Pascoag Reservoir & Dam, LLC v. Rhode Island

• Decision Date: 28 July 2003
• Docket Number: No. 02-2233.,No. 02-2179.,02-2179.,02-2233.
• Citation: 337 F.3d 87
• Parties: PASCOAG RESERVOIR & DAM, LLC, Plaintiff-Appellant/Cross-Appellee, v. The State of RHODE ISLAND, acting by and through Jan Reitsma, in his capacity as Director of the Rhode Island Department of Environmental Management, and Sheldon Whitehouse, in his capacity as Attorney General for the State of Rhode Island, Defendants-Appellees/Cross-Appellants.
• Court: U.S. Court of Appeals — First Circuit

337 F.3d 87

PASCOAG RESERVOIR & DAM, LLC, Plaintiff-Appellant/Cross-Appellee, v. The State of RHODE ISLAND, acting by and through Jan Reitsma, in his capacity as Director of the Rhode Island Department of Environmental Management, and Sheldon Whitehouse, in his capacity as Attorney General for the State of Rhode Island, Defendants-Appellees/Cross-Appellants.

No. 02-2179.

No. 02-2233.

United States Court of Appeals, First Circuit.

Heard April 11, 2003.

Decided July 28, 2003.

COPYRIGHT MATERIAL OMITTED

Barry J. Kusinitz, for plaintiff-appellant/cross-appellee.

Michael Rubin, Assistant Attorney General, with whom Sheldon Whitehouse, Attorney General, James R. Lee, Assistant Attorney General Div. Chief for the State of Rhode Island, Claire Richards, Deputy Executive Counsel, and Mary Kay, Deputy Chief Legal Counsel, for the Rhode Island Department of Environmental Management, were on brief, for defendants-appellees/cross-appellants.

Before BOUDIN, Chief Judge, TORRUELLA and LIPEZ, Circuit Judges.

TORRUELLA, Circuit Judge.

Rhode Island, through its Department of Environmental Management, acquired an area of land in the Pascoag Reservoir ("Reservoir" or "Lake") by adverse possession and obtained a prescriptive easement on behalf of the public to use the Reservoir for recreational activities. In this inverse condemnation suit,¹ Pascoag Reservoir & Dam, LLC ("Pascoag"), the Reservoir's owner, seeks compensation for that acquisition.

The district court dismissed the case for failure to state a claim. Pascoag Reservoir & Dam, LLC v. Rhode Island, 217 F.Supp.2d 206, 229 (D.R.I.2002) (hereinafter "Pascoag Federal Decision"). The court found that, as a general rule, the government must compensate for a taking made by adverse possession or prescription, but Pascoag may not recover in this case either because the statute of limitations began to run in 1975, when the state acquired its property rights, or because the doctrine of laches bars recovery. Id. at 226-29. The court then dismissed Pascoag's state law claims. Id. at 229.

The state appeals the first finding, asserting that adverse possession and prescription do not constitute a taking of property under the Constitution. Pascoag appeals the dismissal of its claim, arguing that the statute of limitations did not begin to run until the recent judicial determination that the state had acquired property rights in the Reservoir.

We agree with the district court that Pascoag failed to state a viable claim. Because Pascoag failed to timely pursue its state remedies, it forfeited its federal claim. Following the "fundamental rule of judicial restraint," we do not reach the constitutional question of whether compensation is due when the state acquires land by adverse possession or prescription. Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 62, 119 S.Ct. 977, 143 L.Ed.2d 130 (1999) (Ginsburg, J., concurring in part and concurring in the judgment) (quotation omitted); see also Kelly v. Marcantonio, 187 F.3d 192, 197 (1st Cir.1999) (declaring "courts should not reach constitutional questions in advance of the necessity of deciding them").

I. Facts

Located in the towns of Burrillville and Glocester, Rhode Island, the Reservoir (also known as Echo Lake) is more than two miles long and has more than ten miles of shoreline. Pascoag's predecessor in title created the Lake in 1860; Pascoag has owned the Reservoir since 1983. In 1964, the state purchased a lot abutting the Reservoir and constructed a public boat ramp the following year.

Until at least 1997, "members of the public could ... use the ramp as a point of access to the lake for various recreational activities, including boating and fishing." Reitsma v. Pascoag Reservoir & Dam, LLC, 774 A.2d 826, 829 (R.I.2001) (hereinafter "Pascoag State Decision"). The Reservoir was enjoyed by "innumerable members of the public and other lakeside property owners." Id. In 1997, Pascoag sought to limit the public's use by placing a "NO TRESPASSING" sign near the water. Id.

