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Lilly Investments v. City of Rochester

United States District Court, E.D. Michigan, Southern Division

September 25, 2015

Lilly Investments, Dentists on Main, P.C., and Louis E. Leonor, Plaintiffs,
v.
City of Rochester and Rochester Planning Commission, Defendants, and City of Rochester, Counter Claimant,
v.
Louis E. Leonor and Lilly Investments, Counter, Defendants

          For Lilly Investments, Dentists on Main, P.C., Louis E. Leonor, Plaintiffs: David B. Viar, LEAD ATTORNEY, Rochester, MI; Richard L. Merpi, LEAD ATTORNEY, Miller Law Firm, P.C., Rochester, MI.

         For City of Rochester, Rochester Planning Commission, Defendants: Lisa A. Anderson, Michael E. Rosati, Steven P. Joppich, Timothy S. Wilhelm, Johnson, Rosati, Schultz & Joppich PC, Farmington Hills, MI; Carol A. Rosati, Johnson, Rosati, Farmington Hills, MI.

         For City of Rochester, Counter Claimant: Lisa A. Anderson, Michael E. Rosati, Johnson, Rosati, Schultz & Joppich PC, Farmington Hills, MI; Carol A. Rosati, Johnson, Rosati, Farmington Hills, MI.

         For Louis E. Leonor, Lilly Investments, Counter Defendants: David B. Viar, LEAD ATTORNEY, Rochester, MI; Richard L. Merpi, LEAD ATTORNEY, Miller Law Firm, P.C., Rochester, MI.

         Hon. JUDITH E. LEVY, United States District Judge. Mag. Judge David R. Grand.

Page 933

         OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' OBJECTIONS [80] TO THE MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION [77]

         Hon. JUDITH E. LEVY, United States District Judge.

         This matter is before the Court on defendants' Objection to the Report and Recommendation of October 17, 2014, Granting in Part and Denying in Part Defendants' Motion to Dismiss. ( See Dkt. 80.) The Magistrate Judge recommends granting defendants' Motion to Dismiss, (Dkt. 30), as to plaintiffs' claim for mandamus and plaintiffs' claim for superintending control, insofar as the claim for superintending control seeks " an order requiring the City of Rochester and planning commission to lift the stop work order and approve the revised site plan." ( See Dkt. 77 at 52.) The Magistrate Judge recommends denying defendants' motion in all other respects.

         Defendant/counter claimant City of Rochester and defendant City of Rochester Planning Commission (collectively " defendants" ) filed timely objections to the Report and Recommendation, (Dkt. 80), plaintiffs' responded to those objections, (Dkt. 83), and defendants replied. (Dkt. 86.)

         Defendants object to the factual findings set forth in the Report and Recommendation, arguing that the Magistrate Judge makes erroneous factual findings related to Ed Francis, the Special Projects approval process, and the approval process in general. Defendants also object to the Magistrate Judge's legal conclusions, arguing that plaintiffs' claims are not ripe for adjudication, the Court has no basis for retaining jurisdiction over any part of plaintiffs' claim for superintending control, the wrong legal standard was applied to the breach of contract claim, and plaintiffs' promissory estoppel claim should be dismissed.

         For the reasons set forth below, the Court adopts in part and rejects in part the Magistrate Judge's Report and Recommendation.

         I. Factual and Procedural Background

         The Court adopts the factual background set forth in the Report and Recommendation, except as addressed infra at III(a)

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. The relevant procedural background is set forth below.

         In January 2014, plaintiffs sued defendants, seeking a writ of mandamus, superintending control, injunctive relief, and damages. ( See Dkt. 1 at 6-25.) Plaintiffs allege in their complaint " taking/inverse condemnation," violation of procedural due process, violation of substantive due process and equal protection, breach of contract, " promissory/equitable estoppel," and violation of 42 U.S.C. § 1983. ( Id. ) Defendants removed to this Court, (Dkt. 1), and counter-sued, alleging nuisance and seeking a declaratory judgment and permanent injunction. ( See Dkt. 3.) Both parties filed motions for preliminary injunction. ( See Dkt. 22; Dkt. 27.)

