R&j Holding Co v. The Redevelopment Authority Of , 670 F.3d 420 ( 2011 )


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  •                                  PRECEDENTIAL
    UNITED STATES COURT OF APPEALS
    FOR THE THIRD CIRCUIT
    _____________
    No. 10-1047
    _____________
    R&J HOLDING COMPANY;
    RJ FLORIG INDUSTRIAL COMPANY, INC.,
    Appellants
    v.
    THE REDEVELOPMENT AUTHORITY OF THE
    COUNTY OF MONTGOMERY;
    DONALD W. PULVER;
    GREATER CONSHOHOCKEN IMPROVEMENT
    CORP.;
    TBFA PARTNERS, L.P.,
    _____________
    On Appeal from the United States District Court
    for the Eastern District of Pennsylvania
    District Court No. 2-06-cv-01671
    1
    District Judge: The Honorable C. Darnell Jones, II
    Argued September 15, 2011
    Before: SLOVITER, SMITH, and NYGAARD, Circuit
    Judges
    (Filed: December 9, 2011)
    Richard L. Bazelon (Argued)
    Michael A. Shapiro
    Bazelon, Less & Feldman
    1515 Market Street
    Suite 700
    Philadelphia, PA 19102
    Counsel for Appellant
    Charles L. Becker
    Kline & Specter
    1525 Locust Street
    19th Floor
    Philadelphia, PA 19102
    Maria T. Guerin
    John F. Smith, III (Argued)
    Reed Smith
    1650 Market Street
    2500 One Liberty Place
    2
    Philadelphia, PA 19103
    Counsel for Appellee The Redevelopment
    Authority of Montgomery County
    H. Robert Fiebach (Argued)
    Jennifer M. McHugh
    Cozen O’Connor
    1900 Market Street
    3rd Floor
    Philadelphia, PA 19103
    Ronald J. Offenkrantz
    Lichter, Gliedman & Offenkrantz
    551 Fifth Avenue
    24th Floor
    New York, NY 10176
    Counsel for Appellees Donald W. Pulver and
    Greater Conshohocken Improvement Corp.
    Barbara W. Mather (Argued)
    Pepper Hamilton
    18th & Arch Street
    3000 Two Logan Square
    Philadelphia, PA 19103
    Counsel for Appellee TBFA Partners, L.P.
    ________________
    3
    OPINION
    ________________
    SMITH, Circuit Judge.
    This is the latest action in a long series of disputes
    that followed the attempted condemnation of commercial
    property in Conshohocken, Pennsylvania. Seeking to
    revitalize    the     Conshohocken        waterfront,     the
    Redevelopment Authority of Montgomery County (the
    “Authority”) – at the behest of developer Donald Pulver
    – attempted to condemn Plaintiffs’ property, which was
    home to a successful steel processing business. The
    Plaintiffs fought the condemnation in state court.
    Plaintiffs prevailed, and were awarded their attorneys’
    fees and expenses.
    But because the Authority held title to Plaintiffs’
    property throughout the state court action, Plaintiffs filed
    a claim in federal court, seeking the “just compensation”
    promised by the Fifth Amendment. The District Court
    rejected Plaintiffs’ claim, essentially because they had
    never asked the Redevelopment Authority whether it
    would simply give them “just compensation.” Turning
    again to the state courts, Plaintiffs did so, and were
    rebuffed because the Pennsylvania Eminent Domain
    Code does not provide for “just compensation” in these
    situations. Thus denied, Plaintiffs returned to federal
    4
    court, still seeking their “just compensation.” The
    District Court dismissed their case, holding that Plaintiffs
    should have brought their federal claims as part of their
    second action in state court.
    We will reverse.
    I
    The District Court had jurisdiction pursuant to 
    28 U.S.C. §§ 1331
     and 1343(a)(3) over Plaintiffs’ federal
    claims under the Fifth and Fourteenth Amendments and
    
    42 U.S.C. § 1983
    . The District Court had supplemental
    jurisdiction pursuant to 
    28 U.S.C. § 1367
    (a) over
    Plaintiffs’ state claims forming part of the same case or
    controversy. The District Court’s December 2, 2009
    Order was a final decision disposing of all of Plaintiffs’
    claims. Plaintiffs timely filed their Notice of Appeal on
    December 28, 2009. We have appellate jurisdiction
    pursuant to 
    28 U.S.C. § 1291
    .
    We exercise plenary review over a District Court
    order dismissing a complaint. See Pension Benefit Guar.
    Corp. v. White Consol. Indus., Inc., 
    998 F.2d 1192
    , 1197
    (3d Cir. 1993). On a motion to dismiss, “we must
    ‘accept all factual allegations as true, construe the
    complaint in the light most favorable to the plaintiff, and
    determine, whether under any reasonable reading of the
    complaint, the plaintiff may be entitled to relief.’”
    5
    Gelman v. State Farm Mut. Auto. Ins. Co., 
    583 F.3d 187
    ,
    190 (3d Cir. 2009) (quoting Phillips v. Cnty. of
    Allegheny, 
    515 F.3d 224
    , 233 (3d Cir. 2008)).
    II
    At all times relevant to this lawsuit, Plaintiff R&J
    Holding Company (the “owner”) owned the parcel of
    land located at 110 Washington Street, Conshohocken,
    Pennsylvania. Plaintiff RJ Florig Industrial Company
    was R&J Holding’s lessee and operated a steel
    processing business on the land.            The Defendant
    Redevelopment Authority of Montgomery County is a
    government agency with the power of eminent domain.
    Defendant Donald Pulver, a land developer, is the
    principal of Defendants Greater Conshohocken
    Improvement Corporation and TBFA Partners, L.P. For
    ease of reference, we will refer to the three as “the Pulver
    Defendants.”
    In 1986, the Authority and the Pulver Defendants
    conceived a plan to redevelop certain land, including the
    subject property, situated in Montgomery County,
    Pennsylvania. They entered into a series of agreements,
    under which the Authority was to condemn as blighted
    the Plaintiffs’ real property and convey it to the Pulver
    Defendants. Importantly, the agreements provided that
    the Authority could initiate condemnation proceedings
    6
    against the property only when directed to do so by
    Pulver.
    On July 11, 1996, at Pulver’s direction, the
    Authority filed a Declaration of Taking for the subject
    property. This had the effect of transferring title to the
    property to the Authority. See 26 Pa. Cons. Stat. Ann. §
    1-402(a) (1997). 1 The owner opposed the taking, arguing
    that it was unlawful because – by giving the Pulver
    Defendants the power to determine whether and when to
    initiate condemnation proceedings – the Authority had
    improperly delegated its eminent domain powers. The
    Common Pleas Court approved the taking over the
    owner’s objection, and the owner appealed this ruling to
    the Pennsylvania Commonwealth Court.
    The Commonwealth Court reversed in an opinion
    dated February 13, 2001. It agreed with the owner that
    the Authority had given the Pulver Defendants the power
    to determine whether and when to condemn the subject
    property. It held that such a delegation of eminent
    domain power was unlawful, as eminent domain is
    1
    Section 1-402 is part of Pennsylvania’s Eminent
    Domain Code, 26 Pa. Cons. Stat. Ann. § 1-401 et seq.
    The Code was repealed and replaced in 2006, but the
    provisions of the pre-2006 Code are at issue in this case.
    See In re De Facto Condemnation and Taking of Lands,
    
