BLUMENTHAL INV. v. City of Des Moines, 99-1458.

• Citation: 636 N.W.2d 255
• Decision Date: 15 November 2001
• Docket Number: No. 99-1458.,99-1458.
• Parties: BLUMENTHAL INVESTMENT TRUSTS, an Iowa Partnership, Appellant, v. The CITY OF WEST DES MOINES, Iowa, Appellee.
• Court: United States State Supreme Court of Iowa

636 N.W.2d 255

BLUMENTHAL INVESTMENT TRUSTS, an Iowa Partnership, Appellant, v. The CITY OF WEST DES MOINES, Iowa, Appellee.

No. 99-1458.

Supreme Court of Iowa.

November 15, 2001.

Thomas D. Hanson and Barry A. Russell of Hanson, Bjork & Russell, L.L.P., Des Moines, for appellant.

Lee H. Gaudineer of Gaudineer & Comito, L.L.P., Des Moines, and Ivan Webber of Ahlers, Cooney, Dorweiler, Haynie, Smith & Allbee, P.C., Des Moines, for appellee.

TERNUS, Justice.

The appellant, Blumenthal Investment Trusts [hereinafter "the Trust"], sued the appellee, the City of West Des Moines, Iowa for injunctive relief and money damages after the City placed unacceptable conditions on a plat approval sought by the Trust. The case was tried to the court, which resulted in a ruling in favor of the City. The Trust appeals. We affirm.

I. Standard of Review.

Our scope of review depends on how the case was tried in the district court. In re Estate of Rutter, 633 N.W.2d 740, 746 (Iowa 2001). This case was brought and tried as an equity case. Therefore, we review de novo. Iowa R.App. P. 4. The presence of constitutional issues also requires that we "review de novo the evidence bearing on" those issues. Iowa Coal Mining Co. v. Monroe County, 494 N.W.2d 664, 668 (Iowa 1993).

II. Background Facts and Proceedings.

Upon our de novo review of the evidence, we find the following facts. The Trust is an Iowa partnership of irrevocable trusts that owns undeveloped land in West Des Moines. Two tracts of land are implicated in the present dispute; both lie between Fuller Road and Grand Avenue in the vicinity of South 50th Street. A forty-acre parcel abuts South 50th. A smaller, nineteen-acre tract is located approximately one-quarter mile east of South 50th, directly north of Oakwood Lane.

The area in question began to undergo development in the 1990s and in 1995 the Trust filed a plat application with the City for the development of the nineteen-acre parcel, designated as Quail Park Vista. City staff, the City's planning and zoning commission, and the City's department of community development reviewed the application. All recommended that plat approval be conditioned on the developer's acceptance of responsibility to participate equitably in the paving of South 50th, which at that time was primarily a gravel road. It was suggested that the developer be given a choice of two alternatives: (1) enter into an agreement with the City, which we shall call an assessment agreement,¹ whereby the City would pave the street and the developer would be assessed its "pro-rata share" of the cost, or (2) make arrangements with other landowners to pave, at their expense, a segment of the road per City specifications.

The Trust objected to the form of the assessment agreement, as did another property owner, St. Francis of Assisi Catholic Church, who was asked to sign an identical assessment agreement at about the same time. The primary concern of these landowners was the breadth of the waiver of statutory rights required by the agreement. The Trust in particular was concerned about the fact that the agreement did not specify the amount of any future assessment and did not allow the developer to protest any such assessment.

A decision was eventually made, at the suggestion of the City's bond counsel, to revise the agreement to address the concerns raised by the Trust and St. Francis. The catchall waiver language was deleted from the agreement and additional language was added requiring that any future assessment be made pursuant to the City's administrative policy 3-6 on special assessments for streets. At a subsequent meeting of the city council, the revised agreement was discussed. The city attorney stated that under the new agreement a developer could challenge whether the City had followed its own policy and state law in making the assessment and whether the City's calculations were correct. Even the revised agreement, however, required the developer to waive (1) "[a]ll legal formalities of whatsoever kind or character required by the laws of Iowa" with respect to future improvements, (2) "[a]ny limitation on the amount of the assessment as a percentage of valuation," and (3) "[a]ny right to defer or postpone payment of any such assessment."

After rejecting any further change to the agreement, the council approved the plat sought by St. Francis, subject to St. Francis's signing the revised assessment agreement. The council then approved the Trust's plat, but conditioned filing of the plat on the Trust's participation in the private paving of South 50th or its execution of the revised assessment agreement.

