Hidden Oaks Ltd v. The City of Austin

UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT

____________

No. 96-50837
____________

HIDDEN OAKS LIMITED, ET AL

Plaintiffs

HIDDEN OAKS LIMITED

Plaintiff - Appellee-Cross-Appellant,

versus

THE CITY OF AUSTIN,

Defendant - Appellant-Cross-Appellee.

Appeals from the United States District Court
for the Western District of Texas

April 29, 1998

Before JOHN R. GIBSON*, JOLLY, and EMILIO M. GARZA, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Hidden Oaks Limited (“Hidden Oaks”) and the City of Austin
(the “City”) cross-appeal the district court’s entry of judgment

for Hidden Oaks on claims of breach of contract and procedural due

process, its dismissal of Hidden Oaks’ substantive due process and

takings claims, and its award of $115,000 in attorney’s fees to

Hidden Oaks. We affirm in part, reverse and vacate in part, and

remand.

*
Circuit Judge of the Eighth Circuit, sitting by designation.
 I

Hidden Oaks owns Stoneridge Apartments (“Stoneridge”), an

eight-building, 137-unit complex located in Austin, Texas. In

August 1994, the City served on Hidden Oaks eight written Notices

of Violation (one for each of the complex’s buildings) asserting

that Stoneridge failed to comply with certain provisions of the

City Uniform Housing Code (“housing code” or “code”).

Specifically, the City alleged that some of the windows in

Stoneridge were not large enough to serve as exit routes in case of

a fire and also that certain exterior structures such as balconies

and walkways were rotting and in need of repair. The notices

advised that if Hidden Oaks “disagree[d] with these findings, [it]

ha[d] appeal rights as set forth in the Housing Code,” which stated

that “[a]ny person affected by any notice of substandard violations

may request and shall be granted an appeal and hearing before the

Building and Standards Commission.”

The notices also threatened that as long as Stoneridge

remained in violation of the code, the City “reserve[d] the right

to place a hold on all utilities,” meaning that once the current

tenant moved out of a unit, the new tenant could not reconnect

utility service. The notices did not specify the circumstances

under which the City would exercise its right to impose a utility

hold on a property, but the City’s deputy building official, Stuart

Hersch, testified at trial that his inspectors generally made these

determinations based on factors such as the owner’s overall

cooperativeness and willingness to make repairs.

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 The parties produced conflicting evidence at trial as to

whether the City provided any way to appeal a building inspector’s

imposition of a hold, separate and apart from the appeal procedure

provided to challenge an inspector’s citation of a property as

substandard. The City argued that even an owner who admitted the

presence of code violations could appeal to the Building and

Standards Commission (the “Commission”), seeking a reprieve or

variance from the imposition of a hold——just as the building

inspector in the first instance might find code violations and yet

refrain from placing the hold at all. Hidden Oaks, on the other

hand, claimed that the City entrusted its building inspectors with

final, unreviewable authority over which substandard buildings

would suffer holds and which would not.

In any event, the parties did not dispute that the Commission

routinely heard appeals related to the correctness of the building

inspector’s citations, i.e., the Notices of Violation. Indeed,

shortly after receiving the notices at issue here, Hidden Oaks

filed an appeal with the Commission, asserting that “our 30-year-

old apartment complex meets the requirements” for egress windows

and “retrofitting of buildings would not achieve a significant

life/safety improvement and would place an undue financial hardship

on [the] owner.” Hidden Oaks did not appeal the citations of the

building inspector regarding the condition of the balconies and

walkways, nor did Hidden Oaks petition the Commission for a

reprieve from the threatened holds.

Prior to the hearing on Hidden Oaks’ appeal, Hersch, along

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with another employee of the City, Terri Hasbrook, set up a meeting

with Chip McLelland, an employee of Hidden Oaks, to discuss Hidden

Oaks’ pending appeal. During the meeting, McLelland expressed his

desire to cooperate fully with the City and avoid the imposition of

utility holds. The City, for its part, suggested that it might

provide some fire-safety-related alternatives for Stoneridge,

rather than insisting that Hidden Oaks essentially tear down the

complex to expand the size of every window.

At the end of the meeting, McLelland asked Hersch to “put

[their agreement] in writing.” Hersch suggested instead that

McLelland draft a letter, which Hersch then would approve.

McLelland sent the letter several days later, stating that Hidden

Oaks was “requesting a postponement of [their] appeals to the

Board,” and setting forth a proposal by which Hidden Oaks would

install “hard wired smoke detector[s] with battery back-up[s] in

each unit which has deficient egress” and “electronically

interconnect smoke detectors in each sleeping room [of the] multi-

bedroom units.” In closing, McLelland noted: “I believe this

[proposal] addresses the major safety concerns expressed by your

Code Enforcement inspector and along with the now completed

electrical repairs, removed sign wiring, and the progress being

made on A/C platform repair, will avoid any further necessity of

threatened utility holds.” Hersch wrote “approved” in one corner,

along with his signature, and placed the letter in Hidden Oaks’

file.

Shortly after sending the letter (“September 1994 letter

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agreement”), Hidden Oaks learned that the City in fact had placed

a utility hold on Stoneridge, contrary to Hidden Oaks’

understanding of the meeting with Hersch and the subsequent

September 1994 letter agreement. Following this discovery, Hidden

Oaks continued to negotiate with the City for the removal of the

hold, but the City did not release the last unit in Stoneridge

until February 1996.1

Hidden Oaks filed this suit in December 1995, alleging breach

of contract, violation of the Fifth Amendment takings clause, and

violation of various sections of the Texas Local Government Code.

The district court dismissed the Fifth Amendment takings claim as

unripe, and Hidden Oaks subsequently amended its complaint to

include an inverse condemnation claim under Article I, § 17 of the

Texas Constitution as well as several federal claims for violations

of substantive and procedural due process. The case proceeded to

trial in late September 1996. At the close of Hidden Oaks’

presentation of evidence, the district court dismissed the

substantive due process and inverse condemnation claims, finding

that the City’s actions were “rationally related to . . .

protect[ing] [the] health and safety of citizens” and that “under

the law, [the City] can’t be unreasonable when they are enforcing

safety and health codes.”

The jury responded to interrogatories on the breach of

contract and procedural due process claims, finding for Hidden Oaks

1
Although the City placed the original hold on the entire
complex, releases occurred first on a building-by-building and then
eventually on a unit-by-unit basis.

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in both instances. The jury awarded damages of $231,089 and

attorney’s fees of $115,000 for the breach of contract claim, and

nominal damages of $1 for the procedural due process violation.

The district court entered judgment for a total sum of $346,090

plus interest and costs, and denied both parties’ requests for

attorney’s fees pursuant to 42 U.S.C. § 1988. Both the City and

Hidden Oaks filed timely appeals.

II

Before trial, the district court dismissed Hidden Oaks’

federal takings claim for lack of jurisdiction, relying on the two-

prong ripeness test of Williamson County Reg’l Planning Comm’n v.

Hamilton Bank, 473 U.S. 172, 186, 195, 105 S. Ct. 3108, 3116, 3121,

87 L. Ed. 2d 126 (1985) (holding that claims for compensation under

the Fifth Amendment takings clause are not ripe until (1) the

relevant governmental unit has reached a final decision as to what

will be done with the property and (2) the plaintiff has sought

compensation for the alleged taking through whatever adequate

procedures the state provides). We review jurisdictional

determinations de novo and are free to consider all issues relevant

to that inquiry, even those not addressed by the district court.

