Military Road Revitalization Company, LLC v. St. Tammany Parish Government

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

MILITARY ROAD REVITALIZATION CIVIL ACTION

COMPANY, LLC ET AL.

VERSUS No. 24-55

ST. TAMMANY PARISH GOVERNMENT SECTION I

ORDER & REASONS

Two motions are pending before the Court. First is a motion1 filed by defendant

St. Tammany Parish Government (“St. Tammany”) to dismiss this matter pursuant

to Federal Rule of Civil Procedure 12(b)(1) or, alternatively, to stay this matter.

Second is a motion2 to dismiss all claims against defendant Safety National Casualty

Corporation (“Safety National”) pursuant to Federal Rule of Civil Procedure 12(b)(6).

Plaintiffs, Military Road Revitalization Company, LLC (“Military Road”) and BCP

Northshore Properties, LLC (“BCP”) (collectively, “plaintiffs”), oppose St. Tammany’s

motion to dismiss.3 Military Road also opposes Safety National’s motion to dismiss.4

St. Tammany and Safety National both filed replies.5

For the reasons that follow, the Court grants in part and denies in part St.

Tammany’s motion to dismiss and denies Safety National’s motion to dismiss. The

Court also grants Military Road leave to amend its complaint.

1 R. Doc. No. 21.

2 R. Doc. No. 22.

3 R. Doc. No. 25.

4 R. Doc. No. 26.

5 R. Doc. Nos. 27, 28.

I. BACKGROUND

Plaintiffs filed the instant lawsuit on January 5, 2024.6 On February 23, 2024,

plaintiffs filed their first amended complaint.7 Plaintiffs allege that “St. Tammany

Parish has a significant need for affordable housing” partially caused by “being

predominately zoned for single-family housing[.]”8

According to plaintiffs, despite recognizing the need for affordable housing and

despite St. Tammany’s demographics, St. Tammany “acted to prevent the

construction of an affordable, multifamily housing development[.]”9 Specifically,

Military Road—a developer—planned to develop a project known as the “Covington

Trace Ridge Apartments” on a 5.328 acre lot located at 72147 Military Road in

Covington, Louisiana.10 The property is listed as HC-2 Highway Commercial on the

official St. Tammany zoning map.11 A “permitted use” of property located in the HC-

2 Highway Commercial District includes “[l]odging, 100 rooms or less (including

apartments, hotels, motels).”12 Plaintiffs assert that permitted uses are considered

“by right” and do not require approval from St. Tammany’s Zoning Commission,

Planning Commission, or Parish Council.13

6 R. Doc. No. 1.

7 R. Doc. No. 10.

8 Id. ¶¶ 12, 14.

9 Id. ¶ 34.

10 Id. ¶ 35.

11 Id. ¶ 36.

12 Id. ¶¶ 39–40 (quoting St. Tammany Parish Unified Development Code, art. V § 130-

917).

13 Id. ¶ 41 (citing St. Tammany Parish Unified Development Code, art. IV § 130-

918(a); id. art. VII § 130-2213).

The amended complaint further alleges that Military Road (the developer) and

BCP (the former owner of the land and improvements located at the property)

executed a purchase and sale agreements in which BCP agreed to sell and Military

Road agreed to purchase all of BCP’s right, title, and interest in and to the property.14

Plaintiffs allege that Military Road has been “working with BCP, engaging with

government officials, cooperating with utility providers, and seeking to ensure

environmental compliance for the [p]roject” since “early 2022[.]”15

Plaintiffs further allege that the project would be a 100-unit, mixed-income

community because 51% of the units target households with income levels of 80% or

less of the area median income and households with at least one member with a

disability.16 Additionally, plaintiffs allege that, “[b]ased on the HC-2 Highway

Commercial zoning and guidance from the St. Tammany Planning and Permits

Department, [Military Road] has incurred approximately $2 million [in] land

acquisition costs, legal fees, development fees, consulting and professional service

fees, government agencies permits and fees, engineering and design fees, and

management fees[.]”17

The amended complaint asserts that, on May 4, 2023, the St. Tammany Parish

Council (the “Parish Council”) introduced “an ordinance imposing a moratorium on

rezoning and/or permitting for the construction of multifamily buildings” in certain

14 Id. ¶ 42.

15 Id. ¶ 43.

16 Id. ¶ 44.

17 Id. ¶ 51.

parts of the parish.18 This May 4, 2023 ordinance did not apply to property zoned as

“HC.”19

On May 9, 2023, Military Road presented the project to several government

officials.20 During this meeting, Councilman David R. Fitzgerald allegedly “expressed

outrage” and “stated that his constituents would ‘hate’ the [p]roject and be very upset

with him if it got built.”21

Plaintiffs further assert that, at the Parish Council’s May 18, 2023 meeting,

the Parish Council introduced an amended version of the moratorium ordinance,

which amended the May 4, 2023 version to apply to “Highway Commercial Zoning

Classifications with Lodging (including apartments, hotels, and motels)[.]”22

Plaintiffs allege that the moratorium ordinance “was clearly targeted and retaliatory,

specifically aimed to stop the [p]roject, and in particular, to keep out workforce or

low-to-moderate income residents, who are mostly African American[s] and

Hispanics, in the affluent neighborhood adjacent to the [p]roperty.”23 The Parish

