Legacy Hsing v. City of Horseshoe Bay

Case: 24-50462 Document: 100-1 Page: 1 Date Filed: 10/31/2025

United States Court of Appeals

Fifth Circuit

United States Court of Appeals FILED

October 31, 2025

for the Fifth Circuit Lyle W. Cayce

____________ Clerk

No. 24-50462

____________

Legacy Housing Corporation,

Plaintiff—Appellant,

versus

City of Horseshoe Bay, Texas; Horseshoe Bay Property

Owners Association; Jaffe Interests, LP, formerly known as

Horseshoe Bay Resort Limited, formerly known as Horseshoe

Bay Resort, Incorporated; Horseshoe Bay Resort

Development, LLC,

Defendants—Appellees.

______________________________

Appeal from the United States District Court

for the Western District of Texas

USDC No. 1:21-CV-1156

______________________________

Before Higginbotham, Jones, and Southwick, Circuit Judges.

Leslie H. Southwick, Circuit Judge:

Legacy Housing bought hundreds of lots for development and also

purchased adjacent land on which to build a road connecting the lots to a

nearby highway. The land was subject to restrictions barring such a road.

Legacy challenges those restrictions, alleging a conspiracy between the City

and other defendants to prevent it from developing its lots. The district court

granted summary judgment to the defendants. We AFFIRM as modified.

Case: 24-50462 Document: 100-1 Page: 2 Date Filed: 10/31/2025

No. 24-50462

FACTUAL AND PROCEDURAL BACKGROUND

In 2019, Legacy Housing bought several hundred vacant lots in a

neighborhood at the southern edge of Horseshoe Bay, Texas, a city about one

hour northwest of Austin. That neighborhood was and remains zoned for

manufactured housing, subject to various restrictions on construction. One

such restriction, existing since 2009, allows only two permits at a time for

constructing housing for which there is not yet a buyer, i.e., speculative

housing. There also are requirements for contractors and subcontractors,

utility hookup fees, and setback requirements. These have all changed to

some degree since Legacy purchased lots in 2019. Property owners can seek

variances.

Apart from these zoning restrictions, Legacy also bought its lots

subject to a declaration of reservations. Among other things, the declaration

restricts the use of the lots to “single-family mobile home dwelling[s],”

requires “improvements” to be pre-approved by the architectural

committee, and reserves a right of way and easement for utilities and

drainage.

Legacy also bought 95 acres of land in the City of Horseshoe Bay’s

extraterritorial jurisdiction (ETJ), between a nearby highway and the

southern edge of the neighborhood. We need not wade deeply into relevant

Texas statutes other than to say a city’s ETJ is defined and governed by

Chapter 42 of the Texas Local Government Code as an area around the

formal boundaries of a city. This land within the ETJ was subject to an

agreement that the property could only be used for “agriculture, wildlife

management, and/or timber land . . . which will include . . . existing single-

family residential use of the Property.”

2

Case: 24-50462 Document: 100-1 Page: 3 Date Filed: 10/31/2025

No. 24-50462

In 2021, despite these restrictions, Legacy built a road over the ETJ

property, the greenbelt, 1 and three of the development lots. It advertised the

road as providing neighborhood residents a much shorter route to and from

the highway and amenities Legacy planned to build on the ETJ property.

The defendants tried to stop Legacy from completing this road on the basis

that it violated valid restrictions, but the road was completed.

Legacy alleges a conspiracy among the defendants — the City, the

property owners’ association (POA), and developers Jaffe Interests, LP, and

Horseshoe Bay Resort Development, LLC. Legacy claims that the

defendants unlawfully conspired to prevent it from developing manufactured

housing on the lots. The events regarding the road were just one part of this

alleged conspiracy.

These are Legacy’s claims against the individual defendants:

(1) The City for regulatory takings based on the zoning

restrictions;

(2) All four defendants under Section 1983 for violations of

substantive due process, procedural due process, the

Takings Clause, and equal protection;

(3) All four defendants for civil conspiracy for the same

reasons;

(4) The POA for breach of fiduciary duty in denying access to

the greenbelt;

(5) The POA and the developers for negligence in denying

access to the greenbelt strip;

_____________________

1

“Greenbelt,” as used throughout this opinion, refers to land intended to remain

undeveloped surrounding a community that serves as a buffer zone. The relevant area of

greenbelt in this case is a five-foot-wide stretch of land separating the back of a

neighborhood from the property to the south.

3

Case: 24-50462 Document: 100-1 Page: 4 Date Filed: 10/31/2025

No. 24-50462

(6) The POA and the developers on a strips and gores claim2;

and

(7) All four defendants for declaratory judgments related to the

other claims.

In light of the newly completed road, the City counterclaimed for

breach of the ETJ development agreement and sought related declaratory

judgments and injunctive relief. Horseshoe Bay Resort Development also

counterclaimed for breach of the restrictive covenant on the development

lots and sought related declaratory judgments and injunctive relief.

Various motions followed. Legacy moved to dismiss the City’s

counterclaims for lack of supplemental jurisdiction. That motion was denied.

The City moved to dismiss all of the claims against it apart from the

regulatory takings claim. That motion was granted. Legacy moved for partial

summary judgment on its strips and gores claim. All the defendants moved

for summary judgment on all claims in which they were implicated. The

defendants’ motions were granted and Legacy’s motion denied. The district

court then entered final judgment. Legacy timely appealed.

DISCUSSION

On appeal, Legacy argues that the district court erred in its resolution

of nearly every claim in this case. We begin by identifying challenges that

have been forfeited. Then, we discuss the resolution of the claims against the

City. Finally, we discuss the resolution of the claims against the remaining

defendants.

