Taylor v. United States

In the United States Court of Federal Claims
No. 18-1082L
(Filed: April 5, 2019)
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*
BUDDY and DONNA TAYLOR, *
*
* Fifth Amendment Taking; Physical
Plaintiffs, * Taking; Regulatory Taking; Ripeness;
* Motion to Dismiss for Failure to State a
v. * Claim; Rule 12(b)(6); Motion to Dismiss
* for Lack of Subject Matter Jurisdiction;
THE UNITED STATES, * Rule 12(b)(1).
*
Defendant. *
*
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A. Blair Dunn, Western Agriculture Resource and Business Advocates, Albuquerque, New
Mexico, for Plaintiffs.
Nathanael B. Yale, Trial Attorney, with whom were Joseph P. Hunt, Assistant Attorney
General, Robert E. Kirschman, Jr., Director, L. Misha Preheim, Assistant Director,
Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington,
D.C., and Michael L. Casillo, Litigation Attorney, Air Force Legal Operations Agency,
Environmental Law and Litigation Division, for Defendant.
OPINION AND ORDER
WHEELER, Judge.
Plaintiffs Buddy and Donna Taylor (“the Taylors”) bring this action against the
United States after the United States Air Force (“USAF”) allegedly flew training missions
within the Taylors’ airspace and improperly interfered with a lease contract between the
Taylors and Wind Energy Prototypes LLC (“Wind Energy”). In their complaint, the
Taylors claim that the USAF’s actions amounted to both a physical and regulatory taking
of their property under the Fifth Amendment. Currently before the Court is Defendant’s
motion to dismiss Plaintiffs’ complaint for lack of subject matter jurisdiction, pursuant to
Rule 12(b)(1), and for failure to state a claim upon which relief may be granted, pursuant
to Rule 12(b)(6). For the reasons explained below, the Court GRANTS Defendant’s
motion to dismiss.
Background
A. USAF’s Overflights
The Taylors own and operate a 6,395-acre cattle ranch in New Mexico. The parcel
is situated near Cannon Air Force Base as well as “near the landing and drop zones” in
Melrose Air Force Range.1 The Taylors allege that following the purchase of their ranch
in 1999, the USAF began flying training missions, during which planes flew approximately
20-500 feet above the Taylors’ land in violation of their property interest. The Taylors
allege that this behavior continues to the present time. According to the Taylors, the USAF
flies these violative routes “regularly.” Notwithstanding the USAF’s alleged interference,
the Taylors continue to perform their cattle ranching operations seemingly without
interruption.
B. The Wind Energy Lease
In October 2008, the Taylors reached an agreement with Wind Energy for the
development of a wind energy farm on the Taylors’ property (the “Green Wing Project”).
Under this agreement, the Taylors gave Wind Energy the exclusive option for an easement
over their property for purposes of “wind resource evaluation, wind energy development,
energy transmission and related wind energy development uses.” Compl. ¶ 14. The
agreement specified that Wind Energy had the option to cancel the agreement at any time
within a five-year period upon issuing proper notice to the Taylors. In exchange, the
Taylors received an option term fee of $3.00 per acre per year with the potential for
additional royalties.
As part of Project Green Wing, Wind Energy would have to build turbines
exceeding 200 feet tall. However, before a landowner can begin construction on structures
of this height, they must first alert the Federal Aviation Administration (“FAA”).
1. FAA Notice and Hazard Determinations
The FAA is authorized to issue rules and regulations concerning air traffic. See 49
U.S.C. § 40103. Pursuant to that authority, persons contemplating construction or
alteration of structures that may present an obstacle to air traffic must first file a Notice of
Proposed Construction or Alteration (“notice”) with the FAA. See 49 U.S.C. § 44718; 14
C.F.R. §§ 77.5, 77.9, 77.13. A building may present an obstacle, triggering the need for a
1
The Melrose Air Force Range is a military air and ground training range used by Cannon Air Force Base.