Council also allegedly “prepared a resolution to ‘investigate’ the Parish President for

allowing the [p]roject[.]”24

18 Id. ¶ 55.

19 Id. ¶ 56.

20 Id. ¶ 57.

21 Id. ¶¶ 58–59.

22 Id. ¶ 64.

23 Id. ¶ 66.

24 Id. ¶ 61.

At its June 1, 2023 meeting, the Parish Council adopted the moratorium

ordinance and the investigation resolution.25 The purpose of the moratorium

ordinance was purportedly to address concerns that population growth has outpaced

improvements to traffic and drainage infrastructure, though plaintiffs allege that this

reasoning was “pretextual” in light of the Louisiana Office of Community

Development’s determination that the project would have no significant impact on

the human or natural environment.26

On June 30, 2023, Military Road filed a lawsuit against St. Tammany in the

22nd Judicial District Court for St. Tammany Parish.27 In that lawsuit, Military Road

sought a judgment declaring the moratorium ordinance null and void under state law

and/or a judgment declaring that the project was exempt from the moratorium

ordinance.28 The state district court denied Military Road’s request for a preliminary

injunction.29 At the time plaintiffs’ amended complaint was filed, that determination

was “the subject of a supervisory writ application with the Louisiana First Circuit

Court of Appeal.”30 However, plaintiffs have now advised the Court that the

Louisiana First Circuit Court of Appeal granted Military Road’s writ application,

reversed the state district judge’s finding that Military Road did not have a right of

action, and found that Military Road had a right to appeal the trial court judgment.31

25 Id. ¶¶ 79–80.

26 Id. ¶¶ 81, 68.

27 Id. ¶ 88.

28 Id.

29 Id. ¶ 90.

30 Id.

31 R. Doc. No. 25, at 9.

On December 7, 2023, the Parish Council extended the moratorium

ordinance.32 It also considered an ordinance to rename and reorganize the Unified

Development Code, including by removing the word “apartments” as a permitted use

in certain zoned property, including property zoned HC-2.33 The Parish Council also

“amended and re-introduced an amendment that exempted the [p]roperty from the

changes to the Unified Development Code.”34 On December 18, 2023, the Parish

Council considered and rejected a resolution that would have authorized the Parish

President to negotiate and execute a consent judgment and settlement and release

agreement with respect to this dispute, vacated the moratorium ordinance to exclude

the project, and authorized the Parish President to “apply [federal Community

Development Block Grant] funds for the development of the [p]roject.”35

Plaintiffs allege that St. Tammany’s “tacit endorsement” of the discriminatory

sentiments espoused by the project’s opponents “has the intent and effect of

retaliating against [p]laintiffs for proposing an affordable housing complex in

Covington and [of] chilling [p]laintiffs and others from proposing similar

developments in the future.”36 Plaintiffs assert that, because of the moratorium

ordinance, they could not seek or obtain necessary permits or start work on the

32 R. Doc. No. 10, ¶ 92.

33 Id. ¶ 93.

34 Id. ¶ 94.

35 Id. ¶¶ 96–97.

36 Id. ¶ 112.

project.37 Plaintiffs further assert that delaying the project risked stopping it

altogether through increased interest rates, increased costs, or lost funding.38

Accordingly, plaintiffs allege that they have suffered and will suffer injuries,

including economic losses and “the deprivation of the right to develop affordable

housing for individuals free from discrimination on the basis of race or disability.”39

Plaintiffs allege that St. Tammany’s actions in blocking the development of the

project have a disparate impact on protected classes, including by limiting housing

opportunities for African Americans, Hispanics, and persons with disabilities who

would live in the proposed apartments.40 Specifically, plaintiffs allege that the

parish’s actions have the purpose and effect of perpetuating racial segregation and

that the parish’s actions constitute unlawful interference with housing opportunities

on the basis of race or disability.41 Additionally, plaintiffs allege that, based on a

liability policy issued by Safety National to St. Tammany, Safety National insures

the “wrongful act” alleged in plaintiffs’ amended complaint.42

Plaintiffs’ amended complaint asserts six claims. First, plaintiffs allege that

St. Tammany’s moratorium ordinance and “repeated refusal to fully permit the

development and construction of the project” violated the Fair Housing Act (the

37 Id. ¶ 113. As the Court will explain more fully below, on April 24, 2024, St.

Tammany passed a resolution vacating in part the moratorium ordinance with

respect to the property.

38 Id. ¶ 114.

39 Id. ¶ 119.

40 Id. ¶¶ 111, 115.

41 Id. ¶¶ 116–17.

42 Id. ¶¶ 119a–19y.

“FHA”) and its implementing regulations.43 Second, plaintiffs allege that St.

Tammany violated plaintiffs’ rights under the Louisiana Equal Housing Opportunity

Act.44 Third, plaintiffs allege that St. Tammany violated the Americans With

Disabilities Act (the “ADA”) and the Rehabilitation Act.45 Fourth, plaintiffs allege

that St. Tammany violated plaintiffs’ rights under Title VI of the Civil Rights Act of

1964.46 Fifth, plaintiffs allege that St. Tammany deprived plaintiffs of due process

property and liberty interests pursuant to the Fifth and Fourteenth Amendments of

the U.S. Constitution and the Louisiana Constitution.47 Sixth, plaintiffs assert a

claim against Safety National under Louisiana’s Direct Action Statute.48

Accordingly, plaintiffs request declaratory judgments that St. Tammany’s

actions violated the FHA, the ADA, the Rehabilitation Act, the Louisiana Equal

Housing Opportunity Act, and Title VI of the Civil Rights Act.49 Plaintiffs further

request a declaratory judgment that the moratorium ordinance was adopted in

43 Id. ¶¶ 120–63. Specifically, Count 1 asserts that the Parish violated 42 U.S.C.

§ 3604 (which makes it unlawful to “make unavailable or deny[] a dwelling to any

person because of race, color, religion, sex, familial status, or national origin”) and 42

U.S.C. § 3617 (which makes it unlawful to interfere with any person . . . on account

of his having aided or encouraged any other person in the exercise or enjoyment of[]

any right granted or protected by [various sections] of this title”).

