Home Builders Association Of Middle Tennessee v. Metropolitan Government Of Nashville And Davidson County

01/30/2019

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

January 8, 2019 Session

HOME BUILDERS ASSOCIATION OF MIDDLE TENNESSEE v.

METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON

COUNTY

Appeal from the Chancery Court for Davidson County

No. 17-0386-II William E. Young, Chancellor

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No. M2018-00834-COA-R3-CV

___________________________________

Plaintiff challenged a zoning ordinance on the grounds that it violated the Federal and

State Constitutions, that it was preempted by a state law, and that it was ultra vires and

thus void. The trial court dismissed this challenge on the grounds of ripeness, lack of

standing, and because no private right of action was conferred by the statute that Plaintiff

contended preempted the ordinance at issue. While the appeal was pending, the

Tennessee Legislature enacted Public Chapter 685, which Defendant contended made the

case moot and accordingly moved to dismiss the appeal. After a thorough consideration

of the arguments, we grant the motion and dismiss the appeal as moot; we vacate the

judgment of the trial court and dismiss the case.

Tenn. R. App. P. 3 Appeal as of Right; Motion to Dismiss Granted; Judgment of the

Trial Court Vacated and Case Dismissed

RICHARD H. DINKINS, J., delivered the opinion of the court, in which FRANK G.

CLEMENT, JR., P.J., M.S., and ANDY D. BENNETT, J., joined.

Braden H. Boucek, Nashville, Tennessee, for the appellant, Home Builders Association

of Middle Tennessee.

Jon Cooper, Director of Law, Lora Barkenbus Fox, and Catherine J. Pham, Nashville,

Tennessee, for the appellee, Metropolitan Government of Nashville & Davidson Co.

OPINION

I. FACTUAL AND PROCEDURAL HISTORY

In September of 2016, the council of the Metropolitan Government of Nashville

and Davidson County (“Metro”) passed two ordinances that provided incentives to home

builders to build affordable housing. The first ordinance, referred to as Substitute

Ordinance BL 2016-133 (“the ordinance” herein), amended Title 17 of the Metropolitan

Code, governing zoning, by adding provisions which adopted a policy known as

Inclusionary Housing.1 A second ordinance, BL 2016-342, amended Title 2 of the Metro

Code by adding Chapter 2.213, which contained provisions allowing Metro to provide

incentive grants to developers to assist with the development of affordable rental and

owner-occupied units.

The Home Builders Association of Middle Tennessee (“HBAMT”), a “non-profit

trade group dedicated to the promotion and protection of the home building industry in

the Middle Tennessee area,” filed suit on April 24, 2017. Count one of the complaint

asserted that, on its face, the ordinance effectuated a taking that violated the Fifth and

Fourteenth Amendments to the U.S. Constitution and Article I, section 21 of the

Tennessee Constitution because it “conditions the approval of development entitlements

needed to build developments over five units on a private property owner’s surrender of

its constitutional right to seek market rate value on their rental or for sale properties.”

Count two of the complaint alleged that the ordinance is preempted by Tennessee Code

Annotated section 66-35-102(b). Count three alleged that Metro’s enactment of the

Ordinance was ultra vires and thus void. HBAMT sought a declaration that the

ordinance “imposes an unconstitutional condition, constituting a taking without just

compensation” and an injunction prohibiting enforcement of the ordinance.

Metro moved to dismiss the complaint pursuant to Rule 12.02(6) of the Tennessee

Rules of Civil Procedure on the ground that the case was not ripe for adjudication

because Plaintiff “has not sought compensation through the ordinance or state law,”

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The stated purpose of the ordinance was:

… to promote the public health, safety and welfare by increasing the production of

Inclusionary Housing units to meet existing and anticipated housing and employment

needs; mitigating the impacts of increasing housing cost and provide housing affordable

to low and moderate income households; providing for a range of housing choices

throughout the city to avoid the concentration of poverty; and to provide a mechanism by

which residential development can contribute in a direct way to increasing the supply of

affordable and work force housing in exchange for additional development entitlements

other than those otherwise permitted as a matter of right.

Metropolitan Gov’t of Nashville & Davidson County, Tennessee, Code § 17.128.030 (2016).

