Pascoag Reservoir v. State of Rhode Islan, (1st Cir. 2003)

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United States Court of Appeals

For the First Circuit

Nos. 02-2179

02-2233

PASCOAG RESERVOIR & DAM, LLC,

Plaintiff-Appellant/Cross-Appellee,

v.

THE STATE OF RHODE ISLAND, acting by and through

JAN REITSMA, in his capacity as Director of the

RHODE ISLAND DEPARTMENT OF ENVIRONMENTAL MANAGEMENT,

and SHELDON WHITEHOUSE, in his capacity as Attorney General

for the State of Rhode Island,

Defendants-Appellees/Cross-Appellants.

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF RHODE ISLAND

[Hon. Ronald R. Lagueux, U.S. District Judge]

Before

Boudin, Chief Judge,

Torruella and Lipez, Circuit Judges.

Barry J. Kusinitz, for plaintiff-appellant/cross-appellee.

Michael Rubin, Assistant Attorney General, with whom Sheldon

Whitehouse, Attorney General, James R. Lee, Assistant Attorney

General Div. Chief for the State of Rhode Island, Claire Richards,

Deputy Executive Counsel, and Mary Kay, Deputy Chief Legal Counsel,

for the Rhode Island Department of Environmental Management, were

on brief, for defendants-appellees/cross-appellants.

July 28, 2003

TORRUELLA, Circuit Judge. Rhode Island, through its

Department of Environmental Management, acquired an area of land in

the Pascoag Reservoir ("Reservoir" or "Lake") by adverse possession

and obtained a prescriptive easement on behalf of the public to use

the Reservoir for recreational activities. In this inverse

condemnation suit, (1) Pascoag Reservoir & Dam, LLC ("Pascoag"), the

Reservoir's owner, seeks compensation for that acquisition.

The district court dismissed the case for failure to

state a claim. Pascoag Reservoir & Dam, LLC v. Rhode Island, 217

F. Supp. 2d 206, 229 (D.R.I. 2002) (hereinafter "Pascoag Federal

Decision"). The court found that, as a general rule, the

government must compensate for a taking made by adverse possession

or prescription, but Pascoag may not recover in this case either

because the statute of limitations began to run in 1975, when the

state acquired its property rights, or because the doctrine of

laches bars recovery. Id. at 226-29. The court then dismissed

Pascoag's state law claims. Id. at 229.

The state appeals the first finding, asserting that

adverse possession and prescription do not constitute a taking of

property under the Constitution. Pascoag appeals the dismissal of

its claim, arguing that the statute of limitations did not begin to

run until the recent judicial determination that the state had

acquired property rights in the Reservoir.

We agree with the district court that Pascoag failed to

state a viable claim. Because Pascoag failed to timely pursue its

state remedies, it forfeited its federal claim. Following the

"fundamental rule of judicial restraint," we do not reach the

constitutional question of whether compensation is due when the

state acquires land by adverse possession or prescription. Am.

Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 62 (Ginsburg, J.,

concurring in part and concurring in the judgment) (quotation

omitted); see also Kelly v. Marcantonio, 187 F.3d 192, 197 (1st

Cir. 1999) (declaring "courts should not reach constitutional

questions in advance of the necessity of deciding them").

I. Facts

Located in the towns of Burrillville and Glocester, Rhode

Island, the Reservoir (also known as Echo Lake) is more than two

miles long and has more than ten miles of shoreline. Pascoag's

predecessor in title created the Lake in 1860; Pascoag has owned

the Reservoir since 1983. In 1964, the state purchased a lot

abutting the Reservoir and constructed a public boat ramp the

following year.

Until at least 1997, "members of the public could . . .

use the ramp as a point of access to the lake for various

recreational activities, including boating and fishing." Reitsma

v. Pascoag Reservoir & Dam, LLC, 774 A.2d 826, 829 (R.I. 2001)

(hereinafter "Pascoag State Decision"). The Reservoir was enjoyed

by "innumerable members of the public and other lakeside property

owners." Id. In 1997, Pascoag sought to limit the public's use by

placing a "NO TRESPASSING" sign near the water. Id.

