EMF Swiss Avenue LLC v City of Dallas

Filing 6

Memorandum Opinion and Order: The court, sua sponte, determines that it lacks federal subject matter jurisdiction. Accordingly, this action is dismissed without prejudice. (Ordered by Judge Sam A Lindsay on 11/8/2017) (svc)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
EMF SWISS AVENUE LLC,
Plaintiff,
v.
CITY OF DALLAS,
Defendant.

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Civil Action No. 3:17-CV-2995-L

MEMORANDUM OPINION AND ORDER
Before the court is Plaintiff EMF Swiss Avenue, LLC’s Application for Temporary
Restraining Order (Doc. 1), filed October 30, 2017. After considering the motion, pleadings,
evidence, and applicable law, the court, sua sponte, dismisses this action without prejudice for lack
of subject matter jurisdiction.
I.

Background
Plaintiff EMF Swiss Avenue, LLC (“Plaintiff” or “EMF”) filed this action on October 30,

2017, against Defendant City of Dallas (“Defendant” or “City”), asserting claims for (1) inverse
condemnation and impermissible takings in violation of the Fifth and Fourteenth Amendments to
the United States Constitution and Article I, Section 17 of the Texas Constitution; and (2)
promissory estoppel. With respect to this court’s subject matter jurisdiction, EMF contends that this
court “has federal question jurisdiction pursuant to 28 U.S.C. § 1331 because this suit concerns the
federal question of whether the City of Dallas has committed a taking against EMF under the Fifth
and Fourteenth Amendments to the United States Constitution.” Complaint and Application for
TRO ¶ 3. EMF asserts the court has supplemental jurisdiction pursuant to 28 U.S.C. § 1367 over

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its promissory estoppel claim. For relief, EMF seeks to recover direct and consequential damages,
attorney’s fees, and costs of suit. EMF also seeks injunctive relief in the form of a temporary
restraining order, preliminary injunction, and permanent injunction enjoining the City from
enforcing a “Stop Work Order” that stopped all construction by EMF on a multi-million dollar
development project (“Project”) on property located in Dallas County and owned by EMF. The
relevant allegations and evidence, drawn from the Complaint and appendix filed in support, are as
follows:
EMF is in the process of constructing a five-story, 253-unit multifamily dwelling at 4217
Swiss Avenue (the “Property”). Prior to commencing construction, EMF received the required
approval and permits from the City. EMF began work on the project and invested more than $13.9
million in the project. Non-party Peaks Addition Home Owner’s Association (“HOA”) filed a
complaint concerning the validity of the permits issued by the City, claiming they should not have
been issued because they did not require the Project to conform to the City’s ordinance addressing
residential proximity slopes (“RPS”) that emanate from other properties located in Dallas Planned
Development District 298. The Director of Sustainable Development and Construction for the City
(“Director”) concluded that no RPS applied to the Project or the Property and, thus, the permits
issued to EMF do not require EMF to conform to RPS. The HOA appealed this decision to the
Board of Adjustment for the City (the “Board”), which upheld the Director’s decision.
In March 2017, five months after the construction began, the HOA filed a lawsuit against the
City and the Board seeking a writ of certiorari and judicial review of the Board’s decision. See
Peaks Addition Homeowners Association v. City of Dallas, et al., Cause No. DC-17-02532, in the
134th Judicial District Court, Dallas County, Texas (the “State Court Action”). The HOA moved

