Petition — Southpark Square, Ltd. v. City of Jackson

—————$___

————

ee

Supreme Court, U. &

FILED

} MAY 1 1978

ee RODAK, JR., CLER

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1977

@-1564

SOUTHPARK SQUARE, LTD.,

Petitioner,

VS.

CITY OF JACKSON, MISSISSIPPI, and STATE HIGHWAY

DEPARTMENT OF THE STATE OF MISSISSIPPI,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

To the United States Court of Appeals for the Fifth Circuit

ALVIN M. BINDER

BINDER, MOORE & HOWELL

511 East Pearl Street

Post Office Box 25

Jackson, Mississippi 39205

601-948-8800

Attorneys for Petitioner

St. Louis Law Printing Co., Inc., 812 Olive Street 63101 314-231-4477

TABLE OF CONTENTS

Page

BetreGmetery GRRGOMNGE «wc ccc cc cccccccccccccces 1

I no nonce Mstcncceneeessess 2

Questions Presented for Review .............+ee0005 2

Constitutional and Statutory Provisions Involved ........ 3

I Or ED 6g cn cccccccvevrcestsvcccccees 4

Reasons for Granting the Writ .............0-+e0eee> 7

GES nk oc cates cecccceccesesccedsecesceceees 8

GS, noi cdnnceeeceseeeesterason cecarsoseos 18

Appendix A—Opinion of the United States Court of Ap-

peals for the Fifth Circuit ................eeeeees A-1

Appendix B—Order Denying Petition for Rehearing En

BN. ben co bn ceecadien cuss eeseebdane 000sdees A-17

Cases Cited

Ballard Fish & Oyster Company, Inc. v. Glaser Construc-

tion Company, Inc., 424 F.2d 473 (4th Cir. 1970).... 10

Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 539

GREED cocdasdeccvsveceesucocescectstocesece 11,12

Cuyahoga River Power Company v. City of Akron, 240

U.S. 462, 36 S.Ct. 402, 60 L.Ed. 743 (1815) ........ 14

Foster v. City of Detroit, 264 F.Supp. 655, aff. 405 F.2d

138 (6th Cir. 1968) motion denied 423 F.2d 660 ..... 14

Foster v. Herley, 330 F.2d 87 (6th Cir. 1964) ........ 10, 16

Gully v. First National Bank in Meridian, 229 U.S. 109,

3 GAL. GG, SE Ete PO CIO 6 cc ccccccccccccces 12

Hines v. Cenla Community Action Committee, Inc., 474

P26 1052, 1056 Gtk Cir. 1973) ... 2. ccccccccccce 13

International Association of Machinists v. Central Airlines,

Inc., 295 F.2d 209, 218 (Sth Cir. 1961) ............ 13

Jackson Municipal Airport Authority v. Evans, 191 So.2d

SE SD nd.wad dc nenbencu enh esessnncese 9

Jacksonville v. Schumann, 167 So.2d 95 (Fla. App. 1964) 9

Martin v. Port of Seattle, 64 Wash.2d 309, 319 P.2d 540,

cert. den. 379 U.S. 989, 85 S.Ct. 701, 131 L.Ed.2d 610 9

McGoon v. Northern Pacific Railway Company, 204 F.

SI IIIS GI oinccc dnecsccancacveds sce: 13

Mosher v. City of Phoenix, 287 U.S. 29, 53 S.Ct. 67, 77

i 14

NLRB v. Shipbuilding Local 22, 391 U.S. 418, 88 S.Ct.

1717, 20 L.Bd.2d 706 (1968) ...............00ee 15, 16

Oneida Indian Nation v. County of Oneida, 414 U.S. 661,

675, 94 S.Ct. 772, 39 L.Ed.2d 73 (1974) ........... 12

Swafford v. Templeton, 185 U.S. 487 (1901) .......... 12

United States v. General Motors Corp., 323 U.S. 373, 378,

65 S.Ct. 357, 359-60, 89 L.Ed. 311 (1945) ......... 7,9

Statutes

U.S. Constitution, Amendment V .............. 2, 3, 5, 8, 12

U.S. Constitution, Amendment XIV, Section 1.2, 3, 5, 8, 10, 12

Title 28, United States Code, Section 1331 (Supp.

4 MTEETT TLL Te 2, 3, 5, 7, 11, 14

Other Authorities

27 Am.Jur.2d, Eminent Domain, Section 478, p. 411... 9

29 C.J.S., Eminent Domain, Section 6, p- 182 .....0+-- 11

9

30 C.J.S., Eminent Domain, Section 399, pp. 475-77 .---

3 Davis, Administrative Law Treatise, Section 20.10 (1958) 15

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1977

No. “ee enenenenenee

SOUTHPARK SQUARE, LTD.,

Petitioner,

VS.

CITY OF JACKSON, MISSISSIPPI, and STATE HIGHWAY

DEPARTMENT OF THE STATE OF MISSISSIPPI,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

To the United States Court of Appeals for the Fifth Circuit

INTRODUCTORY STATEMENT

The Petitioner, Southpark Square, Ltd., respectfully petitions

this Court for a Writ of Certiorari to review the judgment of the

United States Court of Appeals for the Fifth Circuit, officially

reported as Southpark Square, Lid. v. City of Jackson, Missis-

sippi, 565 F.2d 338 (Sth Cir. 1977), handed down by the

United States Court of Appeals for the Fifth Circuit on Decem-

ber 27, 1977.

a

The opinion of the United States Court of Appeals for the

Fifth Circuit is appended, bound with this Petition, and marked

Appendix “A”.

Petition for Rehearing En Banc was denied by the United

States Court of Appeals for the Fifth Circuit on February 2,

1978, and the Order denying the Petition for Rehearing En

Banc is appended, bound with this Petition, and

fix “B”. n, marked Ap-

JURISDICTIONAL STATEMENT

Petitioner seeks review of the j i

judgment of the United States

Court of Appeals for the Fifth Circuit, and Order of said Court

denying the Petition for Rehearing En B

1978. hearing anc dated February 2,

tk MA re Ge Sin Comm tes betes iction to review

judgment by Writ of Certiorari by virtue of j

States Code, Sec. 1254. ” > Cae

QUESTIONS PRESENTED FOR REVIEW

(1) Whether a municipality's denial of a building ing permit

ultimately resulting in the property owner’s loss of his property

for inability to obtain financing, is a compensable taking under

vende umd Fourteenth Amendments to the United States Con-

(2) Whether the Federal District Courts juri

have jurisdiction

under 28 United States Code, Sec. 1331, to entertain suits based

ne

— wn

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

This case involves the Fifth and Fourteenth Amendments to

the Constitution of the United States, and Title 28, Section

1331, of the United States Code.

The Fifth Amendment provides:

“No person shall be held to answer for a capital, or other-

wise infamous crime, unless on a presentment or indictment

of a Grand Jury, except in cases arising in the land or

naval forces, or in the Militia, when in actual service in

time of War or public danger; nor shall any person be sub-

ject for the same offense to be twice put in jeopardy of life

or limb; nor shall be compelled in any Criminal Case to

be a witness against himself, nor be deprived of life, liberty

or property, without due process of law; nor shall private

property be taken for public use, without just compensa-

tion.”

The Fourteenth Amendment provides:

“Section 1. All persons born or naturalized in the United

States, and subject to the jurisdiction thereof, are citizens of

the United States and of the State wherein they reside. No

State shall make or enforce any law which shall abridge the

privileges or immunities of citizens of the United States;

nor shall any State deprive any person of life, liberty or

property without due process of law; nor deny to any person

within its jurisdiction the equal protection of the laws.”

