Gulf Shores Properties, LLC et al v. City of Waveland, Mississippi

Filing 86

ORDER Granting in Part and Denying in Part Defendants' Motion 45 to Dismiss. Signed by District Judge Halil S. Ozerden on 1/25/2018. (JD)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
GULF SHORE PROPERTIES, LLC,
OAK PARK MISSISSIPPI
PROPERTIES, LLC, WAVELAND
PROPERTIES, LLC, and MICHAEL
L. BROWN
v.

PLAINTIFFS/COUNTERDEFENDANTS

Civil No. 1:16cv437-HSO-JCG

CITY OF WAVELAND, MISSISSIPPI
and THE BOARD OF MAYOR AND
ALDERMEN OF THE CITY OF
WAVELAND, MISSISSIPPI

DEFENDANTS/COUNTERPLAINTIFFS

MEMORANDUM OPINION AND ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANTS’ MOTION [45] TO DISMISS
PLAINTIFFS’ SECOND AMENDED COMPLAINT
BEFORE THE COURT is the Motion [45] to Dismiss Plaintiffs’ Second
Amended Complaint filed by Defendants/Counter-Plaintiffs the Board of Mayor and
Aldermen of the City of Waveland, Mississippi, and the City of Waveland,
Mississippi (“Waveland” or “the City”). Plaintiffs/Counter-Defendants in this
litigation are Gulf Shore Properties, LLC, Oak Park Mississippi Properties, LLC,
Waveland Properties, LLC, and Michael Brown1 (collectively, “Gulf Shore”).

Gulf

Shore’s Second Amended Complaint advances several claims against Waveland
arising from Waveland’s water ordinance and charges for water usage.

1

The Second Amended Complaint identifies Michael L. Brown as a plaintiff three times on the first page.
In response to Waveland’s Motion to Dismiss, Gulf Shore states, “Michael Brown was inadvertently listed as a
Plaintiff in the Second Amended Complaint due to an editing error, but he is not asserting any claims in this action
and is not a proper party.” Pls.’ Mem. [51] at 1 n.1. However, Plaintiffs’ counsel has not filed any motion seeking
to remove Michael Brown as a plaintiff.

Waveland seeks dismissal on grounds that the applicable statutes of
limitations bar Gulf Shore’s claims.

Waveland also contends that it is immune

from Gulf Shore’s unjust enrichment claim under state law and that Gulf Shore
fails to state a procedural due process claim upon which relief can be granted.
Based upon its review of the record and relevant legal authority, the Court finds
that Waveland’s Motion [45] should be granted in part as to Gulf Shore’s claim for
violation of procedural due process and denied in part as to Gulf Shore’s remaining
claims.
I. BACKGROUND
A.

Gulf Shore’s Factual Allegations
According to the Second Amended Complaint and attached exhibit, Gulf

Shore purchased two apartment complexes within the City of Waveland,
Mississippi, in 2011. Not. of Claim [28-1] at 1.

When Gulf Shore took possession

of the properties, it began utilizing the City of Waveland’s water service. Id.

Gulf

Shore alleges that since the date of purchase of the complexes, it has been charged
excessive and incorrect monthly rates for water service. Id. at 2. Waveland
assesses Gulf Shore fees based on an estimated monthly usage rate that is much
higher than the actual usage. Id. at 2-3. The monthly statement includes a
charge for wastewater disposal, which Gulf Shore claims Waveland does not have
the authority to collect. Id. at 2.
Late fees and charges incurred by the previous owner of the complexes have
also been allegedly included in Gulf Shore’s water bill. Id. at 2.

2

Gulf Shore

further complains that monthly statements regularly include charges for improperly
computed late fees, and late fees upon late fees, which compounds the charges. Id.
Gulf Shore asserts that on several occasions, it submitted checks for payment of the
water bills, but Waveland did not properly credit these checks, resulting in
improper imposition of late fees.

Id. at 5.

A Notice of Claim, which is attached as

an exhibit to the Second Amended Complaint, contends that these injuries occurred
“[b]etween February 28, 2011 and June 6, 2016.” Id.
On November 16, 2016, Waveland held a meeting of its Board of Aldermen to
vote on and ultimately approve an amended water and sewer ordinance, Ordinance
#371, which purportedly affected Gulf Shore’s rights.

