The Honorable John F. Nangle, United States District Judge * for the Eastern District of Missouri, sitting by designation. United States Court of Appeals FOR THE EIGHTH CIRCUIT

_____________ No. 96-2886EA

_____________ Charles McKenzie; Ronald * McKenzie; Mark McKenzie, doing * business as McKenzie * Development Company, * * Appellants, * Appeal from the United Sta tes * District Court for the Easter n v. * District of Arkansas. * City of White Hall; White Hall * Planning Commission, Phillip * Williams, Individually and in * his official capacity, * * Appellees. *

_____________ Submitted: March 12, 1997 Filed: April 23, 1997

_____________ Before FAGG and HEANEY, Circuit Judges, and NANGLE, District * Judge.

_____________ FAGG, Circuit Judge. After several years of zoning struggles, Charles, Ronald, and Mark McKenzie, owners and developers of a residential subdivision in the City of White Hall, Ark ansas, brought this 42 U.S.C. § 1983 action against the City, its P lanning Commission, and the Planning Co mmissioner (collectively the City), alleging the City violate d the McKenzies’ Fifth and Fourteenth Amendment rights. The City-2-

moved to dismiss for lack of jurisdiction and failure to state a claim under § 1983, but the di strict court denied the motion. The
case proceeded to trial, and near the end, the district cour t unexpectedly expressed concern about jurisdiction. Nevertheless, the court submitted the case t o the jury. The jury found in favor of the McKenzies and awarded $195,790 in compensatory damages and $30,000 in punitive damages. Three weeks after entering judgment
on the general verdict, the court vacated the judgment an d dismissed the case sua sponte for lack of subject matte r jurisdiction, without giving any explanation. The district court denied pending motions, including the City’s motion for judgment as a matter of law, as moot. The McKenzies appeal the dismissal for la ck of jurisdiction. We affirm in part, reverse in part, an d remand for further proceedings.

In 1971, land owned by the McKenzies was platted into a subdivision of fourteen one-ac re lots along both sides of a public
roa dwaynamed Michealann Drive. At the north end of th e subdivision, Michealann Drive ended in a cul-de-sac. Because the land t o the north was undeveloped and the subdivision wa s resi dential, the McKenzies retained a rectangular shaped parce l measuring ten feet by fifty feet as a privacy buffer. The Cit y
annex ed the subdivision in 1977. Eight years later, one of th e lots in the subdivision owned by the Federal Aviatio n Administration was offered for sale. As former owners, th e McKenzies had an option to repurchase the lot, but declined because the City expressed its desire to purchase the land for erection of a new water tower. After the City purchased the lot, howev er, the City did n ot use the property in a manner consistent with th e subdiv ision’s zoning for single family residences. Instead, th e City used the lot as a dumping and storage ground for unsigh tly and dangerous materials.-3-

When the McKenzies protested the misuse of the lot in 1988 , the City responded by demanding access across the privacy bu ffer at the n orth end of Michealann Drive. Because there was no publi c need, the McKenzies refused. In 1989, the McKenzies decided t o revise their plan for the subdivision and divide six of th e remaining lots into nine. The City, acting through the Plannin g Commission, allowed the McKenzies to subdivide two lots into three, but to ok no action on the other four remaining lots. During th e planni ng of sewer improvements, the City’s consulting enginee r adv ised the McKenzies that the City expected the McKenzies t o surrender title to the privacy buffer. The McKenzies refused, and the City withheld approval of redivision of the four lots. In May 1992, the McKenzies met with the City’s mayor, who suggested th e McK enzies should surrender the privacy buffer to induce the cit y council to clean up the City’s lot.
In October 1992, the McKenzies again asked for permission to redivide the four remaining lots into six, but the City told th e McK enzies to delete the privacy buffer and resubmit their plans

. ByJanuary 1993, the McKenzies had planned, built, and sold tw o houses, but eight other planne d homes were not started because the Citywithheld approval of the redivision and building permit s pendin g the McKenzies’ surrender of the privacy buffer. Th e McKenzies continued to refuse to give up the privacy buffer, an d the City continued to deny the McKenzies’ zoning requests. In July 1994, the City said no building permits would be issued for th e McKenzies’ lots until they agr eed to surrender the privacy buffer. The next month, the Planning Commission sent the McKenzies a letter stating, “[T]he commission [will] only approve your resubdivision if you dedicate the [privacy buffer]” as use for a public st reet at a later date. The McKenzies o ffered the City an option to buy the privacy buffer if residential development occurred north of the-4-

land, but the City was not interested in paying for the land

. Because the McKenzies needed a pproval of their zoning and building requests to avoid financial ruin, and only wanted to insur e complementary development north of the subdivision, the McKenzies gave the City an easement in t he privacy buffer contingent on such development. Only after obtaining the conditional easement did the City grant the McKenzies’ zoning requests and building permits.

