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. 

Fort Worth Court of Appeals held plaintiffs’ pleadings defective in flood/drowning case but remanded to allow plaintiffs to replead

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City of Fort Worth v. Soledad Alvarez, et al. 02-20-00408-CV  (Tex. App. – Fort Worth, February 10, 2022)

This is a Texas Tort Claims Act (“TTCA”) vehicle accident case where the Fort Worth Court of Appeals agreed jurisdiction was not pled or presented but remanded for an opportunity to cure the pleading.

Romero was traveling in a vehicle with her daughter when floodwaters due to rain swept the vehicle into an alleged rain-filled excavation on property owned by Whiz-Q that was purported to have improper drainage due to a defective excavation. Both occupants drowned. The family sued Whiz-Q, the City and TxDOT. The City filed a plea to the jurisdiction claiming that its immunity was not waived because it did not own, occupy, or control “the property where this incident occurred” or the access road Romero was on. The plea was denied, and the City appealed.

Plaintiffs argued their pleadings incorporated by implication that the flood waters on the access road constituted a defective condition, but the City asserts the pleadings only mention defective excavation. The court held the pleadings must be read as written, which does not include the flood waters as a defective condition. The City next argued that it did not have a duty to make the premises safe because it did not create the dangerous condition or agree to make safe a known, dangerous condition.   However, a premises-liability defendant may be held liable for a dangerous condition on real property if it created the condition or it “assum[ed] control over and responsibility for the premises,” even if it did not own or physically occupy the property. “The relevant inquiry is whether the defendant assumed sufficient control over the part of the premises that presented the alleged danger so that the defendant had the responsibility to remedy it.”  While the City has exclusive control over its roadways, it entered into an agreement with TxDOT to maintain the access road. The City’s jurisdictional evidence shows that, at the time of the accident, the City did not possess—that is it did not own, occupy, or control—the property or the defective excavation on the property. Whiz-Q owns and operates its business on the property.  The court concluded that at the time of the accident, either Whiz-Q or TxDOT owned or maintained the property, not the City. The pleadings are therefore defective. However, the court noted a premise defect (as opposed to a special defect) could still be potentially raised in the pleadings under the agreement with TxDOT; at least the City failed to negate all conceivable avenues under the agreement.  As a result, the suit was remanded to allow the Plaintiffs to replead under a premise defect theory only.

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

Fifth District Court of Appeals holds property owner’s pleadings adequately alleged waiver of immunity in sewer backup case due to overtaxed pumps

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The City of Blue Ridge v. Rappold, 05-19-00961-CV (5th Cir. Dec. 3, 2020) (mem. op.)

This is an interlocutory appeal from a denial of the City’s plea to the jurisdiction, in a sewage backflow case.

The Rappolds brought a claim under the Texas Tort Claims Act (“TTCA”), alleging that the City’s wastewater treatment facility (“WWTF”) failed in its operation, causing raw sewage and stormwater to cover portions of the Rappolds’ property several times over the course of three years.  The City requested discovery to which Rappold objected.  The trial court considered the plea prior to the City’s motion to compel discovery. The first sewage backup event was allegedly due to an electrical failure in the pumps while the remaining were due to high levels of rain creating too much waterflow for the pumps to handle. The plea was denied and the City appealed.

The court first held that identifying a specific person in the pleadings is not necessary to establish causation, only that a City employee acted negligently within the course and scope of their duties. It also disagreed with the City’s claim that the Rappolds’ claim indicates non-use and, similarly, fails to show operation. The court points to allegations that the City failed to properly maintain the WWTF and that the City’s employees were not using the WWTF as designed. These additional allegations created a sufficient nexus between the damage and the City’s actions to adequately allege that the City was negligently using the motor-driven equipment. Similarly, the City employees’ knowledge that the WWTF is unable to handle large amounts of water it receives at times indicates negligence in continuing to operate the pumps in such a condition. The court also found proper pleading of the “condition or use of tangible personal property”  as different components failed at different times.  Finally, it held that the Rappolds were able to properly plead a takings claim by alleging that the City’s knowledge of the WWTF’s inadequacy resulted in the City using the Rappolds’ land as an overflow depository.

