MICHAEL ZITO; CATHERINE ZITO, Plaintiffs - Appellants, v. NORTH CAROLINA COASTAL RESOURCES COMMISSION, Defendant - Appellee. NORTH CAROLINA COASTAL FEDERATION, Amicus Supporting Appellee.
No. 20-1408
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
August 9, 2021
PUBLISHED. Argued: May 4, 2021. Appeal from the United States District Court for the Eastern District of North Carolina, at Elizabeth City. James C. Dever III, District Judge. (2:19-cv-00011-D)
Before GREGORY, Chief Judge, MOTZ, and THACKER, Circuit Judges.
Affirmed by published opinion. Chief Judge Gregory wrote the opinion, in which Judge Motz and Judge Thacker joined.
ARGUED: J. David Breemer, PACIFIC LEGAL FOUNDATION, Sacramento, California, for Appellants. Ryan Y. Park, NORTH CAROLINA DEPARTMENT OF JUSTICE, Raleigh, North Carolina, for Appellees. ON BRIEF: Glenn E. Roper, North Highlands, Colorado, Erin E. Wilcox, PACIFIC LEGAL FOUNDATION, Sacramento, California, for Appellants. Joshua H. Stein, Attorney General, Sarah G. Boyce, Deputy Solicitor General, Mary Lucasse, Special Deputy Attorney General, Marc Bernstein, Special Deputy Attorney General, NORTH CAROLINA DEPARTMENT OF JUSTICE, Raleigh, North Carolina, for Appellee. Ramona H. McGee, Sierra B. Weaver, Elizabeth R. Rasheed, SOUTHERN ENVIRONMENTAL LAW CENTER, Chapel Hill, North Carolina, for Amicus North Curiae.
This case asks whether a Fifth Amendment takings claim against the North Carolina Coastal Resources Commission (the “Commission“) is barred by State sovereign immunity. When the Commission denied
I.
In 2008, the Zitos purchased a beachfront house and lot (the “Property“) in South Nags Head, North Carolina. The Property is located on one of the State‘s barrier islands, a system of narrow islands that run along the State‘s coast. Between 2008 and 2016, the Zitos used the house as a vacation home and rental property. But on October 10, 2016, the house caught fire and burned to the ground. Following the fire, the Zitos sought to rebuild the house on the same lot.
Given its location, the Zitos’ Property is governed by North Carolina‘s Coastal Area Management Act (“CAMA“). Enacted in 1974, CAMA created the Commission to implement rules regulating land-use planning, development permits, and beach management and restoration along North Carolina‘s coasts.
To do so, CAMA requires coastal property development to be set back a certain distance from the vegetation line—the first line of natural vegetation which marks the boundary between the beach and more stable land. 15A N.C. Admin. Code 07H .0305(a)(5), .0306(a)(1). These set-back requirements protect property owners from coastal storms and encroaching waters while also preventing disturbance to the beaches and dunes that act as buffers for the property and environment further inland. See id. at .0306(a); Br. of N.C. Coastal Fed‘n, as Amicus Curiae in Support of Appellee at 11–12. Under CAMA, buildings with less than 5,000 square feet must be set back a distance at least 60 feet or 30 times the local rate of erosion, whichever is farther. 15A N.C. Admin. Code 7H.0306(a)(5)(A). But buildings of less than 2,000 square feet built before June 1, 1979 fall under a grandfather provision, requiring the property to be set back only 60 feet from the line of vegetation. 15A N.C. Admin. Code 7H.0309(b).
Though the Zitos’ Property qualifies for the grandfather provision, it fails to satisfy the 60 feet set-back limit. Based on an October 2017 survey, the Property is currently set back only 12 feet from the vegetation line. In 2018, the coastline by the Property eroded at an average rate of six feet per year. The next year, the average rate of erosion climbed to seven feet per year. According to amicus curiae, coastal erosion and rising sea levels could cause the Property to be underwater by 2024. Br. of N.C. Coastal Fed‘n, as Amicus Curiae in Support of Appellee at 7.1
The Zitos applied for a permit from the Town of Nags Head. The Town‘s local permit officer denied the application because the Property did not meet CAMA‘s set-back requirements. The Zitos then filed a petition for a variance with the Commission. After considering the petition at a public hearing, the Commission issued its Final Agency Decision denying the variance on December 27, 2018. When notifying the Zitos of the denial, the Commission also informed them of their right to appeal the decision in state superior court.
