San Remo Hotel, L. P. v. City & County of San Francisco

Supreme Court of the United States6/20/2005
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Full Opinion

*326Justice Stevens

delivered the opinion of the Court.

This case presents the question whether federal courts may craft an exception to the full faith and credit statute, 28 U. S. C. § 1738, for claims brought under the Takings Clause of the Fifth Amendment.

Petitioners, who own and operate a hotel in San Francisco, California (hereinafter City), initiated this litigation in response to the application of a city ordinance that required them to pay a $567,000 “conversion fee” in 1996. After the California courts rejected petitioners’ various state-law takings claims, they advanced in the Federal District Court a series of federal takings claims that depended on issues identical to those that had previously been resolved in the state-*327court action. In order to avoid the bar of issue preclusion, petitioners asked the District Court to exempt from § 1738’s reach claims brought under the Takings Clause of the Fifth Amendment.

Petitioners’ argument is predicated on Williamson County Regional Planning Comm’n v. Hamilton Bank of Johnson City, 473 U. S. 172 (1985), which held that takings claims are not ripe until a State fails “to provide adequate compensation for the taking.” Id., at 195. Unless courts disregard § 1738 in takings cases, petitioners argue, plaintiffs will be forced to litigate their claims in state court without any realistic possibility of ever obtaining review in a federal forum. The Ninth Circuit’s rejection of this argument conflicted with the Second Circuit’s decision in Santini v. Connecticut Hazardous Waste Management Serv., 342 F. 3d 118 (2003). We granted certiorari to resolve the conflict, 543 U. S. 1032 (2004),1 and now affirm the judgment of the Ninth Circuit.

I

The San Remo Hotel is a three-story, 62-unit hotel in the Fisherman’s Wharf neighborhood in San Francisco. In December 1906, shortly after the great earthquake and fire destroyed most of the City, the hotel — then called the “New California Hotel” — opened its doors to house dislocated individuals, immigrants, artists, and laborers. The City officially licensed the facility to operate as a hotel and restaurant in 1916, and in 1922 the hotel was given its current *328name. When the hotel fell into financial difficulties and a “dilapidated condition” in the early 1970’s, Robert and Thomas Field purchased the facility, restored it, and began to operate it as a bed and breakfast inn. See San Remo Hotel, L. P. v. City and County of San Francisco, 100 Cal. Rptr. 2d 1, 5 (Cal. App. 2000) (officially depublished).

In 1979, San Francisco’s Board of Supervisors responded to “a severe shortage” of affordable rental housing for elderly, disabled, and low-income persons by instituting a moratorium on the conversion of residential hotel units into tourist units. San Francisco Residential Hotel Unit Conversion and Demolition Ordinance (hereinafter Hotel Conversion Ordinance or HCO) §§41.3(aHg), App. to Pet. for Cert. 195a-197a. Two years later, the City enacted the first version of the Hotel Conversion Ordinance to regulate all future conversions. San Francisco Ordinance No. 330-81, codified in §41.1 et seq. Under the 1981 version of the HCO, a hotel owner could convert residential units into tourist units only by obtaining a conversion permit. And those permits could be obtained only by constructing new residential units, rehabilitating old ones, or paying an “in lieu” fee into the City’s Residential Hotel Preservation Fund Account. See §§41.12-41.13, App. to Pet. for Cert. 224a-231a. The City substantially strengthened the HCO in 1990 by eliminating several exceptions that had existed in the 1981 version and increasing the size of the “in lieu” fee hotel owners must pay when converting residential units. See 145 F. 3d 1095,1099 (CA9 1998).

The genesis of this protracted dispute lies in the 1981 HCO’s requirement that each hotel “file an initial unit usage report containing” the “number of residential and tourist units in the hotel[s] as of September 23,1979.” § 41.6(b)(1), App. to Pet. for Cert. 206a. Jean Iribarren was operating the San Remo Hotel, pursuant to a lease from petitioners, when this requirement came into effect. Iribarren filed the initial usage report for the hotel, which erroneously reported *329that all of the rooms in the hotel were “residential” units.2 The consequence of that initial classification was that the City zoned the San Remo Hotel as “residential hotel” — in other words, a hotel that consisted entirely of residential units. And that zoning determination ultimately meant that, despite the fact that the San Remo Hotel had operated in practice as a tourist hotel for many years, 145 F. 3d, at 1100, petitioners were required to apply for a conditional use permit to do business officially as a “tourist hotel,” San Remo Hotel, L. P. v. City and County of San Francisco, 27 Cal. 4th 643, 654, 41 P. 3d 87, 94 (2002).

