Charles J. Arndt, Inc. v. City of Birmingham

• Decision Date: 17 December 1984
• Docket Number: No. 83-7605,83-7605
• Citation: 748 F.2d 1486
• Parties: CHARLES J. ARNDT, INC., a corporation, Plaintiff-Appellant, v. CITY OF BIRMINGHAM, a municipal corporation, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1486

748 F.2d 1486

CHARLES J. ARNDT, INC., a corporation, Plaintiff-Appellant, v. CITY OF BIRMINGHAM, a municipal corporation, et al Defendants-Appellees.

No. 83-7605.

United States Court of Appeals Eleventh Circuit.

Dec. 17, 1984.

Engel, Hairston, Moses & Johanson, Griffin Sikes, Jr., Charles R. Johanson, III, Birmingham, Ala., for plaintiff-appellant.

Alton B. Parker, Jr., Spain, Gillon, Riley, Tate & Etheredge, J. Stuart Wallace, Birmingham, Ala., for defendants-appellees City of Birmingham, et al.

Carolyn Nelson, Metropolitan Properties, Inc., Birmingham, Ala., for Metropolitan Properties, Inc. and GB Corp.

Thomas Reuben Bell, Sylacauga, Ala., for Metropolitan Properties, Inc.

Appeal from the United States District Court for the Northern District of Alabama.

Before HILL and HENDERSON, Circuit Judges, and WISDOM ^*, Senior Circuit Judge.

ALBERT J. HENDERSON, Circuit Judge:

The appellant, Charles J. Arndt, Inc. ("Arndt"), appeals from the orders of the United States District Court for the Northern District of Alabama dismissing Arndt's federal and state law causes of action and denying its motions to alter or amend the court's judgment and to amend the complaint. Arndt alleged that the actions of the defendants constituted a taking of its property without due process of law in violation of the fifth and fourteenth amendments to the Constitution of the United States and 42 U.S.C. Sec. 1983, and deprived it of substantive due process. Finding there was no taking of Arndt's property in a constitutional sense, we affirm the district court.

On September 8, 1981, the Birmingham, Alabama City Council adopted Resolution No. 1119-81 in furtherance of a previously adopted urban renewal plan for downtown Birmingham. Resolution No. 1119-81 declared Block 60 a blighted area and set out specific findings to support this declaration. The resolution provided that the City of Birmingham ("City") should acquire or cause to be acquired all of the property in Block 60 at a reasonable and fair market price for the subsequent redevelopment of the area. The resolution authorized the City to contract with a developer to acquire the property on behalf of the City. Parcels which the developer was unable to obtain by purchase were to be acquired by the City through the exercise of its power of eminent domain.

Pursuant to the resolution's terms, the City entered into an agreement with Metropolitan Properties, Inc. ("Metropolitan") on September 30, 1981, in which Metropolitan agreed to use its best efforts to purchase all of the property interests located in Block 60. Metropolitan thereupon began negotiations with Arndt, the owner of a leasehold interest in real property located in Block 60 on which Arndt operated a men's retail clothing and tailor shop. The City stepped in to conduct the final phases of the negotiations after Arndt complained of an impasse in the talks with Metropolitan. On October 20, 1982, Arndt granted the City or its assigns an option to terminate the Arndt leasehold interest in the Block 60 property. On the same date, the City assigned the option to Metropolitan. The option was exercised on December 30, 1982, the term of the option having been extended by mutual agreement of the parties.

Arndt filed this complaint against the City, the mayor, various city officials including city council members, Metropolitan, and GB Corporation ¹ in the United States District Court for the Northern District of Alabama on April 29, 1983. The complaint charged that the actions of the various defendants in declaring Block 60 a blighted area, in failing to negotiate in good faith or to commence condemnation proceedings, and in coercing Arndt into granting the City the option to terminate its leasehold constituted a taking of Arndt's property without due process in violation of the fifth and fourteenth amendments and 42 U.S.C. Sec. 1983. The complaint also alleged a state law breach of contract cause of action arising out of the failure of the City, Metropolitan or GB Corporation to pay the contract price after exercising the option.

Both the City and corporate defendants filed motions, denominated as "Motion to Dismiss," with the district court on May 23, 1983 and June 20, 1983. The motions were premised, inter alia, on the plaintiff's failure to state a claim upon which relief could be granted. On June 28, 1983, the district court directed that the motion filed by the City defendants be treated as a motion for summary judgment.

