MCCOY 6 APARTMENTS, LLC et al v. City Of Morgantown, WV et al

Filing 54

Memorandum Opinion and Order Granting-in-part and Denying-in-part Defendants' Motions to Dismiss 28 and 45 and Dismissing Augusta Apartments, LLC, as a Party. Signed by District Judge Irene M. Keeley on 8/26/11. Associated Cases: 1:10-cv-00054-IMK, 1:10-cv-00055-IMK(mh) Modified on 8/26/2011 to correct typographical error. NEF regnerated (mh).

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
MCCOY 6 APARTMENTS, LLC,
AUGUSTA APARTMENTS, LLC,
KRISTIAN E. WARNER,
BENJAMIN F. WARNER,
ANDREW M. WARNER, and
MONROE P. WARNER,
Plaintiffs,
v.

//

CIVIL ACTION NO. 1:10CV54
CIVIL ACTION NO. 1:10CV55
(Judge Keeley)
BANKRUPTCY CASE NO. 09-00304
ADV. PROC. NO. 10-ap-00026
BANKRUPTCY CASE NO. 10-00303
ADV. PROC. NO. 10-ap-00025

CITY OF MORGANTOWN, WV,
DANIEL BOROFF,
DAVID FETTY,
KENNETH TENNANT,
PATRICK PICKENPAUGH,
JASON QUINN,
TERRY HOUGH,
MICHAEL STONE,
DAVID FRIEND, and
TYE POLING,
Defendants.
MEMORANDUM OPINION AND ORDER GRANTING-IN-PART AND
DENYING-IN-PART DEFENDANTS’ MOTIONS TO DISMISS (DKTS. 28,
45) AND DISMISSING AUGUSTA APARTMENTS, LLC, AS A PARTY
I. INTRODUCTION
On July 13, 2011, the Court conducted a hearing on the motion
of the defendants, the City of Morgantown (“City”) and several
employees of the City (“Individual Defendants”), to dismiss the
complaint of the plaintiffs, McCoy 6 Apartments, LLC (“McCoy”),

MCCOY 6 APARTMENTS, LLC, et al.,
v. CITY OF MORGANTOWN, WV, et al.

1:10CV54
1:10CV55

MEMORANDUM OPINION AND ORDER
_________________________________________________________________
Augusta

Apartments,

LLC

(“Augusta”),

and

Kristian,

Benjamin,

Andrew, and Monroe Warner (“Individual Plaintiffs”), for failure to
state a claim under Rule 12(b)(6) of the Federal Rules of Civil
Procedure.
The Court entered an order on July 14, 2011, granting that
motion in part, denying it in part, and directing further briefing.
The parties filed additional briefing, including the defendants’
memorandum filed on July 27, 2011, which the Court construed as a
supplemental

motion

to

dismiss

and

to

which

the

Individual

Plaintiffs have responded. In this memorandum opinion and order,
the Court sets forth its reasoning for granting the initial motion
(dkt. 28), in part, and also GRANTS the second motion to dismiss
(dkt. 45).
II. FACTUAL BACKGROUND
The Individual Plaintiffs were property owners and developers
in the Morgantown, West Virginia area. Their older company, McCoy,
owned many rental properties, including a residential building
known as Mountaineer Court, while their Augusta company was formed
in connection with the development of an apartment complex by that
name. The complaint in these consolidated cases was originally
filed as adversary proceedings in two related bankruptcy cases, and
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alleges that the plaintiffs’ difficulties with the City and the
Individual Defendants began primarily in December 2006, during the
construction of the Augusta apartment complex in Morgantown. Compl.
at ¶ 29 (dkt. 1, 1:10ap25). Despite the prior approval of apartment
development

plans

by

then-Chief

Fire

Marshal

Max

Humphries

(“Humphries”), the plaintiffs began to face strict enforcement of
municipal fire and building codes after Humphries retired and his
successor, Fire Chief David Fetty (“Fetty”), was appointed. Id. at
¶ 31.
Nevertheless, the Augusta

proceeded to successfully open in

August 2007 in time to honor residential leases with students and
others returning to West Virginia University for the school year.
Id. at ¶ 36. The plaintiffs allege that the City and Individual
Defendants’ attention then switched to Mountaineer Court, as new
inspection actions and code violations were issued on that property
as a means to show the plaintiffs who was “in control.”

