Subcontractor did not contract directly with DFW Airport, so no waiver of immunity exists for breach of contract says Dallas COA

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Ruth Torres v. Dallas/Ft Worth International Airport et. al, 05-18-00675-CV (Tex. App. —  Dallas, August, 29, 2019).

This is a breach of contract case where the Dallas Court of Appeals held the trial court was without jurisdiction to hear the claims.

Torres was to provide human resources consulting services to Pursuit of Excellence (POE), a corporation that contracted with DFW to provide airport operations services. POE filed suit against Torres for breach of contract.  Torres answered, counterclaimed, and attempted to bring in the Dallas/Ft.Worth International Airport (DFW).  DFW filed a plea to the jurisdiction, which was granted. Torres appealed.

DFW is a special purpose governmental entity which possesses immunity as a matter of law.  As a result, Torres must establish a waiver of immunity to proceed. The Texas Tort Claims Act expressly lists the operating and regulation of an airport to be a governmental function, so no proprietary aspects are involved. Although TEX. LOC. GOV’T CODE § 271.152 provides for a

waiver of immunity in certain cases, that waiver is not absolute.  Unfortunately for Torres, she did not contract with DFW, but with an independent contractor of DFW.  The waiver under §271.152 only applies to contracts entered into directly with DFW.  The remaining arguments asserted by Torres (UDJA, TOMA, PIA, etc.) were not raised at the trial court so cannot be raised for the first time on appeal. The plea was properly granted.

If you would like to read this opinion click here. Panel consists of Justices Myers, Osborne, and Nowell.  Opinion by Justice Myers.

3rd Court of Appeals holds PIA appeal deadline for entity to challenge AG opinion is jurisdictional

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San Jacinto River Authority v. Ken Paxton,  03-18-00 547-CV (Austin, Aug. 22. 2019) 

This is the Public Information Act (PIA) case where the Austin Court of Appeals held an entity must file suit to appeal an AG opinion within the jurisdictional time limit. 

San Jacinto River Authority (SJRA) received PIA requests from McFarland and Fuchs for communications discussing a specific release of water. It submitted a request for both on the same day.  The AG issued an opinion on the McFarland request opining SJRA could withhold information, but SJRA did not timely submit an opinion request regarding Fuchs and the information must be released. The opinion had language SJRA asserts was an indicated to seek reconsideration. SJRA attempted to seek a reconsideration but was told, by AG letter, the PIA does not allow such. They filed suit to appeal the decision, but it was outside the time frame for appeal of the opinion. SJRA asserted the non-reconsideration letter was the proper trigger point. The AG filed a plea to the jurisdiction, which was granted. SJRA appealed. 

The court analyzed the statutory section regarding an entities ability to file suit to challenge an AG opinion. It held filing suit within the 30 day time period was jurisdictional. The non-reconsideration letter cannot reasonably be characterized as “the decision determining that the requested information must be disclosed” because it did not make any reference to disclosure of the information. It is merely a post-decision correspondence informing SJRA it was prohibited from asking for a reconsideration. The opinion also held the separate declaratory judgment claims were redundant and no jurisdiction existed for it.  SJRA asserted the AG should be estopped from using the jurisdictional arguments because it invited reconsideration, causing delay past the deadline. However, the court held estoppel cannot convey jurisdiction. Finally, regardless of SJRA’s “compelling reason” for withholding the information, the trial I court lacks jurisdiction to hear them since SJRA missed the deadline. The plea is affirmed. 

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

Fort Worth Court of Appeals holds injunctive relief not available to stop enforcement of ordinance regulating gas/oil production

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The Town of Flower Mound, Texas, et al.  v. EagleRidge Operating, LLC, 02-18-00392-CV, (Fort Worth, Aug. 22, 2019)

This is an interlocutor appeal in a temporary injunction case where the Fort Worth Court of Appeals held the zoning restriction on oil/gas equipment at issue was a penal statute and no vested property right existed, depriving the trial court of jurisdiction to issue a temporary injunction. 

Plaintiffs took over operation of a series of oil/gas wells in the Town. The Town passed an ordinance regulating operations, the removal of waste water and hours of operation. The ordinance stated as part of its purpose that  natural gas drilling and production operations involve or otherwise impact the Town’s environment, infrastructure, and related public health, welfare, and safety matters.  In 2018 Plaintiff filed 3 actions with the board of adjustment (BOA) and board of oil and gas appeals (OGA) regarding variances, which were denied. The Town issued several criminal citations for after hour operation and failure to remove wastewater. The Plaintiff sought a TRO and injunction to prevent the enforcement of the ordinance, which was granted. The Town, BOA and OGA appealed.

