Memmer v. United States ( 2020 )

In the United States Court of Federal Claims
No. 14-135L
(Filed: November 2, 2020)
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JEFFREY MEMMER, GILBERT *
EFFINGER, LARRY GOEBEL AND *
SUSAN GOEBEL, OWEN HALPENY, * Trial Decision; Rails-to-Trails; Fifth
MATTHEW HOSTETTLER, JOSEPH * Amendment Taking; Indiana Law; Vacatur
JENKINS, MICHAEL MARTIN AND RITA * and Remand From Federal Circuit Before
MARTIN, McDONALD FAMILY FARMS * Addressing Merits of Cross-Appeals to
OF EVANSVILLE, INC., REIBEL FARMS, * Make a Record for Applying a Multifactor
INC., JAMES SCHMIDT AND ROBIN * Test (as directed in Caquelin); Effect of
SCHMIDT, * Vacatur; Cognizable Property Interests;
* Liability for a Taking When No Trail Use
Plaintiffs, * Agreement Executed, NITU Expires, and
* Abandonment Not Consummated; Arkansas
v. * Game & Fish; Causation; Extent of Taking;
* Damages for a Temporary Taking
THE UNITED STATES, *
*
Defendant. *
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Thomas S. Stewart and Elizabeth Gepford McCulley, Kansas City, MO, for plaintiffs.
David L. Weigert, Edward C. Thomas, James R. MacAyeal, and Daniel Pinkston, United States
Department of Justice, Washington, DC, and Denver, CO, for defendant.
OPINION AND ORDER
SWEENEY, Senior Judge
In this Rails-to-Trails case, plaintiffs own real property adjacent to railroad lines in
southwestern Indiana. They contend that the United States violated the Just Compensation
Clause of the Fifth Amendment to the United States Constitution by authorizing the conversion
of the railroad lines into recreational trails pursuant to the National Trail Systems Act (“Trails
Act”), thus acquiring their property by inverse condemnation. This case presents an issue of first
impression: whether there is a compensable taking in the situation in which the issuance of a
Notice of Interim Trail Use or Abandonment (“NITU”) did not lead to a trail-use agreement, the
NITU expired, and the railroad company did not file a notice of consummation of abandonment
despite having no intention to use its line.
The court initially determined liability upon the parties’ cross-motions for summary
judgment. Thereafter, the parties reached a settlement on the proper amount of damages and the
court entered judgment. Both plaintiffs and defendant appealed and then, shortly thereafter,
jointly requested that the United States Court of Appeals for the Federal Circuit (“Federal
Circuit”) vacate the court’s summary judgment decision and judgment to enable further
proceedings consistent with the Federal Circuit’s decision in Caquelin v. United States
(“Caquelin I”), 697 F. App’x 1016 (Fed. Cir. 2017) (per curiam). The Federal Circuit granted
the parties’ request and vacated the court’s judgment in its entirety. Consequently, none of the
court’s rulings and orders that provided the basis for that judgment survives, requiring the court
to approach this case with a blank slate.
In accordance with the Federal Circuit’s mandate, the court on remand allowed additional
discovery and then conducted a trial on liability and damages. As explained in more detail
below, the court awards damages to plaintiffs in an amount to be determined in accordance with
its findings and conclusions.
TABLE OF CONTENTS
I. BACKGROUND ........................................................................................................................ 3
A. Statutory and Regulatory Context ......................................................................................... 3
B. Fifth Amendment Takings and the Trails Act....................................................................... 6
C. Procedural History................................................................................................................. 7
II. LIABILITY: PROPERTY INTEREST .................................................................................. 11
A. Legal Standards ................................................................................................................... 11
1. Deed Construction ........................................................................................................... 12
2. Scope of Easements ......................................................................................................... 14
B. Findings of Fact................................................................................................................... 14
C. Conclusions of Law............................................................................................................. 18
1. Property Interests Acquired by Indiana Southwestern’s Predecessors ............................ 18
a. The Type A Deeds ....................................................................................................... 18
b. The Type A-1 Deeds .................................................................................................... 19
c. The Smith Deed............................................................................................................ 19
d. The Davis Deed............................................................................................................ 20
e. The Side Track Deed .................................................................................................... 20
2. Scope of the Easements Acquired by Indiana Southwestern’s Predecessors .................. 21
3. Existence of the Easements at the Time of the Alleged Taking ...................................... 22
III. LIABILITY: FIFTH AMENDMENT TAKING .................................................................. 22
A. Legal Standards ................................................................................................................... 22
1. Nature of a Taking ........................................................................................................... 23
2. Causation.......................................................................................................................... 24
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3. Abandonment Under Indiana Law ................................................................................... 25
B. Findings of Fact................................................................................................................... 28
1. Proceedings Before the Board ......................................................................................... 28
2. Actions of Indiana Southwestern During the Proceedings Before the Board and
Thereafter .............................................................................................................................. 31
3. The Character and Use of Plaintiffs’ Properties .............................................................. 33
a. The Effinger Property .................................................................................................. 33
b. The Goebel Property .................................................................................................... 34
c. The Halpeny Property .................................................................................................. 36
d. The Jenkins Property.................................................................................................... 37
e. The Martin Property ..................................................................................................... 38
f. The McDonald Family Farms Property ........................................................................ 39
g. The Memmer Property ................................................................................................. 40
h. The Reibel Farms, Inc. Property .................................................................................. 41
i. The Schmidt Property ................................................................................................... 42
C. Conclusions of Law............................................................................................................. 43
1. The Nature of the Alleged Taking ................................................................................... 43
2. Causation.......................................................................................................................... 48
IV. DAMAGES: EXTENT OF THE CATEGORICAL TAKING ............................................ 51
A. Legal Standard .................................................................................................................... 51
B. Findings of Fact................................................................................................................... 52
C. Conclusions of Law............................................................................................................. 52
V. DAMAGES: PRINCIPAL AMOUNT OF JUST COMPENSATION .................................. 54
A. Legal Standard .................................................................................................................... 54
B. Findings of Fact................................................................................................................... 55
C. Conclusions of Law............................................................................................................. 61
VI. DAMAGES: INTEREST AND COSTS .............................................................................. 63
VII. CONCLUSION .................................................................................................................... 64
I. BACKGROUND
A. Statutory and Regulatory Context
During the last century, the United States began to experience a sharp reduction in rail
trackage. Preseault v. Interstate Com. Comm’n (“Preseault I”), 494 U.S. 1, 5 (1990). To remedy
this problem, Congress enacted a number of statutes, including the Trails Act, 16 U.S.C.
§§ 1241-1251 (2006). The Trails Act, as amended, provides for the preservation of “established
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railroad rights-of-way for future reactivation of rail service” by authorizing the interim use of
such rights-of-way as recreational and historical trails. Id. § 1247(d). This process is referred to
as “railbanking,” and is overseen by the Surface Transportation Board (“Board”), id., the federal
agency with the “exclusive” jurisdiction to regulate “the construction, acquisition, operation,
abandonment, or discontinuance” of most railroad lines in the United States, 49 U.S.C.
§ 10501(b) (2006); accord Chi. & N.W. Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311,
320-21 (1981) (declaring that the authority of the Interstate Commerce Commission––the
Board’s predecessor, see 49 U.S.C. § 1302––over abandonments was both exclusive and
plenary).
Before railbanking can occur, the railroad company must seek to abandon its line, either
by initiating abandonment proceedings with the Board pursuant to 49 U.S.C. § 10903, or by
seeking an exemption from such proceedings pursuant to 49 U.S.C. § 10502. 1 A railroad
company that initiates abandonment proceedings may only abandon its line “if the Board finds
that the present or future public convenience and necessity require or permit the abandonment
. . . .” 49 U.S.C. § 10903(d); accord id. § 10903(e) (providing that the Board “shall” approve
applications for abandonment if it “finds public convenience and necessity”). In addition, there
is a class exemption from abandonment proceedings for railroad companies that “certif[y] that no
local traffic has moved over the line for at least 2 years” and satisfy other specified criteria. 49
C.F.R. § 1152.50(a)-(b), (d)(1); see also id. § 1152.50(c) (finding, in accordance with 49 U.S.C.
§ 10502, that when the stated criteria are satisfied, abandonment proceedings are unnecessary to
implement rail transportation policy or “to protect shippers from abuse of market power”). To
invoke this class exemption, a railroad company must file a notice of exemption with the Board,
id. § 1152.50(d)(2), and if the notice of exemption is complete, the Board must publish a notice
in the Federal Register noting the submission within twenty days of filing, id. § 1152.50(d)(3).
In conjunction with the railroad company’s abandonment application or notice of
exemption, the Board will entertain protests and comments from interested third parties. Id.
§§ 1152.25, .28(a), .29(a). Of particular relevance in this case, interested third parties may
submit a request for the interim use of the railroad line as a trail pursuant to 16 U.S.C. § 1247(d),
seek a public-use condition pursuant to 49 U.S.C. § 10905, and make an offer of financial
assistance (“OFA”) pursuant to 49 U.S.C. § 10904. Id.
If an interested third party submits a trail-use request to the Board that satisfies the
requirements of 16 U.S.C. § 1247(d), the Board makes the necessary findings pursuant to 49
U.S.C. § 10502(a) or 49 U.S.C. § 10903(d), and the railroad company agrees to negotiate a trail-
use agreement, the Board will issue one of two documents: if the railroad company initiated
abandonment proceedings, the Board will issue a Certificate of Interim Trail Use or
Abandonment (“CITU”), and if the railroad company is exempt from abandonment proceedings,
the Board will issue a NITU. Id. § 1152.29(b)-(d). The effect of both documents is the same: to
“permit the railroad to discontinue service, cancel any applicable tariffs, and salvage track and
materials, consistent with interim trail use and rail banking . . . ; and permit the railroad to fully
1
A railroad company may petition for an individual or class exemption, 49 U.S.C.
§ 10502(a)-(b), or, as relevant in this case, invoke a previously created class exemption, 49
C.F.R. § 1152.50 (2010).
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abandon the line if no agreement is reached 180 days after it is issued, subject to appropriate
conditions . . . .” Id. § 1152.29(d)(1); accord id. § 1152.29(c)(1). The Board will entertain
requests to extend the 180-day deadline to enable further negotiations. If the railroad company
and the interested third party execute a trail-use agreement, then abandonment of the railroad line
is stayed for the duration of the agreement. Id. § 1152.29(c)-(d); 16 U.S.C. § 1247(d). If no
trail-use agreement is executed, the railroad company is permitted to fully abandon the line. 49
C.F.R. § 1152.29(c)-(d).
Similarly, if an interested third party believes that it would be appropriate for the railroad
line to be put to public use, “including highways, other forms of mass transportation,
conservation, energy production or transmission, or recreation,” 49 U.S.C. § 10905, it can seek
the imposition of a public-use condition, 49 C.F.R. § 1152.28(a)(2). If the Board finds that the
line is “appropriate for use for other public purposes,” the railroad company may dispose of the
line “only under the conditions” imposed by the Board, which “may include a prohibition against
the disposal of the rail assets for a period of not more than 180 days from the effective date of the
decision authorizing the abandonment or discontinuance, unless the properties have first been
offered, on reasonable terms, for sale for public purposes.” Id. § 1152.28(b); accord 49 U.S.C.
§ 10905.
Abandonment of a railroad line may also be postponed if an interested third party makes
an OFA to subsidize or purchase the railroad line to continue rail service. 49 U.S.C. § 10904; 49
C.F.R. § 1152.27. If a railroad company filed an application for abandonment or a petition for an
individual exemption, the OFA must be made and filed with the Board within four months of the
railroad company’s application/petition or ten days of the Board’s decision granting the
application/petition, whichever is earlier. 49 U.S.C. § 10904(c); 49 C.F.R. § 1152.27(b)(1),
(2)(i). If a railroad company invoked a class exemption, the OFA must be made and filed with
the Board within thirty days of the Board publishing notice of the exemption in the Federal
Register. 49 C.F.R. § 1152.27(b)(2)(ii). “The Board will review each offer submitted to
determine if a financially responsible person has offered assistance. If that criterion is met, the
Board will issue a decision postponing the effective date of” its abandonment authorization,
decision allowing an individual exemption, or notice of exemption, as appropriate. 49 C.F.R.
§ 1152.27(e)(1)-(2); accord 49 U.S.C. § 10904(d)(1). Abandonment is postponed until the
railroad company and “a financially responsible person have reached an agreement on a
transaction for subsidy or sale of the line” or, if an agreement is not reached, the Board
establishes the conditions and amount of compensation for the transaction. 49 U.S.C.
§ 10904(d)(2). If an agreement is reached, abandonment of the line will not proceed. 49 C.F.R.
§ 1152.27(f). If no agreement is reached, the Board will vacate its decision postponing the
effective date of its abandonment authorization, exemption decision, or notice of exemption, id.
§ 1152.27(g)(2), (h)(7), allowing the railroad company to abandon the line.
To exercise its abandonment authority, a railroad company must “file a notice of
consummation with the Board to signify that it has . . . fully abandoned the line” either within
one year of “the service date of the decision permitting the abandonment (assuming that the
railroad intends to consummate the abandonment)” or, if a “legal or regulatory barrier to
consummation exists at the end of the 1-year time period, . . . not later than 60 days after the
satisfaction, expiration or removal of the legal or regulatory barrier.” Id. § 1152.29(e)(2). Upon
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the filing of a notice of consummation, the Board is divested of jurisdiction over the abandoned
railroad line and “state law reversionary property interests, if any, take effect.” Caldwell v.
United States, 391 F.3d 1226, 1228-29 (Fed. Cir. 2004); see also 49 U.S.C. § 10904(g) (“Upon
abandonment of a railroad line . . . , the obligation of the rail carrier abandoning the line to
provide transportation on that line . . . is extinguished.”). In the absence of a timely filed notice
of consummation, the railroad company’s authority to abandon the line “automatically
expire[s].” 49 C.F.R. § 1152.29(e)(2).
B. Fifth Amendment Takings and the Trails Act
As described in more detail below, plaintiffs claim that the issuance of a NITU prevented
them from obtaining fee simple ownership in the land underlying the railroad lines subject to the
NITU and that, consequently, they are owed just compensation under the Fifth Amendment. The
Fifth Amendment prohibits the federal government from taking private property for public use
without paying just compensation. U.S. Const. amend. V. The United States Court of Federal
Claims (“Court of Federal Claims”) possesses jurisdiction to entertain Fifth Amendment takings
claims against the United States, 28 U.S.C. § 1491(a)(1) (2012); Morris v. United States, 392
F.3d 1372, 1375 (Fed. Cir. 2004), such as claims premised upon the conversion of a railroad line
into a recreational trail pursuant to the Trails Act, Preseault I, 494 U.S. at 12-13.
To establish a taking, a plaintiff must first “identif[y] a cognizable Fifth Amendment
property interest that is asserted to be the subject of the taking.” Casitas Mun. Water Dist. v.
United States, 708 F.3d 1340, 1348 (Fed. Cir. 2013); accord Klamath Irrigation Dist. v. United
States, 635 F.3d 505, 520 n.12 (Fed. Cir. 2011) (“It is plaintiffs’ burden to establish cognizable
property interests for purposes of their takings . . . claims.”). To demonstrate a cognizable
property interest in a Trails Act case, a plaintiff must establish ownership in land adjacent to the
railroad line described in the NITU and that ownership in that land can be traced to the railroad
company’s acquisition. Brooks v. United States, 138 Fed. Cl. 371, 377 (2018). A plaintiff must
also establish that the railroad company acquired an easement for railroad purposes that
continued to exist at the time of the alleged taking. Ellamae Phillips Co. v. United States, 564
F.3d 1367, 1373 (Fed. Cir. 2009); Preseault v. United States (“Preseault II”), 100 F.3d 1525,
1533 (Fed. Cir. 1996) (en banc). With respect to this latter requirement, a court considers:
(1) who owned the strips of land involved, specifically did the Railroad . . .
acquire only easements, or did it obtain fee simple estates; (2) if the Railroad
acquired only easements, were the terms of the easements limited to use for
railroad purposes, or did they include future use as public recreational trails; and
(3) even if the grants of the Railroad’s easements were broad enough to
encompass recreational trails, had these easements terminated prior to the alleged
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taking so that the property owners at that time held fee simples unencumbered by
the easements. 2
Preseault II, 100 F.3d at 1533 (footnote added); accord Ellamae Phillips Co., 564 F.3d at 1373.
“[I]f the court concludes that a cognizable property interest exists, it then determines
whether the government’s action amounted to a compensable taking of that interest.” Casitas
Mun. Water Dist., 708 F.3d at 1348. In Trails Act cases, a taking occurs when “government
action destroys state-defined property rights,” either “by converting a railway easement to a
recreational trail, if trail use is outside the scope of the original railway easement,” Ladd v.
United States, 630 F.3d 1015, 1019 (Fed. Cir. 2010), or by compelling the continuation of a
railroad-purposes easement to accommodate negotiations for a trail-use agreement, even if the
negotiations are ultimately unsuccessful, see id. at 1025; Caquelin v. United States (“Caquelin
III”), 959 F.3d 1360, 1364, 1367 (Fed. Cir. 2020). It is well settled that the Board’s issuance of a
NITU, which forestalls the full abandonment of the railroad line, “is the government action that
prevents the landowners from possession of their property unencumbered by the easement.”
Ladd, 630 F.3d at 1023; accord Caquelin III, 959 F.3d at 1367 (“The NITU . . . was a
government action that compelled continuation of an easement for a time; it did so intentionally
and with specific identification of the land at issue; and it did so solely for the purpose of seeking
to arrange, without the landowner’s consent, to continue the easement for still longer, indeed
indefinitely, by an actual trail conversion.”); Barclay v. United States, 443 F.3d 1368, 1374 (Fed.
Cir. 2006) (“The barrier to reversion is the NITU, not physical ouster from possession.”);
Caldwell, 391 F.3d at 1233-34 (“The issuance of the NITU is the only government action in the
railbanking process that operates to prevent abandonment of the corridor and to preclude the
vesting of state law reversionary interests in the right-of-way.”); cf. Marvin M. Brandt Revocable
Tr. v. United States, 572 U.S. 93, 104-05 (2014) (explaining that an easement is terminated when
it is abandoned, leaving the owner of the servient estate with an “unencumbered interest in the
land”).
C. Procedural History
On February 18, 2014, Jeffrey Memmer filed a complaint seeking just compensation
under the Fifth Amendment for himself and as representative of a class of similarly situated
individuals. In a subsequently filed amended complaint, Mr. Memmer was joined by additional
plaintiffs: Gilbert Effinger; Larry and Susan Goebel (“the Goebels”); Owen Halpeny; Matthew
Hostettler; Joseph Jenkins; Michael and Rita Martin (“the Martins”); McDonald Family Farms of
Evansville, Inc. (“McDonald Family Farms”); Reibel Farms, Inc.; and James and Robin Schmidt
2
The “alleged taking” in Preseault II was not a CITU or NITU, but was instead the
conversion of the railroad-purposes easements to trails, because the agreement to allow the
easements to be used as trails predated the Interstate Commerce Commission’s order allowing
the discontinuation of railroad service. 100 F.3d at 1549-52; see also id. at 1552 (“Whether, at
the time a railroad applies to abandon its use of an easement limited to railroad purposes, a
taking occurs under an [Interstate Commerce Commission] order to ‘railbank’ the easement for
possible future railroad use, and allowing in the interim for use of the easement for trail
purposes, is a question not now before us. We offer no opinion at this time on that question.”).
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(“the Schmidts”). In support of their claim for just compensation, plaintiffs allege that they own
their property in fee simple; that prior to the Board’s issuance of the NITU, Indiana
Southwestern Railway Company (“Indiana Southwestern”) owned an easement across each of
their properties; that their properties would no longer be burdened by that easement if the
easement was abandoned or authorized for use beyond its scope; and that but for the issuance of
the NITU, they “would have the exclusive right to physical ownership, possession, and use of
their property free of any easement for recreational trail use or future railroad use.” 3 In its
answer to the amended complaint, defendant admits only one allegation: the existence of the
NITU. Defendant also asserts five affirmative defenses: (1) plaintiffs fail to state a claim upon
which relief can be granted; (2) plaintiffs without an interest in the property allegedly taken lack
standing; (3) plaintiffs who have had their interest in the subject property adjudicated in another
action are estopped from adjudicating those interests in this case; (4) the claims of plaintiffs who
have received compensation for their interest in the subject property are “extinguished by accord
and satisfaction, payment, and/or release”; and (5) the claims that have been waived are barred.
After engaging in discovery regarding liability, the parties filed cross-motions for partial
summary judgment. The parties generally contested two issues in those motions: (1) whether
Indiana Southwestern’s predecessors in interest acquired easements to construct and operate their
railroads and (2) whether the issuance of the NITU could effect a taking under the circumstances
presented in the case (in other words, when a trail-use agreement is not executed, the NITU
expires on its own terms, and the railroad company fails to consummate the abandonment of its
line). The court rendered its liability decision in a July 10, 2015 Opinion and Order. See
generally Memmer v. United States, 122 Fed. Cl. 350 (2015).
First, after acknowledging the undisputed facts that the plaintiffs owned property adjacent
to Indiana Southwestern’s railroad lines and that Indiana Southwestern’s predecessors acquired a
portion of those lines––adjacent to property owned by Reibel Farms, Inc.––via a prescriptive
easement, id. at 354 & n.1, the court analyzed sixteen deeds through which Indiana
Southwestern’s predecessors acquired the other relevant portions of the lines and determined that
three of those deeds conveyed fee simple estates, id. at 358-64. Consequently, it dismissed the
claims that derived from those deeds: Mr. Hostettler’s claim, part of the claim of Reibel Farms,
Inc., and part of the Martins’ claim. Id. at 361-62, 364. Then, with respect to the claims derived
from the thirteen deeds that conveyed an easement and the claim derived from the acquisition of
a prescriptive easement, the court concluded that the scope of those easements did not
encompass recreational trail use. Id. at 364. Finally, the court determined that binding
precedent, including the Federal Circuit’s decision in Ladd, compelled the conclusions that the
issuance of the NITU effected a taking and that “the taking is temporary, spanning from May 23,
2011, the effective date of the NITU, to November 8, 2013, the date the NITU expired.” Id. at
365-66.
After the court issued its liability decision, the parties engaged in discovery on the issue
of damages and ultimately reached a settlement of the amount due for the claims that survived
summary judgment. On April 11, 2017, the court, “[p]ursuant to [its] Opinion and Order, filed
July 10, 2015, and Order, filed April 10, 2017, granting the parties’ request to enter judgment in
3
The amended complaint does not contain class allegations.
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accordance with the Stipulation, filed April 7, 2017,” entered judgment pursuant to Rule 54(b) of
the Rules of the United States Court of Federal Claims (“RCFC”). 4
On June 9, 2017, defendant filed a notice of appeal indicating that it was appealing from
the court’s summary judgment decision and the RCFC 54(b) judgment. Plaintiffs similarly
cross-appealed the summary judgment decision and RCFC 54(b) judgment on June 21, 2017. In
the docketing statement it filed with the Federal Circuit, defendant provided a “[b]rief statement
of the issues to be raised on appeal”: “Whether the United States is liable for a taking of
plaintiffs’ property where no trail use agreement was reached and the railroad ultimately elected
not to abandon its line.” Docketing Statement of Appellant 2, Memmer v. United States, No. 17-
2150 (Fed. Cir. July 13, 2017). In their docketing statement, plaintiffs identified the following
issue for appeal: “Whether the lower court correctly ruled that the railroad owned fee simple in
certain segments of the railroad corridor.” Docketing Statement of Cross-Appellant 2, Memmer
v. United States, No. 17-2150 (Fed. Cir. July 13, 2017).
