United States District Court, S.D. Texas, Houston Division
AMENDED MEMORANDUM OPINION & ORDER
GRAY
H. MILLER, SENIOR UNITED STATES DISTRICT JUDGE
Pending
before the court is defendant City of Houston's
(“the City”) motion to dismiss (Dkt. 26)
plaintiff DM Arbor Court, Ltd.'s (“Arbor
Court”) second amended complaint (Dkt. 22) under Rule
12(b)(1) for lack of jurisdiction and Rule 12(b)(6) for
failure to state a claim, Arbor Court's response in
opposition (Dkt. 31), and the City's reply (Dkt. 34).
Also pending is Arbor Court's motion for leave to file
third amended complaint (Dkt. 61) (“motion to
amend”) and appendix (Dkt. 62), the City's amended
response in opposition and appendix (Dkt. 67), and Arbor
Court's reply and appendix (Dkt. 77).[1]
Having
considered the motions, responses, and applicable law, the
court finds that Arbor Court's motion to amend (Dkt. 61)
should be DENIED as futile because the
takings claims it seeks to reintroduce are unripe, and the
City's motion to dismiss (Dkt. 26) should be
GRANTED because (1) Arbor Court's other
federal constitutional claims are also unripe; (2) the court
declines to exercise jurisdiction over Arbor Court's
supplemental state law claims pursuant to 28 U.S.C. §
1367(c)(3); and (3) Arbor Court's request for injunctive
relief must be dismissed because all of the underlying claims
fail to survive the motion.
I.
Background
A.
Factual Background
Arbor
Court is a 15-building, 232 unit, multi-family apartment
community located at 802 Seminar Drive in Houston, Texas.
Dkt. 22 ¶ 15; Dkt. 61-1 ¶ 17. The community
operates as a Section 8 housing property through a Housing
Assistance Payment (“HAP”) contract with the
United States Department of Housing and Urban Development
(“HUD”). Dkt. 22 ¶¶ 5, 27; Dkt. 61-1
¶ 3. Arbor Court's first-floor units were damaged
from flooding as a result of Hurricane Harvey in August of
2017, causing some of Arbor Court's residents to be
displaced. Dkt. 22 ¶ 1; Dkt. 61-1 ¶ 2. The parties
agree that Arbor Court “is subject to the City's
municipal ordinances” (Dkt. 22 ¶ 15; Dkt. 61-1
¶ 17), including Houston's Floodplain Ordinance
(Dkt. 26 at 2). See Houston, Tex. Rev. Ordinances,
ch. 19.[2] The parties agree that the Floodplain
Ordinance requires Arbor Court to apply for repair permits,
and that Arbor Court did in fact apply for permits to repair
damage sustained during Hurricane Harvey. Dkt. 22 ¶ 2;
Dkt. 26 at 2; Dkt. 61-1 ¶ 4.
On
October 10, 2017, the City's Floodplain Management Office
(“FMO”) found that each of Arbor Court's
buildings had been “substantially damaged”
pursuant to FEMA cost estimation guidelines. Dkt. 22 ¶
19; Dkt. 61-1 ¶ 21. Arbor Court “used the
FMO's ‘Substantial Damage Determination Appeal'
(‘SDDA') form” to appeal the substantial
damage determination. Dkt. 22 ¶ 20; Dkt. 61-1 ¶ 22.
On March 28, 2018, Arbor Court was notified by letter that
its SDDA had been successful for seven of the fifteen
buildings. Dkt. 22 ¶ 21; Dkt. 61-1 ¶
23.[3]
This letter stated that “the hold that had been placed
in the City of Houston building permit system on your address
has been removed, ” and that “[i]f you have not
already done so, you may now proceed with obtaining any City
of Houston permits you need to complete the repairs.”
Dkt. 26-1 at 1-2. Arbor Court “continued to protest the
City's substantial damage determination for the remaining
eight Arbor Court buildings, ” and was notified via
email on May 1, 2018, that “all buildings will be
classified as non-substantial.” Dkt. 22 ¶ 22; Dkt.
