Penrod Brothers Inc v. City of Miami Beach

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 1:23-cv-23362-LEIBOWITZ/AUGUSTIN-BIRCH

PENROD BROTHERS, INC.,

Plaintiff,

v.

CITY OF MIAMI BEACH, FLORIDA,

Defendant.

___________________________________/

ORDER

THIS CAUSE is before the Court on Defendant City of Miami Beach, Florida’s

(“Defendant” or the “City”) Motion to Dismiss Plaintiff’s Fifth Amended Complaint (the “Motion”)

[ECF No. 72], filed on September 3, 2024. Plaintiff Penrod Brothers, Inc. (“Plaintiff” or “Penrod”)

submitted a Response in Opposition to the Motion (the “Response”) [ECF No. 75], and Defendant

submitted a Reply [ECF No. 80]. The Court has reviewed the parties’ arguments, the record, and the

relevant legal authorities. For the reasons stated below, the Motion [ECF No. 72] is GRANTED IN

PART and DENIED IN PART.

I. LEGAL STANDARDS

A. Supplemental Jurisdiction

Where a district court has original jurisdiction over an action, the court “shall have

supplemental jurisdiction over all other claims that are so related to claims in the action within such

original jurisdiction that they form part of the same case or controversy under Article III of the United

States Constitution.” 28 U.S.C. § 1367(a). However, a district court “may decline to exercise

supplemental jurisdiction over a claim” if “(1) the claim raises a novel or complex issue of State law,

(2) the claim substantially predominates over the claim or claims over which the district court has

original jurisdiction, (3) the district court has dismissed all claims over which it has original jurisdiction,

or (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.” Id.

§ 1367(c). Thus, “[d]etermining whether the Court has supplemental jurisdiction over state law claims

entails a two-step inquiry where the Court must first determine whether it can exercise its supplemental

jurisdiction and then whether it should exercise that jurisdiction.” Ariza v. Walters & Mason Retail, Inc.,

516 F. Supp. 3d 1350, 1357 (S.D. Fla. 2021) (cleaned up).

“Federal courts are obligated to inquire into subject-matter jurisdiction sua sponte whenever

it may be lacking.” Cadet v. Bulger, 377 F.3d 1173, 1179 (11th Cir. 2004) (cleaned up). This is true even

where the district court has exercised supplemental jurisdiction over state law claims. See Pinkert v.

Schwade, No. 11-CIV-23324, 2012 WL 3962386, at *1 (S.D. Fla. Sept. 10, 2012) (“Though a district

court has exercised supplemental jurisdiction over state law claims, the court may decline to continue

exercising jurisdiction over those claims[.]”). Moreover, “[t]he decision to exercise supplemental

jurisdiction over pendant state claims rests within the discretion of the district court.” Raney v. Allstate

Ins. Co., 370 F.3d 1086, 1088–89 (11th Cir. 2004) (per curiam); see also West v. City of Albany, 830 F.

App’x 588, 596 (11th Cir. 2020) (per curiam) (noting that a “district court’s decision to either retain

or reject” supplemental jurisdiction over state law claims is “purely discretionary” and “not a

jurisdictional matter”).

The Eleventh Circuit has “encouraged district courts to dismiss any remaining state claims

when … the federal claims have been dismissed prior to trial.” Raney, 370 F.3d at 1089. A district

court may opt to remand state law claims to state court where no basis for federal jurisdiction presently

exists. See Pinkert, 2012 WL 3962386, at *1. As announced in United Mine Workers of Am. v. Gibbs, 383

U.S. 715, 726 (1966), a district court should consider the factors of judicial economy, convenience,

fairness, and comity before doing so. West, 830 F. App’x at 597. The Gibbs factors “may, by their

presence or absence, influence the court in its decision concerning the exercise of such discretion” to

retain or reject supplemental jurisdiction. Palmer v. Hosp. Auth. of Randolph Cnty., 22 F.3d 1559, 1569

(11th Cir. 1994).

B. Rule 12(b)(6) Standard

A pleading in a civil action must contain “a short and plain statement of the claim showing

that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). While a complaint “does not need detailed

factual allegations,” it must provide “more than labels and conclusions” or “a formulaic recitation of

the elements of a cause of action.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); see Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009). Nor can a complaint rest on “‘naked assertion[s] devoid of ‘further

factual enhancement.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557 (alteration in original)).

