Jacobs, Visconsi & Jacobs, Co. v. City of Lawrence, Kan.

• Decision Date: 05 March 1991
• Docket Number: No. 89-3082,89-3082
• Citation: 927 F.2d 1111
• Parties: , 1991-1 Trade Cases 69,361 JACOBS, VISCONSI & JACOBS, CO.; Richard A. Armstrong; and Betty J. Grisham, Plaintiffs-Appellants, v. CITY OF LAWRENCE, KANSAS; Robert J. Schumm; Michael Amyx; Dennis D. Constance; Sandra K. Praeger; Thomas M. Rundle; Lawrence-Douglas County Metropolitan Planning Commission; and Does 1 through 100, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1111

927 F.2d 1111

109 A.L.R.Fed. 737, 1991-1 Trade Cases 69,361

JACOBS, VISCONSI & JACOBS, CO.; Richard A. Armstrong; and Betty J. Grisham, Plaintiffs-Appellants, v. CITY OF LAWRENCE, KANSAS; Robert J. Schumm; Michael Amyx Dennis D. Constance; Sandra K. Praeger; Thomas M. Rundle Lawrence-Douglas County Metropolitan Planning Commission and Does 1 through 100, Defendants-Appellees.

No. 89-3082.

United States Court of Appeals Tenth Circuit.

March 5, 1991.

Robert H. Freilich of Freilich, Leitner, Carlisle & Shortlidge, Kansas City, Mo. (Neil R. Shortlidge and Barbara Brink of Freilich, Leitner, Carlisle & Shortlidge, Kansas City, Mo., and John A. Emerson of Barber, Emerson, Springer, Zinn & Murray, Lawrence, Kan., on the briefs), for plaintiffs-appellants.

Barbara Baran of Ross & Hardies, Chicago, Ill., and Gerald L. Cooley of Allen & Cooley, Lawrence, Kan. (Roger Brown of Allen & Cooley, Lawrence, Kan., Richard F. Babcock and Daniel P. Hogan of Ross & Hardies, Chicago, Ill., with them on the brief), for defendants-appellees.

Before McKAY, ANDERSON, and BALDOCK, Circuit Judges.

McKAY, Circuit Judge.

Appellants, landowners and a developer whose request to rezone a parcel of land was denied by the Lawrence City Commission, appeal the district court's dismissal of their complaint alleging civil rights and antitrust violations for failure to state a cause of action for which relief could be granted. See Fed.R.Civ.P. 12(b)(6). When reviewing the summary dismissal of a complaint, we view the facts in the light most favorable to the plaintiff. Lessman v. McCormick, 591 F.2d 605, 607 (10th Cir.1979).

I.

Appellant Jacobs, Visconsi & Jacobs Company holds an option to purchase a tract of land owned by appellants Armstrong and Grisham. The land is located on the southern edge of Lawrence, Kansas. Appellants sought to rezone the property from single-family residential to general commercial for the purpose of developing a suburban shopping mall. They first filed an application for rezoning in February 1979. The city planning commission recommended denial of the rezoning proposal, which was affirmed by the city commission on March 17, 1981.

After a failed attempt by JVJ at a joint venture to develop a downtown retail shopping center, appellants again filed a rezoning application for the Armstrong and Grisham property on July 13, 1987. In the period between the two applications, the city planning commission adopted a comprehensive downtown plan. The downtown plan purportedly amended Plan '95, the city's comprehensive development plan enacted pursuant to Kan.Stat.Ann. Sec. 12-704 (1982). The stated policy of the downtown and development plans is to support the central business district of Lawrence as the region's only retail center. To that end, the downtown plan favors reduction of competition for downtown business interests. In furtherance of the plan, the city commission appointed a downtown improvement committee to provide assistance and advice on downtown development issues.

On August 8, 1987, the downtown improvement committee concluded that the JVJ proposal, along with two other proposals to develop suburban retail malls, could threaten the downtown's role as the retail core of the city. It recommended that the city pursue a large-scale development in the downtown area. The downtown improvement committee also approved a statement opposing appellants' rezoning application. The statement was presented at a public hearing on appellants' rezoning request.

The city's planning commission also issued a report opposing the three applications for rezoning based in part on their potential negative effect on the downtown retail area. After a public hearing on appellants' application, which spanned over three separate meetings, the planning commission voted unanimously to recommend denial of the application to the city commission. Meanwhile, the downtown improvement committee endorsed a plan to rejuvenate the downtown area and outlined a financing scheme to achieve its objectives.

