Snider v. City of Excelsior Springs

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________

No. 98-1004
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Linda Snider; Robert Carver; *
Donna Carver; Dennis Murphy; *
Lea Murphy; Fred Thorp; Ruth *
Thorp; Albert Teepen; Barbara *
Teepen; Ronald Tavernaro; and *
Barbara Tavernaro, All Parties *
Above Individually and On Behalf *
of All Others Similarly Situated, *
*
Appellants, * Appeal from the United States
* District Court for the Western
v. * District of Missouri.
*
City of Excelsior Springs, Missouri; *
Land Clearance for Redevelopment *
Authority of Excelsior Springs, *
Missouri; and Millennium Management *
Company, *
*
Appellees. *
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Submitted: June 12, 1998

Filed: September 2, 1998
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Before HANSEN and MORRIS SHEPPARD ARNOLD, Circuit Judges, and
PANNER,1 District Judge.
___________

MORRIS SHEPPARD ARNOLD, Circuit Judge.

After the plaintiff class filed a complaint alleging civil rights violations and
asking for damages and relief from a state court condemnation proceeding, the district
court2 held that it lacked subject matter jurisdiction to hear the case and dismissed it.
We affirm the judgment of the district court.

I.
The plaintiffs in this action purchased time-share interests for use at the Elms
Hotel in Excelsior Springs, Missouri. Each made a one-time cash payment, signed a
time-share agreement, and agreed to pay annual fees. In return, the plaintiffs were
permitted to reserve rooms on designated floors of the Elms Hotel, or to exchange their
time for stays at other resorts, for a specified number of days each year.

Despite the revenue from the time-share scheme, the Elms Hotel experienced
financial difficulties and filed for bankruptcy, but the bankruptcy court dismissed the
case after the creditors could not agree on a plan to resolve the hotel's financial
difficulties. Shortly thereafter, the City of Excelsior Springs (City) declared the hotel
and surrounding properties a blighted area and condemned them.

The City and the Land Clearance and Redevelopment Agency (LCRA) then filed
a petition in condemnation in a Missouri state court. The petition named nine of the

1
The Honorable Owen M. Panner, United States District Judge for the District
of Oregon, sitting by designation.
2
The Honorable Ortrie D. Smith, United States District Judge for the Western
District of Missouri.

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time-share holders as representatives of a defendant class to represent the interests of
the more than 800 time-share holders. The City and LCRA moved to certify the class
and notified the nine named class defendants. Shortly thereafter, the state court
certified the class of timeshare holders. The state court then appointed commissioners,
who valued the property being condemned and determined each defendant's interest in
the condemnation award. The commissioners determined net damages of $675,000.
When the state court entered its order condemning the Elms Hotel, it found that six
deeds of trust securing obligations in excess of $20 million that encumbered the hotel
were entitled to priority and that the City and the LCRA were beneficiaries under those
deeds. The state court therefore gave the City and the LCRA superior rights and
interests to the property and the $675,000 condemnation award.

The time-share owners brought this action in federal district court, alleging that
the City and the LCRA secretly planned the condemnation to eliminate the time-share
interests so that the property could be redeveloped free of any encumbrances. The
plaintiffs alleged that the time-share class was certified by the state court but did not
participate in the condemnation proceeding. They further alleged that notice was not
sent to the class members until after the order of condemnation was signed. The
plaintiffs maintained that the actions that the City and the LCRA took in the course of
the condemnation proceeding violated 42 U.S.C. § 1983 because those actions denied
the plaintiffs substantive due process rights, procedural due process rights, access to
the courts, and the right to petition the government to redress grievances. The plaintiffs
also asserted state-law claims, including tortious interference with contract, breach of
non-disturbance agreement, and interference with the right to quiet enjoyment.