See Samaad v. City of Dallas, 940 F.2d 925, 934 (5th Cir. 1991)

(noting that the ripeness analysis of Williamson County “is a

jurisdictional requirement that cannot be waived”).

Here, the district court held that Hidden Oaks failed to

satisfy the first prong of Williamson——requiring that the City

“arrive[] at a final, definitive position regarding how it will

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apply the regulations at issue to the particular land in

question”——because Hidden Oaks failed to petition the Commission

for a reprieve or “variance” from the building inspector’s decision

to impose a utility hold on Stoneridge. Williamson, 473 U.S. at

188, 105 S. Ct. at 3117 (holding federal takings claim unripe

because respondent did not seek variances that would have allowed

it to develop the property, notwithstanding the commission’s

finding that the plan as submitted did not comply with the relevant

regulations). Hidden Oaks disputes that the Commission would even

entertain such a variance petition, and urges that we reverse the

district court’s dismissal as based on the clearly erroneous

factual conclusion that such variance procedures were in fact

available.

We need not resolve this factual dispute,2 particularly in

light of Hidden Oaks’ failure to follow through with any formal

process of appeal. Both parties agree that regardless of whether

the Commission would hear a request for a reprieve or variance from

2
In its order of April 8, 1996, dismissing Hidden Oaks’
federal takings claim for lack of jurisdiction, the district court
resolved this factual dispute by explicitly crediting the affidavit
of Stuart Hersch, the City’s deputy building official, for the
proposition that “utility holds may be appealed to the Building and
Standards Commission.” Subsequent events at trial, however, raised
serious questions regarding Hersch’s credibility. At the close of
Hidden Oaks’ presentation of evidence, the district court expressed
concern over the fact that “[w]e have disputed evidence as to
whether or not there is in effect any appeal with regard to the
utility hold.” At that point, even the City agreed that the
factual question of whether the City provided an appeal on that
issue was disputed and in need of resolution by the jury. For
various reasons not relevant here, this issue never reached the
jury, ostensibly leaving the district court’s April 1996 order of
dismissal as the final factual determination regarding what methods
of appeal the City provided.

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a utility hold, the Commission certainly would hear claims that a

hold had been wrongfully imposed, i.e., that the building in

question was not substandard. To the extent that Hidden Oaks

disputes the City’s characterization of Stoneridge as substandard

or dangerous, this route of appeal offers a relevant form of review

that Hidden Oaks admittedly abandoned, mandating that we dismiss

for lack of jurisdiction under Williamson.3 To the extent that

Hidden Oaks claims to have admitted the presence of certain

dangerous conditions, making this route of appeal irrelevant, it

has no cause of action under the Fifth Amendment. See United

States v. Locke, 471 U.S. 84, 107, 105 S. Ct. 1785, 1799, 85 L. Ed.

2d 64 (1985) (“Regulation of property rights does not ‘take’

private property when an individual’s reasonable, investment-backed

expectations can continue to be realized as long as he complies

with reasonable regulatory restrictions the legislature has

imposed.”); Texaco, Inc. v. Short, 454 U.S. 516, 530, 102 S. Ct.

781, 792, 70 L. Ed. 2d 738 (1982) (“[T]his Court has never required

3
In its brief to this court, Hidden Oaks attempts to evade
the issue of ripeness by recharacterizing its allegations as
fitting within the “temporary takings” analysis of First
Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304,
107 S. Ct. 2378, 96 L. Ed. 2d 250 (1987). Hidden Oaks points out
that the City lifted the last holds on Stoneridge in February 1996,
several months after Hidden Oaks filed its complaint, and we
therefore now know exactly what has been done with the property.
This argument ignores the well-settled rule that jurisdiction “is
determined at the outset of the suit,” based on the allegations of
the plaintiff’s complaint. Mobil Oil Corp. v. Kelley, 493 F.2d
784, 786 (5th Cir. 1974). See also Williamson, 473 U.S. at 183
n.7, 194, 105 S. Ct. at 3115 n.7, 3120 (finding respondent’s claim
unripe despite recognizing that during the pendency of the appeal,
the parties reached an agreement as to how Williamson County would
permit the Bank to develop its property).

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the State to compensate the owner for the consequences of his own

neglect.”). Consequently, we hold that the district court did not

err in dismissing Hidden Oaks’ federal takings claim.

III

At the close of Hidden Oaks’ presentation of evidence, the

district court granted the City’s motion for judgment as a matter

of law with respect to Hidden Oaks’ claim for inverse condemnation

under Article I, § 17 of the Texas Constitution. Finding as a

matter of law that Hidden Oaks could demonstrate neither “actual

physical appropriation” of its property, nor “unreasonable

interference” with its use, the district court noted that “the City

can’t be unreasonable when they are enforcing safety and health

codes.” See generally Town of Sunnyvale v. Mayhew, 905 S.W.2d 234,

259 (Tex. 1995) (holding that a “taking” for purposes of a claim

for inverse condemnation under Article I, § 17 can be “either a

physical appropriation of the property or an unreasonable [i.e.,

arbitrary] interference with the landowner’s right to use and enjoy

his property”).

We review the district court’s grant of a motion for judgment

as a matter of law de novo. See Murray v. Red Kap Indus., Inc.,

124 F.3d 695, 697 (5th Cir. 1997). To the extent that our review

requires consideration of the evidence introduced by the parties,

as opposed to pure questions of law, we apply “the same standard as

the district court,” considering “[a]ll evidence with all

reasonable inferences in the light most favorable to the non-moving

party.” Gutierrez v. Excel Corp., 106 F.3d 683, 686 (5th Cir.

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1997). We affirm “if the facts and inferences point so strongly

and overwhelmingly in favor of one party that no reasonable juror

could arrive at a verdict contrary to the district court's

conclusion.” Id. We reverse if we find “substantial evidence” upon

which “reasonable jurors might reach different conclusions.” Id.

In urging reversal of the district court’s judgment, Hidden

Oaks relies primarily on the federal takings analysis conducted by

the Supreme Court in Lucas v. South Carolina Coastal Council, 505

U.S. 1003, 1028, 112 S. Ct. 2886, 2900, 120 L. Ed. 2d 798 (1992)

(finding a compensable taking even assuming arguendo that the state

acted to protect the public health and safety). In this state-law

context, we find Lucas to be of doubtful relevance. See, e.g.,

Palacios Seafood, Inc. v. Piling, Inc., 888 F.2d 1509, 1513 (5th

Cir. 1989) (noting differences between Article I, § 17 of the Texas

constitution and the federal Fifth Amendment). Moreover, even to

the extent that Hidden Oaks relies on more relevant state-law

standards, we find no evidence in the record to support any legally

colorable argument for an inverse condemnation.

At various stages of the proceedings below, Hidden Oaks argued

alternatively that the district court should find an inverse

condemnation because (1) as a matter of law, utility holds are not

related to health and safety; (2) as a matter of law, utility holds

should be placed only for reasons related to the safety of

providing utilities; and (3) factually, the City placed and/or kept

holds on units in Stoneridge that were admittedly up to code.

