Buchalter's Aviation Group Wins Major Victory in Ninth Circuit

On November 1, 2017, the United States Court of Appeals for the Ninth Circuit handed down a sweeping victory for Buchalter’s client Bonner County, owner and operator of Sandpoint Airport in Sandpoint, Idaho.
 
The airport was sued in 2012 by real estate developer SilverWing at Sandpoint, LLC for actions the county took in order to achieve compliance with federal aviation regulations and specific safety directives from the Federal Aviation Administration.  SilverWing sought tens of millions of dollars in damages under 42 U.S.C. § 1983 for alleged inverse condemnation and violation of equal protection in addition to a state law claim for breach of the covenant of good faith and fair dealing arising from a “through-the-fence” access agreement.
 
After prevailing on summary judgment in the U.S. District Court for the District of Idaho, Buchalter’s Aviation Practice Group, led by attorneys Barbara Lichman and Paul Fraidenburgh, won a complete victory in the Ninth Circuit on every issue across the board, including the affirmance of an attorney fee and cost award totaling almost $800,000 (which is likely to increase after appellate fees and costs are added).
 
With respect to the preempted state law claim, the Ninth Circuit held: 

“The FAA preempts the fields of ‘aviation safety,’ Montalvo v. Spirit Airlines, 508 F.3d 464, 468 (9th Cir. 2007), and ‘aircraft operations,’ Burbank-Glendale-Pasadena Airport Auth. v. City of Los Angeles, 979 F.2d 1338, 1340 (9th Cir. 1992). When the County’s airport was found to be in noncompliance by the FAA, due to specific safety and operations concerns with SilverWing’s development, the FAA required the County to implement a Corrective Action Plan (“CAP”). The CAP included limiting future residential access to the airport and pursuing alternatives to the current ‘through-the-fence’ arrangements, which allowed airplanes to access the municipal airport from SilverWing’s land. It was not the County which frustrated SilverWing’s plans; it was the FAA. Thus, SilverWing’s claim is preempted.”

Likewise, the court affirmed the dismissal of the claims under 42 U.S.C. § 1983, explaining:
“SilverWing’s claims under 42 U.S.C. § 1983 fail. Although the County, in voting to submit a new Airport Layout Plan (“ALP”) to the FAA, took official action to ensure the airport’s compliance with federal law, the ‘moving force’ behind the action was the FAA’s requirement that the County change the airport’s ALP. Thus, the challenged conduct was not pursuant to any County ‘policy or custom’ and cannot serve as the basis for a § 1983 lawsuit. See Monell v. Dep’t of Soc. Servs., 436 U.S. 658, 694 (1978).
Finally, the court affirmed the substantial award of attorney fees and costs, stating:
“The district court did not abuse its discretion by awarding Rule 54(d)(1) costs and attorney’s fees to the County. The County is a ‘prevailing party’ within the meaning of Rule 54(d)(1) because it obtained a judgment with respect to all of SilverWing’s claims except the one ultimately remanded to state court. San Diego Police Officers’ Ass’n v. San Diego City Emps. Ret. Sys., 568 F.3d 725, 741 (9th Cir. 2009). As such, it is entitled to costs unless SilverWing can show why a cost award would be ‘inappropriate or inequitable.’ Ass’n of Mexican-Am. Educators v. California, 231 F.3d 572, 591 (9th Cir. 2000) (en banc). No such showing has been made here. Furthermore, the ‘through-the-fence’ agreement between the parties provided that attorney’s fees were to be awarded to the party deserving of costs in any action brought ‘to enforce’ the agreement. Because the § 1983 claims were brought, at least in part, to enforce the ‘through-the-fence’ agreement, it was not error for the court to award fees also for those claims.
 
Paul Fraidenburgh, who successfully argued the case in the Ninth Circuit on behalf of the airport, commented on the decision: “This is a significant victory not just for Sandpoint Airport but for all public airports in the United States because it confirms that a federally-regulated airport cannot be held liable for actions taken to achieve compliance with federal law.  Section 1983 cannot be used as an end-run around that rule.  Municipalities are insulated from liability under Section 1983 when their actions are motivated by a desire to achieve compliance with federal law rather than a local policy or custom.  The Ninth Circuit correctly decided each of these issues and upheld our substantial fee award.  We are thrilled to have won yet another significant victory for our long-time friends and clients in Bonner County, as well as for airports across the country.”
 

Bonner County Wins Major Victory in Property Owner's "Takings" Lawsuit

The decision of the Federal District Court for the Northern District of Idaho in SilverWing at Sandpoint, LLC v. Bonner County, a case that has been “hanging fire” for almost two years, was worth the wait.  On Friday, November 21, 2014, the Court granted Defendant Bonner County (“Bonner County”) summary judgment on all Plaintiff SilverWing at Sandpoint, LLC’s (“SilverWing”) federal claims for inverse condemnation, or “taking,” of private property by a public entity without just compensation, in violation of the 5th Amendment to the United States Constitution, and 42 U.S.C. § 1983, or violation of a plaintiff’s constitutional or other federal rights by a person acting under color of state law.  See, e.g., Monell v. Department of Social Servs., 436 U.S. 658, 690 (1978).  In addition, the Court granted summary judgment on SilverWing’s state law contract claim for breach of the covenant of good faith and fair dealing.   

