United States District Court, S.D. Mississippi, Southern Division
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
LOUIS GUIROLA, Jr., Chief District Judge.
BEFORE THE COURT is the Motion  to Dismiss filed by Defendant Beau View Phase I Condominiums Owners Association, Inc. in this declaratory judgment action. Beau View Phase I Condominium Owners Association, Inc. (hereinafter "Beau View Owners Association" or "the Owners Association") moves to dismiss Plaintiff Keefe Ditta's Complaint on the grounds that his claims are moot. Ditta has responded in opposition to the Motion, and the Owners Association has filed a reply. Having reviewed the pleadings and the relevant law, it is the opinion of the Court that the Motion should be granted. For the reasons set forth below, the plaintiff's Complaint is dismissed as moot.
This action arises out of a contract dispute between Ditta, who is an owner of a unit in the Beau View Condominiums in Biloxi, Mississippi, and the Beau View Owners Association, over whether Ditta is permitted to lease his unit on a shortterm basis. Ditta claims that leases of any duration were permitted under the terms of the Declaration that established Beau View Condominiums in 2007 (hereinafter "the 2007 Declaration"). However, during the course of this litigation, the Owners Association voted to amend the 2007 Declaration to prohibit short-term leasing. Thereafter, the Owners Association filed the instant Motion to Dismiss.
Ditta's Complaint is based on Beau View's original Declaration issued on November 21, 2007, near the time the property was developed. The 2007 Declaration provides the terms for the operation and administration of the condominiums, and it includes a provision on leasing. That provision is found in Article 12.07, and states in pertinent part:
It shall be deemed to be the intent of all who take title subject to the terms of this Declaration that this shall be a "lease-restricted" development. Entire Units may be leased by the Unit Owners; provided, however, that such lease and the rights of any tenant thereunder are hereby made expressly subject to the power of the Association to prescribe reasonable rules and regulations relating to the lease and rental of Units and to enforce the same.... the Developer, or its assigns, may maintain an on-site rental and rental management program in which the Unit Owner may have the right, but not the obligation, to participate.
(Decl. 39 (12.07), Compton Aff. Ex. 1, ECF No. 50-1). As Ditta points out, the 2007 Declaration did not specify the duration of leases that were permitted. Ditta submits that he engaged in short-term leasing of his unit pursuant to his understanding of the Declaration.
According to the record, the developer of the Beau View condominiums maintained control of the condominiums until 2012. In 2013, the Owners Association took control of the management and elected a new Board of Directors. (Def.'s Mem. in Supp. of Mot. 4-5, ECF No. 51). Shortly thereafter, the newlyelected Board of Directors sought an opinion from the Owners Association's attorney regarding the condominiums' land-use status, and specifically whether short-term leasing was permitted. (Fountain letter, Compton Aff. Ex. 4, ECF No. 50-1). The attorney informed the Owners Association that, given Beau View's land-use classification, short-term leasing "would be an illegal use under Biloxi's zoning and land use regulations." ( Id. ) The Board then sent a letter to the condominium owners explaining that short-term rentals were not permitted, but that it would allow a "grace period" of one year on such rentals. (Apr. 29, 2013 Beau View Letter, Compton Aff. Ex. 5, ECF No. 50-1).
Following the Board's letter to the owners informing them of the prohibition against short-term leasing, Ditta filed this action. He seeks a declaratory judgment that short-term leasing is permitted under the 2007 Declaration. Ditta claims that he "will be affected by the decision" to bar short-term leases. (Compl. for Decl. Relief 3, ECF No. 1). His Complaint seeks the following relief: "that this Court declare that the current Declarations and Bylaws do not restrict owners of such Units from leasing their units for less than thirty days, " and that "this Court declare that in absence of amendments to these Documents, Beau View cannot restrict their Unit Owners from leasing their units for less than thirty days." ( Id. at 3-4).
The Owners Association filed a Counterclaim for a Declaratory Judgment with its Answer. (Answer & Countercl. 8-9, ECF No. 16). It asks the Court to declare that Beau View is a residential, as opposed to commercial, condominium, that short-term rentals are contrary to residential use, and that "Beau View has not fulfilled the governmental and legal requirements... to engage in short term rentals such that owners... who rent their units on a short-term (less than thirty days) basis are doing so in express violation of the applicable statutes... of the City of Biloxi." ( Id. )
Thereafter, the parties engaged in discovery. During that time, the Beau View Owners Association voted to amend its 2007 Declaration to prohibit shortterm leasing. (Def. Reply Ex. K, ECF No. 66-2). The Owners Association held an annual meeting in February 2014, at which a vote was taken to amend Article 12.07 of the Declaration to state that "In no event shall any lease, rental, use, or occupancy of a Beau View Condominium Use be for a short term use or for a period of less than thirty (30) days." (Jan. 2014 Letter Attachment 3, Mot. Am. Articles of Decl. 3, Compton Aff. Ex. 2, ECF No. 50-6; Minutes of Annual Meeting 3, Compton Aff. Ex. 3, ECF No. 50-6). Beau View subsequently filed its Motion to Dismiss on the grounds that the amendment to the Declaration renders Ditta's claim moot. It submits that a dismissal of this action is warranted because a judgment on the merits "would be of no practical benefit to the plaintiff or detriment to the defendant, " and would have "no impact on" any party. (Def. Mem. in Support of Mot. to Dismiss 15, ECF No. 51).
THE LEGAL STANDARD
The Beau View Owners Association does not state the Federal Rule of Civil Procedure under which its Motion is filed, but a motion to dismiss challenging the Court's subject matter jurisdiction is properly brought under Rule 12(b)(1). It is well-established that federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citations omitted). The Court "must presume that a suit lies outside this limited jurisdiction, and the burden of establishing federal jurisdiction rests on the party seeking the federal forum." Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001).
The United States Court of Appeals for the Fifth Circuit has held that a district court may dismiss a case for lack of subject matter jurisdiction based on (1) the complaint alone; (2) the complaint supplemented by undisputed facts in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts. Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981). Where the defendant supports the motion to dismiss with evidence, the attack is "factual" and "no presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself ...