United States District Court, S.D. Mississippi, Southern Division
GULF SHORE PROPERTIES, LLC, OAK PARK MISSISSIPPI PROPERTIES, LLC, WAVELAND PROPERTIES, LLC, and MICHAEL L. BROWN PLAINTIFFS/COUNTER-DEFENDANTS
CITY OF WAVELAND, MISSISSIPPI and THE BOARD OF MAYOR AND ALDERMEN OF THE CITY OF WAVELAND, MISSISSIPPI DEFENDANTS/COUNTER-PLAINTIFFS
MEMORANDUM OPINION AND ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANTS' MOTION  TO DISMISS
PLAINTIFFS' SECOND AMENDED COMPLAINT
SULEYMAN OZERDEN UNITED STATES DISTRICT JUDGE.
THE COURT is the Motion  to Dismiss Plaintiffs'
Second Amended Complaint filed by
Defendants/Counter-Plaintiffs the Board of Mayor and Aldermen
of the City of Waveland, Mississippi, and the City of
Waveland, Mississippi (“Waveland” or “the
City”). Plaintiffs/Counter-Defendants in this
litigation are Gulf Shore Properties, LLC, Oak Park
Mississippi Properties, LLC, Waveland Properties, LLC, and
Michael Brown (collectively, “Gulf Shore”).
Gulf Shore's Second Amended Complaint advances several
claims against Waveland arising from Waveland's water
ordinance and charges for water usage.
seeks dismissal on grounds that the applicable statutes of
limitations bar Gulf Shore's claims. Waveland also
contends that it is immune from Gulf Shore's unjust
enrichment claim under state law and that Gulf Shore fails to
state a procedural due process claim upon which relief can be
granted. Based upon its review of the record and relevant
legal authority, the Court finds that Waveland's Motion
 should be granted in part as to Gulf Shore's claim
for violation of procedural due process and denied in part as
to Gulf Shore's remaining claims.
Gulf Shore's Factual Allegations
to the Second Amended Complaint and attached exhibit, Gulf
Shore purchased two apartment complexes within the City of
Waveland, Mississippi, in 2011. Not. of Claim [28-1] at 1.
When Gulf Shore took possession of the properties, it began
utilizing the City of Waveland's water service.
Id. Gulf Shore alleges that since the date of
purchase of the complexes, it has been charged excessive and
incorrect monthly rates for water service. Id. at 2.
Waveland assesses Gulf Shore fees based on an estimated
monthly usage rate that is much higher than the actual usage.
Id. at 2-3. The monthly statement includes a charge
for wastewater disposal, which Gulf Shore claims Waveland
does not have the authority to collect. Id. at 2.
fees and charges incurred by the previous owner of the
complexes have also been allegedly included in Gulf
Shore's water bill. Id. at 2. Gulf Shore further
complains that monthly statements regularly include charges
for improperly computed late fees, and late fees upon late
fees, which compounds the charges. Id. Gulf Shore
asserts that on several occasions, it submitted checks for
payment of the water bills, but Waveland did not properly
credit these checks, resulting in improper imposition of late
fees. Id. at 5. A Notice of Claim, which is attached
as an exhibit to the Second Amended Complaint, contends that
these injuries occurred “[b]etween February 28, 2011
and June 6, 2016.” Id.
November 16, 2016, Waveland held a meeting of its Board of
Aldermen to vote on and ultimately approve an amended water
and sewer ordinance, Ordinance #371, which purportedly
affected Gulf Shore's rights. Second Am. Compl.  at
6. Gulf Shore claims that Waveland failed to provide Gulf
Shore with notice that Ordinance #371 had been placed on the
agenda for the Board's consideration at this meeting.
Id. Waveland was allegedly aware of Gulf Shore's
concerns about the water rates and fees because the parties
were regularly communicating with each other regarding
Waveland's practices and ordinances. Id.
23, 2016, Gulf Shore submitted a Notice of
Claim “pursuant to the provisions of the
Mississippi Tort Claims Act, ” alleging that Waveland
had excessively and improperly charged Gulf Shore. Not. of
Claim [28-1]. No. action was taken on the Notice of Claim,
Second. Am. Compl.  at 2, following which Gulf Shore
filed a Complaint in the Circuit Court of Hancock County,
Mississippi, on November 3, 2016, Compl. [1-1] at 24. On
November 17, 2016, Gulf Shore filed an Amended Complaint. Am.
Compl. [1-1] at 4. Waveland removed the case to this Court on
December 16, 2016, on grounds of both diversity and federal
question jurisdiction. Not. of Removal [1-1] at 1-2. Gulf
Shore filed the Second Amended Complaint on April 25, 2017.
Second Am. Compl. .