The Zitos filed suit in federal court, arguing that CAMA‘s restrictions amounted to an unconstitutional taking. The Commission filed a motion to dismiss for lack of subject matter jurisdiction, claiming that the suit was barred by State sovereign immunity. The district court agreed with the Commission. First, it found that the Commission qualifies as an arm of the State subject to the protections of sovereign immunity. Zito v. N.C. Coastal Res. Comm‘n, 449 F. Supp. 3d 567, 577–79 (E.D.N.C. 2020). It then relied upon this Court‘s decision in Hutto, where we held that “the Eleventh Amendment bars Fifth Amendment taking claims against States in federal court where the State‘s courts remain open to adjudicate such claims.” Id. at 576 (quoting Hutto v. S.C. Ret. Sys., 773 F.3d 536, 552 (4th Cir. 2014)). Determining that North Carolina‘s Constitution permits individuals to bring takings claims in state court, the district court concluded that Plaintiffs’ claims against the State were barred by sovereign immunity in federal court. Id. at 580–83. The Zitos appealed.
II.
A.
State sovereign immunity presents a question of law that we review de novo. See Hutto, 773 F.3d at 542. Because sovereign immunity is waivable, this Court treats it “akin to an affirmative defense,” meaning that the defendant bears the burden of demonstrating that sovereign immunity applies. Id. at 543.
The Zitos do not dispute that the Commission is an arm of the State, such that sovereign immunity may apply. But they argue that the Fifth Amendment‘s Takings Clause overcomes State sovereign immunity.
The Eleventh Amendment states that “[t]he Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.”
The Fifth Amendment provides that “private property [shall not] be taken for public use, without just compensation.”
the federal government, Plaintiffs argue that its incorporation to the States in the Fourteenth Amendment abrogated the sovereign immunity of States as well.
However, this Court adopted a different reading of the Takings Clause and sovereign immunity in Hutto, 773 F.3d at 540. In Hutto, South Carolina public employees challenged a state law amending pension benefits and contributions for public employees who returned to work after retirement. Id. They argued that changes to the law amounted to a taking because the changes ended benefits and required the employees to make additional contributions. Addressing sovereign immunity, the plaintiffs in Hutto made the same claim the Zitos make here—that “sovereign immunity never bars a constitutional takings claim” due to the Takings Clause‘s guarantee of just compensation. Id. at 551.
This Court disagreed. We observed that the Supreme Court has recognized the surrender of State sovereign immunity in six contexts:
(1) when a State consents to suit; (2) when a case is brought by the United States or another State; (3) when Congress abrogates sovereign immunity pursuant to Section 5 of the Fourteenth Amendment or pursuant to the Bankruptcy Clause; (4) when a suit is brought against an entity that is not an arm of the State; (5) when a private party sues a state official in his official capacity to prevent an ongoing violation of federal law; and (6) when an individual sues a state official in his individual capacity for ultra vires conduct.
Id. (citing S.C. State Ports Auth. v. Fed. Mar. Comm‘n, 243 F.3d 165, 176–77 (4th Cir. 2001)). We declined to create an additional, blanket exception for the Takings Clause.
Although “there is arguably some tension” between the Fifth Amendment guarantee of just compensation and the bar of sovereign immunity, “that tension is not irreconcilable.” Id.
To resolve that tension, this Court compared the Takings Clause to the Due Process Clause‘s right to a remedy for taxes collected in violation of federal law. Id. at 551–52. “In a long line of cases,” the Supreme Court “has established that due process requires a ‘clear and certain’ remedy
B.
The Zitos argue that the Supreme Court‘s ruling in Knick v. Township of Scott, 139 S. Ct. 2162 (2019) undermined Hutto‘s reasoning. Because Knick held that plaintiffs can bring a takings claim in federal court, regardless of state remedies available, the Zitos believe Knick abrogated Hutto‘s rule applying sovereign immunity in federal court if state courts are open to such claims.
