Don’t Take My Contract

I&I Hair v. Beauty Plus The Fifth Circuit rejected a takings claim against the City of Mesquite when that claim arose from the “alleged ‘thwarting of [plaintiffs’] previously approved development and reimbursement rights” governed by their contracts with the City and the Management District.”

The plaintiffs argued that the City had to have acted in its sovereign capacity because “only a governmental entity acting in its governmental or sovereign capacity can change the regulations and rules mid-stream ….”

The Court disagreed: “Although only government entities can alter a regulatory scheme, any party to a contract may attempt—or refuse—to renegotiate the terms of an
agreement midstream. In such circumstances, any resulting dispute is contractual. That conclusion does not change merely because the party is a governmental entity.”

Mesquite Asset Recovery Group v. City of Mesquite, No. 24-11025 (Sept. 23, 2025).