Doyle v. United States

In the United States Court of Federal Claims

No. 15-572L

(Filed: November 30, 2016)

)

JAMES DOYLE, et al., )

)

Plaintiffs, )

) Fifth Amendment Takings, Breach of

v. ) Contract, Ripe Claims, Statute of

) Limitations

THE UNITED STATES, )

)

Defendant. )

)

Roger J. Marzulla, Washington, DC, for plaintiff. Nancie G. Marzulla,

Washington, DC, of counsel.

Jacqueline C. Brown, Environment and Natural Resources Division, U.S.

Department of Justice, Washington, DC, with whom were John C. Cruden, Assistant

Attorney General, for defendant. Daniela Arregui, Environment and Natural Resources

Division, U.S. Department of Justice, Washington, DC, of counsel.

OPINION

FIRESTONE, Senior Judge.

Pending before the court is a motion filed by defendant the United States (“the

government”) to dismiss the above-captioned case pursuant to Rule 12(b)(1) of the Rules

of the Court of Federal Claims (“RCFC”) for lack of subject-matter jurisdiction and

RCFC 12(b)(6) for failure to state a claim upon which relief can be granted.1 Plaintiffs

1

On April 14, 2016, the court dismissed for lack of jurisdiction Count II of the complaint, which

alleged that plaintiffs are entitled to compensation under the Wilderness Act. Pub. L. No. 88-

1

James Doyle, a real estate developer doing business as Rocky Mountain Ventures

(“RMV”), and his wholly owned limited partnership Environmental Land Technologies,

Ltd. (“ELT”), filed this action claiming that the government had taken property owned in

the name of ELT without paying just compensation in contravention of the Fifth

Amendment of the Constitution. In the alternative the plaintiffs allege that the

government breached a contract to acquire up to 2,440 acres of property that ELT owns

or owned at the time of the alleged taking.2

These claims arise in connection with a government-approved Habitat

Conservation Plan (“HCP”) to protect and provide critical habitat for the Mojave desert

tortoise under the Endangered Species Act (“ESA”), 16 U.S.C. § 1531 et seq, in the area

of Washington County, Utah. The ESA was enacted in 1973 to protect endangered and

threatened species and the ecosystems on which they depend. See id. § 1531(b). The Act

directs the listing as endangered or threatened those species that are “in danger of

extinction throughout all or a significant portion of [their] range.” Id. §§ 1532(6), 1533.

Under the ESA, “critical habitat” necessary for the preservation of a listed species is

generally designated at the time the species is listed. Id. §§ 1532(5), 1533(a)(3),

577-78 Stat. 896, (ECF No. 19). The plaintiffs agreed that their property was not subject to the

Wilderness Act.

2

Plaintiffs state that ELT owned the property in question. Compl. ¶¶ 1-2 (ECF No. 1). Only the

owner of property, at the time of claim accrual, has standing to assert a regulatory takings claim.

Air Pegasus of D.C. Inc. v. United States, 424 F.3d 1206, 1212 (Fed. Cir. 2005).

2

(b)(6)(C). Under Section 9 of the ESA, it is unlawful to “take” a listed species. Id. §

1538(a)(1)(B).

The government argues that the plaintiffs’ takings claim must be dismissed

because it is not ripe for review. The government contends that under Federal Circuit

precedent property owners may assert a takings claim based on government regulatory

actions under the ESA only after the property owner has first sought and been denied

permission by the federal government to develop land that is within an area designated as

critical habitat. See Boise Cascade Corp. v. United States, 296 F.3d 1339, 1345-52 (Fed.

Cir. 2002); Schooner Harbor Ventures, Inc. v. United States, 569 F.3d 1359 (Fed. Cir.

2009), on remand, 92 Fed. Cl. 373, aff’d, 418 Fed App’x. 920 (Fed. Cir. 2011). The

government explains that while Section 9 of the ESA prohibits any unauthorized “take”

of a listed species, including disturbance of a protected species’ critical habitat, Section

10 of the ESA, authorizes individuals and non-federal entities to apply for an “incidental

take permit” from the federal government to allow for development under specified

conditions. See 16 U.S.C. §§ 1538-1539.3 The government argues that until plaintiffs

have sought and been denied an ESA Section 10 permit, plaintiffs cannot show the extent

of any regulatory limits on development of their land and thus cannot establish a ripe

3

An applicant seeking an incidental take permit must submit to the United States Fish and

Wildlife Service (“FWS”) a HCP setting forth: (i) the likely impact of the take; (ii) what steps

the applicant will take to minimize and mitigate such impacts, and the funding to do so; (iii) what

alternative actions to the take were considered and rejected; and (iv) what other measures the

agency might require as necessary and appropriate. 16 U.S.C. § 1539(a)(2)(A); see also 50

C.F.R. § 17.32.

3

Fifth Amendment takings claim. See Seiber v. United States, 364 F.3d 1356, 1365 (Fed.

Cir. 2004) (citing Palazzolo v. Rhode Island, 533 U.S. 606 (2001)) (finding that the

“crux” of the ripeness analysis is whether “the permissible uses of the property are known

to a reasonable certainty”).