_____________________

2

The strips and gores doctrine is a unique creature of Texas law used to resolve

the ownership of relatively small strips of land. The details of the doctrine are discussed

below. Legacy used the doctrine to claim ownership of the five feet of greenbelt between

its development lots and the ETJ property.

4

Case: 24-50462 Document: 100-1 Page: 5 Date Filed: 10/31/2025

No. 24-50462

I. Forfeited Issues

Legacy forfeited several alleged errors. First, Legacy sought to

challenge the grant of a motion to dismiss its equal protection and due

process claims against the City and summary judgment on those same claims

against the remaining defendants. Legacy did not list this issue in its

statement of issues. Further, Legacy’s header in the body of the brief

mentions the equal protection claim, but the discussion that follows merely

lays out general principles without applying them to this case. Legacy’s

inadequate briefing forfeited its challenge to the denial of its equal protection

and due process claims. See United States v. Quintanilla, 114 F.4th 453, 464

(5th Cir. 2024) (failure to list an issue in the statement of issues); Brinkmann

v. Dallas Cnty. Deputy Sheriff Abner, 813 F.2d 744, 748 (5th Cir. 1987) (failure

to explain how the district court erred). 3

Next, Legacy sought to challenge the grant of a motion to dismiss its

civil conspiracy claim against the City, a dismissal based on governmental

immunity. Legacy’s discussion of this claim suffices to preserve the

challenge with respect to the remaining defendants. With respect to the City,

though, Legacy fails to explain how the district court erred. Legacy forfeited

its challenge to the dismissal of its civil conspiracy claim against the City. See

Brinkmann, 813 F.2d at 748.

_____________________

3

At most, Legacy’s later discussion of its Section 1983 conspiracy claims may have

preserved an argument that it was deprived of “property” in violation of its due process

rights when the defendants interfered with its construction of the road over the ETJ

property, the greenbelt, and the development lots. Our discussion throughout the opinion

forecloses such a claim: Legacy had no right to build the road over the ETJ property;

Legacy did not own the greenbelt under the strips and gores doctrine; and Legacy had no

right to build the road over the development lots.

5

Case: 24-50462 Document: 100-1 Page: 6 Date Filed: 10/31/2025

No. 24-50462

Finally, Legacy sought to challenge the dismissal of its claims for

declaratory judgment against the non-City defendants. The following is the

extent of Legacy’s briefing on this issue:

The sole basis for granting summary judgment to HSBR

Development, Jaffe and POA on Legacy’s declaratory

judgment action was the summary judgment rulings on all of

Legacy’s underlying claims. Legacy has demonstrated above

that these summary judgment rulings were error.

Legacy’s declaratory judgment claims do not perfectly map onto the

underlying claims it raises on appeal. Some do, others do not. For example,

Legacy sought a declaration that “[t]he POA does not have the authority to

discriminate and provide a disproportionate amount of funding from the dues

to the Resort as compared to the South residents.” That declaration does

not logically connect to any of the underlying claims Legacy raises on appeal.

Legacy’s arguments do not inform the court of any specific error in denial of

the declaratory judgments it sought, and the issue is forfeited. See

Brinkmann, 813 F.2d at 748.

* * *

The remaining issues relate to claims that were resolved at summary

judgment. “We review the district court’s order granting summary

judgment de novo, applying the same standards that the district court

applied.” ACS Constr. Co. of Miss. v. CGU, 332 F.3d 885, 887–88 (5th Cir.

2003). “Summary judgment is warranted ‘if the movant shows that there is

no genuine dispute as to any material fact and the movant is entitled to

judgment as a matter of law.’” Clark v. Champion Nat’l Sec., Inc., 952 F.3d

570, 578 (5th Cir. 2020) (quoting Fed. R. Civ. P. 56(a)).

6

Case: 24-50462 Document: 100-1 Page: 7 Date Filed: 10/31/2025

No. 24-50462

II. Claims Involving the City of Horseshoe Bay

Legacy argues that the district court erred by granting the City

summary judgment on (1) its regulatory takings claim and (2) the City’s

counterclaim for breach of the ETJ development agreement and restrictive

covenant. We will discuss those claims in that order.

A. Regulatory Takings

Regulatory takings claims are reviewed under a three-factor balancing

test, considering:

(1) “[t]he economic impact of the regulation on the claimant”;

(2) “the extent to which the regulation has interfered with

distinct investment-backed expectations”; and

(3) “the character of the governmental action,” i.e., whether

the action “can be characterized as a physical invasion by

government” or is instead “interference aris[ing] from

some public program adjusting the benefits and burdens of

economic life to promote the common good” — “[z]oning

laws are . . . the classic example” of the latter.

Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 124–25 (1978).

Whether a regulatory taking has occurred is an “essentially ad hoc, factual

inquir[y]” evading any “set formula.” Id. at 124 (citing Goldblatt v.

Hempstead, 369 U.S. 590, 594 (1962). The goal of the analysis is “to identify

regulatory actions that are functionally equivalent to the classic taking in

which government directly appropriates private property or ousts the owner

from his domain.” Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 539 (2005).

Legacy advanced a regulatory takings claim based on four different

sets of requirements: (1) supposedly heightened restrictions on

manufactured housing subcontractors; (2) speculative housing permit caps;

7

Case: 24-50462 Document: 100-1 Page: 8 Date Filed: 10/31/2025

No. 24-50462

(3) utility hookup fees; and (4) setback requirements. We will separately

address each.

