Charles McKenzie v. City of White Hall , 112 F.3d 313 ( 1997 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
_____________
No. 96-2886EA
_____________
Charles McKenzie; Ronald *
McKenzie; Mark McKenzie, doing *
business as McKenzie *
Development Company, *
*
Appellants, * Appeal from the United States
* District Court for the Eastern
v. * District of Arkansas.
*
City of White Hall; White Hall *
Planning Commission, Phillip *
Williams, Individually and in *
his official capacity, *
*
Appellees. *
_____________
Submitted: March 12, 1997
Filed: April 23, 1997
_____________
Before FAGG and HEANEY, Circuit Judges, and NANGLE,* District
Judge.
_____________
FAGG, Circuit Judge.
After several years of zoning struggles, Charles, Ronald, and
Mark McKenzie, owners and developers of a residential subdivision
in the City of White Hall, Arkansas, brought this 42 U.S.C. § 1983
action against the City, its Planning Commission, and the Planning
Commissioner (collectively the City), alleging the City violated
the McKenzies’ Fifth and Fourteenth Amendment rights. The City
*
The Honorable John F. Nangle, United States District Judge
for the Eastern District of Missouri, sitting by designation.
moved to dismiss for lack of jurisdiction and failure to state a
claim under § 1983, but the district court denied the motion. The
case proceeded to trial, and near the end, the district court
unexpectedly expressed concern about jurisdiction. Nevertheless,
the court submitted the case to the jury. The jury found in favor
of the McKenzies and awarded $195,790 in compensatory damages and
$30,000 in punitive damages. Three weeks after entering judgment
on the general verdict, the court vacated the judgment and
dismissed the case sua sponte for lack of subject matter
jurisdiction, without giving any explanation. The district court
denied pending motions, including the City’s motion for judgment as
a matter of law, as moot. The McKenzies appeal the dismissal for
lack of jurisdiction. We affirm in part, reverse in part, and
remand for further proceedings.
In 1971, land owned by the McKenzies was platted into a
subdivision of fourteen one-acre lots along both sides of a public
roadway named Michealann Drive. At the north end of the
subdivision, Michealann Drive ended in a cul-de-sac. Because the
land to the north was undeveloped and the subdivision was
residential, the McKenzies retained a rectangular shaped parcel
measuring ten feet by fifty feet as a privacy buffer. The City
annexed the subdivision in 1977. Eight years later, one of the
lots in the subdivision owned by the Federal Aviation
Administration was offered for sale. As former owners, the
McKenzies had an option to repurchase the lot, but declined because
the City expressed its desire to purchase the land for erection of
a new water tower. After the City purchased the lot, however, the
City did not use the property in a manner consistent with the
subdivision’s zoning for single family residences. Instead, the
City used the lot as a dumping and storage ground for unsightly and
dangerous materials.
-2-
When the McKenzies protested the misuse of the lot in 1988,
the City responded by demanding access across the privacy buffer at
the north end of Michealann Drive. Because there was no public
need, the McKenzies refused. In 1989, the McKenzies decided to
revise their plan for the subdivision and divide six of the
remaining lots into nine. The City, acting through the Planning
Commission, allowed the McKenzies to subdivide two lots into three,
but took no action on the other four remaining lots. During the
planning of sewer improvements, the City’s consulting engineer
advised the McKenzies that the City expected the McKenzies to
surrender title to the privacy buffer. The McKenzies refused, and
the City withheld approval of redivision of the four lots. In May
1992, the McKenzies met with the City’s mayor, who suggested the
McKenzies should surrender the privacy buffer to induce the city
council to clean up the City’s lot.
In October 1992, the McKenzies again asked for permission to
redivide the four remaining lots into six, but the City told the
McKenzies to delete the privacy buffer and resubmit their plans.
By January 1993, the McKenzies had planned, built, and sold two
houses, but eight other planned homes were not started because the
City withheld approval of the redivision and building permits
pending the McKenzies’ surrender of the privacy buffer. The
McKenzies continued to refuse to give up the privacy buffer, and
the City continued to deny the McKenzies’ zoning requests. In July
1994, the City said no building permits would be issued for the
McKenzies’ lots until they agreed to surrender the privacy buffer.
The next month, the Planning Commission sent the McKenzies a letter
stating, “[T]he commission [will] only approve your resubdivision
if you dedicate the [privacy buffer]” as use for a public street at
a later date. The McKenzies offered the City an option to buy the
privacy buffer if residential development occurred north of the
-3-
land, but the City was not interested in paying for the land.
Because the McKenzies needed approval of their zoning and building
requests to avoid financial ruin, and only wanted to insure
complementary development north of the subdivision, the McKenzies
gave the City an easement in the privacy buffer contingent on such
development. Only after obtaining the conditional easement did the
City grant the McKenzies’ zoning requests and building permits.
