Opinion ID: 155331
Heading Depth: 2
Heading Rank: 1

Heading: Federal and state-law takings claims

Text: 11 We first consider whether SK Finance's claim under the takings clause of the Fifth Amendment of the United States Constitution is ripe. 12 The issue whether a claim is ripe for review bears on the court's subject matter jurisdiction under Article III of the Constitution. Accordingly, a ripeness challenge, like most other challenges to a court's subject matter jurisdiction, is treated as a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1). Ripeness is a question of law, which we examine de novo. 13 Bateman v. City of West Bountiful, 89 F.3d 704, 706 (10th Cir.1996) (internal citations omitted). Before a federal court can properly determine whether the state has violated the Fifth Amendment [takings clause], the aggrieved property owner must show first that the state deprived him of his property, and second, that the state refused to compensate him for his loss. Miller v. Campbell County, 945 F.2d 348, 352 (10th Cir.1991). Because the Fifth Amendment only prohibits takings without just compensation, a federal constitutional claim is not ripe until compensation is denied under state procedures, if adequate state procedures exist. Bateman, 89 F.3d at 708; see, e.g., National Advertising Co. v. City & County of Denver, 912 F.2d 405, 413-14 (10th Cir.1990). An inverse condemnation cause of action arising under a state's constitution is such a procedure that must be utilized before a federal takings claim can mature. See Bateman, 89 F.3d at 708-09. 14 As the State of Colorado has provided a procedure for obtaining compensation for inverse condemnation, see Colo.Rev.Stat. § 38-1-101 et seq., and SK Finance has not availed itself of that procedure, SK Finance's federal takings claim is not ripe. SK Finance conceded at oral argument of this appeal that its federal takings claim is not ripe. 15 More difficult questions arise with respect to SK Finance's state inverse condemnation claim. Two particular issues merit consideration: (1) Can a federal district court with diversity jurisdiction consider an inverse condemnation claim arising from the Colorado Constitution and statutes providing a special judicial procedure for condemnation claims; and (2) is an inverse condemnation claim ripe under Colorado law? 16 Eminent domain proceedings under Colorado law, which include claims for inverse condemnation, are special statutory actions filed in court rather than before administrative agencies. See Colo.Rev.Stat. § 38-1-101 et seq; see generally Hayden v. Board of County Comm'rs, 41 Colo.App. 102, 580 P.2d 830 (1978); Ossman v. Mountain States Tel. & Tel. Co., 184 Colo. 360, 520 P.2d 738 (1974). LaPlata County contends state compensation procedures must be pursued in state court and cannot be asserted merely as alternative theories in takings claims asserted in federal court, citing Samaad v. City of Dallas, 940 F.2d 925, 934-35 (5th Cir.1991). The Samaad court held the requirement that plaintiff first seek recovery through state procedures implied plaintiff must use state courts rather than federal courts to pursue a state claim, concluding, The local entity from which a plaintiff seeks recovery should be the one to deny just compensation. Id. at 934. 17 We reject the Fifth Circuit's reasoning on this point. In Searl v. School Dist. No. 2, 124 U.S. 197, 199-200, 8 S.Ct. 460, 461, 31 L.Ed. 415 (1888), the Court held an action started in state court under Colorado's eminent domain statute can be removed to federal court when there is diversity of citizenship. This determination necessarily establishes the action could have been brought initially in federal court. See Madisonville Traction Co. v. St. Bernard Mining Co., 196 U.S. 239, 245-46, 25 S.Ct. 251, 253-54, 49 L.Ed. 462 (1905) ([A] suit cannot be removed from a state court unless it could have been brought originally in the circuit court of the United States.). Consequently, the district court had jurisdiction to consider SK Finance's state-law inverse condemnation claim if it was ripe. 18 As under federal law, an inverse condemnation action under Colorado law requires a final decision of a regulatory authority to support a regulatory taking claim. Reale Investments, Inc. v. City of Colorado Springs, 856 P.2d 91, 93 (Colo.App.1993) (citing Williamson County Regional Planning Com'n v. Hamilton Bank, 473 U.S. 172, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985)). 19 [A] regulatory taking is not ripe until the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue. A final decision requires not only an initial rejection of a particular development proposal, but a definitive action by local authorities indicating with some specificity what level of development will be permitted on the property in question. 20 Landmark Land Co. v. Buchanan, 874 F.2d 717, 720 (10th Cir.1989) (internal citations omitted; emphasis added). In Williamson, the Supreme Court explained why a final determination is critical: 21 Although [t]he question of what constitutes a 'taking' for purposes of the Fifth Amendment has proved to be a problem of considerable difficulty, this Court consistently has indicated that among the factors of particular significance in the inquiry are the economic impact of the challenged action and the extent to which it interferes with reasonable investment-backed expectations. Those factors simply cannot be evaluated until the administrative agency has arrived at a final, definitive position regarding how it will apply the regulations at issue to the particular land in question. 22 473 U.S. at 190-91, 105 S.Ct. at 3118-19 (internal citations omitted). See also Suitum v. Tahoe Regional Planning Agency, --- U.S. ----, ---- - ----, 117 S.Ct. 1659, 1670-71, 137 L.Ed.2d 980 (1997) (Scalia, J., concurring) (explaining purpose and nature of finality requirement). 23 The present status of this case does not establish the degree to which SK Finance's reasonable investment-based expectations will be impacted by the decision not to approve construction of an on-site sewage system capable of serving fewer than one quarter of the platted lots. SK Finance has not sought approval for a sewage system capable of fully supporting the Subdivision, and has not attempted to address LaPlata County's concern for the financial viability of the project. Although the owners of the development have from time to time pursued various mechanisms to provide sewer service, they have not entered into negotiations with LaPlata County with the result being that no sewer system is possible. LaPlata County designed a plan to provide sewer service, which was rejected by SK Finance's predecessors. The predecessors were given guidance to pursue such service, but they did not follow through on the recommendations. The fact that the developer installed piping that was incompatible with the City's sewer system does not illustrate state action that would support a takings claim. 24 In Landmark, the plaintiff alleged the defendant's failure to issue building permits for a development previously approved by the defendant constituted a taking. We found the issue was not ripe because [t]he City has neither indicated definitively what level of development will be allowed on Landmark's property, nor finally and officially ruled out the possibility that Landmark will be able to proceed with its original plans. 874 F.2d at 721. We held Landmark's claim will not be ripe until it is in a position to allege not only that its initial permit applications were denied, but also that it has made some effort to pursue compromise with the City that would allow some level of development. Id.; see also Bateman, 89 F.3d 704. 25 The district court did not err in finding SK Finance's state-law takings claims were unripe because LaPlata County had not rendered any final decision regarding the permissibility of a sewer system serving the Subdivision.