545 Halsey Lane Properties, LLC v. Town of Southampton

Citations: 45 F. Supp. 3d 257; 2014 U.S. Dist. LEXIS 130304; 2014 WL 4629087Docket: No. 14-cv-2368 (ADS)(GRB)

Court: District Court, E.D. New York; September 16, 2014; Federal District Court

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On April 11, 2014, Plaintiff 545 Halsey Lane Properties, LLC filed a lawsuit under 42 U.S.C. § 1983 against the Town of Southampton Zoning Board of Appeals (ZBA) following the denial of its appeal against the Town's Building Inspector's decision to deny a building permit for a basketball court on property subject to an agricultural reserve. The Plaintiff claims violations of its Substantive Due Process rights under the Fourteenth Amendment and breach of contract. On May 30, 2014, the Defendants, including the Town, the ZBA, and several individual members, moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. The Court ruled to dismiss the Substantive Due Process claim and declined to exercise supplemental jurisdiction over the breach of contract claim, dismissing it without prejudice. Additionally, the Court denied the Plaintiff's motion to strike arguments presented for the first time in the Defendants’ reply as moot. The Plaintiff is a New York LLC, while the Town is a municipal corporation, and the ZBA was created under New York Town Law. The property in question was acquired by the Plaintiff in 2003 and has historical agricultural use, with prior owners having entered into an agreement with the Town regarding its use, which was authorized by a Town Board resolution in 1980.

The Grant filed with the Suffolk County Clerk reserves various property rights for the Grantors and their successors, including future uses and improvements on the Property. The Plaintiff is a successor-in-title to the Grantors. The Grant specifies that, in exchange for subdivision and easement rights, the Grantors retained rights to utilize the Property for several purposes: farming operations (including soil preparation, cultivation, and use of farm vehicles), open and landscaped areas, recreational uses, and one single-family dwelling with customary accessory structures. The Grantors and successors are allowed to construct and maintain the Property as needed for these uses.

The Property lies within the R-80 Residential Zoning District and an Agricultural Overlay District (AOD) established in 1972. At the time of the Grant, the Town Code did not impose restrictions on construction within the AOD. However, the Town later amended the Code to limit construction on land with transferred development rights to structures incidental to agricultural production, as defined by New York State Agricultural and Markets Law. The Property never had development rights transferred to the Town.

In 1994, further amendments prohibited construction within the AOD except for agricultural structures permitted by the Town Board, with a subsequent transfer of permitting authority to the Planning Board in 1998. In 1996, a former owner sought a permit to construct a single-family residence, but was informed that permits for structures intended for human habitation were not allowed. The Town Board referred the application to the Farmland Committee and Planning Board for recommendations. The Planning Board concluded that the Grant allowed uses beyond agriculture and recommended issuing a construction permit. The Farmland Committee confirmed that the Grant permitted agricultural, open space, recreational uses, and the construction of a single-family residence with accessory structures.

On December 23, 1997, the Town Board granted a permit for constructing a single-family residence and accessory structures on the Property. The Plaintiff's predecessor built a residence, and after purchasing the Property in 2003, the Plaintiff added a baseball diamond, playground, and art sculptures. In 2013, the Plaintiff sought to build a basketball court but was denied by the Town Building and Zoning Inspector, citing that such construction was not permitted on an agricultural reserve. The Plaintiff appealed this decision to the Zoning Board of Appeals (ZBA), arguing that the denial conflicted with the Grant and New York General Municipal Law § 247, asserting that the Town Code should support their rights under the Grant and that the ZBA should adhere to previous precedents. The ZBA ultimately denied the appeal, citing Town Code § 330-51, which prohibits a basketball court on land preserved for agricultural use. The Plaintiff then initiated an Article 78 proceeding in New York State Supreme Court to challenge the ZBA's decision, which remains pending.

Subsequently, on April 11, 2014, the Plaintiff filed a lawsuit under 42 U.S.C. § 1983, claiming violations of Substantive Due Process rights under the Fourteenth Amendment and breach of contract under New York State law. The Defendants moved to dismiss the complaint, arguing the Plaintiff did not establish a constitutionally protected property right, did not demonstrate a custom or policy that caused injury, that the Individual Defendants were entitled to qualified immunity, and that the court should not exercise supplemental jurisdiction over the breach of contract claim. The Plaintiff opposed the motion, and the Defendants later claimed absolute immunity for the Individual Defendants as legislative and quasi-judicial actors. The Plaintiff sought to strike this assertion.

