Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_05-cv-02233/USCOURTS-azd-2_05-cv-02233-0/pdf.json

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

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

CARR HUML INVESTORS, LLC )

GREER RANCH PARCEL 8/4, LLC, ) No. CV 05-2233 PHX MEA

DSE GROUP, LLC, ) No. CV 05-2470 PHX MEA

) No. CV 06-2636 PHX MEA 

Plaintiffs, ) Consolidated

) 

v. ) MEMORANDUM AND ORDER

) 

STATE OF ARIZONA, )

)

Defendant, )

_____________________________ )

)

)

KEVIN G. NORBY, LLC, )

)

Plaintiff, )

)

v. )

)

STATE OF ARIZONA, )

)

Defendant, )

_____________________________ )

)

PHILLIP B. STONICH, BILL )

SCHWOERER, ROBERT SCHWOERER, )

JON SCHWOERER, GALE BARBARA )

HART, CARENA STAMPS, KATHY ) 

HOLDER, SUNLORE HOMES, INC., )

GMSC DEVELOPMENT GROUP, INC., ) 

TERRY ABBOTT, G. LEWIS )

ENTERPRISES, INC., DIAMOND )

HEAD CONSTRUCTION, L.L.C., )

MICHAEL J. DANZER, JEAN DANZER,)

TROY LANGDON, ESTATE OF )

MARY LANGDON, DENISE ABBOTT, )

ELIZABETH DANZER, TOM HOLDER, )

JENNIFER LANGDON, )

) 

Plaintiffs, )

) 

) 

Case 2:05-cv-02233-MEA Document 56 Filed 12/12/07 Page 1 of 45
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 All citations to docket numbers in this Memorandum and Order

are to docket numbers in 05 CV 2233.

-2-

v. )

) 

ELAINE RICHARDSON, ARIZONA )

DEPARTMENT OF REAL ESTATE, )

STATE OF ARIZONA, )

)

Defendants. )

_____________________________ )

All of the parties in each of the above-captioned

matters, which have been properly consolidated, have agreed to

the exercise of magistrate judge jurisdiction over all of the

claims asserted, including the entry of final judgment. Before

the Court are Plaintiffs’ motion for summary judgment [Docket

No. 32] (captioned as a motion for partial summary judgment),

and Defendants’ cross-motion for summary judgment [Docket No.

47].1 Also before the Court is Defendant’s Supplemental Motion

for Summary Judgment [Docket No. 52], filed simultaneously with

a supplemental statement of facts, and Plaintiff’s motion

[Docket No. 53] to strike Defendant’s supplemental motion for

summary judgment, which was filed simultaneously with

Plaintiffs’ supplemental statement of facts [Docket No. 54].

I Procedural History

Plaintiffs in the initial case in this matter filed

suit against the State of Arizona in the Maricopa County

Superior Court, alleging violation of their constitutional

rights and alleging claims based on state law. That case was

removed to the United States District Court for the District of

Case 2:05-cv-02233-MEA Document 56 Filed 12/12/07 Page 2 of 45
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2 The initial case was assigned to the Honorable Morton Sitver,

who stayed the matter in an order issued May 12, 2006. The case was

reassigned due to Judge Sitver’s retirement.

3

 Plaintiffs assert a violation of the Fifth and Fourteenth

Amendments in their complaint and argue in their pleadings that

Defendants violated their right to due process of law.

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Arizona on July 27, 2005.2 The second consolidated suit, filed

by Plaintiff Kevin Norby LLC and naming the State of Arizona as

the defendant, alleged as causes of action an unconstitutional

taking of real property, inverse condemnation, and negligence.

That case was removed to federal court on August 16, 2005. The

third consolidated cause of action, alleging the

unconstitutional taking of real property, inverse condemnation,

negligence, a violation of Plaintiffs’ rights to equal

protection of the law, and a claim for declaratory relief, was

removed to federal court on November 2, 2006. That suit names

as defendants Elaine Richardson, the Arizona Department of Real

Estate, and the State of Arizona. 

In the consolidated action as stipulated to by the

parties, Plaintiffs allege Defendants are liable to Plaintiffs

pursuant to 42 U.S.C. § 1983 because Defendants violated

Plaintiffs’ federal constitutional rights. Plaintiffs assert

Defendants violated their Fifth Amendment and Fourteenth

Amendment rights to be free of the taking of their real property

by the government without just compensation (Count I).3

Plaintiffs allege a cause of action based on inverse

condemnation (Count II). Plaintiffs further assert a claim

based on Defendants’ alleged negligence in issuing a certificate

of administrative completeness with regard to their real

Case 2:05-cv-02233-MEA Document 56 Filed 12/12/07 Page 3 of 45
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4 On June 4, 2007, after all of the parties in all of the cases

agreed to proceed before a Magistrate Judge, and the Court ordered all

three of the cases consolidated and granted Plaintiffs leave to amend

their complaints in Case Number CV 05-02233 PHX MEA and Number CV 05-

2470 PHX MEA to add a cause for relief based on equal protection and

to add a claim for declaratory relief. At that time the Court also

stayed further pleading and oral argument regarding the cross-motions

for summary judgment pending a settlement conference in this matter.

The settlement conference was conducted August 28, 2007, and the

parties were not successful in reaching a settlement of the matter.

-4-

property (Count III). Plaintiffs also contend Defendants

violated their constitutional rights to equal protection of the

law (Count IV). Additionally, Plaintiffs seek declaratory

relief pursuant to 28 U.S.C. § 2201 (Count V), and seek an award

of monetary damages and attorneys’ fees pursuant to 42 U.S.C. §

1988.

No scheduling order was issued in the underlying case.

A motion to dismiss was filed, which motion was denied without

prejudice and the case stayed on May 12, 2006. On January 1,

2007, Plaintiffs filed a motion for partial summary judgment and

a statement of facts in support of their motion. Plaintiffs

sought oral argument on their motion. See Docket No. 32. The

parties stipulated to a lifting of the stay of the proceedings

on February 6, 2007. 

On February 28, 2007, Defendants filed a response to

Plaintiffs’ motion, and a cross-motion for summary judgment and

a controverting statement of facts. On April 2, 2007,

Plaintiffs filed a pleading in support of their motion for

partial summary judgment and in response to Defendants’ crossmotion, and a controverting statement of facts. Defendants

filed a reply in support of their motion on May 7, 2007.4 On

October 4, 2007, Defendants filed a Supplemental Motion for

Case 2:05-cv-02233-MEA Document 56 Filed 12/12/07 Page 4 of 45
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Summary Judgment and Statement of Facts. See Docket No. 52.

Plaintiffs filed a motion to strike the supplemental motion for

summary judgment and filed a supplemental statement of facts.

See Docket No. 53 & Docket No. 54. Defendants filed a pleading

in response to the motion to strike and in support of their

supplemental motion for summary judgment. See Docket No. 55.

The Court concludes oral argument regarding the motions

for judgment as a matter of law is not necessary to expedient

resolution of the motions.

 II Standard for granting judgment as a matter of law

Rule 56 of the Federal Rules of Civil Procedure

provides that judgment shall be entered if the pleadings,

depositions, affidavits, answers to interrogatories and

admissions on file show that there is no genuine dispute

regarding the material facts of the case and the moving party is

entitled to a judgment as a matter of law. See Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S. Ct. 2505, 2509-10

(1986). The party seeking summary judgment bears the initial

burden of informing the Court of the basis for its motion and

identifying those portions of the record which it believes

demonstrate the absence of any genuine issue of material fact.

See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct.

2548, 2553 (1986).

The party opposing the motion may not rest upon the

mere allegations of their pleadings, but instead must produce

significant, probative evidence which contradicts the moving

party’s allegations, establishing that there is a genuine

question of fact for resolution at trial. Anderson, 477 U.S. at

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5 Greer Ranch, L.L.C., purchased the Greer Ranch property in

October of 1997. The owners intended to subdivide the property, and

purchased a well and prepared a preliminary subdivision plat map in

2000. Docket No. 33 (Plaintiff’s Statement of Facts “PSOF”), Exh.

3. “However, a developer or builder could not be persuaded to take

on the project. Therefore, [] RTD Holdings, Inc., was formed to hold

and sell the property as unsubdivided land.” Id., Exh. 3.

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248, 256-57; 106 S. Ct. at 2510, 2513-14. The Court must

consider a party’s motion for summary judgment construing all

alleged facts with all reasonable inferences favoring the nonmoving party. See e.g., Genzler v. Longanbach, 410 F.3d 630,

636 (9th Cir.), cert. denied, 126 S. Ct. 749 (2005). In

considering a motion for summary judgment, the Court must regard

as true the non-moving party’s evidence if it is supported by

affidavits or other evidentiary material. Celotex, 477 U.S. at

324, 106 S. Ct. at 2548; Eisenberg v. Insurance Co. of N. Am.,

815 F.2d 1285, 1289 (9th Cir. 1987). 

III Statement of facts

The parties do not dispute the material facts of the

case. Although Plaintiffs have moved to strike Defendants’

supplemental motion for summary judgment, Plaintiffs do not

contest the truth of the facts stated in Defendants’

supplemental statement of facts. See Docket No. 53.

