Saginaw Hous. Comm'n v. Bannum, Inc., Case Number 08-12148
| Decision Date | 03 February 2012 |
| Docket Number | Case Number 08-12148 |
| Parties | SAGINAW HOUSING COMMISSION et al., Plaintiffs, v. BANNUM, INC., Defendant. |
| Court | U.S. District Court — Eastern District of Michigan |
Honorable Thomas L. Ludington
This land use dispute arises out of the operation of a federal halfway house in Saginaw, Michigan, built in 2008 and in operation since. While the halfway house was under construction, Plaintiff Saginaw Housing Commission sought an injunction in state court to prevent Defendant Bannum, Inc., from completing or operating the facility. Arguing that the proposed use violated Saginaw's zoning ordinance, the housing commission sought a temporary restraining order from the Saginaw Circuit Court. The restraining order was temporarily granted, only to be dissolved at the hearing five days later. Bannum then removed the case to this Court and counterclaimed. Shortly thereafter, the city issued a certificate of occupancy and Bannum began operating the halfway house. The housing commission did not challenge the issuance of the certificate of occupancy (just as it had not challenged the planning commission's approval of the proposed use of the property). Instead, it moved for this Court to abstain from exercising jurisdiction. The Court concluded that abstention was appropriate. The Sixth Circuit reversed, returning the case to this Court.
Bannum now moves to dismiss the complaint, arguing that the claims are barred because the housing commission did not exhaust its administrative remedies. ECF No. 56. The housing commission moves to dismiss Bannum's counterclaims. ECF No. 59. For the following reasons, the Court will grant both parties' motions.
In 2007, the United States Bureau of Prisons solicited bids for the construction and operation of a federal "residential reentry center" (commonly referred to as a halfway house) in Saginaw, Michigan. These centers provide living accommodations to prison inmates nearing release from custody and criminal defendants sentenced to serve a period of time at such a facility. Typically, a resident remains at the center for about four months. Continually monitored by staff, the residents are not prevented from departing the premises without permission. Instead, staff members simply notify law enforcement of the unauthorized departures. The five year contract for the Saginaw facility was scheduled to commence in 2008, conclude in 2013, and was worth more than $4 million.
Bannum, a Kentucky corporation that operates federal halfway houses in several states, prepared a bid. On March 12, 2007, Bannum wrote to the City of Saginaw Zoning Coordinator, John Stemple, and requested information regarding zoning districts in which the center could be located "by right." Bannum also asked for information about obtaining approval from the planning commission. Stemple responded, informing Bannum that the facility would be "permitted as a special land use after approval by the Planning Commission in an M-1 Light Industrial Zoning District and [would be] permitted by right in the M-2 General Industrial Zoning District." Def.'s Answer & Countercl. ¶ 48, ECF No. 3. He also informed Bannum thathe was "aware of some vacant property that is zoned M-2 if [Bannum was] considering new construction for [its] facility and would be happy to put [Bannum's] real estate agent in contact with the owner of this property." Id. Stemple then identified a parcel of land located at 2209 Norman Street in Saginaw. The parcel is zoned M-2, a "general industrial district."
In August 2007, Bannum purchased the parcel and began preparing a "site plan review" that detailed the proposed use. On October 5, 2007, Stemple again wrote to Bannum. "[T]he position of the City of Saginaw," he explained, "[is] that your proposed use is one that is permitted by right and would require no special approvals by the City Planning Commission nor the City Counsel." Def.'s Mot. to Dismiss Ex. 1, ECF No. 56 ("Def.'s Mot."). He elaborated:
Bannum submitted its site plan review to the city planning commission, requesting formal approval of the proposed use.
At a public meeting on October 23, 2007, the commission took up the issue. By a vote of 7-0, the commission approved the plan and issued an order memorializing its decision. Def.'s Mot. Ex. 2.1
Under the order's "findings of fact," two findings are noted: "permitted use - code" and "no opposition present." Id. The order further provides "Any appeal of this decision must be brought to the Circuit Court within 30 days of the date of this order." Id.
