Laguna Hermosa Corporation, ( Doing Business As Rancho Monticello Resort) v. United States

United States Court of Appeals
for the Federal Circuit
__________________________
LAGUNA HERMOSA CORPORATION,
( DOING BUSINESS AS RANCHO MONTICELLO RESORT)
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
__________________________
2011-5062
__________________________
Appeal from the United States Court of Federal
Claims in case no. 10-CV-281, Judge Lynn J. Bush.
__________________________
Decided: February 6, 2012
__________________________
THOMAS C. NAGLE, Law Offices of Thomas C. Nagle, of
Walnut Creek, California, argued for the plaintiff-
appellant.
LANE M. M CFADDEN , Attorney, Environment and
Natural Resources Division, United States Department of
Justice, of Washington, DC, argued for defendant-
appellee. With him on with the brief was IGNACIA S.
M ORENO , Assistant Attorney General.
__________________________

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LAGUNA HERMOSA CORPORATION v. US 2
Before PROST, CLEVENGER , and REYNA, Circuit Judges.
CLEVENGER , Circuit Judge.
Laguna Hermosa, a concessionaire at the Lake Berry-
essa recreation area, appeals from the final decision of the
United States Court of Federal Claims dismissing its
complaint under Rule 12(b)(6) of the Rules of the Court of
Federal Claims. Because we find no error in the trial
court’s decision, we affirm.
I
The Lake Berryessa recreation area was created in
1957 when the Bureau of Reclamation of the United
States Department of the Interior (“the Bureau”) built
Monticello Dam on Putah Creek in northern California.
The United States owns the recreation area. In 1958, the
United States entered into a management agreement
with Napa County, California, under which the county
would administer Lake Berryessa for recreational use.
Napa County, in turn, entered into contracts with seven
concessionaires to develop and operate recreational facili-
ties. As one of the seven, Laguna Hermosa entered into a
concessionaire agreement with Napa County for the
construction and operation of a recreational facility at
Lake Berryessa. In 1975, the Bureau took over the man-
agement of recreation at the lake, including administra-
tion of concessionaire agreements. The concessionaire
agreement with Laguna Hermosa was extended and
modified a number of times. During the term of the
agreement, Laguna Hermosa made various improvements
to the land, including reconfiguration of the topology to
accommodate a resort, boat launch ramps, drainage
structures, access roads, a sewage system, retaining
walls, a water purification plant, and parking lots.

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LAGUNA HERMOSA CORPORATION v. US 3
One year before the concessionaire agreement was set
to expire, Laguna Hermosa and three other Lake Berry-
essa concessionaires brought suit in the Court of Federal
Claims pursuant to the bid protest provisions of the
Tucker Act (28 U.S.C. § 1491(b)(1)-(4)) and challenged the
Bureau’s plan for soliciting new concessionaire bids. The
four concessionaires argued that the Bureau had to re-
quire new concessionaires to provide compensation for all
facilities built on the lakefront. Frazier v. United States,
79 Fed. Cl. 148 (2007), aff’d, 301 F. App’x 974 (Fed. Cir.
2008). The Court of Federal Claims held that Public Law
96-375, 94 Stat. 1505, 1507 (1980), obliged the outgoing
concessionaires to either remove or abandon the facilities,
unless the United States required that particular facili-
ties remain, in which case concessionaires would receive
compensation only for those selected facilities. Frazier, 79
Fed. Cl. at 161. This court affirmed the grant of judgment
on the administrative record without opinion. Frazier v.
United States, 301 F. App’x 974 (Fed. Cir. 2008).
Laguna Hermosa’s concessionaire agreement expired
on June 15, 2008. Upon expiration of the concessionaire
agreement, Laguna Hermosa did not scrap or otherwise
remove the facilities, but instead left them behind intact.
The concessionaire insists that it did not intend to aban-
don the facilities and that it communicated this intent to
the Bureau on several occasions. However, Laguna
Hermosa does not allege that the United States com-
manded or otherwise influenced its decision to leave the
facilities behind.
Two years after Laguna Hermosa’s concessionaire
agreement expired, the Bureau entered into a new con-
cessionaire agreement, covering the area that Laguna
Hermosa once operated, with Pensus Lake Berryessa
Properties (“Pensus”). Laguna Hermosa alleges that since
its concessionaire agreement expired, the United States,