On the same day that plaintiffs filed their cross-appeal, the Federal Circuit issued its
decision in Caquelin I. In that case, several months after the NITU expired on its own terms
without the execution of a trail-use agreement, the railroad company consummated the
abandonment of its line. Caquelin I, 687 F. App’x at 1018. On appeal, the government
advanced an argument in tension with the Federal Circuit’s controlling precedent: that the
“blocking of [the state law] reversion” that occurred for the 180 days between the issuance of the
NITU and the expiration of the NITU “was not a categorical taking but instead calls for a multi-
factor takings analysis.” Id. at 1019; see also id. (remarking that the government invoked the
regulatory takings framework set forth in Penn Central Transportation Co. v. City of New York,
438 U.S. 104, 124 (1978), and the temporary takings analysis set forth in Arkansas Game & Fish
Commission v. United States, 568 U.S. 23, 38-40 (2012)). Although it recognized that its
controlling precedent dictated the result reached by the trial court, the Federal Circuit vacated the
trial court’s judgment and remanded the case to the trial court to create “a fully developed record
applying the multi-factor analysis the government urges” to enable the Federal Circuit to have “a
concrete basis for comparison of the competing legal standards as applied.” Id. at 1020.
Specifically, the Federal Circuit instructed the Caquelin trial court:
On remand, the Court of Federal Claims should conduct such proceedings—pre-
trial, trial, and post-trial—as are necessary for an adjudication of how the
government-advanced multi-factor analysis applies in this case, on the assumption
that such an analysis is the governing standard. An opinion containing findings of
fact and conclusions of law under such a standard—and also discussing what facts
invoke which of the Supreme Court’s standards—would sharpen the focus of
appellate consideration of the issues raised by the government in this case.
Id.
4
The only outstanding issue was the payment of costs pursuant to the Uniform
Relocation Assistance and Real Property Acquisition Policies Act of 1970, which was deferred
until any appeals were resolved.
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Because the issue on appeal in Caquelin I was also present in this case, the parties, before
filing their opening appellate briefs, jointly moved the Federal Circuit to vacate this court’s
judgment and remand the case for proceedings “consistent with” the ruling in Caquelin I.
Corrected Joint Mot. to Vacate and Remand to the Ct. of Federal Claims 1, Memmer v. United
States, Nos. 17-2150, 17-2230 (Fed. Cir. Oct. 12, 2017). Specifically, they asserted:
[P]rinciples of judicial economy are best served by vacating the Court of Federal
Claims’ decision in this case and remanding for further proceedings like those
ordered by this Court in Caquelin. Such a remand would allow development of a
record that would further prime the case for this Court’s review.
Id. at 5. The Federal Circuit granted the joint motion. In its order, it noted that in Caquelin I,
“the Court of Federal Claims was asked to create a record applying the multi-factor analysis the
government urged, so that this court could have a basis for comparison of the competing legal
standards.” Memmer v. United States, Nos. 17-2150, 17-2230, 2017 WL 6345843, at *1 (Fed.
Cir. Nov. 16, 2017). It therefore ordered that “[t]he Claims Court’s judgment is vacated and this
case is remanded for further proceedings consistent with this order.” 5 Id.
On remand, the parties engaged in additional discovery related to the multifactor analysis
and then filed pretrial briefs. The court conducted a pretrial conference in Washington, DC on
November 27, 2018. It then held a trial from April 29 to May 2, 2019, in Evansville, Indiana,
and on May 7, 2019, in Peoria, Illinois. The parties filed posttrial briefs, after which the court
heard closing arguments on October 28, 2020.
The remainder of this opinion sets forth the court’s findings of fact and conclusions of
law, as required by RCFC 52(a)(1), 6 with respect to both liability and damages. 7
5
On May 29, 2020, the Federal Circuit issued its decision in Caquelin III, rejecting the
multifactor analysis urged by the government and affirming the trial court’s conclusion that the
standard set forth in Ladd “remains governing precedent.” 959 F.3d at 1366-70. Nevertheless,
because the Federal Circuit’s mandate requires the court to engage in a multifactor analysis, it
will do so.
6
The court derives the facts from the parties’ Joint Stipulations of Fact for Trial (“Jt.
Stip.”), the transcript of testimony elicited during trial (“Tr.”), and the exhibits admitted into
evidence as part of the trial record (“PX,” “DX,” or “JX”). Citations to the trial transcript will be
to the page number of the transcript and the last name of the testifying witness.
7
As reflected in the procedural history, this case is back before the court after the
Federal Circuit granted the parties’ joint motion to (1) vacate the court’s summary judgment
decision and RCFC 54(b) judgment and (2) remand the case for proceedings similar to those
ordered in Caquelin I. As a consequence of the Federal Circuit’s vacatur, during trial, plaintiffs
were required to establish all elements of a taking––possession of cognizable property interests,
that the government’s action constituted a compensable taking, and the amount of damages––
after which the burden of persuasion shifted to defendant to rebut plaintiffs’ evidence. See, e.g.,
Falcon v. Gen. Tel. Co., 815 F.2d 317, 320 (5th Cir. 1987) (“When the Supreme Court vacated
[the trial court’s] decision, it swept away all that was tied to that judgment.”); In re Joy Glob.,
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II. LIABILITY: PROPERTY INTEREST
The court begins its analysis, as it must, by determining whether plaintiffs have
cognizable property interests that were the subject of the alleged taking. Casitas Mun. Water
Dist., 708 F.3d at 1348.
A. Legal Standards
In general, state law governs the determination of the property interest acquired by a
railroad company. See Preseault II, 100 F.3d at 1534 (“The question of what estates in property
were created by these turn-of-the-century transfers to the Railroad requires a close examination
of the conveying instruments, read in light of the common law and statutes of [the state] then in
effect.”). Moreover, the acquisition of property rights is governed by the law in effect at the time
the rights were acquired. See id.; Hash v. United States, 403 F.3d 1308, 1315 (Fed. Cir. 2005);
accord Clark v. CSX Transp., 737 N.E.2d 752, 758 (Ind. Ct. App. 2000) (remarking that, “in
construing a deed,” courts in Indiana “consider[] the instrument relative to the statutes in effect at
the time of the conveyance”).
Inc., 381 B.R. 603, 612 (D. Del. 2007) (holding that when a grant of summary judgment had
been vacated, “the situation is as if there were no prior proceedings” on summary judgment); see
also Rumsfeld v. Freedom NY, Inc., 329 F.3d 1320, 1332 (Fed. Cir. 2003) (holding that when a
judgment is vacated, the “vacated judgment ‘has no preclusive force either as a matter of
collateral or direct estoppel or as a matter of the law of the case,’” and therefore the tribunal
whose judgment was vacated is “free to come to different factual conclusions the second time
around without revisiting its decision in the earlier vacated decision” (quoting U.S. Philips Corp.
v. Sears Roebuck & Co., 55 F.3d 592, 598 (Fed. Cir. 1995))); Exxon Corp. v. United States, 931
F.2d 874, 877 (Fed. Cir. 1991) (“Law of the case . . . merely requires a trial court to follow the
rulings of an appellate court. It does not constrain the trial court with respect to issues not
actually considered by an appellate court, and thus has long been held not to require the trial
court to adhere to its own previous rulings if they have not been adopted, explicitly or implicitly,
by the appellate court’s judgment.” (footnote and citation omitted)); McGowan v. Sec’y of HHS,
31 Fed. Cl. 734, 737 (1994) (“The law of the case doctrine does not affect the power of a court to
reconsider its interlocutory decisions. The court may change any interlocutory decision up until
the entry of final [judgment].” (citing Jamesbury Corp. v. Litton Indus. Prods., Inc., 839 F.2d
1544, 1551 (Fed. Cir. 1988), overruled on other grounds by A.C. Aukerman Co. v. R.L. Chaides
Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992) (en banc))). This is not to say that the court would
reach different conclusions on the title issues that were in dispute during the summary judgment
stage and to which the parties did not stipulate for purposes of trial, namely, the interpretation of
the deeds through which Indiana Southwestern’s predecessors acquired their property interests in
the railroad lines. But absent that analysis, there would be no grounds to consider whether the
Board’s issuance of the NITU constituted a taking and the amount of damages to which plaintiffs
might be entitled.
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1. Deed Construction
At the time the deeds were executed, Indiana law provided:
Any conveyance of lands worded in substance as follows: “A.B. conveys and
warrants to C.D.” [here describe the premises] “for the sum of” [here insert the
consideration] the said conveyance being dated and duly signed, sealed and
acknowledged by the grantor, shall be deemed and held to be a conveyance in fee
simple to the grantee, his heirs and assigns . . . .
Ind. Rev. Stat. ch. 23, § 12 (1852) (recodified at Ind. Rev. Stat. ch. 18, § 2927 (1881)). Further,
“if it be the intention of the grantor to convey any lesser estate, it shall be so expressed in the
deed.” Id. § 14 (recodified at Ind. Rev. Stat. ch. 18, § 2929 (1881)). Of course, not all deeds
conform to the statutory language. With respect to such deeds:
There are several rules of construction to be used when construing the
meaning of a particular deed. The object of deed construction is to ascertain the
intent of the parties. In so doing, a deed is to be regarded in its entirety and the
parts are to be construed together so that no part is rejected. Where there is no
ambiguity in the deed, the intention of the parties must be determined from the
language of the deed alone. . . .
A deed that conveys a right generally conveys only an easement. The
general rule is that a conveyance to a railroad of a strip, piece, or parcel of land,
without additional language as to the use or purpose to which the land is to be put
or in other ways limiting the estate conveyed, is to be construed as passing an
estate in fee, but reference to a right-of-way in such a conveyance generally leads
to its construction as conveying only an easement.
Brown v. Penn Cent. Corp., 510 N.E.2d 641, 643-44 (Ind. 1987) (citations omitted); accord
Ross, Inc. v. Legler, 199 N.E.2d 346, 348 (Ind. 1964) (“A deed, when the interest conveyed is
defined or described as a ‘right of way,’ conveys only an easement in which title reverts to the
grantor, his heirs or assigns upon the abandonment of such right-of-way.”); Richard S. Brunt Tr.
v. Plantz, 458 N.E.2d 251, 256 (Ind. Ct. App. 1983) (considering a deed in which the grantors
“convey[ed] and quit claim[ed] . . . , for railroad purposes, the following real estate,” and holding
that “[r]eference to the intended use of the land indicate[d] that an easement was conveyed”
because “the grantors would have no reason to specify the use if conveying a fee simple”). But
see Poznic v. Porter Cnty. Dev. Corp., 779 N.E.2d 1185, 1190-92 (Ind. Ct. App. 2002) (holding
that a deed that conveyed to the railroad company “[f]orever, a strip of land for railroad
purposes” conveyed a fee simple and, in so holding, declined to treat the phrase “for railroad
purposes” as limiting language, noted that the deed did not include a statement indicating that the
deed would be void if the strip of land was not used for railroad purposes, and remarked that the
deed did not include the term “right-of-way”).
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“Deeds generally contain three important clauses: the granting clause, the habendum
clause, and the descriptive clause.” 8 Clark, 737 N.E.2d at 758. Reference to a “right-of-way”
may appear in any of them. See, e.g., Ross, Inc., 199 N.E.2d at 349 (rejecting, as “an
overrefinement of the rules of construction,” the contention that use of the term “right-of-way” in
the descriptive clause of a deed is meaningless when the term is not included in the deed’s
granting clause or habendum clause, and holding that “[t]he description clause of a deed may be
employed to describe the quality as well as the dimensions and quantity of the estate conveyed”);
CSX Transp., Inc. v. Rabold, 691 N.E.2d 1275, 1278 (Ind. Ct. App. 1998) (holding that when the
term “right-of-way” is used in the descriptive clause “in reference to the subject matter of the
deed,” and the deed does not contain the term “fee simple,” the deed conveys an easement); see
also Prior v. Quackenbush, 29 Ind. 475, 478 (1868) (“The office of the habendum is properly to
determine what estate or interest is granted by the deed, though this may be performed, and
sometimes is performed, by the premises, in which case the habendum may lessen, enlarge,
explain, or qualify, but not totally contradict or be repugnant to the estate granted in the
premises.” (internal quotation marks omitted)); Claridge v. Phelps, 11 N.E.2d 503, 504 (Ind.
App. 1937) (“[W]hen the granting clause of a deed is general or indefinite respecting the estate
in the lands conveyed, it may be defined, qualified, and controlled by the habendum.”). But see
Clark, 737 N.E.2d at 758 (remarking that when the term “right-of-way” appears “outside of the
granting clause, the term is of limited value because it has two meanings[:] 1) a right to cross
over the land of another, an easement, and 2) the strip of land upon which a railroad is
constructed”). Indeed, even if the granting clause “favors the construction of the deed as
conveying a fee simple absolute to the railroad company, such language is just a factor in
determining whether the parties intended to grant a fee or an easement”; courts will also examine
“other parts of the deed to see if the grantor expressed an intention to convey a lesser estate than
fee simple.” Tazian v. Cline, 686 N.E.2d 95, 98 (Ind. 1997).
In addition to language expressly defining or describing the interest conveyed, evidence
of the parties’ intent to convey an easement may appear in the title of the deed. See Clark, 737
N.E.2d at 758 (remarking that although “the cover and title of the instrument” are not considered
“where the granting language is clear and unambiguous[,] . . . the title may provide additional
evidence of intent where the language of the deed is unclear”). Such evidence may also include
the amount or type of consideration described in the deed. See Tazian, 686 N.E.2d at 99 (“When
attempting to ascertain the intent of the parties to a conveyance to a railroad, appellate courts of
this state look at the consideration paid to the grantee railroad.”); Richard S. Brunt Tr., 458
N.E.2d at 255 (“[W]here the consideration is nominal or where the only consideration is the
benefit to be derived by the grantor from the construction of the railroad rather than the full
market value for the interest acquired reflects the intent to create an easement.”). However,
neither the title of the deed nor the consideration described therein conclusively establishes the
conveyance of an easement. See Clark, 737 N.E.2d at 758 (“[T]he title . . . is not dispositive of
the nature of the conveyance.”), 759 (“[L]ack of consideration or nominal consideration alone is
8
The granting clause contains “[t]he words that transfer an interest in a deed or other
instrument,” Granting Clause, Black’s Law Dictionary 845 (11th ed. 2019); the habendum clause
is the part of a deed or other instrument “that defines the extent of the interest being granted and
any conditions affecting the grant,” Habendum Clause, id. at 854; and the descriptive clause
contains “the dimensions and quantity of the estate conveyed,” Ross, Inc., 199 N.E.2d at 349.
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not sufficient cause for setting aside a deed. . . . [N]ominal monetary consideration, alone, does
not make the instrument ambiguous, nor does it create an easement.”); Richard S. Brunt Tr., 458
N.E.2d at 255 (“Although such consideration is not by itself persuasive that the parties intended
to convey an easement, it is just one more factor held to indicate an easement . . . .”).
Ultimately, in construing deeds purporting to convey property interests to a railroad
company, courts must be cognizant that:
Public policy does not favor the conveyance of strips of land by simple titles to
railroad companies for right-of-way purposes, either by deed or condemnation.
This policy is based upon the fact that the alienation of such strips or belts of land
from and across the primary or parent bodies of the land from which they are
severed, is obviously not necessary to the purpose for which such conveyances
are made after abandonment of the intended uses as expressed in the conveyance,
and that thereafter such severance generally operates adversely to the normal and
best use of all the property involved. Therefore, where there is ambiguity as to
the character of the interest or title conveyed such ambiguity will generally be
construed in favor of the original grantors, their heirs and assigns.
Ross, Inc., 199 N.E.2d at 348; see also Penn Cent. Corp. v. U.S. R.R. Vest Corp., 955 F.3d 1158,
1160 (7th Cir. 1992) (“The presumption is that a deed to a railroad . . . conveys a right of way,
that is, an easement, terminable when the acquirer’s use terminates, rather than a fee simple.”).
2. Scope of Easements
If the court concludes that Indiana Southwestern’s predecessors acquired easements to
construct and operate their railroads, it must then ascertain whether the scope of those easements
includes their use for recreational trails. “[S]tate law controls the basic issue of whether trail use
is beyond the scope of the right-of-way.” Barclay, 443 F.3d at 1374 n.4 (citing Toews v. United
States, 376 F.3d 1371, 1376-77 (Fed. Cir. 2004)). The Indiana Supreme Court has held that
recreational trails are not within the scope of easements created for railroad purposes. Howard v.
United States, 964 N.E.2d 779, 784 (Ind. 2012). Furthermore, under Indiana law, when a
railroad company acquires a right-of-way through adverse possession, it obtains a prescriptive
easement for railroad purposes. See Hoffman v. Zollman, 97 N.E. 1015, 1017 (Ind. App. 1912)
(“A prescriptive right, where there is no color of title, cannot be broader than the claims which
the user evidences. Ordinarily there is no user by a railroad company beyond a user for the
purposes of a right of way.”); accord Macy Elevator, Inc. v. United States, 97 Fed. Cl. 708, 734-
35 (2011) (“[U]nder Indiana law when a railroad acquires property by prescription or by
condemnation, a railroad generally obtains an easement for railroad purposes.”).
B. Findings of Fact
The following facts are relevant to determining whether plaintiffs have cognizable
property interests that were the subject of the alleged taking.
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The interconnecting railroad lines at issue in this case are located in Posey and
Vanderburgh Counties, Indiana, situated (1) between milepost 227.5 at Poseyville, Indiana and
milepost 240.2 near German Township, Indiana and (2) between milepost 277.5 at Cynthiana,
Indiana and milepost 282.0 at Poseyville, Indiana. JX 1 at 3-4. The railroad was constructed by
predecessors of the current owner of the lines, Indiana Southwestern, 9 Jt. Stip. ¶¶ 1-4, which is a
subsidiary of Pioneer Railcorp, id. ¶ 4.
Indiana Southwestern’s predecessors acquired the segments of the railroad lines relevant
in this case by one of two means. First, they acquired a 4.42-acre segment through adverse
possession; Reibel Farms, Inc. owns a parcel of land adjacent to this segment. JX 61; JX 62 at
11; JX 63 at 2; see also Jt. Stip. ¶ 26 (indicating that the parcel owned by Reibel Farms, Inc. is
adjacent to the railroad lines). Second, they acquired the remaining segments by deed. JX 63 at
2. All of the plaintiffs own parcels adjacent to these segments. Id. The deeds, all dated between
1880 and 1882, JX 39 to JX 54, can either be grouped into one of two categories or assessed
individually. 10
The first seven deeds (“Type A deeds”) contain language that is substantially similar to
the following:
Right of Way Deed
Know all men by these Presents that [grantor(s)] for and in consideration
of the construction of the [railroad] and for the further consideration of [amount],
do grant, warrant and convey to the said [predecessor railroad company] its
successors and assigns a strip of land [number] feet in width, being a strip
[number] feet wide on each side of the center line of said Railway as it now is
located through his land . . . described as follows to wit: [Description of land]. It
being distinctly understood that this grant is for the purpose of construction,
maintenance and operation of said Railway.
JX 39; accord JX 40 to JX 44; JX 45 (containing similar language, but with the last sentence
instead providing: “It being distinctly understood that the above described Real Estate is to be
used exclusively for Railroad purposes.”). The amounts of consideration set forth in these deeds
and the approximate land area conveyed are as follows:
9
The railroad lines were constructed by Evansville and Peoria Railroad, which
subsequently became the Peoria, Decatur & Evansville Railway. Jt. Stip. ¶ 1. The Peoria,
Decatur & Evansville Railway became part of the Illinois Central Railroad in 1900. Id. ¶ 2.
Thereafter, the lines were operated by a series of railroad companies. Id. ¶ 3. In March 2000,
Indiana Southwestern acquired the lines from Evansville Terminal Company, Inc. and AB Rail
Investments, Inc. Id. ¶¶ 3-4.
10
For convenience, the court uses certain category and deed names suggested by
plaintiffs in their motion for partial summary judgment.
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Grantor(s) Amount Area
Wm. Marquis $100.00 2.75 acres
N. Marquis et al. $100.24 Unspecified portion of 3.5 acres
A.H. Fretageot et al. $20.05 Unspecified portion of 3.5 acres
Jane Owens et al. $60.14 Unspecified portion of 3.5 acres
Moses Endecott $1000.00 8.24 acres
L. Williams et al. $1.00 1.44 acres
Leroy Williams & wife $250.00 0.97 acres
JX 62 at 6, 8-9, 12. Mr. Halpeny, Mr. Memmer, and Mr. Jenkins own parcels adjacent to the
land conveyed by the Type A deeds. JX 39 to JX 45; JX 63 at 2; see also Jt. Stip. ¶¶ 19, 22-23
(indicating that the parcels owned by these plaintiffs are adjacent to the railroad lines).
The next six deeds (“Type A-1 deeds”) contain language that is substantially similar to
the following:
Know all men by these Presents that [grantor(s)] for and in consideration
of the construction of the [railroad] and for the further consideration of [amount],
do grant, warrant and convey to the said [predecessor railroad company], its
successors and assigns, a strip of Land [number] feet in width, being a Strip
[number] feet wide on each side of the center line of said Railway as it now is
Located through his Land . . . , described a follows, to wit:
[Description of land].
It being distinctly understood that this grant is for the purpose of
construction, maintenance and operation of said Railway.
JX 46; accord JX 47 to JX 51. The amounts of consideration set forth in these deeds and the
approximate land area conveyed are as follows:
Grantor(s) Amount Area
H. Hillenbrand and wife $400.00 4.45 acres
H. Goebel and wife $75.00 2.04 acres
S. McDonald et al. $100.00 1.92 acres
A.N. Martin and wife $700.00 6.04 acres
H.L. Graff and wife $175.00 3.07 acres
A.R. Grimm $257.50 5.16 acres
JX 62 at 1-5. The Goebels, McDonald Family Farms, the Martins, Mr. Effinger, and the
Schmidts own parcels adjacent to the land conveyed by the Type A-1 deeds. JX 46 to JX 51; JX
63 at 2; see also Jt. Stip. ¶¶ 20-21, 25, 27 (indicating that the parcels owned by the Goebels,
McDonald Family Farms, Mr. Effinger, and the Schmidts are adjacent to the railroad lines); id.
¶ 24 (indicating that two of the parcels owned by the Martins are adjacent to the railroad lines).
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Finally, there are three deeds that do not belong to a group. The first such deed (“the
Smith deed”) provides:
Right of Way Deed
Know all men by these presents, that Elizabeth Smith for and in
consideration of the Benefits to be derived from the construction of the [railroad]
and for the further consideration of one hundred Dollars . . . do grant, warrant and
Convey to the said [predecessor railroad company] its successors and assigns a
Strip of land sixty six feet in width being a Strip thirty three feet wide on Each
Side of the center line of said Rail Road as it now is located through her land . . .
described as follows to wit: [Description of land] it is hereby understood that
Said Rail Road Company shall make one good farm crossing for the use and
benefit of Said Elizabeth Smith said crossing to be made at a point to be
designated by the Said Elizabeth Smith.
JX 52. With this deed, Ms. Smith conveyed approximately 1.22 acres, JX 62 at 11, and this
acreage is adjacent to a parcel owned by Mr. Hostettler, JX 52; JX 63 at 2.
The second individual deed (“the Davis deed”) provides:
Right of Way Deed
Know all men by these Presents, That Joseph Davis and Mary C. Davis
. . . for and [in] consideration of the benefits to be derived from the construction
of the [railroad], and for the further consideration of One Hundred and Seventy-
five Dollars . . . do grant, warrant and convey to the said [predecessor railroad
company], its successors and assigns, a strip of Land sixty-six feet in width, being
a strip thirty-three feet wide, in each side of the center line of said Railroad as it
now is located through his land . . . , described as follows to wit: [Description of
land] and it is hereby understood that the said Joseph Davis shall have the right to
a water canal along said line on the south side of said R.R. on said strip of land
[and] that said Joseph Davis reserves the timber on said right of way and that said
R.R. Co. shall make one good crossing for the use and benefit of said Davis
wherever he may designate.
JX 53. With this deed, the Davises conveyed approximately 2.4 acres, JX 62 at 11, and this
acreage is adjacent to a parcel owned by Reibel Farms, Inc., JX 53; JX 63 at 2.
The third individual deed (“the side track deed”) provides:
This Indenture Witnesseth That Abner N. Martin and Cynthia Martin . . .