44 Id. ¶¶ 164–71. The Louisiana Equal Opportunity Act makes it unlawful to “make

unavailable or deny[] a dwelling to any person because of race, color, religion, sex,

familial status, national origin, or natural, protective, or cultural hairstyle.” La. Rev.

Stat. 51:2606A(1).

45 Id. ¶¶ 172–80.

46 Id. ¶¶ 181–87.

47 Id. ¶¶ 188–206.

48 Id. ¶¶ 207–12.

49 Id. at 59–60.

violation of the Fifth and Fourteenth Amendments of the U.S. Constitution.50

Additionally, plaintiffs request a judgment declaring defendants “be held jointly,

severally, and/or solidarily liable with each other for all damages, fees, and costs

suffered by [p]laintiffs[.]”51 Finally, plaintiffs request compensatory and/or punitive

damages.52

On April 9 and April 10, 2024, defendants filed the present motions to dismiss.

According to plaintiffs’ opposition, on April 24, 2024, St. Tammany passed a

resolution that vacated, in part, the moratorium ordinance with respect to the

property.53 However, plaintiffs contend that St. Tammany’s belated removal of the

moratorium ordinance (after the Parish learned that there would be a closing sale of

the property to a third-party buyer such that it could anticipate that Military Road

would not construct its project at the property) “does not unwind the clocks and erase

the damages that [Military Road] already suffered as a result of the Parish’s unlawful

acts in 2023.”54

II. LAW & ANALYSIS

a. St. Tammany’s Motion to Dismiss or Stay

The Court first considers St. Tammany’s motion to dismiss the claims asserted

against it pursuant to Federal Rule of Civil Procedure 12(b)(1) or, alternatively, to

50 Id.

51 Id.

52 Id. at 59–61.

53 R. Doc. No. 25, at 9–10.

54 Id. at 10.

stay this matter.55 First, St. Tammany argues that the Court should dismiss BCP’s

claims because the complaint does not state a valid claim on behalf of BCP.56 Second,

St. Tammany argues that the Court should dismiss all claims in this matter pursuant

to Rule 12(b)(1) because they are not ripe.57 Third, St. Tammany argues that, if the

Court does not dismiss the claims, it should stay “the remainder of these proceedings”

pending resolution of the state court lawsuit.58

In response, plaintiffs assert that BCP’s alleged injury is moot as of April 30,

2024, the date BCP sold the property.59 However, plaintiffs argue that Military

Road’s claims against St. Tammany are ripe.60 They also contend that the Court

should not stay the case, but rather exercise its jurisdiction over the claims in this

matter because the state court litigation will not dispose of the federal claims at issue

in this case.61 Alternatively, Military Road requests leave to amend its complaint.62

In reply, St. Tammany emphasizes that plaintiffs concede “BCP has no

claim[.]”63 St. Tammany also asserts that the opposition does not carry Military

Road’s burden of establishing ripeness based on the unfinished permitting process.64

55 R. Doc. No. 21.

56 R. Doc. No. 21-1, at 13–15. Throughout this order, the Court refers to the pagination

stamped by the Clerk’s Office at the top of this filing, not the different pagination at

the bottom of this filing.

57 Id. at 16–22.

58 Id. at 22–33.

59 R. Doc. No. 25, at 24.

60 Id. at 11–17.

61 Id. at 17–24.

62 Id. at 25.

63 R. Doc. No. 27, at 1–2.

64 Id. at 2–7.

Finally, St. Tammany argues that the opposition does not undermine the parallelism

between the instant matter and the state court case and criticizes Military Road’s

analysis of the factors relevant to the abstention analysis.65

i. Rule 12(b)(1) Standard of Law

“Federal courts are courts of limited jurisdiction; without jurisdiction conferred

by statute, they lack the power to adjudicate claims.” In re FEMA Trailer

Formaldehyde Prod. Liab. Litig., 668 F.3d 281, 286 (5th Cir. 2012). Pursuant to

Federal Rule of Civil Procedure 12(b)(1), “a claim is ‘properly dismissed for lack of

subject-matter jurisdiction when the court lacks the statutory or constitutional power

to adjudicate’ the claim.” Id. (quotation omitted). Courts are to consider a Rule

12(b)(1) jurisdictional argument before addressing any other arguments on the

merits. Id. (citing Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001)).

When ruling on a Rule 12(b)(1) motion, a court may dismiss an action for lack

of subject matter jurisdiction “on any one of three separate bases: (1) the complaint

alone; (2) the complaint supplemented by undisputed facts evidenced in the record;

or (3) the complaint supplemented by undisputed facts plus the court’s resolution of

disputed facts.” Spotts v. United States, 613 F.3d 559, 565–66 (5th Cir. 2010) (quoting

St. Tammany Par., ex rel. Davis v. Fed. Emergency Mgmt. Agency, 556 F.3d 307, 315

(5th Cir. 2009)). “The burden of proof for a Rule 12(b)(1) motion to dismiss is on the

party asserting jurisdiction.” Ramming, 281 F.3d at 161. If a court determines that it

does not have subject matter jurisdiction over an action, the action is dismissed

65 Id. at 7–10.

without prejudice. See, e.g., Hitt v. City of Pasadena, 561 F.2d 606, 608 (5th Cir. 1977).

ii. Subject Matter Jurisdiction Over BCP’s Claims

The Court first decides whether it has subject matter jurisdiction over BCP’s

claims against defendants. As the U.S. Court of Appeals for the Fifth Circuit has

explained, “[m]ootness is the doctrine of standing in a time frame. The requisite

personal interest that must exist at the commencement of litigation (standing) must

continue throughout its existence (mootness).” Env’t Conservation Org. v. City of

Dallas, 529 F.3d 519, 524–25 (5th Cir. 2008) (cleaned up). “If a case has been rendered

moot, a federal court has no constitutional authority to resolve the issues it presents.”

Id. at 525.

