FORTUNE DEVELOPMENT, L.P. v. BERN TOWNSHIP et al

Filing 46

MEMORANDUM AND ORDER THAT DEFENDANT BERN TOWNSHIP MUNICIPAL AUTHORITY'S MOTION TO DISMISS COMPLAINT IS GRANTED. DEFENDANTS BERN TOWNSHIP AND INDIVIDUALLY NAMED TOWNSHIP SUPERVISORS MOTION TO DISMISS IS GRANTED IN PART AND DENIED IN PART. DEFENDA NT LEESPORT BOROUGH AUTHORITY'S MOTION TO DISMISS IS GRANTED; ETC.. SIGNED BY HONORABLE JUAN R. SANCHEZ ON 3/13/13. 3/14/13 ENTERED AND E-MAILED. (jl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
FORTUNE DEVELOPMENT, L.P.

:
:
:
:
:

v.
BERN TOWNSHIP, et al.

CIVIL ACTION
No. 12-2327

MEMORANDUM
Juan R. Sánchez, J.

March 13, 2013

Plaintiff Fortune Development, L.P. (Fortune) seeks to develop a “55+ Age Rated
residential development” on a 58-acre property it owns in Bern Township, Pennsylvania, but has
been unable to secure the wastewater treatment service it needs to do so, allegedly due to
wrongful and obstructive conduct by various local government entities. Fortune brings claims
pursuant to 42 U.S.C. § 1983 against three such entities—Bern Township, the Bern Township
Municipal Authority (BTMA), and the Leesport Borough Authority (LBA)—alleging violations
of its procedural and substantive due process rights. Fortune also brings a state-law claim for
intentional interference with contractual relations against five individually named Bern
Township Supervisors, the Schuylkill River Greenway Association (the Greenway Association),
and the Vice President of the Greenway Association’s Board, and brings a civil conspiracy claim
against all of the individual Defendants.
In four separate motions to dismiss, all Defendants ask this Court to dismiss the claims
against them pursuant to Federal Rule of Civil Procedure 12(b)(6). Because Fortune has failed to
state a procedural or substantive due process claim against any of the local government entities,
Fortune’s federal claims (Counts One and Three) will be dismissed. Fortune’s remaining state-

law claims (Counts Four and Five) will be dismissed without prejudice pursuant to 28 U.S.C.
§ 1367(c).1
FACTS2
Fortune owns a 58-acre tract of land in Bern Township, Pennsylvania (the Property),
adjacent to and immediately south of the Leesport Borough line and west of the Schuylkill River.
The Property is separated from the River by a strip of land owned by the Greenway Association,
a nonprofit organization.
In August 2005, Fortune submitted to Bern Township a plan to develop Water’s Edge, a
“55+ Age Rated residential development,” on the Property. Compl. ¶¶ 18-19. In May 2007, the
Bern Township Board of Supervisors resolved to reject the plan; however, because the Township
did not give the legally required notice of the prospective rejection, the preliminary plan was
deemed approved. Nevertheless, development has been stalled because Fortune has been unable
to secure wastewater treatment service for Water’s Edge.3
Neither Bern Township nor BTMA owns or operates a public wastewater treatment
facility. Rather, the closest public facility to Water’s Edge is owned by LBA. Beginning in
2006, Fortune contacted Bern Township and BTMA about obtaining sewer and wastewater
treatment service for Water’s Edge from the Township’s reserved capacity at the LBA plant;

1

Fortune voluntarily dismissed Count Two of the Complaint, a procedural due process claim
against Leesport Borough (which is no longer a Defendant), in July 2012. See ECF No. 39.
2

The following facts are drawn from the allegations of Fortune’s Complaint, which this Court
must accept as true in evaluating the instant motion to dismiss. Ashcroft v. Iqbal, 556 U.S. 662,
679 (2009).
3

The Complaint also alleges development of Water’s Edge was stalled while Fortune attempted
to obtain water service for the project. Because Fortune’s allegations regarding the difficulties it
experienced in obtaining water service pertain only to Leesport Borough, which is no longer a
Defendant in this action, those allegations are not discussed herein.
2

