The City of Pasadena enacted an ordinance governing the issuance of licenses for used car dealers. Among other things, the ordinance requires that each new license location be a minimum of 1,000 feet from an existing license location, and that a new license would not be issued for the operation of a used car lot within 150 feet of the lot lines of a residential area or subdivision, subject to certain exceptions. The ordinance also provides that where an applicant is denied a license by the city building inspector, there is a right to appeal to the city council, and that “[t]he hearing before the council shall be de novo and the applicant shall have the burden of proving he is entitled to the license.”
The Lindquists, in an effort to expand their existing used car lot, considered purchasing two parcels, but were told by City officials that neither lot would qualify for a license since one lot was within 1000 feet of two existing dealerships and within 150 feet of a residential area, and the second lot was within a 1000 feet of an existing dealership. Unaware that the City sometimes issued these types of licenses on appeal, the Lindquists purchased one of the lots and received a license to sell a variety of vehicles, but not used cars. The Lindquists then discovered that someone else bought the second lot they had considered and the owners of that lot were granted a license by the city council after they appealed the decision of the building inspector, on the grounds that the denial caused economic hardship. The Lindquists then applied for a license to operate a used car dealership in, on their lot which was denied, and on appeal, the city council also denied the license. About two years later the city council granted a used car dealership license for another lot after a councilmember told the council that the owner was a “respectable businessman” who would suffer “economic hardship” without the license. The Lindquists then sued the City alleging a violation of their equal protection and due process rights. The District Court dismissed the complaint for failure to state a claim.
The Fifth Circuit Court of Appeals reversed on the equal protection claim. They disagreed with the District Court’s belief that the Lindquists’ equal protection claim sounded like a selective enforcement claim that would require a showing that the city acted with illegitimate animus or ill will. To ultimately prevail, however, the Court noted that the Lindquists will have to carry the heavy burden of “negative[ing] any reasonable conceivable state of facts that could prove a rational basis” for the differential treatment. With respect to the due process claim, the Court upheld the dismissal, agreeing that this claim was the same at the equal protection claim simply recast in substantive due process terms. As to the procedural due process claims, the Circuit Court also upheld the dismissal since the Lindquists failed to brief the issue. The Court remanded the case for consideration of the equal protection claim.
Lindquist v. City of Pasadena, TX, 2008 WL 1726173 (C.A. 5 (Tex.) 4/15/2008).
The opinion can be accessed at:
http://www.ca5.uscourts.gov/opinions/pub/07/07-20013-CV0.wpd.pdf
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