Advanced Technology Building Solutions, LLC et al v. City of Jackson, Mississippi et al

Filing 65

ORDER finding as moot 27 Motion to Dismiss; granting in part and denying in part 50 Motion to Dismiss; granting in part and denying in part 52 Motion to Dismiss for the reasons set out in the order. Signed by District Judge Daniel P. Jordan III on May 22, 2013. (SP)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
JACKSON DIVISION
ADVANCED TECHNOLOGY BUILDING
SOLUTIONS, LLC, et al.

PLAINTIFFS

v.

CIVIL ACTION NO. 3:12cv389-DPJ-FKB

CITY OF JACKSON, MISSISSIPPI, et al.

DEFENDANTS
ORDER

This § 1983 case is before the Court on motions to dismiss [27, 50, 52] filed by
Defendants City of Jackson, Mississippi, and Harvey Johnson, Jr., and joined in by the remaining
defendants [57]. For the reasons that follow, the motions to dismiss will be granted in part but
otherwise denied.
I.

Facts and Procedural History
Plaintiff Don Hewitt, an African-American male, owns Plaintiff Advanced Technology

Building Solutions, LLC (“ATBS”), a Mississippi real-estate-development company. Plaintiffs
allege generally that the City of Jackson, Mississippi, at the behest of Mayor Harvey Johnson, Jr.,
and through the Jackson Redevelopment Authority (“JRA”), thwarted ATBS’s efforts to work on
three separate projects in downtown Jackson, violating Plaintiffs’ constitutional rights in the
process.
A.

Block C

Plaintiffs allege that ATBS submitted a proposal to develop a parcel of property owned
by JRA known as Block C in May 2009. ATBS’s proposal, which JRA accepted, “consisted of
market-rate housing, retail, and parking.” Am. Compl. [48] ¶ 16. In March 2010, JRA
“authorized the transfer of Block ‘C’ to ATBS . . . .” Id. ¶ 17. But because Mayor Johnson “was

not in favor of having residential units built on Block C,” JRA later decided “to reject all
proposals of development” on Block C. Am. Compl. [48] Ex. B, Aug. 5, 2010 Letter.
B.

Deposit Guaranty Project

In March 2011, ATBS entered into an Option Agreement with the seller of the Deposit
Guaranty National Bank building in downtown Jackson. ATBS hoped to purchase the property
and convert it “into a 120 key hotel, 33 apartments and 32,000 sq. ft. of retail space.” Am.
Compl. [48] ¶ 27. JRA initially “offer[ed] its full and unquestionable support of the conversion
of [the Deposit Guaranty building] to a mixed use development.” Am. Compl. [48] Ex. C, May
6, 2011 Letter. Later, JRA’s Executive Director, Jason Brookins, encouraged ATBS to “consider
multi-family housing as the dominant use of the property” in light of the City of Jackson’s plan
to seek proposals for a Convention Center Hotel. Am. Compl. [48] ¶ 29. Brookins also
“persuaded” ATBS to “pursue project funding” for the Deposit Guaranty building project
“through JRA.” Id. ¶ 31. ATBS thereafter requested a $5,000,000 loan to cover the acquisition
of the Deposit Guaranty building. ATBS made a formal presentation to the JRA Projects
Committee in support of its loan request and, in November 2011, the Projects Committee
“recommended that the project be approved for funding by including it in its Urban Renewal
Zone Amendment Number 10.” Id. ¶ 35. Amendment 10 stated that it was “anticipated that”
JRA “will issue obligations to provide funds to defray all or part of the costs of acquiring,
improving, repairing, rehabilitating, redeveloping and/or developing all or part of the Deposit
Guaranty National Bank Building Property . . . and/or to provide funds to make a loan to defray
all or part of such costs . . . .” Am. Compl. [48] Ex. D, City Council Order at 20. Amendment
10 did not reference ATBS or Hewitt by name.
2