    972 A.2d 576
    , 580 n.2 (Pa. Commw. Ct. 2009).
    7
    inherently a sovereign power and cannot be exercised by
    a private party. The court therefore invalidated the
    taking and remanded the case to the Court of Common
    Pleas. In re Condemnation of 110 Washington Street,
    
    767 A.2d 1154
    , 1160-61 (Pa. Commw. Ct. 2001).
    On remand, the owner petitioned for fees and
    expenses under §§ 1-406 and 1-408 of the Eminent
    Domain Code. These sections provide that an owner
    who successfully resists a condemnation action (i.e., a
    prevailing condemnee) is entitled to “reasonable
    appraisal, attorney and engineering fees and other costs
    and expenses actually incurred because of the
    condemnation proceeding.” Pa. Cons. Stat. Ann. § 1-408
    (1997). The court awarded the owner $550,959.73. See
    R&J Holding Co. v. Redevelopment Auth. of Cnty. of
    Montgomery, 
    885 A.2d 643
    , 647 (Pa. Commw. Ct. 2005).
    In late 2002, Plaintiffs filed a § 1983 suit in federal
    court against the Authority and the Pulver Defendants.
    Their complaint asserted (among other claims) a Fifth
    Amendment takings claim seeking just compensation.
    Plaintiffs alleged – as they do here – that they were
    deprived of certain fundamental property rights,
    including the right to improve the property and the right
    to sell the property.
    The Defendants moved to dismiss on ripeness
    grounds. Under Williamson County Regional Planning
    8
    Commission v. Hamilton Bank, 
    473 U.S. 172
     (1985), if a
    state provides an adequate procedure for seeking just
    compensation, a Fifth Amendment takings claim is not
    ripe until the owner has availed itself of the procedure
    and been denied just compensation. See 
    id. at 194
    . This
    is because the Fifth Amendment does not prohibit the
    taking of property; it only prohibits the taking of property
    without just compensation. See 
    id.
     at 194 & n.13; Cnty.
    Concrete Corp. v. Town of Roxbury, 
    442 F.3d 159
    , 164
    (3d Cir. 2006) (noting that under Williamson County, a
    takings claim is not ripe until “the plaintiff has
    unsuccessfully exhausted the state’s procedures for
    seeking ‘just compensation,’ so long as the procedures
    provided by the state were adequate”).
    The District Court determined that Pennsylvania’s
    Eminent Domain Code allows an aggrieved property
    owner to seek just compensation in these circumstances
    by filing an inverse-condemnation action. See R&J
    Holding Co. v. Redevelopment Auth. of the Cnty. of
    Montgomery, No. 02-cv-9530, 
    2003 WL 22387034
    , at
    *4-6 (E.D. Pa. Oct. 15, 2003). Because the owner had
    not yet filed an inverse-condemnation action seeking just
    compensation, the District Court dismissed the takings
    9
    claim on ripeness grounds.       
    Id.
     (citing Williamson
    County, 
    473 U.S. at 194-95
    ).2
    Plaintiffs then filed an inverse-condemnation
    action in the Montgomery County Court of Common
    Pleas. Asserting that they had suffered a taking during
    the unlawful condemnation proceeding, Plaintiffs argued
    that they were entitled to compensation under
    Pennsylvania’s Eminent Domain Code. At the same
    time, Plaintiffs invoked England v. Louisiana State
    Board of Medical Examiners, 
    375 U.S. 411
     (1964), to
    reserve their federal claims for federal court. The Court
    of Common Pleas agreed with the Plaintiffs and ordered
    the parties to appear before a board of viewers to
    determine the amount of damages. The Authority
    appealed.
    The Commonwealth Court reversed. It held that
    the Eminent Domain Code does not entitle a prevailing
    condemnee to compensatory damages. Rather, the Code
    2
    The owner had also asserted a substantive due process
    claim for improper delegation of authority. The District
    Court dismissed that claim on statute-of-limitations
    grounds. The owner appealed the dismissal of that claim
    (but not the dismissal of its takings claim), and we
    affirmed in a non-precedential opinion. See R&J
    Holding Co. v. Redevelopment Auth. of Cnty. of
    Montgomery, 165 F. App’x 175 (3d Cir. 2006).
    10
    limits a prevailing condemnee’s recovery to the out-of-
    pocket expenses available under §§ 1-406 and 1-408.
    Because the owner had already recovered expenses under
    §§ 1-406 and 1-408, the court concluded that the
    Plaintiffs had received all the relief to which they were
    entitled under the Code. See R&J Holding Co. v.
    Redevelopment Auth. of the Cnty. of Montgomery, 
    885 A.2d 643
    , 649-50 (Pa. Commw. Ct. 2005). Plaintiffs’
    brief before the Commonwealth Court repeatedly
    invoked their rights under the Pennsylvania Constitution,
    but never directly mentioned their rights under the United
    States Constitution. The Commonwealth Court’s opinion
    never explicitly addressed whether denying just
    compensation violated the state or federal constitutions.
    The owner asked the Pennsylvania Supreme Court
    to review the Commonwealth Court’s decision, but it
    declined to do so.3
    Having been denied relief, Plaintiffs returned to
    federal court and filed the current action. They asserted
    essentially the same Fifth Amendment takings claim that
    they had asserted in the first federal lawsuit, as well as
    assorted claims under state law. Defendants moved to
    3
    Plaintiffs renewed their purported reservation of federal
    claims in their briefing before the Commonwealth Court
    and in their Petition for Allowance of Appeal to the
    Pennsylvania Supreme Court.
    11
    dismiss, arguing (among other things) that the takings
    claim was barred by the doctrine of claim preclusion.
    The District Court agreed, dismissed the claim, and
    declined to exercise supplemental jurisdiction over the
    state-law claims.      See R&J Holding Co. v.
    Redevelopment Auth. of Montgomery Cnty., No. 06-1671,
    
