Mlc Automotive, LLC v. Town of Southern Pines

• Decision Date: 03 July 2008
• Docket Number: No. 07-2039.,07-2039.
• Citation: 532 F.3d 269
• Parties: MLC AUTOMOTIVE, LLC; Leith of Fayetteville, Incorporated, Plaintiffs-Appellees, v. The TOWN OF SOUTHERN PINES; Southern Pines Town Council; Frank Quis; David Woodruff; Fred Walden; Christopher Smithson; Mike Haney, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fourth Circuit

532 F.3d 269

MLC AUTOMOTIVE, LLC; Leith of Fayetteville, Incorporated, Plaintiffs-Appellees, v. The TOWN OF SOUTHERN PINES; Southern Pines Town Council; Frank Quis; David Woodruff; Fred Walden; Christopher Smithson; Mike Haney, Defendants-Appellants.

No. 07-2039.

United States Court of Appeals, Fourth Circuit.

Argued: May 14, 2008.

Decided: July 3, 2008.

ARGUED: Susan K. Burkhart, Cranfill, Sumner & Hartzog, LLP, Raleigh, North Carolina, for Appellants. Robin Tatum Currin, Poyner & Spruill, Raleigh, North Carolina, for Appellees. ON BRIEF: Edwin M. Speas, Jr., Chad W. Essick, POYNER & SPRUILL, Raleigh, North Carolina, for Appellees.

Before WILLIAMS, Chief Judge, NIEMEYER, Circuit Judge, and Alexander WILLIAMS, Jr., United States District Judge for the District of Maryland, sitting by designation.

Affirmed by published opinion. Chief Judge WILLIAMS wrote the opinion, in which Judge NIEMEYER and District Judge WILLIAMS joined.

OPINION

WILLIAMS, Chief Judge:

The Town of Southern Pines, North Carolina, and its Council (collectively "the Town") appeal the denial of their Federal Rule of Civil Procedure 60(b) motion. That motion argued, in part, that the district court made a mistake in abstaining under Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943), before the Town filed a timely response to the objections by MLC Automotive, LLC and Leith of Fayetteville, Inc. (collectively "Leith") to a magistrate judge's recommendation that the district court enter summary judgment in favor of the Town on Leith's federal substantive due process claim. The Town also contests the underlying merits of the district court's decision to abstain. We conclude that the district court did not abuse its discretion in abstaining under Burford and therefore affirm.

I.

Because the Town's argument hinges on its belief that the district court should have granted its motion for summary judgment, rather than abstaining under Burford, we construe the facts in the light most favorable to Leith, drawing all reasonable inferences in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (noting that all evidence must be construed in the light most favorable to the party opposing summary judgment).

Leith owns and operates automobile dealerships throughout North Carolina. In 2000, Leith began researching the possibility of developing an automobile park (the "Auto Park")¹ in the Town. For a parcel of land to serve as the location for the Auto Park, Leith needed certain requirements to be met: the parcel needed to have at least 20 acres of land with space for four car dealerships; 1200 feet of frontage on a major artery; and permissive zoning. Eventually, Leith found such a parcel located in the Town near the intersection of U.S. Highway 1 and N.C. Highway 2 (the "Property").

In March 2001, Leith entered into a contract to purchase the Property for $1.55 million. Before executing the purchase agreement, Leith obtained written determinations from the Town that the Property was zoned as "GB," or General Business. Since at least 1989, the Town's Unified Development Ordinance ("the Ordinance") has provided that "Motor Vehicle and Boat Sales or Rental or Sales and Service" are permitted in areas zoned GB. (J.A. at 1236.) Confirmation was proved by Joy Richards, a zoning officer for the Town:

This letter is to advise that a car dealership can be located in the General Business District as long as it can meet all zoning requirements, such as setbacks, landscaping, parking, etc.

(J.A. at 354.) On November 30, 2001, the Town provided Leith an additional written confirmation that an Auto Park would be in compliance with zoning ordinances. In reliance on these notifications and the Ordinance, Leith closed on the Property in January 2002 for a total sale price of $1,553,904.

Shortly thereafter, Leith began negotiating with American Suzuki Motor Corporation to establish a Suzuki franchise on the property. In January 2005, Leith and Suzuki entered into a binding letter of intent ("LOI"), which provided that Leith could hold the Suzuki franchise right for developing a dealership on the Property if Leith met certain obligations.

