FRANK R. ZAPATA, Senior District Judge.
Pending before the Court is a Report and Recommendation issued by Magistrate Judge Jennifer C. Guerin. In her Report and Recommendation, Magistrate Judge Guerin recommends that the Court enter an Order denying Plaintiffs' partial motion for summary judgment and granting Pima County's motion for summary judgment. As the Court finds that the Report and Recommendation appropriately resolved the motions for summary judgment, Plaintiffs' objections are denied.
Accordingly, IT IS HEREBY ORDERED as follows:
(1) Magistrate Judge Guerin's Report and Recommendation (Doc. 295) is accepted and adopted.
(2) Plaintiffs' partial motion for summary judgment (Doc. 276) is denied.
(3) Pima County's motion for summary judgment (Doc. 279) is granted and this case is dismissed with prejudice.
(4) The Clerk of the Court shall enter judgment and close the file in this case.
DATED this 2nd day of March, 2011.
JENNIFER C. GUERIN, United States Magistrate Judge.
Pending before the Court is a Motion for Partial Summary Judgment filed by Plaintiffs on October 15, 2010. (Doc. 276.) Defendant Pima County filed a response and Plaintiffs timely replied. (Docs. 286, 292.)
Also pending before the Court is a Motion for Summary Judgment filed by Defendant Pima County on October 18, 2010. (Doc. 279.) Plaintiffs filed a response and Pima County timely replied. (Docs. 284, 288.)
Pursuant to the Rules of Practice in this Court, the matter was assigned to Magistrate Judge Guerin for a Report and Recommendation. (Doc. No. 37.) The Magistrate recommends that the District Court, after its independent review of the record, enter an order denying Plaintiffs' Motion and granting Defendant's Motion.
On November 18, 2003, Pima County approved a final plat for "The Enclave at Gates Pass," comprised of 21 lots and a common area ("The Enclave"). (DSOF 1; PRSOF 1.)
The parties to the Initial Assurance Agreement were the County, WSP and Fidelity National Title, the trustee of the trust that held title to the property constituting the Enclave. (DSOF 5; PSOF 2.) The Initial Assurance Agreement provided that it was "submitted as an assurance that Subdivider [WSP] will construct the Subdivision Improvements, as required by A.R.S. § 11-806.01 and Pima County Zoning Code Chapter 18.69." (DSOF 6; PSOF 3.) WSP was required to complete all subdivision improvements, including streets, utilities and drainage and flood control improvements, by November 18, 2007. (DSOF 7; PRSOF 3.) The trustee was prohibited from conveying title to any of the lots until Pima County provided a written Release of Assurance. (DSOF 8; PRSOF 3.) The Initial Assurance Agreement provided that WSP could "submit substitute assurances in a form and amount acceptable to County at any time during which [WSP was] not in default under this agreement." (DSOF 9; PRSOF 3.) The Initial Assurance Agreement provided that the execution of a substitute assurance agreement would terminate the Initial Assurance Agreement. (DSOF 10; PRSOF 3.)
On April 20, 2004, WSP and ML Parkhurst Construction entered into a contract for "a land improvement construction job subdividing a vacant raw land into 21 estate lots for sale including all necessary site works, such as earth work, road/paving work and utilities." (Doc. 280, Ex. 3.) WSP agreed to pay ML Parkhurst $544,915.00 for the cost of the subdivision improvements. (Id.)
In 2004, WSP sought to enter into a substitute assurance agreement. (DSOF 11; PRSOF 3.) On June 3, 2004, in order to allow WSP to obtain substitute assurances, Thomas Hosack, the Enclave's engineer, submitted an estimate of $696,813.00 for the cost of the subdivision improvements to Deborah Marchbanks, Pima County Subdivision Coordinator.
On December 14, 2004, a "Release of Subdivision Assurance Trust" ("Release") was recorded with the Pima County Recorder. (DSOF 19; PRSOF 7.) The Release referred to "substitute assurances in the form of a Performance Bond" and included the amount of the bond. (DSOF 20; PRSOF 8; Doc. 280, Ex. 5.) The Release provided that, based on the provision of substitute assurances, the Pima County Board of Supervisors approved the transfer of title to lots in the Enclave. (DSOF 21; PRSOF 8.) Following its standard practice, Pima County did not record the Substitute Assurance Agreement. (DSOF 45; PRSOF 18.)
Plaintiffs purchased sixteen lots within the Enclave. (PSOF 2; DRSOF 2.) At the time of purchase, Plaintiffs knew the improvements were not complete. (DSOF 64; PRSOF 43.)
On April 6, 2006, Plaintiffs sent a letter to Ms. Marchbanks detailing their concerns about the lack of progress on the improvements. (PSOF 21; DRSOF 21.) In response to the April 6, 2006 letter, WSP assured Pima County that improvements would be complete within ninety days. (PSOF 22; DRSOF 22.) WSP failed to complete the improvements. (DSOF 22; PRSOF 9.) On August 24, 2006, Deborah Marchbanks notified WSP of her findings that, pursuant to section 2.8 of the Substitute Assurance Agreement, WSP had failed to diligently construct the required improvements and therefore was in breach of the Substitute Assurance Agreement.