Title 28, United States Code, Section 1331, provides:

“(a) The district courts shall have original jurisdiction of

all civil actions wherein the matter in controversy exceeds

the sum or value of $10,000, exclusive of interests and

costs, and arises under the Constitution, laws, or treaties of

the United States.”

STATEMENT OF THE CASE

On May 31, 1973, Southpark Square, Ltd., Petitioner

(herein “Property owner”), obtained an option from Calvin L.

Wells, individually, Gus Primos, individually, Hayloft, Inc. (Gus

Primos, President) and Ken Primos, individually, for the purchase

of approximately seven hundred (700) front feet along Interstate

Highway 55 North, located just north of the I-55/Briarwood

exchange in Jackson, Mississippi. At the time the option was

iaken, property owner paid option money to the sellers totaling

$10,000.00. On August 10, 1973, property owner notified

Calvin L. Wells and the above seliers of its intent to exercise

these options. (A.138). On December 3, 1973, title passed from

Calvin L. Wells, et al., to property owner to all property cov-

ered by the options given in May. At the time title passed

property owner paid an additional $50,000.00 toward the ou.

chase price (A.139), the purchase price being $620.00 per

front foot, or a total of $434,000.00 (A.138). It was the inten-

tion of property owner to develop the land for constructing and

operating a Ramada Inn Motel project (A.139).

| On February 4, 1974, property owner submitted its applica-

tion for a building permit to the City of Jackson (herein “City”)

for the construction of a Ramada Inn on the property (A.18)

(Ex. P-1, 15), (A.139). Mr. Murray Stewart of the City enily

notified Mr. Billy Cantrell, an employee of property owner, that

the building permit would not be issued because of a proposed

interchange at I-55 and Beasley Road (A.42, Ex. P-2 No. 2)

On February 21, 1974, after several calls and conferences with

Stewart and Cantrell relative to the issuance of the permit, the

City, by Murray Stewart, advised that, “the City of Jackson is

pre tm ete. comune Mit ann haber mean

pro for i ‘

mat age Ramada Inr in the Beasley Road area.” (A.46,

— a

On May 1, 1974, at the request of the property owner, at-

torney Harry Strauss wrote Mayor Russell Davis, Commissioner

Kelly and Commissioner Shanks relative to the dilemma that

property owner found itself in and requested some action re-

garding the issuance of the permit (A.54, Ex. P-3, No. 1). This

letter was referred to the City Attorney, John Stone, for con-

sideration, and on May 8, 1974, he advised Strauss by letter

that the situation had not changed regarding the issuance of the

permit, but that he would keep them advised (A.53, Ex. P-3, No.

1). Upon receipt of Stone’s letter of May 8, property owner re-

quested that Strauss institute legal proceedings.

By August of 1974, property owner had made interest pay-

ments of $28,068.56 (A.143). The principal balance on the

purchase price note was due on October 18, 1974, and the prop-

erty owner, because of the stalemate situation on building, was

unable to obtain either construction financing or permanent fi-

nancing and was forced to allow the property to go into fore-

closure. The property did go into foreclosure and was bought

in by the individuals, corporations and partnerships that sold

this property to property owner (A.148).

Property owner filed its Complaint in the District Court, al-

leging jurisdiction of that Court under. the Fifth and Fourteenth

Amendments of the Constitution of the United States and Title

28, Section 1331 of the United States Code, seeking damages of

$111,000.00, interest and costs (A.1). The District Court

awarded property owner a judgment against the City for $88,-

068.50, together with interest and costs, and denied any relief

against the State Highway Department, State of Mississippi (A.

202).

On appeal, the United States Court of Appeals for the Fifth

Circuit reversed the judgment entered by the District Court on

the grounds that Petitioner's claim was wholly insubstantial and

frivolous. Petitioner now applies to this Honorable Court as

=

it verily believes that the Court of Appeals misapplied the stand-

ards set forth by this Court and by the Court of Appeals itself

as that Court admitted in its opinion that “[t]his case presents

a novel question of constitutional law . . .,” 565 F.2d at 342, and

only by construing the constitutional provision involved could

the Court determine the validity of the Petitioner’s claim. 565

F.2d at 341. The Court of Appeals, in effect, wrongfully sub-

stituted its own finding of fact for that of the trier of fact—the

REASONS FOR GRANTING THE WRIT

We believe that this case furnishes the Court two distinct

and important issues which have imposed insurmountable con-

fusion in the lower courts, both federal and state, warranting a

much-needed ruling by this Honorable Court; (1) whether a

municipality's denial of a building permit, ultimately resulting

in the property owner’s loss of his property for inability to ob-

tain financing, is a compensable taking under the Fifth and

Fourteenth Amendments to the Constitution of the United

States; and (2) whether the Federal District Court has jurisdic-

tion, under 28 U.S.C., Section 1331, to entertain suits based

thereon.

The United States Court of Appeals for the Fifth Circuit in

its opinion in the case at bar, held that the first question here

presented was a novel question of constitutional law. There

are cases where such a denial was held to constitute a compen-

sable taking. Citing United States v. General Motors Corp.,

323 U.S. 373, 378, 65 S.Ct. 357, 359-60, 89 L.Ed. 311 (1945),

rendered by this Honorable Court, the Court of Appeals here

held “while the City of Jackson-did not condemn or physically

occupy Southpark’s land, ‘[g]overnmental action short of ac-

quisition of title or occupancy has been held, if its effects are so

complete as to deprive the owner of all or most of his interest

in the subject matter, to amount to a taking.’ ” 565 F.2d at 342.

With a possibility of such a denial constituting a compensable

taking, the Court of Appeals found it difficult to determine

whether such was the situation in the case at bar. One point is

certain, however, and that is that it was not so obvious that

there was not such a taking. The Court of Appeals, itself, after

stating that the case presented a novel question of constitutional

law, found “no prior cases which make it ‘apparent to a legal

certainty that no constitutional violation had been committed as

alleged.’ ” 565 F.2d at 342.

—_ i

In footnote 6 of its opinion, the Court of Appeals in the in-

stant case listed several cases, as hereinafter more fully appears,

reaching “disparate conclusions hinging on subtle distinctions

and not clearly foreclosing a finding for the Plaintiff in this case.”

565 F.2d at 342.

) With this backdrop of “disparate” cases on such a “novel ques-

tion of constitutional law,” we verily believe that the Federal

District Court correctly asserted its jurisdiction here to make

such a determination on the merits.

To take advantage of this clear opportunity to establish the

necessary guidelines for lower trial courts on these unique con-

stitutional and jurisdictional questions, and for all of the fore-

going reasons, we humbly ask this Court to grant its Writ of

Certiorari to Petitioner, Southpark Square, Ltd.

ARGUMENT

This is an action by property owner, South uare, Ltd.

hereinafter referred to as “Petitioner” oman po of J ack-

son, Mississippi, which was brought as a claim arising under the

Fifth and Fourteenth Amendments to the Constitution of the

United States. This type of action is known as an inverse con-

demnation case which reflects the affirmative taking of an own-

er’s property when one is deprived of its beneficial use by public

authority. We specifically call to this Court’s attention that

much of the testimony which was considered by the lower Dis-

pe Court was contained in the depositions introduced into evi-

ence by agreement of all parties which are ced withi

the record and which were considered by the Mme en

with the oral testinony taken during trial. By definition inverse

condemnation is:

- . am action or eminent domain proceeding initiated

by the property owner rather than the condemnor tg

And is available where:

“

«atin

“ _ . private property has been actually taken for public

use without formal condemnation proceedings and where it

appears there is no intention or willingness of the taker

to bring such proceedings” 27 Am.Jur.2d, Eminent Do-

main, Section 478, p. 411.

