M&N Materials, Inc. v. Town of Gurley, Alabama et al

Filing 23

MEMORANDUM OPINION AND ORDER that the Town of Gurley's 12 Motion to Dimsiss plaintiff's unconstitutional takings claim is DENIED as more fully set out in order. Signed by Judge C Lynwood Smith, Jr on 6/10/2014. (AHI)

FILED
2014 Jun-10 PM 03:17
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
NORTHEASTERN DIVISION
M & N MATERIALS, INC.,
Plaintiff,
vs.
TOWN OF GURLEY,
ALABAMA, et al.,
Defendants.

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Civil Action No. CV-14-S-184-NE

MEMORANDUM OPINION AND ORDER
Plaintiff, M & N Materials, Inc. (“M & N”) filed this case on January 31, 2014,
asserting claims for unconstitutional taking, arbitrary and capricious due process
denial, declaratory judgments under both federal and state law, and an injunction
against the following defendants: (1) the Town of Gurley, Alabama (“the Town” or
“Gurley”); (2) Vulcan Construction Materials, L.P.; (3) Vulcan Lands, Inc.; and (4)
Vulcan Materials Company, Inc.1 The case presently is before the court on the
Town’s motion to dismiss plaintiff’s claim for an unconstitutional taking (Count I).2
Upon consideration of the motion, plaintiff’s response,3 and the Town’s reply,4 the

1

Doc. no. 1 (Complaint). The last three defendants were added “to comply with Alabama
law governing declaratory judgment actions.” Id. ¶¶ 5-7.
2

Doc. no. 12.

3

Doc. no. 17.

4

Doc. no. 19.

court concludes the motion is due to be denied.
I. STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(b) permits a party to move to dismiss a
complaint for, among other reasons, “failure to state a claim upon which relief can be
granted.” Fed. R. Civ. P. 12(b)(6). This rule must be read together with Rule 8(a),
which requires that a pleading contain only a “short and plain statement of the claim
showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). While that
pleading standard does not require “detailed factual allegations,” Bell Atlantic Corp.
v. Twombly, 550 U.S. 544, 550 (2007), it does demand “more than an unadorned,
the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (citations omitted). As the Supreme Court stated in Iqbal:
A pleading that offers “labels and conclusions” or “a formulaic
recitation of the elements of a cause of action will not do.” [Twombly,
550 U.S., at 555]. Nor does a complaint suffice if it tenders “naked
assertion[s]” devoid of “further factual enhancement.” Id., at 557.
To survive a motion to dismiss founded upon Federal Rule of
Civil Procedure 12(b)(6), [for failure to state a claim upon which relief
can be granted], a complaint must contain sufficient factual matter,
accepted as true, to “state a claim for relief that is plausible on its face.”
Id., at 570. A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged. Id., at 556. The
plausibility standard is not akin to a “probability requirement,” but it
asks for more than a sheer possibility that a defendant has acted
unlawfully. Ibid. Where a complaint pleads facts that are “merely
2

consistent with” a defendant’s liability, it “stops short of the line
between possibility and plausibility of ‘entitlement to relief.’” Id., at
557 (brackets omitted).
Two working principles underlie our decision in Twombly. First,
the tenet that a court must accept as true all of the allegations contained
in a complaint is inapplicable to legal conclusions. Threadbare recitals
of the elements of a cause of action, supported by mere conclusory
statements, do not suffice. Id., at 555 (Although for the purposes of a
motion to dismiss we must take all of the factual allegations in the
complaint as true, we “are not bound to accept as true a legal conclusion
couched as a factual allegation” (internal quotation marks omitted)).
Rule 8 marks a notable and generous departure from the hyper-technical,
code-pleading regime of a prior era, but it does not unlock the doors of
discovery for a plaintiff armed with nothing more than conclusions.
Second, only a complaint that states a plausible claim for relief survives
a motion to dismiss. Id., at 556. Determining whether a complaint
states a plausible claim for relief will, as the Court of Appeals observed,
be a context-specific task that requires the reviewing court to draw on
its judicial experience and common sense. 490 F.3d, at 157-158. But
where the well-pleaded facts do not permit the court to infer more than
the mere possibility of misconduct, the complaint has alleged — but it
has not “show[n]” — “that the pleader is entitled to relief.” Fed. Rule
Civ. Proc. 8(a)(2).
In keeping with these principles a court considering a motion to
dismiss can choose to begin by identifying pleadings that, because they
are no more than conclusions, are not entitled to the assumption of truth.
While legal conclusions can provide the framework of a complaint, they
must be supported by factual allegations. When there are well-pleaded
factual allegations, a court should assume their veracity and then
determine whether they plausibly give rise to an entitlement to relief.
Iqbal, 556 U.S. at 678-79 (emphasis added).
II. RELEVANT ALLEGATIONS OF PLAINTIFF’S COMPLAINT

