and site plan approval. Defendants Nancy Graboski ("Graboski"),
John Blaney ("Blaney"), and Peg Caraher ("Caraher"), all members
of the Planning Board, continued the hearing to September 10,
1998. It appears from the amended complaint, that the Planning
Board held the hearing on that date, but reserved decision.
Meanwhile, on August 27, 1998, HBC filed an application to
change the zoning designation of the rear portion of its
property from residential use to Planned Development District
("PDD") so that construction could begin on the ambulatory
surgery center. On September 14, 1998, the Planning Board
returned the application to HBC, because it was incomplete.
On September 28, 1998, before HBC could resubmit its
application for a change of zone, and before the Planning Board
decided McDonald's application for its site plan approval and
special exception use permit, the Southampton Town Board imposed
a six-month moratorium on the issuance of any zoning approvals
in the Hampton Bays. The moratorium made it impossible for HBC
to begin construction on the ambulatory surgery center by
December 31, 1998. Therefore, pursuant to the conditions set
forth in the Certificate of Need, the DOH cancelled the
Certificate of Need, Stony Brook looked at other property to
build its ambulatory surgery center, and HBC lost a 25-year,
$17,000,000 lease with the hospital.
On June 10, 1999, the Planning Board granted McDonald's
special exception use permit and site plan approval. On June 17,
1999, McDonald's applied for a building permit from the Town of
Southampton Department of Land Management and Zoning ("Building
Department"). The Building Department returned the application
on the ground that it was not submitted with a wastewater
On July 13, 1999, the Town Board adopted an amended local
zoning law. On the same date, McDonald's resubmitted its
application for a building permit, and on August 17, 1999, the
Building Department denied McDonald's application based on the
newly enacted zoning law.
B. The Phoenix Property
The president of HBC, as well as most of the company's
officers and board members, are also officers and board members
of Phoenix. In 1995, Phoenix owned a parcel of property in the
Hampton Bays on which it intended to construct two medical arts
buildings: 223 West Montauk Highway, and 225 West Montauk
Highway. On October 24, 1996, the Planning Board approved
Phoenix's site plan application for construction of a medical
office building at 223 West Montauk Highway and granted Phoenix
a special exception permit for renovation of the building
located at 225 West Montauk Highway.
Phoenix did not build the structure at 223 West Montauk
Highway within the two years allotted by the Board's site plan
approval. Thus, on October 24, 1998, Phoenix re-applied for
approval of its site plan at 223 West Montauk Highway. This
application was submitted after McDonald's had applied for a
special exception use permit and for site approval to build the
restaurant on HBC's property. The Planning Board returned
Phoenix's reapplication, stating that it was incomplete.
C. The Causes of Action Remaining After the Court's January
26, 2001 Order
In its Section 1983 First Amendment retaliation claim, HBC
argues that the defendants retaliated against it for exercising
its First Amendment right to apply for various approvals and
permits in regard to
the construction of a McDonald's by defeating HBC's attempts to
construct the ambulatory surgery center. Phoenix raises a
similar claim, asserting that Graboski and members of the
Planning Board retaliated against Phoenix for HBC's exercise of
its First Amendment right to apply for approvals and permits in
regard to the construction of a McDonald's by refusing to accept
Phoenix's applications to build a medical office building.
In support of its substantive due process claim, HBC alleges
that it has a property interest in the use and development of
its property, and the defendants deprived them of that interest
by arbitrarily denying certain land use permits. HBC contends
that the defendants' conduct violated the plaintiffs substantive
due process rights.
A. The Motion for Reconsideration or Reargument
This Court's January 26, 2001 decision held that HBC's
substantive due process claim in regard to the application for a
construction permit was sufficient to withstand the defendants'
challenge pursuant to Rule 12(b)(6). Hampton Bays Connections,
Inc., 127 F. Supp.2d at 379. The Court found that HBC had
alleged a property interest in the construction permit
application, because the Building Inspector lacked discretion
when deciding whether a permit should be issued. Id. The Court
further found that HBC had alleged an arbitrary denial of the
construction permit, because the amended complaint states that
the denial was based on the fact that the defendants did not
want a fast food restaurant, such as McDonald's, constructed in
the Hampton Bays. Id.