The general rule applicable to these type proceedings is

enunciated in 30 C.J.S., Eminent Domain, Section 399, pp

475-77, as follows, to wit:

“Except where there is an exclusive statutory remedy, the

owner of property appropriated for a public purpose with-

out compensation having been made may demand and re-

cover the value of the property taken. Such an action is

sometimes treated as a condemnation proceeding and is

designated as a proceeding in reverse or inverse condemna-

tion. The fact that the action is brought by the owner

rather than the condemnor does not change its essential

nature. The action is not based on tort, but on the constitu-

tional prohibition of the taking of property without com-

pensation.” [Emphasis added}.

The “inverse condemnation” proceeding differs only in that

the land owner institutes the action rather than the entity pos-

sessing condemnation powers. The legal doctrine of inverse

condemnation has been recognized by the state courts in many

instances. See Jackson Municipal Airport Authority v. Evans,

191 So2d 126 (Miss. 1966); Jacksonville v. Schumann, 167

So2d 95 (Fla.App. 1964); Martin v. Port of Seattle, 64 Wash.2d

309, 391 P.2d 540, cert. den. 379 U.S. 989, 85 S.Ct. 701, 131

L.Ed.2d 610.

It is also well settled that the doctrine of inverse condemna-

tion is recognized and applied in the Federal courts. Citing

the case of United States v. General Motors Corp., 323 US.

373, 378, 65 S.Ct. 357, 359-60, 89 L.Ed. 311 (1945), a de-

cision rendered by this Honorable Court, the United States

— 10 —

Court of Appeals for the Fifth Circuit, itself, in the case at

bar, recognized that “. . . while the City of Jackson did not

condemn or physically occupy Southpark’s land, ‘[g]Jovern-

mental action short of acquisition of title or occupancy has

been held, if its effects are so complete as to deprive the owner

of all or most of his interest in the subject matter to amount

to a taking.” 565 F.2d at 342.

In Foster v. Herley, 330 F.2d 87 (6th Cir. 1964), the Court

held:

“The Plaintiff claims a right under the Fourteenth Amend-

ment to the United States Constitution not to be deprived

of his property without due process of law and that the

acts of the Defendant constituted such a deprivation. If

the Fourteenth Amendment is so construed, his claim is

defeated. The District Court has jurisdiction under Sec-

tion 1331, Title 28, United States Code, to decide this

question. Cuyahoga River Power Company v. City of

Akron, 240 U.S. 462, 36 S.Ct. 402, 6 L.Ed. 743; Mosher

v. City of Phoenix, 287 U.S. 29, 53 S.Ct. 67, 77 L.Ed.

148”

The Court went on to reverse the Lower Court’s decision on

the issue of jurisdiction, directing the District C - he

jurisdiction, hear and decide the case on the merits.

In Ballard Fish & Oyster Company, Inc. v. Glaser Construc-

tion Company, Inc., 424 F.2d 473 (4th Cir. 1970), that Court

of Appeals held that a natural gas company’s occupancy of

privately owned oyster beds without first acquiring an easement,

either by grant or condemnation, was action taken under color

of state law, and the question of whether the gas company’s

occupancy constituted an unlawful taking of property without

just compensation in violation of the Fourteenth Amendment to

the Constitution of the United States raised Federal quesiions

and Federal jurisdiction over the owner's action against the gas

company. The Court there stated:

=

“It is now well settled that the due process clause of the

Fourteenth Amendment denies a state, or any of its instru-

mentalities, the power to take private property for a public

use without just compensation. Mosher v. City of Phoenix,

287 US. 29, 53 S.Ct. 67, 77 L.Ed. 148 (1932); Chicago,

B & ORR. v. City of Chicago, 166 U.S. 226, 17 S.Ct.

581, 41 L.Ed. 979 (1897).” 424 F.2d at 474.

The City contended in the case at bar that it may, through

the exercise of police power, fetter and inhibit the valid use of

the property in question. The rule putting this premise to rest

is further set forth in 29 C.J.S., Eminent Domain, Section 6, p.

182, as follows, to wit:

a _ police regulations must be reasonable, and the legis-

lature cannot, under the guise of the police power, im-

posed unreasonable or arbitrary regulations which go be-

yond that power, and in effect deprive a person of his prop-

erty within the purview of the law of eminent domain, as

by depriving the owner of all profitable use of the property

not per se injurious or pernicious restricting the lawful uses

to which the property can be put and destroying its value,

permanently so restricting the use of the property that it

cannot be used for any reasonable purpose, or completely

destroying the beneficial interest of the owner.

Section 1331, Title 28, United States Code, provides:

“(a) The District Court shall have original jurisdiction of

all civil actions wherein the matter in controversy exceeds

the sum or value of $10,000.00, exclusive of interest and

costs, and arises under the Constitution, laws or treaties of

the United States.”

The Court of Appeals in its opinion of reversal in the case

i of

at bar clearly failed to correctly apply the two-prong test

Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 539 (1945),

== j?

to the factual situation of the case at bar in holding that Peti-

tioner’s claim was wholly insubstantial and frivolous, for as the

Court of Appeals, itself, correctly observed, “if there is any

foundation of plausibility to the claim federal jurisdiction exists.”

565 F.2d at 342-43. [Emphasis Added].

The Fifth Circuit stated explicitly “[t}his case presents a novel

question of constitutional law; whether a City’s denial of a build-

ing permit, ultimately resulting in the owner’s loss of his prop-

erty for inability to obtain financing, is a compensible taking.”

565 F.2d at 342; and in recognition of Petitioner's allegation

that the City’s actions were in violation of the Fifth and Four-

teenth Amendments to not have its property taken without just

compensation, held that “[oJnly by construing that constitutional

ar rondo a validity of this claim. Thus, a

case.” 565 F.2d at 341. sieauaa lei

Thus, as in the landmark case of Bell v. Hood, supra, “The

Complaint did, in fact, raise serious questions, both of law

Sead eee ene ESD aly ate

assumed jurisdiction over the versy.”

U.S. at 683. Pages —

The Court of Appeals, here, thus erred in failing to apply the

proper rule of Oneida Indian Nation v. County of Oneida, 414

U.S. 661, 675, 94 S.Ct. 772, 39 L.Ed.2d 73 ( 1974): and

Swafford v. Templeton, 185 U.S. 487 (1901); that “[t}he tales

may fail in a later stage for a variety of reasons; but for jurisdic-

tional purposes, this is not a case where the underlying right or

obligation arises only under state law and federal law is merely

alleged as a barrier to its effectuation, as was the case in Gully

v. First National Bank in Meridian, 299 U.S. 109, 57 S.Ct. 96

81 L.Ed. 70 (1936).” However, even if Gully, supra, should

be deemed applicable to the instant case, then the Petitioner's

claim satisfies the four-point test set out in that case:

=

(1) A right created by the Constitution or laws of the

United States is an essential element of Petitioner's cause

of action;

(2) That right is such that it will be supported if the Con-

stitution or laws of the United States are given one con-

struction or effect, and defeated if given another;

(3) A genuine and present controversy, not merely a pos-

sible or conjectural one, exists with reference thereto;

(4) The controversy is disclosed upon the face of the com-

piaint, unaided by the answer or other pleading.

Regarding the second element of this four-point test, the

Court of Appeals, in the instant case, has obviously failed to

apply its own rule set forth in the case of Hines v. Cenla Com-

munity Action Committee, Inc., 474 F.2d 1052, 1056 (Sth Cir.

1973), that in construing a federal law or Constitutional pro-

vision to see whether one construction will promote the com-

plaint and another defeat it, the construction “does not mean

that ‘the case will necessarily turn upon an interpretation of

the statute, but simply that the complaint must set forth a cause

of action of which federal law is an essential ingredient, and

which may, therefore, properly involve a construction of that

law.” Furthermore, the Court of Appeals clearly failed to apply

its rule set forth in International Association of Machinists v.

