ABC Sand and Rock Company Incorporated v. Maricopa, County of et al

Filing 21

ORDER denying Defendant's Motion to Dismiss [Doc. 10]. See order for details. Signed by Judge Neil V. Wake on 4-18-13. (NRB)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 ABC Sand and Rock Company, Inc., Plaintiff, 10 11 ORDER vs. 12 No. CV-13-00058-PHX-NVW Maricopa County, et al., Defendants. 13 Before the Court is Defendants’ Motion to Dismiss (Doc. 10). 14 15 I. LEGAL STANDARD 16 On a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), all 17 allegations of material fact are assumed to be true and construed in the light most 18 favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 19 2009). To avoid dismissal, a complaint need contain only “enough facts to state a claim 20 for relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 21 (2007). The principle that a court accepts as true all of the allegations in a complaint 22 does not apply to legal conclusions or conclusory factual allegations. Ashcroft v. Iqbal, 23 566 U.S. 662, 678 (2009). “A claim has facial plausibility when the plaintiff pleads 24 factual content that allows the court to draw the reasonable inference that the defendant is 25 liable for the misconduct alleged.” Id. 26 II. FACTS ALLEGED AND ASSUMED TO BE TRUE 27 Defendant Flood Control District of Maricopa County (“District”) is a political 28 subdivision of Defendant Maricopa County (“County”) and the State of Arizona. 1 Defendants DeWayne Justice, Melvin Martin, Hemant Patel, Scott Ward, and Wylie 2 Bearup are members of the Flood Control Advisory Board (“District Board”), which 3 advises the County’s Board of Supervisors regarding flood control, floodplain 4 management, drainage, and related matters. 5 administrative review board for administrative appeals. The District Board also acts as the 6 Defendant Timothy Phillips is the Chief Engineer and General Manager of the 7 District. Defendant Mike Jones is the District’s Sand and Gravel Division Supervisor. 8 Defendant Jack Guzman is a sand and gravel inspector employed by the District. 9 Defendant Ed Raleigh is the District’s Floodplain Administrator. 10 The District has prescribed regulations for permitting, set by the County Board of 11 Supervisors. The primary requirement to obtain a sand and gravel permit is a mining 12 Plan of Development. For many years, the District required only a very simple Plan of 13 Development. Once mining permits are issued, they are renewed in five-year increments. 14 The District’s custom and practice for sand and rock permit renewals has been to require 15 only the payment of the renewal fee and sometimes the completion of a simple permit 16 renewal form. Pursuant to custom and practice, as well as regulations, permit renewals 17 are non-discretionary and automatic. The District followed a practice whereby permit 18 renewals were effectively deemed renewed upon receipt of the operator’s renewal fee, 19 and sometimes it did not formally process renewals for many months. 20 Plaintiff ABC Sand and Rock Company, Inc. (“Plaintiff”) is a small sand and 21 gravel mining business that operates in Maricopa County. It established a mining 22 operation in Glendale, Arizona (“Plant 1”) in 1985 and another in Tonopah, Arizona 23 (“Plant 2”) in 2002. Plaintiff has had a permit for its operations since 1985, when permits 24 were first required by the County. 25 In 1995, the District did not formally process and approve Plaintiff’s Plant 1 26 permit renewal until almost seven months after the formal expiration date. In 2000, 27 Plaintiff obtained its Plant 1 renewal by submitting a simple renewal application and its 28 application fee, and the District did not formally process the Plant 1 renewal until more -2  1 than one year after the formal expiration date. In 2006, Plaintiff obtained its Plant 1 2 renewal by simply submitting its renewal fee without a new application form. Plaintiff’s 3 2000 renewal application was simply annotated by the District inspector with a new 4 expiration date: “EXP Date 2/17/2011.” 5 For Plant 2, Plaintiff submitted its application fee and Plan of Development in 6 2006. The District inspector directed where a berm needed to be installed, and upon its 7 completion, the inspector approved Plant 2 for operations. 8 After Defendant Phillips became General Manager of the District, it began 9 attempting to institute regulatory changes that Plaintiff’s president believed state law did 10 not authorize the District to make. On February 14, 2011, Plaintiff’s president submitted 11 Plaintiff’s permit renewal fee with a letter stating that he was seeking renewal of the 12 existing permit and was not making any change to his Plan of Development. The letter 13 also set forth detailed criticism of the District and its proposed regulatory changes. Also 14 in 2011, Plaintiff submitted extensive comments, criticism, and suggested revisions in 15 response to the District’s draft of proposed regulations and was publicly critical of the 16 District. When the District presented its proposed regulations to the County Board of 17 Supervisors, Plaintiff submitted its own legal analysis, comments, and suggested 18 revisions, and the District’s proposed regulations were removed from the County Board 19 of Supervisors’ meeting agenda. Later, when the District’s proposed regulations were 20 submitted to the County Board of Supervisors at a public hearing, Plaintiff’s criticisms 21 were brought to the County Board’s attention. 