# In the United States Court of Federal Claims

No. 08

- 610C (Filed: April 2 2 , 2014)

TEXTAINER EQUIPMENT MANAGEMENT LIMITED, et al., Plaintiffs, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) ) ) ) Standing T o Bring Takings Claim ; Assignment of Claims Act; Subrogation ; RCFC 17 Substitution; Physical Possession and Use for Public Purpose; Interest on takings claim

Lars H. Liebeler , Washington, DC, for plaintiffs. Robert C. Bigler , Civil Division, United States Department of Justice, Washington, DC, with whom were Stuart F. Delery , Assistant Attorney General , Bryant G. Snee , Acting Director, and Franklin E. White, Jr. , Assistant Director, for defendant.
O P I N I O N FIRESTONE , Judge

. This is the court ’ s fifth decision in this case. 1 Previously, the court determined that the government ’ s decision to take title and possession of shipping containers that the government had leased from TOPtainer Container Management & Sales ( “ TOPtainer ” ) , 2
but were owned by plaintiff, Capital Lease Limited ( “ Capital ” ) , gave rise to a potential

1 Previous decisions in this case are Textainer Equip. Mgmt. Ltd. v. United States , No. 08

- 610, 2013 WL 1984382 (Fed. Cl. May 15, 2013); Textainer Equip. Mgmt. Ltd. v. United States , No. 08

- 610, 2012 WL 5465983 (Fed. Cl. Nov. 6, 2012); Textainer Equip. Mgmt. Ltd. v. United States , 105 Fed. Cl. 69 (2012); Textainer Equip. Mgmt. Ltd. v. United States , 99 Fed. Cl. 211 (2011).

2 TOPTainer is no longer in business. See Textainer , 2013 WL 1984382, at *1.taking of property without just compensation in contravention of the Fifth Amendment to the U.S. Constitution. Textainer , 2012 WL 5465983 , at *8. Specifically, the court found that the government ’ s decision to take title to and possession of plaintiffs ’ shipping containers which the U.S. military u sed in Iraq gave rise to a taking because the government knew the containers belonged to Capital but elected to keep the containers for military use 3 without paying Capital. 4 Id. Although the court found the government liable for a taking of Capital ’ s containers , t he court denied summary judgment on the grounds that there were disputed facts as to w hether Capital owned all of the 477 containers Capital claimed were taken by the government. Until this final round of brief ing, the actual ownership status of many of the containers has been unclear. 5 However, a fter discovery , plaintiff Green Eagle
Investments N.V. ( “ Green Eagle ” ) , Capital ’ s successor, entered into a series of

3 After the filing of the complaint, it was determined that 122 of the se containers were in use by the United States Marine Corps in Okinawa, Japan. Textainer , 99 Fed. Cl. at 216.

4 As discussed below, the court determined that the government ’ s decision to t ake title to and possession of plaintiffs ’ containers despite Capital ’ s notice that it owned the containers and wanted them returned was a sovereign act

. The court found that it was that notice that distinguished Capital ’ s taking s claim from other plaintiffs that were dismissed because t hose other plaintiffs had not provided the government with notice. The court concluded that the government had not taken th e containers of those other plaintiffs because without notice the government could claim that it was a bona fide purchaser for value of those containers. Textainer , 2012 WL 5465983, at *5

- 14.

5 Plaintiff s ha ve had an extremely difficult time determining th e proper p arty to bring its claim. Textainer is the name of the leasing company that took control of Capital ’s containers after Capital merged with Green Eagle. Until recently, plaintiff argued that Green Eagle was Capital ’ s successor and the only su rviving entity of the Capital merger. Then , Green Eagle notified the court that Capital was still in existence, though it was a shell entity in the process of winding down

. Textainer , 2013 WL 1984382, at *3. Thus, Capital has been substituted as the real party in interest along with its successor, Green Eagle. 2stipulations with United States regarding the ownership and value of the subject 477 containers

. Th e se stipulations are summarized as follows : (1) Capital owned 258 containers at the time of the taking at a value of $485,899. 64; (2) Capital Lease G mbH ( “ GmbH ” ) , a wholly

