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

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

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

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

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

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

Copyright infringement does not qualify as a constitutional taking says Texas Supreme Court

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Jim Olive Photograph, D/B/A Photolive, Ince v University of Houston System, 19-0605 (Tex. June 18, 2021)

The Texas Supreme Court held that a governmental entity’s infringement on a copyright does not qualify as a taking under the federal or state constitution.

Jim Olive Photography d/b/a Photolive, Inc. (Olive) is a professional photographer who took a series of aerial photographs of the City of Houston in 2005 and displayed them on his website for purchase. Such photos were registered with the United States Copyright Office.  Olive asserts the University of Houston (“University”) downloaded a copy and removed all identifying copyright and attribution material and began displaying the photographic image on several web pages.  Olive sued the University for a taking without compensation. The University filed a plea to the jurisdiction which was denied. The University appealed. The court of appeals disagreed and dismissed Olive’s claims. Olive appealed.

A copyright is a form of intellectual property that subsists in works of authorship that are original and are fixed in a tangible medium of expression. For a term consisting of the author’s life plus seventy years, the owner of a copyright enjoys the five exclusive rights of reproduction, adaptation, distribution, and public performance and display. The Court assumed, without deciding, that a copyright is a protected property interest. However, a compensable taking does not arise whenever state action adversely affects private property interests. Governments interfere with private property rights every day. Some of those intrusions are compensable; most are not. “A taking is the acquisition, damage, or destruction of property via physical or regulatory means.” To determine whether a physical or regulatory interference with property constitutes a taking, a court ordinarily undertakes a “situation-specific factual inquiry.” Property is the bundle of rights that describe one’s relationship to a thing and not the thing itself. Infringement of a copyright, however, is different than a typical appropriation of tangible property where rights are more closely bound to the physical thing. An act of copyright infringement by the government does not take possession or control of, or occupy, the copyright. The government’s violation of the copyright owner’s rights does not destroy the right or property. The Copyright Act provides that no action by a governmental body to seize or appropriate such ownership shall be given any effect under the Act. Similarly, the government’s unauthorized use of a copy of the copyrighted work is not an “actual taking of possession and control” of the copyright. Copyright infringement not only lacks the key features of a per se taking; it also does not implicate the reasons for creating a per se rule in the first place. Although the Texas Constitution waives governmental immunity with respect to inverse condemnation claims, such a claim must still be “predicated on a viable allegation of taking.” Allegations of copyright infringement assert a violation of the owner’s copyright, but not its confiscation, and therefore factual allegations of an infringement do not alone allege a taking. The plea should have been granted.

The concurring opinion focused more on the need to be flexible with a broad range of harm to property. However, the concurring justices agreed that copyright infringement was too far outside the protection.

If you would like to read this opinion click here. JUSTICE DEVINE delivered the opinion of the Court. JUSTICE BUSBY filed a concurring opinion (found here) in which JUSTICE LEHRMANN joined and in which JUSTICE BLACKLOCK joined as to part II.

Texas Supreme Court holds historic preservation ordinance is not “zoning” but must still comply with certain Chapter 211 requirements

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Powell, et al., v City of Houston, 19-0689 (Tex. June 4, 2021)

The Texas Supreme Court determined that Houston’s Historic Preservation Ordinance was not a zoning ordinance and therefore the zoning restrictions under state law do not apply. However, certain provisions of Chapter 211 of the Texas Local Government Code still apply to the ordinance.

The Houston City Council adopted a Historic Preservation ordinance which required owners of properties in those districts to seek approval from the Houston Archaeological and Historical Commission before modifying or developing their property. The City originally had a waiver provision, but it was removed in 2010 and instead adopted a procedure allowing a neighborhood to seek reconsideration of a designation. Several property owners brought this suit seeking a declaratory judgment that the Ordinance is void and unenforceable because it violated the City Charter’s limits on zoning and it does not comply with certain provisions of Chapter 211 of the Local Government Code. The trial court ruled for the City after a bench trial. The owners appealed arguing the ordinance is a zoning regulation, but the court of appeals disagreed and affirmed the trial court’s order.

