R&j Holding Co v. The Redevelopment Authority Of

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 10-1047

_____________

R&J HOLDING COMPANY;

RJ FLORIG INDUSTRIAL COMPANY, INC.,

Appellants

v.

THE REDEVELOPMENT AUTHORITY OF THE

COUNTY OF MONTGOMERY;

DONALD W. PULVER;

GREATER CONSHOHOCKEN IMPROVEMENT

CORP.;

TBFA PARTNERS, L.P.,

_____________

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

District Court No. 2-06-cv-01671

1

District Judge: The Honorable C. Darnell Jones, II

Argued September 15, 2011

Before: SLOVITER, SMITH, and NYGAARD, Circuit

Judges

(Filed: December 9, 2011)

Richard L. Bazelon (Argued)

Michael A. Shapiro

Bazelon, Less & Feldman

1515 Market Street

Suite 700

Philadelphia, PA 19102

Counsel for Appellant

Charles L. Becker

Kline & Specter

1525 Locust Street

19th Floor

Philadelphia, PA 19102

Maria T. Guerin

John F. Smith, III (Argued)

Reed Smith

1650 Market Street

2500 One Liberty Place

2

Philadelphia, PA 19103

Counsel for Appellee The Redevelopment

Authority of Montgomery County

H. Robert Fiebach (Argued)

Jennifer M. McHugh

Cozen O’Connor

1900 Market Street

3rd Floor

Philadelphia, PA 19103

Ronald J. Offenkrantz

Lichter, Gliedman & Offenkrantz

551 Fifth Avenue

24th Floor

New York, NY 10176

Counsel for Appellees Donald W. Pulver and

Greater Conshohocken Improvement Corp.

Barbara W. Mather (Argued)

Pepper Hamilton

18th & Arch Street

3000 Two Logan Square

Philadelphia, PA 19103

Counsel for Appellee TBFA Partners, L.P.

________________

3

OPINION

________________

SMITH, Circuit Judge.

This is the latest action in a long series of disputes

that followed the attempted condemnation of commercial

property in Conshohocken, Pennsylvania. Seeking to

revitalize the Conshohocken waterfront, the

Redevelopment Authority of Montgomery County (the

“Authority”) – at the behest of developer Donald Pulver

– attempted to condemn Plaintiffs’ property, which was

home to a successful steel processing business. The

Plaintiffs fought the condemnation in state court.

Plaintiffs prevailed, and were awarded their attorneys’

fees and expenses.

But because the Authority held title to Plaintiffs’

property throughout the state court action, Plaintiffs filed

a claim in federal court, seeking the “just compensation”

promised by the Fifth Amendment. The District Court

rejected Plaintiffs’ claim, essentially because they had

never asked the Redevelopment Authority whether it

would simply give them “just compensation.” Turning

again to the state courts, Plaintiffs did so, and were

rebuffed because the Pennsylvania Eminent Domain

Code does not provide for “just compensation” in these

situations. Thus denied, Plaintiffs returned to federal

4

court, still seeking their “just compensation.” The

District Court dismissed their case, holding that Plaintiffs

should have brought their federal claims as part of their

second action in state court.

We will reverse.

I

The District Court had jurisdiction pursuant to 28

U.S.C. §§ 1331 and 1343(a)(3) over Plaintiffs’ federal

claims under the Fifth and Fourteenth Amendments and

42 U.S.C. § 1983. The District Court had supplemental

jurisdiction pursuant to 28 U.S.C. § 1367(a) over

Plaintiffs’ state claims forming part of the same case or

controversy. The District Court’s December 2, 2009

Order was a final decision disposing of all of Plaintiffs’

claims. Plaintiffs timely filed their Notice of Appeal on

December 28, 2009. We have appellate jurisdiction

pursuant to 28 U.S.C. § 1291.

We exercise plenary review over a District Court

order dismissing a complaint. See Pension Benefit Guar.

Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1197

(3d Cir. 1993). On a motion to dismiss, “we must

‘accept all factual allegations as true, construe the

complaint in the light most favorable to the plaintiff, and

determine, whether under any reasonable reading of the

complaint, the plaintiff may be entitled to relief.’”

5

Gelman v. State Farm Mut. Auto. Ins. Co., 583 F.3d 187,

190 (3d Cir. 2009) (quoting Phillips v. Cnty. of

Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)).

II

At all times relevant to this lawsuit, Plaintiff R&J

Holding Company (the “owner”) owned the parcel of

land located at 110 Washington Street, Conshohocken,

Pennsylvania. Plaintiff RJ Florig Industrial Company

was R&J Holding’s lessee and operated a steel

processing business on the land. The Defendant

Redevelopment Authority of Montgomery County is a

government agency with the power of eminent domain.

Defendant Donald Pulver, a land developer, is the

principal of Defendants Greater Conshohocken

Improvement Corporation and TBFA Partners, L.P. For

ease of reference, we will refer to the three as “the Pulver

Defendants.”

In 1986, the Authority and the Pulver Defendants

conceived a plan to redevelop certain land, including the

subject property, situated in Montgomery County,

Pennsylvania. They entered into a series of agreements,

under which the Authority was to condemn as blighted

the Plaintiffs’ real property and convey it to the Pulver

Defendants. Importantly, the agreements provided that

the Authority could initiate condemnation proceedings

6

against the property only when directed to do so by

Pulver.

