Town of Nags Head v. Toloczko

• Decision Date: 27 August 2013
• Docket Number: No. 12–1537.,12–1537.
• Citation: 728 F.3d 391
• Parties: TOWN OF NAGS HEAD, Plaintiff–Appellee, v. Matthew A. TOLOCZKO; Lynn B. Toloczko, Defendants–Appellants.
• Court: U.S. Court of Appeals — Fourth Circuit

728 F.3d 391

TOWN OF NAGS HEAD, Plaintiff–Appellee,

v.Matthew A. TOLOCZKO; Lynn B. Toloczko, Defendants–Appellants.

No. 12–1537.

United States Court of Appeals,Fourth Circuit.

Argued: May 17, 2013.

Decided: Aug. 27, 2013.

ARGUED:J. David Breemer, Pacific Legal Foundation, Sacramento, California, for Appellants. Charles Everett Thompson, II, Thompson & Pureza, Elizabeth City, North Carolina, for Appellee. ON BRIEF:William J. Brian, Jr., Keith P. Anthony, Morningstar Law Group, Morrisville, North Carolina, for Appellants. David R. Pureza, Thompson & Pureza, P.A., Elizabeth City, North Carolina, for Appellee.

Before SHEDD, DAVIS, and DIAZ, Circuit Judges.

Reversed and remanded by published opinion. Judge DIAZ wrote the opinion, in which Judge SHEDD and Judge DAVIS joined.

DIAZ, Circuit Judge:

We heard argument in this case in concert with the related appeal of Sansotta v. Town of Nags Head, 724 F.3d 533, No. 12–1538, 2013 WL 3827471 (4th Cir.2013). Both suits involve a slew of federal and state law claims concerning the legality of efforts by the Town of Nags Head, North Carolina (the “Town”), to declare beachfront properties that encroach onto “public trust lands” a nuisance, and regulate them accordingly. The district court adjudicated the claims in Sansotta, but concluded here that it was inappropriate for a “federal court to intervene in such delicate state-law matters,” Town of Nags Head v. Toloczko, 863 F.Supp.2d 516, 519 (E.D.N.C.2012), and therefore abstained from decision under Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943).

Mindful that the abnegation of federal jurisdiction is a serious measure to be taken only under “extraordinary and narrow” circumstances, Martin v. Stewart, 499 F.3d 360, 370 (4th Cir.2007), we conclude that the circumstances of this case do not merit abstention. While the claims asserted here do involve a sensitive area of North Carolina public policy, resolving them is not sufficiently difficult or disruptive of that policy to free the district court from its “unflagging obligation to exercise its jurisdiction.” In re Mercury Constr. Corp., 656 F.2d 933, 943 (4th Cir.1981) (en banc) (internal quotation marks omitted). We therefore reverse the district court's decision to abstain, and remand for further proceedings.

I.

The Town of Nags Head is a coastal municipality that has the Atlantic Ocean as its eastern boundary. Its beaches have historically been used by the public for transportation and recreational activities. These activities enjoy legal protection under the “public trust doctrine,” which entitles states like North Carolina to appropriate title to tidal lands in trust for the public. See Gwathmey v. State Through Dep't of Env't, Health, & Natural Res., 342 N.C. 287, 464 S.E.2d 674, 677 (1995).

Various natural indicators can demarcate public trust lands from private property. Although the vagaries of beach topography make it difficult to delineate a fixed boundary, the Town and North Carolina both define the relevant area as “seaward of the mean high water mark.” ¹Town of Nags Head, N.C., Code of Ordinances, § 48–7; see alsoN.C. Gen.Stat. § 77–20(e).

Historically, prevailing environmental conditions have pushed the high tide line westward from the Atlantic Ocean, resulting in erosion and the gradual migration of private beachfront property into public trust lands. To combat this trend, beachfront owners like Matthew and Lynn Toloczko ² have periodically restored displaced sand and have raised the height of their cottages by sixteen feet to endure tidal surges. In the event of storm damage, the Toloczkos obtained permits from the Town to make all necessary repairs.

A few years ago, however, the Town determined that certain beachfront properties were beyond rehabilitation because they were located within public trust lands. The Town therefore resolved to demolish these structures through enforcement of its Nuisance Ordinance, which regulates “[a]ny structure, regardless of condition ... located in whole or in part in a public trust area or public land.” Town of Nags Head, N.C., Code of Ordinances, § 16–31(6)(c).

When a tropical storm inflicted serious damage on the Toloczkos' cottage in November 2009, the Town condemned the structure and sent the Toloczkos a “Declaration of Nuisance.” The Town refused to allow the Toloczkos to abate any nuisance by acquiring a permit to make repairs. The Town also began to assess daily fines to compel the Toloczkos to demolish the structure.