Convey and Warrant to [predecessor railroad company] for the sum of One Dollar
the following Real Estate . . . to wit:
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Commencing at a point on the West boundary of their right of way of the
E.D.&E [sic] Road where said Railway crosses the Base Line on the South side of
the South East quarter of Section (31) . . . , thence running in a North Westerly
direction along the right of way of said [railroad] 900 feet, thence West 50 feet[,]
thence South Easterly 900 feet, thence 50 feet to place of beginning. The same to
be theirs and their own as long as said Side track and Depot are in use any failure
or removal will make this Deed none and void.
JX 54. With this deed, the grantors conveyed either 1.03 acres, id., or 0.65 acres, JX 62 at 4-5,
and this acreage is adjacent to a parcel owned by the Martins, JX 54; JX 63 at 2. As of March
1993, no side track or depot existed on or near the acreage. JX 64.
C. Conclusions of Law
1. Property Interests Acquired by Indiana Southwestern’s Predecessors
As noted above, plaintiffs have established that they own land adjacent to the railroad
lines and that their property interests trace back to the land acquired by Indiana Southwestern’s
predecessors for the construction of a railroad. Thus, the court turns to the first factor described
in Preseault II and Ellamae Phillips Co.: whether Indiana Southwestern’s predecessors acquired
easements or fee simple estates.
Determining the property interest acquired by Indiana Southwestern’s predecessors
through adverse possession is straightforward: As previously noted, such an acquisition results
in a prescriptive easement for railroad purposes. However, ascertaining the nature of the
property interests conveyed by the sixteen deeds at issue requires a more searching analysis.
a. The Type A Deeds
The seven Type A deeds share the following characteristics: (1) they bear the title “Right
of Way Deed”; (2) they “grant, warrant and convey . . . a strip of land”; and (3) they indicate
either that the “grant is for the purpose of construction, maintenance and operation” of a railroad
or that the “Real Estate is to be used exclusively for Railroad purposes.” The granting clauses in
the deeds conveyed strips of land to Indiana Southwestern’s predecessors for varying amounts of
consideration. If the deeds contained nothing more than the granting clauses, then they would
have conveyed fee simple interests in the strips of land. See Ind. Rev. Stat. ch. 23, § 12 (1852).
However, the deeds also included habendum clauses indicating that the strips of land were to be
used for railroad purposes. The habendum clauses qualify, without contradicting, the estates
conveyed in the granting clauses. See Prior, 29 Ind. at 478; Claridge, 11 N.E.2d at 504. Indeed,
had the parties intended to convey fee simple interests in the strips of land, they would have had
no reason to specify the use of the land in the habendum clauses. See Richard S. Brunt Tr., 458
N.E.2d at 256. Because deeds should be construed so that no part is superfluous, Brown, 510
N.E.2d at 643, the court concludes that the parties intended to convey easements, and not fee
simple interests, in the strips of land. This conclusion is buttressed by the fact that these deeds
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were recorded with the title “Right of Way Deed.” 11 See Clark, 737 N.E.2d at 758. Moreover,
to the extent that the “railroad purposes” language in the habendum clause renders the deed
ambiguous, public policy favors construing the deeds as conveying easements. See Ross, Inc.,
199 N.E.2d at 348.
The Indiana Supreme Court’s decision in Tazian does not compel a different result. In
Tazian, the deed’s granting clause provided: “[The grantors] do grant and convey and warrant
. . . a strip of land . . . .” 686 N.E.2d at 96. The habendum clause provided that the railroad
company was “to have and to hold all and singular the said premises in and by these presents
released and conveyed unto the [railroad company] forever for the uses and purposes therein
expressed.” Id. As the Indiana Supreme Court explained, the phrase “for the uses and purposes
therein expressed” referred to the uses and purposes described in the granting clause, and the
granting clause contained no limitation on the uses and purposes of the strip of land. Id. at 101;
accord id. (“[T]his deed does not describe the interest conveyed as a railroad right of way nor
does the language limit the conveyance as for railroad purposes or railroad uses.”). In contrast,
the habendum clauses in the seven Type A deeds specified the uses and purposes of the strips of
land that were the subjects of the granting clauses. The court in Tazian found further support for
its conclusion that the deed conveyed a fee simple interest to the railroad company in the use of
the word “forever” in the habendum clause. Id. The Type A deeds do not specify that the grants
to Indiana Southwestern’s predecessors were to be in perpetuity. In sum, the decision in Tazian
does not control the outcome in this case. The Type A deeds conveyed easements.
b. The Type A-1 Deeds
The six Type A-1 deeds share the following characteristics: (1) they “grant, warrant and
convey . . . a strip of Land” and (2) they indicate that the “grant is for the purpose of
construction, maintenance and operation” of a railroad. But for the lack of titles identifying them
as right-of-way deeds, the Type A-1 deeds are substantially the same as the Type A deeds
previously described. Consequently, the court concludes that the parties to the Type A-1 deeds
intended to convey easements, and not fee simple interests, in the strips of land.
c. The Smith Deed
The Smith deed possesses the following characteristics: (1) it is titled “Right of Way
Deed”; (2) it reflects that the grantor did “grant, warrant and Convey . . . a Strip of land”; and
(3) it does not indicate that the strip of land would be used for railroad purposes. The body of
the deed––the granting clause, the habendum clause, and the descriptive clause––does not
include any language that describes the strip of land being conveyed as a right-of-way or limits
11
The monetary consideration paid by Indiana Southwestern’s predecessors for the
rights-of-way described in the Type A deeds (and, in fact, in all of the deeds at issue) ranged
from $1 to $1000. Although the payment of a nominal amount of consideration can suggest the
conveyance of an easement, Tazian, 686 N.E.2d at 99; Richard S. Brunt Tr., 458 N.E.2d at 255,
the court is unable to determine whether the consideration paid was nominal (aside from the two
deeds indicating the payment of $1) because the record lacks any evidence regarding the value of
land in southwestern Indiana in the late 1800s.
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the use of the strip of land to railroad purposes. In such circumstances, the deed conveys a fee
simple estate. See Brown, 510 N.E.2d at 644; accord Ind. Rev. Stat. ch. 23, §§ 12, 14 (1852).
The fact that the deed is titled “Right of Way Deed” does not alter the unambiguous nature of the
conveyance. See Clark, 737 N.E.2d at 758. Nor can public policy override an unambiguous
grant. See Ross, Inc., 199 N.E.2d at 348. In short, the Smith deed conveys a fee simple estate in
the described strip of land. And because Indiana Southwestern owns the strip of land in fee
simple, the issuance of the NITU could not have disturbed the property rights of the adjacent
property owner––Mr. Hostettler. Defendant is therefore entitled to judgment in its favor with
respect to Mr. Hostettler’s claim.
d. The Davis Deed
The Davis deed possesses the following characteristics: (1) it is titled “Right of Way
Deed”; (2) it reflects that the grantors did “grant, warrant and Convey . . . a Strip of land”; (3) it
indicates in the habendum clause that the grantors had “the right to a water canal along said line
on the south side of said R.R. on said strip of land” and “reserve[d] the timber on said right of
way”; and (4) it does not indicate that the strip of land would be used for railroad purposes. In
contrast to the Smith deed, the Davis deed refers to the strip of land as a right-of-way in the
habendum clause. The presence of the term “right-of-way” in the body of a deed can signal that
the deed conveys an easement. See id. at 348-49; Brown, 510 N.E.2d at 644; CSX Transp., Inc.,
691 N.E.2d at 1278. However, the term “right-of-way” has two meanings; it can refer to both
the right to cross land and the land itself. Clark, 737 N.E.2d at 758; CSX Transp., Inc., 691
N.E.2d at 1278. In the Davis deed, the habendum clause indicates that the grantors reserved the
right to a water canal on the south side of the railroad “on said strip of land,” and the right to the
timber “on said right of way.” Thus, a plain reading of the habendum clause reveals that “right
of way” is being used as a synonym for “strip of land,” and therefore refers to the land itself, and
not the right to cross it.
Because the body of the deed does not include any language that describes the strip of
land being conveyed as a right-of-way (in the easement sense of the phrase) or limits the use of
the strip of land to railroad purposes, the deed conveys a fee simple estate. See Brown, 510
N.E.2d at 644; accord Ind. Rev. Stat. ch. 23, §§ 12, 14 (1852). As with the Smith deed, the fact
that the Davis deed is titled “Right of Way Deed” does not alter the unambiguous nature of the
conveyance. See Clark, 737 N.E.2d at 758. Nor can public policy override an unambiguous
grant. See Ross, Inc., 199 N.E.2d at 348. In short, the Davis deed conveys a fee simple estate in
the described strip of land. And because Indiana Southwestern owns the strip of land in fee
simple, the issuance of the NITU could not have disturbed the property rights of the adjacent
property owner––Reibel Farms, Inc. Defendant is therefore entitled to judgment in its favor with
respect to the portion of the claim of Reibel Farms, Inc. that derives from the Davis deed.
e. The Side Track Deed
The side track deed reflects that (1) the grantors did “Convey and Warrant . . . Real
Estate” to the railroad company, (2) the consideration paid by the railroad company was one
dollar, (3) the real estate would remain with the railroad company “as long as said Side track and
Depot are in use,” and (4) “any failure or removal will make this Deed none and void.” Unlike
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the easement-conveying deeds in Macy Elevator, Inc., which provided that “[w]hen said land
herein released Shall cease to be used for Rail Road purposes, it shall revert back to the original
tract” and “Said land 66 feet wide to be held and enjoyed by Said RailRoad Company So long as
it shall be used for a Rail Road & no longer,” 97 Fed. Cl. at 716, the side track deed lacks any of
the typical language suggesting that it conveys an easement rather than a fee simple; the term
“right-of-way” is not used, there is no statement that the “Real Estate” being conveyed is to be
used for “railroad purposes,” and the existence of nominal consideration, on its own, does not
create an easement. See Brown, 510 N.E.2d at 644; Clark, 737 N.E.2d at 759; Richard S. Brunt
Tr., 458 N.E.2d at 255. Rather, the form of the side track deed follows the contemporaneous
statutory language deemed to convey a fee simple estate. See Ind. Rev. Stat. ch. 23, §§ 12, 14
(1852). Because the deed did not convey an easement to the railroad company, the current
owners of the adjacent parcel––the Martins––could not have any property rights that would have
been affected by the issuance of the NITU.
But even if the side track deed conveyed an easement to the railroad company, the
Martins would not prevail because the deed included a contingency that (1) rendered the
easement determinable and (2) would have led to the termination of the easement before the
Board issued the NITU. A determinable easement, like a determinable fee, “terminate[s] upon
the happening of the event upon which its existence is conditioned without any action by the
grantor of the estate or his successors in interest.” Erie-Haven, Inc. v. First Church of Christ,
292 N.E.2d 837, 841 (Ind. Ct. App. 1973); see also Lindsay v. Wigal, 250 N.E.2d 755, 756 (Ind.
App. 1969) (“[T]he words[] ‘as long as’ create a determinable fee which reverts ipso facto on the
happening of the stated event.”). The evidence in the trial record reflects that at some point in
time prior to March 1993, one of Indiana Southwestern’s predecessors removed the side track
and depot from or near the parcel conveyed by the side track deed. This removal terminated the
interest held by the railroad company––whether it was an easement or fee simple estate––leaving
Indiana Southwestern with no interest in the parcel at the time the Board issued the NITU. 12
Thus, the issuance of the NITU would have had no effect on the property rights of the adjacent
property owners, such as the Martins. Defendant is therefore entitled to judgment in its favor
with respect to the portion of the Martins’ claim that derives from the side track deed.
2. Scope of the Easements Acquired by Indiana Southwestern’s Predecessors
Having concluded that Indiana Southwestern’s predecessors obtained easements through
adverse possession and the Type A and Type A-1 deeds, the court proceeds to the next inquiry
set forth in Preseault II and Ellamae Phillips Co.: what is the scope of those easements?
Specifically, are the easements limited to use for railroad purposes, or are they broad enough to
encompass use for recreational trails? All thirteen of the deeds reflect that the conveyances were
for the purposes of constructing, maintaining, and operating a railroad, and under Indiana law,
12
Relatedly, the trial record lacks evidence that the Martins are the heirs of Abner N.
Martin and Cynthia Martin, such that they would be the beneficiaries of the reversion. See also
JX 26 (reflecting that the Martins purchased their parcels in October 2008 from Eugene W.
Kuehn, Charlotte A. Kuehn, Jerry W. Schmidt, and Shirley A. Schmidt); Tr. 268-69 (Martin)
(stating that the Martins purchased their parcels in a private sale from a mentee of Mr. Martin’s
father).
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recreational trails are not within the scope of such easements. Moreover, a railroad company
obtains a railroad purposes easement when it acquires property to construct and operate its
railroad by prescription. Accordingly, the easements possessed by Indiana Southwestern at issue
in this case are limited to use for railroad purposes.
3. Existence of the Easements at the Time of the Alleged Taking
The final inquiry under Preseault II and Ellamae Phillips Co. is whether Indiana
Southwestern’s easements terminated before the alleged taking. Plaintiffs contend that the
taking occurred when the Board issued the NITU, and further contend that thereafter, Indiana
Southwestern took actions that, under state law, constituted the abandonment of the railroad
lines. The trial record lacks any evidence that Indiana Southwestern or its predecessors
abandoned the easements, or that the easements were otherwise terminated, prior to the issuance
of the NITU. Thus, the court concludes that at the time of the alleged taking, the parcels held in
fee simple by adjacent landowners were encumbered by the easements. Accordingly, those
plaintiffs who own parcels adjacent to the easements conveyed by the Type A and Type A-1
deeds––Mr. Halpeny, Mr. Memmer, Mr. Jenkins, the Goebels, McDonald Family Farms, the
Martins, Mr. Effinger, and the Schmidts––and obtained through adverse possession––Reibel
Farms, Inc.––have cognizable Fifth Amendment property interests. 13
III. LIABILITY: FIFTH AMENDMENT TAKING
Having determined the existence of cognizable property interests at the time of the
alleged taking, the next inquiry is whether those interests were, in fact, taken. Casitas Mun.
Water Dist., 708 F.3d at 1348. In its vacated summary judgment decision, the court, relying on
the Federal Circuit’s decision in Ladd, treated the Board’s issuance of the NITU as a categorical
physical taking. However, the Federal Circuit’s remand order in this case and the Federal
Circuit’s decision in Caquelin III require the court to revisit its holding.
A. Legal Standards
The court must address two overarching issues to determine whether the government is
liable for a taking in the circumstances presented in this case: (1) the nature of the alleged taking
and (2) whether the government’s action––the NITU––caused a taking. The resolution of the
13
By deed, Mr. Halpeny’s parcel extends to the centerline of the adjacent railroad line,
JX 20 (deed), and the parcel owned by McDonald Family Farms encompasses the entire relevant
segment of the adjacent railroad line, JX 17 (deed); JX 19 (map). The remaining named
plaintiffs did not acquire the land underlying the adjacent railroad line when they acquired their
parcels. JX 11 (Memmer deed); JX 14 (Goebel deed); JX 23 (Reibel Farms, Inc. deed); JX 26
(Martin deed); JX 29 (Effinger deed); JX 32 (Jenkins deed); JX 34 (Jenkins map); JX 35
(Schmidt deed). Under Indiana law, their parcels extend to the centerline of the adjacent railroad
lines. See Macy Elevator, Inc., 97 Fed. Cl. at 719-20 (noting that it is well settled in Indiana that
when deeds do not include the railroad right-of-way, the adjoining fee owners own to the
centerline of the right-of-way, subject to the easement).
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first issue is dictated by the Federal Circuit’s decisions in Ladd and Caquelin III, but must be
addressed due to the Federal Circuit’s mandate.
1. Nature of a Taking
“When the government physically takes possession of an interest in property for some
public purpose, it has a categorical duty to compensate the former owner, regardless of whether
the interest that is taken constitutes an entire parcel or merely a part thereof.” Tahoe-Sierra
Preservation Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 322 (2002). Takings
in Trails Act cases constitute such categorical physical takings. See Caquelin III, 959 F.3d at
1367-70; Ladd, 630 F.3d at 1025. Depending on the circumstances, these takings can be
permanent or temporary. Caquelin III, 959 F.3d at 1367; Ladd, 630 F.3d at 1025; Barclay, 443
F.3d at 1378; Caldwell, 391 F.3d at 1234.
Another type of taking relevant to this case (due to the Federal Circuit’s remand order) is
temporary noncategorical physical takings. In Arkansas Game & Fish, the United States
Supreme Court (“Supreme Court”) held that “government-induced flooding temporary in
duration gains no automatic exemption from Takings Clause inspection” and that “[w]hen
regulation or temporary physical invasion by government interferes with private property,” a
number of factors are relevant to determining whether a “compensable taking” has occurred:
(1) the duration of the interference; (2) “the degree to which the invasion is intended or is the
foreseeable result of authorized government action,” (3) “the character of the land at issue,”
(4) “the owner’s ‘reasonable investment-backed expectations’ regarding the land’s use,” and
(5) the “[s]everity of the interference . . . .” 568 U.S. at 38-39; see also Ark. Game & Fish
Comm’n v. United States, 736 F.3d 1364, 1370 (Fed. Cir. 2013) (“[T]o determine whether a
taking has occurred, a court must consider whether the injury was caused by authorized
government action, whether the injury was the foreseeable result of that action, and whether the
injury constituted a sufficiently severe invasion that interfered with the landowner’s reasonable
expectations as to the use of the land.”). Although the Federal Circuit held in Caquelin III that
the multifactor test set forth in Arkansas Game & Fish did not apply to a Trails Act taking
triggered by a NITU, the court must assume that it may apply in such a situation to execute the
Federal Circuit’s mandate. 14
14
In Caquelin, the government argued in the alternative that in a Trails Act case in which
the NITU expired without the execution of a trail-use agreement, the alleged taking should be
analyzed as a noncategorical regulatory taking. Caquelin III, 959 F.3d at 1362; see also Penn
Central, 438 U.S. at 124 (identifying the relevant factors as “[t]he economic impact of the
regulation on the claimant . . . , the extent to which the regulation has interfered with distinct
investment-backed expectations,” and “the character of the governmental action”). However, as
the Federal Circuit reaffirmed in Caquelin III, a taking under the Trails Act is a physical, not a
regulatory, taking. 959 F.3d at 1368; accord Ladd, 630 F.3d at 1025. Thus, although the Federal
Circuit’s remand instructions require the court to “create a record applying the multi-factor
analysis the government urged” in Caquelin, the court, like the trial court in Caquelin, will limit
its analysis to the factors described in Arkansas Game & Fish. Indeed, there is no need to
separately address the Penn Central factors since they are, in large part, incorporated into the
Arkansas Game & Fish factors. See Caquelin v. United States (“Caquelin II”), 140 Fed. Cl. 567,
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2. Causation
In addition to determining the nature of the alleged taking, a court must ascertain whether
the government action caused the injury alleged by the plaintiff. As noted above, a taking occurs
in a Trails Act case when the government prevents the vesting of a state-law reversionary interest
by converting a railroad-purposes easement into a recreational trail or by compelling the
continuation of a railroad-purposes easement to accommodate negotiations for a trail-use
agreement. Caquelin III, 959 F.3d at 1364, 1367; Ladd, 630 F.3d at 1019; Barclay, 443 F.3d at
1374; Caldwell, 391 F.3d at 1233. The NITU is the government action that prevents the
reversionary interest from vesting. Caquelin III, 959 F.3d at 1367; Ladd, 630 F.3d at 1023;
Barclay, 443 F.3d at 1374; Caldwell, 391 F.3d at 1233-34.
However, in Caquelin III, the Federal Circuit observed that a NITU is a necessary, but
not a sufficient, requirement to establish a taking. It explained:
It is a fundamental principle of takings law that a government action is not
a taking of property if, even in the absence of the challenged government action,
the plaintiff would not have possessed the allegedly taken property interest. St.
Bernard Parish Gov’t v. United States, 887 F.3d 1354, 1359-60, 1362 (Fed. Cir.
2018); see United States v. Archer, 241 U.S. 119, 132 (1916). That causation
principle focuses on comparing the plaintiff’s property interest in the presence of
the challenged government action and the property interest the plaintiff would
have had in its absence. See Preseault I, 494 U.S. at 24 (O’Connor, J.,
concurring) (endorsing the proposition, acknowledged by the government, that
“the existence of a taking will rest upon the nature of the state-created property
interest that [the landowners] would have enjoyed absent the federal action and
upon the extent that the federal action burdened that interest”). It reflects a
causation principle hardly unique to takings law. See, e.g., Babb v. Wilkie, 140 S.
Ct. 1168, 1178 (2020) (explaining general but-for rule governing damages and
certain other result-altering relief).
Caquelin III, 959 F.3d at 1371. The Federal Circuit then applied this “causation principle” to the
situation presented in the case before it––in which the railroad company fully abandoned its line
by filing a notice of consummation after the NITU expired without the execution of a trail-use
agreement: 15
581-82 (2018), aff’d, 959 F.3d at 1360 (observing that two of the Arkansas Game & Fish factors
are similar to or derived from the Penn Central factors); Def.’s Posttrial Br. 56-62 (merging, in
the legal contentions, the “economic impact” factor of Penn Central and the “severity” factor of
Arkansas Game & Fish).
15
The issuance of a NITU can result in three general outcomes. First, the railroad
company and potential trail operator could reach a trail-use agreement, leading to the conversion
of the railroad-purposes easement into a trail. See, e.g., Barclay, 443 F.3d at 1372; Caldwell,
391 F.3d at 1231-32, 1234 n.7. Second, the railroad company and potential trail operator could
allow the NITU to expire without reaching a trail-use agreement and, thereafter, the railroad
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The challenged government action is the legally mandated maintenance of the
easement through denying abandonment authority to the railroad. It is undisputed
that, without abandonment by the railroad, the easement would remain. It follows
that the NITU would not have altered the continuation of the easement during the
NITU period—i.e., would not have caused the only alleged taking of property—if
the railroad would not have abandoned the rail line during that period even in the
absence of the NITU.
Id. It therefore held “that there is no taking until the time as of which, had there been no NITU,
the railroad would have abandoned the rail line, causing termination of the easement that the
NITU continued by law.” 16 Id. at 1372; see also id. at 1370 (“The precise timing [of
abandonment] is immaterial to liability if abandonment would have occurred during the NITU
period . . . .”).
3. Abandonment Under Indiana Law
Plaintiffs, in addressing causation, argue that Indiana Southwestern abandoned the
railroad lines under state law. “Property law in Indiana provides that, upon abandonment by the
railroad, a railroad easement terminates and the fee simple interest in the land reverts to the
grantor, or the grantor’s heirs, assigns or devisees.” Consol. Rail Corp. v. Lewellen, 682 N.E.2d
779, 782 (Ind. 1997). By statute, “a right-of-way is considered abandoned if”:
company exercises its abandonment authority and fully abandons the railroad line by filing a
notice of consummation. See, e.g., Caquelin III, 959 F.3d at 1362. Third, as in this case, the
railroad company and potential trail operator could allow the NITU to expire without reaching a
trail-use agreement and, thereafter, the railroad company does not exercise its abandonment
authority and fully abandon the line by filing a notice of consummation.
16
The Federal Circuit explained that its holding was consistent with its analyses and
conclusions in Caldwell, Barclay, and Ladd. Caquelin III, 959 F.3d at 1371-72 (observing that
the holdings in all three prior cases “incorporate[d] the causation inquiry” it described).
Specifically, it noted that “nothing in those opinions suggests that a party in those cases argued
to this court that, even in the absence of the NITU, the railroad would not have abandoned the
rail line until some date that would make a difference to the outcome of the issue on appeal—
whether timeliness, in Caldwell and Barclay, or liability for a taking, in Ladd . . . .” Id. at 1372.
It is clear that the Federal Circuit intended its “clarification of [its] case law on the timing of a
NITU-based taking” to be binding on the Court of Federal Claims, see id. at 1371-72, and this
court intends to treat it as binding. However, it is worth noting that the Federal Circuit’s holding
appears to be inconsistent with its prior holding in Ladd that a plaintiff has a complete cause of
action when a NITU is issued (in other words, the plaintiff’s claim accrued) and subsequent
events “cannot be necessary elements of the claim,” 630 F.3d at 1024, suggesting that the
holding in Ladd remains binding, see Barclay, 443 F.3d at 1373 (“Panels of this court are bound
by previous precedential decisions until overturned by the Supreme Court or this court en
banc.”).
