Hornish v. King County

          Argued and Submitted June 14, 2018 Seattle, Washington

          Appeal from the United States District Court for the Western District of Washington Marsha J. Pechman, Senior District Judge, Presiding D.C. No. 2:15-cv-00284-MJP

          Steven Wald (argued), Stewart Wald & McCulley LLC, St. Louis, Missouri; Thomas S. Stewart and Elizabeth Gepford McCulley, Stewart Wald & McCulley LLC, Kansas City, Missouri; for Plaintiffs-Appellants.

          David J. Hackett (argued), King County Prosecuting Attorney's Office, Seattle, Washington; Mallory L.B. Satre and Emily J. Harris, Corr Cronin Michelson Baumgardner Fogg & Moore LLP, Seattle, Washington; for Defendant-Appellee.

          Patrick J. Schneider, Philip E. Paine, and Beth A. Clark, Foster Pepper PLLC, Seattle, Washington, for Amicus Curise BNSF Railway Company.

          James E. Breitenbucher, Riddell Williams P.S., Seattle, Washington, for Amicus Curiae Puget Sound Energy Inc.

          Mark C. Zebrowski, Morrison & Foerster LLP, San Diego, California; David P. Thoreson, Morrison & Foerster LLP, San Francisco, California; Andrea Foster, General Counsel, Rails to Trails Conservancy Inc., Washington, D.C.; for Amicus Curiae Rails to Trails Conservancy.

          Richard M. Stephens, Stephens & Klinge LLP, Bellevue, Washington, for Amicus Curiae Sammamish Home Owners.

          Before: MILAN D. SMITH, JR. and PAUL J. WATFORD, Circuit Judges, and DOUGLAS L. RAYES, ^[*] District Judge.

         SUMMARY^[**]

         Property Law

         The panel affirmed the district court's summary judgment in favor of King County, Washington, quieting title to a rail corridor that the Surface Transportation Board had "railbanked" pursuant to the Trails Act.

         The panel held that the action arose under federal law, and the panel had jurisdiction pursuant to 28 U.S.C. § 1331, because the plaintiffs' state law claim necessarily raised a federal issue that was actually disputed, substantial, and capable of resolution in federal court without disrupting any congressionally approved federal-state balance.

         The panel held that the plaintiffs, landowners whose properties abutted the rail corridor's boundaries, lacked both Article III and statutory standing to bring their claim for a declaratory judgment pursuant to Wash. Rev. Code § 7.24.020 because they lacked any property interests in the corridor. The panel concluded that the County owned one portion of the corridor in fee. In addition, the Trails Act preserved the railroad easement and created a new easement for trail use, and both easements were conveyed to King County. The panel concluded that Washington's "centerline presumption" did not apply.

         The panel held that the district court properly granted summary judgment to and quieted title in King County because the county possessed the railroad easement and the recreational easement. The panel concluded that the easement was 100 feet wide, with certain exceptions. The panel denied plaintiffs' motion to supplement the record with new evidence regarding the width of the corridor.

          OPINION

          M. SMITH, CIRCUIT JUDGE

         After the Surface Transportation Board (the STB) "railbanked" the portions of the Eastside Rail Corridor (the Corridor) adjacent to or bisecting Plaintiffs-Appellants' residential lots, pursuant to the National Trails System Act Amendments of 1983 (the Trails Act), 16 U.S.C. § 1247 et seq., Plaintiffs-Appellants filed suit in federal court seeking a declaration of their property rights in the Corridor. Plaintiffs-Appellants disputed the nature and scope of Defendant-Appellee King County's railroad easement, and the Corridor's width. In response, King County filed counterclaims asking the court to (1) declare that the Trails Act preserved the full scope of the original railroad easement, and that the Corridor's width is 100 feet, and (2) quiet title to the Corridor in King County. Both sides moved for summary judgment. The district court denied summary judgment to Plaintiffs-Appellants, dismissed their claims with prejudice, and granted summary judgment to, and quieted title to the Corridor in, King County. Plaintiffs-Appellants timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.

         FACTUAL AND PROCEDURAL BACKGROUND

         I. The Origins of the Corridor & Plaintiffs-Appellants' Property Interests

         In 1887, the Seattle, Lake Shore & Eastern Railway Company (SLS&E), which later became part of BNSF Railway Company (BNSF, and together with SLS&E, the Railroad), began to construct the Corridor along the eastern shoreline of Lake Sammamish. The SLS&E obtained the land that it needed for the Corridor through various means, which gave the SLS&E a collection of railroad easements and fee simple properties. See Beres v. United States, 104 Fed.Cl. 408, 412 (2012) (hereinafter Beres III).

         All Plaintiffs-Appellants are landowners whose properties abut the Corridor's boundaries (the precise location of which the parties dispute). Plaintiff-Appellant the Thomas E. Hornish and Suzanne J. Hornish Joint Living Trust (Plaintiff-Appellant Hornish) owns property adjacent to a portion of the Corridor that SLS&E obtained through a May 9, 1887 quitclaim deed executed by homesteader William Hilchkanum and his wife. Hilchkanum later sold the remainder of his property, and some part of that remainder interest is now owned by Plaintiff-Appellant Hornish.

         Plaintiffs-Appellants Tracy and Barbara Neighbors, Arul Menezes and Lucretia Vanderwende, Lake Sammamish 4257 LLC, Herbert and Elynne Moore, and Eugene and Elizabeth Morel (the Non-Hornish Plaintiffs-Appellants) own properties that are adjacent to other portions of the Corridor. The SLS&E completed construction of the Corridor's tracks in March 1888, and the Northern Pacific Railroad conveyed its property to Samuel Middleton the following year. The Non-Hornish Plaintiffs-Appellants' chains of title all originate with Middleton.

