2910 Georgia Avenue LLC v. District of Columbia

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

2910 GEORGIA AVENUE LLC,
Plaintiff,
v.
Civil Action No. 12-1993 (CKK)
DISTRICT OF COLUMBIA, et al.,
Defendants.

MEMORANDUM OPINION AND ORDER
(December 29, 2015)

Plaintiff 2910 Georgia Avenue LLC filed suit against the District of Columbia, Mayor

Vincent C. Gray, and Michael P. Kelly in his official capacity as Director for the Department of

Housing and Community Development (“DHCD”), alleging that the District of Columbia’s

Inclusionary Zoning Program (“IZ Program”) constitutes an unconstitutional taking and violates

Plaintiff’s substantive due process and equal protection rights.

Presently before the Court are Plaintiff’s [45] Motion to Reopen Discovery for a Limited

Purpose and Plaintiff’s [43] Motion for Leave to File Amended Complaint. Upon consideration

of the pleadings,1 the relevant legal authorities, and the record as a whole, the Court GRANTS

1 The Court considered the following pleadings in evaluating Plaintiff’s motions: Complaint, ECF
No. [1]; Plaintiff’s Motion to Reopen Discovery for a Limited Purpose (“Pl.’s Mot. to Reopen
Discovery”), ECF No. [45]; Defendants’ Opposition to Plaintiff’s Motion to Reopen Discovery,
ECF No. [47]; Plaintiff’s Reply in Support of its Motion to Reopen Discovery, ECF No. [48];
Plaintiff’s Supplemental Reply in Support of Its Motion for Discovery, ECF No. [52]; Plaintiff’s
Motion for Leave to File Amended Complaint, ECF No. [43]; Defendants’ Opposition to
Plaintiff’s Motion to Amend, ECF No. [44]; Plaintiff’s Reply in Support of Its Motion to Amend,
ECF No. [46]; and Defendants’ Surreply Regarding Requested Discovery, ECF No. [53]. In
response to Defendants’ Surreply, Plaintiff filed a Motion for Leave to File a Supplemental
Memorandum Response, ECF No. [54]. The Court shall grant Plaintiff’s [54] Motion for Leave
to file a Supplemental Memorandum Response because Defendants’ Surreply raised arguments to
which Plaintiff should be granted the opportunity to respond. Accordingly, in preparing this
Memorandum Opinion and Order, the Court also considered Plaintiff’s Supplemental
Memorandum Response, ECF No. [54].
Plaintiff’s [45] Motion to Reopen Discovery for a Limited Purpose and GRANTS Plaintiff’s [43]

Motion for Leave to File Amended Complaint.

As explained more fully below, the Court shall reopen discovery so that both parties may

conduct limited discovery within the parameters set forth in this Memorandum Opinion and Order.

The Court shall allow the parties 45 days from the date of this Memorandum Opinion and Order,

until February 12, 2016, to complete this discovery.

The Court also observes that this discovery concerns facts at issue in the parties’ motions

for summary judgment that have been filed with the Court, but have not yet been fully briefed.

Because this new round of discovery affects the arguments presented by the parties in their motions

for summary judgment, the Court shall deny without prejudice the pending motions for summary

judgment and permit the parties to file renewed motions after the parties have fully developed the

factual record through the above-described discovery. Accordingly, the Court DENIES without

prejudice Defendants’ [49] Motion for Summary Judgment and DENIES without prejudice

Plaintiff’s [50] Motion for Summary Judgment.

The parties shall file a Joint Status Report by February 19, 2016, proposing a schedule of

dates for filing and briefing the parties’ renewed motions for summary judgment. The Court shall

then issue an order setting a briefing schedule.

I. BACKGROUND

The factual allegations and legal claims at issue in the case are set forth fully in the Court’s

September 30, 2013 Memorandum Opinion granting in part and denying in part Defendant’s

Motion to Dismiss. See 2910 Georgia Ave. LLC v. D.C., 983 F. Supp. 2d 127, 129-33 (D.D.C.

2013) reconsideration denied, 59 F. Supp. 3d 48 (D.D.C. 2014).

In short, Plaintiff is a real estate company which purchased the property at 2910 Georgia

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Avenue N.W. in 2009, intending to construct a twenty-two unit condominium building. Compl.

¶ 19. Plaintiff subsequently set aside two of the twenty-two units for sale in order to comply with

the District of Columbia’s IZ program, which was passed with the intent to increase the amount of

affordable housing in the District. Id. ¶ 21; see also D.C. Mun. Regs. tit. 11, § 2600.1. Between

May 2011—when the DCHD began marketing the two set-aside units—and December 13, 2012—

when Plaintiff filed its Complaint—neither of the two set-aside units were sold. Compl. ¶¶ 22-36.

By contrast, the twenty other units in the development sold for market rates between $225,000 and

$404,000 within four months. Id. ¶ 27. Plaintiff contended in its Complaint that the two set-aside

units had failed to sell, in part, due to an Inclusionary Zoning Covenant (the “IZ Covenant”) that

rendered units “effectively unmarketable.” Id. ¶¶ 32, 58.

