The U.S. Court of Appeals for the Sixth Circuit has ruled in favor of SW Nashville EB Owner, LLC, allowing the company to proceed with its lawsuit against the Metropolitan Government of Nashville and Davidson County. The court's decision, filed on August 14, 2026, addresses claims that the city's indefinite hold on a property development permit constitutes an unconstitutional taking of property and a violation of due process.
This ruling is significant for property owners and developers in Nashville and beyond, as it clarifies the legal standards surrounding property rights and government regulations. The case, docket number 25-5781, highlights the ongoing tensions between local governments and private property developers.
Background
SW Nashville EB Owner, LLC purchased a vacant and dilapidated property located at 186 N. 1st St. in Nashville's East Bank district in June 2022. The property is zoned for multi-family residential development, allowing the company to apply for a building permit without needing special approval. However, after submitting its application, the Metropolitan Government placed an indefinite hold on the project, citing the need to evaluate broader infrastructure plans in the area.
The hold was not due to any issues with SW Nashville's application but rather because Metro indicated it might need to acquire right-of-way interests to construct a major roadway. This situation left SW Nashville unable to develop or sell the property, resulting in significant financial losses, including approximately $200,000 in carrying costs each month.
In May 2024, SW Nashville filed a lawsuit in state court against Metro and Lucy Kempf, the Executive Director of the Metropolitan Nashville-Davidson County Planning Department. The company claimed that the indefinite hold on its permit application violated both the Takings Clause and Due Process Clause of the U.S. Constitution. After the case was moved to federal court, the district court dismissed the claims, stating they were not ripe for judicial review.
The Ruling
The Sixth Circuit Court overturned the district court's dismissal, stating that SW Nashville's claims are indeed ripe for judicial resolution. The court emphasized that the indefinite hold imposed by Metro constituted a final decision regarding the company's ability to develop the property. Circuit Judge Whitney D. Hermandorfer wrote, "Metro’s decision to impose the development hold... occurred years ago. SW Nashville also has no trouble showing that it is ‘threatened with imminent injury in fact.'"
The court's ruling means that SW Nashville can now proceed with its claims against Metro, allowing the case to move forward in the legal system. The judges involved in the decision included Eugene E. Siler, Jr., John B. Nalbandian, and Whitney D. Hermandorfer.
Impact
This ruling has significant implications for property developers and local governments across the country. It reinforces the idea that indefinite holds on property development permits can lead to claims of unconstitutional taking and due process violations. The court's decision clarifies that property owners do not need to wait for a formal denial of their applications to challenge government actions that effectively prevent them from using their land.
Going forward, this case may encourage other property owners facing similar situations to pursue legal action against local governments. It also raises questions about how municipalities will handle development permits in the future, as they must now consider the potential legal ramifications of imposing holds on applications.
What's Next
The case has been remanded to the district court for further proceedings, where the court will consider other arguments raised by Metro and Kempf, including statute of limitations and qualified immunity issues. This means that while SW Nashville has won an important victory, the legal battle is far from over.