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. 

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.

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.

Dallas Court of Appeals holds trial court had jurisdiction for BOA appeal only, but no monetary or constitutional claims could survive the board’s plea

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City of Dallas, et al v. PDT Holdings, Inc., et al. 05-21-00018-CV  (Tex. App. – Dallas, August 24, 2021).

This is an appeal from a board of adjustment decision where the Dallas Court of Appeals reversed in part and affirmed in part.

PDT Holdings, Inc (“PDT”) applied for a permit from the City to build a duplex on its property in Dallas.  PDT submitted building plans, which were approved and began construction. However, a City inspector cited PDT and issued a stop work order on the grounds that the structure did not comply with the thirty-six-foot height restriction. PDT adjusted the plans down to 36 feet, but was then told the actual height restriction was twenty-six feet due to the residential proximity slope (RPS) ordinance after it had completed 90% of the construction.  PDT sought a variance for the height restriction (three story duplex) but the variance was denied by the board of adjustment (“BOA”).  PDT appealed to district court but also sought a variety of monetary damages caused to the project. The matter was temporarily abated by agreement and the parties resubmitted to the BOA (with all new members), which again denied the request. The BOA filed a plea to the jurisdiction which was denied. The BOA appealed.

A district court has subject matter jurisdiction only to decide whether the Board’s decision was illegal under section 211.011.  The BOA argued the original appeal to district court was timely but attempted to assert PDT had to appeal the 2nd denial and failed to do so. The Board cites no authority for this requirement other than the general requirement that a petition for writ of certiorari must be filed within ten days of the Board’s decision. The court held the second BOA decision did not change the substance of the controversy between the parties or the issues before the trial court.  Further, nothing demonstrates the trial court lost jurisdiction over the first decision, over which it would still be allowed to proceed. As a result, the trial court properly denied the plea as to the illegality question only. The court next held that it must evaluate jurisdiction based on each claim. PDT did not specify what cause of action entitled it to recover damages or cite express authority waiving governmental immunity for recovery of damages. The plain language of section 211.011(f) does not authorize an award of damages. Further, there is no implied right of action to recover money damages for violation of the due course-of-law provision of the Texas Constitution. The Texas Constitution authorizes suits for equitable or injunctive relief only. But this limited waiver of immunity exists only to the extent the plaintiff has pleaded a viable constitutional claim. The court agreed with the BOA that PDT  does not have a vested property right in obtaining a variance from the RPS ordinance.  The mere existence of a building permit does not render an ordinance unenforceable. A person does not acquire a vested right in a building permit issued in violation of an ordinance. Here, jurisdiction exists for judicial review of the Board’s decision under section 211.011 only. The plea should have been granted for all other claims.

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

Fourth Court of Appeals holds plaintiff suing for BOA decision must be given opportunity to replead to show timing of when the BOA decision was filed in board’s offices

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Alpha Securities, LLC, v City of Fredericksburg, 04-20-00447-CV (Tex. App. – San Antonio, Aug. 10, 2021, no pet h.).

This is a board of adjustment appeal and declaratory judgment action where the San Antonio Court of Appeals agreed no jurisdiction existed, but remanded to provide the Plaintiff the opportunity to replead.

Alpha Securities purchased real property in Fredericksburg’s historical district. It sought a variance to expand its doors so the building could be used for commercial uses. The historic district’s review board approved the expansion of one door, but not the other on Milam St.  As a result, Alpha Securities was unable to obtain a Certificate of Occupancy, water and electrical services. Alpha Securities appealed the determination to the City’s Board of Adjustment (BOA), and the BOA denied relief. Alpha sued the City, which filed a plea to the jurisdiction. The trial court granted the plea and Alpha appealed.