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notice, when the proposed structure exceeds 200 feet above ground level. See 14 C.F.R. §
77.9 (listing other obstacle-creating conditions not relevant to the situation at hand).
Upon submission of a notice, the FAA makes an initial determination of whether
the project “may result in an obstruction of the navigable airspace, an interference with air
navigation facilities and equipment or the navigable airspace, or, after consultation with
the Secretary of Defense, an adverse impact on military operations and readiness.” §
44718(b)(1). The FAA then conducts “an aeronautical study to determine the extent of any
adverse impact on the safe and efficient use of the airspace, facilities, or equipment.” Id.
Upon conclusion of its review, the FAA issues a final determination on whether the project
presents a “hazard to air navigation.” § 44718(b)(3); see also 14 C.F.R. § 77.31. Although
those seeking to construct a potentially obstacle-creating structure must submit a notice,
the FAA has no authority to prevent construction of structures that it deems to be
hazardous. See Flowers Mill Assoc. v. United States, 23 Ct. Cl. 182, 189-90 (1991) (noting
the advisory nature of FAA hazard determinations).
2. Wind Energy Opts Out of the Agreement
Wind Energy exercised its early termination option in September 2012 thereby
canceling its arrangement with the Taylors. The Taylors allege that the Government
brought about this cancellation. Specifically, the Taylors assert that in or around the
summer or early fall of 2012, “agents and/or employees of Defendant with the Cannon Air
Force Base directly intervened” with the contractual arrangement between the Taylors and
Wind Energy by suggesting to Wind Energy that the FAA would not issue a “No Hazard”
determination for the Green Wing Project. The Taylors maintain that the FAA’s informal
indication that a “No Hazard” determination was not forthcoming caused Wind Energy to
withdraw from the agreement.
Neither the Taylors nor Wind Energy has submitted a notice to the FAA, and the
FAA has not issued any official hazard determination pursuant to the above-outlined
process. Nevertheless, the Taylors explain that the FAA’s suggestion was “fatal” to the
construction of wind turbines on their property and thus the Green Wing Project. They
assert that the absence of a “No Hazard” determination severely impacts a developer’s
ability to secure necessary permits from other agencies and to find financing.
Procedural History
On July 25, 2018, the Taylors filed their complaint in this Court alleging (1) that the
USAF’s overflights constitute a physical taking, and (2) the Government engaged in a
regulatory taking when it interfered with the Taylors’ lease with Wind Energy. Lastly, the
Taylors maintain that they are entitled to declaratory judgments regarding their exclusive
rights to use their land and the Government’s interference with those rights.
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Defendant filed its motion to dismiss on October 30, 2018. Plaintiff filed its
response on January 11, 2019, and Defendant replied on February 19, 2019. The Court
heard oral argument on March 19, 2019.
Discussion
A. Plaintiffs’ Regulatory Takings Claim Lacks Subject Matter Jurisdiction.
1. Standard of Review
The United States Court of Federal Claims is a court of limited jurisdiction. 28
U.S.C. § 1491(a)(1); Brown v. United States, 105 F.3d 621, 623 (Fed. Cir. 1997). The
Tucker Act confers jurisdiction on this Court “to render judgment upon any claim against
the United States founded either upon the Constitution, or any Act of Congress or any
regulation of an executive department, or upon any express or implied contract with the
United States, or for liquidated or unliquidated damages in cases not sounding in tort.” 28
U.S.C. § 1491(a)(1).
When deciding a Rule 12(b)(1) motion to dismiss, the Court must assume all the
undisputed facts in the complaint are true and draw reasonable inferences in the non-
movant’s favor. Erikson v. Pardus, 551 U.S. 89, 94 (2007). However, a plaintiff must
establish that jurisdiction exists “by a preponderance of the evidence.” M. Maropakis
Carpentry, Inc. v. United States, 609 F.3d 1323, 1327 (Fed. Cir. 2010). In determining
whether a plaintiff has met this burden, the Court may look “beyond the pleadings and
‘inquire into jurisdictional facts’ in order to determine whether jurisdiction exists.”
