With apologies to Jeff Foxworthy, you might be a regulatory takings maven if…you instantly understood this post’s headline, and eagerly clicked through to read the story.
But you don’t have to be a takings nerd to appreciate the import of today’s Ninth Circuit decision in Los Altos El Granada Investors, v. City of Capitola, No, 07-16888 (Oct. 7, 2009). The court held that federal constitutional claims do not have to be litigated in state court:
Despite clear language from the Supreme Courtestablishing that “a state court determination may not be substituted,against a party’s wishes, for his right to litigate his federal claimsfully in the federal courts,” England v. La. State Bd. of Med. Exam’rs, 375 U.S. 411, 417 (1964), two California courts determined that this right to a federal forum was “irrelevant” andstruck appellant’s clear reservation of its federal claims from itscomplaint. The district court then determined that the actions of theCalifornia courts should be given preclusive effect in federal court.Although we agree that we must give full faith and credit to the statecourt’s decision to strike the England reservation from thecomplaint, we conclude that doing so has no effect on the validity ofappellant’s reservation of federal claims. We thus reverse the judgmentof the district court.
The case began when a mobile home park operator asserted the city’s mobile home rent control ordinance was a taking, and sought administrative relief and brought suit in federal court. [For a recent Ninth Circuit decision on mobile home rent control, see this post.] Characterizing the Williamson County ripeness rules as creatinga “sisyphean task” for property owners who seek to have federal takingsclaims litigated in federal court, the opinion walks through the myriaddecisions from state administrative agencies, and state and federal courts which resulted.
First, the federal suit was dismissed on Williamson County ripeness grounds because the property owner had not sought, and been denied, compensation in state court. So off to state court the property owner went, filing suit in California Superior Court on its claims for compensation under the California Constitution’s just compensation requirement. However, the owner also expressly withheld its federal Fifth Amendment claim from adjudication by making an “England” reservation. It:
reserv[ed] for independent adjudication in the federal courts…all federal questions, including but not limited to any federal Fifth Amendment and Fourteenth Amendment claims for a taking of property, due process or equal protection, for adjudication before the United States District Court.
The state court struck the England reservation as irrelevant, and sustained the city’s demurrer to the complaint (dismissed the complaint for you non-California types). The plaintiffs filed another federal action, alleging its federal claims were now ripe, and had been withheld from state court adjudication. More state litigation followed, which included another England reservation. Read pages 14358-362 for the full procedural history of the cases as the parties traveled back and forth between state and federal courts.
The Ninth Circuit upheld the first England reservation:
It is clear, therefore, that the validity of Los Altos’s original England reservation was not undermined by the fact that no federal court had jurisdiction over the federal questions at the moment the reservation was asserted. Although the district court dismissed Los Altos’s claims with prejudice under Williamson, and although Los Altos could have litigated its federal constitutional claims in state court, Los Altos plainly retained the right to make an England reservation in these circumstances.
Slip op. at 14369. The court next considered whether the state court’s determination the England reservation is “irrelevant” was entitled to full faith and credit (preclusion/collateral estoppel) in the federal action. In other words, whether the federal court was bound to accept this conclusion. The court held no:
[W]e need not decide today whether to recognize an exception to the Full Faith and Credit Clause for such jurisdictional circumventions. Even granting full faith and credit to the Superior Court’s decision to delete Los Altos’s England reservation from its complaint, the Superior Court’s action cannot have had any “preclusive” effect on the claims Los Altos can assert before a federal court, because an explicit, on the record reservation is not required to preserve federal claims.
Slip op. at 14372. The court next upheld the plaintiff’s second England reservation because the complaint seeks damages and not injunctive relief, slip op. at 14376-377, and remanded the case “to the district court to determine the effect of a valid England reservation on the City’s attempt to assert claim and issue preclusion against Los Altos’s federal claims.” Id. at 14377.
Read the full opinion here.