61-1 ¶ 24. At some unspecified later point in time,
“Arbor Court learned that the City was requiring either
the Mayor's Office or Director of Public Works for the
City to approve the issuance and release of any
permits.” Dkt. 22 ¶ 23; see also Dkt.
61-1 ¶ 26.
On July
17, 2018, the City notified Arbor Court via letter that it
had “concluded that Arbor Court's requests for
permits should be denied” because the City Engineer had
“concluded that there is danger to both life and
property due to flooding in the vicinity of the site.”
Dkt. 26-3; Dkt 67-1 at App. 09-10.[4] That letter provided that
Arbor Court could “apply for a variance from the
requirements of Chapter 19, ” or it could “appeal
the denial of permits to the General Appeals Board.”
Dkt. 67-1 at App. 09-10. From July 17, 2018 until October 14,
2019, Arbor Court did not pursue a variance or an appeal to
the General Appeals Board.
On
October 9, 2018, an unspecified person from “the City
called Arbor Court stating that it had eight approved permits
that Arbor Court needed to pick up or the City would cancel
them out of the system.” Dkt. 22 ¶ 25; see
also Dkt. 61-1 ¶ 29. “On October 16, 2018,
Arbor Court went to retrieve those permits.” Dkt. 22
¶ 25; see also Dkt. 61-1 ¶ 29. Upon
arrival, an unspecified person from “the City stated
that the permits would not be released without supervisor
approval.” Dkt. 22 ¶ 25; Dkt. 61-1 ¶ 29.
Arbor Court “returned the next day to seek such
supervisor approval, and it was denied, as the supervisor
confirmed the City would never release any permits to Arbor
Court.” Dkt. 22 ¶ 25; see also Dkt. 61-1
¶ 29.
To
date, Arbor Court has never received any permits. Dkt. 31 at
4. Yet throughout this time period, “the City has
provided permits to similarly situated apartment complexes
that allowed them to rebuild, ” and the “only
material difference between those complexes and Arbor Court
is that Arbor Court is a Section 8 property, and those
complexes are not.” Dkt. 22 ¶ 26; see
also Dkt. 61-1 ¶ 30.
On
October 14, 2019, following this court's original
September 18, 2019 ruling on the pending motions (Dkts. 69,
70), Arbor Court “submitted an appeal to the Houston
General Appeals Board through Houston's permitting office
. . ., which includes both variance requests and a direct
appeal of the City's denial of rebuilding permits.”
Dkt. 77 ¶ 4; see also Dkt. 77-1 at 22. On
October 16, 2019, Arbor Court amended its appeal. Dkt. 77-1
at 1-14. As of November 12, 2019, that appeal is still
pending. Id. at 15.[5]
B.
Procedural Background
On June
8, 2018, Arbor Court filed suit against the City alleging
four causes of action: a takings claim, a due process claim,
a Section 1983 claim, and a request for injunctive relief.
See Dkt. 1. The City moved to dismiss on July 16,
2018. See Dkt. 7. That motion was mooted on October
1, 2018, when Arbor Court filed its first amended complaint,
alleging the same causes of action, but notifying the court
of a related case against Arbor Court: Jackson et al v.
U.S. Dep't of Hous. & Urban Dev. et al, Civil
Action No. H-18-2468 (S.D. Tex.). See Dkt. 14. The
City moved to dismiss the first amended complaint on October
15, 2018. See Dkt. 16. On October 16, 2018, the
court issued its scheduling order, setting the deadline for
amended pleadings as October 31, 2018. Dkt. 17. On October
31, 2018, the City's second motion to dismiss was mooted
when Arbor Court again amended its complaint. See
Dkt. 22. In its second amended complaint, Arbor Court dropped
its takings claim and added constitutional claims for
violations of procedural and substantive due process, equal
protection, and the Contracts Clause of the U.S.
Constitution, in addition to new state law claims for
violations of substantive due process and equal protection,
tortious interference, and violation of vested rights.
