Big Star Developments, LLC v. Town of Highland Indiana et al

Filing 35

OPINION AND ORDER: For the reasons set forth in the Opinion and Order, Plaintiffs' Extension Motion 11 and Defendants' Partial Motion to Dismiss 17 are DENIED AS MOOT, Defendants' motion to dismiss Count II 19 is GRANTED, and De fendants' Motion to Strike 29 is DENIED AS MOOT. Count II is DISMISSED WITHOUT PREJUDICE. The Clerk is directed to REMAND this case to Lake Superior Court for further proceedings. Signed by Judge Rudy Lozano on 6/22/17. (cc: certified copies of Opinion & Order and docket sheet to Lake County Superior Court) (jss)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
BIG STAR DEVELOPMENTS, LLC
Plaintiff,
vs.
TOWN OF HIGHLAND INDIANA;
BERNIE ZEMEN, in his
capacity as President of the
Town of Highland Town
Council; DAN VASSAR, in his
capacity as President of the
Town of Highland Town
Council; MARK HERAK, in his
capacity as President of the
Town of Highland Town
Council; STEVE WAGNER, in
his capacity as Member of
the Town of Highland Town
Council; KONNIE KUIPER, in
his capacity as Member of
the Town of Highland Town
Council; and TOWN OF
HIGHLAND BOARD OF ZONING
APPEALS,

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NO. 2:17–CV-3

Defendants.
OPINION AND ORDER
This matter is before the Court on the Motion for Extension
of Time in which to File the Record (DE #11), filed by Plaintiff
Big Star Developments, LLC (“Big Star”) on January 25, 2017;
Defendants’ Partial Motion to Dismiss (DE #17), filed by Defendants

1

Town of Highland, Indiana, Bernie Zemen, Dan Vassar, Mark Herak,
Steve Wagner, Konnie Kuiper, and Town of Highland Board of Zoning
Appeals (together, “Defendants”) on February 8, 2017; Defendants’
Motion to Dismiss Count II of Plaintiffs’ Verified Petition for
Judicial Review/Declaratory Judgment and Complaint for Lack of
Subject Matter Jurisdiction (DE #19), filed on February 8, 2017;
and Defendants’ Motion to Strike Plaintiff’s Notice of Filing (DE
#29), filed on April 6, 2017.

For the reasons set forth below,

Plaintiffs’ motion for extension of time (DE #11) and Defendants’
partial motion to dismiss (DE #17) are DENIED AS MOOT, Defendants’
motion to dismiss Count II (DE #19) is GRANTED, and Defendants’
motion to strike (DE #29) is DENIED AS MOOT.
WITHOUT PREJUDICE.

Count II is DISMISSED

The Clerk is directed to REMAND this case to

Lake Superior Court for further proceedings.

BACKGROUND
In December 2016, Big Star filed a Verified Petition for
Judicial Review/Declaratory Judgment and Complaint (“Complaint”)
in Lake Superior Court seeking judicial review of a zoning decision
allegedly made by Defendants.

(DE #4 (“Compl.”).)

The Complaint

alleges that in 2015 and 2016, Big Star met with officials of
defendant Town of Highland, Indiana (“Town”) regarding a potential
rezoning of certain property located in Highland (“Property”) to
develop it as a storage facility.

2

(Id., ¶6.)

At the direction of

Town officials, Big Star filed a use variance petition (“petition”)
to allow it to construct a storage facility on the Property. (Id.,
¶7.)

Defendant Town of Highland Board of Zoning Appeals (“BZA”)

held a preliminary hearing on the petition on August 24, 2016.
(Id., ¶8.)

On September 28, 2016, BZA held a public hearing at

which Big Star submitted documentation and evidence in support of
its petition.

(Id., ¶10-11.)

Thereafter, BZA adopted a motion to

forward an unfavorable recommendation to the Town Council pursuant
to Indiana Code § 36-7-4-918.6.

