Case 1:13-cv-00782-PLM Doc #29-1 Filed 08/23/13 Page 1 of 12 Page ID#481

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MICHIGAN, SOUTHERN DIVISION

In Re: A FOREVER RECOVERY, INC., a Michigan corporation, and TIA CORPORATION, Michigan corporation, Petitioners/Plaintiffs, v. PENNFIELD TOWNSHIP, Respondent/Defendant.

Case No. 1:13-cv-00782 Hon. Paul L. Maloney, Chief District Judge

Thomas G. King (P34006) Michael J. Toth (P36310) KREIS, ENDERLE, HUDGINS & BORSOS, P.C. Attorney for Petitioners/Plaintiffs P.O. Box 4010 Kalamazoo, MI 49003 (269) 324-3000 tking@kreisenderle.com

Thomas R. Meagher (P32959) Liza C. Moore (P72240) FOSTER, SWIFT, COLLINS & SMITH, P.C. Attorneys for Respondent/Defendant 313 S. Washington Square Lansing, MI 48933 (517) 371-8161 tmeagher@fosterswift.com

PETITIONERS/PLAINTIFFS A FOREVER RECOVERY, INC. AND TIA CORPORATIONS BRIEF IN OPPOSITION TO RESPONDENT/DEFENDANT PENNFIELD TOWNSHIPS MOTION TO DISMISS UNDER F.E.D. R. CIV. P. 12(b) ORAL ARGUMENT REQUESTED

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TABLE OF CONTENTS Page Table of Authorities .............................................................................................................. 3 Introduction Facts ....................................................................................................................... 4 ....................................................................................................................... 4

Procedural Background ........................................................................................................ 5 Argument I. ...................................................................................................................... 5

Federal and State Standard of Pleading ............................................................... 5

II.

This Court is without jurisdiction to decide this Motion and based upon the Motion to Remand pending before this Court, this Court should remand the entire case to State Court and allow the State Court to decide all of the allegations contained in the complaint .................................................. 7
A. The Court Must Remand This Case Unless the Township Establishes That The Plaintiffs Federal Claim is Ripe for Review .................................................... 7

1. The Court Has No Jurisdiction Over The Plaintiffs Federal Takings Claim ...................................................................................... 8 2. The Township Must Also Establish That The Plaintiffs Federal Due Process Claim Is Ripe To Establish This Courts Jurisdiction Of Plaintiffs Complaint. ....................................................................... 10

Conclusion .......................................................................................................................... 11

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TABLE OF AUTHORITIES Cases

AM Rodriguez Assoc Inc v Douglas, No. 1:08-cv-214 (W.D. Mich. 2009), 2009 U.S. Dist. Lexis 1100998 (November 30, 2009) .....................................................................................................................................10 Ashcroft v Igbal, 556 U.S. 662 (2009) .................................................................................................................4 Baker v Gushwa, 354 Mich 241 (1958) ...............................................................................................................5 Bell Atl. Corp. v Twombly, 550 U.S. 544 (2007), ................................................................................................4 Bigelow v. Mich. Dept. of Natural Resources, 970 F.2d 154, 157 (6th Cir. 1992) ...............................................6 Bigelow v. Mich. Dept. of Natural Resources, 970 F.2d 154, 157 (6th Cir. 1992); see also, Braun v Ann Arbor Twp., 519 F.3d 564 (2008 6th Cir.). .......................................................................................................7 Braun v Ann Arbor Twp., 519 F.3d 564 (2008 6th Cir.). ......................................................................................7 Del-Prairie Stock Farm v Walworth County, 572 F. Supp. 2d 1031 (E.D. Wisc. 2008), ....................................7 Del-Prairie, 572 F. Supp. 2d at 1033, Citing Keller, supra, at 219-21 ...............................................................8 DLX v Kentucky, 381 F. 3d 511 (6th Cir. 2004): ..................................................................................................9 Gamble v Eau Claire County, 5 F.3d 285, 287-288 (7th Cir. 1993 ....................................................................10 Id. at 1032, citing, Michael M. Berger & Gideon Kanner, Shell Game! You Cant Get There From Here: Supreme Court Ripeness Jurisprudence In Taking Cases at Long Last Reaches ............................................7 Lahar v Barnes, 353 Mich. 408 ...........................................................................................................................6 MacDonald, Sommer & Frates v Yolo County, 477 U.S. 340, 350, n.7, 106 S. Ct. 2561, 91 L.Ed.2d 285 (1986) ...............................................................................................................................................................8 Macene v MJW, Inc., 951 F2d 700, 704 (6th Cir. 1991). .....................................................................................8 OToole v Fortino, 97 Mich App 797...................................................................................................................6 San Remo Hotel L.P. v San Francisco, 545 U.S. 323, 347, 125 S. Ct. 2491, 162 L.Ed.2d 315 (2005) ...............8 Suitum v. Tahoe Regional Planning Agency, 520 US 725, 733-734, 117 S. Ct. 1659, 137 L. Ed. 2d 980 (1997). ..............................................................................................................................................................8 Williamson County Regional Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 105 S. Ct. 3108, 87 L. Ed. 2d 126 (1985) ............................................................................................................................................7

