Systematic Recycling LLC v. City of Detroit

635 F. App'x 175
CourtCourt of Appeals for the Sixth Circuit
DecidedJune 10, 2015
Docket13-1334
StatusUnpublished
Cited by9 cases

This text of 635 F. App'x 175 (Systematic Recycling LLC v. City of Detroit) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Systematic Recycling LLC v. City of Detroit, 635 F. App'x 175 (6th Cir. 2015).

Opinion

GRIFFIN, Circuit Judge.

In 2006, the City of Detroit awarded Systematic Recycling LLC (“Systematic”) a conditional zoning grant that permitted it to operate a large composting facility within city limits, subject to certain conditions. One of the conditions was that Systematic enter into a host community agreement (“HCA”) with Detroit to ensure that the city could adequately monitor its composting activities. After Systematic obtained the requisite HCA, it came to light that the individual who had procured the HCA had bribed certain members of the City Council in order to ensure its adoption by the city. Citing the fraud, defendants (collectively, “Detroit”) decided to allow the HCA to lapse rather than renewing it. Systematic’s conditional land use permit and associated zoning grant was, as a result, revoked.

The core of the dispute in this case is whether Detroit violated Systematic’s constitutional rights by failing to renew the HCA and subsequently revoking the permit and zoning grant. The district court concluded that no reasonable jury could find that it did. We agree and affirm.

I.

Early in 2006, Systematic began seeking permission from Detroit to establish and operate a ten-acre composting facility in the city’s Delray neighborhood, an industrial area zoned “M4” on the Detroit Zoning Ordinance Map. The property at which the composting facility was to be operated was owned by Alliance Leasing & Rental, LLC — a company associated with James Rosendall. Systematic leased the property from Alliance Leasing & Rental through Rosendall and obtained in April 2006 a conditional land use approval (the “conditional zoning grant” or “conditional land use permit”) from Detroit, allowing it to establish and operate a composting facility on the property that it had leased. The conditional zoning grant, however, came with strings attached: it listed twenty-six conditions that, if not fully met, would result in “penalties as provided in the Ordinance, which may include the revocation of this grant.” Because the odors from Systematic’s composting operations had the potential to cause a nuisance to surrounding properties, Detroit insisted that Systematic enter into an HCA with it, which would give the city a heightened ability to monitor Systematic’s operations and ensure compliance with a bevy of requirements tailored to Systematic’s cir *178 cumstances. Thus, the last of the conditions specified in the conditional zoning grant was a requirement that Systematic “enter into a Host Community agreement with [Detroit] prior to operating the site as a Compost Facility.”

There was some delay in achieving the requisite HCA. In March 2007, however, the Detroit City Council voted to enter into an HCA with Systematic, under which certain fees would be paid to Detroit by Systematic and Detroit would periodically monitor Systematic’s activities to ensure compliance with local regulations and the terms of the zoning grant. Crucially, the agreement provided that it would continue in effect for only two years, meaning that it would terminate on its own terms if not renewed at the end of March 2009. The HCÁ also provided that, upon its termination, Systematic “shall have no right to continue to operate the [composting facility].”

In January 2009, shortly before the HCA was up for renewal, Rosendall pled guilty in federal court to conspiring to bribe various public officials in the city of Detroit. In a plea agreement submitted to the court pursuant to Federal Rule of Criminal Procedure 11, Rosendall admitted that part of his felonious conduct had involved the City Council’s approval of Systematic’s HCA. According to Rosen-dall’s plea agreement, he bribed several city officials in order to sécure approval of the HCA and also “caused Systematic Recycling to pay [a public official] over $20,000, in part, to help [Rosendall] obtain later approval of the Community Host Agreement with the Detroit City Council, which was receiving opposition to the facility from local community groups and activists.”

On March 2, 2009 — a month after Ro-sendall’s guilty plea — Detroit officials sent Systematic a terse note:

The Host Community Agreement ... entered into on March 30, 2007 ... expires March 31, 2009. This letter is to notify [Systematic] that the City shall allow the Agreement to expire.
In accordance with [the terms of the HCA, Systematic] shall commence closure activities no later than April 1, 2009.

According to the Detroit officials who were involved in the non-renewal decision, there was one overriding reason for permitting the HCA to expire: because it had been “obtained through fraud.”

On April 2, 2009, Systematic filed suit against Detroit in state court, alleging that Detroit had revoked the conditional zoning grant in violation of its federal due process and equal protection rights. Systematic also requested — and received — a temporary restraining order barring Detroit from taking action to shutter or interfere with Systematic’s composting operations on the property in question.

Detroit removed the action to federal district court. As it had in state court, Systematic asked the district court to enter a preliminary injunction enjoining Detroit from interfering with its use of the property; Detroit, by contrast, moved for relief from the state court’s temporary restraining order. In February 2010, the district court denied Systematic’s motion and granted Detroit’s, concluding that there was not a substantial likelihood that Systematic would succeed on the merits of its federal claims. See Systematic Recycling, LLC v. City of Detroit, 685 F.Supp.2d 663, 677 (E.D.Mich.2010) (Systematic I). Systematic appealed the district court’s denial of injunctive relief to this court in March 2010.

In the meantime, Detroit began taking steps to finalize the revocation of the permit and zoning grant. Shortly after the *179 district court declined to grant a preliminary ■ injunction, Detroit’s Buildings & Safety Engineering Department — which handles zoning matters for the city — gave notice to Systematic that it would hold a hearing for Systematic to show cause why the conditional land use permit and the associated conditional zoning grant should not be revoked due to the termination of the required HCA. After hearing the parties’ respective evidence, the hearing officer concluded that revocation of the permit and associated grant was proper. Observing that the zoning grant was conditioned upon the existence of an HCA, the hearing officer found that Detroit had a rational basis to decline to renew the HCA: the fact that it was procured through payment of a bribe. The hearing officer’s decision was adopted by the director of the Buildings & Safety Engineering Department.

Systematic sought review of the hearing officer’s decision before Detroit’s Board of Zoning Appeals, which held a de novo hearing in April 2011. After considering various evidence and testimony — some of which had been before the hearing officer and some of which had not — the Board denied Systematic’s appeal of the revocation of the permit and associated conditional zoning grant. Systematic filed an appeal of the Board’s decision in state circuit court.

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Bluebook (online)
635 F. App'x 175, Counsel Stack Legal Research, https://law.counselstack.com/opinion/systematic-recycling-llc-v-city-of-detroit-ca6-2015.