Central Airlines, Inc., 295 F.2d 209, 218 (Sth Cir. 1961), that

“it is the suit, not a question in the suit, that must arise under

the laws of the United States” in order for federal jurisdiction

to exist and that rule of McGoon v. Northern Pacific Railway

Company, 204 F. 998 (D.C.N.D. 1913), that a federal law

creating a federal right gives rise to the right to sue under that

federal law to enforce that right. “When the complaint asserts

a right created by federal law, it presents a suit which may

properly turn upon a construction of that law; and such a suit

‘arises out of’ the law for purposes of federal jurisdiction.” 204

—_—

F. at 1005. The purpose of these rules would clearly be defeated

if a Plaintiff such as Petitioner, were deprived of a federal forum

in which to protect his federal rights.

The District Court in the instant case found specifically that

it had jurisdiction of Petitioner’s claim and the power and au-

thority to settle it (A.200). Citing Foster v. City of Detroit,

264 F.Supp. 655, affirmed 405 F.2d 138 (6th Cir. 1968),

motion denied 423 F.2d 660; Section 1331, Title 28, U.S.C.;

Cuyahoga River Power Company v. City of Akron, 240 U.S.

462, 36 S.Ct. 402, 60 L.Ed 743 (1815); Mosher v. City of

Phoenix, 287 U.S. 29, 53 S.Ct. 67, 77 L.Ed. 148 (1932).

Respondent, the City of Jackson, never contended either that

the matter in controversy here involved was less than the juris-

dictional amount or that the Petitioner’s claim was not cognizable

under the Constitution of the United States. Jurisdiction of the

District Court was not attacked on either of these two theories;

rather, the City urged lack of jurisdiction for the following

reasons:

(1) The City Council did not pass on the issuance of Peti-

tioner’s building permit;

(2) Petitioner did not avail itself of its legal remedies, i.e.,

appeal, mandamus and exhaustion of administrative remedies.

No federal authority was cited which would negate federal

question jurisdiction or which required thé Petitioner to pursue

its federal claim in state courts and local administrative boards.

Respondent cited numerous cases under the laws of Mississippi

and Texas, and while these cases may be determinative of claims

and rights under the laws of the State of Mississippi and the

State of Texas, these holdings are not controlling and dispositive

of Petitioner’s federal claim and the jurisdiction of the Federal

Courts.

= =

In response to the City’s contention that Petitioner

quate administrative and judicial remedies under state and local

law, Petitioner recognizes the subtle doctrine which requires

resort to administrative remedies prior to resorting to court

actions for redress where the administrative remedy 1s: (1) ade-

quate; (2) involved with specialized administrative understand-

ing and expertise; (3) there will be no additional injury as @

result of pursuing the administrative remedy. 3 Davis, Adminis-

trative Law Treatise (1958) Sec. 20.10 sets out the test for

exhaustion of remedies thusly:

“Probably the guide to requiring or not requiring exhaus-

tion when administrative jurisdiction is challenged should

be examination of three main variables—extent of injury

clarity of doubt about administrative jurisdiction and in-

volvement of specialized administrative understanding in

the question of jurisdiction.”

This Honorable Court, itself, clearly recognized the above

principles applicable to the doctrine of exhaustion in NLRB

v. Shipbuilding Local 22, 391 U.S. 418, 88 S.Ct. 1717, 20 L.Ed.

2d 706 (1968). There, this Court stated as settled law that:

“Exhaustion is not required when the administrative reme-

dies are inadequate.”

In the District Court opinion by the Honorable Judge, Wil-

liam Harold Cox, it is stated:

“The administrative remedies allegedly availab le to the

plaintiff under the circumstances were completely inade-

quate. Such remedies are not expeditious and efficient as

is the right of this plaintiff to resort to this Court for redress

of its injuries _ That defense is addressed to the sound judi-

cial discretion of the Court.”

There referring to the case of NLRB v. Shipbuilding Local 22,

supra (Appendix, p. 200 n. 2).

—=— =

The learned District Judge further stated:

“The municipality contends that this Court is without juris-

diction of this claim under such circumstances. This Court

is of the opinion that it does have jurisdiction of this claim

and has the power and authority to settle it.”

There referring to Foster v. Herley, supra (Appendix, Pg. 200

n. 1).

The facts contained in the record of the Lower Court, in-

cluding the depositions, clearly show the action taken by the

City was arbitrary. The denial of the building permit, pending

a decision by the Mississippi Highway Department on construc-

tion of the Beasley Road interchange, did affect the beneficial

ownership of the property owned by Petitioner. The Court of

Appeals’ decision that the effect was “speculative at best” is

completely in disregard of the record. The record clearly shows

that as a direct result the property was foreclosed upon by the

mortgage holders.

The District Judge was the trier of fact and law. Acting as the

juror he had determined that the taking on the part of the City

was unreasonable. Once that determination was made, the

Court of Appeals should be held to be unable to substitute itself

as the trier of the factual situation which is within the District

Court’s province.

The above clearly exhibits that the Court of Appeals consist-

ently took the record and acted not as an appellate court but as

a trier of fact, and they decided what the City did was not

arbitrary and capricious. This is clearly within the province of

the jury and without a jury it is completely within the discretion

of the Lower Court.

Lastly, and most importantly, we once again single out for the

Court the remarks of the Court of Appeals contained on page

342 of its opinion:

_—=

“This case presents a novel question of constitutional law;

whether a city’s denial of a building permit, ultimately re-

sulting in the owner’s loss of his property for inability to

obtain financing, is a compensable taking.”

The above statement, in and of itself, clearly reflects that the

Court of Appeals substituted its judgment of the facts for and in

behalf of the distinguished Lower Court Judge William Harold

Cox for there is one word that is glaringly absent. The issue is,

in the writer’s opinion:

“Whether a City’s arbitrary denial of a building permit ul-

timately resulting in the owner’s loss of his property for

inability to obtain financing is a compensable taking.”

and

“Whether or not federal jurisdiction is invited upon this

issue.”

A reading of the record and facts as shown by the evidence

and the depositions reveals that even on the date of this Petition

for Writ of Certiorari, April, 1978, there is no interchange nor

is one foreseen in the near future on the property in question in

Jackson, Mississippi.

—

CONCLUSION

Petitioner respectfully submits that a review of the record

and the appendices attached hereto would indicate that this

Petition for Writ of Certiorari should be granted, and the de-

cision of the Fifth Circuit Court of Appeals which reversed the

judgment of the Lower Court should be set aside and the

judgment reinstated.

Respectfully submitted,

ALVIN M. BINDER

511 East Pearl Street

Post Office Box 25

Jackson, Mississippi 39205

(601) 948-8800

Attorney for Petitioner

PROOF OF SERVICE

The undersigned counsel for Plaintiff-Petitioner certifies that

three (3) true and correct copies of the foregoing Petition for a

Writ of Certicrari has this day been mailed by United States

Mail, postage prepaid, to the Honorable John E. Stone, City

Attorney, Counsel for Defendant-Respondent, City of Jackson,

Mississippi, at his office at 220 South President Street, Jackson,

Mississippi 39201; and to the Honorable Robert G. Nichols,

Counsel for Defendant-Respondent, Mississippi State Highway

Department, at his office at Post Office Box 1526, Jackson, Mis-

sissippi 39205.

This the .. . . day of May, 1978.

ALVIN M. BINDER

Attorney for Plaintiff-Petitioner

APPENDIX

APPENDIX “A”

SOUTHPARK SQUARE LIMITED,

a Mississippi Corporation,

Plaintiff-Appellee,

Vv.

