Petition for Writ of Certiorari — Laughlin Recreational Enterprises Inc. v. United States

T Office Supreme Court, WS.

$4-475 FILED

No.

In the Supreme Court o

United States

October Term, 1983

LAUGHLIN RECREATIONAL ENTERPRISES, INC.,

Petitioner,

v.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES

COURT OF APPEALS

FOR THE NINTH CIRCUIT

JERROLD A. FADEM

MICHAEL M. BERGER

DONALD L. WOOD, ESQ. of FADEM, BERGER & NORTON

A Professional Corporation A Professional Corporation

2525 West Charleston Boulevard 501 Santa Monica Boulevard

Las Vegas, Nevada 89102 Post Office Box 2148

Santa Monica, California 90406

Telephone: (213) 451-9951

Attorneys for Petitioner

Westside Law Publishers Los Angeles, California (213) 477-0491

QUESTION PRESENTED

When the government files a condemnation action to

acquire property and, during the pendency of the proceed-

ing, exercises dominion and control over the property in

such a way that the property owner is prevented from

making any use of the property, does the Constitution

compel the payment of prejudgment interest?

PARTIES

All parties are named in the caption.

iii

TOPICAL INDEX

Question Presested i

Parties 1

Opinion Below i

Jurisdiction 2

Constitutional Provisions, Statutes, And Rules 3

Statement Of The Case 3

THIS CASE IS NOT CONTROLLED BY KIRBY.

ITIS THE NEXT STEP BEYOND KIRBY. 8

AT A MINIMUM, THIS CASE OUGHT TO BE

REMANDED TO THE COURT OF AP-

PEALS WITH DIRECTIONS TO RECON-

SIDER ITS SUPERFICIAL READING OF

KIRBY. 9

Conclusion 10

Appendix A Al

Appendix B A2

Appendix C A3

Appendix D A4

iv

TABLE OF AUTHORITIES CITED

Cases Page

Kirby Forest Indus., Inc. v. U.S. (1984) _. US

, 81 L Ed 2d 1 See

U.S. v. 319.88 Acres [D Nev 1980] 498 F.Supp.

763 6,9

Statutes

28 USC §1254(1) 3

40 USC §257 3

40 USC §258a . 5

Constitutions

U.S. Constitution, Fifth Amendment 3

Regulations

36 CFR §2.15 3, 6, 8

No.

In the Supreme Court of the

United States

October Term, 1983

LAUGHLIN RECREATIONAL ENTERPRISES, INC.,

Petitioner,

v.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES

COURT OF APPEALS

FOR THE NINTH CIRCUIT

The Petitioner respectfully prays that a Writ of Certiorari

issue to review a judgment and order of the United States

Court of Appeals for the Ninth Circuit.

OPINION BELOW

The Court of Appeals granted the motion of the United

States for summary affirmance, in a belief that such action

was compelled by this Court’s decision in Kirby Forest

Indus., Inc. v. U.S. (1984) ____ US___., 81 LEd 2d 1.

The Order is App. A. An amended Order is App. B.

JURISDICTION

This is an eminent domain case in which approximately

320 acres of vacant land in Laughlin, Nevada were

acquired by the United States for expansion of the Lake

Mead National Recreation Area. The property was

owned by Petitioner Laughlin Recreational Enterprises,

Inc. (the Property Owner).

As the property was to be included in a recreation area,

the United States wanted it to remain vacant.

A lis pendens was filed at the time the complaint was

filed. While no Declaration of taking was filed, and no

order authorizing possession was obtained, federal officials

watched the property as though it were already federally

owned. They cited one of the Property Owner's expert-

witnesses for supposedly “trespassing and destroying a

natural feature’ when he entered the subject property and

attempted to drill a small hole to leam water depth to

enable himseif to present evidence at the trial below.

Federal policy called for obtaining immediate title

transfer and physical possession if any development was

attempted.

Federal policy also prohibited gambling on the subject

property, although gambling is otherwise legal in Nevada.

The Property Owner would have used the property in part

for gambling. -

The Property Owner was prevented from making any

use of its land from the time the complaint was filed in

1976 to the entry of judgment in 1983.

