# Petition for Writ of Certiorari — Gurney v. United States, 41 Fed. Cl. 2366 (1998) (No. 97-1440)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1998

## Text

/ Supreme Court, U.S.
\ | FILED

4

No.97- 'Q'Y1.440 MAR 3~ 1998

OFFICE OF THE CLERK
IN THE

Supreme Court of the Anited States

OCTOBER TERM, 1997

CLIFFORD F. GURNEY, et al.,
Petitioners,
V.

UNITED STATES OF AMERICA,
Respondent.

On Petition for Writ of Certiorari to the
United States Court of Appeals
for the Federal Circuit

PETITION FOR WRIT OF CERTIORARI

STEPHEN M. TRUITT

Counsel of Record
CHARLES H. CARPENTER
PEPPER HAMILTON LLP
1300 Nineteenth Street, NW
Washington, DC 20036-1685
(202) 828-1200

JOHN A. WESTBERG

LEWIS M. JOHNSON
WESTBERG & JOHNSON

1300 Nineteenth Street, NW
Washington, DC 20036-1685
(202) 835-9810

PRESS OF BYRON S. ADAMS # WASHINGTON, D.C. # 1-800-347-8208

ae

i
QUESTIONS PRESENTED
I.

Whether, when the consideration exchanged for real and
personal property taken per se is less than just compensation,
the United States is liable to pay the property owners the
constitutional shortfall in a Tucker Act proceeding?

Il.

Whether the executive branch may finally fix the
amount to be paid for property it takes without impermissibly
encroaching on the power of the judicial branch to determine
just compensation?

iil.

Whether the receipt of a substantial benefit less than
just compensation for the appropriation of a citizen’s property
makes that appropriation non-compensable?

IV.

Whether the President’s power to espouse and settle
claims against a foreign government is an appurtenance of all
property acquired in international commerce or located abroad
so that an exercise of this power is not a compensable taking?

il
LIST OF PARTIES

The following persons and entities participated in the
case below and are petitioners here:

Walter Abrahim-Youri

Emanuel Aryeh

Nouriel Aryeh

Ouriel Aryeh

Samuel Aryeh

Mehrdad Azarmi

Jalil Fardanesh

Delta Geotechnical Consultants, Inc.
Clifford F. Gurney

David Laylin

Lockwood Green International, Inc.
Bahman Maalizadeh

Odsiran Data Systems, Inc.
Odsiran Meteorological Systems, Inc.
Robert L. Rutz

Jean Bijan Samimy, M.D.

Lina Z. Samimy, M.D.

Carolyn D. Spatta

University of Northern Colorado
University of Pittsburgh

Richard C. Willson, Jr.

Dara Zargar

Respondent the United States was the only other party
in the Court below.

ill

LIST OF PARENT COMPANIES AND
NON-WHOLLY OWNED SUBSIDIARIES

Philipp Holtzmann USA Inc., a wholly owned
subsidiary of Philipp Holtzmann, is the parent corporation of
petitioner Lockwood Green International, Inc. Lockwood
Green does not have any non-wholly owned subsidiaries.
Odsiran Meteorological Systems, Inc. and Odsiran Data
Systems, Inc. are both wholly owned subsidiaries of Ocean
Data Systems, Inc. Neither has non-wholly owned subsidiaries.
Delta Geotechnical Consultants, Inc. has no parent, and no non-
wholly owned subsidiaries.

OPINIONS BELOW

JURISDICTION

iV

TABLE OF CONTENTS

CONSTITUTIONAL PROVISIONS, TREATIES

STATEMENT OF THE CASE
The Small Claims at the Tribunal ..........
‘The Settlement Agreement ..........00055-
The Commission’s Computation of Awards ..
Te TONE os an hose wens oe abs

bo

CONCLUSION

AND STATUTES INVOLVED ...........

The Decision Below is Inconsistent with this
Court’s Decisions in the Rail Reorganization

Cases and Dames & Moore v. Regan........

The President’s Determination of “Just
Compensation” Usurps a Purely Judicial

Se UNRER ARSE EP BT TSE 1 aun Sa tee SOAR AL sor

The Decision Below Impermissibly Broadens

this Court’s Decision in YMCA ............

The Court of Appeals’ Inclusion of the
Power of Eminent Domain in the “Logically
Antecedent Analysis” Required by Lucas,

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TABLE OF CITED AUTHORITIES

Page
Cases
Brannan vy. City of Tulsa, 932 P.2d 44 (Okla. Ct.
Fe Ee. eee a oe 19
California Housing Securities, Inc. v. United States.
Son we Soe (ree. Ce. 100E) oo ek 28

Chas. T. Main, Int'l, Inc. v. Khuzestan Water & Power
Authority, 651 F.2d 800 (Ist Cir. 1981) 7, 10, 11, 26

Colorado Department of Health v. The Mill, 887 P.2d 993
(Colo. 1994), cert denied, 515 U.S. 1159 (1995) . 23

Commodity Futures Trading Commission v. Schor,
SFE Sid MADCON iy do fee wh ha 17

Consarc Corp. v. Iraqi Ministry, 27 F.3d 695
er Aas Rs Ni Ua a ge eee 3 ee

Corn v. City of Lauderdale Lakes, 95 F.3d 1066 (11th
Cir. 1996), cert denied, 118 S. Ct. 441 (1997) ... 22

Dames & Moore v. Department of Treasury, 544 F. Supp.
PE Gee. CN EMME) ois nb dh as eS 3

Dames & Moore v. Regan, 453 U.S. 654 (1981) ... passim

E-Systems, Inc. v. United States, 2 Ct. Cl. 271, 278 (1983) . 8

Exxon Corp. v. Iran, 17 Iran-U.S. Cl. Trib. Rep. 3 (1987) . 7

vi
Fahey v. Mallonee, 322 U.S. 245 (1947) ............. 28
Gray v. United States, 21 Cl. Ct. 340 (1886) ..... . 25, 26

Hail v. City of Santa Barbara, 833 F.2d 1270 (9th Cir.
1986), cert denied, 485 U.S. 940 (1988) ......... 7

Hohri v. United States, 782 F.2d 227 (D.C. Cir. 1986),
vac sted on other grounds, 482 U.S. 64 (1987) ... 19

Juragua Iron Co. v. United States, 212 U.S. 297 (1909) . 24

Kim v. City of New York, 681 N.E.2d 312 (N.Y.),
Care memes, LISS. Gi Sis? 2 bees Sei cde e ae

Kirby Forest Industrial Inc., v. United States, 467 U.S. |
EE cas OU heh: See A ac uwAd otaeicnnen 8

La Abra Silver Mining Co. v. United States, 175 U.S. 423
CRE lik OSS WER CERO R ee eb aee Lc ok eek 3

Lord Corporation, a claim of less than $250,000 presented
by the United States of America v. Iran Helicopter
Support and Renewal Company, 18 Iran-U.S. Cl.
po RR Of ee oe ae ee eee 2

Loretto v. Teleprompter Manhattan CATV Corp., 458
Ch ae CLE i Ps Nc wee oe Leen ohn eve ues 20

Lucas v. South Carolina Coastal Council, 505 U.S. 1003
CRE 2s Sip wees CECE Uh eae passim

