Phoenix Ridge GA TC, LP v. City of Atlanta, Georgia

• Court: Court of Appeals for the Eleventh Circuit
• Decided: March 17, 2025
• Docket: 24-12883
• Status: Unpublished

Opinion

USCA11 Case: 24-12883 Document: 30-1 Date Filed: 03/17/2025 Page: 1 of 11

[DO NOT PUBLISH] In the United States Court of Appeals For the Eleventh Circuit

____________________

No. 24-12883 Non-Argument Calendar ____________________

PHOENIX RIDGE GA TC, LP, Plaintiff-Appellant, versus CITY OF ATLANTA, GEORGIA,

Defendant-Appellee.

Appeal from the United States District Court for the Northern District of Georgia D.C. Docket No. 1:23-cv-04511-MHC ____________________ USCA11 Case: 24-12883 Document: 30-1 Date Filed: 03/17/2025 Page: 2 of 11

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Before WILLIAM PRYOR, Chief Judge, and BRANCH and ANDERSON, Circuit Judges. PER CURIAM: Phoenix Ridge GA TC, LP, appeals the dismissal of its com- plaint alleging a federal claim of municipal liability for a regulatory taking of property and state law claims of inverse condemnation, breach of contract, and infringement of vested property rights against the City of Atlanta. See 42 U.S.C. § 1983; Monell v. Dep’t of Soc. Servs. of City of N.Y., 436 U.S. 658 (1978). We affirm. I. BACKGROUND Millenia Housing Management Ltd. LLC, an entity related to Phoenix Ridge, purchased the Forest Cove building. Forest Cove operated under contract for Section 8 Housing Assistance Pay- ments with the United States Department of Housing and Urban Development, which provided the owner a monthly rental subsidy. Phoenix Ridge planned to rehabilitate the building, relocate its res- idents, and obtain funding from the Georgia Department of Com- munity Affairs. After the City approved building permits to rehabilitate the property, the Director of the Bureau of Code Compliance initiated an in rem proceeding in the municipal court to declare Forest Cove a public nuisance. The municipal court entered an order that Forest Cove was a public nuisance and ordered its demolition. Phoenix Ridge appealed. USCA11 Case: 24-12883 Document: 30-1 Date Filed: 03/17/2025 Page: 3 of 11

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Meanwhile, the Department of Community Affairs in- formed Phoenix Ridge it would not provide funding based on the decision of the municipal court. The City and Phoenix Ridge en- tered into a settlement agreement where Phoenix Ridge agreed to relocate residents and both parties agreed to file a joint consent or- der requesting vacatur of the demolition order. Mayor Andre Dick- ens signed the agreement on behalf of the City. Phoenix Ridge re- located all Forest Cove residents, but the City chose not to sign the consent order. The Fulton County Superior Court ruled that the City breached the settlement agreement and directed the parties to sub- mit a proposed order vacating the demolition order. But the De- partment of Community Affairs denied Phoenix Ridge’s applica- tion for funding, and the Department of Housing and Urban De- velopment denied Phoenix Ridge’s proposal to sell Forest Cove with the Housing Assistance Payment contract. So, Phoenix Ridge voluntarily dismissed the action in the state court. Phoenix Ridge filed a complaint in the district court alleging a regulatory taking in violation of the Fifth and Fourteenth Amendments. See 42 U.S.C. § 1983. It complained that the City ini- tiated an action in rem to abate a public nuisance after approving permits for rehabilitation and refused to seek a consent order to vacate the demolition order. It also alleged state law claims of in- verse condemnation, breach of contract, infringement of vested property rights, and attorney’s fees and costs. USCA11 Case: 24-12883 Document: 30-1 Date Filed: 03/17/2025 Page: 4 of 11

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The City filed a motion to dismiss. It argued that the section 1983 claim should be dismissed because Phoenix Ridge failed to al- lege an official policy or unofficial custom. Phoenix Ridge re- sponded that the single action of an official can represent an official policy if the official has final policymaking authority. It pointed to provisions of local law that it argued gave the director final author- ity to initiate an in rem proceeding and gave the mayor authority over contracts. The district court granted the motion to dismiss. It ruled that Phoenix Ridge had failed to allege municipal liability based on a policy or unofficial custom. It ruled that the director was not a final policymaker when initiating an in rem proceeding because that discretionary decision had no independent legal effect without the municipal court adjudicating it. It also ruled that the mayor was not a final policymaker when breaching the settlement agreement because the mayor may only negotiate contracts after final ap- proval by the city council. The district court declined to exercise supplemental jurisdiction over the state law claims and dismissed them without prejudice. Phoenix Ridge moved for reconsideration and for leave to amend. It argued the district court applied an evidentiary standard instead of a pleading standard in determining whether the director and mayor were final policymakers. It requested that the district court take judicial notice of local laws, including provisions of the city charter and code and administrative orders relevant to the mayor’s authority to breach the settlement agreement. The City USCA11 Case: 24-12883 Document: 30-1 Date Filed: 03/17/2025 Page: 5 of 11