For this loss of use, the Property Owner sought compen-

sation in the form of prejudgment interest. The District

Court, though acknowledging that the Property Owner

had suffered damage because of the lost ability to use the

property since 1976, believed it had no power to award

prejudgment interest.

The District Court’s judgment (App. C) was filed April

12, 1983.

The judgment of the Court of Appeals (App. A) was

filed June 25, 1984. An amended version (App. B) was

filed June 29, 1984.

This Court’s jurisdiction is invoked pursuant to 28 USC

§1254(1).

CONSTITUTIONAL PROVISIONS,

STATUTES, AND RULES

This case involves:

e the Fifth Amendment to the U.S. Constitution;

e 40 USC §257; and

e 36 CFR §2.15.

All are reproduced in App. D.

STATEMENT OF THE CASE

Laughlin, Nevada is situated on the Colorado River in

the southeastern part of the state. The river forms the

boundary between Nevada and Arizona. Laughlin is 99

miles from Las Vegas. (RT 87, 89, 75) ©

The Property Owner began acquiring land in what is

now known as Laughlin, Nevada! in 1966. (RT 75-76) At

that time, there was little development other than one

recently closed slot machine club. (RT 75) By the time of

trial, significant development had occurred. There were

'The name “Laughlin” appears in three contexts in this record. The

subject property was owned by Laughlin Recreational Enterprises,

Inc., whose president is Donald Laughlin. The name of the com-

munity is also Laughlin. That name was chosen by the U.S. Postal

Service in preference to alternatives suggested by Mr. Laughlin. (RT

79) To avoid confusion, the community will be referred to in this

Petition as Laughlin and the corporation as the Property Owner.

seven casinos, with two more in prospect. (RT 76)

Between 3,500 and 4,000 people earned their living in

Laughlin. (RT 76)

Laughlin has only 65 residential units to house those

thousands of employees. (RT 93) The bulk of the working

population must commute 12-25 miles each day from

across the river in Arizona. (RT 78) There are no

significant retail commercial facilities (e.g., grocery and

department stores) in Laughlin. (RT 80)

To say there is a need for housing and general com-

mercial development in Laughlin would be understatement.

(RT 78, 93-95) In recognition, the County’s general plan

calls for such development. (RT 94)

The highest and best use of the subject property was

residential and commercial development to satisfy those

needs. There would also have been some gambling. (RT

96, 275-276) In fact, these 320 acres comprised most of

the privately owned property in the vicinity. Virtually all

other property is owned by various government agencies

or Indian Tribe reservations. (RT 87-88; Exhibit A) To

supply needed housing after the taking of the subject

property, one or more of the governmental iandowners

will have to sell property. (RT 179)

The subject property has not been developed to meet

those needs but, instead, has remained vacant and unused

because of the government’s pending acquisition. (RT

77

2Most of the facts discussed hereafter were the subjects of offers of

proof because of the District Court’s determination that prejudgment

interest could not, as a matter of law, be awarded. The parties

stipulated that if it were decided on appeal that interest could be

awarded, the appropriate rate would be decided on remand by the

District Court sitting without a jury. (RT 257, 367)

- ee “

The property was described by the government's appraiser

as “land-locked” (RT 267), although gaining access

would not have been difficult. (RT 101)

In federal bureaucratese, the subject property is an “‘in-

holding,” as it is property within the boundaries of a

federally owned park or recreation area, but privately

owned. (See RT 352, 373-374.)

The government has had a long-standing policy of not

permitting further development of “in-holding”’ property.

For at least the last 10 years, any time the owner of “‘in-

holding”’ property has sought to put any improvements on

his land, the policy has caused the government to im-

mediately file a declaration of taking (40 USC §258a),

which transfers title to the government. (RT 374)

In the teeth of that settled policy, it would have been

both pointless and senseless for the Property Owner to

expend the large sums required to plan development of the

320 acres and obtain the necessary approval of local

government agencies. Before the first spadeful of dirt

could be moved, the United States would have acquired

title to the property. (RT 374-375)

Moreover, as soon as the compiaint was filed on

October 15, 1976, the government filed a lis pendens.

From that time, the government acted as though it already

owned the subject property. An illustration of that attitude

of federal dominion occurred several months before trial.