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(2) After February 27, 1920, both of the following occur:
(A) The Interstate Commerce Commission or the United States Surface
Transportation Board issues a certificate of public convenience and necessity
relieving the railroad of the railroad’s common carrier obligation on the right-
of-way.
(B) The earlier of the following occurs:
(i) Rails, switches, ties, and other facilities are removed from the right-of-
way, making the right-of-way unusable for continued rail traffic.
(ii) At least ten (10) years have passed from the date on which the
Interstate Commerce Commission or the United States Surface
Transportation Board issued a certificate of public convenience and
necessity relieving the railroad of its common carrier obligation on the
right-of-way.
Ind. Code § 32-23-11-6(a) (2011); see also Lewellen, 682 N.E.2d at 783 (noting that “the
common law on whether abandonment has occurred was superseded by” statute in 1987).
However, “[a] right-of-way is not considered abandoned if the Interstate Commerce Commission
or the United States Surface Transportation Board imposes on the right-of-way a trail use
condition under 16 U.S.C. 1247(d).” 17 Ind. Code § 32-23-11-7; see also 16 U.S.C. § 1247(d)
(2006) (“[I]f such interim use [as a trail] is subject to restoration or reconstruction for railroad
purposes, such interim use shall not be treated, for purposes of any law or rule of law, as an
abandonment of the use of such rights-of-way for railroad purposes. If [an entity] is prepared to
assume full responsibility for the management of such rights-of-way . . . , then the Board shall
impose such terms and conditions as a requirement of any transfer or conveyance for interim use
. . . and shall not permit abandonment . . . inconsistent or disruptive of such use.”).
At the time that the original version of Indiana Code section 32-23-11-6 was enacted, 18
federal law provided that “rail carrier[s]” could abandon their railroad lines through formal
abandonment proceedings if the Interstate Commerce Commission found “that the present or
future public convenience and necessity require[d] or permit[ted] the abandonment” and
“issue[d] to the rail carrier a certificate describing the abandonment,” 49 U.S.C. § 10903 (1982),
or upon the Interstate Commerce Commission recognizing that the rail carrier was exempt from
17
This provision was added to the Indiana Code as section 32-5-12-7 in 1995, see 1995
Ind. Acts 2100, 2124-25 (section 4 of Public Law 40-1995), and recodified as section 32-23-11-7
in 2002, see 2002 Ind. Acts 187, 280, 295 (section 8 of Public Law 2-2002).
18
The original version of the statute provided that abandonment occurred when “the
Interstate Commerce Commission issues a certificate of public convenience and necessity” and
the railroad company removes the “rails, switches, ties, and other facilities . . . from the right-of-
way.” Lewellen, 682 N.E.2d at 783 & n.7; see also id. at 783, 784 n.9 (reflecting that these two
requirements were included in the subsequent version of the statute enacted in 1995).
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formal abandonment proceedings, id. § 10505; 49 C.F.R. § 1152.50(d)(3) (1986). These
actions––issuance of a certificate of public convenience and necessity (also referred to as a
certificate of abandonment) and the recognition of an exemption––constituted authorization for
the rail carrier to abandon its line. See 49 C.F.R. §§ 1152.26(a)(1), .50(d)(2)-(3) (1986); see also
id. § 1152.29(c)(1), (d)(1) (providing that a CITU and a NITU authorized abandonment 180 days
after issuance); Preseault I, 494 U.S. at 7 n.5 (observing that if a trail-use agreement is not
reached within 180 days of the issuance of a CITU or NITU, the CITU or NITU “automatically
converts into an effective certificate or notice of abandonment”). That authorization relieved the
rail carrier “of its obligation to furnish rail service.” Hayfield N. R.R. Co. v. Chi. & N.W.
Transp. Co., 467 U.S. 622, 635 (1984). It was then up to the rail carrier to take the steps
necessary to fully abandon its line. See Black v. Interstate Com. Comm’n, 762 F.2d 106, 112-13
(D.C. Cir. 1985) (discussing what a rail carrier was required to do to fully abandon its line after
receiving a certificate of public convenience and necessity, 19 as well as the “more searching and
functional inquiry about the actual intent” of the rail carrier employed by many federal courts to
determine whether a line had been abandoned). Once a rail carrier fully abandoned its line, the
Interstate Commerce Commission no longer possessed jurisdiction over the line. Preseault I, 494
U.S. at 6 n.3 (citing Hayfield N. R.R. Co., 467 U.S. at 633; Rail Abandonments, 54 Fed. Reg.
8011, 8012 (Feb. 24, 1989)). 20
The requirement that a certificate be issued at the conclusion of formal abandonment
proceedings was removed from federal law effective January 1, 1996. 21 See ICC Termination
19
To fully abandon its line, a rail carrier was required to cease operations and cancel
tariffs. See Black, 762 F.2d at 112. A prior requirement that the rail carrier file a letter with the
Interstate Commerce Commission indicating that the abandonment was consummated was
eliminated in 1984. See, e.g., Consol. Rail Corp. v. Surface Transp. Bd., 93 F.3d 793, 798 (D.C.
Cir. 1996); Abandonment and Discontinuance of Rail Lines and Rail Transportation Under 49
U.S.C. 10903, 61 Fed. Reg. 67,876, 67,879 n.10 (Dec. 24, 1996) (to be codified at 49 C.F.R. pts.
1105, 1152).
20
In Hayfield N. R.R. Co., the Supreme Court stated that the Interstate Commerce
Commission’s “authorization of an abandonment” in a nonconditional certificate of
abandonment brought the Commission’s “regulatory mission to an end” and that “issuing a
certificate of abandonment terminate[d] the Commission’s jurisdiction . . . .” 467 U.S. at 633.
However, in so stating, it relied on Interstate Commerce Commission precedent reflecting that it
was the “exercise” of the authority granted in the certificate of abandonment (or the full
abandonment of the railroad line after a certificate was issued) that terminated the Commission’s
jurisdiction. Id. at 634. Indeed, in Preseault I, decided six years later, the Supreme Court relied
on the entirety of the discussion in Hayfield N. R.R. Co. for its conclusion that “[o]nce a carrier
‘abandons’ a rail line pursuant to authority granted by the Interstate Commerce Commission, the
line is no longer part of the national rail system, and . . . as a general proposition [Interstate
Commerce Commission] jurisdiction terminates.” 494 U.S. at 6 n.3; accord 54 Fed. Reg. at 8012
(“[O]nce a carrier exercises the authority granted in a regular abandonment certificate the line is
no longer part of the national transportation system.”).
21
No such certificate had been required at the conclusion of exemption proceedings. See
49 C.F.R. § 1152.50 (1986); Modification of Procedure for Handling Exemptions Filed Under 49
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Act of 1995, Pub. L. No. 104-88, §§ 2, 102(a), 109 Stat. 803, 804, 823-25. Therefore, the Board
“dispense[d] with the issuance of certificates and instead simply issue[d] ‘decisions granting’ an
application.” 61 Fed. Reg. at 67,880. However, the Board decided that it would “continue to
refer to ‘Certificates of Interim Trail Use or Abandonment’ in the trail use context in part to
distinguish an application proceeding from an exemption proceeding.” Id. In other words, when
ruling on an abandonment application, the Board will issue either a decision (when not imposing
a trail-use condition) or a CITU (when imposing a trail-use condition). Although the Indiana
legislature recodified section 32-23-11-6 in 2002, it did not amend the statute’s language to
reflect this change in federal law. Compare Ind. Code § 32-23-11-6 (2003), with Ind. Code § 32-
5-12-6 (2001).
B. Findings of Fact
The following facts are relevant to determining the nature of the alleged taking and
whether the NITU caused a compensable taking.
1. Proceedings Before the Board
Indiana Southwestern determined that it no longer needed the railroad lines at issue in
this case for rail service. Tr. 955 (LaKemper); accord id. at 958 (“We did not want to maintain
the line in place.”). It therefore began to discuss removing the track from the lines. See DX 108
at 531 (addressing, on July 28, 2010, “the section of track we are going to pull up”), 558
(reflecting an offer, dated July 27, 2010, to “pay Pioneer Railcorp $1,040,000 for all rail, plates,
joint bars, turnouts and miscellaneous scrap steel [and other track material] from said line,”
leaving behind the ties, signal appurtenances, and bridges); see also Tr. 912 (Cullen) (stating an
assumption that the discussions began in the July 2010 time frame), 956 (agreeing that the intent
to salvage the track materials was formed during the spring or summer of 2010).
On October 25, 2010, Indiana Southwestern submitted to the Board a notice of exemption
pertaining to the railroad lines in which it represented that it had satisfied all of the requirements
for seeking a class exemption from abandonment proceedings and declared that it would
consummate the abandonment of the lines “on or after January 15, 2011.” JX 1 at 3-6; see also
Tr. 962 (LaKemper) (“The purpose of the filing is to terminate [the] common carrier obligation
and abandon the line . . . .”). In particular, it certified “that no local traffic has moved over the
subject . . . lines . . . for at least two years” and “that there is no overhead traffic on the Lines that
has been, or would need to be, rerouted as a result of the proposed abandonment.” JX 1 at 8;
accord id. at 5 (remarking that “the Lines have been dormant for over two years,” that “no traffic
has moved over the Lines for some time,” and that “the Lines have not been used for local rail
shipments for over twenty-four (24) months”). Indeed, the last loaded revenue train ran on the
lines in 2004. Tr. 901 (Cullen); accord id. at 151 (Reeves), 196 (Memmer), 235 (Jenkins); see
also id. at 58 (Effinger) (stating that it had “been many years” since trains ran along the lines), 85
(McDonald) (stating that trains did not run “too often” as of ten years before trial), 123-24
(Goebel) (stating that a few trains had run on the lines since early 2000), 207-08 (Siebert)
U.S.C. 10505, 45 Fed. Reg. 85180 (Dec. 24, 1980) (setting forth the exemption procedure that
was later codified at 49 C.F.R. part 1121 in September 1991).
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(stating that it had “been a long time” since trains ran on the lines and when they did, it was
usually only one per week), 255 (Schmidt) (stating that he remembered last seeing a train go by
in 2000 or 2002), 272 (Martin) (stating that it had “been a long time” since trains ran along the
lines). In subsequent correspondence with the Board, Indiana Southwestern noted that “there
was weekly (or less) train service over the line” over the prior two years that “was to move
empty rail cars over and onto the line for rail car storage purposes only.” DX 2.29; accord Tr.
893, 896-99 (Cullen) (stating that after 2004 and until 2009, there was storage traffic on the
lines, both empty cars and cars that were not empty, for which Indiana Southwestern received
payment). It asserted, and the Board later agreed, that such movements did not disqualify it from
invoking the class exemption. DX 2.8 at 1; DX 2.29.
On November 12, 2010, the Board published a notice in the Federal Register in which it
acknowledged Indiana Southwestern’s representations in its notice of exemption, indicated that
in the absence of an OFA the exemption would be effective on December 14, 2010, and noted
that the deadlines for making a trail-use/railbanking request and requesting a public-use
condition were November 22, 2010, and December 2, 2010, respectively. Indiana Southwestern
Railway Co.—Abandonment Exemption—in Posey and Vanderburgh Counties, IN, 75 Fed. Reg.
69,520, 69,520 (Nov. 12, 2010); accord JX 2 at 1-2; see also 49 C.F.R. § 1152.50(d)(3)
(describing the applicable submission deadlines). The Board further provided:
Pursuant to the provisions of 49 C.F.R. § 1152.29(e)(2), [Indiana Southwestern]
shall file a notice of consummation with the Board to signify that it has exercised
the authority granted and fully abandoned the line. If consummation has not been
effected by [Indiana Southwestern’s] filing of a notice of consummation by
November 12, 2011, and there are no legal or regulatory barriers to
consummation, the authority to abandon will automatically expire.
75 Fed. Reg. at 69,520; JX 2 at 3.
Two interested third parties sought to prevent abandonment. On November 17, 2010,
Indiana Trails Fund, Inc. filed a request for a public-use condition and the interim use of the
railroad lines for a trail. Jt. Stip. ¶ 7. The following day, the Town of Poseyville, Indiana
(“Poseyville”) submitted a notice of its intent to file an OFA. Id. ¶ 8. Indiana Southwestern
responded to both submissions. On November 18, 2010, it advised the Board that it was “willing
to negotiate interim trail use/rail banking with . . . Indiana Trails Fund, Inc.” JX 5. Not long
thereafter, it provided Poseyville with the information and documentation necessary for
Poseyville to prepare its OFA. DX 2.8 at 2.
With respect to the OFA, Indiana Southwestern supplied Poseyville with information
indicating that the value of the railroad lines was $3,812,580––$1,008,000 for the land and
$2,804,580 for the track materials. Id. at 3. To arrive at the latter amount, Shane Cullen, Vice
President of Mechanical Operations for Pioneer Railroad Services, Inc., a subsidiary of Pioneer
Railcorp, Tr. 836-37 (Cullen), calculated the retail value of the rails, ties, and ballast on the lines,
id. at 858, 861, 868; DX 108 at 607. He estimated that the value of the rails and related steel
material was $2,480,000, the value of the ties was $174,580, and the value of the ballast was
$150,000. DX 108 at 607; cf. id. at 607 (reflecting an estimated scrap value of the rails and
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related steel material of $1,040,000), 619 (reflecting that Indiana Southwestern received an offer
on November 18, 2010, to purchase the reusable ties for $45,000 or, in the alternative, to provide
for the disposal of all ties for $83,193). To estimate the value of the ties, Mr. Cullen made
certain assumptions regarding the quality of the ties and the number of ties of each quality that
existed on the lines, Tr. 868-69, 871 (Cullen), with those assumptions based on both his
experience and his knowledge that the ties would need to be of a particular quality to support
empty storage traffic on the lines, id. at 879-81; accord id. at 878 (stating that he did not inspect
the lines when making his assumptions). Poseyville filed its OFA on December 20, 2010,
seeking to purchase the lines for $376,600––$240,000 for the land and $136,600 for the net
salvage value of the track materials. DX 2.8 at 2-3.
The Board’s Director of the Office of Proceedings issued a decision regarding the OFA
on December 23, 2010. Id. at 1. The Director concluded that Poseyville was financially
responsible and therefore it postponed the effective date of the abandonment exemption. Id. at 3.
With respect to the trail-use and public-use-condition requests, the Director noted that because
Indiana Trails Fund, Inc. had satisfied the statutory requirements and that Indiana Southwestern
had agreed to negotiate a trail-use agreement, the imposition of a public-use condition and
issuance of a NITU “would be appropriate commencing with the effective date of the
exemption.” Id. at 5. “However,” the Director noted,
an OFA takes priority over a request for issuance of a NITU or for a public use
condition. Therefore, issuance and effectiveness of the NITU and the public use
condition will be delayed until the OFA process has been completed. If
agreement is reached on the sale of the line, the NITU and the public use
condition would be unnecessary and unavailable. If no agreement is reached on
the OFA, the appropriate decision will be issued.
Id.
Indiana Southwestern appealed the Director’s determination that Poseyville was a
financially responsible offeror. JX 6 at 1. In a decision bearing a service date of April 8, 2011,
the Board concluded that Poseyville was not financially responsible for the purpose of
proceeding with the OFA process. Id. The Board then declared that its decision would become
effective on May 23, 2011, and that it would “impose the trail use condition and make effective
the public use condition” on the decision’s effective date. Id. at 7. Specifically, the Board
ordered:
3. The abandonment exemption will become effective on May 23, 2011,
subject to . . . the condition that [Indiana Southwestern] shall keep intact the
right-of-way, including potential trail-related structures, . . . and shall refrain from
disposing of the corridor (other than the track, ties and signal equipment), for a
period of 180 days from May 23, 2011, until November 19, 2011, to enable any
state or local government agency, or other interested person, to negotiate the
acquisition of the lines for public use. . . .
....
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7. If an agreement for interim trail use/rail banking is reached by
November 19, 2011, and notice [sic], trail use may be implemented. If no
agreement is reached by that time, [Indiana Southwestern] may fully abandon the
line . . . .
Id. at 7-8. Thus, the Board’s decision––served on April 8, 2011, and made effective on May 23,
2011––constituted a NITU. Jt. Stip. ¶ 10; see also DX 2.15 (reflecting that the Board, in a
decision served on September 23, 2011, denied Poseyville’s request for reconsideration).
Indiana Trails Fund, Inc. sought and received four extensions of the initial 180-day
period to negotiate a trail-use agreement, culminating in a deadline of November 8, 2013. Jt.
Stip. ¶¶ 11-18; see also 49 C.F.R. § 1152.29(d) (reflecting that a NITU can be issued only with
the agreement of the railroad company); Tr. 814 (counsel for the parties) (stipulating that Indiana
Southwestern agreed to each of these extensions). It did not seek a further extension. Tr. 967
(LaKemper); see also id. (stating that it was Indiana Trails Fund, Inc.’s responsibility to seek an
extension). Consequently, the NITU expired on its own terms, and Indiana Southwestern had
sixty days––or until January 7, 2014––within which to file a notice of consummation to signify
that it fully abandoned the railroad lines. See 49 C.F.R. § 1152.29(e)(2). However, Indiana
Southwestern did not file a notice of consummation with the Board. 22 Tr. 816 (Kitay), 939, 953,
968 (LaKemper). Nevertheless, Indiana Southwestern’s intent remained to either finalize the
abandonment or execute a trail-use agreement. Id. at 967-68 (LaKemper); accord id. at 970
(agreeing that at the time of trial, Indiana Southwestern did not intend to reinstall the tracks that
had been removed).
2. Actions of Indiana Southwestern During the Proceedings Before the Board and
Thereafter
Indeed, Indiana Southwestern’s discussions with Indiana Trails Fund, Inc. to sell the
railroad lines continued after the expiration of the NITU, id. at 969; accord DX 117 at 1, but had
not been “reduced to offers or draft documents,” Tr. 942 (LaKemper). See also id. at 971
(stating that the discussions were temporarily “on hold” due to the “potential buyout” of Pioneer
Railcorp); cf. id. (stating that Indiana Southwestern also engaged in on-and-off discussions with
Poseyville to sell the lines that were never “reduced to offers or draft documents”). In addition,
22
In addition, as of the last day of trial, no one had filed an adverse abandonment
application to request that the Board deem the railroad lines abandoned notwithstanding Indiana
Southwestern’s decision not to file a notice of consummation to signify that it had fully
abandoned the lines. Tr. 816-17 (Kitay); see also id. at 786 (stating that the Board has a process
in which “a third party can come in and ask the Board to find that there’s no further need for the
line as part of the national rail transportation system,” and that if such a request is granted, “the
Board’s jurisdiction over the right-of-way ceases”). However, after trial, the Board rejected a
request by landowners in another case before the court to direct Indiana Southwestern to show
cause why these same lines should not be deemed abandoned, Pls’ Notice of Decision Ex. A,
ECF No. 166-1 (indicating that the request was made on September 11, 2019, and denied on
January 24, 2020).
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on April 4, 2019, plaintiffs’ counsel sent an electronic-mail message to Daniel A. LaKemper,
General Counsel for Pioneer Railroad Services, Inc., Tr. 935-36 (LaKemper), offering to
purchase what was characterized as the easement interest in the corridor for $100,000 and
seeking to reach a deal before the commencement of trial on April 29, 2019. Id. at 942-43; DX
117 at 2-3. Indiana Southwestern did not pursue the expression of interest, Tr. 943 (LaKemper),
because Pioneer Railcorp was “in discussions about a possible buyout and [its] buyer . . .
prohibited [it] from engaging in those kinds of transactions or discussions pending arriving at a
deal with them,” id. at 944. Accord DX 117 at 1-2; see also Tr. 944-45 (LaKemper) (stating that
the buyer intended to purchase Pioneer Railcorp and all of its subsidiaries, including Indiana
Southwestern).
In the meantime, as authorized by regulation and the NITU, Indiana Southwestern took
steps to dispose of the track and other materials on the railroad lines. On August 2, 2011,
Indiana Southwestern executed a Scrap Rail Sales Agreement with A&K Materials Inc.
(“A&K”) in which A&K agreed to pay Indiana Southwestern $1.2 million to purchase and
remove “the switches, rail and other metallic track materials” from the lines. DX 113 at 3-8;
accord Tr. 844-45 (Cullen) (stating that “materials” included “[a]ll the steel rail track material,
which is the rails, joint bars, plates, spikes and bolts and nuts”); cf. Tr. 913 (Cullen) (stating that
A&K had been one of three bidders for the project). A&K was to “leave all bridges, culverts,
signal systems, road crossings, and other structures, fixtures, and facilities intact and
undamaged.” DX 113 at 7; accord id. at 3; see also Tr. 888-89 (Cullen) (stating that there is
“additional cost” with removing a road crossing due to the need to close the road and then
replace the road surface). In addition, it could move the ties “away from the center of the right
of way” but not from the right-of-way itself, and was prohibited from allowing the ties or “other
materials . . . to obstruct, block, or alter the drainage of the right of way or any surrounding
property.” DX 113 at 7. Indeed, although Mr. Cullen estimated that there were approximately
48,160 ties on the lines with a total value of $174,580, 23 DX 108 at 607, he determined that “[i]t
was not economically viable to go back and pick them up,” Tr. 905 (Cullen); accord id. at 906-07
(agreeing that the condition of the ties left in the railroad corridor was “extremely deficient for
operating trains” and that the sole reason they were left behind was because they were not part of
the agreement with A&K), 982-83 (LaKemper) (“If [the ties] had had value to . . . A&K or some
other contractor, [Indiana Southwestern] probably would have sold the ties as well. . . . These
were old branch line ties and . . . it’s unlikely that after they’ve been removed from the rails there
would[] be much usable surface left.”). The deadline for the removal work was April 1, 2012.
DX 113 at 4.
A&K complied with the terms of the contract, removing all rails (except those in road
crossings) and moving the ties from the center of the railroad lines by the deadline. Tr. 849-54
(Cullen); accord id. at 920 (stating that the work was completed by early February 2012); DX
114 (reflecting a $1.2 million payment to Indiana Southwestern); cf. Tr. 976 (LaKemper) (stating
23
Based on his experience, Mr. Cullen assumed that half of the ties were junk and would
need to be sent to a landfill at a cost of $120,400, that a quarter of the ties were reusable on
railroad tracks (relay number one grade) and could be sold for $174,580, and that the remaining
quarter of the ties were reusable––but perhaps not in railroad tracks––and could be sold for
$120,400. Tr. 870-71, 873-75, 878-82 (Cullen).
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that Indiana Southwestern apparently sent a train to the lines in September 2011 to “assist in the
salvage of the rail”). Indeed, a number of the testifying plaintiffs (or plaintiffs’ representatives)
recalled that the tracks were removed in the 2010-2012 time period. See Tr. 85-86 (McDonald),
152, 162 (Reeves), 190 (Memmer), 208 (Siebert), 235 (Jenkins), 255 (Schmidt), 272 (Martin).
And all of them noted that the ties were left behind in piles or stacks. See id. at 58, 73
(Effinger), 85-86 (McDonald), 108-09, 128 (Goebel), 153, 162 (Reeves), 176, 190-91
(Memmer), 208 (Siebert), 235-36 (Jenkins), 255-56 (Schmidt), 273 (Martin). After A&K
completed its work, Indiana Southwestern performed no maintenance along the railroad lines,
such as spraying for weeds or removing vegetation. Id. at 916 (Cullen); accord id. at 58-59
(Effinger), 87 (McDonald), 105 (Goebel), 150 (Reeves), 174 (Memmer), 209 (Siebert), 256
(Schmidt), 271 (Martin); see also PX 1.D (photo of the railroad corridor adjacent to the Memmer
property); PX 2.D (photo of the railroad corridor adjacent to the Goebel property); PX 3.D
(photo of the railroad corridor adjacent to the McDonald Family Farms property); PX 4.D (photo
of the railroad corridor adjacent to the Halpeny property); PX 5.D (photo of the railroad corridor
adjacent to the Reibel Farms, Inc. property); PX 6.D (photo of the railroad corridor adjacent to
the Martins’ property); PX 7.D (photo of the railroad corridor adjacent to the Effinger property);
PX 8.D (photo of the railroad corridor adjacent to the Jenkins property); PX 9.D (photo of the
railroad corridor adjacent to the Schmidts’ property). Rather, many of the plaintiffs or their
lessees performed such maintenance. Tr. 82, 87 (McDonald), 105, 114, 131 (Goebel), 147, 149-
50, 154-55 (Reeves), 174 (Memmer), 207, 209 (Siebert), 236, 245 (Jenkins), 256 (Schmidt), 270-
71 (Martin).
