Town of Nags Head v. Matthew Toloczko , 728 F.3d 391 ( 2013 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-1537
TOWN OF NAGS HEAD,
Plaintiff – Appellee,
v.
MATTHEW A. TOLOCZKO; LYNN B. TOLOCZKO,
Defendants – Appellants.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Elizabeth City. James C. Dever
III, Chief District Judge. (2:11-cv-00001-D)
Argued: May 17, 2013 Decided: August 27, 2013
Before SHEDD, DAVIS, and DIAZ, Circuit Judges.
Reversed and remanded by published opinion. Judge Diaz wrote
the opinion, in which Judge Shedd and Judge Davis joined.
ARGUED: J. David Breemer, PACIFIC LEGAL FOUNDATION, Sacramento,
California, for Appellants. Charles Everett Thompson, II,
THOMPSON & PUREZA, Elizabeth City, North Carolina, for Appellee.
ON BRIEF: William J. Brian, Jr., Keith P. Anthony, MORNINGSTAR
LAW GROUP, Morrisville, North Carolina, for Appellants. David
R. Pureza, THOMPSON & PUREZA, P.A., Elizabeth City, North
Carolina, for Appellee.
DIAZ, Circuit Judge:
We heard argument in this case in concert with the related
appeal of Sansotta v. Town of Nags Head, ___ F.3d ___, No. 12-
1538, 2013 WL 3827471 (4th Cir. 2013). Both suits involve a
slew of federal and state law claims concerning the legality of
efforts by the Town of Nags Head, North Carolina (the “Town”),
to declare beachfront properties that encroach onto “public
trust lands” a nuisance, and regulate them accordingly. The
district court adjudicated the claims in Sansotta, but concluded
here that it was inappropriate for a “federal court to intervene
in such delicate state-law matters,” Town of Nags Head v.
Toloczko, 863 F. Supp. 2d 516, 519 (E.D.N.C. 2012), and
therefore abstained from decision under Burford v. Sun Oil Co.,
319 U.S. 315 (1943).
Mindful that the abnegation of federal jurisdiction is a
serious measure to be taken only under “extraordinary and
narrow” circumstances, Martin v. Stewart, 499 F.3d 360, 370 (4th
Cir. 2007), we conclude that the circumstances of this case do
not merit abstention. While the claims asserted here do involve
a sensitive area of North Carolina public policy, resolving them
is not sufficiently difficult or disruptive of that policy to
free the district court from its “unflagging obligation to
exercise its jurisdiction.” In re Mercury Constr. Corp., 656
F.2d 933, 943 (4th Cir. 1981) (en banc) (internal quotation
2
marks omitted). We therefore reverse the district court’s
decision to abstain, and remand for further proceedings.
I.
The Town of Nags Head is a coastal municipality that has
the Atlantic Ocean as its eastern boundary. Its beaches have
historically been used by the public for transportation and
recreational activities. These activities enjoy legal
protection under the “public trust doctrine,” which entitles
states like North Carolina to appropriate title to tidal lands
in trust for the public. See Gwathmey v. State Through Dep’t of
Env’t, Health, & Natural Res., 464 S.E.2d 674, 677 (N.C. 1995).
Various natural indicators can demarcate public trust lands
from private property. Although the vagaries of beach
topography make it difficult to delineate a fixed boundary, the
Town and North Carolina both define the relevant area as
“seaward of the mean high water mark.” 1 Town of Nags Head, N.C.,
Code of Ordinances, § 48-7; see also N.C. Gen. Stat. § 77-20(e).
Historically, prevailing environmental conditions have
pushed the high tide line westward from the Atlantic Ocean,
resulting in erosion and the gradual migration of private
1
The mean high water mark is the average of all high tide
elevations measured over a nineteen-year period.
