Case: 09-30869 Document: 00511512144 Page: 1 Date Filed: 06/17/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
June 17, 2011
No. 09-30869 Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA,
Plaintiff - Appellee
v.
SID-MARS RESTAURANT & LOUNGE, INC.,
Defendant - Appellant
Appeal from the United States District Court
for the Eastern District of Louisiana
Before DENNIS, OWEN, and SOUTHWICK, Circuit Judges.
LESLIE H. SOUTHWICK, Circuit Judge:
Sid-Mar’s Restaurant filed suit in state court demanding compensation
from the State of Louisiana for the commandeering of its real property following
Hurricane Katrina. While the state court litigation was pending, the United
States initiated condemnation proceedings involving part of the same property
in the United States District Court for the Eastern District of Louisiana. To
avoid potentially conflicting judgments, the United States sought a stay of the
state court proceeding. The district court entered a stay, and Sid-Mar’s
appealed.
We AFFIRM.
Case: 09-30869 Document: 00511512144 Page: 2 Date Filed: 06/17/2011
No. 09-30869
BACKGROUND
From 1967 until destroyed by Hurricane Katrina on August 29, 2005, Sid-
Mar’s Restaurant & Lounge in Metairie, Louisiana was owned and operated by
the Burgess family. Sid-Mar’s was adjacent to the 17th Street Canal and just
outside of the Lake Pontchartrain Hurricane Protection Levee System. After
Hurricane Katrina, the Burgesses desired to rebuild in the same location.
In the aftermath of Katrina, the Department of the Army and the Orleans
Levee District entered into a Cooperation Agreement. Among other terms, the
state agreed to provide the federal government with a right of entry to all lands
deemed necessary for various rehabilitation projects. On January 27, 2006, a
supplement to the Cooperation Agreement was executed. It provided for the
construction of “interim gated closure structures and integrated pumping
capacity near the confluence of Lake Pontchartrain with the 17th Street Outfall
Canal.” This was followed on February 10, 2006, by then-Governor Kathleen
Blanco’s executive order commandeering the use of specific real property for the
project. Among the real property commandeered was the land on which Sid-
Mar’s formerly stood. The federal government first entered the commandeered
property in March 2006 to begin the construction project. It has occupied the
property since this time.
On June 2, 2006, the Burgesses and Sid-Mar’s (collectively referred to as
“Sid-Mar’s”) filed a lawsuit in state court against the State of Louisiana seeking
just compensation for the taking of its real property. The United States was not
named as a defendant.
On June 3, 2009, three years and one day after the state suit was filed and
while it was still pending, the United States filed two Complaints in
2
Case: 09-30869 Document: 00511512144 Page: 3 Date Filed: 06/17/2011
No. 09-30869
Condemnation in federal district court. One was on a .088 acre tract, the other
on a .166 acre tract. Those suits were later consolidated. The entities said to
have interests in the property were Sid-Mar’s, the Sheriff as ex-officio Tax
Collector for Jefferson Parish, the State of Louisiana, and certain unknown
owners. These parcels were among those subject to Sid-Mar’s state court action.
The United States simultaneously filed a Declaration of Taking and deposited
in the registry of the court the sum it estimated to be just compensation. The
declaration and the deposit vested title in the United States to the real property
it sought to condemn. See 40 U.S.C. § 3114(b).
Two days after the federal condemnation proceedings began, Sid-Mar’s
filed for a partial summary judgment in state court. Sid-Mar’s argued it had
acquired title by adverse possession and was the sole owner when the State of
Louisiana commandeered the property in 2006. The State responded in part by
arguing that Sid-Mar’s title was unclear. A hearing was set for July 21, 2009.
The day before the scheduled hearing, the United States filed a motion in
the condemnation suit to stay the state court proceedings. It argued that a stay
was necessary to aid and protect the federal court’s jurisdiction. The district
court agreed and on July 21 enjoined the defendants from prosecuting the state
court suit until authorized by a later order of the federal court. Sid-Mar’s timely
filed an interlocutory appeal. See 28 U.S.C. § 1292(a)(1).
DISCUSSION
Sid-Mar’s makes two claims on appeal: the Anti-Injunction Act precluded
the issuance of this stay, and even if not prohibited, the issuance of a stay was
not proper on the facts of this case. We will consider both arguments.
3
Case: 09-30869 Document: 00511512144 Page: 4 Date Filed: 06/17/2011
No. 09-30869
A. Applicability of Anti-Injunction Act
The Anti-Injunction Act prohibits federal courts from enjoining state court
proceedings. 28 U.S.C. § 2283. Congress enacted the prohibition in 1793, in part
“to work out lines of demarcation between” the independent court systems of the
national government and of each state. Atlantic Coast Line R.R. Co. v. Bhd. of
Locomotive Eng’rs, 398 U.S. 281, 286 (1970).
There are three statutory exceptions that permit the issuance of an
injunction. See 28 U.S.C. § 2283. None of them apply here. The Supreme Court
has interpreted the Anti-Injunction Act to allow the United States to obtain a
stay even when it cannot meet any of the exceptions. Leiter Minerals, Inc. v.
United States, 352 U.S. 220, 225-26 (1957). The Court held that Congress did
not intend the Anti-Injunction Act to apply “when it is the United States which
seeks a stay to prevent threatened irreparable injury to a national interest.” Id.
An injunction is not automatically proper, though, merely because the United
States seeks it. We will discuss this point in the last section of our opinion.
The district court issued a stay in reliance on Leiter Minerals. It concluded
that the federal suit was the only one that “can finally determine the basic issue
in the litigation,” which was the amount and recipients of compensation. The
court also noted that the summary judgment motion pending in the state court
sought to have Sid-Mar’s found to be the owner of the property. Were that
finding made, it would “undermine[] this Court’s ability to determine to whom
compensation should be paid as part of the federal takings procedure.”
Consequently, a stay was proper.
Sid-Mar’s argues that the district court erred by holding that the Leiter
Minerals doctrine applies when the United States is the party seeking a stay.
Instead, Sid-Mar’s asserts that for Leiter Minerals to apply, there must be a
4
Case: 09-30869 Document: 00511512144 Page: 5 Date Filed: 06/17/2011
No. 09-30869
federal interest that predates the state court litigation and requires protection
from irreparable injury. The federal interest, Sid-Mar’s argues, did not exist
until the United States brought its condemnation suit three years after the state
court litigation. We will explain why we place an earlier date on the federal
interest. Sid-Mar’s also argues Leiter Minerals does not control because state
interests predominate over federal ones; the federal government’s title to
property is not at issue in the state suit; there is no risk of inconsistent
judgments in the two suits; the state litigation was pending for three years
before the federal condemnation action was commenced; and the relevant flood-
control project combines local, state, and federal interests.
Sid-Mar’s identifies distinctions that can be made between the facts of the
present case and those in Leiter Minerals. We consider Sid-Mar’s arguments
regarding the reasons Leiter Minerals should not apply at all as relevant to the
question of whether the district court erred in concluding that the circumstances
of this case justified the stay.
B. Propriety of Stay in These Circumstances
The Supreme Court in Leiter Minerals acknowledged that even when the
United States is the party who has obtained a stay of state court proceedings, it
still must be decided whether “an injunction was proper in the circumstances of
this case.” Id. at 226. Sid-Mar’s articulates the issue slightly differently. It
argues that even if the Anti-Injunction Act does not apply, the court “must also
assess whether principles of comity and federalism counsel restraint.” Regions
Banks of La. v. Rivet, 224 F.3d 483, 495 (5th Cir. 2000) (citations omitted). We
have stated that when a district court rules on whether to enjoin state court
proceedings, we review that determination for an abuse of discretion. United
States v. Billingsley, 615 F.3d 404, 408-09 (5th Cir. 2010). Regardless of the
5
Case: 09-30869 Document: 00511512144 Page: 6 Date Filed: 06/17/2011
No. 09-30869
precise articulation of our appellate task, we must answer whether the stay was
proper considering the facts of the particular case.
We review the circumstances that justified a stay in Leiter Minerals. In
1949, the United States granted leases on mineral rights it allegedly owned in
Louisiana. Leiter Minerals, Inc. v. United States, 224 F.2d 381, 383 (5th Cir.
1955), modified and affirmed, Leiter Minerals, 352 U.S. at 230. In 1953, Leiter
Minerals brought suit in state court against the mineral lessees, i.e., it did not
join the United States as a defendant. Leiter Minerals, 352 U.S. at 221. It
sought a declaration that it owned the mineral rights, and the United States had
by operation of state law never acquired title. Id. After the state court suit was
filed, the United States brought suit in federal district court to quiet title to the
mineral rights. Id. at 222-23. The Supreme Court held that only the federal suit
could “finally determine the basic issue” of whether title was in the United
States because “title to land in possession of the United States under a claim of
interest cannot be tried as against the United States by a suit against persons
holding under the authority of the United States.” Id. at 226 (citing United
States v. Lee, 106 U.S. 196 (1882)). Further, even if the state court sought to
avoid as much conflict with the federal court as possible, its judgment could
result in confusion because the basic issue of title could not be resolved by the
state court. Id. at 226-27. Finally, the United States was seeking to protect the
possession of the persons to whom it granted leases by quieting title in federal
court. Id. at 227-28. The action was largely defensive, and the court held that
the government should be allowed to choose its forum. Id. at 228.
Leiter Minerals also presented an alternative reason there should be no
stay. It moved to dismiss the United States’ complaint in federal court “on the
6
Case: 09-30869 Document: 00511512144 Page: 7 Date Filed: 06/17/2011
No. 09-30869
ground that the state court had already assumed jurisdiction over the property
in question . . . .” Id. at 223. Leiter Minerals relied on a case where the
Supreme Court would not allow the United States to enjoin an ongoing state
court proceeding in federal court because “the state court had obtained
jurisdiction over the [property] first and . . . the litigation should be resolved in
that court.” Id. at 227 (citing United States v. Bank of N.Y. & Trust Co., 296
U.S. 463 (1936)). The United States, in Bank of New York, attempted to recover
funds over which it claimed ownership that were subject to a state court
liquidation. Bank of N.Y. & Trust Co., 296 U.S. at 470. The basis of the
government’s claim was that the property at issue in the state suit had been
assigned to it before the liquidation occurred. Id. The Court would not enjoin
the proceeding because the state court asserted its control over the property
first. Id. at 475-76.
