75 F.3d 860 (3rd Cir. 1996), 95-7273, Brown v. Francis

Docket Nº:95-7273.
Citation:75 F.3d 860
Party Name:Barry BROWN; Jolie Stahl, as they are Trustees of the Long Bay Trust v. Leo FRANCIS, as he is the Commissioner of the Department of Public Works; Delma G. Hodge, as she is the Commissioner of the Department of Property and Procurement of the Government of the Virgin Islands; Government of the Virgin Islands of the United States of America (D.C. No.
Case Date:February 07, 1996
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
 
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Page 860

75 F.3d 860 (3rd Cir. 1996)

Barry BROWN; Jolie Stahl, as they are Trustees of the Long Bay Trust

v.

Leo FRANCIS, as he is the Commissioner of the Department of

Public Works; Delma G. Hodge, as she is the Commissioner of

the Department of Property and Procurement of the Government

of the Virgin Islands; Government of the Virgin Islands of

the United States of America (D.C. No. 92-cv-00081).

GOVERNMENT OF the VIRGIN ISLANDS

v.

0.459 ACRES OF LAND CONSISTING OF FOLLOWING: PARCEL NO. 6A

ESTATE THOMAS KINGS QUARTER AND PARCEL NO. 9A

ESTATE THOMAS, VIRGIN ISLANDS; Long Bay

Trust (D.C. No. 93-cv-00059),

Leo Francis, as he is the Commissioner of the Department of

Public Works; Delma G. Hodge, as she is the Commissioner of

the Government of the Virgin Islands; Government of the

Virgin Islands of the United States of America, Appellants.

No. 95-7273.

United States Court of Appeals, Third Circuit

February 7, 1996

Argued Dec. 4, 1995.

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On Appeal from the District Court of the Virgin Islands (Division of St. Thomas and St. John) (D.C. Civil Action Nos. 92-00081 and 93-00059).

Robert W. Bornholt, Pamela Tepper (argued), Department of Justice, St. Thomas, USVI, for Appellants.

Morris M. Goldings (argued), Ellen S. Shapiro, Mahoney, Hawkes & Goldings, Boston, Massachusetts, for Appellees.

Before: GREENBERG and McKEE, Circuit Judges, and ACKERMAN, District Judge. [*]

OPINION OF THE COURT

HAROLD A. ACKERMAN, Senior District Judge.

On this appeal, we are faced with several interrelated jurisdictional issues arising out of appellant Long Bay Trust's inverse condemnation action filed in the District Court of the Virgin Islands and the Government of the Virgin Islands' ("government") parallel eminent domain action filed in the Territorial Court of the Virgin Islands. Both cases involved the same parcels of land.

First, we must determine whether the government's eminent domain case was properly removed from Territorial Court to the district court. Second, we must assess the impact, if any, of the district court's order consolidating the eminent domain and inverse condemnation cases following the removal

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from the Territorial Court, and the parties' subsequent submission of their claims to binding arbitration.

For the following reasons, we conclude that the district court did not have subject matter jurisdiction over the government's eminent domain case and that the case was therefore improperly removed to the district court. Ultimately, this lack of jurisdiction requires us to vacate the district court's order confirming the arbitration award. The eminent domain and inverse condemnation cases will be remanded to the district court with instructions to remand the eminent domain case to the territorial court. Finally, for the reasons we set forth below, the district court is to consider abstaining from deciding the inverse condemnation case.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A. Introduction

This appeal involves a dispute that arose out of the Virgin Island Government's plans to condemn a portion of privately-owned commercial property located in the Virgin Islands. Sometime prior to 1988, the government began planning to improve traffic circulation on or about Long Bay Road and Route 313 in the Virgin Islands. The project, which was to be 100% U.S. federally funded, and was known as the "Long Bay Road Highway Improvement Project" required the use of additional land. Accordingly, the Virgin Islands government commenced negotiations for the "taking" of private land that would be needed for the project.

Specifically, the government required approximately 2.64 acres of land known as Parcels No. 6 and No. 9, located in Estate Thomas, Kings Quarter, St. Thomas. The property was commercially zoned and several buildings were situated upon the land. During December 1988 or January 1989, the government commenced negotiations with the owners of the property, Millad Associates, for the acquisition of the property.

Before a deal could be ironed out with the government, Millad Associates sold the property to Jolie Stahl and Barry Brown, as co-trustees ("trustees") of the Long Bay Trust. The purchasers paid $3.25 million for both the property and the buildings situated upon the property. A deed to the property was executed by the parties on May 9, 1989, and the deed was recorded on May 31, 1989. At the time of purchase, the trustees were aware of the government's plans to "take" a portion of the property.

B. The Litigation

Three years after the trustees purchased the subject property, the trustees filed an inverse condemnation action in the District Court of the Virgin Islands against the government, alleging that the government had unreasonably delayed in taking portions of the trust property. According to the trustees, the government had deprived the trust of the highest and best value of its property by unreasonably delaying in the condemnation of Lots 6 and 9, while at the same time condemning property across the street from the two lots. The trustees contended that this sequence of events allowed a competitor to get a head-start on business, to the detriment of the trust. Moreover, the trustees alleged that they could not secure financing or tenants while the government's proposed taking was pending. 1

The government responded to the trustees' federal court action on August 13, 1992, by filing an eminent domain action, pursuant to V.I.Code Ann. tit. 28, § 411 (1957 & Supp.1994), in the Virgin Islands Territorial Court. The government alleged in its complaint that the property was worth approximately $1.2 million. Furthermore, the government submitted a Declaration of Taking and an Order Vesting Title. The order vesting title was

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signed by Judge Ive Arlington Swan on September 1, 1992.

On September 14, 1992, the trustees filed a notice of removal seeking to remove the government's territorial court eminent domain action to the District Court of the Virgin Islands. App. 10-13. The government thereafter moved to dismiss the removal petition, arguing that removal was improper because the district court did not have subject matter jurisdiction over the eminent domain claim. 2 The district court denied the motion to dismiss.

According to the court, diversity of citizenship jurisdiction supported removal of the eminent domain case to federal court. The court reasoned that complete diversity of citizenship existed between the Government of the Virgin Islands and the trustees. Furthermore, the court found that the trustees' tenants were merely nominal parties to the action whose citizenship could be disregarded for purposes of establishing diversity jurisdiction. The district court therefore found that it had subject matter jurisdiction over the government's eminent domain case and the court denied the government's motion to dismiss the removal petition.

The government renewed its jurisdictional argument in a motion for reconsideration...

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