3. The Character and Use of Plaintiffs’ Properties
Finally, to comply with the Federal Circuit’s mandate to apply the multifactor test
described in Arkansas Game & Fish, the court finds the following facts regarding the parcels
involved in this case.
a. The Effinger Property
The property owned by Mr. Effinger is a 47.45-acre parcel, roughly rectangular in shape,
with the railroad line running along its western boundary. Id. at 57 (Effinger); JX 30; JX 31.
But see Tr. 52 (Effinger) (stating that the parcel includes 44 acres). The only structure on the
parcel is a cell phone tower. Tr. 55 (Effinger). The parcel is hilly and mostly wooded, but has
three areas of tillable land. Id. at 55, 67-68; see also JX 30 (reflecting that the parcel is classified
as agricultural land that includes 12 acres of tillable land and 35.45 acres of woodland). Mr.
Effinger does not farm the tillable areas himself; at the time of trial someone else farmed the
eastern tillable area, and up until two years prior to trial, his brother farmed the western tillable
area. Tr. 55, 69, 72 (Effinger). Due to ditches being washed out on the property at the time of
trial, the middle and western tillable areas could not be accessed for farming purposes, but a
neighbor kept the western tillable area mowed. Id. at 69-70, 72. Mr. Effinger uses the land
primarily for hunting deer, squirrels, rabbits, and turkeys; recreational activities such as hiking;
and obtaining firewood. Id. at 56-57, 72.
The parcel has been in Mr. Effinger’s family for over 100 years. Id. at 52. Mr. Effinger
was deeded the parcel from his father on January 31, 2006, for a small sum, id. at 53-54, 65-66;
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JX 29; the parcel had been part of a larger parcel that his father divided among his children, Tr.
66 (Effinger). The parcel has sentimental value for Mr. Effinger, and thus he does not intend to
sell it even though he has “had offers to sell half of that property . . . for a lot of money . . . .” Id.
at 53; accord id. at 74. Mr. Effinger has insurance in case someone gets injured on the parcel.
Id. at 60. Indeed, there have been trespassers, some of whom have dumped trash in the railroad
corridor. Id. at 59-60.
Mr. Effinger would like to get the railroad corridor back. Id. at 60. He would plant cover
crops so that the wildlife could have something to eat and also sees value in erecting a fence
along the centerline of the corridor to keep trespassers off of the parcel. Id. at 60-61; cf. id. at 59
(stating that there is a barbed-wire fence between the western boundary of the parcel and the
corridor). Prior to this lawsuit, Mr. Effinger had heard that there was a plan to put a trail in the
corridor, but he had never seen the NITU. Id. at 75. He understands that he may need to buy the
corridor from Indiana Southwestern to use it. Id. at 62.
b. The Goebel Property
The property owned by the Goebels consists of two nonadjacent parcels classified as
agricultural land: an irregularly shaped, 59.81-acre parcel and a triangular, 3-acre parcel. 24 JX
15; JX 16; see also JX 15 (reflecting that the larger parcel includes 60.42 acres of tillable land
and 1.66 acres of nontillable land, while the smaller parcel includes 3 acres of tillable land); JX
16 (reflecting that all but a small portion of the triangular parcel is farmed). The railroad line
runs diagonally through roughly the middle of the larger parcel, with an approximately 30-acre
portion to the west of the line and a 38-acre portion to the east of the line, and along the longest
side of the triangular parcel. JX 16; Tr. 101, 106, 116 (Goebel). The larger parcel is flat, Tr. 106
(Goebel), and the triangular parcel has a steep bank and a stream running through it, id. at 132,
136. The parcels are part of a 630-acre farm operated by Mr. Goebel and his son. Id. at 100,
104, 115 (Goebel). Mr. Goebel grows corn, wheat, soybeans, and pumpkins, with average yields
of 210 bushels of corn per acre, 55 bushels of soybeans per acre, and 4000 pumpkins per season.
Id. at 102-04; see also PX 11 at 5-6 (“Average yield is as follows: corn 225-250 bushels per
acre; soybeans 70-80 bushels per acre single crop and 50 bushels per acre double crop . . . ;
winter wheat 100 bushels per acre; and . . . 3,000-4,000 pumpkins per acre.”). The soil
“Productivity Index is 149 which is average to good for the area.” 25 PX 15 at 29.
24
The total acreage of each parcel is set forth in the tax assessor’s records as the “legal
acres” and the “parcel acreage.” JX 15. The totals are less than the “measured acreage” in the
same records. Id. In addition, the totals differ from those offered by Mr. Goebel during trial.
See Tr. 116-18 (Goebel) (stating that the larger parcel includes approximately 68 acres and the
triangular parcel includes “probably” 5 to 6 acres).
25
The “Productivity Index” is a measurement developed by the United States
Department of Agriculture; the scale “probably” goes up to “200.” Tr. 381 (Matthews).
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The two parcels, and the larger farm of which they are a part, 26 have been in Mr.
Goebel’s family for a long time. Tr. 110-11, 120 (Goebel). Mr. Goebel initially leased the
parcels from his cousin in 1979. Id. at 100, 121. At that time, he understood that the railroad
line could be abandoned at some time in the future. Id. at 123-25. Then, when he purchased the
parcels in February 2000, JX 14; accord Tr. 122 (Goebel), his understanding evolved to
believing that the line might be abandoned, based on the small number of trains being run. Tr.
123-25 (Goebel). He first learned that Indiana Southwestern was considering abandoning the
line approximately five or six years before his May 2018 deposition, when the tracks were being
removed. Id. at 127; accord id. at 109 (stating that the tracks were removed “probably” six years
before trial).
Mr. Goebel witnessed the removal of the tracks; the rails were taken from the railroad
corridor, the ties were piled up to the side of the line, and the ballast was left in place. Id. at 107-
09, 128, 130-31. Subsequently, someone took all of the “good” ties that remained, leaving the
bad ones and other “junk” behind. Id. at 108, 128.
An individual helping to remove the tracks told Mr. Goebel that no one was permitted on
the railroad corridor, and “no trespassing” signs were posted where the corridor intersects with
roads. Id. at 108-11, 129. Nevertheless, there is a problem with trespassers on the corridor that
has worsened since the tracks were removed: trespassers hunt, ride their four-wheelers along the
corridor and into the adjacent fields, and, during pumpkin season, pick the pumpkins and then
take them to throw at houses and off of trestles. Id. at 107, 112-13. In addition, Mr. Goebel
crosses the corridor at one location to access the two sides of the larger parcel. Id. at 133.
The existence of the railroad corridor has required Mr. Goebel to expend greater efforts
and incur greater expenses to farm his parcel. For example, he must use point rows to farm his
parcel, which “wastes fertilizer and . . . wastes seed[,] and it’s hard to harvest and hard to plant
. . . .” 27 Id. at 108.
Mr. Goebel has always understood that when trains stopped running along the railroad
line, he would get that land back. Id. at 111, 139. If he owned the railroad corridor, he would
also be able to exclude the trespassers. Id. at 114. In addition, he would level it where he could
and farm on it, which would increase his crop yields. Id. at 108-09, 111-12, 114; accord id. at
132 (stating that it would not be difficult to level the corridor on the large parcel, but that
leveling the triangular parcel would not be feasible due to a ditch along the line; nevertheless, he
could still farm up to the ditch). One of plaintiffs’ expert witnesses, David Matthews, 28 opined
that converting the corridor from nontillable land to tillable land would have cost approximately
26
Mr. Goebel’s 630-acre farm includes a farm previously owned by his great-
grandfather and a 140-acre farm previously owned by his cousin. Tr. 111, 115-16 (Goebel).
27
Point rows are created when planting an irregularly shaped field. See Tr. 93-94
(McDonald). Point rows will overlap with the end rows that surround a field, leading to double
planting on the overlap. Id.
28
The court qualified Mr. Matthews as an expert appraiser. Tr. 313 (court).
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$1750 on the date the NITU was issued: $33 to chisel plow the railroad bed and $1716 to cut
and fill the ditches alongside the railroad bed with a bulldozer. 29 Id. at 408 (Matthews); PX 15 at
33; see also PX 11 at 6 (indicating that “[s]ome ballast would need to be removed or buried”).
Further, plaintiffs’ other expert witness, James B. Kliebenstein, 30 opined that there would be a
return of approximately $13 to $17 for every dollar spent on converting the corridor. PX 11 at 8;
Tr. 623 (Kliebenstein). However, defendant’s expert on what a reasonable buyer of agricultural
land might consider, Charles McCarty, 31 opined that reclaiming a corridor is not quick or easy
due to (1) the need to remove ballast from the corridor, a costly process; (2) the severe
compacting caused by the operation of the railroad; (3) the length of time it takes for soil
productivity to improve; (4) drainage concerns; and (5) the potential need to coordinate with
owners of neighboring parcels. Tr. 752-59 (McCarty).
Mr. Goebel first heard that the railroad corridor might be converted to a trail around the
time the track was removed. Id. at 128 (Goebel). He was aware that Indiana Southwestern
wanted the adjacent landowners to buy back the corridor. Id. at 113.
c. The Halpeny Property
The property owned by Mr. Halpeny is a 34-acre parcel classified as agricultural land that
is split into two parts by a county road: a large acute-trapezoid-shaped area on the east side of
the road and a very small triangular-shaped area on the west side of the road. JX 21; JX 22; see
also JX 21 (reflecting that the parcel includes 33.6 acres of tillable land); JX 22 (reflecting that
the entire parcel is farmed); Tr. 202 (Siebert) (stating that the parcel includes 33 acres), 204-05
(stating that the triangular portion of the parcel is likely farmed by a neighbor). The railroad line
runs along the southern boundary of the parcel perpendicular to the county road. JX 22; Tr. 207
(Siebert). Corn and soybeans are grown on the parcel in rotation, with yields of “a little over
200” bushels of corn per acre and “from 60 to 70, maybe 75” bushels of soybeans “on a really,
really good year.” Tr. 205 (Siebert); accord PX 11 at 9 (“Average yield is as follows: corn 240
bushels per acre and soybeans 65 bushels per acre.”). The soil “Productivity Index is 148 which
is average for the area.” PX 17 at 31.
Mr. Halpeny acquired the parcel from his mother in September 1993, JX 20, and has
leased the parcel to Patrick Siebert since 2016, Tr. 213 (Siebert). Mr. Siebert’s family has
farmed the parcel as long as Mr. Siebert can remember; before Mr. Siebert, the parcel was
29
A chisel plow uses “deep tines that . . . dig up and fluff up the ground” that may have
been compacted by the operation of a railroad. Tr. 390 (Matthews). Using a chisel plow costs
$25 per acre, id. at 391, and using a bulldozer costs approximately $2 per cubic yard of earth
moved, id. at 388, 391.
30
The court qualified Dr. Kliebenstein as an expert in agricultural economics and farm
management. Tr. 594-95 (court).
31
The court allowed Mr. McCarty to testify only on the topic of what a reasonable
farmer would do with a railroad corridor. Tr. 743 (court); see also id. at 742-43 (government
counsel), 746-48 (colloquy between the court and government counsel).
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farmed by his father and brother, and before that, by his father’s uncle. Id. at 202-03; see also id.
at 203 (stating that Mr. Siebert’s father and brother leased the parcel on a crop-share basis with
Mr. Halpeny, retaining three-fifths of the proceeds). Mr. Siebert rents the parcel for $200 per
acre. Id. at 202; see also id. at 332 (Matthews) (suggesting that this rent “may be a sweetheart
deal”). In a good year, he realizes a profit of “maybe” $200 per acre. Id. at 206 (Siebert).
Mr. Siebert does not cross the corridor to access the parcel because access is possible
from the county road. Id. at 207, 209. However, there have been trespassers on the railroad
corridor––people on four-wheelers and hunters. Id. at 209, 211-12.
Mr. Siebert does not want a trail on the railroad corridor because it would create more
traffic and more trash. Id. at 209-10. In fact, he would like to get the corridor back. Id. If he
owned the corridor, he would also have better access to the parcel. Id. at 210. In addition, he
would dispose of the ties, dig out the gravel, cut down the trees and brush, and plant additional
crops. Id. at 210-11. Mr. Matthews opined that converting the corridor from nontillable land to
tillable land would have cost approximately $6500 on the date the NITU was issued: $25 to
chisel plow the railroad bed and $6481 to cut and fill the ditches alongside the railroad bed with
a bulldozer. Id. at 433 (Matthews); PX 17 at 25; see also PX 11 at 9 (indicating that “[s]ome
ballast would need to be removed or buried”). Further, Dr. Kliebenstein opined that there would
be a return of approximately $2 for every dollar spent on converting the corridor. PX 11 at 11;
Tr. 638 (Kliebenstein). But cf. Tr. 752-59 (McCarty) (stating the difficulties involved in
reclaiming the land), 762-63 (stating that a tenant might be reluctant to incur the expenses of
reclamation without assurances from the landowner that he or she could farm the land for long
enough to recover the expenses).
d. The Jenkins Property
The property owned by Mr. Jenkins is a 66-foot-by-165-foot residential lot with the
railroad line running along its eastern boundary. JX 33; JX 34; Tr. 233, 247 (Jenkins). Mr.
Jenkins purchased the lot on contract for $8000, fulfilling the contract around 1995 or 1996. Tr.
232, 240; see also JX 32 (reflecting that in October 2001, the lot was conveyed to Mr. Jenkins
pursuant to a dissolution decree). He finished building his house on the lot in 2006 and then
built a separate garage. Tr. 233-34, 247 (Jenkins). It cost Mr. Jenkins approximately $70,000 to
build the house. Id. at 247.
When Mr. Jenkins purchased the lot, there were trains running along the railroad line. Id.
at 241, 246. The presence of the line reduced the price that Mr. Jenkins paid for the lot, as did
the presence of a mobile home and two tin buildings on the lot. Id. at 241-43. Upon the removal
of the tracks, ballast or smaller rocks (now covered by grass) and some partial ties (subsequently
burned by Mr. Jenkins) were left behind. Id. at 235-36, 244-45. Trespassers are a concern for
Mr. Jenkins, especially with respect to the possible theft of property from his yard or his garage.
Id. at 237-38. Indeed, people on four-wheelers used to trespass on the corridor until “no
trespassing signs” were posted, and other people walk their dogs on the corridor. Id. at 236-37.
Although Mr. Jenkins did not purchase the lot with the understanding that he owned the
railroad corridor or the expectation that he would eventually obtain the corridor, id. at 243, 246,
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“over a period of time when [he] learned that they were going to give it up, [he] thought it would
be nice to have to extend [his] property out,” id. at 247-48. In fact, if the corridor was returned
to Mr. Jenkins, he has considered possibly drilling for oil on it. Id. at 238. If, on the other hand,
the corridor was converted into a trail, Mr. Jenkins would be concerned, but would not erect a
privacy fence because it would be too costly and would make it more difficult to mow his lawn.
Id. at 238, 246-47; cf. id. at 234 (stating that there used to be a chicken-wire fence separating the
corridor from his lot, but that the town removed it when it buried a sewer pipe along the railroad
line). Prior to his deposition, Mr. Jenkins had not seen the NITU. Id. at 248.
e. The Martin Property
The property owned by the Martins consists of two adjacent parcels: a rectangular,
64.35-acre parcel classified as agricultural land, and an irregularly shaped, 112.39-acre parcel
used as agricultural land (but classified as residential land). Id. at 268-69, 276-78 (Martin); JX
27; JX 28; see also JX 12 (reflecting that the smaller parcel includes 42.48 acres of tillable land
and 20.1 acres of woodland, and that the larger parcel, which is deemed to be “residential,”
includes 98.06 acres of tillable land); JX 28 (reflecting that all but the wooded area of the parcels
and the railroad corridor are farmed). But see Tr. 268 (Martin) (indicating that the parcels
include 197 acres), 277 (same). The railroad line runs diagonally through the parcels. JX 28; Tr.
271 (Martin). The parcels are a portion of the little more than 1000 acres farmed (and roughly
300 acres owned) by Mr. Martin. Tr. 267 (Martin). Mr. Martin grows corn, soybeans, and wheat
on the parcels. Id. at 270. The quality of the soil is good. Id. at 269; accord PX 19 at 29 (noting
that the soil “Productivity Index is 150 which is average to good for the area”). Consequently,
Mr. Martin can achieve yields of 200 bushels of corn per acre, 55 to 70 bushels of soybeans per
acre, and 80 to 100 bushels of wheat per acre. Tr. 269-70 (Martin); accord PX 11 at 12
(“Average yield is as follows: corn 200 bushels per acre[]; double crop soybeans 62-65 bushels
per acre; winter wheat 80-90 bushels per acre.”).
Mr. Martin began leasing the parcels around 2004 on a crop-share basis, retaining two-
thirds of the proceeds. Tr. 280-81 (Martin). Then, in October 2008, the Martins purchased the
parcels in a private sale. Id. at 268-69; JX 26. They paid $5500 per acre, for a total of $1.1
million––probably one half of the parcels’ value if sold at auction. Tr. 269 (Martin). They then
sold the portion of the larger parcel north of the railroad line––88 acres of farm land––for
$10,000 per acre, but retained the right to the railroad corridor. Id. at 278-80, 288. The
existence of the railroad line running through the parcels did not affect the price the Martins paid
for them, id. at 281, but does increase the costs involved in farming the land because of the
additional seeds and fertilizer Mr. Martin needs due to the point rows, id. at 271-72; cf. id. at
284-85 (stating that a stream on the larger parcel also requires the use of point rows).
Mr. Martin had seen trespassers on the railroad corridor “for a couple of years,” but not
since trees starting growing on the corridor. Id. at 273. Mr. Martin himself crosses the corridor
using one of three legal crossings. Id. at 281-82.
Mr. Martin would like to get the railroad corridor back and join his parcels. Id. at 272. If
he owned the corridor, he would be able to plant his fields with longer and straighter rows,
increasing his productivity. Id. at 272, 274. But see id. at 283-84 (stating that he had not thought
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about how he would plant his fields in the absence of the corridor). To accomplish this result, he
would need to remove the rock and any structure lying underneath, and then use a bulldozer to
level the area (which is pretty flat). Id. at 273-74. Mr. Matthews opined that converting the
corridor from nontillable land to tillable land would have cost approximately $16,300 on the date
the NITU was issued: $3960 to remove small and medium trees, $118 to chisel plow the railroad
bed, and $12,243 to cut and fill the ditches alongside the railroad bed with a bulldozer. Id. at 416
(Matthews); PX 19 at 33; see also PX 11 at 12 (indicating that “[s]ome ballast would need to be
removed or buried”). Further, Dr. Kliebenstein opined that there would be a return of
approximately $2.50 to $3 for every dollar spent on converting the corridor. PX 11 at 14; Tr.
628 (Kliebenstein). But cf. Tr. 752-59 (McCarty) (stating the difficulties involved in reclaiming
the land). Prior to his deposition, Mr. Martin had not seen the NITU. Tr. 284 (Martin).
f. The McDonald Family Farms Property
The property owned by McDonald Family Farms is a square, 38-acre parcel classified as
agricultural land. Id. at 91 (McDonald); JX 18; JX 19; see also JX 18 (reflecting that the parcel
includes 24.1 acres of tillable land and 13.9 acres of woodland); JX 19 (reflecting that all but a
small portion of the parcel is farmed); Tr. 93 (McDonald) (agreeing that there are woods on a
small portion of the parcel). The railroad line runs diagonally across the southwest portion of
parcel, splitting the parcel into a 31-acre portion north of the line and a triangular, 7-acre portion
south of the line. JX 19; Tr. 91-92 (McDonald). The parcel is part of a 160-acre farm owned by
McDonald Family Farms, which in turn is owned by David McDonald and his three children in
equal shares. Tr. 78, 83, 92, 95 (McDonald). Mr. McDonald currently grows corn and soybeans
in rotation, and has previously planted wheat and alfalfa on the parcel. Id. at 80. The soil quality
is “very good.” Id. at 81-82; accord PX 16 at 29 (noting that the soil “Productivity Index is 149
which is average to good for the area”). Consequently, Mr. McDonald has obtained good yields
for his crops: 242 bushels of corn per acre and 71 to 72 bushels of soybeans per acre. Tr. 82
(McDonald); see also PX 11 at 15 (“Average yield is as follows: corn 180-200 bushels per acre
and soybeans 60-70 bushels per acre.”).
The parcel has been in Mr. McDonald’s family since 1829, when Andrew Jackson
deeded it to one of Mr. McDonald’s ancestors. Tr. 78 (McDonald). In fact, Mr. McDonald’s
great-great-grandfather conveyed the easement to a predecessor of Indiana Southwestern. Id. at
97. Mr. McDonald’s father inherited the parcel from his mother in 1968, and then deeded the
parcel to McDonald Family Farms in 1981 for nominal consideration. Id. at 79, 96; JX 17.
McDonald Family Farms did not acquire the parcel because it believed that it ultimately would
get back the railroad corridor. Tr. 97-98 (McDonald).
After the tracks were removed, Mr. McDonald eventually burned the ties that were left
behind upon discovering that trespassers has used them to construct hunting blinds on his parcel.
Id. at 86-87. Trespassers––people on four-wheelers, dirt bikes, and horses––have become more
prevalent since the tracks were removed. Id. at 87.
The presence of the railroad corridor has required Mr. McDonald to expend greater
efforts and incur greater expenses to farm his parcel. For example, Mr. McDonald created two
crossings over the corridor to access the smaller portion of the parcel, one before the tracks were
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removed and one thereafter. Id. at 83, 90-91. In addition, he must use point rows to farm his
parcel, which requires him to overplant and overfertilize. Id. at 84. Consequently, it costs him
fifteen percent more to farm the parcel with the corridor than it would without the corridor. Id. at
84-85.
Mr. McDonald would like to get the railroad corridor back. Id. at 88. His father told him
that when the trains stopped running along the railroad line, the corridor would revert back to the
owner of the parcel. Id. If he owned the corridor, he would dispose of the ballast by burying it
in a ditch alongside the corridor, level the railroad bed, and farm the land. Id. Doing so would
alleviate the need to use point rows. Id. Mr. Matthews opined that converting the corridor from
nontillable land to tillable land would have cost approximately $1750 on the date the NITU was
issued: $23 to chisel plow the railroad bed and $1877 to cut and fill the ditches alongside the
railroad bed with a bulldozer. Id. at 391-93 (Matthews); PX 16 at 33; see also PX 11 at 15
(indicating that “[s]ome ballast would need to be removed or buried”). Further, Dr. Kliebenstein
opined that there would be a return of approximately $7 for every dollar spent on converting the
corridor. PX 11 at 17; Tr. 633 (Kliebenstein). But cf. Tr. 752-59 (McCarty) (stating the
difficulties involved in reclaiming the land).
g. The Memmer Property
The property owned by Mr. Memmer consists of two adjacent parcels classified as
agricultural land: a right-trapezoid-shaped, 78.75-acre parcel and a right-trapezoid-shaped, 1-
acre parcel. JX 12; JX 13; see also JX 12 (reflecting that the two parcels include 76.9929 acres
of tillable land); JX 13 (reflecting that almost the entirety of the two parcels is farmed). But see
Tr. 184 (Memmer) (estimating that the larger parcel includes 87 acres). The railroad line runs
along the entire northern boundary of the parcels, and Water Tank Road runs parallel to a portion
of the other side of the line. Id. at 175, 181; JX 13. The parcels are part of a 170.3-acre farm
that Mr. Memmer leases to Pathway Family Farms. DX 11 at 7; Tr. 173 (Memmer). For the ten
years preceding trial, the sole crop grown on the parcels was corn. Tr. 173 (Memmer). The soil
quality is “[v]ery good.” Id. at 174; accord PX 14 at 31 (noting that the soil “Productivity Index
is 170 which is average to good for the area”). In 2018, the farm obtained a yield of up to 300
bushels of corn per acre. Tr. 174 (Memmer); see also PX 11 at 18 (“Average corn yield is 240
bushels per acre.”).
