Mike Jabary v. City of Allen ( 2017 )

Case: 15-40009 Document: 00513958568 Page: 1 Date Filed: 04/19/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 15-40009 FILED
April 19, 2017
Lyle W. Cayce
Consolidated With 15-40099 Clerk
MIKE JABARY,
Plaintiff – Appellee,
v.
BRET MCCULLOUGH, City Building Official for the City of Allen,
Defendant – Appellant.
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Consolidated With 15-40772
MIKE JABARY,
Plaintiff – Appellant,
v.
CITY OF ALLEN; BRET MCCULLOUGH, City Building Official for the City
of Allen,
Defendants – Appellees.
Appeals from the United States District Court
for the Eastern District of Texas
USDC No. 4:10-CV-711
Case: 15-40009 Document: 00513958568 Page: 2 Date Filed: 04/19/2017
No. 15-40009
Cons w/ Nos. 15-40099, 15-40772
Before KING, JOLLY, and ELROD, Circuit Judges.
PER CURIAM:*
City building inspector Bret McCullough shut down Mike Jabary’s
hookah lounge. 1 He did so by leaving a notice on the door of the establishment
that summarily revoked Jabary’s certificate of occupancy and informed him
that he was violating the city code by doing business without the certificate.
At issue in this case is whether the building inspector’s action, taken on behalf
of the City of Allen, violated the United States Constitution’s Due Process and
Takings Clauses. The building inspector appeals two district court decisions
denying summary judgment on Jabary’s procedural due process claim. 2
Because the current posture of the case bars us from resolving the factual
dispute on which this claim depends, we DISMISS the building inspector’s
appeal for lack of jurisdiction. Jabary cross-appeals the district court’s
judgment dismissing with prejudice his takings claim against the City.
Because that claim is not ripe, we modify the district court’s judgment of
dismissal to be without prejudice and AFFIRM as modified.
I.
For approximately one year, Jabary’s hookah lounge operated under a
certificate of occupancy signed by the building inspector and by representatives
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
1 A hookah lounge is a smoking facility that provides patrons with communal hookahs,
which are pipes that pass smoke through water and have multiple hoses that function like
stems for breathing what is smoked. See https://en.wikipedia.org/wiki/hookah_lounge.
2 Jabary’s notice of appeal indicates that he also appeals the district court’s denial of
his motion for a new trial on his claim against the City of Allen. We need not reach this issue
as it was not adequately briefed and therefore is not properly before us. See United States v.
Scroggins, 599 F.3d 433, 446–47 (5th Cir. 2010) (holding that an issue was not adequately
presented when it was only mentioned briefly in the context of other issues).
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of the City of Allen’s Fire and Health Departments. The certificate authorized
Jabary to use his facility as a “Restaurant (No Drive-In or Through),” which
the city code defines as “an establishment serving food to the general public in
specific, designated dining areas.” Jabary applied for this certificate of
occupancy using a form that listed “Restaurant/Hookah Bar” as the intended
use, and the building inspector approved the application with knowledge that
Jabary intended to rent hookah devices to his customers. Jabary alleges that,
in addition to the certificate of occupancy, the City issued him two documents,
which are not in the record, acknowledging that the lounge “would be a
smoking-only facility” and omitting any mention of minimum food sale
requirements.
Jabary’s year in business came to an end when the City building
inspector hung a notice of violation on the door of his establishment stating
that he was “doing business in the City of Allen without a certificate of
occupancy.” The building inspector explained in a handwritten note on the
back of the notice that Jabary’s “certificate of occupancy is hereby revoked”
because the “establishment does not meet criteria for restaurant use.” The
building inspector revoked Jabary’s certificate of operation without notice or a
hearing after two inspections of the facility in a two-week period revealed
substantial sanitation problems. 3 However, he later testified that he revoked
the certificate of occupancy for a combination of reasons, including community
concerns, but that he “couldn’t put [his] finger on an emergency issue”
requiring summary revocation of Jabary’s certificate of occupancy.
3 In contrast, City health inspectors responded to the same sanitation problems by
warning Jabary that he would receive a citation if he did not address the problems within
ten days, not one of which had passed by the time the City building inspector revoked the
certificate.
