Zito v. N.C. Coastal Res. Comm'n, 2:19-CV-11-D

• Court: United States District Courts. 4th Circuit. Eastern District of North Carolina
• Citation: 449 F.Supp.3d 567
• Decision Date: 27 March 2020
• Docket Number: No. 2:19-CV-11-D,2:19-CV-11-D
• Parties: Michael ZITO, and Catherine Zito, Plaintiffs, v. NORTH CAROLINA COASTAL RESOURCES COMMISSION, Defendant.

449 F.Supp.3d 567

Michael ZITO, and Catherine Zito, Plaintiffs,
v.
NORTH CAROLINA COASTAL RESOURCES COMMISSION, Defendant.

No. 2:19-CV-11-D

United States District Court, E.D. North Carolina, Northern Division.

Signed March 27, 2020

449 F.Supp.3d 571

J. David Breemer, Erin E. Wilcox, Pacific Legal Foundation, Sacramento, CA, Glenn E. Roper, Pacific Legal Foundation, Highlands Ranch, CO, for Plaintiffs.

Mary L. Lucasse, Marc D. Bernstein, North Carolina Department of Justice, Raleigh, NC, for Defendant.

ORDER

JAMES C. DEVER III, United States District Judge

On March 6, 2019, Michael and Catherine Zito ("the Zitos," or "plaintiffs") filed a complaint against the North Carolina Coastal Resources Commission ("the Commission") alleging a taking of private property without just compensation in violation of the Fifth Amendment of the United States Constitution. See Compl. [D.E. 1] ¶¶ 63–78.¹ The Zitos seek declaratory relief, damages, just compensation, reasonable attorney fees and costs, and all other appropriate relief. See id. at 13. On August 9, 2019, the North Carolina Coastal Federation ("the Federation") moved to intervene as a matter of right under Federal Rule of Civil Procedure 24(a)(2), or alternatively, by permission under Federal Rule of Civil Procedure 24(b) [D.E. 24]. On August 20, 2019, the Commission moved to dismiss the complaint for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) [D.E. 36]. On that same date, the Commission amended its initial answer to the complaint [D.E. 39]. On August 27, 2019, the Zitos opposed the Federation's motion to intervene [D.E. 40]. On September 5, 2019, the Federation replied [D.E. 41]. On September 6, 2019, the Zitos responded to the Commission's motion to dismiss [D.E. 42]. On September 20, 2019, the Commission replied [D.E. 44]. On September 25, 2019, the Zitos moved to clarify the status of the stipulated administrative facts [D.E. 45]. On October 16, 2019, the Commission responded [D.E. 49]. On October 24, 2019, the Zitos replied [D.E. 50].

As explained below,

449 F.Supp.3d 572

Hutto v. South Carolina Retirement System, 773 F.3d 536, 542–43 (4th Cir. 2014), requires this court to hold that the Eleventh Amendment bars the Zitos' Fifth Amendment takings claim. If the Zitos are to obtain relief on this claim, they first must get such relief from the United States Court of Appeals for the Fourth Circuit sitting en banc or from the United States Supreme Court. Thus, the court grants the Commission's motion to dismiss [D.E. 36] and dismisses the complaint without prejudice for lack of subject-matter jurisdiction. The court denies as moot the Federation's motion to intervene [D.E. 24] and the Zitos' motion to clarify the status of the stipulated administrative facts [D.E. 46].

I.

The Zitos are residents of Timonium, Maryland and own a beachfront lot at 10224 East Seagull Drive in South Nags Head, North Carolina ("the property"). See id. at ¶¶ 11–12. The Zitos bought the beachfront lot in 2008 for $438,500 and the lot contained a 1,700 square foot home built in 1982. See id. at ¶¶ 12–13. On October 10, 2016, a fire destroyed the Zitos' home on the property. See id. at ¶ 18. On July 31, 2017, the Zitos sought to rebuild their home, with a total floor area of 1,792 on a 32' × 28' footprint, and submitted a North Carolina Coastal Area Management Act ("CAMA") Minor Permit application to the Town of Nags Head's CAMA Local Permit Officer ("LPO") See id. at ¶¶ 20, 26–27.

CAMA governs development of North Carolina's ocean areas and establishes various rules and regulations. See id. at ¶¶ 20–22. These rules and regulations include set-back requirements for ocean-front development on property within the Ocean Erodible Area of Environmental Concern ("AEC") that are based on a combination of annual erosion rates, the location of the first stable, natural vegetation line, and the size of the building. See id. at ¶¶ 20–24; 15A N.C. Admin. Code 7H.0304. Buildings of less than 5,000 square feet have a set-back line from the first stable line of vegetation of at least 30 times the annual erosion rate. See Compl. at ¶ 23; 15A N.C. Admin. Code 7H.0306(5)(a). Buildings of less than 2,000 square feet built before June 1, 1979, fall under a grandfather provision that establishes a reduced set-back line of 60 feet from the line of vegetation, if the standard set-back line would otherwise prevent building. See Compl. at ¶ 24; 15A N.C. Admin. Code 7H.0309(b). For CAMA permits, the local coastal governments are the initial decisionmakers, and applicants can seek a variance from the Commission if their initial permit is denied. See Compl. at ¶ 25.

