Pompey Coal Co. v. Borough of Jessup

Decision Date31 March 2021
Docket NumberCIVIL ACTION NO. 3:20-cv-00358
PartiesPOMPEY COAL COMPANY, Plaintiff, v. BOROUGH OF JESSUP, et al., Defendants.
CourtU.S. District Court — Middle District of Pennsylvania

(SAPORITO, M.J.)

MEMORANDUM

This is a federal civil rights action concerning the adoption and application of a local land use ordinance. It was originally commenced in state court by the filing of a writ of summons on April 24, 2019. (Doc. 2.) The action was removed to federal court by the defendants on February 28, 2020. (Doc. 1.)

The plaintiff, Pompey Coal Company ("Pompey Coal"), seeks damages and declaratory relief against the Borough of Jessup (the "Borough") and seven current or former members of its Borough Council, each of whom is named as a defendant in both his or her personal and official capacities. In its amended complaint (Doc. 10), Pompey Coal claims that the defendants adopted a land use ordinance, Ordinance 3 of 2019 ("Ordinance 3"), and re-zoned its property in an unconstitutional and tortious manner.

The defendants, appearing jointly through counsel, have moved to dismiss the plaintiff's amended complaint. (Doc. 17.) That motion is fully briefed and ripe for decision. (Doc. 18; Doc. 25; Doc. 31.) For the reasons stated below, the motion will be granted and the amended complaint will be dismissed, but with leave to amend.

I. FACTUAL BACKGROUND

The Borough of Jessup is an incorporated borough located in Lackawanna County, Pennsylvania. It is governed by a seven-member borough council, along with an elected mayor. The Borough consists of 6.75 square miles of established residential, commercial, and industrial zones, with development governed by a comprehensive plan for development adopted in 1995.1

Pompey Coal is a Pennsylvania business corporation that owns land within the Borough that was zoned "M-1A," a designation that permitted manufacturing and other industrial use. William "Billy" Rinaldi is Pompey Coal's president.

On April 13, 2016, Pompey Coal sold 65.35 acres of land it owned within the Borough's M-1A manufacturing zone to Lackawanna Energy, LLC ("Lackawanna Energy"), which subsequently constructed an electrical power plant on that property. The defendants were allegedly outraged by this sale.

Pompey Coal owns an additional 198 acres of land within the Borough's M-1A business park. In the spring of 2018, Pompey Coal began negotiations with Northpoint Development, LLC ("Northpoint") for potential sale of its remaining property within the Borough. Northpoint was interested in developing the land into a distribution center based on its close proximity to railroad, highway, and air transportation.

In the late spring or early summer of 2018, Borough Council president Gerald Crinella allegedly told members of the Borough Council and members of the public that "Billy Rinaldi has enough money," and that the Borough needed to change the zoning ordinance to stop Pompey Coal from selling its land to other unpopular industrial businesses. At the same time, the defendants were engaged in negotiations to provide tax incentives to assist the Trammell Crow Company ("Trammell Crow") in its purchase of 92 acres of commercial land space within the Borough'sM-1A business park to create the Valley View Trade Center.

In July 2018, the defendants began to consider re-zoning and re-mapping parts of the M-1A business park, including the remaining land owned by Pompey Coal. These initial discussions were allegedly "outside the public purview."

On July 31, 2018, the Borough entered into a contract with the Urban Research and Development Corporation ("URDC") to prepare a new comprehensive plan and zoning ordinance for the Borough. The contract with URDC established a 16-month period for development of this new comprehensive plan and zoning ordinance, including public meetings, county review, drafting, and workshops prior to presentment of the draft comprehensive plan and zoning ordinance.

Notwithstanding this contractual timeline, the plaintiff alleges that URDC was directed by the seven individual defendants, without legislative authority from the Borough Council, to produce a draft zoning ordinance and map. This draft zoning ordinance and map, which was later adopted as Ordinance No. 3, proposed to rezone Pompey Coal's property from its existing M-1A industrial zoning classification to an "R-2" residential zoning classification and an "IAC" interchange activitycenter zoning classification.2 This proposed change in zoning of the Pompey Coal property would effectively block any sale to Northpoint, and the defendants allegedly knew and intended as much. URDC produced the draft zoning ordinance and map to the Borough August 9, 2018—nine days after the Borough and URDC entered into the contract providing for a 16-month process to produce an updated comprehensive plan and zoning ordinance for the Borough. Four days later, on August 13, 2018, the defendants forwarded the draft zoning ordinance and map to the Lackawanna County planning commission for review; it was also submitted to the Borough's own planning commission for review.