Knick addressed the substantive requirements of a takings claim: It decided when the plaintiff has “suffered a violation of his Fifth Amendment rights” and is “able to bring a ‘ripe’ federal takings claim in federal court.” Knick, 139 S. Ct. at 2168. Before Knick, the Supreme Court held in Williamson County that “if a State provides an adequate procedure for seeking just compensation, the property owner cannot claim a violation of the Just Compensation Clause until it has used the procedure and been denied just compensation.” Williamson Cnty. Reg‘l Planning Comm‘n v. Hamilton Bank of Johnson City, 473 U.S. 172, 195 (1985). In other words, the Williamson County Court believed a person to be denied just compensation at the moment a person‘s claim for compensation was denied in state court. But Williamson County inadvertently laid a “trap” for potential litigants. Because the full faith and credit statute,
Knick did not address sovereign immunity, as it involved a suit against a town. See Jinks v. Richland Cnty., 538 U.S. 456, 466 (2003) (“[M]unicipalities, unlike States, do not enjoy a constitutionally protected immunity
To sidestep this fact, the Zitos suggest that Knick indirectly altered the sovereign immunity framework by recognizing the self-executing nature of the Takings Clause in federal court. But the Supreme Court recognized the self-executing nature of the Takings Clause in federal court well before Knick. See Jacobs v. United States, 290 U.S. 13, 16 (1933) (“[S]uits [] based on the right to recover just compensation for property taken by the United States . . . . rested upon the Fifth Amendment. Statutory recognition was not necessary.“). Knick itself makes this point when quoting Jacobs to explain that the form of a state remedy does not qualify the substantive takings claim because the claim “rest[s] upon the Fifth Amendment.” Knick, 139 S. Ct. at 2170 (quoting Jacobs, 290 U.S. at 16). So Knick did nothing new with respect to the self-executing nature of the Takings Clause in federal court.5
Additionally, Knick‘s discussion of the Takings Clause does not imply any link between the self-execution of the Takings Clause and the elimination of sovereign immunity. To the contrary, the Supreme Court‘s analysis compares the Takings Clause to other constitutional rights that may be subject to sovereign immunity. The Court wrote,
Although Jacobs concerned a taking by the Federal Government, the same reasoning applies to takings by the States. The availability of any particular compensation remedy, such as an inverse condemnation claim under state law, cannot infringe or restrict the property owner‘s federal constitutional claim—just as the existence of a state action for battery does not bar a Fourth Amendment claim of excessive force.
Knick, 139 S. Ct. at 2171. By drawing a comparison to Fourth Amendment claims of excessive force, the Supreme Court indicated that its analysis did not deal with sovereign immunity, which otherwise limits Fourth Amendment suits seeking damages against States. Ultimately, the Knick Court expressed its belief that Williamson County made the Takings Clause an inferior right “among the provisions of the Bill of Rights“; by reversing Williamson County, the Court meant to “restor[e] takings claims” to equal and “full-fledged status . . . among the other protections in the Bill of Rights.” Id. at 2169–70; see also id.
at 2177 (“Takings claims against local governments
Accordingly, Knick did not undermine Hutto, where this Court held sovereign immunity to bar a takings claim against a State in federal court if state courts remain open to adjudicating the claim.
III.
We next consider whether North Carolina courts remain open to adjudicating the Zitos’ takings claim. The parties agree that state courts satisfy this requirement if they provide a “reasonable, certain, and adequate” means for challenging an action as a taking and obtaining compensation if the challenge is successful. See Oral Argument at 29:03–29:19; Mountain Valley Pipeline, LLC v. 6.56 Acres of Land, 915 F.3d 197, 213 (4th Cir. 2019) (quoting Cherokee Nation v. S. Kan. Ry. Co., 135 U.S. 641, 659 (1890)).
Though North Carolina‘s Constitution generally provides a cause of action for plaintiffs to bring takings claims, see Corum v. Univ. of N.C., 413 S.E.2d 276, 289 (N.C. 1992), the Zitos contend that takings claims against the Commission are governed by
Section 113A-123(b) states that any person with a recorded interest in land affected by a final order of the Commission may “petition the superior court to determine whether the petitioner is the owner of the land in question” and “determine whether . . . the order constitutes the equivalent of taking without compensation.”
