In Maroney, et al. v. Fiorentini, et al., U.S. Dist. Ct., No. 1:16-cv-11575-DLC (D. Mass. Dec., 2017), Magistrate Judge Cabell in the United States District Court of Massachusetts partially denied a motion brought by defendants, the City of Haverhill (“the City”), its Mayor and its Deputy Director of Public Works, to grant judgment in their favor based on failure by the plaintiff developer to assert cognizable claims for civil rights and due process violations, interference with contractual relations, and conspiracy claims.

The Crystal Springs Development

Michael J. Maroney is a developer who proposed and partially built a subdivision of 50 lots located on land off North Broadway in Haverhill, Massachusetts (the “Crystal Springs Development” or the “Development”). In 2009, Premiere Realty Trust (“Premiere”), of which Mr. Maroney is a trustee, purchased the land for the Crystal Springs Development and applied to the Haverhill Planning Board for approval of a subdivision plan. During the Planning Board’s review process, a consultant for the city, Wright-Pierce, provided an engineer’s water system evaluation report that indicated that there was insufficient water pressure to serve the Crystal Springs Development. As a result, Premiere agreed to construct and install a water booster station to serve the Development. The Planning Board approved the subdivision plan on January 25, 2010, which included a condition that Premiere post a security bond of $250,000 to ensure that the water booster station was built by the completion of the Development on or before November 1, 2016. Premiere posted the bond and began construction of the Development.

Permit Dispute and State Court Case

By March of 2015, Maroney/Premiere built and sold 29 of the proposed 50 homes in the Development. However, the City abruptly stopped issuing Premiere permits it needed to complete the remaining 21 homes, including building permits and permits for site applications, citing water pressure and fire flow issues. Maroney was unable to resolve the conflict with the City, and ultimately filed suit in Massachusetts state court, alleging breach of contract and misrepresentation claims, among others, in an attempt to compel the City to issue permits (the “State Court Case”). According to Maroney, the parties to the State Court Case negotiated a settlement, but came to an impasse. The State Court Case is still pending.

The Federal Case

In 2016, Mr. Maroney, as trustee of the Premiere, Premiere, and Mr. Maroney’s construction company filed another case, this time in the United States District Court of Massachusetts, alleging that the City of Haverhill exaggerated concerns about water flow issues at the Crystal Springs Development in an attempt to have Maroney/Premiere pay for water improvements that are designed to address the existing water pressure concerns at a different nearby development, Parsonage Hill.

Plaintiffs state that they constructed a water line as a part of the first phase of the booster station by July 2015, and further that the Haverhill Fire Department signed off on all permits regarding the Crystal Springs Development up through July 7, 2016, and that fire flow testing showed more than sufficient water pressure at the Development for the remaining homes. Nonetheless, plaintiffs claim, the City refused to endorse a construction schedule for the water booster station, issue permits, or otherwise allow Maroney/Premiere to complete construction of either the water booster station or the remaining homes in the Development. Furthermore, plaintiffs allege that a new development, DelHaven Estates, which is located near to and served by the same water tower as Crystal Springs Development, was granted necessary permits in 2015 to install individual water booster stations and build seven homes.

Plaintiffs therefore claim that the defendants, by treating Premiere differently from other similarly situated developers and refusing to issue permits, are depriving plaintiffs of equal protection and substantive due process rights in violation of federal law, violating their civil rights protected by state law, interfering with contractual and economic relations, and engaging in a conspiracy to refuse to issue permits to plaintiffs.

Holding: Defendants moved for judgment on the pleadings, arguing that plaintiffs did not allege sufficient facts to support their claims. The Court allowed the claims against the individual defendants – the Mayor and the Deputy Director of Public Works – to continue, but dismissed the claims against the City. The Court reasoned that plaintiffs sufficiently alleged that the individual defendants treated the Crystal Springs Development differently (pointing in particular to the claim that the City granted DelHaven Estates all its necessary permits, while denying similar permits to plaintiffs), that there was no rational basis for the difference and that the difference was motivated by malice or bad faith – specifically a “gross abuse of power.” The Court found that plaintiffs’ allegations that the City denied it permits even though there is no requirement for a booster station to meet the water needs of the Crystal Springs Development; that the defendants disingenuously denied permits based on the false claim that the plaintiffs had to complete the booster station prior to the end of 2016; and that the Mayor has ordered no permits be issued to plaintiffs until they drop the State Court Case, all are sufficient to find a gross abuse of power by municipal actors. The Court also left open the possibility that plaintiffs could further amend their complaint to re-allege a claim against the City for violation of due process, but also suggested the City could assert qualified immunity against such a claim.

The Takeaway: Typically, developers and other individuals frustrated by the actions of municipal permit authorities face a very high bar in asserting that a municipality, by denying issuance of permits, has violated a developer’s due process or other civil rights. However, Maroney appears to be one of the few cases where a plaintiff can persuasively show that they are being treated differently than other developers, and that the different treatment is based upon a gross abuse of power by the municipal actors. However, plaintiffs have merely survived the first challenge to their case. They still face a high bar in actually proving their claims moving forward.