PEOPLE FOR RESP OMAHA URBAN DEV v. I. COM COMM

WARREN URBOM, Senior District Judge

The plaintiffs and intervenor have filed objections to the report and recommendations made by Magistrate Kopf following the second portion of a bifurcated trial, filing 468. The defendants, who filed their objections to the magistrate's findings and recommendations later than 10 days following the filing of the magistrate's opinion, objected to the magistrate's conclusion that each of the plaintiffs and the intervenor had shown facts at trial sufficient to establish standing. I have reviewed the transcript of the trial and the portions of the magistrate's report that concern these issues and I conclude that the report contains no clearly erroneous findings as to the standing issues. Therefore, I shall adopt the magistrate's recommendations as to the standing of P.R.O.U.D., Roger Durand, Mercer Management Company and the National Trust for Historic Preservation ("National Trust"). See Recommendations (d), (e), (f), and (g).

The National Trust, the intervenor in this case, has objected to the magistrate's finding that it lacks the capacity to sue the federal defendants. The magistrate determined that the National Trust had capacity to sue the nonfederal defendants, but he found that, despite its power "to sue and be sued" under 16 U.S.C. § 468c(b), the National Trust lacked capacity to sue the federal defendants because the Trust failed to overcome the obstacles to capacity that were outlined in Federal Housing Admin. v. Burr, 309 U.S. 242 (1940). The magistrate determined that permitting the National Trust to sue federal defendants would be inconsistent with the statutory scheme for historic preservation in the United States and would constitute a grave interference with significant governmental functions. The federal defendants, who argued at trial that the National Trust lacked capacity to sue them, have since abandoned their position, filing 478.

The intervenor agrees with the basic approach used by the magistrate to determine whether the Trust has capacity to sue. As the magistrate recognized, any limitation on the power of the National Trust to sue or to be sued "cannot be lightly assumed."Burr, 309 U.S. at 245. The Burr test, which was reaffirmed inLoeffler v. Frank, 56 U.S.L.W. 4554, 4555 (U.S. June 13, 1988), established that "if the general authority to `sue and be sued' is to be delimited by implied exceptions, it must be clearly shown that certain types of suits are not consistent with the statutory or constitutional scheme, that an implied restriction of the general authority is necessary to avoid grave interference with the performance of a governmental function, or that for other reasons it was plainly the purpose of Congress to use the `sue and be sued' clause in a narrow sense." Burr, 309 U.S. at 245.

STATUTORY LANGUAGE AND POLICY

Like the magistrate and the intervenor, I shall begin my analysis with an examination of the statutory language of 16 U.S.C. § 468 (1985):

In order to further the policy enunciated in sections 461 to 467 of this title, and to facilitate public participation in the preservation of sites, buildings, and objects of national significance or interest, there is hereby created a charitable, educational, and nonprofit corporation, to be known as the National Trust for Historic Preservation in the United States, hereafter referred to as the "National Trust". The purposes of the National Trust shall be to receive donations of sites, buildings, and objects significant in American history and culture, to preserve and administer them for public benefit, to accept, hold and administer gifts of money, securities, or other property of whatsoever character for the purpose of carrying out the preservation program, and to execute such other functions as are vested in it by sections 468 to 468e of this title.

Upon considering this and the other language that constitutes the federal charter, the magistrate decided that the primary function of the National Trust is "to serve the goal of preservation of historical sites by acquisition, lease, contract, loan or the like." MFAR II, at 38. The magistrate concluded that the statutory language is incapable of being read to suggest that the Trust may sue federal agencies for the purposes of forcing a section 106 consultation. He noted that the only place in the statutory provisions where federal agencies are mentioned is in section 468c(g), which refers to the Trust's power to contract and to make other cooperative agreements with federal agencies, and he found that this section emphasizes the need for a cooperative posture between federal agencies.

The intervenor argues that the only issue regarding its capacity to sue a federal agency concerns whether a function of the National Trust is to attempt to save historical buildings from demolition by lawsuit. Not surprisingly, the Trust answers its own question affirmatively and takes issue with the magistrate's narrow interpretation of the corporation's functions.

