211 Eighth, LLC et al v. Town of Carbondale et al

Filing 101

ORDER RE: CROSS-MOTIONS FOR SUMMARY JUDGMENT. Defendants' Motion for Partial Summary Judgment and Memorandum Brief in Support Thereof 50 is GRANTED IN PART and DENIED IN PART. Plaintiffs' Motion for Partial Summary Judgment 49 is DENIED AS MOOT. Plaintiffs' Motion In Limine To Exclude Testimony of Gary Suiter 34 is DENIED AS MOOT. Defendants are AWARDED their costs to be taxed by the clerk of the court. This case is REMANDED to the District Court of Garfield County, Colorado. By Judge Robert E. Blackburn on 2/11/2013. (kfinn, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Robert E. Blackburn
Civil Case No. 12-cv-00049-REB-MJW
211 EIGHTH, LLC, a Colorado limited liability company, and
PRINCE CREEK CONSTRUCTION, INC., a Colorado corporation,
Plaintiffs,
v.
TOWN OF CARBONDALE, a Colorado home-rule municipality,
NANCY BARNETT, in her official capacity as Acting Town Manager for the Town of
Carbondale, Colorado, and
JOHN PLANO, in his official capacity as the Building Official for the Town of
Carbondale.
Defendants.

ORDER RE: CROSS-MOTIONS FOR SUMMARY JUDGMENT
Blackburn, J.
The matters before me are (1) Defendants’ Motion for Partial Summary
Judgment and Memorandum Brief in Support Thereof [#50],1 filed November 16,
2012; and (2) Plaintiffs’ Motion for Partial Summary Judgment [#49], filed November
16, 2012.2 I grant defendants’ motion for summary judgment in part and deny it as moot
in part, deny plaintiffs’ summary judgment motion as moot, and remand the state law

1

“[#50]” is an example of the convention I use to identify the docket number assigned to a
specific paper by the court’s electronic case filing and management system (CM/ECF). I use this
convention throughout this order.
2

The issues raised by and inherent to the cross-motions for summary judgment are fully briefed,
obviating the necessity for evidentiary hearing or oral argument. Thus, the cross-motions stand submitted
on the briefs. Cf. FED. R. CIV. P. 56(c) and (d). Geear v. Boulder Community Hospital, 844 F.2d 764,
766 (10th Cir.) (holding that the hearing requirement for summary judgment motions is satisfied by court's
review of documents submitted by parties), cert. denied, 109 S.Ct. 312 (1988).

claims to the state district court from which they were removed.3
I. JURISDICTION
I have jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331 (federal
question) and 1367 (supplemental jurisdiction).
II. STANDARD OF REVIEW
Summary judgment is proper when there is no genuine issue as to any material
fact and the movant is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c);
Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265
(1986). A dispute is “genuine” if the issue could be resolved in favor of either party.
Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586,
106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Farthing v. City of Shawnee, 39 F.3d
1131, 1135 (10th Cir. 1994). A fact is “material” if it might reasonably affect the outcome
of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505,
2510, 91 L.Ed.2d 202 (1986); Farthing, 39 F.3d at 1134.
A party who does not have the burden of proof at trial must show the absence of
a genuine fact issue. Concrete Works, Inc. v. City & County of Denver, 36 F.3d
1513, 1517 (10th Cir. 1994), cert. denied, 115 S.Ct. 1315 (1995). By contrast, a movant
who bears the burden of proof must submit evidence to establish every essential
element of its claim or affirmative defense. See In re Ribozyme Pharmaceuticals, Inc.
Securities Litigation, 209 F.Supp.2d 1106, 1111 (D. Colo. 2002). In either case, once

3

My resolution of the cross-motions for summary judgment moots consideration of Plaintiffs’
Motion In Limine To Exclude Testimony of Gary Suiter [#34], filed October 17, 2012.

2

the motion has been properly supported, the burden shifts to the nonmovant to show, by
tendering depositions, affidavits, and other competent evidence, that summary
judgment is not proper. Concrete Works, 36 F.3d at 1518. All the evidence must be
viewed in the light most favorable to the party opposing the motion. Simms v.
Oklahoma ex rel Department of Mental Health and Substance Abuse Services, 165
F.3d 1321, 1326 (10th Cir.), cert. denied, 120 S.Ct. 53 (1999).
III. ANALYSIS
The Town of Carbondale, Colorado (the Town), a home rule municipality, has
enacted an affordable housing ordinance “to mitigate the impact of market rate housing
construction on the limited supply of available land suitable for housing” within the town.
(Def. Motion App., Exh. A-3 ¶ 15.25.020 at 7.) The ordinance establishes “community
housing requirements for [residential] development which require[] a portion of all new
residential development to be set aside for Community housing purposes as a condition
of approval for such development.” (Id.)
In December 2005, plaintiffs submitted an application to the Town for a
development known as Cleveland Place II. Plaintiffs were granted a number of
variances in connection with development of the project (see id., Exh. A-3 ¶ 15.20.100
at 10) and construction was allowed to begin on the infrastructure before the plan was
fully approved. Subsequently, in July 2007, plaintiffs and the Town entered into a
Subdivision Improvement Agreement (“SIA”) (id., Exh. A-8) and a Planned Unit
Development Agreement (“PUD”) (id., Exh. A-9), which were approved by local
ordinance (id., Exh. A-10).