- owned subsidiary of Capital , owned 22 containers at the time of the taking at a value of $33,496.87; (3) P&R Equipment and Finance Corporation ( “ P&R ” ) owned 197 containers at the time of the taking at a value of $219,024.99 ; (4) Capital purchased 99 of P&R ’ s containers, with a value of $153,250.57 , after the date of the taking as part of several larger transaction s that resulted in Ca pital buying 95, 441 containers from P & R between 2005 and 2007; (5) Green Eagle , as the successor to Capital, purchased 98 of P&R ’ s containers , with a value of $218,024.99, after the date of the taking as a part of a transaction involving its purchase of 35, 814 additional containers in 2009. Jt. Stip., ECF No. 157, at 1

- 3. Pending before the court are plaintiffs ’ motion for summary judgment and the government ’ s cross - motion for summary judgment under Rule 56 of the Rules of the United States Court of Federal Claims ( “ RCFC ” )

. Plaintiff seeks to establish ownership and, thus, just compensation for all 477 containers in the amounts claimed above together with interest based on the Moody’s Composite Index of Yields on Aaa Long Term Corporate Bonds (“Moody’s Rate”) from the date of the taking

. The government seeks a ruling that Capital is not entitled to just compensation for any of the 477 containers , and that interest, if established, should be limited to the rate under the Declaration of Takings
Act ( “ DTA ” ) , 40 U.S.C. § 3116

.

3F or the reasons that follow , the court finds that plaintiffs are entitled to summary judgment with regard to their claim for just compensation for the 258 containers owned by Capital at the time of the taking in the amount of $485, 899.64 with interest as set forth below and that the government is entitled to summary judgment with regard to all remaining claims. 6
I. STANDARD OF REVIEW Under RCFC 56, s ummary judgment is appropriate “ if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. ” RCFC 56(a). The court ’ s task is to determine whether a genuine issue of material fact exists , and not “ to weigh the evidence and determine the truth of the

matter

. . . . ” Anderson v. Liberty Lobby , 477 U.S. 242, 249 (1986). As it does for all
RCFC 56 motions, the court views the evidence in a light most favorable to the nonmoving party, drawin g reasonable inferences in its favor. See Schooner Harbor Ventures, Inc. v. United States , 569 F.3d 1359, 1362 (Fed. Cir. 2009); Galvin v. Eli Lilly
& Co. , 488 F.3d 1026, 1031 (D.C. Cir. 2007). If the court finds that a rational trier of fact could not f ind for the nonmoving party, then there is no genuine issue for trial and the movant is entitled to summary judgment. Ricci v. DeStefano , 557 U.S. 557, 586 (2009) (quoting Matsushita Elec. Industr. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587 (1986)).
II. DISCUSSION

6 The court has held several oral arguments in this case and has concluded that an additional argument on the present motions for summary judgment i s not warranted. 4A. C apital and Green Eagle Lack Standing t o Maintain a Takings Claim f

or Containers Own ed b y P&R and GmbH The elements for establishing a taking s claim under the Fifth Amendment are well

- settled and are not disputed by the parties

. T he court first must determine whether the claimant has established a property interest for purposes of the Fifth Amendment. Klamath Irr. Dist. v . United States , 635 F.3d 505, 511 (Fed. Cir. 2011). If a property interest i s established, the court then must determine whether all or a part o f that interest has been appropriated by the g overnment for a public use. Id. Put another way, the government ’ s actions must appropriate a benefit for the government at the expense of the property owner. Moden v. United States , 404 F.3d 1335, 1339 (Fed. Cir. 2005) (quoting Ridge Line v. United States , 346 F.3d 1346, 1356 (Fed. Cir. 2003))

. The government does not dispute that Capital and Green Eagle have standing to assert a claim in connection with t he 258 containers Capital owned at the time the government took title

. Instead, t he government argu es that the United States did not engage in sovereign conduct when it elected to keep Capital ’ s containers. However, the government does challenge plaintiffs ’ standing to seek compensation for the 197 containers that were owned by P&R on the date of taking and the additional 22 containers that were owned by Capital ’ s subsidiary, GmbH , on the date of taking

. The court will
f

irst examine the go v e r n ment ’ s standing arguments with regard to containers owned by P&R and GmbH before turning to the argument regarding plaintiffs ’ containers and, finally, the issu e of the proper interest rate to apply

. 1. P&R C ontainers

5With respect to the 197 containers owned by P&R, the government argues that neither Capital nor Green Eagle has standing to seek just compensation because neither

own ed the containers at the time of the taking , citing United States v. Dow , 357 U.S. 17,
20

