Opinion
C.A. No. 03C-07-213-MMJ.
Submitted: October 2, 2007.
Decided: December 28, 2007.
Upon Defendant's Motion for Judgment as a Matter of Law Upon Defendant's Motion for a New Trial Upon Defendant's Motion for Remittitur.
Adam Balick, Esquire, Joanne Ceballos, Esquire, Balick Balick, Wilmington, DE, and John J. Yannacone, Yannacone Associates, Media, PA, Attorneys for Plaintiff.
Peter J. Walsh, Jr., Esquire, Sarah E. Diluzio, Esquire, Potter Anderson Corroon LLP, and Hamilton P. Fox, III, Esquire, Jay M. McDannell, Sutherland Asbill Brennan LLP, Washington, DC, Attorneys for Defendant.
MEMORANDUM OPINION
PROCEDURAL CONTEXT
Wilmington Hospitality, LLC ("WH") filed this action on July 28, 2003 against New Castle County ("NCC"). The Complaint contained four counts demanding damages and declaratory relief: (1) pursuant to 42 U.S.C. § 1983 based upon deprivation of due process rights; (2) pursuant to 42 U.S.C. § 1983 for deprivation of property without equal protection; (3) inverse condemnation; and (4) breach of contractual obligation to issue a temporary certificate of occupancy. NCC moved to dismiss the Complaint pursuant to Superior Court Civil Rule 12(b)(6).
By Memorandum Opinion dated August 4, 2004, the Court dismissed: WH's cause of action under 42 U.S.C. § 1983 based upon deprivation of due process rights; and WH's claim regarding inverse condemnation. The claims remaining included: 42 U.S.C. § 1983 for deprivation of property without equal protection; and breach of contract.
NCC filed a Motion for Summary Judgment and the Court heard oral argument on April 13, 2007. The Court denied the Motion. A jury trial began on June 4, 2007. On June 12, 2007, NCC filed a Motion for Judgment as a Matter of Law. On June 18, 2007, the Jury rendered a verdict in favor of WH on its equal protection claim awarding $7,500,000.00. The jury found in favor of NCC on the breach of contract claim. On July 2, 2007, NCC renewed its Motion for Judgment as a Matter of Law. In the alternative, NCC requested a New Trial and Remittitur. WH opposes all three motions.
SUMMARY OF THE FACTS
WH is the former owner of a hotel located alongside Airport Road and I-95 in New Castle County. The principals of WH are Joseph L. Capano ("Capano") and Albert Vietri ("Vietri"). WH's predecessor submitted a preliminary plan to NCC for construction of a 118,805 square foot hotel. NCC approved the final record plan on April 11, 1990. The original architectural firm designed a 156,000 square foot hotel — 38,000 square feet larger than the authorized record plan. Construction was delayed for almost 8 years.
Following a dispute with the original firm, a second architectural firm was hired. The second firm completed the necessary drawings and filed an application for a building permit on June 5, 1998. NCC reviewed the application and issued a building permit on July 21, 1998 for a 155,480 square foot hotel.
WH invested approximately $23,000,000 to construct the hotel. On May 12, 2000, WH requested an inspection for a certificate of occupancy. NCC Department of Land Use employees visited the site. NCC found that the hotel did not conform to the record plan and that construction exceeded the plan by 38,000 square feet. NCC denied the request for a certificate of occupancy and revoked WH's building permit.
WH then applied to the NCC Board of Adjustment for nine zoning variances that would allow the hotel to open, including: (1) increasing the maximum floor area ratio to allow use of the building as constructed; (2) allowing encroachment onto the flood plain of approximately 4,000 square feet; and (3) reducing the number of required parking spaces from 325 to 202.
The Board conducted hearings on the requested variances on July 13 and 26, 2000. The Board reviewed documents and heard testimony from a representative of WH, the architects, and the project engineer. On July 27, 2000, the Board denied the variance requests. WH appealed the Board's decision to this Court.
On August 16, 2000, WH asked for permission to open part of the hotel consisting of 102,120 square feet. NCC responded that it would issue a certificate of occupancy if WH removed the top two floors or filled in the excess square footage with foam. WH witnesses testified that the conditions proposed by NCC would have destroyed the value of the project and would have been so expensive and time-consuming that WH would have been forced out of business. NCC further stated that it would permit partial opening of the hotel, without the necessity of removing or disabling the top two floors, provided that Capano and Vietri execute a "restrictive covenant on the property against ownership, management or any financial interest, for a period of twenty years, in the property, directly or indirectly, by Joseph L. Capano, Albert Vietri, or their respective spouses, children and the siblings and cousins of Capano and Vietri." On October 14, 2000, NCC denied WH's renewed request for a certificate of occupancy.
