Maryland Manor Assocs. v. City of Houston

• Decision Date: 08 September 2011
• Docket Number: Civil Action No. H–10–1736.
• Citation: 816 F.Supp.2d 394
• Parties: MARYLAND MANOR ASSOCIATES, et al., Plaintiffs, v. CITY OF HOUSTON, Defendant.
• Court: U.S. District Court — Southern District of Texas

816 F.Supp.2d 394

MARYLAND MANOR ASSOCIATES, et al., Plaintiffs,

v.CITY OF HOUSTON, Defendant.

Civil Action No. H–10–1736.

United States District Court,S.D. Texas,Houston Division.

Sept. 8, 2011.

Kimberli J. Deagen, Barron & Adler, L.L.P., Houston, TX, Stephen I. Adler, Barron & Adler, LLP, Austin, TX, Thomas E. Sheffield, Attorney at Law, Kemah, TX, for Plaintiffs.

Edward B. Adams, Jr., Mary Beth Balhoff, Seth M. Isgur, Fulbright & Jaworski, Jaqueline Irene Leguizamon, City of Houston Legal Department, Houston, TX, for Defendant.

MEMORANDUM AND ORDER

LEE H. ROSENTHAL, District Judge.

The plaintiffs, Maryland Manor Associates and Buckhead Investment Partners, Inc. (collectively, “Maryland Manor”), applied for a permit with the defendant, the City of Houston, for the construction of a multi-story mixed-use building. Citing traffic concerns associated with the proposed development, the City denied Maryland Manor's April 7, 2009 permit application. Maryland Manor sued, alleging that the City's denial violated equal protection and substantive due process under the federal and Texas constitutions, as well as § 245.002(a) of the Texas Local Government Code (the “Vested Rights Act”).

The City has filed two motions to dismiss. In the first motion, the City argues that the plaintiffs' federal constitutional causes of action should be dismissed under Federal Rule of Civil Procedure 12(b)(6) for failure to state claims upon which relief can be granted. (Docket Entry No. 40). In its second motion, the City argues that the plaintiffs' state statutory and constitutional claims should be dismissed under Rule 12(b)(1) because the City enjoys governmental immunity for suits for damages on those claims. (Docket Entry No. 38). Based on the pleadings; the motions, responses, and replies; and the record, this court grants in part and denies in part the City's motions.

A status and scheduling conference is set for September 22, 2011, at 3:00 p.m. in Courtroom 11–B.

The reasons for the rulings are set forth below.

I. Background ¹A. The Allegations in the Complaint

Maryland Manor owns a 1.6–acre tract of land located at 1717 Bissonnet Street in Houston, Texas. (Second Am. Compl. ¶ 8). The plaintiffs want to replace the two-story, 67–unit apartment complex currently on the land with a five-level parking garage and a 23–story mixed-use building, which will contain an amenity plaza with an exercise room, a day spa, business offices, and 17 floors of apartments or condominiums. ( Id. ¶¶ 8, 11). On July 30, 2007, the plaintiffs submitted an application for a foundation and site-work permit accompanied by a Traffic Impact Analysis (“TIA”) to the City. ( Id. ¶ 10). The TIA concluded that the construction project would generate 184 p.m. peak-hour trips to and from the Bissonnet right-of-way and that the corresponding increase in traffic would not have any adverse impact on the surrounding street system. ( Id. ¶ 11).

The City approved the TIA on September 4, 2007, confirming that Maryland Manor's proposed development did not create an adverse traffic impact. ( Id. ¶ 10). On September 28, 2007, the City rescinded its approval of the TIA. Maryland Manor alleges that the rescission was because of “neighborhood opposition to the project and consequent pressure placed on City elected officials based ostensibly on [the proposed project's] height.” ( Id.). The complaint does not indicate what reasons, if any, the City offered to justify its rescission, but does allege that the City did not express any traffic-related concerns. ( Id. ¶ 16).

After the City rescinded its approval of the TIA, the plaintiffs “engaged in a lengthy plan review process associated with its permit application.” ( Id. ¶ 13). The plaintiffs “replied to staff comments, revised plans, and provided additional information approximately ten ... different times to the City Planning Department,” but received “pretextual reasons for the continued and serial denial of ... the foundation permit.” ( Id.). At one point, the City even tried “to ... pass a new City ordinance selectively aimed at [the plaintiffs'] project.” ( Id. ¶ 14).

On April 7, 2009, the plaintiffs submitted a revised permit application that, like its July 30, 2007 application, also proposed a development that would generate 184 p.m. peak-hour trips; the City did not approve this application. ( Id. ¶ 16).

