McCarthy v. City of Cleveland

• Decision Date: 09 November 2010
• Docket Number: No. 09-4149,09-4149
• Citation: 626 F.3d 280
• Parties: Daniel McCARTHY; Colleen Carroll, Individually and on behalf of all others similarly situated, Plaintiffs-Appellants, v. CITY OF CLEVELAND, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

626 F.3d 280

Daniel McCARTHY; Colleen Carroll, Individually and on behalf of all others similarly situated, Plaintiffs-Appellants,

v.CITY OF CLEVELAND, Defendant-Appellee.

No. 09-4149.

United States Court of Appeals, Sixth Circuit.

Argued: Aug. 4, 2010.

Decided and Filed: Nov. 9, 2010.

ARGUED: Thomas A. Muzilla, The Muzilla Law Firm, LLC, Cleveland, Ohio, for Appellants. Gary Scott Singletary, City of Cleveland, Department of Law, Cleveland, Ohio, for Appellee. ON BRIEF: Thomas A. Muzilla, The Muzilla Law Firm, LLC, Cleveland, Ohio, for Appellants. Michael F. Cosgrove, Jennifer Meyer, City of Cleveland, Department of Law, Cleveland, Ohio, for Appellee.

Before: COLE and McKEAGUE, Circuit Judges; MAYS, District Judge.^*

MAYS, D.J., delivered the opinion of the court, in which COLE, J., joined. McKEAGUE, J. (pp. 287-89), delivered a separate concurring opinion.

OPINION

SAMUEL H. MAYS, JR., District Judge.

Plaintiffs Daniel McCarthy and Colleen Carroll appeal the judgment of the district court dismissing their action brought under 42 U.S.C. § 1983. Plaintiffs allege that the City of Cleveland's decision to enforce its traffic camera ordinance against drivers who lease their cars constituted an unconstitutional taking of private property without just compensation because the ordinance originally did not provide for lessee liability. The district court disagreed and dismissed their suit after concluding that their Amended Complaint failed to state a cause of action under the Takings Clause of either the United States or Ohio Constitution. Because Cleveland's enforcement of its traffic regulations did not result in the seizure of a specific fund of money, we hold that no taking of property occurred under the Fifth Amendment and thus AFFIRM the judgment of the district court on the federal question. We find, however, that the district court did not properly address Plaintiffs' state law claims. We REVERSE and REMAND the judgment of the district court on the remaining issues of Ohio law.

I.

Plaintiffs are residents of Cuyahoga County, Ohio, which encompasses the city of Cleveland. On February 23, 2009, McCarthy received a notice from Cleveland's Parking Violations Bureau stating that one of its automatic traffic enforcement cameras had captured him committing a traffic offense. McCarthy received a second notice stating that he had committed another traffic offense on March 3, 2009. Carroll received two notices stating that automatic cameras had captured her violating Cleveland's traffic ordinances on March 8 and August 15, 2007. Both McCarthy and Carroll leased their vehicles. Thus, they were not the registered owners of their respective automobiles. Plaintiffs chose not to contest the citations and paid the $100 fine on each ticket.

Cleveland Codified Ordinance ("CCO") 413.031 authorizes the Parking Violations Bureau to install automatic enforcement cameras to photograph motorists who run red lights or speed through designated locations. The ordinance, as originally enacted, provided that "[t]he owner of a vehicle shall be liable for the penalty imposed under this section." CCO 413.031(c) (2007). It defined "owner" as "the person or entity identified by the Ohio Bureau of Motor Vehicles ... as the registered owner of the vehicle." CCO 413.031(p)(3) (2007). Because McCarthy and Carroll leased their vehicles, they were not listed as registered owners on the records of the Ohio Bureau of Motor Vehicles. Under the plain text of Cleveland's ordinance, Plaintiffs were not liable for the tickets. See CCO 413.031(p)(3) (2007). The Ohio Court of Appeals accepted this reasoning when Dickson & Campbell, LLC, a law firm that also leased its company vehicles but that is not a party to the present suit, chose to contest the citations it received. See Dickson & Campbell, LLC v. City of Cleveland, 181 Ohio App.3d 238, 908 N.E.2d 964, 970 (2009). The Ohio Court of Appeals' ruling effectively immunized lessees from enforcement of Cleveland's automatic traffic camera ordinance. Id. Cleveland has since amended its ordinance to correct the omission so that lessees are now liable for their traffic camera violations. See CCO 413.031(p)(4) (2010) (providing that the "registered owner of a vehicle, or in the case of a leased or rented vehicle, the 'lessee,' " is liable for the ticket).