1. Subcontractor Restrictions

First, Legacy argues the City imposed heightened requirements on

subcontractors when working for manufactured housing contractors as

opposed to traditional housing contractors. In Legacy’s view, these

heightened requirements amounted to a regulatory taking by effectively

preventing it from hiring subcontractors for its projects. The district court

granted the City summary judgment on the basis that Legacy had

misinterpreted the ordinances in question. The district court concluded that

subcontractors were always subject to the more specific subcontractor

provision, regardless of whether they were working for manufactured

housing contractors or traditional housing contractors. 4

To explain Legacy’s argument, we start with the text of the ordinances

in question. Section 3.03.010 of the Horseshoe Bay building regulations

establishes permitting application requirements for contractors and

subcontractors. Subsections (a)(9)(F) and (H) apply to general contractors

and manufactured housing contractors, respectively, and require background

checks, references, and insurance. Subsection (a)(9)(G) applies to

subcontractors and requires only a license and a certificate of insurance.

Although this subsection does not define “subcontractor,” it gives examples:

_____________________

4

Although Legacy faults the district court for improperly weighing the evidence at

summary judgment, the district court merely resolved a pure question of law, which is

permissible. See Sheline v. Dun & Bradstreet Corp., 948 F.2d 174, 176 (5th Cir. 1991) (district

court may decide pure questions of law at summary judgment); City of New Orleans v.

BellSouth Telecomms., Inc., 690 F.3d 312, 322 (5th Cir. 2012) (interpretation of a Louisiana

ordinance was a pure question of law); Jones v. City of Palestine, 266 F. App’x 320, 322 (5th

Cir. 2008) (same for a Texas ordinance).

8

Case: 24-50462 Document: 100-1 Page: 9 Date Filed: 10/31/2025

No. 24-50462

“mechanical, electrical, plumbing.” Legacy’s briefing largely focuses on

plumbers and electricians.

Section 3.03.006(b) defines “[m]anufactured home contractor” as

[a]ny one of the following who participate in the placement of

any manufactured home on a property in the city: The

manufactured home dealer/seller; the retail/broker/installer

with RBI license number from the Texas Department of

Housing and Community Affairs; the delivery company if

different from the seller; the set-up company if different from

the seller; the trim-out company for a double wide if different

from the seller; and the improvements contractor for water,

wastewater and electric utility hook-ups, foundation/tie-

downs and skirting.

Legacy interprets this last clause referring to “improvements

contractor” as subjecting subcontractors to the higher manufactured housing

requirements when providing hookups and the like for manufactured housing

contractors. We disagree. When one term is general and another specific,

the specific provision will usually control. See Antonin Scalia &

Bryan A. Garner, Reading Law: The Interpretation of

Legal Texts 183 (2012). Here, the specific provision is the express listing

of “mechanical, electrical, [and] plumbing” subcontractors. Legacy is right

that applying heightened requirements to manufactured housing

subcontractors seems irrational, but that supports that Legacy is

misinterpreting the provision. See City of Laredo v. Villarreal, 81 S.W.3d 865,

868 (Tex. App.—San Antonio 2002, no pet.) (rejecting the plaintiffs’

interpretation of an ordinance because it “would lead to absurd results”).

Further, although the interpretation of the ordinance is a pure question of

law, it is of some significance that Legacy provides no examples of the City

holding manufactured housing subcontractors to the higher manufactured

9

Case: 24-50462 Document: 100-1 Page: 10 Date Filed: 10/31/2025

No. 24-50462

housing contractor requirements. The district court did not err in rejecting

Legacy’s reading of the ordinance.

2. Permit Caps

Second, Legacy argues that the “two-at-a-time” limit on speculative

housing permits (i.e., permits for houses without buyers) effects a regulatory

taking by functionally preventing it from efficiently installing manufactured

housing at scale. The district court granted the City summary judgment,

emphasizing that the two-permit cap existed as early as 2009, ten years before

Legacy bought the development lots.

First, although the fact that a limitation was pre-existing is relevant in

evaluating a landowner’s reasonable, investment-backed expectations, it

must not be afforded per se dispositive status. Murr v. Wisconsin, 582 U.S.

383, 398 (2017). It appears the district court granted the City summary

judgment solely because the two-permit cap preceded Legacy’s purchase of

the development lots. In making our own de novo evaluation, we would need

to consider the Penn Central factors. A problem quickly arises in attempting

to do so. Legacy argues that it was allowed up to six speculative housing

permits at a time until recently. On the present record, Legacy has not shown

that the City’s practice has actually changed. We explain.

The ordinance allows Legacy to request additional permits beyond the

two-permit cap. The record is devoid of evidence that Legacy has made such

requests. Therefore, it may be that Legacy could still install up to six

manufactured homes at a time if it requested additional permits beyond the

cap. Until Legacy asks, the courts are incapable of evaluating the existence

or extent of any deprivation. See Williamson Cnty. Reg’l Plan. Comm’n v.

Hamilton Bank of Johnson City, 473 U.S. 172, 191 (1985), overruled in part on

other grounds by, Knick v. Township of Scott, 588 U.S. 180 (2019). “A court

cannot determine whether a regulation has gone ‘too far’ unless it knows how

10

Case: 24-50462 Document: 100-1 Page: 11 Date Filed: 10/31/2025

No. 24-50462

far the regulation goes.” MacDonald, Sommer & Frates v. Yolo County, 477

U.S. 340, 348 (1986).