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LAGUNA HERMOSA CORPORATION v. US 4
Pensus, or both have used some of the facilities left be-
hind on the property. Neither the United States nor
Pensus have offered to pay Laguna Hermosa for any of
the facilities currently affixed to the site.
On May 10, 2010, Laguna Hermosa filed a complaint
against the United States in the Court of Federal Claims.
On August 30, 2010, Laguna Hermosa filed an amended
complaint and asserted two causes of action. First, La-
guna Hermosa asserted an inverse condemnation claim
under the Fifth Amendment’s taking clause. Laguna
Hermosa is not appealing the court’s dismissal of that
cause of action, so we will not address it further. Second,
Laguna Hermosa sought compensation from the United
States for the facilities which were allegedly retained and
used by the Bureau or by Pensus on the theory that the
United States should be found to have retrospectively
“required” their retention under section 5(b) of Public Law
96-375, and is therefore obligated to pay Laguna Hermosa
their fair value.
On September 16, 2010, the United States filed a mo-
tion to dismiss the complaint under RCFC 12(b)(6) for
failure to state a claim upon which relief could be granted.
On January 28, 2011, the Court of Federal Claims
granted the motion and ordered that the complaint be
dismissed with prejudice. The trial court dismissed
Laguna Hermosa’s claims for two reasons: (1) issue pre-
clusion foreclosed Laguna Hermosa’s claims, and (2) in
any event, Frazier’s statutory analysis foreclosed the
viability of those claims because Laguna Hermosa had no
cognizable property interest in the facilities after expira-
tion of the lease and thus no right to fair value compensa-
tion under Public Law 96-375. The court entered
judgment against Laguna Hermosa on January 31, 2011,
and Laguna Hermosa filed a timely notice of appeal on
March 8, 2011. As an appeal from a final judgment of the

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LAGUNA HERMOSA CORPORATION v. US 5
Court of Federal Claims, this court has jurisdiction pur-
suant to 28 U.S.C. § 1295(a)(3).
II
This court reviews the trial court’s application of the
doctrine of issue preclusion de novo. Shell Petroleum v.
United States, 319 F.3d 1334, 1338 (Fed. Cir. 2003). This
court also reviews de novo a dismissal for failure to state
a claim pursuant to Rule 12(b)(6) of the Court of Federal
Claims, just as it does dismissals under Federal Rule of
Civil Procedure 12(b)(6). See Cary v. United States, 552
F.3d 1373, 1376 (Fed. Cir. 2009). A complaint must be
dismissed under Rule 12(b)(6) when the facts asserted do
not give rise to a legal remedy, Lindsay v. United States,
295 F.3d 1252, 1257 (Fed. Cir. 2002), or do not elevate a
claim for relief to the realm of plausibility. Ashcroft v.
Iqbal, 129 S.Ct. 1937, 1950 (2009) (citing Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 565-71 (2007)). In deciding a
motion to dismiss, this court must take Laguna Her-
mosa’s factual allegations as true and construe those facts
in the light most favorable to it. See Iqbal, 129 S.Ct. at
1949.
III
Laguna Hermosa argues that the trial court commit-
ted two errors. First, Laguna Hermosa argues that the
trial court incorrectly held that issue preclusion forecloses
its claim for relief under Public Law 96-375. Second,
Laguna Hermosa argues that the trial court mistakenly
held that its second cause of action fails to state a claim,
because the United States should be found to have “re-
quired” the retention of facilities under section 5(b) of
Public Law 96-375 when, as pled, the government retains
and uses those facilities, even if the government did not
expressly and affirmatively state that they were to re-
main on the site.

