Peterson Novelties, Inc. v. City of Berkley

• Decision Date: 01 October 2002
• Docket Number: No. 00-2037.,00-2037.
• Citation: 305 F.3d 386
• Parties: PETERSON NOVELTIES, INC.; and Harold Barman, Plaintiffs-Appellants, v. CITY OF BERKLEY; and Raymond Anger, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

305 F.3d 386

PETERSON NOVELTIES, INC.; and Harold Barman, Plaintiffs-Appellants, v. CITY OF BERKLEY; and Raymond Anger, Defendants-Appellees.

No. 00-2037.

United States Court of Appeals, Sixth Circuit.

Argued: March 8, 2002.

Decided and Filed: October 1, 2002.

COPYRIGHT MATERIAL OMITTED

Hugh M. Davis, Jr. (argued and briefed), Constitutional Litigation Associates, Detroit, MI, for Plaintiffs-Appellants.

James E. Tamm, Julie McCann O'Connor (argued and briefed), O'Connor, DeGrazia & Tamm, Bloomfield Hills, MI, for Defendants-Appellees.

Before KENNEDY and BOGGS, Circuit Judges; and COFFMAN, District Judge.^*

OPINION

BOGGS, Circuit Judge.

Peterson Novelties, Inc. and its owner, Harold Barman (collectively "Peterson"), appeal the district court's dismissal of their § 1983 claims against the City of Berkley, Michigan (the "City") and Detective/Sergeant Raymond Anger of the Berkley Public Safety Department. The district court held that the claims, which arose out of Peterson's operation as a fireworks retailer during 1995 and 1996, were "inextricably interwined" with issues presented to a Michigan state court at that time and were thus precluded by operation of the Rooker-Feldman doctrine. On appeal, Peterson argues (1) that the Rooker-Feldman doctrine does not apply to this situation, and (2) even if it did apply to some of Peterson's claims, it would not operate to preclude all of the claims in the suit. For the reasons that follow, we affirm the district court's disposition.

I

This case begins as Michigan fireworks cases often do, with a fireworks retailer attempting to obtain a seasonal sales license to sell fireworks in a Michigan municipality. In 1995, Peterson applied for a permit to sell consumer fireworks in Berkley and was denied a permit. Peterson filed suit in Oakland County Circuit Court, complaining that the denial violated various of its rights and requesting that the court order the City to grant the permit. After an evidentiary hearing, the state court issued a temporary restraining order for the 1995 season, ordering the City to grant Peterson the permit.

The 1995 case still open, Peterson filed another motion in state court in April 1996 to compel the City to process a permit application for that year. On May 9, 1996, the state court issued a temporary restraining order compelling the City to issue Peterson a seasonal sales permit for the sale of fireworks not prohibited by law. The order specifically listed fireworks that were prohibited under Michigan law, including firecrackers, torpedoes, skyrockets, roman candles, etc.

The specifics of what occurred next are disputed by the parties. However, it is clear that on or about June 24, 1996, Detective Anger, having received information regarding the possible sale by Peterson of illegal fireworks, inspected the tent out of which Peterson was operating, seized fireworks he believed to be illegal, and arrested several Peterson employees. The City alleges that Detective Anger first went to inspect the tent on June 24 and purchased $91.16 worth of fireworks he believed to be illegal, but took no further action. Then, according to the City, on June 25, the Oakland County Prosecutor issued a warrant signed by another state judge and pursuant to that warrant the City seized fireworks it determined to be offered for sale in violation of state law and arrested the Peterson employees. Peterson claims that the City undertook a warrantless raid on or about June 24, seized the fireworks and arrested the employees, and then got the warrant.

Either way, it is clear that Peterson responded by filing for an emergency show cause order, demanding that the City show why it should not be held in contempt of the court's May 9 restraining order. In its emergency motion, Peterson argued that it had been operating legally and within the parameters of the court's previous orders and that the City had intentionally acted contrary to the court's order, seizing fireworks and arresting employees without a warrant. They argued that the seizures were illegal and "subjected [the plaintiffs] to irreparable harm in their business and liberty interests." Peterson asked the court to prevent the City from applying for a warrant based "on the false claim that Plaintiffs are engaged in illegal activity" without attaching a copy of the court's May 9 order to any such application.

The judge who issued the May 9 order was temporarily unavailable, so the parties appeared before another judge of the Oakland County Circuit Court, who directed the parties to appear before the original judge on July 1. Then, on June 26, apparently in reaction to the City's intervening seizure and arrest, that same judge issued the show cause order, ordering the City in the meantime to return all seized consumer fireworks not needed for evidence.

