Sheffield Devel. v. City of Glenn Heights

• Decision Date: 05 March 2004
• Docket Number: No. 02-0033.,02-0033.
• Citation: 140 S.W.3d 660
• Parties: SHEFFIELD DEVELOPMENT COMPANY, INC., Petitioner, v. CITY OF GLENN HEIGHTS, Texas, Respondent.
• Court: Texas Supreme Court

140 S.W.3d 660

SHEFFIELD DEVELOPMENT COMPANY, INC., Petitioner, v. CITY OF GLENN HEIGHTS, Texas, Respondent.

No. 02-0033.

Supreme Court of Texas.

Argued October 30, 2002.

Decided March 5, 2004.

Rehearing Denied September 3, 2004.

Appeal from the 40th District Court, Ellis County, Henry G. Andrews, Jr., J Bruce M. Kramer, Lubbuck, for Amicus curiae American Planning Association.

Terry D. Morgan, Terry Morgan & Associates, P.C., Dallas, for Amicus curiae City of Cedar Hill, TX & Other.

John Rogers, Office of City Attorney, Dallas, for Amicus curiae City of Dallas, Texas.

B.J. Smith, City Attorney, Mesquite, for Amicus curiae City of Mesquite, Texas.

Angela Washington, Cowles & Thompson, PC, Dallas, for Amicus curiae City of Rowlett, Texas.

Christopher G. Senior, for Amicus curiae National Association of Home.

J. David Breemer, Sacramento, CA, for Amicus curiae Pacific Legal Foundation.

Tobb A. Haba, Bush & Motes, P.C., Arlington, for Amicus curiae Texas Association of Builders.

Scott Houston, Austin, for Amicus curiae Texas Municipal League & Other.

David Michael Hugin, Arthur J. Anderson and W. Mike Baggett, Winstead Sechrest & Minick, P.C., Dallas, for Petitioner.

Robert F. Brown, Edwin P. Voss Jr., Brown & Hofmeister, L.L.P., Dallas, for Respondent.

Justice HECHT delivered the opinion of the Court.

After a twelve-month moratorium on development, the City of Glenn Heights rezoned undeveloped property owned by Sheffield Development Co., reducing the number of residences that could be built on the property. Sheffield contends that the moratorium and the "downzoning" each constituted a taking of its property without adequate compensation in violation of article I, section 17 of the Texas Constitution.¹ Sheffield separately requests a declaration that its development rights became vested when it submitted an application during an earlier hiatus in the moratorium. Following a bench trial on liability issues and a jury trial on damages, the district court rendered judgment for Sheffield for $485,000, plus pre- and post-judgment interest, on the downzoning takings claim only. The court concluded that Sheffield's claim for declaratory relief was not ripe for adjudication. A divided court of appeals concluded that Sheffield was entitled to recover on both takings claims, affirmed the damages award for the downzoning claim, and remanded the moratorium claim for trial on damages.² The court also concluded that Sheffield's claim for declaratory relief was ripe and remanded it.³ We hold that Sheffield cannot recover on either takings claim and reverse and render judgment accordingly. We agree with the court of appeals that the case must be remanded to the trial court to determine whether Sheffield fixed its rights by submitting a plat during a hiatus in the moratorium.

I

A

The City of Glenn Heights is a growing suburban community (1990 pop. 4,564; 2000 pop. 8,050) south of Dallas astraddle the Dallas/Ellis County border. In 1986, the City zoned a 236-acre tract as Planned Development District 10 (PD 10), allowing most of it to be developed for single-family residences on lots no smaller than 6,500 square feet, with a maximum density of 5.5 dwelling units per acre.⁴ The owner at the time platted and developed the first phase of the Stone Creek subdivision on just over 43 acres of the tract. Some of the lots in the first phase met only the minimum required sizeminimum-size, but others were larger. The rest of the property was not developed and remained vacant.

In 1995, the City adopted a comprehensive "Future Land Use Plan" which found that the City had an oversupply of high-density residential areas. The plan designated the neighborhood including Stone Creek primarily as a lower density residential area to contain four to five dwelling units per acre. Though PD 10 zoning allowed a maximum of 5.5 dwelling units per acre in the relevant area, the first phase of the development had been built with only 3.9 dwelling units per acre, the trial court found, and thus would comply with the new plan. The plan left PD 10 zoning in place. Except for PD 10 and the thirteen other planned development districts (PDs), all property within the City was rezoned according to the plan, increasing most residential lot sizes to 20,000 square feet minimum. The City did not rezone any of the PDs at that time.

