Court: District Court, E.D. Michigan; September 25, 2015; Federal District Court
The Court ruled on defendants' objections to the Magistrate Judge's Report and Recommendation regarding their Motion to Dismiss. The Magistrate Judge suggested granting the motion for the plaintiffs' claims of mandamus and superintending control to the extent that it sought to lift the stop work order and approve a revised site plan, while recommending denial for all other claims. Defendants, which include the City of Rochester and the City of Rochester Planning Commission, filed objections citing erroneous factual findings and legal conclusions by the Magistrate Judge. They contested the ripeness of the plaintiffs' claims, jurisdiction over the superintending control claim, the legal standard applied to the breach of contract claim, and the dismissal of the promissory estoppel claim.
The Court adopted parts of the Magistrate Judge's Report while rejecting others, affirming the factual background but addressing objections as necessary. The procedural history noted that plaintiffs filed a lawsuit in January 2014 alleging multiple claims, including inverse condemnation and violations of due process, following the defendants' removal to this Court and counterclaims for nuisance. The defendants' motion to dismiss was heard in June 2014, with the Report issued in October 2014, and objections filed in November 2014. The Court emphasized that it must review objections de novo, ensuring they are specific enough to identify contentious issues.
In a facial attack on subject matter jurisdiction, a district court must accept the plaintiffs’ allegations as true and interpret them favorably towards the plaintiffs. If the jurisdictional challenge is factual, the court can evaluate evidence to confirm its jurisdiction. A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) cannot be filed after an answer to the complaint is submitted, but such motions may be treated as motions for judgment on the pleadings under Rule 12(c), which are judged by the same standards as Rule 12(b)(6) motions. To survive a motion to dismiss, a complaint must provide enough factual content, accepted as true, to present a plausible claim for relief, avoiding mere labels or formulaic recitations of claims.
Regarding findings of fact, the defendants contested multiple aspects of the Magistrate Judge’s findings and submitted an exhibit listing objections to additional findings. However, the court will not consider these objections due to non-compliance with a stipulated order limiting the length of objections. The defendants requested an extension to adequately address the report, which was granted. The findings indicate that Ed Francis was appointed as an independent historic preservation expert to assess whether the plaintiffs complied with the U.S. Secretary of the Interior’s guidelines for historic redevelopment.
Defendants assert that the Magistrate Judge mischaracterized the evidence concerning Francis's role in relation to the plaintiffs' construction project, specifically disputing the claim that Francis was hired as an arbiter. They emphasize that the Planning Commission, not Francis, was responsible for making final determinations regarding compliance with the SOI standards, arguing this distinction is crucial to their motion's outcome and affects the ripeness of the case. Defendants challenge three factual findings in the Report and Recommendation, particularly contesting the interpretation of a December 28, 2012 letter from City Manager Vettraino, which the Magistrate Judge cited as indicating that Francis would resolve disputes. The letter states the Planning Commission provided a remedy for disagreements and that an expert review should occur after project completion, suggesting that the Commission would ultimately decide on compliance issues. The defendants argue this indicates the Planning Commission retained authority, while plaintiffs interpret the reference to Francis as a “remedy” as designating him the final arbiter. The Court concludes that Vettraino's letter does not assert that Francis would make final decisions on compliance. Additionally, defendants contest the finding regarding a January 7, 2013 meeting where the Planning Commission allegedly decided to involve a preservation expert to settle disputes, with evidence suggesting the Commission maintained final decision-making authority even after receiving Francis’s report.
Defendants contend that the Magistrate Judge misinterpreted the Planning Commission's meeting minutes from February 6, 2012, and March 26, 2013, by concluding that Francis was designated as the final arbiter to resolve the dispute between the parties. Plaintiffs reference a mention of a "third party arbiter" during the meetings and cite a motion from June 3, 2013, that specified hiring Francis for dispute resolution. The Magistrate Judge noted that the March 26 minutes suggested that in the event of a disagreement regarding compliance with SOI standards, the parties would rely on Francis's determination. On October 1, 2013, Francis reported that the project reasonably complied with SOI standards, which the Judge interpreted as resolving the compliance issue in the Plaintiffs' favor.
