                                                                           FILED
                           NOT FOR PUBLICATION
                                                                            MAY 16 2016
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS


                            FOR THE NINTH CIRCUIT


CITY OF SANTA MONICA,                            No. 14-55583

              Plaintiff - Appellant,             D.C. No. 2:13-cv-08046-JFW-
                                                 VBK
 v.

UNITED STATES OF AMERICA; et al.,                MEMORANDUM*

              Defendants - Appellees.


                    Appeal from the United States District Court
                       for the Central District of California
                     John F. Walter, District Judge, Presiding

                       Argued and Submitted March 11, 2016
                               Pasadena, California

Before: PREGERSON, PAEZ, and NGUYEN, Circuit Judges.

      The City of Santa Monica (the “City”) sued the United States, the Federal

Aviation Administration (“FAA”), and the FAA Administrator (collectively, the

“United States”) to quiet title to approximately 168 acres of land (the “Airport

Land”) on which the Santa Monica Municipal Airport now sits. The district court



        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
held that the City’s suit was time-barred under the Quiet Title Act’s twelve-year

statute of limitations, 28 U.S.C. § 2409a(g), and dismissed the complaint with

prejudice under Federal Rule of Civil Procedure 12(b)(1). We have jurisdiction

pursuant to 28 U.S.C. § 1291. Reviewing de novo, United States v. Peninsula

Commc’ns, Inc., 287 F.3d 832, 836 (9th Cir. 2002), we reverse.

      1. The district court erred in concluding that the statute of limitations issue

is not inextricably intertwined with the merits of the City’s Quiet Title Act claim.

When jurisdictional and substantive issues are so intertwined that the question of

jurisdiction is dependent on the merits, it is “both proper and necessary for the trial

court first to resolve the merits of the claim” to determine its own jurisdiction. See,

e.g., Augustine v. United States, 704 F.2d 1074, 1077-79 (9th Cir. 1983); see also

Young v. United States, 769 F.3d 1047, 1052-53 (9th Cir. 2014).

      We cannot determine on this record whether the City knew or should have

known that, under the 1948 Instrument of Transfer, title to the Airport Land would

revert to the United States if the land ever ceased to be used as an airport. The

parties do not dispute that the City owned title to the Airport Land in fee simple at

the time that the United States and the City executed the Runway and Golf Course

Leases in 1941. Both leases were set to terminate twelve months after the (then-

unknown) end date of Proclamation 2487, and the City argues that neither lease


                                           2
transferred title of its land to the United States. While the conveyances in the

Instrument of Transfer must “be used for public airport purposes for the use and

benefit of the public,” those restrictions applied to “the land, buildings, structures,

improvements and equipment in which this instrument transfers any interest”

(emphasis added). Similarly, while the Instrument of Transfer restricts certain

property from being “used, leased, sold, salvaged or disposed of . . . for other than

airport purposes” without the United States’ consent, the document again made

clear that such restrictions applied to the “property transferred by this instrument”

(emphasis added). The reverter clause likewise applied to “the title, right of

possession and all other rights transferred by this instrument” (emphasis added).

Given the language in the Instrument of Transfer, the parties’ alleged property

interests at the time of the original leases, and evidence of the parties’ conduct, the

question of whether the City had “notice” of the United States’ claim of a perpetual

reversionary interest in the Airport Land is inextricably intertwined with the

ultimate scope and validity of that claim. Augustine, 704 F.2d at 1078-79; see also

Shultz v. Dept. of Army, 886 F.2d 1157, 1160 (9th Cir. 1989).

      Contrary to the United States’ arguments, the fact that the Instrument of

Transfer’s restrictions “run with the land” does not conclusively establish notice of

a perpetual reversionary interest in the title to the Airport Land itself. While that


                                            3
language likely imposes the same requirements set forth in the Instrument of

Transfer on subsequent owners and assigns, we cannot — without reaching the

merits — determine what a reasonable landowner should have known about the

United States’ claim in 1948. See, e.g., Citizens for Covenant Compliance v.

Anderson, 906 P.2d 1314, 1318 (Cal. 1995); see also Shultz, 886 F.2d at 1160.

