If you have a case involving Chapter 245 vested rights, zoning changes, and distance restrictions on alcohol sales read this 71 page opinion

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FLCT, Ltd. and Field Street Development I, Ltd. v. City of Frisco, Texas, 02-14-00335-CV (Tex. App.- Fort Worth, May 26th 2016)

Owners are two partnerships that own adjacent property in Frisco. FLCT’s tract is located on the actual corner; Field’s tract is located directly east of FLCT’s. In both 2006 and 2007, the City’s zoning ordinance permitted property owners in the C-1 district to sell beer and wine “by right.” However, no public school was located within three hundred feet.  After Owners submitted a preliminary site plan for an expanded facility, Frisco ISD began negotiating with Owners to purchase the southernmost part of FLCT’s and Field’s tracts for an elementary school. Before Owners closed on the sale to Frisco ISD in 2009, they filed an amended preliminary site plan application with the City. The City Council then amended the zoning ordinance. Owners then sold a portion of the property to 7-Eleven which conditioned the sale on the ability to obtain all permits (including selling beer and wine). The City asserted 7-Eleven could not sell alcohol at that location. The City then went through several ordinance amendments to adjust and prohibit alcohol sales near churches, schools, and hospitals. 7-Eleven eventually sued under §11.37(d) of the alcoholic beverage code seeking an order requiring the City Secretary to make the statutory certification. Tex. Alco. Bev. Code Ann. § 11.37(d) (West Supp. 2015). However, the City Secretary certified the area was in a dry region. Owners submitted a vested rights petition to the City under Chapter 245 of the Texas Local Government Code asserting they began developing the property at time alcohol sales were permitted so their rights vested at that moment to forever be able to sell alcohol at that location. The trial court granted the City’s plea to the jurisdiction and the Owners appealed.

First, the court held Chapter 245 provides the authority for a declaratory judgment action to enforce a landowner’s rights. Owners are seeking a determination of the existence and extent of their rights to develop and use the Property.  As a result, the plea should not have been granted as to the Chapter 245 claims. Next the court analyzed the Texas Alcoholic Beverage Code and held not only does it permit a city to enact distance regulations it also allows the city to grant variances as to enforcement of those distance requirements. Accordingly, the code does not pre-empt the City’s enactment and enforcement of the distance requirements, which means the Owners are not limited to the relief under the TABC. Here, Owners have raised both a constitutional claim and a vested property rights claim in the form of a declaratory judgment, which is specifically authorized by statute. They are not seeking to appeal any action by the TABC or any action in connection with a pending permit, so again, no pre-emption. The TABC does not provide the exclusive remedy for Owners’ claims based on the City’s enforcement of the distance requirements with respect to the Property. Next, the Owners contend the City’s zoning changes are void as they did not provide individual notice to property owners. However, such notice is only applicable for changes in zoning classifications, not other types of zoning changes. The court analyzed the term “classification” and held the legislature intended that if a city (either through its zoning commission or city government) wishes to consider a zoning district or boundary change to a discrete piece of property, it is to ensure that owners of surrounding properties that would be affected by the change have notice and an opportunity to participate in any hearing regarding that change. Here, the City’s December 2012 zoning ordinance purported to place restrictions on the types and places where businesses could sell alcohol within five different districts where alcohol sales were then permitted. Thus, this was not a rezoning of classification applicable only to the Property itself; the Property was still included in the C-1 district after the passage of the ordinance. In other words, the City’s interpretation is correct and this was not a “classification” change requiring individual notice. Next, the City contended that it could not issue a “permit” for alcohol so no vested right applies to its sale. However, Chapter 245 also applies to certificates. The certificate required by the City Secretary qualifies. Further, the Owner’s claims are not predicated on the continued operation of a particular type of business but on use restrictions and, thus, they are not excluded on that basis from §245.001’s definition of project. The court agreed with Owners’ contention that the amended ordinance affected the C-1 district by imposing additional restrictions on alcohol sales that had not previously been imposed. Accordingly, the Owners’ pleadings and evidentiary facts show that the exemption in §245.004(2)(i.e. no vested right for certain zoning classifications) does not preclude their remaining Chapter 245 claims. Next the court concluded that the preliminary site plan originally applied for contained sufficient notice it intended to include alcohol sales. Further, a regulatory taking can occur when government action unreasonably interferes with a landowner’s use and enjoyment of the property. After analyzing the facts and a detailed analysis of the legal standards, the court held facts were sufficiently pled and established to confer jurisdiction for a regulatory taking claim. As a result, the trial court order granting the plea is affirmed-in-part, reversed-in-part and remanded.

To read the opinion click here. Panel consists of Chief Justice Livingston, Justice Walker and Justice Sudderth. Opinion issued by Chief Justice Livingston. Attorney for FLCT, Ltd. Is Arthur J. Anderson. Attorney for City of Frisco is Richard Abernathy and Field Street Development I, Ltd. is represented by Arthur J. Anderson.

 

Texas Supreme Court holds the accommodation doctrine applies to groundwater leases

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Coyote Lake Ranch, LLC v City of Lubbock, 14-0572 (Tex. May 27, 2016)

This is a dispute over a groundwater lease owned by the City and whether the accommodation doctrine (which is founded in oil and gas law) applies. The Texas Supreme Court held that it does.

