The Dallas Fifth Court of Appeals has ruled in favor of a real estate developer in a rare exaction challenge brought against the City of Dallas over a 10-foot strip of land on Mockingbird Lane in East Dallas.
In a unanimous opinion, the court ruled that the developer, 6101 Mockingbird LLC, will get its day in court against the city because the developer followed the appropriate procedural remedies before filing suit.
Dallas had argued that Dallas County Court at Law No. 5, where the lawsuit was filed, lacked jurisdiction because 6101 Mockingbird did not properly exhaust its administrative remedies with the city first.
But in an 11-page opinion written by Justice David Schenck, the court called the city’s assertions “unavailing.”
“The demand and transfer of title are already complete, triggering the constitutional obligation to justify the exaction… the possibility that [6101] Mockingbird might, at some future point, seek a variance to permit its structure to be built up to the edge of the potential roadway, and that the city might approve it, does not render the current posture unripe,” the opinion says.
The July 23 ruling also turns over a new leaf in the legal process for 6101 Mockingbird, which has been trying to recover more than $300,000 from the city for four-and-a-half years. The early phases of the lawsuit have gone on so long that the land at issue has already been developed since the dispute began.
It also marks a rare win for a developer taking on the City of Dallas in the midst of a hot real estate market in which the high property values cause developers to give the city the land they want without putting up a fight to forego the risk of losing their deals.
“Our clients are very happy that the appeals court agreed with our position and we’re looking forward to presenting our case in the trial court,” said Dallas lawyer Brad Jackson, who represents 6101 Mockingbird. “We are confident that we will prove that this is just another attempt by the City of Dallas to perform a wrongful exaction of private property without paying just compensation.”
The city attorney’s office declined to comment on the case. Assistant City Attorney Sonia Ahmed is handling the case for Dallas.
The dispute dates back to January 2015, when 6101 Mockingbird filed for a permit with the city that would allow it to divide a strip of land it owns at Mockingbird Lane and Skillman Avenue into two lots. The developers had plans to build a medical services clinic and possibly an adjacent Starbucks drive-thru.
The city conditionally approved 6101 Mockingbird’s application the following month, but later informed the developers that they would need to dedicate 10 feet of their land back to the city for future infrastructure purposes, such as widening the road to facilitate the flow of traffic. Another condition of the approval was a zoning ordinance that shaved another 15 feet off the property line.
This altered 6101 Mockingbird’s development plans. The 25-foot total setback meant the developers had to make its medical clinic longer and thinner, which hindered their ability to build something next door.
6101 Mockingbird told the city it thought the required dedication was an “illegal taking,” court documents show, and asked it to send out an engineer to perform a rough proportionality test — a test that determines whether the city owes the developer money for the land it took back.
The city engineer determined the required dedication was roughly proportional to the impact of the proposed development project, which meant the city would not owe 6101 Mockingbird anything.
Jackson then went through 10 more months of filing various appeals to the city to “exhaust all remedies” before filing a lawsuit, a common requirement in municipal law.
In the meantime, Jackson’s clients moved forward with their altered development plan so as not to lose the deal, but designated the portion of the land at issue under protest with the city so they didn’t waive their right to object to it. Today, the lot houses the Lakewood Emergency Room.
Once Jackson filed the lawsuit for 6101 Mockingbird, Jackson said, the city picked apart a couple of sentences in his brief and filed an interlocutory appeal, arguing that while Jackson’s clients had exhausted all remedies for the 10-foot designation, they had not properly appealed the 15-foot designation with the city.
Because of that, the city argued, the Dallas trial court did not have jurisdiction to adjudicate the dispute.
In its July 23 opinion, the Dallas Court of Appeals disagreed, and paved the way for the case to go to trial.
“The city did not simply put a limitation on the use Mockingbird might make of its property, it required that Mockingbird deed a portion of its property to the city,” the opinion says. “Then, in addition, it imposed a 15-foot setback requirement from what effectively became the new property line.”