The basic test as to whether a law is penal is whether the wrong sought to be redressed is a wrong to the public or a wrong to an individual. A public wrong involves the “violation of public rights and duties, which affect the whole community, considered as a community, and are considered crimes; whereas individual wrongs are infringements of private or civil rights belonging to individuals, considered as individuals, and constitute civil injuries.”  When an ordinance’s primary purpose is to protect the welfare of a municipality’s citizens, it “is clearly addressing a wrong to the public at large” and is a penal.  The court held the zoning ordinance was penal in nature. To be entitled to injunctive relief, the Plaintiff had the burden to demonstrate irreparable injury to a vested property right. Contrary to Plaintiff’s position, allegations of injury to an interest in real property does not equate to irreparable injury of a vested property right. Increases in operating costs does not equate to irreparable harm to their mineral interests. Loss of profitability, alone, also does to equate to irreparable harm to their mineral interest. As a result, Plaintiff is not entitled to injunctive relief to prevent enforcement of such a penal ordinance. Under sections of Tex. Loc. Gov’t Code chapter 211 (dealing with BOA and appeals), no injunction is textually available for an appeal from the BOA to a district court, only from an official to the BOA. The Legislature made a distinction between a restraining order and an injunction, and no injunctive relief is available under Chapter 211 for an appeal to district court from a BOA decision. 

Chief Justice Sudderth concerned in a majority of the opinion, but dissented as to the interpretation under Chapter 211. He opinioned a temporary restraining order is a stopgap, placeholding measure to preserve the status quo 14 days, just until a litigant’s application for temporary injunction can be heard.  For practical purposes, depriving the trial court of the ability to extend the restrained enforcement makes little sense. 

If you would like to read this opinion click here. Panel consists of Chief Justice Sudderth, Justice Gabriel, visiting Judge Wallach.  Memorandum opinion by visiting judge Wallach. 

Developer properly pleaded claims County failed to maintain roadways, Fort Worth Court of Appeals says

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Wise County, et al v. Katherine Mastropiero02-18-00378-CV (Tex. App. – Fort Worth, August 9, 2019)

In this case, the Fort Worth Court of Appeals held that the district court had jurisdiction to hear a property owner’s claims the County must maintain roads in her subdivision.

Mastropiero (the developer) began to develop Prairie View Estates, a subdivision in Wise County. In Phase Two of the subdivision, the county refused to maintain the roadways. The plat described several roads and stated that the roads were “dedicate[d] to the public.” Mastropiero alleged that the owners, residents, and members of the public have used the roads continuously ever since. The final plat was then endorsed and filed in the County’s records.  Mastropiero asserted she did not have to file a maintenance bond after the  County accepted the roads but that the County was required to maintain the roads. She sued for a failure to maintain, and the County filed a plea to the jurisdiction, which was denied.

Article V, § 8 of the Texas constitution provides that the district court has supervisory jurisdiction to review certain actions of the County Commissioners Court. Mastropiero has alleged that the Commissioners Court failed to perform a clear statutory duty.  The County asserted it never “accepted” the dedication and thus has no statutory duty. Recording a map or plat showing streets or roadways does not, standing alone, constitute a completed dedication as a matter of law. But acceptance does not require a formal act; implied acceptance is also sufficient, including use of the roads by the public. The determination of whether a dedication has been accepted is a question of fact. As a result, from a jurisdictional standpoint, Mastropiero properly pleaded a cause of action against the County. Additionally, the suit against a single commissioner, but only in her official capacity, is the same as a suit against the County. A suit to compel prospective action is viable in an ultra vires suit, as is raised here.  The plea was properly denied.

If you would like to read this opinion, click here. Panel consists of Justices Birdwell, Bassel and Womack. Memorandum opinion by Justice Birdwell. The attorney listed for the County is James Stainton. Ms. Mastropiero appeared pro se.