On July 11, 1996, at Pulver’s direction, the

Authority filed a Declaration of Taking for the subject

property. This had the effect of transferring title to the

property to the Authority. See 26 Pa. Cons. Stat. Ann. §

1-402(a) (1997). 1 The owner opposed the taking, arguing

that it was unlawful because – by giving the Pulver

Defendants the power to determine whether and when to

initiate condemnation proceedings – the Authority had

improperly delegated its eminent domain powers. The

Common Pleas Court approved the taking over the

owner’s objection, and the owner appealed this ruling to

the Pennsylvania Commonwealth Court.

The Commonwealth Court reversed in an opinion

dated February 13, 2001. It agreed with the owner that

the Authority had given the Pulver Defendants the power

to determine whether and when to condemn the subject

property. It held that such a delegation of eminent

domain power was unlawful, as eminent domain is

1

Section 1-402 is part of Pennsylvania’s Eminent

Domain Code, 26 Pa. Cons. Stat. Ann. § 1-401 et seq.

The Code was repealed and replaced in 2006, but the

provisions of the pre-2006 Code are at issue in this case.

See In re De Facto Condemnation and Taking of Lands,

972 A.2d 576, 580 n.2 (Pa. Commw. Ct. 2009).

7

inherently a sovereign power and cannot be exercised by

a private party. The court therefore invalidated the

taking and remanded the case to the Court of Common

Pleas. In re Condemnation of 110 Washington Street,

767 A.2d 1154, 1160-61 (Pa. Commw. Ct. 2001).

On remand, the owner petitioned for fees and

expenses under §§ 1-406 and 1-408 of the Eminent

Domain Code. These sections provide that an owner

who successfully resists a condemnation action (i.e., a

prevailing condemnee) is entitled to “reasonable

appraisal, attorney and engineering fees and other costs

and expenses actually incurred because of the

condemnation proceeding.” Pa. Cons. Stat. Ann. § 1-408

(1997). The court awarded the owner $550,959.73. See

R&J Holding Co. v. Redevelopment Auth. of Cnty. of

Montgomery, 885 A.2d 643, 647 (Pa. Commw. Ct. 2005).

In late 2002, Plaintiffs filed a § 1983 suit in federal

court against the Authority and the Pulver Defendants.

Their complaint asserted (among other claims) a Fifth

Amendment takings claim seeking just compensation.

Plaintiffs alleged – as they do here – that they were

deprived of certain fundamental property rights,

including the right to improve the property and the right

to sell the property.

The Defendants moved to dismiss on ripeness

grounds. Under Williamson County Regional Planning

8

Commission v. Hamilton Bank, 473 U.S. 172 (1985), if a

state provides an adequate procedure for seeking just

compensation, a Fifth Amendment takings claim is not

ripe until the owner has availed itself of the procedure

and been denied just compensation. See id. at 194. This

is because the Fifth Amendment does not prohibit the

taking of property; it only prohibits the taking of property

without just compensation. See id. at 194 & n.13; Cnty.

Concrete Corp. v. Town of Roxbury, 442 F.3d 159, 164

(3d Cir. 2006) (noting that under Williamson County, a

takings claim is not ripe until “the plaintiff has

unsuccessfully exhausted the state’s procedures for

seeking ‘just compensation,’ so long as the procedures

provided by the state were adequate”).

The District Court determined that Pennsylvania’s

Eminent Domain Code allows an aggrieved property

owner to seek just compensation in these circumstances

by filing an inverse-condemnation action. See R&J

Holding Co. v. Redevelopment Auth. of the Cnty. of

Montgomery, No. 02-cv-9530, 2003 WL 22387034, at

*4-6 (E.D. Pa. Oct. 15, 2003). Because the owner had

not yet filed an inverse-condemnation action seeking just

compensation, the District Court dismissed the takings

9

claim on ripeness grounds. Id. (citing Williamson

County, 473 U.S. at 194-95).2

Plaintiffs then filed an inverse-condemnation

action in the Montgomery County Court of Common

Pleas. Asserting that they had suffered a taking during

the unlawful condemnation proceeding, Plaintiffs argued

that they were entitled to compensation under

Pennsylvania’s Eminent Domain Code. At the same

time, Plaintiffs invoked England v. Louisiana State

Board of Medical Examiners, 375 U.S. 411 (1964), to

reserve their federal claims for federal court. The Court

of Common Pleas agreed with the Plaintiffs and ordered

the parties to appear before a board of viewers to

determine the amount of damages. The Authority

appealed.

The Commonwealth Court reversed. It held that

the Eminent Domain Code does not entitle a prevailing

condemnee to compensatory damages. Rather, the Code

2

The owner had also asserted a substantive due process

claim for improper delegation of authority. The District

Court dismissed that claim on statute-of-limitations

grounds. The owner appealed the dismissal of that claim

(but not the dismissal of its takings claim), and we

affirmed in a non-precedential opinion. See R&J

Holding Co. v. Redevelopment Auth. of Cnty. of

Montgomery, 165 F. App’x 175 (3d Cir. 2006).

10

limits a prevailing condemnee’s recovery to the out-of-

pocket expenses available under §§ 1-406 and 1-408.

Because the owner had already recovered expenses under

§§ 1-406 and 1-408, the court concluded that the

Plaintiffs had received all the relief to which they were

entitled under the Code. See R&J Holding Co. v.

Redevelopment Auth. of the Cnty. of Montgomery, 885

A.2d 643, 649-50 (Pa. Commw. Ct. 2005). Plaintiffs’

brief before the Commonwealth Court repeatedly

invoked their rights under the Pennsylvania Constitution,

but never directly mentioned their rights under the United

States Constitution. The Commonwealth Court’s opinion

never explicitly addressed whether denying just

compensation violated the state or federal constitutions.