The Supreme Court has emphasized that, “[t]o survive a motion to dismiss[,] a complaint must contain

sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id.

(quoting Twombly, 550 U.S. at 570); see also Am. Dental Assoc. v. Cigna Corp., 605 F.3d 1283, 1288–90

(11th Cir. 2010).

When reviewing a motion to dismiss, a court generally must accept the plaintiff’s allegations

as true and evaluate all plausible inferences derived from those facts in favor of the plaintiff. See, e.g.,

Chaparro v. Carnival Corp., 693 F.3d 1333, 1335–37 (11th Cir. 2012). A court is ordinarily limited to the

facts contained in the complaint and attached exhibits, including documents referred to in the

complaint that are central to the claim. See, e.g., Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949, 959 (11th

Cir. 2009). While the court is required to accept as true all allegations contained in the complaint,

courts “are not bound to accept as true a legal conclusion couched as a factual allegation.” See Twombly,

550 U.S. at 555; Iqbal, 556 U.S. at 678; see also Mamani v. Berzain, 654 F.3d 1148, 1153–54 (11th Cir.

2011).

II. BACKGROUND

Plaintiff has been a trusted and valued City of Miami Beach (the “City”) partner for more than

three decades, operating a world-renowned high-end beach club––Nikki Beach, located at One Ocean

Drive––on city property leased to Plaintiff. [ECF No. 69 ¶ 3]. Plaintiff and the City entered into a

lease agreement (the “Lease”) on November 7, 1985. [Id. ¶ 32]. The Lease required Plaintiff to

develop, construct, manage, and operate a restaurant and beachfront facility at One Ocean Drive. [Id.

¶ 33]. Plaintiff also entered into a Concession Agreement coterminous with the Lease’s maturity

allowing Plaintiff to continue operations of its beachfront operation eastward to the beach. [Id. ¶ 34].

The Lease expires on May 6, 2026. [Id. ¶ 37].

The City is required by law to submit its multi-million-dollar One Ocean Drive project to a

formal and public competitive bidding process. [Id. ¶ 4]. Plaintiff alleges that the City chose to

circumvent these procurement requirements by not having a competitive bidding process and instead

directly awarding control over the One Ocean Drive property (the “Property”) to a competitor,

Boucher Brothers Miami Beach, LLC (“Boucher”). [Id. ¶ 55]. On October 26, 2022, the City

Commission referred discussion of the upcoming expiration of Plaintiff’s agreements to the City’s

Finance and Economic Resilience Committee (“FERC”). [Id. ¶ 67]. At the January 27, 2023 FERC

meeting, City Commissioners introduced an agenda item to fast track a process to find a new operator

for the Property. [Id. ¶ 68]. On April 21, 2023, the City Manager issued a memorandum advising the

City that it was legally required to “follow the formal competitive solicitation process and issue a

Request for Proposals (“RFP”) for the best possible use and viable concepts” for the Property. [Id. ¶

70].

At the April 21, 2023 FERC meeting, despite the City Manager’s prior memorandum, FERC

proposed to the full Commission a resolution requiring the City Manager to negotiate a term sheet

exclusively with Boucher for the lease, services, and operation of the Property. [Id. ¶ 72]. FERC’s

recommendation was discussed at an April 28, 2023 Commission meeting. [Id. ¶¶ 73–74]. At that

meeting, the Commissioners conceded that the recommended process was unorthodox but allowed

Boucher an opportunity to offer its proposal without accepting proposals from other prospective

bidders, including Plaintiff. [Id. ¶ 74]. If later approved by the Commission, accepting the Boucher

proposal could result in an award of the project without competitive bidding. [Id.].

During the April 28, 2023 meeting, the City Commission passed Resolution 2023-32586 (the

“April 28 Resolution”), which authorized the City’s Administration to: (a) negotiate a proposed non-

binding term sheet with Boucher with respect to the potential management or operation of the

Property, to be effective after the expiration of the Lease; (b) recommend accomplishing the contracts

contemplated by the term sheet through “amendment to” Boucher’s already-existing concession

agreement(s) with the City “or as a stand-alone agreement;” (c) consummate the contract for lease and

services at the Property after review and approval of the term sheet by the Mayor and Commission;

and (d) do so “in accordance with Section 1.03(f) of the City Charter,” meaning without the requisite

public referendum. [Id. ¶¶ 75–76].