In their § 1983 lawsuit, the McKenzies raise a variety of
claims based on the City’s demand that the McKenzies surrender the
buffer in exchange for approval of zoning and building requests and
correction of the City lot’s misuse. Generally, the McKenzies
allege the City acted under color of state law to deprive them of
their property rights, due process, and equal protection. More
specifically, the McKenzies allege the City took their privacy
buffer without just compensation, and the City’s misuse of its lot
was a nuisance that amounted to an unconstitutional taking of the
McKenzies’ surrounding subdivision property. Further, the
McKenzies allege the City withheld building permits without a
legitimate reason, and arbitrarily and capriciously withheld
approval of the resubdivision. The McKenzies assert the City has
not taken similar actions against other similarly situated
individuals. In addition to compensation for the taken property,
the McKenzies sought redress for decreased subdivision property
values, lost profits, other damage to their business, punitive
damages, and declaratory and injunctive relief.
On appeal, the McKenzies contend the district court had
jurisdiction to consider their claims. Because the district court
made no findings about any disputed jurisdictional facts and none
are disputed by the parties, we review the jurisdictional issue de
-4-
novo. See Osborn v. United States, 918 F.2d 724, 730 (8th Cir.
1990).
At the outset, we note the cases mentioned by the district
court when questioning jurisdiction during trial, Anderson v.
Douglas County, 4 F.3d 574 (8th Cir. 1993), and Chesterfield Dev.
Corp. v. City of Chesterfield, 963 F.2d 1102 (8th Cir. 1992),
involved the failure to state § 1983 claims, not subject matter
jurisdiction. “[T]he failure to present an adequate § 1983 claim
does not strip the court of jurisdiction unless the claim is
clearly immaterial, frivolous, and wholly insubstantial.” Daigle
v. Opelousas Health Care, Inc., 774 F.2d 1344, 1347 (5th Cir. 1985)
(footnote omitted). Jurisdiction is based on the complaint’s
allegations. See id. at 1348. If the McKenzies’ complaint stated
a claim on its face, it alleged a valid § 1983 action and
successfully invoked the district court’s jurisdiction. See id. at
1347.
In their complaint, the McKenzies state a colorable takings
claim by alleging the City conditioned approval of zoning and
building permits on surrender of the privacy buffer without
legitimate public concerns related to the requests. See Goss v.
City of Little Rock, 90 F.3d 306, 309-10 (8th Cir. 1996); W.J.
Jones Ins. Trust v. City of Fort Smith, 731 F. Supp. 912, 913 (W.D.
Ark. 1990). The McKenzies also state a colorable claim that the
City’s misuse of its lot was a nuisance amounting to a taking of
subdivision property other than the privacy buffer. See National
By-Products, Inc. v. City of Little Rock, 916 S.W.2d 745, 747-48
(Ark. 1996). Takings claims are cognizable under § 1983. See Lake
Country Estates, Inc. v. Tahoe Reg. Planning Agency, 440 U.S. 391,
398-400 (1979). The McKenzies allegations also encompass due
process and equal protection claims actionable under § 1983. See
-5-
Executive 100, Inc. v. Martin County, 922 F.2d 1536, 1538, 1540-41
(11th Cir. 1991). The district court would have jurisdiction of
the McKenzies’ claims under 28 U.S.C. § 1343(a)(3). See Lynch v.
Household Fin. Corp., 405 U.S. 538, 544 n.7 (1972).
The City contends the McKenzies’ claims are not ripe, however.
To show their claims are ready for federal review, the McKenzies
must first show there is a sufficiently concrete case or
controversy within the meaning of Article III of the Constitution.
See Bob’s Home Serv., Inc. v. Warren County, 755 F.2d 625, 627 (8th
Cir. 1985). The City contends there is no presently justiciable
case or controversy because no taking of the privacy buffer has
occurred yet. Although the circumstances that trigger the easement
have not happened, the City’s established interest in the
McKenzies’ property implies an immediate injury: a reduction in the
value of the McKenzies’ land. See id. The conditional easement
eliminates or reduces the expectancy that potential purchasers can
develop the land, and possess and control it in perpetuity. See
id.; Hall v. City of Santa Barbara, 833 F.2d 1270, 1276 (9th Cir.
1986). Even if this cloud does not amount to a “taking” within the
meaning of the Fifth Amendment, an issue we need not decide, the
diminution in value, although small, is a concrete injury that
poses a presently justiciable question. See Bob’s Home Serv., 755
F.2d at 627.
To establish the second aspect of ripeness, the McKenzies must
show prudential considerations justify present exertion of federal
judicial power. See id. The City asserts current exercise of
federal jurisdiction is unwarranted because the City had not made
a final decision to deny zoning and building permits unless the
McKenzies surrendered the privacy buffer, and the McKenzies had not
sought compensation for the privacy buffer through available state
-6-
procedures. See Williamson County Reg. Planning Comm’n v. Hamilton
Bank, 473 U.S. 172, 186 (1985) (temporary taking by government
regulations). The McKenzies respond that the two Williamson
requirements do not apply in physical taking cases.