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because Plaintiff did not have standing, and because “there is no private right of action

for Plaintiff to enforce state law.” The motion was heard on August 17, and on October

31 the court entered an order holding that the case was not ripe because HBAMT had not

sought compensation through the ordinance or applicable Tennessee law; that HBAMT

lacked standing; and that no private right of action existed in section 66-35-102(b) to

enable HBAMT to enforce that law. HBAMT’s motion to alter or amend the judgment

was denied. HBAMT appeals, raising the following issues for our review:

1. Whether a facial taking claim based on the unconstitutional conditions

doctrine is ripe for judicial review immediately upon enactment of the

challenged law or must a plaintiff first seek compensation through

inverse condemnation.

2. Whether HBAMT has organizational standing to raise a facial challenge

to an effective law certain to affect the property rights of HBAMT’s

members and inflicting immediate compliance costs before the law has

been applied to any of HBAMT’s members.

On October 4, 2018, Metro filed a motion requesting this Court to consider post-

judgment facts and dismiss this case as moot due to the Legislature’s enactment of Public

Chapter 685 on April 9, 2018, which amended Tennessee Code Annotated section 66-35-

102.2 Metro contended that the statute “expressly prohibits local governments from

enforcing ordinances that condition a zoning change on the allocation of affordable

housing” and that, according to its terms, “any ordinances in conflict with this act are

void and unenforceable.” On October 25, HBAMT filed a motion to consider post-

judgment facts and asserted that “this Court should consider the fact that . . . Metro . . .

has not repealed its Inclusionary Zoning Ordinance (Metro Code. § 17.40.780) even after

the passage of the state law that Metro argues mooted this case” and that “the continued

existence of the law demonstrates that the case is anything but moot.”

This Court granted both motions to consider post-judgment facts and reserved

judgment on Metro’s motion to dismiss the appeal.

II. ANALYSIS

In order for a court to rule on a matter, the case must remain justiciable throughout

the entire course of litigation, including appeal. Alliance for Native American Indian

Rights in Tennessee, Inc. v. Nicely et al., 182 S.W.3d 333, 338 (Tenn. Ct. App. 2005);

State v. Ely, 48 S.W.3d 710, 716, n.3 (Tenn. 2001). A case is not justiciable if it does not

involve a genuine, continuing controversy requiring the adjudication of presently existing

rights. State v. Brown & Williamson Tobacco Corp., 18 S.W.3d 186, 193 (Tenn. 2000);

Ford Consumer Fin. Co., Inc. v. Clay, 984 S.W.2d 615, 616 (Tenn. Ct. App. 1998). A

2

Public Chapter 685 is reproduced in its entirety as an appendix to this opinion.

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moot case is one that has lost its justiciability because it no longer involves a present,

ongoing controversy. McCanless v. Klein, 188 S.W.2d 745, 747 (Tenn. 1945); County of

Shelby v. McWherter, 936 S.W.2d 923, 931 (Tenn. Ct. App. 1996). A case will be

considered moot if it no longer serves as a means to provide some sort of judicial relief to

the prevailing party. Knott v. Stewart County, 207 S.W.2d 337, 338-39 (Tenn. 1948);

Ford Consumer Fin. Co., 984 S.W.2d at 616.

The nature and purpose of the doctrine of mootness has been explained by the

Tennessee Supreme Court:

Tennessee’s courts believed that “the province of a court is to

decide, not advise, and to settle rights, not to give abstract opinions.”

Accordingly, they limited their role to deciding “legal controversies.” A

proceeding qualifies as a “legal controversy” when the disputed issue is real

and existing, and not theoretical or abstract, and when the dispute is

between parties with real and adverse interests.

***

Tennessee courts do not apply the mootness doctrine mechanically. Rather,

when the question of mootness is raised, they consider many factors,

including the reason that the case is alleged to be moot, the stage of the

proceeding, the importance of the issue to the public, and the probability

that the issue will recur. Over time, the courts have recognized several

circumstances that provide a basis for not invoking the mootness doctrine.

These circumstances include: (1) when the issue is of great public

importance or affects the administration of justice, (2) when the challenged

conduct is capable of repetition and of such short duration that it will evade

judicial review, (3) when the primary subject of the dispute has become

moot but collateral consequences to one of the parties remain, and (4) when

the defendant voluntarily stops engaging in the challenged conduct. . . .