In response to St. Tammany’s motion to dismiss, plaintiffs assert that—

although in their view BCP had standing when this lawsuit was filed—BCP’s alleged

injury is now moot because BCP sold the property on April 30, 2024.66 Accordingly,

the Court will dismiss BCP’s claims against defendants as moot pursuant to Rule

12(b)(1).

iii. Subject Matter Jurisdiction Over Military Road’s Claims

The Court next decides whether it has subject matter jurisdiction over Military

Road’s claims against defendants. “Article III of the United States Constitution

provides that federal courts have the power to decide only actual cases or

controversies.” Choice, Inc. of Tex. v. Greenstein, 691 F.3d 710, 714–15 (5th Cir. 2012).

“The justiciability doctrines of standing, mootness, political question, and ripeness all

66 R. Doc. No. 25, at 24.

originate in Article III’s ‘case’ or ‘controversy’ language.” Id. at 715 (cleaned up). “The

ripeness doctrine is also drawn from prudential reasons for refusing to exercise

jurisdiction.” Id. (cleaned up). “The ripeness doctrine’s basic rationale is to prevent

the courts, through avoidance of premature adjudication, from entangling themselves

in abstract disagreements.” Id. (cleaned up).

“A court should dismiss a case for lack of ripeness when the case is abstract or

hypothetical.” Id. (cleaned up). “The key considerations are the fitness of the issues

for judicial decision and the hardship to the parties of withholding court

consideration.” Id. (cleaned up). “A case is generally ripe if any remaining questions

are purely legal ones; conversely, a case is not ripe if further factual development is

required.” Id. (cleaned up). “However, even where an issue presents purely legal

questions, the plaintiff must show some hardship in order to establish ripeness.” Id.

(cleaned up).

St. Tammany argues that the Court should dismiss the complaint as unripe

since Military Road “voluntarily abandoned” the process of applying for certain

necessary permits.67 Specifically, St. Tammany argues that Military Road “has failed

and refused to address [ ] approximately 100 deficiencies in the permit applications,

which must be resolved prior to the issuance of the requested permits.”68 Accordingly,

St. Tammany argues that Military Road’s claims are merely speculative as they

depend entirely on contingent future events—namely, the finalization of the

67 R. Doc. No. 21-1, at 16–17.

68 Id. at 17.

government process for determining whether the project may go forward.69

The Court recognizes that Military Road’s permit applications are incomplete

and that there are ninety-nine outstanding “comments” or “deficiencies” which

Military Road has not addressed.70 Many of these deficiencies are significant. For

example, there is an unaddressed comment related to the property’s “limits of fill”

because the property is located in a “Critical Drainage Area” and subject to a “No Net

Fill” requirement.71 Additionally, there are unaddressed comments relating to

Military Road’s failure to obtain permits from the Louisiana Department of

Transportation and Development for work under a state highway and Military Road’s

failure to provide structural calculations stamped by a licensed professional engineer

regarding the safety of a proposed aluminum guardrail.72

Notably, however, one of the “deficiencies” or “comments” cited by St.

Tammany’s engineers in the markup summary for the project was the existence of

the very same moratorium Military Road challenges in the instant lawsuit.73

“Especially where it is clear that an application would be denied, ripeness doctrine

does not require litigants to ‘press on meaninglessly’ by going through a futile

application process.” Brookline Opportunities, LLC v. Town of Brookline, 682 F. Supp.

69 Id.

70 R. Doc. No. 21-9 (declaration of Theodore Reynolds, Assistant Director of the

Engineering Department for St. Tammany Parish), at 3.

71 Id. at 3.

72 Id. at 4.

73 R. Doc. No. 21-10, at 115 (“Property currently under a moratorium per Council Od.

23-5152 on the issuance of permits for new construction or placement of any new

residential building structures in a multi-family residential district (A-6 through A-

8), or Highway Commercial Zoning Classifications.”).

3d 168, 181–82 (D.N.H. 2023) (quoting Pinchback v. Armistead Homes Corp., 907 F.2d

1447, 1452 (4th Cir. 1990) and citing Sharpivisons, Inc. v. Borough of Plum, 475 F.

Supp. 2d 514, 522 (W.D. Pa. 2007)); see also BMG Monroe I, LLC v. Vill. of Monroe,

93 F.4th 595, 601 (2d Cir. 2024) (recognizing futility exception to rule that an FHA

claim alleging discriminatory enforcement of zoning regulations is not ripe until the

government entity charged with implementing the regulations has reached a final

decision); Oxford House, Inc. v. City of Baton Rouge, La., 932 F. Supp. 2d 683, 691

(M.D. La. 2013) (W.D. La. Aug. 3, 2016) (explaining that, if a request for an

accommodation would be futile or foredoomed, then the plaintiff is not required to

make such a request before asserting a reasonable accommodation claim).

Accordingly, the Court finds that the instant lawsuit is ripe despite Military Road’s

failure to complete the permit process.

St. Tammany cites several Fifth Circuit cases holding that a takings claim is

not ripe until the relevant governmental unit has reached a final decision as to what

will be done with the property.74 These cases are distinguishable. Indeed, the Fifth

Circuit has explicitly stated that, because a violation under the FHA occurs when a

person is first denied a reasonable accommodation, irrespective of the remedies

granted in subsequent proceedings, “ripeness in the Fair Housing Act context must

be distinguished from ripeness cases involving unconstitutional takings or other

zoning issues.” Groome Resources Ltd., L.L.C. v. Parish of Jefferson, 234 F.3d 192,

74 Id. at 17–18 (citing Sandy Creek Investors, Ltd. v. City of Jonestown, Tex., 325 F.3d

623, 626, 626 (5th Cir. 2003) and Urban Developers LLC v. City of Jackson, Miss., 468

F.3d 281, 292 (5th Cir. 2006)).

