Third Circuit Court of Appeals Finds District Court Lacked Subject Matter Jurisdiction Over Federal Claims Related to Moratorium on the Construction of Swimming Pools

E & R purchased land in Rehoboth Beach with the intention of building a residential home and in-ground pool on the property. E & R submitted its building application on September 15, 2014, after being told at a joint meeting of the City’s Board of Commissioners and Planning Commission that applications should be submitted by September 19 in order to be reviewed under “the currently applicable standards and zoning ordinances.” Four days after E & R’s submission, the City adopted a resolution proposing a moratorium on permits and other approvals for the construction of unenclosed swimming pools within the zoning district where E & R’s property was located. On November 17, the City informed E & R that it would take no further action on the Adopted Resolution or on E & R’s permit application. E & R promptly filed an against the City in the Delaware Court of Chancery, later amending the Complaint to assert state and federal claims against the City, the Mayor, the City Building Inspector and members of the City Board of Commissioners. Defendants removed the case to federal court and filed a motion to dismiss for lack of subject matter jurisdiction and for failure to state a claim on which relief can be granted. E & R now appeals the District Court’s order granting in part and denying in part Defendants’ motion to dismiss.

The court found that E & R’s failure to appeal to the BOA was dispositive for ripeness purposes because the BOA alone had the authority to render a final decision as to whether E & R was properly denied a building permit pursuant to the City’s zoning regulations. It further found that not only had E & R failed to set forth adequate factual allegations to support its conclusory assertion that the initial permit denial was not appealable, but it also pleaded facts that directly undercut its theory. Specifically, the Complaint asserted that “the City called an executive session with the Mayor, Commissioners, and Lynn on October 31, 2014 to further consider E & R’s Building Permit Application, its rejection by the Building Inspector, and the applicability of the moratorium.” The court held that the District Court erred in declining to apply the finality rule to one of E & R’s federal claims, instead dismissing its substantive due process challenge for failure to state a claim. Thus, because the District Court lacked subject matter jurisdiction over any of E & R’s federal claims, the plain language of 28 U.S.C. § 1447(c) mandated that the matter be remanded to the state court from which it was removed.

E & R Enterprise, LLC v City of Rehoboth Beach, 2016 WL 3077612 (3rd Cir. CA 6/1/2016)