Alpha’s first argument, that the City did not timely seek a ruling on the plea, was overruled. Subject matter jurisdiction cannot be waived, and courts cannot acquire subject matter jurisdiction by estoppel.  Alpha attempted to bring ultra vires claims but did not include any specific officials. Such claims were properly denied. To the extent Alpha Securities intended to establish that the review board and BOA violated the law, including its constitutional rights, the UDJA does not waive the City’s governmental immunity.  Next, the court analyzed the timeliness of the appeal. The appeal clock does not start to run at the time of the BOA decision- rather when the BOA’s decision “is filed in the board’s office.” The pleadings do not establish the date when the BOA’s decision was filed in the board’s office. Because Alpha Securities’ pleadings are insufficient to establish jurisdiction but do not affirmatively demonstrate an incurable defect, the trial court should have given Alpha the opportunity to replead. [Comment: this appears to require pleadings to affirmatively list the specific dates for deadline compliance in order to establish jurisdiction].  The City asserts Alpha repled three times and should not be allowed to do so again. However, the Fourth Court determined that was inconsequential in this case. If the trial court determines the plea is meritorious and the pleadings are deficient, the plaintiff must then be given a reasonable opportunity to amend the pleadings to cure the jurisdictional defects. As a result, the case was remanded.

If you would like to read this opinion click here. Panel consists of Justices Chapa, Rios, and Rodriguez. Memorandum opinion by Justice Rodriguez.

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.

Property owner failed to allege Ch. 211 or 245 claims for zoning change; failure-to-exhaust-remedies bar applied to inverse-condemnation claim

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City of Dickinson v Stefan, 14-18-00778-CV, (Tex. App. – Houston [14th Dis.], Oct. 27, 2020)

Stefan operated his home computer business in a residential zone, but allowed his church group to host events, including weddings on the property.  The City changed later changed the zoning code and created a registration process for non-conforming uses. The registration allows a property owner to continue the same nonconforming use after the City adopted the change but the owner cannot expand the nonconforming use. Stefan registered his home computer business but did not list any church activities. Stefan did not write “events,” “wedding venue,” “event center,” or anything else that would indicate he had been using the Property for events.  Neither party produced evidence the City approved the request. Stefan was later cited for operating a special event center against the zoning code without a special use permit. Stefan appealed to the Board of Appeals, which denied his request to operate special events. Stefan then sued the City for declaratory relief claimed inverse-condemnation.  The city filed a plea to the jurisdiction, which was denied. The City appealed.

The Court first held that Stefan failed to allege a vested right determination under chapter 245 or a board of adjustment appeal under chapter 211 of the Texas Local Government Code. The operation of an ongoing business is not a “project” within the meaning of chapter 245. Rights to which a permit applicant is entitled under chapter 245 accrue on the filing of an original application or plan for development or plat application that gives the regulatory agency fair notice of the project and the nature of the permit sought.  Stefan’s pleadings do not mention chapter 245 or a vested right. Stefan does not cite § 211.011 or seek a writ of certiorari for a BOA appeal. He sued the City, not the BOA. As a result, he failed to seek judicial review of the BOA decision. The City challenged jurisdiction for the declaratory judgment and takings claims for failure to timely appeal the City Board of Adjustment determination and that Stefan did not exhaust his administrative remedies regarding nonconforming uses. Even under a liberal construction of the pleadings, the court cannot create a claim Stefan’s pleading did not contain, and it could not conclude that Stefan sought judicial review of the BOA decision under chapter 211. The exhaustion-of-administrative-remedies rule requires that a plaintiff pursue all available remedies within the administrative process before seeking judicial relief. Chapter  211 must be exhausted before a party may seek judicial review of a determination made by an administrative official. As a result, the trial court lacked jurisdiction over his declaratory claims and inverse-condemnation claims.

The concurrence believed Stefan’s failure to allege 211 should not preclude consideration, but then held Stefan abandoned that consideration in his briefing.

If you would like to read this opinion click here. Panel consists of Chief Justice Frost and Justices Wise and Hassan (Hassan, J. concurring – opinion found here).

Fort Worth Court of Appeals analyzes the law-of-the-case doctrine and determines private property owners did not establish claims against a city regarding fee simple land ownership

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City of Mansfield, et al., v Saverings, et al, 02-19-00174-CV (Tex. App. – Fort Worth, July 16, 2020)

In this lengthy opinion, the Fort Worth Court of Appeals holds certain private property owners did not establish a right to declaratory relief regarding fee-simple ownership of lots over which the City exercised some regulatory control, asserting they were public paths.