Coyote Lake Ranch is used primarily for agriculture, raising cattle, and recreational hunting. In 1953, the Ranch sold a groundwater lease to the City of Lubbock to help it combat a massive drought. In 2012, the City announced plans to increase water-extraction efforts on the Ranch, possibly drilling as many as 20 test wells. The Ranch objected noting that mowing or removing vegetation from the surface causes destructive wind erosion, exacerbated by cattle tromping over mowed paths. According to the Ranch, wind, drought, and grazing cattle prevent grass from growing back, particularly in the areas the City mowed. The trial court enjoined the City from further efforts to drill wells. The Court of Appeals reversed holding the accommodation doctrine did not apply.

An oil-and-gas lessee has an implied right to use the land but must exercise that right with due regard for the landowner’s rights. This is the accommodation doctrine. It has never before been extended to a groundwater lease. The Court analyzed the lease language and noted that the different interpretations presented by the parties provide extremes on both sides. The Ranches interpretation could severely restrict the City’s drilling activities if the City could only drill where the Ranch deemed appropriate. The City’s interpretation would mean it has an all but an absolute right to use the surface heedless of avoidable injury, although it must answer for damages caused to the surface. Going back to the concept of mineral separation interests the Court held the mineral and surface estates must exercise their respective rights with due regard for the other’s rights. After going through the history of the accommodation doctrine, the Court held the doctrine should be applied to groundwater leases. The Court then noted the injunction was too prohibitive, however, and remanded the case for further processing in the trial court.

Chief Justice Hecht delivered the opinion of the Court, in which Justice Green, Justice Johnson, Justice Guzman, Justice Devine and Justice Brown joined. Justice Boyd delivered a concurring opinion, in which Justice Willett and Justice Lehrmann joined.

 

Trial court properly dismissed various claims brought against Board of Adjustment

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Glen Sumner v. Board of Adjustments of City of Spring Valley Village, Texas; The City of Spring Valley Village Texas, Art Flores, and Rickie Prichard 14-15-00149-CV (Tex. App- Houston [14th Dist.], May 17th 2016).

This is a board of adjustment and takings case where the 14th Court of Appeals affirmed the dismissal of all Plaintiff’s claims.

Spring Valley Village adopted a zoning ordinance which states “[i]t shall be the responsibility of each owner . . . to maintain the drainage patterns of adjacent property owners or landowners caused either by direct diversion of water on the land or by failure to adequately accommodate new or changed drainage patterns…” Sumner owns a home in Spring Valley. Sumner asserts Prichard bought the adjoining property with the intent to build a new house. The plans called for the elevation of Prichard’s property and changed the drainage.  Sumner believed Prichard’s plans would change the natural flow of surface water onto his property in violation of the zoning ordinance. The City’s building official issued a permit for an irrigation system to Prichard consistent with the site plans. Sumner filed an application with the Board of Adjustment relating to the building official’s permit. The Board unanimously rejected Sumner’s protest. Sumner sued the building inspector and the City. The trial court signed a single order dismissing all claims against the building inspector; dismissing Sumner’s petition for writ of certiorari; and granting the City’s motion for summary judgment. The trial court granted the severance to separate the City Defendant’s from Prichard, making its order final.  Sumner appealed.

The Court of Appeals first held the trial court did not abuse its discretion in granting the severance. The claims could have been asserted as an independent lawsuit and they are not so interwoven that they involve identical facts and issues. Next the court held Sumner did not exhaust his administrative remedies regarding the building inspector because the pleadings show Sumner was complaining about a certificate of occupancy, not an irrigation permit. Since Sumner did not timely challenge the certificate with the Board, the trial court was without jurisdiction to consider it. Regarding the takings claim, although district courts typically are courts of general jurisdiction, the Legislature has vested exclusive jurisdiction over inverse condemnation claims in the Harris County Courts at Law for this particular area of the State. Tex. Gov’t Code Ann. §25.1032(c) (West Supp. 2015).  The Court next held Sumner did not properly allege an ultra vires claim under his plead facts. Sumner claims monetary damages for past acts which is not allowed. He further seeks control of future actions, however, such claims are not ripe as there is no indication Prichard intends or will submit any future plans. As a result, the trial court properly dismissed all claims, although the mechanism it uses was adjusted by the Court of Appeals (i.e. certain claims should have been dismissed under the plea, not the MSJ).

For the full opinion click here. Panel consists of Justices Boyce, Busby and Brown. Memorandum Opinion issued by Justice Busby. Attorneys listed for the City defendants are Dennis S. Dresden and Andrea Chan. Glen Sumner represented himself.

Court orders ZBOA to issue certificate of occupancy since “[t]he proposed use of the property in question looked, swam, and quacked like a ‘Hospital’ and ‘Convalescent Center'”

City of Glen Rose, Texas and the Zoning Board of Adjustments of the City of Glen Rose, Texas v. Ernest and Shirley Reinke, 07-15-00266-CV (Tex. App. – Amarillo, February 8, 2016),

This is an appeal from a ZBOA decision regarding the denial of a certificate of occupancy. The Amarillo Court of Appeals affirmed the granting of the petitioner’s appeal of the ZBOA.