3

Pursuant to the SIA, plaintiffs agreed to a number of “conditions of approval and
installation of public improvements,” including, most importantly for present purposes,
two units of community housing,4 designated as Lots 1A and 1B, which were to “be
ready for occupancy as required by the Carbondale Municipal Code.” (Id., Exh. A-8 ¶
2.b(xv) at 4.) The code, in turn, states that community housing units “shall be ready for
occupancy no later than the occupancy of free market units within the project.” (Id.,
Exh. A-3 ¶ 15.25.070(C) at 9.)
Development of Cleveland Place II proceeded, but in May 2008, the Town
learned that Lots 1A and 1B had either been sold or were under contract at free market
prices. The parties negotiated various amendments to the SIA and PUD, which
increased the total number of units for the project from 18 to 20 and designated three
units for community housing. (See id., Exh. A-11 ¶ C(7) at 3.) Although defendants
contend that plaintiffs failed to begin construction on the community housing units,5
plaintiffs counter that it was agreed that community housing units would be marketed as
“pre-sales,” to be constructed only after a buyer had entered into a commercially
reasonable contract.
Plaintiffs maintain that although they actively marketed the community housing
units through the Town’s administrative agent, Mountain Regional Housing Authority
(“MRHA”), they found only one buyer. Moreover, plaintiffs insist that the community
4

In so stating, I do not intend to express any opinion about whether community housing
constitutes a “public improvement,” an issue about which the parties disagree.
5

Defendants suggest that construction did continue on the free market units thereafter, noting
that four Certificates of Occupancy (“CO”s) were issued after the amendments were approved. Plaintiffs
insist, however, that the COs were issued only for units that had been completed prior to the amendments
and that plaintiffs undertook no new construction after the amendments.

4

housing contracts approved by MRHA included unreasonable conditions under which
their lender refused to finance construction of pre-sale units.
On August 6, 2009, the Town, via its attorneys, sent plaintiffs a letter under the
heading “NOTICE OF BREACH AND NOTICE OF INTENT TO TAKE ACTION” in
which the Town stated its position that the failure to build the community housing units
contemporaneously with the other units in the development constituted a breach of the
parties’ contract, as did plaintiffs’ alleged refusal to allow MRHA to use its standard form
contract to market and sell the units. (Id., Exh. A-15 at 2.) The letter advised plaintiffs
that if they did not cure within ten days, the Town would exercise its rights under the
SIA, including recording an affidavit of default and withholding additional building
permits and/or COs until the deficiencies had been cured. (Id., Exh. A-15 at 3; see also
id., Exh. A-8 ¶ 18 at 11-12.)6
In October 2010 and August 2011, plaintiffs requested COs for two units in the
Cleveland Place II development. Both were denied by the Town’s building inspector,
citing, inter alia, “pending litigation” and the affidavit of default.7 Meanwhile, in March
2011, the Town’s engineer performed a “warranty inspection” of the development and
noted that some concrete had failed.8

6

Because plaintiffs’ principal was out of the country at the time, he did not receive notice of this
letter until October 4, 2009. (See Def. Motion App., Exh. A-16.)
7

Although defendants assert that plaintiffs did not pursue any form of appeal of those denials,
plaintiffs insist that there is no applicable process for appeals for denial of a CO based on the recording of
an affidavit of default. The exhibit proffered by defendants in support of this particular issue is singularly
unilluminating on the matter. (See Def. Supp. Motion App. [#51], Exh. 3 (replacing Exh. A-18).)
8

Plaintiffs dispute whether the engineer, Chris Lehrman, had the expertise to determine that the
problems with the concrete were caused by material and/or workmanship, and concomitantly, what, if any,
portion of the repairs were attributable to warranty items.