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responded arguing that the district court was allowed to make a legal determination about the scope of the director and mayor’s authority when resolving a motion to dismiss. It also argued that amendment would be futile because the new law did not refute the determination that the mayor lacked final policymaking authority regarding the settlement agreement. The district court denied Phoenix Ridge’s motions. It ruled that it was permissible to determine the scope of policymaking au- thority in ruling on a motion to dismiss. It ruled that the authorities cited by Phoenix Ridge did not establish that the mayor has final policymaking authority. The district court denied leave to amend as futile. II. STANDARDS OF REVIEW We review a dismissal for failure to state a claim de novo and accept as true the complaint’s factual allegations and construe them in the light most favorable to the plaintiff. Hunt v. Aimco Props., 814 F.3d 1213, 1221 (11th Cir. 2016). We review a decision to deny leave to amend based on futility de novo. City of Miami v. Citigroup Inc., 801 F.3d 1268, 1275 (11th Cir. 2015). III. DISCUSSION We divide our discussion in two parts. First, we explain that the district court did not err in dismissing Phoenix Ridge’s USCA11 Case: 24-12883 Document: 30-1 Date Filed: 03/17/2025 Page: 6 of 11

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complaint. Second, we explain that the district court did not err in denying leave to amend as futile. A. The District Court Did Not Err in Dismissing Phoenix Ridge’s Complaint. Phoenix Ridge argues the district court erred in dismissing its section 1983 claim because the district court applied a height- ened pleading standard. We disagree. A municipality may not be held vicariously liable for constitutional violations committed by its officers. Hoefling v. City of Miami, 811 F.3d 1271, 1279 (11th Cir. 2016). A plaintiff may establish either an official policy or an unof- ficial custom or practice of the municipality shown through the re- peated acts of a final policymaker. Grech v. Clayton Cnty., Ga., 335 F.3d 1326, 1329 (11th Cir. 2003) (en banc). The first method allows a single incident of unconstitutional activity caused by an uncon- stitutional policy, City of Oklahoma City v. Tuttle, 471 U.S. 808, 823– 24 (1985), but the second method requires a “longstanding and widespread practice,” Brown v. City of Fort Lauderdale, 923 F.2d 1474, 1481 (11th Cir. 1991). A municipality may be liable for a single ac- tion of an individual when “the decisionmaker possesses final au- thority to establish municipal policy with respect to the action or- dered.” Pembaur v. City of Cincinnati, 475 U.S. 469, 481 (1986). Phoenix Ridge sought to establish that the City was liable for the actions of the director and mayor as decisionmakers with final policymaking authority. Its complaint did not allege that any indi- viduals had final policymaking authority. Instead, it argued that the USCA11 Case: 24-12883 Document: 30-1 Date Filed: 03/17/2025 Page: 7 of 11

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mayor and director had final policymaking authority in response to the City’s argument that it had not alleged an official policy or an unofficial custom or practice. Although Phoenix Ridge argues that the identification of policymakers is an evidentiary standard, not a pleading requirement, it conceded below and on appeal that a dis- trict court could consider whether an identified policymaker had final policymaking authority in a motion to dismiss in certain cir- cumstances. The precedents Phoenix Ridge cites for the proposition that the final policymaker determination cannot be made when ruling on a motion to dismiss are inapposite. In Hoefling, we reasoned that “not all theories of municipal liability under § 1983 require (or de- pend on) a single final policymaker” and concluded that “identify- ing and proving that a final policymaker acted on behalf of a mu- nicipality is an evidentiary standard, and not a pleading require- ment.” 811 F.3d at 1279–80 (citation and internal quotation marks omitted). We held that the district court erred in requiring Hoefling to identify the city official who acted as the final policymaker be- cause he sufficiently alleged an informal custom through allega- tions that the municipality had systematically engaged in similar conduct. Id. at 1279–81. And in Christmas v. Nabors, we held that the plaintiff did not need to allege the identity of a final policymaker because he alleged a widespread practice that jail officials scan all incoming mail. 76 F.4th 1320, 1329–30 (11th Cir. 2023). In contrast, Phoenix Ridge did not allege an unofficial custom or widespread practice and relied on the single decisions of the mayor and the di- rector. USCA11 Case: 24-12883 Document: 30-1 Date Filed: 03/17/2025 Page: 8 of 11