199 n.6 (5th Cir. 2000) (citing Bryant Woods Inn, Inc. v. Howard Cnty., Md., 124 F.3d

597, 602 (4th Cir. 1997)); see also Bryant Woods, 124 F.3d. at 602 (“Fair Housing Act

claims are thus unlike takings claims, which do not ripen until post-decisional

procedures are invoked without achieving a just compensation.”).75

St. Tammany also relies on Urban Developers for the proposition that, even

outside the takings context, a claim is unripe when “it is mere speculation and

conjecture whether the project the plaintiff seeks to complete can happen.”76 Urban

Developers involved federal procedural due process claims under 42 U.S.C. § 1983 as

well takings claims. Urban Developers, 48 F.3d at 287. In analyzing the ripeness of

the plaintiff’s procedural due process claims, the Urban Developers court relied on

“general ripeness principles”—namely, “the fitness of the issues for judicial decision

and the hardship to the parties of withholding court consideration”—as opposed to

the specific ripeness principles that apply in the takings context. Id. at 295. Pursuant

to those principles, the court found the procedural due process claims to be unripe

because they rested upon a “contingent future event”: the deprivation of property

without due process of law. Id. at 295–96. Since the city had not yet made a final

determination about whether it would issue a building permit or condemn the

property, the court could not properly evaluate its procedural due process claim based

on the deprivation of property.

75 The Court notes that the Urban Developers court conducted two different ripeness

analyses: one for the takings claims, and another for the remaining constitutional

claims. See Urban Developers, 468 F.3d at 292–96.

76 R. Doc. No. 21-1, at 18.

Urban Developers is instructive with respect to Military Road’s procedural due

process claims. Specifically, Military Road alleges that St. Tammany deprived it of

its “property and liberty interests under color of law without due process of law in

violation of the Due Process Clause of the Fourteenth Amendment to the U.S.

Constitution and the Louisiana Constitution.”77 The Fifth Circuit has explained that,

where a permitting process has not yet run its course, due process claims are

“‘abstract and hypothetical’ and thus unripe for judicial review.” Monk v. Huston, 340

F.3d 279, 282–83 (5th Cir. 2003) (quoting New Orleans Pub. Serv., Inc. v. Council of

New Orleans, 833 F.2d 583, 586 (5th Cir. 1987). Accordingly, the Court will dismiss

St. Tammany’s procedural due process claims as unripe.

Next, St. Tammany cites Discovery Real Est. & Dev., L.L.C. v. Town of St.

Francisville, No. 22-605, 2022 WL 5265142 (M.D. La. Oct. 6, 2022). In that case, the

court dismissed a developer’s FHA claim against a town for lack of standing and lack

of ripeness. Discovery, 2022 WL 5265142, at *1, 14–15. The developer alleged FHA

violations based on changes to a comprehensive zoning ordinance (“CZO”) which post-

dated a moratorium on new developments of any “major subdivision” and new multi-

unit residential structures. Id. at *1, 4–6. The preexisting moratorium was based on

problems the town faced with its sewer system. Id. at *4–6.

The Discovery court concluded that the developer lacked standing because any

injury was caused by the preexisting moratorium rather than the changes to the CZO

and any injury would not be redressed by a court order preventing enforcement of the

77 R. Doc. No. 10, ¶ 190.

changes to the CZO. Id. at *14. The Court also concluded that, even if the plaintiff

had standing, its FHA claim was unripe because the case would benefit from further

factual development, including whether the moratorium would be extended, whether

the town’s sewage plant would be completed on time, and whether that would remedy

the town’s sewage and flooding issues. Id. However, as plaintiffs point out, Discovery

is distinguishable because it involved a challenge to changes to a CZO which could

not redress the developer’s injury because of the existence of a separate moratorium.

In this case, by contrast, there was no separate barrier to the development beyond

the moratorium ordinance.

Finally, although no party suggests Military Road’s claims for declaratory

judgments are moot, the Court must consider whether such claims are moot in light

of the vacatur of the moratorium. See Bailey v. Southerland, 821 F.2d 277, 278 (5th

Cir. 1987) (“In the absence of its being raised by a party, this court is obliged to raise

the subject of mootness sua sponte.”). “For a declaratory judgment to issue, there must

be a dispute which ‘calls, not for an advisory opinion upon a hypothetical basis, but

for an adjudication of present right upon established facts.’” Ashcroft v. Mattis, 431

U.S. 171, 172 (1977) (quoting Aetna Life Ins. v. Haworth, 300 U.S. 227, 242 (1937));

see also Bauer v. Texas, 341 F.3d 352, 358 (5th Cir. 2003).

Importantly, in addition to declaratory relief, Military Road seeks

compensatory and/or punitive damages based on St. Tammany’s alleged conduct in

enacting the moratorium ordinance. Military Road alleges that the ordinance caused

it to incur $2 million in economic losses and caused it to suffer the deprivation of the

right to develop affordable housing free from discrimination.78 The vacatur of the

moratorium ordinance does not annul these alleged past damages, so they constitute

present harm. The Court therefore finds that Military Road’s claims are not moot.

Accordingly, the Court will dismiss BCP’s claims against both defendants

without prejudice as moot and dismiss Military Road’s procedural due process claims

without prejudice as unripe. The Court will deny St. Tammany’s motion to dismiss

for lack of subject matter jurisdiction in all other respects.

iv. Request for a Stay

St. Tammany next argues that the Court should stay the remainder of these

proceedings pending resolution of the state court litigation pursuant to Colorado

River Water Conservation District v. United States. 424 U.S. 800 (1976).79 “Generally,

as between state and federal courts, the rule is that the pendency of an action in the

state court is no bar to proceedings concerning the same matter in the [f]ederal court

having jurisdiction[.]” Id. at 817 (cleaned up).

