Bergano, D.D.S., P.C. et al v. City Of Virginia Beach et al
Filing
40
OPINION & ORDER granting in part and denying in part 22 Motion to Amend/Correct; granting in part and denying in part 12 Motion to Dismiss for Failure to State a Claim. The Court GRANTS Defendants' Motion to Dismiss as to Counts 1, 3, 4, and 5 and DENIES the Motion to Dismiss as to Counts 2 and 6. The Court GRANTS Plaintiff leave to amend the Complaint as to Count 4 but otherwise DENIES Plaintiffs Motion for Leave to Amend Complaint. Signed by District Judge Henry C. Morgan, Jr on 8/15/16 and filed on 8/17/16. (tbro)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Norfolk Division
ALLAN L. BERGANO, D.D.S., P.C. et«/.,
Plaintiffs,
v.
Civil Action No. 2:15cv520
CITY of VIRGINIA BEACH, et ah,
Defendants.
OPINION & ORDER
This matter is before the Court on two motions: the City of Virginia Beach, Philip A.
Davenport, and Gail E. Salmons's ("Defendants") Motion to Dismiss ("Motion to Dismiss"),
Doc. 12, and Dr. Allan L. Bergano's1 ("Plaintiff) Motion for Leave to Amend ("Motion to
Amend"), Doc. 22.
For the following reasons, the Court GRANTS Defendants' Motion to
Dismiss as to Counts 1, 3, 4, and 5 and DENIES it as to Counts 2 and 6. Doc. 12. The Court
DENIES Plaintiffs Motion to Amend, Doc. 22, but GRANTS Plaintiff leave to amend Count 4.
I.
A.
BACKGROUND
Factual Allegations2
Plaintiff is a dentist whose practice has been located at 256 N. Witchduck Road, Suite D,
Virginia Beach for over thirty (30) years. Am. Compl. U15. In the spring or summer of 2014, a
real estate representative for the City of Virginia Beach ("the City") informed Plaintiff that the
City intended to acquire the Witchduck Office Court ("the Witchduck building"), Plaintiffs
1Dr. Bergano and his dental practice, Dr. Allan L. Bergano, D.D.S., P.C, are both Plaintiffs, but for clarity only, the
Court refers to them collectively as "Dr. Bergano" or "Plaintiff."
2"In considering a motion to dismiss, [the Court] accept[s] as true all well-pleaded allegations and view[s] the
complaint in the light most favorable to the plaintiff." Venkatraman v. REI Svs.. Inc.. 417 F.3d 418, 420 (4th Cir.
2005) (citing Mvlan Labs.. Inc. v. Matkari. 7 F.3d 1130, 1134 (4th Cir.1993)). The Court cautions, however, that
the facts alleged by Plaintiffare recited here for the limited purpose of deciding the instant Motion to Dismiss. The
recited facts are not factual findings upon which the parties may rely for any other issue in this proceeding.
1
office location, from the owner, Jerry Collier ("Mr. Collier"). Id ^ 27, Ex. F. The representative
told Plaintiff that the acquisition was for a public project and Plaintiff would need to relocate.
Id. On September 9, 2014, the City acquired the Witchduck building as part of the City's
"Witchduck Road Phase II Project."3 l± fl 10, 18, 21, Ex. B HA. On September 9, 2014,
Plaintiff signed a Possession Agreement with the City to remain in the Witchduck building until
September 15, 2015. Id, Ex. B. On September 15, 2014, the City notified Plaintiff that it would
be using the entire building and Plaintiff would have to relocate. Id, Ex. A at 1. The City also
stated that Plaintiff was eligible to receive relocation assistance from the City. Id, Ex. A. Later,
the City moved its Human Services Department into the Witchduck building, and all private
professional offices except Plaintiffs were relocated. Id. H21.
In 2015, Plaintiff hired a real estate broker to find a new location for Plaintiffs dental
practice.
Id TJ 35.
Plaintiff and the broker determined 4460 Corporation Lane, Suite 190,
Virginia Beach was suitable for the dental practice, and Plaintiff hired experts and contractors to
provide estimates of the "significant" work to be done in the space to accommodate his practice.
Id. ffil 35-36. On July 28, 2015, Plaintiff signed a lease for the Corporation Lane building and
submitted the lease and construction estimates to the City for reimbursement. Id ffi| 38-39. On
August 5, 2015, the City notified Plaintiff that it would not provide the requested funds to
modify the Corporation Lane property because "it was apparent that the location would
accommodate the dental practice with minor modifications and exceeds what the dental
[practice] currently occupies." Id, Ex. C at 1. On August 12, 2015, Plaintiffinformed the City
that he would appeal its decision to deny him relocation assistance for the Corporation Lane
property. Id K36. On August 19, 2015, Plaintiff requested a hearing date for his appeal. Id,
3City Attorney Mark Stiles's September 23, 2015 letter to Plaintiffs counsel states that the City acquired the
Witchduck Office Court on September 14, 2015. Am. Compl., Ex. H at 1.
2
Ex. E, at 1.
On August 20, 2015, the City notified Plaintiff that it no longer needed the entire
Witchduck property and Plaintiff did not have to relocate his practice after all. Id, Ex. F. The
City told Plaintiff that it would reimburse him for "any expenses incurred to satisfy any
contractual relocation obligations entered into after the effective date of the notice of relocation
eligibility, pursuant to 49 CFR § 24.2(a)(9)(ii)(G)." Id The City also offered to discuss a new
lease with Plaintiff. Id On September 18, 2015, Plaintiff sent a letter to the City complaining of
the loss of direct access to Witchduck Road, the loss of parking for Plaintiffs staff and patients,
the relocation of other professional offices from the Witchduck building, and the presence of
police and shackled inmates at the building. Id ffl[ 20-26.
On September 23, 2015, the City responded with its factual findings and a determination
that Plaintiff and his business are not "displaced persons." Id. ^ 47, Ex. H at 2. The City
recounted that it had paid the broker's fees and "may compensate Dr. Bergano and his wife, for
their time and expenses pursuing an alternate location in accordance with Virginia
Administrative Code Section 24 VAC 30-41-300." ]d, Ex. H at 2. On October 12, 2015, the
City met with Plaintiff, his counsel, and the real estate broker. Doc. 13 at 5 n.3.4 Plaintiff still
occupies and practices in the same office space he has used since he became a tenant of the
Witchduck building many years ago.5 Hearing Tr. at 19:15-19:16, Apr. 7, 2016.
B.
Procedural History
On December 1, 2015, Plaintiff filed a three-count Complaint in this Court alleging that
(1) Plaintiff and his practice are displaced persons entitled to relocation benefits; (2) Defendants
violated Plaintiffs civil rights under 42 U.S.C. §§ 1983, 1988; and (3) Defendants violated
4Plaintiffs Amended Complaint does not mention the October 12, 2015 meeting.
5It appears that Plaintiff has begun renting another office, but it is not clear whether Plaintiff has moved his practice
to that office. See jd ^ 66.
Plaintiffs civil rights under the Equal Protection Clauses of the Fifth and Fourteenth
Amendments. Compl. ffl| 39-75. On December 31, 2015, Defendants filed a Motion to Dismiss
for Failure to State a Claim.
Doc. 5.
On January 11, 2016, Plaintiff filed an Amended
Complaint. Am. Compl. On January 25, 2016, Defendants filed the instant Motion to Dismiss.
Doc. 12. Plaintiff responded in opposition on February 8, 2016, Doc. 15, and Defendants replied
on February 16, 2016, Doc. 16. On April 7, 2016, the Court held a hearing on the Motion to
Dismiss. Doc. 20. On April 13, 2016, Plaintiff filed the instant Motion to Amend. Doc. 22. On
April 27, 2016, Defendants responded in opposition, Doc. 25, and on May 4, 2016, Plaintiff
replied, Doc. 26.
On May 9, 2016, the Parties conducted a settlement conference before a
magistrate judge of this Court. Doc. 27. The Parties did not settle. Id
Plaintiffs six-count Amended Complaint alleges that Defendants violated Plaintiffs (1)
rights guaranteed under 42 U.S.C. §§ 1983, 4601, 4622, Am. Compl. ffi[ 54-114; (2) procedural
due process rights under the Fifth and Fourteenth Amendments, id. ffi| 115-22; (3) substantive
due process rights under the Fifth and Fourteenth Amendments, id fflj 123-25; and (4) right to
equal protection guaranteed by the Fifth and Fourteenth Amendments, id lffl 126-38. Plaintiff
also (5) requests declaratory relief under 28 U.S.C. § 2201 and Virginia Code § 8.01-184, id Iflj
139-43, and (6) protection of his rights guaranteed under Virginia Code §§ 25.1-400, 25.1-406,
ia\fll44-58.