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Internal correspondence reveals that City officials had been discussing
possible ways of revoking Jabary’s certificate of occupancy in response to
community concerns about tobacco sales to minors and about sales of K2, a
drug similar to marijuana that was legal at the time. During these discussions,
the City’s senior planner had indicated that operating as a hookah lounge was
permitted under Jabary’s certificate of occupancy and that only establishments
that sold alcohol were required to have a minimum amount of food sales. The
building inspector had initially agreed that “the facility is in compliance from
a zoning, building code, and health perspective.” After the first inspection
revealed sanitation problems, however, he helped to implement a “plan of
action” to inspect a second time and “see if we all agree there is not 51% sales
of food then pull CO [certificate of occupancy].”
Jabary brought a procedural due process claim against the City building
inspector and a takings claim against the City of Allen. 4 The district court
dismissed Jabary’s procedural due process claim, but this court determined
that the building inspector was not entitled to qualified immunity on the
pleadings and reversed. Jabary v. City of Allen (Jabary I), 547 F. App’x 600
(5th Cir. 2013). On remand, the building inspector twice moved for summary
judgment on Jabary’s procedural due process claim, again based on qualified
immunity. The district court denied both motions, finding that there was a
genuine issue of material fact as to whether the building inspector acted
arbitrarily or had a reasonable basis for determining that there was an
emergency requiring summary action. The building inspector appeals both
denials of summary judgment on Jabary’s procedural due process claim.
4 Jabary also brought other claims that are not at issue in this appeal.
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The district court stayed Jabary’s takings claim against the City so that
Jabary could pursue it in state court as required by Williamson County
Regional Planning Commission v. Hamilton Bank, 473 U.S. 172 (1985). After
the Texas Fifth Court of Appeals affirmed summary judgment for the City in
Jabary’s state lawsuit, the district court lifted its stay. Jabary v. City of Allen
(Jabary II), No. 05-12-01608-CV, 2014 WL 3051315 (Tex. App.—Dallas July 3,
2014, no pet.) (mem. op., not designated for publication). The City of Allen
moved for summary judgment, and the district court granted the City’s motion
and dismissed Jabary’s takings claim on the ground that Jabary II precluded
the claim and, alternatively, that the claim was not ripe. The district court
then severed Jabary’s claims against the City and entered a final judgment of
dismissal as to these claims pursuant to Federal Rule of Civil Procedure 54(b).
Jabary appealed the judgment of dismissal, and his appeal is consolidated with
the building inspector’s appeal in the case now before us.
II.
This court’s jurisdiction over denial of summary judgment on qualified
immunity is limited to issues of law. Trent v. Wade, 776 F.3d 368, 376 (5th
Cir. 2015); Kinney v. Weaver, 367 F.3d 337, 346 (5th Cir. 2004). Thus, we
review the materiality of any factual disputes de novo and do not review their
genuineness at all. Trent, 776 F.3d at 376; Kinney, 367 F.3d at 347, 349.
Because the district court identified a genuine issue of fact as to whether the
building inspector had a reasonable basis for determining that there was an
emergency warranting immediate action, our jurisdiction over his appeal is
limited to an assessment of whether this issue of fact is material to the
qualified immunity defense.
The defense of qualified immunity turns on two questions, which the
court may address in any order: (1) whether the official violated a federal right;
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and (2) whether the right was clearly established at the time of the challenged
conduct. Trent, 776 F.3d at 377. We have already determined that at the time
Jabary’s certificate of occupancy was revoked, it was clearly established that
procedural due process in most cases requires an opportunity for a hearing
prior to deprivation of a property interest. Jabary I, 547 F. App’x 609–10
(citing Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 542 (1985); Mathews
v. Eldridge, 424 U.S. 319, 333 (1976)); see also Bell v. Burson, 402 U.S. 535,
542 (1971) (requiring opportunity for a hearing prior to deprivation of a license
necessary to the plaintiff’s profession); Leland v. Miss. State Bd. of Registration
for Prof’l Eng’rs & Land Surveyors, 35 F.3d 559, *1 (5th Cir. 1994) (same).
However, a pre-hearing deprivation of property is permissible if: (1) the state
did not act arbitrarily or abuse its discretion in determining that there existed
an emergency situation that threatens public safety and necessitates quick
action; 5 and (2) adequate post-deprivation process is provided. RBIII, L.P. v.
City of San Antonio, 713 F.3d 840, 844–45 (5th Cir. 2013); see also Zinermon v.
Burch, 494 U.S. 113, 127–28 (1990) (describing general requirement of
opportunity for pre-deprivation hearing and noting that due process can be
satisfied by a post-deprivation hearing in emergency situations).
