City of Grapevine v. Muns, 02-19-00257-CV

CourtCourt of Appeals of Texas
Writing for the CourtElizabeth Kerr, Justice
Decision Date23 December 2021
PartiesCity of Grapevine, Appellant v. LUDMILLA B. MUNS, RICHARD MUELLER, KARI PERKINS, KEVIN Perkins, Pamela Holt, and A-l Commercial and Residential Services, Inc., Appellees
Docket Number02-19-00257-CV

City of Grapevine, Appellant
v.

LUDMILLA B. MUNS, RICHARD MUELLER, KARI PERKINS, KEVIN Perkins, Pamela Holt, and A-l Commercial and Residential Services, Inc., Appellees

No. 02-19-00257-CV

Court of Appeals of Texas, Second District, Fort Worth

December 23, 2021


On Appeal from the 348th District Court Tarrant County, Texas Trial Court No. 348-303736-18

Before Sudderth, C.J., and Kerr, J.[1]

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OPINION ON REHEARING

Elizabeth Kerr, Justice

After considering Appellant City of Grapevine's motion for en banc reconsideration and Appellees Ludmilla B. Muns, Richard Mueller, Kari Perkins, Kevin Perkins, Pamela Holt, and A-1 Commercial and Residential Services, Inc.'s response, we withdraw our August 5, 2021 opinion and judgment on our own motion and substitute the following.[2]

I. Introduction

This appeal arises from a challenge to the City of Grapevine's municipal ordinance banning short-term rentals (STRs).[3] Ludmilla B. Muns, Richard Mueller, Kari and Kevin Perkins, Pamela Holt, and A-1 Commercial and Residential Services, Inc. (collectively, "the Homeowners") own residential properties in Grapevine that they lease to others on a short-term basis. In September 2018, the City of Grapevine passed an ordinance expressly prohibiting STRs in the City (the "STR Ordinance"). As a result, the Homeowners sued the City, requesting declarations that the STR Ordinance violates their substantive-due-course-of-law rights, is preempted, and is

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unconstitutionally retroactive. The Homeowners also asserted a regulatory-takings claim and sought injunctive relief.

The City moved for summary judgment and filed a plea to the jurisdiction arguing that the trial court lacks subject-matter jurisdiction over this case because (1) the Homeowners failed to exhaust their administrative remedies; (2) the Homeowners are seeking an advisory opinion on the STR Ordinance because they have not challenged the City's existing zoning ordinance under which STRs are not a permitted use in the first place; (3) the Homeowners' regulatory-takings claim is invalid; and (4) governmental immunity bars the Homeowners' claims for declaratory and injunctive relief. The trial court disagreed and denied the City's motion and plea. The City has filed this interlocutory appeal, [4] contending in five issues that the trial court lacked jurisdiction and thus erred by denying the City's jurisdictional plea.[5] We will reverse and render in part and affirm in part.

II. Background

In 1982, the City adopted a comprehensive zoning ordinance (the "Zoning Ordinance") that prohibits the use of a building within the City's limits for any purpose except those uses that the ordinance specifically authorizes: "no use of any

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building, structure[, ] or land . . . shall hereafter be established, altered, moved, divided[, ] or maintained, in any manner except as authorized by the provisions of this ordinance." See Grapevine, Tex., Code of Ordinances, app. D, §§ 1, 6.C (2020) (emphases added). The Zoning Ordinance defines "use" as "the purpose or activity for which a piece of land or its buildings is designed, arranged, or intended, or for which it is occupied or maintained." Id. § 12.A.426.

In the two zoning districts in which the Homeowners' properties are located, the Zoning Ordinance authorizes "single-family detached dwellings" as a principal permitted use. Id. §§ 15.A.1, 16.A.2. A "single-family detached dwelling" is "an enclosed building having accommodations for and occupied by only one family, which building must of itself meet all the lot area, front yard, side yard, rear yard, height[, ] and other zoning requirements." Id. § 12.A.394. A "family" is "any number of individuals living together as a single housekeeping unit interdependent upon one another."[6] Id. § 12.A.140.

In 2000, the City amended the Zoning Ordinance to allow bed and breakfasts in certain areas of Grapevine.[7] See Grapevine, Tex., Ordinance 2000-47 (Apr. 18, 2000). This amendment defined "bed and breakfast facility" as "an accessory use to a single-family dwelling unit in which no more than twelve (12) rooms in the principal

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residential structure are set aside for guest clients; . . . [the] length of stay of guest clients ranges from one (1) to thirty (30) days; and the owner/operator of the principal structure resides on-site." Id. sec. 2.A (codified at Grapevine, Tex., Code of Ordinances, app. D, § 12.A.29a). The amendment excluded from "[b]ed and breakfast homestay[s] . . . uses such as motels, hotels, community residential homes, boarding or lodging houses, apartment dwellings, guest cottages or single-family dwelling transient rental." Id. The amendment did not define "single-family dwelling transient rental." See id.