In 1998, the state brought suit in state court asserting,

among other things, that it had acquired property rights in the

Reservoir. Pascoag cross-claimed, alleging that the state's

actions constituted a taking without just compensation, but the

state courts did not decide the taking issue because Pascoag later

voluntarily dismissed its inverse condemnation claim. In 2001, the

Rhode Island Supreme Court held that the state had acquired by

adverse possession a small portion of the Lake bottom (occupied by

the boat ramp) and had acquired, on the public's behalf, a

prescriptive easement to use the boat ramp to access the entire

Lake for recreational purposes. Id. at 834. The court held "that

the state had begun to use the Reservoir property in 1965 and,

under the Rhode Island ten year adverse possession statute, had

acquired title to a portion of the Reservoir plus an easement in

1975." Pascoag Federal Decision, 217 F. Supp. 2d at 211 (citing

Pascoag State Decision, 774 A.2d at 838). The issue in the state

case was whether the state acquired land rights by adverse

possession and prescription; the Rhode Island Supreme Court held

that it did. Pascoag State Decision, 774 A.2d at 834.

Pascoag filed this complaint in federal court in October

2001, alleging that the state violated the Takings Clause of the

Fifth and Fourteenth Amendments and asserting related state law

claims. The district court, treating the claim as one arising

under 42 U.S.C. § 1983, dismissed the suit, and this appeal

followed.

II. Standard of Review

We review de novo the district court's dismissal for

failure to state a claim under Fed. R. Civ. P. 12(b)(6). Rockwell

v. Cape Cod Hosp., 26 F.3d 254, 255 (1st Cir. 1994). We accept the

complaint's allegations as true and make all reasonable inferences

in favor of the plaintiff. Id. We will affirm the dismissal only

if Pascoag cannot prove any facts entitling it to relief. Id.

III. Discussion

A. Prerequisites to a Takings Claim

In Williamson County Regional Planning Commission v.

Hamilton Bank, the Supreme Court outlined two prerequisites to a

federal suit alleging a Fifth Amendment taking of a property

interest. 473 U.S. 172, 186, 194-95 (1985). A federal suit is not

timely until a plaintiff demonstrates that (a) "the government

entity charged with implementing the regulations has reached a

final decision regarding the application of the regulations to the

property at issue," (the "final decision requirement") and (b) the

plaintiff sought (and was denied) just compensation by means of an

adequate state procedure (the "state action requirement"). (2) Id. at

186, 194-95. Williamson County stands "for the proposition that

there is no uncompensated taking -- that is, nothing to litigate

under § 1983 -- until the state has established (a) what it has

taken, and (b) its refusal to pay 'just compensation.'" SGB Fin.

Servs., Inc. v. Consol. City of Indianapolis-Marion County, Ind.,

235 F.3d 1036, 1038 (7th Cir. 2000).

Although Williamson County was a regulatory taking case,

a modified verison of its timeliness analysis applies to physical

taking cases. Daniel v. County of Santa Barbara, 288 F.3d 375, 382

(9th Cir. 2002). The present case concerns a potential physical

taking, based on the intrusion onto Pascoag's property or the

acquisition of rights in that property. (3) In a physical taking

case, the final decision requirement is relieved or assumed because

"[w]here there has been a physical invasion, the taking occurs at

once, and nothing the [governmental actor] can do or say after that

point will change that fact." Hall v. City of Santa Barbara, 833

F.2d 1270, 1281 n.28 (9th Cir. 1987); cf. Arnett v. Myers, 281 F.3d

552, 563 (6th Cir. 2002) (finding final decision requirement

satisfied because decision maker "arrived at a definitive position

inflicting an actual, concrete injury when its agents removed and

destroyed" plaintiff's alleged property); Forseth v. Village of

Sussex, 199 F.3d 363, 372 n.12 (7th Cir. 2000) (finding physical

taking claim subject only to Williamson County's state action

requirement). However, the state action requirement remains in

physical taking cases: "[C]ompensation must first be sought from

the state if adequate procedures are available." Sinaloa Lake

Owners Ass'n v. City of Simi Valley, 882 F.2d 1398, 1402 (9th Cir.