The district court entered its order dismissing the plaintiff's claims on September 1, 1983. The court found that Arndt's claim that the City Council's declaration of blight constituted a taking was foreclosed by the United States Supreme Court's decision in Danforth v. United States, 308 U.S. 271, 60 S.Ct. 231, 84 L.Ed. 240 (1939). Arndt's assertion that the defendants failed to negotiate in good faith or to commence timely condemnation proceedings was seen as inconsistent with the claim that it was coerced into granting the option to terminate the lease. In the court's view, Arndt's admission that it entered into an option agreement with the City confirmed that the property was not taken without due process of law. Finally, the court declined to exercise pendent jurisdiction over the state breach of contract claim. ² At the time of the district court's order, Arndt continued to operate its business at the Block 60 location.

Arndt subsequently filed a motion to alter or amend the court's judgment pursuant to Rule 59 of the Federal Rules of Civil Procedure and a motion for leave to amend its complaint. The amended complaint essentially restated the allegations contained in the first complaint and stressed Arndt's claim of a denial of substantive due process. In an order entered October 17, 1983, the district court denied both motions. In its memorandum of opinion accompanying the order, the court rejected Arndt's arguments of denial of substantive due process and offensive collateral estoppel. Arndt appeals both the orders of September 1, 1983 and October 17, 1983.

I.

In the briefs submitted to this court, the parties have engaged in a spirited battle over the district court's procedural disposition of the case in its September 1, 1983 order. Arndt insists that the district court treated the defendants' motions as motions to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6). It relies on language in the district court's orders referring to the defendants' "motions to dismiss" for support. Counsel for the City defendants contends, however, that its motion was converted into a motion for summary judgment, while counsel for the corporate defendants maintains that the district court did not dispose of its motion under Fed.R.Civ.P. 56. Therefore, our first task is to determine the nature of the district court's treatment of the motions styled "Motion to Dismiss."

In its order of June 28, 1983, the district court ordered that the motion to dismiss filed by the City defendants be considered as a motion for summary judgment. The court then prescribed a briefing schedule, stating that Arndt was to respond "to the city's motion and to the motion to dismiss filed by defendants Metropolitan Properties, Inc. and GB Corp." It thus appears that the district court initially intended to treat only the motion to dismiss filed by the City defendants as a motion for summary judgment under Fed.R.Civ.P. 56.

The district court entered its order granting the motions to dismiss on September 1, 1983. In its memorandum opinion, the court stated that:

This cause is now before the court on the defendants' motions to dismiss, which have been treated as motions for summary judgment for purposes of briefing and oral arguments. Upon consideration of the pleadings, briefs, affidavits, and other supporting materials submitted by plaintiff and defendants, and based on material facts not in dispute, the court concludes that the defendants' motions to dismiss are due to be granted ....

Record, Volume 1, at 110-11. The district court's referral to the "defendants' motions to dismiss" does not reveal whether the court meant to treat the motions to dismiss filed by both the City and corporate defendants as motions for summary judgment or was simply addressing the City defendants' motion. It is evident, however, that the district court did adjudicate the City defendants' motion on summary judgment. ³

The Fifth Circuit Court of Appeals phrased it best in Tuley v. Heyd, 482 F.2d 590 (5th Cir.1973) ⁴ when it stated that:

It is a familiar principle that the label a district court puts on its disposition of a case is not binding on a court of appeals. When a district court grants a motion styled a motion to dismiss, but bases its ruling on facts developed outside the pleadings, the appellate court will review the 'dismissal' as a summary judgment under the standards laid down in Fed.R.Civ.P. 56.

Id. at 593 (citations omitted). Accord Save Our Cemeteries, Inc. v. Archdiocese of New Orleans, Inc., 568 F.2d 1074, 1077 (5th Cir.), cert. denied, 439 U.S. 836, 99 S.Ct. 120, 58 L.Ed.2d 133 (1978); Village Harbor, Inc. v. United States, 559 F.2d 247, 249 (5th Cir.1977). This ruling is premised on Fed.R.Civ.P. 12(b) which states that if matters outside the pleadings are presented to and not excluded by the court, a Fed.R.Civ.P. 12(b)(6) motion shall be considered as a motion for summary judgment. ⁵ Though the district court did speak in terms of "motions to dismiss," the order of September 1, 1983 makes it clear that the judge considered not only the pleadings, but the parties' briefs and other supporting materials. Accordingly, we will review the district court's judgment in conformance with the standards developed for the review of grants of summary judgment motions. ⁶

II.

The just compensation clause of the fifth amendment states that private property shall not be taken for public use without just...