Court Opinion

ID: 3050414
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:31:09.847469+00
Date Added: 2024-06-11T11:41:15.161176
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

CROWN POINT DEVELOPMENT, INC.,            
                 Plaintiff-Appellant,
                 v.
CITY OF SUN VALLEY; JON C.
THORSON, in his official capacity                No. 06-35189
as Mayor of Sun Valley and in his
private capacity; ANN AGNEW;                      D.C. No.
                                                CV-05-00492-EJL
BLAIR BOAND; KEVIN LAIRD; LUD
                                                   OPINION
RENICK, in their official capacities
as members of the Sun Valley
City Counsel and in their
individual and private capacities,
             Defendants-Appellees.
                                          
         Appeal from the United States District Court
                   for the District of Idaho
          Edward J. Lodge, District Judge, Presiding

                    Argued and Submitted
            October 19, 2007—Seattle, Washington

                     Filed November 1, 2007

      Before: Dorothy W. Nelson, C. Arlen Beam,* and
             Pamela Ann Rymer, Circuit Judges.

                    Opinion by Judge Rymer

   *The Honorable C. Arlen Beam, Senior United States Circuit Judge for
the Eighth Circuit, sitting by designation.

                                14451
           CROWN POINT DEVELOPMENT v. SUN VALLEY           14453

                          COUNSEL

J. David Breemer, Pacific Legal Foundation, Sacramento,
California, for the appellant.

James J. Davis, Boise, Idaho, for the appellees.

                           OPINION

RYMER, Circuit Judge:

   This appeal requires us to decide whether a developer may
state a claim for relief based on the allegedly arbitrary and
irrational denial of a permit application. The district court said
not, relying on our decision in Armendariz v. Penman, 75
F.3d 1311 (9th Cir. 1996) (en banc), which held that the Fifth
Amendment’s Takings Clause subsumes or “preempts” sub-
stantive due process claims. Accordingly, it dismissed the
complaint by Crown Point Development, LLC (Crown Point)
against the City of Sun Valley and members of the City Coun-
cil.

  Crown Point appeals, arguing that it may proceed despite
Armendariz, because the United States Supreme Court ruled
14454      CROWN POINT DEVELOPMENT v. SUN VALLEY
in Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 532 (2005),
that a property owner’s challenge to a regulation that does not
substantially advance legitimate interests is grounded in due
process, not the Takings Clause. We agree that Armendariz
has been undermined to the limited extent that a claim for
wholly illegitimate land use regulation is not foreclosed.
However, the record is undeveloped on this point. Having
clarified that Armendariz does not block the way altogether,
we leave it to the district court on remand to flesh out the
parameters of Crown Point’s claim. We also leave questions
of a stay, or abstention, for the district court’s consideration.

                                I

  According to its complaint, Crown Point is the developer
of Crown Ranch, a 9.76 acre residential subdivision in Sun
Valley, Idaho. The project has proceeded over a number of
years and in five separate phases. Crown Ranch is zoned RM-
2 which carries a minimum density requirement of four units
per gross acre. To meet this standard, Crown Point was
required to build 39 total units on the property.

   It built 26 units during Phases 1 through 4. Originally, it
planned to construct eight units in Phase 4 and 11 units in
Phase 5. However, Sun Valley required Crown Point to
reduce the number of units in Phase 4 from eight to six in
order to receive approval. This meant that Crown Point had
to propose constructing 13 townhouse units for Phase 5 in
order to satisfy the minimum density requirement.

   The Sun Valley Planning and Zoning Commission
requested revisions, which Crown Point made, and the Com-
mission approved the amended application. But a current
Crown Ranch resident and the Crown Ranch Homeowners
Association, being dissatisfied with the overall density of
Phase 5, appealed to the City Council. When the Council
denied the application, Crown Point sought judicial review in
state court, which remanded for new Findings of Fact and
           CROWN POINT DEVELOPMENT v. SUN VALLEY          14455
Conclusions of Law. Another round of litigation ensued with
respect to the new findings, with the Idaho district court even-
tually concluding that the City Council’s denial of Crown
Point’s application was arbitrary and capricious. The Idaho
Supreme Court reversed that ruling because the trial court had
improperly expanded the administrative record, but again
remanded because the revised findings of fact were still insuf-
ficient. Crown Point Dev., Inc. v. City of Sun Valley, 156 P.3d
573, 579 (Idaho 2007).