When the Deposit Guaranty building project was presented to JRA’s full board, “ATBS
immediately received opposition from [board member] Beau Whittington, who appeared to be
prejudiced to a black developer.” Am. Compl. [48] ¶ 36. Nevertheless, in December 2011, JRA
and ATBS entered into a Memorandum of Understanding whereby JRA proposed to “use its best
efforts to pursue issuance of . . . Bonds,” the proceeds of which “will be used to fund [a] Loan”
to ATBS. Am. Compl. [48] Ex. E, Memorandum of Understanding at 2–3. Thereafter, JRA’s
Planning Board approved Amendment 10 to the City’s Urban Renewal Plan in January 2012, and
in February 2012, the Jackson City Council approved Amendment 10.
Ultimately, ATBS needed the JRA Finance Committee to approve its loan request to
move forward with the Deposit Guaranty building project. JRA attorney Tony Gaylor “advised
ATBS that the ATBS [funding] proposal would be viewed differently by JRA, . . . implying that
the . . . Deposit Guaranty . . . building project would be highly scrutinized due to ATBS being a
black-owned private enterprise.” Am. Compl. [48] ¶ 93. At a March 21, 2012 Finance
Committee meeting, just ten days before ATBS’s option to purchase the Deposit Guaranty
building was set to expire, “Brookins announced that he had met with [Mayor] Johnson . . . the
night before and that Mr. Johnson stated that ‘the rules of the game have changed’ and that the
Mayor did not want to finance the ATBS project.” Id. ¶ 106. Absent JRA financing, ATBS was
unable to purchase the Deposit Guaranty building.
C.

Convention Center

At the same time ATBS was working toward the possible purchase and redevelopment of
the Deposit Guaranty building, ATBS became involved in a bidding process for another JRA
project. On November 23, 2011, JRA sought proposals for a Convention Center Hotel project.
3

Plaintiffs allege that, before the bidding process concluded, “an Atlanta financial consultant hired
to advise the City” indicated “[i]n a statement to the media” that a deal on the Convention Center
Hotel project between JRA and Transcontinental Realty Investors (“TCI”) was “all but done.”
Am. Compl. ¶ 43. ATBS reviewed TCI’s proposal, which had an estimated cost of $90,000,000,
and decided to submit its own bid. To that end, ATBS formed a joint venture with Journeyman
Austin Holdings, a developer of convention center hotels, to compete for the Convention Center
Hotel project. When the period for accepting bids expired, only TCI and ATBS/Journeyman had
submitted bids for the project. ATBS alleges that its bid “was $23,000,000 less than TCI’s
proposal” and “included a 300-space parking garage and 20,000 sq. ft. of retail space,” neither of
which were included in TCI’s proposal. Id. ¶ 56. In the end, “JRA decided to reject both
proposals, stating that there were problems and deficiencies with both responses to the [Request
for Proposals].” Id. ¶ 58.
Feeling aggrieved by the outcome of the Block C, Deposit Guaranty building, and
Convention Center Hotel projects, ATBS and Hewitt filed this lawsuit on June 6, 2012 against
the City of Jackson; Mayor Johnson, in his official and individual capacities; JRA; Brookins, in
his official capacity; JRA Chairman Ronnie Crudup, in his official capacity; and JRA
Commissioners Brian Fenelon and H.A. “Beau” Whittington, Jr., in their official and individual
capacities. Compl. [1]. The City and Mayor Johnson filed a Motion for More Definite
Statement [18], which Magistrate Judge F. Keith Ball granted on September 28, 2012 [24].
Plaintiffs then filed a Supplemental Pleading on October 12, 2012 [25], and the City and Mayor
Johnson filed their first Motion to Dismiss [27]. Plaintiffs sought [38] and were granted [47]
leave to amend the Complaint, and Plaintiffs filed the now-operative Amended Complaint [48]
4

on February 5, 2013. In the Amended Complaint, Plaintiffs assert § 1983 claims for violations of
their substantive due process, equal protection, and First Amendment rights; conspiracy claims
under § 1985 and § 1986; and state-law tort claims for gross negligence, tortious breach of
contract, and tortious interference. The City [50] and Mayor [52] moved to dismiss the Amended
Complaint, and the remaining defendants filed a joinder in the motions [57]. Plaintiffs
responded to the motions to dismiss [59], and the time for rebuttals has now expired without
further submissions from Defendants.
II.

