     Case: 14-20188         Document: 00512877989          Page: 1     Date Filed: 12/19/2014




            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT     United States Court of Appeals
                                                        Fifth Circuit

                                                                                         FILED
                                                                                  December 19, 2014
                                         No. 14-20188
                                                                                       Lyle W. Cayce
                                                                                            Clerk

LARRY BISHOP; CYNTHIA BISHOP; DEBORAH CLARK; GEORGE
CLARK; GARY MCGREGOR; TERI MCGREGOR; JOHN STANFORD;
CAROL SEVERANCE; KRIS B. HALL; HOLLY J. JONES,

                 Plaintiffs - Appellants

v.

CITY OF GALVESTON; JEFF COLLEY; STEVEN C. MCCRAW; GREG
PEKAR; HILDA SOPER,

                 Defendants - Appellees




                      Appeal from the United States District Court
                           for the Southern District of Texas
                                USDC No. 4:11-CV-4152


Before JOLLY and COSTA, Circuit Judges, and ROSENTHAL, District
Judge.*
PER CURIAM: **
       This case arose after Hurricane Ike, the latest in the long and destructive
history of natural disasters that have struck Galveston, Texas.                         The ten



       *   District Judge of the Southern District of Texas, sitting by designation.
       **Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                  No. 14-20188
Plaintiffs in this lawsuit applied to have their damaged beachfront homes
purchased with federal disaster relief funds distributed through the State of
Texas and the City of Galveston. When Defendants—the City of Galveston
and a number of officials in the Texas Department of Public Safety—failed to
purchase their properties with the federal funds, Plaintiffs brought this
lawsuit asserting due process claims. The district court held that Plaintiffs
lacked a property interest in the funds that would implicate the protections of
the Due Process Clause. For the reasons discussed below, we agree.
                                        I.
      The Stafford Act authorizes the Federal Emergency Management
Agency (FEMA) to provide property acquisition assistance in connection with
“hazard mitigation measures which the President has determined are cost-
effective and which substantially reduce the risk of future damage, hardship,
loss, or suffering in any area affected by a major disaster.”           42 U.S.C.
§ 5170c(a)–(b). Pursuant to that authority, FEMA’s Hazard Mitigation Grant
Program (HMGP) “provides grants to states and local governments to
implement long-term hazard mitigation measures after a major disaster
declaration.”         FEMA,       Hazard      Mitigation      Grant      Program,
http://www.fema.gov/hazard-mitigation-grant-program (last visited Dec. 12,
2014). Under the HMGP, flood-prone properties may be purchased for the
purpose of conserving “natural floodplain functions.”            FEMA, Hazard
Mitigation Assistance Unified Guidance 93 (June 1, 2010). 1 In order to receive
funding under this program, jurisdictions within Texas apply to the Texas
Department of Public Safety’s (DPS) Division of Emergency Management,




      1    Available at http://www.fema.gov/media-library-data/20130726-1737-25045-
4275/final_june_1_2010_hma_unified_guidance_09252012a_508.pdf.
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                                    No. 14-20188
which combines the local applications and requests the total funding from
FEMA. 2
      When Hurricane Ike hit in September 2008, Galveston County was
declared a disaster area. As a result, the area qualified for HMGP funding.
Plaintiffs are owners of Ike-damaged homes in the Sands of Kahala Beach
subdivision on the west end of Galveston Island who sought to have their
properties purchased with HMGP funds.
      The City of Galveston began the application process for HMGP funds in
early 2009. Plaintiffs’ properties qualified for acquisition. The City then
applied to the State for HMGP funds and was awarded the grants at issue in
this case. On July 31, 2009, the Texas Division of Emergency Management
sent letters notifying the City of the grants and listing the approved projects,
which included Plaintiffs’ properties. The letters stated that the projects “must
be completed within twenty-four months from the project approval date,” ROA
73, and that “[o]nce drawn down by the grantee, the funds must be distributed
in this manner,” ROA 508.          Between September 2009 and January 2010,
Plaintiffs entered into contracts with the City for the sale of their properties.
The contracts, in accordance with FEMA’s HMGP guidelines, required
Plaintiffs to convey “marketable title to said property in fee simple, clear of all
liens and encumbrances.” See ROA 851; FEMA, Hazard Mitigation Assistance
Unified Guidance 84. Under the terms of the grant, the City was required to
complete its acquisition of the properties by July 23, 2011.
      Around this time, Plaintiffs were involved in various disputes with other
members of the Sands of Kahala homeowners’ association (HOA). The HOA
notified the City that the City would incur financial liability for HOA fees if it



