The John Corporation v. City of Houston

• Decision Date: 12 June 2000
• Docket Number: No. 99-20010,99-20010
• Citation: 214 F.3d 573
• Parties: (5th Cir. 2000) THE JOHN CORPORATION; US VANGUARD LTD INC, Plaintiffs - Appellants v. THE CITY OF HOUSTON; CHERRY MOVING COMPANY INC, doing business as Cherry Demolition Defendants - Appellees
• Court: U.S. Court of Appeals — Fifth Circuit

Page 573

214 F.3d 573 (5th Cir. 2000)

THE JOHN CORPORATION; US VANGUARD LTD INC, Plaintiffs - Appellants v. THE CITY OF HOUSTON; CHERRY MOVING COMPANY INC, doing business as Cherry Demolition Defendants - Appellees

No. 99-20010

IN THE UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT

June 12, 2000

Appeal from the United States District Court for the Southern District of Texas Before KING, Chief Judge, and DUHE and DeMOSS, Circuit Judges.

KING, Chief Judge:

Plaintiffs-Appellants The John Corporation and U.S. Vanguard, Limited, Inc. appeal from the district court's judgment dismissing without prejudice their claims against the City of Houston and Cherry Moving Company, Inc., arguing that the lower court erred in finding that each of their federal claims is either unripe or frivolous. Although we agree that an Eighth Amendment claim is frivolous and that the takings claim is unripe, we conclude that other claims are ripe, and therefore reverse in part and remand for further proceedings.

I. FACTUAL AND PROCEDURAL BACKGROUND

In 1995, Van Ngoc Pham, president of The John Corporation, executed an earnest money contract with Winkler Investment Group to purchase an apartment complex for $1.9 million. The complex included fifty-three apartment buildings, six utility buildings, and a mailroom. Four years prior to Pham's purchase, the City of Houston ("the City") had issued demolition orders covering the apartment buildings.

Pham discussed a rehabilitation plan with the City. He executed a Bond Agreement with the City that set forth the conditions under which he would be allowed to rehabilitate the buildings, and posted a $70,000 bond to secure building permits. According to the complaint, renovation efforts were immediately undertaken, but were thwarted by a number of actions on the City's part. Those actions included ordering the eviction of all tenants, and thereby restricting an income stream; refusing, after issuing a number of occupancy permits for renovated buildings, to issue further permits; and placing a hold on temporary electrical permits, thereby thwarting efforts to repair three buildings damaged by fire in June 1996. The City is also described as issuing a number of citations against The John Corporation for violations of ordinances after a broken water line was discovered and reported, and not removing those citations after it was determined that water line was on City property and the City was obligated to repair it. The City did not extend the time available for obtaining permits to compensate for the City's refusal to issue permits while the water line remained unrepaired. In addition, the City is said to have filed liens and otherwise billed The John Corporation for work allegedly done by contractors and city officials. Finally, during the summer of 1997, Cherry Moving Company ("Cherry Moving") demolished forty-one apartment buildings and portions of the fence surrounding the property.

The John Corporation, U.S. Vanguard Limited, Inc., and Pham filed suit in state court against the Winkler Investment Group, the City, and Cherry Moving, asserting violations of due process and equal protection rights under the Fifth, Eighth, and Fourteenth Amendments to the U.S. Constitution and violations of Texas state law and the Texas Constitution. The claims against the Winkler Investment Group were severed and tried. The plaintiffs subsequently moved to non-suit the City and Cherry Moving. Shortly thereafter, on May 29, 1998, The John Corporation and U.S. Vanguard ("Appellants") filed this action in the United States District Court for the Southern District of Texas under 42 U.S.C. § 1983. Their complaint, in addition to stating state-law claims of breach of contract, fraud, and misrepresentation, asserts that the City and Cherry Moving violated their rights under the Fifth, Eighth, and Fourteenth Amendments of the U.S. Constitution, and seeks actual and punitive damages, interest, and attorney fees. The complaint filed in federal court asserts claims generally similar to those filed in state court, but adds allegations that the City demolished the property "without a public purpose and without just compensation in violation of the Fifth Amendment" and that the demolition was undertaken in violation of an injunction. On September 4, the City filed a motion to remand, and Cherry Moving filed a motion to dismiss for lack of subject-matter jurisdiction. Construing the City's motion as a motion to dismiss for lack of subject-matter jurisdiction, the court granted both motions and dismissed the claims without prejudice to refiling in the appropriate state court. The two corporations timely appeal.

