Laurel Sand & Gravel, Inc. v. Wilson

• Decision Date: 05 March 2008
• Docket Number: No. 07-1046.,07-1046.
• Citation: 519 F.3d 156
• Parties: LAUREL SAND & GRAVEL, INCORPORATED, Plaintiff-Appellant, v. Shari T. WILSON, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

519 F.3d 156

LAUREL SAND & GRAVEL, INCORPORATED, Plaintiff-Appellant, v. Shari T. WILSON, Defendant-Appellee.

No. 07-1046.

United States Court of Appeals, Fourth Circuit.

Argued: December 4, 2007.

Decided: March 5, 2008.

ARGUED: Mark John Hardcastle, Rockville, Maryland, for Appellant. Adam Dean Snyder, Assistant Attorney General, Office of the Attorney General of Maryland,

Baltimore, Maryland, for Appellee. ON BRIEF: Terry B. Blair, Baltimore, Maryland, for Appellant. Douglas F. Gansler, Attorney General, Baltimore, Maryland, for Appellee.

Before NIEMEYER and GREGORY, Circuit Judges, and JAMES P. JONES, Chief United States District Judge for the Western District of Virginia, sitting by designation.

Affirmed by published opinion. Judge GREGORY wrote the opinion, in which Judge NIEMEYER and Judge JONES joined.

OPINION

GREGORY, Circuit Judge:

Laurel Sand & Gravel, Inc., a mining corporation, appeals from the district court's dismissal of its claims on the basis of res judicata and abstention. Since Laurel raised and adjudicated the same claims in a state court proceeding and failed to exhaust its administrative remedies before filing suit in federal court, we affirm the district court's decision.

I.

In 1991, the Maryland General Assembly enacted the Surface Mine Dewatering Act ("Dewatering Act") to protect property owners in counties where karst terrain¹ is located from the dewatering of surface mines. The Dewatering Act established zones of dewatering influence for all mines and imposed remedial measures on a miner if a well within the zone of influence failed due to declining ground water or if damage was caused by subsidence. Md. Envir. Code § 15-812(a). Specifically, the Dewatering Act provides that a licensed miner within the zone of influence must:

(1) Replace, at no expense to the owner of real property that is affected by the surface mine dewatering, a water supply that fails as a result of declining ground water levels; and (2) upon a determination by the Department of proximate cause after the permittee has received proper notice and an opportunity to respond and provide information, pay monetary compensation to the affected property owner or repair any damage caused as a result of the sudden subsidence of the surface of the land.

Md. Envir. Code § 15-813(c). However, the Maryland Department of Environment ("MDE") may not require a licensed miner to replace water supplies if the miner demonstrates to the MDE by clear and convincing evidence that pit dewatering is not the proximate cause of the loss water supply. Id. § 15-813(f). The MDE must also provide the licensed miner the opportunity for a contested hearing. Id. § 15-813(g).

The day after the Dewatering Act became law, Laurel Sand & Gravel, Inc. ("Laurel"), a Maryland corporation, engaged in the business of mining limestone and other aggregates in Maryland and West Virginia, along with nine other licensed miners, formed the Maryland Aggregates Association and challenged the constitutionality of the Dewatering Act. In Maryland Aggregates, Inc. v. State of Maryland, 337 Md. 658, 655 A.2d 886 (1995), Laurel facially attacked the constitutionality of the Dewatering Act. Laurel contended that the Dewatering Act's statutory procedures for resolving claims were constitutionally deficient and that the contested case hearing process violated procedural due process. The Maryland Court of Appeals rejected Laurel's constitutional claims and dismissed the case.

In February 2002, eleven years after the law's enactment, the MDE notified Laurel that a shallow residential well in its zone of influence was dry due to declining ground water. The well belonged to David Thomas ("Thomas well"). MDE informed Laurel that, under the Dewatering Act, it was required to replace the well or lose its mining license for noncompliance. Laurel replaced the well at a cost of $3,000 and initiated a contested case hearing.

At a hearing before an administrative law judge ("ALJ"), Laurel argued that a recent severe drought — not its dewatering operations — was the proximate cause of the Thomas well's failure. In addition, Laurel argued that Maryland Aggregates violated federal constitutional law. (J.A. 33.) The ALJ found that because Laurel failed to prove by clear and convincing evidence that it was not the proximate cause of water supply loss to the Thomas well, it had violated the Dewatering Act. Laurel filed exceptions to the ALJ's proposed decision. However, the MDE's Final Decision Maker adopted the ALJ's findings and conclusions. Laurel did not seek judicial review of the final decision in the Maryland state courts.