On December 15, 2006, WSP filed for Chapter 11 bankruptcy. (DSOF 28; PRSOF 13.) After WSP's bankruptcy filing, the County elected to allow time to complete the improvements through the bankruptcy, subject to Capitol's assurance that this would not prejudice the County's rights under the bond. (DSOF 29; PRSOF 13.) On July 31, 2007, WSP filed a plan of reorganization. (DSOF 30; PRSOF 13.) The bankruptcy court confirmed the plan on January 8, 2008. (DSOF 31; PRSOF 13.) The reorganization plan called for another entity, West Speedway Partners II, LLC ("WSP II") to complete the improvements. (DSOF 32; PRSOF 13.) The reorganization plan required
WSP II filed for bankruptcy on July 8, 2009. (DSOF 34; PRSOF 13.) On August 25, 2009, the County again made a claim on the bond. (DSOF 35; PRSOF 13.) On April 28, 2010, Pima County entered into a settlement agreement with, among others, WSP II and Capitol, whereby Capitol agreed to pay the full sum of the bond into escrow in order to facilitate completing the improvements. (Doc. 280, Ex. 16.) The settlement was approved by a bankruptcy judge in WSP's bankruptcy proceedings over Plaintiffs' objections. (Doc. 280, Exs. 17 & 18.)
The parties dispute whether work on the improvements is currently occurring. (DSOF 38; PRSOF 14.) Three of the Plaintiffs' lots have been sold at trustee's sales for significantly less than Plaintiffs' purchase price. (DSOF 49; PRSOF 24, 25.)
Plaintiffs initiated this action by filing a complaint alleging various counts against numerous defendants on January 3, 2008. (Doc. 1.) After several amendments of the complaint and dismissals of various parties and claims by the Court, (see, e.g., Docs. 182, 183), what remains at issue in this case are Plaintiffs' four claims against Pima County as alleged in Plaintiffs' Third Amended Complaint: (1) violation of the 5th Amendment takings clause; (2) violation of the 14th Amendment right to substantive due process; (3) gross negligence under Arizona law; and (4) promissory estoppel under Arizona law.
Plaintiffs move for partial summary judgment on their claims of substantive due process and negligence. In support of their motion, Plaintiffs allege that they closed escrow in reasonable reliance on information presented in their Purchase Documents, and representations made to them by WSP, its realtor, and its project engineer. (Doc. 284, p. 4.) When WSP failed to complete improvements, the County had an obligation to make a claim on the bond and complete the improvements. (Id.) The County's withdrawal of its demand on the bond without further assurances and/or oversight of the "incompetent developer was grossly negligent, in breach of its statutory and promissory duties" and was the proximate cause of continued delays and Plaintiffs' damages. (Id. at pp. 4-5.) In addition, Plaintiffs allege that the County had an obligation to inspect the properties and its failure to do so has resulted in the developer cutting faulty grades and trenches, inappropriately dumping sub-terrain rock on the lots, and causing vast destruction of expensive, protected vegetation. (Doc. 276, p. 6.) Plaintiffs allege the County's inaction has deprived them of the use of enjoyment of their properties for more than five years.
Defendant Pima County moves for summary judgment on all claims.
In deciding a motion for summary judgment, the Court views the evidence and all reasonable inferences therefrom in the light most favorable to the party opposing the motion. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Eisenberg v. Insurance Co. of North America, 815 F.2d 1285, 1289 (9th Cir.1987).
Summary judgment is appropriate if the pleadings and supporting documents "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v.
A party moving for summary judgment initially must demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 325, 106 S.Ct. 2548. The moving party merely needs to point out to the Court the absence of evidence supporting its opponent's claim; it does not need to disprove its opponent's claim. Id.; see also Fed.R.Civ.P. 56(c). If a moving party has made this showing, the nonmoving party "may not rest upon the mere allegations or denials of the adverse party's pleading, but . . . must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). See also Anderson, 477 U.S. at 256, 106 S.Ct. 2505; Brinson v. Linda Rose Joint Venture, 53 F.3d 1044, 1049 (9th Cir.1995).
The ultimate inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251, 106 S.Ct. 2505.
Examining Plaintiffs' allegations in the context of Fifth Amendment takings jurisprudence is akin to working a square peg into a round hole. Nothing in this case suggests that the County engaged in a taking of Plaintiffs' interest in their private property.
The Constitution prohibits "takings of private property . . . for public use, without just compensation." U.S. Const. Amend. V. Federal takings claims fall into three categories.
