Court Finds That The Forest Service Had A Duty Not To Interfere With Resort’s Rights Under Its Permit

Plaintiffs are the former owners of a seasonal resort on the Sierra National Forest, which they operated under a Term Special Use Permit.  Plaintiffs claimed that the Forest Service violated their permit when it allowed a logging contractor to harvest timber on their permit area which prevented them from building more cabins in the area.  The Forest Service claimed that its actions were authorized pursuant to its duty to reduce the risk of forest fire.  However, the Court found that the permit imposed a duty on the Forest Service not to use the permitted land “in a way that ‘unduly interferes’ with” the permittee’s contractual rights.

The Forest Service approved a site development plan in 1993 which authorized the permittee to build a restaurant and 10 cabins.  Between 1993 and 2011, the permittee built four cabins.  In 2001, the permittee informed the Forest Service that its food sales were down, so the restaurant “will probably never happen.”  The permittee also stated that, while there might be a sufficient need in the future to build more cabins, there currently was not sufficient demand to build all 10 cabins.

In 2011, the Forest Service allowed a logger to remove trees in an area that also included land within the permit area, and a half-acre of the permit area had been clear cut to create a landing area for logging project.  However, this area had been where the permittee wanted to construct additional cabins.  The Court held that, if the landing did not need to be located where it had been, the Forest Service was potentially in violation of these obligations.  However, the Court also concluded that, even if the Forest Service violated the contract, the profits which the permittee claimed that it had lost were too speculative and not reasonably foreseeable by the Forest Service.  The Court stated that, because it could not award damages based “on the mere possibility” that the permittee might build new cabins at some time in the future, the permittee’s claim was denied.