L & F Homes and Devel, L.L.C. v. City of Gulfport

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
August 7, 2013
No. 12-60597, Cons. w/ 12-60600 Lyle W. Cayce
Clerk
L & F HOMES AND DEVELOPMENT, L.L.C., doing business as Hyneman
Homes; LARRY MITRENGA,
Plaintiffs-Appellants
v.
CITY OF GULFPORT, MISSISSIPPI,
Defendant-Appellee
-----------------------------------------------------------
Cons. w/ 12-60601
LARRY MITRENGA,
Plaintiff-Appellant
v.
CITY OF GULFPORT, MISSISSIPPI,
Defendant-Appellee
Appeals from the United States District Court
for the Southern District of Mississippi
USDC No. 1:10-CV-387
Before GARZA, SOUTHWICK, and HAYNES, Circuit Judges.
No. 12-60597, Cons. w/ 12-60600, 12-60601
PER CURIAM:*
L&F Homes and Development, LLC and Larry Mitrenga were denied
water service from the City of Gulfport for a planned residential development
called “Roundhill.” L&F and Mitrenga sued Gulfport for discrimination under
42 U.S.C. § 1982, the Fair Housing Act (“FHA”), and the Equal Protection
Clause; for violations of the Takings Clause and substantive due process; for
procedural due process deprivation; and on state law claims related to breach of
contract. The district court granted summary judgment to Gulfport on all
claims. We AFFIRM.
FACTUAL BACKGROUND
The relevant background of this case falls into three broad categories:
approvals granted to L&F’s Roundhill development, treatment of a neighboring
development tract referred to as “781,” and Gulfport’s fire flow requirements.
In March 2006, Gulfport issued what is called a “will serve letter” to the
predecessor in interest of Roundhill, which confirmed there was water and sewer
service available to the property. In August 2006, Gulfport entered into a
Wastewater Service Agreement with the then-owner of Roundhill.
Subsequently, Mississippi officials approved the sewer plan; Gulfport then
inspected the Roundhill property and prepared a list of items the developer had
to complete. In January 2007, a work order was issued for installation of a City
water meter on Roundhill. After 2007 there is some evidence that the water
system at Roundhill was at least partially active, but L&F never paid for water
service, and there is no evidence of payment by any other entity.
In 2008, Gulfport issued a will serve letter to the 781 development, which
was on land neighboring Roundhill and on the same Landon Road water line.
*
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.
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At that time, the 781 project was a townhouse complex. Gulfport refused to
issue a new will serve letter in the fall of 2009, after 781’s development plan
shifted to a cottage complex. Later, at a June 2010 hearing before a governing
board for the county, 781 was further denied a conditional use permit on the
basis that “the development is incompatible with the neighborhood.” At this
hearing, various Gulfport representatives offered reasons why 781 would be
incompatible. These included problems regarding traffic and parking, light and
noise, danger to children posed by vehicles, fire protection, crime, and
consistency with other city development plans. One Gulfport representative
made references to crime problems at a Federal Emergency Management Agency
park in Gulfport, a park with predominantly black residents located in an area
that otherwise had primarily white residents.
In November 2006, City Ordinance 2501 increased the fire flow
requirements for residential developments such as Roundhill and 781 from 500
gallons per minute (“gpm”) to 1000 gpm. This measure identified the amount of
water available at a given location by connection to water sources for firefighting
needs. In November 2009, Gulfport received a hydraulic analysis by the Garner
Russell firm that stated the fire flow capacity for the water line servicing
Roundhill and 781 was only 600 gpm, not the required 1000 gpm. Subsequent
testing confirmed this deficiency.
In February 2010, Gulfport denied final approval of water service to
Roundhill. In March 2011, after this present lawsuit had been filed, Gulfport
began supplying water service to Roundhill from a new water line constructed
by the county. In March 2012, Gulfport excavated a portion of the Landon Road
line that had earlier been found insufficient to service Roundhill. A nearly-
closed water valve was discovered. After the valve was opened, it appears that
the Landon Road water line could supply the Roundhill property.
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The district court granted summary judgment in favor of Gulfport on all
claims arising from Gulfport’s denial of water service to Roundhill. Both L&F
and Mitrenga appeal.
DISCUSSION
We review a district court’s grant of summary judgment de novo. Onoh v.
