Chemsol, LLC v. City of Sibley

• Decision Date: 04 June 2019
• Docket Number: No. C18-4012-LTS,C18-4012-LTS
• Citation: 386 F.Supp.3d 1000
• Parties: CHEMSOL, LLC and Iowa Drying & Processing, LLC, Plaintiffs, v. The CITY OF SIBLEY, IOWA, Defendant.
• Court: U.S. District Court — Northern District of Iowa

386 F.Supp.3d 1000

CHEMSOL, LLC and Iowa Drying & Processing, LLC, Plaintiffs,

v.The CITY OF SIBLEY, IOWA, Defendant.

No. C18-4012-LTS

United States District Court, N.D. Iowa, Western Division.

Signed June 4, 2019

Todd W. Weidemann, Woods & Aitken LLP, Omaha, NE, Scott R. Carlson, Pro Hac Vice, SR Carlson Law, Minneapolis, MN, for Plaintiffs.

Brent Hinders, Eric Michael Updegraff, Hugh J. Cain, Hopkins & Huebner PC, Des Moines, IA, Harold D. Dawson, DeKoter, Thole & Dawson, PLC, Sibley, IA, for Defendant.

ORDER

Leonard T. Strand, Chief Judge

I. INTRODUCTION

This case is before me on a motion (Doc. No. 23) for summary judgment by defendant City of Sibley, Iowa (Sibley). Plaintiffs ChemSol, LLC (ChemSol), and Iowa Drying & Processing, LLC (IDP), have filed a resistance (Doc. No. 30), and Sibley has filed a reply (Doc. No. 40). Oral argument is not necessary. See N.D. Iowa L.R. 7(c).

II. PROCEDURAL BACKGROUND

Plaintiffs commenced this case by filing a complaint (Doc. No. 1) on February 16, 2018. The complaint asserts three claims for relief under 42 U.S.C. § 1983 and Iowa law, all arising from Sibley's enactment and enforcement of an odor ordinance:

Count I: Violation of Due Process (facial and as-applied challenge)

Count II: Inverse Condemnation

Count III: Tortious Interference with Expected Business Advantage

Doc. No. 1. Plaintiffs seek compensatory damages, as well as declaratory and injunctive relief. Id. at 15.

Sibley answered and discovery commenced. Sibley filed the present motion for summary judgment on March 14, 2019. Plaintiffs filed their resistance on April 4, 2019. This matter is currently scheduled for a jury trial beginning August 26, 2019.

III. SUMMARY JUDGMENT STANDARDS

Any party may move for summary judgment regarding all or any part of the claims asserted in a case. Fed. R. Civ. P. 56(a). Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

A material fact is one "that might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Thus, "the substantive law will identify which facts are material." Id. Facts that are "critical" under the substantive law are material, while facts that are "irrelevant or unnecessary" are not. Id. "An issue of material fact is genuine if it has a real basis in the record," Hartnagel v. Norman , 953 F.2d 394, 395 (8th Cir. 1992) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ), or "when ‘a reasonable jury could return a verdict for the nonmoving party’ on the question," Woods v. DaimlerChrysler Corp. , 409 F.3d 984, 990 (8th Cir. 2005) (quoting Anderson , 477 U.S. at 248, 106 S.Ct. 2505 ). Evidence that only provides "some metaphysical doubt as to the material facts," Matsushita , 475 U.S. at 586, 106 S.Ct. 1348, or evidence that is "merely colorable" or "not significantly probative," Anderson , 477 U.S. at 249-50, 106 S.Ct. 2505, does not make an issue of material fact genuine. Put another way, "[e]vidence, not contentions, avoids summary judgment." Reasonover v. St. Louis Cnty. , 447 F.3d 569, 578 (8th Cir. 2006) (citation omitted). The parties "may not merely point to unsupported self-serving allegations." Anda v. Wickes Furniture Co. , 517 F.3d 526, 531 (8th Cir. 2008).

As such, a genuine issue of material fact requires "sufficient evidence supporting the claimed factual dispute" so as to "require a jury or judge to resolve the parties' differing versions of the truth at trial." Anderson , 477 U.S. at 249, 106 S.Ct. 2505 (quotations omitted). The party moving for entry of summary judgment bears "the initial responsibility of informing the district court of the basis for its motion and identifying those portions of the record which show a lack of a genuine issue."

Hartnagel , 953 F.2d at 395 (citing Celotex , 477 U.S. at 323, 106 S.Ct. 2548 ). Once the moving party has met this burden, the nonmoving party must go beyond the pleadings and by depositions, affidavits, or otherwise, designate specific facts showing that there is a genuine issue for trial. Mosley v. City of Northwoods , 415 F.3d 908, 910 (8th Cir. 2005). The nonmovant must show an alleged issue of fact is genuine and material as it relates to the substantive law. Id. If a party fails to make a sufficient showing of an essential element of a claim or defense with respect to which that party has the burden of proof, then the opposing party is entitled to judgment as a matter of law. Celotex , 477 U.S. at 322, 106 S.Ct. 2548.