In 1996, the government approved a Habitat Conservation Plan and

Implementation Agreement and issued an Incidental Take Permit for Washington County

that allowed for development in some areas and precluded development in other areas,

including areas where plaintiffs own land. However, the government argues that the

permit held by Washington County does not prevent plaintiffs from seeking their own

Section 10 permit to develop lands within the area now within the protected reserve

established by the HCP. It is not disputed that plaintiffs have not sought or been denied

an incidental take permit of their own to develop any portion of the ELT property at

issue. The government argues that until plaintiffs seek a Section 10 incidental take

permit from the federal government, the federal government has not made a final decision

regarding what if any development of the plaintiffs’ property will be approved. In such

circumstance, the government argues that plaintiffs’ Fifth Amendment takings claim is

not ripe and must be dismissed.4

4

On September 9, 2016, the parties submitted a joint status report detailing the current status of

the Section 10 incidental take permit issued to Washington County. The permit expired on

March 14, 2016. In the same report the parties indicated that the government is still working on

but has not yet completed a comprehensive plan for the long-term management of the Red Cliffs

National Conservation Area which includes plaintiffs’ land. Both parties however stated that

there is no reason to stay the case pending the completion of the plan.

4

The government argues further that to the extent its actions under the ESA in

listing the tortoise, designating critical habitat, or approving the HCP in 1996 gave rise to

a taking of plaintiffs’ property without just compensation, on the grounds that those

actions are found to be binding on plaintiffs, the government’s actions took place more

than six years before the plaintiffs filed their complaint and thus the case is barred by the

statute of limitations. 28 U.S.C. § 2501 (“Every claim of which the United States Court

of Federal Claims has jurisdiction shall be barred unless the petition thereon is filed

within six years after such claim first accrues.”). The government similarly argues that

the inclusion of plaintiffs’ property within the Red Cliffs National Conservation Area5

occurred more than six years before plaintiffs filed suit and thus any takings claim based

on that designation alone is also barred by the statute of limitations. See Omnibus Public

Land Management Act of 2009, Pub. L. No. 111-11, § 1974, 123 Stat. 991 (2009).

Finally, the government argues that the plaintiffs’ breach of contract claims based

on alleged commitments by the government in the HCP or the Implementation

Agreement to buy plaintiffs’ land must be dismissed for failure to state a claim.6

5

As discussed infra, the Red Cliffs National Conservation Area was established in 2009 by the

Omnibus Public Land Management Act § 1974. Plaintiffs’ land was included within the

boundaries of the Red Cliffs National Conservation Area, and the Secretary of the Interior was

given authority to sell certain public lands in order to fund the purchase of private land within the

area.

6

The Implementation Agreement was drafted in December 1995 alongside the HCP. The

Implementation Agreement incorporated the HCP and was created to set forth the responsibilities

of the parties in order to best accomplish the goals of the HCP. On February 23, 1996, the

Implementation Agreement was signed by the Town of Ivins, the State of Utah (acting by and

through the Utah Department of Natural Resources), BLM, FWS, and Washington County.

5

Specifically, the government argues that the federal government never entered into a

binding agreement with plaintiffs or otherwise agreed to purchase the plaintiffs’ property

under the HCP or Implementation Agreement. The government argues that the

provisions in the HCP and Implementation Agreement only provide for voluntary land

exchanges or sales between “willing buyers and sellers” and provide that landowners who

do not enter into an exchange or sale are not bound by the HCP.

The plaintiffs argue in response that their takings claim is timely and ripe. They

also argue that they have alleged sufficient facts to establish a breach of contract claim.

Specifically, the plaintiffs contend that the HCP established a compensation mechanism

for purchasing the plaintiffs’ property and that it is the failure of that mechanism in 2010

or so that gives rise to the takings claim. Plaintiffs contend that the government took

their property because they lost use of their land during the period in which negotiations

for purchase of their land were ongoing having agreed to be bound by the HCP. They

argue that they had only agreed to have their land included within the HCP’s protected

area in exchange for the government’s promise to either purchase or exchange plaintiffs’

land for land outside the protected habitat area. They argue their takings claim is ripe

because it would be futile for them to seek an incidental take permit from the federal

government. According to plaintiffs, the government’s failure to complete that

acquisition process and either purchase or exchange property for plaintiffs’ land gives

rise to both a taking and breach of contract claim.

For the reasons that follow, the government’s motion to dismiss is GRANTED.

6

I. FACTUAL BACKGROUND7

Mr. Doyle, acting through RMV and ELT, began acquiring land in the early 1980s

in the area of St. George, Utah, in Washington County with the goal of constructing a real

estate development including luxury homes and nine golf courses. Overall, plaintiffs

allege that they acquired a total of 2,440 acres for development while holding preferential

rights to an additional 11,000 acres. After procuring water rights, designing

transportation corridors, and acquiring zoning rights, Mr. Doyle was prepared to break

ground for the initial phase of his project. However, on April 2, 1990, the Fish and

Wildlife Service (“FWS”) listed the Mojave population of the desert tortoise as

“threatened” under the ESA. 50 C.F.R. §§ 17.11(h), 17.42(e); Endangered and

Threatened Wildlife and Plants; Determination of Threatened Status for the Mojave

Population of the Desert Tortoise, 55 Fed. Reg. 12,178 (Apr. 2, 1990). On February 8,

1994, all of the plaintiffs’ land was designated as “critical habitat” for the tortoise.

Endangered and Threatened Wildlife and Plants; Determination of Critical Habitat for the

Mojave Population of the Desert Tortoise, 59 Fed. Reg. 5,820 (Feb. 8, 1994).

