Sunrise Corp v. City of Myrtle Beach , 420 F.3d 322 ( 2005 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
SUNRISE CORPORATION OF MYRTLE 
BEACH; BOULEVARD DEVELOPMENT
LLC; S&H DEVELOPMENT, INC.,
Plaintiffs-Appellants,
v.
THE CITY OF MYRTLE BEACH; MARK
MCBRIDE, Individually; JUDY
RODMAN, Individually; RACHAEL
BROADHURST, Individually; CHARLES  No. 04-2171
MARTINO, Individually; WILSON
CAIN, Individually; CRAIN WOODS,
Individually; LARRY BRAGG,
Individually; TOM CONN,
Individually; TOM DAVIS,
Individually; SALLY HOWARD,
Individually; FRED ROURK,
Individually,
Defendants-Appellees.

Appeal from the United States District Court
for the District of South Carolina, at Florence.
C. Weston Houck, Senior District Judge.
(CA-99-132-12)
Argued: May 25, 2005
Decided: August 26, 2005
Before WIDENER, WILKINSON, and NIEMEYER, Circuit Judges.
Affirmed by published opinion. Judge Widener wrote the opinion, in
which Judge Wilkinson and Judge Niemeyer concurred.
2 SUNRISE CORP. v. THE CITY OF MYRTLE BEACH
COUNSEL
ARGUED: Howell V. Bellamy, Jr., BELLAMY, RUTENBERG,
COPELAND, EPPS, GRAVELY & BOWERS, P.A., Myrtle Beach,
South Carolina, for Appellants. Frances Isaac Cantwell, REGAN &
CANTWELL, Charleston, South Carolina, for Appellees. ON
BRIEF: Douglas M. Zayicek, BELLAMY, RUTENBERG, COPE-
LAND, EPPS, GRAVELY & BOWERS, P.A., Myrtle Beach, South
Carolina, for Appellants. William B. Regan, REGAN & CANT-
WELL, Charleston, South Carolina; L. Gregory Cook Horton,
Adriane Malanos Belton, BUIST, MOORE, SMYTHE & MCGEE,
P.A., Charleston, South Carolina, for Appellees.
OPINION
WIDENER, Circuit Judge:
Plaintiffs, Sunrise Corporation of Myrtle Beach, Boulevard Devel-
opment LLC, and S&H Development, Inc. (collectively Sunrise),1
appeal from the district court’s granting of defendant the City of Myr-
tle Beach’s (Myrtle Beach) motions for summary judgment.2 In the
underlying case Sunrise was seeking damages for violations of the
Due Process, Equal Protection and Takings Clauses of the Constitu-
1
The district court dismissed plaintiffs Sunrise Corporation and S&H
Development, Inc. for lack of prudential standing, which is one of the
issues plaintiffs argue on this appeal. Under Rivanna Trawlers Unlimited
v. Thompson Trawlers, Inc., 840 F.2d 236, 239 (4th Cir. 1988)(citing
Bell v. Hood, 327 U.S. 678, 682 (1946)), when the contested basis for
jurisdiction is also an element of the plaintiff’s federal claim, the claim
should not be dismissed for lack of jurisdiction. The contested basis for
jurisdiction in this case is whether there was an injury in fact, which is
also an element of their federal claim. Accordingly we find that the dis-
trict court erred in dismissing Sunrise and S&H for lack of prudential
standing, and should have addressed the objection as an attack on the
merits, as do we. Rivana, 840 F.2d at 239.
2
There were a number of individual defendants in the case below, Sun-
rise, however, has abandoned the claims against the individual defen-
dants.
SUNRISE CORP. v. THE CITY OF MYRTLE BEACH 3
tion under 42 U.S.C. § 1983, attorney’s fees under 42 U.S.C. § 1988,
and inverse condemnation. Finding that Sunrise is not entitled to any
remedy, we affirm.
I.
In 1996, shortly after all three plaintiffs were formed, plaintiffs
purchased the St. John Inn and surrounding land, an 88-unit hotel and
restaurant located on 2.65 acres in the City of Myrtle Beach, looking
to further development. Sunrise then examined the zoning regulations,
decided on a proposal for a 14-story tower with 98-units, obtained
financing, entered negotiations with a builder, and began to execute
contracts to pre-sell individual units in the new tower.
