Last week, the Federal Circuit heard oral argument in ATS Ford Drive Investment, LLC v. United States, a takings case that attracted an amicus brief. In it, the Federal Circuit is reviewing a judgment of the Court of Federal Claims, which granted a motion for summary judgment in favor of the government. Judges Lourie, Stoll, and Cunningham heard the argument. This is our argument recap.
Mark F. (Thor) Hearne, II argued for ATS Ford Drive Investment. In his opening, he explained that the “key issue in this case” is whether the interest that the “owners’ predecessor . . . granted the Peru Indianapolis railroad in the 1840s” was an “easement or title to the fee estate in the land.” He contended that, “if it’s an easement,” then “the government must pay the owners compensation.” Alternatively, he argued, if the railroad “held title to the fee estate, then the government need not pay.”
A judge asked, if certification is needed, if the railroad charter’s language sounds like an easement. Hearne responded by arguing that, if “the text of the documents that define the interest are . . . clearly an easement, there will not be a need to certify.” But, he continued, “this case is of great importance to Indiana” and the “Indiana Supreme Court” invites “these cases to be certified . . . if there is any doubt on the part of the court.” Another judge asked about previous rails-to-trails cases that were certified to the Indiana Supreme Court. Hearne cited several examples.
Then, another judge asked him to differentiate the language in this case with a prior case. Hearne responded by arguing that, in the previous case, the railroad charter “says the railroad had the . . . capacity to acquire” a fee simple, but that the railroad can “certainly acquire less of an interest.” Hearne also argued that “other Indiana Supreme Court decisions” have “never read” the prior case “in the same way that the Court of Federal claims did,” which concluded that “the interest must be fee simple.”
David S. Frankel argued for the United States. He opened by arguing that “plaintiffs seek to unsettle the law and upend property rights that have been well established for generations under Indiana law.” Regarding certification, he explained it “is available only if there is a lack of clear controlling precedent.” On this point, he argued, “the question at the heart of this appeal was resolved over 170 years ago by the Indiana Supreme Court.” Moreover, he continued, “it was confirmed about 30 years after that, and then in subsequent decisions of both the Indiana Supreme Court and Indiana appellate courts it has been reaffirmed as binding precedent.”
A judge asked if “release and relinquish language . . . is helpful” to determine whether a conveyance is “in fee simple.” Frankel argued, in response, that one prior case stands for the proposition that the relevant language grants a fee simple and not a lesser interest.
Another judge asked for Frankel’s position on certification to the Indiana Supreme Court. Frankel said the government’s “position is that certification is unavailable because there’s a presence of clear, controlling precedent.” He further argued that, even “if certification” were available, “this court shouldn’t take that opportunity” because the Supreme Court has said certification should occur only when “there’s a novel or unsettled question of law.”
In his rebuttal, Hearne argued several points. He refuted the relevance of a particular case by arguing the case was about “disagreement over . . . scope” and that there “was no disagreement” over whether the interest conveyed was an easement. He argued the “use of the term right of way” should be found to convey an easement. He also contended the documents “that define[ ] the interest” is the “release documents,” not the charter, which is “not part of the transaction.” Next, he argued, if the charter defines the nature of the property interest, then “every piece of property” that “railroads acquired would be fee simple, notwithstanding the language in the actual document between the parties.” Finally, he maintained, if there is any “ambiguity [the case] should be certified to the Indiana Supreme Court.” He insisted there is “novelty” present in this case and, as a result, the resolution of this case “would potentially affect many other property owners.” Ultimately, because of the “implications for Indiana public policy,” he urged certification to the Indiana Supreme Court.
We will continue to keep track of this case and report on developments.