449 F.Supp.3d 567
E.D.N.C.2020Background:
- Plaintiffs Michael and Catherine Zito own a beachfront lot in Nags Head, NC; their 1982 house burned in 2016 and they sought to rebuild in 2017.
- Town denied a CAMA minor permit because the proposed rebuild failed coastal setback rules; the Coastal Resources Commission denied a variance on hardship grounds after a public hearing.
- The Zitos sued in federal court under the Fifth Amendment (takings/just compensation), seeking damages and declaratory relief; Commission moved to dismiss invoking Eleventh Amendment immunity and other grounds.
- The Commission argued it is an "arm of the state," Congress did not abrogate immunity, and North Carolina courts remain available to hear takings claims (invoking Hutto).
- Plaintiffs argued the Just Compensation Clause is self-executing and thus the Eleventh Amendment cannot bar a federal takings suit; they also challenged the adequacy of state remedies.
- The district court followed Fourth Circuit precedent (Hutto), held the Commission is immune under the Eleventh Amendment and that North Carolina provides a forum, and dismissed the federal takings claim without prejudice for lack of subject-matter jurisdiction.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Eleventh Amendment bars Zitos' federal takings claim | Fifth Amendment's Just Compensation Clause is self-executing; Eleventh cannot bar federal takings damages | Eleventh Amendment bars takings suits in federal court when state courts are open (per Hutto) | Court: Eleventh Amendment bars suit; dismissal for lack of jurisdiction (followed Hutto) |
| Whether the Commission is an "arm of the state" (entitling it to sovereign immunity) | N/A (Zitos disputed implications but offered no contrary arm-of-state proof) | Commission funded/created/treated as state entity; judgments would inure to state treasury | Court: Commission is an arm of the state; factors weigh for immunity |
| Whether immunity was waived or abrogated (e.g., by Fourteenth Amendment/self-execution) | The Fourteenth Amendment and self-executing Takings Clause preclude sovereign immunity; no need for statutory abrogation | No clear waiver and Congress did not abrogate immunity for state agencies; Hutto forecloses self-execution argument | Court: No waiver or abrogation shown; self-execution argument rejected in light of binding precedent |
| Whether North Carolina provides an adequate forum (so Eleventh applies) | State statutory scheme (N.C. Gen. Stat. §113A-123) leaves a temporal gap for compensation; plaintiffs say state forum is inadequate | State statutes plus North Carolina Constitution and state-law remedies (inverse condemnation/Law of the Land) provide an available forum | Court: State courts are open and provide remedy (including under NC Constitution); Hutto's state-forum requirement satisfied |
Key Cases Cited
- Hutto v. South Carolina Ret. Sys., 773 F.3d 536 (4th Cir. 2014) (Eleventh Amendment bars federal takings suits when state courts remain open)
- Knick v. Township of Scott, 139 S. Ct. 2162 (2019) (overruled Williamson County’s exhaustion rule; recognized federal takings claims but did not resolve Eleventh immunity tension)
- First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304 (1987) (temporary regulatory takings can give rise to damages)
- Reich v. Collins, 513 U.S. 106 (1994) (state courts must hear certain federal claims; discussed in Hutto analogy)
- DLX, Inc. v. Kentucky, 381 F.3d 511 (6th Cir. 2004) (holding Takings Clause does not defeat Eleventh Amendment immunity)
- Cunningham v. General Dynamics Info. Tech., Inc., 888 F.3d 640 (4th Cir. 2018) (sovereign immunity deprives federal courts of jurisdiction)
- Alden v. Maine, 527 U.S. 706 (1999) (limits on subjecting nonconsenting states to private suits; cited in abrogation/waiver context)