Martingale LLC v. Louisville

RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 2 Martingale LLC, et al. v. City of No. 02-5895 ELECTRONIC CITATION: 2004 FED App. 0080P (6th Cir.) Louisville, et al. File Name: 04a0080p.06 _________________ UNITED STATES COURT OF APPEALS COUNSEL FOR THE SIXTH CIRCUIT ARGUED: Donald L. Cox, LYNCH, COX, GILMAN & _________________ MAHAN, Louisville, Kentucky, for Appellants. John L. Tate, STITES & HARBISON, Louisville, Kentucky, for MARTINGALE LLC; BRIDGE X Appellees. ON BRIEF: Donald L. Cox, William H. THE GAP , INC ., - Mooney, LYNCH, COX, GILMAN & MAHAN, Louisville, Plaintiffs-Appellants, - Kentucky, Theodore L. Mussler, Jr., MUSSLER & - No. 02-5895 ASSOCIATES, Louisville, Kentucky, for Appellants. John - L. Tate, Emily R. Hartlage, STITES & HARBISON, v. > Louisville, Kentucky, for Appellees. , - CITY OF LOUISVILLE ; _________________ - WATERFRONT DEVELOPMENT - OPINION CORPORATION , - _________________ Defendants-Appellees. - - JAMES S. GWIN, District Judge. In this case, Martingale, N LLC (“Martingale”) and Bridge the Gap, Inc. (“Bridge the Appeal from the United States District Court Gap”) appeal the district court’s ruling permitting the City of for the Western District of Kentucky at Louisville. Louisville (“City”) and the Waterfront Development No. 01-00255—Charles R. Simpson, III, District Judge. Corporation to condemn a structure known as the Big Four Bridge. The Big Four Bridge connects Jeffersonville, Indiana Argued: October 22, 2003 with Louisville, Kentucky. The City and the Waterfront Development Corporation wish to use the bridge as part of a Decided and Filed: March 17, 2004 public park, but Martingale and Bridge the Gap contend that the City has no legal power to condemn the bridge. Before: BOGGS, Chief Judge; GIBBONS, Circuit Judge; GWIN, District Judge.* For the following reasons, the district court’s decision is AFFIRMED.

* The Ho norable James S. Gwin, United States District Judge for the Northern District of Ohio, sitting by designation.

No. 02-5895 Martingale LLC, et al. v. City of 3 4 Martingale LLC, et al. v. City of No. 02-5895 Louisville, et al. Louisville, et al.

I. Background Five years later, the bridge's approaches were removed. The bridge remains in this condition today, completely The story of this case begins in 1888, when the Kentucky inaccessible to humans. For the past thirty years, the bridge General Assembly chartered the Louisville and Jeffersonville has not been functional. Bridge Company (“Bridge Company”). The Bridge Company’s charter provided it the “right and power to The bridge's abandonment did not stop the transfer of the construct, maintain and operate” a bridge to make rail bridge. Penn Central Transportation Company went bankrupt connections between the railroad lines on each side of the in 1970 and transferred all of its properties other than Ohio River. A year later, the Bridge Company approved final operating railroads to the Penn Central Corporation. But the plans for the bridge, and in 1895, construction was completed. Penn Central Corporation did not keep the bridge, either. In 1982, Charles R. Hammond (“Hammond”) acquired the In 1927, the Cleveland, Cincinnati, Chicago, and St. Louis bridge and then transferred it to the Louisville and Railroad Company (known as the “Big Four Railroad Jeffersonville Bridge Corporation (“Bridge Corporation”), of Company”) acquired an interest in the bridge from the Bridge which he was president. Hammond then transferred all of the Company. Over the following two years, the bridge and its real property associated with the bridge, but not the bridge approaches were rebuilt. Years later, in 1955, the Bridge itself, to the Kentucky Real Estate Holding Corporation. Company and Big Four merged, making Big Four the bridge's sole owner and the operator. In 1987, Bridge the Gap acquired the bridge at a Sheriff's sale for $10,300. The Waterfront Development Corporation Through a series of subsequent mergers, Big Four became purchased the real estate surrounding the bridge pylon on the a part of the Penn Central Transportation Company (“Penn Kentucky side of the river in 1995. In 2000, Bridge the Gap Central”). In 1968, Penn Central decided that due to its sold its interest in the bridge to Martingale for $400,000, merger with the New York Central Railroad Company, retaining only the right to display holiday lights on the bridge certain rail lines were surplus, and that continuing to operate for a ten-year period.2 these lines would be a “financial burden . . . and an undue burden on interstate commerce.” The rail line crossing the Hoping to use the bridge as a pedestrian walkway as a part bridge was one such line. A year later, the Interstate of the City's Waterfront Park, the City of Louisville passed a Commerce Commission (“ICC”) approved Penn Central's resolution authorizing condemnation of the bridge on application to abandon the bridge. In 1969, the rail line November 28, 2000. In April 2001, Bridge the Gap and spanning the bridge was thus abandoned.1 Martingale sued in the United States District Court for the Western District of Kentucky. Their suit sought a declaratory judgment of their right to insulate the bridge from

