Charlie Norfolk Center Associates, L.P. v. Norfolk Redevelopment & Housing Authority

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 07-1571
CHARLIE NORFOLK CENTER ASSOCIATES, L.P.,
Plaintiff - Appellant,
v.
NORFOLK REDEVELOPMENT AND HOUSING AUTHORITY,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern
District of Virginia, at Norfolk. Jerome B. Friedman, District
Judge. (2:06-cv-00616-JBF)
Argued: May 13, 2008 Decided: July 1, 2008
Before KING, Circuit Judge, HAMILTON, Senior Circuit Judge, and
Henry F. FLOYD, United States District Judge for the District of
South Carolina, sitting by designation.
Affirmed by unpublished per curiam opinion.
ARGUED: Roger J. Magnuson, DORSEY & WHITNEY, LLP, Minneapolis,
Minnesota, for Appellant. Conrad Moss Shumadine, WILLCOX & SAVAGE,
PC, Norfolk, Virginia, for Appellee. ON BRIEF: David Y. Trevor,
DORSEY & WHITNEY, LLP, Minneapolis, Minnesota, for Appellant.
David H. Sump, Elaine K. Inman, CRENSHAW, WARE & MARTIN, PLC,
Norfolk, Virginia; Brett A. Spain, WILLCOX & SAVAGE, PC, Norfolk,
Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Plaintiff Charlie Norfolk Center Associates, L.P. (“CNC”),
appeals from the final judgment entered in the Eastern District of
Virginia on its breach of contract claims against defendant Norfolk
Redevelopment and Housing Authority (the “NRHA”). See Charlie
Norfolk Ctr. Assocs., L.P. v. Norfolk Redev. & Hous. Auth., No.
2:06-cv-00616 (E.D. Va. Mar. 26, 2007) (granting summary judgment
to NRHA under Federal Rule of Civil Procedure 56(c)) (the “Summary
Judgment Order”); Charlie Norfolk Ctr. Assocs., L.P. v. Norfolk
Redev. & Hous. Auth., No. 2:06-cv-00616 (E.D. Va. May 18, 2007)
(denying CNC’s motion to amend judgment under Rule 59(e)) (the
“Rule 59(e) Order”).1 On appeal, CNC contends that the district
court erred in three respects in making its summary judgment award:
failing to recognize that (1) the NRHA breached its obligations
under an Option Agreement when it rejected CNC’s proposed
development plan without negotiating alterations to the plan; (2)
the NRHA breached its obligations by unreasonably rejecting CNC’s
preliminary plans for property development; and (3) the NRHA
prevented and delayed CNC’s submission of an acceptable development
plan. CNC contends that the court thereafter abused its discretion
in the Rule 59(e) Order by declining to vacate the summary judgment
1
The Summary Judgment Order is found at J.A. 144-64, and the
Rule 59(e) Order is found at J.A. 1195-1209. (Citations to “J.A.
__” refer to the contents of the Joint Appendix filed by the
parties in this appeal.)
2
award and failing to authorize discovery. As explained below, we
have carefully assessed these contentions and are satisfied that
the judgment in favor of the NRHA should be affirmed.
I.
The NRHA is a political subdivision of the Commonwealth of
Virginia, charged with overseeing the redevelopment of blighted
urban areas in Norfolk pursuant to a redevelopment plan adopted by
the NRHA and approved by the City (the “Redevelopment Plan”). The
NRHA is authorized to promote redevelopment by making blighted real
estate available for purchase by private parties for purposes
designated in the Redevelopment Plan. See Va. Code Ann. § 36-53.
On June 5, 1996, the NRHA entered into an agreement with CNC, a
Connecticut-based real estate developer, that granted CNC an option
to purchase, for the sum of $1.6 million, a 2.46 acre parcel of
real estate in downtown Norfolk (the “Option Agreement” or
“Agreement”).2 The real estate parcel (the “Property”), which was
then being used as a surface parking lot, is located adjacent to
the MacArthur Center, a large shopping mall that had been developed
primarily by CNC. Under the terms of the Option Agreement, CNC had
the exclusive right to purchase the Property from the NRHA under
specified conditions, which included the following:
2
The Option Agreement is found at J.A. 85-98.