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Nor does our decision in Brown support the argument of Phoenix Ridge. In Brown, neither party addressed the final policy- maker method for establishing municipal liability below or on ap- peal, so we remanded to the district court to consider all available policymaking authority. 923 F.2d at 1480. The district court did not err in ruling the director and mayor were not final policymakers. When deciding whether an of- ficial had final policymaking authority, we look to state and local positive law as well as custom and usage having the force of law. Holloman ex rel. Holloman v. Harland, 370 F.3d 1252, 1292 (11th Cir. 2004). Our inquiry focuses on the subject matter of the alleged vi- olation. See Morro v. City of Birmingham, 117 F.3d 508, 514 (11th Cir. 1997). In assessing whether an official acted as a final deci- sionmaker, we look to whether there was an opportunity for mean- ingful review of the decisionmaker’s actions. Id. The director was not a final policymaker when filing the in rem action. The Atlanta Housing Code gives the director power to enforce provisions of the code and file a complaint in rem against a property he identifies as unfit for habitation subject to a final de- termination by the municipal court following a hearing. See Atlanta Housing Code of 1987 §§ 7(a), 54(a)-(d). The decision to file a com- plaint has no independent legal effect absent adjudication by the municipal court. See Morro, 117 F.3d at 514 (stating that the police chief was not a final policymaker when his disciplinary decisions were subject to review by a personnel board and the circuit court). USCA11 Case: 24-12883 Document: 30-1 Date Filed: 03/17/2025 Page: 9 of 11

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Phoenix Ridge’s reliance on Bannum, Inc. v. City of Fort Lauderdale, 901 F.2d 989 (11th Cir. 1990), is misplaced. Bannum con- cerned the doctrine of ratification “when a subordinate public offi- cial makes an unconstitutional decision and when that decision is then adopted by someone who does have final policymaking au- thority.” Matthews v. Columbia Cnty., 294 F.3d 1294, 1297 (11th Cir. 2002). In Bannum, the decision of the Code Enforcement Board was affirmed by the Board of Adjustment as the highest policymaking body and then became an official decision. Bannum, 901 F.2d at 998– 99. Here, in contrast, the director is not a subordinate of the mu- nicipal court. The mayor also did not have final policymaking authority when deciding not to sign the consent order. The City Charter es- tablishes that the mayor has authority to execute contracts subject to approval by city council. Atlanta City Charter § 3-104(10) (The mayor has the power “[w]hen authorized by the council” to “nego- tiate . . . contracts . . . after final approval by the council[.]”); At- lanta City Code § 2-176 (“The mayor shall execute all contracts ap- proved by the council . . . and shall indicate, in writing, to the pres- ident and members of the city council the reasons why the contract has not been executed.”). Because the city council had to approve any contracts or decisions not to execute contracts, the mayor lacked final policymaking authority. Manor Healthcare Corp. v. Lom- elo, 929 F.2d 633, 637 (11th Cir. 1991) (holding that the city council’s ability to override the mayor’s veto for zoning issues meant that the mayor was not the final policymaker for zoning decisions). And Phoenix Ridge did not argue in the district court that the city USCA11 Case: 24-12883 Document: 30-1 Date Filed: 03/17/2025 Page: 10 of 11

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council was a final policymaker, so we will not consider this theory for the first time on appeal. See Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1332 (11th Cir. 2004) (holding that we will not con- sider an argument raised for the first time on appeal absent extraor- dinary circumstances). B. The District Court Did Not Err in Denying Leave to Amend. The district court did not err in denying Phoenix Ridge’s mo- tion for leave to amend as futile. Chang v. JPMorgan Chase Bank, N.A., 845 F.3d 1087, 1094 (11th Cir. 2017). Phoenix Ridge pointed to the mayor’s authority to encourage growth and promote the well-be- ing of the city along with administrative orders to argue that the mayor had authority over development plans for Forest Cove and had an interest in breaching the settlement agreement. See Atlanta City Charter § 3-104(11). But these authorities do not address whether the mayor had the authority to breach a contract and re- fuse to sign the consent order without approval from the city coun- cil. See Morro, 117 F.3d at 514. The provision of the city code giving the city attorney, who answers to the mayor, authority to settle claims for under $500 does not change that conclusion. See Atlanta City Code § 2-404 (“The City attorney shall have authority, without approval of the council, to settle all claims and suits for sums not to exceed $500.00 in each instance. Settlement of claims and suits in excess of $500.00 shall first be approved by the council.”); Atlanta City Charter § 3-303(f ) (“The city attorney shall be responsible to the mayor and to the city council.”). The settlement agreement required the City to advance USCA11 Case: 24-12883 Document: 30-1 Date Filed: 03/17/2025 Page: 11 of 11

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funds and for Phoenix Ridge to reimburse the City for relocating Forest Cove residents, costs which Phoenix Ridge alleged exceeded $9 million, so the provision giving the city attorney settlement au- thority could not apply. IV. CONCLUSION We AFFIRM the order dismissing Phoenix Ridge’s com- plaint and denying leave to amend.