According to the complaint, the plaintiffs worked with other landowners and

Washington County, Utah to develop an HCP that would have allowed for some

7

Where subject matter jurisdiction is questioned, the court may consider evidence outside

plaintiffs’ complaint to determine whether it has jurisdiction without converting the motion to

dismiss to one for summary judgment. Engage Learning, Inc. v. Salazar, 660 F.3d 1346, 1355

(Fed. Cir. 2011). The facts set forth below thus include the undisputed facts the government has

submitted in support of its motion to dismiss for lack of ripeness or in the alternative to dismiss

on the grounds that the statute of limitations has run.

7

development of ELT’s property under an incidental take permit. That HCP was, however,

rejected by the FWS. A second HCP was submitted by Washington County and, on

February 23, 1996, the FWS issued an incidental take permit that incorporated the revised

HCP. The HCP called for the creation of a 61,022 acre “Mojave Desert habitat reserve”

within Washington County. The revised HCP does not allow for development in the area

of ELT’s property. Issuance of Permit for Incidental Take of Threatened Species, 61

Fed. Reg. 26,529 (May 28, 1996). Both the HCP and the Implementation Agreement

dated December, 1995 and signed in 1996, include language with regard to private lands

in the area designated as habitat.

Section 3.1 of the HCP states “[t]he central element of this HCP is the creation of

a Mojave Desert habitat reserve in Washington County. This proposed reserve will be of

61,022 acres in size and will be managed for the protection of the Mojave Desert tortoise

and other listed . . . species.” Section 3.2 of the HCP includes an Acquisition Strategy

which states:

[A]pproximately two-thirds of the proposed reserve is under BLM or State

Park ownership. The remaining third comprises parcels currently under

State or private ownership that are needed to make the reserve contiguous

and effective. Three acquisition strategies have been identified to facilitate

the acquisition of these necessary private lands. . . Land will be acquired or

exchanged upon the principle of a willing seller and willing buyer.

Landowners have been consulted throughout the HCP process and have

been encouraged to participate in these land exchanges. In the event they

do not, the HCP will have no legal effect on their property and the HCP

will place no restrictions on land use within the reserve.”8

8

The plaintiffs claim that Congress endorsed the HCP’s land acquisition strategies based on a

1996 provision regarding a potential exchange of land with the Water Conservancy District of

Washington County, Utah. In that law, Congress stated that “[i]n acquiring any lands and any

interests in lands in Washington County, Utah, by purchase, exchange, donation or other

8

(Emphasis added). The Implementation Agreement further states that no person who is

not a party or participating city is to be deemed a third party beneficiaries and that no

person other than a party or participating city has a right to enforce the agreement.

Implementation Agreement at 22 (“No persons who are not parties . . . are intended to be

deemed third Party beneficiaries under this Agreement . . .”).

Using the acquisition authorities provided for in the HCP and Implementation

Agreement, the federal government, between 1996 and 2006, acquired approximately 534

acres of plaintiffs’ property for a total of $9,273,013 in exchanged land and money.

Def.’s Mot. 7-8. Negotiations for further acquisition of the plaintiffs’ property were

unsuccessful, including negotiations from 1997 to 1998 for the acquisition of 1,865 acres,

negotiations from 2000 to 2007 for the acquisition of 10 acres, and negotiations from

2008 to 2011 for 9 acres. Aside from the land acquired from plaintiffs, BLM has been

able to successfully acquire 8,814 acres of land within the reserve, of which 5,219 acres

were acquired from private landowners.

Congress established the Red Cliffs National Conservation Area in 2009. See

Omnibus Public Land Management Act § 1974. The statute required the Secretary of the

transfers of interest, the Secretary of the Interior shall appraise, value, and offer to acquire such

lands and interests without regard to the presence of a species listed as threatened or endangered

or any proposed or actual designation of such property as critical habitat for a species listed as

threatened or endangered pursuant to the Endangered Species Act of 1973 (16 U.S.C. § 1531 et

seq.).” Omnibus Parks and Public Lands Management Act § 309(f). Congress did not, however,

allocate resources to purchase the private lands in the reserve. This provision was apparently

enacted to ensure that that land would be valued based on its former fair market value, as

opposed to its present value under encumbrance of the ESA.

9

Interior to develop a comprehensive management plan for the area, which could

incorporate the HCP, and authorized the Secretary of the Interior to sell certain public

land and use the proceeds to purchase private land within the conservation area. Id.

§§ 1974, 1978. The statute did not place any additional restrictions on development by

private land owners. As noted, plaintiffs’ land falls within this National Conservation

Area.

In 2010, the plaintiffs transferred all but 274 acres of the 2,400 acres at issue in

this case to the plaintiffs’ creditors under an approved bankruptcy plan. Compl. at 7.

The government subsequently acquired approximately 29 acres of the transferred land

from two of the plaintiffs’ creditors for a total of $4,000,000 in land and money; those

creditors also donated to the government land valued at $2,000,000.

A. District Court Action

On September 20, 2013, Mr. Doyle and ELT filed an action against Secretary of

the Interior Sally Jewell, the FWS, the BLM, and Washington County in the United

States District Court for the District of Utah. Doyle v. Jewell, No. 2:13-CV-861-CW,

2014 WL 2892828, at *1 (D. Utah June 26, 2014). Mr. Doyle and ELT asserted that the

federal defendants “(1) ha[d] failed to implement a comprehensive management plan [for

the Red Cliffs National Conservation Area] to [the plaintiffs’] detriment; (2) ha[d]

unreasonably delayed acquiring [the plaintiffs’] property; and (3) ha[d] acted arbitrarily

and capriciously in failing to comply with [the defendants’] commitments” in violation of

the Administrative Procedure Act (“APA”). Doyle, 2014 WL 2892828, at *1.

