Property v . Town of Derry, et a l . 08-CV-270-JD 11/18/08 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Property Portfolio Group, LLC

v. Civil N o . 08-cv-270-JD Opinion N o .

Town of Derry, Robert Mackey, George Sioras and John Does 1-20

O R D E R

The plaintiff, Property Portfolio Group, LLC (“PPG”),

brought suit in state court against the town of Derry, New

Hampshire; Robert Mackey, Derry’s Code Enforcement Officer;

George Sioras, Derry’s Planning Director, and John Doe

defendants, alleging state law claims and constitutional claims

under

. The defendants removed the case to this

court and moved to dismiss PPG’s amended complaint. PPG objects.

Standard of Review

In considering a motion to dismiss under Federal Rule of

Civil Procedure 12(b)(6), the court assumes the truth of the

well-pleaded facts, taking them in the light most favorable to

the non-moving party. Thomas v . Rhode Island,

4 4 , 948

(1st Cir. 2008). Although a plaintiff need not provide detailed

factual allegations to survive a motion to dismiss, “a

plaintiff’s obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a

formulaic recitation of the elements of a cause of action will

not do.” Bell Atl. Corp. v . Twombly, 127 S . C t . 1955, 1964-65

(2007) (internal quotation marks and brackets omitted); see also

Erickson v . Pardus, 127 S . C t . 2197, 2200 (2007); accord Thomas,

. A plaintiff’s allegations, therefore, must demonstrate “a plausible entitlement to relief,” Thomas,

(internal quotation marks omitted), and must “give the

defendant fair notice of what the claim is and the grounds upon

which it rests,” Erickson, 127 S . C t . at 2200 (internal quotation

marks and ellipsis omitted).

Background

The following facts are taken from PPG’s first amended

complaint (document n o . 1 4 ) . PPG owns a multi-family residential

building at 7 Central Street in Derry, New Hampshire. The

property is zoned within the central business district, which

requires a residential buffer zone between abutting non-

residential and residential uses. The property at 7 Central

Street is abutted on the north by 32 West Broadway, and on the

south by 9 Central Street. The town’s fire station was located

at 32 West Broadway until 2004, when the town sold the property.

A residence was located at 9 Central Street until 1997, when its

owner, The Halcyon Club (“Halcyon”), razed the building and

2 converted the property into a parking lot. A buffer was never

installed on that portion of 9 Central Street which abutted 7

Central Street when the parking lot was created.

In 2005, PPG requested that Robert Mackey, the town’s Code

Enforcement Officer, enforce the buffer requirement between PPG’s

property and 9 Central Street. Mackey refused, and PPG appealed his decision to the town’s Zoning Board of Adjustment (“ZBA”).

The ZBA refused to hear the case, finding that it lacked

jurisdiction. PPG alleges that it appealed to the Rockingham

Superior Court, which remanded the case back to the ZBA, ordering

it to grant PPG a hearing on the buffer issue.1

On remand, the ZBA upheld Mackey’s refusal to require a

residential buffer, and PPG again appealed to the superior court.

PPG alleges that the court remanded the case to the ZBA a second

time, ordering it to require Halcyon to install a buffer on the portion of its property which abuts 7 Central Street. Halcyon

appealed to the New Hampshire Supreme Court, which PPG alleges

affirmed the superior court’s decision in an unpublished opinion.

1 Many of the decisions of the New Hampshire courts in this case are unpublished and were not provided to the court. PPG makes several representations regarding the outcomes of these cases, representations which the defendants do not dispute in their motion to dismiss. For purposes of the motion to dismiss only, the court accepts the holdings of the state court decisions as stated by PPG in its amended complaint.

3 PPG then filed a motion for contempt, and the ZBA instructed

Mackey to enforce the 20-foot buffer requirement on 9 Central

Street. Halcyon installed the buffer, which was less than 20

feet and did not provide for sufficient erosion control. In

installing the buffer, Halcyon caused damage to PPG’s property.