Mitchell v. Harmony, 54 U.S. (13 How.) 115 (1851) .... 24

vii

Monangahela Nav. Co. v. United States, 148 U.S. 312
SOO 30k6 465d axed eecae ls rua ok 15, 16, 17

National Board of Young Mens Christian Ass'ns v. United
et passim

Nollan v. California Coastal Committee, 483 U.S. 825
SeEN Abed baeus eae Ce cea vb ais 27

Penn Central Transportation Co. v. New York City,

GO ns UN RII oS ee gh Stier ts 6, 19
Porter v. United States, 496 F.2d 583, 204 Ct. Cl. 355

(1974), cert. denied, 420 U.S. 1004 (1975) ...... 24
Regional Rail Reorganization Act Cases, 419 U.S. 102

CPE eater eee ee eee ha. passim
a ty ee I RUN gy 24
Ribas y Hijo v. United States, 194 U.S. 315 a. 3 ae 24

Seery v. United States, 127 F. Supp. 601, 130 Ct. Cl. 481
EE Sake Peeves euiy ess Ae Gee yo ERS 24

Stevens v. City of Cannon Beach, 854 P.2d 449
(Or. 1993), cert denied, 510 U.S. 1207 (1994) ... 22

Suitum v. Tahoe Regional Planning Agency, 117 S. Ct.
ENED TE ous he cbdiscica wand ete ue SY 21

Turney v. United States, 115 F. Supp. 457, 126 Ct. Cl.
PEE Case wx niche ag ly eae od toe ws 24

Vill

Wallace v. City of Atlantic City, 608 A.2d 480

ees a aE BOE ipl 3 sig kad ad 96 bere ee 40% 19
Ware v. Hylton, 3 U.S. (3 Dall.) 199 (1796) ........... 27
United States v. Belmont, 303 U.S. 324 (1937) ........ 23
United States v. Caltex, 344 U.S. 149 (1952) .......... 24

United States v. New River Collieries, 262 U.S. 341
ho 4. RRC AS en eta RS TE i ae aa 16

United States v. Sioux Nation of Indians, 448 U.S. 371
to ee Be UR Rt AE oo Pe Bry eae ee oe

United States v. Sperry, 493 U.S. 52 (1989) ........ 25, 26
United States v. Verdugo-Urquidez, 494 U.S. 259 (1990) . 24

Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579

CEP ceva ete Saadeh kane ER Paes 9
Statutes
28 Ss LR Kaa ee CERT ERGed ew hee ESR REG
ee a BE EW hw as ws wai ede wie-6 die 6 bo aieee aes 10
RES EE 0 oielded dwt ho ew sb be eR ee aeons 10
Be as SCE h clk cb de ewals ger orebieniaas 1,2

Be Sas A ES Cea a a Sid TA Rs Oe Sela 15

a

Miscellaneous

Cohen & Ravitch, Economic Sanctions, Domestic
Deprivations, and the Just Compensation
Clause: Enforcing the Fifth Amendment in
the Foreign Affairs Context, 13 Yale J. Int’]
ep SE Aaa ais pu eR hr 9

Declaration of the Government of the Democratic and
Popular Republic of Atgeria Concerning the
Settlement of Claims by the Government of the
United States of America and the Government
of the Islamic Republic of Iran, January 19,

ea ie J Bee §, es ne 14
8 M. Whiteman, Digest of International Law iy Da 3
1 Nichols on Eminent Domain .................. 26, 27

Restatement (Second) of Foreign Relations Law § 211
NEE ON a wae SOU Re eC cine: 3

Testimony of Lloyd Cutler, Esq. in Halliburton Co. v.
Commissioner, No. 9797-86 (U.S. Tax 0) Ran

xX

TABLE OF APPENDIX

Appendix A - Decision of the United States Court
of Appeals for the Federal Circuit,

Ere 4. Cire a ks oo Hh a: Pe ors 5

Appendix B - Decision of the United States Court

of Federal Claims, September 18, 1996 ......

Appendix C - Settlement Agreement in Claims of Less
Than $250,000, Case No. 86 and Case No. B38

Appendix D - Halliburton Corp. v. Commissioner,
No. 9797-86 (U.S. Tax Ct.), Excerpts from
Direct Examination of Lloyd N. Cutler, Esq.,

Wee a oe ee

Appendix E - Affidavit of Lewis M. Johnson ........

Appendix F - Final Decision of the Foreign Claims
Settlement Commission, Jn the Matter of

Co. SE ov tie ewerds haNkwies ba

Appendix G - Final Decision of the Foreign Claims
Settlement Commission, Jn the Matter of

Dara Zargar, Lina Zargar Samimy ..........

Appendix H - Final Decision of the Foreign Claims
Settlement Commission, Jn the Matter of

ESP OSS Ee Rete ot CDT IE

Appendix I - Final Decision of the Foreign Claims
Settlement Commission, Jn the Matter of

University of Northern Colorado ...........

. 30a

xi

Appendix J - Final Decision of the Foreign Claims
Settlement Commission, Jn the Matter of
Jalil Fardanesh

OPINIONS BELOW

The opinion of the Court of Appeals for the Federal
Circuit (App. 1a) is not yet reported. The opinion of the Court
of Federal Claims (App. 18a) is reported at 38 Fed. Cl. 482
(1996).

JURISDICTION

The judgment of the Court of Appeals was entered
December 4, 1997. (App. la.) This Court’s jurisdiction is
invoked under 28 U.S.C. 1254(1).

CONSTITUTIONAL PROVISIONS, TREATIES
AND STATUTES INVOLVED

Amendment V of the United States Constitution
provides “nor shall private property be taken for public use,
without just compensation.” The Tucker Act, 28 U.S.C.
1491(a)(1) provides “[t]he United States Court of Federal
Claims shall have jurisdiction to render judgment upon any
claim against the United States founded . . . upon the
Constitution . . .” The Settlement Agreement for Claims of
Less Than $250,000, Case No. 86 and Case No. B38, made
between the United States and the Islamic Republic of Iran on
May 13, 1990, is reproduced in the Appendix at 30a-40a.

STATEMENT OF THE CASE

Petitioners’ are United States nationals who owned real
and personal property and related claims against the

' Petitioners are individuals, companies, and educational
institutions. Their complaint was filed on their own behalf and as
representative of all claimants receiving awards from the Foreign Claims
Settlement Commission. Their motion for class certification was denied as
moot by the Court of Federal Claims.

2

Government of Iran (“Iran”) arising out of the Iranian
Revolution. The real and personal property was situated in
Iran. The claims against Iran were pending at the Iran-United
States Claims Tribunal in the Hague, The Netherlands. In 1990
the President, acting alone, condemned the petitioners’ property
and conveyed it to Iran “as is and where is.” The President also
fixed compensation for the property at $50,000,000. The
Foreign Claims Settlement Commission determined the value
of the property taken to be far in excess of this amount.
Petitioners filed suit in the Court of Federal Claims under 28
U.S.C. 1491(a)(1) to secure just compensation under the Fifth
Amendment: a “cash award” for the “constitutional shortfall.”