Only one factual issue material to this analysis is disputed. The parties
do not dispute that Jabary had a property interest in his certificate of
occupancy, that he was deprived of it prior to any opportunity for a hearing, or
that there were adequate post-deprivation procedures in place. 6 Thus,
5 Jabary argues that more stringent review of the determination that there is an
emergency is appropriate in cases where the state did not act pursuant to an ordinance
providing for summary action. Because Jabary acknowledges that this argument is forfeited
and because we would reach the same result under either standard, we need not decide the
question.
6 However, Jabary contends that these procedures were meaningless in his case
because he was not aware of them.
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whether the building inspector’s action violated Jabary’s clearly established
right to a pre-deprivation hearing depends on whether his determination that
there was an emergency was arbitrary or an abuse of discretion. See RBIII,
713 F.3d at 844–45; see also Bowlby v. City of Aberdeen, Miss., 681 F.3d 215,
220–26 (5th Cir. 2012) (holding, where there was no emergency, that a city
permit to operate a retail business could not be revoked without pre-
deprivation process). Accordingly, the issue of fact identified by the district
court—whether there was a reasonable basis for the building inspector to
determine that there was an emergency—is material to the qualified immunity
defense.
Nevertheless, the building inspector challenges the district court’s
determination that there is a factual dispute as to whether the building
inspector acted reasonably. He argues that this dispute is not genuine.
According to the building inspector, there can be no genuine dispute of fact
because the district court determined that unsanitary conditions could allow a
jury to determine that there was a reasonable basis for thinking there was a
public health emergency, although it also determined that a jury could find
otherwise. The building inspector also argues that unsanitary conditions and
concerns over the sale of K2 preclude any argument that he acted arbitrarily
or abused his discretion. Because these arguments attack the genuineness of
the issue of fact identified by the district court rather than its materiality, we
lack jurisdiction to consider them on interlocutory review and must remand
the case for further consideration of Jabary’s procedural due process claims
against the building inspector. See Kinney, 367 F.3d at 347, 349.
III.
A federal takings claim is not ripe if the plaintiff has not pursued
available and adequate means of obtaining compensation under state law.
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Williamson, 473 U.S. at 196–97. A plaintiff has not pursued available and
adequate means of obtaining compensation if he brings an action in state court
but fails to present it in a posture that allows the state court to rule on the
merits. Liberty Mut. Ins. Co. v. Brown, 380 F.3d 793, 798 (5th Cir. 2004). Thus,
a claim is not ripened by pursuit of a state court lawsuit that is dismissed for
failure to comply with a reasonable state-law exhaustion requirement. Id. at
797–98.
Under this rule, Jabary’s takings claim is not ripe. Jabary’s state court
takings lawsuit was dismissed for failure to comply with a reasonable state-
law exhaustion requirement because he did not file an administrative appeal
within fifteen days of the time his certificate of occupancy was revoked. Jabary
II, 2014 WL 3051315, at *3. Jabary argues that there is now no available
means for pursuing compensation under state law, as demonstrated by the
dismissal of his state lawsuit for failure to file an administrative appeal that
is time-barred. He also argues that there is no adequate means for pursuing
compensation under state law because Texas law requires, as a pre-requisite
to an inverse-condemnation lawsuit, that he exhaust administrative remedies
that did not provide for compensation and were therefore futile. Although at
first blush these arguments give us pause, we have already held in similar
circumstances that state law provided an available and adequate means of
obtaining compensation even though the plaintiff’s state claims were time-
barred and required exhaustion of non-compensatory administrative appeals.
See Liberty Mutual, 380 F.3d at 799 (holding that the availability and adequacy
of a remedy must be judged at the time of the alleged taking); Liberty Mut. Ins.
Co. v. La. Ins. Rating Comm’n, 713 So. 2d 1250, 1253 (La. Ct. App. 1998)
(determining that administrative appeal procedure did not provide for
compensation). Thus, the district court correctly determined that Jabary’s
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federal takings claim is unripe due to his failure to use adequate state
procedures for obtaining just compensation that were available at the time of
the taking. Dismissal was appropriate but should have been without prejudice
due to the fact that the district court lacked subject matter jurisdiction to hear
the issue on the merits. See Jabary I, 547 F. App’x at 605.
IV.
For the reasons stated above, the building inspector’s appeal is
DISMISSED for lack of jurisdiction and Jabary’s procedural due process claim
is REMANDED for further consideration. Because Jabary’s takings claim
against the City of Allen is not ripe, the district court’s judgment dismissing
Jabary’s claim is modified to be without prejudice and is AFFIRMED as
modified.
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