P&Z members immune from ultra vires actions from third parties in plat approval/denial proceedings

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Josh Schroeder, et al. V Escalera Ranch Owners’ Association, Inc., No. 20-0855 (Tex. June 3, 2022)

In this case, the Texas Supreme Court held individuals on the planning and zoning commission were entitled to immunity from ultra vires claims brought by third parties challenging a plat approval. 

Escalera Ranch is a subdivision within the City of Georgetown’s extraterritorial jurisdiction. A developer applied for a preliminary plat. The subdivision’s home owners association (Association)  opposed the application. They asserted that the plat did not conform to the City’s Unified Development Code (UDC) or adopted fire code. They claimed that under the UDC, streets like Escalera Parkway are expected to carry no more than 800 vehicles per day and serve a maximum of 80 dwelling units.  After analysis, Commission staff reported that “[t]he proposed Preliminary Plat meets all of the requirements of the [UDC]…” and the fire marshal asserted it would meet the fire code. The Commission approved the plat, asserting it had a ministerial duty to approve the plat. The Association sued for mandamus asserting the act was ultra vires and to resend the plat. The Commission filed a plea to the jurisdiction which was granted at the trial court. The court of appeals reversed asserting a fact question existed and the Commission individuals appealed. 

“[P]lat approval is a discretionary function that only a governmental unit can perform.” But once the relevant governmental unit determines that a plat conforms to applicable regulations, it has a ministerial duty to approve that plat. The Commission made such a determination in this case.  Mandamus seeking to compel action by a public official “falls within the ultra vires rationale.”  The Local Government Code does not create a ministerial duty to deny a nonconforming plat. To the contrary, recordable plats that are not acted upon within 30 days must be approved, even without a determination of conformity. The Commission exercises discretion in determining ordinance conformity. So, the Court analyzed the assertion under an abuse of discretion standard.  The Commission’s conformity determination is a discretionary one that necessarily involves “interpret[ing] and constru[ing] . . . applicable ordinances”. While the UDC limits the discretion of what the Commission may consider, it does not otherwise restrict the Commission’s exercise of its discretion to determine conformity.  The Legislature created a ministerial duty to approve a conforming plat, with no reciprocal duty to deny a nonconforming one. If a municipal planning and zoning commission wants to deny a plat for nonconformance, it has only thirty days to do so. After that, the plat is generally approved—even if nonconforming.  The Legislature has not created a mechanism for third parties to seek judicial review of a municipality’s platting approval.  As a result, the individual members are immune from any ultra vires claim brought by the Association. 

If you would like to read this opinion click here. Opinion by Justice Heck. 

Texas Supreme Court holds city’s civil-enforcement of utility payment ordinance was not an unconstitutional taking

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City of Baytown v Alan Schrock, 20-0309 (Tex. May 13, 2022) 

In this takings case, the Texas Supreme Court held the City of Bayton (City) did not commit a taking by withholding utility service in order to collect unpaid utility bills.  

Schrock owned property that he would lease to tenants. The City’s ordinances required landlords to either guarantee payment for utility bills or to file a declaration with the City stating that the landlord would not guarantee its tenant’s utility payments. The City also had an ordinance prohibiting the connection of new utility services at properties encumbered by outstanding utility bills. At some point, utility bills for the City’s water service to the property went unpaid and Schrock did not file any declaration. Schrock contested unpaid amounts (pointing to his tenant as the responsible party) but the City, after a hearing, placed a lien on the property. The City then refused to connect utilities to the property when one of Schrock’s tenants requested it, which caused the tenant to cancel the lease. Because no utilities were connected, no tenants rented, the property fell into disrepair. Schrock sued the City for inverse condemnation and other claims, primarily alleging that the City’s refusal to reconnect his utility service violated Tex Loc. Gov’t Code § 552.0025 (which prohibits municipalities from conditioning utility service connections on payment of outstanding utility bills incurred by other customers residing at the same address.). The trial court ruled for the City, but the court of appeals reversed, noting a fact question existed. The City appealed.  

 A regulatory takings claim is one in which “the plaintiff complains that the government through regulation so burdened his property as to deny him its economic value or unreasonably interfere with its use and enjoyment.” The Court made a distinction between a regulation that directly regulates land use and one which merely impairs the use of the property because of its enforcement. The Court held that the City’s providing utilities to the property was a service; its regulation of that service was not a regulation of the property itself. The true nature of Schrock’s claim lies in the City’s wrongful enforcement of its ordinance, not in an intentional taking or damage of his property for public use. The Court noted that nearly every civil-enforcement action results in a property loss of some kind. Property damage due to civil enforcement of an ordinance unrelated to land use, standing on its own, is not enough to sustain regulatory takings claims. 

If you would like to read this opinion click here. Justice Bland delivered the opinion. Justice Young delivered a concurring opinion, in which Justice Lehrmann, Justice Blacklock, and Justice Busby joined. 

Texas Supreme Court holds general-law cities cannot impose a revenue-based licensing fee for construction trash haulers

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Builder Recovery Services, LLC v. The Town of Westlake, Texas, 21-0173, (Tex, May 20, 2022) 

In this case, the Texas Supreme Court held that general law cities have limited authority to impose license fees for solid waste collections.  

The Town of Westlake is a general-law municipality that imposed a percentage-of-revenue license fee on companies like Builder Recovery Services, LLC (BRS) which hauls trash away from construction sites.  The Town has a percentage agreement with Republic Services, which performs regular residential and commercial trash collection for the Town, but which also included construction site hauls. The Greater Fort Worth Builders Association sent the Town a letter questioning the Town’s legal authority to make Republic the exclusive provider of construction trash-hauling services. BRS and the Town’s staff attempted to agree on terms for a license, but no agreement was reached. BRS began operating in the Town without a license. When the Town cited BRS for operating without a license, it brought suit. The Town amended the fee amount during the suit. The trial court ruled the original fee was invalid and rejected the remainder of the BRS claims.  Both sides appealed. The court of appeals affirmed in part and reversed in part, by affirming the judgment favoring the Town but holding the BRS claim regarding the original fee was moot. BRS appealed.  

