City of Harlingen v. Obra Homes, Inc., No. 13-02-268-CV (TX 1/13/2005)
| Decision Date | 13 January 2005 |
| Docket Number | No. 13-02-268-CV.,13-02-268-CV. |
| Parties | CITY OF HARLINGEN, Appellant, v. OBRA HOMES, INC., CLAUDE THACKER AND CATHERINE THACKER, Appellees. |
| Court | Texas Supreme Court |
On appeal from the 138th District Court of Cameron County, Texas.
Before Chief Justice VALDEZ and Justices RODRIGUEZ and GARZA.
Obra Homes, Inc. ("Obra") sued the City of Harlingen ("the City") contending the City's failure to grant its zoning request was a "taking" under the Texas Constitution and was also a violation of due process and equal protection rights. After a trial, the jury found the City acted unreasonably in failing to approve the zoning request but awarded Obra only $125.00 in lost profits. The trial court increased the damages to $16,000.00.
Now on appeal, the City contends: (1) Obra's claims were not ripe; (2) Obra's claims were rendered moot by subsequent re-zoning of the property; (3) Obra lacked standing to sue for a taking of the property; (4) no taking occurred; (5) loss of profits are not the proper measure of damages for a takings claim; (6) the trial court erred in increasing the award; and (7) Obra presented no evidence that its due process rights were violated. Obra cross-appeals contending the evidence established damages in excess of $16,000 and the trial court abused its discretion in failing to award greater damages. We reverse the judgment of the trial court and render judgment in favor of the City.
Obra is in the business of developing land and selling homes. In June 1998, Obra entered into an earnest-money contract to purchase an undeveloped tract of land from Catherine Thacker. Under the contract, Obra would pay Thacker $606,832 for the property and closing would occur on December 10, 1998. Possession was to be delivered at closing.
The tract of land consists of about 44.6 acres located in Harlingen. Obra planned to subdivide the property and build between 280 and 287 single-family homes on the property. Each home would be built on a lot measuring about 5,000 square feet.
The contract required the enactment of certain zoning ordinances which would permit the erection of single family homes on the property. An addendum to the contract gave Obra the right to conduct studies, including inspection of zoning laws, within 160 days of the contract's effective date. If Obra discovered the property was not suitable for its intended use within the 160-day period, it could notify Thacker and cancel the contract.
When Obra entered into the earnest money contract, the tract of land was zoned N, which refers to areas not yet zoned or newly annexed or subdivided. In June 1998, Obra applied for a re-zoning of the property to R-2, which refers to an area for the development of primarily duplex family units. Under this designation, Obra contended it would have been able to build single family homes on 5,000-square-foot lots.
The City staff and the Planning and Zoning Commission both recommended approval of the re-zoning request. The City staff, however, noted the availability of R-1 zoning, which refers to an area designated for the development of single family homes on lots no smaller than 6,000 square feet.
On August 5, 1998, when the request was presented to the City Commission, several citizens voiced concerns, which included complaints that the lot-size was too small and the plan would negatively impact the value of the lots in surrounding areas and overcrowd local schools. The City Commission did not approve or deny the request, and the request failed by default.
On the recommendation of the City staff, Obra re-submitted its proposed subdivision under a request to have the property re-zoned to PD. This type of zoning refers to a planned development, allows flexibility in planning, and, according to Obra, could have allowed the building of single-family residences on 5,000-square-foot lots.
Again, the City staff and the Planning and Zoning Commission recommended approval of the re-zoning request. When the request went before the City Commission, the Mayor proposed postponing the vote so a meeting could be held between Obra, representatives of the homeowners, and City representatives. Obra agreed. At the meeting, however, Obra and the homeowner representatives were not able to reach an agreement that both addressed the representatives' concerns and was satisfactory to Obra.
On October 7, 1998, Obra's request for PD zoning was again considered by the City Commission. Several citizens spoke in opposition to re-zoning, voicing many of the same concerns previously expressed and stating R-1 was the best zoning option. The proposed ordinance changing the zoning from N to PD did not receive the required support and accordingly, failed.