In 1998, the state brought suit in state court asserting, among other things, that it had acquired property rights in the Reservoir. Pascoag cross-claimed, alleging that the state's actions constituted a taking without just compensation, but the state courts did not decide the taking issue because Pascoag later voluntarily dismissed its inverse condemnation claim. In 2001, the Rhode Island Supreme Court held that the state had acquired by adverse possession a small portion of the Lake bottom (occupied by the boat ramp) and had acquired, on the public's behalf, a prescriptive easement to use the boat ramp to access the entire Lake for recreational purposes. Id. at 834. The court held "that the state had begun to use the Reservoir property in 1965 and, under the Rhode Island ten year adverse possession statute, had acquired title to a portion of the Reservoir plus an easement in 1975." Pascoag Federal Decision, 217 F.Supp.2d at 211 (citing Pascoag State Decision, 774 A.2d at 838). The issue in the state case was whether the state acquired land rights by adverse possession and prescription; the Rhode Island Supreme Court held that it did. Pascoag State Decision, 774 A.2d at 834.

Pascoag filed this complaint in federal court in October 2001, alleging that the state violated the Takings Clause of the Fifth and Fourteenth Amendments and asserting related state law claims. The district court, treating the claim as one arising under 42 U.S.C. § 1983, dismissed the suit, and this appeal followed.

II. Standard of Review

We review de novo the district court's dismissal for failure to state a claim under Fed.R.Civ.P. 12(b)(6). Rockwell v. Cape Cod Hosp., 26 F.3d 254, 255 (1st Cir.1994). We accept the complaint's allegations as true and make all reasonable inferences in favor of the plaintiff. Id. We will affirm the dismissal only if Pascoag cannot prove any facts entitling it to relief. Id.

III. Discussion

A. Prerequisites to a Takings Claim

In Williamson County Regional Planning Commission v. Hamilton Bank, the Supreme Court outlined two prerequisites to a federal suit alleging a Fifth Amendment taking of a property interest. 473 U.S. 172, 186, 194-95, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985). A federal suit is not timely until a plaintiff demonstrates that (a) "the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue," (the "final decision requirement") and (b) the plaintiff sought (and was denied) just compensation by means of an adequate state procedure (the "state action requirement").² Id. at 186, 194-95, 105 S.Ct. 3108. Williamson County stands "for the proposition that there is no uncompensated taking — that is, nothing to litigate under § 1983 — until the state has established (a) what it has taken, and (b) its refusal to pay `just compensation.'" SGB Fin. Servs., Inc. v. Consol. City of Indianapolis-Marion County, Ind., 235 F.3d 1036, 1038 (7th Cir.2000).

Although Williamson County was a regulatory taking case, a modified verison of its timeliness analysis applies to physical taking cases. Daniel v. County of Santa Barbara, 288 F.3d 375, 382 (9th Cir.2002). The present case concerns a potential physical taking, based on the intrusion onto Pascoag's property or the acquisition of rights in that property.³ In a physical taking case, the final decision requirement is relieved or assumed because "[w]here there has been a physical invasion, the taking occurs at once, and nothing the [governmental actor] can do or say after that point will change that fact." Hall v. City of Santa Barbara, 833 F.2d 1270, 1281 n. 28 (9th Cir.1987); cf. Arnett v. Myers, 281 F.3d 552, 563 (6th Cir.2002) (finding final decision requirement satisfied because decision maker "arrived at a definitive position inflicting an actual, concrete injury when its agents removed and destroyed" plaintiff's alleged property); Forseth v. Village of Sussex, 199 F.3d 363, 372 n. 12 (7th Cir.2000) (finding physical taking claim subject only to Williamson County's state action requirement). However, the state action requirement remains in physical taking cases: "[C]ompensation must first be sought from the state if adequate procedures are available." Sinaloa Lake Owners Ass'n v. City of Simi Valley, 882 F.2d 1398, 1402 (9th Cir.1989), overruled on other grounds by Armendariz v. Penman, 75 F.3d 1311, 1326 (9th Cir.1996) (en banc).

B. State Action Requirement

Here, if Rhode Island "provides an adequate process for obtaining compensation, and resort to that process holds out some realistic promise of yielding just compensation," Pascoag may not seek compensation in federal court for an alleged taking without first resorting to the state process. Gilbert v. City of Cambridge, 932 F.2d 51, 63 (1st Cir.1991); accord Williamson County, 473 U.S. at 195, 105 S.Ct. 3108 ("[I]f 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."). "`[B]ecause the Fifth Amendment<sup>4</sup> proscribes takings without just compensation, no constitutional violation occurs until just compensation has been denied.'" Gilbert, 932 F.2d at 63 (quoting Williamson County, 473 U.S. at 194 n. 13, 105 S.Ct. 3108); accord Gamble v. Eau Claire County, 5 F.3d 285, 286 (7th Cir.1993) (stating that a litigant must "exhaust[] his remedies for obtaining a compensation award or equivalent relief from the state" because "the right protected by the duty of just compensation is not to the land or its use but merely to the market value of what is taken"). Thus, "the state's action ... is not `complete' until the state fails to provide adequate compensation for the taking." Williamson County, 473 U.S. at 195, 105 S.Ct. 3108.

Pascoag did not seek compensation through the state court. Pascoag's...