In December 2004, Leith began incurring expenditures in anticipation of building on the Property, and in January 2005, one of Leith's engineers met with the Town Planning Director to confirm that the property was zoned "GB" and that the Auto Park was a permitted use as a matter of right in the GB zone. Leith would, however, have to obtain several permits, including an architectural compliance permit, from the Town Council before receiving an actual building permit. The requirements were compiled in a "checklist" that the Town provided to Leith, which listed a total of thirteen steps a building contractor had to take before a building permit would issue. Leith was not required to obtain the checklist requirements in any particular order and chose to first pursue the architectural compliance permit.

Leith filed an architectural compliance permit application on March 17, 2005 and presented its Suzuki dealership design to the Council on April 6, 2005. The Council and the Town's Mayor both expressed dissatisfaction with Leith's proposed design and informed Leith that the Council would not approve the architectural compliance permit until Leith changed the design.²

Leith re-presented its architectural compliance permit on June 8, 2005 during a Council agenda meeting. Leith received positive feedback on its new design, and it expected that its architectural compliance permit would be granted at the next Council meeting. Community interest in the proposed Auto Park was growing, however, and at the next Council meeting, the minutes indicate that "[m]any residents spoke in opposition" to the Auto Park and asked the Council to rezone the Property and "fight" Leith. (J.A. at 355.) The Council failed to act on Leith's architectural compliance permit application at that meeting, and at its next meeting in July. On July 29, 2005, residents filed a request to rezone the Property to "Office Services" ("OS"), which would not permit an automobile dealership. This request was the first zoning request since at least 1989 filed in the Town by a landowner seeking to rezone the property of another landowner.

During an August 9, 2005 Council meeting, residents appeared and filed a petition urging the Town to "take the property by eminent domain and use the land to build a [recreational] park that can be used by citizens." (J.A. at 426.) Residents further stated that they would move if the "obnoxious auto mall" was permitted. (J.A. at 427.) The Council again postponed making a decision on Leith's architectural compliance permit application at this meeting.

The Council eventually approved Leith's architectural compliance permit application on September 13, 2005 by a vote of three to two. Leith's architectural compliance permit application took six months to be granted. By comparison, the average architectural compliance permit application was decided at the first Council meeting after its filing and, prior to Leith's application, the longest turnaround time had been two to three months.

By this time, however, residents had also requested an amendment to the Ordinance to otherwise prohibit Leith's intended land use. Less than a month after granting Leith's architectural compliance permit, on October 11, 2005, the Town rezoned the property OS, thereby preventing Leith from fulfilling their obligations under the LOI with Suzuki and effectively ending Leith's bid to build an Auto Park. The minutes from the October Town Council meeting do not discuss reasons for the change in zoning, save resident opposition. It is also undisputed that, as noted earlier, prior to the rezoning, an Auto Park had been a permitted use on the Property since at least 1989. In addition, in 2002 the Town Council had performed a study of appropriate uses for property along the U.S. Highway 1 corridor and had removed certain permitted uses, but not automotive dealerships.

Moreover, under North Carolina law, "[z]oning regulations shall be made in accordance with a comprehensive plan." N.C. Gen.Stat. § 160A-383 (2007). Thus:

When adopting or rejecting any zoning amendment, the governing board shall also approve a statement describing whether its action is consistent with an adopted comprehensive plan and any other officially adopted plan that is applicable, and briefly explaining why the board considers the action taken to be reasonable and in the public interest.

Id.

In order to comply with § 160A-383, the Town developed the Southern Pines Land Development Plan. However, the Town did not review the Plan in making its decision to rezone the Property OS, and it did not perform any studies as to what zoning might be most appropriate for the Property.

In explaining the rationale for the decision to rezone the Property, the Town Manager testified that, prior to that decision, he was instructed to "find the best way to stop [the Auto Park]." (J.A. at 305.) In July, the Town Manager sent the following email to a member of the Town Council:

The Mayor and I spoke earlier, and my suggestion is that if we (the Council) wish to pursue stopping this then a meeting with [the Town's Attorney] needs to take place and a game-plan developed. I would suggest that the Architectural review is probably NOT the "line in the sand" that we draw, but instead maybe the Zoning permit language you suggest.... Willing to discuss the architectural review possibilities with [the Town Attorney], but given how far they have come and the code we work with I question the strength of our position come time to defend. Strategically, we need to consider the merits of running with our strongest argument versus throwing small (and legally surmountable) roadblocks in the way all throughout the process.

(J.A. at 380.)

Discussing the actual...