The farm has been in Mr. Memmer’s family for four generations. Tr. 170 (Memmer);
accord id. at 170 (stating that Mr. Memmer’s great-grandfather purchased the farm), 185 (same).
Mr. Memmer’s maternal grandparents sold the farm to Mr. Memmer’s parents for $300 per acre.
Id. at 185. Mr. Memmer began working for his parents on the farm in 1973. Id. at 170-71, 186.
He inherited a one-half interest in the farm in 1999 when his father died, id. at 185, and
continued to farm the land until 2006, id. at 171, 173, 187. Thereafter, the farm was leased to
Harold Bender Farms. Id. at 173, 187. In the meantime, in November 2007, his mother
conveyed the remaining one-half interest in the farm to him, reserving for herself a life estate.
JX 11. Mr. Memmer obtained full ownership of the farm when his mother died in 2010. Id.; Tr.
171 (Memmer); accord Tr. 186 (Memmer) (stating that his mother’s estate settled in 2011). He
began leasing the farm to Pathway Family Farms in 2013. Tr. 173 (Memmer); see also id. at 187
(stating that the last year of the lease to Harold Bender Farms was 2012). For the 2018 crop
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year, the rent was $450 per tillable acre, id. at 189; DX 11 at 7; the rent for 2013 through 2016
was similar, Tr. 189 (Memmer); see also id. at 175-76 (stating that the rent has been “about $425
an acre per year”), 332 (Matthews) (stating that this rent is “really high”). Mr. Memmer has not
attempted, and has no plans, to sell the farm. Id. at 190 (Memmer).
Mr. Memmer would like to get the railroad corridor back, but was not sure that he would
be able to do so when the trains stopped running. Id. at 175. If he owned the corridor, he would
be able to access his parcels from Water Tank Road and exclude people from the parcels. Id. at
175-77; see also id. at 176 (stating that trespassers––mostly just people on four-wheelers––have
accessed the corridor and entered his land). In addition, he would remove the dirt and
overburden––a task that could take a couple or a few years, id. at 177, 194, 196––and then plant
crops on it, increasing the farm’s productivity. Id. at 177; see also id. at 177 (indicating that he
would reuse or give away the dirt and overburden), 194 (stating that he would give away the
overburden). Mr. Matthews opined that converting the corridor from nontillable land to tillable
land would have cost approximately $1300 on the date the NITU was issued: $34 to chisel plow
the railroad bed and $1300 to cut and fill the ditches alongside the railroad bed with a bulldozer.
Id. at 444 (Matthews); PX 14 at 33; see also PX 11 at 18 (indicating that “[s]ome ballast would
need to be removed or buried”). Further, Dr. Kliebenstein opined that there would be a return of
approximately $11 for every dollar spent on converting the corridor. PX 11 at 20. But cf. Tr.
752-59 (McCarty) (stating the difficulties involved in reclaiming the land).
h. The Reibel Farms, Inc. Property
The property owned by Reibel Farms, Inc. is an irregularly shaped (roughly, a right
trapezoid), 79.159-acre parcel classified as agricultural land. JX 24; JX 25; see also JX 24
(reflecting that the parcel includes 78.1849 acres of tillable land); JX 25 (reflecting that the entire
parcel is farmed). But see Tr. 160 (Reeves) (estimating that the parcel includes “probably 95”
acres, “give or take”). The railroad line runs along the entire northern boundary of the parcel. 32
JX 25; Tr. 149 (Reeves). The parcel is part of a 119-acre farm leased to Reeves Grain Farm
LLC, which is owned by Chris Reeves and his wife. Tr. 142, 144, 159 (Reeves). Mr. Reeves
currently grows corn and soybeans in rotation. Id. at 147-48. The soil is high quality. Id. at
149; accord PX 18 at 31 (noting that the soil “Productivity Index is 164 which is average to
good”). Consequently, Mr. Reeves has obtained, on average, 240 bushels per acre of corn. Tr.
148-49 (Reeves); accord PX 11 at 20-21 (“Average yield is as follows: corn 230-240 bushels per
acre; soybeans 68 bushels per acre.”).
The parcel has been in Mr. Reeves’s wife’s family since 1910. Tr. 144, 163 (Reeves).
Mr. Reeves’s in-laws purchased the parcel from his father-in-law’s parents in 1960, id. at 163,
and in October 1993, transferred the parcel to Reibel Farms, Inc., JX 23. Reibel Farms, Inc. is
owned by Mr. Reeves’s mother-in-law, Treva Reibel. Tr. 142, 163-64 (Reeves). Mr. Reeves
32
Indiana Southwestern holds roughly one-half of the railroad line bordering the parcel
as an easement and owns the remainder of the line bordering the parcel in fee simple. See supra
Section II.C.1; see also PX 18 at 30 (depicting the locations of the two parts of the line); JX 60 to
JX 61 (containing valuation maps that depict the two parcels acquired by Indiana Southwestern’s
predecessors and describe how those parcels were acquired).
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began farming the parcel in 2005, paying a minimum of $250 per acre, but usually more, to lease
the land. 33 Id. at 144, 149-50. Due to its proximity to Poseyville, people have wanted to
purchase the parcel, but it is not for sale so long as Mr. Reeves is farming it or owns it. Id. at
151.
After the tracks were taken up, the good ties were eventually removed, id. at 152, and Mr.
Reeves burned the remaining ties, which were rotten, id. at 153. Trespassers––mostly just
people drinking beer, but occasionally people on all-terrain vehicles––have accessed the railroad
corridor. Id. at 147, 154-55; see also id. at 154 (stating that there used to be rabbit hunters on the
corridor, but that he had not seen one in at least five years), 155-56 (expressing concern that
trespassers could get injured on the parcel or steal from his machinery shed). In addition, Mr.
Reeves was exploring hiring someone to fill in the ditch along the bottom of the railroad bed
because water drains from his parcel to the ditch and the ditch stays wet, promoting unwanted
tree and weed growth. Id. at 147, 151.
Mr. Reeves does not want a trail on the railroad corridor and would like to get the
corridor back. Id. at 156. His father-in-law told him that when the trains stopped running along
the railroad line, the corridor would revert back to the owner of the parcel. Id. at 164. If he
owned the corridor, he would remove the rocks and dirt (the railroad bed is raised approximately
four to five feet above the parcel, id. at 151), and farm it. Id. at 156-57. Mr. Matthews opined
that converting the corridor from nontillable land to tillable land would have cost approximately
$2000 on the date the NITU was issued: $26 to chisel plow the railroad bed and $1950 to cut
and fill the ditches alongside the railroad bed with a bulldozer. Id. at 427 (Matthews); PX 18 at
25; accord Tr. 156 (Reeves) (stating his estimate that it would cost less than the $13,000 to
$15,000 per acre that the land is worth to reclaim the corridor); see also PX 11 at 6 (indicating
that “[s]ome ballast would need to be removed or buried”). Further, Dr. Kliebenstein opined that
there would be a return of approximately $5 for every dollar spent on converting the corridor.
PX 11 at 23; Tr. 646 (Kliebenstein). But cf. Tr. 752-59 (McCarty) (stating the difficulties
involved in reclaiming the land), 762-63 (stating that a tenant might be reluctant to incur the
expenses of reclamation without assurances from the landowner that he or she could farm the
land for long enough to recover the expenses). Mr. Reeves was not aware that Indiana
Southwestern wanted landowners to purchase the corridor to reclaim it. Id. at 58 (Reeves).
i. The Schmidt Property
The property owned by the Schmidts is an irregularly shaped, 20-acre residential lot with
the railroad line running in a gradual curve along the lot’s eastern boundary. Id. at 255, 260
(Schmidt); JX 36; JX 37. But see Tr. 259 (Schmidt) (stating that the lot contains 21.7 acres), 264
(same). The Schmidts purchased the lot in 1998 for $155,000 with the intent of building a house
on it. Tr. 252, 258-59, 264 (Schmidt); accord JX 35. They ultimately did not build a house
because they were able to buy a nearly new house from some friends instead. Tr. 252, 262
(Schmidt). However, they do not plan to sell the lot because they would like to see it preserved
in its natural state. Id. at 262-63.
33
The evidence in the trial record does not indicate when Reibel Farms, Inc. began to
lease the parcel to Reeves Grain Farm LLC.
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The lot has a pond, but otherwise is completely wooded, id. at 252-53, 259-60, 264; JX
37, and at the time the Schmidts purchased it, it had an “estimated wooded value” between
$10,000 and $12,000, Tr. 252-53 (Schmidt). Mr. Schmidt has planted some oak and walnut trees
on the lot, and has in the past used the lot for firewood, id. 254-55, but has no plans to harvest
the wood, id. at 264. In addition, the lot has “[l]ots of ups and downs,” id. at 252-53; access to
the railroad corridor requires traversing a ravine with a steep slope, id. at 256-57, 261-62.
The Schmidts have allowed their oldest son and a family friend to hunt deer on the lot, id.
at 254, and Mr. Schmidt is concerned that he might encounter other hunters who might have
accessed the lot via the railroad corridor notwithstanding the “no trespassing” signs he posted, id.
at 257.
If the Schmidts obtained the railroad corridor, Mr. Schmidt could plant more trees or feed
the deer. Id. at 258. Mr. Schmidt could not recall seeing the NITU prior to his deposition. Id. at
263.
C. Conclusions of Law
The facts elicited during trial inform both of the issues the court must address to
determine whether plaintiffs with cognizable property interests have established a taking: (1) the
nature of the alleged taking and (2) causation. Although the resolution of the causation issue
could render the other issue moot, the court addresses it second to facilitate compliance with the
Federal Circuit’s mandate.
1. The Nature of the Alleged Taking
As an initial matter, binding Federal Circuit precedent provides that the type of taking
involved in Trails Act cases is a categorical physical taking. See Caquelin III, 959 F.3d at 1367-
70; Ladd, 630 F.3d at 1025. Accordingly, to the extent that a taking occurred in this case, it was
a categorical physical taking.
Notwithstanding this conclusion, the court must apply the multifactor test set forth in
Arkansas Game & Fish for the assessment of temporary noncategorical physical takings to
comply with the Federal Circuit’s mandate. 34 The first factor identified by the Supreme Court is
the duration of the government’s interference with the property interest at issue. 35 Ark. Game &
Fish, 568 U.S. at 38. In this case, the Board issued the NITU on May 23, 2011, preventing
Indiana Southwestern from exercising its authority to fully abandon the railroad lines. The bar to
34
Given the Federal Circuit’s subsequent determination that the multifactor test set forth
in Arkansas Game & Fish is not applicable to a Trails Act taking triggered by a NITU, see
Caquelin III, 959 F.3d at 1369-70, the court’s analysis, while complete, is concise.
35
In Trails Act cases, duration is a factor that bears upon the compensation owed to a
landowner, not to the government’s liability for a taking. Ladd, 630 F.3d at 1025; Caquelin II,
140 Fed. Cl. at 579.
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abandonment remained in place for almost two-and-one-half years, until the NITU’s expiration
on November 8, 2013. 36 During this period, the affected plaintiffs were unable to reclaim the
land underlying the easements and use it for their own purposes––whether it be to farm, plant
trees or other vegetation, or explore for oil––or to take steps to exclude others. Such an extended
deprivation of the use of the land weighs in favor of concluding that a taking occurred. Accord
Caquelin II, 140 Fed. Cl. at 579-80 (concluding that a 180-day total deprivation of the use of
land weighed in the landowner’s favor); see also Banks v. United States, 138 Fed. Cl. 141, 149
(2018) (observing that “[t]emporary takings of less than six years have been held to be
compensable”).
The second factor identified in Arkansas Game & Fish is “the degree to which the
invasion is intended or is the foreseeable result of authorized government action.” 568 U.S. at
39. There can be no dispute that the affected plaintiffs’ inability to use the land underlying the
easements was both intended and the foreseeable result of the Board’s issuance of the NITU.
Accord Caquelin III, 959 F.3d at 1367 (“The NITU . . . compelled continuation of an easement
. . . intentionally and with specific identification of the land at issue; and it did so solely for the
purpose of seeking to arrange, without the landowner’s consent, to continue the easement for still
longer . . . by an actual trail conversion.”); Caquelin II, 140 Fed. Cl. at 580 (“The [Board] issued
the NITU with intent to block [the plaintiff] from any use of the corridor segment while a
potential trail use was being negotiated. . . . [T]he result of the NITU was foreseeable, as the
very point of a NITU is to prevent a landowner’s reversionary interest from taking effect so the
trail negotiating process can take place.”); Banks, 138 Fed. Cl. at 150 (“The owners of the
underlying fee are precluded from using their own land. That result requires no great foresight to
anticipate.”). Accordingly, this factor weighs in favor of concluding that a taking occurred.
The third Arkansas Game & Fish factor is “the character of the land at issue . . . .” 37 568
U.S. at 39. Most of the land bordering or surrounding the railroad lines is farm land with good
soil and crop yields. Mr. Goebel described average yields of 210 bushels of corn per acre, 55
bushels of soybeans per acre, and 4000 pumpkins per season. Mr. Siebert described yields of
more than 200 bushels of corn per acre and from 60 to 75 bushels of soybeans per acre. Mr.
Martin agreed that the soil quality is good and described yields of 200 bushels of corn per acre,
55 to 70 bushels of soybeans per acre, and 80 to 100 bushels of wheat per acre. Mr. McDonald
stated that the soil quality was very good and described good yields of 242 bushels of corn per
acre and 71 to 72 bushels of soybeans per acre. Mr. Memmer stated that the soil quality was
very good and described a yield in 2018 of up to 300 bushels of corn per acre. And, Mr. Reeves
agreed that the soil quality is high and described average yields of 240 bushels of corn per acre.
36
Plaintiffs contend that the duration of the taking is indefinite. Because interference
that lasts for two-and-one-half years is sufficient to support the conclusion that a taking occurred
under the Arkansas Game & Fish multifactor test, the court defers addressing plaintiffs’
contention until it reaches the issue of the extent of the alleged taking.
37
As noted by the trial court in Caquelin II, this factor is not relevant in determining
liability in a Trails Act case since liability in such a case does not depend upon the nature of the
land; rather, this factor is relevant to determining just compensation. See 140 Fed. Cl. at 581
n.22; accord Banks, 138 Fed. Cl. at 150.
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Indiana Southwestern does not maintain the railroad corridor adjacent to any of the farm land,
but the farmers all take steps to ensure that weeds and other vegetation do not grow on the
corridor and then spread into their fields. Thus, the corridor mainly consists of residual ballast or
rocks, with a limited amount of weeds and other vegetation. Reclamation of the corridor would
allow the land to be used to grow crops.
The remaining land bordering the railroad lines is wooded or residential in nature. With
respect to the Effinger and Schmidt parcels, the line borders woodland and is suitable for
planting trees or cover crops for wildlife to feed on. With respect to the Jenkins parcel, the line
runs along the rear of the backyard of a small, unwooded lot in a residential neighborhood.
Indiana Southwestern does not maintain the railroad corridor adjacent to these parcels. Mr.
Jenkins maintains the portion of the corridor adjacent to his parcel, and it mainly consists of
residual ballast or rocks, with a limited amount of weeds and other vegetation. However, neither
Mr. Effinger nor Mr. Schmidt maintains the portions of the corridor adjacent to their parcels and
they are therefore overgrown with vegetation.
In short, the portions of the railroad corridor adjacent to the parcels at issue do not exhibit
any characteristics that would prevent the NITU from triggering a taking. Therefore, the third
Arkansas Game & Fish factor weighs in favor of concluding that a taking occurred.
The fourth factor identified by the Supreme Court is “the owner’s ‘reasonable
investment-backed expectations’ regarding the land’s use.” Ark. Game & Fish, 568 U.S. at 39.
It is unclear whether this factor has any relevance for an alleged physical taking outside of the
flooding context presented in Arkansas Game & Fish. See In re Upstream Addicks & Barker
(Texas) Flood-Control Reservoirs, 146 Fed. Cl. 219, 261 (2019) (“[F]looding cases can pose an
exception to the quotidian rule that physical takings do not involve consideration of ‘reasonable
investment-backed expectations.’ . . . Despite the evident tension of transposing this factor from
the regulatory to the physical takings context, Arkansas Game & Fish clarifies that reasonable
expectations are a relevant consideration in connection with physical takings cases of this
particular nature.”); see also Banks, 138 Fed. Cl. at 150 (“In Arkansas, the Court noted that
distinct investment-backed expectations are a matter often informed by the law in force in the
State in which the property is located. There can be no need for further consideration here. The
only issue is whether plaintiffs owned a fee estate. If so, then the entire premise behind Preseault
[I] is that they have a right under state law to expect the return of unfettered access when a
railroad easement comes to an end.” (citation omitted)). Nevertheless, because the court has
been instructed to apply the Arkansas Game & Fish factors in this case, it will endeavor to assess
plaintiffs’ reasonable investment-backed expectations.
Under this factor, the court examines whether plaintiffs had investment-backed
expectations for the use of the land underlying the railroad lines and whether such expectations
were reasonable. See Cienega Gardens v. United States, 331 F.3d 1319, 1345-46 (Fed. Cir.
2003). But see Caquelin III, 959 F.3d at 1370 (rejecting the proposition that the government
could “mandate an easement, without giving rise to takings liability, so long as, during the time
of the easement, the landowner could or would not have made productive use of the land on
which the easement ran”); In re Upstream Addicks & Barker, 146 Fed. Cl. at 261 n.23 (“Perhaps
the Supreme Court’s inclusion of the words ‘investment-backed’ [in Arkansas Game & Fish]
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invites too strong a reference to regulatory takings law. Simply referring to ‘reasonable
expectations’ would capture the context in which the Court used the factor in Arkansas Game &
Fish.”). Further, although the Supreme Court in Arkansas Game & Fish did not specify precisely
when, in the case of a temporary physical invasion of land, a plaintiff’s expectations should be
measured, it implied that they need not be measured as of the time the plaintiff acquired the
land. 38 See 568 U.S. at 39 (observing that the flooding caused by the government had no
historical precedent, thereby implying that events that occurred between the time of acquisition
and the time of the government action were relevant to assessing the plaintiff’s expectations); see
also Caquelin II, 140 Fed. Cl. at 582-84 (analyzing the plaintiff’s expectations for the use of her
land during the time the NITU was in effect and disregarding the government’s contentions that
the plaintiff lacked any expectation regarding the use of her land at the time she acquired it and
that the plaintiff lacked an investment-backed expectation because she inherited the land).
In this case, the railroad lines are adjacent to land used by six plaintiffs for agricultural
purposes. The four plaintiffs who farm the parcels themselves or lease the parcels to others to
farm testified that they would reclaim the railroad corridor if they could and then farm the
reclaimed land. Similarly, the individuals leasing the other two agricultural parcels testified that
they would like to see the corridor reclaimed for farming. The soil quality on all six parcels is
average or better and the land in the corridor could therefore be put to productive use for
growing crops. Mr. Kliebenstein testified that these six plaintiffs would receive a positive return
on their reclamation investment. And although Mr. McCarty testified as to the general
difficulties in reclaiming railroad corridors for farming purposes, he did not state that these six
plaintiffs would not receive a positive return on their reclamation investments. Based on this
evidence, the owners of the agricultural parcels had a reasonable expectation that the land in the
corridor could have been made into productive farm land but for the Board’s issuance of the
NITU. Thus, the fourth Arkansas Game & Fish factor weighs in favor of concluding that a
taking of the corridor adjacent to the parcels owned by the Goebels, Mr. Halpeny, the Martins,
McDonald Family Farms, Mr. Memmer, and Reibel Farms, Inc. occurred.
With respect to the portions of the railroad corridor adjacent to the wooded and
residential parcels, the plaintiffs who owned those parcels testified that they would reclaim the
corridor if they could: Mr. Effinger would plant cover crops to provide food for wildlife, Mr.
Schmidt would either plant trees or feed the deer, and Mr. Jenkins would incorporate it into his
parcel and possibly drill for oil. Although these are all productive uses, the trial record lacks any
38
In contrast, a plaintiff alleging a regulatory taking must “establish a reasonable
investment-backed expectation in the property at the time it made the investment.” Cienega
Gardens v. United States, 503 F.3d 1266, 1288 (Fed. Cir. 2007). Such an analysis “is designed
to account for property owners’ expectation that the regulatory regime in existence at the time of
their acquisition will remain in place, and that new, more restrictive legislation or regulations
will not be adopted.” Love Terminal Partners, L.P. v. United States, 889 F.3d 1331, 1345 (Fed.
Cir. 2018). Because this case does not concern the imposition of “new, more restrictive
legislation or regulations,” id., but instead concerns government action causing a physical
appropriation of property, the court need not consider Mr. McCarty’s testimony regarding how
the existence of a railroad corridor might affect a purchaser’s view of an adjacent parcel (i.e., the
purchaser’s reasonable expectation), see Tr. 745-46 (McCarty).
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evidence regarding the financial return that these three plaintiffs could realize upon their
proposed uses of the adjacent corridor. 39 Accordingly, the fourth Arkansas Game & Fish factor
does not tilt in either direction in the determination of whether a taking of these portions of the
corridor occurred.
The fifth and final Arkansas Game & Fish factor is the “[s]everity of the interference” in
the use of the land caused by the government’s action. 568 U.S. at 39. The issuance of the
NITU compelled the continuation of Indiana Southwestern’s easements, preventing all use of the
railroad corridor adjacent to plaintiffs’ parcels. Plaintiffs could not farm the corridor, build on
the corridor, exclude trespassers from the corridor, or exercise any other rights inherent in
owning land in fee simple. Accordingly, the interference was more than severe––it was
complete. 40 Accord Caquelin II, 140 Fed. Cl. at 584; Banks, 138 Fed. Cl. at 150. This factor
therefore weighs in favor of finding that a taking occurred.
In accordance with the above analysis, the court concludes that if the multifactor test
described in Arkansas Game & Fish was applicable in Trails Act cases in general, and this case
in particular, plaintiffs have established that a taking occurred. Of course, as confirmed by the
39
The lack of evidence of financial gain is irrelevant to a categorical physical taking,
such as the one that occurred in this case, because in such circumstances the landowners lose all
of their property rights, which are, as a whole, inherently valuable. Indeed, although the value of
some of these rights––such as the right to quiet enjoyment and the right to exclude trespassers––
may not be easily quantifiable, they provide a clear benefit to the landowner that is diminished or
eliminated by a categorical taking such as a forced continuation of an easement. That the
deprivation of these valuable rights may not appropriately analyzed under the rubric of
“reasonable investment-backed expectations” demonstrates the difficulty in applying the
Arkansas Game & Fish factors to a categorical taking. Accord infra note 40.
40
As alluded to by the trial court in Caquelin II, because a NITU forecloses all use of
land underlying a railroad line, the noncategorical takings analysis described in Arkansas Game
& Fish is inappropriate. See 140 Fed. Cl. at 584; accord Caquelin III, 959 F.3d at 1367, 1369-
70. Moreover, because a NITU results in a physical taking, the court rejects defendant’s
suggestion that it must assess the severity of the government’s interference using the parcel-as-a-
whole approach. Accord Tahoe-Sierra, 535 U.S. at 322 (“When the government physically takes
possession of an interest in property for some public purpose, it has a categorical duty to
compensate the former owner, regardless of whether the interest that is taken constitutes an
entire parcel or merely a part thereof.” (citation omitted)); Ideker Farms, Inc. v. United States,
136 Fed. Cl. 654, 680 (2018) (“Nor is the ‘parcel as a whole’ test applicable or appropriate for
determining the severity of government-induced flooding in a physical takings case.”), recons.
denied, 142 Fed. Cl. 222 (2019); see also Norman v. United States, 429 F.3d 1081, 1091 (Fed.
Cir. 2005) (“[A] physical taking of any portion of private property will ordinarily result in
compensation, while a regulatory taking becomes ‘categorical,’ and therefore requires
compensation, only if the owner is deprived of all beneficial use of the ‘parcel as a whole.’”).