The Houston City Charter does not prohibit the City from zoning altogether, but it limits the City’s power to adopt a zoning ordinance by requiring six months’ notice of any proposed ordinance and voter approval in a binding referendum. Zoning regulations have numerous characteristics, and given the prevalence of zoning ordinances, not all of these characteristics are always present. However, generally, a zoning ordinance is defined as a city ordinance that regulates the use to which land within various parts of the city may be put. It also allocates uses to the various districts of a municipality, as by allocating residences to certain parts and businesses to other parts, but more on a comprehensive basis throughout the entire city. Conversely a “historic preservation” is the effort to conserve, preserve, and protect artifacts and developed places, including structures and landscapes, of historical significance, and does not fall under traditional zoning categories. The Court analyzed various aspects of zoning and definitions, historically and determined the ordinance was not a zoning ordinance. For example, the ordinance impacts a site by requiring alterations and additions to a building to remain compatible with the building’s own existing height, size, and location, and with that of the rest of the district. Because each building is regulated according to its own features or the features of nearby buildings, there is no uniform standardization of height, bulk, and placement across the district as in traditional zoning laws. In sum, the Ordinance does not regulate the purposes for which land can be used, lacks geographic comprehensiveness, impacts each site differently in order to preserve and ensure the historic character of building exteriors, and does not adopt the enforcement and penalty provisions characteristic of a zoning ordinance. Therefore, it is not zoning.

However, Chapter 211 of the Local Government Code subjects regulations that would not traditionally be considered zoning to certain procedural requirements, such as regulation of structures in historically significant areas and certain pumping and use of groundwater. The fact Chapter 211 applies to this type of regulation does not mean it qualifies as zoning. However, even though Chapter 211 applies, the owners failed to establish that the City did not comply with the requirements.  For example, the ordinance actually qualifies, by itself, as a comprehensive plan for its intended purpose. As a result, the court of appeals order is affirmed.

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

Fort Worth Court of Appeals holds oral pronouncements from bench cannot be considered when appealing a written order granting Town’s plea to the jurisdiction

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John Artuso v. Town of Trophy Club, Texas, 02-20-00377-CV, (Tex. App – Fort Worth, May 13, 2021)

This is a negligence, taking,  and declaratory judgment action where the Fort Worth Court of Appeals affirmed the granting of the Town’s plea to the jurisdiction.

Plaintiff Artuso sued the Town of Trophy Club for negligence and gross negligence with regard to his home’s placement in the Town’s Public Improvement District No. 1 (PID) and the special assessments imposed in the district. Artuso asserted he timely paid all assessments and even overpaid. He requested the Town credit his account for previously over-assessed amounts, which he characterized as a taking. He claimed that the manner in which the Town apportioned the PID costs was arbitrary and capricious, amounting to a violation of his due process rights, and he complained that the Town had not responded to his assessment-reduction petition. The Town filed two pleas to the jurisdiction, which were granted. Artuso appealed.

Artuso’s argument that the trial court’s oral statements about the grounds for granting the plea were improper. The trial court’s signed order listed no grounds.  The appellate court asserted it could not look to the oral statements in the record, only to the wording of the actual written order. By applying this policy, the courts and parties are relieved of the obligation to “parse statements made in letters to the parties, at hearings on motions for summary judgment, on docket notations, and/or in other places in the record.” Because Artuso has failed to challenge all of the grounds upon which the Town’s motion could have been granted, and failed to brief all grounds, the court of appeals affirmed the granting of the dispositive motions.

If you would like to read this opinion click here. Panel consists of Chief Justice Sudderth, and Justices Kerr and Womack. Memorandum Opinion by Chief Justice Sudderth. Docket page with attorney information found here.

Eastland Court of Appeals holds City failed to obtain ruling on special exceptions, therefore it could not complain about a lack of factual specificity in the pleadings within its plea to the jurisdiction

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City of Odessa, Texas v. AIM Media Texas, LLC d/b/a The Odessa American, 11-20-00229-CV  (Tex. App. – Eastland, May 13, 2021).

This is a Public Information Act (“PIA”) case where the Eastland Court of Appeals held the Plaintiff had properly fallen under the jurisdiction of the PIA.

