Free Reply to Response to Supplemental Brief - District Court of Federal Claims - federal

Case 1:04-cv-01544-LMB

Document 74

Filed 05/11/2007

Page 1 of 14

IN THE UNITED STATES COURT OF FEDERAL CLAIMS ________________________________ ) THE ELLAMAE PHILLIPS COMPANY, ) a Colorado Registered Limited ) Liability Partnership, ) ) Plaintiff, ) No. 04-1544 L v. ) ) Judge Lawrence M. Baskir UNITED STATES OF AMERICA, ) ) Defendant. ) _______________________________ ) DEFENDANT'S REPLY TO PLAINTIFF'S RESPONSE MEMORANDUM REGARDING THE COURT'S MARCH 15, 2007 ORDER MATTHEW J. McKEOWN Acting Assistant Attorney General Environment & Natural Resources Division United States Department of Justice WILLIAM J. SHAPIRO United States Department of Justice Environment and Natural Resources Div. 501 I Street, Suite 9-700 Sacramento, CA 95814 (916) 930-2207 (phone) (916) 930-2210 (fax) Attorney for Defendant Of Counsel: Evelyn Kitay, Surface Transportation Board Washington, D.C. Dated: May 11, 2007

Case 1:04-cv-01544-LMB

Document 74

Filed 05/11/2007

Page 2 of 14

TABLE OF CONTENTS MEMORANDUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 I. THE FEDERAL CIRCUIT'S HASH DECISION DID NOT DECIDE ALL LIABILITY ISSUES FOR ALL FUTURE CASES AGAINST THE UNITED STATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 PLAINTIFF'S CONCESSION THAT THE 1875 ACT EASEMENT WAS NOT ABANDONED SUPPORTS DEFENDANT'S POSITION IN THE PENDING SUMMARY JUDGMENT BRIEFING . . . . . . . . . . . . . . . . . . . . 6 THE COURT SHOULD REJECT PLAINTIFF'S ARGUMENT ABOUT "ADVERSE ABANDONMENT" . . . . . . . 8 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

II.

III.

IV.

ii

Case 1:04-cv-01544-LMB

Document 74

Filed 05/11/2007

Page 3 of 14

TABLE OF AUTHORITIES CASES Allustiarte v. United States, 256 F.3d 1349 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Barclay v. United States, 443 F.3d 1368 (Fed. Cir. 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Hash v. United States, 403 F.3d 1308 (Fed. Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 4 Joshua v. United States, 17 F.3d 378 (Fed. Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Phillips Co. v. S. Pac. Rail Corp., 902 F.Supp. 1310 (D. Colo. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Preseault v. United States, 494 U.S. 1 (1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 6, 7

STATUTES 16 U.S.C. § 1247 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 16 U.S.C. § 1247(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 6, 9 16 U.S.C. § 1248(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 43 U.S.C. § 912 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 49 U.S.C. § 10903 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

REGULATIONS 49 C.F.R. § 1152.50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 10

iii

Case 1:04-cv-01544-LMB

Document 74

Filed 05/11/2007

Page 4 of 14

MEMORANDUM Defendant submits this reply memorandum pursuant to the Court's Order, dated March 15, 2007 ("Court Order"). The Court Order directed the parties to submit "supplemental briefs on the questions raised by the Federal Circuit's mandate to the Idaho District Court in Hash v. United States, 403 F.3d 1308, 1318 (Fed. Cir. 2005)." Defendant submitted its opening memorandum on April 6, 2007 ("Defendant's Opening Memorandum"), and Plaintiff submitted its responsive memorandum on May 2, 2007 ("Plaintiff's Response"). The Federal Circuit's Hash decision only resolved a single issue ­ whether or not the United States held the reversionary interest in the fee underlying the railroad's right of way. Plaintiff's Response ignores many of Defendant's arguments, and ultimately misapprehends the meaning of the Hash decision by focusing exclusively on a single phrase in a multi-page legal opinion. Defendant's arguments, therefore, are unchallenged and the Court should conclude that Hash is not dispositive on the issues raised in this case. Further, Plaintiff's concession that "the question of abandonment is