Nw. Airlines, Inc., 613 F.3d 596, 599 (5th Cir. 2010). We view all evidence in the
light most favorable to the non-moving party. Id. Summary judgment should
be granted only if “there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A
genuine issue of material fact exists if “a reasonable jury could return a verdict
for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). Summary judgment is appropriate if the non-moving party “fails to
make a showing sufficient to establish the existence of an element essential to
that party’s case.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
“We review questions of jurisdiction, and specifically standing, de novo.”
Bonds v. Tandy, 457 F.3d 409, 411 (5th Cir. 2006).
I. Section 1982
Section 1982 states: “All citizens of the United States shall have the same
right, in every State and Territory, as is enjoyed by white citizens thereof to
inherit, purchase, lease, sell, hold, and convey real and personal property.” 42
U.S.C. § 1982. A discrimination claim typically requires a showing that the
plaintiff is “a member of a racial minority.” See Bellows v. Amoco Oil Co., 118
F.3d 268, 274 (5th Cir. 1997). Yet “whites have a cause of action under Section
1982 when discriminatory actions are taken against them because of their
association with blacks.” Woods-Drake v. Lundy, 667 F.2d 1198, 1201 (5th Cir.
1982). The “association” in Woods-Drake was white resident-plaintiffs who were
threatened with eviction “if they continued to have black guests.” Id.4
No. 12-60597, Cons. w/ 12-60600, 12-60601
L&F does not claim status as a racial minority. Instead, it asserts that
Roundhill was denied water service because of the development’s temporal and
physical proximity to 781, which was a housing development allegedly likely to
be occupied by a majority of black residents. Roundhill and 781, on adjacent
tracts, both applied for water service that would need to come from the same
Landon Road line. The properties are subject to different development plans and
owned by distinct corporate entities. In effect, L&F asserts Roundhill was
denied water service so that Gulfport’s denial of service to 781 would not appear
to be motivated by race. Woods-Drake protects whites who are punished for
their support of or interaction with minorities. Id. (summarizing cases). We do
not accept that the discrimination prohibited by the Woods-Drake reasoning
reaches situations where a non-minority alleges it was part of the collateral
damage resulting from its coincidental presence in the queue for a governmental
benefit at the same time and location as a minority.
L&F lacks standing to bring a Section 1982 claim.
II. Fair Housing Act
The FHA applies to “any person who . . . claims to have been injured by a
discriminatory housing practice.” 42 U.S.C. § 3602(i)(1). The “sole requirement
for standing under the FHA is the Article III minima.” Lincoln v. Case, 340 F.3d
283, 289 (5th Cir. 2003) (citation omitted). We analyze FHA claims under a
burden-shifting framework. See Simms v. First Gibraltar Bank, 83 F.3d 1546,
1556-57 (5th Cir. 1996).
Standing for an FHA claim does not require association with minorities.
It is enough that L&F claims that Gulfport’s supposed discrimination against
the other development led to its own damage. For example, the Supreme Court
noted that the distinction between standing for first-party test purchasers and
for third-party neighborhood residents was “of little significance [under the
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FHA;] . . . the only requirement for standing to sue” was distinct and palpable
injury fairly traceable to the challenged action (i.e., injury in fact). Havens
Realty Corp. v. Coleman, 455 U.S. 363, 375-76 (1982).
L&F has standing to claim that Gulfport discriminated for racial reasons
against another development and that discrimination injured L&F as well. It
must “show that race was a consideration and played some role in a real estate
transaction” to establish a prima facie case. Hanson v. Veterans Admin., 800
F.2d 1381, 1386 (5th Cir. 1986). Discriminatory consideration of race under the
FHA can be demonstrated by either “a showing of a significant discriminatory
effect” or “proof of discriminatory intent,” that is disparate impact or
discriminatory treatment. Id. L&F claims discrimination on both theories.
A. Disparate Impact
“[D]isparate-impact claims ‘involve [policies or] practices that are facially
neutral in their treatment of different groups but that in fact fall more harshly
on one group than another and cannot be justified by business necessity.’”
Raytheon Co. v. Hernandez, 540 U.S. 44, 52 (2003) (discussing claims under the
Americans with Disabilities Act). The Supreme Court has not previously
answered and has just granted a writ of certiorari on this question: “Are
disparate impact claims cognizable under the Fair Housing Act?” Mt. Holly
Gardens Citizens in Action, Inc. v. Township of Mount Holly, 658 F.3d 375 (3d
Cir. 2011), cert. granted, 133 S. Ct. 2824 (2013).