“Greer Ranch” refers to a parcel of real property in

Maricopa County north of Phoenix, near New River Road, comprised

of approximately 364 acres of unincorporated land. Greer Ranch

was once wholly owned by RTD Holdings, Inc. RTD Holdings, Inc.

is not a party in any of the three cases consolidated in this

matter.5

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6

“Unsubdivided lands” means land or lands divided or

proposed to be divided for the purpose of sale or lease,

... into six or more lots, parcels or fractional interests

and the lots or parcels are thirty-six acres or more each

..., or that are offered, known or advertised under a

common promotional plan for sale or lease...

Ariz. Rev. Stat. Ann. § 32-2101(59) (2002 & Supp. 2006).

7 Section 32-2195.03 provides, inter alia:

Upon examination of unsubdivided land, the commissioner,

unless there are grounds for denial, shall prepare and

issue to the owner or agent a public report authorizing the

sale or lease of the unsubdivided lands in this state. ...

.... The commissioner shall require the owner or agent to

reproduce the report and furnish each prospective buyer

with a copy before the buyer signs an offer to purchase...

B. Notwithstanding any provision of subsection A of this

section, an owner may prepare a final public report for use

in the sale of unsubdivided lands ...

***

4. The department shall determine within fifteen business

days after the receipt of the notification and public

report whether the notification and public report are

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On or about January 2, 2002, RTD Holdings, Inc.

(“RTD”), submitted a Public Report to the Arizona Department of

Real Estate (“ADRE”), regarding Greer Ranch, which was then

unsubdivided land.6 See Docket No. 33 (Plaintiffs’ Statement of

Facts “PSOF”), Exh. 1 & Exh. 2; Ariz. Rev. Stat. Ann. §

32-2195.03 (2002 & Supp. 2006). On January 10, 2002, the ADRE

issued an Unsubdivided Lands Public Report (“Public Report”) to

RTD, establishing that the Public Report submitted by RTD was

administratively complete. PSOF, Exh. 1. The issuance of a

Public Report is a prerequisite to the selling of unsubdivided

land within the state of Arizona. The ADRE’s certification that

the Public Report was administratively complete conferred upon

RTD a license to begin selling parcels of Greer Ranch property.

See Ariz. Rev. Stat. Ann. §§ 32-2101(28) & 32-2195.03(D) (2002

& Supp. 2006).7

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administratively complete. ...

5. An owner may commence sales or leasing activities as

permitted under this article after obtaining a certificate

of administrative completeness from the commissioner.

6. Before or after the commissioner issues a certificate of

administrative completeness, the department may examine any

public report, development or applicant that has applied

for or received the certificate. If the commissioner

determines that the owner or development is not in

compliance with any requirement of state law or that

grounds exist under this chapter to suspend, deny or revoke

a public report, the commissioner may commence an

administrative action ...

***

D. No owner or agent may sell or lease or offer for sale or

lease unsubdivided lands without first obtaining a public

report from the commissioner....

***

F. ... when the commissioner ... has satisfactory evidence

that the owner or agent is violating any provision set

forth in this article or the rules of the commissioner or

has engaged in any unlawful practice ... with respect to

the sale of unsubdivided lands or deviated from the

provisions of the public report, the commissioner may

investigate the subdivision project and examine the books

and records of the owner or agent. ...

(emphasis added).

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The Public Report, which RTD was required by state law

to provide to each purchaser of Greer Ranch land, contains the

following:

DISCLAIMER

This report is NOT A RECOMMENDATION NOR AN

ENDORSEMENT by the State of Arizona of this

land. The department has not subjected the

application and public report to a detailed

examination. The developer prepared the

report and the Department has verified none

of the information in this report; the

Department has accepted all information as

true and accurate based on attestation of the

developer and/or the developer’s agents. The

purchaser should verify all facts before

signing any documents. The Department assumes

no responsibility for the quality or quantity

of any improvement in this development.

PSOF, Exh. 1 (emphasis added).

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8

 If any Plaintiff acted in concert with RTD or another property

owner to split their Greer Ranch property into six or more parcels and

sell portions of the property without compliance with Arizona’s

subdivision statutes and regulations, they would have violated Arizona

Revised Statutes Annotated § 32-2181(D). See Siler v. Arizona Dep’t

of Real Estate, 193 Ariz. 374, 379, 972 P.2d 1010, 1015 (Ct. App.

1999) (applying state law in effect at that time providing that

Arizona’s subdivision laws were triggered by the division of land into

four or more lots and concluding violation of the statute did not

require a finding of specific intent).

9

 Specifically, the order notes that there were seven lots of

less than 36 acres each, that multiple parcels of land were identified

as parcel 3, parcel 8, and parcel 9, and that the parcels were not

contiguous. PSOF, Exh. 2.

-9-

Subsequent to January of 2002, RTD sold parcels 5

through 9 of the Greer Ranch property to Plaintiffs.8 Plaintiffs

were presumably provided with the Public Report when they

purchased their properties from RTD, as required by state law.

After the issuance of the Public Report and prior to January 28,

2004, some Plaintiffs expended money in the furtherance of

developing their property for residential use. See Docket No.

41 (Plaintiffs’ Reply) at 2.

 On January 28, 2004, Defendant ADRE issued a summary

suspension of the Public Report. PSOF, Exh. 2. Defendant ADRE

had determined that RTD had created an illegal subdivision by

selling other than unsubdivided land. Id., Exh. 2. Defendant

ADRE determined RTD’s January 2002 report contained inaccurate

statements and representations and that RTD had not complied

with state subdivision laws and regulations.9 Id., Exh. 2.

Accordingly, Defendant ADRE suspended RTD’s license to sell land

within Greer Ranch, i.e., the Public Report, by means of a

“Summary Suspension Order.” Id., Exh. 2.

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Defendant ADRE notified RTD of the Summary Suspension

Order because RTD had prepared the Public Report which was

invalidated by the Summary Suspension Order. Docket No. 38

(Defendants’ Statement of Facts “DSOF”) at para. 2. The Summary

Suspension Order was recorded in the Maricopa County Recorder’s

Office on February 11, 2004. PSOF, Exh. 2. The Summary

Suspension Order was directed to RTD, “Greer Ranch,” and David

Reesor and Edward Grant, the principals of RTD and the

signatories to the Public Report. Id., Exhs. 1 & 2. The order

provided: “The terms of this Order apply only to the interest of

the Respondents named herein and do not apply to any other

entity.” Id., Exh. 2. The order, however, concluded that the

Public Report, which covered all of the Greer Ranch property,

was incorrect and that the Greer Ranch property was a

subdivision. Id., Exh. 2. Plaintiffs were not given actual

notice of the Summary Suspension Order.

RTD appealed the Summary Suspension Order and hearings

were held by the Office of Administrative Hearings. Id., Exh.

3. An Administrative Law Judge (“ALJ”) issued a decision

regarding the appeal on June 14, 2004. Id., Exh. 3. The ALJ

concluded that Greer Ranch met the definition of a “subdivision”

and not that of unsubdivided lands and, accordingly, affirmed

the Summary Suspension Order. Id., Exh. 3. 

On July 14, 2004, Defendant Richardson, the

Commissioner of the ADRE, issued a Final Order (“Final Order”).

The Final Order was recorded in the Maricopa County Recorder’s

Office on August 4, 2004, as Instrument No. 2004-0904954. Id.,

Exh. 4. The Final Order adopted the ALJ’s conclusion that Greer

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10 The evidence presented by Defendants at Docket No. 52

indicates the following Plaintiffs recorded deeds for Greer Ranch

property after February 11, 2004: Bill Schwoerer, Sunlore Homes, Gale

Barbara Hart, Robert Schwoerer, Jon Schwoerer, Carena Stamps, G. Lewis

Enterprises, Diamond Head Construction, Troy and Jennifer Langdon,

Kevin Norby, Terry and Denise Abbott. Plaintiffs Bill Schwoerer,

Carena Stamps, G. Lewis Enterprises, Diamond Head Construction, Troy

and Jennifer Langdon, purchased Greer Ranch property after the date

the Final Order was recorded.

11 There is no explicit claim of estoppel in Plaintiffs’

pleadings. However, Plaintiffs offer statements of fact with regard

to their alleged reasonable reliance on the Public Report and, in the

case of Plaintiff Norby, the representations of Defendant ADRE, when

acting to their supposed detriment by purchasing their properties.

Any claim of estoppel against a state government agency would be

precluded because Plaintiffs have not alleged nor provided evidence

of any affirmative misrepresentation beyond mere negligence on the

part of any Defendant which would not result in harm to the public

interest if corrected. See, e.g., Morgan v. Gonzales, 495 F.3d 1084,

1092 (9th Cir. 2007); Sulit v. Schiltgen, 213 F.3d 449, 454 (9th Cir.

2000)(“Neither the failure to inform an individual of his or her legal

rights nor the negligent provision of misinformation constitute

affirmative misconduct. ... In any event, estoppel against the

government is unavailable where petitioners have not lost any rights

to which they were entitled.”); Watkins v. United States Army, 875

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Ranch was a subdivision and was not unsubdivided lands. Id.,

Exh. 4. The Final Order vacated the Summary Suspension Order,

but also revoked the January 2002 Public Report, i.e., RTD’s

license to sell Greer Ranch land. Id., Exh. 4. 

