Summary
holding that city's enactment of temporary moratorium could not serve as a basis for futility claim
Summary of this case from Woodbridge Church v. City of MedinaOpinion
Case No.: A3-00-50
November 27, 2001
MEMORANDUM AND ORDER
Defendant City of Fargo filed a motion for summary judgment (doc. # 26) in the above-entitled case. In reviewing the motion, the Court found reason to question its jurisdiction over plaintiff's claims, specifically whether the claims before it were ripe and whether plaintiff was required to adjudicate its takings claim in state court. This matter came on for hearing on October 2, 2001. At the conclusion of this hearing, the Court ordered that the parties prepare supplemental briefing on these issues. Upon review of the parties' briefings and of the file, the Court finds that it does not have jurisdiction over plaintiff's claims. For the reasons articulated below, plaintiff's claims are hereby DISMISSED.
I. Background
Plaintiff GBT Partnership (GBT) purchased a 114 acre tract south of the City of Fargo. It planned to plat and develop the property. Twenty-seven of the 114 acres were platted and developed into a subdivision known as Forest River Third Addition. The remaining 97 acres, known as "Maple Prairie," are the focus of this lawsuit. Briefly stated, GBT contends that the actions of the City of Fargo essentially prevented it from platting and ultimately developing these 97 acres.
The City of Fargo has a process for approving plat applications. One part of this process requires that an applicant submit the proposal to the Fargo Planning Commission for preliminary approval before the proposal is sent to the Board of City Commissioners for final approval.
In early 1997, GBT filed an application for plat approval and submitted a petition to rezone the area to residential. The City Planner then recommended that GBT address various concerns before the plat application was reviewed in a full hearing by the Fargo Planning Commission. GBT contends that since the cost of complying with these conditions was too high, it withdrew its plat application in August 1997. This withdrawal occurred before the Planning Commission was able to recommend approval or denial of the plat application to the Board of City Commissioners. On August 10, 1998, in the wake of the flood of 1997, the City of Fargo placed a temporary moratorium on the issuance of building permits in the floodway. GBT contends that this moratorium further impeded the development of Maple Prairie. Ultimately, GBT sold the property as agricultural land.
To the extent that DVM's argument for adhesion focuses on the liquidated damages clause, the Court notes that this clause is subject to an independent review below.
The moratorium was to be in effect "until the Fargo City Ordinances have been passed and FEMA has made a final determination on their flood plain map." Minutes of Fargo City Commission (Aug. 10, 1998).
The City of Fargo contends that the moratorium did not cover Maple Prairie because this land was not in the floodway. GBT asserts, however, that staff from the City of Fargo in fact applied the moratorium to its property. The Court will assume, for the purposes of this motion, that the moratorium did apply to Maple Prairie.
GBT brings suit against the City of Fargo for a violation of 42 U.S.C. § 1983, contending that Fargo's actions constituted a taking without just compensation. GBT also alleges a denial of substantive and procedural due process and a denial of equal protection. Finally, GBT pleads a state law inverse condemnation claim, asking this Court to exercise supplemental jurisdiction over this claim.
II. Analysis
The City of Fargo did not initially challenge this court's jurisdiction. Nevertheless, the Court has a duty to make an inquiry sua sponte as to whether plaintiff's claims are properly before this Court. See Krein v. Norris, 250 F.3d 1184, 1187 (8th Cir. 2001) (explaining that each federal court has a special obligation to examine whether jurisdiction is appropriate). As explained below, the Court finds that it does not have jurisdiction.
At oral argument and in its supplemental brief, the City of Fargo now asserts that jurisdiction is improper.
A. Takings and Inverse Condemnation Claims
Under Williamson County Regional Planning Comm'n v. Hamilton Bank, 473 U.S. 172 (1985), GBT must satisfy two requirements before its takings claim is properly in federal court. First, GBT must show that the City of Fargo reached a final decision to deny approval of its plat application. Id. at 186. Second, GBT must demonstrate that it sought compensation from the state of North Dakota, unless that compensation is inadequate or unavailable. Id.; McKenzie v. City of White Hall, 112 F.3d 313, 317 (8th Cir. 1997).