Reinkes sought but were denied a certificate of occupancy to operate a drug and alcohol rehabilitation center as either a “hospital” or “convalescent center” under a City zoning ordinance. The City Administrator denied the request  noting the application was more akin to a sanitarium and such denial was affirmed by the ZBOA.  The Reinkes appealed to district court, which granted their motion for summary judgment and ordered the ZBOA to issue a certificate of occupancy. The City and ZBOA appealed.

The court first determined the ZBOA appeal was on the certificate of occupancy (“CofO”), not the Reinkes’ application for special use permit, which was denied previously. As a result, the only issue is the CofO.  Next, under Tex. Loc. Gov’t Code §211.011 the only question the trial court has in such a proceeding is deciding “the legality of the zoning board’s order.” And, discretion is abused when the board acted “. . . without reference to any guiding rules and principles or clearly fails to analyze or apply the law correctly.” After analyzing the City’s zoning code, the court determined the proposed business had the characteristics of both a “Convalescent Center” and “Hospital” as expressly defined by the City. Given that, the Reinkes property was eligible for the desired certificate of occupancy should have been issued. Strike a bit of humor the court noted “[w]e are reminded of that old idiom that if it looks like a duck, swims like a duck and quacks like a duck, then it is a duck. The proposed use of the property in question looked, swam, and quacked like a ‘Hospital’ and ‘Convalescent Center[.]’” Unlike the terms “Hospital” and “Convalescent Center,” though, the City had not defined the word “Sanitarium.” Due to this circumstance, the City Administrator turned to the internet to garner a definition of the word. After applying various cannons of statutory construction, the court determined the Administrator’s definitions were inconsistent with the ordinance. The summary judgement for the Reinkes was therefore affirmed.

If you would like to read this opinion, click here.  Panel Chief Justice Quinn, Justice Campbell, and Justice Hancock.  Opinion given by Chief Justice Quinn.  Attorney for the Appellee is Stuart V. Neal.  Attorneys for the Appellant are Wayne K. Olson, Brady Pendleton, Ashley Dierker, and Fredric

Property owners cannot sue on City’s right to amend deed restrictions on lots it owns or create City park; increased traffic and noise cannot be basis for inverse condemnation claim

The City of Friendswood and Kevin Holland v. Paul and Carolyn Horn, et al., 01-15-00436-CV (Tex. App. – Houston [1st Dist.], February 11, 2016).

This is essentially an inverse condemnation case where the First Court of Appeals reversed the denial of a plea to the jurisdiction and dismissed the Plaintiff’s claims involving converting adjoining property to a city park.

After Tropical Storm Allison destroyed the Imperial Estates Section One subdivision, the City of Friendswood acquired most of the subdivision’s 42 lots through a federally-subsidized flooding mitigation program from FEMA.  The program required the City to leave the lots open for flood control, but the lots could be used for specific purposes, including a park.  Four property owners did not sell and rebuilt their homes. Ten years later, the City decided to develop the lots (consistent with federal guidelines) into a park and the home owners sued asserting the park was inconsistent with deed restrictions, was an inverse condemnation, and a nuisance. The trial court denied the City’s plea to the jurisdiction and the City appealed.

The 1958 deed restrictions dictated that lots were dedicated “for residential purposes only.” Since the City owned 38 lots, it had the ability to amend the restrictions under the express terms of the deeds and did so through a properly posted meeting. The City’s actions were in furtherance of flood control and public park development, which are governmental functions as a matter of law, not proprietary. As a result, immunity applies. Under the takings analysis, the court determined the City did not enter onto the Plaintiff’s property, but merely moved forward with developing the lots it already owns. The homeowners’ live pleadings does not allege that any diminution in the value of their lots occurred when the City acquired lots in 2001. Rather, the homeowners allege that the City’s decision to place a park adjacent to their property 10 years later impairs the peaceable use and enjoyment of their property. These allegations cannot support an inverse condemnation claim for compensation. “[I]ncreased traffic and noise to a community do not give rise to a compensable taking.” The homeowners’ nuisance claim is premised on the same allegations as their inverse condemnation claim and is also insupportable. Further, the City is immune from any declaratory judgment claims or contract claims arising out of its right to amend the covenants. To the extent the homeowners seek injunctive relief or specific performance to enforce the deed restrictions, these claims for relief may not be brought against a governmental unit. The City is immune from misrepresentation claims as such are intentional torts. Finally, the undisputed evidence established properly Texas Open Meetings Act postings, so the ultra vires claims against the Mayor are dismissed.

If you would like to read this opinion click here. Panel: Chief Justice Radack, Justice Bland and Justice Huddle. Opinion by Justice Bland. The attorneys listed for the Plaintiffs are Aaron Mark Pool and James T. Sunosky. The attorneys listed for the City are William S. Helfand and Charles T. Jeremiah.

BOA had authority to grant hardship variance after neighbor found survey discrepancy

Glen Sumner v. Board of Adjustments of the City of Spring Valley Village, et al, 01-14-00888-CV (Tex. App. – Houston [14th Dist.] October 20, 2015)

This is an appeal from a Board of Adjustment (“BOA”) order granting a variance in which the Houston Court of Appeals for the 14th District affirmed the granting of the City’s Plea to the Jurisdiction in a very long opinion.

