TOM S. LEE, District Judge.
This cause is before the court on the motion of defendant The City of Madison, Mississippi for summary judgment, and on the cross-motion of plaintiff Vineyard Investments, LLC, for partial summary judgment on the issue of liability. Each party has responded to the other's motion and the court, having considered the memoranda of authorities, together with attachments, submitted by the parties, concludes that the City's motion should be granted and Vineyard's motion denied.
The following facts are not in dispute.
At the City's request, a hearing was scheduled for December 4, 2007 before the State Tax Commission on Vineyard's application for a liquor permit.
In the meantime, at Vineyard's request, the subject of its permit application was placed on the October 2, 2007 agenda of the regular meeting of the Mayor and Board of Aldermen. The hearing was attended by representatives of Vineyard, as well as by members of the Colony Crossing Merchants Association, who objected to issuance of the requested permit on the grounds that having a second liquor store in the shopping center, particularly having one next door to a children's craft store and in relatively close proximity to a children's learning center, was detrimental to the "family" clientele the merchants wanted to attract.
On November 20, 2007, the Board of Aldermen voted unanimously to deny Vineyard's request for a building permit until after knowing the outcome of the December 4, 2007 hearing of the State Tax Commission concerning Vineyard's application for a liquor license. Vineyard timely sought review of the City's decision in the Madison County Circuit Court, pursuant to Mississippi Code Annotated § 11-51-75. In connection with the appeal, the City presented, inter alia, attested copies of the minutes from the City's meetings which pertained to Vineyard's application, and correspondence to the City from the Colony Crossing Merchants Association.
A week later, on December 4, 2007, the hearing went forward before the State Tax Commission on Vineyard's application for a liquor license. At that hearing, the Mayor testified that the City opposed issuance of a liquor license to Vineyard for its proposed Colony Crossing package store because in the City's opinion, having two package retail stores in the same commercial development could cause economic hardship to the community; one could drive the other out of business, creating a vacancy, which could in turn imply poor economic health. Also testifying at the hearing was the president of the Colony Crossing Merchants Association, who objected to the opening of a second liquor store in the shopping center for the same reasons it had previously expressed to the City. Over the City's objections, the State Tax Commission approved Vineyard's application for its package retail permit on December 18, 2007. Notwithstanding this, the City still refused to issue Vineyard a building permit, and Vineyard pressed forward with its appeal of the City's decision.
Initially, on December 18, 2008, the circuit court affirmed the City's denial of Vineyard's permit application, finding that the City's decision was supported by substantial
Vineyard filed the present action against the City on June 16, 2009 pursuant to 42 U.S.C. § 1983, alleging that the City deprived it of rights under the United States Constitution. More specifically, Vineyard contends the City's arbitrary and capricious rejection of its application for a building permit amounted to a deprivation of substantive due process, a deprivation of equal protection and tortious interference with business relations. The parties have filed cross-motions for summary judgment as to each of Vineyard's claims.
"The claim that a person is entitled to substantive due process means ... that state action which deprives [a person] of life, liberty, or property must have a rational basis-that is to say, the reason for the deprivation may not be so inadequate that the judiciary will characterize it as `arbitrary.'" Levitt v. University of Texas
To state a substantive due process claim, a party must first establish that he had a valid "property interest" in a benefit that was entitled to constitutional protection at the time it was deprived of that benefit. Vineyard asserts it had a "protected property interest in a building permit" and that the City's refusal to issue the permit was arbitrary and capricious, and violated Vineyard's substantive due process rights under the Fourteenth Amendment. In support of its motion, the City initially argues that Vineyard's property interest in the building permit is insufficient to merit substantive due process protection, but it submits further that even if Vineyard had a protected property interest, the decision to deny the permit was not arbitrary or capricious.
The City's principal challenge to Vineyard's assertion of a protected property interest in the requested building permit is based on the City's contention that while property interests created by state law are protected by procedural due process, only property interests created by the United States Constitution are protected by substantive due process. As the primary support for this position, the City relies on Justice Powell's statement in his concurrence in Regents of University of Michigan v. Ewing, that "[w]hile property interests are protected by procedural due process even though the interest is derived from state law rather than the Constitution, Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972), substantive due process rights are created only by the Constitution." 474 U.S. 214, 229, 106 S.Ct. 507, 515, 88 L.Ed.2d 523 (1985) (Powell, J., concurring). In making this argument, the City acknowledges that the Fifth Circuit in Schaper v. City of Huntsville, 813 F.2d 709 (5th Cir.1987), found that a state-created property interest in continued employment was entitled to substantive due process protection. Yet the City submits that whereas the Fifth Circuit has recognized the principle that only the federal constitution can create a right which merits substantive due process protection, it merely carved out a single exception to this principle when the right is one for continued public employment. Clearly, however, the distinction suggested by the City is unfounded. The argument overlooks the fact that in Schaper, the Fifth Circuit specifically interpreted the majority opinion in Ewing as implying "that substantive due process rights may be created the same way procedural due process rights are created, by state law." Id. at 716. But even more, the City's position is directly contradicted by numerous Fifth Circuit cases holding that substantive due process claims are based on the arbitrary denial of state-created property rights. One such case involved the City of Madison itself. In Bryan v. City of Madison, the court wrote:
Bryan v. City of Madison, Miss., 213 F.3d 267, 274-275 (5th Cir.2000). Accordingly, the court rejects the City's contention that Vineyard's claim fails for want of a property interest emanating from the federal constitution, rather than from state law.