   Meanwhile, Crown Point filed this action pursuant to 42
U.S.C. § 1983. It alleges a single, substantive due process
claim. Crown Point’s theory is that the City Council arbitrar-
ily interfered with its property rights by denying the applica-
tion for Phase 5 without any evidence in support and under
circumstances forced by the City Council’s own prior actions.

   Sun Valley moved to dismiss on the footing that well-
settled law in this circuit does not allow substantive due pro-
cess claims pursuant to the Fourteenth Amendment when the
interest at stake is real property, citing Armendariz, 75 F.3d
at 1326. The district court agreed that Armendariz controlled,
granted the motion, and declined to rule on the City’s alterna-
tive motion to stay proceedings.

   Regrettably, Crown Point did not assist the district court —
as it should have done — by arguing there as it does here that
Lingle’s repudiation of the “substantially advances” takings
formula undercuts Armendariz. Still, it did argue that certain
substantive due process rights continue despite Armendariz,
and are not subsumed in the Takings Clause. This is the same
argument now made, albeit supported by different authorities
and reasoning. Although a discretionary call and a somewhat
close one, we are hard-pressed to accept Sun Valley’s position
that Crown Point waived the argument that Lingle modifies
the reach of Armendariz. Where “the question presented is
one of law, we consider it in light of ‘all relevant authority,’
regardless of whether such authority was properly presented
14456      CROWN POINT DEVELOPMENT v. SUN VALLEY
in the district court.” Ballaris v. Wacker Siltronic Corp., 370
F.3d 901, 908 (9th Cir. 2004) (quoting Elder v. Holloway, 510
U.S. 510, 516 (1994)). Therefore, we reach the merits of
Crown Point’s Lingle-based argument.

                               II

   In Armendariz, a group of low-income property owners
brought a § 1983 action challenging the City of San Bernardi-
no’s allegedly overzealous enforcement of housing code pro-
visions in order to drive the tenants out of a high-crime area
and to allow a commercial developer to acquire the property
“on the cheap.” We held that the right which the property
owners sought to vindicate originated in the Fifth Amendment
Takings Clause rather than in substantive due process, thus
the claim failed in light of Graham v. Connor, 490 U.S. 386
(1989), and Albright v. Oliver, 510 U.S. 266 (1994). Graham
held that claims of excessive force brought under § 1983 must
be analyzed under the more specific Fourth or Eighth Amend-
ments rather than under the more subjective standard of sub-
stantive due process; Albright reaffirmed the Graham rule
where the plaintiff alleged that the defendants violated his
substantive due process rights by initiating a criminal prose-
cution without probable cause.

   [1] More to the point here, in Macri v. King County, 126
F.3d 1125, 1129 (9th Cir. 1997), we held that a claim arising
out of an application to subdivide property which the owners
alleged was denied without substantially advancing a legiti-
mate public purpose was actually a takings claim, not a claim
lying solely in substantive due process. This was because the
Supreme Court had repeatedly recognized — in Agins v. City
of Tiburon, 447 U.S. 255, 260 (1980), Nollan v. California
Coastal Comm’n, 483 U.S. 825 (1987), and Dolan v. City of
Tigard, 512 U.S. 374, 383-85 (1994)) — that “a land use
restriction that does not ‘substantially advance legitimate state
interests’ or ‘denies an owner economically viable use of his
land’ effects a taking.” Macri, 126 F.3d at 1129 (quoting
             CROWN POINT DEVELOPMENT v. SUN VALLEY                   14457
Agins). In other words, our pre-Lingle view was that a regula-
tion that does not “substantially advance legitimate state inter-
ests” is a taking under Agins, and if it is a taking, then it
follows from Armendariz that the Fifth Amendment’s Taking
Clause is the specific textual source of protection against such
conduct.1

   However, this understanding of the Agins’ “substantially
advances” language — i.e., that it is a “stand-alone regulatory
takings test” — was rejected by the Supreme Court in Lingle.
544 U.S. at 540. The Court concluded “that this formula pre-
scribes an inquiry in the nature of a due process, not a takings,
test, and that it has no proper place in our takings jurispru-
dence.” Id. As the Court explained, the “substantially
advances” test “does not help to identify those regulations
whose effects are functionally comparable to government
appropriation or invasion of private property; it is tethered
neither to the text of the Takings Clause nor to the basic justi-
fication for allowing regulatory actions to be challenged under
the Clause.” Id. at 542.