1 The record is not clear on what exactly was abandoned. One way 2 to read the record indicates that only the rail line was abandoned, and that Because the sale contra ct was co ntingent upon the gra nt of certain the ICC proceeding had no effect on the bridge. Another interpretation perm its from the City and the Wa terfront Developm ent Corporation, the holds that Penn Central abandoned the bridge when it abandoned the rail sale may not have been consumm ated. Ho wever, Martingale app arently line. Regard less, this amb iguity does not affect our resolution of the case. has at least an equitable lien on the Bridge under the term s of the co ntract.

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condemnation, an injunction restraining the City of Louisville The City of Louisville and the Waterfront Development and the Waterfront Development Corporation from Corporation respond by arguing that there are no issues of condemning the bridge, compensatory damages, costs, and material fact regarding any of the above-mentioned issues, attorneys’ fees. In July 2001, the City filed suit in Kentucky and that the district court correctly granted judgment in their state court to condemn the bridge. favor as a matter of law. Additionally, the City and the Waterfront Development Corporation say that the Anti- On June 5, 2002, the district court entered summary Injunction Act, 28 U.S.C. § 2283, prohibits this Court from judgment in favor of the City and the Waterfront enjoining a state court condemnation proceeding. Development Corporation. The court reasoned that: (1) the bridge is not in interstate commerce; (2) the Rivers and The Court analyzes these arguments below. Harbors Act does not prohibit condemnation of the bridge; (3) the bridge’s status as a post route does not prohibit III. Standard of Review condemnation; and (4) the plaintiffs’ alleged franchises had been forfeited in 1969 when the ICC permitted Penn Central An appellate court reviews a district court’s grant of to abandon the bridge. Additionally, the district court held summary judgment de novo. Doren v. Battle Creek Health that even if the plaintiffs possessed the alleged franchises, this Sys., 187 F.3d 595, 597 (6th Cir. 1999). Summary judgment was no bar to condemnation because the City and the is appropriate where the evidence submitted shows “that there Waterfront Development Corporation could condemn the is no genuine issue as to any material fact and that the moving franchises and pay the plaintiffs reasonable compensation for party is entitled to a judgment as a matter of law.” Fed. R. them. Plaintiffs Martingale and Bridge the Gap now appeal Civ. P. 56(c). The moving party has the initial burden of the district court’s grant of summary judgment. showing the absence of a genuine issue of material fact as to an essential element of the non-moving party’s case. Waters II. Summary of the Parties’ Arguments v. City of Morristown, 242 F.3d 353, 358 (6th Cir. 2001). A fact is material if its resolution will affect the outcome of the Martingale and Bridge the Gap argue that summary lawsuit. Daughenbaugh v. City of Tiffin, 150 F.3d 594, 597 judgment was inappropriate because they presented enough (6th Cir. 1998) (citing Anderson v. Liberty Lobby, Inc., 477 evidence to the district court to create issues of material fact U.S. 242, 248 (1986)). with regard to: (1) whether the bridge is in interstate commerce, and if so, whether the City’s attempt to condemn Once the moving party satisfies its burden, the burden shifts it is an impermissible burden on interstate commerce; (2) to the non-moving party to set forth specific facts showing a whether the bridge and any franchises to operate it were triable issue. Matsushita Elec. Indus. v. Zenith Radio Corp., abandoned as a matter of law under the ICC’s procedures for 475 U.S. 574, 586 (1986). It is not sufficient for the non- abandoning a rail line; (3) whether a municipality in moving party merely to show some possibility of doubt as to Kentucky can condemn a federal, Kentucky, or Indiana the material facts. Id. franchise to own and operate bridge over the Ohio River; and (4) whether the City of Louisville can condemn personal In deciding a motion for summary judgment, the court property for use in a park. views the factual evidence and draws all reasonable inferences in favor of the non-moving party. National