II.
A.
DEFENDANTS' MOTION TO DISMISS
Legal Standards
i.
Rule 12(b)(6)
A Rule 12(b)(6) motion to dismiss tests the sufficiency of a complaint; "it does not
resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses."
Republican Party of N.C. v. Martin. 980 F.2d 943, 952 (4th Cir. 1992). "To survive a motion to
dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to
relief that is plausible on its face.'" Ashcroft v. Iqbal. 556 U.S. 662, 678 (2009) (quoting Bell
Atl. Corp. v. Twombly. 550 U.S. 544, 570 (2007)). Although a court must accept as true all
well-pleaded factual allegations and construe them in the plaintiffs favor, Edwards v. Citv of
Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999), the same is not true for legal conclusions, Iqbal
556 U.S. at 678. "Threadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice."
Id
In deciding the sufficiency of a civil rights
complaint, a court '"must be especially solicitous of the wrongs alleged' and 'must not dismiss
the complaint unless it appears to a certainty that the plaintiff would not be entitled to relief
under any legal theory which might plausibly be suggested by the facts alleged.'" Presley v. Citv
of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006) (quoting Edwards v. City of Goldsboro. 178
F.3d 231, 244 (4th Cir. 1999)) (emphasis in original).
In deciding a motion to dismiss, a court may consider the facts alleged on the face of the
complaint as well as "matters of public record, orders, items appearing in the record of the case,
and exhibits attached to the complaint." Moore v. Flagstar Bank, 6 F. Supp. 2d 496, 500 (E.D.
Va. 1997) (quoting 5A Charles A. Wright & Arthur R. Miller, Fed. Prac. & Proc. § 1357 (1990));
see Pueschel v. United States, 369 F.3d 345, 353 n.3 (4th Cir. 2004) (citations omitted).
However, "[consideration of a document attached to a motion to dismiss ordinarily is permitted
only when the document is integral to and explicitly relied on in the complaint." Zak v. Chelsea
Therapeutics Int'l. Ltd.. 780 F.3d 597, 606-07 (4th Cir. 2015) (quoting Am. Chiropractic Ass'n
v. Trigon Healthcare. Inc.. 367 F.3d 212, 234 (4th Cir. 2004)) (alteration in original).
//.
Exhibit-Prevails Rule and Corollary
Generally, when an attachment to a complaint and the complaint itself conflict, a court
should rely on the exhibit-prevails rule. Goines v. Valley Cmty. Servs. Bd., No. 15-1589, 2016
WL 2621262, at *4 (4th Cir. May 9, 2016). Under this rule, the exhibit is taken as true over
"'the bare allegations of the complaint.'"
Id (quoting Favetteville Inv'rs v. Commercial
Builders. Inc.. 936 F.2d 1462, 1465 (4th Cir. 1991)). Thus, if a plaintiff "'attaches documents
and relies upon the documents to form the basis for a claim or part of a claim, dismissal is
appropriate if the document negates the claim.'" Id (quoting Thompson v. 111. Dep't of Prof 1
Regulation. 300 F.3d 750, 754 (7th Cir. 2002)).
In applying the exhibit-prevails rule, however, "it is not always appropriate to conclude
that the plaintiff has adopted the contents of an attached document." Id at *5 (citing N. Ind. Gun
& Outdoor Shows. Inc. v. Citv of S. Bend, 163 F.3d 449, 455 (7th Cir. 1998) (explaining the
extent of Rule 10(c))) (illustrating that libel plaintiffs do not attach allegedly libelous documents
for their truth).
The court must consider the purpose for which the plaintiff attached the
document. Id If the plaintiff "incorporates a document upon which his claim is based, or ... the
complaint otherwise shows that the plaintiff has adopted the contents of the document, crediting
the document over conflicting allegations in the complaint is proper." Id If instead it is clear
that the plaintiff attached the document "for purposes other than the truthfulness of the
document," the contents should not be taken as true. Id When a defendant creates a document,
the plaintiffs purpose in attaching it is particularly important because the document "may reflect
the defendant's version of contested events or contain self-serving, exculpatory statements that
are unlikely to have been adopted by the plaintiff." Id at *6. For example, a plaintiff may attach
a defendant's recitation of some facts to develop part of the case background, but is not "required
to adopt the factual contents of the report wholesale." Banneker Ventures, LLC v. Graham, 798
F.3d 1119, 1134 (D.C. Cir. 2015). A court must therefore consider the plaintiffs case theory and
purpose for attaching the document in order to read the complaint and attachment in the light
most favorable to him. Id.
B.
Count 1: "Deprivation of Rights Guaranteed Under Federal Law" (Displacement
and Relocation Assistance)
/.
Federal Rights ofAction Under the Uniform Relocation Assistance Act ("URA ")
"The fact that a federal statute has been violated and some person harmed does not
automatically give rise to a private cause of action in favor of that person." Touche Ross & Co.
v. Redington, 442 U.S. 560, 568 (1979) (citation and internal quotation marks omitted). Rather,
a federal statute must specifically allow plaintiffs to bring private causes of action. See Gonzaga
Univ. v. Doe, 536 U.S. 273, 280 (2002). "[U]nless Congress 'speaks with a clear voice,' and
manifests an 'unambiguous' intent to confer individual rights, federal funding provisions provide
no basis for private enforcement by § 1983." Id (quoting Pennhurst State Sch. & Hosp. v.
Halderman, 451 U.S. 1, 17, 28, & n.21).
Congress passed the URA to provide a standard procedure for allocating benefits to
private parties displaced by any federally funded project. 42 U.S.C. § 4601 et seq. (2012); see
Clear Sky Car Wash, LLC v. Citv of Chesapeake. Va.. 910 F. Supp. 2d 861, 873-74 (E.D. Va.
2012), affd 743 F.3d 438 (4th Cir. 2014). After thoroughly reviewing Circuit holdings and the
URA's legislative history, this Court held in Clear Sky that neither the Act's land acquisition
provisions (Subchapter III) nor its relocation assistance provisions (Subchapter II) create a
federal right of action. Clear Sky, 910 F. Supp. 2d at 876-79.6 A federal court therefore has no
jurisdiction over claims brought under Subchapter II or III of the URA. Id at 879. Rather, a
6The Fourth Circuit affirmed this Court's decision butaddressed only Subchapter III because appellants had not
properly alleged a Subchapter II claim. Clear Sky. 743 F.3d at 442 & n.2.
7
plaintiff must bring a URA claim under the Administrative Procedure Act (APA). Id at 879.
/'/'.
Federal Law
Title 42, Section 4601(6) of the United States Code, entitled "Definitions," provides the
following definitions and exclusions of "displaced person:"
(A) The term "displaced person" means, except as provided in subparagraph
(B)-
(i) any person who moves from real property, or moves his personal
property from real property—
(I) as a direct result of a written notice of intent to acquire or the
acquisition of such real property in whole or in part for a program
or project undertaken by a Federal agency or with Federal financial
assistance; or
(II) on which such person is a residential tenant or conducts a small
business, a farm operation, or a business defined in paragraph
(7)(D), as a direct result of rehabilitation, demolition, or such other
displacing activity as the lead agency may prescribe, under a
program or project undertaken by a Federal agency or with Federal
financial assistance in any case in which the head of the displacing
agency determines that such displacement is permanent; and
(ii) solely for the purposes of sections 4622(a) and (b) and 4625 of this
title, any person who moves from real property, or moves his personal
property from real property—
(I) as a direct result of a written notice of intent to acquire or the
acquisition of other real property, in whole or in part, on which
such person conducts a business or farm operation, for a program
or project undertaken by a Federal agency or with Federal financial
assistance; or
(II) as a direct result of rehabilitation, demolition, or such other
displacing activity as the lead agency may prescribe, of other real
property on which such person conducts a business or a farm
operation, under a program or project undertaken by a Federal
agency or with Federal financial assistance where the head of the
displacing agency determines that such displacement is permanent.
(B) The term "displaced person" does not include—
(i) a person who has been determined, according to criteria established by
the head of the lead agency, to be either in unlawful occupancy of the
displacement dwelling or to have occupied such dwelling for the purpose
of obtaining assistance under this chapter;
(ii) in any case in which the displacing agency acquires property for a
program or project, any person (other than a person who was an occupant
of such property at the time it was acquired) who occupies such property
on a rental basis for a short term or a period subject to termination when
8
the property is needed for the program or project.