22 ultimately rejected the District’s proposal on November 30, 2011. The County Board of Supervisors 23 On March 10, 2011, the District inspected Plant 1 and approved it. On that day, 24 the District inspector requested that Plaintiff submit a renewal application, and Plaintiff 25 did. On April 11, 2011, Defendant Jones issued a list of demands, including information 26 about operations, new engineering, and consent to entirely new permit terms on the 27 existing plan. 28 -3  1 One of the new permit terms was the Property Owner Liability provision proposed 2 by the District to the County Board of Supervisors and publicly opposed by Plaintiff. 3 The Property Owner Liability provision required that liability be shifted from operators to 4 property owners even though County regulations allowed mining permits to be issued to 5 either property owners or operators. Customarily, the sand and gravel operator held the 6 permit and was subject to the District’s jurisdiction, not the property owner. This shift in 7 liability was like requiring a strip mall property owner to obtain and be liable for the 8 liquor license of a bar that leases space in the mall. Plaintiff believed that it would 9 expose property owners to the seizure of property by the District based on a tenant’s 10 actions or inactions. 11 Plaintiff provided much of the information that Defendant Jones requested, and the 12 District ultimately abandoned its remaining new demands, except for the Property Owner 13 Liability provision. The District, through Defendant Jones, continued to attempt to 14 require Plaintiff to agree to the Property Owner Liability provision even after the County 15 Board of Supervisors rejected it on November 30, 2011. The District continued to post 16 the Property Owner Liability provision as a listed permit requirement on the District 17 website as late as April 2012. 18 On May 31, 2011, the District, through Defendant Raleigh, issued a Notice of 19 Violation against Plaintiff, claiming Plaintiff was operating without a permit. 20 District demanded that Plaintiff completely cease its business operations, which would 21 effectively put the company out of business. Moreover, the Notice of Violation claimed 22 that Plaintiff had not renewed its permit in both 2006 and 2011. Although the District 23 admitted that its records showed that Plaintiff’s permit was renewed in 2006, it claimed 24 that its renewal was an error. The District’s former inspector who conducted the 2006 25 inspection testified that he performed the inspection and renewed the permit on behalf of 26 the District. He further testified that he noted in the District’s inspection database, which 27 he maintained, that Plaintiff’s permit was renewed. 28 -4  The 1 In September 2011, Plaintiff met with the Defendant Raleigh and the District’s 2 attorneys, and the parties came to an agreement. To confirm the terms, Plaintiff’s 3 accountant and advisor read over the final agreement, and everyone agreed, including 4 Defendant Raleigh. But the next morning, the District’s lawyer sent a typed copy of the 5 agreement, with drastically different terms than those the parties had agreed upon. The 6 District continued to expand its list of demands in December 2011 and in March 2012. 7 Plaintiff leases approximately 200 of the 240 acres of Plant 1 from the Arizona 8 State Land Department (“ASLD”), which holds the property in trust for the State. 9 Defendant Jones and Defendant Guzman went to the ASLD and demanded that ASLD 10 terminate its lease with Plaintiff. ASLD notified Plaintiff, conducted its own 11 investigation, and concluded that Plaintiff was in compliance with the law. Plaintiff also 12 was notified by Fort McDowell Yavapai Materials that the District attempted to halt its 13 business with Plaintiff. In addition, the District contacted the Arizona Department of 14 Transportation, and as a result, Plaintiff was removed from the Department’s bid list and 15 lost business. 16 Another sand and gravel operator, M.R. Tanner Mining, operated in the floodplain 17 without a permit for nine years. On September 15, 2011, Plaintiff presented evidence of 18 M.R. Tanner Mining’s operation without a permit during a District administrative 19 hearing. At the end of the day, Defendant Raleigh contacted M.R. Tanner Mining and 20 offered a temporary permit. The District did not issue a Notice of Violation or impose a 21 fine on M.R. Tanner Mining for operating without a permit for nine years. In contrast, 22 the District issued a Notice of Violation and imposed a fine for $169,000 on Plaintiff for 23 allegedly operating without a permit for a number of months. 