MARTIN L.C. FELDMAN, District Judge.
Before the Court is the defendants' joint motion to dismiss or, in the alternative, to abstain or stay. For the reasons that follow, the motion is GRANTED in part and DENIED in part.
This civil rights lawsuit concerns a subtenants' operation of a mechanical bull on its subleased premises, which resulted in a state trial court ruling, during an eviction proceeding, that the mechanical bull must be removed; the subtenants assert that their lessors conspired with state actors to remove them from their subleased Bourbon Street property.
In 1989 the City of New Orleans created the Canal Street Development Corporation (CSDC),
In January 1998 800 Canal Street sublet a portion of the property
Section 2.01(C) of the 800 Canal-Storyville sublease restricts the use of the leased premises, providing:
On February 4, 2002 Storyville, in turn, sublet the space to Bourbon Street Management, LLC, which then entered into still another sublease with Howl at the Moon New Orleans, LLC and Jazz Parlor, LLC, all with the approval of CSDC and 800 Canal. As a result of the latest sublease arrangement, the operations in the subleased premises included a restaurant, as well as musical performances such as jazz performances, and a concept known as "Howl at the Moon", which featured live entertainment.
According to the allegations of the complaint, the leased premises and hotel are zoned "CBD 3" under the City's Comprehensive Zoning Ordinances. CSDC obtained a conditional use ordinance with the City to operate a hotel on the property; "live entertainment" is permitted as an accessory use.
For years Storyville and its sublessees featured live musical performances and other live entertainment, without interference or objection by 800 Canal or CSDC. Sometime after Hurricane Katrina — "[i]n an effort to reopen its business and meet their lease obligations to 800 Canal" — one of Storyville's subtenants installed a mechanical bull in the sublet premises as part of a country-western theme restaurant and bar known as The Bourbon Cowboy; the Bourbon Cowboy operated without objection for some time.
In September 2009 representatives of 800 Canal (and David Abbenanty, HRI's president and Chief Operating Officer, and Steve Nance, HRI's vice president of investments)
On December 7, 2009 800 Canal Street filed suit in state court, seeking to evict Storyville and its subtenants, alleging that (1) they had routinely encouraged topless women to ride the mechanical bull in violation of Section 2.01(C) of the sublease; (2) they violated the restricted use provisions of the sublease under Section 1.01(L); and (3) they failed to comply with the zoning ordinances for the City, which violated Section 5.02 of the sublease.
The plaintiffs in this federal suit maintain that May's letter was wrongfully solicited by Connick and violated the proper procedure governing violations of the CZO, which generally requires a violation or citation to issue, an allowance of 15 days to cure any violation, followed by proceeding to the Board of Zoning Adjustment and then to Civil District Court and, if necessary, eventually to the state supreme court. Nonetheless, the Paul May letter was provided to the state court in the eviction proceeding, and the state court admitted it into evidence over the Storyville subtenants' objections.
The state court defendants (Storyville, et al.) appealed this judgment on March 15, 2010, asserting that the state trial court erroneously ordered them to remove the mechanical bull. On May 6, 2010 800 Canal Street appealed the state court's denial of its petition for eviction and its May 4 judgment denying its motion for award of attorneys' fees and costs. Those appeals are pending.
Other lawsuits are pending in state court between these parties.
After 800 Canal Street filed its eviction proceeding, Storyville filed a declaratory and injunctive action against 800 Canal Street in state court, seeking to enjoin 800 Canal Street from evicting it from the leased premises and seeking a declaratory judgment that it was not in violation of the sublease. 800 Canal Street filed exceptions of lis pendens and no cause of action. Storyville agreed that it could not enjoin the first-filed eviction suit, and a judgment was entered, declaring the issue moot. The state court then granted 800 Canal Street's exception of lis pendens, dismissing the suit. Storyville appealed the dismissal based on lis pendens; that appeal is also pending.
On April 1, 2010 Storyville again sued 800 Canal Street in state court, seeking declaratory and injunctive relief; Storyville also sought to recover attorneys' fees and costs it had incurred in the eviction lawsuit by 800 Canal Street. Storyville again sought to enjoin 800 Canal Street from terminating its sublease. Storyville also sought a determination as to whether certain violations that 800 Canal Street asserted were barred on the basis of res judicata. 800 Canal Street filed opposition papers and the injunctive relief hearing was continued, without date.
