Sierra Nevada Sw Enterprises v. County of Douglas , 506 F. App'x 663 ( 2013 )

FILED
NOT FOR PUBLICATION FEB 04 2013
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
SIERRA NEVADA SW ENTERPRISES, No. 11-16451
LTD., a Nevada limited company;
NEVADA NORTHWEST, LLC, a Nevada D.C. No. 3:10-cv-00354-RCJ-
limited liability company, RAM
Plaintiffs - Appellants,
MEMORANDUM *
v.
DOUGLAS COUNTY, a political
subdivision of the State of Nevada; T.
MICHAEL BROWN, Douglas County
Manager, in his official and individual
capacity; MIMI ROSS, Douglas County
Community Development Director, in her
official and individual capacity;
MICHAEL A. OLSON; DAVID J.
BRADY; NANCY McDERMID; GREG
LYNN; DOUG N. JOHNSON,
Defendants - Appellees,
PERI ENTERPRISES, LLC, a Nevada
limited liability company,
and
Real-party-in-interest -
Appellee.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Appeal from the United States District Court
for the District of Nevada
Robert Clive Jones, Chief District Judge, Presiding
Argued and Submitted January 17, 2013
San Francisco, California
Before: TASHIMA and GRABER, Circuit Judges, and ADELMAN,** District
Judge.
Plaintiffs Sierra Nevada SW Enterprises, Ltd., and Nevada Northwest, LLC,
who own and develop land in Nevada, commenced this action under 42 U.S.C.
§ 1983 for alleged violations of their federal constitutional rights by Defendants
Douglas County ("County"), T. Michael Brown, Mimi Moss, Michael A. Olson,
David J. Brady, Nancy McDermid, Greg Lynn, and Doug N. Johnson. Plaintiffs
claim that Defendants’ approval of a development agreement and amendment of
the County’s master zoning plan, to the benefit of real-party-in-interest Peri
Enterprises, LLC, violated their rights to due process and equal protection under
the Fourteenth Amendment and effected an uncompensated taking in violation of
the Fifth Amendment.
**
The Honorable Lynn S. Adelman, United States District Judge for the
Eastern District of Wisconsin, sitting by designation.
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The district court granted Defendants’ motion for judgment on the pleadings,
and Plaintiffs timely appeal. Reviewing de novo, Harris v. Cnty. of Orange, 682
F.3d 1126, 1131 (9th Cir. 2012), we affirm.
1. We assume, without deciding, that the transferrable development rights
("TDRs") created by section 20.500 of the Douglas County Code constitute
property rights for purposes of this federal constitutional analysis.
2. The district court correctly dismissed Plaintiffs’ procedural due process
claim. As relevant here, a procedural due process violation consists of "(1) a
deprivation of a constitutionally protected . . . property interest, and (2) a denial of
adequate procedural protections." Brewster v. Bd. of Educ., 149 F.3d 971, 982
(9th Cir. 1998). The allegations of the complaint fail to establish the first.
Plaintiffs do not allege that Defendants deprived them of their TDRs; they allege
only that the approval of the development agreement and master plan amendment
diminished the value of those TDRs by reducing demand in the TDR market as a
whole. An indirect impact of that kind is not a "deprivation" for purposes of
procedural due process. See Dumas v. Kipp, 90 F.3d 386, 392 (9th Cir. 1996)
("Procedural due process protections do not extend to those who suffer indirect
harm from government action."); cf. Shanks v. Dressel, 540 F.3d 1082, 1088 (9th
Cir. 2008) (holding that, where a city granted a permit for a development that
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might have indirect, negative effects, "economic, aesthetic or otherwise," on a third
party’s property, those effects did not amount to "a governmental deprivation" of
that property).1
3. The district court correctly dismissed Plaintiffs’ substantive due process
claim. To state such a claim, a plaintiff must allege (1) "that a state actor deprived
it of a constitutionally protected . . . property interest," Shanks, 540 F.3d at 1087,
and (2) that the governmental action was "arbitrary and capricious," Halverson v.
