Randall Pavlock v. Eric Holcomb

Citation: Not availableDocket: 21-1599

Court: Court of Appeals for the Seventh Circuit; May 25, 2022; Federal Appellate Court

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The United States Court of Appeals for the Seventh Circuit reviewed the case of Randall Pavlock and others against Indiana state officials, following a decision by the Indiana Supreme Court in Gunderson v. State, which affirmed that the state holds exclusive title to Lake Michigan and its shores up to the ordinary high-water mark. The plaintiffs, who own beachfront property, claimed their property extended to the low-water mark and argued that the Gunderson ruling constituted a judicial taking of their private property in violation of the Fifth Amendment. They sought to hold various Indiana officials accountable for this alleged taking.

The defendants included Governor Eric Holcomb and other state officeholders, who were substituted in accordance with Federal Rule of Appellate Procedure 43(c)(2). The district court dismissed the case, finding that the plaintiffs lacked standing under Article III because the named officials did not cause the alleged injury or could provide a remedy. The appellate court affirmed the district court's decision but modified it to indicate that the dismissal was without prejudice. The court noted the historical context of Indiana's public trust over Lake Michigan and the ongoing dispute regarding property boundaries between private owners and the state.

The court's decision centered on the historical application of the public-trust and Equal-Footing doctrines, confirming that Indiana acquired exclusive title to lands beneath Lake Michigan upon statehood in 1816. The court referenced key cases establishing that later-admitted states, under the Equal-Footing principle, hold the same property rights as the original thirteen states regarding navigable waters. It concluded that Indiana maintained title to the shores of Lake Michigan up to the ordinary high-water mark, with private landowners holding rights only to landward of that boundary. Following this ruling, the Indiana General Assembly enacted House Enrolled Act (HEA) 1385, affirming state ownership of Lake Michigan's waters in trust for public use and clarifying that bordering landowners do not possess exclusive rights to the submerged land. HEA 1385 expanded recognized public uses of Lake Michigan's shoreline to include activities like boating and swimming, alongside established rights for walking, commerce, navigation, and fishing. In the current case, the property owners, not involved in Gunderson but claiming deeds extending to the low-water mark, have their factual allegations accepted as true due to the procedural context of a motion to dismiss.

The Indiana Supreme Court's ruling established state ownership of land up to the ordinary high-water mark, which the Owners claim constitutes an uncompensated taking of their property under the Fifth Amendment. They argue that HEA 1385 further expanded Gunderson's easement, negatively impacting their property rights. Consequently, the Owners filed a lawsuit in federal court under 42 U.S.C. § 1983 against state defendants in their official capacities, seeking a declaratory judgment that both the Gunderson decision and HEA 1385 resulted in an uncompensated taking. They also requested a permanent injunction to prevent enforcement of these rulings. The Owners concede their challenge revolves around a judicial-takings claim, asserting that if Gunderson is upheld, their title to land below the ordinary high-water mark was never valid, thus HEA 1385 would not affect their rights. They do not seek compensation but rather the ability to exclude the public from the claimed lands.

The district court dismissed the case, citing sovereign immunity and the functional equivalence of the Owners' claims to a quiet-title action, referencing Idaho v. Coeur d’Alene Tribe of Idaho. The court did not address the potential for a judicial takings claim but reasoned that the Owners failed to demonstrate an established right to the property in question as per Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection. The Owners further developed their judicial takings theory, asserting that the Indiana Supreme Court's decision unlawfully took their property without compensation. While the Takings Clause applies to states via the Fourteenth Amendment, the Supreme Court has not definitively ruled on whether it applies to state judiciaries. The last significant consideration of judicial takings occurred in Stop the Beach, where no consensus was reached regarding the application of the Takings Clause to judicial decisions affecting property rights. Only a minority of justices acknowledged the possibility of such violations under specific circumstances.

The case revolves around a Florida statute that allows local governments to restore eroding beaches by establishing an "erosion control line" that supersedes the mean high-water line as the boundary between private and state property. Beachfront property owners challenged this law in state court, claiming it infringed on their property rights without just compensation. The Florida Supreme Court upheld the law, stating it did not contravene Florida’s Takings Clause. The property owners appealed to the U.S. Supreme Court, asserting that the Florida Supreme Court effectively denied their property rights by declaring them nonexistent.

Justice Scalia, writing for a plurality, argued that a judicial ruling that nullifies established property rights could constitute a taking. He proposed a test for judicial takings, asserting that if a legislative or judicial declaration negates a recognized property right, it equates to a taking. However, his opinion did not achieve a majority consensus, and the Court ultimately found that the state court's ruling did not amount to a taking, as it did not eliminate a right under Florida law.

Justice Kennedy, joined by Justice Sotomayor, contended that the power to take property lies with the legislative and executive branches, which must act for public purposes and provide compensation. He suggested that if a judicial decision invalidates an established property right, it could be challenged under the Due Process Clause for lacking due process. He emphasized that while states can modify property law incrementally, courts should not abandon established principles. Justice Breyer, in a separate concurrence, raised concerns about federal judicial involvement in state property law, suggesting that recognizing judicial takings could disrupt state interests.

