Cenergy-Glenmore Wind Farm 1, LLC v. Town of Glenmore

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13-2633
CENERGY-GLENMORE WIND FARM #1, LLC,
Plaintiff-Appellant,
v.
TOWN OF GLENMORE,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Eastern District of Wisconsin.
No. 12-C-1166 — William C. Griesbach, Chief Judge.
____________________
ARGUED APRIL 1, 2014 — DECIDED AUGUST 7, 2014
____________________
Before TINDER and HAMILTON, Circuit Judges, and
KAPALA, District Judge. *
HAMILTON, Circuit Judge. Plaintiff CEnergy-Glenmore
Windfarm #1, LLC, obtained a conditional use permit from
the town of Glenmore, Wisconsin, to develop a wind farm
there. But the company did not obtain required building
permits in time to take advantage of a lucrative opportunity
* The Honorable Frederick J. Kapala, of the United States District Court
for the Northern District of Illinois, sitting by designation.
2 No. 13-2633
to sell electricity generated by wind turbines to a Wisconsin
power company. CEnergy then filed this lawsuit against
Glenmore claiming a denial of its right under the Fourteenth
Amendment to substantive due process and a violation of
the town’s state law obligation to deal in good faith. The dis-
trict court dismissed the due process claim for failure to state
a claim upon which relief can be granted and declined to re-
tain jurisdiction over the supplemental state law claim.
CEnergy has appealed. We affirm the district court’s judg-
ment.
I. Factual and Procedural Background
On appeal from the grant of a Rule 12(b)(6) motion to
dismiss, we must accept the facts alleged in the plaintiff’s
complaint as true. See Chrzanowski v. Bianchi, 725 F.3d 734,
736 (7th Cir. 2013). CEnergy alleges that Prelude, a company
whose assets it later purchased, contracted in 2007 with a
family in Glenmore to build a wind farm on the family’s
property. Prelude also obtained a conditional use permit
from Glenmore to develop the farm.
Roughly two years later, Prelude entered into a power
purchase agreement with the Wisconsin Public Service Cor-
poration (WPS) to sell wind turbine-generated electricity for
20 years at specified rates. The agreement was binding on
WPS only if Prelude obtained all necessary permits and sat-
isfied various other requirements by March 1, 2011.
Prelude learned in September 2010 that before construc-
tion could begin, it would need to obtain a building permit
for each of the seven planned wind turbines. The company
tried to submit applications for the permits to the Town
Board, Glenmore’s legislative body, but the Board refused to
No. 13-2633 3
accept the applications unless the company provided addi-
tional information about the project.
By December 31, 2010, Prelude provided the Board with
all requested information and told the Chair of the Board
that the building permits would need to be approved by
March 1, 2011, for the power purchase agreement with WPS
to take effect. Without the power purchase agreement, Prel-
ude told the Chair, the wind farm project would not be fea-
sible because the energy market had changed substantially
since the execution of the agreement with WPS. Also in De-
cember 2010, CEnergy agreed to purchase Prelude’s assets,
including the right to develop the wind farm. The sale closed
in February 2011, on the eve of the WPS contract deadline.
In the meantime, public sentiment in Glenmore had
turned decidedly against the wind farm project, as the Town
Board well knew. Angry citizens had gathered at the Board’s
public meetings in January and February 2011 to oppose the
plan. Unbeknownst to CEnergy, the Chair of the Board was
receiving “threats to his physical safety should he approve
the wind turbine project.”
Although CEnergy had asked the Town Board to take up
the issue of the building permits at both the January and
February meetings, the Board did not do so, ostensibly be-
cause the town’s attorney needed more time to review the
information Prelude had submitted in December 2010.
CEnergy contends that the Board members actually avoided
taking up the issue “because of threats made to the physical
safety of those officials by a mob of citizens opposing the
project.”
4 No. 13-2633
The Town Board “finally allowed CEnergy to complete
and submit” applications for the building permits on March
1, 2011, and considered the applications at a meeting on
March 7. At that meeting, the Board voted to grant the per-
mits and then adjourned. But citizens in attendance became
“accusatory and threatening” toward Board members and
other town officials. The Chair reopened the meeting in re-
sponse to the clamor. After further discussion, the Board
voted to rescind the grant of the permits. A little over a week
later, the Board held a special meeting and again reversed
course, voting to nullify the actions it had taken after ad-
journment on March 7, thus reinstating the earlier vote in
favor of granting the permits. The permits still were not ac-
tually issued, however, because the attorney for Glenmore
contended that the applications were still missing crucial in-
formation.
As it turned out, even the initial vote on March 7 had
come too late to save the wind farm project. WPS, perhaps
pleased to escape from what had become for it an unprofita-
ble deal, had sent CEnergy a letter on March 4 backing out of
the power purchase agreement. As a principal reason, WPS
cited CEnergy’s failure to obtain the necessary permits by
March 1.
