Tanners Creek Properties, v. Tremain, NA 02-41-C-B/H.
| Decision Date | 01 October 2003 |
| Docket Number | NA 02-41-C-B/H. |
| Parties | TANNERS CREEK PROPERTIES, LLC, Plaintiff, v. PAUL E. TREMAIN, SR., et. al., Defendants. |
| Court | U.S. District Court — Southern District of Indiana |
Plaintiff Tanners Creek Properties, LLC filed suit under 42 U.S.C. § 1983 against Defendants Paul E. Tremain, Sr., City of Lawrenceburg, Indiana, City of Lawrenceburg Department of Redevelopment, Kris Schnitgen, and Mike Buffington. Plaintiff contends that the Defendants breached their real estate purchase and development contract with Plaintiff, and, in the course of the alleged breach, deprived Plaintiff of its right to develop and sell its real property, a taking without just compensation or due process of law in violation of the Fifth and Fourteenth Amendments to the United States Constitution. Defendants move for summary judgment on Plaintiff's § 1983 claim, arguing that Plaintiff suffered no constitutional violation. In addition, Defendants request that the Court decline supplemental jurisdiction over Plaintiff's remaining state law breach of contract and tort claims and dismiss them, as well as certain Defendants' contingent, compulsory counterclaims, without prejudice. For the reasons set forth below, we GRANT Defendants' Motion for Summary Judgment on Plaintiff's § 1983 claim and DISMISS WITHOUT PREJUDICE Plaintiff's remaining state law claims and certain Defendants' contingent, compulsory counterclaims.
In August 1998, Hilsinger Management Company, Ltd. ("Hilsinger Management"), the sole member of Plaintiff Tanners Creek Properties, LLC ("Plaintiff"), entered into a Purchase Agreement with Defendant City of Lawrenceburg Department of Redevelopment ("the Department of Redevelopment"), Article 11 of which permitted Hilsinger Management to assign its rights under the Purchase Agreement to any of its subsidiaries, including Plaintiff. Compl. ¶¶ 12-14. Prior to December 1, 1998, Hilsinger Management assigned its rights under the Purchase Agreement to Plaintiff, an Indiana limited liability company. Id. ¶¶ 1, 23. Plaintiff contracted with Defendant, City of Lawrenceburg ("the City"), an Indiana municipal corporation, to purchase and develop a 122-acre parcel of real property in Dearborn County, Indiana ("the Property"), which consisted of approximately 77 acres on the north side of U.S. Highway 50 ("the North Property") and approximately 45 acres on the south side of U.S. Highway 50 ("the South Property"). Id. ¶¶ 2, 9. On the North Property, Plaintiff intended to build up to 500 residential units (condominiums, apartments, and single-family homes) as well as some retail units. On the South Property, Plaintiff intended to develop up to 450,000 square feet of retail space. Id. Ex. A, §§ 1.1, 3.3.8.
Pursuant to Article 2 of the Purchase Agreement, the parties agreed to a purchase price of $1,500,000, payable by Plaintiff to the City as follows: (a) an initial deposit of $1,000.00 payable into escrow at the execution of the Purchase Agreement; (b) an additional $499,000.00 payable at the closing on the conveyance of the Property; and (c) the balance of the purchase price, $1,000,000.00 payable at the later of: (i) the earlier of: (x) the completion of the Excavation Work1 at the Property as determined by the Plaintiff or (y) the first anniversary of the closing, or (ii) the completion by the City of the water and sewer service for the Property, as determined by the Plaintiff. Compl. ¶¶ 18-19, Ex. A.
The parties closed on the purchase of the Property on December 21, 1998, and Plaintiff took title to the Property from the City. Compl. ¶ 28. At the closing, the City obtained and recorded a mortgage in the amount of $1,000,000 from Plaintiff to secure the balance of the purchase price. Id. ¶ 29. Plaintiff completed the Excavation Work on September 1, 1999, and notified the City of this completion in writing on October 22, 1999. Pl.'s Memo. in Opposition to Defs.' Mot. for Summ. J. ("Pl.'s Memo."), Ex. 6. Therefore, under Article 2(c) of the Purchase Agreement, Plaintiff did not owe the balance of the purchase price until the City completed the water and sewer service for the Property.
Section 3.3.8 of the Purchase Agreement obligated the City to provide adequate water and sewer service for the Property no later than three (3) months after completion of the Excavation Work. Arguably, this three-month deadline would have fallen on December 1, 1999, three months after the completion of the Excavation Work, but in any case, no later than January 22, 2000, three months after Plaintiff notified the City in writing of the completion. In addition, the City was required to provide sewer and water service to the North Property by the time of completion of the Excavation Work. If the City failed to make the required sewer and water available to the North Property by the agreed date, the City would owe Plaintiff liquidated damages in the amount of $547.95 per day until sewer and water service was provided.