WH filed an action in the Court of Chancery, seeking to compel NCC to issue a certificate of occupancy. The presiding Vice Chancellor was appointed acting Superior Court Judge to hear appeals from the Board of License, Inspection and Review and from the Board of Adjustment. The Court of Chancery denied WH's motions for a temporary restraining order and for a preliminary injunction.
WH's lender instituted foreclosure proceedings on December 26, 2000. WH filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code on June 29, 2001.
On September 25, 2001, a meeting was held among NCC, WH, counsel for WH, and a prospective purchaser of the hotel. The parties vehemently disagree as to what transpired during the meeting. WH contends that NCC agreed to issue a temporary certificate of occupancy if WH complied with the terms of a letter from NCC dated February 2, 2001. By letter dated November 1, 2001, WH's attorney referred to the February 2, 2001 letter as a "commitment." By letter dated November 2, 2001, NCC took the position that the February 2nd letter contained a useful listing of outstanding building code issues, but that NCC would not issue a certificate of occupancy until the construction was in full compliance with all applicable laws.
WH claims that NCC's refusal to issue a certificate of occupancy, as agreed during the September 25, 2001 meeting, "was done with the intent to undermine and interfere with WH's bankruptcy." WH also entered into a settlement agreement with its lender. The agreement would have permitted WH to satisfy its outstanding obligations to the lender at a discount of approximately $1,500,000. Thus, WH asserts that NCC's breach of the agreement reached during the meeting was a "malicious" attempt to prevent WH from selling the property and thereby recoup some of its financial losses.
On November 2, 2001, WH executed a contract to sell the hotel to a company whose principals were not related to or affiliated with WH or its principals. The agreement of sale was approved by the bankruptcy court.
ANALYSIS Judgment as a Matter of Law
Under Rule 50(b) the Court may "allow the judgment to stand or may reopen the judgment and either order a new trial or direct the entry of judgment as a matter of law." This Court must decide whether, under any reasonable interpretation of the evidence, the jury could justifiably find in favor of the non-moving party and against the moving party. The jury verdict is entitled to "enormous deference." "The factual findings of a jury will not be disturbed if there is any competent evidence upon which the verdict could reasonably be based."NCC argues a Judgment as a Matter of Law is appropriate because the jury verdict is unsupported by the record, against the weight of evidence and not supported by equal protection jurisprudence.
Section 1983 Equal Protection
The United States Supreme Court has authorized "class of one" equal protection claims where the party can show that it has been "intentionally treated differently from others similarly situated and that there is no rational basis for the difference in treatment" The party asserting the equal protection violation must: (1) identify others who are "similarly situated"; (2) show that these similarly situated entities were treated differently; (3) show that the differential treatment was intentional, in the sense of deliberately singling out or being motivated by animus; and (4) demonstrate that there is no rational basis for any differential treatment.
Vill. of Willowbrook v. Olech, 528 U.S. 562, 564 (2000).
Hill v. Borough of Kutztown, 455 F.3d 225, 239 (3d Cir. 2006).
In assessing judgment as a matter of law, the Court will not act as a "zoning board of review," but will determine whether the jury's findings were rationally based on competent evidence. The Court will focus specifically on the two elements discussed in NCC's brief: (1) the high degree of similarity required to establish equal protection; and (2) the demonstrated rational basis offered by NCC to justify any differential treatment.
Greenbriar Vill., L.L.C. v. Mountain Brook, City, 345 F.3d 1258, 1262 (11th Cir. 2003).
Entities Identified by Plaintiff as "Similarly Situated"
WH's equal protection claim requires a finding that developers seeking permits from NCC were treated differently than WH because "[d]ifferent treatment of dissimilarly situated persons does not violate the equal protection clause." To find that two projects were similarly situated requires some specificity. WH does not have to prove that they are identically situated, but must prove that WH was "treated differently than someone who is prima facie identical in all relevant respects."
E T Reality v. Strickland, 830 F.2d 1107, 1109 (11th Cir. 1987).
Campbell v. Rainbow City, Alabama, 434 F.3d 1306, 1314 (11th Cir. 2006).