A developer filed a final plat in Tarrant County, creating a planned housing development—The Arbors of Creekwood – Gated Community (the Development) located in the City, but which had two HOAs. An amended plat divided the lots into R1 and R2 lots. All R2 lots were in the floodplain, which was governed by City ordinance. The developer created a lake and connected jogging paths ending at the lake. The developer testified the paths were for public use.  The boundary line for the R2 lots abutting the lake was to the north of the lake; thus, the lake was not included within the boundaries of these R2 lots. The developer executed a declaration of covenants, conditions, and restrictions (the Declaration) for the Development and filed them in Tarrant County. The Declaration stated the HOAs owned fee-simple title to private streets in the Development and “common properties” which had a complicated definition. In 1997, the Arbors HOA forfeited its right to do business and became a terminated entity. The surviving HOA asserted the Arbors HOA property lots (R2) automatically transferred to it. In January 2012, the City began planning for a “possible future trail connection” to the jogging path. Construction on the bridge began in 2013 and opened on January 25, 2014. Some owners of R1 lots noticed an increase in people using the jogging path and trespassing on the R1 lots. The R1 owners sued seeking a declaration they owned the R2 lots as common properties, and seeking to quiet title The Court of Appeals issued an interlocutory opinion in review of a temporary injunction noting the R2 lots were included in the definition of “common properties.” The R1 Owners also raised claims against the City Defendants for trespass and inverse condemnation.  The City Defendants filed a traditional and no-evidence motion for summary judgment, including arguments that the facts and law had substantially changed since the interlocutory order. They argued the R1 owners did not have a right to possess the R2 lots (which were originally owned by the defunct HOA) and that they did not have a private right to enforce a city ordinance on floodplain development. The trial court denied the City Defendants’ motions and granted the partial summary judgment of the R1 owners. The City Defendants appealed.

The court first went through a detailed analysis of the evidence submitted, objections to the evidence, and what constituted judicial admissions. The court held the law-of-the-case doctrine only applied to claims fully litigated and determined in a prior interlocutory appeal; it did not apply to claims that have not been fully litigated. The law-of-the-case doctrine is flexible and directs the exercise of court discretion in the interest of consistency but does not limit its power.  The interlocutory opinion (which was a complicating obstacle) did not address the R1 Owners’ UDJA claim regarding title to the R2 lots, only a probable right of relief for trespass claims based on an undeveloped record. The court noted they were substantially different arguments, issues, law, and review standards. [Comment: For a good analysis of the doctrine and its boundaries, read this section of the case.]  The City argued the R2 lots owned by the defunct HOA could be distributed only under the terms of the articles of incorporation and could not pass to the live HOA automatically. The court agreed with the City that the R1 owners did not establish a proper conveyance under the articles.

Next the court turned to the floodplain ordinance, where the R1 owners asserted the City failed to follow its own ordinance by obtaining studies before constructing structures in the floodplain connecting the jogging paths. The City Defendants’ argument no private cause of action to enforce the ordinance exists is one of standing. The R1 Owners did not challenge the validity of the ordinance but rather asserted that they wanted a construction of the ordinance and enforcement of it against the City Defendants. The R1 Owners did not have a right to enforce the ordinance through a UDJA claim, which only waives immunity for ordinance invalidation.  Alternatively, under the record, the R1 owners did not establish the City violated the ordinance. The City Defendants proffered summary-judgment evidence raising a fact issue on their substantial compliance.  Finally, since the court held the R1 owners could not bring a UDJA claim, the attorney’s fee award was reversed.

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

San Antonio Court of Appeals affirms county’s jurisdictional challenge and award of sanctions against property owner

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Kehoe v Kendall County, 04-19-00825-CV (Tex. App. – San Antonio, July 15, 2020).

This is a declaratory judgment case involving a private property easement where the San Antonio Court of Appeals affirmed the City’s plea to the jurisdiction and awarded sanctions against the Plaintiff.

Kehoe asserts Kendall County improperly accepted a 40-foot easement across her property and sought a declaration no easement exists. She brought suit under the Uniform Declaratory Judgment Act (“UDJA”) and the Texas Private Real Property Rights Preservation Act (“PRPRPA”). The County filed a plea to the jurisdiction, which was granted, and sought sanctions asserting Kehoe previously sued over the easement and lost. The trial court granted sanctions and Kehoe appealed.