    2009 WL 4362567
     (E.D. Pa. Nov. 30, 2009).
    This appeal followed.
    III
    While the District Court addressed only
    Defendants’ arguments regarding claim preclusion,
    Defendants assert numerous grounds for affirming the
    District Court, including claim preclusion, issue
    preclusion, failure to state a claim, and the statute of
    limitations. We address each in turn.
    III.A
    Under the Full Faith and Credit Statute, 
    28 U.S.C. § 1738
    , “judicial proceedings . . . shall have the same full
    faith and credit in every court within the United States . .
    . as they have by law or usage in the courts of” the state
    from which they emerged. Section 1738 “has long been
    understood to encompass the doctrines of res judicata, or
    ‘claim preclusion,’ and collateral estoppel, or ‘issue
    preclusion.’” San Remo Hotel v. City & Cnty. of S.F.,
    
    545 U.S. 323
    , 336 (2005). To determine the effect of a
    12
    Pennsylvania court judgment, we are required to apply
    Pennsylvania’s claim- and issue-preclusion law. See
    Kremer v. Chem. Const. Corp., 
    456 U.S. 461
    , 466 (1982)
    (“Section 1738 requires federal courts to give the same
    preclusive effect to state court judgments that those
    judgments would be given in the courts of the State from
    which the judgments emerged.”).
    Claim preclusion, or res judicata, is a defense
    asserted when a case is essentially identical to one that
    has previously been adjudicated. In many jurisdictions,
    claim preclusion extends not only to those claims
    actually asserted in a previous action, but also to all those
    claims which could have been asserted. Pennsylvania’s
    law of claim preclusion was summarized by the state
    supreme court in Balent v. City of Wilkes-Barre, 
    669 A.2d 309
    , 313 (Pa. 1995): “Any final, valid judgment on
    the merits by a court of competent jurisdiction precludes
    any future suit between the parties or their privies on the
    same cause of action. Res judicata applies not only to
    claims actually litigated, but also to claims which could
    have been litigated during the first proceeding if they
    were part of the same cause of action.” For claim
    preclusion to apply, Pennsylvania requires that the two
    actions share the following four conditions: (1) the thing
    sued upon or for; (2) the cause of action; (3) the persons
    and parties to the action; and (4) the capacity of the
    parties to sue or be sued. See Bearoff v. Bearoff Bros.,
    13
    Inc., 
    327 A.2d 72
    , 74 (Pa. 1974). But we need not
    consider whether all of these elements are present.
    Because the Plaintiffs clearly stated their intention to
    split their state and federal claims during the second state
    action and the Defendants raised no objections, the
    Defendants have acquiesced to the Plaintiffs’ claim
    splitting.4
    4
    The Dissent argues that the Plaintiffs had already
    waived their federal rights when they failed to assert
    them as preliminary objections in the first state action.
    The Dissent is correct that failure to raise certain matters
    as a preliminary objection constitutes a waiver, but those
    matters are specifically enumerated by statute:
    “Preliminary objections shall be limited to and shall be
    the exclusive method of challenging (1) the power or
    right of the condemnor to appropriate the condemned
    property unless the same has been previously
    adjudicated; (2) the sufficiency of the security; (3) any
    other procedure followed by the condemnor; or (4) the
    declaration of taking. Failure to raise these matters by
    preliminary objections shall constitute a waiver thereof.”
    Pa. Cons. Stat. Ann. § 1-406 (1997) (emphasis added).
    In this action, Plaintiffs do not challenge the validity of
    the taking, the security supplied, or the procedure used.
    Rather, Plaintiffs challenge the sufficiency of their
    compensation. This is not an issue that must be raised by
    preliminary objections, so it cannot have been waived.
    14
    As we held in Bradley v. Pittsburgh Board of
    Education, 
    913 F.2d 1064
     (3d Cir. 1990), Pennsylvania
    follows Section 26(1) of the Restatement (Second) of
    Judgments, which provides that claim preclusion shall
    not apply where:
    (a) The parties have agreed in terms
    or in effect that the plaintiff may split his
    claim or the defendant has acquiesced
    therein; or
    (b) The court in the first action has
    expressly reserved the plaintiff’s right to
    maintain the second action.
    
