Pioneer Craft House, Inc. v. City of South Salt Lake
676 F. App'x 744
| 10th Cir. | 2017Background
- Pioneer Craft House (Pioneer), a nonprofit, leased city-owned property under a 2008 lease for $1/year; no public hearing was held before the lease was approved.
- In April 2012 the City locked Pioneer out and terminated the 2008 lease; Pioneer later entered a separate higher‑rent one‑year agreement in July 2012.
- Pioneer sued the City and the City Attorney under 42 U.S.C. § 1983, alleging deprivation of property without due process.
- Defendants moved to dismiss the second amended complaint, arguing the 2008 lease was ultra vires and unenforceable under Utah law (failure to hold statutorily required public hearing), so Pioneer lacked a protected property interest.
- Pioneer sought leave to file a third amended complaint alleging, inter alia, that the city relied on a city attorney’s advice (citing Utah Code § 10‑7‑85) that no public hearing was required.
- The district court dismissed the complaint, denied leave to amend as futile; the Tenth Circuit affirmed, holding the lease was void/unenforceable and reliance on counsel did not cure lack of statutory authority.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Pioneer had a protected property interest in the 2008 lease sufficient for a § 1983 due‑process claim | The 2008 lease (and related county/city transaction) created a property interest; alternatively, the City relied on counsel who advised a hearing was unnecessary | The lease was ultra vires because Utah law required a public hearing for such nonmonetary assistance to nonprofits, so no enforceable property interest existed | Held: No protected property interest; lease unenforceable without statutorily required hearing |
| Whether Pioneer’s proposed third amended complaint cured the pleading defects (i.e., whether amendment would be futile) | New allegations about attorney advice and statutory authority (§ 10‑7‑85) show the City intended to comply with law and thus amendment states a claim | Reliance on city attorney’s mistaken legal advice cannot validate a contract made without statutory authority; amendment would be futile | Held: Denial of leave to amend not an abuse of discretion; amendment futile |
| Whether alternative statutory/transactional theories (raised on appeal) could validate the lease | On appeal Pioneer contends the combined county/city transactions made § 10‑8‑2(1)(a)(v) inapplicable or satisfied, so no hearing required | Defendants note Pioneer did not present these theories below and the district court’s statutory interpretation stands | Held: New theories forfeited on appeal; Pioneer did not show plain error |
| Whether estoppel or reliance on city officers can validate an ultra vires municipal contract | Pioneer argues city’s actions and counsel advice should prevent defendants from asserting invalidity | Defendants argue municipalities and their agents cannot create estoppel to exceed statutory power | Held: No estoppel; agents’ actions cannot validate acts beyond statutory authority |
Key Cases Cited
- Miller ex rel. S.M. v. Bd. of Educ. of Albuquerque Pub. Sch., 565 F.3d 1232 (10th Cir. 2009) (standard of review where denial to amend is based on futility)
- Buckley Constr., Inc. v. Shawnee Civic & Cultural Dev. Auth., 933 F.2d 853 (10th Cir. 1991) (elements of a § 1983 property‑interest due‑process claim)
- Salt Lake Cty. Comm’n v. Salt Lake Cty. Att’y, 985 P.2d 899 (Utah 1999) (construction of municipal authority to dispose of property and requirement of adequate consideration)
- Sears v. Ogden City, 533 P.2d 118 (Utah 1975) (municipal property held in trust; gifts require legislative authority)
- First Equity Corp. of Fla. v. Utah State Univ., 544 P.2d 887 (Utah 1975) (municipality not bound by contracts made without authority; no estoppel from acts exceeding statutory power)
- Watson ex rel. Watson v. Beckel, 242 F.3d 1237 (10th Cir. 2001) (amendment futility doctrine)
- Price Dev. Co. v. Orem City, 995 P.2d 1237 (Utah 2000) (context for municipal transactions; cited by parties regarding hearings)
- Ockey v. Lehmer, 189 P.3d 51 (Utah 2008) (distinction between void and voidable contracts)