De Facto Finality and the No‑Exhaustion Rule in § 1983 Land‑Use Litigation: T&W Holding Co. v. City of Kemah, Texas (5th Cir. 2025)

I. Introduction

In T&W Holding Company, L.L.C. v. City of Kemah, Texas, No. 24‑40679 (5th Cir. Nov. 21, 2025), the United States Court of Appeals for the Fifth Circuit addressed a recurring and important issue in constitutional property litigation: when are land‑use and enforcement decisions “final” for purposes of ripeness under 42 U.S.C. § 1983, and can a city require property owners to exhaust local remedies (such as an appeal to the city council) before a federal court may hear their constitutional claims?

The case arose from two separate actions by the City of Kemah:

A zero‑occupancy notice that effectively closed an existing bar and barred residential use of a four‑story building owned by T&W and operated by related entities.
The towing of a food truck operated on the same property by It’s Five O’Clock Here, L.L.C. (“Five O’Clock”).

The plaintiffs—T&W Holding Co., L.L.C. (owner), Palapas, Inc. (bar operator), and Five O’Clock (food truck operator)—brought federal and state constitutional claims under § 1983, alleging takings, due process, and equal protection violations, and also sought declaratory relief. The district court dismissed:

All claims relating to the zero‑occupancy notice as unripe for lack of a “final decision” because plaintiffs had not gone to the Kemah City Council; and
All food truck claims under Rule 12(b)(6) on the merits, and then the associated declaratory judgment request as derivative.

On appeal, the Fifth Circuit:

Reversed the ripeness dismissal of the zero‑occupancy claims, holding that the city’s action had achieved “de facto finality” and that municipal “conditions precedent” cannot impose an exhaustion requirement on § 1983 claims.
Affirmed dismissal of the food truck claims, not on the district court’s reasoning, but because the plaintiffs waived those issues by inadequately briefing them on appeal.
Revived the declaratory judgment claim only as it relates to the zero‑occupancy disputes.

The opinion thus clarifies and reinforces two central principles:

The ripeness “finality” requirement in regulatory takings and related § 1983 claims is modest and satisfied when a government decision has already deprived the owner of use—so‑called de facto finality.
Local governments cannot impose administrative exhaustion as a precondition to § 1983 actions by use of “condition‑precedent‑to‑suit” ordinances.

II. Summary of the Opinion

A. Factual and Procedural Background

T&W owns a four‑story building in Kemah, Texas. Palapas has long operated a bar on the first and second floors. Plaintiffs allege that in 2004 the City granted a change of occupancy permit for use of the third floor as a bed and breakfast, and that the third and fourth floors have since been used for short‑ and long‑term residential rentals. (The City disputes ever issuing a residential certificate of occupancy—an issue left unresolved at this stage.)

In May 2021, the owner applied for a short‑term rental permit for the third and fourth floors. The City required application for a multi‑use certificate of occupancy, prompting an inspection on July 8, 2021. Kemah’s Chief Building Official and Fire Marshal, Brandon Shoaf, found “a multitude of life safety hazards” and issued a zero‑occupancy notice for the entire building, allowing only the owner and repair contractors inside until the building passed re‑inspection. Plaintiffs allege this eliminated “substantially all economic use” of the property and has persisted for years.

Separately, Five O’Clock had operated a food truck on the property since August 2020. In April 2021, Shoaf informed plaintiffs that a food truck could not be parked for more than 24 hours. The City “red tagged” the truck, issued a stop‑work order, and demanded removal; Five O’Clock stopped operating but left the truck on site. In October 2021, after similar notices, the City towed the food truck. A Justice of the Peace court found probable cause for towing; Five O’Clock appealed but later nonsuited.

Plaintiffs then sued the City under § 1983, asserting:

Takings, due process, and equal protection claims under federal and Texas constitutions related to the zero‑occupancy order and related permitting actions.
The same types of claims related to the food truck towing.
A claim for declaratory judgment.