The policy enunciated in section 461, which is referred to in the first sentence of section 468, is "to preserve for public use historic sites, buildings and objects of national significance for the inspiration and benefit of the people of the United States." 16 U.S.C. § 461. The intervenor argues that the policy articulated in section 461, combined with the policy of "facilitat[ing] public participation in the preservation of sites, buildings, and objects of national significance or interest," indicates that a function of the National Trust is to institute lawsuits "to preserve [historical sites and buildings] for public benefit," regardless of whether the defendants are federal agencies.

I agree with the intervenor that, based solely upon an interpretation of the statutory language of the National Trust's charter, the primary function of the Trust is not as narrow as the magistrate's report implies. However, I also acknowledge that the breadth of the Trust's functions, including its right to sue and be sued, may be limited by the concerns expressed in Burr. A useful resource for determining whether Burr's limitations apply to limit the Trust's capacity to sue is the legislative history of the laws involving the nation's historic preservation efforts.

The legislative histories of four statutes have bearing on the issues presented in this case: the creation of the National Trust in 1949; the passage of the National Historic Preservation Act in 1966; and amendments to the latter in 1976 and in 1980, which includes the attorney's fee award provision. The magistrate and the intervenor devoted considerable attention to these documents in formulating their positions on the issue of the Trust's capacity. I have done the same.

In the interests of time and of judicial economy, I shall not repeat the legislative histories, except where necessary. Suffice it to say that I have read the documents that constitute the legislative histories of the above-listed statutes, including the portions that the magistrate relied upon in formulating his recommendation and including the portions that the intervenor relies upon in objecting to the recommendation. See generally, H.R. Rep. No. 855, 81st Cong., 1st Sess., reprinted in 1949 U.S. Code Cong. Admin. News 2285; H.R. Rep. No. 1916, 89th Cong. 2d Sess., reprinted in 1966 U.S. Code Cong. Admin. News 3307-3319; S. Rep. No. 1363, 89th Cong., 2d Sess. 1 (1966); S. Rep. No. 367, 94th Cong. 2d Sess., 33-34, reprinted in 1976 U.S. Code Cong. Admin. News 2442; H.R. Rep. No. 1457, 96th Cong., 2d Sess., reprinted in 1980 U.S. Code Cong. Admin. News 6378, 6409; and S. Rep. No. 943, 96th Cong., 2d Sess., 1 (1980).

I have also read the Illinois Supreme Court's opinion inLandmarks Preservation Council of Illinois v. City of Chicago, 125 Ill. 2d 164, 531 N.E.2d 9 (1988). I agree with the Illinois court's conclusion that the "National Trust must be allowed to maintain suits in State courts to prevent unlawful destruction of buildings it deems of national historic significance." Id. at ___, 531 N.E.2d at 14. However, I also agree with the magistrate's conclusion that this case is not particularly helpful in deciding whether the Trust has capacity to sue federal agencies since the defendants in that case were not federal agencies.

Based upon my review of the statutes, the legislative history, case law, and the trial transcript, I have decided to reject the magistrate's recommendation regarding the Trust's capacity to sue federal defendants. I find no evidence in the record that the Trust's capacity to sue a federal agency is inconsistent with the statutory scheme or presents a grave interference with the undertakings of a federal agency. I am not oblivious to the difficulties that may be presented when the Trust sues the director of a federal agency who is also a statutorily designated member of the Board of Trustees. However, I do not think it has been shown that the Secretary of the Interior cannot simultaneously perform his duties as secretary and as a Trustee. The problems that were identified by the magistrate do not rise to the level that is required by Burr and Loeffler.

The issues raised in Burr and Loeffler concern the scope of the federal instrumentalities' "sue and be sued" clause. This case assumes a posture different from those cases because this case concerns the National Trust's right to initiate a lawsuit, rather than a federal agency's exposure to suit.