3
beachfront property into public trust lands. To combat this
trend, beachfront owners like Matthew and Lynn Toloczko 2 have
periodically restored displaced sand and have raised the height
of their cottages by sixteen feet to endure tidal surges. In
the event of storm damage, the Toloczkos obtained permits from
the Town to make all necessary repairs.
A few years ago, however, the Town determined that certain
beachfront properties were beyond rehabilitation because they
were located within public trust lands. The Town therefore
resolved to demolish these structures through enforcement of its
Nuisance Ordinance, which regulates “[a]ny structure, regardless
of condition . . . located in whole or in part in a public trust
area or public land.” Town of Nags Head, N.C., Code of
Ordinances, § 16-31(6)(c).
When a tropical storm inflicted serious damage on the
Toloczkos’ cottage in November 2009, the Town condemned the
structure and sent the Toloczkos a “Declaration of Nuisance.”
The Town refused to allow the Toloczkos to abate any nuisance by
acquiring a permit to make repairs. The Town also began to
assess daily fines to compel the Toloczkos to demolish the
structure.
2
The Toloczkos have owned a beachfront cottage in the Town
since 1992.
4
The Toloczkos refused to raze their cottage, and the Town
sued them in North Carolina state court, seeking to collect the
assessed civil fines and demolish the cottage. The Toloczkos
removed the case to federal court based on diversity of
citizenship.
After removal, the Toloczkos filed twenty-one counterclaims
alleging violations of state and federal law. The bulk of the
counterclaims sought related, if not duplicative, declaratory
judgments that the Town acted unlawfully by enforcing the public
trust doctrine through its Nuisance Ordinance. The Toloczkos
also sought injunctive relief and money damages for violations
of state and federal law.
During the course of the litigation, the Town amended its
Zoning Ordinance to prohibit any structure if located: “(1)
Wholly within the wet sand area of the public trust beach area,
i.e. on the state owned property seaward of the mean high water
mark;” or “(2) Wholly or partially within any portion of the
public trust beach area in such a manner that the building or
structure impedes the flow of vehicular, pedestrian, or
emergency services traffic at normal high tide.” Town of Nags
Head, N.C., Code of Ordinances § 48-87. The amended ordinance
also forbids the issuance of building and repair permits for
structures located on public trust lands.
5
In the meantime, a North Carolina beach replenishment
initiative added substantial sand seaward of the cottage,
prompting the Town to inform the Toloczkos that it no longer
considered their cottage a nuisance. The Town subsequently
offered the Toloczkos the opportunity to procure new permits to
repair the cottage. 3 To repair the cottage, however, the
Toloczkos needed to petition the North Carolina Department of
Environment and Natural Resources (CAMA) for approval to obtain
a local permit to replace their damaged septic tanks. CAMA
denied the permit due to the cottage’s location within an “Area
of Environmental Concern” and “comments from the Town of Nags
Head indicating that the proposal has been deemed to be
currently inconsistent with the Code of Ordinances of the Town
of Nags Head.” J.A. 391. Accordingly, the parties continued
the litigation.
3
We do not think this affects our jurisdiction, as
“voluntary cessation of a challenged practice” moots an action
only if “subsequent events made it absolutely clear that the
allegedly wrongful behavior could not reasonably be expected to
recur.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs.,
Inc., 528 U.S. 167, 189 (2000). Here, the Town maintains that
the cottage resides in the public trust area, and Town Manager
Cliff Ogburn conveyed that he “could . . . still declare--
redeclare [the Toloczkos’] cottage to be a nuisance.” J.A. 180-
81. Under these conditions it is not clear--certainly not
“absolutely”--that the asserted injury will not recur. In fact,
given Ogburn’s statements, and the fluctuating terrain of the
beachfront, “there is a reasonable expectation that the
[Toloczkos] will be subject to the same action again.” Spencer
v. Kemna, 523 U.S. 1, 17 (1998).
6
The district court, however, declined to decide the case.