A protected property interest arises where there is "a legitimate claim to entitlement" as opposed to a mere subjective expectancy. See Skidmore v. Shamrock Independent School Dist., 464 F.2d 605, 606 (5th Cir.1972) (citing Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972)). "A claim to entitlement arises, for these purposes, when a statute or regulation places substantial limits on the government's exercise of its licensing (or permitting) discretion. No discretion in the official and a reasonable expectation in the citizen are central elements of a protected property interest." Hampton Co. Nat. Sur., LLC v. Tunica County, Miss., 543 F.3d 221, 226 (5th Cir. 2008) (citing Town of Castle Rock, Colo. v. Gonzales, 545 U.S. 748, 756, 125 S.Ct. 2796, 162 L.Ed.2d 658 (2005)); see also Chavers v. Morrow, 354 Fed.Appx. 938, 941 (5th Cir.2009)("To determine whether statutes or regulations create a protected property interest, we must ask whether they place substantive limitations on official discretion.")(internal quotations and citations omitted); cf. Horton v. City of Smithville, 117 Fed.Appx. 345, 348 (5th Cir.2004) ("discretionary statutes do not give rise to constitutionally-protected property interests"); Baldwin v. Daniels, 250 F.3d 943, 946 (5th Cir.2001) (finding appellant had no property interest where statute committed decision to the discretion of the responsible officer).
"In determining whether statutes and regulations limit official discretion, the Supreme Court has explained that we are to
The Mississippi Court of Appeals has held that since Vineyard was in compliance with all building codes and zoning ordinances when it applied for the building permit (and there was and is apparently no dispute about that), then under applicable Mississippi law, the City had no discretion to deny the permit. See Vineyard Investments, LLC v. City of Madison, 999 So.2d 438, 439 (Miss.Ct.App.2009). From this, it follows that Vineyard had a property interest in issuance of a building permit.
Once it is determined that a state has deprived an individual of a property interest, the court must determine whether the government action that gave rise to the deprivation is supported by a rational basis. Brennan v. Stewart, 834 F.2d 1248, 1257-58 (5th Cir.1988). Whether a particular action has the requisite rational relationship to a legitimate government interest is a question of law to be decided by the court. FM Properties Operating Co. v. City of Austin, 93 F.3d 167, 172 (5th Cir.1996).
The Fifth Circuit has explained that in reviewing a claim that a zoning or other land-use decision by a state lacked a rational basis and hence denied substantive due process, "a court could pursue either of two analytical tracks. A regulatory decision can be legislative or it can be adjudicative, and it will be reviewed differently depending on which category it is placed into." Shelton v. City of College Station,
The Fifth Circuit has not articulated a test for distinguishing between legislative and adjudicative action, but relevant considerations can be gleaned from the court's decisions. In Shelton, the court observed that the enactment of zoning ordinances is generally a legislative function. Beyond that, the proper categorization of land-use decisions can be more difficult, and typically involves consideration of the function and powers of the decisionmaker to make the determination, including the extent of any discretion it has in the matter; whether the decision involved the promulgation of legislative policy as a defined and binding rule of conduct or instead the application of previously established or defined policies or standards; and whether the challenged decision is one that applies prospectively to the general community or is instead directed specifically at the plaintiff.
For example, in County Line Joint Venture v. City of Grand Prairie, Tex., 839 F.2d 1142, 1144 (5th Cir.1988), the court concluded that the city's enactment of an ordinance providing for automatic extinguishment of a specific use permit upon six months of nonuse was a legislative, not adjudicative act, reasoning as follows:
Id. at 1146; see id. ("Conduct of a municipal body is likely to be deemed legislative when an elected group, such as a city council, makes a general zoning decision which applies to a large group of interests. Conversely, a municipal body's action may be more likely termed adjudicative if an appointed group, such as a zoning board, makes a specific decision regarding a specific piece of property.").
In Shelton, from which the court's reasoning in County Line was derived, the Fifth Circuit concluded that a zoning board's denial of an individual request for a variance from a zoning ordinance, while not strictly legislative, was nevertheless "quasi-legislative" and thus properly analyzed under the legislative model of rationality review. Summarizing the opinion in Shelton, the court in Mahone wrote:
Mahone, 836 F.2d at 934 (quoting Shelton).
