Austin Court of Appeals holds AG established only 6 days of violations by city of concealed handgun prohibitions, not the 500+ asserted

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Ken Paxton, Texas Attorney General v. City of Austin, Mayor Steve Adler, Ora Houston, Delia Garza, Sabino Renteria, Gregorio Casar, Ann Kitchen, Don Zimmerman, Leslie Pool, Ellen Troxclair, Kathie Tovo, and Sheri Gallo, each in their Official Capacity, 03-19-00501-CV, (Tex. App – Austin, July 22, 2021)

This is a handgun notice/AG penalty case against the City of Austin. The Austin Court of Appeals affirmed the imposition of civil penalties against the City of Austin imposed by the trial court and denied the AG’s request for stronger penalties as a matter of law.

In 2015, the Legislature enacted Section 411.209 (“Wrongful Exclusion of Concealed Handgun License Holder”) of the Texas Government Code, which it amended in 2017 and 2019. The section addresses penalties against a City that improperly prohibits the carrying of concealed handguns in certain locations. Under §30.06 of the Texas Penal Code, in order to prohibit a licensed concealed handgun carrier from entering a public building, the City must post a specific sign with specific language. A citizen testified he sent the City notices to remove a pictorial sign and that he was orally told he could not enter.  Under §411.209, the AG filed suit against the City for improperly prohibiting licensed carriers. The trial court dismissed the claims related to the City’s prohibition picture of a gun with a circle and line through it, but held the AG met its burden of proof as to other warnings (including oral warnings) on six separate days. The trial court imposed penalties of $9,000 against the City. The City did not appeal, but the AG did.  AG asserted the City should have been penalized over $5 million due to continuing violations and in dismissing the pictorial violation.

To be a prohibited notice under former Section 411.209(a), the notice must be either “by a communication described by Section 30.06, Penal Code” or “by any sign expressly referring to that law or to a license to carry a handgun.” Former Tex. Gov’t Code § 411.209(a). The City’s pictorial sign is not “a communication described by Section 30.06, Penal Code.” And although the City’s Etching perhaps could be considered a “written communication” in the ordinary and common meaning of that phrase, Section 30.06 expressly defines “written communication” under which the pictorial sign does not qualify. As a result, dismissal of claims related to the pictorial sign was proper. Next, the district court concluded that the Attorney General met his burden to establish a violation of former Section 411.209(a) for six different days in 2016.  However, it failed to prove continuing violations on any other day. When a party attacks the legal sufficiency of an adverse finding on an issue on which it bears the burden of proof, the judgment must be sustained unless the record conclusively establishes all vital facts in support of the issue.  The AG failed to make such a showing. Finally, the Attorney General did not raise any complaint until his appeal regarding the district court’s award of a $1,500 per diem amount rather than the mandatory $10,000 minimum authorized by the statute for subsequent violations.  As a result, the court could not review that issue as it was not preserved.

Panel consists of Justices Goodwin, Kelly, and Smith. Affirmed. Memorandum Opinion by Justice Goodwin can be read here. Docket page with attorney information found here.

Texas Supreme Court holds ratepayer has standing to sue to challenge electric rate increase

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Data Foundry, Inc. v City of Austin, 19-0475 (Tex. April 9, 2021)

This is a utility rate challenge case. However, the issue considered by the Texas Supreme Court is whether the company purchasing electricity has standing to sue. The Court held it does have standing.

Data Foundry is an internet service provider that operates data centers in Austin. The City owns and operates Austin Energy, an electric utility system. In 2016, Austin Energy proposed to change the retail rates it was charging for electric services. The City hired a hearing examiner to conduct a review of the proposed new rates. Several ratepayers, including Data Foundry, intervened and participated in the hearing process. Ratepayers were permitted to conduct discovery, provide testimony, and cross-examine witnesses at a public hearing. Data Foundry submitted briefs in which it argued, as it does in this case, that Austin Energy’s proposed rate structure would result in rates that were unreasonable, unlawful, and confiscatory.  The Austin City Council passed an ordinance establishing new base rates and pass-through rates. Data Foundry sued in district court to hold the ordinance invalid. The City filed a motion to dismiss all of Data Foundry’s claims under Rule 91a. The trial court granted the motion, but the Court of Appeals reversed in part and affirmed in part.

The threshold inquiry into standing “in no way depends on the merits of the [plaintiff’s] contention that particular conduct is illegal.” To maintain standing, a plaintiff must show: (1) an injury in fact that is both concrete and particularized and actual or imminent, not conjectural or hypothetical; (2) that the injury is fairly traceable to the defendant’s challenged action; and (3) that it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.  In the context of lawsuits filed by ratepayers to challenge utility rates charged by a municipality, the Court has not required an individual plaintiff to allege its injury is distinct from injuries other ratepayers may suffer. An injury is “particularized” for standing purposes if it “affect[s] the plaintiff in a personal and individual way.” Data Foundry thus alleges an injury that is particularized to it—Data Foundry suffers financial harm because it must pay Austin Energy a particular sum of money that exceeds what Data Foundry contends it should have to pay and that the rate is discriminatory. The fact that the City’s actions may also injure other residents does not preclude a finding that Data Foundry has alleged a sufficiently particularized injury. Being forced to part with one’s money to pay an excessive electric rate is an injury that is personal and individual, even though others may suffer the same injury. The Court held several cases holding that a utility ratepayer cannot establish standing to sue unless it alleges an injury different from that of other ratepayers, beyond its personal obligation to pay a rate that it claims is improper, are disapproved of as inconsistent with Texas standing jurisprudence. The Court remanded to determine the remaining issues under PURA as such determinations are not based on standing, which was the only ground upon which the trial court ruled.