In particular, the Court noted that although the amended
complaint stated that the Building Inspector denied the
application because it did not comply with the newly enacted
zoning regulation, the amended complaint also alleged that "the
Building Department intentionally delayed reviewing their
application for a construction permit so that the Town Board
could pass a new local law, amending the zoning regulations so
that the erection of fast food restaurants in the area of the
plaintiffs' property was no longer permitted." Id. Viewing the
allegations in the amended complaint in the light most favorable
to the plaintiff, the Court found that the plaintiffs had
alleged an arbitrary denial of the construction application.
The defendants now argue that the Court's decision overlooked
language in the Building Inspector's August 17, 1999 written
denial of the building permit, which the defendants claim would
have altered the outcome of the decision. The defendants point
to the second sentence of the letter which states that
McDonald's application for a building permit did not address
three conditions set forth in the June 10, 1999 site plan
approval by the Planning Board's approval and, the application
could be denied on that basis alone. Based on this sentence, the
defendants argue that the McDonald's application would have been
denied even if the new zoning regulations had not been amended,
because the application failed to satisfy other, unrelated
conditions. Therefore, argue the defendants, had this Court
considered the second reason for the denial of the permit, the
Court would have concluded that the Building Inspector's action
does not constitute a substantive due process violation.
Motions for reargument are governed by Rule 6.3 of the Local
Rules of the United States Courts for the Southern and Eastern
Districts of New York. Local Rule 6.3 provides as follows:
A notice of motion for reargument shall be served
within ten (10) days after the docketing of the
court's determination of the original motion. There
shall be served with the notice of motion a
memorandum setting forth concisely the matters or
controlling decisions which counsel believes the
court has overlooked. No oral argument shall be heard
unless the court grants the motion and specifically
directs that the matter shall be reargued orally. No
affidavits shall be filed by any party unless
directed by the court.
The standard for granting a motion for reconsideration "is
strict, and reconsideration will generally be denied unless the
moving party can point to controlling decisions or data that the
court overlooked — matters, in other words, that might
reasonably be expected to alter the conclusion reached by the
court." Shrader v. CSX Transportation, Inc., 70 F.3d 255,
256-57 (2d Cir. 1995) (citations omitted). The difficult burden
imposed on the moving party has been established "in order to
dissuade repetitive arguments on issues that have already been
considered fully by the Court." Ruiz v. Commissioner of D.O.T.
of City of New York, 687 F. Supp. 888, 890 (S.D.N.Y. 1988),
modified on other grounds, 934 F.2d 450 (2d Cir. 1991). To
grant such a motion means that a Court must find that it
overlooked "matters or controlling decisions" which, if it had
considered such issues, "would have mandated a different
result." Durant v. Traditional Investments, Ltd., 88 CV 9048,
1990 WL 269854 (S.D.N.Y. April 25, 1990).
At the outset, the Court finds that it may consider the
contents of the August 17, 1999 denial letter in reconsidering
whether the plaintiffs' substantive due process claim survives
the Rule 12(b)(6) motion. It is well settled that a Court
deciding a motion to dismiss the complaint may consider the
"facts stated on the face of the complaint, . . . documents
appended to the complaint or incorporated in the complaint by
reference, and . . . matters of which judicial notice may be
taken." Leonard F. v. Israel Discount Bank of N.Y.,
199 F.3d 99, 107 (2d Cir. 1999); Hayden v. County of Nassau,
180 F.3d 42, 54 (2d Cir. 1999). A court may also consider "documents
either in plaintiffs' possession or of which plaintiffs had
knowledge and relied on in bringing suit." Brass v. American
Film Technologies, Inc., 987 F.2d 142, 149 (2d Cir. 1993); see
Cortec Indus., Inc. v. Sum Holding, L.P., 949 F.2d 42, 47-48
(2d Cir. 1991).
Here, the plaintiffs refer to the August 17, 1999 denial of
the building permit in paragraph 141 of the amended complaint.
Accordingly, the Court finds that the letter is incorporated in
the amended complaint by reference. See Leonard F., 199 F.3d
at 107; Hayden, 180 F.3d at 54. Furthermore, given that the
substantive due process cause of action is based in part on the
August 17, 1999 letter, it is clear that the plaintiffs were in
possession of the document, had knowledge of it, and relied on
it in bringing this lawsuit. See Brass, 987 F.2d at 149;
Cortec Indus., 949 F.2d at 47-48. For these reasons, the Court
finds that it can consider the contents of the letter in
determining the defendants' motion to reargue the motion to
dismiss the complaint pursuant to Rule 12(b)(6).
