R&J Holding Co. v. Redevelopment Auth. of the Cnty. of Montgomery

• Citation: 670 F.3d 420
• Decision Date: 09 December 2011
• Docket Number: No. 10–1047.,10–1047.
• Parties: 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.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

670 F.3d 420

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.

No. 10–1047.

United States Court of Appeals, Third Circuit.

Argued Sept. 15, 2011.Filed: Dec. 9, 2011.

Richard L. Bazelon, (Argued), Michael A. Shapiro Bazelon, Less & Feldman, Philadelphia, PA, for Appellant.

Charles L. Becker, Kline & Specter, Maria T. Guerin John F. Smith, III, (Argued), Reed Smith, Philadelphia, PA, for Appellee the Redevelopment Authority of Montgomery County.

H. Robert Fiebach, (Argued), Jennifer M. McHugh, Cozen O'Connor, Philadelphia, PA, Ronald J. Offenkrantz, Lichter, Gliedman & Offenkrantz, New York, NY, for Appellees Donald W. Pulver and Greater Conshohocken Improvement Corp.Barbara W. Mather, (Argued), Pepper Hamilton, Philadelphia, PA, for Appellee TBFA Partners, L.P.Before: SLOVITER, SMITH, and NYGAARD, Circuit Judges.

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 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.’ ” 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 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.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 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.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 Commission v. Hamilton Bank, 473 U.S. 172, 105 S.Ct. 3108, 87 L.Ed.2d 126 (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, 105 S.Ct. 3108. 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, 105 S.Ct. 3108; 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 claim on ripeness grounds. Id. (citing Williamson County, 473 U.S. at 194–95, 105 S.Ct. 3108).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, 84 S.Ct. 461, 11 L.Ed.2d 440 (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 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 ...