Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_06-cv-00044/USCOURTS-azd-2_06-cv-00044-0/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 42:1983 Civil Rights Act

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Jim Langan, an individual, d/b/a Full

Circle Bed and Breakfast,

Plaintiff,

v.

Town of Cave Creek, an Arizona

municipality,

Defendant.

NO. CIV-06-0044-PHX-SMM

ORDER

Pending before the Court is Defendant Town of Cave Creek's (“Town”) Motion to

Dismiss Complaint submitted pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim

upon which relief can be granted. (Dkt. 7). Plaintiff Jim Langan has filed a response to

Defendant's Motion to Dismiss. (Dkt. 9). In turn, Defendant has filed a reply in support of

its motion. (Dkt. 11).

Plaintiff Jim Langan is a citizen and property owner in the Town of Cave Creek, and

the owner and operator of the Full Circle Bed and Breakfast ("Full Circle B&B") located

in Cave Creek. (Dkt. 1, ¶ 1). Defendant Town of Cave Creek is a municipality, duly

organized under the State of Arizona, which makes policy through its town council. (Dkt.

1, ¶ 2). Plaintiff operated Full Circle B&B under a Special Use Permit ("SUP") issued by

the town council. (Dkt. 1, ¶ 4). When the SUP came up for renewal, the town council

Case 2:06-cv-00044-SMM Document 12 Filed 06/22/06 Page 1 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

-2-

granted the SUP for an additional five (5) years at a properly noticed meeting held on March

1, 2004. (Dkt. 1, ¶ 8). On May 17, 2004, the town council met without notice, and

reconsidered and denied the extension of the SUP that it had already granted. (Dkt. 1, ¶¶

12-13).

Relying on 42 U.S.C. § 1983, Plaintiff alleges that Defendant's revocation of the SUP

is a taking without just compensation in violation of the Fifth Amendment to the United

States Constitution (Dkt. 1, Count II). Plaintiff also alleges a violation under section 1983

of his procedural due process rights guaranteed by the Fourteenth Amendment to the United

States Constitution (Dkt. 1, Count I). Based upon the foregoing allegations, Plaintiff asserts

he is entitled to a declaratory judgment that the SUP is in full force and effect. (Dkt. 1,

Count III).

Defendant moved to dismiss this action for failure to state a claim upon which relief

can be granted. (Dkt. 7). Among several reasons, Defendant asserts Plaintiff's federal

takings claim is not ripe, and there is no protected property interest in a SUP that requires

due process. (Dkt. 7).

STANDARD OF REVIEW

Fed.R.Civ.P. 12(b)(6) authorizes a court to dismiss a claim on the basis of a

dispositive issue of law. Neitzke v. Williams, 490 U.S. 319, 326 (1989). A complaint may

not be dismissed for failure to state a claim “unless it appears beyond doubt that the plaintiff

can prove no set of facts in support of [the] claim which would entitle [the plaintiff] to

relief.” Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir.1987) (quoting Conley v.

Gibson, 355 U.S. 41, 45-46 (1957)). If as a matter of law it is clear that no relief could be

granted under any set of facts that could be proved consistent with the allegations, under

Rule 12(b)(6) a claim must be dismissed, without regard to whether it is based on an

outlandish legal theory or on a close but ultimately unavailing one. See Neitzke, 490 U.S.

at 327. On a motion to dismiss for failure to state a claim, the court must presume all factual

Case 2:06-cv-00044-SMM Document 12 Filed 06/22/06 Page 2 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

-3-

allegations of the complaint to be true and draw all reasonable inferences in favor of the

nonmoving party. Usher, 828 F.2d at 561. A court is not required to accept legal

conclusions cast in the form of factual allegations if those conclusions cannot reasonably

be drawn from the facts alleged. McGlinchy v. Shell Chemical Co., 845 F.2d 802, 810 (9th

Cir. 1988).

