Vulcan Materials Co. v. City of Tehuacana

• Decision Date: 23 January 2001
• Docket Number: No. 99-51013,99-51013
• Parties: (5th Cir. 2001) VULCAN MATERIALS COMPANY, Plaintiff-Appellant, v. THE CITY OF TEHUACANA, Defendant-Appellee
• Court: U.S. Court of Appeals — Fifth Circuit

Page 382

238 F.3d 382 (5th Cir. 2001)

VULCAN MATERIALS COMPANY, Plaintiff-Appellant, v. THE CITY OF TEHUACANA, Defendant-Appellee.

No. 99-51013

IN THE UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT

January 23, 2001

REVISED, JANUARY 24, 2001

[Copyrighted Material Omitted] Appeal from the United States District Court for the Western District of Texas.

Before GARWOOD, HIGGINBOTHAM and STEWART, Circuit Judges.

GARWOOD, Circuit Judge:

Plaintiff-Appellant Vulcan Materials Company ("Vulcan"), a New Jersey corporation with its principal place of business in Birmingham, Alabama, brought this action against Defendant-Appellee the City of Tehuacana ("the City"), a municipality in Limestone County, Texas, alleging that a 1998 ordinance passed by the City Council forbidding certain quarrying or mining activities violates Vulcan's rights under both the United States and Texas Constitutions. Vulcan appeals the district court's refusal to exercise jurisdiction over its state constitutional and federal declaratory judgment claims as well as the dismissal of its federal substantive due process and equal protection claims. We affirm in part and reverse and remand in part.

Facts and Proceedings Below

In October 1997, Vulcan leased the single limestone quarry that is the subject of this action. The quarry consists of mining areas, reserves, and processing facilities. Part of the quarry lies within the Tehuacana city limits. Vulcan claims it made a substantial investment in acquiring the right to operate the quarry, reasonably expecting to mine the entire quarry, including that part within the City limits. On December 8, 1998, the City adopted an ordinance¹ that prohibits Vulcan from conducting certain mining or quarrying operations within the City limits.

On December 15, 1998, Vulcan brought this action against the City, seeking a declaratory judgment pursuant to 28 U.S.C. § 2201, injunctive relief pursuant to 28 U.S.C. § 2202 and 42 U.S.C. § 1983, and damages pursuant to 42 U.S.C. § 1983. Specifically, Vulcan asserted a federal takings claim, a state inverse-condemnation (takings) claim, and state and federal substantive due process, procedural due process, and equal protection claims. Vulcan also sought a declaratory judgment that a 1981 ordinance of the City forbidding the mining of minerals does not apply to its activities. Jurisdiction over the federal claims was predicated upon 28 U.S.C. § 1331, while jurisdiction over the state claims was based upon 28 U.S.C. § 1367 and, alternatively, 28 U.S.C. § 1332.

The City filed a motion to dismiss Vulcan's complaint for want of subject matter jurisdiction and for failure to state a claim upon which relief can be granted under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). On August 20, 1999, the district court dismissed Vulcan's federal takings claim as not ripe for adjudication under Rule 12(b)(1) and Vulcan's remaining federal constitutional claims under Rule 12(b)(6). The district court also declined to exercise jurisdiction over Vulcan's state constitutional claims and its federal declaratory judgment claim regarding the 1981 ordinance.

Vulcan now appeals the district court's refusal to exercise jurisdiction over its state constitutional and federal declaratory judgment claims as well as the dismissal of its federal substantive due process and equal protection claims. Vulcan does not appeal the dismissal of its federal takings claim or its federal procedural due process claim.

Discussion

I. Inverse-Condemnation

The district court refused to exercise diversity jurisdiction over Vulcan's Texas law inverse-condemnation claim, reasoning that our decision in Samaad v. City of Dallas, 940 F.2d 925 (5th Cir. 1991) prevents the exercise of diversity jurisdiction over state takings claims. In Samaad jurisdiction was based entirely on sections 1331 and 1367; no diversity jurisdiction was present or asserted.

The Samaad plaintiffs claimed that grand prix automobile racing in a public park owned by the City of Dallas was so disruptive that it effected a taking of their property without just compensation. Id. at 928. The Samaad district court granted defendants' motion for summary judgment as to the federal takings claim and dismissed the state law inverse-condemnation claim, asserted under section 1367, without prejudice. Id. The Samaad plaintiffs appealed the summary judgment order but apparently did not appeal the dismissal of the state takings claim. Id. We held that the district court lacked jurisdiction to hear the federal takings claim because that claim was not ripe for adjudication. Id. at 934-35.

