SAMUEL ALBA, United States Magistrate Judge.
Before the court is a motion for summary judgment filed by Defendant Riverton City. (Docs. 25, 55.) Riverton City argues that the claims brought in this action by Plaintiffs Willis Lauritz Petersen, Jr., Leslee P. Christensen, Allan D. Petersen, Kristine Petersen Smith, and Dean B. Petersen, as trustees of the Margarett Park Petersen Family Living Trust (collectively "the Petersens") are barred by issue preclusion. Having carefully considered the parties' memoranda and oral arguments, the court grants Riverton City's motion and orders that this case be dismissed.
This action arises from the Petersens' dissatisfaction with Riverton City's decision not to change the zoning designation on a 20.84 acre parcel of undeveloped property ("the property") owned by the Petersens. The Petersens had entered into a conditional agreement with developer D.R. Horton to buy the property for $5.5 million; however, the deal did not occur because D.R. Horton terminated its purchase contract with the Petersens. The Petersens allege that Riverton City's denial of D.R. Horton's application to rezone the property to R-3 zoning resulted in the contract's termination.
In response to Riverton City's denial of the rezoning request, the Petersens filed two actions. First, they filed a petition for review pursuant to section 10-9a-801 of the Utah Code ("state case"). The Petersens' state case was unsuccessful. Utah State Judge Anthony Quinn granted Riverton City's motion for summary judgment, and the Utah Supreme Court unanimously upheld Judge Quinn's decision following the Petersens' appeal. See Petersen v. Riverton City, 2010 UT 58, ¶¶ 5, 30, 243 P.3d 1261.
The Petersens also filed this federal civil rights action, alleging takings claims under the Utah and Federal Constitutions, as well as due process claims, an equal protection claim, and a state tort claim for interference with existing and prospective economic relations. This action was initially filed in Utah State Court, then Riverton City removed it to this court and the case was assigned to United States Magistrate Judge Samuel Alba.
Riverton City then filed a motion for summary judgment on April 15, 2009. (Doc. 25.) The Petersens filed a motion for leave to amend their complaint on April 27, 2009 (Doc. 29), followed by a Rule 56(f) motion on May 6, 2009 (Doc. 32). At a July 22, 2009 hearing, the court granted the Petersens' two motions. (Docs. 44-46.) The Petersens filed their amended complaint on August 4, 2009. (Doc. 47.)
After the court allowed extensive time for discovery to be conducted pursuant to
Summary judgment is appropriate when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). In its summary judgment motion, Riverton City argues that it is entitled to summary judgment because four of the Petersens' claims are barred by issue preclusion and the other one is barred by governmental immunity.
The court first addresses Riverton City's issue preclusion argument. Section 1738 of the United States Code "requires federal courts to give preclusive effect to any state-court judgment that would have preclusive effect under the laws of the State in which the judgment was rendered." San Remo Hotel, L.P. v. City and County of San Francisco, 545 U.S. 323, 335, 125 S.Ct. 2491, 162 L.Ed.2d 315 (2005); see also id., at 347-48, 125 S.Ct. 2491. "Federal courts ... are not free to disregard 28 U.S.C. § 1738 simply to guarantee that all takings plaintiffs can have their day in federal court." Id. at 338, 125 S.Ct. 2491.
Under Utah law, issue preclusion — also known as collateral estoppel — bars parties from relitigating facts and issues in a second suit that were fully litigated in the first suit if the following four elements are met:
Oman v. Davis Sch. Dist., 2008 UT 70, ¶ 29, 194 P.3d 956 (citation omitted); see also id., ¶ 31.
"[I]ssue preclusion `prevents the relitigation of issues that have been once litigated and determined in another action even though the claims for relief in the two actions may be different.'" Id., ¶ 31 (citation omitted) (emphasis in original). "When an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim." Restatement (Second) of Judgments § 27 (1982) (emphasis added) (cited with approval and quoted in parenthetical in Oman, 2008 UT 70, at ¶ 31). Thus, "the question is whether the [Utah courts in the state action] actually decided an issue of fact or law that was necessary to its judgment," San Remo Hotel, 545 U.S. at 342, 125 S.Ct. 2491, not whether the Petersens brought the same claims in the state action as they are bringing in this federal action.
Turning to this case and the first element of issue preclusion, there is no dispute
Second, for issue preclusion to apply, the issues decided in the previous case must be identical to the ones presented in this case. The court concludes that this second element of issue preclusion is met as to four of the five claims brought by the Petersens in their amended complaint.
