Posted by: Patricia Salkin | October 14, 2018

TX Appeals Court Holds Property Owners Failed to Exhaust Administrative Remedies Prior to Pursuing Inverse Condemnation Action

This post was authored by Matthew Loeser, Esq.

Appellant property owners Joe Murphy, Yoram Ben-Amram, and Galtex Development, LLC brought an inverse-condemnation suit against the City of Galveston, Texas.  The trial court denied the City’s initial plea to the jurisdiction. On appeal, the court reversed the trial court’s order and rendered judgment dismissing the property owners’ takings claims with regard to the City’s denial of a Specific Use Permit (SUP), and affirmed the property owners’ takings claims based on the City’s revocation of the property’s grandfathered, non-conforming zoning status. The trial court then considered the City’s second plea to the jurisdiction, and held that it lacked subject-matter jurisdiction due to the property owners’ failure to exhaust their administrative remedies regarding the City’s revocation of the property’s non-conforming status.
In support of its contention, the City presented evidence that the property owners could have filed an administrative appeal to the ZBA pursuant to the zoning standards and chapter 211 within a reasonable time after the City informed Ben-Amram that the property was in violation of section 29-111(a)(4) and had lost its non-conforming status. Additionally, the City presented evidence that the property owners failed to appeal this decision to the ZBA. The court found that because the property owners did not appeal the loss of the property’s “grandfather” status to the ZBA, they failed to exhaust their administrative remedies. Thus, the trial court did not have subject-matter jurisdiction over the property owners’ takings claims.
The property owners argued that because the City did not inform them of the option to appeal the revocation decision to the ZBA, the City should be estopped from insisting on exhaustion. Here, however, the record did not reflect that Ben Amram testified any City official told him that the City would not enforce the six-month actual-occupancy zoning standard against the property, or that any City official told him that he should not, or would not need to, appeal the loss of the property’s non-conforming status to the ZBA. Moreover, the court found that the evidence did not support that estoppel was the property owners’ only available remedy, as the property owners had the right to pursue their SUP application to a final decision.
Next, the property owners contended that the City’s actions in “concealing” their right to appeal the revocation decision to the ZBA, while at the same time “coercing” Ben-Amram to make costly repairs, constituted a business compulsion. Since the property owners did not raise business compulsion in their response to the City’s plea to the jurisdiction. The court held the property owners waived this issue on appeal.
Lastly, as to property owners request that the court reconsider its prior holding, the court found that the property owners merely reprised their prior arguments and relied on prior evidence and authorities. As such, the court held there was no reason for us to revisit its prior holding that the City was entitled to dismissal on the property owners’ takings claims based on the City’s denial of the SUP application. The trial court’s holding was therefore affirmed.

Murphy v City of Galveston, 557 S.W. 3d 235 (TX App. 9/13/2018)


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