One week later, Jazz Parlor filed a mandamus suit against CSDC and Cynthia Connick in state court, seeking to order CSDC and Connick to put 800 Canal
Two months later, this federal suit was filed based on the state trial court's "erroneous ruling" in the eviction proceeding
• In Count I, the plaintiffs allege that the defendants violated their civil rights under Section 1983 and 1985 by acting under color of state law and in conspiracy with one another to violate their procedural and substantive due process rights, that the defendants knew that the plaintiffs had a protected property interest in the leased premises, and that the defendants circumvented the normal procedures for alleged zoning violations, including by meeting with Paul May and convincing him to write a letter.
• In Count II, the plaintiffs assert that the defendants' conspiracy to use City actors to avoid the administrative process and penalize them for an alleged zoning violation violated their right to equal protection "by implementing a scheme which succeeded in failing to provide them the same remedies as afforded to others similarly situated."
• In Count III, the plaintiffs assert that the defendants wrongfully used the May letter in an "attempt[] to enforce the erroneous position that `live entertainment' is not allowed in the leased premises," thereby impairing the contract (the sublease) that CSDC had previously approved, in violation of the Contracts Clause of the U.S. Constitution.
• The plaintiffs generally assert civil rights violations under Sections 1983, 1985, and 1986.
• Invoking this Court's supplemental jurisdiction, the plaintiffs further assert various state law claims, including breach of contract, detrimental reliance, tortious interference with contract, and negligence.
The plaintiffs seek damages including attorney's fees, past lost revenue, loss of
The defendants now seek dismissal of the plaintiffs' complaint based on lack of subject matter jurisdiction, invoking the Rooker-Feldman doctrine. If the Court finds that it has subject matter jurisdiction, the defendants seek to dismiss the plaintiffs' claims for failure to state a claim. Alternatively, the defendants urge the Court to abstain from hearing the plaintiffs' claims, or to stay this litigation pending resolution of the state court appeals.
Invoking the Rooker-Feldman doctrine, the defendants challenge this Court's subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). The Court must consider this threshold matter of subject matter jurisdiction first.
A lawsuit must be dismissed if it appears that the Court lacks subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1), (h)(3). The party asserting jurisdiction bears the burden of establishing the Court's subject matter jurisdiction. Kokkonen v. Guardian Life Ins. Co. Of America, 511 U.S. 375, 377, 114 S.Ct. 1673, 1675, 128 L.Ed.2d 391 (1994). The Court may base its decision on: "(1) the complaint alone; (2) the complaint supplemented by undisputed facts; or (3) the complaint supplemented by undisputed facts and the court's resolution of disputed facts." Barrera-Montenegro v. United States, 74 F.3d 657, 659 (5th Cir.1996).
Federal district courts lack jurisdiction to entertain collateral attacks on state court judgments. United States v. Shepherd, 23 F.3d 923, 924 (5th Cir.1994); Liedtke v. State Bar of Texas, 18 F.3d 315, 317 (5th Cir.1994), cert. denied, 513 U.S. 906, 115 S.Ct. 271, 130 L.Ed.2d 189 (1994), reh'g denied, 513 U.S. 1036, 115 S.Ct. 626, 130 L.Ed.2d 533. This "firmly established" principle is known as the Rooker-Feldman doctrine. Liedtke, 18 F.3d at 317 (citing Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923) and D.C. Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983)). Application of the doctrine is limited to cases "brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments." Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284, 125 S.Ct. 1517, 161 L.Ed.2d 454 (2005)(addressing the scope of the Rooker-Feldman doctrine to resolve a conflict among the courts of appeals). Federal authority to review a state court judgment lies exclusively with the Supreme Court of the United States. Id. at 292, 125 S.Ct. 1517; Hale v. Harney, 786 F.2d 688, 691 (5th Cir.1986) ("[j]udicial errors committed in state courts are for correction in the state court systems, at the head of which stands the United States Supreme Court; such errors are no business of ours").
