Background
North Carolina landowners whose property abutted a railroad corridor brought a Fifth Amendment taking claim after the corridor was converted to recreational trail use under the National Trails System Act. The railroad’s predecessors had conveyed land to the Hendersonville and Brevard Railway Telegraph and Telephone Company via deeds dated 1894–1895. In 2021, the railroad’s successor sought to abandon the corridor for interim trail use, and the Surface Transportation Board issued a Notice of Interim Trail Use and Abandonment on June 29, 2021. Plaintiffs contended this constituted an uncompensated taking of their property rights.
The central dispute turned on a single question of property interpretation: whether the source deeds conveyed fee simple title to the railroad or only an easement for railroad purposes. If the railroad acquired fee simple, plaintiffs would retain no compensable property interest. If the railroad acquired only an easement, plaintiffs’ underlying fee interest could potentially support a taking claim depending on the easement’s scope and termination.
The Court’s Holding
The court granted summary judgment for the government, holding that the railroad source deeds conveyed fee simple title, not an easement. Applying North Carolina law and the binding precedent of McCotter v. Barnes (1958), the court held that N.C. Gen. Stat. § 39-1 presumes all real estate conveyances are in fee simple absent plain language indicating a lesser estate. The deeds at issue contained hallmarks of a fee simple conveyance—including language granting “a strip of land” and “the land hereby conveyed”—and included no provisions plainly indicating intent to convey a lesser interest. The court rejected plaintiffs’ argument that nominal consideration and restrictions to railroad purposes overcame the statutory presumption, noting that McCotter had rejected identical arguments.
Because the railroad acquired fee simple title in the corridor, plaintiffs retained no reversionary interest and thus lacked the protectable property interest required to bring a Fifth Amendment takings claim. The court also held that plaintiffs waived their arguments opposing McCotter by failing to raise them until the reply brief, violating the principle that arguments must be presented in a responsive brief to preserve them for reply.
The court separately imposed Rule 11 sanctions against plaintiffs’ counsel for asserting unsupported legal conclusions, including that “no authority” supported the government’s position when McCotter v. Barnes directly supported it, and characterizing that position as “frankly stupid and frivolous” despite its foundation in controlling precedent.
Key Takeaways
- In rails-to-trails Fifth Amendment takings cases, plaintiffs must prove they held a protectable property interest at the time of the alleged taking, typically through showing the railroad acquired only an easement of limited scope
- North Carolina law presumes real estate conveyances are in fee simple absent express language indicating a lesser estate; this presumption applies to railroad conveyances and shifts burden to plaintiffs
- McCotter v. Barnes (1958) remains binding authority requiring fee simple findings for railroad deeds substantially similar to those at issue; courts will not override the statutory presumption absent plain conflicting language
- Attorneys must verify legal citations and do not breach the duty of candor merely through AI hallucinations, but certainly do through deliberate assertion of unsupported legal claims, particularly when characterizing opposing positions as frivolous despite controlling precedent supporting them
Why It Matters
This decision reinforces the doctrinal framework governing Fifth Amendment takings in the rails-to-trails context: compensation depends entirely on what property interest the railroad originally acquired under state law. The court’s application of North Carolina’s fee simple presumption means that landowners bear the burden of overcoming a statutory presumption that railroad conveyances transferred complete ownership rather than limited rights-of-way. For practitioners, the case illustrates that McCotter’s holding—that railroad deeds with nominal consideration and railroad-use restrictions nonetheless convey fee simple—remains controlling nearly seventy years later and governs a potentially large class of similar 19th-century conveyances.
The opinion also delivers a sharp rebuke to counsel who make sweeping declarations of settled law without citation or factual support, particularly when contradicting controlling precedent. The court’s imposition of Rule 11 sanctions signals that while reliance on erroneous AI-generated citations may be sanctionable negligence, deliberate misstatement of the law—asserting “no authority” exists for a position that binding precedent directly supports—constitutes a more culpable violation of the attorney’s duty of candor.