(Id., ¶12.)

At a meeting on

November 14, 2016, the Town Council allegedly (1) considered an
additional written remonstrance without allowing Big Star to be
heard, (2) accepted the BZA’s unfavorable recommendation, and (3)
denied Big Star’s petition without discussion or explanation.
(Id., ¶¶13-14.)

The Complaint alleges that “the Town’s actions

have rendered the Property valueless as it is undevelopable,” that
the Town was aware of this when it denied Big Star’s petition, and
that the Town plans to acquire the Property for its own purposes.
(Id., ¶29.) The Complaint asserts three claims against Defendants:
judicial review pursuant to Indiana Code §§ 36-7-4-1003 and 36-74-1016(a)

and

declaratory

judgment

(Count

I);

violation

of

procedural and substantive due process under 42 U.S.C. § 1983
(Count II); and inverse condemnation (Count III).
On January 4, 2017, Defendants filed a notice of removal of
the

case

to

federal

court

based

3

on

the

Court’s

original

jurisdiction over Count II under 28 U.S.C. § 1331.

(DE #1.)

On

January 25, 2017, Big Star moved to extend the time in which to
file the record of the zoning proceedings on which its claims are
based (“Extension Motion”).

(DE #11.)

On February 8, 2017,

Defendants filed a partial motion to dismiss, seeking to dismiss
Counts I and II and all Defendants except the Town (“Partial Motion
to Dismiss”). (DE #17.) Defendants also filed a motion to dismiss
Count II for lack of subject matter jurisdiction (“Motion to
Dismiss Count II”).

(DE #19.)

Big Star subsequently filed a

notice of filing of the record of the zoning proceedings, and on
April 6, 2017, Defendants moved to strike that notice of filing
(“Motion to Strike”).

(DE #29.)

The parties have fully briefed

all four motions. The Court will first consider Defendants’ Motion
to Dismiss Count II.

DICUSSION
Motion to Dismiss Count II
Defendants

argue

that

the

Court

lacks

subject

matter

jurisdiction over Count II because it is not ripe for review.

See

Sprint Spectrum L.P. v. City of Carmel, Indiana, 361 F.3d 998,
1002 (7th Cir. 2004) (ripeness is a prerequisite to the exercise
of a federal court’s subject matter jurisdiction).

Motions to

dismiss for lack of subject matter jurisdiction fall under Rule
12(b)(1) of the Federal Rules of Civil Procedure.

4

In considering

a Rule 12(b)(1) motion, the Court must “accept as true all wellpleaded factual allegations and draw all reasonable inferences in
favor of the plaintiff,” and may “look beyond the jurisdictional
allegations of the complaint and view whatever evidence has been
submitted on the issue to determine whether in fact subject matter
jurisdiction exists.”

St. John's United Church of Christ v. City

of Chicago, 502 F.3d 616, 625 (7th Cir. 2007) (citation omitted).
The plaintiff bears the burden of demonstrating subject matter
jurisdiction, and must “clearly allege facts that invoke federal
court

jurisdiction.”

“presume[s]

that

Sprint,

federal

361

courts

F.3d

lack

at

1001.

The

jurisdiction

contrary appears affirmatively from the record.”

Court

unless

the

Id. (citation

and internal quotation marks omitted).
Defendants argue that while Count II is labeled a due process
claim, it is actually a mislabeled takings claim that is not ripe
for review because Big Star has not exhausted its state remedies.
In Williamson County Regional Planning Commission v. Hamilton Bank
of Johnson City, 473 U.S. 172, 105 S. Ct. 3108, 87 L.Ed.2d 126
(1985), the United States Supreme Court set forth the ripeness
requirements imposed on a claim that governmental action amounted
to a taking of property:

(1) there must be a “final decision” by

the regulatory agency; and (2) the property owner must exhaust
available

state

including

inverse

remedies

for

obtaining

condemnation

proceedings,

5

just

compensation,

before

filing

in

federal court.
premature

where

Id. at 186, 196–97 (holding taking claim was
respondent

had

not

shown

state’s

inverse

condemnation procedure was unavailable or inadequate).