however, these Defendants denied Fortune’s request on the basis that the LBA plant did not have
sufficient capacity to serve Water’s Edge. Fortune then applied to Bern Township for a private,
on-site wastewater treatment plant, but the Township denied the application, at least in part
because Fortune did not have access to the Schuylkill River for discharge of treated wastewater.
Following these unsuccessful attempts to obtain sewer and wastewater treatment services,
in 2008 or 2009, Fortune hired Dr. Hugh Archer, an expert on wastewater treatment plant
capacity, to evaluate whether the LBA plant had the capacity to serve Water’s Edge. In 2009,
Dr. Archer determined the LBA plant could make an additional 50,000 gallons per day of
treatment capacity available (an amount sufficient to serve Water’s Edge) if LBA were to submit
an application to the Pennsylvania Department of Environmental Protection (DEP) to “re-rate”
the LBA plant’s capacity. Later in 2009, LBA agreed to undertake a capacity analysis of its
treatment plant and to submit a re-rating application if additional capacity was found.
On October 30, 2009, Fortune’s lawyer offered to assume all of LBA’s costs relating to
any re-rating, and in December 2009, Michael Butto, one of the partners of Fortune, appeared at
an LBA meeting with a $23,000 check to fund LBA’s capacity analysis. During the meeting,
however, LBA told Butto that, per the request of Bern Township and/or BTMA, any request for
sewer and wastewater treatment capacity for Water’s Edge would have to be made through
BTMA.
Butto left the LBA meeting and went directly to a BTMA meeting the same night, at
which BTMA advised Butto an extra 50,000 gallons per day was not sufficient for Water’s Edge.
BTMA also told Butto that another developer, Forino Co., L.P. (Forino), wanted the same
additional capacity Fortune was seeking. (Forino was present at the BTMA meeting.) Fortune
and Forino thereafter agreed to split the cost of the LBA capacity analysis, with each developer

3

reserving its right to claim any found capacity for itself. Although LBA’s engineer ultimately
confirmed Dr. Archer’s conclusion that the LBA plant had an excess capacity of 50,000 gallons
per day, BTMA did not authorize either Fortune or Forino to use the excess capacity, asserting it
needed another $20,000 from each developer for equipment and/or engineering work.4
On November 15, 2011, Fortune’s lawyer wrote to LBA’s lawyer, seeking a
determination as to whether LBA would allocate any of the excess capacity to Fortune without
Fortune’s payment of more money. LBA has never responded to the letter. Fortune believes
unspecified Bern Township and BTMA officials who were opposed to Water’s Edge persuaded
LBA not to allow Fortune adequate wastewater treatment capacity.
As an alternative to obtaining wastewater treatment services from LBA, Fortune has also
sought such services from the Reading Area Water Authority (RAWA), which is located on the
opposite side of the Schuylkill River from Water’s Edge. As noted, the Property is separated
from the River by a strip of land owned by the Greenway Association. There is an existing 30foot-wide easement over the Association’s land, and a pipe running through the easement carries
stormwater from a development adjacent to Water’s Edge to the Schuylkill River.
In September 2008, Fortune entered into an agreement with RAWA (the Easement
Agreement) under which RAWA agreed to exercise its eminent domain power to condemn an
easement for water and utility purposes over the Greenway Association’s land, which would
enable RAWA to connect water and sewer services from Water’s Edge to RAWA’s facilities. In
February 2009, RAWA’s Board of Directors passed a resolution authorizing condemnation of

4

The Complaint does not specify when LBA’s engineer confirmed there was additional capacity
in the LBA plant or when BTMA requested additional funds from Fortune and Forino. At oral
argument, however, Fortune’s counsel represented LBA’s engineer completed his analysis in
June 2010, and BTMA requested additional funds sometime thereafter.
4

the contemplated easement. On May 4, 2010, RAWA filed a Declaration of Taking Complaint
in the Berks County Court of Common Pleas to condemn the easement.
Before the Complaint was filed, in response to questions from Bern Township regarding
Fortune’s proposed private, on-site wastewater treatment plant (which the Township had
rejected), Fortune informed the Township it expected to have access to the Schuylkill River for
post-treatment wastewater discharge through the easement contemplated by the Easement
Agreement. Bern Township and the Greenway Association thereafter entered into an agreement
of sale (the Future Sale Agreement) purporting to convey the Association’s land to Bern
Township for $1, allegedly in an effort to prevent the condemnation. The Bern Township
Supervisors approved the Future Sale Agreement at a meeting on May 1, 2010, a Saturday.
Although the Agreement contemplates closing within five years of execution, closing has not
occurred to date.
The Greenway Association filed preliminary objections to RAWA’s Declaration of
Taking, and Bern Township filed a petition to intervene, also objecting to the condemnation.5
The Berks County Court of Common Pleas sustained the Association’s preliminary objections,
finding the proposed condemnation was improper because RAWA was taking private property to
serve a private enterprise (Fortune) and the size of the easement was not reasonably related to
RAWA’s public purpose to provide water. See Reading Area Water Auth. v. Schuylkill River
Greenway Ass’n, 50 A.3d 255, 257 (Pa. Commw. Ct. 2012). RAWA appealed, and on July 30,
2012, the Commonwealth Court reversed, holding RAWA was “authorized by law to use its