In their § 1983 lawsuit, the McKenzies raise a variety o f claims based on the City’s dem and that the McKenzies surrender the buffer in exchange for approval of zoning and building reque sts and correctionof the City lot’s misuse. Generally, the McKenzie s allege the City acted under color of state law to deprive them of their property rights, due process, and equal protection. Mor e sp ecifically, the McKenzies allege the City took their privac y buffer without just compensati on, and the City’s misuse of its lot was a nuisance that amounted to an unconstitutional taking of the McKenzies’ surrounding subdivision property. Further, th e McKenzies allege the City withheld building permits without a legitimate reason, and arbitrarily and capriciously withhel d approval of the resubdivision. The McKenzies assert the City has not taken similar actions against other similarly situate d individuals. In addition to compensation for the taken property, the McKenzies sought redress for decreased subdivision propert y
va lues, lost profits, other damage to their business, punitiv e damages, and declaratory and injunctive relief.

On app eal, the McKenzies contend the district court ha d jurisdiction to consider their claims. Because the district court made no findings about any disputed jurisdictional facts and none are disputed by the parties, w e review the jurisdictional issue de-5-

novo. See Osborn v. United States , 918 F.2d 724, 730 (8th Cir

. 1990).

At the outset, we note the cases mentioned by the distric t court when questioning jurisdiction during trial, Anderson v

. Douglas County , 4 F.3d 574 (8th Cir. 1993), and Chesterfield Dev. Corp. v. City of Chesterfield , 963 F.2d 1102 (8th Cir. 1992) , involved the failure to state § 1983 claims, not subject matte r jurisdiction. “[T]he failure to present an adequate § 1983 claim does not strip the court of jurisdiction unless the claim i s clearly immaterial, frivolous, and wholly insubstantial.” Daigle v. Opelousas Health Care, Inc. , 774 F.2d 1344, 1347 (5th Cir . 1985) (footnote omitted). Jurisdiction is based on the complaint’ s allegations. See id. at 1348. If the McKenzies’ complaint stated
a claim on its face, it alleged a valid § 1983 action an d successfully invoked the district court’s jurisdiction. See id. at 1347.

In the ir complaint, the McKenzies state a colorable taking s cla imby alleging the City conditioned approval of zoning an d buil ding permits on surrender of the privacy buffer withou t legitimate public concerns related to the requests. See Goss v
. Ci tyof Little Rock , 90 F.3d 306, 309-10 (8th Cir. 1996); W.J
. Jones Ins. Trust v. City of Fort Smith , 731 F. Supp. 912, 91 3 (W.D. Ark. 199 0). The McKenzies also state a colorable claim that th e City’s misuse of its lot was a nuisance amounting to a taking o f subdivision property other than the privacy buffer. See National By-Products, Inc. v. City of Little Rock , 916 S.W.2d 745, 747-4 8 (Ark. 1996). Takings claims are cognizable under § 1983. S ee Lake Country Estates, Inc. v. Tahoe Reg. Planning Agency , 440 U.S. 391, 398-400 (1979). The McKenzies allegations also encompass du e process and equal protection claims actionable under § 1983. See-6-

Executive 100, Inc. v. Martin County , 922 F.2d 1536, 1538, 1540-41 (11th Cir. 1991). The district court would have jurisdiction of the McKenzies’ claims under 28 U.S.C. § 1343(a)(3). See Lynch v. Household Fin. Corp. , 405 U.S. 538, 544 n.7 (1972).
The City contends the McKenzies’ claims are not ripe, howeve r. To show their claims are ready for federal review, the McKenzie s must first show there is a sufficiently concrete case o r controversy within the meaningof Article III of the Constitution. See Bob’s Home Serv., Inc. v. Warren County , 755 F.2d 625, 6 27 (8th Cir. 1 985). The City contends there is no presently justiciabl e
case or controversy because no taking of the privacy buffer ha s occurred yet. Although the circumstances that trigger the e asement have not happened, the City’s established interest in th e McKenzies’ property implies an immediate injury: a reductionin the value of the McKenzies’ land. See id. The conditional easemen t eliminates or reduces the expe ctancy that potential purchasers can develop the land, and possess and control it in perpetuity. Se e id. ; Hall v. City of Santa Barbara , 833 F.2d 1270, 1276 (9th Cir. 1986). Even if this cloud does not amount to a “taking” wit hin the meaning of the Fifth Amendment, an issue we need not decide, th e diminutionin value, although small, is a concrete injury tha t poses a presently justiciable question. See Bob’s Home Serv. , 755 F.2d at 627.
To establish the second aspect of ripeness, the McKenzies mu st show prudential considerations justify present exertion of federal judicial power. See id. The City asserts current exercise o f federal jurisdiction is unwarranted because the City had not made
a final decision to deny zoning and building permits unless th e McKenzies surrendered the privacy buffer, and the McKenzies had not sought compensation for the pr ivacy buffer through available state-7-