1

Case 1:04-cv-01544-LMB

Document 74

Filed 05/11/2007

Page 5 of 14

not critical to" Plaintiff's position, Pl.'s Resp. at 4,1/ means that the Court should, at a minimum, rule in Defendant's favor on the abandonment issue and find that the 1875 Act easement has not been abandoned. Consequently, in analyzing the government's potential liability, the Court should assume that the 1875 Act easement remains intact. Plaintiff's concession limits this case to the sole question of whether or not an interim trail is within the scope of an 1875 Act grant. Application of National Trails System Act, 16 U.S.C. § 1247(d) ("Trails Act"), then, can only result in the possible imposition of an incremental burden created when a trail is imposed over an existing railroad right-of-way. Even that limited harm has not been shown here, however, since Plaintiff failed to show that a public trail is beyond the scope of the 1875 Act easement. The Court, therefore, should grant Defendant's Motion for Summary Judgment and deny Plaintiff's Cross Motion for Partial Summary Judgment.

Accord Pl.'s Resp. at 7 ("Thus, by Congressional enactment, rails-to-trails conversions under § 1247(d) conversions [sic] are not abandonments."); id. ("abandonment is not our concern"); id. ("abandonment is not necessary to our task"); id. at 8 ("Our concern lies not in the abandonment clause of Judge Newman's Final Paragraph, but rather in the following clause."). 2

1/

Case 1:04-cv-01544-LMB

Document 74

Filed 05/11/2007

Page 6 of 14

I.

THE FEDERAL CIRCUIT'S HASH DECISION DID NOT DECIDE ALL LIABILITY ISSUES FOR ALL FUTURE CASES AGAINST THE UNITED STATES In its Opening Memorandum, Defendant offered a variety of reasons

why the Court should conclude that the Federal Circuit's Hash decision was limited to a single ownership issue and, therefore, not relevant to the issues now pending before this Court. These reasons included the following: 1. The Hash District Court only resolved the ownership issue before the case was appealed to the Federal Circuit. See Def.'s Opening Mem. at 4-6. The United States explicitly reserved all other liability-related issues for future proceedings at the District Court proceeding and at the Federal Circuit proceeding. See id. at 5-6 (reserving these issues at the District Court); id. at 7 (reserving these issues at the Federal Circuit). Neither party identified the issues pending in the instant case in its appellate briefs preceding the Federal Circuit's Hash decision. See id. at 6-7. The Federal Circuit did not identify the liability issues that are pending in the instant case when it stated the issue on appeal in Hash. See id. at 6-7. The four-and-a-half pages of analysis preceding the paragraph in question in the Hash decision did not identify or discuss the issues pending in the instant case. See id. at 12-13.2/

2.

3.

4.

5.

2/

Although Plaintiff cites four pages of text from the Federal Circuit's Hash
(continued...)

3

Case 1:04-cv-01544-LMB

Document 74

Filed 05/11/2007

Page 7 of 14

6.

Neither the context nor the text of the concluding paragraph suggests that the Federal Circuit intended to rule on anything other than the single ownership issue that the District Court had considered. See id. at 14-16. Even if the Federal Circuit intended to resolve questions about the abandonment or the scope of 1875 Act easements in Hash, there are no grounds to apply those conclusions outside the facts of Hash. See id. at 19-22.

7.

Plaintiff's Response does not challenge any of these arguments. Rather than responding to Defendant's arguments, Plaintiff urges the Court to avoid a contextual reading of the paragraph in question and instead focus only on the second phrase of the third sentence: "On the railway's abandonment of its right-of-way these owners were disencumbered of the railway easement, and upon conversion of this land to a public trail, these owners' property interests were taken for public use, in accordance with the principles set forth in the Preseault cases." Pl.'s Resp. at 8 (citing Hash, 403 F.3d at 1318 (emphasis added)). According to Plaintiff, then, the Federal Circuit intended the highlighted language to mean that the United States would be liable in every future case involving the interaction of the 1875 Act and 16 U.S.C. § 1247 whenever a trail is

2/

(...continued)

decision in its Response, see Pl.'s Resp. at 10-14, Plaintiff offers no discussion of its relevance to the Court's questions. 4

