Starsail Adventures, LLC v. Iredell County

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF NORTH CAROLINA

STATESVILLE DIVISION

CIVIL ACTION NO. 5:24-CV-00003-KDB-DCK

CAROLINA DESTINATIONS,

LLC, STARSAIL ADVENTURES,

LLC, AVANTSTAY

SOUTHEAST, LLC,

Plaintiff,

v. ORDER

IREDELL COUNTY,

Defendant.

THIS MATTER is before the Court on Plaintiff Starsail Adventures, LLC, Caroline

Destinations, LLC, and AvantStay Southeast, LLC’s Motion to Remand (Doc. No. 15). The Court

has carefully considered this motion and the parties’ briefs and exhibits. For the reasons discussed

below, the Court will GRANT in part and DENY in part the motion.

I. LEGAL STANDARD

District courts are “courts of limited jurisdiction. They possess only that power authorized

by Constitution and Statute.” Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552

(2005). “A court is to presume, therefore, that a case lies outside its limited jurisdiction unless and

until jurisdiction has been shown to be proper.” United States v. Poole, 531 F.3d 263, 274 (4th Cir.

2008) (citing Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994)). Under 28 U.S.C.

§ 1441, a defendant may remove a case from state court to federal district court if the district court

has original jurisdiction.

When faced with a motion to remand, a party seeking removal to federal court bears the

burden of establishing federal jurisdiction. See Ellenburg v. Spartan Motors Chassis, Inc., 519

F.3d 192, 200 (4th Cir. 2008) (quoting In re Blackwater Security Consulting, LLC, 460 F.3d 576,

583 (4th Cir. 2006)). Removal jurisdiction raises significant federalism concerns; therefore, in

considering a motion to remand, the court must “strictly construe the removal statute and resolve

all doubts in favor of remanding the case to state court.” Goucher Coll. v. Cont'l Cas. Co., 541 F.

Supp. 3d 642, 647 (D. Md. 2021) (quoting Richardson v. Phillip Morris Inc., 950 F. Supp. 700,

702 (D. Md. 1997)); Hartley v. CSX Transp., Inc., 187 F.3d 422, 425 (4th Cir. 1999); Syngenta

Crop. Prot., Inc. v. Henson, 537 U.S. 28, 32 (2002).

II. FACTS AND PROCEDURAL HISTORY

This case arises out of a zoning text amendment enacted by the Iredell County Board of

Commissioners on October 17, 2023. See Doc. No. 1-2 at ⁋ 1. The amendment altered the County’s

ordinance on short term vacation rental (“STR”) zoning requirements (the “STR Ordinance” or

“Ordinance”). Id. The STR Ordinance, as amended, applies to all dwellings rented for personal,

vacation, leisure, or recreational use for periods of 90 days or less and requires the property owners

to submit a request for a zoning permit in order to operate an STR. Id. at ⁋⁋ 32-33. The permit

application requires disclosure of the property owner’s name, location of the property, the number

of bedrooms, location of signage and adequate parking, and allows the Zoning Administrator to

obtain the deed reference of the property. Id. at ⁋ 34. The Ordinance applies retroactively, meaning

that properties currently operating as STRs could be non-conforming under the STR Ordinance.

Id. at ⁋ 37.

The Ordinance also imposes restrictions on the use of the property being rented out. For

example, occupancy cannot exceed two persons per bedroom (plus two additional persons);

owners may not host events such as weddings, parties, reunions, or other large gatherings; and

STR owners must provide 24-hour emergency contacts for the property as part of their registration

requirements. Id. at ⁋⁋ 38-40.