Standard
In considering a motion under Rule 12(b)(6), the “court accepts ‘all well-pleaded facts as

true, viewing them in the light most favorable to the plaintiff.’” Martin K. Eby Constr. Co. v.
Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004) (quoting Jones v. Greninger, 188
F.3d 322, 324 (5th Cir. 1999)). However, “the tenet that a court must accept as true all of the
allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of
the elements of a cause of action, supported by mere conclusory statements, do not suffice.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)). To overcome a Rule 12(b)(6) motion, a plaintiff must plead “enough facts to state a
claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “Factual allegations must
be enough to raise a right to relief above the speculative level, on the assumption that all the
allegations in the complaint are true (even if doubtful in fact).” Id. at 555 (citations and footnote
omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Iqbal, 556 U.S. at 678.
5

The Supreme Court’s examination of the issue in Iqbal provides a framework for
examining the sufficiency of a complaint. First, the district court may “begin by identifying
pleadings that, because they are no more than conclusions, are not entitled to the assumption of
truth.” Id. at 679. Second, “[w]hen there are well-pleaded factual allegations, a court should
assume their veracity and then determine whether they plausibly give rise to an entitlement to
relief.” Id.
III.

Analysis
The original Motion to Dismiss [27] focused on the sufficiency of the original Complaint

and Supplemental Pleading. Those submissions were supplanted by the now-operative Amended
Complaint [48], so the original motion is moot. The Court will focus on the arguments raised in
the Motions to Dismiss the Amended Complaint [50, 52].
A.

Fourteenth Amendment Substantive-Due-Process Claim

Plaintiffs base their substantive-due-process claim on JRA’s decision not to finance
ATBS’s purchase of the Deposit Guaranty building. See Am. Compl. [48] Count I, ¶¶ 110–24.1
A substantive-due-process claim will lie where a state “arbitrarily abuses its power to deprive
individuals of constitutionally protected rights.” Simi Inv. Co. v. Harris Cnty., 236 F.3d 240, 249
(5th Cir. 2000).
A plaintiff who brings a substantive due process claim[] must satisfy two
considerations. “First, he must allege a deprivation of a constitutionally protected
right.” Mikeska v. City of Galveston, 451 F.3d 376, 379 (5th Cir. 2006). Second,
he must demonstrate that the government action is not “rationally related to a
legitimate governmental interest.” Id.

1

The Amended Complaint contains two sets of paragraphs numbered 110 through 123.
Count I begins with the second paragraph numbered 110.
6

Bush v. City of Gulfport, 454 F. App’x 270, 275–76 (5th Cir. 2011). Defendants argue that
Plaintiffs’ substantive-due-process claim fails for lack of a constitutionally-protected property or
liberty interest.
1.

Property Interest

A protected property interest arises when the plaintiff has “a legitimate claim to
entitlement” rather than “a mere subjective expectancy.” Vineyard Inv., LLC v. City of Madison,
757 F. Supp. 2d 607, 613 (S.D. Miss. 2010) (Lee, J.) (citing Skidmore v. Shamrock Indep. Sch.
Dist, 464 F.2d 605, 606 (5th Cir. 1972); Perry v. Sindermann, 408 U.S. 593 (1972)). In this case,
“Plaintiffs contend that the urban renewal rezoning, the revised urban renewal plan, and the
Order adopted by the City of Jackson created a vested property right to Plaintiffs” in JRA
funding for the acquisition of the Deposit Guaranty building. Pls.’ Mem. [59] at 13. Plaintiffs
assert that these actions and documents create a contract—or at least an implied contract—even
though the funding was never finally approved.
A property interest can “be created by ordinance, or by an implied contract. In either
case, however, the sufficiency of the claim of entitlement must be decided by reference to state
law.” Bishop v. Wood, 426 U.S. 341, 344 (1976). And “in Mississippi, where the government
authority has discretion in awarding a contract, the law does not recognize a protected property
interest in such contract until it is actually awarded.” Miss. Forum on Children & Families v.
Miss. Dept. of Human Servs., 850 F. Supp. 2d 644, 648 (S.D. Miss. 2012) (Lee, J.) (citing Nelson
v. City of Horn Lake ex rel. Bd. of Aldermen, 968 So. 2d 938, 944 (Miss. 2007); Elec. Data Sys.
Corp. v. Miss. Div. of Medicaid, 853 So. 2d 1192, 1207 (Miss. 2003)).