7th Court of Appeals holds vested rights statute requires a showing of two permits; one vesting and one after a change in regulations

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Jon E. Jacks v. The Zoning Board of Adjustment of the City of Bryan  07-18-00174-CV (Tex. App. – Amarillo, July 9, 2019)

This is a board of adjustment appeal/vested rights case where the Seventh Court of Appeals upheld the Zoning Board of Adjustment’s motion for summary judgment.

Jacks purchased a piece of property in a residential subdivision intending to build a laundromat. Because the original plan for the subdivision had been filed with the City in 1960, Jacks asserted he possessed a vested right to 1960 regulations under chapter 245 of the Texas Local Government Code. When asked for a declaration from the City’s planning department that he possessed vested rights, Jacks was informed the City had no process for a blanket declaration and Jacks must apply for a permit on the project before an analysis of any vested right is performed. Relying on an e-mail “denial” from the Planning Manager Jacks pursued an appeal of this decision to the City’s Zoning Board of Adjustment. The Board denied Jacks’ request noting Jacks failed to identify any specific regulation that had changed, and Jacks failed to identify any permit application that had been denied.  Jacks appealed to district court pursuant to Tex. Loc. Gov’t Code §211.011.  The trial court granted the City’s motion for summary judgment and Jacks appealed.

Under Texas Local Government Code §245.002, once an application for the first permit of a development is filed all subsequent applications for permits shall be considered under the laws and regulations in effect at the time the first application was filed. The Amarillo Court of Appeals held the statute requires two permit applications be involved; one to vest the rights and the second after a law changed but which must be applied under the old law. Here, Jacks pointed to the 1960 first application, but failed to point to a second application in which the City tried to apply a different set of rules.  Second, Jacks objected to the trial court considering evidence not presented at the Board level.  Jacks did not preserve his objection, but additionally, §211.011 authorizes the trial court to consider additional evidence. As a result, the trial court properly dismissed the claims.

If you would like to read this opinion click here. Panel consists of Chief Justice Quinn, Justice Pirtle and Justice Parker. Memorandum Opinion by Justice Parker. Jon Jacks appeared pro se. The attorneys listed for the ZBA are Ryan S. Henry, Artin T. DerOhanian and Michael McCann Jr.

 

U.S. Supreme Court holds ADEA applies to governmental entities, regardless of the size (i.e. under 20 employees).

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Mount Lemmon Fire District v Guido, et al., 17-587 (U.S. November 6, 2018).

Firefighters sued the District asserting it violated the Age Discrimination in Employment Act.  The parties disputed the language of the ADEA. The Fire District responded that it was too small to qualify as an “employer” under the ADEA, which provides: “The term ‘employer’ means a person engaged in an industry affecting commerce who has twenty or more employees . . . . The term also means (1) any agent of such a person, and (2) a State or political subdivision of a State . . . .” 29 U. S. C. §630(b).  The firefighters asserted the “also means” language creates a separate category of employers regardless of size.

After a detailed analysis of the history and wording in the ADEA and comparing the language to Title VII, the Court held the ADEA applies to political subdivisions of the state regardless of the number of employees. The ordinary meaning of “also means” is additive rather than clarifying. Furthermore, the text of §630(b) pairs States and their political subdivisions with agents, a discrete category that, beyond doubt, carries no numerical limitation. The Court acknowledged reading the ADEA as written to apply to states and political subdivisions regardless of size gives the ADEA a broader reach than Title VII. But this disparity is a consequence of the different language Congress chose to employ.

If you would like to read this opinion click here. GINSBURG, J., delivered the opinion of the Court, in which all other justices joined, except KAVANAUGH, J., who took no part in the consideration or decision of the case.

Eastland Court of Appeals holds erroneously calling the police is a discretionary act exempting employees from ultra vires claims

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The University of Texas of the Permian Basin et al. v. Michael Banzhoff, 11-17-00325-CV (Tex. App. – Eastland, May 31, 2019).

This is an ultra vires and abuse of process case where there Eastland Court of Appeals held the University of Texas at Permian Basin (UTPB) retained governmental immunity.

UTPB hired Banzhoff as a golf coach but terminated him within a year. He was issued a criminal trespass notice not to attend UTPB sporting events. Shortly after his termination, Banzhoff was arrested at the Odessa Country Club for criminal trespass.  Banzhoff sued UTPB, the athletic director (Aicinena) and the interim coach who replaced him (Newman) alleging seven different causes of action. Aicinena and Newman moved to be dismissed under §101.106(e) of the Texas Tort Claims Act (TTCA) and UTPB filed a plea to the jurisdiction. The trial court granted the dismissal as to Aicinena and Newman, and partially granted UTPB’s plea. The trial court allowed the abuse of process and ultra vires claims to proceed. UTPB filed this interlocutory appeal.

