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Elvis Presley Enterprises, Inc. v. City of Memphis

United States District Court, W.D. Tennessee, Western Division

August 13, 2019




         Before the Court is Defendant City of Memphis's (the “City's”) November 6, 2018 motion to dismiss. (ECF No. 8.) Plaintiffs Elvis Presley Enterprises, Inc., EPPF, LLC, and Guesthouse at Graceland, LLC (collectively “EPE”)[1] responded on December 4, 2018. (ECF No. 21.) The City replied on December 18, 2018. (ECF No. 23.) Plaintiffs filed supplemental briefing on May 30, 2019. (ECF No. 42.) The City filed supplemental briefing on June 4, 2019. (ECF No. 45.)

         EPE brings claims against the City for retaliation under 42 U.S.C. § 1983, intentional interference with contractual relationships under Tennessee law, and intentional interference with business relationships under Tennessee law. (Id. 18-22.)

         The City filed its motion to dismiss under Federal Rule of Civil Procedure 12(b)(6).

         For the following reasons, the City's motion to dismiss is GRANTED IN PART and DENIED IN PART.

         I. Background

         EPE owns and operates Graceland, the former home of Elvis Presley and a current tourist attraction in Memphis, Tennessee.[2](ECF No. 1 at 2.)[3]

         In 2014, EPE developed the Graceland Project, a planned redevelopment of Graceland that included a new hotel and improvements to existing facilities. (Id. at 2-3.) To help fund the Graceland Project, EPE submitted EPE's Economic Impact Plan for Graceland Economic Development Area (the “Plan”) to the City, Shelby County, Tennessee (the “County”), and the Economic Development Growth Engine Industrial Development Board of the City of Memphis and County of Shelby (“EDGE”). (Id. at 3.) The Plan included a request for tax increment financing, which would earmark a certain amount of property taxes to support the Graceland Project. (Id.) EDGE, the City, and the County approved the Plan in late 2014. (Id.) The new hotel was built. (Id. at 4.) The facility improvements were completed. (Id.)

         In 2017, EPE sought to expand the Graceland Project. (Id. at 5.) EPE submitted to EDGE the Supplement to Economic Impact Plan for Graceland Economic Growth Area (the “Supplemental Plan”). (Id.) The Supplemental Plan requested approval, among other things, of an arena capable of seating 6, 200 people (the “Arena”). (Id.)

         While EDGE considered the Supplemental Plan, Memphis Basketball, LLC (“Memphis Basketball”) contacted the City. (Id. at 6.) Memphis Basketball owns and operates the National Basketball Association franchise the Memphis Grizzlies. (Id.) The Memphis Grizzlies play their home games at FedExForum, a multipurpose arena located in downtown Memphis, Tennessee.[4]Memphis Basketball contended that the City's approval of the Arena would violate a contract between Memphis Basketball and the City, prohibiting the City from providing public financing for competing entertainment facilities. (Id. at 9.) Memphis Basketball threatened to sue EDGE if EDGE approved the Supplemental Plan. (Id. at 8.)

         EDGE told EPE it would not move forward with the approval process for the Supplemental Plan until Memphis Basketball dropped its litigation threat. (Id. at 7.) About the same time, the City told EPE that the City would not consent to the Supplemental Plan, particularly the Arena, until Memphis Basketball gave the City written confirmation that approval of the Arena would not breach the City's contract with Memphis Basketball. (Id. at 8.) The approval process for the Supplemental Plan came to a halt. (Id.)

         EPE responded by filing a declaratory judgment action in Tennessee Chancery Court. (Id. at 9.) EPE asked the court to interpret the contract between Memphis Basketball and the City. (Id.) EPE contended that the contract did not prohibit the City from approving the Arena. (Id.) The Chancery Court dismissed the case, concluding that EPE had to demand that EDGE consider and vote on the Supplemental Plan before EPE could seek a declaratory judgment. (Id. at 10.)

         In February 2018, after the Chancery Court's decision, EPE asked EDGE to vote on the Supplemental Plan at its next meeting. (Id. at 11.) EDGE did not do so. (Id.) In March 2018, EPE filed a new action in Tennessee Chancery Court, seeking to force EDGE to vote. (Id. at 12.) EDGE approved the Supplemental Plan about a month later. (Id.) EDGE conditioned its approval on a court order declaring that approval of the Arena would not breach the contract between the City and Memphis Basketball. (Id.)

