Indiana Land Co., LLC v. City of Greenwood

• Court: U.S. Court of Appeals — Seventh Circuit
• Writing for the Court: Posner
• Citation: Indiana Land Co., LLC v. City of Greenwood, 378 F.3d 705 (7th Cir. 2004)
• Decision Date: 10 August 2004
• Docket Number: No. 03-3662.,03-3662.
• Parties: INDIANA LAND COMPANY, LLC, Plaintiff-Appellant, v. CITY OF GREENWOOD, Defendant-Appellee.

378 F.3d 705

INDIANA LAND COMPANY, LLC, Plaintiff-Appellant, v. CITY OF GREENWOOD, Defendant-Appellee.

No. 03-3662.

United States Court of Appeals, Seventh Circuit.

Argued March 30, 2004.

Decided August 10, 2004.

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Appeal from the United States District Court for the Southern District of Indiana, Sarah Evans Barker, J.

Stephen L. Huddleston (argued), Franklin, IN, for Plaintiff-Appellant.

Andrew P. Wirick, Theodore J. Blanford (argued), Hume Smith Geddes Green & Simmons, Indianapolis, IN, for Defendant-Appellee.

Before POSNER, RIPPLE, and MANION, Circuit Judges.

POSNER, Circuit Judge.

The plaintiff, a real estate developer, brought suit for damages against the City of Greenwood, Indiana, under 42 U.S.C. § 1983, charging violations of the due process and equal protection clauses of the Fourteenth Amendment. The district court granted summary judgment in favor of the City, and the developer has appealed. The facts, which concern events that occurred in 2000, are not in dispute. The plaintiff had signed a contract to buy 142 acres adjoining the City for development as a residential subdivision. For such development to be possible, the plaintiff had to get the City to annex the acreage and rezone it from agricultural to residential use. The contract was made conditional on the plaintiff's obtaining these legal changes from the City.

The authority of the City Council of Greenwood to make such changes is not contested. The plaintiff had first, however, to submit its proposal to the City's Plan Commission. The Commission didn't like the proposal and recommended that the City Council turn it down. The Council convened a public hearing, and after discussion voted on the plaintiff's proposal. The vote was 3-3. The Council has seven members, but one was absent. State law provides that a mayor, although he shall preside at meetings of his city's council, may vote only to break a tie. Ind.Code 36-4-6-8(b). But since there was a tie, the Mayor of Greenwood voted — to grant the plaintiff's application. A member of the Council objected, pointing out that an ordinance of Greenwood required a two-thirds vote to overturn a recommendation of the Plan Commission. The state zoning statute, however, provides that a city council or other legislative body "may take action ... only by a vote of at least a majority of all the elected members of the body." Ind.Code 36-7-4-609(b). Moreover, "if there is a constitutional or statutory provision requiring a specific manner for exercising a power, a unit wanting to exercise the power must do so in that manner." Ind.Code 36-1-3-6(a).

The Council directed the City Attorney to research the legality of the two-thirds ordinance in light of these statutory provisions. She did so and advised the Council that in her opinion the two-thirds requirement was invalid because inconsistent with still another Indiana statute, which provides that "a majority vote of the legislative body is required to pass an ordinance, unless a greater vote is required by statute." Ind.Code 36-4-6-12. A public hearing was convened at which the Council debated the issue and concluded that the ordinance's two-thirds requirement was valid, noting among other reasons for so concluding that the state statute(s) could be interpreted as making a majority vote a floor rather than (also) a ceiling. Yet having so concluded and having gone on to decide that since the requirement was valid the plaintiff's application had been validly denied, the Council forthwith repealed the requirement with respect to future decisions on recommendations of the Plan Commission; approvals would henceforth require only a simple majority.

The Mayor advised the plaintiff to make some changes in its application and resubmit it to the Plan Commission, which was done and this time the Commission recommended that the Council approve the plaintiff's application. The Council convened another public hearing to consider the matter. At this meeting (the third on the plaintiff's application), with all members present, the Council voted down the application by a 4-3 vote, precipitating this suit. As a result of the Council's action the contract lapsed and the plaintiff didn't get to develop the 142 acres; we learned at argument that another developer later received the approval that the plaintiff had sought and that the tract is now indeed a residential subdivision.

