Power Road-Williams Field LLC v. Gilbert, Town of et al
Filing
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ORDER: Defendants' Motion to Dismiss 7 is granted in part; This case is remanded to Maricopa County Superior Court. Signed by Judge David G Campbell on 4/18/2014. (See Order for details) (Attachments: # 1 Remand Letter)(ALS)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE DISTRICT OF ARIZONA
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Power Road-Williams Field LLC,
Plaintiff,
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ORDER
v.
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No. CV-13-02065-PHX-DGC
Gilbert, et al.,
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Defendants.
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Defendants Town of Gilbert, City of Mesa, and Maricopa County have filed a
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motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Doc. 7. The
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motion is fully briefed. The Court will grant Defendants’ motion in part and remand this
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case to Maricopa County Superior Court.1
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I.
Background.
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Plaintiff Power Road-Williams Field, LLC brought this action in Arizona Superior
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Court on May 15, 2013. Doc. 1-1 at 3. Plaintiff alleges violations of state and federal
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law, including A.R.S. § 9-461.11(F) and 42 U.S.C. § 1983. Defendants removed the
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action to federal court on October 10, 2013. Doc. 1.
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Plaintiff owns approximately 73 acres of land located at the northwest corner of
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the intersection of Power Road and Williams Field Road in Maricopa County. Doc. 1-1,
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¶ 6. Power Road is a major arterial roadway that experiences heavy traffic, services the
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The requests for oral argument are denied because the issues have been fully
briefed and oral argument will not aid the Court’s decision. See Fed. R. Civ. P. 78(b);
Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998).
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larger metropolitan area, and serves as the common corporate boundary between Gilbert
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and Mesa. Id., ¶¶ 8-9.
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Defendants entered into an intergovernmental agreement (“IGA”) pursuant to
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A.R.S. § 11-951, et seq., to undertake a $30 million improvement project to widen and
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realign a segment of Power Road, creating a separate one-way, three-lane road in each
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direction. Doc. 1-1, ¶ 11. The gist of Plaintiff’s complaint is that the IGA did not
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comply with A.R.S. § 9-461.11(F) and that the process mandated by statute was not
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followed. Id., ¶ 21. Plaintiff alleges that the Town of Gilbert staff “decided to radically
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re-design and re-align the intersection of Power Road and Williams Field Road” in order
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to “retaliate against Plaintiff and deprive it of the economically viable use of Plaintiff’s
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property” because Plaintiff had refused to cooperate with Gilbert’s plan to annex part of
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the property. Id., ¶¶ 13, 57-58.
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The Gilbert General Plan states that arterial roads should provide reasonable levels
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of traffic services (“LOS”), that traffic signals and intersection design should create a safe
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and efficient flow of traffic to optimize travel and increase corridor capacity, and that
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public projects should reduce vehicle emissions. Id., ¶ 28. Plaintiff alleges that Power
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Road could have been widened to three lanes traveling in each direction by using the
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existing alignment and right of way (the “Existing Improved Alignment”). Id., ¶ 29.
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Multiple traffic impact analyses commissioned by Plaintiff and Defendants reported that
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the Existing Improved Alignment would be superior to the proposed realignment. Id.,
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¶¶ 34-44.
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intersection and construct an expensive and longer bridge over a floodway and canal (the
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“One Way Alignment”). Id., ¶ 30.
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Nevertheless, the Gilbert Town staff chose to redesign the roadway
Plaintiff alleges that the One Way Alignment does not conform to the Gilbert
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General Plan and significantly reduces the value of Plaintiff’s property.
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Plaintiff alleges that Defendants adopted the IGA without (1) reviewing the economic
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impact of the alignment on development potential for surrounding land; (2) considering
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the effect on area business or tax revenues; (3) determining whether the realignment of a
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Id., ¶ 45.
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major arterial roadway and construction of a multimillion dollar bridge would conform to
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the Gilbert Plan; (4) determining whether construction of the One Way Alignment would
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be cheaper than the Existing Improved Alignment; (5) considering the fact that the One
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Way Alignment will increase traffic wait times, reduce traffic service below acceptable
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LOS, and generate more air pollution; (6) analyzing the effect of the One Way Alignment
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design on traffic safety and intersection maintenance costs; and (7) determining whether
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the intersection design will fail before its ultimate design year due to the extremely short
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distances between signalized intersections. Id., ¶ 97. As a result of these failures,
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Plaintiff alleges that it was deprived of property without the process required by state law
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and is entitled to compensation of more than $7,100,000. Id., ¶¶ 118-19.