Lechliter v. United States, 70 Fed. Cl. 536, 543 (2006) (quoting Rocovich v. United States,
933 F.2d 991, 993 (Fed. Cir. 1991)). If the Court finds that it lacks subject matter
jurisdiction, it must dismiss the claim. RCFC 12(h)(3); Gluck v. United States, 84 Fed. Cl.
609, 614 (2008).
2. Plaintiffs’ Regulatory Takings Claim Sounds in Tort and Not in Takings.
The Government contends that the Taylors’ regulatory takings claim premised on
the Government’s indication that it would not issue a “No Hazard” determination is more
appropriately characterized as a claim for tortious interference with contract. This
difference is not merely semantic: this Court has jurisdiction over claims founded upon the
Fifth Amendment, but it lacks jurisdiction over those claims sounding in tort. See 28
U.S.C. § 1491(a)(1).
The Taylors’ characterization of their own claim is irrelevant. Rather, the Court
must “look to the true nature of the action” to determine whether jurisdiction exists. 120
Delaware Ave. LLC v. United States, 95 Fed. Cl. 627, 630 (2010) (citations omitted). “At
this juncture, the court is not deciding whether a taking occurred, but rather is deciding
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whether plaintiffs have sufficiently alleged a taking rather than a tort claim such that this
court has jurisdiction to proceed to the merits.” Warren Trust v. United States, 107 Fed.
Cl. 533, 558 (2012).
The Fifth Amendment to the U.S. Constitution provides that “private property [shall
not] be taken for public use, without just compensation.” U.S. Const. amend. V. A takings
claim is evaluated under a two-part analysis. “First, the court determines whether the
claimant has identified a cognizable Fifth Amendment property interest that is asserted to
be the subject of the taking. Second, if the court concludes that a cognizable property
interest exists, it determines whether that property interest was ‘taken.’” Acceptance Ins.
Cos., Inc. v. United States, 583 F.3d 849, 854 (Fed. Cir. 2009) (citations omitted).
Accordingly, to establish jurisdiction in this Court, the Taylors must only plead sufficient
facts that, when accepted as true, show that they had a property interest in their contract
with Wind Energy, and that the Government took that interest when it indicated that a “No
Hazard” determination would not be issued.
The Constitution “neither creates nor defines the scope of property interests
compensable under the Fifth Amendment.” Maritrans, Inc. v. United States, 342 F.3d
1344, 1352 (Fed. Cir. 2003) (citing Bd. of Regents of State Colls. v. Roth, 408 U.S. 564,
577 (1972)). Instead, courts look to ‘“existing rules and understandings’ and ‘background
principles’ derived from an independent source, such as state, federal, or common law” to
define the requisite property interest to establish a taking. Id. (citing Lucas v. South
Carolina Coastal Council, 505 U.S. 1003, 1030 (1992)). This broad standard for
identifying Fifth Amendment property interests has been held to include intangible rights
like contracts. See Lynch v. United States, 292 U.S. 571, 579 (1954); Cienega Gardens v.
United States, 331 F.3d 1319, 1329 (Fed. Cir. 2003) (recognizing “ample precedent for
acknowledging a property interest in contract rights under the Fifth Amendment”).
As to the second factor, the Government “does not ‘take’ contract rights pertaining
to a contract between two private parties simply by engaging in lawful action that affects
the value of one of the parties’ contract rights.” Id. To establish that the Government took
private contract rights, a plaintiff must demonstrate that the Government “put itself in the
shoes” of one of the parties and assumed “all the rights and advantages” of that party. Id.
at 1365-66 (quoting Brooks-Scanlon Corp. v. United States, 265 U.S. 106, 120 (1924));
see also Omnia Commercial Co., Inc. v. United States, 261 U.S. 502, 510-11 (1923). It is
insufficient for the plaintiff to merely allege that the Government frustrated the rights of a
party or took the subject matter of the contract that made performance impossible. See
Omnia, 261 U.S. at 511. But that is precisely what the Taylors do in their complaint.
