## Facts

- Landowners Joseph and Clarice Wheeler contracted to sell land to Cliff Development Corp. for $160,000 for a planned 120-unit apartment complex; Cliff made a $1,000 down payment.
- The planning commission determined the project complied with existing zoning, the City issued a building permit, and Cliff paid $6,165 in permit fees and began pre-construction work.
- After community opposition, public meetings, and a referendum opposing the project, the City Council enacted Ordinance No. 216, which prohibited apartment complexes.
- The plaintiffs sued the City and city officials for constitutional violations and sought damages and equitable relief.
- The district court held the ordinance unconstitutional as applied to the plaintiffs, finding it arbitrary and capricious, confiscatory, and lacking a substantial relationship to legitimate police-power interests.
- After prior appellate proceedings established liability, the remaining dispute concerned the proper methodology for calculating damages and allocating them among the landowners and the development entities.
- By agreement, the individual city officials were dismissed from the damages claims, leaving the City as the damages defendant.

## Issues

1. Whether the district court applied the correct measure of damages for the City’s unconstitutional interference with the approved apartment development.
2. How damages should be calculated and allocated among landowners and developer entities to compensate actual loss without duplicative recovery.
3. What limits apply to recovery of lost profits and other consequential losses to ensure damages are caused by the constitutional violation and are not speculative.

## Decision

- The Eleventh Circuit held that the district court applied an incorrect measure of damages.
- The court vacated the damages judgment and remanded for recalculation consistent with proper § 1983 damages principles.
- The court left intact the prior determinations of unconstitutional conduct and liability; the appeal concerned damages only.

## Legal Principles

- Compensatory damages under § 1983 are guided by common-law tort principles and aim to place plaintiffs in the position they would have occupied absent the constitutional violation—no better and no worse.
- The proper measure of damages must reflect the value of the specific legally protected interests impaired by the unconstitutional act and must be tied to provable economic harm.
- Courts must differentiate distinct interests of different plaintiffs (e.g., landowners’ interests in the contracted sale and property-related losses versus developers’ interests in project costs and reasonably certain profits).
- Damages must be allocated to avoid double counting the same economic loss across multiple plaintiffs.
- Recovery must be limited to losses caused by the unconstitutional conduct and established with reasonable certainty; purely speculative profits are not compensable.

## Conclusion

The Eleventh Circuit vacated the damages award because the district court used an improper damages methodology and remanded for a recalculation that compensates only actual, non-duplicative, non-speculative losses attributable to the City’s unconstitutional land-use action.


Wheeler v. City of Pleasant Grove (Wheeler III), 833 F.2d 267 (11th Cir. 1987)