The court first held that Kehoes’ arguments in her brief, even broadly construed, do not address the trial court’s jurisdictional dismissal. The briefings consist solely of bare assertions of error, without citations to applicable authority or the record. Since nothing was properly briefed for review, the plea to the jurisdiction remains properly granted. Likewise, Kehoe does not address the standards for sanctions and so they are likewise affirmed.

If you would like to read this opinion click here. The panel consists of Justices Martinez, Rios, and Watkins.  Opinion by Justice Watkins.

BOA appeal moot due to relocation of shed built in setback says Fort Worth Court of Appeals

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Oak Point Board of Adjustment v. Jeff Houle, 02-19-00068-CV, (Tex. App – Fort Worth, Dec. 12, 2019)

This is a board of adjustment appeal where the Fort Worth Court of Appeals reversed the denial of the Board’s plea to the jurisdiction and dismissed the case.

The City of Oak Point has a zoning ordinance establishing a 50-foot front-yard setback in the residential neighborhoods. Houle, a resident, complained about the variance to the set-back granted to his neighbor, Bobby Pope. Pope received a permit and built a shed, but due to a miscalculation, it was built in the setback. The Board of Adjustment (BOA) granted the variance. Houle attempted to challenge it by suit in the county court at law. The BOA filed a plea to the jurisdiction which was denied.  It appealed.

The BOA advised Pope had since moved the shed out of the setback. By variance, the BOA effectively excepted Pope’s shed from the front-yard setback requirement. Houle’s petition seeks to undo that exception. However, the variance expressly stated that should the shed ever be moved, the variance would be nullified, which is exactly the relief requested by Houle. The shed’s relocation means that Houle has obtained the relief he sought by his claims, and a judicial determination cannot have any practical legal effect on an existing controversy rendering his lawsuit moot. None of Houle’s arguments asserting why the suit remains live apply. As a result, the plea should have been granted.

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

Austin Court of Appeals holds Austin’s short-term rental regulations unconstitutional (assembly clause also declared fundamental right entitled to strict scrutiny)

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Ahmad Zaatari v City of Austin, 03-17-00812-CV (Tex. App. —  Austin, Nov. 27, 2019).

This is a dispute regarding the City of Austin’s regulation on short-term rental properties. The Austin Court of Appeals reversed-in-part and affirmed-in-part the City’s plea to the jurisdiction. [Comment: This is a 43-page opinion and 18-page dissent. So, the summary is a bit longer than normal]

In 2012, Austin adopted an ordinance amending its zoning and land-development codes to regulate Austinites’ ability to rent their properties as short-term rentals.  Several other amendments occurred at different times adjusting the definitions and scope of the codes until, in 2016, Property Owners sued the City for declaratory and injunctive relief to declare the regulations unconstitutional. The Property Owners (which also included the State of Texas as a party) moved for summary judgment while the City filed a plea to the jurisdiction and a no-evidence motion for summary judgment. The trial court denied the Property Owner’s MSJ, denied the City’s plea, but granted the City’s summary judgment.  Everyone appealed.

The City’s plea to the jurisdiction challenges the State’s standing to intervene in this dispute, the Property Owners’ standing to bring claims on behalf of tenants, and the ripeness of the underlying claims. The court held  the State’s standing to intervene in this matter is  unambiguously conferred by the Uniform Declaratory Judgment Act which states when the validity of a statute or ordinance is brought, the attorney general of the state must also be served with a copy of the proceeding and is entitled to be heard. Tex. Civ. Prac. & Rem. Code § 37.006(b).  The court next held the underlying matters were ripe because some provisions of the 2016 ordinance took effect immediately, while others were not effective until 2022. Facial challenges to ordinances are “ripe upon enactment because at that moment the ‘permissible uses of the property [were] known to a reasonable degree of certainty.’” The court held  the City’s alleged constitutional overreach itself is an injury from which the Property Owners and the State seek relief.  Further, governmental immunity does not shield the City from viable claims for relief from unconstitutional acts. As a result, the plea was properly denied.