A major issue which the Property Owner anticipated was

whether the subject property contained its own water

supply.* The Property Owner sent its hydrologist, Dr.

3This alone distinguishes the case from Kirby. There, the use the

owner might have made was simply cutting trees. (___._ US at___.,

81 L Ed 2d at 14) No detailed, expensive planning is required to cut

trees. It is to develop 320 acres of vacant land.

‘This was the second trial of this case. The District Court had

Wyman, onto property it supposedly still owned to drill a

test hole to determine the depth of the water table. When

Dr. Wyman did sc_ two different federal officers, on two

different occasions, cited him for trespassing on the land

and destroying a natural feature. (RT 234-235, 248-249)

Finally, though the property was supposedly privately

owned, the government exercised control over it through

36 CFR §2.15, which prohibits gambling activities (legal

in Nevada) because the property is surrounded by federally

owned land. (RT 423) The gambling prohibition is

extensively discussed in the District Court’s October 3,

1980 Order Granting Plaintiffs Motion For A New Tnal

after the first trial. The importance of that governmental

control was the basis for the new trial order. (The order is

reported as U.S. v. 319.88 Acres [D Nev 1980] 498

F.Supp 763.)

Thus, by filing the lis pendens, prohibiting gambling on

the subject property, establishing a policy of immediate

condemnation if development were requested, and exer-

cising dominion over the subject property by criminal

process as though it were already federally owned, the

United States prevented any use of the subject property

since at least October 15, 1976.

The District Court acknowledged both the unfairness

of its ruling denying interest and that the government’s

actions caused damage to the Property Owner:

“It is not that I don’t share the property

owner’s view that tieing up the property this way

all this time is detrimental, there is no question it

is detrimental.” (RT 368)

granted a new trial on the government’s motion. The water supply

issue had been hotly contested at the first trial.

** And, all this does create an economic hardship

and does reduce the value of the land to the

landowner. There is no question about it. But, it

seems to me that this is a policy question. You

are atte:npting to get around the hardships of the

policy by interest and I don’t think we can do

that.” (RT 370-371)

“IT don’t know exactly — I don’t want the

record to be erroneous here; I don’t say that I

have in mind a specific injury or specific dollar

amounts for Mr. Laughlin. But, I can see, having

tied up all this property all this time, he has

suffered some economic injury. We don’t have

in the record what this is.”” (RT 375)

The District Court denied any prejudgment interest

(RT 367) and entered judgment on the jury’s verdict for

the fair market value of the property.

The District Court’s view that Congress determines

what is just compensation (RT 369-370) was the basis for

denying compensation for the years of nonuse.

Because it has long been established that interest is part

of just compensation, and the determination of just

compensation is a matter for the judiciary rather than

Congress, the Property Owner appealed. On appeal,

neither side questioned the jury’s determination of fair

market value.

During the pendency of the appeal, this Court decided

Kirby Forest Indus., Inc. v. U.S. (1984) US ;

81 L Ed 2d 1. This Court concluded that where the

government does not take possession and takes no action

which restricts the owner’s ability to use his property,

prejudgment interest is not Constitutionally required.

Believing this case controlled by Kirby, the Court of

Appeals summarily affirmed, without either oral argu-

ment or an explanatory opinion.

THIS CASE IS NOT CONTROLLED BY

KIRBY. IT IS THE NEXT STEP BEYOND

KIRBY.

When this Court decided Kirby last Term, it dealt with

a time-consuming condemnation project in which the

government took no specific action against the property:

e it did not take possession;

e it did not exercise dominion or control;

e itdid not prevent the owner from using the land as

he would have in the absence of the pending

condemnation.

Those are not the facts at bench.

This case is the next step beyond Kirby. Here, the

government did take specific action which demonstrated

federal dominion and control and prevented the use of the

subject property:

e First, the Government prohibited entry on the

subject property and cited “violators” for criminal

trespass. When an expert witness hired by the

Property Owner went on the subject property, at

the Property Owner’s request, to investigate in

preparation of his testimony for trial, he was twice

criminally cited by two different federal officers.

(RT 234-235, 248-249)

e Second, the Government forbade gambling (legal

in Nevada) on the subject property through 36

CFR §2.15. (RT 423) But for that prohibition,

the highest and best use of the subject property

would have included some gambling. (See the

District Court’s opinion granting the government

a new trial in this case because of this issue in

U.S. v. 319.88 Acres |D Nev 1980] 498 F.Supp.