General-law cities, like the Town of Westlake, possess only those powers and privileges that the State expressly confers upon them.  A claim that a percentage-of-revenue fee of any size is unlawful is not mooted by an intervening adjustment to the size of the fee.  The court made a distinction between a licensing fee and a franchise fee. The Town’s relationship with Republic is governed by an exclusive franchise agreement as described in section 364.034 of the Health and Safety Code. The Court assumed the Town had the authority to require a license, then focused its analysis on the types of licensing fees allowed. A licensing fee is meant to recoup administrative costs of the licensing system. The Town does not regulate the price of trash hauling in this instance. How much BRS charges its customers to haul their trash “is none of the Town’s concern, and this privately negotiated, fluctuating amount has nothing to do with how much money the Town needs to administer its trash-hauling regulations.”  The Court held it was unlikely that the Legislature’s grant to general-law cities the generic authority to regulate trash hauling was intended to include an implied power for a revenue-based charge of this nature.  While a licensing fee properly tied to administrative costs is allowed, it cannot be revenue-based. Next, the Court held that while the fee and remainder of the regulations appear to be a packaged deal, the ordinance has a severability clause. But what remains was not argued, so the Court remanded the case. 

 Panel consists of Chief Justice Hecht, and Justices Lehrmann, Boyd, Devine, Blacklock, Busny, Bland, Huddle, and Young. Court of Appeals’ judgment reversed; Remanded to Court of Appeals. Opinion by Justice Blacklock can be read here. Docket page with attorney information found here. 

First District Court of Appeals holds property owner could not bring a takings claim based on judicial order regarding substandard building

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Jaime Jaramillo v. The City of Texas City, 01-20-00654-CV, (Tex. App.—Houston [1st Dist.], Feb. 8, 2022, no pet. h.) (mem. op.).

This is a takings case brought after the City initiated an enforcement action for a dilapidated building. The First District Court of Appeals affirmed the dismissal of the property owner’s claims.

Jaramillo entered into an Agreed Order of Abatement with the City where the City would be able to abate and demolish the structures on the real property belonging to Jaramillo any time after a certain date if he did not comply with the ordinances and the International Property Maintenance Code. After reviewing the Agreed Order with the prosecutor and signing it, Jaramillo filed suit two weeks later claiming a taking of his property, denial of procedural due process, fraud, and civil conspiracy. The City filed a motion to dismiss for want of jurisdiction due to entering an unappealable order and sovereign immunity. The trial court granted the motion. Jaramillo appealed.

The court found that there was no waiver of immunity asserted as immunity cannot be waived for an intentional tort.  It further found civil conspiracy is a derivative tort; therefore, it cannot stand alone. Under his due process claim, Jaramillo agreed in the order that the building was substandard.  A court, not an administrative body, entered the order based on the agreement. As a result, no procedural due process was violated.  Jaramillo failed to preserve any errors before accepting and signing the Agreed Order. The Order was affirmed.

Panel consists of Chief Justice Radack, and Justices Rivas-Molloy and Guerra. Memorandum Opinion by Justice Rivas-Molloy can be read here. Docket page with attorney information found here.

U.S. Supreme Court holds Austin on-premise/off-premise sign regulation is content neutral

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Special contributing author Laura Mueller, City Attorney for Dripping Springs

City of Austin, Texas v. Reagan Nat’l Advert. Of Austin, LLC., et al, No. 20-1029 (April 21, 2022).

The primary question in regulating off-premise signs differently than on-premise signs is whether such a regulation implicates the First Amendment in a way that requires strict scrutiny or instead allows intermediate scrutiny.  The Supreme Court of the United States held an Austin city regulation treating on-premise and off-premise signs differently is not content-based and so can be reviewed under intermediate scrutiny.

An outdoor advertiser, Reagan, attempted to obtain permits from the City of Austin to transition its off-premise signs, otherwise known as billboards, to electronic billboards.  The applications were denied by the City because the signs were off-premise signs which are not allowed to be transitioned to electronic signs although the same restriction did not apply equally to on-premise signs.  The City’s definition of “off-premise sign” at the applicable period included:

“a sign advertising a business, person, activity, goods, products, or services not located on the site where the sign is installed, or that directs persons to any location not on that site.”

Austin, Tex., City Code §25–10–3(11) (2016).  After the denial, Reagan sued the City under the United States Constitution based on the Free Speech Clause of the First Amendment as interpreted by Reed v. Town of Gilbert, arguing that the distinction between on-premise and off-premise signs was a content-based regulation that required a strict scrutiny analysis. 576 U. S. 155 (2015). The district court held that the regulation differentiating between on- and off-premise signs were content-neutral and valid under intermediate scrutiny. In Reagan’s appeal, the Court of Appeals for the Fifth Circuit held that the distinction was content-based and that it required strict scrutiny because the distinction affected both non-commercial and commercial speech and it required the City to read the sign to regulate it. The City appealed to the Supreme Court of the United States and it granted certiorari.

Under Reed, a land-use regulation requires review under strict scrutiny, a standard almost impossible to meet to validate the regulation, if it is content-based in how it regulates speech or “applies to particular speech because of the topic discussed or the idea or message expressed.” Reed, 576 U.S. at 163.  If it is content-neutral it must meet intermediate scrutiny which means the regulation is “narrowly tailored to serve a significant governmental interest.”  Ward v. Rock Against Racism, 491 U. S. 781, 791 (1989).  The Court in this case held that even though the regulation required that the sign be read to determine how to regulate it, the regulation did not “single out any topic or subject matter for differential treatment.”  Reagan at 8.  Instead, the regulation was focused on the location of the sign.  The Court stated that its ruling is consistent with the Reed case and:

It is the dissent that would upend settled understandings of the law. Where we adhere to the teachings of history, experience, and precedent, the dissent would hold that tens of thousands of jurisdictions have presumptively violated the First Amendment, some for more than half a century, and that they have done so by use of an on-/off-premises distinction this Court has repeatedly reviewed and never previously questioned. For the reasons we have explained, the Constitution does not require that bizarre result.