DISCUSSION

I. Violation of Takings Clause (Count Two)

There are two categories of government action that are treated as per se takings within

the meaning of the Fifth Amendment Takings Clause: (1) permanent physical occupation

claims and (2) regulatory takings. See Levald, Inc. v. City of Palm Desert, 998 F.2d 680,

684 (9th Cir. 1993). A "regulatory taking" occurs when the value or usefulness of private

property is diminished by a regulatory action that does not involve a physical occupation of

the property. Hotel & Motel Ass'n of Oakland v. City of Oakland, 344 F.3d 959, 965 (9th

Cir. 2003) (Hotel). Neither a physical appropriation nor a public use is a necessary

component of a regulatory taking. Tahoe-Sierra Preservation Council, Inc. v. Tahoe

Regional Planning Agency, 535 U.S. 302, 326 (2002).

Not all regulatory actions rise to the level of a taking subject to just compensation for

the affected property owner. See U.S. v. Riverside Bayview Homes, Inc., 474 U.S. 121, 126

(1985) (Riverside). It is well established that the government may enact regulations that

diminish the value of private property, yet do not constitute a taking requiring

compensation, so long as a reasonable use of the regulated property exists. Silveira v.

Lockyer, 312 F.3d 1052, 1092 (9th Cir. 2002), as amended. Moreover, "where the

government merely regulates the use of property, compensation is required only if

considerations such as the purpose of the regulation or the extent to which it deprives the

owner of the economic use of the property suggest that the regulation has unfairly singled

out the property owner to bear a burden that should be borne by the public as a whole." Yee

Case 2:06-cv-00044-SMM Document 12 Filed 06/22/06 Page 3 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

-4-

v. City of Escondido, 503 U.S. 519, 522-23 (1992). "A requirement that a person obtain a

permit before engaging in a certain use of his or her property does not itself 'take' the

property in any sense: after all, the very existence of a permit system implies that permission

may be granted, leaving the landowner free to use the property as desired." Riverside, 474

U.S. at 127. Only when a permit is denied and the effect of the denial is to prevent

"economically viable" use of the land in question can it be said that a taking has occurred.

Id.

Courts have been “unable to develop any 'set formula' for determining when 'justice

and fairness' require that economic injuries caused by public action be compensated by the

government,” and “it depends largely upon the particular circumstances of the case.” Penn

Cent. Transp. Co. v. City of New York, 438 U.S. 104, 124 (1978) (citations omitted).

Courts engage in ad hoc factual inquiries, but have found that a taking occurs where

government action has a sufficient economic impact and interferes with distinct

investment-backed expectations. See id.; Del Monte Dunes at Monterey, Ltd. v. City of

Monterey, 95 F.3d 1422, 1432 (9th Cir. 1996) (Del Monte).

In addition to the division into physical occupation and regulatory takings, takings

claims are divided into “facial” and “as-applied” challenges. Levald, 998 F.2d at 686. A

“facial” challenge is distinguished from an “as applied” challenge, which “involves a claim

that the particular impact of a government action on a specific piece of property requires the

payment of just compensation.” Id. (quoting Keystone Bituminous Coal Ass'n v.

DeBenedictis, 480 U.S. 470, 494 (1987)).

In the present case, Plaintiff asserts that the Defendant's revocation of his renewed

five-year SUP falls within the category of a "regulatory taking." (Dkt. 9, p. 7). Because

Plaintiff is making an "as-applied" challenge to a regulatory taking, he must show that the

Town's action in denying his permit was applied in a way that deprived him of his property.

Case 2:06-cv-00044-SMM Document 12 Filed 06/22/06 Page 4 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

-5-

Plaintiff maintains that Full Circle B&B was his "sole source of income." (Dkt. 1, ¶ 8).

Plaintiff also alleges that as a result of the Town's action, he has sustained economic injury.

(Dkt. 1, ¶ 25). Furthermore, Plaintiff alleges the unilateral and unexpected revocation of

the SUP breached his "investment-backed expectations" (Dkt. 9, p.2). See Del Monte, 95

F.3d at 1432. Because the takings analysis is a fact-specific inquiry, at this stage in the

litigation it does not appear beyond doubt that Plaintiff cannot prove any set of facts in

support of his takings claim which would entitle him to relief. See Id. at 1431-32; Usher,

828 F.2d at 561. Therefore, Plaintiff's takings claim cannot be dismissed on this ground.

In addition to alleging that the Town's action deprived him of his property, Plaintiff

must allege facts that show his takings claim is ripe. In Williamson County Reg'l Planning

Comm'n v. Hamilton Bank, the Supreme Court established two conditions that must be

satisfied before an “as-applied” challenge to an alleged regulatory taking is ripe. 473 U.S.