The first and second of these arguments merit little

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discussion. As a matter of law, placing utility holds on

substandard property qualifies as a reasonable, non-arbitrary

decision designed to accomplish the “legitimate goal” of keeping

substandard housing unoccupied. See Nash v. City of Lubbock, 888

S.W.2d 557, 562-63 (Tex. App. 1994, no writ) (finding no

compensable violation of due process in city’s demolition of

substandard buildings); City of Lubbock v. Corbin, 942 S.W.2d 14,

22 (Tex. App. 1996, writ denied) (finding that “it was not

unreasonable” to refer even a newly constructed home to the Housing

Standards Commission for possible demolition); cf. Camara v.

Municipal Court of San Francisco, 387 U.S. 523, 535, 537, 87 S. Ct.

1727, 1734, 1735, 18 L. Ed. 2d 930 (1967) (upholding “the police

power of municipalities to impose and enforce . . . minimum

standards even upon existing structures” and noting that “the

public interest demands that all dangerous conditions be prevented

or abated”).

Hidden Oaks argues in response that utility holds cannot be

“reasonably related” to health and safety because they do not

immediately protect the current tenant from the allegedly

substandard conditions, and because a landlord may avoid the impact

altogether by placing utilities in its own name. Yet simply

demonstrating that a particular regulation is imperfectly adapted

to its end, or contains loopholes through which one might avoid the

desired impact, does not mean that the mechanism is unreasonable,

or, more to the point, arbitrary. See Hunt v. City of San Antonio,

462 S.W.2d 536, 539 (Tex. 1971) (“If reasonable minds may differ as

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to whether or not a particular . . . ordinance has a substantial

relationship to the public health, safety, morals, or general

welfare . . . the ordinance must stand as a valid exercise of the

city’s police power.”); Webb v. Dameron, 219 S.W.2d 581, 584 (Tex.

Civ. App. 1949, writ ref’d n.r.e.) (“Action is not arbitrary or

capricious when exercised honestly and upon due consideration,

where there is room for two opinions, however much it may be

believed that an erroneous conclusion was reached.”) (quoting In re

Persons Employed at St. Paul & Tacoma Lumber Co., 110 P.2d 877, 883

(Wash. 1941)); cf. United States R.R. Retirement Bd. v. Fritz, 449

U.S. 166, 175, 101 S. Ct. 453, 460, 66 L. Ed. 2d 368 (1980)

(holding that classifications challenged under the Equal Protection

Clause may be non-arbitrary even though imperfect). Similarly,

Hidden Oaks’ protestations regarding the “arbitrary” nature of

placing utility holds for reasons unrelated to the safety of

providing utilities ignores the City’s substantial and legitimate

interest in keeping substandard housing unoccupied, not simply in

ensuring the safe provision of electrical service. See Sims v.

Century Kiest Apartments, 567 S.W.2d 526, 531 (Tex. Civ. App. 1978,

no writ) (recognizing as valid a city’s interest in establishing

ordinances that ensure that “dwellings offered for rental be safe

and fit for habitation”).

Hidden Oaks’ remaining allegation))that the City placed

utility holds on non-substandard units in an effort to force Hidden

Oaks to bring other units in Stoneridge up to code))presents a more

troubling scenario, and a closer question of “unreasonableness”

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under state law. See City of Pharr v. Pena, 853 S.W.2d 56, 61

(Tex. App. 1993, writ denied) (recognizing that courts may find a

taking when the government has acted with an “improper motive”);

Southwestern Gas & Elec. Co. v. Stanley, 70 S.W.2d 413, 415 (Tex.

1934) (authorizing punitive damages against utility for cutting off

service to a residence in order to force the owner to pay a

separately metered and contested bill for service to his business).

Nevertheless, in order to prevail on such a theory, Hidden Oaks

would need to demonstrate, at an absolute minimum, that at least

one non-substandard unit in Stoneridge suffered a utility hold at

some particular, definite moment in time.

The record reveals, however, that Hidden Oaks presented no

clear evidence at trial as to when particular units suffered the

imposition of utility holds, much less if those particular units,

at that particular time, met all applicable sections of the housing

code. On cross-examination, Hidden Oaks’ witness Brian Cunningham

admitted that he had records indicating when the City placed and

released holds on various units. Inexplicably, however, Hidden

Oaks failed to introduce that evidence and therefore failed to

demonstrate that any unit in Stoneridge suffered a utility hold at

the same time that it satisfied all sections of the City housing

code.4

4
Hidden Oaks did attempt to demonstrate this point by
eliciting testimony that (1) a substantial number of the units in
Stoneridge were efficiencies, (2) the alleged code violations
relating to window size would not apply to efficiencies, and (3)
the entire complex of Stoneridge suffered a utility hold for some
period of time. As the district court noted, however, this
argument ignores the other code violations alleged by the City,

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 As a result of this failure of proof, we see no substantial

evidence that would enable a reasonable juror to determine that

Hidden Oaks suffered an inverse condemnation of its property. We

therefore hold that the district court did not err in granting

judgment as a matter of law with respect to this claim.

IV

Following Hidden Oaks’ presentation of evidence, the City also

moved for judgment as a matter of law on Hidden Oaks’ claim for

damages, under 42 U.S.C. § 1983, based on a denial of substantive

due process. The district court granted the motion, finding as a

matter of law that the City’s actions were “rationally related to

protecting the health and safety of citizens.” See FM Properties

Operating Co. v. City of Austin, 93 F.3d 167, 174 (5th Cir. 1996)

(“[G]overnment action comports with substantive due process if the

action is rationally related to a legitimate government

interest.”). Whether this “rational relation” in fact exists is a

question of law that we review de novo. See id. at 172 n.6.

In arguing that the district court erred in finding a rational

relation between the City’s placement of utility holds and the

protection of health and safety, Hidden Oaks does not appear to

appreciate the limited range of a substantive due process analysis.

See, e.g., Shelton v. City of College Station, 780 F.2d 475, 477

(5th Cir. 1986) (holding that decisions of state zoning boards do

not violate substantive due process unless the court finds no

“conceivable rational basis” on which the board might have based

which were not necessarily inapplicable to efficiencies.

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its decision). Thus, Hidden Oaks maintains strenuously on appeal

that the City behaves rationally in placing a utility hold on a

property only when allowing utility service to continue would

itself create a risk to public health or safety——as when faulty

wiring creates a risk of fire, or leaking pipes create a risk of

flood. Accordingly, Hidden Oaks argues that in placing a utility

hold on Stoneridge simply to force the repair of other types of

dangerous violations——such as rotting balconies or inadequate fire

escape routes——the City has stepped beyond the bounds of

rationality and violated Hidden Oaks’ right to substantive due

process.

In support of this proposition, Hidden Oaks cites

International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154,

90 L.Ed. 95 (1945), again a case we find to be of doubtful

relevance. In any event, we need not belabor our earlier

conclusion that municipalities do in fact have a substantial,

legitimate interest in keeping substandard housing unoccupied, and

are entitled to further this interest by ensuring that landlords

either repair their property during the current tenancy or face a

complete loss of income from the substandard unit. See Camara, 387

U.S. at 537, 87 S. Ct. 1735 (“[T]he public interest demands that

all dangerous [housing] conditions be prevented or abated.”);

United States R.R. Retirement Bd, 449 U.S. at 179, 101 S. Ct. at

461 (refusing to hold government action “arbitrary” when “plausible

reasons” exist for that action).