Plaintiff then filed suit on May 12, 2023, to invalidate the April 28 Resolution that limited

negotiations to Boucher and to ensure its ability to participate in a public, formal competitive

solicitation process. [Id. ¶ 80]. On May 17, 2023, the Commission passed Resolution No. 2023-32612

(the “May 17 Resolution”), which rescinded the April 28 Resolution and directed the City

Administration to prepare and issue a request for proposals for the management or operation of a

high-end beach establishment at the Property. [Id. ¶ 81]. The May 17 Resolution directed the City

Administration to issue the request for proposals no later than June 15, 2023, with a deadline for

submission of proposals no later than August 15, 2023, to make a recommendation for award of the

RFP at the September 2023 City Commission meeting. [Id. ¶ 89].

On June 14, 2023, pursuant to the May 17 Resolution, the City issued RFP No. 2023-479-KB

(the “RFP”). [Id. ¶ 90]. On July 31, 2023, Plaintiff protested the specifications and procedures in the

RFP. [Id. ¶ 126]. On August 4, 2023, the City granted in part and denied in part Plaintiff’s protest

and specifications challenge, admitted to certain errors in the originally-issued request and

specifications, and reissued the RFP with certain amendments and addenda, as well as an extension of

the submission deadline to August 29, 2023. [Id. ¶ 129]. On August 15, 2023, Plaintiff protested the

specifications and procedures in the reissued RFP and addenda. [Id. ¶ 155]. On August 18, 2023, the

City denied Plaintiff’s bid specifications protest in full; the City also extended the deadline to submit

bids to August 31, 2023. [Id. ¶¶ 158–59].

With the submission deadline approaching, Plaintiff requested a 24-hour deadline extension

on August 30, 2023 due to the issuance of a State of Emergency by the Governor of Florida due to

Hurricane Idalia. [Id. ¶ 172]. The City denied that request. [Id. ¶ 173]. Plaintiff then submitted its

bid as instructed using the Periscope online platform prior to the August 31, 2023, 3:00 p.m. deadline.

[Id. ¶ 174]. In advance of that deadline, Plaintiff electronically submitted and uploaded all required

“Tabs (including all documents and attachments) to the Line Items operation” in Periscope which

constituted its complete proposal submittal under the RFP. [Id. ¶ 175]. Also before the deadline,

Plaintiff selected the “confirmation” button on the Periscope platform, and its bid on Periscope was

“confirmed.” [Id. ¶ 176]. However, Periscope did not generate a confirmation. [Id.].

Plaintiff suspected error and immediately and urgently contacted the provider and the City

and made numerous submissions of copies of its bid by other means (including email, ShareFile, and

hand-delivery). [Id.]. The City refused to accept Plaintiff’s timely bid on Periscope, refused to address

Plaintiff’s identification of error in the City’s submission platform, and refused to accept Plaintiff’s

multiple courtesy/backup copies. [Id. ¶ 179].

On August 31, 2023, Plaintiff, by letter to all relevant City administrative and political officials,

explained its timely submission, noted its earlier extension request, and requested acceptance of its

timely submission. [Id. ¶ 180]. On September 1, 2023, the City, by letter, denied that request and

continued to refuse to accept or consider Plaintiff’s bid. [Id. ¶ 181]. That same day, Plaintiff protested

the City’s solicitation decisions to deny and refuse to accept or consider Plaintiff’s bid. [Id. ¶ 183].

Less than 15 minutes later, the City through the City Attorney summarily denied the protest. [Id. ¶

187]. On September 7, 2023, the City sent a longer letter reiterating its denial of the protest. [Id. ¶

188].

The City accepted three bids as timely submitted for Option 1 (an option for up to 10 years)

and four bids timely submitted for Option 2 (an option for up to 30 years). [Id. ¶¶ 116, 191]. Boucher

submitted multiple bids: one was the pre-negotiated proposal joined with Major Food Group, and

another was part of a competing bidder’s proposal. [Id. ¶ 192]. On September 11, 2023, the City’s

evaluation committee met and issued its results ranking the Boucher/Major Food Group bid highest

for both Option 1 and Option 2. [Id. ¶¶ 193, 200]. On September 20, 2023, the City Manager issued

her recommendation comparing the proposed Option 1 and Option 2 submissions and ultimately

recommended Boucher’s Option 1 for award of the RFP. [Id. ¶ 201]. On September 27, 2023, the

City Commission met, and in Resolution No. 2023-32783 (the “September 27 Resolution”), voted to

award the RFP to Boucher. [Id. ¶ 202].