Case 1:04-cv-01544-LMB

Document 74

Filed 05/11/2007

Page 8 of 14

constructed. See Pl.'s Resp. at 9. In making its argument, Plaintiff concedes that it does not intend to argue that the 1875 Act easements were abandoned. See id. at 4-8. Plaintiff's interpretation of the Hash decision requires an unreasonably isolated reading of a single phrase in a conclusory paragraph, and also requires the Court to ignore the Supreme Court's clear direction that "under any view of takings law, only some rail-to-trail conversions will amount to takings." Preseault v. United States, 494 U.S. 1, 16 (1990). Properly read in context, the sentence is intended to frame a contingency, not offer a new conclusion about the ultimate liability of the United States without any supporting analysis. See also Def.'s Opening Mem. at 18-19. For the several reasons discussed in Defendant's Opening Memorandum, which Plaintiff has declined to challenge, the Court should conclude that the paragraph in question is a conclusory paragraph that only resolved the single ownership issue that the Hash landowners had appealed.3/

3/

Plaintiff's discussion of the principles of stare decisis and res judicata, Pl.'s Resp. at 14-17, assumes the paragraph in question was intended to resolve all liability issues. Plaintiff offers no justification for that position and, therefore, offers no support for its interpretation of the Federal Circuit's decision. 5

Case 1:04-cv-01544-LMB

Document 74

Filed 05/11/2007

Page 9 of 14

II.

PLAINTIFF'S CONCESSION THAT THE 1875 ACT EASEMENT WAS NOT ABANDONED SUPPORTS DEFENDANT'S POSITION IN THE PENDING SUMMARY JUDGMENT BRIEFING As noted above, Plaintiff uses its Response to concede that it no

longer intends to argue that the 1875 Act easement was abandoned. Plaintiff's concession has important legal consequences in the pending briefing because it limits Defendant's potential liability to the alleged incremental burden imposed by trial use over the existing 1875 Act easement. The Federal Circuit is clear that the "primary object of the NITU [is] to preclude abandonment and thus to enable a trail use agreement." Barclay v. United States, 443 F.3d 1368, 1377 (Fed. Cir. 2006); see also 16 U.S.C. § 1247(d) (providing that the uses contemplated by the Act "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"). Consequently, "[t]he bar on abandonment effected by the NITU's trail use condition triggered accrual of the cause of action here. . . ." Barclay, 443 F.3d at 1377; see also Preseault, 494 U.S. at 8 (stating that the possible preemption of contrary state law on abandonment contained in the Trails Act "gives rise to a takings question . . ."). Plaintiff now urges the Court to focus only on the question of whether

6

Case 1:04-cv-01544-LMB

Document 74

Filed 05/11/2007

Page 10 of 14

interim trail use is within the scope of the 1875 Act easement. See, e.g., Pl.'s Resp. at 8-9. As noted in Defendant's summary judgment briefing, interim trail use is within the scope of an 1875 Act grant. Hence, issuance of the NITU did not interfere with Plaintiff's property rights and, therefore, did not result in a violation of the Fifth Amendment. See Def.'s Summ. J. Mem. at 27-30. Even if the Court disagreed with Defendant's position and concluded that interim trail use is not within the scope of the 1875 Act easement, the Court should consider the legal effect of such a conclusion. The Trails Act authorizes two distinct present uses of the 1875 Act easements: (1) railbanking, and (2) interim trail use. Preseault, 494 U.S. at 17-18; see also Def.'s Summ. J. Mem. at 25-30. Railbanking, the preservation of a railroad corridor for future rail use, is clearly a railroad purpose, and is, therefore, within the scope of the 1875 Act grant under even Plaintiff's narrow interpretation of the scope of the grant. See Def.'s Summ. J. Mem. at 26-27; Def.'s Reply Br. at 4-8. Since Plaintiff now concedes that it does not intend to argue abandonment, Plaintiff can only recover for the incremental burden imposed by the interim trail over and above the existing railroad easement, assuming that such an incremental burden exists.

7

Case 1:04-cv-01544-LMB

Document 74

Filed 05/11/2007

Page 11 of 14

III.

THE COURT SHOULD REJECT PLAINTIFF'S ARGUMENT ABOUT "ADVERSE ABANDONMENT" Plaintiff's new argument that it would have recovered the

unencumbered fee underlying the right of way based on "the principles of adverse abandonment," Pl.'s Resp. at 18, is improperly raised after the close of summary judgment briefing and after oral argument. Because Plaintiff's argument is improperly raised in a supplemental briefing, Defendant respectfully submits that the Court reject the argument. In addition, Plaintiff's suggestion that some sort of adverse abandonment "would have come into play," id., finds no support in this record. Accordingly, even if Plaintiff could raise a new argument at this late date, Plaintiff has failed to offer any record support for the proposition. Plaintiff's new argument is also without legal merit. For example, the Tenth Circuit's decision in Phillips Co. v. Denver & Rio Grande Western R. Co., 97 F.3d 1375 (10th Cir. 1996) ("Phillips I"), does not mention the concept of "adverse abandonment," as Plaintiff suggests at page 18 of its Response. In fact, the Tenth Circuit affirmed the trial court's decision that the STB was correct in concluding that the railroad "cannot be found to have `abandoned' the line under 43 U.S.C. § 912 and 16 U.S.C. § 1248(c)" because the STB "has never exercised its authority at 49 U.S.C. § 10903 to

