Grady Cunningham v. Bedford County, Tennessee ( 2018 )

10/29/2018
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
March 14, 2018 Session
GRADY CUNNINGHAM, ET AL. v. BEDFORD COUNTY, TENNESSEE, ET AL.
Appeal from the Chancery Court for Bedford County
No. 30129 J. B. Cox, Chancellor
___________________________________
No. M2017-00519-COA-R3-CV
___________________________________
A landowner filed a declaratory judgment action alleging that the Bedford County Board
of Commissioners’ denial of his request to rezone his property was arbitrary and
capricious, violated his due process rights under 42 U.S.C. section 1983, constituted a
regulatory taking, and that the Commission violated the Tennessee Open Meetings Act
when it met with its counsel prior to taking the vote. The landowner requested
compensatory damages for the manner in which his application to rezone his property
was handled and compensation for the taking of his property. After a bench trial, the trial
court held that the Commission’s decision was arbitrary and capricious and violated the
landowner’s due process rights; the court ordered the property rezoned from residential to
commercial and awarded the landowner damages. The court held that there had been no
regulatory taking and no violation of the Open Meetings Act. Both parties appeal. Upon
review, we have determined that the court erred in holding that the Commission’s
decision to deny the application for rezoning was arbitrary and capricious and in ordering
the property rezoned; in holding that the landowner’s due process rights were violated
and in awarding damages and attorney fees to the landowner; we affirm the decision in
all other respects.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court of Bedford
County is Reversed in Part and Affirmed in Part
RICHARD H. DINKINS, J., delivered the opinion of the court, in which J. STEVEN
STAFFORD, P.J., W.S., and W. NEAL MCBRAYER, J., joined.
Josh A. McCreary, Murfreesboro, Tennessee, for the appellants, Grady Cunningham, and
Celebration 2000, Inc.
Ginger Bobo Shofner, Shelbyville, Tennessee, for the appellees, Tony Smith, Jimmy
Patterson, Ed Castleman, Bobby Fox, Billy King, Jr., Bob Davis, Janice Brothers, Phillip
Farrar, Mark Thomas, John Brown, Linda Yockey, Tony Barrett, Jeff W. Yoes, Don
Gallagher, Jimmy Woodson, Denise Graham, Joe Tillett, Bedford County, Tennessee,
and Bedford County Board of Commissioners.
OPINION
I. FACTUAL AND PROCEDURAL HISTORY
Plaintiff, Grady Cunningham, purchased real estate located at 2506 Highway 231
North, Bedford County, Tennessee (“the Property”) on October 13, 2005. At the time of
purchase, the property was zoned residential, and he tried unsuccessfully several times to
have the property rezoned for commercial use. At issue in this case is his most recent
application for rezoning, which was filed in May 2013.
In June 2013, the Bedford County Planning Commission (the “Planning
Commission”) recommended that the Bedford County Board of Commissioners (the
“Commission”) rezone the property into the C-2 (commercial) category; the
recommendation was put on the agenda for the Commission’s July meeting. At that
meeting, Mr. Cunningham was the only person who spoke about his rezoning application;
a motion to approve the rezoning was made and seconded, but failed to pass.
Mr. Cunningham’s rezoning application was then placed on the Commission’s
agenda for its September 2013 meeting. A public hearing was held as part of the
meeting, at which Mr. Cunningham and his attorney spoke in favor of the application; a
resident of Candlewood Subdivision, located adjacent to the Property, spoke against it.
The minutes of the meeting recite that, at the business portion of the meeting, a motion
was made to defer consideration of the rezoning application until the Commission’s
October meeting in order to “send [Mr. Cunningham’s rezoning application] back to the
Planning Commission and waive their one-year rule on hearing requests.” The motion
passed.
The Commission met again on October 8; Mr. Cunningham’s application to
rezone the property was again on the agenda. Prior to considering the application, the
Commission recessed to confer with its attorney. After returning, a motion to approve
the application was made and seconded, and the motion failed; neither Mr. Cunningham
nor his counsel was given the opportunity to speak prior to the vote.
Mr. Cunningham filed this proceeding in the Chancery Court for Bedford County
on January 16, 2014, seeking a declaratory judgment that the denial of his rezoning
application was “arbitrary, capricious and illegal for which there is no rational or
2
justifiable basis.”1 The complaint alleged that the Defendants violated Mr.