10

On June 26, 2014, the district court granted in part and denied in part the federal

defendants’ motion to dismiss the plaintiffs’ claims. The court noted that “while the

Secretary is not required to purchase land,” the Red Cliffs legislation requires her “to

implement the management plan to address how land within the area will be managed.”

Id. at *2. On May 19, 2015, Mr. Doyle, ELT, and the federal defendants filed a joint

stipulation and motion for entry of judgment, in which they agreed that judgment could

be entered against the federal defendants requiring the development of a comprehensive

plan. The district court granted the motion on May 27, 2015, and ordered the federal

defendants to develop a comprehensive plan for the long-term management of the Red

Cliffs National Conservation Area as required by 16 U.S.C. § 460www(d)(1) on or before

June 30, 2016. The federal government was given an extension of time and is still

working on a long-term plan.

B. Litigation in this Court

The plaintiffs filed their complaint in this court on June 5, 2015. On August 18,

2015, the government filed a motion to dismiss (ECF No. 8). Plaintiffs’ filed their

response (ECF No. 9) on September 18, 2015, and the government filed its reply (ECF

No. 10) in support of its motion on October 5, 2015.

The case was then stayed for a period of time to allow the parties to discuss

settlement. Because those negotiations could not resolve all claims, the court met again

with the parties and on April 14, 2016, the court issued an order requiring additional

briefing on whether the 6-year statute of limitations set in 28 U.S.C. § 2501 bars

plaintiffs’ claims, as alleged by the government. The plaintiffs filed their supplemental

11

brief (ECF No. 22) on May 20, 2016, the government filed its response (ECF No. 25) on

June 24, 2016, and the plaintiffs filed their reply (ECF No. 26) on July 8, 2016. The

parties on September 9, 2016, provided the court with a status report on the current status

of the incidental take permit, the HCP and Red Cliffs National Conservation Area

comprehensive plan. Oral argument was heard on November 7, 2016.

II. JURISDICTION AND LEGAL STANDARDS

This court’s subject matter jurisdiction over cases involving Fifth Amendment

takings and contract disputes is set by the terms of the Tucker Act, 28 U.S.C. 1491(a). It

is a plaintiff’s burden to prove that subject matter jurisdiction is appropriate in this court

by a preponderance of evidence. Banks v. United States, 741 F.3d 1268, 1277 (Fed. Cir.

2014) (citing Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir.

1988)). In deciding whether jurisdiction is proper in a motion to dismiss under Rule

12(b)(1), the court accepts as true only uncontroverted factual allegations in the

complaint. Engage Learning, Inc. v. Salazar, 660 F.3d 1346, 1355 (Fed. Cir. 2011);

Cedars-Sinai Med. Ctr. v. Watkins. 11 F.3d 1573, 1584 (Fed. Cir. 1993). Where the

jurisdictional facts are questioned, the court must consider and resolve the disputed

jurisdictional facts. The court’s consideration of facts outside the complaint in such cases

does not convert the motion to dismiss into one for summary judgment. Engage

Learning, 660 F.3d at 1355 (citing Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006)).

When deciding a motion to dismiss for failure to state a claim upon which relief

may be granted, the court must accept as true all the factual allegations in the complaint.

Sommers Oil Co. v. United States, 241 F.3d 1375, 1378 (Fed. Cir. 2001). A plaintiff

12

opposing a motion to dismiss for failure to state a claim must demonstrate that the

complaint “state[s] a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556

U.S. 662, 678 (2009) (quotations and citations omitted). In deciding the motion, the

court may “draw the reasonable inference that the defendant is liable for the misconduct

alleged,” and that the plaintiff is plausibly entitled to the relief sought. Id.

III. DISCUSSION

In Count I of their complaint, plaintiffs allege a regulatory taking of their land

without just compensation. In Count III, plaintiffs allege a breach of contract when the

government failed to pay for or exchange plaintiffs’ land. “It has long been the policy of

the courts to decide cases on non-constitutional grounds when that is available, rather

than reach out for the constitutional issue.” Stockton E. Water Dist. v. United States, 583

F.3d 1344, 1368 (Fed. Cir. 2009) (citing Nw. Austin Mun. Util. Dist. No. One v. Holder,

557 U.S. 193, 206 (2009). Accordingly, the court shall first consider plaintiffs’ breach of

contract claim before addressing the takings claim.

A. Plaintiffs Cannot State a Claim for Breach of Contract.

Plaintiffs present two theories for breach of contract. Plaintiffs first argue that

they were parties to the HCP and that the government breached the contract when it

failed to pay just compensation for the land or provide land of equal value in exchange.

Pl.’s Resp. 15-16. Alternatively, plaintiffs argue that they are third party beneficiaries

under the HCP and the Implementation Agreement. Id. at 16-19.

In order to state a claim for breach of contract against the United States the

plaintiff must allege facts to show that it is in privity of contract with the government. See

13

Pac. Gas & Elec. Co. ex rel. Brown v. United States, 838 F.3d 1341 (Fed. Cir. 2016)

(citing Anderson v. United States, 344 F.3d 1343, 1351 (Fed. Cir. 2003)). Ordinarily only

signatories to a contract have privity of contract with the government. See Anderson, 344

F.3d at 1351; Castle v. United States, 301 F.3d 1328, 1339 (Fed. Cir. 2002) (finding that

shareholders of a party were not parties to the contract because they “neither negotiated

with, nor promised any performance to, the government.”). The purpose of limiting

breach of contract suits to parties to the contract is to prevent recovery from parties with

whom the government did not negotiate and to whom the government did not intend to

obligate itself. See generally Erickson Air Crane, 731 F.2d at 813 (rejecting claims of

subcontractors as lacking standing to sue under the Tucker Act).

