ELECTRONICALLY FILED 3/30/2015 4:52 PM 47-CV-2014-902167.00 CIRCUIT COURT OF MADISON COUNTY, ALABAMA JANE C. SMITH, CLERK IN THE CIRCUIT COURT OF MADISON COUNTY, ALABAMA CARL E. FALLIN, SR. ) ) Plaintiff, ) ) v. ) Case No. CV-2014-902167 KKH ) CITY OF HUNTSVILLE, et al., ) ) Defendants. ) MOTION TO DISMISS COUNT TWO OF PLAINTIFF S FIRST SUPPLEMENTED AND AMENDED COMPLAINT COMES NOW the Defendant City of Huntsville ( City ), by and through undersigned counsel, and moves this Court, pursuant to Rule 12(b)(6) of the Alabama Rules of Civil Procedure, to dismiss Count Two of Plaintiff Carl E. Fallin s ( Plaintiff ) First Supplemented and Amended Complaint for failure to state a claim upon which relief can be granted. One taxpayer s disagreement with the City s decision to enter into certain real estate transactions does not confer standing to commence a lawsuit pursuant to Ala. Const. art,. IV 94 and 94.01. To hold otherwise would permit a single taxpayer to ensnare a municipality in litigation over any lawfully approved measure to expend tax dollars. Here, Plaintiff is left in the untenable position of having to argue that the City paid too much money for certain real estate when the only available recourse can be found at the polls, not at the courthouse. Count Two fails to state a claim and is due to be dismissed as a matter of law. In support of its motion, the City states as follows: I. MOTION TO DISMISS STANDARD While notice pleading is permissible under Rule 8(e), the legal sufficiency of a complaint may be challenged by Rule 12(b)(6). The process for analyzing such a legal challenge can be summarized as follows: 1
When the trial court is called upon to consider a Rule 12(b)(6) motion, it must examine the allegations in the complaint and construe it so as to resolve all doubts concerning [its] sufficiency in favor of the [claimant]. In so doing, the court does not consider whether the claimant will ultimately prevail, only whether he has stated a claim under which he may possibly prevail. A.W. ex rel. Hogeland v. Wood, 57 So. 3d 751, 756 (Ala. 2010) (quoting Hightower and Co., Inc. v. United States Fidelity & Guar. Co., 527 So. 2d 698, 702-03 (Ala. 1988)). However, if the allegations of a complaint, even if proven, would not support a claim that would entitle the plaintiff to relief, dismissal is appropriate. Blackwood v. Davis, 613 So. 2d 886, 887 (Ala. 1993). II. UNDERLYING FACTUAL ALLEGATIONS The City was named a party to this litigation after entering into what Plaintiff has labeled as a series of extraordinary real estate contracts and transactions. (Amend. Compl., 8). Plaintiff believes that these particular real estate transactions are extraordinary due to the price negotiated by the City. (Id.). Plaintiff deems each a sham transaction, (Id. at 29), while disregarding the incontrovertible reality that these real estate transactions were negotiated and lawfully approved by a majority vote of the City s elected officials. Attached hereto as Exhibit 1 and bates labeled COH 00001-00074 is a true and correct copy of the Minutes of the Regular Meeting of the City Council of Huntsville Alabama, Held Thursday, June 12, 2014. Exhibit 1 is referenced throughout the complaint. (See e.g., Amend. Compl., 22-23). Attached hereto as Exhibit 2 and bates labeled COH 00075-00082 is a true and correct copy of Resolution No. 14-310 adopted by the City on May 24, 2014. Exhibit 2 is similarly referenced in the complaint. (See e.g., Amend. Compl., 18). Attached hereto as Exhibit 3 and bates labeled COH 00085-00098 is a true and correct copy of Resolution No. 14-2
435 adopted by the City on June 12, 2014. Exhibit 3 is also referenced in the complaint. (See e.g., Amend. Compl., 20). Finally, attached hereto as Exhibit 4 and bates labeled COH 00101-00110 is a true and correct copy of Resolution No. 14-436 adopted by the City on June 12, 2014. Exhibit 4 is also referenced in the complaint. (See e.g., Amend. Compl., 21). Exhibits 1-4 are all public records central to Plaintiff s complaint and are also offered in support of the City s present motion. 1 III. ARGUMENT It is axiomatic that, as a municipal corporation organized and existing under the laws of the State of Alabama, the City is permitted to enter into real estate transactions. (Amend. Compl., 2). See generally O Rorke v. City of Homewood, 286 Ala. 99, 237 So. 2d 487 (1970); Rogers v. City of Mobile, 277 Ala. 261, 169 So. 2d 282 (1964). None of the City s resolutions described in Exhibits 1-4 or sham transactions as Plaintiff would have this court believe transfer any public funds to Cabela s, Inc. To the contrary, the City paid money to the developer and in return received title to the real estate that it purchased. The City paid no money to Cabela s. All money paid by the City was used to purchase the land and build public use infrastructure on the City s land. Plaintiff wrongfully alleges that the use of municipal funds in such real estate transactions violates the bar in 94.01 of the State Constitution on granting public funds to a private entity. (Amend Compl., 8). Thankfully, such is not the law in the State of Alabama. 1 If a plaintiff does not incorporate by reference or attach a document to its complaint, but the document is referred to in the complaint and is central to the plaintiff s claim, a defendant may submit an indisputably authentic copy to the court to be considered on a motion to dismiss. Newson v. Protective Industrial Ins. Co. of Alabama, 890 So. 2d 81, 83-84 (Ala. 2003) (internal citations omitted). 3
