Muskegon Theatres, Inc. v. City of Muskegon

Decision Date05 December 1974
Docket NumberNo. 74-1447,74-1447
Citation507 F.2d 199
PartiesMUSKEGON THEATRES, INC., a Michigan corporation, Plaintiff-Appellant, v. CITY OF MUSKEGON, a Municipal Corporation, and the Amazon Company, a Michigan corporation, Defendants-Appellees.
CourtU.S. Court of Appeals — Sixth Circuit

Alexis J. Rogoski, R. Bunker Rogoski, Muskegon, Mich., for plaintiff-appellant.

Thomas J. O'Toole, James J. Kobza, George A. Parmenter, John M. Briggs, III, Muskegon, Mich., for defendants-appellees.

Before CELEBREZZE, PECK and MILLER, Circuit Judges.

JOHN W. PECK, Circuit Judge.

On September 28, 1972, plaintiff-appellant ('appellant') filed in federal district court a complaint alleging that defendant-appellee city ('City'), through certain urban renewal activities from 1966 to 1971, had 'taken' its leasehold interest. Because appellant's lessor ('lessor') refused to join as co-plaintiff, appellant joined lessor as co-defendant. On June 1, 1973, City filed its declaration of taking in Muskegon County circuit court. On June 13, 1973, appellant filed in federal district court an amended and supplemental complaint realleging the 'taking' to have been without just compensation and alleging that City delayed in filing its state court condemnation proceedings in order to obtain a lower appraisal of appellant's interest. 1 On September 28, 1973, the district judge dismissed appellant's original complaint because allegations of lost profits and depreciated property value stemming from surrounding urban renewal failed to state a 'taking' in the constitutional sense. On November 7, 1973, appellant, City, and lessor stipulated that title to the realty would vest in City, that City would pay into federal district court its estimate of just compensation, and that City would dismiss without prejudice its declaration of taking in state court. The parties reserved the right to prove the date of 'taking' for valuation purposes.

On February 26, 1974, the district judge refused to accept the parties' stipulation, characterizing it as 'transfer(ring) the entire litigation, except so much as has been agreed to, from the Muskegon Circuit Court to this court for final disposition and . . . stipulat(ing) that this court has jurisdiction without an admission of same or a specific finding thereof by this court.' The judge found that federal-state comity dictates that parties cannot, by stipulation, remove state court proceedings to federal court; moreover, he found that he was unable to say that the state courts would fail to afford appellant its constitutional rights.

Appellant appeals the district court's sua sponte dismissal of its amended and supplemental complaint. We hold that the district court had power to abstain from exercising jurisdiction, but should have retained jurisdiction pending state court proceedings.

Of course, parties cannot stipulate the subject matter jurisdiction of federal courts. Arenas v. United States, 95 F.Supp. 962, 972 (S.D.Cal. 1951), aff'd, 197 F.2d 418 (9th Cir. 1952). See United States v. Anderson,503 F.2d 420 (6th Cir. 1974), Mill Owners Mut. Fire Ins. Co. v. Kelly, 141 F.2d 763, 766 n. 1 (8th Cir. 1944), Commonwealth ex rel. Woods v. Cavell,157 F.Supp. 272, 276-277 (W.D.Pa.1957), aff'd, 254 F.2d 816 (3rd Cir. 1958). But an alleged 'taking' in violation of the Fifth and Fourteenth Amendments presents a 'serious constitutional question,' Foster v. Herley,330 F.2d 87 (6th Cir. 1964), Eleopoulos v. Richmond Development Agency,351 F.Supp. 63, 64 (N.D.Cal.1972), clearly within the district court's 'federal question jurisdiction.' 28 U.S.C. 1331 (1970). 2

Even so, the district court could abstain from exercising such jurisdiction. Even if City's entering into the stipulation is deemed as waiving City's motion to dismiss for abstention reasons, the district court still properly raised the abstention issue because the propriety of a district court's raising abstention sua sponte is well-settled. Louisiana Power & Light Co. v. City of Thibodaux, 360 U.S. 25, 79 S.Ct. 1070, 3 L.Ed.2d 1058 (1959); Empire Pictures Distributing Co. v. City of Fort Worth, 273 F.2d 529 (5th Cir. 1960); Mitchell Family Planning, Inc. v. City of Royal Oak, 335 F.Supp. 738, 740 (E.D.Mich.1972).

Recently, this court 3 and the Supreme Court 4 have focused on 'the oft-mentioned, but seldom fully understood, issue of abstention.' 5 Though abstention, being an equitable doctrine, often turns on case-by-case facts, 6 courts generally have recognized the purposes of abstention as including the avoidance of premature and unnecessary decisions of federal constitutional law 7 and of 'any (unnecessary) possible irritant(s) in the federal-state relationship.' Reetz v. Bozanich, 397 U.S. 82, 87, 90 S.Ct. 788, 790, 25 L.Ed.2d 68 (1970).

