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Nature of Suit Code: 512
Nature of Suit: 
Cause of Action: 

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United States Court of Appeals 

for the Federal Circuit ______________________ 

LOST TREE VILLAGE CORPORATION,

Plaintiff-Appellee

v.

UNITED STATES,

Defendant-Appellant

______________________ 

2014-5093

______________________ 

Appeal from the United States Court of Federal 

Claims in No. 1:08-cv-00117-CFL, Judge Charles F. 

Lettow. 

______________________ 

Decided: June 1, 2015

______________________ 

 JERRY STOUCK, Greenberg Traurig LLP, Washington 

DC, argued for plaintiff-appellee. 

MATTHEW LITTLETON, Environment and Natural Resources Division, United States Department of Justice, 

argued for defendant-appellant. Also represented by 

KATHERINE J. BARTON, SAM HIRSCH. 

MARK MILLER, Pacific Legal Foundation. Palm Beach 

Gardens, FL, for amici curiae Pacific Legal Foundation, 

National Association of Home Builders. Also represented 

by CHRISTINA M. MARTIN. 

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2 LOST TREE VILLAGE CORPORATION v. US

______________________ 

Before PROST, Chief Judge, NEWMAN, and REYNA, Circuit 

Judges.

REYNA, Circuit Judge. 

On remand from Lost Tree Village Corp. v. United 

States (“Lost Tree I”), 707 F.3d 1286 (Fed. Cir. 2013), the 

Court of Federal Claims held that the government’s 

denial of Lost Tree Village Corporation’s application for a 

permit to fill wetlands on a 4.99 acre plat (“Plat 57”) 

constituted a per se regulatory taking under Lucas v. 

South Carolina Coastal, 505 U.S. 1003 (1992), and, alternatively, a regulatory taking under Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978). We 

affirm that a Lucas taking occurred because the government’s permit denial eliminated all value stemming from 

Plat 57’s possible economic uses. We do not reach the 

trial court’s alternate holding under Penn Central. 

BACKGROUND

In 1968, Lost Tree entered into an option agreement 

to purchase approximately 2,750 acres of property on the 

mid-Atlantic coast of Florida.1 The agreement gave Lost 

Tree the option to purchase various parcels of land, including a barrier island on the Atlantic coast, a peninsula

west of the barrier island bordering the Indian River 

(known as the “Island of John’s Island”), and other islands 

in the Indian River, including Gem Island and McCuller’s 

Point. From 1969 to 1974, Lost Tree purchased most of 

the land covered by the option agreement, including half 

of McCuller’s Point, the Island of John’s Island, and Gem 

1 Lost Tree I contains a thorough description of the

significant volume of facts giving rise to this dispute. 707 

F.3d at 1288–91. We include only facts necessary for this 

opinion. 

 

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Island. The Island of John’s Island and Gem Island 

include the 4.99 acres now known as Plat 57.

Beginning in 1969 and continuing through the mid1990s, Lost Tree developed approximately 1,300 acres of 

the property purchased under the option agreement into 

the gated residential community of John’s Island. The 

John’s Island community includes property on the barrier 

island, Gem Island, and the Island of John’s Island. The 

community includes single family homes, a private hotel, 

condominiums, two golf courses, and a beach club.

Plat 57 is an undeveloped plat that lies on Stingaree 

Point, a small southerly peninsula on the Island of John’s 

Island and Gem Island. Plat 57 consists of submerged 

lands and wetlands that have been disturbed by upland 

mounds vegetated by an invasive pepper species and by 

ditches installed for mosquito control. Though Lost Tree 

developed Stingaree Point and land bordering Plat 57, 

Lost Tree had no plans of developing Plat 57 until 2002.

In early 2002, Lost Tree learned that a developer applied for a wetlands fill permit for land south of Plat 57. 

As mitigation for the permit, the developer proposed 

improvements to a mosquito control impoundment on 

McCuller’s Point. Because Lost Tree owned land on 

McCuller’s Point, permitting authorities required Lost 

Tree’s consent to the proposed mitigation. Lost Tree 

withheld approval and instead sought permitting credits

in exchange for the developer’s proposed improvements. 