Purze v. Winthrop Harbor, 286 F.3d 452, 455 (7th Cir. 2002).
NCC contends there are aspects of similarity that must exist before the Court allows the jury to consider the issue. Additionally, the Court must impose "exacting burdens on plaintiffs to demonstrate similarity" or an "extremely high degree of similarity." NCC argues the projects WH claims received differential treatment are not similar situated. Additionally, without the requisite demonstration of similarity, the Court should not have allowed the jury to consider the issue.
Jicarrilla Apache Nation v. Rio Arriba Cty., 440 F.3d 1202, 1213 (10th Cir. 2006).
Clubside, Inc. v. Valentin, 468 F.3d 144, 159 (2d Cir. 2006).
"The ultimate determination of whether parties are similarly situated is a fact-bound inquiry and, as such is normally grist for the jury's mill." The burden of proving substantial similarity requires a "high degree of similarity," not an "exact correlation." "[T]he degree of similarity required may be relaxed somewhat if the plaintiff has presented evidence of `personal malice and bad faith' retaliation." A directed verdict is appropriate where it is clear that no reasonable jury could find that the comparators are similarly situated.
Cordi-Allen v. Conlon, 494 F.3d 245, 251 (1st Cir. 2007).
Id.; Tapalian v. Tusino, 377 F.3d 1, 6 (1st Cir. 2004).
Cordi-Allen, 494 F.3d at 251 n. 4; Tapalian, 377 F.3d at 7.
Harlen Assocs. v. Inc. Vill. of Mineolo, 273 F.3d 494, 499 n. 2 (2d Cir. 2001).
There are three possibilities:
(1) If a reasonable jury COULD ONLY FIND that the entities were similarly situated to plaintiff, the Court must enter a directed verdict for plaintiff.
(2) If NO reasonable jury COULD FIND that the entities were similarly situated to plaintiff, the Court must enter a directed verdict for defendant.
(3) If a reasonable jury COULD FIND that the entities were similarly situated to plaintiff, the Court must give the issue to the jury.
At the conclusion of the evidence, the Court found that a reasonable jury could (but also might not) find that the entities were similarly situated to WH. Therefore, the Court denied NCC's motion for a directed verdict and deferred to the jury's determination. The Court finds no reason to alter this conclusion following the jury's verdict.
WH presented evidence supporting its allegations of substantial similarity.
1. Krishnas, LLC Hotel Project.
Krishnas, LLC ("Krishnas") was in the process of constructing a hotel when NCC learned of a 3,000 square foot discrepancy between the record plan and the construction plans. An attorney for a contractor on the project submitted a detailed analysis demonstrating that even allowing for Krishnas' 31,413 square feet calculation (3,000 beyond what the record plan allowed), the plans which were being processed by Krishnas would improperly allow the construction of 41,603 square feet. Thus, the difference between what the contractor's attorney maintained was allowed by Code and Krishnas' construction was approximately 43%, which was 47% beyond that permitted by the record plan. NCC did not investigate to determine if Krishnas was intentionally overbuilding. No demands were made to dismantle part of the hotel and no demand was made to bar the owners of the property or their relatives from having any interest in the property. NCC granted Krishnas a variance to allow completion of construction. The Krishnas decision was rendered on June 28, 2000, the same summer that WH's variance applications were denied.
2. Parkside V, LLC.
On May 27, 2003, the Delaware Racing Association, the predecessor in interest to Parkside V, LLC ("Parkside"), purchased the exact property that is the subject of this litigation. Parkside requested variances which mirrored those that had been sought by WH, including: (1) increasing the maximum permitted gross floor area to accommodate the square footage of the building as constructed; (2) reducing the number of required loading berths from 3 to 1; (3) reducing paving setback requirements; (4) reducing the opacity requirement along Airport Road; (5) reducing the required landscape surface ratio; and (6) permitting an encroachment onto the floodplain. NCC issued a report recommending that Parkside's variance requests be granted. NCC noted that there would be a restriction on the future transfer of the property to Capano, Vietri or any of their family members for a period of twenty years. NCC further found that "clearly, without plan approval, there can be no beneficial use of the Property . . . applicant has been denied substantially all economically viable use of the Property through application of the UDC." The Board granted all of Parkside's variance requests. The Board found that "given its location in the floodplain, the Property loses economic viability for any use without the Board granting a beneficial use appeal." NCC did not demand the removal of any excess square footage.
