MC Trilogy Tex. v. City of Heath

1

MC TRILOGY TEXAS, LLC, Plaintiff, v. CITY OF HEATH, TEXAS, Defendant.

Civil Action No. 3:22-CV-2154-D

United States District Court, N.D. Texas, Dallas Division

December 21, 2023

MEMORANDUM OPINION AND ORDER

SIDNEY A. FITZWATER SENIOR JUDGE

In this action challenging a municipality's land use decisions defendant the City of Heath, Texas (“Heath”) moves under Fed.R.Civ.P. 12(b)(6)^[1] to dismiss plaintiff MC Trilogy Texas, LLC's (“MC Trilogy's”) substantive and procedural due process claims for failure to state a claim on which relief can be granted and to abstain under Burford v. Sun Oil Co., 319 U.S. 315 (1943) from hearing MC Trilogy's remaining federal- and state-law claims. For the reasons explained below, the court grants Heath's motion to dismiss MC Trilogy's substantive and procedural due process claims and declines to abstain under Burford.

I

In MC Trilogy Tex., LLC v. City of Heath (“MC Trilogy I”), __ F.Supp.3d __, 2023 WL 2544308 (N.D. Tex. Mar. 16, 2023) (Fitzwater, J.), the court dismissed MC Trilogy's substantive and procedural due process claims. Id. at *3.^[2] MC Trilogy sought leave to amend its complaint, in part to cure pleading deficiencies that the court in MC Trilogy I had identified regarding these claims. See MC Trilogy Tex., LLC v. City of Heath 2023 WL 6333115, at *1 (N.D. Tex. Sept. 28, 2023) (Fitzwater, J.). Heath opposed MC Trilogy's motion for leave to amend on the ground that the repleaded substantive and procedural due process claims were futile. Id. The court recognized that it could refuse leave to amend based on futility of amendment, but it declined to address Heath's futility argument, relying instead on its “almost unvarying practice when futility is raised . . . to address the merits of the claim or defense in the context of a Rule 12(b)(6) or Rule 56 motion.” Id. at *2 (quoting Reneker v. Offill, 2011 WL 1427661, at *1 (N.D. Tex. Apr. 13, 2011) (Fitzwater, C.J.)). Heath now moves under Rule 12(b)(6) to dismiss MC Trilogy's first amended complaint (“amended complaint”) for failure to state a claim on which relief can be granted. MC Trilogy opposes the motion, which the court is deciding on the briefs, without oral argument.

II

“In deciding a Rule 12(b)(6) motion to dismiss, the court evaluates the sufficiency of [the plaintiff's] amended complaint by ‘accept[ing] all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.'” Bramlett v. Med. Protective Co. of Fort Wayne, Ind., 855 F.Supp.2d 615, 618 (N.D. Tex. 2012) (Fitzwater, C.J.) (second alteration in original) (internal quotation marks omitted) (quoting In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007)). To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.; see also Twombly, 550 U.S. at 555 (“Factual allegations must be enough to raise a right to relief above the speculative level[.]”). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘shown'-‘that the pleader is entitled to relief.'” Iqbal, 556 U.S. at 679 (alteration omitted) (quoting Rule 8(a)(2)). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. at 678.

III

The court turns first to MC Trilogy's substantive due process claim.

A

MC Trilogy alleges in its amended complaint that Heath violated MC Trilogy's substantive due process rights by denying its preliminary plat application as “incomplete” based on an “inapplicable” and “not-yet-effective” ordinance. P. Am. Compl. (ECF No. 142) at 28, ¶ 107. MC Trilogy filed its preliminary plat application on August 31, 2021 with one-acre minimum single-family residential lots, as permitted by the agricultural district zoning classification at the time. Heath's amended ordinance increasing the property's minimum single-family residential lot size to ten acres went into effect, if at all, on September 4, 2021, four days after MC Trilogy filed its preliminary plat. MC Trilogy alleges that it was therefore arbitrary and irrational for Heath to deny the plat application as “incomplete” for the reason that it did not comply with the ten-acre minimum single-family residential lot requirement.