*** * *

The Algiers Declarations (“Declarations”), upheld by
this Court in Dames & Moore v. Regan, 453 U.S. 654 (1981),
resolved the “Iranian Hostage Crisis.” The Declarations moved
adjudication of the claims of U.S. nationals against Iran arising
out of the Iranian Revolution from U.S. courts to a new arbitral
forum (the Iran-United States Claims Tribunal or “Tribunal”’)
and provided funding for awards in favor of United States
claimants. The Declarations also divided claims in two
categories, large and small. Large Claims ($250,000 or more)
were presented at the Tribunal by each Large Claimant itself.
Small Claims, although also referred to the Tribunal, were
presented by the United States as “trustee, guardian and
representative,” on behalf of the Small Claimants.’

? Regional Rail Reorganization Act Cases, 419 U.S. 102, 148
(1974).

* Lord Corporation, a claim of less than $250,000 presented by the

United States of America v. Iran Helicopter Support and Renewal
Company, 18 Iran-U.S. Cl. Trib. Rep. 377, 384 n.3 (1988). The United
(continued...)

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3

The Small Claims at the Tribunal

The Tribunal commenced proceedings in 1983 on some
2,800 Small Claims filed with it. At the Tribunal, prevailing
Small Claimants* collected payment in full including interest
on awards to the date of payment. Iran has replenished the
security account for the payment of Tribunal awards several
times so that every Tribunal award against Iran has been paid
in full including interest to the time of payment.

The Settlement Agreement

In May 1990, without specific notice to or consent of
the Small Claimants, the United States entered into the
Settlement Agreement (App. 30a) expressly appropriating all
Small Claims by means of espousal.* It then conveyed the
claims to Iran. In addition, the United States conveyed to Iran
all property, real or intangible, that was the subject matter of a

*(...continued)
States considered the relationship between the Small Claimants and the
government to be, “if anything, one of greater trust than that of private
clients to their attorney.” Dames & Moore v. Department of Treasury, 544
F. Supp. 94, 99 (C.D. Cal. 1982) (quoting declaration of James H. Michel,
Deputy Legal Advisor of the Department of State).

* Of the 32 reported small claims decisions, 19 (59% of those
decided) were adjudicated in favor of U.S. claimants. Seventy-one Small
Claimants received awards on agreed terms. Thus, of the Small Claims
resolved at the Tribunal by decision or Tribunal approved settlement, 87%
received an award. The comparable statistic for Large Claimants is 74%.
(App. 46a, 47a. Johnson Aff.).

* “Espousal” is the formal taking up of a citizen’s claim against a
foreign sovereign, see Restatement (Second) of Foreign Relations Law
§ 211 comment (a) (1965), and vests title to the claim in the United States.
See La Abra Silver Mining Co. v. United States, 175 U.S. 423, 459 (1899);
8 M. Whiteman, Digest of International Law 1216-33 (1967).

4

Small Claim or related to it even if the Claim had been
withdrawn, dismissed on jurisdictional grounds, was never
filed, or even if the claimant still owned the property in
question.© The Settlement Agreement also resolved two
outstanding claims of the United States arising from defaulted
loans to Iran. In exchange for claims’ dismissals and
termination and related property transfers Iran agreed to pay the
United States the sum of $105,000,000.

Under the terms of the Settlhement Agreement, the
allocation of the $105,000,000 between the three categories of
claims (Small Claims, No. 86, and B38) was "within the sole
competence and responsibility of the Government of the United
States." (App. 34a (Settlement Agreement § III (iii)).) The
government allocated $50 million for payment of the Small
Claims and the remaining $55 million for payment of two other
claims, which were claims of the United States itself arising
from loans it had made to Iran. The United States thus satisfied
its own claims to the detriment of the Small Claimants.

The Commission’s Computation of Awards

The Small Claims were referred to the Foreign Claims
Settlement Commission (“Commission”) for valuation. The
Commission was directed to decide each claim applying
Tribunal precedent, taking into account defenses available to
Iran. (App. 34a (Settlement Agreement § III (v)).) It made
awards on only about one third of the Small Claims,

* This happened in cases where the claimant alleged an
expropriation by Iran but failed to show it and thus remained the owner of
the property in question up to the date of the Settlement Agreement. See,
e.g., App. 90a (Matter of Fardanesh); App. 60a (Matter of Zargar); App.
76a (Matter of Azarmi).

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5

considerably less than the two-thirds or better success rate of
claimants at the Tribunal.

Where the property taken was a claim against Iran, the
Commission included in its award interest accruing from the
time the claim arose to June 22, 1990, the date the claim was
taken by the Agreement. In cases where the United States took
property related to a claim (real or personal property still
owned by a Small Claimant because the expropriation by Iran
was not established as alleged), the Commission awarded no
interest because no interest had accrued before June 22, 1990.’

Small Claimants whose choses in action were taken did
not receive what the Commission found due, however. The
United States paid these petitioners less than the Commission
awarded because the $50,000,000 set by the President to pay
the claims was insufficient.’ Secondly, the United States
neither computed nor paid any interest for the period after the

’ The reasoning was that the claimant continued to own the
property up to the date of the Settlement Agreement, when it was taken, and
interest was not due, therefore, for this period. See App. 91a (Matter of
Fardanesh). Such prevailing Small Claimants received the full amount of
whai the Commission awarded but no interest for the period from the
Settlement Agreement to the payment, almost five years.

* Petitioners here were awarded in toto principal of $3,335.945.41
and interest up to June 22, 1990 of $2,801,408.28. Only $1,046,971.12 of
this interest found due was paid, leaving a shortfall of $1,754,437.16. or
approximately 29% of the total! awarded by the Commission. The
comparable statistics fc~ the claimants as a whole are principal of
$41,570,936.31, interest through June 22, 1990 of $44,984,859.31, with a
shortfall of $29,457,290.66.

No Petitioner received interest for any period after June 22, 1990.
To the initial underpayment, then, must be added (a) approximately four
years of interest on the entire award, as it came after the taking and (b) an
additional three years of interest on the underpayment.

6

Settlement Agreement to the date of payment, which was
almost five years. This cash shortfall affected all successful
claimants.

Petitioners then sued in the Court of Federal Claims
asserting their real and personal property had been taken per se
and that the payment received was less than just compensation
as defined by this Court. Petitioners sought a partial summary
judgment of the United States’ liability for the constitutional
shortfall between what petitioners received and fair market
value of their houses, orchards, claims, bank accounts, and
businesses at the time of their appropriation and conveyance by
the United States to Iran and interest to the date of payment.

The Decisions Below

The Court of Federal Claims denied petitioners’ motion
and granted the United States’ cross-motion for summary
judgment. The court rejected petitioners’ contention that their
property had been taken per se. Applying its interpretation of
the analysis announced by this Court in Penn Central
Transportation Co. v. New York City, 438 U.S. 104 (1978), the
court determined that the espousal and settlement did not
amount to a compensable taking because, primarily, some
compensation had been made available.

The Court of Appeals for the Federal Circuit recognized
that petitioners’ property had been taken per se, not merely
regulated.’ (App. 8a.) In the court’s view, however, this was

* The court refers to the property affected as “claims” against Iran
without acknowledging that real property, tangible property, as well as
intangibles other than claims, were also taken and conveyed to Iran. See
e.g., App. 84a, 90a (Matter of Fardanesh: taking of two pieces of real
property); App. 63a (Matter of Zargar: taking of apartment building and

(continued...)