42 U.S.C. § 4601(6)(A)-(B) (2012).
Title 42, Section 4622 of the United States Code, entitled "Moving and Related
Expenses," states in pertinent part,
(a) General provision
Whenever a program or project to be undertaken by a displacing agency will
result in the displacement of any person, the head of the displacing agency shall
provide for the payment to the displaced person of—
(1) actual reasonable expenses in moving himself, his family, business,
farm operation, or other personal property;
(2) actual direct losses of tangible personal property as a result of moving
or discontinuing a business or farm operation, but not to exceed an amount
equal to the reasonable expenses that would have been required to relocate
such property, as determined by the head of the agency;
(3) actual reasonable expenses in searching for a replacement business or
farm; and
(4) actual reasonable expenses necessary to reestablish a displaced farm,
nonprofit organization, or small business at its new site, but not to exceed
$25,000, as adjusted by regulation, in accordance with section 4633(d) of
this title.
(c) Displacement from business or farm operation; election of payments;
minimum and maximum amounts; eligibility
Any displaced person eligible for payments under subsection (a) of this section
who is displaced from the person's place of business or farm operation and who is
eligible under criteria established by the head of the lead agency may elect to
accept the payment authorized by this subsection in lieu of the payment
authorized by subsection (a) of this section. Such payment shall consist of a fixed
payment in an amount to be determined according to criteria established by the
head of the lead agency, except that such payment shall not be less than $ 1,000
nor more than $40,000, as adjusted by regulation, in accordance with section
4633(d) of this title. A person whose sole business at the displacement dwelling
is the rental of such property to others shall not qualify for a payment under this
subsection.
42 U.S.C. § 4622(a), (c) (2012).
The URA, found in Title 49, Part 24 of the Code of Federal Regulations, provides the
following definitions and exclusions of "displaced person:"
(i) General. The term displaced person means, except as provided in paragraph
(a)(9)(ii) of this section, any person who moves from the real property or moves
his or her personal property from the real property. (This includes a person who
occupies the real property prior to its acquisition, but who does not meet the
length of occupancy requirements of the Uniform Act as described at § 24.401(a)
and § 24.402(a)):
(A) As a direct result of a written notice of intent to acquire (see
§ 24.203(d)), the initiation of negotiations for, or the acquisition of, such
real property in whole or in part for a project;
(B) As a direct result of rehabilitation or demolition for a project; or
(C) As a direct result of a written notice of intent to acquire, or the
acquisition, rehabilitation or demolition of, in whole or in part, other real
property on which the person conducts a business or farm operation, for a
project. However, eligibility for such person under this paragraph applies
only for purposes of obtaining relocation assistance advisory services
under § 24.205(c), and moving expenses under §24.301, §24.302 or
§ 24.303.
(ii) Persons not displaced. The following is a nonexclusive listing of persons who
do not qualify as displaced persons under this part:
(D) A person who is not required to relocate permanently as a direct result
of a project. Such determination shall be made by the Agency in
accordance with any guidelines established by the Federal Agency funding
the project (See appendix A, § 24.2(a)(9)(ii)(D));
(F) A person whom the Agency determines is not displaced as a direct
result of a partial acquisition;
(G) A person who, after receiving a notice of relocation eligibility
(described at § 24.203(b)7), is notified in writing that he or she will not be
displaced for a project. Such written notification shall not be issued unless
the person has not moved and the Agency agrees to reimburse the person
for any expenses incurred to satisfy any binding contractual relocation
obligations entered into after the effective date of the notice of relocation
eligibility....
URA, 49 C.F.R. § 24.2(a)(9) (2016) (footnote added). "This Act applies to all acquisitions of
real property or displacements of persons resulting from Federal or federally-assisted programs
or projects and affects 18 Federal Agencies." Uniform Relocation Assistance and Real Property
Acquisition for Federal and Federally-Assisted Programs, 70 Fed. Reg. 590, 590 (Jan. 4, 2005)
(b) Notice of relocation eligibility. Eligibility for relocation assistance shall begin on the date of a
notice of intent to acquire (described in 49 C.F.R. § 24.203(d)), the initiation of negotiations
(defined in § 24.2(a)(15)), or actual acquisition, whichever occurs first. When this occurs, the
Agency shall promptly notify all occupants in writing of their eligibility for applicable relocation
assistance.
URA, 49 C.F.R. § 24.203(b) (2016).
10
(49 C.F.R. pt. 24).
//'/.
Analysis
Plaintiff alleges a claim under the "Federal Uniform Relocation Assistance and Real
Property Acquisition Policies of Chapter 61 of Title 42 of the United States Code." Am. Compl.
U108. Plaintiff accordingly argues that Defendants are "liable to [him] pursuant to 42 U.S.C.
§ 1983." Id 1| 108. Plaintiffs relocation claims arise under Subchapters II and III of the URA.
Id U1| 108, 58; see 42 U.S.C. § 4601 et seg, (2012). Under this Court's ruling in Clear Sky.
Subchapter II does not create a federal right of action. 910 F. Supp. 2d at 876-79. Under the
Fourth Circuit's ruling in Clear Sky, Subchapter III does not create a federal right of action. 743
F.3d at 444. Because § 1983 only "supplies a remedy for rights conferred by other statutes or by
the Constitution," Plaintiff cannot pursue a § 1983 in the absence of rights of action under the
URA. Id. Therefore, the Court does not have jurisdiction to consider Plaintiffs URA claim.
/'.
Conclusion
The Court GRANTS Defendants' Motion as to Count 1.
C.
Count 2: "Deprivation of Rights Without Due Process of Law (Procedural Due
Process)"
ii.
Procedural Due Process
Under the Due Process Clauses of the Fifth and Fourteenth Amendments, the government
must provide a person with due process of law when acquiring his property.
U.S. Const,
amends. V, XIV. To plead a procedural due process claim, a plaintiff must demonstrate he (1)
"had a constitutionally cognizable life, liberty, or property interest," (2) "the deprivation of that
interest was caused by 'some form of state action,'" and (3) "the procedures employed were
constitutionally inadequate." Sansotta v. Town of Nags Head. 724 F.3d 533, 540 (4th Cir. 2013)
(quoting Iota Xi Chapter of Sigma Chi Fraternity v. Patterson, 566 F.3d 138, 145 (4th Cir. 2009))
(requiring three elements to prove a procedural due process claim); Clear Sky, 910 F. Supp. 2d at
11
885 (requiring three elements to plead a procedural due process claim); see Sylvia Dev. Corp. v.
Calvert Cntv.. Md.. 48 F.3d 810, 826 (4th Cir. 1995).
Hi.
Property Interests Protected
Procedural due process protects property interests "well beyond actual ownership of real
estate, chattels, or money." Bd. of Regents of State Colls, v. Roth. 408 U.S. 564, 571-72 (1972).
These interests are vindicated, not created, by the Fourteenth Amendment.
Bannum. Inc. v.
Town of Ashland, 922 F.2d 197, 200 (4th Cir. 1990). Rather, they are created by "existing rules
or understandings that stem from an independent source such as state law.. . that secure[s]
certain benefits and . .. supports] claims of entitlement to those benefits." Roth, 408 U.S. at
577; see Johnson v. Citv of Kings Mountain. 883 F.2d 69, at *1 (4th Cir. 1989) (unpublished
table decision) (noting that employment property interests are "determined by reference to state
law") (citing Bishop v. Wood, 426 U.S. 341, 344 (1976)). "To have a property interest in a
benefit, a person clearly must have more than an abstract need or desire for it [ ] ... [or] a
unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it." Roth,
408 U.S. at 577 (holding that a public university professor did not have a guarantee or property
interest in the renewal of his one-year contract).
"A contingent or expected property interest, in contrast to an entitlement to a property
interest, does not 'rise to the level' of a constitutionally protected property interest for due
process purposes." Miller v. Montgomery Cntv., Md., 458 F. App'x 304, 309 n.9 (quoting
Phelps v. Housing Auth. of Woodruff. 742 F.2d 816, 823 (4th Cir. 1984)). A property interest
exists "if there are such rules or mutually explicit understandings that support [a plaintiffs]
claim of entitlement to the benefit and that he may invoke at a hearing." Perry v. Sindermann,
408 U.S. 593, 601 (1972). Independent sources of property interests can include "agreements
implied from 'the promisor's words and conduct in light of the surrounding circumstances."'
12
Fuller v. Laurens Cntv. Sch. Dist. No. 56, 563 F.2d 137, 142 (4th Cir. 1977); see Bishop, 426
U.S. at 344 (concerning implied contracts). However, an "informal system" lacking specific
parameters or a "mutually explicit understanding" is insufficient to create a property interest.
Med Corp.. Inc. v. Citv of Lima. 128 F. Supp. 2d 454, 457 (N.D. Ohio 2000).