The City moved to dismiss under Rules 12(b)(1) and 12(b)(6), arguing:

The takings claims were unripe because no final decision had been made—you must first attempt to fix the property, seek a new inspection, get a denial, and then appeal to the City Council under Kemah Code § 1‑14(e);
Due process and equal protection claims related to the zero‑occupancy order were likewise not ripe;
The food truck claims were non‑justiciable and, in any event, failed to state a claim; and
Without substantive claims, declaratory relief could not stand.

A magistrate judge recommended complete dismissal:

He concluded that all zero‑occupancy‑related claims (takings, due process, equal protection) were not ripe because plaintiffs had not appealed to the City Council, as supposedly required by Kemah Code § 2‑93, which states that no suit may be brought unless the plaintiff has first applied to the City Council for relief and been refused.
He held the food truck claims justiciable but meritless and recommended dismissing them under Rule 12(b)(6).
He recommended dismissing declaratory relief as there were no surviving substantive claims.

The district court adopted the recommendation in full. Plaintiffs appealed, challenging both the ripeness determinations and the Rule 12(b)(6) dismissals.

B. Holdings of the Fifth Circuit

Zero‑occupancy claims are ripe. The Court held that once the City issued and maintained a zero‑occupancy notice that deprived plaintiffs of all use of the property for years, the City’s decision was “de facto final” for ripeness purposes. The Court rejected the district court’s reliance on Kemah Code § 2‑93 and emphasized that § 1983 does not require administrative exhaustion. The takings, due process, and equal protection claims tied to the zero‑occupancy notice must be heard on the merits.
Food truck claims were waived on appeal. The Court declined to examine either justiciability or the merits of the food truck-related claims because plaintiffs failed to adequately brief any challenge to the district court’s dismissal. Perfuctory references and incorporation by reference were insufficient. Issues raised meaningfully only in a reply brief come too late. The Court deemed the food truck arguments waived and affirmed their dismissal.
Declaratory judgment revived in part. Because declaratory relief is derivative of substantive rights, the Court held it may be available to the extent plaintiffs prevail on their now‑reinstated zero‑occupancy claims. It thus reversed dismissal of the declaratory judgment claim insofar as it relates to the zero‑occupancy issues, but affirmed dismissal of declaratory relief based on the food truck issues.

The case was remanded for the district court to consider the merits of the zero‑occupancy‑related takings, due process, equal protection, and declaratory judgment claims.

III. Detailed Analysis

A. Precedents and Authorities Cited

1. Regulatory Takings Ripeness and “Finality”

Several Supreme Court decisions structure the Court’s analysis of ripeness in takings claims:

Suitum v. Tahoe Regional Planning Agency, 520 U.S. 725 (1997) – Suitum held that a regulatory takings claim is generally not ripe until the regulatory agency has reached a final decision about how a regulation applies to specific property. This “final decision” requirement prevents courts from ruling on incomplete or hypothetical injuries.
Knick v. Township of Scott, 588 U.S. 180 (2019) – Knick overruled previous precedent requiring property owners to seek compensation in state court before suing in federal court. It reaffirmed that exhaustion of state remedies is not required for § 1983 takings actions: “The Fifth Amendment right to full compensation arises at the time of the taking, regardless of post‑taking remedies that may be available.”
Pakdel v. City & County of San Francisco, 594 U.S. 474 (2021) (per curiam) – Pakdel is central here. It reiterates that the ripeness finality requirement is “relatively modest.” All that is required is that “there is no question about how the regulations at issue apply to the particular land in question.” It further clarifies that “nothing more than de facto finality is necessary” and that administrative exhaustion is not a prerequisite once the government has taken a conclusive position.

The T&W Holding opinion relies heavily on Pakdel and Knick to conclude that once the City issued a zero‑occupancy order that practically and economically shut down plaintiffs’ use of the building, the City’s decision was final for purposes of ripeness—regardless of additional local review avenues.

