Opinion
1:02-cv-01133-JDT-TAB
March 28, 2003.
John R. Molitor and Judy G. Hester, Molitor Grisham Hester PA
Cathy Elliott, Bose McKinney Evan LLP
Thomas F. Bedsole and Daniel P. King, Locke Reynolds LLP
Richard S. Nikchevich, W. Scott Porterfield and Steven J. Yatvin, Barack Ferrazzano Kirschbaum Perlman Nagelberg
ENTRY ON DEFENDANTS AND INTERVENOR'S MOTIONS TO DISMISS
This Entry is a matter of public record and is being made available to the public on the court's web site, but it is not intended for commercial publication either electronically or in paper form. Although the ruling or rulings in this Entry will govern the case presently before this court, this court does not consider the discussion in this Entry to be sufficiently novel or instructive to justify commercial publication or the subsequent citation of it in other proceedings.
This case arises out of Sprint Spectrum, L.P. ("Sprint")'s efforts to install a personal communications service ("PCS") antenna and equipment shelter. Defendants City of Carmel, Indiana, Board of Zoning Appeals for the City of Carmel and Clay Township, and Michael P. Hollibaugh (collectively, "Defendants") and Intervenor Richard Deer move the Court to dismiss the complaint for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). Intervenor Deer additionally moves to dismiss for failure to state a claim. Fed.R.Civ.P. 12(b)(6). The court now rules on both motions.
This section summarizes the allegations of the complaint, which must be taken as true for the purposes of Sprint's motion to dismiss.
Sprint and its affiliates are in the business of providing wireless communications services, involving the construction and operation of a nationwide PCS network. Sprint currently holds a PCS wireless broadcast license for the Indianapolis Major Trading Area that is valid until June 23, 2005. The network consists of a system of adjacent cell sites centered around mounted antennae that enable service within a set geographical area. On May 14, 2001, Sprint entered into a lease agreement with Dr. Edwin Zamber in order to collocate an antenna onto a pre-existing tower on Dr. Zamber's property previously used for "ham" radio communications. Sprint also planned to build an equipment shelter adjacent to the tower. The Zamber site is located in a district zoned "S-1 Residence District" pursuant to section 5.1 of the Carmel/Clay Zoning Ordinance.
Sprint filed an application for an improvement location permit, along with building plans, with the Department of Community Services (the "Department") on May 7, 2001. On or about June 15, 2001, the Department issued the permit. On or about August 15, 2001, Mr. Deer, an Invervenor in this suit whose property abuts the Zamber site, appealed the issuance of the permit with the Carmel/Clay Board of Zoning Appeals ("BZA") on the grounds that the antenna did not constitute a permitted use under the Zoning Ordinance (the "Zoning Appeal") governing residential districts. A couple of weeks later, shortly after Sprint had begun building on the site, the Carmel Building Commissioner issued a stop work order on the project, and on August 24, 2001, Michael P. Hollibaugh, the Department Director and a Defendant in this case in his official capacity, sent a letter to Sprint revoking the improvement location permit. It gave as sole reason for the revocation the need to subdivide the Zamber site into two smaller parcels, necessitating subdivision plat approval by another agency, the Plan Commission. Sprint appealed the revocation of the improvement location permit to the BZA (the "Subdivision Appeal").
After some wrangling in which the BZA's decision to dismiss Sprint's Subdivision Appeal as untimely was reversed by a state court, the BZA eventually heard both the Subdivision Appeal and the Zoning Appeal on the merits. On June 24, 2002, the BZA unanimously upheld Mr. Deer's Zoning Appeal and found that the improvement location application was wrongly approved. It issued findings of fact stating that the "use for which the [improvement location permit] was granted (a commercial antenna and unstaffed, unoccupied commercial radio equipment shelter) is not a Permitted Use under the S-1 Residential District and related sections of the Carmel/Clay Zoning Ordinance." (Compl., Ex. F.) Thus, Sprint must seek a special use permit, or variance, in order to complete the equipment shelter and collocate the antenna onto the existing tower. Similarly, on July 22, 2002, the BZA rejected Sprint's Subdivision Appeal for the reason stated in the August 24, 2001 revocation letter, namely, that Sprint needed to seek subdivision plat approval prior to completing its construction on the Zamber site.