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7

not enough to find governmental liability. The court concluded
that the factors identified by the Court of Federal Claims in its
regulatory takings analysis under Penn Central were “relevant”
in determining if there had been a “compensable taking.”””°
(App. 8a.) The court then denied liability finding that because
the President has the power to settle claims against a foreign
sovereign, “it does not strain Lucas [v. South Carolina Coastal
Council, 505 U.S. 1003 (1992)] beyond its intended purpose”
to hold the exercise of that power is not compensable. (App.
13a.)

Secondly, the court denied liability because it found,
without any basis in the record, that petitioners were the
“particular intended beneficiaries” of the Settlement Agreement
within the purview of National Board of Young Mens Christian
Ass’ns v. United States, 395 U.S. 85, 92 (1969), and that they
had “substantially benefitted” from the settlement. (App. 11a.)
The court ignored that the benefit received was “demonstrably
and measurably inferior’'' to what they would have received
had they been allowed to proceed at the Tribunal where their
claims would have been paid in full including interest to the
date of payment. See Exxon Corp. v. Iran, 17 Iran-U.S. Cl.
Trib. Rep. 3, 21-22 (1987) (Brower, J., concurring).

*(...continued)
surrounding land); App. 76a (Matter of Azarmi: taking of right to refund of
down payment and right to delay damages from builder).

'° Ordinarily courts reach “dramatically different results” depending
on whether the taking is viewed as “regulatory” or per se. See Hall v. City
of Santa Barbara, 833 F.2d 1270, 1275 (9th Cir. 1986), cert denied, 485
U.S. 940 (1988).

"' Chas. T. Main Int'l, Inc. v. Khuzestan Water & Power Auth., 651
F.2d 800, 815 (1st Cir. 1981).

8

The concurrence, agreeing with the “analysis and result”
of the majority opinion, found the case to be “significant.” In
particular, the case provided an opportunity to recognize that
“certain ‘per se’ takings . .. which involve a property owner
being ousted from his property by government action . . . do not
automatically result under the fifth amendment in
compensation to the ousted property owner.” (App. 14a.) The
concurrence suggested a “rule of reason analysis” be applied
ad hoc to determine if “governmental interests in espousal are
so weak” as to warrant compensation. Petitioners having made
no such showing, the taking was therefore “non-compensable.”

The court did not discuss this Court’s decisions in
Regional Rail Reorganization Act Cases, 419 U.S. 102 (1974),
and Dames & Moore v. Regan, relied on by petitioners below.

REASONS FOR GRANTING THE WRIT

When the President, acting alone, appropriates a
citizen’s property and conveys it to another, may he also finally
fix the compensation to be paid for that property thereby
foreclosing judicial inquiry as to its actual value? Or must
there be a judicial inquiry and hearing allowing the injured
citizen to prove the “constitutional shortfall” between the
compensation set by the President and the property’s actual fair
market value at the time of transfer plus interest to the date of
payment, i.e., the just compensation this Court has required?”

'2 Interest from the taking date to the time of payment is a part of
just compensation. Regional Rail Reorganization Act Cases, 419 U.S. 102,
149 (1974), Kirby Forest Indus. Inc., v. United States, 467 U.S. 1, 10
(1984); E-Systems, Inc. v. United States, 2 Cl. Ct. 271, 278 (1988).

9

These questions “touch fundamentally upon the manner in
which our republic is to be governed.”

The President may spend the “bargaining chips” of a
citizen’s property to achieve an international agreement, but the
issue of who ultimately pays -- the national or the nation --
presents an intrinsically important question.'* The decision
below is disruptive: if there is no effective damage remedy at
law under the Tucker Act, future claimants of necessity will
seek district court injunctions on due process grounds directly
restraining implementation of agreements by the executive
before they take effect.’ Forcing that option upon claimants
would have two undesirable effects. First, it would undermine
the President’s power to negotiate such resolutions as the
Agreement’s effectiveness would turn on the outcome of such
a challenge. Secondly, the reviewing court, if not the Court of

' Dames & Moore y. Regan, 453 U.S. 654, 659 (1981).

'* See Cohen & Ravitch, Economic Sanctions, Domestic
Deprivations, and the Just Compensation Clause: Enforcing the Fifth
Amendment in the Foreign Affairs Context, 13 Yale J. Int’l] L. 146, 162
(1988), urging that the “principle of just compensation for takings abroad”
be adopted. “. . . [WJhere the United States has either signed a treaty that
‘takes’ title or allows a foreign state to assume title as a part of the
agreement, or has itself acquired use of the contested property, it should be
held liable in the Claims Court for its actions.”

'* Compare Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579
(1952), granting injunctive relief against a governmental seizure in the
absence of a Tucker Act remedy with Dames & Moore v. Regan, 453 U.S.
654 (1981), denying injunctive relief on grounds the Tucker Act damage
remedy was an adequate remedy at law thereby precluding equitable relief.
To the same effect compare the district court decision enjoining the
“conveyance taking” of rail properties because of the unavailability of a
Tucker Act remedy with the Supreme Court’s vacation of that injunction,
having found the Tucker Act remedy available. Regional Rail
Reorganization Act Cases, 419 U.S. 102, 119-20 (1974).

10

Federal Claims in a Tucker Act suit, would have to examine the
adequacy of compensation in a vacuum, in the rushed
atmosphere of a preliminary injunction hearing, and without an
appropriately “developed record.”'®

The rule announced below -- that there is no effective
Tucker Act remedy for takings by Presidential espousals -- will
govern all future executive agreements. And the “sheer
magnitude’’”’ of the Presidential power asserted makes this case
worthy of consideration by this Court. Yet very likely the
decision will never conflict with that of another circuit thereby
invoking this Court’s customary certiorari discretion. This is
an artifact of the peculiar, exclusive appellate jurisdiction of the
Federal Circuit over damage claims against the United States.
28 U.S.C. § 1295(a)(2) & (3). This exclusivity guarantees that
all money claims for takings by espousal will come through the
Court of Appeals for the Federal Circuit and nowhere else."*

Two portions of the opinion stand out for their
dissonance with Fifth Amendment jurisprudence. First, the
court below erroneously indicated that the appropriation of a
citizen’s property is not a compensable taking if the
appropriation, although complete, nonetheless confers through
a compensation mechanism a “substantial” benefit upon the
citizen which is jess than “just compensation.” This view

'* Regional Rail Reorganization Act Cases, 419 U.S. at 146.

" Dames & Moore, 453 U.S. at 688 (quoting with approval Chas.
T. Main Int'l, Inc. v. Khuzestan Water & Power Auth., 651 F. 2d 800, 814
(1st Cir. 1981)).

'* This is not true of most taking claims against the United States
which almost invariably involve real property interests located within the
United States. District courts have jurisdiction over such proceedings under
28 U.S.C. 1358 with concomitant review in all circuit courts.

1]

misconstrues this Court’s decision in National Board of Young
Mens Christian Ass’ns v. United States, 395 U.S. 85 (1969)
(“YMCA”), and would convert the Fifth Amendment to read
“nor shall private property be taken for public use without
substantial compensation.”