FEDERAL INSTRUMENTALITY

As a preliminary matter, I shall address the intervenor's argument that it is not, as the magistrate's findings reflect, a federal instrumentality. Because the character of the National Trust is important to the ultimate resolution of this capacity issue, I shall analyze its nature. The National Trust contends that it is a private, nonprofit corporation. It notes that its activities are not subject to review by the federal government, that it is not bound by the requirements of the Administrative Procedures Act, that it is independently run by its Board of Trustees who are not appointed by the President, that it is not represented by the Justice Department, and that the Court of Claims has determined that it is not a federal entity for purposes of the Tucker Act, see Chas. H. Tompkins Co. v. United States, 230 Ct. Cl. 754 (1982).

The Trust's charter refers to it as "a charitable, educational and nonprofit corporation," see 16 U.S.C. § 468, and I note that three of the members of its Board of Trustees are statutorily required to be public: the Secretary of the Interior, the Attorney General and the Director of the National Gallery of Art, see 16 U.S.C. § 468b.

I observe that the Trust is not one of the "private corporations established under Federal law" that are listed at 36 U.S.C. § 1101, and that Congress did not designate the Trust as such in its Federal charter, as it did with the National Fish and Wildlife Foundation, see 16 U.S.C. § 3706. Though it is not purely private, the Trust possesses many of the qualities identified by the Supreme Court as indicative of private status.

In San Francisco Arts Athletics, Inc. v. United States Olympic Committee, 55 U.S.L.W. 5061 (U.S. June 25, 1987), the Court considered whether the USOC activities could constitute state action for purposes of an action under 42 U.S.C. § 1983. While it is true that the USOC is listed as a private corporation created under federal law in 36 U.S.C. § 1101, the factors that the Supreme Court considered in analyzing the nature of the USOC may aid my analysis of the nature of the National Trust. The Court stated:

The fact that Congress granted it a corporate charter does not render the USOC a government agent. All corporations act under charters granted by a government, usually by a State. They do not thereby lose their essentially private character. Even extensive regulation by the government does not transform the actions of the regulated entity into those of the government.

Id. at 5067. The Court also found that Congress' intent to aid the USOC with funding did not make the entity the government's agent. "That a private entity performs a function which serves the public does not make its acts [governmental] action."Rendell-Baker v. Kohn, 457 U.S. 830 (1982). In describing the federal charter for the USOC, the Court stated:

The Act merely authorized the USOC to coordinate activities that always have been performed by private entities. Neither the conduct not the coordination of amateur sports has been a traditional governmental function. . . . `Normally [a government] can be held responsible for a private decision only when it has exercised coercive power or has provided such significant encouragement, either overt or covert, that the choice must in law be deemed to be that of the [government].'

Id. at 5067 quoting Blum v. Yaretsky, 457 U.S. 991, 1004 (1982). Like the USOC, the National Trust does not become a federal entity based solely upon its federal charter, and like the USOC, the National Trust does not become a federal entity by virtue of its eligibility to receive federal matching grants-in-aid. Moreover, historic preservation efforts have not traditionally been a governmental function and, in fact, the Congress has made it clear in the legislative history that the private individuals and organizations are better equipped to pursue these efforts.

Given this information, I am inclined to believe that the National Trust, albeit with three public Trustees on its Board, is more private than public in nature. My inclination is affirmed by the legislative history of subsequent acts touching on the historic preservation effort. In the legislative history from the National Historic Preservation Act in 1966, a letter from the Secretary of the Interior was included in the Senate Report. The letter stated in part:

It [the National Trust] is the only nongovernmental body operating on a nationwide basis in the historic preservation field.

S. Rep. No. 1363, 89th Cong., 2d Sess. (1966) at 13 (letter from Stewart L. Udall) (emphasis added). When the attorney's fee provision was passed, permitting all interested persons who "substantially prevail" in a suit brought under the NHPA to obtain their fees, the House report stated that the "any interested persons" referred to individuals and "non-profit organizations" who prevail. H.R. Rep. No. 1457, 96th Cong., 2d Sess. (1980). By the language of its charter, the National Trust is a nonprofit organization. 16 U.S.C. § 468.