Id. at

¶ 37.
Ultimately, these actions forced McCoy to seek out a loan from
First United Bank in the amount of $2.4 million as a financial
means of making the changes to Mountaineer Court needed to satisfy
the Defendants. Id. at ¶ 77.

However, the Plaintiffs were unable

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MEMORANDUM OPINION AND ORDER
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to satisfy the demands of the Defendants. Ultimately, control of
the Mountaineer Court, at this point condemned and subject to an
Imminent

Danger

Evacuation

Order,

was

reclaimed

by

McCoy’s

mortgagee, Fifth Third Bank. Id. ¶ 103-105.
After Fifth Third’s seizure of Mountaineer Court on January 5,
2009, and despite two years of work by the plaintiffs attempting
conform to the defendants’ demands, the bank was able to hire a
contractor who, within seventy-two hours, repaired the building in
a manner that proved satisfactory to the defendants. Id. at ¶ 106.
Following the loss of Mountaineer Court, McCoy and Augusta filed
for bankruptcy, causing the Individual Plaintiffs to lose control
of their other rental properties.
III. ANALYSIS
Count One - Substantive Due Process
The plaintiffs must demonstrate three elements to prove that
their substantive due process rights were disregarded in violation
of 42 U.S.C. § 1983:
(1) that they had property or a property
interest; (2) that the state deprived them of
this property or property interest; and(3)
that the state’s action falls so far beyond
the outer limits of legitimate governmental
action that no process could cure the
deficiency.
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Sylvia Dev. Corp. v. Calvert County, 48 F.3d 810,827 (4th Cir.
1995). Because the claim in this count relates to the Mountaineer
Court property (under a theory that the defendants’ actions led to
Fifth

Third

seizing

the

building),

neither

Augusta

nor

the

Individual Defendants have standing to assert it. With respect to
McCoy, the defendants contend that their enforcement of building
codes do not constitute a taking or deprivation of property right,
and that adequate means of appeal were available to the defendants
to protest the actions in the first place.
Although

the

plaintiffs

argue

that

no

meaningful

administrative appellate review was available, they also concede
they never filed any action in state court seeking to modify the
City’s

requirements

or

to

enjoin

the

allegedly

overzealous

inspectors. The City and the Individual Defendants have the right
to issue code violations and assess fines or condemn property as
declared by West Virginia statute. See W. Va. Code § 8-11-1(a)(2).
Thus, their actions were not “so far beyond the outer limits of
legitimate governmental action” as to constitute a violation of
McCoy’s due process rights. The Court therefore GRANTS the motion
to dismiss and DISMISSES Count One as to all parties.

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MEMORANDUM OPINION AND ORDER
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Count Two - Equal Protection
The plaintiffs also seek relief under 42 U.S.C. § 1983 for a
violation of their equal protection rights. More specifically, the
plaintiffs’ allegations concern a “class of one” equal protection
claim.

Once again, the plaintiffs allege no factual support for

any harm suffered by Augusta or the Individual Plaintiffs, and
dismissal of their claims on this count is proper.

However, the

Court denies the motion as to McCoy because the complaint provides
a factual basis for the claim by showing the disparate treatment
between McCoy and Fifth Third Bank by the Defendants when the
different parties controlled the exact same property.
A

plaintiff

effectively

pleads

a

“class

of

one”

equal

protection claim when she “alleges that she has been intentionally
treated differently from others similarly situated and that there
is no rational basis for the difference in treatment.” Willowbrook
v. Olech, 528 U.S. 562, 564 (2000). Grace Olech, a homeowner,
brought suit against the Village of Willowbrook when it required
her to have a 33-foot easement in comparison to the 15-foot
easement required of other owners. Id. at 563. Olech claimed that
the easement was an “irrational and wholly arbitrary” demand of the
municipality. Id. The district court dismissed Olech’s claim under