The Supreme Court established in Williamson County Reg'l Planning Comm'n v. Hamilton Bank of Johnson City, 105 S.Ct. 3108, 3119 (1985), that a federal takings claim does not ripen until just compensation is denied. Therefore, for a federal takings claim to become ripe, the plaintiff is required to seek compensation through the procedures the state has provided unless those procedures are unavailable or inadequate. Id. at 3120-22. The Samaad plaintiffs argued that this requirement could be satisfied by simultaneously bringing federal and state law takings claims, with the district court resolving the state claim first. Samaad, 940 F.2d at 934. We held that: 1) Williamson County could not be satisfied by simultaneously bringing federal and state takings claims; and 2) there could be no section 1367 supplemental jurisdiction over the state law claim since the federal claim that provided the sole basis of supplemental jurisdiction was not ripe. Id.

We do not think Samaad prevents district courts from exercising diversity jurisdiction over state takings claims. Samaad was not a diversity case. Samaad apparently involved an appeal only of the district court's disposition of the federal takings claim. In contrast, Vulcan appeals only the dismissal of its state law inverse-condemnation claim. Samaad only stands for the proposition that the Williamson County ripeness requirement for a federal takings claim is not satisfied by simultaneously bringing a state law takings claim. Vulcan's position on appeal is not that it is entitled to ripen a federal takings claim by simultaneously bringing a state law takings claim. It does not appeal the dismissal of the federal takings claim. Vulcan only asks that the same rules of diversity jurisdiction apply to its state law inverse-condemnation claim as apply to any other state law claim a plaintiff might bring in diversity.² If diversity is lacking, the second Samaad reason precludes the district court from hearing the state takings claim-but that is not the case here for diversity is present. We hold that a plaintiff may bring a state law takings claim in federal district court if the traditional requirements for diversity jurisdiction are fulfilled.

This holding is consistent with Searl v. School-Dist. No. 2, in Lake Co., Colorado, 8 S.Ct. 460 (1888), in which the defendant property owner was allowed to remove after a school district sued under Colorado law to condemn his property for public use. We also recognize our agreement with the Tenth Circuit, which has held that a plaintiff may bring a state law takings claim in diversity, though apparently may not use that claim to ripen a federal takings claim brought in the same proceeding. SK Finance SA v. La Plata County, Board of County Commissioners, 126 F.3d 1272, 1276 (10th Cir. 1997). In reaching this conclusion, the Tenth Circuit misconstrued our decision in Samaad as requiring that state law takings claims be brought only in state court. As we have explained, the first reason in Samaad only forbids a plaintiff from ripening a federal takings claim by simultaneously bringing a state takings claim. We so note only because the Tenth Circuit's misconstruction was relied upon by the district court in refusing to exercise jurisdiction over Vulcan's Texas law inverse-condemnation claim.

The City argues that to allow a district court to hear a state takings claim in diversity is to risk the danger of a district court reviewing its own decision regarding the state claim to determine if that decision denied the plaintiff just compensation. We think that this would almost never be a problem. Assume that, to prevent res judicata from impairing its rights, a plaintiff in diversity pleads both state and federal law takings claims. The district court, properly following Samaad, dismisses the federal takings claim. Then, following our holding today, proceeds to try the state law takings claim. If the plaintiff wins, no difficulty is presented because, under the doctrine of collateral estoppel, the issue of damages may not be relitigated. If the state remedy is inadequate, Williamson County and Samaad allow the plaintiff to bring the federal law takings claim without first bringing the state claim. If the plaintiff loses, the doctrine of collateral estoppel prevents relitigation of any issues determined in the first proceeding. It would only be in the rarest of cases wherein the denial of compensation was due to some issue peculiar to state law that there could ever be a second trial.³ This faint possibility is not enough to justify departure from the normal rules governing federal diversity jurisdiction over state law claims. See supra note 2.

Finally, it appears that under Texas law Vulcan's inverse-condemnation claim is ripe for adjudication. Trail Enterprises, Inc. v. City of Houston, 957 S.W.2d 625, 631-32 (1997).⁴ Accordingly, we find that the district court erred when it dismissed Vulcan's state law inverse-condemnation claim.

II. Federal Substantive Due Process

Vulcan's complaint alleges the City violated its rights under the Due Process Clause of the Fourteenth Amendment in that the 1998 ordinance is arbitrary and unreasonable and that the means employed by the ordinance lack a real and substantial relation to the goal the City seeks to achieve. The district court dismissed...