DLC Management Corp. v. Town of Hyde Park

• Decision Date: 15 December 1998
• Docket Number: 97-7934 and 97-9004,Docket Nos. 97-7932
• Citation: 163 F.3d 124
• Parties: DLC MANAGEMENT CORP., Plaintiff-Appellant, Arnold L. Cohen, Frederick Cohen and Carole Horowitz, Plaintiffs-Appellants-Cross Appellees, v. TOWN OF HYDE PARK, The Town of Hyde Park (N.Y.) Town Board of the Town of Hyde Park and Planning Board of Hyde Park, Defendants-Appellees-Cross Appellants, Nancy Alden and Evelyn Crispell, Defendants.
• Court: U.S. Court of Appeals — Second Circuit

Page 124

163 F.3d 124

DLC MANAGEMENT CORP., Plaintiff-Appellant Arnold L. Cohen, Frederick Cohen and Carole Horowitz Plaintiffs-Appellants-Cross Appellees, v. TOWN OF HYDE PARK, The Town of Hyde Park (N.Y.) Town Board of the Town of Hyde Park and Planning Board of Hyde Park, Defendants-Appellees-Cross Appellants Nancy Alden and Evelyn Crispell, Defendants.

Docket Nos. 97-7932, 97-7934 and 97-9004.

United States Court of Appeals Second Circuit.

Argued March 31, 1998.

Decided Dec. 15, 1998.

Robert Hermann, Plunkett & Jaffe, P.C., White Plains, N.Y., for Plaintiffs-Appellants-Cross Appellees.

Edward Rubin, of Counsel, New York, NY, for Plaintiff-Appellant.

S. Pitkin Marshall, New York, NY, Brian S. Sokoloff, Thurm & Heller, New York, NY, On the Brief, for Defendants-Appellees-Cross-Appellants.

Before: PARKER, Circuit Judge, EGINTON, ^* and GLASSER, ^** Senior District Judges. ^***

EGINTON, Senior District Judge:

Plaintiffs DLC Management ("DLC"), Arnold Cohen, Frederick Cohen, and Carole Horowitz (the "Landowner Plaintiffs") appeal from a decision of the United States District Court for the Southern District of New York (Charles L. Brieant, Judge ) granting summary judgment in favor of defendants Town of Hyde Park, the Town Board of Hyde Park, and the Planning Board of Hyde Park (collectively "the Town") as to plaintiffs' 42 U.S.C. § 1983 substantive due process claim. Specifically, plaintiffs seek review of the district court's finding that plaintiffs lacked a property interest sufficient to support a substantive due process claim. Plaintiffs also appeal from the district court's denial of their motion for a new trial as to their equal protection claim, asserting that the district court decided that motion by applying an incorrect legal standard.

The Town cross-appeals from the district court's denial of its motion for summary judgment as to plaintiff's equal protection claim, as well as from the district court's imposition of $39,905 in discovery sanctions against defendants. We affirm.

I. BACKGROUND

A. Factual Background

This dispute focuses on the zoning status of one of two parcels of land which the Landowner Plaintiffs contracted on May 16, 1989 to sell to DLC for $3.25 million. The sale agreement was conditioned on the property being zoned "in the manner necessary for [DLC's] intended use as a shopping center of not less than 150,000 square feet of rentable area." At the time of the sale agreement's execution, however, the parcels had a Tourist Business zoning classification which prohibited commercial development other than tourist-oriented retail businesses such as gift shops, antique shops, and arts and crafts boutiques. ¹ Hyde Park Town Code ("Town Code") § 108-22(D)(7).

On November 24, 1989, the Town enacted Local Law 4, which among other things, changed the status of one of the two parcels under contract to DLC from a Tourist Business to a Planned Business zoning classification. Under the Planned Business zoning classification, the building of a shopping center was permitted upon environmental review, Town approval of a site plan application, and the Zoning Board of Appeals's issuance of a Special Permit. Town Code § 108-21(E)(6). The Town contends that the 1989 rezoning was procedurally and substantively flawed, and that it was initiated for the personal benefit of Basil Raucci, the then-Chairperson of the Zone Line Revision Committee (the "ZLRC").

DLC began the land use approval process in January, 1990 by submitting a site plan application to the Town. In March of that year, DLC supplemented its site plan application with an environmental assessment form, seeking approval for a 199,000 square foot shopping center to be named Playhouse Square. Four months later, the Town issued a "positive declaration" and began its environmental review of DLC's proposal. ²

In 1992, Grand Union and Wal-Mart agreed to become Playhouse Square's anchor tenants, and as a result of these tenants' need for additional space, DLC sought Town approval for an extra 24,000 square feet. At the Town's request, DLC submitted the new site plan application and environmental assessment form for a proposed 223,000 square foot shopping center. DLC also submitted a preliminary Draft Environmental Impact Statement ("DEIS"). See N.Y. Envtl. Conserv. Law § § 8-0105, 8-0109.