7

Though Defendants clearly started the process of providing funding for the project, the
documents and actions Plaintiffs rely upon were not final. For example, the Memorandum of
Understanding with JRA specifically states that “[c]onsummation of any transaction will be
dependent upon additional approvals from other parties including the Jackson City Council and
the Mayor of the City of Jackson.” Am. Compl. [48] Ex. E at 1. Likewise, the order adopted by
the Jackson City Council merely stated that it was “anticipated that” obligations would be issued
to provide funds for the Deposit Guaranty project. Id. Ex. D at 19–20. And the order neither
references ATBS nor obligates JRA to fund the redevelopment of the Deposit Guaranty building.
Finally, the Amended Complaint observes that the process fell apart before final approval by the
JRA Finance Committee. Am. Compl. ¶¶ 93–106.
In sum, the documents relied upon by Plaintiffs did not award ATBS the governmental
funding it sought. Thus, ATBS lacked a “legitimate claim of entitlement” to the funding.
Nelson, 968 So. 2d at 944 (citing Bd. of Regents of State Colleges v. Roth, 408 U.S. 564, 577
(1972); Shepard v. City of Batesville, No. 2:04cv330-D-B, 2007 WL 108288, at *7 (N.D. Miss.
Jan. 8, 2007)). Plaintiffs have not alleged a constitutionally-protected property interest.
2.

Liberty Interest

The only liberty interest Plaintiffs clearly articulated is the “constitutionally protected
liberty interest in pursuing a chosen occupation.” Stidham v. Tex. Comm’n on Private Sec., 418
F.3d 486, 491 (5th Cir. 2005) (citations omitted). But to state such a claim, “a person must
allege that he was effectively prevented from practicing the profession.” Sanchez v. Cnty. of El
Paso, 486 F. App’x 455, 457 (5th Cir. 2012) (citing Martin v. Mem’l Hosp. at Gulfport, 130 F.3d
1143, 1148–49 (5th Cir. 1997)). So while Plaintiffs have a liberty interest in pursuing their
8

chosen occupation of real-estate development, Plaintiffs do not allege that Defendants deprived
them of that interest. Instead, they allege that Defendants prevented them from obtaining public
funds to develop a particular project. The facts alleged by Plaintiffs do not “state[] a plausible
claim of the denial of a constitutionally protected liberty interest.” Sanchez, 486 F. App’x at 457;
cf. Roth, 408 U.S. at 575 (“It stretches the concept too far to suggest that a person is deprived of
‘liberty’ when he simply is not rehired in one job but remains as free as before to seek another.”
(citation omitted)). The substantive-due-process claim will be dismissed.2
B.

Fourteenth Amendment Equal Protection Claims

In the initial motions to dismiss, Defendants challenged the viability of Plaintiffs’
equal-protection claims for insufficient pleading. See Defs.’ Mem. [28] at 20–21. But Plaintiffs
addressed the lack of factual depth in the Amended Complaint, and Defendants did not
specifically move to dismiss the equal-protection claims in their motions to dismiss the Amended
Complaint [50]. At best, Defendants argue that all § 1983 claims should be dismissed for failure
2