After the planning commission issued its recommendation, JVJ filed with the city commission a request for the disqualification of one or more of the commission's members from the consideration of its rezoning application for reasons of bias or prejudice. Commissioner Schumm is the proprietor of four businesses located in the downtown area. Commissioner Amyx owns real estate in downtown Lawrence and is also the proprietor of a business located there. In addition, Commissioner Constance was an active member of the downtown improvement committee during its analysis of JVJ's rezoning application. JVJ also stated its concern that many of the commission members had prejudged the merits of its rezoning request.

On April 12, 1988, the city commission adopted the planning commission's findings of fact. It then voted unanimously to accept the planning commission's recommendation to deny appellants' rezoning request. None of the commissioners disqualified themselves from considering the application.

On May 10, 1988, appellants filed a five-count complaint in the district court against the City of Lawrence, its city commissioners and the city-county planning commission. The complaint seeks both monetary and injunctive relief. Four counts allege deprivation of constitutional rights in violation of 42 U.S.C. Sec. 1983 (1988). The complaint alleges that appellants were denied procedural due process, equal protection, and substantive due process. Appellants also allege that they were deprived of property without just compensation. The final count alleges a violation of federal antitrust law. After appellees filed a motion to dismiss the complaint, appellants voluntarily withdrew the count that alleged a taking without just compensation. See Fed.R.Civ.P. 41(a)(2).

The district court dismissed the remaining four counts pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a cause of action for which relief could be granted. Jacobs, Visconsi & Jacobs Co. v. City of Lawrence, 715 F.Supp. 1000 (D.Kan.1989). The district court dismissed appellants' procedural and substantive due process claims after concluding that appellants' rezoning application did not present a property interest sufficient to trigger due process protection. The court next found appellants' equal protection claim deficient. It concluded that appellants did not allege two identifiable groups that were treated differently. Even if appellants were to allege unequal treatment, the district court reasoned, the denial of appellants' rezoning application was rationally related to a legitimate purpose. Finally, the district court found that appellees' actions were entitled to state action immunity for the alleged antitrust violation.

Appellants appeal the judgment of the district court on each of the four counts. We review de novo a district court's dismissal of a complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim for which relief could be granted. Swanson v. Bixler, 750 F.2d 810, 813 (10th Cir.1984). We will uphold a dismissal only when it appears that the plaintiff can prove no set of facts in support of the claims that would entitle the plaintiff to relief. Hishon v. King & Spaulding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984); Pike v. Mission, 731 F.2d 655, 658 (10th Cir.1984).

II.

By its terms, a plaintiff states a cause of action under section 1983 when the plaintiff alleges both the deprivation of a federal right and that the defendant acted under color of state law. ¹ Lessman, 591 F.2d at 609. The parties do not dispute that appellees' actions were taken under color of state law. The issue before us, therefore, is whether appellees' actions deprived appellants of a federal right. We address, in turn, appellants' claims relating to procedural due process, equal protection and substantive due process.

A. Procedural Due Process

Appellants initially argue that they were denied an opportunity to bring their rezoning application before a fair and impartial tribunal. They emphasize the personal interest of two of the council members in the downtown area and the involvement of another on the downtown improvement committee. Appellants also allege that many of the commissioners had prejudged appellants' rezoning application. They contend that the city commissioners' consideration of the application was therefore tainted with bias and prejudice.

Procedural due process guarantees apply only to those liberty and property interests encompassed by the fourteenth amendment. Board of Regents v. Roth, 408 U.S. 564, 569, 92 S.Ct. 2701, 2705, 33 L.Ed.2d 548 (1972). To sustain their cause of action under section 1983, then, appellants must first allege a property interest sufficient to warrant due process protection. Curtis Ambulance, Inc. v. Board of County Comm'rs, 811 F.2d 1371, 1375 (10th Cir.1987). A property interest protected by the due process clause results from a legitimate claim of entitlement created and defined "by existing rules or understandings that stem from an independent source such as state law." Roth, 408 U.S. at 577, 92 S.Ct. at 2709. When analyzing whether a plaintiff presents a legitimate claim of entitlement, we focus on the degree of discretion given the decisionmaker and not on the probability of the decision's favorable outcome. ² Carey v. Piphus, 435 U.S. 247, 266, 98 S.Ct. 1042, 1053, 55 L.Ed.2d 252 (1978). Appellants must therefore demonstrate that there is a set of conditions the fulfillment of which would give rise to a legitimate expectation to the rezoning of their property. Otherwise, the city's decisionmaking lacks sufficient substantive limitations to invoke due process guarantees. See Walker v. Kansas City, 911 F.2d 80, 94 (8th Cir.); Spence v. Zimmerman, 873 F.2d 256, 258 (11th Cir.1989); RRI Realty Corp. v. Southampton, 870 F.2d 911 (2d Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 240, 107 L.Ed.2d 191 (1989); ...