PPG filed a second motion for contempt with the superior court.2 PPG alleges that Halcyon has indicated that it intends to seek “a

waiver of the court orders” before the town’s planning board.

Amended Complaint (“Amend. C . ” ) , ¶ 4 0 .

In 2004, the town charged George Sioras, the town’s Planning

Director, with finding a buyer for 32 West Broadway. Hall

Business Restorations, LLC (“Hall”) offered to purchase the

property for the purposes of operating a bar and restaurant. The

property, however, could not accommodate parking for the proposed

use, and Halcyon agreed to allow Hall to use the parking lot at 9 Central Street. In May of 2005, the town’s planning board

granted Hall approval to use 32 West Broadway as a bar and

restaurant, based upon Sioras’s recommendation. Approval was

conditioned upon Hall submitting a landscape plan which provided

for a residential buffer between 32 West Broadway and 7 Central

Street. In September of 2005, after the sale of 32 West Broadway

2 PPG alleges that a hearing was held on its motion before the superior court on September 2 6 , 2008. The parties have not informed the court of the outcome of this hearing.

4 was completed, Hall removed the existing natural buffer between

its property and 7 Central Street and did not install a

residential buffer in its place.

PPG filed a petition in Rockingham Superior Court against

the town, challenging the planning board’s approval of Hall’s

proposal. The court dismissed PPG’s petition for lack of jurisdiction because the petition was filed outside the 30-day

deadline for an appeal of a planning board decision. See N.H.

Rev. Stat. Ann. 677:15. The New Hampshire Supreme Court affirmed

the superior court’s decision. See Property Portfolio Group, LLC

v . Town of Derry, et a l . (“Portfolio I ” ) ,

1 0 , 613

(2006). During this time, PPG brought a separate enforcement

action against Hall in Hillsborough Superior Court. The court

dismissed the case, citing the Supreme Court’s decision in

Portfolio I . PPG appealed, and in an unpublished decision, the Supreme Court reversed and remanded the case to the superior

court on the ground that the issue in Portfolio I was limited to

the planning board’s approval of Hall’s proposal.

On May 1 3 , 2008, the superior court issued an order

requiring Hall and its successors to immediately install a 20-

foot buffer. This decision was not appealed. Wells Fargo

Foothill/Avatar Income Fund, LLC (“Wells Fargo”) is Hall’s

successor and an intervener in the state court proceedings. PPG

alleges that Wells Fargo contacted the defendants to discuss

5 obtaining a variance from the buffer requirement. Wells Fargo

failed to install the buffer, and PPG filed a motion for contempt

with the superior court.3 PPG alleges that it also requested

Mackey to enforce the buffer requirement against Wells Fargo.

Mackey did not respond, and PPG appealed to the ZBA. The ZBA

found that it lacked jurisdiction to hear the case, and PPG appealed to the superior court.4

On May 2 0 , 2008, PPG filed suit against the defendants in

Rockingham Superior Court (Case N o . 08-C-429), alleging state and

federal law claims. The defendants removed the case to this

court on July 7 , 2008, and PPG filed an amended complaint on

September 4 , 2008. PPG’s amended complaint alleges that the

defendants allowed the owners of 32 West Broadway to remove the

natural buffer between the property and 7 Central Street, dump

rubble up to and over the boundary line with 7 Central Street, install a utility pole on the property line in front of the door

to an apartment on 7 Central Street, store snow on the property

in such a way as to cause run-off onto 7 Central Street, install

inadequate drainage, and locate a dumpster within a few feet of

the boundary line. PPG also alleges that the defendants refused

3 PPG does not explain what happened in the superior court on its motion for contempt. 4 PPG has not explained what happened in the superior court after this point.

6 to enforce a buffer on 9 Central Street and allowed Halcyon to

park vehicles along the boundary of the property with 7 Central

Street.