On October 16, 2023, Plaintiff protested the City’s award of the RFP to Boucher and protested

the proposed award of the negotiated lease/concession contract to Boucher. [Id. ¶ 208]. On October

17, 2023, the City responded to and denied Plaintiff’s protests. [Id. ¶ 221]. On October 18, 2023, the

City Commission met, and by Resolution No. 2023-32825 (the “October 18 Resolution”), voted to

award the publicized contract to Boucher. [Id. ¶ 207].

Plaintiff then brought this case alleging that the City’s Charter- and Code-violative and

defective process yielded the intended results—selection of the City’s pre-selected no-bid vendor and

proposal. [Id. ¶ 222]. The Complaint alleges the following counts:

Count I – Procedural Due Process, 42 U.S.C. § 1983 (No-Bid Process);

Count II – Procedural Due Process, Art. 1. Sec. 9 Fla. Const. (No-Bid Process);

Count III – Violation of Charter/Code (No-Bid Process);

Count IV – Declaratory Judgment (No-Bid Process);

Count V – Substantive Due Process, 42 U.S.C. § 1983 (No-Bid Process);

Count VI – Substantive Due Process, Art. 1. Sec. 9 Fla. Const. (No-Bid Process);

Count VII – Violation of Charter/Code (Specifications Challenge);

Count VIII – Declaratory Judgment (Specifications Challenge);

Count IX – Injunction (Specifications Challenge);

Count X – Violation of Charter/Code (Submission Challenge);

Count XI – Declaratory Judgment (Submission Challenge);

Count XII – Injunction (Submission Challenge);

Count XIII –Substantive Due Process, Art. 1. Sec. 9 Fla. Const. (Submission Challenge);

Count XIV – Violation of Charter/Code (Award Challenge);

Count XV – Declaratory Judgment (Award Challenge); and

Count XVI – Injunction (Award Challenge).

[See id. generally].

This Complaint is the City’s Fifth Amended Complaint. [Id.]. This Complaint was filed after

this Court adopted United States Magistrate Judge Panayotta Augustin-Birch’s Report and

Recommendation on Defendant’s Motion to Dismiss Fourth Amended Complaint (the “R&R”). [See

ECF No. 59; ECF No. 44]. In her R&R, Magistrate Judge Augustin-Birch recommended the

following: (1) Defendant’s Motion to Dismiss Fourth Amended Complaint be denied insofar as it

requests Plaintiff’s claims be dismissed for lack of standing because Plaintiff was entitled to conduct

discovery into matters that could affect standing; (2) Plaintiff’s Fourth Amended Complaint be

dismissed without prejudice for Plaintiff to replead its claims because the Fourth Amended Complaint

was a shotgun pleading where each count adopted the allegations of all preceding counts; and (3)

Defendant’s Motion to Dismiss Fourth Amended Complaint be denied without prejudice insofar as

it challenges individual counts because it was not clear which of Plaintiff’s allegations were

incorporated into each count. [See ECF No. 44 at 10]. Thus, the R&R did not address the merits of

each of Plaintiff’s claims as it was not clear which factual allegations supported each count. Now that

the Complaint is no longer a shotgun pleading, the Court has an opportunity to address the merits of

Plaintiff’s claims.

III. DISCUSSION

Defendant moves to dismiss with prejudice Plaintiff’s Fifth Amended Complaint (the

“Complaint”) [ECF No. 69] pursuant to Rules 12(b)(1), 12(b)(6), and 12(b)(7) of the Federal Rules of

Civil Procedure. [ECF No. 72 at 4]. Defendant removed this action to this Court based on federal

question jurisdiction because the Complaint alleged two federal claims pursuant to 42 U.S.C. § 1983.

[ECF No. 1 ¶ 2]. Thus, the Court will first determine whether Plaintiff has stated valid federal claims

before moving to the other bases for dismissal to ensure the Court has subject-matter jurisdiction over

this action.