Reagan at 13.

The Court reversed the court of appeals opinion and remanded the question of whether the regulation meets the lower standard of intermediate scrutiny to the court of appeals for review. The Court also did not issue a holding related to whether a city can treat commercial speech differently to non-commercial speech.  Reagan at fn.3.   However, it did reference cases that provided for such commercial versus non-commercial distinctions favorably.  Reagan at 9-10.  See Suffolk Outdoor Advertising Co. v. Hulse, 439 U. S. 808 (1978); Metromedia, Inc. v. San Diego, 453 U. S. 490, 503–512 (1981) (plurality opinion); Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n of N. Y., 447 U. S. 557 (1980).  Practically, this is a minor change to the Reed analysis that only applies to on-and-off-premise signs, but could have implications for other sign regulations that are broad and do not target a specific communicative content.  This case does not approve or disapprove a distinction between commercial and non-commercial content.

Sotomayer, J., delivered the opinion of the Court, in which Roberts, C.J., and Breyer, Kagan, and Kavanaugh, JJ., joined.  Breyer, J. and Alito, J. concurring.  Thomas, J. filed a dissenting opinion, in which Gorsuch and Barrett, JJ., joined.

Breyer Concurrence:  Does not agree with Reed, but agrees that this opinion is consistent with Reed.  “But the First Amendment is not the Tax Code. Its purposes are often better served when judge-made categories (like “content discrimination”) are treated, not as bright-line rules, but instead as rules of thumb.”

Alito concurring and dissenting.  Does not agree that on-/off-premise distinction is content neutral, but instead the court of appeals should look at the billboards in question on a case-by-case basis to see if the City’s ordinance is unconstitutional.

Thomas Dissent:  The bright-line rule of Reed is that if the sign has to be read to be regulated then it is a content-based restriction.  No communicative content can be a basis for regulation.

If you would like to read this opinion click here.

Texas Supreme Court holds the law requires more than conclusory references to the statute’s elements in order to waive immunity

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Patrick Von Dohlen, et. al., v City of San Antonio, 20-0725 (Tex. April 1, 2022)

This is a declaratory judgment – statutory cause of action case brought against the City of San Antonio (“City”) for violating Chapter 2400 of the Texas Government Code. The Texas Supreme Court held the Plaintiffs failed to allege a proper waiver under the statute but remanded for an ability to cure the defect.

The city council for the City of San Antonio declined to allow Chick-fil-A to operate a concession area within the City’s airport. The Plaintiffs alleged the action was taken due to councilmember comments opposing the religious views of the company. Specifically, the company has a legacy of anti-LGBTQ behavior. Later, the Legislature passed TEX. GOV’T CODE § 2400.002, which prohibits a city from taking “any adverse action against any person based wholly or partly on the person’s membership in, affiliation with, or contribution, donation, or other support provided to a religious organization.”  Four years later, the Plaintiffs sued the City and asserted it was in violation of this statutory provision. The City challenged jurisdiction asserting the law is not retroactive, and lack of standing due to no distinct injury from the general public. The trial court denied the plea, but the court of appeals reversed and dismissed the claims. Plaintiffs appealed.

When a statute waives immunity, a plaintiff must still plead an actual violation and mere references to the statute are insufficient. Chapter 2400 explicitly waives sovereign and governmental immunity when a person “alleges” a violation of Section 2400.002.  However, the petition’s alleged facts all occurred prior to the enactment of Chapter 2400 and nothing afterward. While the Plaintiffs allege the City’s violation is continuing in nature, they do not allege any facts to support this. Here, Plaintiffs do not plead sufficient facts to “actually allege a violation” of Chapter 2400 because they fail to point to any specific “action” the City took on or after Chapter 2400 was effective. However, this does not mean the City has negated the ability to plead such a claim. Texas law does not favor striking defective pleadings without providing plaintiffs an opportunity to replead.  As a result, the case is remanded to allow the ability to replead.

If you would like to read this opinion click here. JUSTICE HUDDLE delivered the opinion of the Court, in which Chief Justice Hecht, Justice Lehrmann, Justice Boyd, Justice Busby, Justice Bland, and Justice Young joined. JUSTICE BLACKLOCK filed an opinion concurring in the judgment, in which Justice Devine joined and is found here

Fort Worth Court of Appeals affirms trial court’s authority under Civil Service Act to vacate a hearing examiner award, remand for a rehearing, and require a separate hearing examiner

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Shea O’Neill v. City of Fort Worth, 02-21-00214-CV (Tex. App. – Fort Worth, Feb 3, 2022)

This is a civil service case (which has already gone up and down the appellate ladder) where the Fort Worth Court of Appeals affirmed the trial court’s ability to order a substituted hearing examiner in an appeal from an indefinite suspension. [Comment: Note, this is a 38-page opinion].

O’Neill was a firefighter for the City and was indefinitely suspended after being involved in a physical altercation with a citizen at a TCU football scrimmage.  He appealed to a hearing examiner who found for O’Neill. An appeal resulted to the Fort Worth Court of Appeals, which remanded the issue to decide if the hearing examiner improperly considered outside evidence. On remand, the court (specifically Judge Fitzpatrick) held the hearing examiner (Guttshall) violated the Civil Service Act (Tex. Loc. Gov’t Code §§143.010(g) and 143.053(d)) by considering evidence that was not presented in the final hearing.  The trial court vacated the examiner’s decision and ordered a rehearing. When the City recognized that the same hearing examiner (Guttshall) was set to preside over the rehearing, the City objected and filed a plea to the jurisdiction, which Guttshall denied. The City then filed suit (that resulted in the present appeal) under the Uniform Declaratory Judgments Act (UDJA) to hold Guttshall could not preside over the rehearing. The trial court held a trial on the merits under the UDJA claims and found Guttshall had exhibited bias, was no longer independent and ruled for the City. O’Neill appealed.