On August 22, 2018, without any input from Pompey Coal, owner of the affected property, the Borough planning commission "approved" the draft zoning ordinance and map.3 Subsequently, on August 27, 2018,the county planning commission provided its evaluation of the proposed amendment to the Borough's zoning ordinance and map, advising that the proposed changes were inconsistent with the Borough's existing comprehensive plan, which designated the land for manufacturing use. The county planning commission further advised that the rezoning of the affected property might be premature in light of the comprehensive plan update process the Borough had recently undertaken, and that the rezoning might be challengeable in court.4

On August 30, 2018, the Borough solicitor wrote to Pompey Coal to inform it that a public hearing on the proposed zoning change would be held on October 1, 2018. On September 5, 2018, an attorney representing Pompey Coal wrote to notify the Borough solicitor that it objected to any change in zoning that would impact Pompey Coal's property. In particular, Pompey Coal's letter noted that a change from a M-1Aclassification to R-2 and IAC classification would impose a severe and substantial financial impact on the development of the property. The letter suggested that the zoning change would constitute a deprivation of property, a regulatory taking for which just compensation was required, and impermissible "spot zoning." On September 26, 2018, an attorney representing Lackawanna Energy likewise objected to the proposed amendment to the Borough zoning ordinance and map. According to the amended complaint, no hearing was held on October 1, 2018.

On October 1, 2018, Northpoint agreed to purchase approximately 183 acres of Pompey Coal's M-1A-zoned land within the Borough for $3.5 million. Pompey Coal and Northpoint agreed to a sixty-day due diligence period prior to signing a full agreement of sale.

On March 25, 2019, the Borough Council held a hearing on the draft amendments to the Borough zoning ordinance and map, at which Pompey Coal appeared and raised objections to the amendment. Prior to the hearing, a notice of hearing was published in the March 11, 2019, and March 18, 2019, editions of The Scranton Times, a newspaper of general circulation.

On April 10, 2019, the Borough Council adopted Ordinance No. 3,amending the Borough's zoning ordinance and map, re-zoning Pompey Coal's property from a M-1A zoning classification to R-2 and IAC zoning classifications. Prior to the hearing, a notice of hearing was published in the April 3, 2019, edition of The Scranton Times. As noted in the amended complaint, the Borough did not adopt an updated comprehensive plan prior to adopting Ordinance No. 3.

Earlier that same day, Pompey Coal submitted a land development plan to the Borough in preparation for its sale of land to Northpoint. The land development plan proposed two warehouses to be built within the property owned by Pompey Coal. On April 24, 2019, the Borough planning commission reviewed Pompey Coal's land development plan and voted to permit it to supplement its submission, rejecting a motion to reject it as technically defective. On May 20, 2019, notwithstanding the planning commission vote, the Borough secretary forwarded a letter to Pompey Coal's attorney rejecting the land development plan, signed by the secretary on behalf of the planning commission chair.

As a result of the Borough Council's passage of Ordinance No. 3, Pompey Coal alleges that it has been unable to finalize an agreement of sale of the property to Northpoint because the property is no longer zonedM-1A and the landowner would not be permitted to develop the two warehouses Northpoint desired to build.

On April 24, 2019, Pompey Coal commenced the instant civil action by filing a writ of summons in the court of common pleas, docketed there as Pompey Coal Company v. Borough of Jessup, Case No. 2019-02461 (Lackawanna Cty. (Pa.) C.C.P.). (Doc. 2.) Pompey Coal filed its original state-court complaint on February 7, 2020. (Doc. 2-1.) The action was removed by the defendants to federal district court on February 28, 2020, and Pompey Coal filed its amended complaint in this federal civil action on March 30, 2020. (Doc. 1; Doc. 10.)5

On May 7, 2019, Pompey Coal commenced a second state-court action, Pompey Coal Company v. Borough of Jessup, Case No. 2019-02735 (Lackawanna Cty. (Pa.) C.C.P.), by filing a notice of procedural appeal in the court of common pleas, which challenged the validity of the Borough's adoption of Ordinance No. 3 under provisions of the PennsylvaniaMunicipal Planning Code and the Pennsylvania Borough Code. (Doc. 18-1; Doc. 18-2.)

On May 30, 2019, Pompey Coal commenced a third state-court action, Pompey Coal Company v. Borough of Jessup, Case No. 2019-03224 (Lackawanna Cty. (Pa.) C.C.P.), by filing a notice of appeal in the...

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