Aviation & General Insurance v. United States

In the United States Court of Federal Claims

No. 14-703C

(Filed: May 26, 2015)

************************************* *

*

AUREUS ASSET MANAGERS, LTD., et. *

al., *

* Fifth Amendment Taking Claim;

Plaintiffs, * 1985 Terrorist Hijacking Sponsored

* by Government of Libya; Effect of

v. * U.S. Claims Settlement Agreement

* With Libya; Rule 12(b)(6) Motion to

THE UNITED STATES, * Dismiss.

*

Defendant. *

*

************************************* *

Steven R. Perles, Edward B. MacAllister, and Joshua K. Perles, Perles Law Firm, PC,

Washington, D.C., for Plaintiffs.

L. Misha Preheim, with whom were Joyce R. Branda, Acting Assistant Attorney General,

Robert E. Kirschman, Jr., Director, and Reginald T. Blades, Jr., Assistant Director,

Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington,

D.C., for Defendant.

OPINION AND ORDER ON

DEFENDANT’S MOTION TO DISMISS

WHEELER, Judge.

Plaintiffs Aureus Asset Managers, Ltd. (“Aureus”) and Riverstone Insurance (UK),

Ltd. (“Riverstone”) are corporations organized under the laws of the United Kingdom.

Aureus is an asset management entity and Riverstone is an insurance provider. Aureus is

the successor in interest to Minster Insurance Group, Ltd. (“Minster”), which Aureus

acquired in a December 22, 2010 voluntary liquidation. Minster and Riverstone were

among the entities who provided liability insurance coverage for the aircraft hull of

EgyptAir Flight 648 on November 23, 1985. This flight fell victim to a terrorist attack

later determined to have been sponsored by the government of Libya. When the United

States lifted Libya’s sovereign immunity in 1996 for its state sponsorship of terrorism,

Plaintiffs brought civil claims in the United States District Court for the District of

Columbia for indemnification of the losses sustained in insuring the destroyed aircraft. The

United States later restored Libya’s sovereign immunity in 2008, thereby terminating all

pending claims against Libya, and directing the claims of U.S. nationals to be heard by the

Foreign Claims Settlement Commission (“FCSC”), an independent agency within the

Department of Justice. The FCSC’s jurisdiction excluded Plaintiffs because they are not

U.S. nationals. Plaintiffs now bring this action for the Government’s alleged taking of their

legal claims without just compensation in violation of the Fifth Amendment. The case is

before the Court on Defendant’s motion to dismiss for failure to state a claim upon which

relief can be granted

Factual Background

EgyptAir Flight 648 was a Boeing 737-200 passenger airplane scheduled to travel

on November 23, 1985 from Athens, Greece to Cairo, Egypt with 89 passengers (excluding

hijackers) and six crew members. See Compl. ¶ 11. Abu Nidal Organization (“ANO”),

also referred to as Black September, was a known terrorist organization in Libya. Id. ¶ 12.

Ten days earlier, an ANO terrorist named Omar Rezaq and two other ANO terrorists

traveled from Beirut to Athens with illegal passports and boarded EgyptAir Flight 648 on

the day of the flight. Id. ¶ 17. Twenty-two minutes into the flight, the ANO terrorists

hijacked the plane, and caused a mid-flight shootout with an Egyptian Sky Marshal. Id. ¶

18. The shootout pierced the fuselage and caused severe depressurization, forcing the plane

to land in Malta. Id. The terrorists demanded refueling, but the Maltese government

refused. Id. ¶ 19. The terrorists proceeded to assassinate passengers systematically,

beginning with two Israeli women, followed by three Americans. Id. ¶ 20. Then, 24 hours

after the hijacking began, Egyptian commandos stormed the plane in an effort to rescue the

remaining passengers. Id. ¶ 21. Using explosives, the commandos breached the plane

doors. Id. In response to the raid, the terrorists lobbed hand grenades into the passenger

cabin, killing dozens. Id. ¶ 22. In addition to the human tragedy and loss of life, the aircraft

hull was damaged beyond repair. Id. ¶ 23.