   [2] In this, Lingle pulls the rug out from under our rationale
for totally precluding substantive due process claims based on
arbitrary or unreasonable conduct. As the Court made clear,
there is no specific textual source in the Fifth Amendment for
   1
     We have since applied Armendariz in a number of similar contexts.
See, e.g., Buckles v. King County, 191 F.3d 1127, 1137 (9th Cir. 1999)
(precluding a substantive due process claim based on “spot zoning”);
Madison v. Graham, 316 F.3d 867, 871 (9th Cir. 2002) (holding due pro-
cess claims based on governmental interference with property rights fore-
closed by the Takings Clause); Squaw Valley Development Co. v.
Goldberg, 375 F.3d 936, 950 (9th Cir. 2004) (noting that the developer
was required to pursue its claim of alleged overzealous and selective regu-
lation under the Takings Clause, even if a takings claim would have
failed); Ventura Mobilehome Communities Owners Ass’n. v. City of San
Buenaventura, 371 F.3d 1046, 1054 (9th Cir. 2004) (rejecting a due pro-
cess challenge to a rent control ordinance on the theory that it did not sub-
stantially advance a legitimate purpose because it was barred by the
explicit textual provisions of the Takings Clause).
14458      CROWN POINT DEVELOPMENT v. SUN VALLEY
protecting a property owner from conduct that furthers no
legitimate government purpose. Thus, the Graham rationale
no longer applies to claims that a municipality’s actions were
arbitrary and unreasonable, lacking any substantial relation to
the public health, safety, or general welfare.

   Sun Valley posits that Crown Point’s claim nevertheless
remains controlled by the Takings Clause and Armendariz’s
preemption analysis because the claim involves a deprivation
of property whether or not the City’s action effected a taking.
While a plausible view, yet another supervening decision,
County of Sacramento v. Lewis, 523 U.S. 833 (1998), sug-
gests otherwise. In Lewis, the estate of a passenger who was
accidentally struck by a deputy sheriff at the end of a high
speed chase brought a due process claim under § 1983. The
Court rejected the County’s argument that the due process
claim was invariably subsumed by the Fourth Amendment,
explaining that “Graham does not hold that all constitutional
claims relating to physically abusive government conduct
must arise under either the Fourth or Eighth Amendments;
rather, Graham simply requires that if a constitutional claim
is covered by a specific constitutional provision, such as the
Fourth or Eighth Amendment, the claim must be analyzed
under the standard appropriate to that specific provision, not
under the rubric of substantive due process.” Id. at 843 (quot-
ing United States v. Lanier, 520 U.S. 259, 272 n.7 (1997)).
The Court went on to hold that Lewis’s claim was not “cov-
ered” by the Fourth Amendment because he had not been sub-
jected either to a search or to a seizure.

   [3] Applying the Lewis rule to land use, the Fifth Amend-
ment would preclude a due process challenge only if the
alleged conduct is actually covered by the Takings Clause.
Lingle indicates that a claim of arbitrary action is not such a
challenge. Rather, it identifies three basic categories of regu-
latory action that generally will be deemed a taking for Fifth
Amendment purposes: where government requires an owner
to suffer a permanent physical invasion of property, see
             CROWN POINT DEVELOPMENT v. SUN VALLEY                  14459
Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S.
419 (1982); where a regulation deprives an owner of all eco-
nomically beneficial use of property, see Lucas v. South Car-
olina Coastal Council, 505 U.S. 1003 (1992); and where the
Penn Central factors are met, Penn Central Transp. Co. v.
New York City, 438 U.S. 104 (1978).2 To the extent a property
owner’s complaint falls within one of these categories (or
some other recognized application of the Takings Clause),
Lewis suggests that the claim must be analyzed under the
Fifth Amendment whether or not it proves successful; but to
the extent that the conduct alleged cannot be a taking, Lewis
and Lingle indicate that a due process claim is not precluded.
Lingle, 544 U.S. at 542 (“[A] regulation that fails to serve any
legitimate governmental objective may be so arbitrary or irra-
tional that it runs afoul of the Due Process Clause.”) (citing
Lewis, 523 U.S. at 846); see Lingle, 544 U.S. at 549 (Ken-
nedy, J. concurring) (noting that the Lingle decision “does not
foreclose the possibility that a regulation might be so arbitrary
or irrational as to violate due process”).