On December 13, 2012, Plaintiff filed a three-count Complaint against Defendants,

alleging that (1) the District of Columbia’s IZ Program constitutes an unconstitutional taking; (2)

the IZ Program violates Plaintiff’s substantive due process rights and equal protection rights; and

(3) Plaintiff is entitled to a declaratory judgment stating that: (a) the IZ Program is unconstitutiona l;

(b) Defendants Gray and Kelly, acting under color of state law, have deprived Plaintiff of rights,

privileges, and immunities secured by the United States Constitution, in violation of 42 U.S.C. §

1983; and (3) Plaintiff is entitled to compensation. See Compl. ¶¶ 56-84.

On September 30, 2013, the Court denied in part and granted in part Defendants’ Motion

to Dismiss Plaintiff’s Complaint. See Mem. Op. & Order, ECF Nos. [20], [21]. In relevant part,

the Court granted Defendants’ Motion to Dismiss Plaintiff’s takings claims against the general

“set-aside” requirement of the IZ Program writ large on the basis that the claim was not ripe, but

denied Defendants’ Motion to Dismiss with respect to Plaintiff’s challenge to the IZ Covenant,

finding that it was ripe. Mem. Op. at 1. On April 9, 2014, the Court denied Defendants’ [24]

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Motion for Reconsideration of the Court’s holding that Plaintiff’s challenge to the IZ Covenant

was ripe. 2 See Mem. Op & Order, ECF Nos. [31], [32]. After those decisions, Plaintiff’s claims,

as to all counts, remained viable as to Plaintiff’s challenge to all aspects of the IZ Covenant.

Discovery closed in this case on May 7, 2015. 3 On May 8, 2015, the Court held a Status

Conference, at which Plaintiff expressed an intent to file a Motion for Leave to Amend its

Complaint. See Order, ECF No. [42]. Later that day, the Court issued an order setting May 20,

2015 as the deadline by which Plaintiff would have to file said Motion. Id. The Court’s Order

also included a briefing schedule contemplating that the parties would file their Cross-Motions for

Summary Judgment on or before June 29, 2015, with Oppositions due on July 20, 2015 and Replies

due on August 3, 2015. Id.

In compliance with the Court’s Order, Plaintiff filed its Motion for Leave to File Amended

Complaint on May 20, 2015. See id. In this motion, Plaintiff seeks leave to amend its Complaint

in order to: (1) add factual allegations based on information learned during the discovery, (2)

update factual allegations in the original Complaint that require amendment due to the passage of

time, and (3) include an additional cause of action for denial of procedural due process based on

the facts and information either learned or confirmed in discovery. See Pl.’s Mot. to Amend, ECF

No. [43], at 1.

One week later, on May 27, 2015, Plaintiff filed a second motion, a Motion to Reopen

2 Defendants’ Motion was originally styled as a Motion for Clarification of the Court’s September
30, 2013, opinion. However, in an October 17, 2013, Minute Order, the Court stated that it would
treat Defendant’s Motion as a Motion for Reconsideration.

3 Discovery was originally scheduled to close on May 1, 2015. On April 7, 2015, the Court
granted Plaintiff’s consent motion to extend discovery by one week for good cause shown by
Plaintiff’s counsel. See Order, ECF No. [41].
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Discovery for a Limited Purpose. See Pl.’s Mot. to Reopen Discovery, ECF No. [45]. In this

motion, Plaintiff seeks to reopen discovery regarding the April 10, 2015 sale of one of the two set-

aside units, Unit C-02, including Defendants’ approval of the buyer’s eligibility for the IZ program.

See id. at 3. Plaintiff’s motion also included a request to extend the summary judgment briefing

schedule to allow for the additional discovery. See id. at 7.

On June 29, 2015, both parties filed motions for summary judgment. See Defs.’ Mot. for

Summary Judgment, ECF No. [49] and Pl.’s Mot. for Summary Judgment, ECF No. [50]. Two

days later, on July 1, 2015, the Court issued an order staying the briefing schedule of the motions

for summary judgment until the Court resolved the outstanding motions filed by Plaintiff. See

ECF No. [51]. The Court’s Order also required the parties to file supplemental briefing as to

Plaintiff’s outstanding motions. See id.

II. LEGAL STANDARD

A. Motion to Reopen Discovery under Rule 16(b)(4)

Federal Rule of Civil Procedure 16(b)(4) provides that the Court may modify a

scheduling order where there is “good cause.” Fed. R. Civ. P. 16(b)(4). In determining whether

a motion to reopen discovery satisfied this “good cause” requirement, a court should consider

the following factors:

(1) whether trial is imminent; (2) whether the request is opposed; (3) whether the
non-moving party would be prejudiced; (4) whether the moving party was diligent
in obtaining discovery within the guidelines established by the court; (5) the
foreseeability of the need for additional discovery in light of the time allotted by
the district court; and (6) the likelihood that discovery will lead to relevant
evidence.

In re Rail Freight Fuel Surcharge Antitrust Litig., 281 F.R.D. 12, 14 (D.D.C. 2011) (quoting

Childers v. Slater, 197 F.R.D. 185, 187-88 (D.D.C. 2000)). In determining whether there is

5
good cause to reopen discovery, a court should particularly focus on whether the moving party

was diligent in obtaining discovery. Id.

