Opinion
File No. 5:01-CV-105
November 29, 2001
OPINION
Before this Court are Plaintiffs Richard Pryor ("Pryor") and Capital Avenue Homes, Inc.'s (collectively "Plaintiffs") motion for summary judgment and preliminary injunction and Defendant City of Lansing's (the "City" or "Lansing") motion for summary judgment. In this action, Plaintiffs assert violations of the Fifth Amendment's Taking Clause and the Fourteenth Amendment's Equal Protection Clause in conjunction with Lansing's requirement that Plaintiffs build sewers, curbs, and other infrastructure ("infrastructure requirement") to connect to utilities. As explained below, Plaintiffs' motions are DENIED, and Defendant's motion is GRANTED.
I.
In 1993, the City of Lansing sold two lots and two homes as part of a community redevelopment project. The lots and homes were sold together because one of the conditions of the sale was to move the homes from their existing location to the new lots. Plaintiff Pryor purchased the properties for $400 and moved the homes to the new lots. When Plaintiff Pryor went to connect the homes to utilities at their new location, he discovered that the City expected him to build the infrastructure for the utilities including sewers and curbs. Plaintiff Pryor disputed this infrastructure requirement as a condition of the sale and sued the City and two of its em ployees in state court.
The state court dismissed Plaintiff Pryor's claims with prejudice. On appeal, the Michigan Court of Appeals specifically noted that Plaintiff Pryor "fail[ed] to provide any legal authority to support his position." (Pryor v. Clegg, No. 200720, slip op. at 1 (Mich.Ct.App. May 18, 1999), Def.'s Ex. 22). Despite this lack of legal authority, the Michigan Court of Appeals did address the merits of Plaintiff Pryor's claims and affirmed the circuit court's dismissal of all claims.
Plaintiff Pryor then sued two City employees in federal court. Pryor v. Clegg, No. 5:98-CV-125, 1999 U.S. Dist. LEXIS 9175 (W.D.Mich. June 11, 1999). Pryor claimed that the employees failed to specify the infrastructure in the infrastructure requirement and that this action was in retaliation for his criticisms of the City. The City employees moved for summary judgment, and this Court granted the motion in June 1999. Plaintiff Pryor appealed to the Sixth Circuit, and the Sixth Circuit dismissed the appeal for want of prosecution. Plaintiff Pryor and his corporation, Capital A venue Homes, Inc., filed this action on August 27, 2001.
II.
Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED.R.CIV.P. 56(c). An issue concerning a material fact is genuine if the record as a whole could lead a reasonable trier of fact to find for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Under Rule 56, the court must view the evidence in a light most favorable to the nonmoving party. Adickes v. S.H. Kress Co., 398 U.S. 144, 158-59 (1970). Summary judgment is not proper if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson, 477 U.S. at 248. Summary judgment is proper if the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to the party's case for which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
III.
Defendant claims that it is entitled to summary judgment because this case is barred by the principles of res judicata and collateral estoppel. Although "res judicata" is generally understood to bar the relitigation of the same claim or cause of action and "collateral estoppel" is generally understood to bar the relitigation of the same issue, Drummond v. Comm'r of Social Sec., 126 F.3d 837, 840 (6th Cir. 1997), this Court will follow the recommendation of the Sixth Circuit Court of Appeals and refer to these concepts as "claim preclusion" and "issue preclusion." Heyliger v. State U. Comm. Coll. Sys. of Tenn., 126 F.3d 849, 852 (6th Cir. 1997) (citing Barnes v. McDowell, 848 F.2d 725, 728 n. 5 (6th Cir. 1988)). When analyzing the effect of a prior state court action, the state's rules concerning claim and issue preclusion are applicable. Spence v. TRW, Inc., 92 F.3d 380, 382 (6th Cir. 1996). If the prior litigation was in federal court, then the Sixth Circuit's tests for claim and issue preclusion govern. See E.E.O.C. v. Frank's Nursery Crafts, Inc., 177 F.3d 448, 462-63 (6th Cir. 1999).
Defendant argues that the prior state litigation provides a basis for claim preclusion. "Michigan has adopted a broad application of res judicata [(claim preclusion)] that bars claims arising out of the same transaction that plaintiff could have brought but did not." Bergeron v. Busch, 228 Mich. App. 618, 620-21, 579 N.W.2d 124, 126 (1998). Claim preclusion applies when "(1) the prior action was decided on the merits, (2) the matter contested in the second case was or could have been resolved in the first, and (3) both actions involved the same parties or their privies." Id. at 621, 579 N.W.2d at 126. The parties do not appear to dispute that the prior action was decided on the merits and that both Plaintiff Pryor and the City were parties to the state court action. Instead, Plaintiffs argue that Defendant has waived claim preclusion under MICH. CT. R. 2.203(A)(2), that Defendant has not satisfied the second requirement for claim preclusion, and that as this case represents a continuing claim, claim preclusion is not applicable.