No federal court of appeals has recognized the judicial-takings theory since the Stop the Beach decision, with all circuits opting to avoid resolving the issue. They have assumed that if such a claim existed, it would follow the test proposed by Justice Scalia: whether an established property right has been declared nonexistent by the state. However, in cases reviewed by these circuits, courts have consistently found that no established property right was erased. For instance, in Wells Fargo Bank v. Mahogany Meadows Ave. Tr., the 9th Circuit declined to determine the viability of judicial-takings claims due to a lack of established rights under Nevada law. Similarly, other cases like Petrie ex rel. PPW Royalty Tr. v. Barton and In re Lazy Days’ RV Ctr. Inc. dismissed claims based on the premise that they would fail regardless of the existence of a judicial-takings theory.

The current case faces an antecedent issue of Article III standing, which the court must assess independently. The requirements for standing include personal injury that is traceable to the defendant's conduct and likely to be remedied by the relief sought. While the Owners allege that their property was taken without just compensation, they do not sufficiently demonstrate causation and redressability. Specifically, they fail to show that a favorable ruling would likely address their injury, as none of the defendants have the authority to grant them title in light of the Indiana Supreme Court’s Gunderson decision and HEA 1385. The court clarified that it cannot overturn a state supreme court ruling and that none of the state defendants can confer title since the Indiana Supreme Court has determined that the land in question belongs to the state. Consequently, any injunction issued would not resolve the underlying issue.

A lawsuit alleging a violation of Fifth Amendment rights typically seeks compensation, but the Owners did not pursue this against Indiana, and federal courts may lack jurisdiction to provide such compensation due to states' sovereign immunity. The Supreme Court's decision in *Knick v. Township of Scott* allows federal takings claims without exhausting state remedies, yet this is limited to municipalities, which do not have sovereign immunity like states do. Federal circuit courts have uniformly held that *Knick* did not alter states' sovereign immunity concerning takings claims for damages in federal court, especially since state courts remain available for such claims. Additionally, states are not considered "persons" under 42 U.S.C. § 1983, eliminating the possibility of seeking damages through that statute. 

The Owners are seeking only equitable and declaratory relief, specifically an injunction to prevent the State from enforcing the Gunderson decision or HEA 1385. However, even if the Ex parte Young exception applies, the requested injunction would not remedy the Owners' injury, which stems from Gunderson limiting their property rights to the ordinary high-water mark on Lake Michigan. The injunction would not change the state’s title to the land or grant the Owners rights to exclude the public from the beach. Therefore, any attempt by the Owners to claim rights over submerged lands would be negated by Indiana law, which recognizes state ownership. The judicial takings claim raised by the Owners is notably different from the claim in *Cedar Point Nursery v. Hassid*, where the government physically took possession without acquiring title.

The Supreme Court determined that California's access regulation constituted a per se physical taking, necessitating compensation, and sent the case back for further proceedings. The Cedar Point plaintiffs sought declaratory and injunctive relief similar to the Owners in this case, but their injury stemmed from the uncompensated taking of property they owned, which could be remedied through either prospective or retrospective judicial action. In contrast, the Owners cannot have their injuries redressed by ordering state defendants to refrain from enforcing state property law, as this does not alter the law itself. 

Furthermore, the Owners failed to meet the causation requirement for Article III standing, as they must demonstrate that their alleged injury is directly linked to the defendants’ actions rather than independent third-party actions. The property in question is held in public trust due to prior determinations by the Indiana Supreme Court and subsequent legislative confirmation, independent of the state defendants' actions. The Owners' claim lacks sufficient allegations to show that the state defendants’ enforcement of the Gunderson decision caused any new injury beyond what they already faced due to the court's ruling.

This situation underscores concerns of federalism and comity associated with judicial takings. The Indiana Supreme Court's ruling established the public-private boundary regarding property along Lake Michigan, suggesting that the disputed land was never privately owned, and thus, not subject to a taking. The Owners' sense of grievance does not equate to a legal claim, as property rights are defined by state courts, and if they lacked title under Indiana law, the property could not have been taken by the state.

State property law, not actions by state parties, undermines the Owners' claims to property taken under Gunderson v. Indiana. The court cannot assert that property was taken without effectively overturning Gunderson, which would infringe upon the Indiana Supreme Court's exclusive authority to review state court decisions. Although the Rooker-Feldman doctrine does not apply since the Owners were not involved in the Gunderson case, its principles suggest caution in allowing federal courts to reassess state supreme court rulings.

The district court dismissed the case for two primary reasons. First, it found that it lacked subject-matter jurisdiction based on a narrow exception to the Ex parte Young doctrine, as articulated in Idaho v. Coeur d’Alene Tribe of Idaho. Generally, Ex parte Young allows lawsuits against state officials for ongoing federal law violations, but Coeur d’Alene established that this exception does not extend to quiet title actions against a state in federal court. The Owners argued against the applicability of Coeur d’Alene, but the court upheld its relevance, deeming the case similar to a quiet title action.

Second, the court determined that the Owners failed to state a claim under the judicial takings theory, as articulated by Justice Scalia, which requires proof of a clearly established property right prior to the state court's decision. The Owners could not demonstrate that the Indiana Supreme Court's ruling represented a significant deviation from established property rights, as the status of the Lake Michigan coastline was previously ambiguous.

Ultimately, the court affirmed the district court's dismissal for lack of subject-matter jurisdiction, adjusting the dismissal to be without prejudice, as the Owners lacked standing to sue state officials who did not cause or could not remedy the alleged harm.