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for summary judgment in the State Court Action, and the City filed a cross-motion for summary
judgment. EMF intervened in the matter on September 8, 2017. On September 11, 2017, the judge
in the State Court Action granted final summary judgment for the HOA and ruled against the City.
Following issuance of the Final Judgment in favor of the HOA, on September 1, 2017, the
City issued a “Stop Work Order” halting all construction on the Property. EMF responded by filing
an Emergency Motion to Stay Enforcement of the September 11, 2017 Final Judgment. On
September 18, 2017, the judge in the State Court Action, following a hearing, denied EMF’s motion.
EMF has appealed this adverse decision to the Fifth District Court of Appeals at Dallas, Texas,
where it is pending.
On September 19, 2017, EMF filed a Motion to Determine Supersedeas Security in the State
Court Action, asking the court to set the type and amount of supersedeas security in order for EMF
to post adequate security and suspend enforcement of the court’s final judgment during the appellate
process. The motion was denied without explanation. EMF appealed the decision, and that appeal
is also pending.
On October 30, 2017, EMF filed this lawsuit and in support of its Application for TRO
contends:
This lawsuit seeks relief narrowly-tailored in scope and of the highest
urgency. The [City] has, sua sponte and prematurely issued, a Stop Work Order
precluding all construction of any kind on a multi-million dollar development
Property located in Dallas County. The preclusive effects of this Stop Work Order
are disastrous and have caused and will continue to cause irreparable harm to EMF
and the construction project on its Property through indefinite construction delays,
dispersal of the construction workforce, potential lender defaults, and lost
construction capital and pricing. The need for injunctive relief, therefore, is
immediate and necessary to enjoin the City’s impermissible taking of EMF’s
Property in violation of EMF’s rights under Texas law and the United States
Constitution.

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Complaint and Appl. for TRO ¶ 6.
II.

Subject Matter Jurisdiction
A federal court has subject matter jurisdiction over civil cases “arising under the

Constitution, laws, or treaties of the United States,” or over civil cases in which the amount in
controversy exceeds $75,000, exclusive of interest and costs, and in which diversity of citizenship
exists between the parties. 28 U.S.C. §§ 1331, 1332. Federal courts are courts of limited
jurisdiction and must have statutory or constitutional power to adjudicate a claim. Kokkonen v.
Guardian Life Ins. Co., 511 U.S. 375, 377 (1994) (citations omitted); Home Builders Ass’n of Miss.,
Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998). Absent jurisdiction conferred by
statute or the Constitution, they lack the power to adjudicate claims and must dismiss an action if
subject matter jurisdiction is lacking. Id.; Stockman v. Federal Election Comm’n, 138 F.3d 144, 151
(5th Cir. 1998) (citing Veldhoen v. United States Coast Guard, 35 F.3d 222, 225 (5th Cir. 1994)).
A federal court must presume that an action lies outside its limited jurisdiction, and the burden of
establishing that the court has subject matter jurisdiction to entertain an action rests with the party
asserting jurisdiction. Kokkonen, 511 U.S. at 377 (citations omitted). “[S]ubject-matter jurisdiction
cannot be created by waiver or consent.” Howery v. Allstate Ins. Co., 243 F.3d 912, 919 (5th Cir.
2001).
Federal courts may also exercise subject matter jurisdiction over a civil action removed from
a state court. Unless Congress provides otherwise, a “civil action brought in a State court of which
the district courts of the United States have original jurisdiction, may be removed by the defendant
or defendants, to the district court of the United States for the district and division embracing the
place where such action is pending.” 28 U.S.C. § 1441(a).

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A federal court has an independent duty, at any level of the proceedings, to determine
whether it properly has subject matter jurisdiction over a case. Ruhgras AG v. Marathon Oil Co.,
526 U.S. 574, 583 (1999) (“[S]ubject-matter delineations must be policed by the courts on their own
initiative even at the highest level.”); McDonal v. Abbott Labs., 408 F.3d 177, 182 n.5 (5th Cir.
2005) (A “federal court may raise subject matter jurisdiction sua sponte.”) (citation omitted).
III.

Analysis
Having reviewed EMF’s Complaint and Application for TRO, as well as the appendix

submitted in support, the court concludes it lacks federal subject matter jurisdiction over
Plaintiff’s claims pursuant to the Rooker-Feldman doctrine and, alternatively, because Plaintiff’s
federal takings claim is not ripe.
A.