The Court will proceed directly to the second prong of Williamson, as it is most easily addressed. According to Williamson, "[t]he Fifth Amendment does not proscribe the taking of property; it proscribes taking without just compensation." 473 U.S. at 194. Accordingly, "a property owner has not suffered a violation of the Just Compensation Clause until the owner has unsuccessfully attempted to obtain just compensation through the procedures provided by the state." 473 U.S. at 195. Because North Dakota law provides a procedure for obtaining compensation for any property allegedly taken by the City of Fargo, and since GBT has neither availed itself of that procedure nor alleged that this procedure is inadequate, GBT's takings claim must be dismissed. See McKenzie, 112 F.3d at 317 (dismissing plaintiffs' takings claims for failure to pursue an inverse condemnation claim in the state court).
North Dakota law provides a means by which a property owner may seek compensation through its inverse condemnation procedure. N.D. Cent. Code ch. 32-15. Indeed, GBT acknowledges the availability of a state law inverse condemnation claim by asserting a pendent state claim for inverse condemnation.
In its reply brief, GBT asserts that the state compensation prong may be satisfied if this Court exercises supplemental jurisdiction over the state law inverse condemnation claim. Williamson, however, does not require that a property owner merely pursue a state law claim; instead, Williamson demands that property owners seek compensation "through the procedures the State has provided for doing so." 473 U.S. at 194. In accordance with the direction from Williamson, the Fifth Circuit, the only circuit that has directly addressed this issue, has found that the state compensation prong may not be satisfied by simultaneously bringing federal and state takings claims. See John Corp v. City of Houston, 214 F.3d 573, 581 n. 15 (5th Cir. 2000) (citing Samaad v. City of Dallas, 940 F.2d 925, 934-95 (5th Cir. 1991)). Likewise, this Court finds that GBT may not satisfy the state compensation component of Williamson merely by asking this Court to assert supplemental jurisdiction over the state law claim. Thus, the Court DISMISSES the takings claim and declines to exercise supplemental jurisdiction over the inverse condemnation claim.
The Court notes that the Fifth Circuit has recently indicated that it will allow federal district courts to exercise diversity jurisdiction over a state law takings claims. See Vulcan Materials Co. v. City of Tehuacana, 238 F.3d 382, 385-87 (5th Cir. 2001). In so holding, the Fifth Circuit did not vacate its previous position that a claimant may not ripen a federal takings claim by simultaneously bringing a state takings claim. Id.
Dismissal of the state claim is appropriate pursuant to 28 U.S.C. § 1367(c)(3), which authorizes the Court to decline to exercise supplemental jurisdiction over state law claims in which it "has dismissed all claims over which it has original jurisdiction." As explained herein, the Court dismisses all of GBT's federal claims.
B. Equal Protection and Due Process Claims
Besides alleging a takings claim, GBT also asserts an equal protection claim and due process claims. Several courts have indicated that the dismissal of a takings claim may necessitate the dismissal of ancillary constitutional claims, especially substantive due process claims. In so holding, these courts rely on the Supreme Courts decisions in Albright v. Oliver, 510 U.S. 266 (1994) and Graham v. Connor, 490 U.S. 386 (1989):
Where a particular Amendment "provides an explicit textual source of constitutional protection" against a particular sort of government behavior, "that Amendment, not the more generalized notion of `substantive due process,' must be the guide for analyzing these claims."
Albright, 510 U.S. at 273 (quoting Graham, 490 U.S. at 395). The Tenth Circuit has applied this rule very broadly, concluding that both equal protection claims and due process claims are "subsumed within `the more particularized protections of the Takings Clause'" if these claims rest on the same facts as the concomitant takings claim. Bateman v. City of West Bountiful, 89 F.3d 704, 709 (10th Cir. 1996) (citation omitted). While not applying Albright as broadly as the Tenth Circuit, other circuits have concluded that the more specific Takings Clause preempts the protections of the substantive due process clause. See John Corp. v. The City of Houston, 214 F.3d 573, 582-83 (5th Cir. 2000) (setting forth the circuit courts which have held that a substantive due process claim is subsumed by the Takings Clause). Still other circuits have held that a claimant may advance both a substantive due process claim and a takings claim, asserting that the substantive due process clause invokes different rights than the Takings Clause. Id. at 583 (setting forth the circuit courts which have allowed both a substantive due process claim and a takings claim).
It is unclear where the Eighth Circuit falls within this continuum, since it has never directly addressed the issue. Even assuming, however, that the equal protection claims and due process claims are not subsumed by the takings claim, the Eighth Circuit has indicated that at least the finality prong of Williamson must be satisfied before a federal court can adjudicate an equal protection or a due process claim. See McKenzie, 112 F.3d at 317 (allowing jurisdiction over a due process and equal protection claim because the City's decision to deny zoning and building permits were final).