B. Motion to Amend under Rule 15(a)(2)

Under the Federal Rules of Civil Procedure, a party may amend its pleadings once as a

matter of course within twenty-one days after service or within twenty-one days after service of

a responsive pleading. Fed. R. Civ. P. 15(a)(1). Where, as here, a party seeks to amend its

pleadings outside that time period, they may do so only with the opposing party’s written

consent or the district court's leave. Fed. R. Civ. P. 15(a)(2). The decision whether to grant

leave to amend a complaint is within the discretion of the district court, but leave should be

freely given unless there is a good reason to the contrary. Willoughby v. Potomac Elec. Power

Co., 100 F.3d 999, 1003 (D.C. Cir. 1996).

“When evaluating whether to grant leave to amend, the Court must consider (1) undue

delay; (2) prejudice to the opposing party; (3) futility of the amendment; (4) bad faith; and (5)

whether the plaintiff has previously amended the complaint.” Howell v. Gray, 843 F. Supp. 2d

49, 54 (D.D.C. 2012) (citing Atchinson v. District of Columbia, 73 F.3d 418 (D.C. Cir.

1996)); see also Foman v. Davis, 371 U.S. 178, 182 (1962). With respect to an amendment

causing undue delay, “[c]ourts generally consider the relation of the proposed amended

complaint to the original complaint, favoring proposed complaints that do not ‘radically alter the

scope and nature of the case.’ ” Smith v. Cafe Asia, 598 F.Supp.2d 45, 48 (D.D.C. 2009)

(citation and internal quotations omitted). With respect to an amendment being futile, “a district

court may properly deny a motion to amend if the amended pleading would not survive a motion

to dismiss.” In re Interbank Funding Corp. Sec. Litig., 629 F.3d 213, 218 (D.C. Cir. 2010).

Because leave to amend should be liberally granted, the party opposing amendment bears the

6
burden of coming forward with a colorable basis for denying leave to amend. Abdullah v.

Washington, 530 F.Supp.2d 112, 115 (D.D.C. 2008).

III. DISCUSSION

Plaintiff seeks two different types of relief through its motions. In its Motion to Reopen

Discovery, Plaintiff seeks the Court’s permission to conduct limited discovery concerning the sale

of Unit C-02, citing information that Plaintiff learned in mid-May, after discovery had closed and

after Plaintiff had filed its Motion to Amend. See Pl.’s Mot. to Reopen Discovery, at 6. In its

Motion to Amend, Plaintiff seeks to amend its Complaint, in order to add a procedural due process

claim based on certain facts and information learned during discovery. See Pl.’s Mot. to Amend,

at 1.

Defendants oppose both motions. With respect to Plaintiff’s Motion to Reopen Discovery,

Defendants argue that the Court should deny Plaintiff’s motion because Plaintiff has not met the

“good cause” requirement under Rule 16(b)(4). See Def.’s Opp’n to Pl.’s Mot. to Reopen

Discovery, at 6-7. With regard to Plaintiff’s Motion to Amend, Defendants argue that the Court

should deny Plaintiff’s motion because (1) Plaintiff failed to comply with Local Civil Rule 7(m);

(2) Plaintiff unduly delayed in the filing of the motion; (3) amending the Complaint would unduly

prejudice Defendants; and (4) amending the Complaint would be futile. See Def.’s Opp’n to Pl.’s

Mot. to Amend, at 1-2.

The Court finds that there is “good cause” under Rule 16(b)(4) to allow Plaintiff to conduct

limited discovery regarding the sale of Unit C-02. The Court shall also grant leave to Plaintiff to

amend its Complaint; however in order to address any prejudice faced by Defendants, the Court

shall also provide Defendants with the opportunity to conduct limited discovery into certain issues

raised by Plaintiff’s addition of the procedural due process claim.

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A. There is “Good Cause” to Reopen Discovery under Rule 16(b)(4).

Plaintiff seeks to reopen discovery for the limited purpose of obtaining evidence

concerning the sale of Unit C-02 to Ms. Ragini Patel for $142,500.00 on April 10, 2015. Plaintiff

makes its request in light of new facts discovered by Plaintiff shortly after filing its motion for

leave to amend its Complaint on May 20, 2015. See Pl.’s Mot. to Reopen Discovery, at 6.

As explained in Plaintiff’s motion, Plaintiff learned that a condominium resident had

indicated that an individual staying in Unit C-02 reported having rented it through the online rental

website, Airbnb.com. See id. at 4. Upon further inquiry, Plaintiff discovered that Ms. Patel and

an individual identified as “Mr. Jay”—whom Plaintiff believe is Ms. Patel’s fiancé or husband,

Vijay Kumar—were advertising Unit C-02 for rent on Airbnb, in violation of the IZ regulations

and the condominium rules. See id. As Plaintiff investigated this issue, Plaintiff learned a number

of additional facts that, Plaintiff believes, affected Ms. Patel’s eligibility to participate in the IZ

Program at the time of her application, including: (1) Ms. Patel already owned a home in New

Jersey; (2) Ms. Patel was either married or engaged to Mr. Kumar, who also owned a home in

Virginia; and (3) Ms. Patel’s income, when combined with Mr. Kumar’s income, exceeded the

income eligibility threshold to participate in the program. Id. at 2.

