Norfolk Bus. Dist. v. HUD

Decision Date12 June 1996
Docket NumberCivil Action No. 2:96cv308.
Citation932 F. Supp. 730
PartiesThe NORFOLK FEDERATION OF BUSINESS DISTRICTS, Plaintiff, v. The DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, in Its Official Capacity as an Agency of the Government of the United States, Henry Cisneros, in His Official Capacity as the Secretary of the Department of Housing and Urban Development, City of Norfolk, and the Norfolk Redevelopment and Housing Authority, Defendants.
CourtU.S. District Court — Eastern District of Virginia




Andrew Michael Sacks, Stanley E. Sacks, Sacks, Sacks & Imprevento, Norfolk, VA, for Plaintiff.

Philip Richard Trapani, City Attorney, Bernard A. Pishko, Assistant City Attorney, Office of the City Attorney, Norfolk, VA, William G. Broaddus, Earle Duncan Getchell, Jr., McGuire, Woods, Battle & Boothe, Richmond, VA, James Long Chapman, IV, Francis N. Crenshaw, David Harlen Sump, Crenshaw, Ware & Martin, Norfolk, VA, for Defendants.


MORGAN, District Judge.

Defendants the city of Norfolk and the Norfolk Redevelopment and Housing Authority have filed a motion to dismiss all counts of Plaintiff's complaint. For the reasons outlined below, the Court GRANTS their motions and dismisses counts I, II, III, V, VI, VII, VIII, IX with prejudice and dismisses count IV without prejudice. The Court announced its ruling from the bench on April 26, 1996, and now publishes this opinion and order to further explain the rationale for its findings.

I. Factual and Procedural History

On March 21, 1996, the Norfolk Federation of Business Districts ("NFBD") as Plaintiff filed a complaint with this Court against the following Defendants: the city of Norfolk ("City"); the Norfolk Redevelopment & Housing Authority ("NRHA")1; the United States Department of Housing and Urban Development ("HUD"); and Henry Cisneros in his official capacity as Secretary of HUD. NFBD purports to represent eight member businesses or merchant associations which represent affiliated businesses and individuals in the following geographical areas within the city of Norfolk: Greater Wards Corner Business Association; Janaf Shopping Center Merchants Association; MidTown Industrial Business Association; Military Circle Merchants Association; Norview Business Association; Ocean View Merchants Association; Old Dominion Merchants Association; and 35th Street Merchants Association. It claims to be acting "as and for itself as well as on behalf of the legal interests and rights of its constituent member merchant or business associations and their affiliated member businesses and individuals." (Comp. at ¶ 17.)2

Plaintiff also claims that it has standing as it has suffered and will continue to suffer actual or threatened injury from Defendants' actions without the aid of this Court. Although Defendants City and NRHA challenged Plaintiff's standing in their initial briefs, they appear to have abandoned this position as they failed to raise it in oral argument. The Court FINDS on the pleadings that Plaintiff has alleged sufficient standing to bring its complaint.

NFBD charges that each Defendant has violated its rights under the United States Constitution, federal laws, the Constitution of the Commonwealth of Virginia, the Code of Virginia, and the general laws of the Commonwealth of Virginia. More specifically, Plaintiff alleges in Count I of its complaint that the City and NRHA ("Municipal Defendants") violated its constitutional rights under the Fourteenth Amendment's Due Process and Equal Protection Clauses arising from these Defendants' "unfair and discriminatorily selective favoring of private business competitors of Plaintiff's constituents through heavy public subsidies to entice those competitors to participate in Norfolk's MacArthur Center Project." (hereinafter "Center") (Compl. at ¶ 1.) It claims that under title 42 U.S.C. § 1983, this Court has "special civil rights" jurisdiction pursuant to title 28 U.S.C. §§ 1331, 1343(a)(3), (4). In addition, Plaintiff asserts this Court's federal question jurisdiction under title 28 U.S.C. § 1331 due to its claims under the Fourteenth Amendment.

Counts II and III allege that the Municipal Defendants violated its state-created property rights by violating its Due Process Rights under the Fourteenth Amendment when it allegedly unlawfully utilized and planned to continue to utilize publicly raised tax money to benefit private parties and unlawfully took and planned to continue to take private property in the form of money raised in the exercise of its taxing authority for private purposes. Plaintiff asserts the same jurisdictional claims for Counts II and III as for Count I.

