Property owners’ taking claim not ripe since city was clearly open to reapplication of SUP denial

The City of Galveston, Texas v. Joe Murphy, et al., 14-14-00222-CV (Tex. App. – Houston [14th Dist.], January, 13, 2015)

This is an inverse condemnation case where the 14th Court reversed the denial of a jurisdictional challenge based on ripeness.

At the time of the claims, Ben-Amram d/b/a Galtex owned the property (two buildings) subject to a mortgage held by Murphy. Although the Historical District is zoned for single-family dwellings, the property was categorized and operated as “multiple-family dwellings,” comprising a total of 14 rental units. In 2008, Hurricane Ike struck Galveston Island and flooded the first floors of the property. After several months of attempted repairs the City advised Galtex the property was “unfit” for habitation and condemned it. Galex attempted multiple renovation strategies but was not successful in becoming compliant.  After six months the City advised Galtex the property had been unoccupied for too long and lost its “grandfather” status for non-conforming use and would require an SUP to continue operations if able to reopen. However, the City Council denied the SUP request. The property owners sued alleging the SUP denial and invocation of the six-month vacancy constituted a regulatory taking.  The City filed a jurisdictional challenge asserting there was no final decision on the property. After an evidentiary hearing, the trial court denied the motion and the City appealed.

A taking is not ripe until a final denial has occurred which allows a comparison of property status. The City asserted the decision was not final since it was a safety issue and procedural issue which caused the denial so they can still fix the concerns and resubmit. The court stated “the key question is whether the City’s denial of the SUP constituted a final decision such that we know to a reasonable degree of  certainty the extent of permitted usage of the property.” After analyzing the facts, the court determined the SUP denial was not a final decision. One issue for the denial was the lack of an engineer’s letter certifying the property’s safety. Additionally, the evidence showed the property owners still needed to do work on several units and the repairs were not yet complete. The court went through comments by various councilmembers regarding the safety if the SUP was granted before all repairs and full compliance was achieved. The City was clearly open to reapplication once code compliance was achieved which defeats the property owners argument of futility. As a result, the claims are not ripe and the trial court was without jurisdiction.

If you would like to read this opinion click here. Panel: Justice McCally, Justice Brown and Justice Wise. Opinion by Justice Brown. The attorneys listed for the City are Jocelyn A. Holland and David P. Salyer.  The attorney listed for Murphy is Mark W. Stevens.