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K & S Developments LLC v. City of Seatac

United States District Court, Ninth Circuit

October 10, 2013

K & S DEVELOPMENTS LLC, Plaintiff,
v.
CITY OF SEATAC, COLLIERS INTERNATIONAL WA, et al., Defendants.

ORDER ON PLAINTIFFS MOTION TO ABSTAIN

MARSHA J. PECHMAN, District Judge.

This matter comes before the Court on Plaintiffs motion to abstain and/or remand its claims to the Superior Court of King County. (Dkt. No. 20.) Having reviewed the motion, Defendant Colliers' Response (Dkt. No. 21), Defendants Seatac et al.s Response (Dkt. No. 22), Plaintiffs Reply (Dkt. No. 25), Defendants' Notice of Removal and Plaintiffs state court Complaint (Dkt. No. 1), and all related papers submitted by the parties, the Court GRANTS in part and DENIES in part Plaintiffs motion.

The Court DENIES Plaintiffs motion to the extent that it seeks Pullman abstention and to have its federal claims stayed until final determination by the state court. The Court GRANTS Plaintiffs motion to the extent that it seeks remand of its claims to state court on the basis that its federal claims are unripe for adjudication.

Background

In 2003 Plaintiff K&S Developments, LLC, purchased real property known as the Sea-Tac Center using hard money loans. (First Am. Compl. ["FAC"] ¶ 11, Dkt. No. 1, Ex. 1; Colliers Resp. at 3, Dkt. No. 21.) K&S sought to develop the property, but encountered various regulatory obstacles including a moratorium on "park-and-fly" facilities adopted by Defendant City of Seatac. (FAC ¶¶ 12-16.) In February 2008, after several years of negotiation, K&S and the City of Seatac entered into a development agreement to build a mixed-use residential complex on the property. (FAC ¶ 19.) The real estate crash and recession intervened, and K&S defaulted on its loans. (Pl.s Mot. Abstain at 4, Dkt. No. 20; Colliers Resp. at 3.) One of its lenders filed for judicial foreclosure. (Selig Decl. at Ex. D, Dkt. No. 22.) The City of Seatac, as an undisclosed principal acting through Defendant Colliers, then approached K&S and offered to acquire the property through the purchase of the loans and a deed in lieu of foreclosure. (FAC ¶ 27.) This deed was executed on December 24, 2009. (FAC ¶ 28.)

In its complaint, originally filed in King County Superior Court, K&S alleges that Seatacs conduct during the development process, its use of secrecy during negotiations for purchase of the property, and its application (through Colliers) of illicit pressure on K&Ss lenders resulted in a less than voluntary transaction in which the city paid below fair market value for the property. (FAC ¶¶ 11-30.) According to K&S, the negotiations and deed-in-lieu transaction amounted to inverse condemnation under Washington State Constitution and laws, a violation of the federal takings clause, deprivation of the federal rights to substantive and procedural due process and equal protection, and retaliation for conduct and speech protected by the First Amendment. (FAC ¶¶ 31-67.) K&S also alleges a variety of related state contract and tort claims, and seeks declaratory relief and damages pursuant to § 1983. (FAC ¶¶ 68-99; id. at 13.)

Defendants removed to federal court on the basis of a federal question on March 18, 2013.

K&S filed a motion to abstain on June 20, 2013, arguing that this Court should decline to exercise jurisdiction based on the abstention doctrine named after Railroad Commission of Texas v. Pullman , 312 U.S. 496 (1941) ("Pullman abstention"), and further that the federal takings claim is unripe for adjudication under the second prong of the ripeness test established in Williamson County Regional Planning Commission v. Hamilton Bank , 473 U.S. 172 (1985). (Pl.s Mot. Abstain at 7-14.) Defendants Colliers and City of Seatac et al. oppose Pullman abstention on legal and practical grounds but omit any discussion of the ripeness of K&Ss claims in federal court. (Colliers Resp. at 6-9; Seatac Resp. at 6-7.) Seatac further notes that it will raise many simple contractual defenses to K&Ss claims and that if its arguments succeed, K&Ss constitutional contentions may never come into play. (Sea Tac Resp. at 4-6.)

Analysis

I. Pullman Abstention

Abstention from the exercise of federal jurisdiction is "an extraordinary and narrow exception to the duty of a District Court to adjudicate a controversy properly before it." Colorado River Water Conservation Dist. v. United States , 424 US. 800, 813 (1976) (quoting County of Allegheny v. Frank Mashuda Co. , 360 U.S. 185, 188 (1959)). Pullman abstention is a wellestablished exception to this general duty, see 17A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 4242 (3d ed.), though in recent years it has been partially displaced by the more efficient procedure of certifying questions to state high courts. See Arizonans for Official English v. Arizona , 520 U.S. 43, 75-76 (1997).

According to the Ninth Circuit, Pullman abstention is appropriate where:

(1) the federal plaintiffs complaint requires resolution of a sensitive question of federal constitutional law; (2) the constitutional question could be mooted or narrowed by a definitive ruling on the state law issues; and (3) the possibly determinative issue of state law is unclear.

Spoklie v. Montana , 411 F.3d 1051, 1055 (9th Cir. 2005). Pullman abstention is properly invoked only "where the order to parties to repair to the state court would clearly serve an important countervailing interest." County of Allegheny , 360 U.S. at 188-89. That is, courts should abstain only "in exceptional cases where principles of comity and federalism justify postponing the exercise of jurisdiction that Congress conferred upon federal courts." Pearl Inv. Co. v. City and County of San Francisco , 774 F.2d 1460, 1462 (9th Cir. 1985). In contrast to other abstention doctrines, federal courts are never required to abstain based on ...


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