Subsequent to the attack, the United States Department of Defense determined that

ANO had conducted the hijacking with the sponsorship of the Libyan government, which

provided material support for ANO and its terrorist members. Id. ¶ 13. Libya and Syria

provided safe haven, training, logistic assistance, and financial aid to ANO. Id. ¶ 15. Libya

provided its support in the form of weapons, money, airline tickets, unobstructed travel and

haven in Libya, terrorism training, protected transport of weapons in Libya’s “diplomatic

pouch” in freight transit, official documents and Tunisian passports, as well as operational

assistance in preparing for the hijacking of EgyptAir Flight 648. Id. ¶ 16. Defendant does

not contest that Libya provided material support for the hijacking of Flight 648. The

destroyed aircraft was insured for $14 million. Id. ¶ 24.

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This case turns heavily on the existence of Libya’s sovereign immunity from suit.

In 1996, amendments to the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. §

1605A, lifted Libya’s sovereign immunity for its state sponsorship of terrorism. Id. ¶ 25.

On April 26, 2006, Plaintiffs filed suit in the U.S. District Court for the District of Columbia

against Libya and Syria to recover payments made for the insurance of EgyptAir Flight

648. Certain Underwriters at Lloyd’s London v. Socialist People’s Libyan Arab

Jamahiriya, No. Civ. 06-731(GK) (D.D.C. filed April 21, 2006). On August 4, 2008,

Congress enacted the Libyan Claims Resolution Act, Pub. L. No. 110-301, 122 Stat. 2999

(2008) (“LCRA”) which stripped the U.S. District Court of its subject matter jurisdiction

over Plaintiffs’ claims against Libya. Compl. ¶ 27. On August 14, 2008, the United States

entered into a Claims Settlement Agreement with Libya, terminating all pending suits

against Libya for death or property loss caused by an act of “extra judicial killing, aircraft

sabotage . . . or the provision of material support or resources for such an act.” Id. ¶ 28;

Claims Settlement Agreement Between the United States of America and the Great

Socialist People’s Libyan Arab Jamahiriya, 2008 U.S.T. Lexis 72, entered into force Aug.

14, 2008. President George W. Bush issued Executive Order No. 13477 on October 31,

2008, terminating all current and pending terrorism-related claims against Libya pursuant

to the LCRA. The Order espoused the claims of all U.S. Nationals and established a

procedure to compensate those U.S. nationals. The Order did not provide for compensation

of foreign nationals. As a result, in 2010, the United States obtained a dismissal of

Plaintiffs’ suit against Libya for the hijacking of EgyptAir Flight 648, citing the public

purpose of “normalizing” relations with Libya. Compl. ¶ 32.

Under the terms of the LCRA and Executive Order No. 13477, the Department of

State referred the claims of U.S. nationals against Libya to the FCSC in December 2008

and January 2009. The FCSC imposed a “continuous nationality rule” in its jurisdiction,

requiring that all claimants be United States nationals from the time of the wrongful

international act until the espousal of the claim by the United States Government. Id. ¶ 35.

Accordingly, the Plaintiffs did not submit a claim for the EgyptAir losses. Id. ¶ 36. Only

New York Marine, the sole United States corporation involved in the action, filed a claim

with the FCSC to recover losses from the EgyptAir flight. Id. The FCSC rejected this

claim for lack of jurisdiction as well, finding that EgyptAir itself was the proper party to

bring the claim because EgyptAir owned the aircraft hull. Id. ¶ 37.

Plaintiffs filed the present action on August 4, 2014, alleging a taking without just

compensation in violation of the Fifth Amendment of the United States Constitution. Id. ¶

1. Plaintiffs allege damages of $1,208,964.24 in performance of their insurance obligations

resulting from the destruction of EgyptAir Flight 648. Id. ¶ 3. On November 13, 2014,

Defendant filed a motion to dismiss under Rule 12(b)(6) for Plaintiffs’ failure to state a

claim upon which relief can be granted. Defendant does not contest the facts surrounding

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the destruction of the aircraft or Libya’s sponsorship of the terrorist acts. However,

Defendant argues that Plaintiffs have not identified a cognizable property interest upon

which to base their takings claims, and that the United States did not “take” their property

if it is considered a property interest. In the alternative, Defendant argues that the Court

should dismiss this suit as a non-justiciable political question.