Plaintiffs in this case include property owners Edward and Tara Dowdell, who manage

Starsail Adventures, LLC; property manager and broker AvantStay Southeast LLC; and property

manager and broker Carolina Destinations, LLC. Id. at ⁋⁋ 9-10. They filed their case against

Defendant Iredell County in the Superior Court for Iredell County on December 22, 2023, alleging

that the Iredell County Board lacked the authority to enact the STR Ordinance, the STR Ordinance

violates several provisions of the North Carolina Constitution and various state statutes, and that

the Ordinance represented an unlawful “taking” in the form of inverse condemnation under both

North Carolina and Federal law. See generally, Doc. No. 1-2. Plaintiffs seek declaratory,

injunctive, and damages/monetary relief. Id. On December 22, 2023, the same day the Complaint

was filed, the State Court set a date for a hearing on a preliminary injunction and effectively

granted Plaintiffs’ request for a temporary restraining order staying enforcement of the STR

Ordinance. See Doc. No. 1-4 (“This matter shall come on for a preliminary injunction the term of

January 2, 2024. The county shall not seek enforcement of the 10-17-2023 STR Ordinance pending

that preliminary injunction.”). Defendants timely filed a notice of removal with this Court on

January 4, 2024, and Plaintiffs filed a motion for a temporary restraining order and preliminary

injunction in this Court on January 5, 2024. See Doc. Nos. 1, 5.

In its Order setting a briefing schedule for the motion for a temporary restraining order and

preliminary injunction, the Court directed Plaintiffs to address whether the allegations in the

Complaint supported federal subject-matter jurisdiction, which the parties have addressed in

Plaintiffs’ Motion to Remand, now before this Court, and the associated briefing.

Significantly, this is not the only pending case challenging the STR Ordinance. The day

before the Complaint in the instant action was filed Lawrence v. Iredell County, 23-CVS-3407,

was filed in the Superior Court for Iredell County. Although this action was removed to federal

court, Lawrence has remained in state court because the plaintiffs in that case only brought claims

under state law. See Doc. No. 14-1. And, in Lawrence, the state court has recently enjoined

enforcement of the STR Ordinance. Doc. No. 14-2 at 6-7. Thus, the STR Ordinance is currently

enjoined and may not be enforced against the Plaintiffs in the instance case.

III. DISCUSSION

In their Motion to Remand and associated Reply brief, Plaintiffs argue that the alleged

federal claims in their case are not substantial enough to support jurisdiction in this Court and

further urge the Court to decline jurisdiction under the Colorado River abstention doctrine. See

Doc. Nos. 15-1, 17. Defendant contends in response that Plaintiffs alleged a cognizable federal

claim in their fifth and sixth causes of action and that the Colorado River doctrine should not be

applied in this matter. See Doc. No. 16.

A. Subject-Matter Jurisdiction

1. Federal Question Jurisdiction

The Court’s subject matter jurisdiction over this action depends on the presence or absence

of “federal question” jurisdiction. 28 U.S.C. § 1331.1 Article III of the United States Constitution

states that “[t]he judicial Power shall extend to all Cases, in Law and Equity, arising under ... the

Laws of the United States.” U.S. Const. art. III, § 2, cl. 1. 28 U.S.C. § 1331 grants federal district

courts “original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of

1 All parties are citizens of North Carolina so the Court’s diversity jurisdiction is not at

issue here. See Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987).

the United States.” In cases removed from state court, a case may arise under federal law in two

ways: (1) “when federal law creates the cause of action asserted” and (2) “the plaintiff’s right to

relief [in a state law claim] necessarily depends on resolution of a substantial question of federal

law.” Gunn v. Minton, 568 U.S. 251, 257 (2013); Empire Healthchoice Assurance Inc. v. McVeigh,

547 U.S. 677 (2006). Only the first is implicated in this case.

“The presence or absence of federal-question jurisdiction is governed by the ‘well-pleaded

complaint rule,’ which provides that federal jurisdiction exists only when a federal question is

presented on the face of the plaintiff's properly pleaded complaint.” Caterpillar Inc. v. Williams,

482 U.S. 386, 392 (1987) (citing Gully v. First National Bank, 299 U.S. 109, 112-13 (1936)). Here,

only two claims plausibly support federal question jurisdiction.