24 In early 2011, the District provided notice and conducted a routine inspection of 25 Plant 1 in March 2011. No problems were found, and the District approved the 26 operations. Near the end of 2011, however, Defendant Guzman attempted to inspect 27 Plant 1 with less than one day’s notice. In July 2012, Defendant Guzman arrived at Plant 28 1 without any notice and attempted to conduct an inspection. On another occasion in -5  1 2012, Defendant Guzman gave no notice of an inspection, but conducted an inspection of 2 Plant 2 without permission to be on the property. Defendant Guzman admitted that he 3 was directed by Defendant Jones and other District superiors to treat Plaintiff in this way. 4 The District has directed a conspiracy to put Plaintiff out of business, which 5 included use of the administrative review process. Defendant Phillips directed the 6 conspiracy involving Defendants Raleigh, Jones, Guzman, the individual District Board 7 members, and others. On September 12 and 15, 2011, a hearing was held before an 8 administrative hearing officer regarding Plaintiff’s challenge to the Notice of Violation. 9 The hearing officer found that Plaintiff’s permit was renewed in 2006 and expired on 10 May 14, 2011. Subsequently, Defendant Phillips issued his final order, adopting the 11 hearing officer’s ruling and issuing a fine of $169,000. Plaintiff appealed the hearing 12 officer’s ruling, and the case was set for hearing before the District Board. On January 13 25, 2012, the District held an ex parte hearing without notice to plan ruling against 14 Plaintiff at the administrative appeal hearing. 15 Phillips, the District Board members, and the District Board attorney. The meeting was 16 recorded, and subsequently Plaintiff obtained a copy of the recording. Defendant Phillips 17 presented his position that Plaintiff was in violation of the permitting rules. District 18 Board members indicated they were ready to rule against Plaintiff, and one even 19 questioned whether a hearing was necessary. 20 administrative appeal was heard, Plaintiff objected to the District Board serving as the 21 review panel due to bias. After deliberations, the District Board ruled in favor of Plaintiff 22 and found that its February 2011 permit renewal was valid and in effect. Against the 23 advice of the County Board of Supervisors, the District decided to appeal its own ruling 24 to the Superior Court. Because the deadline to appeal had passed on May 2, 2012, the 25 District Board issued a new order on June 27, 2012, restating its March 28, 2012 final 26 decision, and on July 31, 2012, filed its appeal in Superior Court. The participants included Defendant On March 28, 2012, when the 27 The Complaint identifies five claims for relief, the last of which is a remedy, not a 28 claim: (1) Violation of 42 U.S.C. § 1983: Retaliation of ABC’s First Amendment -6  1 Rights; (2) Violation of 42 U.S.C. § 1983: Violation of Due Process; (3) Violation of 42 2 U.S.C. § 1983: Violation of Equal Protection; (4) Violation of 42 U.S.C. § 1985: 3 Conspiracy; and (5) Injunctive Relief. Each claim is alleged against all Defendants. 4 III. ANALYSIS 5 A. 6 Defendants contend that this action should be dismissed because Plaintiff has 7 failed to exhaust administrative remedies. Exhaustion of state administrative remedies is 8 not a prerequisite to bringing an action pursuant to § 1983 except as required under other 9 federal statutes not applicable here. Patsy v. Bd. of Regents, 457 U.S. 496, 516 (1982); 10 Exhaustion of Administrative Remedies Heck v. Humphrey, 512 U.S. 477, 480 (1994). 11 B. Compliance with Arizona Notice of Claim Statute 12 Defendants contend that Plaintiff’s state law claims must be dismissed for failure 13 to comply with A.R.S. § 12-821.01, the Arizona notice of claim statute. Plaintiff states 14 that none of the claims alleged in the Complaint are based on state law. State notice of 15 claim statutes do not apply to actions under § 1983. Felder v. Casey, 487 U.S. 131, 140- 16 41 (1988), superseded by statute on other grounds, 42 U.S.C. § 1997(e)(a) (2011). 17 C. 18 Defendants contend that Plaintiff’s state law claims must be dismissed as time- 19 barred by A.R.S. § 12-821. Again, Plaintiff states that none of the claims alleged in the 20 Complaint are based on state law. 21 22 23 24 25 26 27 D. Statute of Limitations Absolute Immunity Defendants contend that claims against the County and District Board are barred by A.R.S. § 12-820.01, which provides public entities absolute immunity in specific circumstances. However, Defendants merely quote the statute and do not present any argument or analysis regarding how the statute applies here. The statute applies only to state law claims, which are not pleaded here. Defendants do not mention absolute immunity in their Reply; therefore, this defense is also deemed abandoned. 28 -7  1 E. 2 The parties agree that there is no respondeat superior liability under § 1983 claims. 