Other Authorities
28 U.S.C.A. 1738 ...............................................................................................................................................8 the Self Parody State, 36 Urban Lawyer, 671, 671-672 (2004) and Scott A. Keller, Judicial Jurisdiction Stripping Masquerading as Ripeness: Eliminating the Williamson County State Litigation Requirement For Regulatory Takings Claims, 85 Tex. Law Rev. 199 (2006) (Keller). ...................................................7

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INTRODUCTION Defendant/Respondent Pennfield Townships (Township) Motion should be denied with prejudice because the remedy for Plaintiffs/Petitioners A forever Recovery, Inc. and TIA Corporations (Plaintiffs) Federal Constitutional takings claims when pled along with State takings and zoning claims and filed in State Court is to allow the State Court to review the unripe federal claims in conjunction with the State case and not to allow removal and dismissal before sending the remaining claims back to State Court. In addition, Plaintiffs Complaint was originally filed in State Court under rules of pleading for State Court cases and, under those standards, the causes of action including the federal cause of action are adequately plead and do not fail as a matter of law. In the event that this Court should retain jurisdiction of the Federal Constitutional claim and require it to be immediately litigated in Federal Court (contrary to the request in Plaintiffs Motion for Remand), then it would be inappropriate to apply an arguably more rigorous standard of pleading to these State Court pleadings to the extent that this Court determine that more exacting pleading requirements are now required by Ashcroft v Igbal, 556 U.S. 662 (2009) and Bell Atl. Corp. v Twombly, 550 U.S. 544 (2007), without allowing an opportunity for Plaintiffs to amend their complaint to comply with pleading standards for matters filed in Federal Court under the Federal Rules of Civil Procedure. FACTS While pursuant to Fed. R. Civ. P. 12(b), for the purposes of this motion, the Township has indicated that it has accepted the (factual but not conclusory) allegations of Plaintiffs Complaint as true, the Township has completely ignored the factual allegations contained in Plaintiffs Complaint and how they are incorporated into the subsequent causes of action

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including these as to the takings claims. To the extent that additional factual basis is required for those takings claims, Plaintiffs request the opportunity to amend so as to conform their complaint (filed under the Michigan Court Rules and consistent with that courts rules regarding pleading) to comply with the Federal court rule pleading requirements, if this matter is to remain in Federal Court. PROCEDURAL BACKGROUND On June 18th, Plaintiff filed a Complaint and a Petition for Superintending Control among other relief, to the Calhoun County Circuit Court with substantial exhibits. On June 19 , 2013, the Township filed a Notice of Removal to Federal Court (DK 1). On July 25, 2013, the Township filed their Motion to Dismiss pursuant to Fed R Civ P 12(b) (DK 17) On August 9, 2013,

Plaintiffs filed a Motion for Remand (DK 20). Plaintiffs now file their Response and Brief in opposition to the Townships Motion to Dismiss. ARGUMENT I. Federal and State Standard of Pleading While the exact scope of Igbal and Twombly are still being sorted out by the Federal Courts, they arguably provide a heightened level of pleading under the Federal Rules of Civil Procedure which goes beyond allegations which would reasonably inform a Defendant of the nature of the cause that he is called upon the defend, as are required by the Michigan Court Rules. The Michigan standard under which Plaintiffs complaint was filed is found in MCR 2.111(B) which indicates in relevant part that a pleading must contain a statement of facts without repetition on which the pleader intends to rely stating a cause of action with specific allegations necessary to reasonably inform the adverse party of the nature of the claims the adverse party is called upon to defend; (See MCR 2.111 (B)(1). The Michigan Supreme