Plaintiff’s “Fifth Claim for Relief: Unconstitutionality of Contest Ordinance and Inverse

Condemnation” includes claims plausibly arising under federal law. As stated by Plaintiffs:

North Carolina Constitution, Article I § 19 states in relevant part

that: "No person shall be ... in any manner deprived of his ...

property, but by the law of the land .... " which section "imposes

upon a governmental agency taking private property for public use

a correlative duty to make just compensation to the owner of the

property taken. This principle is considered in North Carolina as an

integral part of the law of the land within the meaning of this section.

The requirement that just compensation be paid for land taken

for a public use is likewise guaranteed by the United States

Constitution, Amendment XIV applying Amendment V to the

States which states that “nor shall private property be taken for

public use, without just compensation.”

Doc. No. 1-2 at ⁋ 105 (emphasis added) Although Plaintiffs argue in their Motion to Remand that

the federal questions raised in the Complaint were pled “in the event that the State Court did not

find a claim for inverse condemnation under either North Carolina law or its Constitution,” the

Court must look at the “face of the plaintiff’s properly pleaded complaint.” Caterpillar Inc., 482

U.S. at 392; Doc. No. 15-1. There is no indication in the quoted text that the claim was pled as an

alternative claim. Thus, noting that Plaintiffs are “the master of the[ir] claim” and had the choice

to “avoid federal jurisdiction by exclusive reliance on state law,” the Court must read the

Complaint as it currently stands and, doing so, readily finds it is at least plausible that the cited

portion of this claim arises under federal law (as it directly alleges). Id.

A portion of Plaintiffs’ “Sixth Claim for Relief: Inverse Condemnation” also supports

federal question jurisdiction. In the Complaint, Plaintiff makes two references to Federal

Constitutional rights:

Pursuant to N.C. Gen, Stat.§40A-51, the Fourth and Fifth

Amendments to the United States Constitution (as made

applicable to the States by the Fourteenth Amendment), the

14th Amendment due process clause, and Article 1, §19 of the

North Carolina Constitution, allege and say that NCDOT has

partially taken their property without instituting a condemnation

action for all the property partially taken in violation of their

statutory and constitutional rights …. The acts and omissions

complained of Defendant also amount to a violation of the

Fourth Amendment's protection against unreasonable seizures

of Defendants' property.

Doc. No. 1-2 at ⁋⁋ 115, 125 (emphasis added). Again, Plaintiffs clearly have alleged claims arising

out of federal law, specifically the Fourth, Fifth, and Fourteenth Amendments to the United States

Constitution.

Plaintiffs’ three remaining claims do not invoke federal question jurisdiction in any

manner.2 Id. at ⁋⁋ 42-98. So, the next question for the Court is whether to assume supplemental

jurisdiction over Plaintiff’s state statutory, common law and constitutional claims. For the reasons

explained below, the Court will decline to exercise supplemental jurisdiction over those claims

and will accordingly remand them to the state court.

2 In their Complaint, Plaintiffs allege five claims, but number them as claims one, three,

four, five, and six. See Doc. No. 1-2.

2. Supplemental Jurisdiction

“[I]n any civil action of which the district courts have original jurisdiction, the district

courts shall have supplemental jurisdiction over all other claims that are so related to claims in the

action within such original jurisdiction that they form part of the same case or controversy under

Article III of the United States Constitution.” 28 U.S.C. § 1367. Whether federal and state law

claims are part of the same case or controversy is determined by examining whether they “derive

from a common nucleus of operative fact … such that a plaintiff would ordinarily be expected to

try them all in one judicial proceeding.” Hinson v. Norwest Financial South Carolina, Inc., 239

F.3d 611, 615 (4th Cir. 2001) (quoting Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 349 (1988))

(alternation adopted). However, district courts may decline to exercise jurisdiction under the

exceptions enumerated in Section 1367(c), including when a claim “substantially predominates

over the claim or claims over which the district court has original jurisdiction” or “in exceptional

circumstances, there are other compelling reasons for declining jurisdiction. §§ 1367(c)(2),(4). The

Supreme Court has held that these statutory exceptions reflect “the understanding that, when

deciding whether to exercise supplemental jurisdiction, ‘a federal court should consider and weigh

in each case, and at every stage of the litigation, the values of judicial economy, convenience,

fairness, and comity.’” See City of Chicago v. Int’l Coll. of Surgeons, 522 U.S. 156, 173 (1997)

(quoting Carnegie-Mellon, 484 U.S. at 350).

