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LLC v. City of Yuma

United States District Court, Ninth Circuit

June 5, 2013

AVENUE 6E INVESTMENTS, LLC, et al., Plaintiffs,
v.
CITY OF YUMA, ARIZONA, a municipal corporation, Defendant.

ORDER AND OPINION [Re: Motion at Docket 146]

JOHN W. SEDWICK, District Judge.

I. MOTION PRESENTED

At docket 146, the City of Yuma, Arizona ("the City") has filed for summary judgment on the sole remaining claim in this case - the Fair Housing Act disparate impact claim. The City argues that plaintiffs Avenue 6E Investments, LLC and Saguaro Desert Land, Inc. (jointly "Plaintiffs" or "the Hall Companies")[1] cannot state a prima facie case of disparate impact under the federal Fair Housing Act because of the abundant housing supply in the market at the time it denied Plaintiffs' rezoning request. The City's statement of facts and supporting materials are located at docket 147.[2] Plaintiffs' response to the motion is at docket 171. Plaintiffs filed a response to the City's statement of facts at docket 162[3] and filed their own statement of facts at docket 164.[4] The City's reply is at docket 182 and its response to Plaintiffs' statement of facts is at docket 180.[5] Oral argument was requested but would not assist the court.

II. BACKGROUND

This action arises from the City's denial of the Hall Companies' rezoning application for a 42-acre parcel of undeveloped land in Yuma, Arizona ("the Property"). The Property is located in the southeast portion of Yuma; specifically, on the west side of Avenue 6E and about one-half mile south of 32nd Street.[6] The south end of the Property abuts a low-density R-1-8 subdivision, Belleza Phase 1. The north end of the Property is bordered by a recreational vehicle village. The City owns the parcel of land to the east of the Property, which is designated for use as a wastewater facility and municipal park. To the west of the Property is the Terra Bella subdivision, which is zoned R-1-6 (minimum 6, 000-square-foot lots) but contains lots larger than the minimum lot size.[7]

Prior to 2006 the Property was part of a larger 80-acre parcel of land owned by KD. Yuma, LLC ("KDC"). KDC applied to rezone the 80-acre parcel from agricultural to R-1-8 (minimum 8, 000-square-foot lots). The City Counsel granted the rezoning application, after which KDC obtained approval of a preliminary plat on the entire parcel that set out single family lots that were at least 8, 000 square feet.[8] KDC developed the southern 38 acres, known as Belleza Phase 1, and then sold the remaining 42 acres, the Property, to the Hall Companies. The Hall Companies purchased the Property from KDC for $5.8 million, or around $135, 000 an acre.[9]

In 2008, the Hall Companies determined that development of the Property with R-1-8 zoning was not feasible because there was no demand for large-lot expensive homes in Yuma due to existing inventory and the housing market decline.[10] Consequently, the Hall Companies designed a development consisting of smaller lots: approximately 198 lots each 6, 000 square feet.[11] The Hall Companies intended to construct affordable and moderately priced homes using a housing product- the Sunrise model home-they had built in another one of their subdivisions, Ocotillo Unit 5, located approximately 1.25 miles south of the Property.[12] Unlike the more expensive large-lot homes, they believed that these affordable or moderately priced homes were still in demand.[13] The Hall Companies deemed "affordable" to mean entry-level houses priced between $120, 000 and $150, 000 and moderately priced to mean mid-level houses priced between $150, 000 and $175, 000.[14] Specifically, their proposed price range for the Sunrise model to be constructed on the Property was between $125, 200 and $159, 800.[15] They were not seeking to develop low-income housing as defined by the Department of Housing and Urban Development ("HUD").[16]

In order to implement the new plan, the Hall Companies submitted an application to the City to rezone the property from R-1-8 to R-1-6. Zoning designations R-1-8 and R-1-6 are both considered low-density zoning designations in Yuma, only one density gradient apart.[17] In September of 2008, the City Council, after hearing objections from surrounding landowners, denied the rezoning application.[18]

The Hall Companies filed an amended complaint against the City, alleging violations of their equal protection and substantive due process rights under 42 U.S.C. §1983, claims of discriminatory intent and disparate impact under the federal Fair Housing Act, 42 U.S.C. §33601 et seq. ("FHA"), and violations of Arizona constitutional and statutory law. The City moved to dismiss all claims under Rule 12(b)(6) of the Federal Rules of Civil Procedure. The court granted that motion as to all of the claims except for the disparate impact claim under the FHA. In support of the disparate impact claim, Plaintiffs allege that the racial makeup of purchasers of the proposed R-1-6 development on the Property would have consisted of more Hispanic people than the racial makeup of purchasers of a large-lot development in a R-1-8 subdivision. Thus, according to Plaintiffs' amended complaint, the City's refusal to rezone the Property to R-1-6 from R-1-8 had a discriminatory adverse impact on Hispanics. Plaintiffs also allege that the proposed development would have had an integrative effect by providing additional affordable housing options within a predominately white area of Yuma and outside the existing segregated areas in Yuma that were predominately Hispanic.

The City filed two motions for summary judgment; one at docket 146 and one at docket 148. In the motion at docket 146, the City argues that Plaintiffs cannot meet their prima facie burden for a disparate impact claim under the FHA because of the glut of housing opportunities that were similar to the Plaintiffs' proposed development on the Property in the southeast portion of Yuma at the time of its rezoning denial. The City presents an alternative basis for summary judgment at docket 148, arguing that Plaintiffs have failed to present the appropriate statistics to meet the prima facie test for disparate impact and that it had a legitimate and nondiscriminatory basis for denying the rezoning. This order only addresses the motion at docket 146.

III. STANDARD OF REVIEW

Summary judgment is appropriate where "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."[19] The materiality requirement ensures that "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment."[20] There can be no genuine issue as to any material fact if a party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial."[21] Ultimately, "summary judgment will not lie if the... evidence is such that a reasonable jury could return a verdict for the nonmoving party."[22] In resolving a motion for summary judgment, a court must view the evidence in the light most favorable to the non-moving party.[23] The reviewing court may not weigh evidence or assess the credibility of witnesses.[24]

The moving party has the burden of showing that there is no genuine dispute as to any material fact.[25] The moving party need not present evidence; it need only point out the lack of any genuine dispute as to material fact.[26] Once the moving party has met this burden, the non-moving party must set forth evidence of specific facts showing the existence of a genuine issue for trial.[27] All evidence presented by the non-movant must be believed for purposes of summary judgment and all justifiable inferences must be drawn in favor of the non-movant.[28] However, the non-moving party may not rest upon mere allegations or denials, but must show ...


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