Four of the five claims brought by the Petersens in this action present two issues which are identical to issues presented in the Petersens' state case: (1) whether the Petersens had any constitutionally protectable property interest under state law and (2) whether there was a reasonable basis for Riverton City's denial of the rezoning application. The state courts' findings and conclusions regarding these two issues dispose of four (of the five) claims brought by the Petersens in their amended complaint, which alleges that Riverton City's denial of their application for rezoning: (1) constituted a regulatory taking under the United States and Utah Constitutions (Doc. 47, ¶¶ 36-41); (2) violated substantive due process because it was arbitrary, unreasonable, and irrational (id., ¶¶ 42-51); (3) deprived them of procedural due process (id., ¶¶ 67-73); and (4) deprived them of their equal protection rights (id., ¶¶ 60-66).
The Petersens argue that "[t]he legal and factual issues presented in this federal civil rights case are not `identical' to those considered by the Utah Supreme Court in reviewing the Petersen Family's petition for review [because] [t]he standard and scope of review ... is not the same." (Doc. 61, at 23.) Nevertheless, as discussed in more detail below, the Petersens have not shown that material differences in the standard and scope of review exist.
The Petersens' complaint alleges that "[t]he denial of the [application to rezone the property] constitute[d] a regulatory taking." (Doc. 47, ¶¶ 37-40.) For their regulatory takings claim to succeed, the Petersens must establish that they had "a protectable property interest" that was sufficiently adversely affected by Riverton City's decision not to rezone their property to constitute a constitutional taking. E.SPIRE Communications, Inc. v. New Mexico Public Regulation Comm'n, 392 F.3d 1204, 1210 (10th Cir.2004); see also Utah Public Emps. Ass'n v. State, 2006 UT 9, ¶ 27, 131 P.3d 208 ("A claimant must possess some protectable interest in property before [being] entitled to recover[y] under this [takings] provision.")
This issue — whether the Petersens had a protectable property interest in Riverton City's denial of the rezoning application — is critical to the Petersens' regulatory takings claim, and was addressed by the Utah Supreme Court in the state case. In the state case, the Utah Supreme Court determined that the Riverton City Council's decision not to rezone the property took nothing from the Petersens because the decision left the property as it was, and that the Petersens did not have a constitutionally protected property interest in a favorable zoning decision that they allege would have increased the property's
Petersen, 2010 UT 58, ¶ 23. That court also determined, "[The Petersens'] unilateral expectation of a zoning change simply does not rise to the level of a protectable property interest." Id., ¶ 24. Thus, the Utah Supreme Court determined that the Petersens did not have a protectable property interest resulting from their expectation of a favorable rezoning application decision, and that such an interest did not arise from representations Riverton City employees allegedly made to them. In addition, that determination was necessary to its judgment in the state case. See id., ¶¶ 21-24 (concluding the Petersens' due process claim failed because they could not show they had a protectable property interest).
The Petersens argue that the existence of a protectable property interest in terms of a regulatory takings claim was not addressed in the state case because the property interest they are asserting is not a property interest in the expectation of a favorable rezoning decision; instead, the Petersens argue that the protectable property interest they are asserting in their takings claim is that of the property itself, and that "Riverton [City's] zoning scheme, as applied, has effectuated a regulatory taking of the Petersen['s] property by destroying all economically viable use of the property." (Doc. 61, at 35.) The Petersens further describe their property interest as follows:
Id. Thus, the Petersens appear to argue that the protectable property interest at issue in their takings claim is the economically viable use of the property, not any expectation or interest in a favorable rezoning decision. This argument lacks merit.
In their amended complaint, the Petersens set forth their regulatory takings claim as follows:
(Doc. 47, ¶¶ 37-40 (emphasis added).) Thus, the amended complaint does not describe Riverton City's "regulatory scheme" as the basis of the takings claim. Further, it does not state that the denial of the rezoning application "demonstrate[d]" the regulatory scheme's effectual taking. Instead, it stated that the denial of the rezoning application constituted a regulatory taking. By this description, the property interest asserted by the Petersens under their regulatory takings claim is their expectation or interest in having the rezoning application approved. The Petersens' attempt to recharacterize their property interest is simply an artful play of words.
The Utah Supreme Court determined the Petersens do not have a protectable property interest in their expectation of a favorable rezoning application decision, which determination was necessary to the court's judgment. Further, that identical issue is a necessary element of the Petersens' regulatory takings claim. Consequently, this court concludes that as to the regulatory takings claim, the second element of issue preclusion is met.
The Utah Supreme Court's conclusion that the Petersens did not have a protectable property interest in Riverton City's approval of the rezoning application also bars the Petersen's due process claims.