It seems to me that the magistrate's primary concern was with what he saw as the clear intent of Congress that federal agencies and instrumentalities should work in cooperation to achieve the goals of historic preservation. He relied on the matching grants-in-aid provision for the Trust, the development of the consultation process under section 106, and the original character of the Advisory Council as solely "advisory." He also maintained that Congress' intent in creating the Advisory Council was to present a forum where unbiased and objective decisions could be reached.

Congress' demand for cooperation is also evident, according to the magistrate, in its decision to designate the Attorney General and the Secretary of the Interior to sit on the National Trust's Board of Trustees and in designating the Chairman of the National Trust and the Secretary of the Interior as members of the Advisory Council. The magistrate concluded that "[q]uite clearly," Congress did not intend for the Trust to be independent.

Magistrate Kopf also considered the fact that Congress withdrew the Attorney General's statutory membership of the Advisory Council at the same time that Congress permitted the Advisory Council to institute legal proceedings under the NHPA as indicative of Congress intention to keep federal agencies that have the power to sue separate from the Justice Department. The intervenor pointed out, however, that the Attorney General was removed along with several other members of the Board of Trustees in an attempt to decrease the total Board membership. See S. Rep. No. 943, 96th Cong., 2d Sess. at 13.

Though Magistrate Kopf's observations about the contents of the legislative histories are accurate, I disagree with the inferences that he has drawn from them. The Burr test requires a court to make legal and factual determinations with regard to the reality of the situation. The defendants presented no evidence to demonstrate that the Secretary of the Interior, Mr. Hodel, feels that his statutory duties as secretary of the Interior are inconsistent with his duties as a Trustee. Nor have the defendants shown that Mr. Hodel's duties as the secretary pose a grave interference to his ability to meaningfully participate as a Trustee or that his status as a Trustee poses a grave interference with his duties as secretary. In short, there has been no demonstration that the Secretary is unable to perform his statutory duties satisfactorily. The defendants' challenge to the Trust's capacity, therefore, must fall of its own weight.

DEFECTIVE TITLE TO THE PARK LAND

The other major issue presented in this second phase of the trial pertains to whether Douglas County's title to the majority of the land that is now part of the park property is defective in any way, and if the title is defective, then whether the defect constitutes a conversion of the land under the LWCFA. The intervenor and the plaintiffs object to the magistrate's conclusion that defective title was not proved. They rely heavily upon certified records from the Douglas County Register of Deeds office, upon an abstractor's certificate compiled by Frank J. Drelicharz in 1983, and upon Drelicharz's testimony to show that defective title exists.

The magistrate ruled before trial and again at trial that the title searches performed by Sherri Schrat for the Omaha Development Foundation, a defendant, were privileged under the work product doctrine and, therefore, the plaintiffs and intervenor were precluded from using evidence regarding the searches or the conclusions that Mrs. Schrat drew from them at trial. He also decided that certain testimony by Mrs. Schrat, if allowed into evidence, would not constitute lay opinion under the Federal Rules but rather would constitute expert testimony. However, because the parties had not designated her as an expert in the pretrial order, she would not be allowed to testify in that capacity. See filing 420, and MFAR II at 1508-1511.

The plaintiffs and intervenor object to this ruling for many reasons. They argue that the searches were performed before the title defect became an issue in the case, and that in any event, ODF waived the privilege by its actions. Specifically, they contend that other title searches that were performed by Mrs. Schrat had been provided to the plaintiffs and intervenor in discovery and that Mrs. Schrat stated that no greater degree of secrecy pertained to the searches in question than to the previously disclosed searches. Additionally, they contend that Mrs. Schrat testified that she discussed the conclusions that she had drawn from the searches in question with other parties, including Drelicharz and an attorney for the plaintiffs and intervenor.

I conclude that the magistrate's decision not to receive the evidence was proper for the reasons that he provided at trial. The plaintiffs and intervenor apparently have argued nothing new in their brief to me, and I do not find their original arguments any more persuasive than did the magistrate. With this evidentiary objection out of the way, I shall consider the substantive objections.