Similarly, without reaching the merits, we cannot conclude that recording the

Instrument of Transfer as a quitclaim deed or using the phrase “title” established

notice of a perpetual reversionary interest in the Airport Land itself; a quitclaim

deed simply reflects the termination of a claim to an interest. Moreover, a

quitclaim deed “operates to transfer only what right, title and interest the grantor

may have” in the first place. See, e.g., Hagan v. Gardner, 283 F.2d 643, 646 (9th

Cir. 1960).

      Indeed, the merits and notice issues in this case may ultimately depend on

the disputed significance of the parties’ conduct between World War II and 2008.

For example, when the City requested in 1952 that the United States release certain

parcels of the land from restrictions in the Instrument of Transfer, the surrendered

Runway and Golf Course leases had not yet expired. Thus, whether the City

obtained the 1952 release because the Instrument of Transfer conveyed an

unexpired leasehold interest and federal improvements (as the City argues), or a


                                           4
reversionary interest in title to the Airport Land itself (as the United States argues),

is inextricably intertwined with which party’s reading of the Instrument of Transfer

is ultimately correct.

      The same is true of the other conduct in the record. For instance, the

California Attorney General’s Opinion from 1975 does not definitively show that

the City knew of the United States’ claimed interest in title to the Airport Land.

Like the City Attorney’s opinion in 1962, the Attorney General’s conclusion was

based on both the Instrument of Transfer and numerous grant agreements

restricting the City’s use of airport property which, at the time, still may have

contained World War II improvements made by the United States. The Attorney

General’s opinion stated only that the City could not “at the present time” cease

using the land for airport purposes. It did not mention the reverter clause. And

whether the United States later disclaimed its purported interest in the 1984

Settlement Agreement likewise involves disputed questions of fact potentially

implicating both the merits of the Quiet Title Act claim and the “notice” issues.

See Michel v. United States, 65 F.3d 130, 133 (9th Cir. 1995) (per curiam) (“If the

government has apparently abandoned any claim it once asserted, and then it

reasserts a claim, the later assertion is a new claim and the statute of limitations for

an action based on that claim accrues when it is asserted.”); Shultz, 886 F.2d at


                                            5
1061. Because these issues “go to the heart of” the merits, the district court erred

by prematurely dismissing this action on jurisdictional grounds. See Augustine,

704 F.2d at 1078-79; cf. Young, 769 F.3d at 1052 (“In this case, the question

whether the Park Service knew or should have known of the hazard created by the

transformer is a disputed issue of jurisdictional fact that is ‘so intertwined’ with the

substantive dispute that resolution of the former depends, at least in part, on

resolution of the latter.”).1

       2.     For similar reasons, the district court erred in holding that the

Instrument of Transfer “clouded” title to the Airport Land. The twelve-year

limitation period in 28 U.S.C. § 2409a(g) “begins when a claim of title in favor of

the United States becomes adverse to the plaintiff.” Leisnoi, Inc. v. United States,

267 F.3d 1019, 1025 (9th Cir. 2001) (emphasis added) (citing Michel, 65 F.3d at

131-32). Thus, even though the United States and the City both openly claimed

property interests in the airport, that fact alone did not start the statute of

limitations unless the claimed property interests conflicted. See, e.g., Michel, 65

F.3d at 132 (citing Werner v. United States, 9 F.3d 1514, 1516 (11th Cir. 1993));

       1
        By contrast, in a case cited by the parties, Kingman Reef Atoll Investments,
LLC v. United States, the record was clear that the plaintiff “had actual notice that
the United States claimed an interest in Kingman reef” because the plaintiff
himself “acknowledged that . . . ownership [of the property] presumably rests with
the State or Navy Department.” 541 F.3d 1189, 1197 (9th Cir. 2008).

                                             6
Shultz, 886 F.3d at 1160-61. Here, the United States’ alleged contingent

reversionary interests could have been consistent with the City retaining fee simple

title to the Airport Land. McFarland v. Norton, 425 F.3d 724, 727-28 (9th Cir.

2005); Narramore v. United States, 852 F.2d 485, 492 (9th Cir. 1988), vacated and

remanded on other grounds, 960 F.2d 1048 (Fed. Cir. 1992). At this stage,

nothing in the record conclusively shows otherwise.

      REVERSED AND REMANDED.




                                          7