However, the Federal Circuit has recognized that a plaintiff may state a claim if

the plaintiff can show that it is a “third party beneficiary” of the contract. Sullivan v.

United States, 625 F.3d 1378, 1380 (Fed. Cir. 2010). Designation as a third party

beneficiary to a government contract is an “exceptional privilege” that “should not be

granted liberally.” German Alliance Ins. Co. v. Home Water Supply Co., 226 U.S. 220,

230 (1912); Flexfab L.L.C. v. United States, 424 F.3d 1254, 1259 (Fed. Cir. 2005). In

Glass v. United States, the Federal Circuit articulated the standard that a third party

beneficiary can only state a claim by demonstrating that “the contract not only reflects the

express or implied intention to benefit the party, but that it reflects an intention to benefit

the party directly.” 258 F.3d 1349, 1354 (Fed. Cir. 2001); see also Montana v. United

States, 124 F.3d 1269, 1273 (Fed. Cir. 1997) (stating same). A prospective third party

beneficiary need not be named as such in the contract, but must nevertheless demonstrate

14

that the claimed benefit is not “purely incidental and not contemplated by the contracting

parties,” and that he falls within a class clearly intended by the parties to benefit from the

contract.” Sullivan, 625 F.3d at 1380; Klamath Water Users Protective Ass’n v.

Patterson, 204 F.3d 1206, 1211 (9th Cir. 1999). If a plaintiff can establish privity or

third party beneficiary status, a plaintiff must also be able to establish “an obligation or

duty arising out of the contract, a breach of that duty, and damages caused by the

breach.” San Carlos Irrigation & Drainage Dist. v. United States, 877 F.2d 957, 959

(Fed. Cir. 1989) (citations omitted).

In interpreting a contract, the court looks first to the plain language of the contract.

See Aleman Food Servs., Inc. v. United States, 994 F.2d 819, 822 (Fed. Cir. 1993);

Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991). The plain language

of the contract will be controlling if it is unambiguous. Coast Fed. Bank, FSB v. United

States, 323 F.3d 1035, 1040–41 (Fed. Cir. 2003); TEG–Paradigm Envtl., Inc. v. United

States, 465 F.3d 1329, 1338 (Fed. Cir. 2006) (“When the contract’s language is

unambiguous it must be given its plain and ordinary meaning and the court may not look

to extrinsic evidence to interpret its provisions.” (internal quotation marks and citations

omitted)).

Tested by these standards, plaintiffs cannot state a claim for breach of contract in

this case. Plaintiffs contend that they are parties to the HCP and Implementation

Agreement due to Mr. Doyle’s participation as a voting member of the steering

committee which worked in conjunction with Washington County, BLM, and FWS

representatives to draft both documents. This argument is not supported. The fact that

15

private individuals or entities served as members of the steering committee for an HCP

does not make those persons parties to the Section 10 permit which then incorporates the

HCP. The HCP was issued to Washington County only. By its terms the permit does not

include Mr. Doyle or any of the other plaintiffs. In addition, the Implementation

Agreement which was negotiated to implement the HCP does not include plaintiffs as

parties to the Agreement. The parties to the Implementation Agreement by its terms are:

the State of Utah, the Town of Ivins, BLM, FWS, and Washington County.

Implementation Agreement at 25-26. As such, plaintiffs are not in direct privity with the

United States based on either the HCP or the Implementation Agreement and thus their

contract claim hinges on their being able to establish that they are third party

beneficiaries under either document. The plain language of both the HCP and the

Implementation Agreement, however, foreclose plaintiffs from stating a claim based on a

third party beneficiary status.

The HCP clearly and unambiguously states with regard to private land that

“Landowners have been consulted throughout the HCP process and have been

encouraged to participate in these land exchanges. In the event they do not, the HCP will

have no legal effect on their property and the HCP will place no restrictions on land use

within the reserve.” HCP at 24. The Implementation Agreement goes on to state that

“No persons who are not parties . . . are intended to be deemed third Party beneficiaries

under this Agreement . . . .” Implementation Agreement at 22. The Implementation

Agreement goes on to explain that any benefits to third parties are “incidental,” that

persons not signatories to the Implementation Agreement shall not have the right to

16

enforce it. Implementation Agreement at 22. Given the above-quoted plain language,

plaintiffs cannot state a breach of contract claim as third party beneficiaries to either the

Implementation Agreement or HCP.

Plaintiffs’ contention that they should be deemed third party beneficiaries of the

HCP because the HCP does not expressly discuss “third party beneficiaries” is without

merit. The argument is expressly contradicted by the terms of the Implementation

Agreement. Section III.A of the Implementation Agreement, which incorporates the

HCP by reference, states that “[i]n the event of any direct contradiction between the

terms of this Agreement and the HCP, the terms of this Agreement shall control. In all

other cases, the terms of this Agreement and the terms of the HCP shall be interpreted to

be supplementary to each other.” Because plaintiffs’ argument that they are third party

beneficiaries to the HCP is in “direct contradiction” to the Implementation Agreement it

must fail.