Second, the court erroneously found that the President’s
right to espouse is an attribute of all property acquired through
international commerce or located abroad. The court thus
misconstrued Lucas by including in the “logically antecedent”
analysis of the common law attributes of the property in
question the power of eminent domain itself.’ While some
“circularity must be tolerated . . .” in takings analysis,” the
court below surely goes too far, as it would eliminate just
compensation for takings altogether.

The holding is also wrong on the merits -- the President
is bound by the Bill of Rights “even when acting in the sphere
of international relations,”*! and does not have a right to
appropriate private property for public use without just
compensation. These issues -- whether if the citizen has
realized some benefit the appropriation of his property is not
compensable, whether the power of eminent domain itself is a
part of background law to be examined when making a Lucas
determination, and whether the unexercised power of
condemnation is an attribute of all property such that its
exercise is not compensable -- arise in any number of contexts
in the several circuits and in each of the states.

" The power of espousal is a species of the eminent domain power.
See pp. 26-27, infra.

* Lucas, 505 U.S. at 1034 (Kennedy, J., concurring).

*! Main, 651 F.2d at 813, n. 20.

12

The decisions of this Court hold that conveyance
takings of property are compensable and that victims of such
expropriation must be able to obtain a “cash award” for the
“constitutional shortfall” for their injury in a suit under the
Tucker Act, precisely the remedy the decisions below made
unavailable. Accordingly, the case merits review.

1. The Decision Below is Inconsistent with this Court’s
Decisions in the Rail Reorganization Cases and
Dames & Moore v. Regan

The taking and conveyance to Iran of petitioners’
property here are indistinguishable from the “conveyance
taking” in Regional Rail Reorganization Act Cases, 419 U.S.
102 (1974).* There the Rail Act directed the transfer by the
Penn Central (the "debtor") of its railroad property (real and
personal) to a government corporation as part of the
reorganization of the bankrupt northeast rail operations. The
Act also provided compensation consisting of money and
securities in new reorganized entities. The debtor objected on
grounds that the consideration which Congress provided in
exchange for the conveyance of its railroad properties was
inadequate. It was clear, however, that Congress in enacting
the Rail Act intended that no further compensation be provided
to the debtor above what the Act provided. The debtor then
sought to enjoin the transfer on grounds that the Rail Act
deprived it of its property without due process of law.

When this Court was considering the challenge to the
Rail Act, no court had yet passed on the constitutional
adequacy of the congressionally fixed compensation. The
availability of review under the Tucker Act, where that issue

” The court below did not discuss or refer to this case although it
was relied on by petitioners.

ee ee

ee a Gute a

13

could be resolved, saved the scheme from immediate
constitutional scrutiny:

Congress fully expected that this consideration
would provide the minimum compensation
required by the Constitution; it wished to
provide no more. If, however, that hopeful
expectation should not be fulfilled, and the

- consideration exchanged for the rail property
should prove to be less than the constitutional
minimum, the Tucker Act will be available as
the jurisdictional basis for a suit in the Court of
Claims for a cash award to cover any
constitutional shortfall. Id. at 148 (emphasis
added).

This Court applied these principles in Dames & Moore
v. Regan to the President’s power to settle claims against
foreign nations. In deciding that the Tucker Act was available
as a remedy for any unconstitutional taking, this Court
necessarily found that the interests there at issue -- claims
against Iran -- were property capable of being taken in violation
of the Fifth Amendment. Otherwise, this Court would not have
been required to decide the availability of the Tucker Act
remedy: it could simply have stated no such remedy need be
available because claims against a foreign government and
tangible property abroad, are not property, or that the United
States has an inherent right to appropriate these claims without
compensation.

Dames & Moore is this Court’s most recent discussion
of the relation of the takings clause and the foreign relations
power. But the Presidential action considered there was
fundamentally different from the action taken here. In Dames
& Moore, the President had shifted the venue of claims’

14

adjudication to the Tribunal; there was no appropriation and
transfer of claims or real property of U.S. citizens as here.
Nevertheless, a taking of property without just compensation
was threatened by the operation of the Algiers Declarations and
this made “ripe for adjudication the question whether petitioner
will have a remedy at law under the Tucker Act...” 453 U.S.
at 689.

There were several bases argued for contending that
claims might be “taken” by the Declarations without provision
for just compensation. First, there was no assurance that Iran
would replenish the escrow account once it was depleted by
awards. Thus, there was a distinct possibility that claimants
would go to the Tribunal but return with less than just
compensation or no compensation at all. Second, not all
claimants referred to the Tribunal were eligible to have their
claims heard there. Certain contract claims were excluded from
the jurisdiction of the Tribunal by Article II, Section 1 of the
Claims Settlement Declaration. Nevertheless, the Declarations
“terminated” these claims and excluded them from the
jurisdiction of the courts of any nation.”» Such claimants would
have had their claims terminated, yet not be within the
Tribunal’s jurisdiction -- a “Catch-22” leaving them with no
remedy.

Dames & Moore was in this situation. (Transcript of
Oral Argument, Petitioner’s counsel at 6.) Accordingly, it
urged that the Tucker Act damage remedy must be available to
it under Regional Rail Reorganization Act Cases should their

*> Declaration of the Government of the Democratic and Popular
Republic of Algeria Concerning the Settlement of Claims by the
Government of the United States of America and the Government of the
Islamic Republic of Iran, January 19, 1981, art. VII(2), 20 LL.M. 223
(1981).

RCE ee oe cree cru ean a oon i oe

15

claim go to the Tribunal only to be dismissed on jurisdictional
grounds. As Mr. Justice Rehnquist inquired of the Solicitor
General, “. . . what if they go through all these steps and come
back and can show a loss, then do they have a takings claim?”
(Tr. Oral argument, 41). As the provisions of 28 U.S.C. § 1502
exclude claims “arising under or dependent on a treaty” from
the jurisdiction of the Court of Federal Claims that forum
seemed unavailable for a Tucker Act claim. This dilemma was
eased by the Solicitor General’s concession at oral argument
that §1502 did not bar the Tucker Act remedy. This Court
added “We agree.” Id. at 689.

At no point did this Court suggest that Dames &
Moore’s claim was anything but property subject to the
protection of the Fifth Amendment and capable of being taken
by the United States.” Nor was it suggested that the President
had an “easement” of some kind allowing him to take complete
possession of its claim without compensation. Had such been
the case, much of this Court’s opinion would have been
unnecessary.

The impact of the Settlement Agreement is far more
direct than the potential effect of the Declarations on Dames &
Moore’s claims. Here petitioners’ property was appropriated
and conveyed to Iran.

2. The President’s Determination of “Just
Compensation” Usurps a Purely Judicial Function

This Court considered in Monangahela Nav. Co. v.
United States, 148 U.S. 312 (1893), legislation fixing the

* This seems to be the thrust of the opinion below when it suggests
that the right to compensation is not in petitioners’ “bundle of sticks”
because the property involved is not located in the United States.

16

compensation to be paid for property condemned, locks and a
dam on the Monangahela River, at a sum not to exceed
$161,733.13. The law also stated that in proceedings to value
the property, “the franchise of said corporation to collect tolls
shall not be considered.” In holding that the Congressionally
imposed dollar limit could not be given effect, this Court stated

By this legislation Congress seems to have
assumed the right to determine what shall be the
measure of compensation . . . But when the
taking has been ordered, then the question of
compensation is judicial. It does not rest with
... the legislature . . . to say what compensation
shall be paid, or even what shall be the rule of
compensation.” 148 U.S. at 327 (emphasis
added).

