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Sameric Corp. of Delaware, Inc. v. City of Philadelphia

April 10, 1998

SAMERIC CORPORATION OF DELAWARE, INC., APPELLANT
v.
CITY OF PHILADELPHIA; PHILADELPHIA HISTORICAL COMMISSION, AN AGENCY OF THE CITY OF PHILADELPHIA; EDWARD A. MONTGOMERY, JR.; RICHARD TYLER, PH.D.; CHRIS CASHMAN; DAVID BROWNLEE, PH.D.; DAVID HOLLENBERG; BARBARA KAPLAN; JOAN FERRERA; AND DAVID WISMER, INDIVIDUALLY AND IN THEIR OFFICIAL CAPACITIES AS MEMBERS OF THE PHILADELPHIA HISTORICAL COMMISSION.



On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civ. No. 95-07057) Argued March 9, 1998

Before: Greenberg, Scirica, and Aldisert, Circuit Judges.

The opinion of the court was delivered by: Greenberg, Circuit Judge.

(Filed: April 10, 1998)

OPINION OF THE COURT

I. INTRODUCTION

Sameric Corporation of Delaware ("Sameric") appeals from the district court's order of July 14, 1997, granting summary judgment to the City of Philadelphia (the "City") and various individual defendants. Sameric filed this action in November 1995 alleging that the City violated its federal and state constitutional rights by improperly designating Sameric's theater as an historic building and subsequently denying Sameric a permit to demolish the theater. Sameric's complaint alleged that, as a result of the defendants' unlawful designation of the theater and subsequent denial of the demolition permit, its business was injured and it was forced to sell its properties, including the theater, at substantially less than fair market value.

The district court had subject matter jurisdiction over these claims pursuant to 28 U.S.C. §§ 1331, 1367. We have jurisdiction to review the final order of the district court pursuant to 28 U.S.C. § 1291.

II. FACTS AND PROCEDURAL HISTORY

A. Philadelphia's Historic Preservation Ordinance

The Philadelphia Historical Commission ("Historical Commission") is an instrumentality of the City which administers Philadelphia's Historic Preservation Ordinance (the "ordinance"). The Historical Commission's primary obligation is to "[d]esignate as historic those buildings, structures, sites and objects which the Commission determines, pursuant to the criteria set forth in Subsection (5) of [Section 14-2007], are significant to the City." Phila. Code § 14-2007(4)(a). The ordinance permits the Historical Commission to designate a building*fn1 as historic where at least one of ten enumerated criteria is met.

When a building is proposed for historic designation, the Historical Commission prepares a nomination form, which begins the process by which the Historical Commission considers buildings for designation. The nomination form details information regarding the building's historic, architectural, and cultural features. The Designation Committee of the Historical Commission (the "Designation Committee") is responsible for selecting which nominated buildings the Historical Commission will consider for historic designation. When the Designation Committee recommends a building for preservation, it presents its report and recommendation to the Historical Commission at a hearing on the matter.

Pursuant to the ordinance, the owner of a building designated as historic may not demolish or alter that building without a permit from the Department of Licenses and Inspections ("Department of Licenses"). See Phila. Code § 14-2007(7)(a). If an owner desires such a permit, it applies to the Department of Licenses, which then forwards the application to the Historical Commission for review. An owner may obtain the permit where it is suffering "financial hardship" or the building "cannot be used for any purpose for which it is or may be reasonably adapted." Phila. Code § 14-2007(7)(f). The ordinance requires the Department of Licenses to grant the application if the Historical Commission has no objection but to deny the application if the Historical Commission does object. See Phila. Code § 14-2007(7)(g). Upon the denial of such a permit, the owner may appeal to the Board of License and Inspection Review (the "Board of License Review"). See Phila. Code § 14-2007(10).

B. Historic Designation of the Boyd Theater

Prior to 1988, Sameric owned the Boyd Theater*fn2 on Chestnut Street in Philadelphia. The Historical Commission began to consider the Boyd Theater as a candidate for designation as historic in 1984 or 1985 by reason of discussions between members of the Historical Commission and the City of Philadelphia Planning Commission.