Eleven Plaintiffs purchased Greer Ranch property after

February 11, 2004, the date the Summary Suspension Order was

recorded. See Docket No. 52.10 Five of these eleven Plaintiffs

purchased their property after the date the Final Order was

recorded, i.e., August 4, 2004. Id. at 3. Plaintiff Kevin

Norby LLC completed its purchase of several parcels of Greer

Ranch property from RTD after February 11, 2004. Docket No. 37

at 4 n.4. Kevin Norby asserts he relied on the assurance of

ADRE that this property was not affected by the Summary

Suspension Order. Docket No. 41, Exh. 15.11

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F.2d 699, 707 (9th Cir. 1989) (“estoppel will only apply where the

government’s wrongful act will cause a serious injustice, and the

public’s interest will not suffer undue damage by imposition of the

liability.”).

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The Final Order states that “on or about May 5, 2002

through September 2, 2002, Appellants RTD sold parcels 5 through

9 at Greer Ranch ...” PSOF, Exh. 4. The Final Order further

states: “The sales conducted by Appellants RTD were in violation

of subdivision laws....” Id., Exh. 4. Additionally, the Final

Order states: “The sales of parcels 5 through 9 without a

Subdivision Public Report may be rescindable by purchasers

pursuant to A.R.S. § 32-2183(F).” Id., Exh. 4. Plaintiffs were

not given actual notice of the Final Order. 

The Commissioner, Defendant Richardson, sent her Final

Order to the Maricopa County Regional Development Services

Department (“MCRDSD”). Id., Exh. 13. The MCRDSD responded by

letter to Defendant Richardson on August 4, 2004. Id., Exh. 13.

The letter notes the Commissioner’s finding that Greer Ranch

comprised a subdivision. Id., Exh. 13. The letter stated that

no subdivision plat had been approved for Greer Ranch. Id.,

Exh. 13. 

The letter further states: 

In accordance with the Zoning Ordinance for

Unincorporated Maricopa County, “...The

Zoning Inspector shall withhold the issuance

of any and all permits when it appears that

the proposed erection, construction,

reconstruction, alteration, maintenance or

use does not fully conform to any Ordinance,

regulation, or provision enacted or adopted

by the Board of Supervisors... As a result,

beginning immediately, we are suspending the

issuance of building permits for all property

within Greer Ranch until this matter has been

resolved. 

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12 RTD appealed the Superior Court’s judgment to the Arizona

Court of Appeals. PSOF, Exh. 5. RTD dismissed its appeal and entered

into a Consent Order with ADRE on or about May 11, 2006. Id., Exh.

8. The Consent Order “exempted” some Greer Ranch parcels, i.e., the

parcels previously owned by RTD, parcels numbers 1-4, from the

requirements of Arizona Revised Statutes §§ 32-2181 to 32-2185. Id., Exh. 8.

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Id., Exh. 13 (emphasis in original). See also Exh. 9 (Cease and

Desist Order noting building permits could not be issued for

land in violation of the state’s subdivision statutes).

In July of 2004 RTD timely appealed the Final Order to

the Maricopa County Superior Court. PSOF, Exh. 5. Plaintiffs

were not given notice of and were not parties to that Superior

Court action. On June 6, 2005, the Maricopa County Superior

Court entered a judgment affirming the Final Order. Id., Exh.

7.12

On June 21, 2005, Defendant ADRE issued a Cease and

Desist Order regarding the right of property owners to sell

Greer Ranch land. Id., Exh. 9. The Cease and Desist Order was

issued to Plaintiffs and other owners of Greer Ranch parcels.

See id., Exh. 9. The facts stated in the Cease and Desist Order

indicate that some Plaintiffs acted in contravention of

Arizona’s subdivision laws, i.e., that these Plaintiffs split

their property into six parcels and sold the parcels without

compliance with state statutes regarding the sale of subdivided

land. Id., Exh. 9. The Cease and Desist Order notified the

named respondents that they were prohibited from offering their

property for sale “without first complying with applicable laws

and rules.” Id., Exh. 9. The Cease and Desist Order also

requires the respondents to provide notice to persons to whom

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13 The individuals exempted from the Cease and Desist Order as of

October 28, 2005, included Plaintiff Carr Huml Investors, DSE Group,

Bill Schwoerer, Kevin G. Norby LLC, Gale Hart, Phillip Stonich,

Michael Danzer, Sunlore Homes, Terry Abbott, Tom Holder, Mary Langdon,

and Troy Langdon. See PSOF, Exh. 12.

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they had sold Greer Ranch land to notify those persons that the

sales were voidable. Id., Exh. 9.

Plaintiffs appealed the Cease and Desist Order and

requested a hearing. Id., Exh. 10. Prior to the hearing, ADRE

issued a series of releases whereby some Plaintiffs were

released from the Cease and Desist Order. Id., Exh. 12.13 The

unilateral releases stated: 

The parcels remain part of Greer Ranch, which

is a subdivision pursuant to A.R.S. §

32-2181, et seq. and the Commissioner’s Final

Order in RTD Holdings, Inc. [], as recorded

August 4, 2004 in the records of Maricopa

County Recorder at Recording No. 04-094954.

Id., Exh. 12. Because the unilateral releases state that

Plaintiffs’ property is in an illegal subdivision, Maricopa

County cannot lift the moratorium on the issuance of building

permits for Plaintiffs’ property. Id., Exh. 15.

On or about November 4, 2005, after the first suit

consolidated in this action was filed in the Arizona Superior

Court, Plaintiffs’ counsel received a letter from the Maricopa

County Attorney. Id., Exh. 14. The letter stated that some

individuals had been released from the Cease and Desist Order,

and were “now allowed to transfer [] the subject property.”

Id., Exh. 14.

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14 Plaintiffs assert “[s]ome Greer Ranch property owners actually

obtained permits and built their homes before the Summary Suspension

Order was issued. Plaintiffs’ rights were vested at the time they

purchased the property.” Docket No. 40 at 9 n.2, citing Folsom Inv.,

Inc. v. City of Scottsdale, 620 F. Supp. 1372 (D. Ariz. 1985). 

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IV Analysis

Arguments

As amended, the complaint(s) state claims for relief

based on the Fifth Amendment “takings” doctrine and the right to

due process of law, and an equal protection claim, pursuant to

42 U.S.C. § 1983. Plaintiffs contend their right to equal

protection was violated by Defendants because Plaintiffs were

treated differently from others who bought Greer Ranch property

from RTD. Plaintiffs seek a declaratory judgment that all

orders prohibiting them from developing their property are void

ab initio because they were deprived of due process in the

issuance of the orders, which divested Defendants of

jurisdiction over Plaintiffs’ real property rights. The amended

complaint(s) also assert causes of action predicated on state

law theories of inverse condemnation and negligence.

 Plaintiffs assert “the commissioner’s final order is

void for lack of jurisdiction.” Docket No. 32 at 5. Plaintiffs

further contend Defendants violated their right to due process

of law because, they allege, Defendants failed to give

Plaintiffs notice of an action which would affect their vested

property rights, i.e., issuance of the Summary Suspension

Order.14 Plaintiffs argue Defendants’ failure to give Plaintiffs

notice of the action “reclassifying” Plaintiffs’ property “from

Unsubdivided to subdivided lands in proceedings to which

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15 Plaintiffs only, apparently, seek judgment as a matter of law

with regard to their claim that Defendants violated their right to due

process. Plaintiffs assert in their response to Defendants’ motions

that there are material issues of fact in dispute with regard to

Plaintiffs’ Fifth Amendment “takings” claims.

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Plaintiffs were given no notice is of no effect.” Id. at 8. 

Plaintiffs seek an order declaring “that the Final Order and the

Superior Court judgment upholding the Final Order are void,

[and] that ADRE violated Plaintiffs due process rights under

both the United States Constitution and under the Arizona

Constitution and ordering that the Public Report be reinstated

as to Plaintiffs’ land.” Id.15

Defendants argue the State of Arizona must be dismissed

as a party to this matter because it is not a “person” who may

be sued pursuant to section 1983. Defendants assert they are

entitled to judgment as a matter of law in their favor because

Plaintiffs’ due process claim is not ripe for adjudication.

Defendants argue this claim is not ripe because a state statute

gives Maricopa County sole discretion to issue building permits.

See Docket No. 37 at 5. Defendants also contend Plaintiffs do

not have standing to raise their due process claims. Id.

Defendants further assert the Summary Suspension Order issued

January 28, 2004, and recorded February 11, 2004, was not a

“taking” of Plaintiffs’ property in violation of the Fifth

Amendment.

A basic legal dispute between the parties is whether,

as a matter of law, the disclaimer in the Public Report, or the

recording of the Summary Suspension Order, or the recording of

the Final Order, constituted actual or constructive notice to

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these Plaintiffs that their purchase of Greer Ranch property

involved restrictions on the use or development of the property

due to RTD’s failure to comply with Arizona’s subdivision laws.

