In Los Altos El Granada v. City of Capitola, published today, the 9th Circuit concluded that a mobile home park challenging a rent control ordinance as a "taking" could reserve its right to assert its federal takings claims in federal court while exhausting its state court remedies by suing for inverse condemnation in state court. The park had asserted an England v. La. State Bd.of Med. Exam’rs, 375 U.S. 411, 417 (1964) reservation in its state court complaint, which asserted the park's right to litigate its federal claims in state court. The trial court struck the reservation as "irrelevant." Later, when the park's federal action was stayed to permit the state court action to be completed, the park asserted another England reservation. The state court struck that one on the ground that the federal court was abstaining from deciding the case.
The 9th Circuit held that the district court erred in dismissing the federal action on the ground that the state court had struck the reservations. Although the 9th Circuit held the state court's decision to strike the reservations could not be challenged in federal court (due to the "full faith and credit" rule), it also held that an express England reservation isn't necessary to preserve a plaintiff's right to litigate in federal court, if the facts show that the plaintiff is being forced to litigate its claims in state court. Here, the state court's action in striking the England reservations established that the plaintiff was being forced to litigate its takings claims in state court.
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