5

Although Fortune originally believed Bern Township had objected to the condemnation on the
basis that the easement could not be condemned because the Township was the equitable owner
of the land in question and condemnation of municipally owned land is not permitted under
Pennsylvania law, Fortune has since conceded the Township did not assert RAWA’s inability to
take municipally owned land as a preliminary objection.
5

power of eminent domain to condemn land for the provision of water and sewer facilities” and
that the “incidental benefit to Fortune [did] not strip the project of its public purpose . . . [of]
providing water, sewer and storm water management to citizens living in RAWA’s service area.”
Id. at 258-60. The Greenway Association and Bern Township’s petition for allowance of appeal,
filed on October 17, 2012, remains pending in the Pennsylvania Supreme Court.
On April 30, 2012, Fortune filed the Complaint in this action. Fortune brings § 1983
claims against Bern Township, BTMA, and LBA, alleging violations of its procedural and
substantive due process rights. Fortune also brings a state-law claim for intentional interference
with contractual relations against five individually named Bern Township Supervisors (Lucille
M. Brady, Boyd Wagner III, Robert Eveland, Irene Reed, and Jeffrey A. Thompson), the
Greenway Association, and R. Dean Foster, the Vice President of the Greenway Association’s
Board. Finally, Fortune brings a state-law civil conspiracy claim against all of the individual
Defendants. All Defendants have moved to dismiss the Complaint pursuant to Federal Rule of
Civil Procedure 12(b)(6).
DISCUSSION
To survive a motion to dismiss pursuant to Rule 12(b)(6), “a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim
is facially plausible when the facts pleaded “allow[] the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Id. In evaluating a Rule 12(b)(6)
motion, a district court first must separate the legal and factual elements of the plaintiff’s claims.
Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). The court “must accept all of the
complaint’s well-pleaded facts as true, but may disregard any legal conclusions.” Id. at 210-11.

6

The court must then “determine whether the facts alleged in the complaint are sufficient to show
that the plaintiff has a ‘plausible claim for relief.’” Id. at 211 (quoting Iqbal, 556 U.S. at 679).
To state a § 1983 claim for deprivation of procedural due process rights, a plaintiff must
allege “(1) he was deprived of an individual interest that is encompassed within the Fourteenth
Amendment’s protection of ‘life, liberty, or property,’ and (2) the procedures available to him
did not provide ‘due process of law.’” Hill v. Borough of Kutztown, 455 F.3d 225, 233-34 (3d
Cir. 2006) (citation omitted).

“[A] state provides constitutionally adequate procedural due

process when it provides reasonable remedies to rectify a legal error by a local administrative
body.” DeBlasio v. Zoning Bd. of Adjustment, 53 F.3d 592, 597 (3d Cir. 1995), abrogated on
other grounds by United Artists Theatre Circuit, Inc. v. Twp. of Warrington, 316 F.3d 392 (3d
Cir. 2003) (citation omitted).

Thus, for example, where a state provides a “full judicial

mechanism” for challenging an administrative decision, the state provides adequate procedural
due process “whether or not the plaintiff avails him or herself of the provided appeal
mechanism.” Id. (quotation omitted).
For its procedural due process claim, Fortune alleges Bern Township, BTMA, and LBA
deprived it of its “legitimate claim of entitlement to wastewater treatment services from . . .
LBA” without due process of law. Compl. ¶¶ 78-79. Defendants argue this claim should be
dismissed because the Pennsylvania Sewage Facilities Act, 35 Pa. Stat. Ann. §§ 750.1–750.20,
also known as “Act 537,” provides an adequate process by which a real estate developer may
seek review of a municipality’s decisions regarding the availability of sewage collection,
treatment, and disposal services.

