Court Opinion

ID: 4256550
Source: CourtListenerOpinion
Date Created: 2018-03-21 06:30:44.315628+00
Date Added: 2024-06-11T14:45:20.442160
License: Public Domain

Fourth Court of Appeals
                                      San Antonio, Texas
                                 MEMORANDUM OPINION
                                         No. 04-17-00077-CV

                  ELECTRO SALES AND SERVICES, INC. and Salim Merchant,
                                     Appellants

                                                  v.

                                    CITY OF TERRELL HILLS,
                                            Appellee

                      From the 57th Judicial District Court, Bexar County, Texas
                                   Trial Court No. 2016-CI-19821
                            Honorable Michael E. Mery, Judge Presiding

Opinion by:       Patricia O. Alvarez, Justice

Sitting:          Karen Angelini, Justice
                  Rebeca C. Martinez, Justice
                  Patricia O. Alvarez, Justice

Delivered and Filed: March 14, 2018

AFFIRMED

           Appellants Electro Sales and Services, Inc. and Salim Merchant appeal the trial court’s

order granting summary judgment in favor of the City of Terrell Hills. They assert (1) the trial

court had jurisdiction to consider Appellants’ regulatory taking claim, and (2) the trial court erred

in granting summary judgment because a genuine issue of material fact exists as to whether the

City’s actions constituted a regulatory taking. We affirm the trial court’s judgment.
                                                                                                   04-17-00077-CV

                                                 BACKGROUND

         On June 7, 2011, Appellants purchased a strip center from Billy Y. Eng and Gin Wei Eng.

The strip center consists of three rental spaces or suites located in a single building. It is undisputed

that the strip center was rezoned from commercial to semi-commercial use in the 1960s. At that

time, the two end suites were being operated as a convenience store and a bar, and the middle suite

was being operated as a laundromat. As a result, the nonconforming commercial use of the suites

was grandfathered and allowed to continue unless vacated for six months.1 Before the Engs sold

the strip center to Appellants, the middle suite was vacant for more than six months, and the City

notified the Engs that the middle suite had lost its nonconforming use rights and was thereafter

limited to semi-commercial use. Appellants and the Engs dispute whether the Engs disclosed this

information to Appellants.

         On June 13, 2011, Appellants sent a letter to the City applying to rezone the strip center

from semi-commercial to commercial. The City considered the application at its August 8, 2011

city council meeting. At the meeting, a resident whose home is located directly behind the strip

center expressed concern at being unable to control the types of businesses that could open if the

strip center was zoned commercial. The minutes reflect the resident expressed concern about

“problems over the years with disturbances from the ‘drunks and derelicts’ that hang out in the

parking lot.” One of the council members commented that the strip center was in “a transition area

and there are immediate neighbors that are directly affected by whatever business could possibly

open at th[e] location.” The city council voted to deny the rezoning request.

1
  The ordinance describing the rezoning and the grandfathering of the nonconforming use is not contained in the
appellate record; therefore, this description of the nonconforming use rights is based on the description provided by
the parties.

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                                                                                     04-17-00077-CV

       On July 10, 2012, Appellants’ attorney sent another request to rezone the strip center from

semi-commercial to commercial. After discussing the request at a meeting on October 8, 2012,

the city council did not take any action on the request but decided to schedule a meeting to discuss

amending the city ordinance to allow for the issuance of special use permits.

       On December 10, 2012, the city council amended the City’s ordinance to provide for

special use permits in semi-commercial zoning districts. The amendment contained an application

process and procedures for considering a special use permit application. The amendment required

a special use permit application to be accompanied by a site plan prepared to scale and meeting

various specific requirements.

       On December 12, 2012, Appellants sent a letter to the City applying for a special use permit

to open a barber shop and beauty parlor. The letter contained in the appellate record was not

accompanied by a site plan. On May 13, 2013, the city council signed an ordinance approving the

special use permit for a hair and nail salon.