As to the abuse of process claim, no waiver of governmental immunity exists for such a tort. To fall within the ultra vires exception, “a suit must not complain of a government officer’s exercise of discretion, but rather must allege, and ultimately prove, that the officer acted without legal authority or failed to perform a purely ministerial act.”  Suits complaining of ultra vires actions must be brought against government officials in their official capacity and may seek only prospective injunctive remedies. In this case, UTPB—a governmental entity—is not a proper defendant to Banzhoff’s ultra vires claim. As to the individuals, the general allegations in the pleadings are insufficient to plead an ultra vires claim against Aicinena or Newman.  Further, Banzhoff failed to plead any facts that support a finding that Aicinena or Newman exceeded any delegated authority, did not perform a ministerial duty, or violated Banzhoff’s constitutional rights.  The court expressly noted the criminal trespass notice in the record was not issued by either Aicinena or Newman and that there was no specific allegation either man called the police regarding Banzhoff’s presence at the Odessa Country Club. However, even if the court were to take Banzhoff’s allegations as true, “he fails to explain how issuing a criminal trespass notice or calling the police—even if done erroneously—are anything but discretionary actions by Aicinena or Newman.”  As a result, the plea should have been granted in its entirety.

If you would like to read this opinion click here. Panel consists of Chief Justice Bailey, Justice Willson and Wright, Senior Justice.   Memorandum Opinion by Chief Justice Bailey.  The attorneys listed for Banzhoff are Gerald K. Fugit and M. Michele Greene.  The attorneys listed for UTPB are Enrique M. Varela and Eric Hudson.

Texarkana Court of Appeals holds noncore attorney work product is confidential and not subject to PIA disclosure.

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Ken Paxton, Attorney General of the State of Texas v. City of Dallas, 06-18-00095-CV, (Tex.  App. – Texarkana, May 15, 2019).

In this Texas Public Information Act (“PIA”) case, the Texarkana Court of Appeals held noncore attorney work product is confidential and not subject to public disclosure under the PIA.

The City received seven PIA requests for reports and other records relating to specified incident investigations, each conducted in response to a notice of claim for damages received by the City. In each case, the City sought an AG opinion and was told to release the information. The City filed suit as an appeal. In cross-motions for summary judgment the trial court ruled for the City holding the information was confidential. The AG appealed.

“Core public information” is protected from disclosure only “if it is confidential under either the PIA or other law.” Core public information (also referenced as “super-public” information) includes “a completed report, audit, evaluation, or investigation made of, for, or by a governmental body.” Tex. Gov’t Code Ann. § 552.022(a)(1). It is confidential only if made so by other law.  The City asserted the information is noncore work product under Rule 192.5 of the Texas Rules of Civil Procedure and, therefore, is “confidential under . . . other law.” The Texas Supreme Court has described the level of protection accorded to core work product as, “inviolate,” “flatly not discoverable,” and “sacrosanct and its protection impermeable.” In contrast, noncore work product is “[a]ny other work product” that is not core work product.  The record indicates the information at issue includes the City’s investigations, evaluation of claims filed against the City and liability analysis prepared by the City’s employees and agents after the City received the notices of claim. The City employees testified the information constitutes material prepared or mental impressions developed in anticipation of litigation or for trial. Each of the notices of claim in question constitute statutory notices required by the Texas Tort Claims Act. As such, they satisfy the objective standard for anticipated litigation. The in-camera review of the records indicated to the court that the City’s investigations were conducted for the purpose of preparing for potential litigation, therefore qualifying for the subjective prong of the anticipated litigation analysis.  The records are therefore “noncore” work product under Rule 192.5. Finally, after a lengthy analysis of Rule 192.5, the court held the noncore work product was confidential.  The trial court judgment was affirmed.

If you would like to read this opinion click here.  Panel by Chief Justice Morriss III, Justice Burgess and Justice Stevens. Memorandum Opinion by Justice Burgess.  The attorneys listed for the City of Dallas are James B. Pinson and Nicholas D. Palmer.  The attorney listed for General Paxton is Matthew R. Entsminger.

