Is it a Breach of Contract or a Taking?

One of the most troublesome, and recurring, challenges in takings litigation is whether the action that resulted in the loss of property is due to a breach of contract or an act of eminent domain — a taking. If you choose wrong, you may find yourself on the losing end of the litigation. Just ask plaintiffs, CAI International, Inc (“CAI”), Cronos Containers Limited (“Cronos”), and Textainer Equipment Management (U.S.) Limited (“Textainer”), the successor in interest to Capital Lease Limited (“Capital”). These plaintiffs recently argued to the Court of Federal Claims that the U.S. Army’s failure to return leased containers was a taking.

But the trial court disagreed that the claim presented was a taking, holding instead that the case was properly analyzed as a contract breach. The court then held that the Army had exercised a provision in its lease with TOPtainer that provided that containers not returned at the end of a grace period could be “deemed lost” such that the government would pay a depreciated reimbursement price per container to TOPtainer and title to the containers would pass to the government. As a result, the trial judge denied the plaintiffs’ motion for summary judgment, and granted the Government’s cross-motion.

Please see full Opinion below for more information.