3

M & N was formed in 2003 by Brian McCord and Brian Nelson for the purpose
of owning and operating a rock quarry. The land M & N was planning to use for the
quarry was a 160-acre parcel already owned by Nelson and located outside the Gurley
town limits.5 M & N purchased the land from Nelson and obtained permits from the
Alabama Department of Environmental Management (“ADEM”) to operate a quarry
on the land.6 It also obtained business licenses from Madison County and the State
of Alabama.7 As the property was located outside the Gurley town limits, M & N was
not originally required to obtain a license or permit from the Town.
Sometime in 2003, some of Gurley’s residents began to oppose the opening of
the quarry. The residents proposed that the Town annex the property M & N intended
to use for the quarry, so that the Town could then regulate the quarry’s operation.8
The Town initially declined to annex the land, but the issue was put to a vote on April
13, 2004, and as a result of that vote, M & N’s property was involuntarily
incorporated into the Town of Gurley.9
M & N applied for a business license from the Town, but the Town Clerk’s
office informed M & N that it had “‘been instructed not to issue a business license for
5

Complaint ¶ 8.

6

Id. ¶¶ 9-10.

7

Id. ¶ 11.

8

Id. ¶ 12.

9

Id. ¶¶ 12-13.

4

M & N.’”10 Less than two weeks later, “the Town imposed a moratorium, specific to
the M & N property only, on accepting any application for a permit, license, zoning
request, or any similar request that could be made by M & N to the Gurley
government.”11

Additionally, in July of 2004, the Town created a Board of

Adjustment for the purpose of hearing applications for variances from zoning
decisions.12 Six of the eight members of the newly-created Board of Adjustment were
individuals known to be against the development of the quarry.13 Citizens who had
made public statements against the quarry also were elected to the offices of Mayor
and City Council.14

The newly elected Town government reassigned the

responsibility for processing business licenses to an individual who was known to be
against the quarry.15 The newly elected Mayor appointed to the Town’s Planning
Commission five new members who were opposed to the quarry.16 The Planning
Commission subsequently recommended that the property M & N intended for the
quarry be re-zoned for agricultural use, and that recommendation was adopted by the

10

Id. ¶¶ 14-15.

11

Complaint ¶ 16.

12

Id. ¶¶ 17-18.

13

Id. ¶ 19.

14

Id. ¶ 20.

15

Id. ¶ 21.

16

Id. ¶ 22.

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City Council.17
After M & N received its ADEM permits and State and County licenses, but
before the Town annexed M & N’s property, defendant Vulcan Materials Company
(“Vulcan Materials”) and certain of its subsidiaries became aware of M & N’s intent
to open the quarry.18 Additionally, prior to the annexation, Vulcan Construction
Materials, LP (“Vulcan Construction”) paid M & N for the right to explore the
property for mineral deposits and other characteristics of potential value, so it could
determine if it wanted to purchase the property from M & N.19 After conductig that
exploration, Vulcan Construction obtained an option to purchase the property from
M & N for an amount that apparently was specified in the parties’ agreement, but is
not specified in plaintiff’s complaint.20 After the new Mayor, City Council, and
Planning Commission were elected, and after the new Board of Adjustment was
created, Vulcan Construction “substantially reduced” the purchase price it was
willing to pay M & N due to what it referred to as “‘this Gurley situation.’”21 The
complaint does not specify how much Vulcan Construction’s new offer was, or how
much it was reduced from the original purchase price. Vulcan Construction also
17

Complaint ¶ 23.

18

Id. ¶ 24.

19

Id. ¶ 25.

20

Id. ¶ 26.

21

Id. ¶ 27.

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offered a Royalty Agreement to M & N, but because the quarry has never been
allowed to operate on the property, Vulcan Construction has not paid M & N any
money under the Royalty Agreement.22
M & N felt that it was “[o]ut of viable options, facing a town that was prepared
to do anything necessary to stop its lawful business, and still owing money on
promissory notes for the quarry land.”23 Consequently, it “had no reasonable
alternative other than to accept an offer to purchase from Vulcan[ Construction]’s
affiliate, Vulcan Lands, at an amount far less than the amount Vulcan [Construction]
agreed to pay prior to ‘the Gurley situation.’”24
After Vulcan Lands purchased the property from M & N, it applied for a
business license from the Town, but the application was denied.25 M & N retained
a royalty interest in the property, but it has never received any royalty payments from
Vulcan Lands, or from any other Vulcan entity, because Vulcan Lands has never been
permitted to operate a quarry on the property it purchased from M & N.26 Even so,
the Town has permitted certain Vulcan entities to open and operate a quarry on
another parcel of land that is contiguous to the land Vulcan Lands purchased from M
22

Id. ¶ 28.

