Port Penn Hunting Lodge Ass'n v. Meyer

PORT PENN HUNTING LODGE ASSOCATION, Petitioner, v. MATTHEW S. MEYER, individuallyand in his official capacity as the County Executivefor New Castle County, NEW CASTLE COUNTY,TRACY SURLES, individually and in her official capacity,MARY A. JACOBSON, individually and in her official capacity,RICHARD E. HALL, individuallyand in his official capacity, Respondents.

C.A. No. 2018-0328-TMR

COURT OF CHANCERY OF THE STATE OF DELAWARE

Date Submitted: February 4, 2019

May 9, 2019

MEMORANDUM OPINION

L. Vincent Ramunno, RAMUNNO & RAMUNNO, P.A., Wilmington, Delaware; Attorney for Petitioner.

Max B. Walton and Kyle Evans Gay, CONNOLLY GALLAGHER LLP, Newark, Delaware; Brian J. Merritt, NEW CASTLE COUNTY OFFICE OF LAW, New Castle, Delaware; Attorneys for Respondents.

MONTGOMERY-REEVES, Vice Chancellor.

For over two decades, the petitioner has worked to develop a parcel of land in southern New Castle County, Delaware. New Castle County has allegedly thwarted the petitioner's attempts. In particular, the petitioner asserts that New Castle County refuses to provide sewer service for the petitioner's proposed development while providing sewer service for developments on nearby land. The petitioner argues that New Castle County's discriminatory conduct violates its rights to substantive due process, equal protection, and just compensation for takings, and constitutes illegal contract zoning. The petitioner requests injunctive relief, declaratory relief, and damages. The respondents move to dismiss the petitioner's complaint for failure to state a claim. For the reasons that follow, I grant the respondents' motion.

I. BACKGROUND

I draw all facts from the Verified Complaint (the "Complaint"), the documents attached to it, and the documents incorporated by reference into it.¹ At this stage of the proceedings, I take all of Petitioner's well-pled facts as true and draw all reasonable inferences in its favor.

This saga began in 1997, when New Castle County (the "County") adopted a Unified Development Code and "made a commitment to construct sewers in southern New Castle County to accommodate the growth expected" in that area.² "[A]t least 20 years ago" Petitioner Port Penn Hunting Lodge Association ("Port Penn") bought an approximately 320-acre parcel of land (the "Land") in New Castle County, Delaware.³ Port Penn then attempted to develop the Land into a project called the Preserve, which Port Penn envisioned containing 120 acres of developed property and 200 acres of land in its natural state.⁴

Around the same time, the County established two sanitary sewer districts, the Northern New Castle County Sanitary Sewer Area and the Southern New Castle County Sanitary Sewer Service Area (the "SSSA"). The SSSA included the Land. In 2003, the County passed a resolution reaffirming that "New Castle County made a commitment to construct sewers in southern New Castle County to accommodate the growth expected within this area" and "the implementation of a sewer system in southern New Castle County is a necessary component of good land use planning."⁵

Port Penn has not pled that the establishment of the SSSA constituted a commitment to extend sewer services to the entire SSSA, nor that New Castle County ever specifically committed to provide sewer service to Port Penn. Port Penn does assert that County officials at the Department of Special Services ("Special Services"), now known as the Department of Public Works, which is responsible for sewer service, gave assurances that the County would provide sewer service to the Land on a fair and equal basis. Specifically, Port Penn contends that "Charles Baker, the General Manager [of Special Services] at that time, informed [Port Penn's] representative that if sewer was provided for anyone in that area the County would certainly not play favorites and in fairness would provide sewer to other property owners in the area."⁶ Port Penn adds that Respondent Meyer, a subsequent General Manager of Special Services, "expressed his intent to make public sewer available for the area and to treat all property owners in the Port Penn area fairly and equally."⁷

In early 2000, Port Penn submitted its development plan for the Land to the County for the first time, but the County Land Use Department advised Port Penn in a letter on June 23, 2000, that sewer service was not available and that development would have to wait until it became available.⁸ The County Land Use Department sent another letter advising Port Penn that public sanitary sewer systems were not available "in the vicinity of the site" on June 7, 2001.⁹ On October 26, 2007, the County denied another Port Penn application, writing that "the Department of Special Services had determined that there is no sewer capacity for this proposed development; therefore, this application may not advance . . . until the sewer issue is resolved."¹⁰

