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Sullivan v. Town of Stockholm

United States District Court, W.D. Wisconsin

August 23, 2019

MICHAEL SULLIVAN, STACY SULLIVAN, and BIRCHWOOD ACRES, LLC, Plaintiffs,
v.
TOWN OF STOCKHOLM and JANE WHITESIDE, Defendants.

          OPINION AND ORDER

          JAMES D. PETERSON DISTRICT JUDGE

         Plaintiffs Michael and Stacy Sullivan wished to make their single-family home in Stockholm, Wisconsin available to tourists for short-term rentals. But in 2016 and 2017, Stockholm's Plan Commission and Town Board denied the Sullivans' application for a conditional use permit that would have allowed them to do so. Although state law now allows them to rent out their property, the Sullivans (along with their limited liability corporation, Birchwood Acres, LLC) are suing the town of Stockholm and former Stockholm Plan Commission chair Jane Whiteside for damages incurred in 2016 and 2017. (The court will refer to the Sullivans and Birchwood Acres, LLC collectively as “the Sullivans.”) The Sullivans assert claims under both the Due Process Clause and state tort law.

         One of the defendants, Jane Whiteside, has moved to dismiss the Sullivans' claims against her for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Dkt. 11. Whiteside contends that (1) the Sullivans' allegations are too speculative to state a claim; (2) the due process claim is barred as a matter of law because the Sullivans failed to avail themselves of available state-law remedies; and (3) Whiteside is immune from state-law tort liability because, as chair of the Plan Commission, she was acting in a quasi-legislative or quasi-judicial capacity. The court will deny Whiteside's motion. There may be reasons to question whether the Sullivans are likely to prevail on any of their claims, but Whiteside isn't entitled to a dismissal for any of the reasons she asserts in her motion.

         BACKGROUND

         The court draws the following facts from the Sullivans' complaint, Dkt. 1, and accepts them as true for the purpose of deciding Whiteside's motion. Zahn v. N. Am. Power & Gas, LLC, 815 F.3d 1082, 1087 (7th Cir. 2016).

         Michael and Stacy Sullivan live in Minnesota. They designed and built “Birchwood Acres, ” a second home that they intended to use on weekends, in the Pepin Pava development in Stockholm, Wisconsin. After construction was completed in summer 2016, Michael and Stacy transferred title to the home to their limited liability corporation, Birchwood Acres, LLC.

         The Sullivans began advertising Birchwood Acres for rent on a vacation rentals website in September 2016. In December 2016, the Stockholm Town Board Chair informed the Sullivans that they needed to apply for a conditional use permit and should cease renting the home until they received that permit. So the Sullivans ceased advertising the house and, on January 6, 2017, they submitted a conditional use permit application to the Stockholm Plan Commission, the body tasked with recommending to the Town Board whether to grant conditional use permits.

         Whiteside was chair of the Plan Commission at the time. She was a fellow resident of the Pepin Pava development, and she opposed the Sullivans' conditional use permit application. She lobbied members of the Plan Commission to recommend denying the permit application by circulating a memorandum written by her husband, attorney William Mavity, which argued among other things that permitting short-term rentals of Birchwood Acres would adversely affect the value and quality of homes in Pepin Pava. Whiteside and Mavity also lobbied town residents and members and officers of the Pepin Pava Homeowners' Association to oppose the permit application.

         On March 16, 2017, the Plan Commission held a hearing to consider the Sullivans' application. Whiteside both presided over the hearing and actively urged the Commission's members to recommend denial. The Commission did so by a unanimous vote. A written report prepared by Whiteside indicated that the reasons for the Commission's recommendation included: (a) the perceived adverse impact on neighbors in the Pepin Pava development; (b) the fact that the Sullivans' property had “bec[o]me a business, ” despite their building permit which authorized only a single-family home; and (c) concerns that approving the permit would set a “significant precedent” in favor of allowing commercial business. Dkt. 1, ¶ 33. Four days later, Whiteside presented the Commission's report and recommendation to the Town Board.

         On April 22, 2017, the town held a public hearing on the Sullivans' conditional use permit application. The Sullivans were told prior to the hearing that they would have ten minutes to make their case for the conditional use permit, but at the hearing itself, they were told they would only have three minutes to speak. So instead of speaking at the hearing, the Sullivans submitted comments to the Town Board in writing.

         On May 15, 2017, the Town Board voted unanimously to deny the Sullivans' conditional use permit application, based in part on Whiteside's report for the Plan Commission. On June 2, the Sullivans sent the Board a notice of appeal and demand for review of determination, as provided under Wisconsin Statute § 68.11. The Board denied review without a hearing four days later. So the Sullivans filed a petition for certiorari review in Pepin County Circuit Court. The Circuit Court granted the Sullivans' petition. In a decision issued December 4, 2017, Judge Joseph Boles concluded that:

1. Due to Plan Commission Chair Jane Whiteside's participation in March 16, 2017 Plan Commission meeting [sic], the Town of Stockholm did not afford the plaintiffs due process in its decision to deny their conditional use permit application.
2. The decision of the town of Stockholm is reversed and remanded for new proceedings without Jane Whiteside's ...

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