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Enters., Inc. v. Smith, 114 F.3d 561, 563 (6th Cir. 1997). In response, Martingale and Bridge the Gap assert that the Ultimately the Court must decide “whether the evidence Anti-Injunction Act is inapplicable because they seek presents sufficient disagreement to require submission to a declaratory relief in addition to an injunction. Additionally, jury or whether it is so one-sided that one party must prevail they argue that the Anti-Injunction Act cannot apply because as a matter of law.” Terry Barr Sales Agency, Inc. v. All-Lock they requested that the injunction be directed against the City Co., 96 F.3d 174, 178 (6th Cir. 1996) (internal quotations and the Waterfront Development Corporation, not against the omitted). state courts. Finally, Martingale and Bridge the Gap assert that the Anti-Injunction Act does not prohibit injunctions that IV. Analysis forbid the commencement of state court proceedings. The City and the Waterfront Development Corporation We now turn to these arguments, using the text of the Anti- assert that even if Martingale and Bridge the Gap’s arguments Injunction Act as a starting point. The Anti-Injunction Act are meritorious, the federal Anti-Injunction Act, 28 U.S.C. states in full: § 2283, barred the district court from granting the requested relief. If the City and the Waterfront Development A court of the United States may not grant an injunction Corporation are correct, then we need not reach the merits of to stay proceedings in a State court except as expressly the case with respect to Martingale and Bridge the Gap’s authorized by Act of Congress, or where necessary in aid claims for declaratory and injunctive relief. For this reason, of its jurisdiction, or to protect or effectuate its we open our analysis with this issue. judgments. The district court did not address the Waterfront 28 U.S.C. § 2283. The Supreme Court has, on several Development Corporation and the City’s Anti-Injunction Act occasions, recognized that the Anti-Injunction Act creates “an argument. Regardless, this Court may consider it. This absolute prohibition against enjoining state court proceedings, would be the case even if the parties did not raise the issue. unless the injunction falls within one of three specifically See, e.g., Gloucester Marine Rys. Corp. v. Charles Parisi, defined exceptions.” Atlantic Coast Line R.R. Co. v. Bhd. of Inc., 848 F.2d 12, 15 (1st Cir. 1988); Hickey v. Duffy, 827 Locomotive Eng’rs, 398 U.S. 281, 286-87, 90 S. Ct. 1739, F.2d 234, 243 (7th Cir. 1987). 1743 (1970); see also Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623, 630-31, 97 S. Ct. 2881, 2886 (1977). These three According to the City and the Waterfront Development exceptions, embedded within the statute’s text, permit Corporation, the Anti-Injunction Act forbade the district court injunctions against state court proceedings (1) where from granting the relief that Martingale and Bridge the Gap Congress expressly authorizes, (2) where necessary in aid of requested. The City and the Waterfront Development the court’s jurisdiction, and (3) where necessary to protect or Corporation claim that the Anti-Injunction Act bars relief effectuate the court’s judgments. See 28 U.S.C. § 2283. because Martingale and Bridge the Gap seek injunctive relief and because their claims do not fit into any of the Anti- Martingale and Bridge the Gap fit into none of the Act’s Injunction Act’s three exceptions. exceptions. First, the parties do not assert, nor do we find, that Congress expressly authorizes injunctions against state courts in the Rivers and Harbors Act, 33 U.S.C. §§ 401 et seq.