In Bannum. the town of Ashland gave written approval to a contractor for the operation
of a half-way house, but later rescinded its approval for the project. 922 F.2d at 199. The Fourth
Circuit held that the injured contracting party did not have a property interest in the continued
approval of the project because the town gave its approval
pursuant to an informal request without the payment of a fee. No underlying
ordinance, rule or procedure applied to the application for or the grant of the
approval, and no other term or condition attached by operation of [contract or
property] law or by understanding
[N]othing in the record suggested] that
Ashland could not have unilaterally withdrawn the approval at any time.
Id. at 200. The court noted that a "well-founded expectancy ... does not rise to the level of a
property interest protected by the Fourteenth Amendment, nor did Bannum's "mere reliance on
the approval elevate [the] interest into an entitlement." Id at 200-01.
iv.
Constitutionally Adequate Procedure
"Due process 'is flexible and calls for such procedural protections as the particular
situation demands' in order 'to minimize the risk of error.'" Slade v. Hampton Roads Reg'l Jail,
407 F.3d 243, 253 (4th Cir. 2005) (quoting Greenholtz v. Inmates of Neb. Penal & Corr.
Complex, 442 U.S. 1, 12-13 (1979)).
When determining whether a deprivation is
constitutionally proper, a court must consider "(1) the private interest to be affected by the
action; (2) the risk of erroneous deprivation of that interest through the procedures that were used
and the probable value of added procedures; and (3) the government's interest, including the
fiscal and administrative burdens of added procedures." Id (citing Mathews v. Eldridge. 424
U.S. 319, 335(1976)).
13
v.
Analysis
Plaintiff must allege that Defendants deprived him of property or a property interest
without due process of law. Sansotta, 724 F.3d at 540. These could include an interest in his
tenancy of the Witchduck building, an interest in access to the building and parking lot, or an
interest in the building's conditions prior to the City's acquisition. See Roth, 408 U.S. at 572,
578. While Count 2 does not on its face allege a lost property interest, it "incorporate^] the
foregoing allegations" of the Amended Complaint. Am. Compl. 1| 115. In support of Claim 1,
Plaintiff alleges that, as a displaced person, he has "a property interest in relocation benefits
under the [URA]." Id. H71. The Clear Sky plaintiffs' identical claim to benefits under the URA
was rejected because entitlement to a property interest must be created by statute or other
recognized rules, Town of Castle Rock, Colo, v. Gonzales, 545 U.S. 748, 756 (2005), and the
URA does not create such entitlements, Clear Sky, 910 F. Supp. 2d at 885-86. Just as the Clear
Sky plaintiffs failed to state a property interest required for a procedural due process claim,
Plaintiff has failed to allege a property interest for URA benefits.
However, unlike the Clear Sky plaintiffs, Plaintiff has alleged entitlement to additional
cognizable property interests protected by state contract law and guaranteed through procedural
due process.8 See Roth, 408 U.S. at 577. Plaintiff alleges that the City has (1) diminished
Plaintiffs access to the building and parking and (2) made the Witchduck building an improper
place for his dental practice. See Am. Compl. HH 20-22, 63, 114.
The Court first notes that Plaintiff has never owned any portion of the Witchduck
building or its surrounding property; he has only been a tenant. Id K1f 16-17, Exs. A, B 1f C. He
8 The Clear Sky plaintiffs pled "no facts suggesting that they [had] been deprived of their property or liberty
interests in the Land and business comprising Clear Sky Car Wash." Clear Sky. 910 F. Supp. 2d at 885. Instead,
they alleged only their entitlement to "certain pre-deprivation rights of which Defendants [had] deprived them by
failing to comply with the URA's policies." Id at 886.
14
has not alleged a property interest in his tenancy of the Witchduck building because he
apparently still occupies his office at the building. See id UK 20-23. Plaintiffs counsel stated at
the April 7, 2016 motion hearing, "[Plaintiff]'s operating the business still at the current
site ...." Hearing Tr. at 19:15-19:16, Apr. 7, 2016.
Taking this statement and Plaintiffs
ongoing complaints about the City's use of the building as true, Plaintiff still practices dentistry
in the building. See Am. Compl. ffi| 20-23. Similar to the Clear Sky plaintiffs, who "remained
in possession of the land and continued to operate the business despite the instant litigation,"
Plaintiff has not left the Witchduck building despite his allegations that is unsuitable for his
practice. 910 F. Supp. 2d at 885. Defendants therefore have not deprived Plaintiff of his
property interest in his tenancy.
a. Plaintiff Has Alleged Property Interests in Access to the Witchduck Building and
Adequate Parking.
Plaintiff has, however, properly alleged that the City interfered with his property interests
in access to the Witchduck building and in adequate parking. Am. Compl. HU 20, 63. Plaintiff
alleges that the City has "eliminate[ed] direct access to Witchduck Road for the building and
facility." Id K20. This has caused the property to "los[e] direct access to Witchduck Road
requiring more maneuvers to enter the property and making it less desirable." Id. U63. To have
a property interest in the access to the building, Plaintiff must have a legitimate claim of
entitlement to it rising above mere expectation or reliance. Roth, 408 U.S. at 577. As a tenant,
Plaintiff does not own the access areas around the building, but his lease with the City must
allow him, his employees, and his patients to reach his office space in a reasonable manner.
Plaintiffs lease with the city9 requires the City "to use reasonable efforts to minimize any
9Plaintiffs lease with the City is considered for itstruth under theexhibit-prevails rule and corollary because it was
not prepared in view of the instant litigation and Plaintiff agreed to its provisions when he signed it. See Goines,
2016 WL 2621262, at *5; Banneker. 798 F.3d at 1134.
15
disruption to the Tenant's business (including access to, and visibility of, the Premises) caused
by ongoing construction around the Premises." Am. Compl., Ex. B U 19. In contrast to the
town's approval letter in Bannum, the City's contractual promise to provide regular and
reasonable access to the Witchduck building elevates Plaintiffs interest to an expected benefit
based in state contract law. See 922 F.2d at 199. Therefore, Plaintiff has properly alleged a
property interest in access to the building.
Plaintiff alleges that the City's "eliminating parking spaces from the Witchduck Office
Court's parking lot, eliminating direct access to Witchduck Road for the building and facility,
and reserving other parking for 'Police Parking Only' and other City vehicles" has curbed
Plaintiffs ability to park at the building. Id. ffij 20, 63. "City employees and guests routinely
take all available parking," and "[a]s a result of the City's acquisition, there is no longer
sufficient parking for [Plaintiff] to operate his practice." Id. HH2K 63.
The Court notes that Plaintiff attached a letter from City Attorney Mark Stiles ("Mr.
Stiles") to his Amended Complaint. ]±, Ex. H. Mr. Stiles wrote to Plaintiffs counsel on
September 23, 2015, "I have considered two separate leases that Dr. Bergano had for the
premises while it was owned by Mr. Collier .... Dr. Bergano's original lease did not give him
control over the parking lot." Id at 2. According to the City, Plaintiff does not have a property
interest in the parking lot. See id Because Plaintiff attached the City's letter to his Amended
Complaint and explicitly relies on it, id. K47, it should be considered in deciding the Motion to
Dismiss. Zak, 780 F.3d at 606-07. Applying the exhibit-prevails rule and its corollary, the
Court considers that Plaintiff attached the letter written by a Defendant for the purpose of
providing factual background. See Gomes, 2016 WL 2621262, at *5; Banneker, 798 F.3d at
1134. Mr. Stiles's letter recites some of the City's actions in dealing with Plaintiffs objections,
16
which may be couched in self-serving language.
See Goines, 2016 WL 2621262, at *6.
Plaintiffs Amended Complaint would not sensibly incorporate as true the statements concerning
Plaintiffs displacement status or interest in the Witchduck building parking lot. See, e.g.. Am.
Compl., Ex. H at 2. Therefore, the Amended Complaint's allegations stand despite the conflict,
and Mr. Stiles's letter is not to be taken as true for the purposes of deciding the Motion to
Dismiss. See Goines. 2016 WL 2621262 at *5-6.
Just as Plaintiff has a property interest in the access to the building, he has a property
interest in adequate parking. When it executed its one year lease with Plaintiff, the City knew
that Plaintiffs employees and patients must be able to park at the Witchduck building for their
shifts and appointments. Indeed, the City extended a commercial lease with Plaintiff, and this
type of lease necessitates space for visitors to park on the premises. See Am. Compl., Ex. B K 1.
b. Plaintiff Has Alleged a Property Interest in the Suitability of the Property for a Dental
Practice.