Plaintiff argues that the District failed to consider the aforementioned facts when reviewing

Ms. Patel’s application to purchase Unit C-02, and that these facts now raise suspicions about fraud

and negligence in regard to the transparency and accuracy of the IZ Program’s selection process.

Id. at 6. In its request to reopen discovery, Plaintiff asks that (1) Defendants be required to search

for and provide all documentation concerning the IZ Program in connection with the application,

selection, financing, and sale of the C-02 unit to Ms. Patel and (2) the Court permit Plaintiff to

obtain documents from, and to conduct depositions (of no more than two hours each) of Ms. Patel

8
and three decisionmakers involved in the review of Ms. Patel’s application. See Pl.’s Supplemental

Reply, ECF No. [52], at 1. Plaintiff indicates that it would complete these depositions within thirty

days of an order allowing them. Id.

Defendants oppose Plaintiff’s motion, arguing that the newly discovered facts do not render

Ms. Patel ineligible to purchase Unit C-02. See Defs.’ Opp’n to Pl.’s Mot. to Reopen Discovery,

at 3. First, Defendants dispute Plaintiff’s contention that Ms. Patel’s ownership interest in the New

Jersey property disqualified her. See id. at 3-4. According to Defendants, the program allowed

Ms. Patel to own the New Jersey property at the time of her application, as long as she certified

that she would divest herself of the property interest before closing. See id. at 4. See also D.C.

Mun. Regs. Tit. 14, § 2213.3. Defendants contend that Ms. Patel made such a certification, but

did not actually divest herself of the property interest, thereby making her eligible for the program,

but in default under the IZ Covenant running with the property. Id. Defendants argue that this

distinction is important because the IZ Covenant provides for a 30-day right to cure, and that in

the case of a default, the District’s remedy would be to force a re-sale of the property, a result

irrelevant to Plaintiff, as Plaintiff would retain the $142,500 it received for the initial sale of the

unit. Id.

Plaintiffs in their reply brief do not respond to Defendants’ argument concerning Ms.

Patel’s ownership interest in the New Jersey property. See Pl.’s Reply in Support of Pl.’s Mot. to

Reopen Discovery.

Based on the record before the Court, it appears that Ms. Patel’s ownership interest in the

New Jersey property would not have automatically disqualified her from applying to participate in

the IZ Program. According to Section 2213.3 of Inclusionary Zoning Implementation regulations,

in order to be eligible to participate in the IZ Program, a “household” must “not have an ownership

9
interest in any other housing or will divest such interest before closing on the purchase of . . . the

Inclusionary Unit.” D.C. Mun. Regs. Tit. 14, § 2213.3 (emphasis added). Here, Defendants have

indicated that Ms. Patel certified that she would divest the property interest before closing on the

purchase of Unit C-02. See id. Accordingly, it appears that evidence regarding Ms. Patel’s

ownership interest in the New Jersey property is more likely to be relevant to whether Ms. Patel

was in default under the IZ covenant, than whether she was a qualified buyer under Section 2213.3.

See id. The Court, however, notes that the factual record before the Court is limited, and therefore,

the Court is reluctant to reach a firm conclusion on this issue at this time.

Defendants also argue that Mr. Kumar’s home ownership and income are irrelevant to

determining whether Ms. Patel was a qualified buyer of Unit C-02 because Mr. Kumar “was not

part of her household as defined by the IZ regulations.” See Defs.’ Opp’n to Pl’s Mot. to Reopen

Discovery, at 5. In support of this argument, Defendants cite D.C. Mun. Regs. Tit. 14, § 2299,

which defines a “household” under the IZ regulations as “all persons who will occupy the

Inclusionary Unit. A Household may be a single family, one (1) person living alone, two (2) or

more families living together, or any other group of related or unrelated persons who share living

arrangements.” Id. Defendants contend that Mr. Kumar’s information is irrelevant because Ms.

Patel indicated in her application that only she and her daughter would occupy Unit C-02, and that

Ms. Patel’s federal income tax return lists her filing status as “head of household.” See Defs.’

Opp’n to Pl’s Mot. to Reopen Discovery, at 5.

The Court does not find Defendants’ argument persuasive. As Plaintiffs note in their reply

brief, “household” under the IZ regulations considers “all persons who will occupy the

Inclusionary Unit.” D.C. Mun. Regs. Tit. 14, § 2299 (emphasis added). Accordingly, the IZ

regulations are forward-looking, such that Ms. Patel’s eligibility would depend, in part, on which

10
persons would be occupying Unit C-02 in the future. See id. Furthermore, Defendants’ own Rule

30(b)(6) deposition testimony indicates that the District follows the “HUD Part 5” requirements

when certifying households for the IZ Program. See Pl.’s Reply in Support of Pl.’s Mot. to Reopen

Discovery, at 4 (citing Defendants’ Rule 30(b)(6) deposition testimony). The “HUD Part 5”

requirements mandate that an IZ household’s income must include all amounts “anticipated to be

received from a source outside the family during the 12-month period following admission or

annual reexamination effective date.” 24 C.F.R. § 5.609(a)(2). See also D.C. Mun. Regs. Tit. 14,

§ 2299 (defining “annual income” in accordance with the definition in 24 C.F.R. § 5.609).