A. Count I – Procedural Due Process, 42 U.S.C. § 1983 (No-Bid Process)

Count I alleges that “Plaintiff has a liberty and property interest to participate in, to apply for,

and to be considered for, public procurement projects within the City, on full, fair and equal

consideration to all participants.” [ECF No. 69 ¶ 226]. Count I further alleges that “the City deprived

Plaintiff of its liberty and property interests, including by preparing and enacting the April 28

Resolution, which circumvented mandatory procedural protections” and that “the City’s policy,

including the April 28 Resolution, denied and did not afford Plaintiff notice and an opportunity to be

heard, both prior to and after the deprivations of those protected interests, by authorizing

circumvention of competitive solicitation procedures, direct negotiation exclusively with a preferred

prospective bidder, and award to that bidder, all absent participation by Plaintiff.” [Id. ¶ 228–29].

Defendant argues that the Complaint fails to state a claim for a violation of procedural due

process over the now-rescinded April 28 Resolution that forms the basis of Count I. [ECF No. 72 at

18]. In support of this, Defendant argues that (1) Plaintiff lacks a protectable property interest in the

City’s procurement projects; (2) the April 28 Resolution did not violate the City’s Charter or Code; (3)

Plaintiff has failed to allege a completed deprivation of due process; and (4) Plaintiff has failed to

sufficiently allege the violation of a protectable liberty interest. [Id. at 18–22]. Plaintiff argues in

response that Defendant misunderstands its claims. [ECF No. 75 at 46–49]. Plaintiff argues instead

that (1) Penrod has a protected liberty interest in the Code’s procedural guaranties; and (2) nothing

the City provided post-deprivation cured its pre-deprivation abandonment of due process. [Id.].

The Fourteenth Amendment of the United States Constitution protects against deprivation

by state action of a constitutionally protected interest in “life, liberty or property” without the due

process of law. Zinermon v. Burch, 494 U.S. 113, 125 (1990). The Due Process Clause provides two

types of constitutional protection: procedural due process and substantive due process. McKinney v.

Pate, 20 F.3d 1550, 1555 (11th Cir. 1994). To demonstrate a procedural due process violation, a

plaintiff must allege “(1) a constitutionally protected interest in life, liberty or property; (2)

governmental deprivation of that interest; and (3) the constitutional inadequacy of procedures

accompanying the deprivation.” Bank of Jackson County v. Cherry, 980 F.2d 1362, 1366 (11th Cir. 1993).

Thus, to state a cognizable procedural due process claim, Plaintiff must first allege a

constitutionally protected interest in life, liberty, or property. The Complaint states in Count I that

“Plaintiff has a liberty and property interest to participate in, to apply for, and to be considered for,

public procurement projects within the City, on full, fair and equal consideration to all participants.”

[ECF No. 69 ¶ 226]. Defendant argues in its Motion that Plaintiff lacks a protectable interest in the

City’s procurement projects on the basis that the procedural component of the Due Process Clause

does not require the City to comply with City-created procedural rules. [ECF No. 72 at 18–20].

Plaintiff argues in response that Defendant misunderstands Plaintiff’s claims. [ECF No. 75 at 46].

Plaintiff notes that “[i]t is uncontroversial that constitutional due process does not, itself, require

compliance with specific state- and municipal-level procedures; as the City well knows, Penrod does

not claim otherwise.” [Id.]. Instead, Plaintiff contends that it “has a protected liberty interest in the

Code-mandated competitive bidding procedures themselves—and the City deprived Penrod of that

interest without the minimum constitutional requirement of non-emergent pre-deprivation notice and

a hearing.” [Id.]. Although the Complaint alleges that Plaintiff has both a protected liberty and

property interest, Plaintiff rests its arguments in its Response on the fact that Plaintiff has a protectable

liberty interest in the Code-mandated competitive bidding procedures themselves and says nothing

about an alleged property interest. [Id.].

“Property interests stem not from the Constitution, but from such sources as statutes,

regulations, ordinances, and contracts.” Arrington v. Helms, 438 F.3d 1336, 1348 (11th Cir. 2006).

“Whether these sources create a property interest must be decided by reference to state law.” Id.

Likewise, state law can give rise to a liberty interest for purposes of procedural due process when state-

created procedures place substantive limitations upon official discretion. E.g., Kentucky Department of

Corrections v. Thompson, 490 U.S. 454, 461–62 (1989); Hewitt v. Helms, 459 U.S. 460, 471–72 (1983); Bass

v. Perrin, 170 F.3d 1312, 1318 (11th Cir. 1999).