O’Neill argued the City’s declaratory-judgment lawsuit was barred by res judicata or collateral estoppel. The main issue presented to the trial court was whether Guttshall could preside over the rehearing regarding O’Neill’s appeal of his indefinite suspension. While O’Neill asserted the court failed to make the findings of fact on the issues he requested (so the findings entered could not be used in evaluating the appeal), the trial court, as the trier-of-fact has no duty to make additional or amended findings that are unnecessary or contrary to its judgment. O’Neill next asserted the City requested a rehearing when appealing Guttshall’s opinion to Judge Fitzpatrick so the issue of a hearing examiner was already addressed. Hence, his argument goes, since Judge Fitzpatrick did not expressly grant relief for a separate hearing examiner, only a rehearing, the issue was fully litigated. However, when an appellate court remands a case and limits a subsequent trial to a particular issue, the trial court may only determine that particular issue. Because of the remand, Judge Fitzpatrick was therefore constrained to decide only the City’s procured-by-unlawful-means claim and nothing provided for her to determine whether Guttshall had exhibited bias and was thus no longer an independent or impartial hearing examiner. As a result, res judicata and collateral estoppel are not triggered. Next, O’Neill asserted that since Guttshall denied the City’s plea, the issue was already addressed and the City cannot appeal. However, if the denial were considered the same as an arbitrator’s award (which O’Neill argued it was), such an award is appealable. But more importantly, the City’s plea to the jurisdiction and declaratory-judgment action accomplished separate purposes. The City’s plea was an objection to Guttshall presiding over the rehearing, which was a requirement to preserve the issue.  The UDJA claim went beyond mere preservation and sought express relief on the uncertainty of the issue under the wording of Chapter 143 (which does not expressly address this situation). Next, O’Neill argued the trial court erred by impliedly finding that subject-matter jurisdiction exists even though the City failed to exhaust its administrative remedies.  However, since the declarations sought are strictly limited to statutory interpretations, they are questions of law that do not require exhaustion. Next O’Neill argued that the trial court erred by fashioning a remedy not expressly authorized by the Civil Service Act, i.e., allowing a rehearing before a new hearing examiner. The trial court used guidance by referring to the Texas Arbitration Act (TAA) in interpreting/applying the Civil Service Act. The sections of the Civil Service Act make no provision for a scenario in which the district court vacates the hearing examiner’s award and remands the case for a rehearing. The court noted that the Texas Supreme Court has looked to the TAA in prior opinions to fill in the gaps when the Civil Service Act is silent.  Turning to the TAA concerning the issue here, it has a specific section dedicated to rehearings after an arbitration award is vacated. The Civil Service Act states in multiple locations that a hearing examiner must be independent and therefore neutral. When a hearing examiner is found to have developed bias against one party, they are not independent. To allow a biased hearing examiner to preside over the rehearing merely because the Civil Service Act is completely silent regarding rehearings is against the purpose of the Act. The trial court, following the Texas Supreme Court’s example for crafting remedies when the Civil Service Act provides none, is permitted to look to the TAA for guidance.  As a result, the trial court’s order is affirmed.

If you would like to read this opinion click here. Panel consists of Chief Justice Sudderth, Justice Bassel and Justice Walker. Memorandum Opinion by Justice Bassel.

Lubbock Court of Appeals affirmed board of adjustment condition to re-evaluate variance request after a set number of years

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MVP Raider Park Garage, LLC. V Zoning Board of Adjustment of City of Lubbock, et al, 07-20-00261-CV (Tex. App. – Lubbock, Jan. 12, 2022)

This is a board of adjustment case where the Lubbock Court of Appeals affirmed the BOA’s denial of a variance request.

Raider Park owns a parking garage that provides student parking for Texas Tech University. Under the City of Lubbock’s Code of Ordinances, not more than ten percent of any wall may be devoted to wall signs in the zoning district. Raider Park sought a variance to allow 35 percent of all walls to be used for signage. The BOA ultimately conditionally granted the variance but required stipulations, including a seven-year review and revision requirement of the variance. At the seven-year review, the BOA denied the request to continue the variance permit. Raider Park sued. Both parties filed opposing motions for summary judgment. The trial court ruled in favor of the BOA. Raider Park appealed.

The court first noted the BOA had the authority to require a review and to treat the request to reauthorize the variance as a new request. The City’s ordinances specifically authorize this type of condition. When the Board granted the requested variance in 2012, it did so “subject to” conditions that were expressly stated on the Board’s decision form. The Board referred to the condition as an “experiment” to see if this type of review process worked better and allowed actual data and public reaction to be evaluated. The Board created an opportunity to revisit whether 35 percent coverage was “too much” and if the increase was determined to be unworkable, then the Board could adjust it in the future. The original variance was specifically designed to allow the Board to revisit and revise. The court noted the Board had the discretion to treat the review as a new request and hold public hearings to gauge public reaction. Further, the review process was never challenged as invalid. The court next determined the original variance was not a temporary variance but a variance subject to conditions. If the owner had a problem with the condition, the owner could have appealed the decision. Further, Raider Park points to no authority prohibiting the imposition of such a condition.  As a result, the trial court order is affirmed.

If you would like to read this opinion click here. Panel consists of Justice Pirtle, Justice Parker and Justice Doss. Memorandum opinion by Justice Parker.