procedures. See Williamson County Reg. Planning Comm’n v. H amilton Bank , 473 U.S. 172, 186 (1985) (temporary taking by governmen t regula tions). The McKenzies respond that the two Williamso n requirements do not apply in physical taking cases.
Although the district court cited regulatory taking cases wh en voicing its concern about jurisdiction, we agree with the Mc Kenzies that this case involves a phys ical taking rather than a regulatory
one . Appropriation of a public easement across a landowner’ s property is the taking of a property interest rather than a mer e restrictionon the land’s use. See Nollan v. California Coasta l Comm’n , 483 U.S. 825, 831 (1987). The City’s easement for a public right- of-waygives rise to future physical occupation of th e McKenzies’ land. See Yee v. City of Escondido , 503 U.S. 519, 527 (1992); W.J. Jones Ins. Trust , 731 F. Supp. at 913. When the City too k the conditional easement, the McKenzies lost their right t o exclude the City from possession and use of the land shoul d contingencies beyond their control arise. See Hall , 833 F.2d a t 1277.

Aphysical taking is by definition a final decision for th e purpose of satisfying Williams on ’s first requirement. See Sinaloa Lake Owners Ass’n v. City of S imi Valley , 882 F.2d 1398, 1402 (9th Cir. 1989). Besides, the Commission’s letter to the McKenzie s shows th e City had made a final decision to deny zoning request s and building permits until the McKenzies relinquished the privacy buffer. See Christopher Lake Dev. Co. v. St. Louis County , 35 F.3d 1269, 1274 (8th Cir. 1994). As for the second Williamso n requir ement, the plaintiff must seek compensation from the stat e before proceeding to federal court if adequate state procedu res are available, even in a physical taking case. See id. ; see als o Littlefield v. City of Afton , 785 F.2d 596, 609 (8th Cir. 1986).-8-

This is so because when the st ate provides an adequate process for obtaining compensation, no Fifth Amendment violation occurs until compensation is denied. See Sinaloa Lake Owners Ass’n , 882 F.2d at 1402.

The McKenzies did not pursue compensation for taking of th e privacy buffer through availab le state procedures. See Collier v. Ci tyof Springdale , 733 F.2d 1311, 1316 (8th Cir. 1984). Eve n thoughthe City did not take the land through eminent domai n procedures, the McKenzies have a cause of action against the City under Ark. Code Ann. § 18-15-410 to recover the value of property taken in fact. See Robinson v . City of Ashdown , 783 S.W.2d 53, 56 (Ark. 1990); see also Ark. Cod e Ann. § 18-61-101(a) (1987) (sevenyear statute of limitations). This inverse condemnation procedure is also available for takings by nuisance. See National By

Products, Inc. , 916 S.W.2d at 748. The McKenzies have not shown a stat e inverse condemnation action would be futile, see Azu l Pacifico, Inc. v. City of Los Angeles , 948 F.2d 575, 579 (9th Cir. 1991), so the McKenzies must bring an action in the Arkansas courts before their takings claims will be ripe for prosecution in th e federal arena.

The McKenzies reply that 42 U.S.C. § 1983 does not requir e exhaustion of state remedies. The requirements that the McKenzies obtain a final decision and attempt state compensation procedures are not exhaustion requirement s, however, but necessary predicates to showing there has been a taking of property without jus t compensation. See Estate of H imelstein v. City of Fort Wayne , 898 F.2d 573, 577 n.5 (7th Cir. 1990). We thus conclude the McK enzies’ claims that the City took the buffer through coercion and th e other land by nuisance are not ripe because the McKenzies have not sought just compensation from the state. The McKenzies need not pursue-9-

state procedures for a claim t hat the City took the privacy buffer withou t a justifying public purpose, however, because this is a Constitutional violation even if compensation is paid. See Samaad v. City of Dallas , 940 F.2d 925, 936-37 (5th Cir. 1991).

Because the City’s decisions to deny zoning and buildin g permits absent surrender of the privacy buffer were final, th e McKenzies’ due process and equal protection claims based on those decis ions are ripe. See Sinaloa Lake Owners Ass’n , 882 F.2d a t 1404; Executive 100, Inc. , 922 F.2d at 1540-41; see als o Christop her Lake Dev. Co. , 35 F.3d at 1274-75. Although most o f the claims are based on facts giving rise to the McKenzies’ takings claims, the McKenzies need not seek relief in state court befor e brin ging their federal due process and equal protection claims

. See Sinaloa Lake Owners Ass’n , 882 F.2d at 1404.
In conclusion, we affirm the dismissal of the takings claims for lack of jurisdiction because the claims are premature, bu t
rev erse the dismissal of the due process and equal protectio n claims. Because the jury rendered a general verdict, we canno t reinstate the award with respect to the due process and equa l pr otectionclaims. We thus remand for further proceeding s consistent with this opinion.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.