The Taylors premise their regulatory takings claim on the allegation that the
Government held “private discussions with [Wind Energy]” during which Government
agents “communicat[ed] [their] desire to prevent wind turbines in the designated air space”
and “suggest[ed] that ‘No Hazard’ [determinations] would not be issued.” Compl. ¶¶ 19-
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20; 32-38. These conversations ultimately had the effect of “interfer[ing] with the contract
between Plaintiffs and Wind Energy” and caused Wind Energy to withdraw from the
agreement with the Taylors. Compl. ¶ 34-35. Lastly, the complaint mentions that the
Government took this action with “no justification.” Compl. ¶ 36.
While the Taylors’ contract with Wind Energy is a cognizable Fifth Amendment
property interest, these facts do not show that the Government replaced itself with one of
the original contracting parties so that it took the contract. Rather, the Taylors’ allegations
are consistent with a claim that the Government improperly interfered with their contract
and that Wind Energy canceled the agreement because of this improper interference.
Comparing the similarities between the Taylors’ allegations with the factors for a tortious
interference with contract cause of action confirms that Plaintiffs’ claim, as alleged in their
complaint, sounds in tort and not in takings.
Curiously, Plaintiffs’ complaint lays out the elements of a tortious interference with
contract claim under New Mexico law even though they are alleging a taking. Those
factors, as set out in the complaint, are: “(1) defendant has knowledge of the [contract]
between the parties; (2) performance of the contract was refused; the plaintiff was unable
to fulfill the contract’s obligations[;] (3) the defendant played an active and substantial part
in causing the plaintiff to lose the benefits of the contract[;] (4) damages flowed from the
breach of contract; and (5) the defendant induced the breach without justification or
privilege to do so.” Compl. ¶ 32 (citing Clockman v. Marburger, No. 35,690, 2017 WL
1018819, at *2 (N.M. Ct. App. Feb 15, 2017)). The Taylors’ allegations are much more
consistent with a tort than a takings claim. And since the Taylors’ claim for a regulatory
taking of its contract with Wind Energy is truly a cause of action for tortious interference
with their contract, this Court is without jurisdiction to hear this claim.
3. Plaintiff’s Claim is Not Ripe for Review.
Entertaining Plaintiffs’ arguments that their regulatory takings claim does not sound
in tort and that they have properly alleged a takings cause of action, the Taylors’ claim still
fails because it is not yet ripe. Courts are “without jurisdiction to consider takings claims
that are not ripe.” Martin v. United States, 894 F.3d 1356, 1360-61 (Fed. Cir. 2018).
Unripe claims must be dismissed accordingly. See, e.g., Williamson Cnty. Reg’l Planning
Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172, 186-87 (1985).
As-applied regulatory takings claims ripen “once it becomes clear that the agency
lacks the discretion to permit any development, or the permissible uses of the property are
known to a reasonable degree of certainty.” See Palazzolo v. Rhode Island, 533 U.S. 606,
620 (2001). Such regulatory action is typically not ready for judicial review until the
agency has issued a final decision. Id. at 618 (“[A] takings claim challenging the
application of land-use regulations is not ripe until “the government entity charged with
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implementing the regulations has reached a final decision regarding the application of the
regulations to the property at issue.”).
Neither Wind Energy nor the Taylors filed a notice with the FAA regarding their
proposed Green Wing Project or turbine construction to trigger the FAA’s review. See 49
U.S.C. § 44718; 14 C.F.R. §§ 77.5, 77.9, 77.13. The FAA, therefore, has not issued a
preliminary indication of whether an obstacle may result from turbine construction,
conducted an aeronautical study or issued a final hazard determination. Rather, the Taylors
base their claim on the Government’s informal indication that the FAA would not issue a
“No Hazard” determination. This is not a final agency decision regarding the application
of the regulations to the Taylors’ property that is ripe for judicial review.