In their supplemental motion for summary judgment,

Defendants declare:

Defendants [] move for summary judgment

against Plaintiffs Norby, Schwoerer, Hart,

Stamps, Homes, Langdon, G. Lewis Enterprise,

Diamond Head Construction and Terry and

Denise Abbott. These eleven named Plaintiffs

recorded deeds for their parcels after

February 11, 2004, the date when ADRE

recorded the Summary Suspension of the Public

Report. Accordingly, these eleven Plaintiffs

had notice, prior to their acquisition of

property in Greer Ranch, that Greer Ranch was

an illegal subdivision, which bars all of

their claims in this lawsuit.

In their motion for summary judgment, response to

Defendants’ motion for summary judgment, and their motion to

strike Defendants’ supplemental motion for summary judgment,

Plaintiffs assert that, as a matter of law, Plaintiffs did not

have actual or constructive notice of the Summary Suspension

Order or the Final Order:

Defendants’ “Supplemental” Motion does not

explain how the Summary Suspension Order gave

notice of anything when it specifically

stated that it did not apply to Plaintiff.

Since it did not apply to Plaintiff not even

the title companies who were insuring title

to Plaintiffs’ property listed the Summary

Suspension Order on the title commitments.

[]. Thus, even those Plaintiffs who came into

title after the recording of the Summary

Suspension had no notice, constructive or

otherwise, because the Summary Suspension

Order did not apply to them. 

 Even if the Summary Suspension Order had

been directed to Plaintiffs, the mere

recording of the Summary Suspension Order was

insufficient to put Plaintiffs on notice. As

Plaintiffs argued [,] ADRE was required to

give Plaintiffs actual notice and an

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opportunity to be heard. The recording of a

Summary Suspension Order gave no actual

notice. When notice is required to be given

in a particular manner, any means other than

that prescribed is ineffective. “This is so

even though the intended recipient of the

notice does in fact acquire the knowledge

contemplated by the law.” Hart v. Bayless

Investment and Trading, Co., 86 Ariz. 379 at

388, 346 P.2d 1101 at 1108 (1960).

Docket No. 53 at 3-4.

Plaintiffs’ motion to strike

Granting or denying the motion to strike is a matter

committed to the Court’s discretion. See Herring v. Delta Air

Lines, Inc., 894 F.2d 1020, 1021 (9th Cir. 1990); Castello v.

Martin, 197 Fed. App. 14, 17 (1st Cir. 2006). A motion to

strike is properly denied if that decision does not result in

prejudice to the moving party. See, e.g., Ramsdell v. Bowles,

64 F.3d 5, 8 (1st Cir. 1995); Voice Capture, Inc. v. Intel

Corp., 354 F. Supp. 2d 997, 1008 (S.D. Iowa 2004).

Defendants’ supplemental motion for summary judgment

seeks judgment as a matter of law with regard to all of the

claims alleged by Plaintiffs Norby, Schwoerer, Hart, Stamps,

Homes, Langdon, G. Lewis Enterprise, Diamond Head Construction

and Terry and Denise Abbott. Defendants assert that, because

these eleven Plaintiffs recorded deeds for their parcels of

Greer Ranch property after February 11, 2004, the date on which

ADRE recorded the Summary Suspension of the Public Report, these

Plaintiffs’ claims are barred because they had notice, prior to

their acquisition of property in Greer Ranch, that Greer Ranch

was an illegal subdivision. 

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16 The State of Arizona waived sovereign immunity from suit

regarding Plaintiff’s state-law based claims by removing the matter

to federal court. See Lapides v. Board of Regents, 535 U.S. 613, 617,

122 S. Ct. 1640, 1643 (2002); Bank of Lake Tahoe v. Bank of Am., 318

F.3d 914, 917 (9th Cir. 2003). However, the designation of a proper

section 1983 defendant is statutory and does not arise from the

Eleventh Amendment, accordingly, the state could not waive

jurisdiction over Plaintiffs’ federal constitutional claims. See, e.g., Gean v. Hattaway, 330 F.3d 758, 766 (6th Cir. 2003). 

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Plaintiffs argue the supplemental motion for summary

judgment is barred, inter alia, because it is not authorized by

Rule 7.2, Local Rules of Civil Procedure for the United States

District Court for the District of Arizona. Because Plaintiffs

do not contest the facts asserted, but only the legal argument

raised by Defendants, and because the Court’s decision

predicated on the facts and argument presented in the

supplemental pleadings is cumulative to the denial of relief to

all Plaintiffs, the Court will deny the motion to strike. See

Pickens v. Collection Servs. of Athens, Inc., 165 F. Supp. 2d

1376, 1379 (M.D. Ga. 2001).

Persons who may be sued pursuant to section 1983

To state a section 1983 claim, the plaintiff must

allege facts establishing that a “person,” acting under color of

state law, deprived the plaintiff of a right, privilege, or

immunity secured by the United States Constitution. See, e.g.,

Karim-Panahi v. Los Angeles Police Dep’t, 839 F.2d 621, 624 (9th

Cir. 1988). The State of Arizona is not a “person” who may be

sued pursuant to section 1983 and, therefore, the State of

Arizona must be dismissed as a defendant and any section 1983

claim alleged solely against the State of Arizona must be

dismissed.16 

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State officials acting in their official capacities are

not “persons” who may be sued for monetary damages pursuant to

section 1983. See, e.g., Will v. Michigan Dep’t of State

Police, 491 U.S. 58, 68-69, 109 S. Ct. 2304, 2312 (1989); Sable

Commc’ns v. Pacific Tel. & Tel., 890 F.2d 184, 191 (9th Cir.

1989). Accordingly, Defendant Richardson, sued in her official

capacity, may not be sued for monetary damages pursuant to

section 1983. Additionally, state agencies, such as the Arizona

Department of Real Estate, which act as an arm of the state, are

not “persons” who may be sued for monetary damages pursuant to

section 1983. See Maldonado v. Harris, 370 F.3d 945, 951 (9th

Cir. 2004); Hartman v. Kickapoo Tribe Gaming Comm’n, 319 F.3d

1230, 1234 (10th Cir. 2003). 

Plaintiffs have not named a defendant who may be sued

for monetary damages pursuant to section 1983. Defendant

Richardson and Defendant ADRE are entitled to judgment as a

matter of law with regard to Plaintiffs’ section 1983 claims

against them for monetary damages, and the State of Arizona is

entitled to judgment as a matter of law with regard to

Plaintiffs’ section 1983 claims. Accordingly, even if

Plaintiffs were entitled to relief on their section 1983 claims,

the only relief Plaintiffs would be entitled to from the named

Defendants would be declaratory relief against Defendant

Richardson and Defendant ADRE.

Equal Protection

The Equal Protection Clause of the Fourteenth Amendment

prohibits the discriminatory application of the law. In order

to determine whether a regulatory classification violates the

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Equal Protection Clause, the Court must first consider whether

the classification is based on a suspect class or implicates

fundamental rights. See Nordlinger v. Hahn, 505 U.S. 1, 10, 112

S. Ct. 2326, 2331-32 (1992); Patel v. Penman, 103 F.3d 868, 875

(9th Cir. 1996). If the classification is based on a suspect

class or implicates fundamental rights, the classification is

evaluated under a heightened standard. Nordlinger, 505 U.S. at

10, 112 S. Ct. at 2331-32. If the classification is not based

on a suspect class and does not implicate fundamental rights, it

is evaluated under the “rational basis” standard, i.e., the

plaintiffs prevail only if they establish the challenged

decision or classification is not rationally related to a

legitimate state interest. Patel, 103 F.3d at 875.

Purchasers of undeveloped land are not a suspect

classification and there is no fundamental right to build on,

sell, or subdivide real property absent compliance with

government restrictions. Cf. Hager v. City of West Peoria, 84

F.3d 865, 872 (7th Cir. 1996) (“Access to real property does not

rise to the level of a fundamental right such that its denial

merits heightened scrutiny.”). Plaintiffs’ purchase of real

property did not confer a protectable federal constitutional

right to freeze the “existing” zoning or to use the property as

they believed the law allowed at the time of purchase. Cf.

Lakeview Dev. Corp. v. City of S. Lake Tahoe, 915 F.2d 1290,

1295 (9th Cir. 1990) (stating in the context of a due process

claim that: “There is, of course, no federal Constitutional

right to be free from changes in the land use laws.”).

Therefore, rational basis review applies to Plaintiffs’ equal

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protection claims.

Under rational basis review, the Equal Protection

Clause is satisfied if: (1) there is a plausible policy reason

for the challenged classification; (2) the facts on which the

classification is based could rationally have been considered to

be true by the governmental decisionmaker; and (3) the

relationship of the classification to the legitimate goal is not

so attenuated as to render the distinction arbitrary or

irrational. See Nordlinger, 505 U.S. at 11, 112 S. Ct. at 2332,

quoted in Tutor-Saliba Corp. v. City of Hailey, 452 F.3d 1055,

1061-62 (9th Cir. 2006). 

To succeed on their equal protection claim, Plaintiffs

would have to present evidence sufficient for a jury to find not

only that the ADRE’s treatment of their property rights was

different from its treatment of other property owners, but also

that the ADRE’s actions were irrational and wholly arbitrary.

See Gamble v. City of Escondido, 104 F.3d 300, 307 (9th Cir.

