NRP Holdings LLC v. City of Buffalo, Docket No. 17-783-cv

• Decision Date: 20 February 2019
• Docket Number: Docket No. 17-783-cv,August Term, 2017
• Citation: 916 F.3d 177
• Parties: NRP HOLDINGS LLC, NRP Properties LLC, Plaintiffs-Appellants, v. CITY OF BUFFALO, Byron W. Brown, Demone A. Smith, Buffalo Urban Renewal Agency, Steven M. Casey, Defendants-Appellees, Richard A. Stenhouse, Buffalo Jeremiah Partnership for Community Development, Inc., John Doe 1-10, John Doe Companies, 1-5, Defendants.
• Court: U.S. Court of Appeals — Second Circuit

916 F.3d 177

NRP HOLDINGS LLC, NRP Properties LLC, Plaintiffs-Appellants,

v. CITY OF BUFFALO, Byron W. Brown, Demone A. Smith, Buffalo Urban Renewal Agency, Steven M. Casey, Defendants-Appellees,Richard A. Stenhouse, Buffalo Jeremiah Partnership for Community Development, Inc., John Doe 1-10, John Doe Companies, 1-5, Defendants.^*

Docket No. 17-783-cv

August Term, 2017

United States Court of Appeals, Second Circuit.

Argued: January 31, 2018

Decided: February 20, 2019

Nelson Perel (Thomas S. Lane, on the brief), Webster Szanyi LLP, Buffalo, NY, for Plaintiffs-Appellants.

Michael A. Brady (Daniel J. Brady, on the brief), Hagerty & Brady, Buffalo, NY, for Defendants-Appellees City of Buffalo, Byron W. Brown, and Demone A. Smith.

Richard T. Sullivan, Harris Beach PLLC, Buffalo, NY, for Defendant-Appellee Buffalo Urban Renewal Agency.

Rodney O. Personius, Personius & Melber LLP, Buffalo, NY, for Defendant-Appellee Steven M. Casey.

Before: Sack, Parker, and Carney, Circuit Judges.

Susan L. Carney, Circuit Judge:

We confront here primarily a question of legislative immunity raised by a mayor’s inaction in the face of well-developed but extra-contractual expectations of the prospective developer of a low-income housing project.

A real estate development team that included plaintiffs-appellants NRP Holdings LLC and NRP Properties LLC (together, "NRP") made preliminary arrangements with the City of Buffalo ("Buffalo," or the "City") from 2007 to 2009 to build affordable housing on City-owned land, a project that would be financed in large part by public grants, loans, and tax exemptions (the "Project"). As the planning phase drew to a close, NRP felt pressure from the City to hire an organization sponsored by a political ally of Mayor Byron W. Brown as a contractor on the Project. After NRP hired a different contractor—one that, in NRP’s estimation, offered a more attractive proposal at lower cost—the City failed to take the steps necessary to approve the Project, and the whole undertaking died on the vine.

In the aftermath, NRP filed suit seeking damages in the United States District Court for the Western District of New York (Skretny, J .). As defendants, NRP named, inter alia , the City, the City’s Urban Renewal Agency, and three City officials (the latter three, the "individual defendants"): Mayor Brown; Deputy Mayor Steven M. Casey; and Demone A. Smith, a member of the Buffalo Common Council (the City’s legislative body). From 2012 through 2017, the District Court issued orders that resolved all of NRP’s claims in defendants’ favor, some by dismissal under Federal Rule of Civil Procedure 12(b)(6) and 12(c), and others by award of summary judgment under Rule 56. NRP now appeals the District Court’s 2017 final judgment as to four claims that it lodges against all of these defendants: one under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961 – 1968 ; an equal protection claim asserted under 42 U.S.C. § 1983 ; and two New York common-law claims, one for breach of contract and one under a theory of promissory estoppel.

We are troubled by the implications of the evidence that NRP adduced in support of its claims. That evidence suggests that defendants’ motives for scuttling the Project—a development that, it appears, might have benefited low-income individuals and families in Buffalo—stemmed from either caprice or a form of political engagement whose ethical valence seems dubious. Nonetheless, as a matter of law, we conclude that NRP’s damages claims fail. We therefore AFFIRM the District Court’s judgment in favor of defendants.

Background

I. Factual background

The following account is drawn from the record before the District Court when it adjudicated defendants’ motions for summary judgment.² The facts as described here are undisputed by the parties unless otherwise indicated.

A. The proposed affordable housing project

In late 2007, NRP’s development team began discussions with the City and the City of Buffalo Urban Renewal Agency ("BURA") about a possible affordable housing project to be located on Buffalo’s East Side.³ The Project was dubbed "East Side Housing Opportunities II" ("East Side II") because it was intended to resemble a recent similar development project in the City, "East Side Housing Opportunities I" ("East Side I"), in which certain members of NRP’s development team had played key roles.