The Court in Leiter Minerals was unswayed by this argument, finding the
situation different than what was before the Court in Bank of New York. See
Leiter Minerals, 352 U.S. at 227. The United States in Bank of New York was
acting “like any private claimant” trying to acquire property “it never possessed
and that [was] in the hands” of a party appointed by the state court to liquidate
an insurance company. Id. at 227-28. In Leiter Minerals, the United States, as
mentioned above, was in a defensive posture, “seeking to protect . . . possession
and quiet title by a federal court proceeding.” Id. at 228. Speaking directly to
Leiter Minerals’ argument that the government could not enjoin the state court
litigation because the state court had been the first to acquire jurisdiction over
the property, the Court wrote that the United States should be able to choose its
forum “even though the state litigation has the elements of an action
7
Case: 09-30869 Document: 00511512144 Page: 8 Date Filed: 06/17/2011
No. 09-30869
characterized as quasi in rem.” Id. (emphasis added). Leiter Minerals
contemplated the government’s ability to enjoin state court litigation when its
interest in the subject property went beyond a claim that could be asserted by
a private creditor. See id.
This part of the Leiter Minerals reasoning evokes but did not elaborate on
a doctrine that is sometimes called the “prior-exclusive-jurisdiction rule,”
helpfully discussed at some length in a key treatise on federal court practice.
See 13F Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal
Practice and Procedure § 3631 (3d ed. 2009). The authors write that “when a
state or federal court of competent jurisdiction has obtained possession, custody,
or control of particular property, that authority and power over the property may
not be disturbed by any other court[,]” and cite an array of Supreme Court cases
for this proposition. Id. (collecting cases). The “prior-exclusive-jurisdiction rule”
applies even when the United States is a party. Id. N either party in the
present appeal has discussed this doctrine, though the focus on Leiter Minerals
at least tangentially touches on it. We will briefly explore the doctrine.
The Supreme Court, principally in cases that predate Leiter Minerals,
frequently referred to the principle “that the court first assuming jurisdiction
over property may maintain and exercise that jurisdiction to the exclusion of the
other . . . .” Princess Lida of Thurn and Taxis v. Thompson, 305 U.S. 456, 466
(1939); see also Farmers’ Loan & Trust Co. v. Lake St. Elevated R.R. Co., 177
U.S. 51, 61 (1900); Freeman v. Howe, 65 U.S. 450, 459 (1860). The primary
reason for this rule is “one of necessity to prevent unseemly conflicts between the
federal and state courts and to prevent the impasse which would arise if the
federal court were unable to maintain its possession and control of the property,
8
Case: 09-30869 Document: 00511512144 Page: 9 Date Filed: 06/17/2011
No. 09-30869
which are indispensable to the exercise of the jurisdiction it has assumed.”
Mandeville v. Canterbury, 318 U.S. 47, 49 (1943).
Wright and Miller make no allowance for a situation where, as in Leiter
Minerals, the government’s attempted federal lawsuit is largely defensive and
attempts to mitigate the possible effect state court litigation might have on the
government’s rights, including avoidance of conflict with a later-filed federal
lawsuit. See Leiter Minerals, 352 U.S. at 227-28. Leiter Minerals squarely
addressed the petitioner’s attempted application of this rule and identified a set
of facts that allow a government-filed action to take precedence over this
longstanding principle. Id.
In this arena, Leiter Minerals has a limited but powerful impact. Where
the United States is a party, and it asserts a claim of right to a piece of property
that is subject to ongoing litigation in state court, the government will be able
to enjoin that litigation to protect its interests if certain conditions are met.
Leiter Minerals identified several factors that could allow the government to
take this step: the state court’s inability to make a complete determination of the
basic issue in the litigation, confusion that could be caused by inconsistent
judgments, and a claim of right or interest in the property that precedes the
state court litigation. See id. at 226-28. Therefore, the “prior-exclusive-
jurisdiction rule” must be read in light of the principles supporting Leiter
Minerals.
In the years following the Leiter Minerals decision, courts of appeals have
had few opportunities to apply its holding to cases involving the United States
as a party. One case deserves our focus because a sister circuit applied the
“prior-exclusive-jurisdiction rule” to deny the United States’ request to enjoin
9
Case: 09-30869 Document: 00511512144 Page: 10 Date Filed: 06/17/2011
No. 09-30869
a state court proceeding in which the government claimed an interest in the
property subject to litigation. See United States v. Certified Indus., Inc., 361
F.2d 857 (2d Cir. 1966). In Certified Industries, a sub-contractor filed a
mechanic’s lien against a contractor in New York state court to recoup unpaid
fees and later attempted to foreclose on the lien. Id. at 859. The United States,
seeking unpaid taxes from the same contractor, later filed an action in federal
district court, asserting a state-law claim to impose a trust on funds owed to the
contractor. Id. The district court granted the government a preliminary
injunction which enjoined the state court suit. Id.
The Second Circuit reversed, concluding that the principles of Leiter
Minerals were inapplicable. Id. at 860. The subcontractor’s assertion of the lien
in state court was not, in the court’s view, “a direct or an indirect challenge to
the right of the United States to retain funds or title to property in its
possession at the commencement of the state proceeding.” Id. at 861.
Therefore, Certified Industries presented facts more closely akin to Bank of New
York than Leiter Minerals. See id. at 861-62. The Second Circuit applied the
“prior-exclusive-jurisdiction rule” and vacated the injunction. See id.
Certified Industries is part of a line of cases that apply the “prior-
exclusive-jurisdiction rule” to factual scenarios where the concerns that
prompted Leiter Minerals are not present. The facts in today’s case, however,
are more closely aligned with those in Leiter Minerals than either Certified
Industries or Bank of New York. In Certified Industries, the court focused on
the government’s lack of possession of the property at issue in the state court
suit when that suit was filed to find the “prior-exclusive-jurisdiction rule”
should preclude enjoining the state proceedings. See id. at 861.
10
Case: 09-30869 Document: 00511512144 Page: 11 Date Filed: 06/17/2011
No. 09-30869
Here, beginning in March 2006, the interest of the United States, as
asserted by the State of Louisiana’s commandeering, has been clear. Indeed,
it was the government’s delay in pursuing its claims that, according to Sid-
Mar’s, led Sid-Mar’s to file its own state court suit. We discuss later the nature
of the interest the United States gained. We also will discuss that the precise
interest gained either by Louisiana or the United States by the act of
commandeering is unclear, but what is beyond question is that Louisiana acted
in concert with the United States in taking control of this property prior to the
state court litigation. This prior assertion of control distinguishes our
circumstances from those in Certified Industries or Bank of New York, where
the government had no control over or title in the property involved in the state
court suits they attempted to enjoin in federal court. See id.; Bank of N.Y. &
Trust Co., 296 U.S. at 470, 475-77.
In our case, the United States claimed the state court litigation could
interfere with the federal condemnation because the suits involved some of the
same property and there was a risk of inconsistent judgments. The federal
condemnation action required the United States to pay the former owner of the
property from whom title had been taken by the Declaration of Taking. In the
state court suit, Sid-Mar’s sought to have itself determined to be the owner and
to receive compensation from the State of Louisiana. The United States argued
that Louisiana had not taken the subject property. Because Sid-Mar’s had not
joined the federal government as a party, the United States could not remove the
suit to federal court. Finally, the United States argued it was entitled to have
its rights and interests in the property resolved in federal court.
11
Case: 09-30869 Document: 00511512144 Page: 12 Date Filed: 06/17/2011
No. 09-30869
The parties agree on appeal about one error in the district court’s stay
order. In its summary of facts, the district court stated the federal court
condemnation suit was filed at the same time as Sid-Mar’s state court suit. In
fact, the state court action predates the federal suit by three years. The parties
do not agree on the importance of the error. As will be discussed, we find none.
Sid-Mar’s denied there was any risk of inconsistent judgments or any
burdens of the rights of the United States. Its explanation starts with describing
what occurred prior to the federal condemnation. The property was
commandeered on February 10, 2006. The authority for the seizure was the
Louisiana Homeland Security and Emergency Assistance and Disaster Act. La.
Rev. Stat. § 29:721. According to the governor’s executive order, Louisiana
“commandeer[ed] the use” of about ten acres. The commandeering was at the
request of the Army Corps of Engineers and was for levee and floodwall
construction. The executive order also required that the owners be identified
and compensated.
According to Sid-Mar’s, the government was dilatory in identifying and
paying owners of the commandeered property. Thus, in June 2006, Sid-Mar’s
brought suit against the State of Louisiana. The litigation had not been resolved
when in February 2009, a trial date of August 3, 2009 was set. On June 2, the
State sought leave to file a third-party demand against the Corps of Engineers.
The federal government almost immediately removed the suit to federal court.
Within days, the action was remanded, and the Corps was never made a party.
The day after the short-lived removal of the state court suit, the United
States filed this condemnation action. Sid-Mar’s argues there was no need to file
the condemnation action, as the State of Louisiana and the Corps of Engineers
12
Case: 09-30869 Document: 00511512144 Page: 13 Date Filed: 06/17/2011
No. 09-30869
had possession of the property for over three years, a period beginning with the
Louisiana governor’s order to commandeer the property. Sid-Mar’s argues it
should be allowed to proceed against Louisiana. Only issues of state law will be
involved, Sid-Mar’s says, as it does not challenge the federal government’s right
to condemn the same property.
Sid-Mar’s agrees that the acquisition of title by the United States and the
setting of the compensation it will pay are matters solely for the federal suit.
Sid-Mar’s contends, though, that there is no possibility the state court judgment
would conflict with the federal judgment. It alleges the state and federal courts
will examine who held title to the property during separate time periods, i.e., the
state proceedings will determine who had title when the commandeering
occurred. Sid-Mar’s argues Louisiana must have had title on June 3, 2009, when
the United States took the land. As stated in its brief, “the federal condemnation
proceedings will determine the compensation the Government owes the State,
as the owner of the property at the time of the” Declaration of Taking. In effect,
Sid-Mar’s alleges there have been two seizures of title, first by Louisiana from
Sid-Mar’s, then by the United States from Louisiana. Sid-Mar’s shapes its
argument about title being in the State of Louisiana from 2006 to 2009 into an
impenetrable barrier, preventing the state court suit’s decision on title from
affecting the federal suit’s decision-making.
Having set up the issues in the two suits in this way, Sid-Mar’s then
discusses at some length the case that it argues is most analogous to the present
suit. See Eden Memorial Park Ass’n v. United States, 300 F.2d 432 (9th Cir.
1962). In that case, the United States had agreed to the State of California’s
request to condemn part of a cemetery and then to convey it to the state to
13
Case: 09-30869 Document: 00511512144 Page: 14 Date Filed: 06/17/2011
No. 09-30869
construct an interstate highway. Id. at 433-34. The request had followed a state
appellate court’s holding that the relevant state agency had no authority to
condemn a cemetery for a highway. Id. at 434. After the federal condemnation
was filed, the cemetery owner filed in state court to enjoin the state agencies
from taking possession of the property condemned by the United States or to
construct a highway across the cemetery. Id. at 435-36. The federal district
court entered a stay. Id. at 436.