If you would like to read this memorandum opinion, click here. Panel consists of Justice Molberg and Justice Carlyle. Memorandum opinion by Justice Carlyle.

Tyler Court of Appeals holds District is immune from sewer backup as 20 year old plastic coupler which failed was not part of the motor system

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Sean Self v. West Cedar Creek Municipal Utility District, 12-20-00082-CV, (Tex. App – Tyler, Jan. 6, 2021)

This is an appeal from the granting of a plea to the jurisdiction in a sewage backup case in which the Tyler Court of Appeals affirmed the order.

Self and his wife Kimberly entered into a contract with the District in 2012  water and sewer services. After sewage backed up into their home in April 2015, the District made some repairs to the vault system. Another backup occurred in 2016 and Sean Self sued the District alleging negligent use of motor-driven equipment, premises defect, unconstitutional taking, non-negligent nuisance, and breach of contract. The District filed a plea to the jurisdiction, which was granted. Self appealed.

It is undisputed that a plastic coupler (known as a quick connect) failed causing the backup. Self argued the motors, pipes and couplers are all one system. The court explained in detail how the Self system worked. The coupler gives District employees the ability to remove the pump without cutting pipes. There is no motor in the coupler. It merely assists in disconnecting the pump if it needs to be worked on. If the coupler fails, gravity will cause any sewage coming from a higher-grade property to backfill Self’s property. Self’s expert plumber testified the pumps used can cause high pressure, which could potentially break the coupler, but he did not know that is what occurred in this instance.  However, there was no evidence that the coupler assists in sewage collection other than to the extent it helps maintain the connection between the pump and the discharge line. The evidence shows that, if the coupler breaks, whether the pump is on or not, the sewage in the tank would flow out to the ground or through the line in the tank and back into the house, due to the force of gravity, not the operation or use of motorized equipment. Under a premise defect theory, the duty owed by an owner of premises to an invitee is not that of an insurer. The coupler was placed in 1995. The fact that materials deteriorate over time and may become dangerous does not itself create a dangerous condition, and the actual knowledge required for liability is of the dangerous condition at the time of the accident, not merely of the possibility that a dangerous condition can develop over time. No evidence of actual knowledge existed. In the context of an inverse condemnation claim, “the requisite intent is present when a governmental entity knows that a specific act is causing identifiable harm or knows that the harm is substantially certain to result.” A taking cannot be established by proof of mere negligent conduct. No knowledge of intent is present. While Self alleged a claim for non-negligent nuisance, there is no separate waiver of governmental immunity for nuisance claims. Finally, as to the breach of contract claim, no goods are services were provided to the District, it was the District providing services to Self. As a result, no waiver of immunity exists.

If you would like to read this opinion click here. Panel consists of Chief Justice Worthen, and Justices Hoyle and Neeley.  Affirmed. Opinion by Justice Neeley. Docket page with attorney information found here.

Second Court of Appeals holds general law city has inherent power to require solid waste haulers to obtain a license

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Builder Recovery Services LLC v. The Town of Westlake, Texas, 02-20-00051-CV,  (Tex. App. – Fort Worth, Jan. 1, 2021)(mem. op.).

This is a declaratory judgment/ordinance invalidation suit brought by a solid waste collector where the Fort Worth Court of Appeals affirmed the Town’s power to require licenses. [Warning, this is a long opinion at 56 pages].

BRS contracts with home builders in the Town of Westlake to remove the temporary construction waste that the builders generate and place a dumpster on the property during construction. The dumpsters are towed to each site and place as much as 20,000 pounds of weight upon the Town’s roads, with as many as ten visits to each site during construction. BRS initially raised concerns that the Town’s regular solid waste hauler (Republic) could not be the sole hauler for temporary construction waste. The city council delegated the Town’s staff to meet with the builders to discuss amendments to the Town’s ordinances in order to address the issue. The Town eventually passed an ordinance allowing third-party haulers like BRS to obtain licenses for temporary construction waste services in imposed certain regulations on the license. BRS brought suit asserting, among other things, that the license fee was not tied to actual administrative costs, that the ordinance was preempted by state law, and challenging the Town’s authority to pass the ordinance. After a bench trial, the trial judge found largely in favor of the Town but did invalidate the license fee calculation. BRS appealed.