The owner asked the Pennsylvania Supreme Court

to review the Commonwealth Court’s decision, but it

declined to do so.3

Having been denied relief, Plaintiffs returned to

federal court and filed the current action. They asserted

essentially the same Fifth Amendment takings claim that

they had asserted in the first federal lawsuit, as well as

assorted claims under state law. Defendants moved to

3

Plaintiffs renewed their purported reservation of federal

claims in their briefing before the Commonwealth Court

and in their Petition for Allowance of Appeal to the

Pennsylvania Supreme Court.

11

dismiss, arguing (among other things) that the takings

claim was barred by the doctrine of claim preclusion.

The District Court agreed, dismissed the claim, and

declined to exercise supplemental jurisdiction over the

state-law claims. See R&J Holding Co. v.

Redevelopment Auth. of Montgomery Cnty., No. 06-1671,

2009 WL 4362567 (E.D. Pa. Nov. 30, 2009).

This appeal followed.

III

While the District Court addressed only

Defendants’ arguments regarding claim preclusion,

Defendants assert numerous grounds for affirming the

District Court, including claim preclusion, issue

preclusion, failure to state a claim, and the statute of

limitations. We address each in turn.

III.A

Under the Full Faith and Credit Statute, 28 U.S.C.

§ 1738, “judicial proceedings . . . shall have the same full

faith and credit in every court within the United States . .

. as they have by law or usage in the courts of” the state

from which they emerged. Section 1738 “has long been

understood to encompass the doctrines of res judicata, or

‘claim preclusion,’ and collateral estoppel, or ‘issue

preclusion.’” San Remo Hotel v. City & Cnty. of S.F.,

545 U.S. 323, 336 (2005). To determine the effect of a

12

Pennsylvania court judgment, we are required to apply

Pennsylvania’s claim- and issue-preclusion law. See

Kremer v. Chem. Const. Corp., 456 U.S. 461, 466 (1982)

(“Section 1738 requires federal courts to give the same

preclusive effect to state court judgments that those

judgments would be given in the courts of the State from

which the judgments emerged.”).

Claim preclusion, or res judicata, is a defense

asserted when a case is essentially identical to one that

has previously been adjudicated. In many jurisdictions,

claim preclusion extends not only to those claims

actually asserted in a previous action, but also to all those

claims which could have been asserted. Pennsylvania’s

law of claim preclusion was summarized by the state

supreme court in Balent v. City of Wilkes-Barre, 669

A.2d 309, 313 (Pa. 1995): “Any final, valid judgment on

the merits by a court of competent jurisdiction precludes

any future suit between the parties or their privies on the

same cause of action. Res judicata applies not only to

claims actually litigated, but also to claims which could

have been litigated during the first proceeding if they

were part of the same cause of action.” For claim

preclusion to apply, Pennsylvania requires that the two

actions share the following four conditions: (1) the thing

sued upon or for; (2) the cause of action; (3) the persons

and parties to the action; and (4) the capacity of the

parties to sue or be sued. See Bearoff v. Bearoff Bros.,

13

Inc., 327 A.2d 72, 74 (Pa. 1974). But we need not

consider whether all of these elements are present.

Because the Plaintiffs clearly stated their intention to

split their state and federal claims during the second state

action and the Defendants raised no objections, the

Defendants have acquiesced to the Plaintiffs’ claim

splitting.4

4

The Dissent argues that the Plaintiffs had already

waived their federal rights when they failed to assert

them as preliminary objections in the first state action.

The Dissent is correct that failure to raise certain matters

as a preliminary objection constitutes a waiver, but those

matters are specifically enumerated by statute:

“Preliminary objections shall be limited to and shall be

the exclusive method of challenging (1) the power or

right of the condemnor to appropriate the condemned

property unless the same has been previously

adjudicated; (2) the sufficiency of the security; (3) any

other procedure followed by the condemnor; or (4) the

declaration of taking. Failure to raise these matters by

preliminary objections shall constitute a waiver thereof.”

Pa. Cons. Stat. Ann. § 1-406 (1997) (emphasis added).

In this action, Plaintiffs do not challenge the validity of

the taking, the security supplied, or the procedure used.

Rather, Plaintiffs challenge the sufficiency of their

compensation. This is not an issue that must be raised by

preliminary objections, so it cannot have been waived.

14

As we held in Bradley v. Pittsburgh Board of

Education, 913 F.2d 1064 (3d Cir. 1990), Pennsylvania

follows Section 26(1) of the Restatement (Second) of

Judgments, which provides that claim preclusion shall

not apply where:

(a) The parties have agreed in terms

or in effect that the plaintiff may split his

claim or the defendant has acquiesced

therein; or

(b) The court in the first action has

expressly reserved the plaintiff’s right to

maintain the second action.

Id. at 1072 (quoting Restatement (Second) of Judgments

§ 26(1)). We also held in Bradley, pursuant to the

commentary in the Restatement, that “[t]he failure of the

defendant to object to the splitting of the plaintiff’s claim

is effective as an acquiescence in the splitting of the

claim.” Id. (quoting Restatement (Second) of Judgments

§ 26(1)(a) cmt. a (1982)). We further noted that the

Restatement explicitly mentioned cases where “the

opposing party may acquiesce in the federal claim being

split off and reserved.” Id. at 1073 (quoting Restatement

(Second) of Judgments § 86, cmt. f).

In Coleman v. Coleman, 522 A.2d 1115, 1120 (Pa.