Here, each of Plaintiffs’ claims arise out of the STR Ordinance because each claim seeks

relief from the STR Ordinance’s restrictions on homeowners who lease their homes to others for

short term rentals. Thus, the common nucleus of operative fact test is satisfied and absent any

exception the Court could exercise supplemental jurisdiction over Plaintiffs’ state law claims.

However, the Court finds it should not exercise supplemental jurisdiction over those claims

because the “values of judicial economy, convenience, fairness and comity” weigh in favor of

remand. City of Chicago, 522 U.S. at 173.

First, this case involves a local zoning ordinance and its effect on local homeowners’ use

of their property. District courts may abstain from adjudicating local zoning disputes when “state

courts should hear the case initially due to their ‘familiarity and experience with such matters.’”

Reynolds v. City of Roanoke, 7:10-cv-00260, 2011 WL 2787269, at *2 (W.D. Va. July 13, 2011)

(quoting Fralin & Waldron, Inc. v. City of Martinsville, 493 F.2d 481, 82-83 (4th Cir. 1974)). This

is especially persuasive when, as here, “the interpretation and application of these ordinances can

involve complex relationships between local government bodies and the state courts.” Reynolds,

2011 WL 2787269, at *3. In this case, each of the claims in some way requires determinations of

North Carolina state law, including complex issues such as preemption, and the application of state

law, including the North Carolina Constitution, to local land ordinances. Moreover, given that the

state court judge in Lawrence already granted a preliminary injunction enjoining the STR

Ordinance, the “state court[] [is] in a better position than this Court to interpret and apply the

challenged [] law” because the state court is already well versed in the issues that are presented in

the instant case. Id. The Court also recognizes that North Carolina “likely has an interest in

maintaining a coherent policy regarding local issues such as zoning.” Id.

Second, a decision from this Court regarding the state law issues may in effect be nothing

more than an advisory opinion. Were the Court to grant the motion for a preliminary injunction, it

would have no substantive effect because the statute is already enjoined. Similarly, if it declined

to do so, the state court injunction would still be in effect. Moreover, the relief sought in this case

and in Lawrence could be redundant. If the state court finds that the Ordinance is unconstitutional

under North Carolina law, then a claim that it violated federal law is moot. Thus, the Court would

not have to address the constitutional questions raised by the Plaintiffs if the state court vacates

the STR Ordinance.

Accordingly, the Court finds that exercising supplemental jurisdiction over Plaintiff’s state

law claims would be inappropriate at this time because the state courts have an interest in these

claims and are arguably better positioned to resolve them; state law questions predominate because

they likely lead to the same relief Plaintiffs’ request in this case; and because some of the relief

Plaintiffs request has already been granted in the state court, rendering similar action from this

Court moot.

Thus, the Court will exercise jurisdiction over Plaintiff’s claims that raise federal question

jurisdiction (in the Fifth and Sixth claims) but will decline to exercise supplemental jurisdiction

over the remaining state law claims. Therefore, Plaintiffs’ Motion to Remand will be granted as to

Plaintiff’s claims arising under North Carolina law.

B. Colorado River Doctrine

Having found that the Court has jurisdiction over the federal claims asserted in Plaintiff’s

Fifth and Sixth claims, the Court must now address whether it should abstain from exercising that

jurisdiction. Generally, the “pendency of an action in the state court is no bar to proceedings

concerning the same matter in the Federal court having jurisdiction.” vonRosenberg v. Lawrence,

849 F.3d 163, 167 (4th Cir. 2017) (quoting McClellan v. Carland, 217 U.S. 268, 282 (1910)).

However, the Colorado River doctrine permits a district court to “abstain from exercising

jurisdiction over a duplicative federal action for purposes of ‘wise judicial administration.’” Id.