Section 94 does not create a cause of action for a citizen taxpayer to enjoin or otherwise prevent a municipality from paying what he believes is too much for rights to certain real estate. The Alabama Supreme Court in Rogers v. City of Mobile heard a citizen taxpayer s appeal following the trial court s rejection of his attempt to enjoin a real estate project for refining and processing sugar near Mobile Bay. 2 In analyzing the merits of the taxpayer s Section 94 claim, the court observed: When a contract of a public body is an ordinary commercial contract, with benefits flowing to both parties and a consideration on both sides, it is not a lending of credit by the public body. Otherwise, 93 and 94, Constitution 1901, as amended, would prohibit any public body from entering into any contract whereunder the other party gained any benefits whatever. Rogers, 169 So. 2d at 298. Put differently, benefits must accrue to the other party to every contract with a public body because otherwise, no one would enter into a contract with the public body. Id. Here, the mere fact that the City paid money to a private developer to purchase land does not run afoul with Section 94. Plaintiff cannot survive a motion to dismiss the Section 94 claim simply by inserting the word sham or fraud to describe the real estate transactions reflected in Exhibits 1-4. With respect to the contractual terms a municipality may agree to, the Alabama Supreme Court plainly stated in Rogers v. City of Mobile: In a long line of decisions, we have held that the wisdom, propriety, expediency and desirability of actions by public bodies are not matters for judicial review in the absence of 2 Rather than being an ordinary contract for the purchase of land by the City from a private individual, as is the case here, the transactions at issue in Rogers were far more complex and included, among other items, a ground lease between the City of Mobile and the Alabama State Docks Department, the construction of a sugar refinery by the City of Mobile to be financed by revenue bonds and secured by a mortgage and deed of trust, the leasing of the completed sugar refinery by the City of Mobile to the Alabama State Docks Department, the employment of a private operating company to operate the refinery and a service requirements agreement with certain private companies. Rogers, 169 So. 2d at 287-289. 4
an allegation of fraud, corruption, bad faith, abuse of discretion, or unfair dealing. We have held further that the corruption, bad faith, abuse of discretion, and unfair dealing that will justify judicial review are tantamount to and equivalent of fraud. Id. at 282 (internal citations omitted). Let there be no doubt that the City is not being sued for fraud in the above-styled action, nor can it be. The City is not alleged to have entered into the subject transactions absent approval via a properly held vote of the elected council members. Instead, Plaintiff s gripe is over how much these duly elected City officials authorized be spent by the City on the real estate transactions, an amount Plaintiff considers, in his own judgment, to be waste as well as excessive and unreasonable. (Amend. Compl., 30, 53, 54). Not surprisingly then, Plaintiff has not endeavored to meet the special pleading requirements from Rule 9(b) of the Alabama Rules of Civil Procedure to plead fraud with particularity. Plaintiff does not even have standing to assert, in a judicial forum, what amounts to be simply a criticism of the City s business judgment. The gist of the question of standing is whether the party seeking relief has alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions. Flast v. Cohen, 392 U.S. 83, 99 (1968) (quoting Baker v. Carr, 369 U.S. 186, 204 (1962)). A plaintiff must establish a nexus between [his or her] status and the precise nature of the infringement alleged. Flast v. Cohen, 392 U.S. at 102. For instance, in Henson v. HealthSouth Medical Center, Inc., 891 So.2d 863, 973 (Ala. 2004), the Alabama Supreme Court stated that a taxpayer has standing to challenge a tax abatement conferred upon another taxpayer so long as the taxpayer can demonstrate a probable increase in his tax burden from the challenged activity. 5