In November 2007, two other property developers in the area filed suit against the County in the United States District Court for the District of Delaware to compel the County to provide sewer service.¹¹ The case settled, and the County agreed to provide sewer systems for the developers.¹² Two other nearby developers, also sued and settled in exchange for commitments to sewer service.¹³

At an undetermined later date, Port Penn once more submitted its development plan for approval.¹⁴ On May 16, 2017, the County again responded that there was insufficient sewer capacity for the proposed development.¹⁵ When Port Penn complained of favoritism, the County responded that only properties with settlement agreements would receive sewer service.¹⁶ For the next several months, Port Penn and the County exchanged letters, with Port Penn repeatedly pressing for sewer service and the County stating that only property owners with settlement agreements would receive sewer service.¹⁷

Port Penn alleges that in response to the settlements the County reached with other developers, the County installed "a sewer pipe under Route 1 of such a small size that it could only service" the other developers.¹⁸ Port Penn concludes that the County installed an undersized pipe to create a justification for denying sewer service to Port Penn due to lack of sewer capacity.¹⁹ Port Penn asserts that the County did this to prevent Port Penn from developing the Land and "to obtain open space for free without having to pay for preservation rights or at the very least reducing the value of the property and thereby the price for same."²⁰

On May 3, 2018, Port Penn filed its Complaint in this action (the "Complaint"). On May 30, 2018, Respondents filed their Motion to Dismiss. On January 10, 2019, I held oral argument on the Motion to Dismiss. On January 30, 2019, Port Penn filed a letter updating the Court on the status of proposed legislation in New Castle County regarding a proposed moratorium on the creation of septic systems in the area including the Land. On February 1, 2019, Respondents filed a letter in response. On February 4, 2019, Port Penn filed a rebuttal letter.

II. ANALYSIS

Port Penn asserts five causes of action: (1) a purported substantive due process claim, which asserts that "[t]he County has acted under color of state law in violation of Delaware Law and 42 U.S.C. § 1983 and in violation of Petitioner's rights,"²¹ and the County's actions constitute "a blatant violation of the Takings and Due Process Clauses of the Fifth and Fourteenth Amendments to the United States Constitution and the Delaware Constitution";²² (2) a purported equal protection claim, which asserts that "[t]he County has intentionally treated Petitioner and its Proposed Development differently from other similarly situated and even adjacent properties in the SSSA"²³ with "no rational or legitimate reason" for the differential treatment,²⁴ violating "Section 8 of Article VIII of the Delaware Constitution [, which] prohibits the use of public funds for private purposes,"²⁵ and carrying out de facto "'contract zoning' i.e., a contract by the government to zone for the benefit of a private owner, which is expressly prohibited by Delaware law and established case law,"²⁶ also constituting a violation of "Petitioner's rights to equal protection as guaranteed by the Fourteenth Amendment to the United States Constitution and the Delaware Constitution";²⁷ (3) a purported declaratory judgment claim as to Port Penn's rights to sewer service and a preliminary injunction pending trial on the merits to enjoin the County from providing sewer service to Port Penn's neighbors but not Port Penn, as well as damages and fees;²⁸ (4) a purported estoppel claim and an injunction preventing the County from excluding Port Penn from carrying out sewer plans that provide service to Port Penn's neighbors, as well as damages, fees, and costs;²⁹ and (5) a purported "injunctive relief temporary restraining order" claim to prevent the County from excluding Port Penn from sewer plans that provide service to Port Penn's neighbors, as well as damages, fees, and costs.³⁰

For the sake of analytical clarity, I organize the Complaint into the following six categories: (1) substantive due process claims, (2) equal protection claims, (3) takings claims, (4) contract zoning claims, (5) estoppel claims, and (6) miscellaneous other claims.³¹

Respondents move to dismiss the entire Complaint under Court of Chancery Rule 12(b)(6). The standard for dismissal pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted is well established. When considering a motion to dismiss under Rule 12(b)(6), this Court must "accept as true all of the well-pleaded allegations of fact and draw reasonable inferences in the [petitioner's] favor."³² While the Court must draw all reasonable inferences in the petitioner's favor, it is not "required to accept as true conclusory allegations 'without specific supporting factual allegations.'"³³ "[D]ismissal is inappropriate unless the '[petitioner] would not be entitled to...