Consequently, Legacy’s challenge to the two-permit cap is not

prudentially ripe. See Suitum v. Tahoe Reg’l Plan. Agency, 520 U.S. 725, 737

(1997); DM Arbor Ct., Ltd. v. City of Houston, 988 F.3d 215, 218 n.2 (5th Cir.

2021) (prudential ripeness requirement for regulatory takings remains good

law). The ripeness requirement is only prudential, not jurisdictional.

Rosedale Missionary Baptist Church v. New Orleans City, 641 F.3d 86, 88–89

(5th Cir. 2011). Even so, summary judgment will often be inappropriate

when a regulatory takings claim is prudentially unripe. This case provides a

good example.

Legacy’s expert reports — discussed in greater detail below —

asserted that the two-permit cap rendered the lots entirely undevelopable.

Based on that assertion, as the district court recognized, the 85% diminution

of the raw lot values could be sufficiently serious for the economic impact

factor to favor Legacy. See CCA Assocs. v. United States, 667 F.3d 1239, 1246

(Fed. Cir. 2011) (noting an earlier case in which a 77% drop in property value

was sufficiently serious for the economic impact factor to favor the plaintiff).

That assertion, though, cannot be evaluated until Legacy requests and is

denied additional permits. Even if we were to assume that no rational jury

could find that the other two Penn Central factors favored Legacy, summary

judgment would still be inappropriate. Penn Central establishes a deliberately

“ad hoc, factual inquir[y],” not a counting exercise. Penn Central, 438 U.S.

at 124. The district court should have dismissed the regulatory takings claim

without prejudice insofar as it challenged the two-permit cap. See DM Arbor

Ct., 988 F.3d at 220. We will modify the dismissal to reflect that it is without

prejudice.

11

Case: 24-50462 Document: 100-1 Page: 12 Date Filed: 10/31/2025

No. 24-50462

3. Utility Hookup Fees

Third, Legacy argues that fees for hooking up new manufactured

homes to the City’s sewer system are so excessive as to constitute regulatory

takings. The district court granted summary judgment to the City,

classifying the utility hookup fees as user fees, which are categorically not

takings. Koontz v. St. Johns River Water Mgmt. Dist., 570 U.S. 595, 615

(2013). Legacy does not meaningfully counter the district court’s reasoning,

instead simply asserting that the fees are excessive and were imposed for the

improper purpose of preventing Legacy from installing manufactured

housing.

The utility hookup fees here, “imposed for the reimbursement of the

cost of government services,” are user fees, not takings. See United States v.

Sperry Corp., 493 U.S. 52, 63 (1989). The district court did not err.

4. Setback Requirements 5

Fourth, Legacy briefly argues that the setback requirements are

regulatory takings in that they make it “virtually impossible to place Legacy’s

houses on the [development] lots.” The district court granted the City

summary judgment because (1) Legacy failed to provide competent evidence

of a sufficiently serious economic impact; (2) Legacy should have expected

reasonable new zoning restrictions over time; and (3) the character of the

governmental action, i.e., zoning, favored the City. We will not say more

_____________________

5

We use “setback requirements” as a shorthand for the space-related

requirements imposed by the City. This category of requirements includes (1) “paved

driveway[s] of not less than 400 square feet and at least 12 feet wide”; (2) “[p]orches,

decks, and patios [with] a combined area of 150 square feet [that] cannot be included in the

setbacks”; and (3) pre-existing setback requirements. The City correctly notes that the

setback requirements themselves pre-existed Legacy’s purchase of the development lots,

but the effect of the other requirements in restricting the space for Legacy’s homes cannot

be evaluated apart from the pre-existing setback requirements.

12

Case: 24-50462 Document: 100-1 Page: 13 Date Filed: 10/31/2025

No. 24-50462

about the third Penn Central factor. The setback requirements are zoning

regulations, and so the third Penn Central factor favors the City. See Penn

Central, 438 U.S. at 124–25.

Before evaluating the first Penn Central factor, economic impact, we

recount what evidence Legacy provided on that score. Legacy offered two

expert reports by Chad Denton and Legacy executive Curtis Hodgson. Both

reports stated that the raw value of each lot — i.e., the value of the lot without

a house on it — dropped from $35,000 to $5,000, without specifying how

they arrived at $5,000. 6 Next, both experts said that the expectancy value of

each lot — i.e., the value of the lot with a house on it, after deducting

development and marketing costs — dropped from $60,500 to $5,000.

Although both experts suggested that “fixed costs due to the new

requirements . . . will increase to approximately $45,000” from $30,000, 7

they concluded that the expectancy value was $5,000, i.e., the raw lot value,

because developing the lots was completely infeasible.

The district court found that the economic impact factor favored the

City for three reasons. We need consider only one. The one we analyze is

that the post-taking expectancy value was based on the proposition that the

lots were rendered entirely undevelopable, and that proposition was refuted

by the experts’ concession that the setback requirements merely increased

_____________________

6

Hodgson and Denton both calculated an increase in raw lot value of $20,000 per

lot if Legacy could build a road connecting the back of the neighborhood to the nearby

highway. We ignore that number because, as we will explain below, Legacy never had a

right to build that roadway. Although pre-existing limitations are not per se immune from a

regulatory takings analysis, Legacy does not argue that barring highway access was a

regulatory taking.

7

Neither expert report specified whether this was $45,000 in entirely new costs or

instead some lesser increase on a pre-existing amount of fixed costs. At his deposition,

Hodgson clarified that there was a $15,000 increase from $30,000 in pre-taking costs for

fees, install, and improvements.