5

Defendant Nancy Barnett, the acting town manager, notified plaintiffs on June 9,
2011, of the Town’s intent to draw on the extant letter of credit unless the alleged
deficiencies were cured within ten days. Ms. Barnett presented a first sight draft on
June 16, 2011, and a second on June 20, 2011. Although plaintiffs filed a motion for a
temporary restraining order to prevent the Town from calling in the letter of credit, the
bank released the funds on June 20, 2011.
As a result of these events, the development is now in foreclosure, and plaintiffs
represent that they are liable to their lenders for nearly three million dollars. The suit
they initially brought in Colorado state district court was eventually removed to this court
after plaintiffs filed an amended complaint asserting claims under 42 U.S.C. § 1983.
Plaintiffs assert four such claims here, alleging violation of their constitutional
rights of equal protection and substantive and procedural due process, as well as a
claim alleging a regulatory taking under the Fifth Amendment. In addition, plaintiffs
have alleged state law claims for breach of contract and for declaratory and injunctive
relief. For their part, defendants have counterclaimed for breach of contract.
A. EQUAL PROTECTION
Plaintiffs’ first claim asserts a violation of their rights of equal protection under the
Fourteenth Amendment. “Equal protection is essentially a direction that all persons
similarly situated should be treated alike.” Fogle v. Pierson, 435 F.3d 1252, 1260 (10th
Cir.), cert. denied, 127 S.Ct. 675 (2006) (citation and internal quotation marks omitted).
The Equal Protection Clause “does not forbid classifications. It simply keeps
governmental decisionmakers from treating differently persons who are in all relevant

6

respects alike.” Nordlinger v. Hahn, 505 U.S. 1, 10, 112 S.Ct. 2326, 2331, 120
L.Ed.2d 1 (1992). In general, and particularly in relation to economic and social welfare
issues, the state “retains broad discretion to classify as long as its classification has a
reasonable basis.” Graham v. Richardson, 403 U.S. 365, 371, 91 S.Ct. 1848, 1852,
29 L.Ed..2d 534 (1971). However, if the government’s classification involves a suspect
class or burdens a fundamental constitutional right, the classification is subject to strict
scrutiny and must be narrowly tailored to serve a compelling government interest. Save
Palisade FruitLands v. Todd, 279 F.3d 1204, 1210 (10th Cir.), cert. denied, 123 S.Ct.
81 (2002).
Plaintiffs do not argue (nor could they) that they are members of a suspect
class.9 Rather, they allege that they have a fundamental right to lease, sell, and convey
property which comes within the ambit of the Equal Protection Clause. The single case
on which they rely for this proposition, however, is inapposite.10 Contrary to plaintiffs’
suggestion, the universe of fundamental rights implicated by the Equal Protection
Clause is fairly limited. It includes the right of interstate travel, the right to vote, rights
guaranteed by the First Amendment and procedural due process, and various iterations

9

Suspect classes include “discrete and insular minorit[ies]” based on nationality, race, or
alienage. See Graham, 91 S.Ct. at 1852 (citation and internal quotation marks omitted). See also See
Save Palisade FruitLands, 279 F.3d at 1210 (designation of suspect class “is based on characteristics
beyond an individual's control and whether the class is saddled with such disabilities, or subjected to such
a history of purposeful unequal treatment, or relegated to such a position of political powerlessness as to
command extraordinary protection from the majoritarian political process”) (internal citations and quotation
marks omitted).
10

Plaintiffs cite to United States v. Maybee, 687 F.3d 1026 (8th Cir.), cert. denied, 133 S.Ct.
556 (2012), in which the court defined the term of art “badges and incidents of slavery” as used in the
Thirteenth Amendment as including “restraints upon those fundamental rights which are the essence of
civil freedom, namely the same right . . . to inherit, purchase, lease, sell and convey property, as is
enjoyed by white citizens.” Id. at 1030 n.2 (citation and internal quotation marks omitted).

7

of the right of privacy implicating matters of an intimate personal nature. See
Oklahoma Education Association v. Alcoholic Beverage Laws Enforcement
Commission, 889 F.2d 929, 932 (10th Cir. 1989);see also United States v. Williams,
124 F.3d 411, 422 (3rd Cir. 1997), cert. denied, 118 S.Ct. 698 (1998). Beyond these
narrow categories, however, and following the lead of the Supreme Court, the Tenth
Circuit has been particularly reluctant to expand the realm of fundamental rights
protected under the Equal Protection Clause:
It is not the province of this Court to create substantive
constitutional rights in the name of guaranteeing equal
protection of the laws. Thus, the key to discovering whether
[a right] is fundamental is not to be found in comparisons of
the relative societal significance of [that right] as opposed to
[others]. Nor is it to be found by weighing whether [that right]
is as important as the right [that has been historically
recognized]. Rather, the answer lies in assessing whether
there is [such a] right . . . explicitly or implicitly guaranteed by
the Constitution.
Oklahoma Education Association, 889 F.2d at 933 (citation and internal quotation
marks omitted) (concluding that right to pursue an occupation is not a fundamental right
for purposes of the Equal Protection Clause).
More particularly, federal courts have concluded uniformly that the right to
dispose of one’s property is not fundamental for equal protection purposes in
circumstances similar to those presented in this case.11 See Hager v. City of West
Peoria, 84 F.3d 865, 872 (7th Cir. 1996) (“Access to real property does not rise to the