To state a substantive due process claim for wrongful denial
of a permit, the plaintiffs must satisfy a two-pronged test.
First, they must show "that [they] had a valid `property
interest' in a benefit that was entitled to constitutional
protection at the time [they were] deprived of that benefit."
Lisa's Party City, Inc. v. Town of Henrietta, 185 F.3d 12, 17
(2d Cir. 1999). Here, the defendants are not requesting that the
Court reconsider whether the
plaintiffs had a property interest in the building permit.
Accordingly, the Court's decision will address only whether the
plaintiffs have satisfied the second prong by alleging that the
defendants' action in depriving them of the valid property
interest was "so outrageously arbitrary as to be a gross abuse
of governmental authority." Lisa's Party City, 185 F.3d at 17.
A claim for a substantive due process violation must describe
state action taken "under circumstances warranting the labels
`arbitrary' and `outrageous.'" Natale v. Town of Ridgefield,
170 F.3d 258, 262 (2d Cir. 1999). Substantive due process does
not forbid arbitrary or capricious governmental actions that can
be corrected in a state court's review of an administrative
proceeding. See id. "Substantive due process is an outer limit
on the legitimacy of governmental action, . . . [and its]
standards are violated only by conduct that is so outrageously
arbitrary as to constitute a gross abuse of governmental
authority." Id. at 262-63.
The Building Inspector's August 17,1999 denial of HBC's
McDonald's application states, in relevant part:
I will note from the onset [sic] that Conditions No.
2, 9 and 24 of the June 30, 1999 Planning Board
approval have not been addressed and by themselves
would prohibit the issuance of a building permit at
this time. Notwithstanding the aforementioned
deficiencies, your application has been denied for
the following reasons . . .
The letter then lists ten subsections of the newly enacted
zoning amendments with which the McDonald's application failed
The Court now finds that it overlooked the sentence informing
the defendants that their failure to satisfy conditions two,
nine, and twenty-four "would prohibit the issuance of a building
permit at this time" when it rendered the January 26, 2001
decision. Further, had the Court considered this language, it
would have reached a different conclusion regarding the
arbitrariness of the government's conduct. Shrader v. CSX
Transportation, Inc., 70 F.3d 255, 256-57 (2d Cir. 1995).
After re-examining the August 17, 1999 letter, the Court finds
that the denial was based on two factors: (1) the plaintiffs'
failure to satisfy three requirements upon which the issuance of
a building permit was premised; and (2) the plaintiffs' failure
to comply with the new zoning amendments. Therefore, even if the
zoning regulations had not been amended in a manner that
prohibited the McDonald's construction, the Building Inspector
would have denied the building permit application in any event,
because the plaintiffs did not satisfy three conditions
precedent to the receipt of the permit.
Moreover, the Court finds that to deny a building permit
because the application fails to meet the requirements of the
Planning Board is not an arbitrary governmental action.
Conditions two, nine, and twenty-four are three of twenty-eight
requirements outlined in the Planning Board's site approval,
which is attached to the complaint and was actually granted on
June 10, 1999, not June 30, 1999, as indicated in the denial
letter. The site plan approval states that "the McDonald's
Corporation site plan application . . . be and hereby is
APPROVED, with the Following Conditions and Modifications:"
"2. Prior to the issuance of a building permit, a
covenant and/or easement shall be submitted in a form
acceptable to the Town Attorney's office that
provides for common access between the subject parcel
and adjoining westerly parcel. . . .
"9. Prior to the issuance of a building permit, the
applicant shall provide prior notification, at least
two weeks, when the subject site is scheduled for
clearing to the Town of Southampton, Department of
Land Management Planning Division and a construction
fence shall be installed around the drip line of the
natural vegetation that is to remain on site. . . .
"24. Prior to the issuance of a building permit, the
applicant shall obtain Suffolk County Department of
Health Services approval. . . . "
The three conditions are straightforward Planning Board
requirements that will prevent an applicant from receiving a
building permit if they remain unfulfilled. The amended
complaint and the documents attached thereto indicate that the
conditions of the site plan approval were not in any way
connected to the zoning amendments. The Planning Board set forth
all twenty-eight conditions more than one-month prior to the
passage of the amendments, and the conditions do not refer to or
require compliance with zoning regulations. Accordingly, the
Building Inspector's decision to deny the building permit
because the plaintiffs failed to satisfy three conditions
precedent to the issuance of a permit was a legitimate
government action taken in apparent good faith.