The Ninth Circuit held that Leiter Minerals gave federal courts authority
to issue stays against state court suits whenever the applicant was the United
States, but the stay was not proper in the circumstances of that case. Id. at 437-
39. The cemetery owner was not contesting the ownership of the United States
to the land, and thus the federal court did not need a stay to protect its
jurisdiction. Id. at 437. Further, the condemnation suit would fully invest the
United States with title to the part of the cemetery property it sought. Id. at
437-38. Whether state law could thereafter block construction across the
cemetery would not be an issue for the condemnation action. Id. at 438-39.
In contrast, Leiter Minerals had been enjoined from prosecuting its action
against the mineral lessees in state court because the United States might suffer
“irreparable injury in the form of loss of royalties . . . from any temporary,
wrongful dispossession of its lessees by the state court proceedings.” Leiter
Minerals, 352 U.S. at 223. Because the title of the United States to the minerals
could only be finally determined in federal court, there was the potential for
conflicting judgments if the state court proceedings were not stayed. Id. at 228.
Sid-Mar’s argues there is no potential for conflicting judgments here, just
as there was not in Eden and unlike Leiter Minerals. In Sid-Mar’s view, no
14
Case: 09-30869 Document: 00511512144 Page: 15 Date Filed: 06/17/2011
No. 09-30869
conflict will arise because the federal court may decide title (in the State of
Louisiana) and the compensation amount (presently unknown) without needing
to know the result of the state court suit.
The argument, able as it is, requires our accepting the premise that in
2009, title was in the State of Louisiana. The premise may, however, be false.
The United States concedes that it is uncertain what estate is seized by the act
of commandeering. Determining what property interest Louisiana acquires by
commandeering begins with the relevant statute. Pursuant to the Louisiana
Homeland Security and Emergency Assistance and Disaster Act (the “Act”), the
governor has the authority to “commandeer or utilize any private property”
found necessary to cope with a disaster or emergency subject to applicable
compensation requirements. La. Rev. Stat. § 29:724D(4). The Sid-Mar’s
property was commandeered in order to provide the United States with “right
of entry to all lands, easements, and rights-of-way, including suitable borrow
and dredged or excavated material disposal areas” as needed for the repairs to
the 17th Street Canal. The Executive Order specifically reserved to the private
owners “all such rights and privileges in said land as may be used without
interfering with or abridging the rights hereby acquired” by the commandeering.
In addition, the Cooperation Agreement between the United States and
the State of Louisiana contemplated that the State would commandeer property
such as that involved in this suit. It then provided that the United States would
“obtain a deed or servitude agreement, as appropriate,” to the property. If
necessary, the United States would acquire property in its name through
eminent domain. These terms support the proposition that the act of
commandeering displaced Sid-Mar’s right to use the property, but it was
15
Case: 09-30869 Document: 00511512144 Page: 16 Date Filed: 06/17/2011
No. 09-30869
understood that the United States would thereafter acquire the interests it
needed through negotiation or by eminent domain.
It is unresolved whether the premise of Louisiana’s ownership from 2006
to 2009 is correct. If Sid-Mar’s or other owners still had title because title was
among “such rights and privileges in said land as may be used without
interfering with or abridging the rights hereby acquired” by the commandeering,
then the condemnation is necessary to establish that title and the compensation
due. There remains a serious issue of who is to receive the compensation in the
federal condemnation suit. To the United States, that uncertainty makes Leiter
Minerals factually similar. There could be conflicting just-compensation awards
that are based on different interpretations of the interests acquired by the act
of commandeering. In addition, if title were not acquired by Louisiana through
commandeering this property, another question will be how compensation for the
loss of use prior to condemnation is to be calculated and who is to pay it. We do
not need to decide the state law issues. Resolving them in the most appropriate
manner that still protects the jurisdiction of the district court for the
condemnation action is a matter to be considered on remand.
The district court was correct about the potential conflict between state
and federal judgments concerning who held title to the property at the time of
the June 3, 2009 taking by the United States, and how the amount of
compensation due. Without deciding the issue of ownership, it is possible the
United States had a claim to the land that preceded the commencement of the
state court lawsuit. Since March 2006, the federal government has been in
continuous possession of the land. Further, the Executive Order that acted to
commandeer the property referred specifically to the Cooperation Agreement
16
Case: 09-30869 Document: 00511512144 Page: 17 Date Filed: 06/17/2011
No. 09-30869
between the United States and the Orleans Levee District in the section that set
out compensation for the previous owner of the property. That Cooperation
Agreement, as mentioned above, indicated the federal government would later
acquire full ownership rights in the property.
One circuit court, applying Leiter Minerals, has allowed the government
to enjoin state court litigation involving a piece of property because the
government held a future interest in that property. See Alonzo v. United States,
249 F.2d 189, 196-97 (10th Cir. 1957). At the very least, the uncertainty
surrounding the ownership of this property and the extent of the United States’
interest militates in favor of enjoining the state court litigation.
Sid-Mar’s also argues that Leiter Minerals was incorrectly decided. We
understand the argument may be offered in order to preserve it for possible
review by the Supreme Court. Surely all also understand that this court does
not have the authority to overturn a Supreme Court ruling.
Central to the final resolution of the condemnation issues is whether the
State of Louisiana acquired title by the act of commandeering. The Supreme
Court in Leiter Minerals also faced a foundational issue of state law. After
holding that a stay was permissible, it also suggested the need for the federal
court to receive the opinion of the state court on the state law issues.
Before attempting to answer [the state law questions] and to decide
their relation to the issues in the case, we think it advisable to have
an interpretation, if possible, of the state statute by the only court
that can interpret the statute with finality, the Louisiana Supreme
Court. The Louisiana declaratory judgment procedure appears
available to secure such an interpretation, and the United States of
course may appear to urge its interpretation of the statute. It need
hardly be added that the state courts in such a proceeding can
17
Case: 09-30869 Document: 00511512144 Page: 18 Date Filed: 06/17/2011
No. 09-30869
decide definitively only questions of state law that are not subject to
overriding federal law.
We therefore modify the judgment of the Court of Appeals to
permit an interpretation of the state statute to be sought with every
expedition in the state court in conformity with this opinion.
Leiter Minerals, 352 U.S. at 229-30 (citations omitted).
The Louisiana Supreme Court subsequently ruled on the declaratory
judgment. Leiter Minerals v. California Co., 132 So. 2d 845, 849-50 (La. 1961).
The district court will need to determine the best manner in which to
proceed in reaching an answer to the title questions that arise because of the
commandeering. It might resolve the question itself, lift the stay for the limited
purpose of allowing the state court to determine title, or take other steps to avoid
the potential for inconsistent rulings in the two proceedings.
AFFIRMED.
18
Case: 09-30869 Document: 00511512144 Page: 19 Date Filed: 06/17/2011
No. 09-30869
DENNIS, Circuit Judge, dissenting:
I respectfully dissent because the majority refuses to apply the “prior
exclusive jurisdiction doctrine” under which the United States is not entitled to
an injunction staying state court proceedings where the state court is the first
court to assume jurisdiction over the subject matter property of an action in rem
or quasi in rem. United States v. Bank of N.Y. & Trust Co., 296 U.S. 463, 477-81
(1936); United States v. Certified Indus., Inc., 361 F.2d 857 (2d Cir. 1966); see
also Penn Gen. Cas. Co. v. Pennsylvania ex rel. Schnader, 294 U.S. 189 (1935).
The majority misapplies the Supreme Court’s decision in Leiter Minerals, Inc.
v. United States, 352 U.S. 220 (1957), by broad, rough analogy and holds that the
prior exclusive jurisdiction doctrine does not apply when the United States
brings suit offensively in federal court to condemn private property. Thus, the
majority sweepingly abrogates the prior exclusive jurisdiction doctrine in this
circuit in respect to subsequently filed federal condemnation suits by allowing
and perhaps compelling federal district courts, at the government’s request, to
enjoin and supersede prior filed state court in rem condemnation proceedings
involving the same property. In my view, however, Leiter Minerals, at most,
creates only a very narrow exception to the doctrine, when the United States
sues defensively to quiet its pre-existing title to property, that does not apply
here. In Leiter Minerals, the Supreme Court indicated that where the United
States’ position is ‘‘defensive’’ it should be able to choose its forum ‘‘even though
the state litigation has the elements of an action characterized as quasi in rem.”
Leiter Minerals, 352 U.S. at 228. However, the position of the United States in
this action is offensive, not defensive; it is not seeking to quiet its title to
property that it already claims to own, as was the case in Leiter Minerals, but
19
Case: 09-30869 Document: 00511512144 Page: 20 Date Filed: 06/17/2011
No. 09-30869
to supersede the state court’s jurisdiction and acquire title to the property in the
first instance by condemnation. Furthermore, Sid-Mar’s assertion of their state
constitutional rights in an in rem inverse condemnation proceeding against the
state in state court is neither a direct nor an indirect challenge to the right of the
United States to bring a condemnation action against whomever the state court
declares to be the owner of the subject property under Louisiana property law.
The present case is more akin to Bank of New York & Trust Co., in which the
Supreme Court relied on the prior exclusive jurisdiction doctrine “in remitting
the United States to the state court, [because] the Court saw no ‘impairment of
any rights’ or ‘any sacrifice of its proper dignity as a sovereign.’” Leiter Minerals,
352 U.S. at 227 (quoting Bank of N.Y. & Trust Co., 296 U.S. at 480-81).
I.
The United States brought this suit to condemn approximately 0.166 acres
of land abutting Lake Pontchartrain in Jefferson Parish, Louisiana for a federal
hurricane protection and flood control project. Upon the United States’ motion,
the district court asserted jurisdiction over the 0.166 acres and enjoined the
alleged private owners’ pending state court inverse condemnation suit against
the State of Louisiana for taking and ousting them from the same property, in
addition to other parcels. In that state court action, the plaintiffs had alleged
that the State had physically taken 10.2 acres—including the 0.166 acres of their
property that the United States seeks to condemn in the present federal
case—without compensating them for the taking.
A.
Prior to Hurricane Katrina, which struck New Orleans and Jefferson
Parish in August, 2005, Sidney and Marion Burgess, and their Louisiana
20
Case: 09-30869 Document: 00511512144 Page: 21 Date Filed: 06/17/2011
No. 09-30869
corporation, Sid-Mar’s Seafood Restaurant & Lounge, Inc., (collectively
“Sid-Mar’s”) allegedly maintained and operated a seafood restaurant, on or near
the 0.166-acre res, which was destroyed by the storm. On February 10, 2006, the
Governor of Louisiana, pursuant to Louisiana Revised Statutes § 29:721 et seq.,
commandeered 10.2 acres of land, including the 0.166 acres at issue in this case,
for emergency hurricane protection and flood control purposes. Louisiana
Revised Statutes § 29:721 et seq. authorizes the Governor to take private
property if necessary to cope with a disaster or emergency, subject to any
applicable requirements for compensation; and provides that the amount of
compensation shall be calculated in the same manner as for a taking of property
pursuant to the condemnation laws of Louisiana. See La. Rev. Stat. Ann.