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LAGUNA HERMOSA CORPORATION v. US 6
A
Turning to Laguna Hermosa’s first argument, the doc-
trine of issue preclusion, or collateral estoppel, protects
the finality of judgments by “preclud[ing] relitigation in a
second suit of claims actually litigated and determined in
the first suit.” In re Freeman, 30 F.3d 1459, 1465 (Fed.
Cir. 1994) (citing Lawlor v. Nat’l Screen Serv. Corp., 349
U.S. 322, 326 (1955)). Issue preclusion bars a cause of
action when four conditions are met:
(1) the issue is identical to one decided in the first
action; (2) the issue was actually litigated in the
first action; (3) resolution of the issue was essen-
tial to a final judgment in the first action; and (4)
the plaintiff had a full and fair opportunity to liti-
gate the issue in the first action.
Freeman, 30 F.3d at 1465 (citing A.B. Dick Co. v.
Burroughs Corp., 713 F.2d 700, 702 (Fed. Cir. 1983)).
As to the first condition, we hold that the trial court
erred in concluding that the issues in this case are identi-
cal to those in Frazier. In this suit, the court must inter-
pret the word “require” in the statute, whereas this
analysis was unnecessary in Frazier. Frazier’s analysis
was limited to whether “the option of the Bureau to
require permanent facilities to remain on site includes the
discretion to retain all or some or none of the permanent
facilities at each concession.” Frazier, 79 Fed.Cl. at 161.
As such, the Frazier court did not decide whether reten-
tion and use of permanent facilities after expiration of the
lease was sufficient action to trigger the compensation
provision of Public Law 96-375. Since this condition is not
satisfied, issue preclusion does not apply; however, the
court will briefly address why the other conditions are
also not satisfied.

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LAGUNA HERMOSA CORPORATION v. US 7
As to the second condition, “the requirement that the
issue have been actually decided is generally satisfied if
the parties to the original action disputed the issue and
the trier of fact decided it.” Freeman, 30 F.3d at 1466
(citing Mother’s Rest., Inc. v. Mama’s Pizza, Inc., 723 F.2d
1566, 1569 (Fed. Cir. 1983)). In Frazier, the parties did
not dispute the meaning of “require” as used in section
5(b). Instead, the parties and the Frazier court presumed
that the United States would require at least some per-
manent facilities to remain at the lake. As to the third
condition, “[t]he purpose of this requirement is to prevent
the incidental or collateral determination of a nonessen-
tial issue from precluding reconsideration of that issue in
later litigation.” Freeman, 30 F.3d at 1466 (citing
Mother’s., 723 F.2d at 1571). As stated above, the Frazier
court did not reach this issue at all because the court
presumed that the United States would require at least
some permanent facilities to remain at the lake. As to the
fourth condition, the parties did not have a full and fair
opportunity to litigate this issue, which was not ripe at
the time of the Frazier suit since the lease had not yet
expired, so this condition is also not satisfied.
Given that none of the four conditions are satisfied,
issue preclusion does not apply to bar Laguna Hermosa’s
cause of action here. However, as discussed below, the
court correctly dismissed the complaint for failure to state
a claim under Rule 12(b)(6), so this error is harmless.
B
Next, Laguna Hermosa argues that the trial court
mistakenly held that its second cause of action fails to
state a claim, because the United States should be found
to have “required” the retention of facilities under section
5(b) of Public Law 96-375 when, as pled, the government
retains and uses those facilities. “[T]he starting point in

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LAGUNA HERMOSA CORPORATION v. US 8
every case involving construction of a statute is the lan-
guage itself.” Santa Fe Indus., Inc. v. Green, 430 U.S.
462, 472 (1977) (quotation marks omitted). Therefore, the
starting point of our analysis is the text of section 5(b) of
Public Law 96-375, which states:
Notwithstanding any other laws to the contrary,
all permanent facilities placed by the concession-
aires in the seven resorts at Lake Berryessa shall
be considered the property of the respective cur-
rent concessionaires. Further, any permanent
additions or modifications to these facilities re-
main the property of said concessionaires: Pro-
vided, That at the option of the Secretary of the
Interior, the United States may require that the
permanent facilities mentioned herein not be re-
moved from the concession areas, and instead, pay
fair value for the permanent facilities or, if a new
concessionaire assumes operation of the conces-
sion, require that concessionaire to pay fair value
for the permanent facilities to the existing conces-
sionaire.
Act of Oct. 3, 1980, Pub. L. No. 96-375, § 5(b), 94 Stat.
1505, 1507 (1980). Although Laguna Hermosa contends
that the United States should be deemed to have “re-
quired” the retention of facilities when the government
retains and uses those facilities, this contention is incon-
sistent with the plain language of the statute. Here, the
key issue is the meaning of the word “require,” in that if
the United States can be found to have required the
facilities to remain, then Laguna Hermosa’s complaint
survives the Rule 12(b)(6) motion. This court does not
think that Congress intended the word “require” to be
interpreted as Laguna Hermosa suggests. The plain
language of the statute indicates that there must be some
affirmative action by the government before the duty to