Invoking the Burford doctrine of abstention, the court noted
“the danger of federal interference with unsettled, important
policy matters reserved to the states,” and determined that
“land use is an important public policy that lies within the
prerogative of a sovereign state.” Toloczko, 863 F. Supp. 2d at
525. Because the dispute involved “profound, unresolved state-
law issues that transcend the case at hand,” id. at 529, the
court exercised its discretion to decline federal jurisdiction. 4
This appeal followed.
4
Where--as here--claims for discretionary relief are
removed to federal court and a district court decides to
abstain, the court should “remand” rather than “dismiss” the
claims. Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 731
(1996). Similarly, federal courts may only abstain from claims
for discretionary relief, i.e., declaratory and equitable
actions, while claims for damages may be stayed but not
dismissed or remanded. See id. at 730. Here, the district
court stayed the Toloczkos’ 42 U.S.C. § 1983 claim (counterclaim
sixteen), inverse condemnation claim (counterclaim nineteen),
slander of title claim (counterclaim twenty), and negligence
claim (counterclaim twenty-one). Additionally, the court
dismissed the Toloczkos’ regulatory takings claim (counterclaim
eighteen) on ripeness grounds. The Toloczkos raise no argument
in their opening brief as to their state law claims for slander
of title and negligence, and therefore have waived appellate
review of the district court’s decision to stay those claims.
As for the Town’s claims in the complaint, the district
court concluded that the Town’s withdrawal of the Nuisance
Declaration mooted the state law abatement actions (counts I and
II). The district court also stayed the claim to collect the
civil fines (count III).
7
II.
A.
We review a district court’s decision to abstain for abuse
of discretion, “ever mindful that, although the standard is a
deferential one, the discretion to abstain is tempered by the
truism that ‘the federal courts have a virtually unflagging
obligation to exercise their jurisdiction.’” MLC Auto., LLC v.
Town of S. Pines, 532 F.3d 269, 280 (4th Cir. 2008) (internal
quotations omitted).
The Burford abstention doctrine relaxes the otherwise
“unflagging” mandate of Article III when an adjudication may
undermine the “independence of state action” on issues that are
local and important to a state’s sovereignty. Quackenbush, 517
U.S. at 728. In this way, the doctrine advances federal and
state comity by permitting courts to abstain where “an incorrect
federal decision might embarrass or disrupt significant state
policies.” Nature Conservancy v. Machipongo Club, Inc., 579
F.2d 873, 875 (4th Cir. 1978) (per curiam).
Burford involved a Fourteenth Amendment challenge to the
Texas Railroad Commission’s grant of an oil-drilling permit.
Because Texas had devised an intricate regime of judicial review
that fostered “a specialized knowledge” in a complex and “ever-
changing” area of the law, the Supreme Court concluded that
federal interference would wreak “[d]elay, misunderstanding of
8
local law, and needless federal conflict with the State policy.”
Burford, 319 U.S. at 327. “Under such circumstances,” the Court
held, “a sound respect for the independence of state action
requires the federal equity court to stay its hand.” Id. at
334.
The Supreme Court has since “carefully defined the areas in
which such abstention is permissible,” Martin, 499 F.3d at 363,
specifying two contexts in which the Burford doctrine applies:
(1) [W]hen there are difficult questions of state law
bearing on policy problems of substantial public
import whose importance transcends the result in the
case then at bar; or (2) where the exercise of federal
review of the question in a case and in similar cases
would be disruptive of state efforts to establish a
coherent policy with respect to a matter of
substantial public concern.
New Orleans Pub. Serv., Inc. v. Council of City of New Orleans
(NOPSI), 491 U.S. 350, 361 (1989) (internal quotations omitted).
B.
