City of Grapevine v. Ludmilla B. Muns, Richard Mueller, Kari Perkins, Kevin Perkins, Pamela Holt, and A-1 Commercial and Residential Services, Inc., 02-19-00257-CV

Background

Grapevine passed a 2018 ordinance that defined and expressly banned short‑term rentals (STRs — rentals under 30 days). The City sent notices threatening enforcement after a 45‑day grace period.
Owners of several residential properties who had been operating STRs sued the City, alleging regulatory taking (Penn Central), violations of due‑course‑of‑law and retroactivity under the Texas Constitution, and that the STR ban was preempted by state law; they sought declaratory and injunctive relief and obtained a temporary injunction.
The City argued the trial court lacked jurisdiction: the owners failed to exhaust administrative remedies (appeal to the Board of Adjustment), their claims seek an advisory opinion because the preexisting 1982 Zoning Ordinance already prohibited STRs, the takings claim was legally deficient, and governmental immunity barred relief.
The court of appeals held (1) owners were not required to exhaust because the Board could not resolve the constitutional takings claims and the City’s pre‑hearing statements/letter were informational rather than enforcement actions; (2) the 1982 Zoning Ordinance, properly construed, permitted STRs as a use of single‑family detached dwellings (so the STR Ordinance effected a change); and (3) fact issues exist on Penn Central factors (economic impact and investment‑backed expectations), so the takings claim survives jurisdictional attack.
The court dismissed the owners’ implied preemption claim for failing to plead a clear legislative intent to preempt local STR regulation, but it upheld the owners’ retroactivity and substantive‑due‑course claims and the availability of injunctive relief against enforcement of the STR Ordinance. The remainder of the trial court’s denial of the City’s plea was affirmed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1) Must owners exhaust administrative remedies (appeal to Board of Adjustment)?	Owners: No—statements from city officials were informational and the Board cannot decide constitutional takings claims.	City: Yes—owners were aggrieved by administrative determinations that zoning always prohibited STRs and had to appeal first.	Held: No exhaustion required; officials’ statements were not enforcement actions and the Board lacks authority to resolve constitutional takings questions.
2) Is the suit an advisory opinion because the preexisting Zoning Ordinance already banned STRs?	Owners: They challenge the STR Ordinance; whether zoning allowed STRs is an element of their constitutional claims, not the relief sought.	City: Any invalidation of the STR Ordinance would be advisory because zoning still bans STRs.	Held: Not advisory—the court construed the Zoning Ordinance to permit STRs, so declaring the STR Ordinance invalid would have practical effect.
3) Did owners plead a viable regulatory‑takings claim?	Owners: STR ban destroys economically valuable STR use, frustrated investment‑backed expectations; Penn Central factors raise fact issues.	City: No vested right to a particular use; no causation because zoning already barred STRs; market/appraisal evidence shows values rose.	Held: Claim survives jurisdictional challenge—owners showed a property interest, causation issue (zoning permits STRs), and fact issues on Penn Central factors (economic impact; investment‑backed expectations).
4) Are owners’ declaratory claims (preemption, retroactivity, due‑course) valid and waive immunity?	Owners: Tax Code and Property Code implicitly preempt local bans; STR Ordinance is retroactive and violates substantive due course of law.	City: No clear legislative intent to preempt; owners have no vested right to an STR use; immunity bars relief.	Held: Preemption claim dismissed (insufficient unmistakable legislative intent). Retroactivity and substantive‑due‑course claims are facially valid (owners alleged a settled leasing right), so immunity is waived as to those claims.
5) Can owners obtain injunctive relief against the City?	Owners: They seek equitable relief to enjoin enforcement of an unconstitutional ordinance.	City: Immunity bars injunctive suits or claims are ultra vires and must be brought against officials.	Held: Injunctive relief is available; claims challenge the ordinance’s validity (not ultra vires acts), so immunity does not bar equitable relief.

Key Cases Cited

Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104 (1978) (establishing the ad hoc regulatory‑takings balancing test)
Sheffield Dev. Co., Inc. v. City of Glenn Heights, 140 S.W.3d 660 (Tex. 2004) (applying Penn Central factors in Texas takings law)
Hearts Bluff Game Ranch, Inc. v. State, 381 S.W.3d 468 (Tex. 2012) (takings causation and immunity waiver principles)
Mayhew v. Town of Sunnyvale, 964 S.W.2d 922 (Tex. 1998) (investment‑backed expectations analysis)
City of Dallas v. Stewart, 361 S.W.3d 562 (Tex. 2012) (administrative agencies lack authority to decide constitutionality)
Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217 (Tex. 2004) (standards for plea to the jurisdiction and sovereign immunity)
Robinson v. Crown Cork & Seal Co., 335 S.W.3d 126 (Tex. 2010) (retroactivity framework; reject simple vested‑rights test)
BCCA Appeal Grp., Inc. v. City of Houston, 496 S.W.3d 1 (Tex. 2016) (preemption requires unmistakable clarity of legislative intent)
Mission Consol. ISD v. Garcia, 372 S.W.3d 629 (Tex. 2012) (jurisdictional plea fact‑issue standard paralleling summary judgment)
Zaatari v. City of Austin, 615 S.W.3d 172 (Tex. App.—Austin 2019) (contextual discussion of STR regulation, enforcement, and retroactivity)