    Id. at 1072
     (quoting Restatement (Second) of Judgments
    § 26(1)). We also held in Bradley, pursuant to the
    commentary in the Restatement, that “[t]he failure of the
    defendant to object to the splitting of the plaintiff’s claim
    is effective as an acquiescence in the splitting of the
    claim.” Id. (quoting Restatement (Second) of Judgments
    § 26(1)(a) cmt. a (1982)). We further noted that the
    Restatement explicitly mentioned cases where “the
    opposing party may acquiesce in the federal claim being
    split off and reserved.” Id. at 1073 (quoting Restatement
    (Second) of Judgments § 86, cmt. f).
    In Coleman v. Coleman, 
    522 A.2d 1115
    , 1120 (Pa.
    Super. 1987) (en banc), the Pennsylvania Superior Court,
    15
    quoting Restatement Sections 26(1) (a) and (b), held that
    “[t]he law of Pennsylvania is in accord with the approach
    taken by the Restatement.” 
    Id.
     In a prior case, the
    Pennsylvania Supreme Court explained: “Though such
    splitting of actions is not favored it is not impermissible
    when the parties and the court agree on that method of
    adjudicating the action.” Keystone Bldg. Corp. v.
    Lincoln S&L Ass’n, 
    360 A.2d 191
    , 196 n.10 (Pa. 1976).
    Neither the briefs of the parties nor our own
    research has uncovered any Pennsylvania case which
    would call Bradley’s interpretation of Pennsylvania law
    into question. As such, Bradley controls the outcome
    here. On the very first page of their state complaint,
    Plaintiffs noted their intent to reserve their federal claims
    for adjudication in a federal forum. Plaintiffs reiterated
    their intent to reserve their federal claims in their filings
    before the Pennsylvania Commonwealth Court and the
    Pennsylvania Supreme Court. Defendants uttered not a
    word about the reserved federal claims while Plaintiffs
    prosecuted their state claims all the way to the
    Pennsylvania Supreme Court. They cannot now benefit
    from their silence.5
    5
    The Pulver Defendants argue that such consent cannot
    bind them because they were not parties to the first
    action. But the defense of claim preclusion can be
    asserted only by parties that did participate in the first
    16
    Note that our decision relies solely on our
    interpretation of Pennsylvania claim preclusion law.
    Plaintiffs originally styled their reservation of federal
    claims as an England reservation. In England v.
    Louisiana State Board of Medical Examiners, 
    375 U.S. 411
     (1964), the Supreme Court held that “when a federal
    court abstains from deciding a federal constitutional issue
    to enable the state courts to address an antecedent state-
    law issue, the plaintiff may reserve his right to return to
    federal court for the disposition of his federal claims.”
    San Remo, 
    545 U.S. at 339
     (discussing England).
    England was decided in the context of Pullman
    abstention, under which a federal court postpones
    exercise of its properly-invoked jurisdiction and directs
    the parties to state court because the outcome may be
    decided by an antecedent question of state law. See R.R.
    action. See Balent, 669 A.2d at 313 (“Any final, valid
    judgment on the merits by a court of competent
    jurisdiction precludes any future suit between the parties
    or their privies on the same cause of action.” (emphasis
    added)). To the extent the Pulver Defendants are
    asserting that they are in privity with the Authority and
    therefore participated in the first action, they cannot have
    it both ways. Either they are in privity and are bound by
    the Authority’s implied consent, or they are not in privity
    and lack standing to assert the defense of claim
    preclusion.
    17
    Comm’n of Tex. v. Pullman Co., 
    312 U.S. 496
     (1941).
    England reservations have been permitted outside
    the Pullman context, including in cases sent to state court
    to fulfill the ripeness requirements of Williamson County.
    See, e.g., Fields v. Sarasota Manatee Airport Auth., 
    953 F.2d 1299
    , 1306 (11th Cir. 1992). But the availability of
    an England reservation in the Williamson County context
    has been called into question by San Remo Hotel v. City
    & County of San Francisco, 
    545 U.S. 323
     (2005), in
    which the Supreme Court held that plaintiffs could not
    rely on England to avoid the bar of issue preclusion in a
    takings case. See 
    id. at 338
    . Yet we need not consider
    the continued viability of England in the Williamson
    context. Regardless of whether Plaintiffs’ statement was
    valid as an England reservation, it provided notice to
    Defendants of Plaintiffs’ intent to split their state and
    federal claims. And Plaintiffs reiterated their intent to
    reserve their federal claims in filings before the
    Pennsylvania        Commonwealth       Court    and     the
    Pennsylvania Supreme Court. Defendants’ failure to
    object constitutes implied consent under Pennsylvania
    law. Thus, pursuant to 
    28 U.S.C. § 1738
    , we faithfully
    apply Pennsylvania law in concluding that Plaintiffs’
    claims are permitted.6
    6
    Defendants suggest that San Remo undermines our
    holding in Bradley. But Bradley contained two entirely
    18
    III.B
    Defendants have raised several alternative bases
    for affirming the District Court’s judgment, namely issue
    preclusion, failure to state a claim, and the statute of
    limitations. “We ordinarily decline to consider issues not
    decided by a district court, choosing instead to allow that
    court to consider them in the first instance.” Forestal
    Guarini SA v. Daros Int’l, Inc., 
    613 F.3d 395
    , 401 (3d
    Cir. 2010). But given the vintage of this dispute, we
    think it appropriate, as a matter of judicial economy, to
    accelerate its resolution to the extent reasonably possible.
    These three issues are properly before us and have been
    fully briefed. We exercise our discretion to resolve them
    now.7
    independent holdings: first, that an England reservation
    was available under the circumstances of that case, 
    913 F.2d at 1072
    ; second, that the defendants had – as a
    matter of Pennsylvania state law – impliedly consented to
    Bradley splitting his state and federal claims, 
    id.
     at 1072-
    73. Even if we assume (without deciding) that Bradley’s
    first holding is no longer good law, there is no reason to
    conclude that Bradley’s second holding was undermined
    in any way by San Remo.
    7
    Defendants also object to plaintiffs’ request for punitive
    damages and plaintiffs’ suit against Mr. Pulver in his
    19
    Just as claim preclusion bars re-litigation of an
    entire case, issue preclusion bars re-litigation of discrete
    issues, even in a case based on an entirely different
    claim. The fundamental question is whether the issue has
    been actually decided by a court in a prior action. See
    McNeil v. Owens-Corning Fiberglas Corp., 
    680 A.2d 1145
    , 1147-48 (Pa. 1996) (“[W]hen an issue of fact or of
    law is actually litigated and determined by a valid final
    judgment, and determination of the issue was essential to
    judgment, the determination on that issue is conclusive in
    a subsequent action between the parties, whether on the
    same or a different claim.”).
    The parties agree that the Plaintiffs avoided
    directly raising their federal claims before the
    Pennsylvania state courts. And in its opinion holding
    that the Eminent Domain Code did not provide for “just
    compensation” under the circumstances of this case, R&J
    Holding Co. v. Redevelopment Auth. of the Cnty. of
    Montgomery, 
    885 A.2d 643
    , 650 (Pa. Commw. Ct. 2005),
    the Pennsylvania Commonwealth Court never directly
    addressed whether such an interpretation was permitted
    under the United States Constitution.
    Nonetheless, the Defendants assert that issue
    preclusion should apply. Defendants’ argument runs as
    individual capacity. We leave these and any remaining
    issues for initial consideration by the District Court.
    20
    follows: The Plaintiffs did argue that an interpretation of
    the Eminent Domain Code denying just compensation
    could conflict with the Pennsylvania Constitution. Since
    the Commonwealth Court had the constitutional
    argument before it, the court must necessarily have
    decided that its interpretation of the Eminent Domain
    Code was permissible under the Pennsylvania
    Constitution (even though the court never actually said
    so). See Grubb v. Pub. Utils. Comm’n of Ohio, 
    281 U.S. 470
    , 477-78 (1930) (“The question of the constitutional
    validity of the order was distinctly presented by the
    appellant’s petition and necessarily was resolved against
    him by the judgment affirming the order. Omitting to
    mention that question in the opinion did not eliminate it