We first consider whether the district court correctly
abstained from resolving the claims for declaratory relief
(counterclaims one through fifteen, and seventeen) asserted by
the Toloczkos. The gravamen of these counterclaims concerns the
Town’s authority to ratify and enforce an ordinance that
regulates structures on public trust lands. We have
traditionally viewed questions of state and local land use and
zoning law as the paradigm of Burford abstention, calling them
9
“a classic example of situations in which the exercise of
federal review . . . would be disruptive of state efforts to
establish a coherent policy with respect to a matter of
substantial public concern.” Pomponio v. Fauquier Cnty. Bd. of
Supervisors, 21 F.3d 1319, 1327 (4th Cir. 1994) (en banc)
(internal quotations omitted), abrogated in part on other
grounds by Quackenbush, 517 U.S. at 728-31. “While zoning and
land use cases do not automatically warrant Burford abstention,”
Wash. Gas Light Co. v. Prince George’s Cnty. Council, 711 F.3d
412, 419 (4th Cir. 2013), our precedent demonstrates that these
cases characteristically meet the Burford abstention criteria. 5
The instant case would seem to fit the trend, as the litany
of state and federal law counterclaims lodged by the Toloczkos
appear to invite a federal court to decide (1) the legal
authority of the Town to enforce North Carolina’s public trust
5
See id. (Maryland “mandatory referral statute” governing
public utilities compliance with municipal zoning laws); MLC
Auto., 532 F.3d at 283 (claim that town rezoning violated vested
rights and constitutional due process); Pomponio, 21 F.3d at
1320-21 (challenge to application of local zoning ordinance);
Palumbo v. Waste Tech. Indus., 989 F.2d 156, 159-60 (4th Cir.
1993) (challenge to local waste management permitting scheme);
Front Royal & Warren Cnty. Indus. Park Corp. v. Town of Front
Royal, 945 F.2d 760, 763-64 (4th Cir. 1991) (annexation and
sewer services); Browning-Ferris, Inc. v. Balt. Cnty., 774 F.2d
77, 79 (4th Cir. 1985) (complex state regulations governing
landfill operations); Caleb Stowe Assocs., Ltd. v. Cnty. of
Albemarle, Va., 724 F.2d 1079, 1080 (4th Cir. 1984) (challenge
to “authority of local planning bodies and Boards of
Supervisors”).
10
doctrine through its Nuisance Ordinance, and (2) whether the
Toloczkos’ cottage is subject to that ordinance. Both questions
risk an “interference with the State’s or locality’s land use
policy,” Pomponio, 21 F.3d at 1328, which might “disrupt the
State’s attempt to ensure uniformity in the treatment of an
essentially local problem,” NOPSI, 491 U.S. at 362 (internal
quotations omitted). This is especially true for the claims
that request a determination that the cottage is not located in
the public trust area, 6 as it would obviously offend federalism
and comity for a federal court to physically delimit the metes
and bounds of a state’s sovereign lands. See Idaho v. Coeur
d’Alene Tribe of Idaho, 521 U.S. 261, 283 (1997) (“State
ownership of [submerged lands] has been considered an essential
attribute of sovereignty.”).
If this were the end of the matter, we would not hesitate
to affirm the district court’s abstention under Burford. But
6
In this task, a court would have no guidance. The scope
of the public trust common law doctrine remains the exclusive
province of the North Carolina courts to define, see N.C. Gen.
Stat. § 77-20(d) (“These public trust rights in the ocean
beaches are established in the common law as interpreted and
applied by the courts of this State.”), and they have
consistently declined the opportunity to do so in the context of
beachfront property. See Cooper v. United States, 779 F. Supp.
833, 835 (E.D.N.C. 1991) (“The extent to which the public trust
doctrine applies to dry sand property in North Carolina is an
unsettled question.”); Concerned Citizens of Brunswick Cnty.
Taxpayers Ass’n v. State ex rel. Rhodes, 404 S.E.2d 677, 688
(N.C. 1991).