II.
Under the so-called Rooker-Feldman doctrine, a federal district court does not
have subject matter jurisdiction over challenges to state court decisions in judicial
proceedings. See Rooker v. Fidelity Trust Co., 263 U.S. 413, 416 (1923), and District
of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 476 (1983). Instead, federal

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review of state court decisions is vested exclusively in the United States Supreme
Court. See Feldman, 460 U.S. at 486. A federal district court has jurisdiction over
constitutional challenges only if they are not inextricably intertwined with the claims
asserted in the state court, see Keene Corp. v. Cass, 908 F.2d 293, 296 (8th Cir. 1990),
and a state claim is inextricably intertwined if the federal challenge succeeds only to
the extent that the state court wrongly decided the issues before it. See id. at 296-97.
That is, Rooker-Feldman precludes a federal action if the relief requested in the federal
action would effectively reverse the state court decision or void its holding. Landers
Seed Co. v. Champaign Nat'l Bank, 15 F.3d 729, 732 (7th Cir. 1994), cert. denied 513
U.S. 811 (1994). Deciding whether Rooker-Feldman bars the plaintiffs' federal suit
therefore requires that we determine what the state court held and whether the relief
that the plaintiffs requested in their federal action would void the state court's decision
or would require us to determine that that decision was wrong. See Charchenko v. City
of Stillwater, 47 F.3d 981, 983 (8th Cir. 1995).

The state court, as we indicated, entered an order approving the condemnation
of the Elms Hotel. Under Missouri law, the purpose of condemnation proceedings is
" 'to ascertain and acquire title to the land sought for [public] purposes and to foreclose
all outstanding claims and interests that are, or may be, asserted thereto by others.'"
City of Columbia v. Baurichter, 713 S.W.2d 263, 266 (Mo. 1986) (emphasis omitted),
quoting City of St. Louis v. Barthel, 166 S.W. 267, 272 (Mo. 1914). The state court's
order thus had the effect under Missouri law of foreclosing all outstanding claims or
interests.

The plaintiffs' complaint alleges that the defendants violated federal and state
laws by their actions in the course of the condemnation proceeding. They prayed for
damages, attorneys' fees, and "to have their time share interests reinstated in the Elms
Hotel and Resort." The state court, however, had already determined the relevant
damages from the condemnation and had extinguished whatever property interests the
plaintiffs may have had. For the federal district court to order condemnation damages

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or to reinstate property interests would require it to determine that the state court had
decided the condemnation matter wrongly: In other words, the relief for which the
plaintiffs prayed would, if granted, effectively void the state court's judgment. Most
importantly, the federal court would essentially be acting as an appeals court reviewing
the state court judgment, which violates the Rooker-Feldman doctrine.

The plaintiffs argue that the Rooker-Feldman doctrine does not bar their claim
in federal court because they were not given proper notice in the state court and
therefore could not be "parties" who were bound by the state court judgment. It is true
that the Supreme Court has held that the Rooker-Feldman rule does not bar a federal
claim brought by one who was not a party to the state court action and therefore not in
any position to seek appellate review of the state court judgment. See Johnson v. De
Grandy, 512 U.S. 997, 1005-06 (1994). The state court in this case, however, entered
an order certifying as a class those people holding time-share interests in the Elms
Hotel.

Whether that class certification and the time-share holders' subsequent treatment
as parties was correctly decided by the state court is, again, not an issue that the federal
district court has jurisdiction to decide under the Rooker-Feldman doctrine. To
determine that the plaintiffs here were not "parties" in the state court action would
require us to hold that the state court wrongly certified the class and wrongly ordered
a final judgment in the condemnation proceeding. As we have held before in a case in
which the plaintiffs alleged insufficient notice in a state court action, there is no
procedural due process exception to the Rooker-Feldman rule. See Postma v. First
Federal Savings & Loan of Sioux City, 74 F.3d 160, 162 n.3 (8th Cir. 1996).

The plaintiffs also argue that the Rooker-Feldman rule does not apply here
because the state court judgment is void. Citing Hansberry v. Lee, 311 U.S. 32 (1940),
they argue that the judgment is void because the absent class members were not
adequately represented at trial. The United States Supreme Court, of course, had

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appellate jurisdiction to review and reverse the Illinois Supreme Court's decision in
Hansberry. Under the Rooker-Feldman rule, in contrast, no federal district court has
jurisdiction to decide that the state court judgment was void.

For the foregoing reasons, we affirm the judgment of the district court.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

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