11

The proposed Final Pretrial Order (see [#98] at 5 n.6) suggests that there is a split of authority
among the federal courts about whether such a right is indeed fundamental, although neither argument
nor authority on the issue is presented, either in the proposed Final Pretrial Order or in briefing on the
instant motions. My own research has uncovered no authority finding such a right to be fundamental in
the context of an equal protection claim.

8

level of a fundamental right such that its denial merits heightened scrutiny.”); Del Monte
Dunes at Monterey, Ltd. v. City of Monterey, 920 F.2d 1496, 1508 (9th Cir. 1990) (no
fundamental right implicated by city’s rejection of development proposal); Carr HUML
Investors, LLC v. Arizona, 2007 WL 4403981 at *9 (D. Ariz. Dec. 11, 2007) (“[T]here is
no fundamental right to build on, sell, or subdivide real property absent compliance with
government restrictions.”); Tanners Creek Properties, LLC v. Tremain, 2003 WL
22284569 at *5 (S.D. Ind. Sept. 30, 2003) (“[W]e agree with Defendants that Plaintiff's
property right is more fairly characterized as a right to the benefit of its bargain rather
than as a fundamental right to develop and sell its real property.”); North Dixie Theatre,
Inc. v. McCullion, 613 F.Supp. 1339, 1347 (S.D. Ohio 1985) (statute requiring flea
market operator to obtain motor vehicle dealer’s license in order to rent space to people
wishing to sell cars did not impinge on fundamental right). See also John E. Long, Inc.
v. Borough of Ringwood, 61 F.Supp.2d 273, 285 n.8 (D.N.J. 1998) (noting that
“[a]lthough one does have a fundamental right to acquire and dispose of real property, a
person does not have a fundamental right to use the property or have it zoned any way
he or she wishes”), aff’d, – Fed. Appx. –, 213 F.3d 628 (3rd Cr. March 2000) (citation
and internal quotation marks omitted). Although not binding, these precedents are
instructive.12 Moreover, and particularly in light of the Tenth Circuit’s reticence to
recognize new categories of fundamental rights, I find and conclude that plaintiffs have

12

Moreover, and albeit in a slightly different context, the Tenth Circuit has held that the right to
hunt on one’s land is not fundamental for purposes of an equal protection challenge. Clajon Production
Corp. v. Petera, 70 F.3d 1566, 1580 (10th Cir. 1995) (“Economic regulations – i.e., those burdening one's
property rights – have traditionally been afforded only rational relation scrutiny under the Equal Protection
Clause.”).

9

not asserted the violation of a fundamental right for purposes of their equal protection
claim.
Alternatively, plaintiffs suggest they still may proceed to trial as a “class of one.”13
See Village of Willowbrook v. Olech, 528 U.S. 562, 564, 120 S.Ct. 1073, 1074, 145
L.Ed.2d 1060 (2000). “To succeed on an equal protection claim as a class of one, a
party must demonstrate that (1) it has been intentionally treated differently than those
similarly situated; and (2) the difference in treatment was objectively irrational and
abusive.” Furlong Enterprises, LLC v. Nickerson, 785 F.Supp.2d 970, 980 (D. Colo.
2011) (internal citations and quotation marks omitted).
Assuming arguendo that plaintiffs can satisfy the first element – a proposition not
at all clear from the record before me – they present nothing to substantiate the second.
Plaintiffs must show “that they were singled out for persecution due to some animosity,
meaning that the actions of [the Town] were a spiteful effort to ‘get’ [plaintiffs] for
reasons wholly unrelated to any legitimate state activity.” Mimics, Inc. v. Village of
Angel Fire, 394 F.3d 836, 849 (10th Cir. 2005) (citation and internal quotation marks
omitted). Although plaintiffs argue that the Town issued COs to other developers who
had not built community housing units, the evidence reveals rational distinctions for
these differences in treatment – most notably, that all these alleged comparators
actually built community housing, whereas plaintiffs never did. Nor is there any other
record evidence sufficient to allow a reasonable jury to conclude that defendants
harbored the type of malice and ill will against plaintiffs sufficient to support a class-of13

Plaintiffs do not argue that defendants’ actions could not withstand a challenge under the
rational relationship standard.