Sumner’s neighbors, the Khans, purchased an adjacent lot and sought a variance to construct a second story onto the existing house, which the City granted. Sumner then discovered an apparent error in the conveyance history resulting in a one-foot strip of land discrepancy. This meant the second story addition was approximately six inches closer to the property line than the eight feet permitted by the Building Setback Ordinance. As a result, the Khans applied to the BOA for a variance, which was granted. Sumner also complained about various other alleged problems with the Khans including complaints about their air conditioner location and roof height restrictions.  Sumner requested a hearing in front of the BOA on his height restriction complaint.  He was told the measurements for the heights were only to certain points on the roof and the Khans were in compliance. Sumner sued appealing the BOA’s decisions including the original set-back variance and the subsequent hearing on the height restrictions. The suit went up and down from state to federal court and back again. Upon return to state court the City and BOA filed a motion for summary judgment, motion to dismiss and plea to the jurisdiction, which the trial court granted. Sumner appealed.

The court first determined Sumner waived his argument on the finality of the trial court’s order since he did not properly brief it. Sumner had the burden of proof to establish the illegality of the Board’s order. Whether a hardship exists is a question of fact to be determined by the Board. The Board heard testimony the six-inch discrepancy was inadvertent in the surveys and allowing the variance did not harm the public. Testimony confirmed the setback violation remained undiscovered until construction of the Khans’ addition was substantially complete. As a result, the BOA was within its authority to grant a hardship variance. Additionally, the court incorporated the federal judge’s holding that “[t]here is simply no protected property interest in having a zoning ordinance enforced against one’s neighbors.” Sumner also did not have a right to cross-examine witnesses at the BOA meetings. He was not a party and did not take advantage of the BOA procedure entitling him to submit questions the Board would ask of applicants. Finally, the City was well within its authority to amend its ordinances after Sumner began his complaints. It is settled law that a city may rezone or amend its ordinances “as long as the action is not arbitrary, capricious and unreasonable.” Sumner presented no evidence to meet this burden. The trial courts order was affirmed.

If you would like to read this opinion click here.  Panel: Justice Jennings, Justice Higley and Justice Brown. Memorandum Opinion by Justice Brown.  The attorneys listed for the City and BOA are Scott Bounds, John H. Hightower, and Andrea Chan.  The attorneys listed for Sumner are William R. Sudela, J. Daniel Long, and Elizabeth Harris

City’s jurisdictional plea denied in case asserting City’s development agreement equates to contract zoning

City of Shavano Park v. Ard Mor, Inc., et al, 04-14-00781-CV (Tex. App. – San Antonio, July 29, 2015)

This is an interlocutory appeal from the denial of a plea to the jurisdiction involving a challenge to an adjacent development agreement and zoning change. The San Antonio Court of Appeals reversed in part and affirmed in part.

Ard Mor operates a child care facility. Lockhill Ventures, LLC owns two lots of land adjacent to the childcare facility, which is subject to deed restrictions. . Lockhill Ventures intends to build a gas station and gas storage tanks next to Ard Mor’s facility. The City’s zoning does not list “gas station” as a permitted use. However, the Lockhill property is subject to a development agreement in which, once annexed, Lockhill is permitted a project which includes a convenience store with gas station. Ard Mor sued the City and Lockhill. The City filed a plea to the jurisdiction, which was denied after the court heard four days of testimony in a temporary injunction hearing. The trial court enjoined Lockhill, but not the City.  The City remained a party to suit.

Ad Mor’s numerous requests for declaratory relief against the City fall into four requests for relief: construe various City ordinances, declare the Agreement void, declare the annexation ordinance void, and declare the actions of the City and its officials to be ultra vires acts which violated their due process rights. The court first addressed Ad Mor’s request to invalidate the agreement as being contract zoning. The court held that since the City did not set its plea to the jurisdiction for a hearing, but merely urged it during the temporary injunction, Ad Mor did not have the ability to develop the record to establish its jurisdictional basis. Therefore remand on this claim is proper. Ad Mor’s claims challenging the annexation ordinance are not attacks on procedural irregularities (which can only be brought in a quo warranto proceeding) but an assertion that contract zoning makes the ordinance void. This is a permissible challenge under the Declaratory Judgment Act. However, Ad Mor failed to allege a proper due process claim, mainly because it did not allege it was treated differently than someone else. Additionally, Ad Mor brought ultra-vires claims against the City, not its officials. Such claims can only be brought against officials and therefore the claims against the City are improper. Finally, the court held the City did not properly challenge the claims to interpret its zoning ordinances, so it will not address them on appeal. As a result, the court affirmed in part, reversed in part, and remanded for further processing.

If you would like to read this opinion click here. Panel: Chief Justice Marion, Justice Martinez and Justice Alvarez.  Memorandum Opinion by Chief Justice Marion.  The attorneys listed for the City are Lowell Frank Denton, Elizabeth Provencio and Patrick Charles Bernal.  The attorneys listed for Ard Mor and other Plaintiffs are Aaron Saxon, Jay K Farwell, Karen L. Landinger, and David Lawrence Earl.