Second Amended Complaint alleges seven counts against
Waveland. Count I seeks a declaration that Waveland: 1) is
assessing an unlawful tax against Gulf Shore, or,
alternatively, is assessing water and sewer rates and fees in
violation of state law; 2) is in breach of its contract with
Gulf Shore; 3) is violating Gulf Shore's equal protection
rights by failing to categorize water and sewer users fairly;
and 4) is violating Gulf Shore's due process rights.
Id. at 7-8.
Shore brings two claims pursuant to 42 U.S.C. § 1983 in
Counts II and III. Gulf Shore brings a due process claim in
Count II, and complains that Waveland deprived Gulf Shore of
procedural and substantive due process by withholding notice
of the City's consideration of changes to the ordinance
at the Board meeting and by then amending the ordinance.
Second Am. Compl.  at 8-9. Count III claims that Waveland
violated Gulf Shore's equal protection rights by imposing
water and sewer charges based on discriminatory, unfair,
arbitrary, and/or capricious factors. Id. at 9-10.
IV alleges that Waveland breached its contracts with Gulf
Shore by charging rates and fees inconsistent with City
ordinances. Id. at 10. Count V raises a tort claim
for ultra vires conduct, claiming that Waveland violated
state law by levying an impermissible tax disguised as a fee
or, alternatively, by charging rates that are unreasonable
and unfairly applied, exceeding Waveland's authority.
Id. at 10-11. Count VI sets forth an unjust
enrichment claim for Waveland continuing to retain monies
Gulf Shore has paid, even though Waveland illegally charged
rates and fees. Id. at 11-12. Lastly, Count VII
claims that Waveland's water and sewer ordinance is
unconstitutionally vague as written and as applied.
Id. at 12.
to Federal Rule of Civil Procedure 12(b)(6), Waveland now
moves to dismiss the Second Amended Complaint, raising three
main arguments. Mot. . Waveland first contends that Gulf
Shore's claims are all time-barred by the relevant
statutes of limitations. Defs.' Mem.  at 4. Waveland
posits that the claims accrued in 2011 as indicated by the
Notice of Claim and that Gulf Shore failed to file suit
within the applicable three- and one-year statutes of
limitations. Id. at 5-6.
alternative, Waveland argues that some of Gulf Shore's
claims are due to be dismissed on their merits under a Rule
12(b)(6) standard. Specifically, Waveland asserts that it is
immune from Gulf Shore's unjust enrichment claim under
state law. Id. at 6. Next, Waveland maintains that
Gulf Shore's procedural due process claim fails to state
a claim upon which relief can be granted, on grounds that
Gulf Shore was not entitled to notice of Waveland's
adoption of the new water ordinance because procedural due
process requirements do not apply to legislative functions,
and because Gulf Shore failed to file its statutorily
required appeal to state court to oppose the adoption of
Ordinance #371. Id. at 7-8. Waveland offers no other
Rule 12(b)(6) arguments, beyond the statutes of limitations
defense, as to Gulf Shore's remaining claims.
Shore responds that except for its due process claim, all
claims arise from Waveland's repeated, continuous, and
ongoing improper billing; therefore, the continuing tort
doctrine tolled the statutes of limitations. Pls.' Mem.
 at 5. Gulf Shore asserts that the Mississippi Tort
Claims Act (“MTCA”) waives Waveland's
immunity for its unjust enrichment claim. Id. at 8.
Regarding the lack of notice of Waveland's adoption of
Ordinance #371, Gulf Shore counters that utility ratepayers
have a recognized property interest in proceedings related to
utility rates, thus triggering procedural due process rights.
Id. at 11. Gulf Shore further maintains that there
is no requirement to exhaust state remedies in order to bring
a claim under 42 U.S.C. § 1983. Id. at 12.
Waveland argues in its Reply that the continuing tort
doctrine does not apply against governmental entities. Reply
 at 2.
presented with a motion to dismiss pursuant to Federal Rule
of Civil Procedure 12(b)(6), a court “must assess
whether the complaint contains sufficient factual matter,
accepted as true, to state a claim for relief that is
plausible on its face[.]” Spitzberg v. Houston Am.
Energy Corp., 758 F.3d 676, 683 (5th Cir. 2014) (citing
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009);
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). A court must accept all well-pleaded facts as true
and view those facts in the light most favorable to the
plaintiff. Varela v. Gonzales, 773 F.3d 704, 707
(5th Cir. 2014) (citation omitted). This tenet, however, is
inapplicable to legal conclusions. Id. (citation
omitted). “A statute of limitations may support
dismissal under Rule 12(b)(6) where it is evident from the
plaintiff's pleadings that the action is barred and the
pleadings fail to raise some basis for tolling or the
like.” Jones v. Alcoa, Inc., 339 F.3d 359, 366
(5th Cir. 2003).
Whether the Pertinent Statutes of Limitations Bar ...