      2       Texas        DPS,       Hazard      Mitigation         Grant       Program,
http://www.txdps.state.tx.us/dem/Mitigation/hmgp_fact_sheet.pdf.
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                                  No. 14-20188
acquired the properties. The City Council therefore expressly conditioned its
purchases on all participating homeowners securing a release from HOA fees,
in order to exempt the City from future financial obligations and to satisfy the
program’s clear title requirement.
      Another problem soon arose. The Department of Homeland Security
contacted the Texas Division of Emergency Management about allegations
that Plaintiffs had used inflated estimates of their property values. The state
agency forwarded notice of the inquiry to the City and directed it to “cease all
activities concerning the purchase” of the properties. ROA 1111.
      As a result of the delay caused by the fraud investigation, the City
requested and received from the State an extension of the grant until August
31, 2011, and an extension of the deadline to close the sale of Plaintiffs’ homes
until August 1, 2011. Plaintiffs were notified of the new deadlines via email.
On August 8, 2011, the City’s attorney notified Plaintiffs’ attorney that
Plaintiffs had missed the deadline “to convey to the City fee simple title to their
property.” ROA 1095. Plaintiffs contend that the City acquired all eligible
properties but theirs, although the parties agree that no other homes in the
Sands of Kahala Beach subdivision were acquired.
      Plaintiffs first filed two suits in state court seeking to compel the City to
purchase their properties. After the dismissal of those cases, Plaintiffs decided
to try federal court and brought this suit against the City of Galveston and a
number of DPS officials. The district court dismissed all claims. In ruling on
the DPS officials’ motion to dismiss under Rule 12(b)(6), the court found that
Plaintiffs lacked a constitutionally protected property interest in the HMGP
funds because nothing in the Stafford Act statute or regulations “dictates that
qualified property owners are entitled to participate in the program or limits
the State’s discretion in determining a property owner’s qualifications for the
program or reviewing those qualifications at any time in the process.” Bishop
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                                  No. 14-20188
v. City of Galveston, 2013 WL 960531, at *10 (S.D. Tex. Mar. 12, 2013). With
respect to the City’s motion for summary judgment, the court determined that
Plaintiffs’ failure to show that they had obtained an HOA fee waiver defeated
their claimed property interest in the funds. Bishop v. City of Galveston, 1 F.
Supp. 3d 623, 635–36 (S.D. Tex. 2014). It also denied Plaintiffs’ request for
additional discovery, noting that Plaintiffs had been given more than ten
months to pursue discovery and had “not offered any reasons or evidence of
diligence in pursuing discovery nor of why they need more time and how that
extension of discovery would probably create a genuine issue of fact.” Id. at
635.
        In this appeal, Plaintiffs assert that Defendants deprived them of a
property interest in the funds without due process by imposing an August 1
deadline for closing on the homes that was “arbitrary, self-imposed, and not
otherwise a requirement of or related to the HMGP.” They further contend
that the deadline was not communicated to them in advance of August 8 and
that they provided the HOA fee waiver by August 5.
                                        II.
        We review de novo the district court’s decisions granting the motion to
dismiss and the motion for summary judgment. See Priester v. JP Morgan
Chase Bank, N.A., 708 F.3d 667, 672 (5th Cir. 2013) (Rule 12(b)(6) dismissal);
Tiblier v. Dlabal, 743 F.3d 1004, 1007 (5th Cir. 2014) (summary judgment). A
district court’s decision to grant summary judgment without allowing further
discovery is reviewed for abuse of discretion. See Six Flags, Inc. v. Westchester
Surplus Lines Ins. Co., 565 F.3d 948, 963 (5th Cir. 2009) (“The trial judge’s
decision to curtail discovery is granted great deference and, thus, is reviewed
under an abuse of discretion standard.”).
        The initial inquiry in any due process case is whether the plaintiff can
identify an interest in “life, liberty, or property” that the Constitution protects.
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                                    No. 14-20188
Plaintiffs initially identified the potential sources of a property interest in
HMGP funds as the statute and regulations themselves as well as in
combination with the policies and practices implementing them; and the sales
contracts between Plaintiffs and the City. Plaintiffs later conceded that the
statute and regulations did not alone create a property interest, but continued
to assert that a property interest arose from the combination of the statute and
regulations with the sales agreements and policies and practices.
      The question whether the Stafford Act alone gives Plaintiffs a property
interest in HMGP funds is easily resolved. Government benefit programs give
rise to a property interest only when a claimant has an entitlement to the
benefit. Ridgely v. FEMA, 512 F.3d 727, 735 (5th Cir. 2008) (citing Bd. of
Regents of State Colls. v. Roth, 408 U.S. 564, 577 (1972)). There are two
reasons why there is no such entitlement here. First, the HMGP funding in
this case was not available to Galveston residents as an individual assistance
program like the one at issue in Ridgely, 512 F.3d at 728–30. Instead, Texas
received grants from FEMA and administered the program through its
Division of Emergency Management, as authorized by the Stafford Act. See 42
U.S.C. § 5170c(c). 3 Second, putting aside that government entities rather than
individuals are the direct recipients of HMGP grants, awarding a grant under
the program is a discretionary decision. See 42 U.S.C. § 5170c (providing
FEMA with the authority to provide hazard mitigation assistance and setting
minimum standards, but only stating that the agency “may” do so).               That
means there is no entitlement to the funds. See Ridgely, 512 F.3d at 735 (“[A]
benefit is not a protected entitlement if government officials may grant or deny