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Court, in the case of Baker v Gushwa, 354 Mich 241 (1958) indicates that the courts must allow a pleader a little looseness of expression so as to make provision for uncertainty of the proof, provided that no unfair advantage is taken of the opponent thereby. The Court indicates that a declaration must contain such specific allegations as will reasonably inform the defendant of the nature of the cause he is called upon to defend. A liberal attitude is taken in passing upon the sufficiency of pleadings, the chief object of the declaration being to appraise plainly the opposite party of the cause of action and the claim of plaintiff. 354 Mich at 246. Likewise, in the case of Lahar v Barnes, 353 Mich. 408 (1958), the Michigan Supreme Court indicated that it is not essential to the sufficiency of the pleading that it set forth matters of evidence, or that it should anticipate defenses that might be raised. It is simply the duty of the plaintiff to state his cause of action in his declaration and the right of the defendant to be appraised thereby of the facts which are believed to constitute the plaintiffs cause of action and adequately advise the defendant of the charge so as to enable him to prepare his defense. The Supreme Court went on to say a liberal interpretation of the pleadings is both permissible and proper. 353 Mich at 416. The Michigan Court of Appeals in the case of OToole v Fortino, 97 Mich App 797 (1980) reaffirmed that the pleading standard in the State of Michigan is that a pleading must give notice of the nature of the claim sufficient to permit preparation of a meaningful response and must state a claim upon which relief can be granted. All of the factual allegations of the complaint are taken as true along with an inferences and conclusions which may be fairly drawn from the facts alleged. Unless the claim is so clearly unenforceable as a matter of law that no factual development can possibly justify the right to recover the motion

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for summary judgment for failure to state a cause of action must be denied. 97 Mich App at 801-802. As can be seen from the foregoing and a review of Igbal and Twombly, it is at least arguable that the Federal Rules of Civil Procedure as construed by the U.S. Supreme Court now require something in addition to the notice of pleading requirements of the Michigan Court Rules as construed by the Michigan Supreme Court. It would be entirely inappropriate to allow a defendant to remove a cause of action plead properly in State Court under the requirements of the Michigan Court Rules to Federal Court and then allege that the pleading standards Federal Court Rules (made applicable only by virtue of said removal) have not been met without allowing a plaintiff an opportunity to amend its complaint. However, as can be seen from the subsequent argument, this Court need not ever decide whether any amendment is required as this Court lacks jurisdiction and should grant Plaintiffs Motion to Remand and allow the State Court to act upon the complaint that was previously filed before it. II. This Court is without jurisdiction to decide this Motion and based upon the Motion to Remand pending before this Court, this Court should remand the entire case to State Court and allow the State Court to decide claims contained in the complaint.
A. The Court Must Remand This Case Unless the Township Establishes That The Plaintiffs Federal Claim is Ripe for Review. Federal land use jurisprudence contains procedural and substantive anomalies that alter the usual rules of federal question jurisdiction. In Del-Prairie Stock Farm v Walworth County, 572 F. Supp. 2d 1031 (E.D. Wisc. 2008), the Court observed that federal land use law was an area of jurisprudence that many commentators have criticized and as one has characterized as incoherent, contradictory, and at times, impossible to apply in real cases in a rational manner or at all. Id. at 1032, citing, Michael M. Berger & Gideon Kanner, Shell Game! You Cant Get There From Here: Supreme Court Ripeness Jurisprudence In Taking Cases at Long Last Reaches the Self Parody State, 36 Urban Lawyer, 671, 6717