172 (1985). First, the action alleged to constitute the taking must be “a final decision

regarding how [the owner] will be allowed to develop its property.” Id. at 190. Second, a

plaintiff must have sought compensation for the alleged taking through available state

procedures. Id. at 194. “The Fifth Amendment does not proscribe the taking of property;

it proscribes taking without just compensation.” Id. (emphasis added). “So long as the state

provides ‘an adequate process for obtaining compensation,’ no constitutional violation can

occur” until just compensation is denied. Levald, 998 F.2d at 686 (citations omitted).

Plaintiff has not alleged that he used available state procedures and was denied just

compensation. A violation of the Takings Clause does not occur until just compensation has

been denied, and Plaintiff must use available state procedures to seek such compensation

before he may bring a § 1983 takings claim in federal court. Levald, 998 F.2d at 687.

Arizona offers a variety of statutory remedies for takings. "[T]he legislature, pursuant to its

grant of authority under Ariz. Const. art. 2, § 17, has provided statutory remedies for acts

Case 2:06-cv-00044-SMM Document 12 Filed 06/22/06 Page 5 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

-6-

of eminent domain, see A.R.S. § 9-518, and inverse condemnation, see A.R.S. § 11-972 and

A.R.S. § 12-1111 et seq." City of Phoenix v. Superior Court In and For County of

Maricopa, 762 P.2d 128, 132 (Ariz. Ct. App. 1988). For inverse condemnation actions,

A.R.S. § 12-1124 provides the remedy of compensation and money damages. Id. Arizona

has found that these statutes provide an adequate remedy for any alleged taking which might

occur. Id. This Court agrees. Because Arizona law provides a remedy for takings, see id.,

and Plaintiff has not alleged the use of available Arizona procedures to seek compensation

before bringing this federal claim, he must pursue that claim before a taking claim under the

Fifth Amendment can be ripe. See Austin v. City and County of Honolulu, 840 F.2d 678,

682 (9th Cir. 1988). The proper disposition for an unripe federal takings claim is dismissal

without prejudice. See Macri v. King County, 126 F.3d 1125, 1129 (9th Cir. 1997) (stating

that a federal takings claim is properly dismissed without prejudice on ripeness grounds).

II. Violation of Procedural Due Process (Count One)

A threshold requirement to a procedural due process claim is the plaintiff's showing

of a liberty or property interest protected by the Constitution. Wedges/Ledges of Cal., Inc.

v. City of Phoenix, 24 F.3d 56, 62 (9th Cir. 1994). The Fourteenth Amendment's procedural

protection of property safeguards the interests that a person has already acquired in specific

benefits, and these property interests may take many forms. Board of Regents v. Roth, 408

U.S. 564, 576 (1972). "Property interests, of course, are not created by the Constitution."

Greene v. Babbitt, 64 F.3d 1266, 1272 (9th Cir. 1995) (quoting Board of Regents, 408 U.S.

at 577 (1972)). Rather, protected property interests are created and their dimensions are

defined by existing rules or understandings that stem from an independent source, such as

state law. Id. To have a property interest in a certain benefit, a person must have a

legitimate claim of entitlement, rather than an abstract need or unilateral expectation of it.

Id. at 1271. 

Case 2:06-cv-00044-SMM Document 12 Filed 06/22/06 Page 6 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

-7-

First, the Court notes that Plaintiff has voluntarily withdrawn his substantive due

process claim. (Dkt. 9, p. 2 n. 2). Thus, the Court only addresses his procedural due process

claim. Plaintiff asserts both a vested property interest in the SUP and a liberty interest in

his reputation and ability to continue to conduct business in his profession. (Dkt. 1, ¶ 16).

With regards to Plaintiff's property interest, generally "[t]he law is settled that special

use permits create no vested property rights." Paulina Lake Historic Cabin Owners Assoc.

v. U.S.D.A. Forest Service, 577 F.Supp. 1188, 1193 (D. Ore. 1983) (citing United States v.