Given the limited nature of our review, we agree with the

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district court that the City’s actions were “rationally related to

the protection of [the] health and safety of citizens” and

therefore not actionable as violations of the Fourteenth Amendment.

Accordingly, we hold that the district court did not err in

granting judgment as a matter of law on this claim.5

V

At the close of all the evidence, the jury found for Hidden

Oaks on both the procedural due process and breach of contract

claims. In framing these issues for the jury, Hidden Oaks argued

that the September 1994 letter agreement formed an enforceable

contract, in which Hidden Oaks agreed to withdraw its appeal of the

window-size violations as consideration for the City’s promise not

to place a utility hold on Stoneridge. Hidden Oaks also alleged

that the City violated Hidden Oaks’ due process rights by

performing a sort of “bait and switch” with the appeal of the

underlying violations——convincing Hidden Oaks to withdraw its

appeal in exchange for a promise that no holds would be imposed,

and then breaching that agreement after the deadline for appeal had

passed.

The City asserted at the charge conference that these theories

of recovery were inconsistent. Either the City took away Hidden

Oaks’ right to appeal, or Hidden Oaks surrendered it voluntarily as

5
To the extent that Hidden Oaks may have stated a more
plausible claim for a violation of its right to substantive due
process by demonstrating that the City placed holds on non-
substandard units, we note again that we will not address the legal
merits of this claim in light of Hidden Oaks’ failure to prove the
necessary, underlying facts. See supra at 13.

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consideration for certain benefits from the City. The district

court admitted the possibility of a conflict, but decided to wait

for the jury’s verdict before ruling on the City’s objection. Once

the jury returned, however, having found for Hidden Oaks on both

claims, the district court denied the City’s motion for a new trial

and renewed motion for judgment. The City appeals the denial of

these motions on the grounds that (1) Hidden Oaks failed to prove

a protected property interest either in continued utility service

or in renting the units at Stoneridge, (2) no valid contract

existed because the City Council never ratified the September 1994

letter agreement, (3) the contract as found by the jury would be

unenforceable, and (4) neither the text of nor the circumstances

surrounding the September 1994 letter agreement demonstrated mutual

assent to remove utility holds from Stoneridge.6

6
The City also alleges two additional points of error, which
we find unworthy of textual discussion. The first involves the
City’s allegation, raised for the first time in its reply brief,
that insufficient evidence supports the jury’s finding of a
procedural due process violation. Not only is this point of error
untimely, see United States v. Green, 46 F.3d 461, 465 n.3 (5th
Cir. 1995) (holding issue raised for the first time in a reply
brief waived), but additionally, in making the argument, the City
appears to fundamentally misunderstand the jury’s verdict.
Devoting itself to refuting “[p]laintiff’s argument of no valid
appeal for utilty holds,” this section of the City’s reply brief
continues to argue the issue of whether or not the Building and
Standards Commission would have entertained a petition for a
repreive or variance from a legally imposed utility hold. As noted
above, however, this factual dispute was not the basis for the
jury’s finding of a procedural due process violation; rather, the
basis for the verdict was the City’s allegedly intentional bait and
switch, resulting in Hidden Oaks losing its right to appeal even
the underlying notices of violation. As argued, therefore, this
point of error is irrelevant, and we need not address it.
The second point involves the City’s assertion that Hidden
Oaks’ procedural due process claim is unripe, citing Williamson
County Reg’l Planning Comm’n v. Hamilton Bank, 473 U.S. 172, 105 S.

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 For reasons unclear to us, the City did not raise the issue of

an inconsistent verdict in its brief to this court. We therefore

deem that issue waived. See Melton v. Teachers Ins. and Annuity

Ass’n of Am., 114 F.3d 557, 561 (5th Cir. 1997).7 With regard to

the remaining issues, we review the district court’s denial of a

motion for judgment as a matter of law de novo, assessing whether

the evidence produced at trial provided a “legally sufficient . .

Ct. 3108, 87 L. Ed. 2d 126 (1985), and Samaad v. City of Dallas,
940 F.2d 925 (5th Cir. 1991). Again, however, the City has
misunderstood the jury’s procedural due process verdict. For while
other circuits have held that Williamson may operate to bar a
procedural due process claim, see, e.g., Bigelow v. Michigan Dep’t
of Natural Resources, 970 F.2d 154 (6th Cir. 1992); Harris v.
Riverside County, 904 F.2d 497 (9th Cir. 1990), those cases involve
allegations of deprivations “ancillary” to or “arising from” a
takings claim. See Bigelow, 970 F.2d at 160 (applying Williamson
ripeness test to a procedural due process claim that the court
found “ancillary” to the main issue of “whether the state properly
denied full compensation to the plaintiffs for their fishing
licenses”); Harris, 904 F.2d at 501 (holding procedural due process
claim not subject to ripeness constraints because it did not
“directly arise from, or rely on, [a] taking claim”). Here,
however, the main thrust of Hidden Oaks’ suit is not a claim for a
taking. Indeed, both Hidden Oaks’ federal and state takings claims
were dismissed as a matter of law before the jury ever received the
case. Instead, the main thrust of Hidden Oaks’ complaint, as
reflected by the jury’s verdict, is the allegation that the City
made a deal with Hidden Oaks which it then chose not to keep.
7
We have found no case permitting us to raise the issue of
inconsistent verdicts sua sponte on appeal. In Brunner v. Maritime
Overseas Corp., 779 F.2d 296 (5th Cir. 1986), we did hold that
because a trial judge has “no authority” to enter judgment on an
inconsistent verdict, failure to object to the jury instructions
below would not prevent a litigant from arguing on appeal that the
verdicts were inconsistent. Id. at 297. Nevertheless, Brunner
provides no explicit support for creating an exception to the well-
settled rule that arguments not raised on appeal are waived. See,
e.g., Melton, 114 F.3d at 561 (“This court has repeatedly stated
that the brief of the appellant is required to contain a statement
of the issues presented for review and an argument portion which
analyzes and supports those contentions. Consequently, issues not
raised or argued in the brief are considered waived and thus will
not be noticed or entertained by this Court on appeal.”)

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. basis for a reasonable jury to find” as this particular jury did.

FED. R. CIV. P. 50(a)(1). We review the district court’s denial of

a motion for a new trial only for a “clear abuse of discretion.”

Dawsey v. Olin Corp., 782 F.2d 1254, 1261 (5th Cir. 1986).

Questions of law receive de novo review. USX Corp. v. Tanenbaum,

868 F.2d 1455, 1457 (5th Cir.1989).

A

The City asserts that, as a matter of law, Hidden Oaks has

demonstrated no valid property interest either in continued utility

service or in lost rent. We disagree on both counts. The

Fourteenth Amendment to the United States Constitution provides, in

relevant part, that “[n]o State shall . . . deprive any person of

life, liberty, or property, without due process of law.” U.S.