To take advantage of the potential permitting credits, 

Lost Tree sought permits and approvals required to 

develop Plat 57. In August 2002, Lost Tree submitted an 

application to the Town of Indian River Shores requesting 

approval for a preliminary plat and permission to fill 

some of the wetland on Plat 57. Lost Tree filed a corresponding application for a wetlands fill permit under 

§ 404 of the Clean Water Act, 33 U.S.C. § 1344. The town 

approved Lost Tree’s application, and Lost Tree obtained 

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4 LOST TREE VILLAGE CORPORATION v. US

zoning and other local and state permits necessary to 

begin developing Plat 57 into a residential lot. In August 

2004, however, the Army Corps of Engineers denied Lost 

Tree’s § 404 fill permit because the Corps determined that 

Lost Tree could have pursued less environmentally damaging alternatives and because Lost Tree had adequately 

realized its development purpose through the development of the John’s Island community.

Lost Tree sued the government in the Court of Federal Claims, alleging that the government’s permit denial 

constituted a taking under the Fifth Amendment. Lost 

Tree’s appraiser opined that Plat 57 would be worth 

$25,000 without the fill permit and $4,800,000 with the 

permit after being developed into a residential lot. The 

government’s appraiser opined that Plat 57 would be 

worth $30,000 without the permit and $4,720,000 with 

the permit and developed. The trial court did not determine Plat 57’s loss in value because it held that the 

relevant parcel included Plat 57, Plat 55 (a nearby developed plat), and scattered wetlands within the John’s 

Island community. Relying on the government’s unrebutted testimony regarding the value of the relevant parcel 

as a whole, the trial court determined that the government’s permit denial diminished the parcel’s value by 

approximately 58.4%. Lost Tree Vill. Corp. v. United 

States (“Lost Tree CFC I”), 100 Fed. Cl. 412, 437 (2011). A 

58.4% loss in value, while not insignificant, was not 

sufficient to maintain a takings claim according to the 

trial court. Id.

Lost Tree appealed that decision, and we reversed. 

The relevant parcel, according to the court, is Plat 57 

alone because Lost Tree did not treat Plat 57 as part of 

the same “economic unit” as Plat 55 and the scattered 

wetlands included in the trial court’s relevant parcel

definition. Lost Tree I, 707 F.3d at 1293–94. We remanded to the trial court with instructions to apply the approCase: 14-5093 Document: 45-2 Page: 4 Filed: 06/01/2015
LOST TREE VILLAGE CORPORATION v. US 5

priate takings framework after determining the loss in 

economic value to Plat 57. Id. at 1295.

On remand, the trial court found that the government’s permit denial diminished Plat 57’s value by approximately 99.4%. Lost Tree Vill. Corp. v. United States

(“Lost Tree CFC II”), 115 Fed. Cl. 219, 231 (2014). Because Lost Tree and the government valued Plat 57 

similarly in Lost Tree CFC I, the trial court averaged the 

parties’ original estimates to determine Plat 57’s loss in 

value. Id. at 228. Without a permit, the parties’ estimated values averaged to $27,500. Id. Plat 57’s with permit 

value, after being developed into a residential lot, averaged to $4,760,000.2 Id. at 231. After subtracting development costs from Plat 57’s averaged developed value, the 

trial court found that Plat 57’s undeveloped, with permit

value would be $4,245,387.93. Id.

The trial court held that Plat 57’s loss in value was 

sufficient to maintain a takings claim. Because Plat 57 

lost 99.4% of its value, the court held that the government’s permit denial constituted a per se taking under 

Lucas. Id. In large part because of the economic impact 

to Plat 57, the trial court alternatively held that the 

government’s permit denial constituted a taking under 

Penn Central. Id. at 233. The court awarded Lost Tree 

$4,217,887.93 (Plat 57’s as permitted value minus Plat 

57’s nominal value) plus interest. Id. The government 

appealed, contesting the trial court’s holding under Lucas

2 The government argued for the first time in Lost 

Tree CFC II that Plat 57’s highest value should be its 

value before the government denied the permit. The court 

allowed the government to file an evidentiary proffer to 

explain its new theory but ultimately rejected the proffer 

because the government failed to provide enough specificity regarding Plat 57’s value before the permit denial. Id.

at 230.

 

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and its alternate holding under Penn Central. We have 

jurisdiction under 28 U.S.C. § 1295(a)(3).

DISCUSSION

Whether a government action constitutes a taking is a 

question of law based on underlying facts. Bass Enters., 

133 F.3d at 895. We review the trial court’s conclusions of 

law de novo and underlying facts for clear error. Id.