763.)

In Kirby, this Court did not need to address the question

of whether prejudgment interest is appropriate when the

government exercises dominion and control and deprives

the owner of his rights by criminal process. That question

is squarely presented at bench. It is the right shoe to

Kirby’s left, and merits a decision so that, between the two

cases, the law on this subject will be settled.

Kirby said when interest is not proper. This case will tell

when it is.

AT A MINIMUM, THIS CASE OUGHT TO BE

REMANDED TO THE COURT OF APPEALS

WITH DIRECTIONS TO RECONSIDER ITS

SUPERFICIAL READING OF KIRBY.

The Court of Appeals gave this case short shrift:

e there was no oral argument;

e there was no explanatory opinion.

The Court of Appeals simply granted the government's

motion for summary affirmance and entered a brief order

citing Kirby.

But, as this Court is aware, Kirby was based on its

specific facts. As this Court said:

“Tf petitioner’s depiction of the impairment of

its beneficial interests during the pendency of the

condemnation suit were accurate, we would find

its constitutional argument compelling. We

have frequently recognized that a radical curtail-

ment of a landowner’s freedom to make use of or

ability to derive income from his land may give

10

rise to a taking within the meaning of the Fifth

Amendment, even if the Government has not

physically intruded upon the premises or acquired

a legal interest in the property. . . .

“However, we do not find, prior to the pay-

ment of the condemnation award in this case, an

interference with petitioner’s property interests

severe enough to give rise to a taking under the

foregoing theory. Until title passed to the United

States, petitioner was free to make whatever use

_ it pleased of its property. The Government never

JSorbade petitioner to cut the trees on the land or

to develop the tract in some other way. Indeed,

petitioner is unable to point to any statutory

provision that would have authorized the Govern-

ment to restrict petitioner’s usage of the property

prior to payment of the award.” (Kirby, US

at ____, 81 L Ed 2d at 13, emphasis added.)

A reasoned opinion by the Court of Appeals would have

to deal with the factual differences between this case and

Kirby. For, here, there was governmental interference.

The District Court so found. There was an imposition of

government control by citing the Property Owner’s em-

ployee for ‘trespassing’ when he went on supposedly

private property and by the prohibition of gambling, an

activity otherwise legal on private property in Nevada.

If this Court believes the case does not warrant its

plenary consideration, the Property Owner asks that it be

remanded to the Court of Appeals for proper considera-

tion in light of Kirby.

CONCLUSION

This case represents the next logical step following

Kirby. It gives either this Court or the Court of Appeals

11

(on remand) the opportunity to address the necessity of

prejudgment interest when the government exercises

dominion and control over rromrty being condemned

before the government actyv2\' Suys it.

The Property Owner prays that a wn issue.

Respectfully submitted,

DONALD L. WOOD

and

JERROLD A. FADEM

MICHAEL M. BERGER _

FADEM, BERGER & NORTON

By MICHAEL M. BERGER

Attorneys for Petitioner

Laughlin Recreational Enterprises, Inc.

APPENDIX

ih Vel “er [

SO Al

eS

Clem, 8. WINBERRY

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, )

Plaintiff-Appellee, )

. )

319.88 ACRES OF LAND,MORE ) No. 83-2080

OR LESS IN CLARK COUNTY, ) DC#CV-LV-76

NEVADA, et al., ) 0199 RDF

Defendants, ) Nevada (Las Vegas)

LAUGHLIN RECREATIONAL

ENTERPRISES, INC., ' entuine

Defendant-Appellant. )

)

Before: HUG, POOLE and NELSON, Circuit Judges

Appellee’s motion for summary affirmance is granted.

Kirby Forest Industries, Inc. v. United States, 52 U.S.L.W.

4607 (S.Ct. May 21, 1984).

A TRUE COPY _

ATTEST JUL 17 1984

PHILLIP B. WINBERRY

Clerk of Court

by. l cl G Cc 7 TTA

MoCal 6/18/84 Deputy Clerk/

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,

Defendant- Appellant.