This jurisdictional limitation cannot be evaded by asserting claims not raised in the state court proceedings or claims framed as original claims for relief. United States v. Shepherd, 23 F.3d 923, 924 (5th Cir.1994). If the issues before the federal district court are "inextricably intertwined" with a state court judgment, the Court is "in essence being called upon to review the state-court decision", and
The defendants contend that this Court lacks subject matter jurisdiction based on the Rooker-Feldman doctrine because the plaintiffs essentially challenge the state court's ruling that the mechanical bull violated the parties' sublease agreement. The plaintiffs counter that their assertion of civil rights violations makes this suit a distinct proceeding that warrants federal review. The Court disagrees. The plaintiffs' claims here are obviously an attempt to seek federal review of their disappointment with the state court process, indeed a process that is still fully taking its course: the plaintiffs do not deny that they appealed the state court's February 26, 2010 order, asserting that the state court erroneously ordered them to remove the mechanical bull. Indeed, they assert in their federal complaint that the state court erred in its ruling. However, the parties have failed to adequately address in their papers whether the state court ruling is sufficiently final to trigger the application of the Rooker-Feldman doctrine.
The defendants insist that the Fifth Circuit's ruling in Hale v. Harney is controlling here: in 1986, the Fifth Circuit ruled that Rooker-Feldman is not limited to final state court judgments or orders on which appeals have been exhausted. Hale v. Harney, 786 F.2d 688, 691 (5th Cir. 1986).
Id. at 690-91. It is clear that, if Hale controls, the Rooker-Feldman doctrine bars the plaintiffs' federal lawsuit here, even though state appellate proceedings are pending.
The plaintiffs, without mentioning Hale, seem to suggest that developments since Hale undermine the ruling insofar as Hale applied Rooker-Feldman in spite of the pending state appellate proceedings. Ultimately, the Court agrees.
At the outset, the plaintiffs correctly note that the Fifth Circuit has observed, since Hale:
Rowley v. Wilson, 200 Fed.Appx. 274 (5th Cir. Aug. 4, 2006)(unpublished) (internal citations omitted). Rowley is an unpublished per curiam opinion. Therefore, pursuant to 5th Circuit Rule 47.5.4, Rowley is not precedent except under certain limited circumstances not present here. Accordingly, the Court also looks to other authority analyzing Exxon Mobil's gloss on Rooker-Feldman to determine whether Exxon Mobil so limited Rooker-Feldman as to make it inapplicable, as the plaintiffs maintain, to state court judgments that are on appeal in the state system.
Two camps have emerged post-Exxon Mobil. One camp is comprised of courts that have found Rooker-Feldman inapplicable unless all state proceedings, including appeals, have been resolved before the federal suit begins. See, e.g., Nicholson v. Shafe, 558 F.3d 1266, 1275-76 (11th Cir. 2009) ("[B]ecause an appeal remained pending in the state court action at the time the Appellants filed the instant [federal] case, the state court proceedings had not ended for the purposes of Rooker-Feldman
A second camp disagrees with this reasoning. This other line of cases, like the Fifth Circuit did pre-Exxon Mobil in Hale, applies Rooker-Feldman as long as the federal suit seeks review of a previously-rendered state court judgment, regardless of whether that judgment is being appealed in the state court system when the federal suit begins. See, e.g., Caldwell v. Gutman, Mintz, Baker & Sonnenfeldt, 701 F.Supp.2d 340, 347 (E.D.N.Y.2010); Plummer v. State Bar of Arizona, No. 08-1630, 2009 WL 2222713 (D.Ariz. July 23, 2009); Field Auto City v. General Motors Corp., 476 F.Supp.2d 545, 553 (E.D.Va.2007)("a federal suit is no less an appeal [of] the state trial court judgment simply because state appeals are not yet final ... [a]nd, the purpose and function of Rooker-Feldman are no less implicated and important in cases where the state appeal becomes final before or after the federal suit is filed"); Sinclair v. Bankers Trust Co. of California, N.A., No. 05-72, 2005 WL 3434827, at *3 (W.D.Mich. Dec. 13, 2005) ("[u]nlike Exxon Mobil, the state court proceedings between [the defendants and the plaintiff] reached judgment before [the plaintiff] filed her federal claim ... the state court proceeding that must reach judgment before a federal complaint is filed for Rooker-Feldman to be applicable is the appealable trial court's judgment...").