II. STANDARD OF REVIEW

We review a district court's grant of a motion to dismiss for lack of subject-matter jurisdiction de novo, using the same standards as those employed by the lower court. See Rodriguez v. Texas Comm'n on the Arts, 199 F.3d 279, 280 (5th Cir. 2000); EP Operating Ltd. Partnership v. Placid Oil Co., 26 F.3d 563, 566 (5th Cir. 1994). We must take as true all of the complaint's uncontroverted factual allegations, see Saraw Partnership v. United States, 67 F.3d 567, 569 (5th Cir. 1995), and will affirm the dismissal if "'the court lacks the statutory or constitutional power to adjudicate the case.'" Home Builders Ass'n of Miss., Inc. v. City of Madison, Miss., 143 F.3d 1006, 1010 (5th Cir. 1998) (quoting Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1187 (2d Cir. 1996)).

Appellants assert jurisdiction under 28 U.S.C. § 1331. As the Supreme Court recently has reaffirmed, in federal question cases,

the District Court has jurisdiction if "the right of the petitioners to recover under their complaint will be sustained if the Constitution and laws of the United States are given one construction and will be defeated if they are given another" unless the claim "clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such a claim is wholly insubstantial and frivolous."

Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 89 (1998) (quoting Bell v. Hood, 327 U.S. 678, 682-83, 685 (1946)). Appellants have the burden of demonstrating that the federal court has subject-matter jurisdiction. See Stockman v. Federal Election Comm'n, 138 F.3d 144, 151 (5th Cir. 1998).

III. THE COMPLAINT

In their complaint, Appellants allege that the City, in undertaking a course of conduct that thwarted their attempts to renovate their property and that culminated in the destruction of forty-one buildings, violated rights guaranteed by the Fifth, Eighth, and Fourteenth Amendments to the U.S. Constitution. The district court dismissed the Eighth Amendment claim, finding it frivolous. It interpreted the gravamen of Appellants' complaint as asserting a takings claim, and because Appellants had not used state-provided procedures to attempt to obtain just compensation as required under Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985), the court declared that claim to be unripe. Relying principally on Graham v. Connor, 490 U.S. 386 (1989), the district court also dismissed the Appellants' due process¹ and their equal protection claims, finding that those claims were subsumed into the more particularized takings claim. Thus, at issue is whether the district court properly dismissed each of the Appellants' claims.

In order to resolve this issue, we must be clear on what the complaint alleges, for the "first step in any [§ 1983] claim is to identify the specific constitutional right allegedly infringed." Albright v. Oliver, 510 U.S. 266, 271 (1994) (citing Graham, 490 U.S. at 394); see also County of Sacramento v. Lewis, 523 U.S. 833, 841 n.5 (1998); Baker v. McCollan, 443 U.S 137, 140 (1979) (noting the need "to isolate the precise constitutional violation with which [the defendant] is charged" in § 1983 cases). Individuals may look to several constitutional provisions for protection against state action that results in a deprivation of their property. The Fourteenth Amendment guarantees that individuals are not to be deprived of their property without due process of law, a protection that has been viewed as guaranteeing procedural due process and substantive due process. Procedural due process promotes fairness in government decisions "[b]y requiring the government to follow appropriate procedures when its agents decide to 'deprive any person of life, liberty, or property.'" Daniels v. Williams, 474 U.S. 327, 331 (1986). Substantive due process, "by barring certain government actions regardless of the fairness of the procedures used to implement them, [] serves to prevent governmental power from being 'used for purposes of oppression. '" Id. (quoting Murray's Lessee v. Hoboken Land & Improvement Co., 59 U.S. (18 How.) 272 (1856)). The Equal Protection Clause protects individuals from governmental action that works to treat similarly situated individuals differently.² See City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432, 439 (1985); Rolf v. City of San Antonio, 77 F.3d 823, 828 (5th Cir. 1996); Samaad v. City of Dallas, 940 F.2d 925, 941 (5th Cir. 1991).

Other protections exist through incorporation.³ For example, because principles embodied in the Takings Clause of the Fifth Amendment have been incorporated into the Fourteenth Amendment, see Samaad, 940 F.2d at 933, individuals are also granted the right to receive "just compensation" if the state takes their property for public use. Finally, the Fourth Amendment protects individuals against unreasonable seizures of property. See United States v. James Daniel Good Real Property, 510 U.S. 43 (1993); Soldal v. Cook County, Ill., 506 U.S. 56, 61-63 (1992); Samuels v. Meriwether, 94 F.3d 1163 (8th Cir. 1996); Hroch v. City of Omaha, 4 F.3d 693 (8th Cir. 1993); Conner v. City of Santa Ana, 897 F.2d 1487 (9th Cir.), cert. denied, 498 U.S. 816 (1990).

Appellants assert...