Texas Supreme Court holds navigation district retains immunity from suit by State, but ultra-vires claims against commissioners can proceed to trial

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Chambers-Liberty Counties Navigation District, et al. vs. State of Texas, 17-0365 (Tex. May 10, 2019)

This is an interlocutory appeal in a sovereign immunity/regulatory control case where the Texas Supreme Court held the Chambers-Liberty Counties Navigation District (“District”) retained immunity from suit against the claims brought by the State of Texas. However, the District’s commissioners were not immune from the ultra-vires claims.

The District leased part of a navigation stream to Sustainable Texas Oyster Resource Management, LLC (“STORM”) for specific oyster production. The Texas Parks and Wildlife Department (“Department”) asserted the Department had exclusive authority to regulate oyster production in Texas and sued the District to invalidate a lease issued to STORM.  In the 1950s, the State of Texas conveyed more than 23,000 acres submerged land to the District, which as become prime for oyster cultivation. After the lease was issued to STORM, the company sent no-trespass notices to holders of any oyster-production permits. These permits authorize a holder to “plant oysters and make private beds in public waters.”  STORM claimed exclusive use of the leased submerged land. While the District agrees the water above the submerged land belongs to the State, it asserts it owns the fee simple in the land and can lease its exclusive use. The Department sued the District to invalidate the lease and individual District commissioners for ultra-vires acts associated with the lease. The Department also sought monetary damages for “restitution.” The District and commissioners filed a plea to the jurisdiction, which was partially denied.

The Court first addressed the Department’s claim for monetary damages. It held that Under §311.034 of the Government Code (Texas Code Construction Act), the use of the term “person” in a statute does not waive immunity.  And while the Parks and Wildlife Code allows the Department certain rule making authority, the Department cannot waive immunity by rule which is not contained within the statute.  Since nothing in the applicable Parks and Wildlife Code waives immunity, no waiver for declaratory and monetary claims exists. The Department cannot circumvent the immunity by labeling a claim for monetary damages as “restitution.”    Next, the Court held an ultra-vires claim cannot be brought against the District. However, it can be brought against the commissioners. The Court held the Department properly pled the commissioners acted beyond their lawful authority by entering into the lease. The statute creating the District provided it “rights, privileges and functions” but only those conferred by law. Unlike a home-rule municipality which gets its power from the Texas Constitution, the District is a creature of statute and must look to the Legislature for its authority. Considering the entire regulatory system as a whole, the Court held the powers of the District are limited to navigation. While the statute allows the District to lease land and regulate marine commerce, the question of whether  oyster cultivation qualifies may be precluded when comparing the exclusive power granted to the Department. The Department shall regulate the taking and conservation of fish, oysters, and other marine life. The ultra-vires claims against the commissioners to prospectively enjoin the lease are permitted to go forward.  However, the Court was careful to explain that its holding only allows the State’s claims to go to trial, not whether the State will ultimately win on the present facts.

If you would like to read this opinion click here.  Opinion by Justice Blacklock. The docket page with attorney information can be found here.

Texas Supreme Court holds plaintiff in red-light challenge lawsuit was required to exhaust administrative remedies before filing for injunctive relief

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Garcia v City of Willis, et al., 17-0713 (Tex. May 3, 2019)

In this constitutional challenge to red-light camera case, the Texas Supreme Court held the plaintiff was required to exhaust administrative remedies before bringing his constitutional-takings claim.

Luis Garcia sued the City of Willis on behalf of himself and “others similarly situated” who paid a civil penalty for violating a city ordinance for red-light infractions caught on camera. He sought the invalidation of the ordinance, a refund, or a takings claim. The City filed a plea to the jurisdiction, which was denied by the trial court, but granted by the court of appeals. On appeal to the Supreme Court, the State filed an amicus brief, arguing additional authority in support of the City.