Cunningham’s constitutional rights to due process and equal protection of laws, that they
were liable for inverse condemnation of his property under Tennessee Code Annotated
section 29-16-123, and that they violated the Open Meetings Act, Tennessee Code
Annotated section 8-44-101, et seq. Mr. Cunningham moved and was granted leave to
amend his complaint to add a claim that Defendants’ actions constituted a regulatory
taking under Phillips v. Montgomery County, 442 S.W.3d 233 (Tenn. 2014). Mr.
Cunningham was granted leave to amend his complaint a second time to add Celebration
2000, Inc., a corporation he owned, as a plaintiff.
The non-jury trial was held on August 23, 25, 26, and September 1, 2016. On
October 28, the court entered its Memorandum Opinion, and on December 2, entered its
Final Order and Judgment, which incorporated the Memorandum Opinion and held that:
1. The decision of the Defendant Bedford County Board of
Commissioners was arbitrary, capricious and not fairly debatable.
2. The process engaged in by the Defendants violated Mr. Cunningham’s
due process rights, both procedurally and substantively.
3. There has been no regulatory taking by the Bedford County Board of
Commissioners.
4. There has been no violation of the Sunshine Law.
5. The members of the Board of Commissioners were acting within the
scope of their authority in carrying out their duties.
The court ordered that the Property be rezoned from residential to commercial, dismissed
the Complaint against the individual Commissioners, and awarded Mr. Cunningham
damages in the amount of $75,600.00, plus interest, and attorney’s fees in the amount of
$10,000.00.
Mr. Cunningham moved to alter the judgment on November 23, asking the court
to “revisit [the] award of lost profits, including, but not limited to, the time period
October, 2013 through the present, and an award of real estate taxes” and “to clarify its
finding on violations of substantive and procedural due process.” The court thereafter
entered an order declining to alter or amend the monetary award; the court amended the
1
The complaint named Bedford County, the Bedford County Board of Commissioners, and the individual
members of the Commission as defendants; in this opinion our reference to the “the Commission” shall,
unless otherwise noted, be to all defendants.
3
prior order to add that “[t]he Defendants violated Plaintiffs’ substantive and procedural
due process in violation of 42 U.S.C. § 1983.”
Mr. Cunningham appeals, stating two issues:
Whether the trial court calculated damages correctly when the Defendants
violated Plaintiffs’ due process rights under 42 U.S.C. section 1983, and the
Plaintiff presented expert proof on lost profits and other damage caused by
the Defendants’ wrongful acts.
Whether the trial court erred by not finding a regulatory taking under
Phillips v. Montgomery County, 442 S.W.3d 233 (Tenn. 2014).
Defendants raise an additional issue:
Whether the trial court erred in finding that the Bedford County
Commission of Commissioners’ decision to deny the rezoning request was
arbitrary, capricious, and not fairly debatable and that a violation of due
process rights under 42 U.S.C. section 1983 occurred.
II. STANDARD OF REVIEW
Review of the trial court’s findings of fact is de novo upon the record,
accompanied by a presumption of correctness, unless the preponderance of the evidence
is otherwise. See Tenn. R. App. P. 13(d); Kaplan v. Bugalla, 188 S.W.3d 632, 635 (Tenn.
2006). Review of the trial court’s conclusions of law is de novo with no presumption of
correctness afforded to the trial court’s decision. Kaplan, 188 S.W.3d at 635.
III. ANALYSIS
A. The Denial of the Rezoning Request
The trial court opined that the Commission’s decision on Mr. Cunningham’s
rezoning request was reviewed according to the “fairly debatable, rational basis” standard
as articulated in Fallin v. Knox Cty. Bd. of Com’rs., 656 S.W.2d 338 (Tenn. 1983); the
court concluded that the Commission’s denial of the application was “not fairly
debatable,” but was, “in fact[,] arbitrary and capricious.” On the basis of this holding, the
court ordered the Property rezoned. The Commission contends that the trial court should
have applied the “rational basis” test and concluded that the Commission had a rational
basis for denying Mr. Cunningham’s application for rezoning.
“Amending a zoning ordinance is a legislative act . . . intended to protect the
health, safety, and welfare of the citizens living in the community covered by the
4
ordinance.” Cato v. The Montgomery Cty. Bd. of Com’r, No. M2001-01846-COA-R3-
CV, 2002 WL 1042179, at *2 (Tenn. Ct. App. May 23, 2002) (citations omitted).