(quoting Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 818 (1976)).

Courts are “mindful” that this is an “extraordinary and narrow exception to the duty of a District

Court to adjudicate a controversy properly before it.” Chase Brexton Health Servs., Inc. v.

Maryland, 411 F.3d 457, 463 (4th Cir. 2005) (quoting Colorado River, 424 U.S. at 813).

“The threshold question in deciding whether Colorado River abstention is appropriate is

whether there are parallel federal and state suits.” Id. If the Court finds the suits are parallel, it

proceeds to a balancing test “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

(1983)).3 However, the Court need not reach this balancing test in this action because it finds that

the suits are not parallel.

Suits are sufficiently parallel “if substantially the same parties litigate substantially the

same issues in different forums.” Id. (citing New Beckley, 946 F.2d at 1073). In short, they must

be “almost identical.” vonRosenberg, 849 F.3d at 168 (citing Chase Brexton, 411 F.3d at 464). “It

is not enough for parties in the state and federal actions to be merely aligned in interest.” Id. Cases

“arising out of the same factual circumstances do not qualify as parallel if they differ in scope or

involve different remedies.” Id. “If there is any serious doubt that the state action would resolve

all of the claims, ‘it would be a serious abuse of discretion’ to abstain.” Id. (citing Moses H. Cone

Mem’l Hospital, 460 U.S. at 28).

There are multiple differences between Lawrence and the instant case that make Colorado

River abstention inappropriate. First, the parties between the two cases are not substantially

similar. In Lawrence, the Plaintiffs are two homeowners who manage their properties through a

3 Should the Court have reached this step of the inquiry, it would have analyzed six factors: (1)

whether the subject matter of the litigation involves property where the first court may assume in

rem jurisdiction to the exclusion of others; (2) whether the federal forum is an inconvenient one;

(3) the desirability of avoiding piecemeal litigation; (4) the relevant order in which the courts

obtained jurisdiction and the progress achieved in each action; (5) whether state law or federal law

provides the rule of decision on the merits; and (6) the adequacy of the state proceeding to protect

the parties' rights. Id. (citing Moses H. Cone Mem’l Hosp., 460 U.S. at 15-16).

registered LLC. In this case, Plaintiffs include homeowners who manage their rental properties

through LLCs, but also include two companies whose business is to manage short term rentals

rather than own them. See McLaughlin v. Untied Virginia Bank, 955 F.2d 930, 934-35 (4th Cir.

1992) (finding actions were not parallel where the state suit involved claims by corporations and

the federal suit involved personal claims by the president of those corporations). Thus the parties

are not substantially similar. Second, Plaintiffs here bring both federal and state law claims,

whereas the plaintiffs in Lawrence bring only state law claims. Thus, although the ultimate relief

sought may be similar, the scope of the claims is not. Third and finally, the plaintiffs in Lawrence

did not bring a claim for inverse condemnation under either state or federal law, further

distinguishing the scope of the two cases.

Therefore, the cases are not parallel and so the Court declines to abstain from exercising

its federal question jurisdiction under the Colorado River doctrine.

IV. ORDER

NOW THEREFORE IT IS ORDERED THAT:

1. Plaintiff’s Motion to Remand (Doc. No. 15) is GRANTED in part and DENIED

in part;

2. Plaintiff’s state law claims are to be remanded to the Superior Court for Iredell

County; and

3. This case shall proceed toward a trial on the merits on the remaining federal

law claims in the absence of a voluntary resolution of the dispute among the

parties.

SO ORDERED ADJUDGED AND DECREED.

Signed: February 26, 2024

Kenneth D. Bell

United States District Judge HOU

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