If you would like to read this opinion click here. JUSTICE HUDDLE delivered the opinion of the Court.

San Antonio Court of Appeals holds city ethics commission properly ruled complainant’s filing was frivolous and could award sanctions

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Lakshmana Viswanath v. The City of Laredo, 04-20-00152-CV (Tex. App. – San Antonio, April 14, 2021)
This is an appeal from a city ethics commission determination where the San Antonio Court of Appeals affirmed the commission’s finding but reversed the award of attorney’s fees.
Viswanath is the founder of a government watchdog group known as Our Laredo, who ran for city council and was defeated by Councilman Martinez in 2018. In 2019, a member of Our Laredo, Victor Gomez, filed an ethics complaint with the City’s Ethics Commission against the Co-City Managers arguing they were required to “ensure” that Councilman Martinez forfeit his seat due to an alleged conflict of interest. They did not file a complaint against Martinez, but against the Co-Managers. Viswanath filed an additional ethics complaint against the Co-City Managers arguing they unfairly advanced the private interest of certain developers at the expense of the general population by recommending that City Council pass two ordinances. The Commission dismissed both complaints, concluding they did not allege violations of the Laredo Ethics Code and therefore did not invoke the Commission’s jurisdiction. After finding both complaints frivolous, the Commission publicly admonished Gomez and ordered Viswanath to pay the maximum civil fine—$500.00—plus $7,900.68 in attorney’s fees to the Commission’s conflicts counsel. Viswanath filed a verified petition in district court appealing the Commission’s decision and seeking a declaratory judgment. The City filed a motion for summary judgment, which the trial court granted. Viswanath appealed.
The court of appeals first held that the City’s ethics code allows an appeal to district court and requires a suit against the City. It, therefore, waived the City’s immunity from suit, but only for the limited purposes spelled out in the Ethics Code and that the proper mechanism for that is the UDJA. Under this mechanism, the trial court must review the Commission’s decision under the substantial evidence rule. At the initial hearing, Viswanath testified he was involved in filing both the complaint about Councilman Martinez and the complaint about the ordinances. Viswanath testified that the objection he raised was that the Co-City Managers “made the wrong recommendation”—a recommendation which was ultimately accepted by City Council. He was informed by several city officials that city management could not conduct the investigation he requested or provided the remedy he sought. Based on this evidence, the Commission could have reasonably determined that Viswanath was aware the Co-City Managers lacked authority to perform the investigation or grant the relief he requested, yet still filed his complaint in a groundless and harassing action. Substantial evidence supported the Commission’s decision, so the trial court was required to affirm it as a matter of law. The court also determined that the Commission was authorized to require a complainant who files a frivolous complaint to pay a civil penalty, the respondent’s fees, and any other sanction authorized by law. As a result, the Commission has the authority to aware the Commission’s attorney’s fees be paid as an “other sanction” allowed by law. However, the record does not show what evidence was presented to substantiate the fee amount. As a result, that portion is reversed and remanded for the trial court to determine a proper award amount.
If you would like to read this opinion click here. The panel consists of Chief Justice Martinez, Justice Chapa and Justice Watkins. Memorandum Opinion by Justice Watkins.

Property owner not entitled to de novo review of nuisance determination says Austin Court of Appeals

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Mark Groba v. The City of Taylor, Texas, 03-19-00365-CV (Tex. App. – Austin, Feb. 3, 2021)

In this nuisance abatement case, the Austin Court of Appeals affirmed the granting of the City’s plea to the jurisdiction.

Groba, a real property owner, was subject to an enforcement action in the Municipal Court of Taylor, acting in an administrative capacity.  The court conducted a hearing and issued an order granting the City’s application to declare Groba’s property a nuisance under chapter 214 of the Texas Local Government Code. The municipal court later issued an order declaring that Groba failed to comply with its original order to clean up the nuisance. The City then filed a Chapter 54 lawsuit to enforce it’s ordinances and the orders in district court. The City sought injunctive relief related to its nuisance determination, including authorizing the City to demolish the building and charge the costs for doing so to Groba. The City also sought civil penalties.  The trial court issued an injunction order allowing the City to demolish the building, which the City did.  The day after the demolition, Groba filed a counterclaim for declaratory judgment and trespass, arguing that he was entitled to a jury trial on the nuisance determination. The City filed a plea to the jurisdiction, which the trial court granted. Groba appealed.