Plaintiff has also alleged a property interest in the character of the Witchduck property as
it existed before the City acquired it. See Am. Compl. UK 19, 22, 63, 114. Hinting that a change
in its nature was foreseeable, Plaintiff relays that Mr. Collier, "when advised by the City of the
condemnation of a portion of the subject property for the Project, requested that the City of
Virginia Beach acquire the entire property as a result of the negative impact to the remaining
property." Id. H17. Plaintiff states that the City did acquire the whole Witchduck property, but
then did not assist Plaintiff in relocating. See id. ffi[ 116, 118. The City "took Dr. Bergano's
property and rendered it unsuitable for use as a dental practice." Id. 1ffl 113-14. To wit, the City
has "dramatically changed the nature and use of the property" by replacing all other professional
offices with a Human Services Department and bringing convicted felons and police presence to
the building. Id. Iffl 19, 22. The Court notes that Mr. Stiles's letter to Plaintiffs counsel stated,
17
I do note that neither [previous] lease allowed Dr. Bergano to control the uses on
the property. Mr. Collier could have opted to lease the other units to any
individual or business, including to the City for the uses now occupying the
Property, so the status quo for Dr. Bergano has not changed.
Id., Ex. H, at 2. Again considering the purpose for which Plaintiff attached the document, the
Court does not consider Mr. Stiles's statements for their truth.
Plaintiff need not show that he exercised influence over Mr. Collier's choices about use
of the property. Instead, he has shown that he exercised more than a "mere reliance" on the
City's preserving the property as it existed, because the City's lease with Plaintiff specifically
stated that Plaintiffs office space must be "used as a dental office and for no other purpose." Id,
Ex. B 1| 1; see Bannum, 922 F.2d at 200. Plaintiff could do nothing else with his office space;
thus, he had an entitlement, not just a "unilateral expectation," that the property would remain
suitable for a dental practice. Roth, 408 U.S. at 577. The City is consequently bound by the
implication of its explicit restriction on Plaintiff. Fuller, 563 F.2d at 142. Therefore, Plaintiff
has alleged a property interest in the suitability of the Witchduck property for a dental practice.
c. Plaintiff Has Properly Alleged Procedural Due Process Claims.
Plaintiff has alleged "constitutionally cognizable .. . property interests]" in access to the
Witchduck building, adequate parking, and the suitability of the property for a dental practice.
See Clear Sky, 910 F. Supp. 2d at 885. It is also clear that that the City's actions deprived
Plaintiff of these legitimate property interests. Am. Compl. UK 20, 21, 63, 65; see Clear Sky, 910
F. Supp. 2d at 885. Plaintiff must finally plead that the City used "constitutionally inadequate"
procedures to deprive him of his property interests. Clear Sky, 910 F. Supp. 2d at 885.
In Slade, the Fourth Circuit considered a jail's daily deduction of one dollar ($1) from the
appellant's account, which could continue up to five months. Slade, 407 F.3d at 253. The Court
held that the jail had a legitimate interest in defraying the costs of retaining the appellant and the
18
incremental deduction of approximately $150 presented "little risk of erroneous deprivation that
a pre-deprivation hearing would ameliorate." Id In contrast, Plaintiffs loss of access to the
building, adequate parking, and the building's suitability for a dental practice are intrusions upon
substantial private property interests without a defined end. The City gave Plaintiff no indication
as to when its construction on the property or its use of it as a Human Services location will
cease, nor has it provided Plaintiff a hearing or "opportunity to be heard."10 Am. Compl. ffl| 41,
45, 116, 120. Further, though the administrative burden of providing a hearing is much greater
than an automatic prisoner account deduction, the City should be accustomed to providing a
"prompt and full opportunity to be heard" as outlined in its standard relocation assistance
brochure. Id, Ex. G at 7. A great risk of error also exists here, where the deprivation of a
business owner's property interests can damage his livelihood. See Slade, 407 F.3d at 253. The
City's use of the property and treatment of Plaintiff are more than "routine matters of
accounting" or "essentially ministerial matters." Id. at 253-54 (quoting Tillman v. Lebanon
Cntv. Corr. Facility, 221 F.3d 410, 422 (3d Cir. 2000)). They are serious property decisions that
require discretion and careful communication with affected parties.
The City should have
presented Plaintiffwith a full opportunity to be heard beyond the reading and responding to his
letters requesting an appeal. Am. Compl. Exs. D, E, F. Finally, the City prepared for almost a
year to provide relocation assistance to Plaintiff before it alerted him that he did not need to
relocate; discussing the reasons for its decision and reversal at a hearing would have imposed a
minimal burden on the City. Id. Iffl 28, 44. Plaintiff has properly alleged that the procedures
provided to him were constitutionally inadequate.
10 The Court notes that "government entities need not provide a hearing before they physically take private property,
so long as the taking is for a public use." Presley. 464 F.3d at 489 (citing Bragg v. Weaver. 251 U.S. 57, 58 (1919)).
Here, the City's action is not a taking because Plaintiff is a tenant rather than an owner of the Witchduck property.
Therefore, even if the City's project is for a public use, the City is not excused from providing a hearing.
19
vi.
Conclusion
Because Plaintiff has properly alleged procedural due process claims for the denial of
access to the Witchduck building, adequate parking, and suitability of the property for a dental
practice, the Court DENIES Defendants' Motion as to Count 2.
D.
Count 3: "Deprivation of Rights Without Due Process of Law (Substantive Due
Process)"
/.
Substantive Due Process
To plead a substantive due process claim, a plaintiff must demonstrate "'(1) that [he] had
property or a property interest; (2) that [the defendant] deprived [him] of this property or
property interest; and (3) that [the defendant's] action falls so far beyond the outer limits of
legitimate governmental action that no process could cure the deficiency.'" Clear Sky, 910 F.
Supp. 2d at 885 (quoting Sylvia, 48 F.3d at 827). "Substantive due process is 'a far narrower
concept than procedural; it is an absolute check on certain governmental actions notwithstanding
'the fairness of the procedures used to implement them.'" Id. (quoting Love v. Pepersack, 47
F.3d 120, 122 (4th Cir. 1995)). "Irrationality and arbitrariness imply a most stringent standard
against which state action is to be measured in assessing a substantive due process claim."
Rucker v. Harford Cntv., 946 F.2d 278, 281 (4th Cir. 1991). Consequently, a substantive due
process claim will succeed "only where the state courts can do nothing to rectify the injury that
the state has already arbitrarily inflicted."
Love, 47 F.3d at 123; see Awkard v. Md.-Nat'l
Capital Park & Planning Comm'n. No. RWT 08cvl562, 2011 WL 2896005, at *3 (D. Md. July
15, 2011) (holding that a substantive due process claim was insufficient because the plaintiffs
"ha[d] not shown that their post-deprivation remedies [were] inadequate to rectify any taking of
their property" since they had not initiated an inverse condemnation, a quiet title, or other state
court proceeding). "[B]y barring certain government actions regardless of the fairness of the
20
procedures used to implement them, it serves to prevent governmental power from being 'used
for purposes of oppression.'"
Daniels v. Williams, 474 U.S. 327, 321-22 (1986) (quoting
Murray v. Hoboken Land & Imp. Co., 59 U.S. 272, 277 (1855)) (citations omitted).
In Marks v. City of Chesapeake, Virginia, the Fourth Circuit held that a plaintiff properly
alleged a substantive due process claim following a city's denial of a permit for a palmistry and
hand reading business.
883 F.2d 308 (4th Cir. 1989). The plaintiff claimed the denial was
"arbitrary" and "capricious" because the city council simply complied with the plaintiffs local
opponents' '"religious' reasons for withholding the permit." Id at 312-13. In Rucker, the
Fourth Circuit held that an undisputedly accidental police shooting was not an "'oppressive'
abuse of governmental power" because the plaintiff had entered into a "scene of visible danger
from which he was warned by the police to leave." 946 F.2d at 281. The Court held that though
the plaintiff did not leave, the shooting was not "reckless and irresponsible" enough to be
"'inhumane' conduct 'literally shocking to the conscience'" as is required for a physical
substantive due process claim. Id at 282.
In Keck v. Virginia, a magistrate judge of this Court found that a complaint insufficiently
alleged a substantive due process claim even though the plaintiffs "demotion, transfer, and pay
reduction were mistaken and unfair." No. 3:10cv555, 2011 WL 4589997, at *20 (E.D. Va. Sept.
9, 2011). The magistrate judge stated, "[TJhose allegations alone [could not] possibly undergird
a substantive due process claim" and recommended that the claim be dismissed. Id
/'/'.
Analysis
Plaintiff must demonstrate that Defendants deprived him of access to the Witchduck
building, adequate parking, and suitability of the property for his dental practice in an
"irrational" or "arbitrary" way such that no state court process can cure his injury. See Clear
21
Sky, 910 F. Supp. 2d at 885; Rucker, 946 F.2d at 281. In 2014 and 2015, Plaintifftook steps to
relocate his dental office because of the City's representations that it needed the entire
Witchduck building. Am. Compl. KH 35-36, 38-39, Ex. A at 1. Less than a month before his
one year lease expired and after he had been denied relocation assistance and declared his intent
to appeal the decision, the City arbitrarily informed Plaintiff that he no longer needed to relocate.
