Robert Holton v. Bobby Henon

• Court: Court of Appeals for the Third Circuit
• Decided: October 22, 2020
• Docket: 19-2825
• Status: Unpublished

Opinion

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ____________

No. 19-2825 ____________

ROBERT HOLTON, Appellant

v.

BOBBY HENON; DARIN L. GATTI; EDWARD JEFFERSON; CITY OF PHILADELPHIA ____________

On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civil No. 2-18-cv-02228) District Judge: Honorable Chad F. Kenney ____________

Submitted Pursuant to Third Circuit L.A.R. 34.1(a) October 2, 2020

Before: SHWARTZ, PHIPPS, and FISHER, Circuit Judges.

(Filed: October 22, 2020) ____________

OPINION* ____________

* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. PHIPPS, Circuit Judge.

Citing several code violations, the Philadelphia Department of Licenses and

Inspections issued a cease operations order to a scrap metal and automobile salvage

business operating on a parcel of land within the City of Philadelphia. The owner of that

business, Robert Holton, contested that order administratively, and after holding an

evidentiary hearing, the City of Philadelphia Board of License and Inspection Review

upheld the order. Holton then challenged that order in state court – twice through

preliminary injunction motions and once through an appeal. In state court, the City

defended the issuance of the cease operations order on two grounds: (i) that Holton

lacked a proper use permit, and (ii) that due to the City’s prior condemnation of the

parcel, Holton did not own the property. In response to the real property dispute, Holton

produced a quitclaim deed, but the state court rejected each of his requests for relief.

Holton did not pursue further appeals in state court.

Unsuccessful in state court and unable to operate his business, Holton sought

redress in federal court. See 28 U.S.C. §§ 1331, 1343(a)(4). He alleged that he owned

the property “in fee, free and clear,” Second Am. Compl. ¶ 16 (App. 128), and he sued

the City of Philadelphia under the Fifth Amendment for taking his property without just

compensation. He also sued a Member of the Philadelphia City Council, the Chief

Engineer of the City of Philadelphia, and a Senior Attorney in the City of Philadelphia

Law Department – each under 42 U.S.C. § 1983 for conspiring to take his property.

The City and the individual defendants moved to dismiss the complaint on several

grounds. The District Court granted that motion, relying on the Rooker-Feldman doctrine

2 to dismiss the case for lack of subject-matter jurisdiction. Holton v. Henon, No. 18-cv-

2228, 2019 WL 2320871, at *4 (E.D. Pa. May 28, 2019). Holton timely appealed. In

exercising appellate jurisdiction over that final order, see 28 U.S.C. § 1291, we will

vacate and remand the case for the reasons below.

In two Supreme Court cases – Rooker and Feldman – the Supreme Court

interpreted a federal statute, 28 U.S.C. § 1257, to limit implicitly, through an affirmative

pregnant, the jurisdiction of inferior federal courts. See Rooker v. Fid. Tr. Co., 263 U.S.

413 (1923); D.C. Ct. of Appeals v. Feldman, 460 U.S. 462 (1983). That statute grants the

Supreme Court jurisdiction over appeals taken from “the highest court of a State in which

a decision could be had.” 28 U.S.C. § 1257(a). Such an appealed judgment must involve

federal law in at least one of three ways: (i) by drawing into question a federal statute or

treaty; (ii) by challenging a state law as “repugnant to the Constitution, treaties, or laws

of the United States”; or (iii) by implicating a title, right, privilege, commission, or

authority held by virtue of federal law. Id. By its terms, § 1257 says nothing about the

jurisdiction of any other federal court. The Supreme Court filled that gap in Rooker and

in Feldman by construing § 1257’s affirmative grant of jurisdiction to the Supreme Court

as eliminating the jurisdiction of every other federal court over the class of cases

identified in § 1257. See Rooker, 263 U.S. at 416 (recognizing that federal district courts

have original jurisdiction but not appellate jurisdiction); Feldman, 460 U.S. at 482–86

(prohibiting federal district court review of judicial determinations by state courts but

allowing challenges to rules promulgated by those courts). See also Exxon Mobil Corp.