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Second, the injunction they seek is not necessary in aid of Finally, because there has been no prior federal court the court’s jurisdiction. Courts have applied this second decision on the matter of the bridge, Martingale and Bridge exception in only two scenarios: where the case is removed the Gap cannot show that an injunction would be “necessary from the state court, and where the federal court acquires in to promote or effectuate [the court’s] judgments.” rem or quasi in rem jurisdiction over a case involving real property before the state court does. See, e.g., 17 Wright, Martingale and Bridge the Gap’s arguments against Miller, & Cooper, Federal Practice & Procedure: applying the Anti-Injunction Act are unavailing. They argue Jurisdiction 2d § 4225, at 528 (1988); Erwin Chemerinsky, that the Anti-Injunction Act may bar their request for an Federal Jurisdiction, §11.2.3, at 699-700 (3d ed. 1999). injunction, but not their claim for declaratory relief. Neither of these scenarios applies in this case.3 Further, the Martingale and Bridge the Gap’s argument is clever, but existence of a federal right not to have property taken without unpersuasive. Their ultimate goal is to halt the state court just compensation does not render equitable relief necessary condemnation proceedings, a result that either an injunction in aid of the federal courts’ jurisdiction. First of all, or a declaratory judgment would accomplish equally well. Martingale and Bridge the Gap have failed to show a Other parties have tried this ruse, and most courts that have violation of this right. Second, the Supreme Court has noted addressed this issue have rejected their argument. See, e.g., that “when a state proceeding presents a federal issue, even a Am. Airlines, Inc. v. Dep’t of Transp., 202 F.3d 788 (5th Cir. pre-emptive issue, the proper course is to seek resolution of 2000), cert. denied 530 U.S. 1274, 120 S. Ct. 2740 (2000); that issue by the state courts.” Chick Kam Choo v. Exxon U.S. Steel Corp. Plan for Employee Ins. Benefits v. Musisko, Corp., 486 U.S. 140, 149-50, 108 S. Ct. 1684, 1691 (1988). 885 F.2d 1170, 1175 (3d Cir. 1989), cert. denied, 453 U.S. 1074 (1990); Gloucester Marine Rys. Corp., 848 F.2d at 15; Texas Employers’ Ins. Ass’n v. Jackson, 862 F.2d 491, 498-99 (5th Cir. 1988) (en banc), cert. denied, 490 U.S. 1035 (1989); 3 Although this case does involve aspects of real property law, Bledsoe v. Fulton Bank, 940 F. Supp. 804, 808 (E.D. Pa. jurisdiction over these parties is based on in personam, rather than in rem, 1996). This Court follows the guidance of these courts and principles. Therefore, the “in aid of jurisdiction” exception does not determines that where, as here, declaratory relief would have app ly. See Ven do C o. v. Le ktro-V end Corp., 433 U.S. 623, 641-42 (1977) (declining to apply the “necessary in aid of jurisdiction” exception where the same practical effect as an injunction, the Anti-Injunction the federal and state actio ns were based on in personam jurisdiction, and Act precludes the court from granting a declaratory judgment. noting that “[t]he traditional notion is that in personam actions in federal and state court may proceed concurrently, without interference from Additionally, Martingale and Bridge the Gap argue that the either court, and there is no evidence that the exception to § 2283 was Anti-Injunction Act does not prevent a court from enjoining intended to alter this b alance.”); see also In re Am. Ho nda Mo tor Co., the parties from commencing state court proceedings, as Inc., Dealersh ips Relation Litig., 315 F.3d 417, 439 (4th Cir. 2003) (“The ‘necessary in aid of its jurisdiction’ exception to the Anti-Injunction Act opposed to enjoining the parties from proceeding with is widely understood to apply most often when a federal court was the already-filed state actions. They are correct. However, this first in obtaining jurisdiction over a res in an in rem action and the same is of no moment to the instant case because the City filed its federal court seeks to enjoin suits in state courts involving the same res.”); condemnation action in July 2001. Because the Ben nett v. Medtronic, Inc., 285 F.3d 801 , 806 (9th Cir. 2002) (indicating condemnation action has been pending since that time, the that the mo st prominent form of the “in aid of jurisdiction” exc eption is for in rem actions); In re Diet Drugs, 282 F.3d 2 20, 234 (3d Cir. 2002). Anti-Injunction Act prohibits any federal court from granting the declaratory or injunctive relief that Martingale and Bridge