1997) (“Rational basis scrutiny also is appropriate for [the

plaintiff’s] due process claim”), citing Munoz v. Sullivan, 930

F.2d 1400, 1404 n.10 (9th Cir. 1991). “[T]he rational basis test

is identical under the two rubrics [of equal protection and due

process]....”); Lockary v. Kayfetz, 917 F.2d 1150, 1155-56 (9th

Cir. 1990) (“Scrutiny under equal protection analysis is

essentially equivalent to scrutiny under due process doctrine

... the rational relation test will not sustain conduct by state

officials that is malicious, irrational or plainly arbitrary”).

Arizona’s subdivision laws are intended to protect the

public health, safety, and welfare, by ensuring residents are

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afforded adequate streets, utilities, drainage, and other public

services. See, e.g., Siler v. Arizona Dep’t of Real Estate, 193

Ariz. 374, 378, 972 P.2d 1010, 1014 (Ct. App. 1999); Alaface v.

National Inv. Co., 181 Ariz. 586, 596-97, 892 P.2d 1375, 1385-

86 (Ct. App. 1994). Because of widespread problems with

“wildcat” subdivisions in the state of Arizona, state statutes

afford the Commissioner of the Department of Real Estate the

discretion to act against illegal subdivisions retroactively,

i.e., to order property owners to do what they “would have had

to do if, at the outset, the group had sought permission and

legally subdivided the area.” Siler, 193 Ariz. at 379, 892 P.2d

at 1015. 

Arizona Revised Statutes § 32-2195.03(B)(6) authorizes

the ADRE to suspend a public report at any time, even years

after the issuance of the public report, if there is

noncompliance with state subdivision laws by the property owner

who submitted the report:

Before or after the commissioner issues a

certificate of administrative completeness,

the department may examine any public report,

development or applicant that has applied for

or received the certificate. If the

commissioner determines that the owner or

development is not in compliance with any

requirement of state law or that grounds

exist under this chapter to suspend, deny or

revoke a public report, the commissioner may

commence an administrative action....

Plaintiffs have not presented any evidence of any

“improper or unlawful” handling of their building permits or

applications. See Valley Outdoor, Inc. v. City of Riverside,

446 F.3d 948, 955 (9th Cir. 2006). Plaintiffs have not

presented evidence that ADRE’s application of Arizona’s

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17 In Village of Willowbrook v. Olech, 528 U.S. 562, 565, 120 S.

Ct. 1073, 1075 (2000), the Supreme Court affirmed the Court of

Appeals’ decision reinstating a complaint wherein the plaintiff

alleged the municipality’s requirement of an easement twice as large

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subdivision laws to their property was improper or unlawful.

Id. Plaintiffs have not established that Defendant Richardson

or Defendant ADRE violated their rights to equal protection by

arbitrarily, maliciously, or dishonestly classifying the legal

status of their real property, when to allow further development

of the subject property absent further process would violate

state statutes. Compare Village of Willowbrook v. Olech, 528

U.S. 562, 564, 120 S. Ct. 1073, 1074-75 (2000) (holding that

even a “class of one” may assert an equal protection claim under

such circumstances); Lockary, 917 F.2d at 1155-56; Esmail v.

Macrane, 53 F.3d 176, 180 (7th Cir. 1995) (holding that the

government may not engage in “a spiteful effort to ‘get’ [an

individual] for reasons wholly unrelated to any legitimate state

objective”). 

Plaintiffs do not present evidence establishing that

any action or non-action by Defendant ADRE or Defendant

Richardson was predicated on “... its adverse effects upon [the]

identifiable group.” Wayte v. United States, 470 U.S. 598, 610,

105 S. Ct. 1524, 1532 (1985). Plaintiffs present no evidence

the Final Order or Summary Suspension Order were intended to

discriminate against them as a discrete class. See Village of

Willowbrook, 528 U.S. at 564, 120 S. Ct. at 1074-75 (recognizing

an equal protection violation where a municipal ordinance was

targeted at a single individual because the governmental action

was arbitrary and irrational).17

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as other property owners was wholly arbitrary. The Supreme Court did

not reach the issue of whether the plaintiff was required to allege

the municipality’s subjective malicious motivation to state a claim

for relief. 

-25-

Defendants have established there is a plausible policy

reason for the challenged classification and Plaintiffs do not

assert the facts on which the challenged classifications are

based could not rationally have been considered to be true by

Defendants. The relationship of the classification to the

legitimate goal is not so attenuated as to render the

distinction arbitrary or irrational. Defendants have provided

sufficient evidence of distinguishing characteristics of

Plaintiffs’ situation, i.e., that Plaintiffs were not the

original subdivider of the property, that Plaintiffs had not

submitted the revocable Public Report, that Plaintiffs were not

parties to the judicial proceedings regarding the Public Report

resulting in the Consent Order, to survive rational-basis review

of Defendants’ decisions regarding the challenged classification

of Plaintiffs’ property rights. See Hotel & Motel Ass’n of

Oakland v. City of Oakland, 344 F.3d 959, 971 (9th Cir. 2003)

(“Under rational-basis review, where a group possesses

distinguishing characteristics relevant to interests the State

has the authority to implement, a State’s decision to act on the

basis of those differences does not give rise to a

constitutional violation.”), quoted in Equity Lifestyle Prop.,

Inc. v. County of San Luis Obispo, 505 F.3d 860, 871-72 (9th

Cir. 2007).

Because, taking the facts in the light most beneficial

to Plaintiffs, their constitutional rights to equal protection

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of the law were not violated by any action of Defendants,

Defendants are entitled to judgment as a matter of law with

regard to Plaintiffs’ equal protection claim.

Substantive due process

The Due Process Clause of the Fourteenth Amendment

prohibits the deprivation “of life, liberty, or property,

without due process of law.” U.S. Const., amend. XIV, § 1.

Plaintiffs allege they were deprived of their real property

without due process of law, arguing they were not provided

notice of the Summary Suspension Order and were not parties to

the state court litigation resulting in the Consent Order.

Plaintiffs also assert a regulatory “takings” claim. 

Plaintiffs may not, arguably, proceed on a claim

predicated on their right to substantive due process when the

claim is properly a Fifth Amendment takings claim. Pursuant to

federal law, the same government activity may not provide a

basis for both a substantive due process claim, i.e., a claim

that the plaintiffs were deprived of their Fourteenth Amendment

right to not be deprived of property without due process of law,

and a regulatory takings claim, i.e., that the government “took”

their property for a public purpose by means of a regulation

without just compensation. See Madison v. Graham, 316 F.3d

867, 869-70 (9th Cir. 2002) (comparing the “private” takings

rule of Armendariz to a public takings claim); Buckles v. King

County, 191 F.3d 1127, 1137 (9th Cir. 1999)(“a plaintiff is

precluded from asserting a substantive due process claim instead

of, or in addition to, a takings claim”); Macri v. King County,

126 F.3d 1125, 1128-29 (9th Cir. 1997); Armendariz, 75 F.3d at

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18 The holding in Armendariz “has been undermined to the limited

extent that a [substantive due process] claim for wholly illegitimate

land use regulation is not foreclosed.” Crown Point Dev., Inc. v.

City of Sun Valley, ___ F.3d ___, 2007 WL 3197049, at *1 (9th Cir.).

In Crown Point, the Ninth Circuit concluded a developer could proceed

on a substantive due process claim based on a municipality’s allegedly

arbitrary and irrational denial of a permit application because it was

possible the plaintiff could establish the municipality’s action did

not substantially advance legitimate interests. Plaintiffs in this

matter do not assert that Defendants’ actions in enforcing Arizona’s

subdivision statutes did not substantially advance a legitimate state

interest, removing this matter from the rubric of the holding in Crown

Point. See also Action Apartment Ass’n, Inc. v. Santa Monica Rent

Control Bd., ___ F.3d ___, 2007 WL 4225774, at *4 (9th Cir.) (noting

Crown Point concluded that “the Fifth Amendment does not invariably

preempt a claim that land use action lacks any substantial relation

to the public health, safety, or general welfare”). Additionally, the

Court’s conclusion in the instant matter is not affected by these

recent holdings because, as discussed infra, Plaintiffs do not have

a constitutionally-protectible property right to develop their

property in contravention of Arizona’s subdivision laws, a necessary

element of a substantive due process claim. 

19 Compare Dodd v. Hood River County, 59 F.3d 852, 864 (9th Cir.

1995), wherein the Ninth Circuit Court of Appeals analyzed the

plaintiffs’ claim predicated on the defendant’s change in the zoning

of their property:

To establish a violation of their right to substantive due

process, the [plaintiffs] must prove that the County’s

actions were “clearly arbitrary and unreasonable, having no

substantial relation to the public health, safety, morals,

or general welfare.” [] A substantive due process claim

requires proof that the interference with property rights

was irrational and arbitrary. []. Federal judicial

interference with a local government zoning decision is

proper only where the government body could have no

legitimate reason for its decision. [] There is no denial

of substantive due process if the question as to whether

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1324.18 Because the Takings Clause “provides an explicit textual

source of constitutional protection” against the challenged

action, the Fifth Amendment and “not the more generalized notion

of ‘substantive due process,’ must be the guide” in reviewing

Plaintiffs’ claims. Graham v. Connor, 490 U.S. 386, 395, 109 S.