         II. The Railbanking Process

         In 1997, BNSF conveyed all of its ownership interests in the Corridor to The Land Conservancy of Seattle and King County (TLC) through a recorded quitclaim deed. On June 11, 1997, TLC initiated the "railbanking" process by petitioning the STB for an exemption to allow TLC's abandonment of the Corridor for active rail service. See Land Conservancy of Seattle & King Cty.-Abandonment Exemption-in King Cty., WA, No. AB-508X, 1997 WL 359085, at *1 (S.T.B. June 23, 1997). As part of its petition, TLC provided King County's Statement of Willingness to Assume Financial Responsibility as the interim trail sponsor under the Trails Act. Burlington N. & Santa Fe Ry. Co.-Abandonment Exemption-in King Cty., Wa, No. AB-6 (Sub-No. 380X), 1998 WL 638432, at *1 (S.T.B. Sept. 16, 1998). The STB granted the exemption on May 13, 1998. Then, in September of 1998, the STB issued a Notice of Interim Trail Use (NITU) to facilitate railbanking and interim trail use.

         Subsequently, TLC and King County entered into an agreement formally designating King County as the trail sponsor. The agreement also conveyed to King County all of TLC's ownership interests in the Corridor through a recorded quitclaim deed, which described the precise property that was being conveyed. King County then constructed a soft-surface hiking and biking trail in the Corridor. More recently, King County has prepared to construct a paved trail.

         III. Prior Proceedings

         On February 25, 2015, several of Plaintiffs-Appellants, among others, filed suit to obtain a declaration of their rights with regard to the Corridor and to quiet their title in the Corridor. King County moved to dismiss the complaint for lack of standing, arguing that the Plaintiffs-Appellants had failed to demonstrate that they had any ownership interest in the Corridor. While this motion was pending, the Plaintiffs-Appellants sought leave to file a proposed amended complaint.

         On June 5, 2015, the district court granted King County's motion to dismiss, and denied leave to file the proposed amended complaint. The court determined that amendment would be futile because the proposed amended complaint did not remedy the standing defects of the original complaint. However, the court gave the Plaintiffs-Appellants leave to file a different amended complaint that would address the standing problem. Plaintiffs-Appellants did so, filing the Amended Complaint (AC). King County then answered and brought quiet title and declaratory judgment counterclaims.

         Both sides then filed motions for summary judgment. On April 20, 2016, the district court denied Plaintiffs-Appellants' summary judgment motion, dismissed Plaintiffs-Appellants' claims with prejudice, and granted summary judgment to King County with regard to its declaratory judgment and quiet title counterclaims. Plaintiffs-Appellants timely appealed.

         STANDARD OF REVIEW

         We review the district court's grant of summary judgment de novo. King County v. Rasmussen, 299 F.3d 1077, 1083 (9th Cir. 2002). We "must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine [disputes] of material fact and whether the district court correctly applied the relevant substantive law. All reasonable inferences from the evidence must be drawn in favor of the nonmoving party." Id. (citation omitted).

         JURISDICTION

         We have jurisdiction pursuant to 28 U.S.C. § 1331. 28 U.S.C. § 1331 authorizes federal jurisdiction over all civil actions "arising under" federal law. The Supreme Court "has found that statutory term satisfied in either of two circumstances. Most directly, and most often, federal jurisdiction attaches when federal law creates the cause of action asserted." Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning, 136 S.Ct. 1562, 1569 (2016). The parties agree that such is not the case here. However, "even when 'a claim finds its origins' in state law, there is 'a special and small category of cases in which arising under jurisdiction still lies.'" Id. (quoting Gunn v. Minton, 568 U.S. 251, 258 (2013)). This case falls within the latter category.

         As the Supreme Court has explained, "a federal court has jurisdiction of a state-law claim if it 'necessarily raises a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance' of federal and state power." Manning, 136 S.Ct. at 1570 (alteration omitted) (quoting Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 314 (2005)). "That is, federal jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress." Gunn, 568 U.S. at 258. Jurisdiction is proper "[w]here all four of these requirements are met" because in such a case, "there is a 'serious federal interest in claiming the advantages thought to be inherent in a federal forum,' which can be vindicated without disrupting Congress's intended division of labor between state and federal courts." Id. (quoting Grable, 545 U.S. at 313). The Supreme Court "ha[s] often held that a case 'arose under' federal law"- meeting these criteria-"where the vindication of a right under state law necessarily turned on some construction of federal law." Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Tr. for S. Cal., 463 U.S. 1, 9 (1983) (citing Smith v. Kansas City Title & Tr. Co., 255 U.S. 180 (1921); Hopkins v. Walker, 244 U.S. 486 (1917)); see also 14B Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 3722 (4th ed. 2016) ("An important corollary to the well-pleaded complaint rule is that the essential federal element of the plaintiff's complaint must be supported under one construction of federal law and defeated under another.").

         Plaintiffs-Appellants argue that the federal courts lack jurisdiction because a Trails Act issue arises only as a defense. They liken this case to Shulthis v. McDougal, 225 U.S. 561 (1912), wherein the Court held that it had no jurisdiction over a quiet title action simply because one party had "derived his title under an act of Congress." Id. at 570. Plaintiffs-Appellants also posit that this case is distinguishable from Rasmussen because there, King County was the plaintiff alleging that its rights derived from federal law, 299 F.3d at 1082, while here, King County is a defendant and its assertion of rights ...