23

Complaint ¶ 29 (alteration supplied).

24

Id. (alterations supplied).

25

Id. ¶ 30.

26

Id. ¶¶ 30, 32.

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& N.27 The Town has never compensated, or offered to compensate, M & N for
“annexing the property into Gurley or regulating its lawful business out of
existence.”28
Even though the complaint in this case does not specify how much the purchase
price of M & N’s land decreased after various members of the Gurley local
government took actions to ensure that the quarry could not open, an opinion of the
Alabama Supreme Court in a state law inverse condemnation suit M & N brought
against the Town sheds some light on that matter. In addressing a petition, filed by
the Town and its Mayor, for a writ of mandamus directing the trial court to grant their
motions for summary judgment on M & N’s claims against them, the Alabama
Supreme Court stated that Vulcan Lands originally acquired an option to purchase the
property from M & N for $3.75 million on July 12, 2004, but that it never exercised
that option because M & N could not obtain a business license from the Town. Ex
parte Simpson, 36 So.3d 15, 20 (Ala. 2009). “Nevertheless, on November 23, 2004,
M & N sold the property to Vulcan Lands.” Id. “According to M & N, the
consideration for the sale of the property was actually $1 million, plus the royalty

27

Id. ¶ 32.

28

Id. ¶ 31.

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payments and obligations due under the agreement.” Id. at 21.29
III. DISCUSSION
M & N’s unconstitutional taking claim is asserted under the Fifth Amendment
to the United States Constitution,30 made applicable to the various states through the
Fourteenth Amendment.31 The United States Supreme Court defined the contours of
a Fifth Amendment taking claim in Lingle v. Chevron U.S.A. Inc., 544 U.S. 528

29

It is permissible for the court to consider the facts set forth in the Alabama Supreme
Court’s opinion without converting the Town’s motion to dismiss into a motion for summary
judgment. See Fed. R. Civ. P. 12(d) (“If, on a motion under Rule 12(b)(6) or 12(c), matters outside
the pleadings are presented to and not excluded by the court, the motion must be treated as one for
summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all
the material that is pertinent to the motion.”). Documents from prior judicial proceedings can be
considered without converting a motion to dismiss into one for summary judgment, because such
documents are “public records that [are] ‘not subject to reasonable dispute’ because they [are]
‘capable of accurate and ready determination by resort to sources whose accuracy could not
reasonably be questioned.’” Horne v. Potter, 392 F. App’x 800, 802 (11th Cir. 2010) (quoting Fed.
R. Evid. 201(b); other citations omitted) (alterations supplied).
30

The Fifth Amendment to the United States Constitution provides that:

No person shall be held to answer for a capital, or otherwise infamous crime,
unless on a presentment or indictment of a Grant Jury, except in cases arising in the
land or naval forces, or in the Militia, when in actual service in time of War or public
danger; nor shall any person be subject for the same offence to be twice put in
jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness
against himself, nor be deprived of life, liberty, or property, without due process of
law; nor shall private property be taken for public use, without just compensation.
U.S. Const., amend. V (1791) (emphasis supplied to the “taking clause”).
31

The “taking clause” of the Fifth Amendment has long been held applicable to the states.
The Supreme Court said in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978),
that “of course” the taking clause “is made applicable to the States through the Fourteenth
Amendment.” Id. at 122 (citing Chicago, Burlington & Quincy Railroad Co. v. Chicago, 166 U.S.
226, 238-39 (1897)).

