Court Opinion

ID: 9469501
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:41:56.329583+00
Date Added: 2024-06-11T17:41:24.919525
License: Public Domain

ARNOLD, Circuit Judge,
concurring.
I agree with the Court that this is an appropriate case for Pullman abstention. There are unsettled questions of state law that may determine or affect plaintiffs’ due-process claim, and the pending state-court § 1983 action affords a ready vehicle for the authoritative determination of those questions. I write separately because I reach this result by a different route and with a different emphasis from the Court’s.
1. When the plaintiffs go back to the state courts after our remand, the first question to be answered, I should think, will be the res judicata effect of the prior judgment in the condemnation action, coupled with the voluntary non-suit of the landowners’ “bad faith” counterclaim. The District Court seems to have thought that the counterclaim was compulsory, see 519 F.Supp. at 486 & n.3, and if this is true the failure to press it would ordinarily bar refiling. There is much to be said for this point of view. It is hard to see how the counterclaim can be said to arise out of a “transaction or occurrence” different from “the subject matter” of AP&L’s claim for condemnation. Ark.R.Civ.P. 13. If there is a cause of action, federal or state, for a bad-faith underestimation of a deposit by a condemn- or, it makes a lot more sense for that claim to be tried in the same case as the basic claim for condemnation that underlies the entire controversy. The most important issue raised by both claims is identical: what was the fair market value of the land on the date of taking? The more the value fixed by the jury in the condemnation trial exceeds the deposit (if it exceeds it at all), the more likely it is that a trier of fact might be persuaded that the underestimation of the deposit was willful. So there will be some saving of time and effort if the condemnation and bad-faith claims are tried in the same case, before the same judge, even if they are “bifurcated” in the sense of not being submitted to the same jury.
On the other hand, at least two features of this case make me uncertain enough *1158about the proper application of Ark.R.Civ.P. 13 to want the question resolved by the courts of the sovereign that promulgated the rule. First, both sides agree that the bad-faith counterclaim could not conveniently have been submitted to the same jury as decided the fair market value of the land taken. Even if the counterclaim had not been withdrawn, a separate hearing, presumably before another jury,1 would still have been necessary. So the saving of parties’, lawyers’, and judges’ time, effort, and expense would not have been so great as in the usual compulsory-counterclaim situation, in which everything can and should be tried at once. Second, the order of the Circuit Court of Independence County, Arkansas, allowing withdrawal of the counterclaim, expressly recited, not once but twice, that the counterclaim was being dismissed “without prejudice.” Arkansas Power & Light Co. v. Edwards, No. CIV 78-228 (Cir.Ct. Independence County, Ark., Aug. 12, 1980). Presumably the landowners would never have dismissed their counterclaim had they known the dismissal was to be with prejudice. Possibly the Circuit Court erred as a matter of law in describing the dismissal as without prejudice, but it is hardly fair to the landowners to penalize them for this error. Shrieves v. Yarbrough, 220 Ark. 256, 247 S.W.2d 193 (1952), holds that the voluntary dismissal of a compulsory counterclaim is a bar to its reassertion, and that must be the general rule, but in Shrieves, so far as the reported opinion of the Supreme Court of Arkansas discloses, there had not been an express recitation in the court’s prior order of dismissal that its action was “without prejudice.”
2. Whether these potential distinguishing factors take this case out of the normal compulsory-counterclaim rule is solely a question of Arkansas law. These issues were not explicitly addressed by the District Court, and they are sufficiently troublesome — and the underlying federal questions sufficiently important — to justify Pullman abstention. If the state courts hold that Ark.R.Civ.P. 13 applies, this case will be over. The landowners’ § 1983 actions, federal and state, will be barred by res judicata. The res judicata effect of the judgment of an Arkansas state court is itself a question of Arkansas law. “The .. . judicial proceedings of any court of any . . . State . .. shall have the same full faith and credit in every court within the United States and its Territories and Possessions as they have by law or usage in the courts of such State .. . . ” 28 U.S.C. § 1738 (1976). This principle applies fully to judgments of state courts of competent jurisdiction deciding federal questions. See Kremer v. Chemical Constr. Co., - U.S. -, 102 S.Ct. 1883, 72 L.Ed.2d 262 (1982); Allen v. McCurry, 449 U.S. 90, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980).2