Ct. 1865, 1871 (1989). See also Equity Lifestyle Properties,

Inc., 505 F.3d at 870 n.16; Rumber v. District of Columbia, 487

F.3d 941, 944 (D.C. Cir. 2007).19

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the government acted arbitrarily or capriciously is “at

least debatable.” Clover Leaf Creamery Co., 449 U.S. at

469, 101 S. Ct. at 724.

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The [] claim of “taking of property without

due process” potentially fits well within

this theory. The [] case has never been about

compensation but rather has concerned

“invalidation of the regulation” imposed by

the City... Yet, the Supreme Court has left

undecided three times the issue of whether

the Constitution supports such a theory. []

And Supreme Court authority subsequent to

Williamson County strongly stresses that

substantive due process concepts are not

available to provide relief when another

provision of the Constitution directly

addresses the type of illegal government

conduct alleged by the plaintiff. ...

Warren v. City of Athens, 411 F.3d 697, 706-07 (6th Cir. 2005)

(emphasis added) (allowing, however, that “a substantive due

process violation occurs when arbitrary and capricious

government action deprives an individual of a constitutionally

protected property interest.”).

Even if Plaintiffs did not assert Fifth Amendment

claims, any independent substantive due process claim must fail

on the merits. To establish a substantive due process

violation, the plaintiffs must produce evidence there was an

abuse of governmental power depriving the plaintiffs of a

protected property interest which “shocks the conscience.” See,

e.g., United Artists Theatre Circuit, Inc. v. Township of

Warrington, 316 F.3d 392, 401 (3rd Cir. 2003) (holding that in

the land-use context, substantive due process is violated only

when government action “shocks the conscience”). Assuming,

arguendo, that Plaintiffs had a protectible property right,

Plaintiffs do not assert the deprivation of that interest

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resulted from an abuse of governmental power of sufficient

degree to be deemed a constitutional violation. See Greenbriar,

Ltd. v. City of Alabaster, 881 F.2d 1570, 1577 (11th Cir. 1989).

The federal courts have consistently concluded that a

landowner’s substantive due process and equal protection rights

are not violated even when a municipality acts in violation of

state or local law, in bad faith, or beyond its jurisdiction.

See Chesterfield Dev. Corp. v. City of Chesterfield, 963 F.2d

1102, 1104 (8th Cir. 1991); PFZ Props., Inc. v. Rodriguez, 928

F.2d 28, 32 (1st Cir. 1991); Coniston Corp. v. Village of

Hoffman Estates, 844 F.2d 461, 467 (7th Cir. 1988) (“Something

more is necessary than dissatisfaction with the rejection of a

site plan to turn a zoning case into a federal case; and it

should go without saying that the something more cannot be

merely a violation of state (or local) law.”).

Procedural due process

Plaintiffs contend they were deprived of their right to

notice and an opportunity to be heard prior to the governmental

decisions issued with regard to Greer Ranch and the prohibition

of the development thereof, because they were not given notice

of the Summary Suspension Order or the Consent Order.

Plaintiffs’ procedural due process claim is also one that is,

arguably, subsumed in their Fifth Amendment “takings” claim.

The Circuit Courts of Appeal have concluded that a “distinct”

body of due process doctrine controls the government’s taking of

private property. See Presley v. City Of Charlottesville, 464

F.3d 480, 489-90 (4th Cir. 2006) (holding that “in the takings

context, the Due Process Clause only entitles property owners to

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adequate notice prior to a judicial condemnation or

just-compensation proceeding.”).

To be sure, Count III alleges violation of

the Fifth Amendment Takings Clause, not

violation of the Fourteenth Amendment Due

Process Clause-the focus of the federal

complaint. Nevertheless, we repeatedly have

held that two actions are “parallel” where

the underlying issues are the same, even if

they have been “repackag[ed] ... under

different causes of action.” Clark, 376 F.3d

at 687. In this case, [the plaintiff’s]

claims in the federal and state actions are

inextricably interlinked: Government action

effecting a taking is only valid if the

plaintiff is compensated justly and is

afforded due process of law.... 

Tyrer v. City of South Beloit, Ill., 456 F.3d 744, 753-54 (7th

Cir. 2006).

To establish a violation of their right to procedural

due process a plaintiff must establish the deprivation of a

constitutionally protected liberty or property interest and a

denial of adequate procedural protections supporting the

deprivation. See Tutor-Saliba Corp., 452 F.3d at 1061; Foss v.

National Marine Fisheries Serv., 161 F.3d 584, 588 (9th Cir.

1998); Brewster v. Board of Educ. of Lynwood Unified Sch. Dist.,

149 F.3d 971, 982 (9th Cir. 1998). When considering a

procedural due process challenge to a government decision, the

Court must first decide whether the challenged decision “was the

type of government action to which due process applies.” Harris

v. County of Riverside, 904 F.2d 497, 501 (9th Cir. 1990). If

the challenged decision warrants scrutiny, the Court must then

decide whether the government’s decision deprived the plaintiffs

of a protected interest without adequate process. Id.

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Property interests protectable by section 1983 are not

created by the United States Constitution, but instead “by

existing rules or understandings that stem from an independent

source such as state law ....” Board of Regents v. Roth, 408

U.S. 564, 577, 92 S. Ct. 2701, 2709 (1972). See also Green v.

Babbitt, 64 F.3d 1266, 1272 (9th Cir. 1995). To have a property

interest in a government benefit, such as a building permit or

an exclusion from subdivision laws, “a person clearly must have

more than an abstract need or desire for it. He must have more

than a unilateral expectation of it. He must, instead, have a

legitimate claim of entitlement to it.” Board of Regents, 408

U.S. at 577, 92 S. Ct. at 2709. The “mere fact a person has

received a government benefit in the past, even for a

considerable length of time, does not, without more, rise to the

level of a legitimate claim of entitlement.” Doran v. Houle,

721 F.2d 1182, 1186 (9th Cir. 1983).

Even assuming a landowner possesses an abstract “right”

to build a dwelling on their real property, as stated supra,

owners of real property do not necessarily have an unconditional

right, protected by the takings or deprivation clauses of the

Constitution, to build any particular project they choose or to

receive an exemption from state statutes enacted for the public

welfare. See Lakeview Dev. Corp., 915 F.2d at 1294-95.

Permitting requirements are not per se constitutionally

“illegitimate” if they disallow a previously permitted use of

real property, because there is no federal constitutional right

to be free from changes in state or local land use laws. See,

e.g., id.; Haas v. City & County of San Francisco, 605 F.2d

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20 Plaintiffs assert they acquired a “vested” right to develop

their property at the time they purchased their Greer Ranch parcels

from RTD. Pursuant to Arizona law, to acquire a vested right to a

permit authorizing the commencement of a particular land 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’l Title Ins. Co. v. Pima

County, 831 P.2d 426, 429 (Ariz. Ct. App. 1992). See also Carpinteria

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

Cir. 2003); Emmett McLoughlin Realty, Inc. v. Pima County, 58 P.3d 39,

43 (Ariz. Ct. App. 2002). However, the issue is not relevant to a

section 1983 claim with regard to whether Plaintiffs had a property

right protected by the United States Constitution:

In contrast to a taking or deprivation claim, the gravamen

of a “vested rights” claim is that the landowner has a

right to a particular use of his land because he has relied

to his detriment on a formal government promise (in the

form of a permit) stating that he can develop that use. The

claim is thus a species of governmental estoppel. [] A

claim of estoppel against the government rests not on

Constitutional norms of fairness but on broader norms of

equity. []. Since no federal constitutional or statutory

law requires the states to recognize any doctrine of

governmental estoppel, let alone a doctrine with the

particular contours that Lakeview urges us to recognize, we

must reject Lakeview’s suggestion that federal law governs

the issue of vested rights.

Lakeview Dev. Corp. v. City of S. Lake Tahoe, 915 F.2d 1290, 1295 (9th

Cir. 1990) (interpreting California law) (internal citations omitted).

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1117, 1120 (9th Cir. 1979); Traweek v. City & County of San

Francisco, 659 F. Supp. 1012, 1026 (N.D. Cal. 1984)

(“[P]laintiffs bought into a heavily regulated situation and

were on notice that ... [t]heir purchase of property ... was

therefore necessarily ‘subject to further legislation upon the

same topic.’”).20 Accordingly, a section 1983 claim may not be

premised solely on the fact that a state “person” repealed a law

or revoked a once-valid permit. Lakeview Dev. Corp., 915 F.2d

at 1295. See also Thornton v. City of St. Helens, 425 F.3d

1158, 1164 (9th Cir. 2005).

Plaintiffs never had a “right” to build on or subdivide

their property in violation of state statutes, which was

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somehow rescinded by Defendants. Accordingly, because

Plaintiffs do not, as a matter of law, have a constitutionallyprotected property interest in the classification of their land

pursuant to Arizona’s subdivision laws, Plaintiffs’ rights to

procedural due process have not been violated. See Stone v.

Godbehere, 894 F.2d 1131, 1134 (9th Cir. 1990) (concluding that

the purpose of due process is to prevent erroneous deprivation

of property rights, stating: “The deciding factor justifying the

lack of traditional procedural protections in this case is that

the risk of erroneous deprivation is minimal or nonexistent.”).

