Sebago-Long Lake Waterway Marina, Inc. v. Town of Naples

• Court: Superior Court of Maine
• Decided: November 29, 2007
• Docket: CUMcv-07-452
• Status: Unpublished

Opinion

STATE OF MAINE SUPERIOR COURT CUMBERLAND, ss. CIVIL ACTION Docket No. CV-07-i~~20 Tb\N - LtA"" - \ \ ~ ,<9"'7 SEBAGO-LONG LAKE WATERWAY MARINA INC.,

Plaintiff,

v. ORDER

TOWN OF NAPLES, et al,

Defendants.

Before the court is a motion by plaintiff Sebago-Long Lake Waterway Marina Inc.

(the "Marina") for a preliminary injunction restraining any further proceedings by the

Town of Naples Planning Board with respect to the Marina's application for a building

permit to construct two boat storage facilities.

At a conference on September 28, 2007 the parties agreed that the Marina's

application for a preliminary injunction would be consolidated with its request for a

permanent injunction, and that the court would attempt to call the case in for a hearing

before the end of November. Upon further review of plaintiff's moving papers, the

respective submissions of the parties in connection with plaintiff's motion, and the Law

Court's decision in Adelman v. Town of Baldwin, 2000 ME 91, 750 A.2d 577, the court

determines that on this record, motions for a preliminary and permanent injunction

should be denied and that a hearing is not necessary.

This is a highly unusual action. Invoking the provisions of 30-A M.R.S. § 2605,

the Marina has filed this action accompanied by a petition of 11 residents of Naples

stating that they do not believe Daniel Craffey, the owner and operator of Mooselanding Marina in Naples,1 would receive a fair and impartial hearing from the

Naples Planning Board and requesting this court to restrain any further proceedings by

the current members of the Planning Board on plaintiff's permit application.

30-A M.R.S. §§ 2605(1)-(4) provide in pertinent part as follows:

§ 2605. Conflicts of interest

Certain proceedings of municipalities, counties and quasi­ municipal corporations and their officers are voidable and actionable according to the following provisions.

1. Voting. The vote of a body is voidable when any official in an official position votes on any question in which that official has a direct or an indirect pecuniary interest.

2. Contracts. A contract, other than a contract obtained through properly advertised bid procedures, made by a municipality, county or quasi-municipal corporation during the term of an official of a body of the municipality, county or quasi-municipal corporation involved in the negotiation or award of the contract who has a direct or an indirect pecuniary interest in it is voidable, except as provided in subsection 4.

3. Restrain proceedings. The Superior Court may restrain proceedings in violation of this section on the application of at least 10 residents of the municipality, county or area served by the quasi-municipal corporation.

4. Direct or indirect pecuniary interest. In the absence of actual fraud, an official of a body of the municipality, county government or a quasi-municipal corporation involved in a question or in the negotiation or award of a contract is deemed to have a direct or indirect pecuniary interest in a question or in a contract where the official is an officer, director, partner, associate, employee or stockholder of a private corporation, business or other economic entity to which the question relates or with which the unit of municipal, county government or the quasi-municipal corporation contracts only where the official is directly or indirectly the owner of at least 10% of the stock of the private corporation or owns at least a 10% interest in the business or other economic entity.

1 According to the affidavit of Daniel Craffey, Mooselanding Marina is a d/b / a" of plaintiff /I

Sebago-Long Lake Waterway Marina Inc. Craffey Aft.

2 When an official is deemed to have a direct or indirect pecuniary interest, the vote on the question or the contract is not voidable and actionable if the official makes full disclosure of interest before any action is taken and if the official abstains from voting, from the negotiation or award of the contract and from otherwise attempting to influence a decision in which that official has an interest. The official's disclosure and a notice of abstention from taking part in a decision in which the official has an interest shall be recorded with the clerk or secretary of the municipal or county government or the quasi-municipal corporation.

On its face, this statute allows challenges to "the vote of a body" when any of the

voting members of the body have a direct or indirect pecuniary interest. § 2605(1). A

"body" is defined in 30-A M.R.S. § 2604(1) to include a board such as the planning

board.

Under the statute, however, a vote is made voidable only when a voting member

has a "direct or indirect pecuniary interest." § 2605(1). The statute further states that a

member of a planning board is deemed to have a direct or indirect pecuniary interest in

a question on contract where the official is an officer, director, associate, employee, or

stockholder of a private corporation or other economic entity "to which the question

relates," or with which the unit of municipal government contracts "only where the

official is directly or indirectly the owner of at least 10% of the stock of the private

corporation or owns at least a 10% interest in the business or other economic entity"

(emphasis added).