AIM Media, a newspaper company, sued the City for mandamus under the PIA asserting the City failed to timely provide the information requested and improperly redacted information. The City asserted it provided all information and that AIM Media plead conclusory allegations only, with no facts. The City asserts it filed special exceptions to the bare pleadings then filed a plea to the jurisdiction, which was denied. The City appealed.

The court noted the City challenged the pleadings only, so the pleadings were taken as true for purposes of the plea. The PIA allows a requestor to sue for mandamus.  While the court appeared to acknowledge that a lack of factual allegations can be grounds for a plea, the court held the City failed to obtain a ruling on their special exceptions. As a result, whether the special exceptions properly put AIM Media on notice of any jurisdictional defects was not before the court. Taking the pleadings as true, the court held AIM Media pled the minimum jurisdictional requirements.  The plea was therefore properly denied.

If you would like to read this opinion click here. Panel consists of Chief Justice Bailey, Justice Trotter and Justice Williams. Opinion by Chief Justice Bailey.

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

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

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

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

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

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

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

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

San Antonio Court of Appeals holds City’s “Paid Sick Leave” ordinance was preempted by state law

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Washington et al. v. Associated Builders & Contractors of South Texas, Inc., et al., 04-20-00004-CV (Tex. App.—San Antonio, March 10, 2021).

In this case, the Fourth Court of Appeals considered the legality of San Antonio’s paid sick leave (PSL) ordinance. The Court held the PSL ordinance was unconstitutional because it established a minimum wage and is inconsistent with Texas Minimum Wage Act (TMWA).

In 2018, various advocacy groups and non-profits initiated a petition to adopt what was labeled the “Paid Sick Leave Ordinance.”  One of the most critical components of the PSL ordinance was that it would require many San Antonio employers to provide paid leave to their employees for sick days, doctor appointments, and for other specifically enumerated reasons.  Under the ordinance, a business’s failure to comply with the provision of paid time off could result in fines.   Instead of sending the ordinance to the electorate under the city charter, the City Council decided to adopt the PSL ordinance verbatim as submitted in the petition. In response, multiple businesses and business associations sought and obtained temporary and permanent injunctions to prevent its enforcement.  The City appealed.

While there were numerous claims asserted the court’s primary focus was to analyze whether the PSL ordinance established a minimum wage, thereby causing the ordinance to be preempted by the TMWA and/or unconstitutional.  The court’s decision turned on whether paid sick leave constitutes a “wage” under the TMWA. The court relied on dictionary definitions and the common meaning of words within the ordinance.  Ultimately, the court held the PSL ordinance was in fact a “wage” and wage regulations are governed by the TMWA. The ordinance was therefore preempted.

If you would like to read this opinion, click here. Opinion by Justice Alvarez. Panel consists of Justices Alvarez, Rios, and Watkins. For more information on San Antonio’s Sick & Safe Leave ordinance and other related items, click here.

 

Amarillo Court of Appeals holds Texas Attorney General immune from County’s claims regarding conceal handgun signs

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Ken Paxton, Texas Attorney General v. Waller County Texas; et al, 07-20-00297-CV, (Tex. App – Amarillo, March 4, 2021)

This is a conceal/carry notice case where the Amarillo Court of Appeals reversed the denial of the Texas Attorney General’s plea to the jurisdiction and dismissed the case.

The Waller County Courthouse has a sign noting a person cannot carry any weapons, including knives and guns, in the courthouse. Section 411.209 of the Government Code prohibits a political subdivision from posting notices barring entry to armed concealed-handgun license holders unless entry is barred by statute.  Terry Holcomb filed a complaint with the County regarding the sign. The County did not remove the sign and instead sued the Texas Attorney General seeking a declaration the signs do not violate §411.209, which was resolved in a prior case. Separate from the declaratory judgment action, the Texas Attorney General brought a mandamus action against Willer County and various county officials. Waller County filed counterclaims seeking declarations. The AG filed a plea to the jurisdiction as to the counterclaims which was denied. The AG appealed.