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(2005). The following quote from that opinion is lengthy, but a comprehensive
understanding of the text is necessary because the parties dispute the proper scope of
a takings claim. The Supreme Court’s opinion in Lingle said that:
The Takings Clause of the Fifth Amendment, made applicable to
the States through the Fourteenth, see Chicago, B. & Q. R. Co. v.
Chicago, 166 U.S. 226, 17 S. Ct. 581, 41 L. Ed. 979 (1897), provides
that private property shall not “be taken for public use, without just
compensation.” As its text makes plain, the Takings Clause “does not
prohibit the taking of private property, but instead places a condition on
the exercise of that power.” First English Evangelical Lutheran Church
of Glendale v. County of Los Angeles, 482 U.S. 304, 314, 107 S. Ct.
2378, 96 L. Ed.2d 250 (1987). In other words, it “is designed not to
limit the governmental interference with property rights per se, but
rather to secure compensation in the event of otherwise proper
interference amounting to a taking.” Id., at 315, 107 S. Ct. 2378
(emphasis in original).
While scholars have offered various
justifications for this regime, we have emphasized its role in “bar[ring]
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.” Armstrong v. United States, 364 U.S. 40, 49, 80 S. Ct. 1563, 4
L. Ed. 2d 1554 (1960); see also Monongahela Nav. Co. v. United States,
148 U.S. 312, 325, 13 S. Ct. 622, 37 L. Ed. 463 (1893).
The paradigmatic taking requiring just compensation is a direct
government appropriation or physical invasion of private property. See,
e.g., United States v. Pewee Coal Co., 341 U.S. 114, 71 S. Ct. 670, 95
L. Ed. 809 (1951) (Government’s seizure and operation of a coal mine
to prevent a national strike of coal miners effected a taking); United
States v. General Motors Corp., 323 U.S. 373, 65 S. Ct. 357, 89 L. Ed.
311 (1945) (Government’s occupation of private warehouse effected a
taking). Indeed, until the Court’s watershed decision in Pennsylvania
Coal Co. v. Mahon, 260 U.S. 393, 43 S. Ct. 158, 67 L. Ed. 322 (1922),
“it was generally thought that the Takings Clause reached only a ‘direct
appropriation’ of property, or the functional equivalent of a ‘practical
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ouster of [the owner’s] possession.’” Lucas v. South Carolina Coastal
Council, 505 U.S. 1003, 1014, 112 S. Ct. 2886, 120 L. Ed. 2d 798
(1992) (citations omitted and emphasis added; brackets in original); see
also id., at 1028, n. 15, 112 S. Ct. 2886 (“[E]arly constitutional theorists
did not believe the Takings Clause embraced regulations of property at
all”).
Beginning with Mahon, however, the Court recognized that
government regulation of private property may, in some instances, be so
onerous that its effect is tantamount to a direct appropriation or ouster
— and that such “regulatory takings” may be compensable under the
Fifth Amendment. In Justice Holmes’ storied but cryptic formulation,
“while property may be regulated to a certain extent, if regulation goes
too far it will be recognized as a taking.” 260 U.S., at 415, 43 S. Ct. 158.
The rub, of course, has been — and remains — how to discern how far
is “too far.” In answering that question, we must remain cognizant that
“government regulation — by definition — involves the adjustment of
rights for the public good,” Andrus v. Allard, 444 U.S. 51, 65, 100 S. Ct.
318, 62 L. Ed. 2d 210 (1979), and that “Government hardly could go on
if to some extent values incident to property could not be diminished
without paying for every such change in the general law,” Mahon,
supra, at 413, 43 S. Ct. 158.
Our precedents stake out two categories of regulatory action that
generally will be deemed per se takings for Fifth Amendment purposes.
First, where government requires an owner to suffer a permanent
physical invasion of her property — however minor — it must provide
just compensation. See Loretto v. Teleprompter Manhattan CATV Corp.,
458 U.S. 419, 102 S. Ct. 3164, 73 L. Ed. 2d 868 (1982) (state law
requiring landlords to permit cable companies to install cable facilities
in apartment buildings effected a taking). A second categorical rule
applies to regulations that completely deprive an owner of “all
economically beneficial us[e]” of her property. Lucas, 505 U.S., at
1019, 112 S. Ct. 2886 (emphasis in original). We held in Lucas that the
government must pay just compensation for such “total regulatory
takings,” except to the extent that “background principles of nuisance
and property law” independently restrict the owner’s intended use of the
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property. Id., at 1026-1032, 112 S. Ct. 2886.
Outside these two relatively narrow categories (and the special
context of land-use exactions discussed below, see infra, at 2086-2087),
regulatory takings challenges are governed by the standards set forth in
Penn Central Transp. Co. v. New York City, 438 U.S. 104, 98 S. Ct.
2646, 57 L. Ed. 2d 631 (1978). The Court in Penn Central
acknowledged that it had hitherto been “unable to develop any ‘set
formula’” for evaluating regulatory takings claims, but identified
“several factors that have particular significance.” Id., at 124, 98 S. Ct.
2646. Primary among those factors are “[t]he economic impact of the
regulation on the claimant and, particularly, the extent to which the
regulation has interfered with distinct investment-backed expectations.”
Ibid. In addition, the “character of the governmental action” — for
instance whether it amounts to a physical invasion or instead merely
affects property interests through “some public program adjusting the
benefits and burdens of economic life to promote the common good” —
may be relevant in discerning whether a taking has occurred. Ibid. The
Penn Central factors — though each has given rise to vexing subsidiary
questions — have served as the principal guidelines for resolving
regulatory takings claims that do not fall within the physical takings or
Lucas rules. See, e.g., Palazzolo v. Rhode Island, 533 U.S. 606,
617-618, 121 S. Ct. 2448, 150 L. Ed. 2d 592 (2001); id., at 632-634, 121
S. Ct. 2448 (O’CONNOR, J., concurring).
Lingle, 544 U.S. at 536-39 (alterations and emphasis in original).
It is undisputed that M & N’s claim is for a “regulatory taking,” not a “physical
taking.” The parties disagree, however, about the scope of the regulatory taking
claim. The Town argues that the claim must be dismissed because M & N failed to
“plausibly allege” that the Town’s actions have deprived M & N of all beneficial use