Plaintiff brings Count IV under 42 U.S.C. § 5301 et seq. and its attendant regulations, claiming that under § 108 of the Loan Guarantee Application made by the Municipal Defendants to HUD, see 42 U.S.C. § 5308, these Defendants failed to meet statutory and regulatory criteria to justify such a guarantee. It similarly asserts that the federal government through HUD wrongfully approved the Municipal Defendant's application to the prejudice of Plaintiff's Constitutional rights. Plaintiff claims that this Court has jurisdiction under title 28 U.S.C. §§ 1331, 1346, and 1361.

Count V charges the Municipal Defendants with violating the federal statutory rights of Plaintiff which arise out of their improper use of the § 108 Loan Guarantee statutes and regulations. NFBD asserts federal jurisdiction under title 28 U.S.C. §§ 1331, 1343(a)(3), (4) as it brings this count under title 42 U.S.C. § 1983.

The remaining Counts VI — IX rest with the supplemental and pendant jurisdiction of this Court as they lie under the Virginia Constitution, the Code of Virginia and the general laws of the Commonwealth of Virginia. 28 U.S.C. § 1367. Plaintiff asserts that the Commonwealth's Constitution as well as these laws prohibit actions of the Municipal Defendants in connection with the proposed financing of the Center.

The City filed a Motion to Dismiss pursuant to Rule 12(b)(6) on April 5, 1996; it then filed a Motion to Shorten Time and Schedule Hearing on the basis of the substantial prejudice it alleges will occur with any delay. Fed.R.Civ.P. 12(b)(6); 10(E)(1). NRHA filed a similar Motion to Dismiss premised upon Rule 12(b)(6) on April 5, 1996. Plaintiff has responded with a Consolidated Brief in Opposition to Motion to Dismiss of Defendants City and NRHA on April 22, 1996, at which time it also filed an "Objection to Conversion of the city of Norfolk and Norfolk Redevelopment and Housing Authority's 12(b)(6) Motion Into a Summary Judgment Motion; or Motion to Defer Such Conversion Until a Reasonable Opportunity For Discovery, and Incorporated Brief."

This matter came before the Court on the motions to dismiss of the Municipal Defendants. As of the hearing, neither HUD nor Secretary Cisneros had been served.

II. Analysis

Pursuant to Federal Rules of Civil Procedure 12(b)(6), Defendants urge that Plaintiff's Complaint fails to set forth facts upon which a claim for relief could stand. A 12(b)(6) motion requires the Court to accept the factual allegations in Plaintiff's complaint and to construe them in the light most favorable to it as the non-moving party. E.g., Mylan Laboratories, Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993), cert. denied, 510 U.S. 1197, 114 S.Ct. 1307, 127 L.Ed.2d 658 (1994). The claim should not be dismissed for failure to state a claim unless it appears to a certainty that Plaintiff can prove no set of facts in support of the claims which would entitle it to relief. Id.; see Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). A court should not dismiss a complaint even if it appears on the face of the pleadings that the chance of "recovery is remote and unlikely." Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). In ruling on a 12(b)(6) motion, the Court can rely only upon the allegations in the complaint and those documents attached as exhibits or incorporated by reference. See Simons v. Montgomery County Police Officers, 762 F.2d 30, 31 (4th Cir.1985), cert. denied, 474 U.S. 1054, 106 S.Ct. 789, 88 L.Ed.2d 767 (1986).

Defendant City has attached a copy of the Redevelopment Plan to its Motion to Dismiss. Ordinarily, attachments such as exhibits or affidavits could not be considered by the Court in analyzing a motion to dismiss, or the Court would of necessity have to convert the motion to one for summary judgment and accept attachments outside the pleadings from both parties under Rule 56. Fed. R.Civ.P. 56. A court has wide discretion to exclude matters outside of the pleadings in order to preserve the motion as one to dismiss — "the mere submission of extraneous materials does not by itself convert a Rule 12(b)(6) motion into a motion for summary judgment." 2A Moore's Federal Practice ¶ 12.093 (1995). However, in this case, the Court may in fact consider this particular attachment due to its unique characteristics without converting the motion to one for summary judgment.

Federal Rules of Civil Procedure, 12(b)(6) state that if matters outside the pleadings are "presented to and not excluded by the court" then the motion is to be converted into a motion for summary judgment according to Rule 56. Nonetheless, a brief or memorandum submitted in support of a motion to dismiss is not considered to be outside of the pleadings, see id. (citing Richardson v. Rivers, 335 F.2d 996 (D.C.Cir. 1964)), and exhibits or other documents incorporated by reference into the pleadings are also not matters outside the pleadings. Id. (citing Solis-Ramirez v. United States Dept. of Justice, 758 F.2d 1426 (11th Cir. 1985)). Where reports or documents are attached to complaints or adopted by reference into pleadings, Fed.R.Civ.P. 10(c), no conversion need occur. See Solis-Ramirez, ...

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