13

Case: 24-50462 Document: 100-1 Page: 14 Date Filed: 10/31/2025

No. 24-50462

development costs by $15,000. It may be that the expert reports’ assertion

that the two-permit cap made development entirely infeasible would often

suffice to support the asserted expectancy value. Here, though, we are

considering the setback requirements separately from any other

requirements, including the two-permit cap. That is because the other

requirements have fallen out of the case for reasons that logically precede

application of the Penn Central factors. Without those other requirements,

nothing in the expert reports supports the conclusion that the post-taking

expectancy value is $5,000. Indeed, the expert reports themselves suggest

that the value should be $45,500 when considering only the setback

requirements. 8 Even supposing lost profits can be validly considered in this

analysis (a question we do not decide), we agree with a sister circuit that a

mere 25% diminution does not demonstrate a regulatory takings claim. See

CCA Assocs., 667 F.3d at 1246 (“[W]e are aware of no case in which a court

has found a taking where diminution in value was less than 50 percent.”

(quotation marks and citation omitted)).

The expert reports’ conclusion that the post-taking raw lot value

dropped to $5,000 is similarly unsupported when considering only the

_____________________

8

Although the expert reports suggest that development was also completely

infeasible because Legacy could not fit any of its models on the lots, that suggestion is flatly

refuted by Hodgson’s own deposition admissions. See Scott v. Harris, 550 U.S. 372, 380

(2007) (holding courts should disregard a version of events that is “blatantly contradicted

by the record, so that no reasonable jury could believe it” at summary judgment); cf. S.W.S.

Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 495 (5th Cir. 1996) (agreeing that summary

judgment cannot be defeated by the submission of affidavits that contradict sworn

testimony without explanation). As Hodgson admitted at his deposition, Legacy has

models ranging “from 400 square feet to 2,700 square feet and . . . all points in between.”

Based on the evidence in the record, no rational jury could find that the lots were too small

to fit a Legacy model. To the extent that Legacy might lose profits by installing smaller

models, the expert reports provide no basis to conclude that those lost profits would be

significant enough for the economic impact factor to favor Legacy.

14

Case: 24-50462 Document: 100-1 Page: 15 Date Filed: 10/31/2025

No. 24-50462

setback requirements. Although the expert reports themselves did not

explain how they arrived at this number, the experts’ deposition testimony

shows that the value was derived from the going market rate, as indicated by

the prices at which Legacy bought the lots. Hodgson explained the

discrepancy between this price and the estimated $35,000 pre-taking raw lot

value as “[t]he delta between being able to put a mobile home on it and not

being able to put a mobile home on it.” In other words, the lots were worth

more to Legacy than to other buyers because Legacy had the resources

necessary to install manufactured homes on the lots. If the lots were

rendered entirely undevelopable by new regulations, they would be worth

only the going market rate of $5,000.

When considering only the setback requirements, nothing in the

expert reports supports the conclusion that the lots were entirely

undevelopable rather than $15,000 more expensive to develop. The expert

reports do not specify what the post-taking raw lot value would be when

considering only the setback requirements. We may not assume that parties

would fill evidentiary gaps at summary judgment. See Little v. Liquid Air

Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc). A rational jury would have

no evidentiary basis to conclude that diminution in the raw lot values was

significant enough for the economic impact factor to favor Legacy.

Next, the district court found that the second Penn Central factor,

investment-backed expectations, also favored the City. The district court

appropriately focused on Legacy’s “primary expectation concerning the use

of the parcel,” i.e., building manufactured housing. See Penn Central, 438

U.S. at 136. Because Legacy can still accomplish that goal, the setback

requirements did not interfere with its reasonable, investment-backed

expectations.

15

Case: 24-50462 Document: 100-1 Page: 16 Date Filed: 10/31/2025

No. 24-50462

The record conclusively establishes that Legacy can fit its models onto

the development lots. As Hodgson admitted at his deposition, Legacy has

models ranging “from 400 square feet to 2,700 square feet and . . . all points

in between.” Any interference with Legacy’s reasonable, investment-backed

expectations is limited. With each Penn Central factor favoring the City,

summary judgment was appropriate.

B. Breach of the ETJ Development Agreement and Restrictive Covenant

(Counterclaim)

Legacy also argues that the district court erred in resolving the City’s

counterclaim for breach of the ETJ development agreement and restrictive

covenant. To preface, Legacy built a paved road over the ETJ property,

connecting to the back end of the neighborhood. 9 The road had gates on each

end and a dividing line down the middle. Under the ETJ development

agreement, ETJ property may only be used for “agriculture, wildlife

management, and/or timber land . . . which will include . . . existing single-

family residential use of the Property,” unless the property owner gets “prior

written consent” from the City to use the property for other purposes. The

district court found — and Legacy does not meaningfully contest on appeal

— that the ETJ development agreement binds Legacy and satisfies all the

requirements for an enforceable restrictive covenant. Legacy argues (1) that

the road over the ETJ property is a permissible “driveway”; and (2) that the

City committed a prior material breach of the ETJ development agreement

based on an email sent by the City to the Texas Department of

Transportation.

_____________________

9

To be clear, the part of the road on the ETJ property is paved, and the part of the

road over the greenbelt and the development lots is not paved. In this section we are only

discussing the portion of the road on the ETJ property.

16

Case: 24-50462 Document: 100-1 Page: 17 Date Filed: 10/31/2025

No. 24-50462

The district court found (1) that the road exceeded the permissible

uses authorized by the ETJ development agreement; and (2) that the email

did not constitute a prior material breach. We agree. On the “driveway”

issue, the label Legacy puts on the road is immaterial. What matters is its

intended use as a publicly available shortcut to the highway, and also as a

means to access planned future amenities (which would independently

violate the ETJ agreement). To the extent Legacy argues there is a fact issue

as to whether the road was an innocent “driveway” as opposed to what we

have described, the record flatly refutes Legacy’s position. See Scott v.