         After securing EDGE's approval, EPE sought the County's. (Id. at 13.) The County approved the request in the Supplemental Plan for increased tax increment financing to support the expanded Graceland Project. (Id.) Addressing the Arena, the County told EPE to get a court declaration on the proper interpretation of the contract between the City and Memphis Basketball. (Id.)

         EPE followed EDGE and the County's instructions. (Id. at 14.) In late June 2018, EPE filed a declaratory judgment action in Tennessee Chancery Court against the City, Memphis Basketball, and the County to determine whether approval of the Arena would violate the contract between the City and Memphis Basketball. (Id.)

         While that case was pending, EPE sought to move forward with parts of the expanded Graceland Project unrelated to the Arena. (Id.) EPE submitted its Application for Planned Development Approval (the “Development Application”) to the Memphis and Shelby County Office of Planning and Development (the “OPD”) in August 2018. (Id. at 15.) Approval of the Development Application would have allowed EPE, among other things, to build a new airplane hangar for planes formerly owned by Elvis Presley, build new cabins, and update a recreational vehicle park. (Id. at 16.) EPE was confident the OPD would approve the Development Application. (Id. at 15.)

         The OPD neither approved nor denied the Development Application. (Id.) Instead, it decided to table consideration of the Application indefinitely, until the Chancery Court litigation over the Arena was complete. (Id. at 16.) That decision followed instructions from the Memphis City Attorney. (Id. at 19.) In an email, the OPD planning director told EPE that:

Earlier this week, the City Attorney requested that [the Development Application] be deferred until the pending litigation in Chancery Court is concluded. I have conferred with my in-house Division attorney and he agrees. Therefore, [the Development Application] will not be considered . . . until such time as the pending legislation [sic] is concluded.

(Id. at 16.) The Development Application did not seek approval of the Arena at issue in the Chancery Court case.[5] (Id. at 14-17.)

         Because of the OPD's deferral, EPE is prohibited from moving forward with the Development Application projects. (Id. at 16.) EPE has lost numerous business opportunities -- such as hosting various shows, events, and exhibitions -- causing EPE to suffer substantial monetary loss. (Id. at 20.)

         EPE filed its complaint in this case on October 16, 2018. EPE alleges that the City, through the city attorney, blocked the OPD from considering the Development Application. (Id. at 18.) EPE alleges that the City did so for two reasons. (Id. at 18-19.) The first is punitive. The City wanted to punish EPE for disagreeing with the City about the contract with Memphis Basketball, obtaining EDGE and the County's conditional approvals of the Supplemental Plan, suing the City twice in Chancery Court, and commenting publicly about these matters. (Id. at 18.) The second reason is coercive. The City wanted to deter EPE from maintaining its latest suit against the City and from pursuing similar conduct designed to protect EPE's rights and interests. (Id. at 19.)

         II. Jurisdiction

         The Court has federal question jurisdiction. Under 28 U.S.C. § 1331, district courts have original jurisdiction “of all civil actions arising under the Constitution, laws, or treaties of the United States.” EPE asserts a right to relief against the City under § 1983. That claim arises under the laws of the United States.

         The Court has supplemental jurisdiction over EPE's Tennessee-law claims. See 28 U.S.C. § 1367(a). Those claims derive from a “common nucleus of operative fact” with EPE's federal claim against the City. United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 725 (1966); Soehnlen v. Fleet Owners Ins. Fund, 844 F.3d 576, 588 (6th Cir. 2016).

         III. Standard of Review

          Federal Rule of Civil Procedure 12(b)(6) allows dismissal of a complaint that “fail[s] to state a claim upon which relief can be granted.” A Rule 12(b)(6) motion permits the defendant “to test whether, as a matter of law, the plaintiff is entitled to legal relief even if everything alleged in the complaint is true.” Campbell v. Nationstar Mortg., 611 Fed.Appx. 288, 291 (6th Cir. 2015) (quotation omitted). A motion to dismiss tests only whether the plaintiff has pled a cognizable claim and allows the court to dismiss meritless cases that would waste judicial resources and result in unnecessary discovery. See Kolley v. Adult Protective Servs., 725 F.3d 581, 587 (6th Cir. 2013).

         When evaluating a motion to dismiss for failure to state a claim, the Court must determine whether the complaint alleges “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible on its face if “the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. If a ...

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