The Court, however, disagrees with the Magistrate Judge's interpretation, asserting that the minutes do not definitively support the notion that Francis was the final arbiter. It points out that Francis was mentioned as an arbiter only once by a single Planning Commission member, while another member indicated that the Commission's role was to apply SOI standards fairly. Additionally, the February 6, 2012, minutes did not reference Francis as the final arbiter, instead noting that an outside expert would be selected if disagreements arose. Consequently, the Court clarifies that Francis was engaged to assess compliance with SOI standards but was not intended to serve as the final decision-maker. It concludes that although the term "resolve" suggests finality, the Planning Commission was expected to make the final decision after receiving Francis's report, thereby rejecting any inconsistencies in the Magistrate Judge's findings.
Further, regarding the allegation that defendants improperly influenced Francis and did not share his report, the Court clarifies that the Magistrate Judge did not make such a finding of improper influence but merely noted that Francis's reports were allegedly not provided to plaintiffs. The Court also emphasizes that any alleged influence over Francis's report does not change the factual determination of who had final decision-making authority, thus rejecting defendants' objections to this finding.
Plaintiffs sought a waiver of the City’s payment-in-lieu-of-parking requirement in their proposal for Special Project approval. Defendants contested the Magistrate Judge's factual findings regarding this requirement, specifically disputing the assertion that the plaintiffs were actively seeking such a waiver. They referenced the Magistrate Judge's characterization of the October 4, 2011 proposal as necessitating a waiver, arguing that the evidence indicated the City Planner advised plaintiffs to formally request a modification of parking standards if that was their intent. In response, plaintiffs deemed the defendants' objections trivial, noting that the Magistrate Judge’s finding was merely a statement of fact regarding the proposal's requirements, not an assertion of a concrete request for a waiver.
During a Planning Commission meeting on September 15, 2011, plaintiffs' architect suggested that they could pay for parking if permitted to construct a new building but would require free parking to renovate the existing structure. The October 4, 2011 proposal aligned with this discussion. The Court rejected defendants' objections to the Magistrate Judge's findings about this proposal.
Defendants also challenged the Magistrate Judge's characterization of a November 18, 2011 letter responding to Planning Commission concerns. The letter indicated that plaintiffs intended to preserve the original structure while requesting a waiver of the payment-in-lieu-of-parking requirement, arguing that this historic preservation would justify a modification of parking requirements under Special Project standards. Plaintiffs maintained that the Magistrate Judge’s findings were correct, pointing out that the letter explicitly requested a parking modification in accordance with the Special Projects approval standards. The Court upheld the accuracy of the Magistrate Judge's factual description.
Defendants fail to provide record citations to substantiate their claim that plaintiffs agreed to retain the original structure solely for parking modification eligibility. They also lack factual support for the assertion that preserving the historical façade was necessary for Special Projects approval. Additionally, defendants do not cite record evidence regarding the alleged $480,000 value of the parking waiver, which plaintiffs dispute as unnegotiated. The Report and Recommendation correctly notes that Special Projects approval was required, and the description of plaintiffs' November 18, 2011 letter by the Magistrate Judge is accurate. Defendants' objections regarding this letter are rejected due to lack of supporting evidence.
Concerning the Rochester Zoning Ordinance (RZO), defendants argue that section 2701 pertains only to Site Plan approval and not Special Projects, claiming section 2115 outlines the standards for Special Projects approval. Plaintiffs counter that the omission is a harmless error, as both sections are relevant for Special Projects, particularly regarding the requirement for a site plan submission and the city’s obligation to act on it within 45 days. Sections 2701 and 2115 both contain provisions related to Special Projects approval, with section 2701 detailing information required for financial impact assessments and section 2115 outlining submission requirements and review standards for Special Projects. The Magistrate Judge's assertion that section 2701 relates to both original site plan and Special Projects approval is deemed correct. Although the Report and Recommendation did not cite section 2115, it is recognized as an applicable ordinance governing Special Projects approval.