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II.
Legal Standard.
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When analyzing a complaint for failure to state a claim under Rule 12(b)(6), the
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well-pled factual allegations are taken as true and construed in the light most favorable to
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the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). Legal
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conclusions couched as factual allegations are not entitled to the assumption of truth,
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Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009), and therefore are insufficient to defeat a
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motion to dismiss for failure to state a claim, In re Cutera Sec. Litig., 610 F.3d 1103,
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1108 (9th Cir. 2010) (citation omitted).
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complaint must plead enough facts to state a claim to relief that is plausible on its face.
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Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This plausibility standard “is not
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akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a
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defendant has acted unlawfully.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at
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556). “[W]here the well-pleaded facts do not permit the court to infer more than the mere
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possibility of misconduct, the complaint has alleged – but it has not ‘show[n]’ – ‘that the
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pleader is entitled to relief.’” Id. at 679 (quoting Fed. R. Civ. P. 8(a)(2)).
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III.
To avoid a Rule 12(b)(6) dismissal, the
Analysis.
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Defendants argue that the complaint must be dismissed for three reasons: (1) it is
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barred by res judicata; (2) it is barred by the statute of limitations; and (3) it fails to state
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a claim under 42 U.S.C. § 1983 or A.R.S. § 9-461.11(F). Doc. 23 at 1; Doc. 7 at 2-3.
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The Court will address each argument below.
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A.
Res Judicata.
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Plaintiff instituted an action in Arizona Superior Court in March 2011, suing
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Defendants for alleged violations of A.R.S. § 11-952 and § 9-461.11(F) (the “Previous
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Action”). Doc. 22 at 1; Doc. 22-1 at 1. Plaintiff alleged that Defendants had violated the
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Gilbert General Plan (Doc. 22-1 at 28), failed to follow statutory procedures (Doc. 22-1
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at 32), and failed to enter into an IGA (Doc. 22-1 at 33). Plaintiff sought declaratory,
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injunctive, and mandamus relief, but no monetary relief, presumably because the
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improvements had not yet been built. The Superior Court granted Defendants’ motions
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to dismiss three of Plaintiff’s four claims for failure to state a claim and later granted
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summary judgment on the remaining claim. Doc. 22 at 2. Before final judgment had
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been entered, Plaintiff filed this action, alleging that Defendants’ IGA was defective and
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adding a claim for damages under 42 U.S.C. § 1983 and a state law claim for negligence.
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The Superior Court entered judgment on August 8, 2013. Id. Plaintiff appealed to the
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Arizona Court of Appeals and briefing is now underway. Id.
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“To determine the preclusive effect of a state court judgment, federal courts look
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to state law.” Intri-Plex Techs., Inc. v. Crest Group, Inc., 499 F.3d 1048, 1052 (9th Cir.
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2007) (citation omitted). “Under Arizona law, a claim is barred by res judicata if a court
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previously issued a final judgment on the merits involving the same cause of action with
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the same parties.” Chaney Bldg. Co. v. City of Tucson, 716 P.2d 28, 30 (Ariz. 1986).
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Arizona uses the “same evidence” test for determining whether an earlier action is the
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same as the current action. Phoenix Newspapers, Inc. v. Dep’t of Corrections, State of
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Ariz., 934 P.2d 801, 804 (Ariz. Ct. App. 1997). Under this test, “[i]f no additional
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evidence is needed to prevail in the second action than that needed in the first, then the
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second action is barred.” Id.; see also Rousselle v. Jewett, 421 P.2d 529, 531 (1966).
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The “same evidence” test is quite liberal, and permits a plaintiff to avoid preclusion
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“merely by posturing the same claim as a new legal theory,” even if both theories rely on
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the same underlying occurrence. Phoenix Newspapers, Inc., 934 P.2d at 805.
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The claims asserted in this case are not barred by res judicata. Although the
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claims asserted in the Previous Action arise from the same underlying dispute and within
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the same administrative and statutory framework, Plaintiff’s claims in this case are
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legally and factually distinct. The Previous Action sought redress for harms stemming
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from Defendants’ failure to enter into an IGA, failure to conform to the Gilbert General
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Plan, and arbitrary and capricious exercise of governmental powers. Doc. 23 at 3;
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Doc. 22-1 at 28-35. This case seeks redress for harms stemming from an allegedly
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deficient IGA that Defendants entered into after the Previous Action was filed, asserts a
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claim under 42 U.S.C. § 1983 for depriving Plaintiff of property without due process of
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law, and claims negligent use of governmental power to retaliate against Plaintiff.
