California Eminent Domain Report

According to the U.S. Court of Appeals for the Ninth Circuit, the answer is a definitive yes. 

Generally speaking, Pullman abstention permits a federal court to stay a federal claim to allow a state court to resolve a state issue that could either eliminate or narrow the scope of the federal claim. In order to invoke Pullman abstention, the federal claim must also touch on a sensitive area of social policy and involve an undecided question of state law.

In Gearing v. City of Half Moon Bay, the Gearings asserted that under California’s Housing Crisis Act and California legislation passed in 2019 (Senate Bill 330), they were permitted as a matter of right to build housing on their properties. The City of Half Moon Bay asserted that the City’s Land Use Plan severely restricted housing developments in the area where the properties were located, and that under the Land Use Plan the Gearings first needed to submit and the City needed to approve a master plan for the proposed housing development. Shortly thereafter, the City informed the Gearings that it planned to acquire their properties via eminent domain. Before any eminent domain action was filed, however, the Gearings filed an action in federal court asserting that the City’s actions amounted to a regulatory taking in violation of the Fifth and Fourteenth Amendments to the U.S. Constitution. Approximately one week later, the City filed an eminent domain action in state court. The City then followed that up with a motion in the federal case requesting that the federal court stay the regulatory takings claim under the Pullman abstention doctrine.

The Gearings argued that in light of the U.S. Supreme Court’s decisions in Knick v. Township of Scott (2019) 139 S.Ct. 2162 and Pakdel v. City and County of San Francisco (2021) 141 S.Ct. 2226, Pullman abstention was no longer an option because it would effectively impose a state exhaustion requirement. Specifically, the Gearings argued that if the federal court stayed the federal litigation, they would have to litigate the crux of the regulatory takings claim – whether they did or did not have a right to build the proposed housing – as part of the state eminent domain action because it goes to the determination of the fair market value of the properties. The Ninth Circuit dismissed the Gearings’ argument in a relatively short opinion.

The Ninth Circuit first noted that “neither Knick nor Pakdel explicitly limit abstention in takings litigation.” The Ninth Circuit then further distinguished Knick and Pakdel, explaining that both of those decisions merely address when a federal takings claim is ripe, whereas Pullman abstention addresses when a federal court may stay a ripe claim. The Ninth Circuit also stated that even if Knick and Pakdel did broadly reject exhaustion requirements in the takings context, the decisions wouldn’t compel rejection of the Pullman abstention doctrine in this particular case because “eminent domain and regulatory takings suits compensate property owners for different injuries.” Thus, the Gearings could defend the eminent domain action without challenging the constitutionality of the City’s enforcement of the Land Use Plan, and after the eminent domain action is resolved litigate the regulatory takings claim in federal court. In that regard, the Ninth Circuit noted that the Gearings had made an England reservation in the state litigation, which prevents the state court from ruling on federal issues.

After rejecting the Gearings’ primary argument, the Ninth Circuit confirmed that all of the elements necessary for a Pullman abstention were present and affirmed the district court’s order staying the federal litigation.

In light of the Ninth Circuit’s recent ruling, one can reasonably assume an uptick in local jurisdictions pursuing Pullman abstention motions in situations where there is a pending state eminent domain action and a competing federal takings lawsuit.