Geft Outdoor, L.L.C. v. City of Westfield

          ORDER ON PLAINTIFF'S MOTIONS TO AMEND AND SUPPLEMENT

          Tim A. Baker United States Magistrate Judge

         I. Introduction

         At issue are Plaintiff GEFT Outdoor, L.L.C.'s motions for leave to file a second amended complaint [Filing No. 109] and for leave to file a supplemental complaint. [Filing No. 116.] GEFT filed suit against Defendant City of Westfield, Indiana, in November 2017, alleging the City's sign ordinances are unconstitutional. In December 2017, GEFT filed an amended complaint, adding claims related to an alleged confrontation between GEFT and City representatives, which occurred on December 16, 2017. Both GEFT and the City sought preliminary injunctions, and the Court granted the City's motion but denied GEFT's, which GEFT unsuccesfully appealed to the Seventh Circuit. Now, GEFT seeks to amend its complaint to add GEFT's founder and owner, Jeffrey Lee, as an additional plaintiff, and to include Lee's individual claims stemming from the December 16 incident. GEFT also seeks to supplement its complaint to add claims challenging the constitutionality of the City's amended sign ordinances and the Board of Zoning Appeals' decision to deny GEFT a variance. The City opposes the changes to the complaint, arguing they are untimely, futile, and prejudicial. However, many of the City's arguments have been rendered moot by developments occurring after its filings. The City's remaining arguments are unpersuasive, and GEFT meets its Rule 15 burden. Therefore, the Court grants GEFT's motions to amend [Filing No. 109] and supplement its complaint. [Filing No. 116.] GEFT shall file its amended and supplemental complaint within seven days.

         II. Background

         GEFT's business is to buy or lease land so it can build, maintain, and operate signs on that land. GEFT uses the signs to display commercial and noncommercial speech. GEFT leased some land in Westfield and applied for and received a permit from the State of Indiana to erect a digital billboard on the property. Westfield has a Unified Development Ordinance with a chapter on signs that requires permits for all signs that are not exempted. GEFT began building the sign at issue in early November 2017, but did not seek a permit, and instead filed this lawsuit challenging the constitutionality of the City's sign restrictions and exemptions. A few days after GEFT filed this lawsuit, the City posted a “stop work notice, ” indicating the construction was in violation of the permit requirements. GEFT responded with a letter informing the City it intended to continue building the sign and that it believed the sign ordinance was unconstitutional. The City replied to the letter, instructing GEFT to remedy the violations within 30 days to avoid an enforcement action.

         On December 16, 2017, GEFT set to work installing the advertising head and digital billboard on the steel pole that had already been erected. GEFT alleges an inspector and police sergeant from the City confronted GEFT and its contractors, demanding the work cease. GEFT's founder/owner, Lee, asked what would happen if GEFT continued with the instillation, and the police sergeant responded that Lee would be “asking for trouble.” [Filing No. 117-1, at ECF p. 15, ¶ 83.] According to GEFT, the City's inspector then went to each contractor to individually tell them they would be fined if they continued working on the sign. Roughly 20 minutes after the inspector and sergeant left, GEFT claims an attorney for the City arrived and threatened to have them all arrested if they did not stop work immediately. GEFT asserts the City's attorney declined to speak with GEFT's attorney over the phone. Instead, the City's attorney allegedly stated that continuing to work on the sign was a nuisance in violation of the stop work notice. GEFT claims the attorney threatened to arrest and jail Lee, GEFT's contractors, and the owner of the property if GEFT continued working on the sign. Faced with the threats, GEFT claims it halted work. The following week GEFT filed an amended complaint to include its claims based on this alleged incident, but the amendment did not include any claims on behalf of Lee. [Filing No. 21, at ECF pp. 8-11, ¶¶ 40-63.]

         A few months later, on March 1, 2018, GEFT timely moved to amend its complaint to add Lee's claims as well as add additional allegations. On April 20, the City amended the UDO. During a telephonic status conference the following November, GEFT informed the Court that it intended to seek a variance under the Amended UDO and would be filing another motion to amend to add related claims. GEFT's March 1 motion to amend was still pending, so the Court recommended GEFT withdraw the motion and file a new motion after it sought the variance. [Filing No. 104.] GEFT requested a variance under the Amended UDO in December of 2018, and GEFT filed a motion to file a second amended complaint in January 2019. [Filing No. 109.] The City's Board of Zoning Appeals held a hearing on February 12, 2019, denying GEFT's request for a variance. A month later, GEFT filed its motion for leave to file a supplemental complaint. [Filing No. 116.]