    from the case or make the judgment . . . any less an
    adjudication of it.”); Balent, 669 A.2d at 315 (Pa. 1995)
    (“[W]e must assume that the court properly considered
    the constitutional implications, before making its final
    determination that the taking was non-compensable.”).
    Finally, the Pennsylvania and United States constitutions
    have been interpreted co-extensively by Pennsylvania
    courts. See United Artists Theater Circuit, Inc. v. City of
    Phila., 
    635 A.2d 612
    , 616 (Pa. 1993) (“[T]his Court has
    continually turned to federal precedent for guidance in its
    ‘taking’ jurisprudence, and indeed has adopted the
    analysis used by the federal courts.”). Therefore, by
    determining the state constitutional issue, the
    Commonwealth Court determined the federal
    21
    constitutional issue.
    We disagree.         First, even assuming the
    Commonwealth Court’s opinion inherently considered
    the federal constitutionality of its interpretation of the
    Eminent Domain Code, that has no bearing on whether
    there are alternative means for obtaining just
    compensation (such as a § 1983 suit). Second, this chain
    of logic stretches too far. The parties never actually
    litigated the federal constitutionality of the Pennsylvania
    Eminent Domain Code and the state courts never actually
    decided it. A past conclusion that the Takings Clause of
    the Pennsylvania Constitution and the Takings Clause of
    the United States Constitution are co-extensive does not
    constitute a present determination that an interpretation
    of state law accords with the United States Constitution,
    particularly when the federal constitutionality of that
    interpretation was never directly presented to the state
    court.
    We hold that issue preclusion does not bar
    Plaintiffs’ suit.
    III.C
    Defendants also assert that Plaintiffs have failed to
    state a claim because this is not a taking. TBFA argues
    that without an accompanying attempt to take physical
    possession of the property, transfer of title to the
    22
    government does not constitute a taking. TBFA also
    argues that the Plaintiffs have abandoned any argument
    based on regulatory takings precedent. The Authority,
    Pulver, and GCIC argue that even if regulatory takings
    precedent is applied, this is not a taking. We conclude
    that this is a per se taking because title to the land
    actually passed from Plaintiffs to the Authority when the
    Authority filed a Declaration of Taking on July 11, 1996.
    In Yee v. Escondido, 
    503 U.S. 519
     (1992), the
    Supreme Court explained that “[w]here the government
    authorizes a physical occupation of property (or actually
    takes title), the Takings Clause generally requires
    compensation.” 
    Id. at 522
     (emphasis added). In United
    States v. Lynah, 
    188 U.S. 445
     (1903), as a first step
    towards determining whether there had been a taking, the
    Court noted: “Was there a taking? There was no
    proceeding in condemnation instituted by the
    government, no attempt in terms to take and appropriate
    the title.” 
    Id. at 468
    . This implies that had such an
    attempt occurred, the Court would have held there to be a
    taking.
    Defendants dismiss Yee as a regulatory takings
    case. But while Yee was indeed a regulatory takings
    case, the Supreme Court had to formulate some way to
    decide whether it was a regulatory takings case. In both
    Yee and Lynah, the first question asked was “Did the
    government take title or possession of the land?” While
    23
    the Court answered in the negative in both cases,
    answering in the affirmative would have obviated any
    need for considering regulatory takings jurisprudence.
    In addition, the nature of the Authority’s action
    belies any argument that this was a regulatory taking.
    Had the Authority been successful in state court, it
    intended to take physical possession of the property. The
    lines of precedent for per se and regulatory takings are
    separate and distinct. See Tahoe-Sierra Preservation
    Council, Inc. v. Tahoe Regional Planning Agency, 
    535 U.S. 302
    , 323-24 (2002) (holding it “inappropriate to
    treat cases involving physical takings as controlling
    precedents for the evaluation of a claim that there has
    been a ‘regulatory taking,’ and vice versa”). Because the
    Authority’s acquisition of the property would have ended
    as a per se taking, it must have begun as a per se taking.8
    8
    Supreme Court precedent does suggest that in some rare
    cases, regulatory takings may be considered the
    equivalent of per se takings. The Court has identified
    only two situations in which this would occur: first,
    where regulation compels physical invasion of an
    owner’s property; second, where regulation deprives an
    owner of all economically beneficial use of their
    property. See Lucas v. S.C. Coastal Council, 
    505 U.S. 1003
    , 1015-18 (1992). Neither situation is at issue here.
    24
    The only contrary authority cited by the
    Defendants is Horne v. USDA, No. CV-F-08-1549, 
    2009 U.S. Dist. LEXIS 115464
     (E.D. Cal. Dec. 11, 2009). In
    that case, the District Court considered the
    constitutionality of a raisin marketing order under which
    a certain portion of the raisin crop was required to be
    transferred to the Raisin Administrative Committee as
    “reserve tonnage.” The District Court concluded that
    “the transfer of title to the reserve tonnage does not
    constitute a physical taking.” 
    Id. at *76
    . The Ninth
    Circuit, though affirming the judgment of the District
    Court, rested its analysis on a sounder analytical
    framework, concluding that “the Raisin Marketing Order
    applies to the Hornes only insofar as they voluntarily
    choose to send their raisins into the stream of interstate
    commerce.” Horne v. USDA, No. 10-15270, 
    2011 U.S. App. LEXIS 15284
    , at *23 (July 25, 2011). In other
    words, in order to participate in the world of raisin
    marketing, growers must surrender a portion of their crop
    as an entrance fee. But whether growers choose to sell in
    interstate commerce (and pay the fee) is entirely their
    prerogative. To the extent the District Court in Horne
    was stating a broader position, we cannot agree.
    Yee and Lynah seem to indicate that a per se taking
    can be triggered by either: (1) a physical occupation of
    the owner’s land or (2) a transfer of title. We agree.
    Practice involving federal government takings confirms
    25
    that transfer of title is a watershed moment. When the
    federal government is involved in condemnation
    proceedings, it can file a Declaration of Taking and pay
    estimated just compensation. If it does so, title passes
    immediately, and this set of events marks the “taking.”
    See United States v. Dow, 
    357 U.S. 17
    , 22-23 (1958)
    (noting that the filing of a declaration and payment of
    just compensation works a transfer of title and that “[t]he
    scheme of the Taking Act makes it plain that when the
    Government files a declaration before it has entered into
    possession of the property the filing constitutes the
    ‘taking’”). In addition, Federal Rule of Civil Procedure
    71A(i)(1) prohibits judges from dismissing a
    condemnation proceeding “if the plaintiff has already
    taken title, a lesser interest, or possession as to any part
    of” the property. Rather, the court “must award
    compensation for the title, lesser interest, or possession
    taken.” 
    Id.
     Again, this implies that transfer of title
    constitutes a taking, for which just compensation must be
    paid.
    The parties do not dispute that transfer of title
    occurred by operation of Pennsylvania’s Eminent
    Domain Code. See 26 Pa. Cons. Stat. Ann. § 1-402(a)
    (1997) (repealed 2006) (“[T]he title which the
    condemnor acquires in the property condemned [passes]
    to the condemnor on the date of [the filing in court of the
    declaration of taking.]”). As the Supreme Court has
    26
    explained, its “jurisprudence involving condemnations
    and physical takings is as old as the Republic and, for the
    most part, involves the straightforward application of per
    se rules.” Tahoe-Sierra, 
    535 U.S. at 322
    . Because title
    was actually transferred to the Authority, we hold that
    this was a per se taking.
    III.D
    Finally, the Defendants assert that the Plaintiffs’
    claims are barred by the statute of limitations. We
    disagree.
    Defendants appear to be arguing that the takings
    claims at issue here can be equated with improper
    delegation claims that were dismissed on statute of
    limitations grounds by the District Court in the first
    federal action. See R&J Holding Co. v. Redevelopment
    Auth. of the Cnty. of Montgomery, No. 02-cv-09530,
    
