City retains immunity for implied reimbursement contract


Midtown Edge, L.P. and Midtown Condominiums, L.L.C. v. The City of Houston, 01-12-00730-CV (Tex. App. – Houston [1st Dist.], February 13, 2014).

This is an appeal from an interlocutory order granting the City of Houston’s plea to the jurisdiction in a breach of contract case. The 1st Court of Appeals affirmed.

Midtown applied to the City to use a wasterwater line as part of a project, but the City noted a new larger line was needed to accommodate the project. Midtown Edge constructed a new line and dedicated to the City. Later, another apartment complex attached to the line and Midtown applied to the City for partial reimbursement on a pro rata share which the City denied. Midtown sued alleging the City’s explanation letter of construction options (one option being a reimbursement process requiring council approval) was a contract and that by denying reimbursement the City also committed an unconstitutional taking. The City’s plea asserted it was immune from any contract claim and no taking can occur because Midtown consented to the City’s ownership by dedication. The trial court granted the plea and Midtown appealed.

The Houston Court of Appeals first held the claims were ripe for adjudication in county court.  However, while multiple documents can form a contract when taken as a whole, there must still be an intent to enter into such an agreement. The explanation letters sent by the City required Midtown to choose various triggering elements including council approval for some options. The court determined the City did not intend to enter into a binding agreement by the explanation letters so the breach and declaratory judgment claims are barred. Further, Midtown chose to construct the line at its own cost (as opposed to other options offered) and therefore could not claim an exaction or takings claim. Finally, no waiver of immunity exists for promissory estopple and no exception applies in this case. The trial court’s order is affirmed.

If you would like to read this opinion click here.  Panel: Justice Jennings, Justice Higley, and Justice Brown.  Opinion by Justice Jennings. The attorneys listed for Midtown are listed as Jeffery Wagnon and
Robert S. Bennett.  The attorneys listed for the City are Fernando De Leon, Brian Anthony Amis,
Denise L. Miller, and John B. Wallace.

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