To determine whether a genuine issue of material fact exists, I must view the evidence in the light most favorable to the nonmoving party. Matsushita , 475 U.S. at 587-88, 106 S.Ct. 1348. Further, I must give the nonmoving party the benefit of all reasonable inferences that can be drawn from the facts. Id. However, "because we view the facts in the light most favorable to the nonmoving party, we do not weigh the evidence or attempt to determine the credibility of the witnesses." Kammueller v. Loomis, Fargo & Co. , 383 F.3d 779, 784 (8th Cir. 2004) (citing Quick v. Donaldson Co. , 90 F.3d 1372, 1376-77 (8th Cir. 1996) ). Instead, "the court's function is to determine whether a dispute about a material fact is genuine." Quick , 90 F.3d at 1377.

IV. RELEVANT FACTS

Unless otherwise noted, the following facts are undisputed:

A. The Parties

ChemSol is a Minnesota limited liability company that owned a drying facility located at 1020 4th Avenue, Sibley, Iowa (the Facility), from November 2012 until transferring it to IDP in April 2017. Doc. No. 1 at ¶ 7. IDP is a Minnesota limited liability company that was formed to operate the Facility. Before 2012, the Facility was used for milk drying and storage. Doc. No. 23-6 at 9. In April 2017, IDP acquired the Facility from ChemSol pursuant to a warranty deed. Id. at 8, 23. IDP also owns the equipment at the Facility. Id. at 23. IDP uses the Facility to dry biological liquids such as plasma protein, porcine peptone and gelatin into powders for other applications – such as dog food – by spraying the liquids through nozzles into a heated chamber. Id. at 22.

IDP owes money to ChemSol for the purchase of the Facility, but ChemSol does not have an ownership interest in IDP.¹ However, ChemSol, IDP and several related companies share executive employees. John Bowlsby is the President of ChemSol and the Vice President of IDP. Id. at 45. Larry Zilverberg is the Vice President of ChemSol, and the President of IDP. Doc. No. 30-2 at 109. James Reidy is the Chief Financial Officer (CFO) for ChemSol and IDP, as well as the CFO for Transport U.S.A., LLC, Pro Roasting Solutions, and Hemotech, Inc. Doc. No. 23-6 at 21. These entities have various business relationships with each other. For example, IDP processes product that is owned and ultimately sold by Hemotech. Id. at 22.

Sibley is an Iowa municipal corporation located in Osceola County, Iowa. Doc. No. 1 at ¶ 9. Jerry Johnson is the mayor of Sibley while Larry Pedley, Jan Henningsen, Tim Nobles, Gail Buchholtz and Mike Groote currently serve on the City Council.² Glenn Anderson is the City Administrator. Doc. No. 23-6 at 59; Doc. No. 30-2 at 94. The law firm of DeKoter, Thole, Dawson & Rockman, PLC, and specifically Harold Dawson, represents Sibley as the City Attorney.³

B. The Odor Ordinance

Two versions of Sibley's nuisance ordinance are at issue in this case.⁴ The November 2013 version prohibited "[t]he creation or maintenance of a nuisance," and defined nuisance to include "offensive smells":

The erecting, continuing or using of any building or other place for the exercise of any trade, employment or manufacture which, by occasioning noxious exhalations, offensive smells or other annoyances, becomes injurious and dangerous to the health, comfort or property of individuals or the public.

Doc. No. 23-3 at 7.

In December 2015, the odor ordinance was amended to increase the civil penalty for municipal violations from $ 100 per offense to $ 750 for a "first offense," and $ 1,000 for repeated violations.⁵ Doc. No. 23-2 at 7, Doc. No. 30-1 at 60-61. On June 27, 2016, Sibley amended the odor ordinance to add the words "unreasonably" and "unreasonable." Specifically, the June 2016 version states:

"[N]uisance" shall mean whatever is injurious to health, indecent, or unreasonably offensive to the senses, or an obstruction to the free use of property, so as essentially to interfere unreasonably with the comfortable enjoyment of life or property.

* * *

Offensive Smells: The erecting, continuing or using of any building or other place for the exercise of any trade, employment or manufacture which, by occasioning unreasonably noxious exhalations, unreasonably offensive smells or other unreasonable annoyances, becomes injurious and dangerous to the health, comfort or property of individuals or the public.

Doc. No. 23-2 at 15 (emphasis added). This amendment brought the odor ordinance in line with the Iowa Code's definition of nuisance. See Iowa Code §§ 657.1(1) (nuisance defined), 657.2(1) (odor as a nuisance).⁶ Finally, if "the authorized municipal representative finds that a nuisance exists, and that the appropriate method of abatement is reasonably ascertainable from the circumstances," the ordinance provides procedures for abatement including notice and the right to a public hearing. Doc. No. 23-2 at 17.

C. The Conflict

Before ChemSol purchased the Facility and IDP began drying product, the companies had dealings with the Sibley City Council and with the Osceola County Economic Development Commission (OCEDC).⁷ ChemSol applied for economic development grants from the...