2. No Administrative Exhaustion for § 1983 Claims

The court invokes a line of Supreme Court authority rejecting judicially imposed exhaustion requirements in § 1983 actions:

Patsy v. Board of Regents of the State of Florida, 457 U.S. 496 (1982) – Patsy held that plaintiffs bringing § 1983 claims are not required to exhaust state administrative remedies before filing suit in federal court.
Knick again – building on Patsy, Knick repeats that exhaustion is not a prerequisite to § 1983 suits.
Bowlby v. City of Aberdeen, 681 F.3d 215 (5th Cir. 2012) – Bowlby applied Patsy in the Fifth Circuit context, specifically holding that “exhaustion of state remedies is not required before a plaintiff can bring suit under § 1983 for denial of due process.”

These cases undergird the Fifth Circuit’s rejection of Kemah’s attempt to graft a municipal exhaustion requirement onto § 1983 actions by using Kemah Code § 2‑93.

3. Subject Matter Jurisdiction and Review of Dismissals

For standards of review and jurisdiction, the court cites:

Ramming v. United States, 281 F.3d 158 (5th Cir. 2001) (per curiam) – describing de novo review of dismissals under Rules 12(b)(1) and 12(b)(6).
Barrera‑Montenegro v. United States, 74 F.3d 657 (5th Cir. 1996) – outlining the forms of evidence a court may consider in Rule 12(b)(1) motions.
In re S. Recycling, L.L.C., 982 F.3d 374 (5th Cir. 2020), and Smith v. Regional Transit Authority, 756 F.3d 340 (5th Cir. 2014) – confirming that when jurisdictional facts are disputed, the district court may weigh evidence and resolve fact disputes and that such findings are reviewed for clear error.

These cases frame how the Fifth Circuit scrutinizes the district court’s ripeness ruling (treated as jurisdictional under Rule 12(b)(1)).

4. Waiver for Inadequate Briefing on Appeal

The affirmance of the food truck claims rests not on substantive law but on appellate waiver doctrine:

Price v. Digital Equipment Corp., 846 F.2d 1026 (5th Cir. 1988) – “Arguments must be briefed to be preserved.”
Sanders v. Unum Life Insurance Co. of America, 553 F.3d 922 (5th Cir. 2008) – “A party waives an issue if he fails to adequately brief it,” and “merely mentioning a claim does not constitute a supported argument or adequate briefing.” It also reiterates that arguments first supported in a reply brief come “too late.”
Audler v. CBC Innovis Inc., 519 F.3d 239 (5th Cir. 2008) – cited for the same waiver principle.

These precedents support the Court’s conclusion that because plaintiffs did not meaningfully challenge the district court’s reasoning on the food truck claims in their opening brief, those issues were not preserved.

B. The Court’s Legal Reasoning

1. Zero‑Occupancy Notice: Ripeness, Finality, and No Exhaustion

The central legal question was whether plaintiffs’ constitutional challenges to the zero‑occupancy order were ripe for federal adjudication. The district court had concluded they were not, because—relying on Kemah Code § 2‑93—plaintiffs had not first sought relief from the City Council. The Fifth Circuit disagreed on two levels:

The City’s action had already achieved “de facto finality.”
The Court applied Pakdel’s formulation that the ripeness finality requirement is modest: plaintiffs need only show that there is no real question about how the regulation applies to the property.
- The zero‑occupancy notice barred anyone except the owner and contractors from being in the building.
- According to plaintiffs, this immediately eliminated all economic use of the property (no bar, no rentals on the third and fourth floors).
- At oral argument, the City effectively conceded that plaintiffs had been without use of the building for four years.
Based on these facts, the Court held that the City had taken a conclusive position regarding use of the property. For ripeness purposes, this constituted “de facto finality”. No further local steps were needed to crystallize plaintiffs’ injury.
Municipal “conditions precedent” cannot impose exhaustion on § 1983 claims.
Kemah Code § 2‑93 states that no suit “shall be instituted or maintained” against the City unless the plaintiff “applied to the city council for redress, satisfaction, compensation, or relief” and the Council refused. The magistrate judge read this as making only City Council decisions “final.” The Fifth Circuit held this is
:
- Under Patsy, Knick, and Pakdel, administrative or local exhaustion is not a prerequisite for § 1983 claims when the governmental action has already occurred and caused the alleged deprivation.
- Section 1983 “guarantees a federal forum for claims of unconstitutional treatment at the hands of state officials.” Local procedures cannot override that federal guarantee by postponing when a cause of action arises or when a federal court may exercise jurisdiction.
- The Court emphasized that the city’s own ordinance cannot transform the federal “finality” requirement into an exhaustion obligation.
Consequently, the Court concluded that Kemah Code § 2‑93 is inapplicable as a ripeness barrier in federal § 1983 litigation.