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LAGUNA HERMOSA CORPORATION v. US 9
compensate is triggered. This is consistent with the
common meaning of the word “require.” See, e.g., Oxford
English Dictionary 681 (2d ed. 1989) (defining “require”
as “to ask or request (one) for something”); American
Heritage Dictionary of the English Language 1482 (4th
ed. 2004) (defining “require” as “to call for as obligatory or
appropriate”); Merriam-Webster’s Collegiate Dictionary
995 (10th ed. 2001) (defining “require” as “to claim or ask
for by right and authority”). This interpretation is also
consistent with the definition of the word “required” as
interpreted in other contexts by this court. See, e.g., Intel
Corp v. VIA Tech., Inc., 319 F.3d 1357, 1362 (Fed. Cir.
2003) (holding in a contract dispute that “the plain mean-
ing of the word ‘required’ is the opposite of that of the
word ‘optional’”).
The statute vests title to permanent facilities placed
on the concession in the concessionaire. Unless the Secre-
tary expressly directs that a particular facility must
remain on the concession, the concessionaire is free to
remove the facility in whole or part. Indeed, if the Secre-
tary expresses no interest in a particular facility remain-
ing on the concession for the benefit of the United States
or a subsequent concessionaire, the owner knows it is free
to deal with the facility as it wishes. Laguna Hermosa’s
theory that the government must be “deemed” to have
required facilities to remain on the concession overlooks
the clear option given to the Secretary to express disinter-
est in the facilities, thereby granting the concessionaire
the option of removing or dismantling the facility, or
leaving it intact. Had Congress meant the statute to be
read as Laguna Hermosa posits, it could easily have said
that (a) all permanent facilities placed on the concession
are the property of the concessionaire and (b) the conces-
sionaire shall be paid fair value for any permanent facility
remaining on the concession at the end of a concession-

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LAGUNA HERMOSA CORPORATION v. US 10
aire’s contract that is used by the government or the
subsequent concessionaire. Our task is to interpret the
statute as written, as we have, not to rewrite it. Thus,
given that the United States has merely retained and
used the facilities, the government cannot be found to
have “required” the concessionaire to leave them, and
Laguna Hermosa’s complaint fails to state a claim upon
which relief may be granted.
Even if the court were to find the language of the
statute ambiguous, the legislative history supports our
interpretation of the statute as requiring some affirmative
action by the United States before its duty to compensate
under Public Law 96-375 is triggered. See Diamond v.
Chakrabarty, 447 U.S. 303, 315 (1980) (“[O]ur obligation
is to take statutes as we find them, guided, if ambiguity
appears, by the legislative history and statutory pur-
pose.”); Nutrition 21 v. United States, 930 F.2d 862, 865
(Fed. Cir. 1991) (“Where . . . the words of a statute are not
expressly defined, and do not fairly admit of a plain, non-
ambiguous meaning, resort to the legislative history for
clarification is justified.”). Contrary to Laguna Hermosa’s
contentions, the scant legislative history shows that the
statute gives the Secretary of the Interior authority to
enter into new concessionaire agreements at Lake Berry-
essa and protects the existing concessionaires through the
statutory language contained in Public Law 96-375. See
126 Cong. Rec. H1867 (daily ed. Feb. 5, 1980) (statement
of Reps. Clausen and Lujan, repeating the statutory
language by saying “[w]e simply intend that if the United
States wants the facilities to stay when the concessionaire
leaves, the Secretary will pay the concessionaire fair
value for the permanent facilities”); S. Rep. No. 96-890, at
2 (1980); H.R. Rep. No. 96-710, at 6 (1979). The legisla-
tive history does not indicate Congress’s intent to com-

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LAGUNA HERMOSA CORPORATION v. US 11
pensate concessionaires absent a declaration by the
government that a facility must remain.
Finally, we note that the statute involved in this case,
section 5(b) of Public Law 96-375, is of extremely limited
reach. Only the “permanent facilities mentioned herein”
are affected by the statute. Thus, by its terms, the stat-
ute only addresses the balance of rights between the
seven concessionaires at Lake Berryessa at the time of
enactment and the Secretary, not other concessionaires at
other locations.
Thus, although the trial court erred in its issue pre-
clusion analysis, we agree with the trial court’s conclusion
that Laguna Hermosa’s complaint fails to state a claim
under Rule 12(b)(6).
For the reasons stated herein, the judgment of the
Court of Federal Claims is affirmed.
AFFIRMED
COSTS
Each party shall bear its own costs.

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