Finally, even if they could show that they are beneficiaries of these documents

and could thus enforce them, the plaintiffs cannot, as discussed above, state a claim for

breach of any contract duty. The plaintiffs are not bound by the HCP or Implementation

Agreement. As discussed above, plaintiffs’ participation in the acquisition mechanism

established in the HCP was purely voluntary. Private landowners were “encouraged to

participate” but not required to participate in the land exchange and acquisition program.

More importantly, neither of the referenced documents imposed a mandatory duty upon

the government to purchase plaintiffs’ property. By their terms these documents make

clear that participation by private parties is limited to voluntary transactions between

17

willing sellers and willing buyers.9 Here, the government and plaintiffs were able to

agree to some purchases or exchanges of plaintiffs’ property but not others. Nothing in

the documents plaintiffs rely upon obligated the government to pay plaintiffs “fair market

value” for plaintiffs’ property if they could not agree on a purchase price. Put another

way, plaintiffs cannot show any legally enforceable duty on the part of the United States

in the documents identified requiring the government to purchase their property when the

parties failed to reach a voluntary agreement on price. As such, plaintiffs’ breach of

contract claim must be dismissed for failing to state a claim. The court will now turn to

plaintiffs’ takings claim.

B. Plaintiffs’ Takings Claim is Not Ripe.

The Fifth Amendment to the United States Constitution states that private property

shall not “be taken for public use, without just compensation.” U.S. Const. amend. V. In

order to proceed on a takings claim premised on a regulation, a plaintiff must show that

the takings claim is “ripe” for hearing. The Federal Circuit has held that a regulatory

9

At oral argument plaintiffs suggested that the phrase “land will be acquired or exchanged upon

the principle of a willing seller and willing buyer” (HCP at 23) should be read to mean only that

plaintiffs are entitled to just compensation based on fair market value and not that the

government was not obligated to buy their land when the parties could not agree on a price. The

plaintiffs argue in effect that landowners are not free to walk away from the process identified in

the HCP and Implementation Agreement and pursue their own land development strategy if

negotiations with the government fail. This argument does not bear close scrutiny. The language

of the HCP makes plain that if the government and landowners cannot reach agreement as

willing buyers and sellers the landowners are free to walk away from the process. The HCP

states on page 24 that landowners “have been encouraged to participate.” It does not state that

landowners are bound by the HCP. To the contrary, the HCP recognizes that if landowners do

not participate with respect to certain land, “the HCP will have no legal effect on their property.”

HCP at 24.

18

takings claim ordinarily is not ripe for consideration until the government entity charged

with implementing the regulation has “reached a final decision regarding the application

of the regulation to the property at issue.” Barlow v. Haun, Inc., 805 F.3d 1049, 1058

(Fed. Cir. 2015). This means that where the regulatory takings claim involves a

permitting process, plaintiffs must demonstrate that the proposed activity has been

actually prohibited by federal law. See Seiber v. United States, 364 F.3d 1356 at 1363.

With respect to takings claims involving restrictions imposed by the ESA in particular,

the Federal Circuit has required plaintiffs to show that they have applied for and have

been denied an incidental take permit in order to show their takings claim is ripe for

consideration. See Morris v. United States, 392 F.3d 1372, 1374-75 (Fed. Cir. 2004)

(rejecting as unripe regulatory takings claim where no incidental take permit was sought).

Indeed, even where a plaintiff has been enjoined by a court from conducting an activity

on its property because of the ESA, the Federal Circuit has required that the plaintiff seek

an incidental take permit in order to establish that the case is ripe. Boise Cascade Corp.

v. United States, 296 F.3d 1339, 1348 (Fed. Cir. 2002) (rejecting a Fifth Amendment

takings claim brought after plaintiff was enjoined from logging without an incidental take

permit under the ESA).

In the present case, the plaintiffs do not dispute that they have not sought or been

denied an incidental take permit with respect to development of any of their property

within the reserve, or the later-designated Red Cliffs National Conservation Area. Ex. 1,

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Crist Decl. at ¶ 4.10 Accordingly, under established Federal Circuit precedent, plaintiffs’

takings claim must be dismissed absent the court finding an exception to the incidental

take permitting requirement.

Here, the plaintiffs contend that their claim is ripe without having to seek an

incidental take permit from the FWS because they were bound by the HCP and prohibited

from developing the subject property when they agreed to negotiate for the sale or

exchange of their land. In plaintiffs’ view, because they participated in the acquisition

and exchange process provided for in the HCP and under the Implementation Agreement,

their land has been forever set aside for protection and they cannot obtain an incidental

take permit without forfeiting the right to just compensation or possibly opening

themselves to civil and/or criminal liability under the ESA. According to plaintiffs, by

voluntarily agreeing to negotiate for the purchase of their property under the HCP, they

are now bound by the terms of the HCP and will not be able to obtain an incidental take

permit of their own. For the reasons that follow the court finds that this argument is

without merit.

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Plaintiffs’ argument that they did submit two incidental take permits through their

participation in the steering committee with Washington County is unavailing. Plaintiffs’

Response at 5-6. While it is true that Mr. Doyle was a member of the steering committee that

was involved in the drafting of the HCP, including one that would have allowed some

development of the plaintiffs’ property, membership on the steering committee is not the same as

personally submitting an incidental take permit application to your own land. The FWS issued

the incidental take permit to Washington County that included work of the steering committee.

The final submission was sent by Washington County only and not by any of the individual

landowners. Thus, it cannot be said that plaintiffs have already applied for and been denied an

incidental take permit that precludes development of their property.