The court first went through a detailed analysis of the power distinctions between general law cities and home rule cities. While the Town is a general law city, the court held it has the power to regulate solid waste collection under §361.113 of the Texas Health and Safety Code. The court rejected BRS’ argument that the section does not empower the Town to issue licenses as a license is an inherent part of the regulatory power.  Licenses are one means for a governmental agency to regulate activities that the Town is empowered to regulate. The court analyzed the various powers of the Town, including inherent powers and noted the power to regulate carries with it all means to accomplish the regulation, including licensing. Further, BRS failed to establish the ordinance was invalid because it failed to negate all conditions which would warrant the ordinance.  Further, such rules do not conflict with the franchise section of the same subtitle of the statute. Franchises and licenses are separate creatures. The court analyzed the wording of the various health and safety code sections and determined the power to license is not preempted by any other portion of the code. It held a “dumpster” is not the same as a “container” as that term is defined under the Solid Waste Disposal Act. The court determined the license fee issue was moot due to an amended ordinance.  However, due to an outstanding issue of attorney’s fees, the court remanded to the trial court for disposition.

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

Attorney’s fees for breach of contract under Tex. Loc. Gov’t Code §271.153 valid only if equitable and just – denied for much smaller change order amount

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Dowtech Specialty Contractors, Inc. v. City of Weinert, 11-18-00246-CV (Tex. App. – Eastland, September 25, 2020)(mem. op.).

This is a breach of contract dispute where the Eastland Court of Appeals affirmed a trial court judgment awarding Dowtech a small amount of damages, but denied the contract remainder and attorney’s fees.

The City’s water supply is a combination of well water and water obtained from the North Central Texas Municipal Water Authority (the NCTMWA). The well water needed to be treated so the City, using several grants, decided to construct a pressurized system to keep the well water separate from NCTMWA water. During the bid process, the engineer advised the bidders to adjust a line item for instrumentation to allow NCTMWA to control certain valves/parts, but also a separate control system for the City. The revised bid specifically noted that not all necessary components for a full system were specified and the contractor must provide all items needed for a functional system. Dowtech was awarded the bid, but the main difference from the losing bidder was the cost of line item. Later, the City adjusted the pumphouse and issued a change order. When Dowtech asserted it was finished, the City noted it had not installed all parts of the instrumentation system, to which Dowtech asserted the bid did not require an operational system. After Dowtech submitted a final invoice, to which the City asserted it breached the agreement and refused to pay the final invoice. Dowtech sued the City for breach of contract and sought to recover both the contract balance and the charges for the additional work.  The City counterclaimed.  After a bench trial, the trial court awarded Dowtech $2,052.50 for the pumphouse work, but that Dowtech did not complete all work required by the contract so was not entitled to the contract price. It also denied the request for attorney’s fees and interest. Dowtech appealed.

The Court of Appeals held Dowtech did not plead the affirmative defense that its performance under the contract was excused and does not argue that the issue was tried by consent. But even if it had, the evidence was legally and factually sufficient to support the trial court’s determination Dowtech failed to complete all contracted work. Further, Dowtech did not file a motion for new trial or otherwise object to the trial court’s failure to award prejudgment interest on the change order amount. Therefore, Dowtech failed to preserve this issue for appeal.  Additionally, because the suit was brought under Tex. Loc. Gov’t Code §271.153, attorney’s fees can only be awarded if equitable and just. The trial court had discretion to award fees and the fact both parties failed in their primary claims (with Dowtech winning only as to the much smaller change order amount), the Court of Appeals felt the record did not reflect an arbitrary or unreasonable decision by the trial judge. The judgment was affirmed.

If you would like to read this opinion click here. The panel consists of Chief Justice Bailey, Justice Stretcher, and Senior Justice Wright.  Memorandum opinion by  Chief Justice Bailey.

 

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.