In opposition to Defendant’s motion, Plaintiffs filed a response on January 22, 2015,

arguing that they have a legally cognizable property interest in their judicial claims against

Libya. Plaintiffs further argue that the Government’s extinguishment of those claims

without providing an alternative means of recovery was a taking under the Fifth

Amendment. Plaintiffs also dispute that this case involves a non-justiciable question. The

motion has been fully briefed, and the Court heard oral argument on May 4, 2015. The

motion is ready for decision.

Discussion

A. Jurisdiction

The Tucker Act provides this Court with exclusive jurisdiction for “any claims

against the United States founded . . . upon the Constitution” in excess of $10,000. 28

U.S.C. § 1491(a)(1); 28 U.S.C. § 1346(a)(2). “This [provision] includes on its face all

takings claims against the United States.” Lion Raisins, Inc. v. United States, 416 F.3d

1356 (Fed. Cir. 2005); Acceptance Ins. Cos. Inc. v. United States, 503 F.3d 1328 (Fed. Cir.

2007) (“A Fifth Amendment takings claim falls within the Tucker Act’s grant of

jurisdiction because it is a ‘claim against the United States founded upon the

Constitution.’”). The Tucker Act itself does not create a substantive cause of action. In

order to come within the jurisdictional reach of the Tucker Act, a plaintiff must identify a

separate source of substantive law that creates the right to money damages. Fisher v.

United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005). In the parlance of Tucker Act cases,

that source of law must be “money-mandating.” See United States v. Helen Mitchell, 463

U.S. 206, 217 (1983). It is well-established that the Takings Clause of the Fifth

Amendment is a money-mandating source of law for purposes of Tucker Act jurisdiction.

See Jan's Helicopter Serv., Inc. v. F.A.A., 525 F.3d 1299, 1309 (Fed. Cir. 2008). As

Plaintiffs here allege the taking of their property without just compensation, the Court has

jurisdiction of their claim.

The Fifth Amendment applies with equal effect to foreign nationals whose property

is taken by the Government without just compensation. Russian Volunteer Fleet v. United

States, 282 U.S. 481 (1931); Alvarez-Mendez v. Stock, 746 F. Supp. 1006, 1015 (C.D. Cal.

1990) (“[N]on-resident aliens are entitled to the protection of the Fifth Amendment’s

prohibition on unlawful takings”).

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B. Standard of Review

In reviewing a Rule 12(b)(6) motion to dismiss, the Court “must accept all well-

pleaded factual allegations as true and draw all reasonable inferences” in favor of the non-

moving party. Boyle v. United States, 200 F.3d 1369, 1372 (Fed. Cir. 2000) (internal

citation omitted). To survive a Rule 12(b)(6) motion to dismiss, a plaintiff needs to provide

only “‘a short and plain statement of the claim,’” showing a plausible claim to relief. Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007) (quoting Conley v. Gibson, 355 U.S.

41, 47 (1957)). “A claim has facial plausibility when 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).

C. Stating a Taking Claim

In evaluating whether government action constitutes a Fifth Amendment taking,

courts generally conduct 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

Insurance Cos., Inc. v. United States, 583 F.3d 849, 854 (Fed. Cir. 2009). In order to

prevail on the Government’s motion to dismiss, Plaintiffs must only plead sufficient facts

that, when accepted as true, show that Plaintiffs had a cognizable property interest in their

claims against Libya, and that the Government took the claims by Executive Order and the

FCSC’s jurisdictional limitations. As explained below, the Court finds that Plaintiffs have

met their burden to survive the Government’s Rule 12(b)(6) motion to dismiss.

1. Cognizable Property Interest

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,

such as leaseholds, United States v. General Motors Corp., 323 U.S. 373, 378 (1945), liens,

Armstrong v. United States, 364 U.S. 40, 44 (1960), and contracts, Lynch v. United States,

292 U.S. 571, 579 (1934).

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In support of a finding that Plaintiffs’ causes of action against Libya constitute

property interests for the purpose of establishing a taking claim, Plaintiffs cite three

primary cases, two of which are controlling precedent from the Federal Circuit. First, in

Alliance of Descendants of Texas Land Grants v. United States, 37 F.3d 1478 (Fed. Cir.

