Coral Beach v. City of Galveston

Case: 21-40321 Document: 00516265723 Page: 1 Date Filed: 04/04/2022
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
April 4, 2022
No. 21-40321 Lyle W. Cayce
Clerk
Coral Beach, Independent Executrix of the Estate of
Joseph John "Joe" Murphy; Yoram Ben-Amram; Galtex
Development, L.L.C.,
Plaintiffs—Appellants,
versus
The City of Galveston, Texas,
Defendant—Appellee.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 3:12-CV-167
Before Barksdale, Stewart, and Dennis, Circuit Judges.
Per Curiam:*
Plaintiffs-Appellants appeal the district court’s dismissal of their
federal takings claims for lack of subject matter jurisdiction. We
AFFIRM.
*
Pursuant to 5th Circuit Rule 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opinion should not be published and is not precedent except under the limited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 Circuit Rule 47.5.4.
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No. 21-40321
I. Facts and Procedural History
The property at issue consists of two buildings (collectively, the
“Property”) located in the East End Historical District of the City of
Galveston, Texas (the “City”), containing fourteen rental units in total.
Yoram Ben-Amram d/b/a Galtex Development, L.L.C. purchased the
Property in March 2007, subject to a mortgage held by Joe Murphy. Zoning
standards in the Historical District prohibit multifamily dwellings, but the
Property maintained a legally non-conforming or “grandfather” status as a
multifamily dwelling because it pre-dated the existence of the Historical
District and the zoning standards. To keep this grandfather status, zoning
standards prohibited “a discontinuance of actual occupancy as a multiple-
family use for any consecutive period of time of six (6) months or longer.”1
The Property had always complied with this occupancy requirement until it
was damaged by Hurricane Ike in September 2008. In January 2009, the City
condemned the Property as unfit for human habitation and directed the
tenants to vacate the buildings. The City informed Ben-Amram of the
improvements needed to bring the Property back up to compliance with the
International Property Maintenance Code, which the City had adopted. In
response to the condemnation, Ben-Amram contacted the City and advised
officials that he had already hired a construction company, and he obtained
the required permits and began renovations. In January 2010, city inspectors
indicated that the condemnation would be lifted if Ben-Amram completed
certain additional repairs and submitted an engineer’s letter attesting to the
Property’s safety. Ben-Amram never produced an engineer’s letter.
1
Galveston, Tex., Zoning Standards § 29-111(a)(4) (1991). The 1991
Zoning Standards were replaced in 2015 by the Land Development Regulations of 2015
after this action was filed in state court in 2012.
2
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In May 2010, after the Property had been vacant for nearly fourteen
months, the City informed Ben-Amram that the Property had lost its
grandfather status and that he would have to get a Specific Use Permit
(“SUP”) approved for the Property to operate as a multifamily dwelling
again. Zoning standards permitted Ben-Amram to appeal the revocation of
grandfather status to the Zoning Board of Adjustments,2 but he did not
appeal. Ben-Amram applied for the SUP in December 2010. At the February
2011 city council meeting where Ben-Amram’s request for the SUP was
heard, the city council denied the SUP. However, multiple city council
members encouraged Ben-Amram to make the necessary repairs and apply
again, and the mayor confirmed that nothing would prevent him from
reapplying.3 Ben-Amram did not reapply. Murphy foreclosed on the Property
in October 2011.
In April 2012, Plaintiffs-Appellants filed suit against the City in state
court claiming that the City took their property without just compensation in
violation of the Texas and United States constitutions. In June 2012, the City
removed this case to federal court. In August 2013, the federal court
remanded the state takings claims to state court and stayed the federal claims
pending exhaustion of Plaintiffs-Appellants’ state court remedies. After
Texas appellate courts ruled against Plaintiffs-Appellants,4 thus resolving the
2
Id. § 29-112(c) (“Appeals to the Board can be taken by any person aggrieved or
by an officer, department or board of the municipality affected by any decision of the
Building Official.”) (now codified at Article 14 of the Unified Development Code).
3
Galveston City Council Regular Meeting Excerpt at 78–85 (Feb. 10, 2011).
4
See City of Galveston v. Murphy, 533 S.W.3d 355, 365 (Tex. App.—Houston [14th
Dist.] 2015, pet. denied) (holding that trial court lacked subject matter jurisdiction over
Plaintiffs’ regulatory taking claims regarding the denial of the SUP); Murphy v. City of
Galveston, 557 S.W.3d 235, 244–45 (Tex. App.—Houston [14th Dist.] 2018, pet. denied)
(affirming trial court’s order dismissing Plaintiffs’ Texas takings claims regarding the loss
3
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state takings claims, this case was reinstated on the federal docket in January
2020 for the district court to hear Plaintiffs-Appellants’ claims under the
United States Constitution, through 42 U.S.C. § 1983, for taking of property
without just compensation. The City moved for summary judgment arguing
that the district court lacked subject matter jurisdiction over the federal
takings claims. The district court construed the summary judgment motion
as a Rule 12(b)(1) motion and granted it on grounds that the claims were not
ripe for judicial review because Plaintiffs-Appellants failed to establish that
the City’s decisions were final.
The issue on appeal is whether the district court erred by dismissing
Plaintiffs-Appellants’ regulatory takings claims for lack of subject matter
jurisdiction.
II. Standard of Review
“Ripeness is a question of law that implicates this court’s subject
matter jurisdiction, which we review de novo.” Urb. Devs. LLC v. City of
Jackson, 468 F.3d 281, 292 (5th Cir. 2006). The district court construed the
City’s motion for summary judgment as a motion to dismiss under Fed. R.