§§ 29:722, 29:724, 29:730.
The Governor’s February 10, 2006 commandeering order declared that a
state of emergency continued to exist after Katrina because of the potential for
future hurricanes to cause severe flooding, damage to private and public
property, and danger to the safety and security of citizens; that the United
States Army Corps of Engineers and numerous state and local officials and
entities had requested that the Governor commandeer the property for the
construction of the Lake Pontchartrain Louisiana and Vicinity Hurricane
Protection Project, 17th Street Outfall Canal Interim Closure Structure, and
necessary appurtenances and clearings, “reserving however, to the landowners,
their heirs and assignees, all such rights and privileges in said land as may be
used without interfering with or abridging the rights hereby acquired”; that the
subject property containing approximately 10.2 acres had been commandeered
as required by the Department of the Army; that the owners of the
21
Case: 09-30869 Document: 00511512144 Page: 22 Date Filed: 06/17/2011
No. 09-30869
commandeered property shall be identified and compensated in accordance with
the terms of the Cooperation Agreement Between the United States of America
and the Orleans Levee District for Rehabilitation of a Federal Hurricane/Shore
Protection Project executed on October 21, 2005, as supplemented by
Supplemental Agreements Nos. 1 and 2, dated January 27, 2006; and that the
Division of Administration, State Land Office, shall take immediate steps to
grant right of entry to the property commandeered for the above purposes
pursuant to this order.
On June 2, 2006, Sid-Mar’s filed suit against the State of Louisiana,
through the Governor and the Division of Administration, State Land Office, in
the 24th Judicial District of Louisiana in Jefferson Parish, alleging that Sid-
Mar’s were owners of property included within the property taken by the
Governor’s February 10, 2006 commandeering order; that the State of Louisiana
has physically occupied Sid-Mar’s property and deprived Sid-Mar’s of any use of
or access to that property; that on February 13, 2006, construction of the Lake
Pontchartrain Louisiana and Vicinity Hurricane Protection Project, 17th Street
Outfall Canal Interim Closure Structure began on the property; but that the
state has not compensated Sid-Mar’s for the property taken or their resulting
damages; and that Sid-Mar’s were entitled to compensation and damages as a
result of the commandeering or taking of the property and to other legal and
equitable relief pursuant to Louisiana law.1
B.
1
On June 5, 2009, Sid-Mar’s filed a motion for partial summary judgment in their state court
suit, but before any state court decision thereon, the federal district court enjoined the state
proceedings on July 21, 2009 as described below.
22
Case: 09-30869 Document: 00511512144 Page: 23 Date Filed: 06/17/2011
No. 09-30869
In the present federal case, on June 3, 2009, the United States filed this
action in the United States District Court for the Eastern District of Louisiana
against the 0.166-acre sub-part of the commandeered property involved in Sid-
Mar’s state court suit, seeking to take and condemn that 0.166 acres for the
construction, repair and rehabilitation of a federal project, viz., the Lake
Pontchartrain, Louisiana and Vicinity Hurricane Protection Project, 17th Street
Outfall Canal, Interim Control Structure, Jefferson Parish, Louisiana.2 Sid-
Mar’s and others were named as defendants. The government prayed for
judgment granting it a fee simple title to the land, reserving to the landowners
only the right, title and interest to the underlying minerals.
On July 21, 2009, pursuant to the United States’ motion, the district court
enjoined Sid-Mar’s from further prosecution of their state court inverse
condemnation suit against the State of Louisiana. The federal district court’s
decree stated it had the authority to issue the injunction because the
Anti-Injunction Act, 28 U.S.C. § 2283, does not apply when the United States
seeks to stay state court proceedings, citing Leiter Minerals, Inc. v. United
States, 352 U.S. 220, 226 (1957), for this proposition. Moreover, the district court
concluded that “this case is sufficiently analogous to the factual situation in
Leiter [Minerals], where the Supreme Court held that a stay of state court
proceedings was appropriate,” to warrant an injunction. It explained that similar
to Leiter Minerals, the suit in federal court is “the only one that [can] finally
determine the basic issue in the litigation.” (alteration in original) (quoting
2
This appears to be the same or a similar project for which the Louisiana Governor
commandeered the subject property on February 10, 2006. However, neither the pleadings nor
the parties’ briefs explain whether the state project and the federal project are one and the
same.
23
Case: 09-30869 Document: 00511512144 Page: 24 Date Filed: 06/17/2011
No. 09-30869
Leiter Minerals, 352 U.S. at 226) (internal quotation marks omitted). “In
addition, currently pending before the state court is a motion for partial
summary judgment. Plaintiffs in that case seek a state court order declaring
plaintiffs the rightful owners of property currently at issue in this federal
matter. Such a finding by the state court specifically undermines this Court’s
ability to determine to whom compensation should be paid as part of the federal
takings procedure. The Court is mindful that although it is rare that a federal
court will enjoin and stay a state court proceeding, the government’s motion fits
squarely within clearly established law on when such a stay is appropriate.”
After the injunction issued, Sid-Mar’s moved the district court to lift the
injunction in light of their previously filed state court inverse condemnation
proceeding. However, the district court denied that motion in an oral order
without any additional findings of fact or conclusions of law. Sid-Mar’s timely
filed an interlocutory appeal. See 28 U.S.C. § 1292(a)(1).
II.
It is well settled that “if two suits [are] pending, one in a state and the
other in a federal court, [and they] are in rem or quasi in rem, so that the court
or its officer must have possession or control of the property which is the subject
matter of the suits in order to proceed with the cause and to grant the relief
sought, the court first acquiring jurisdiction or assuming control of such property
is entitled to maintain and exercise its jurisdiction to the exclusion of the other.”
Mandeville v. Canterbury, 318 U.S. 47, 48-49 (1943). Accordingly, “an abundance
of federal decisional law, including an impressive array of Supreme Court
24
Case: 09-30869 Document: 00511512144 Page: 25 Date Filed: 06/17/2011
No. 09-30869
decisions,3 makes it clear that in all cases involving a specific piece of property,
real or personal (including various forms of intangible property), the federal
court’s jurisdiction is qualified by the ancient and oft-repeated rule—often called
the doctrine of prior exclusive jurisdiction—that when a state or federal court of
competent jurisdiction has obtained possession, custody, or control of particular
property, that authority and power over the property may not be disturbed by
any other court.” 13F Charles Alan Wright et al., Federal Practice & Procedure
§ 3631, at 271-72 (3d ed. 2009).
“Although the prior-exclusive-jurisdiction rule is based at least in part on
considerations of judicial comity, it very often is referred to as a jurisdictional
limitation, and has been applied even when the United States is a party.” Id. at
275-77 (emphasis added) (footnotes omitted); see also Penn Gen. Cas. Co., 294
U.S. at 195 (“To avoid unseemly and disastrous conflicts in the administration
of our dual judicial system, see Peck v. Jenness, 48 U.S. (7 How.) 612, 625 (1849);
Taylor v. Carryl, 61 U.S. (20 How.) 583, 595 (1857); Freeman v. Howe, 65 U.S.
3
The Wright and Miller treatise cites the following cases as supporting this proposition:
Mandeville, 318 U.S. 47; Toucey v. N.Y. Life Ins. Co., 314 U.S. 118 (1941); Princess Lida of
Thurn & Taxis v. Thompson, 305 U.S. 456 (1939); Penn Gen. Cas. Co., 294 U.S. 189; Harkin
v. Brundage, 276 U.S. 36, 43 (1928); Lion Bonding & Sur. Co. v. Karatz, 262 U.S. 77, 88-90
(1923); Kline v. Burke Constr. Co., 260 U.S. 226 (1922); Palmer v. Texas, 212 U.S. 118 (1909);
Wabash R.R. Co. v. Adelbert Coll., 208 U.S. 38 (1908); Farmers’ Loan & Trust Co. v. Lake St.
Elevated R.R. Co., 177 U.S. 51 (1900); Moran v. Sturges, 154 U.S. 256 (1894); Byers v.
McAuley, 149 U.S. 608 (1893); Porter v. Sabin, 149 U.S. 473 (1893); Rio Grande Ry. Co. v.
Vinet, 132 U.S. 478 (1889); Borer v. Chapman, 119 U.S. 587, 600 (1887); Heidritter v. Elizabeth
Oil-Cloth Co., 112 U.S. 294 (1884); Krippendorf v. Hyde, 110 U.S. 276 (1884); Ellis v. Davis,
109 U.S. 485 (1883); Yonley v. Lavender, 88 U.S. (21 Wall.) 276 (1874); Buck v. Colbath, 70
U.S. (3 Wall.) 334 (1865); Freeman v. Howe, 65 U.S. (24 How.) 450 (1860); Taylor v. Carryl, 61
U.S. (20 How.) 583 (1857): Orton v. Smith, 59 U.S. (18 How.) 263 (1855); Peale v. Phipps, 55
U.S. (14 How.) 368 (1852); Williams v. Benedict, 49 U.S. (8 How.) 107 (1850); and Peck v.
Jenness, 48 U.S. (7 How.) 612 (1849). 13F Charles Alan Wright et al., Federal Practice &
Procedure § 3631, at 271 n.15 (3d ed. 2009).
25
Case: 09-30869 Document: 00511512144 Page: 26 Date Filed: 06/17/2011
No. 09-30869
(24 How.) 450, 459 (1860); Buck v. Colbath, 70 U.S. (3 Wall.) 334, 341 (1865);
Farmers’ Loan & Trust Co. v. Lake Street Elevated R.R. Co., 177 U.S. 51, 61
(1900), and to protect the judicial processes of the court first assuming
jurisdiction, Wabash R.R. Co. v. Adelbert Coll., 208 U.S. 38, 54 (1908); Palmer
v. Texas, 212 U.S. 118, 129, 130 (1909), the principle, applicable to both federal
and state courts, is established that the court first assuming jurisdiction over the
property may maintain and exercise that jurisdiction to the exclusion of the
other.”).
The basis of the doctrine in considerations of judicial comity and
federalism was explained by the Supreme Court over one hundred years ago in
Palmer v. Texas, 212 U.S. 118, 125 (1909):
The Federal and state courts exercise jurisdiction within the same
territory, derived from and controlled by separate and distinct
authority, and are therefore required, upon every principle of justice
and propriety, to respect the jurisdiction once acquired over
property by a court of the other sovereignty. If a court of competent
jurisdiction, Federal or state, has taken possession of property, or by
its procedure has obtained jurisdiction over the same, such property
is withdrawn from the jurisdiction of the courts of the other
authority as effectually as if the property had been entirely removed
to the territory of another sovereignty.
