4th Leaf, LLC v. City of Grayson

Decision Date19 November 2019
Docket NumberCIVIL ACTION NO. 19-18-DLB
Citation425 F.Supp.3d 810
Parties 4TH LEAF, LLC, Plaintiff v. CITY OF GRAYSON, et al., Defendants
CourtU.S. District Court — Eastern District of Kentucky

W. Jeffrey Scott, Whitley Hill Bailey, Grayson, KY, for Plaintiff.

Licha H. Farah, Jr., Alexandra Deaton DeMoss-Campbell, Ward, Hocker & Thornton, PLLC, Lexington, KY, for Defendants.

MEMORANDUM OPINION AND ORDER

David L. Bunning, United States District Judge

This matter is before the Court upon a Motion to Dismiss, wherein Defendants City of Grayson; George Steele, individually and as Mayor of City of Grayson; Jack Harper, individually and as a Grayson City Council Member; Pam Nash, individually and as a Grayson City Council Member; and Terry Stamper, individually and as a Grayson City Council Member (collectively "Defendants"), seek dismissal of Plaintiff 4th Leaf, LLC's claims for violations of its constitutional rights under 42 U.S.C. § 1983. (Doc. # 17). The Motion is fully briefed and ripe for review. (Docs. # 19 and 20). For the reasons stated herein, the Motion to Dismiss is granted in part and denied in part.

I. FACTUAL AND PROCEDURAL BACKGROUND

On February 3, 1999, Plaintiff 4th Leaf, LLC purchased a piece of property in Grayson, Kentucky. (Doc. # 1 at ¶ 16). Plaintiff eventually sold most of the property, but it retained a portion of the property to use as a private roadway ("the Roadway"). (Doc. # 19-4 at 1). The Roadway is the subject of this dispute. In 2012, Defendant City of Grayson introduced Ordinance No. 2-2012 ("the Ordinance") which proposed opening the Roadway to the public and incorporating it into the city road system. (Doc. # 1 at ¶¶ 23–24). City of Grayson claimed it had authority to enact the Ordinance under Ky. Rev. Stat. § 82.400(3).1 Id. The City of Grayson held the first public reading of the Ordinance on March 22, 2012 and a second public reading on March 27, 2012. Id. at ¶ 24. The Ordinance was adopted at both readings. Id. Grayson City Council Members Defendants Jack Harper, Pam Nash, and Terry Stamper voted in favor of the Ordinance, and Defendant Mayor George Steele signed it into law. See (Doc. # 19-4 at 7–8).

On April 19, 2012, Plaintiff filed suit in Carter Circuit Court (the "state court action") against Defendants and other individuals who were involved in the adoption of the Ordinance. (Doc. # 19-3). The state court action includes two counts: Count 1 requests that the court declare the Ordinance "illegal, void, unconstitutional, invalid, and of no force and effect," and Count 2 requests damages for inverse condemnation and constitutional violations stemming from the adoption of the Ordinance. Id. at 9–11. On April 18, 2013, Plaintiff filed a Motion for Judgment on the Pleadings, asking the Carter Circuit Court to enter an order "in conformity with the relief requested in ... Count 1 ... and for all other relief to which it may appear to be entitled." (Doc. # 20-1 at 10). On July 23, 2014, the Carter Circuit Court entered an Order granting Plaintiff's Motion for Judgment on the Pleadings and invalidating the Ordinance. (Doc. # 19-4). The Order did not address Plaintiff's inverse-condemnation claim or order any form of relief beyond invalidating the Ordinance. Id. at 23. The Kentucky Court of Appeals affirmed the Carter Circuit Court's Order and then denied Defendant's petition for rehearing. (Docs. # 19-5 and 19-6). The Supreme Court of Kentucky denied discretionary review. (Doc. # 19-7). Count 1 having been resolved, the case is still pending in Carter Circuit Court on Count 2.

After the Kentucky Supreme Court denied discretionary review of the Carter Circuit Court Order, Plaintiff filed this action on February 12, 2019. (Doc. # 1). Plaintiff brings three claims pursuant to 42 U.S.C. § 1983. Id. at ¶¶ 31–62. First, Plaintiff claims that the Ordinance was an unlawful taking of its property without just compensation. Id. at ¶¶ 31–43. Second, Plaintiff alleges that Defendants engaged in an unlawful custom and practice to deprive Plaintiff of its property when Defendants passed the Ordinance. Id. at ¶¶ 44–50.2 Finally, Plaintiff claims that Defendants violated its due-process rights by passing the Ordinance.3 Id. at ¶¶ 51–60. The Court has subject-matter jurisdiction over this matter pursuant to 28 U.S.C. § 1331.

