Pvm Redwood Company, Inc. v. United States

686 F.2d 1327, 1982 U.S. App. LEXIS 25736

• Court: Court of Appeals for the Ninth Circuit
• Decided: September 13, 1982
• Docket: 80-4096
• Status: Published

Opinions

MERRILL, Circuit Judge:

PVM Redwood Company, Inc. appeals the dismissal of its action for failure of its complaint to state a claim upon which relief could be granted.

PVM operates a sawmill. In its complaint it alleged that passage of the Redwood Park Expansion Act, Pub.L.No.95-250, 92 Stat. 163, 16 U.S.C. § 79b et seq., caused a taking of its property by the United States for which it is entitled to compensation under the Fifth Amendment of the United States Constitution. The District Court ruled that from the allegations of the complaint it was clear that no property right held by PVM had been taken by the Government. We agree.

The nature of PVM’s alleged property right appears from Count I of its complaint. It is there alleged that under authority granted by the Act the Secretary of the Interior had acquired for the United States timber lands owned by those who had in the past supplied 98% of PVM’s requirements; that this had made it impossible for them to continue to meet PVM’s needs. The complaint stated:

“Prior to and during the 1977 calendar year, Plaintiff contracted and received from Louisiana-Pacific Corporation and Simpson Timber Company, ninety-eight percent (98%) of its raw materials * * *.

That after the passage of the Redwood National Park Expansion Act, Plaintiff’s suppliers informed Plaintiff that they could no longer furnish said raw materials which amounted to ninety-eight percent (98%) of Plaintiff’s total production * * * »

As a consequence, it is alleged, PVM suffered an increase in production costs through a need to deal with an inferior grade of lumber and the need to retool and purchase new machinery in order to deal with that raw material.¹

PVM has failed to distinguish between “appropriation of property and the frustration of an enterprize by reason of the exercise of a superior governmental power.” United States v. Grand River Dam Authority, 363 U.S. 229, 236, 80 S.Ct. 1134, 1138, 4 L.Ed.2d 1186 (1960). PVM has not been denied use of its property; it can still run its sawmill. It had no ownership interest in its source of supply. As the Supreme Court stated in Grand River, supra, 363 U.S. at 236, 80 S.Ct. at 1138:

Here respondent has done no more than prove that a prospective business opportunity was lost. More than that is necessary as Omnia Co. v. United States, 261 U.S. 502 [43 S.Ct. 437, 67 L.Ed. 773] [1923], holds. In that case the claimant stood to make large profits from a contract it had with a steel company. But the United States, pursuant to the War Power, requisitioned the company’s entire steel production. Suit was brought in the Court of Claims for just compensation. The Court, after pointing out that many laws and rulings of Government reduce the value of property held by individuals, noted that there the Government did not appropriate what the claimant owned but only ended his opportunity to exploit a contract. “Frustration and appropriation are essentially different things.” Id., at 513 [43 S.Ct. at 439].

It is not clear from PVM’s complaint that existing contracts had been frustrated. Rather it would seem that what had been frustrated was an expectancy based on past experience that contracts would be entered, into. Grand River applies a fortiori.

We conclude that PVM “can prove no set of facts in support of [its] claim which would entitle [it] to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957) (footnote omitted), and that dismissal of this action was proper.²

Finally PVM contends that the court erred in holding what PVM describes as an evidentiary hearing before dismissing its complaint on the pleadings. It argues that in holding a hearing, the court effectively converted the Government’s Rule 12 motion to dismiss on the pleadings into a motion for summary judgment under Rule 56 and accordingly should have provided PVM with notice and an opportunity to present pertinent material.³

We do not agree with PVM’s characterization of the events below. While the court did engage in a brief colloquy with counsel for PVM (six pages of transcript), it did nothing to elicit evidence outside the pleadings; rather, it merely attempted to clarify the allegations of PVM’s complaint.

JUDGMENT AFFIRMED.

1 . In Count II of its complaint PVM alleged that the United States had appropriated from PVM a “personal property interest” and had “interfere[d] with [its] ongoing contracts for supply.” Because these allegations refer to the interest specified in Count I, we need not address them separately.

2 . PVM also contends that it is entitled to compensation under the terms of the Redwood Park Expansion Act since it is among the class of “affected mill employers” mentioned in the statute. Pub.L.No.95-250, sec. 201(8), 92 Stat. 173 (section not codified in U.S.C.). This argument is without merit. The Act defines affected mill employers for purposes of determining those employees eligible for assistance under the Act. See Pub.L.No.95-250, sections 203 et seq., 92 Stat. 175 et seq.

3 . In this regard, Rule 12(c) provides:

If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.