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The plaintiffs’ argument hinges on the mistaken notion that agreeing in the first

instance to negotiate with the government for the sale or exchange of their property on a

“willing buyer and willing seller” basis they were forever bound by the development

limitations in the HCP. As discussed above, the HCP and Implementation Agreement

specifically stated that the HCP has “no legal effect on property [belonging to private

citizens who do not enter into land exchanges or sell their property to the government]

and [places] no restrictions on use of their property.” Implementation Agreement at 6.

Because plaintiffs always had the option of leaving the voluntary acquisition

program established in the HCP they cannot argue that their property was taken by the

federal government when they agreed to enter negotiations with the government for

acquiring their property within the reserve and now Red Cliffs Conservation Area.

Plaintiffs made a voluntary decision not to develop their land or seek permission to

develop their land in hopes that they would be able to reach an agreement with the federal

government. Indeed, they have reached agreement for the sale of many acres. Where

they could not agree on a price, the plaintiffs were free to seek permission to develop

their land by seeking their own incidental take permit from the FWS. The plaintiffs’

decision to voluntarily forbear from seeking to develop their land during the negotiation

period did not give rise to a taking. By its terms, the HCP contemplated only voluntary

arrangements between willing buyers and willing sellers. Thus, plaintiffs’ decision to

negotiate with the government for an extended period of time was not compelled by the

HCP or Implementation Agreement. For this reason, the court concludes that plaintiffs

cannot argue that the government took their property when the plaintiffs agreed to

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negotiate with the government for the sale or exchange of the land. Unless and until the

government confirms the extent of the restrictions on plaintiffs’ use or development of

the subject property the takings claim is not ripe. See Morris, 392 F.3d at 1376 (citing

Williamson, 473 U.S. at 186); Seiber, 364 F.3d at 1365 (stating that Palazzolo established

that the “crux” of the ripeness analysis is whether “the permissible uses of the property

are known to a reasonable certainty”).

The court also finds that the inclusion of plaintiffs’ land within the designated Red

Cliffs National Conservation Area as of March 30, 2009 does not alter the court’s

conclusion that there has not been a taking until plaintiffs seek an incidental take permit.

By virtue of the National Conservation Area designation, the Department of the Interior

is authorized to acquire private property within the area and limit certain uses of public

lands within the designated area. The statute creating the Conservation Area did not

however place any express restrictions on development of private lands located within its

boundary. Under the terms of the statute, the Department of the Interior is authorized to

sell federal lands located elsewhere in Washington County, in order to fund land

acquisitions within the National Conservation Area. See Omnibus Pub. Land Mgmt. Act

§ 1978. The statute does not contain any proclamations with respect to specific rights or

obligations as to plaintiffs’ land. The conservation designation is thus not in and of itself

a bar to development. As such, plaintiffs do not know the extent of any restrictions on

their ability to develop their land until they seek an incidental take permit.

Plaintiffs further argue that they were not required to apply for an incidental take

permit because such application would be futile. The court finds this argument

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unavailing. The Federal Circuit has noted that “[f]utility is an exception to the agency

final decision requirement for ripeness.” Schooner Harbor, 92 Fed. Cl. at 381. “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, a takings

claim is likely to have ripened.” Palazzolo, 533 U.S. at 620. Plaintiffs’ argue that any

application for an incidental take permit would be futile because the HCP expressly

prohibits incidental takes on reserve lands, which plaintiffs’ property was classified as.

See HCP Section 6.6 (“Reserve Lands are those State and private parcels located within

the proposed reserve boundary presented in this HCP. No incidental take of desert

tortoises will be allowed on reserve lands.”).

In the instant case, the plaintiffs cannot show that applying for a section 10

incidental take permit would be futile. Although the HCP clearly contemplates

disallowing development on reserve lands, it also states, as discussed above, that for

those landowners who chose not to participate, “the HCP will have no legal effect on

their property and the HCP will place no restrictions on land use within the reserve.”

HCP Section 3.2. In such circumstance, the court cannot assume that the FWS will

foreclose all development of plaintiffs’ land. The FWS has preserved its discretion with

regard to development, by agreeing in the HCP that some development will be allowed

under Section 10. Because Section 10 gives the FWS discretion to allow for

development in areas designated as critical habitat under the ESA, the court cannot say

that the permissible uses of the plaintiffs’ property are known to a reasonable degree of

certainty as contemplated by Palazzolo. The purpose of the Section 10 permitting

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process is to give the FWS the opportunity to review and balance the competing concerns

of critical habitat protection and development. Reconciling these competing goals is

precisely why a party is required to seek an administrative decision before a takings claim

can ripen. Cf. Boise Cascade Corp., 296 F.3d at 1351.

Accordingly, because plaintiffs have failed to seek an incidental take permit and

have never been denied such a permit by FWS, the court concludes that plaintiffs’ claim

for a regulatory taking is not ripe and must be dismissed without prejudice for lack of

jurisdiction.

C. Any Concerns Related to the Statute of Limitations are Moot.

The final issue before the court on defendant’s motion is whether plaintiffs’ claims

are barred by the statute of limitations. “Every claim of which the United States Court of

Federal Claims has jurisdiction shall be barred unless the petition thereon is filed within

six years after such claim first accrues.” 28 U.S.C. § 2501. Plaintiffs contend that that

their Fifth Amendment takings claim and breach of contract claim did not accrue until

2010 or 2011 at the latest, which is when the government allegedly cut off negotiations to

purchase plaintiffs’ land and thus denied just compensation for the land. Defendant

argues that any takings claim would have accrued no later than 1996, when the HCP and

Implementation Agreement were signed, and thus any claim for a regulatory taking

would be untimely as to the statute of limitations. Defendant further argues that with

regard to any breach of contract claim, the statute of limitations would not reset with

every failed negotiation and that, at most, plaintiffs would only be able to argue breach of

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contract with regard to the most recent negotiations for the sale of 9.02 acres, while all

other acreage would be barred.