After receiving a copy of the municipal court order, Groba did not appeal and, thus, did not comply with the jurisdictional prerequisites for judicial review of the nuisance determination.  Groba asserted he was entitled to de novo review of the City’s nuisance determination, and even if he had failed to timely appeal the nuisance determination, the City is estopped from asserting a jurisdictional challenge to his request for a jury trial because the City “misled” him by filing “multiple proceedings” and by dismissing the criminal municipal-court case after he had requested a jury trial. A property owner aggrieved by a municipality’s order under § 214.001 may seek judicial review of that decision by filing a verified petition in district court within thirty days of receipt of the order. A court cannot acquire subject-matter jurisdiction by estoppel. The City’s enforcement of an ordinance may be estopped, but only in exceptional circumstances that are not present. But subject-matter jurisdiction is still not conferred through estoppel.  Further, contrary to Croba’s assertions, the Texas Supreme Court’s opinion in City of Dallas v. Stewart, 361 S.W.3d 562 (Tex. 2012) does not give him an unconditional right to de novo review of a nuisance determination. A de novo review is required only when a nuisance determination is appealed, which Croba did not perform.

If you would like to read this opinion click here. Panel consists of Chief Justice Byrne, Justice Baker and Justice Triana. Memorandum Opinion by Chief Justice Byrne.

Texas Supreme Court holds Texas Board of Chiropractic Examiners’ rules are valid even over objection of the Texas Medical Association

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Texas Board of Chiropractic Examiners v Texas Medical Association, 18-1223 (Tex. Jan. 29, 2021)

This case centers on the tension between chiropractors and physicians and several Texas Board of Chiropractic Examiners’ rules. The Texas Supreme Court held the Board’s rules were valid.  The analysis is beneficial for government lawyers as 1) it discusses the presumptions of validity and statutory construction and 2) for any lawyers defending personal injury or involved in worker’s compensation systems the scope of the rules can be important.

The line between practicing medicine and practice in the chiropractic profession is not always clear. The Texas Chiropractic Act (the Act) draws part of that line by defining the practice of chiropractic to include evaluating the musculoskeletal system and improving the subluxation complex. The Texas Board of Chiropractic Examiners (the Board) has issued rules defining both terms as involving nerves in addition to muscles and bones. Another Board rule authorizes chiropractors to perform an eye-movement test for neurological problems that is known by the acronym VONT. The Texas Medical Association (TMA) asserts that only physicians may perform VONT. The Legislature passed the Medical Practice Act (the MPA) to regulate physicians.  It empowers the Texas Medical Board “to regulate the practice of medicine” in Texas. The Court went through a detailed history of the Act and MPA and the Board and the TMA. The Board adopted what is now Rule 78.1 defining chiropractic practice to include diagnosing and treating neuromusculoskeletal conditions causing an alteration in the biomechanical and/or neuro-physiological reflections. In comments to the Board, TMA opposed the definition of the musculoskeletal system which would include the nervous system and brain.  The Board also allowed chiropractors to perform vestibular-ocular-nystagmus testing or VONT. TMA sued to invalidate the rules as exceeding the scope of chiropractic practice prescribed by the Act. After a bench trial, the court issued findings of fact and conclusions of law, holding that the challenged rules are invalid because they exceed the statutory scope of chiropractic practice. The Board appealed. The court of appeals affirmed in part.

The Court first held the TMA had proper authority to sue to invalidate the Board rules because the MPA recognizes that “the practice of medicine is a privilege” reserved to licensed physicians. Obtaining and maintaining the privilege imposes economic costs, and allowing nonphysicians to practice medicine outside the MPA’s control would impair—or at least threaten to impair—that privilege.  The Board rules are presumed valid. Using the principles of statutory construction and this presumption as the starting point, the Court found the trial court failed to afford Rule 78.1 a presumption of validity. TMA argues that the rule’s references to nerves authorize chiropractors to diagnose any neurological condition, which is the practice of medicine. However, the rule’s words cannot be read beyond their context. Nothing in Rule 78.1 suggests that chiropractic practice extends beyond the evaluation and treatment of the musculoskeletal system. The rule merely acknowledges the reality that chiropractors cannot ignore the presence and effect of associated nerves that help shape the musculoskeletal system and allow it to move. The Board’s definition of the musculoskeletal system only includes those nerves “associated” with the muscles, tendons, ligaments, bones, joints, and tissues “that move the body and maintain its form.” Because chiropractic is carved out of the comprehensive regulation of the practice of medicine under the MPA, its scope under the Act must be limited. Rule 78.1 acknowledges and respects the Act’s boundaries. As a result, TMA has not overcome the definitions’ presumption of validity. With regards to the VONT rule, it is a neurological test that a medical doctor may use to diagnose a problem of the brain, inner ear, or eyes, none of which is a part of the spine. However, the Board also presented evidence that VONT can be used to facilitate chiropractic treatment. A reading of all the Board’s rules together makes it clear that a chiropractor’s proper use of VONT is not for treating a neurological condition, which is certainly outside the scope of chiropractic, but rather for the limited purpose of determining whether and how to treat a patient’s musculoskeletal system.  As a result, both rules retain their presumption of validity.

If you would like to read this opinion click here. Chief Justice Hecht delivered the opinion of the Court, in which Justice Guzman, Justice Lehrmann, Justice Devine, Justice Blacklock, and Justice Busby joined in full, and in which Justice Boyd and Justice Bland joined except with respect to Part III(D).