The City argues that the majority vote against the plaintiff's application in the last meeting makes the lawsuit moot. Since a majority of the Council voted down the application when the Plan Commission had approved it (and by a lopsided vote of 8-2), how likely is it that the Council, had it not been for the absence of one of its members, would have approved it earlier when the Plan Commission had recommended against approval? Not as unlikely as may seem, because the Council member who had missed the first vote voted in favor of the application at the final hearing and might have done so at the first meeting despite the adverse recommendation of the Plan Commission and the fact that the plaintiff had sweetened its application between the first and third hearings. But it doesn't matter how likely or unlikely this was. For what the plaintiff is seeking is a determination that the first vote taken by the Council, the one that approved the plaintiff's application though by less than a two-thirds vote, was valid, in which event there would have been no second, negative vote. In effect, there was a change in membership between the two votes (the mayor, in the first vote, was replaced in the second vote by the member of the City Council who had been absent when the first vote was taken), and the plaintiff is arguing that the change violated the Fourteenth Amendment and therefore should have no legal effect. And if it has no legal effect, only the vote approving the plaintiff's application is in the picture. It is thus like a case in which the plaintiff loses a bench trial and argues that he was entitled to a jury trial; his appeal is not moot even if the appellate court is confident that a jury would have come to the same conclusion as the trial judge.

So let us turn to the merits of the appeal, beginning with the due process issue. There is an initial question whether the plaintiff was deprived of "property" within the meaning of the due process clause when the City Council turned down its application for annexation and rezoning. Were the plaintiff complaining of being deprived of the 142 acres that it had contracted to buy, the complaint might fail, as in Bryan v. City of Madison, 213 F.3d 267, 274-76 (5th Cir.2000), because a contract to buy something is not tantamount to ownership of the thing. But the plaintiff was deprived of a contract right, and so we must ask when does a contract right rise to the dignity of constitutional "property"? It is settled that the right not to be fired without cause — the right that employment contracts terminable before the expiration of their term only for cause create — is constitutional property. Board of Regents v. Roth, 408 U.S. 564, 576-77, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). But the status of other contract rights (other than a contractual right merely to procedural protections, which has uniformly been held not to create constitutional property, Campbell v. City of Champaign, 940 F.2d 1111, 1113 (7th Cir.1991), and cases cited there) is unsettled, though most cases to address the issue reject the position that all contract rights are constitutional property. Glatt v. Chicago Park Dist., 87 F.3d 190, 192-93 (7th Cir.1996); Bernard v. United Township High School Dist. No. 30, 5 F.3d 1090, 1091, 1093 (7th Cir.1993); Linan-Faye Construction Co. v. Housing Authority of City of Camden, 49 F.3d 915, 931-32 (3d Cir.1995); Martz v. Incorporated Village of Valley Stream, 22 F.3d 26, 31 (2d Cir.1994); San Bernardino Physicians' Services Medical Group, Inc. v. County of San Bernardino, 825 F.2d 1404, 1407-10 (9th Cir.1987); but see General Electric Co. v. New York State Dept. of Labor, 936 F.2d 1448, 1453 (2d Cir.1991). These cases reflect a natural reluctance to port the entire body of disputes arising from the public contracts of the states to federal court. The difficult question is where within the universe of such contracts to draw the line. Mid-American Waste Systems, Inc. v. City of Gary, 49 F.3d 286, 289-92 (7th Cir.1995).

As an original matter, one might suppose "property" limited to interests that the law protects by means of injunctions or criminal prosecutions, and of course the normal remedy for a breach of contract is merely an award of damages. The contract promisor is free to walk away from his contract, leaving the promisee with merely a money claim; but he is not free to steal the promisee's vase and say, it's mine for keeps but you can sue me for the dollar value of it. The Roth line of cases is based, however, on the idea of the "new property" — that in a modern society a person's principal assets are intangible and that one of the most valuable of these is the job security conferred by a contract of employment terminable (before its term is up) only for cause. At the opposite extreme would be a contract that had merely granted the plaintiff an option — a right to assert a right and thus, it might be thought, an interest so tenuous as to be remote from property that one clings to because it is valuable or one is committed. In Pro-Eco, Inc. v. Board of Commissioners, 57 F.3d 505, 512-13 (7th Cir.1995), we left open the question whether an option is constitutional property.

The plaintiff's contract to buy the 142 acres was not an option; the plaintiff was committed, provided only that the City Council came through. If having signed the contract the plaintiff decided not to seek the Council's approval, that would not have entitled it to repudiate the contract. Still, the purely commercial interest of which the...