Legislative bodies, like the Commission here, are given “broad discretion in enacting or
amending zoning ordinances.” Family Golf of Nashville, Inc. v. Metro. Gov’t of
Nashville, 964 S.W.2d 254, 260 (Tenn. Ct. App. 1997). “When the act of a local
governmental body is legislative, judicial review is limited to ‘whether any rational basis
exists for the legislative action and, if the issue is fairly debatable, it must be permitted to
stand as valid legislation.’” McCallen v. City of Memphis, 786 S.W.2d 633, 640 (Tenn.
1990) (quoting Keeton v. City of Gatlinburg, 684 S.W.2d 97, 98 (Tenn. Ct. App. 1984));
see also Cato, 2002 WL 1042179, at *2 (“[T]he courts will decline to second-guess a
decision either to approve or to disapprove an amendment to a zoning ordinance as long
as the decision has some conceivable, appropriate basis to justify it.”). Accordingly,
when the validity of an amendment to a zoning ordinance is fairly debatable, the courts
must not substitute their judgment for that of the local legislative body. Cato, 2002 WL
1042179, at *2 (citing McCallen, 786 S.W.2d at 641).
Mr. Cunningham argues that the opposition of the residents of Candlewood
subdivision does not provide a basis on which the Commission could lawfully refuse to
rezone his property. He cites two cases in support of his position: (1) Rogers Grp., Inc. v.
Cty. of Franklin, By & Through Franklin Cty. Reg’l Planning Comm’n, No. 01A01-9110-
CH-00378, 1992 WL 85805 (Tenn. Ct. App. Apr. 29, 1992); (2) Mullins v. City of
Knoxville, 665 S.W.2d 393 (Tenn. Ct. App. 1983). Neither of these cases, however,
involved a proposed zoning change which, as noted above, is a legislative act.2
2
The plaintiff in Rogers Group, Inc. v. County of Franklin, By & Through Franklin County Regional
Planning Commission had submitted a plot plan for the operation of a rock quarry, rock crushing plant,
and portable hot mix asphalt plant to the Planning Commission, which voted to deny the plan. The
decision at issue was to determine if the proposed use fit within the existing zoning, which was an
administrative decision because it involved executing laws already in existence. See McCallen, 786
S.W.2d at 639 (observing that “[i]n order to qualify as an administrative, judicial, or quasi-judicial act, the
discretionary authority of the government body must be exercised within existing standards and
guidelines.”).
Similarly, in Mullins v. City of Knoxville, the plaintiff submitted a “site development plan,” which
had to be reviewed and approved by the Knoxville Metropolitan Planning Commission before the
proposed use would be allowed. 665 S.W.2d at 394. The Commission approved the plan, and a
community association appealed the Planning Commission’s decision to the city council under a
provision of the ordinance which permitted such an appeal. Id. The City Council held a hearing at which
a representative of the community association expressed opposition to the development, after which the
council, without expressing any reason for its action, voted to accept the appeal and reverse the action of
the Planning Commission. Id. On certiorari review, the chancery court sustained the council’s action. Id.
On further appeal, this court reversed, holding that the proposed use fit within the existing zoning
ordinance. Id. Thus, Mullins is not applicable to the facts before us, as it dealt with an administrative
decision rather than a legislative one.
5
The role that community opposition to a rezoning decision plays was before the
court in Day v. City of Decherd, in which property owners argued that the City “had
arbitrarily and capriciously refused to rezone the property from residential to commercial
uses.” No. 01A01-9708-CH-00442, 1998 WL 684533, at *1 (Tenn. Ct. App. July 1,
1998). On appeal, we rejected the argument, holding that:
. . . Legislative classifications in a zoning law are valid if any possible
reason can be conceived to justify them. State ex rel. SCA Chemical Waste
Services, Inc. v. Konigsberg, 636 S.W.2d 430 (Tenn. 1982). Specifically,
zoning decisions are immune from judicial interference if the validity of the
ordinance is “fairly debatable.” Fallin v. Knox County Bd. of
Commissioners, 656 S.W.2d 338 (Tenn. 1983).
Id. at *2. In this regard, we recognized that basing a “decision solely on neighborhood
opposition” was error when the government body is sitting in an administrative capacity;
however, we recognized a different approach for legislative decisions:
Legislators, however, do what legislators do: they listen to their
constituents; they test the wind; they try to please as many people as
possible, consistent with the constitution and a good conscience. And they
are not to be condemned for doing so. That is their job.
Id. at *3.
Mr. Cunningham argues that “the minutes from the October 2013 County
Commission meeting are entirely void of reasons as to why the County Commission did
not approve the Plaintiff’s application. This alone was enough to require a reversal.” Mr.