After the HCO was revised in 1990, petitioners applied to convert all of the rooms in the San Remo Hotel into tourist use rooms under the relevant HCO provisions and requested a conditional use permit under the applicable zoning laws. In 1993, the City Planning Commission granted petitioners’ requested conversion and conditional use permit, but only after imposing several conditions, one of which included the requirement that petitioners pay a $567,000 “in lieu” fee.3 Petitioners appealed, arguing that the HCO requirement was unconstitutional and otherwise improperly applied to their hotel. See id., at 656, 41 P. 3d, at 95. The City Board of Supervisors rejected petitioners’ appeal on April 19,1993.

*330In March 1993, petitioners filed for a writ of administrative mandamus in California Superior Court. That action lay dormant for several years, and the parties ultimately agreed to stay that action after petitioners filed for relief in Federal District Court.

Petitioners filed in federal court for the first time on May 4, 1993. Petitioners’ first amended complaint alleged four counts of due process (substantive and procedural) and takings (facial and as-applied)4 violations under the Fifth and Fourteenth Amendments to the United States Constitution, one count seeking damages under Rev. Stat. § 1979, 42 U. S. C. § 1983, for those violations, and one pendent state-law claim. The District Court granted respondents summary judgment. As relevant to this action, the court found that petitioners’ facial takings claim was untimely under the applicable statute of limitations, and that the as-applied takings claim was unripe under Williamson County, 473 U. S. 172.

On appeal to the Court of Appeals for the Ninth Circuit, petitioners took the unusual position that the court should not decide their federal claims, but instead should abstain under Railroad Comm’n of Tex. v. Pullman Co., 312 U. S. 496 (1941), because a return to state court could conceivably moot the remaining federal questions. See App. 67-68; see also 145 F. 3d, at 1101. The Court of Appeals obliged petitioners’ request with respect to the facial challenge, a request that respondents apparently viewed as an “outrageous act of chutzpah.” Id., at 1105. That claim, the court rea*331soned, was “ripe the instant the 1990 ECO was enacted,” id., at 1102, and appropriate for Pullman abstention principally because petitioners’ “entire case” hinged on the propriety of the planning commission’s zoning designation — the precise subject of the pending state mandamus action, 145 E 3d, at 1105.5 The court, however, affirmed the District Court’s determination that petitioners’ as-applied takings claim — the claim that the application of the HCO to the San Remo Hotel violated the Takings Clause — was unripe. Because petitioners had failed to pursue an inverse condemnation action in state court, they had not yet been denied just compensation as contemplated by Williamson County. 145 F. 3d, at 1105.

At the conclusion of the Ninth Circuit’s opinion, the court appended a footnote stating that petitioners would be free to raise their federal takings claims in the California courts. If, however, they wanted to “retain [their] right to return to federal court for adjudication of [their] federal claim, [they] must make an appropriate reservation in state court.” Id., at 1106, n. 7.6 That is precisely what petitioners attempted to do when they reactivated the dormant California case. Yet petitioners advanced more than just the claims on which the federal court had abstained, and phrased their state claims in language that sounded in the rules and standards established and refined by this Court’s takings jurisprudence. Petitioners claimed, for instance, that “imposition of the fee ‘fails to substantially advance a legitimate government interest’ and that ‘[t]he amount of the fee imposed is not roughly proportional to the impact’ of the proposed tourist use of the San Remo Hotel.” 27 Cal. 4th, at 656, 41 P. 3d, at 95 (quoting petitioners’ second amended *332state complaint).7 The state trial court dismissed petitioners’ amended complaint, but the intermediate appellate court reversed. The court held that petitioners’ claim that the payment of the “in lieu” fee effected a taking should have been evaluated under heightened scrutiny. Under more exacting scrutiny, the fee failed this Court’s “essential nexus” and “rough proportionality” tests because, inter alia, it was based on the original flawed designation that the San Remo Hotel was an entirely “residential use” facility. See id., at 657-658, 41 P. 3d, at 96-97 (summarizing appellate court opinion (internal quotation marks omitted)).