       On January 10, 2013, Appellants filed the underlying lawsuit against the City and the Engs.

Appellants alleged regulatory taking and declaratory judgment claims against the City. Appellants

also alleged fraud, negligent misrepresentation, and statutory fraud claims against the Engs.

       On February 5, 2014, appellants sent a letter to the City requesting a special use permit to

open a barber shop. The letter contained in the appellate record was not accompanied by a site

plan. On April 13, 2015, the city council signed an ordinance approving a special use permit for

a hair and nail salon.

       On August 16, 2016, the City moved for summary judgment in the underlying lawsuit,

asserting traditional and no-evidence grounds. After considering the City’s motion, Appellants’

response, and the City’s reply, the trial court signed an order granting the City’s motion. The

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claims against the City were then severed into a separate cause making the trial court’s order final

and appealable. 2 The appellants appeal.

                                               STANDARD OF REVIEW

           We review a trial court’s order granting summary judgment de novo. Cmty. Health Sys.

Prof’l Servs. Corp. v. Hansen, 525 S.W.3d 671, 680 (Tex. 2017). To prevail on a traditional

motion for summary judgment, the movant must show “there is no genuine issue as to any material

fact and the [movant] is entitled to judgment as a matter of law.” TEX. R. CIV. P. 166a(c); accord

Hansen, 525 S.W.3d at 681.

           A [no evidence] motion for summary judgment must be granted if: (1) the moving
           party asserts that there is no evidence of one or more specified elements of a claim
           or defense on which the adverse party would have the burden of proof at trial; and
           (2) the respondent [fails to produce more than a scintilla of] summary judgment
           evidence raising a genuine issue of material fact on those elements.

Sudan v. Sudan, 199 S.W.3d 291, 292 (Tex. 2006) (per curiam); see also King Ranch, Inc. v.

Chapman, 118 S.W.3d 742, 751 (Tex. 2003) (“More than a scintilla of evidence exists when the

evidence rises to a level that would enable reasonable and fair-minded people to differ in their

conclusions.”) (quotation marks omitted).                 Whether reviewing a traditional or no evidence

summary judgment, we consider all the evidence in the light most favorable to the nonmovant

“and resolve any doubts in the nonmovant’s favor.” See Joe v. Two Thirty Nine Joint Venture, 145
S.W.3d 150, 157 (Tex. 2004).

           “Where, as here, a trial court does not specify the grounds on which it granted the motion

for summary judgment, we must affirm if any of the grounds asserted in the motion are

meritorious.” Hansen, 525 S.W.3d at 680. “Further, when the motion asserts both no-evidence

and traditional grounds, we first review the no-evidence grounds.” Id.

2
    Appellants’ claims against the Engs were left pending in the original cause.

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                                                                                                 04-17-00077-CV

                                        JURISDICTIONAL GROUNDS

        In its motion, the City asserted three grounds challenging the trial court’s jurisdiction to

consider the appellants’ regulatory taking claim. 3 We first consider each of these grounds.

A.      Immunity

        The City asserted the trial court did not have jurisdiction to consider the appellants’

regulatory taking claim because its immunity was not waived. The City’s assertion of immunity

was based on its contention that the appellants had not alleged a viable claim.

        “It is well settled that the Texas Constitution waives government immunity with respect to

inverse-condemnation claims.” City of Houston v. Carlson, 451 S.W.3d 828, 830 (Tex. 2014);

accord Hearts Bluff Game Ranch, Inc. v. State, 381 S.W.3d 468, 476–77 (Tex. 2012) (recognizing

a regulatory taking claim is an inverse condemnation claim). “Nevertheless, such a claim is

predicated upon a viable allegation of taking.” Carlson, 451 S.W.3d at 830.

        “A regulatory taking occurs when [a] regulation (1) compels ‘the property owner to suffer

a physical invasion of his property,’ (2) ‘denies all economically beneficial or productive use of

land,’ or (3) ‘does not substantially advance legitimate state interests.’” Vill. of Tiki Island v.