Cunningham cites no authority for this contention, and the law indicates the opposite. As
our Supreme Court has recognized:
[A]dministrative determinations, judicial or quasi-judicial in nature, . . . are
accompanied by a record of the evidence produced and the proceedings had
in a particular case, whereas, the enactment of ordinances or resolutions,
creating or amending zoning regulations, is a legislative, rather than an
administrative, action and is not ordinarily accompanied by a record of
evidence, as in the case of an administrative hearing.
Fallin, 656 S.W.2d at 342. Further, as a legislative decision, the rational basis test is
satisfied if there is a “conceivable”3 or “possible”4 reason for the Commission’s decision.
3
Cato, 2002 WL 1042179, at *2.
4
Fallin, 656 S.W.2d at 342.
6
The record shows that residents of the Candlewood Subdivision, which abuts the
Property, opposed the request for rezoning. As we have held, “local legislative bodies
cannot be faulted for responding to their constituents when it comes to rezoning property
as long as their actions are consistent with the state and federal constitutions and with
good conscience.” Cato, 2002 WL 1042179, at *2 n.5 (citing Day, 1998 WL 684533, at
*3). Factually based neighborhood opposition to the request, articulated through
statements made before the Commission, is part and parcel of the consideration of
rezoning requests. In this context, the opposition from the residents of Candlewood
Subdivision is a rational basis for the Commission’s decision.
Because there was a rational basis for the Commission’s decision, we reverse the
trial court’s holding that the decision was arbitrary and capricious and ordering the
Property rezoned.
B. Regulatory Taking5
In the Conclusions of Law portion of the Memorandum Opinion, the court stated
that “[t]here has been no regulatory taking by the Bedford County Board of
Commissioners as the remedy provided by the Court will allow for Mr. Cunningham to
benefit from the rezoning he requested.” Although not included as a finding of fact or a
conclusion of law, in the Analysis portion of the opinion, the trial court stated:
Mr. Cunningham bought a piece of property that was zoned R-1 with
absolutely no guarantee that it would be rezoned. He did not make his
purchase contingent upon rezoning. He did not execute an option that
would have allowed him to avoid the risks associated with land ownership
if he could not accomplish his intent to have the property rezoned.
In his brief on appeal, Mr. Cunningham contends that the trial court erred in
holding that there was no regulatory taking:
5
The evolution of the concept of a regulatory taking was set forth in Phillips v. Montgomery County:
The concept of a regulatory taking first emerged almost a century ago in
Pennsylvania Coal Co. v. Mahon. While recognizing that government could not function
if it had to pay every time regulations diminished land values, the Court held that a taking
occurs “if regulation goes too far.” With this “storied but cryptic formulation,” the Court
first declared that governmental action which diminishes private property rights, but
which does not amount to a direct appropriation or physical invasion of private property
may constitute a taking that necessitates the payment of “just compensation.”
442 S.W.3d at 239 (internal citations omitted).
7
The facts in the case clearly establish a basis for a finding of a
regulatory taking. Here, the Plaintiff testified without dispute that the
subject property was purchased with the expectation of moving his
commercial business. He was led to believe at or about the time of buying
the property that rezoning the property to C-2 for this purpose would be no
problem. Thus, the Plaintiff had a reasonable investment-backed
expectation. The Defendants, in violation of existing law, thwarted those
efforts for approximately 10 years through improper application of the
Bedford County Zoning Ordinance. Thus, the extent to which the regulation
was improperly applied and interfered with the Plaintiff’s distinct
investment-backed expectations was significant.
In considering the “character of the governmental action,” the Court
specifically found there were problems with the process involved (actually
making a finding that the Plaintiffs’ due process rights were violated, and
that participants on behalf of the County Commission had clear conflicts of
interest). Thus, the conduct of the Defendant government in improperly
applying the regulation to the Plaintiffs’ property was egregious. Clearly,
the trial court should have found these actions constituted a regulatory
taking under Phillips v. Montgomery County and should be reversed on this
issue.
For the reasons below, we concur with the holding that no regulatory taking occurred.