Austin Court of Appeals holds temporary injunction order need not set a specific trial date, but must place the case for trial on the court’s calendar, otherwise the order is void

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Hegar, Comptroller of Public Accounts of State of Texas, et al., v Zertuche Construction, LLC, 03-19-00238-CV (Tex. App. – Austin, Jan. 22, 2021).

This is a tax collection case, but the main thrust is the procedural ruling on injunctions where the Austin Court of Appeals held that Zertuche Construction’s temporary injunction order was void due to a lack of trial setting.

The Comptroller audited Zertuche’s sales-and-use tax report, determined it owed additional taxes, and imposed penalties and interest. After a decision upholding an assessment of approximately $2.6 million, Zertuche submitted a written protest letter and followed the procedural steps for challenging the holding. Zertuche filed suit challenging the assessment and seeking an injunction to prohibit the Comptroller from taking action to collect the taxes owed under the assessment. The Comptroller responded by filing a plea to the jurisdiction. The trial court conducted a combined hearing on the Comptroller’s plea to the jurisdiction and Zertuche’s application for a temporary injunction to enjoin tax collection. The trial court issued a temporary injunction order prohibiting tax collection, but did not rule on the plea. The Comptroller and AG appealed.

Rule 683, dealing with temporary injunction orders,  requires that an order granting a temporary injunction state the reasons for its issuance and set “the cause for trial on the merits with respect to the ultimate relief sought.” See Tex. R. Civ. P. 683. The trial court’s order stated “[t]he parties will set this matter for trial as soon as possible after the resolution of EBS Solutions [case pending in Texas Supreme Court] if Defendants’ Plea to the Jurisdiction and Motion to Dismiss for Lack of Jurisdiction is denied by this Court.” Thus, rather than set a date for trial, the order provides that the parties will set the matter for trial. Although a specific trial date need not be set in the order, the order must “set the cause for trial on the merits” and that “rule 683 implicitly requires the injunction to order the cause be calendared on the trial court’s docket.” Because the temporary injunction order does not set the cause for trial on the merits the Court of Appeals determined the order was void.

If you would like to read this opinion click here. Panel consists of e Justices Goodwin, Baker, and Kelly. Memorandum Opinion by Justice Kelly.

U.S. 5th Circuit holds property owner’s federal Clean Water Act claim against Town for improper discharge was proper due to lack of comparable state regulation

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Stringer v. Town of Jonesboro, 20-30192 (5th Cir. Jan. 18, 2021)

In this §1983 taking suit and federal Clean Water Act (“CWA”) case, the U.S. 5th Circuit held the Plaintiff’s §1983 suit for damages due to sewage backup was barred, but not her Clean Water Act claim.

Stringer alleges that, since at least 2011, the Town’s wastewater treatment system has malfunctioned during periods of heavy rain, with chronic failures of a specific pump. She asserts the Town failed to respond to her complaints as political payback she ran against the mayor in an election.  She was also an alderwoman. The Louisiana Department of Health (LDOH) and the Louisiana Department of Environmental Quality (LDEQ) were aware of the overtaxed system. LDEQ sent the Town warning letters and issued compliance orders. LDOH also enforced the State Sanitary Code, issued the Town a compliance order imposed mandatory ameliorative measures and assessed a daily fine. Stringer brought a “citizen suit” under the CWA, 33 U.S.C. § 1365, as well as constitutional takings claims under 42 U.S.C. § 1983. She also sued the Mayor asserting he retaliated against her. The Defendants filed a motion to dismiss which the trial court granted. Stringer appealed.

The CWA creates a regime of water pollution regulation that harnesses state and federal power but also allows citizen suits. However, such citizen suits are not permitted if the applicable state is already prosecuting comparable enforcement actions. A state statute is “comparable” to the CWA so long as the state law contains comparable penalty provisions, has the same overall goals, provides interested citizens a meaningful opportunity to participate at significant stages of the decision-making process, and has adequate safeguards. The Louisiana Sanitary Code provides no formal or structured means for interested citizens to become aware of LDOH’s enforcement efforts, nor any mechanism by which they can call for further action. However, LEQA’s enforcement mechanisms provide for interested parties to obtain “periodic notice” of “all violations, compliance orders and penalty assessments,” because it mandates public comment before a proposed settlement is finalized, and because it permits third parties to “intervene in an adjudicatory hearing, or petition for an adjudicatory hearing if none is held.” However, LDEQ was not the focus of the Defendants’ diligent prosecution argument in the district court. Further, whether LDEQ has “diligently” pursued a comparable action under § 1319(g) may be “a fact-intensive question that can only be answered after the proper development of a record.”  As a result, the CWA claims should not have been dismissed. However, Stringer’s §1983 takings claim had a one-year statute of limitations. Stringer’s complaint confirms she was aware of the pertinent underlying facts as early as November 2011. A cause of action accrues when the plaintiff learns the facts giving rise to her injury. As a result, such claims were properly dismissed. Finally, Stringer’s First Amendment retaliation claim was also time-barred.

If you would like to read this opinion click here. Panel consists of Justices Elrod, Duncan and Wilson. Opinion by Justice Duncan.

Second Court of Appeals holds general law city has inherent power to require solid waste haulers to obtain a license

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Builder Recovery Services LLC v. The Town of Westlake, Texas, 02-20-00051-CV,  (Tex. App. – Fort Worth, Jan. 1, 2021)(mem. op.).