    2003 WL 22387034
    , at *6-*9 (E.D. Pa. Oct. 15, 2003),
    aff’d, 165 F. App’x 175 (3d Cir. 2006) (not precedential).
    They cannot. Plaintiffs’ claims here are clearly distinct.
    Defendants also cite several pieces of literature
    arguing that the Williamson County “ripeness” label is
    incorrect and misleading or that plaintiffs should
    generally only be able to proceed in state court on takings
    27
    claims. 9 These arguments are unpersuasive in light of the
    Supreme Court’s repeated description of Williamson
    County’s requirements as a ripeness issue. See, e.g.,
    Williamson County, 
    473 U.S. at 186
     (“Because
    respondent has not yet obtained a final decision regarding
    the application of the zoning ordinance and subdivision
    regulations to its property, nor utilized the procedures
    Tennessee provides for obtaining just compensation,
    respondent’s claim is not ripe.”). These arguments also
    ignore the fundamental basis of the Williamson opinion:
    simply put, until just compensation has been denied, an
    owner has not suffered a constitutional injury and does
    not have a federal takings claim. See 
    id.
     at 194 n.13
    (“[B]ecause the Fifth Amendment proscribes takings
    without just compensation, no constitutional violation
    occurs until just compensation has been denied.”).
    As we held in Whittle v. Local 641, International
    Brotherhood of Teamsters, 
    56 F.3d 487
    , 489 (3d Cir.
    9
    See Thomas E. Roberts, Fifth Amendment Taking
    Claims in Federal Court: The State Compensation
    Requirement and Principles of Res Judicata, 24 Urb.
    Law, 479, 501-03 (1992); Thomas E. Roberts, Facial
    Takings Claims Under Agins-Nectow: A Procedural
    Loose End, 
    24 U. Haw. L. Rev., 623
    , 634-35 (2002);
    Douglas T. Kendell et al., Choice of Forum and Finality
    Ripeness: The Unappreciated Hot Topics in Regulatory
    Takings Cases, 33 Urb. Law 405, 407-09 (2001).
    28
    2005): “[A] cause accrues when it is sufficiently ripe
    that one can maintain suit on it.” Plaintiffs’ takings claim
    did not accrue until the Pennsylvania Supreme Court
    denied review in the second state action on March 21,
    2006. See R&J Holding Co. v. Redevelopment Auth. of
    the Cnty. of Montgomery, Nos. 1018 &1019 MAL 2005
    (Pa. Mar. 21, 2006). Because this action was filed on
    April 21, 2006, it is of no moment whether we adopt the
    statute of limitations put forward by the Plaintiffs
    (twenty-one years) or the statute of limitations put
    forward by the Defendants (two years). The action is
    timely.
    III.D
    In light of its dismissal of the federal claims, the
    District Court properly declined to exercise jurisdiction
    over Plaintiffs’ state law claims. But “[s]ince we will
    reinstate [Plaintiffs’ federal claims], we must vacate that
    portion of the district court’s order dismissing without
    prejudice [Plaintiffs’] pendent state law claims
    . . . . The standard for exercising discretion to dismiss
    state claims pendent on a viable federal claim differs
    from the standard governing dismissal when the federal
    claim itself lacks merit.” Markowitz v. Ne. Land Co., 
    906 F.2d 100
    , 106 (3d Cir. 1990).
    29
    IV
    We conclude that Plaintiffs’ suit cannot be barred
    on the grounds of claim preclusion, issue preclusion,
    failure to state a claim, or the statute of limitations.
    This is the latest in a long series of actions
    following the condemnation of a single piece of property.
    We are aware that the parties and the courts have
    expended substantial resources over the years in efforts
    to resolve the underlying dispute. But the Plaintiffs –
    having reserved their federal rights in state court and
    having received no objection from the Defendants – are
    entitled to a federal forum for their federal claims.
    We will reverse and remand to the District Court
    for further proceedings consistent with this opinion. 10
    10
    Citing United States v. Bodcaw, 
    440 U.S. 202
     (1979),
    the Dissent asserts that a remand would be futile because
    the damages sought by the Plaintiffs exceed the scope of
    damages available to them under the Fifth Amendment.
    We disagree. Just compensation is limited to damages
    sought “for the property,” 
    id. at 203
    , and thus Bodcaw
    excluded appraisal fees incurred in a condemnation
    action from the scope of just compensation, see 
    id. at 204
    . Such indirect costs are not the result of an
    impairment of property rights. But here Plaintiffs seek
    30
    compensation for their inability to fully utilize, develop,
    and sell their property. There can be no question that
    these are rights inhering in the property itself, unlike the
    indirect costs excluded by Bodcaw. To the extent some
    of Plaintiffs’ claims seek both direct and indirect costs,
    we leave it to the District Court to consider the scope of
    those claims and, if appropriate, to limit them.
    31
    R&J Holding Company, RJ Florig Industrial Company, Inc.
    v. The Redevelopment Authority of the County of
    Montgomery, No. 10-1047.
    Nygaard, J. Dissenting.
    In its singular focus upon R.J. Florig’s procedural
    machinations, I believe the majority has erred. Three
    conclusions compel my dissent: 1.) R.J. Florig’s federal
    claims have been waived; 2.) the issues raised in the federal
    claims have been conclusively addressed by the state court;
    and 3.) the lack of a federal remedy moots the federal claims.
    The Pennsylvania Eminent Domain Code “is intended
    . . . to provide a complete and exclusive procedure and law to
    govern all condemnations of property for public purposes and
    the assessment of damages therefor. . . .” 26 P.S. § 1-303
    (1996). In that vein, the Code states that “[a]ll preliminary
    objections shall be raised at one time and in one pleading.”
    26 P.S. § 1-406(c) (1996). Moreover, “[f]ailure to raise these
    matters by preliminary objections shall constitute a waiver
    thereof.” 26 P.S. § 1-406(a) (1996). The Commonwealth
    Court said that “preliminary objections are intended as a
    procedure to resolve expeditiously the factual and legal
    challenges to a declaration of taking before the parties
    proceed to determine damages.” In re Condemnation by City
    of Coatesville, 
    898 A.2d 1186
    , 1189 n. 7 (Pa. Cmwlth. 2006).
    The problem, however, is that R.J. Florig never raised its
    federal claims. Rather, it stated in a footnote to its
    preliminary objections:
    R.J. Florig Company is not
    presenting in this case its federal
    1
    constitutional and civil rights
    claims, including the claims that
    the actions of the Authority and
    others constitute a taking of
    private property for purported
    public      use     without    just
    compensation and a deprivation of
    property without due process of
    law in violation of the Fifth and
    Fourteenth Amendments of the
    Unites States Constitution. R.J.
    Florig Company reserves its right
    to litigate these federal claims in
    federal court.
    Preliminary Objections, p. 2 n. 1. While R.J. Florig declared
    that it was “not presenting” its claims, the Code does not