Super. 1987) (en banc), the Pennsylvania Superior Court,

15

quoting Restatement Sections 26(1) (a) and (b), held that

“[t]he law of Pennsylvania is in accord with the approach

taken by the Restatement.” Id. In a prior case, the

Pennsylvania Supreme Court explained: “Though such

splitting of actions is not favored it is not impermissible

when the parties and the court agree on that method of

adjudicating the action.” Keystone Bldg. Corp. v.

Lincoln S&L Ass’n, 360 A.2d 191, 196 n.10 (Pa. 1976).

Neither the briefs of the parties nor our own

research has uncovered any Pennsylvania case which

would call Bradley’s interpretation of Pennsylvania law

into question. As such, Bradley controls the outcome

here. On the very first page of their state complaint,

Plaintiffs noted their intent to reserve their federal claims

for adjudication in a federal forum. Plaintiffs reiterated

their intent to reserve their federal claims in their filings

before the Pennsylvania Commonwealth Court and the

Pennsylvania Supreme Court. Defendants uttered not a

word about the reserved federal claims while Plaintiffs

prosecuted their state claims all the way to the

Pennsylvania Supreme Court. They cannot now benefit

from their silence.5

5

The Pulver Defendants argue that such consent cannot

bind them because they were not parties to the first

action. But the defense of claim preclusion can be

asserted only by parties that did participate in the first

16

Note that our decision relies solely on our

interpretation of Pennsylvania claim preclusion law.

Plaintiffs originally styled their reservation of federal

claims as an England reservation. In England v.

Louisiana State Board of Medical Examiners, 375 U.S.

411 (1964), the Supreme Court held that “when a federal

court abstains from deciding a federal constitutional issue

to enable the state courts to address an antecedent state-

law issue, the plaintiff may reserve his right to return to

federal court for the disposition of his federal claims.”

San Remo, 545 U.S. at 339 (discussing England).

England was decided in the context of Pullman

abstention, under which a federal court postpones

exercise of its properly-invoked jurisdiction and directs

the parties to state court because the outcome may be

decided by an antecedent question of state law. See R.R.

action. See Balent, 669 A.2d at 313 (“Any final, valid

judgment on the merits by a court of competent

jurisdiction precludes any future suit between the parties

or their privies on the same cause of action.” (emphasis

added)). To the extent the Pulver Defendants are

asserting that they are in privity with the Authority and

therefore participated in the first action, they cannot have

it both ways. Either they are in privity and are bound by

the Authority’s implied consent, or they are not in privity

and lack standing to assert the defense of claim

preclusion.

17

Comm’n of Tex. v. Pullman Co., 312 U.S. 496 (1941).

England reservations have been permitted outside

the Pullman context, including in cases sent to state court

to fulfill the ripeness requirements of Williamson County.

See, e.g., Fields v. Sarasota Manatee Airport Auth., 953

F.2d 1299, 1306 (11th Cir. 1992). But the availability of

an England reservation in the Williamson County context

has been called into question by San Remo Hotel v. City

& County of San Francisco, 545 U.S. 323 (2005), in

which the Supreme Court held that plaintiffs could not

rely on England to avoid the bar of issue preclusion in a

takings case. See id. at 338. Yet we need not consider

the continued viability of England in the Williamson

context. Regardless of whether Plaintiffs’ statement was

valid as an England reservation, it provided notice to

Defendants of Plaintiffs’ intent to split their state and

federal claims. And Plaintiffs reiterated their intent to

reserve their federal claims in filings before the

Pennsylvania Commonwealth Court and the

Pennsylvania Supreme Court. Defendants’ failure to

object constitutes implied consent under Pennsylvania

law. Thus, pursuant to 28 U.S.C. § 1738, we faithfully

apply Pennsylvania law in concluding that Plaintiffs’

claims are permitted.6

6

Defendants suggest that San Remo undermines our

holding in Bradley. But Bradley contained two entirely

18

III.B

Defendants have raised several alternative bases

for affirming the District Court’s judgment, namely issue

preclusion, failure to state a claim, and the statute of

limitations. “We ordinarily decline to consider issues not

decided by a district court, choosing instead to allow that

court to consider them in the first instance.” Forestal

Guarini SA v. Daros Int’l, Inc., 613 F.3d 395, 401 (3d

Cir. 2010). But given the vintage of this dispute, we

think it appropriate, as a matter of judicial economy, to

accelerate its resolution to the extent reasonably possible.

These three issues are properly before us and have been

fully briefed. We exercise our discretion to resolve them

now.7

independent holdings: first, that an England reservation

was available under the circumstances of that case, 913

F.2d at 1072; second, that the defendants had – as a

matter of Pennsylvania state law – impliedly consented to

Bradley splitting his state and federal claims, id. at 1072-

73. Even if we assume (without deciding) that Bradley’s

first holding is no longer good law, there is no reason to

conclude that Bradley’s second holding was undermined

in any way by San Remo.

7

Defendants also object to plaintiffs’ request for punitive

damages and plaintiffs’ suit against Mr. Pulver in his

19

Just as claim preclusion bars re-litigation of an

entire case, issue preclusion bars re-litigation of discrete

issues, even in a case based on an entirely different

claim. The fundamental question is whether the issue has

been actually decided by a court in a prior action. See

McNeil v. Owens-Corning Fiberglas Corp., 680 A.2d

1145, 1147-48 (Pa. 1996) (“[W]hen an issue of fact or of

law is actually litigated and determined by a valid final

judgment, and determination of the issue was essential to

judgment, the determination on that issue is conclusive in

a subsequent action between the parties, whether on the

same or a different claim.”).