- 21 (1958) , for the proposition that just compensation is due at the time of the taking to the owner at that time, not an owner at an earlier or later date. The government argues that , to the extent that plaintiffs contend they acquired P&R ’ s claim for just compensation for the 197 cont ainers when they later purchased those containers, the ir claim is barred by the Assignment of Claims Act. 7

7 Two anti

- assignment statutes restrict the manner in which private entities may voluntarily assign contracts with, and claims against, the governme nt. These two statutes are often referred to collectively as the “ Assignment of Claims Act ” or the “ Anti

- Assignment Acts, ” and are codified at 41 U.S.C. § 15 and 31 U.S.C. § 3727. D elmarva Power & Light Co. v. United States , 542 F.3d 889, 892 ( Fed. Cir. 2008) ; Fireman ’ s Fund Ins. Co. v. England , 313 F.3d 1344, 1349 (Fed. Cir. 2002) . The statute applicable here is 31 U.S.C. § 3727, the Assignment of Claims Act. The Act provides, in relevant part: (a) In this section, “ assignment ” means

— (1) a transfer or assignment of any part of a claim against the United States Government or of an interest in the claim; or (2) the authorization to receive payment for any part of the claim. (b) An assignment may be made only after a claim is allowed, the amount of the claim is decided, and a warrant for payment of the claim has been issued. The assignment shall specify the warrant, must be made freely, and must be attested to by 2 witnesses. The person making the assignment shall acknowledge it before an official who may acknowledge a deed, and the official shall certify the assignment. The certificate shall state that the official completely explained the assignment when it was acknowledged. An assignment under this subsection is valid for any purpose. 31 U.S.C. § 3727(a)

- (b).

6P laintiff s do not dispute that they did not own the containers a t the time of the tak ing and do not dispute that they do not have a claim authorized under the Assignment of Claims Act

. Rather, they argue that they have standing to seek just compensation on two grounds. First, plaintiffs argues that they were subrogated to P&R ’ s just compensation claim and , for that reason , the claim is exempt from t he Assignment of Claims Act

. Second, they argue on policy grounds that the Assignment of Claims Act does not apply to this c ase .

a. Plaintiffs Are Not Sub rogat ed to P&R ’ s Claims
P laintiffs argue that their claims for just compensation are subrogation claims under the c ontract between Capital and P&R

— the contract that allowed Capital to lease
P&R ’ s containers to TOP t ainer , and for TOP t ainer to then lease th os e containers to the government

. Under those contracts, Capital had assumed the risk of loss of P&R ’ s containers , was required to buy insurance for the containers , and eventually was required to b uy all of P&R ’ s c ontainers , including those taken by the government at the end of the lease term. According to p laintiffs , th is contractual arrangement with P&R effectively subrogated them to P&R ’ s claim for just compensation. Because subrogation claims are ordinarily exempt from the Assignment of Claims Act, plaintiffs argue , their claims are exempt from the Assignment of Claims Act

. In support of this argument, p laintiffs rely

on United States v. Aetna Cas. & Sur. Co. , 338 U.S. 366 (1949), and Saint John Marine Co. v. United States , 92 F. 3d 39 (2d Cir. 1996)

. 8

8 In Aetna , the Supreme Court held that the insurance company that paid a tort victim harmed by the United States became equitably subrogated to the victim ’ s tort claim against the government. 7The court agrees with the government that p laintiffs ’ contractual arrangement with
P&R did not effect ively subrogate Capital to P&R ’ s claim for just compensation . While the Supreme Court and other courts have recognized exemptions to the Assignment of Claims Act, th e se exemption s are very narrow and do not extend to the facts of this case . In Dow , the plaintiff acquired property after it had been condemned and physically occupied

— but before a formal declaration of taking had been filed

— and thereafter brought a claim for just compensation. Addressing the question of whether the claim for just compensation vested in the owner at the time the United States took possession of the property or when the government filed a formal declaration of taking , the Supreme Court held that a claim for just compensation based on the voluntary acquisiti on of property previously taken by the government can only give rise to a claim by the subsequent purchaser if that purchaser satisfies the requirements under the Assignment of Claims
Act. Dow , 357 U.S. at 20