"[T]o prevail on either a procedural or substantive due process claim, a plaintiff must first establish that a defendant's actions deprived plaintiff of a protectable property interest." Hyde Park Co. v. Santa Fe City Council, 226 F.3d 1207, 1210 (10th Cir.2000); see also Heideman v. Washington City, 2007 UT App 11, ¶ 17, 155 P.3d 900 ("To prevail on a due process claim, a party must first establish that it has a `protectable property interest.' This is an interest in which one has `"a legitimate claim of entitlement."'" (citations omitted)). Because, as just discussed, the Utah courts determined in the Petersens' state case that the Petersens have no constitutionally protected property interest, and the determination of that issue was necessary to the state court's judgment, the second element of issue preclusion is met as to their due process claims.
The Petersens argue that the state case did not address the identical issue that exists in their due process claims in
(Doc. 61, at 32.) Thus, the Petersens appear to be characterizing their rights to due process as the actual property interest at issue in their due process claims; however, due process rights provide for "fair" decisions and "fundamental fairness," but they do not constitute the actual property interest at issue in a due process claim. Cf. Hyde Park Co., 226 F.3d at 1210 (explaining that "[a]n abstract need for, or unilateral expectation of, a benefit does not constitute `property'").
Furthermore, in their amended complaint, the Petersens describe their protectable property interest under their substantive due process claim as follows:
(Doc. 47, ¶¶ 43-44 (emphasis added).) The Petersens do not explicitly state their property interest under their procedural due process claim, but they do state, "Because the denial of the [zoning application] was a violation of Plaintiffs' procedural due process rights, Plaintiffs are entitled to a judgment reversing the denial." (Doc. 47, ¶ 73.) As such, and especially in the context of the rest of their complaint, the Petersens characterize the actual property interest at issue in their procedural due process claim as their interest in a favorable decision of the rezoning application.
Turning to the Petersens' equal protection claim, the Petersens allege they were treated differently than others who were "similarly situated," that the treatment was without "rational basis" and was "motivated by a totally illegitimate animus." (Doc. 47, ¶¶ 62-63.) As Riverton City points out, because the Petersens' equal protection claim is not based on membership in a protected class, the "class-of-one" equal protection analysis applies to their claim. That theory requires the Petersens to show that Riverton City's challenged decision was without any conceivable legitimate basis. See Jicarilla Apache Nation v. Rio Arriba County, 440 F.3d 1202, 1211 (10th Cir.2006) (explaining that "a class-of-one plaintiff must show that the official action was objectively irrational and abusive"); see also id. at 1209 ("In the paradigmatic class-of-one case, a public official inflicts a cost or burden on one person without imposing it on those who are similarly situated in material respects, and does so without any conceivable basis other than a wholly illegitimate motive."); Neilson v. D'Angelis, 409 F.3d 100, 105 (2d Cir.2005) (explaining that a class-of-one plaintiff must show that "no rational person could regard the [plaintiff's circumstances] to differ from those of a comparator to a degree that would justify the differential treatment on the basis of a legitimate government policy") (overruled on other grounds) (cited with approval by Highland Dev. Inc. v. Duchesne County, 505 F.Supp.2d 1129, 1151 (D.Utah 2007)).
Thus, the issue of whether Riverton City's rezoning denial lacked any conceivable legitimate basis is dispositive of the Petersens' equal protection claim. The Tenth Circuit has explained that a conceivable legitimate basis is shown if the defendant presents credible evidence of a rational government basis for the treatment. In addition, evidence of a rational or reasonable government basis defeats a class-of-one equal protection claim even if evidence of pretext, or ill will, is presented. See Highland Dev., Inc., 505 F.Supp.2d at 1153 ("In the Tenth Circuit, pretext, or subjective ill will, is not relevant to a class-of-one claim. If there is evidence of a rational government basis for the treatment, then the class-of-one claim fails as a matter of law."); see also Jicarilla Apache Nation, 440 F.3d at 1210-11 ("Because a class-of-one plaintiff must show that the official action was objectively irrational and abusive, ... pretext is not an issue.... If there was an objectively reasonable basis for the Defendants' actions in this case, the district court did not err in granting summary judgment in favor of the Defendants on that ground...." (emphasis in original)).
In the state case, the Utah Supreme Court ruled that "there was clearly a reasonable basis for the [Riverton City] Council
The Petersens argue that issue preclusion does not apply to their equal protection claim because the issue presented and decided in the state case was not identical to the one presented here. The Petersens argue that a different standard applied in the state case because a statutory presumption of validity existed in that case; however, as Riverton City points out, a statutory presumption of validity also exists in this case. A presumption of rationality or constitutionality exists in civil rights cases involving legislation, such as this one. See Teigen v. Renfrow, 511 F.3d 1072, 1083 (10th Cir.2007); United States v. Phelps, 17 F.3d 1334, 1343 (10th Cir.), cert. denied, Phelps v. United States, 513 U.S. 844, 115 S.Ct. 135, 130 L.Ed.2d 77 (1994); see also Heller v. Doe by Doe, 509 U.S. 312, 319, 113 S.Ct. 2637, 125 L.Ed.2d 257 (1993) (explaining that courts must afford a governmental economic decision a "strong presumption of validity" and uphold such a decision "`if there is any reasonably conceivable state of facts that could provide a rational basis for the classification'" (citation omitted)).