Private property cannot “be taken for public use, 

without just compensation.” U.S. Const. amend. V. A 

government regulation constitutes a taking under the 

Fifth Amendment if it “goes too far.” Pa. Coal Co. v. 

Mahon, 260 U.S. 393, 412–13 (1922). The seminal regulatory takings case, Penn Central Transportation Co. v. New 

York City, identifies three factors of particular significance in determining whether a regulation goes too far: (i) 

the “economic impact of the regulation on the claimant,”

(ii) the “extent to which the regulation has interfered with 

distinct investment-backed expectations,” and (iii) “the 

character of the governmental action.” 438 U.S. 104, 124 

(1978).

In contrast to takings evaluated under Penn Central’s 

balancing test, two types of regulatory takings require 

just compensation “without case-specific inquiry into the 

public interest advanced in support of the restraint,” 

Lucas, 505 U.S. at 1015, and without consideration of the 

landowner’s investment-backed expectations, Palm Beach 

Isles Assocs. v. United States, 231 F.3d 1354, 1357 (Fed. 

Cir. 2000). The first is a physical invasion. Loretto v. 

Teleprompter Manhattan CATV Corp., 458 U.S. 419, 438 

(1982). The second is a regulation depriving a landowner 

of “all economically beneficial uses in the name of the 

common good,” leaving the landowner with “economically 

idle” property. Lucas, 505 U.S. at 1019. 

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I. Lucas

The question presented in this appeal is whether residual value arising from noneconomic uses precludes 

application of Lucas and requires application of Penn 

Central’s balancing test. Confined to its facts, Lucas does 

not answer the question. In Lucas, the South Carolina 

legislature enacted a statute that prohibited a landowner 

from erecting any permanent habitable structures on his 

land. 505 U.S. at 1009. The state trial court found that 

the prohibition left the property valueless. Id. The Supreme Court emphasized that the prohibition denied the 

landowner all “economically beneficial uses” of his land. 

Id. at 1019 (emphasis added). Yet the Court used the 

term “use” synonymously with the term “value.” See id.

at 1019 n.8. The question of whether residual value 

attributable to noneconomic uses precludes Lucas’s per se

treatment was not squarely answered, however, because 

the affected parcel in Lucas retained no value of any kind. 

Id. at 1009. Subsequent Supreme Court cases emphasize 

that a Lucas taking requires a total loss in economic

value, see Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l 

Planning Agency, 535 U.S. 302, 330 (2002), but Supreme 

Court precedent does not address the precise facts before 

us, in particular, the existence of residual land value 

derived solely from noneconomic uses. 

A. Residual Value

The trial court held that because the government’s 

permit denial deprived Lost Tree of 99.4% of Plat 57’s 

value, a Lucas taking had occurred. Lost Tree CFC II, 115 

Fed. Cl. at 231. Recognizing that Lucas requires a total 

loss in economic value, id. at 228 (citing Tahoe-Sierra, 535 

U.S. at 330), the trial court explained that Plat 57’s 

residual value “does not reflect any economic use.” Id. at 

231 (emphasis added). Plat 57’s residual value stems

from environmental value as wetland. Id. at 231 n.9. 

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Thus, Plat 57’s residual value is not economic value, and 

hence Lucas applies. 

The government argues that Lucas is about value, no 

matter its source. According to the government, if a 

regulated parcel retains any value, including environmental value, the landowner cannot maintain a Lucas claim. 

Lost Tree and Amicus Curiae respond that Lucas is about 

use. If a regulation deprives a landowner of all land use, 

Lucas’s per se treatment is appropriate.

We agree with the trial court that a Lucas claim falls 

somewhere between the parties’ interpretations. While 

Lucas itself does not squarely address the issue, this 

court’s precedent does. In Loveladies Harbor, Inc. v. 

United States, the government denied plaintiffs a § 404

fill permit. 28 F.3d 1171, 1173 (Fed. Cir. 1994). The fair 

market value of the affected parcel prior to the permit 

denial was over $2 million. Id. at 1174. After the permit 

denial, the parcel was worth $12,500, less than one percent of its original value. Id. at 1175. Because the remaining value was “de minimis,” the relevant parcel was 

“deprived of all economically feasible use,” and Lucas’s 

per se treatment was appropriate. Id. at 1181–82.

