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. 

Texas Supreme Court holds general-law cities cannot impose a revenue-based licensing fee for construction trash haulers

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Builder Recovery Services, LLC v. The Town of Westlake, Texas, 21-0173, (Tex, May 20, 2022) 

In this case, the Texas Supreme Court held that general law cities have limited authority to impose license fees for solid waste collections.  

The Town of Westlake is a general-law municipality that imposed a percentage-of-revenue license fee on companies like Builder Recovery Services, LLC (BRS) which hauls trash away from construction sites.  The Town has a percentage agreement with Republic Services, which performs regular residential and commercial trash collection for the Town, but which also included construction site hauls. The Greater Fort Worth Builders Association sent the Town a letter questioning the Town’s legal authority to make Republic the exclusive provider of construction trash-hauling services. BRS and the Town’s staff attempted to agree on terms for a license, but no agreement was reached. BRS began operating in the Town without a license. When the Town cited BRS for operating without a license, it brought suit. The Town amended the fee amount during the suit. The trial court ruled the original fee was invalid and rejected the remainder of the BRS claims.  Both sides appealed. The court of appeals affirmed in part and reversed in part, by affirming the judgment favoring the Town but holding the BRS claim regarding the original fee was moot. BRS appealed.  

General-law cities, like the Town of Westlake, possess only those powers and privileges that the State expressly confers upon them.  A claim that a percentage-of-revenue fee of any size is unlawful is not mooted by an intervening adjustment to the size of the fee.  The court made a distinction between a licensing fee and a franchise fee. The Town’s relationship with Republic is governed by an exclusive franchise agreement as described in section 364.034 of the Health and Safety Code. The Court assumed the Town had the authority to require a license, then focused its analysis on the types of licensing fees allowed. A licensing fee is meant to recoup administrative costs of the licensing system. The Town does not regulate the price of trash hauling in this instance. How much BRS charges its customers to haul their trash “is none of the Town’s concern, and this privately negotiated, fluctuating amount has nothing to do with how much money the Town needs to administer its trash-hauling regulations.”  The Court held it was unlikely that the Legislature’s grant to general-law cities the generic authority to regulate trash hauling was intended to include an implied power for a revenue-based charge of this nature.  While a licensing fee properly tied to administrative costs is allowed, it cannot be revenue-based. Next, the Court held that while the fee and remainder of the regulations appear to be a packaged deal, the ordinance has a severability clause. But what remains was not argued, so the Court remanded the case. 

 Panel consists of Chief Justice Hecht, and Justices Lehrmann, Boyd, Devine, Blacklock, Busny, Bland, Huddle, and Young. Court of Appeals’ judgment reversed; Remanded to Court of Appeals. Opinion by Justice Blacklock can be read here. Docket page with attorney information found here. 

First District Court of Appeals holds property owner could not bring a takings claim based on judicial order regarding substandard building

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Jaime Jaramillo v. The City of Texas City, 01-20-00654-CV, (Tex. App.—Houston [1st Dist.], Feb. 8, 2022, no pet. h.) (mem. op.).

This is a takings case brought after the City initiated an enforcement action for a dilapidated building. The First District Court of Appeals affirmed the dismissal of the property owner’s claims.

Jaramillo entered into an Agreed Order of Abatement with the City where the City would be able to abate and demolish the structures on the real property belonging to Jaramillo any time after a certain date if he did not comply with the ordinances and the International Property Maintenance Code. After reviewing the Agreed Order with the prosecutor and signing it, Jaramillo filed suit two weeks later claiming a taking of his property, denial of procedural due process, fraud, and civil conspiracy. The City filed a motion to dismiss for want of jurisdiction due to entering an unappealable order and sovereign immunity. The trial court granted the motion. Jaramillo appealed.

The court found that there was no waiver of immunity asserted as immunity cannot be waived for an intentional tort.  It further found civil conspiracy is a derivative tort; therefore, it cannot stand alone. Under his due process claim, Jaramillo agreed in the order that the building was substandard.  A court, not an administrative body, entered the order based on the agreement. As a result, no procedural due process was violated.  Jaramillo failed to preserve any errors before accepting and signing the Agreed Order. The Order was affirmed.