We need not await the Supreme Court’s decision because the plaintiffs’
claim fails regardless of the answer. Beyond just alleging the existence of a
disparate impact, L&F would have to identify a “specific test, requirement, or
practice” that is responsible for the disparity. Smith v. City of Jackson, 544 U.S.
228, 241 (2005) (discussing claim under the Age Discrimination in Employment
Act). L&F asserts that the likely racial composition of the hypothetical 781
development would be at least 60% black and that denying 781 the ability to
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No. 12-60597, Cons. w/ 12-60600, 12-60601
develop creates a disparate impact. Even if that is true, L&F has failed to
describe a specific neutral practice or policy that “falls more harshly” on a
protected group than on others; that failure means the disparate-impact theory
is inapplicable. Cf. Pacheco v. Mineta, 448 F.3d 783, 792 (5th Cir. 2006)
(dismissing disparate-impact claims where an administrative charge complained
only of disparate treatment).
If there is a claim under the FHA, it is for disparate treatment.
B. Disparate Treatment
“Disparate treatment” is “deliberate discrimination.” Munoz v. Orr, 200
F.3d 291, 299 (5th Cir. 2000). Such discrimination is shown by evidence of
discriminatory action or by inferences from the “fact of differences in treatment.”
See Int’l Bhd. of Teamsters v. United States, 431 U.S. 324, 335 n.15 (1977).
Turning first to direct evidence of discrimination, L&F points to
statements made by Gulfport representatives at a June 2010 public hearing
conducted by the county on the subject of 781’s conditional use permit. L&F
highlights the testimony of a police officer who stated: “What I see is this is a
footprint the same as a FEMA park. If you know of anything that we dealt with
in a FEMA park, we were constantly having drug problems, shootings, rapes,
and stuff like that. Now I feel we are going to have the same issues here . . . .
You may have someone there that is a [pedophile] that is going to be watching
kids over there.” Other concerns included problems with traffic and parking,
light and noise, danger to children posed by vehicles, fire protection issues, and
consistency with other city development plans. One city resident also mentioned
concern over the depression of property values. No speaker at the hearing
mentioned race.
This evidence does not support that any City official acted with racial
motivations. L&F also points to evidence that when it requested testing of the
Landon Road line in April 2010, Gulfport expressed concerns that testing on
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No. 12-60597, Cons. w/ 12-60600, 12-60601
behalf of L&F could adversely impact settlement negotiations in Gulfport’s
litigation with 781. Without more, the stated concerns about a lawsuit being at
a delicate stage of settlement do not equate to evidence of discrimination.
L&F also attempts to show that the Roundhill development was qualified
for water service but had the service denied, whereas similarly situated
residents were treated differently. See Munoz, 200 F.3d at 299. As a threshold
matter, L&F does not claim that prior to the excavation of the Landon Road line
in March 2012, Roundhill or 781 satisfied the fire flow requirements of the 2006
ordinance. Rather, L&F asserts that the Landon Road line “had the capacity to
provide ample fire flow” such that if the closed valve had been open in 2010,
Roundhill would have been qualified. What might have occurred had all the
facts been known does not matter. On February 22, 2010, the Landon Road line
as then-operational could not supply fire flow of 1000 gpm to Roundhill. There
is no evidence Gulfport knew of the closed valve, which might make the denial
pretextual. Roundhill was, therefore, not qualified.
Even though Roundhill was not qualified, L&F attempts to show “that race
was a significant factor in the refusal” because other similarly situated
developments were approved notwithstanding a lack of verification of compliance
with the ordinance. See Artisan/Am. Corp. v. City of Alvin, Tex., 588 F.3d 291,
295 (5th Cir. 2009). A proper point of comparison is a “nearly identical, similarly
situated individual[ ].” Bryant v. Compass Group USA Inc., 413 F.3d 471, 478
(5th Cir. 2005).
The most relevant comparator to which L&F points is Holliman Place, a
residential development within Gulfport city limits, which received a will serve
letter in 2008. Holliman did not receive final approval until 2011 after
satisfactory fire flow testing. Although testing demonstrated inadequate fire
flow on December 8, 2011, uncontradicted evidence suggests that a “looping”
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modification rendered the fire flow adequate on December 9, 2011. This looping
modification means Holliman was not a nearly identical comparator.
L&F also identifies Sam’s Club, Rooms to Go, and the English Manor
residential development, as comparators. L&F does not point to inadequate fire
flow testing on these sites in a contemporary time period, prior to final approval.
