Sandy Creek Investors, Ltd. v. City of Jonestown

United States Court of Appeals
Fifth Circuit
F I L E D
REVISED MARCH 27, 2003
March 24, 2003
UNITED STATES COURT OF APPEALS
For the Fifth Circuit Charles R. Fulbruge III
Clerk

No. 02-50420

SANDY CREEK INVESTORS, LTD,

Plaintiff-Appellant-Cross Appellee,

VERSUS

THE CITY OF JONESTOWN, TEXAS; ET AL,

Defendants,

THE CITY OF JONESTOWN, TEXAS,

Defendant-Appellee-Cross Appellant.

Appeals from the United States District Court
For the Western District of Texas, Austin

Before JONES, WIENER, and DeMOSS, Circuit Judges.

DeMOSS, Circuit Judge:

Sandy Creek Investors, Ltd. ("Sandy Creek"), a Texas limited

partnership, is the owner of real property located in a portion of

Travis County, Texas, known as North Lake Hills Subdivision

(hereinafter referred to as "the Property"). Sandy Creek acquired

the Property as well as other surrounding real property in December
1996 with the intent to develop a marina on the Property. The

Property was not located within the boundary limits of the City of

Jonestown ("the City") at the time it was acquired by Sandy Creek.

According to Sandy Creek, it voluntarily submitted to annexation

based on the representation of the City's representatives that the

City would approve the necessary zoning and related development

permits to allow Sandy Creek to develop the Property, as a master

planned community, including residential, commercial and multi-

family sections including a marina and related facilities and

improvements.

The City annexed the Property and additional real property

owned by Sandy Creek pursuant to city ordinances that became

effective on May 30, 1997 ("May 1997 ordinance"), and November 7,

1997 ("November 1997 ordinance"). The May 1997 ordinance covered

two tracts (Tract One and Tract Two) comprising Section One of

North Lake Hills Subdivision. Tract One began at an iron pipe and

described an area abutting the southern right-of-way of Reed Park

Road. Tract Two began at the same iron pipe and then describes an

area that crosses Reed Park Road and then abuts the northern right-

of-way. Reed Park Road was not owned by the City when the May 1997

ordinance was passed. Sandy Creek admits that Tract Two is

adjacent to the City. The contiguity and adjacency of Tract One is

contested.

The November 1997 ordinance covered Section Two of North Lake

Hills Subdivision. The property subject to this ordinance was

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contiguous to Tract Two, Section One of North Lake Hills

Subdivision. The City subsequently annexed several other tracts

that are contiguous to Section Two of North Lake Hills Subdivision.

In January 1998, the City Counsel approved the zoning designation

of the property as "Commercial B-2," which allows various types of

commercial development. At that time, the City did not have any

specific zoning ordinances or regulations for a marina development.

In July 1999, Sandy Creek applied to the City for a Land

Development permit, which the City did not approve. The City then

enacted a special use ordinance preventing Sandy Creek from

developing a marina as it had intended.

As a result, Sandy Creek filed suit against the City and

certain City officials (hereinafter collectively referred to as

"the defendants") on December 27, 1999, in the District Court for

Travis County, Texas, 261st Judicial District, seeking a

declaratory judgment that the annexations of the Property were void

because they included property that was neither contiguous nor

adjacent to the City as required by applicable Texas law. In the

alternative, Sandy Creek requested that the court find the City's

B-2 zoning sufficient for the construction and operation of a

marina and that the land permit Sandy Creek applied for be approved

as a matter of law. In addition, Sandy Creek requested that the

court issue an injunction restraining the defendants from revoking

the zoning designation previously obtained and from taking any

action that would further postpone, delay or frustrate the

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development of a marina. Also requested of the court was a

mandatory injunction requiring the City to issue all necessary

permits to allow the development of a marina.