The Taylors contend that they are excused from taking this final step since the
FAA’s position is already clear and further review would prove futile, but this exception is
limited. Morris v. United States, 392 F.3d 1372, 1376 (Fed. Cir. 2004) (outlining that this
exception serves as a means for avoiding multiple subsequent applications after it is clear
from one final judgment that no project will be approved). Indeed, the futility exception is
inapplicable, and a final agency decision is necessary, even when it is highly likely that the
Government’s position would be adverse to the party’s interests. See Barlow & Haun, Inc.
v. United States, 805 F.3d 1049, 1059 (Fed. Cir. 2015) (determining that permit application
was not futile and still required despite there not being a high likelihood for approval);
Williamson, 473 U.S. at 186 (disapproval of plaintiff’s preliminary plat proposal was not
a final decision that no variances would be granted). Accordingly, the FAA’s purported
informal indication of its position is not a sufficiently clear decision to trigger this
exception. This Court cannot review the Taylors’ claim because it is not yet ripe.
B. Plaintiffs Fail to State a Claim for Either a Regulatory Taking or a Physical
Taking.
1. Standard of Review
When considering a motion to dismiss a complaint for failure to state a claim upon
which relief may be granted under Rule 12(b)(6), the Court must accept as true all factual
allegations submitted by the plaintiff. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007). While factual allegations are entitled to the assumption of truth, courts are not
“bound to accept as true a legal conclusion couched as a factual allegation.” Id.
Accordingly, for the plaintiff to survive dismissal, the Court must conclude that “the
plaintiff pleads factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (citing Twombly, 550 U.S. at 556). The plaintiff’s factual allegations must be
substantial enough to raise the right to relief above the speculative level, accepting all
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factual allegations in the complaint as true and indulging all reasonable inferences in favor
of the non-movant. Twombly, 550 U.S. at 545; Chapman Law Firm Co. v. Greenleaf
Constr. Co., 490 F.3d 934, 938 (Fed. Cir. 2008).
2. Regulatory Taking
a. Failure to Issue a “No Hazard” Determination Cannot Form the
Basis for a Regulatory Taking as a Matter of Law.
“[W]hile property may be regulated to a certain extent, if regulation goes too far it
will be recognized as a taking.” Penn. Coal Co. v. Mahon, 260 U.S. 393, 415 (1922). In
analyzing whether Government regulation amounts to a taking, courts conduct a fact-based
inquiry, which considers: (1) the character of the governmental action; (2) the economic
impact of the action on the claimant; and (3) the effects of the governmental action on the
reasonable investment-backed expectations of the claimants. See Penn Cent. Transp. Co.
v. City of N.Y., 438 U.S. 104, 124 (1978); see also Lingle v. Chevron U.S.A., Inc., 544
U.S. 528, 538–39 (2005).
While the FAA’s hazard determination may present “a considerable stumbling
block” for the Taylors’ ability to find financing for their project, the fact remains that the
FAA’s opinions are strictly advisory in nature. Flowers Mill, 23 Ct. Cl. at 187, 189. These
determinations are “not legally enforceable”; The FAA has no authority to prohibit
construction on a project that it deems to be hazard-creating. Id. at 186, 188-89; see also
Breneman v. United States, 57 Fed. Cl. 571, 585 (2003). The FAA does not take property
when it issues a hazard determination. Accordingly, the Government did not take the
Taylors’ property rights when it indicated to Wind Energy that a “No Hazard”
determination was not forthcoming. Withholding a “No Hazard” determination cannot
constitute a taking as a matter of law, and, as a result, the Taylors fail to state a regulatory
takings claim premised on this theory.
b. Plaintiffs Have Not Alleged Essential Elements of a Regulatory
Takings Claim.
Even assuming the Taylors can base their regulatory takings claim on the
Government’s hazard determination, they have failed to allege facts sufficient to support
their claim. As stated above, the Taylors’ contract with Wind Energy is a cognizable Fifth
Amendment property interest, but the Taylors have not sufficiently alleged that this right
was taken.