Though the Court dismisses the substantive-due-process claim as it relates to the Deposit
Guaranty project, it is not clear whether a separate substantive-due-process claim was pleaded as
to Block C, and if so, whether it survives under Rule 12(b)(6). In the fact section of the
Amended Complaint, Plaintiffs claim that they were awarded the Block C project only to have it
pulled in violation of their due-process rights. See Am. Compl. [48] at ¶¶ 17, 22. But Plaintiffs
failed to mention Block C in Count I—the only substantive-due-process count in the Amended
Complaint. And it is unclear whether Defendants interpreted the Amended Complaint as
including a substantive-due-process claim as to Block C. On the one hand, Defendants state in
passing that no property right existed as to that project. Defs.’ Mem. [51] at 7. But on the other
hand Defendants never explained that position and never directly addressed a substantive-dueprocess claim as to Block C. Plaintiffs were equally cursory in their response, arguing in the
overview that a property interest does exist as to Block C but then failing to address the issue
when discussing the motion to dismiss Count I. Based on this record, the Court is not willing to
say a substantive-due-process claim was ever pleaded as to Block C, or if it was, whether it
should survive Defendants’ motions. The matter can be addressed at the Rule 56 stage if
appropriate.
9

to plead a property or liberty interest. See Defs.’ Mem. [51] at 6 (“At the onset, in order for
Plaintiffs to have any implicated claim, Plaintiffs must possess a constitutionally-protected
property or liberty interest.”). Though the argument has merit as to the substantive-due-process
claim, “[n]o such deprivation of liberty or property is required for a violation of the Equal
Protection Clause.” Brennan v. Stewart, 834 F.2d 1248, 1257 (5th Cir. 1988). Accordingly, the
Court finds that the equal-protection claims in Counts II and III should not be dismissed at the
Rule 12(b)(6) stage.
C.

First and Fourteenth Amendment Retaliation Claim

Count IV of the Amended Complaint is confusing. The claim is entitled “Retaliation as
Violation of Plaintiffs’ Equal Protection under the Fourteenth Amendment and Right to Free
Speech under the First Amendment (Personal Vindictiveness) through 42 U.S.C. [§] 1983.”
Though Plaintiffs make reference to equal protection in this Count, the core averment—one that
appears elsewhere in their Amended Complaint [48] and Response [59]—appears to allege a
First Amendment retaliation claim. As Plaintiffs pleaded it, ATBS was denied financing for the
Deposit Guaranty building project in retaliation for “Don Hewitt’s constant criticism of the
flawed, unfair bidding process and the excessive fees to the Mayor’s political affiliates and
consultants.” Am. Compl. [48] ¶ 173. Defendants likewise interpret this count as asserting a
First Amendment retaliation claim.3

3

Plaintiffs seem to confuse Counts IV and V in their Response [59]. Thus, their legal
analysis never directly addresses Count IV. Nevertheless, the Court does not interpret this as a
waiver because the First Amendment retaliation claim is mentioned elsewhere in their Response.
See Pls.’ Resp. [59] at 20. It is also part of the conspiracy claim in Count V. The Court will
therefore test the merits of Defendants’ arguments.
10

Assuming that is the nature of this count, it is also unclear which First Amendment
retaliation standard applies. First Amendment “cases form a ‘spectrum’ ranging from, at one
end, cases involving ‘government employees, whose close relationship with the government
requires a balancing of important free speech and government interests’ and, on the other end,
cases involving ‘ordinary citizens whose viewpoints on matters of public concern the
government has no legitimate interest in repressing.’” Kinney v. Weaver, 367 F.3d 337, 358 (5th
Cir. 2004) (citing Bd. of Cnty. Comm’rs, Wabaunsee Cnty. v. Umbehr, 518 U.S. 668, 680
(1996)).
When addressing claims by public employees or government contractors, the Court
applies the test most recently articulated in Garcetti v. Ceballos, 547 U.S. 410 (2006); see also
Umbehr, 518 U.S. at 684 (holding that government contractors are viewed like public
employees). A different test applies to speech by “ordinary citizens.” See Kinney, 367 F.3d at
360 (discussing difference between public employee and private citizen First Amendment
retaliation claims).
In this case, Defendants argue their case under the public-employee standard without
explaining why it should apply. Plaintiffs likewise offer no analysis of this issue. But because
Defendants’ motion would fail under either test, the Court will not delve deeper into the issue at
this stage. Instead, this Order will track the Defendants’ arguments under the public-employee
test which adds several elements to the “ordinary citizens” test:
To establish a constitutional claim for First Amendment retaliation, four elements
must be shown: (1) that plaintiff “suffered an ‘adverse employment decision’”; (2)
that the plaintiff’s “speech involved a ‘matter of public concern’”; (3) that the
plaintiff’s “‘interest in commenting on matters of public concern . . . outweighs