Second Am. Compl. [28] at 6.

Gulf Shore claims that Waveland failed to provide Gulf Shore with notice that
Ordinance #371 had been placed on the agenda for the Board’s consideration at this
meeting.

Id.

Waveland was allegedly aware of Gulf Shore’s concerns about the

water rates and fees because the parties were regularly communicating with each
other regarding Waveland’s practices and ordinances. Id.
B.

Procedural History
On June 23, 2016, Gulf Shore submitted a Notice of Claim2 “pursuant to the

provisions of the Mississippi Tort Claims Act,” alleging that Waveland had
excessively and improperly charged Gulf Shore.

Not. of Claim [28-1].

No action

The Mississippi Tort Claims Act, Miss. Code Ann. § 11-46-1, et seq., provides a limited waiver
of the sovereign immunity of the state and its officials. Miss. Code Ann. § 11-46-11(1) provides:
“After all procedures within a governmental entity have been exhausted, any person having a claim
under this chapter shall proceed as he might in any action at law or in equity, except that at least
ninety (90) days before instituting suit, the person must file a notice of claim with the chief executive
officer of the governmental entity.”

2

3

was taken on the Notice of Claim, Second. Am. Compl. [28] at 2, following which
Gulf Shore filed a Complaint in the Circuit Court of Hancock County, Mississippi,
on November 3, 2016, Compl. [1-1] at 24. On November 17, 2016, Gulf Shore filed
an Amended Complaint.

Am. Compl. [1-1] at 4. Waveland removed the case to

this Court on December 16, 2016, on grounds of both diversity and federal question
jurisdiction.

Not. of Removal [1-1] at 1-2. Gulf Shore filed the Second Amended

Complaint on April 25, 2017.

Second Am. Compl. [28].

The Second Amended Complaint alleges seven counts against Waveland.
Count I seeks a declaration that Waveland: 1) is assessing an unlawful tax against
Gulf Shore, or, alternatively, is assessing water and sewer rates and fees in
violation of state law; 2) is in breach of its contract with Gulf Shore; 3) is violating
Gulf Shore’s equal protection rights by failing to categorize water and sewer users
fairly; and 4) is violating Gulf Shore’s due process rights.

Id. at 7-8.

Gulf Shore brings two claims pursuant to 42 U.S.C. § 1983 in Counts II and
III.

Gulf Shore brings a due process claim in Count II, and complains that

Waveland deprived Gulf Shore of procedural and substantive due process by
withholding notice of the City’s consideration of changes to the ordinance at the
Board meeting and by then amending the ordinance.
9.

Second Am. Compl. [28] at 8-

Count III claims that Waveland violated Gulf Shore’s equal protection rights by

imposing water and sewer charges based on discriminatory, unfair, arbitrary,
and/or capricious factors. Id. at 9-10.
Count IV alleges that Waveland breached its contracts with Gulf Shore by

4

charging rates and fees inconsistent with City ordinances. Id. at 10.

Count V

raises a tort claim for ultra vires conduct, claiming that Waveland violated state
law by levying an impermissible tax disguised as a fee or, alternatively, by charging
rates that are unreasonable and unfairly applied, exceeding Waveland’s authority.
Id. at 10-11.

Count VI sets forth an unjust enrichment claim for Waveland

continuing to retain monies Gulf Shore has paid, even though Waveland illegally
charged rates and fees. Id. at 11-12.

Lastly, Count VII claims that Waveland’s

water and sewer ordinance is unconstitutionally vague as written and as applied.
Id. at 12.
Pursuant to Federal Rule of Civil Procedure 12(b)(6), Waveland now moves to
dismiss the Second Amended Complaint, raising three main arguments. Mot. [45].
Waveland first contends that Gulf Shore’s claims are all time-barred by the relevant
statutes of limitations. Defs.’ Mem. [46] at 4.

Waveland posits that the claims

accrued in 2011 as indicated by the Notice of Claim and that Gulf Shore failed to
file suit within the applicable three- and one-year statutes of limitations. Id. at 56.
In the alternative, Waveland argues that some of Gulf Shore’s claims are due
to be dismissed on their merits under a Rule 12(b)(6) standard. Specifically,
Waveland asserts that it is immune from Gulf Shore’s unjust enrichment claim
under state law. Id. at 6.