3. Concord Pets Food Supplies, Inc.
Concord Pets Food sought a variance from the maximum building square footage of 3,445 square feet to maintain 11,020 square feet of gross floor area at its commercial property. NCC approved this variance, representing a differential of approximately 220% beyond that permitted by code and other variances relating to paving setbacks, opacity and landscape surface ratio. NCC did not demand demolition or foaming the excess square footage, or barring the property owners and their relatives from future ownership.
4. Montelone.
Montelone built a 4,832 square feet structure difference of approximately 93% beyond the 2,500 square foot record plan of office space. NCC granted the variance with respect to the maximum gross floor area ratio, allowed for less than half of the required parking spaces, and granted related variances regarding opacity and paving setbacks. No demands were made by NCC for removal of excess square footage, or that the property owners and their relatives forfeit their interest in the property.
5. Other Projects.
NCC granted 326 Associates, L.P. a variance for reduced parking spaces where the difference between the square footage permitted by the record plan and the square footage constructed was approximately 34%. A square footage differential of approximately 28% beyond that permitted by Code was allowed to Golden Dove Associates. A 9% height differential between what was constructed and what was permitted by code was granted to Boscov's. NCC granted itself, albeit before any construction commenced, a variance allowing for an increase in height, of approximately 63% beyond that permitted by code, for its police headquarters. NCC noted the majority of the property borders a landfill and other industrial or heavy industrial zoned property.
* * * * *
In support of its motion, NCC presents cogent and detailed arguments as to why the comparators are not similar. NCC also claims that WH failed to clarify the precise conduct, or the specific course of conduct, underlying NCC's differential treatment. These arguments, and NCC's evidence supporting these arguments, were presented to the jury. Clearly, the jury found WH's evidence and reasoning more convincing.
NCC also claims that the Court erred by failing to give a jury instruction conveying "an appropriately high burden needed to establish the similarly situated element." The Court's instruction was:
As to the first element of the claim, in determining whether other landowners were similarly situated, you may consider whether a prudent person, looking objectively at the incidents, would consider them similarly situated.
See Dartmouth Review v. Dartmouth College, 889 F.2d 13, 19 (1st Cir. 1989) ("The test is whether a prudent person, looking objectively at the incidents, would think them roughly equivalent and the protagonists similarly situated."); Cordi-Allen, 494 F.3d at 251 ("Plaintiffs claiming an equal protection violation must first identify and relate specific instances where persons situated similarly in all relevant aspects were treated differently.").
The Court declined to give NCC's proposed instruction because the instruction was unduly complicated and confusing, and stated the law in a manner strongly biased in favor of NCC.
The Court's job is not to assess the findings of the jury. The Court must determine if WH provided competent evidence of similarly situated projects so that a reasonable jury could find for WH. WH provides examples of two hotel projects and two commercial projects that were granted variances by NCC during the same time period. In fact, the Parkside hotel project involved the same property, use and variances as those requested by WH. The Court finds NCC established a prima facie case of similarly situated projects, sufficient for jury consideration.
Rational Basis for Differential Treatment
The purpose of the Equal Protection Clause is to prevent a statute or state official from operating in an arbitrary or intentionally discriminatory manner. In the context of equal protection claims, government action must be rationally related to a legitimate government interest. An action must be upheld "if there is any reasonably conceivable state of facts that could provide a rational basis."NCC argues that it provided a rational basis for the differential treatment of WH. In short, NCC states the reasons for differential treatment include substantial parking deficiency, environmental encroachment, the sheer magnitude of the overbuild, unfair competitive advantage to WH, unpermitted uses, and WH's bad faith.
WH has the burden to show the reasons proffered by NCC were not rationally related to legitimate government interest. NCC argues that the only question is whether its articulated reasons, for apparently different treatment of WH, are rationally related to a legitimate government interest. Further, NCC contends that this limited issue is a question of law for the Court to decide. NCC reasons that "the decision concerning what constitutes a rational basis is undoubtedly in the hands of the Court because it would be almost impossible to convey to a jury the very differential standard of rational basis found in the law."
Id. at 315.
The Court disagrees. In this case, the issue of whether NCC's actions are rationally related to a legitimate government interest is for the trier of fact. The main reason articulated by NCC for its treatment of WH is that WH acted in bad faith. NCC is correct that the salient factual question is not whether WH indeed acted in bad faith. Rather, the question is whether NCC had a rational basis for believing that WH acted in bad faith.