The parties agree that the Plaintiffs avoided

directly raising their federal claims before the

Pennsylvania state courts. And in its opinion holding

that the Eminent Domain Code did not provide for “just

compensation” under the circumstances of this case, R&J

Holding Co. v. Redevelopment Auth. of the Cnty. of

Montgomery, 885 A.2d 643, 650 (Pa. Commw. Ct. 2005),

the Pennsylvania Commonwealth Court never directly

addressed whether such an interpretation was permitted

under the United States Constitution.

Nonetheless, the Defendants assert that issue

preclusion should apply. Defendants’ argument runs as

individual capacity. We leave these and any remaining

issues for initial consideration by the District Court.

20

follows: The Plaintiffs did argue that an interpretation of

the Eminent Domain Code denying just compensation

could conflict with the Pennsylvania Constitution. Since

the Commonwealth Court had the constitutional

argument before it, the court must necessarily have

decided that its interpretation of the Eminent Domain

Code was permissible under the Pennsylvania

Constitution (even though the court never actually said

so). See Grubb v. Pub. Utils. Comm’n of Ohio, 281 U.S.

470, 477-78 (1930) (“The question of the constitutional

validity of the order was distinctly presented by the

appellant’s petition and necessarily was resolved against

him by the judgment affirming the order. Omitting to

mention that question in the opinion did not eliminate it

from the case or make the judgment . . . any less an

adjudication of it.”); Balent, 669 A.2d at 315 (Pa. 1995)

(“[W]e must assume that the court properly considered

the constitutional implications, before making its final

determination that the taking was non-compensable.”).

Finally, the Pennsylvania and United States constitutions

have been interpreted co-extensively by Pennsylvania

courts. See United Artists Theater Circuit, Inc. v. City of

Phila., 635 A.2d 612, 616 (Pa. 1993) (“[T]his Court has

continually turned to federal precedent for guidance in its

‘taking’ jurisprudence, and indeed has adopted the

analysis used by the federal courts.”). Therefore, by

determining the state constitutional issue, the

Commonwealth Court determined the federal

21

constitutional issue.

We disagree. First, even assuming the

Commonwealth Court’s opinion inherently considered

the federal constitutionality of its interpretation of the

Eminent Domain Code, that has no bearing on whether

there are alternative means for obtaining just

compensation (such as a § 1983 suit). Second, this chain

of logic stretches too far. The parties never actually

litigated the federal constitutionality of the Pennsylvania

Eminent Domain Code and the state courts never actually

decided it. A past conclusion that the Takings Clause of

the Pennsylvania Constitution and the Takings Clause of

the United States Constitution are co-extensive does not

constitute a present determination that an interpretation

of state law accords with the United States Constitution,

particularly when the federal constitutionality of that

interpretation was never directly presented to the state

court.

We hold that issue preclusion does not bar

Plaintiffs’ suit.

III.C

Defendants also assert that Plaintiffs have failed to

state a claim because this is not a taking. TBFA argues

that without an accompanying attempt to take physical

possession of the property, transfer of title to the

22

government does not constitute a taking. TBFA also

argues that the Plaintiffs have abandoned any argument

based on regulatory takings precedent. The Authority,

Pulver, and GCIC argue that even if regulatory takings

precedent is applied, this is not a taking. We conclude

that this is a per se taking because title to the land

actually passed from Plaintiffs to the Authority when the

Authority filed a Declaration of Taking on July 11, 1996.

In Yee v. Escondido, 503 U.S. 519 (1992), the

Supreme Court explained that “[w]here the government

authorizes a physical occupation of property (or actually

takes title), the Takings Clause generally requires

compensation.” Id. at 522 (emphasis added). In United

States v. Lynah, 188 U.S. 445 (1903), as a first step

towards determining whether there had been a taking, the

Court noted: “Was there a taking? There was no

proceeding in condemnation instituted by the

government, no attempt in terms to take and appropriate

the title.” Id. at 468. This implies that had such an

attempt occurred, the Court would have held there to be a

taking.

Defendants dismiss Yee as a regulatory takings

case. But while Yee was indeed a regulatory takings

case, the Supreme Court had to formulate some way to

decide whether it was a regulatory takings case. In both

Yee and Lynah, the first question asked was “Did the

government take title or possession of the land?” While

23

the Court answered in the negative in both cases,

answering in the affirmative would have obviated any

need for considering regulatory takings jurisprudence.

In addition, the nature of the Authority’s action

belies any argument that this was a regulatory taking.

Had the Authority been successful in state court, it

intended to take physical possession of the property. The

lines of precedent for per se and regulatory takings are

separate and distinct. See Tahoe-Sierra Preservation

Council, Inc. v. Tahoe Regional Planning Agency, 535

U.S. 302, 323-24 (2002) (holding it “inappropriate to

treat cases involving physical takings as controlling

precedents for the evaluation of a claim that there has

been a ‘regulatory taking,’ and vice versa”). Because the

Authority’s acquisition of the property would have ended

as a per se taking, it must have begun as a per se taking.8

8

Supreme Court precedent does suggest that in some rare

cases, regulatory takings may be considered the

equivalent of per se takings. The Court has identified

only two situations in which this would occur: first,

where regulation compels physical invasion of an

owner’s property; second, where regulation deprives an

owner of all economically beneficial use of their

property. See Lucas v. S.C. Coastal Council, 505 U.S.

1003, 1015-18 (1992). Neither situation is at issue here.

