HDC, LLC v. City of Ann Arbor

• Decision Date: 30 March 2012
• Docket Number: No. 10–2078.,10–2078.
• Citation: 45 NDLR P 4,675 F.3d 608
• Parties: HDC, LLC; XY, LLC; 200 East William Street, LDHA, LLC, Plaintiffs–Appellants, v. CITY OF ANN ARBOR, Defendant–Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

45 NDLR P 4

675 F.3d 608

HDC, LLC; XY, LLC; 200 East William Street, LDHA, LLC, Plaintiffs–Appellants,

v.CITY OF ANN ARBOR, Defendant–Appellee.

No. 10–2078.

United States Court of Appeals, Sixth Circuit.

Argued: Jan. 12, 2012.Decided and Filed: March 30, 2012.

ARGUED: K. Dino Kostopoulos, Padilla Kostopoulos PLLC, Birmingham, Michigan, for Appellants. Stephen K. Postema, Office of the City Attorney, Ann Arbor, Michigan, for Appellee. ON BRIEF: K. Dino Kostopoulos, Padilla Kostopoulos PLLC, Birmingham, Michigan, Elizabeth L. Sokol, Law Offices of Elizabeth L. Sokol, Royal Oak, Michigan, for Appellants. Stephen K. Postema, Office of the City Attorney, Ann Arbor, Michigan, James M. Cameron, Jr., Krista L. Lenart, Dykema Gossett PLLC, Ann Arbor, Michigan, for Appellee. John B. Nalbandian, Dominick S. Gerace, Taft Stettinius & Hollister, LLP, Cincinnati, Ohio, for Amicus Curiae.Before: KENNEDY, MARTIN, and STRANCH, Circuit Judges.

OPINION

BOYCE F. MARTIN, JR., Circuit Judge.

This is an appeal of a dismissal under Federal Rule of Civil Procedure 12(c). Three related companies—HDC, LLC, XY, LLC, and 200 East William Street, LDHA, LLC—sued the City of Ann Arbor, Michigan. Ann Arbor issued a “request for proposal” to develop city-owned property and HDC submitted a proposal in response. Ann Arbor accepted HDC's development proposal. HDC formed XY to develop the project, and 200 East William Street to develop and own the affordable housing portion of the project. The parties entered into an option agreement providing the developers with the option to purchase the property under certain conditions. The developers failed to meet one of these conditions—a requirement that the developers obtain a demolition permit by a specific date—and Ann Arbor terminated the agreement. The developers brought suit alleging violations of the Fair Housing Act, 42 U.S.C. § 3601 et seq., and various state laws. The developers claim that the demolition permit condition was impossible to meet and that Ann Arbor knew or should have known that the condition was impossible to meet. Ann Arbor stated it terminated the agreement because the developers failed to meet the condition, but the developers assert that Ann Arbor actually terminated the agreement for the unlawful reason that the project would accommodate handicapped tenants.

The developers alleged disparate treatment, disparate impact, and reasonable accommodation claims pursuant to the Act. See id. §§ 3604, 3605. The developers also alleged an interference claim pursuant to the Act. See id. § 3617. The district court found that the developers' claims under the Act failed because the developers (1) made only conclusory allegations that Ann Arbor acted with discriminatory intent; and (2) failed to provide factual allegations from which the court could infer that Ann Arbor's behavior was the result of disparate treatment, would have a disparate impact on handicapped people, or interfered with a right protected by the Act. The district court declined to exercise pendent jurisdiction over the developers' state law claims. The district court also dismissed the developers' reasonable accommodation claim but the developers have abandoned this issue on appeal. See Fed. R.App. P. 28(a)(9)(A); Marks v. Newcourt Credit Grp., Inc., 342 F.3d 444, 462 (6th Cir.2003). The developers filed a motion to alter or amend the dismissal and a motion to amend the complaint. We affirm the district court's dismissal of the complaint and its subsequent denials of the developers' motions to alter or amend the judgment and to amend the complaint.

I.