3 Plaintiff contends that the Complaint alleges only direct § 1983 claims against the 4 County, District, and individual employee Defendants. Defendants contend that the 5 Complaint “fails to state a claim for deliberate indifference.” Municipal Liability Under § 1983 6 “To bring a § 1983 claim against a local government entity, a plaintiff must plead 7 that a municipality’s policy or custom caused a violation of the plaintiff’s constitutional 8 rights.” Ass’n for Los Angeles Deputy Sheriffs v. Cnty. of Los Angeles, 648 F.3d 986, 9 992-93 (9th Cir. 2011). A plaintiff must show (1) he possessed a constitutional right of 10 which he was deprived, (2) the municipality had a policy, (3) the policy amounts to 11 deliberate indifference to the plaintiff’s constitutional right, and (4) the policy is the 12 “moving force behind the constitutional violation.” Anderson v. Warner, 451 F.3d 1063, 13 1070 (9th Cir. 2006). “For a policy to be the moving force behind the deprivation of a 14 constitutional right, the identified deficiency in the policy must be closely related to the 15 ultimate injury,” and the plaintiff must establish “that the injury would have been avoided 16 had proper policies been implemented.” Long v. Cnty. of Los Angeles, 442 F.3d 1178, 17 1190 (9th Cir. 2006). 18 The Complaint alleges that Defendants’ actions are the actions of the County and 19 the District. The actions alleged are those of the highest levels of investigatory and 20 enforcement actors of the District. The Complaint further alleges they executed acts, 21 policies, procedures, customs, and training (or lack of training) in violation of Plaintiff’s 22 constitutional rights, knew of the unlawful conduct and approved of it, knew of the 23 unlawful conduct and ratified it by inaction, and/or were deliberately indifferent to the 24 execution of such conduct. The Complaint provides specific factual allegations regarding 25 each Defendant’s conduct sufficient to give notice of the substance of Plaintiff’s claims 26 against each Defendant. 27 28 -8  1 F. 2 The Complaint names individual Defendants in their official capacity as well as 3 their individual capacity. Defendants contend that claims against the District employees 4 and the District Board members are barred by qualified immunity because the 5 constitutional rights allegedly violated were not clearly established. Qualified Immunity 6 “Qualified immunity shields federal and state officials from money damages 7 unless a plaintiff pleads facts showing (1) that the official violated a statutory or 8 constitutional right, and (2) that the right was ‘clearly established’ at the time of the 9 challenged conduct.” Ashcroft v. al-Kidd, __ U.S. __, 131 S. Ct. 2074, 2080 (2011). 10 Courts have discretion to decide which of the two prongs of the qualified immunity 11 analysis should be addressed first and may grant qualified immunity on the basis of the 12 second prong alone without deciding the first prong. Pearson v. Callahan, 555 U.S. 223, 13 236 (2009); James v. Rowlands, 606 F.3d 646, 651 (9th Cir. 2010). 14 “A Government official’s conduct violates clearly established law when, at the 15 time of the challenged conduct, the contours of a right are sufficiently clear that every 16 reasonable official would have understood that what he is doing violates that right.” 17 Ashcroft v. al-Kidd, 131 S. Ct. at 2083 (internal quotation and alteration marks omitted). 18 For a right to be “clearly established,” there need not be a case directly on point, but 19 “existing precedent must have placed the statutory or constitutional question beyond 20 debate.” Id. “The principles of qualified immunity shield an officer from personal 21 liability when an officer reasonably believes that his or her conduct complies with the 22 law.” Pearson, 555 U.S. at 244. 23 The Complaint alleges that Defendants knew of the improper treatment of Plaintiff 24 and permitted it to continue. Defendants state, “There is no case law that would have put 25 Defendants on notice that their conduct was violative of any clearly established rights.” 26 But Defendants would not need case law to know that arbitrarily changing permit 27 renewal requirements without notice, imposing sanctions on Plaintiff and not on other 28 -9  1 similarly situated operators, attempting to impose unlawful permit requirements, and 2 holding secret ex parte District Board meetings in retaliation for Plaintiff’s public 3 criticism of the District would violate Plaintiff’s First Amendment, due process, and 4 equal protection constitutional rights. On the facts alleged, none of the Defendants is 5 entitled to qualified immunity protection. 6 G. 7 Defendants raise for the first time in their Reply that the Flood Control Advisory 8 Board and Board of Hearing Review are non-jural entities, but the Complaint does not 9 identify them as defendants. Defendants also raise for the first time in the Reply issues 10 regarding individual Defendants Wylie Bearup and Melvin Martin, but the Court 11 considers only arguments presented in Defendants’ Motion to Dismiss. 12 13 14 Issues Raised for the First Time in Reply IT IS THEREFORE ORDERED that Defendants’ Motion to Dismiss (Doc. 10) is denied. Dated this 18th day of April, 2013. 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 10  

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