Plaintiffs assert that the Government took the contract between themselves and
Wind Energy after Department of Defense “agents and/or employees” suggested to Wind
Energy that the FAA would not issue a “No Hazard” determination on the proposed wind
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turbine construction project on the Taylors’ property. Compl. ¶ 19. Thereafter, Wind
Energy canceled the agreement. Compl. ¶ 20.
These facts do not show that the Government “put itself in the shoes” of one of the
original contracting parties and assumed “all the rights and advantages” of that party.
Brooks-Scanlon Corp., 265 U.S. at 120. Again, at most, these allegations state a claim that
the Government interfered with the Taylors’ contract with Wind Energy which, as a matter
of law, is insufficient to demonstrate a taking of the Taylors’ contractual rights. Palmyra
Pacific Seafoods, LLC v. United States, 651 F.3d 1361, 1365 (Fed. Cir. 2009), cert. denied,
599 U.S. 1106 (2010); Huntleigh USA Corp. v. United States, 525 F.3d 1370, 1381 (Fed.
Cir. 2008) (holding that Government action having the effect of frustrating plaintiff’s
“business expectations . . . does not form the basis of a cognizable takings claim.”).
Accordingly, the Taylors have failed to state a regulatory takings claim.
3. Plaintiffs Have Not Stated a Claim for a Physical Taking.
Typically, the Government’s physical occupation of private property is a per se
taking. See Hendler v. United States, 952 F.2d 1364, 1375 (Fed. Cir. 1991). However,
physical taking by aircraft overflights, referred to as a taking by avigation easement, are
subject to a heightened pleading standard. To state a claim, a plaintiff must show: (1)
planes flew directly over the plaintiff’s land; (2) flights were frequent and at a low altitude;
and (3) flights directly and immediately interfered with the plaintiff's enjoyment and use
of the land. See United States v. Causby, 328 U.S. 256, 266 (1946); Brown v. United
States, 73 F.3d 1100, 1102 (Fed. Cir. 1996); Andrews v. United States, 108 Fed. Cl. 150
(2012).
The Taylors do not allege that the flights were frequent enough to state a claim for
an avigation easement. Plaintiffs assert that “military aircraft[s] regularly fly training
routes” across their property. Compl. ¶ 22. The legal standard requires overflights to be
frequent; “regularly” is simply a restatement of “frequently.” See “Frequently”, MIRIAM-
WEBSTER, https://www.merriam-webster.com/thesaurus/frequently. Though detailed
factual allegations are not necessary, the Taylors have simply parroted back the legal
standard and offered the legal conclusion that the overflights were frequent. This will not
do. Because Plaintiffs’ complaint offers “no more than conclusions,” their assertions “are
not entitled to the assumption of truth.” Iqbal, 556 U.S. at 679. The Taylors have,
therefore, failed to state a claim for a physical taking.
4. Plaintiffs Are Not Entitled to Declaratory Relief.
The Taylors ask the Court to declare that (1) they “have the exclusive use and rights
to the air space over their property up to 500 feet [above the ground]” and (2) [the
Government’s] physical occupation of this airspace constitutes a taking of property
requiring just compensation.” Compl. ¶ A-B.
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The Tucker Act, 28 U.S.C. § 1491(a)(1), provides this Court with jurisdiction to
hear claims predicated on the Constitution, a federal statute or regulation, or a contract with
the Government. However, this Court does not have the general authority to issue
declaratory judgments and may only award such equitable relief under certain
circumstances. See Halim v. United States, 106 Fed. Cl. 677, 684-85 (2012). The Taylors
fail to assert that their claims fall into any of the limited exceptions where such equitable
relief is appropriate. As such, the Court lacks jurisdiction to entertain these requests.
Conclusion
Based upon the foregoing, the Court GRANTS the Government’s Motion to
Dismiss as to all Plaintiffs’ claims. The Clerk shall enter judgment in favor of the
Government. No costs. Plaintiffs Buddy and Donna Taylor’s complaint is dismissed
without prejudice.
IT IS SO ORDERED.
s/ Thomas C. Wheeler
THOMAS C. WHEELER
Judge
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