Association has standing to challenge validity of zoning change ordinance; Declaratory judgment actions do not intertwine jurisdiction with merits says Dallas Court of Appeals

 

City Of Dallas and Larry Holmes, in his Official Capacity as Chief Building Official for the City of Dallas v. East Village Association, 05-14-01406-CV (Tex. App. –Dallas July 21, 2015.

This is an interlocutory appeal from the denial of a plea to the jurisdiction in a case challenging the validity of a City zoning change via ordinance.

The City changed its zoning in a particular location to allow for the construction of a Sam’s Club store. The Dallas Development Code allows a variety of retail uses in Mixed Use 3 Districts, adopted by the Ordinance, as a matter of right, but “big box” stores are only allowed with a SUP, which carries its own requirements for issuance. Contending that they were surprised and upset by the news that a Sam’s Club store was coming to their neighborhood, property owners near East Village formed the Association to challenge the sufficiency of the notice given of the proposed change in zoning. The City filed a plea to the jurisdiction which was denied.

The court first determined that the Association has standing to bring suit. The City argued its purpose was to challenge the zoning which is not a proper non-profit purpose.  However, the court held protecting the quality of neighborhood living is a civic purpose and qualifies.  While the Association does not own property within 200 feet of the zoning change, at least one of its members does, objected to the zoning, and would be adversely impacted. Next, for jurisdictional purposes, immunity is waived under the Declaratory Judgment Act if a party challenges the validity of an ordinance.  Unlike a Texas Tort Claims Act case where jurisdiction is intertwined with the merits, declaratory judgment actions are not interconnected with the underlying claim. Because lack of sufficient notice is a basis upon which the Ordinance would be void, the Association has pleaded a claim.  When an ordinance is challenged for lack of sufficient notice as to the scope of the change in zoning, the issue of sufficiency of the notice is not a jurisdictional question, but rather a question as to the merits. Further, the Association presented competing evidence of the sufficiency so a fact question exists anyway. Finally, the Association brings ultra-vires claims seeking an order mandating that any permits already issued under the new zoning change be cancelled.  The Association sought permanent injunctive relief for ultra vires conduct predicated on a void ordinance.  While the City does maintain immunity from such claims, the city officials do not.

If you would like to read this opinion click here.  Justice Lang-Miers, Justice Brown, and Justice Schenck.  Opinion given by Justice Schenck.  Attorneys for Appellee are Anthony Ricciardelli, and P. Michael Jung.  Attorneys for the Appellant are James B. Pinson, Warren M.S. Ernst, Christopher D. Bowers, Christopher J. Caso, and Barbara E. Rosenberg.

Tax abatement agreement does not waive immunity under Chapter 271 of Local Government Code, but filing counterclaim did says Beaumont Court of Appeals

The City of Conroe, et al v. TPProperty LLC 09-13-00509-CV (Tex. App. – Beaumont, June 25, 2015).

This is a breach of contract case involving a type of HOT agreement and tax abatement in which the Beaumont Court of Appeals modified the denial of the City’s plea to the jurisdiction. Warning, this is a 51 page opinion but the analysis is detailed and helpful.

The City and predecessor to TPProperty entered into a tax abatement agreement and agreement to use hotel occupancy tax (“HOT”) funds for specific guest services to promote tourism. After TPProperty purchased the assets, including the contracts, the City asserted it was in breach.  TPProperty sued the City for breach in response and the tax assessor to force specific performance of the tax abatement and HOT agreement. The City filed a plea to the jurisdiction which was denied.

The court first addresses (mainly in a footnote explaining a split in the courts of appeals on whether proprietary-governmental dichotomy exists in contracts) that tax collection is a governmental function. The court then analyzed whether the contracts were subject to a waiver of governmental immunity under Chapter 271 of the Texas Local Government Code. [Comment: It is a good analysis of the “services provided to a governmental entity” language and anyone with this subject matter as an issue should take a look.]  The court ultimately held that the abatement agreement did not provide a direct benefit to the City so was not a “service.”  The abatement in order to allow renovations and the use as a hotel was for  TPProperty’s benefit. It did not require the City to pay TPProperty any money or compensation for operating the hotel.  While the city would benefit in a general way from having an old apartment complex renovated the benefits did not stem from the type of services envisioned by the statute.  Likewise, the HOT agreement does not contain any “services.”  While TPProperty has authority to use HOT funds, it is not required to use them at all. No waiver of immunity exists under Chapter 271.  The City also did not waive immunity by conduct.  However, the City filed a counterclaim regarding ad valorem taxes which TPProperty asserts waives immunity from suit. The court held the counterclaims were related and germane to TPProperty so the City waived its immunity from suit with respect to TPProperty’s contract claims, so far as those claims act as offsets to the City’s counterclaims.  Additionally, at the time the counter-claim was filed, the tax appraisal district could not have granted relief to TPProperty under the Tax Code, so TPProperty was not required to exhaust its administrative remedies prior to filing suit. Finally, the declaratory judgment relief sought are within the court’s jurisdiction to the extent the City waived immunity under the counterclaims. However, the court was careful to note the denial of the plea was proper only to the limited extent that any allowable claims of TPProperty may properly offset any recovery by the City on its counterclaims.

