Westborough Mall, Inc. v. City of Cape Girardeau, Mo.

• Decision Date: 12 November 1982
• Docket Number: No. 81-2314,81-2314
• Parties: 1983-1 Trade Cases 65,240 WESTBOROUGH MALL, INC., a Corporation; George Staples, Jr., and Westborough Mall Associates, a Missouri Limited Partnership, by and through George Staples, Jr., its Sole General Partner, Appellants, v. CITY OF CAPE GIRARDEAU, MISSOURI, a Municipal Corporation; Paul W. Stehr, Robert K. Herbst, Howard C. Tooke, Samuel L. Gill, Gail L. Woodfin, W.G. Lawley, Charles L. Drury, Drury Industries, Inc., a Corporation, May Department Stores Co., a Corporation, West Park Associates, a Missouri Limited Partnership, May Centers of Cape, Inc., a Corporation, and May Centers, Inc., a Corporation, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 733

693 F.2d 733

1983-1 Trade Cases 65,240

WESTBOROUGH MALL, INC., a Corporation; George Staples, Jr.,

and Westborough Mall Associates, a Missouri

Limited Partnership, by and through

George Staples, Jr., its Sole

General Partner, Appellants, v. CITY OF CAPE GIRARDEAU, MISSOURI, a Municipal Corporation;

Paul W. Stehr, Robert K. Herbst, Howard C. Tooke, Samuel L.

Gill, Gail L. Woodfin, W.G. Lawley, Charles L. Drury, Drury

Industries, Inc., a Corporation, May Department Stores Co.,

a Corporation, West Park Associates, a Missouri Limited

Partnership, May Centers of Cape, Inc., a Corporation, and

May Centers, Inc., a Corporation, Appellees.

No. 81-2314.

United States Court of Appeals,

Eighth Circuit.

Submitted May 19, 1982.

Decided Nov. 12, 1982.

Robert E. Manley, Andrew S. Lipton, Manley, Jordan & Fischer, Cincinnati, Ohio, Robert H. Freilich, Martin L. Leitner, Freilich & Leitner, Kansas City, Mo., James R. Robison, Sikeston, Mo., for appellants.

Thomas C. Walsh, John Michael Clear, Michael G. Biggers, Stephen R. Snodgrass, St. Louis, Mo., for appellees Charles L. Drury, Drury Industries, Inc., The May Department Stores Company, West Park Associates, May Centers of Cape, Inc., and May Centers, Inc., Bryan, Cave, McPheeters & McRoberts, St. Louis, Mo., of counsel.

Stephen E. Strom, Finch, Bradshaw, Strom & Steele, Cape Girardeau, Mo., for appellees City of Cape Girardeau, Samuel L. Gill, Robert K. Herbst, W.G. Lawley, Paul W. Stehr, Howard C. Tooke and Gail L. Woodfin.

Before HEANEY, Circuit Judge, HENLEY, ^* Senior Circuit Judge, and BECKER, ^** Senior District Judge.

HEANEY, Circuit Judge.

This action was brought by Westborough Mall, Inc., and others to challenge actions taken by the City of Cape Girardeau, city officials and various private individuals and business concerns involved with the development of the West Park Mall, a shopping center located in the City of Cape Girardeau. The Westborough Mall developers claimed that the city illegally acted to deprive them of their zoning rights without due process of law. They also alleged that city officials and the West Park Mall developers illegally conspired to preclude competition by improperly reverting the C-4 zoning the Westborough developers had obtained to construct the Westborough Mall and then granting development rights to the West Park group. Finally, they asserted that two ordinances rezoning the West Park Mall property were illegal.

On October 27, 1981, the district court entered summary judgment in favor of the city and the West Park Mall developers, 532 F.Supp. 284. Although we agree with the district court that the Westborough developers lack standing to challenge the zoning changes granted to the West Park group, we find there is sufficient evidence that the city deprived the Westborough developers of their zoning rights without notice or a hearing to preclude a judgment as a matter of law. We also believe there are genuine issues of material fact regarding the existence of an illegal agreement between city officials and the West Park Mall developers to intentionally interfere with the progress of the Westborough Mall. We therefore reverse the district court in part and remand for a trial on the merits of these claims.

Our holding is based upon the established rule that summary judgment is justified only when, viewing the facts and inferences that may be derived therefrom in a light most favorable to the nonmoving party, the court is convinced there is no evidence to sustain a recovery under any discernible circumstances. Ralph's Distributing Co. v. AMF, Inc., 667 F.2d 670, 672 (8th Cir.1981); Vette Co. v. Aetna Casualty & Surety Co., 612 F.2d 1076, 1077 (8th Cir.1980). The burden is thus on the defendants to establish their right to judgment as a matter of law: there must be no genuine issue of material fact and no room for doubt or controversy. See id.; St. Louis County Bank v. United States, 674 F.2d 1207, 1209 (8th Cir.1982). A review of the facts in this case demonstrates why, in view of these standards, the district court erred in granting summary judgment.