10

one claim.
For these reasons, I find and conclude that summary judgment is appropriate as
to plaintiffs’ equal protection claim, and the motion as to that claim therefore will be
granted.
B. PROCEDURAL DUE PROCESS
The Fourteenth Amendment provides, inter alia, that the state may not deprive
“any person of life, liberty, or property, without due process of law.” U.S. CONST.,
amend. XIV. The procedural component of due process protects “the opportunity to be
heard at a meaningful time and in a meaningful manner.” Mathews v. Eldridge, 424
U.S. 319, 333, 96 S.Ct. 893, 902, 47 L.Ed.2d 18 (1976) (citation and internal quotation
marks omitted). To make out a claim for violation of the right to procedural due process,
plaintiffs must show, inter alia, the deprivation of an interest within the ambit of the
protection of the Fourteenth Amendment, that is, an interest in “life, liberty, or property.”
See Ingraham v. Wright, 430 U.S. 651, 672, 97 S.Ct. 1401, 1413, 51 L.Ed.2d 711
(1977); Elliott v. Martinez, 675 F.3d 1241, 1244 (10th Cir. 2012). “Protected liberty
interests may arise from two sources – the Due Process Clause itself and the laws of
the States.” Kentucky Department of Corrections v. Thompson, 490 U.S. 454, 460,
109 S.Ct. 1904, 1908 ,104 L.Ed.2d 506 (1989) (citation and internal quotation marks
omitted).
Plaintiffs argue that they have a protected property interest by virtue of
Colorado’s Vested Property Rights Act, which provides:
[a] vested property right shall be deemed established with
respect to any property upon the approval, or conditional
11

approval, of a site specific development plan, following
notice and public hearing, by the local government in which
the property is situated.”
§24-68-103(1)(b), C.R.S. The fact that state law creates a right, however, does not end
the constitutional inquiry. It further must be determined whether, as a matter of “federal
constitutional law . . . that interest rises to the level of a legitimate claim of entitlement
protected by the Due Process Clause such that the right is a protected property right
protected by due process.” Cross Continent Development, LLC v. Town of Akron,
Colorado, 742 F.Supp.2d 1179, 1188 (D. Colo. 2010) (quoting Memphis Light, Gas
and Water Division v. Craft, 436 U.S. 1, 9, 98 S.Ct. 1554, 56 L.Ed.2d 30 (1978))
(internal quotation marks omitted). Such a legitimate claim of entitlement exists only
when “the asserted right to property or liberty is mandated by state law [in that] specified
substantive predicates exist.” Elliott, 675 F.3d at 1244.
Plaintiffs’ vested property right under state law consists of “the right to undertake
and complete the development and use of said property under the terms and conditions
of the site specific development plan including any amendments thereto.” §24-68103(1)(c), C.R.S. In other words, plaintiffs have the right to complete the development
in accordance with the terms of the SIA and the PUD. Yet their compliance with those
terms vel non is the crux of this lawsuit. Without first determining that plaintiffs are not
in material breach of the contract, it is impossible to say that state law mandates a
decision in their favor.
This determination reveals a related and even more fundamental problem with
plaintiffs’ procedural due process claim, namely, that the circumstances in which a

12

breach of contract may give rise to a procedural due process claim are limited in any
event. “[I]t is neither workable nor within the intent of section 1983 to convert every
breach of contract claim against a state into a federal claim.” Taylor Acquisitions,
L.L.C. v. City of Taylor, 313 Fed. Appx. 826, 831 (6th Cir.), cert. denied, 130 S.Ct. 299
(2009) (citation and internal quotation marks omitted). There is no viable claim for
violation of the Due Process Clause when “the contract has not given rise to a greater
interest than the contract itself, and so a wrongful termination of the contract may be
fully remedied by a common law breach of contract action.” DeBoer v. Pennington,
287 F.3d 748, 750 (9th Cir. 2002). Therefore, “a claim for breach of contract generally
does not support a due process claim unless state contract remedies are foreclosed to
the plaintiff.” Cross Continent Development, 742 F.Supp.2d at 1187. Stated
differently, “if the state provides a remedy through a breach of contract action in state
court, there is no due process violation.” Id.14
It is clear beyond question that Colorado provides a remedy for breach of
contract, which state law remedy plaintiffs have sought to avail themselves in this selfsame action. Although the availability of such a claim for relief may be inadequate, and
pre-deprivation procedures consequently required, if the plaintiff “was denied a right by
virtue of which he was presently entitled . . . to exercise ownership dominion over real . .
. property,” Baird v. Board of Education for Warren Community Unit, 389 F.3d 685,
691 (7th Cir. 2004), cert. denied, 126 S.Ct. 332 (2005) (citation and internal quotation

14

Chief Judge Easterbrook provides a thoroughgoing analysis – in the particularly colorful style
and manner for which he is renowned – of this principle in Mid-American Waste Systems, Inc. v. City of
Gary, Indiana, 49 F.3d 286, 289-92 (7th Cir. 1995).