The Rooker-Feldman Doctrine

Because the Rooker-Feldman doctrine is jurisdictional, the court must address this issue
first. As summarized by the Fifth Circuit:
“Reduced to its essence, the Rooker–Feldman doctrine holds that inferior federal
courts do not have the power to modify or reverse state court judgments” except
when authorized by Congress. Union Planters Bank Nat’l Ass’n v. Salih, 369 F.3d
457, 462 (5th Cir.2004) (internal quotation marks and citation omitted); see
generally 18B Charles Alan Wright et al., Federal Practice and Procedure § 4469.1
(2d ed. 2002 & Supp.2012). The Supreme Court has explained that the doctrine is a
narrow one and “is confined to ... cases brought by state-court losers complaining of
injuries caused by state-court judgments rendered before the district court
proceedings commenced and inviting district court review and rejection of those
judgments.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284, 125
S.Ct. 1517, 161 L.Ed.2d 454 (2005).
Truong v. Bank of Am., N.A., 717 F.3d 377, 382 (5th Cir. 2013).
In seeking injunctive relief, EMF informs the court that:
[it] does not seek this court to enjoin any actions of the State Court Judge, the State
Court Final Judgment, or interfere in the appellate process thereof. Rather, EMF
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contends that the City’s Stop Work Order was issued independently of the State
Court Final Judgment and EMF now seeks to enjoin the deleterious effects of the
Stop Work Order or any actions in reliance thereon.
Compl. and Appl. for TRO at 11 note 6.* Plaintiff’s contention that it is not asking this court to
interfere with or nullify the trial court’s decision granting summary judgment in favor of the HOA
or to interfere with the appellate process is not persuasive and contradicts its contentions made to
the state district court in seeking to stay enforcement of the final judgment in favor of the HOA. For
example, in its Emergency Motion to Stay Enforcement of the September 11, 2017 Final Judgment
filed in the State Court Action, EMF argued that the “Court’s Final Judgment and the resulting
September 14, Stop Work Order imposed by the City would cause irreparable and immediate injury
not only to EMF, but also to its third- party subcontractors and their workers.” See Intervenor’s
Emergency Mot. to Stay Enforcement of September 11, 2017 Final Judgment at 2 filed in Peaks
Addition Homeowners Association v. City of Dallas, et al., Cause No. DC-17-02532, in the 134th
Judicial District Court, Dallas County, Texas. EMF further requested in its prayer for relief that
“the Court grant [its] Motion and stay any enforcement of the September 11, 2017 Final Judgment
and the resultant Stop Work Order pending [the Court’s] consideration of [its] Motion for New
Trial and other post-judgment motions.” Id. at 11. Clearly, and as illustrated by EMF’s numerous
attempts to stay enforcement of the judgment and, concomitantly, the Stop Work Order, the Stop
Work Order and the court’s September 11, 2017 final judgment are inextricably intertwined. To
suggest otherwise would smack of a legal fiction.

*

Although the state district court judge remarked that he never ordered the City to issue a Stop Work
Order on the Project, a fair reading of his order granting summary judgment in the HOA’s favor and ruling
against the City would cause a reasonable person to conclude that the permits should never have been issued,
which would necessarily require a work stoppage on the Project.
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In short, based on the court’s reading of Complaint and Application for TRO, as well as the
court’s review of the documents filed in the State Court Action, the court determines that Plaintiff
is inviting the court to review and reject a final order of the state court that is currently on appeal.
Pursuant to the Rooker-Feldman doctrine, this court lacks subject matter jurisdiction over this
lawsuit. Moreover, even were the court to conclude that the Rooker-Feldman doctrine did not
deprive it of subject matter jurisdiction, the court determines that Plaintiff’s federal Takings Clause
claim is not ripe.
B.