The original judge held the show cause hearing on July 1, 1996, during which he took testimony and viewed demonstrative evidence. He issued an order on July 3, 1996 reaffirming his May 9 order. He held that Peterson could continue to operate its business selling consumer fireworks not specifically enumerated as illegal by the Michigan fireworks statute. However, the judge did not find the City in contempt of his May 9 order and he did not award contempt damages.

Peterson then applied to the same judge for declaratory relief, seeking an order that the Michigan statute prohibiting the sale of certain fireworks was void for vagueness, and the court granted the relief. This finding was later effectively overturned by the Michigan Court of Appeals; however, based on this declaratory relief, the state district court dismissed the pending criminal charges against Barman. The prosecutor's appeal of this dismissal was finally dismissed in July 1998, pursuant to a stipulation by the parties.

On June 29, 1999, Peterson and others filed a two-count complaint in federal court against the City and Detective Anger. In the first count, the Plaintiffs alleged First Amendment retaliation, the deprivation of property without due process of law in violation of the Fifth and Fourteenth Amendments, malicious prosecution in violation of the Fourth and Fourteenth Amendments, and unreasonable search and seizure in violation of the Fourth Amendment. In the second count, the plaintiffs alleged various state law causes of action. The district court dismissed the second count, and Peterson and Barman filed an amended complaint on July 29, 1999, in which they were the only plaintiffs and in which they alleged only the violations listed in the first count.

The defendants moved for summary disposition and the court held a hearing on the motion. The defendants argued that since Peterson's claims all arose out of the same facts that formed the basis of Peterson's emergency motion in state court seeking a finding of contempt against the City, the new claims were precluded by Rooker-Feldman. Alternatively, the defendants argued that Peterson's suit was barred by claim preclusion based on the earlier state court suit because all of Peterson's claims could have been brought in the earlier suit.

The district court granted the defendants' motion for judgment on the pleadings, holding that Peterson's claims were "inextricably intertwined" with issues earlier presented to the state court and were therefore precluded by the Rooker-Feldman doctrine. See Peterson Novelties, Inc. v. City of Berkley, No. 99-73256, 2000 WL 1279169, at *2 (E.D.Mich. Aug.4, 2000). It is from this holding that Peterson appeals to this court.

II The District Court's Application of the Rooker-Feldman Doctrine

The Rooker-Feldman doctrine, derived from two Supreme Court cases, Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923), and District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983), holds that lower federal courts lack subject matter jurisdiction to engage in appellate review of state court proceedings or to adjudicate claims "inextricably intertwined" with issues decided in state court proceedings. See, e.g., Patmon v. Michigan Supreme Court, 224 F.3d 504, 506 (6th Cir.2000) (noting that, pursuant to Rooker-Feldman, application to the Supreme Court is "the only avenue for federal review of state court proceedings"); Holloway v. Brush, 220 F.3d 767, 778 (6th Cir.2000) (en banc) (reading the doctrine as "teach[ing] that federal courts have no subject matter jurisdiction to entertain federal constitutional claims that are inextricably intertwined with a state court's ruling in an earlier action, when their adjudication would be tantamount to a review [of] the state court decision." (quotations omitted)); United States v. Owens, 54 F.3d 271, 274 (6th Cir.1995) (noting that the doctrine "stands for the proposition that a federal district court may not hear an appeal of a case already litigated in state court").

In defining what is meant by "inextricably interwined," this court has adopted the reasoning of Justice Marshall and of the Eighth Circuit that:

[T]he federal claim is inextricably intertwined with the state-court judgment if the federal claim succeeds only to the extent that the state court wrongly decided the issues before it. Where federal relief can only be predicated upon a conviction that the state court was wrong, it is difficult to conceive the federal proceeding as, in substance, anything other than a prohibited appeal of the state-court judgment.

Catz v. Chalker, 142 F.3d 279, 293 (6th Cir.1998) (quoting Keene Corp. v. Cass, 908 F.2d 293, 296-97 (8th Cir.1990) (quoting Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 25, 107 S.Ct. 1519, 95 L.Ed.2d 1 (1987) (Marshall, J., concurring))), amended by 243 F.3d 234 (6th Cir.2001); see also Tropf v. Fid. Nat'l Title Ins. Co., 289 F.3d 929, 937 (6th Cir.2002) (quoting Catz for the same proposition); Anderson v. Charter Township of Ypsilanti, 266 F.3d 487, 492-93 (6th Cir.2001) (quoting...