See Am. Compl. U36, Exs. C at 1, F. Nevertheless, the City's actions could have been "unfair"
and yet fail to constitute an "oppressive abuse of governmental power" that "shock[s] the
conscience." Keck, 2011 WL 4589997, at *20; Rucker, 946 F.2d at 281-82.
Furthermore, Plaintiff has not alleged that he exhausted all state remedies, see infra Part
III.C, nor is it apparent that the state courts "can do nothing to rectify the injury" he has
suffered, see Love, 47 F.3d at 123. The access, parking, and suitability of the Witchduck
building for a dentistry are not irreparably damaged property interests; they can be restored or
Plaintiff can be appropriately compensated for his loss. Therefore, Plaintiff has failed to allege a
substantive due process claim.
vii.
Conclusion
The Court GRANTS Defendants' Motion as to Count 3.
E.
Count 4: "Deprivation of Equal Protection Under the Law"
/.
Equal Protection
The Equal Protection Clause of the Fourteenth Amendment requires the government to
treat all similarly situated citizens in the same manner. U.S. Const, amend. XIV § 1. "In order
to survive a motion to dismiss an equal protection claim, a plaintiff must plead sufficient facts to
demonstrate plausibly that he was treated differently from others who were similarly situated and
that the unequal treatment was the result of discriminatory animus." Equity in Athletics. Inc. v.
22
Dep'tofEduc. 639 F.3d 91, 108 (4th Cir. 2011).
//.
Analysis
Plaintiff alleges that "[t]he City has previously relocated other dental practices for a
related project and paid relocation benefits in approximate amounts of $283,866.73,
$298,517.65, and $520,687.54."
Am. Compl. 1129.
He also alleges that "[t]he City has
provided relocation benefits to other displaced persons along the Project."11 Id 1) 131. Even
taken as true, these statements and Plaintiffs assertion that the City acted "irrationally,
arbitrarily, and capriciously," id K135, do not demonstrate that the City denied him benefits due
to discriminatory animus, see Equity in Athletics, 639 F.3d at 108. Plaintiff has not stated any
discriminatory reason why he believes the City denied him benefits and therefore fails to state a
proper equal protection claim.
viii.
Conclusion
The Court GRANTS Defendants' Motion as to Count 4. But see infra Part II.H.
F.
Count 5: "Declaratory Relief
/.
Federal Law
The federal Declaratory Judgment Act states in pertinent part,
(a) In a case of actual controversy within its jurisdiction,. . . any court of the
United States, upon the filing of an appropriate pleading, may declare the rights
and other legal relations of any interested party seeking such declaration, whether
or not further relief is or could be sought. Any such declaration shall have the
force and effect of a final judgment or decree and shall be reviewable as such.
28 U.S.C. § 2201(a) (2012). The purpose of this Act "is to avoid accrual of avoidable damages
to [the] party uncertain of its rights." Volvo Const. Equip. N. Am., Inc. v. CLM Equip. Co., 386
11 While Plaintiff argues he was treated differently from others who received relocation assistance, he states that
"[t]he City has a policy and custom of denying relocation benefits to displaced persons" and "the City did not
provide relocation benefits or assistance to any other persons who relocated from the Witchduck Office Court as a
result of the City's Project...." Am. Compl.ffi] 93-94. The Court resolves the apparent contradiction in favor of
Plaintiffs proper allegation of an equal protection claim, i.e., that the City denied benefits to Plaintiff, but not
others. The City therefore cannot have a policy of denying benefits to displaced persons.
23
F.3d 581, 593 (4th Cir. 2004) (citing NUCOR Corp. v. Aceros v Maquilas de Occidente, 28 F.3d
572, 577 (7th Cir. 1994)).
Under federal law, a declaratory judgment is appropriate when: "(1) the complaint alleges
an actual controversy between the parties of sufficient immediacy and reality to warrant issuance
of a declaratory judgment; (2) the court possesses an independent basis for jurisdiction over the
parties . . . ; and (3) the court does not abuse its discretion in its exercise of jurisdiction." Volvo,
386 F.3d at 592 (internal quotation marks omitted) (citing 28 U.S.C. § 2201; Cont'l Cas. Co. v.
Fuscardo, 35 F.3d 963, 965 (4th Cir. 1994); N. Jefferson Square Assocs. v. Va. Hous. Dev.
Auth.. 94 F. Supp. 2d 709, 714 (E.D. Va. 2000)); accord Md. Cas. Co. v. Pac. Coal & Oil Co..
312 U.S. 270,273(1941).
ii.
Virginia Law
The Virginia Declaratory Judgment Act states,
In cases of actual controversy, circuit courts within the scope of their respective
jurisdictions shall have power to make binding adjudications of right, whether or
not consequential relief is, or at the time could be, claimed and no action or
proceeding shall be open to objection on the ground that a judgment order or
decree merely declaratory of right is prayed for. Controversies involving the
interpretation of deeds, wills, and other instruments of writing, statutes, municipal
ordinances and other governmental regulations, may be so determined, and this
enumeration does not exclude other instances of actual antagonistic assertion and
denial of right.
Va. Code §8.01-184.
Under Virginia law, declaratory judgment is inappropriate when the plaintiff demands it
after "the various claims and rights asserted ha[ve] all accrued and matured, and ... the wrongs
ha[ve] been suffered." Liberty Mut. Ins. Co. v. Bishop. 211 Va. 414, 421 (1970). In fact,
[t]he intent of the declaratory judgment statutes is not to give parties greater rights
than those which they previously possessed, but to permit the declaration of those
rights before they mature. In other words, the intent of the act is to have courts
render declaratory judgments which may guide parties in their future conduct in
relation to each other, thereby relieving them from the risk of taking undirected
24
action incident to their rights, which action, without direction, would jeopardize
their interests. This is with a view rather to avoid litigation than in aid of it.
Id
Hi.
Analysis
Plaintiff makes both federal and state declaratory judgment claims. Am. Compl. ffil 1, 3,
143; 28 U.S.C. § 2201(a); Va. Code § 8.01-184. To receive a declaration of the Parties' rights
and obligations under federal law, Plaintiffs claim must meet the three-pronged federal
declaratory judgment test. Volvo, 386 F.3d at 592. While Plaintiffs claim alleges an actual
controversy, it lacks the "sufficient immediacy" requirement that merits a declaratory judgment.
Id. Plaintiffs dispute with Defendants is not projected; Defendants' notifying Plaintiff that he
needed to relocate, Plaintiffs incursion of brokerage and construction estimate fees, and the
City's reversal of its relocation decision have already occurred. Am. Compl. UK 35-36, Exs. A,
F. Plaintiffs claims are ripe for actual adjudication, not federal declaratory judgment.
To receive a declaratory judgment under Virginia law, Plaintiff must demonstrate that he
anticipates suffering a wrong if the Court does not enumerate the Parties' rights and obligations.
Liberty Mut„ 211 Va. at 421. Again, Plaintiff alleges that the City has already improperly
denied him relocation assistance. Am. Compl. at 1. The purpose of the Virginia declaratory
judgment action is to "avoid litigation" rather than "aid" it as an addition to a complaint, Liberty
Mut., 211 Va. at 421, but Plaintiff has attempted the latter. Neither federal nor state declaratory
judgment is proper here.
iv.
Conclusion
The Court GRANTS Defendants' Motion as to Count 5.
G.
Count 6: "Deprivation of Rights Guaranteed Under State Law"
/.
Supplemental State Law
25
A federal court may exercise supplemental jurisdiction over state law claims when the
court has original jurisdiction over federal claims which form part of the same case or
controversy as the state law claims. 28 U.S.C. § 1367(a) (2012). If all of the claims under a
court's original jurisdiction are dismissed, the supplemental claims must also be dismissed.
§ 1367(c)(3).
/'/'.
Analysis
Plaintiff has sufficiently alleged procedural due process claims, see supra Part II.C,
which are properly before the Court under its federal jurisdiction, § 1331. His supplemental state
law claims arise from the same facts as his federal due process claims and are therefore properly
before the Court under its supplemental jurisdiction. § 1367(a).
Hi.
Conclusion
The Court DENIES Defendants' Motion as to Count 6.
H.
Conclusion
When viewed in the light most favorable to him, Edwards, 178 F.3d at 244, a portion of
Plaintiffs allegations are sufficient to state a claim for which relief can be granted, Fed. R. Civ.