Next, Waveland maintains that Gulf Shore’s procedural

due process claim fails to state a claim upon which relief can be granted, on grounds
that Gulf Shore was not entitled to notice of Waveland’s adoption of the new water

5

ordinance because procedural due process requirements do not apply to legislative
functions, and because Gulf Shore failed to file its statutorily required appeal to
state court to oppose the adoption of Ordinance #371. Id. at 7-8.

Waveland offers

no other Rule 12(b)(6) arguments, beyond the statutes of limitations defense, as to
Gulf Shore’s remaining claims.
Gulf Shore responds that except for its due process claim, all claims arise
from Waveland’s repeated, continuous, and ongoing improper billing; therefore, the
continuing tort doctrine tolled the statutes of limitations.

Pls.’ Mem. [51] at 5.

Gulf Shore asserts that the Mississippi Tort Claims Act (“MTCA”) waives
Waveland’s immunity for its unjust enrichment claim. Id. at 8. Regarding the
lack of notice of Waveland’s adoption of Ordinance #371, Gulf Shore counters that
utility ratepayers have a recognized property interest in proceedings related to
utility rates, thus triggering procedural due process rights. Id. at 11.

Gulf Shore

further maintains that there is no requirement to exhaust state remedies in order
to bring a claim under 42 U.S.C. § 1983. Id. at 12. Waveland argues in its Reply
that the continuing tort doctrine does not apply against governmental entities.
Reply [52] at 2.
II. DISCUSSION
A.

Legal Standard
When presented with a motion to dismiss pursuant to Federal Rule of Civil

Procedure 12(b)(6), a court “must assess whether the complaint contains sufficient
factual matter, accepted as true, to state a claim for relief that is plausible on its

6

face[.]” Spitzberg v. Houston Am. Energy Corp., 758 F.3d 676, 683 (5th Cir.
2014) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)).

A court must accept all well-pleaded facts as

true and view those facts in the light most favorable to the plaintiff. Varela v.
Gonzales, 773 F.3d 704, 707 (5th Cir. 2014) (citation omitted). This tenet, however,
is inapplicable to legal conclusions. Id. (citation omitted).

“A statute of

limitations may support dismissal under Rule 12(b)(6) where it is evident from the
plaintiff’s pleadings that the action is barred and the pleadings fail to raise some
basis for tolling or the like.” Jones v. Alcoa, Inc., 339 F.3d 359, 366 (5th Cir. 2003).
B.

Whether the Pertinent Statutes of Limitations Bar Gulf Shore’s Claims
1.

The Statutes of Limitations

Waveland asserts that the applicable three- and one-year statutes of
limitations bar Gulf Shore’s claims because they accrued in 2011, yet the Complaint
was not filed until 2016.

Defs.’ Mem. [46] at 5-6. With respect to Gulf Shore’s

ultra vires claim, the MTCA provides that all claims “shall be commenced within
one (1) year next after the date of the tortious, wrongful or otherwise actionable
conduct on which the liability phase of the action is based, and not after[.]”

Miss.

Code Ann. § 11-46-11.
Mississippi’s catchall statute of limitations states that “[a]ll actions for which
no other period of limitation is prescribed shall be commenced within three (3) years
next after the cause of such action accrued, and not after.” Miss. Code. Ann. § 151-49. This statute applies to breach of contract and unjust enrichment claims, see

7

Pickett v. Gallagher, 159 So. 3d 587, 589, 591 (Miss. Ct. App. 2014), and to Gulf
Shore’s claim of unconstitutional vagueness of Waveland’s ordinance because, as
the parties agree, there appears to be no statute specifically stating a limitations
period for such an action, Defs.’ Mem. [46] at 4-5; Pls.’ Mem. [51] at 5.
Section 1983 claims “are subject to state personal injury statutes of
limitations.” King-White v. Humble Indep. Sch. Dist., 803 F.3d 754, 759 (5th Cir.
2015) (citation omitted).

“[W]here state law provides multiple statutes of

limitations for personal injury actions, courts considering § 1983 claims should
borrow the general or residual statute for personal injury actions.” Owens v.
Okure, 488 U.S. 235, 249-50 (1989).