1989), overruled on other grounds by Armendariz v. Penman, 75 F.3d

1311, 1326 (9th Cir. 1996) (en banc).

B. State Action Requirement

Here, if Rhode Island "provides an adequate process for

obtaining compensation, and resort to that process holds out some

realistic promise of yielding just compensation," Pascoag may not

seek compensation in federal court for an alleged taking without

first resorting to the state process. Gilbert v. City of

Cambridge, 932 F.2d 51, 63 (1st Cir. 1991); accord Williamson

County, 473 U.S. at 195 ("[I]f a state provides an adequate

procedure for seeking just compensation, the property owner cannot

claim a violation of the Just Compensation Clause until it has used

the procedure and been denied just compensation."). "'[B]ecause

the Fifth Amendment (4) proscribes takings without just compensation,

no constitutional violation occurs until just compensation has been

denied.'" Gilbert, 932 F.2d at 63 (quoting Williamson County, 473

U.S. at 194 n.13); accord Gamble v. Eau Claire County, 5 F.3d 285,

286 (7th Cir. 1993) (stating that a litigant must "exhaust[] his

remedies for obtaining a compensation award or equivalent relief

from the state" because "the right protected by the duty of just

compensation is not to the land or its use but merely to the market

value of what is taken"). Thus, "the state's action . . . is not

'complete' until the state fails to provide adequate compensation

for the taking." Williamson County, 473 U.S. at 195.

Pascoag did not seek compensation through the state

court. Pascoag's burden is to show that one of the narrow

exceptions to the state action requirement applies. The Supreme

Court in Williamson County identified two exceptions -- where state

remedies were "unavailable" or "inadequate." 473 U.S. at 196-97;

accord Deniz v. Municipality of Guaynabo, 285 F.3d 142, 146 (1st

Cir. 2002); Gilbert, 932 F.2d at 65. Some courts have also

recognized an exception where state remedies are "futile." See,

e.g., Daniels, 306 F.3d at 456.

1. Availability of adequate state remedies

First, we consider whether adequate state remedies were

available to Pascoag. Courts have made exceptions to Williamson

County's state action requirement when state law did not recognize

the taking that occurred, or did not permit the relief required to

make the plaintiff whole. See, e.g., Daniels, 306 F.3d at 456-57

(finding an exception to the state action requirement because

plaintiffs did not have a "definable pecuniary loss" and state

inverse condemnation proceedings were limited to monetary damages);

Hall, 833 F.2d at 1281 n.28 (finding a state court process

inadequate because at the time, no action for inverse condemnation

based on a regulatory taking could be brought under California

law); see also Suitum v. Tahoe Reg'l Planning Agency, 520 U.S. 725,

734 n.8 (1997) ("Ordinarily, a plaintiff must seek compensation

through state inverse condemnation proceedings before initiating a

takings suit in federal court, unless the state does not provide

adequate remedies for obtaining compensation.").

Pascoag cannot show that Rhode Island's remedies were

inadequate or unavailable. The Rhode Island Constitution prohibits

the taking of private property for public use without just

compensation and Rhode Island state courts have long allowed

recovery through suits for inverse condemnation. Annicelli v.

Town of South Kingstown, 463 A.2d 133, 139 (R.I. 1983); E & J Inc.

v. Redevelopment Agency of Woonsocket, 405 A.2d 1187, 1189 (R.I.

1979) ("Governmental action short of actual acquisition of property

may be a constructive taking or an inverse condemnation . . . .");

cf. Caldarone v. Rhode Island, 199 A.2d 303, 304 (R.I. 1964)

(assessing damages for land taken by state); see also Harris v. Mo.