As a result, a staff employee of the Historical Commission prepared a nomination form for the Boyd Theater in January 1986. The nomination form detailed the Boyd Theater's notable features and included photographs and citations to publications concerning the theater. The completed nomination form was forwarded to the Designation Committee, which held a meeting to consider the nomination. The Designation Committee decided unanimously to recommend to the Historical Commission that the Boyd Theater be designated as historic.

Following this vote, the Historical Commission sent Sameric a letter on March 28, 1986, indicating the Commission's intent to consider designating the theater. The letter notified Sameric that a hearing was scheduled for April 30, 1986, to consider the matter. At Sameric's request, the Commission postponed this hearing six times.

On January 27, 1987, Sameric attempted to prevent the Historical Commission from considering the proposed designation by filing an action in equity in the Court of Common Pleas of Philadelphia County seeking a temporary restraining order against the Historical Commission. The Court of Common Pleas stayed the Historical Commission's consideration of the proposed designation for 30 days. On January 30, 1987, the Historical Commission removed the suit to the United States District Court for the Eastern District of Pennsylvania on the grounds that some of the claims arose under the Constitution. The district court then granted the Commission's motion to dismiss Sameric's complaint.*fn3 See Sameric Corp. of Chestnut St., Inc. v. Philadelphia Historical Comm'n, Civ. A. No. 87-553, 1987 WL 7636, at *2 (E.D. Pa. Mar. 5, 1987).

Following the district court's dismissal of the complaint, the Historical Commission held a hearing on March 25, 1987, to consider the proposed designation of the Boyd Theater as historic. At the hearing, Commissioner David Brownlee, a member of the Designation Committee, presented the committee's recommendation and report. Although, during the hearing, Sameric's counsel repeatedly asked the Historical Commission to postpone the vote so that Sameric could present evidence, the Historical Committee voted to designate the Boyd Theater as historic, with only Commissioner John Street Dissenting.

Later that day, Sameric requested the Court of Common Pleas to vacate the Historical Commission's decision and reschedule the hearing because the Commission did not properly notify Sameric of the hearing and because Sameric was not prepared to present certain evidence at the hearing. The court granted Sameric's request and ordered the Historical Commission to reconvene to hear the matter again. See Sameric Corp. of Chestnut St. v. City of Philadelphia, Civ. A. No. 4525 (Ct. C.P. Phila. County Mar. 25, 1987).

The Commission held the second hearing on April 2, 1987. At this hearing, Commissioner Brownlee again presented the Designation Committee's recommendation for designation and described the theater as a superb example of art deco. The Commissioner then presented a slide show detailing particular features of the theater, both interior and exterior. The Designation Committee's report emphasized that the building was an authentic example of art deco and that the building was "almost completely intact both on the interior and exterior." App. 54-55.

The president of Sameric, Merton Shapiro, then testified that many of the features which the Designation Committee emphasized, such as the ticket booth, entrancewayfloor, glass doors to the main lobby, mirrors, and the lobby ceiling, were not original. Shapiro presented slides of the building which illustrated the original appearance of the theater, both exterior and interior, and narrated the presentation, pointing out all the changes that he and others had made to the appearance of the theater. App. 163-69. Upon the completion of Shapiro's presentation, Richard Tyler, the Executive Director of the Historical Commission, acknowledged that Shapiro's presentation showed that there had been substantial changes to the appearance of the theater. Tyler also urged the Commission members to consider this evidence. App. 192.

The Historical Commission also heard testimony on behalf of Sameric from a partner of an architectural firm regarding the authenticity of the Boyd Theater's art deco style. App. 183-87. According to the architect, the theater was not an architecturally notable building in either its original or present form. App. 184. In addition, the architect testified that of the 18 criteria enumerated in a scholarly treatise which identify the art deco style, the remaining portion of the Boyd Theater's original facade included only five. App. 184.

At the close of the evidence, the Historical Commission again voted to designate the Boyd Theater as historic, with only Commissioner Street again voting against the designation.

C. The State Court Proceedings

Following the designation of the Boyd Theater as historic, on April 24, 1987, Sameric filed a complaint in equity in the Court of Common Pleas in Philadelphia County against the City challenging the designation of the theater. The parties agreed that Sameric's suit should be construed as an appeal from the decision of a local agency pursuant to 2 Pa. Cons. Stat. Ann. § 752 (West 1995). See Sameric Corp. of Chestnut St., Inc. v. City of Philadelphia, 558 A.2d 155, 156 n.1. (Pa. Cmmw. Ct. 1989). The Court of Common Pleas dismissed the action, and the Commonwealth Court affirmed, holding that the evidence regarding the exterior was sufficient to support the designation and that the designation of the interior was within the authority of the ordinance. See id. at 156-57.