In this case plaintiff, in its complaint, originally challenged the impartiality of

four members of the planning board: James Allen, Dan Allen (alternate member),

Anthony Longley, and Kevin Rogers. Longley and Rogers, however, are not challenged

based on any alleged direct or indirect pecuniary interest.

3 Instead, Longley is challenged because at one point he contacted Craffey about

performing excavation work at the Marina and allegedly told Craffey that he was a

member of the planning board and could facilitate any construction projects Craffey

might have. Craffey did not use Longley for excavation work. Longley is also alleged

to have demonstrated bias against Craffey and the Marina at a videotaped preliminary

meeting of the planning board in connection with the Marina's current permit

application and to have engaged in ex parte communications with Naples residents

about the Marina's permit application.

Rogers is challenged because he allegedly demonstrated bias against Craffey at a

previous Planning Board meeting (also videotaped) in connection with an unrelated

application by Craffey for a two-lot subdivision (referred to as the Aubuchon store

project).

These challenges to the impartiality of Longley and Rogers mayor may not have

merit, but they are not cognizable under 30-A M.R.S. § 2605, which is directed to

pecuniary interests. Plaintiff argues that under § 2605(6), the court can nevertheless

restrain further proceedings of the Planning Board based on the alleged bias of Longley

and Rogers even though no direct or indirect pecuniary interest is alleged. Section

2605(6) provides as follows:

Every municipal and county official shall attempt to avoid the appearance of a conflict of interest by disclosure or by abstention.

(emphasis added.)

First, this provision applies to conflicts of interest, which is not the same as bias.

Plaintiff is alleging bias here. Second, the language of this provision is precatory, not

mandatory ("shall attempt to"). While § 2605(6) is designed to provide guidance to

municipal officials, that section does not allow a court to restrain the proceedings of

4 planning boards in advance. Only when there is a "violation" of § 2605 can a court

restrain proceedings under § 2605(3), and such a violation requires a direct or indirect

pecuniary interest.

This does not mean that a permit applicant is without a remedy in the case of

bias or conflict of interest. If the Marina's permit application is denied by the Planning

Board and if the Marina contends that certain voting members were impermissibly

biased against it, the Marina can raise the alleged bias in a proceeding under Rule 80B

and, with a sufficient showing, obtain a separate trial of the facts of the issue of bias.

See, e.g., Baker's Table Inc. v. City of Portland, 2000 ME 7 «JI 9, 743 A.2d 237, 241; Ryan v.

Town of Camden, 582 A.2d 973, 975 (Me. 1990); Gashgai v. Board of Registration in Medicine,

390 A.2d 1080, 1084 n.6 (Me. 1978).

This does not resolve the case because the two other Planning Board members

challenged by plaintiff in its original moving papers, James Allen and Dan Allen

(alternate), are in fact alleged to have a direct or indirect pecuniary interest in plaintiff's

application. Specifically, plaintiff's moving papers alleged that these two board

members have a direct or indirect pecuniary interest because they are owners of other

marinas which compete with plaintiff. By letter of August 14, 2007, however, counsel

for plaintiff advised the court that his client is no longer challenging the participation of

Dan Allen.

Whether plaintiff is entitled to relief, therefore, depends on whether James

Allen's position as the owner of a competing marina 2 gives James Allen a direct or

indirect pecuniary interest "in the question" before the Planning Board that would

2 James Allen submitted an affidavit acknowledging that his marina and the plaintiff marina are competitors but stating that there are sufficient customers in Naples for multiple marinas to prosper. Allen's affidavit states that he believes he has always separated his personal business from planning board business and that he would review plaintiff's application on the merits.

5 entitled plaintiff to a restraining order from this court. This in turn depends on whether

the statute is broadly or narrowly construed. Under a broad construction, any

competitor of an applicant would have a direct or indirect pecuniary interest in the

question. Under a narrow interpretation, only a board member owning at least 10% of

the business seeking a permit would have a direct or indirect pecuniary interest in the

question before the Planning Board. Upon examination of the statute and the relevant

policy considerations, the court concludes that a narrow interpretation is called for and

that the statute only applies if a voting official has a direct or indirect pecuniary interest

in the specific business entity which is applying for a permit or in any business entity

which is participating in the proceedings before the board.