Accordingly, even if the District was not required to consider Mr. Kumar as part of Ms. Patel’s

“household” as the time of her application, the District may have been required to consider Mr.

Kumar’s assets and income, if Ms. Patel had anticipated receiving income from Mr. Kumar within

the twelve-month period subsequent to the application. See id.

The Court also finds that there is “good cause” under Rule 16(b)(4) to reopen discovery

under the factors delineated in In re Rail Freight. See 281 F.R.D. at 14. Here, trial is not imminent,

and Plaintiff’s motion came only three weeks after the close of discovery. See id. Furthermore,

although the request is opposed, Plaintiff was diligent in obtaining discovery within the guidelines

established by the Court and filed its motion within days of learning the facts at issue. See id.

Defendants contend that Plaintiff should have obtained discovery in December 2014, when

Plaintiff received Ms. Patel’s eligibility documents to purchase Unit C-02. See Defs.’ Opp’n to

Pl.’s Mot. to Reopen Discovery, at 9. However, Plaintiff did not have reason to conduct further

investigation into Ms. Patel’s eligibility until facts came to light in May 2015 regarding Ms. Patel’s

alleged relationship with Mr. Kumar and Ms. Patel’s alleged misuse of the property. For the same

reason, it is not clear to the Court that the need for additional discovery on the issue of Ms. Patel’s

11
eligibility would have been foreseeable during the discovery period. Furthermore, for the reasons

discussed above, discovery is likely to lead to relevant evidence. See In re Rail Freight, 281 F.R.D.

at 14. Finally, Defendants argue that they would be prejudiced by Plaintiff’s additional discovery,

insofar as they would be forced to incur additional expenses resulting from the second round of

discovery. Accordingly, to ameliorate this prejudice, the Court shall require Plaintiff to pay for

the costs of conducting the four depositions requested by Plaintiff, not including attorneys’ fees.

In sum, the facts newly discovered by Plaintiff shortly before the filing of Plaintiff’s motion

to reopen discovery raise questions regarding Ms. Patel’s eligibility to purchase Unit C-02 and

regarding the process by which the District approved Ms. Patel’s application. Because this

information came to light after the discovery had closed, the parties did not have an opportunity to

fully develop the record on these issues—issues that both parties agree are central to this case.

Accordingly, the Court finds that there is “good cause” to allow Plaintiff to take focused and

limited discovery regarding the sale of Unit C-02 to Ms. Patel. As previously noted by this Court,

such discovery should focus strictly on Ms. Patel’s eligibility to purchase Unit C-02, not on Ms.

Patel’s alleged post-purchase breach of the IZ covenant. See Court’s Order dated July 1, 2015,

ECF No. [51]. Specifically, the Court shall permit Plaintiff to conduct depositions—for which

Plaintiff’s examination will not exceed two hours each—of the following four witnesses:

(1) Ms. Patel;

(2) Darryl A. Featherstone, the individual who certified Ms. Patel’s eligibility for the
Marshall Heights Community Organization to Defendants;

(3) a 30(b)(6) representative for the District who can testify about: Ms. Patel’s file,
including all documents submitted to the Marshall Heights Community Organization
or the District regarding financial status and eligibility, all documents from the District
relating to guidance or instructions on determining eligibility for the IZ program and
any eligibility analysis of Ms. Patel’s household; and

(4) a 30(b)(6) representative for the Navy Federal Credit Union who can testify about: Ms.
12
 Patel’s file, including all documents submitted regarding financial status, household
information, and eligibility, all documents from the District relating to guidance or
instructions on determining eligibility for the IZ Program and any eligibility analysis
of Ms. Patel’s household.

Plaintiff may also request that each deponent produce the following documents, to the extent
applicable:

a. Its complete file concerning Ms. Patel;

b. All documents submitted to the Marshall Heights Community Organization, the
District of Columbia, and Navy Federal Credit Union regarding the financial status,
household information, and eligibility for the IZ Program for Ms. Patel’s household;

c. All documents from the District to its certifying agencies relating to guidance or
instructions on determining eligibility for the IZ Program; and

d. Any eligibility analysis of Ms. Patel’s household.

Having found that there is “good cause” to reopen discovery on the limited issues described above,

the Court shall now consider whether to grant leave to Plaintiff to amend its complaint.

B. The Court Shall Grant Leave to Plaintiff to Amend Its Complaint under Rule 15(a)(2).

Plaintiff seeks to amend its Complaint in order to: (1) add factual allegations based on

information learned during the discovery, (2) update factual allegations in the original Complaint

that require amendment due to the passage of time, and (3) include an additional cause of action

for denial of procedural due process based on the facts and information either learned or confirmed

in discovery. See Pl.’s Mot. to Amend, ECF No. [43], at 1. Plaintiff contends that the lack of clear

notice concerning implementation deadlines and the absence of an appropriate “phase-in” period

before the IZ Program was made legally effective denied Plaintiff any opportunity to incorporate

“bonus density” into its building design. Id. at 1-2. Plaintiff argues that as a result, its property

interests were negatively impacted by the exactions imposed by that program without any

corresponding benefit or compensation. Id. at 2. Plaintiff maintains that the additional cause of

action for denial of procedural due process is an alternative framework for the Court to consider

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and evaluate Plaintiff’s claims, based on facts already known to the District and on facts developed

through discovery conducted in this case. Id.