24

The only contrary authority cited by the

Defendants is Horne v. USDA, No. CV-F-08-1549, 2009

U.S. Dist. LEXIS 115464 (E.D. Cal. Dec. 11, 2009). In

that case, the District Court considered the

constitutionality of a raisin marketing order under which

a certain portion of the raisin crop was required to be

transferred to the Raisin Administrative Committee as

“reserve tonnage.” The District Court concluded that

“the transfer of title to the reserve tonnage does not

constitute a physical taking.” Id. at *76. The Ninth

Circuit, though affirming the judgment of the District

Court, rested its analysis on a sounder analytical

framework, concluding that “the Raisin Marketing Order

applies to the Hornes only insofar as they voluntarily

choose to send their raisins into the stream of interstate

commerce.” Horne v. USDA, No. 10-15270, 2011 U.S.

App. LEXIS 15284, at *23 (July 25, 2011). In other

words, in order to participate in the world of raisin

marketing, growers must surrender a portion of their crop

as an entrance fee. But whether growers choose to sell in

interstate commerce (and pay the fee) is entirely their

prerogative. To the extent the District Court in Horne

was stating a broader position, we cannot agree.

Yee and Lynah seem to indicate that a per se taking

can be triggered by either: (1) a physical occupation of

the owner’s land or (2) a transfer of title. We agree.

Practice involving federal government takings confirms

25

that transfer of title is a watershed moment. When the

federal government is involved in condemnation

proceedings, it can file a Declaration of Taking and pay

estimated just compensation. If it does so, title passes

immediately, and this set of events marks the “taking.”

See United States v. Dow, 357 U.S. 17, 22-23 (1958)

(noting that the filing of a declaration and payment of

just compensation works a transfer of title and that “[t]he

scheme of the Taking Act makes it plain that when the

Government files a declaration before it has entered into

possession of the property the filing constitutes the

‘taking’”). In addition, Federal Rule of Civil Procedure

71A(i)(1) prohibits judges from dismissing a

condemnation proceeding “if the plaintiff has already

taken title, a lesser interest, or possession as to any part

of” the property. Rather, the court “must award

compensation for the title, lesser interest, or possession

taken.” Id. Again, this implies that transfer of title

constitutes a taking, for which just compensation must be

paid.

The parties do not dispute that transfer of title

occurred by operation of Pennsylvania’s Eminent

Domain Code. See 26 Pa. Cons. Stat. Ann. § 1-402(a)

(1997) (repealed 2006) (“[T]he title which the

condemnor acquires in the property condemned [passes]

to the condemnor on the date of [the filing in court of the

declaration of taking.]”). As the Supreme Court has

26

explained, its “jurisprudence involving condemnations

and physical takings is as old as the Republic and, for the

most part, involves the straightforward application of per

se rules.” Tahoe-Sierra, 535 U.S. at 322. Because title

was actually transferred to the Authority, we hold that

this was a per se taking.

III.D

Finally, the Defendants assert that the Plaintiffs’

claims are barred by the statute of limitations. We

disagree.

Defendants appear to be arguing that the takings

claims at issue here can be equated with improper

delegation claims that were dismissed on statute of

limitations grounds by the District Court in the first

federal action. See R&J Holding Co. v. Redevelopment

Auth. of the Cnty. of Montgomery, No. 02-cv-09530,

2003 WL 22387034, at *6-*9 (E.D. Pa. Oct. 15, 2003),

aff’d, 165 F. App’x 175 (3d Cir. 2006) (not precedential).

They cannot. Plaintiffs’ claims here are clearly distinct.

Defendants also cite several pieces of literature

arguing that the Williamson County “ripeness” label is

incorrect and misleading or that plaintiffs should

generally only be able to proceed in state court on takings

27

claims. 9 These arguments are unpersuasive in light of the

Supreme Court’s repeated description of Williamson

County’s requirements as a ripeness issue. See, e.g.,

Williamson County, 473 U.S. at 186 (“Because

respondent has not yet obtained a final decision regarding

the application of the zoning ordinance and subdivision

regulations to its property, nor utilized the procedures

Tennessee provides for obtaining just compensation,

respondent’s claim is not ripe.”). These arguments also

ignore the fundamental basis of the Williamson opinion:

simply put, until just compensation has been denied, an

owner has not suffered a constitutional injury and does

not have a federal takings claim. See id. at 194 n.13

(“[B]ecause the Fifth Amendment proscribes takings

without just compensation, no constitutional violation

occurs until just compensation has been denied.”).

As we held in Whittle v. Local 641, International

Brotherhood of Teamsters, 56 F.3d 487, 489 (3d Cir.

9

See Thomas E. Roberts, Fifth Amendment Taking

Claims in Federal Court: The State Compensation

Requirement and Principles of Res Judicata, 24 Urb.

Law, 479, 501-03 (1992); Thomas E. Roberts, Facial

Takings Claims Under Agins-Nectow: A Procedural

Loose End, 24 U. Haw. L. Rev., 623, 634-35 (2002);

Douglas T. Kendell et al., Choice of Forum and Finality

Ripeness: The Unappreciated Hot Topics in Regulatory

Takings Cases, 33 Urb. Law 405, 407-09 (2001).

28

2005): “[A] cause accrues when it is sufficiently ripe

that one can maintain suit on it.” Plaintiffs’ takings claim

did not accrue until the Pennsylvania Supreme Court

denied review in the second state action on March 21,

2006. See R&J Holding Co. v. Redevelopment Auth. of

the Cnty. of Montgomery, Nos. 1018 &1019 MAL 2005

(Pa. Mar. 21, 2006). Because this action was filed on

April 21, 2006, it is of no moment whether we adopt the

statute of limitations put forward by the Plaintiffs

(twenty-one years) or the statute of limitations put

forward by the Defendants (two years). The action is

timely.

