Posted by: Patricia Salkin | October 12, 2016

TX Appeals Court Finds Landowners Adequately Pled that Amendment to Ordinance Impacted Ability to Use Property Constituting a Regulatory Taking but Upheld Dismissal of Other Claims

This appeal arose from a final judgment granting the City of Frisco’s plea to the jurisdiction and dismissing with prejudice all of the claims of appellants FLCT, Ltd. and Field Street Development I, Ltd. against the City. The owners contended that the trial court erred by granting the plea to the jurisdiction because: their case was ripe for adjudication, they properly alleged a regulatory takings claim for which the City was not immune, they pled sufficient facts to show that a December 2012 zoning ordinance amendment enacted by the City was “null and void” because the City did not deliver them proper notice under local government code section 211.007(c), and the City’s immunity from suit was waived as to Owners’ declaratory judgments act claims because they asserted valid claims under chapter 245 of the local government code.

Specifically, owners contended that the trial court erred by concluding that the City was immune from suit on Owners’ chapter 24 declaratory judgment claims because the alcoholic beverage code did not pre-empt chapter 245 and the section 11.37(d) appeals process in the alcoholic beverage code was not an exclusive remedy. However, the court determined that not only did the alcoholic beverage code permit a city to enact distance regulations falling within the scope of section 109.33, it also allowed the city to grant variances as to the enforcement of those distance requirements. Accordingly, the code did not pre-empt the City’s enactment and enforcement of the distance requirements in this case.

Owners next challenge the City’s contention that the alcoholic beverage code’s remedy for the denial of a permit was exclusive and precluded a chapter 245 action as to the City’s distance ordinance. The City further contended that instead of bringing a declaratory judgment claim on their chapter 245 claims, Owners were limited to appealing the County Court’s denying 7–Eleven’s permit application. Here, Owners have raised both a constitutional claim and a vested property rights claim in the form of a declaratory judgment, which was specifically authorized by statute. They were not seeking to appeal any action by the TABC or any action in connection with a pending permit because 7–Eleven withdrew its application after the county judge denied the proceeding under section 11.37(d). Instead of pursuing this remedy through exhaustion of its appeals, 7–Eleven elected to abandon the permit application, the ground lease, and the prospect of constructing and operating a convenience store on the Property. The court therefore held that the alcoholic beverage code did not provide the exclusive remedy for Owners’ claims based on the City’s enforcement of the distance requirements with respect to the Property.

In their third issue, Owners contended that the trial court erred by determining that the City’s immunity was not waived for their declaratory judgment claim regarding lack of notice. Owners claimed that they pled a valid claim that the December 2012 changes to the City’s zoning ordinance were void for lack of individual notice to them in accordance with the local government code. The court found that additional notice to individual property owners under section 211.007(c) was not required in a case such as this one, in which a zoning ordinance change applied district-wide or across multiple districts without a change in classification of the individual owners’ properties. Accordingly, the court held that Owners failed to plead facts that would waive the City’s immunity for this declaratory judgment claim. 

Lastly, the Owners alleged the trial court erred by dismissing their inverse condemnation claim because they were not claiming that the City has denied them a license or permit to sell alcohol; instead, they claimed that the City unreasonably interfered with their existing property rights by erroneously applying distance requirements to the Property in contravention of Owners’ chapter 245 vested rights. The court determined that whether a valid takings claim had been alleged was a question of law, as factual issues existed that must be resolved by a fact finder, including the extent of the economic impact on the Property and whether the City had a first-in-time policy regarding development. Thus, the court held that the trial court erred by dismissing Owners’ inverse condemnation claim for lack of jurisdiction.

FLCT, Ltd. v. City of Frisco, 493 S.W.3d 238, 276 (Tex. App. 2016)


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