However, to the extent that a parcel-as-a-whole analysis is relevant, defendant is correct that the
portion of each affected plaintiffs’ larger parcel impacted by the NITU is objectively small in
terms of land area.
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Federal Circuit in Caquelin III, the Arkansas Game & Fish multifactor test is inapplicable in
Trails Act cases. See 959 F.3d at 1369-70. Rather, as noted above, the compelled continuation
of an easement caused by the issuance of a NITU is a categorical physical taking.
2. Causation
The sole remaining question with respect to liability is whether the Board’s issuance of
the NITU caused the injury alleged by plaintiffs––a compelled continuation of Indiana
Southwestern’s easements that prevented plaintiffs from acquiring fee simple interests in the
underlying land by operation of state law. Defendant contends that plaintiffs cannot establish
causation. Specifically, it argues that because the NITU expired without the execution of a trail-
use agreement and Indiana Southwestern did not fully abandon the railroad lines by filing a
notice of consummation, plaintiffs are in the same position they were in before Indiana
Southwestern filed its notice of exemption and therefore suffered no injury. Plaintiffs counter
that they were injured by the Board’s issuance of the NITU––at least while the NITU was in
effect––because a NITU automatically causes a taking under binding precedent. Moreover,
plaintiffs contend, Indiana Southwestern did, in fact, abandon the lines under state law.
Under the standard articulated by the Federal Circuit in Caquelin III, the Board’s issuance
of the “NITU would not have altered the continuation of the easement during the NITU period—
i.e., would not have caused the only alleged taking of property—if the railroad would not have
abandoned the rail line during that period even in the absence of the NITU.” 959 F.3d at 1371.
Accordingly, plaintiffs must establish that Indiana Southwestern would have abandoned the
railroad lines in the absence of the NITU. Plaintiffs have satisfied their burden.
Indiana Southwestern decided that it no longer needed the railroad lines and therefore, on
October 25, 2010, initiated the process for abandoning the lines by filing a notice of exemption
with the Board. In its notice, it averred that it had satisfied all of the requirements to be exempt
from abandonment proceedings, including having no local traffic move over the lines for at least
the preceding two years, and represented that it would consummate the abandonment of the lines
“on or after January 15, 2011.” JX 1 at 3-6. In a November 12, 2010 notice, the Board
acknowledged Indiana Southwestern’s submission and provided that in the absence of a
regulatory barrier, such as an OFA or a NITU, the exemption would become “effective on
December 14, 2010,” and Indiana Southwestern could fully abandon the lines by filing “a notice
of consummation by November 12, 2011 . . . .” JX 2 at 2-3.
Subsequently, the Board received an OFA and Indiana Southwestern agreed to negotiate
a trail-use agreement (ultimately leading to the issuance of the NITU), creating regulatory
barriers to Indiana Southwestern’s ability to file a notice of consummation. Nevertheless,
Indiana Southwestern continued its efforts to abandon the railroad lines. On August 2, 2011,
while the NITU was in effect and as expressly permitted by regulation, it executed a contract
with A&K in which A&K agreed to purchase and remove the rails and other metal material from
the lines by April 1, 2012. A&K completed the work by early February 2012, well before the
NITU expired. In addition, Mr. LaKemper testified that even after the NITU expired, it was
Indiana Southwestern’s intent to either finalize the abandonment or execute a trail-use
agreement.
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These facts reflect that Indiana Southwestern had every intent to abandon the railroad
lines during the period of time that the NITU was in effect, and was prevented from doing so by
the existence of the NITU. Further, the only evidence possibly suggesting that Indiana
Southwestern might not have abandoned the lines between May 23, 2011, and November 8,
2013, is the fact that it did not file a notice of consummation within the sixty-day period
following the expiration of the NITU, as legally required. However, what Indiana Southwestern
chose to do (or not do) after the NITU expired is not particularly suggestive of what Indiana
Southwestern was planning to do while the NITU was in place because such action (or inaction)
might have been prompted by information learned or circumstances that arose after the NITU
expired. 41 See Caquelin III, 959 F.3d at 1370-71 (focusing on whether the railroad company
would have abandoned its line “during the NITU” period). And even if it was suggestive, it is
outweighed by the evidence demonstrating Indiana Southwestern’s intent to abandon the lines.
Accordingly, the Board’s issuance of the NITU injured plaintiffs by compelling the continuation
of Indiana Southwestern’s easements––despite Indiana Southwestern’s expressed intent to
abandon the lines––and preventing them from acquiring fee simple interests in the underlying
land.
Moreover, the evidence in the trial record reflects that Indiana Southwestern satisfied the
requirements for abandonment set forth in Indiana Code section 32-23-11-6(a)(2) and that, in
accordance with Indiana Code section 32-23-11-7, the railroad lines would have been considered
abandoned under state law in the absence of the trail-use condition imposed in the NITU. As
noted above, Indiana Code section 32-23-11-6(a)(2) sets forth two requirements for
abandonment. First, the Board must “issue[] a certificate of public convenience and necessity
relieving the railroad of the railroad’s common carrier obligation on the right-of-way.” Ind.
Code § 32-23-11-6(a)(2)(A). Second, as relevant to this analysis, the railroad company must
remove the “[r]ails, switches, ties, and other facilities . . . from the right-of-way, making the
right-of-way unusable for continued rail traffic.” Id. § 32-23-11-6(a)(2)(B)(i).
The first requirement, when read literally, would prevent any abandonments from
occurring under Indiana law after January 1, 1996, because after that date, there was no provision
in federal law for the issuance of a certificate of public convenience and necessity. In other
words, the statute ostensibly enacted to describe the requirements for abandonment actually
prevents abandonment. This is an absurd result that cannot possibly reflect the intent of the
Indiana legislature; if the legislature meant to foreclose all abandonments, it could have done so
more simply. However, when reading the provision in its entirety, the legislative intent becomes
evident. See Walczak v. Labor Works-Ft. Wayne LLC, 983 N.E.2d 1146, 1154 (Ind. 2013)
(“We presume the General Assembly intended the statutory language to be applied logically and
consistently with the statute’s underlying policy and goals, and we avoid construing a statute so
as to create an absurd result.” (citation omitted)). Because a certificate of public convenience
41
Similarly, the evidence indicating that Indiana Southwestern continued to negotiate a
trail-use agreement with Indiana Trails Fund, Inc. after the NITU expired and declined to
entertain plaintiffs’ offer to purchase the railroad corridor several years thereafter is irrelevant to
whether it would have abandoned the railroad lines between May 23, 2011, and November 8,
2013.
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and necessity provided a railroad company with the authority to abandon a railroad line and that
authority relieved the railroad company of its obligation to furnish service on the line, Hayfield
N. R.R. Co., 467 U.S. at 635, the modern-day equivalent of the certificate of public convenience
and necessity is the document issued by the Board that authorizes abandonment––the decision
issued in response to an application for abandonment or petition for an individual exemption, or
the notice recognizing that a railroad company has invoked a class exemption.
Here, the Board initially authorized Indiana Southwestern to abandon the railroad lines
when it published its notice in the Federal Register on November 12, 2010. That authorization
was postponed due to Poseyville’s OFA and then reinstated when the Board issued the NITU on
May 23, 2011. Indeed, in the NITU, the Board provided that Indiana Southwestern could
abandon the lines if a trail-use agreement was not executed within 180 days and, in the
meantime, could remove the rails, ties, and switches from the lines. Further, the pertinent
regulation––49 C.F.R. § 1152.29(c)(1)––provides that the issuance of a NITU permitted Indiana
Southwestern to discontinue service and cancel tariffs. Accordingly, by issuing the NITU, the
Board authorized Indiana Southwestern to abandon the lines, relieving it of its common carrier
obligation to provide rail service. 42
Defendant’s contention that only the filing of a notice of consummation of abandonment
would satisfy Indiana Code section 32-23-11-6(a)(2)(A) is not well taken. As noted above, when
section 32-23-11-6(a)(2)(A) was initially enacted, federal law required the issuance of a
certificate of public convenience and necessity. Although that certificate relieved a railroad
company of its obligation to provide rail service on the relevant line, it was not the final step of
the abandonment process such that its line was removed from the jurisdiction of the Interstate
Commerce Commission. Rather, once a railroad company received the certificate, it needed to
actually abandon the railroad line by, at a minimum, ceasing operations and cancelling tariffs.
Consequently, the proper analogue to the “certificate of public convenience and necessity”
identified in section 32-23-11-6(a)(2)(A) is not the notice of consummation that follows actual
abandonment of a line and removes the line from the Board’s jurisdiction, but the document
providing the railroad company with the authority to abandon the line in the first instance.
Defendant also contests plaintiffs’ ability to establish that Indiana Southwestern has
satisfied the second requirement of section 32-23-11-6(a)(2). Plaintiffs assert that by removing
the rails and switches from the railroad corridor and pulling up (but leaving behind) the ties,
Indiana Southwestern rendered the railroad lines unusable for rail traffic. Defendant disagrees,
arguing that to comply with the plain language of the provision, Indiana Southwestern was
required to remove the rails embedded in the road crossings and the ties from the corridor, but
did neither. Defendant’s construction of the provision is overly precise.
42
That Indiana Southwestern did not ultimately perfect the abandonment by filing a
notice of consummation with the Board is not relevant to determining whether the requirement
described in Indiana Code section 32-23-11-6(a)(2)(A) was satisfied during the pendency of the
NITU. However, as explained below, it is relevant to determining the extent of the taking for
which defendant is liable.
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There is no dispute that A&K, pursuant to its contract with Indiana Southwestern,
dismantled the tracks on the railroad lines, removing the rails, switches, and other metallic
components from the railroad corridor, but leaving the road crossings intact and leaving the ties
alongside where the tracks had been located. Consequently, neither the rails embedded in the
road crossings nor the ties were removed from the corridor. Nevertheless, it cannot seriously be
contended that leaving these track components in the corridor made the corridor usable for rail
traffic. According to Indiana Southwestern’s employees, the reason the road crossings were left
intact was the costs involved in closing the roads to allow for their removal and reconstructing
the roads thereafter, and the primary reason why the ties were left behind was because it was not
economically viable to remove them from the corridor. They further explained that it was
unlikely that the ties could be used for rail service and that Indiana Southwestern had no intent to
use its lines for rail service. Thus, the overwhelming evidence in the trial record reflects that
after A&K completed its work in early 2012, the corridor was not, as stated in Indiana Code
section 32-23-11-6(a)(2)(A), “usable for rail traffic.”
In sum, plaintiffs have established that the Board’s issuance of the NITU injured them by
compelling the continuation of Indiana Southwestern’s easements––despite Indiana
Southwestern’s expressed intent to abandon the lines and despite Indiana Southwestern’s
satisfaction of the requirements of Indiana Code section 32-23-11-6(a)(2)––and preventing them
from acquiring fee simple interests in the underlying land.
IV. DAMAGES: EXTENT OF THE CATEGORICAL TAKING
Having determined that the government is liable for a categorical taking, the next inquiry
concerns the extent of that taking. Plaintiffs urge the court to conclude that the taking extended
beyond the expiration of the NITU and ultimately may be permanent because Indiana
Southwestern has abandoned the railroad lines under Indiana law, prolonging the blocking of the
reversion of state law property interests caused by the NITU. Defendant, on the other hand,
contends that Indiana law is irrelevant and, if there is a taking in this case, it is temporary in
nature and ended upon the expiration of the NITU.
A. Legal Standard
In Trails Act cases, the railroad company’s actions subsequent to the Board’s issuance of
a NITU dictate the extent of the taking and, therefore, the amount of just compensation owed by
the government. The Federal Circuit has provided clear guidance regarding the extent of the
taking in two factual scenarios. First, when the issuance of a NITU leads to a trail-use agreement
and, therefore, the conversion of a railroad-purposes easement to a trail, the taking is permanent
because the adjacent fee owners are prevented indefinitely from using the land burdened by
easement. Caquelin III, 959 F.3d at 1367; Caldwell, 391 F.3d at 1234. Second, when the
issuance of a NITU does not lead to a trail-use agreement, the NITU expires, and the railroad
company decides to fully abandon its line by filing a notice of consummation, the taking is
temporary because the adjacent fee owners recover the land burdened by easement upon the
abandonment by operation of state law. Caquelin III, 959 F.3d at 1362, 1367; Ladd, 630 F.3d at
1018, 1025; see also Barclay, 443 F.3d at 1378 (rejecting the contention that a “NITU should not
be viewed as the taking because subsequent events might render the NITU only temporary”).
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However, the Federal Circuit has not considered the situation presented in this case, in which the
issuance of the NITU did not lead to a trail-use agreement, the NITU expired, and the railroad
company did not file a notice of consummation despite having no intention to use its line.
Similarly, there is no precedent from the Court of Federal Claims that grapples with this
situation. Consequently, this case presents an issue of first impression.
B. Findings of Fact
The facts relevant to the inquiry regarding the extent of the taking are set forth previously
in more detail, but are summarized here for convenience. The last loaded revenue train ran on
the railroad lines in 2004, the last local traffic on the lines ran no later than October 2008, and
the last use of the lines for railroad car storage was in 2009. On October 25, 2010, Indiana
Southwestern submitted to the Board a notice of exemption from abandonment proceedings. On
November 12, 2010, the Board published a notice in the Federal Register in which it indicated
that in the absence of an OFA, Indiana Southwestern’s exemption would be effective on
December 14, 2010, allowing Indiana Southwestern to fully abandon its lines by November 12,
2011. That authority was delayed by Poseyville filing an OFA. After disposing of Poseyville’s
OFA, the Board issued a NITU on May 23, 2011, imposing a trail-use condition and delaying
Indiana Southwestern’s ability to abandon the lines for an additional 180 days. On August 2,
2011, while the NITU was in effect, Indiana Southwestern contracted with A&K to remove the
tracks from the lines by April 1, 2012. By that deadline, A&K took up the rails (except those in
road crossings), removing them from the railroad corridor. A&K also took up the ties, leaving
them along the lines within the corridor; on some portions of the lines, the good ties were
eventually removed and/or the ties were destroyed. Ultimately, the NITU expired on November
8, 2013, no trail-use agreement was executed while the NITU was in effect or thereafter, and
Indiana Southwestern did not file a notice of consummation by the January 7, 2014 deadline to
signify that it fully abandoned the lines. Nevertheless, Indiana Southwestern’s intent remained
to either finalize the abandonment or execute a trail-use agreement.
C. Conclusions of Law
Under these facts, plaintiffs contend that the taking triggered by the NITU has continued
beyond the expiration of the NITU and will eventually become permanent. Specifically, they
argue that their state law reversionary interests were initially blocked by the Board’s issuance of
the NITU and continued to be blocked, after Indiana Southwestern abandoned its lines under
state law, by the federal regulatory requirement that a railroad company consummate its
abandonment of its line. 43 Defendant, without much elaboration, rejects plaintiffs’ argument that
43
Plaintiffs repeatedly invoke the third prong of the test set forth in Preseault II as
bearing upon whether a taking has occurred and the nature of the taking. However, the three-part
test in Preseault II merely describes what a court should consider when determining whether a
plaintiff has a property interest that was affected by the government’s action. See Preseault II,
100 F.3d at 1532-33. The court has already determined, applying the test from Preseault II, that
all but one of the plaintiffs have a cognizable property interest, in other words, that Indiana
Southwestern acquired easements for railroad purposes that existed at the time that the Board
issued the NITU.
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a taking exists due to the continuation of Board jurisdiction over the lines after the expiration of
the NITU. Defendant’s position is correct as a matter of law.
Pursuant to the Fifth Amendment, the federal government is liable to pay just
compensation when it takes private property for public use. In a Trails Act case, the federal
government takes a landowner’s right to an unencumbered interest in her land by either
permitting a railroad-purposes easement to be converted into a trail easement or, as in this case,
by prolonging a railroad-purposes easement beyond the time it would have been extinguished
under state law. In either scenario, the taking accrues when the Board issues a CITU or NITU.
When a trail-use agreement is executed before a CITU or NITU expires, the taking is permanent
because the original railroad-purposes easement is replaced by a new easement of an indefinite
duration. When the CITU or NITU does not lead to a trail-use agreement and the railroad
company instead consummates the abandonment of its line, the taking is temporary because the
CITU or NITU only caused the railroad-purposes easement to be prolonged for a defined period
of time, after which the easement was extinguished upon the consummation of abandonment and
the landowner regained an unencumbered interest in her land.
In this case, the Board forced the continuation of Indiana Southwestern’s railroad-
purposes easements when it issued the NITU on May 23, 2011. The NITU did not lead to a trail-
use agreement, and it ultimately expired on November 8, 2013. Had Indiana Southwestern filed
a notice of consummation by the January 7, 2014 deadline, the railroad-purposes easements
would have been extinguished and plaintiffs would have been left with unencumbered fee simple
estates. However, Indiana Southwestern did not file such a notice. This failure had two
consequences: (1) Indiana Southwestern’s authority to abandon the lines expired and (2) the
Board retained jurisdiction over the lines.
As previously explained, the determination of whether a railroad line has been abandoned
under Indiana law is dependent upon whether, under federal law, the Board has granted the
railroad company the authority to abandon the line and whether that authority is subject to a trail-
use condition. Ind. Code §§ 32-23-11-6(a)(2)(A), 32-23-11-7. When the NITU (and, therefore,
the trail-use condition) expired on November 8, 2013, the requirements for abandonment under
Indiana law were satisfied: Indiana Southwestern had the authority to abandon its lines; the rails,
switches, and ties were removed from the lines; and there was no trail-use condition in effect.
Accordingly, under state law, the lines were considered to be abandoned. Normally, such an
abandonment would have resulted in the extinguishment of the railroad-purposes easements. See
Lewellen, 682 N.E.2d at 782. However, the Board possesses exclusive and plenary authority to
regulate railroad abandonments, see 49 U.S.C. § 10501(b) (2006); Kalo Brick & Tile Co., 450
U.S. at 319-21, and has promulgated a regulation providing that a line is not fully abandoned
until the railroad company files a notice of consummation, 49 C.F.R. § 1152.29(e)(2) (2010).
This regulation preempts Indiana law. 44 As a consequence, the federal government was
44
Presumably, in most circumstances, Indiana law will not conflict with federal law
because railroad companies that obtain the authority to abandon their lines from the Board and
remove the tracks from the lines either consummate the abandonment or execute a trail-use
agreement. This case presents an atypical situation in which the railroad company takes neither
course of action.
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responsible for extending the railroad-purposes easements from the date the Board issued the
NITU until the date Indiana Southwestern’s authority to abandon its lines expired. After that
date, Indiana Southwestern, not the federal government, was responsible for the continuation of
the easement since the decision to fully abandon the lines was solely within its control. 45
Therefore, the federal government has not permanently taken plaintiffs’ parcels. 46 Accord
Navajo Nation v. United States, 631 F.3d 1268, 1274 (Fed. Cir. 2011) (“A takings claim must be
predicated on actions undertaken by the United States, not [a third party].”).
In sum, defendant is liable to pay plaintiffs just compensation for a temporary categorical
taking that lasted from the date the Board issued the NITU, May 23, 2011, to the date Indiana
Southwestern’s authority to abandon its railroad lines expired, January 7, 2014––a period of 960
days (2.63 years).
V. DAMAGES: PRINCIPAL AMOUNT OF JUST COMPENSATION
The final task for the court is to determine the amount of just compensation due to
plaintiffs for the temporary categorical taking. Plaintiffs devote fewer than two pages in their
opening posttrial brief to this topic. They reproduce a chart summarizing the amounts of just
compensation calculated by their expert, Mr. Matthews, in three different scenarios (a permanent
taking, a temporary taking from May 23, 2011, to October 1, 2018, and a temporary taking from
May 23, 2011, to November 8, 2013) and aver that defendant did not refute Mr. Matthews’s
testimony by offering its own damages evidence or expert testimony. But they do not describe
the applicable legal standard or explain how the evidence in the trial record satisfies that
standard. Defendant, in the fewer than two pages it devotes to the topic, provides a legal
standard and asserts that plaintiffs have not satisfied that standard in general terms, but limits its
assertion to the agricultural parcels at issue. Neither party revisits the issue of calculating just
compensation in their responsive posttrial briefs. Nor did the parties address just compensation
during closing arguments. Notwithstanding the deficiencies in the parties’ submissions, the court
must provide a complete analysis of the amount of just compensation due to plaintiffs.
A. Legal Standard
Just compensation, as described in the Fifth Amendment, “means the full monetary
equivalent of the property taken.” United States v. Reynolds, 397 U.S. 14, 16 (1970). In other
words, the owner of the property taken “is to be put in the same position monetarily as he would
have occupied if his property had not been taken.” Id. For a temporary taking, “the just
compensation to which the owner is entitled is the value of the use of the property during the
temporary taking, i.e., the amount which the owner lost as a result of the taking.” Yuba Nat.
45
Alternatively, an interested third party could try to force Indiana Southwestern to
abandon the railroad lines by initiating adverse abandonment proceedings before the Board.
46
Because this case does not present the scenario in which an ongoing temporary taking
might ripen into a permanent taking––as in Balagna v. United States, 138 Fed. Cl. 398 (2018), in
which the NITU remained pending after five years while a trail-use agreement was being
negotiated––there is no need to fashion a unique remedy as plaintiffs request.
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Res., Inc. v. United States, 904 F.2d 1577, 1580-81 (Fed. Cir. 1990). “The usual measure of”
such loss of use “is the fair rental value of the property for the period of the taking.” 47 Id. at
1581; accord Kimball Laundry Co. v. United States, 338 U.S. 1, 7 (1949) (holding, when “it was
known from the outset that this taking was to be temporary . . . , that the proper measure of
compensation is the rental that probably could have been obtained”).
There is no set method for calculating fair rental value. See Am.-Hawaiian S.S. Co. v.
United States, 124 F. Supp. 378, 381 (Ct. Cl. 1954) (“The ascertainment of value is not
controlled by rigid rules or artificial formulae; what is required is a ‘reasonable judgment having
its basis in a proper consideration of all relevant facts.’” (quoting Standard Oil Co. of N.J. v. S.
Pac. Co., 268 U.S. 146, 156 (1925))), judgment entered, 130 Ct. Cl. 818 (1955); see also Yaist v.
United States, 17 Cl. Ct. 246, 257 (1989) (“The court may use its judgment in selecting the
method to determine fair market value.”). Furthermore, although “the ‘conventional’ method” of
valuing an easement “is the ‘before-and-after’ method, i.e., ‘the difference between the value of
the property before and after the Government’s easement was imposed[,]’ . . . there may be
appropriate alternative valuation methods for the taking of an easement.” Otay Mesa Prop., L.P.
v. United States, 670 F.3d 1358, 1364 (Fed. Cir. 2012) (quoting United States v. Va. Elec. &
Power Co., 365 U.S. 624, 632 (1961)); see also Balagna, 138 Fed. Cl. at 404 (observing that “the
case law is not well developed with respect to valuing temporary takings in the rails-to-trails
context”). Regardless of how it is calculated, fair rental value must account for the physical
condition of the property at the time of the taking. See Rasmuson v. United States, 807 F.3d
1343, 1345-46 (Fed. Cir. 2015) (“[T]he fair market value of the land includes the physical
remnants of the railway that would have remained on the landowners’ property but for the
issuance of the NITUs. . . . [A] ‘before’ calculation that does not take into account the costs of
removing the physical remnants of the railway will result in an artificially inflated value and
yield a windfall to the landowner.”).
“The landowners have the burden of establishing the value of the railway corridor, which
is a question of fact.” Id. at 1345.
B. Findings of Fact
Plaintiffs presented the appraisal reports and testimony of an expert appraiser, Mr.
Matthews, to support their claim for just compensation. Mr. Matthews explained that
determining just compensation for a temporary taking triggered by a NITU is a two-step process:
estimating the lost rent for the duration of the taking and then discounting the rent to its present
value. Tr. 344-45, 348-49 (Matthews); cf. id. at 362 (stating that because railroad companies
typically used only a narrow strip of land within a railroad corridor to construct the railroad,
much of the corridor has a rental value without needing any curative measures).