Findings from the Report and Recommendation highlight statements made by the plaintiffs' architect, Mr. Stuhlreyer, regarding the existing building's parking issues and renovation costs. He indicated that retaining the current structure would inhibit onsite parking and that renovating it would be financially unfeasible without the City waiving parking fees, estimating renovation costs to be 1.25 times that of a new building. Defendants argue Stuhlreyer acknowledged a parking issue regardless of the building's use, which plaintiffs contest, asserting that the record supports the Magistrate Judge’s conclusions. Meeting minutes confirm both statements attributed to Stuhlreyer, emphasizing the parking concerns and the need for design adjustments.
Additionally, the defendants raised several factual objections regarding the approval process: they contested the Report's assertion that the November 2011 site plan referenced the Secretary of the Interior (SOI) standards, but plaintiffs deemed this objection trivial. The Court clarified that it was the December 2011 plan that mentioned the SOI standards. Defendants also disputed the characterization of the Planning Commission's feedback during a December 5, 2011 meeting, claiming only one member found the plan “too loose.” However, minutes from the meeting indicated that the Chair expressed this concern, though the Commission collectively voted to forward the plan to the City Council. The Court amended the findings to reflect both the Chair's opinion and the Commission's decision to advance the plan for further review.
Defendants object to the Magistrate Judge’s findings regarding the removal of a tree, asserting that the Judge accepted plaintiffs’ claims without proper consideration of section 2706 of the RZO, which mandates strict adherence to approved site plans. However, the Court clarifies that the Judge merely noted the allegation without accepting it as factual, and declines to determine whether the tree's removal violated city ordinances.
Additionally, defendants challenge the Magistrate Judge's interpretation of a May 28, 2013 letter from City Manager Vettraino, arguing it pertains to a revised landscaping plan rather than a revised site plan. The Court finds that the Report does not imply that a revised site plan had been submitted at that time, noting instead that the letter indicated a stop work order for not following the original plan and that the Planning Commission had options regarding the order.
Finally, defendants dispute the finding that on December 4, 2013, the Planning Commission agreed to receive documentation from plaintiffs but failed to vote on the project, claiming plaintiffs did not submit required documentation on time. The Court acknowledges that while the documentation was late, the Report accurately reflects the meeting's outcome and supplements the findings to note the tardiness of the submission, deeming it a minor issue.
Defendants challenge the assertion that distributing documents to the Planning Commission during a meeting violates its guidelines, which the Court declines to determine in the context of the defendants’ factual objections. They also dispute the Magistrate Judge's finding regarding the handling of the Elm tree matter at the January 4, 2014 meeting, contending it actually occurred on January 6, 2014, and that the subcommittee created during the meeting was not "non-existent." Plaintiffs argue that the date is a harmless error and that the term "non-existing subcommittee" is appropriate since it was established at that meeting. The Court corrects the date to January 6 and clarifies that the subcommittee was indeed assigned the matter at that time.
In terms of legal conclusions, defendants seek to dismiss plaintiffs’ takings and federal claims, asserting these claims lack ripe adjudication, thus affecting subject matter jurisdiction. The Court, following a two-prong test from Williamson County, notes that plaintiffs must demonstrate a final decision by the regulatory body and exhaustion of state remedies. As the motion questions the factual basis for jurisdiction, the Court may assess evidence relevant to its jurisdictional authority. Defendants object to the jurisdiction finding, arguing that the Magistrate Judge improperly concluded a final decision had been made on plaintiffs’ application. However, the Magistrate Judge recommended that plaintiffs do not need an actual final decision to proceed with their takings claim, citing substantial evidence supporting their futility argument.
The Magistrate Judge accurately outlined the importance of finality in regulatory takings claims, emphasizing that it helps determine whether a regulation deprives a landowner of all economically beneficial use of their property or frustrates their reasonable investment-backed expectations. The Sixth Circuit highlights several reasons for the finality requirement: it aids in creating a comprehensive record, ensures that a court understands the regulation's application to a specific property, and potentially offers the property owner relief through the variance process without involving courts in constitutional issues. This requirement also reflects federalism principles, recognizing land use disputes as local matters best resolved locally.