Norma Faye Pyles Lynch Family Purpose LLC v. Putnam Cty., 301 S.W.3d 196, 203,

(Tenn. 2009) (citations omitted). In specifically addressing the public interest exception,

which HBAMT contends applies in this case, the Court stated:

. . . [A]s a general rule, Tennessee’s appellate courts should dismiss appeals

that have become moot regardless of how appealing it may be to do

otherwise. However, under “exceptional circumstances where the public

interest clearly appears,” the appellate courts may exercise their judgment

and discretion to address issues of great importance to the public and the

administration of justice. To guide their discretion, the courts should first

address the following threshold considerations: (1) the public interest

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exception should not be invoked in cases affecting only private rights and

claims personal to the parties; (2) the public interest exception should be

invoked only with regard to “issues of great importance to the public and

the administration of justice”; (3) the public interest exception should not

be invoked if the issue is unlikely to arise in the future; and (4) the public

interest exception should not be invoked if the record is inadequate or if the

issue has not been effectively addressed in the earlier proceedings.

If the threshold considerations do not exclude the invocation of the

public interest exception to the mootness doctrine, the courts should then

balance the interests of the parties, the public, and the courts to determine

whether the issues in the case are exceptional enough to address. In making

this determination, the courts may consider, among other factors, the

following: (1) the assistance that a decision on the merits will provide to

public officials in the exercise of their duties, (2) the likelihood that the

issue will recur under similar conditions regardless of whether the same

parties are involved, (3) the degree of urgency in resolving the issue, (4) the

costs and difficulties in litigating the issue again, and (5) whether the issue

is one of law, a mixed question of law and fact, or heavily fact-dependent.

Id. at 210–11 (citations and footnotes omitted).

As we resolve this issue, we have taken into account the four threshold

considerations. HBAMT contends that the appeal is not moot because its facial challenge

is an issue of great public importance; in our analysis, the first and third considerations

must also be taken into account. The purpose of the ordinance is to address “the public

health, safety and welfare by increasing the production of Inclusionary Housing units”;

the interest presented by HBAMT, however, is one which falls more as affecting the

asserted rights of its individual members. We are persuaded that the consideration of

whether the issue is unlikely to arise in the future is paramount.

In Kentucky Right to Life, Inc. v. Terry, the Sixth Circuit Court of Appeals

addressed the question of whether a Legislature’s amendment or repeal of the law at issue

in a pending case rendered the case moot; the court observed:

The mootness doctrine, a subset of the Article III justiciability

requirements, demands a live case-or-controversy when a federal court

decides a case. Legislative repeal or amendment of a challenged statute

while a case is pending on appeal usually eliminates this requisite case-or-

controversy because a statute must be analyzed by the appellate court in its

present form.

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108 F.3d 637, 644 (6th Cir.1997) (citations omitted); see also Green Party of Tenn. v.

Hargett, 700 F.3d 816, 822 (6th Cir. 2012); Banas v. Dempsey, 742 F.2d 277, 281 (6th

Cir. 1984) (holding that a change in federal law while an action was pending rendered

moot the plaintiffs’ request for injunctive relief to prevent the defendant from enforcing

allegedly unconstitutional state practices).

Public Chapter 685 expressly precludes Metro from enforcing the ordinance, i.e.,

taking the action that HBAMT sought to have declared unconstitutional; as such,

HBAMT’s members face no threat of further injury. See Banas v. Dempsey, 742 F.2d

277, 282–83 (6th Cir. 1984), aff’d sub nom. Green v. Mansour, 474 U.S. 64 (1985)

(holding that the plaintiffs had “received the benefits to which they claimed to be entitled

after filing their lawsuit” and were “under no threat of further injury as a result of

defendant’s conduct” such that they “lacked a ‘personal stake in the outcome’ required to

assure the concrete adverseness necessary for the resolution of constitutional questions”)

(quoting O’Shea v. Littleton, 414 U.S. 488, 94 S. Ct. 669, 38 L.Ed.2d 674 (1974); Baker

v. Carr, 369 U.S. 186, 204, 82 S. Ct. 691, 703, 7 L.Ed.2d 663 (1962)). In light of the

nullification of the Metro ordinance by Public Chapter 685, the issue presented is

unlikely to arise in the future.3

III. CONCLUSION

We conclude that the public interest exception to the mootness doctrine is not

applicable to the facts of this case, as the issue presented is unlikely to arise in the future.