III.D

In light of its dismissal of the federal claims, the

District Court properly declined to exercise jurisdiction

over Plaintiffs’ state law claims. But “[s]ince we will

reinstate [Plaintiffs’ federal claims], we must vacate that

portion of the district court’s order dismissing without

prejudice [Plaintiffs’] pendent state law claims

. . . . The standard for exercising discretion to dismiss

state claims pendent on a viable federal claim differs

from the standard governing dismissal when the federal

claim itself lacks merit.” Markowitz v. Ne. Land Co., 906

F.2d 100, 106 (3d Cir. 1990).

29

IV

We conclude that Plaintiffs’ suit cannot be barred

on the grounds of claim preclusion, issue preclusion,

failure to state a claim, or the statute of limitations.

This is the latest in a long series of actions

following the condemnation of a single piece of property.

We are aware that the parties and the courts have

expended substantial resources over the years in efforts

to resolve the underlying dispute. But the Plaintiffs –

having reserved their federal rights in state court and

having received no objection from the Defendants – are

entitled to a federal forum for their federal claims.

We will reverse and remand to the District Court

for further proceedings consistent with this opinion. 10

10

Citing United States v. Bodcaw, 440 U.S. 202 (1979),

the Dissent asserts that a remand would be futile because

the damages sought by the Plaintiffs exceed the scope of

damages available to them under the Fifth Amendment.

We disagree. Just compensation is limited to damages

sought “for the property,” id. at 203, and thus Bodcaw

excluded appraisal fees incurred in a condemnation

action from the scope of just compensation, see id. at

204. Such indirect costs are not the result of an

impairment of property rights. But here Plaintiffs seek

30

compensation for their inability to fully utilize, develop,

and sell their property. There can be no question that

these are rights inhering in the property itself, unlike the

indirect costs excluded by Bodcaw. To the extent some

of Plaintiffs’ claims seek both direct and indirect costs,

we leave it to the District Court to consider the scope of

those claims and, if appropriate, to limit them.

31

R&J Holding Company, RJ Florig Industrial Company, Inc.

v. The Redevelopment Authority of the County of

Montgomery, No. 10-1047.

Nygaard, J. Dissenting.

In its singular focus upon R.J. Florig’s procedural

machinations, I believe the majority has erred. Three

conclusions compel my dissent: 1.) R.J. Florig’s federal

claims have been waived; 2.) the issues raised in the federal

claims have been conclusively addressed by the state court;

and 3.) the lack of a federal remedy moots the federal claims.

The Pennsylvania Eminent Domain Code “is intended

. . . to provide a complete and exclusive procedure and law to

govern all condemnations of property for public purposes and

the assessment of damages therefor. . . .” 26 P.S. § 1-303

(1996). In that vein, the Code states that “[a]ll preliminary

objections shall be raised at one time and in one pleading.”

26 P.S. § 1-406(c) (1996). Moreover, “[f]ailure to raise these

matters by preliminary objections shall constitute a waiver

thereof.” 26 P.S. § 1-406(a) (1996). The Commonwealth

Court said that “preliminary objections are intended as a

procedure to resolve expeditiously the factual and legal

challenges to a declaration of taking before the parties

proceed to determine damages.” In re Condemnation by City

of Coatesville, 898 A.2d 1186, 1189 n. 7 (Pa. Cmwlth. 2006).

The problem, however, is that R.J. Florig never raised its

federal claims. Rather, it stated in a footnote to its

preliminary objections:

R.J. Florig Company is not

presenting in this case its federal

1

constitutional and civil rights

claims, including the claims that

the actions of the Authority and

others constitute a taking of

private property for purported

public use without just

compensation and a deprivation of

property without due process of

law in violation of the Fifth and

Fourteenth Amendments of the

Unites States Constitution. R.J.

Florig Company reserves its right

to litigate these federal claims in

federal court.

Preliminary Objections, p. 2 n. 1. While R.J. Florig declared

that it was “not presenting” its claims, the Code does not

authorize parties to make such a choice. They are limited by

the law. See § 1-406(c). By the terms of the Code, R.J.

Florig’s failure to raise these claims in its preliminary

objections must be regarded as a waiver of those claims.

Accordingly, R.J. Florig’s abandoned federal claims should

not have been considered by the District Court.

Moreover, as the District Court determined, the issues

raised in R.J. Florig’s federal complaint have been

conclusively ruled upon in state court. We already

affirmed—in an earlier decision—the District Court’s denial

of R.J. Florig’s section 1983 claim as time-barred. In its

federal complaint, R.J. Florig premises its remaining federal

takings claim by characterizing the Commonwealth Court’s

holding in its inverse condemnation action as follows:

2

Plaintiffs pursued just

compensation for taking of their

property rights in state court

under Pennsylvania law but

Pennsylvania appellate courts

conclusively determined that

Pennsylvania does not provide a

remedy for taking of Plaintiffs’

property rights during the

unlawful de jure condemnation of

their property, regardless of the

extent of the taking.