If you want to read this opinion click here. Panel: Chief Justice McKeithen, Justice Kreger and Justice Horton.  Opinion by Justice Kreger. The attorneys listed for the City are John J. Hightower, Eric C. Farrar and M. Kaye Brouse.  The attorney listed for TPProperty is John Russell Hardin.

Payday loan company has no jurisdiction to challenge City ordinance regulating payday loans says Fort Worth Court of Appeals

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ACE Cash Express, Inc. v. The City of Denton, Texas 02-14-00146-CV (Tex. App. – Fort Worth, June 4, 2015).

This is a case involving a company’s attempt to invalidate a city ordinance regulating credit access businesses in which the Fort Worth Court of Appeals affirmed the granting of a plea to the jurisdiction.

The Credit Services Organizations Act (the CSO Act) contained within the Texas Finance Code provides for the licensing and regulation of credit access businesses (sometimes referred to as payday lenders).  The City of Denton enacted additional requirements and imposed misdemeanor penalties for violations. ACE Cash Express (“ACE”) sued to invalidate the ordinance asserting it exceeded the City’s police power and was unconstitutional.  The City filed a plea to the jurisdiction which the trial court granted and ACE appealed.

Generally, declaratory and injunctive relief are not applicable to challenge criminal statutes. The crux of ACE’s argument is that it could not challenge the statute in criminal court since no employees would conduct actions to trigger liability.  An exception to the general requirement that challenges to criminal statutes must occur in criminal court is City of Austin v. Austin City Cemetery Ass’n, 87 Tex. 330, 28 S.W. 528 (1894), in which customers of a cemetery had to participate in the criminal act in order to allow the Cemetery to challenge a city ordinance. However, the Fort Worth court noted a distinction between requiring “customer” participation to challenge a criminal ordinance and requiring an employee and/or agent. Therefore the Austin City Cemetery exception does not apply. When ACE self-reported certain matters the City refused to prosecute and thereby prevented ACE from challenging the ordinance.  However, that does not mean ACE would not be able to challenge the ordinance when the City does prosecute. Further, no vested right exists entitling ACE to challenge the constitutionality of the ordinance. The ordinance did not deprive ACE of any physical property, did not retroactively cancel any loans already made, and did not forbid ACE from engaging in its business.  It only regulated the terms under which it may offer its services. ACE did not have a vested property right to its contractual options to renew, extend, or refinance the loans. Finally, the Texas Declaratory Judgment Act does not waive immunity by itself, but is only a procedural mechanism for which independent waiver of an underlying claim exists.  Finding none, the court affirmed the granting of the plea.

If you would like to read this opinion click here.  Panel: Justice Dauphinot, Justice Gabriel and Justice Sudderth. Memorandum Opinion by Justice Gabriel.  The attorney listed for the City is Jerry Drake, Jr.  The attorneys listed for ACE Cash are Benjamin Leon Stewart and Clayton E. Bailey.

Texas Supreme Court holds civil penalties allowed under Chapter 54 for all zoning ordinances, not just health and safety ordinances.

CITY OF DALLAS v. TCI WEST END, INC., 13-0795 (Tex. May 8, 2015)

Texas Local Government Code §54.012(3) the authorizes a municipality to pursue a civil action against a property owner to enforce an ordinance “for zoning that provides for the use of land or classifies a parcel of land according to the municipality’s district classification scheme.” The court of appeals held that a municipality cannot pursue a civil action for general zoning violations. Because the court of appeals’ holding is incompatible with the statute’s plain language, the Texas Supreme Court reversed.

The City of Dallas contends that TCI West End, Inc. (“TCI”) demolished a building located in a historic overlay district in violation of a city ordinance.  The City sued TCI for civil penalties under §54.017 of the Texas Local Government Code. Following a jury verdict in favor of the City, TCI appealed and the court of appeals reversed the verdict holding §54.012 and §54.017 apply only to health and safety ordinances, not “general zoning ordinances regulating the use of land.”

The threshold issues for the Court are (1) whether §54.012(3) and §54.017 are limited to enforcement of “health and safety” zoning ordinances; and (2) whether §54.017 requires that actual notice be effected before violation of the applicable ordinance. In support of its holding, the court of appeals cited a Texas Attorney General opinion limiting the statute’s application to health and safety matters.  After analyzing the statutory language, the Supreme Court held “the interpretation of §54.012(3) as incorporating a health-and-safety limitation is contrary to the plain and unambiguous language in the statute and would render meaningless and redundant language in that section expressly circumscribing other categories of ordinances enforceable under subchapter B.”  The Court also held that the perception that conflicts exist between the injunctive relief in subchapter B of Chapter 54 and the relief allowed in Chapter 211 does not mean “the statutes are mutually exclusive merely because they overlap in scope.” The Court also held the court of appeals alternative argument (that no evidence existed of notice before the demolition of the building) fails because §54.017 authorizes civil penalties if a defendant violated an ordinance after receiving notice or if the owner failed to take action necessary for compliance with the ordinance after receiving such notice. The disjunctive “or” notes two separate options to support civil penalties. As a result, the court of appeals opinion is reversed.

If you would like to read this opinion click here. Per Curiam Opinion. The docket page with attorney information is found here.