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672 (2004) and Scott A. Keller, Judicial Jurisdiction Stripping Masquerading as Ripeness: Eliminating the Williamson County State Litigation Requirement For Regulatory Takings Claims, 85 Tex. Law Rev. 199 (2006) (Keller). However, Federal Courts decisions to allow State Courts to take the lead in sorting and takings claims upon state land use decisions can be better understood through a review of the doctrine of ripeness. In Williamson County Regional Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 105 S. Ct. 3108, 87 L. Ed. 2d 126 (1985), the Supreme Court established a two prong test to evaluate whether a federal takings claim is ripe for adjudication in federal court. The first prong also known as the final decision rule, requires proof that the governmental entity charged with implemen ting the regulations has reached a final decision regarding the application of the regulations to the property at issue. Id. at 186. The second prong also known as the state litigation requirement requires that the claimant seek compensation through the procedures the state has provided for doing so. Id. at 194. As a result, A federal taking claim can only ripen in federal court if the state does not provide an adequate procedure to obtain compensation for a regulatory taking. Michigan plaintiffs can file inverse condemnation claims in state courts to obtain compensation. The 6th Circuit has held that the availability of an inverse condemnation claim provides an adequate compensation procedure. Macene v MJW, Inc., 951 F2d 700, 704 (6th Cir. 1991). The Supreme Court has described the Williamson County Rules as two prudential hurdles to a regulatory takings claim brought against a state entity in federal court. Suitum v. Tahoe Regional Planning Agency, 520 US 725, 733-734, 117 S. Ct. 1659, 137 L. Ed. 2d 980 (1997). The 6th Circuit, however, has consistently held that ripeness is determinative of jurisdiction. If a claim is unripe, federal courts lack subject matter jurisdiction and a Complaint originally brought in Federal Court must be dismissed. Bigelow v. Mich. Dept. of Natural Resources, 970 F.2d 154, 157 (6th Cir. 1992); see also, Braun v Ann Arbor Twp., 519 F.3d 564 (2008 6th Cir.). 1. The Court Has No Jurisdiction Over the Plaintiffs Federal Takings Claim.

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Although the Plaintiffs Complaint contained a federal takings claim the pleading of that claim provided no basis for removal of the Plaintiffs Complaint because the district court has no subject matter jurisdiction over federal taking claims that are unripe. A federal district court has no jurisdiction to hear a federal takings claim when, as here, the Plaintiffs have an inverse condemnation remedy in State Court. Moreover, as a practical matter, Williamson County prevents a district court from hearing a federal takings claim even after the plaintiff litigates its inverse condemnation claim in state court. Once the plaintiff litigates the claim, the Full Faith and Credit Statute, 28 U.S.C.A. 1738, precludes the plaintiff from litigating its federal takings claim in federal court. San Remo Hotel L.P. v San Francisco, 545 U.S. 323, 347, 125 S. Ct. 2491, 162 L.Ed.2d 315 (2005). The Plaintiffs, however, properly pleaded a federal takings claim that was justiciable in State Court. 545 U.S. at 346. San Remo rejected the plaintiffs argument that Williamson County prevents a plaintiff from litigating its federal claims in state courts. Id. at 346. The Court held that reading Williamson County to preclude plaintiffs from raising such claims in the alternative would erroneously interpret our cases as requiring property owners to resort to piecemeal litigation or otherwise unfair procedures. Citing MacDonald, Sommer & Frates v Yolo County, 477 U.S. 340, 350, n.7, 106 S. Ct. 2561, 91 L.Ed.2d 285 (1986). The 6th Circuit similarly observed in DLX v Kentucky, 381 F. 3d 511 (6th Cir. 2004) that: although Williamson County speaks broadly in terms of when the federal right of action ripens, prong two ripeness does not necessarily operate to bar the litigation of a federal claim in the state courts because ripeness is a doctrine governing justiciability in the federal courts, pursuant to Article III or prudential concerns... This is borne out by the number of cases where plaintiffs assert federal claims in the state courts contemporaneous with or even instead of their state constitutional claims. (Internal citations omitted. Id. at 524, (emphasis in original). As a result, even if the Plaintiffs federal taking claim is not justiciable in federal court, it is justiciable in state court. The Township, therefore, could not reasonably remove a complaint to federal court based on the taking claim. See Del-Prairie, 572 F. Supp. 2d at 1033, Citing Keller, supra, at 219-21 (the court must have jurisdiction over the claim for it to be the basis for removal.)