The magistrate's findings first addressed whether a conversion may occur under the LWCFA based on a possible defect in the title. He found that a theoretical title defect fails to threaten the County's title to the land because in a theoretical situation, there is no evidence that the property would be converted to any use other than public outdoor recreational use as a park. He stated that the plaintiffs and intervenor failed to adduce any evidence that the title defect threatened to change the use of the park, noting that they were unable to demonstrate that there were any real claimants who threatened to divest the county of title or otherwise to convert the use of the land. Although he made reference to a letter from an attorney that was addressed to the City, which the plaintiffs and intervenor asked him to receive after the record had been closed, the magistrate decided not to allow the letter into evidence. Stating that the conversion argument was nothing but theoretical, the magistrate concluded that the plaintiffs and intervenor did not satisfy their burden of proof on the conversion issue.

Since January 20, 1989, the date the magistrate filed his findings and recommendations, a petition to quiet title to some of the land in question in this case has been filed in the Douglas County District Court. The plaintiffs and intervenor have filed a motion asking me to accept further evidence in this case. Although the time allotted for the defendants to respond to the motion has not yet expired, I shall proceed as if the evidence were received, because I find that it would not significantly bear on the outcome of this case. The petition to quiet title indicates that a part of the plaintiffs' and intervenor's conversion argument has become more than purely theoretical. Nevertheless, I agree with the magistrate that the assurances provided by the title insurance alleviate the threat to conversion.

The magistrate found that even if the plaintiffs and intervenor could show that a defect existed, they did not show that the defect would constitute a conversion under the LWCFA. The magistrate rejected their use of Friends of Shawangunks v. Clark, 754 F.2d 446, 451 (2nd Cir. 1985) and found that the County's possession of a Special Warranty Deed and the evidence that the County had title insurance demonstrated that the County's title to the land would be rigorously defended. He noted that the Special Warranty Deed gave the County at least two assurances. First, that the railroad was lawfully seised of the land that it conveyed and, second, that the railroad would defend its title against any lawful claims made through, by or under the railroad. He put significant weight upon the fact that the County had procured title insurance on the land in the amount of $543,000 that could be used to satisfy any claims arising from a claim of title defect. See Exhibit 3076. This discussion seems to me to address the "real question" that was identified in the plaintiffs' and intervenor's brief: Can the County assure the National Park Service that it has title, control or tenure over the land? Plaintiffs' and Intervenor's Brief at 58. See 16 USC § 4601-8(f)(3). The magistrate's conclusion is that the County can assure its control over the land, and based on the evidence, I cannot say that this conclusion is clearly erroneous.

The plaintiffs and intervenor cite Friends for the proposition that a conversion includes instances in which "[p]roperty interests are conveyed for non-public outdoor recreational uses." Id. at 451. (emphasis omitted).

The magistrate also concluded that, in any event, the plaintiffs and intervenor failed to show chain of title in another and, therefore, they failed to show that there had been a conversion under the Friends case. As the magistrate found, four methods of presenting prima facie evidence of title exist in Nebraska: by having an abstract prepared by a licensed abstractor, by providing a complete title insurance policy, by hiring an expert to perform a title search and to give an opinion as to the title at trial, and by copying and having received into evidence all pertinent public records that show proper title. The magistrate determined that the plaintiffs relied on limited title searches performed by nonexperts, some of which were not received by him at trial, and upon certified records from the Register of Deeds office in Douglas County to establish title. He decided that neither of these methods was effective.

Magistrate Kopf noted that in Nebraska instruments concerning land may be valid between parties even if they are not recorded, Neb. Rev. Stat. § 76-238 (Reissue 1986), and that the land of a debtor is bound by the judgment of any court in Nebraska, Neb. Rev. Stat. § 25-1304 and § 25-1305. He concluded that the plaintiffs and intervenor failed to prove that a defective title exists, primarily because there was no evidence that any qualified person performed a search of the judgment books of the Douglas County District Court.