The California Supreme Court reversed over the partial dissent of three justices.8 The court initially noted that petitioners had reserved their federal causes of action and had sought no relief for any violation of the Federal Constitution. Id., at 649, n. 1, 41 P. 3d, at 91, n. I.9 In the portion of its opinion discussing the Takings Clause of the California Constitution, however, the court noted that “we appear to have construed the clauses congruently.” Id., at 664, 41 P. 3d, at 100-101 (citing cases). Accordingly, despite the fact that petitioners sought relief only under California law, the state court decided to “analyze their takings claim under the *333relevant decisions of both this court and the United States Supreme Court.” Ibid., 41 P. 3d, at 101.10

The principal constitutional issue debated by the parties was whether a heightened level of scrutiny applied to the claim that the housing replacement fee “ ‘does not substantially advance legitimate state interests.’” Ibid, (quoting Lucas v. South Carolina Coastal Council, 505 U. S. 1003, 1016 (1992)). In resolving that debate the court focused on our opinions in Nollan v. California Coastal Comm’n, 483 U. S. 825 (1987), and Dolan v. City of Tigard, 512 U. S. 374 (1994). Rejecting petitioners’ argument that heightened scrutiny should apply, the court emphasized the distinction between discretionary exactions imposed by executive officials on an ad hoc basis and “‘generally applicable zoning regulations’” involving “‘legislative determinations.’” 27 Cal. 4th, at 666-668, 41 P. 3d, at 102-104 (quoting, e.g., Dolan, 512 U. S., at 385, 391, n. 8). The court situated the HCO within the latter category, reasoning that the ordinance relied upon fixed fees computed under a formula that is generally applicable to broad classes of property owners.11 The court concluded that the less demanding “reasonable relationship” test should apply to the HCO’s monetary assessments, 27 Cal. 4th, at 671, 41 P. 3d, at 105.

*334Applying the “reasonable relationship” test, the court upheld the HCO on its face and as applied to petitioners. As to the facial challenge, the court concluded that the HCO’s mandated conversion fees “bear a reasonable relationship to loss of housing ... in the generality or great majority of cases . . . .” Id., at 673, 41 P. 3d, at 107. With respect to petitioners’ as-applied challenge, the court concluded that the conversion fee was reasonably based on the number of units designated for conversion, which itself was based on petitioners’ own estimate that had been provided to the City in 1981 and had remained unchallenged for years. Id., at 678, and n. 17, 41 P. 3d, at 110-111, and n. 17. The court therefore reversed the appellate court and reinstated the trial court’s order dismissing petitioners’ complaint.

Petitioners did not seek a writ of certiorari from the California Supreme Court’s decision in this Court. Instead, they returned to Federal District Court by filing an amended complaint based on the complaint that they had filed prior to invoking Pullman abstention.12 The District Court held that petitioners’ facial attack on the HCO was not only barred by the statute of limitations, but also by the general rule of issue preclusion. See App. to Pet. for Cert. 85a-*33586a.13 The District Court reasoned that 28 U. S. C. § 1738 requires federal courts to give preclusive effect to any state-court judgment that would have preclusive effect under the laws of the State in which the judgment was rendered. Because California courts had interpreted the relevant substantive state takings law coextensively with federal law, petitioners’ federal claims constituted the same claims that had already been resolved in state court.

The Court of Appeals affirmed. The court rejected petitioners’ contention that general preclusion principles should be cast aside whenever plaintiffs “must litigate in state court pursuant to Pullman and/or Williamson County.” 364 F. 3d 1088, 1096 (CA9 2004). Relying on unambiguous Circuit precedent and the absence of any clearly contradictory decisions from this Court, the Court of Appeals found itself bound to apply general issue preclusion doctrine. Given that general issue preclusion principles governed, the only remaining question was whether the District Court properly applied that doctrine; the court concluded that it did. The court expressly rejected petitioners’ contention “that California takings law is not coextensive with federal takings law,” ibid., and held that the state court’s application of the “reasonable relationship” test was an “ ‘equivalent determination’ of such claims under the federal takings clause,” id., at 1098.14 We granted certiorari and now affirm.