An unbroken line of this Court’s decisions has
maintained the vitality of this proscription. United States v.
New River Collieries, Co., 262 U.S. 341 (1923), reiterated “’. . .
ascertainment of compensation is a judicial function, and no
power exists in any department of the government to declare
what compensation shall be or to prescribe any binding rule in
that regard.” Id. at 343-44. More recently, in 1980, this Court
reaffirmed “. . . the ancient principle that the determination of
the measure of just compensation for a taking of private
property ‘is a judicial and not a legislative question.’” United
States v. Sioux Nation of Indians, 448 U.S. 371, 417 n. 30
(1980).

What the Congress acting together with the President is
forbidden to do cannot be accomplished by the President acting
on his own authority. Yet that is the result of the decision
below. The President has taken property and assumed to
himself the wholly “judicial function” of determining the

)

ag SEPT PGA, EPS at eet cdney oe VL ee

17

amount of “just compensation.” In finding that the President
had provided an adequate alternative to either continued
enjoyment of the property or just compensation, the Federal
Circuit endorsed this procedure. This stands in contradiction
to Monangahela and its progeny.

The encroachment by the President on the function of
another coequal department, the judicial branch, is neither
minor nor inconsequential. It is thorough and complete: there
is essentially no role for the judiciary under the decision below,
no matter what compensation is set. Under the analysis of
Commodity Futures Trading Comm'n v. Schor, 478 U.S. 833,
850 (1986) this is an “aggrandizement” of Presidential power
“at the expense of a coordinate branch.”

Permitting the judiciary to exercise its exclusive power
to determine just compensation will not inhibit the President’s
exercise of his foreign affairs power. Judicial review will only
mean that the public, not individuals, bear the costs of our
foreign policy goals. In fact President Carter was specifically
advised by his counsel before entering the Algiers Declarations
that Rail Reorganization Act Cases required a constitutionally
adequate compensation for the claimants who were diverted
from U.S. district courts to the Tribunal. See App. 41a-45a
(Testimony of Lloyd Cutler, Esq. in Halliburton Corp. v.
Commissioner, No. 9797-86 (U.S. Tax Ct.)).

This Court should grant certiorari and clarify, for
benefit of the court below and the President, that
determinations of just compensation for a taking by the United

18

States are judicial functions, notwithstanding the fact that the
appropriation is undertaken to advance foreign policy goals.**

3. The Decision Below Impermissibly Broadens this
Court’s Decision in YMCA

This Court should grant certiorari in order to clarify
that the decision in YMCA was limited to emergencies where
immediate government action was necessary to protect
substantial private interests, and to clarify to the Federal Circuit
and all other courts that receipt of some benefit less than just
compensation does not, of itself, convert an otherwise
compensable taking into a permitted encroachment.

The court below reasoned that because petitioners
received a “substantial” benefit from the espousal and
settlement, there had been no compensable taking. Not only
does this confuse the distinct taking and compensation
analyses, it is a serious misapplication of the authority relied
upon below -- this Court’s holding in YMCA.

YMCA arose from a civil disturbance in the Panama
Canal Zone. YMCA, 395 U.S. at 86. In the course of the
disturbance, a building owned by the YMCA was damaged.
The YMCA sued, claiming that its building was damaged as
the direct result of the U.S. Army’s having taken up positions
first in front of the building, and later inside the building. The
Court rejected this claim, finding that the damage to the
building was caused by the rioters, and not by the United
States. Id. at 89. In addition, however, the Court considered
whether the United States was liable under the Fifth

*° The exercise of this judicial function is all the more important
where, as here, the taking occurs in peacetime and in the absence of an
international emergency or other overarching foreign policy concern.

ee

19

Amendment for the Army’s temporary occupation of the
building. The Court found that it was not, for two reasons:
first, the YMCA had abandoned the building during the
disturbance, and therefore was not deprived of its use by the
Army’s occupation. Jd. at 89-90. Second, the Court found that
the YMCA had stipulated that the Army had occupied the
building for the primary purpose of protecting the building.
The Court indicated that

where, as here, the private party is the particular
intended beneficiary of the governmental
activity, ‘fairness and justice’ do not require
that losses which may result from that activity
may also “be borne by the public as a whole,”
even though the activity may also be intended
incidentally to benefit the public. Were it
otherwise, governmental bodies would be liable
under the Just Compensation Clause to property
owners every time policemen break down the
doors of buildings to foil burglars thought to be
inside. Id. at 92 (citations omitted).

This rule has been applied sparingly in the ensuing 30
years, perhaps because it has been consistently understood to
stand for a proposition that does not often arise: that when the
government occupies property to protect it, no compensable
taking has occurred. See Penn Central, 438 U.S. at 128 (1978);
Hohri v. United States, 782 F.2d 227, 243 n.36 (D.C. Cir.
1986), vacated on other grounds, 482 U.S. 64 (1987). Indeed,
reported applications. of the YMCA rule have involved the
situation hypothesized in YMCA: damage to private property
due to law enforcement activity. See, e.g., Brannan v. City of
Tulsa, 932 P.2d 44 (Okla. Ct. App. 1996); Wallace v. City of
Atlantic City, 608 A.2d 480, 482-83 (N.J. Super. Law 1992).

20

The Federal Circuit cited YMCA but did not apply its
holding.” The court did not base its decision on the motives of
the United States. Nor was there any indication that the court
considered that the President acted from necessity. Indeed,
there was no record evidence as to what moved the President to
espouse and settle the small claims: the United States did not
present any factual basis whatever for a conclusion that the
espousal and settlement was motivated to benefit the petitioners
in particular.”’

By changing the inquiry from the government’s need to
act in an emergency to the hypothesized beneficial effects of
the government’s actions, the Federal Circuit’s decision in this
case stretches YMCA beyond recognition -- and, if the new
interpretation is followed in other courts, will have a profound
impact on takings jurisprudence. The YMCA tule,
unambiguously based on the government’s duty to act in an
emergency for the benefit of particular citizens, is replaced with
a rule which amounts to a complete fusion of the “taking” and
“compensation” parts of the inquiry. Under the Federal
Circuit’s holding, a state would be free, for example, to

* The court below also ignored this Court’s discussion of YUCA
in Loretto v. Teleprompter Manhattan Teleprompter CATV Corp.: where
this Court distinguished physical invasion cases, such as YMCA, from
permanent occupation cases, such as Loretto: 458 U.S. 419, 432 (1982).
Here it is beyond dispute that petitioners property was permanently
espoused -- that the government’s action cannot be considered a “physical
invasion short of permanent appropriation.”

” The undisputed facts showed that before espousal, petitioners had
the right, under Tribunal precedent, to be paid interest on their claims from
the date of the taking by Iran through the date of payment. It is also
undisputed that after the espousal and settlement, petitioners received
substantially less interest than they would have if their claims had been
decided at the Tribunal. Thus whatever “benefit” petitioners received was
less than what was taken from them.