 

 

Because developer did not ascertain reason for City’s plat denial, no justiciable controversy exists

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The Village of Tiki Island v. Premier Tierra Holdings, Inc., 14-14-00629-CV (Tex. App. – Houston [14th Dist.], March 24, 2015)

The Plaintiff sought a declaratory judgment action to determine vested development rights under Chapter 245 of the Texas Local Government Code. This is an interlocutory appeal from the denial of a plea to the jurisdiction where the 14th Court of Appeals determined no justiciable controversy exists and reversed the denial.

Premier Tierra Holdings, Inc., owns a tract of property in the Village of Tiki Island (“City”), located in Galveston County. Premier desires to develop or sell the property for a mixed-use marina development (the “Project”). Premier asserted that chapter 245 required the City to consider the approval of an application for a permit solely on the basis of the regulatory scheme existing at the time the first plat application for a project is filed, and therefore certain provisions of the City’s zoning ordinance (adopted later) could not be applied to its project. The application was denied.  Premier sued seeking a declaration it has a vested right as of its original plat application with the marina project. The City filed a plea to the jurisdiction asserting the relief sought was for a ruling on a “hypothetical future application of land-use regulations.”  The trial court denied the City’s plea and it appealed.

The court held that while Chapter 245 allows a declaratory judgment action to determine certain vested rights, at the time Premier filed its plat application, the City was governed by chapter 212 of the Local Government Code, which establishes the standards for approval of a proposed subdivision plat.  The City contended Premier never exercised its statutory right to request that the City provide the reasons for the denial, never appealed the denial, and never advanced the denial was improper. The court held “Premier’s request for declaratory relief fails to present a justiciable controversy because the record does not disclose the reasons why the City denied the 2010 plat application; no plat or permit applications have since been denied for any specified reasons; and Premier has not challenged the City’s denial of its plat application in this or any other proceeding.” The City was not required to approve the application simply because it was filed, but was entitled to approve, disapprove, or conditionally approve based on regulations in effect at the time. Essentially, since Premier did not ascertain the reason for the denial or attempt to cure any defects and the City has the right to deny for some reasons but not others, no controversy yet exists. The court disagreed that the claims failed because of mootness and ripeness and expressly stated that its opinion should not be read or implied to hold “the plat application itself or any statutory rights Premier acquired for the project as a result of filing the plat application are necessarily mooted..”  “Premier may have vested rights in the project, but there is no context within which to declare what they are. Any such declaration would be a prohibited advisory opinion that would not resolve” the dispute. Since the court could not do anything at this juncture, no jurisdiction yet exists.

If you would like to read this opinion click here. Panel: Justice Christopher, Justice Donovan and Justice Wise.  Opinion by Justice Wise.  The attorney for the Village is John J. Hightower.  The attorney listed for Premier Tierra Holding is H. Fred Cook.

Suit against City employee, individually, dismissed, but ultra-vires claims remain even under Sec. 101.106 of Civil Practice and Remedies Code

Charles N. Draper v. Greg Guernsey, in his Capacity as Director of Planning and Development Watershed Protection Review Department; and City of Austin, 03-14-00265-CV (Tex. App. – Austin, February 25, 2015).

This is a land-use dispute but the opinion focuses on the dismissal of a City employee under Tex. Civ. Prac. & Rem. Code §101.106 vs ultra-vires claims.

Draper, pro se, sued the City of Austin and the Director of Planning, Guernsey, regarding property he owns but whose development is under certain restrictions pursuant to City ordinance. The City filed a motion to dismiss Guernsey under §101.106(a)(suit against entity precludes suit against employee) and (e)(suit against entity and employee means employee entitled to dismissal), which the trial court granted.

The court first noted that the pleadings are not very clear, but it appears some claims by Draper are ultra-vires claims to force the defendants to recognized some form of vested right under Chapter 245 of the Texas Local Government Code. The proper defendant to an ultra-vires claim seeking to restrain allegedly unlawful actions by the City would be Guernsey, not the City.  However, Draper also sought monetary damages exceeding $10 million asserting various improper acts by Guernsey and other City officials.   The court analyzed the interplay between subsection (a) and (e) and ultimately held 1) all claims against Guernsey, individually, were properly dismissed, 2) suit against Guernsey in his official capacity only is a suit against the City, but must be brought against Guernsey in his capacity as an official for ultra-vires purposes, and 3) the trial court’s wording that dismissed Guernsey in all respects was error.  So, Guernsey individually is let out but the ultra-vires claims remain.

If you would like to read this opinion click here. Panel: Justice Pemberton, Justice Puryear and Justice Bourland. Memorandum Opinion by Justice Pemberton. The attorney for City of Austin and Greg Guernsey is Sandra Kim. Appellant Charles Draper is pro se.

U.S. Supreme Court holds Telecommunications Act does not require reasons for denial of permit in any particular form, but does require they be issued at same time as notice letter

T-Mobile South, LLC v. City of Roswell, 13-975 (January 14, 2015).

This is a Telecommunication Act case where the City of Roswell, Georgia denied an application to build a cell tower on residential property but failed to specify the grounds in its denial. The Act requires localities to provide reasons when they deny applications to build cell phone towers and their reasons for a denial must be supported by substantial evidence in the record. Since the City did not specify the grounds in the notice of denial, T-Mobile sued under the Act.