Further, Gulfport testified that Sam’s Club and Rooms to Go had internal
sprinkler systems that would justify a variance from the ordinance, and that
looping of water lines and the placement of fire hydrants were also
considerations. English Manor received final approval before the effective date
of the ordinance.1
Gulfport’s determination of compliance with the ordinance primarily relied
on a developer’s engineers. In November 2009, Gulfport received a report
indicating that the Landon Road line produced a fire flow below 1000 gpm,
putting Gulfport on notice that the general fire flow capacity of the Landon Road
line was inadequate. We have been pointed to no evidence that Gulfport
approved a residential development for water service after this date without
verifying compliance with the 1000 gpm requirement.
“The burden of establishing a prima facie case of disparate treatment is
not onerous.” Tex. Dep’t of Cmty. Affairs v. Burdine, 450 U.S. 248, 253 (1981).
Nonetheless, L&F has failed to carry it. The district court properly dismissed
the disparate treatment and disparate impact claims.
III. Equal Protection
1
L&F refers to other residential developments that Gulfport allowed to proceed after
the enactment of the ordinance, but discovery did not unearth relevant records of pre-approval,
inadequate fire flow testing supportive of discrimination. Although here, as in other instances,
L&F points to Gulfport’s unsatisfying production of records, L&F does not appeal any of the
district court’s discovery rulings.
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No. 12-60597, Cons. w/ 12-60600, 12-60601
An equal protection claim may be “brought by a ‘class of one,’ where the
plaintiff alleges that she has been intentionally treated differently from others
similarly situated and that there is no rational basis for the difference in
treatment.” Vill. of Willowbrook v. Olech, 528 U.S. 562, 564 (2000). Similarly,
an equal protection plaintiff can prevail under a selective enforcement theory by
showing “that the selective enforcement was deliberately based upon an
unjustifiable standard such as race, religion, or other arbitrary classification.”
Allred’s Produce v. U.S. Dep’t of Agric., 178 F.3d 743, 748 (5th Cir. 1999)
(quotation marks omitted).
The ordinance establishes requirements in order to maintain sufficient
water pressure to fight fires. There is no evidence or even argument that the
ordinance, by utilizing the fire flow requirements of the 2003 International Fire
Code, is “irrational” or “arbitrary.” See Olech, 528 U.S. at 565. The ordinance
provides for differential treatment of property depending on the use to which the
property is put, and that too is not irrational. See Mikeska v. City of Galveston,
451 F.3d 376, 381 (5th Cir. 2006).
L&F does not really argue that the ordinance itself is irrational. Instead,
it claims that Gulfport selectively enforced the ordinance against Roundhill and
not against other developments. We have already discussed that L&F has not
identified in the record a similarly situated comparator against whom the
ordinance was not enforced. It was not until November 2009 that Gulfport
became aware of testing that documented the inadequacy of fire flow of the
relevant portion of the Landon Road line. Holliman satisfied the requirements
of the ordinance and was approved. The commercial buildings, though also
covered by the ordinance, qualified for exceptions or reductions in the fire flow
requirements. The record arguably does not demonstrate diligent inquiry,
enforcement, or record keeping by Gulfport, but there is no evidence of instances
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in which Gulfport was aware of noncompliance and nonetheless issued a final
approval of water service.
For L&F to succeed in a selective enforcement claim, it “must prove that
the government [was] motivated by improper considerations, such as race.”
Bryan v. City of Madison, 213 F.3d 267, 277 (5th Cir. 2000). L&F has not shown
evidence that, either by its statements or actions, Gulfport’s denial of water
service to Roundhill was “deliberately based upon an unjustifiable standard such
as race.” Allred’s Produce, 178 F.3d at 748.
The district court properly dismissed the Equal Protection claim.
IV. State Law Claims
L&F raises state law claims of breach of express contract, breach of
implied contract, and equitable estoppel.
A. Express Contract
In Mississippi, “an enforceable contract must appear in the official minutes
of a public board.” Bruner v. Univ. of S. Miss., 501 So. 2d 1113, 1115 (Miss.
1987). It is the responsibility of the contracting party to ensure that such
contracts are properly recorded in such minutes. Id. In a breach of contract
suit, the plaintiff must prove the existence of a valid contract by a preponderance
of the evidence. Garner v. Hickman, 733 So. 2d 191, 195 (Miss. 1999). “The
existence of a contract and its terms are questions of fact to be resolved by the
fact-finder, whether a jury or a judge in a bench-trial.” Weible v. Univ. of S.