The Toloczkos refused to raze their cottage, and the Town sued them in North Carolina state court, seeking to collect the assessed civil fines and demolish the cottage. The Toloczkos removed the case to federal court based on diversity of citizenship.

After removal, the Toloczkos filed twenty-one counterclaims alleging violations of state and federal law. The bulk of the counterclaims sought related, if not duplicative, declaratory judgments that the Town acted unlawfully by enforcing the public trust doctrine through its Nuisance Ordinance. The Toloczkos also sought injunctive relief and money damages for violations of state and federal law.

During the course of the litigation, the Town amended its Zoning Ordinance to prohibit any structure if located: “(1) Wholly within the wet sand area of the public trust beach area, i.e. on the state owned property seaward of the mean high water mark;” or “(2) Wholly or partially within any portion of the public trust beach area in such a manner that the building or structure impedes the flow of vehicular, pedestrian, or emergency services traffic at normal high tide.” Town of Nags Head, N.C., Code of Ordinances § 48–87. The amended ordinance also forbids the issuance of building and repair permits for structures located on public trust lands.

In the meantime, a North Carolina beach replenishment initiative added substantial sand seaward of the cottage, prompting the Town to inform the Toloczkos that it no longer considered their cottage a nuisance. The Town subsequently offered the Toloczkos the opportunity to procure new permits to repair the cottage.³To repair the cottage, however, the Toloczkos needed to petition the North Carolina Department of Environment and Natural Resources (CAMA) for approval to obtain a local permit to replace their damaged septic tanks. CAMA denied the permit due to the cottage's location within an “Area of Environmental Concern” and “comments from the Town of Nags Head indicating that the proposal has been deemed to be currently inconsistent with the Code of Ordinances of the Town of Nags Head.” J.A. 391. Accordingly, the parties continued the litigation.

The district court, however, declined to decide the case. Invoking the Burford doctrine of abstention, the court noted “the danger of federal interference with unsettled, important policy matters reserved to the states,” and determined that “land use is an important public policy that lies within the prerogative of a sovereign state.” Toloczko, 863 F.Supp.2d at 525. Because the dispute involved “profound, unresolved state-law issues that transcend the case at hand,” id. at 529, the court exercised its discretion to decline federal jurisdiction.⁴ This appeal followed.

II.

A.

We review a district court's decision to abstain for abuse of discretion, “ever mindful that, although the standard is a deferential one, the discretion to abstain is tempered by the truism that ‘the federal courts have a virtually unflagging obligation to exercise their jurisdiction.’ ” MLC Auto., LLC v. Town of S. Pines, 532 F.3d 269, 280 (4th Cir.2008) (internal quotations omitted).

The Burford abstention doctrine relaxes the otherwise “unflagging” mandate of Article III when an adjudication may undermine the “independence of state action” on issues that are local and important to a state's sovereignty. Quackenbush, 517 U.S. at 728, 116 S.Ct. 1712. In this way, the doctrine advances federal and state comity by permitting courts to abstain where “an incorrect federal decision might embarrass or disrupt significant state policies.” Nature Conservancy v. Machipongo Club, Inc., 579 F.2d 873, 875 (4th Cir.1978) (per curiam).

Burford involved a Fourteenth Amendment challenge to the Texas Railroad Commission's grant of an oil-drilling permit. Because Texas had devised an intricate regime of judicial review that fostered “a specialized knowledge” in a complex and “ever-changing” area of the law, the Supreme Court concluded that federal interference would wreak “[d]elay, misunderstanding of local law, and needless federal conflict with the State policy.” Burford, 319 U.S. at 327, 63 S.Ct. 1098. “Under such circumstances,” the Court held, “a sound respect for the independence of state action requires the federal equity court to stay its hand.” Id. at 334, 63 S.Ct. 1098.

The Supreme Court has since “carefully defined the areas in which such abstention is permissible,” Martin, 499 F.3d at 363, specifying two contexts in which the Burford doctrine applies:

(1) [W]hen there are difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar; or (2) where the exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.

New Orleans Pub. Serv., Inc. v. Council of City of New Orleans (NOPSI), 491 U.S. 350, 361, 109 S.Ct. 2506, 105 L.Ed.2d 298 (1989) (internal quotations omitted).

B.

We first consider whether the district court correctly abstained from resolving the claims for declaratory relief (counterclaims one through fifteen, and seventeen) asserted by the Toloczkos. The gravamen of these counterclaims concerns the Town's authority to ratify and enforce an ordinance that regulates structures on public trust lands. We have traditionally viewed questions of state and...