3
• CNC was to notify the NRHA in writing, prior to
termination of the Option Agreement, of its intent
to exercise the purchase option, see Option
Agreement 2;
• Within 60 days of notifying the NRHA of its intent
to exercise the purchase option, CNC was to
identify its objections to title, and conduct any
necessary soil or engineering tests on the
Property, see id. at 2-3; and,
• CNC was required to submit and obtain the NRHA’s
approval of a plan for developing the Property,
showing, inter alia, (1) the intended use of the
Property, “which must be for retail, residential,
hotel or office use, or any use permitted under
[s]ection [1.B.]1.a.(3)(c) of the [NRHA]’s
Redevelopment Plan,” and (2) “the specific use or
uses proposed to be constructed on the [site] in
sufficient detail to show . . . all improvements, a
plan view and elevation of the improvements, the
materials to be used in the external facades, the
provision for on-site parking (if any) and the
approximate gross floor plan.” Id. at 7.3
Under the Option Agreement, the NRHA agreed that it would not
otherwise sell, offer, or agree to sell the Property during the
option period. The NRHA also agreed to “consider in good faith any
[d]evelopment [p]lan for the Property submitted by [CNC] and to
suggest such reasonable changes to plans submitted by [CNC] as may
be necessary for [the NRHA] to give its approval.” Option
3
Pursuant to section 1.B.1.a.(3)(c) of the Redevelopment Plan,
entitled “Other Permitted Uses,” “land within the Project Area
which is not devoted to public uses, semi-public uses, existing
private uses or the proposed regional shopping mall may be used for
commercial, office, retail or transient housing uses, either singly
or by a combination of such uses.” J.A. 124. This section further
provides that “[p]ublic uses, such as public parking garages and
accessways, can be constructed within areas which are designated
for redevelopment by private enterprise.” Id.4
Agreement 7-8. Accordingly, the NRHA could not unreasonably
withhold its approval of a development proposal for the Property
submitted by CNC. See id. at 8.
In November 2000, CNC met with the NRHA and the Mayor of
Norfolk to discuss a preliminary mixed-use plan for the Property
(to be called “Norfolk Place”). In an effort to make such a plan
acceptable, CNC, among other things, identified potential tenants
and prepared architectural designs for the Norfolk Place project.
It failed, however, to submit a formal development plan proposing
any such project.
On May 25, 2001, CNC notified the NRHA of its intent to
exercise the purchase option. On November 13, 2001, CNC submitted
a formal development plan to the NRHA reflecting that its intention
was to continue using the Property as a surface parking lot. This
plan consisted only of a single aerial photograph of the Property,
marked to show the intended restriping of the lot’s parking spaces
and placement of a 300-foot long chain across the lot. Two days
later, CNC submitted a revised development plan to the NRHA,
consisting of a photograph identical to the one initially
submitted, but failing to show the proposed restriping of the lot
(the “Development Plan” or “Plan”). By letter of November 21,
2001, the NRHA rejected the Development Plan as “woefully
inadequate,” explaining that surface parking — in the absence of
major on-site improvements — was not a valid use of the Property
5
under the Option Agreement, which expressly incorporated by its
terms section 1.B.1.a(3)(c) of the Redevelopment Plan. The NRHA
thus advised CNC that its Development Plan failed to satisfy the
requirements of the Agreement. See J.A. 138. The Option Agreement
expired on November 21, 2001, and, until sometime in 2006, the
Property continued to be owned by the NRHA.
Almost five years after the Option Agreement expired, on
October 31, 2006, CNC filed a complaint in the Eastern District of
Virginia, alleging that it had satisfied all conditions precedent
to the exercise of its purchase option on the Property. It also
alleged that the NRHA had breached the Option Agreement in three
respects: (1) by failing to act in good faith in considering the
Development Plan; (2) by offering the Property for sale to other
prospective purchasers; and (3) by hindering CNC’s completion of
the Development Plan (because, for instance, the NRHA desired a
more substantial development of the Property). On December 11,
2006, the NRHA moved to dismiss CNC’s complaint for failure to
state a claim, pursuant to Rule 12(b)(6) of the Federal Rules of
Civil Procedure. On January 5, 2007, CNC filed its opposition to
such a dismissal, requesting instead that the court authorize
discovery pursuant to Rule 56(f).4 The district court, by its
4
Rule 56(f) provides that “[i]f a party opposing [a summary
judgment] motion shows by affidavit that, for specified reasons, it
cannot present facts essential to justify its opposition, the court
may[, inter alia,] deny the motion.” Fed. R. Civ. P. 56(f)
(emphasis added).
6
Summary Judgment Order of March 26, 2007, construed the motion to
dismiss as a motion for summary judgment (under the operative
version of Rule 12), and granted summary judgment to the NRHA.5
On April 9, 2007, CNC filed a motion to alter or amend
judgment, pursuant to Rule 59(e),6 asserting three grounds: (1)
that new evidence (in the form of, for example, deposition
testimony that the “such as” language in section 1.B.1.a.(3)(c) was
illustrative, rather than exclusive) showed that the summary
judgment award had been improperly granted; (2) that the Summary
Judgment Order erroneously concluded that the Development Plan
failed to satisfy the requirements of the Option Agreement; and (3)
that the “prevention doctrine” was inapplicable to the NRHA.7 CNC
also contended in its Rule 59(e) motion that the court had erred in
5
Rule 12 was recently amended, effective December 1, 2007, as
part of the general restyling of the Civil Rules. The operative
version of Rule 12 provided in subsection (b) that “[i]f, on a
motion [under Rule 12(b)(6),] matters outside the pleadings are
presented to and not excluded by the court, the motion shall be
treated as one for summary judgment and disposed of as provided in
Rule 56.”