While the City did not initially challenge Garcia’s standing to bring suit, the State’s amicus brief raised the issue, and the Court felt it was required to address that first. After receiving notice from the City of his red-light violation, Garcia paid the requisite civil fine. He has no outstanding fines and does not assert that he plans to violate red-light laws in the future. And for standing purposes, we “assume that [plaintiffs] will conduct their activities within the law,” barring some stated intent otherwise. Because no pending charges exist, Garcia lacks standing for prospective injunctive relief and could not be a class member of others similarly situated who have not paid the fine.  However, he does have standing to seek a refund of his past payment. In this context, immunity is waived only if Garcia paid the fine under duress.  Here, Garcia chose to voluntarily pay a fine and forgo administrative remedies that would have entitled him to an automatic stay of the enforcement of his fine under TEX. TRANSP. CODE § 707.014(a).  Because Garcia could have invoked this automatic reprieve from payment and challenged the notice of violation administratively — but chose not to — he cannot now claim he paid his fine under duress.  Therefore, the City maintains its immunity.

Garcia additionally argues the fine imposed on him amounts to an unconstitutional taking, because the underlying is unconstitutional and because the City failed to conduct the statutorily required engineering study.  He asserts he could not challenge the constitutionality of the fine in the administrative hearing. However, the fact remains that the hearing officer might have ruled in his favor for other reasons that would moot his constitutional arguments. As a result, he failed to exhaust his administrative remedies.

If you would like to read this opinion, click here.  Justice Brown delivered the opinion of the Court.  The docket page with attorney information can be found here.

Texas Supreme Court holds entity not required to show risk of harm to a specific individual in order to except records from PIA release

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Texas Department of Criminal Justice v Levin, 17-0552 (Tex. April 12, 2019)

This is a Public Information Act (PIA) case in which the Texas Supreme Court held the PIA must yield to protecting information that, if released, would create a substantial threat of physical harm to the source’s employees and others.

The Levin plaintiffs (Levin) represent capital defendants on death row. Concerned with the possibility of mismanaged executions by lethal injection, Levin made a PIA request of the Department, which included a list of drugs used for lethal injections and their source. The Department did not release the specific identity of the pharmacy or pharmacist that compounded the drugs (i.e., “source”) and requested an Attorney-General opinion. The AG agreed with the Department that the PIA has a common-law exception where release would create a substantial risk of harm. Levin appealed. While on appeal, the Legislature amended the PIA to create a statutory exception for the source of drugs used for executions.

In prior court and AG opinions, a threat to a specific party was required in order to take advantage of the common-law exception. Here, no one but the Department and the pharmacy itself knows the identity of the source that supplies the lethal injection drugs to the State of Texas. There is no evidence of a history of specific threats to that particular pharmacist or pharmacy, because the source’s identity has been kept confidential. The Court noted, however, that the word “substantial” as used in prior opinions does not refer to the degree to which harm is likely to occur, but rather, the degree of the potential threat of harm itself. Courts should focus on the connection between the requested information, on the one hand, and the potential threat and magnitude of such harm, on the other. The Court found, based on the summary judgment evidence, that the Department properly established release of the information potentially would create substantial physical harm which does not currently focus on an identified person, including evidence of what happened to other pharmacies when release of similar information became public. (Note: some but not all of the evidence was considered relevant). As a result, the Department must withhold the information requested.

If you wish to read this opinion, click here. Justice Green delivered the opinion of the Court. The docket page with the attorney information is found here.

13th Court of Appeals holds building and standards commission order was final, so could not be collaterally attacked under TOMA

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Harker Heights Condominiums, LLC v. City of Harker Heights, Texas, 13-17-00234-CV (Tex. App. – Corpus Christi, March 28, 2019).

In this case the 13th Court of Appeals affirmed the granting of the City of Harker Heights’ plea to the jurisdiction dismissing a claim for injunctive relief to prevent the demolition of a building.

Harker Heights Condominiums (HHC) owns property on which thirty-three condominium units sit and that are leased to low income residents in need of housing. The City inspected the property, found defects and ordered repair.  The inspector found substandard conditions rising to such a level as to pose substantial danger to life, health and property.  The City’s Building and Standards Commission ordered certain properties repaired within ninety days or be demolished. HHC was able to bring one unit up to code, but was not able to timely repair the remaining units. After the City awarded a demolition contract, HHC sued to prevent destruction of the units. An initial temporary injunction was granted. After HHC added a claim for violating the Texas Open Meetings Act (TOMA) the City filed a plea to the jurisdiction which was granted. HHC appealed.

