The US Court of Appeals for the Second Circuit (NY) has provided some guidance on how to prove a substantive due process zoning case, and what is a “property interest” that triggers constitutional protection. In Cine SK8, Inc. v. Town of Henrietta (No. 06-1718-cv) (Nov. 8, 2007), “Fun Quest” received a special use permit to operate a dance club for teenagers, but after an overcrowding incident at Fun Quest, the Town modified the permit to prohibit the use.
Fun Quest filed a federal court lawsuit, alleging the Town modified the permit and eventually drove Fun Quest into bankruptcy because it was motivated by racial animus (the district court found that “numerous witnesses have testified that after drawing attention to photographs taken of the crowd gathered at Fun Quest . . . [a Town supervisor] stated in sum and substance: ‘Look at these pictures. There is not a white face among them. I don’t want these people in my town.'”).
The first issue was what is a “property” interest for purposes of a substantive due process claim. Applying New York state law, the Second Circuit held that the special use permit was a vested right, and consequently was a property right that could not be infringed upon by the Town in an arbitrary and irrational manner. The court determined that the permit as issued was valid, that Fun Quest substantially relied upon the permit by making $2.3 million worth of improvements in reliance, and went into bankruptcy following the Town’s modification of the permit. The court held this was sufficient evidence to allow the case to go to trial, and that the district court erred when it granted the Town’s motion for summary judgment. Slip op. at 12.
The second issue was whether the property right had been infringed upon by the Town. A substantive due process claim arises in the land use or regulatory context when a property owner alleges that the government has acted in an arbitrary and capricious manner. As noted by the Supreme Court, the Due Process Clause bars “certain arbitrary, wrongful government actions ‘regardless of the fairness of the procedures used to implement them.'” Daniels v. Williams, 474 U.S. 327 (1986), quoted in Zinermon v. Burch, 494 U.S. 113 (1990). For a recent example of a substantive due process claim from the Ninth Circuit, see Crown Point Development, Inc. v. City of Sun Valley, No. 06-35189 (Nov. 1, 2007), a decision about which I blogged here. On the question of arbitrariness, the court in Cine SK8 held that the allegations of racial animus should not have been summarily dismissed, and that Fun Quest should have been allowed to go to trial on the issue. The court expressed a concern that “public officials motivated by racial animus or other unconstitutional purposes can hide their true intentions and thereby prevent injured parties from obtaining the redress to which they are entitled.” Slip op. at 14. The court rejected the 11th Circuit’s rule that a single member’s expressed unconstitutional motivations are relevant only if it can be shown that the majority of the deliberative body’s members were influenced by the member’s motivations. The court concluded:
Given these considerations, we believe that in appropriate circumstances a plaintiff seeking to hold a municipality or public officials liable based on the actions of a public body may prevail – and, at the very least, should survive summary judgment – even when the plaintiff has not presented evidence that a majority of the individual members of that body acted with unconstitutional motives. In our view, even if a plaintiff does not demonstrate directly that a majority of a public body acted with unconstitutional motives, he should be permitted to take his case to trial if he proffers evidence that strongly indicates that discrimination was a significant reason for a public body’s actions and the defendant body, or its members, fails to counter that evidence with its own clear evidence that a majority acted with permissible motives.
Slip op. at 15.
In a very interesting portion of the opinion, the court also held that a government body acting without legal authority may also violate substantive due process. The court noted that the Town lacked the authority under its own zoning regulations to amend the special use permit. The court examined the Town’s zoning ordinance and concluded that the law permitted the Town to “approve, deny, suspend, or revoke” a special use permit, but did not make any provision “for the amendment of a special use permit in any circumstance.” Slip op. at 20 (emphasis original):
And, as defendants’ counsel conceded at oral argument, if the Town Board did not have authority for the actions it took regarding Fun Quest’s permit – as it appears it did not – the Board’s actions were ultra vires and, as a result, sufficiently arbitrary to amount to a substantive due process violation.
Slip op. at 21. This analysis may be applicable any time government acts outside of its legal authority, whether it is acting beyond its own rules as in Cine SK8, or in the case of local government, goes beyond a power delegated from the state. In those circumstances, not only does a property owner have a claim that the government is acting ultra vires, it has a substantive due process claim as well. See here for one example regarding impact fees under Hawaii law.
Read the full opinion in Cine SK8 here.