The City contends that because the Zoning Ordinance does not expressly allow STRs, they have never been a permitted use in the City. But for several years before the STR Ordinance's 2018 passage, the Homeowners had rented out their Grapevine properties on a short-term basis without interference from the City. In fact, when some of the Homeowners contacted the City's Planning and Zoning Department to ask about any restrictions on STRs, City employees told them that the City had no restrictions, regulations, or permit requirements for STRs. Based on these representations and the existing Zoning Ordinance, the Homeowners invested money to purchase or to improve Grapevine homes for use as furnished STRs.[8] Some of the

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Homeowners paid short-term-occupancy taxes to the City, without incident and with the City apparently happy to accept them.[9]

More recently, however, Grapevine's STR market has exploded because websites like Airbnb, Homeaway, and Vrbo have made it easier for property owners to market their STRs to prospective renters. For some permanent residents who live near STRs, this uptick has created problems such as noise disturbances, increased vehicle traffic, and street-parking problems. For the City's police department, STRs have generated increased complaints from residents involving STR guests: criminal mischief, domestic disputes, parking violations, alarm calls, and noise disturbances. But the City has never issued a citation for short-term renting in violation of the Zoning Ordinance.[10]

Because of the increase in STRs and the associated complaints, the Grapevine City Council began a ten-month study and observation period in November 2017 concerning how STRs affect residential neighborhoods. In early September 2018, the city council held a public hearing on the STR issue. At the beginning of the

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hearing, the City's Assistant Attorney, Matthew Boyle, stated that-despite what the Homeowners had been led to believe-the Zoning Ordinance had always prohibited STRs:

And at the outset as to where we are now, I want to make it clear that the short-term rentals are not [a] permitted use in the [C]ity of Grapevine and they have never been listed as a permitted use under the zoning ordinance and as such they are currently and have been since at least 2000 prohibited in the [C]ity of [G]rapevine.

After hearing citizens' comments, the city council passed the STR Ordinance, which (1)defines a "single-family dwelling transient rental" as "[t]he rental or offer for rental of any dwelling or any portion of a dwelling for a period of less than 30 days"[11] and (2)expressly prohibits them in the City. Grapevine, Tex., Ordinance No. 2018-065 (Sept. 4, 2018) (codified at Grapevine, Tex., Code of Ordinances, ch. 14, art. VI, §§ 14-150, -151). According to the City, the STR Ordinance did not really amend the Zoning Ordinance but simply clarified and affirmed that the Zoning Ordinance did not allow STRs.

Immediately after the STR Ordinance's enactment, Scott Williams, the City's Building Official and Director of Development Services, prepared and mailed identical notice letters to all Grapevine's known STR owners and operators. The notice-which each of the Homeowners received-stated,

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Be advised that short term/transient rentals ("STR's") are prohibited in the City of Grapevine. STR's are not listed as a permitted use in any Zoning classification in the City, and as such, are not allowed. . . . Following the [September 2018] Public Hearing, the City Council approved [the STR Ordinance] that affirmed the prohibition on STR's in Grapevine. Single family dwelling transient rentals (aka STR's) are defined as "the rental or offer for rental of any dwelling or any portion of a dwelling for a period of less than 30 days.["] The complete Ordinance is attached.

The notice informed STR owners that they would be allowed a 45-day conditional grace period to allow them a "reasonable time to honor commitments that have already been made, and/or to market their home(s) for other, permitted uses." The notice warned that after the grace period expired, "any person found to be in violation of the Zoning Ordinance regarding STR's [would] be issued a citation, and upon conviction thereof [would] be fined in a sum not to exceed $2, 000.00." The notice further warned that ordinance violations during the conditional grace period would "result in an order to immediately cease the STR" and would "result in prosecution as described above."[12]

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In October 2018, the Homeowners sued the City, seeking declarations that the STR Ordinance is unconstitutional because it (1) is a regulatory taking of their property without compensation;[13] (2) violates their due-course-of-law rights under the Texas Constitution;[14] (3) is impliedly preempted by Chapter 156 of the Texas Tax Code alone or in combination with Chapter 92 of the Texas Property Code;[15] and (4) deprives the Homeowners of their vested rights to continue their STRs, in violation of Chapter 245 of the Texas Local Government Code.[16] The Homeowners also sought to enjoin the City from enforcing the STR Ordinance.

The trial court granted the...

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