The Supreme Court several times has dealt with abstention in eminent domain 8 contexts. Martin v. Creasy, 360 U.S. 219, 79 S.Ct. 1034, 3 L.Ed.2d 1186 (1959), rev'g 160 F.Supp. 404 (W.D.Pa.1958), is the closest to being on-point because it, like the instant complaint, invoked the district court's federal question jurisdiction. 9 In Martin, plaintiffs claimed that a state statute unconstitutionally limited compensable 'takings.' Though the district court originally stayed its exercise of jurisdiction pending plaintiffs' resort to state courts, 10 it later exercised its jurisdiction because of its view that continuing its stay would irreparably harm plaintiffs. The Supreme Court found that such exercise was error.

'The circumstances which should impel a federal court to abstain from blocking the exercise by state officials of their appropriate functions are present here in a marked degree . . .. Reflected among the concerns which have traditionally counseled a federal court to stay its hand are the desirability of avoiding unseemly conflict between two sovereignties, the unnecessary impairment of state functions, and the premature determination of constitutional questions. All those factors are present here.' 360 U.S. at 224, 79 S.Ct. at 1037.

Perhaps with a view toward federal judicial economy, the Court found an 'additional reason' for abstention in the statute's varying impact on different landowners.

'Some (landowners) may be completely deprived of access; others may have access to existing roads or service roads to be constructed; still others may have access to the highway itself through points of ingress and egress established under the statute. In the state court proceedings the case of each landowner will be considered separately, with whatever particular problems each case may present.' 360 U.S. at 224-225, 79 S.Ct. at 1037.

In several reported opinions, 11 courts have abstained from exercising their federal question jurisdiction in eminent domain contexts. In Creel v. City of Atlanta, 399 F.2d 777 (5th Cir. 1968), the court of appeals found that the district court should have abstained from deciding plaintiffs' claim that the city had 'taken' their property in violation of the federal constitution. Though the city in Creel had filed an action in state court to condemn such property, Hohensee v. State of Pennsylvania Dep't of Highways, 383 F.2d 784 (3rd Cir. 1967), as well as Martin, supra, makes it clear that the lack of a pending state court condemnation action creates no preclusion to abstention. Accord, Elterich v. City of Sea Isle City, 477 F.2d 289 (3rd Cir. 1973); see Comment, The Need for More Definitive Standards in Employment of Federal Court Abstention, 1969 Utah L.Rev. 196, 205-207; cf. Peace v. City of Center, 372 F.2d 649 (5th Cir. 1967). Contra Eleopoulos v. Richmond Development Agency, 351 F.Supp. 63 (N.D.Cal.1972).

Some federal courts, of course, have exercised their jurisdiction in eminent domain contexts. 12 Ballard Fish & Oyster Co. v. Glaser Const. Co., 424 F.2d 473 (4th Cir. 1970), rejected a contention that plaintiff initially 'should be required to seek a remedy in the state courts under Virginia's constitutional prohibition against taking property for a public use without just compensation.' The court of appeals found that plaintiffs must resort to state judicial remedies only in 'exceptional circumstances.' Ballard, though, termed the issue exhaustion 13 rather than abstention. Moreover, public service corporations with delegated eminent domain powers, rather than municipalities, were involved in Ballard.

Town of East Haven v. Eastern Airlines, Inc., 282 F.Supp. 507 (D.Conn.1968), Eleopoulos v. Richmond Development Agency, 351 F.Supp. 63 (N.D.Cal.1972), and Joiner v. City of Dallas, 380 F.Supp. 754 (N.D.Tex.1974), explicitly rejected abstention claims. Eleopoulos, of course, is easily distinguishable in that there, as in Foster, infra, the state remedy became adequate only after the filing of the federal complaint. Joiner involved only federal claims, 380 F.Supp. at 761, and, moreover, failed to even cite, much less distinguish, Creel which the Joiner court's court of appeals decided just six years earlier. In East Haven, certain property owners claimed, inter alia, that a municipally-operated airport had 'taken' their property without just compensation in violation of the Fourteenth Amendment's due process clause. The city, claiming that such would also violate state law, including the state constitution, argued that the property owners had to seek redress initially in state court. The district court, relying on Mosher v. City of Phoenix, 287 U.S. 29, 53 S.Ct. 67, 77 L.Ed. 148 (1932), rejected the city's claim. The district court recognized the validity of Martin, but found Martin inapplicable because

'the circumstances which would merit abstention are not present in the instant action. The constitutional question is not a novel one, . . . and the activities from which the plaintiffs seek relief have already occurred. Furthermore, a state statute is not under attack and the state courts have not, as they had in Martin, signified in a related action that relief (would) be...

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