The City Council held a 2-hour-long public hearing on April 12, 2010, to consider T-Mobile’s application. It arranged privately to have the hearing transcribed, and the City subsequently issued detailed minutes summarizing the proceedings. At the hearing there were concerns that the tower would lack aesthetic compatibility, that the technology was outdated and unnecessary, and that the tower would be too tall. T-Mobile responded by reiterating that it had met all of the ordinance’s requirements and by providing testimony from a property appraiser that placement of cell phone towers does not reduce property values. Individual councilmembers made various comments and asked questions regarding the application during the meeting. The motion to deny the petition noted it would be aesthetically incompatible with the natural setting, that it would be too tall, and that its proximity to other homes would adversely affect the neighbors and the resale value of their properties. The motion passed unanimously.  Two days later, the City sent a formal notice of denial.  It did not specify the particular grounds but did note the minutes of the meeting could be obtained from the City clerk, even though they were not approved for 26 days. T-Mobile sued and the trial court granted its motion for summary judgment.  The Eleventh Court of Appeals reversed holding the detailed minutes were sufficient to specify the grounds for denial and provided substantial evidence for support and T-Mobile appealed.

The U.S. Supreme Court first held that cities must provide reasons for any denial under the Act. Otherwise it is impossible to determine if the denial is supported by substantial evidence, which is a legal term of art.  However, the reasons for the denial need not appear in the notice letter. The Act does not specify any particular form for providing notice. The reasons must be provided within a reasonable time, however, since any person aggrieved must seek judicial review within 30 days of the decision. The 26 day delay in issuing the minutes which contain the reasons deprived was insufficient. The reasons for the denial must be conveyed at essentially the same time as the notice of denial.  The Justice Robert’s dissent asserts four days was sufficient to allow for the appeal so would have ruled the City complied with the Act. Justice Thomas’s dissent expresses an opinion the majority was too eager to reach beyond the statutory language and placed additional administrative burdens on the City.

If you would like to read this opinion click here. JUSTICE SOTOMAYOR delivered the opinion of the Court with JUSTICES SCALIA, KENNEDY, BREYER, ALITO, and KAGAN, JJ., joined. ALITO, J., filed a concurring opinion. ROBERTS, C. J., filed a dissenting opinion in which GINSBURG, J., joined, and in which THOMAS, J., joined as to Part I. THOMAS, J., filed a dissenting opinion. The docket sheet with attorney information can be found here.

Changing tri-display billboard to LED billboard is a reconstruction and not merely a change in “electrical wiring or devices” so required a permit

Garrett Operators, Inc. v. City of Houston, 01-13-00767-CV (Tex. App. – Houston [1st Dist.], January 22, 2015)

Garrett Operators, Inc. (“Garrett”) filed a declaratory judgment action against the City of Houston (“the City”) regarding the application and interpretation of the City’s Sign Code as it pertains to Garrett’s LED lighted billboard.  The complexity of the case turns on the fact Garrett previously sued and his claims were dismissed as not yet ripe for his failure to get approval to change his Billboard to LEDs. After his claims became ripe (i.e. he received a final decision from the administrative sign body), he sued the City, but the City’s Sign Code had been amended. Garrett claimed that any application of the 2008 amendments to him was a violation of the Texas Constitution’s prohibition against retroactive laws.  The parties submitted opposing summary judgments to the trial court, which granted the City’s motion and denied Garrett’s.

The court first addressed whether the tolling provision of Tex. Civ. Prac. &  Rem. Code § 16.064 (Vernon 2008) for the refiling of the same suit within 60 days applies. The court held that §16.064 should be construed with §16.068, which permits amended or supplemental pleading to relate back to the date of the original filing. Here, Garrett’s claims are not based on a different transaction or occurrence but the same set of circumstances. The City was unable to establish the “intentional disregard” doctrine for county court jurisdiction since the inverse condemnation claims in the original suit were not inherently intertwined. [Comment: essentially the court held the transactions were the same, but the claims were not inherently intertwined.] As a result, the tolling applied and Garrett did not miss the statute of limitations. The retroactive law argument required the court to analyze whether Garrett was required to obtain a permit for “changing” the sign to LEDs or whether a permit was not required under the code because he was merely changing the “ornamental features, electrical wiring or devices, or display.” After examining Garrett’s own evidence, the court determined this type of extensive change to the sign goes beyond merely changing the “electrical wiring and devices.”  As a result, the proposed conversion from a tri-display billboard to a LED-display billboard was not merely a change to the “electrical wiring and devices,” but was a reconstruction or alteration requiring a permit. And since he had not vested right to change the sign without a permit under the prior law, the retroactivity argument is not applicable. Additionally, since no permit application was filed until 2011, the Chapter 245 “vested rights” argument is also not applicable. As a result, the trial court properly granted the City’s summary judgment motion.

If you would like to read this opinion click here. Panel: Chief Justice Radack, Justice Bland and Justice Huddle. Opinion by Chief Justice Radack. The attorneys listed for Garrett Operations, Inc. are Richard L. Rothfelder  and Sydney N. Floyd. The attorneys listed for the City of Houston are John B. Wallace and Hope E. Hammill-Reh.