After learning that the deal with WPS could not be sal-
vaged, CEnergy filed this suit claiming that Glenmore de-
prived it of property without substantive due process of law
when the Town Board delayed granting the building per-
mits. In support of this claim, CEnergy alleges in its com-
plaint that it had “vested property rights granted to it in the
CUP [conditional use permit] and the requested building
permits.” The Town Board’s decision to take no action on the
No. 13-2633 5
building permits “at least until after March 1” was meant to
thwart the wind farm project, making the decision “an arbi-
trary and egregious abuse of [the Board’s] authority” that
“shock[s] the conscience” and cost CEnergy a contract worth
more than $7 million in profits.
The district court concluded for two reasons that CEner-
gy did not state a viable substantive due process claim. First,
the court explained, the Town Board’s decision to delay ac-
tion on the building permit applications in the face of strong
public opposition did not “shock the conscience” as required
to state a substantive due process claim. Second, CEnergy
did not use available state law mechanisms for forcing action
on its permit applications. Specifically, CEnergy did not pur-
sue building permits under a local ordinance that governs
the building-permit application process, nor did CEnergy
ask a state court for a writ of mandamus to force action on
its requests for building permits. This circuit has long held
that a plaintiff who fails to pursue available state law reme-
dies in the land-use context has no substantive due process
claim.
II. Analysis
We review de novo the district court’s decision to grant
Glenmore’s Rule 12(b)(6) motion to dismiss, construing the
complaint in the light most favorable to the non-moving par-
ty—CEnergy—and accepting the factual allegations in the
complaint as true. See, e.g., Yeftich v. Navistar, Inc., 722 F.3d
911, 915 (7th Cir. 2013). We note at the outset, however, that
federal courts, as we have explained time and again, are not
zoning boards of appeal. See, e.g., General Auto Service Sta-
tion v. City of Chicago, 526 F.3d 991, 1000 (7th Cir. 2008); Dis-
covery House, Inc. v. Consolidated City of Indianapolis, 319 F.3d
6 No. 13-2633
277, 283 (7th Cir. 2003); Centres, Inc. v. Town of Brookfield, 148
F.3d 699, 704 (7th Cir. 1998); River Park, Inc. v. City of Highland
Park, 23 F.3d 164, 165 (7th Cir. 1994); Polenz v. Parrott, 883
F.2d 551, 558 (7th Cir. 1989). State and local land-use deci-
sions are entitled to great deference when constitutional
claims are raised in federal court.
Successful constitutional challenges to state and local
land-use decisions generally rely on the takings clause of the
Fifth Amendment (as incorporated by the Fourteenth) or the
equal protection clause of the Fourteenth Amendment. See,
e.g., Koontz v. St. Johns River Water Management Dist., 133 S.
Ct. 2586, 2599–2600 (2013) (takings clause violated by condi-
tioning approval of land-use permit on monetary exaction
that lacked nexus to proposed project); City of Cleburne v.
Cleburne Living Center, 473 U.S. 432, 448–50 (1985) (require-
ment that group home for the mentally disabled obtain a
special permit violated equal protection clause). But the Su-
preme Court has acknowledged at least the theoretical pos-
sibility that a land-use decision—if it was “arbitrary in the
constitutional sense” and deprived the plaintiff of proper-
ty—could constitute a deprivation of property without sub-
stantive due process of law. See City of Cuyahoga Falls v. Buck-
eye Community Hope Foundation, 538 U.S. 188, 198–99 (2003)
(rejecting substantive due process claim based on delay in
issuance of building permits because delay was “eminently
rational” rather than arbitrary). We also have acknowledged
that possibility, see Polenz, 883 F.2d at 558 (collecting cases),
though like the Supreme Court we have never definitively
concluded that any land-use decision actually amounted to a
deprivation of property without substantive due process.
One reason that substantive due process is of questionable
relevance in this area is that the due process clause’s proce-
No. 13-2633 7
dural guarantees and the rights protected by the equal pro-
tection and takings clauses leave little if any ground uncov-
ered.
Whether CEnergy has even identified a property interest
in the building permits it sought, its use of the land it leased,
or its agreement with WPS is questionable, but we need not
decide those issues. Like the district court we conclude that
CEnergy’s substantive due process claim fails because the
Board’s actions were not arbitrary in the constitutional sense
and because CEnergy did not seek recourse under state law
as required by a long line of cases in this circuit. We need not
address other potential problems with the company’s claim.
On the issue of arbitrariness, we have said that a land-use
decision must “shock the conscience” to run afoul of the
Constitution. Bettendorf v. St. Croix County, 631 F.3d 421, 426
(7th Cir. 2011). We also have suggested that the action must
have been “arbitrary and capricious,” Centres, 148 F.3d at
704, or “random and irrational,” General Auto Service Station,
526 F.3d at 1000. In yet another formulation, the Supreme
Court has explained that a land-use decision must be arbi-
trary to the point of being “egregious” to implicate substan-
tive due process. Cuyahoga Falls, 538 U.S. at 198. These
standards should not be viewed as distinct, at least in the
land-use context. In Cuyahoga Falls, the Supreme Court relied
upon County of Sacramento v. Lewis, 523 U.S. 833, 846 (1998),
for the proposition that “only the most egregious official
conduct can be said to be arbitrary in the constitutional
sense” (internal quotation marks omitted), and Lewis itself,
see 523 U.S. at 855, applied the “shock the conscience”
standard.