Defendants make four arguments in their opposition to Plaintiff’s motion to amend: (1)

Plaintiff failed to comply with Local Civil Rule 7(m); (2) Plaintiff unduly delayed in the filing of

the motion; (3) amending the Complaint would unduly prejudice Defendants; and (4) amending

the Complaint would be futile. See Def.’s Opp’n to Pl.’s Mot. to Amend, at 1-2. The Court shall

address each of Defendants’ arguments in turn.

1. Compliance with Local Civil Rule 7(m).

First, Defendants argue that the Court should deny Plaintiff leave to amend because

Plaintiff did not comply with Local Civil Rule 7(m), which imposes a duty to confer on

nondispositive motions. Id. at 2. Specifically, LCvR 7(m) requires that “[b]efore filing any

nondispositive motion in a civil action, counsel shall discuss the anticipated motion with opposing

counsel in a good-faith effort to determine whether there is any opposition to the relief sought,

and, if there is, to narrow the areas of disagreement.” LCvR 7(m).

Here, Plaintiff’s counsel expressed an intent to file a Motion for Leave to Amend Its

Complaint during the Status Conference held in this matter on May 8, 2015. See Order, ECF No.

[42]. Furthermore, Defendants indicated at that status conference that they would oppose the

contemplated motion. See Defs.’ Opp’n to Pl.’s Mot. to Amend, at 3. Plaintiff subsequently filed

its motion in accordance with the briefing schedule ordered by the Court after that status

conference. See id. In light of the foregoing, the Court finds that denying Plaintiff leave to amend

its complaint on the basis of the alleged procedural deficiency would not be in accord with the

principles of justice cited in Rule 15(a)(2). See Ellis v. Georgetown Univ. Hosp., 631 F. Supp. 2d

71, 80 n.7 (D.D.C. 2009).

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 2. Undue Delay

Second, Defendants argue that leave to amend should be denied because Plaintiff unduly

delayed in filing their motion. See Defs.’ Opp’n to Pl.’s Mot. to Amend, at 4. Defendants contend

that Plaintiff’s procedural due process claim relates only to events that occurred between 2006 and

2009, and that all of the facts cited by Plaintiff in its proposed amended complaint were derived

from publicly available documents published during that time period. See id. Defendants further

maintain that the proposed amended complaint does not cite to any newly discovered facts in

support of its procedural due process claim. See id.

The Court disagrees. Plaintiff’s proposed amended complaint includes allegations that the

DHCD was warned repeatedly by multiple sources that the IZ Covenant contained affordability

restrictions that were contrary to long-standing federal housing regulations and that the DHCD

proceeded to require Plaintiff and other developers to enter into the IZ Covenant, despite knowing

that the deed restrictions surviving foreclosure violated various federally administered rules. See

Pl.’s Proposed Amended Complaint, ECF No. [43-1], ¶¶ 24-28. Such information may “color

Plaintiff’s claim for denial of procedural due process” and was not publicly available to Plaintiff

at the time of filing suit, but rather was discovered by Plaintiff only through the course of

discovery. See Pl.’s Reply in Support of Pl.’s Mot. to Amend, at 1-2. The Court notes, however,

that Plaintiff has not provided any explanation as to why it did not seek leave to amend the

Complaint at some point during discovery when these facts came to light, as opposed to three

weeks after discovery had closed. Nevertheless, “delay alone is not a sufficient reason for denying

leave . . . If no prejudice [to the non-moving party] is found, the amendment will be allowed.”

Caribbean Broad. Sys., Ltd. v. Cable & Wireless P.L.C., 148 F.3d 1080, 1084 (D.C. Cir. 1998)

(quoting 6 Charles Alan Wright, Arthur R. Miller & Mary Kane, Fed. Practice & Proc. § 1487

15
(1990 & Supp. 1997)). Accordingly, the Court shall now consider whether Defendants would face

any prejudice should the Court grant leave to Plaintiff to amend its complaint.

3. Prejudice to Defendants

Defendants contend that if Plaintiff is allowed to add a procedural due process claim as

part of an amended complaint, then Defendants would be prejudiced if they are not allowed to

conduct additional discovery regarding the facts concerning the procedural due process claim. See

Defs.’ Opp’n to Pl.’s Mot. to Reopen Discovery, ECF No. [44], at 6; Defs.’ Sur-Reply Regarding

Requested Discovery, ECF No. [53], at 1. Specifically, Defendants would need to depose Eric

Colbert, the architect for Plaintiff’s development, and take an additional deposition of Arthur

Linde, Plaintiff’s Manager. See id. The topics of these depositions would concern when Mr.

Colbert and Mr. Linde became aware of the IZ program’s requirements and the decisions they

made concerning whether to incorporate the bonus density provided under the IZ Program. See

id. Defendants indicate that they would seek to schedule both depositions, of no more than two

hours each, within 30 days of the entry of the Court’s order resolving Plaintiff’s motions. See id.