Ripeness

The Takings Clause of the Fifth Amendment made applicable to the States through the
Fourteenth Amendment, Chicago, B & Q.R. Co. v. Chicago, 166 U.S. 228 (1897), directs that
“private property” shall not “be taken for public use without just compensation.” U.S. Const.
amend. V. The Supreme Court has recognized that a taking may occur when a governmental entity
exercises its power of eminent domain through formal condemnation proceedings, see, e.g., Loretto
v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 425-26 (1982), or deprives a property owner
of all economically beneficial use of his property. See, e.g., Lucas v. South Carolina Coastal
Comm’n, 505 U.S. 1003, 1019 (1997); Nathan v. California Coastal Comm’n, 483 U.S. 825 (1987).
The court has an independent duty to determine whether Plaintiff’s Takings Clause claim is
ripe. See Urban Developers LLC v. City of Jackson, Mississippi, 468 F.3d 281, 292 (5th Cir. 2006)
(sua sponte raising issue of whether a Takings Clause claim was ripe). “Ripeness is a question of
law that implicates [the] court’s subject matter jurisdiction.” Id. (citations omitted).
As summarized by the Fifth Circuit:
The Supreme Court has adopted a two-prong test for ripeness under the Fifth
Amendment’s Takings Clause, explaining that such claims are not ripe until (1) the
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relevant governmental unit has reached a final decision as to how the regulation will
be applied to the landowner; and (2) the plaintiff has sought compensation for the
alleged taking through whatever adequate procedures the state provides.
Id. at 292-93 (citing Williamson County Reg’l Planning Comm’n v. Hamilton Bank of Johnson City,
473 U.S. 172 (1985)); see also Vulcan Materials Co. v. City of Tehuacana, 238 F.3d 382, 385 (5th
Cir. 2001) (“[F]or a federal takings claim to become ripe, the plaintiff is required to seek
compensation through the procedures the state has provided unless those procedures are unavailable
or inadequate.”).
In this action, Plaintiff, invoking federal question jurisdiction, is alleging that the Stop Work
Order, resulting from the final judgment in favor of the HOA in the State Court Action, constitutes
an inverse condemnation and impermissible takings in violation of the Fifth and Fourteenth
Amendments to the United States Constitution and Article I, Section 17 of the Texas Constitution.
Under Williamson, however, Plaintiff may not bring his federal Takings Clause claim until he has
sought “compensation through the procedures the State has provided for doing so.” 473 U.S. at 194;
see also Vulcan Materials, 238 F.3d at 385 (“[F]or a federal takings claim to become ripe, the
plaintiff is required to seek compensation through the procedures the state has provided unless those
procedures are unavailable or inadequate.”). Under Texas law, EMF has an inverse condemnation
suit available to it but has not pursued this avenue, choosing instead to file its claim in federal court.
See Trail Enters., Inc. v. City of Houston, 957 S.W.2d 625, 630-31 (Tex. 1997) (“If the government
appropriates property without paying adequate compensation, the owner may recover the resulting
damages in an ‘inverse condemnation suit.’”).
Plaintiff has failed to show that state procedures are either unavailable or inadequate.
Instead, Plaintiff has brought his federal Takings Clause claim and his state law claim in one federal

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action, with his state law claim before the court as pendent to its federal claim. As stated by the
Fifth Circuit, in a case where a plaintiff sought to bring both a state and federal takings claim in
federal court based, and where jurisdiction was based entirely on federal question jurisdiction under
28 U.S.C. § 1331 and supplemental jurisdiction under 28 U.S.C. § 1367:
[A] federal district court could not exercise jurisdiction over a state law claim that
is pendent to a claim over which the federal courts would have no jurisdiction.
Assuming a takings claim were the only federal claim asserted in the complaint, the
court could not exercise jurisdiction over the pendent state compensation claim, for
the federal takings claim on which jurisdiction over the state claim would be
contingent would not yet be ripe. The circularity of plaintiffs’ suggested procedure
proves fatal.
Samaad v. City of Dallas, 940 F.2d 925, 933-35 (5th Cir. 1991), abrogated on other grounds by Stop
the Beach Renourishment, Inc. v. Florida Dep’t of Envtl. Prot., 560 U.S. 702, 728 (2010). In sum,
because Plaintiff failed to seek just compensation for the alleged inverse condemnation or taking of
its property by a regulatory authority through procedures available under state law, its federal
Takings Clause claim is not ripe for adjudication. See Williamson, 473 U.S. at 195; Vulcan
Materials, 238 F.3d at 385-86.
IV.

Conclusion
For these reasons, the court, sua sponte, determines that it lacks federal subject matter

jurisdiction. Accordingly, this action is dismissed without prejudice.
It is so ordered this 8th day of November, 2017.

_________________________________
Sam A. Lindsay
United States District Judge

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