Pavlock v. Holcomb

• Decision Date: 25 May 2022
• Docket Number: 21-1599
• Citation: 35 F.4th 581
• Parties: Randall PAVLOCK, et al., Plaintiffs-Appellants, v. Eric J. HOLCOMB, Governor of Indiana, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

35 F.4th 581

Randall PAVLOCK, et al., Plaintiffs-Appellants,

v.Eric J. HOLCOMB, Governor of Indiana, et al., Defendants-Appellees.

No. 21-1599

United States Court of Appeals, Seventh Circuit.

Argued November 10, 2021

Decided May 25, 2022

Christopher M. Kieser, Attorney, Pacific Legal Foundation, Sacramento, CA, Kathryn Daly Valois, Attorney, Pacific Legal Foundation, Palm Beach Gardens, FL, for Plaintiffs-Appellants.

Aaron T. Craft, Benjamin M. L. Jones, Attorneys, Office of the Attorney General, Indianapolis, IN, for Defendant-Appellees.

Before Manion, Wood, and Scudder, Circuit Judges.

Wood, Circuit Judge.

In Gunderson v. State , 90 N.E.3d 1171 (Ind. 2018), the Indiana Supreme Court held that the State of Indiana holds exclusive title to Lake Michigan and its shores up to the lake's ordinary high-water mark. See id. at 1173. Gunderson was an unwelcome development for plaintiffs Randall Pavlock, Kimberley Pavlock, and Raymond Cahnman, who own beachfront property on Lake Michigan's Indiana shores. Believing that their property extended to the low -water mark, they brought this lawsuit in federal district court alleging that the ruling in Gunderson amounted to a taking of their private property in violation of the Fifth Amendment. They would like to hold the state supreme court responsible for this alleged taking. In other words, they are asserting a "judicial taking."

The plaintiffs, whom we will call the Owners, sued a number of Indiana officeholders in their official capacities: Governor Eric Holcomb; the Attorney General, now Todd Rokita; the Department of Natural Resources Director, now Daniel Bortner; and the State Land Office Director, now Jill Flachskam. (We have identified the current officeholders, none of whom was in place when the complaint was filed, with the exception of Governor Holcomb. We have substituted the current officials for their predecessors in accordance with Federal Rule of Appellate Procedure 43(c)(2). We refer to the defendants collectively as the State.) The district court granted the State's motion to dismiss for failure to state a claim. Because none of the named officials caused the Owners' asserted injury or is capable of redressing it, we conclude that the Owners lack Article III standing and affirm the judgment of the district court, though we modify it to show that it is without prejudice.

I

A

Indiana has long held in trust the portion of Lake Michigan that lies within its borders and the submerged lands below the water. See Lake Sand Co. v. State , 68 Ind.App. 439, 120 N.E. 714, 715–16 (1918). The shores of Lake Michigan are surrounded by privately-owned property. Owners of private lakeshore property, including our plaintiffs, and the State dispute where the line should be drawn between the public and private holdings. In 2014, the Pavlocks' neighbors filed a quiet-title action against Indiana in state court. That was the Gunderson case, in which the Indiana Supreme Court first attempted to fix that line.

The Gunderson plaintiffs, like the Owners here, took the position that their deeds conferred title (and thus the right to exclude the public) past the lake's ordinary high-water mark, all the way down to the low-water mark. See Gunderson , 90 N.E.3d at 1175. The ordinary high-water mark is a commonly used method of measuring the boundaries of non-tidal bodies of water. At common law, it was defined as "the point where the presence and action of water are so common and usual ... as to mark upon the soil of the bed a character distinct from that of the banks, in respect to vegetation, as well as in respect to the nature of the soil itself." Id. at 1181 (collecting authorities) (internal quotation marks omitted); compare 33 C.F.R. § 328.3 (2021) (defining the ordinary high-water mark for the Army Corps of Engineers). By contrast, the low-water mark is the lowest level reached by a lake or a river (for example, a lake's low point during a dry season). Low-Water Mark , OXFORD ENGLISH DICTIONARY (3d ed. 2013).