13

marks omitted), plaintiffs here were not denied any such right, see Lujan v. G&G Fire
Sprinklers, Inc., 532 U.S. 189, 196, 121 S.Ct. 1446, 1451, 149 L.Ed.2d. 391 (2001).
Instead, they simply allege that they were denied the benefit of their bargain. The predeprivation procedures mandated by due process are not implicated in these
circumstances. See id. (post-deprivation claim for breach of contract adequate where
plaintiff’s claim amounted to no more than deprivation “of payment that it contends it is
owed under a contract, based on the State's determination that [plaintiff] failed to
comply with the contract's terms. [Plaintiff] has only a claim that it did comply with those
terms and therefore that it is entitled to be paid in full.”).
For these reasons, I find and conclude that defendants’ motion for summary
judgment as to plaintiffs’ procedural due process claim must be granted.
C. SUBSTANTIVE DUE PROCESS
Due process also includes a substantive component, “the touchstone [of which]
. . . is protection of the individual against arbitrary action of government . . . in the
exercise of power without any reasonable justification in the service of a legitimate
governmental objective.” Graves v. Thomas, 450 F.3d 1215, 1220 (10th Cir. 2006)
(quoting County of Sacramento v. Lewis, 523 U.S. 833, 845-46, 118 S.Ct. 1708,
1716, 140 L.Ed.2d 1043 (1998)) (internal quotation marks omitted). Plaintiffs may make
out such a claim either by showing the infringement of a fundamental right or by
presenting evidence suggesting that defendants’ actions are so egregious as to “shock
the conscience” of the court. Neither of these benchmarks is met here.

14

The rights protected by substantive due process are carefully delimited to “those
fundamental rights and liberties which are, objectively, deeply rooted in this Nation's
history and tradition,” and thus are “implicit in the concept of ordered liberty, such that
neither liberty nor justice would exist if they were sacrificed.” Washington v.
Glucksberg, 521 U.S. 702, 720-721, 117 S.Ct. 2258, 2268, 138 L.Ed.2d 772 (1997)
(citations and internal quotation marks omitted). Beyond specifically enumerated
categories of interests, the Supreme Court has “always been reluctant to expand the
concept of substantive due process because guideposts for responsible decisionmaking
in this unchartered area are scarce and open-ended.” Id., 117 S.Ct. at 2267 (citation
and internal quotation marks omitted). More particularly, “substantive due process is
not a blanket protection against unjustifiable interferences with property.” Lee v. City of
Chicago, 330 F.3d 456, 467 (7th Cir. 2003) (citation and internal quotation marks
omitted).

The right to dispose of one’s property as one sees fit is not one of the

traditionally recognized fundamental rights for purposes of substantive due process.
See Mann v. Calumet City, Illinois, 2009 WL 395465 at *6 (N.D. Ill. Feb. 17, 2009),
aff’d, 588 F.3d 949 (7th Cir. 2009).
In the absence of such a right, rational-basis review prevails, see Lee, 330, F.3d
at 467,15 unless plaintiffs can demonstrate that defendants’ alleged actions were so
outrageous as to “shock the conscience of federal judges,” Uhlrig v. Harder, 64 F.3d

15

Moreover, “when a substantive-due-process challenge involves only the deprivation of a
property interest, a plaintiff must show either the inadequacy of state law remedies or an independent
constitutional violation before the court will even engage in this deferential rational-basis review.” Lee,
330 F.3d at 467 (citation and internal quotation marks omitted). The parties present neither argument nor
evidence relevant to this issue.