On July 23, 2002, Sprint filed this action, alleging several violations of the Telecommunications Act of 1996, a takings and due process claim under the Fifth and Fourteenth Amendments, a takings claim under the Indiana Constitution, requests for a writ of certiorari under Indiana law to review the BZA's June 24 and July 22 decisions, and a final claim for declaratory judgment.
II. Standard of Review
When considering a motion to dismiss for subject matter jurisdiction under Rule 12(b)(1), a court must accept as true all well-pleaded allegations and draw all reasonable inferences in favor of the non-movant. Alicia-Hernandez v. Catholic Bishop of Chicago, No. 02-2289, 2003 WL 373349, at *2 (7th Cir. Feb. 21, 2003) (citation omitted). Where a dispute exists as to jurisdictional facts, a court may look beyond the allegations to any evidence submitted on the issue, id., however, the disagreement in this case concerns the significance of uncontroverted facts.
III. Discussion
A. TCA Claims
Sprint brought suit under the Telecommunications Act of 1996 ("TCA"), codified in scattered sections of Title 47, United States Code. The TCA grants state and local governments the authority to regulate the placement of wireless telecommunications structures, but as the Seventh Circuit has noted, "their authority is not unfettered." Aegerter v. City of Delafield, Wis., 174 F.3d 886, 888 (7th Cir. 1999). Specifically, "they must now support any decision to deny certain requests for those facilities with a written opinion that is based on substantial evidence in a written record, and they may not unreasonably discriminate among providers of functionally equivalent services." Id. (citing 47 U.S.C. § 332(c)(7)(B)(iii), (B)(i)(I)) (internal quotation marks omitted). The statute also allows an action to be brought in "any court of competent jurisdiction" by "any person adversely affected by any final action or failure to act by a State or local government or any instrumentality thereof that is inconsistent with [§ 332(c)(7)]." 47 U.S.C. § 332(c)(7)(B)(v). This case revolves around whether either the decisions by the BZA with respect to either of the BZA decisions constitutes a "final action" within the meaning of that provision.
The parties agree on a couple of important matters. First, the BZA is the highest administrative authority empowered under Indiana law to hear appeals of administrative decisions under the local zoning ordinance. See Ind. Code § 36-7-4-918.1 (defining appellate jurisdiction of state boards of zoning appeals). Sprint therefore cannot take any further administrative appeal of the two adverse BZA decisions. Indiana law does provide for review of board of zoning appeals decisions through the issuance of a writ of certiorari by the circuit or superior court of the county in which the affected premises are located, Ind. Code 36-7-4-1003, but Sprint does not claim to have availed itself of that mechanism prior to initiating this action. However, neither the Defendants nor the Intervenor contend that Sprint was required to exhaust its state judicial remedies in order to bring an action under the TCA. Such an argument could well face an uphill battle, as several courts have invoked the legislative history of the TCA to refrain from imposing an exhaustion of state court remedies requirement on parties seeking redress under that statute. See, e.g., AT T Wireless PCS, Inc. v. Town of Porter, 203 F. Supp.2d 985, 989 (N.D.Ind. 2002) ("the term `final action' means final administrative action at the State or local government level so that a party can commence action under the subparagraph rather than waiting for the exhaustion of any independent State court remedy otherwise required.") (quoting H.R. Conf. No. 104-458, 104th Cong., 2d Sess. 208 (1996), reprinted in 1996 U.S.S.C.A.N. 124, 223); Laurence Wolf Capital Mgmt. Trust v. City of Ferndale, 176 F. Supp.2d 725, 727 (E.D.Mich. 2000). But the court need not fully address this issue, as the Defendants do not press the argument and resolution of the jurisdictional issue rests on other considerations.