Fort Worth Court of Appeals holds Plaintiffs properly plead constitutional challenges to City’s short-term rental ordinance

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City of Grapevine v. Ludmilla B. Muns, et al, 02-19-00257-CV (Tex. App. – Fort Worth, Dec. 23, 2021)

This is an opinion on rehearing where the Fort Worth Court of Appeals reversed in part and affirmed in part the trial court’s order regarding the validity of the City’s short-term rental ordinance. [Comment: warning, this is a long opinion – 50 pages.]

The City asserted its zoning ordinance was written in a way that prevented short-term rentals (STRs), but some “bed and breakfasts” were allowed.  However, there was sporadic enforcement. After an increase in complaints about negative effects from STRs, the City conducted a study.  At the end of the study, the City passed an ordinance banning short-term rentals (STRs) in the entire city. The City provided a 45-day grace period before enforcement would begin. Several property owners and commercial real estate services sued to invalidate the ordinance. The City filed a plea to the jurisdiction and motion for summary judgment, which were denied. The City appealed.

The City first contended the Plaintiffs failed to appeal any decisions to the board of adjustment and therefore failed to exhaust their administrative remedies. Generally, a party must exhaust the administrative remedies available under Chapter 211 of the Local Government Code before seeking judicial review of an administrative official’s decision. However, the Plaintiffs did not apply for permits or otherwise receive any enforcement notification to which they must appeal. Statements made about the City’s intent to enforce an ordinance, without more, is not the type of administrative action over which an appeal is triggered. Appealable actions are those actual determinations made in the act or process of compelling a property owner’s compliance with a City ordinance. Information-only statements are not appealable administrative determinations.  Further, the Plaintiffs challenged the constitutionality of the ordinance, which does not always require exhaustion. Generally, administrative bodies do not have the authority to rule on the constitutionality of statutes and ordinances. And while constitutional challenges are not “globally exempted” from the exhaustion requirement, if the administrative body lacked the ability to “render a relief that would moot the claim” then no exhaustion is required.  The board of adjustment lacked the authority to grant the Plaintiffs’ the right to conduct an STR, so no exhaustion is required. Next, the City argued that STRs do not fit within the definition of a “single-family detached dwelling” under its zoning code because STRs are not occupied by a single-family but are occupied by groups of people. However, the City’s code defines the word “family” in such a way that it does not require that the people living as a “single housekeeping unit” be related by blood or marriage. It also has no duration of occupancy limit. As a result, by its own wording, the code does not prohibit STRs as long as the occupancy fall within the common and ordinary meaning of “family.”  The City next argued the Plaintiffs did not directly challenge the validity of the STR ordinance (only an interpretation of whether it applied to them) so no declaratory relief can be granted.  However, the court found their retroactivity, due-course-of-law, and takings claims turn on whether the existing code allowed STRs. To that extent, they have a valid justiciable controversy. Under the takings analysis, the court held that although a property owner generally has no vested right to use his property in a certain way without restriction, they have a vested right in the real property, which includes the ability to lease. From a constitutional standpoint, that is sufficient to trigger a protected property right interest for jurisdictional purposes. This, along with the fact the court found that STRs were not expressly prohibited by the wording of the ordinance,  creates a fact issue as to whether the Plaintiffs suffered a taking. The court also noted that, contrary to the City’s arguments, lost profits are a relevant factor to consider in assessing the property’s value and the severity of the economic impact on a property owner. The Plaintiffs pled and submitted evidence to support that STRs “generate higher average rent than long-term leases, even after expenses” and that the STR Ordinance prevents them from “participating in an active, lucrative market for [STRs].” Next, the court did agree with the City that the regulation of STRs is not preempted by the Tax Code, as alleged by the Plaintiffs. Plaintiffs did not point to any provision in either the Tax Code or the Property Code that implies that the legislature meant to limit or forbid local regulations banning STRs. The court then addressed the retroactive law arguments, holding that a “settled” right is different than a vested right and the Plaintiffs asserted the STR ordinance impaired their settled property rights under the common law and under the City’s code to lease their properties on a short-term basis. The issue is not about the “property owners’ right to use their property in a certain way,” but about the owners’ “retaining their well-settled right to lease their property.” Next, in the substantive-due-process context, a constitutionally protected right must be a vested right that has some definitive, rather than merely potential existence. Property owners do not acquire a constitutionally protected vested right in property uses once commenced or in zoning classifications once made. Thus, although the Homeowners have a vested right in their properties, they do not have a vested right under the Zoning Ordinance to use them as STRs.  However, the court found they do have a fundamental leasing right, which is sufficient to plead, jurisdictionally, a due-course-of-law claim. The court clarified in this rehearing opinion, that its holding on this point is limited to the fact a property owner has a fundamental right to lease, but the durational limits may be valid or may be invalid depending on the extent of the regulatory intrusion into that right. The intrusion goes to the merits of the case, which the court declined to address as part of the interlocutory appeal.  In short, the Plaintiffs properly plead all claims for jurisdictional purposes, except a claim under a preemption theory.

If you would like to read this opinion click here. Panel consisted of Chief Justice Sudderth and Justices Kerr and Gabriel.  Opinion on rehearing by Justice Kerr.

Fort Worth Court of Appeals holds one city was not entitled to a plea to the jurisdiction in condemnation suit brought by adjoining city

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Town of Westlake, Texas v. City of Southlake, 02-21-00241-CV  (Tex. App. – Fort Worth, Dec. 23, 2021)

This is an interlocutory appeal from the denial of the Town of Westlake’s plea to the jurisdiction in a case where the City of Southlake filed condemnation proceedings against the Town of Westlake.  The Fort Worth court of appeals affirmed the denial. [Comment: warning, this is a long opinion – 49 pages.]