Under

Williamson, “if a state provides adequate procedures for seeking
just compensation, a property owner cannot state a takings claim
in federal court until [it] has used these procedures and been
denied just compensation.”

Black Earth Meat Mkt., LLC v. Vill. of

Black Earth, 834 F.3d 841, 847 (7th Cir. 2016).
The parties do not dispute that the decision to deny Big
Star’s use variance petition was a final decision subject to
judicial review.1

Nor do they dispute that Big Star has not

exhausted state remedies to obtain just compensation.

Big Star

filed its Complaint in state court seeking judicial review of
Defendants’ zoning decision, and asserting an inverse condemnation
claim.2

(Compl., Counts I & III.)

Defendants removed the case to

1

 The Court notes that the parties disagree as to whether the BZA

or the Town Council made the final decision to deny Big Star’s
petition.
(See DE #23 at 5 (“final decisions of the board of
zoning appeals on use variances ‘are considered zoning decisions
for purposes of this chapter and are subject to judicial review…’”)
(quoting Ind. Code § 36-7-4-1016(a)); DE #26 at 4 (“Under IC 367-4-918.6 and IC 36-7-4-1003(a), it is the Town Council’s decision,
not the BZA’s recommendation, that is under review.”).) Because
Big Star does not satisfy Williamson’s second requirement of
exhausting state remedies, the Court need not resolve this issue.

2

  In Indiana, “[i]nverse condemnation is the process provided by

statute that allows individuals to be compensated for the loss of
property interests taken for public purposes without use of the
eminent domain process.”
Tornatta Investments, LLC v. Indiana
6

federal court based on Count II of the Complaint, which alleges
due process claims under 42 U.S.C. § 1983.

(Compl., Count II).

None of these claims have been adjudicated.
The

disputed

issue

mislabeled taking claim.

is

whether

Count

II

is

actually

a

Big Star maintains that Count II is

correctly labeled as procedural and substantive due process claims
under 42 U.S.C. § 1983.

As Big Star points out, there is “no

general duty to exhaust state judicial or administrative remedies
before pursuing an action under 42 U.S.C. § 1983.”

Horsley v.

Trame, 808 F.3d 1126, 1129 (7th Cir. 2015) (citing Patsy v. Board
of Regents of State of Florida, 457 U.S. 496, 516, 102 S. Ct. 2557,
73 L.Ed.2d 172 (1982)).

However, “labels do not matter”; “the

Williamson [] exhaustion requirement applies with full force to
due process claims (both procedural and substantive) when based on
the same facts as a takings claim.”

Greenfield Mills, Inc. v.

Macklin, 361 F.3d 934, 961 & n.33 (7th Cir. 2004) (citations
omitted); see Peters v. Village of Clifton, 498 F.3d 727, 730 n.4
(7th Cir. 2007) (The “ripeness requirements of Williamson [] create
a takings claim exception to Patsy's general requirement that
exhaustion is not required in § 1983 suits.”) (citation omitted).
Thus, the Court must determine if Big Star’s due process claims

Dep't of Transp., 879 N.E.2d 660, 663 (Ind.
(citations omitted); Ind. Code § 32-24-1-16. 
7

Ct.

App.

2008)

are really takings claims in disguise.
not ripe.

If they are, Count II is

See Black Earth Meat Mkt., 834 F.3d at 847.

Defendants assert that Count II is actually a takings claim
because

it

relies

on

condemnation claim:

the

same

facts

as

Big

Star’s

inverse

that the Town deprived Big Star of any

economically beneficial use of the Property by denying its use
variance petition.
property

are

Due process claims that concern the use of the

“archetypal

takings

claims”;

claims

that

allege

deprivations of “interests independent of the property itself” are
not takings claims.

