The redevelopment authority of Montgomery County, Pennsylvania has filed this cert petition seeking review of the Third Circuit’s decision in R&J Holding Co. v. Redevelopment Authority of Montgomery County, 670 F.3d 420 (3d Cir. Dec. 9, 2011), a case we detailed here. In that case, the Third Circuit held that a property owner did not litigate its federal takings claims in an earlier state court case, and thus actually allowed a property owner to raise its federal constitutional claims in federal court. Imagine that.

The procedural facts of the various state and federal cases that we detailed in our post on the case are worth reading, since, unlike the usual case where the property owner loses its state law takings claim in its Williamson County-required journey to state court, here the property owner initially prevailed on its state law taking claim. In its first visit to state court, the property owner defeated the redevelopment authority’s attempt to condemn its land. The owner then instituted an inverse condemnation claim in federal court for its damages. The federal court dismissed under Williamson County, and the owner brought its inverse case in state court (and expressly did not litigate its federal claim by filing an England reservation), which agreed and awarded it damages.

The Pennsylvania appeals court reversed, concluding that Pennsylvania law does not recognize a right of a property owner who defeats a taking to seek damages other than attorneys fees and costs under Pennsylvania statutes. Having been denied compensation under state law and being told it was categorically barred from bringing a state law compensation claim, the owner went back to federal court to litigate its federal takings claim. The district court dismissed. But the Third Circuit reversed, holding that the property owner did not present its federal challenge to the state court, and the redevelopment authority waived any challenge to the England reservation by not objecting.

Here are the Questions Presented:

In San Remo Hotel, L.P. v. City & County of San Francisco, 545 U.S. 323 (2005), this Court held that state court judgments in actions filed pursuant to Williamson County Regional Planning Comm’n v. Hamilton Bank, 473 U.S. 172 (1985), are entitled to preclusive effect on takings claims in a later federal action. The Court also held that this preclusive effect could not be “negate[d]” by asserting in the state court a purported “reservation,” under England v. Louisiana State Bd. of Med. Examiners, 375 U.S. 411 (1964), of the right to press the same takings claim in federal court based on the Fifth Amendment. The questions presented are:

1. Whether issue preclusion bars a takings claim based on the Fifth Amendment only where the state court expressly decides Fifth Amendment issues or, additionally, where the state court decides the same takings claim under state takings law?

2. Whether, after a federal court’s dismissal of a takings claim under Williamson County, and the assertion in state court of an England reservation, a federal court—circumventing San Remo Hotel and Williamson County—can rely on that reservation, notwithstanding its invalidity, in refusing to apply claim preclusion to bar the reasserted takings claim?

This petition asks the Court to validate a the proposition that an England reservation is simply invalid in takings claims. See Petition at 27 (The Third Circuit’s “unprecedented use of Respondents’ invalid England reservation to circumvent claim preclusion has the same effect.”). The authority also argues that Williamson County requires a property owner to raise its federal claim in state court. Id. (“The Third Circuit’s decision thus threatens to become a template for encouraging (and permitting) adroit condemnees to refrain from asserting federal law arguments and authorities in state court …”).

Problem is, neither Williamson County nor San Remo can be read as aggressively as the redevelopment authority does in its petition. Williamson County does not require that a property owner bring her federal takings claim in state court, only that the state deny compensation under state law before the federal claim becomes ripe. And San Remo concluded that the property owner litigated its federal takings claim in the course of litigating its state compensation claim, effectively waiving its England reservation (“By broadening their state action beyond the mandamus petition to include their “substantially advances” claims, petitioners effectively asked the state court to resolve the same federal issues they asked it to reserve.”). In R & J Holding, the state appeals court concluded that Pennsylvania statutes do not permit a claim for compensation, and the property owner does not appear to have litigated the “functional equivalent” of a federal takings claim. 

Finally, get a load of this: the agency claming that this is all some unfair procedural machination by the property owner to pull the wool over its eyes and lure it into not objecting to the England reservation:

Beyond that, the Third Circuit’s decision also creates the possibility of an unfair procedural trap for condemning authorities. Given this Court’s clear directives in Allen and San Remo Hotel, condemning authorities rightly may see no need to object to asserted England reservations in state court Williamson County proceedings, which those authorities reasonably believe are invalid. Under the Third Circuit’s decision, however, the failure to object to such invalid England reservations would eliminate the authorities’ otherwise meritorious claim preclusion defense. Such a procedural trap is unfair and improper, and this Court should clarify in this case why it is flawed under settled precedent.

Petition at 27-28. And here it was that we believed it was only property owners who thought that Williamson County–San Remo created unfair procedural traps. Come on government agencies this stuff isn’t hard according to Justice Souter, who thinks it is just a matter of a phone call or two.

Our prediction? Cert denied.

If the Court grants cert, however, this case may be an opportunity for a conditional cross petition asking the Court to revist the wisdom of Williamson County, an issue it was not asked to decide in San Remo: From the San Remo transcript:

Justice O’Connor: And you haven’t asked us to revisit that Williamson County case, have you?

Mr. Utrecht: We have not asked that this Court reconsider the decision in Williamson County.

Justice O’Connor: Maybe you should have.

Even so, the Catch-22 nature of the Williamson County–San Remo trap prompted four Justices to note that the experiment in denying federal review to a federal constitutional claim may have run its course and is due for another look. Chief Justice Rehnquist wrote:

Finally, Williamson County‘s state-litigation rule has created some real anomalies, justifying our revisiting the issue… I joined the opinion of the Court in Williamson County. But further reflection and experience lead me to think that the justifications for its state-litigation requirement are suspect, while its impact on takings plaintiffs is dramatic… In an appropriate case, I believe the Court should reconsider whether plaintiffs asserting a Fifth Amendment takings claim based on the final decision of a state or local government entity must first seek compensation in state courts.

Is R & J Holding the “appropriate case?” We’ll be following the case to see. Follow the Court’s docket page here. Our thanks to Gideon Kanner for passing this along.
Continue Reading New Cert Petition: Distinguishing Williamson County Results In An “Unfair Procedural Trap For Condemning Authorities