Skagit Cnty., 42 F.3d 1257, 1261 (9th Cir. 1995) .
Plaintiffs fail to meet the first requirement for the same reasons set forth
with respect to their procedural due process claim. See Gerhart v. Lake Cnty., 637
F.3d 1013, 1019 (9th Cir.), cert. denied, 132 S. Ct. 249 (2011) (applying the same
analysis as to whether a plaintiff was deprived of a constitutionally protected
interest with respect to both substantive and procedural due process claims).
Plaintiffs also fail to meet the second requirement. "[O]nly egregious
official conduct can be said to be arbitrary in the constitutional sense: it must
amount to an abuse of power lacking any reasonable justification in the service of a
1
Plaintiffs do not claim to have a property interest in the denial of Peri’s
proposal itself. In any event, they do not. Cf. Shanks, 540 F.3d at 1089–90
(rejecting claim that a party had a property interest in the denial of a third party’s
permit application unless the city complied with applicable local ordinances).
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legitimate governmental objective." Shanks, 540 F.3d at 1088 (internal quotation
marks omitted); cf. Dodd v. Hood River Cnty., 59 F.3d 852, 864 (9th Cir. 1995)
("Federal judicial interference with a local government zoning decision is proper
only where the government body could have no legitimate reason for its
decision."). Here, reasonable justifications existed for the County’s alleged
actions; for example, the development agreement ensured that Peri would
expeditiously undertake various public infrastructure improvements.
4. The district court correctly dismissed Plaintiffs’ equal protection claim.
Plaintiffs assert a "class of one" claim, and they do not allege that Defendants’
actions implicate a fundamental right or suspect classification, so they must allege
that Defendants "(1) intentionally (2) treated [them] differently than other similarly
situated property owners, (3) without a rational basis." Gerhart, 637 F.3d at 1022.
As a threshold matter, the complaint does not establish a true "class of one"
claim because it alleges only that Peri was subjected to individualized preferential
treatment, not that Plaintiffs were subjected to individualized adverse treatment. In
any event, Plaintiffs were not "similarly situated" to Peri. They did not apply for a
development agreement of the kind that Peri did. Moreover, the involved parties’
properties are each uniquely situated geographically and their development
proposals were separated in time, so their applications raised different
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considerations. With respect to the third element of Plaintiffs’ claim, as explained,
the County had rational, legitimate grounds for approving the Peri agreement.
5. The district court correctly dismissed Plaintiffs’ takings claim. A per se
taking requires that the government action deprived them of "all economically
beneficial or productive use" of the affected property. Lucas v. S.C. Coastal
Council, 505 U.S. 1003, 1015 (1992). Plaintiffs do not plausibly allege such a
deprivation. They do not assert that the price of TDRs in Douglas County has
actually collapsed; they merely speculate regarding what other landowners might
think about the Peri agreement and the effect of those possible thoughts on
demand. That "sheer possibility" of a taking is inadequate to state a claim.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Nor can Plaintiffs state a claim under Penn Central Transportation Co. v.
City of New York, 438 U.S. 104, 124 (1978). See Lingle v. Chevron U.S.A. Inc.,
544 U.S. 528, 538–39 (2005) (listing the factors that are relevant in a Penn Central
inquiry as (1) "the economic impact of the regulation on the claimant," (2) "the
extent to which the regulation has interfered with distinct investment-backed
expectations," and (3) "the character of the governmental action." (internal
quotation marks and brackets omitted)). Even if Defendants’ conduct diminished
the value of Plaintiffs’ TDRs to some extent, the latter two factors preclude a Penn
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Central claim. As to the second, Defendants acted on legal authority that existed at
the time of Plaintiffs’ investments. As to the third, the grant of development rights
to a third party on a different parcel does not have the character of a "classic taking
in which government directly appropriates private property or ousts the owner
from his domain." Id. at 539.
AFFIRMED.
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