Robert Holton v. Bobby Henon ( 2020 )


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  •                                                                    NOT PRECEDENTIAL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.
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