7

Under Act 537, each municipality must submit to DEP6 “an officially adopted plan for
sewage services for areas within its jurisdiction” and must revise the plan periodically, as
required by the applicable regulations. 35 Pa. Stat. Ann. § 750.5(a). Such plans must “provide
for the resolution of existing sewage disposal problems, provide for the future sewage disposal
needs of new land development and provide for the future sewage disposal needs of the
municipality.” 25 Pa. Code § 71.11. The Act also affords property owners a means of obtaining
changes to a municipality’s official plan. Under the Act, a resident or legal or equitable property
owner in a municipality may make a written demand on the municipality to revise (or
implement) its official plan. If the municipality issues a written refusal or fails to respond to the
demand within 60 days, the resident or legal or equitable property owner “may file a private
request with [DEP] requesting that [DEP] order the municipality to revise its official plan if the
resident or property owner can show that the official plan is not being implemented or is
inadequate to meet the resident’s or property owner’s sewage disposal needs.” 35 Pa. Stat. Ann.
§ 750.5(b).7 “DEP’s decision is appealable to the Environmental Hearing Board (EHB) for an
evidentiary hearing and issuance of findings of fact and conclusions of law.” McGrath Constr.,
Inc. v. Upper Saucon Twp. Bd. of Supervisors, 952 A.2d 718, 721 n.1, 728 (Pa. Commw. Ct.

6

Although the statute refers to the Department of Environmental Resources, in 1995, the
Department’s name was changed to the Department of Environmental Protection. Pa. Dep’t of
Envtl. Prot. v. Cromwell Twp., 32 A.3d 639, 642 n.2 (Pa. 2011).
7

Once a private request is filed with DEP, the municipality involved has 45 days in which to
submit written comments. Id. § 750.5(b.1). The statute requires DEP to issue a written decision
on the request within 120 days after receiving the municipality’s comments or after expiration of
the 45-day comment period, if no comments are submitted, and a property owner may initiate a
mandamus action if DEP fails to act within the specified time limits. Id. § 750.5(b.2); Heck v.
Penn Lake Park Borough, 786 A.2d 336, 340-41 (Pa. Commw. Ct. 2001) (noting “Section 5.5(b)
of Act 537 even provides for the award of counsel fees and court costs in the event that
applicants are compelled to initiate a mandamus action against the Department for failure to act
within specified time limits”).
8

2008) (citing 35 Pa. Stat. Ann. § 750.16); Del. Riverkeeper v. Dep’t of Envtl. Prot., 879 A.2d
351, 354 (Pa. Commw. Ct. 2005) (noting EHB conducts a de novo hearing on appeal). The
EHB’s decision, in turn, is appealable to the Commonwealth Court. McGrath Constr., 952 A.2d
at 721 n.1, 728.
These procedures for administrative and judicial review are similar to procedures the
Third Circuit has found sufficient to provide constitutionally adequate procedural due process in
other cases. See DeBlasio, 53 F.3d at 597-98 (holding procedures for challenging adverse
zoning decisions, which included the availability of an appeal to a zoning board of adjustment
and review in state court, were constitutionally sufficient); Midnight Sessions, Ltd. v. City of
Phila., 945 F.2d 667, 681 (3d Cir. 1991) (holding licensing scheme satisfied procedural due
process where licensing department’s denial of a dance hall license could be appealed to a
review board for an evidentiary hearing, where licensing department and review board were
required to provide reasons for their decisions, and where review board’s decision could be
challenged in state court), abrogated on other grounds by United Artists, 316 F.3d 392.
Defendants argue the Act 537 procedures outlined above provide an “adequate
adjudicatory mechanism[] by which sewage capacity and the availability thereof [can] be
requested and acquired.” E.g., BTMA’s Mem. 13. Fortune concedes the Act 537 procedures
were available to it at some point in the development process, noting it attempted this remedy,
i.e., “an application under the Pennsylvania Sewage Facilities Act, . . . before the alleged injury
occurred, to no avail.” Pl.’s Opp’n to BTMA’s Mot. to Dismiss 8.8 However, Fortune argues

8

Although Fortune does not specify what issues it raised in its Act 537 application, it links its
pursuit of this remedy to paragraphs 28 and 29 of its Complaint, which concern its application
for a private, on-site wastewater treatment plant for Water’s Edge, which Bern Township denied.
See id. (citing Compl. ¶¶ 28-29). At oral argument, Fortune represented it appealed the denial of
its application, and BTMA represented Fortune’s appeal was ultimately withdrawn without
9

these procedures do not provide a means of challenging BTMA’s decisions “not to allocate any
of its reserved capacity in LBA’s plant for [Fortune]” and “not to seek wastewater treatment
capacity from LBA for [Fortune],” in part because there has never been any written decision
denying Fortune’s request for such capacity.

Id. at 8-9 (noting Fortune “has simply been

stonewalled”).
Insofar as Fortune contends it may not use the Act 537 procedures to challenge the denial
of its request for capacity from the LBA plant because there has been no written decision on its
request, the statute refutes this argument. Under the Act, a property owner may request that DEP
order a municipality to revise its official plan if the municipality denies the property owner’s
written demand to do so “or fail[s] . . . to reply in either the affirmative or negative within sixty
days.”