This is a declaratory judgment/ordinance invalidation suit brought by a solid waste collector where the Fort Worth Court of Appeals affirmed the Town’s power to require licenses. [Warning, this is a long opinion at 56 pages].

BRS contracts with home builders in the Town of Westlake to remove the temporary construction waste that the builders generate and place a dumpster on the property during construction. The dumpsters are towed to each site and place as much as 20,000 pounds of weight upon the Town’s roads, with as many as ten visits to each site during construction. BRS initially raised concerns that the Town’s regular solid waste hauler (Republic) could not be the sole hauler for temporary construction waste. The city council delegated the Town’s staff to meet with the builders to discuss amendments to the Town’s ordinances in order to address the issue. The Town eventually passed an ordinance allowing third-party haulers like BRS to obtain licenses for temporary construction waste services in imposed certain regulations on the license. BRS brought suit asserting, among other things, that the license fee was not tied to actual administrative costs, that the ordinance was preempted by state law, and challenging the Town’s authority to pass the ordinance. After a bench trial, the trial judge found largely in favor of the Town but did invalidate the license fee calculation. BRS appealed.

The court first went through a detailed analysis of the power distinctions between general law cities and home rule cities. While the Town is a general law city, the court held it has the power to regulate solid waste collection under §361.113 of the Texas Health and Safety Code. The court rejected BRS’ argument that the section does not empower the Town to issue licenses as a license is an inherent part of the regulatory power.  Licenses are one means for a governmental agency to regulate activities that the Town is empowered to regulate. The court analyzed the various powers of the Town, including inherent powers and noted the power to regulate carries with it all means to accomplish the regulation, including licensing. Further, BRS failed to establish the ordinance was invalid because it failed to negate all conditions which would warrant the ordinance.  Further, such rules do not conflict with the franchise section of the same subtitle of the statute. Franchises and licenses are separate creatures. The court analyzed the wording of the various health and safety code sections and determined the power to license is not preempted by any other portion of the code. It held a “dumpster” is not the same as a “container” as that term is defined under the Solid Waste Disposal Act. The court determined the license fee issue was moot due to an amended ordinance.  However, due to an outstanding issue of attorney’s fees, the court remanded to the trial court for disposition.

If you would like to read this opinion click here. Panel consists of Justice Bassel, Justice Womack and Justice Wallach.  Memorandum opinion by Justice Bassell.

The Tenth Court of Appeals affirmed the trial court’s summary judgment against the plaintiff developer because it did not challenge all possible grounds supporting the summary judgment order

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Special contributing author Laura Mueller, City Attorney for Dripping Springs

David A. Bauer, et al. v. City of Waco, No. 10-19-00020-CV (Tex. App.—Waco  December 9, 2020) (mem. op.).

The Waco Court of Appeals affirmed a trial court’s judgment dismissing the plaintiff’s vested rights and takings claims on summary judgment.

The plaintiff developer sued the city after being required to provide an easement for a water line and meet other requirements in the city’s code prior to construction of its project.  The city required changes to various permit applications of the plaintiff prior to approval and required an easement for a previously placed waterline. The plaintiff developer sued the city for vested rights and takings, arguing the regulations were inapplicable due to the vesting of its original permit.  Among its summary judgment arguments, the City argued that a declaration of the plaintiff’s vested rights would not resolve the issue because the ordinance in place at the time of initial permit vesting would yield the same result.  As to the required easement, the City argued that the plaintiff did not seek a variance from the easement and could not claim a taking.  The trial court granted summary judgment in favor of the city but the order did not provide specific reasons.

To appeal a summary judgment, the appealing party has to prove that any or all bases for the summary judgment is error.  Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995); Lesher v. Coyel, 435 S.W.3d 423, 429 (Tex. App.—Dallas 2014, pet. denied). To establish a claim for vested rights under Chapter 245 of the Local Government Code the plaintiff needs to show that the city is required to review a permit application based on the regulations in effect at the time the original application is filed.  See Tex. Loc. Gov’t Code § 245.002; Milestone Potranco Dev., Ltd., v. City of San Antonio, 298 S.W.3d 242, 248 (Tex. App.—San Antonio 2009, pet. denied).  For a takings claim, the plaintiff needs to show that the action where the property was taken was done without consent of the property owner and that there has been a final decision regarding the application of the regulations to the property at issue. Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 929 (Tex. 1998). The court of appeals upheld the trial court’s judgment on both the vesting rights and takings claims because the plaintiff failed to disprove every basis for the summary judgment including that the ordinance in effect for vesting would not have changed the result and that the original property owner had given consent for the installation of the water line.

If you would like to read this opinion click here.   Panel consists of Chief Justice Gray and  Justices Davis and Neill. Opinion by Chief Justice Tom Gray.

 

El Paso Court of Appeals held Governor’s executive orders control over county judge order in the event of conflicts

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State of Texas, et al v. El Paso County, Texas, et al., 08-20-00226-CV (Tex. App. – El Paso, Nov. 13, 2020).

This is an interlocutory appeal from the denial of the temporary injunction involving a conflict between the county judge’s executive order and the Governor’s executive order.  The El Paso Court of Appeals reversed the denial.