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Fed. R. Civ. P. 12(b)(6), but the Court of Appeals for the Seventh
Circuit reversed. Id. at 564. The United States Supreme Court
agreed, and Olech was permitted to continue her “class of one”
equal protection claim. Id. at 566.
Because there are no allegations in the complaint which
suggest that the Individual Plaintiffs and Augusta were unequally
treated when compared to any other similarly situated person or
entity, the

Court

grants

dismissal

of

their

claims

of equal

protection. McCoy, however, has asserted enough facts to sustain a
“class of

one”

equal

protection

action

by alleging

a unique

situation in which Fifth Third Bank, the successive possessor of
the same property, was treated differently, without reason, by the
City and the Individual Defendants. These are sufficient facts to
survive a 12(b)(6) motion under Olech. In conclusion, the Court
GRANTS the Defendants’ motion to dismiss the equal protection
claims of Augusta and the Individual Plaintiffs, but DENIES the
motion with respect to McCoy.
Count Three - Malicious Prosecution
Under

West

Virginia

law,

“[a]n

action

for

malicious

prosecution must be brought within one year of the termination of
the action alleged to have been maliciously prosecuted.” Syl. Pt.
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1, McCammon v. Oldaker, 516 S.E.2d 38 (W. Va. 1999). None of the
allegations in the complaint occurred within one year of its filing
on March 2, 2010. Thus, the Court GRANTS the motion to dismiss this
claim and DISMISSES Count Three as to all parties.
Count Four - Abuse of Process
Similarly, abuse of process is subject to a one-year statute
of limitations. Syl. Pt. 3, Preiser v. MacQueen, 352 S.E.2d 22
(1985). Because it is undisputed that the plaintiffs’ interactions
with the defendants ended more than one year before their lawsuit
was filed, the Court GRANTS the motion to dismiss this claim and
DISMISSES Count Four as to all parties.
Count Five - Procedural Due Process
As already noted, the plaintiffs concede that they failed to
file any action in state court to object to the defendants’
allegedly improper and discriminatory conduct. They thus have
failed to show that their rights to procedural due process were
violated. The Court therefore GRANTS the motion to dismiss this
claim and DISMISSES Count Five as to all parties.
Count Six - Inverse Condemnation
Again, the complaint supports this cause of action only as to
McCoy, which argues that the defendants’ regulatory and inspection
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MEMORANDUM OPINION AND ORDER
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actions, including the declaration of a nuisance, so deprived the
company of the ability to make use of its property as to constitute
a compensable governmental taking. A regulatory taking occurs “when
a regulation deprives an owner of ‘all economically beneficial
uses’ of his land.” Tahoe-Sierra Pres. Council v. Tahoe Reg’l
Planning Agency, 535 U.S. 302, 330 (2002)(quotation omitted).
While the City, as noted above, has the statutory authority to
enforce building and fire codes and issue condemnation orders for
properties considered a nuisance, McCoy alleges that inspectors had
no valid basis for doing so, or alternatively did so in an extreme
and unwarranted fashion. As a result, McCoy temporarily lost the
ability to rent its apartments, and ultimately lost control to
Fifth Third.
Taken in the light most favorable to McCoy, these allegations
establish a prima facie case of a regulatory taking. Thus, the
Court DENIES the motion as to McCoy’s claim, but GRANTS the motion
as to Augusta and the Individual Plaintiffs, and DISMISSES Count
Six as to their claims.
Count Seven - Negligence
Under W. Va. Code § 29-12A-5(a), municipalities, such as the
City, and officers, such as the Individual Defendants, are immune
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from

negligence

claims

arising

from

their

official

actions,

including those of the type asserted here:
(9) Licensing powers or functions including, but not
limited to, the issuance, denial, suspension or
revocation of or failure or refusal to issue, deny,
suspend or revoke any permit, license, certificate,
approval order or similar authority;
(10) Inspection powers or functions, including failure to
make an inspection, or making an inadequate inspection,
of any property real or person, to determine whether the
property complies with or violates any law or contains a
hazard to health or safety;
All of the plaintiffs’ negligence claims are within the scope
of this broad grant of immunity. Thus, the Court GRANTS the motion
as to these claims and DISMISSES Count Seven with prejudice as to
all parties.
Count Eight - Outrage
As corporate entities, McCoy and Augusta concede that they
cannot maintain an action for the tort of outrage, also known as
intentional

infliction

of

emotional

distress.