- 21. The Court determined that the claim for j ust compensation vested when the government took possession and thus the taking claim belonged to the property owner at the time of the take. Id. at 20 ( “[I]t is undisputed that ‘(since) compensation is due at the time of taking, the owner at that time, not the owner at an earlier or later date, receives payment.’ ” (quoting Danforth v. United States , 308 U.S. 271, 284 (1939 )); see also Palazzolo v. Rhode Island , 533 U.S. 606, 628 (2001) (citing

B ecause the assignment occurred by operation of law , t he Supreme Court held that the Assignment of Claims Act did not apply

. In Saint John Marine , t he Second Circuit relied on Aetna to hold that a lien created by a maritime agreement served to assign a claim against the United States without triggering the A ssignment of Claims Act

. B oth cases turn on assignments that arise from independent legal relationship s , i.e. , by operation of law

. P laintiffs argue that the same principle should apply here

. 8Danforth , 308 U.S. a t 284 ). A pplying those principles to this case, the court finds that , absen t an exception, plaintiffs’ claims based on P&R’s containers are barred by the Assignment of Claims Act.
In this regard , the court agrees with the government that plaintiffs are not entitled

to an ex e m ption from the Assignment of Claims Act based on their a greement with P&R

. B ecause plaintiffs did not take on the legal obligation to pay just compensation in the event of a taking , plaintiffs are not subrogated to P&R’s taking claim

. Although plaintiffs had the opportunity to include a provision covering such takings in the agreement with P&R, they did not do so

. Without such a provision, there is no mechanism for the assignment of a taking claim through operation of law, rega rdless of whether Capital assumed the risk of loss and acq uired insurance to cover losses. In Dow , the court noted that “ There were readily available contractual means by which he cou ld have protected himself vis

- a - vis his grantors against the contingency that his claim against the United States would be subseq uently invalidated by the Anti

- Assignment
Act. ” Dow , 357 U.S. at 27. For example, i n the present case , plaintiffs could have negotiated for P&R to pursue the takings claim against the government and to then pay over the funds to plaintiffs. However, because they did not do so , the Assignment of Claims Act bars plaintiffs from recovering for the containers owned by P&R at the time of the taking

. 9

9 If plaintiffs are instead arguing that they are subrogated to P&R ’ s claims for a tort committed by the government in keeping the containers , that claim is outside the jurisdiction of this court. See 28 U.S.C. § 149 1 (a)(1) ( The United States Court of Federal Claims shall have jurisdiction to render judgment upon any claim

. . . not sounding in tort. ” )

. 9b. Policy Is Broader Than Plaintiffs Claim Plaintiffs further argue that , because the Assignment of Claims Act is fundamentally a statute designed to protect the United States from fraud, claim trafficking , and potential conflicting claims , finding an exemption is appropriate in this
case because it will not undermine the fundamental purpose of the Act

. According to
p laintiffs , their purchase of P&R ’ s taken containers as part of a pre

- existing agreement entered into before the taking does not implicate the policy concerns that the Act is designed to address. Th us , they argue on policy grounds that there is no reason t o apply the Assignment of Claims Act. The government disagrees , arguing that the Assignment of Claims Act not only appl ies but that the policy concerns of the Act are broader than plaintiffs claim

. Specifically, t he government argues that , as discussed in Kingsbury v. United States , 563 F.2d 1019 , 1024 (Ct. Cl. 1977) , the Assignment of Claims Act preserves for the government defenses and counterclaims which might not be available against the assignee , and therefore the United States is also protected fro m a loss of those defenses and counterclaims

. P laintiffs ’ contention that their claim should be exempt from the Assignment of Claims Act on pol icy grounds , regardless of whether subrogation applies, is

u npersuasive

. While it is no doubt true that the Assignment of Claims Act is intended , in the first instance, to protect the government from fraud, conflicting claims, and potential liability to multiple parties, those are not the only reasons for its application

. Among the reasons for precluding the transfer of takings claims is the concern that different defenses
10may apply depending upon who own s the property on the d ate of taking

. United States v. Shannon , 342 U.S. 288, 2 92 (1952) (quoting Grace v. United States , 76 F. Supp. 174, 175 (D. Md. 1948)) ; see also Palazzolo , 533 U.S. a t 628 ( “ A blanket rule that purchasers with notice have no compe nsation right when a claim becomes ripe is too blunt an instrument to accord with the duty to compensate for what is taken

. ” )

