Kingman Reef Atoll Investments, L.L.C. v. United States, 541 F.3d 1189 (9th Cir. 2008).

Terra Bowling, J.D.

Home to hundreds of species of marine life, a small coral reef atoll located almost 1,000 miles south of Hawaii was targeted by the U.S. Fish and Wildlife Service (FWS) as a potential site for a National Wildlife Refuge. In the course of the designation, the atoll’s rightful ownership was disputed between a private party and the United States government. When the private party brought suit to quiet title to the atoll, the courts found the challenge to ownership was time barred, leaving the U.S. as the rightful owner of the reef.

History of the Atoll
Kingman Reef Atoll was first claimed by the U.S. Guano Company in 1860, although the first reported western contact was at the end of the eighteenth century. In 1922, an employee of the Island of Palmyra Copra Company claimed the reef in the name of the U.S for his employer to use as a fishing base. The company ceded the atoll to the Fullard-Leo family later that year. A decade later, the family approached the United States to inquire whether the government would like to purchase the islands. The United States began an investigation of the ownership of the island, which ended with the conclusion that an affirmative action on behalf of the government would establish that the atoll was a territory of the United States.
      In 1934, President Roosevelt issued an executive order stating that the Kingman Reef was under the jurisdiction of the U.S. Navy. In 1937, members of the Fullard-Leo family sent a letter to their Congressional representative, noting that the reef was owned by the state or Navy and asking for compensation for their care of the island over the past fifteen years. The request was forwarded to the Navy, which declined to compensate the family, claiming that the family had no vested rights in the reef. The family threatened suit. President Roosevelt issued a second executive order in 1941 establishing the atoll as a defensive sea area, and the Navy promulgated regulations to reflect access restrictions.
      In the fifty years since, both the Navy and the Fullard-Leo family acted as owners of the atoll, granting third-party access to the island. In the 1990s, the FWS investigated the possibility of acquiring the atoll and nearby Palmyra Atoll for designation as a National Wildlife Refuge. During its initial investigations, the FWS determined that the Fullard-Leos owned the reef. However, soon after, the FWS learned of the Navy’s interest in the atoll and began negotiations with the Department of the Defense to obtain the atoll for the refuge. The Department of Defense transferred its interest to the Department of the Interior (which houses the FWS), and the Kingman Reef National Wildlife Refuge was established on January 18, 2001.
      In 2005, Kingman Reef Atoll Investments (KRAI) brought an action to quiet title to Kingman Reef under the Quiet Title Act (QTA).1 The United States District Court for the District of Hawaii dismissed the action, finding that the action was time barred by the QTA.

The QTA
Sovereign immunity is a doctrine that prevents private parties from suing the federal government without its consent. In many instances, the immunity is waived by statute. The QTA, in fact, waives the federal government’s sovereign immunity in civil actions by private citizens seeking to quiet title to property in which the United States has an interest. The waiver is subject to several exceptions, including a statute of limitations.
      The QTA’s statute of limitations requires a private party to bring an action “within twelve years of the date upon which it is accrued.”2 Under the QTA, an action accrues when the landowner or his predecessors knew or should have known of the claim. The district court dismissed the case based on the fact that the statute of limitations had run, which deprived the court of subject matter jurisdiction to hear the merits of the case. The court noted that when a jurisdictional issue, such as statutory time limits, is distinct from the merits of the case, a court may dismiss the case for lack of subject matter jurisdiction.

Jurisdiction
On appeal to the Ninth Circuit, KRAI first argued that the statute of limitations was not jurisdictional and the lower court should not have dismissed the case for lack of subject matter jurisdiction. The Ninth Circuit rejected this contention relying on its own precedent and recent U.S. Supreme Court decisions that have upheld jurisdictional treatment of statutory time limits.
      Next, KRAI argued that the district court erred in dismissing the case based on the statutory time limit, because the time limit issue was “intermeshed” with the ownership issue. As noted above, a court can only dismiss for lack of subject matter jurisdiction when the jurisdictional elements are distinct from the merits of the case. In this instance, the Ninth Circuit found that the issue was whether the plaintiff had notice of the government’s claim, not whether the claim was valid.

Statute of Limitations
Next, KRAI objected to the district court’s finding that their claim was time barred by the statute of limitations. The court again noted that under the QTA, the statute of limitations requires a private party to bring an action “within twelve years of the date upon which it is accrued” and that an action accrues when the landowner or his predecessors knew or should have known of the claim. KRAI argued that the district court erred in its decision that the action had accrued under the QTA. The Ninth Circuit disagreed.
      The court found that action began to accrue in 1938 when KRAI’s predecessor of the reef, the Fullard-Leos, exchanged communications with the Navy. In a letter to their state congressman, the Fullard-Leos had acknowledged state or Navy ownership of the reef. The Navy’s response to the letter and the Fullard-Leos subsequent threat to sue served as the Fullard-Leo’s acknowledgement of the United States’ ownership claim under the QTA. Therefore, the statute of limitations on the QTA claim ran out in 1950.

Abandonment
Finally, the company claimed that even if the statute of limitations had run on the Fullard-Leos’ claim, the United States had abandoned its interest in the reef in the years between 1938 and 2000. KRIA first cited the Navy’s failure to exclude the public from the reef as evidence of abandonment. The court dismissed this argument, noting settled principles of law providing that the United States cannot abandon its claims to property by inaction or adverse possession. KRIA next cited government employees’ actions indicating the government’s abandonment of the property, namely the employees’ acknowledgment of the Fullard-Leo’s ownership. The court found that a reasonable person could not take employees’ remarks as evidence of ownership. The court found that the United States cannot abandon its interest in property unless it clearly and unequivocally abandons is interest by documentation from a government official authorized to make such decisions.

Conclusion
The Ninth Circuit affirmed the district court’s decision. On January 6th, President Bush signed several proclamations establishing marine national monuments in several large tracts of U.S. controlled waters in the Pacific Ocean. The designations encompass the Kingman Reef and Palmyra Atoll. The designation will limit fishing or any other commercial activity in the waters.  

Endnotes
1.  28 U.S.C. A7 2409a.
2.  Id. at A7 2409a(g).