8

Case 1:04-cv-01544-LMB

Document 74

Filed 05/11/2007

Page 12 of 14

permit the abandonment." Phillips Co. v. S. Pac. Rail Corp., 902 F.Supp. 1310, 1315 (D. Colo. 1995). The STB also noted that "[e]ven if the Commission were to approve the abandonment of the Aspen Branch, the property could not revert to [Plaintiff] if the right-of-way were to be converted for use as a trail and banked for future rail use pursuant to section 8(d) [of] the National Trails System Act, 16 U.S.C. § 1247(d)." Id. at 1317. Rather than supporting Plaintiff's new argument about "adverse abandonment," therefore, Phillips I actually shows why Plaintiff's argument should be rejected. It also appears that Plaintiff's new argument is an attempt to revive an argument that the Tenth Circuit rejected in Plaintiff's earlier lawsuit. As the Tenth Circuit noted, Plaintiff attempted to improperly raise a new argument on appeal related to 49 C.F.R. § 1152.50, based on Plaintiff's allegation that the "railroad lines [had] been out of service for more than two years." 97 F.3d at 1378. The Tenth Circuit rejected Plaintiff's argument on procedural grounds (as should this Court), and also because "that exemption [set forth in 49 C.F.R. § 1152.50] is expressly available

9

Case 1:04-cv-01544-LMB

Document 74

Filed 05/11/2007

Page 13 of 14

only to railroads and is not self-executing." Id.4/ Since this Court lacks jurisdiction to overturn final decisions of other courts, Plaintiff may not collaterally attack the Tenth Circuit's decision in this forum. See, e.g., Joshua v. United States, 17 F.3d 378, 380 (Fed. Cir. 1994); Allustiarte v. United States, 256 F.3d 1349, 1352 (Fed. Cir. 201). IV. CONCLUSION For the reasons discussed above, and in Defendant's Opening Memorandum, the Court should conclude that the Federal Circuit's decision in Hash did not address or resolve the issues raised in parties' pending motions for summary judgment. The Court, therefore, should grant Defendant's Motion for Summary Judgment and deny Plaintiff's City of Peoria & the Village of Peoria Heights, IL ­ Adverse Discontinuance ­ Pioneer Industrial Railway Company, Docket No. AB878-0 (Aug. 10, 2005), which Plaintiff cites at pages 18-19 of its Response, does not support Plaintiff's position. In City of Peoria, the petitioner sought STB "authorization for adverse discontinuance," not an "adverse abandonment." Pl.'s Appendix 2 at 5 (emphasis added). The petitioner's argument relied on a line of STB decisions where the STB had granted adverse discontinuance authority "where the owner of a rail line proposed to replace an operator after the operator's contractual or property right to operate over the line expired or was lawfully terminated, but where the operator refused to voluntarily give up its operating authority." Id. at 4. The facts and issues involved in the City of Peoria proceeding have no bearing on the instant matter, and Plaintiff's suggestion that the decision should be read as a "confirmation of the continuing vitality of the principles of adverse abandonment jurisprudence," Pl.'s Resp. at 19, or is otherwise instructive in the instant lawsuit, is unsupportable. 10
4/

Case 1:04-cv-01544-LMB

Document 74

Filed 05/11/2007

Page 14 of 14

Cross-Motion for Partial Summary Judgment. Dated: May 11, 2007 Respectfully submitted, MATTHEW J. McKEOWN Acting Assistant Attorney General Environment & Natural Resources Division United States Department of Justice /s/ William J. Shapiro___________ WILLIAM J. SHAPIRO United States Department of Justice Environment and Natural Resources Div. 501 I Street, Suite 9-700 Sacramento, CA 95814 (916) 930-2207 (phone) (916) 930-2210 (fax) Attorney for Defendant

11