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Petworth Holdings, LLC v. Bowser

United States District Court, District of Columbia

April 20, 2018

PETWORTH HOLDINGS, LLC, et al., Plaintiffs,
MURIEL BOWSER, et al., Defendants.



         Although cities seek to attract destination restaurants and desirable retail, they must also keep the more prosaic needs of their citizenry in mind. For example, fearing the rapid disappearance of full-service gas stations from the District of Columbia, the D.C. City Council passed the Retail Service Station Act (RSSA) in 1976 to ban the conversion of such gas stations to limited-service stations. This moratorium was reauthorized ten times and made permanent in 2005.

         In recent years a different threat emerged: District gas stations were disappearing altogether as developers converted them into more lucrative commercial and residential properties. Seeking to combat this threat, the City Council amended the RSSA in 2014-15 to expand its reach. Plaintiffs Petworth Holdings, LLC and John Formant, the owners of a property containing a full-service Shell gas station, are convinced that these amendments have hindered their ability to sell their property. They have thus now sued, seeking a declaration that the amended RSSA violates the Fifth and Thirteenth Amendments of the U.S. Constitution and an injunction barring Defendants Muriel Bowser, Karl A. Racine, Tommy Wells, and the District of Columbia Gas Station Advisory Board from enforcing it.

         Arguing that Plaintiffs have no standing to challenge the RSSA and that, in any event, it violates neither constitutional amendment, Defendants have now moved to dismiss. Finding that Plaintiffs have standing to sue and have sufficiently stated a plausible Fifth Amendment claim, but not one under the Thirteenth Amendment, the Court will grant in part and deny in part Defendants' Motion.

         I. Background

         A. Statutory Background

         According to the Complaint, which the Court must presume true for purposes of this Motion, our story begins with the New Columbia Statehood Initiative and Omnibus Boards and Commission Reform Amendment Act of 2014 (the “Act”). See D.C. Code § 36-304.01; Compl., ¶ 18. The Act amended a longstanding D.C. statute regulating the alteration and conversion of full-service gas stations in the District - the Retail Service Station Act. See Compl., ¶¶ 18-20. The RSSA, which imposed a moratorium on the conversion of full-service gas stations to limited-service gas stations, was initially passed in 1976 and was then reauthorized every five years until it was made permanent in 2005. See MTD at 1-2. The Act amended the RSSA by inserting two important additions: the word “discontinued” and the phrase “or into any other use.” Compl., ¶ 19. Following the amendments, the RSSA now provides: “No retail service station which is operated as a full service retail service station on or after April 19, 1977, may be discontinued, nor may be structurally altered, modified, or otherwise converted . . . into a non full service facility or into any other use.” Id., ¶ 21; D.C. Code § 36-304.01(b) (emphasis added).

         The RSSA does provide a process through which parties can seek an exemption from its prohibitions by application to the Gas Station Advisory Board. The GSAB, after receiving an exemption application, determines whether it should be granted and makes a recommendation to the Mayor accordingly. See D.C. Code § 36-304.01(d). The GSAB, however, appears not to be currently operational: it has no employees, no physical office space, and no members have been appointed to it for the last 11 years. See Compl., ¶¶ 29-31.

         Although the Act was passed by the D.C. City Council in October 2014, it was never signed by newly elected D.C. Mayor, Muriel Bowser, but was deemed approved without her signature in January 2015 and became effective in May of that year. Id.., ¶ 18. In November 2014, meanwhile, the City Council passed an emergency bill making the Act effective immediately. Id., ¶ 26. Although outgoing Mayor Vincent Gray signed the emergency bill, he stated that he did so only “because [he] received assurances that the City Council [would] advance legislation amending these flawed provisions, ” which “may violate the Fifth Amendment by ‘taking' a retail service station owner's property without just compensation.” Compl., Exh. A (Vincent Gray Letter) at 2. The City Council later passed three different bills in 2015 and 2016 attempting to address Mayor Gray's concerns, but Mayor Bowser refused to sign any of them into law, noting each time that the Act failed to provide a “fair, transparent, and constitutional process” for “gas station owners.” Compl., Exh. B (Nov. 23, 2015, Muriel Bowser Letter) at 2.

         B. The Current Action

         Plaintiffs are the owners of a lot at 4140 Georgia Avenue N.W. in Washington, which contains a Shell “full service retail service station.” Compl., ¶¶ 3-6. Having initially purchased the Property from DAG Petroleum Suppliers LLC in 2005, they are currently leasing it back to DAG, who, along with several sub-lessees, operates the station and several other businesses on site. Id., ¶¶ 5, 14. Intending to develop the Property, Plaintiffs initially filed and were granted approval on a Planned Unit Development application in 2006. Id., ¶ 15. These plans were later postponed by the 2007-08 financial crisis. Id., ¶ 16. In 2014, Plaintiffs made a decision to sell the Property and solicited bids from potential purchasers and developers. Yet, as just discussed, that same fall, the D.C. City Council passed the Act. Believing that the Act “vastly expanded the scope of the [RSSA], ” Plaintiffs brought this suit, claiming that the RSSA now prevents them or any potential owner of the Property from ever closing down the gas station and redeveloping the Property for another purpose. Id., ¶ 22. As a result, Plaintiffs allege that the Act “substantially hinder[s]” the sale of the Property, as “potential purchasers of the Property have stated that they would not purchase the Property if they were required to operate a full-service [gas station] . . . in perpetuity.” Id., ¶¶ 35-36. Plaintiffs seek a declaration that the Act violates the Fifth and Thirteenth Amendments of the U.S. Constitution and an injunction barring Defendants from enforcing it. Defendants have now moved to dismiss.

         II. Legal Standard

         Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of an action where a complaint fails “to state a claim upon which relief can be granted.” In evaluating Defendants' Motion to Dismiss, the Court must “treat the complaint's factual allegations as true . . . and must grant [P]laintiff[s] ‘the benefit of all inferences that can be derived from the facts alleged.'” Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000) (quoting Schuler v. United States, 617 F.2d 605, 608 (D.C. Cir. 1979)) (internal citation omitted); see also Jerome Stevens Pharms., Inc. v. FDA, 402 F.3d 1249, 1250 (D.C. Cir. 2005). The pleading rules are “not meant to impose a great burden upon a plaintiff, ” Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 347 (2005), and she must thus be given every favorable inference that may be drawn from the allegations of fact. Sparrow, 216 F.3d at 1113.

         Although “detailed factual allegations” are not necessary to withstand a Rule 12(b)(6) motion, Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). A court need not accept as true, then, “a legal conclusion couched as a factual allegation, ” nor an inference unsupported by the facts set forth in the complaint. Trudeau v. Fed. Trade Comm'n, 456 F.3d 178, 193 (D.C. Cir. 2006) (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986) (internal quotation marks omitted)). For a plaintiff to survive a 12(b)(6) motion even if ‚Äúrecovery is very remote and ...

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