Da Vinci Investment, L. P. v. City of Arlin ( 2018 )

Case: 17-11158 Document: 00514616541 Page: 1 Date Filed: 08/27/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 17-11158
August 27, 2018
Lyle W. Cayce
Clerk
DA VINCI INVESTMENT, LIMITED PARTNERSHIP; DANIEL GRIFFITH,
Plaintiffs-Appellants
v.
CITY OF ARLINGTON, TEXAS,
Defendant-Appellee
************************************************************************
DANIEL GRIFFITH,
Plaintiff-Appellant
v.
CITY OF ARLINGTON, TEXAS,
Defendant-Appellee
Appeals from the United States District Court
for the Northern District of Texas
USDC No. 4:13-CV-971
Case: 17-11158 Document: 00514616541 Page: 2 Date Filed: 08/27/2018
No. 17-11158
Before GRAVES and COSTA, Circuit Judges, and BENNETT, District
Judge.*
PER CURIAM: **
Plaintiffs Da Vinci Investment Limited Partnership and Daniel Griffith
sued the City of Arlington claiming violations of their substantive due process
and equal protection rights under 42 U.S.C. § 1983. Da Vinci also claimed
that an unlawful taking occurred under the Texas Constitution. The City of
Arlington filed a motion for summary judgment. The district court granted
the motion. This appeal followed. We AFFIRM.
FACTUAL AND PROCEDURAL BACKGROUND
This case arises out of a proposed development plan to build a car wash
in Arlington, Texas. In 1991, Da Vinci purchased approximately 12 acres of
undeveloped land in Arlington and obtained a zoning change on the property
to “planned development” (“PD”). PD zoning provides that property can only
be developed in accordance with an approved development plan. Over several
years, Da Vinci developed and sold portions of the land. The land at issue in
this appeal is Da Vinci's sole remaining tract (the “Lot”). In 2012, Da Vinci
contracted with Daniel Griffith to purchase the Lot; the purchase was
conditioned upon approval by the City of a development plan to build a car
wash. Pursuant to the PD zoning, a car wash was a permitted use on the Lot.
In February 2013, the City conducted a review and found that the proposed
development plan for a car wash was unlikely to have a negative effect on the
location and was consistent with the surrounding uses. In March, Da Vinci
and the purchaser submitted a formal development plan application for the
* District Judge for the Southern District of Texas, sitting by designation.
** 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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Lot. That same month, a City staff report found that the plan complied with
the minimum commercial design standards and would have no impact on
traffic. Conversely, there was significant opposition to the development plan
from real estate developer Jim Poynter and two former city officials. These
individuals sent emails to the council members stating their objections and
sometimes attaching letters of opposition from community members.
In May, after a public hearing, the planning and zoning commission
recommended against approving the development plan because it did not
mitigate compatibility problems and it did not enhance the neighborhood.
Appellants appealed the commission’s decision to the city council; the council
agreed to hear the appeal.
In August, the city council conducted a public hearing to consider the
development plan. The hearing consisted of, among other things, a
presentation by Da Vinci and citizens who spoke both for and against the
plan. At the conclusion of the hearing, the council voted to deny the
development plan application by a vote of 5-4. Council Member Parker, who
made the motion to deny the proposed development plan, gave three reasons
for the denial: (1) the plan failed to mitigate compatibility issues; (2) the plan
failed to enhance the neighborhood; and (3) the plan failed to mitigate the
concerns of a majority of the neighbors.
In November 2013, Da Vinci filed suit against the City and several
other parties in state court. The case was removed to the United States
District Court for the Northern District of Texas. Later, Griffith filed his
lawsuit against the same defendants and the district court ordered the two
cases consolidated. After consolidation, the City filed a motion for summary
judgment asserting that Appellants’ Substantive Due Process and Equal
Protection claims, Da Vinci’s taking claim under state law, and Griffith’s
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state constitutional claims and exemplary damages claims all failed as
matter of law. The district court judge granted the City’s motion. Da Vinci
and Griffith filed a timely appeal challenging all rulings made by the district
court except the grant of summary judgment on Griffith’s state constitutional
and exemplary damages claims.
DISCUSSION
We review a district court’s grant of summary judgment de novo,
applying the same standards as the district court. Ezell v. Kan. City S. Ry.
Co., 866 F.3d 294, 297 (5th Cir. 2017). Summary judgment “is appropriate
only if the movant shows that there is no genuine issue as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a); see also Tolan v. Cotton, 572 U.S. ––––, ––––, 134 S. Ct. 1861,
1866, 188 L. Ed. 2d 895 (2014) (per curiam). We construe the evidence in the
light most favorable to the nonmoving party and draw all reasonable
inferences in that party’s favor. R & L Inv. Prop., LLC v. Hamm, 715 F.3d
145, 149 (5th Cir. 2013).
I. Substantive Due Process
“To prevail on a substantive due process claim, [a plaintiff] must first
establish that it held a constitutionally protected property right to which the
Fourteenth Amendment’s due process protection applies.” Simi Inv. Co., v.