Harris, 550 U.S. 372, 380 (2007) (holding courts should disregard a version

of events that is “blatantly contradicted by the record, so that no reasonable

jury could believe it” at summary judgment). Legacy openly advertised the

road as providing “direct access” to the highway and also as a means to

access a planned “multi-acre amenity package on the [ETJ property] that

could possibly include a brand-new swimming pool, state of the art

playground, and multi-purpose community center.” The road is not a

“driveway” facilitating permissible uses of the ETJ property.

On the issue of prior material breach, the email demonstrates only that

the City was aware of Legacy’s road and believed (accurately) it violated the

ETJ development agreement. Legacy argues that the City committed a prior

material breach by trying to get the Texas Department of Transportation to

do something that would trigger annexation of the ETJ property in violation

of the ETJ development agreement. This argument falls with Legacy’s

flawed claim that the road was a permissible “driveway.” If Legacy was

building a publicly available shortcut to the highway and a means to access

planned future amenities — and it was — then annexation would not violate

the ETJ development agreement. The ETJ development agreement allows

the City to annex the ETJ property “if the Owner commences development

of the Property in violation of th[e] Agreement.” Legacy breached first when

17

Case: 24-50462 Document: 100-1 Page: 18 Date Filed: 10/31/2025

No. 24-50462

it started building the road for the purposes outlined in its letter. The email

was sent after it became clear what Legacy was doing. Thus, the email was

neither prior nor a breach.

Contrary to Legacy’s claims, it does not matter whether the City had

conclusive evidence of Legacy’s intentions at the time. What matters is what

Legacy was doing. There is nothing in the record to suggest that Legacy’s

plans changed between when the email was sent and when Legacy advertised

its plans. On the contrary, Hodgson admitted at his deposition that this was

Legacy’s plan from the time it bought the ETJ property.

Regardless, even if the advertisement itself post-dated the November

2, 2021 email, there was clear evidence of Legacy’s intentions before then.

On October 22, 2021, pictures were taken from the development lots

showing that Legacy had finished paving the road up to the boundary between

the ETJ property and the greenbelt. At his deposition, Hodgson

acknowledged that Legacy had built this road. That road had nowhere left to

go but over the greenbelt strip and development lots to connect to the

neighborhood’s streets. Legacy’s intentions could hardly have been clearer.

No rational jury could find that the City breached the ETJ development

agreement first.

III. Claims Involving the Remaining Defendants

Legacy argues that the district court erred by granting the remaining

defendants summary judgment on (1) its strips and gores claim; (2) its

negligence and gross negligence claims; (3) its Section 1983 and civil

conspiracy claims; (4) its breach of fiduciary duty claim against the POA;

and (5) the developers’ counterclaim for breach of restrictive covenant. We

will discuss those claims in that order.

18

Case: 24-50462 Document: 100-1 Page: 19 Date Filed: 10/31/2025

No. 24-50462

A. Strips and Gores 10

Legacy argues that not only were the remaining defendants not

entitled to summary judgment on its strips and gores claim, but that Legacy

was itself entitled to summary judgment on the claim.

The strips and gores doctrine is a unique creature of Texas law

designed to encourage the use and development of land. See Strayhorn v.

Jones, 300 S.W.2d 623, 638 (Tex. 1957) (discussing the purpose of the

doctrine). The Supreme Court of Texas explained this way:

It is well known that separate ownership of long narrow

strips of land, distinct from the land adjoining on each side, is a

fruitful source of litigation and disputes. To avoid this source

of contention, it is presumed that a grantor has no intention of

reserving a fee in a narrow strip of land adjoining the land

conveyed when it ceases to be of use to him, unless such fee is

clearly reserved. The reason for the rule is obvious. Where it

appears that a grantor has conveyed all land owned by him

adjoining a narrow strip of land that has ceased to be of any

benefit or importance to him, the presumption is that the

grantor intended to include such strip in such conveyance;

unless it clearly appears in the deed, by plain and specific

language, that the grantor intended to reserve the strip.

Cantley v. Gulf Prod. Co., 143 S.W.2d 912, 915 (Tex. 1940). Thus, if a

landowner has conveyed all of his or her land except for a relatively

_____________________

10

We recognize that neither the POA nor the developers claim to own the

greenbelt strip, which raises questions about the adversity of the parties on Legacy’s strips

and gores claim. See MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) (requiring

parties to have “adverse legal interests” for a case to be justiciable (quoting Aetna Life Ins.

Co. of Hartford v. Haworth, 300 U.S. 227, 240–41 (1937))). Nevertheless, we find there to

be sufficient adversity because the POA and the developers contest Legacy’s ownership of

the greenbelt strip through the strips and gores doctrine in defending against other claims

in the case.

19

Case: 24-50462 Document: 100-1 Page: 20 Date Filed: 10/31/2025

No. 24-50462

insignificant strip, Texas law presumes the intention was to convey the strip

as well, unless the deed expressly reserves the strip. Id.