35 Pa. Stat. Ann. § 750.5(b) (emphasis added); see also 25 Pa. Code § 71.14(a).

Defendants’ failure to issue a written denial thus cannot prevent Fortune from availing itself of
the remedies available under the Act. It is also not apparent why Fortune could not use the Act
537 procedures to require BTMA to allocate some of its reserved capacity in the LBA plant to
Fortune, or to request additional capacity from the LBA plant and allocate such additional
capacity to Fortune. See McGrath Constr., 952 A.2d at 721-23 (noting developer’s use of Act
537 procedures to require township to revise its Act 537 plan to accommodate public sewer
service for proposed development, despite the existence of a moratorium on sewer connections

prejudice. The docket entries in EHB Case No. 2009-097 reflect that Fortune appealed a June
2009 letter from DEP denying Fortune’s “Private Request to Revise Official Plan for the Waters
Edge Village” to the EHB in July 2009, and then withdrew the appeal without prejudice almost
two years later, in May 2011. Fortune Dev., L.P. v. Pa. Dep’t of Envtl. Prot., No. 2009-097 (Pa.
Envtl. Hr’g Bd. filed July 9, 2009), http://ehb.courtapps.com/public/document_shower_pub.php?
csNameID=3930 (last visited Mar. 12, 2013); see Clean Harbors, Inc. v. ACSTAR Ins. Co., No.
09-5715, 2010 WL 1930579, at *2 n.7 (D.N.J. May 12, 2010) (observing docket entries in a
publicly filed civil action are matters of public record that a court may consider in evaluating a
motion to dismiss). The reasons for the withdrawal are not apparent from the docket.
10

within the development area, where developer proposed to re-route sewer line to interceptor lines
not affected by moratorium); Pequea Twp. v. Herr, 716 A.2d 678, 681, 687-88 (Pa. Commw. Ct.
1998) (recounting developer’s use of Act 537 to obtain revision to township’s official sewage
plan calling for the installation of public sewers for proposed industrial park on the basis that
township’s plan was inadequate to meet developer’s sewage disposal needs in “dispute
concern[ing] the use of reserved sewer capacity in [township’s] public sewer system”); cf. 35 Pa.
Stat. Ann. § 691.203(b) (noting DEP’s authority to “issue appropriate orders to municipalities
where such orders are found to be necessary to assure that there will be adequate sewer systems
and treatment facilities to meet present and future needs or otherwise to meet the objectives of
[the Clean Streams Law],” including orders requiring municipalities “to negotiate with other
municipalities for combined or joint sewer systems or treatment facilities”). Because Act 537
provides a constitutionally adequate procedure by which Fortune may seek a modification of
Bern Township’s sewage service plan and obtain administrative and judicial review if the
Township denies or fails to act on the request, Fortune has not alleged a violation of its
procedural due process rights. Count I of the Complaint will therefore be dismissed with
prejudice.9

9

Defendants also argue Fortune’s procedural due process claim is barred by the two-year statute
of limitations applicable to § 1983 claims in Pennsylvania because the actions that allegedly
resulted in sewer capacity not being made available to Fortune—namely, Bern Township and/or
BTMA’s denial of Fortune’s initial request for capacity from the LBA plant, denial of Fortune’s
application for a private, on-site wastewater treatment plant, interference with Fortune’s efforts
to obtain capacity from LBA directly, and notification that 50,000 gallons per day was
insufficient for Water’s Edge, and LBA’s notification that requests for sewer or wastewater
treatment capacity from the LBA plant would have to be made through BTMA—all occurred
prior to April 30, 2010. Fortune argues its procedural due process claim against BTMA and
LBA encompasses these Defendants’ refusal to make excess capacity from the LBA plant
available to Fortune even after LBA’s own engineer confirmed the existence of such capacity in
June 2010, including BTMA’s demand for an additional $20,000 from Fortune sometime after
June 2010 and LBA’s failure to respond to Fortune’s renewed request for excess capacity in
11