We review decisions granting judgment on the pleadings pursuant to Rule 12(c) under the same de novo standard applied to motions to dismiss under Rule 12(b)(6). Kottmyer v. Maas, 436 F.3d 684, 689 (6th Cir.2006). This Court construes the complaint in a light most favorable to the plaintiff, accepts all factual allegations as true, and determines whether the complaint states a plausible claim for relief. Albrecht v. Treon, 617 F.3d 890, 893 (6th Cir.2010) (citing Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009); League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir.2007)). This Court has applied the now-familiar pleading requirements outlined in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Iqbal to Rule 12(c) motions and held that plaintiffs must “plead ... factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Albrecht, 617 F.3d at 893 (citation and internal quotation marks omitted); see New Albany Tractor, Inc. v. Louisville Tractor, Inc., 650 F.3d 1046, 1049–51 (6th Cir.2011). Merely pleading facts that are consistent with a defendant's liability or that permit the court to infer misconduct is insufficient to constitute a plausible claim. Iqbal, 129 S.Ct. at 1949–50; Courie v. Alcoa Wheel & Forged Prods., 577 F.3d 625, 629 (6th Cir.2009). When considering a Rule 12(c) motion, this Court “need not accept as true legal conclusions or unwarranted factual inferences.” Kottmyer, 436 F.3d at 689 (citation omitted).

II.

Ann Arbor argues that the developers' claims do not fall within the scope of the Act because the developers' proposed project was a low-income housing project and the Act does not ban discrimination based on income. The Act makes it unlawful “[t]o discriminate in the sale or rental, or to otherwise make unavailable or deny, a dwelling to any buyer or renter because of a handicap[.]” § 3604(f)(1). The Act also makes it unlawful for a “person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of ... handicap....” § 3605(a). “[T]he plain language of the [Act] does not prevent discrimination based on ‘low income....’ ” White Oak Prop. Dev., LLC v. Washington Twp., Ohio, 606 F.3d 842, 851 (6th Cir.2010). In support of its argument that the developers' claims are not covered by the Act, Ann Arbor notes that its request for proposal was aimed solely at housing for low-income residents; the developers' proposal described the target population solely in terms of income; and the developers obtained state tax credits predicated only on the presence of low-income housing. However, because the developers alleged that they were “developing affordable residential housing for handicapped persons,” we hold that they have arguably pled claims within the scope of the Act.

The developers argue that the district court improperly dismissed their claims under the Act because it misapplied the “plausibility” standard laid out in Iqbal and Twombly. First, the developers argue that they have effectively pled a disparate treatment claim pursuant to sections 3604 and 3605, both of which prohibit discrimination because of a handicap. To prevail on a disparate treatment claim, a plaintiff must show proof of intentional discrimination. See Nationwide Mut. Ins. Co. v. Cisneros, 52 F.3d 1351, 1362 (6th Cir.1995). This can be established either through direct evidence of intentional discrimination or though circumstantial evidence using the burden-shifting framework first articulated in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). See Lindsay v. Yates, 498 F.3d 434, 440 n. 7 (6th Cir.2007). In support of their argument that they have pled sufficient facts to support a claim of disparate treatment, the developers point to the following pleadings: (1) evidence showing that the proposed project was intended to benefit handicapped persons; (2) the option agreement's condition precedent that the developers obtain a demolition permit for the property when, according to the developers, Ann Arbor knew or should have known that the developers could not obtain a demolition permit without first owning the property; and (3) Ann Arbor's refusal to modify the demolition permit condition after the developers failed to meet it.

We find that these allegations are insufficient to give rise to a “reasonably founded hope that the discovery process will reveal relevant evidence to support their claim[ ]” of disparate treatment. Id. at 440 n. 6 (citation and internal quotation marks omitted). The facts alleged in the complaint do not plausibly support a finding that Ann Arbor “designed” the option agreement to fail by intentionally including a condition it knew or should have known the developers could not meet. Plaintiffs in this case are a sophisticated land development firm and associated companies which agreed to the demolition permit condition during the negotiation of the option agreement. Further, the complaint recounts that Ann Arbor voluntarily engaged in the development process from 2005 to 2007, aware of the developers' proposed project and who would be housed in it. The complaint provides no facts supporting the inference that Ann Arbor did not want the development to take place and instead sought to derail it because it would house handicapped individuals. This claim is particularly implausible in light of the fact that when the option agreement was negotiated, the parties had previously negotiated an option contract that had since expired and, nonetheless, decided to enter into the option agreement containing the demolition permit requirement.

Plaintiffs claim Ann Arbor's refusal to modify the demolition permit condition was motivated by discrimination. Ann Arbor asserts that it has put forth an alternative explanation for its decision to terminate the option agreement: the developers' failure to comply with the requirements of the option agreement. See Iqbal, 129 S.Ct. at 1951–52 (finding an “obvious alternative explanation” for the alleged disparate impact of defendants' arrest policy on Arab...