*336II

Article IV, § 1, of the United States Constitution demands that “Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.” In 1790, Congress responded to the Constitution’s invitation by enacting the first version of the full faith and credit statute. See Act of May 26, 1790, ch. 11, 1 Stat. 122.15 The modern version of the statute, 28 U. S. C. § 1788, provides that “judicial proceedings ... shall have the same fifil faith and credit in every court within the United States and its Territories and Possessions as they have by law or usage in the courts of such State . . . .” This statute has long been understood to encompass the doctrines of res judicata, or “claim preclusion,” and collateral estoppel, or “issue preclusion.” See Allen v. McCurry, 449 U. S. 90, 94-96 (1980).16

The general rule implemented by the full faith and credit statute — that parties should not be permitted to relitigate issues that have been resolved by courts of competent jurisdiction — predates the Republic.17 It “has found its way into *337every system of jurisprudence, not only from its obvious fitness and propriety, but because without it, an end could never be put to litigation.” Hopkins v. Lee, 6 Wheat. 109, 114 (1821). This Court has explained that the rule

“is demanded by the very object for which civil courts have been established, which is to secure the peace and repose of society by the settlement of matters capable of judicial determination. Its enforcement is essential to the maintenance of social order; for, the aid of judicial tribunals would not be invoked for the vindication of rights of person and property, if, as between parties and their privies, conclusiveness did not attend the judgments of such tribunals in respect of all matters properly put in issue and actually determined by them.” Southern Pacific R. Co. v. United States, 168 U. S. 1, 49 (1897).

As this case is presented to us, under our limited grant of certiorari, we have only one narrow question to decide: whether we should create an exception to the full faith and credit statute, and the ancient rule on which it is based, in order to provide a federal forum for litigants who seek to advance federal takings claims that are not ripe until the entry of a final state judgment denying just compensation. See Williamson County, 473 U. S. 172.18

*338The essence of petitioners’ argument is as follows: because no claim that a state agency has violated the federal Takings Clause can be heard in federal court until the property owner has “been denied just compensation” through an available state compensation procedure, id., at 195, “federal courts [should be] required to disregard the decision of the state court” in order to ensure that federal takings claims can be “considered on the merits in ... federal court,” Brief for Petitioners 8, 14. Therefore, the argument goes, whenever plaintiffs reserve their claims under England v. Louisiana Bd. of Medical Examiners, 375 U. S. 411 (1964), federal courts should review the reserved federal claims de novo, regardless of what issues the state court may have decided or how it may have decided them.

We reject petitioners’ contention. Although petitioners were certainly entitled to reserve some of their federal claims, as we shall explain, England does not support their erroneous expectation that their reservation would fully negate the preclusive effect of the state-court judgment with respect to any and all federal issues that might arise in the future federal litigation. Federal courts, moreover, are not free to disregard 28 U. S. C. § 1738 simply to guarantee that all takings plaintiffs can have their day in federal court. We turn first to England.

Ill

England involved a group of plaintiffs who had graduated from chiropractic school, but sought to practice in Louisiana without complying with the educational requirements of the State’s Medical Practice Act. 375 U. S., at 412. They filed suit in federal court challenging the constitutionality of the Act. The District Court invoked Pullman abstention and stayed the proceedings to enable the Louisiana courts to *339decide a preliminary and essential question of state law— namely, whether the state statute applied at all to chiropractors. 375 U. S., at 413.19 The state court, however, reached beyond the state-law question and held not only that the statute applied to the plaintiffs but also that its application was consistent with the Fourteenth Amendment to the Federal Constitution. The Federal District Court then dismissed the federal action without addressing the merits of the federal claim.