To establish a § 1983 substantive due process claim, a plaintiff must show government
actors deprived him of an interest protected by the substantive due process clause, and that the
deprivation shocks the conscience. Chainey v. Street, 523 F.3d 200, 219 (3d Cir. 2008). Fortune
alleges Bern Township, BTMA, and LBA violated its substantive due process rights by taking
arbitrary and conscience-shocking actions intended to stop Fortune’s proposed development,
including (1) denying Fortune’s request for capacity from the LBA plant (Bern Township and
BTMA), (2) denying Fortune’s application for a private, on-site wastewater treatment plant
(Bern Township), (3) delaying implementation of the additional capacity Fortune identified in
the LBA plant and offering a portion of the additional capacity to another developer (Bern
Township, BTMA, and LBA), and (4) entering into the Future Sale Agreement (Bern Township),
all with the intent of stopping the Water’s Edge development. Compl. ¶¶ 85-89. All three
Defendants argue Fortune’s substantive due process claim should be dismissed because Fortune
has failed to allege a deprivation of a constitutionally protected property interest. In addition,
Defendants suggest—explicitly or implicitly—the claim should be dismissed because the
challenged conduct by Defendants does not rise to the level of “conscience shocking.” LBA’s
Mem. 5; see also Bern Twp.’s Mem. 13 (arguing Fortune “cannot simply ‘dress up’ its
Complaint as constituting Federal Constitutional violations,” citing the United Artists “shocks
the conscience” standard); BTMA’s Mem. 10 (arguing “[r]equesting a cash contribution for
equipment and/or engineering work, based on the Authority’s ‘need’ for money for that work, as
alleged, does not amount to any actionable conduct on the part of BTMA”).
Although the Fourteenth Amendment prohibits deprivations of “life, liberty, or property,
without due process of law,” U.S. Const. amend. XIV, § 1, the property interests protected by
November 2011. Because Fortune’s procedural due process claim fails for other reasons, this
Court need not resolve this issue.
12

substantive due process are narrower than the interests protected by procedural due process. See
DeBlasio, 53 F.3d at 598 (“[N]ot all property interests worthy of procedural due process
protection are protected by the concept of substantive due process.” (quoting Reich v. Beharry,
883 F.3d 239, 244 (3d Cir. 1989))). Only those property interests that are “fundamental” under
the United States Constitution are worthy of substantive due process protection.

Gikas v.

Washington Sch. Dist., 328 F.3d 731, 736 (3d Cir. 2003); see also DeBlasio, 53 F.3d at 599.
Defendants argue Fortune’s substantive due process claim is foreclosed by Ransom v.
Marrazzo, 848 F.2d 398 (3d Cir. 1988), in which the Third Circuit Court of Appeals held a
property owner or occupant’s claim of entitlement to water and sewer services, while sufficient
to warrant procedural due process protection, is not a property interest entitled to substantive due
process protection. In Ransom, a class of Philadelphia residents who had been denied water and
sewer service unless they paid delinquent service charges incurred, but not paid, by the prior
residents of their homes, brought a § 1983 action against various City defendants alleging
violations of their due process and equal protection rights. The class included owners as well as
occupants of residences who were denied water and sewer services. Id. at 401 & n.1. The
plaintiffs argued the deprivation of such services on the basis of payment delinquencies incurred
by third parties violated their substantive due process rights, but the Third Circuit rejected the
claim, holding
[t]he provision of water and sewer services, whether by a municipality or by a
private utility company, is not . . . a federally protected right. The legal fact that,
once a municipality (or, for that matter, a private utility company) establishes a
utility for its citizens, a citizen’s expectation of receiving that service rises to the
level of a property interest cognizable under the Due Process Clause merely
brings that expectation within the compass of the Fourteenth Amendment’s
procedural protections . . . . It does not transform that expectation into a
substantive guarantee against the state in any circumstance.
Id. at 412 (internal citations omitted).
13

Fortune argues Ransom is not controlling because its substantive due process claim is
predicated not on its claim of entitlement to wastewater treatment services but on Defendants’
interference with its use and enjoyment of its property, an interest that has been held to warrant
substantive due process protection in the Third Circuit. Pl.’s Opp’n to BTMA’s Mot. to Dismiss
7. In DeBlasio v. Zoning Board of Adjustment, the Third Circuit held that “ownership is a
property interest worthy of substantive due process protection,” and, as a result,
in the context of land use regulation, that is, in situations where the governmental
decision in question impinges upon a landowner’s use and enjoyment of property,
a landowning plaintiff states a substantive due process claim where he or she
alleges that the decision limiting the intended land use was arbitrarily or
irrationally reached.
53 F.3d at 600-01.10 While DeBlasio supports Fortune’s contention that use and enjoyment of
property is an interest protected by substantive due process, this Court is not persuaded Fortune
can avoid the holding of Ransom simply by reframing its challenge to Defendants’ denial of
wastewater treatment services in terms of its use and enjoyment of its property.
First, in determining whether the asserted property interest in DeBlasio was sufficient to
support a substantive due process claim, the Third Circuit surveyed its own prior case law
regarding the category of property interests protected by substantive due process, including its
decision in Ransom. The court noted it had held in Ransom “that an entitlement under state law
to water and sewer services does not constitute a protectable property interest for purposes of
substantive due process,” DeBlasio, 53 F.3d at 598, but did not question or in any way disturb