P. 12(b)(6). For the foregoing reasons, the Court GRANTS Defendant's Motion to Dismiss as to
Counts 1, 3, 4, and 5 and DENIES the Motion to Dismiss as to Counts 2 and 6. However, the
Court GRANTS Plaintiff leave to amend Count 4. If Plaintiff is unable to allege a cause of
action under Count 4, no further amendments will be allowed.
III.
A.
PLAINTIFF'S MOTION FOR LEAVE TO AMEND COMPLAINT
Legal Standards
A party may amend its pleading once as a matter of course before a responsive pleading
is filed. Fed. R. Civ. P. 15(a)(1). Afterward, a party may amend its pleading with the opposing
26
party's written consent or the court's leave, and "[t]he court should freely give leave when
justice so requires." Fed. R. Civ. P. 15(a)(2). Leave to amend should be granted if no "undue
delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies
by amendments previously allowed, undue prejudice to the opposing party by virtue of
allowance of the amendment, [or] futility of amendment..." are present. Foman v. Davis, 371
U.S. 178, 182 (1962). Federal courts strive to resolve matters on their merits rather than on
technicalities. Sciolino v. Citv of Newport News, Va., 480 F. 3d 642, 651 (4th Cir. 2007).
/'.
Bad Faith
The more advanced a matter, the more likely an amendment prejudices the defendant and
suggests the plaintiffis acting in bad faith. Laber v. Harvey, 438 F.3d 404, 427 (4th Cir. 2006).
Strategically delaying the assertion of a claim or defense does not indicate bad faith unless it is
accompanied by prejudice to the other party. See Buder v. Merrill Lynch, Pierce, Fenner &
Smith. Inc., 644 F.2d 690, 694 (8th Cir. 1981) (holding that the plaintiffs' proceeding on a late
second case theory was not in bad faith because they were not required to proceed on both
theories at the outset of the case).
ii.
Delay or Dilatory Motive
A party should move to amend its pleading as soon as the necessity for amendment
becomes clear, Deasy v. Hill, 833 F.2d 38, 41 (4th Cir. 1987), but delay without any
"specifically resulting prejudice" or obvious "design by dilatoriness to harass the opponent" is
insufficient for a denial of the motion, Davis v. Piper Aircraft Corp., 615 F.2d 606, 613 (4th Cir.
1980). Motions to amend pleadings can even be made at trial if the opposing party is not
prejudiced. See Sweetheart Plastics, Inc. v. Detroit Forming, Inc., 743 F.2d 1039, 1044 (4th Cir.
1984).
The opposing party must, however, have a fair opportunity to conduct necessary
27
discovery on any issues introduced by the amendment. Deasy, 833 F.2d at 41.
Hi.
Futility
A plaintiff may not amend a complaint to include a futile new claim. Laber, 438 F.3d at
426. A claim is futile if the amendment's language is "clearly insufficient or frivolous on its
face." Johnson v. Oroweat Foods Co.. 785 F.2d 503, 510 (4th Cir. 1986). If the claim does not
on its face signal the inapplicability of the statute and a factual inquiry must be made, then the
claim is not futile. Id
iv.
Prejudice
"Absence of prejudice, though not alone determinative, will normally warrant granting
leave to amend." Davis, 615 F.2d at 613. However, if the defendant will be prejudiced, the
plaintiffs amendment will usually be prohibited. See, e.g.. Red Bird Egg Farms. Inc. v. Pa.
Mfrs. Indem. Co., 15 Fed. App'x 149, 154 (4th Cir. 2001) (holding that the plaintiffs
amendment including a new case theory three days before trial "would have disrupted the trial
schedule and unduly prejudiced [the defendant]"); Johnson, 785 F.2d at 509-10 (stating that
delay and prejudice to the opposing party, not delay alone, are sufficient to bar amendment). But
c.f. Sweetheart Plastics, 743 F.2d at 1044 (holding that an amendment was permissible at trial
because defendant was not prejudiced). In Laber v. Harvey, the Fourth Circuit stated,
A common example of a prejudicial amendment is one that raises a new legal
theory that would require the gathering and analysis of facts not already
considered by the defendant, and is offered shortly before or during trial. An
amendment is not prejudicial, by contrast, if it merely adds an additional theory of
recovery to the facts already pled and is offered before any discovery has
occurred.
438 F.3d at 427.
v.
Administrative Procedures Act ("APA ")
"Agency action made reviewable by statute and final agency action for which there is no
28
other adequate remedy in a court are subject to judicial review." 5 U.S.C. § 704 (2012). This
Court held in Clear Sky Car Wash, LLC v. City of Chesapeake, Virginia that the URA creates no
private right of review under § 4625. 910 F. Supp. 2d 861, 878-79 (E.D. Va. 2012); 42 U.S.C.
§ 4601 et seq. (2012). A court thus can review only a final agency action under § 4625.
5
U.S.C. § 704; see Luian v. Nat'l Wildlife Fed'n, 497 U.S. 871, 882 (1990); Clear Sky, 910 F.
Supp. 2d at 878-79. An "agency action" is "the whole or a part of an agency rule, order, license,
sanction, relief, or the equivalent or denial thereof, or failure to act." 5 U.S.C. § 551(13). An
agency action is final when it: (1) "mark[s] the 'consummation' of the agency's decisionmaking
process" such that it is not tentative or interlocutory; and (2) has determined a party's "rights or
obligations" or results in "legal consequences." Bennett v. Spear, 520 U.S. 154, 177-78 (1997).
A plaintiff bringing a claim under the APA must first "exhaust[ ] ... all intra-agency
appeals mandated either by statute or by agency rule." Volvo GM Heavy Truck Corp. v. U.S.
Dept. of Labor, 118 F.3d 205, 209 (4th Cir. 1997) (quoting Darby v. Cisneros, 509 U.S. 137, 147
(1993)). Then, in pleading his claim, a plaintiff must identify the agency action that affects him
in the specified fashion and "show that he has 'suffered legal wrong' because of the challenged
agency action, or is 'adversely affected or aggrieved by the action within the meaning of a
relevant statute.'" Luian, 497 U.S. at 882-83 (quoting 5 U.S.C. § 702).
In Beaird-Poulan Division of Emerson Electric Company v. Department of Highways,
State of Louisiana, the district court held that a state denial of relocation benefits was a final
agency action subject to judicial review even though the agency had "rebuffed plaintiffs request
for relocation assistance" and "ha[d] not held an adversary hearing," despite the Court's order to
do so. 441 F. Supp. 866, 868 (W.D. La. 1977), aff d sub nom. Beaird-Poulan. Inc. v. Dep't of
Highways, State of Louisiana, 616 F.2d 255 (5th Cir. 1980). The administrative decision was
29
considered final because "[a]ll steps for reconsideration ha[d] been taken." Id
B.
Parties' Arguments
/.
Plaintiff
Recalling the April 7, 2016 hearing on the Motion to Dismiss, Plaintiff claims that
"Defendants argued to the Court that [Plaintiffs] only vehicle to enforce [his] rights under the
URA is a claim pursuant to the Administrative Procedure Act. . . ." Doc. 23 at 2. Plaintiff
"do[es] not agree that [his] only remedy is under the APA," but claims that "justice requires" the
granting of leave to amend to add an APA claim. Id
In response to Defendants' arguments, Plaintiff states that Defendants "invit[ed]"
Plaintiff to make a claim under the APA. Defendants' attorney said at the April 7, 2016 hearing,
"But it's under the APA, and that is enunciated in Clear Sky that that is the vehicle that is
available for a judicial review of that decision." Doc. 26 at 2 n.l (quoting Hearing Tr. 34:4,
April 7, 2016).
Plaintiff argues, "[t]he Defendants cannot represent to the Court that Dr.
Bergano was afforded an appeal with regard to whether he is a displaced person and now seek to
bar his claim under the APA on the grounds that he failed to make that appeal." Doc. 26 at 2.
Plaintiff also responds that the City's September 23, 2015 letter was a final agency action
because it "stated that [the City] had reviewed the information provided and 'ultimately
concluded' that Dr. Bergano could remain in the property and notified him of this
determination." Doc. 26 at 2 (quoting Am. Compl., Ex. H). Plaintiff claims he also did not need
to appeal that final action because the City "notified him of its final determination" thirty-four
(34) days after notifying him that he did not need to relocate and "before the 90 day period had
elapsed." Doc. 26 at 2-3.
//'.
Defendants
30
Defendants argue that Plaintiffs amendment is futile because it is untimely, no final
agency action has occurred, and Plaintiff knows it is baseless. Doc. 25 at 2-5.