1994), the plaintiffs sued the United States under the Fifth Amendment for extinguishing

their unresolved claims against the government of Mexico. The United States had

previously entered into a treaty with Mexico, removing jurisdiction of all United States

tribunals over the plaintiffs’ claims for compensation from Mexico for land grant disputes.

Though the plaintiffs ultimately lost the case based upon the statute of limitations, the

Federal Circuit first found that the plaintiffs had identified a property interest in their causes

of action. The Government is quick to dismiss this precedent “because it involved land,”

and a right to sue for compensation relating to land is “an incident of ownership of the land

itself.” Def.’s Reply at 8. Thus, the Government argues, that case was more analogous to

a suit for a taking of land than it is to the judicial claims at issue here.

The Court declines to ignore Alliance of Descendants as quickly as the Government.

The Federal Circuit undertook a short yet complete analysis of the underlying taking claim

at issue in that case, “examin[ing] what private property the United States allegedly took.”

Alliance of Descendants, 37 F.3d at 1481. The court found that plaintiffs had alleged a

taking of “their property interest in a legal cause of action.” Id. (emphasis added). Indeed,

the Federal Circuit pointed out that “[t]he claimants do not in this suit allege a taking of

the land in Texas itself. Rather, they allege that the United States took away their legal

right to sue for compensation for that land.” Id. Then, in unqualified language, the court

stated, “[b]ecause a legal cause of action is property within the meaning of the Fifth

Amendment . . . claimants have properly alleged possession of a compensable property

interest.” Id. (citing Cities Servs. Co. v. McGrath, 342 U.S. 330, 335-36 (1952) and Ware

v. Hylton, 3 U.S. 199, 245 (1796)). Nowhere does the Federal Circuit limit its reasoning

to the incidence of land ownership. Indeed, neither Cities Services nor Ware involve

takings of land. See Cities Servs. Co, 342 U.S. at 331 (involving gold debentures); Ware,

3 U.S. at 245 (involving rights of debtors injured by public treaty). Thus, Defendant’s

dismissal of Alliance of Descendants because it involves land is unavailing, and the Court

instead finds the case to be controlling.

The second major case upon which Plaintiffs rely is Abrahim-Youri v. United

States, 139 F.3d 1462 (Fed. Cir. 1997). In that case, former hostages in Iran sued the

Government under a taking theory for espousing and settling their claims against Iran for

damages suffered during their capture. Id. at 1463. The United States signed the Algiers

Accords and settled with Iran in return for the freeing of the hostages and setting up a

tribunal to hear claims. Id. at 1464. The plaintiffs in that case were awarded damages with

interest by the FCSC, but the money in the settlement fund was insufficient to cover all of

the interest. Id. As a result, the plaintiffs were forced to accept full compensation but only

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34.5 percent of their awarded interest. Id. They sued under a taking theory for the

uncompensated remainder.

Once again, the Federal Circuit stated, “[w]e agree with plaintiffs that their property

rights – their choses in action against Iran – were extinguished when the Government

espoused and settled their claims.” Id. at 1465. Ultimately, the Court found no

compensable taking for other reasons. However, for purposes of determining a cognizable

property interest, the Federal Circuit maintained its earlier position from Alliance of

Descendants that causes of action against a foreign sovereign are property interests under

the Fifth Amendment. Yet the Government dismisses this case, asserting that the Federal

Circuit did not “specifically address whether the referenced ‘choses in action’ constituted

property within the meaning of the Takings Clause,” and it is unclear if the Federal Circuit

was merely agreeing that “what the plaintiffs had identified as property rights were

extinguished.” Def.’s Reply at 8-9. The Court disagrees.