         III. Discussion

         The standards for amending and supplementing a complaint under Rule 15 are generally the same. Glatt v. Chi. Park Dist., 87 F.3d 190, 194 (7th Cir. 1996). However, the procedural posture of this case puts an additional hurdle on amendments. The Court set an April 2, 2018, deadline for amendments-but not supplements-in the Case Management Plan, and that deadline has long passed. [Filing No. 42, at ECF p. 3.] Parties must show good cause to amend the CMP, and this heightened standard to amend a scheduling order trumps the general standard from Rule 15. Adams v. City of Indianapolis, 742 F.3d 720, 734 (7th Cir. 2014); Trustmark Ins. Co. v. Gen. & Cologne Life Re of Am., 424 F.3d 542, 553 (7th Cir. 2005). The difference between a supplement and an amendment is the timing of the underlying events. Supplemental pleadings concern “any transaction, occurrence, or event that happened after the date of the pleading to be supplemented.” Fed.R.Civ.P. 15(d). The December 16, 2017, incident occurred before GEFT filed its amended complaint. [Filing No. 21, at ECF p. 9.] Therefore, GEFT must show good cause for its delay in seeking to add Lee's claims that arise from the December 16, 2017, incident.

         GEFT easily clears this additional hurdle because the delay was out of its control. GEFT first moved to amend its complaint on March 1, 2018-a month and a day before the deadline. The Court had not yet ruled on this motion when the parties appeared by counsel for a telephonic status conference in November 2018. At that point, the parties were more focused on the appeal of the Court's preliminary injunction order, and GEFT indicated it would again seek leave to amend after it requested a variance from the City. [Filing No. 104.] To simplify things, the Court recommended GEFT withdraw its March 1 motion in favor of a more complete motion following the variance application. In two months, GEFT sought a variance and had filed a new motion for leave to file a second amended complaint. The Court appreciates the City's concern that over a year has passed since the case began. However, the “‘good cause' standard primarily considers the diligence of the party seeking amendment.” Trustmark Ins. Co. v. Gen & Cologne Life Re of Am., 424 F.3d 542, 553 (7th Cir. 2005) (quoting Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992)). Greater diligence on the part of GEFT could not have prevented the delay, so good cause is shown.

         With good cause shown for the delay, the Court now turns to whether GEFT can satisfy Rule 15's relatively lax standard for the amendment and supplemental claims. Rule 15 “require[s] a district court to allow amendment unless there is a good reason-futility, undue delay, undue prejudice, or bad faith-for denying leave to amend.” Life Plans, Inc. v. Sec. Life of Denver Ins. Co., 800 F.3d 343, 357-58 (7th Cir. 2015); Glatt v. Chi. Park Dist., 87 F.3d 190, 194 (7th Cir. 1996) (holding that the same standard applies to amendments and supplemental pleadings);^[1] see also Chi. Reg'l Council of Carpenters v. Vill. of Schaumburg, 644 F.3d 353, 356 (7th Cir. 2011) (the court has substantial discretion either to permit or deny a motion to supplement).

         The City makes several arguments supporting its position that GEFT's proposed changes to its complaint are futile. In determining whether a claim added under Rule 15 is futile, the Court considers whether the allegation is sufficient to withstand a motion to dismiss. Vargas-Harrison v. Racine Unified Sch. Dist., 272 F.3d 964, 974 (7th Cir. 2001). The City argues GEFT's changes would not withstand a motion to dismiss because GEFT's pleading regarding the Amended UDO is deficient, Lee lacks a property interest to serve as a basis for his due process claims, the Court lacks jurisdiction over the supplemental claims, and the abstention doctrine prohibits the Court from affording the relief GEFT seeks.^[2]

         The City argues GEFT's as applied challenge to the Amended UDO is deficient because GEFT never applied for the permits required by the UDO and Amended UDO. The City also takes issue with the fact GEFT argues the UDO applies even though GEFT also challenges the Amended UDO. However, these arguments are undeveloped and unpersuasive. The City does not explain how the lack of permit applications renders GEFT's complaint deficient. Further, the proposed complaint recognizes that the Amended UDO may apply, and it is not clear from the proposed complaint which version the BZA applied when reviewing GEFT's recent application for a variance. [Filing No. 117-1, at ECF pp. 8, 17-20, ¶¶ 40, 98-128.] To the extent these arguments question whether GEFT has standing to challenge the Amended UDO, the arguments are unpersuasive. To have standing, the plaintiff must show it suffered an injury that the defendant caused and that can be redressed through a favorable decision. Matushkina v. Nielsen, 877 F.3d 289, 292 (7th Cir. 2017). GEFT has alleged an injury-its speech was prevented-that was caused by what GEFT argues is an unconstitutional permit requirement, and that alleged injury is redressable by an injunction or declaratory judgment from this Court.

         The City next argues that adding Lee to GEFT's fifth and sixth causes of action is futile because Lee lacks any property interest in the land at issue. GEFT leases the property on which the sign was to be built. Because GEFT is an LLC, Lee does not have a personal interest in the property. See Pazmino v. Bose McKinney & Evans, LLP, 989 N.E.2d 784, 786, 789 (Ind. App. 2013) (LLCs are legally distinct from their owners). However, GEFT and Lee do not base these due process claims solely on property rights. While GEFT does allege it was illegally deprived of the use of its property, GEFT and Lee also seek to recover damages for the allegedly illegal arrest threats. [Filing No. 109, at ECF pp. 29-32, ¶¶ 189-91, 193, 196-99, 201-03.] ...