Lastly, Sandy Creek sought relief under Article I, Section 3

of the Texas Constitution, the Fourteenth Amendment to the United

States Constitution, and 42 U.S.C. § 1983. According to Sandy

Creek, the defendants ignored state law and applicable City

ordinances when they refused to approve the land development permit

despite the fact that the permit met all requirements. Sandy Creek

argued that the defendants' actions were arbitrary, unreasonable,

capricious, and lacking a substantial relation to any valid

legislative/governmental objective, which denied Sandy Creek its

rights to use and develop the Property. Sandy Creek, therefore,

requested damages equal to the value of the Property due to the

City's alleged unconstitutional taking.

Because Sandy Creek's original and amended complaints included

a federal takings issue, the defendants removed the case to the

United States District Court for the Western District of Texas in

January 2000. Sandy Creek did not file a motion to remand and

there is no diversity of citizenship between the parties. On

August 2, 2000, Sandy Creek filed a Motion for Summary Judgment,

asking the district court to declare the May 1997 ordinance void ab

initio, because a portion of the property annexed by the May 1997

ordinance was not contiguous to the City. The defendants filed a

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Verified Motion for Summary Judgment on August 3, 2000, and a

Supplemental Motion for Summary Judgment on August 10, 2000,

seeking judgment against Sandy Creek on all of its claims. The

parties then reached a tentative settlement agreement that was

subject to approval by the City's City Council. The case was

abated pending consideration of that settlement. The settlement

was not approved and the abatement was lifted in January 2001.

The district court entered an order granting Sandy Creek's

Motion for Summary Judgment in part and denying the motion of the

defendants on March 26, 2001. However, the judgment inadvertently

reflected that the summary judgment order disposed of all claims

involved in the cause. Therefore, on March 25, 2002, the district

court granted Sandy Creek's Motion for Entry of Judgment Nunc Pro

Tunc on the competing summary judgment motions, and entered an

order authorizing the voluntary dismissal of Sandy Creek's

remaining claims, and a Final Judgment that rendered the summary

judgment order final and appealable.

We need not make any decisions concerning the substantive

issues in this case. "[I]f parties do not raise the issue of

jurisdiction, or even if they contend that the Court of Appeals has

jurisdiction we still must determine, sua sponte, whether we have

jurisdiction in a particular case." United States v. Lipscomb, 299

F.3d 303, 358 (5th Cir. 2002). Having reviewed the record in this

case, we hold that the district court never had jurisdiction over

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this case. As noted above, the removal of this case from the state

court to federal court was based on the federal takings claim made

in Sandy Creek's original and amended complaints. However, that

issue was not ripe when the case was removed.

A takings claim is 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 through whatever adequate procedures the state

provides. See Williamson County Reg'l Planning Comm'n v. Hamilton

Bank, 473 U.S. 172, 194-95 (1985); Hidden Oaks Ltd. v. The City of

Austin, 138 F.3d 1036, 1041 (5th Cir. 1998); Samaad v. City of

Dallas, 940 F.2d 925, 933-34 (5th Cir. 1991). Here, Sandy Creek

has not exhausted its administrative or state court remedies as

required by the second prong of Williamson County.

Although "substantive due process claims alleging deprivations

of property are not necessarily subsumed under the Takings Clause,"

Sandy Creek's complaint that the City violated its Fourteenth

Amendment to the United States Constitution was framed only as a

takings claim. Simi Investment Co., Inc. v. Harris County, Tex.,

236 F.3d 240, 248 (5th Cir. 2000) (citing John Corp. v. City of

Houston, 214 F.3d 573, 582 (5th Cir. 2000)). Therefore, there were

no other due process claims that the district court could have

properly considered. We further note that Sandy Creek's § 1983

claim also was not properly before the district court: "Because a

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violation of the Takings Clause does not occur until just

compensation has been denied, . . . Appellants must use available

state procedures to seek such compensation before they may bring a

§ 1983 takings claim to federal court." John Corp., 214 F.3d at

581 (citation omitted).

We therefore hold that the district court lacked jurisdiction

to consider this case because the federal takings claim was not

ripe. We VACATE the district court's Order and Final Judgment and

REMAND with instructions for the district court to REMAND the case

to the District Court for Travis County, Texas, 261st Judicial

District, from which it was removed.

VACATED and REMANDED with instructions.

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