In the present case, the first two categories are clearly not at issue: Pima
Even in the context of Penn Central, however, Plaintiffs' takings claim defies logic. Penn Central examines the economic impact of government regulation on private property interests based on two primary factors: (1) the economic impact of the regulation on the claimant, ie. the extent to which the regulation has interfered with distinct investment-backed expectations and (2) the character of the governmental action, ie. whether it amounts to a physical invasion or instead merely affects property interests through "some public program adjusting the benefits and burdens of economic life to promote the common good." Penn Central Transp. Co. v. New York City, 438 U.S. 104, 124, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978). Analysis of Plaintiffs' claims under Penn Central is first stymied by the fact that there is no government regulation at issue in this case. In their response to Pima County's Motion for Summary Judgment, Plaintiffs contend that Pima County caused their injuries by failing to record the Substitute Assurance Agreement and by failing to timely ensure completion of the improvements. (Doc. 284, pg. 7.) Essentially, it is Plaintiffs' position that Pima County should have taken action to circumvent the harm caused by WSP's botched development project and ensuing bankruptcy. Plaintiffs have not cited any authority to suggest that a government's inaction or omissions can amount to a taking, and this Court is not aware of any such case law. To the contrary, the takings cases discussed above all involve an affirmative, overt action by the government —the adoption of a regulation, the implementation of a redevelopment plan, the acquisition of an easement, etc.—that directly causes a diminution in private property values. See Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 216 F.3d 764, 783 (9th Cir.2000) (in the takings context, the plaintiff must establish both causation-in-fact and proximate causation).
Second, and more generally, conceiving of Plaintiffs' allegations as a takings claim goes against the very purpose of the Takings Clause, which is to "prevent the government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." Palazzolo v. Rhode Island, 533 U.S. 606, 618, 121 S.Ct. 2448, 150 L.Ed.2d 592 (2001) (citing Armstrong v. United States, 364 U.S. 40, 49, 80 S.Ct. 1563, 4 L.Ed.2d 1554 (1960)). Takings
In sum, Plaintiffs do not state a valid takings claim under any takings theory, and Pima County is entitled to summary judgment on this claim.
In order to state a claim for substantive due process, Plaintiffs must allege that Pima County engaged in arbitrary and irrational conduct that deprived Plaintiffs of a legally cognizable interest in their real property. See Lingle, 544 U.S. at 542, 125 S.Ct. 2074 (holding that "deprivation of real property, although it would no longer constitute a taking, might be so arbitrary or irrational that it runs afoul of the Due Process Clause"). In the present case, Plaintiffs have alleged that the County acted arbitrarily in failing to perform its alleged regulatory duties, ie. overseeing construction of the Enclaves to ensure timely completion of the improvements. However, Plaintiffs' substantive due process claim is precluded by the holding in Shanks v. Dressel, 540 F.3d 1082 (9th Cir. 2008). In Shanks, a group of homeowners sued the city, alleging that its failure to enforce historic preservation regulations against a developer violated the homeowners' constitutionally-protected property interests. The Court rejected the homeowners' substantive due process claim, holding that "failure-to-protect" and "failure-to-enforce" allegations do not give rise to a substantive due process claim. As the Shanks court stated: "The Constitution generally does not require the state to `protect the life, liberty, and property of its citizens against invasion by private actors.' DeShaney v. Winnebago County Dep't of Soc. Serv., 489 U.S. 189, 195, 109 S.Ct. 998, 103 L.Ed.2d 249 (1989). Consequently, the state's failure to protect an individual from `harms inflicted by persons not acting under color of law' will not ordinarily give rise to § 1983 liability. Huffman v. County of Los Angeles, 147 F.3d 1054, 1058 (9th Cir.1998)." Id. at 1087. Like the homeowners in Shanks, Plaintiffs have alleged merely a "failure to protect" claim against Pima County, ie. that applicable statutes and regulations should have compelled Pima County to ensure completion of the Enclaves after WSP failed to provide Plaintiffs with the completed lots that Plaintiffs believed they were purchasing. The Constitution does not impose upon the County a duty to protect Plaintiffs from untimely and substandard work by third parties.
A.R.S. § 12-820.02 provides qualified immunity to the County for any actions other than those which allege that the County acted with intent to cause harm or with gross negligence.
In order to state a claim for promissory estoppel, Plaintiffs must demonstrate that: (1) the County made a promise to Plaintiffs; (2) the County should have reasonably foreseen that Plaintiffs would rely on that promise; (3) Plaintiffs did in fact rely on that promise and (4) Plaintiffs' reliance was justified. See Double AA Builders, Ltd. v. Grand State Const. L.L.C., 210 Ariz. 503, 114 P.3d 835, 839 (Ariz.App.2005). If these elements are proven, the promise "is binding if injustice can be avoided only by enforcement of the promise." See id. Plaintiffs contend that the Initial Assurance Agreement constituted a promise by the County to Plaintiffs that the Enclave improvements would be completed; Plaintiffs
For the foregoing reasons, the Magistrate Judge recommends the District Court, after is independent review of the record, enter an order:
1. DENYING the Motion for Partial Summary Judgment filed by Plaintiffs on October 15, 2010 (Doc. 276);
2. GRANTING the Motion for Summary Judgment filed by Defendant Pima County on October 18, 2010 (Doc. 279.);
3. Awarding judgment in favor of Pima County and directing the Clerk of the Court to close the file in this matter.
Pursuant to 28 U.S.C. § 636(b), any party may serve and file written objections within 14 days of being served with a copy of this Report and Recommendation. If objections are not timely filed, they may be deemed waived. If objections are filed, the parties should use the following case number:
DATED this 20th day of January, 2011.
