... and Justice for All

Landowners Lose $3.6 Million Verdict In Suit Challenging Zoning Ordinance

A zoning ordinance which caused Wal-Mart to pull out of a land purchase agreement was then challenged by the landowners.  A jury found that the ordinance violated the landowners' constitutional rights and awarded them $3.6 million in damages.  But the Sixth Circuit Court of Appeals has taken it away, reversing the jury's verdict and ordering another trial in Loesel v City of Frankenmuth, No 10-2354 (August 20, 2012).  

Wal-Mart agreed to buy the plaintiffs' land for $4 million intending to build one of its supercenters on it. Meanwhile, the city of Frankenmuth, which the Sixth Circuit described as "famous for its Bavarian-themed stores, restaurants such as the Bavarian Inn and Zehnder's serving family-style chicken dinners and its gift shops," passed an zoning ordinance amendment that limited the building size of any development on the land Wal-Mart was to purchase. As a result, Wal-Mart pulled out of the deal.  The landowners sued the city, and a jury awarded them $3.6 million in damages.

The claim that the landowners won at trial on was that the zoning ordinance violated their rights under the Equal Protection Clause of the U.S. Constitution's Fourteenth Amendment, pursuing that under the "class of one" theory recognized by the Supreme Court in Village of Willowbrook v Olech, 528 US 562 (2000).  In addition to showing that they were treated differently than other landowners similarly situated in all material respects, the landowners had to prove that city's actions were irrational.  This showing can be made "either by negativing every conceivable reason for the government's actions or by demonstrating that the actions were motivated by animus or ill-will."  And on this final point the Sixth Circuit falls back on an anamolous ruling and takes away the jury's verdict.

The Court ruled that the jury could have properly found for the landowners that they were similarly situated. It also ruled that a jury could properly have found the ordinance to lack a rational basis, a finding premised mainly on poor coordination of language in the city development plan and the ordinance. But the Court ruled that there was insufficient evidence for a jury to properly find that the ordinance was enacted out of animus toward the landowners personally. 

Despite the latter ruling, it would seem enough for the landowners to keep their verdict: they had proved all the elements that they had to prove on at least one theory. And the Supreme Court ruled that a general verdict that can be supported by at least one theory is enough, even though it is impossible to tell which theory the jury actually relied on, in Griffin v United States, 502 US 46 (1991). But Griffin was a criminal case and while at least four other circuits have applied its rule to the civil context, the Sixth Circuit declined to do so in Virtual Maintenance v Prime Computer, 11 F3d 660 (6th Cir 1993). So the jury verdict was reversed and the case sent back for another trial.

This case appears to be one of the best candidates for en banc review that can be imagined: a Wal-Mart development frustrated by a local ordinance; a case involving property owners rights in an age where those are hot-button issues and an anamolous Sixth Circuit decision that appears to stand alone among the circuit courts.  

Robert L. Abell
www.RobertAbellLaw.com 

 

Landlord Has No Liability Under Kentucky Dram Shop Act

Can a landlord be liable under the Kentucky Dram Shop Act for injuries to a patron of a bar operated by the landlord's tenant? "No" answered the Kentucky Court of Appeals in Carruthers v. Edwards, No. 2011-CA-1612 (August 10, 2012).  Affirming a Rule 12 dismissal by the McCracken Circuit Court the Court explained as follows:

The statute addresses two types of persons:  a dram shop (and its
servers) who serve alcohol to an intoxicated person, and the intoxicated person the
dram shop serves.  KRS 423.241(2).  It does not create or comment upon the
liability of a third-party who fits neither description.  Although Appellees run their
own dram shop, they served no alcohol to Watson.  We conclude that no purpose
intended by our Legislature’s passage of the Dram Shop Act would be served by
imposing liability upon a lessor who simply holds title to property on which his
properly licensed lessee engages in the regulated sale of intoxicating liquors.  See
Robinson v. Walker, 211 N.E.2d 488, 491 (Ill. App. 1965).  Therefore, the
complaint failed to state a claim based upon the Dram Shop Act.

This case was also discussed in an earlier post: Did Kentucky's Dram Shop Act Survive Taylor v. King?

Robert L. Abell
www.RobertAbellLaw.com

Did Kentucky's Dram Shop Act Survive Taylor v. King?

The Kentucky Court of Appeals has assured us that Kentucky's Dram Shop Act did survive its decision in Taylor v. King, 345 SW3d 237 (Ky App 2010). The Court, in an opinion written by Chief Judge Glenn Acree, explained in Carruthers v Edwards, No 2011-CA-1612 (August 10, 2012), as follows:

In Taylor, this Court declared unconstitutional KRS 413.241's provision governing proximate cause "to the extent it would prevent a fact-finder from determining whether an injury was a foreseeable consequence of a dram shop's improper service of alcohol. In do doing, we explained "the legislative finding regarding proximate causation in KRS 413.241(1) intrudes upon the fact-finding role of the courts." Accordingly, in light of Taylor, KRS 413.241's presumption or imputation of proximate cause no longer exists.

The relevant sections of KRS 413.241 "imposing liability upon a dram shop or its creation of a priority of liability between the dram shop and the intoxicated tortfeasor," however, remain unchanged. KRS 413.241 still imposes a duty upon a dram shop and its employees, before selling or serving alcohol to a person, to use their powers of observation to perceive readily visible warning signs that a person is intoxicated, and to refrain from serving or selling alcohol to that patron. KRS 413.241(2). If the dram shop or its employees fail to perceive, or simply ignore, those warning signs, the dram shop may be held liable pursuant to KRS 413.241 provided the dram shop's negligent conduct is also the proximate cause of the plaintiff's injuries.

In sum, while Taylor struck down as unconstitutional the presumption of proximate cause codified in KRS 413.241(1), it neither addressed nor held the remainder of KRS 413.241 unconstitutional. Dram shop liability -- under specifically delineated circumstances -- still exists in this Commonwealth, as does the statutory limitation on liability.

The opinion by Chief Judge Acree was joined by Judges Denise Clayton and Janet Stumbo.

Robert L. Abell
www.RobertAbellLaw.com