The Zitos' property falls within the AEC. See id. at ¶ 29. The AEC official erosion rate is 6 feet per year, which, when multiplied by 30 as required by CAMA, results in a standard setback line of 180 feet from the first line of stable vegetation. See id.; 15A N.C. Admin. Code 7H.0306(5)(a). On April 26, 2018, the Town of Nags Head LPO denied the Zitos' CAMA Minor Permit. See Compl. ¶ 32; Ex. C [D.E. 1-4]. The LPO did so because the "[the Zitos'] home is setback approximately 12 ft. landward of the static vegetation line," and thus did not meet CAMA's requirements. See Compl. ¶ 32; Ex. C [D.E. 1-4] 3.

After the denial, the Zitos filed a variance petition with the Commission. See Compl. ¶¶ 25, 34. On November 27, 2018, the Commission considered the variance petition at a public hearing. See id. at ¶ 35. On December 27, 2018, the Commission denied the variance and issued a "Final Agency Decision." See id. at ¶ 36; Ex. D [D.E. 1-5]. In its "Final Agency Decision," the Commission concluded that the Zitos failed to demonstrate the requisite hardship to qualify for a variance. See Compl.

449 F.Supp.3d 573

¶ 37; Ex. D [D.E. 1-5] 11–16. On March 6, 2019, the Zitos filed this action and sought declaratory relief, just compensation, reasonable attorney fees and costs, and all other appropriate relief.

On May 9, 2019, the Commission moved to dismiss the complaint, asserting three grounds for dismissal: (1) under Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of subject-matter jurisdiction; (2) under the Eleventh Amendment's grant of sovereign immunity; and (3) under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim [D.E. 13, 14]. On June 5, 2019, the Zitos responded in opposition, and waived the state law inverse condemnation takings claim in count one of their complaint [D.E. 16]. On June 19, 2019, the Commission replied [D.E. 17].

On June 21, 2019, the Supreme Court decided Knick v. Township of Scott, ––– U.S. ––––, 139 S. Ct. 2162, 204 L.Ed.2d 558 (2019). In Knick, the Court overruled Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985), a case that had formed a core part of the Commission's motion to dismiss. See Knick, 139 S. Ct. at 2167–68 ; [D.E. 14] 9–17. In Knick, the Court removed Williamson County's state-litigation requirement and held that a "property owner has suffered a violation of his Fifth Amendment rights when the government takes his property without just compensation, and therefore may bring his claim in federal court under [section] 1983 at that time." Knick, 139 S. Ct. at 2168. On June 26, 2019, this court denied the Commission's motion to dismiss and motion for leave to file a supplemental memorandum in light of Knick [D.E. 19]. See [D.E. 20, 21]. On July 10, 2019, the Commission answered the complaint [D.E. 22], and on August 20, 2019, amended its answer [D.E. 39].

On August 20, 2019, the Commission moved, for a second time, to dismiss for lack of jurisdiction [D.E. 36] and filed a supporting memorandum with three arguments [D.E. 38]. First, the Eleventh Amendment bars the Zitos from asserting their federal takings claim in federal court since they could have brought a takings claim in state court. See [D.E. 38] 7–10; Hutto, 773 F.3d at 552. Second, and relatedly, the Eleventh Amendment provides the Commission Eleventh Amendment immunity in federal court because it is an "arm of the state." See [D.E. 38] at 10–20. Third, Congress has not abrogated the Commission's Eleventh Amendment immunity, and the Commission has not waived it. See id. at 21–24.

On September 6, 2019, the Zitos responded in opposition [D.E. 42]. They argued that the Fifth Amendment's Just Compensation Clause is self-executing, that it is binding on the states through the Fourteenth Amendment, and that the Eleventh Amendment does not bar claims against states under the Just Compensation Clause in federal court. See id. at 7–10. The Zitos also argued that, even if the Just Compensation Clause is not self-executing, they cannot bring a takings claim in North Carolina state court and thus the Eleventh Amendment should not apply. See id. at 12–16. On September 20, 2019, the Commission replied and argued that Hutto remains binding precedent, that North Carolina state courts remain open for the Zitos to assert their takings claim, and that the court should not accept wholesale the Zitos' statement of facts concerning the administrative and statutory scheme. See [D.E. 44].

II.

A.

The Fifth Amendment Takings Clause...