The state supreme court sided with Indiana in Gunderson , interpreting state law to require "that the boundary separating public trust land from privately-owned" lakefront property "is the common-law ordinary high water mark." Gunderson , 90 N.E.3d at 1173. The court reached its decision by tracing the history of the public-trust doctrine. It began by applying the Equal-Footing doctrine, see, e.g. , PPL Montana, LLC v. Montana , 565 U.S. 576, 590–91, 132 S.Ct. 1215, 182 L.Ed.2d 77 (2012), under which Indiana received exclusive title to the lands underlying the Great Lakes when the state was admitted to the Union in 1816. Gunderson , 90 N.E.3d at 1176–77 (citing Martin v. Waddell's Lessee , 41 U.S. 367, 414, 16 Pet. 367, 10 L.Ed. 997 (1842) (holding that when the original thirteen states "became themselves sovereign" each acquired "the absolute right to all their navigable waters and the soils under them for their own common use"); Utah v. United States , 403 U.S. 9, 10, 91 S.Ct. 1775, 29 L.Ed.2d 279 (1971) (holding that, under the " ‘equal footing’ principle," later-admitted states acquired "the same property interests in submerged lands as was enjoyed by the Thirteen Original States"); Hardin v. Jordan , 140 U.S. 371, 382, 11 S.Ct. 808, 35 L.Ed. 428 (1891) (extending public ownership over navigable waters and underlying land "to our great navigable lakes, which are treated as inland seas.")). Following the weight of authority, the state supreme court concluded that "Indiana at statehood acquired equal-footing lands inclusive of the temporarily-exposed shores of Lake Michigan up to the natural [ordinary high-water mark]." Id. at 1181.

The Indiana Supreme Court then asked whether, at some point between statehood and the present day, the state relinquished title to the land below Lake Michigan's ordinary high-water mark. This issue, it recognized, is one of state law. See Oregon ex rel. State Land Bd. v. Corvallis Sand & Gravel Co. , 429 U.S. 363, 376–77, 97 S.Ct. 582, 50 L.Ed.2d 550 (1977) (explaining that, while the Equal-Footing doctrine is a matter of federal law, "subsequent changes in the contour of the land, as well as subsequent transfers of the land, are governed by the state law"). To answer that question, the court examined its own cases, the Lake Preservation Act, Ind. Code § 14-26-2-5, and other provisions of the Indiana Code. It concluded that, with the exception of discrete parcels not relevant here, Indiana has never relinquished title to Lake Michigan's shores below the ordinary high-water mark. Gunderson , 90 N.E.3d at 1182–85. Thus, as a matter of state law, the court concluded that Indiana holds absolute title to the lands under Lake Michigan up to the ordinary high-water mark. Private landowners in Indiana may thus hold title only to beachfront property above (i.e. land-ward of) that boundary. Id. at 1182.

Shortly after Gunderson was decided, the Indiana General Assembly passed House Enrolled Act (HEA) 1385, which codified the Gunderson decision. The Act stipulates that:

(a) Absent any authorized legislative conveyance before February 14, 2018, the state of Indiana owns all of Lake Michigan within the boundaries of Indiana in trust for the use and enjoyment of all citizens of Indiana.

(b) An owner of land that borders Lake Michigan does not have the exclusive right to use the water or land below the ordinary high water mark of Lake Michigan.

Ind. Code § 14-26-2.1-3. The plaintiffs argue that HEA 1385 further broadened public use of the Lake Michigan shoreline. Gunderson held that "at a minimum , walking below the [ordinary high-water mark] along the shores of Lake Michigan" is a protected public use, along with commerce, navigation, and fishing. Gunderson , 90 N.E.3d at 1188. The statute, however, expressly recognizes public uses such as boating, swimming, and other ordinary recreational uses. Ind. Code § 14-26-2.1-4(b).

B

Because this case was resolved on a motion to dismiss, we accept all well-pleaded factual allegations in the complaint as true. Hardeman v. Curran , 933 F.3d 816, 819 (7th Cir. 2019).

The Owners all hold title to beachfront property on the Lake Michigan shore. None of them was a party to Gunderson (though Cahnman participated as amicus curiae ). Like the Gunderson plaintiffs, the Owners here allege that their property deeds cover land that extends down to Lake Michigan's low-water mark. Therefore, they argue, when the Indiana Supreme Court determined that the state has always held title to the land all the way up to the ordinary high-water mark, Indiana's highest court "took" (for Fifth Amendment purposes) a portion of their property without just compensation. HEA 1385, they argue, was also an uncompensated taking, because it expanded Gunderson 's easement to permit additional uses.

Faced with this unfavorable ruling from the state court, the Owners turned to the federal court, filing this action under 42 U.S.C. § 1983 against the state defendants we mentioned, all of whom are sued in their official capacities. The Owners want the federal court to issue a declaratory judgment stating that the Indiana Supreme Court's decision in Gunderson (and HEA 1385) effected an uncompensated taking of their property between the ordinary high-water mark and the low-water mark. They also seek a permanent injunction barring the state defendants from enforcing Gunderson and HEA 1385. The Owners concede that their challenge to HEA 1385 turns on their judicial-takings claim. If Gunderson stands, it follows that the Owners never held title to the land below the ordinary high-water mark, and the legislation therefore had no effect on their property rights. The Owners are not seeking compensation for the alleged taking; they want only to be able to exclude members of the public from the lands they claim.

The district court granted the State's motion to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). It held that the Owners' claims are functionally...