The City of Southlake moved to condemn approximately 1400 feet of land owned by the Town of Westlake. In Southlake, a residential development was principally within Southlake, but abutted the boundary with Westlake. Immediately inside Westlake’s eastern town limit is a right of way owned and maintained by Westlake that abuts the lanes of Farm-to-Market Road 1938, but the actual road is owned by the State of Texas. The construction of the present configuration of FM 1938 was a cooperative effort of Southlake, Westlake, Keller, and Tarrant County.  Westlake opposed for years the developer’s requests for access across Westlake’s ROW as only one access to the development currently exists and the developer needed two. Westlake claims that the present condemnation action brought by Southlake is an attempt by Southlake to use its powers of condemnation to gain access to FM 1938 that the developer has not been able to negotiate. Southlake followed the condemnation procedures outlined in chapter 21 of the Texas Property Code and the commissioners awarded Westlake $22,000 for the condemnation. Westlake filed a motion to dismiss which was denied. Then, just before the award was filed with the district court, Westlake filed a plea to the jurisdiction in the district court. The court noted the plea was not a plea, but should have been a motion opposing the taking and denied the plea.  Westlake filed this interlocutory appeal in response. Southlake filed a motion to dismiss at the court of appeals level.

With regard to Southlake’s motion to dismiss, the trial court’s jurisdiction was triggered once the commissioners’ findings were filed, even if Westlake “jumped the gun” and filed the plea before the commissioners’ filing.  There is no consequence for filing early. As a result, the matter is properly before the appellate court. Next, regarding Westlake’s plea, Westlake first argues no waiver of immunity exists under §251.001 of the Local Government Code, however the court noted the language allows condemnation regardless of whether the property is already public or private, whether it is inside the city or outside, and possesses safeguards to prevent abuses. Because the statute allows condemnation of public property, it must, therefore include a waiver of immunity for the owning entity. Comparing the langue in §251.001 to similar provisions of the Utility Code (which the Texas Supreme Court previously ruled constitute a waiver of immunity), the court held immunity is waived for Westlake.  While case law states that when one governmental entity is condemning property owned by another governmental entity, the condemning entity must establish the “paramount importance” standards (i.e. it has a public need greater and will not destroy the public nature).  However, the paramount importance doctrine is not jurisdictional. With regards to Westlake’s argument that § 311.002 of the Transportation Code (giving cities exclusive control over streets and highways) the record has not been established enough to make the determination of whether the condemnation will interfere with such streets (since Westlake owns only the adjoining ROW). The record was also not sufficiently developed to establish whether Southlake could establish a valid public purpose.  As a result, the plea was within the trial court’s discretion to deny.

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

Texarkana holds city properly supported its summary judgment to permanently enjoin mobile home park

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Polecat Hill, LLC, et al. v. City of Longview, Texas, et al. 06-20-00062-CV (Tex. App. – Texarkana, December 2, 2021).

This is a nuisance/permit case brought under Chapter 54 of the Texas Local Government Code where the Texarkana Court of Appeals affirmed the judgment entered on behalf of the City.  [Comment: this is a long, 39-page opinion].

Polecat owned 5 acres of land within the City limits. Polecat received a notice of violation from the City asserting the property violated several health and safety ordinances and needed to be repaired. After receiving the notice, Polecat sued the City. The city counterclaimed against the corporate owners and sued the property in rem. Polecat asserted the property had operated as a location for manufactured dwellings to affix to real property and obtain connections since the 1960s. Polecat argued that the City refused to allow it to proceed with its plans to prepare the Property to be on public sewer service. Polecat argued that, instead, the City was requiring it to apply for a mobile home park license and comply with city ordinances by dedicating property to install fire hydrants, dedicating a turnaround space for fire trucks, and absorbing the cost of water flowing through the fire hydrants. The City asserted Polecat was illegally operating an unlicensed mobile home park and unlicensed travel trailer park in violation of the City’s code of ordinances.  The trial court granted the City’s traditional and no-evidence motions for summary judgment, resulting in a final judgment in favor of the City. The trial court’s order specifically found that the Polecat Defendants’ violations of city ordinances created a substantial danger of injury or adverse health impact and that a permanent injunction was necessary to prohibit the specific conduct that violated the ordinances and to require conduct necessary to comply with them. Polecat appealed.

The summary judgment evidence showed that the Property was continuously operated as a mobile home and travel trailer park. Polecat testified that the Property was a residential property that was eighty percent occupied, but admitted it housed rental mobile homes since the 1960s, as well as seven travel trailers.  The City’s appraisal district had labeled the Property as a mobile home park, and Polecat had never challenged that designation. Even the TNRCC sent notices of violations to Polecat related to improperly hooked up septic lines. The summary judgment evidence showed that the City was willing to work with the Polecat Defendants to obtain mobile home and travel trailer park licenses and would consider a site plan that complied with city ordinances, however, Polecat did not agree to comply with the ordinances.  During discovery, numerous other violations became apparent, including violations preventing fire trucks from being able to properly access or service the Property.  Polecat’s testimony established it never applied for a license to operate a mobile home park or travel trailer park.  The City’s traditional summary judgment motion established various violations of the City’s ordinances. The City also filed a no-evidence motion for summary judgment asserting that because the City was not requesting the dedication or transfer of any portion of the Property to the public for public use; the City had not deprived the Polecat Defendants of all viable use of the Property. Further, it was Polecat’s failure to apply for a site plan permit and a license that prevented the City from extending sewer services. Polecat also admitted it was not challenging the validity of any ordinances.

The court found Polecat failed to preserve its appellate points objecting to the City’s summary judgment evidence as they complained of only procedural defects and failed to obtain a ruling. Next, the court held the City was not required to prove continuing violations in order to be entitled to injunctive relief under Chapter 54. Polecat’s petition did not contain any challenge to the city ordinances themselves or allege that the ordinances did not apply to them and therefore was not entitled to any declaratory relief. The court also noted that there were multiple defendants, including the property in rem, but only Polecat responded to the summary judgment on behalf of itself alone. As a result, the other defendants could only attack the granting of the summary judgment by asserting the City failed to carry its burden of proof. The City met its burden to establish entitlement to summary judgment and permanent injunctive relief. Further, “[i]n a regulatory taking, it is the passage of the ordinance that injures a property’s value or usefulness.” Polecat does not challenge the passage of any ordinance. Instead, the petition focused on whether the City’s intentional actions resulted in inverse condemnation.  However, since the City did not destroy all economically viable use of the property, there can be no taking. Additionally, Polecat’s summary judgment evidence (which Polecat argued created a fact issue) contained mainly affidavits that were unsigned and unnotarized. As a result, Polecat failed to create a fact issue with proper summary judgment evidence. The trial court properly entered judgment for the City.