In Kaplan v. Clear Lake City Water Authority, 794 F.2d 1059 (5th Cir.1986), the court applied Shelton's analysis to decisions made by state-created water authorities, described as political subdivisions formed under Texas law to provide water and sanitary sewer services to the area within its boundaries. Id. at 1060-61. The court observed that while water districts did not possess the same broad governmental powers held by zoning boards, Texas law did give the districts some discretionary power to determine who gets services and when, and based on that discretion, the court found that the water authorities possessed "limited legislative or quasi-legislative functions" and that
In the case at bar, the challenged decision was made by an elected body which indisputably has broad powers with respect to zoning decisions. What is at issue here, though, is not a zoning decision—be it the establishment of a zoning law or a decision whether to permit a variance from a zoning law—but rather the denial of a building permit to a specific applicant for a proposed business that complied with all of the City's building codes and zoning ordinances. Under state law, as has now been determined by the Mississippi Court of Appeals, the City had no discretion to deny Vineyard's application for a permit. Given these circumstances, the court concludes that the City's decision was adjudicative, not legislative, and therefore subject to Shelton's adjudicative rationality analysis. Indeed, courts have consistently held that the issuance of building permits in like circumstances is a non-legislative act. See Koorn v. Lacey Tp., 78 Fed.Appx. 199, 204 (3d Cir.2003) (noting in dicta that issuance of building permits is a non-legislative act, which is analyzed under a separate thread of substantive due process from legislative acts); Bateson v. Geisse, 857 F.2d 1300, 1304 (9th Cir.1988)(city council members' decision to reject plaintiff's building permit which "was directed specifically and solely at a single individual" and did not "appl[y] to the general community" was non-legislative act); Scott, 716 F.2d at 1423 (4th Cir.1983) (finding members of city council did not act in their legislative capacity, but rather in executive capacity in issuing order to county planning commission to delay consideration of building permit); see also 8A Eugene McQuillian, The Law of Municipal Corporations § 25.217 (3d ed. 2008) ("[A] zoning ordinance vesting in the municipal council the power to determine whether a building permit should be granted ... ordinarily is regarded as administrative, rather than legislative in character.") (cited in Jaggers v. City of Alexandria, No. 08-5213, 2009 WL 233244, *5 (6th Cir.2009)).
The adjudicative mode of analysis asks not whether there was some conceivable rational basis for the challenged decision, but requires a finding as to what actually motivated the decision, and then asks whether this is rationally related to a legitimate governmental purpose. In this case, the record evidence reflects that the reasons the City articulated for denying the permit remained constant from the time the issue first arose through the hearing before the State Tax Commission. In the September 18, 2007 resolution by the Board of Aldermen to oppose Vineyard's application for a liquor permit, the Board found that granting Vineyard's permit "would not be in the best interest of the City or its citizens," that "a concentration of Package Retailers in the (shopping center) [was] not necessary or desirable for the welfare of the municipality," and that the use of such property for a liquor store "[would] not promote and foster the development and improvement of the community in which it is located and the civil, social, educational, cultural, moral, economic or industrial welfare thereof and specifically is not consistent with the overall land use goals and planning for the area." Along these lines, the Mayor testified at the
The court does not understand Vineyard to contend that these would not be rational reasons for a zoning decision by a city limiting the number and/or location of liquor stores. But Vineyard points out that the City's decision here was not a zoning decision, over which the City might arguably have had some discretion. Instead, according to Vineyard, its application should have involved a mere administrative determination of whether its building permit application satisfied existing building codes and zoning ordinances, and that it was entitled to have its application approved once it was determined that the application complied with those existing standards and ordinances. Vineyard submits that given the City's lack of discretion in the matter, it necessarily follows that the City's denial of the application was arbitrary and capricious, and a violation of Vineyard's due process and equal protection rights. In other words, Vineyard seems to contend that because state law gave the City no discretion to deny the permit, it follows that its denial of the permit was arbitrary and capricious for due process purposes. Vineyard's position on this point is not well-founded. The City may have had no discretion to deny the building permit as a matter of state law; but "a violation of state law is neither a necessary nor a sufficient condition for a finding of a due process violation. [Likewise, not] every apparent transgression of state law by a state agency triggers the operation of the federal equal protection clause." Stern v. Tarrant County Hosp. Dist., 778 F.2d 1052, 1059 (5th Cir.1985); see also Smith v. Picayune, 795 F.2d 482, 488 (5th Cir.1986) ("the guarantees of the fourteenth amendment... its promise of protection from arbitrary or irrational state action, are guarantees that turn on federal constitutional standards of ... rationality rather than on state standards").