11
here the district court is not required to sail into these
uncharted waters because North Carolina law is clear that the
Town has no authority to enforce the public trust doctrine in
the first place. See Town of Nags Head v. Cherry, Inc., 723
S.E.2d 156, 161 (N.C. Ct. App.), disc. review denied, 733 S.E.2d
85, 85-86 (N.C. 2012); Fabrikant v. Currituck Cnty., 621 S.E.2d
19, 27 (N.C. Ct. App. 2005); Neuse River Found., Inc. v.
Smithfield Foods, Inc., 574 S.E.2d 48, 54 (N.C. Ct. App. 2002),
disc. review denied, 577 S.E.2d 628 (N.C. 2003).
In Cherry, a case nearly identical to ours, the Town filed
a state court abatement action claiming that a physical
structure occupied public trust lands, and therefore was subject
to its Nuisance Ordinance. 723 S.E.2d at 157-59. The Court of
Appeals of North Carolina dismissed the suit for lack of
standing, holding that “only the State, acting through the
Attorney General, has standing to bring an action to enforce the
State’s public trust rights.” Id. at 161.
In light of this clear statement of North Carolina law, the
instant counterclaims neither present “difficult questions of
state law” regarding North Carolina public trust lands nor
“disrupt[] . . . state efforts to establish a coherent policy
with respect” to this important policy. NOPSI, 491 U.S. at 361.
As to the first point, the Town’s lack of standing to enforce
the public trust doctrine obviates any difficult state law
12
questions. The district court recognized this principle, but
stated that the “issue was far from settled” and that it was
“not prepared to say whether the North Carolina Court of Appeals
accurately has predicted how the Supreme Court of North Carolina
would (or will) rule on the issues in controversy in Cherry.”
Toloczko, 863 F. Supp. 2d at 528 n.6.
At this juncture, however, we are prepared to make such a
statement given that the Supreme Court of North Carolina
declined discretionary review during the pendency of this
appeal, see Cherry, 733 S.E.2d at 85-86, as it did the first
time it had the opportunity to decide which entities have legal
standing to press public trust rights, see Neuse River, 577
S.E.2d at 628.
Because “North Carolina currently has no mechanism for us
to certify questions of state law to its Supreme Court,” MLC
Auto., 532 F.3d at 284, we (and the district court) must “follow
the decision of an intermediate state appellate court unless
there is ‘persuasive data’ that the highest court would decide
differently.” United States v. Little, 52 F.3d 495, 498 (4th
Cir. 1995) (internal quotations omitted). Given the Supreme
Court of North Carolina’s decision not to review Cherry, the
district court no longer has cause to abstain over the
counterclaims that depend on the Town’s authority to enforce
section 16-31(6)(c) of the Nuisance Ordinance.
13
Nor would deciding this case in federal court disrupt
“state efforts to establish a coherent policy with respect to a
matter of substantial public concern.” NOPSI, 491 U.S. at 361.
Here it is the Town, not the federal courts, that has interfered
with North Carolina’s governance of public trust lands. In
fact, as Cherry explained, “it is entirely reasonable to grant
[the] power [to enforce the public trust doctrine] to the State
only, in order to minimize conflicts between municipalities or
other local governments and the state agencies which have been
granted the responsibility of managing and protecting public
trust rights.” Cherry, 723 S.E.2d at 161 (internal quotations
omitted). Because North Carolina law already bars the Town from
enforcing its Nuisance Ordinance on the facts before us, no
principle of abstention should preclude a federal court from
saying so.
We will not call the district court’s decision an abuse of
discretion because the controlling state law, which had not been
established at the time of the abstention, “is now clear and
certain.” Martin, 499 F.3d at 366. It suffices to say that
because the balance of federal and state interests has changed
with intermediate developments in state court precedent,
“continued abstention at this point would be inappropriate.”
Front Royal, 135 F.3d at 283.
14
C.
We next address whether the district court properly
abstained from deciding the Toloczkos’ claim under 42 U.S.C.