Myrtle Beach’s esthetic zoning laws require that every new con-
struction requires approval of the Community Appearance Board
before a building permit would issue, even if the plans complied with
all zoning regulations. Myrtle Beach Code Appx. A § 603.1. Under
this law, the Board is to consider preservation of the landscape; rela-
tion of the proposed buildings to the environment; drives, parking,
and circulation; surface water drainage; utility service; advertising
features; special features; and application of design standards. Myrtle
Beach Code Appx. A § 604. If the Board denies the proposal, the
applicant can appeal to the City Council, Myrtle Beach Code Appx.
A § 606, which reviews the proposal de novo. Myrtle Beach Code
Appx. A § 606.2. If the City Council affirms the Board, the applicant
has the right to appeal to the Circuit Court in and for Horry County.3
Myrtle Beach Code Appx. A § 606.2.
In mid 1998, Sunrise applied for a permit to build the new hotel.
They then submitted to the Board a proposal that complied with all
of the zoning ordinances. The Board suggested changes to the pro-
posal and later held a second hearing. This hearing was attended by
residents of the area who voiced opposition to Sunrise’s proposal.
After the hearing, the Board denied the proposal, citing section 604
of the City Code. Sunrise then appealed the Board’s decision to the
City Council and was granted a hearing where area residents again
3
The Circuit Court may be referred to as the Court of Common Pleas.
They are the same court.
4 SUNRISE CORP. v. THE CITY OF MYRTLE BEACH
voiced opposition to the proposal. Five days later the City Council
denied the proposal because of its view that the proposal violated sec-
tions 601 and 604 of the City Code. Plaintiffs then appealed the deci-
sion of the City Council to the Circuit Court.
While the appeal of the City Council’s decision was still pending,
plaintiffs brought the instant action in the Court of Common Pleas of
Horry County, a state court, seeking to recover their pre-development
costs as well as lost profits from the pre-sale of units in the proposed
tower. The complaint asserted causes of action against the City Coun-
cil as well as several individual members of the Board. The complaint
sought damages under 42 U.S.C. § 1983 for violations of the Due
Process, Equal Protection, and Takings Clauses; 42 U.S.C. § 1988 for
attorney’s fees; and inverse condemnation under South Carolina state
law. The defendants then removed the case to federal district court.
The parties agreed to stay this action until the resolution of the state
court appeal of the City Council’s denial of plaintiffs’ proposal.
On May 13, 1999, the Court of Common Pleas issued an order
reversing the decision of the City Council withholding the permit,
finding that Myrtle Beach’s decision violated the holding of Peterson
Outdoor Advertising v. City of Myrtle Beach, 489 S.E.2d 630 (S.C.
1997)(Board’s denial of proposal must be based on application of the
City Code to the facts of the case), because it was arbitrary, subjec-
tive, without evidentiary support, an abuse of discretion, and a denial
of plaintiffs’ due process and equal protection rights. The court then
determined that re-application would be futile and ordered Myrtle
Beach to issue the permit to Sunrise. At some point in 1999, plaintiffs
sold the site for approximately four million dollars.
Myrtle Beach appealed the Court of Common Pleas’ decision to the
South Carolina Court of Appeals, which affirmed in 2001. An appeal
was then taken by Myrtle Beach to the Supreme Court of South Caro-
lina, which initially granted certiorari, but later dismissed the writ as
improvidently granted. At that point defendants made the permit
available to plaintiffs.
After the Supreme Court of South Carolina dismissed the writ of
certiorari, the district court lifted its stay in this case, and both parties
later filed motions for summary judgment. At the hearing on the
SUNRISE CORP. v. THE CITY OF MYRTLE BEACH 5
motions, the district court denied plaintiffs’ motion for summary
judgment which contended that the South Carolina Court of Appeals
decision was res judicata of their § 1983 due process and equal pro-
tection claims, as well as granted defendants’ motion for summary
judgment on those same claims. The district court also reserved ruling
on the rest of defendants’ motion. Plaintiffs then filed a motion for
reconsideration. The district court held a hearing on that motion, after
which it improvidently dismissed two of the plaintiffs for lack of pru-
dential standing,4 denied plaintiffs’ motion for reconsideration, and
granted the defendants’ motion for summary judgment as to the tak-
ings and inverse condemnation claims.