The Uniform Declaratory Judgments Act (“UDJA”) is not a grant of jurisdiction, but rather is a procedural device for deciding cases already within a court’s jurisdiction. The UDJA does not allow “interpretation” claims against a governmental entity or official.  The County’s counterclaims seek interpretation of §411.209, not its invalidation. The UDJA does not waive sovereign immunity for “bare statutory construction” claims. To sue the AG for ultra vires claims, the AG must not be exercising his discretion. Because the AG has discretion to bring or not bring an enforcement claim, no ultra vires action is possible.  Section 411.209 of the Government Code authorizes the Attorney General to investigate alleged violations of the statute and decide whether further legal action is warranted. When an official is granted discretion to interpret the law, an act is not ultra vires merely because it is erroneous; “[o]nly when these improvident actions are unauthorized does an official shed the cloak of the sovereign and act ultra vires.” As a result, the counterclaims should be dismissed.

If you would like to read this opinion click here. Panel consists of Chief Justice Quinn, and Justice Pirtle and Parker. Reversed and Remanded to Trial Court. Opinion by Justice Parker. Docket page with attorney information found here.

Dallas Court of Appeals holds Plaintiffs failed to challenge all grounds on which dismissal could have been granted; therefore dismissal is affirmed

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Chris Carter and Karen Pieroni v. Dallas City Plan Commission and City of Dallas, 05-20-00190-CV, (Tex. App – Dallas, March 1, 2021)

This is a Confederate monument case where the Dallas Court of Appeals affirmed the granting of the City’s plea to the jurisdiction.

After a Confederate monument was originally scheduled for removal from a City cemetery, Plaintiffs brought suit to prevent its destruction. Through asserted the City violated its own codes, violated the Texas Open Meetings Act, the Texas Monument Protection Act and a few others. The City filed a plea to the jurisdiction, which was granted, except to claims under the Texas Antiquities Act. Plaintiffs appealed after non-suiting the remaining claim.

No judgment may be reversed on appeal unless the error complained of probably caused rendition of an improper judgment. TEX. R. APP. P. 44.1(a)(1). To appeal, an appellant must challenge each independent ground asserted in the plea. The City asserted three grounds in its plea to the jurisdiction: standing, governmental immunity, and the political question doctrine. The political question doctrine is not necessarily a component of or necessarily entwined with either of the other two grounds. Plaintiffs challenged standing and immunity, but not the political question doctrine. Because the Plaintiffs did not challenge each independent, standalone ground on which the dismissal of their claims could properly have been based, the court affirmed the granting of the plea.

If you would like to read this opinion click here. Panel consists of Justices Myers, Osborne, and Carlyle. Memorandum Opinion by Justice Carlyle. Docket page with attorney information found here.

13th Court of Appeals holds remainder of employment contract was consequential damages, not amounts due and owed, therefore no waiver of immunity exists for breach

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Edinburg Housing Authority, Dr. Martin Castillo, Gabriel Salinas, Simon Garza, Marissa Chavana, and Juan Guzman v. Rodolfo Ramirez, 13-19-00269-CV, (Tex. App – Corpus Christi Feb. 25, 2021)

This is an interlocutory appeal from the denial of a housing authority’s motion to dismiss on jurisdictional grounds in an employment dispute. The Corpus Christi Court of Appeals reversed the denial and dismissed the case.

Ramirez signed a three-year employment contract with the Housing Authority to be its Executive Director and was extended for another three years, to end in 2021. However, in 2018 the board of the housing authority terminated Ramirez. Ramirez sued the Authority as well as individual commissioners (hereinafter “Authority Defendants”) for breach of contract, as well as constitutional due course of law, equal protection, and declaratory judgment relief. The Authority Defendants filed a motion to dismiss under Rule 91a citing a lack of jurisdiction. The trial court denied the motion and the Authority Defendants appealed.