The finality requirement permits adjudication only when "the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue"; until then, the case is not ripe for adjudication. Williamson, 473 U.S. at 186. The rationale behind the finality requirement was explained in Bannum, Inc. v. City of Louisville, 958 F.2d 1354, 1362-63 (6th Cir. 1992):
What is needed before litigation can proceed in a case such as this is that proceedings have reached some sort of an impasse and the position of the parties has been defined. We do not want to encourage litigation that is likely to be solved by further administrative action and we do not want to put barriers to litigation in front of litigants when it is obvious that the process down the administrative road would be a waste of time and money. . . . By finality we mean that the actions of the city were such that further administrative action by [the property owner] would not be productive.
Not only does the finality requirement promote efficiency, as explained in Bannum, it also allows the Court to determine the parameters of the property owner's claims. See Williamson, 473 U.S. at 190-91, 199-200 (explaining that the factors needed to resolve a takings and a due process claim "cannot be evaluated until the administrative agency has arrived at a final, definitive position regarding how it will apply the regulations at issue to the particular land in question"). Furthermore, the finality requirement ensures that an issue exists for the Court's consideration. The Court in Williamson emphasizes this point:
If [the property owners] were to seek administrative relief under these procedures, a mutually acceptable solution might well be reached with regard to individual properties, thereby obviating any need to address the constitutional questions. The potential for such administrative solutions confirms the conclusion that the taking issue decided by the District Court simply is not ripe for judicial resolution.
Id. at 187 (quoting Hodel v. Virginia Surface Mining Reclamation Assn., Inc., 452 U.S. 264, 297 (1981)).
The City of Fargo clearly did not reach a final decision with respect to development of Maple Prairie since GBT withdrew its plat application before the City Planning Commission ever made a recommendation to approve or deny the plat application. GBT does not argue this point. Rather, GBT argues that a submission for plat approval would have been futile, contending that the City of Fargo indicated its unwillingness to grant plat approval when (1) the City Planner requested that GBT fulfill certain conditions before the Planning Commission held a hearing on the plat application; and (2) the City of Fargo issued a moratorium in August of 1998, which prevented the issuance of building permits in Maple Prairie.
The Supreme Court has recognized that the finality requirement need not be satisfied if additional action on the part of the landowner would be futile. MacDonald v. County of Yolo, 477 U.S. 340, 350 n. 7 (1986) ("A property owner is of course not required to resort to piecemeal litigation or otherwise unfair procedures in order to obtain [a final] determination."). The futility exception works "to protect property owners from being required to submit multiple applications when the manner in which the first application was rejected makes it clear that no project will be approved." Southern Pacific Transp. Co. v. City of Los Angeles, 922 F.2d 498, 504 (9th Cir. 1990). This exception, however, is narrow, and the landowner has a heavy burden in proving futility. Del Monte Dunes v. Monterey, 920 F.2d 1496, 1501 (9th Cir. 1990), aff'd 526 U.S. 687 (1999).
Some courts have not explicitly recognized the language in MacDonald as creating a futility exception to the ripeness requirement. Several circuits, however, have acknowledged a futility exception to the threshold requirement of a final decision. See, e.g., Seguin v. City of Sterling Heights, 968 F.2d 584, 589 (6th Cir. 1992); Del Monte Dunes v. Monterey, 920 F.2d 1496, 1501 (9th Cir. 1990). The Eighth Circuit has not explicitly recognized such an exception; for the purposes of this motion, however, the Court will assume that such an exception exists in the Eighth Circuit.
GBT seems to contend that it need not have even submitted one application for development, relying heavily on the Supreme Court's recent decision in Palazzolo v. Rhode Island, 121 S.Ct. 2448 (2001). GBT's reliance is misplaced. In Palazzolo, the Supreme Court reviewed the Rhode Island Supreme Court's dismissal of the land owner's takings claim for, among other things, lack of ripeness. The land owner, Palazzolo, attempted to develop a waterfront parcel. Id. at 2454. He submitted two separate applications for development with the Rhode Island Coastal Resources Management Council (Council). Id. at 2455-56. Each of these applications was rejected. Id. Palazzolo then brought a claim for inverse condemnation in Rhode Island Superior Court. Id. at 2456. The superior court rejected his claim, and the Rhode Island Supreme Court affirmed, holding that even though Palazzolo's applications were denied, doubt remained as to the extent of allowable development by the Council. Id at 2457. The Supreme Court reversed the decision of the Rhode Island Supreme Court, holding that Palazzolo did not have to continue submitting applications for development when it becomes clear that the permissible uses of the property are known to a reasonable degree of certainty. Id. at 2459.