“[F]ederal courts also look to state law for its

tolling provisions.” Burge v. Par. of St. Tammany, 996 F.2d 786, 788 (5th Cir.
1993).

As noted previously, the residual statute of limitations for personal injury

claims in Mississippi is found at Mississippi Code Section 15-1-49, which sets forth
a three-year statute of limitations applicable to Gulf Shore’s due process and equal
protection claims brought under 42 U.S.C. § 1983.
There does not appear to be a Mississippi statute addressing the limitations
period for claims seeking declaratory relief.

“As a general rule, an action for

declaratory judgment will be barred to the same extent that the applicable statute
of limitations bars an underlying action in law or equity.”

22A Am. Jur. 2d

Declaratory Judgments § 182 (2017). “Because claims for declaratory relief
necessarily derive from claims for substantive relief, the statute of limitations for
the underlying action at law generally is applied to an accompanying action

8

for declaratory relief.”

Id.

To the extent Gulf Shore seeks a declaration

pertaining to Waveland’s ultra vires conduct, then, the one-year statute of
limitations would apply.

Declaratory relief based upon breach of contract and

violation of equal protection and due process would be subject to the three-year
statute of limitations.
2.

Analysis
a.

Due Process and Constitutional Vagueness Claims

Gulf Shore’s procedural and substantive due process claims derive from
Waveland’s amending of the water and sewer ordinance, which, according to the
Second Amended Complaint, occurred on November 16, 2016.

Gulf Shore first

raised these claims in its Second Amended Complaint filed on April 25, 2017.
These due process claims thus fall within the three-year statute of limitations and
are not time-barred.

Gulf Shore’s unconstitutional vagueness claim also appears to

be a challenge to the amended ordinance, Ordinance #371, as the Second Amended
Complaint seeks a judgment “permanently enjoining Ordinance #371 as
unconstitutionally vague.”

Second Am. Compl. [28] at 14.

Because the Second

Amended Complaint alleges that this amended ordinance was approved on
November 16, 2016, this claim also falls within the three-year statute of limitations
and is not time-barred.
b.

Remaining Claims

Gulf Shore’s remaining claims would be time-barred absent tolling or an
exception to the statute of limitations because Gulf Shores alleges that the injuries

9

giving rise to its equal protection, breach of contract, ultra vires conduct, and unjust
enrichment claims all first occurred on February 28, 2011.
Mississippi recognizes the continuing tort doctrine:
Where a tort involves a continuing or repeated injury, the cause
of action accrues at, and limitations begin to run from, the date of the
last injury, or when the tortious acts cease. Where the tortious act has
been completed, or the tortious acts have ceased, the period of
limitations will not be extended on the ground of a continuing wrong.
A “continuing tort” is one inflicted over a period of time; it involves
a wrongful conduct that is repeated until desisted, and each day creates
a separate cause of action. A continuing tort sufficient to toll a statute
of limitations is occasioned by . . . continual unlawful acts, not by
continual ill effects from an original violation.
Smith v. Franklin Custodian Funds, Inc., 726 So. 2d 144, 148 (Miss. 1998) (citation
omitted). Mississippi courts do not apply “the continuing tort doctrine when harm
reverberates from one wrongful act or omission.” Id. at 149.
Waveland argues, without citation to any caselaw, that the continuing tort
doctrine does not apply to claims against governmental entities because Mississippi
Code Section 15-1-51 provides when the statute of limitations shall “run” in favor of
the state, counties, and municipal corporations and does not limit that period to
when the claim accrues.

Reply [53] at 3. Section 15-1-51 states that “[t]he

statutes of limitation shall run in favor of the state, the counties, and municipal
corporations beginning at the time when the plaintiff first had the right to demand
payment of the officer or board authorized to allow or disallow the claim sued upon.”
Miss. Code. Ann. § 15-1-51.
However, a continuing tort tolls the time when both “the cause of action

10

accrues at, and limitations begin to run from.” Smith, 726 So. 2d at 148.
Waveland also does not attempt to square its argument with the fact that the
Supreme Court of Mississippi has held that the continuing tort doctrine does apply
to claims against the state under the MTCA. See Estate of Fedrick ex rel. Sykes v.
Quorum Health Res., Inc., 45 So. 3d 641, 643 (Miss. 2010).