Ronquille, 463 S.W.3d 562, 575 (Tex. App.—Houston [1st Dist.] 2015, no pet.) (quoting Sheffield

Dev. Co., v. City of Glenn Heights, 140 S.W.3d 660, 671 (Tex. 2004)). “Otherwise, however,

whether regulation has gone ‘too far’ and become too much like a physical taking for which the

constitution requires compensation requires a careful analysis of how the regulation affects the

balance between the public’s interest and that of private landowners.” Sheffield Dev. Co., 140
S.W.3d at 671–72. “While each case must therefore turn on its facts, guiding considerations can

be identified, including: (1) the economic impact of the regulation on the claimant; (2) the extent

3
  In their brief, Appellants challenge the summary judgment only as to their regulatory taking claim. Accordingly,
they have waived any complaint with regard to their declaratory judgment claim. See TEX. R. APP. P. 38.1(i).

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                                                                                      04-17-00077-CV

to which the regulation has interfered with distinct investment-backed expectations; and (3) the

character of the governmental action.” Vill. of Tiki Island, 463 S.W.3d at 575 (quoting Sheffield

Dev. Co., 140 S.W.3d at 671–72) (quotation marks omitted).

       In their petition, Appellants alleged the City’s denial of their rezoning request “denied

[them] all economically viable use of the middle space or unreasonably interfered with [their] right

to use and enjoy the property.” Accordingly, Appellants alleged a viable regulatory taking claim.

See Rowlett/2000, Ltd. v. City of Rowlett, 231 S.W.3d 587, 589, 591 (Tex. App.—Dallas 2007, no

pet.) (analyzing whether city’s refusal to rezone property constituted a regulatory taking);

Weatherford v. City of San Marcos, 157 S.W.3d 473, 478, 489–91 (Tex. App.—Austin 2004, pet.

denied) (same).

B.     Standing

       The City also moved for summary judgment on the basis that Appellants lacked standing

to assert their claim.     The City asserted the semi-commercial zoning classification was

implemented in the 1960s, and the expiration of the middle suite’s nonconforming use rights

occurred prior to the sale of the strip center to Appellants. The City also asserted it had not taken

any action to restrict Appellants’ use of the strip center, but instead had granted Appellants’

requests for special use permits.

       A person has standing to sue when he or she is personally aggrieved by an alleged

wrongdoing. Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848–49 (Tex. 2005) (quoting

Nootsie, Ltd. v. Williamson Cty. Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996)); Denman v.

Citgo Pipeline Co., 123 S.W.3d 728, 731–32 (Tex. App.—Texarkana 2003, no pet.). “The right

to sue for [an] injury [to real property] is a personal right belonging to the person owning the

property at the time of the injury.” Denman, 123 S.W.3d at 732. “A mere subsequent purchaser

cannot recover for an injury committed before his or her purchase.” Id.
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                                                                                                     04-17-00077-CV

         In this case, both the change in zoning from commercial to semi-commercial use and the

City’s decision that the middle suite had lost its nonconforming use rights occurred before

Appellants purchased the strip center. Accordingly, Appellants do not have standing to sue for

any injury caused by those decisions. However, Appellants were personally aggrieved by the

City’s denial of their rezoning request; therefore, they have standing to sue for any injury caused

by that decision. See Lovato, 171 S.W.3d at 848–49; Denman, 123 S.W.3d at 731–32.

C.       Ripeness

         In Appellants’ brief, they refer to their “request for a rezoning of the property from semi-

commercial to commercial or, in the alternative, to reinstate the previous non-conforming use

exception.” In its brief, the City challenges the appellants’ reference to its refusal to reinstate the

middle suite’s nonconforming use.

         “Ripeness is an element of subject matter jurisdiction.” Mayhew v. Town of Sunnyvale,

964 S.W.2d 922, 928 (Tex. 1998). An essential prerequisite to the ripeness of a regulatory takings

claim is a “‘final and authoritative determination’ by the governmental entity applying the

regulations at issue to the property.” City of Galveston v. Murphy, 533 S.W.3d 355, 360 (Tex.