However, pursuant to the Colorado River abstention doctrine, a federal court

may abstain from exercising its jurisdiction “based on considerations of wise judicial

administration, giving regard to conservation of judicial resources and

comprehensive disposition of litigation.” Afr. Methodist Episcopal Church v. Lucien,

756 F.3d 788, 797 (5th Cir. 2014) (cleaned up). “Colorado River abstention is a narrow

exception to a federal court’s virtually unflagging duty to adjudicate a controversy

78 R. Doc. No. 10, ¶¶ 52, 119.

79 R. Doc. No. 21-1, at 22–33.

that is properly before it. Under this doctrine, a federal court may abstain only under

exceptional circumstances.” Id.

In deciding whether to abstain pursuant to Colorado River, a federal court

must first determine whether the state and federal lawsuits are “sufficiently parallel

to make consideration of abstention proper.” Afr. Methodist Episcopal Church, 756

F.3d at 797. If the lawsuits are sufficiently parallel, a federal court must balance six

factors to determine whether exceptional circumstances warrant abstention:

1) assumption by either court of jurisdiction over a res, 2) relative

inconvenience of the forums, 3) avoidance of piecemeal litigation,

4) the order in which jurisdiction was obtained by the concurrent

forums, 5) to what extent federal law provides the rules of

decision on the merits, and 6) the adequacy of the state

proceedings in protecting the rights of the party invoking federal

jurisdiction.

Id. (quoting Stewart v. W. Heritage Ins. Co., 438 F.3d 488, 491 (5th Cir. 2006)).

The Court first considers whether the state and federal proceedings qualify as

parallel actions. Parallel actions involve “the same parties and the same issues[.]” Id.

at 797 (cleaned up). The Fifth Circuit has explained that “there need not be applied

in every instance a mincing insistence on the precise identity of parties and issues.”

Id. (cleaned up). This lawsuit and the state court lawsuit involve substantially the

same parties for purposes of the Colorado River inquiry. In the state lawsuit, Military

Road brought claims against St. Tammany.80 In the federal lawsuit, Military Road

and BCP brought claims against St. Tammany and its insurer, Safety National.81

80 See generally R. Doc. No. 21-8 (state court petition).

81 See generally R. Doc. No. 10.

However, BCP’s claims have now been dismissed as moot, leaving Military Road as

the only plaintiff. Further, as St. Tammany points out, Military Road has no

independent cause of action against Safety National since Safety National’s liability

is derivative of the alleged liability of its insured.

Mindful of its “virtually unflagging” duty to adjudicate a controversy that is

properly before it, however, the Court finds that the two lawsuits do not involve “the

same issues” for purposes of the Colorado River parallelism analysis. It is true that

the claims in both cases arise from the same set of facts: “the enactment of the

[m]oratorium [o]rdinance and that [o]rdinance’s effect on [Military Road’s]

construction of the [p]roject.”82

Importantly, though, if Military Road prevailed in the state court case, that

judgment would not resolve the question of whether St. Tammany violated the Fair

Housing Act or the other federal statutes cited in Military Road’s federal complaint.

Broadly, in the state court action, Military Road seeks: (1) a writ of mandamus

ordering St. Tammany to issue permits and ordering all comments to remove any

reference that the property is under the moratorium ordinance; (2) an injunction

enjoining St. Tammany from enforcing the moratorium ordinance; (3) declaratory

judgments that the moratorium ordinance is null and void and unconstitutional or

that the project is exempt from the moratorium; and (4) a judgment awarding

damages based on an unconstitutional taking.83 Even if Military Road obtained this

82 R. Doc. No. 21-1, at 24.

83 See generally R. Doc. No. 21-8.

relief, it would not resolve the questions at issue in this federal lawsuit—namely,

whether St. Tammany violated various federal statutes not at issue in the state

litigation and whether Military Road is entitled to damages based on those violations.

Accordingly, the Court finds that the two actions are not sufficiently parallel

to warrant Colorado River abstention. See, e.g., Liverpool FC Am. Mktg. Grp., Inc. v.

Red Slopes Soccer Found., No. 17-CV-00756, 2018 WL 2298388, at *5 (E.D. Tex. May

21, 2018) (finding no parallelism where a state court judgment would not resolve the

question raised by the federal lawsuit); Alpert v. Riley, No. 04-3774, 2011 WL 801978,

at *12 (S.D. Tex. Feb. 10, 2011) (finding no parallelism where “[t]he state court

litigation did not and will not dispose of the issues raised in [the] federal case”); cf.

Afr. Methodist Episcopal Church, 756 F.3d at 798 (finding parallelism where the state

court proceeding would necessarily dispose of all claims asserted by the plaintiff in

the federal action). The Court will therefore deny St. Tammany’s alternative request

to stay this lawsuit pursuant to Colorado River.84

b. Safety National’s Motion to Dismiss

The Court next considers Safety National’s motion to dismiss the claims

asserted against it pursuant to Federal Rule of Civil Procedure 12(b)(6).85 Safety

84 Because the Court concludes that the state court lawsuit and the federal court

lawsuit are not parallel, it need not address the six Colorado River factors. See Afr.

Methodist Episcopal Church, 756 F.3d at 797 (explaining that the parallelism inquiry

is “an initial step prior to application of the Colorado River factors”); Parada v.

Sandhill Shores Prop. Owners Ass’n, Inc., 604 F. Supp. 3d 567, 582 (S.D. Tex. 2022)

(“Accordingly, the court concludes that the state and federal proceedings are not

‘parallel actions,’ declines to abstain, and therefore need not consider the Colorado

River factors.”)