Both plaintiff George Staples, Jr., and defendant Charles Drury, President of Drury Industries, Inc., had expressed interest in developing a shopping mall in the City of Cape Girardeau in the early 1970's. In 1973, Staples entered into a long-term lease on approximately sixty-seven acres of land for the purpose of constructing a regional shopping facility, referred to as Westborough Mall. On June 5, 1974, the Cape Girardeau City Council enacted ordinance 904, which rezoned the Westborough Mall property to C-4, a zoning change that the owners of the property had applied for upon the mayor's suggestion to Staples that C-4 zoning was required for the development of a regional facility. This ordinance exempted the property from another local ordinance, Chapter 30, Sec. 31, subsection (e) of the Code of Ordinances, which provided that if a shopping center was not constructed on property rezoned C-4 within three years, the zoning would automatically revert to the classification in force prior to the establishment of the C-4 district.

It was not until several years after the plaintiffs obtained C-4 zoning that Drury Industries, Inc., and May Centers of Cape, Inc., formed a partnership to develop a competing center, the West Park Mall. The West Park Mall was to be located on land owned by Drury that was less than one mile from the Westborough site. ¹ The gravamen of plaintiffs' complaint is that the city and the West Park Mall developers conspired to preclude competition by the plaintiffs by illegally reverting their C-4 zoning. The plaintiffs claim that this action was taken to allow the May-Drury defendants the opportunity to secure tenants and begin operation of the West Park Mall.

The district court held that there was no evidence of a conspiracy and, further, that any action taken by the city or the private defendants regarding the status of plaintiffs' zoning had no effect on the viability of plaintiffs' project, since plans for the development of Westborough Mall had not materialized and the project was in essence a failure. The plaintiffs argue that the existence of an illegal conspiracy may be inferred from the nature of the relationship between city officials and defendant Charles Drury and from the improper actions taken by the city to revert plaintiffs' C-4 zoning only two days after granting the defendants' zoning petition, actions which allowed the defendants to complete their financing plans for the West Park Mall development. The plaintiffs also contend that there is a genuine issue of material fact as to the viability of their project, which renders summary judgment inappropriate.

The facts that support plaintiffs' position may be summarized as follows: Commencing in 1973, plaintiff Staples attempted to secure tenants for the Westborough Mall, especially anchor (or major) tenants such as J.C. Penney, Sears or Famous Barr. No major tenants expressed interest, however, and Staples abandoned his plans for approximately two years. Then, in September, 1976, Staples formed Westborough Mall Associates, a limited partnership, to develop the Westborough Mall site. The partnership raised $800,000 and received a building permit from the city in June, 1977. That same month, the city council enacted ordinance 1204, which corrected certain legal descriptions of the Westborough property and confirmed that the property was zoned C-4.

Site work on the Westborough project also began in 1977. Water drainage systems were installed, a survey was conducted and grading and other surface improvements were made. By December, 1978, the plaintiffs had expended more than $1 million on the development. No anchor tenants had yet committed themselves to the project, but letters of interest from many smaller stores had been received. Steps were being taken to secure additional financing to begin construction of the mall shell, and because of the reluctance of any major store to become a tenant, the plaintiffs were investigating a new anchor store concept--an "Elite" store composed of a number of small tenants.

Defendant Drury's plans for a shopping mall in Cape Girardeau were also proceeding during this time period. Drury sought to enter into a joint venture with the May defendants, who were experienced shopping mall developers. His discussions with May officials culminated in at least a tentative agreement with them to proceed to develop the West Park Mall in 1977. The agreement was a beneficial one in several respects, one of which was the probability of obtaining a Famous Barr store as an anchor tenant because Famous Barr was a subsidiary of May. An October, 1977, memorandum ² by Drury to the Drury Industries Board of Directors suggested:

Participation by [May Stores] in the center does not automatically guarantee that a Famous Barr store will be in the center. However, the track record is that [May] is not involved in any center that does not have a first-line May department store in it. A Famous Barr store in Cape Girardeau is a calculated risk. With [May] participation in our center, however, it is very doubtful that Famous Barr, in the event it does not go in our center, will go in any other competitive center in our market area.

Drury's contribution to the joint venture included assistance in dealing with city officials. Indeed, Drury had received a letter from the city attorney as early as 1974, about the same time that plaintiff Staples was informed by the mayor that C-4 zoning was required to build a shopping mall, which indicated that Drury could proceed to develop his center with C-2 or regular commercial zoning. ³ As Drury later disclosed to May officials, his strategy was "low key." In 1977, he informed them that he already had talked with defendant Lawley, the city manager, and planned to talk with the mayor privately about obtaining C-2 zoning on all of the West Park...