The Governor’s executive order GA-32 allows bars and open with reduced capacity in October of 2020. After the County had a surge in COVID-19 cases, El Paso County Judge Ricardo Samaniego issued an executive order including a stay at home mandate and eliminating social gatherings not confined to a single household. While it listed several permitted essential services, bars were not included and restaurants could only allow curbside pickup.  The State and a collection of restaurants sued the County and the judge asserting the order was contrary to the Governor’s order. They sought a temporary injunction to prevent enforcement of the County Judge’s order, which the trial court denied. Plaintiffs appealed.

The court first wanted to make clear that it was not deciding on the wisdom of either order, only the statutory construction provision as to which controlled over the other. The Governor’s order contains a preemption clause countermanding any conflicting local government actions, but the County order states any conflict requires the stricter order to apply. County judges are deemed to be the “emergency management director” for their county. The Texas Disaster Act contemplates that a county judge or mayor may have to issue a local disaster declaration and has similar express powers to those issued to the Governor. However, a county judge is expressly referred to as the “agent” of the Governor, not as a separate principle. Further, even if the County judge had separate authorization, the Legislature has declared the Governor’s executive order has the force of law. State law will eclipse inconsistent local law. Additionally, the Act allows the Governor to suspend the provisions of any regulatory statute within an executive order, which would include the County order.  The court then analyzed the standards for a temporary injunction and held the trial court erred in denying the injunction.  Finally, the court concluded by stating how essential the role of a county judge is when managing disasters and emergencies and that their opinion should not be misunderstood. The Governor’s order only controls over conflicts, and any provision of the County order which can be read in harmony remains enforceable.

Justice Rodriguez’s dissent opined that the Governor exceeded the authority provided by the Disaster Act. In his view, “the Governor has taken a law that was meant to help him assist local authorities by sweeping away bureaucratic obstacles in Austin, and used it in reverse to treat local authorities as a bureaucratic obstacle to…”  a once-size-fits-all coronavirus response plan.

If you would like to read this opinion click here. The dissent by Justice Rodriguez is found here. Panel consists of Chief Justice Alley, Justice Rodriguez and Justice Palafox.  Opinion by Chief Justice Alley.

The Third Court of Appeals held that no implied authority exists for actions of a state agency without a showing that the implied authority is required to effectively perform a statutorily expressed responsibility.   

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Special contributing author Laura Mueller, City Attorney for Dripping Springs

University of Texas at Austin President Jay Hartzell, et al. v. S.O., et al., No. 03-19-00131-CV (Tex. App.—Austin September 4, 2020).

In this ultra virus University case, the plaintiff sued University officials for exceeding their authority in attempting to revoke her Ph.D after she had already graduated from the University.    The Court of Appeals held that the University did exceed its authority in attempting to revoke her earned degree because they do not have specific statutory authority to revoke degrees and the authority to revoke degrees is not essential to its statutory authority to award degrees.

The plaintiff was awarded a Ph.D in 2008.  In 2012, the University conducted an investigation and attempted to revoke her Ph.D for academic misconduct in 2014.  The plaintiff sued the University stating that her due process rights were violated by the University’s procedure.  The University undid its revocation and instituted a different procedure to investigate the possibility of revoking the plaintiff’s degree again.  In response to the University’s renewed efforts, the plaintiff sued the University in this suit as an ultra vires claim.  The University defendants filed a plea to the jurisdiction arguing they had the authority to revoke the degree because its rules allowed it and because the authority to revoke degrees is implied with the authority to award degrees.  This case has been through the appellate process once on the issue of ripeness.  The appellate court held that her complaint was ripe and the case was sent back to the trial court.  Upon return, the trial court granted-in-part and denied-in-part the plea.  In this appeal, the issue is whether the University has the authority to revoke degrees, the basis of the plaintiff’s ultra vires claim.

An ultra vires claim waives immunity if the plaintiff can show that an official’s conduct exceeded their granted authority.  Houston Belt & Terminal Ry. Co. v. City of Houston, 487 S.W.3d 154, 158 (Tex. 2016).  State agencies, like the University, only have the authority that they are given by statute and may only adopt rules pursuant to their statutory authority.  Pruett v. Harris Cnty. Bail Bond Bd., 249 S.W.3d 447, 452 (Tex. 2008).  State law gives a University the authority to “award” a degree, but not to revoke one.  Tex. Educ. Code § 65.31(b).  Authority can be implied if the agency needs the power in order to allow the agency to effectively carry out the functions necessary for its expressed authority.  Tex. Mun. Power Agency v. Pub. Util. Comm’n, 253 S.W.3d 184, 192-93 (Tex. 2007).   The Court of Appeals held that the authority to award degrees does not require the authority to revoked degrees, and therefore revoking a degree after a student has earned it and graduated is an ultra vires act waiving sovereign immunity.

The Court also affirmed the trial court’s denial of attorney’s fees from the plaintiff.  Even though the plaintiff prevailed, the legal questions were ones that needed to be decided and an appellate court gives a trial court wide discretion in determining attorney’s fees so long there is no abuse of discretion.

Justice Kelly issued a concurring and dissenting opinion stating that the University does have the authority to revoke a student’s degree, but that the claims are not ripe.