The government argues that subsequent doctrinal developments at the Supreme Court conflict with Loveladies 

Harbor. We agree that subsequent decisions have explained that a Lucas taking is rare. In Palazzolo v. Rhode 

Island, the plaintiff argued that wetlands regulations 

reduced his land value by more than 93%. 533 U.S. 606, 

616 (2001). That decrease in value was not sufficient to 

trigger Lucas’s per se treatment. Id. at 631. The Supreme Court more recently clarified in Tahoe-Sierra that 

Lucas “was limited to ‘the extraordinary circumstance 

when no productive or economically beneficial use of land 

is permitted.’” 535 U.S. 302, 330 (2002) (emphasis in 

original) (quoting Lucas, 505 U.S. at 1017).

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We disagree that post-Lucas Supreme Court developments conflict with our holding in Loveladies Harbor. In 

Palazzolo, the 93% loss in value was insufficient to trigger 

Lucas because the landowner was left with value attributable to economic uses. As the Court explained, “[a] 

regulation permitting a landowner to build a substantial 

residence on an 18-acre parcel does not leave the property 

‘economically idle.’” Palazzolo, 533 U.S. at 631. The 

Court also indicated that the “State may not evade the 

duty to compensate on the premise that the landowner is 

left with a token interest[,]” implying that residual value 

does not defeat a categorical takings claim at least when 

residual value is not attributable to economic uses. See 

id. at 629. In Tahoe-Sierra, the Court addressed a “temporary” takings claim. The Court explained that 32-

month moratoria on development do not deprive a landowner of all economically beneficial use because economic 

use can resume at the end of the moratoria. See TahoeSierra, 535 U.S. 302, 332 (“Logically, a fee simple estate 

cannot be rendered valueless by a temporary prohibition 

on economic use, because the property will recover value 

as soon as the prohibition is lifted.”).

The government argues that this court’s precedent 

characterizes Lucas as applying only in the narrow circumstance in which all value, regardless of its source, has 

been lost. We disagree. After Tahoe-Sierra, our cases 

have characterized the Lucas inquiry in terms of “value.” 

See, e.g., Cienega Gardens v. United States, 331 F.3d 

1319, 1344 (Fed. Cir. 2003) (Lucas requires loss of “100%

of a property interest’s value”). Aside from Loveladies 

Harbor, however, our takings jurisprudence addresses 

circumstances such as those in Tahoe-Sierra and Palazzolo in which economic use (and hence economic value) was 

merely suspended, permitted on an unaffected portion of 

the parcel, or not entirely destroyed. See, e.g., Seiber v. 

United States, 364 F.3d 1356 (Fed. Cir. 2004); Bass EnCase: 14-5093 Document: 45-2 Page: 9 Filed: 06/01/2015
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ters. Prod. Co. v. United States, 381 F.3d 1360 (Fed. Cir. 

2004). 

B. Land Sale as an “Economic Use”

The government argues that a landowner’s ability to 

sell an affected parcel is an economic use that precludes 

Lucas’s per se treatment. According to the government,

Lucas classifies a sale as an economic use. The government cites this court’s decision in Conti v. United States

for the same proposition. See 291 F.3d 1334 (Fed. Cir. 

2002). Because Plat 57 has residual value, the government argues Lost Tree’s ability to sell Plat 57 precludes 

Lucas’s application. 

We disagree. The government’s argument incorrectly 

assumes that negligible noneconomic appraisal value 

enables a landowner to sell a regulated parcel. As the 

trial court found, Plat 57’s residual environmental value 

has been reduced by mosquito abatement measures, 

which left isolated hummocks and stagnant eutrophic 

pools. Lost Tree CFC II, 115 Fed. Cl. at 231 n.9. The 

government did not produce evidence indicating that Lost 

Tree could sell Plat 57 in such a condition. Speculative 

land uses are not considered as part of a takings inquiry. 

See Olson v. United States, 292 U.S. 246, 257 (1934).

Even if we assume that Plat 57’s value necessarily 

enables Lost Tree to sell the parcel, we disagree that all

sales qualify as economic uses. When there are no underlying economic uses, it is unreasonable to define land use

as including the sale of the land. Typical economic uses

enable a landowner to derive benefits from land ownership rather than requiring a landowner to sell the affected 

parcel. See, e.g., Kirby Forest Indus., Inc. v. United 

States, 467 U.S. 1 (1984) (logging); United States v. 50 

Acres of Land, 469 U.S. 24 (1984) (landfilling); United 

States v. Fuller, 409 U.S. 488 (1973) (livestock grazing).

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Contrary to the government’s assertion, Lucas does 

not suggest that a land sale qualifies as an economic use. 