Although Thacker gave Obra an extension to close on the property for an additional sum of money, Obra ultimately failed to consummate the sale and the contract expired. Thacker retained the property and the earnest money.
Obra's initial pleading sought injunctive relief including a permanent injunction preventing the City from denying its request for PD zoning. Obra later amended its pleading to seek economic damages, consequential damages, lost profits, attorney's fees, and costs.
Other than questions pertaining to the amount of damages, the only question presented to the jury was whether the City acted "unreasonably in failing to approve or deny [Obra]'s requests for re-zoning." All but one juror answered yes. The final judgment did not specify on what claims judgment was rendered and awarded only monetary damages.1
By its first issue, the City contends Obra's claims were not ripe because Obra never obtained a "final decision" on the zoning requests. Alternatively, the City argues by its second issue that Obra's claims became moot.
Both ripeness and mootness are components of subject matter jurisdiction. See Valley Baptist Med. Ctr. v. Gonzalez, 33 S.W.3d 821, 822 (Tex. 2000) (). Whether the trial court has subject matter jurisdiction over a claim is a question of law and is reviewed de novo. City of Houston v. Northwood Mun. Util. Dist. No. 1, 73 S.W.3d 304, 308 (Tex. App.-Houston [1st Dist.] 2001, pet. denied). To determine whether subject matter jurisdiction exists, we look to the pleadings and also may consider evidence relevant to the jurisdictional issue. Id.
The City contends the failure to approve or deny Obra's re-zoning requests was not a "final decision." We disagree.
A final decision regarding the application of zoning regulations to the property at issue is required for a due process challenge to land-use decisions to be ripe. Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 929-30 (Tex. 1998). This prerequisite requires a "`final and authoritative determination of the type and intensity of development legally permitted on the subject property.'" Id. (quoting MacDonald, Sommer & Frates v. Yolo County, 477 U.S. 340, 348 (1986)). We cannot determine whether a taking has occurred until we can compare the uses prohibited by the regulation to any permissible uses that may be made of the subject property. Id.
A "final decision" generally requires denial of a development plan and a denial of a variance from the controlling regulations. Id. at 932. The term "variance" includes other types of available permits or actions that could provide similar relief. Id. at 930. However, futile variance requests or re-applications are not required to render the claim ripe. Id. at 929. Nor is the party required to seek permits for development that he does not deem economically viable. Id. at 932.
Here, Obra submitted an application for re-zoning to R-2 and later to PD. The City's inaction on both applications effectively denied Obra's application. In addition, Michelle McCoy, the director of the planning and zoning commission, testified that after Obra's second re-zoning request failed for lack of support in the commission, she informed Obra "that that was the end of the line." She also told Obra it could file an application for R-1 zoning if it chose. R-1 zoning would require Obra to build single family residences on 6,000 square-foot lots. The City was not going to allow development of single family residences on 5,000 square-foot lots but would consider a plan for development on 6,000 square-foot lots. Tommy Brownell, the land acquisition and development manager for Obra, testified that, at the price they would pay per acre for the land, Obra would not have profited enough from building on 6000 square-foot lots to justify the risk.
Although the commission did not explicitly deny the re-zoning applications, its inaction effectively denied Obra the re-zoning it sought. Under these circumstances, we conclude Obra received a final decision and its claims are ripe for adjudication. We overrule the City's first issue.
The City also contends the case and appeal became moot after the property was later sold to Elizarde Homes, Inc. and Elizarde Homes obtained re-zoning of the property to R-1. Again, we disagree.
An appeal becomes moot when the appellate court's judgment cannot affect the rights of the parties. VE Corp. v. Ernst & Young, 860 S.W.2d 83, 84 (Tex. 1998). That is, the cause is moot when our judgment can have no "practical legal effect upon a then-existing controversy." Bd. of Adjustment, City of Corpus Christi v. McBride, 676 S.W.2d 705, 708 (Tex. App.-Corpus Christi 1984, no writ).
In McBride, the principle case relied on by the City, the appellant sought the reinstatement of an injunction preventing the continued construction of a home. Id. at 706, 708. During the pendency of the...
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