Plaintiff s bare standing allegation is that he regularly pays taxes to the City, (Amend. Compl., 1), and that [a] portion of the public monies used by Huntsville, as described herein, include the taxes paid by [Plaintiff]. (Amend. Compl., 10). There is no allegation that either (a) Plaintiff s local taxes have or will go up or down as a result of these real estate transactions, or (b) that even the relief requested would cause Plaintiff s local taxes to go up or down. In other words, it cannot be said that a nexus exists between Plaintiff s status as a taxpayer and the real estate transactions that Plaintiff s Section 94 action, if successful, would vindicate. It is disingenuous for Plaintiff to allege that he has no adequate remedy at law for the injuries and damages suffered by him, (Amend. Compl., 58), when Plaintiff is unable to show any injury or damage in the first place. Consider the implications of allowing taxpayers to rely on the judicial system when they find themselves dissatisfied with their elected officials. Plaintiff would have this court believe that, so long as he is paying his taxes, Plaintiff may seek judicial relief based on allegations related to any transaction authorized by the publicly elected bodies whose responsibility it is to determine how best to disperse taxpayer dollars. The basis for the Alabama Supreme Court s rationale in Rogers v. City of Mobile can best be described as the practical reality of judicial review versus review by the electorate. The judicial system cannot and should not be used by citizen taxpayers as a forum to second guess or criticize the lawful decisions made by elected public officials on how best to spend tax revenue. The alternative is impractical given the multitude of competing interests across a given population. If a taxpayer wishes to have his or her opinion heard on a given matter, he or she may exercise their right to freedom of speech and expression by making their opinion known at council meetings, to their elected officials, or 6
through the media. If change is not effectuated to the satisfaction of the citizen taxpayer, then the taxpayer may choose to support another candidate for office during the next election cycle. Ultimately, because the City lawfully exercised its power to purchase real estate, this court cannot grant Plaintiff the equitable relief he requests. To be sure, the Plaintiff does not and cannot allege that the City had no right to purchase the property. Rather, Plaintiff seeks to put the Court in the untenable position of determining that the City paid too much for the property. Courts are not given the power to review the wisdom or unwisdom, or the rightness or wrongness of laws passed by the governing bodies of municipalities. Guarisco v. City of Daphne, 825 So. 2d 750, 754 (Ala. 2002) (quoting Episcopal Foundation of Jefferson County v. Williams, 281 Ala. 363, 367, 202 So.2d 726, 729 (1967)). Despite this, Plaintiff s prayer for relief seeks to unwind these real estate transactions and return the money back into the City s coffers. (Amend. Compl., pp. 18-19). Plaintiff can point to no legal authority whatsoever to support that he may, as a taxpayer, unwind the sale of the property purchased by the City. The recovery of such an amount is legal in nature, not equitable. Also, there is no dispute that the City negotiated that certain development and infrastructure improvements to the purchased real estate would be swiftly commenced. See generally Exhibits 1-4. In order for Plaintiff to seek to enjoin the City from relying on its longstanding authority to buy, sell, and improve its own infrastructure, Plaintiff is required to request a hearing on a preliminary injunction and post the appropriate security. See ALA. R. CIV. P. 65. No such hearing has been requested, and no order preserving the status quo currently restricts the City from proceeding with any ongoing work. Plaintiff is not permitted to run from the uncertainty and expense of seeking preliminary injunctive relief only to then request as 7
permanent injunctive relief the unwinding of all work the City completed on its own infrastructure. WHEREFORE, premises considered, the City respectfully requests that this Court Count Two of Plaintiff s First Supplemented and Amended Complaint for failure to state a claim upon which relief can be granted. Respectfully submitted this 30th day of March, 2015. s/ T. Michael Brown One of the Attorneys for Defendant, City of Huntsville OF COUNSEL Bradley Arant Boult Cummings LLP One Federal Place 1819 Fifth Avenue North Birmingham, AL 35203-2119 Telephone: (205) 521-8000 Facsimile: (205) 521-8800 Benjamin L. McArthur (MCA 032) Harold D. Mooty, III (MOO117) Bradley Arant Boult Cummings LLP 200 Clinton Avenue Suite 900 Huntsville, AL 35801 8
CERTIFICATE OF SERVICE This is to certify that on this 30th day of March, 2015, a true and correct copy of the foregoing filed using Alabama s electronic filing system and will be served on counsel of record both electronically and by depositing a copy of same in the United States Mail, postage prepaid, properly addressed to: David M. Fridy, Esquire Albert L. Jordan, Esquire Wallace, Jordan, Ratliff & Brandt, LLC 800 Shades Creek Parkway Suite 400 Birmingham, AL 35209 /s/ T. Michael Brown Of Counsel 9