The

Individual

Plaintiffs, however, have pled facts supporting this claim adequate
to survive a motion to dismiss.
In West Virginia, a plaintiff must show the following four
elements to sustain a claim of outrage:
(1)

that

the

defendant’s
10

conduct

was

atrocious,

MCCOY 6 APARTMENTS, LLC, et al.,
v. CITY OF MORGANTOWN, WV, et al.

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MEMORANDUM OPINION AND ORDER
_________________________________________________________________
intolerable, and so extreme and outrageous as to exceed
the bounds of decency; (2)that the defendant acted with
the intent to inflict emotional distress, or acted
recklessly when it was certain or substantially certain
emotional distress would result from his conduct; (3)
that the actions of the defendant caused the plaintiff to
suffer emotional distress; and (4) that the emotional
distress suffered by the plaintiff was so severe that no
reasonable person could be expected to endure it.
Kowalyk v. County Comm’n, No. 5:08CV181, 2011 U.S. Dist. LEXIS
1375, at *25-26 (N.D.W. Va. Jan. 6, 2011).
The Individual Plaintiffs allege that the defendants engaged
in a vindictive campaign to destroy their businesses and personally
ruin them. They claim that the inspectors took such actions as to
make compliance impossible, not for any legitimate purpose but out
of spite and personal animosity. As a result, they claim they have
suffered humiliation, embarrassment, mental anguish and severe
emotional distress.
At the pleading stage, such allegations are sufficient. Thus,
the Court DENIES the motion to dismiss Count Eight as to the
Individual Plaintiffs, but GRANTS the motion as to McCoy and
Augusta. The Court further agrees with the defendants that the tort
of outrage is subject to a two-year statute of limitations, and
thus any claims arising out of the plaintiffs’ involvement in the
Augusta, which opened in 2007, are time-barred. The claims survive
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only as to the allegations related to the Individual Plaintiffs’
problems with the defendants regarding the eventual condemnation of
Mountaineer Court.
Count Nine - Negligent Misrepresentation
The statutory immunity cited above bars these claims, for they
relate to the defendants’ licensing, inspection, and regulatory
functions. See W. Va. Code § 29-12A-5(a). Thus, the Court GRANTS
the motion to dismiss as to these allegations and DISMISSES Count
Nine as to all parties.
Count Ten - Intentional Misrepresentation
As

an

initial

matter,

the

Individual

Plaintiffs

cannot

maintain their claim for intentional misrepresentation or fraud.
Any loss they suffered was as a result of their interest in the
McCoy and Augusta LLCs. Under the West Virginia Uniform Limited
Liability Company Act, a member of a limited liability company “is
not a [co-owner] of, and has no transferable interest in, property
of [that] limited liability company.” W. Va. Code § 31B-5-501(a).
Thus, they have no standing to assert a claim of fraud.
In any event, the plaintiffs fail to plead a case for fraud
under Fed.R.Civ.P. 9 with particularity. As the defendants point
out in their reply brief filed on August 18, 2011, not a single
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false

statement

is

alleged

against

any

of

the

Individual

Defendants, and as the City can speak only though its employees, no
sufficient allegation of misrepresentation is stated. Thus, the
Court GRANTS the motion to dismiss as to that claim and DISMISSES
Count Ten.
CONCLUSION
In summary, only the following claims remain in the case:
•

McCoy’s claim of denial of its equal protection rights under
Count Two;

•

McCoy’s claim of inverse condemnation under Count Six; and

•

the Individual Plaintiff’s claims of outrage under Count Eight
as to the events related to the eventual closure and loss of
the Mountaineer Court property.

All other claims in the complaint are dismissed, and Augusta is
DISMISSED as a party to this case.
It is so ORDERED.
The Clerk is directed to transmit copies of this Order to
counsel of record.
DATED: August 26, 2011.
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE

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