Panel consists of Chief Justice Radack, and Justices Rivas-Molloy and Guerra. Memorandum Opinion by Justice Rivas-Molloy can be read here. Docket page with attorney information found here.

Fort Worth Court of Appeals holds Plaintiffs properly plead constitutional challenges to City’s short-term rental ordinance

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City of Grapevine v. Ludmilla B. Muns, et al, 02-19-00257-CV (Tex. App. – Fort Worth, Dec. 23, 2021)

This is an opinion on rehearing where the Fort Worth Court of Appeals reversed in part and affirmed in part the trial court’s order regarding the validity of the City’s short-term rental ordinance. [Comment: warning, this is a long opinion – 50 pages.]

The City asserted its zoning ordinance was written in a way that prevented short-term rentals (STRs), but some “bed and breakfasts” were allowed.  However, there was sporadic enforcement. After an increase in complaints about negative effects from STRs, the City conducted a study.  At the end of the study, the City passed an ordinance banning short-term rentals (STRs) in the entire city. The City provided a 45-day grace period before enforcement would begin. Several property owners and commercial real estate services sued to invalidate the ordinance. The City filed a plea to the jurisdiction and motion for summary judgment, which were denied. The City appealed.

The City first contended the Plaintiffs failed to appeal any decisions to the board of adjustment and therefore failed to exhaust their administrative remedies. Generally, a party must exhaust the administrative remedies available under Chapter 211 of the Local Government Code before seeking judicial review of an administrative official’s decision. However, the Plaintiffs did not apply for permits or otherwise receive any enforcement notification to which they must appeal. Statements made about the City’s intent to enforce an ordinance, without more, is not the type of administrative action over which an appeal is triggered. Appealable actions are those actual determinations made in the act or process of compelling a property owner’s compliance with a City ordinance. Information-only statements are not appealable administrative determinations.  Further, the Plaintiffs challenged the constitutionality of the ordinance, which does not always require exhaustion. Generally, administrative bodies do not have the authority to rule on the constitutionality of statutes and ordinances. And while constitutional challenges are not “globally exempted” from the exhaustion requirement, if the administrative body lacked the ability to “render a relief that would moot the claim” then no exhaustion is required.  The board of adjustment lacked the authority to grant the Plaintiffs’ the right to conduct an STR, so no exhaustion is required. Next, the City argued that STRs do not fit within the definition of a “single-family detached dwelling” under its zoning code because STRs are not occupied by a single-family but are occupied by groups of people. However, the City’s code defines the word “family” in such a way that it does not require that the people living as a “single housekeeping unit” be related by blood or marriage. It also has no duration of occupancy limit. As a result, by its own wording, the code does not prohibit STRs as long as the occupancy fall within the common and ordinary meaning of “family.”  The City next argued the Plaintiffs did not directly challenge the validity of the STR ordinance (only an interpretation of whether it applied to them) so no declaratory relief can be granted.  However, the court found their retroactivity, due-course-of-law, and takings claims turn on whether the existing code allowed STRs. To that extent, they have a valid justiciable controversy. Under the takings analysis, the court held that although a property owner generally has no vested right to use his property in a certain way without restriction, they have a vested right in the real property, which includes the ability to lease. From a constitutional standpoint, that is sufficient to trigger a protected property right interest for jurisdictional purposes. This, along with the fact the court found that STRs were not expressly prohibited by the wording of the ordinance,  creates a fact issue as to whether the Plaintiffs suffered a taking. The court also noted that, contrary to the City’s arguments, lost profits are a relevant factor to consider in assessing the property’s value and the severity of the economic impact on a property owner. The Plaintiffs pled and submitted evidence to support that STRs “generate higher average rent than long-term leases, even after expenses” and that the STR Ordinance prevents them from “participating in an active, lucrative market for [STRs].” Next, the court did agree with the City that the regulation of STRs is not preempted by the Tax Code, as alleged by the Plaintiffs. Plaintiffs did not point to any provision in either the Tax Code or the Property Code that implies that the legislature meant to limit or forbid local regulations banning STRs. The court then addressed the retroactive law arguments, holding that a “settled” right is different than a vested right and the Plaintiffs asserted the STR ordinance impaired their settled property rights under the common law and under the City’s code to lease their properties on a short-term basis. The issue is not about the “property owners’ right to use their property in a certain way,” but about the owners’ “retaining their well-settled right to lease their property.” Next, in the substantive-due-process context, a constitutionally protected right must be a vested right that has some definitive, rather than merely potential existence. Property owners do not acquire a constitutionally protected vested right in property uses once commenced or in zoning classifications once made. Thus, although the Homeowners have a vested right in their properties, they do not have a vested right under the Zoning Ordinance to use them as STRs.  However, the court found they do have a fundamental leasing right, which is sufficient to plead, jurisdictionally, a due-course-of-law claim. The court clarified in this rehearing opinion, that its holding on this point is limited to the fact a property owner has a fundamental right to lease, but the durational limits may be valid or may be invalid depending on the extent of the regulatory intrusion into that right. The intrusion goes to the merits of the case, which the court declined to address as part of the interlocutory appeal.  In short, the Plaintiffs properly plead all claims for jurisdictional purposes, except a claim under a preemption theory.