In lieu of seeking judicial review of the administrative decision, a year later, Laurel filed suit in federal district court against Maryland's Secretary of the Environment, Shari T. Wilson, arguing that the Dewatering Act violates the Due Process and Takings Clause of the United States Constitution. The district court dismissed Laurel's action on the grounds that: (1) res judicata precluded Laurel from raising the same claims litigated in Maryland Aggregates; (2) Laurel lacked a property interest to sustain a due process and takings claim under the Constitution; and (3) Younger abstention applied.

II.

We review a district court's decision to grant a motion to dismiss pursuant to Rule 12(b)(6) de novo. Brooks v. City of Winston-Salem, 85 F.3d 178, 181 (4th Cir. 1996). A district court's decision to abstain under Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), however, is reviewed for abuse of discretion. Nivens v. Gilchrist, 319 F.3d 151, 153 (4th Cir.2003).

III.

A. Res Judicata

Laurel challenges the constitutionality of the Dewatering Act arguing that § 15-813(c) improperly requires it to immediately replace another's dry well in an established zone of influence. Since this process occurs without a pre-deprivation hearing, Laurel argues that the Dewatering Act violates its procedural due process rights under the Fifth and Fourteenth Amendments of the Constitution. In addition, Laurel contends that the Dewatering Act enforces strict liability by improperly shifting the burden of proof to the miner and that the $3,000 expended in replacing the Thomas well constitutes an unconstitutional taking. Laurel seeks a declaratory judgment, injunctive relief, and damages under 42 U.S.C. § 1983. The district court held that because these claims were litigated in Maryland Aggregates, res judicata and collateral estoppel precluded Laurel from raising them again.

Res judicata, also known as claim preclusion, bars a party from relitigating a claim that was decided or could have been decided in an original suit. Pueschel v. United States, 369 F.3d 345, 355 (4th Cir. 2004). The doctrine was designed to protect "litigants from the burden of relitigating an identical issue with the same party or his privy and [to promote] judicial economy by preventing needless litigation." Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979). Generally, the preclusive effect of a judgment rendered in state court is determined by the law of the state in which the judgment was rendered. Under Maryland law, the elements of res judicata are: (1) that the parties in the present litigation are the same or in privity with the parties in the earlier dispute; (2) that the claim presented in the current action is identical to the one determined in the prior adjudication; and (3) that there has been a final judgment on the merits. Anne Arundel County Bd. of Educ. v. Norville, 390 Md. 93, 887 A.2d 1029, 1037 (2005) (citing Colandrea v. Wilde Lake Comm. Ass'n., 361 Md. 371, 761 A.2d 899, 910 (2000)).

Laurel argues that res judicata is inapplicable because an as-applied challenge to the Dewatering Act's constitutionality is a different claim than the facial challenge raised in Maryland Aggregates. The MDE argues that the claims are not different and were raised in Maryland Aggregates. Because it is undisputed that this case involves the same parties and a final judgment on the merits was rendered in Maryland Aggregates, the only issue is whether the two causes of action are the same for purposes of res judicata.

The test for deciding "whether the causes of action are identical for claim preclusion purposes is whether the claim presented in the new litigation `arises out of the same transaction or series of transactions as the claim resolved by the prior judgment.'" Pittston Co. v. United States, 199 F.3d 694, 704 (4th Cir.1999)(quoting Harnett v. Billman, 800 F.2d 1308, 1313 (4th Cir.1986)). "Newly articulated claims based on the same [transactional] nucleus of facts may still be subject to a res judicata finding if the claims could have been brought in the earlier action." Tahoe Sierra Pres. Council, Inc. v. Tahoe Regional Planning Agency, 322 F.3d 1064, 1078 (9th Cir.2003).

To determine whether res judicata applies, we must compare the allegations set forth in Maryland Aggregates with the allegations set forth in Laurel's Amended Complaint. In Maryland Aggregates, Laurel sought a declaratory judgment holding the Dewatering Act unconstitutional on a number of grounds and an injunction against the enforcement and implementation of the Dewatering Act. Specifically, Laurel argued: (1) the Dewatering Act violated its right to substantive due process because there was no rational basis for the legislation; (2) the statute denied equal protection of the law to resident counties unaffected by the Dewatering Act; (3) the Dewatering Act interfered with the mine operators' constitutional rights to a jury trial; (4) the Dewatering Act deprived them of property without just compensation; and (5) that the statutory procedures for establishing zones of dewatering influence and for resolving claims under the Dewatering Act were constitutionally deficient.

Laurel maintains that it was denied due process by not receiving a pre-deprivation hearing...