21

appropriate farmland to build a highway without compensation,
provided it could show that the highway would allow the
farmer better access to markets. A municipal body would be
free to restrict all use of a landowner’s real property and
provide as compensation transferable development rights worth
half the value lost to the reai property. This interpretation
“render[s] much of [the Court’s] regulatory takings
jurisprudence a nullity,”, when applied to a per se taking.
Suitum v. Tahoe Regional Planning Agency, 117 S. Ct. 1659,
1672 (1997) (Scalia, J. concurring) Taken to its logical
conclusion -- in fact, as applied here -- the Federal Circuit’s
new rule is that the Constitution merely requires “substantial”
compensation, not “just” compensation. Neither the language
of the Fifth Amendment, nor any precedent of this Court,
supports this interpretation.

4. The Court of Appeals’ Inclusion of the Power of
Eminent Domain in the “Logically Antecedent
Analysis” Required by Lucas, Nullifies that Decision

In Lucas, this Court considered whether state
restrictions on beachfront development constituted a taking
under the Fifth and Fourteenth Amendments. The Court
concluded that the property lost all economic value as a result
of the restrictions, but could not determine whether a
compensable taking had occurred. The Court held that a taking
would not have occurred if the state had the power, under the
common law, to impose the same restrictions without making
just compensation:

Where the State seeks to sustain regulation that
deprives land of all economically beneficial use,
we think it may resist compensation only if the
logically antecedent inquiry into the nature of
the owner’s estate shows that the prescribed use

22

interests were not part of his title to begin with.
Lucas, 505 U.S. at 1027.

The Federal Circuit has misapplied the Court’s decision
in Lucas to this case in two independent ways. First, the court
below incorrectly conducted the “logically antecedent inquiry”
by including the eminent domain power (espousal) as part of
the “estate” that petitioners had in their overseas property. If
this approach were correct there could never be a taking since
all property (domestic and foreign) is subject to being
condemned for the public good. Second, the court erroneously
held that “the prescribed use interests” -- in this case continued
possession of any interest in the seized property -- was not part
of petitioners’ “title to begin with.” Taken together, these
interpretations are remarkable distortions of Lucas, and, have
obvious, far-reaching consequences. The court below would
grant the President “plenary power to settle claims, even as
against foreign governmental entities,” the very power this
Court refused to sanction in Dames & Moore. Dames &
Moore, 453 U.S. at 688.

Since Lucas, courts have understood that the “logically
antecedent inquiry” requires analysis of the property under the
law that creates that property. See, e.g., Corn v. City of
Lauderdale Lakes, 95 F.3d 1066, 1075 (11th Cir. 1996), cert
denied, 118 S. Ct. 441 (1997); Consarc Corp. v. Iraqi Ministry,
27 F.3d 695, 701 & n.5 (D.C. Cir. 1994) (noting that while
federal definition of property was applicable in determining
propriety of administrative action, state definition would be
applicable to takings claim); Stevens v. City of Cannon Beach,
854 P.2d 449, 453-57 (Or. 1993), cert denied, 510 U.S. 1207
(1994) (regulation preventing enclosure of beach property
where Oregon law recognized public right of access). This is
because, as the Court noted,

cca a cam acca ats omc

23

[aJny limitation so severe cannot be merely
legislated or decreed (without compensation),
but must inhere in the title itself, in the
restrictions that background principles of the
State’s law of property and nuisance already
place upon land ownership. A law or decree
with such an effect must, in other words, do no
more than duplicate the result that could have
been achieved in the courts . . . Lucas, 505 U.S.
at 1029.

Neither the Federal Circuit nor the government has
identified a court with the power to transfer complete
ownership of petitioners’ property without compensation.
While there has been some confusion as to whether the
“common law” to be applied in this inquiry includes statutes,
see, e.g., Kim v. City of New York, 681 N.E.2d 312, 315 (N.Y.),
cert denied, 118 S. Ct. 50 (1997) (analyzing divergent views),
as well as whether this inquiry is truly “antecedent,” or whether
it folds into the “reasonable investment-backed expectations”
prong of a Penn Central analysis, see, e.g., Colorado Dept. of
Health v. The Mill, 887 P.2d 993, 1002-03 (Colo. 1994), cert
denied, 515 U.S. 1159 (1995), there has never been a
Suggestion that a court should not look at the law of the state or
nation where the property exists.

Here petitioners’ rights derived from a variety of
different laws.” Petitioner Gurney, for example, had a right

* This case raises the subsidiary question whether the Just
Compensation clause applies to property located abroad, an issue this Court
has not finally resolved, although it has implied and the lower courts have
found that the Fifth Amendment obligation of just compensation applies to
the taking by the United States of property owned by a citizen but located
outside the United States. United States v. Belmont, 301 U.S. 324, 332

(continued...)

24

under Iranian employment law to receive a termination
payment after his twelve-year job at the Iranian embassy in
Washington, D.C. ended. (App. 5la-52a.) Petitioner
University of Northern Colorado had a contractual right to be
paid tuition (App. 80a-82a), under Colorado law. Petitioners
Zargar and Samimy owned real property in Iran. (App. 55a-
56a.) Under the holding of Lucas, as it has been almost
universally applied, the Federal Circuit was required to
determine that the President’s right to take their property
without compensation was an attribute of Iranian contract law,
Colorado contract law, and Iranian property law, respectively.
The government did not assert, and the Federal Circuit did not
determine, that the President’s rights arise under the law
underlying the claimants’ property. Instead, the circuit found
that the president’s foreign policy power to espouse claims --
a Presidential power asserted and acquiesced in by Congress,

4(._ continued)

(1937) (dicta); Mitchell v. Harmony, 54 U.S. (13 How.) 115 (1851) (dicta);
Porter v. United States, 496 F.2d 583, 591, 204 Ct. Cl. 355 (1974), cert.
denied, 420 U.S. 1004 (1975); Seery v. United States, 127 F. Supp. 601,
603, 130 Ct. Cl. 481 (1955); Turney v. United States, 115 F. Supp. 457,
464, 126 Cl. Ct. 202 (1953); see Reid v. Covert, 354 U.S. 1, 9 (1957) (citing
Mitchell and Turney with approval). That the extraterritoriality of the
property is not of paramount consideration can also be implied from this
Court’s decisions in YMCA, United States v. Caltex, 344 U.S. 149 (1952),
Juragua lion Co. v. United States, 212 U.S. 297 (1909), and Ribas y Hijo
v. United States, 194 U.S. 315 (1904). In each case, the claimant’s property
was taken outside the United States -- and in each, the Court denied
compensation on a basis other than the simple and undisputed fact that the
property was located outside the United States. More recently, in United
States v. Verdugo-Urquidez, 494 U.S. 259 (1990), the Court distinguished
the applicability of the Fourth Amendment -- which is not available to
foreign citizens on foreign soil -- with that of the more broadly phrased Fifth
Amendment. /d. at 264-66. The Federal Circuit did not address this
question although an unavoidable implication of its holding here is that the
Just Compensation clause does not apply to property located abroad whether
acquired by will, gift or investment.

25

see Dames & Moore, 453 U.S. at 688 -- satisfied the
requirements of Lucas.

By including in the applicable common law to be
examined the power to condemn or espouse, the Federal Circuit
has critically undermined Lucas. The analysis assures there can
never be a taking because in every case of property ownership
there will always be the possibility of condemnation which,
under the analysis below, renders the taking a “non-
compensable taking.”