8 No. 13-2633
However the standard is formulated, the Glenmore Town
Board’s decision to delay action on CEnergy’s building per-
mit requests could not have been arbitrary in the constitu-
tional sense. As far as the Constitution is concerned, popular
opposition to a proposed land development plan is a ration-
al and legitimate reason for a legislature to delay making a
decision. See River Park, 23 F.3d at 167 (explaining that “the
idea in zoning cases is that the due process clause permits
municipalities to use political methods to decide”).
Even if the Board’s treatment of the building permit ap-
plications had been arbitrary in the constitutional sense,
CEnergy still would have failed to state a substantive due
process claim. We have held repeatedly that a plaintiff who
ignores potential state law remedies cannot state a substan-
tive due process claim based on a state-created property
right. E.g., Lee v. City of Chicago, 330 F.3d 456, 467 (7th Cir.
2003); Centres, 148 F.3d at 704; Polenz, 883 F.2d at 558–59.
Without this requirement, procedural due process claims
based on “random and unauthorized” deprivations of prop-
erty (which might also be described as “arbitrary”) could be
brought as substantive due process claims even when a post-
deprivation remedy was available. Kauth v. Hartford Ins. Co.
of Illinois, 852 F.2d 951, 958 (7th Cir. 1998). This would un-
dermine the holdings of Hudson v. Palmer, 468 U.S. 517
(1984), and Parratt v. Taylor, 451 U.S. 527 (1981), that a post-
deprivation remedy is sufficient to satisfy due process in
such situations. The claims would simply be reframed as
substantive due process claims. Kauth, 852 F.2d at 958 (“Giv-
en the Supreme Court's recent decisions in Parratt and Hud-
son, however, we believe that in cases where the plaintiff
complains that he has been unreasonably deprived of a state-
created property interest, without alleging a violation of
No. 13-2633 9
some other substantive constitutional right or that the avail-
able state remedies are inadequate, the plaintiff has not stat-
ed a substantive due process claim.”).
We have similarly held that, regardless of how a plaintiff
labels an objectionable land-use decision (i.e., as a taking or
as a deprivation without substantive or procedural due pro-
cess), recourse must be made to state rather than federal
court. See River Park, 23 F.3d at 167 (“Labels do not matter. A
person contending that state or local regulation of the use of
land has gone overboard must repair to state court.”).
CEnergy had options under state law for obtaining the
building permits that it did not use.
As the district court explained, the standard process in
Glenmore for obtaining a building permit is set out in the
“Town of Glenmore Zoning Ordinance.” Under Section E.2
of that ordinance, permit requests are to be submitted in
writing to the “Glenmore Town Zoning Administrator.” If
the Administrator does not make a decision on the applica-
tion within 10 days, the application is considered denied,
and the applicant then has 30 days to appeal to the “Board of
Appeals.” The process under the ordinance seemingly does
not involve the Town Board at all. Nonetheless, CEnergy
made no attempt to proceed under the ordinance, even after
the Town Board refused to accept its permit applications in
September 2010 and began making excuses for not taking
action on the permit requests despite knowing of the dead-
line CEnergy faced.
Nor did CEnergy take advantage of another potential op-
tion under state law: seeking a writ of mandamus to force
the town to act on the permit applications. Wisconsin courts
may under some circumstances issue writs of mandamus to
10 No. 13-2633
compel the issuance of building permits. See Lake Bluff Hous-
ing Partners v. City of South Milwaukee, 540 N.W.2d 189 (Wis.
1995). CEnergy argues that a writ of mandamus to force ac-
tion from the town was not a possibility because mandamus
cannot be used to force legislative action. Although CEnergy
may be right, its argument depends on the premise that a
decision about the building permits was a legislative one.
But if the building-permit decision was legislative, then it
was discretionary. In that case CEnergy had no property
right in the permits, meaning that the Board’s delay in grant-
ing them could not have been a deprivation of property that
could support a due process claim.
Confusingly, CEnergy contends elsewhere in its appellate
brief that the decision whether to issue the permits was not
“subject to legislative or political whims.” Yet the company
chose to ask a legislative body, the Town Board, to vote on
the permit requests rather than proceeding under the zoning
ordinance or arguing in state court for mandamus relief on
the basis that the Board’s consideration of the permit re-
quests was actually an administrative function rather than a
legislative one. CEnergy is thus like the unsuccessful plain-
tiff in River Park, which alleged in support of its due process
claim that the city council was obliged by state law to ap-
prove a subdivision plan but intentionally delayed approval
until the subdivision project was no longer feasible. CEnergy
also “went along with the political process until it was too
late” for another course of action and then “lost the political
fight.” 23 F.3d at 167. Now CEnergy seeks a judgment in
federal court that would cost each resident of Glenmore
roughly $6000. The company, however, must live with its
strategic choices. No do-over is available through federal lit-
igation. Id.
No. 13-2633 11
The judgment of the district court is AFFIRMED.