Complaint, ¶ 107 (emphasis added). This statement

misconstrues the Commonwealth Court’s ruling. The

Commonwealth Court determined the following:

In this case, R & J Holding

already received costs and

expenses under Section 408 of the

Eminent Domain Code. Thus,

they are not entitled to any more

costs and expenses under any

other Section of the Eminent

Domain Code because the Code

does not require that a condemnee

be made whole. Moreover, R & J

Holding is seeking damages under

502(e) which only applies when

“no declaration of taking therefor

has been filed”. To apply this

Section to this case, this Court

would have to insert the word

3

“valid” before “declaration of

taking.” Because a declaration of

taking was filed in this case,

damages under Section 502(e) are

not available to R & J Holding.

R & J Holding Company v. The Redevelopment Authority of

the County of Montgomery, 885 A.2d 643, 650 (Pa. Cmwlth.

2005) (internal citations omitted). The Commonwealth Court

ruled that, because this case originated in a declaration of

taking, it is a de jure condemnation. R.J. Florig’s successful

defense against the declaration under the Code’s de jure

provisions enabled it to regain title to its property and receive

attorney’s fees and costs in the amount of $550,959.73. The

Commonwealth Court determined that, having received these

remedies, R.J. Florig was not permitted to simply re-label the

very same taking as an inverse de facto condemnation and go

back to court seeking another remedy.

Therefore, the Commonwealth Court did not rule that

R.J. Florig was without a remedy. To the contrary, it ruled

that the 1996 taking of R.J. Florig’s property was

conclusively litigated and fully remedied in accordance with

the Pennsylvania Eminent Domain Code, and as a result it

could not be re-litigated. R.J. Florig wishes to read the

decision as pointing to a gap in the scheme of just

compensation permitted under the Code when, in fact, the

decision closed the door to them. Its federal Fifth

Amendment taking claim is, in every respect, the de facto

condemnation claim raised and dismissed in state court. Res

judicata requires that we respect the state court’s ruling by

affirming the District Court’s dismissal of the claim.

Therefore, even were we to assume that the federal claims

4

were properly severed from the state claim, res judicata

precludes our jurisdiction to consider them again.

Finally, even were we to ignore the relevance of

waiver and res judicata to this case, the majority’s remand is

perplexing because there is simply no remedy available at

law. In R.J. Florig’s complaint for its federal taking claim, it

seeks just compensation for, inter alia, their inability to

“redevelop, sell, or lease the Florig Property . . . [for their

inability to] expand and/or relocate the steel processing

business for a period of more than five years . . . [and for]

causing plaintiffs to spend thousands of hours in dealing with

the imminent threat of condemnation.” Complaint, p. 27.

The problem is that such damages are not prescribed by the

concept of just compensation under the United States

Constitution. In fact, the Pennsylvania Eminent Domain

Code, under which this case was litigated, provided R.J.

Florig with a wider range of relief than is available under

federal law.

I agree with the majority that an actual—rather than a

de facto—taking occurred here because title to the property

transferred at the declaration of taking. There can be no other

conclusion. This, however, has consequences for the

parameters of the constitutional right to just compensation.

As the Supreme Court said:

This Court has often faced the

problem of defining just

compensation. One principle

from which it has not deviated is

that just compensation “is for the

property, and not to the owner.”

5

As a result, indirect costs to the

property owner caused by the

taking of his land are generally

not part of the just compensation

to which he is constitutionally

entitled.

United States v. Bodcaw, 440 U.S. 202, 203 (1979) (internal

citation omitted). In its analysis, the Bodcaw Court spoke of

a particular federal statute that, under certain circumstances,

authorized attorney’s fees and litigation expenses where—as

was the case here—“a condemnation action is dismissed as

being unauthorized . . . .” It concluded, however, that “such

compensation is a matter of legislative grace rather than

constitutional command,” and it denied relief presumably

because no such statute applied in that case. Id. at 204. In the

same way, R.J. Florig does not cite to, nor can I find any

federal statute that would authorize any remedy beyond that

which it has already received under the Pennsylvania Eminent

Domain Code. Re-titling this de jure action as a de facto

condemnation does not change this fact.

Alternatively, construing the condemnation as a

regulatory taking does not change the analysis. In

circumstances that were analogous to this case, the Supreme

Court said the following with regard to a constitutional right

to just compensation.

Even if the appellants' ability to

sell their property was limited

during the pendency of the

condemnation proceeding, the

appellants were free to sell or

6

develop their property when the

proceedings ended. Mere

fluctuations in value during the

process of governmental

decisionmaking, absent

extraordinary delay, are “incidents

of ownership. . . .”

Agins v. City of Tiburon, 447 U.S. 255, 263 n. 9 (1980)

(overruled on other grounds in Lingle v. Chevron U.S.A. Inc.,

544 U.S. 528 (2005)) (quoting Danforth v. United States, 308

U.S. 271, 285 (1939)). R.J. Florig was never denied the

ability to operate its business, eventually regained title to the

property, and ultimately sold it at market value. I see no

basis for distinguishing R.J. Florig’s multiple claims for

damages from “incidents of ownership.” As a result, even

were we to analogize this case to a regulatory taking, no relief

is warranted.

In Williamson, the Supreme Court said: “[B]ecause

the Fifth Amendment proscribes takings without just

compensation, no constitutional violation occurs until just

compensation has been denied.” Williamson County

Regional Planning Com'n v. Hamilton Bank of Johnson City,

473 U.S. 172, 195 (1985). Here, even if waiver and the

doctrine of res judicata are ignored, R.J. Florig has not

demonstrated any basis to claim that, by resorting to the

remedies available under the Pennsylvania Eminent Domain

Code, they have been unjustly compensated. As a result, their

claim is moot.

For all of these reasons, I dissent.

7