81 Dev. Co. v. Soil & Materials Eng'rs, Inc.

• Decision Date: 09 March 2021
• Docket Number: Case No. 1:19-cv-998
• Parties: THE 81 DEVELOPMENT COMPANY, LLC, Plaintiff, v. SOIL AND MATERIALS ENGINEERS, INC., et al., Defendants.
• Court: U.S. District Court — Western District of Michigan

THE 81 DEVELOPMENT COMPANY, LLC, Plaintiff, v. SOIL AND MATERIALS ENGINEERS, INC., et al., Defendants.

Case No. 1:19-cv-998

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

March 9, 2021

Hon. Hala Y. Jarbou

OPINION

This is an action arising under 28 U.S.C. § 1983 and state law. Before the Court is Defendants' motion to dismiss. The Court will grant the motion.

I. Background

A. Summary

In 2015, Plaintiff, The 81 Development Company, LLC ("81 Dev"), applied for a special use permit from Peninsula Township to construct a condominium complex on its 81-acre property in the Township. After a lengthy and complicated process, the Township approved the permit subject to multiple conditions, including environmental testing and monitoring. (See Special Use Permit, Decision & Order on Remand (Jan. 23, 2018), ECF No. 1-100.) 81 Dev believes that the Township treated it unfairly and in violation of its right to equal protection because the Township approved a permit for a similar development project, called "Vineyard Ridge," without environmental testing or monitoring requirements.

Defendant James Harless works for Defendant Soils and Materials Engineering, Inc. (SME). Before approving the permit, the Township hired SME to provide an environmental report about 81 Dev's project. Harless prepared the report in 2017, opining that the project was a potential threat to human health due to the likely presence of contaminants in the soil. (See Compl. ¶ 123, ECF No. 1.) The report urged 81 Dev to conduct environmental testing on its property. (Id.)

81 Dev contends that Harless was not a neutral expert. He allegedly worked with the Township's attorney, James Young, and Young's law firm, Young, Graham, and Wendling, P.C. ("YGW") to prepare a "false" report indicating that 81 Dev's property was contaminated. (Id. ¶¶ 123.1-123.10.)

This is the third lawsuit filed by 81 Dev regarding the Township's decision.¹ Accordingly, Defendants seek dismissal due to res judicata and failure to state a claim.

B. 81 Dev's Permit Process

81 Dev submitted its permit application in January 2015, in accordance with the Michigan Zoning Enabling Act and a Peninsula Township ordinance. In July, some property owners adjacent to the project site, including James Komendera, expressed concerns about the environmental impact of the project, particularly with respect to grading of the land. (Compl. ¶ 14.) Nevertheless, the Township's board approved the permit in August 2015, subject to multiple conditions. (Id. ¶ 16.)

Komendera appealed the permit decision to the Grand Traverse County Circuit Court. (Id. ¶ 18.) In January 2016, the Grand Traverse County Circuit Court approved most of the board's conditions but remanded for further findings on two of the permit conditions. The court concluded that the board had not made adequate findings regarding (1) fire safety and (2) soil erosion, grading, and stormwater, as required to satisfy the local ordinance. (See id. ¶¶ 20-26.) Instead,the board had improperly delegated those matters to the Township Engineer and the Township Fire Department for approval. (Id.)

Township Engineer approves 81 Dev's grading and stormwater plans.

In March 2016, the Township Engineer allegedly approved 81 Dev's grading and stormwater plans. (Id. ¶ 30.)

On June 20, 2016, the Michigan Court of Appeals denied Komendera's appeal.

Residents raise concerns about the environmental impacts of 81 Dev's project.

Throughout the summer and fall of 2016, the Township received comments from Komendera and other members of the public raising environmental concerns with 81 Dev's project, including the possible presence of "lead, arsenic, [and] farming chemicals" on the development site. (Id. ¶¶ 36, 61.) These individuals asked the Township to require 81 Dev to conduct soil testing and prepare an environmental assessment of its property.

Township's board is replaced.

On August 2, 2016, the Township held a primary election that resulted in the replacement of all seven members of the Township board. One of those new board members, Robert Manigold, contended that dissatisfaction with the Township's handling of 81 Dev's permit application motivated the campaigns of the new slate of board members. (Id. ¶ 45.)

Township's attorney raises the possibility of environmental testing.