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the Gap seek. In other words, an injunction issued anytime The complaint alleges no further facts in support of this relief after July 2001 would not prevent the parties from and fails to allege any claim or theory of recovery for which commencing state court litigation; it would stop the parties plaintiffs seek compensatory damages or attorneys’ fees.4 from proceeding with existing state court litigation, which is The complaint fails to allege a claim for intentional exactly what the Anti-Injunction Act prohibits. interference with prospective contractual relations under Kentucky law. See Nat’l Collegiate Athletic Ass’n v. The Court finds support for this analysis in its own Hornung, 754 S.W.2d 855, 858-59 (Ky. 1988) (requiring precedent. In Roth v. Bank of the Commonwealth, 583 F.2d allegations of an improper motive, consisting of malice or 527 (6th Cir. 1978), state court litigation commenced after the some wrongful conduct on behalf of defendant). Likewise, federal suit was filed. The district court relied on a Seventh the complaint fails to allege a claim for a Takings Clause Circuit precedent to grant an injunction. violation. See Williamson County Reg’l Planning Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172, 194 (1985) This Court reversed, concluding, (requiring an allegation of a deprivation of due process or a denial of fair compensation). Because this stray request for we are led inevitably to the conviction that the logic of monetary relief is not accompanied by any alleged claim on [the Seventh Circuit’s opinion in] Barancik [v. Investors which the relief could be based, our determination that the Finding Corp., 489 F.2d 933 (7th Cir. 1973)] (which in Anti-Injunction Act bars declaratory and injunctive relief effect says that state proceedings which are commenced concludes the case. It is unnecessary for us to reach the issues in fact are not commenced in law if commenced after the on which the district court based its decision. time the judicial power of the federal court was invoked) amounts to precisely that type of judicial improvisation We therefore AFFIRM the district court’s decision to grant which the Supreme Court has warned us to avoid. summary judgment in favor of the City of Louisville and the Waterfront Development Corporation. Id. at 534. Therefore, the fact that the City did not file the state court lawsuit until after Bridge the Gap and Martingale filed suit in the federal district court has no bearing on the applicability of the Anti-Injunction Act. For these reasons, we conclude that the Anti-Injunction Act applies and that the district court lacked the power to grant Martingale and Bridge the Gap’s requested injunctive and declaratory relief. The injunctive and declaratory relief sought by Martingale and Bridge the Gap is clearly the heart of this case. Yet, included in the prayer for relief in plaintiffs’ “Complaint for Declaration of Rights and Injunctive Relief” is a request for compensatory damages and attorneys’ fees. A brief mention of monetary injury “in the form of lost business opportunities 4 and attorneys fees” is included elsewhere in the complaint. Mo reover, the appellate briefs do not mention compensatory dama ges or attorney’s fees.