   [4] Accordingly, it is no longer possible in light of Lingle
and Lewis to read Armendariz as imposing a blanket obstacle
to all substantive due process challenges to land use regula-
tion. See Miller v. Gammie, 335 F.3d 889, 893 (9th Cir. 2003)
(en banc) (holding that a three-judge panel may depart from
circuit precedent when an intervening decision by the
Supreme Court has undercut its theory or reasoning such that
the two are clearly irreconcilable). We have implicitly recog-
nized as much in two recent decisions. In Spoklie v. Montana,
  2
    “Primary among those factors are the economic impact of the regula-
tion on the claimant and, particularly, the extent to which the regulation
has interfered with distinct investment-backed expectations. In addition,
the character of the governmental action — for instance whether it
amounts to a physical invasion or instead merely affects property interests
through some public program adjusting the benefits and burdens of eco-
nomic life to promote the common good — may be relevant in discerning
whether a taking has occurred.” Lingle, 544 U.S. at 538-39 (internal quo-
tations and citations omitted).
14460      CROWN POINT DEVELOPMENT v. SUN VALLEY
we affirmed dismissal of a takings claim which asserted a
“substantially advances” theory, citing Lingle, and separately
addressed and affirmed dismissal of a substantive due process
claim because the state’s justification was not “clearly arbi-
trary and unreasonable, having no substantial relation to the
public health, safety, morals, or general welfare.” 411 F.3d
1051, 1057 & 1059 (9th Cir. 2005) (quoting Village of Euclid
v. Ambler Realty Co., 272 U.S. 365, 369 (1926)). And in
Equity Lifestyle Properties, Inc. v. County of San Luis Obispo,
___ F.3d ___, 2007 WL 2694667 (9th Cir. 2007), we deter-
mined that a municipal rent control ordinance survived a due
process challenge because rent control laws are rationally
related to a legitimate public purpose, but in doing so noted
that Lingle answers the question whether takings jurispru-
dence or due process doctrine governs by stating: “[The Tak-
ings Clause] is designed not to limit the governmental
interference with property rights per se, but rather to secure
compensation in the event of otherwise proper interference
. . . . Due process violations cannot be remedied under the
Takings Clause, because if a government action is found to be
impermissible — for instance because it fails to meet the
‘public use’ requirement or is so arbitrary as to violate due
process — that is the end of the inquiry. No amount of com-
pensation can authorize such action.” 2007 WL at *8 n.16
(quoting Lingle, 544 U.S. at 537, 543) (internal quotation
marks and citations omitted). We now explicitly hold 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. Therefore, we must reverse,
as the district court dismissed Crown Point’s claim solely on
the authority of Armendariz which held to the contrary.

   This said, there is scant basis for us to go further. We
decline to do so, as fleshing out the parties’ positions with
specific reference to the allegations in the complaint, or to a
record adduced on summary judgment, will give us the bene-
fit of the district court’s informed analysis on a developed
record. See Dream Palace v. County of Maricopa, 384 F.3d
          CROWN POINT DEVELOPMENT v. SUN VALLEY         14461
990, 1005 (9th Cir. 2004). Consequently, we simply hold that
Crown Point’s substantive due process theory is not fore-
closed altogether. We leave it to the district court on remand
to determine whether a claim is stated, and to consider other,
related, issues such as whether the claim is ripe or whether a
stay, or abstention, are indicated. As to these points we
express no opinion.

  REVERSED AND REMANDED.