. Thus , one party cannot simply step into the shoes of another when seeking just compensation for property belonging to ano ther on the date of the taking. 10 T he Assignment of Claims Act ’ s legitimate policy goal of preserving defenses is therefore furthered by applying the Act here. Plaintiffs’ claims for just compensation in connection with P&R’s containers must therefore be DENIED

. 2. Capital Lease GmbH C ontainers With respect to the 22 containers owned by GmbH , the government argues that plaintiffs lack standing to bring claims for just compensation , as with the containers owned by P&R . Plaintiffs argue in response that they s hould have standing on two grounds. First, they argue that, as the sole stockholder of GmbH, they own the assets of GmbH and may step into its shoes as its alt er ego. Second, plaintiffs argue that , if they

10 For example, while the court need not resolve the question at this time, P&R may not actually be entitled to state a taking s claim on its own behalf in the first instance. Capital gave notice to the government that TOPtainer did not own its containers and thus could not sell them, but there is no evidence that P&R gave such notice to the government. In such circumstances, P&R likel y would not be entitled to state a taking claim on its own behalf, and the government could be prejudiced by allowing plaintiffs to bring those claims as their own. This is especially true in a case such as this, where the notice provided to the government is a critical factor in establishi ng liability. As a result, plaintiffs may simply be wrong in assuming that P&R has a right to just compe nsation. 11may not bring GmbH ’ s claims, GmbH itself should be permitted to join this litigation under RCFC 17.

a. Plaintiffs Do Not Own GmbH ’ s A ssets The government argues that plaintiffs do not have standing to pursue a takings
claim with respect to the 22 containers that were owned by GmbH because , although Capital is a stockholder in GmbH, GmbH is a separate legal entity distinct from Capital

. As a result, the government argues, Capital cannot be presumed to have own ed the containers belonging to GmbH at the time of the taking , citing Dole Food Co. v. Patrickson , 538 U.S. 468, 474

- 75 (2003) , for the general rule that two separate corporations are regarded as distinct legal entities even if the stock of one corporation is owned wholly by the other and that the parent cannot be presumed to have legal title to the assets of the subsidiary solely on this basis

. Plaintiffs argue in response that Capital should be allowed to p ursue the claim of its subsidiary because Capital Lease GmbH, as Capital ’ s wholly

- owned subsidiary , is in fact the alter ego of Capital and thus Capital may bring a claim on its behalf

. In support,
p laintiffs rely on several cases in the Fourth and Tenth Circuits that t hey argue demonstrate that a wholly

- owned subsidiary is an alter ego of the parent for purposes of standing and claim pre clusion

. 11 In the alternative, p laintiffs argue that GmbH should be

11 In Saudi v. V. Ship Switz. , the 4th Circuit held that a relationship where the subsidiary is a “mere corporate vehicle” is sufficient to establish privity for purposes of claim preclusion . 93 Fed. App’x 516, 520

- 21 (citing Robinson v. Volkswagenwerk AG , 56 F.3d 1268, 1275 (10th Cir. 1995) ; Whitehead v. Viacom , 233 F. Supp. 2d 715, 721 (D. Md. 2002) ; Buckley v. Airshield Corp

. , 977 F. Supp. 375, 378

- 79 (D. Md. 1997) )

. In Robinson , the 10th Circuit held that a controlling, “near alter ego” relationship was sufficient to establish privity for purposes of claim 12allowed to join this suit pursuant to RCFC 17 as the real party in interest for the 22 containers if it is found to be the owner . The court agrees with the government that Capital does not have standing to seek compensation because , as a corporate parent , it cannot be presumed to own Capital Lease GmbH ’ s assets and thus does not own the 22 containers belonging to GmbH. There is simply no evidence before the court to allow the court to find that Capital ’ s ownership of GmbH ’ s stock alone made Capital the owner of the 22 containers. Plaintiffs ’ reliance on cases showing wholly

- owned subsidiaries as alter egos for the purp oses of standing and claim preclusion is misplaced. Parents and their subsidiaries are generally consid e red to be entirely s eparate entities , Dole , 538 U.S. at 4 7 4 (citin g First Nat ’ l City Bank v. Banco
P ara El Co mercio Exterior de Cuba , 462 U.S. 611, 625 (1983)) , a nd plaintiffs have presented no evidence to demonstrate that such a relationship exists here. Because plaintiff s have failed to provide such evidence to demonstrate that GmbH was Capital ’ s alter ego, p laint iffs ’ cases are unpersuasive. Acc ordingly, t he court sees no reason not to

a pply the general rule, articulated by the Supreme Court, and find that that shareholder
C apital is not presumed to be the owner of G mbH ’ s corporate assets