In August 2009, the City approved a different permit application, which Maryland Manor had submitted on August 4 “under protest and subject to [a] challenge of the denial” of its April 7 application. ( Id. ¶ 15). The August 4 application “called for a project that would generate only a net 120 P.M. peak hour automobile trips onto and off of the Bissonnet right of way.” ( Id.). When it approved the August 4 application, the City found that the plaintiffs' April 7 application did not meet the criteria of § 40–86 of the Houston Code of Ordinances because the proposed development would create an extraordinary traffic hazard and would excessively interfere with the normal use of the Bissonnet right-of-way. ( Id.).

After unsuccessfully appealing the denial of its April 7 permit application—first to the City of Houston General Appeals Board and then to the Houston City Council—Maryland Manor filed this action against the City, asserting five causes of action. ( Id. ¶¶ 23, 24). The first two causes of action are brought under 42 U.S.C. § 1983. In the first § 1983 cause of action, Maryland Manor alleges that the City violated its federal substantive due process rights in two ways. First, Maryland Manor alleges that the City acted arbitrarily and capriciously in denying the April 7, 2009 permit application because the driveway-permit ordinance did not authorize the City “to regulate density” or to consider the traffic impact of the proposed project further down the street where the driveway connects or at a nearby intersection not in the driveway's immediate vicinity. ( Id. ¶¶ 7, 19, 20, 27). Second, Maryland Manor alleges that the City's denial of its April 7 permit application was not rationally related to a legitimate government interest because the traffic increase associated with the proposed development would not create any adverse traffic impacts. ( Id. ¶¶ 11, 21, 27, 29). In the second cause of action, Maryland Manor alleges a federal equal protection clause violation. The complaint states that the City has not applied either the driveway-permit ordinance or the interpretation of the ordinance applied to Maryland Manor to any similarly situated developer. ( Id. ¶ 33). The complaint specifically identifies six “recently permitted or completed projects” to which the City has not applied the ordinance and states that there are at least 36 other projects to which the ordinance has not been applied. ( Id. ¶¶ 33, 34). The identified developers include LaMaison on Revere Apartments located at 2727 Revere Street; Fairmount Museum District Apartments located at 4310 Dunlavy Street; the Medical Clinic of Houston in the 1700 block of Sunset Boulevard; Sonoma at the intersection of Dunstan Road and Kelvin Street; Millenium Greenway at 4100 Southwest Freeway; and 2121 Mid Lane located at 2121 Mid Lane. ( Id. ¶ 33). Maryland Manor alleges that the City had no rational basis for applying the driveway-permit ordinance to Maryland Manor but not to any of the six developers for the properties the complaint identifies. ( Id. ¶ 32). In the third and fourth causes of action, Maryland Manor alleges that the City violated its substantive due process and equal protection rights under the Texas constitution. ( Id. ¶ 36). In the fifth cause of action, Maryland Manor alleges that the City violated its vested rights under Texas Local Government Code § 245.002(a) by failing to consider its application solely on the basis of rules, regulations, and ordinances that were in effect on the date Maryland Manor submitted its first permit application, as § 245.002(a) requires. ( Id. ¶ 37). The plaintiffs do not dispute that the driveway ordinance was in effect on July 30, 2007, but they allege that “[n]o reasonable reading of any City ordinance [at that time] ... could have resulted in the denial of or failure to approve [Maryland Manor's] April 7, 2009 ... permit application.” ( Id. ¶ 39).

B. The Motions to Dismiss

On October 4, 2010, the City moved to dismiss the plaintiffs' federal claims under Rule 12(b)(6). (Docket Entry No. 33). After the plaintiffs responded, (Docket Entry No. 34), the City filed an amended motion to dismiss, (Docket Entry No. 40). Because the amended motion expands on the original motion, the original motion is moot and only the amended motion is considered.

In the amended motion, the City argues that the federal equal protection claim should be dismissed because the six developers identified in the complaint are not similarly situated to the plaintiffs and because the driveway-permit ordinance is rationally related to the legitimate government objective of regulating traffic flow. ( Id., 3–5). The City also argues that the federal substantive due process claim fails because Maryland Manor has no “constitutional right to build a twenty-three ... story building and a five level parking garage [that] will generate 184 P.M. peak hour automobile trips to and from the Bissonnet right of way,” ( id., 6), and because the City's denial of the plaintiffs' permit application was rationally related to traffic regulation, ( id., 6–7).² On March 15, 2011, after the plaintiffs responded to the City's amended motion to dismiss and after the City retained additional counsel, the City filed a reply to the plaintiffs' response. (Docket Entry No. 66). The reply makes new arguments in support of the amended motion to dismiss. As to the equal protection claim, the City argues that the plaintiffs' complaint is deficient because it failed to allege exactly how the six identified properties are similar to Maryland Manor and because ...