Texas Supreme Court holds 1949 utility easements with “reconstruction” language means easements are general with no fixed width

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Southwestern Electric Power Company v. Kenneth Lynch, Tommy Batchelor, and Twant Wilson, Texas, 18-0768, (Tex. – Feb. 28, 2020)

This is a property/easement dispute where the Texas Supreme Court held a set of utility easements were general, with no fixed width, regardless of the historic use.

In 1949, Southwestern Gas & Electric Company (Southwestern) acquired a number of easements over a stretch of land in northeast Texas to construct a transmission line. Southwestern constructed wooden poles at the time. Southwestern Electric Power Company (SWEPCO) later acquired these easements. The easements authorize SWEPCO “to erect towers, poles and anchors along” a set course on a right-of-way that traverses several privately owned properties and SWEPCO historically used only 30 feet of easement area. In 2014 and 2015, SWEPCO undertook a modernization project to replace the transmission lines.  SWEPCO offer to set a width of 100 feet to individual property owners. Some owners accepted, but the Landowners in this case did not. After the project was completed, the Landowners filed suit seeking a declaratory judgment fixing SWEPCO’s easements to a thirty-foot width, fifteen feet on each side of the transmission line. They asserted the offer of 100 feet meant SWEPCO intended to exceed the 30 feet in the future.  SWEPCO filed two pleas to the jurisdiction, which were denied, and counterclaims for trespass and breach of contract. The trial court held a bench trial and held for the Landowners. The judgment was affirmed by the court of appeals.

The Court first determined SWEPCO’s pleas were properly denied as a ripe controversy existed regarding the scope of the easement, regardless of whether SWEPCO ever utilized more than 30 feet. While acknowledging many of the Landowner’s assertions were hypotheticals, it noted their claims are inextricably tethered to a disagreement of present scope. Regarding that scope, the easements do not state a specific maximum width of the right-of-way, nor do the easements specify how much of the land SWEPCO is entitled to access. Instead of construing the easements as general easements that intentionally omitted a defined width, the courts below incorrectly held the easements became “fixed and certain” once the transmission lines were constructed. The plain language of the easements stated they allowed for reconstruction and alteration, which contemplates future construction and installation of new poles and additional lines. The Court has recognized the existence of general easements that do not require a fixed width.  As a result, they are general easements with no fixed widths. However, the  Court noted a holder of a general easement must utilize the land in a reasonable manner and only to an extent that is reasonably necessary.  If at some point in the future SWEPCO utilizes the easements in a way that the Landowners believe is unreasonable and not reasonably necessary, or in a way that violates the express terms of the easements, the Landowners could at that point bring suit to enjoin SWEPCO’s use of the easements.

If you would like to read this opinion click here. Opinion by Justice Green. Justice Bland did not participate. Docket page with attorney information can be found here.

Taxpayer lacked standing to challenge Houston drainage fee ordinance despite charter election invalidity

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Elizabeth C. Perez v. Sylvester Turner, et al., 01-16-00985-CV (Tex. App. – Hous. [1st Dist], Oct. 15, 2019)

This is a long standing/multi-opinion dispute challenging the City of Houston’s drainage fee ordinance. Prior summaries found here and here. In this substituted opinion (for an opinion issued in August of 2018), the First District affirmed the granting of the City’s plea to the jurisdiction.

Voters in the City of Houston adopted a dedicated charter amendment for a “Pay-As-You-Go Fund for Drainage and Streets.” It then adopted a regulatory ordinance. One source of funding was a charge imposed on properties directly benefitting from the drainage system. The ballot language for the charter amendment was originally held misleading and invalid. After several disputes from the subsequent ordinance occurred, Perez  brought this ultra-vires claim and sought a judgment declaring the drainage fee ordinance invalid (yet again); an injunction against the assessment, collection, and expenditure of taxes and fees pursuant to the ordinance; and reimbursement, “on behalf of herself and all other similarly situated persons or entities,” of taxes and fees assessed and collected pursuant to the ordinance and paid “under duress.”  The City filed a plea to the jurisdiction asserting Perez lacked standing because she had suffered no particularized injury separate from the public, which was granted. Perez appealed.