On appeal, the Supreme Court of Pennsylvania originally held that the historic designation of the Boyd Theater amounted to a taking without just compensation in violation of Article I, Section 10, of the Pennsylvania Constitution. See United Artists Theater Circuit, Inc. v. City of Philadelphia, 595 A.2d 6 (Pa. 1991).*fn4 Thus, the court did not decide whether the designation was proper under the ordinance. One Justice filed a Concurring opinion stating that the designation was improper under the ordinance because it was based on the interior of the building; thus, he found it unnecessary and imprudent to reach the state constitutional issue. See id. at 28 (Cappy, J., Concurring).

The Supreme Court of Pennsylvania later granted rehearing and reconsidered the appeal. On rehearing, the court held that designating a privately owned building as historic did not automatically constitute an unconstitutional taking. See United Artists' Theater Circuit, Inc. v. City of Philadelphia, 635 A.2d 612, 620 (Pa. 1993) (hereinafter "United Artists' II"). However, the court also found that the ordinance does not permit designation based upon a building's interior, and therefore, the Historical Commission improperly designated the Boyd Theater to the extent the designation was based upon its interior. See id. at 622. Because the court found it impossible to separate the evidence so as to decide whether there was sufficient evidence based only on the exterior of the theater to support its designation, the court vacated the Historical Commission's designation of the Boyd Theater. See id.

Insofar as we are aware, the Commission has not redesignated the building as historic. While the court in United Artists' II did not in its opinion remand the case to the Common Pleas Court, according to Sameric it is seeking damages in the Common Pleas Court attributable to the designation of the Boyd Theater as historic.

D. Sameric's Application for a Demolition Permit

On April 8, 1987, six days after the Historical Commission designated the Boyd Theater as historic, Sameric filed an application for a demolition permit for the theater, which was transferred immediately to the Historical Commission for review. On April 9, 1987, the Architectural Review Committee of the Historical Commission held a brief hearing on Sameric's application. The Historical Commission then postponed consideration of the application until August 26, 1987. At a series of meetings, the Historical Commission considered evidence and, on December 2, 1987, it voted to deny Sameric's application for a demolition permit. On February 2, 1988, the Historical Commission issued its Findings of Fact and Decision. Pursuant to the ordinance, the Department of Licenses denied the permit based upon the Historical Commission's objection to it. See Phila. Code § 14-2007(7)(g).

On December 15, 1987, Sameric appealed the denial of its application for a demolition permit to the Board of License Review. In April 1988, Sameric sold all of its theaters, including the Boyd, to United Artists Theater Circuit, Inc. Under the terms of the sale, Sameric retained its claims for damages resulting from the historic designation of the theater. After selling the property, Sameric abandoned its appeal of the denial of the permit. Thus, the Board of License Review never concluded its hearings or rendered a decision on Sameric's appeal.

E. The District Court Proceedings

In November 1995, Sameric instituted this suit in the United States District Court for the Eastern District of Pennsylvania against the City, the Historical Commission, and various individual defendants who were the Executive Director and Commissioners of the Historical Commission, in their individual and official capacities. Consequently, in the course of this opinion, depending upon our context, our references to the City may include all of the defendants. Sameric's complaint asserted claims pursuant to 42 U.S.C. § 1983 for violations of its federal substantive and procedural due process rights as well as a civil conspiracy claim against all defendants. In addition, Sameric alleged that the defendants violated various rights secured under the Pennsylvania Constitution.

As a result of these alleged violations, Sameric asserts that its business was injured and that its property was reduced in value. In particular, Sameric alleges that beginning in late 1986, after the commencement of the designation proceedings, it was unable to obtainfinancing because the proposed designation of the theater would reduce the value of the property significantly. Thus, beginning in 1987, Sameric no longer could afford to obtain quality films for its theaters. Sameric contends that ultimately it was forced to sell its entire holdings because ...


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