If you would like to read this opinion click here. Panel consists of Chief Justice Morris and Justices Burgess and Carter. Opinion by Justice Burgess.

Dallas Court of Appeals holds commercial lease on property separated from airport was a proprietary function

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City of Dallas v. Oxley Leasing North Loop, LLC, 05-21-00241-CV, (Tex. App – Dallas, Nov. 12, 2021)

This is a breach of a lease agreement case where the Dallas Court of Appeals affirmed the denial of the City’s plea to the jurisdiction, holding the City was performing a proprietary function.

The City created a Land Use and Development Plan (“Development Plan”) for the airport. The Development Plan identified several portions of airport property for potential development, designating some as airfield operations, airfield-related development, non-aviation-related development, open space/recreational, and a commercial office park.  The City leased portions of the commercial office park (“the Property”) to First Continental Bank for an initial term of 40 years. The City agreed to construct a barrier and a road to physically separate the Property from the back of the airport. The lease was assigned several times, eventually being held by Oxley. The City and Oxley dispute whether Oxley property initiated an extension under the lease. The City, believing no renewal had occurred, moved to evict Oxley. Oxley filed suit for breach of the lease and the City filed a plea to the jurisdiction. The trial court denied the plea and the City appealed.

Leasing in a commercial park is not listed under the TTCA as a governmental function. As a result, the court must analyze the nature of the transaction under Wasson II standards. The mere fact that the City leased property located at the airport is not determinative of the nature of that activity.  Since the Property is identified by the City as nonaviation related, the court had little difficulty determining it was not related to the operation of the airport. Under Wasson II,  the City had no obligation to lease the Property to First Continental Bank, was discretionary, and the nature of the private lease necessarily excludes the general public from benefiting from the premises. The fact that a city’s proprietary action bears some metaphysical relation to a governmental function is insufficient to render the proprietary action governmental. As a result, the specific lease at issue is proprietary and the City is not entitled to immunity.

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

Amarillo Court of Appeals holds fire marshal’s office employs firefighters who are entitled to civil service protection

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City of Amarillo, Texas, et al. v. Nathan Sloan Nurek and Michael Brandon Stennett, 07-20-00315-CV, (Tex. App – Amarillo, Nov. 18, 2021)

This is a civil service case where the Amarillo Court of Appeals affirmed in part and reversed in part a trial judgment holding the fire marshal’s office was entitled to civil service protection.

Plaintiffs sued the City and various officials trying to hold the Amarillo Fire Marshal’s Office (“FMO”) should be classified as a civil service position.  In the City, firefighters are classified positions, but the FMO is not classified.  As such, employees within the FMO are civilians who are not afforded civil service protections. The FMO performs fire prevention duties such as checking building plans, inspecting businesses, and investigating suspicious fires. FMO employees are certified by the Texas Commission on Fire Protection. Following a bench trial, the trial court entered a final order declaring that positions within the Amarillo FMO are civil service positions, but denied the promotional relief sought. The trial court ruled the firefighter’s association (“Association) was the necessary real party in interest, not the individual Plaintiffs and the claims were therefore precluded.

Both parties agree that the determination of whether a particular position is a “fire fighter” position depends on whether the position meets the definition identified in Texas Local Government Code section 143.003(4).  The City’s argument appeared to turn on whether the position was one of “fire suppression” and not other duties. The express language of section 419.032 distinguishes “fire protection personnel” from “fire suppression.”  The testimony established  FMO positions require substantial knowledge of firefighting. The trial court heard evidence that the FMO was moved within the Amarillo Fire Department in 1989, the FMO is part of the Fire Department for budgeting purposes, and the FMO is listed as part of the Fire Department within the City’s Organizational Structure. As a result, the trial court properly determined the position should be classified as a firefighter. Next, the City actively argued that the association lacked standing to participate in the case and Plaintiff’s agreed. The court did not see any basis for the trial court holding the association’s inaction established the defenses of laches, estoppel, or limitations. The trial court also made findings that the City proved that using non-classified employees in FMO positions was motivated by good faith, was more satisfactory to the public, and was based on more than monetary savings.  However, the standard requires that the City provide a good-faith reason to justify the use of non-classified personnel over civil servants, rather than assessing the qualifications of particular individuals to serve in those positions. Therefore, the City is not entitled to a good-faith defense for the use of non-classified personnel.   And while the court of appeals found the Plaintiff’s general relief was not precluded, the trial court did not consider the entitlement on the merits. As a result, certain relief matters were remanded.

Panel consists of Chief Justice Quinn, and Justices Parker and Doss. Affirmed, reversed, and remanded to trial court. Opinion by Justice Parker can be read here. Docket page with attorney information found here.

Fourth Court of Appeals upholds injunction preventing Governor from prohibiting ordinances regulating face masks – Governor’s authority does not extent to local health and safety regulations with separate grants of authority

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Greg Abbott, in his Official Capacity as Governor of Texas, and State of Texas v. City of San Antonio and County of Bexar, 04-21-00342-CV (Tex. App. – San Antonino, November 10, 2021).

This is a COVID-19 declaratory judgment (ultra vires) action brought against Texas Governor Gregg Abbott where the Fourth Court of Appeals held the Governor does not have the power to prevent certain local regulations during a disaster.