CONST. amend. XIV. In order to assert a violation of this

amendment, one must at least demonstrate the deprivation of a

protected “property interest” established through “some independent

source such as state law.” Board of Regents v. Roth, 408 U.S. 564,

577, 92 S. Ct. 2701, 2709, 33 L. Ed. 2d 548 (1972). Under this

analysis, the “hallmark of property . . . is an individual

entitlement grounded in state law, which cannot be removed except

‘for cause.’” Logan v. Zimmerman Brush Co., 455 U.S. 422, 430, 102

S. Ct. 1148, 1155, 71 L. Ed. 2d 265 (1982) (quoting Memphis Light,

Gas & Water Div. v. Craft, 436 U.S. 1, 11-12, 98 S. Ct. 1554, 1561-

62, 56 L. Ed. 2d 30 (1978)).

Texas law mandates that all utility providers “shall serve

every consumer within [their] certified area and shall render

-19-
continuous and adequate service.” TEX. WATER CODE ANN. § 13.250.

Additionally, Texas law declares that utility providers “may not

discontinue, reduce, or impair service to any part of [a]

certificated service area except for: (1) nonpayment of charges;

(2) nonuse; or (3) another similar reason that occurs in the usual

course of business.” TEX. UTIL. CODE ANN. § 37.152.8 We find that

these provisions demonstrate an entitlement to continuous and

adequate utility service, which may be removed only “for cause.”

See Burgess v. City of Houston, 718 F.2d 151, 154 (5th Cir. 1983)

(recognizing “a constitutionally protected right to continued

utility service”) (citing Memphis Light, 436 U.S. at 18, 98 S. Ct.

at 1565).

The City claims, however, that this entitlement proves

irrelevant here because the City is not disconnecting service to

Hidden Oaks, but merely refusing to connect service to the incoming

tenant. We find no merit in this distinction. This hypothetical

incoming tenant, after all, has nothing to do with the City’s

decision not to provide utilities to the unit in question. Rather,

it is the building’s owner, Hidden Oaks, that is the cause of the

8
The entirety of § 37.152 reads:

(a) Unless the commission issues a certificate that the
present and future convenience and necessity will not be
adversely affected, a certificate holder may not discontinue,
reduce, or impair service to any part of the holder’s
certificated service area except for: (1) nonpayment of
charges; (2) nonuse; or (3) another similar reason that occurs
in the usual course of business.
(b) A discontinuance, reduction, or impairment of service
must be in compliance with and subject to any condition or
restriction the commission prescribes.

-20-
denial of connection. In this context, the City can hardly claim

that it is depriving the tenant, and not Hidden Oaks, of

“continuous service” to its building.

We also find no merit in the City’s assertion that Hidden Oaks

has no constitutionally protected property interest in leasing

Stoneridge. Indeed, Texas recognizes that the ability to collect

rent for the use of one’s land is one of the most fundamental

sticks in the bundle of rights termed “property.” See F. Groos &

Co. v. Chittim, 100 S.W. 1006, 1010 (Tex. Civ. App. 1907, no writ)

(“[T]he rents accruing from lands are, unless in some way severed

from it, a part of the realty, and the right to them, as a part of

the freehold, rests in him who has the title.”).

As a matter of law, therefore, Texas recognizes entitlements

both to continuous utility service and to “the rents accruing from

land.” Given this holding, the district court did not err in

denying the City’s motion for judgment or abuse its discretion in

denying the City’s request for a new trial on this ground.

B

Moving to the jury’s contract findings, the City cites several

Texas cases in support of the proposition that, as a matter of law,

contracts with the City are invalid until explicitly authorized by

the City Council. See, e.g., City of Greenville v. Emerson, 740

S.W.2d 10, 13 (Tex. Civ. App. 1987, no writ). Hidden Oaks does not

dispute this argument directly, but rather asserts that the City

-21-
explicitly conceded the existence of a contract below.9

The support for this assertion in the record could not be more

clear. At the charge conference, the district court suggested

instructing the jury that “the City of Austin denies that any

contract was ever formed between the City and the Plaintiff in

September of 1994.” The City objected. Explicitly asserting

“that’s not true,” the City went on to explain that “the City is

not contending that we didn’t form a contract with the Plaintiff.”

Instead, the City asserted, “the issue [was] not did we have a

contract, but what did the contract require.”

Curiously, Hidden Oaks provides us with no authority

indicating the legal consequences of this exchange. We find,

however, that given the City’s clear concession, made in open court

and with the explicit intent to induce the district court’s

reliance, the City is judicially estopped from asserting that no

contract existed. See Ergo Science, Inc. v. Martin, 73 F.3d 595,

598 (5th Cir. 1996) (holding that the doctrine of judicial

estoppel, as a matter of federal procedure, entitles federal judges

to rely on “statements made by counsel in open court relinquishing

a specific claim”). Accordingly, we will not address the merits of

9
Hidden Oaks also invites us to reject the City’s claim of
invalidity because the City has disingenuously asserted it for the
first time on appeal. “Such infidelity,” Hidden Oaks opines,
“mocks the orderly administration of justice, and calls into
question the candor of its proponent.” While articulated with
admirable fervor, Hidden Oaks might wish to save such righteous
indignation for a nobler cause. The City did, in fact, raise this
argument below, not only in its pre-trial Reply to Plaintiffs’
Original Complaint, but also in its post-trial Motion for New Trial
and Renewed Motion for Judgment.

-22-
the City’s “invalid without authorization” argument.

C

The City also claims that even if the jury correctly found

that a contract existed, the contract as found by the jury could

not be enforceable because it would bargain away the City’s

governmental power to enforce the housing code. See Clear Lake

City Water Auth. v. Clear Lake Utils. Co., 549 S.W.2d 385, 391

(Tex. 1977) (holding that a municipality may not “by contract or

otherwise, bind itself in such a way as to restrict [the] free

exercise of [its] governmental powers”); accord Joleewu, Ltd. v.

City of Austin, 916 F.2d 250, 255 (5th Cir. 1990). We disagree.

Not every contract made by a municipality relating to its

governmental functions violates the rule of Clear Lake City.

Instead, the ultimate test concerns whether the contract at issue

will, as a matter of law, “potentially control or embarrass the

City in the exercise” of these powers. Cibolo Creek Mun. Auth. v.

City of Universal City, 568 S.W.2d 699, 702 (Tex. Civ. App. 1978,

writ ref’d n.r.e.). Here, the contract as found by the jury states

only that as long as Hidden Oaks adheres to a certain schedule of

repairs (and withdraws its challenge to the City’s findings of code

violations), the City will not impose utility holds related to the

current Notices of Violation. The contract does not mandate that

the City may never again impose utility holds on Stoneridge, nor

does it even purport to address, much less limit, the City’s

inherent power to find code violations at Stoneridge in the future.

In addition, because Hidden Oaks, as the owner of the

-23-
apartment complex, is an “end user” of the City’s utility service,

the rule of Clear Lake City would not apply. See Brubaker v.

Brookshire Mun. Water Dist., 808 S.W.2d 129, 132 (Tex. App. 1991,

no writ) (declining to apply Clear Lake City to plaintiffs because,

as owners of an apartment complex denied water and sewer service in

violation of an alleged oral agreement, they were “end users” of

the utility service, as opposed to the plaintiff in Clear Lake

City, which was itself a utility company and an intermediate

provider of service).

D

Even assuming that a contract did exist, however, and that it

could be enforced, the City asserts that the text and surrounding

circumstances of the September 1994 letter agreement support only

a finding that the City agreed to refrain from placing “any

further” utility holds on Stoneridge, not that the City agreed to

remove any utility holds already in place. As a general rule, “the

interpretation of a contract is a question of law, not fact.”