In Abrahim-Youri, the Federal Circuit compared the claims at issue with those in

Belk v. United States, 858 F.2d 706 (Fed. Cir. 1988), another takings case involving U.S.

hostages in Iran. The Federal Circuit described the legal theory in Belk as similar to that

in Abrahim-Youri, noting that in Belk, “[t]he former hostages alleged that the Government

took their property – their causes of action against Iran – by entering into the Algiers

accords with Iran.” Abrahim-Youri, 139 F.3d at 1466. This overt recognition of similar

legal claims undermines the Government’s assertion here that the Federal Circuit gave

cursory consideration to whether causes of action are property. Instead, the Federal Circuit

distinguished Belk from Abrahim-Youri on different grounds, finding that the former

hostages in Belk were the intended beneficiaries of the Algiers Accords, and thus the

plaintiffs failed to show the taking was performed for the public good alone. Furthermore,

the Government, as the defendant in Belk, “assumed the alleged causes of action against

Iran constitute property” for the purposes of the motion for summary judgment. Belk v.

United States, 12 Cl. Ct. 732, 733 (1987).

Third, Plaintiffs rely on Shanghai Power v. United States, 4 Cl. Ct. 237 (1983), aff’d,

765 F.2d 159 (Fed. Cir. 1985), to argue that even unfiled causes of action can be considered

property under the Fifth Amendment. Pl.’s Opp. at 9. In Shanghai Power, the Court found

a property interest in claims against China for expropriation that were later settled by

President Carter for less than full value. 4 Cl. Ct. at 239. The Court construed the concept

of Fifth Amendment property broadly, finding that any interest will be considered

“property for purposes of the [F]ifth [A]mendment unless that interest is devoid of a legally

enforceable right or recognition of a property interest would contravene public policy.” Id.

at 240. The Court held that a claim for compensation based on expropriation met this

standard. Id. The Court did not disqualify the claims as property for being nascent.

Instead, the Court found the stage of the claim relevant only to its value, considering factors

like forum availability and likelihood of success to determine damages. Id. at 241-42.

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The Government does not address how Shanghai Power might work against the

Plaintiffs’ property interest argument here. Instead, the Government merely asserts that

the Court found no taking due to the lack of a reasonable expectation of recovery in claims

involving foreign relations, and the inherent authority of the President to espouse claims.

Gov.’s Reply at 9. The Government also points to the holding that the case was non-

justiciable as it interfered with the President’s ability to carry on diplomatic relations. Id.

Thus, the Government does not explain how the finding of a property interest in Shanghai

Power is inapplicable to the facts here. Accordingly, the Court finds Shanghai Power

instructive.

In its motion, Defendant relies upon three main cases to argue against the existence

of a Fifth Amendment property interest in this case. First, the Government cites Adams v.

United States, 391 F.3d 1212 (Fed. Cir. 2004) for the proposition that “causes of action

(particularly ones sounding in tort) do not constitute cognizable or ‘vested’ property.”

Def.’s Mot. to Dismiss at 5-6; Adams, 391 F.3d at 1225-26. In Adams, the plaintiffs sued

under a taking theory for the extinguishment of four years of Fair Labor Standards Act

(“FLSA”) claims after Congress shortened the statute of limitations from six years to two

years. 391 F.3d at 1219. However, the Federal Circuit did not hold that causes of action

are never “vested” property rights under the Fifth Amendment. Instead, the appellate court

held that property rights from legal claims only exist when the action protects a “legally-

recognized property interest.” Id. at 1225-26; Def.’s Mot. to Dismiss at 6. In Adams, the

Federal Circuit found that the plaintiffs’ claims for overtime pay did not meet this standard,

as they “confuse[d] a property right cognizable under the Takings Clause of the Fifth

Amendment with a due process right to payment of a monetary entitlement under a

compensation statute.” 391 F.3d at 1220.

Interestingly, the Federal Circuit in Adams cites to Cities Serv. Co. v. McGrath in

finding that causes of action are property rights when they protect legally-recognized

property interests. The Federal Circuit cited this same case in Alliance of Descendants

where it held that a legal cause of action is property when it protects an interest like land.