. b. Substitution Under RCFC 17 Is Not Appropri a te Plaintiffs argue that , if GmbH is the real party in interest for these containers , they are permitted an opportunity under RCFC 17 to join them here. Plaintiffs contend that

preclusion. 56 F.3d at 1275. While the cases hold that privity between a parent and subsidiary can be demonstrated by an alter ego relationship for purposes of claim preclusion, plaintiffs have presented no evidence that the relationship between Capital and GmbH is actually that of an alter ego . 13they were not aware of GmbH ’ s ownership until re cently , and thus could not have brought a motion for substitution earlier. Additionally, plaintiffs argue that permitting GmbH ’ s join der would not be prejudicial to the government and denying the motion would serve no policy objective. The government argues in response that plaintiffs ’ reque st for substitution under
RCFC is not based on an understandable mistake , and that the request comes too late in the litigation to be appropriate. According to the government , plaintiffs could have settled the ownership issues earlier if they had investigated them, which would have informed them of GmbH ’ s status. The government contends that plaintiffs ’ current request is due to plaintiffs ’ own failure s or omissions , and t hat the court is under no obligation to correct them.
T he court agrees with the government that plaintiffs ’ request to substitute GmbH as the real party in interest under RCFC 17 for the 22 containers comes too late

. Under RCFC 17, “ [ t] he court may not dismiss an action for failure to prosecute in the name of the real party in interest until, after an objection, a reasonable time has been allowed for the real party in interest to ratify, join , or be substituted into the action. After ratification, joinder, or substitutio n, the action proceeds as if it had been originally commenced by the real party in interest. ” RCFC 17(a)(3). Under this rule, courts must allow a reasonable opportunity for a plaintiff to substitute the real party in interest. However, “ when the determination of the right party to bring the action was not difficult and when no excusable m istake ha [ s] been made, then Rule 17(a)(3) is not applicable and the action should be dismissed .” 6A Charles Alan Wright, Arthur R. Miller, Mary Kay Kane,

14Richard L. Marcus & Adam N. Steinman, Fed eral Prac tice a nd Proc e dure § 1555 (3d ed.)

. As discussed above, t he present litigation has been delayed repeatedly by plaintiffs ’ failure to resolve the issues of ownership. See supra , note 5. In this case, plaintiffs have spent much of the last six years identifying various parties that they contend were the real part i es in interest. Finally, in November 2013, plaintiffs , after repeated discovery attempts by the government, informed the court that they had identified GmbH as the owner of these containers. See Jt. Status Rep., ECF No. 15 5 , at 2. Even so, plaintiffs waited several months to move for substitution, and even then only did so as an alternative argument. As a result, this request is simply too late. As the

event s in this case occurred nearly a decade ago, p ermitting plaintiffs to jo in GmbH here would effectively extend the statute of limitations on the action, placing a greater burden on the government to accommodate plaintiffs ’ inability to resolve questions of ownership which existed from the outset of this case . As the court has been given no reason to believe that a timely discovery of the ownership status of the containers was difficult, the court finds no excusable mistake for plaintiffs’ failure to join GmbH at a stage of this litigation prior to the third and final round of s ummary judgment motions. Plaintiffs ’ request to join GmbH to the action at this late date is therefore DENIED and plaintiffs’ claims for just compensation in connection with GmbH’s containers must also be rejected

. B. The Government Is Liable for a Taking of Capital ’ s Containers

15The government next asks that the court reconsider its ruling that the government is liable for a Fifth Amendment taking of the 258 containers actually owned by Capital at the time the government took title and possession of the containers , arguing that the court erred in concluding that the United States acted in a sovereign capacity when it appropriated plaintiffs ’ property interest. The government argues that the dec ision of the United States to take title and possession of Capital ’ s containers after receiving notice from Capital was a proprietary act and that Capital has never identified a sovereign act. The government further argues , relying on Alaska Airlines v. Johnson , 8 F.3d 791, 798 (Fed. Cir. 1993) , and DSI Corp. v. United States , 655 F.2d 1072, 1074 ( Ct. Cl. 1981) , that United States did not take Capital ’ s container s for a public benefit . As a result, according to the government , the United States cannot be held liable for a taking