Thornton v. Bean Contracting Co., 592 F.2d 1287, 1290 (5th Cir.

1980). Even so, an exception to this rule applies when “extrinsic

evidence has been used in interpreting an ambiguous contract.” Id.

Whether a contract term is indeed ambiguous is a question of law,

but once we determine legal ambiguity, the fact finder’s

interpretation deserves traditional deference. See Paragon

Resources, Inc. v. National Fuel Gas Distrib. Corp., 695 F.2d 991,

995 (5th Cir. 1983).

Here, the district court made an implicit finding of legal

-24-
ambiguity by instructing the jury that “[i]n deciding whether the

parties reached an agreement, you may consider what they wrote,

said and did in light of the surrounding circumstances, including

any earlier course of dealing.” Moreover, in attempting to clarify

the parties’ positions for the jury, the district court noted that

Hidden Oaks interpreted the September 1994 letter agreement to mean

that the City, in return for certain promises from Hidden Oaks,

generally would not “use” utility holds on Stoneridge in order to

force compliance with the outstanding notices of violation. The

City, on the other hand, interpreted the September 1994 letter

agreement to mean only that the City would not use the outstanding

notices of violation to place additional holds on Stoneridge,

beyond those holds already imposed as of the date of the agreement.

Applying these instructions to the facts, the jury found both

that a contract existed and that the City had breached that

contract by refusing to remove utility holds from Stoneridge. In

doing so, the jury rejected the City’s characterization of the

September 1994 letter agreement——specifically, the City’s

suggestion that it had promised only to refrain from placing future

holds and not to remove any holds already in place.

Insofar as the City relies on the text of the September 1994

letter agreement to support a reversal of the jury’s verdict, we

construe this argument as an attack on the district court’s legal

conclusion that the language of the September 1994 letter agreement

was ambiguous, and in need of extrinsic evidence to determine the

true intent of the parties. So construed, we find the City’s

-25-
argument meritless. As the ambiguity of a contract is a question

of law, we review the district court’s determination de novo. See

Jhaver v. Zapata Off-Shore Co., 903 F.2d 381, 383 (5th Cir. 1990).

We affirm as long as the language at issue is “reasonably

susceptible to more than one meaning.” Constitution State Ins. Co.

v. Iso-Tex Inc., 61 F.3d 405, 408 (5th Cir. 1995).

The September 1994 letter agreement reads, in relevant part:

“this proposal will . . . avoid any further necessity of threatened

utility holds.” Depending on whether one emphasizes the words “any

further” or the word “threatened,” one might come to different

conclusions about the content (and timing) of the City’s promise.

“Any further” tends to indicate that some holds might already be in

place, while “threatened” as a modifier of “utility holds” tends to

indicate quite the opposite. We therefore affirm the district

court’s holding that the contract is ambiguous.

Insofar as the City also challenges the verdict by asserting

error in the district court’s denial of its motion for judgment as

a matter of law, we construe this assertion of error as a challenge

to the legal sufficiency of the evidence. See Hiltgen v. Sumrall,

47 F.3d 695, 699 (5th Cir. 1995). We therefore review the district

court’s denial of the motion de novo, reversing that denial only

when “there is no legally sufficient evidentiary basis for a

reasonable jury to find” as this particular jury did. Id. at 700.

In conducting this review, we must remember that “we are not free

to reweigh the evidence or to re-evaluate the credibility of

witnesses.” Id. Instead, we must accept any reasonable factual

-26-
inferences made by the jury, being careful not to “substitute . .

. other inferences that we may regard as more reasonable.” Id.

The testimony at trial established that the City’s original

hold, placed on or about the date of the September 1994 letter

agreement, covered every unit in the Stoneridge complex. Based on

this fact, the jury might reasonably infer that a promise merely

not to impose “further” or “additional” holds on Stoneridge would

make no sense. At that point, after all, the City could do nothing

“further” in the way of utility holds but remove them. In

addition, the testimony at trial also established that at the time

the parties executed the September 1994 letter agreement, neither

McLelland nor Hersch understood that Stoneridge already suffered

from a utility hold. Based on this fact, the jury again might

reasonably infer that the distinction proffered by the

City——between holds already imposed and holds yet to be

imposed——was not what the parties had in mind when they formed the

September 1994 letter agreement.

Because these factual inference are reasonable and supported

by the evidence, we do not find it implausible that a reasonable

jury would determine, as this jury did, that the City promised in

the September 1994 letter agreement to remove any utility holds

already in place. We therefore hold that the district court did

not err in denying the City’s motion for judgment as a matter of

law with respect to the contract claim.10

10
In support of its claim of legally insufficient evidence,
the City also cites Gulf Coast Farmers Coop. v. Valley Co-op Mill,
572 S.W.2d 726 (Tex. Civ. App. 1978, no writ), for the proposition

-27-
 With regard to the district court’s denial of the City’s

motion for a new trial on the breach of contract claim, we note

that our standard of review here is even more deferential than our

review of the denial of a motion for judgment as a matter of law.

See Hiltgen, 47 F.3d at 703. Absent “a clear showing of an abuse

of discretion,” we will not reverse the trial court’s decision to

deny a new trial. Dawsey v. Olin Corp., 782 F.2d 1254, 1261 (5th

Cir. 1986). In order to make such a “clear showing,” the City

would have to demonstrate “an absolute absence of evidence to

support the jury’s verdict,” thus indicating that the trial court

had abused its discretion in refusing to find the jury’s verdict

“contrary to the great weight of the evidence.” Id. at 1262;

Robin, 719 F.2d at 98. In light of our previous holding that the

district court correctly denied the City’s motion for judgment as

a matter of law on the breach of contract claim, we find no abuse

of discretion in the district court’s denial of the City’s motion

for a new trial. See Hiltgen, 47 F.3d at 703.

VII

Having found that the City had breached its contract with

Hidden Oaks, the jury returned a verdict for $231,089 in damages,

which was precisely the amount Hidden Oaks claimed it had suffered

that an offer and acceptance must be “clear and definite” in order
to form a contract. Id. at 737. To the extent that this argument
challenges the existence of a contract, it is foreclosed by
judicial estoppel, as discussed above. To the extent that this
argument relates merely to the clarity of the parties’ agreement,
we note that the City’s own witness, Stuart Hersch, admitted on
cross-examination that the September 1994 letter agreement was
“clear” that Hidden Oaks was “looking to avoid utility holds being
placed on the property.”

-28-
in lost rent. Both the City and Hidden Oaks appeal this award——the

City alleging that the jury had insufficient evidence on which to

base its decision and Hidden Oaks arguing that the district court

erroneously limited the types of damage the jury could consider in

arriving at its final figure. We find no merit in Hidden Oaks’

allegations of error, but agree with the City that insufficient

evidence supports the jury’s verdict on damages.

In attacking the damage award, Hidden Oaks asserts that the

district court’s instructions and evidentiary rulings prevented the

jury from considering two additional types of damage: (1) lost re-

sale value of the property because of the “stigma” of the utility

holds, and (2) unnecessary repairs made in an effort to convince

the City to lift the holds. We review challenges to the district

court’s jury instructions in order to determine if “the charge as

a whole” creates a “substantial” doubt, incapable of eradication,

as to whether the jury has been “properly guided in its

deliberations.” Russell v. Plano Bank and Trust, 130 F.3d 715, 719

(5th Cir. 1997) (internal quotation marks and citations omitted).11

We review the trial court’s evidentiary rulings for an abuse of

discretion. See Kelly v. Boeing Petroleum Serv., 61 F.3d 350, 356

(5th Cir. 1995).