II.
On appeal, plaintiffs advance five arguments as to how the district
court allegedly erred. First plaintiffs assert that the district court erred
by holding that Myrtle Beach was not barred by res judicata from
arguing that it had not violated plaintiffs’ due process, equal protec-
tion and Fifth Amendment rights. Second, plaintiffs argue that the dis-
trict court erred in holding that Sunrise Development and S&H
Development, Inc. did not have prudential standing.5 Third, plaintiffs
assert that the district court erred in dismissing their due process
claims and argue the Board’s actions were illegitimate under the guise
of the esthetic ordinance. Fourth, plaintiffs argue that the district court
erred by dismissing their Equal Protection claim because they failed
to present evidence as to being similarly situated and the victim of
illegitimate discretion. Lastly, plaintiffs assert that the district court
erred in dismissing their takings and inverse condemnation claims by
holding that their intended use of the property was not an antecedent
property right and that the delay was caused by the time required to
get judicial review.
We review de novo a district court’s grant of summary judgment.
Temkin v. Fredrick County Comm’rs, 945 F.2d 716, 718 (4th Cir.
1991). Summary judgment under Rule 56(c) is appropriate "if the
pleadings, depositions, answers to interrogatories, and admissions on
4
See n.1, supra.
5
See n.1, supra.
6 SUNRISE CORP. v. THE CITY OF MYRTLE BEACH
file, together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled to
judgment as a matter of law." Anderson v. Liberty Lobby, 477 U.S.
242, 247 (1986).
III.
Plaintiffs assert that the district court erred by not applying the doc-
trine of res judicata to bar Myrtle Beach from arguing that its actions
did not violate their Constitutional rights. The judgment they argue
should be given res judicata effect is the decision of the Common
Pleas Court which stated that Myrtle Beach’s actions were "arbitrary,
subjective, without evidentiary support, an abuse of discretion, merely
a pretense to stop development, and a denial of Plaintiffs’ due process
and equal protection rights."
Under 28 U.S.C. § 1738, federal courts must give full faith and
credit to state court judgments. This includes the application of state
preclusion rules to determine whether a prior state court judgment has
res judicata effect in a § 1983 action. Dionne v. Mayor and City
Council of Baltimore, 40 F.3d 677, 682 (4th Cir. 1994). Under South
Carolina law, to establish res judicata a party must show "(1) identity
of the parties; (2) identity of the subject matter; and (3) adjudication
of the issue in the former suit." Plum Creek Dev. Co., Inc. v. City of
Conway, 512 S.E.2d 106, 109 (S.C. 1999).
Even if we consider the requirement of identity of the subject mat-
ter to be satisfied, which is not at all certain, the federal Constitutional
rights of due process and equal protection were not adjudicated in the
South Carolina Court of Appeals.6 That proceeding was nothing other
than a court review of an administrative determination by local zoning
authority. That court summarized its decision as follows: "We con-
clude the decision of City Council was arbitrary because it was based,
not on the evidence in the record and the esthetic concerns of the
CAB’s ordinance, but upon the objections of citizens of the neighbor-
hood who wanted to stop further development in the area." JA 425.
This decision is an indication of a mistake by the local zoning authori-
6
We apply that decision, not the decision of the Court of Common
Pleas.
SUNRISE CORP. v. THE CITY OF MYRTLE BEACH 7
ties and hardly conclusive evidence, even if evidence at all, of a viola-
tion of due process and equal protection rights. It is no indication that
such federal Constitutional rights were decided in the decision of the
South Carolina Court of Appeals, and we so hold.
IV.
Plaintiffs next assert that the district court erred in dismissing their
due process claims. To establish a violation of procedural due pro-
cess, plaintiffs must show that (1) they had property or a property
interest (2) of which the defendant deprived them (3) without due pro-
cess of law. Sylvia Dev. Corp. v. Calvert County, Md., 48 F.3d 810,
826 (4th Cir. 1995). To establish a violation of substantive due pro-
cess, plaintiffs must "demonstrate (1) that they had property or a
property interest; (2) that the state deprived them of this property or
property interest; and (3) that the state’s action falls so far beyond the
outer limits of legitimate governmental authority that no process
could cure the deficiency." Sylvia Dev. Corp., 48 F.3d at 827 (citing
Love v. Pepersack, 47 F.3d 120, 122 (4th Cir. 1995))(emphasis in
original).