The court next determined the trial court erred in several evidentiary rulings, which mainly deal with the public dispute over short-term rentals. The State and the Property Owners filed traditional motions for summary judgment on their claims regarding the constitutionality of the ordinance. The Texas Constitution prohibits retroactive laws. The State contends that the ordinance provision terminating all type-2 operating licenses is retroactive because it “tak[es] away th[e] fundamental and settled property right” to lease one’s real estate under the most desirable terms. While disagreeing on the effect, the City conceded the ordinance retroactively cancels existing leases. Not all retroactive laws are unconstitutional. The Court held the regulation operates to eliminate well-established and settled property rights that existed before the ordinance’s adoption.  Upon reviewing the record the court held the City made no findings to justify the ordinance’s ban on type-2 rentals and its stated public interest was slight. Nothing in the record demonstrates this ban would address or prevent any listed concerns, including preventing strangers in the neighborhood, noise complaints, and illegal parking. In fact, many of the concerns cited by the City are the types of problems that can be and already are prohibited by state law or by City ordinances banning such practices. Further, for four years the City did not issue a single citation to a licensed short-term rental owner or guest for violating the City’s noise, trash, or parking ordinances. The purported public interest served by the ordinance’s ban on type-2 short-term rentals cannot be considered compelling. Private property ownership is a fundamental right. The ability to lease property is a fundamental privilege of property ownership. Granted, the right to lease property for a profit can be subject to restriction or regulation under certain circumstances, but the right to lease is nevertheless plainly an established one.  Based on the practices performed in Austin over the years, short-term rentals have a settled interest and place in the City. The City’s ordinance eliminates the right to rent property short term if the property owner does not occupy the property. As a result, the regulations are unconstitutionally retroactive.

The court then addressed the Property Owner’s claim the regulations violated their right to assembly under the Texas Constitution. After a lengthy analysis, the court held the Texas Constitution’s assembly clause is not limited to protecting only petition-related assemblies and the judicially created “right of association” does not subsume the Texas Constitution’s assembly clause in its entirety.  The right is a “fundamental right” for constitutional analysis purposes and must be examined under a strict scrutiny analysis. The regulation sections challenged limited the number of persons at a rental at any one time, the hours of the day a rental could be used,  number of permitted leaseholders, and various other congregation related activities. The City already has various nuisance ordinances in place to address the negative effects of short-term rentals on neighbors. As a result, the City failed to establish a compelling interest that justifies a different ordinance which is not narrowly tailored. The City has not provided any evidence of a serious burden on neighboring properties sufficient to justify the additional regulations, which therefore violate the assembly clause of the Texas Constitution.

The court reversed that part of the district court’s judgment granting the City’s no-evidence motion for summary judgment and denying the Property Owners’ and the State’s motions for summary judgment. It rendered judgment declaring specific sections of the City Code void.

Justice Kelly  dissented asserting 1) the sections were not unconstitutionally retroactive (with analysis), 2) the Assembly Clause assures Texans the fundamental right to peaceably gather for purposes of meaningful civic discourse without fear of retribution – not to have short-term rentals (which are assembly-neutral zoning regulations that have a rational basis), 3) loud noise, obstructing infrastructure, flouting law enforcement, public disturbances, threats to public safety- all these may make an assembly non-peaceable and can be regulated, and 4) the majority opinion is also out of step with Texas “fundamental right” precedent (i.e. declaring rights fundamental, and thus beyond ordinary democratic give-and-take, is a weighty matter, unjustified in this case).

If you would like to read this opinion click here. Panel consists of Chief Justice Rose, Justices Goodwin and Kelly.  Opinion by Chief Justice Rose.  Dissenting Opinion by Justice Kelly found here. Docket page with attorney information found here.

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. 

City not liable for takings claim because of alleged failure to enforce ordinances against neighboring property owner/developer

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City of Mason v. William Robin Lee, et al.  04-18-00275-CV (Tex. App. – San Antonio, Nov. 7, 2018).

This is an interlocutory appeal in a regulatory takings case where the Fourth Court of Appeals reversed the denial of the City’s plea to the jurisdiction and dismissed the takings claims.

