Posted by: Patricia Salkin | November 22, 2012

6th Circuit Court of Appeals Holds Corruption by City Council Does Not Give Rise to Constitutional Claims in Rezoning

In April 2011 Law of the Land reported on the district court opinion involving prospective purchaser that had a conditional agreement to purchase property contingent on rezoning to enable the construction of a charter school. The purchaser brought an action against city of Toledo and a former city councilman Robert McCloskey asserting claims under § 1983 and Ohio state law, alleging the former councilman improperly sought $100,000 from the vendor and prospective purchaser in exchange for the council’s approval of the proposed re-zoning ordinance, and that defendants, inter alia, violated its right to substantive and procedural due process, equal protection, and to petition the government for redress of grievances.  District Judge Carr granted summary judgment to defendants on all claims other than the claim against McCloskey for tortious interference of business relationships, due to evidence offered by EJS that his actions were outside scope of employment and taken in bad faith thus raising an issue of material fact. In fact. McCloskey was indicted in 2006 on federal criminal corruption charges and sentenced to 27 months in prison after pleading guilty. EJS dropped the state-law wrongful interference claims and appealed to the circuit court.

Kaitlin Heinen posted the following additional background on the Midwest Planning BLUZ Blog:

In  May 2002, EJS filed a re-zoning petition with the Toledo-Lucas County Plan Commission. The Plan Commission recommended the re-zoning and passed the request onto the Toledo City Council. The City Council’s Zoning and Planning Commission held a public hearing on July 17, 2002, where everyone agreed to re-zone only the portion of Pilkington’s lot that would be needed for the school. The Committee voted unanimously to recommend the request for full vote by the Council, which was placed on the City Council’s agenda for August 13, 2002. During this re-zoning process, EJS had obtained an early-start building permit to begin $200,000 worth of repairs and improvements on the technical center.

Prior to August 13, Pilkington executives John Keil and Randy Berg had a lunch meeting with City Council member Robert McCloskey, who represented the district containing the Pilkington lot. McCloskey asked Pilkington to donate $100,000 to assist local retirees at the community center—Keil and Berg declined. At the next council meeting, member Peter Gerken moved to table consideration of the re-zoning for two weeks. EJS claims that McCloskey lobbied the other members to reverse their vote, but when he could not get enough to defeat the measure, he asked Gerken to table the matter. (McCloskey was a former Pilkington union negotiator, who had helped negotiate a labor agreement that capped healthcare benefits for retirees, for which he faced significant criticism upon being elected to City Council.) McCloskey then proceeded to call Keil, Berg, and Erich Speckin, the owner of EJS, and left questionable voicemails that sought the money for the retirement center in connection with the pending re-zoning. On August 22, Keil sent a letter to all of the City Council members and Mayor, seeking support for the re-zoning request and to consider the unrelated issues between Pilkington and McCloskey: “Such issues have the potential for exploitation to the detriment of the zoning request.” Pilkington and EJS never reported McCloskey’s request to the police.

On August 27, 2002, the City Council voted 7-4 against re-zoning (4 members had changed their vote from committee, including McCloskey). Only one member testified that he had been approached by McCloskey, who discouraged voting for the ordinance. EJS did not appeal the denial. Two months later, Toledo voters passed a levy, mandating the building of two new middle schools on the east side of Toledo. Toledo Public Schools (TPS) won an eminent domain lawsuit against Pilkington in November 2003 for the entire 43-acre lot. The Plan Commission, the City Council’s Zoning and Planning Committee, and the City Council approved a re-zoning in January 2004 to build a TPS middle school there.

***

EJS argued it had property interests in the ordinance for re-zoning, in its contracts, and in its early-start building permit. However, despite approvals by the planning commission and committee, the City Council never approved the re-zoning ordinance. Because the City Council had discretionary authority to approve the rezoning, and they did not, the 6th Circuit found no property interest in the re-zoning ordinance and hence there was no recognizable rights to support a substantive due process claim.  EJS also argued that the contract options created property interests, but the Court noted that the purchase agreement explicitly states that “prior to the Closing Date, [EJS] has no title or estate in the Property…and will not claim any such interest…over any part of the Property.” Since the contract was explicitly contingent upon obtaining a re-zoning for the property, which did not happen, no property interest attached.  Lastly, the early-start building permit did not constitute a property interest or entitlement to the requested rezoning as the City Code made clear that any work completed under the permit was “performed at the applicant’s own risk.”

With respect to the claim that their liberty interest in a government decision free from corruption was violated, the Court held that since corruption in this instance only speaks to procedural due process, and EJS did not possess a  property interest, the claim failed. Further, the Court held that the government  did not interfere with EJS’ right to contract because the contracts were contingent on discretionary zoning.

Fruthermore, the Court dismissed EJS’s argument that corrupt zoning decisions “shock the conscience” and therefore violate substantive due process as a result, regardless of whether or not a property or liberty interest is at stake noting that “Our prior precedent makes clear that in the context of a discretionary zoning decision, government action will not shock the conscience unless the arbitrary and capricious action touches on a protectable interest.” The court stated, “although we can condemn McCloskey for his misconduct, we simply cannot say that his behavior is so shocking as to shake the foundations of this country,” which was the original purpose for establishing the “shocks the conscience” standard.

EJS Properties, LLC v City of Toledo, 698 F.3d 845 (6th Cir. 9/5/2012, rehearing den. 10/18/2102)

The opinion can be accessed at: http://www.ca6.uscourts.gov/opinions.pdf/12a0300p-06.pdf


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