Discussion

In its amended complaint, PPG alleges state law claims of

trespass, negligence, and inverse condemnation. Its federal

claim is brought pursuant to § 1983. The defendants move to

dismiss the § 1983 claim on the grounds that PPG failed to allege

a municipal custom or practice to support its claim against

Derry, that PPG failed to allege the lack of a post deprivation

remedy in support of its procedural due process claim, that the

allegations do not support a substantive due process claim, that

PPG has not alleged an equal protection violation, and that PPG

failed to allege an unconstitutional taking. The defendants

argue that PPG’s state law claims must be dismissed because they

were adjudicated in state court and are therefore barred by res

judicata.

I. Federal Claims

Count four of PPG’s amended complaint asserts a § 1983 claim

against the defendants.

, in and of itself,

“does not endow plaintiffs with any substantive rights.” Clark

v . Boscher,

0 7 , 112 (1st Cir. 2008). To recover under

7 § 1983, the plaintiff must prove that it was deprived of a

federal right, which was “carried out by persons acting under

color of state law.” Id. In addition, to recover against a

government entity such as a town, the plaintiff must also prove

that the entity was “a moving force behind the deprivation” -

that i s , the deprivation was a result of the entity’s “policy or custom.” Kentucky v . Graham,

(1985)(internal

quotations omitted).

PPG’s amended complaint fails to precisely allege any

violation of a federal right which is supported by facts.

Rather, PPG makes broad and often vague references to

constitutional claims. Under normal circumstances, the court

would grant the defendants’ motion to dismiss for these failings

on the ground that PPG has failed to provide the defendants with

“fair notice” of its claims and the “grounds upon which [they] rest[].” Erickson, 127 S . C t . at 2200. In their motion to

dismiss, however, the defendants address certain constitutional

arguments they believe PPG asserted in its amended complaint,

including claims for substantive and procedural due process

violations, an equal protection violation, and an

unconstitutional taking. In its objection to the defendants’

motion to dismiss, PPG argues only that its complaint

sufficiently alleges substantive and procedural due process

8 claims.5 The court, therefore, will examine PPG’s well-pleaded

facts only to determine whether they demonstrate violations of

their substantive and procedural due process rights under the

Fourteenth Amendment.

A. Due Process

“The Due Process Clause of the Fourteenth Amendment

prohibits a state from depriving a person of ‘life, liberty, or

property, without due process of law.’” Pagan v . Calderon,

6 , 32 (1st Cir. 2006) (quoting U.S. Const. amend. XIV, §

1). “This guarantee has both substantive and procedural

components.” Pagan,

2 . “Procedural due process

requires that the procedures provided by the state in effecting

the deprivation of liberty or property are adequate in light of

the affected interest. Substantive due process, however, imposes

limits on what a state may do regardless of what procedural

protection is provided.” Pittsley v . Warish,

, 6 (1st

Cir. 1991); see also Pagan,

(“The substantive due

process guarantee does not, however, serve as a means of

constitutionalizing tort law so as to ‘impos[e] liability

5 PPG also makes numerous new factual allegations which were not included in its amended complaint. The court will not accept as true those facts which were not included in the complaint in ruling upon the motion to dismiss.

9 whenever someone cloaked with state authority causes harm.’”

(quoting County of Sacramento v . Lewis,

(1998)).

1. Substantive Due Process

To prove a substantive due process violation, a plaintiff

must show “both that the acts [of the defendants] were so

egregious as to shock the conscience and that they deprived him

of a protected interest in life, liberty, or property.”6 Pagan,

(emphasis in original) (“‘[C]onscience-shocking

conduct is an indispensable element of a substantive due process

challenge to executive action.’” (quoting DePoutot v . Raffaelly,

1 2 , 118 n.4 (1st Cir. 2005)). “[T]he conventional

planning dispute - at least when not tainted with fundamental

procedural irregularity, racial animus, or the like - . . . is a

matter primarily of concern to the state and does not implicate

the Constitution.” Creative Environments, Inc. v . Estabrook,

2 2 , 833 (1st Cir. 1982). “[The First Circuit has] left the

door slightly ajar for federal relief in truly horrendous

6 The court questions whether PPG has a constitutionally protected property interest, or a property interest recognized by state law. PPG has failed to specifically identify the property interest it is asserting. However, the defendants do not argue this point and the court will assume, without deciding, and only for purposes of the motion to dismiss, that PPG has a protected property interest in the buffer.