The prior judicial declaration that the Charter Amendment is void does not address the Drainage Fee Ordinance. Thus, to the extent that Perez’s claims are based on her allegations the prior opinions invalided the ordinance, such are misplaced. The charter amendment was only needed to shift a portion of ad valorem tax revenue from debt services and was not required for authority to pass a drainage fee ordinance. Local Government Code Chapter 552 provided independent authority for such an ordinance. Perez has pleaded that she paid “illegal” drainage fees, she has cited to no authority declaring illegal the Drainage Fee Ordinance. Further, Perez has to demonstrate she “suffered a particularized injury distinct from that suffered by the general public” by the drainage fees collected.  The municipal fees were assessed to property owners across the City. The payment of municipal fees, like the drainage fees assessed against Perez’s properties here and numerous other properties in the City, does not constitute a particularized injury. Taxpayer standing is an exception to the “particularized injury” requirement.  However, it is not enough for the plaintiff to establish that she is a taxpayer— the plaintiff “may maintain an action solely to challenge proposed illegal expenditures.” A litigant must prove that the government is actually expending money on the activity that the taxpayer challenges; merely demonstrating that tax dollars are spent on something related to the allegedly illegal conduct is not enough.  Perez asserts the fees were collected illegally.  However, she was unable to establish the City is actually making any “measurable, added expenditure” of funds on illegal, unconstitutional, or statutorily unauthorized activities. As a result, she is not entitled to taxpayer standing. The plea was properly granted.

If you would like to read this opinion click here. Panel consists of Justice Keyes, Justice Lloyd and Justice Kelly. The attorneys listed for the City are Collyn A. Peddie and Patricia L. Casey.  The attorneys listed for Perez are Dylan Benjamen Russell, Andy Taylor  and Joseph O. Slovacek.

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

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

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

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

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

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

1st District Court of Appeals holds section of Texas Water Code regarding sewer CCNs unconstitutional

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City of Tyler v. Liberty Utilities (Tall Timbers Sewer) Corp., 01-17-00745-CV (Tex. App. – Houston [1st Dist.], December 20, 2018)

This is a declaratory judgment case where the First District Court of Appeals in Houston held a provision of the Texas Water Code unconstitutional.

Liberty Utilities (Tall Timbers Sewer) Corporation provides retail sewer utility service in Smith County under a certificate of convenience and public necessity. The City of Tyler desired to provide sewer service in Liberty’s service areas. State law prohibited the dual service in the area, so the City went to the Legislature, which passed §13.2475 of the Texas Water Code.  This created an exception from the generally applicable law allowing the City to provide sewer service within its boundaries, even in Liberty’s service areas. Liberty then sued the City, successfully obtaining a declaratory judgment that §13.2475 is unconstitutional. The City appealed.

In this 21-page opinion, the court analyzed the constitutional prohibition against local laws under  Article III, Section 56 of the Texas Constitution. The court analyzed the legislative debate and the author’s stated intended purpose. The court determined the section was bracketed and intended to address Tyler and regulated its affairs as a local law. The court further determined none of the constitutional exceptions from the prohibition applied. “The City of Tyler’s legislative strategy to uniquely exempt itself from the operation of Water Code Section 13.247(a) was a violation of the Texas Constitution’s default preference for laws of general applicability and general prohibition of local laws.”  As a result, it held §13.2475 unconstitutional.

If you would like to read this opinion click here. Panel consists of Justice Keyes, Justice Bland, Justice Massengale. Opinion by Justice Massengale.

Contract for sale of waste water to golf course is a governmental function and no waiver of immunity exists for breach claim

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City of Merkel v Copeland, 11-16-00323-CV (Tex. App. — Eastland, October 18, 2018). 

This is a governmental immunity/breach of contract claim where the Eastland Court of Appeals reversed the denial of the City’s plea to the jurisdiction. 

The City entered into a contract with Tin Cup Country Club where the City would sell the waste (i.e. effluent) from the City’s waste water treatment plant with a minimum each year and a set amount per gallon. Tin Cup used the waste to water and fertilize the golf course. Copeland and Cully purchased Tin Cup and the contract.  The City later stopped providing water as the quality did not meet state requirements.  Plaintiffs sued for breach of contract. The City filed a plea to the jurisdiction which was denied. The City appealed. 