On appeal, we held that when a federal court abstains from deciding a federal constitutional issue to enable the state courts to address an antecedent state-law issue, the plaintiff may reserve his right to return to federal court for the disposition of his federal claims. Id., at 419. In that case, the antecedent state issue requiring abstention was distinct from the reserved federal issue. See id., at 418-419. Our discussion of the “typical case” in which reservations of federal issues are appropriate makes clear that our holding was limited to cases that are fundamentally distinct from petitioners’. “Typical” England cases generally involve federal constitutional challenges to a state statute that can be avoided if a state court construes the statute in a particular manner.20 In such cases, the purpose of abstention is not to afford state courts an opportunity to adjudicate an issue that is functionally identical to the federal question. To the contrary, the purpose of Pullman abstention in such cases is to avoid resolving the federal question by encouraging a state-law determination that may moot the federal controversy. *340See 375 U. S., at 416-417, and n. 7.21 Additionally, our opinion made it perfectly clear that the effective reservation of a federal claim was dependent on the condition that plaintiffs take no action to broaden the scope of the state court’s review beyond decision of the antecedent state-law issue.22

Our holding in England does not support petitioners’ attempt to relitigate issues resolved by the California courts. With respect to petitioners’ facial takings claims, the Court of Appeals invoked Pullman abstention after determining that a ripe federal question existed — namely, “the facial takings challenge to the 1990 HCO.” 145 F. 3d, at 1105.23 It did so because “ ‘land use planning is a sensitive area of social policy’” and because petitioners’ pending state mandamus action had the potential of mooting their facial challenge to the HCO by overturning the City’s original classification of the San Remo Hotel as a “residential” property. Ibid. Thus, petitioners were entitled to insulate from preclusive effect one federal issue — their facial constitutional challenge *341to the HCO — while they returned to state court to resolve their petition for writ of mandate.

Petitioners, however, chose to advance broader issues than the limited issues contained within their state petition for writ of administrative mandamus on which the Ninth Circuit relied when it invoked Pullman abstention. In their state action, petitioners advanced not only their request for a writ of administrative mandate, 27 Cal. 4th, at 653, 41 P. 3d, at 93, but also their various claims that the HCO was unconstitutional on its face and as applied for (1) its failure to substantially advance a legitimate interest, (2) its lack of a nexus between the required fees and the ultimate objectives sought to be achieved via the ordinance, and (3) its imposition of an undue economic burden on individual property owners. Id., at 672-676, 41 P. 3d, at 106-109. By broadening their state action beyond the mandamus petition to include their “substantially advances” claims, petitioners effectively asked the state court to resolve the same federal issues they asked it to reserve. England does not support the exercise of any such right.

Petitioners’ as-applied takings claims fare no better. As an initial matter, the Court of Appeals did not abstain with respect to those claims. Instead, the court found that they were unripe under Williamson County. The court therefore affirmed the District Court’s dismissal of those claims. 145 F. 3d, at 1106. Unlike their “substantially advances” claims, petitioners’ as-applied claims were never properly before the District Court, and there was no reason to expect that they could be relitigated in full if advanced in the state proceedings. See Allen, 449 U. S., at 101, n. 17. In short, our opinion in England does not support petitioners’ attempt to circumvent § 1738.

IV

Petitioners’ ultimate submission, however, does not rely on England alone. Rather, they argue that federal courts simply should not apply ordinary preclusion rules to state-*342court judgments when a case is forced into state court by the ripeness rule of Williamson County. For support, petitioners rely on the Court of Appeals for the Second Circuit’s decision in Santini, 342 F. 3d, at 130.

In Santini, the Second Circuit held that parties “who litigate state-law takings claims in state court involuntarily” pursuant to Williamson County cannot be precluded from having those very claims resolved “by a federal court.” 342 F. 3d, at 130. The court did not rest its decision on any provision of the federal full faith and credit statute or our cases construing that law. Instead, the court reasoned that “[i]t would be both ironic and unfair if the very procedure that the Supreme Court required [plaintiffs] to follow before bringing a Fifth Amendment takings claim . . . also precluded [them] from ever bringing a Fifth Amendment takings claim.” Ibid. We find this reasoning unpersuasive for several reasons.

