Municipal – Faulty permit filings foreclosed property interest

When a BMW store applied for a renovation permit but then performed a demolition instead, the City of Rockville, Maryland, revoked the previously-granted permit. The company’s initial permit applications contained material misrepresentations, so it had no property interest that could give rise to due process claims related to the resulting permit.

Background

Appellant Rockville Cars leased a parcel of land owned by Robin Tang in Rockville, Maryland. The plot held a building that Rockville Cars planned to convert into an automobile show room.

Before commencing its work on the building, Rockville Cars submitted two documents to the City to obtain a building permit. First, it sent a Minor Site Plan Application to the City’s Department of Community Planning and Development Services. In this document, Rockville Cars accurately listed Tang as the landowner and obtained his permission to begin redevelopment of the existing building.

About four months later, Rockville Cars filed a Commercial Building Permit Application with the Department’s Inspection Services Division. The Permit Application featured two differences from the Minor Site Plan Application. First, the Permit Application stated that Rockville Cars would not just repurpose, but demolish and renovate the building. Second, the Permit Application mistakenly listed Priority One Automotive as the property owner rather than Tang.

After receiving the Permit Application, the City approved the renovation of the Rockville Pike building and issued a permit in Tang’s name. With the permit in hand, Rockville Cars razed the leased building.

However, based on an email from Tang retracting his permission underlying the building permit, the City subsequently issued a Stop-Work Order, not only citing Tang’s objection but also noting that the scope of the project didn’t comport with the Minor Site Plan Amendment. In further correspondence, the City explained that the demolition violated zoning ordinances requiring new buildings to be constructed a certain distance away from the road. The original building had been exempt, but any new structure had to comply with the build-to provision.

Rockville Cars submitted a new application that the City approved. To restart construction, Rockville Cars conceded to numerous demands at a considerable expense. As a result, it sued the City on grounds that suspension of the building permit violated its procedural due process rights under the Fourteenth Amendment. The district court granted the City’s motion to dismiss, and this appeal followed.

Property interest

Rockville Cars does not have a legitimate claim of entitlement to a permit that was granted on the basis of material misrepresentations. A property interest fails to accrue if the City grants a permit on the basis of mistake or in violation of the law. The foundation of Maryland’s common-law doctrine of vested rights rests on this principle. The first element of that doctrine, which requires obtaining a lawful building permit, illustrates a core principle: State law does not entitle permit holders to a property right when permits are obtained on the basis of mistake or in violation of the law. Such events render any permit void ab initio.

Rockville Cars’ applications contained three material misrepresentations. First, the Minor Site Plan Amendment stated that Rockville Cars would renovate the existing building, but the Permit Application stated that Rockville Cars would demolish it. Because the City relied on the Minor Site Plan Amendment to assure compliance with zoning ordinances, the City granted the building permit on the premise that the project would gut and renovate the existing building.

Second, Rockville Cars misrepresented the owner of the property in question. It listed Priority One Automotive as the owner of the property when in fact Tang owned it and had authority to submit the Building Permit Application.

Third, Rockville Cars certified in the Building Permit Application that the proposed construction “shall conform to the regulations in the Rockville City Code, and all other codes and regulations ….” The Building Permit itself stated, “PERMIT VOID IF ZONING ORDINANCE IS VIOLATED.” By demolishing the building in question, Rockville Cars violated the City’s build-to ordinance, which required construction of new buildings within a certain distance from the center of the street.

Given these material misrepresentations, Rockville Cars had no legitimate claim of entitlement to a permit it never lawfully obtained.

Rockville Cars’ procedural due process claim fails for another, equally important reason: Even if a property right vested in Rockville Cars’ building permit, and even if the City deprived Rockville Cars of that interest, no § 1983 procedural due process violation exists when a party fails to exhaust both administrative and state court remedies that the government affords to them. Rockville Cars failed to pursue the post-deprivation state remedies afforded to it.

First, Rockville Cars could have pursued an appeal through the City’s Board of Appeals. It made no effort to submit a claim before the Board, nor did it ever allege that the City made representations that the Board was closed to it. Second, Rockville Cars could have availed itself of the state courts. It could have sought an injunction to block the City’s suspension of the building permit; it could have even sought an immediate declaration of its rights that the appellate process provided by the City Code was unconstitutional. But Rockville Cars ignored these avenues in its rush to federal court. As a result, there is no reason to believe that the state process for redeeming Rockville Cars’ alleged property right in its permit was constitutionally inadequate.

Affirmed.

Concurrence

(Diaz, J.) Rockville Cars’ failure to exhaust available administrative and state court remedies dooms this federal case. For that reason, I agree that the district court properly granted dismissal. I would not, however, reach the thornier question of whether Rockville Cars obtained a protected property interest that entitled it to some quantum of process before the City revoked its permit. That may not be so. But because Rockville Cars failed to exhaust the administrative and state court remedies available to it, I join my colleagues in affirming the district court’s judgment dismissing this case.

Rockville Cars LLC v. City of Rockville, Md. (Lawyers Weekly No. 001-092-18, 19 pp.) No. 17-1175; May 24, 2018; from DMD at Greenbelt (Messitte, J.) Howard Benjamin Hoffman for Appellants; Kevin Bock Karpinski for Appellees. 4th Cir.