Absolute immunity is characterized as immunity from suit, distinguishing it from traditional affirmative defenses. The Defendants argue that this Court should consider absolute immunity despite not raising it in their initial motion. However, since the Court grants the motion to dismiss on other grounds, it does not need to evaluate the Individual Defendants' absolute immunity concerning the events in question, leading to the denial of the motion to strike as moot.

In a related action, initiated on February 6, 2014, Plaintiff challenged decisions by the Planning Board regarding conditional approvals for building permits under 42 U.S.C. § 1983. The Defendants moved to dismiss this complaint for lack of jurisdiction and failure to state a claim. Subsequently, the Plaintiff sought to consolidate this action with another case. On August 19, 2014, the Court denied the motion to dismiss, but reserved its decision on the motions to dismiss and consolidate.

The Rule 12(b)(6) standard requires a complaint to present sufficient factual allegations to establish a plausible claim for relief, per the Twombly standard. The court must accept factual allegations as true but not legal conclusions or mere assertions. A complaint survives a motion to dismiss only if it presents a context-specific plausible claim for relief. The court's review is limited to the complaint's text and any documents referenced or judicially noticed.

Claims of due process violations under the Fourteenth Amendment, actionable through section 1983, necessitate the existence of a federally protected property right and a denial of that right without due process, either procedural or substantive.

The United States Constitution does not inherently create property interests; thus, courts apply an entitlement test based on existing rules or understandings from state law to determine if a claimed property right warrants protection under due process. In this context, New York State law is examined to assess the Plaintiff's property rights. Federal courts are cautioned against acting as zoning boards of appeal, as the Due Process Clause does not oversee state and local land-use decisions; that responsibility lies with state courts. For a land-use benefit to be recognized as a property interest under the due process clause, a landowner must demonstrate a "clear entitlement" to that benefit, which requires more than a mere desire for it. The clear entitlement test is stringent and assesses the discretion of the authority in making decisions rather than predicting specific outcomes. A property interest exists when the authority is mandated to issue a permit if certain criteria are met, as illustrated by a case where a homeowner had a right to an excavation permit due to the lack of discretion by the superintendent of highways. Conversely, no property interest exists in scenarios where officials have broad discretion, such as in zoning law enforcement. The court must identify the specific property right allegedly denied to the Plaintiff, which can include both existing and sought interests, contingent upon a legitimate claim of entitlement. The existence of a protected property right hinges on whether, under state law, the application would likely have been granted without the alleged due process denial.

Entitlement to a permit hinges on whether the issuing authority is mandated to grant it upon meeting specific, objectively ascertainable criteria. The Plaintiff claims a constitutionally protected property interest in constructing a basketball court, citing the Grant's provision for "compatible recreational uses" on the Property, which includes the area under an agricultural reserve easement. The Defendants argue that the Grant does not define "compatible recreational use." However, the Court does not need to determine if the Plaintiff has a valid property interest, as it concludes that the Plaintiff has not met the second requirement of a Substantive Due Process claim: demonstrating that the Defendants acted arbitrarily or irrationally in infringing upon any property right. The Plaintiff must show that the governmental action was not only incorrect but so egregiously arbitrary as to represent a gross abuse of authority. The Court emphasizes that substantive due process is violated only by governmental actions with no legitimate justification. In this case, even assuming the Plaintiff's allegations are true, the Court finds that the Zoning Board of Appeals (ZBA) may have simply misapplied the Town Code regarding "compatible recreational use" without any indication of ill will or malice. Consequently, the Plaintiff has not sufficiently established a plausible Substantive Due Process claim, and the Court grants the Defendants’ motion to dismiss this claim.

The Plaintiff's Substantive Due Process claim under § 1983 is dismissed because it did not satisfy the necessary legal elements, negating the need for the Court to address the Defendants' other arguments regarding Monell claims, personal involvement of Individual Defendants, or qualified immunity. The Plaintiff's request to amend the complaint is denied, as the Court finds no justification for amendment or indication of how it would address existing deficiencies. The lengthy original complaint does not suggest any viable amendments. The Court also clarifies that Rule 15(a) cannot be used as a fallback to avoid dismissal. 

Regarding supplemental jurisdiction over the New York State breach of contract claim, the Court declines to exercise jurisdiction since all federal claims have been dismissed, aligning with Second Circuit guidance that typically favors not exercising jurisdiction in such instances. Although there is a related action pending, the claims are legally distinct and involve different defendants. Consequently, the breach of contract claim is dismissed without prejudice. The Court further denies as moot the Plaintiff's motion to strike arguments in the Defendants’ reply and orders the case closed.