City retains immunity in declaratory judgment suit even though party only sought a declaration of rights

City of Dallas v EZ Pawn, No. 05-12-01269-CV, (Tex. Civ. App. – Dallas April 2, 2013).

The Fifth District Court of Appeals held the City of Dallas retains sovereign immunity under the Texas Uniform Declaratory Judgment Act when a plaintiff is merely seeking an interpretation of an ordinance and not its invalidity.

EZ Pawn, operates a pawnshop but in 2003 began offering loan services. In 2012 the City asserted its ordinances classified the use as an “Alternative Financial Establishment” and required EZ Pawn to comply with provisions for that business.  EZ Pawn sued under the UDJA seeking a declaration the ordinance should be interpreted a particular way so the loan service is not an AFE.  The City filed a Plea to the Jurisdiction asserting that sovereign immunity precluded the suit as the UDJA only waives immunity if an individual “challenges” an ordinance, not when it merely seeks a declaration of rights.

The Texas Supreme Court has recognized that the legislature expressly waived immunity for lawsuits challenging the validity of a municipal ordinance because §37.006(b) of the UDJA expressly requires joinder of a municipality in actions challenging the validity of a municipal ordinance. See Tex, Dep’t of Transp, v. Sefik, 355 S.W.3d 618, 622 & n.3 (Tex. 2011); see also City of El Paso v. Heinrich, 284 S.W.3d 366, 373 n.6 (Tex. 2009).  However, the Court has also concluded that the legislature through the UDJA has not clearly and unambiguously waived sovereign immunity when an ordinance is not challenged.  As a result, the Plea should have been granted and the claims dismissed.

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