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

Fort Worth Court of Appeals holds one city was not entitled to a plea to the jurisdiction in condemnation suit brought by adjoining city

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Town of Westlake, Texas v. City of Southlake, 02-21-00241-CV  (Tex. App. – Fort Worth, Dec. 23, 2021)

This is an interlocutory appeal from the denial of the Town of Westlake’s plea to the jurisdiction in a case where the City of Southlake filed condemnation proceedings against the Town of Westlake.  The Fort Worth court of appeals affirmed the denial. [Comment: warning, this is a long opinion – 49 pages.]

The City of Southlake moved to condemn approximately 1400 feet of land owned by the Town of Westlake. In Southlake, a residential development was principally within Southlake, but abutted the boundary with Westlake. Immediately inside Westlake’s eastern town limit is a right of way owned and maintained by Westlake that abuts the lanes of Farm-to-Market Road 1938, but the actual road is owned by the State of Texas. The construction of the present configuration of FM 1938 was a cooperative effort of Southlake, Westlake, Keller, and Tarrant County.  Westlake opposed for years the developer’s requests for access across Westlake’s ROW as only one access to the development currently exists and the developer needed two. Westlake claims that the present condemnation action brought by Southlake is an attempt by Southlake to use its powers of condemnation to gain access to FM 1938 that the developer has not been able to negotiate. Southlake followed the condemnation procedures outlined in chapter 21 of the Texas Property Code and the commissioners awarded Westlake $22,000 for the condemnation. Westlake filed a motion to dismiss which was denied. Then, just before the award was filed with the district court, Westlake filed a plea to the jurisdiction in the district court. The court noted the plea was not a plea, but should have been a motion opposing the taking and denied the plea.  Westlake filed this interlocutory appeal in response. Southlake filed a motion to dismiss at the court of appeals level.

With regard to Southlake’s motion to dismiss, the trial court’s jurisdiction was triggered once the commissioners’ findings were filed, even if Westlake “jumped the gun” and filed the plea before the commissioners’ filing.  There is no consequence for filing early. As a result, the matter is properly before the appellate court. Next, regarding Westlake’s plea, Westlake first argues no waiver of immunity exists under §251.001 of the Local Government Code, however the court noted the language allows condemnation regardless of whether the property is already public or private, whether it is inside the city or outside, and possesses safeguards to prevent abuses. Because the statute allows condemnation of public property, it must, therefore include a waiver of immunity for the owning entity. Comparing the langue in §251.001 to similar provisions of the Utility Code (which the Texas Supreme Court previously ruled constitute a waiver of immunity), the court held immunity is waived for Westlake.  While case law states that when one governmental entity is condemning property owned by another governmental entity, the condemning entity must establish the “paramount importance” standards (i.e. it has a public need greater and will not destroy the public nature).  However, the paramount importance doctrine is not jurisdictional. With regards to Westlake’s argument that § 311.002 of the Transportation Code (giving cities exclusive control over streets and highways) the record has not been established enough to make the determination of whether the condemnation will interfere with such streets (since Westlake owns only the adjoining ROW). The record was also not sufficiently developed to establish whether Southlake could establish a valid public purpose.  As a result, the plea was within the trial court’s discretion to deny.