. In this connection, the government also seeks to distinguish this case from Armstrong v. United States , 364 U.S. 40 (1960) , where the Supreme Court found a taking in a contractual context. In Armstrong , the g overnment entered into a contract with a shipbuilder for the construction of Navy personnel boats. Armstrong , 364 U.S. at 41. The contract provided that, if the shipbuilder defaulted, the United States could terminate the contract , require the shipb uilder to transfer title , and require the shipbuilder to deliver all completed and uncompleted work to the government

. Id

. When the shipbuilder defaulted, the g overnment exercised its right to require it to transfer the boat hulls still under construction to the g overnment. Id

. At the time of the transfer, the suppliers of the boat materials possessed valid state law liens on the materials. Id

. at 41

- 42. However,

t he suppliers ’ liens could not be enforced against the Unite d States due to sovereign
16immunity. Id. at 42. As a result, the Court found, the application of sovereign immunity destroyed the liens at issue and caused a compensable taking of the suppliers ’ liens. Id

. at 48

- 49. The government argues that Armstron g does not provide any precedent for this

case because the government in this case never took valid title from TOPtainer as a bona fide purchaser for value

. The government argues that assertion of control over the containers by the United States was “ wrongful , ” and therefore gives rise only to a claim for conversion of t he containers. In support of this argument, t he government relies on State Sav. Bank of Ortley v. United States , 59 Ct. Cl. 621 (1924) , in which the Court of Claims held that it lacked j urisdiction to entertain the plaintiff ’ s conversion claim where the Federal Reserve accepted coupon bonds that it had been notified were stolen , and Morgan Guar. Trust Co. v. Third Nat ’ l Bank , 529 F.2d 1141, 1143 (1st Cir. 1976) , which held that a bank that was notified of the owner ’ s claim prior to accepting stolen treasury bills was not a bona fide purchaser and thus was guilty of a conversion . Based on these cases, the government conclude s that , unlike Armstrong , the g overnment in this case has not obtained any property rights that a private company or individual could not obtain and, thus, no taking occurred. Capital argues in response that the government , by taking physical possession of its property for use by the military , has established a per se taking and that there is no basis for reconsideration of the court ’ s previous determination of taking liability

. The court agrees with Capital and declines the government ’ s invitation to reconsider its earlier ruling. Regardless of whether the government ’ s actions may also be

17characterized as a tort, the critical issue in this case is whether the government is liable for a taking of property

. C ontrary to the government ’ s contention, the fact that the government ’ s behavior might also give rise to a tort claim does not alter thi s result

. See City of Monterey v. Del Monte Dunes at Monterey, Ltd. , 526 U.S. 687, 717 (1999) (“ The city argues that because the Constitution allows the government to take property for public use, a taking for that purpose cannot be tortious or unlawful. We reject this conclusion

. . . . When the government repudiates this duty, either by denying just compensation in fact or by refusing to provide procedures through which compensation may be sought, it violates the Constitution. In those circumstances th e government's actions are not only unconstitutional but unlawful and tortious as well. ”). T he court finds that t he government is liable for a taking in this case because the government did appropriate Capital ’ s containers for a public benefit in the form of continued military use . The principle distinction between a tort and taking relates to the purpose of the government ’ s action. A tort is intended to remedy a n injury to property without regard to
p ublic benefit

. See Ridge Line , 346 F.3d at 1355 (discussing distinction between a taking and a tort)

. A taking, in contrast, turns on whether the government has acted for a public benefit. Moden , 404 at 1342 (citing Ridge Line , 346 F.3d at 1356). Here, the undisputed facts demonstrate that the government decided to keep Capital ’ s containers for a public
purpose . First, when the United States continues to physically occupy and use property after a lease expires, a taking occurs. See Prudential Ins. Co. of Am. v. United States , 801 F.2d 1295, 13 00 n.13 (Fed. Cir. 1986) (citing Kimball Laundry Co. v. United States , 338 U.S. 1 (1959); United States v. General Motors Corp. , 323 U.S. 373 (1945)).
18Second, military conduct that appropriates private property for its use is recognized as giving rise to a taking. See Ar gent v. United States , 124 F.3d 1277, 1281 (Fed. Cir. 1997). Here, the United States decided to keep and use the containers belonging to Capital past the end of its lease without just compensation and did so for a military use , satisfying the requirement of a public purpose