We are of opinion that plaintiffs received due process, both proce-
dural and substantive. Plaintiffs claim that their due process rights
were violated because the hearings they received were unfair. Even
if true, which we do not decide, this does not change the fact that
plaintiffs received four levels of review, in each of which they were
permitted to present their side of the controversy.7 In cases such as
this we review the state process as a whole, and do not look only to
what happened in front of the Board. See e.g. Tri County Paving, Inc.
v. Ashe County, 281 F.3d 430, 437 (4th Cir. 2002)(a "due process vio-
lation actionable under § 1983 is not complete when the deprivation
occurs; it is only complete if and when the State fails to provide due
process")(quoting Fields v. Durham, 909 F.2d 94, 98 (4th Cir. 1990)).
While it is true that there were several levels of judicial and adminis-
trative review, plaintiffs received the very remedy they sought, the
permit to develop the property. Indeed, the very extent of review is
7
The decision by the Board was reviewed by the City Council, then the
Court of Common Pleas, then the South Carolina Court of Appeals, and
finally the South Carolina Supreme Court.
8 SUNRISE CORP. v. THE CITY OF MYRTLE BEACH
an indication of the existence of procedural due process, rather than
its absence. Costs incurred securing a permit are part of the process,
and we have never held them to be compensable. Plaintiffs also assert
that the state court’s determination of arbitrariness entitles them to
damages under § 1983. But we have made it clear that a violation of
state law is not tantamount to a violation of a federal right, Sylvia
Dev. Corp., 48 F.3d at 829.8
Accordingly, we find that the district court did not err in dismissing
plaintiffs’ due process claims.
V.
Plaintiffs next assert that the district court erred by dismissing their
equal protection claim by holding that they failed to present evidence
as to being similarly situated and the victim of illegitimate discretion.
Sunrise bases this argument on Tri County Paving, where we said that
a party can bring an equal protection claim by alleging that it had
been intentionally treated differently from others similarly situated
and that there was no rational basis to support the different treatment.
281 F.3d at 439 (citing Village of Willowbrook v. Olech, 528 U.S.
562, 564 (2000)). Plaintiffs essentially argue that because their high
rise building was denied while other high rises were approved, a case
for violation of equal protection exists. Under our rule in Sylvia Dev.
Corp. to support this claim, plaintiffs had to show that the classifica-
tion, that of a high rise, was the basis of Myrtle Beach’s decision, and
that this fact prompted Myrtle Beach to engage in intentional, pur-
poseful discrimination. 48 F.3d at 820. While plaintiffs did present
evidence that there were other high rises in Myrtle Beach, they failed
to present evidence that their project was rejected because it was a
high rise. The evidence in the record explaining why the project was
rejected was the order of the City Council which rejected the project
because of its failure to discourage monotonous, drab or unsightly
development, to conserve natural beauty, to give proper attention to
exterior appearance, and properly relate to its site.
8
Our reasoning in Sylvia applies here, and we apply it: "The fact that
established state procedures were available to address and correct illegal
actions by the Board belie the existence of a substantive due process
claim." Sylvia, 48 F.3d at 829.
SUNRISE CORP. v. THE CITY OF MYRTLE BEACH 9
Even if we were to determine that plaintiffs’ project was similarly
situated to other projects, they would still need to show purposeful
discrimination. If disparate treatment alone was sufficient to support
a Constitutional remedy then every mistake of a local zoning board
in which the board mistakenly treated an individual differently from
another similarly situated applicant would rise to the level of a federal
Constitutional claim. Sylvia Dev. Corp. 48 F.3d at 825 (citing Snow-
den v. Hughes, 321 U.S. 1, 11-12 (1994)). There is no evidence in the
record that Sunrise was subjected to purposeful, invidious discrimina-
tion. At most the evidence shows that the public was opposed to the
project for a number of reasons, some relevant to Board review and
some not. This evidence that the Board and City Council responded
to the public opposition does not rise to the level of a Constitutional
violation, because we have recognized that matters of zoning are
inherently political, and that it is a zoning official’s responsibility to
mediate disputes between developers, and local residents. Sylvia Dev.