The Zitos, however, emphasize the outcome if the state court rules the Commission‘s action to be a taking and the State does not pursue eminent-domain proceedings (i.e., if the State agrees to cease the regulatory restriction). To the Zitos, § 113A-123(b) would invalidate the restriction but offer no compensation for the temporary taking. In this situation, the Commission asserts that the plaintiff may bring a subsequent suit under the North Carolina Constitution to obtain compensation for the temporary taking.6
Even if we assume that
648, 652 (N.C. Ct. App. 2018) (“A Corum claim allows a plaintiff to recover compensation for a violation of a state constitutional right for which there is either no common law or statutory remedy, or when the common law or statutory remedy that would be available is inaccessible to the plaintiff.“).7
For instance, in Midgett, a landowner sued the State Highway Commission for a taking because its construction of a nearby highway caused his property to become flooded. Midgett v. N.C. State Highway Comm‘n, 132 S.E.2d 599, 602 (N.C. 1963), rev‘d on other grounds by Lea Co. v. N.C. Bd. of Transp., 304 S.E.2d 164 (N.C. 1983). Though North Carolina provided an “ordinarily exclusive” statutory remedy for the taking, the applicable condemnation statute contained a statute of limitations that “would make a recovery by the plaintiff in the instant case impossible.” Id. at 608. Nevertheless, the North Carolina Supreme Court held that the plaintiff‘s taking claim could be maintained under the State Constitution. Id. The Court explained that the State Constitution‘s promise of just compensation for a taking is not “susceptible of impairment by legislation,” and where “no statute affords an adequate remedy under a particular fact situation, the common law will furnish the appropriate action for adequate redress of such grievance.” Id.; see also Craig
ex rel. Craig v. New Hanover Cnty. Bd. of Educ., 678 S.E.2d 351, 356–57 (N.C. 2009) (reaffirming Midgett and North Carolina‘s “long-standing emphasis
In reply, the Zitos contend that even if they can bring a takings claim for damages after § 113A-123(b) proceedings, the statutory proceedings effectively create an exhaustion requirement forbidden by the Supreme Court in Knick. But again, the Zitos misstate the holding of Knick. Knick prohibited the use of state procedures as an exhaustion requirement for a takings claim in federal court. See Knick, 139 S. Ct. at 2167. But Knick did not prohibit States from establishing procedural requirements in their own courts. Indeed, Knick reaffirmed Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1018 n.21 (1984), where the Supreme Court upheld a federal statute that “required the plaintiff to attempt to vindicate its [takings] claim [] through arbitration before proceeding [with their takings claim] under the Tucker Act.” Knick, 139 S. Ct. at 2173. This requirement was permissible because Congress “is free to require plaintiffs to exhaust administrative remedies before bringing constitutional claims” in federal court. Id.; see also Ladd, 971 F.3d at 579 (“In reaffirming [Ruckelshaus], the Court notes that Congress can, as a condition of its waiver of sovereign immunity in the Tucker Act, require takings plaintiffs to exhaust administrative remedies before proceeding to federal court.“). If Congress can condition its waiver of federal sovereign immunity in federal court by requiring plaintiffs to satisfy certain exhaustion requirements, it follows that States may condition their waiver of State sovereign immunity the same way in their courts as well. See Felder v. Casey, 487 U.S. 131, 138 (1988) (“No one disputes the general and unassailable proposition . . . that States may establish the rules of procedure governing litigation in their own courts.“).
Of course, there are limits on the procedural constraints that the States may impose. The Supreme Court has warned that state procedures violate the Supremacy Clause if the procedures effectively deprive plaintiffs of their federal rights. See id. (“[W]here state courts entertain a federally created cause of action, the ‘federal right cannot be defeated by the forms of local practice.‘“). For example, a State may not adopt procedures that discriminate between state and federal claims. See Haywood v. Drown, 556 U.S. 729, 738 (2009); Felder, 487 U.S. at 141. But the Zitos’ arguments revolve around Knick, and they otherwise offer no argument for why North Carolina‘s procedures might impede their federal rights in violation of the Supremacy Clause. As explained above, North Carolina‘s procedures are consistent with Knick; North Carolina‘s procedures guarantee the ability to challenge the Commission‘s action as a taking in state court; and if North Carolina‘s statutes do not provide an adequate constitutional remedy, the North Carolina Constitution guarantees the Zitos the ability to seek that remedy in state court.
Thus, North Carolina‘s courts remain open for takings claims. Under Hutto, this means that sovereign immunity bars the Zitos’ claims against the State in federal court. 773 F.3d at 552.
IV.
We recognize there must be sorrow in the Zitos’ loss of their home, and even more so in light of the steadily rising swells of our oceans’ waters. But State sovereign immunity bars their takings claims against the Commission in federal court when North Carolina‘s courts remain open to adjudicating those claims. For the
AFFIRMED