The court first determined the City was performing a governmental function, not proprietary.  While sale of waste is not a listed function, it is a required sub-component of the governmental function of water and sewer services. The City must get rid of the waste somehow under TCEQ regulations, so selling it is a reasonable means of fulfilling its overall function. The only waiver of immunity would be found in Chapter 271 of the Texas Local Government Code relating to goods or services provided to the entity. Since the City was not purchasing anything (but selling) the issue becomes whether Tin Cup was providing a service. Under section 271.151(B), a contract for the sale of certain acre-feet of reclaimed water is subject to waiver, but that section did not exist when the contract was executed.  As a result, only subsection (A) applies. The contract was not a “service” and was not intended to be a service.  As a result no waiver of immunity exists. The plea should have been granted. 

If you would like to read this opinion click here. Panel consists of Justices Bailey, Chief Justice  Grey (by assignment from Waco) and Wright (retired). 

City could not use Family Code legitimation to challenge standing in wrongful death case

City of Austin d/b/a Austin Energy v. Maria Del Rosario, 03-18-00107-CV (Tex. App. – Austin, July 3, 2018)

Jaime Membreno died in 2009 when he came in contact with one of the City’s overhead power lines while working on a construction job in Austin.  Membreno was a citizen of El Salvador. Jaime was never married to Maria. She asserts that after his death she gave birth to Jaime’s son in El Salvador where she lived.  She sued the City on behalf of her minor son under a premise-defect theory of liability. She claimed that the City “failed to use reasonable care to safely operate and maintain the electric distribution system and its overhead distribution lines and poles in particular.” The City filed a plea to the jurisdiction which was denied. The City appealed.

The City asserts to have standing to sue under the Wrongful Death Act, an illegitimate child must comply with the requirements of Texas Family Code §160.201(b), thereby establishing a father-child relationship. However, the Texas Supreme Court has previously held it is inappropriate to incorporate the requirements of the Family Code for legitimation into the Wrongful Death Act. Additionally, in order to try and establish a father-son relationship, Maria had a DNA test performed of Jaime’s brother. The decedent’s brother had a 99.8% chance that they are nephew and uncle. The brother swore that he had never engaged in sexual relations with Maria. Maria showed the birth certificate demonstrating Jaime was listed as the father and provided her own affidavit. The court held Maria marshaled proof from which the fact finder could conclude that the clear and convincing evidence showed that her child was the son of the decedent. The City asserted Maria also lacked capacity to sue, however, a lack-of-capacity challenge is not jurisdictional. As a result, the City’s plea was properly denied.

 

If you would like to read this opinion, click here. Panel consists of Justice Goodwin, Justice Field and Justice Shannon. Memorandum Opinion by Justice Shannon. The attorney listed for the City is Ms. Chris Edwards.  The attorneys listed for the Plaintiffs are Sean B. Swords and David C. Wenholz.

Developer’s asserted causal link between use of bulldozers and inability to timely sell lots is insufficient to establish waiver of immunity says 13th Court of Appeals

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City of Weslaco v. Raquel Trejo and Roberto Trejo, 13-18-00024-CV (Tex. App. – Corpus Christi, June 21, 2018)

This is an interlocutory appeal from the denial of the City’s plea to the jurisdiction in a Texas Tort Claims Act case where the 13th Court of Appeals reversed but remanded the case.

The Trejos began to develop land into a residential subdivision. The Trejos hired Rio Delta Engineering to develop plans and designs for the subdivision’s infrastructure. Before lots could be sold, essential services such as water and sewer would have to be designed, built, and approved by the City. The City elected to combine the sewer and water plans of the Trejos as well as another client of Rio Delta, the Apostolic Church. The Trejos alleged the City delayed the sewer extension unreasonably, costing them the ability to timely sell lots. The Trejos filed suit alleging that the City was negligent in managing the sewer construction project, which “involved the use of motorized vehicles.” The City filed a plea to the jurisdiction, which was denied. The City appealed.