See Id. Arbor Court retained its Section 1983 claim
and request for injunctive relief. See Id. The City
moved to dismiss the second amended complaint on November 14,
2018. See Dkt. 26. On June 27, 2019, Arbor Court
moved for leave to file its third amended complaint, seeking
to update facts and reinsert the takings claim it dropped
from its second amended complaint. Dkt. 61 at 2. On July 23,
2019, deadlines in this case were stayed pending a ruling in
Civil Action H-18-2468. Dkt. 68. On August 15, 2019, Arbor
Court was dismissed from Jackson. See Civil
Action No. H-18-2468, slip op. at 1 (S.D. Tex. Aug. 15, 2019)
(granting plaintiff's motion to dismiss Arbor Court as a
defendant).[6]
II.
Ripeness
Ripeness
questions pervade both motions, and the court must consider
jurisdictional attacks before attacks on the merits.
Ramming v. United States, 281 F.3d 158, 161 (5th
Cir. 2001).
With
regard to the motion to amend (Dkt. 61), the City argues that
the takings claim that Arbor Court seeks to reintroduce to
this litigation is not ripe because Arbor Court has not
pursued any formal appeals, meaning that it is without a
final decision-a prerequisite to a ripe takings claim. Dkt.
67 ¶¶ 21-25.[7] In support of this argument, the City has
attached various evidentiary materials, including the July
17, 2018 denial letter, which informed Arbor Court of the
“process to apply for a variance, ” or its right
to “appeal the denial of permits to the General Appeals
Board.” Dkt. 67-1 at App. 09. Arbor Court contends that
there are no ripeness or jurisdictional issues because its
“successful [substantial damage determination] appeal
did not result in Plaintiff receiving any repair
permits.” Dkt. 61 at 9. Arbor Court also contends that
“nothing about [its now-filed] appeal . . . will remedy
the compensable temporary taking that already has occurred,
because there is nothing about the [appeal or variance
process] that addresses or deals with the question of
compensation due to Plaintiff for the loss of its beneficial
use of the property already suffered.” Dkt. 77 ¶
6.
With
regard to the second amended complaint (Dkt. 22), the City
argues that Arbor Court's claims are unripe for the same
reason: Arbor Court's failure to pursue any formal
appeal. Dkt. 26 at 10-11. The City attached various
evidentiary materials in support of this argument as well,
including the July 17, 2018 letter. See Dkt. 26-3.
Arbor Court contends that the second amended complaint
“details final decisions by the City and compliance
with any appeal processes required or applicable under the
circumstances, ” and that the City's
“arguments about failure to exhaust remedies is an
improper merits-based argument about disputed issues of fact,
and has no bearing on the Court's Rule 12(b)(1) and
12(b)(6) inquiries.” Dkt. 31 at 2 n.1.
A.
Legal Standard
“[R]ipeness
inquires as to ‘whether the harm asserted has matured
sufficiently to warrant judicial intervention.'”
Contender Farms, L.L.P. v. U.S. Dep't of Agric.,
779 F.3d 258, 267 (5th Cir. 2015) (quoting Miss. State
Democratic Party v. Barbour, 529 F.3d 538, 544-45 (5th
Cir. 2008)). “[R]ipeness is a constitutional
prerequisite to the exercise of jurisdiction.”
Shields v. Norton, 289 F.3d 832, 835 (5th Cir. 2002)
(citing Abbott Labs. v. Gardner, 387 U.S. 136,
148-49, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967)). In determining
whether a case is ripe, the court relies on two
considerations: “‘the fitness of the issues for
judicial resolution and the hardship to the parties of
withholding court consideration.'” TOTAL Gas
& Power N. Am., Inc. v. Fed. Energy Regulatory
Comm'n, 859 F.3d 325, 333 (5th Cir. 2017) (quoting
New Orleans Pub. Serv., Inc. v. Council of New
Orleans, 833 F.2d 583, 586 (5th Cir. 1987)). “A
case is generally ripe if any remaining ...