Conservation Comm'n, 790 F.2d 678, 680-81 (8th Cir. 1986) (finding

constitutional provision provided adequate remedy). Thus, Rhode

Island has an adequate process available to address Pascoag's suit

for just compensation.

2. Futility of pursuing state remedies (5)

In its decision regarding the property rights of the

state and Pascoag, the Rhode Island Supreme Court discussed

Pascoag's potential takings claims in dicta:

[E]ven if the state's conduct from 1965 to

1975 had been unlawful and amounted to an

improper taking of the lake owner's property

without paying just compensation, and even if

the lake owner's property had not been taken

in the constitutional sense until the

prescriptive period ended in 1975 - issues

that we have no need to decide in this case -

the corporation and its predecessors failed to

assert any takings claim in a timely manner.

Thus, they are barred from asserting them now

under any statute of limitations that possibly

could apply to such claims . . . .

Pascoag State Decision, 774 A.2d at 838. Pascoag argues that

because this language suggests that Pascoag's claim is time-barred,

state court remedies are futile.

Again, Pascoag fails to carry its burden to show that an

exception to the state action requirement applies. Pascoag's

futility argument is simply that it is now time-barred from making

state law claims. If the futility rule were read this broadly it

would swallow the general rule of state remedy exhaustion. Like

the other exceptions, the futility exception must consider the

landowner's available state remedies at the time of the taking.

See Williamson County, 473 U.S. at 194 ("[A]ll that is required [by

the Fifth Amendment] is that a reasonable, certain and adequate

provision for obtaining compensation exist at the time of the

taking.") (quotation omitted). There is no evidence that the state

would not have been receptive to Pascoag's claim had it been

brought at the time the property was taken (regardless of whether

that was in 1965 or 1975 -- a determination we address below).

Pascoag offers no compelling explanation for not using state

procedures earlier, (6) and we find that state court remedies are not

futile.

C. Consequences of Failure to Bring a Timely State Claim

Pascoag did not satisfy the Williamson County

prerequisites for a federal claim. We have stated that takings

claims are "unripe until the potential state remedy has been more

fully pursued." (7) Gilbert, 932 F.2d at 65. The situation here is

different. As the Rhode Island Supreme Court noted, there is a

fatal flaw in Pascoag's claim: it is too late for any state law

cause of action. Williamson County requires the pursuit of state

remedies before a taking case is heard in federal court. Adequate

state remedies were available to Pascoag; it simply ignored those

remedies until it was too late. By failing to bring a timely state

cause of action, Pascoag forfeited its federal claim.

We assume for purposes of this appeal that a taking claim

may arise when the government acquires property rights by adverse

possession or prescription. Reviewing the dates as determined by

the Rhode Island Supreme Court, the state and the public began

using the land and water in a manner that was open, actual,

notorious, hostile, adverse, continuous, and under a claim of right

in 1965. Pascoag State Decision, 774 A.2d at 834. Property rights

were acquired by the state and the public in 1975. Id. at 838.

The state court decision was issued in 2001.

Relying on United States v. Dickinson, 331 U.S. 745

(1947), Pascoag argues that the circumstances surrounding the

taking had not "stabilized" until the Rhode Island Supreme Court's

final decision, and the statute of limitations did not begin to run

until that time. See id. at 749. We find Dickinson

distinguishable. There, the government caused plaintiff's land to

be flooded, and the water level rose over a period of years. Id.

at 747. The government did not use condemnation proceedings, but

"left the taking to physical events." Id. at 748. The Court held

that the statute of limitations did not begin to run when flooding

commenced, but only when physical events stabilized, Id. at 749.

This ensured that damages could be ascertained and that res

judicata would not bar recovery for future damage. Id.