v. Saudi Basic Indus. Corp., 544 U.S. 280, 291 (2005) (“Rooker and Feldman exhibit the

3 limited circumstances in which this Court’s appellate jurisdiction over state-court

judgments, 28 U.S.C. § 1257, precludes a United States district court from exercising

subject-matter jurisdiction in an action it would otherwise be empowered to adjudicate

under a congressional grant of authority . . . .”); Verizon Md., Inc. v. Pub. Serv. Comm’n

of Md., 535 U.S. 635, 644 n.3 (2002) (“The Rooker-Feldman doctrine . . . does not

authorize district courts to exercise appellate jurisdiction over state-court judgments,

which Congress has reserved to this Court, see § 1257(a).”).

The current formulation of what has become known as the Rooker-Feldman

doctrine builds off that principle. But the doctrine also implicitly incorporates a

foundational reality – that federal courts are courts of limited jurisdiction. See Home

Depot U.S.A., Inc. v. Jackson, 139 S. Ct. 1743, 1746 (2019) (“We have often explained

that ‘[f]ederal courts are courts of limited jurisdiction.’” (quoting Kokkonen v. Guardian

Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (alteration in original))); In re Cmty. Bank

of N. Va. Mortg. Lending Pracs. Litig., 911 F.3d 666, 670 (3d Cir. 2018). Specifically,

the “[j]urisdiction of the lower federal courts is . . . limited to those subjects encompassed

within a statutory grant of jurisdiction.” Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites

de Guinee, 456 U.S. 694, 701 (1982). And there is a general absence of statutory

authority for any federal court to hear an appeal from a state court other than “the highest

court of a State in which a decision could be had.” 28 U.S.C. § 1257(a); see also Atl.

Coast Line R.R. Co. v. Brotherhood of Locomotive Eng’rs, 398 U.S. 281, 296 (1970)

(“[L]ower federal courts possess no power whatever to sit in direct review of state-court

decisions.”); cf. 28 U.S.C. § 2254(a) (empowering federal district courts to review

4 collaterally final state-court judgments through a writ of habeas corpus). Thus, the

Rooker-Feldman doctrine precludes not only appeals from highest state courts to inferior

federal courts but also appeals from any non-highest state court to inferior federal courts.

This Court has articulated four conditions necessary for Rooker-Feldman to bar an

action that is otherwise within a federal court’s subject-matter jurisdiction. Those are the

following:

(1) the federal plaintiff must be a state-court loser; (2) the federal plaintiff must complain of injuries caused by the adverse state-court judgment; (3) that adverse state-court judgment must have been rendered before the federal suit was filed; and (4) the federal plaintiff must invite the federal district court to review and reject the adverse state-court judgment.

See Great W. Mining & Min. Co. v. Fox Rothschild LLP, 615 F.3d 159, 166 (3d Cir.

2010); see also Malhan v. Sec’y U.S. Dep’t State, 938 F.3d 453, 458 (3d Cir. 2019).

Of those four conditions, only the third – that the state-court judgment must

precede the filing of the federal suit – is satisfied here. A federal court’s subject-matter

jurisdiction is assessed on the filing date of the complaint or an amended complaint. See

Rockwell Int’l Corp. v. United States, 549 U.S. 457, 473–74 (2007) (“[W]hen a plaintiff

files a complaint in federal court and then voluntarily amends the complaint, courts look

to the amended complaint to determine jurisdiction.”); Santomenno ex rel. John Hancock

Tr. v. John Hancock Life Ins. Co. (U.S.A.), 677 F.3d 178, 185 (3d Cir. 2012). The

original state-court judgment from August 20, 2018, was vacated, but it was reinstated on

September 12, 2018, with the state court affirming the decision by the Board of License

5 and Inspection Review on the grounds that Holton failed to have a use registration

permit. Holton filed his second amended complaint in the federal action after that date,

on January 22, 2019. Because the state-court judgment was entered before Holton’s

operative complaint, the third condition is met. But dismissal on Rooker-Feldman

grounds requires fulfillment of all four conditions, and here the other three are not

satisfied.

