Posted by: Patricia Salkin | November 20, 2012

6th Circuit Court of Appeals Holds City Did Not Violate Property Owner’s Constitutional Rights When Drafting and Ordinance to Keep Out Large Retailers Such as Wal-Mart

This appeal concerns the legality of actions taken by the City of Frankenmuth to keep a Wal-Mart supercenter from being built on land owned by the Loesel family in Frankenmuth Township. As the result of a post purchase-agreement ordinance that restricted the size of any new buildings on the property to 65,000 square feet or less, Wal-Mart terminated its conditional agreement to purchase the Loesels’ land for $4 million. The Loesels sued the city for damages, claiming that the selective zoning ordinance violated their rights under the Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution.

Because the city never denied Wal-Mart a permit to build its structure, the district court dismissed the plaintiffs’ as-applied challenge and allowed the facial challenge of the ordinance to move forward. Ultimately, the jury awarded the plaintiffs $3.6 million. The district court denied the city’s motion for judgment as a matter of law or, in the alternative, for a new trial or remittitur, and the city appealed.

The city claimed that the district court erred in denying its renewed motion for judgment as a matter of law. The city argued that there was insufficient evidence for the jury to reasonably conclude that the ordinance’s size restriction violated the Equal Protection Clause.

The Sixth Circuit first determined that a genuine dispute of material fact existed as to whether there were similarly situated other properties that were treated differently under the zoning ordinance and whether the ordinance lacked a rational basis. Therefore, the Sixth Circuit held that the district court did not err when it denied the city’s motion on these two issues.

The Sixth Circuit also determined, however, that there was no evidence that the ordinance was passed because of any animosity against the Loesels. The district court, therefore, should have granted the city’s motion for judgment as a matter of law on the animus theory of liability. The circuit court therefore vacated the judgment for the Loesels and remanded this case for a new trial.

Loesel v. City of Frankenmuth, No. 10-2354 (6th Cir. August 20, 2012).

The opinion can be accessed at: http://www.ca6.uscourts.gov/opinions.pdf/12a0270p-06.pdf

This abstract appears in the Illinois Municipal League Bulletin (8/23/2012) available at: http://legal.iml.org/page.cfm?key=9286


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