Joe Murphy, Yoram Ben-Amram, and Galatex Development, Llc v. the City of Galveston, Texas
15-0423
| Tex. App. | Aug 6, 2015Background
- Owners (Galatex/Yoram Ben-Amram; mortgagee Joe Murphy) repaired a 14-unit multifamily property in Galveston after Hurricane Ike; city inspectors repeatedly cited code issues and intermittently lifted/reinstated condemnation.
- In May 2010 the City informed owners the property lost its grandfathered nonconforming multifamily status because it had been unoccupied over six months and that a Special Use Permit (SUP) would be required to resume multifamily use.
- Owners submitted an SUP; Landmark and Planning Commissions recommended denial; City Council denied the SUP in February 2011 while expressing both safety/code concerns and, according to owners, a preference for reduced density (removal of units for green space/parking).
- Owners did not reapply for an SUP after completing all repairs, did not obtain the engineer’s letter the City had requested, and did not seek a parking variance from the Zoning Board of Adjustment.
- Owners sued for inverse condemnation alleging (1) the City’s revocation of grandfathered status (May 2010) and (2) denial of the SUP (Feb 2011) effected a taking. Trial court denied the City’s plea to the jurisdiction; the Fourteenth Court of Appeals affirmed dismissal of the taking claim based on the SUP denial (ripeness) but affirmed denial of dismissal as to the earlier revocation-based taking claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Ripeness of taking claim based on denial of SUP | Denial was final and part of a ‘‘whipsaw’’ scheme; further reapplication or variance would be futile | Denial was not final because Council invited reapplication after code compliance/engineer’s letter or a tweak; owner failed to reapply or seek variance | Court: Not ripe — dismissal of takings claim based on SUP denial rendered (no final decision; reapplication/variance could have resolved) |
| Futility of reapplication / variance requirement | Reapplication/variance would be futile given City’s demonstrated intent to force density reduction and leverage delay | City’s statements showed openness to reconsideration after compliance; futility not established | Court: No fact issue of futility; owners failed to prove reapplication would have been futile |
| Ripeness / takings claim based on City’s May 2010 revocation of grandfathering (six‑month vacancy) | Revocation was a distinct, final regulatory act that destroyed reasonable investment-backed expectations; ripe for review | Claim not ripe because owners did not pursue administrative appeals (ZBA) or variance | Court: Claim based on revocation pleaded sufficiently and trial court correctly denied plea as to that claim (not dismissed) |
| Whether owners had to exhaust administrative remedies (ZBA appeal) before suit | ZBA appeal would have been futile and would unjustifiably delay relief; not required | ZBA/variance or reapplication could have provided a final outcome; exhaustion required for ripeness | Court: For SUP denial claim, exhaustion/reapplication or variance required; for revocation claim, record did not show exhaustion requirement conclusively and dismissal was improper |
Key Cases Cited
- Mayhew v. Town of Sunnyvale, 964 S.W.2d 922 (Tex. 1998) (ripeness requires a final, authoritative land-use decision; futile reapplications need not be made in exceptional circumstances)
- Sheffield Dev. Co. v. City of Glenn Heights, 140 S.W.3d 660 (Tex. 2004) (courts should not presume good-faith delay; delay used for extortion is unconstitutional)
- Hallco Tex., Inc. v. McMullen County, 221 S.W.3d 50 (Tex. 2007) (ripeness doctrine can be manipulated to ‘‘whipsaw’’ landowners; discussion of reapplication/variance/futility)
- City of Dallas v. Stewart, 361 S.W.3d 562 (Tex. 2012) (limits on administrative bodies’ competence to resolve constitutional property claims; skepticism about delegating takings adjudication to appointed boards)
- Monterey v. Del Monte Dunes at Monterey, Ltd., 526 U.S. 687 (1999) (condemns government refusal to state conditions or allow conditional approvals that would permit landowners to cure concerns)
- Palazzolo v. Rhode Island, 533 U.S. 606 (2001) (government cannot burden property through repetitive or unfair procedures to avoid final decision)
- Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987) (exactions must have nexus; uncompensated exactions characterized as ‘‘out-and-out extortion’’)