Moreover, “the statute

of limitations is an affirmative defense that places the burden of proof on the party
pleading it.” Frame v. City of Arlington, 657 F.3d 215, 239 (5th Cir. 2011) (citation
and quotation marks omitted). Absent citation to any other legal authority by
Waveland, the Court is left to conclude that, at least based on the present briefing,
the continuing tort doctrine would apply to the specific facts of this case.
Applying the continuing tort doctrine to the facts alleged in the Second
Amended Complaint, which the Court must accept as true at this stage of the case,
Gulf Shore has sufficiently pled that Waveland plausibly committed continuing and
repeated wrongful acts by imposing improper charges and fees on a repeated and
recurring basis.

Specifically, the Second Amended Complaint contends that each

month, Waveland charged Gulf Shore excessive rates, charged for wastewater
disposal without authority to do so, and charged improperly computed late fees.
Furthermore, on several occasions, Waveland allegedly did not properly credit Gulf
Shore’s payments, resulting in more late fees.

Assuming the truth of Gulf Shore’s

factual allegations, it is plausible that Waveland would have committed repeated
wrongful acts from 2011 to 2016.

Gulf Shore’s alleged injury did not result merely

from the original wrongful act in 2011. The Second Amended Complaint sets forth

11

facts plausibly alleging that the continuing tort doctrine tolled the statute of
limitations for Gulf Shore’s equal protection, ultra vires conduct, and unjust
enrichment claims until June 2016.
As to the breach of contract claim, the parties have not directed the Court to
any Mississippi state court opinions directly on point, but “both the Fifth Circuit
and this Court have implicitly recognized that [a continuing breach of contract]
claim exists under Mississippi law.” Singing River Elec. Power Ass’n v. Bellsouth
Telecomm., Inc., No. 1:10cv486-LG-RHW, 2011 WL 5082235, at *7 (S.D. Miss. Oct.
26, 2011) (citing Merchants & Marine Bank v. Douglas–Guardian Warehouse
Corp., 801 F.2d 742, 745 (5th Cir. 1986); Provenza v. Stamps, No. 1:09cv191-LGRHW, 2010 WL 706480, at *2 (S.D. Miss. Feb. 22, 2010)).

Here, the Second

Amended Complaint claims that Waveland continually breached its contracts with
Gulf Shore by charging rates and fees inconsistent with City ordinances. If true,
and viewing the facts in the light most favorable to Gulf Shore, it is plausible that
this would not constitute simply a single breach that occurred in 2011, but one that
was repeated with every new bill or charge.

In sum, the Court will decline to

dismiss any claims based on the statutes of limitations.
C.

Waveland’s Merits Arguments on the Unjust Enrichment and Procedural
Due Process Claims
1.

Whether Waveland is Immune from Gulf Shore’s Unjust Enrichment
Claim

Waveland contends that it is immune from Gulf Shore’s unjust enrichment
claim.

Defs.’ Mem. [46] at 6. Mississippi Code Section 11-46-3(1) grants

12

immunity to the state and its political subdivisions for “breach of implied term or
condition of any warranty or contract.” Mississippi Code Section 11-46-5(1) waives
the immunity granted under Section 11-46-3 for
claims for money damages arising out of the torts of such governmental
entities and the torts of their employees while acting within the course
and scope of their employment . . . , however, immunity of a
governmental entity in any such case shall be waived only to the extent
of the maximum amount of liability provided for in Section 11-46-15.
Miss. Code Ann. § 11-46-5(1).
“While this waiver contains no explicit reference to implied warranty and
implied-contract claims against governmental entities, the supreme court in Estate
of Stewart determined, without explanation, that the section 11-46-5 waiver applied
to a breach of implied contract claim.” 1704 21st Ave., Ltd. v. City of Gulfport, 988
So. 2d 412, 417 (Miss. Ct. App. 2008) (citing City of Jackson v. Estate of Stewart ex
rel. Womack, 908 So. 2d 703, 711 (Miss. 2005)).

Accordingly, in 1704 21st Avenue,

the Court of Appeals of Mississippi held that the plaintiff’s claims for unjust
enrichment “originate from an implied-in-law contract” and the waiver in Section
11-46-5 applied.