Heath maintains that MC Trilogy's substantive due process claim is based only on violations of state and local law.^[3] MC Trilogy responds that the claim is not based on Heath's violation of state and local law because Heath denied the preliminary plat application “without regard to any law,” considering that the ten-acre minimum single-family residential lot requirement was “non-existent and/or yet to be effective.” P. Resp. (ECF No. 177) at 12. MC Trilogy distinguishes FM Properties Operating Co. v. City of Austin, 93 F.3d 167 (5th Cir. 1996), which held that a land developer failed to state a substantive due process claim when the city refused to approve a site plan application that failed to comply with a local ordinance. See id. at 176. In FM Properties the local government misapplied a law that was in effect at the time the zoning decision was made, whereas Heath is alleged to have misapplied a law that was not in effect at the time it declined to approve MC Trilogy's final plat.

B

To state a substantive due process claim, MC Trilogy must allege that (1) Heath violated its constitutionally protected right and (2) demonstrate that the alleged violation does not rationally relate to a legitimate governmental interest. See Cripps v. La. Dep't of Agric. & Forestry, 819 F.3d 221, 232 (5th Cir. 2016). Property interests arise from “state statutes, local ordinances, existing rules, contractual provisions, or mutually explicit understandings,” not the Constitution itself. Machete Prods., LLC v. Page, 809 F.3d 281, 290 (5th Cir. 2015) (quoting Blackburn v. City of Marshall, 42 F.3d 925, 937 (5th Cir. 1995)). Federal constitutional law, however, determines whether due process protections apply to an interest created by state law. See Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1, 9 (1978). In the zoning context, a legitimate claim of entitlement to an applied-for benefit does not exist if government officials have discretion to grant or deny the benefit. See Da Vinci Inv., LP v. City of Arlington, 747 Fed.Appx. 223, 226 (5th Cir. 2018) (per curiam) (citing Town of Castle Rock v. Gonzales, 545 U.S. 748, 756 (2005)).

MC Trilogy alleges that it had a constitutionally protected property interest “to lawfully use and develop the Property in accordance with the regulations and ordinances in effect” at the time it filed its preliminary plat application on August 31, 2021. P. Am. Compl. (ECF No. 142) at 23, ¶ 87; at 27, ¶ 106. MC Trilogy presumably bases its constitutionally protected interest on § 245.002 of the Texas Local Government Code. Texas state courts hold that § 245.002 “vests rights in a particular project, not the property itself.” Town Park Ctr., LLC v. City of Sealy, 639 S.W.3d 170, 190 (Tex. App. 2021, no pet.) (emphasis added) (citing Hatchett v. W. Travis Cnty. Pub. Util. Agency, 598 S.W.3d 744, 749 (Tex. App. 2020, pet. denied)). But the court will assume arguendo that MC Trilogy has a constitutionally protected interest in its position.

MC Trilogy's amended complaint still fails to plead a plausible substantive due process claim because it fails to allege sufficient facts for the court to draw the reasonable inference that the alleged violation does not rationally relate to a legitimate governmental interest. In MC Trilogy I the court dismissed MC Trilogy's substantive due process claim because Heath's decision could conceivably be supported by a rational basis, “such as the desire to mitigate traffic issues.” MC Trilogy I, __ F.Supp.3d __, 2023 WL 2544308, at *3. MC Trilogy's amended complaint does not allege sufficient new facts to transform the substantive due process claim into a plausible claim. MC Trilogy only contends that Heath acted arbitrarily and irrationally because it considered an inapplicable and ineffective ordinance to deny the preliminary plat application. But “a government entity's failure to follow the procedures established by state law does not automatically render that conduct arbitrary or unrelated to a legitimate state interest.” Smith v. City of Bastrop, 2023 WL 2890162, at *10 (5th Cir. Apr. 11, 2023) (per curiam) (citing Stern v. Tarrant Cnty. Hosp. Dist., 778 F.2d 1052, 1060 (5th Cir. 1985); and then citing Levitt v. Univ. of Tex. at El Paso, 759 F.2d 1224, 1233 (5th Cir. 1985)).

Accordingly, the court grants Heath's motion to dismiss MC Trilogy's substantive due process claim.

IV

The court next turns to MC Trilogy's procedural due process claim.

A

MC Trilogy similarly alleges that Heath violated MC Trilogy's procedural due process rights because “the procedures leading up to and after the City's arbitrary and irrational abuse of governmental power in making its determination that the Preliminary Plat Application was incomplete deprived [it] of any meaningful opportunity to be heard at a meaningful time and in a meaningful manner[.]” P. Am. Compl. (ECF No. 142) at 28, ¶ 108. MC Trilogy received two written notifications from...