Lacano Invs., LLC v. Balash

Lacano Invs., LLC v. Balash, 765 F.3d 1068 (9th Cir. 2014) (holding that the Eleventh Amendment barred patent owners’ action for declaratory judgment against Alaska state officials for the ownership of streambeds because it was the functional equivalent of an action to quiet title).

The federal government issued land patents to Lacano Investments, LLC, Nowell Avenue Development, and Ava L. Eads (collectively, “Patent Owners”) before Alaska joined the Union in 1959. Patent Owners alleged that the land patents gave them ownership of particular streambeds in Alaska. However, the Alaska Department of Natural Resources (“the Department”) contended that the streambeds were “state-owned.” The Department based this contention on its determinations in 2010 and 2011 that the waterways above the relevant streambeds were first navigable in 1959 and continued to be navigable. Further, the Submerged Lands Act of 1953 grants the state title and ownership of lands beneath navigable waters.

After the Department notified Patent Owners of its determination, Patent Owners argued that their title was unaffected by the navigability determination. Patent Owners relied on a different section of the Submerged Lands Act, under which streambeds granted by federal patents prior to statehood do not transfer to the state upon joining the Union. Patent Owners subsequently sued the Department, seeking a declaratory judgment that the navigability determinations violated the Submerged Lands Act and an injunction barring the Department from claiming title to the lands beneath the waterways. The United States District Court for the District of Alaska (“district court”) dismissed the complaint for lack of subject matter jurisdiction. Patent Owners appealed to the United States Court of Appeals for the Ninth Circuit (“court”).

The court first examined whether the district court’s dismissal for lack of subject matter jurisdiction was appropriate. On a motion to dismiss for lack of subject matter jurisdiction, courts must accept all factual allegations in the complaint as true. Patent Owners alleged in their complaint that the streambeds were not submerged or state-owned and argued that the court was required to accept this allegation as true. The court held this was not a factual allegation but a legal conclusion, and thus did not accept it as true. The court then looked beyond the complaint to extrinsic evidence of the Department’s claim to the streambeds. Specifically, it examined letters attached to the complaint in which the Department demonstrated Alaska’s claim of ownership to the lands in dispute. Accordingly, the court held that the district court’s dismissal for lack of subject matter jurisdiction was appropriate.

The court then considered whether the Eleventh Amendment’s provision of sovereign immunity barred Patent Owners’ action, and found in the affirmative. The Eleventh Amendment prohibits certain suits brought against a state by an individual without the state’s consent. However, the Ex parte Young doctrine allows actions where an individual seeks prospective or injunctive relief against state officials who would have to implement a state law that is inconsistent with federal law.

The court held that Patent Owners’ action did not fall within the Ex parte Young exception and was therefore barred by the Eleventh Amendment. Binding on this issue was Idaho v. Coeur d’Alene Tribe of Idaho, in which the Coeur d’Alene Tribe (“Tribe”) sued the State of Idaho for ownership and use of land under navigable riverbeds within the boundaries of the Tribe’s reservation. The Supreme Court (“Court”) in Coeur d’Alene held that the Eleventh Amendment barred the suit because the Tribe was seeking close to the functional equivalent of an action to quiet title, and because the Tribe’s identity as a sovereign nation further implicated Idaho’s sovereign interests. The Court held that federal courts lack jurisdiction over all actions where a plaintiff seeks relief that is close to the functional equivalent of a quiet title and dismissed the Tribe’s claim.

The court in this case found that, like the Tribe in Coeur d’Alene, Patent Owners’ claim was the functional equivalent of a quiet title because they wanted full enjoyment and use of the streambeds. Finding that this case presented the same issues as Coeur d’Alene, the court affirmed the district court’s judgment, but did not affirm its reasoning. Specifically, it determined that the district court’s attempt to assess the State of Alaska’s interest in the streambeds was not necessary, and that Patent Owners’ claim should be dismissed simply because it was “close to the functional equivalent” of a quiet title action.

The court turned next to Patent Owners’ three counterarguments. Patent Owners first alleged that Coeur d’Alene was no longer good law, and that the court should have applied the Supreme Court’s recent “straightforward inquiry” analysis in Verizon Md., Inc. v. Pub. Serv. Comm’n of Md. to determine whether the Ex parte Young doctrine exempted their action from the Eleventh Amendment prohibition. In Verizon, the Court directed lower courts to conduct a direct assessment of whether a complaint alleges an ongoing violation of federal law and seeks relief properly characterized as prospective. While the court acknowledged the tension between the “straightforward inquiry” and the holding in Coeur d’Alene, it held that Coeur d’Alene remained binding. In so concluding, the court noted that Verizon did not overturn Coeur d’Alene and that a more recent Supreme Court decision affirmed Coeur d’Alene’s core holding on the issue.

Patent Owners next alleged that their case was the exact opposite factual situation of Coeur d’Alene. Patent Owners argued that the Tribe in Coeur d’Alene sought to divest Idaho’s longstanding title, whereas Alaska sought to divest the Patent Owners’ alleged longstanding title in this case. The court rejected Patent Owners’ argument, and held that the Coeur d’Alene decision relied on the principle that submerged lands beneath navigable waters are tied in a unique way to sovereignty, regardless of the length of the state’s claim to title.

Lastly, Patent Owners alleged that their case differed from Coeur d’Alene because the Tribe had independent sovereign authority such that its ownership of the land would effectively diminish Idaho’s regulatory authority. Patent Owners argued that, because they lacked independent sovereign authority, their ownership of the streambeds in question would not threaten Alaska’s regulatory power. However, the court held that the identity of the Tribe was not dispositive in Coeur d’Alene, as the Supreme Court in that case had already made its decision when it raised the further impacts to state sovereignty. In so concluding, the court noted that, like the land in Coeur d’Alene, the streambeds in this case had a unique legal status and that state ownership of them was necessary for sovereignty.

Accordingly, the court affirmed the district court’s dismissal of Patent Owners’ claim.

 

The title image features the streambed of Gold Creek in Alaska. This file is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.