Exclusive Brands LLC v. City of Garden City

• Decision Date: 08 September 2020
• Docket Number: Case No. 19-cv-11062
• Parties: Exclusive Brands LLC, Plaintiff, v. City of Garden City, Michigan, et al., Defendants.
• Court: U.S. District Court — Eastern District of Michigan

Exclusive Brands LLC, Plaintiff, v. City of Garden City, Michigan, et al., Defendants.

Case No. 19-cv-11062

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

September 8, 2020

Judith E. Levy United States District Judge

Mag. Judge Elizabeth A. Stafford

OPINION AND ORDER GRANTING DEFENDANTS CITY OF GARDEN CITY, GARDEN CITY BUILDING DEPARTMENT, DALE DOUGHERTY, AND GARDEN CITY CITY COUNCIL'S MOTION TO DISMISS [23]; GRANTING DEFENDANT PATRICK J. SLOAN'S MOTION TO DIMISS [38]; AND GRANTING DEFENDANT JEFF VAN DAM'S MOTION TO DISMISS [42]

I. Introduction

Plaintiff Exclusive Brands LLC brought this action for injunctive, declaratory, compensatory, and punitive relief pursuant to 42 U.S.C. § 1983 for alleged violations of its rights to (1) equal protection under the Fourteenth Amendment of the United States Constitution and the Constitution of the State of Michigan; (2) procedural due process under the Fifth Amendment of the U.S. Constitution and the Michigan Constitution; and (3) substantive due process under the Fifth Amendment of the U.S. Constitution and the Michigan Constitution. Plaintiff, a medical marijuana dispensary, argues that Defendants Garden City and a number of its municipal entities and employees unlawfully denied it a special use permit to operate a medical marijuana facility in Garden City, Michigan.

Defendants collectively filed three motions to dismiss in this case: (1) Defendants Garden City, Building Department, Dougherty, and City Council filed a motion to dismiss for lack of subject-matter jurisdiction and failure to state a claim upon which relief may be granted; (2) Defendant Sloan filed an answer to Plaintiff's second amended complaint and subsequently filed a motion to dismiss for a failure to state a claim; and (3) Defendant Van Dam filed a motion to dismiss for lack of subject-matter jurisdiction and/or for failure to state a claim. For the reasons below, the Court GRANTS all motions and dismisses this case.

II. Background

A. Parties

Plaintiff is a Michigan Limited Liability Corporation with its principle place of business in Livonia, Michigan. (ECF No. 15, PageID.79.) Plaintiff sought a special use permit to operate a medical marijuana facility in Garden City, Michigan. (Id. at PageID.81.)

Defendant City of Garden City ("Garden City") is a Michigan municipal corporation (Id. at PageID.79), and Defendant Garden City Building Department ("Building Department") is a "a body within [D]efendant Garden City." (Id. at PageID.80.)

Defendant Dale Dougherty is the City Manager of Defendant Garden City and the Planning and Zoning Administrator for Defendant Garden City. (Id. at PageID.79.) The only facts with respect to Defendant Dougherty in Plaintiff's second amended complaint are his job title and his general role as City Manager. (ECF No. 15, PageID.80 ("[D]efendant Dougherty appoints the heads of nearly all departments of [D]efendant Garden City, administers personnel relations, and prepares policy recommendations for [D]efendant City Council . . . . [D]efendant Dougherty is responsible for the direction and supervision of the administration of all departments . . . of [D]efendant Garden City.").)

Defendant Garden City City Council ("City Council") is "the legislative body within [D]efendant Garden City." (Id.)

Defendant Patrick J. Sloan "was and is a Planning and Zoning Consultant and Senior Principal Planner to [D]efendant Garden City." (Id.)

Defendant Jeff Van Dam is "the Administrator for [D]efendant . . . Building Department." (Id.) Defendant Van Dam contends that he is not an employee of Defendant Garden City but rather an employee of Buccilli Group, LLC, which provides the Building Department services on a contract with Defendant Garden City. (ECF No. 42, PageID.294.) Plaintiff's complaint is silent as to this allegation.

B. Factual Background

i. Garden City's Medical Marijuana Ordinance

The State of Michigan's Medical Marihuana Facilities Licensing Act ("MMFLA") enables a municipality to decide whether to allow marijuana facilities within the municipality by adopting an ordinance. M.C.L. § 333.27205(1). Pursuant to MMFLA, Defendant Garden City adopted an ordinance in February 2018 to allow medical marijuana facilities within its boundaries and to participate in the medicalmarijuana facilities licensing system. CITY OF GARDEN CITY, REGULAR COUNCIL MEETING MINUTES FEBRUARY 5, 2018, http://www.gardencitymi.org/AgendaCenter/ViewFile/Minutes/_02052018-173; see GARDEN CITY, MICH., CODE OF ORDINANCES § 154.165. This ordinance authorizes and specifies the number and types of permitted medical marijuana facilities with special land use approval, and zoning regulations.¹ Id.