The Court determines that the first camp — in requiring that the state proceedings have ended, which includes the requirement that the appellate process has been exhausted (if undertaken) — is the most supportable. The law in the Fifth Circuit is hardly conclusive, given that the appellate court has not expressly overruled Hale. However, unpublished Fifth Circuit opinions signaling that Exxon Mobil has so limited the scope of the Rooker-Feldman doctrine as to make it inapplicable to cases such as the pending matter, where the state appellate process is incomplete and pending,
While the plaintiffs' claims here are obviously an attempt to seek federal review of state court process, that process is still taking its course: the plaintiffs do not deny that they appealed the state court's February 26, 2010 order, asserting that the state court erroneously ordered them to remove the mechanical bull. It is the unfinished and ongoing posture of the state court appellate process that presents a procedural obstacle to the defendants' invocation of Rooker-Feldman. See LAC Real Estate Holdings, L.L.C. v. Biloxi Marsh Lands Corp., 320 Fed.Appx. 267 (5th Cir.2009)(holding that Rooker-Feldman doctrine has no application where "[t]he state court proceedings are still pending and no final judgment has been rendered"); see also Rowley, 200 Fed. Appx. at 275. Because a threshold procedural condition for the application of Rooker-Feldman is not met (the state court proceedings have not ended within the meaning of Exxon Mobil), this Court has subject matter jurisdiction to entertain this suit.
As noted above, the state court proceedings are still pending — no final judgment has been rendered. Nevertheless, the Court is not now forced to act as an appellate tribunal of the state district court judgment. Because this case involves parallel state and federal litigation, the Court next considers whether "[c]omity or abstention doctrines may ... permit or require [the Court] to stay or dismiss the federal action in favor of state-court litigation."
Federal courts have a "virtually unflagging" obligation to exercise the jurisdiction granted to them. Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976). Accordingly, the mere "pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction." Id. (quoting McClellan v. Carland, 217 U.S. 268, 282, 30 S.Ct. 501, 54 L.Ed. 762 (1910)). In "extraordinary and narrow" circumstances, however, a district court may abstain from exercising its jurisdiction. Id. at 813 (noting that "[a]bstention from the exercise of federal jurisdiction is the exception, not the rule").
As a threshold matter, a stay of federal proceedings under Colorado River may be considered when the federal and state cases are parallel, which generally means that the actions involve the same parties and same issues. See Stewart v. Western Heritage Ins. Co., 438 F.3d 488, 491 (5th Cir.2006). Once it is determined that the state and federal cases are parallel, the Court must determine if "exceptional circumstances" warrant abstention by applying six
Id. (citations omitted). "[T]hese factors [are not applied] mechanically, but carefully balance[d] ... `with the balance heavily weighted in favor of the exercise of jurisdiction.'" Id. (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 16, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)).
Applying these factors demonstrates that exceptional circumstances permit the Court to abstain from exercising jurisdiction in deference to the ongoing state appellate proceedings.
Because the Court has determined that abstention is appropriate, it need not address the defendants' remaining arguments. Accordingly, IT IS ORDERED: that the defendants' motion is DENIED in part, insofar as it sought dismissal for lack of subject matter jurisdiction and GRANTED in part, insofar as it sought a stay of proceedings in deference to the ongoing state court litigation. Because the case will be stayed until the parallel state court proceedings are resolved, IT IS FURTHER ORDERED: that the case is closed administratively for statistical purposes.
544 U.S. 280, 284, 125 S.Ct. 1517, 1521-22, 161 L.Ed.2d 454 (2005).
Here, Congress clearly reserved to the U.S. Supreme Court appellate jurisdiction over state court judgments "rendered by the highest court of a State[.]" As Exxon Mobil made clear:
Exxon Mobil, 544 U.S. at 291-92, 125 S.Ct. 1517. The Supreme Court went on to note that "Congress, if so minded, may explicitly empower district courts to oversee certain state-court judgments and has done so, most notably, in authorizing federal habeas review of state prisoners' petitions. 28 U.S.C. § 2254(a)." Id. at 292 n. 8, 125 S.Ct. 1517.