Because the Legislature has deemed sanitary and storm sewers to be a governmental function, immunity applies to the design allegations. The Trejos did not establish a waiver for such a claim.  No waiver exists for negligent training of personnel or supervisors. As to the claims for negligent operation of bulldozers, there must be a causal nexus between the operation or use of the motor-driven vehicle or equipment and a plaintiff’s property damage. This causal nexus is not satisfied by the mere involvement of vehicles or equipment, nor by a use that “does no more than furnish the condition that makes the injury possible.” The Trejos “have drawn a thin thread of causation across the span of many years and several intermediary steps—the use of equipment led to the design flaws, which led to problems with the sewer, which led to construction delays, which led to the Trejos’ inability to sell houses in 2008, which led to the project’s insolvency in 2009, which led to the bank’s foreclosure—in an effort to link the use of motorized equipment to the underlying harm of foreclosure.”  Such is too tenuous to be a causal link. However, the court held the Trejos should be given the opportunity to amend so remanded the case.

If you would like to read this opinion click here. Panel consists of Justice Rodriguez, Justice Contreras and Justice Hinojosa. Memorandum Opinion by Justice Rodriguez.  He attorneys listed for the City are Hector X Saenz and Charles S. Frigerio.  The attorney listed for the Trejos is Savannah Robinson.

Texas Supreme Court holds leasing of lakefront property is proprietary for purposes of beach-of-contract claim

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Wasson Interests, Ltd. vs. City of Jacksonville,17-0198, — S.W.3d. — (Tex. June 1, 2018)

In 2016 the Texas Supreme Court held the proprietary/governmental dichotomy applies in a breach of contact case. Summary found here. In this companion case, the Court held the contract was entered into as part of the City’s proprietary function and immunity is not implicated when the City leased lakefront property.

The City of Jacksonville constructed Lake Jacksonville in the late 1950s to serve as the City’s primary source of water. In the 1990s, the Wassons assumed an existing 99-year lease of lakefront property owned by the City of Jacksonville. The lease specifies, among other things, that the property is to be used for residential purposes only. After living on the property for several years, the Wassons moved and conveyed their interest in the lease to Wasson Interests, Ltd. (“WIL”). WIL then began renting the property for terms of less than one week, which the City asserted violated the terms of the lease.  This began a series of suits and opinions involving the parties.  In its 2016 opinion the Texas Supreme Court held the proprietary/governmental dichotomy applied to contracts and remanded the case to the trial court. In this appeal, the question is whether the City’s action of leasing the property was proprietary or governmental. The trial court held the actions were governmental and WIL appealed.

The City argued the function of developing and maintaining the lake was a governmental function. As a result, all aspects, including the leasing of land to tenants, is governmental. However, the Court went through several prior cases and indicated it is the action committed at the time (i.e. the lease contract) which counts in determining the proprietary/governmental purpose. “We hold that, to determine whether governmental immunity applies to a breach-of-contract claim against a municipality, the proper inquiry is whether the municipality was engaged in a governmental or proprietary function when it entered the contract, not when it allegedly breached …Stated differently, the focus belongs on the nature of the contract, not the nature of the breach. If a municipality contracts in its proprietary capacity but later breaches that contract for governmental reasons, immunity does not apply. Conversely, if a municipality contracts in its governmental capacity but breaches that contract for proprietary reasons, immunity does apply.” In making that determination, the court held “we consider whether (1) the City’s act of entering into the leases was mandatory or discretionary, (2) the leases were intended to benefit the general public or the City’s residents, (3) the City was acting on the State’s behalf or its own behalf when it entered the leases, and (4) the City’s act of entering into the leases was sufficiently related to a governmental function to render the act governmental even if it would otherwise have been proprietary.” After utilizing this test to the facts, the Court held the leasing of property is not essential or related to the waterworks operation. Merely because an activity “touches” upon a governmental function does not make it governmental in all things. As a result, it is proprietary in nature. The case is remanded for trial.

If you would like to read this opinion click here. Opinion by Justice Boyd. The docket page for this case is found here.