Having determined that the zero‑occupancy order itself marks the “final decision” for ripeness purposes, the Court reversed dismissal of:

The federal takings claim related to the zero‑occupancy order;
The associated federal due process claim (procedural or substantive, to be fleshed out on remand); and
The equal protection claim concerning the City's treatment of this property.

The Court likewise noted that these due process and equal protection claims are governed by the same no‑exhaustion principle as takings claims under § 1983; they are not subject to a special ripeness bar just because local review processes exist.

2. Application to Due Process and Equal Protection Claims

The district court had held that the due process and equal protection claims were not ripe because they required “similar factual development” to the takings claim, and thus, in its view, also demanded a final City Council decision. The Fifth Circuit rejected this logic:

Due process and equal protection claims raised under § 1983 are governed by the same no‑exhaustion rule as takings claims (Patsy, Bowlby).
Once the government’s action is complete and operative—here, the zero‑occupancy order—it is sufficiently final to trigger potential violations of due process and equal protection as well.
Requiring plaintiffs to exhaust municipal administrative remedies would conflict with the federal statutory design of § 1983.

Thus, the Court concluded that all zero‑occupancy‑related claims—takings, due process, and equal protection—are ripe and must be considered on their merits by the district court.

3. Food Truck Towing Claims: Waiver by Inadequate Briefing

Although the City advanced a Rooker‑Feldman abstention argument (contending that plaintiffs’ federal suit was effectively an appeal from the state Justice of the Peace’s probable‑cause ruling), the Fifth Circuit did not reach that question, nor did it evaluate the merits of the 12(b)(6) dismissal. Instead, it resolved the food truck portion of the case on purely procedural, appellate grounds.

The Court examined plaintiffs’ opening brief and found:

No specific challenge to any of the district court’s rationales for dismissing the food truck claims;

Only a generic listing of constitutional provisions (takings clauses) and a bare assertion—without citations—that plaintiffs had adequately pled their claims;

An attempt in the reply brief to respond to the City’s arguments regarding towing, but that came too late under Fifth Circuit law.

Applying Price, Sanders, and Audler, the Court held:

“Arguments must be briefed to be preserved.”
Mere mention of a claim is not adequate; a party must develop a reasoned challenge to the district court’s ruling with supporting authority and analysis.
Arguments first substantively developed in a reply brief are deemed waived because the appellee has no opportunity to respond.

Because plaintiffs did not identify or argue specific errors in the district court’s dismissal of the food truck claims, the Court treated those issues as waived on appeal and affirmed the dismissal. It explicitly declined to rule on Rooker‑Feldman or on the substantive sufficiency of the food truck claims.

4. Declaratory Judgment: Derivative of Substantive Claims

Finally, the Court turned to the request for declaratory relief. The district court had dismissed the declaratory judgment count on the ground that no substantive claims remained. The Fifth Circuit refined that ruling:

Declaratory relief is derivative—it depends on the existence of a justiciable underlying right or controversy.
Because the Court reinstated plaintiffs’ § 1983 claims regarding the zero‑occupancy order, the request for declaratory judgment related to those claims is no longer moot or redundant at the pleadings stage.
However, because the food truck claims remain dismissed—and that dismissal is affirmed—any declaratory judgment premised on the towing is properly dismissed.

Accordingly, the Court:

Reversed dismissal of the declaratory judgment claim insofar as it relates to the zero‑occupancy dispute; and
Affirmed dismissal of the declaratory judgment claim regarding the food truck.