First, both petitioners and Santini ultimately depend on an assumption that plaintiffs have a right to vindicate their federal claims in a federal forum. We have repeatedly held, to the contrary, that issues actually decided in valid state-court judgments may well deprive plaintiffs of the “right” to have their federal claims relitigated in federal court. See, e. g., Migra v. Warren City School Dist. Bd. of Ed., 465 U. S. 75, 84 (1984); Allen, 449 U. S., at 103-104. This is so even when the plaintiff would have preferred not to litigate in state court, but was required to do so by statute or prudential rules. See id., at 104. The relevant question in such cases is not whether the plaintiff has been afforded access to a federal forum; rather, the question is whether the state court actually decided an issue of fact or law that was necessary to its judgment.

In Allen, the plaintiff, Willie McCurry, invoked the Fourth and Fourteenth Amendments in an unsuccessful attempt to suppress evidence in a state criminal trial. After he was convicted, he sought to remedy his alleged constitutional vio*343lation by bringing a suit for damages under 42 U. S. C. § 1988 against the officers who had entered his home. Relying on “ ‘the special role of federal courts in protecting civil rights’ ” and the fact that § 1983 provided the “only route to a federal forum,” the Court of Appeals held that McCurry was entitled to a federal trial unencumbered by collateral estoppel. 449 U. S., at 93. We rejected that argument emphatically.

“The actual basis of the Court of Appeals’ holding appears to be a generally framed principle that every person asserting a federal right is entitled to one unencumbered opportunity to litigate that right in a federal district court, regardless of the legal posture in which the federal claim arises. But the authority for this principle is difficult to discern. It cannot lie in the Constitution, which makes no such guarantee, but leaves the scope of the jurisdiction of the federal district courts to the wisdom of Congress. And no such authority is to be found in §1983 itself .... There is, in short, no reason to believe that Congress intended to provide a person claiming a federal right an unrestricted opportunity to relitigate an issue already decided in state court simply because the issue arose in a state proceeding in which he would rather not have been engaged at all.” Id., at 103-104 (footnote omitted).24

As in Allen, we are presently concerned only with issues actually decided by the state court that are dispositive of federal claims raised under § 1983. And, also as in Allen, it *344is clear that petitioners would have preferred not to have been forced to have their federal claims resolved by issues decided in state court. Unfortunately for petitioners, it is entirely unclear why their preference for a federal forum should matter for constitutional or statutory purposes.

The only distinction between this case and Allen that is possibly relevant is the fact that petitioners here originally invoked the jurisdiction of a Federal District Court, which abstained on Pullman grounds while petitioners returned to state court. But petitioners’ as-applied takings claims were never properly before the District Court because they were unripe. And, as we have already explained, the Court of Appeals invoked Pullman abstention only with respect to petitioners’ “substantially advances” takings challenge, which petitioners then gratuitously presented to the state court. At a bare minimum, with respect to the facial takings claim, petitioners were “in an offensive posture in [their] state-court proceeding, and could have proceeded first in federal court had [they] wanted to litigate [their ‘substantially advances’] federal claim in a federal forum.” Migra, 465 U. S., at 85, n. 7. Thus, the only distinction between this case and Allen is a distinction of no relevant significance.

The second reason we find petitioners’ argument unpersuasive is that it assumes that courts may simply create exceptions to 28 U. S. C. § 1738 wherever courts deem them appropriate. Even conceding, arguendo, the laudable policy goal of making federal forums available to deserving litigants, we have expressly rejected petitioners’ view. “Such a fundamental departure from traditional rules of preclusion, enacted into federal law, can be justified only if plainly stated by Congress.” Kremer v. Chemical Constr. Corp., 456 U. S. 461, 485 (1982). Our cases have therefore made plain that “an exception to § 1738 will not be recognized unless a later statute contains an express or implied partial repeal.” Id., *345at 468 (citing Allen, 449 U. S., at 99). Even when the plaintiff’s resort to state court is involuntary and the federal interest in denying finality is robust, we have held that Congress “must ‘clearly manifest’ its intent to depart from § 1738.” 456 U. S., at 477.

The same concerns animate our decision here. Congress has not expressed any intent to exempt from the full faith and credit statute federal takings claims. Consequently, we apply our normal assumption that the weighty interests in finality and comity trump the interest in

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