85 R. Doc. No. 22.

National argues that, if St. Tammany prevails on its motion to dismiss, plaintiffs’

claims against Safety National must also be dismissed or stayed because the

Louisiana Direct Action Statute merely creates a procedural right of action against

an insurer where a plaintiff has a substantive cause of action against the insured.86

Additionally, Safety National contends that plaintiffs’ claims against it should also

be dismissed because the amended complaint fails to allege facts suggesting that all

criteria of the Louisiana Direct Action Statute have been satisfied and because the

amended complaint fails to articulate the basis for the claims against Safety

National.87

Plaintiffs respond that the Court should deny Safety National’s motion to

dismiss because it should also deny St. Tammany’s motion to dismiss.88 Additionally,

plaintiffs argue that their claims against Safety National do satisfy Louisiana’s

Direct Action Statute.89 Alternatively, plaintiffs request leave to amend.90

In reply, Safety National first highlights plaintiffs’ concession that BCP’s

claims are moot and argues that the Court should dismiss those claims.91 Next, Safety

National reiterates its argument that, to the extent the Court grants St. Tammany’s

motion to dismiss, it should also grant Safety National’s motion to dismiss.92 Safety

National also contends that plaintiffs’ amended complaint is insufficiently specific to

86 R. Doc. No. 22-1, at 4–5.

87 Id. at 5–7.

88 R. Doc. No. 26, at 3.

89 Id. at 3–7.

90 Id. at 7.

91 R. Doc. No. 28, at 2.

92 Id. at 2–3.

put Safety National on notice of the claims being asserted against it.93 Finally, Safety

National argues that the Direct Action Statute does not permit Military Road’s claims

against Safety National.94

i. Rule 12(b)(6) Standard of Law

Rule 12(b)(6) of the Federal Rules of Civil Procedure allows for dismissal of a

complaint for “failure to state a claim upon which relief can be granted.” “To survive

a motion to dismiss, a complaint must contain sufficient factual matter, accepted as

true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009) (citation and internal quotations omitted). A claim is facially plausible

“when the plaintiff pleads factual content that allows the court to draw the reasonable

inference that the defendant is liable for the misconduct alleged.” Id. “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.” Culbertson v. Lykos,

790 F.3d 608, 616 (5th Cir. 2015) (citation omitted) (internal quotation marks

omitted).

“[T]he face of the complaint must contain enough factual matter to raise a

reasonable expectation that discovery will reveal evidence of each element of the

plaintiffs’ claim.” Hi-Tech Elec., Inc v. T&B Constr. & Elec. Servs., Inc., No. 15-3034,

2017 WL 615414, at *2 (E.D. La. Feb. 15, 2017) (Vance, J.) (emphasis added) (citing

Lormand v. US Unwired, Inc., 565 F.3d 228, 255–57 (5th Cir. 2009)). A complaint is

93 Id. at 3–5.

94 Id. at 5–7.

insufficient if it contains “only labels and conclusions, or a formulaic recitation of the

elements of a cause of action.” Whitley v. Hanna, 726 F.3d 631, 638 (5th Cir. 2013)

(citation and internal quotations omitted). It “must provide the defendant with fair

notice of what the plaintiff’s claim is and the grounds upon which it rests.” Dura

Pharms., Inc. v. Broudo, 544 U.S. 336, 346 (2005) (internal quotations omitted).

In considering a motion to dismiss, a court views the complaint “in the light

most favorable to [the] plaintiff, accepting as true all well-pleaded factual allegations

and drawing all reasonable inferences in [the] plaintiff's favor.” Lovick v. Ritemoney

Ltd., 378 F.3d 433, 437 (5th Cir. 2004).

ii. Dismissal or Stay Based on St. Tammany’s Motion

As noted, Safety National first argues that Louisiana’s Direct Action Statute

“does not create an independent cause of action against an insurer, but merely creates

a ‘procedural right of action against an insurer where the plaintiff has a substantive

cause of action against the insured.’”95 Military Road does not appear to contest that,

to the extent any claims are dismissed with respect to St. Tammany, they must also

be dismissed with respect to Military Road pursuant to the Direct Action Statute.96

As the Court previously explained, it will grant in part and deny in part St.

Tammany’s motion to dismiss. Specifically, it will grant the motion to dismiss BCP’s

claims against St. Tammany because those claims are moot. It will also grant the

95 R. Doc. No. 22-1, at 4 (quoting OXY USA Inc. v. Quintana Prod. Co., 79 So. 3d 366,

377 (La. App. 1st Cir. 2011)).

96 See R. Doc. No. 26, at 3 (arguing that the Court should deny Safety National’s

motion to dismiss “[f]or the reasons argued by [Military Road] in opposition to [St.

Tammany’s] [m]otion to [d]ismiss or, [a]lternatively, to [s]tay [c]ase”).

motion to dismiss Military Road’s procedural due process claims as unripe. However,

it will deny the motion to dismiss Military Road’s other claims against St. Tammany

and deny St. Tammany’s motion to stay. Accordingly, the Court will also dismiss

BCP’s claims against Safety National and Military Road’s procedural due process

claim against Safety National.

iii. Direct Action Statute

Safety National also contends that the claims against it do not satisfy

Louisiana’s Direct Action Statute because that statute only applies to lawsuits

brought by tort victims.97 Pursuant to the Direct Action Statute, an “injured person

or his survivors or heirs mentioned in Subsection A of this Section, at their option,

shall have a right of direct action against the insurer within the terms and limits of

the policy[.]” La. R.S. 22:1269(B)(1). In Subsection A, the statute provides that “[n]o

policy or contract of liability insurance shall be delivered in this state, unless it

contains provisions to the effect that the insolvency or bankruptcy of the insured shall

not release the insurer from the payment of damages for injuries sustained or loss

occasioned during the existence of the policy[.]” La. R.S. 22:1269(A). Additionally, “an

action may [ ] be maintained within the terms and limits of the policy by the injured

person, or his survivors, mentioned in Civil Code Art. 2315.1, or heirs against the

insurer.” Id.