Fuller, 409 U.S. 488, 492-93 (1973) (further citations omitted)); see also Pai 'Ohana v.

United States, 875 F.Supp. 680, 699 (D. Haw. 1995) (finding that the termination of special

use permits did not implicate due process because the permits did not create vested property

interests recognized by the Fifth Amendment), aff'd, 76 F.3d 280 (9th Cir. 1996). However,

Arizona recognizes the "vested rights doctrine," in which a property owner who materially

acts in reliance on an issued building or special use permit may continue to act in

conformance therewith, notwithstanding arbitrary governmental withdrawal or cancellation

of the permit. Emmett McLoughlin Realty, Inc. v. Pima County, 58 P.3d 39, 43 (Ariz. Ct.

App. 2002) (Emmett). To acquire a vested right to a previously issued permit authorizing

commencement of use or construction, the property owner must physically construct

improvements permitted by the use or incur substantial expenditures toward construction

or establishment of the use in reliance on or in conformance with the permit. Fidelity Nat.

Title Ins. Co. v. Pima County, 831 P.2d 426, 429 (Ariz. Ct. App. 1992) (Fidelity). Thus,

although special use permits do not automatically create vested property interests, Plaintiff

may have a vested right to the permit under Arizona law if he materially acted in reliance

on it. See Emmett, 58 P.3d at 43; Fidelity, 981 P.2d at 429. 

Plaintiff has alleged that "in reliance upon receipt of the Special Use Permit, [he]

invested thousands of dollars in the Bed and Breakfast, both in terms of physical

Case 2:06-cv-00044-SMM Document 12 Filed 06/22/06 Page 7 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

1

 Defendant does not contend Plaintiff's procedural due process claim is not ripe. 

Furthermore, in certain limited and appropriate circumstances, procedural due process

claims under 42 U.S.C. § 1983 concerning land use may proceed even when related Fifth

Amendment "as-applied" taking claims are not yet ripe for adjudication. Carpinteria

Valley Farms, Ltd. v. County of Santa Barbara, 344 F.3d 822, 831 (9th Cir. 2003). See

Plaintiff's Complaint at ¶¶ 8, 12, 14, 16, 18, 24.

-8-

renovations, upkeep, and marketing promotions." (Dkt. 1, ¶ 5). In addition to his property

interest, Plaintiff has also asserted a "liberty interest in his reputation and ability to conduct

business in his profession." (Dkt. 1, ¶ 16). Plaintiff appears to have properly alleged a

liberty and property interest protected by the Constitution. Wedges/Ledges, 24 F.3d at 62.

Plaintiff further alleges Defendant deprived him of due process by failing to provide notice

and the opportunity for a hearing. (Dkt. 1, ¶ 17). Because it is not clear that no relief could

be granted under any set of facts that could be proved consistent with Plaintiff's allegations,

Plaintiff's claim of a procedural due process violation will not be dismissed.1

III. Request for Declaratory Judgment (Count Three)

Under the Declaratory Judgment Act (the "Act"), “[i]n a case of actual

controversy within its jurisdiction. . . any court of the United States. . . may declare the

rights and other legal relations of any interested party seeking such declaration.” 28

U.S.C. § 2201(a) (emphasis added). In applying the Act, the Ninth Circuit requires the

district court to first determine whether there is an actual case or controversy within its

jurisdiction. American States Ins. Co. v. Kearns, 15 F.3d 142, 143 (9th Cir.1994). The

requirement that a case or controversy exist under the Act is “identical to Article III's

constitutional case or controversy requirement.” Kearns, 15 F.3d at 143. If a case is not

ripe for review, there is no case or controversy, and the court lacks subject-matter

jurisdiction. Id.

Second, even if the court finds that it has jurisdiction, the decision to hear

declaratory actions is discretionary, and guided by the factors set out in Brillhart v.

Case 2:06-cv-00044-SMM Document 12 Filed 06/22/06 Page 8 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

-9-

Excess Ins. Co., 316 U.S. 491 (1942), and its progeny. Kearns, 15 F.3d at 143-44. The

non-exclusive Brillhart factors state that, “1) [t]he district court should avoid needless

determination of state law issues; 2) it should discourage litigants from filing declaratory

actions as a means of forum shopping; and 3) it should avoid duplicative litigation.”