As for the second error -- whether a right to continued
possession of any interest inhered in petitioners’ title to their
property, the Federal Circuit did not cite to any decision from
this Court which even remotely supports the proposition that
the President has the power to appropriate a citizens property
free of any obligation of compensation. Nor could it.2°

* See Gray v. United States, 21 Ct. Cl. 340, 392-93 (1886), holding
that a claims settlement by the United States was a taking. Petitioners did not
argue below, and are not asserting here, that Gray is binding in this case.
However, Gray is either a correct statement of the law or it is not. If it is not
a correct statement of the law, then either (a) it was incorrect when made or
(b) the principles articulated in Gray have somehow changed. That the
former is not the case is indicated by Congress’ payment of claims. Indeed,
the court below distinguished Gray, determining that Fifth Amendment
jurisprudence had “evolved” over the last 100 years. It did not, however,
point to any cases in which the principles enunciated in Gray have been
abandoned or modified by this Court.

The few times the Court has had similar questions before it, it has
declined to interpret the Fifth Amendment contrary to Gray. As noted
above, in Dames & Moore, the Court considered whether the transfer of
claims was a taking. If the court below is correct that under an evolved Fifth
Amendment, claims against a foreign sovereign may be taken without just
compensation, the Court could have summarily answered this question in the
negative. In United States v. Sperry Corp., 493 U.S. 52 (1989), the Court

(continued...)

26

“[NJeither the President nor Congress may exercise their
powers so as to contravene the protections of the Bill of Rights,
even when acting in the sphere of international relations.”
Main, 651 F.2d at 813, n. 20. The President’s power to espouse
claims is not merely an analogue to the power of eminent
domain -- it is the same power and has the same purpose:

The right of sovereigns to dispose of the effects
of individuals in order to make peace, is often a
disputed point, nor can they exercise this right
over the property of subjects in any manner
other than as sovereigns. The property of
subjects is so far under the eminent control of
the State, that the State or the sovereign who
represents it, can use that property, or destroy it,
or alienate it, not only in the case of extreme
necessity, which sometimes allow individuals
the liberty of infringing upon the property of
others, but on all occasions, where the public
good is concerned, to which the original
framers of society intended that private interests
should give way. But when that is the case, it is
to be observed, the State is bound to repair the
losses of individuals, at the public expense, in

9(__.continued)

considered whether the imposition of a fee on Tribunal awards was a
compensable taking. The Court concluded that it was not, and specifically
distinguished Gray, noting that the United States had not canceled altogether
Sperry’s claims. Jd. at 59 n.6. In Sperry, the Court also explicitly noted that
Sperry was not asserting the claim advanced by petitioners here -- that the
government’s action had led to a gross recovery less than would have
otherwise been obtained. /d. at 59-60. Again, petitioners are not contending
that the Court has adopted the rule in Gray -- it is clear, however, that this
Court has not subscribed to an evolution of the Fifth Amendment that
overrules Gray.

ee aA R NR re TT ETI Sane

27

aid of which the sufferers have contributed their
due portion. 1 Nichols on Eminent Domain
§ 1.2[2] (quoting Grotius, De Jure Belli et
Pacis, Lib. Ill, C.20, Sec. 7 (1625)).*°

Yet the court below did not simply conclude that the
President has the power to take property without
compensation.*' It found -- without citation to any authority
whatsoever -- that the potential exercise of the power is an
incorporeal hereditament burdening any and all property
acquired through international commerce.** The decision of the
Federal Circuit is striking in one more respect: not only did the
court hold that the President has the power to appropriate

*° See also Ware v. Hylton, 3 U.S. (3 Dall.) 199, 283 (1796)
(Opinion of Cushing, J.) (reinstatement of previously canceled debts to
foreign subjects could be considered proper exercise of eminent domain).
The relationship between the power to espouse and the obligation to
compensate was recognized in that case as well:

[t}hat Congress had the power to sacrifice the rights and
interests of private citizens to secure the Safety or
prosperity of the public, I have no doubt; but . . . ample
compensation ought to be made to all . . . who have been
injured by the treaty for the benefit of the public. This
principle is recognized by the constitution... Jd. at 245
(Opinion of Chase, J.).

*' In any event, even if he possessed this power, the potential that
this power might be exercised had not ripened into a property right at the
time petitioners acquired their property. It was -- at very most -- a mere
“unilateral claim of entitlement,” Nollan v. California Coastal Comm., 483
U.S. 825, 833 n.2 (1987), not an enforceable property interest.

* Petitioners University of Northern Colorado and Gurney, for
example, acquired their rights against Iran as the result of transactions with
Iran conducted in the United States. See App. 80a-82a (Matter of University
of Northern Colorado); App. 49a-50a (Matter of Gurney).

28

without just compensation, it found that this proposition is such
a common place that each and every petitioner can be charged
with knowledge of it, without any evidentiary showing at all,
despite the explicit, contrary language of the 1955 Treaty of
Amity between the United States and Iran.*’ This is exactly the
kind of abuse the Court sought to prevent when it explained
that only rules derived from an “objectively reasonable
application” of pre-existing law can be said to inhere in a
property owner’s title. Lucas, 505 U.S. at 1032 n.18.

The lower court’s extraordinary holding has
implications far beyond this case. First, there is the question of
what is the proper source for determining whether, under
Lucas, a sovereign’s right to appropriate or condemn property
is to be considered in the “logically antecedent” analysis under
Lucas. Second, does the President have the power to
appropriate private property without just compensation, simply
because the property was acquired in international commerce.

The Treaty of Amity provided that

Property of nationals and companies of either High Contracting
Party, including interests in property, shall receive the most
constant protection and security within the territories of the other
High Contracting party, in no case less than that provided for by
international law. Such property shall not be taken without the
prompt payment of just compensation. 8 U.S.T. 899, T.LA.S. No.
3853. art. IV(2).

Petitioners were therefore operating in a fundamentally different
environment from the plaintiffs in California Housing Securities, Inc. v.
United States, 959 F.2d 955, 959 (Fed. Cir. 1992), cited by the concurrence
below. App. 15a. Those plaintiffs were involved in banking, “‘one of the
longest regulated and most closely supervised of public callings,” id. at 958
(quoting Fahey v. Mallonee, 332 U.S. 245, 250 (1947), and could therefore
not claim a taking when the government exercised its regulatory authority
to place their savings and loan association in receivership.

29

Finally, is this Presidential power an incorporeal hereditament
-- 4 present property interest -- of all property?

The Court should grant certiorari to resolve these

questions.

CONCLUSION

For the foregoing reasons, the writ of certiorari should

be granted.

Dated: March 3, 1998

Respectfully submitted,

STEPHEN M. TRUITT
Counsel of Record

PEPPER HAMILTON LLP
1300 Nineteenth Street, N.W.
Washington, D.C. 20036
(202) 828-1230

JOHN A. WESTBERG
LEWIS M. JOHNSON
WESTBERG & JOHNSON
1300 Nineteenth Street, N.W.
Washington, D.C. 20036
(202) 835-9810

Counsel for Petitioner

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386013_2319%3A1. Public record. Not legal advice.