15

567, 573 (10th Cir. 1995) (quoting Collins v. City of Harker Heights, 503 U.S. 115,
126, 112 S.Ct. 1061, 1069, 117 L.Ed.2d 261 (1992)) (internal quotation marks omitted),
cert. denied, 116 S.Ct. 924 (1996). This is indeed a lofty threshold, which requires that
plaintiffs
do more than show that the government actor intentionally or
recklessly caused injury to the plaintiff by abusing or
misusing government power. Instead, [they] must
demonstrate a degree of outrageousness and a magnitude
of potential or actual harm that is truly conscience shocking.
Tonkovich v. Kansas Board of Regents, 159 F.3d 504, 528 (10th Cir. 1998) (citation
and internal quotation marks omitted). As implied in the statement of the standard itself,
the question whether conduct is conscience shocking is one of law for the court. See
Perez v. Unified Government of Wyandotte County/Kansas City, Kansas, 432 F.3d
1163, 1168 n.4 (10th Cir. 2005), cert. denied, 126 S.Ct. 2971 (2006).
Assuming arguendo that it is proper to consider plaintiffs’ claims under the rubric
of substantive due process at all, as opposed to a more particularized constitutional
guarantee, see Albright v. Oliver, 510 U.S. 266, 273, 114 S.Ct. 807, 813, 127 L.Ed.2d
114 (1994), I cannot conclude that defendants’ alleged actions in this lawsuit, even
construed in the light most favorable to plaintiffs, are so arbitrary and outrageous as to
shock the conscience. The actions plaintiffs describe outline a disagreement – albeit
undoubtedly a vigorous one – about the proper interpretation of the terms of a
contract.16 Such is not the stuff of a substantive due process claim. The motion for

16

Plaintiffs assert in their response that the Town “made false and defamatory statements about
Developer to unit owners in the Development and other developments” (Plf. Resp. at 19 [#59], filed
December 17, 2012), but fail to cite the court to any evidence in the record or otherwise identify these
alleged statements in any particular.

16

summary judgment thus will be granted as to this claim as well.
D. VIOLATION OF THE TAKINGS CLAUSE
Plaintiffs allege an unconstitutional taking in the October 2010 and August 2011
denials of COs for the two units that ostensibly are otherwise ready for occupancy, as
well as in the calling in of the letter of credit.17 These allegations implicate a claim of a
regulatory, as opposed to a physical, taking. See Yee v. City of Escondido,
California, 503 U.S. 519, 522-23, 112 S.Ct. 1522, 1526, 118 L.Ed.2d 153 (1992). A
regulatory taking occurs “when a regulatory or administrative action places such
burdens on ownership of private property that essential elements of such ownership
must be viewed as having been taken.” Kemp v. United States, 65 Fed. Cl. 818, 821
(2005) (citation and internal quotation marks omitted).
In analyzing such a claim, it is important to remember that “[t]he Fifth
Amendment does not proscribe the taking of property; it proscribes taking without just
compensation.” Williamson County Regional Planning Com'n v. Hamilton Bank of
Johnson City, 473 U.S. 172, 194, 105 S.Ct. 3108, 3120, 87 L.Ed.2d 126 (1985). As a
necessary corollary of that principle, a takings claim is not ripe until the plaintiff has
sought and been denied just compensation. Id., 105 S.Ct. at 1320
Nor does the Fifth Amendment require that just
compensation be paid in advance of, or contemporaneously
with, the taking; all that is required is that a reasonable,
certain and adequate provision for obtaining compensation

17

It is not entirely clear whether plaintiffs intend to invoke the Colorado Constitution as well. To
the extent they do, the Colorado Takings Clause is consistent with, and at least as broad as, the Fifth
Amendment Takings Clause, making the court’s determination under one provision coextensive with the
other. See Animas Valley Sand and Gravel, Inc. v. Board of County Commissioners of the County
of La Plata, 38 P.3d 59, 64 (Colo. 2001).

17

exist at the time of the taking. If the government has
provided an adequate process for obtaining compensation,
and if resort to that process yields just compensation, then
the property owner has no claim against the Government for
a taking.
Id. at 3120-21 (internal brackets, citations, and quotation marks omitted). For this
reason, “if a State provides an adequate procedure for seeking just compensation, the
property owner cannot claim a violation of the Just Compensation Clause until it has
used the procedure and been denied just compensation.” Id. at 3121.
Colorado does provide such a procedure by virtue of its eminent domain statute,
see §§ 38-1-101 - 38-1-122, C.R.S., which affords property owners the right to institute
inverse condemnation proceedings against the state, see Casey v. Colorado Higher
Education Insurance Benefits Alliance Trust, – P.3d –, 2012 WL 3517612 at *8
(Colo. App. Aug. 16, 2012). Plaintiffs’ suggestion that this statute does not apply to
regulatory takings is baseless.18 Although inverse condemnation is not the exclusive
remedy for a regulatory taking under Colorado law, the exceptions to that process are
limited to circumstances in which the plaintiff cannot bring an inverse condemnation
proceeding because the alleged taking was done by a state agency that has no power