Plaintiff agrees that “the law is well established that the mere failure to follow state procedures

does not necessarily rise to the level of a violation of federal procedural due process rights.” Maddox

v. Stephens, 727 F.3d 1109, 1124 n. 15 (11th Cir. 2013); [see ECF No. 75 at 46 (“It is uncontroversial

that constitutional due process does not, itself, require compliance with specific state- and municipal-

level procedures; as the City well knows, Penrod does not claim otherwise.”)]. However, Plaintiff cites

no Florida state law to support its allegation that it has a protected liberty or property interest in the

Code-mandated competitive bidding procedures themselves, and the Court is not aware of any.

Plaintiff also notes that while the Eleventh Circuit has yet to opine directly on liberty interests

in state-created procurement procedures, relevant precedent strongly supports the constitutional

requirement of notice and a hearing before eliminating such procurement procedures. [ECF No. 75

at 46–47]. The Court disagrees with Plaintiff that the cases it cites support its arguments for notice

and a hearing because the interests at stake in those cases differ from any alleged liberty or property

interest here. One case Plaintiff cites, Pataula Elec. Membership Corp. v. Whitworth, 951 F.2d 1238, 1244

(11th Cir. 1992), recognizes that “the Georgia Supreme Court has long recognized a constitutionally

protected property interest in the award of a contract under competitive bidding statutes and rules,”

such that Department of Corrections “officials knew or should have known that they deprived

plaintiffs—as lowest responsible bidders—of a property interest by ignoring statutory and regulatory

directives.” However, Florida does not recognize that same protected property interest, so the analysis

of Georgia law in Pataula is not helpful here. See P’ship For Cmty. Health, Inc. v. Dep’t Of Child. & Fams.,

93 So. 3d 1191, 1193 (Fla. Dist. Ct. App. 2012) (A plaintiff “has no constitutionally protected property

interest in a contract which was not awarded to it.”).

Another case Plaintiff cites notes that “[i]n the context of bidding contracts, courts have

generally found that a bidder has a property interest in a contract ‘only if the bidding procedures are

sufficiently explicit and the decisionmaker’s discretion is sufficiently limited to entitle the bidder to

receive the contract if it satisfies a certain set of conditions.’” Grace & Naeem Uddin, Inc. v. North

Broward Hosp. Dist., 2013 WL 3313443, at *3 (S.D. Fla. July 1, 2013) (citing City–Wide Asphalt Paving v.

Alamance Cnty., No. 2:96CV66, 1996 U.S. Dist. LEXIS 14428, at *7 (M.D.N.C. Aug. 12, 1996)). In

Grace, the court found that the plaintiff stated a valid procedural due process claim under 42 U.S.C. §

1983 where a Florida statute mandated that defendant award the contract at issue to the lowest

qualified and responsive bidder, which plaintiff claimed it was but was not awarded the contract. Id.

at *2, *5. Here, however, there are no allegations that the City conducted a bidding process or awarded

a contract where Plaintiff was deprived of a similar property interest as the one found in Grace.

Plaintiff has provided no authority persuasive to this Court to support its argument that it has

a protected liberty interest in the Code-mandated competitive bidding procedures. Plaintiff lastly

argues that “if the City is correct and the extent of Penrod’s constitutional rights is unsettled, dismissal

is especially inappropriate.” [ECF No. 75 at 47]. The Court disagrees. The law is not unsettled;

rather, Plaintiff’s argument is without support under Florida law.

Therefore, the Court agrees with Defendant that Plaintiff has not alleged a protectable

property or liberty interest to state a claim for a procedural due process violation under 42 U.S.C. §

1983. Thus, the Motion is granted as to Count I, and Count I is dismissed.

B. Count V – Substantive Due Process, 42 U.S.C. § 1983 (No-Bid Process)

Count V alleges that “Plaintiff has state-created liberty and property interests and rights

protected by the federal Constitution to participate in, to apply for, and to be considered for, public

procurement projects within the City, on full, fair and equal consideration to all participants.” [ECF

No. 69 ¶ 255]. Count V further alleges that “[t]he City’s actions in violating Plaintiff’s rights were

done in part by and included the City Commission’s planning and formal adoption of the April 28

Resolution, which is a legislative act,” and that “[t]he City deprived Plaintiff of its constitutionally

protected rights in violation of law mandating formal competitive solicitation procedures, which both

per se and in fact renders such actions done for no legitimate purpose, and for reasons that were

corrupt, arbitrary, capricious, and with no conceivable legitimate economic or rational basis.” [Id. ¶¶

261–62].