Principal Life Ins. Co. v. Robinson, 394 F.3d 665, 672 (9th Cir. 2004) (citations omitted)

(Principal Life). Courts have noted additional considerations, such as: whether the

declaratory action will settle all aspects of the controversy; whether the declaratory

action will serve a useful purpose in clarifying the legal relations at issue; whether the

use of a declaratory action will result in entanglement between the federal and state court

systems; and the availability and relative convenience of other remedies. Id.

Plaintiff alleges he is entitled to a declaration that the SUP "is in full force and

effect." (Dkt. 1, ¶ 29). Plaintiff does not demand that the Court declare the procedure by

which the Town revoked his SUP unconstitutional and require the Town to provide

notice and an opportunity for a hearing. Thus, rather than a declaration of his due

process rights, Plaintiff seeks a declaration of his rights regarding the use of his property. 

Determining whether Plaintiff is entitled to the full force and effect of his permit,

however, requires inquiry into whether the regulatory taking affected part of his complex

bundle of property rights, and the compensable value of those rights. See Gilbert v. City

of Cambridge, 745 F. Supp. 42, 52 (D. Mass. 1990). In other words, the relief Plaintiff

seeks by his declaratory judgment claim is inextricably intertwined with his takings

claim, which the Court has found is not ripe for review. If a case is not ripe for review,

there is no case or controversy, and the court lacks subject-matter jurisdiction. Kearns,

15 F.3d at 143. Since Plaintiff's takings claim is not yet ripe, this Court does not have

jurisdiction to declare Plaintiff's rights in the SUP at this time.

Furthermore, Brillhart's factors clearly demonstrate state court as the more

Case 2:06-cv-00044-SMM Document 12 Filed 06/22/06 Page 9 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

-10-

appropriate forum for Plaintiff's declaratory judgment claim. Principal Life, 394 F.3d at

672. Another district court has questioned the propriety of the federal declaratory

judgement device as a means to resolve a takings claim because of the special character

of takings litigation and the special qualities of the declaratory judgment device. Gilbert,

745 F. Supp. at 50-51. This Court agrees with the Gilbert court that a declaratory

judgment takings claim only addresses the "takings" element, without addressing the

other essential component of just compensation, thus precluding full development of the

constitutional questions. Id. at 51. Additionally, federal declaratory relief concerning

takings claims should not become a ready procedural mechanism for the federal courts to

intervene prematurely before state procedures have run their course. Id. at 53. By not

interfering prematurely, this Court will accomplish Brillhart's second and third factors,

avoiding duplicative litigation and discouraging litigants from filing declaratory actions

in federal court as a means of forum shopping. In addition, the Court will "avoid

needless determination of constitutional questions which may lead to a needless

obstruction of the domestic policy of the states," the first factor of Brillhart. Id. at 54

(citing Alabama State Federation of Labor v. McAdory, 325 U.S. 450, 471(1945)). 

Finally, the inverse condemnation procedure established by Arizona statute offers an

available and relatively convenient remedy, without entangling the federal and state

court systems. Therefore, the Court exercises its discretion and dismisses without

prejudice Plaintiff's third count requesting a declaratory judgment.

Accordingly, 

/ / / 

/ / / 

/ / / 

/ / / 

Case 2:06-cv-00044-SMM Document 12 Filed 06/22/06 Page 10 of 11
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

-11-

IT IS HEREBY ORDERED GRANTING IN PART and DENYING IN

PART Defendant's Motion to Dismiss Complaint pursuant to Fed.R.Civ.P. 12(b)(6) for

failure to state a claim upon which relief can be granted. (Dkt. 7). Count One of

Plaintiff's Complaint properly states a procedural due process claim against Defendant

Town of Cave Creek. Counts Two and Three of Plaintiff's Complaint are DISMISSED

WITHOUT PREJUDICE.

DATED this 22nd day of June, 2006.

Case 2:06-cv-00044-SMM Document 12 Filed 06/22/06 Page 11 of 11