Second, the parties agree, or at least Sprint does not deny, that its ultimate goal of establishing wireless telecommunications facilities at the Zamber site has not been foreclosed by the BZA decisions. As the Defendants emphasize, those decisions establish the procedural route Sprint must take at this juncture in order to proceed with its project: it must submit a subdivision plat to the Plan Commission and apply for a special use permit. It is reasonably clear that were the BZA to make a subsequent ruling which would have the effect of definitively blocking Sprint's attempt to build its facilities — for instance, by denying Sprint a variance — the final action requirement would be met. The question now before the court is whether, at this stage in the process where Sprint still has administrative avenues open to it, either the Zoning or Subdivision decision by the BZA qualifies as a final action.
Neither the statute itself nor the case law interpreting it provide much guidance. The TCA does not define "final action," and the legislative history, even if credited, offers no clues. The Defendants and the Intervenor rely on two district court cases, Cox Commications PCS, L.P. v. City of San Marcos, 204 F. Supp.2d 1272 (S.D.Cal. 2002); Indiana Bell Tel. Co., Inc. v. Smithville Tel. Co., Inc. 31 F. Supp.2d 628 (S.D. Ind. 1998), the latter of which is readily distinguishable. Indiana Bell involved a suit by a telecommunications company invoking a provision of the TCA to force arbitration of interconnection agreements it had entered into with rural telephone local exchange carriers. These agreements were possibly subject to modification as a consequence of the passage of the TCA in 1996. The Indiana Utility Regulatory Commission ("IURC") dismissed the plaintiff's petition for arbitration, which the court held was not a final action pursuant to 47 U.S.C. § 252(e)(6) because the IURC had not denied the request on the merits but rather consolidated it with an on-going factual investigation in furtherance of its policy-making duties under the TCA. Id. at 637. In this case, by contrast, the effect of the BZA decisions was not postponement of the issues pending further factual findings, but, instead, a definitive ruling as to those matters (the need for submission of a subdivision plat and special use permit application).
Cox Communications bears closer resemblance to the case at hand, but still does not answer the statutory question posed herein. In Cox, the plaintiff (also Sprint) informed the City defendant that it wished to use the City's public rights of way to install wireless telecommunications facilities. The City notified the plaintiff it would have to follow the procedures for obtaining a Conditional Use Permit ("CUP"). The plaintiff believed this requirement to be in violation of its state and federal rights, and sued the City under the TCA. The court found that, at a minimum, the term "final action" entails a decision by the appropriate local authority, and "because the defendants have not rejected Sprint's application for an excavation permit or a CUP. . . . no decision or final action has been made on Sprint's request." Id. at 1277 (emphasis in original). Sprint correctly notes that the plaintiff in Cox Communications filed in federal court without contesting the City's instructions in any higher administrative forum. It is true that, as evidenced by the above quotation, the court seemed to think that the "final action" requirement of § 332(c)(7)(B)(v) called for an ultimate determination as to the company's ability to place its facilities. That result would favor the Defendants and Intervenor. But the rationale given by the court — lack of decision — only supports the weaker conclusion that the City's opinion with respect to the procurement of a CUP did not constitute a final administrative decision. Of importance to this case, the court did not explain why a final determination by a municipal authority on a procedural matter — also a decision — would not satisfy the statute. This gap in the reasoning limits the usefulness of Cox Communications to the Defendants and Intervenor's cause.
Sprint, for its part, cites Indiana state court decisions holding that a plaintiff bringing an as-applied constitutional challenge to a zoning ordinance does not have to first apply for a variance before seeking relief in Indiana courts. See Bd. of Zoning Appeals of the City of New Albany v. Koehler, 194 N.E.2d 49 (Ind. 1963); Church of Christ in Indianapolis v. Metro. Bd. of Zoning Appeals of Marion County, 371 N.E.2d 1331 (Ind.Ct.App. 1978). The relevance of this line of cases for the construction of a term in a federal enactment is not evident. If Sprint is only trying to show that Indiana law permits appeals to the proper state court from any decision of a board of zoning appeals, even on a penultimate or procedural issue, that much is clear from the certiorari statute. "Each decision of. . . . the board of zoning appeals is subject to review by certiorari." Ind. Code § 36-7-4-1003. But plainly a state may want to entrust its own courts with closer scrutiny over the administration and interpretation of local zoning laws than Congress would have wished to commit to the federal courts over such laws.