Defendant argues that Count V fails to state a claim for a violation of substantive due process

pertaining to the now-rescinded April 28 Resolution. [ECF No. 72 at 22–25]. In support of this,

Defendant argues that (1) Penrod’s substantive due process claims are based on an executive

deprivation of rights set forth in the City Charter and Code and therefore, are not cognizable; and (2)

in the alternative, the City’s challenged conduct passes the highly deferential rational-basis test. [Id.].

In response, Plaintiff argues that (1) because the City abrogated Penrod’s state-created rights to

competitive procurement by legislative act, Penrod properly claims protection by the federal

Constitution’s guaranty of substantive due process; and (2) the City’s abrogation of its Charter and

Code obligations and protections fails rational basis review because it was both arbitrary pretext to

give the property to a political insider and donor and inherently irrational because the decisions

violated the City’s own Charter and Code. [ECF No. 75 at 41–46].

“The substantive component of the Due Process Clause protects those rights that are

‘fundamental,’ that is, rights that are ‘implicit in the concept of ordered liberty[.]’” McKinney, 20 F.3d

at 1556 (quoting Palko v. Connecticut, 302 U.S. 319, 325 (1937). “Fundamental rights are those rights

created by the Constitution.” Kentner v. City of Sanibel, 750 F.3d 1274, 1279 (11th Cir. 2014). “Property

interests, of course, are not created by the Constitution[, but rather] … by existing rules or

understandings that stem from an independent source such as state law.” Board of Regents of State Colls.

v. Roth, 408 U.S. 564, 577 (1972); see also Vinyard v. Wilson, 311 F.3d 1340, 1356 (11th Cir. 2002). “As

a result, there is generally no substantive due process protection for state-created property rights.”

Kentner, 750 F.3d at 1279. “There is, however, at least one exception to [the Eleventh] Circuit’s general

rule that there are no substantive due process claims for non-fundamental rights.” Id. “Where a

person’s state-created rights are infringed by a ‘legislative act,’ the substantive component of the Due

Process Clause generally protects that person from arbitrary and irrational governmental action.” Id.

at 1279–80.

“There is no dispositive test to determine which actions are executive and which are legislative,

because local governing bodies often do both.” Id. However, “[e]xecutive acts typically arise from

the ministerial or administrative activities of the executive branch and characteristically apply to a

limited number of people, often to only one.” Id. “Legislative acts, on the other hand, generally apply

to a larger segment of—if not all of—society.” Id. (quoting McKinney, 20 F.3d at 1557 n.9). “A

legislative act also involves policy-making rather than mere administrative application of existing

policies.” Id. “[L]aws and broad-ranging executive regulations are the most common examples.” Id.

(quoting McKinney, 20 F.3d at 1557 n.9).

Even if Plaintiff had alleged a protectable liberty or property interest (and it has not), the Court

would find that Plaintiff has not alleged a substantive due process violation here. A “legislative act”

must be at issue for Plaintiff to allege a substantive due process violation. Although the Complaint

states that the April 28 Resolution was a “formal legislative act” [ECF No. 69 ¶ 75], the Court

disagrees. Based on the legal distinction between legislative and executive acts and the Court’s review

of the Complaint, the April 28 Resolution was an executive act. Legislative acts typically apply to a

larger segment of society, and the April 28 Resolution (authorizing the City Administration to

negotiate a proposed non-binding term sheet with Boucher) only applied to Boucher and involved

one site of public property. See Flagship Lake Cnty. Dev. No. 5, LLC v. City of Mascotte, Fla., 559 F. App’x

811, 816 (11th Cir. 2014) (“The City’s decision was a ‘textbook executive act’ because it affected only

[plaintiff].”); Flint Elec. Membership Corp. v. Whitworth, 68 F.3d 1309, 1313 n.4 (11th Cir. 1995), modified,

77 F.3d 1321 (11th Cir. 1996) (characterizing as executive the selection according to state procurement

laws of a bidder for a state contract); see also Brantley Cnty. Dev. Partners, LLC v. Brantley Cnty., Ga. by &

through Chairman & Members of Brantley Cnty. Bd. of Commr’s, 559 F. Supp. 3d 1345, 1374 (S.D. Ga. 2021)