A claim against the United States first accrues when all the events have occurred

that are necessary to fix the liability of the government and entitle the claimant to demand

payment and sue for money. L.S.S. Leasing Corp. v. United States, 695 F.2d 1359, 1365

(Fed. Cir. 1982); Lins v. United States, 688 F.2d 784, 786088 (Ct. Cl. 1982). A cause of

action accrues and the statute of limitations begins to run when a plaintiff is armed with

the facts about the harm done to him. United States v. Kubrick, 444 U.S. 111, 123

(1979); Applegate v. United States, 25 F.3d 1579, 1581-84 (Fed. Cir. 1994).

The Federal Circuit has held that in a regulatory takings case, the statute of

limitations does not begin to accrue until the claim is ripe. Bayou Des Familles Dev.

Corp. v. United States, 130 F.3d 1034, 1038 (Fed. Cir. 1997) (determining that the

inquiry for the court to decide is when did a parties’ “takings claim become ripe for

adjudication” because that signifies “starting the statute of limitations clock.”). This

precedent has been consistently followed in this court. See Barlow & Haun, Inc. v.

United States, 87 Fed. Cl. 428 (Fed. Cl. 2009) (noting that “[a] regulatory taking claim is

ripe (and thus accrues) when the administrative agency has arrived at a final, definitive

position regarding how it will apply the regulations at issue to the particular land in

question.”)(internal quotations and citations omitted); Royal Manor, LTD v. United

States, 69 Fed. Cl. 58, 62 (Fed. Cl. 2005) (“It is well established that an as-applied

regulatory takings claim for economic damages does not ripen until there is a definitive

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position regarding how the statute will apply to the particular property in question.”); Id.

at 61 (“[A] regulatory takings claim accrues at the same time that it ripens . . . .”).

Benchmark Res. Corp. v. United States is analogous to the instant case. In

Benchmark, the plaintiff mining companies filed suit after the government, acting

through the Office of Surface Mining Reclamation and Enforcement (“OSM”),

designated certain portions of plaintiffs’ property as unsuitable for surface mining. See

74 Fed. Cl. 458 (Fed. Cl. 2006). The government moved to dismiss, arguing that

plaintiffs’ takings claim was unripe because it had never petitioned OSM for a permit

application. Id. at 464. The court agreed with the government in dismissing plaintiffs’

takings claim as unripe, noting that it was uncontested that plaintiffs’ had not sought a

permit from OSM and holding that “[b]ecause plaintiffs’ takings claim does not come

within the futility exception to the administrative exhaustion doctrine, the claim is not

ripe for adjudication.” Id. at 469. In dismissing the plaintiffs’ amended complaint

without prejudice, the court noted that, should plaintiffs’ apply and be denied a permit by

OSM in the future, they would be free to challenge that administrative decision in the

Court of Federal Claims. Id. at 475.

Having already determined that plaintiffs’ takings claim is unripe, the court holds

that plaintiffs’ have not run afoul of the statute of limitations with regard to the property

they own. Precedent is clear that in a regulatory takings case, the statute of limitations

does not start to accrue until the matter is ripe. The matter will become ripe in the instant

case when plaintiffs’ file for a Section 10 permit and receive a decision. It is axiomatic

then that a regulatory takings case which is unripe cannot be barred by the six year statute

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of limitations. Plaintiffs’ remain free to seek an incidental take permit to develop their

land or continue negotiations with the government for the purchase or exchange of their

property. Plaintiffs’ takings claim cannot be barred by the statute of limitations because

the claim is not ripe.

To the extent the government argues that the statute of limitations also bars

plaintiffs’ claim for breach of contract, the court believes it does not require a substantive

discussion. It is clear from the analysis supra in Section A that plaintiffs are not parties

to a contract with the government nor are they third party beneficiaries by the plain

language of the Implementation Agreement. The court has also determined that the

government did not have an enforceable duty to purchase their property in any case.

Accordingly, any argument regarding the statute of limitations on this issue is moot

because plaintiffs’ have failed to state a claim upon which relief can be granted. See

Shinnecock Indian Nation v. United States, 782 F.3d 1345, 1350 (Fed. Cir. 2015) (citing

Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp., 549 U.S. 422, 431 (2007) for the

proposition that “a federal court has leeway to choose among threshold grounds for

denying audience to a case on the merits.”).

IV. CONCLUSION

For the reasons above, the government’s motion to dismiss is granted in part and

denied in part. The court holds that plaintiffs’ claim for a regulatory taking is not ripe and

thus the government’s motion to dismiss Count I of the complaint is GRANTED.

Plaintiffs’ takings claim in Count I shall be dismissed without prejudice. Additionally, the

court holds that plaintiffs’ claim for breach of contract fails to state a claim against the

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United States. Accordingly, the government’s motion to dismiss Count III of the

complaint for failure to state a claim is GRANTED. The government’s motion to

dismiss based on the statute of limitations is DENIED as moot. The clerk is directed to

enter judgment accordingly. No costs.

IT IS SO ORDERED.

s/Nancy B. Firestone

NANCY B. FIRESTONE

Senior Judge

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