The case presents three classes of Plaintiffs:

Plaintiffs who purchased their property after the issuance of

the Public Report and prior to the recording of the Summary

Suspension Order, Plaintiffs who purchased property after the

recording of the Summary Suspension Order and prior to the

recording of the Final Order, and Plaintiffs who purchased

property after the recording of the Final Order.

The Court concludes that, pursuant to Arizona law, the

first class of Plaintiffs had constructive knowledge of the

potential restrictions on their land by means of the Disclaimer

in the Public Report, which put these Plaintiffs on notice that

further investigation of the status of the property might be

required, and which rendered any reliance on the Public Report

unreasonable. The Disclaimer in the Public Report required

Plaintiffs to inquire further before purchasing their property.

See Luke v. Smith, 13 Ariz. 155, 162, 108 P. 494, 496 (1910)

(“Where one has notice of a fact affecting property which he

seeks to purchase, which puts him upon inquiry, he is chargeable

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21

Constructive notice includes both information available

through recorded documents and knowledge of facts that

impose a duty to inquire. []. Further, [n]otice of facts

and circumstances which would put a man of ordinary

prudence and intelligence on inquiry is ... equivalent to

knowledge of all of the facts a reasonably diligent inquiry

would disclose.[]

(internal citations and quotations omitted)

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with knowledge which the inquiry, if made, would have revealed;

and one is put upon inquiry by notice of a claim which is

inconsistent with the title he seeks to obtain, and must

exercise due diligence to ascertain the facts upon which the

claim is based.”). 

The Court further concludes that, pursuant to Arizona

law, Plaintiffs who purchased their property after February 11,

2004, the date the Summary Suspension Order was recorded, had

this additional constructive notice of the existence of

restrictions on Greer Ranch property, in addition to the

Disclaimer. See Hall v. World Sav. & Loan Ass’n, 189 Ariz. 495,

500-01, 943 P.2d 855, 860-61 (Ct. App. 1997).21 And with regard

to the last class of Plaintiffs, the recording of the Final

Order provided a further piece of constructive notice of the

problems with Greer Ranch property to the five Plaintiffs who

purchased property subsequent to August 4, 2004, the date the

Final Order was recorded. These Plaintiffs had constructive

notice by means of the Disclaimer, and the recording of the

Summary Suspension Order, and by the recording of the Final

Order. See Mountain States Tel. & Tel. Co. v. Kelton, 79 Ariz.

126, 133, 285 P.2d 168, 172 (1955) (holding recordation provides

notice to those who are bound by law to search for it); Bailey

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v. Kuida, 69 Ariz. 357, 362, 213 P.2d 895, 898 (1950); Carley v.

Lee, 58 Ariz. 268, 273, 119 P.2d 236, 239 (1941); HSL Linda

Gardens Props., Ltd. v. Freeman, 176 Ariz. 206, 207, 859 P.2d

1339, 1340 (Ct. App. 1993). See also In re Bisbee, 157 Ariz.

31, 35, 754 P.2d 1135, 1139 (1988).

Furthermore, all of the Plaintiffs received actual

notice and an opportunity to be heard with regard to the Cease

and Desist order. See Federoff v. Pioneer Title & Trust Co. of

Ariz., 166 Ariz. 383, 387-88, 803 P.2d 104, 108-09 (1990).

Fifth Amendment “takings” claim

The Fifth Amendment to the United States Constitution

provides, in pertinent part: “nor shall private property be

taken for public use, without just compensation.” U.S. Const.

amend. V, cl. 4. This clause prohibits the government “from

forcing some people alone to bear public burdens which, in all

fairness and justice, should be borne by the public as a whole.”

Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 123,

98 S. Ct. 2646, 2659 (1978); Maritrans Inc. v. United States,

342 F.3d 1344, 1351 (Fed. Cir. 2003). A takings claim may be

predicated on a regulation which restricts the landowner’s use

of his property.

Regulatory takings claims are classified as categorical

and non-categorical claims. See, e.g., Hotel & Motel Ass’n of

Oakland, 344 F.3d at 965. A categorical taking occurs when “all

economically viable use, i.e., all economic value, has been

taken by the regulatory imposition.” Rith Energy, Inc. v.

United States, 247 F.3d 1355, 1362 (Fed. Cir. 2001) (citation

omitted). Conversely, a non-categorical taking is one “that is

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22 In that case, the Ninth Circuit Court of Appeals concluded,

inter alia, that a facial takings claim challenging city ordinances

placing maintenance and habitability restrictions on commercial

properties was not ripe. The Ninth Circuit also held that the

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the consequence of a regulatory imposition that prohibits or

restricts only some of the uses that would otherwise be

available to the property owner, but leaves the owner with

substantial viable economic use.” Id. (citation omitted). 

Because Plaintiffs have not been deprived of all

economic value with regard to their property, and because the

challenged actions were taken in pursuit of legitimate state

interests, Plaintiffs’ claims are properly classified as a noncategorical taking. See Lingle v. Chevron U.S.A., Inc., 544

U.S. 528, 537, 125 S. Ct. 2074, 2081 (2005) (holding that

compensation is due for a categorical taking only if the

plaintiff can establish that the regulation eliminated all

economically viable use of the property and that “background

principles of nuisance and property law” did not independently

restrict the plaintiff’s intended use of the property), quoting

Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015,

112 S. Ct. 2886, 2893 (1992); Air Pegasus of D.C., Inc. v.

United States, 424 F.3d 1206, 1213 n.3 (Fed. Cir. 2005). See

also Dolan v. City of Tigard, 512 U.S. 374, 385, 114 S. Ct.

2309, 2316 (1994); Agins v. City of Tiburon, 447 U.S. 255, 260,

100 S. Ct. 2138, 2141 (1980). 

Plaintiffs contend a taking has occurred because the

value or usefulness of their property was diminished by a

regulatory action, citing Hotel & Motel Association v. City of

Oakland, 344 F.3d 959, 965 (9th Cir. 2003).22 To the extent that

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challenged city ordinance substantially advanced a legitimate state

interest, and thus was not a takings and that the city was not

required to provide the property owners’ association with

individualized notice or a hearing prior to enactment of the

ordinances. 

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Plaintiffs seek monetary damages for the alleged violation of

their Fifth Amendment rights, the federal courts, including the

United States Supreme Court, have concluded that a Fifth

Amendment takings claim seeking monetary damages is not “ripe”

until the plaintiffs have exhausted available state remedies

with regard to claiming compensation for any loss of property

value. See, e.g., Washington Legal Found. v. Legal Found. of

Wash., 271 F.3d 835, 871 (9th Cir. 2001); Dodd v. Hood River

County, 59 F.3d 852, 859 (9th Cir. 1995) (holding the federal

courts lack jurisdiction to consider an as-applied regulatory

taking claim until a determination is reached that “just

compensation” has been denied by the state).

The United States Supreme Court held in Williamson

County Regional Planning Commission v. Hamilton Bank of Johnson

City, that a federal takings claim is not ripe for adjudication

if the plaintiff landowner had “not yet obtained a final

decision” from the relevant state regulatory agency regarding

any devaluation or loss of the use of their property. 473 U.S.

172, 186-87, 105 S. Ct. 3108, 3116-17 (1985). The Williamson

court held the plaintiff’s takings claim was not ripe because

the plaintiff had not used “the available state procedure for

obtaining just compensation.” Id., 473 U.S. at 186, 105 S. Ct.

at 3116. See also River City Capital, L.P. v. Board of County

Comm’rs, Clermont County, Oh., 491 F.3d 301, 306-07 (6th Cir.

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2007); McNamara v. City of Rittman, 473 F.3d 633, 638 (6th Cir.

2007); Macri, 126 F.3d at 1129 (“It is axiomatic that a takings

violation is not complete until the plaintiff has sought

compensation through state remedies and been denied...”). 

Arizona does have an inverse condemnation procedure,

which Plaintiffs do not allege is unavailable or inadequate, nor

do Plaintiffs contend the procedure would be futile, as

evidenced by the fact that these cases originated in state court

as inverse condemnation actions. See Washington Legal

Foundation, 271 F.3d at 872. See also Ariz. Const. art. 2, §

17; Wonders v. Pima County, 207 Ariz. 576, 580, 89 P.3d 810, 814

(2004). Accordingly, to the extent Plaintiffs seek monetary

damages based on a regulatory non-categorical takings claim,

Plaintiffs’ claims are not ripe and must be dismissed without

prejudice.

To the extent that Plaintiffs seek declaratory judgment

for the alleged violation of their Fifth Amendment rights the

claim, arguably, is ripe for adjudication. See Suitum v. Tahoe

Reg’l Planning Agency, 520 U.S. 725, 736 n.10, 117 S. Ct. 1659,

1666 n.10 (1997); Yee v. City of Escondido, 503 U.S. 519,

533-34, 112 S. Ct. 1522, 1531-32 (1992) (concluding that,

although Williamson precludes unripe claims for just

compensation, it does not exclude from federal court a claim for

declaratory and injunctive relief to establish that a state law,

on its face, violates the Fifth Amendment). However, Plaintiffs

are not entitled to injunctive relief based on an as-applied

non-categorical regulatory takings claim; the only remedy

available to plaintiffs in such a section 1983 suit is “just

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compensation,” i.e., damages. See Madison, 316 F.3d at 871.