Plaintiffs filed suit in the Court of Common Pleas of Cuyahoga County, Ohio, on May 29, 2009, alleging that Cleveland's enforcement of the original traffic camera enforcement ordinance against lessees violated the Takings Clause of the United States and Ohio Constitutions. See U.S. Const. amend. V; Ohio Const. Art. I, § 19. Plaintiffs also sought mandamus and other equitable relief under Ohio law to force Cleveland to disgorge the wrongly collected fines as just compensation for the alleged takings. Cleveland removed the action to federal court based on federal question jurisdiction. See 28 U.S.C. §§ 1331, 1441(b). Following briefing, the district court granted Cleveland's Motion to Dismiss. McCarthy v. City of Cleveland, No. 1:09-CV-1298, 2009 WL 2424296, at *1, 2009 U.S. Dist. LEXIS 68651, at *3 (N.D.Ohio Aug.6, 2009). The district court found that Plaintiffs failed to allege that a taking had occurred because Plaintiffs voluntarily paid the fines without contesting them using the appeal procedure noted on the citations. Id. at *4, 2009 U.S. Dist. LEXIS 68651, at *11. Plaintiffs timely filed their notice of appeal.

II.

Plaintiffs argue that Cleveland's enforcement of the automatic traffic camera ordinance against lessees deprived them of their property without just compensation in violation of the Takings Clause of the Fifth Amendment. ¹ Plaintiffs assert that Cleveland's actions effected a per se taking and that their decision to pay the fines without contesting them did not amount to a voluntary payment that would deprive them of their right to challenge Cleveland's action. (Appellants' Br. at 15-19.) They argue that they had "no meaningful choice" but to pay the citations. ( Id. at 19.)

We review a district court's dismissal of a complaint de novo. Delay v. Rosenthal Collins Group, LLC, 585 F.3d 1003, 1005 (6th Cir.2009). In so doing, "we accept as true all non-conclusory allegations in the complaint and determine whether they state a plausible claim for relief." Id. (citing Ashcroft v. Iqbal, --- U.S. ----, 129 S.Ct. 1937, 1949-50, 173 L.Ed.2d 868 (2009)).

A.

The Fifth Amendment provides, in pertinent part, that private property shall not "be taken for public use, without just compensation." U.S. Const. amend. V; see also Chicago Burlington & Quincy R.R. Co. v. Chicago, 166 U.S. 226, 239, 17 S.Ct. 581, 41 L.Ed. 979 (1897) (holding that the Takings Clause applies to the states). Because Cleveland has not returned Plaintiffs' fines or provided any other compensation, the question before the court is whether Cleveland's actions constitute a taking. See Webb's Fabulous Pharms., Inc. v. Beckwith, 449 U.S. 155, 160, 101 S.Ct. 446, 66 L.Ed.2d 358 (1980). A taking may assume one of two forms: per se, also known as a physical taking, or regulatory. Waste Mgmt., Inc. of Tenn. v. Metro. Gov't of Nashville and Davidson County, 130 F.3d 731, 737 (6th Cir.1997). A physical taking occurs when "the government physically intrudes upon a plaintiff's property." Id. A regulatory taking occurs when a governmental enactment leaves a property owner with " no productive or economically beneficial use" of his property, Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1017, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992) (emphasis in original), or prevents the property owner from enjoying "some—but not all—economic uses." Harris v. City of St. Clairsville, 330 Fed.Appx. 68, 76 (6th Cir.2008). Plaintiffs assert that Cleveland's enforcement of its original traffic camera ordinance is a per se taking. (Appellants' Br. at 12.)

The Supreme Court has held that certain statutes can effect a per se taking of funds. In Webb's Fabulous Pharmacies, 449 U.S. at 163-64, 101 S.Ct. 446, the Court found that a Florida statute allowing county court clerks to keep all interest earned on funds paid into court in interpleader actions effected a taking without just compensation. See Fla. Stat. § 28.33 (1977). The seizure of the interest earned was unrelated to any service provided by the Florida court system because a separate statute specified a percentage fee that the court clerk would receive to cover his expenses. Webb's Fabulous Pharms., 449 U.S. at 157 n. 3, 101 S.Ct. 446. (citing Fla. Stat. § 28.24 (1977)). The Supreme Court held that the Florida statute allowed the "State, by ipse dixit, [to] transform private property into public property without compensation" and invalidated the provision. Id. at 164, 101 S.Ct. 446.

More recently, the Supreme Court has held that state programs requiring that the interest earned by lawyers' trust accounts be turned over to the states' legal aid charities effect a per se taking of private property. Brown v. Legal Found. of Wash., 538 U.S. 216, 240, 123 S.Ct. 1406, 155 L.Ed.2d 376 (2003). Known as Interest on Lawyers' Trust Accounts ("IOLTA"), these programs, now found in every state, confiscate the interest earned from attorneys' general trust accounts. Id. at 220, 123 S.Ct. 1406. Those general trust accounts hold client funds that are not large enough to justify establishing separate, client-specific trust accounts. Id. at 223-24, 123 S.Ct. 1406. Because the interest income generated by funds held in IOLTA accounts is the private property of the funds' owners, the Court found that state IOLTA programs took private property for the legitimate public use of providing legal aid to the poor. Id. at 220, 240, 123 S.Ct. 1406.²

These two examples, in which the Supreme Court found a per se taking of funds, explain why the Cleveland traffic ordinance challenged here does not effect a taking. In each case, the state law at issue operated to seize a sum of money from a...