First, Defendants assert that Plaintiffs "attempt to assert a claim under the APA is
untimely." Doc. 25 at 2, 4. Because Plaintiffs amendment is based on the City's August 20,
2015 letter denying Plaintiff relocation benefits, Defendants allege that Plaintiff should have
appealed it within the City's ninety (90) day appeal window, or by November 20, 2015. Doc. 25
at 3. Defendants note that the City's appeal period is longer than the sixty (60) day window
required under federal regulations. Id; see 49 C.F.R. § 24.10. Defendants argue that because
Plaintiff first pled an APA claim on December 1, 2015, outside the City's appeal window, any
APA claim is time-barred. Id. They claim that "no facts ... or any inferences to be drawn from
[the pleadings] indicate Dr. Bergano ever desired to appeal the City's August 20, 2015 decision
regarding his status as a displaced person, other than the fact that he immediately filed suit in
federal court." Id. Furthermore, Defendants argue, Plaintiff cannot construe his August 12,
2015 letter to the City declaring an "intent to appeal"12 as an appeal of the City's decision
because the City's August 20, 2015 letter denying Plaintiffbenefits had not yet been sent. Am.
Compl., Ex. A; Doc. 25 at 3.
Flowing from their first argument, Defendants claim that Plaintiffs amendment is futile
because no final agency action has occurred. Doc. 25 at 2. "Because Dr. Bergano never
appealed the August 20, 2015 decision regarding his relocation eligibility status, the City was
never afforded the opportunity to issue final agency action on his claim of being a displaced
person under the URA." Id. at 3. Defendants characterize the City's August 20, 2015 letter
12 Plaintiff attached this letter to his Amended Complaint, Am. Compl., Ex. D, and proposed Amended Complaint,
Doc. 23, Ex. A. The letter states, "[T]he firm will be appealing the City's decision regarding the build out costs of
the Berganos' new office and relocation costs. By copy of this letter to Robin Brandeburg we give notice of our
intent to appeal and would ask for your cooperation in expediting the process." Am. Compl., Ex. D.
31
denying Plaintiff relocation benefits as "in and of itself.. . not a final agency action under the
facts in the record before the court." Id
Third, Defendants argue that Plaintiff knows his amendment is futile as signaled by his
"strategically selecting] what causes of action to pursue in the original Complaint and First
Amended Complaint." Id at 4. They claim Plaintiff "was aware of the APA and the need to
make such a claim from the initiation of the lawsuit," and he did in fact include an APA claim in
his original Complaint.
Id
After Defendants filed their first Motion to Dismiss, Doc. 5,
however, Plaintiff filed his Amended Complaint without the APA claim, Am. Compl., and did
not mention any APA relief in his opposition to Defendant's Motion to Dismiss, see Doc. 15.
Defendants thus argue,
[t]he fact that all references to the APA or 5 U.S.C. § 704 were thereafter
purposely removed and not included among the claims in the first Amended
Complaint, despite Dr. Bergano's having been put on notice by the Defendants of
the necessity to make such a claim, demonstrates that Plaintiff was well aware
that he had no basis to make such a claim ....
Doc. 25 at 4.
C.
Analysis
/.
Introduction
The City made three (3) decisions in Plaintiffs case: (1) Plaintiff was entitled to no
relocation assistance for the alternate dental office, Am. Compl. Ex. C, at 1; (2) Plaintiff did not
need to relocate, id, Ex. F; and (3) Plaintiff was not displaced and was entitled to no relocation
assistance, id, Ex. H, at 2. Plaintiffs ability to receive judicial review in this Court under the
APA depends on whether a "final agency action" occurred "for which there is no other adequate
remedy in a court." 5 U.S.C. § 704.
The City's first decision that Plaintiff was entitled to no relocation assistance for the
alternate dental office was nullified by the City's second decision that Plaintiff did not need to
32
relocate. Because the City's second decision did not affect any legal "rights or obligations," it
was not a final agency action. See Bennett, 520 U.S. at 177-78. The City's third decision that
Plaintiff was not displaced produced the simultaneous "legal consequence" that he was entitled
to no relocation assistance. See Am. Compl., Ex. H, at 2; Bennett 520 U.S. at 177-78; 42 U.S.C.
§§ 4601(6)(A)-(B), 4622. The City's third decision, therefore, is the proper subject of a "final
agency action" analysis.
A denial of relocation benefits can be subject to judicial review if it is final. BeairdPoulan, 441 F. Supp. at 868. The City's relocation assistance brochure states,
If any person feels the City has failed to properly determine their eligibility for
relocation assistance, the aggrieved person may file a written interim appeal
within 90 days. You will be given a prompt and full opportunity to be heard.
You have the right to be represented by legal counsel or other representative at
your expense. The City will promptly review your appeal, consider all pertinent
information and then provide you with a written determination explaining the
decision. If you are still dissatisfied, a final appeal to the Commonwealth
Transportation Commissioner may be submitted within 10 days. If the full relief
you requested is not granted, you have the right to seek judicial review, which
must be filed with the courts within thirty (30) days after receipt of the final
appeal determination.
Am. Compl, Ex. G, at 7. In the City's relocation appeal process, a final decision follows a
preliminary decision, an opportunity for the aggrieved party to be heard, the City's review and
secondary decision, and an appeal to the Transportation Commissioner. Id Only after these
steps are completed may the aggrieved party submit its petition for judicial review under the
APA. See 5 U.S.C. § 704.
/.
Bad Faith, Delay, and Prejudice
Defendants allege no bad faith or purposeful delay in Plaintiffs seeking to amend his
complaint. See Doc. 25. Nor do Defendants allege a prejudicial result if Plaintiff amends his
complaint. See id This suit was filed only seven (7) months ago, and Defendants clearly had
notice of the potentiality of an APA claim signaled by their suggesting this claim at the April 7,
33
2016 hearing. See Doc. 26 at 2 (citing Hearing Tr. 34:4, April 16, 2016). There appears to be no
prejudice to Defendants, who acknowledge the substance of a potential APA claim and have
already prepared some argument on the issue. See id
ii.
Futility
Plaintiffs argument that he did not need to appeal because Defendants gave him a final
decision on September 23, 2015 is nonsensical. See Doc. 26 at 2. Plaintiff characterizes the
City's September 23, 2015 letter labeling him "not displaced" as a "final" agency action as
though it resulted from an appeal process, but the letter contained the very decision which
Plaintiff would have had to appeal. Am. Compl., Ex. H, at 2.
The City's relocation brochure requires an appellant to "file a written interim appeal"
within ninety (90) days of the City's notice of decision. Id, Ex. G, at 7. Plaintiff did not file a
written appeal from any ofthe City's decisions.13 Plaintiff could have appealed his displacement
status and received a second decision from the City followed by a decision from the
Transportation Commissioner. Id Those steps would have initiated the "consummation of the
[City's] decisionmaking process."
Bennett, 520 U.S. at 177-78.
Instead of appealing, as
Defendants point out, Plaintiff filed the instant lawsuit. Doc. 25 at 3.
Therefore, because Plaintiff did not appeal the City's decision characterizing him as "not
displaced," "all steps for reconsideration" have not been taken, and a final agency action has not
occurred. See Beaird-Poulan, 441 F. Supp. at 868. Because the City's actions thus far are not
"final" for purposes of the APA, Plaintiffs amendment is futile. See 5 U.S.C. § 704.
D.
Conclusion
13 Plaintiffs counsel did send the City a letter on August 12, 2015 in response to the City's August 5 notification
that it would not provide relocation assistance for Plaintiffs selected alternate office space. Am. Compl., Exs. D, at
1, C, at 1. Plaintiffs counsel stated, "[T]he firm will be appealing the City's decision regarding the build out
costs ...." Id, Ex. D, at 1. Plaintiffs counsel's use of the future tense indicated that the letter was not Plaintiffs
actual appeal, nor could it have been under the analysis above. Id.
34
Insofar as the Motion for Leave to Amend Complaint seeks to add a claim under the
APA. the Court DENIES the Motion. Doc. 22. However, the Court GRANTS Plaintiff leave to
amend Count 4. See supra Part II.H.
IV.
CONCLUSION
For the foregoing reasons, the Court GRANTS Defendants* Motion to Dismiss as to
Counts 1, 3, 4, and 5 and DENIES the Motion to Dismiss as to Counts 2 and 6. Doc. 12. The
Court GRANTS Plaintiff leave to amend the Complaint as to Count 4 but otherwise DENIES
Plaintiffs Motion for Leave to Amend Complaint. Doc. 22.
The Clerk is REQUESTED to deliver electronically a copy of this Opinion and Order to
all counsel of record.
It is so ORDERED.
/s/
Henry Coke Morgan, Jr.
Senior United States District Judge
HENRY COKE MORGAN
SENIOR UNITED STATES DISTRICT JUDGE
Norfolk, VA
CkKAX!\J$> ,2016
35
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?