    authorize parties to make such a choice. They are limited by
    the law. See § 1-406(c). By the terms of the Code, R.J.
    Florig’s failure to raise these claims in its preliminary
    objections must be regarded as a waiver of those claims.
    Accordingly, R.J. Florig’s abandoned federal claims should
    not have been considered by the District Court.
    Moreover, as the District Court determined, the issues
    raised in R.J. Florig’s federal complaint have been
    conclusively ruled upon in state court.           We already
    affirmed—in an earlier decision—the District Court’s denial
    of R.J. Florig’s section 1983 claim as time-barred. In its
    federal complaint, R.J. Florig premises its remaining federal
    takings claim by characterizing the Commonwealth Court’s
    holding in its inverse condemnation action as follows:
    2
    Plaintiffs       pursued      just
    compensation for taking of their
    property rights in state court
    under Pennsylvania law but
    Pennsylvania appellate courts
    conclusively determined that
    Pennsylvania does not provide a
    remedy for taking of Plaintiffs’
    property rights during the
    unlawful de jure condemnation of
    their property, regardless of the
    extent of the taking.
    Complaint, ¶ 107 (emphasis added).       This statement
    misconstrues the Commonwealth Court’s ruling.       The
    Commonwealth Court determined the following:
    In this case, R & J Holding
    already received costs and
    expenses under Section 408 of the
    Eminent Domain Code. Thus,
    they are not entitled to any more
    costs and expenses under any
    other Section of the Eminent
    Domain Code because the Code
    does not require that a condemnee
    be made whole. Moreover, R & J
    Holding is seeking damages under
    502(e) which only applies when
    “no declaration of taking therefor
    has been filed”. To apply this
    Section to this case, this Court
    would have to insert the word
    3
    “valid” before “declaration of
    taking.” Because a declaration of
    taking was filed in this case,
    damages under Section 502(e) are
    not available to R & J Holding.
    R & J Holding Company v. The Redevelopment Authority of
    the County of Montgomery, 
    885 A.2d 643
    , 650 (Pa. Cmwlth.
    2005) (internal citations omitted). The Commonwealth Court
    ruled that, because this case originated in a declaration of
    taking, it is a de jure condemnation. R.J. Florig’s successful
    defense against the declaration under the Code’s de jure
    provisions enabled it to regain title to its property and receive
    attorney’s fees and costs in the amount of $550,959.73. The
    Commonwealth Court determined that, having received these
    remedies, R.J. Florig was not permitted to simply re-label the
    very same taking as an inverse de facto condemnation and go
    back to court seeking another remedy.
    Therefore, the Commonwealth Court did not rule that
    R.J. Florig was without a remedy. To the contrary, it ruled
    that the 1996 taking of R.J. Florig’s property was
    conclusively litigated and fully remedied in accordance with
    the Pennsylvania Eminent Domain Code, and as a result it
    could not be re-litigated. R.J. Florig wishes to read the
    decision as pointing to a gap in the scheme of just
    compensation permitted under the Code when, in fact, the
    decision closed the door to them.          Its federal Fifth
    Amendment taking claim is, in every respect, the de facto
    condemnation claim raised and dismissed in state court. Res
    judicata requires that we respect the state court’s ruling by
    affirming the District Court’s dismissal of the claim.
    Therefore, even were we to assume that the federal claims
    4
    were properly severed from the state claim, res judicata
    precludes our jurisdiction to consider them again.
    Finally, even were we to ignore the relevance of
    waiver and res judicata to this case, the majority’s remand is
    perplexing because there is simply no remedy available at
    law. In R.J. Florig’s complaint for its federal taking claim, it
    seeks just compensation for, inter alia, their inability to
    “redevelop, sell, or lease the Florig Property . . . [for their
    inability to] expand and/or relocate the steel processing
    business for a period of more than five years . . . [and for]
    causing plaintiffs to spend thousands of hours in dealing with
    the imminent threat of condemnation.” Complaint, p. 27.
    The problem is that such damages are not prescribed by the
    concept of just compensation under the United States
    Constitution. In fact, the Pennsylvania Eminent Domain
    Code, under which this case was litigated, provided R.J.
    Florig with a wider range of relief than is available under
    federal law.
    I agree with the majority that an actual—rather than a
    de facto—taking occurred here because title to the property
    transferred at the declaration of taking. There can be no other
    conclusion.      This, however, has consequences for the
    parameters of the constitutional right to just compensation.
    As the Supreme Court said:
    This Court has often faced the
    problem     of   defining     just
    compensation.     One principle
    from which it has not deviated is
    that just compensation “is for the
    property, and not to the owner.”
    5
    As a result, indirect costs to the
    property owner caused by the
    taking of his land are generally
    not part of the just compensation
    to which he is constitutionally
    entitled.
    United States v. Bodcaw, 
    440 U.S. 202
    , 203 (1979) (internal
    citation omitted). In its analysis, the Bodcaw Court spoke of
    a particular federal statute that, under certain circumstances,
    authorized attorney’s fees and litigation expenses where—as
    was the case here—“a condemnation action is dismissed as
    being unauthorized . . . .” It concluded, however, that “such
    compensation is a matter of legislative grace rather than
    constitutional command,” and it denied relief presumably
    because no such statute applied in that case. 
    Id. at 204
    . In the
    same way, R.J. Florig does not cite to, nor can I find any
    federal statute that would authorize any remedy beyond that
    which it has already received under the Pennsylvania Eminent
    Domain Code. Re-titling this de jure action as a de facto
    condemnation does not change this fact.
    Alternatively, construing the condemnation as a
    regulatory taking does not change the analysis.             In
    circumstances that were analogous to this case, the Supreme
    Court said the following with regard to a constitutional right
    to just compensation.
    Even if the appellants' ability to
    sell their property was limited
    during the pendency of the
    condemnation proceeding, the
    appellants were free to sell or
    6
    develop their property when the
    proceedings        ended.     Mere
    fluctuations in value during the
    process      of       governmental
    decisionmaking,              absent
    extraordinary delay, are “incidents
    of ownership. . . .”
    Agins v. City of Tiburon, 
    447 U.S. 255
    , 263 n. 9 (1980)
    (overruled on other grounds in Lingle v. Chevron U.S.A. Inc.,
    
