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Town of Nags Head v. Toloczko, No. 12-1537

Decided: August 27, 2013

The Fourth Circuit found that, although the claims asserted involve a sensitive area of North Carolina public policy, resolving them would not be sufficiently disruptive of that policy to warrant abstention and therefore reversed the district court’s decision to abstain and remanded for further proceedings.

This case arose out of a dispute between the Town of Nags Head (the “Town”), a coastal municipality bordered by the Atlantic Ocean, and Nags Head beachfront property owners, Matthew and Lynn Toloczko (the “Toloczko’s”). The Town’s beaches enjoy legal protection under the “public trust doctrine,” which entitles the state of North Carolina to appropriate title to tidal lands in trust for the public. Although the vagaries of beach topography make it difficult to delineate a fixed boundary, the Town and North Carolina both define the relevant areas as “seaward of the mean high water mark.” Historically, prevailing environmental conditions have pushed the high tide line westward resulting in the gradual migration of private beachfront property into public trust lands. Consequently, beachfront owners, like the Toloczko’s, have periodically replaced displaced sand and raised the height of their cottages to endure tidal surges. However, when a tropical storm inflicted serious damage on the Toloczko’s cottage in November 2009, the Town condemned the structure and found it was beyond rehabilitation because it was located within public trust lands and therefore a nuisance under the Town’s Nuisance Ordinance. The Town refused to allow the Toloczko’s to abate any nuisance by acquiring a permit to make repairs and began assessing daily fines to compel the Toloczko’s to demolish the structure. After the Toloczko’s refused to demolish their cottage, the Town sued them in North Carolina state court, seeking to collect the assessed fines and demolish the cottage. Based on diversity, the Toloczko’s removed the case to federal court and filed twenty-one counterclaims alleging violations of state and federal law. The district court, however, finding that the dispute involved “profound, unresolved state-law issues that transcend the case at hand,” invoked the Burford doctrine of abstention and declined to exercise federal jurisdiction. This appeal followed.

On appeal, the Fourth Circuit first considered whether the district court correctly abstained from resolving the claims for declaratory relief asserted by the Toloczko’s, the substance of which concerned the Town’s authority to ratify and enforce an ordinance regulating structures on public trust lands. After examining intermediate developments in North Carolina precedent, the court found that, because North Carolina law already bars the Town from enforcing its Nuisance Ordinance under the facts presented, continued abstention was not appropriate. Next, the court held that the district court improperly abstained from deciding the Toloczko’s claim under 42 U.S.C. § 1983 alleging due process and equal protection violations. Lastly, the court reviewed the district court’s dismissal of the Toloczko’s regulatory takings claim and its decision to stay the inverse condemnation claim because the Toloczko’s failed to obtain an inverse adjudication—the relevant state law remedy—in state court before removal to federal court in violation of the Williamson County ripeness doctrine. Recognizing that Williamson County is a prudential rather than a jurisdiction rule, the court exercised its discretion to suspend the state-litigation requirement in the interests of fairness and judicial economy and therefore remanded the federal and state law takings claim to the district court.

Full Opinion

– W. Ryan Nichols