App.—Houston [14th Dist.] 2015, pet. denied) (quoting Mayhew, 964 S.W.2d at 929). In this case,

the record does not establish Appellants ever made a request that the City reinstate the previous

nonconforming use exception; therefore, any claim based on the refusal of such a request is not

ripe for our consideration. 4

4
  Appellants also refer to the City erroneously interpreting its ordinance with regard to the expiration of the
nonconforming use rights for the middle suite. To the extent Appellants could establish they were personally
aggrieved by the decision because the middle suite should continue to have nonconforming use rights, Appellants
never presented that challenge to the city council and therefore never sought a “final and authoritative determination”
from the City regarding that decision. Similarly, although Appellants question whether a barbershop should be
considered a commercial use, Appellants never sought a “final and authoritative determination” from the City
regarding whether a barbershop is a commercial or semi-commercial use.

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                                                                                                    04-17-00077-CV

D.       Conclusion

         After considering the jurisdictional grounds asserted in the City’s motion, we conclude the

trial court had jurisdiction to consider Appellants’ regulatory taking claim based on the City’s

denial of Appellants’ request to rezone the property. Accordingly, we next consider whether

summary judgment was proper as to that claim on any other ground raised in the City’s motion.

                           NO-EVIDENCE MOTION FOR SUMMARY JUDGMENT

         In its brief, the City asserts Appellants have not raised any issue challenging the grounds

raised in the City’s no-evidence motion. In their brief, however, Appellants assert they “presented

some evidence of each of [the] elements” or “discrete considerations in ascertaining the public-

private balance of the City’s restrictions.” Appellants further assert that “because the evidence is

judged in a light favorable to the non-movant, a no-evidence summary judgment on any part of

the balancing test is inappropriate. Because there is a genuine issue of material fact regarding that

balance and whether the restrictions go too far, summary judgment is improper . . . .” (citation

omitted). Therefore, we disagree with the City’s assertion and next consider whether the summary

judgment was properly granted on no-evidence grounds. See Hansen, 525 S.W.3d at 680 (noting

when a motion for summary judgment “asserts both no-evidence and traditional grounds, we first

review the no-evidence grounds”).

A.       Type of Regulatory Taking Alleged in Appellants’ Original Petition

         As previously noted, a regulatory taking can occur when a regulation (1) compels the

property owner to suffer a physical invasion of his property, (2) denies all economically beneficial

or productive use of land, (3) does not substantially advance legitimate state interests, 5 or (4) goes

5
 In Lingle v. Chevron U.S.A., Inc., the Supreme Court held the “substantially advances” formula was no longer a valid
regulatory taking test. 544 U.S. 528, 531–32 (2005). “In light of Lingle, the continued validity of the [substantially
advances] test for purposes of state constitutional law may be the subject of further consideration by the Texas
Supreme Court.” Rowlett/2000, Ltd., 231 S.W.3d at 595.

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                                                                                                  04-17-00077-CV

“too far” and “become[s] too much like a physical taking.” Sheffield Dev. Co., 140 S.W.3d at

671–72. Before addressing whether Appellants produced more than a scintilla of evidence on the

elements of their regulatory taking claim, we must first determine the type of regulatory taking

claim alleged by Appellants in their petition. In their petition, Appellants alleged the City’s actions

“denied Plaintiff all economically viable use of the middle space or unreasonably interfered with

Plaintiff’s right to use and enjoy the property.” Therefore, Appellants alleged only the second and

fourth types of regulatory taking.