3. If the state courts hold that the landowners’ § 1983 claim is not precluded by the former adjudication, the state courts should then decide whether plaintiffs’ bad-faith theory states any kind of claim for relief under state law. Ark.Stat.Ann. § 73-276.15(a)(5) requires a utility company’s petition for condemnation to include “a statement of the sum of money estimated by such utility to be just compensation for the land taken” (emphasis added). In most cases this estimate will determine the amount of the initial deposit. The state courts may well hold that the statute necessarily contemplates an estimate made in good faith. If they do, I have no doubt that state procedures will be found to afford a remedy for the enforcement of the right thus implied. If the state courts hold that the landowners’ “bad faith” theory does not state a claim under state law, then the federal constitutional issue sought to be raised by the instant § 1983 complaints will recur.
*11594. At this point the federal courts should fall silent. State-court action may make the decision of any federal question unnecessary, and the hope that that will occur is the whole rationale for Pullman abstention. Yet, this Court’s opinion intimates, ante, pp. 1155-1156, that if “no state remedy exists for . . . bad faith misconduct” on the part of a condemnor, “federal due process may well accord the plaintiffs a remedy for AP&L’s [alleged] misconduct.” This statement might better have been omitted, but it is clearly only a dictum, since the Court at once adds: “We need not, however, decide that issue at this time.” Ibid. Since the Court has foreshadowed a possible opinion on the question, I take the liberty of following suit. What follows is dictum in a separate opinion, if there is such a thing.
Plaintiffs’ whole theory is based on their claim that AP&L made a $136,000 deposit for their land when it knew the land was worth more. From this supposed bad faith flow all the damages which plaintiffs claim the Due Process Clause of the Fourteenth Amendment entitles them to recover. Yet, the requirement that a deposit be made in the first place is a creature of state law only. The Constitution of the United States says nothing about deposits. So far as the Fourteenth Amendment is concerned, a condemnor may take property without a deposit, so long as just compensation is ultimately paid.
This analysis is consistent with current federal law on the subject. Federal condemnation procedures contained in the Declaration of Taking Act, 40 U.S.C. §§ 258a-258e, provide for the posting of a deposit with the court in an amount “estimated . . . to be just compensation for the land taken.” 40 U.S.C. § 258a. See also Fed.R.Civ.P. 71A(j). But there was no such requirement, so far as my research reveals, prior to the passage of the Act in 1931.3 And even now, apparently, resort to § 258a is not mandatory; the federal government can enter into physical possession, without instituting any condemnation proceedings, much less posting a deposit, and leave the property owner to seek compensation under the Tucker Act, 28 U.S.C. §§ 1346(a)(2) and 1491. United States v. Dow, 357 U.S. 17, 21, 78 S.Ct. 1039, 1044, 2 L.Ed. 1109 (1958). Nor does current federal case law recognize an injury due to the filing of an inadequate deposit.
In In Re United States, 257 F.2d 844 (5th Cir.), cert. denied, 358 U.S. 908, 79 S.Ct. 234, 3 L.Ed.2d 228 (1958), a District Court had vacated the government’s declaration of taking pursuant to § 258a because of an inadequate deposit. The government had filed a sum of $100,000 with the court, but the property owners contended the property’s value to be in excess of $1,600,000. The owners further contended, just as the plaintiffs do here, that the deposit was so inadequate as to evidence bad faith. The Court of Appeals set aside the order, concluding that the District Court acted beyond its power because under the statute the only role of the courts is the ultimate ascertainment of just compensation. Id. at 846-47. It went on to say