CITY OF JACKSON, MISSISSIPPI,

Defendant-Appellant,

State Highway Department of the State

of Mississippi, Defendant.

No. 76-1806.

United States Court of Appeals,

Fifth Circuit.

Dec. 27, 1977.

(565 F.2d 338)

Action was brought against municipality and the state to re-

cover for alleged taking of plaintiff's property without just com-

pensation. The United States District Court for the Southern

District of Mississippi, William Harold Cox, J., granted judg-

ment for plaintiff against the municipality, and the latter ap-

pealed. The Court of Appeals, Simpson, Circuit Judge, held

that: (1) although a claim is not foreclosed by prior authorita-

tive decisions, it must be more than frivolous to support federal

question jurisdiction, and (2) claim that a compensable taking oc-

curred when city denied building permit, with result that financ-

ing could not be obtained, thereby causing plaintiff to lose the

property through foreclosure, was wholly insubstantial and frivo-

lous where, among other things, permit was denied because of

a

uncertainty as to how much of the property would be taken by

proposed highway interchange, only ten-month delay was in-

volved, owner did not appeal permit denial and property in-

creased in value during the year in which it held title.

Reversed with directions.

1. Federal Courts Key 241

Failure of a complaint to cite statute conferring jurisdiction

on district court will not defeat jurisdiction where the facts al-

leged satisfy statutory jurisdictional requirements. 28 U.S.C.A.

§ 1331.

2. Federal Courts Key 241

In federal question cases, where the complaint is so drawn

as to seek recovery directly under the Constitution or laws of

the United States, the federal court, but for two possible ex-

ceptions, must entertain the suit; the exceptions are where the

federal question clearly appears to be immaterial and made

solely for purpose of obtaining jurisdiction or where the claim is

wholly insubstantial and frivolous. 28 U.S.C.A. §§ 1331, 1331

(a), 1653.

3. Federal Courts Key 242

A federal question is wholly insubstantial and frivolous where

it is either obviously without merit or its unsoundness so clearly

results from previous decisions of the United States Supreme

Court as to foreclose the subject. 28 U.S.C.A. §§ 1331, 1331(a),

1653.

— * a

4. Federal Courts Key 242

Even though a federal claim is not foreclosed by prior au-

thoritative decisions, it must be more than frivolous to support

federal question jurisdiction. 28 U.S.C.A. §§ 1331, 1331(a),

1653.

5. Federal Courts Key 242

Issue of federal question jurisdiction is entirely separate from

question whether the complaint states a claim on which relief

can be granted; although a federal question substantial enough

to confer jurisdiction but not substantial enough to state a cause

of action is difficult to conceive, the doctrine is well establisied,

for failure to state a proper cause of action calls for judgment

on the merits and not for dismissal for want of jurisdiction. 28

U.S.C.A. §§ 1331, 1331(a), 1653.

6. Federal Courts Key 243

Claim that city’s refusal to issue building permit for motel

constituted a taking without compensation, in that for want of

such permit financing could not be obtained thereby causing

owner to lose the property through foreclosure, was wholly in-

substantial and frivolous where permit was denied because of

uncertainty as to how much of the property would be taken by

the proposed highway interchange, only ten-month delay was

involved, owner did not appeal permit denial or seek mandamus

and property increased in value during year in which it held

title; claim was so wholly insubstantial and frivolous that dis-

trict court lacked federal question jurisdiction. U.S.C.A. Const.

Amends. 5, 14; 28 U.S.C.A. § 1331.

— Sa

7. Eminent Domain Key 2(1)

In deciding to build a motel on the property, the plaintiff

complaining that denial of building permit amounted to a taking

of property without just compensation, took risk that its applica-

tion would be denied in a proper exercise of the municipality's

police power. U.S.C.A.Const. Amends. 5, 14.

4. Federal Courts Key 242

Even though a federal claim is not foreclosed by prior au-

thoritative decisions, it must be more than frivolous to support

federal question jurisdiction. 28 U.S.C.A. §§ 1331, 1331(a),

1653.

5. Federal Courts Key 242

issue of federal question jurisdiction is entirely separate from

guestion whether the complaint states a claim on which relief

can be granted; although a federal question substantial enough

to confer jurisdiction but not substantial enough to state a cause

of action is difficult to conceive, the doctrine is well established,

for failure to state a proper cause of action calls for judgment on

the merits and not for dismissal for want of jurisdiction. 28

U S.C.A. §§ 1331, 1331(a), 1653.

6. Federal Courts Key 243

Claim that city’s refusal to issue building permit for motel

constituted a taking without compensation, in that for want of

such permit financing could not be obtainea ‘aereby causing

owner to lose the property through foreclosure, was wholly in-

substantial and frivolous where permit was denied because of

—_Y

uncertainty as to how much of the property would be taken by

the proposed highway interchange, only ten-month delay was

involved, owner did not appeal permit denial or seek mandamus

and property increased in value during year in which it held

title; claim was so wholly insubstantial and frivolous that district

court lacked federal question jurisdiction. U.S.C.A. Const.

Amends. 5, 14; 28 U.S.C.A. § 1331.

7. Eminent Domain Key 2(1)

In deciding to build a motel on the property, the plaintiff com-

plaining that denial of building permit amounted to a taking

of property without just compensation, took risk that its applica-

tion would be denied in a proper exercise of the municipality’s

police power. U.S.C.A.Const. Amends. 5, 14.

8. Eminent Domain Key 2(1)

Federal courts are extremely reluctant to find that denials of

building permits in exercise of municipality's police power are

so arbitrary and capricious as to transform them from permissible

regulation to compensable taking. U.S.C.A.Const. Amends. 5,

14.

9.Mandamus Key 87

Mandamus is available under Mississippi law to compel is-

suance of an improperly denied building permit.

—_

John E. Stone, City Atty., Jackson, Miss., for defendant-

appellant.

Alvin M. Binder, Jackson, Miss., for plaintiff-appellee.

Robert G. Nichols Jr., Jackson, Miss., for other interested

parties.

Appeal from the United States District Court for the South-

ern District of Mississippi.

Before COLEMAN, SIMPSON and TJOFLAT, Circuit

Judges.

SIMPSON, Circuit Judge:

For want of a building permit, financing could not be obtained.

For want of financing, the balance of the purchase price of the

property could not be paid. For want of payment, the property

went into foreclosure and was sold at auction. So says South-

park Square Limited, the aggrieved property owner. In the

court below, Southpark prevailed on its claim thgt, because of

these unfortunate consequences, the denial of a building permit

by the Permit Department of the City of Jackson, Mississippi,

amounted to a taking of property without just compensation in

violation of the Fifth and Fourteenth Amendments,’ and re-

ceived a judgment for damages. We determine that the district

court lacked subject matter jurisdiction and reverse.

1 The district court explained its finding of a constitutional taking

as follows: a

The municipality did not wish to authorize the plaintiff to

construct its vast improvements necessary for the construction of

this Ramada Inn at this site under such circumstances, but the

municipality clearly violated the rights of the plaintiff

in deferring and thus refusing to grant such permit under such

circumstances. There were certain adj | to be made on

the site before the Ramada Inn could be permitted to move in

and such facility but it is no answer to this claim to say

that such facilities are not then available to the lot. This act.on

of the municipality resulted in a taking or damaging plaintiff's

without making any sort of compensation therefor.

taking or damaging was for public use.

—_

I. THE FACTS

On December 3, 1973, after earlier negotiations, Southpark

acquired title to a plot of land fronting on Interstate 55 in Jack-

son, Mississippi. The aggregate purchase price was $434,000, in

addition to $10,000 earlier paid for an option on the property.