On March 14, 2019, Defendants filed a Motion to Dismiss, arguing that the Complaint should be dismissed because the Court lacked subject-matter jurisdiction and also because the Complaint fails to state a claim upon relief may be granted. (Doc. # 17). Initial briefing was complete on April 18, 2019. (Docs. # 19 and 20). In light of the Supreme Court's ruling in Knick v. Township of Scott , ––– U.S. ––––, 139 S. Ct. 2162, 204 L.Ed.2d 558 (2019), on September 17, 2019, the Court ordered the parties to file contemporaneous supplemental briefs addressing the applicability of Knick to the Motion to Dismiss. (Doc. # 21). The parties having submitted their supplemental briefs, (Docs. # 22 and 23), this matter is ripe for the Court's review.

II. ANALYSIS
A. Standard of Review
1. Dismissal for Lack of Subject-Matter Jurisdiction

Federal Rule of Civil Procedure 12(b)(1) allows parties to move for dismissal of a complaint when the court lacks subject-matter jurisdiction. Fed. R. Civ. P. 12(b)(1). The court lacks subject-matter jurisdiction if the action is not ripe for review. Bigelow v. Mich. Dep't of Nat. Res. , 970 F.2d 154, 157 (6th Cir. 1992).4 In a Rule 12(b)(1) motion, the plaintiff has the burden of proving that the Court has subject-matter jurisdiction. RMI Titanium Co. v. Westinghouse Elec. Corp. , 78 F.3d 1125, 1135 (6th Cir. 1996). A court considers 12(b)(1) arguments before any additional 12(b) motions because any remaining arguments would be moot if subject-matter jurisdiction is lacking. Moir v. Greater Cleveland Reg'l Transit Auth. , 895 F.2d 266, 269 (6th Cir. 1990). A "motion to dismiss for failure to state a cause of action may be decided only after establishing subject matter jurisdiction, since determination of the validity of the claim is, in itself, an exercise of jurisdiction." Id. (citing Bell v. Hood , 327 U.S. 678, 682, 66 S.Ct. 773, 90 L.Ed. 939 (1946) ).

2. Dismissal for Failure to State a Claim

Federal Rule of Civil Procedure 12(b)(6) allows parties to move for dismissal of a complaint when it "fail[s] to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, ‘to state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Allegations are plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. A complaint need not contain "detailed factual allegations," but must contain more than mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Id. Put another way, the "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). When reviewing a motion to dismiss, the Court must "construe the complaint in the light most favorable to the plaintiff [and] accept all well-pleaded factual allegations as true." Hill v. Snyder , 878 F.3d 193, 203 (6th Cir. 2017).

In reviewing a 12(b)(6) motion to dismiss, the Court "may consider the complaint and any exhibits attached thereto, public records, items appearing in the record of the case, and exhibits attached to the defendant's motion to dismiss, so long as they are referred to in the complaint and are central to the claims contained therein." DeJohn v. Lerner, Sampson & Rothfuss , No. 1:12CV1705, 2012 WL 6154800, at *2 (N.D. Ohio Dec. 11, 2012) (citing Amini v. Oberlin Coll. , 259 F.3d 493, 502 (6th Cir. 2001) ).

B. Subject-Matter Jurisdiction

As an initial matter, the Court has subject-matter jurisdiction over this action because Plaintiff's claims are ripe for review. The ripeness doctrine is meant "to prevent the courts, through premature adjudication, from entangling themselves in abstract disagreements." Kentucky Press Ass'n, Inc. v. Kentucky , 454 F.3d 505, 508 (6th Cir. 2006) (quoting Thomas v. Union Carbide Agric. Prods. Co. , 473 U.S. 568, 105 S.Ct. 3325, 87 L.Ed.2d 409 (1985) ). Relying on Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City , 473 U.S. 172, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985), Defendants originally argued that Plaintiff's claims were not ripe because Plaintiff had not exhausted its state remedies, which was a prerequisite to bringing a takings claim pursuant to § 1983 under Williamson County . (Doc. # 17-1 at 5–7) (citing Williamson Cty. , 473 U.S. at 194, 105 S.Ct. 3108 ). The United States Supreme Court, however, overturned Williamson County during the pendency of this Motion in Knick v. Township of Scott , ––– U.S. ––––, 139 S. Ct. 2162, 204 L.Ed.2d 558 (2019). Under Knick , a takings claim pursuant to § 1983 is now ripe "upon the taking of [plaintiff's] property without just compensation by a local government." Knick , 139 S. Ct. at 2179. In their Supplemental Brief, Defendants concede that Plaintiff's claims are ripe under the new standard articulated in Knick . (Doc. # 23 at 2). Accordingly, Defendants Motion to Dismiss pursuant to 12(b)(1) is denied as moot .

C. Failure to State a Claim

Having established subject-matter jurisdiction, the Court turns to Defendants' arguments that the Complaint should be dismissed for failure to state a claim upon which relief may be granted. See generally (Doc. # 17-1 at 9–15). Defendants make five arguments to support dismissal under 12(b)(6). Id. First, Defendants...

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