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It is axiomatic that if this Court does not have removal jurisdiction that it does not have jurisdiction to grant the Townships Motion to Dismiss the Federal takings claim. 2. The Township Must Also Establish That The Plaintiffs Federal Due Process Claim Is Ripe To Establish This Courts Jurisdiction Of Plaintiffs Complaint. The Plaintiffs complaint also contained a claim for compensatory relief for the taking of its Property without due process. The 6th Circuit has consistently held that due process claims also are not ripe for adjudication in federal court if they are intertwined with or ancillary to federal takings claims. Bigelow, 970 F.2d at 159-160. Bigelow holds that when a due process claim is intertwined with a takings claim the court has no jurisdiction to hear the claim until after the plaintiff litigates its state inverse condemnation claim. Id. at 160. The Plaintiffs due process claim is ripe in state court under the first prong of the Williamson County test because the Township made a final decision that has inflicted an actual injury on the Plaintiffs. However, as Bigelow holds, the federal court has no jurisdiction of the plaintiffs due process claim if is intertwined with and ancillary to the takings claim, as is clearly evident in the case before this Court. In any event, it is the Township that has the burden to demonstrate that Plaintiffs federal due process claim is independent from its federal taking claim and otherwise ripe for adjudication under the final decision ripeness prong, and there has been no such showing. Even if the Court were to find that the Plaintiffs due process taking claim is ripe, the Plaintiffs request that the Court not subject the Plaintiffs to the piecemeal litigation of their claims. State courts are fully competent to adjudicate constitutional challenges to local land use decision. San Remo, 545 U.S. at 347. In AM Rodriguez Assoc Inc v Douglas, No. 1:08-cv-214 (W.D. Mich. 2009), 2009 U.S. Dist. Lexis 1100998 (November 30, 2009), the plaintiff filed federal constitutional claims against the city after it denied the plaintiff's development application. The plaintiff filed the complaint in state court and the 10

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defendant removed to federal court. The defendant subsequently filed a motion to dismiss the complaint on the pleadings. The plaintiff asserted taking, substantive due process, equal protection and procedural due process claims. The Court held that the plaintiff's taking, substantive due process and equal protection claims were not ripe because they were ancillary to the plaintiff's taking claim. Id. at 9-10. The Court held that the plaintiff's procedural due process claim was ripe. Id. at 12. The Court however held the claim in abeyance pending the finality of the state court inverse condemnation action. Id. at 14-15. The Del Prairie Court described the Catch 22 that plaintiffs face under Williamson and San Remo. Del Prairie, 572 F.Supp.2d at 1032-1033. The Court also observed that the second prong of Williamson was not really a ripeness requirement but strips federal district court jurisdiction over federal takings claims. The Court also held that it did not have jurisdiction over the plaintiff's due process claim because the 7th Circuit like the 6th Circuit holds that a substantive due process claim which involves a taking is also subject to Williamson Countys state litigation requirement. Id. at 1034 citing Gamble v Eau Claire County, 5 F.3d 285, 287-288 (7th Cir. 1993). The Court, therefore, should deny the Townships Motion to Dismiss unless the Township establishes that the Plaintiffs federal claims are ripe for adjudication. Even if the Court finds that the Plaintiffs due process claim are ripe, the Plaintiffs request that the Court either delay adjudication of the claims pending the resolution of the Plaintiffs claims in State Court, or at a minimum allow amendment of the Federal takings claims so as to overcome any pleading deficiency based upon Twombly and Igbal.

CONCLUSION Plaintiff respectfully requests that this Court deny the Townships Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b) and remand the entire case back to the Michigan Circuit Court as the Federal claims are unripe in this Court but can be adjudicated along with the State Court claims in State Court as set forth more fully in this Brief. In the event that this
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Court determines that Plaintiffs claims are ripe and should be litigated in this Court at this time, Plaintiff requests the opportunity to amend its claims to the extent that the Court finds that they are in any way deficient under Twombly and Igbal. Plaintiffs also respectfully request that this Court grant them such other and further relief as is just and proper. Respectfully submitted, KREIS, ENDERLE, HUDGINS & BORSOS, P.C.

Dated: August 23, 2013

/s/ Thomas G. King______________________

Thomas G. King (P34006) Michael J. Toth (P36310) KREIS, ENDERLE, HUDGINS & BORSOS, P.C. Attorneys for Plaintiffs Po Box 4010 Kalamazoo, MI 49003 269-324-3000

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