City of Monterey v. Del Monte Dunes, 526 U.S. 687, 690 (1999).
However, merely stating a plausibly rational reason is not sufficient. There must be some reasonable factual basis for the reason. Otherwise, all a government entity would have to do is pronounce a superficially credible reason, in order to pass equal protection muster. The Court is not limited to evaluating NCC's stated rational basis without further judging whether the merits are related to a legitimate government interest.
See Acierno v. New Castle Cty., 2000 WL 718346, at *4 (D.Del. May 23, 2000).
There are three possibilities:
(1) If a reasonable jury COULD ONLY FIND that defendant NCC had a reason, rationally related to a legitimate government interest, for apparently different treatment of plaintiff WH, the Court must enter a directed verdict for plaintiff.
(2) If NO reasonable jury COULD FIND that defendant NCC had a reason, rationally related to a legitimate government interest, for apparently different treatment of plaintiff WH, the Court must enter a directed verdict for defendant.
(3) If a reasonable jury COULD FIND that defendant NCC had a reason, rationally related to a legitimate government interest, for apparently different treatment of plaintiff WH, the Court must give the issue to the jury.
The Court found that questions of fact predominated the issue of whether NCC's articulated reasons, for apparently different treatment of WH, were rationally related to a legitimate government interest. Therefore, the Court denied NCC's motion for a directed verdict and deferred to the jury's determination. The Court finds no reason to alter this conclusion following the jury's verdict.
Motion for New Trial
Under Superior Court Rule 59, the Court may grant a motion for new trial. However, the Court gives enormous deference to jury verdicts. If any reasonable difference of opinion exists, the Court will yield to the jury's decision. This Court will only grant a new trial if the jury disregarded applicable rules of law, or "the verdict is tainted by legal error committed by the Court during the trial."For the reasons underlying the denial of NCC's Motion for Judgment as a Matter of law, NCC's Motion for New Trial is denied.
Motion for Remittitur
In the absence of exceptional circumstances, the jury's award of damages should be deemed appropriate. Under Delaware law, enormous deference is given to jury verdicts. Reasonable differences of opinion are resolved in favor of the jury's opinion. The court will set aside a jury's verdict only in the rare case where it is "clear that the award is so grossly out of proportion to the injuries suffered, as to shock the court's conscience and sense of justice." Remittitur is required only when the award of damages is so excessive that it must have been based on passion, prejudice or misconduct, rather than on objective consideration of evidence presented at trial.
Id. at 1236.
The jury assessed the credibility of all witnesses and determined the weight to be given to their testimony. The jury considered voluminous exhibits, including specific financial information. The damages evidence was detailed and vigorously contested.
NCC argues that the "jury verdict was pulled from thin air" and that it was excessive and unsubstantiated by the evidence. The damage calculation does not have to be made with mathematical certainty. The jury may give an approximation based on facts presented at trial. The jury heard evidence regarding WH's net out-of-pocket expenses, the estimated lost value of the hotel, various contracts and settlement agreements among WH and third parties, and the ultimate purchaser's cost to complete the hotel.
Cura Fin. Serv. v. Elec. Payment Exch., Inc., 2001 WL 1334188, at *20 (Del.Ch. Oct. 22, 2001).
Young, 702 A.2d at 1236-38.
The Court finds the damages awarded by the jury are supported by the evidence presented at trial. Therefore, the Motion for Remittitur is denied.
CONCLUSION
At the conclusion of the evidence, the Court found that a reasonable jury could find that the entities identified by plaintiff were similarly situated to plaintiff. The Court also found that a reasonable jury could, or might not, find that defendant NCC had a reason, rationally related to a legitimate government interest, for apparently different treatment of plaintiff. THEREFORE, the equal protection issue was properly presented to the jury. Defendant New Castle County's Renewed Motion for Judgment as Matter of Law is hereby DENIED.The Court finds that the interests of justice do not require setting the jury's verdict aside. THEREFORE, Defendant New Castle County's Motion for a New Trial is hereby DENIED.
The Court finds that the damages awarded by the jury are not out of proportion to the injuries suffered, so as to shock the Court's conscience and sense of justice. THEREFORE, Defendant New Castle County's Motion for Remittitur is hereby DENIED.
IT IS SO ORDERED.