[W]e deem the settled law to be that the purported bad faith exception to the rule of finality of the administrative estimate of just compensation does not exist, that, in short, the courts have no jurisdiction to review the amount of estimated compensation.
Ibid, (emphasis ours). Accord, United States v. Cobb, 328 F.2d 115 (9th Cir. 1964).
I am inclined to agree with this approach. If the final award includes interest at the market rate from the date of taking, I cannot see what the landowner has lost. If the answer is that the low deposit has, as a practical matter, increased his attorney’s *1160fees, because it widens the spread to which a percentage-fee contract is applied, the fact remains that the state did not, as a matter of federal law, have to require any deposit at all. We are dealing here not with the Due Process Clause of the Fourteenth Amendment simpliciter, but with the Just Compensation Clause of the Fifth Amendment, as applied to the states by the Fourteenth. A violation of state law, however willful or reprehensible, does not ipso facto amount to a constitutional tort. It is hard for me to see, therefore, what AP&L’s good or bad faith has to do with federal constitutional rights.
On the other hand, it seems entirely possible that landowners have a right, secured by the federal Constitution, to the fair market value of their property, including interest at the market rate from the date of taking to the date of payment. A thousand dollars three years from now is worth less than a thousand dollars in hand today, and a thousand dollars three years from now with interest at 10 per cent, is worth less than a thousand dollars three years from now with interest at 15 per cent. If a landowner could get 15 per cent, if he had the money now (and if, as a corollary, AP&L, which does have the money now, is getting 15 per cent.), then arguably compensation at a lower interest rate is not “just.” That is the holding of State v. Carney, 309 N.W.2d 775 (Minn.1981), and, although the case arose under the Constitution of Minnesota, the principle, as a matter of logic, fits the federal Constitution just as well. If this theory has merit, it would be available irrespective of the condemnor’s bad faith, and irrespective of the amount of any deposit. The Arkansas Constitution, Art. XIX, § 13, limits interest to ten per cent., but that provision would of course yield to the Fifth and Fourteenth Amendments if there were any inconsistency. This theory of just compensation, while not precisely stated in plaintiffs’ complaint, is fairly comprehended within their allegations.
Finally, if I am right in thinking, at least tentatively, that there may be a federal constitutional right to interest at the market rate, but no such right to any good-faith deposit, that conclusion might have implications for the utility company’s res judicata defense. For there would surely be' no doubt that any contention as to the appropriate rate of interest should be raised and decided in the main condemnation action. It would be part of what the Court calls plaintiffs’ just-compensation counterclaim, as opposed to their bad-faith counterclaim, and the determination of just compensation is the principal purpose of the condemnation proceeding. The landowners could still urge, however, that res judicata should not be applied because the order allowing withdrawal of their bad-faith counterclaim was expressly made “without prejudice,” and because their claim for a higher rate of interest was initially proffered (even if incorrectly) as an incident of their bad-faith counterclaim.

. Unless the whole case could have been transferred to equity, which I doubt: the landowners were not asking for an injunction, but only for money.

. Congress may of course repeal or modify 28 U.S.C. § 1738, but it has not done so in 42 U.S.C. § 1983. Allen v. McCurry, supra. Nor is there any claim here that the doctrine of res judicata, if it applies in this case, is itself inconsistent with due process or otherwise unconstitutional.

. A sampling of prior federal statutes required the government
to pay over the judicially determined compensation before it [could] enter upon the land, Act of August 1, 1888, 25 Stat. 357, 40 U.S.C. § 257; Act of August 18, 1890, 26 Stat. 316, 50 U.S.C. § 171, or proceed under other statutes which enable[d] it to take immediate possession upon order of court before the amount of just compensation has been ascertained. Act of July 18, 1918, 40 Stat. 904, 911, 33 U.S.C. § 594 ... .
United States v. Dow, 357 U.S. 17, 21, 78 S.Ct. 1039, 1044, 2 L.Ed. 1109 (1958).