6
Pursuant to Rule 59(e), a court may amend an earlier judgment
on three grounds: (1) to accommodate an intervening change in
controlling law; (2) to account for new evidence not available at
trial; or (3) to correct a clear error of law or prevent manifest
injustice. See Hutchinson v. Staton, 994 F.2d 1076, 1081 (4th Cir.
1993).
7
Under the so-called “prevention doctrine,” a condition
precedent to a contract is excused when the promisor prevents or
hinders the occurrence of the condition, and the condition would
have occurred in the absence of such prevention or hindrance. See
In Re Peanut Crop Ins. Litigation, 524 F.3d 458, 474 (4th Cir.
2008).
7
denying CNC discovery under Rule 56(f). On May 18, 2007, the
district court, by its Rule 59(e) Order, denied the motion to alter
or amend judgment. The court concluded therein that CNC had failed
to present any evidence that was unavailable when the Summary
Judgment Order was entered, and that CNC had otherwise failed to
show that the court had made any clear legal error. CNC has filed
a timely appeal, and we possess jurisdiction pursuant to 28 U.S.C.
§ 1291.
II.
We review de novo a district court’s award of summary
judgment, viewing the facts in the light most favorable to the non-
moving party. See Lee v. York County Sch. Div., 484 F.3d 687, 693
(4th Cir. 2007). An award of summary judgment is appropriate only
“if the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.” Fed R.
Civ. P. 56(c); see also Lee, 484 F.3d at 693. We review for abuse
of discretion the denial of a Rule 59(e) motion to alter or amend
judgment. See Temkin v. Frederick County Comm’rs, 945 F.2d 716,
724 (4th Cir. 1991). Finally, we also review for abuse of
discretion a district court’s denial of a Rule 56(f) motion for
discovery. See Ingle v. Yelton, 439 F.3d 191, 195 (4th Cir. 2006).
8
III.
CNC contends on appeal that the Summary Judgment Order should
be vacated for three reasons: (1) the NRHA breached its
obligations under the Option Agreement by rejecting CNC’s
Development Plan and failing to negotiate with CNC concerning
alterations to the Plan; (2) the NRHA breached its contract
obligations by unreasonably rejecting CNC’s preliminary plans for
developing the Property; and (3) the NRHA prevented and delayed
CNC’s submission of the Development Plan. CNC also maintains that
the court abused its discretion in the Rule 59(e) Order by refusing
to recognize new evidence and the Summary Judgment Order’s clear
legal error, and also in denying CNC’s request for discovery
pursuant to Rule 56(f). We address these contentions in turn.
A.
1.
CNC’s first contention on appeal is that the NRHA was not
entitled to summary judgment because it breached the Option
Agreement in rejecting CNC’s Development Plan, without suggesting
reasonable changes or revisions that could have made the Plan
acceptable. As noted, the Agreement mandated that the NRHA
consider in good faith any development plan submitted by CNC and
suggest reasonable changes to such a plan that might result in the
NRHA’s approval. Further, the Agreement stipulated that the NRHA
could not unreasonably withhold, delay, or deny approval of
9
proposed development plans. The district court determined that the
NRHA did not contravene its obligations under the Agreement in
rejecting the Development Plan, because CNC’s contract rights had
never vested due to its failure to submit a development plan that
conformed to the threshold requirements of the Agreement. See
Summary Judgment Order 18.
In reviewing the permitted uses spelled out in the Option
Agreement, and the incorporated section 1.B.1.a.(3)(c) of the
Redevelopment Plan, the district court concluded that CNC’s
proposed Development Plan failed to pass muster because “surface
parking was not an appropriate or permitted use of the [P]roperty.”
Summary Judgment Order 9. In so ruling, the court explained that
the only provision of the Redevelopment Plan that referenced and
authorized the use of redevelopment property for surface parking
was not incorporated into the Agreement, reinforcing its conclusion
that surface parking was not a permitted use under the Agreement.
See Summary Judgment Order 8-9.
The district court further observed that the Agreement
mandated that a permissible development plan must contain “a
showing of the approximate gross floor area, indicating that the
type of development contemplated was a building, [rather than
simply] a surface parking lot.” Summary Judgment Order 10. CNC’s
Development Plan (consisting of an aerial photograph showing a
single chain stretching across the Property), however, failed to
10
contain any such descriptions of improvements, external facades,
and gross floor area, as mandated by the Option Agreement.