While Pascoag points to facts suggesting that the

situation regarding ownership of the Reservoir was not certain as

late as 1997, the State Supreme Court found that the State's use

satisfied all the adverse possession requirements by 1975. At that

time a final account could be struck, and nothing in the State's

use of the Lake changed over time, so piecemeal litigation would

not result. There was continuous occupancy by the State for ten

years at which point property rights were acquired by operation of

law and, if compensable, must be countered by a state court suit

within the period allowed by the state statute of limitations.

Pascoag also asserts that its claim was not ripe until

the decision of the Rhode Island Supreme Court. We disagree.

First, Pascoag's argument is at odds with the state court's finding

of adverse possession and prescription, which is binding on Pascoag

and requires open and notorious possession by the adverse party.

That determination means, assuming arguendo that a taking claim

could be made for acquisition by adverse possession or

prescription, Pascoag should have known that a taking was in

progress and brought suit under state law at that time (within the

relevant statute of limitations). (8) The statute of limitations for

a state taking claim is, at most, 10 years (for "all civil actions

not otherwise limited"), and likely 1 year (for "assessment of

damages in state condemnation proceedings"). R.I. Gen. Laws § 936 (2002). Pascoag's claim was ripe under state law at least by

1975, when Pascoag, assuming it had any claim at all, could have

brought suit for recovery in state proceedings. If it had done so

and the state had denied a remedy in violation of the Constitution,

then a § 1983 claim would have ripened at the time of the denial.

To its detriment, Pascoag did not file suit, but instead waited

until the state sought judicial remedies in 1998.

Second, while the Williamson County requirements

typically reveal a claim to be premature, they may also reveal that

a claim is barred from the federal forum. See Vandor, Inc. v.

Militello, 301 F.3d 37, 39 (2d Cir. 2002); Harbours Pointe, 278

F.3d at 706; Gamble, 5 F.3d at 286; Harris, 790 F.2d at 681. The

Williamson County "ripeness" requirements will never be met in this

case, because the state statute of limitations has run on Pascoag's

inverse condemnation claim. By failing to bring its state claim

within the statute of limitations period, Pascoag forfeited its

federal claim. Gamble, 5 F.3d at 286; accord Vandor, 301 F.3d at

39. "The state provided a remedy, but plaintiff[] failed to pursue

it. [It] cannot obtain jurisdiction in the federal courts simply

by waiting until the statute of limitation bars the state

remedies." Harris, 790 F.2d at 681.

In Gamble, the plaintiff filed suit in federal court

alleging that she had been denied just compensation by a zoning

plan. Gamble, 5 F.3d at 285. The Seventh Circuit, citing

Williamson County, asked whether she had exhausted her remedies

"for obtaining a compensation award or equivalent relief from the

state." Id. at 286. Among the options available to the plaintiff

under state law was the ability to bring an inverse condemnation

suit. Id. However, the statute of limitations barred plaintiff

from raising that issue in the state courts. Id. Analogizing to

other situations where exhaustion of remedies is required, the

court held that the failure to pursue state compensation remedies

in a timely fashion forfeited plaintiff's federal claim to just

compensation. Id.

Similarly, Pascoag's failure to bring a timely suit for

compensation under state law has led to the forfeiture of its

federal taking claim. Even making all reasonable inferences in

favor of Pascoag -- that a taking claim can stand when the state

acquires land by adverse possession, that the claim did not accrue

until the state assumed property rights in 1975, and that the Rhode

Island statute of limitations for such a claim is 10 years --

Pascoag's state claim was time-barred in 1985. "[A] claimant

cannot be permitted to let the time for seeking a state remedy pass

without doing anything to obtain it and then proceed in federal

court on the basis that no state remedies are open." Id.

Pascoag's failure to assert a timely state claim has foreclosed its

federal cause of action. "Litigants who neglect or disdain their

state remedies are out of court, period." River Park, Inc. v. City

of Highland Park, 23 F.3d 164, 165 (7th Cir. 1994).