(finding that defendants’ rezoning decision constituted an executive action as it applied only to plaintiff

and its property rather than the residents of the county at large). Thus, it was an executive act. Because

the April 28 Resolution was an executive act, it cannot support a substantive due process claim under

42 U.S.C. § 1983. Thus, the Motion is granted as to Count V, and Count V is dismissed.

C. Supplemental Jurisdiction (remaining state law claims)

Defendant’s Motion to Dismiss is granted as to Count I and Count V. Because the Court

finds that both federal claims in the Complaint over which this Court has original subject matter

jurisdiction are due to be dismissed, the Court no longer has subject-matter jurisdiction. Having

disposed of these claims, the Court declines to exercise supplemental jurisdiction over Plaintiff’s

remaining state law claims. A district court may decline to exercise its supplemental jurisdiction if it

“has dismissed all claims over which it has original jurisdiction.” 28 U.S.C. § 1367(c)(3). The dismissal

of state law claims is strongly encouraged when federal law claims are dismissed prior to trial. Baggett

v. First Nat’l Bank of Gainesville, 117 F.3d 1342, 1353 (11th Cir. 1997). Moreover, the Gibbs factors

support the Court declining to exercise supplemental jurisdiction over the state law claims.

Concerns of comity here weigh heavily in favor of dismissal. The Complaint now consists

entirely of state causes of action that would be more appropriately resolved by a Florida state court.

Pinkert, 2012 WL 3962386, at *2; see also Ameritox, Ltd. v. Millennium Lab’ys, Inc., 803 F.3d 518, 540 (11th

Cir. 2015) (“State courts, not federal courts, should be the final arbiters of state law in our federalist

system.” (cleaned up)). Moreover, it would not inconvenience the parties for the state law claims to

be litigated in state court as the parties initially litigated this case in state court. As to judicial economy,

the Court has not yet considered the issues raised in the state law claims nor have the parties argued

these issues before the Court. Parker v. Scrap Metal Processors, Inc., 468 F.3d 733, 746 (11th Cir. 2006)

(“Having a state court rehash issues that have already been argued in federal court is far more likely

to cause multiplicity in litigation[.]”). Finally, Plaintiff is free to refile its remaining claims in state

court. See Zen Grp., Inc. v. Harris, No. 1:20-CV-23218, 2021 WL 6802922, at *2 (S.D. Fla. Dec. 29,

2021) (citing Espinoza v. Galardi S. Enterprises, Inc., No. 14-CIV-21244, 2018 WL 1729757, at *11 (S.D.

Fla. Apr. 10, 2018) (“However, the question of whether [p]laintiffs could timely bring its state law

claims in state court is a non-issue. This is because § 1367(d) tolls the statute of limitations for state

claims during the period in which they have been pending in federal court and for 30 days after an

order of dismissal.’””); 28 U.S.C. § 1367(d)).

Accordingly, the Court declines to exercise supplemental jurisdiction over Plaintiffs remaining

state-law claims. Moreover, having disposed of all of Plaintiffs federal claims on the grounds

articulated above, the Court need not and does not address any of the other arguments made in the

Motion.

IV. CONCLUSION

Accordingly, it is ORDERED and ADJUDGED as follows:

1. Defendant’s Motion to Dismiss [ECF No. 72] is GRANTED to the extent that it ts

directed to the claims brought pursuant to 42 U.S.C. § 1983, and DENIED to the extent

that it is directed to the claims brought pursuant to Florida law.

2. Counts | and V of the Complaint pursuant to 42 U.S.C. § 1983 are DISMISSED WITH

PREJUDICE.

3. The Court declines to exercise supplemental jurisdiction over Plaintiffs claims pursuant

to Florida law and such claims (Counts II, III, IV, VI, VH, VUI, EX, X, XI, XII, XIII,

XIV, XV, and XVI) are DISMISSED WITHOUT PREJUDICE.

4. Any pending motions are DENIED AS MOOT.

5. All deadlines are TERMINATED.

6. ‘The Clerk of Court is DIRECTED to CLOSE THIS CASE.

DONE AND ORDERED 1n the Southern District of Florida on June 10, 2025.

ae es

UNITED STATES DISTRICT JUDGE

ce: counsel of record

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