Lumbard v. City of Ann Arbor

• Citation: 913 F.3d 585
• Decision Date: 10 January 2019
• Docket Number: No. 18-1258,18-1258
• Parties: Lynn LUMBARD; Anita Yu; John Boyer ; Mary Raab, Plaintiffs-Appellants, v. CITY OF ANN ARBOR, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

913 F.3d 585

Lynn LUMBARD; Anita Yu; John Boyer ; Mary Raab, Plaintiffs-Appellants,

v.CITY OF ANN ARBOR, Defendant-Appellee.

No. 18-1258

United States Court of Appeals, Sixth Circuit.

Argued: December 5, 2018

Decided and Filed: January 10, 2019

Rehearing En Banc Denied February 27, 2019

ALICE BATCHELDER, Circuit Judge.

In 2000, the City of Ann Arbor passed an ordinance requiring certain homeowners to undergo structural renovations to their homes to alleviate storm water drainage problems affecting the city and surrounding areas. The City paid or reimbursed the homeowners for the renovations. In 2014, the Appellants, homeowners affected by the ordinance, pursued litigation in Michigan state courts alleging that the City's actions amounted to a taking without just compensation under the Michigan Constitution. At the outset of litigation, the Appellants filed an England Reservation in an attempt to preserve a federal takings claim for subsequent adjudication in federal court. The Appellants lost in state court and then filed suit in federal court alleging causes of action under the Fifth Amendment of the United States Constitution and under 42 U.S.C. § 1983. The federal district court dismissed the Fifth Amendment claim as issue precluded and the § 1983 action as claim precluded. We AFFIRM .

I.

The Appellants in this case are property owners in and around the City of Ann Arbor, Michigan ("City"). The houses on their properties were built between 1946 and 1973. At the time of their construction, in accordance with City regulations, the houses were outfitted with drainage piping that emptied both storm water and sanitary sewage into a single "combined sewer system." In 1973, the City modernized its sewer system by adding a separate sewer system exclusively for storm water. After the completion of the new sewer system in 1973, the City passed an ordinance requiring that any new structures be built to discharge storm water to the storm sewer system and sanitary sewage to the old combined sewer system. Existing structures were exempted from the ordinance.

The City's population continued to grow and the strain on the sewer systems came to a head in the years between 1997 and 2002. In each of those years the City experienced several tremendous rainfall events which resulted in overflows of the old combined sewer system including sewage overflow into public streets and the Huron River, and backups of sewage into City residents' basements. In early 2001, the City established a City Task Force and retained engineering consultants to study the problem and devise a solution. The City Task Force ultimately recommended a public works program that would disconnect the exempted homes in the older neighborhoods of the City from the old combined sewer system. The "Disconnect Program" would reroute the storm water drainage from selected homes to the storm sewer system, while maintaining the sanitary sewage outflow to the sanitary sewer system.

In August 2001, the City enacted Ordinance 32-01 ("Ordinance"). This Ordinance effectively repealed the 1973 exemption by declaring that all homeowners with pre-existing combined outflow drainage piping were in violation of City regulations. The Ordinance empowered the Director of the Utility Department ("Director") to select properties within the "Target Areas" ¹ to be required to undertake the sewer work required by the Disconnect Program. Owners of selected properties had 90 days to comply, after which they would be fined $100 per month of noncompliance. All selected properties were eligible for a publicly funded installation by contractors preselected by the Director or up to $3,700 in reimbursement for an installation done by private contractors selected by the property owners.

The Disconnect Program required the excavation of a three-foot-by-four-foot sump pit in the foundation of the structure, connection of an electric pump, and the installation of piping that would send the ground water and storm water from the house to the storm water sewer nearby. This project could involve jackhammering into the foundation, penetrating walls, ripping up lawns, and hanging visible piping in and around the house through which the electric pump would pump water to the outside. After installation of the system, the homeowner would be responsible for its maintenance and operation costs. The Appellants lived in the "Target Areas," were selected for the Disconnect Program, and complied with the Program's requirements between the years of 2001–2003.

