Loesel v. City of Frankenmuth

• Decision Date: 27 September 2010
• Docket Number: Case No. 08–11131–BC.
• Citation: 743 F.Supp.2d 619
• Parties: Ronald LOESEL, Arthur Loesel, Gayle Loesel, Elaine Loesel, Valerian Nowak, Valerian Nowak and Alice B. Nowak Trust by Valerian Nowak, Plaintiffs,v.CITY OF FRANKENMUTH, Defendant.
• Court: U.S. District Court — Eastern District of Michigan

743 F.Supp.2d 619

Ronald LOESEL, Arthur Loesel, Gayle Loesel, Elaine Loesel, Valerian Nowak, Valerian Nowak and Alice B. Nowak Trust by Valerian Nowak, Plaintiffs,
v.
CITY OF FRANKENMUTH, Defendant.

Case No. 08–11131–BC.

United States District Court, E.D. Michigan, Northern Division.

Sept. 27, 2010.

[743 F.Supp.2d 623]

Andrew Kochanowski, Southfield, MI, for Plaintiffs.

ORDER AND OPINION DENYING DEFENDANT'S MOTION FOR JUDGMENT, OR IN THE ALTERNATIVE FOR A NEW TRIAL OR REMITTITUR; GRANTING IN PART, DENYING IN PART, AND SCHEDULING FOR EVIDENTIARY HEARING IN PART PLAINTIFFS' MOTION FOR ENTRY OF JUDGMENT AND ASSESSMENT OF ATTORNEY FEES, INTEREST, AND COSTS; SCHEDULING TELEPHONIC STATUS CONFERENCE; AND DENYING PLAINTIFFS' MOTION TO STRIKE THOMAS L. LUDINGTON, District Judge.

Plaintiffs Ronald and Arthur Loesel filed a complaint against Defendant City of Frankenmuth on March 17, 2008. The Loesels are owners of a tract of land on the northern outskirts of Frankenmuth. On May 4, 2009, the Loesels filed an amended complaint [Dkt. # 33], joining as necessary plaintiffs the co-owners of the tract of land, including Gayle and Elaine Loesel, Valerian Nowak, and The Valerian Nowak and Alice B. Nowak Trust. Collectively, Plaintiffs entered into an option agreement with Wal–Mart for Wal–Mart to purchase their land for four-million dollars if it could build one of its stores on the land.

Defendant learned of the contract, became concerned about the impact that a Wal–Mart and other similar stores would have on Defendant, and eventually adopted a zoning ordinance (“the ordinance”), which appeared to preclude Wal–Mart from building one of its stores on Plaintiffs' property. The ordinance placed a 65,000 square foot cap on the size of buildings that could be built on property, including

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Plaintiffs', to which it applied. Wal–Mart abandoned its application to build a store on Plaintiffs' property and the option contract with Plaintiffs. On March 4, 2010, a jury concluded that Plaintiffs proved that Defendant violated their equal protection rights, and determined that Plaintiffs were entitled to recover $3.6 million in damages.

Originally, the Loesels' complaint alleged claims against Defendant based on the Equal Protection Clause, the Due Process Clause, the Privilege and Immunities Clause of the Fourteenth Amendment, and the Commerce Clause. However, on March 27, 2009, 2009 WL 817402, the Court granted in part Defendant's motion for summary judgment, leaving Plaintiffs to pursue only a facial equal protection challenge. See [Dkt. # 29]. Subsequently, Defendant filed both a motion for reconsideration and a renewed motion for summary judgment addressing the equal protection challenge.

First, in resolving Defendant's initial motion for summary judgment, the Court acknowledged that a zoning ordinance is unconstitutional only when it is “clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare.” Vill. of Euclid v. Ambler Realty Co., 272 U.S. 365, 395, 47 S.Ct. 114, 71 L.Ed. 303 (1926). Yet, the Court noted that in certain situations, a government enactment may be invalidated on equal protection grounds if it is “underinclusive,” or “do[es] not include all who are similarly situated with respect to a rule, and thereby burden less than would be logical to achieve the intended government end.” See generally Laurence A. Tribe, American Constitutional Law, § 16–4, 1446–49 (2d ed.1988). As the Supreme Court has noted, “nothing opens the door to arbitrary action so effectively as to allow those officials to pick and choose only a few to whom they will apply legislation and thus to escape the political retribution that might be visited upon them if larger numbers were affected.” Ry. Express Agency v. New York, 336 U.S. 106, 112, 69 S.Ct. 463, 93 L.Ed. 533 (1949). Ultimately, to be held unconstitutional, the government enactment must be “clearly wrong, a display of arbitrary power, not an exercise of judgment.” Mathews v. de Castro, 429 U.S. 181, 185, 97 S.Ct. 431, 50 L.Ed.2d 389 (1976).