The court reaches this conclusion for four reasons. First, this interpretation

makes the disqualification for planning board issues congruent with the disqualification

applicable to contracts. The latter applies to an official with a direct or indirect

pecuniary interest in the business entity with which the municipality contracts. See 30­

A M.R.S. § 2605(4). The most reasonable interpretation of § 2605, therefore, is that it is

designed to provide a remedy for self-dealing by municipal or county officials. This

would exclude a broader interpretation applicable to potential competitors.

Second, if the statue were broadly interpreted to apply to persons with a direct or

indirect interest in potentially competing businesses, it would appear to be over­

inclusive. For instance, although Dan Allen appears to be in the exact same position as

James Allen (both are owners of marinas which are competitors of plaintiff), plaintiff

has withdrawn its objection to Dan Allen. Under the statute, however, there should be

no distinction between them - either both are covered or neither are covered. 3

3 The statute cannot be reasonably interpreted to permit plaintiff to pick and choose which board members should be disqualified.

6 Moreover, if any form of actual or potential competition is a disqualifying factor under

§ 2605, the boundaries of the statute are extremely problematic. For instance, if the

owner of a restaurant is on a planning board, does this mean he or she is disqualified

from all matters dealing with any restaurant? If a person owning rental property is on a

planning board, is he or she disqualified from all matters relating to any rental unit?

Third, the remedy under the statute - restraining any further proceedings of a

duly constituted agency of municipal government - represents a dramatic intrusion into

land use decisions that are generally entrusted to local officials and citizens functioning

in the context of democratic government at the municipal level. Such a usurpation of

local authority should be limited to the most egregious of situations and argues for a

narrow interpretation of the statute.4

Supporting this interpretation is the fact that unless the statute is construed

narrowly, § 2605 could become an accepted mechanism whereby permit applicants in

controversial cases attempt to circumvent local planning and appeals boards and the

normal permit application process. Given that applicants such as the plaintiff marina

have an existing remedy under Rule 80B (assuming that their permit applications are

denied - which is not a foregone conclusion), courts should be wary of allowing

applicants to subvert the pennit process.

Finally, the Law Court's decision in Adelman v. Town a/Baldwin, 2000 ME 91 'li'li 6­

7, 750 A.2d at 581, strongly supports the proposition that - at least where a remedy

under Rule 80B exists - parties contesting planning board decisions must proceed under

Rule BOB rather than by bringing independent actions under 30-A M.R.S. § 2605.

4 In this case, plaintiff is seeking the appointment of a referee to supplant the Planning Board in ruling on its permit application. Such a remedy is potentially available but only after a Planning Board has demonstrated that it cannot possibly afford the permit applicant a fair hearing. See Mutton Hill Estates Inc. v. Town of Oakland, 468 A.2d 989 (Me. 1983).

7 Adelman suggests that because plaintiff has an adequate remedy at law under Rule BOB,

it may not seek preemptive injunctive relief in this action.

In reaching this result, the court specifically does not reach the merits of

plaintiff's claims of conflict of interest and bias. Thus, even if James Allen does not have

an automatically disqualifying interest for purposes of section 2605, it is possible that he

may have a conflict of interest as the owner of a competing marina and that, if he does

not disqualify himself, this conflict would entitle to plaintiff to relief under Rule BOB.

This may depend upon such issues as the extent to which James Allen's business would

be affected by the permit sought by plaintiff, which cannot be determined on the

existing record. Similarly, the court has not viewed the videotape evidence that

plaintiff contends supports its claim of bias on the part of Longley and Rogers and

expresses no opinion as to whether plaintiff would be entitled to relief because of

alleged bias on their part. s These issues may have to await an evidentiary hearing

under Rule BOB(d), depending on whether any members of the planning board

disqualify themselves and whether plaintiff's permit application is in fact denied.

The entry shall be:

Plaintiff's motions for a preliminary and permanent injunction are denied,

without prejudice to any claims of bias or conflict of interest that may arise in a later

proceeding for judicial review under Rule 80B. Because no other relief is sought in the

complaint, the complaint is dismissed.

DATED: November 2-' ,2007

Thomas D. Warren Justice, Superior Court

5 In the court's view, it would be particularly problematic if it were proven that Longley solicited excavation business while stating that he could be helpful on the planning board.

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