10th Circuit Court of Appeals Holds Operator of Mobile Home Park Did Not Have Protectable Property Interest in its Special-Use Permit or in Approval of its Planned Unit Development (PUD) Zoning Application

Zia Shadows L.L.C. and its principals filed suit in federal district court, alleging the City’s delays in approval of a zoning request—and the conditions ultimately attached to the approval—violated Zia Shadows’ rights to due process and equal protection. Zia Shadows also alleged the City’s actions were taken in retaliation for Zia Shadows’ public criticisms of the City. The district court granted summary judgment to the City on Zia Shadows’ due-process and equal-protection claims, and a jury found in favor of the City on Zia Shadows’ First Amendment retaliation claim.

On appeal, Zia Shadows argued the district court erred in granting summary judgment, the district court abused its discretion both in its instruction of the jury and its refusal to strike a juror, and the jury’s verdict was against the clear weight of the evidence. In support of its due-process claim, Zia Shadows asserted a protectable property interest in its special-use permit to operate as a mobile-home park and in the approval of its PUD application. The court found that Zia Shadows failed to meet its burden to show a legitimate claim of entitlement to the continued validity of its special-use permit because it failed to cite authority limiting the City’s discretion to revoke or modify a special-use permit. Additionally, the municipal code granted the City significant discretion in approving, denying, or modifying a PUD application. Thus, Zia Shadows failed to demonstrate that it had a constitutionally protectable property interest in either its special-use permit or the approval of its PUD application.

As to Zia Shadow’s Equal Protection Claim, Zia Shadows claims it was the only mobile-home park that was required to comply with the new zoning ordinance; that its PUD application was subjected to greater financial scrutiny and conditions on approval of its PUD than other applicants; and that the new owner of the mobile-home park previously operated by it had not been required to comply with the requirements the City imposed on Zia Shadows. However, Zia Shadows did not cite any evidence to show it was similarly situated to any mobile-home parks that were not required to comply with the new zoning ordinances, or to show that similarly situated PUD applicants received more favorable treatment and were not subjected to a similar level of financial scrutiny. Moreover, the court found the presented evidence was inadequate to support a class-of-one claim because it failed to meaningfully address the City’s actions or the reasons for the City’s differential treatment.

Lastly, although Zia Shadows contended “the evidence was overwhelming that the City’s actions were motivated by appellants’ speech,” every point of evidence Zia Shadows cited was susceptible to various interpretations, supporting Zia Shadows’ case only if viewed in a very particular light. The court also found that Zia Shadows was required to show more than an improper purpose behind the City’s actions; it needed to show that the City’s actions were specifically motivated by Zia Shadows’ criticism of the City. Absent such a showing, the court found no basis for disturbing the district court’s decision.

Zia Shadows, LLC v City of Law Cruces, 2016 WL 3960827 (10th Cir. CA 7/22/16)