First, contrary to Plaintiffs' contention, Defendant has not waived claim preclusion. When these parties litigated in state court, Michigan Court Rules provided that:
Failure to object in a pleading, by motion, or at a pretrial conference to improper joinder of claims or failure to join claims required to be joined constitutes a waiver of the joinder rules, and the judgment shall only merge the claims actually litigated. T his rule does not affect collateral estoppel or the prohibition against relitigation of a claim under a different theory.
MICH. CT. R. 2.203(A)(2) (repealed effective June 1, 1999). Plaintiffs claim that unless Defendant objected to non-joinder of the Takings Clause and Equal Protection Clause claim in the state action, Defendant has waived res judicata and that nothing in the record suggests an objection. The rule specifically states that it "does not affect . . . the prohibition against relitigation of a claim under a different theory." Claim is defined as "a demand for money or property as of right." BLACK'S LAW DICTIONARY 247 (6th ed. 1990). A theory is the "[f]acts on which the right of action is claimed to exist [or t]he basis of liability or grounds of defense." BLACK'S LAW DICTIONARY 1478 (6th ed. 1990). In other words, even under the Michigan Rule, claim preclusion still applies. Consequently, Defendant has not waived the argument that claim preclusion applies to this case.
Similarly, Plaintiffs' second argument that this state case did not involve the same matter fails. Plaintiffs, like some courts, have confused claim preclusion and issue preclusion. Heyliger, 126 F.3d at 852 (6th Cir. 1997) (noting "the perennial confusion over the vocabulary and concepts of the law of preclusion"); Bhama v. Bhama, 169 Mich. App. 73, 81, 425 N.W.2d 733, 737 (1988) (applying issue preclusion but describing it as res judicata or claim preclusion). Res judicata is more commonly used to refer to claim preclusion and not issue preclusion. Heyliger, 126 F.3d at 852 (6th Cir. 1997). Unlike issue preclusion, claim preclusion does not require that the prior litigation involve the resolution of a exactly the same issue currently before a court in the second case. In Michigan, the requirement is only that "the matter contested in the second case was or could have been resolved in the first." Bergeron, 228 Mich. App. at 621, 579 N.W.2d at 126. Plaintiff Pryor certainly could have raised both a Takings Clause and an Equal Protection Clause argument in his state case. Because Plaintiff Pryor did not raise these claims in the state court action, claim preclusion bars both he and his corporation from raising them here.
Plaintiffs' third argument that Defendant's conduct represents a continuing violation may have some merit. The alleged continuing violation is based on supposed changes to the infrastructure requirement by the City since the state court litigation. Specifically, Plaintiffs contend that during the state court litigation, the City agreed that Plaintiff Pryor could connect individual leads from his houses to North Street. (Pl.'s Br. Opp'n at 2 citing Def.'s Ex. 5 at 22, Ex. 7 at 12). According to Plaintiffs, the City refused to permit this type of connection after the state court litigation. (Pl.'s Br. Opp'n at 2 citing Def.'s Ex. 19). In the latter communications, the City does appear to emphasize that the leads would have to be public. To the extent the City did change its position, Plaintiffs are not barred by claim preclusion from the prior state court action. If these alleged changes in position are not barred by the prior federal court action, the Court will address the merits of these alleged changes.
Even assuming that this action is not barred by the prior state court action, claim preclusion from the prior federal court action still bars most of Plaintiffs' claims in this case. Claim preclusion prevents "litigation of claims that `were previously available to the parties, regardless of whether they were asserted or determined in the first proceeding.'" E.E.O.C. v. Frank's Nursery Crafts, Inc., 177 F.3d 448, 462-63 (6th Cir. 1999) (quoting Brown v. Felsen, 442 U.S. 127, 131 (1979)). Claim preclusion applies when "(1) the prior action was decided on the merits, (2) the matter contested in the second case was or could have been resolved in the first, and (3) both actions involved the same parties or their privies." Id. at 621.
Plaintiffs dispute the application of claim preclusion because the claims are not the same and the City has engaged in continuing violations. Again, Plaintiffs fail to properly distinguish claim preclusion and issue preclusion. Claim preclusion does not require that both the first and second cases involved identical issues. Instead, the requirement is merely that any claims in the second suit could have been resolved in the first suit. Plaintiff Pryor could have brought his Takings Clause and Equal Protection Clause claims before this Court in the earlier federal proceeding.
On the other hand, Plaintiffs are correct that if the City has changed the infrastructure requirement since the prior federal litigation, then Plaintiffs could not have raised their current claims under the Takings Clause and the Equal Protection Clause at the time of the prior federal action. Like the previous state court case, the prior federal case does not bar Plaintiffs from raising their claims based on changes to the infrastructure requirement. Consequently, the Court will address the merits of Plaintiffs' Takings Clause and Equal Protection Clause claims based only on changes by the City to the infrastructure requirement since the prior federal case.
Addressing the merits of Plaintiffs' Fifth Amendment's Takings Clause, this Clause "is [intended] to prevent the government `from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.'" Franklin County Convention Facilities Auth. v. Am. Premier Underwriters, Inc., 240 F.3d 534, 552 (6th Cir. 2001) (quoting Armstrong v. United States, 364 U.S. 40, 49 (1960)). "Because the takings analysis focuses on `fairness and justice,' it is necessarily an ad hoc standard." Id. Despite the ad hoc nature of the standard, there are still several relevant factors including: "`the economic impact of the regulation, its interference with reasonable investment backed expectations, and the character of the governmental action.'" Id. (quoting Kaiser Aetna v. United States, 444 U.S. 164, 174-75 (1979)).