    544 U.S. 528
     (2005)) (quoting Danforth v. United States, 
    308 U.S. 271
    , 285 (1939)). R.J. Florig was never denied the
    ability to operate its business, eventually regained title to the
    property, and ultimately sold it at market value. I see no
    basis for distinguishing R.J. Florig’s multiple claims for
    damages from “incidents of ownership.” As a result, even
    were we to analogize this case to a regulatory taking, no relief
    is warranted.
    In Williamson, the Supreme Court said: “[B]ecause
    the Fifth Amendment proscribes takings without just
    compensation, no constitutional violation occurs until just
    compensation has been denied.”         Williamson County
    Regional Planning Com'n v. Hamilton Bank of Johnson City,
    
    473 U.S. 172
    , 195 (1985). Here, even if waiver and the
    doctrine of res judicata are ignored, R.J. Florig has not
    demonstrated any basis to claim that, by resorting to the
    remedies available under the Pennsylvania Eminent Domain
    Code, they have been unjustly compensated. As a result, their
    claim is moot.
    For all of these reasons, I dissent.
    7
    

Document Info

Docket Number: 10-1047

Citation Numbers: 670 F.3d 420

Judges: Nygaard, Sloviter, Smith

Filed Date: 12/9/2011

Precedential Status: Precedential

Modified Date: 8/5/2023

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United States v. Lynah , 23 S. Ct. 349 ( 1903 )

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Grubb v. Public Util. Comm'n of Ohio , 50 S. Ct. 374 ( 1930 )

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