Plaintiff argues in its Supplemental Memorandum in Response to Defendants’ Sur-Reply

that Defendants should not be allowed to take these depositions because Defendants had a

sufficient opportunity to depose the witnesses during discovery. See Pl.’s Supp. Mem. in Response

to Defs.’ Sur-Reply, ECF No. [54-1], at 7. The Court finds Plaintiff’s argument unconvincing.

Defendants are entitled to discovery on the procedural due process claim and could not have

conducted discovery on that claim during discovery because Plaintiff did not file its motion to

amend its complaint until after discovery had closed. Accordingly, in order to ameliorate any

prejudice faced by Defendants as a result of the Court’s granting of Plaintiff’s motion to amend its

complaint, the Court shall allow Defendants to conduct both of the depositions on the topics

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requested by Defendants. The Court shall also require Plaintiff to pay for the costs of conducting

the two depositions, not including attorneys’ fees.

4. Futility

Finally, Defendants contend that the filing of Plaintiff’s proposed amended complaint

would be futile because the procedural due process claim would not survive a motion to dismiss.

See Defs.’ Opp’n to Pl.’s Mot. to Amend, at 7. Specifically, Defendants argue that (1) Plaintiff’s

procedural due process claim is barred by the applicable statute of limitations and (2) Plaintiff’s

proposed Amended Complaint fails to state a procedural due process claim upon which relief may

be granted. See id. at 7-8.

As a preliminary matter, the parties do not dispute that the applicable statute of limitations

for Plaintiff to bring a procedural due process claim under 42 U.S.C. § 1983 is three years,

beginning when Plaintiff had a “complete and present cause of action,” that is, when Plaintiff could

“file suit and obtain relief.” Bay Area Laundry & Dry Cleaning Pension Trust Fund v. Ferbar

Corp. of Cal., 522 U.S. 192, 201 (1997)). The statute of limitations “starts ticking when the

plaintiff has sufficient notice of the conduct . . . which is now asserted as the basis for [his] lawsuit.”

Sanders v. D.C., 85 F. Supp. 3d 523, 531 (D.D.C. 2015) (quoting Curtis v. Lanier, 535 F. Supp.

2d 89, 95 (D.D.C. 2008)). Defendants argue that the statute of limitations in this case began to run

in December 2009 when the District published its Final Rulemaking for the IZ Program’s

implementation. See Defs.’ Opp’n to Pl.’s Mot. to Amend, at 7-8. According to Defendants, the

statute of limitations expired on December 11, 2012, two days before Plaintiff filed the instant

Complaint. Id. at 8.

In response, Plaintiff argues that Defendants overlook the fact that the IZ Program, as

applied to Plaintiff, did not inflict injury on Plaintiffs until April 2010, at the earliest. See Pl.’s

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Reply in Support of Pl.’s Mot. to Amend, at 13. Plaintiff contends that it did not realize that it was

harmed until April 2010 when zoning approval for Plaintiff’s project was revoked by the District.

See Proposed Amended Complaint, ECF No. [43-1], ¶ 37. Until zoning approval was revoked,

Plaintiff had not received any indication during the permit review process that the IZ program

would apply to Plaintiff’s project. See id. ¶ 39. According to Plaintiff, even the District’s zoning

officials allegedly were unsure whether Plaintiff’s project was subject to inclusionary zoning, as

evidenced by the fact that zoning approval was granted on March 30, 2010. See id. ¶ 38.

Upon consideration of the parties’ arguments, the Court concludes that Defendants have

not met their burden to show a colorable basis for denying leave to amend due to the running of

the applicable statute of limitations on Plaintiff’s procedural due process claim. Based on the

record before the Court, it appears that Plaintiff did not have a “complete and present cause of

action” in December 2009 or that Plaintiff had “sufficient notice of the conduct . . . which is now

asserted as the basis for [this] lawsuit” at that time. See Sanders, 85 F. Supp. 3d at 531. The Court

notes, however, that the Court reserves the right to reconsider this issue as the parties develop the

record, and that Defendants shall not be precluded from raising the statute of limitations issue as

part of a motion to dismiss or as part of a motion for summary judgment, which can be more fully

briefed and argued by the parties.

Defendants also argue that Plaintiff’s proposed amended complaint is futile because it fails

to state a procedural due process claim. See Defs.’ Opp’n to Pl.’s Mot. to Amend, at 8-10.

Defendants’ argument rests on their characterization of Plaintiff’s procedural due process claim as

a challenge only to the District’s “changed . . . date of implementation” of the IZ Program. See id.

at 8. According to Defendants, Plaintiff’s procedural due process claim rests solely on the

District’s alleged failure to “establish and enforce a consistent notice protocol and implementation

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deadlines” for the IZ program. See id. (citing Proposed Amended Complaint, ECF No. [43-1],

¶ 102). Defendants argue that the District is not required to provide any prior notice when enacting

the IZ law and regulations because they are “generally applicable legislative actions” that do not

require notice protocol. See id. at 8-9.