On this date, Southpark made a down payment of $50,000 and

executed a note for the balance, payable on October 18, 1974,

at an interest rate of 10 percent per annum. Southpark’s pur-

pose in acquiring the property was to build on it a Ramada Inn.

On February 4, 1974, Southpark applied to the City of Jack-

son Permit Department for a building permit to construct a foun-

dation for the hotel. The application immediately encountered

minor obstacles because of a local zoning ordinance and the

unavailability of water and sewerage lines. A more serious

problem arose when the city permit department learned from the

State Highway Department that an interchange at Beasley Road

on I-55 was in the planning and would require a right of way

over a portion of the road frontage of Southpark’s property. On

February 15, 1974, Murry Stewart, the City Engineer, informed

Southpark of the proposed Beasley Road interchange, noting

that “[t]he exact amount of right of way needed has not been

determined as yet”. Six days later, Stewart again wrote to South-

park about the eventual need to acquire some of the frontage

property and stated that issuance of the building permit was being

deferred until city officials knew more precisely the extent of

right of way needed. The City admits that it declined to issue a

permit out of concern that the award of compensation when it

eventually condemned the land would be substantially higher if

the hotel was then in being. Stewart did suggest to Southpark,

in a letter dated March 18, 1974, that “the developer alter his

construction plans so as to, if possible, have his development

confined to property that will remain after this right-of-way

acquisition.” Faced with this denial, counsel for Southpark, on

—*

May 1, 1974, wrote to the Mayor and City Commissioners of

Jackson to inform them of Southpark’s precarious financial po-

sition, threatening to bring suit if the permit did not issue. The

City, through its attorney, responded that until the State High-

way Department finalized its plans “we cannot give you at this

time any further information other than that previously furnished

”

you”.

Southpark was unable to pay the balance of the purchase price

when it fell due late in 1974, and contends that it could not

obtain financing because of its inability to secure a building per-

mit. It thus forfeited the property to the vendor. On December

18, 1974, Southpark filed its complaint against the City of Jack-

son and the State of Mississippi Highway Department in this

case, claiming damages of (a) $10,000, for loss of earnest money

paid for the property; (b) $50,000, for loss of down payment on

the property; (c) $48,000, for loss of sums advanced for archi-

tectural and development fees; (d) $3100 for loss of attorneys’

fees expended; and (e) 10% interest on the unpaid balance of the

purchase price of the property. The court dismissed the claims

against the State Highway Department and awarded damages

against the City for items (a), (b) and (e), totalling $88,068.50.

This appeal timely followed.

II. JURISDICTION OF THE DISTRICT COURT

[1] At the heart of this appeal lies the question of jurisdiction

—whether the district court was statutorily empowered to hear

this case. In its complaint, Southpark alleged that “this action

arises under the Fifth and Fourteenth Amendments to the Con-

stitution . . . and the matter in controversy herein exceeds, ex-

clusive of interest and costs, the sum of $10,000.00”.? The dis-

2 Although the complaint failed to cite the statute conferring ju-

risdiction on the district court, 28 U.S.C. § 1331 (1970), this omis-

sion will not defeat jurisdiction where the facts alleged in the com-

—

trict court concluded that it had subject matter jurisdiction under

Title 28, U.S.C. § 1331 (1970).*

[2] “Jurisdiction is essentially the authority conferred by

Congress to decide a given type of case one way or the other”.

Hagans v. Lavine, 415 U.S. 528, 538, 94 S.Ct. 1372, 1379-80,

39 L.Ed.2d 577 (1974). In federal question cases under §

1331, “where the complaint . . . is so drawn as to seek recovery

directly under the Constitution or laws of the United States, the

federal court, but for two possible exceptions . . . must entertain

the suit”. Bell v. Hood, 327 U.S. 678, 681-82, 66 S.Ct. 773,

776, 90 L.Ed. 939 (1946). The two exceptions are where the

federal question “clearly appears to be immaterial and made

solely for the purpose of obtaining jurisdiction or where such a

claim is wholly insubstantial and frivolous”. Id.

“A case arises under the Constitution or law of the United

States whenever . . . the title or rights set up by the party may

be defeated or sustained by a particular construction of [either].”

plaint satisfy the jurisdictional requirements of the statute. See

Schlesinger v. Conon, 420 U.S. 738, 744, n. 9, 95 S.Ct. 1300,

1306 n. 9, 43 L.Ed.2d 591 Ng Smith v. United States, 502 F.2d

case, it would

amend its hy 2 this point.

152-53 n. 3 (1st Cir. 1976).

3 Section 1331(a) provides:

(a) The district courts shall have — jurisdiction of all

civil actions wherein the matter in con et

or value of $10,000 exclusive of inte arias came aud soles

nas Gap Geeetiiion. len, or Gentian of Go Unieed Stone

except that no such sum or value shall be required in any such

action brought against the United States, any agency thereof, or

any officer or employee thereof in his official capacity.

ons Come a ae of on concern here, was added by amend-

ment October 21, 1976. See Pub.L. 94-574, § 2, 90 Stat. 2721.

This language did not appear in the statute on the date of suit, De-

Eisler v. how mg 535. par 0

am MiGan

Fountain v. New Orleans Public Service, Inc., 387 F.2d 343,

344 (5th Cir. 1967), citing Gully v. First National Bank, 299

U.S. 109, 57 S.Ct. 96, 81 L.Ed. 70 (1936). Southpark alleges

that the City’s actions have violated its Fifth Amendment right

not to have its property taken without just compensation. Only

by construing that constitutional provision can we determine

the validity of this claim. Thus, a question “arising under” the

Constitution is presented in this case. Ballard Fish & Oyster Co.

vy. Glaser Construc. Co., 424 F.2d 473 (4th Cir. 1970); Creel

v. City of Atlanta, Ga., 399 F.2d 777, 778 (Sth Cir. 1968);

Foster v. Herley, 330 F.2d 87, 91 (6th Cir. 1964) ;* Sanfilippo

v. County of Santa Cruz, 415 F.Supp. 1340, 1343-44 (N.D.Cal.

1976).

[3] The more difficult question presented is whether the

federal question involved is “wholly insubstantial and frivolous.”®

To make this determination we must apply a two-pronged test:

{L]ack of substantiality in a federal question may appear

either because it is obviously without merit or because its

4 The Foster case, relied on by the district court in this case, was

a class action on behalf of property owners who alleged that their

property was taken by the City of Detroit when it stalled an eminent

domain action for ten years, resulting in serious depreciation of prop-

erty values. The case was first dismissed for lack of subject matter

jurisdiction, 207 F.Supp. 71 (E.D.Mich.1962). _The Court of A

peals reversed, holding that federal question jurisdiction was

lished. 330 F.2d 87 (6th Cir. 1964). On remand, the district court

found that the City’s actions amounted to a com nsable taking and

awarded damages. 254 F.Supp. 655 (E.D.Mich.1966), aff'd, 405

F.2d 138 (6th Cir. 1968). We cited the jurisdictional principles of

the case with al in Traylor v. City of Amarillo, Texas, 492

F.2d 1156, 119] n. 2 (Sth Cir. 1974). For a narrow reading of

Foster, see Jimmie’s Inc. v. City of West Haven, 436 F.2d 1339 (2d

Cir. i971).

5 The other exception to the rule of Bell v. Hood, supra,—that

the federal question be “immaterial”—is not involved in this case.

The constitutional claims, whatever their merit or substance, are the

essence of this lawsuit. See Creel v. City of Atlanta, Ga., 399 F.2d

777, 778 (Sth Cir. 1968).

— A-11 —

unsoundness so clearly results from the previous decisions

of [the Supreme Court] as to foreclose the subject.