In Phillips v. Montgomery County, the Tennessee Supreme Court held that article
I, section 21 of the Tennessee Constitution, which states that “no man’s particular
services shall be demanded, or property taken, or applied to public use, . . . without just
compensation being made therefor” encompasses regulatory takings to the same extent as
the “Takings” clause of the Fifth Amendment to the United States Constitution. 442
S.W.3d 233, at 242-44 (Tenn. 2014) (citing U.S. Const. amend. 5 (“[P]rivate property”
shall not be “taken for public use, without just compensation.”)). The Phillips court
reversed the Court of Appeals’ judgment dismissing the property owners’ petition for
certiorari, which had alleged that the Regional Planning Commission’s denial of their
preliminary plat that would subdivide 15.62 acres constituted a regulatory taking, and
remanded the case for consideration of the claim. Id. at 236-37, 245. In so doing, the
court adopted the principles set forth in Lingle v. Chevron U.S.A. Inc., stating:
The Lingle Court reiterated the two categories of governmental
regulatory actions generally recognized as per se takings under the Fifth
Amendment. The first category involves situations in which the
government “requires an owner to suffer a permanent physical invasion of
her property—however minor” and therefore must provide the owner just
compensation. The second category consists of “total regulatory takings,”
8
in which governmental action deprives a property owner of “‘all
economically beneficial us[e]’ of her property.” Both categories of per se
regulatory takings are “relatively narrow,” id., and the latter especially
“rare.”
Lingle also instructed that when a claim involves neither of these
categories, governmental action alleged to constitute a regulatory taking
must be assessed under the standards first established in Penn Central
Transportation Co. v. New York City. The two “primary” Penn Central
factors to be considered are “[t]he economic impact of the regulation on the
claimant and, particularly, the extent to which the regulation has interfered
with distinct investment-backed expectations.” The “character of the
governmental action” may also be a third factor that will be relevant to
determining if a taking has occurred. These “ad hoc, factual inquiries, [and]
careful examination and weighing of all the relevant circumstances,” have
been widely recognized as the “polestar” of federal takings law.
442 S.W.3d 233, 240 (Tenn. 2014) (internal citations omitted).
Mr. Cunningham does not cite to specific testimony, other evidence, or particular
findings of the court in support of his argument. We have identified the following
findings that are pertinent to the holding that no regulatory taking occurred:6
1. Mr. Cunningham purchased the property in question in 2005, knowing it
was zoned R-1.
2. Mr. Cunningham did not make his contract to purchase contingent upon
a zoning change.
3. Mr. Cunningham did not purchase his property by use of an option so
that he would not be bound to purchase the property if the rezoning could
not be accomplished.
***
7. Mr. Cunningham’s first application in 2005 was made before he had
actually closed on the property.
***
6
Neither party contends that the trial court’s findings are not supported by the evidence, nor cites to
evidence that preponderates against any finding.
9
19. His May 2013 application came before the Planning Commission in
June of 2013 and the Planning Commission voted to recommend rezoning
of the property to C-2.
20. Mr. White, the Planning and Zoning Director, opined that the property
met all the requirements to comply with Mr. Cunningham’s request, and he
recommended rezoning the property as C-2.
21. Ms. Keylon [a consultant for the Planning Commission] also opined
that the property met all the requirements, and in her opinion should be
rezoned C-2.
***
25. At the County Commission meeting in July of 2013, a motion was
made and seconded that the property should be rezoned. This motion failed
by a majority vote.
***
43. [At a meeting of the County Commission on October 8, 2013,] [t]he
motion to rezone the property was voted upon and it failed by a majority of
the votes of the Commissioners.
***
127. Mr. Cunningham testified that he bought the property to be a
commercial property and he wanted to move his business out to that
location, and that it would be a good investment for his kids and grandkids.
128. He paid $180,000.00 for the property and has paid interest on the note
over the years.
129. He pays $1,200.00 per month rent in his present location.
130. Mr. Cunningham has a note on the property and he pays interest at a
rate of six percent on this note and has done so since he purchased the
property.
Mr. Cunningham does not argue that the Commission’s decision falls into either
category of per se takings identified in Lingle and adopted in Phillips; consequently, in
our resolution of this issue we look to the three “Penn Central” factors, adopted in
Phillips, quoted above.
10
1. The economic impact of the regulation on Mr. Cunningham. The trial
court found that Mr. Cunningham incurred a $180,000 obligation to purchase the
Property in order to locate his existing business there. As a result of having his rezoning
application denied he has been unable to relocate his business there and continues to pay
rent at his current location. The court correctly found that he did not take action that
would have protected him if the rezoning was not successful.