“The origin of the rule, however, predates our dual federal-state court
system, and its primary purpose is to protect the jurisdiction of the court that
has acquired control over the property.” 13F Wright et al., supra, at 278-79.
It is settled that where a federal court has first acquired jurisdiction
of the subject-matter of a cause, it may enjoin the parties from
proceeding in a state court of concurrent jurisdiction where the
effect of the action would be to defeat or impair the jurisdiction of
the federal court. Where the action is in rem the effect is to draw to
the federal court the possession or control, actual or potential, of the
26
Case: 09-30869 Document: 00511512144 Page: 27 Date Filed: 06/17/2011
No. 09-30869
res, and the exercise by the state court of jurisdiction over the same
res necessarily impairs, and may defeat, the jurisdiction of the
federal court already attached. The converse of the rule is equally
true, that where the jurisdiction of the state court has first attached,
the federal court is precluded from exercising its jurisdiction over
the same res to defeat or impair the state court’s jurisdiction.
Kline v. Burke Constr. Co., 260 U.S. 226, 229 (1922).
As a result, the Wright and Miller treatise is able to cite ample authority
demonstrating that the doctrine has been applied equally to suits brought by the
United States and private parties. It highlights that Bank of New York & Trust
Co., 296 U.S. 463, held that “[t]he United States, as a plaintiff, must follow the
general rule that the court first acquiring jurisdiction of a res acquires exclusive
jurisdiction [over] the res.” 13F Wright et al., supra, § 3631, at 277 n.20. In
addition, the treatise cites United States v. One 1985 Cadillac Seville, 866 F.2d
1142 (9th Cir. 1989); United States v. Certified Industries, Inc., 361 F.2d 857 (2d
Cir. 1966); Pridgen v. Andresen, 891 F. Supp. 733 (D. Conn. 1995); and United
States v. Augspurger, 452 F. Supp. 659 (W.D.N.Y. 1978), amended, 477 F. Supp.
94 (W.D.N.Y. 1979), as further support. 13F Wright et al., supra, § 3631, at 277
n.20. Therefore, substantial controlling authority establishes that possibly
always, and certainly in every case except where the United States seeks to
defend its pre-existing property rights, federal courts lack authority to proceed
with in rem proceedings if there is a prior initiated state court in rem proceeding
involving the same subject matter property.
III.
It is undisputed that both this federal condemnation suit and the state
court inverse condemnation action are in rem proceedings. In the absence of
explicit Louisiana case law or commentary to that effect regarding inverse
27
Case: 09-30869 Document: 00511512144 Page: 28 Date Filed: 06/17/2011
No. 09-30869
condemnation suits, however, I will set forth my reasons for so concluding. After
that, I will discuss further why my colleagues in the majority have fallen into
serious error in failing to adhere to the prior exclusive jurisdiction doctrine in
this case and how this decision stems from their misinterpretation of Leiter
Minerals. I will also demonstrate how their holding creates undesirable
precedent, rests on faulty factual and legal support, and splits us from the
Second Circuit.
A.
Federal and Louisiana courts have expressly recognized that
condemnation suits brought by federal, state and local governments to take
private property for public purposes are in rem proceedings. See United States
v. Carmack, 329 U.S. 230, 235 n.2 (1946) (“The proceeding to condemn the land
being in rem . . . .” (citing United States v. Dunnington, 146 U.S. 338, 352 (1892);
and In re Condemnation Suits by the United States, 234 F. 443, 445 (E.D. Tenn.
1916))); United States v. Petty Motor Co., 327 U.S. 372, 376 (1946)
(“Condemnation proceedings are in rem . . . .” (citing A.W. Duckett & Co. v.
United States, 266 U.S. 149 (1924); and Dunnington, 146 U.S. at 350-54)); A.W.
Duckett & Co., 266 U.S. at 151 (“[I]t seems to us manifest that the United States,
although not taking the fee, proceeded in rem as in eminent domain, and
assumed to itself by paramount authority and power the possession and control
of the piers named, against all the world.”); Eagle Lake Improvement Co. v.
United States, 160 F.2d 182, 184 (5th Cir. 1947) (“A condemnation proceeding is
an action in rem. It is not the taking of rights of designated persons, but the
taking of the property itself.” (citing A.W. Duckett & Co., 266 U.S. at 151)); New
Orleans Redevelopment Auth. v. Lucas, 881 So. 2d 1246, 1255 (La. Ct. App. 4th
28
Case: 09-30869 Document: 00511512144 Page: 29 Date Filed: 06/17/2011
No. 09-30869
Cir. 2004); State Through Dep’t of Highways v. Boudreaux, 401 So. 2d 428, 430
(La. Ct. App. 1st Cir. 1981) (“An expropriation is in the nature of an in rem
proceeding.” (citing Garber v. Phillips Petroleum Co., 146 So. 2d 518 (La. Ct.
App. 3d Cir. 1963))); Garber, 146 So. 2d at 521 (“A condemnation proceeding is
a proceeding in rem. It is not a taking of rights of persons in the ordinary sense
but an appropriation of the land or property itself. When the property is
conveyed by judgment, all previous existing estates or interests in the land are
extinguished.” (citing A.W. Duckett & Co., 266 U.S. 149; Dunnington, 146 U.S.
338; and United States v. Certain Lands in Borough of Brooklyn, 129 F.2d 577
(2d Cir. 1942))); State Through Dep’t of Highways v. Walker, 129 So. 2d 35, 37
(La. Ct. App. 2d Cir. 1961) (“Condemnation proceedings are in rem . . . .”).
Although I have not found cases explicitly declaring that inverse
condemnation suits are in rem proceedings, I conclude that they should be so
considered because the United States Supreme Court and Louisiana’s highest
court have held that they are substantially equivalent to condemnation actions
and essential to the self-executing constitutional protection of private property
owners from governmental takings without just compensation. “In addition to
. . . three statutory methods, the United States is capable of acquiring privately
owned land summarily, by physically entering into possession and ousting the
owner.” Kirby Forest Indus., Inc. v. United States, 467 U.S. 1, 5 (1984) (citing
United States v. Dickinson, 331 U.S. 745, 747-49 (1947)). “In such a case, the
owner has a right to bring an ‘inverse condemnation’ suit to recover the value of
the land on the date of the intrusion by the Government.” Id. (citing United
States v. Dow, 357 U.S. 17, 21-22 (1958)). “Such a suit is ‘inverse’ because it is
brought by the affected owner, not by the condemnor.” Id. at 5 n.6 (citing United
29
Case: 09-30869 Document: 00511512144 Page: 30 Date Filed: 06/17/2011
No. 09-30869
States v. Clarke, 445 U.S. 253, 257 (1980)). “The owner’s right to bring such a
suit derives from ‘the self-executing character of the constitutional provision
with respect to condemnation.’” Id. (quoting Clarke, 445 U.S. at 257, in turn
quoting 6 P Nichols, Eminent Domain § 25.41 (rev. 3d ed. 1972)). As the
Supreme Court stated in First English Evangelical Lutheran Church of Glendale
v. Los Angeles, “[t]he fact that condemnation proceedings were not instituted and
that the right was asserted in suits by the owners did not change the essential
nature of the claim. The form of the remedy did not qualify the right. It rested
upon the Fifth Amendment. Statutory recognition was not necessary. A promise
to pay was not necessary. Such a promise was implied because of the duty to pay
imposed by the Amendment. The suits were thus founded upon the Constitution
of the United States.” 482 U.S. 304, 315 (1987) (quoting Jacobs v. United States,
290 U.S. 13, 16 (1933)) (internal quotation marks omitted).
Similarly, the Louisiana Supreme Court has held that an “action for
inverse condemnation arises out of the self-executing nature of” the state
constitutional requirement that “the expropriating entity is bound to make
reparations,” and the action requires the state to compensate private landowners
for their property taken or damaged for public purposes even when the state has
not initiated statutorily authorized expropriation proceedings. State Through
Dep’t of Transp. & Dev. v. Chambers Inv. Co., 595 So. 2d 598, 602 (La. 1992); see
also Avenal v. State, 886 So. 2d 1085, 1104 (La. 2004) (“Inverse condemnation
claims derive from the Takings Clauses contained in both the Fifth Amendment
of the U.S. Constitution and Art. I, § 4 of the Louisiana Constitution.”);
Constance v. State Through Dep’t of Transp. & Dev., Office of Highways, 626 So.
2d 1151 (La. 1993); St. Tammany Parish Hosp. Serv. Dist. No. 2 v. Schneider,
30
Case: 09-30869 Document: 00511512144 Page: 31 Date Filed: 06/17/2011
No. 09-30869
808 So. 2d 576, 582 (La. Ct. App. 1st Cir. 2001) (“[T]he Louisiana Supreme Court
has recognized that the action for ‘inverse condemnation’ arises out of the
self-executing nature of the constitutional command to pay just compensation.”).
Further, the Louisiana Supreme Court held that the “aim of Article I, § 4, of [the
Louisiana] [C]onstitution [of 1974] in requiring that the owner shall be
compensated for property ‘taken or damaged . . . to the full extent of his loss’ . . .
was deliberate, prompted by a belief on the part of the sponsors that inadequate
awards had been provided under the prior law.” Chambers Inv. Co., 595 So. 2d
at 602 (first omission in original) (citing L. Hargrave, The Declaration of Rights
of the Louisiana Constitution of 1974, 35 La. L. Rev. 1, 15 (1974); and citing as
“cf.” State v. Dietrich, 555 So. 2d 1355, 1358-59 (La. 1990); and State Through
Dep’t of Highways v. Constant, 369 So. 2d 699, 702 (La. 1979) as indicating that
“the purpose of the additional language in Article I, § 4 was to compensate an
owner for any loss sustained by reason of the taking, and not merely restricted
as under the former constitution to the market value of the property taken and
to reduction in the market value of the remainder”); see also Avenal, 886 So. 2d
at 1103 n.23 (citing Chambers Inv. Co., 595 So. 2d at 602 for this same
proposition).
For these reasons, I conclude that the inverse condemnation action arising
out of the self-executing nature of the United States and Louisiana Constitutions
affords Sid-Mar’s the same protection to the full extent of their loss as would be
provided them in a statutory condemnation action brought by the state or any
governmental entity in an in rem proceeding. Functionally, an action in rem is
“[a]n action determining the title to property and the rights of the parties not
merely among themselves, but also against all persons at any time claiming an
31
Case: 09-30869 Document: 00511512144 Page: 32 Date Filed: 06/17/2011
No. 09-30869
interest in that property; a real action.” Black’s Law Dictionary 32 (8th ed.