10

In United Artists Theatre Circuit, Inc. v. Township of Warrington, the Third Circuit held
DeBlasio and other prior decisions could not be reconciled with the Supreme Court’s decision in
County of Sacramento v. Lewis, 523 U.S. 833 (1998), insofar as the Third Circuit cases held “a
municipal land use decision violates substantive due process if it was made for any reason
‘unrelated to the merits,’ or with an ‘improper motive.’” 316 F.3d at 400 (citations omitted).
Rather, a land use decision must meet Lewis’s more demanding “shocks the conscience”
standard to violate substantive due process. Id.
14

this holding. Significantly, the court did not regard its recognition of property ownership as an
interest entitled to substantive due process protection as being in any tension with its prior
holding in Ransom that entitlement to water and sewer services does not warrant such protection,
even though at least some of the plaintiffs in Ransom were property owners, whose use and
enjoyment of their property was surely impinged upon by the denial of water and sewer services.
Second, DeBlasio involved a property owner’s substantive due process challenge to
municipal zoning decisions finding the plaintiff’s property was in violation of a zoning ordinance
and denying his request for a use variance. The land use decisions at issue in DeBlasio thus
affirmatively prohibited the property owner’s desired use of his property. In contrast, Ransom
involved a deprivation of water and sewer services.

While the denial of such services

undoubtedly impacts a property owner’s use and enjoyment of his property, unlike the zoning
decisions at issue in DeBlasio, it does not directly prohibit the property’s use.
Here, Fortune’s substantive due process claim primarily challenges Defendants’ denial of
or interference with its request for wastewater treatment services from LBA or RAWA. Under
Ransom, Fortune’s interest in such services is not a property interest protected by substantive due
process. See Warren v. New Castle Cnty., No. 07-725, 2008 WL 2566947, at *17-18 (D. Del.
June 26, 2008) (rejecting developer’s argument that it had sufficiently alleged a substantive due
process claim for deprivation of its right to own, use, enjoy, and develop property where “[t]he
only alleged interference with [the developer’s] property rights [was] the County’s denial of
access to public sewer”).11 Fortune’s substantive due process claim must be dismissed for this
reason.12

11

Insofar as Fortune’s substantive due process claim challenges Bern Township’s denial of its
application for a private, on-site wastewater treatment plant for Water’s Edge, this aspect of
Fortune’s claim may arguably be subject to a different analysis, since it involves a denial not of
15

wastewater treatment services but of Fortune’s requested use of its property. It is clear from the
Complaint, however, that the Township denied Fortune’s application no later than 2009. See
Compl. ¶¶ 28-30 (alleging Fortune hired an expert to evaluate the LBA Plant’s capacity in 20082009, after Bern Township had denied Fortune’s application for an on-site treatment plant); see
also Pl.’s Opp’n to Bern Township’s Mot. to Dismiss 3 (arguing the Township’s “pre-injury”
conduct from 2006-2009 “is relevant to show [the Township’s] motives”). As a result, any claim
based on the denial of the application is barred by the applicable two-year statute of limitations.
12