12

of its property, thus rendering the property worthless.32 It is true that no such
allegations appear in M & N’s complaint; indeed, judicially noticeable documents
from a related state court case indicate that, even after all of the Town’s regulatory
impediments were implemented, M & N still was able to sell its property for $1
million, and it retained a right to royalty payments. Thus, it cannot be reasonably
deduced from any of the allegations of M & N’s complaint that M & N was deprived
of all economically beneficial or productive use of its property, or that the property
was rendered essentially worthless. See Agripost, Inc. v. Miami-Dade County, 195
F.3d 1225, 1231 (11th Cir. 1999); Serpenfoot v. Rome City Commission, 322 F.
App’x 801, 805 (11th Cir. 2009).
That would be the end of the matter, if demonstrating the loss of all
economically beneficial use of property were the only way to demonstrate an
unconstitutional regulatory taking. It is not. As the Lingle opinion makes clear, loss
of all economically beneficial use is but one type of a per se (or, as the Town calls it,
a “categorical”) regulatory taking claim. Another way of supporting a regulatory
taking claim is by evaluating the factors set forth in the Supreme Court’s Penn
Central opinion: i.e., the economic impact of the regulation on plaintiff; the extent

32

Doc. no. 13 (“Brief of Town of Gurley, Alabama in Support of Motion to Dismiss Federal
Takings Claim”), at 7.

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to which the regulation has interfered with distinct investment-backed expectations;
and, the character of the governmental action. See Penn Central, 438 U.S. at 124.
While the factual allegations of plaintiff’s complaint could certainly be more detailed,
they are not inconsistent with a Penn Central regulatory takings claim.33
IV. CONCLUSION AND ORDER
For all of the foregoing reasons, the Town of Gurley’s motion to dismiss
plaintiff’s unconstitutional takings claim (Count One ) is DENIED.34
DONE and ORDERED this 10th day of June, 2014.

______________________________
United States District Judge

33

The court disagrees with the Town’s argument that demonstrating the loss of all
economically beneficial use of the property is a “fundamental requirement[] of any regulatory takings
claim. Doc. no. 19 (“Reply of Town of Gurley, Alabama in Support of Motion to Dismiss Federal
Takings Claim”), at 1-2. The Eleventh Circuit admittedly framed the analysis in Serpenfoot and
Agripost in terms that, when read alone, seem to support the Town’s argument. See Serpenfoot, 322
F. App’x at 805-06 (“In order to state a claim for a regulatory taking, a plaintiff must allege . . . that
the government action denied her ‘all economically beneficial or productive use of [her] property.’”)
(quoting Agripost, 195 F.3d at 1231) (alteration in original, ellipses supplied); Agripost, 195 F.3d
at 1231 (“First, the property owner must allege that the governmental action . . . has ‘denie[d] all
economically beneficial or productive use of’ his property. . . . . In other words, the governmental
action must have made the property worthless.”) (quoting Lucas, 505 U.S. at 1015). However, the
Agripost decision predates the Supreme Court’s 2005 opinion in Lingle, and the Serpenfoot decision
is unpublished and, therefore, only persuasive authority. Lingle makes it clear that a plaintiff can
support a regulatory takings without alleging that its property has been rendered valueless.
34

The Town already filed an answer and amended answer to plaintiff’s complaint, denying
the allegations of Count One. See doc. no. 14 (Answer by Town of Gurley); doc. no. 20 (Amended
Answer by Town of Gurley).

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