Here, Legacy invokes the strips and gores doctrine to assert that it

owns the five-foot-wide strip of greenbelt between the back of one of the

development lots and the ETJ property. Legacy needs to cross that small

portion of the greenbelt for its road from the development lots to the

highway. 11

As background, all the land on the relevant plat was formerly owned

by a single entity: Kings Land. At various times, Kings Land conveyed all the

lots by express reference to the plat. The plat included a clearly delineated

greenbelt, mapping the boundaries between the lots and the long, continuous

greenbelt. Kings Land did not expressly reserve the greenbelt in the deeds;

instead, it conveyed the described property that the plat showed did not

include the greenbelt. For other plats, Kings Land conveyed the greenbelt to

the POA, but the record contains no evidence that Kings Land ever expressly

conveyed the portion of the greenbelt relevant in this case to anyone. Kings

Land no longer exists, and it cannot (but need not) be determined on this

record who owns the greenbelt.

The district court concluded that the strips and gores doctrine did not

apply here for three independent reasons: (1) Kings Land unambiguously

reserved the greenbelt by reference to the plat, which clearly marked the

boundaries of each lot and the greenbelt; (2) the greenbelt as a whole is not

_____________________

11

To have a right to construct the entire road, Legacy would need a right to cross

the ETJ property, the greenbelt, and the development lots. Even so, some of Legacy’s

claims for damages rely on the idea that Legacy owns the greenbelt strip, and those claims

would not require Legacy to show that it was entitled to build the full road (although not

having a right to build the entire road certainly would affect any damages Legacy could

recover). We make this observation in further support of our conclusion that the necessary

adversity exists for us to rule on this issue.

20

Case: 24-50462 Document: 100-1 Page: 21 Date Filed: 10/31/2025

No. 24-50462

small; and (3) Kings Land’s continued access to the greenbelt strips through

the other greenbelt strips showed that the strips at issue were still useful to

Kings Land when the conveyance was made.

The first reason is correct and sufficient. Over eighty years ago, we

held that Texas’s strips and gores doctrine does not apply to unambiguous

conveyances unless the case involves a road or right of way, in which case

courts presume that the grantor intended to convey the center of the road or

right of way. 12 See Simon v. Rudco Oil & Gas Co., 132 F.2d 211, 212 (5th Cir.

1942). That holding remains binding under our rule of orderliness even

though the Supreme Court of Texas opinion in Strayhorn could plausibly be

read as at least abrogating an earlier opinion that Simon relied upon, i.e.,

McKee v. Stewart, 162 S.W.2d 948, 950 (Tex. Comm’n App. 1942). Strayhorn

does not unambiguously abrogate either Simon or McKee, and, as we will

explain, that is the relevant question. 13

Our rule of orderliness, requiring a later panel to adhere to the

published opinion of an earlier one, fully applies to the court’s interpretations

_____________________

12

Most of the cases cited by Legacy involve this centerline presumption or a related

presumption that a deed noting an existing easement merely acknowledges the easement’s

existence without reserving the land subject to the easement. Legacy also cites a case for

the proposition that a reservation marked on a plat does not prevent application of the strips

and gores doctrine if the deed does not mention the reservation. See Reeves v. Towery, 621

S.W.2d 209, 212–13 (Tex. App.—Corpus Christi 1981, writ ref’d n.r.e.). That case is

distinguishable because the reservation marked on the plat was within the boundaries of the

lot as also marked on the plat. Id. at 210. The case does not speak to the question whether

the strips and gores doctrine would have applied if the lot as marked on the plat had not

encompassed the reserved portion.

13

Strayhorn may be better explained as a case about rivers, involving an entirely

separate presumption that conveyances follow river lines and grant concomitant riparian

rights. See Strayhorn, 300 S.W.2d at 631–32. As with roads and rights of way, Texas law

recognizes a centerline presumption for rivers. Id. at 636. Even then, although the deed in

Strayhorn was facially unambiguous, its description clashed with the contract’s description,

creating an ambiguity. Id. at 638.

21

Case: 24-50462 Document: 100-1 Page: 22 Date Filed: 10/31/2025

No. 24-50462

of state law. FDIC v. Abraham, 137 F.3d 264, 268–69 (5th Cir. 1998). A

prior panel’s determination of the meaning of state law must be “followed by

other panels without regard to any alleged existing confusion in state law,

absent a subsequent state court decision or statutory amendment which

makes this Court’s decision clearly wrong.” Lee v. Frozen Food Express, Inc.,

592 F.2d 271, 272 (5th Cir. 1979). Our Simon opinion is not clearly wrong

under Texas law.

Additionally, we also consider the fact that the strips and gores

doctrine is about misdescriptions, i.e., a grantor intends to convey all owned

property but does not accurately describe all. Here, far from meaning to

convey the greenbelt strip along with other property, Kings Land intended to

retain the small portion of the greenbelt that was contiguous to the granted

property. It was a slice of the much larger band of greenbelt that was to

benefit all the property it bordered. By omitting the adjacent section of

greenbelt, the description in the deed was entirely accurate. 14 Legacy did not

receive the relevant portion of the greenbelt under the strips and gores

doctrine.

B. Negligence and Gross Negligence

Legacy argues that the district court erred by granting the remaining

defendants summary judgment on its negligence and gross negligence claims.

Those claims are based on the idea that the remaining defendants had a duty

not to interfere with Legacy’s use of the greenbelt. To succeed on a claim for

negligence in Texas, “[t]here must be a legal duty owed by one person to

another, a breach of that duty, and damages proximately caused by the

_____________________

14

The strips and gores doctrine applies to determining what land a grantor conveys

at the time of a deed. See Seager v. Fry, 707 S.W.3d 452, 468 (Tex. App.—Eastland 2025,

no pet.). Later events could affect current title through adverse possession or some other

doctrine, a possibility not raised in this appeal. See id. at 469.