The Trust did not appeal the city council's decision on its plat application. Rather, it elected to pursue negotiations for the private paving of a portion of the street. When these negotiations were not successful, the Trust filed this lawsuit some six months later.

The Trust alleged that the City's requirement that the Trust execute the assessment agreement or pay for the private paving of the street violated several of its constitutional rights: (1) procedural due process; (2) substantive due process; and (3) equal protection. The Trust sought three types of relief: (1) an injunction against the use of the assessment agreement; (2) a mandatory injunction requiring the City to adopt formal procedures defining a developer's responsibility for off-site improvements; and (3) damages and attorney fees pursuant to 42 U.S.C. § 1983. Finally, the Trust sought damages based on the City's alleged improper interference with the Trust's prospective business expectations.² This case was tried to the court. The Trust sought to prove that the City's actions were arbitrary and capricious, favored certain developers over others, and were motivated by concern for the City's financial interests over the interests of the Trust. In rendering its ruling, the trial court concluded that the Trust's § 1983 claims were not ripe for adjudication because the Trust had failed to exhaust state remedies available to it. Nonetheless, the court also rejected the Trust's constitutional claims on their merits. The district court held that the Trust's request for injunctive relief was moot because South 50th between Fuller Road and Grand Avenue was fully paved, and the City had not prevented the development of Quail Park Vista despite the Trust's failure to execute the assessment agreement.³ Finally, the court rejected the Trust's tort claim, finding that the Trust had not proved any interference by or improper motive on the part of the City.

The Trust has appealed, claiming error in the trial court's rulings. We address each claim separately.⁴

III. Exhaustion of State Remedies.

Although the district court addressed the merits of each claim asserted by the Trust, it also held that "a § 1983 action will not lie when there is an adequate state post-deprivation procedure to remedy a random, arbitrary deprivation of property or liberty." The court held that Iowa Code section 354.10 provides "an adequate state remedy for [the Trust's] claims."

Iowa Code section 354.10 allows any person aggrieved during the process of obtaining approval for a subdivision plat to appeal to the district court. Iowa Code§ 354.10 (1995). This statute expressly provides that an applicant may be aggrieved by "[t]he requirements imposed by a governing body as a condition of approval." Id. Thus, the Trust clearly had a right to appeal the City's decision to place conditions on its approval of the Trust's plat application. The City continues to assert on appeal that the Trust's failure to pursue this avenue of review forecloses any claim under § 1983.

In support of its assertion that the Trust's claim is not "ripe" for adjudication, the City relies on cases imposing two conditions on a litigant bringing a takings claim under the Fifth Amendment. In the context of a takings claim, a plaintiff must show that the underlying proceedings are final and that all state remedies have been exhausted. Iowa Coal Mining Co. v. Monroe County, 555 N.W.2d 418, 432 (Iowa 1996) (Iowa Coal Mining II) (citing Williamson County Reg'l Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 185-95, 105 S.Ct. 3108, 3115-21, 87 L.Ed.2d 126, 138-44 (1985)). The distinction between these two concepts has been explained as follows:

The question whether administrative remedies must be exhausted is conceptually distinct ... from the question whether an administrative action must be final before it is judicially reviewable. While the policies underlying the two concepts often overlap, the finality requirement is concerned with whether the initial decision-maker has arrived at a definitive position on the issue that inflicts an actual, concrete injury; the exhaustion requirement generally refers to administrative and judicial procedures by which an injured party may seek review of an adverse decision and obtain a remedy if the decision is found to be unlawful or otherwise inappropriate.

Williamson County, 473 U.S. at 192-93, 105 S.Ct. at 3119-20, 87 L.Ed.2d at 142-43 (citations omitted). It is the latter concept—exhaustion of remedies—that the City claims has not been satisfied here.

Contrary to the district court's blanket statement that state remedies must be exhausted before one may assert a § 1983 claim, the prerequisites for a § 1983 suit depend on the underlying basis for the claim. For example, as we have already stated, a Fifth Amendment takings claim brought under § 1983 must satisfy both conditions of finality and exhaustion. Iowa Coal Mining II, 555 N.W.2d at 432. In contrast, exhaustion of state remedies is not a prerequisite to a § 1983 substantive due process claim. City of Iowa City v. Hagen Elecs., Inc., 545 N.W.2d 530, 535 (Iowa 1996); Bakken v. City of Council Bluffs, 470 N.W.2d 34, 39 (Iowa 1991). Nor is it a prerequisite to an equal protection challenge. Christopher Lake Dev. Co. v. St. Louis County, 35 F.3d 1269,...