A.A. Profiles, Inc. v. City of Ft. Lauderdale

Citations: 850 F.2d 1483; 1988 U.S. App. LEXIS 10099; 1988 WL 72423Docket: 87-5219

Court: Court of Appeals for the Eleventh Circuit; August 1, 1988; Federal Appellate Court

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A.A. Profiles, Inc. filed a lawsuit against the City of Fort Lauderdale and its City Commission members, alleging violations of 42 U.S.C. Sec. 1983 for taking property without just compensation under the Fifth Amendment and depriving it of property without due process under the Fourteenth Amendment. The case was tried non-jury, focusing solely on liability, but the district court dismissed the case, ruling there was no taking or due process violation since the appellant did not pursue state remedies.

The appellant had contracted to purchase a 28-acre tract zoned for industrial use, intending to establish a wood-chipping business. The development proposal received initial approval from several agencies and was unanimously approved by the City Commission in December 1979. After purchasing the land and obtaining building permits, the appellant began construction and sought to start operations despite not completing a required concrete wall, receiving temporary approval from the Chief Building Inspector.

However, complaints from residents led the Chief Zoning Inspector to halt operations, citing discrepancies between the approved plans and those used for permitting. Subsequently, the City Commission voted to temporarily suspend the development approval, and a "stop work" order was issued the following day. The appellate court reversed the district court's judgment and remanded the case for further proceedings.

On July 1, 1980, the City Commission discussed the wood-chipping operation and instructed the city attorney to draft a resolution to amend the original resolution. A proposed resolution was presented at a public hearing on July 30, 1980, where many residents expressed opposition and suggested potential violence if the project proceeded. The hearing concluded after the appellant announced it would pause the project to clarify its legal standing with the City. Subsequently, the appellant requested the City to stop making the project unfeasible and sought damages for losses incurred. On March 10, 1981, the City Commission unanimously passed Ordinance No. C-81-16, changing the zoning from M-1 to B-3-C, light industrial use. Consequently, the appellant faced financial difficulties, leading to a foreclosure by lenders on the property.

To succeed in a claim under 42 U.S.C. § 1983, a plaintiff must demonstrate a constitutional violation. The appellants contend that the City's actions infringed upon the constitutional prohibition against taking private property without just compensation and violated procedural due process. The Fifth Amendment stipulates that private property cannot be taken for public use without just compensation, a principle applicable to states via the Fourteenth Amendment. The Supreme Court has established that a taking can occur either through formal eminent domain condemnation or through governmental regulation that significantly restricts property use. For regulation to be valid, it must substantially advance a legitimate state interest or deprive the owner of economically viable use of the land. If a regulation exceeds this threshold, it may be deemed a taking.

A takings claim concerning governmental regulation is not ripe for adjudication until a government entity has made a final decision regarding the application of the regulations to the property in question. This finality is essential for evaluating the economic impact and interference with reasonable investment-backed expectations resulting from the regulatory action. A plaintiff must also demonstrate the absence of adequate state remedies, such as inverse condemnation, to address the injury caused by the final decision.

In this case, the appellant claims that the City Commission's temporary suspension of project approval amounts to a regulatory taking and that the state lacks an adequate procedure for just compensation. Although the City acknowledges the absence of state remedies, it contends that no final decision was made because the appellant did not complete a required wall before commencing business.

However, the case is deemed ripe for adjudication since the City not only suspended the project's approval but also enacted a rezoning ordinance, which effectively imposed a moratorium on development. This prevented the appellant from fulfilling the necessary conditions for construction. The rezoning ordinance reflects a definitive position by the City on the property.

The City argues that the South Florida Building Code provides an appellate procedure for aggrieved property owners to challenge stop work orders and permit suspensions, suggesting that the appellant should have exhausted these remedies prior to filing a section 1983 action. Nonetheless, the requirement for exhaustion of administrative remedies is distinct from the necessity for finality in administrative actions before judicial review. The Board of Rules and Appeals can review stop work orders but lacks the authority to overturn zoning decisions. Thus, the rezoning ordinance is considered a final decision, allowing for the examination of the takings claim's merits.

A government regulation constitutes a taking if it does not substantially advance a legitimate state interest or is not reasonably necessary for a significant public purpose, as established in Penn Central Transp. Co. v. City of New York. In Wheeler v. City of Pleasant Grove, the court identified a regulatory taking when a property owner, having obtained a construction permit, was subsequently prohibited from proceeding due to a new ordinance that was deemed arbitrary and capricious, infringing on the developer's Fourteenth Amendment rights. This case parallels Wheeler, as the original resolution granted the appellant a property interest, which was then nullified by a rezoning ordinance that did not accommodate the appellant's wood-chipping operation, representing a confiscatory measure.

While the City contends its actions were justified in the interest of health and safety, it cannot remedy violations of local regulations through unconstitutional measures. The City had alternative solutions available to address public complaints regarding the appellant's operations. The court concluded that the City’s actions were impermissible and reversed the district court's ruling, remanding for further proceedings to address the taking.

The court reversed and remanded the case, presided over by Senior U.S. District Judge Walter E. Hoffman. The complaint initially sought relief under sections 1981 and 1988, but the section 1981 claim was abandoned. A proposed resolution necessitated establishing a buffer zone around the property and constructing a wall before operations began, along with ensuring that a wood-chipping machine was functioning prior to material acceptance.

The court referenced a legal principle indicating that if a government provides a fair compensation process for takings, property owners cannot claim against the government. The appellant contended that Florida law does not sufficiently offer just compensation for regulatory takings, referencing prior case law which established that the only remedy for a property owner challenging a zoning ordinance was to seek to invalidate that ordinance. The court highlighted that a recent Florida Supreme Court ruling recognized a taking occurred when the state destroyed healthy trees, affirming the right to seek compensation in inverse condemnation cases. However, it clarified that this ruling does not extend to zoning ordinance cases, maintaining that zoning and inverse condemnation are distinct under Florida law.

The court also noted the city's characterization of a suspension as "temporary" was dubious, as it effectively became permanent without any action to lift it. Furthermore, testimony indicated that foreclosure proceedings on the property were ongoing during the rezoning, yet the appellant remained the injured property owner. The court dismissed attempts by the appellees to differentiate this case from a precedent by emphasizing that a taking occurred with the new ordinance that revoked prior development approval.

The court rejects the appellant's argument that the City lacked the authority to amend the ordinance requiring the completion of a wall prior to the commencement of operations. The inclusion of the wall in the appellant's proposal estops them from contesting the City's amendment. In a communication dated May 2, 1980, the city attorney referenced relevant case law (Hollywood Beach Hotel Co. v. City of Hollywood and Sakolsky v. City of Coral Gables) to assert that the appellant had a vested right to pursue the wood-chipping development. However, during a public hearing on May 6, 1980, the city attorney cautioned that the operation of a dump, which raised concerns among local residents, could lead to criminal penalties potentially justifying an injunction or civil remedy. The appellant also claims a violation of procedural due process under the Fourteenth Amendment, arguing that the May 6 commission meeting lacked adherence to state law mandated procedures. The district court's opinion does not clarify whether this claim was considered, and thus the court will not evaluate its merits.