Mere Reference To Potential Federal Claim In Exhibit to Complaint Insufficient To Create Federal Question Jurisdiction

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In Reneaud v. City of Traverse City, the court addressed whether the plaintiffs' Complaint was properly removed from Grand Traverse County Circuit Court to the Western District of Michigan based on federal subject matter jurisdiction. The plaintiffs had filed a Complaint in Grand Traverse County Circuit Court alleging that the City of Traverse City's removal of the Brown Bridge Dam on the Boardman River caused so much damage to the plaintiffs' property that it constituted a "taking" or "inverse condemnation" of the plaintiffs' property and also violated Michigan's Natural Resources and Environmental Protection Act. Judge Quist granted the plaintiffs' motion for remand, rejecting each of the three arguments advanced by the defendants concerning federal question jurisdiction.

First, the court rejected the argument that a reference in the Complaint to a United States Supreme Court case on taking/inverse condemnation somehow established federal subject matter jurisdiction. The court noted that "this principle is particularly logical in this case, as Michigan courts can, and often do, consider United States Supreme Court decisions for guidance and interpreting the Michigan Constitution."

The court then rejected the defendants' contention that a reference in a letter attached as an exhibit to the Complaint identifying a potential federal claim created federal question jurisdiction. The court noted that "while attachments are deemed to be included in a complaint, the well-pleaded complaint rule requires that a federal question be 'presented on the face of the properly pleaded complaint'" (quotation omitted). The Complaint itself contained no mention of a federal takings claim.

Finally, the court rejected the defendants' argument that the plaintiffs' takings/inverse condemnation claim under Michigan law presented a substantial federal question. The court held that although the United States Department of the Interior performed an environmental assessment related to the removal of the Brown Bridge Dam, "the Department's environmental assessment will not resolve whether the City's decision to remove the dam—which regulated water flow—was an unconstitutional taking." The court concluded that although remand to state court was proper, the motion for removal was not frivolous, such that attorneys' fees were not awarded to the plaintiffs.