IV. Potential Impact on Future Cases and Municipal Practice

A. Strengthening the “De Facto Finality” Standard

The opinion reinforces and operationalizes the Supreme Court’s Pakdel decision in the land‑use context:

When a city issues an order—such as a zero‑occupancy notice—that immediately and indefinitely bars all economic use of property, the order is effectively a final decision for ripeness purposes.
Property owners do not have to engage in multiple rounds of local applications, reapplications, or optional appeals just to ripen their § 1983 claims.
This clarity is especially important for regulatory takings, short‑term rental restrictions, occupancy limitations, and code‑enforcement shutdowns, where cities might otherwise argue that property owners must pursue every administrative avenue before filing suit.

B. Limits on Municipal “Condition Precedent to Suit” Ordinances

Kemah’s § 2‑93 is a type of ordinance commonly described as a “notice and opportunity for settlement” or “condition precedent” clause. The Fifth Circuit’s treatment has significant implications:

Such clauses may still have effect in state‑law claims or in non‑constitutional contexts, but they cannot operate to postpone or bar federal § 1983 claims once the alleged constitutional violation has occurred.
Cities cannot insist that a City Council decision is the only “final” decision capable of ripening a federal takings claim if the injury flows from an earlier, operative order (here, the official’s zero‑occupancy notice).
Municipal drafters should recognize that while local processes (appeals to boards, councils, commissions) are valuable, they cannot be made prerequisites to accessing federal courts for constitutional injuries.

Practically, this may lead municipalities to:

Review and revise their codes to distinguish between procedural steps for local relief and any purported preconditions to federal litigation.
Train officials that once they take enforcement actions that substantially impair property rights, those actions may be immediately reviewable in federal court under § 1983.

C. Litigation Strategy for Property Owners and Municipalities

For property owners and their counsel:

This decision underscores that once a government action has actually deprived the owner of use or value (especially for an extended period), § 1983 claims are likely ripe even if local “appeals” remain available.
Owners can choose whether to pursue local remedies for practical or political reasons, but those choices generally will not delay or defeat federal jurisdiction.
At the same time, plaintiffs must be careful on appeal to clearly challenge every adverse ruling they wish to overturn; otherwise, issues may be lost through waiver, as happened with the food truck claims.

For municipalities and defense counsel:

Arguments that plaintiffs must use every local procedure (city council appeals, special boards, etc.) before suing under § 1983 are increasingly fragile post‑Knick and Pakdel, and now clearly disfavored in the Fifth Circuit.
Defense efforts may instead focus on:
- Whether the alleged action truly effected a taking or constitutional violation (on the merits),
- Whether the claim is otherwise barred (statutes of limitation, claim preclusion, etc.), or
- Whether the plaintiff has adequately pleaded facts to support a plausible claim under Rule 12(b)(6).

D. Clarifying the Role of Appellate Waiver

The handling of the food truck claims is also a cautionary tale:

Even potentially significant constitutional issues—such as municipal authority to tow vehicles, Rooker‑Feldman questions, or due process in code enforcement—can be effectively removed from appellate review if appellants do not properly brief them.
The Court’s adherence to its waiver doctrine promotes:
- Fairness to appellees, who are entitled to clear notice of the issues being contested;
- Judicial efficiency, by narrowing the focus to arguments that parties have actually presented and developed.

In future property disputes, counsel must ensure that:

Every challenged ruling is specifically identified;
Arguments are substantiated with authority and analysis in the opening brief; and
Reply briefs are used to respond, not to raise new substantive arguments for the first time.

V. Complex Concepts Simplified

1. What Is a “Regulatory Taking”?

The Constitution’s Takings Clause prohibits the government from taking private property for public use without just compensation. A regulatory taking occurs not when the government physically seizes land, but when a regulation or official order goes so far that it effectively takes the property’s value or use.

Examples include:

Zoning rules that render land practically unusable for any economically viable purpose;
Environmental or safety restrictions that ban all development on a parcel; or
An order (like a zero‑occupancy notice) that indefinitely prevents use of an existing income‑producing building.

In T&W Holding, plaintiffs allege the zero‑occupancy order eliminated “substantially all economic use” of the building, which is the sort of allegation that can support a regulatory takings claim.