      3    See     also    Texas    DPS,     Hazard    Mitigation   Grant    Program,
http://www.txdps.state.tx.us/dem/Mitigation/hmgp_fact_sheet.pdf.
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                                    No. 14-20188
it in their discretion.”) (quoting Town of Castle Rock v. Gonzales, 545 U.S. 748,
756 (2005)).
      Plaintiffs invoke language from Ridgely, which recognizes that even
when the statute and regulations do not, standing alone, create a property
interest, “[t]he possibility remains that plaintiffs can establish a property
interest based on . . . policies and practices in implementing the statute and
regulations.” 512 F.3d at 735. The only such conduct Plaintiffs have identified
relates to their contracts with the City for the purchase of their homes.
      A property interest may arise from a contract. See id. at 735; Perry v.
Sindermann, 408 U.S. 593, 601 (1972) (noting that a contract can be evidence
of a claim of entitlement to a government benefit). At the outset, we note that
it is unclear how the contracts could give rise to a claim against the DPS
officials given that the State is not a party to the contracts and did not enter
into any other agreements with Plaintiffs. 4 But because we find that the
contract did not give Plaintiffs an unconditional interest in the HMGP funds
even as to the City, we need not rely on that distinction.
      The contracts with the City required each homeowner “to transfer
marketable fee simple title to the property to the City and . . . to execute now
and in the future, any and all documents required by the City and/or [Texas
Division of Emergency Management] to complete this transaction.” ROA 851.
The City argues that Plaintiffs failed to meet the condition precedent for the
purchase of the properties when they failed to provide HOA fee waivers by the
August 1 deadline. As discussed above in the context of government benefits,
the Due Process Clause is implicated only when the claimant has an
entitlement to the property.       A party to a contract has no entitlement to