        In their brief, Appellants not only argue summary judgment was improperly granted on the

second and fourth types of regulatory taking, but they also argue the City’s refusal to rezone the

strip center does not substantially advance legitimate state interests. Because Appellants did not

allege that type of regulatory taking in their petition, we need not address Appellants’ arguments

regarding the third type of regulatory taking. 6

B.      Denial of All Economically Beneficial or Productive Use of Land

        “A restriction denies the landowner all economically viable use of the property or totally

destroys the value of the property if the restriction renders the property valueless.” Mayhew, 964
S.W.2d at 935. “Determining whether all economically viable use of a property has been denied

entails a relatively simple analysis of whether value remains in the property after the governmental

action.” Id. “This type of taking is limited to the extraordinary circumstance when no productive

or economically beneficial use of land is permitted and the landowner is left with a token interest.”

6
  We note Appellants argued the City had the burden to present evidence that their denial of the rezoning request
substantially advanced a legitimate state interest. We question such an argument in response to a no-evidence motion
because Appellants had the burden to prove their regulatory taking claim. See Battista v. City of Alpine, 345 S.W.3d
769, 775–76 (Tex. App.—El Paso 2011, no pet.). However, we note the City presented the minutes from the August
8, 2011 city council meeting in which one of the council members commented that the property was in “a transition
area and there are immediate neighbors that are directly affected by whatever business could possibly open at th[e]
location.” This comment was preceded by concerns expressed by a resident whose home was located directly behind
the strip center.

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                                                                                      04-17-00077-CV

City of San Antonio v. El Dorado Amusement Co., 195 S.W.3d 238, 245 (Tex. App.—San Antonio

2006, pet. denied) (quotation marks omitted) (quoting Sheffield Dev. Co., 140 S.W.3d at 671).

       In this case, it is undisputed that Appellants continue to receive income from the rental of

the two end suites. Therefore, Appellants did not and could not produce any evidence that the strip

center was rendered valueless by the City’s denial of Appellants’ rezoning request. See Strother

v. City of Rockwell, 358 S.W.3d 462, 471–72 (Tex. App.—Dallas 2012, no pet.) (affirming no-

evidence summary judgment on claim that property was rendered valueless where evidence

established plaintiff was still receiving rent for property); City of Houston v. Trail Enters., Inc.,

377 S.W.3d 873, 879 (Tex. App.—Houston [14th Dist.] 2012, pet. denied) (“The analysis focuses

on the parcel of land as a whole and not discrete segments of the parcel.”).

C.     Whether the Regulation Goes “Too Far”

       When we consider “whether [a] regulation has gone ‘too far’ and become too much like a

physical taking for which the constitution requires compensation, [we must conduct] a careful

analysis of how the regulation affects the balance between the public’s interest and that of private

landowners.” Sheffield Dev. Co., 140 S.W.3d at 671–72.

       While each case must therefore turn on its facts, guiding considerations can be
       identified, . . . [including] [(1)] ‘[t]he economic impact of the regulation on the
       claimant,’ . . . [(2)] ‘the extent to which the regulation has interfered with distinct
       investment-backed expectations,’ . . . [and (3)] ‘the character of the governmental
       action.’

Id. at 672 (quoting Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 124 (1978)).

       1.      Economic Impact

       The economic impact of the regulation on the claimant “compares the value that has been

taken from the property with the value that remains in the property, [and] [t]he loss of anticipated

gains or potential future profits is not usually considered in analyzing this factor.” Mayhew, 964
S.W.2d at 935–36.

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                                                                                      04-17-00077-CV

       The only summary judgment evidence presented by Appellants in response to the City’s

motion was the affidavit of Salim Merchant. In his affidavit, Merchant does not explain how the

City’s refusal to rezone the strip center decreased its value. Although Merchant states he has been

unable to lease the middle suite, he provides no evidence that the space cannot be leased for semi-

commercial use. See Brown v. Mesa Distribs., Inc., 414 S.W.3d 279, 287 (Tex. App.—Houston

[1st Dist.] 2013, no pet.) (noting affidavit that does not provide factual support is not proper

summary judgment evidence); Thompson v. Curtis, 127 S.W.3d 446, 450 (Tex. App.—Dallas

2004, no pet.) (noting a statement is conclusory if no underlying facts are provided). Furthermore,