Mays v. Kirk, 414 F.2d 131, 135 (Sth Cir. 1969), quoting from

California Water Service Co. v. City of Redding, 304 U.S. 252,

58 S.Ct. 865, 867, 82 L.Ed. 1323 (1938).

This case presents a novel question of constitutional law:

whether a city’s denial of a building permit, ultimately resulting

in the owner’s loss of his property for inability to obtain financ-

ing, is a compensable taking. We can find no prior cases which

make it “apparent to a legal certainty that no constitutional vio-

lation had been committed as alleged.” Rodriguez v. Ritchey,

556 F.2d 1185, 1192 (Sth Cir. 1977) (en banc). Courts dealing

with the taking question in roughly analogous fact situations have

reached disparate conclusions hinging on subtle distinctions and

not clearly foreclosing a finding for the plaintiff in this case.®

A dispositive prior decision would be difficult to find because

traditionally, the Supreme Court has “treated the issue as to

® In Maher v. City of New Orleans, 516 F.2d 1051 (Sth Cir.

1975), this Court held that denial of a building permit pursuant to

an ordinance enacted to preserve a historic section of the city did not

amount to a taking. Under similar circumstances, the Court of

Claims found a taking, distinguishing Maher because the the plaintiff

in that case “had not shown that sale of the property was impracti-

cable, that commercial rental could not ide a reasonable rate of

return, or that other potential use of the a Se ene

Benenson v. United States, 548 F.2d 939, 949 (Ct.Cl.1977) (quot-

by 516 F.2d at 1066). In Kirschke v. City of Houston, 330

S.W.2d 629 (Tex.Civ.App.1960), appeal dismissed, 364 U.S. 474,

81 S.Ct. 242, 5 L.Ed.2d 221 (1960), a Texas court held that denial

cf a building permit because of anticipated highway construction was

not a constitutional taking where the property owner could still com-

| issuance of the permit by mandamus. Sixteen years later another

exas court refused to follow Kirschke in a case which closely paral

lels the instant case. The issue before the court in San Antonio River

Authority v. Garrett Brothers, 528 S.W.2d 266 (Tex.Civ.App.1975),

was “‘whether prohibitions ‘on use. of property which have as

their purpose prevention of private development that would

- increase the cost of planned future acquisition of such prop-

— A-12 —

whether a particular governmental restriction amounted to a

constitutional taking as being a question properly turning upon

the particular circumstances of each case”. United States v. Cen-

tral Eureka Mining Co., 357 U.S. 155, 168, 78 S.Ct. 1097,

1104, 2 L.Ed.2d 1228 (1958). Also, while the City of Jackson

did not condemn or physically occupy Southpark’s land, “[g]ov-

ernmental action short of acquisition of title or occupancy has

been held, if its effects are so complete as to deprive the owner of

all or most of his interest in the subject matter, to amount to a

taking”. United States v. General Motors Corp., 323 US. 373,

378, 65 S.Ct. 357, 359-60, 89 L.Ed. 311 (1945).

[4, 5] Even though Southpark’s claim is not foreclosed by

prior authoritative decisions, it must be more than frivolous to

support federal question jurisdiction. In determining substan-

tiality, we must ask “whether there is any legal substance to the

position the plaintiff is presenting”. C. Wright & A. Miller, 13

Federal Practice and Procedure § 3564, at 426 (1975). The test

here “is a rigorous one and if there is any foundation of plausi-

bility to the claim federal jurisdiction exists”. /d. at 428, quoted

erty by the government is the type of case in which payment. of

compensation is required.” Id. at 273. The court held that the just

compensation clause of the Fifth Amendment prohibited the gov-

ernment “as a ive purchaser of land, to give itself such an

ag = ol by denying a building permit. Id. at 274. Similarly, while

the California Supreme Court has that no “cause of action in in-

verse condemnation [is] stated for the denial of a building permit,”

Selby Realty Co. v. City of San Buenaventura, 10 Cal.3d 110, 109

Cal.Rptr. 799, 514 P.2d 111, 122 (1973), it has suggested that op-

ive conduct or unreasonable delay in connection with the denial

could alter this result. Klopping v. City of Whittier, 8 Cal.3rd 39,

104 Cal.Rptr. 1, 500 P.2d 1345, 1350 n. 1 (1972). See also An-

tonelli Construction v. Milstead, 34 N.J.Super. 449, 112 A.2d 608

(1955): “To prevent the plaintiff from improving its land in order

that the municipality may continue to have a drainage area by the

means here employed [denial of a building permit] is clearly a taking

a ae a

. at 614.

— ~~)

in Hilgeman v. National Ins. Co. of America, 547 F.2d 298, 300

n. 1 (Sth Cir. 1977).?

[6-9] However hard we strain to find “any legal substance”

to Southpark’s position, we cannot avoid the conclusion that its

claim is “wholly insubstantial and frivolous”. Scuthpark lost its

property as a direct consequence of its own financial arrange-

ments and tactical decisions, not because the City committed

any act remotely resembling a taking.

The City of Jackson denied Southpark’s application for a

building permit pending a decision by the State Highway Depart-

ment regarding construction of the Beasley Road interchange.

The effect of this denial on Southpark’s beneficial ownership of

the property is speculative at best. We do not know whether

the City’s determination would have been reversed had South-

park filed a formal administrative appeal, an appeal to a state

court, or a petition for a writ of mandamus to compel issuance

of the permit. Even assuming that denial of the permit was

valid and would have withstood any legal challenge by South-

park, the value of the property actually increased during the year

in which Southpark held title. Had Southpark looked for and

found a purchaser willing to assume the mortgage, or to pay

* In finding a lack of subject r jurisdiction under this

we are well aware that “[t)he jurisdictional issue here is entirely cape,

rate from the questions whether the complaint states a claim on which

relief can be granted . . .” Weir v. Muller, 527 F.2d 872, 873

(Sth Cir. 1976). As the Supreme Court noted in Bell v. Hood, supra,

the failure to state a proper cause of action calls for a judgment on

the merits and not for a dismissal for want of jurisdiction”. 327

U.S. at 682, 66 S.Ct. at 776. Although a federal question substantial

enough to confer jurisdiction but not substantial e to state a

cause of action is difficult to conceive, the doctrine is we established.

See, e. g., Wheeldin v. Wheeler, 373 U.S. 647, 83 S.Ct. 1441, 10

L.Ed.2d 605 (1963). Courts must thus draw fine lines, even if to

some the distinction between a dismissal for lack of jurisdiction and

Samiscal Sor Sailese to state 0 claim upon which cull can be

exercise in semantics”. Barron & Holtzoff, 1 Fede i

and Procedure § 25, at 124 (1960). ”

— A-14—

cash in full, it might have sold the property, either at no loss or

even at a profit. In essence, then, Southpark is seeking to hold

the City liable in damages, through inverse condemnation, for the

financial arrangements of a private mortgagor.

Considered against the facts of this case, such a proposition

is unsupportable in law or policy. Southpark defaulted on its

note for the purchase price of the property only ten months

after the county engineer denied the building permit pending a

decision with respect to the condemnation of a portion of the

property in question. While it is conceivable that a municipality's

denial of a permit for similar reasons may be so manifestly in

bad faith or accompanied by unreasonable and oppressive delay

as to constitute a taking,* this is not such a case. We would

deny a municipality the breathing space needed for responsible

decision-making in the vital realm of urban planning if we held

that it could not wait ten months to determine what property is

needed for major road construction. A city would be unduly

hamstrung if its permit decisions subjected it to potential lia-

bility on the basis of financial arrangements independently made

by property owners affected by those decisions.