Plaintiffs, in response, contend that Plaintiff’s procedural due process claim challenges

more than just the District’s changed date of implementation of the IZ Program. See Pl.’s Reply

in Support of Pl.’s Mot. to Amend, at 14-16. Rather, Plaintiff argues that its procedural due process

claim rests on a series of allegations concerning actions and decisions taken by the District

regarding the application of the IZ program to Plaintiff’s property. See id. For example, Plaintiff’s

proposed amended complaint includes allegations that District officials were confused about the

applicability of the IZ Program to Plaintiff’s property and that Defendants failed to implement an

effective system to sell Plaintiff’s two IZ units to qualified buyers. See Proposed Amended

Complaint, ECF No. [43-1], ¶¶ 19, 38, 43, 57-58, 101-07; see also Pl.’s Reply in Support of Pl.’s

Mot. to Amend, at 14-15.

Upon consideration of the parties’ arguments, the Court concludes that Defendants have

not met their burden to show a colorable basis for denying leave to amend on the basis of their

argument that Plaintiff has failed to state a procedural due process claim. Based on the record

before the Court, it appears that Plaintiff’s procedural due process claim challenges certain actions

and decisions taken by the District regarding the application of the IZ program to Plaintiff’s

property and not simply the establishment and enforcement of a notice protocol for the IZ program.

See Proposed Amended Complaint, ECF No. [43-1], ¶¶ 19, 38, 43, 57-58, 101-07. The Court

again notes, however, that Defendants shall not be precluded from raising their arguments as part

of a motion to dismiss or as part of a motion for summary judgment, which can be more fully

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briefed and argued by the parties.

For the reasons stated above, the Court finds on the current record that the filing of

Plaintiff’s proposed amended complaint would not be futile. Accordingly, the Court, in the

exercise of its discretion under Rule 15(a)(2), shall grant leave to Plaintiff to file its proposed

amended complaint.

IV. CONCLUSION

For the reasons outlined above, it is, this 29th day December, 2015, hereby

ORDERED that Plaintiff’s [45] Motion to Reopen Discovery for a Limited Purpose is

GRANTED and that Plaintiff’s [43] Motion for Leave to File Amended Complaint is GRANTED.

It is FURTHER ORDERED that the Court shall reopen discovery so that both parties

may conduct limited discovery for the purposes set forth in this Opinion. The Court shall allow

the parties 45 days from the date of this Memorandum Opinion and Order, until February 12,

2016, to complete this discovery.

IT IS FURTHER ORDERED that Plaintiff may conduct depositions—for which

Plaintiff’s examination will not exceed two hours each—of the following four witnesses:

(1) Ms. Patel;

(2) Darryl A. Featherstone, the individual who certified Ms. Patel’s eligibility for the
Marshall Heights Community Organization to Defendants;

(3) a 30(b)(6) representative for the District who can testify about: Ms. Patel’s file,
including all documents submitted to the Marshall Heights Community Organization
or the District regarding financial status and eligibility, all documents from the District
relating to guidance or instructions on determining eligibility for the IZ program and
any eligibility analysis of Ms. Patel’s household; and

(4) a 30(b)(6) representative for the Navy Federal Credit Union who can testify about: Ms.
Patel’s file, including all documents submitted regarding financial status, household
information, and eligibility, all documents from the District relating to guidance or
instructions on determining eligibility for the IZ Program and any eligibility analysis
of Ms. Patel’s household.
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Plaintiff may also request that each deponent produce the following documents, to the extent
applicable:
a. Its complete file concerning Ms. Patel;

b. All documents submitted to the Marshall Heights Community Organization, the
District of Columbia, and Navy Federal Credit Union regarding the financial status,
household information, and eligibility for the IZ Program for Ms. Patel’s household;

c. All documents from the District to its certifying agencies relating to guidance or
instructions on determining eligibility for the IZ Program; and

d. Any eligibility analysis of Ms. Patel’s household.

IT IS FURTHER ORDERED that Defendants may conduct depositions—for which

Defendants’ examination will not exceed two hours each—of (1) Eric Colbert, the architect for

Plaintiff’s development and (2) Arthur Linde, Plaintiff’s Manager. The topics of these depositions

shall concern when Mr. Colbert and Mr. Linde became aware of the IZ program’s requirements

and the decisions they made concerning whether to incorporate the bonus density provided under

the IZ Program.

IT IS FURTHER ORDERED that in order to ameliorate any prejudice faced by

Defendants as a result of the granting of Plaintiff’s motions, the Court shall require Plaintiff to pay

for the costs of conducting the six depositions described above, not including attorneys’ fees.

IT IS FURTHER ORDERED that the Court shall deny without prejudice the pending

motions for summary judgment and permit the parties to file renewed motions after the parties

have fully developed the factual record through the above-described discovery. Accordingly, the

Court DENIES without prejudice Defendants’ [49] Motion for Summary Judgment and DENIES

without prejudice Plaintiff’s [50] Motion for Summary Judgment.

//

//

//
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 IT IS FURTHER ORDERED that the parties shall file a Joint Status Report by February

19, 2016, proposing a schedule of dates for filing and briefing the parties’ renewed motions for

summary judgment. The Court shall then issue an order setting a briefing schedule.

/s/
COLLEEN KOLLAR-KOTELLY
UNITED STATES DISTRICT JUDGE

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