In Adams, the Court found no legally-protected interest in a claim of Government liability

for overtime pay before an administrative agency. 391 F.3d at 1226. Importantly, the

nature of Government liability in Adams was created entirely by federal statute and is more

aptly described as an entitlement rather than as a property right “under state and common

law.” Id. Conversely, aircraft hulls and insurance contracts are generally considered

property under state and common law. See Maritrans, 342 F.3d at 1352 (finding a property

interest in tank barges); U.S. Trust Co. of New York v. New Jersey, 431 U.S. 1, 19 (1977)

(“Contract rights are a form of property and as such may be taken for a public purpose

provided that just compensation is paid.”). The Government repeatedly and erroneously

argues that Plaintiffs did not actually own the aircraft hull and were not attempting to

enforce the insurance contracts against Libya. Instead, the Government argues, Plaintiffs

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were bringing pure tort claims which do not meet the definition of property. But the

Government fails to consider the importance of the word “protect” in the operative standard

here. Plaintiffs’ causes of action are property rights when they protect legally-recognized

property interests. Here, Plaintiffs’ suit for damages was filed to protect Plaintiffs from

losses sustained under their insurance contracts and the loss of the aircraft, which were

caused by Libyan-sponsored terrorists. Plaintiffs need not own the aircraft or enforce the

insurance contract to protect those interests with legal claims.

As holders of subrogated insurance contracts, Plaintiffs were entitled to sue and

recover on behalf of the direct victims of terrorism here, and were “entitled to all the rights

and remedies belonging to the insured against a third party with respect to any loss covered

by the policy.” Subrogation, Black’s Law Dictionary (9th ed. 2009); Pl.’s Opp. At 13-14.

Thus, Plaintiffs’ legal claims seeking recovery for damages to both the aircraft hull and the

contract property would fall under the Adams definition of a claim protecting a legally-

recognized property interest.

The other two cases upon which Defendant primarily relies are Stauffer v. Brooks

Bros. Group, Inc., 758 F.3d 1314 (Fed. Cir. 2014) and Rogers v. Tristar Prods., Inc., 559

Fed. Appx. 1042 (Fed. Cir. May 2, 2012) (non-precedential). According to the

Government, both cases hold that there is no vested property right in a legal cause of action

until there is a final, unreviewable judgment, which Plaintiffs in this case failed to obtain.

Despite the Government’s characterization of Rogers to the contrary, neither of these cases

involved a takings claim against the United States for compensation. Instead, both cases

involved qui tam bounty hunter rights, another federal statutory entitlement, that were

eliminated by statutes. Although Rogers discusses the Takings Clause, the action before

the court was for reconsideration of a dismissal for mootness of the plaintiff’s original qui

tam whistleblower action. The plaintiff argued, among other things, that the Takings

Clause prohibited the Government from extinguishing his claim, and did not argue for

compensation for the taking of the claim itself. Thus, the court’s analysis of property rights

in Rogers is, for our purposes, inapposite. If accepted as controlling, this cursory analysis

in a non-precedential opinion on the mootness of a qui tam action would then be

inconsistent with other controlling takings analyses already summarized, which almost

uniformly find that causes of action protecting legally-recognized property rights are

property for Fifth Amendments purposes, regardless of their procedural posture. The Court

declines to give such weight to Rogers. Similarly, Stauffer involved “an award of statutory

creation, which, prior to final judgment, was wholly within the control of Congress,” and

thus is equally unhelpful to this Court’s analysis.

The Government also cites to twelve opinions from other circuits to support its

belief that “property” under the Fifth Amendment does not include non-final judgments.

Only four of these opinions involve the Takings Clause as opposed to the Due Process

Clause. Further, to the extent any of these cases holds that only final judgments are

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considered property under the Fifth Amendment, this authority is directly contrary to the

Federal Circuit precedent discussed above. Thus, the Court declines to give weight to these

cases in determining what qualifies as property under the Takings Clause.

Ultimately, the Court agrees with Plaintiffs that the Federal Circuit cases discussing

cognizable property under the Takings Clause are reconcilable by property type. The

Adams, Rogers, and Stauffer holdings all concern claims that were brought to protect

federally created statutory rights, “not state and common law recognized property interests

such as land, contract, intangible property and personal injury.” Pl.’s Opp. at 17. The

Shanghai Power, Abrahim-Youri, and Alliance of Descendants cases all found Takings

Clause property interests because the claims were brought to protect property more similar

to the case at bar. Thus, for the purposes of the motion to dismiss, the Court finds that

Plaintiffs have alleged sufficient facts to show a property interest in the insurance contracts

they sought to protect with a legal claim against Libya, which the United States

subsequently extinguished.