In fact, it is precisely because a contrary construction would involve the federal courts in zoning disputes before the ultimate question of the plaintiff's ability to develop his property has been settled that the court believes the term "final action" in § 332(c)(7)(B)(v) should be reserved to include solely those administrative decisions which fully dispose of a party's attempt to place, construct or modify personal wireless service facilities. This is how the Supreme Court has applied the concept of finality to zoning cases in the takings context, and the court sees no reason to diverge from that understanding here. See Williamson County Regional Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172, 186-94 (1985) (takings claim not ripe because, inter alia, respondent's failure to petition board of zoning appeals for variance meant that no final administrative decision had been taken with respect to respondent's ability to develop its land). This interpretation, which would defer access to federal court until all reasonably available administrative paths have been exhausted, has the merit of preserving the autonomy of local authorities to administer and interpret their own zoning laws, in accord with the Seventh Circuit's statement of Congress' purpose in passing the TCA:
Some may disagree with Congress' decision to leave so much authority in the hands of state and local governments to affect the placement of the physical infrastructure of an important part of the nations telecommunications network. But that is what it did when it passed the Telecommunications Act of 1996, and it is not our job to second-guess that political decision.
Aegerter, 174 F.3d at 892. So, for example, were the BZA to subsequently grant Sprint the special use permit, it would moot the need for federal court intervention. Conversely, a denial by the BZA would constitute a "final action" and the issue would be ripe for adjudication. As the Court in Williamson County noted, "resort to the procedure for obtaining variances would result in a conclusive determination by the Commission whether it would allow respondent to develop the subdivision in the manner respondent proposed." Williamson County, 473 U.S. at 193.
Sprint replies that this interpretation cannot be right because it would allow boards of zoning appeals to evade the statute by erecting an endless series of procedural obstacles in the way of a wireless service provider. The court notes, first, that the allegations do not indicate such a scenario has occurred in this case, nor that it would be futile for Sprint to pursue its remaining administrative options. And second, were a local authority to react in such a manner, an aggrieved party would not be without recourse, because the TCA also creates a right of action for a person adversely affected by a "failure to act" on the part of a state or local government. 47 U.S.C. § 332(c)(7)(B)(v); see also § 332(c)(7)(B)(ii). Thus, an administrative entity which needlessly multiplied the hurdles to obtaining a final disposition of a service provider's proposal could be found liable under the TCA for failure to act. "As the [TCA] itself recognizes, inaction can take not only the form of complete inactivity, but also the absence of any meaningful consideration of an application. Otherwise, a local zoning authority could indefinitely delay an application by a flurry of hearings, requests, and counter-submissions that effectively mask a denial." Nextel Partners of Upstate New York, Inc. v. Town of Canaan, 62 F. Supp.2d 691, 694 (N.D. New York, 1999) (rejecting argument that "failure to act" claim under TCA not ripe because application still in information-gathering stage).
Finally, lack of a final action is not simply a failure of an element of the claim but divests the court of jurisdiction over the matter. Both parties have proceeded on that assumption, and as the statute makes a court's authority to hear a case under the TCA dependent on the entry of a final action, see 47 U.S.C. § 332(c)(7)(B)(v), it appears to be correct. See Indiana Bell Tel., 31 F. Supp.2d at 643-44 (lack of reviewable agency decision deprived district court of jurisdiction over TCA claims).
B. Takings Claim
Based on the revocation of the improvement location permit, Sprint has also brought a federal takings claim, which the Defendants and Intervenor argue fails to satisfy ripeness standards for takings claims. Sprint responds by citing an Indiana case holding that a plaintiff does not have to exhaust its administrative remedies before a board of zoning appeals to raise a temporary takings claim in state court. See Area Plan Comm'n of Evansville v. Major, 720 N.E.2d 391 (Ind.Ct.App. 1999). However, the proper source of authority for evaluating the ripeness of takings claims in federal court is federal law. The Supreme Court in Williamson County Regional Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985) has delineated the ripeness requirements imposed on Takings Clause litigants. First, there must be a "final decision" on the part of the governmental entity charged with implementing the relevant regulations — here, as there, the zoning board. Id. at 186. See also Daniels v. Area Plan Comm'n of Allen County, 306 F.3d 445, 454 (7th Cir. 2002). In Williamson County, the respondent had submitted a proposed plat for development of its property, and the local planning commission ruled that several aspects of the plat violated the zoning ordinance and subdivision regulations. Id. at 187. The respondent did not apply to the board of zoning appeals for variances that would have permitted the proposed development, but instead filed a takings claim in federal court. Id. at 188. Overturning a jury verdict in favor of the respondent, the Court held that its complaint was premature, because the government entity affected with the implementation of the land-use regulations had not been presented with a request for variances, and, thus, issued no conclusive ruling on whether the zoning ordinance would apply to deprive the owner of all the economic benefit of the property. Id. at 194. Because Sprint has failed to seek a special use permit or subdivision plat approval, similar to the respondent in Williamson County, the same result holds here.