      4 The State’s approval of the City’s participation in the program merely authorized
the purchase of the properties.
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                                   No. 14-20188
performance by another party when that performance is dependent on
fulfilling a condition precedent. See Solar Applications Eng’g, Inc. v. T.A.
Operating Corp., 327 S.W.3d 104, 108 (Tex. 2010) (“A condition precedent is an
event that must happen or be performed before a right can accrue to enforce
an obligation. . . . [I]f an express condition is not satisfied, then the party whose
performance is conditioned is excused from any obligation to perform.”
(internal quotation marks and citations omitted)); RESTATEMENT (SECOND) OF
CONTRACTS § 225(1) (“Performance of a duty subject to a condition cannot
become due unless the condition occurs or its non-occurrence is excused.”); cf.
Cypress Forest Pub. Util. Dist. v. Kleinwood Mun. Util. Dist., 309 S.W.3d 667,
675–76 (Tex. App.—Houston [14th Dist.] 2010, no pet.) (holding that plaintiff
did not have a vested property right in the annexation of property because the
right was contingent on the “developers’ discretion to execute and file the
petition for annexation”).
      The district court found that Plaintiffs failed to comply with the
condition of delivering clear title by August 1. Plaintiffs do not contend that
they met the August 1 deadline, but argue that it was arbitrarily imposed and
never communicated to them before the deadline had already passed.
Undisputed record evidence refutes the latter contention. Plaintiffs’ counsel
requested information about the deadline on June 29, 2011. The City’s counsel
responded two days later with an attached letter from the City’s consultant to
the State, requesting that the State “extend the final date that the six
remaining homeowners can close the sale of their properties until August 1,
2011” and that “the grant be extended until August 31, 2011, if possible, to
allow for the City to complete the final settlements and demolitions and give
the City enough time to properly close out the grant.” ROA 1108–10. The
requested extension was approved shortly thereafter.


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                                   No. 14-20188
      Even if we were to set the deadline aside, we have no evidence that
Plaintiffs ever provided the HOA fee waivers. Although Plaintiffs assert that
they had met this condition by August 5, 2011, their counsel effectively
conceded at oral argument that there is nothing in the record to substantiate
this assertion. This, of course, is insufficient to defeat the City’s motion for
summary judgment, which requires an evidentiary showing, not just
allegations in a complaint. See Russell v. Harrison, 736 F.2d 283, 287 (5th Cir.
1984) (“[A] plaintiff cannot establish a genuine issue of material fact by resting
on the mere allegations of its pleadings.”). What is more, the City submitted
an affidavit from Galveston’s City Attorney stating that an HOA waiver was
never provided. In light of this undisputed evidence that Plaintiffs never
obtained the HOA waivers and thus could not deliver clear title as the contract
required, the district court correctly granted summary judgment.
      Nor did the district court err in denying additional discovery. Although
Plaintiffs argued in the district court that discovery was not complete, they
failed to file a motion for continuance under Rule 56(d) or otherwise specify
what discovery was necessary to produce evidence on a material issue. The
failure to file a Rule 56(d) motion for further discovery likely forfeits this issue.
See Ferrant v. Lowe’s Home Ctrs., Inc., 494 F. App’x 458, 463 (5th Cir. 2012)
(although plaintiff noted that discovery was incomplete, she “did not seek
[relief under Rule 56(d), and therefore] she cannot argue that the district court
erred in granting summary judgment without allowing for sufficient
discovery”). But even if Plaintiffs had filed the proper motion, the district court
had sound reasons for not delaying a ruling by allowing further discovery. The
time provided for discovery was ample and the factual issue that was the basis
for the summary judgment—Plaintiffs’ failure to obtain HOA waivers—is one
for which any helpful evidence should have been in Plaintiffs’ possession. The
district court therefore did not abuse its discretion in granting summary
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                                 No. 14-20188
judgment without allowing additional discovery. See Am. Family Life Assur.
Co. of Columbus v. Biles, 714 F.3d 887, 894 (5th Cir. 2013) (explaining that a
litigant “may not simply rely on vague assertions that additional discovery will
produce needed, but unspecified, facts”).
      We therefore AFFIRM the district court’s dismissal of Plaintiffs’ claims.




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