The Court in Lucas referred to a “sale” as an economic use

in the context of personal property whose “only economically productive use is sale or manufacture for sale.” 505 

U.S. at 1028 (citing Andrus v. Allard, 444 U.S. 51, 66–67 

(1979) (a case dealing with a prohibition on the sale of 

eagle feathers)). The Court explained that a personal 

property owner should be aware of the possibility that a 

regulation could render personal property worthless 

because of the State’s “traditionally high degree of control 

over commercial dealings.” Id. By contrast, in the context of real property, focusing Lucas “solely on market 

value” allows “external economic forces,” such as inflation, 

to artificially skew the takings inquiry. Del Monte Dunes 

at Monterey v. City of Monterey, 95 F.3d 1422, 1433 

(9th Cir. 1996).

The government cites this court’s decision in Conti v. 

United States for the proposition that a sale qualifies as 

an economic use. See 291 F.3d 1334 (Fed. Cir. 2002). In 

Conti, a regulation banned drift gillnet fishing in the

Atlantic Swordfish Fishery. Id. at 1344. The plaintiff 

alleged a taking because the regulation prevented him 

from using his gillnet fishing gear. The Court did not 

apply Lucas in part because the claimant could offer for 

sale or sell his gillnet fishing gear. Id. Conti, however, 

deals with personal property. Aside from that distinction, 

the claimant’s ability to sell the commercial gillnet fishing 

gear stemmed from a potential buyer’s ability to use that 

gear to fish somewhere other than in the Atlantic Swordfish Fishery. See id. The economic use, i.e., the owner’s 

ability to sell, stemmed from a separate economically 

productive use. The same cannot be said of Lost Tree’s 

alleged ability to sell Plat 57. 

The government argues that the trial court’s holding 

will allow speculators to purchase regulated property 

cheaply, apply for a development permit, and, if the 

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permit is denied, succeed on a Lucas claim. We disagree. 

Lost Tree persuasively argues that “[i]n the real world, 

real estate investors do not commit capital either to 

undevelopable property or to long, drawn-out, expensive 

and uncertain takings lawsuits.” Appellee Br. 21, n.7. 

Even if the government’s hypothetical was plausible, this 

court considered and rejected a similar argument in 

Loveladies Harbor. 28 F.3d 1171, 1181 (Fed. Cir. 1994). 

The court explained that if such strategic behavior presented itself, “[o]ur precedent displays a flexible approach, 

designed to account for factual nuances.” Id. 

Framed differently—in the context of existing land 

ownership—the government’s hypothetical lends support 

to the trial court’s holding. To establish a per se claim

under the government’s reading of Lucas, a landowner

would have to demonstrate that a regulation destroyed all 

land value, regardless of its source. Yet the fact that the

landowner could make such a showing, according to the 

government’s hypothetical, would prompt speculation 

giving rise to post-regulation land value. In other words, 

speculators would value otherwise valueless land based 

solely on the possibility that a Lucas taking could be 

maintained and that a takings judgment could be won. 

Land value resulting from such speculation would defeat 

the very Lucas claim on which the speculation was based. 

II. Loss in Market Value

Because the trial court calculated Plat 57’s loss in 

value by subtracting Plat 57’s value without a permit

from Plat 57’s value with a permit, the government argues that the trial court overstated the economic impact 

to Plat 57. The government contends that the trial court 

should have subtracted Plat 57’s value without a permit 

from Plat 57’s demonstrated value before the permit 

denial (i.e., Plat 57’s purchase price). 

We disagree. Plat 57’s value with a permit reflects 

Plat 57’s “highest and best use.” The highest and best use 

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of a parcel is “the reasonably probable and legal use of 

vacant land or improved property, which is physically 

possible, appropriately supported, financially feasible, 

and that results in the highest value.” Olson, 292 U.S. at 

255. As the trial court understood, the government 

cannot rely on the regulatory taking at issue to reduce the 

fair market value of an affected parcel. See Fla. Rock 

Indus., Inc. v. United States, 791 F.2d 893, 905 (Fed. Cir. 

1986). 

CONCLUSION

We affirm the trial court’s holding that the government’s permit denial constituted a per se regulatory 

taking under Lucas because Plat 57’s residual value is not 

attributable to any economic uses. Lucas does not require 

a balancing of the Penn Central factors, and thus we do 

not address the trial court’s alternate holding under Penn 

Central. 

AFFIRMED

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