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Doc. 23 at 4-5; Doc. 1-1 at 26-31. Although the claims arise from some of the same facts
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as the Previous Action, they are new legal theories based on some additional facts and
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therefore are not barred by res judicata under Arizona law. See Phoenix Newspapers, 934
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P.2d at 805 (explaining that the same evidence test allows litigants to “implicat[e]
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somewhat different facts” and “recast their claims under new theories”).
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B.
Statute of Limitations.
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Defendants argue that all of Plaintiff’s state law claims are barred by a one-year
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statute of limitation. Doc. 7 at 11. Defendants assert that the state law claims accrued on
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May 10, 2012, “at the very latest,” and that Plaintiff filed its complaint on May 15, 2013.
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Id. at 11-12. Both of Plaintiff’s state law claims stem from Defendants’ execution of the
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allegedly deficient IGA. Plaintiff’s complaint alleges that the IGA was recorded on
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May 10, 2012, but that Plaintiff’s counsel did not and could not receive a copy of the
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IGA until May 16, 2012. Doc. 1-1, ¶¶ 86-87. Plaintiff argues that the causes of action
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did not accrue until May 16, 2012, the day Plaintiff’s counsel received a copy of the IGA.
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Doc. 11 at 16.
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In Arizona, any action against a public entity or public employee must be brought
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within one year after the accrual of a cause of action. A.R.S. § 12-821. The related 180-
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day deadline for presenting a notice of claim to the public entity, set forth in A.R.S. § 12-
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821.01, provides that the cause of action accrues “when the damaged party realizes he or
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she has been damaged and knows or reasonably should know the cause, source, act,
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event, instrumentality or condition which caused or contributed to the damage.” A.R.S.
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§ 12-821.01(B) (emphasis added). Arizona courts have applied this trigger to both the
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one-year statute of limitation and the 180-day notice of claim period for claims against
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public entities. See Long v. City of Glendale, 93 P.3d 519, 525 (Ariz. Ct. App. 2004)
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(reversing dismissal based on both § 12-821 and § 12-821.01); Flood Control Dist. of
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Maricopa Cnty. v. Gaines, 43 P.3d 196, 202 (Ariz. Ct. App. 2002) (“a cause of action
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under § 12-821 does not accrue until it is ‘discovered’”).
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Thus, Plaintiff’s claim did not accrue until it realized it had been damaged by
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Defendants’ actions. “The requirement that a claimant ‘realize’ he has been damaged is
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inconsistent with the idea that claimants can be deemed to have notice of a claim as a
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matter of law regardless of their actual knowledge of the claim. One does not ‘realize’
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something because there is a legal presumption that he knows it.” Long, 93 P.3d at 525.
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Arizona courts additionally have noted that although “official records may give
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constructive notice of some facts, they do so only to those who are bound to search those
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records.” Id. at 526 (citation omitted). Defendants cite no law that compelled Plaintiff to
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search public records for the content of the IGA. Thus, the Court cannot conclude as a
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matter of law that Plaintiff’s state law claims accrued on May 10, 2012 due to the
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recording of the IGA.
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Defendants have also provided the Court with a copy of Plaintiff’s claim letter to
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Mayor John W. Lewis of the Town of Gilbert, dated November 2, 2012, which states that
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“[t]he date of the actual triggering event for the accrual of [the relevant claims] is
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Thursday, May 10, 2012. This is the date on which the IGA was recorded in the official
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records of the Maricopa County Recorder . . . . The recording of the IGA gave
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constructive notice to [Plaintiff] of the IGA[.]” Doc. 7-1 at 5. Plaintiff argues that the
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Court may not consider this letter because “[a] motion to dismiss may not rely upon
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evidence outside the pleadings.” Doc. 11 at 17. The Court does not agree. Because
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Plaintiff’s complaint refers to the letter and Plaintiff does not question its authenticity, the
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Court may consider it in ruling on this motion. Knievel v. ESPN, 393 F.3d 1068, 1076
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(9th Cir. 2005).
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Defendants argue that Plaintiff’s statement in the notice of claim letter that its
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claim accrued on May 10, 2012 is dispositive on the timeliness issue. It is not. Plaintiff’s
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claim accrued when Arizona law says it accrued, not when Plaintiff thought it accrued.