According to the court, because CNC’s Development Plan did not
conform to the Agreement, the NRHA “acted in good faith in
rejecting the plan and did not unreasonably deny its approval.”
Summary Judgment Order 18. Having carefully considered this issue,
we are satisfied to adopt the district court’s reasoning as our
own. See id. at 7-10.
2.
CNC’s second contention is that the NRHA breached its
contractual obligations under the Option Agreement by unreasonably
rejecting the preliminary plans that CNC had raised (prior to
submission of its Development Plan) to construct a mixed-use
development on the Property. In this regard, CNC asserts that the
City of Norfolk’s Mayor had communicated to CNC that he would not
approve the particular commercial tenants proposed by CNC for
Norfolk Place. CNC acknowledges in its appellate brief, however,
that the NRHA’s approval of development plans was not contingent on
any tenant placement or approval. See Br. of Appellant 10-11. On
appeal, CNC maintains that the NRHA was obligated, pursuant to the
Option Agreement, to provide feedback on preliminary plans, and
that the NRHA breached the Agreement by failing to provide any such
feedback. As the district court recognized, however, CNC stopped
short of actually submitting a plan that satisfied the conditions
11
precedent provided for in the Agreement. Because of CNC’s failure
to submit any formal development proposals to the NRHA prior to
submitting its surface parking plan, the NRHA “was not required to
begin an interactive negotiation process with [CNC] with regard to
any previously submitted ‘plans,’ whether or not they constituted
‘[d]evelopment [p]lans.’” Rule 59(e) Order 13-14. Under the
circumstances, we agree with the district court and reject this
contention as well.
3.
CNC’s third contention on appeal is that the NRHA prevented
CNC from submitting a conforming development plan by, inter alia,
denying CNC’s engineers access to the Property to conduct tests;
failing to resolve deficiencies uncovered by such tests; and
repeatedly rejecting CNC’s preliminary proposals for development
and failing to raise objections when CNC first notified the NRHA
that it would be submitting a development plan for surface parking.
According to CNC, the NRHA, by its preventive actions, waived CNC’s
contractual obligation to obtain approval of a development plan
before exercising its purchase option under the Agreement. The
district court rejected this contention, however, reasoning that
the NRHA acts in a governmental capacity when it makes
redevelopment property available for private purchase under section
36-53 of the Code of Virginia, and is therefore not subject to the
prevention doctrine or other similar concepts such as waiver and
12
estoppel. See Summary Judgment Order 13.8 Finally, the court
concluded that, “even were [CNC] able to assert the prevention
doctrine against the [NRHA (by the NRHA acting in a non-
governmental capacity)], [CNC] would be unable to succeed on that
basis, as it was in fact not prevented from submitting a valid
development plan.” Id. We also agree with the district court on
this point, and we are content to reject it on the reasoning of the
Summary Judgment Order.
B.
After the Summary Judgment Order was entered, CNC moved to
alter or amend the judgment pursuant to Rule 59(e), contending that
new evidence showed that summary judgment had been improperly
awarded. CNC also asserted that the district court had erred in
concluding that the Development Plan failed to satisfy the
requirements of the Option Agreement, and in ruling that the
prevention doctrine did not apply to the NRHA. Finally, CNC
maintained that the court erred in denying discovery pursuant to
Rule 56(f). In its Rule 59(e) Order of May 18, 2007, the court
ruled that the “new evidence” CNC sought to present was in fact
available when CNC initially responded in the district court, and
8
In its Summary Judgment Order, the district court ruled that
the NRHA is bound, under section 36-53 of the Virginia Code, to
“condition the sale or lease of land on the obligation of
purchasers or lessees to use it for a designated purpose, begin
work on improvements within a fixed period of time, and comply with
other conditions.” Summary Judgment Order 13.
13
also was “insufficient to cause the court to reevaluate its
decision.” Rule 59(e) Order 4. After considering CNC’s
contentions, the court reaffirmed the ruling in its Summary
Judgment Order and concluded (1) that CNC had failed to satisfy the
necessary conditions precedent for a transfer of the Property, and
(2) that the NRHA was not subject to the prevention doctrine under
Virginia law. Accordingly, the court ruled that discovery was
neither warranted nor necessary, and denied CNC’s Rule 59(e)
motion. See id. at 14. Having thoroughly assessed each of the
contentions presented with respect to the Rule 59(e) Order, it is
clear that the court did not abuse its discretion in declining to
alter or rescind its Summary Judgment Order.
IV.
Pursuant to the foregoing, we are satisfied to adopt as our
own the reasoning of the Summary Judgment Order, as well as that of
the Rule 59(e) Order, and thus affirm the judgment of the district
court.
AFFIRMED
14