Iron Bar, LLC v. Dougherty
| Decision Date | 03 February 2021 |
| Docket Number | Civil Action No. 19-9170 |
| Parties | IRON BAR, LLC, et al., Plaintiffs, v. TIMOTHY DOUGHERTY, et al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
NOT FOR PUBLICATION
THIS MATTER comes before the Court on Defendants Timothy Dougherty's ("Dougherty"), Stefan Armington's ("Armington"), and the Town of Morristown, New Jersey's ("Morristown" or the "Town," and together with Dougherty and Armington, "Defendants") Motion to Dismiss the Second Amended Complaint, ECF No. 50. Plaintiffs 5-7 South Street Holdings, LLC ("5-7 SSH"), 9 South Street Holdings, LLC ("9 SSH"), 11 South Street Holdings, LLC ("11 SSH" and, together with 5-7 SSH and 9 SSH, the "SSH Entities"), and Iron Bar, LLC d/b/a Iron Bar, Revolution Social Brew House, and Gran Cantina ("IB LLC" and, together with the SSH Entities, "Plaintiffs") oppose the Motion. ECF No. 52. For the reasons explained below, the motion is GRANTED in part and DENIED in part.
This matter arises from an alleged campaign of harassment by Morristown, its Mayor, and a town councilman against a business operating two restaurants and bars in Morristown.
IB LLC is a limited liability company with its principal place of business at 5 South Street in Morristown. SAC ¶ 8. IB LLC operates two bars and restaurants in adjacent premises on South Street: Iron Bar and Revolution Social Brew House ("Revolution"). Id. IB LLC also unsuccessfully attempted to open a third bar in adjacent premises, Gran Cantina. Id. ¶¶ 76-92. The SSH Entities hold or held property interests in the premises where IB LLC operated.2 James Cavanaugh ("Cavanaugh") is the principal of each plaintiff LLC. Id. ¶ 12.
Dougherty has served as the elected Mayor of Morristown since January 1, 2010. Id. ¶¶ 13, 24. Armington is a member of the Town Council and served as President of the council during the relevant period. Id. ¶ 14. The Council doubles as the Town's Alcoholic Beverage Control Board (the "ABC Board"), and Armington served as president of that body as well. Id. ¶ 35.
The origin of this dispute dates to 2010, when Cavanaugh first developed the concept for Iron Bar and began renovating its premises. Id. ¶¶ 21-23. Previously, Cavanaugh had been a personal friend and political supporter of Dougherty. Id. ¶ 29. When Dougherty became aware of Cavanaugh's plans for Iron Bar, he demanded that he be included as an silent investor in Iron Bar through his son. Id. ¶¶ 30-31. Cavanaugh refused the offer, "and Dougherty thereafter harbored intense animus toward both Cavanaugh personally and [his] businesses." Id. ¶ 32. Separately, Armington harbored longstanding animus against Cavanaugh due to an unrelated development proposal put forth by Cavanaugh. Id. ¶ 36. Plaintiffs allege that Dougherty and Armington, motivated by personal animus against Cavanaugh, repeatedly used the power of the Morristown government to harass Plaintiffs and diminish their business.
Plaintiffs contend that Defendants retaliated against them for three distinct activities protected by the First Amendment.
First, Plaintiffs allege that through Cavanaugh, they dissociated from Dougherty by declining to provide him political support. Due to the breakdown of the parties' relationships, Cavanaugh withdrew his support for Dougherty's campaigns, which included hosting campaign events at Iron Bar. Id. ¶ 37.
Second, in October 2016, the SSH Entities sued the Morristown Parking Authority ("MPA") claiming that the MPA was overburdening an easement on their property (the "State Litigation"). Id. ¶ 131 & Ex. 5. This caused Defendants to "repeatedly express[] rage at Plaintiffs," including statements by Dougherty to Cavanaugh: "You fucked with the wrong people" and Id. ¶¶ 134, 137. Relatedly, during a hearing regarding IB LLC's liquor license, nonparty councilwoman Allison Deep allegedly said, Id. ¶ 135.
Third, Plaintiff alleges that IB LLC was forced to initiate administrative proceedings to challenge restrictions that the ABC Board imposed on its liquor license.3 After a 2015 renovation to Revolution's proposed space, IB LLC applied to expand its liquor license to cover Revolution. Id. ¶¶ 42, 45. Morristown's ABC approved the transfer on June 28, 2016, but required Revolution to stop serving alcohol at 11:00 p.m. Sunday through Thursday and 11:30 p.m. Friday andSaturday. Id. ¶ 46 & Ex. 1, at 2. A town ordinance generally permits licensed establishments to serve alcohol until 2:00 a.m. and no other Morristown establishment with a liquor license was required to cease service prior to 2:00 a.m. Id. ¶¶ 44, 47, 64. While the Town expressed "concerns regarding additional bar patrons in the downtown neighborhood," it placed no similar service restrictions on two other neighboring bars when permitting them to expand their licensed premises. Id. ¶¶ 51-53.