Accordingly, we grant Metro’s motion to dismiss this appeal, vacate the judgment of the

trial court, and dismiss this case as moot.

RICHARD H. DINKINS, JUDGE

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HBAMT maintains that the case is not moot because “it takes a repeal or a court order to void a

preempted law” and Metro has not repealed the ordinance; this argument is without merit. Repeal of the

ordinance is not necessary for purposes of determining whether the case is moot. Moreover, our

resolution of this case is based on our holding that Public Chapter 685 renders the ordinance

unenforceable, a position advanced by Metro in the motion and affirmed by its counsel at argument.

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APPENDIX

State of Tennessee

Public Chapter No. 685

House Bill No. 1143

By Representatives Casada, Cameron Sexton, Daniel

Substituted for: Senate Bill No. 363

By Senator Haile

AN ACT to amend Tennessee Code Annotated, Title 7; Title 13 and Title 66,

relative to housing sold or rented at below market value.

WHEREAS, the 109th General Assembly enacted Public Chapter 822 that

prohibited a local governmental unit from enacting, maintaining, or enforcing “any

zoning regulation, requirement, or condition of development imposed by land use or

zoning ordinances, resolutions, or regulations or pursuant to any special permit, special

exception, or subdivision plan that requires the direct or indirect allocation of a

percentage of existing or newly constructed private residential or commercial rental units

for long-term retention as affordable or workforce housing”; and

WHEREAS, the Metropolitan Government of Nashville and Davidson County

enacted an ordinance to incentivize inclusionary housing with any residential

development that seeks additional development entitlements beyond that permitted by the

current zoning district, which is in direct conflict with Public Chapter 822; and

WHEREAS, it is the intent of the General Assembly to clarify that neither

Nashville nor any local government has the authority to enact such an ordinance that

would place requirements regarding inclusionary, affordable, or below market value

housing when entitlements, variances, or any other form of permit or authorization is

sought from the local government; now, therefore,

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF

TENNESSEE:

SECTION 1. Tennessee Code Annotated, Section 66–35–102, is amended by

deleting subsections (b) and (c) and substituting instead the following:

(b)

(1) Notwithstanding any provision of law to the contrary, a local

government unit, or any subdivision or instrumentality thereof, shall not enact,

maintain, or enforce any ordinance, resolution, regulation, rule, or other

requirement of any type that:

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(A) Requires the direct or indirect allocation of existing or newly

constructed private residential or commercial rental units to be sold or

rented at below market rates;

(B) Conditions any zoning change, variance, building permit,

development entitlements through amendment to the zoning map, or any

change in land use restrictions or requirements, on the allocation of existing

or newly constructed private residential or commercial rental units to be

sold or rented at below market rates; or

(C) Requires a person to waive the person's constitutionally

protected rights related to real property in order that the local government

unit can increase the number of existing or newly constructed private

residential or commercial rental units that would be available for purchase

or lease at below market rates within the jurisdiction of the local

government unit.

(2) This subsection (b) does not prohibit a local government unit from

creating or implementing a purely voluntary incentive-based program designed to

increase the construction or rehabilitation of workforce or affordable private

residential or commercial rental units, which may include providing local tax

incentives, subsidization, real property or infrastructure assistance, or any other

incentive that makes construction of affordable housing more economical, so long

as no power or authority granted to the local government unit to regulate zoning or

land use planning is used to incentivize or leverage a person to develop, build, sell,

or rent housing at below market value.

(3) Any person who suffers an ascertainable loss of money or property,

real, personal, or mixed, or any other article, commodity, or thing of value

wherever situated, as a result of the practices prohibited by this section, may bring

an action individually to recover actual damages.

SECTION 2. All ordinances, resolutions, regulations, rules, or requirements of any

type of a local government unit that are in conflict with this act are void and

unenforceable.

SECTION 3. This act shall take effect upon becoming a law, the public welfare

requiring it.

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