10 situations [and] . . . the threshold for establishing the

requisite 'abuse of government power' is a high one indeed."

Nestor Colon Medina & Sucesores, Inc. v . Custodio,

2 ,

45 (1st Cir. 1992). The defendants’ conduct “must at the very

least be extreme and egregious, o r , put another way, truly

outrageous, uncivilized, and intolerable.” Pagan,

(internal quotations and citations omitted).

In an effort to meet this high standard, PPG alleges that

the defendants “have set themselves . . . above the law” (Amend.

C., ¶ 49) by continued failure to comply with state court orders,

counseling the abutting landowners on how to avoid the state

court orders, and conspiring to reduce the value of 7 Central

Street in order to put PPG out of business and use the property

for parking. The facts as alleged by PPG, however, do not

support these claims.

With regard to 32 West Broadway, PPG alleges that: Wells

Fargo “has been in contact with the defendants and is planning on

attempting to evade” the judgment of the state courts (id., ¶

4 8 ) ; Mackey failed to “take action against the current owners of

32 West Broadway” to enforce the buffer (id., ¶ 4 5 , 4 6 ) ; and the

ZBA declined to accept an appeal from Mackey’s decision on the

ground that it did not have jurisdiction. With regard to 9

Central Street, PPG alleges that: Mackey refused to enforce the

11 buffer requirement; the ZBA found that it did not have

jurisdiction to hear an appeal from Mackey’s decision; upon

remand from the superior court, the ZBA then upheld Mackey’s

decision, which was ultimately reversed by the state courts;7 the

ZBA then instructed Mackey to enforce the buffer requirement;

Mackey met with Sioras and Halcyon to discuss ways to evade the decisions of the courts; and Halcyon plans to appeal the courts’

orders to the planning board, “with the encouragement” of Mackey

and Sioras (id., ¶ 4 0 ) .

The facts as alleged by PPG, although suggesting potentially

inappropriate activities, are insufficient to meet the “shocks

the conscience” standard with regard to the conduct of the

defendants in this case. PPG has not alleged facts which show a

“fundamental procedural irregularity, racial animus, or the like”

which would elevate the defendants’ conduct to the level of egregiousness required for a violation of PPG’s substantive due

process rights. Creative Environments,

. The

only allegation that comes close is that Sioras and Mackey met

with Halcyon to determine how the state courts’ decisions could

be evaded. Assuming that to be true, their conduct is not

sufficiently egregious to establish a violation of substantive

7 PPG alleges that the superior court’s reversal was affirmed by the Supreme Court.

12 due process, particularly where the ZBA ultimately ordered Mackey

to enforce the buffer requirement, and a buffer was installed by

Halcyon.

Further, PPG’s allegation that the abutting property owners

may seek ways to avoid the state court decisions cannot be

impugned to the defendants. While PPG alleges that the defendants intend to circumvent the state court orders in the

future, conjecture about future conduct cannot support PPG’s

present claim that the defendants’ conduct “shocks the

conscience.” Id. at 830. Therefore, PPG has “failed to

establish a plausible violation of [its] constitutional right to

substantive due process.” Clark,

.

2. Procedural Due Process To recover for a procedural due process violation under the

Fourteenth Amendment, the plaintiff must prove: (a) that a

protected property right exists; “(b) [that the] governmental

action with respect to that property right amounts to a

deprivation; and (c) [that] the deprivation, if one be found, was

visited upon the plaintiff without due process of law.” Fusco v .