Garden City's existing standards and procedures for special use regulations, adopted in its ordinances §§ 154.415-17, apply to the medical marijuana facility special use applicants. § 154.165(C). According to Garden City's ordinances, the Planning Commission and the City Council approve or deny special use permit applications. § 154.416. When an applicant submits the special use application materials, required fees, and multiple copies of the completed site plan to the Building Department, the Zoning Administrator and other city officials review the application package and make recommendations as appropriate. §§ 154.416(E)-(F). After revising the site plan andapplication materials based on the recommendations, the applicant then submits a revised plan for further review. § 154.416(G). The Planning Commission reviews the application, and it "may approve, approve with conditions, or deny a Special Use request." § 154.416(I)(1). After the Planning Commission makes a decision and forwards it to the City Council, the City Council determines whether to consider the special use application. §§ 154.416(I), (J). If the City Council decides not to consider the application, then the Planning Commission's decision is final. § 154.416(J). If, however, the City Council considers the application, it takes the Planning Commission's decision as a recommendation, and the City Council makes a final decision to "approve, approve with conditions, or deny a Special Use proposal" by reviewing the application and site plan, along with findings of the Planning Commission. §§ 154.416(J), (L). All decisions at each stage of the process are subject to the complete discretion of the Planning Commission and the City Council.² Issuing abuilding permit requires a submission of the final approval of the special use application along with other materials. § 154.416(P).

On July 23, 2018, the City Council approved the proposal limiting the total number of medical marijuana facilities in Garden City to three. (ECF No. 23-5, PageID.166.) Then, on September 24, 2020, the City Council adopted the amended ordinance, reflecting the change. (ECF No. 23-8, PageID.190.)

ii. Medical Marijuana Facility Licensing Process

The State of Michigan Department of Licensing and Regulatory Affairs ("LARA") employees a two-step process for medical marijuana facility licensing: (1) pre-qualification; and (2) license qualification. Medical Marihuana Facility License Application, Dep't of Licensing and Regulatory Affairs, https://www.michigan.gov/lara/0,4601,7-154--453929--,00.html (last visited June 22, 2020). The pre-qualification step involves a background check of the applicant and all supplemental applicants, and it requires applicants to disclose those entities with an indirect or direct ownership interest. Id. Pre-qualification may be granted before an applicant secures a physical location for the facility. Id. The next step, license qualification, requires a pre-qualified applicant tosubmit information specific to the facility location and to the type of facility for which the license is applied. Id.

LARA cannot issue a medical marijuana facility license unless the municipality where the proposed facility is located has authorized marijuana facilities through its ordinance. Id. After an applicant completes the license qualification step, the Medical Marihuana Licensing Board ("MMLB") makes a final approval of the application. Id.

iii. Plaintiff's Special Use Permit Application Process

On May 31, 2018, MMLB granted Plaintiff a prequalification status pursuant to the licensing provisions of the MMFLA. (ECF No. 15, PageID.81.) Beginning in May 2018, Plaintiff's representative contacted Defendant Sloan frequently "regarding Plaintiff's desire to obtain a special use permit" for a medical marijuana facility. (Id.) In July 2018, Plaintiff entered into a $1.2 million purchase agreement for property in Garden City to operate a medical marijuana facility, contingent upon Garden City's approval of a special use permit. (Id. at PageID.82.) Plaintiff made a non-refundable $25,000 deposit for the property and additionally spent approximately $15,000 to prepare for renovation and apply for a special use permit. (Id.)

Some time prior to August 6, 2018, Sloan advised Plaintiff's representative that, if submitted by August 13, 2018, Plaintiff's application for a special use permit "would be accepted and placed on the agenda" for the Garden City Planning Commission's meeting on September 13, 2018. (Id.) However, on August 6, 2018, the City Council established a six-month moratorium on accepting additional medical marijuana special use permit applications. (Id. at PageID.83; ECF No. 23-6, PageID.169.) The moratorium began on August 7, 2018. (ECF No. 23-6, PageID.169.) The City Council adopted a resolution to reaffirm the moratorium, mandating the moratorium to expire on February 7, 2019, unless the City Council extended it. (ECF No. 42-6, PageID.361.) The resolution specified that medical marijuana facility permit applicants impacted by the moratorium could appeal a deferral of their application with a written request for appeal submitted to the Building Department. (Id.) Applicants seeking a hearing on their appeal had to request a hearing in writing, and the hearing...