Miss., 89 So. 3d 51, 59 (Miss. Ct. App. 2011). “Questions concerning the
construction of contracts are questions of law that are committed to the court,”
and which we review de novo. Facilities, Inc. v. Rogers-Usry Chevrolet, Inc., 908
So. 2d 107, 110 (Miss. 2005).
First, L&F argues that in early 2007, Gulfport approved and accepted
Roundhill’s water system. What we find in the record is a work order in January
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2007 for installation of a water meter at Roundhill. There was evidence that
after this date Roundhill received water. Gulfport counters that there is no
record of the actual installation of a water meter and that no entity ever paid for
water at Roundhill. Whatever the meaning of these 2007 events, there is no
evidence of a written agreement such as one in which Gulfport agreed to provide
water service.
Second, two documents appear in Gulfport’s official minutes: a will serve
letter and a wastewater service agreement. The will serve letter states that
Roundhill was eligible for sewer and water service. A notification of eligibility
does not constitute an agreement to provide water service. It instead
contemplates multiple additional steps and specifically references the need for
a future final approval and inspection. Among the requirements for a contract
is definiteness, which this letter does not provide. Rotenberry v. Hooker, 864
So.2d 266, 270 (Miss. 2003). The second writing is a “Wastewater Service
Agreement” through which Gulfport agreed to treat Roundhill’s wastewater; the
terms of this agreement plainly only apply to wastewater.
The will serve letter and the wastewater agreement do not establish that
Roundhill expressly contracted with Gulfport for water service.
B. Implied Contract
An implied contract arises “from a mutual agreement and intent to
promise, but where the agreement and promise have not been fully expressed in
words.” Kaiser Invs., Inc. v. Linn Agriprises, Inc., 538 So. 2d 409, 413 (Miss.
1989). A contract implied in fact has the same binding legal effect as an express
contract. Franklin v. Franklin ex rel. Phillips, 858 So. 2d 110, 120 (Miss. 2003).
The district court held that the claim is barred by sovereign immunity. We
agree. Mississippi provides for governmental immunity in breach of implied
contract suits involving “the issuance, denial, suspension or revocation of, or the
failure or refusal to issue, deny, suspend or revoke any privilege, ticket, pass,
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permit, license, certificate, approval, order or similar authorization . . . .” MISS.
CODE ANN. § 11-46-9(1)(h); see City of Jackson v. Estate of Stewart ex rel.
Womack, 908 So. 2d 703, 711 (Miss. 2005). The governmental unit forfeits this
immunity when a decision “is of a malicious or arbitrary and capricious nature.”
MISS. CODE ANN. § 11-46-9(1)(h).
A decision is not arbitrary and capricious when it is “fairly debatable” or
“supported by substantial evidence,” defined as “affording a substantial basis of
fact from which the fact in issue can be reasonably inferred.” Elec. Data Sys.
Corp. v. Miss. Div. of Medicaid, 853 So. 2d 1192, 1203 (Miss. 2003). This is a
highly deferential standard. Id. at 1202-03. As of February 22, 2010, Gulfport
understood that inadequate fire flow was then reaching Roundhill, and Gulfport
did not yet know of the closed valve. Consequently, Gulfport’s decision to deny
water service is at least fairly debatable. See Watkins v. Miss. Bd. of Bar
Admissions, 659 So. 2d 561, 568 (Miss. 1995).
Immunity is also waived when a decision is “malicious.” MISS. CODE ANN.
§ 11-46-9(1)(h). At least two definitions might be attributed to the word
malicious in this context. The first is that an act be “[w]ithout just cause or
excuse.” BLACK’S LAW DICTIONARY (9th ed. 2009). That definition does not differ
meaningfully from “arbitrary and capricious.” Gulfport’s denial was not
arbitrary based on what the city knew about water flow. A second definition is
more intent-based: “Substantially certain to cause injury” or with the “intention
or desire to harm another usu. seriously through doing something unlawful or
otherwise unjustified.” BLACK’S LAW DICTIONARY (9th ed. 2009); WEBSTER’S
THIRD NEW INTERNATIONAL DICTIONARY 1367 (Merriam-Webster 1993). In
applying a similar standard, Mississippi has at least suggested that a malicious
act may be one violative of the constitutional rights of a party. See In re Dean,
972 So. 2d 590, 594 (Miss. 2008) (“this Court will reverse the Board’s decision
only upon finding that it was ‘arbitrary, capricious or malicious’ in that it was
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unsupported by substantial evidence or violated a constitutional right of the
party”). We have already explained why the record does not support that
Gulfport’s denial was based on a constitutionally impermissible basis.