However, the finality requirement is not absolute; it may be waived if obtaining a final decision is deemed futile, as established in case law. A property owner is not obliged to engage in ineffective or unfair procedures to secure this determination. The threshold for meeting the finality requirement is that the plaintiff must demonstrate that further administrative actions would not yield productive results. Additionally, to invoke the futility exception, the landowner must have submitted at least one meaningful variance application. The Magistrate Judge compared the current case to precedents from the Second and Ninth Circuits, particularly referencing Sherman v. Town of Chester, where the court found that the plaintiff could bypass the finality requirement due to the town's complex and obstructive zoning processes, despite the absence of a final decision on the application.
The excerpt discusses a legal case involving a plaintiff's struggle with a local Planning Commission regarding property development. The Second Circuit found that the Town would not create a definitive barrier to the plaintiff’s progress, but would instead keep moving the goalposts, thereby hindering the plaintiff's ability to achieve a final decision. This aligns with a similar case in the Ninth Circuit, where landowners faced repeated rejections and were asked to submit scaled-down plans, illustrating a pattern of resistance that met the finality requirement. However, in the current case, the plaintiffs did not experience the same persistent resistance from the Planning Commission. Instead, there was evidence of genuine efforts from both sides to engage constructively in the approval process. The plaintiffs had their proposal initially approved after a period of amendments, and while there were conflicts, the record indicated a willingness to negotiate. After the Planning Commission condemned the property citing public safety concerns, the condemnation was lifted after the plaintiffs acknowledged prior mistakes. Despite ongoing disagreements, the Planning Commission and the plaintiffs continued to communicate, with the City Manager issuing a stop-work order due to lack of response from the plaintiffs. The Planning Commission remained actively involved in reviewing the project, indicating a more collaborative rather than obstructive relationship.
The city planner determined that most conditions outlined in the applicant's April 25, 2013 letter have been met, although the Planning Commission has not formally approved the site plan modifications described in that letter. The Commission indicated that if satisfied with the modifications, it would accept the site plan, contingent upon updates to the landscape plan, the construction of the porch rail from authentic wrought iron, and submission of floodlight details. The Planning Commission decided that the attorneys for both the plaintiffs and the city would collaborate to draft an agreement defining terms for lifting a stop work order, wherein the plaintiffs would waive certain rights and claims against the city in exchange for this action. The Commission stated that no further actions would occur until this agreement was finalized.
On October 1, 2013, an updated report indicated the property reasonably complied with the SOI standards, yet the Planning Commission continued to request more information from the plaintiffs. In November 2013, the Commission reviewed an incomplete application from the plaintiffs, postponing further discussion until December. On December 4, 2013, the Commission approved an updated set of application materials and established a subcommittee to meet with the plaintiffs to clarify expectations and achieve a written settlement stipulation. The evidence suggests that the subcommittee's creation was a genuine effort to resolve disputes rather than a tactic to delay progress. However, following this meeting, the plaintiffs filed a lawsuit.
The situation contrasts with past cases where defendants consistently altered demands. Here, negotiations led to site plan and special project approvals for the plaintiffs, who subsequently commenced work but allegedly violated the approved plan. The Planning Commission sought to amicably resolve the situation, with both parties at times showing a commitment to resolution while also contributing to delays. Allegations from the plaintiffs claiming the Commission concealed reports, solicited donations for approval, and imposed waivers of rights do not indicate an unavoidable failure to achieve a final decision on the amended proposal.
Futility can excuse a plaintiff from applying for a permit, but mere speculation about a potential denial does not suffice. The plaintiffs failed to meet the finality requirement under Williamson, leading to the dismissal of their federal claims. The court cited relevant cases indicating that the finality prong applies to equal protection and procedural due process claims, emphasizing that allowing procedural claims at this stage could undermine the ripeness requirement for takings claims. Consequently, with the dismissal of all federal claims, the court lacks jurisdiction over the state law claims and declines to adopt the associated Report and Recommendation. The court also expressed concerns regarding the Planning Commission's requirement for plaintiffs to waive their rights as a condition for their permit application, referencing a case that invalidated a similar provision in a city franchise agreement meant to bypass the right to challenge in court. The motion to dismiss is granted in part regarding federal claims, and state law claims are dismissed due to lack of subject matter jurisdiction.