Seeking assurances that the Town would ultimately approve Playhouse Square, representatives of DLC and Wal-Mart attended meetings with Town Supervisor Nancy Alden. DLC claims that Alden expressed her support for Playhouse Square. The Town contends that Alden was interested, but non-committal. Meanwhile, Walter Crispell, owner and operator of a Hyde Park hardware store and husband of Planning Board Chairperson Evelyn Crispell, expressed to the media and at a public meeting his opposition to the shopping center's development. In spite of this probable conflict of interest, Chairperson Crispell declined to recuse herself from the review of the Playhouse Square project. DLC alleges that Walter Crispell, a longtime social friend of Alden, also met privately with Alden in attempts to pressure her into changing her position with respect to Playhouse Square.

Thereafter, DLC began to face some formidable challenges to its Playhouse Square proposal. For instance, in February, 1993, the Town required DLC to submit another DEIS after DLC requested an additional 30,000 square foot expansion. Apparently exceeding its authority, the Planning Board required DLC to include in this DEIS a study of the probable economic impact of Playhouse Square on local businesses, and retained an economist to assess the study's accuracy. After the DEIS had been finally accepted as complete,the Town required DLC to provide a Supplemental Environmental Impact Statement to correct alleged defects in the DEIS. At another point, Supervisor Alden raised a proposal at an illegally-called Town Meeting for a moratorium on new buildings along Route 9, where Playhouse Square was to be located. ³ Alden also began to publicly voice her opposition to the Playhouse Square project.

Finally, on July 12, 1993, the Town adopted Local Law 8. Local Law 8 repealed as illegal some, but not all, of the Town's 1989 zoning enacted by Local Law 4. Among the very few parcels Local Law 8 affected was the property upon which Playhouse Square was to be built. As a consequence of Local Law 8, the Playhouse Square property lost its Planned Business zoning classification, and reverted to the more restrictive Tourist Business classification. Seeking to invalidate Local Law 8, plaintiffs initiated a C.P.L.R. Article 78 proceeding before the Supreme Court of the State of New York, Dutchess County. The state court struck down Local Law 8, holding that the Town had failed to obey State environmental requirements before amending its zoning laws. It is undisputed that at the time the Town passed Local Law 8, the Landowner Plaintiffs remained the owners of the land, and DLC was the contract-vendee of the property.

As a result of Local Law 8, Wal-Mart and Grand Union canceled their contracts for Playhouse Square. Plaintiffs claim that they spent over $1 million on the Playhouse Square Project, but admit that nothing was ever built on the property.

B. The Proceedings Below

Plaintiffs brought this action pursuant to 42 U.S.C. § 1983 on October 14, 1993, claiming that the Town, Alden, and Crispell had violated their constitutional rights to procedural due process, substantive due process, and equal protection. Discovery, which was overseen by Magistrate Judge Mark D. Fox, was contentious and protracted, and culminated in $39,905 in sanctions against defendants for the late production of certain documents.

Defendants moved for summary judgment on December 8, 1993, claiming that Local Law 8 had been enacted in order to correct certain "blatantly illegal zoning" of 1989. On August 30, 1994, the district court denied defendants' motion for summary judgment, finding that there were disputed issues of material fact as to whether Local Law 8 was intended to correct the alleged illegalities surrounding the passage of Local Law 4 or to avoid competition which would result from the building of Playhouse Square. In a September, 1995 pretrial conference, the court dismissed the action with prejudice as to Crispell.

Defendants renewed their motion for summary judgment on September 28, 1995. Defendants argued with respect to the due process claim that plaintiffs had no constitutionally-protected property interest. As to plaintiffs' equal protection claim, defendants asserted that plaintiffs had failed to show that other similarly-situated properties were treated differently than their property. Alden asserted the defenses of qualified and legislative immunity. In a Memorandum and Order dated April 2, 1996, Judge Brieant granted defendant's motion for summary judgment as to the substantive and procedural due process claims, but denied the motion as to the equal protection claim. Judge Brieant also dismissed the action as to Alden on the basis of her legislative immunity.

The equal protection claim proceeded to trial in February 1997. After hearing five weeks of evidence, the jury returned a verdict in favor of defendants. Plaintiffs thereafter moved for a new trial pursuant to Fed.R.Civ.P. 59. That motion was denied by Judge Brieant in open court at a hearing on April 17, 1997. On June 26, 1997, Judge Brieant adopted Magistrate Judge Fox's recommendation that plaintiffs be awarded $39,905 in discovery sanctions for what the district court characterized as defendants' "Fabian response to discovery" and "nonchalant attitude about conscientious compliance."

II. DISCUSSION

A. Substantive Due Process

Plaintiffs assert that the district court erred when it granted summary judgment in favor of defendants as to plaintiffs' substantive due process claim. Specifically, plaintiffs urge us to find that they had a property interest,...