The Zeschs’ trust asserted they owned property adjacent to or downhill from property owned by Tyler and Reyeses. The City approved a minor plat and Reyeses began constructing a single-family residence. The Zeschs assert the development caused increase water runoff damaging the property. Additionally, the Zeschs assert the construction generated nuisance level noise and dust. They assert the City committed a regulatory taking by approving the plat, then refusing to enforce various City ordinances against Reyeses. The City filed a plea to the jurisdiction, which was denied. The City took this interlocutory appeal.

The court first noted a justiciable controversy still exists even though the Zeschs settled with Tyler and Reyes and now own the property since a question remains as to whether the Zeschs’ property was damaged due to the City’s actions. Next, to state a valid takings claim, a plaintiff generally must allege: (1) an intentional governmental act; (2) that resulted in his property being taken; (3) for public use. The crux of the Zeschs claims is that the City failed to impose applicable regulations to the subdivision and to the property owned by the Reyeses. The Texas Supreme Court and the Fourth Court have recognized “the law does not recognize takings liability for a failure to” act. A municipality’s failure to enforce applicable zoning ordinances and special permit restrictions does not constitute a regulatory taking.  The court also cited to precedent noting that if the government’s alleged affirmative conduct is nothing beyond allowing private developers to use their property as they wish, the more appropriate remedy is a claim against the private developers rather than a novel taking claim against the government.  Interestingly, in a footnote, the court held that the Penn Central analysis (applicable when a regulation unreasonably interferes with a property owner’s use and enjoyment of the property) does not apply in this type of case because the Zeschs were not complaining of regulations applied to them, but of the lack of regulations applied to others. No intentional conduct occurred so the plea should have been granted.

If you would like to read this opinion click here. Justice Martinez, Justice Chapa and Justice Rios.  Memorandum Opinion by Justice Rios.  The docket page with attorney information can be found here.

City’s denial of plat application citing inconsistencies with “general plan” of city, without more, is insufficient and therefore vested rights are implicated

 

The Village of Tiki Island, et al.  v. Premier Tierra Holdings Inc., 14-18-00014-CV (Tex. App. – Houston [14th Dist.], July 10, 2018)

This is an interlocutory appeal in a land-use case were the 14th Court of Appeals affirmed the denial of the City’s plea to the jurisdiction.

This case has gone up and down the appellate ladder already.  Prior summary found here. Premier sought to develop property for a mixed-use marina project. Premier submitted a plat application which included up to one hundred residential units and up to 250 dry stack enclosed boat slips. The City had no meaningful land-use regulations or platting or subdivision regulations. Five days later the city enacted a zoning ordinance prohibiting dry boat storage, limiting heights and set-backs, and restricting rental dates and parking. The City then rejected the plat application as being inconsistent with the new ordinance. Premier next sought a rezoning application as a planned unit district, which was denied.  It also sought several plat amendments which were denied. Premier filed a mandamus and sought declaratory relief asking the court to approve the original plat application and successive plat applications based on vested rights under chapter 245 of the Texas Local Government Code. It further brought a takings claim. The City Defendants filed a plea to the jurisdiction which was denied. The City Defendants appealed.

Chapter 245 creates a system by which property developers can rely on a municipality’s regulations in effect at the time the original application for a permit is filed. It freezes” the rules at the time the original application for a permit is filed, and limits the rights of a city to “change the rules in the middle of the game.” Chapter 212 of the Texas Local Government Code deals with plat approval and requires plats to conform to the “general plan” of the city and for extensions of utilities and roadways. The City’s assertion that it relied on a pre-existing “general plan” of the City in denying the original plat application was rejected as the City did not provide, in the record, evidence of such a plan or what its framework would have been. Chapter 212 plans must be adopted after public hearings, which is not evident in the record. A vague reference to a general plan of the city is insufficient for plea purposes and a fact question exists preventing the plea. Further, Chapter 245 expressly authorized a declaratory judgment suit to establish Chapter 245 rights. As to the takings claim, the court held Premier alleged facts to support a takings claim based on the denial of its vested rights in the project.

If you would like to read this legal opinion, click here. Justice Christopher, Justice Donovan and Justice Wise. Opinion by Justice Wise.