2. Taking of Property Interest

The parties’ analysis of the Penn Central factors is premature at this stage of the

case. Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104 (1978). While those

factors may ultimately be relevant in deciding whether a taking has occurred, they do not

assist the Court in deciding whether Plaintiffs have stated a plausible taking claim.

Plaintiffs have pled that their legal causes of action against Libya were terminated by the

Claims Settlement Agreement between the United States and Libya, as well as Executive

Order No. 13477. Compl. at 13. Further, although the United States provided for a

settlement procedure for U.S. Nationals, “no such parallel procedure” was established for

foreign nationals. Id. at 14. Thus, according to Plaintiffs, the taking occurred when the

Government terminated their legal claims and then failed to provide an alternate means of

recovery. These facts are sufficient to establish a claim for a taking by the United States

Government for the public purpose of “‘normalizing’ relations between the United States

and Libya.” Id.

3. Justiciability

The Government argues that this case involves a non-justiciable political question.

Def.’s Mot. at 17. Specifically, the Government claims that the “President’s authority for

the Claims Settlement Agreement and the extinguishment of plaintiffs’ claims is beyond

question and is a quintessential example of the exercise of the President’s broad

constitutional powers in foreign affairs.” Id.; United States v. Pink, 315 U.S. 203 (1942)

(Frankfurter, J., concurring). The Government also cites Shanghai Power for the

proposition that “[a] judicial inquiry into whether the President could have extracted a more

generous settlement from another country would seriously interfere with his ability to carry

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on diplomatic relations.” 4 Cl. Ct. at 248. Yet in Shanghai Power, the nature of the

plaintiff’s suit was “to recover that difference” between the value of its claim and the

settlement negotiated by the President. Id. at 239. The plaintiffs were already entitled to

receive a portion of the value of their claims, but disputed the amount negotiated by the

Government. Here, however, Plaintiffs do not disagree with the amount negotiated with

Libya. Pl.’s Opp. at 39. Instead, Plaintiffs are challenging the United States’ decision to

exclude them from the settlement altogether. Id. at 38-39. Plaintiffs allege the United

States terminated Plaintiffs’ claims, which are cognizable property rights, and then failed

to include Plaintiffs in the settlement process to compensate them for said termination.

Plaintiffs do not, as the Government alleges, purport to question the President’s authority

or discretion in his power to conduct foreign relations. Id. at 37. Instead, Plaintiffs seek

compensation for their terminated claims and challenge the decisions of the Government

after it negotiated and settled with Libya, specifically in designing the settlement process

and the FCSC’s jurisdiction.

Further, the Government cites Belk v. United States for a similar holding when the

Court found it “does not believe it has the authority . . . to enter upon policy determinations

for which judicially manageable standards are lacking.” 12 Cl. Ct. 732, 736 (citing Baker

v. Carr, 369 U.S. 186, 226 (1962)). Yet, again, the facts of Belk involved an espousal of

claims and a settlement the U.S. Government made on behalf of the plaintiffs, and of which

the plaintiffs were held to be the beneficiaries. Belk, 12 Cl. Ct. at 734. Here, instead,

Plaintiffs have not received any compensation or consideration for their extinguished

claims, and cannot reasonably be considered to be the direct beneficiaries of the settlement

with Libya. If the Government had included them in the FCSC’s jurisdiction, Plaintiffs

may have been forced to accept reduced value for their claims, and any claim for a better

deal would likely be non-justiciable. But here, where Plaintiffs were excluded from

receiving any just compensation whatsoever, the Court must decide whether the

Government violated the Fifth Amendment prohibition of takings without just

compensation. Accordingly, the Court finds that it is well within its jurisdiction to decide

this takings claim against the United States.

Conclusion

For the foregoing reasons, the Government’s motion to dismiss is DENIED.

Pursuant to Rule 12(a)(4)(A), Defendant shall file its Answer within 14 days, on or before

June 9, 2015.

IT IS SO ORDERED.

s/Thomas C. Wheeler____

THOMAS C. WHEELER

Judge

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