L&F’s claim for breach of implied contract is therefore barred by sovereign
immunity.
C. Equitable Estoppel
L&F also seeks damages under an estoppel theory. The argument is that
after Gulfport assured L&F that its development could proceed, Gulfport was
estopped from reversing positions.
Estoppel may arise even though a defendant is a municipality. Mayor &
Bd. of Aldermen, City of Clinton v. Welch, 888 So. 2d 416, 432 (Miss. 2004). An
estoppel claim requires: “(1) belief and reliance on some representation; (2)
change of position, as a result thereof; and (3) detriment or prejudice as a result
of the change of position.” Id.The relevant representations here are in the will serve letter and the
alleged oral statements made by City officials. As to the oral statements, L&F
alleges that the Gulfport Director of Public Works told Mitrenga and another
L&F representative, Steve Elrod, that there were no impediments to the
development of Roundhill, and that the project was “good to go.” Accepting as
true that these statements were uttered, these statements do not support
estoppel as a matter of law. There is no evidence that the Gulfport Director of
Public Works who made these statements had the power to authorize
exemptions from the ordinance, and “ordinarily the unauthorized acts of one of
its officials does not estop a municipality from acting in its governmental
capacity.” Suggs v. Town of Caledonia, 470 So. 2d 1055, 1057 (Miss. 1985).
The district court’s opinion did not address the will serve letter as a
representation potentially supportive of estoppel. L&F’s summary judgment
briefing on the issue refers only to “assurances improperly given” and discusses
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various oral representations. L&F’s complaint refers to “Gulfport’s
representations that the Roundhill subdivision was an existing entitled
community as of December 2009.” L&F did not urge before the district court
that it detrimentally relied on the will serve letter.2 Arguments not presented
to the district court are waived. Kirschbaum v. Reliant Energy, Inc., 526 F.3d
243, 257 n.15 (5th Cir. 2008).
L&F has failed to establish an equitable estoppel claim that withstands
summary judgment.
V. Substantive Due Process
“A violation of substantive due process . . . occurs only when the
government deprives someone of liberty or property.” Simi Inv. Co., v. Harris
Cnty., 236 F.3d 240, 249 (5th Cir. 2000). This claim requires a showing of (1) a
constitutionally protected right and (2) an arbitrary, irrational abuse of power
that effects that deprivation. Id.Even if L&F had a constitutionally protected right to the relevant water
service, a deprivation is unconstitutional only if it is “clearly arbitrary and
unreasonable, having no substantial relation to the public health, safety, morals,
or general welfare.” FM Props. Operating Co. v. City of Austin, 93 F.3d 167, 174
(5th Cir. 1996) (quoting Vill. of Euclid v. Ambler Realty Co., 272 U.S. 365, 395
(1926)). By contrast, a deprivation will be sustained if “the question is at least
debatable” “whether a rational relationship exists between the [policy or
decision] and a conceivable legitimate objective.” Simi Inv. Co., 236 F.3d at 251.
2
Estoppel is an equitable remedy appropriate “only when equity clearly requires it” to
avoid a result that is unconscionable or the perpetuation of fraud or injustice. B.C. Rogers
Poultry, Inc. v. Wedgeworth, 911 So. 2d 483, 491 (Miss. 2005); Kimball Glassco, 64 So. 3d at
947. Here, the will serve letter was issued in 2006, before the passage of the ordinance, and
approximately four years prior to the denial of water service to Roundhill. To the extent that
L&F relied on the will serve letter, that reliance was not reasonable. See Trosclair v. Miss.
Dep’t of Transp., 757 So. 2d 178, 181 (Miss. 2000).
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We do not “insist that a local government be right” or that a regulation be
the best means of advancing a given end, only that the ordinance have a rational
relationship to a legitimate government interest. FM Properties, 93 F.3d at 174.
This ordinance has the required rational relationship. We cannot say Gulfport’s
fire flow ordinance is irrational or arbitrary.