§ 1983 alleging due process and equal protection violations
(counterclaim sixteen). We conclude that the district court
need not abstain. While this constitutional claim intersects
with the Town’s land use and zoning laws, it is not merely
“state law in federal law clothing.” Johnson v. Collins Entm’t
Co., 199 F.3d 710, 721 (4th Cir. 1999). We also agree with the
Toloczkos that a court need not define the geographical reach of
the public trust doctrine to resolve their constitutional claim.
In fact, the district court decided an analogous claim in
Sansotta without offense to North Carolina’s land use or zoning
law. We are confident the court can do the same here.
III.
Finally, we review the district court’s dismissal of the
Toloczkos’ regulatory takings claim and its decision to stay the
inverse condemnation claim (counterclaims eighteen and
nineteen). The Toloczkos allege here that the Town stripped
their property of all viable economic use by declaring their
cottage a nuisance and forbidding the issuance of any permits to
repair the structure.
15
The Fifth Amendment forbids the taking of private property
“for public use, without just compensation.” U.S. Const. amend.
V. The Takings Clause applies to the states, see Chicago, B &
Q.R. Co. v. Chicago, 166 U.S. 226 (1897), and to takings in the
form of government regulations that effectively deprive a
property of all economic value, see Henry v. Jefferson Cnty.
Comm’n, 637 F.3d 269, 276 (4th Cir. 2011). “It is also clear
that temporary, but total, regulatory takings are compensable.”
Front Royal, 135 F.3d at 285.
However, where “a State provides an adequate procedure for
seeking just compensation, the property owner cannot claim a
violation of the Just Compensation Clause until it has used the
procedure and been denied just compensation.” Williamson Cnty.
Reg’l Planning Comm’n v. Hamilton Bank of Johnson City, 473 U.S.
172, 195 (1985). The district court dismissed the regulatory
takings claim as unripe under this state-litigation requirement,
as the Toloczkos failed to obtain an inverse condemnation
adjudication--the relevant state law remedy--in state court
before removal to federal court.
The Williamson County ripeness doctrine “does not preclude
state courts from hearing simultaneously a plaintiff’s request
for compensation under state law and a claim that, in the
alternative, the denial of compensation would violate the Fifth
Amendment of the Federal Constitution.” San Remo Hotel, L.P. v.
16
City & Cnty. of S.F., Cal., 545 U.S. 323, 346 (2005). But to
satisfy Williamson County, plaintiffs must not only file a state
law inverse condemnation claim--they must also be “denied just
compensation” through a final adjudication in state court. 473
U.S. at 195.
In this case, the Toloczkos removed their regulatory
takings claim to federal court before a North Carolina court
could grant or deny a correlative state-law remedy. Unlike in
Sansotta, ___ F.3d ___, slip op. at 21, where we held that the
Town waived the state-litigation requirement by removing the
case to federal court, here the Toloczkos preempted their own
state law remedy. Where a plaintiff’s failure to satisfy
Williamson County results from their own litigation strategy,
rather than the defendant’s “procedural gamesmanship” or forum
manipulation, id. at 29, Sansotta’s waiver principle does not
apply.
But “[b]ecause Williamson County is a prudential rather
than a jurisdictional rule, we may determine that in some
instances, the rule should not apply and we still have the power
to decide the case.” Id. at 24. Exercise of such discretion may
be particularly appropriate to avoid “piecemeal litigation or
otherwise unfair procedures.” San Remo Hotel, 545 U.S. at 346(internal quotations omitted).
17
This is a proper case to exercise our discretion to suspend
the state-litigation requirement of Williamson County. In the
interests of fairness and judicial economy, we will not impose
further rounds of litigation on the Toloczkos. We therefore
remand both the federal and state law takings claim to the
district court.
IV.
For the foregoing reasons, we reverse the district court’s
decision to abstain and remand for further proceedings
consistent with this opinion.
REVERSED AND REMANDED
18