Opinion ID: 549048
Heading Depth: 3
Heading Rank: 1

Heading: Whether a Compensable Taking Occurred

Text: 36 The Fifth Amendment to the United States Constitution provides, in part, nor shall private property be taken for public use, without just compensation. The purpose of this clause is to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole. Armstrong v. United States, 364 U.S. 40, 49, 80 S.Ct. 1563, 1569, 4 L.Ed.2d 1554 (1960). This court must decide whether the poultry quarantine imposed a burden on the Yanceys which should be borne by the public as a whole. 37 The resolution of such issues depends largely on the particular circumstances involved in each case. 38 [W]e have eschewed the development of any set formula for identifying a taking forbidden by the Fifth Amendment, and have relied instead on ad hoc, factual inquiries into the circumstances of each particular case. To aid in this determination, however, we have identified three factors which have particular significance: (1) the economic impact of the regulation on the claimant; (2) the extent to which the regulation has interfered with distinct investment-backed expectations; and (3) the character of the governmental action. 39 Penn Central Transportation Co. v. New York City, 438 U.S. 104, 124, 98 S.Ct. 2646, 2659, 57 L.Ed.2d 631 (1978); see also Connolly v. Pension Benefit Guaranty Corp., 475 U.S. 211, 224-25, 106 S.Ct. 1018, 1026, 89 L.Ed.2d 166 (1986). 40 The Claims Court reviewed the particular circumstances of this case in light of the Penn Central factors. The Claims Court found that the quarantine had reduced the value of their healthy turkey breeder flock seventy-seven percent from $91,616 to $20,887, the amount received from the slaughter. Yancey v. U.S., Claims Court No. 413-85C, at 17 (filed December 30, 1988). 41 Even considering the receipt of $21,496 from the Commonwealth of Virginia, plaintiffs incurred a substantial loss on their investment. Although plaintiffs were able to mitigate their loss by slaughtering the flock, there was no other alternative, economically viable use for the flock while the quarantine was in effect. 42 Id. (emphasis added). Moreover, the Claims Court found the Yanceys learned about the quarantine from the newspaper only the day before it took effect. Id. at 18-19. 43 At the time of the acquisition of the turkey breeder flock, plaintiffs had the investment-backed expectation to sell the hatching eggs to customers outside of Virginia. Defendant's actions in administering the quarantine resulted in an unforeseen and disparate impact upon plaintiffs. 44 Id. at 19. Because the Government has not demonstrated that the Claims Court's findings of facts were clearly erroneous, we accept these facts as true. 45 Relying on Florida Rock Indus. v. United States, 791 F.2d 893, 901 (Fed.Cir.1986), cert. denied, 479 U.S. 1053, 107 S.Ct. 926, 93 L.Ed.2d 978 (1987), the Claims Court concluded that there is no fixed formula for determining when the Fifth Amendment comes into play. [T]he Fifth Amendment ... does not find a taking in a mere denial of the 'highest and best use,' i.e., most profitable use, that would be available in the absence of regulation. Id. However, a regulation ... can be a taking if its effect on a landowner's ability to put his property to productive use is sufficiently severe. Id. at 900. 46 Moreover, the Claims Court determined that even if the Government's regulatory action were presumed to be reasonable, a compensable taking may still occur. In Department of Agriculture v. Mid-Florida Growers, Inc., 521 So.2d 101 (Fla.1988), cert. denied, 488 U.S. 870, 109 S.Ct. 180, 102 L.Ed.2d 149 (1988), the court held that Florida's destruction of citrus trees tested and found not to be infected with citrus canker, a communicable viral disease, was a compensable taking, despite the fact that the action was a valid exercise of police powers. 47 The Government takes issue with the Claims Court's conclusion that compensation must be provided for deprivation of the economically viable use of property even though the property remains within the use and control of the owner. We acknowledge that where there has been no physical appropriation of the property for public use, but rather merely a regulatory restriction upon use of property, the Supreme Court has generally held that the restriction is constitutionally permissible in the absence of compensation. See Keystone Bituminous Coal Assoc. v. DeBenedictis, 480 U.S. 470, 107 S.Ct. 1232, 94 L.Ed.2d 472 (1987) (when the private and public interests are weighed, the public interest in preventing activities similar to public nuisances is a substantial one, which in many instances has not required compensation). Still, Keystone involved a facial challenge to a regulation under the Fifth Amendment; no evidence was offered of the regulation's economic impact. We favor the Yanceys' position that the Keystone opinion did not hold that the nature of governmental activity conclusively forecloses all claims for just compensation. 48 On the contrary, the Government's proper exercise of regulatory authority does not automatically preclude a finding that such action is a compensable taking. See United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 126-27, 106 S.Ct. 455, 458-59, 88 L.Ed.2d 419 (1985). There should be no blanket exception to the Takings Clause whenever Congress exercises its Commerce Clause authority.... Kaiser Aetna v. United States, 444 U.S. 164, 172, 100 S.Ct. 383, 389, 62 L.Ed.2d 332 (1979). The application of a [regulation] to particular property effects a taking if the [regulation] ... denies an owner economically viable use of his land (citations omitted). Agins v. City of Tiburon, 447 U.S. 255, 260, 100 S.Ct. 2138, 2141, 65 L.Ed.2d 106 (1980). 