         On April 22, 2014, defendants filed a motion to dismiss, (Dkt. 30), which was referred to Magistrate Judge David R. Grand. (Dkt. 32.) The Magistrate Judge heard oral argument on defendants' motion to dismiss on June 23, 2014, (see Dkt. 72), and issued a Report and Recommendation granting the motion in part and denying it in part on October 17, 2014. (Dkt. 77.) On November 11, 2014, defendants filed objections to the Report and Recommendation. (Dkt. 80.)

         II. Legal Standard

         District courts review de novo those portions of a report and recommendation to which a specific objection has been made. 28 U.S.C. § 636(b)(1)(C). " De novo review in these circumstances entails at least a review of the evidence that faced the magistrate judge; the Court may not act solely on the basis of a report and recommendation." Spooner v. Jackson, 321 F.Supp.2d 867, 869 (E.D. Mich. 2004). But objections to the Report and Recommendation must not be overly general, such as objections that dispute the correctness of the Report and Recommendation but fail to specify findings believed to be in error. Spencer v. Bouchard, 449 F.3d 721, 725 (6th Cir. 2006); see also Howard v. Sec'y of HHS, 932 F.2d 505, 509 (6th Cir. 1991). " The objections must be clear enough to enable the district court to discern those issues that are dispositive and contentious." Miller v. Currie, 50 F.3d 373, 380 (6th Cir. 1995).

         When considering a facial attack to subject matter jurisdiction, " the district court must assume that Plaintiffs' allegations are true and must construe them in a light most favorable to Plaintiffs." Little Traverse Bay Bands of Odawa Indians v. Great Spring Waters of Am., 203 F.Supp.2d 853, 855 (W.D. Mich. 2002) (citing RMI Titanium Co. v. Westinghouse Electric Corp., 78 F.3d 1125, 1134-35 (6th Cir. 1996)). But if the motion attacks the factual basis for jurisdiction, the district court " is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case." RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir. 1996) (quoting Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 890-91 (3d Cir. 1977)); see United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994); Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990).

         A party may not bring a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) after answering the complaint. See Fed.R.Civ.P. 12(b)(6). This technical error has " no impact" on a district court's review, though, because courts generally consider such a motion as if it had been brought as a motion for judgment on the pleadings under Rule 12(c). Satkowiak v. Bay Cty. Sheriff's Dep't, 47 Fed.Appx. 376, 377 n.1 (6th Cir. 2002); see, e.g., Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 n.1 (6th Cir. 1988); Wagner v. Higgins, 754 F.2d 186, 188 (6th Cir. 1985). And a motion for judgment on the pleadings under Rule 12(c)

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is analyzed using the same standard as for a motion to dismiss under Rule 12(b)(6). Tucker v. Middleburg-Legacy Place, 539 F.3d 545, 549 (6th Cir. 2008).

         When deciding a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court must " construe the complaint in the light most favorable to the plaintiff and accept all allegations as true." Keys v. Humana, Inc., 684 F.3d 605, 608 (6th Cir. 2012). " To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). A plausible claims need not contain " detailed factual allegations," but it must contain more than " labels and conclusions" or " a formulaic recitation of the elements of a cause of action[.]" Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