VI. Procedural Due Process
The “guarantee of fair procedure” requires that when the government
invades a constitutionally protected interest in “life, liberty, or property,” the
government must provide due process of law. Zinermon v. Burch, 494 U.S. 113,
125 (1990). First, we ask whether a given interest “qualif[ies] as property
interests for purposes of procedural due process.” See Bowlby v. City of
Aberdeen, 681 F.3d 215, 220 (5th Cir. 2012). Second, we ask “what process the
State provided, and whether it was constitutionally adequate.” Id. Because we
find no recognized property right under state law, we do not discuss the
procedure.
L&F argues that it has a property interest in water service and “should be
treated as an existing water recipient . . . [,] not a mere applicant for new
service.” Evidence allegedly supporting the claim is that Gulfport issued a will
serve letter to Roundhill. L&F also argues that Roundhill was receiving water
service as of January 2007 based on evidence that in January 2007, Southwest
Water, a utility contractor with Gulfport, verified with the Gulfport Department
of Public Works that water service was available for irrigation purposes.
Subsequently, Southwest Water issued a work order and installed a yard meter,
which would be used for landscaping or irrigation purposes.3
3
As noted above, although L&F discusses Gulfport’s unsatisfying production of records
on this point, L&F does not appeal any of the district court’s discovery rulings.
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Gulfport responds that the will serve letter indicated by its own terms that
Roundhill was merely eligible for water service. The letter identified multiple
additional steps prior to final approval. Further, Gulfport argues that no yard
meter was ever installed by Gulfport, L&F was never billed for any water, and
even if a yard meter had been installed and irrigation water flowing, this water
“would not qualify for potable use as water to a residence.”
The district court determined that L&F was seeking “new, as opposed to
continued, water service.” We agree that the evidence did not create a dispute
of material fact that L&F’s project had ever been approved for or received the
relevant water service. As noted, the will serve letter was a declaration of
eligibility for service and not an indication that water service was being
provided. Even if Roundhill had been connected to an irrigation water source,
this does not establish that L&F was a recipient of the water service to which
the fire flow requirements applied.
Protected property interests are those “that rise to the level of a ‘legitimate
claim of entitlement’” and not “mere expectations.” Walsh v. La. High Sch.
Athletic Ass’n, 616 F.2d 152, 159 (5th Cir. 1980). Property interests are matters
of state law, and they “stem from independent sources such as state statutes,
local ordinances, existing rules, contractual provisions, or mutually explicit
understandings.” Blackburn v. City of Marshall, 42 F.3d 925, 936-37 (5th Cir.
1995). L&F has not pointed to Mississippi caselaw, statutes, or a local ordinance
that creates a right to obtain water service. The district court also noted L&F’s
failure to identify any state authority on the question and relied on that
omission to reject the existence of a right.
When determining state law in the absence of any controlling authority,
“it is the duty of the federal court to determine as best it can, what the highest
court of the state would decide.” Transcon. Gas Pipe Line Corp. v. Transp. Ins.
Co., 953 F.2d 985, 988 (5th Cir. 1992). Mississippi has recognized a property
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interest in the continuation of existing electrical service. Tucker v. Hinds Cnty.,
558 So. 2d 869, 874 (Miss. 1990). The court relied on the fact that an
“overwhelming majority of courts which have considered this question have
found that continuance of electrical power is a property interest worthy of
protection under the due process clause of the Fourteenth Amendment.” Id. at
873. If there is similar substantial agreement that a property right exists in
obtaining water service, not just continuing service in place, the agreement is a
stranger to the parties’ briefing. We will not brief the possibility for them. In
fact, L&F has not argued that such a right exists, as it has understandably
insisted that it has been denied a more recognizable right to maintain existing
water service. We have already shown why we agree with the district court that
there is no evidence of prior service.
We will not take Mississippi caselaw further than it has gone on the issue
of property rights in utility service, as we do not see a basis to predict the state’s
highest court would recognize the right relevant here.
L&F has similarly failed to show that there was a mutually explicit
understanding that Gulfport would provide water service based on either the
will serve letter or the installation of the yard meter. Although L&F argues it
expected ultimately to receive approval for water service and expended financial
resources in reliance on this expectation, “a unilateral expectation” is not enough
to create a protected property interest. Blackburn, 42 F.3d at 936.
The failure to identify a protected property interest is fatal to L&F’s
procedural due process claim. See Baldwin v. Daniels, 250 F.3d 943, 946-47 (5th
Cir. 2001).
VII. Takings
The Takings Clause of the Fifth Amendment, made applicable to states
through the Fourteenth Amendment, is relevant when private property is taken
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No. 12-60597, Cons. w/ 12-60600, 12-60601
either for private use or without just compensation. Urban Developers LLC v.