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Under Arizona law, Plaintiff’s cause of action accrued when Plaintiff “realized” it had
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been damaged. Defendant has not argued or otherwise shown that Plaintiff realized it
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had been damaged before May 15, 2012.
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C.
Failure to State a Claim under 42 U.S.C. § 1983.
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Defendants argue that Plaintiff’s complaint fails to state a claim under § 1983.
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Plaintiff alleges that Defendants’ failure to adopt an IGA in conformity with the
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procedural requirements of A.R.S. § 9-461.11(F) deprived Plaintiff of a protected
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property right – “a reasonable expectation that Plaintiff would be accorded certain
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procedural due process prior to the time Defendants adopted and implemented this joint
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development plan” – without due process of law in violation of the Fourteenth
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Amendment. Doc. 1-1, ¶ 120-21. Defendants argue that Plaintiff’s claim alleges a “mere
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failure of Defendants to follow state law,” and that this cannot form the basis for a § 1983
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claim. Doc. 7 at 7-8.
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The Due Process Clause forbids governmental deprivation of substantive rights
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without constitutionally adequate procedure. See Cleveland Bd. of Educ. v. Loudermill,
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470 U.S. 532, 541 (1985). To obtain relief on a procedural due process claim, the
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plaintiff must establish the existence of “(1) a liberty or property interest protected by the
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Constitution; (2) a deprivation of the interest by the government; [and] (3) lack of
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process.” Portman v. Cnty. of Santa Clara, 995 F.2d 898, 904 (9th Cir. 1993); see also
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Board of Regents v. Roth, 408 U.S. 564, 569 (1972). “Not every procedural requirement
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ordained by state law, however, creates a substantive property interest entitled to
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constitutional protection.” Shanks v. Dressel, 540 F.3d 1082, 1091 (9th Cir. 2008). “A
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protected property interest is present where an individual has a reasonable expectation of
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entitlement deriving from ‘existing rules or understandings that stem from an
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independent source such as state law.’” Wedges/Ledges of Cal., Inc. v. City of Phoenix,
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24 F.3d 56, 62 (9th Cir. 1994) (quoting Roth, 408 U.S. at 577)).
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expectation of entitlement is determined largely by the language of the statute and the
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extent to which the entitlement is couched in mandatory terms.” Ass’n of Orange Cnty.
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Deputy Sheriffs v. Gates, 716 F.2d 733, 734 (9th Cir. 1983). “Although procedural
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requirements ordinarily do not transform a unilateral expectation into a protected
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property interest, such an interest is created ‘if the procedural requirements are intended
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to be a significant substantive restriction on . . . decision making.’” Wedges/Ledges, 24
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F.3d at 62 (quoting Goodisman v. Lytle, 724 F.2d 818, 820 (9th Cir. 1984)).
“A reasonable
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In the Ninth Circuit, procedural due process claims generally fail where the
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relevant law does not contain mandatory language that significantly constrains the
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decision maker’s discretion. Shanks, 540 F.3d at 1090. “Only if the governing statute
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compels a result upon compliance with certain criteria, none of which involve the
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exercise of discretion by the reviewing body, does it create a constitutionally protected
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property interest.” Id. at 1091 (internal quotation marks and citation omitted). For
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example, in Wedges/Ledges, the property interest at stake was a license to operate
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amusement games. Under the controlling section of the Phoenix City Code, the City
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Treasurer was required to determine whether or not a coin-operated game qualified as a
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“game of skill.” Wedges/Ledges, 24 F.3d at 63. If it did, the Code provided that a game
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license tag “shall be issued.” Id. The court concluded that the use of the imperative in
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the provision without the presence of any open-ended discretionary factors created an
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expectation and protected property interest that could form the basis of a due process
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claim. Id.
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In Shanks, by contrast, a homeowners and community organization sued to enjoin
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construction of a duplex that it feared would devalue the neighborhood. The organization
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alleged that it was denied a procedural due process right when the city of Spokane failed
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to enforce provisions of its zoning code intended to preserve historic districts. Shanks,
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540 F.3d at 1084. Shanks held that no protected property interest was at stake because
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the relevant law granted the city wide discretion in negotiating the content of building
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permits and because the city was directed to guide its discretion by considering “factors
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of public interest” in an unspecified way that did not mandate any outcome. Id. at 1091.
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The statute in this case contains mandatory procedural language. See, e.g., A.R.S.