In instructing the jury on breach-of-contract damages, the

district court directed that the jury should “consider only the

11
Russell also provides that even assuming we find such doubt,
“we will not reverse if we determine, based upon the entire record,
that the challenged instruction could not have affected the outcome
of the case.” Id. at 719 (quoting FDIC v. Mijalis, 15 F.3d 1314,
1318 (5th Cir.1994)).

-29-
. . .[r]ents lost, if any, between the day the contract was

breached and the day the utility holds that were placed on

Stoneridge in August or September 1994 were released.” Hidden Oaks

complains that this instruction prevented the jury from considering

the evidence introduced at trial as to unnecessary repairs.

Because Hidden Oaks failed to object to this instruction at trial,

it has waived this claim. See Tandy Brands Inc. v. Harper, 760

F.2d 648, 653 (5th Cir. 1985) (finding that defendant had waived

any error resulting from the trial court’s failure to instruct the

jury on a specific claim when defendant did not object to this

omission in the instructions).

With regard to the lost value claim, Hidden Oaks argues that

the district court erred in refusing to permit the opinion

testimony of Jim Maloney as to how the City’s wrongful imposition

of utility holds had lowered Stoneridge’s market value below what

it would have been without the holds. The district court

consistently sustained the City’s objections to this testimony

because the court found Maloney unqualified to testify as an expert

in appraising property.

In challenging this decision, Hidden Oaks bears a heavy

burden. Trial courts have “wide discretion” in deciding whether or

not a particular witness qualifies as an expert under the Federal

Rules of Evidence. See FED. R. EVID. 702 (providing that a witness

may qualify as “expert” through “knowledge, skill, experience,

training, or education.”); Ellis v. K-Lan Co., 695 F.2d 157, 162

(5th Cir. 1983). The district court heard a substantial amount of

-30-
testimony from Maloney, both with and without the jury, in an

attempt to determine his qualifications. Hidden Oaks elicited

testimony that Maloney visited Austin about once a month to

purchase and sell property for his employer, Cunningham Capital,

and that part of his job was to evaluate the worth of various

properties in order to determine if Cunningham should make an offer

and at what price. On cross examination, the City elicited

testimony that Maloney was not a licensed appraiser in any state,

nor was he a licensed real estate broker. In addition, Maloney had

no formal schooling in the methods of appraisal and was unable to

respond fully to the City attorney’s questions regarding standard

appraisal theory. In light of these concessions, the district

court acted well within its discretion in refusing to permit

Maloney to testify as an expert regarding the worth of Stoneridge.

See United States v. 60.14 Acres of Land, 362 F.2d 660, 668 (3d

Cir. 1966) (“[T]he essential elements of the real estate expert’s

competency include his knowledge of the property and of the real

estate market in which it is situated, as well as his evaluating

skill and experience as an appraiser.”) (emphasis added) (quoted

favorably in United States v. 71.29 Acres of Land, 376 F. Supp.

1221, 1226 (W.D. La. 1974)).

Hidden Oaks argues in the alternative that the district court

erred by not permitting Maloney to testify at least as an owner

regarding the value of the property at different times. Hidden

Oaks correctly points out that we adhere to the general rule that

an owner always may testify as to value, whether assessed as of the

-31-
time of trial, or at some definitive point in the past. See United

States v. 329.73 Acres of Land, 666 F.2d 281, 284 (5th Cir. 1982),

reh’g granted and rev’d on other grounds, 704 F.2d 800 (5th Cir.

1983) (rejecting appellant’s attack on the probative value of a

landowner’s testimony regarding the value of his land before and

after the imposition of a flowage easement because appellant’s

argument “overlooks the fact that the opinion testimony of a

landowner as to the value of his land is admissible without further

qualification”).

Here, however, the trial court not only permitted Hidden Oaks

to ask Maloney, as an owner, what he thought the property was worth

today, but also ruled that Hidden Oaks could ask Maloney what he,

as an owner, thought the property was worth in 1994, before the

utility holds went on. Hidden Oaks nevertheless made a deliberate

decision not to ask Maloney about the property value in 1994, and

even objected when the City attorney attempted to cross-examine

Maloney on this issue.12 Having made such a choice at trial,

Hidden Oaks hardly can request now that we reverse and remand in

order for it to reassess its earlier strategy.

The City, on the other hand, urges that the district court

erred in denying its motion for a new trial on damages because the

award was speculative and supported by “no evidence.” As noted

above, we will reverse a district court’s denial of a motion for a

12
The reason for this omission appears to lie in the fact that
the resale value of Stoneridge had in fact increased from 1994 to
the time of trial, just not as much as Hidden Oaks would have
expected.

-32-
new trial only upon a “clear showing of an abuse of discretion.”

See Dawsey, 782 F.2d at 1261. In order to make such a “clear

showing,” the City would need to demonstrate “an absolute absence

of evidence to support the jury’s verdict.” Id.

Here, in support of its request for $231,089 in damages

flowing from lost rent, Hidden Oaks relied solely on the testimony

of Jim Maloney, senior vice-president of Cunningham Capital

Corporation. Maloney testified that he arrived at the $231,089

figure by calculating the rent Hidden Oaks should have been able to

collect from September 1994 to December 1995 and then subtracting

out Hidden Oaks’s actual gross receipts for that time period. From

September through December 1994, Maloney calculated the rent Hidden

Oaks should have received by multiplying the rentable square

footage at Stoneridge times $.74, which was the rent per square

foot being charged at Stoneridge in July 1994. For January through

December 1995, Maloney multiplied the rentable square footage at

Stoneridge times $.78 per square foot, which Maloney alleged was

the “market rent” during this time period. The resulting amounts

represented what Hidden Oaks should have made per month during the

relevant time period if Stoneridge had (a) been able to charge the

“average” rate for its apartments throughout 1995 and (b) enjoyed

a 100% occupancy rate. These monthly figures, added together,

represented the total amount that Hidden Oaks thought it should

have taken in from September 1994 to December 1995.

Maloney then subtracted 5% off this total, making the

assumption that throughout the period of damage, Hidden Oaks would

-33-
have enjoyed a 95% rather than a 100% occupancy rate. On cross-

examination, Maloney admitted that Stoneridge was only 60% occupied

when Cunningham bought the property and reached a high of only 93%

occupancy before the imposition of the utility holds.

Nevertheless, Maloney defended his assumption of 95% occupancy by

pointing to the market average in Austin at the time of trial.

At the outset, we question whether these calculations

accurately depict the gross income Hidden Oaks could have expected

to receive from September 1994 to December 1995. Hidden Oaks

introduced no evidence at trial that Stoneridge ever had enjoyed an

occupancy rate as high as 95%, or had occupancy rates comparable to

the market average. Indeed, all the testimony regarding occupancy

rates indicated that Stoneridge had a history of severe problems

filling its units.