Black Earth Meat Mkt., 834 F.3d at 848.

Big

Star does not identify an interest independent of the Property.
Cf. id. (finding plaintiff’s financing agreement with a third party
and its liberty interest in slaughter to be “properly construed as
(non-takings) procedural due process claims”).

In defending the

merits of its procedural due process claim, Big Star maintains
that “the private interest that will be affected by the official
action is rendering the property at issue completely valueless, as
it is undevelopable under the current zoning scheme.”
6.)

(DE #23 at

Big Star’s inverse condemnation claim similarly alleges that

“the Town’s actions have rendered the Property valueless as it was
undevelopable,” a fact the Town was aware of when it “denied Big
Star’s Use Variance Application.”

(Compl. ¶29.)

Because Big Star

identifies the same property interest for its procedural due
process

and

inverse

condemnation

8

claims,

the

procedural

due

process claim is actually a takings claim.

See Black Earth Meat

Mkt., 834 F.3d at 848 (holding that because “a property interest
in the non-conforming use” and “the right to use the property for
a slaughterhouse purpose” were “archetypal takings claims,” due
process claims with regard to these interests were not ripe).3
Moreover, Big Star’s due process claims are based on the same
conduct as its inverse condemnation claim.

Count III alleges

inverse condemnation based in part on the Town’s decision to deny
Big Star’s use variance petition, and specifically incorporates
the allegations in Count II.

(Compl. ¶¶ 21, 29.)

Where, as here,

a plaintiff’s due process claim asks the Court “to review the same
conduct

that

resulted

in

an

alleged

requirement applies with full force.”

taking,

the

exhaustion

Jackson v. Vill. of W.

Springs, 612 F. App'x 842, 846 (7th Cir. 2015) (internal citations
and quotation marks omitted); see Macklin, 361 F.3d at 961 (holding
that Williamson required dismissal of procedural due process claim
where alleged procedural flaws during a state agency’s decision to

3
  In its response brief, Big Star indicates that its substantive

due process claim is based on a “state-created property interest.”
(DE #23 at 7.)
“[A] plaintiff who ignores potential state law
remedies cannot state a substantive due process claim based on a
state-created property right.” CEnergy-Glenmore Wind Farm No. 1,
LLC v. Town of Glenmore, 769 F.3d 485, 488-89 (7th Cir. 2014)
(citations omitted). “[R]egardless of how a plaintiff labels an
objectionable land-use decision (i.e., as a taking or as a
deprivation without substantive or procedural due process),
recourse must be made to state rather than federal court.” Id. at
489 (citation omitted).
9

dredge a pond allegedly caused the destruction of property);
Forseth v. Vill. of Sussex, 199 F.3d 363, 370 (7th Cir. 2000)
(holding that a “‘labeled’ substantive due process claim” that
fell within the framework for takings claims was subject to
Williamson).
for

inverse

process,

the

Because the same facts underlie Big Star’s claims
condemnation
due

process

and

procedural

claims

are

and

subject

substantive
to

due

Williamson’s

requirement to exhaust state remedies.
Big Star responds that Count II is not based on the effect of
the Town’s decision on the Property, but rather, on the Town’s
conduct in denying Big Star the opportunity to be heard. According
to Big Star, the due process dispute is over the Town’s handling
of its use variance petition, not an attack on the way the decision
affects

the

Property.4

Big

Star

relies

on

the

Complaint

allegations that the Town Council (1) failed to discuss Big Star’s
petition at the November 14, 2016 council meeting, (2) failed to
consider the petition in its study session, (3) accepted a written
remonstrance in opposition to the petition, (4) denied Big Star an
opportunity to respond to the remonstrance, and (5) denied the
petition.

(Compl. ¶¶13, 14; see id. ¶¶16, 21 (incorporating these

allegations into Counts II and III).)