2. The extent to which the regulation has interfered with his distinct
investment-backed expectations. Mr. Cunningham’s argument in this regard proceeds
on the premise that Commission was in some manner obliged to grant his request to have
his property rezoned. He fails to identify the “existing law” he contends the Commission
violated or to delineate the “improper application of the Bedford County Zoning
Ordinance” of which he complains. Simply put, his expectation that the property would
be rezoned does not create a legal obligation on the Commission to approve his
application. His planned use of the property was in fact a hopeful use. Mr. Cunningham
knew the property was zoned residential at the time he purchased the property, and he
also knew that he intended to use the property for commercial purposes. The trial court
specifically found that “Mr. Cunningham bought a piece of property that was zoned R-1
with absolutely no guarantee that it would be rezoned”; that “Mr. Cunningham purchased
the property in question in 2005, knowing it was zoned R-1”; that “Mr. Cunningham did
not make his contract to purchase contingent upon a zoning change”; and that “Mr.
Cunningham did not purchase his property by use of an option so that he would not be
bound to purchase the property if the rezoning could not be accomplished.” While he
argues that “[h]e was led to believe at or about the time of buying the property that
rezoning the property to C-2 for this purpose would be no problem,” Mr. Cunningham
cites no evidence, and we have found none in the record, that would give rise to this
belief, or that, in any event, would require the Commission to approve his application.
3. The character of the governmental action. Mr. Cunningham references the
court’s holdings that his due process rights were violated and that some of the
Commission members had conflicts of interest as bearing on this inquiry. The action at
issue, however, is the denial of his rezoning application; as held earlier, there was a
rational basis for the Commission’s decision and, as a consequence, no element of a
regulatory taking was presented in the denial of the application.
On the record presented, we conclude that no regulatory taking occurred and
affirm the court’s holding in this regard.7
7
In the Memorandum Opinion, the court held that there had not been a regulatory taking “as the remedy
provided by the Court will allow for Mr. Cunningham to benefit from the rezoning he requested.” We
affirm the trial court’s dismissal of this claim on the basis stated herein and not upon the rationale stated
by the trial court. See Section III A, supra.
11
C. Due Process Claims
Private citizens whose federal rights have been violated by state officials are
afforded a remedy via 42 U.S.C.A. section 1983.8 Parks Props. v. Maury County, 70
S.W.3d 735, 743 (Tenn. Ct. App. 2001). As noted in Parks Props.:
Section 1983 creates no substantive rights of its own. Rather, it creates a
species of tort liability that provides a federal cause of action for the
violation of rights independently established either in the United States
Constitution or federal law. Thus, the first step in analyzing any Section
1983 claim is to identify the specific federal right allegedly being infringed.
There can be no successful claim under Section 1983 unless the defendant
has deprived the plaintiff of a right “secured by the Constitution and laws”
of the United States.
The Due Process Clause provides that “[n]o State shall ... deprive any
person of life, liberty, or property, without due process of law.” As
interpreted by the United States Supreme Court, the Due Process Clause
safeguards rights in two ways. First, procedural due process requires state
and local governments to employ fair procedures when they deprive
persons of a constitutionally protected interest in “life, liberty, or property.”
Procedural due process protections do not prevent deprivations of “life,
liberty, or property” but rather guard against “substantively unfair or
mistaken deprivations of property.”
The Due Process Clause, however, guarantees more than fair process. It
also has a substantive component that bars certain governmental actions
regardless of the procedures used to implement them. Thus, substantive
due process is the second way that the Due Process Clause protects “life,
liberty, or property.”
8
42 U.S.C.A. section 1983 provides:
Every person who, under color of any statute, ordinance, regulation, custom, or usage, of
any State or Territory or the District of Columbia, subjects, or causes to be subjected, any
citizen of the United States or other person within the jurisdiction thereof to the
deprivation of any rights, privileges, or immunities secured by the Constitution and laws,
shall be liable to the party injured in an action at law, suit in equity, or other proper
proceeding for redress, except that in any action brought against a judicial officer for an
act or omission taken in such officer’s judicial capacity, injunctive relief shall not be
granted unless a declaratory decree was violated or declaratory relief was unavailable.
For the purposes of this section, any Act of Congress applicable exclusively to the
District of Columbia shall be considered to be a statute of the District of Columbia.
12
70 S.W.3d. at 743-44 (internal citations and footnotes omitted).
1. Procedural Due Process
In Martin v. Sizemore, this court discussed the nature of the interest protected by
procedural due process:
The Due Process Clause of the Fourteenth Amendment and Tenn. Const.
art. I, § 8 provide similar procedural protections and guarantees. Both
provisions provide procedural protections for property and liberty interests
against arbitrary governmental interference. While they contain a guarantee
of fair process, they do not prevent the deprivation of property interests.
Rather, procedural due process guards against unfair or mistaken
deprivations of property interests.