Sprint distinguishes Williamson County on the grounds that in this case "Sprint has challenged the administrative procedures that the Defendants argue Sprint has failed to exhaust as not required by the Zoning Ordinance." (Defs. Resp. Br. at 11.) But Sprint's disagreement with the BZA's interpretation of the Zoning Ordinance cannot ripen what would otherwise be a premature takings claim. At best, and although Sprint does not make this clear, Sprint's objection could be construed as an assertion that the procedural steps themselves effect a temporary taking of property. In that event, even if it may be said that the BZA decisions are final decisions of the appropriate government authority as to the necessity of those procedures (but not the ultimate question of the use of the property), Sprint would still fail the second part of the Williamson County test for ripeness of takings claims, the exhaustion of state procedures for obtaining just compensation, as discussed below.
It is even more clear that Sprint has not satisfied the second Williamson County ripeness requirement, the exhaustion of all state procedures for obtaining compensation before filing in federal court. "[I]f a State provides an adequate procedure for seeking just compensation, the property owner cannot claim a violation of the Just Compensation Clause until it has used the procedure and been denied just compensation." The Court in Williamson County held that the respondent had not exhausted state remedies because of the availability of a state inverse condemnation right of action to obtain just compensation, which the respondent had neither utilized nor otherwise shown to be inadequate. Id. at 196-97. The Indiana Code likewise contains an inverse condemnation provision, see Ind. Code § 32-24-1-16, however, the complaint does not indicate any attempt to invoke that procedure or otherwise demonstrate its inadequacy. The court thus concludes that Sprint has not exhausted the state procedures available to provide compensation for takings of property. See Forseth v. Village of Sussex, 199 F.3d 363, 373 (7th Cir. 2000) (takings claim premature because, inter alia, plaintiffs not bring state inverse condemnation suit). Sprint's failure to exhaust its state remedies strips the court of jurisdiction to entertain the takings claim. See Suitum v. Tahoe Reg'l Planning Agency, 520 U.S. 725, 733 n. 7 (1997).
Such an attempt would likely not fare well, as Sprint alleges sustaining actual harm and seeks monetary damages (Compl. ¶ 72) (thus distinguishing this case from Daniels v. Area Plan Commission, 306 F.3d 445 (7th Cir. 2002)) and the Indiana inverse condemnation statute may be used as a vehicle to bring a temporary takings suit based on revocation of an improvement location permit, see Area Plan Comm'n of Evansville v. Major, 720 N.E.2d 391 (Ind.Ct.App. 2000).
IV. Conclusion
As discussed above, the court lacks jurisdiction over Sprint's TCA and takings claims, and since Sprint has pled no other causes involving a federal question on which to hang supplemental jurisdiction, this court has no power to hear the remaining state claims. The Defendants' and Intervenor's motions to dismiss for lack of subject matter jurisdiction is thus GRANTED, alleviating the need to consider the Intervenor's motion to dismiss for failure to state a claim.
Sprint's Complaint lists a Fourteenth Amendment due process claim arising out of the revocation of the building permit which neither party alludes to in the briefs. (See Compl. ¶ 70-71.) The court notes that this claim also requires a showing of the inadequacy of state law remedies, see Doherty v. City of Chicago, 75 F.3d 318, 326 (7th Cir. 1996), and so jurisdiction over it would be lacking for the reasons expressed in the discussion of the takings claim.
ALL OF WHICH IS ORDERED