The equities of this case also argue strongly against the posi-

tion asserted by Southpark. In deciding to build a Ramada Inn

on its property, Southpark took the risk that its application for

a building permit would be denied in a proper exercise of the

police power by the City of Jackson.* The Federal courts have

8 See, e.g., Foster v. City of Detroit, Mich., 254 F.Supp. 655,

661 (E.D.Mich.1966), aff'd, 405 F.2d 138 (6th Cir. 1968), where

the city was charged with “causing and permitting the threat of im-

minent condemnation to hang over [the] property for ten years, all

the while encouraging the decay and desertion of the area, and then

discontinuing the action and instituting new proceedings with ap-

praisals based on the lower values of vacant property in a, by this

time, blighted area”.

® “Those who enter upon a business take that risk”. Alaska Fish

Salting and By-Products Co. v. Smith, 255 U.S. 44, 48, 41 S.Ct. 219,

220, 65 L.Ed.2d 489 (1921).

———

— A-15 —

been extremely reluctant to find such permit denials so arbitrary

and capricious as to transform them from permissible regulation

to compensable taking. See, e. g., Maher v. City of New Orleans,

516 F.2d 1051 (Sth Cir. 1975); Trinity Methodist Church,

South v. Federal Radio Comm'n, 61 App.D.C. 311, 62 F.2d 850

(1932), cert. denied, 288 U.S. 599, 53 S.Ct. 317, 77 L.Ed. 975

(1933); Pope v. City of Atlanta, 418 F.Supp. 665 (N.D.Ga.

1976). If the City did illegally deny the permit in this case,

Southpark could have acted to redress the wrong and possibly

have avoided the forfeiture which was otherwise inevitable. A

local ordinance allowed an appeal within five days to the City

Council from a permit decision by the City Engineer.1° Mis-

sissippi law provides for an appeal from a decision of the City

Council to the Circuit Courts. Miss.Code Ann. § 11-51-75

(1972). See Cowan v. Gulf City Fisheries, Inc., 344 So.2d 724

(Miss.1977); City of Jackson v. Sunray DX Oil Co., 197 So.2d

882 (Miss. 1967). Additionally, mandamus is available to com-

pel issuance of an improperly denied permit. Thompson v. May-

field, 204 So.2d 878 (?iss.1967); Berry v. Embrey, 238 Miss.

819, 120 So.2d 165 (1960).1! Of course, Southpark could

have revised its building plans to avoid any possible conflict with

the City’s planned road construction. Yet all that Southpark

did was to write a single letter to the mayor and city commis-

sioners explaining its need for a permit in light of its inability to

10 Section 10 of an ordinance passed by the Jackson City Council

on June 1, 1950, recorded in Minute Book “Z”, pages 198-203.

The full ordinance is a part of the record in this case.

11 Other states have considered the availability of mandamus as

a bar to an inverse condemnation action. See Selby Realty Co. v.

City of San Buenaventura, 10 Cal.3d 110, 109 Cal.Rptr. 799, 514

P.2d 111, 122 (1973); Kirschke v. City of Houston, 330 S.W.2d

629 (Tex.Civ.App. 1960). We raise this consideration here as rele-

vant to determining whether the actions of the City of Jackson can

be construed as a taking, not to suggest that Southpark’s failure to

seck mandamus operates as a jurisdictional bar under the exhaustion

doctrine. See Foster v. City of Detroit, Mich., 405 F.2d 138, 145

(6th Cir. 1968).

— A-16 —

obtain financing, but not alleging that denial of the permit was

illegal. For many months, Southpark stood mute, doing nothing

to protect its property and legally abandoning its original appli-

cation for a permit.*?

Clearly, Southpark suffered damage: it lost its property. But

“damage or loss does not of itself create a taking. Whether

property has been taken for a public use so as to require just

compensation is determined by the character of the invasion,

not by the amount of damage suffered”. Woodland Market

Realty Co. v. City of Cleveland, 426 F.2d 955, 958 (6th Cir.

1970). The only municipal “invasion” involved in this case is

the denial of a building permit—a denial which, on the record

before us, cannot be branded as arbitrary, capricious, ultra vires,

or as anything other than a valid exercise of the police power. We

cannot consider such a denial as an invasion of any vested prop-

erty right, for until a permit was issued, Southpark had no vested

right to build a Ramada Inn. As relevant to the issue of whether

there was a constitutional taking, the operative cause of South-

park’s loss was the private financial arrangement made by it in

acquiring the property. The city’s exercise of its licensing power

cannot be circumscribed, under an inverse condemnation theory,

by private contracts to which it is not a party.

We hold that the district court was without power to entertain

this federal question case otherwise within its jurisdiction because

the claim asserted is “so attenuated and unsubstantial as to be

absolutely devoid of merit”. Newburyport Water Co. v. New-

buryport, 193 U.S. 561, 579, 24 S.Ct. 553, 557, 48 L.Ed. 795

12 A local ordinance regarding application for permits, adopted

December 18, 1973, and made a i i

provides as follows: “105.5—L ATION. An application for a

permit for any proposed

doned six months after the date of filing, unless before then a permit

shall have been issued”.

_

TOE Zee

Oe ee ees wee S oe

= MAT an

( 1904). Lacking jurisdiction, the district court should have dis-

missed the action. Fed.R.Civ.P. 12(h) (3).

The judgment of the district court is accordingly reversed with

directions to vacate the judgment appealed from and dismiss the

action.

REVERSED.

APPENDIX “B”

UNITED STATES COURT OF APPEALS

Fifth Circuit

DENIALS OF REHEARING EN BANC

(Rule 35 Federal Rules of Appellate Procedure; Local Fifth Cir-

cuit Rule 12)

Group 1—Denials where no member of the panel nor Judge in

regular active service on the Court requested that the

Court be polled on rehearing en banc.

Group 2—Denials after a poll requested by a member of the

panel or a Circuit Judge in regular active service.

Group 3—Denials on the Court’s own motion after a poll re-

quested by a member of the panel or a Circuit Judge

in regular active service.

~~

Docket Date of Citation of

Title Number Denial Panel Decision

GROUP 1

Dawson v. Hogan ............ 77-2576 2/08/78 N.D.Ga., 567

F.2d 388

Garza v. Rodriguez .......... 76-3898 2/21/78 S.D.Tex., 559

F.2d 259

Harrell v. Citizens Bank of Folk-

ston-Nahunta-Hoboken,

BEE Sdaneecdcncexesces 76-1043 2/08/78 S$.D.Ga., 567

F.2d 389

Laje v. R. E. Thomason General

DE bi nas condenses enees 76-1496 2/01/78 W.D.Tex., 564

F.2d 1159

Montgomery v. Jordan ........ 77-1951 2/13/78 W.D.Tex., 567

F.2d 389

Padre Island, Steamtanker ... .75-3479 2/16/78 M.D.Fia., 559

F.2d 1008

Parnell v. Rapides Parish School

DE cuvdcenedudeenesads 76-4176 2/03/78 W.D.La., 563

F.2d 180

Rapides Parish School Board v.

DT. «As senedeneseeseass 76-4176 2/03/78 W.D.La., 563

F.2d 180

Resendis v. Lee Way Motor

Pe Gi. ccencceeecuses 73-2322 2/03/78 W.D.Tex., 560

F.2d 1285

Socony Mobil Oil Co., Inc. v.

Texas Coastal and Interna-

Se Ss onc evevencseress 75-3479 2/16/78 M.D.Fla., 559

F.2d 1008

Southpark Square Limited v. City

of Jackson, Mississippi ..... . 76-1806 2/02/78 S.D.Miss., 565

: F.2d 338

> GW BD wc cccccccccce 76-1843 2/15/78 S.D.Miss., 565

F.2d 1338