49 The Government also attacks the Claims Court's primary reliance on cases involving ownership of real property. Despite the Government's attack, the Claims Court's reasoning is equally applicable to other significant property interests besides land ownership. There is no doubt that other property interests are also protected by the Fifth Amendment. See Ruckelshaus v. Monsanto Co., 467 U.S. 986, 104 S.Ct. 2862, 81 L.Ed.2d 815 (1984) (the Supreme Court determined that Fifth Amendment protection could cover an intangible trade-secret property interest). For Fifth Amendment purposes, the Yanceys' ownership of their turkey flock deserves just as much protection as if ownership of their farm had been appropriated. 50 The Claims Court held, based on the specific facts of this case, that compensation should be paid to the Yanceys pursuant to the Just Compensation Clause of the Fifth Amendment. Before we can adopt the same conclusion, one case that the Claims Court failed to mention must be addressed. Empire Kosher Poultry, Inc. v. Hallowell, 816 F.2d 907 (3rd Cir.1987), is a case that has similar facts and reaches a contrary holding. 51 In Empire, the court considered the imposition of a quarantine in Pennsylvania related to the same outbreak of Avian Influenza as in the instant case and held that there was no compensable taking. In both cases, the sellers of poultry were disadvantaged by Government imposed quarantines. The Yanceys try to distinguish the facts of the Empire case. They emphasize that in Empire, involving healthy chickens raised for slaughter, the birds could be sold within the quarantine area for the purpose for which they were raised. Moreover, in Empire, the seller chose to close his own processing plant after the quarantine was in effect and, in doing so, limited his own investment backed expectation. This leads us to the conclusion that, in the Empire case, the quarantine had less adverse economic impact on the seller than in the instant case. 52 Insofar as the Empire case can be distinguished from the instant case we choose not to follow it for that reason. Insofar as the two cases are similar, we choose not to follow Empire because we find it inconsistent with the intent of the Fifth Amendment. Basic understanding of the Fifth Amendment makes clear that it is designed not to limit governmental interference with property rights per se, but rather to secure compensation in the event of otherwise proper interference amounting to a taking. First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304, 315, 107 S.Ct. 2378, 2385-86, 96 L.Ed.2d 250 (1987) (a zoning regulation's temporary denial of a land owner's use of property amounted to a compensable taking). 53 In addition to the Empire case, it should be noted that the Claims Court's specific findings of fact preclude this court from relying on several other cases cited by the Government. For instance, the Government argues that the percentage diminution in value of the turkeys was too small to amount to a compensable taking. See Euclid v. Ambler Realty Co., 272 U.S. 365, 47 S.Ct. 114, 71 L.Ed. 303 (1926) (75% diminution in value caused by zoning law not a taking), and Hadacheck v. Sebastian, 239 U.S. 394, 36 S.Ct. 143, 60 L.Ed. 348 (1915) (87 1/2% diminution in value not a taking). However, we do not read these early precedents as creating an automatic numerical barrier preventing compensation, as a matter of law, in cases involving a smaller percentage diminution in value. The Claims Court properly weighed all the relevant considerations, including percentage diminution in value, under the modern Penn Central approach and found that the Yanceys suffered severe economic impact. In view of the Claims Court's well supported factual findings, we cannot rule as a matter of law that the flock's percentage diminution in value was too small to warrant a taking. 54 Similarly, the Claims Court's findings of fact preclude this court from following Galloway Farms, Inc. v. United States, 834 F.2d 998, 1003 (Fed.Cir.1987). In Galloway Farms, the court ruled that the grain embargo imposed on the Soviet Union did not amount to a compensable taking under the Fifth Amendment for those farmers allegedly deprived of an economic use of their property because other markets remained open. The Galloway Farms case is distinguishable from the case at hand because in Galloway Farms the property owner had the opportunity to use his property in other economically viable ways. The Claims Court found that the Yanceys had no choice but to sell their birds for substantially less than their value. 4 55 There is simply no way that the Government can refute the Claims Court's findings of fact. When adverse economic impact and unanticipated deprivation of an investment backed interest are suffered, as when the poultry quarantine forced the Yanceys to sell their turkey flock, compensation under the Fifth Amendment is appropriate. Even when pursuing the public good, as the USDA was doing when it imposed the poultry quarantine, the Government does not operate in a vacuum. Bluntly stated, the consequences of the Government's action cannot be ignored. Why should the Yanceys be forced to bear their own losses when their turkeys were not diseased? The Yanceys' losses came about because of the Government's action. If the intent of the poultry quarantine was to benefit the public, the public should be responsible for the Yanceys' losses.