22

Case: 24-50462 Document: 100-1 Page: 23 Date Filed: 10/31/2025

No. 24-50462

breach.” D. Houston, Inc. v. Love, 92 S.W.3d 450, 454 (Tex. 2002). “The

existence of a duty is a question of law for the court to decide from the facts

surrounding the occurrence in question.” Walker v. Harris, 924 S.W.2d 375,

377 (Tex. 1996).

The district court granted the remaining defendants summary

judgment on these claims because Legacy did not receive the greenbelt strip

under the strips and gores doctrine, and “Legacy has not established that

there is an applicable legal duty to help Legacy gain access to the greenbelt

strip for the purposes of building a driveway or pavement over it.” Neither

Legacy nor the defendants have been shown to own the greenbelt. Thus, for

purposes of analysis, the issue is whether the defendants’ simply interfering

(without physical violence or some other tortious conduct) with a non-

owner’s effort to build a road over land breaches a duty. No authority

supporting such a duty has been offered. Summary judgment was

appropriate.

C. Section 1983 and Civil Conspiracy

Legacy argues that the district court erred by granting summary

judgment to the remaining defendants on the Section 1983 and civil

conspiracy claims. The district court granted summary judgment because

Legacy failed to substantiate a predicate tort or Section 1983 violation. See

Tilton v. Marshall, 925 S.W.2d 672, 681 (Tex. 1996) (requiring an underlying

tort for a civil conspiracy claim); Hale v. Townley, 45 F.3d 914, 920 (5th Cir.

1995) (requiring an underlying Section 1983 violation for a Section 1983 civil

conspiracy claim).

Legacy challenges this ruling by arguing that it was unlawfully

deprived of property rights to build a road over the ETJ property and the

greenbelt strip. Those arguments mirror Legacy’s arguments on its other

23

Case: 24-50462 Document: 100-1 Page: 24 Date Filed: 10/31/2025

No. 24-50462

claims. Based on our previous discussion of those claims, summary judgment

was appropriate on the Section 1983 and civil conspiracy claims.

D. Breach of Fiduciary Duty (POA)

Legacy briefly argues that the POA breached a fiduciary duty to let

Legacy build a road on the greenbelt strip, such that summary judgment for

the POA on Legacy’s breach of fiduciary duty claim was improper. As a

member of the POA, Legacy has a right to the “use and enjoyment of the

Properties and Common Land as provided in the Restrictions.” The district

court granted the POA summary judgment because Legacy claims that it

both owned the property and POA had a duty to grant it access were

irreconcilable. The POA does not claim to own the greenbelt strip.

Therefore, any duty the POA had regarding the greenbelt strip was not

fiduciary in nature because it exceeded the scope of the fiduciary relationship.

Palmer v. Fuqua, 641 F.2d 1146, 1155 (5th Cir. Unit A Apr. 1981) (relying on

Rankin v. Naftalis, 557 S.W.2d 940, 944 (Tex. 1977)).

Legacy suggests the district court erred by not considering its

“alternative” argument that “the POA’s conduct in acting to completely

prevent Legacy from accessing the greenbelt” was a breach of fiduciary duty.

Legacy has not shown error. If the POA did not own the greenbelt strip —

and Legacy and the POA agreed it did not — any duty the POA had

regarding the greenbelt strip was not fiduciary in nature. See Palmer, 641 F.2d

at 1155.

Summary judgment was appropriate on the claims based on these

supposed fiduciary duties.

E. Breach of Restrictive Covenant (Developers’ Counterclaim)

Lastly, Legacy argues that the district court erred by granting the

developers summary judgment on their breach of restrictive covenant

24

Case: 24-50462 Document: 100-1 Page: 25 Date Filed: 10/31/2025

No. 24-50462

counterclaim. Under the declaration of reservations, the development lots

may be used only for “single-family mobile home dwelling[s].” Additionally,

the declaration of reservations requires “improvements” to be pre-approved

by the architectural committee and reserves a right of way and easement for

utilities and drainage. The district court found that Legacy’s road violated

the declaration of reservations because Legacy did not first obtain the

architectural committee’s approval.

As before, Legacy argues that its road is not a road but a driveway.

Alternatively, Legacy argues that it did not build anything on the

development lots at all. The “driveway” argument fails for the same reason

that it failed before: the record flatly contradicts any suggestion that the road

is intended as a driveway instead of as a shortcut to the highway and planned

future amenities, as Legacy publicly advertised. See Scott, 550 U.S. at 380

(holding courts should disregard a version of events that is “blatantly

contradicted by the record, so that no reasonable jury could believe it” at

summary judgment). It also fails for the independent reason — which Legacy

does not dispute on appeal — that Legacy did not get the architectural

committee’s approval before building the “driveway.”

Legacy’s second argument that it did not build anything on the

development lots is contradicted by the record. See id. The record contains

clear photographic evidence that Legacy bulldozed over not only the five-

foot-wide strip of greenbelt but also over part of the development lots. At his

deposition, Hodgson admitted that Legacy did this as part of its plan to build

a road connecting the back of the neighborhood to the nearby highway.

Legacy openly advertised the road as accessible from the development lots.

That Legacy did not pave over the newly flattened section of the

development lots does not deprive the road of its status as an improvement

for which Legacy needed advance approval from the architectural

committee. The district court did not err.

25

Case: 24-50462 Document: 100-1 Page: 26 Date Filed: 10/31/2025

No. 24-50462

We MODIFY the judgment to dismiss the regulatory takings claim

without prejudice insofar as it challenged the two-permit cap and AFFIRM

the judgment as modified.

26