Federal Courts,  Federal Procedure,  Ninth Circuit

Procedural Maneuvering at its Finest and the Double Duty Judge

The Ninth Circuit’s decision in Vacation Village, Inc. v. Clark County, Nevada, case no. 05-16173 (July 23, 2007) delivers a “two-fer” of “bloggable” items.

First, the procedural maneuvering.  Landowners sued Clark County for inverse condemnation in Nevada state court.  While the action was pending, the Landowners filed a voluntary Chapter 11 bankruptcy petition, listing the inverse condemnation claim as a contingent and unliquidated claim of the estate. When the Landowners advised the state court judge that they were not ready to proceed with trial, the court advised them that there were no available trial dates between then and the expiration of the five-year limitations period under state law for bringing a claim to trial (which was about three months off) and that the case would be automatically dismissed when the limitations period ran.

What to do?

Why, remove the case to bankruptcy court!  Which is exactly what the Landowners did.  The case was tried to the bankruptcy court three and one-half years later, well after the expiration of the state limitations period.  The district court then withdrew the reference to the bankruptcy court and entered judgment of more than $10 million for the Landowners.  Slick.

The County says too slick.  It contends on appeal that, under the Rooker-Feldman doctrine, the district court lacked subject matter jurisdiction because any judgment undercut the state court’s ruling regarding dismissal, which was inextricably intertwined with the claim the Landowners intended to pursue in the adversary proceeding.  The Ninth disagrees and holds that the Rooker-Feldman doctrine is inapplicable.  The district court did not have to find that the state court was wrong in order to find for the Landowners because the state court never actually dismissed the case.  It only stated that the case would be dismissed when the limitations period ran, by which time the case had been removed from the state court.

Where did the double duty judge come in?  Believe it or not, the bankruptcy judge and the district court judge were the same person.  After trial in the bankruptcy court, the bankruptcy judge, Robert Jones, was confirmed as a district court judge of the same district.  A year after his confirmation as district judge, he issued Findings of Fact and Conclusions of Law in the bankruptcy action, which he signed as a “United States Bankruptcy Judge.”  He then withdrew the reference sua sponte for reasons of judicial efficiency and entered judgment in his capacity as a district judge.  And the Ninth says, “No problem.”