Harris Cnty., 236 F.3d 240, 249–50 (5th Cir. 2000). “To have a property
interest in a benefit,” a plaintiff must “have a legitimate claim of entitlement
to it;” relevant entitlements are “created and their dimensions are defined by
existing rules or understandings that stem from an independent source such
as state law.” Town of Castle Rock v. Gonzales, 545 U.S. 748, 756, 125 S. Ct.
2796, 162 L. Ed. 2d 658 (2005) (citation and quotation marks omitted). If the
benefit may be granted or denied at the discretion of government officials, it
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is not an entitlement. Id. Courts look for “‘explicitly mandatory language,’ i.e.
specific directives to the decision maker that if the regulations’ substantive
predicates are present, a particular outcome must follow.” Ridgely v.
FEMA, 512 F.3d 727, 735–36 (5th Cir. 2008) (quoting Ky. Dep’t of Corr. v.
Thompson, 490 U.S. 454, 463, 109 S. Ct. 1904, 104 L. Ed. 2d 506 (1989)).
As noted by this Court in a previous appeal of this same case, if, under
the ordinances, city council members could “grant or deny [a development
plan application] in their discretion,” there was no entitlement to the benefit
and, therefore, no protected property right. Da Vinci Inv., Ltd. P’ship v.
Parker, 622 F. App’x 367, 370 (5th Cir. 2015) (quoting Castle Rock, 545 U.S.
at 756). Da Vinci argues that the council members had no discretion to deny
its development plan because it had met all the guidelines set forth in the
ordinances. We again find no such mandatory language. See Da Vinci, 622 F.
App’x at 370 (finding in a prior appeal that Da Vinci failed to point to
mandatory language in the ordinances still at issue). For a second time,
Appellants fail to cite any explicit language in the ordinances requiring, for
example, the city council to grant a development plan application when all
guidelines are met. Because there is no “explicitly mandatory language” in
the ordinances requiring city officials to approve a development plan, even
where a plan meets all required guidelines, the city council had discretion to
grant or deny the benefit. Accordingly, Appellants did not have a protected
property right in the approval of its development plan.
Without a protected property interest, there can be no substantive due
process violation. See Simi Inv. Co., 236 F.3d at 249–50. Accordingly, the
district court’s grant of summary judgment on this claim was appropriate.
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II. Equal Protection Claim
Da Vinci and Griffith both bring a “class of one” theory Equal
Protection claim. Under a “class of one” Equal Protection claim, a plaintiff
must allege that he/she has been intentionally treated differently from others
similarly situated and that there was no rational basis for the differential
treatment. Vill. of Willowbrook v. Olech, 528 U.S. 562, 564 (2000) (per
curiam) (establishing the “class of one” Equal Protection analysis).
Appellants argue that their development plan application was treated
differently than the application of Cooper Carwash. The district court found
that Cooper Carwash was not similarly situated, and, even if it was, the City
had a rational basis for the differential treatment. The undisputed facts
show the following comparisons between the two projects: (1) both lots were
to be used as a carwash; (2) Appellants’ development involved a 1.45-acre lot
while the Cooper Carwash development involved a 1.3 acre lot, but was
submitted as part of a development plan for a 5.149-acre property; (3) the
City had once owned part of the land in the Cooper Carwash property; (4)
Appellants’ development was to be a standalone carwash with twenty-six
vacuum stalls, while Cooper Carwash had a QuikTrip convenience store
incorporated into the development plan; (5) Appellants’ development would
have built a carwash on a vacant lot, while Cooper Carwash involved the
redevelopment and demolition of old stores, dry cleaners, and apartment
buildings, some of which were abandoned; (6) Appellants’ development plan
was decided on August 6, 2013, and Cooper on December 6 and 13, 2011; (7)
the makeup of the city council was different during the consideration of
Appellants’ development and Cooper Carwash; (8) differences in the
surrounding areas associated with the two lots existed; and (9) Appellants’
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development had approximately twenty people opposed to the plan, while
Cooper Carwash had just two.
Under a rational basis review, a court affords governmental decisions a
“strong presumption of validity,” and will uphold a governmental decision “if
there is any reasonably conceivable state of facts that could provide a rational
basis for the classification.” Heller v. Doe by Doe, 509 U.S. 312, 319–20 (1993).
Moreover, “the range of rational grounds is not restricted to those articulated
at the time the [government] made its decision,” but encompasses all
conceivable bases, actual or hypothesized. Reid v. Rolling Fork Pub. Util.