In the summer of 1996, Sheffield Development Co. contracted to purchase the undeveloped part of Stone Creek including certain unbuilt lots in the first phase area, in all about 194 acres, for $600 an acre. The price was below market because the owner, a firm headquartered in England, was anxious to liquidate its real estate portfolio in the United States. Sheffield's principal, Gary Sheffield, was an experienced, successful developer of single-family subdivisions. Before closing on the contract, he made a due-diligence investigation of all City regulations and restrictions affecting the property. He met several times with the City Secretary, the City Manager, the Mayor, and various Council members to advise them of Sheffield's plans to continue the Stone Creek development as permitted by the PD 10 zoning and to ascertain that no zoning changes for the property were planned. He specifically requested that Sheffield be notified of any possible zoning changes. No City officer or employee expressed any objection or reservation to Sheffield's plans or stated that the PD 10 zoning might change, but neither did anyone offer any assurance that the zoning would not change.

At the time, the Vested Rights Statute allowed a landowner to vest zoning rights by filing a plat.⁵ Through the fall of 1996, representatives of the City met to discuss downzoning PD 10 and imposing a moratorium on development, but they did not tell Sheffield of these meetings for fear that it would quickly close on the purchase of the property, file a plat, and vest its zoning rights. When Sheffield finally did close on the purchase of the property in December, the City Council met three days later in executive session to discuss downzoning PD 10.

On January 6, 1997, without prior notice to Sheffield (the law that now requires four days' notice in such circumstances⁶ was not yet in effect), the City Council adopted Resolution No. 287-97 prohibiting the filing and acceptance of plats in PDs until February 6 to allow time to determine whether existing PD zoning was consistent with the comprehensive land use plan. The resolution recited:

the temporary suspension is solely for the purpose of allowing the City Council to study, in conjunction with the City's planning and administrative officials, the zoning, growth and development related issues and concerns presented by the nonconformity of the City's planned developments with the City's Code and Future Land Use Plan.

Before the end of this moratorium, the City's consultant recommended that PD 10 be rezoned to require lots no smaller than 12,000 square feet, thereby permitting construction of about half the number of houses permitted by PD 10. The consultant also recommended that eleven other PDs be rezoned, leaving two that would not be rezoned. The recommendation was referred to the City's Planning and Zoning Commission, and the City Council extended the moratorium to March 6.

On March 11, after the moratorium had expired on its face, Sheffield submitted a plat for the development of its property under PD 10 zoning requirements. The City Secretary rejected the plat on the asserted ground that the City Manager had continued the moratorium in effect without Council action. On March 17, the City Council extended the moratorium to May 6.

On March 24, the Planning and Zoning Commission accepted some of the consultant's recommendations for rezoning twelve PDs but rejected the proposed rezoning of PD 10 and four other PDs. Anticipating that the City Council would be unwilling to accept the Commission's decision yet unable to override it — a three-fourths vote, or six of the seven members, was required by the City charter — the City Manager recommended that final action be delayed. Accordingly, on April 21, the City Council rezoned three of the twelve PDs as recommended by the consultant and approved by the Commission, and adopted Resolution No. 292-97, essentially identical to Resolution 287-97, extending the moratorium to July 21. The City Council later extended the moratorium under the same resolution to December 31 and finally to May 15, 1998. From July through December 1997, the City rezoned another seven of the twelve PDs as recommended by the consultant, leaving PD 10 and one other on which the City Council had not acted. At the same time, the City and Sheffield made some efforts to negotiate their differences, but the City had no further studies done or reports made on whether PD 10 should be rezoned.

On April 27, 1998, the Planning and Zoning Commission voted to accept the consultant's January 1997 recommendation to rezone PD 10 and the remaining PD. The same day, the City Council approved the rezoning.

B

Sheffield sued the City for inverse condemnation, arguing that both the moratorium and the rezoning of the property violated the takings provision of the Texas Constitution, article I, section 17. Sheffield also sought a declaratory judgment that the plat it filed in March 1997, during the gap in the moratorium periods authorized by the City Council, had been deemed approved by the City's failure to take action on it⁷ and vested Sheffield's rights by statute. Sheffield's pleadings did not assert the claim for declaratory judgment as an alternative to the claims for damages.⁸ Sheffield asserted a number of other claims against the City, which the trial court denied. Sheffield has not appealed the trial court's rulings on those claims, and thus they do not concern us here.

The parties agreed to try liability issues to the court and damages, if necessary, to a jury. After the bench trial, the court...