18

Plaintiffs’ reliance for this proposition on the district court’s decision in Obendorf v. City and
County of Denver, 653 F.Supp. 304 (D. Colo. 1986), is particularly perplexing. The Obendorf plaintiffs
argued specifically that they were not asserting a takings claim, but rather were seeking damages related
to an alleged a conspiracy to fraudulently designate plaintiffs’ property as “blighted” in order to have it
condemned. See id. at 306. The district court rejected the defendants’ attempt to recharacterize the
plaintiffs’ claims as involving a claim for just compensation under the Takings Clause, noting that “[i]n fact,
if plaintiffs seek just compensation through inverse condemnation proceedings, then the objective, which
defendants' conspiracy was designed to achieve, would be realized.” Id. at 308. Indeed, the plaintiffs
there conceded that had they been seeking just compensation, such a claim would not have been ripe
unless and until they had pursued an inverse condemnation action in state court. Id. Moreover, the
viability of Obendorf on its own merits has been called into question. See First Bet Joint Venture v. City
of Centry City by and through City Council, 818 F.Supp. 1409, 1411-12 (D. Colo. 1993)

18

to condemn. State, Department of Health v. The Mill, 809 P.2d 434, 440 (Colo.
1991).19 By contrast, the Town of Carbondale is a home rule municipality, fully
possessed of the power of eminent domain. See Town of Telluride v. San Miguel
Valley Corp., 185 P.3d 161, 165 (Colo. 2008) (noting that section 1 of article XX of the
Colorado Constitution grants home rule municipalities the power of eminent domain).
Accordingly, plaintiffs’ takings claim is not ripe, and the motion for summary
judgment is granted as to that claim.
E. BREACH OF CONTRACT
Thus, the only remaining claims for consideration are the parties’ respective state
law claims for breach of contract .20 When all federal claims have been dismissed prior
to trial, the court generally should decline to exercise supplemental jurisdiction over
pendant state claims. United States v. Botefuhr, 309 F.3d 1263, 1273 (10th Cir. 2002).
I find it appropriate to decline to exercise supplemental jurisdiction, and thus will remand
the remaining state law claims to the state district court from which they were removed.
IV. ORDERS
THEREFORE, IT IS ORDERED as follows:
19

The reasons underlying such a determination are obvious:
We decline to restrict the remedy for a taking to inverse condemnation
where the potential consequence of such a holding would be that a
property owner would have no remedy for a violation of the self-executing
Takings Clauses of the United States and Colorado Constitutions.
Limiting a property owner to an inverse condemnation action against an
agency that does not have the power of eminent domain would enable
the State to take property without paying compensation, in violation of the
United States and Colorado Constitutions.

The Mill, 809 P.2d at 440 (footnote omitted).
20

These claims are implicated also in plaintiffs’ claims for declaratory and injunctive relief.

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1. That Defendants’ Motion for Partial Summary Judgment and
Memorandum Brief in Support Thereof [#50], filed November 16, 2012, is GRANTED
IN PART and DENIED IN PART as follows:
a. That the motion is GRANTED concerning the claims of the plaintiffs for
alleged violation of their rights under the United States Constitution brought
pursuant to 42 U.S.C. § 1983: specifically, the claims for violation of the
guarantees of equal protection and substantive and procedural due process
under the Fourteenth Amendment and for violation of the Just Compensation
Clause of the Fifth Amendment; and
b. That in all other respects, the motion is DENIED AS MOOT;
2. That Plaintiffs’ Motion for Partial Summary Judgment [#49], filed
November 16, 2012, is DENIED AS MOOT;
3. That Plaintiffs’ Motion In Limine To Exclude Testimony of Gary Suiter,
[#34], filed October 17, 2012, is DENIED AS MOOT;
4. That judgment SHALL ENTER on behalf of defendants, Town of Carbondale,
a Colorado home-rule municipality; Nancy Barnett, in her official capacity as Acting
Town Manager for the Town of Carbondale, Colorado; and John Plano, in his official
capacity as the Building Official for the Town of Carbondale, Colorado, and against
plaintiffs, 211 Eighth, LLC, a Colorado Limited Liability Company; and Prince Creek
Construction, Inc., a Colorado corporation, on plaintiffs’ claims brought pursuant to 42
U.S.C. § 1983; provided,

20

a. That the dismissal of and concomitant judgment on plaintiffs’ claims for
violation of the Just Compensation Clause shall be without prejudice; and
b. That the dismissal of and concomitant judgment on plaintiffs’ remaining
federal claims under the Fourteenth Amendment shall be with prejudice;
5. That as prevailing parties, defendants are AWARDED their costs to be taxed
by the clerk of the court under Fed. R. Civ. P. 54(d)(1) and D.C.COLO.LCivR 54.1;
6. That the trial set to commence February 25, 2013, is VACATED; and
7. That this case is REMANDED to the District Court of Garfield County,
Colorado (where it was filed originally as Case Number 2011CV166).
Dated February 11, 2013, at Denver, Colorado.
BY THE COURT:

21