2. “Ripeness” and the “Final Decision” Requirement

Ripeness asks: Is this dispute ready for court review, or is it still too early? In land‑use takings cases, courts historically required a “final decision” from the government about how regulations apply to the specific property. The idea is to avoid hypothetical disputes when the government might yet modify its position.

However:

The Supreme Court in Pakdel clarified that this requirement is “relatively modest.”
Once the government’s decision is clear and operative and its impact on the property is settled, the claim is ripe—even if additional optional procedures exist.
“De facto finality” simply means that, in reality, the government has already made up its mind and has acted on that decision.

In this case, a zero‑occupancy notice lasting four years and shutting down all use of the property is a classic example of de facto finality.

3. Administrative “Exhaustion” Versus Finality

Exhaustion means using all available administrative remedies—such as internal appeals—before going to court. Some statutes explicitly require exhaustion; § 1983 does not.

The key distinction:

Finality is about whether the government has taken a concrete position that injures the plaintiff.
Exhaustion is about whether the plaintiff has pursued every administrative review pathway available.

The Fifth Circuit emphasizes that:

Federal law requires finality, not exhaustion, in § 1983 land‑use cases.
Local ordinances cannot transform finality into an exhaustion requirement by insisting that plaintiffs first appeal to a city council or board.

4. Waiver on Appeal by Inadequate Briefing

To preserve an issue for appellate review, a party must:

Explicitly identify which rulings it is challenging; and
Offer reasoned argument with citations to legal authority.

Simply listing a constitutional provision or saying “the district court was wrong” is insufficient. If an argument is not properly developed in the opening brief, appellate courts generally treat it as waived. Issues raised only in a reply brief are also usually deemed waived.

In T&W Holding, this rule meant that, notwithstanding the underlying facts, the court left the food truck dismissals intact because plaintiffs did not properly challenge them.

5. Declaratory Judgment

A declaratory judgment is a court order that clarifies the rights and legal relations of the parties without necessarily awarding damages or ordering coercive relief (like an injunction). It is often used to:

Determine whether a law or ordinance is constitutional;
Clarify whether a party may continue a particular use of property; or
Resolve disputes about the interpretation of a contract, statute, or regulation.

However, a declaratory judgment must rest on a live, justiciable controversy. If all underlying substantive claims fail, declaratory relief usually falls with them. Conversely, if some claims survive (as here, the zero‑occupancy claims), a declaratory judgment may still be appropriate.

VI. Conclusion: Significance of T&W Holding v. City of Kemah

The Fifth Circuit’s decision in T&W Holding Co. v. City of Kemah is significant for several reasons:

Firmly applying “de facto finality” in land‑use disputes. The Court confirms that a local government’s enforcement action—such as a long‑lasting zero‑occupancy order—can be sufficiently final to ripen § 1983 takings, due process, and equal protection claims even if local appeal mechanisms exist.
Reinforcing the no‑exhaustion principle under § 1983. Municipal efforts to require complainants to first seek relief from city councils or other local bodies cannot delay or prevent federal § 1983 litigation once a constitutional injury has occurred. Local “conditions precedent to suit” ordinances cannot override federal law.
Clarifying the derivative nature of declaratory relief. The opinion illustrates that declaratory judgment claims rise or fall with the viability of underlying substantive claims; here, they survive only as to the zero‑occupancy dispute.
Highlighting the importance of proper appellate briefing. The waiver ruling on the food truck claims underscores that even potentially meritorious constitutional issues will not be addressed if they are not clearly and thoroughly briefed in the opening appellate papers.

On remand, the district court must now decide the substantive merits of the zero‑occupancy claims: whether the City’s actions indeed constituted a taking, violated due process, or denied equal protection, and whether declaratory relief is appropriate. While T&W Holding does not predetermine those answers, it ensures that property owners in the Fifth Circuit cannot be turned away from federal court solely because they declined to pursue additional local administrative review—once the government has already made and implemented a decision that effectively deprives them of their property rights.

De Facto Finality and the No‑Exhaustion Rule in § 1983 Land‑Use Litigation: Commentary on T&W Holding Co. v. City of Kemah (5th Cir. 2025)