For federal due process purposes, "government action comports with substantive due process if the action is rationally related to a legitimate governmental interest." FM Prop. Operating Co., 93 F.3d at 174. In the court's opinion, notwithstanding the context or manner in which the decision was made, the City's actions satisfy this standard. The evidence cited by the City demonstrates that the City was responding to concerns about the impact of another liquor store in the shopping center on the public health and welfare, matters unquestionably of governmental interest.
Vineyard contends that there exists a genuine issue of material fact as to whether the reasons the City has offered for its decision to deny the building permit to Vineyard were its true reasons, and points to evidence which it contends suggests that Mayor Butler denied the issuance of the permit to benefit a friend, Jim Streetman. It notes that Streetman owned an interest in the liquor store that already operated in the Colony Crossing shopping center and contends that the Mayor "was
In sum, therefore, the court concludes that based on the undisputed facts of record, Vineyard cannot prevail on its substantive due process claim, which will be dismissed.
Vineyard alleges to the extent the City has claimed it denied Vineyard a building permit because Vineyard had not yet received a permit from the State Tax Commission to operate a liquor store at the time Vineyard submitted its application for a building permit, the City violated Vineyard's equal protection rights, since the City had previously issued building permits to four other liquor stores within the City without requiring any of them to first obtain an ABC permit from the Tax Commission to operate a liquor store.
Engquist v. Oregon Dept. of Agr., 553 U.S. 591, 602, 128 S.Ct. 2146, 2153, 170 L.Ed.2d 975 (2008). To prevail on its equal protection claim, Vineyard must establish that (1) it has been intentionally treated differently from others similarly situated; and (2) there is no rational basis for the difference in treatment. See id.
In support of its motion, the City argues that it is entitled to summary judgment on Vineyard's equal protection claim both because Vineyard cannot establish that any similarly situated package retail store was treated differently, and because there was a rational basis for any difference in treatment. In the court's opinion, the City's position on both points has merit.
The documentary evidence of record suggests that the City denied Vineyard's building permit on November 20, 2007 pending the outcome of Vineyard's application for a liquor license, the issuance of which the City was actively opposing because it believed that having two package retail stores in the same commercial development could cause economic hardship to the community, and because it found that having two liquor stores in the Colony Crossing Shopping Center would change the character of the development and undermine its family atmosphere. The opinion of the Mississippi Court of Appeals indicates that the City took the position in its argument to that court that it denied the permit because Vineyard had not yet gotten its liquor license when it applied for a building permit, and because a building permit could not be issued for a business that could not be lawfully operated. See Vineyard Investments, LLC v. City of Madison, 999 So.2d at 442. While this was an additional reason advanced by the City during the appeal process to explain its decision, it is clear from the record that this was not the only reason for the City's decision.
Vineyard asserts a cause of action for tortious interference with business relations against the City via § 1983 based on its allegations that the City's unlawful denial of a building permit was a "deliberate course of conduct under color of law which tortiously interfered with Plaintiff's right to conduct a business pursuant to a lease agreement between Plaintiff and Kroger." The City urges that summary judgment is warranted inasmuch as there is no federal
Section 1983 does not create substantive rights, but rather provides a civil remedy for the deprivation of constitutional or other rights created by federal law. Southwestern Bell Telephone, LP v. City of Houston, 529 F.3d 257, 260 (5th Cir.2008) ("[§ ]1983 confers no substantive rights, but merely provides a remedy for the violation [, by a person acting under color of state law,] of rights secured under the Constitution and laws of the United States") (quoting Kirchberg v. Feenstra, 708 F.2d 991, 1000 (5th Cir.1983) (emphasis added)). Further, despite Vineyard's assertion that the unlawful denial of a permit is analogous to a claim of tortious interference, there clearly is no support for the position that the United States Constitution or any other federal law guarantees the right to be free from the tortious interference with a business relationship. Khan v. Gallitano, 180 F.3d 829, 835 (7th Cir.1999) (plaintiff "failed to show why the right to be free from tortious interference by state actors is a fundamental right deeply rooted in our history and tradition or implicit in the concept of ordered liberty" or "why having a state-law remedy for whatever injury the defendants caused her is inadequate under the federal constitution"); BPNC, Inc. v. Taft, 147 Fed.Appx. 525, 530 (2005) ("tortious interference with contract ... is not a right that arises under federal law").
Based on all of the foregoing, it is ordered that the City's motion for summary judgment is granted, and it is ordered that Vineyard's motion for summary judgment on liability is denied.
A separate judgment will be entered in accordance with Rule 58 of the Federal Rules of Civil Procedure.
Miss.Code Ann. § 17-1-19 (emphasis added). The court found that the denial of a permit under this statute would be permissible only where there was an actual improper use, or attempted improper use of the property; the City's denial, the court held, was not justified, as there was nothing in the record to suggest that Vineyard had any intention of actually using the property as a package retail store before obtaining an ABC permit. Id. at 441.