2004). Sid-Mar’s alleged in their state inverse condemnation suit that they held
a valid title to the 0.166-acre parcel at issue in the instant federal suit (which
was part of the 10.2 acres commandeered by the state) against all persons
claiming an interest in that property when the Governor of Louisiana
commandeered the property by physically taking it and ousting them from
possession and access to the land. Accordingly, I conclude that Sid-Mar’s
commenced a valid inverse condemnation action in rem in the state court prior
to the United States’ filing of the federal condemnation suit against the same
property in rem in the present case. Therefore, the federal courts must respect
the previously filed state court in rem proceedings as establishing that court’s
exclusive jurisdiction to adjudicate the title to the property taken and the
compensation to be paid by the state in connection with the taking.4
Additionally, the Louisiana Governor’s commandeering order reserved to the
owners of the land taken “all such rights and privileges in said land as may be
used without interfering with or abridging the rights hereby acquired.” This
reservation necessarily contemplates that a state court with in rem jurisdiction
and possession and control of the property will determine the nature and the
4
The Louisiana Homeland Security and Emergency Assistance and Disaster Act, La. Rev.
Stat. Ann. § 29:721 et seq., empowers the Governor, subject to any applicable requirements for
compensation, to “commandeer or utilize any private property if he finds it necessary to cope
with a disaster or emergency.” La. Rev. Stat. Ann. § 29:724(D)(4). The Act provides that the
amount of compensation for such a loss “shall be calculated in the same manner as
compensation due for the taking of property pursuant to the condemnation laws of
[Louisiana].” La. Rev. Stat. Ann. § 29:730(G). The Act does not, however, establish or refer to
any particular statutory method or procedure to govern the compensation of persons whose
property is taken or condemned under the Governor’s emergency commandeering power.
Accordingly, Sid-Mar’s inverse condemnation action is an in rem action based on the self-
executing nature of the state and federal constitutions.
32
Case: 09-30869 Document: 00511512144 Page: 33 Date Filed: 06/17/2011
No. 09-30869
extent, if any, of the landowners’ future right to use the property commandeered
and taken from them.
B.
Contrary to the majority’s and district court’s conclusions, I also conclude
that this case is neither analogous to nor controlled by Leiter Minerals, Inc. v.
United States, 352 U.S. 220 (1957), and therefore the prior exclusive jurisdiction
doctrine applies to and demands dismissal or a stay of this later filed federal in
rem condemnation action in light of the earlier filed state in rem inverse
condemnation action.
In Leiter Minerals, the Supreme Court first decided that the Anti-
Injunction Act, 28 U.S.C. § 2283, does not apply to bar injunctions or stays
sought by the United States because “statutes which in general terms divest pre-
existing rights or privileges will not be applied to the sovereign without express
words to that effect.” 352 U.S. at 224 (quoting United States v. United Mine
Workers of Am., 330 U.S. 258, 272 (1947)) (internal quotation marks omitted).
But the Court then stated that “[t]he question still remains whether the
granting of an injunction was proper under the circumstances of that case.” Id.
at 226. The Supreme Court went on to give qualified approval of the district
court’s injunction of the state court proceedings in Leiter Minerals, id. at 226-28,
but the Court distinguished the situation in Leiter Minerals from the “more
unusual situation where the United States, like any private claimant, made a
claim against funds that it never possessed and that were in the hands of
depositaries appointed by the state court. In [Leiter Minerals], a private party
is seeking by a state proceeding to obtain property currently in the hands of
persons holding under the United States; the United States is seeking to protect
33
Case: 09-30869 Document: 00511512144 Page: 34 Date Filed: 06/17/2011
No. 09-30869
that possession and quiet title by a federal court proceeding,” id. at 227-28
(emphasis added). Put another way, as the majority recognizes, Leiter Minerals
did not directly analyze the prior exclusive jurisdiction doctrine or its
implications. Majority Op. 7-8. However, it did allude to the doctrine through
distinguishing Bank of New York & Trust Co., which, as discussed supra, applied
the doctrine against a later initiated in rem action brought by the United States.
When its tangential consideration of the doctrine is understood in this manner,
it becomes clear that Leiter Minerals did not fundamentally alter or amend the
prior exclusive jurisdiction doctrine, but rather, at most, recognized a narrow
exception where the sovereign, who is only required to litigate in the courts of
its choosing, was seeking defensively to “protect” and “quiet” title it already
possessed.
An enhanced recounting of Leiter Minerals’ facts and legal analysis, drawn
from the district court’s opinion, helps to contrast its situation from other cases,
such as this one, in which the prior exclusive jurisdiction doctrine applies. “On
December 21, 1938, the United States acquired [by cash sale] from Thomas
Leiter a tract of land comprising more than 8,000 acres” in Louisiana, reserving
“mineral rights in the land to the vendor, with a stipulation that, with certain
exceptions,” the rights “would expire on April 1, 1945.” United States v. Leiter
Minerals, Inc., 127 F. Supp. 439, 440 (E.D. La. 1954). Leiter Minerals, Inc.
claimed “to have succeeded Thomas Leiter in title to the reserved mineral
interest.” Id. On March 1, 1949, the United States executed several mineral
leases to Frank and Allen Lobrano, who conveyed operating rights under the
leases to the California Company, which drilled eighty producing wells on the
property. Id. Subsequently, the United States received royalty therefrom in
34
Case: 09-30869 Document: 00511512144 Page: 35 Date Filed: 06/17/2011
No. 09-30869
excess of $3.5 million. Id. Thus, any interruption in the operation of the wells
would have caused the United States irreparable damage. Id. Also, “[s]ince the
date of its acquisition, the United States ha[d] . . . maintained and administered
the lands acquired from Thomas Leiter as part of a wild life refuge, thus
retaining physical possession of the surface of the land . . . [and] the mineral
rights by virtue of the mineral operations conducted by its lessees.” Id. Leiter
Minerals filed suit in state court in Louisiana against the California Company
and Allen Lobrano as mineral lessees from the United States and prayed that
Leiter Minerals be recognized as the lawful owner of all mineral rights under the
land acquired by the United States from Thomas Leiter. Id. at 440-41; see also
Leiter Minerals, 352 U.S. at 221 (stating that Leiter Minerals “founded its claim
on Louisiana Act No. 315 of 1940, La. Rev. Stat. § 9:5806 (1950), which, it
alleged, made ‘imprescriptible’ a reservation of mineral rights in a deed of
December 21, 1938, to the United States by its predecessor in title”). The United
States brought suit in the federal district court for the Eastern District of
Louisiana to quiet its title to the mineral rights and for a preliminary injunction
to restrain Leiter Minerals from prosecuting its state court action. Leiter
Minerals, 127 F. Supp. at 441. “It s[ought] equitable relief in the form of an
action to quiet title and to remove clouds on the title of the United States. A
federal court has jurisdiction to grant such relief.” Id. The district court held
that, since the United States was not and could not be made a party to the state
court suit, the title of the United States could be tried only in the federal court
action, and that an injunction against prosecution of the state proceedings
should issue to protect its jurisdiction pending determination of the ownership
of the property. Id. at 443-46. The Court of Appeals affirmed, holding that the
35
Case: 09-30869 Document: 00511512144 Page: 36 Date Filed: 06/17/2011
No. 09-30869
preliminary injunction was proper because “the district court under the clear
provisions of the statute, 28 U.S.C. § 1345, became vested with exclusive
jurisdiction to determine the title of the United States to the mineral rights
claimed by appellant.” Leiter Minerals, Inc. v. United States, 224 F.2d 381,
383-84 (5th Cir. 1955).
Subject to one modification,5 the Supreme Court affirmed the judgment of
the Court of Appeals upholding the district court’s injunction of the state court
proceedings and allowing the United States’ suit to quiet title to its property to
proceed in the federal district court. The Court based its conclusions on
principles more fully elaborated upon in the district court opinion: The United
States as “sovereign cannot be sued in its own courts, or in any other, without
its consent and permission.” Leiter Minerals, 127 F. Supp. at 442 (quoting Beers
v. Arkansas, 61 U.S. (20 How.) 527, 529 (1857)) (internal quotation marks
omitted). “Officers or agents of the United States may be sued, however, for
possession of property held by them in behalf of the United States.” Id. (citing
Land v. Dollar, 330 U.S. 731 (1947); United States v. Lee, 106 U.S. 196 (1882)).
“Such an action is not one against the United States and, of course, would not
be res judicata as against the United States.” Id. (citing Dollar, 330 U.S. 731;
Lee, 106 U.S. 196). Therefore, “[w]here a suit is brought in a state or federal
court against officers or agents of the United States claiming property held by
those officers for the United States, the United States may bring its own action
in a state or federal court asking the court to adjudicate its claim to title to the
5
To avoid the possibility that the district court would unnecessarily reach and decide a federal
constitutional question, the Supreme Court “modif[ied] the judgment of the Court of Appeals
to permit an interpretation of the state statute to be sought with every expedition in the state
court in conformity with this opinion.” Leiter Minerals, 352 U.S. at 230.
36
Case: 09-30869 Document: 00511512144 Page: 37 Date Filed: 06/17/2011
No. 09-30869
property involved in the former suit and is entitled to an injunction staying
further proceedings therein.” Id. (emphasis added).6 In other words, “since the
United States cannot be made a defendant to a suit concerning its property, and
no judgment in any suit against an individual who has possession or control of
such property can bind or conclude the government, . . . the government is
always at liberty, notwithstanding any such judgment, to avail itself of all the
remedies which the law allows to every person, natural or artificial, for the
vindication and assertion of its rights,” which, because of sovereign immunity,
must occur in federal court. Id. at 443 (emphasis added) (quoting Lee, 106 U.S.
at 222) (internal quotation marks omitted). Therefore, an injunction was proper
in the circumstances presented in Leiter Minerals because the United States
came into federal court in a defensive position, seeking to protect and quiet title
to an existing property right that was being litigated against its agents in state
court. Id. at 444.
By contrast, the district court continued, an injunction would not have
been proper, were the circumstances present in Leiter Minerals like those at
issue in United States v. Bank of New York & Trust Co., 296 U.S. 463 (1936).
Leiter Minerals, 127 F. Supp. at 444. “In [Bank of New York & Trust Co.] the
Supreme Court held that the federal court did not have exclusive jurisdiction of
6
The court cited the following as support for this proposition: Land v. Dollar, 341 U.S. 737
(1951); Dollar, 330 U.S. 731; Lee, 106 U.S. 196; United States v. Dollar, 196 F.2d 551 (9th Cir.
