St. Paul Fire & Marine Ins. Co. v.
United States, 31 Fed. Cl. 151, 155 (1994). Because of the tangled claims of ownership and
changes since 1994 in and with a nearby refuge managed by the United States Fish and Wildlife
Service, see Def.’s Reply Exs. 4, 5, 6, defendant’s proffered amended defense is not facially
meritless.
CONCLUSION
For the reasons state above, the government’s motion for leave to amend its answer is
GRANTED.
It is so ORDERED.
s/ Charles F. Lettow
Charles F. Lettow
Judge
documents when he died in 2010. Pls.’ Opp’n at 8 & Ex. A (e-mail from Jackie Compton, Fish
and Wildlife Service, to Pete Jerome, et al. (Nov. 7, 2011), attaching an e-mail from Lynn
Robinson to Compton (Dec. 9, 2008)).
5