The court first decided that, contrary to the individual commissioner’s assertion, the court did have interlocutory jurisdiction to hear the appeal involving them individually as well as in their official capacities. Section 51.014(a)(5) of the Texas Civil Practice & Remedies Code allows interlocutory appeal for the denial of a motion for summary judgment based on an individual’s immunity.  While the underlying motion was a motion to dismiss as opposed to an MSJ, the court determined they are treated the same for purposes of §51.014(a)(5). Next, suits brought pursuant to a Texas constitutional provision are limited to equitable relief and do not allow a claim for monetary damage.  This applies to the entity as well as individual employees and officials. Ramirez’s constitutional claims should have been dismissed because they sought only the recovery of monetary damages. Next, to trigger the waiver of immunity for contract claims under Tex. Loc. Gov’t Code § 271.152, a plaintiff must claim damages within the limitations of the chapter, i.e. balances due and owed, but not paid. Consequential damages are specifically excluded. Ramirez does not claim that the Housing Authority and its Commissioners failed to pay him for work he completed as the Housing Authority’s Executive Director. Rather, Ramirez seeks recovery of the wages he would have earned had his employment contract continued through the end of its extended term. These future wages would be considered “lost profits,” which are “consequential damages excluded from recovery.”  As a result, no jurisdiction exists as to the contract claim. The court then determined Ramirez’s constitutional claims against the commissioners, individually, cannot be brought against them as private actors. Because the individual commissioners are not the State or an entity thereof, these claims cannot stand. Further, Ramirez signed a contract with the Authority, not the individual commissioners. As a result, the commissioners cannot be individually sued for breach of contract. Finally, Ramirez had the opportunity to amend and failed to correct any defects. As a result, he is not entitled to amend.  Finally, the court determined the Authority Defendants were entitled to attorney’s fees and remanded to the trial court for such a determination.

If you would like to read this opinion click here. Panel consists of Chief Justice Contreras, and Justices Hinojosa and Silva. Reversed and remanded. Opinion by Justice Hinojosa. Docket page with attorney information found here.

Dallas Court of Appeals holds City waived immunity in lease agreement for use of soccer fields in exchange for upgrades and maintenance

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City of McKinney, Texas v. KLA International Sports Management, LLC, 05-20-00659-CV, (Tex. App – Dallas, Feb. 4, 2021)

This is a contractual immunity case where the Dallas Court of Appeals held the City’s immunity was waived.

KLA, a private sports management company and the City signed a non-exclusive revocable license agreement on December 18, 2018, giving KLA “recreational use” of three fields at the city-owned park. By an amendment, KLA agreed to replace two existing artificial turf soccer fields (Fields 1 and 2) and rehabilitate a grass field. The work, once commenced, was required to be completed within 180 days.  In exchange, the City granted KLA a priority 30-year license entitling it to use the improved fields for only soccer practice and soccer games in accordance with an agreed annual use calendar.  The City later issued a notice of default to KLA, alleging construction and timeliness deficiencies and other breaches. Ultimately the City terminated the contract under a theory of breach. KLA sued the City for breach of contract seeking specific performance, damages, attorney’s fees, and injunctive relief. The City filed a plea to the jurisdiction, which was denied. The City appealed.

The court first stated the standards from Wasson II relating to the governmental/proprietary dichotomy does not apply if the function is listed as governmental in a statute. The court determined the City’s license contract constituted a governmental function.  Section 271.152 of the Texas Local Government Code provides a “limited waiver of immunity for local governmental entities that enter into certain contracts.” Chapter 271 does not define “services,” but the Texas Supreme Court has interpreted the term in this context as “broad enough to encompass a wide array of activities.” The agreement to provide services need not be the primary purpose of the agreement. “When a party has no right under a contract to receive services, the mere fact that it may receive services as a result of the contract is insufficient to invoke chapter 271’s waiver of immunity.” However, the license here required KLA to (1) improve or rehabilitate the three fields to a standard that reasonably equated to a FIFA-certified playing surface using industry-standard components and materials from a FIFA-approved turf manufacturer and (2) to provide year-round maintenance services on those fields. Thus, the City’s license agreement provided for both goods and services and provided more than indirect benefits to the City. The City need not pay currency in order to constitute proper consideration. Improving, rehabilitating, and maintaining the soccer fields was proper consideration for nonexclusive use of the fields and satisfies the requirements of Chapter 271.  The plea was properly denied.

If you would like to read this opinion click here. Panel consists of Justices Molberk, Reichek, and Nowell. Affirmed. Opinion by Justice Reichek. Docket page with attorney information found here.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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