Dist., 854 F.2d 751, 754 (5th Cir. 1988). “As long as there is a conceivable
rational basis for the official action, it is immaterial that it was
not the or a primary factor in reaching a decision or that it was not actually
relied upon by the decision-makers or that some other nonsuspect irrational
factors may have been considered.” Id. (emphasis in original). “[D]ecisions
that are imprudent, ill-advised, or even incorrect may still be rational.” Rossi
v. West Haven Bd. of Ed., 359 F. Supp. 2d 178, 183 (D.Conn. 2005); see
also Smith v. City of Chic., 457 F.3d 643, 652 (7th Cir. 2006) (holding that “an
incomplete, inadequate, or inaccurate explanation” for the government’s
decision in a “class of one” case “will not equate to a lack of rational basis,
otherwise ‘the federal courts would be drawn deep into the local enforcement
of . . . state and local laws.’”) (quotation omitted).
Here, the city council member that made the motion to deny the
application stated several reasons for denying the development plan,
including that the proposed development did not enhance the neighborhood
or address the concerns of the neighbors. Multiple neighbors had expressed
concerns about the development plan. Some of those concerns were about an
increase in noise, lack of adequate screening, traffic, and the closeness to an
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elementary school. Further, as laid out above, the ordinances do not contain
explicitly mandatory language requiring approval if certain conditions are
met. As such, and given the fact that one of the purposes of the regulations is
to “provide development which enhances neighborhood areas,” denying the
application for the purposes articulated by the City was rationally related to
a legitimate government purpose under the circumstances. Additionally, the
differences between Cooper Carwash and Appellants’ development, described
above, suggest that there was a rational basis for the different outcome. “The
lack of similarly situated comparators will often provide a rational basis for
the difference in treatment.” Lindquist v. City of Pasadena, Tex., 656 F. Supp.
2d 662, 691 (S.D. Tex. 2009), aff’d sub nom., Lindquist v. City of Pasadena
Texas, 669 F.3d 225 (5th Cir. 2012). As Appellants failed to show that the
City lacked a rational basis for its decision to deny the development plan, the
district court’s grant of summary judgment was appropriate.
III. Takings Claim
Texas courts generally recognize three types of takings: (1) where there
is a physical occupation of the land; (2) where the government exacts part of
the land; and (3) where government regulations cause a diminution in the
value of the land. Town of Flower Mound v. Stafford Estates Ltd. P’ship, 135
S.W.3d 620, 630 (Tex. 2004). Da Vinci argues that the actions taken by the
City in this case constitute a regulatory taking under Texas law.
A regulation may be a taking when it deprives the owner of all
economically beneficial uses of the land. Sheffield Dev. Co., Inc. v. City of
Glen Heights, 140 S.W.3d 660, 671 (Tex. 2004). If the regulation does not,
then Texas courts have generally looked to the three factors described by the
United States Supreme Court in Penn Central Transportation Co. v. City of
New York, 438 U.S. 104, 104 (1978), to guide their analysis. E.g. Sheffield,
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140 S.W.3d at 672; City of Lorena v. BMTP Holdings, L.P., 409 S.W.3d 634,
644 (Tex. 2013); Hearts Bluff Game Ranch, Inc. v. State, 381 S.W.3d468, 478
(Tex. 2012). The evidence presented with the motion for summary judgment
undisputedly shows that Da Vinci’s property retained some value. As such,
applying the Penn Central factors to the alleged taking is appropriate. Those
factors are: “(1) the economic impact of the regulation on the claimant; (2) the
extent to which the regulation has interfered with distinct investment backed
expectations; and (3) the character of the governmental action.” Sheffield,
140 S.W.3d at 672 (quoting Connolly v. Pension Benefits Guar. Corp., 475 U.S
211, 225 (1986) (inner quotation marks omitted). Importantly, these factors
are not the only consideration given to a regulatory taking claim. As
explained by Justice Sandra Day O’Connor: “Penn Central does not supply
mathematically precise variables, but instead provides important guideposts”
to aid courts in determining whether a taking has occurred and compensation
is due. Palazzolo v. Rhode Island, 533 U.S. 606, 634, 121 S. Ct. 2448
(2001) (O'Connor, J., concurring). Ultimately, the Court must consider “all of
the surrounding circumstances” and employ a “fact-sensitive test of
reasonableness.” Sheffield, 140 S.W.3d at 672–73 (quoting City of College
Station v. Turtle Rock Corp., 680 S.W.2d 802, 804 (Tex. 1984)).
Here, though the value of Da Vinci’s property was undoubtedly reduced
by the denial of its development plan application, the zoning and allowable
uses of the property never changed. As before, the property is still zoned for
commercial development and it may be developed. Also like before, this
ability is subject to the City’s approval of a development plan. As the zoning
of the lot in question has not changed, this Court cannot find reasonably held
investment-backed expectations were affected by the City enforcing
restrictions in place when such investments were made. Likewise, Da Vinci
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cannot show the character of the government action was severe enough to
justify a compensable taking under Texas law. As such, the district court’s
grant of summary judgment as to Da Vinci’s takings claim was appropriate
under the applicable law.
CONCLUSION
For the foregoing reasons, the district court was correct in granting
summary judgment on all the claims at issue. Accordingly, We AFFIRM the
district court’s grant of summary judgment.
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