The intervenor and plaintiffs argue, however, that the Burlington Railroad lacked the power to deed title to the land to the county since, under the Nebraska Constitution and Nebraska case law including Lillich v. Lowery, 211 Neb. 757, 320 N.W. 2d 463 (1982) and Roberts v. Sioux City Pac. R.R. Co., 73 Neb. 8, 102 N.W. 60 (1905), a railroad that takes a right-of-way in land by condemnation receives only an easement in the real estate for railroad purposes, and that the rights in the land revert to the servient estate upon abandonment by the railroad. The plaintiffs and intervenor rely on Exhibit 3001, the Report of the Commissioners from 1882, which, they say, indicates that the Burlington Northern's predecessor obtained a right-of-way to the land that now constitutes part of the land to be used for the park. The plaintiffs and intervenor contend that in 1984, when the Burlington Railroad transferred by Special Warranty Deed the land that had constituted its right-of-way, the railroad abandoned its easement and the rights in the use of the land reverted to those who owned the servient estates in 1882 and their heirs.

The Lillich and Roberts cases did not persuade the magistrate that the only interest that the Burlington Northern's predecessor could have obtained in 1882 was an easement. The transfer between the original condemnees and the railroad took place in 1882, before Lillich and Roberts were decided by the Nebraska Supreme Court, and under a statute that was not in effect at the time those cases were decided. He found that the statute was open to an interpretation that would have provided for the railroad to take greater rights in the land than an easement, including the possibility that the railroad was to receive a fee title interest in the land. I agree that the statute in place in 1882 need not necessarily be construed in the narrow manner that subsequent statutes were construed by the Nebraska Supreme Court.

The plaintiffs and interveners contend that the defective title is established by Drelicharz's testimony and Exhibit 3078. The exhibit is an abstractor's certificate that was completed in 1983 pursuant to an investigation that preceded the issuance of title insurance in favor of the County. The plaintiffs and intervenor emphasize that Drelicharz, who is a licensed abstractor, testified that he completed judgment searches, a probate search and a tax lien search in connection with the issuance of the abstractor's certificate.

I observe that Exhibit 3078, the product of Drelicharz's title search that is in evidence, is an abstractor's certificate. It is not an abstract and it does not constitute copies of all the pertinent records. Drelicharz was not designated as an expert at the pretrial conference, though he is a licensed abstractor. I see no way that Exhibit 3078 and Drelicharz's testimony can suffice to prove title in Nebraska. Thus, I agree with the magistrate's conclusion that the plaintiffs and intervenor have failed to show a title defect and that they have failed to show a conversion under the LWCFA.

OTHER ISSUES

The magistrate took little time to conclude that the County's interest in the east half of vacated Seventh Street, which adjoins portions of blocks 131 and 155, is not in jeopardy based on the City's condemnation action since the County is not a defendant in the action. Exhibits 3010 and 3011. I agree. I also agree with the magistrate's conclusion that all necessary parties were joined in this action, because the action involves public rights and, therefore, joinder is not required.

JUDGMENT

For the reasons provided in the accompanying memorandum and my previous memorandum, filing 448,

IT IS ORDERED that:

1. the findings and recommendations of the magistrate, filings 261 and 449, are approved determining that:

a. based upon the existing Riverfront Redevelopment Agreement (including all approved plans, specifications, and construction drawings as of July 11, 1988), there is no federal funding, federal licensing or other federal involvement requiring a section 106 review under the NHPA, or otherwise implicating the NEPA or the LWCFA;

b. insofar as the Omaha Development Foundation and ConAgra are concerned, a section 106 review (or other action required under the NHPA, the NEPA or the LWCFA) could not result in a federally required retention of one or more buildings in Jobbers Canyon;

c. the National Trust for Historic Preservation in the United States has standing for itself and its members to bring this action;

d. People for Responsible Omaha Urban Development lacks standing for itself, but PROUD has standing for its members;

e. Roger Durand has standing;

f. Mercer Management Company has standing for itself;

h. the court has before it appropriate parties such that adequate relief can be provided by the court;

2. the National Trust for Historic Preservation in the United States has capacity to sue the federal defendants and the nonfederal defendants;

3. all dispositive motions at any time made by any party and all motions for injunctive relief are denied;

4. plaintiffs' and intervenor's motion for leave to supplement the record, filing 443, are denied; and

5. final judgment is entered in favor of the defendants and against the plaintiffs and intervenor.