Before: HUG, POOLE and NELSON, Circuit Judges

Appellee’s motion for summary affirmance is granted.

Kirby Forest Industries, Inc. v United States, 52 U.S.L.W.

4607 (S.Ct. May 21, 1984).

Any redetermination of the value of the land because of

any increase in value since the judgment was entered in

April of 1983 and the time of actual taking, can be sought

by appellant at the time under Fed. R. Civ. R. 60(b) as

provided in Kirby. No remand is necessary.

A TRUE COPY

ATTEST JUL 1? 1984

pn ee PHILLIP B. WINBERRY

Clerk of Court

by, C44: Lil,

RECEIVED TIL 2 &§ yope Deputy Clerk/.

J

)

Plaintiff- Appellee, ) No. 83-2080

vs. ) DC# CV-LV-76

319.88 ACRES OF LAND, 0199 RDF

MORE OR LESS IN Nevada (Las Vegas)

CLARK COUNTY, NEVADA, et al., ‘

LAUGHLIN RECREATIONAL ‘ AMENDED

ENTERPRISES, INC., ) ORDER

)

APPENDIX B

A3

JUDGMENT IN A CIVIL CASE

United States District Court DISTRICT

NEVADA

CASE TITLE. DOCKET NUMBER

UNITED STATES OF CV-LV-76-199-RDF

AMERICA

Vv. NAME OF JUDGE

319.88 ACRES OF OR MAGISTRATE

LAND, etc, et al ROGER D. FOLEY

™ Jury Verdict. This action came before the Court and a

jury with the judicial officer named above presiding.

The issues have been tried and the jury has rendered its

verdict.

©) Decision by Court. This action came to trial or hearing

before the Court with the judge (magistrate) named

above presiding. The issues have been tried or heard

and a decision has been rendered.

IT IS ORDERED AND ADJUDGED

That the fair market value of subject property is $99 1 628.00.

dpe IZ 1s PUB} ENTERED

APR 12 1983

CLK .

malaga Oca Omicron

BY Laces) li Hera DEPUTY

CLERK

CAROL C. FITZGERALD

(BY) DEPUTY CLERK

F ( DATE

Ga & VW Yfron— 4/12/83

V

APPENDIX C

A4

U.S. Constitution

5th Amendment

. . . nor Shall private property be taken for

public use, without just compensation.”

se

40 USC §257

“In every case in which the Secretary of the

Treasury or any other officer of the Government

has been, or hereafter shall be, authorized to

procure real estate for the erection of a public

building or for other public uses, he may acquire

the same for the United States by condemnation,

under judicial process, whenever in his opinion it

is necessary or advantageous to the Government

to do so, and the Attomey General of the United

States, upon every application of the Secretary

of the Treasury, under this section and section

258 of this title, or such other officer, shall cause

proceedings to be commenced for condemnation

within thirty days from receipt of the application

at the Department of Justice.”

36 CFR §2.15

““Gambling in any form, or the operation of

gambling devices, whether for merchandise or

otherwise, is prohibited on the federally owned

lands of a park area, and on privately owned

lands within park areas under the legislative

jursidiction of the United States.”

APPENDIX D

PROOF OF SERVICE BY MAIL

State of California

SS.

County of Los Angeles

I, the undersigned, say: I am and was at all times herein

mentioned, a citizen of the United States and a resident of

the County of Los Angeles, over the age of eighteen (18)

years and not a party to the within action or proceeding;

that my business address is 11333 Iowa Avenue, Los

Angeles, California 90025; that on September 21, 1984,

I served the within Petition for Writ of Certiorari in said

action or proceeding by depositing true copies thereof,

enclosed in a sealed envelope with postage thereon fully

prepaid, in the United States mail at Los Angeles,

California, addressed as follows:

Clerk, U.S. Supreme Court

One First Street, N.W.

Washington, D.C. 20543

(Original and 40 copies)

Kathleen P. Dewey

David C. Shilton

Room 2339

10th and Constitution Avenue, N.W.

Solicitor General Washington, D.C. 20530

Department of Justice

Washington, D.C. 20530

I declare under penalty of perjury that the foregoing is

true and correct. Executed on September 21, 1984, at Los

Angeles, California.

Joy Rivelli Miller

(Original signed)