The Court noted that Plaintiffs did not allege a traditional equal protection claim, because they did not allege that they were members of a “protected class.” Rather, Plaintiffs sought to establish a “class of one” claim, which required them to demonstrate that they were treated differently from others who were similarly situated and that there was no rational basis for the difference in treatment. See Vill. of Willowbrook v. Olech, 528 U.S. 562, 564, 120 S.Ct. 1073, 145 L.Ed.2d 1060 (2000); Engquist v. Or. Dep't of Agriculture, 553 U.S. 591, 601–02, 128 S.Ct. 2146, 170 L.Ed.2d 975 (2008). The Court explained that a “ ‘class of one’ plaintiff may demonstrate that a government action lacks a rational basis in one of two ways: either by negativing every conceivable basis which might support the government action or by demonstrating that the challenged government action was motivated by animus or ill-will.” Warren v. City of Athens, 411 F.3d 697 (6th Cir.2005) (quotations omitted); TriHealth, Inc. v. Bd. of Comm'rs, Hamilton County, Ohio, 430 F.3d 783, 788 (6th Cir.2005) (“To prevail, [plaintiffs] must demonstrate that the differential treatment they were subjected to is so unrelated to the achievement of any combination of legitimate purposes that the court can only conclude that the County's actions were irrational.”). See, e.g., Romer v. Evans, 517 U.S. 620, 634–35, 116 S.Ct. 1620, 134 L.Ed.2d 855 (1996) (finding that a state constitutional amendment

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lacked a rational basis because the amendment “ seems inexplicable by anything but animus toward the class it affects”). Although a “conceivable” basis does not need to have been articulated by the decisionmaker at the time of the decision, it should be apparent that a proposed basis “ ‘may reasonably have been the purpose and policy’ of the relevant governmental decisionmaker.” Nordlinger v. Hahn, 505 U.S. 1, 9, 15, 112 S.Ct. 2326, 120 L.Ed.2d 1 (1992) (quoting Allied Stores of Ohio, Inc. v. Bowers, 358 U.S. 522, 528–529, 79 S.Ct. 437, 3 L.Ed.2d 480 (1959)).

The crux of Plaintiffs' argument was that Defendant violated their equal protection rights when it intentionally crafted the reach of the ordinance to exempt Bronner's and Tom Johnston's interest in Kroger, and other similar properties, from the ordinance. Bronner's is a retail store specializing in Christmas ornaments and other merchandise, which is approximately 400,000 square feet. Kroger is a 57,000 square foot grocery store located in the Bavarian Mall, which is itself 107,000 square feet. Neither Bronner's nor Kroger is subject to the ordinance because it applies only to properties zoned CL–PUD (commercial local—planned use development), like the Loesels' property. Kroger and Bronner's are zoned B–3 (highway commercial). Defendant argued that Plaintiffs' property was not similarly situated to the properties on which Bronner's and other tourist-related businesses are located because those businesses are not part of a PUD district. In addition, Bronner's and the Kroger store had already been operating for many years, in B–3 zones, without any detrimental effect on Defendant.

The Court concluded that Defendant did not demonstrate, as a matter of law, that Bronner's and Kroger were not “similarly situated” to Plaintiffs. The fact that the Bronner's and Kroger were zoned B–3, rather than CL–PUD did not mean that they were not similarly situated to Plaintiffs. Both Kroger and the Loesels' property are located north of Genesee Street, next to North Main Street, in an area primarily zoned B–3. This area is north of the tourist zone, which is primarily zoned B–2 (local business). Similarly, Bronner's is located south of East Curtis Road (also known as East and West Jefferson), next to South Main Street, in an area primarily zoned B–3. This area is south of the main tourist zone, although a CT–PUD (commercial tourist—planned used development) zone is located nearby. In sum, all three properties are located outside the main tourist area, next to Main street, in areas primarily zoned B–3.

The Court also concluded that Defendant did not demonstrate, as a matter of law, that Plaintiffs could not prove that “there is no rational basis for the difference in treatment.” Olech, 528 U.S. at 564, 120 S.Ct. 1073. The Court noted that the articulated purposes of the ordinance, for example, to maintain land use stability, the historical Bavarian character of the community, and pedestrian accessibility, were legitimate purposes, but concluded that the ordinance did not appear to serve those interests in a rational manner. In applying the ordinance exclusively to the CL–PUD zone, Defendant intentionally excluded the main tourist area and the CT–PUD zone, which is intended to cater to tourists, from the size-cap restriction. If the purpose was to maintain land use stability and the character of the community, the main tourist area is precisely where the ordinance would be expected to apply. Similarly, there was no apparent rational basis for applying the ordinance to the CL–PUD zone, but not the CT–PUD zone. Both areas are zoned for development, are substantially surrounded by B–3 zoning, and are located beyond the approximate bounds of the main tourist area. Thus, the Court concluded that Defendant did not

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prove, as a matter of law, that there was a rational basis to apply the ordinance exclusively to the CL–PUD zone, yet not the main tourist zone or the CT–PUD zone.

On May 22, 2009, 2009 WL 1449049, the Court denied Defendant's motion for reconsideration of the equal protection claim. See [Dkt. # 36]. Defendant argued that the Court did not accord deference to the City's decision to enact the ordinance, citing Pearson v. Grand Blanc, 961 F.2d 1211 (6th Cir.1992). Defendant contended that the ordinance could not possibly violate Plaintiffs'...