The threshold consideration with regard to any procedural due process
claim is whether the plaintiff has a liberty or property interest that is
entitled to protection under U.S. Const. amend. XIV, § 1 and Tenn. Const.
art. I, § 8. To qualify for constitutional protection, a property interest must
be more than a “unilateral expectation” or an “abstract need or desire.” It
must be a “legitimate claim of entitlement” created and defined by “existing
rules or understandings that stem from an independent source such as state
law.”
The types of interests entitled to protection as property interests are varied.
However, they share the common characteristic that they are an individual
entitlement, grounded in state law, that cannot be removed except “for
cause.”
Martin, 78 S.W.3d 249, 262 (Tenn. Ct. App. 2001) (internal citations omitted). Further,
as noted in Rowe v. Board of Education:
A section 1983 action based upon procedural due process has thus three
elements: (1) a liberty or property interest protected by the Constitution; (2)
a deprivation of the interest by the government; and (3) lack of process. In
addressing a claim of an unconstitutional denial of procedural due process,
we apply a two-step analysis. Initially, we must determine whether [the
plaintiff’s] interest rises to the level of a constitutionally protected liberty or
property interest. If there is a constitutionally protected interest, then the
second step is to weigh the competing interests of the plaintiff and
government to determine what process is due and whether deprivation has
occurred.
13
938 S.W.2d 351, 354 (Tenn. 1996) (internal citations omitted). “The extent and nature of
the required procedural due process protections depend on the nature and circumstances
of the case.” Martin, 78 S.W.3d at 263.
While he accurately states that procedural due process protects against unfair
deprivations of property, Mr. Cunningham has not identified any constitutionally
protected property interest that would implicate the protections of the due process clause
in this case. The property was zoned residential at the time he purchased it, and he
sought to have it rezoned for commercial purposes; he does not challenge the fact that the
property was zoned residential but, rather, the failure of the Commission to grant his
application to rezone. He has failed to demonstrate that he was entitled to have it rezoned
and, consequently, was not deprived of procedural due process.9 He has no legitimate
claim of entitlement to a discretionary decision. Richardson, 218 F.3d at 517.
Even if we were to assume that Mr. Cunningham succeeded in showing a
constitutionally protected property interest, in weighing “the competing interests of the
plaintiff and government to determine what process is due and whether deprivation has
occurred” here, Mr. Cunningham received the process he was due. See Martin, 78
S.W.3d at 263. “At its core, procedural due process requires ‘notice and an opportunity
to be heard at a meaningful time and in a meaningful manner.’” Puckett v. Lexington-
Fayette Urban Cty. Gov’t, 833 F.3d 590, 606 (6th Cir. 2016) (quoting Garcia v. Fed.
Nat’l Mortg. Ass’n, 782 F.3d 736, 740–41 (6th Cir. 2015)). Mr. Cunningham had notice
of the meetings at which his rezoning application would be considered, both before the
Planning Commission and the Commission. He spoke at the July 2013 meeting of the
Commission when the Commission first considered the application; when the application
was heard at the Commission’s September meeting, he appeared, with his attorney, and
again advocated for its approval. While Mr. Cunningham takes issue with the fact that he
was not afforded a chance to speak during the October meeting, his prior appearances
before the Commission afforded him procedural due process.
9
In Richardson v. Township of Brady, the Sixth Circuit Court of Appeals held:
“The requirements of procedural due process apply only to the deprivation of interests
encompassed by the Fourteenth Amendment’s protection of liberty and property.” Board
of Regents v. Roth, 408 U.S. 564, 569, 92 S. Ct. 2701, 33 L. Ed. 2d 548 (1972). In order to
state a successful procedural due process claim, therefore, Richardson must establish the
existence of a protected property interest. An abstract need or unilateral expectation does
not suffice to create a property interest; rather, a person must “have a legitimate claim of
entitlement.” Id at 577, 92 S. Ct. 2701. The Supreme Court has explained that the
Constitution does not create property interests: “[T]hey are created and their dimensions
are defined by existing rules or understandings that stem from an independent source
such as state law—rules or understandings that secure certain benefits and that support
claims of entitlement to those benefits.” Id.
218 F.3d 508, 516-17 (6th Cir. 2000).
14
2. Substantive Due Process
As noted earlier, amending a zoning ordinance is a legislative act. Cato, 2002 WL
1042179, at *2. In our consideration of this issue, we are guided by the discussion in
Parks Properties:
The substantive due process analysis applies to both legislative acts
and non-legislative or executive acts. Legislative acts, generally including
statutes, ordinances, and broad administrative regulations, apply to large
segments of society; while non-legislative or executive acts typically apply
to one person or a limited number of persons.