In February 2014, a group of homeowners, including Anita Yu ("Yu"), filed a complaint in Michigan state court against the City, alleging violation of the Michigan Constitution for a taking without just compensation (inverse condemnation) by a physical, permanent occupation of her property for a public purpose. The City removed the case to federal district court and Yu moved to remand to state court on the basis that her federal claims were unripe pursuant to the Williamson exhaustion doctrine. See Williamson Cnty. Reg'l Planning Comm'n v. Hamilton Bank of Johnson City , 473 U.S. 172, 194, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985). The federal district court agreed and remanded the case to state court. Yu then filed a Notice of England Reservation informing the state court that she wanted to litigate only the state claims. See England v. Louisiana State Bd. of Med. Examiners , 375 U.S. 411, 415, 84 S.Ct. 461, 11 L.Ed.2d 440 (1964). After discovery, the state court granted the City's motion to dismiss, finding that Yu owned the installation from the Disconnect Program and that the "issue of ownership ... falls squarely on point" as dispositive in deciding the claim under Michigan takings law.

In October 2015, a group of similarly situated homeowners, the Lumbard plaintiffs ("Lumbard"), filed a complaint against the City in Michigan state court alleging identical state-law claims. Lumbard also attempted to preserve federal claims by filing a Notice of England Reservation with the court. The Michigan state court found that the legal issues were the same as those in the Yu case and granted the City's motion to dismiss.

In September 2016, the court consolidated the Yu and Lumbard cases for appeal in the Michigan Court of Appeals. The court found that Yu and Lumbard did not contest that they owned the installations, so the only question was whether, as a matter of law, a takings challenge for physical invasion² could occur if the homeowners owned the installations. Noting that the "[Michigan] Takings Clause is ‘substantially similar’ to its federal counterpart," the court applied Supreme Court takings caselaw, namely Loretto v. Teleprompter Manhattan CATV Corp. , 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982). Yu v. City of Ann Arbor , No. 331501, 2017 WL 1927846, 4 (Mich. Ct. App. May 9, 2017). The Michigan Court of Appeals found that "a permanent physical occupation does not occur so long as the owner can exercise the rights of ownership over the installation," and affirmed both trial court decisions. Id .

In October 2017, Yu and Lumbard filed a complaint against the City in the United States District Court for the Eastern District of Michigan alleging several "causes of action" arising under the Fifth Amendment of the United States Constitution and 42 U.S.C. § 1983. The City moved to dismiss asserting that the claims were barred by issue and claim preclusion or, in the alternative, time-barred. The district court issued an opinion and order granting the City's motion to dismiss, holding that the Fifth Amendment takings claim was barred by issue preclusion and the § 1983 claim was barred by claim preclusion.

II.

We review de novo an order dismissing for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Theile v. Michigan , 891 F.3d 240, 243 (6th Cir. 2018). While the district court succinctly and ably applied the labyrinth of federal takings caselaw in its decision to grant summary judgment, the Appellants raise several arguments that we address explicitly.

First, the Appellants argue that Williamson , supra , is a jurisdictional bar to adjudication in federal court and thus they were forced to seek remand of their action to state court. But in Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection , 560 U.S. 702, 729, 130 S.Ct. 2592, 177 L.Ed.2d 184 (2010), the Supreme Court considered two objections from the state agency, one of which was based on Williamson , for not having first "sought just compensation," and the Court dismissed the objections saying, "[n]either objection appeared in the briefs in opposition to the petition for writ of certiorari, and since neither is jurisdictional, we deem both waived." Id . The Court has also held that "[n]onjurisdictional defects of this sort should be brought to our attention no later than in respondent's brief in opposition to the petition for certiorari; if not, we consider it within our discretion to deem the defect waived." Oklahoma City v. Tuttle , 471 U.S. 808, 815–816, 105 S.Ct. 2427, 85 L.Ed.2d 791 (1985). The Appellants urge that because Stop the Beach began in federal court, and thus was never removed, it does not apply to cases such as theirs which were initially removed to federal court. We disagree. The procedural posture of removal and remand neither strips nor grants subject-matter jurisdiction. Indeed, this court has already affirmed that the exhaustion requirement of Williamson is waivable, see Lilly Inv. v. City of Rochester , 674 F. App'x 523, 531 (6th Cir. 2017),³ as have our sister circuits in the years since Stop the Beach . See Sansotta v. Town of Nags Head , 724 F.3d 533, 544 (4th Cir. 2013) ; Sherman v. Town of Chester , 752 F.3d 554, 564 (2d Cir. 2014). Because Williamson is a waivable defense for state defendants, and it was the City that removed this case to federal court, the Appellants could have litigated their claims in federal court. By moving to...