Civ. P. 12(b)(1). A motion filed under Rule 12(b)(1) “allow[s] a party to
challenge the subject matter jurisdiction of the district court to hear a case.”
Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001) (citing FED. R.
CIV. P. 12(b)(1)). The district court can dismiss for lack of subject matter
jurisdiction based on any one of the following three bases: “(1) the complaint
alone; (2) the complaint supplemented by undisputed facts evidenced in the
record; or (3) the complaint supplemented by undisputed facts plus the
court’s resolution of disputed facts.” Id. (citing Barrera–Montenegro v. United
States, 74 F.3d 657, 659 (5th Cir. 1996)). The party asserting jurisdiction in
of grandfather protection because the Plaintiffs failed to exhaust their administrative
remedies).
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opposition to a Rule 12(b)(1) motion bears the burden of proof, thus the
plaintiff usually bears the burden of proving that jurisdiction exists. Id.(citations omitted).
Courts distinguish between 12(b)(1) motions that base the lack of
jurisdiction on the face of the complaint and 12(b)(1) motions that attack the
existence of subject matter jurisdiction in fact. See Williamson v. Tucker, 645
F.2d 404, 412–13 (5th Cir. 1981). The City attacks the existence of subject
matter jurisdiction in fact. In a factual attack, “no presumptive truthfulness
attaches to plaintiff’s allegations, and the existence of disputed material facts
will not preclude the trial court from evaluating for itself the merits of
jurisdictional claims.” Id. at 413.
III. Discussion
Plaintiffs-Appellants argue that the district court erred in holding that
it lacked subject matter jurisdiction because Plaintiffs-Appellants’ takings
claims were not ripe. We disagree.
The Takings Clause of the Fifth Amendment, made applicable to the
states through the Fourteenth Amendment, prohibits the taking of private
property for public use without just compensation. Urb. Devs. LLC, 468 F.3d
at 292. The Supreme Court has held that “[w]hen a plaintiff alleges a
regulatory taking in violation of the Fifth Amendment, a federal court should
not consider the claim before the government has reached a ‘final’ decision.”
Pakdel v. City & Cnty. of San Francisco, 141 S. Ct. 2226, 2228 (2021). Under
the finality requirement, “a plaintiff must show that ‘there [is] no question
. . . about how the “regulations at issue apply to the particular [property] in
question.”’” Id. at 2230 (quoting Suitum v. Tahoe Reg’l Plan. Agency, 520
U.S. 725, 739 (1997)). While a plaintiff is no longer required to exhaust state
remedies in order to pursue “a takings claim when the government has
reached a conclusive position,” “a plaintiff ’s failure to properly pursue
administrative procedures may render a claim unripe if avenues still remain
5
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for the government to clarify or change its decision.” Id. at 2231; see also
Knick v. Twp. of Scott, 139 S. Ct. 2162, 2167 (2019) (“[T]he settled rule is that
‘exhaustion of state remedies “is not a prerequisite to an action under [42
U.S.C.] § 1983.”’”).
Here, because two such avenues remained available, the district court
properly concluded that Plaintiffs-Appellants’ claims were not ripe for
judicial review. First, when Ben-Amram was notified that the City had
revoked the Property’s grandfather status because the Property had been
unoccupied for more than six months, he could have appealed the City’s
decision to the Board of Adjustments.5 To the extent that Plaintiffs-
Appellants contest the City’s interpretation of “occupancy” under zoning
standard § 29-111(a)(4), appealing to the Board of Adjustments offered a
relevant form of review, but Plaintiffs-Appellants never filed an appeal with
the Board. Second, nothing prevented Ben-Amram from reapplying for an
SUP after the city council denied his first application, yet he failed to reapply.
This court has held that “whenever the property owner has ignored
or abandoned some relevant form of review or relief, such that the takings
decision cannot be said to be final, the takings claim should be dismissed as
unripe.” Urb. Devs. LLC, 468 F.3d at 293 (citing Hidden Oaks Ltd. v. City of
Austin, 138 F.3d 1036, 1041 (5th Cir. 1998)). In Urban Developers LLC v. City
of Jackson, the plaintiff asserted a regulatory takings claim against the city
alleging that the city deprived it of economic use of its land by applying a
5
Plaintiffs-Appellants argue that an appeal to the Board of Adjustments would have
been futile because the City could appeal the Board’s ruling and has a track record of doing
so. The futility exception excuses a property owner “from obtaining a final decision if
pursuing an appeal to a zoning board of appeals . . . would be futile.” Murphy v. New Milford
Zoning Comm’n, 402 F.3d 342, 349 (2d Cir. 2005). Because Plaintiffs-Appellants’ futility
argument relied on speculation rather than a conclusive showing that further attempts to
secure relief would have been fruitless, the district court held that the futility doctrine
offered them no relief. We agree with the district court’s resolution of this issue.
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flood-zone ordinance that prevented rehabilitation and repairs to its
apartments. Id. at 292. However, after the city rejected the plaintiff’s
building plans due to non-compliance with the ordinance, the plaintiffs did
not apply for a flood-zone development permit, pursue mandamus against
the city’s community development officer, or undertake the appeal process
set forth in the city’s municipal code. Id. at 293. Thus, this court dismissed
the plaintiff’s regulatory takings claims as unripe because the plaintiff had not
satisfied the finality requirement. Id. at 294.
Similarly, here, because Plaintiffs-Appellants ignored relevant forms
of relief, we hold that they failed to satisfy the finality requirement, and the
district court properly dismissed their federal takings claims as unripe.
IV. Conclusion
For the foregoing reasons, the district court’s dismissal of Plaintiffs-
Appellants’ federal takings claims is AFFIRMED.
7