GBT asserts that the holding in Palazzolo "substantially expands" Williamson, asserting that Palazzolo abandons the finality requirement. The Court disagrees. Palazzolo does not abdicate the finality requirement; it merely holds that a decision is final when the decision maker, through the rejection of development proposals, makes clear that additional proposals will be denied. In the present case, as contrasted with Palazzolo, GBT did not receive any rejections because it withdrew its plat application.
As support for its position that it did not need to obtain a final decision from the Board of City Commissioners, GBT points out that the Court in Palazzolo did not require the land owner to submit any applications with regard to the upland parcel. The facts of Palazzolo are distinguishable from the facts of this case, however. In Palazzolo, the Court found that no application was needed with regard to the upland parcel because the Council had already rejected application proposals for the entire parcel. Again, GBT is not aided by the futility exception, because unlike in Palazzolo, GBT has not received any rejection from the City of Fargo.
GBT further contends that the Board of City Commissioners would have rejected the plat had it not been withdrawn. As support for its position, GBT directs the Court's attention to a letter written by the City Planner in which the City Planner indicated that GBT's plat application would be denied unless GBT complied with certain conditions. The Court, however, cannot speculate on a decision by the City, when no decision had, in fact, been made. Further, as the City of Fargo correctly points out, the City Planner does not make the final decision on whether a plat is approved or denied; the final decision rests with the Board of Commissioners after a full public hearing and only after receiving a recommendation from the Planning Commission. To allow GBT to allege a claim before the Board of Commissioners has even voted on the plat application would entirely circumvent the finality requirement in Williamson.
The Court finds persuasive the decision in Vashi v. Charter Twp. of W. Bloomfield, 159 F. Supp.2d 608 (E.D.Mich. 2001). In Vashi, the plaintiffs submitted a development proposal to the City's Planning Commission, seeking to establish a day care center. Id. at 610. After a hearing, the Planning Commission recommended that the Township Board, the final decision maker, deny the plaintiffs' application. Id. at 611. The plaintiffs then withdrew their application and brought suit in federal district court, alleging various constitutional claims, including due process and equal protection claims. Id. at 611-12. The Township Board requested summary judgment, arguing that plaintiffs failed to obtain a final decision as required by Williamson. Id. at 613. Plaintiffs argued that their application was futile, contending that they had already received a strong indication that their application would be denied when the planning commission recommended that the application be denied. The Vashi Court soundly rejected plaintiffs' futility claim: "Plaintiffs' argument that it would have been futile to proceed with their proposal to the Township Board misses the point that, `by finality we mean that the actions of the [township] were such that further administrative action . . . would not be productive.'" Id. at 620 (citation omitted). Likewise, the Court finds that although GBT was receiving some indication that its application would be rejected, this is simply insufficient to invoke the finality requirement.
Second, GBT argues that the building moratorium removed power from the City of Fargo to make a decision on the development of Maple Prairie. The futility doctrine may be invoked when a board simply refuses to take applications, Gardens Country Club, Inc. v. Palm Beach County, 712 So.2d 398, 401 (Fla.Dist.Ct.App. 1998). The Court, however, does not believe this is the case here. First, the moratorium went into effect after the plaintiff had withdrawn its initial application. Thus, it is not clear how, and if, it would have affected its initial application. Second, the moratorium was temporary, and a mere delay in seeking final review should not be enough, in the Court's view, to dispense with the requirement of seeking a final ruling. The Court acknowledges that the futility exception may apply when there is an excessive delay, but only if the party demonstrates that it is "clear beyond peradventure that excessive delay in such a final determination [would cause] the present destruction of the property's beneficial use." Kinzli v. Santa Cruz, 818 F.2d 1449, 1454 (9th Cir. 1987) (emphasis added). GBT has not demonstrated, however, that the moratorium was either excessive or would cause destruction of the property's beneficial use. See Del Monte Dunes, 920 F.2d at 1501 (explaining that the landowner bears the burden of demonstrating futility)
While the Court is sympathetic to GBT's situation, Williamson makes clear, and Palazzolo affirms, that it is imperative that one asserting a takings claim and ancillary constitutional claims must not only pursue available state remedies but also receive a final decision from the local government entity. Thus, GBT's claims against the City of Fargo may not proceed in this Court until both of these prongs are satisfied.
III. Conclusion.
Accordingly, since GBT has failed to satisfy either of these prongs, GBT's complaint and cause of action is DISMISSED WITHOUT PREJUDICE.
IT IS SO ORDERED.