More problematic is Hidden Oaks’s complete lack of evidence

tying the unrented apartments to the City’s imposition of utility

holds. Given that the property had not performed to market

expectations in the past, Hidden Oaks could not simply cite market

statistics and assume that any differentiation in actual income was

the result of the utility holds. See City of Denton v. Weems, 456

S.W.2d 207, 210 (Tex. Civ. App. 1970, writ ref’d n.r.e.) (finding

plaintiff’s alleged damages for lost apartment rentals speculative

because “[n]one of the reported damages [were] tied to the

termination of electrical current,” and “[t]here was no evidence

that [any potential tenants] saw the apartment or would consider

renting it”); cf. Marks v. Pan Am. World Airways, Inc., 785 F.2d

-34-
539, 542 (5th Cir. 1986) (affirming district court’s grant of

judgment notwithstanding the verdict when testimony from expert

economist was “merely speculative”). We find such assumptions

particularly troubling in light of certain evidence introduced at

trial indicating that Hidden Oaks could have readily determined

which units suffered utility holds at which times simply by

consulting the apartment manager or by calling the City utility

office. See Richter, S.A. v. Bank of Am. Nat’l Trust & Sav. Ass’n,

939 F.2d 1176, 1188 (5th Cir. 1991) (rejecting a requirement of

“mathematical precision” in proving damages, but noting that Texas

law requires one to “bring forward the best evidence of the damage

of which the situation admits, [providing] some basis for

reasonable inferences”).

Thus, because Hidden Oaks produced “absolutely no evidence”

indicating that the vacancies at Stoneridge were due solely or even

primarily to the City’s imposition of utility holds, we reverse the

district court’s denial of the City’s motion for a new trial on

contract damages. On remand, Hidden Oaks should produce whatever

evidence it may have in its possession relating to which units at

Stoneridge remained vacant and why. Without this information, we

cannot allow the jury to simply assume that a complex with a

history of vacancy problems suddenly would perform up to market

standards, but for the City’s breach of contract. We therefore

vacate the contractual damage award and remand for further

proceedings in accordance with this opinion.

VI

-35-
 After the jury returned its verdict, both the City and Hidden

Oaks moved for an award of attorney’s fees under 42 U.S.C. § 1988,

both parties alleging that they had prevailed on the claim of

procedural due process and the City requesting additional fees as

the prevailing party on Hidden Oaks’s claims under the federal

takings clause and the substantive component of the due process

clause. The district court denied the motions of both parties, and

we affirm.

Section 1988 provides that a court “in its discretion, may

allow the prevailing party . . . a reasonable attorney’s fee as

part of the costs.” 42 U.S.C. § 1988. Even a plaintiff who wins

only nominal damages qualifies as such a “prevailing party.”

Farrar v. Hobby, 506 U.S. 103, 112, 113 S. Ct. 566, 573, 121 L. Ed.

2d 494 (1992). Nevertheless, in determining the reasonableness of

a fee award, courts must consider “the degree of the plaintiff’s

overall success,” recognizing that often a plaintiff who “seeks

compensatory damages but receives no more than nominal damages”

will be the kind of prevailing party that merits no attorney’s fee

at all. Id. at 114-15, 574-75 (quoting Texas State Teachers Ass’n

v. Garland Indep. Sch. Dist., 489 U.S. 782, 793, 109 S. Ct. 1486,

1494, 103 L. Ed. 2d 866 (1989)). In assessing the district court’s

application of these standards, we review only for an abuse of

discretion. See United States v. Mississippi, 921 F.2d 604, 609

(5th Cir. 1991).

With regard to Hidden Oaks’s request for fees as a prevailing

party on the procedural due process claim, we find that the

-36-
district court acted well within its discretion by denying this

request. The district court instructed the jury to award only

nominal damages on this claim because Hidden Oaks produced no

evidence at trial indicating any damage specifically arising from

the procedural due process violation. See Farrar, 506 U.S. at 115

(“In a civil rights suit for damages . . . the awarding of nominal

damages . . . highlights the plaintiff’s failure to prove actual,

compensable injury.”); cf. Riley v. City of Jackson, 99 F.3d 757,

760 (5th Cir. 1996) (distinguishing Farrar where plaintiff

primarily sought and obtained injunctive relief, in addition to

winning an award of nominal damages). Moreover, Hidden Oaks’s

victory produced no “public benefit” justifying an award of fees in

spite of receiving only nominal damages. See Farrar, 506 U.S. at

121 (O’Connor, J., concurring) (noting that an award of merely

nominal damages may support an award of fees when the litigation

has “accomplished some public goal”). Indeed, as the district

court noted, the procedural due process violation as found by the

jury was peculiar to Hidden Oaks, not general in the sense that the

City would be forced to change its dealings with other landowners

as a result. On these facts, therefore, we find that the jury’s

award of nominal damages to Hidden Oaks on its procedural due

process claim gave Hidden Oaks little more than “the moral

satisfaction of knowing that a federal court concluded that [its]

rights had been violated.” Hewitt v. Helms, 482 U.S. 755, 762, 107

S. Ct. 2672, 2676, 96 L. Ed. 2d 654 (1987). Accordingly, we affirm

the district court’s denial of § 1988 attorney’s fees to Hidden

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Oaks.

The City also alleges error in the district court’s § 1988

rulings, claiming that the City should receive fees as the

“prevailing party” on Hidden Oaks’s claims under the federal

takings clause and the substantive component of the due process

clause. Unlike prevailing plaintiffs, however, who are generally

entitled to § 1988 fees absent special circumstances, prevailing

defendants cannot recover § 1988 fees without demonstrating that

the plaintiff’s underlying claim was frivolous, unreasonable or

groundless. See United States v. Mississippi, 921 F.2d at 609

(citing Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 422, 98

S. Ct. 694, 700, 54 L. Ed. 2d 648 (1978)).

Here, the City noted in its motion for attorney’s fees that

the district court granted both its motion to dismiss Hidden Oaks’s

federal takings claim, and its motion for judgment as a matter of

law with respect to Hidden Oaks’s claim for a violation of

substantive due process. These rulings, however, do not establish

that the underlying claims were “frivolous, unreasonable or

groundless.” See Hughes v. Rowe, 449 U.S. 5, 15-16 (1980) (“The

fact that the Court dismissed Plaintiffs’ suit is not in itself a

sufficient justification for the fee award.”). Other than pointing

out these rulings, the City made no argument to the district court

that Hidden Oaks’s claims were frivolous in the sense required by

Christiansburg. We cannot say, therefore, that the district court

abused its discretion in denying the City’s motion for § 1988 fees.

VIII

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 In summary, we affirm the district court in all respects

except in its denial of the City’s motion for a new trial on

contract damages. Thus, we affirm the district court’s dismissal

without prejudice of Hidden Oaks’s federal takings claim; we

affirm the district court’s dismissal with prejudice of Hidden

Oaks’s claims under Article I, § 17 of the Texas Constitution and

the substantive component of the Fourteenth Amendment due process

clause; we affirm the judgment of the district court as to

liability and attorney’s fees on the breach of contract claim; we

affirm the judgment of the district court as to liability and

damages on the procedural due process claim; and we affirm the

judgment of the district court as to attorney’s fees under § 1988.

With regard to the district court’s judgment as to damages on

Hidden Oaks’s breach of contract claim, however, we reverse the

court’s decision to deny the City’s motion for a new trial on

damages, vacate the damage award, and remand to the district court

for further proceedings consistent with this opinion.

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