The bureau of prisons awarded the contract to Bannum in March 2008. The next month, the city issued a building permit to Bannum. Construction commenced.
On May 7, 2008, the Saginaw Housing Commission and three hundred unnamed plaintiffs filed a complaint for temporary and permanent injunctive relief in the Saginaw Circuit Court. The housing commission is a municipal corporation created to own, manage, and maintain low income housing in Saginaw. Primarily funded by the U.S. Department of Housing and Urban Development, the housing commission also owns an eleven acre parcel of real property across the street from Bannum's property. This parcel is slated for future development as a residential neighborhood.
Attached to the housing commission's complaint and motion for a temporary restraining order was an affidavit of Duane Walker, the former executive director of the housing commission. In the affidavit, the gentleman asserts that "construction of the facility is impermissible under the zoning ordinances of the City of Saginaw." Def.'s Notice of Removal 9, ECF No. 1. On May 8, 2008, the circuit court granted the request for a temporary restraining order. On May 12, 2008, the court held a hearing and lifted the restraining order.
Three days later, the Saginaw City School District filed suit against Bannum and the City of Saginaw in the Saginaw Circuit Court, similarly seeking to enjoin the construction andoperation of the halfway house. The nearest school is about seven hundred and fifty feet from Bannum's property.
The following day, May 16, 2008, Bannum removed both cases to this Court based on diversity of citizenship. Contending that the City of Saginaw had been fraudulently joined as a party, Bannum argued that the city should be disregarded for purposes of diversity. The following week, Bannum answered both complaints and raised counterclaims alleging abuse of process, interference with contract, violation of 42 U.S.C. § 1983, and ultra vires acts.
Both the housing commission and the school district moved to return the matter to state court. The school district moved to remand the case. The housing commission moved for this Court to abstain from exercising jurisdiction. Bannum and the city, in turn, moved to dismiss both complaints. Because of the common issues, a consolidated hearing was held. Following the hearing, the Court issued an opinion and order concluding that the city was properly joined in the school district's complaint, defeating diversity jurisdiction, and that abstention was appropriate with regard to the housing commission's complaint. ECF No. 23. Accordingly, the school district's motion to remand was granted, as was the housing commission's motion to abstain, and Bannum and the city's motions to dismiss were denied without prejudice.
On July 17, 2008, the Chief Inspector of the City of Saginaw issued a certificate of occupancy for the property to Bannum for operation of the center. Bannum later began operating the center, and has maintained operations since.
In August 2008, Bannum moved for reconsideration of this Court's order. The motion was denied. Saginaw Housing Comm'n v. Bannum Inc., No. 08-12148-BC, 2008 WL 3843541(E.D. Mich. Aug 14, 2008), rev'd 576 F.3d 620, 629 (6th Cir. 2009). Bannum appealed to the Sixth Circuit.
In 2009, the Sixth Circuit reversed in part. Saginaw Housing Comm'n v. Bannum, Inc., 576 F.3d 620, 629 (6th Cir. 2009). Writing for the panel, Judge McKeague noted, "The question in this appeal is one of first impression in this circuit: whether a federal court should abstain from a decision involving the interpretation of a local land use ordinance." Id. at 626. Answering in the negative, the court drew a distinction between state governments, for whom abstention is merited because of their "rightful independence," and municipal governments, which "have no such independence." Id. Reversing the grant of the motion to abstain, the court wrote: "[W]e hold that Burford abstention applies only to statewide policies and that the appropriate focus for Burford abstention is state policy, rather than local policy." Id. at 628. The housing commission's case was thus remanded to this Court (the Sixth Circuit concluded that this Court's order remanding the school district's case for lack of subject matter jurisdiction was unreviewable).
In March 2010, the housing commission sought concurrence for a stipulated order dismissing its complaint and Bannum's counterclaims with prejudice. See ECF No. 44. Bannum refused as it was unwilling to dismiss its counterclaims.
More than a year and a half passed, during which numerous efforts were made to reach a consensual...
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