Texas law permits municipalities to establish commissions to consider violations of ordinances related to public safety. The local government code provides for judicial review of any decision of a building and standards commission panel, but the “district court’s review shall be limited to a hearing under the substantial evidence rule.” To appeal an order of a building and standards commission, an aggrieved party must file a verified petition in district court within thirty days of the commission’s order.  HHC waited eighty days. HHC asserted the “decision” was actually the City Council decision to award the demolition contract, not the Commission’s decision. However, the City’s award was merely the granting of a contract, not an order outlined in Chapter 214 of the Local Government Code. The court noted that even if the HHC injunctive relief were interpreted to be a proper petition for review under Chapter 214, it was nonetheless untimely. This untimely filing also means HHC’s TOMA suit is untimely as holding otherwise would subject the commission order to impermissible collateral attack. The plea was properly granted.

If you would like to read this opinion click here. Panel consists of Chief Justice Contreras, Justice Hinojosa and Visiting Judge Dorsey. Memorandum Opinion by Visiting Judge Dorsey. The attorneys listed for the City are Charles D. Olson, Charles Alfred Mackenzie and Burk A. Roberts.  The attorneys listed for HHC are Brandy Wingate Voss,  Ryan D. V. Greene and  G. Alan Waldrop.

Texas Supreme Court holds Type B economic development corporations are not entitled to immunity for breach of contract claims

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Rosenberg Development Corp. v. Imperial Performing Arts, Inc., No. 17-0660 (Tex. – March 9, 2019).

The Texas Supreme Court holds Type -B EDCs are not entitled to governmental immunity in breach of contract cases.

Rosenberg Development Corporation (RDC) is a Type B economic development corporation created by the City of Rosenberg. RDC executed a contract with Imperial Performing Arts, Inc. (Imperial), a nonprofit organization for performance and visual art activities, including reopening a local arts center and theater. However, the reopening and renovations exceed the agreed amounts by over ten fold. RDC and Imperial filed suit and counterclaims. The immunity issue addressed the breach of contract claims. RDC filed a plea to the jurisdiction, which was denied as to Imperial’s contract claim, and was affirmed by the court of appeals. RDC filed for discretionary review.

The threshold issue for the Court was whether RDC—a municipality’s statutorily authorized corporate creation—is immune from suit under the common law even though RDC is neither a sovereign entity nor a political subdivision of the state. The Development Corporation Act (Title 12, Subtitle C1 of the Local Government Code) authorizes municipalities to create such EDC corporations. The Court analyzed the Act, its purpose, and its language. The Court noted that for the purpose of interlocutory appeals, the RDC qualifies given the specific definition in the Texas Tort Claims Act.  The Court then noted the Development Corporation Act does not speak to governmental immunity directly, but in §505.106, the Legislature has declared that (1) a Type B corporation is “not liable for damages arising from the performance of a governmental function of a Type B corporation or the authorizing municipality,” and (2) “[f]or purposes of Chapter 101, Civil Practice and Remedies Code, a Type B corporation is a governmental unit and the corporation’s actions are governmental functions.” Notably, however, an economic development corporation “is not a political subdivision or a political corporation for purposes of the laws of this state …” and the Legislature has forbidden authorizing municipalities from bestowing on the corporation any “attributes of sovereignty.”   As to the RDC’s argument it obtains statutory immunity from suit and liability, the Court held “[b]ecause section 505.106 merely purports to limit the remedies available when economic development corporations perform governmental functions, we need not consider whether the Legislature can confer immunity by statute or only waive it.”  Where the governing statutory authority demonstrates legislative intent to grant an entity the “nature, purposes, and powers” of an “arm of the State government,” that entity is a government unit unto itself and is entitled to assert immunity in its own right. The Court analyzed cases where governmental self-insurance risk pools have been determined to be governmental entities and determined what is required to qualify as a governmental unit unto itself. While promoting and developing business enterprises and job training is a public purpose merely engaging in such an act does not, ipso facto, make the actor a governmental unit. The common-law rule of immunity is exclusively for the judiciary to define, and in doing so, the Court does not just consider whether the entity performs governmental functions, but also the “nature and purposes of immunity.” Granting immunity to an EDC is not necessary to satisfy the political, pecuniary, and pragmatic policies underlying our immunity doctrines. Further, the Legislature simply did not grant these entities “powers of government” to perform essential governmental functions or activities. Also, since the Act already limits liability and damage’s exposure, the fiscal analysis used to determine if an entity is governmental is not applicable. Ultimately, the Court held “that the Legislature did not authorize municipalities to create economic development corporations as distinct governmental entities entitled to assert immunity in their own right.”