. 12 The fact that the government was initially acting in a proprietary capacity when it paid TOPtainer for the containers belonging to Capital does not convert the government ’ s decision to keep th ose same containers after Capital notified i t tha t TOPtainer had no right to sell the containers and sought their return into a proprietary act. As a result, the government is liable for taking plaintiffs’ containers for a public use and the court declines the opportunity to reconsider its prior opinions. C. A Combination of t he Declaration Of Takings Act Rate with the Moody ’ s Rate Is t he Correct Interest Rate When the court first considered the issue of interest, the court held that the interest

rate under the DTA , 13 rather than the Moody’s Rate , was likely the correct interest rate because the plaintiffs failed to provide any evidence to support the application of the Moody ’ s R ate. Textainer , 99 Fed. Cl. a t 223. Since that time, plaintiffs have argued that the DTA rate alone is not sufficient to provide just compensation and , citing Hughes

12 As discussed above, i t is undisputed that many of the subject containers were located in Okinawa, Japan after this lawsuit was filed. Textainer , 99 Fed. Cl. at 216

. The government has never argued or presented any evidence to show that plaintiffs’ other containers were not similarly being used by the government when they were taken. As this court found previously, this use clearly satisfies the requirements to demons trate a taking.

13 The DTA rate is based on the the one - year Treasury yield rate set by the Federal Reserve (“52

- week T

- bill” or “Treasuries”)

. 19Aircraft Co. v. United States , 86 F.3d 1566, 1574 (Fed. Cir. 1996), to argue that this court should exercise its discretion and apply the Moody ’ s R ate. The government argues in response that the court should not reconsider its initial ruling and should apply the DTA rate. According to the government, while the DTA rate is now very low, the reason for the delay in securing compensation rests with plaintiffs

. As a result, the government argues, applying the Moody ’ s R ate would reward plaintiffs for their failure to resolve the ownership issue more quickly. The court finds, in its discretion, that a combination of both rates is appropriate to use i n this case. F or the period from when the lawsuit was filed until 2009 , the DTA rate should be applied . Thereafter, the Moody ’ s R ate should be applied

. The court’s primary goal in determining a correct interest rate is to employ an interest calculation that does not simply “yiel[d] a higher or lower payment, but rather . . . is the more accurate measure of the economic harm to property owners.” NRG Co. v . United States , 31 Fed. Cl. 659, 670 n.8 (1994). In making this determination, the court is to choose an interest rate that puts the property owner in as good a financial position as if the compensation were given concurrently with the taking. Kirby For est Indus. v . United States , 467 U.S. 1, 10 (1984). With these standards in mind, the court is persuaded that in this i nstance an objective “reasonably prudent investor” would have sought yields consistent with the Moody’s Rate. See Pitcairn v. United States , 547 F.2d 1106, 11 24 (Ct. Cl. 1976), (“[L]ong

- term corporate bond yields are an indicator of broad trends and relative levels

20of investment yields or interest rates. They cover the broadest segment of the interest rate spectrum.”). In addition, the court finds that it is app ropriate to compound interest annually. Compound interest may be necessary “to accomplish complete justice” under the Just Compensation Clause. Dynamics Corp. of Am. v. United States , 766 F.2d 518, 519 (Fed. Cir. 1985) (citations and quotation marks omit ted). Compound interest is also in accord with prudent investment practices. Brunswick Corp. v. United States , 36 Fed. Cl. 204, 219 (1996) (“[I]nterest rates shall be compounded annually since no prudent, commercially reasonable investor would invest at simple interest.”). Thus, plaintiffs are entitled to interest, compounded annually, based on the DTA rate until 2009 and then to present based on the Moody’s Rate.
III. CONCLUSION For the foregoing reasons, the plaintiffs ’ motion for summary judgment is GRANTED
- IN
- PART and DENIED
- IN
- PART and the government ’ s cross - motion for summary judgment is GRANTED
- IN
- PART and DENIED
- IN
- PART

. The parties shall file a proposed judgment consistent with this opinion for the court ’ s review no later than May 9 , 2014

. IT IS SO ORDERED.
s/Nancy B. Firestone NANCY B. FIRESTONE Judge

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