On June 29, 2016, IB LLC challenged the restrictions in administrative proceedings before the New Jersey Division of Alcoholic Beverage Control ("NJDABC"). Id. ¶ 57 & Ex. 1, at 2. On February 23, 2018, after an evidentiary hearing, a New Jersey Office of Administrative Law Judge ("ALJ") held that the restrictions were unreasonable and an inappropriate exercise of the Town's discretion. Id. ¶ 59 & Ex. 1, at 15. During the hearing, both Armington and Morristown's chief of police stated that they did not know why the restrictions were placed on Revolution. Id. ¶¶ 63, 65. Morristown appealed the NJDBAC's determination to the New Jersey Superior Court, Appellate Division, which affirmed the ruling on July 19, 2019. Id. ¶ 69 & Ex. 3. Plaintiffs allege that notwithstanding the favorable ruling, the Town imposed the same restrictions on Revolution at its most recent renewal hearing without justification, despite IB LLC's counsel specific request for an explanation. Id. ¶ 72.
Separately, in 2016, Cavanaugh decided to open a Mexican-style restaurant and bar called Gran Cantina in the storefront next to Revolution. Id. ¶¶ 76-79. However, the Town denied IB LLC's application to expand its liquor license to cover these premises, citing concerns with additional bar patrons visiting the area. Id. ¶¶ 81, 86. Prior to the hearing, Dougherty allegedly "boasted" to 11 SSH's landlord that "there was no chance the [liquor license] application wouldbe granted." Id. ¶ 82. IB LLC initially appealed this determination as well but later abandoned the appeal due to its costs. Id. ¶¶ 90-91.
The ABC Board's decisions to restrict IB LLC's license in both instances were made without receiving any written objection from Morristown's police, fire, building, health, or MPA departments. Id. ¶¶ 50, 85. Plaintiffs contend that the Town's restrictions on IB LLC's liquor license were arbitrary, capricious, unreasonable, and motivated by personal animus towards IB LLC and Cavanaugh. Id. ¶¶ 49, 54, 84, 88. They further assert that the resulting "cloud" over Revolution's license and outright rejection of Gran Cantina's license has diminished the value of IB LLC, diminished the value of the SSH Entities' property interests, and complicated IB LLC's financing efforts. Id. ¶¶ 73, 74, 92.
Plaintiffs allege that in addition to the restrictions on IB LLC's liquor license, Defendants have interfered with its business by imposing roadblocks during peak business hours. From 2017 to the present, the Morristown Police Department ("MPD") has been closing the area of South Street in front of Iron Bar and Revolution during the late evenings of every Thursday, Friday, and Saturday night. Id. ¶¶ 93-94, 96. Plaintiffs claim that Dougherty personally ordered the roadblocks to discourage patrons from visiting the businesses, in violation of state law. Id. ¶¶ 102, 107-13. They allege that the roadblocks serve no legitimate purpose, are inconsistent with "the manner in which traffic is regulated" in other high-occupancy areas of Morristown, prevent ride-hailing services from accessing the bars, inhibit access by handicapped patrons, and make it appear as though "a catastrophic event" occurred near Plaintiffs' premises. Id. ¶¶ 97-105. MPD officers also routinely enter Iron Bar and Revolution to arbitrarily inspect the number offunctioning toilets, despite the fact that neither bar has ever been cited for inoperable toilets. Id. ¶¶ 124-29.
Plaintiffs initiated this action on April 1, 2019, asserting fourteen causes of action under federal and state law. See Compl., ECF No. 1. On January 17, 2020, the Court dismissed the Complaint without prejudice and permitted Plaintiffs to replead certain claims. ECF No. 27.
Plaintiff filed the SAC on May 5, 2020, asserting thirteen causes of action under 42 U.S.C. § 1983 ("Section 1983") and New Jersey common law: (1) two violations of the Petition Clause of the First Amendment, SAC ¶¶ 139-62; (2) two violations of the Association Clause of the First Amendment, id. ¶¶ 163-82; (3) one violation of the Takings Clause of the Fifth Amendment, id. ¶¶ 183-90; (5) two violations of the Due Process Clause of the Fourteenth Amendment, id. ¶¶ 191-214; (6) two violations of the Equal Protection Clause of the Fourteenth Amendment, id. ¶¶ 215-39; (7) two counts of tortious interference with prospective economic relations, id. ¶¶ 240-51; (8) one count of tortious interference with contract; and (9) one count of common law civil conspiracy, id. ¶¶ 261-69.
Defendants now move to dismiss the SAC pursuant to Federal Rule of Civil Procedure 12(b)(6).
In resolving a Rule 12(b)(6) motion to dismiss, the Court accepts all pleaded facts as true, construes the complaint in the plaintiff's favor, and determines "whether, under any reasonable reading of the complaint, the plaintiff...
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