Bexar County and the City of San Antonio sued Governor Abbott after the Governor signed Executive Order GA-38, which provides, with some exceptions, that: “No governmental entity, including a county, city, school district, and public health authority, and no governmental official may require any person to wear a face-covering or to mandate that another person wear a face covering . . . .”  The local entities sued asserting the order exceeded the Governor’s authority. The trial court issued a temporary injunction order enjoining the enforcement of certain provisions of Executive Order GA-38 disallowing local governmental entities from requiring individuals to wear face coverings. The Governor filed an interlocutory appeal.

The City and County’s ultra vires claim requires construction of the Texas Disaster Act.  The entities have different powers, but both have the ability to adopt reasonable rules and regulations to protect public health. These powers are granted to the entities at all times and are especially relevant during times of disaster. The Governor invoked § 418.016(a) of the Texas Government Code as support for his authority. Under the section, the Governor may “suspend the provisions of any regulatory statute prescribing the procedures for conduct of state business or the orders or rules of a state agency if strict compliance with the provisions, orders, or rules would in any way prevent, hinder, or delay necessary action in coping with a disaster.”  After analyzing the language the Fourth Court held the statutes the Governor purports to suspend are not “regulatory statutes,” subject to suspension under the Act.  Regulatory statutes “prescribe the procedures” for the conduct of state business, such as procedures for the proper return of mail-in ballots.  The statutes do not address state-level procedure or business; instead, they are “grant-of-authority statute[s] giving local authorities the leeway to act in their best independent judgment within the confines of their own jurisdictions.”  Further, the Governor may only suspend regulatory statutes proscribing procedures for state business. The health and safety laws at issue are not procedural but  grant authority to local governments to act on matters of local public health and do not pertain to “state business.” It would “strain credulity to suppose the Legislature intended to abdicate its legislative prerogative, beyond the narrow regulatory and procedural matters specified, and permit the Governor to suspend all legislated grants of local authority on matters of public health without stating so directly.”  The court then examined the injury elements in the interim, the status quo elements of an injunction, and standing of the local entities. In the end, the court held the local entities were entitled to legally seek a temporary injunction and such injunction was proper under the standards indicated in the rules.

If you would like to read this opinion click here. Panel consists of Chief Justice Martinez, Justice Chapa and Justice Rios. Opinion by Chief Justice Martinez. The docket page can be found here.

 

First Court of Appeals holds 380 development agreement was an agreement for goods and services (waiving immunity) but dismissed all other claims brought against the City by the developer

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Town Park Center, LLC v. City of Sealy, Texas, Janice Whitehead, Mayor, Lloyd Merrell, City Manager and Warren Escovy, Assistant City Manager, 01-19-00768-CV, (Tex. App – Hou [1st], Oct. 28, 2021)

In this contract dispute, the First Court of Appeals in Houston affirmed in part and reversed in part the City’s plea to the jurisdiction. This is the third lawsuit involving the parties and underlying dispute.

Town Park Center and the City executed a “380” Economic Development Agreement (“the EDA”) to develop a commercial shopping center on Town Park’s property. Town Park Center agreed to develop and construct the shopping center according to a development plan that the City had approved. The City agreed to pay annual economic development grant payments (based on sales tax collections) to Town Park Center “as an incentive to comply with this Agreement.” Town Park Center first filed suit against the City and officials, asserting breach of contract and other claims. The basis was an assertion the EDA required the City to sell stormwater detention capacity to Town Park and failed. The City filed a plea to the jurisdiction, which was granted as to the city but not the individual officials. The officials appealed but Town Park non-suited. Town Park then filed a second suit against other officials, but which was otherwise identical.  Town Park later non-suited, only to file a third suit seeking mandamus, declaratory, injunctive relief, takings, ultra vires claims and claims under the “vested rights provision” of Local Government Code chapter 245. The factual allegations were nearly identical to the first and second suit. The City filed a plea to the jurisdiction and argued immunity as well as res judicata “ish” arguments. The trial court granted the plea and Town Park Center appealed.

The court noted that res judicata is an affirmative defense and could not be raised in a plea to the jurisdiction. It declined to consider the arguments through the lens of a summary judgment noting the trial court consideration lacked the hallmarks of a true summary judgment proceeding, including the required 21 days’ notice of a hearing date. However, the City also raised immunity defenses. The court held the EDA constituted a contract for goods or services which can trigger a waiver of immunity. The EDA included a provision for Town Park Central to build and dedicate a road to the City as part of the development, which therefore constitutes a service.  The trial court therefore erred in granting the plea as to the breach of contract claim. However, as to the Chapter 245 vested rights claim, Town Park Center did not identify any City order, regulation, ordinance, rule, or other requirement in effect when its rights in the project vested that mandates the sale of the capacity at issue. With no change in order or rule, Chapter 245 is inapplicable. As to Town Park’s takings claim, it failed to establish the City’s refusal to allow the purchase of detention capacity deprived them of the beneficial use of the property. Specifically, the court noted Town Park Center finished the development and sold it to host a grocery store. The City, therefore, did not deprive it of all economic use of the property. As to the ultra vires claims, the court first chastised the parties for failing to follow proper pleadings rules, making the determination more difficult on the court, specifically by labeling various amended pleadings as supplemental pleadings. Considering the pleadings as filed, the court held the City officials ended up joining the City’s plea as part of a supplement (without objection from the other side). Merely failing to comply with a contract does not give rise to an ultra vires claim.  While Town Park Central points to a city resolution allowing for detention capacity purchases, it does not mandate the sale of detention capacity. It instead only provides that the City may sell detention capacity, which is discretionary. As a result, the ultra vires claims were properly dismissed.

In short, the court reversed the dismissal of the breach of contract claim, ultimately affirmed the dismissal of all other claims, and remanded for trial.

Panel consists of Justices Kelly, Guerra, and Farris. Opinion by Justice Farris can be read here. Docket page with attorney information found here.