         III. Analysis

         a. Findings of Fact

         Defendants raise several objections to the Magistrate Judge's findings of fact. In addition to the objections raised in defendants' brief, defendants attach an exhibit " adopted [t]herein as if fully set forth in the text of" the brief, which lists objections to forty-two additional factual findings in the Report and Recommendation. (Dkt. 80 at 13; Dkt. 80-1.) The Court will not consider the factual objections included in the exhibit, because they do not comply with the Stipulated Order for Additional Pages and Additional Time to Serve Objection to Magistrate's Report and Recommendation, which set a thirty-five page limit. ( See Dkt. 79 at 3 (" Counsel for Defendants assert that a thirty-five page limit is necessary to adequately identify the parts of the Report and Recommendation to which Defendants object and to state with specificity the basis for the objections. . . . The parties therefore stipulate and agree to an Order granting Defendants an extension of ten pages pursuant to E.D. Mich. LR 7.1(d)(3)(A) . . . ." ).)

         i. Finding that Ed Francis was intended to be the final arbiter of a dispute between the parties.

         Ed Francis was retained as an independent historic preservation expert to review plaintiffs' proposal and to prepare a report on whether plaintiffs " reasonably complied" with the United States Secretary of the Interior's guidelines for historic redevelopment (" SOI standards" ). ( See Dkt. 30-2 at 117-18; Dkt. 30-3 at 69-87.) Defendants object generally that the Magistrate Judge makes " multiple errors in [his] characterization of the evidence pertaining to . . . Francis and the role [he] played relative to [p]laintiffs' construction project." (Dkt. 80 at 13.) Defendants argue that the Planning Commission did not hire Francis as an arbiter to resolve the disagreement, as stated in the Report and Recommendation. ( Id. at 13-14; see Dkt. 77 at 10, 34.) This factual finding is critical to the outcome of defendants' motion because it is dispositive on the issue of ripeness. Defendants argue instead that Francis' role was advisory, and that the Planning Commission itself was to " make the final determination as to reasonable compliance." (Dkt. 80 at 13.) According to defendants, this undermines the Magistrate Judge's determination that the Court has subject matter jurisdiction over plaintiffs' constitutional claims.

         Defendants take issue with three related factual findings in the Report and Recommendation, on which the Magistrate Judge based his conclusion that Francis was intended to be the final arbiter in the case of a dispute between the parties. First, defendants argue that the Report and Recommendation incorrectly concluded--based on a December 28, 2012 letter from City

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Manager Vettraino--that Francis would conclusively resolve the disagreement between the parties regarding compliance with the SOI standards. ( Id. at 14.) The letter provides, in relevant part:

[T]he Planning Commission provided a very specific remedy if there was a disagreement between Mr. Dziurman, representing the City's Historical Commission, and Designhaus Architecture, representing [plaintiff].
* * *
[I]t is proper for the project to proceed, with the assurances received from the applicant, and with a final review by the City selected expert being done at the conclusion of the project. After the review by the expert, [the Commission should] be provided a complete report from the expert in order to consider if any action is warranted regarding the Special Project approval.

(Dkt. 30-3 at 19). The Report and Recommendation summarizes the letter as follows:

On December 28, 2012, City Manager Vettraino sent a letter to the Commission about the project, . . . . [stating] that Vettraino believed there was a disagreement between the parties regarding compliance and that the Commission should invoke its option to solicit the assistance of a preservation expert to resolve the disagreement, which would take place at the conclusion of the project's construction.

(Dkt. 77 at 9-10.) According to defendants, the letter demonstrates that the Planning Commission, and not the " City selected expert," (here, Francis), would resolve any dispute as to compliance with the SOI standards. (Dkt. 80 at 14.) Plaintiffs contend that the reference in the letter characterizing Francis' recommendation as a " remedy" to any disagreement indicates that Francis was selected to be the final arbiter of such a dispute. (Dkt. 83 at 13-14.)

         Vettraino's letter is, at best, unclear as to whether Franics was charged with resolving any dispute as to the SOI standards. Although Vettraino referred to a City selected expert as a " remedy," the letter also suggests that the Planning Commission would consider whether any action was warranted on plaintiffs' application after receiving the expert's report. The Court thus amends the Magistrate Judge's factual findings to indicate that Vettraino did not indicate in his December 28, ...


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