Posted by: Patricia Salkin | August 16, 2013

LA App. Court Upholds Moratoria and Rezoning Impacting Walmart Application, Finds Application Alone Does Not Create a Vested Right and Dismisses Allegations of Bias and Discrimination

Plaintiff, Moretco, Inc., purchased property in Plaquemines Parish (“the parish”), Louisiana, where it sought to develop a shopping center including a Walmart.  In April of 2010, the Parish Council adopted an ordinance which provided a moratorium on permitting building activity that cost more than $30,000 without special permission of the Council.  The ordinance would allow a permit applicant to pursue its project only if it satisfied specific conditions as determined by the Council, including zoning and planning compliance, traffic impact studies, etc.  In January of 2011, a month after the moratorium had expired, Moretco filed a permit application to construct its shopping center.  Two weeks after Moretco had filed its application, the parish adopted another ordinance that would establish a second moratorium with nearly the same provisions as the first.  The ordinance provided that the second moratorium would be effective as of January 1, 2011.  At the time the ordinance was passed, no decision had been made on Moretco’s permit application.  The parish also amended a zoning ordinance in March of 2011, which provided that in Moretco’s district, retail establishments larger than 25,000 square feet would require special review and approval from the parish’s Planning Board and Council.  Moretco never sought the further approval required by the ordinances.  In April of 2011, Moretco filed a complaint against Plaquemines Parish, the Plaquemines Parish Council and its members, and Plaquemines Parish President William Nungesser (collectively, “the Council”), seeking a preliminary injunction against the parish’s application of both the second moratorium ordinance and the amended zoning ordinance.  The trial court denied Moretco’s request and Moretco appealed this decision to the Court of Appeal of Louisiana, Fourth Circuit.

On appeal, Moretco argued that the trial court erred in denying the preliminary injunction because “(1) the ordinances [were] unconstitutionally vague; (2) the retroactive application of the ordinances to Moretco’s permit application would violate Moretco’s constitutional rights; and (3) the passage of the ordinances was an arbitrary and capricious abuse of the Council’s power motivated by Councilman Hinkley’s racial bias.”

The appellate court cited to the elements a party must satisfy in order to prove entitlement to a preliminary injunction: that “(1) it will suffer irreparable injury, loss, or damage if the injunction is not issued; (2) it is entitled to the relief sought; and (3) it will likely prevail on the merits of the case.”  Here, the court determined that in order to prove its entitlement to a preliminary injunction, Moretco would need to demonstrate that each ordinance was invalid on its face.

With regard to the alleged unconstitutional vagueness, Moretco cited to a case, McCauley v. Albert E. Briede & Son.  In McCauley, the ordinances at issue provided no standard or guide by which they could be enforced.  The court thus held that they were unconstitutionally vague.  The appellate court in the present case cited to the Louisiana Supreme Court’s definition, which states that a law is “fatally vague and offends due process when a person of ordinary intelligence does not have a reasonable opportunity to know what is prohibited so that he may act accordingly or if the law does not provide a standard to prevent arbitrary and discriminatory application.”  With regard to laws regulating businesses, the party contesting the law must first seek clarification with the legislature before pursuing judicial intervention.  The court here distinguished the present case from McCauley, listing the numerous requirements and guidelines provided by the ordinances at issue.  The ordinances require an inquiry into zoning and planning compliance and traffic impact studies, among others, in order to guide the Council in its decision-making process.  Furthermore, the vice present of Moretco himself testified that he did not seek clarification regarding the meaning of the ordinances.  As a result of the foregoing, the appellate court concluded that Moretco failed to meet its burden to prove the ordinances were unconstitutionally vague.

Moretco also argued that its constitutional due process rights would be violated if the parish were to apply the ordinances retroactively once Moretco had already submitted its permit application.  The appellate court noted that a party’s permit application does not give it a vested right to the permit if a subsequent ordinance is passed that would prohibit the issuance of the permit.  The right would be vested only if the permit was already granted prior to the prohibitive legislation.  The court explained that here, although Moretco applied for the permit prior to the ordinances at issue, the permits had not yet been granted once the ordinances were passed.  The court determined that Moretco did not have a vested right in the permits and as such, the trial court properly denied the injunction based on the retroactively applied ordinances.

Finally, the court addressed Moretco’s argument that the passage of the ordinances were arbitrary and capricious acts of the Council motivated by Councilman Hinkley’s racial bias.  A Moretco representative testified that when he and some others met with Hinkley to discuss issues regarding the project, Hinkley expressed concern about allowing a Walmart in the district because he did not want “those people from Behrman Highway” coming into the parish.  The representative testified that because (in his experience) the majority of the customers of the Berhman Highway Walmart were African-American, he believed that Hinkley’s issue with the project was with African-Americans coming to shop at Moretco’s proposed Walmart.  The parish President also testified that he personally believed the moratorium “sent the wrong message” to developers.  On the contrary, two others who were present at the same meeting testified that Hinkley’s concern with the Walmart project was because of its large size, not because of racial prejudice.  Additionally, in a video recording of a different meeting, Hinkley expressed that the Walmart project would need to be “conducive to the needs of the parish in that location.”  The trial court found that overall, the evidence was insufficient to prove that the challenged ordinances were motivated by racial discrimination as opposed to genuine concerns for the public good.

In its review, the appellate court explained that zoning ordinances are always entitled to a presumption of validity.  There is an “extraordinary burden” placed on the challenger to prove otherwise.  Moretco needed to overcome the extraordinary burden to prove that the ordinances at issue had “no real or substantial relationship to the general welfare of the Plaquemines Parish community.”  Moretco first argued that the parish President’s testimony demonstrated that the ordinances were passed to attack the Walmart project for racially discriminatory reasons.  The appellate court rejected this argument because the President’s lack of authority over zoning decisions rendered his opinions irrelevant.  Moreover, the President testified as a fact witness, not an expert, and the trial court was entitled to its assessment of the witness’s credibility.

Moretco’s next argument was that the trial court should have applied an adverse inference when the Council failed to call Hinkley as a witness.  The appellate court explained that an adverse inference must be made when “a party having control of a favorable witness fails to call him or her to testify”; however, exceptions to the rule exist when (1) the witness’s testimony would be cumulative; (2) the party seeking to enforce the adverse inference has the burden of proof on the issue to be addressed by the witness; or (3) the witness is equally available to be questioned by the opposing party.  The court found that all three exceptions existed here; thus, the trial court did not abuse its discretion in refusing to apply an adverse inference.

In its final argument, Moretco compared its case with Berry v. Volunteers of American, Inc.  The appellate court here stated that in addition to procedural distinctions, the case at hand was factually different from Berry, and Moretco’s reliance on it was therefore misplaced.  In Berry, the property owners’ property was rezoned after they had signed an agreement to sell it for the construction of a home for the elderly.  The appellate court in the present case stated that the property owners in Berry were in a different situation than Moretco.  While the zoning change would have prevented the home in Berry from being built altogether, Moretco here still had the opportunity to apply for approval of its project.  Moretco had only applied for the permit prior to the passing of the challenged ordinances; it had not yet applied for approval as per the requirements of the new ordinances.  The appellate court held that the differences between the present case and Berry were too vast to afford any significance and thus rejected Moretco’s argument on the basis that the Council abused its power in passing the ordinances.

Moretco, Inc. v. Plaquemines Parish Council, 112 So.3d 287 (La. App. 3/6/2013)

The opinion can be accessed at:

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