Under the first condition, the federal plaintiff must be a state-court loser. See

Exxon Mobil, 544 U.S. at 284; Great W. Mining, 615 F.3d at 166. Holton did lose in

state court: he failed to overturn the cease operations order. But he is not a state-court

loser in the Rooker-Feldman context because the state court did not rule upon the takings

and § 1983 claims that he now brings in federal court. See Geness v. Cox, 902 F.3d 344,

360 (3d Cir. 2018).

The second Rooker-Feldman condition is similarly unmet. That condition

examines whether the federal plaintiff complains of injuries caused by an adverse state-

court judgment. See Exxon Mobil, 544 U.S. at 284; Great W. Mining, 615 F.3d at 166.

Holton’s injuries relate to the lost use of his alleged real property, and the state-court

order upheld the cease operations order. But that does not mean that the state-court order

caused those injuries. In evaluating causation under Rooker-Feldman, the critical inquiry

is the source of the injury. See Great W. Mining, 615 F.3d at 168. And here, the state

court did not issue the cease operations order. Rather, the City of Philadelphia, through

its officers, did so. While the subsequent state-court judgment upheld that order, that

does not amount to causing the injury for Rooker-Feldman purposes. See id. at 167

6 (explaining that Rooker-Feldman does not create a jurisdictional bar when a state-court

judgment “simply ratified, acquiesced in, or left unpunished” the actions of a third party

(quoting Hoblock v. Albany Cnty. Bd. of Elections, 422 F.3d 77, 88 (2d Cir. 2005))); see

also Desi’s Pizza, Inc. v. City of Wilkes-Barre, 321 F.3d 411, 425–26 (3d Cir. 2003)

(rejecting the application of Rooker-Feldman to a federal claim for selective prosecution

despite repeated state-court findings of nuisance because the federal claim arose

independently of the state court’s nuisance finding).

The fourth Rooker-Feldman condition is likewise unfulfilled here. To satisfy that

condition, the federal plaintiff must seek “review and rejection” of the adverse state-court

judgment. Exxon Mobil, 544 U.S. at 284; see also Great W. Mining, 615 F.3d at 168.

Essentially, the federal plaintiff must seek a declaration that the state-court judgment is

“null and void” – as was the case in Rooker. 263 U.S. at 414–15; see also Exxon Mobil,

544 U.S. at 284; Great W. Mining, 615 F.3d at 169 (explaining that the “appellate

review” barred by Rooker-Feldman “consists of a review . . . to determine whether [the

state court] reached its result in accordance with law” (quoting Bolden v. City of Topeka,

441 F.3d 1129, 1143 (10th Cir. 2006))). But Holton does not seek to undo the state-court

judgment upholding the cease operations order. To the contrary, Holton’s just

compensation and damages claims depend upon the cease operations order. Because

Holton’s federal lawsuit relies upon, as opposed to seeks to undo, the state-court

judgment, the fourth Rooker-Feldman condition is not met here. See In re Phila. Ent. &

Dev. Partners, 879 F.3d 492, 500–01 (3d Cir. 2018) (holding Rooker-Feldman did not

7 apply to federal suit that “could have started from the premise that the [state board and

state court] reached the correct result under state law”).

The rejection of Rooker-Feldman’s applicability clears only a jurisdictional bar to

Holton’s lawsuit. It may be that Holton’s claims would be barred by issue preclusion –

if, for instance, the state court determined on the merits, after a full and fair opportunity

to litigate the issue, that Holton did not own the property on which he operated his

business. See Kedra v. Schroeter, 876 F.3d 424, 434 n.2 (3d Cir. 2017); Greenleaf v.

Garlock, Inc., 174 F.3d 352, 357–58 (3d Cir. 1999); see also 28 U.S.C. § 1738. But issue

preclusion is not a jurisdictional bar, and the parties may address that defense on remand

in the District Court. See Exxon Mobil, 544 U.S. at 293 (citing Fed. R. Civ. P. 8(c));

Great W. Mining, 615 F.3d at 170.

For these reasons, we will vacate the District Court’s judgment and remand for

proceedings consistent with this opinion.