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§ 9-461.11(F)(1)(d) (“A property owner shall be afforded the opportunity at a public
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hearing . . . to present [evidence]. If on the basis of the [evidence] presented there is
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reason to believe . . . the [plan] may result in a significant [reduction in value or
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productive use], adoption or implementation of the plan shall be postponed pending
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investigation and resolution of the alleged deprivation.”) (emphasis added).
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mandatory language does not, however, dictate any particular outcome. It merely states
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that adoption or implementation of the plan “shall be postponed” for further investigation
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and resolution. Plaintiff does not complain in this case about a lack of postponement.
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Plaintiff complains that the project went forward as planned. And yet the statue says
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nothing about whether the governing body was required to modify the project on the
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basis of evidence presented at the public hearing. On that question, the governing body
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retains discretion. The Court concludes, therefore, that A.R.S. § 9-461.11(F) creates no
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procedural entitlement that rises to the level of a property right protected under the
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Constitution. See James v. Rowlands, 606 F.3d 646, 656 (9th Cir. 2010) (“To create a
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right protected by the Due Process Clause, the state law must provide more than merely
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procedure; it must protect some substantive end.”) (internal quotation marks and citation
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omitted); accord Olim v. Wakinekona, 461 U.S. 238, 250 n.12 (1983) (“[A]n expectation
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of receiving process is not, without more, a liberty interest protected by the Due Process
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Clause.”).
The
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Additionally, even if the Court found that Plaintiff possessed a protectable
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property interest, Defendants’ conduct did not violate due process. It is the Due Process
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Clause, not state law, which determines what process is due. Halverson v. Skagit Cnty.,
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42 F.3d 1257, 1260 (9th Cir. 1994). “Ordinarily, due process of law requires [notice and]
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an opportunity for some kind of hearing prior to the deprivation of a significant property
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interest.” Sinaloa Lake Owners Ass’n v. City of Simi Valley, 882 F.2d 1398, 1405 (9th
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Cir. 1989) (internal quotations omitted). Plaintiff’s complaint alleges that it was provided
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notice of Defendants’ proposed action and that it was able to appear at multiple public
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hearings and present evidence. Even if Defendants’ conduct did not perfectly accord
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with state law, due process was satisfied by this notice and opportunity to be heard. See
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Walker v. Sumner, 14 F.3d 1415, 1420 (9th Cir. 1994) (noting that “if state procedures
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rise above the floor set by the due process clause, a state could fail to follow its own
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procedures yet still provide sufficient process to survive constitutional scrutiny.”)
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(internal quotations marks and citation omitted) (overruled on other grounds, Sandin v.
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Conner, 515 U.S. 472, 483-84 (1995)).
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The Court will dismiss Plaintiff’s § 1983 claim.
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D.
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This case was removed from state court on the basis of the federal question
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presented by the § 1983 claim, with supplemental jurisdiction over the state law claims.
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Doc. 1, ¶ 2. A district court may decline to exercise supplemental jurisdiction if “the
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district court has dismissed all claims over which it has original jurisdiction.” 28 U.S.C.
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§ 1367(c)(3). The Supreme Court has instructed that “‘if the federal claims are dismissed
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before trial . . . the state claims should be dismissed as well.’” Carnegie-Mellon Univ. v.
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Cohill, 484 U.S. 343, 350 n.7 (1988) (quoting United Mine Workers of America v. Gibbs,
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383 U.S. 715, 726 (1966)). While not a hard-and-fast rule, the statement has come to
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mean that “in the usual case in which all federal claims are eliminated before trial, the
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balance of factors . . . will point toward declining to exercise jurisdiction over the
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remaining state-law claims.” Id.
Remand.
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The Court concludes that this action should be remanded. With dismissal of the
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§ 1983 claim, the basis for this Court’s federal question jurisdiction no longer exists. The
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remaining state-law claims, particularly the claim under A.R.S. § 9-461.11(F), present
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complicated questions of statutory interpretation that are best addressed by Arizona trial
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and appellate courts. Those courts have a greater interest and expertise in resolving state
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law claims and applying state statutes. Additionally, remand will benefit the federal
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system by allowing this Court to devote its scarce resources to resolving federal issues.
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IT IS ORDERED:
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Defendants’ motion to dismiss (Doc. 7) is granted in part.
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2.
This case is remanded to Maricopa County Superior Court.
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Dated this 18th day of April, 2014.
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