Typically, a legislative act will withstand a substantive due process
challenge if the government identifies a legitimate governmental interest
that the legislative body could rationally conclude was served by the
legislative act. Legislative acts that burden certain fundamental rights may
be subject to stricter scrutiny.
***
To prevail on a substantive due process claim under Section 1983, a
plaintiff must establish as a threshold matter that it has an interest entitled
to protection under the Due Process Clause. These interests are limited to
interests in “life, liberty, or property” and other interests explicitly
protected by other constitutional provisions. Regrettably, the case law
provides relatively little specific guidance as to what constitutes a property
interest worthy of substantive due process protection.
When a Section 1983 claim is based upon the alleged deprivation of
a property interest, the property interest must be something more than either
an abstract need or desire or a unilateral expectation of a claimed right.
Rather, the person claiming the property right must have a legitimate claim
of entitlement to it.
The United States Constitution does not create property interests.
They are created and their dimensions are defined by existing rules and
understandings that stem from independent sources such as state law.
However, the courts must look to federal law to determine whether a
particular property right is entitled to substantive due process protection.
For a property right to provide a basis for a substantive due process claim
under Section 1983, the right must involve an interest that is deemed to be
fundamental under the United States Constitution.
15
Parks Prop., 70 S.W.3d at 743–45 (internal citations omitted).
In Parks Properties, the developers of a warehouse facility filed suit to compel the
Director of Community Development for the County to issue a building permit,
contending that the Director and the Planning Commission had agreed to waive a
requirement that the warehouses have automatic sprinkler systems, and to recover
damages under 42 U.S.C. section 1983. Id. at 740. The trial court held that the county
had violated the developers’ substantive due process rights and awarded damages of
$445,152.55. Id. at 741. On appeal this court reversed, holding that neither of the
developers had a property interest protected by substantive due process. Id. at 749. In so
ruling, we noted:
Section 1983 claims by developers against local building and zoning
officials are common, even though rejections of development projects and
refusals to issue building permits do not ordinarily implicate substantive
due process concerns. For these sorts of claims, a protectable property
interest is “what is securely and durably yours under state or federal law, as
distinct from what you hold subject to so many conditions as to make your
interest meager, transitory, or uncertain.” When seeking a permit or
authorization, a developer has a protectable property interest in a permit or
authorization only if it can prove that it has a legitimate claim of
entitlement to the permit or authorization.
The application of this “strict entitlement” test focuses on the extent
to which the local authority may exercise discretion in arriving at a
decision. A property interest protectable by substantive due process exists
if the local authority has no discretion to decline to issue a permit, license,
or other authorization to an applicant who demonstrates compliance with all
pre-existing requirements. On the other hand, no protectable property
interest in a permit or authorization exists if the local authority retains
broad discretion to grant or deny the permit or authorization.
Parks Prop. 70 S.W.3d at 746 (internal citations omitted).
In the present case, as noted earlier, the Commission retained broad discretion to
amend the zoning ordinance. As respects Mr. Cunningham’s substantive due process
rights at issue, we discern no difference between the “broad discretion to grant or deny
the permit or authorization” at issue in Parks Properties and the discretion vested in the
16
Commission to grant or deny his rezoning request. In the absence of such a protectable
property interest, Mr. Cunningham was not deprived of substantive due process.10
Accordingly, we reverse the trials court’s holding that Mr. Cunningham’s rights to
procedural and substantive due process were violated.
D. Award of Damages and Fees
The trial court did not specify the basis upon which it awarded damages of
$75,600; the $10,000 award of attorney’s fees was made “pursuant to the [unspecified]
statute.” Inasmuch as we have reversed the holdings that would give rise to a claim for
monetary relief, we reverse the awards of damages and attorney’s fees.
IV. CONCLUSION
For the foregoing reasons, we reverse the holding that the Commission’s decision
to deny the rezoning application was arbitrary and capricious and the order that the
property be rezoned; we reverse the holding that Mr. Cunningham’s rights to due process
were violated; and we reverse the awards of damages and attorney’s fee; we affirm the
holding that there was no regulatory taking of Plaintiffs’ property.
_________________________________
RICHARD H. DINKINS, JUDGE
10
In his brief, Mr. Cunningham asserts that a denial of an amendment to a zoning ordinance may violate
substantive due process if it is “arbitrary, capricious, or not rationally related to a legitimate public
purpose.” Our holding in III. A., supra, addresses this argument.
17