Although the district court cited regulatory taking cases when
voicing its concern about jurisdiction, we agree with the McKenzies
that this case involves a physical taking rather than a regulatory
one. Appropriation of a public easement across a landowner’s
property is the taking of a property interest rather than a mere
restriction on the land’s use. See Nollan v. California Coastal
Comm’n, 483 U.S. 825, 831 (1987). The City’s easement for a public
right-of-way gives rise to future physical occupation of the
McKenzies’ land. See Yee v. City of Escondido, 503 U.S. 519, 527
(1992); W.J. Jones Ins. Trust, 731 F. Supp. at 913. When the City
took the conditional easement, the McKenzies lost their right to
exclude the City from possession and use of the land should
contingencies beyond their control arise. See Hall, 833 F.2d at
1277.
A physical taking is by definition a final decision for the
purpose of satisfying Williamson’s first requirement. See Sinaloa
Lake Owners Ass’n v. City of Simi Valley, 882 F.2d 1398, 1402 (9th
Cir. 1989). Besides, the Commission’s letter to the McKenzies
shows the City had made a final decision to deny zoning requests
and building permits until the McKenzies relinquished the privacy
buffer. See Christopher Lake Dev. Co. v. St. Louis County, 35 F.3d
1269, 1274 (8th Cir. 1994). As for the second Williamson
requirement, the plaintiff must seek compensation from the state
before proceeding to federal court if adequate state procedures are
available, even in a physical taking case. See id.; see also
Littlefield v. City of Afton, 785 F.2d 596, 609 (8th Cir. 1986).
-7-
This is so because when the state provides an adequate process for
obtaining compensation, no Fifth Amendment violation occurs until
compensation is denied. See Sinaloa Lake Owners Ass’n, 882 F.2d at
1402.
The McKenzies did not pursue compensation for taking of the
privacy buffer through available state procedures. See Collier v.
City of Springdale, 733 F.2d 1311, 1316 (8th Cir. 1984). Even
though the City did not take the land through eminent domain
procedures, the McKenzies have a cause of action against the City
under Ark. Code Ann. § 18-15-410 to recover the value of property
taken in fact. See Robinson v. City of Ashdown, 783 S.W.2d 53, 56
(Ark. 1990); see also Ark. Code Ann. § 18-61-101(a) (1987) (seven-
year statute of limitations). This inverse condemnation procedure
is also available for takings by nuisance. See National By-
Products, Inc., 916 S.W.2d at 748. The McKenzies have not shown a
state inverse condemnation action would be futile, see Azul
Pacifico, Inc. v. City of Los Angeles, 948 F.2d 575, 579 (9th Cir.
1991), so the McKenzies must bring an action in the Arkansas courts
before their takings claims will be ripe for prosecution in the
federal arena.
The McKenzies reply that 42 U.S.C. § 1983 does not require
exhaustion of state remedies. The requirements that the McKenzies
obtain a final decision and attempt state compensation procedures
are not exhaustion requirements, however, but necessary predicates
to showing there has been a taking of property without just
compensation. See Estate of Himelstein v. City of Fort Wayne, 898
F.2d 573, 577 n.5 (7th Cir. 1990). We thus conclude the McKenzies’
claims that the City took the buffer through coercion and the other
land by nuisance are not ripe because the McKenzies have not sought
just compensation from the state. The McKenzies need not pursue
-8-
state procedures for a claim that the City took the privacy buffer
without a justifying public purpose, however, because this is a
Constitutional violation even if compensation is paid. See Samaad
v. City of Dallas, 940 F.2d 925, 936-37 (5th Cir. 1991).
Because the City’s decisions to deny zoning and building
permits absent surrender of the privacy buffer were final, the
McKenzies’ due process and equal protection claims based on those
decisions are ripe. See Sinaloa Lake Owners Ass’n, 882 F.2d at
1404; Executive 100, Inc., 922 F.2d at 1540-41; see also
Christopher Lake Dev. Co., 35 F.3d at 1274-75. Although most of
the claims are based on facts giving rise to the McKenzies’ takings
claims, the McKenzies need not seek relief in state court before
bringing their federal due process and equal protection claims.
See Sinaloa Lake Owners Ass’n, 882 F.2d at 1404.
In conclusion, we affirm the dismissal of the takings claims
for lack of jurisdiction because the claims are premature, but
reverse the dismissal of the due process and equal protection
claims. Because the jury rendered a general verdict, we cannot
reinstate the award with respect to the due process and equal
protection claims. We thus remand for further proceedings
consistent with this opinion.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
-9-