If you would like to read this opinion click here.   Panel consists of Justices Goodwin, Baker, and Kelly. Opinion by Justice Thomas Baker.  Concurring/dissenting opinion by Justice Kelly can be found here.

14th Court of Appeals holds waiver of immunity in TCEQ SOAH hearing need not be by express statutory language

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Hyde v Harrison County, 14-18-00628-CV (Tex. App. – Houston [14th Dist.], July 30, 2020)

Harrison County (the “County”) owns and operates underground storage tanks at its road and bridge department and at its airport. A Texas Commission on Environmental Quality (the “Commission”) investigator determined the County violated the Texas Water Code by not providing a release detection for the pressurized piping. The Commission initiated an administrative enforcement action against the County. The Commission sought an administrative penalty of $5,626 against the County. At the contested case hearing at the State Office of Administrative Hearings (“SOAH”) the SOAH judge assessed an administrative penalty against the County. The County timely filed a petition in district court and argued the SOAH judge did not have jurisdiction over the County. The trial court agreed with the County and vacated the SOAH order. The Commission appealed.

The Court first held no express statutory waiver of immunity exists for the administrative proceedings or penalties in the Water Code. However, the court noted that there are limited circumstances where waiver need not be statutorily expressed. The Water Code requires such tanks comply with Commission requirements for pressurized piping release detection equipment. When a statutory context in which a statute defines “person” to include governmental entities, a statute imposes liability on a “person,” and construing the statute not to waive immunity would make part of the statutory scheme meaningless, the court may find a waiver. The court further noted that  § 7.051 allows the Commission to lower a penalty if the owner contributes to supplemental projects, but notes non-governmental entities cannot use this option if the project is necessary to bring the owner into compliance.  The Commission is also required to develop a policy to prevent “regulated entities” from avoiding compliance through the use of such supplemental projects. These provisions would be useless if governmental entities were not subject to regulation and penalties. The court concluded “…that applying the statutory definition of ‘person’ from Government Code section 311.005 to Water Code section 7.051 shows clear legislative intent to waive governmental immunity against assessment of an administrative penalty under section 7.051 because the context of section 7.051 affords no other reasonable construction.” As a result, the trial court erred in vacating the SOAH order.

If you would like to read this opinion click here. Panel consists of Chief Justice Frost, Justices Wise and Hassan. Opinion by Chief Justice Frost.

 

Austin Court of Appeals holds junior college could not withhold school transcripts of two employees under the Texas Public Information Act

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Del Mar College District v Ken Paxton, 03-19-00094-CV (Tex. App. – Austin, July 1, 2020)

This is a Texas Public Information Act (“PIA”) case where the Austin Court of Appeals affirmed an order requiring the release of certain information possessed by the college district.

The Del Mar College District (“District”), a junior college district,  received a request for the personnel files of two professors.  The files contained their college transcripts. The District timely requested an opinion from the Attorney General’s office. The AG opined certain information could be withheld, but determined other information must be released, including the college transcripts. The District filed suit against the AG and the trial court heard opposing summary judgment motions. The trial court granted the AG’s motion and ordered the release of the transcripts. The District appealed.

The court listed a narrow legal question – was the junior college a “public school” for purposes of the PIA exception under §552.102(b)(which exempts such transcripts). The court held the proper inquiry was into the meaning of the phrase “public school,” which has its own generally accepted meaning, referring to the elementary and secondary educational system funded by the state. Junior colleges, in contrast, are part of the higher education system and charge tuition to their students. See Tex. Educ. Code § 130.084(b). “Public Education,” governs the State’s free elementary and secondary schools, while “Higher Education,” governs the State’s university and college system. The court acknowledged that junior colleges have been held to be integral to the Texas education system and could be a public school for other purposes, but noted it was not a “free” public school. Section 552.102(b) is part of the Public Information Act, not the Education Code, and is not part of the “general law governing the establishment, management, and control of independent school districts.” So, while the District is a public entity and a school subject to the PIA, it is not a “public school” for purposes of Section 552.102(b).  As a result, the college transcripts must be released.

If you would like to read this opinion click here. Panel consists of Chief Justice Rose, Justices Triana and Smith. Opinion by Chief Justice Rose.

Texas Supreme Court holds contractor entitled to derivative immunity for conspiracy claims, but not fraud claims

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GTECH Corp v. Steele, et al, 18-0158 (Tex. June 12, 2020).

In this case, the Texas Supreme Court held a contractor providing certain functions of the Texas Lottery Commission was not entitled to derivative sovereign immunity.

GTECH provided instant ticket manufacturing and services to the Texas Lottery Commission.  GTECH was sued by multiple plaintiffs (in multiple suits alter consolidated on appeal) alleging that the instructions on a scratch-off lottery ticket were misleading, causing them to believe they had winning tickets when they did not.  GTECH created draft tickets, which the TLC commented on and made changes, but ultimately approved after the back-and-forth concluded. After several complaints, the TLC shut down the game within 60 days of its release.  The plaintiffs asserted claims for fraud, fraud by nondisclosure, aiding and abetting fraud and conspiracy.  GTECH filed pleas to the jurisdiction, asserting it was entitled to the same immunity held by the Lottery Commission. Due to the multitude of suits, some pleas were granted, some denied, but all ended up on appeal.