11

the [d]efendant’s interest in promoting [workplace] efficiency’”; and (4) that the
plaintiff’s speech motivated the defendant’s action.
Here, Defendants argue that the First Amendment retaliation claim must fail for four
reasons: (1) lack of a property or liberty interest; (2) the speech was not a matter of public
concern; (3) the Amended Complaint failed to precisely articulate when and how Plaintiffs
exercised their free-speech rights; and (4) the Amended Complaint failed to adequately plead that
the speech motivated the adverse actions. First, there is no property or liberty interest component
to either First Amendment retaliation test. See generally DePree v. Saunders, 588 F.3d 282,
286–87 (5th Cir. 2009) (outlining public employee test); Keenan v. Tejeda, 290 F.3d 252, 258
(5th Cir. 2002) (outlining ordinary citizen test). Second, even assuming the “public interest”
element applies, speech related to the bidding process for a $90 million government project
easily satisfies it. Third, the Amended Complaint amply describes the protected speech. See,
e.g., Am. Compl. [48] ¶¶ 66, 72, 173. Finally, the averments of the Amended Complaint
provide sufficient factual basis to support the causation prong. Id. at ¶¶ 174, 182. Accordingly,
the First Amendment retaliation claim will not be dismissed.
D.

Conspiracy Claim

Plaintiffs allege that Fenelon, Whittington, and Mayor Johnson “conspired to
discriminate” against Plaintiffs because Hewitt is African-American. Am. Compl. [48] ¶ 181.
Defendants argue that Plaintiffs cannot succeed on this claim because “Plaintiffs do not possess
any vested constitutionally-protected property or liberty rights of which the . . . Defendants could
conspire to deprive Plaintiffs.” Defs.’ Mem. [51] at 14. The Court does not find this fact
determinative of the conspiracy claim. Plaintiffs have alleged that three defendants entered into

12

an agreement to discriminate against Plaintiffs because of Hewitt’s race in violation of the Equal
Protection Clause. This states a conspiracy claim under § 1985. See Bryant v. Military Dep’t of
Miss., 597 F.3d 678, 687 (5th Cir. 2010). Because the claim does not appear to be asserted
against the City, JRA, Brookins, or Crudup, the motion will be granted as to those defendants.
E.

State-Law Tortious-Interference Claim

Finally, the City of Jackson Defendants move to dismiss the state-law tortiousinterference claim. Plaintiffs do not respond to this portion of the motion, and the Court deems
the tortious-interference claim abandoned as to the City and Mayor Johnson. See Black v. N.
Panola Sch. Dist., 461 F.3d 584, 588 n.1 (5th Cir. 2010).4
IV.

Conclusion
The Court has considered all the parties’ arguments. Those not addressed would not have

changed the outcome. For the foregoing reasons, Defendants’ Motion to Dismiss [27] is deemed
moot. Defendants’ Motions to Dismiss [50, 52] are granted as to Count I, the conspiracy claim
against the City, JRA, Brookins, and Crudup (Count V), and the tortious-interference claim
(Count VI(c)). The motions are otherwise denied.
SO ORDERED AND ADJUDGED this the 22nd day of May, 2013.
s/ Daniel P. Jordan III
UNITED STATES DISTRICT JUDGE

4

The tortious-interference claim is asserted against only the City and Mayor Johnson.
Am. Compl. [48] ¶¶ 198–99. The state-law-gross-negligence and tortious breach-of-contract
claims, on the other hand, are brought against just JRA. Accordingly, that claim was not
addressed in the motions filed by the City or Mayor Johnson. Because JRA failed to separately
move to have them dismissed, id. ¶¶ 192–97; see Joinder [57], those claims will go forward.
13