In this case, SilverWing claimed that Bonner County had taken its property by implementing a plan for the airport, an Airport Layout Plan (“ALP”) approved in accordance with the regulations promulgated by the Federal Aviation Administration (“FAA”), that showed the single runway at Sandpoint Airport moving 60 feet to the west, toward SilverWing’s property.  SilverWing argued that forcing the movement of a taxiway that already been constructed to service the “hangar homes” in the development, and thus causing it to incur upon the five lots closest to the runway, making them unbuildable, caused a loss to SilverWing of $26 million.  The Court ruled that implementation of the requirements of the ALP was a federal requirement arising out of federal responsibility for aviation safety and not within the discretion of Bonner County.  
 

The Court’s ruling was substantially based on the concept of federal preemption.  Preemption of state or local law occurs under one of three scenarios: (1) where the federal government affirmatively expresses an intent to preempt (express preemption); (2) where it has enacted laws which so substantially occupy the specified field that they leave no room for state or local law (field preemption); or (3) state or local law directly conflicts with federal law, or state law stands as an obstacle to the accomplishment of the full purposes and objectives of Congress (conflict preemption).  See, e.g., Montalvo v. Spirit Airlines, 508 F.3d 464, 470 (9th Cir. 2007).  In this case, therefore, the Court held that Bonner County was acting properly and in accordance with federal law that it had no power to contradict, and, therefore, could not be held responsible for the impacts. 

The Court’s ruling left intact SilverWing’s single claim for promissory estoppel, based on the argument that it had been misled by promises made by Bonner County’s former Airport Commission and former Airport Director.  The Court has given the parties the option of conferring as to whether to take this single claim to mediation, arbitration, judicially sponsored settlement, or trial.  No decision has as yet been made.  
 
A copy of the Court’s Memorandum Decision and Order can be found here.

Judge Blocks City of Santa Monica's Latest Effort to Close the Santa Monica Airport

Predictably, Judge John Walter of the Los Angeles Federal District Court summarily dismissed a lawsuit brought by the City of Santa Monica (“Santa Monica”) aimed at closing the Santa Monica Airport, based on, among other things, unconstitutional taking of property without just compensation.  The court’s decision was made on the procedural grounds that, among other things, the lawsuit was brought too late and in the wrong court.

First, the court found that Santa Monica had brought the suit after the applicable 12 year statute of limitations had expired.  28 U.S.C. § 2409(a)(g).  The court’s rationale was that Santa Monica knew as long ago as 1948 that the Federal Aviation Administration (“FAA”) had a residual claim to the property arising from the Deed of Transfer of the federal government’s lease back to the City of Santa Monica.  That residual claim, therefore, required that Santa Monica’s suit be brought no later than the early 1960s. 

In addition, the court found that, even if a claim for unconstitutional taking could be sustained under the applicable statute of limitations, it was improperly brought in the District Court, as the Tucker Act, 28 U.S.C. § 1491(a)(1) vests exclusive subject matter jurisdiction over monetary claims against the federal government exceeding $10,000 with the Court of Federal Claims.  Santa Monica does not, of course, dispute that the value of the airport property that it wishes to recover and use for other purposes exceeds $10,000. 

Although the court chose the procedural route in making its decision, there appear to be relevant substantive grounds as well.
 

First, the parties continue to debate the factual issue of whether Santa Monica’s contractual relationship with the federal government extends only to the year 2015, or as far out as 2023.  The FAA’s reliance on the latter date arises from the fact that Santa Monica took its final federal grant in 2003, and its contract with the federal government is presumed to extend for the “useful life” of the facilities purchased with the most recent grant, or 20 years.  See, e.g., FAA Order 5190.6B, Chapter 4, §§ 4.6.h(1) and (2).  There is also the issue of real property purchased for the airport with federal funds.  In the case of Santa Monica Airport, the then existing Works Progress Administration (“WPA”) and Civil Aeronautics Authority (“CAA”) used eminent domain to acquire additional land in order to replace two runways with a modern 5,000 foot long runway.  As that section was purchased with federal funds, the obligation to keep that portion of the property, at least, in aviation use arguably remains in perpetuity.  Id. at § 4.6.h(2). 

Finally, there is the legal issue of whether the 5th Amendment’s “takings” clause applies to make whole a City like Santa Monica.  The 5th Amendment specifically states: “. . . nor shall private property be taken for public use, without just compensation.”  [Emphasis added.]

Therefore, there may be a strong argument that the 5th Amendment does not apply where one public entity is alleged to have “taken” the property of another public entity without paying for it. 