Id. at 417-18

1704 21st Avenue and Estate of Stewart therefore appear to stand for the
proposition that Waveland’s immunity from Gulf Shore’s unjust enrichment claim is
waived to the extent of the maximum amount of liability provided for in Section 1146-15.

Section 11-46-15(1)(c) states that in any suit for damages against a

governmental entity or its employee for claims arising from acts or omissions
occurring on or after July 1, 2001, the liability under the MTCA shall not exceed

13

$500,000.00.

Gulf Shore may thus pursue its unjust enrichment claim to this

extent.
2.

Whether the Second Amended Complaint Fails to State a Procedural
Due Process Claim Upon Which Relief Can Be Granted

In Count II, Gulf Shore advances a claim for “violation of the Plaintiff’s rights
to substantive and procedural due process[.]”

Second Am. Compl. [28] at 8-9.

Gulf Shore thus appears to bring separate claims for substantive due process and
procedural due process violations.

“Substantive due process analysis is

appropriate only in cases in which government arbitrarily abuses its power to
deprive individuals of constitutionally protected rights.” Simi Inv. Co. v. Harris
Cty., 236 F.3d 240, 249 (5th Cir. 2000).

However, Waveland seems to take issue

with only the procedural due process claim, and has not argued for a dismissal on
the merits of the substantive due process claim.
Gulf Shore’s procedural due process claim alleges that Waveland withheld
notice of the changes it was considering to the ordinance in violation of due process.
Id. at 8-9. Waveland contends that the adoption of a utility ordinance is a
legislative function and that procedural due process rights do not attach to
legislative actions of public bodies.

Defs.’ Mem. [46] at 7.

Gulf Shore responds

that it has a recognized property interest in proceedings related to utility rates, and
that Waveland was required to provide Gulf Shore with notice that the City was
considering amending the water and sewer ordinance.

Pls.’ Mem. [51] at 9-11.

“While an individual is entitled to notice and a hearing before state action
deprives him of life, liberty, or property, no such right attends legislative
14

enactments that affect a general class of persons.” United States v. LULAC, 793
F.2d 636, 648 (5th Cir. 1986). This is because “all of those persons have received
procedural due process by the legislative process itself and they have no right to
individual attention.”

Id.; see also McMurtray v. Holladay, 11 F.3d 499, 504 (5th

Cir. 1993) (“[W]hen a legislature extinguishes a property interest via legislation
that affects a general class of people, the legislative process provides all the process
that is due.”).
“Generally, if the court views the governmental conduct as legislative, the
property owner has no procedural due process rights.” Cty. Line Joint Venture v.
City of Grand Prairie, 839 F.2d 1142, 1144 (5th Cir. 1988). On the other hand, if
the action “is viewed as administrative/adjudicative, procedural due process rights
may attach.”

Id.

Conduct of a municipal body is likely to be deemed legislative
when an elected group, such as a city council, makes a general zoning
decision which applies to a large group of interests. Conversely, a
municipal body’s action may be more likely termed adjudicative if an
appointed group, such as a zoning board, makes a specific decision
regarding a specific piece of property.
Id.; see also Xcaliber Int’l Ltd. LLC v. Atty. Gen. State of Louisiana, 612 F.3d 368,
382 (5th Cir. 2010) (“Generally speaking, legislative actions are non-individualized
determinations that affect a wider class of individuals, whereas adjudicative actions
involve individualized assessments that affect a smaller number of people in a more
exceptional manner.”).
According to the Second Amended Complaint, the Board of Mayor and
Aldermen “comprises the elected officials responsible for the City of Waveland.”
15

Second Am. Compl. [28] at 2. The Second Amended Complaint alleges that the
Board met on November 16, 2016, to vote on and approve an amended water and
sewer ordinance.

Id. at 6-7. The City’s action in amending its water and sewer

ordinance and adopting the amended ordinance, Ordinance #371, was thus a
decision by elected officials.

The Second Amended Complaint sets forth no facts

plausibly alleging that the amendment to the City’s ordinance was a specific
decision regarding a specific piece of property, rather than one affecting a general
class of persons.
Relying on Mississippi Power Co. v. Mississippi Public Service Commission,
168 So. 3d 905, 913 (Miss. 2015), Gulf Shore contends that it enjoys a recognized
property interest in proceedings related to utility rates.