Preliminarily, the Court notes that Plaintiffs claim the City was without authority for the infrastructure requirement and that this lack of authority constitutes their argument that the infrastructure requirement was in violation of the Takings Clause. This argument is not persuasive. Although Plaintiffs suggest that the City's resolution "does not say that [Plaintiff Pryor] has to build the City's infrastructure," (Pl.'s Br. Supp. at 3), the resolution does state: "That the purchaser is responsible for the extension of all utility services West North Street to the building site, including but not limited to storm and sanitary sewer, water, electrical and gas services. That the purchaser will be responsible for street improvements, including curb and gutter." Pryor v. Clegg, No. 5:98-CV-125, 1999 U.S. Dist. LEXIS 9175, *2 (W.D. Mich. June 11, 1999). Plaintiffs' reading of the resolution ignores this clear language. Similarly, Plaintiffs contention that the resolution is void as ultra vires is explicitly contradicted by the Michigan Court of Appeals decision "that the sale of property, along with its terms and conditions, constituted a governmental function and not an ultra vires activity." (Pryor v. Clegg, No. 200720, slip op. at 4 (Mich.Ct.App. May 18, 1999), Def.'s Ex. 22).
Having dispensed with Plaintiffs' arguments that the infrastructure requirement is a taking, the Court evaluates the facts with reference to the factors relevant to a takings claim. This analysis indicates that the City's actions do not constitute a taking. Although building the necessary infrastructure obviously will have a significant economic impact, Plaintiffs cannot argue that this requirement interferes with Plaintiffs' reasonable investment expectations. Plaintiff Pryor only paid $400 for two houses and two lots, and he had to realize that the properties were so reasonable because there were other costs associated with the purchase. In addition to moving the homes, these other costs included the City's infrastructure requirement. Similarly, the character of the governmental action here indicates that there is no taking. The infrastructure requirement is part of the sale agreement that Plaintiff Pryor entered into with the City. Plaintiff Pryor did not have to purchase the properties if he did not want to be obligated to install the necessary infrastructure. Consequently, Plaintiffs have not demonstrated that the City's actions constitute a taking.
Like Plaintiffs' Fifth Amendment Takings Clause claim, Plaintiffs have not established a violation of the Fourteenth Amendment's Equal Protection Clause. The basis of any equal protection claim is that the state has treated similarly-situated individuals differently. Silver v. Franklin Twp. Bd. of Zoning Appeals, 966 F.2d 1031, 1036 (6th Cir. 1992). Because Plaintiffs do not claim an infringement of a fundamental right or membership in a suspect class, the City's actions are reviewed using the rational basis test. Id. (citing Belle Terre v. Boraas, 416 U.S. 1, 8 (1974)). When applying the rational basis test, the City's actions are "`accorded a strong presumption of validity' and will be upheld if `any reasonably conceivable state of facts' could demonstrate that [the City's actions are] rationally related to a legitimate government purpose." Ashki v. I.N.S., 233 F.3d 913, 920 (6th Cir. 2000) (quoting Heller v. Doe, 509 U.S. 312, 319-20 (1993)).
Here, there is no question that the City's actions are rationally related to a legitimate government purpose. The City wanted to develop the area where it sold the homes and lots to Plaintiff Pryor. With this goal in mind, the City sold Plaintiff Pryor these properties for only $400 knowing that Plaintiff Pryor would provide the necessary infrastructure for connecting the utilities. This method of buying the necessary infrastructure by the City is rational. Therefore, Plaintiffs' Fourteenth Amendment Equal Protection Clause claim fails.
IV.
In conclusion, Plaintiffs' claims are barred under claim preclusion by the prior state court action and the prior federal court action except to the extent that the City has changed the infrastructure requirement. Plaintiffs could have raised these new claims in either of the prior actions but choose not to do so. Consequently, claim preclusion bars them from instituting this action. To the extent that the City changed the infrastructure requirement, Plaintiffs are not barred as these claims were not available until the City changed its position. Plaintiffs, however, do not prevail on either their Fifth Amendment Takings Clause claim or their Fourteenth Amendment Equal Protection Clause claim. The City's actions do not constitute a taking in violation of the Takings Clause and are not irrational in violation of the Equal Protection Clause. Therefore, Plaintiffs' motion for preliminary injunction and summary judgment is DENIED, and Defendant's motion for summary judgment is GRANTED. Accordingly, an order consistent with this opinion will be entered.
ORDER
In accordance with the opinion entered this date,
IT IS HEREBY ORDERED that Plaintiffs' motion for preliminary injunction and summary judgment (Docket #5) is DENIED.
IT IS FURTHER ORDERED that Defendant's motion for summary judgment (Docket #15) is GRANTED.
IT IS FURTHER ORDERED that JUDGMENT is entered in favor of Defendant, and Plaintiffs' complaint is DISMISSED in its entirety.