Safety National asserts that “[t]he Louisiana Supreme Court has held that the

only ‘injured persons’ with standing to bring a direct action against an insurer under

97 R. Doc. No. 22-1, at 5–6.

the Direct Action Statute are those persons who are the victims of tortious conduct.”98

Indeed, in Arrow Trucking and other cases, Louisiana courts have suggested that the

Direct Action Statute applies to tort victims rather than insureds with contract

claims against a defendant. See, e.g., Arrow Trucking, at 465 So. 2d at 700 (holding

that a reinsurer could not be sued pursuant to Louisiana’s Direct Action Statute

because the reinsurance policy insured against an insurer’s policy loss rather than

against a liability, and explaining that the statute’s reference to “the injured person”

refers to a tort victim, and not to an insurer suffering a policy loss); Green v. Auto

Club Grp. Ins., 24 So. 3d 182, 184 (La. 2009) (“The Direct Action Statute was enacted

to give special rights to tort victims, not to insureds with contract claims against a

defendant . . . In the absence of a Direct Action Statute, a plaintiff would have no

right of action against an alleged tortfeasor’s liability insurer because the obligation

between the plaintiff and the alleged tortfeasor is delictual in nature, and plaintiff

has no contractual relationship with the tortfeasor’s insurer.”) (cleaned up).

Military Road’s FHA claims against Safety National sound in tort, not in

contract. Courts and other authorities have explained that FHA actions are

essentially actions in tort because the FHA “merely defines a new legal duty, and

authorizes the courts to compensate a plaintiff for the injury caused by the

defendant’s wrongful breach.” Dillon v. AFBIC Dev. Corp., 597 F.2d 556, 562 (5th Cir.

1979) (quoting Curtis v. Loether, 415 U.S. 189, 195 (1974)); see also Meyer v. Holley,

98 R. Doc. No. 22-1, at 5 (citing Arrow Trucking Co. v. Cont’l Ins. Co., 465 So. 2d 691

(La. 1985)).

537 U.S. 280, 285 (2003) (noting that “an action brought for compensation by a victim

of housing discrimination pursuant to the FHA is, in effect, a tort action”); Tracey

Bateman et al., Actual Damages in Fair Housing Proceedings by Private Individuals,

6 Federal Procedure Lawyers Edition § 11:576 (March 2024 Update) (“A damages

action under the Fair Housing Act (FHA) is, in effect, a tort action.”). Safety

National’s argument that the Court should dismiss Military Road’s claims against it

pursuant to the Direct Action Statute because none of Military Road’s claims sound

in tort is unavailing. The Court will therefore deny Safety National’s motion in this

respect.99

iv. Notice Pleading and Leave to Amend

Safety National also asserts that “[p]laintiffs cannot make mere conclusory

allegations as to their claims against Safety National by making oblique references

to the basis for their claim for damages” and that the complaint “fails to state the

factual matter to support evidence that all of the criteria of the Louisiana Direct

Action Statute have been satisfied.”100 In reply, Safety National suggests that

Military Road must identify with specificity the nature of and basis for claiming

monetary damages with respect to each count to permit Safety National an

opportunity to evaluate and prepare a defense as to each count.101

99 The Court notes that it has supplemental jurisdiction over the Direct Action

Statute claim. See City of New Orleans v. Kernan, 933 F. Supp. 565, 569 (E.D. La.

1996) (Fallon, J.) (denying insurer’s motion to dismiss because the court had

supplemental jurisdiction over the plaintiff’s Direct Action Statute claim since it

arose out of the same case or controversy as other claims before the court).

100 R. Doc. No. 22-1, at 6–7.

101 R. Doc. No. 28, at 3–5.

Federal Rule of Civil Procedure 15(a) provides that leave to amend pleadings

“shall be freely given when justice so requires.” Although Rule 15 “evinces a bias in

favor of granting leave to amend,” it is not automatic. Martin’s Herend Imps., Inc. v.

Diamond & Gem Trading U.S.A. Co., 195 F.3d 765, 770 (5th Cir. 1999); United States

ex rel. Lin v. Mayfield, 773 F. App’x 789, 790 (5th Cir. 2019) (quotations omitted). A

decision to grant leave to amend is within the discretion of the trial court. Mayfield,

773 F. App’x at 790.

Based on this standard, the Court in its discretion will grant Military Road

leave to amend its complaint to address the purported deficiencies specifically

identified by Safety National’s reply brief and to update its allegations in light of

recent developments with respect to the sale of the property and the vacatur of the

moratorium.

III. CONCLUSION

For the reasons stated herein,

IT IS ORDERED that St. Tammany’s motion to dismiss is GRANTED IN

PART and DENIED IN PART. The motion is GRANTED in that BCP’s claims

against both defendants are DISMISSED WITHOUT PREJUDICE as moot. The

motion is also GRANTED in that Military Road’s due process claim against both

defendants is DISMISSED WITHOUT PREJUDICE as unripe. The motion is

DENIED to the extent it seeks dismissal of Military Road’s other claims pursuant to

ripeness doctrine. The motion is also DENIED to the extent it seeks a stay pursuant

to Colorado River.

IT IS FURTHER ORDERED that Safety National’s motion to dismiss is

DENIED.

IT IS FURTHER ORDERED that Military Road may file an amended

complaint into the record no later than Monday, JUNE 10, 2024. Such amended

complaint shall remove any reference to claims brought by BCP, shall include

updated factual allegations in light of the vacatur of the moratorium, and shall

address the alleged deficiencies identified in Safety National’s reply brief.

New Orleans, Louisiana, May 31, 2024.

Mi eAnA__

Sef

UNITED STATES DISTRICT JUDGE

30