In December 2016, the Township's attorney, James Young, told 81 Dev that assessing the impacts of its grading plan might require 81 Dev to conduct environmental testing on its property. (Id. ¶ 76.) Thereafter, Young exchanged emails with the Township Engineer, Brian Boals, asking him to "recommend [environmental] testing that is professionally justifiable given the historicaluse of [81 Dev's] property." (Id. ¶ 78.) Young told Boals that he expected 81 Dev to push back on that recommendation but he hoped that 81 Dev would conduct testing voluntarily. (Id.)

In January 2017, a firm called Otwell Mawby produced a report assessing the "adverse impact" of 81 Dev's project. (Id. ¶ 91.) The report acknowledged the presence of lead and arsenic in the soil, noting that they "accumulate in the upper soil horizon" because they are "immobile in the soil column." (Id.) However, Otwell Mawby concluded that 81 Dev's grading operations would not have an adverse impact if soils are "managed and contained onsite." (Id. ¶ 92.) In addition, there would be "little potential for adverse impact from stormwater runoff to adjacent properties" if 81 Dev adhered to a grading plan previously approved by Boals. (Id.) Boals and Young both received a copy of that report.

Boals subsequently contacted Young's law firm, YGW, recommending that they confer with Defendant Harless regarding concerns about agricultural contamination. Young agreed, suggesting that Harless prepare a separate report about the property in response to the Otwell Mawby report. Boals also provided Young a draft of his recommendations regarding the 81 Dev project. These recommendations included the requirement to conduct an environmental assessment on the property. Young edited those recommendations to clarify that they were consistent with the requirements of the Township's zoning ordinance. (Id. ¶ 100.)

Township hires Harless to assess 81 Dev's project.

Boals reached out to Harless in February 2017. Around that time, Young told Boals in an email that it was important for Harless to "evaluate the on-site conditions [of 81 Dev's property] and whether grading could spread contaminated soils to nearby property via wind, rain or other mechanisms." (Id. ¶ 109.) Young wanted Harless to know that "this project will most likely belitigated," but Young believed he had persuaded 81 Dev's attorney that "environmental testing MUST be done." (Id.) Boals forwarded Young's comments to Harless.

Young provides directions to Harless.

A few days later, Young gave specific directions to Harless:

It is important that you understand why your report is a crucial part of the Township's processing of this development and, also, that you understand the position of the developers['] consultants. Also, this project is opposed by a large number of citizens who have their own attorney and their own environmental consultant. Whatever decision that the township banks [sic] will be litigated by the losing side. Thus, it is crucial that the Township's decision be based on well reasoned reports by qualified environmental experts. . . .

The key section of the zoning ordinance (ZO) is section 8.1.3(K). Brian Boals sent you a copy of the ZO. You need only focus on that section. . . It would be extremely important to the Township if your report contained the following concepts:

1. based on your expertise and professional experience, if you agree that environmental testing is an appropriate meanings [sic] of determining whether "adverse impacts" could impact adjacent properties during grading, then please provide your professional opinion. You have accurate information regarding the historical use of the property in Brian Boals last report.

2. if you believe that the amount of the grading for this project or its location is of significance in determining whether an adverse impact could occur, then please state this.

3. if you know of any other law or regulation (excluding the ZO) that would be applicable to this property, given its historical use, please contact me and I may have you include it if legally relevant.

4. please state the "type" of environmental testing that should be conducted on a site like this.

Lastly, I would like your comments regarding all of the reports that we have from the experts obtained by the developer and the opponents. This should NOT be in your report. Such communication should be directly with me. If you disagree with any aspects of those reports, then I need to know it and the basis for your disagreement. I can then decide how and when to use this information. Note that environmental testing is only step one. Once we have the results, step two is a determination by the experts (with you being the key neutral expert) regarding what the next steps (such as remediation, altering locations of grading, etc.) should be, if any.

(Id. ¶ 114.)

In early March 2017, Harless sent Young a draft report. Young responded with several suggested revisions, including the following:

a. language usage "to make it easier for a Judge";

b. suggesting testing locations be selected by Harless, "not leave it up to the developer";

c. "Last paragraph - please add the following concept if you agree with it: environmental testing and "soil control plans" (my wording - please use standard terminology) are needed so that the township can make a determination under the zoning standard as to whether there would be adverse impacts on "adjacent and neighboring land" (take direct quote from 8.1.3.k). I ask that this be added because this [sic] our only legal basis for requiring the testing and plans is this standard. I have provided a legal opinion that 8.1.3.k be interpreted this

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