Because Plaintiffs have not named a “person” subject to a

section 1983 monetary damages judgment as a defendant in this

matter, Plaintiffs’ takings claim as against the Defendants

named in their complaint(s) must be dismissed.

Furthermore, Defendants are entitled to judgment as a

matter of law with regard to Plaintiffs’ takings claim. See

Lucas, 505 U.S. at 1022-24, 112 S. Ct. at 2896-97 (“[T]he

Takings Clause does not require compensation when an owner is

barred from putting land to a use that is proscribed by [ ]

existing rules or understandings.”). Determining whether an

actionable non-categorical taking has occurred involves the

fact-based inquiry stated in Penn Central, i.e., an inquiry into

(1) the character of the governmental action; (2) the economic

impact of the action on the plaintiff; and (3) the effects of

the governmental action on the reasonable investment-backed

expectations of the plaintiff. See, e.g., Lingle, 544 U.S. at

537, 125 S. Ct. at 2081; Penn Cent. Transp. Co., 438 U.S. at

124, 98 S. Ct. at 2659; American Pelagic Fishing Co., LP v.

United States, 379 F.3d 1363, 1372 (Fed. Cir. 2004); Maritrans,

342 F.3d at 1351. 

As stated supra, the character of the challenged

government action was enforcing compliance with Arizona’s public

land laws providing for the safety and welfare of citizens.

Although the economic impact of the action on Plaintiffs is

presumably substantial, it is temporary as Plaintiffs can bring

their property into compliance with the subdivision laws, likely

resulting in a tremendous increase in the value of their

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property. Additionally, although the Plaintiffs had investmentbacked expectations with regard to their property, any

expectation of being allowed to proceed with the sale or

development of their property in derogation of subdivision laws

would not be reasonable. 

Plaintiffs cannot prove Defendant Richardson or the

ADRE denied a plat application, property sale, or building

permit, without advancing a legitimate state interest or under

circumstances denying Plaintiffs of any economically viable use

of their property. See, e.g., Macri, 126 F.3d at 1129. A

government decision diminishing the value of private property

does not constitute a taking requiring compensation if, despite

the regulation, a reasonable use of the regulated property still

exists. See Silveira v. Lockyer, 312 F.3d 1052, 1092 (9th Cir.

2002). Additionally, the right to build on, sell, or develop

their property absent compliance with Arizona’s laws was never

a “stick” in the “bundle” of property rights possessed by

Plaintiffs and, accordingly, they were not deprived of any

legitimate “right” by the Defendants. See Boise Cascade Corp.

v. United States, 296 F.3d 1339, 1343 (Fed. Cir. 2002) (“First,

a court determines whether the plaintiff possesses a valid

interest in the property affected by the governmental action,

i.e., whether the plaintiff possessed a ‘stick in the bundle of

property rights.’” (internal citation omitted)); M & J Coal Co.

v. United States, 30 Fed. Cl. 360, 367 (Fed. Cl. 1994)

(“Interests that are not sufficiently bound up with the

reasonable expectations of the claimant are not ‘sticks’ in the

claimant’s ‘bundle of rights’ and thus do not constitute

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property for Fifth Amendment purposes.”). “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.” United States v. Riverside

Bayview Homes, Inc., 474 U.S. 121, 127, 106 S. Ct. 455, 459

(1985). 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.

Accordingly, even taking the facts in the light most

favorable to Plaintiffs and assuming that the claims are ripe,

Defendants are entitled to judgment as a matter of law with

regard to Plaintiffs’ claims that their property was taken

without just compensation in violation of the Fifth Amendment.

Claims for declaratory relief

Pursuant to the Declaratory Judgment Act, codified at

28 U.S.C. § 2201, “[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.” When determining the propriety of

judgment pursuant to section 2201, the Court must first

determine whether there is an actual case or controversy within

its jurisdiction, using the same analysis as that used to

analyze the “case or controversy” requirement of Article III.

See, e.g., American States Ins. Co. v. Kearns,, 15 F.3d 142, 143

(9th Cir. 1994). The Court lacks subject matter jurisdiction

over the matter if the claims are not ripe, i.e., if there is no

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case or controversy. Id.

Assuming the first prong of the test is satisfied,

however, the Court’s jurisdiction to entertain a declaratory

action is discretionary. See id. When deciding whether to

exercise this jurisdiction, the Court may consider, inter alia,

whether it should “avoid needless determination of state law

issues,” and whether “it should discourage litigants from filing

declaratory actions as a means of forum shopping.” Principal

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

citing Brillhart v. Excess Ins. Co., 316 U.S. 491, 62 S. Ct.

1173 (1942). 

The Court should “avoid needless determination of

constitutional questions which may lead to a needless

obstruction of the domestic policy of the states...” Alabama

State Fed’n of Labor v. McAdory, 325 U.S. 450, 471, 65 S. Ct.

1384, 1394 (1945). The Court should also consider whether a

declaratory judgment will settle all aspects of the controversy,

and the relative convenience of other remedies. See Principal

Life Ins. Co., 394 F.3d at 672. The Supreme Court has

instructed the lower courts to balance concerns of judicial

administration, comity, and fairness, when determining whether

to exercise their discretion with regard to declaratory

judgments. See American States Ins. Co., 15 F.3d at 144;

Chamberlain v. Allstate Ins. Co., 931 F.2d 1361, 1367 (9th Cir.

1991).

Having concluded that Defendants are entitled to

judgment as a matter of law with regard to Plaintiffs’ section

1983 claims, the Court concludes Defendants are also entitled to

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judgment as a matter of law with regard to Plaintiffs’ claims

pursuant to 28 U.S.C. § 2201.

State law based claims

Plaintiffs have also asserted a state law based claim

for negligence and a claim for inverse condemnation against

Defendants. 

Ordinarily, if “all federal-law claims are eliminated

before trial, the balance of factors to be considered under the

pendent jurisdiction doctrine--judicial economy, convenience,

fairness, and comity--will point toward declining to exercise

jurisdiction over the remaining state-law claims.”

Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n.7, 108 S.

Ct. 604, 619 n.7 (1988). The Court must consider “judicial

economy, convenience and fairness to litigants; if these are not

present a federal court should hesitate to exercise jurisdiction

over state claims....” United Mine Workers v. Gibbs, 383 U.S.

715, 726, 86 S. Ct. 1130, 1139 (1966). 

The Court concludes that, because Plaintiffs initiated

these claims in the state court and no federal constitutional

claims remain for the Court’s consideration, Plaintiffs’ statelaw based claims of action should not be decided by the Court

but instead should be remanded.

V Conclusion

Plaintiffs purchased their property from RTD at their

own risk, and were presumably aware of the disclaimer contained

in the Public Report. Plaintiffs knew or should have known

that, at the time RTD sold the parcels, Greer Ranch was an

illegal subdivision pursuant to the state’s statutes. The Court

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B. Any subdivider or agent who sells or leases a lot or parcel

in a subdivision in violation of § 32-2183 or by means of a

public report which contains an untrue statement of a material

fact or omits a material fact required to be stated in such

report shall be liable to the purchaser of such lot or parcel as

provided in this section unless at the time of purchase the

purchaser knew of the untruth or omission.

***

D. Damages in any suit brought pursuant to this section shall be

the difference between the purchase price of the lot or parcel

plus the cost of any improvements made to such lot or parcel and

the following applicable amount:

1. The price at which such lot or parcel was sold in a bona fide

market transaction prior to suit or judgment.

2. If the lot or parcel has not been sold before judgment, the

current market value of the lot or parcel and any improvements

as of the date the suit was filed.

E. In any action in which a violation of this section is

established the purchaser shall also be entitled to recover

reasonable attorney fees as determined by the court. ....

***

H. Nothing contained in this section shall be construed to

preclude any other remedies that may exist at law or in equity.

Ariz. Rev. Stat. Ann. § 32-2183.03 (2002 & Supp. 2006). The result is not

otherwise because some Plaintiffs may have allowed the two or three-year

statute of limitations on such an action to lapse. See id. § 32-2183.03(H)

(allowing for two years to bring an action when the plaintiff discovers the

malfeasance or for three years from the date of the purchase of the land).

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agrees with Defendants that Plaintiffs’ claims are properly

asserted against RTD and properly brought in the state court.

Defendants note Plaintiffs have a right of recision and a right

to damages pursuant to Arizona Revised Statutes §§ 32-2183.0323

and 32.2195.06.

Accordingly,

IT IS ORDERED that Plaintiffs’ motion for partial

summary judgment [Docket No. 32] is denied, and that Plaintiffs’

motion to strike [Docket No. 53] is denied.

IT IS FURTHER ORDERED that Defendants’ motion for

summary judgment [Docket No. 47] is granted with regard to all

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of Plaintiffs’ section 1983 claims and with regard to

Plaintiffs’ claim for declaratory relief pursuant to 28 U.S.C.

§ 2201, and that Defendants’ supplemental motion for summary

judgment [Docket No. 52] is granted.

IT IS FURTHER ORDERED that Plaintiffs’ state-law based

claims for negligence and inverse condemnation are remanded to

the Arizona Superior Court.

The Clerk of the Court shall enter separate judgment

accordingly.

DATED this 11th day of December, 2007.

Case 2:05-cv-02233-MEA Document 56 Filed 12/12/07 Page 45 of 45