Further, Plaintiff would not owe interest or principal payments on the $1,000,000.00 balance of the purchase price until the City furnished the sewer and water service to the North Property and also fulfilled its obligations under Section 3.3.6 of the Purchase Agreement. Section 3.3.6 requires the City to install a traffic signal and to construct roads, with acceleration and deceleration lanes, giving access to the Property from Route 50 ("the Roadway Improvements").
In a letter agreement dated December 1, 1998, the parties provided for the following contingency:
In the event that [the City] do[es] not provide such water and sewer service in accordance with Section 3.3.8, in addition to the rights [Plaintiff] ha[s] under Section 3.3.8, [Plaintiff] can take over the responsibility to provide water and sewer service to the Property and then offset [its] costs against the balance that [Plaintiff] owe[s] under Article 2(c). Such offset shall be considered a prepayment on such balance due effective as of the date [Plaintiff] incur[s] such costs.
The letter agreement contained a similar cost offset arrangement with regard to the provision of the Roadway Improvements. Compl. Ex. B. By December 31, 1999, one year after closing, Plaintiff alleges that it had completed the Excavation Work, constructed portions of the Roadway Improvements, arranged for the remainder of the Roadway Improvements, and arranged for the provision of water and sewer service to the Property. Pl.'s Memo. p. 7-8.
In November 1999, Defendant Paul E. Tremain, Sr., ("Mayor Tremain") was elected Mayor of the City of Lawrenceburg. He appointed Defendant Kris Schnitgen ("Schnitgen") as the City's Economic Development Director. Compl. ¶¶ 4-5. In early 2000, Plaintiff met with Mayor Tremain and Schnitgen to advise them of the status of the project and make them aware of the City's outstanding obligations under the contract. Several complications subsequently arose, Plaintiff believes because of the Tremain administration's opinion that the project was "bad deal for the City." Pl.'s Memo. p. 12.
For example, despite written assurances from the City's then Utilities Director, Defendant Mike Buffington ("Buffington"), in February 2000 that "the utilities of water, sanitary sewer, and electricity are available to the project [Plaintiff's development of condominiums on the North Property]," Plaintiff has been unable as of yet to obtain the appropriate permit from the Indiana Department of Environmental Management ("IDEM"). See Pl.'s Memo., Exs. 8, 21, 25, 47, 49; Buffington Dep. pp. 62-65; Hilsinger Decl. ¶ 11; Tremain Dep. p. 8. In June 2000, electric and water services to a United States Post Office under construction on the South Property were disconnected, resulting in the entry of a Civil Consent Decree and Permanent Injunction. See U.S. Postal Serv. v. City of Lawrenceburg, et. al., No. IP 00-1052-C-D/F. In addition, in September 2001, Buffington allegedly withdrew an April 2000 order to construct power lines on the North Property; the North Property is still without electrical power. Buffington Dep. pp. 90-93, 98-117; Phelps Dep. pp. 17-19, 22-23, 28-31; Hilsinger Decl. ¶ 12.
In June 2001, the parties came close to reaching an agreement that Plaintiff was entitled to offset the $1,000,000 balance of the Property's purchase price by $738,078.91. Pl.'s Memo., Ex. 64. The agreement was never finalized, however, and Plaintiff alleges that the City has refused to release the $1,000,000 mortgage on the Property unless Plaintiff acknowledges, falsely in its opinion, that adequate sewer and electric utilities have been provided to the Property. Hilsinger Decl. ¶ 14. All told, Plaintiff claims to have invested $10,000,000 in the development of the Property, a development which at present consists in large part of unoccupied retail space and vacant land. Id. ¶¶ 15-16.
Plaintiff filed its Complaint in this Court on March 4, 2002, alleging a violation of 42 U.S.C. § 1983 against all defendants as well as violations of state breach of contract and tort law against certain of the defendants. On February 3, 2003, Defendants the City, the Department of Redevelopment, Mayor Tremain, and Schnitgen filed a motion for summary judgment on the § 1983 claim and a request that Plaintiff's remaining state law claims, as well as the contingent compulsory counterclaims of Defendants the City and the Department of Redevelopment, be dismissed without prejudice pursuant to 28 U.S.C. § 1367(c)(3). Defendant Buffington joined this motion on March 17, 2003.
Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show...
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