1952); United States v. Dollar, 193 F.2d 114 (9th Cir. 1952); Dollar v. United States, 190 F.2d
547 (9th Cir. 1951); Brown v. Wright, 137 F.2d 484 (4th Cir. 1943); United States v. McIntosh,
57 F.2d 573 (4th Cir. 1932); United States v. Dollar, 100 F. Supp. 881 (N.D. Cal. 1951); United
States v. Dollar, 97 F. Supp. 50 (N.D. Cal. 1951); United States v. Taylor’s Oak Ridge Corp.,
89 F. Supp. 28 (E.D. Tenn. 1950); United States v. Cain, 72 F. Supp. 897 (W.D. Mich. 1947);
United States v. Babcock, 6 F.2d 160 (D. Ind. 1925); and United States v. Inaba, 291 F. 416
(E.D. Wash. 1923).
37
Case: 09-30869 Document: 00511512144 Page: 38 Date Filed: 06/17/2011
No. 09-30869
the claim of the United States to certain funds of three Russian insurance
companies dissolved by the Soviet government in 1918, which funds were in the
custody of the state court in New York in connection with proceedings in that
court liquidating the insurance companies. The funds were being held subject to
appropriate orders of the court providing for their distribution to creditors,
policyholders, and other claimants, in accordance with the state insurance laws.
The Soviet government claimed ownership of these funds and assigned its claim
to the United States, which filed suit in 1933, eight years after the state
liquidation proceedings began, in the United States District Court for the
Southern District of New York, and sought to enjoin further proceedings
concerning the funds in the state court. The judgment of the federal district
court, dismissing the complaint and denying a motion for injunction, was
affirmed by the Supreme Court on the ground that the state court had first
assumed jurisdiction and control of the funds, and that such control was
essential to give effect to that court’s jurisdiction to protect the rights of
claimants in the state court proceeding, none of whom was before the federal
court.” Id. at 444-45. Thus, the Leiter Minerals district court emphasized that
were the United States entering federal court offensively, seeking to secure
possession of a property right through an in rem proceeding, and there was a
prior initiated in rem state court proceeding involving the same property, the
prior exclusive jurisdiction doctrine would apply and require the federal court
to stay or dismiss its case in deference to the prior in rem state court action.
Albeit with not as much clarity or detail as the district court, the Supreme
Court affirmed on the same basis: that the circumstances presented in Leiter
Minerals warranting an injunction were narrow: An injunction was only proper
38
Case: 09-30869 Document: 00511512144 Page: 39 Date Filed: 06/17/2011
No. 09-30869
because the United States had invoked the federal court’s jurisdiction
defensively, being forced to quiet its existing title that had been put at issue in
a state court suit brought against its lessors. The Court explained that the
injunction was proper because “the federal court was the only one that could
finally determine the basic issue in the litigation—whether the title of the
United States to the mineral rights was affected by Louisiana Act No. 315 of
1940. The United States was not a party to the state suit and, under settled
principles, title to land in possession of the United States under a claim of
interest cannot be tried as against the United States by a suit against persons
holding under the authority of the United States.” Leiter Minerals, 352 U.S. at
226 (emphasis added) (citing Lee, 106 U.S. 196).
The Supreme Court also distinguished, rather than overruled, Bank of
New York & Trust Co., 296 U.S. 463, upon which Leiter Minerals continued to
rely, stating: “the Bank of New York case presented the more unusual situation
where the United States, like any private claimant, made a claim against funds
that it never possessed and that were in the hands of depositaries appointed by
the state court. In [Leiter Minerals], a private party is seeking by a state
proceeding to obtain property currently in the hands of persons holding under
the United States; the United States is seeking to protect that possession and
quiet title by a federal court proceeding. Therefore, since the position of the
United States is essentially a defensive one, we think that it should be permitted
to choose the forum in this case . . . .” Leiter Minerals, 352 U.S. at 227-28
(emphasis added). Thus, the Court affirmed the district court’s analysis that
were the United States to have entered federal court offensively, seeking to
secure a right it did not posses through an in rem proceeding, and were there a
39
Case: 09-30869 Document: 00511512144 Page: 40 Date Filed: 06/17/2011
No. 09-30869
prior initiated in rem state court proceeding involving the same property, the
prior exclusive jurisdiction doctrine would prevent the federal district court from
issuing an injunction against the state court proceedings.7
Lest there be any doubt as to this reading of Leiter Minerals, it has been
supported and adhered to consistently by subsequent Supreme Court and circuit
cases. In Colorado River Water Conservation District v. United States, the Court
reaffirmed the continued validity of the prior exclusive jurisdiction
rule—including when the United States initiates the later federal in rem
action—by explaining, “It has been held, for example, that the court first
assuming jurisdiction over property may exercise that jurisdiction to the
exclusion of other courts.” 424 U.S. 800, 818 (1976) (citing Donovan v. City of
Dallas, 377 U.S. 408, 412 (1964); Princess Lida, 305 U.S. at 466; Bank of N.Y.
& Trust Co., 296 U.S. at 477). The Court continued that “[t]his has been true
even where the Government was a claimant in existing state proceedings and
then sought to invoke district-court jurisdiction.” Id. (citing Bank of N.Y. & Trust
Co., 296 U.S. at 479). The Court acknowledged the Leiter Minerals precedent,
7
Further demonstrating that Leiter Minerals did not meaningfully, if at all, alter or amend
the long-established prior exclusive jurisdiction doctrine, the Leiter Minerals’ district court
explained that it was an open question whether the state suit being enjoined in that case was
in fact an in rem action. It explained that one of the “many and obvious” distinctions between
Leiter Minerals and Bank of New York & Trust Co., is that “[t]here is no case . . . from the
Supreme Court which holds that the mere filing of a suit claiming ownership of property
places that property under the control of the court so that no other court has the right to
adjudicate claims against that property. In fact, the decisions seem to be to the contrary.”
Leiter Minerals, 127 F. Supp. at 446 (citing Markham v. Allen, 326 U.S. 490 (1946);
Mandeville, 318 U.S. 47; Commonwealth Trust Co. v. Bradford, 297 U.S. 613 (1936)). Although
the Supreme Court later acknowledged that “the state litigation has the elements of an action
characterized as quasi in rem,” it declined to call into question the district court’s insinuation
that the prior exclusive jurisdiction doctrine might not be implicated at all because the state
court proceedings were not truly in rem or quasi in rem. Leiter Minerals, 352 U.S. at 228.
40
Case: 09-30869 Document: 00511512144 Page: 41 Date Filed: 06/17/2011
No. 09-30869
but only through a citation, “but cf.” In this manner, the Court indicated that
Leiter Minerals could be read as a narrow exception to its broad statement that
the prior exclusive jurisdiction doctrine applies “even where the Government
was a claimant.” Nonetheless, the Court’s cursory treatment of the precedent
clearly indicated that it understood Leiter Minerals to provide, at most, an
unremarkable and very narrow exception to the general rules articulated in
Colorado River Water Conservation District.
More recently and directly, the Tenth Circuit in United States v. Buck
described Leiter Minerals as standing solely for the narrow proposition described
above, that a federal court may enjoin a “state court proceeding[] . . . to protect
jurisdiction of [the] federal court in [a] quiet title action brought by [the] United
States.” 281 F.3d 1336, 1344 (10th Cir. 2002).
The situation here, involving Sid-Mar’s prior state court inverse
condemnation in rem action vis-a-vis the subsequently filed United States’
federal court condemnation in rem action, is markedly different from that in
Leiter Minerals. Sid-Mar’s state suit does not challenge the title to land or
minerals held by a lessee who obtained rights in the property from the United
States. The United States’ federal suit is not an action to quiet its pre-existing
title or claim of interest to land or minerals or to remove a cloud on its title
created by Sid-Mar’s. Instead, the United States is seeking to condemn land in
which it previously did not have a title or a claim of interest. In this manner, the
present situation is more similar to the situation in United States v. Bank of New
York & Trust Co., where the United States, like any private claimant, made a
claim against funds that it did not possess or that were not in the hands of
persons holding under the United States’ title. Therefore, assuming arguendo
41
Case: 09-30869 Document: 00511512144 Page: 42 Date Filed: 06/17/2011
No. 09-30869
that Leiter Minerals intended to speak to and amend the prior exclusive
jurisdiction doctrine, it did not do so in a manner that would keep the doctrine
from applying to the facts of this case; as in Bank of New York & Trust Co., the
rule that the court first assuming jurisdiction over property may maintain and
exercise that jurisdiction to the exclusion of the other applies to the present case.
Accordingly, the state court in Sid-Mar’s inverse condemnation action should be
allowed to maintain its jurisdiction to adjudicate title and compensation with
respect to the 0.166 acres commandeered and taken by the State of Louisiana,
to the exclusion of the federal district court’s jurisdiction to adjudicate the
United States’ condemnation of the same property. Once that state court
litigation is complete, there would be no barrier the United States filing its
condemnation action in federal district court.
C.
The facts and analysis in Leiter Minerals underscored that it created a
narrow exception, if any, to the prior exclusive jurisdiction doctrine: That when
the United States, which is only required to litigate in the courts of its choosing,
is seeking defensively to “protect” and “quiet” title it already possesses, it can
obtain an injunction against a prior initiated state court in rem proceeding
concerning the same property. The majority, however, reads this narrow
exception expansively, as providing federal district courts with the power to
enjoin prior initiated state court in rem suits any time the United States
conceives of a “future interest” it might have in the res. Majority Op. 17.
Momentarily recognizing the unacceptable implications of such a rule, the
majority attempts to characterize the United States’ “future interest” in this case
as concrete: “[I]t is possible the United States has a claim to the land that
42
Case: 09-30869 Document: 00511512144 Page: 43 Date Filed: 06/17/2011
No. 09-30869
preceded the commencement of the state court lawsuit. . . . [T]he [state]
Executive Order that acted to commandeer the property referred specifically to
the Cooperation Agreement between the United States and the Orleans Levee
District . . . . That Cooperation Agreement . . . indicated the federal government
would later acquire full ownership rights in the property.” Majority Op. 17. Yet
this mischaracterizes the Cooperation Agreements, of which there are actually
three: the original agreement and two supplements. The Cooperation
Agreements between the U.S. Department of the Army and the Orleans Levee
District, among other local entities, do not purport to grant the United States
any interest in the parcel of land that the Governor of Louisiana commandeered
from Sid-Mar’s nor do they obligate the Governor nor the State of Louisiana to
transfer property to the Department. The Agreement merely obligates the
Orleans Levee District, and the other named local entities, to try to acquire
necessary land and right-of-ways, both of which are described by their general
location and not by legal descriptions; and it states that if that strategy fails, the
United States can obtain such an interest “through the exercise of eminent
domain authority” if there existed sufficient appropriations. That is, at the time
the United States signed the Cooperation Agreements, its interest in the
property subject to the Agreements was no more of a legal interest than it might
have in any property in the nation: If the Levee District’s strategy outlined in
the Cooperation Agreements failed, and the United States determined that it
was appropriate and desirable for it to exercise its power of eminent domain, and
funds were available, it intended to do so. Consistent with this, the United
States never alleged nor argued as part of this federal suit that it had an existing
interest in Sid-Mar’s property when Sid-Mar’s state suit was filed. To the
43
Case: 09-30869 Document: 00511512144 Page: 44 Date Filed: 06/17/2011
No. 09-30869
contrary, in its brief in the district court arguing for a stay, the United States
acknowledged that this case was distinguishable from Leiter Minerals because
it was not filing “a quiet title action in the instant case.” As a result, the
majority’s rule is as broad and unwieldy as it appears. It undermines the
principles of federalism that the prior exclusive jurisdiction doctrine was
designed to protect. Not surprisingly then, the case law that the majority cites
in support of its holding stands for no such principle and, in fact, the majority
splits us from the Second Circuit.