The Petersens also argue that the issues are not identical because in the state case the Utah courts examined whether Riverton City's rezoning denial was "reasonably debatable" rather than arbitrary and capricious; however, this argument lacks merit because, in reaching their decision, the Utah courts considered the identical issue presented in the instant case — whether the rezoning denial had a rational or reasonable basis. The Utah Supreme Court, in the language that follows, explicitly made this determination, which determination was necessary to its judgment in the case:
Petersen, 2010 UT 58, ¶¶ 5, 12, 15, 22 n. 2. Thus, the Utah Supreme Court determined that Riverton City's denial of the rezoning application had at least some "reasonable basis."
The court is aware that the Petersens have done extensive discovery on the issue of pretext or malice, which discovery was not allowed in the state case; however, any evidence of pretext or malice does not change the outcome of their class-of-one equal protection claim. The Utah Supreme Court expressly found that the Riverton City Council had several reasonable bases upon which it denied the rezoning application, and that determination is binding upon this court. See San Remo Hotel, 545 U.S. at 342, 125 S.Ct. 2491; Highland Dev. Inc., 505 F.Supp.2d at 1153 ("In the Tenth Circuit, pretext, or subjective ill will, is not relevant to a class-of-one claim. If there is evidence of a rational government basis for the treatment, then the class-of-one claim fails as a matter of law.").
In conclusion, because the state court determined that a reasonable basis existed for the rezoning denial, which determination was necessary to the state case's judgment, and because that identical issue is dispositive of the Petersens' equal protection claim in the instant case, the court concludes that the second element of issue preclusion is met as to the Petersens' equal protection claim.
In summary, the court concludes that the second element of issue preclusion is met as to the Petersens' regulatory takings, due process, and equal protection claims because identical and dispositive issues to those claims were decided in the state case, and those issues were necessary to the state judgment.
The court next examines whether the dispositive issues discussed above were completely, fully, and fairly litigated, as required by the third element of issue preclusion. As with the second element of issue preclusion, just discussed, the Petersens argue that this third element of issue preclusion is not met because the Utah courts did not decide those dispositive issues under the same standard or scope of review that this court must employ.
The court addressed this argument in the previous section and found it meritless. Furthermore, in the state case, after considering the evidence and arguments presented, the courts made binding findings of fact and conclusions of law regarding the dispositive issues. As such, this court concludes that the third element of issue preclusion is met as to the four claims just discussed because dispositive issues were completely, fully, and fairly litigated in the state case.
Both at the district and appellate levels, the Petersens' state case was decided on the merits and a final judgment was issued. The findings and conclusions regarding those dispositive issues discussed herein were necessary to the state court's final judgment. Thus, the fourth and final element of issue preclusion also was met as to the four claims discussed above.
As a result, the court concludes that issue preclusion bars the Petersens from bringing their regulatory takings claim, equal protection claim, and substantive
Finally, turning to the Petersen's fifth claim, Riverton City argues that the court should grant summary judgment as to that claim because it is barred by Riverton City's governmental immunity. The Petersens' final claim is that by not granting the rezoning application, Riverton City intentionally interfered with existing or prospective economic relations ("economic interference claim") with developer D.R. Horton. (Doc. 47, ¶¶ 52-59.)
Riverton City has blanket immunity for governmental functions. See Utah Code Ann. § 63G-7-201. A "governmental function" "means each activity, undertaking, or operation of a governmental entity." Id. § 63G-7-102(4)(a). Under this statutory definition, the Riverton City Council's decision to deny a rezoning application is a governmental function, and is thus protected by governmental immunity.
Having concluded that the city council's rezoning decision is protected by governmental immunity, the court next examines whether an exception to that immunity applies. See Wagner v. Utah, 2005 UT 54, ¶ 12, 122 P.3d 599. The Petersens are asserting Riverton City's action interfered with the contract between the Petersens and D.R. Horton by denying the rezoning application. No specific waiver of immunity exists for a city's allegedly tortious interference with contractual rights, see Utah Code Ann. § 63G-7-301. As Riverton City points out, although Section 63G-7-301(4) waives blanket immunity "as to any injury proximately caused by a negligent act or omission of an employee committed within the scope of employment," Section 63G-7-301 expressly excepts from that waiver any injury caused by "interference with contract rights," see id. § 63G-7-301(5)(b). As a result, the court concludes that the Petersens' economic interference claim is barred by governmental immunity.
In summary, the Petersens' five claims are barred by issue preclusion and governmental immunity, preventing this court from addressing them.
Based on the above analysis,