Corp. 48 F.3d at 828.
Similar to the plaintiffs in Sylvia Dev. Corp., the plaintiffs here at
most could prove that similarly situated developers were treated dif-
ferently, without an adequate evidentiary basis for the differing treat-
ment. Even if this is good grounds for an appeal under state law, it
does not give rise to a claim for a violation of equal protection. Sylvia
Dev. Corp., 48 F.3d at 825. Accordingly, we are of opinion that the
district court did not err in dismissing plaintiffs’ equal protection
claim.
VI.
Plaintiffs’ final argument is that the district court erred in dismiss-
ing their takings and inverse condemnation claims by holding that the
lawful use of property was not an antecedent property right, and that
the delay was only an unfortunate by-product of the adjudicatory sys-
tem. Under South Carolina law federal takings law is incorporated as
an element of an inverse condemnation action. Sea Cabins on the
Ocean IV Homeowners Association, Inc. v. City of North Myrtle
Beach, 548 S.E.2d 595, 601 (S.C. 2001). Accordingly these two
issues are both resolved by a finding that the City’s actions here did
not constitute a taking under federal law. There are two distinct types
10 SUNRISE CORP. v. THE CITY OF MYRTLE BEACH
of taking under federal law, categorical and regulatory.9 Because
Myrtle Beach in this case neither physically took possession of any
part of the property, Loretto v. Teleprompter Manhattan CATV Corp.,
458 U.S. 419 (1982), nor denied plaintiffs all economically viable
use10, Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1016
(1992), this case would not be a categorical taking.
A regulatory taking occurs when a regulation or limitation on land
use interferes with a landowner’s rights but does not deprive the land
of all economically viable use. See generally Penn Central Transp.
Co. v. New York City, 438 U.S. 104 (1978). The analysis in a takings
case necessarily begins with determining whether the government’s
action actually interfered with the landowner’s antecedent bundle of
rights. See Lucus, 505 U.S. at 1027 (discussing how property rights
are a "bundle of rights"). If, as the district court found, there was no
interference with this bundle of rights, there is no taking.
Plaintiffs contend that there was interference with their antecedent
property rights because their proposal complied with all of the zoning
ordinances in force at the time, and thus they were entitled to the per-
mit. But the plaintiffs ignore the fact that under the applicable law
they were required to not only comply with the zoning ordinances, but
also to secure Board approval under Myrtle Beach Code Appx. A
§ 603.1. Myrtle Beach Code Appx. A § 603.1 is as certainly a part of
the City’s zoning law as any other land use ordinance. Accordingly,
they had no right to proceed with the project until they received the
Board’s approval.
As a general rule, a delay in obtaining a building permit is not a
taking but a non-compensable incident of ownership. Agins v. City of
Tiburon, 447 U.S. 255, 263 n. 9 (1980)("Mere fluctuations in value
during the process of governmental decision making, absent extraor-
9
The South Carolina court in Sea Cabins refers to the same as physical
and regulatory. 548 S.E.2d at 601.
10
The City did not deny plaintiffs all economically viable use because
the original inn and restaurant remained open while this case was pend-
ing. Nor were the plaintiffs deprived of any use they sought which con-
formed with the City zoning laws. The sought-for permit issued.
SUNRISE CORP. v. THE CITY OF MYRTLE BEACH 11
dinary delay, are ‘incidents of ownership’"). Plaintiffs contend that
this case is an example of the extraordinary delay referred to in Agins.
But the delay at issue in this case was not extraordinary. Plaintiffs
first applied for Board approval in August of 1998. By that November
they had been through the entire process twice. At no point did defen-
dants take more than 15 days to issue their final decisions. The bulk
of the delay that plaintiffs claim was extraordinary was a result of the
process to appeal the defendants’ decision. There is nothing in the
record to suggest that defendants had any control over how quickly
the case moved under state law through the various judicial appeals
processes, or that the defendants acted in bad faith or engaged in
deliberate delay during that process. Accordingly, any delay was
nothing more than the law’s delay as lamented for some 400 years,
and not an extraordinary delay that could give rise to Constitutional
implications.
The judgment of the district court is accordingly
AFFIRMED.