IV. Conclusion

To sum up, a taking by adverse possession occurred, on

Pascoag's own theory, in 1975 after a ten-year period of government

occupancy or use. At that point, Pascoag had an obligation to

bring a suit in state court for compensation within the limitations

period unless the state remedy was plainly futile (which in this

case it was not); and by failing to do so it forfeited any federal

claim that state processes were inadequate. Of course, the

situation in 1975 may well have been unclear from a legal

standpoint, but for that, Pascoag's remedy was to bring a lawsuit

within the statutory period. The question of whether or not the

state must pay when it takes land by adverse possession or

prescription will have to wait for another day. Because Pascoag

failed to bring a timely claim in state court, it forfeited its

federal takings claim. The district court's decision is affirmed.

Affirmed.

1. Inverse condemnation is "'a cause of action against a

governmental defendant to recover the value of property which has

been taken in fact by the governmental defendant, even though no

formal exercise of the power of eminent domain has been attempted

by the taking agency.'" United States v. Clarke, 445 U.S. 253, 257

(1980) (quoting D. Hagman, Urban Planning and Land Development

Control Law 328 (1971)).

2. This case does not raise the issue of whether the Williamson

County requirements apply when a litigant alleges that the state

has taken property for a purely private use. See Daniels v. Area

Plan Comm'n, 306 F.3d 445, 453 & n.6 (7th Cir. 2002) (identifying

circuit split and citing cases).

3. Both the fee simple in the Lake bottom and the easement on

behalf of the public are permanent physical occupations. See

Nollan v. Cal. Coastal Comm'n, 483 U.S. 825, 832 (1987).

4. The Fifth Amendment provides that "private property [shall not]

be taken for public use without just compensation." U.S. Const.

amend. V. It applies to the states through the Fourteenth

Amendment. MacDonald, Sommer & Frates v. County of Yolo, 477 U.S.

340, 342 n.1 (1986).

5. We recognized a futility exception to Williamson County's final

decision requirement where "the granting authority has dug in its

heels and made it transparently clear that the permit, application

or no, will not be forthcoming." Gilbert, 932 F.2d at 61 (citation

omitted). A futility exception to the state action requirement

would exist under similar circumstances.

6. Because Pascoag's federal claim has been forfeited, we need not

address the issue of whether Pascoag, who became the owner of the

Reservoir in 1983, has a right to compensation. See Palazzolo v.

Rhode Island, 533 U.S. 606, 628 (2001) (noting that in a physical

taking case, "it is a general rule of the law of eminent domain

that any award goes to the owner at the time of the taking, and

that the right to compensation is not passed to a subsequent

purchaser.").

7. The term "ripe" is confusing because, as explained infra, a

plaintiff is barred from bringing federal suit in a situation such

as Pascoag's, where the state statute of limitations has run.

Ripeness terminology suggests that a claim will later be available

to the plaintiff; such language has been avoided in some recent

cases. See City of Monterey v. Del Monte Dunes at Monterey, Ltd.,

526 U.S. 687, 721 (1999) ("A federal court, moreover, cannot

entertain a takings claim under § 1983 unless or until the

complaining landowner has been denied an adequate postdeprivation

remedy."); Harbours Pointe of Nashotah, LLC v. Village of Nashotah,

278 F.3d 701, 704 (7th Cir. 2002) (noting that a plaintiff "cannot

state a claim under federal law until he has used those [state]

procedures and been denied compensation."); but see Palazzolo, 533

U.S. at 618 (using "ripeness" to explain Williamson County's

requirements in the regulatory taking context). We, too, avoid

terms of ripeness because the Williamson County requirements may

reveal the claim to be either unripe (too early) or overripe (too

late).

8. What remedies did Pascoag have available to it? From 1965 to

1975, before adverse possession and prescription transferred title,

Pascoag could have brought a suit to evict the state from the land

or, alternatively, should have demanded that the state agree in

writing that occupancy was not intended to be adverse but was by

temporary and revocable permission. This may seem harsh but

adverse possession law puts this burden on all landowners as to all

occupants.

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