The Court also notes it is doubtful whether Fortune’s allegations rise to the level of
conscience-shocking, as required to sustain a substantive due process claim. “The ‘shocks the
conscience’ standard encompasses ‘only the most egregious official conduct.’” United Artists,
316 F.3d at 400 (quoting Lewis, 523 U.S. at 846). Merely alleging government actors had “an
improper motive is insufficient, even where the motive is unrelated to the merits of the
underlying decision.” Chainey, 523 F.3d at 220. In Eichenlaub v. Township of Indiana, 385
F.3d 274 (3d Cir. 2004), the Third Circuit rejected a substantive due process claim by property
owners whose efforts to develop their lands had been thwarted by Township officials. The court
held plaintiffs’ allegations that zoning officials had “applied subdivision requirements to their
property that were not applied to other parcels,” “pursued unannounced and unnecessary
inspection and enforcement actions,” “delayed certain permits and approvals,” “improperly
increased tax assessments,” and “maligned and muzzled the [plaintiffs]” did not rise to the level
of conscience-shocking, absent allegations of corruption or self-dealing, or allegations that
zoning officials were seeking to hamper development “in order to interfere with otherwise
constitutionally protected activity at the project site, or because of some bias against an ethnic
group.” Id. at 286.
Fortune’s allegations regarding Defendants’ denial of capacity from LBA, delays in
implementing the additional capacity identified by Fortune, and consideration of another
developer’s request for a portion of such additional capacity are in line with the allegations found
to be less than conscience shocking in Eichenlaub. Although Fortune alleges Defendants were
opposed to Water’s Edge, there is no allegation such opposition was based on any
constitutionally protected activity or characteristic, nor is there any allegation of self-dealing by
Defendants in connection with their handling of Fortune’s requests for capacity from the LBA
plant. See Locust Valley Golf Club, Inc. v. Upper Saucon Twp., 391 F. App’x 195, 199 (3d Cir.
2010) (holding even if zoning official who had twice attempted to purchase a golf course was
motivated to deny a proposal to develop the golf course “out of spite or in the remote hope that
he might one day purchase the property himself,” such “‘improper motives’ were not so
egregious as to shock the conscience”); see also Clark v. Boscher, 514 F.3d 107, 110, 113 (1st
Cir. 2008) (holding allegations property owners were denied necessary permits to develop a
residential subdivision on their land, including the allegation owners’ request for municipal
water service was denied because the City did not want their project, did not “rise to the level of
behavior that shocks the conscience”). Fortune’s allegation that even after LBA’s own engineer
confirmed the existence of excess capacity in the LBA plant, BTMA requested an additional
$40,000 ($20,000 each from Fortune and Forino) for “equipment and/or engineering work” also
does not rise to the level of conscience-shocking. See DB Enter. Developers & Builders, Inc. v.
Micozzie, 394 F. App’x 916, 919-20 (3d Cir. 2010) (holding defendant’s threats to shut down
work on a residential development unless the developer performed offsite sewer construction
16

For the reasons set forth above, Fortune’s procedural and substantive due process claims
against Bern Township, BTMA, and LBA (Counts One and Three) will be dismissed with
prejudice.

Having dismissed Fortune’s federal claims, this Court will decline to exercise

supplemental jurisdiction over its remaining state-law claims.

See 28 U.S.C. § 1367(c)(3)

(providing a district court may decline to exercise supplemental jurisdiction if “the district court
has dismissed all claims over which it has original jurisdiction”). Therefore, Counts Four and
Five of the Complaint will be dismissed without prejudice.
An appropriate order follows.

work on public roadways were not conscience-shocking and therefore could not support a
substantive due process claim).
Fortune’s allegation that Bern Township entered into a sham transaction to purchase the
Greenway Association’s property in order to prevent Fortune from obtaining water and
wastewater treatment services from RAWA presents a closer question. However, the premise of
this argument—that the Township entered into the Future Sale Agreement to thwart RAWA’s
condemnation of a water and sewer easement by asserting its ownership of the Greenway’s
property, “thereby putting [the property] out of reach of RAWA’s eminent domain authority,”
Fortune’s Opp’n to Bern Twp.’s Mot. to Dismiss 3; see also Compl. ¶ 69—is undermined by the
fact the Township has not asserted the property subject to the Future Sale Agreement cannot be
taken by eminent domain because it is municipally owned.
Fortune argues this case is like Associates in Obstetrics & Gynecology v. Upper Merion
Township, 270 F. Supp. 2d 633, 655-56 (E.D. Pa. 2003), in which the court held an abortion
services provider stated a substantive due process claim based on allegations the Township had
enforced a zoning code provision against it solely because it was an abortion provider. Fortune
contends that, like the defendants in the Associates case, Bern Township, BTMA, and LBA have
acted with discriminatory animus, denying Fortune’s request for wastewater treatment capacity
because they do not want the Water’s Edge development. As the Third Circuit recognized in
distinguishing the Associates case from the facts presented in Eichenlaub, however,
[b]ecause the municipal action [in Associates] implicated abortion rights, the
District Court’s analysis of the “shocks the conscience” standard proceeded
largely under those judicial decisions that address protection of abortion services
under the Fourteenth Amendment. That analysis is inapplicable to a zoning
controversy that does not involve allegations of hostility to constitutionallyprotected activity on the premises.
385 F.3d at 285. Because this case also involves no “allegations of hostility to constitutionallyprotected activity on the premises,” id., the Associates case is likewise inapposite here.
17

BY THE COURT:

/s/ Juan R. Sánchez
Juan R. Sánchez

18

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