Norfolk Federation of Business Districts v. City of Norfolk

Decision Date25 September 1996
Docket NumberNo. 96-1746,96-1746
Citation103 F.3d 119
CourtU.S. Court of Appeals — Fourth Circuit
PartiesNOTICE: Fourth Circuit Local Rule 36(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit. The NORFOLK FEDERATION OF BUSINESS DISTRICTS, Plaintiff-Appellant, v. CITY OF NORFOLK, a municipal corporation; Norfolk Redevelopment and Housing Authority, Defendants-Appellees, U.S. Department of Housing & Urban Development, in its official capacity as agency of the Government of the United States; Henry G. Cisneros, in his official capacity as the Secretary of the Department of Housing and Urban Development, Defendants. . Argued:

Before MURNAGHAN and HAMILTON, Circuit Judges, and MERHIGE, Senior United States District Judge for the Eastern District of Virginia, sitting by designation.

OPINION

PER CURIAM:

The district court dismissed plaintiff's Counts I, II, III, V, VI, VII, VIII, and IX with prejudice and dismissed Count IV without prejudice. The court only considered the motion to dismiss as it related to the defendants served with process; the City of Norfolk and the Norfolk Redevelopment and Housing Authority (NRHA). NFBD agreed to dismiss HUD and Secretary Cisneros after the district court's judgment.

We review de novo the dismissal of the federal claims properly before the Court pursuant to Rule 12(b)(6), Brooks v. City of Winston Salem, 85 F.3d 178, 181 (4th Cir.1996), and conclude that the trial judge was correct in his rulings and affirm.

Appellant's contention that the lower court erred in not converting the Appellees' 12(b)(6) motion to a motion for summary judgment under Rule 56 Fed.R.Civ.P is not well taken.

The record reflects that the complaint was accompanied by a number of documents which made reference to Norfolk redevelopment plan, an admittedly public document. The lower court's consideration of that document was appropriate and did not warrant converting the Rule 12(b)(6) motion to one for summary judgment. Anheuser-Busch, Inc. v. Schmoke, 63 F.3d 1305, 1312 (4th Cir.1995), cert. granted and judgment vacated on other grounds, 116 S.Ct. 1821 (1996). In short, a court may consider matters of public record, items appearing in the record of the case, as well as exhibits attached to the complaint. See generally Charles A. Wright and Arthur R. Miller, Federal Practice and Procedure § 1357 (1990), cited with approval in Anheuser, 63 F.3d at 1312.

Plaintiff is the Norfolk Federation of Business Districts (NFBD), an organization that purports to represent and act for eight member businesses or merchant associations, affiliated businesses and individuals in a number of geographical areas within Norfolk, including such businesses and individuals with business interest in an area designated as Norfolk MacArthur Center Project ("the Center") which is the area giving rise to this controversy. It claims to be acting "as and for itself as well as on behalf of the legal interests and rights of its constituent member merchant or business associations and their affiliated member businesses and individuals."

On May 31, 1994 the City and NRHA entered into a cooperation agreement which was adopted by the City of Norfolk Council by ordinance. NFBD alleges that this agreement provides that the City will guarantee all financial obligations of NRHA pertaining to the MacArthur Center Project, provide NRHA with all funds required for the Center, and meet all NRHA obligations and payments regarding the Center. In the agreement the City authorized the issuance of up to $50,000,000.00 in parking revenue bonds for garage construction and up to $13,537,050.00 in general obligation bonds for Center infra structure improvement. NRHA sought $32,815.00 from a private bank loan.

The Center is to house a number of stores including a Nordstrom department store which the City and NRHA describe as the main focus of the Center. The defendants plan to fund construction of the store almost entirely by public monies. Plaintiff argues that the defendants selectively favor Nordstrom, a private competitor of many of plaintiff NFBD's constituents, with a locally unprecedented infusion of public monies for the private benefit of Nordstrom, by agreeing to build the Nordstrom store to Nordstrom's customized specifications with such public money.

Thus NFBD concludes that the defendants are publicly subsidizing private businesses with largely public taxpayer funds. It argues that the defendants' actions constitute an arbitrary and capricious selective favoring of these competitors to plaintiff with an improper use of public funds, thus violating both its Equal Protection and Substantive Due Process rights.

Plaintiff contends that defendants' actions violate its constitutional economic rights under the Fourteenth Amendment to the United States Constitution. As the district court correctly pointed out, however, only laws affecting fundamental rights are within the purview of the Fourteenth Amendment's strict scrutiny analysis. National Paint & Coatings Ass'n. v. City of Chicago, 45 F.3d 1124 (7th Cir1995), cert. denied, 115 S.Ct. 2579 (1995). Since "[c]orporations do not have fundamental rights; they do not have liberty interests, period." Id. at 1129. After concluding that the plaintiff's fundamental rights had not been violated, the district court correctly analyzed its claims under the rational basis test. Under the rational basis test the question is not whether the legislation or the official action is "in every respect logically consistent with its aims to be constitutional," rather it "is enough that there is an evil at hand for correction, and that it might be thought that the particular legislative measure was a rational way to correct it." Williamson v. Lee Optical of Oklahoma, Inc., 348 U.S. 483, 487-88 (1955).

In Count I the plaintiff alleges that the defendants violated its rights under the Fourteenth Amendment's Due Process and Equal Protection Clauses arising from defendants' "unfair and discriminatorily selective favoring of private business competitors of Plaintiff's constituents through heavy public subsidies to entice those competitors to participate in Norfolk's MacArthur Center Project."

In Counts II and III, plaintiff alleges that the defendants violated its due process rights in its state-created property rights. Plaintiff alleges that the defendants unlawfully utilized and planned to continue to utilize publicly raised tax money to benefit private parties and unlawfully took and planned to continue to take private property in the form of money raised in the exercise of its taxing authority for private purposes.

In Count IV, plaintiff claims that under § 108 of the Loan Guarantee Application made by the defendants to HUD the defendants fail to meet statutory and regulatory criteria to justify such a guarantee. It further claims that the federal government through HUD wrongfully approved the application to the prejudice of plaintiff's constitutional rights.

Count V charges the defendants with violating the...

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