In Mississippi Power, the

Mississippi Power Company (“MPC”) petitioned the Public Service Commission
(“PSC”) for approval to increase power rates based on Construction Work in
Progress accounts (“CWIP”). The PSC subsequently approved the rate increases
for two years “by including ‘mirror CWIP’ in the rate bases and rates.” Id. at 908.
The Supreme Court of Mississippi held that while “ratepayers have no property
interest in a certain rate, the ratepayers may not be subject to proceedings in which
he or she may be deprived of a protected property interest without adequate
protection in place to certify the fundamental fairness of the action taken by the
government.” Id. at 913.

Under that principle,

the Commission deprived ratepayers of procedural due process by failing
to require notice to the ratepayers. No notice of the original filing was
provided to the ratepayers in the overwhelming majority of the
southeastern Mississippi counties constituting MPC’s service
16

area. MPC sought and obtained approval for CWIP recovery that would
result in rate increases. When MPC pursued rate increases as part of its
certificate filing, all of its customers were entitled to notice. Few, if any,
received it. The ratepayers are “interested parties” in this proceeding.
Id. at 914.
The foregoing case is inapposite to the present dispute, however.

In

Mississippi Power, the ratepayers were subject to the “proceeding” of MPC filing to
the Commission for increased rates based on CWIP.

That proceeding took the

Commission’s actions out of the legislative realm and into the adjudicative. Here,
no such adjudicative action occurred.

Waveland’s meeting and adoption of the

amended ordinance was not the type of proceeding contemplated by Mississippi
Power, rather, it was more in the nature of legislative action by an elected body.
Similarly unpersuasive is Gulf Shore’s reliance on Mullane v. Central
Hanover and Trust Co., 393 U.S. 306 (1950), where the United States Supreme
Court considered the constitutional sufficiency of notice given to the beneficiaries of
a common trust fund of a judicial settlement of accounts by the trustee of the fund.
As explained by the Supreme Court:
The due process standards of Mullane apply to an “adjudication”
that is “to be accorded finality.” The Court in Mullane itself
distinguished the situation in which a State enacted a general rule of
law governing the abandonment of property. It has long been
established that laws must give the person of ordinary intelligence a
reasonable opportunity to know what is prohibited, so that he may act
accordingly, but it has never been suggested that each citizen must in
some way be given specific notice of the impact of a new statute on his
property before that law may affect his property rights.
Texaco, Inc. v. Short, 454 U.S. 516, 535-36 (1982) (citation, quotation marks, and
footnote omitted).
17

Gulf Shore has not stated a constitutional procedural due process claim upon
which relief may be granted, and the Court will dismiss this claim.

As mentioned

above, because Waveland has not challenged Gulf Shore’s substantive due process
claim on its merits, this claim will proceed.
III. CONCLUSION
For the foregoing reasons, the Court concludes that Plaintiffs’ Second
Amended Complaint sufficiently alleges that the pertinent statutes of limitations do
not bar Plaintiffs’ claims and that Defendants’ immunity does not preclude
Plaintiffs’ unjust enrichment claim.

Plaintiffs have failed to state a claim upon

which relief may be granted for violation of procedural due process. Waveland’s
Motion to Dismiss will be granted in part and denied in part.
IT IS, THEREFORE, ORDERED AND ADJUDGED that Defendants The
Board of Mayor and Aldermen of the City of Waveland, Mississippi, and the City of
Waveland, Mississippi’s Motion [45] to Dismiss Plaintiffs Gulf Shore Properties,
LLC, Oak Park Mississippi Properties, LLC, Waveland Properties, LLC, and
Michael Brown’s Second Amended Complaint is GRANTED IN PART as to
Plaintiffs’ claim for violation of procedural due process, and this claim is
DISMISSED WITH PREJUDICE.

The Motion is DENIED IN PART as to

Plaintiffs’ remaining claims for violation of substantive due process, violation of
equal protection, breach of contract, ultra vires conduct, unjust enrichment, and
unconstitutional vagueness.

These claims will proceed.

18

SO ORDERED AND ADJUDGED, this the 25th day of January, 2018.

s/ Halil Suleyman Ozerden
HALIL SULEYMAN OZERDEN
UNITED STATES DISTRICT JUDGE

19