City of Jackson, 468 F.3d 281, 292 (5th Cir. 2006). With respect to claims based
on insufficient compensation, “no constitutional violation occurs until just
compensation has been denied.” Williamson Cnty. Reg’l Planning Comm’n v.
Hamilton Bank of Johnson City, 473 U.S. 172, 194 n.13 (1985). Only when “the
relevant governmental unit has reached a final decision” and “the plaintiff has
sought compensation for the alleged taking” through applicable procedures is the
claim ripe. Urban Developers, 468 F.3d at 292-93.
L&F acknowledges that Mississippi provides relief for inverse
condemnation. See MISS. CONST. art. 3, § 17. L&F appealed the denial of service
to the Harrison County Circuit Court, but the appeal was dismissed without
prejudice because L&F had not exhausted its remedies. The record does not
reflect further action by L&F with respect to exhaustion of municipal and state
procedures. Therefore, “the relevant governmental unit” has not “reached a final
decision,” and L&F’s appeal to this court is not ripe for adjudication. See Urban
Developers, 468 F.3d at 292-93.
VIII. Larry Mitrenga’s Individual Claims
Both L&F and Mitrenga individually filed claims in this suit. Mitrenga
appeals the grant of summary judgment on his claims.
A. Mitrenga’s Federal Law Claims
The “irreducible constitutional minimum of standing” requires injury in
fact, a causal connection between that injury and the complained of conduct, and
a likelihood that the injury can be redressed by a favorable decision. Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). Mitrenga asserts two
injuries: economic and psychological.
Mitrenga’s alleged economic injury stems from his personal guarantee of
a loan to L&F. Although the bank has not seized Mitrenga’s collateral for the
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No. 12-60597, Cons. w/ 12-60600, 12-60601
loan, his assets remain encumbered by the personal guarantee. A stockholder
in a corporation does not have standing to bring suit in his own name for injuries
sustained by the corporation. Bellows v. Amoco Oil Co., 118 F.3d 268, 277 (5th
Cir. 1997). This is true even where that individual is the sole shareholder of a
corporation. Id. at 276-77. As an individual, Mitrenga has not been injured by
Gulfport; rather Gulfport’s actions have affected L&F as an LLC, which in turn
has been unable to distribute funds to its creditors and shareholders, namely
Mitrenga.
Mitrenga also asserts that he has suffered “mental anguish” as a result of
Gulfport’s discrimination. The only evidence Mitrenga has offered is a two-
sentence doctor’s letter stating: “Mr. Mitrenga’s legal problems have caused a
situational reactive disorder” and alluding to medication and more frequent
doctor visits. This evidence is rather thin even to establish actual injury, but it
is wholly inadequate to establish causation. An injury must be fairly traceable
to the challenged actions of the defendant. Lujan, 504 U.S. at 560. Mitrenga’s
allusion to “this whole situation” and the doctor’s to “legal problems” fails to
establish the requisite nexus between Gulfport’s underlying conduct and
Mitrenga’s mental anguish.
There is insufficient evidence to raise a genuine dispute of material fact
that Mitrenga’s mental anguish was caused by Gulfport’s alleged underlying
unlawful conduct, as apart from general litigation fatigue. On a different set of
facts evidencing clear and egregious racial discrimination in the context of an
eviction, this court “presumed . . . some degree of emotional distress.”
Woods-Drake v. Lundy, 667 F.2d 1198, 1203 (5th Cir. 1982). That atypical
presumption does not apply in this case.
B. Mitrenga’s State Law Claims
Mississippi law also establishes that an individual shareholder does not
have standing to bring suit in his own name for injuries to a corporation. Mathis
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No. 12-60597, Cons. w/ 12-60600, 12-60601
v. ERA Franchise Sys., Inc., 25 So. 3d 298, 301 (Miss. 2009). On the express and
implied contract claims, any contract to provide water service was between
Gulfport and L&F, not Mitrenga individually.
As to the estoppel claim, Mitrenga asserts that he relied, individually, on
the oral representations of City officials in making the decision to pledge
personal assets in support of a loan to L&F. As discussed above, the equitable
estoppel claim does not have merit as the unauthorized statements of an official
do “not estop a municipality from acting in its governmental capacity.” Suggs
v. Town of Caledonia, 470 So. 2d 1055, 1057 (Miss. 1985).
AFFIRMED.
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