For all those reasons, and others, not the least of which is the preemptive authority of the Interstate Commerce Clause of the United States Constitution which militates against the closure of aviation resources, especially where options are as severely constrained as they are in the Los Angeles region, it is doubtful that Santa Monica will prevail in closing its airport.  A more fruitful approach might be an application to the FAA under 14 C.F.R. Part 161 for mitigation measures that can relieve the surrounding population to some extent of the impacts of noise and pollution which were so instrumental in precipitating the lawsuit requesting closure in the first instance.
 

FAA Reauthorization Act Changes Rules for Valuation of Residential Properties

Exemption of NextGen procedures from environmental review is not the only issue raised by the FAA Reauthorization legislation set to be approved by the United States Senate on Monday, February 6 at 5:30 p.m. EST.  Section 505 of the Conference Version of the Bill allows a public entity taking private residential properties by eminent domain for airport purposes to pay the value of the property after its value has been diminished by the pendency of the project itself, and by any delay by the public entity in purchasing the property.  In other words, the Congress is overriding the long held judicial precept that “temporary takings are as protected by the Constitution as are permanent ones.”  See, e.g., First Evangelical Lutheran Church of Glendale v. Los Angeles County, California, 482 U.S. 304, 318 (1987).

Specifically, § 505 amends 49 U.S.C. § 47504 to allow the Federal Aviation Administration to “disregard any decrease or increase in the fair market value of the real property caused by the project for which the property is to be acquired, or by the likelihood that the property would be acquired for the project. . .”  Thus, hypothetically, once government announces a program of eminent domain, it may wait an unlimited time to appraise the property in the hope that the value will diminish by virtue of the threat itself, or of the deterioration of the surrounding areas caused by voluntary relocation in the face of the threat of condemnation.

This is precisely the inequity the weight of Supreme Court jurisprudence has sought to eliminate.  It is true that this case differs nominally from the typical case of “inverse condemnation,” i.e., a taking by government of all economically viable use of a property by regulation without just compensation, Tahoe Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302, 350 (2002).  However, the absence of compensation for the indeterminate period before the actual purchase of the property, during which time the property arguably has no economically viable use, is paramount to the “temporary” taking at issue in, among other seminal cases, Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992). 

In summary, the FAA Reauthorization Act adds the insult of potential undisclosed impacts of new NextGen procedures on previously non- or marginally impacted communities, to the injury of reduced compensation for residential properties eventually impacted, even if the reduction in value of those properties is caused by the airport’s intentional delay in purchasing the property.
 

California Airport Land Use Planning Handbook 2011 Update Delayed Again

The California Department of Transportation, Aviation Division (“Caltrans”) has announced yet another delay in the publication of the “California Airport Land Use Planning Handbook” (“Handbook”). The Handbook constitutes guidance for California’s airport land use commissions (“ALUC”) in the establishment of height, density and intensity restrictions for land uses around California airports. This delay continues and even increases the risk of conflict between ALUCs and local land use jurisdictions throughout California. 

ALUC restrictions are not the last word concerning land uses around airports, as local land use jurisdictions have final authority to approve or disapprove land uses within their own boundaries. However, ALUC restrictions can make it more difficult for a local jurisdiction to effectuate previously enacted development plans in the vicinity of an airport. This is because, to overcome the ALUC determination of inconsistency with ALUC restrictions, the local jurisdiction must overrule the ALUC by a two-thirds vote, a hurdle often difficult if not impossible to overcome because of fears of liability.

 

The last edition of the Handbook was published in 2002, and much has changed in the legal arena concerning restrictions on development around airports. For example, the 2002 Handbook recommends a condition on development requiring the dedication of “avigation easements” or the right of an aircraft to overfly property at any altitude or noise level without legal liability. However, the Oregon Supreme Court has recently ruled that the requirement for dedication of an avigation easement imposed by a land use jurisdiction that does not own an airport may constitute inverse condemnation, or the taking of private property without just compensation, prohibited by the Fifth Amendment to the United States Constitution. As many land use jurisdictions around California airports do not also sponsor and operate the airport in or near their jurisdiction, this ruling in Oregon takes on added significance in California. We look forward to a discussion in the 2011 Handbook update of the circumstances under which such dedication would be constitutionally permissible.

Similarly, the current version of the Handbook deals not only with the scope of ALUC jurisdiction, but also exceptions to that jurisdiction. One of those exceptions is for “existing uses.” While the Caltrans enabling legislation, Public Utilities Code section 21674(a), refers only to a limitation on “otherwise incompatible uses,” the 2002 Handbook has extended the exception to include not only existing bricks and mortar, but also uses for which there are “vested rights” such as development agreements and vesting tentative maps.

So far so good. But, inexplicably, after correctly evaluating recent case law on the concept of vested rights, the current Handbook goes on to say: “Thus, while an ALUC cannot force a change in land use once [a vested right] has been achieved, it can nevertheless require compliance with height restrictions, intensity limitations, noise level reduction, and other criteria set forth in its policies and implemented by local agencies.” This position is patently contrary to both the intent of the legislation and the clear guidance of the remainder of the Handbook. We hope that this and other such internal inconsistencies will be addressed and revised in the 2011 Handbook update.