As they had for East Side I, the parties developed a plan under which NRP would purchase real property from the City and finance construction of the buildings and infrastructure with a combination of private funds and four types of public support:

(1) Federal "HOME" fund loans, which are made available under the HOME Investment Partnerships Program and allocated by state and local entities like BURA, see 42 U.S.C. §§ 12741 – 12756 ;

(2) An agreement for "payments in lieu of taxes" (a "PILOT agreement"), under which NRP would be exempted from local and county property taxes, and would instead comply with a predefined schedule of payments to the City and to Erie County;

(3) State tax credits provided under the New York State Low-Income Housing Tax Credit Program, see N.Y. Pub. Hous. Law §§ 21 – 25 ; and

(4) A low-interest loan from the New York State Housing Trust Fund, see N.Y. Priv. Hous. Fin. Law §§ 1100 – 1103.

Not surprisingly, each of these programs requires various applications and sets processes for obtaining the necessary governmental approvals. As relevant for this appeal, Buffalo municipal law provides that the City may enter into contracts for transfers of City-owned property and for PILOT agreements only if such contracts have been approved by a vote of the City’s legislative body, called the "Common Council." City law vests Buffalo’s mayor with broad discretion over whether to introduce to the Common Council the resolutions necessary to secure City approval.

B. The Wanamaker letter

In February 2008, the City and BURA set forth the fundamentals of their undertakings with regard to East Side II in a series of letters addressed to NRP by Timothy Wanamaker, who then served as BURA’s Vice President and (concurrently) as the Executive Director of Buffalo’s Office of Strategic Planning. Most relevant for our purposes is a letter addressed to NRP and dated February 25, 2008 (the "Wanamaker letter").

In what he called a "commitment letter," Wanamaker described East Side II as "redevelop[ing] a significant number of long vacant properties and creat[ing] much needed affordable housing" in Buffalo by providing "fifty ... units of single-family homes in the Masten Park and Cold Springs neighborhoods." App’x 408-09. He confirmed to NRP that BURA had "earmarked" $ 1.6 million in HOME funds for the Project, App’x 408, noting at the same time that before issuing any such funds, "BURA is required to meet all applicable Federal, State and local rules and regulations," App’x 409. Wanamaker also declared that "[t]he City will provide" $ 1.6 million in HOME funds, will extend its "usual" Low-Income Housing PILOT agreement to NRP, and will provide "51 buildable vacant lots ... at a price no greater than $ 2,000 per buildable lot, and not to exceed a total price of $ 100,000."Id. He cautioned, still, that "[t]his commitment letter is only valid if [NRP] is successful in securing a 2008 Low-Income Housing Tax Credit allocation to complete the project" from New York State. Id .

C. Preliminary steps, but no final approval

In 2008 and early 2009, the City, BURA, and NRP took further steps to make East Side II a reality. The City proposed a list of specific lots to be included in the Project. BURA unanimously passed a resolution allocating $ 1.6 million in federal HOME funds to the Project, an allocation decision that was then approved by the Buffalo Fiscal Stability Authority ("BFSA"), which oversees the City’s financial operations. Serving as an ex officio member of BFSA’s Board of Directors, Mayor Brown voiced no objection to BURA’s proposed allocation of HOME funds in the BFSA proceedings. In his capacity as Mayor, in March 2009 he filed a request with the United States Department of Housing and Urban Development ("HUD") for the release of $ 1.6 million of HOME funds to support the Project.

In deposition, Mayor Brown testified that he and the City "were trying to move this project forward" during this period, and "had every intention of supporting this project." App’x 1055. He further acknowledged that, based on communications such as the Wanamaker letter and actions such as the City’s request to HUD for the release of funds, NRP’s development team "could definitely feel that they were receiving support from the city," and "that it made sense for them to do everything that they were supposed to do to try to complete [the] project." Id. at 1059–60.

NRP did precisely that. It secured over $ 3 million in tax credits and low-interest loans from New York State and completed various other Project-related tasks: it conducted appraisals and title searches for the proposed lots, prepared architectural designs, took out private loans, obtained insurance coverage, and submitted applications for requisite permissions to various governmental bodies with jurisdiction over the Project, such as the City Planning Board and the City’s Department of Economic Development, Permit and Inspection Services. During this planning phase, NRP spent more than $ 489,000 on unreimbursed Project-related expenses and uncompensated labor devoted to Project-related tasks.

By mid-2009, almost all the preliminary arrangements were in place. NRP was prepared to begin construction as soon as Mayor Brown signed off on certain final matters. Critically, the City’s legislature—the Common Council—had not yet approved the property transfer or the PILOT agreement because Mayor Brown had not yet introduced the necessary resolutions for the Council’s action.

As it turned out, he never would. As a result, the Project never received the City’s final approval. NRP never...