47
Just compensation for a permanent taking is normally measured by the fair market
value of the property taken, in other words, what a willing buyer would pay to a willing seller for
the property. United States v. 50 Acres of Land, 469 U.S. 24, 29 & n.1 (1984); Yuba Nat. Res.,
Inc. v. United States, 821 F.2d 638, 641 (Fed. Cir. 1987). “[T]emporary reversible takings
should be analyzed in the same constitutional framework applied to permanent irreversible
takings . . . .” Yuba Nat. Res., Inc., 821 F.2d at 641.
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There are several methods for estimating lost rent. One method is to determine the
market value of a temporary easement by comparing sales of parcels unencumbered by a
temporary easement to sales of parcels encumbered by a temporary easement, id. at 345, and
then applying a rate of return to estimate rent, id. at 318-19. The difficulty with this approach is
that the difference in sales prices between the two types of parcels is likely to be nominal, and an
appraiser would not consider the existence of the easement when estimating the sales price of an
encumbered parcel. Id. at 345-46.
Another method is to determine lost rent by identifying rents for parcels similar to the
subject parcel (in other words, with the physical remnants of a railroad line) and adjusting those
rents to account for differences between those parcels and the subject parcel. Id. at 344, 549.
Mr. Matthews rejects this method because there is “[n]ot much data out there,” id. at 549, and it
does not account for damages (such as the need to use point rows) caused by the taking, id. at
319, 549, which must be taken into consideration when ascertaining just compensation, id. at
339, 564, 569; accord id. at 551-52 (stating that although damages are difficult to appraise, they
must be considered for an appraisal to be valid), 569 (stating that failing to ascertain damages
“would make the appraisal void”).
A third method, used by Mr. Matthews, is to derive lost rent from the market value of the
parcel––in essence, determining just compensation for a permanent taking and then applying a
rate of return to estimate rent. Id. at 318-19, 339, 548. Under this method, the first task is to
ascertain the market value of the subject parcel on the date of the taking, assuming that the parcel
is unencumbered by an easement (the “before” condition). Id. at 317, 341, 368, 496, 560.
Market value can be determined using a cost approach, an income approach, or a comparable
sales approach. Id. at 320-22, 383. In this case, Mr. Matthews used the comparable sales
approach. Id. at 321, 383. He identified sales of parcels that were the most similar to the parcels
owned by plaintiffs and then adjusted the sales prices to account for differences between the
parcels on factors such as the date of the sales, market conditions, soil quality, parcel shape,
amount of tillable land, topography/flood potential, highest and best use, location, and
availability of utilities. Id. at 321-22, 327-35, 385-86, 452, 554-56. Based on this data, he
calculated the average value of land per acre, multiplied that amount by the number of acres in
the subject parcel (which included the railroad corridor), and then subtracted the amount, if any,
of the cost to cure. 48 See, e.g., id. at 386-87, 391-92; see also id. at 488-89 (stating that the
parcel is appraised in the physical condition that existed on the date of the taking, which includes
any remnants of the railroad bed that might need to be removed to use the land), 523 (stating that
because an appraiser must assume that the railroad corridor has been reclaimed and is being used
in the “before” condition even though the corridor has not been reclaimed, the cost to cure must
be subtracted from the value of the parcel). The resulting amount was the estimated value of the
48
For the agricultural parcels, the cost to cure is the cost to convert the railroad corridor
into tillable land. Tr. 355, 390-93 (Matthews); see also supra Section III.B.3 (describing Mr.
Matthews’s conclusions regarding the cost to convert the corridors into tillable land, Mr.
Kliebenstein’s opinion that such a conversion was economically feasible, and Mr. McCarty’s
opinion that such conversions are not quick or easy). There are no conversion costs for the
residential parcels. Tr. 363 (Matthews); accord PX 20 at 26; PX 21 at 27; PX 22 at 27.
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subject parcel in the “before” condition. See, e.g., id. at 392. The following table sets forth the
amounts determined by Mr. Matthews to estimate the value of plaintiffs’ parcels in the “before”
condition:
Parcel Owner Acres Per-Acre Total Cost to Indicated
Value Value Cure Value
Severed Parcels
The Goebels 133.870 $8400 $1,124,500 $1750 $1,122,800
The Martins 287.820 $7000 $2,014,740 $16,300 $1,997,400
McDonald Family 115.720 $8150 $943,100 $1900 $941,200
Farms
Nonsevered Parcels
Mr. Halpeny 36.010 $8700 $313,287 $6500 $306,800
Mr. Memmer 90.355 $9700 $876,500 $1300 $875,200
Reibel Farms, Inc. 117.830 $9100 $1,072,253 $2000 $1,070,300
Wooded Parcels
Mr. Effinger 62.450 $7000 $437,200 $0 $437,200
The Schmidts 20.000 $7500 $150,000 $0 $150,000
Improved Residential Parcel
Mr. Jenkins 0.250 $27,000 $6800 $0 $6800
See PX 14 at 28; PX 15 at 36; PX 16 at 36; PX 17 at 28; PX 18 at 28; PX 19 at 36; PX 20 at 26;
PX 21 at 27; PX 22 at 27.
The second task is to ascertain the market value of the land within the railroad corridor in
the “before” condition by multiplying the average value of land per acre by the number of acres
in the corridor, and then, for the agricultural and wooded parcels, subtracting from that amount
any cost to cure. Tr. 394 (Matthews). The following table sets forth the amounts determined by
Mr. Matthews to estimate the value of the land within the corridor in the “before” condition:
Parcel Owner Acres Per-Acre Total Cost to Indicated
Value Value Cure Value
Severed Parcels
The Goebels 3.190 $8400 $26,800 $1750 $25,000
The Martins 5.480 $7000 $38,400 $16,300 $22,100
McDonald Family 1.920 $8150 $15,600 $1900 $13,700
Farms
Nonsevered Parcels
Mr. Halpeny 2.010 $8700 $17,500 $6500 $11,000
Mr. Memmer 1.605 $9700 $15,569 $1300 $14,300
Reibel Farms, Inc. 1.050 $9100 $9555 $2000 $7600
Wooded Parcels
Mr. Effinger 1.560 $7000 $11,000 $0 $11,000
The Schmidts 2.770 $7500 $20,800 $0 $20,800
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Improved Residential Parcel
Mr. Jenkins 0.050 $27,000 $1400 $0 $1400
See PX 14 at 29; PX 15 at 37; PX 16 at 37; PX 17 at 29; PX 18 at 29; PX 19 at 37; PX 20 at 26;
PX 21 at 27; PX 22 at 27.
The third task is to ascertain the market value of the property assuming that, on the date
of the taking, the trail has been built and is being used (the “after” condition). Tr. 317, 341-42,
367, 395, 495-98, 502, 561 (Matthews). To determine this value, Mr. Matthews used the same
sales as comparators and adjusted the sales price on the same factors he used in the “before”
condition. Id. at 335, 397, 459, 465-66. The only substantial difference in adjustments between
the “before” and “after” conditions was the parcel shape adjustment for the three agricultural
parcels severed by a railroad line because in the “before” condition there were no point rows, but
in the “after” condition, point rows are necessary. Id. at 335-36, 396-97. Based on this data, Mr.
Matthews calculated the average value of land per acre, multiplied that amount by the number of
acres in the subject parcel (which excluded the railroad corridor), id. at 395-96, and then, for the
improved residential parcel, subtracted the cost to cure damages arising from the existence of the
trail (the construction of a privacy fence), id. at 467-68. The resulting amount was the estimated
value of the subject parcel in the “after” condition. Id. at 397-98. The following table sets forth
the amounts determined by Mr. Matthews to estimate the value of plaintiffs’ parcels in the
“after” condition:
Parcel Owner Acres Per-Acre Total Cost to Indicated
Value Value Cure Value
Severed Parcels
The Goebels 130.68 $8200 $1,071,600 $0 $1,071,600
The Martins 282.34 $6750 $1,905,800 $0 $1,905,800
McDonald Family 113.80 $7800 $887,600 $0 $887,600
Farms
Nonsevered Parcels
Mr. Halpeny 34.00 $8700 $295,800 $0 $295,800
Mr. Memmer 88.75 $9700 $860,900 $0 $860,900
Reibel Farms, Inc. 116.78 $9100 $1,062,700 $0 $1,062,700
Wooded Parcels
Mr. Effinger 60.89 $7000 $426,200 $0 $426,200
The Schmidts 17.23 $7500 $129,200 $0 $129,200
Improved Residential Parcel
Mr. Jenkins 0.20 $27,000 $5400 $1600 $3800
See PX 14 at 34; PX 15 at 42; PX 16 at 42; PX 17 at 34; PX 18 at 34; PX 19 at 42; PX 20 at 30-
31; PX 21 at 31-32; PX 22 at 31-32.
The fourth task is to determine the diminution of value of the parcel attributable to the
taking by subtracting the market value of the parcel in the “after” condition from the market
value of the parcel in the “before” condition. Tr. 398 (Matthews). This diminution of value is
then allocated between the previously calculated market value of the land taken and the damages
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to the remainder of the parcel. Id. at 373-74, 398, 568. The following table sets forth the
amounts used by Mr. Matthews to calculate the diminution of value of the parcels, as well as his
allocation of the diminution of value:
Parcel Owner “Before” “After” Difference Market Damages
Value Value Value of
Land
Taken
Severed Parcels
The Goebels $1,122,800 $1,071,600 $51,200 $25,000 $26,200
The Martins $1,997,400 $1,905,800 $92,600 $22,100 $70,500
McDonald Family $941,200 $887,600 $53,600 $13,700 $39,900
Farms
Nonsevered Parcels
Mr. Halpeny $306,800 $295,800 $11,000 $11,000 $0
Mr. Memmer $875,200 $860,900 $14,300 $14,300 $0
Reibel Farms, Inc. $1,070,300 $1,062,700 $7,600 $7,600 $0
Wooded Parcels
Mr. Effinger $437,200 $426,200 $11,000 $11,000 $0
The Schmidts $150,000 $129,200 $20,800 $20,800 $0
Improved Residential Parcel
Mr. Jenkins $6800 $3800 $3000 $1400 $1600
See PX 14 at 35; PX 15 at 43; PX 16 at 43; PX 17 at 35; PX 18 at 35; PX 19 at 43; PX 20 at 31;
PX 21 at 32; PX 22 at 33.
The final task is to apply a rate of return to the components of the diminution of value to
determine the amount of annual rent lost due to the taking. Tr. 349-50, 399-400, 549
(Matthews). Mr. Matthews used a rate of return of 3.5% for the agricultural parcels, id. at 350, a
rate of return of 5% for the wooded parcels, id. at 352, and a gross rent multiplier of 17 for the
improved residential parcel, PX 22 at 36. 49 The following table sets forth the amounts used by
Mr. Matthews to calculate plaintiffs’ annual lost rent:
Parcel Owner Market Annual Damages Annual
Value of Rent for Rent for
Land Taken Land Taken Damages
Severed Parcels
The Goebels $25,000 $875 $26,200 $917
The Martins $22,100 $774 $70,500 $2468
McDonald Family Farms $13,700 $480 $39,900 $1397
49
The gross rent multiplier is derived from an analysis of “sales and listing of rental
properties in Posey County” and reflects the ratio of rent to sales price. See PX 22 at 36.
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Nonsevered Parcels
Mr. Halpeny $11,000 $385 $0 $0
Mr. Memmer $14,300 $501 $0 $0
Reibel Farms, Inc. $7,600 $266 $0 $0
Wooded Parcels
Mr. Effinger $11,000 $550 $0 $0
The Schmidts $20,800 $1040 $0 $0
Improved Residential Parcel
Mr. Jenkins $1400 $82 $0 $0
See PX 14 at 39; PX 15 at 47; PX 16 at 47; PX 17 at 39; PX 18 at 39; PX 19 at 47; PX 20 at 35;
PX 21 at 36; PX 22 at 37.
Once the annual lost rent for the two components is estimated, the second step to
determining the principal amount of just compensation is to discount that rent to its present
value. Tr. 400, 488, 494 (Matthews). The multiplier used by Mr. Matthews for the agricultural
parcels accounted for the number of growing seasons lost due to the taking and a 3.5% discount
rate. Id. at 351, 400; see, e.g., PX 16 at 46 (indicating that Mr. Matthews used a multiplier of
2.8997 because “the present value of $1.00 paid at the beginning of the period for three years,
discounted at 3.5%[, has] the net present value of $2.8997”); see also Tr. 350-51 (Matthews)
(stating that the discount rate was the same as the rate of return because all that is being valued is
land without depreciable assets). Because Mr. Matthews was calculating just compensation for a
temporary taking spanning from May 23, 2011, to November 8, 2013, he determined that the
number of lost growing seasons was three. Tr. 351 (Matthews). The multiplier used by Mr.
Matthews for the wooded parcels accounted for a taking of 900 days (2.47 years) and a 5%
discount rate. PX 20 at 34; PX 21 at 35; see, e.g., PX 20 at 34 (indicating that Mr. Matthews
used a multiplier of 2.2654 because the “the present value of $1.00 paid in years 1 & 2 with year
three a partial payment of $0.47, discounted at 5.0%[, has] the net present value of $2.2654”).
And the multiplier used by Mr. Matthews for the improved residential parcel accounted for a
taking of 900 days (2.47 years) and a 3.5% discount rate. PX 22 at 36; see PX 22 at 36
(indicating that Mr. Matthews used a multiplier of 2.3236 because the “the present value of $1.00
paid in years 1 & 2 with year three a partial payment of $0.47, discounted at 3.5%[, has] the net
present value of $2.3236”). The just compensation due to the landowner is the present value of
the lost rent plus (1) any costs to reclaim the railroad corridor in excess of the lost rent
attributable to the land taken or (2) any costs to cure the damages caused by the existence of the
trail. See, e.g., PX 16 at 44-45; PX 22 at 36-37; see also Tr. 552-53 (Matthews) (defining
“excess cost to cure” damages). The following table sets forth the amounts used by Mr.
Matthews to calculate the present value of plaintiffs’ lost rent and total just compensation; for the
wooded and residential parcels, certain cells are empty because Mr. Matthews assumed that the
duration of the taking was 2.47 years (900 days) rather than, as the court has determined, 2.63
years (960 days):
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Parcel Owner Present Present Present Excess Total Just
Value Value of Value of Cost to Compensation
Factor Rent for Rent for Cure /
Land Damages Cost to
Taken Cure
Severed Parcels
The Goebels 2.8997 $2500 $2700 $0 $5200
The Martins 2.8997 $2200 $7200 $0 $9400
McDonald Family 2.8997 $1390 $4000 $500 $5900
Farms
Nonsevered Parcels
Mr. Halpeny 2.8997 $1100 $0 $0 $1100
Mr. Memmer 2.8997 $1451 $0 $0 $1500
Reibel Farms, Inc. 2.8997 $800 $0 $0 $800
Wooded Parcels
Mr. Effinger - - - $0 -
The Schmidts - - - $0 -
Improved Residential Parcel
Mr. Jenkins - - - $1600 -
See PX 14 at 39; PX 15 at 47; PX 16 at 47; PX 17 at 39; PX 18 at 39; PX 19 at 47; PX 20 at 35;
PX 21 at 36; PX 22 at 37.
C. Conclusions of Law
Through Mr. Matthews’s expert appraisal reports and testimony, plaintiffs presented
evidence of the fair rental value of their parcels. In response, defendant argues that “[p]laintiffs
have not presented a valuation that comports with” the following “fundamental principles,”
Def.’s Posttrial Br. 68: (1) the proper measure of damages for a temporary taking is fair rental
value; (2) fair rental value is “the price that a willing lessee would pay to a willing lessor, for the
period of the [temporary] taking,” Heydt v. United States, 38 Fed. Cl. 286, 309 (1997); and (3)
fair rental value is an objective standard. Defendant contends that the portions of the railroad
corridor adjacent to the agricultural parcels were not suitable to be farmed on the date the Board
issued the NITU, that no reasonable farmer would lease the corridor for a temporary period, and,
consequently, that the corridor had no fair rental value.
Defendant, in contending that no reasonable farmer would have leased the railroad
corridor as-is on May 23, 2011, identifies a notable constraint in using fair rental value to
measure damages for a temporary taking in a Trails Act case. In general, the portion of a
railroad corridor adjacent to a plaintiff’s parcel is typically a short and narrow strip of land upon
which the remnants of a railroad line are situated, the duration of the taking may be very short
(conceivably, as short as 180 days), and on the date of the taking, the precise duration of the
taking is unknown. Thus, it is difficult to fathom that there would be a rental market for any
such corridor. Nevertheless, the owners of land underlying the corridor often could have and
would have put the land to productive use but for the taking. For example, an owner of an
industrial or commercial parcel could build or expand a parking lot, an owner of a residential
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parcel could reroute a driveway, or a farmer could plant more crops. Thus, the fact that no one
would want to lease the parcels burdened with the physical remnants of a railroad line does not
mean that the parcel lacks value. And the goal of just compensation is to put a landowner in the
same position that she would have been in absent the taking by providing her with the amount
lost due to the taking. Consequently, the lack of an actual willing lessee cannot be fatal to
plaintiffs’ claim for just compensation. See United States v. Miller, 317 U.S. 369, 374 (1943)
(“Where, for any reason, property has no market resort must be had to other data to ascertain its
value; and, even in the ordinary case, assessment of market value involves the use of
assumptions, which make it unlikely that the appraisal will reflect true value with nicety.”
(footnote omitted)). Plaintiffs owning agricultural parcels lost three growing seasons on the
corridor due to the taking and should be compensated for that loss.
The method of valuation used by Mr. Matthews allowed him to estimate fair rental value
of a railroad corridor in the absence of an active rental market for such land: applying a rate of
return to the value of the land taken. This method, which the court and defendant have endorsed
in other cases, see Hardy v. United States, 141 Fed. Cl. 1, 59-60 (2018), vacated in part on other
grounds, 965 F.3d 1338 (Fed. Cir. 2020), provides an acceptable method of estimating fair rental
value. Accord Am.-Hawaiian S.S. Co., 124 F. Supp. at 381.
With respect to the agricultural parcels, Mr. Matthews demonstrated that even accounting
for the physical condition of the land, the land would generate income for the farmers; Dr.
Kliebenstein opined that it was economically feasible for the farmers to convert the land; and
plaintiffs testified that they would farm the land if given the opportunity to do so. Although Mr.
McCarty testified on behalf of defendant that converting a railroad corridor into tillable land
might not be quick or easy, he did not provide an opinion with respect to the time or effort
required to convert the corridor running along or through the agricultural parcels at issue. Thus,
the court has no basis to disturb Mr. Matthews’s determination that these plaintiffs would lose all
three growing seasons affected by the taking (2011, 2012, and 2013). Furthermore, nothing in
the trial record provides a basis for rejecting the use of Mr. Matthews’s method to estimate the
fair rental value of the wooded and residential parcels.
Using his valuation method, Mr. Matthews determined the principal amount of just
compensation due to each plaintiff. Defendant does not challenge the data underlying Mr.
Matthews’s calculations (such as the highest and best use of the parcels, the comparable sales,
the adjustments, the costs to cure, the rates of return, or the discount rates) or Mr. Matthews’s
calculations themselves. Thus, plaintiffs have satisfied their burden of proving a principal
amount of just compensation for a temporary categorical taking spanning from May 23, 2011, to
January 7, 2014, for the plaintiffs who own agricultural parcels, as follows: 50
50
Although Mr. Matthews assumed that the temporary taking spanned from May 23,
2011, to November 8, 2013, his calculations are not affected by the longer takings period
determined by the court because he used the number of growing seasons rather than the number
of years, and the number of lost growing seasons is not different.
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Name Just
Compensation
The Goebels $5200
The Martins $9400
McDonald Family Farms $5900
Mr. Halpeny $1100
Mr. Memmer $1500
Reibel Farms, Inc. $800
For the plaintiffs who own wooded or residential parcels, Mr. Matthews’s determination of just
compensation was based on a temporary taking lasting 2.47 years rather than 2.63 years. Thus,
the principal amounts due to Mr. Effinger, the Schmidts, and Mr. Jenkins for the temporary
taking need to be recalculated. 51
VI. DAMAGES: INTEREST AND COSTS
In addition to the principal amount of just compensation, plaintiffs are entitled to receive
(1) interest on that principal amount and (2) reimbursement for their costs. Specifically, with
respect to the former, “the Fifth Amendment’s reference to ‘just compensation’ entitles the
property owner to receive interest from the date of the taking to the date of payment as a part of
his just compensation.” United States v. Thayer-W. Point Hotel Co., 329 U.S. 585, 588 (1947).
With respect to the latter, Section 304(c) of the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970 provides:
The court rendering a judgment for the plaintiff in a proceeding brought under [28
U.S.C. § 1491] awarding compensation for the taking of property by a Federal
agency . . . shall determine and award or allow to such plaintiff, as a part of such
judgment . . . , such sum as will in the opinion of the court . . . reimburse such
plaintiff for his reasonable costs, disbursements, and expenses, including
reasonable attorney, appraisal, and engineering fees, actually incurred because of
such proceeding.
42 U.S.C. § 4654(c) (2006).
The parties did not address interest or costs during trial, in their posttrial briefs, or during
closing arguments. The court cannot direct the entry of final judgment pursuant to RCFC 58
until all three components of just compensation––principal, interest, and costs––are determined.
51
This task should take little effort since it requires only the determination of a new
present value factor (substituting 2.63 years for 2.47 years), multiplying that value by the annual
rent for the land taken, and, for Mr. Jenkins, adding the cost to cure. Indeed, it appears that for
Mr. Effinger, the new present value factor would be 2.4036 and the present value of lost rent
would be approximately $1322; for the Schmidts, the new present value factor would be 2.4036
and the present value of lost rent would be $2500; and for Mr. Jenkins, the new present value
factor would be 2.4679 and the present value of lost rent would be approximately $202.
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Further, to the extent that the parties wish to defer proceedings on costs, the court will not direct
the entry of judgment pursuant to RCFC 54(b) until the appropriate interest rate and
compounding frequency are determined. 52
VII. CONCLUSION
As set forth in more detail above, the court concludes that (1) the plaintiffs who own
property adjacent to the easements conveyed by the Type A and Type A-1 deeds––Mr. Halpeny;
Mr. Memmer; Mr. Jenkins; the Goebels; McDonald Family Farms; the Martins; Mr. Effinger;
and the Schmidts––and obtained through adverse possession––Reibel Farms, Inc.––have
cognizable Fifth Amendment property interests; (2) defendant is entitled to judgment with
respect to the claim of Mr. Hostettler, the portion of the claim of Reibel Farms, Inc. that derives
from the Davis deed, and the portion of the Martins’ claim that derives from the side track deed;
(3) defendant is liable to pay just compensation to the plaintiffs with cognizable property
interests for a temporary categorical physical taking; (4) the temporary taking spanned from May
23, 2011, to January 7, 2014; (5) the principal amount of just compensation due to the Goebels is
$5200, the Martins is $9400, McDonald Family Farms is $5900, Mr. Halpeny is $1100, Mr.
Memmer is $1500, and Reibel Farms, Inc. is $800; and (6) the award of just compensation shall
include interest from the date of the taking and costs pursuant to the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970.
By no later than Monday, November 16, 2020, the parties shall file a joint status report
in which they (1) set forth the principal amount of just compensation due to Mr. Effinger, the
Schmidts, and Mr. Jenkins based on the court’s rulings; (2) indicate whether they will stipulate to
the appropriate interest rate and compounding frequency; and (3) propose a schedule for further
proceedings.
IT IS SO ORDERED.
s/ Margaret M. Sweeney
MARGARET M. SWEENEY
Senior Judge
52
In the now-vacated RCFC 54(b) judgment, the court adopted the parties’ stipulation
that interest was to be calculated on the principal amount for the duration of the taking using the
Moody’s Aaa rate, compounded annually, and for the period following the taking at 3.65%,
compounded annually. See also Tech. Coll. of the Low Country v. United States, 147 Fed. Cl.
364, 371 (2020) (holding that interest should be calculated using the Moody’s rate and
compounded quarterly); Hardy v. United States, 138 Fed. Cl. 344, 357 (2018) (same).
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