As I described above, the prior exclusive jurisdiction doctrine is designed
to defend and respect our national system of dual sovereignty. “The Federal and
state courts exercise jurisdiction within the same territory, derived from and
controlled by separate and distinct authority, and are therefore required, upon
every principle of justice and propriety, to respect the jurisdiction once acquired
over property by a court of the other sovereignty.” Palmer v. Texas, 212 U.S. 118,
125 (1909). Accordingly, the prior exclusive jurisdiction doctrine was designed
to force courts’ “circumspection in undertaking any action that might result in
the interference with a res in the custody of another court, which thereby might
violate the autonomy of the state and federal judicial systems.” 13F Wright et
al., supra, at 278.
By holding that the prior exclusive jurisdiction doctrine does not apply
whenever the United States has a conceived “future interest” in the res, the
majority provides the federal district courts with largely unfettered discretion
to debase previously filed state court proceedings. According to the majority,
because the United States could exercise its power of eminent domain over
property, that is a sufficient federal interest to empower the district courts
proceeding in rem to reach into the state courts and strip them of their existing
44
Case: 09-30869 Document: 00511512144 Page: 45 Date Filed: 06/17/2011
No. 09-30869
jurisdiction over property under their control. Although the United States has
no direct interest at stake in the state court suit and it will suffer no impairment
of any pre-existing property right or its right to choose its forum in which to
establish such rights, the majority allows federal courts to stay state court
proceedings and potentially circumvent the state courts in the name of a federal
interest. The majority allows for such an outcome even though these are
precisely the circumstances in which the Supreme Court has stated that our
interests in federalism are at their highest and thus the prior exclusive
jurisdiction doctrine should be fully enforced. See Bank of N.Y. & Trust Co., 296
U.S. at 480-81 (stating that the prior exclusive jurisdiction doctrine prevented
the federal court’s from assuming jurisdiction over the res in a suit brought by
the United States because “[t]here is no merit in the suggestion that the United
States, in presenting its claim in the state proceedings, would be compelled to
take the position of a defendant—being sued without its consent” and “[w]e
cannot see that there would be impairment of any rights the United States may
possess”).
The majority cites Alonzo v. United States, 249 F.2d 189 (10th Cir. 1957),
as supporting its holding that the United States’ “future interest” in the res is
a sufficient basis for a federal court to enjoin a prior initiated state court in rem
proceeding; but that case establishes no such rule. There, the Tenth Circuit held
that because the United States had an existing interest in property subject to a
state court suit, “as clear as it would be if the fee were in the United States,” a
federal district court could enjoin the state proceeding, allowing the United
States to litigate in federal court. Id. at 197. In Alonzo, Lupe, Jim, Joe and
Valentino Alonzo and James Garcia filed suit in a New Mexico court seeking to
eject the Pueblo Indian tribe from “certain lands described in their complaint .
45
Case: 09-30869 Document: 00511512144 Page: 46 Date Filed: 06/17/2011
No. 09-30869
. . and damages for minerals alleged to have been wrongfully extracted from said
lands.” Id. at 190. The United States then entered federal court “in its own
behalf and in behalf of the Pueblo . . . seeking a judgment quieting the title to
certain of the lands embraced in the state court action and enjoining the
plaintiffs in the state court action from prosecuting such action.” Id. (emphasis
added). The district court issued a preliminary injunction against the state court
plaintiffs preventing them from prosecuting their state court suit and they
appealed.
The Tenth Circuit upheld the injunction, citing Leiter Minerals. Id. at 196-
97. It reviewed the history of the Pueblo’s ownership of the land and their
relationship with the United States and concluded that although the Pueblo had
many traditional aspects of ownership, “[r]estricted Indian land is property in
which the United States has an interest. ‘This national interest is not to be
expressed in terms of property, or to be limited to the assertion of rights incident
to the ownership of a reversion or to the holding of a technical title in trust.’” Id.
at 197 (quoting United States v. Hellard, 322 U.S. 363, 366 (1944), in turn
quoting Heckman v. United States, 224 U.S. 413, 437 (1912)) (internal quotation
marks omitted). Therefore, “the Governmental interest in the instant action is
as great as it would be if the fee to the lands involved were in the United States.
Indeed, since the United States is suing as a guardian of a dependent nation in
discharge of a fiduciary duty, its right and duty to protect the interests of its
wards may be even greater then it would if it were suing in its own behalf with
respect to its own lands.” Id. It was in light of this relationship to and authority
over the land—not, as the majority claims, the United States’ “future interest in
that property,” Majority Op. 17—that the Tenth Circuit concluded, under Leiter
46
Case: 09-30869 Document: 00511512144 Page: 47 Date Filed: 06/17/2011
No. 09-30869
Minerals, that the United States could seek and obtain an injunction of the state
court suit. Alonzo, 249 F.3d at 197 (citing Leiter Minerals, 352 U.S. 220).
Moreover, the majority’s holding splits us from the Second Circuit. In
United States v. Certified Industries, Inc., 361 F.2d 857 (2d Cir. 1966), the
Second Circuit considered essentially the same question presented by this case:
whether Leiter Minerals amends the prior exclusive jurisdiction doctrine so that
it does not apply to later initiated federal in rem proceedings brought by the
United States. Consistent with my analysis, a unanimous panel of the Second
Circuit held that Leiter Minerals was distinguishable and that the prior
exclusive jurisdiction doctrine continued to apply to federal court actions brought
by the United States except where the United States enters federal court
defensively, seeking to protect and quiet its pre-existing title to property.
In the Second Circuit’s case, Certified Industries, a construction
subcontractor, sued in state court seeking to “foreclose a lien” for funds it was
owed for work it had performed for Meteor, a contractor. Id. at 858-59. The
United States sought to enjoin that state court suit “on the theory that it [was]
entitled to have a trust imposed” on those same funds. Id. at 859. The district
court granted the United States a preliminary injunction, but the Second Circuit
reversed, stating that both the prior initiated state court suit and the federal
suit were in rem. Id. at 859-60. The Second Circuit explained that Leiter
Minerals did “not mean . . . that a stay is automatically granted simply on the
application of the United States.” Id. at 859. As recounted by the Second Circuit,
while the Supreme Court in Leiter Minerals held that the Anti-Injunction Act
did not bar injunctions of state court suits sought by the United States, the
Leiter Minerals Court also “went on to say that it was also necessary to inquire
47
Case: 09-30869 Document: 00511512144 Page: 48 Date Filed: 06/17/2011
No. 09-30869
‘whether the granting of an injunction was proper in the circumstances of this
case.’” Id. (quoting Leiter Minerals, 352 U.S. at 226). Therefore, the Second
Circuit held, consistent with my analysis and contrary to the conclusion of the
majority, that in light of the prior exclusive jurisdiction doctrine, “[t]he United
States is not entitled to an injunction staying state court proceedings where the
state court is the first court to assume jurisdiction over the subject matter
property of an action in rem or quasi in rem.” Id. at 860 (citing Bank of N.Y. &
Trust Co., 296 U.S. at 447; Penn Gen. Cas. Co., 294 U.S. at 195).
The Second Circuit acknowledged that Leiter Minerals may have carved
out a narrow exception to the prior exclusive jurisdiction doctrine, but, for the
same reasons that I believe that Leiter Minerals is distinguishable from the
instant case, the Second Circuit explained that the exception did not apply to its
case. Id. at 861. The Second Circuit reasoned: “The Supreme Court in [Leiter
Minerals] indicated that where the United States’ position is ‘defensive’ it should
be able to choose its forum ‘even though the state litigation has the elements of
an action characterized as quasi in rem.’” Id. at 861 (quoting Leiter Minerals, 352
U.S. at 228). However, in Certified Industries the United States’ position was not
“defensive” because it was not seeking to protect or retain “funds or title to
property in its possession at the commencement of the state proceeding.” Id.
(emphasis added). Therefore, analogizing the case to Bank of New York & Trust
Co., the Second Circuit concluded that the prior exclusive jurisdiction doctrine
applied to bar the injunction sought by the United States. Id. at 861-62; see also
United States v. Akin, 504 F.2d 115, 122 n.5 (10th Cir. 1974) (stating that the
Supreme Court allowed the injunction in Leiter Minerals because “the United
48
Case: 09-30869 Document: 00511512144 Page: 49 Date Filed: 06/17/2011
No. 09-30869
States [was] seeking to protect [its] possession and quiet title by a federal court
proceeding” (citing Leiter Minerals, 352 U.S. at 227-28)).
Just last year, the Second Circuit positively cited to Certified Industries’
reading of Leiter Minerals and the prior exclusive jurisdiction doctrine in
Interworks Systems Inc. v. Merchant Financial Corp., 604 F.3d 692, 701 n.7 (2d
Cir. 2010) (indicating that Certified Industries’ analysis of when an “injunction
against state court proceedings could issue” remained good law). This court too
has positively cited Certified Industries for its articulation of the prior exclusive
jurisdiction doctrine. Signal Props., Inc. v. Farha, 482 F.2d 1136, 1137 (5th Cir.
1973) (citing Certified Indus., 361 F.2d 857).
CONCLUSION
Therefore, I conclude that, consistent with the relevant Supreme Court
and circuit authority and the views of the leading commentators, Leiter Minerals
does not exempt in rem actions by the United States from the prior exclusive
jurisdiction doctrine—except possibly where it is defensively seeking to quiet its
pre-existing title to property—and because the United States in this case is
proceeding offensively, not defensively, to acquire title to property for the first
time in this federal action filed after Sid-Mar’s commenced the in rem state court
action involving the same parcel of land, the doctrine requires that the
injunction of Sid-Mar’s state court in rem action issued by the district court be
withdrawn. Accordingly, I would vacate the district court’s injunction and
remand the case to it for dismissal, stay, or other proceedings consistent with
this opinion. For these reasons, I respectfully dissent.
49