Chief Justice Hecht wrote separately only to point out the highly unusual features of a Type B municipally-created economic development corporation. While he agreed an EDC is not a governmental unit by itself, an EDC is not liable for damages arising from the performance of its governmental functions for purposes of the Texas Tort Claims Act. Since the TTCA only waives immunity, he opines an EDC has immunity from suit and liability for tort claims. In dicta, the Chief Justice noted that since an EDC’s expenditures must be approved by its municipality, a judgment against an EDC in any circumstance may not be enforceable.

If you would like to read this opinion click here. Justice Guzman delivered the opinion of the court.  Chief Justice Hecht filed a concurring opinion, found here.  The docket page with attorney information can be found here.

Texas Supreme Court holds specific performance is available remedy under waiver of immunity for certain contracts

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Hays Street Bridge Restoration Group v City of San Antonio, 17-0423 (Tex. March 15, 2019)

This is a breach of contract case where the Texas Supreme Court held the waiver of immunity found in TEX. LOC. GOV’T CODE §§ 271.151–.160 (as it existed at the time the contract was executed) also applied to specific performance.

The Hays Street Bridge is a historic cultural landmark in San Antonio. In the 1980s, when the City closed the bridge and Union Pacific Railroad sought to demolish it, a group of citizens formed the restoration group to save the bridge. The City obtained a $2.89 million federal grant administered by the Texas Department of Transportation to fund restoration and the Restoration Group promised, through an MOU, to match any funds for restoration. Over the next decade, the Restoration Group raised and transferred to the City more than $189,000 in cash and arranged for significant in-kind donations.  However, in 2012, it adopted an ordinance authorizing the sale of the property to Alamo Beer Company as part of an economic-incentive package. The Restoration Group sued, alleging the transfer would breach the City’s promise in the MOU to use the funds for repair of the bridge. For its breach of contract claim, the Restoration Group sought only specific performance.  The trial court ordered specific performance, but the court of appeals reversed, holding the City was immune. The Texas Supreme Court granted review.

The Court, citing to its recent holding in Wasson Interests v City of Jacksonville (Wasson II), held the MOU was of a governmental nature and not proprietary. The MOU was made to support the City–State funding agreement for restoration of the bridge and revitalization of the surrounding area. Under the Wasson II four-part test, only the first factor (mandatory v discretionary) leans toward proprietary. As a result, the City maintains immunity unless waived. Section 271.152 of the Local Government Code “waives” the City’s immunity, but that waiver is limited by the provisions found in other portions of the Act. Section 271.153 limits damages, not remedies. Damages equates to money, and specific performance equates to equitable remedies. Since the waiver is not limited by §271.153 on the subject of specific performance, such relief is a remedy encompassed within the waiver.

If you would like to read this opinion, click here.  Opinion by Chief Justice Hecht.

City Manager’s change to policy manual is not a unilateral employment contract says Texas Supreme Court

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City of Denton v Brian Rushing, et al, 17-0336 (Tex. March 15, 2019)

This is an interlocutory appeal from an order denying a plea to the jurisdiction in a breach of contract case. The Texas Supreme Court reversed the denial and dismissed the case.

Rushing, Patterson and Marshall were employees of the Denton Utilities Department. All three worked uncompensated on-call shifts between 2011 and 2015. Policy 106.06 of the City’s Policies and Procedures Manual defines the rights and responsibilities of an on-call employee.  On-call time was listed as uncompensated.  In 2013, the City Manager modified Policy 106.06 and defined an explicit pay schedule for on-call time. These amendments were not approved by the City Council.  Rushing and the others sued the City, asserting Policy 106.06 was a unilateral contract and that they were entitled to payment of on-call time dating back to 2011.  The Court of Appeals held the City Manager’s policy adjustments equated to a unilateral contract, and immunity is waived under §271.152. The Texas Supreme Court granted review.

The Court first held interpreting Policy 106.06 to be a unilateral contract regarding Rushing’s employment conflicts with the disclaimer in the manual that nothing in the manual “ in any way” constitutes terms of a contract of employment.  Further, Policy 106.06 is a provision of a policies and procedures manual and not an ordinance adoption of a contract. Although city ordinances may create enforceable contracts, the Court held it has not previously determined that a municipality’s policies and procedures manual can create an enforceable contract. The Court reversed and rendered a decision for the City.

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