4

 The Court notes that Big Star’s argument is belied by its assertion

that the private interest at issue in its procedural due process
claim is “rendering the property at issue completely valueless.”
(DE #23 at 6.) 
10

In Jackson v. Village of Western Springs, 612 F. App'x 842
(7th Cir. 2015), the Seventh Circuit rejected a similar argument
that the district court had misconstrued a procedural due process
claim as a takings claim:
This due-process claim, says Jackson, asserts that the
Village disregarded local procedures and engaged in
delay tactics.
Yet we have consistently held that
applying the label “procedural due process” does not
absolve
a
litigant’s
obligation
to
first
seek
compensation in state court before turning to federal
court.
When a plaintiff’s claim of a violation of
procedural due process asks the federal courts to review
the same conduct that resulted in an alleged taking, the
“exhaustion requirement applies with full force.”
[Macklin, 361 F.3d at 961–62.] Jackson’s claim that the
Village used an unfair process in reaching its zoning
decisions is merely ancillary to, and not independent
of, his takings claim.
Id. at 846 (some citations omitted; emphasis added).

Because the

plaintiff did not pursue state remedies, his due process claim was
unripe and subject to dismissal.

Id.

Here, Big Star’s allegation that the Town employed an unfair
process in denying the use variance petition is not independent of
its

inverse

condemnation

claim;

rather,

the

allegedly

unfair

process is “merely ancillary to, and not independent of,” this
claim.

Id.; see also Joseph Metz & Sons, Inc. v. Vill. of Lyons,

No. 01 C 0270, 2002 WL 243437, at *5 (N.D. Ill. Feb. 20, 2002)
(finding a substantive due process claim fell within the framework
of a takings claim where allegations of the improper adoption and
execution

of

village

ordinances

11

and

a

conspiracy

to

deprive

plaintiffs of their substantive due process rights “clearly play
second fiddle to th[e] one overriding concern” of preventing the
condemnation of plaintiffs’ land and businesses).

Because Big

Star has not exhausted its state remedies for the alleged due
process violations committed by Defendants, its due process claims
are not yet ripe for adjudication.

The Court therefore dismisses

Count II without prejudice for lack of subject matter jurisdiction.
Having dismissed Count II, the Court does not have original
jurisdiction over the claims in the Complaint.

Where a district

court

it

has

“dismissed

all

claims

over

which

has

original

jurisdiction,” the court may decline to exercise supplemental
jurisdiction over remaining claims.
Court

finds

supplemental

that

it

would

jurisdiction

not

over

28 U.S.C. § 1367(c)(3).
be

Big

appropriate
Star’s

to

remaining

The

exercise
claims.

Therefore, it remands this case to the Lake Superior Court.

See

Whitely v. Moravec, 635 F.3d 308, 311 (7th Cir. 2011) (recognizing
that “a district judge has discretion to relinquish supplemental
jurisdiction and remand once the federal claim has dropped out” of
a lawsuit).

Other Motions
The Court need not rule on the parties’ other motions because
they raise issues that are not material to the Court’s decision to
dismiss Count II. Moreover, Indiana state courts are better suited

12

to decide the state law issues raised in these motions.
Defendants’

Partial

Motion

to

Dismiss,

Big

Star’s

The

Extension

Motion, and Defendants’ Motion to Strike are denied as moot.

CONCLUSION
For the reasons set forth above, Plaintiffs’ Extension Motion
(DE #11) and Defendants’ Partial Motion to Dismiss (DE #17) are
DENIED AS MOOT, Defendants’ motion to dismiss Count II (DE #19) is
GRANTED, and Defendants’ Motion to Strike (DE #29) is DENIED AS
MOOT.

Count II is DISMISSED WITHOUT PREJUDICE.

The Clerk is

directed to REMAND this case to Lake Superior Court for further
proceedings.

DATED:

June 22, 2017

/s/ RUDY LOZANO, Judge
United States District Court

13