Connecticut,

0 1 , 205 (2d Cir. 1987); Jeneski v . City of

Worcester,

4 , 17 (1st Cir. 2007). Regarding the latter

13 requirement, the Supreme Court has held that “an unauthorized

intentional deprivation of property by a state employee does not

constitute a violation of the procedural requirements of the Due

Process Clause of the Fourteenth Amendment if a meaningful

postdeprivation remedy for the loss is available.” Hudson v .

Palmer,

1 7 , 533 (1984); Decker v . Hillsborough County Attorney’s Office,

7 , 22 (1st Cir. 1988) (“[T]he

deprivation could not be said to be without due process unless no

effective state remedy were available.” (citing Hudson, 468 U.S.

at 533)).

PPG cites to Roy v . Augusta,

(1st Cir. 1983),

as a case presenting similar facts, in which the First Circuit

found that the plaintiff’s § 1983 procedural due process claim

survived a motion to dismiss. The plaintiff in Roy was given an

expired, invalid renewal license to operate his pool hall following decisions by the Maine courts ordering the defendants

to renew his license.

. He applied for a

current license, but while his application was pending, he had to

convey the pool hall to the mortgagees to avoid foreclosure. The

defendants then denied his application on the ground that he

“lacked a sufficient property interest in the premises.”

. The court found that the plaintiff had a property interest

in the license given the state courts’ decisions, that the

defendants had “‘tak[en]’ his property in derogation of the

14 process afforded by the state,” and that due to special

circumstances, the plaintiff no longer had recourse in the state

courts.

,; see also Chiplin Enters. v . City of

Lebanon,

(1st Cir. 1983).

Assuming, without deciding, that PPG has been deprived of a

protected property interest in the buffer, PPG has failed to allege facts which show it was denied due process. PPG has not

alleged that recourse in the state courts is unavailable to

enforce the buffer requirement. PPG filed numerous actions in

the state courts, and according to PPG’s complaint, prevailed in

those proceedings. PPG now claims that Wells Fargo and Halcyon

have not complied with the court orders, that the defendants have

failed to enforce the orders, and that PPG was therefore required

to file motions for contempt in the state courts. Based upon

these allegations, not only is recourse available in the state courts, but PPG is currently pursuing i t .

PPG has failed to establish that no effective state remedy

is available. PPG’s procedural due process claim is thus

distinguishable from the plaintiff’s claim in Roy, where recourse

in the state courts was no longer available. See Decker, 845

F.2d at 22 (distinguishing Roy where it appeared plaintiff may

“ultimately achieve some effective relief” in the state courts).

Therefore, PPG has “failed to establish a plausible violation of

[its] constitutional right to [procedural] due process.” Clark,

15

.

B. Federal Claims against the Town

The defendants also seek dismissal of the § 1983 claims

against the town on the ground that PPG has failed to prove the

town acted pursuant to “official municipal policy” or custom.

Collins v . City of Harker Heights,

(1992).

Given the court’s dismissal of all federal claims against all

defendants, this argument need not be addressed.

II. State Law Claims PPG failed to state federal claims upon which relief may be

granted, and these claims are therefore dismissed. Given the

court’s dismissal of the PPG’s federal claims, the court declines

to exercise supplemental jurisdiction over its state law claims.

See Marrero-Gutierrez v . Molina,

, 7 (1st Cir. 2007).

The court will not address, therefore, the defendants’ res

judicata argument as it applies to PPG’s state law claims.

Conclusion

For the foregoing reasons, the defendants’ motion to dismiss

(document n o . 15) is granted as to the plaintiff’s federal claims

16 and is denied as to the state law claims for lack of

jurisdiction. The clerk shall enter judgment in favor of the

defendants as to the federal claims and remand the remaining

claims to the Rockingham Superior Court.

SO ORDERED.

vJo s e p h A. DiClerico, Jr. Joseph United States District Judge

November 18, 2008

cc: R. Matthew Cairns, Esquire John P. Griffith, Esquire

17