The Court first noted it had not yet had the opportunity to address whether a Texas government agency’s immunity from suit might extend to its private contractors and if so under what circumstances. In the instances of derivative immunity, it only applies  to a private company operating “solely upon the direction” of a government, and exercising “no discretion in its activities,” was “not distinguishable” from the entity such that “a lawsuit against one [was] a lawsuit against the other.”  Here, the contract required GTECH to provide suggested game designs. After receiving approval from the Lottery Commission, GTECH provided drafts and received comments. GTECH’s role also included crafting, designing, and choosing wording. The Commission’s instant product coordinator testified he would expect GTECH to notify the Commission if it saw concerns with a game, including misleading instructions.  Based on the contract and other evidence in the record, the Court held GTECH had some discretion with regard to the conduct at issue.  The Court held that close supervision and final approval of work over which a contractor has discretion are not the same as the government specifying the manner in which a task is to be performed. Importantly, the Court stated “[t]hus, even if we recognized derivative sovereign immunity for contractors, GTECH would not be entitled to immunity from suit on the fraud claims under the control standard.”  This seems to indicate the issue of derivative immunity for contracts with state agencies remains an open question. The Court also stated “[a] challenge to an element of a plaintiff’s claim by a defendant who lacks immunity from suit does not implicate the jurisdiction of the court; it should be raised in a motion for summary judgment rather than a plea to the jurisdiction.”  Finally, the majority held that extending immunity to contractors for fraud could not further the purpose of immunity.   However, the Court did say that GTECH WAS entitled to derivative immunity from the allegation of conspiracy and aiding and abetting because such claims require a finding of the underlying fraud claim being viable against the TLC.  Since the TLC has immunity from fraud claims, the conspiracy and aiding and abetting claims cannot be sustained against GTECH.

Chief Justice Hecht’s concurring in part and dissenting in part opinion notes that he believes since the ultimate decision and approval of the final ticket form rested with the Commission that GTECH should have been provided immunity as to the fraud claims. He stated “Today’s lesson is that if the government acts only through its own employees, it is immune from suit, but if it consults experts before it acts, it is still immune from suit but the experts are not, except that the experts are immune from suit for helping the government defraud but not for giving the government advice that it uses to defraud. And there you have it.”  He agreed GTECH was immune from the conspiracy and aiding and abetting claims.

Justice Boyd’s opinion essentially stated his opinion is that “the simple and logical conclusion” is simply that sovereign immunity only protects the sovereign, no one else. He clarified that this does not affect his opinion on official or qualified immunity which applies to individuals.

If you would like to read this opinion click here.  Opinion by Justice Busby. Chief Justice Hecht delivered an opinion concurring in part and dissenting in part. Justice Boyd delivered an opinion concurring in part and dissenting in part.

BOA appeal deadline of 10 days applies to Open Meetings, declaratory judgment, and as-applied constitutional claims, holds Dallas Court of Appeals

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Tejas Motel, LLC v City of Mesquite, by and through its Board of Adjustment, 05-19-00667-CV (Tex. Civ. App. – Dallas, June 4, 2020).

This is an appeal from a Board of Adjustment decision regarding non-conforming status in which the Dallas Court of Appeals affirmed the granting of the City’s plea to the jurisdiction.

The City of Mesquite had two zoning categories of lodging facilities within the City and placed conditions on their uses — Limited Services and General Services, neither of which Tejas Motel (“Tejas”) qualified under. Although the Tejas Motel had been nonconforming since 1997, the City did not specifically address that nonconformance until 2018, when the City passed an ordinance changing the manner in which the City’s Board of Adjustment could amortize nonconforming properties. The BOA held public hearings and scheduled a date for all non-conforming properties to become compliant, including Tejas. The City introduced evidence that the nonconforming use would adversely affect nearby properties.  Tejas then announced an agreement for a May 1, 2019 compliance date and the BOA approved that as a compliance date. Tejas, however, denied receiving a written copy after the BOA decision, which the BOA insists was mailed. Tejas then sued the BOA to invalidate the compliance date. The City filed a plea to the jurisdiction, which was granted.

The requirement that one timely file a petition for writ of certiorari to challenge a zoning board decision is part of an administrative remedy, which is provided by the Texas Local Government Code and must be exhausted before board decisions may be challenged in court. Under Tex. Loc. Gov’t Code §211.011 Tejas had ten days from the date the decision was filed to challenge the decision. The Board’s July 31 written “Decision and Order” triggered the statutory deadline. Tejas did not file by the deadline, thereby precluding the court from obtaining jurisdiction. This included challenges brought under the Texas Open Meetings Act, declaratory judgment claim and as-applied constitutional challenges.  Tejas also failed to state any viable federal claims. Although a city is not immune from federal constitutional claims, a trial court may grant a plea to the jurisdiction if a constitutional claim is not viable. Tejas had no constitutionally protected, vested due process interest in continuing to use the property in violation of the city’s ordinances, especially when it acquired the property knowing the restrictions.  As a result, the plea was properly granted.

If you would like to read this opinion, click here. The panel consists of Justices Molberg, Carlyle, and Evans.  Memorandum Opinion by Justice Carlyle.