Merchant’s loss of potential profit “is not usually considered in analyzing this factor.” Mayhew,
964 S.W.2d at 936; see also Appaloosa Dev., LP v. City of Lubbock, No. 07-13-00290-CV, 2014
WL 3906458, at *2 (Tex. App.—Amarillo Aug. 11, 2014, no pet.) (mem. op.) (holding loss of

profit the appellant anticipated earning if request to change zoning was granted was not a proper

consideration); Weatherford, 157 S.W.3d at 490 (refusing to consider that property would be worth

more if it was rezoned as evidence that regulation affected value of property).

       2.      Investment-Backed Expectation

       With regard to the investment-backed expectation of the landowner, “[t]he existing and

permitted uses of the property constitute the ‘primary expectation’ of the landowner that is affected

by regulation. Knowledge of existing zoning is to be considered in determining whether the

regulation interferes with investment-backed expectations.” Mayhew, 964 S.W.2d at 936. “The

purpose of the investment-backed expectation requirement is to assess whether the landowner has

taken legitimate risks with the reasonable expectation of being able to use the property, which, in

fairness and justice, would entitle him or her to compensation.” Edwards Aquifer Auth. v. Bragg,

421 S.W.3d 118, 142 (Tex. App.—San Antonio 2013, pet. denied). “[T]he regulatory regime in

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                                                                                      04-17-00077-CV

place at the time the claimant acquires the property at issue helps to shape the reasonableness of a

claimant’s investment-backed expectations.” Id. at 143 (alteration in original).

       In this case, it is undisputed that the strip center was zoned semi-commercial before

Appellants purchased the property, and Merchant acknowledged in his affidavit that the middle

suite had “lost its non-conforming use.” Therefore, the zoning of the strip center could not interfere

with Appellants’ investment-backed expectations because the zoning was in existence when the

appellants purchased the property. Thus, there is no evidence of interference with investment-

backed expectations. See Appaloosa Dev., L.P., 2014 WL 3906458, at *3 (noting denial of request

to change zoning “had no effect on the permitted uses of the property”).

       3.      Character of the Governmental Action

       Finally, the character of the governmental action must be considered.             In denying

Appellants’ request, one council member noted the property was in “a transition area and there are

immediate neighbors that are directly affected by whatever business could possibly open at th[e]

location.” See id. at *4 (analyzing reason for zoning decision in discussing character of the

governmental action). In addition, although the City denied Appellants’ request, the City amended

its ordinance to provide a procedure for Appellants to obtain special use permits. Finally, the City

granted both of Appellants’ applications for special use permits. Although Merchant asserts in his

affidavit that obtaining special use permits takes “months,” he provided no evidence to support his

assertion. Merchant’s conclusory assertion is no evidence that any delay was the City’s fault rather

than Appellants’. See Brown, 414 S.W.3d at 287 (noting affidavit that does not provide factual

support is not proper summary judgment evidence); Thompson, 127 S.W.3d at 450 (noting

statement is conclusory if no underlying facts are provided). The summary judgment evidence

establishes that the two letters Merchant sent requesting special use permits did not meet several

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of the application requirements contained in the ordinance, including the requirement that the

application be accompanied by a site plan meeting specific requirements.

       4.      Conclusion

       Based on the foregoing, we conclude Appellants failed to produce more than a scintilla of

evidence to show the City’s denial of their rezoning request went “‘too far’ and [became] too much

like a physical taking.” Sheffield Dev. Co., 140 S.W.3d at 671–72. Therefore, the trial court

properly granted the City’s no-evidence motion for summary judgment. We need not consider the

traditional motion. See Hansen, 525 S.W.3d at 680–81.

                                          CONCLUSION

       Because the trial court properly granted the City’s no-evidence motion for summary

judgment on the only regulatory taking claim the trial court had jurisdiction to consider, we affirm

the trial court’s judgment.

                                                  Patricia O. Alvarez, Justice

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