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

Texarkana holds city properly supported its summary judgment to permanently enjoin mobile home park

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Polecat Hill, LLC, et al. v. City of Longview, Texas, et al. 06-20-00062-CV (Tex. App. – Texarkana, December 2, 2021).

This is a nuisance/permit case brought under Chapter 54 of the Texas Local Government Code where the Texarkana Court of Appeals affirmed the judgment entered on behalf of the City.  [Comment: this is a long, 39-page opinion].

Polecat owned 5 acres of land within the City limits. Polecat received a notice of violation from the City asserting the property violated several health and safety ordinances and needed to be repaired. After receiving the notice, Polecat sued the City. The city counterclaimed against the corporate owners and sued the property in rem. Polecat asserted the property had operated as a location for manufactured dwellings to affix to real property and obtain connections since the 1960s. Polecat argued that the City refused to allow it to proceed with its plans to prepare the Property to be on public sewer service. Polecat argued that, instead, the City was requiring it to apply for a mobile home park license and comply with city ordinances by dedicating property to install fire hydrants, dedicating a turnaround space for fire trucks, and absorbing the cost of water flowing through the fire hydrants. The City asserted Polecat was illegally operating an unlicensed mobile home park and unlicensed travel trailer park in violation of the City’s code of ordinances.  The trial court granted the City’s traditional and no-evidence motions for summary judgment, resulting in a final judgment in favor of the City. The trial court’s order specifically found that the Polecat Defendants’ violations of city ordinances created a substantial danger of injury or adverse health impact and that a permanent injunction was necessary to prohibit the specific conduct that violated the ordinances and to require conduct necessary to comply with them. Polecat appealed.

The summary judgment evidence showed that the Property was continuously operated as a mobile home and travel trailer park. Polecat testified that the Property was a residential property that was eighty percent occupied, but admitted it housed rental mobile homes since the 1960s, as well as seven travel trailers.  The City’s appraisal district had labeled the Property as a mobile home park, and Polecat had never challenged that designation. Even the TNRCC sent notices of violations to Polecat related to improperly hooked up septic lines. The summary judgment evidence showed that the City was willing to work with the Polecat Defendants to obtain mobile home and travel trailer park licenses and would consider a site plan that complied with city ordinances, however, Polecat did not agree to comply with the ordinances.  During discovery, numerous other violations became apparent, including violations preventing fire trucks from being able to properly access or service the Property.  Polecat’s testimony established it never applied for a license to operate a mobile home park or travel trailer park.  The City’s traditional summary judgment motion established various violations of the City’s ordinances. The City also filed a no-evidence motion for summary judgment asserting that because the City was not requesting the dedication or transfer of any portion of the Property to the public for public use; the City had not deprived the Polecat Defendants of all viable use of the Property. Further, it was Polecat’s failure to apply for a site plan permit and a license that prevented the City from extending sewer services. Polecat also admitted it was not challenging the validity of any ordinances.

The court found Polecat failed to preserve its appellate points objecting to the City’s summary judgment evidence as they complained of only procedural defects and failed to obtain a ruling. Next, the court held the City was not required to prove continuing violations in order to be entitled to injunctive relief under Chapter 54. Polecat’s petition did not contain any challenge to the city ordinances themselves or allege that the ordinances did not apply to them and therefore was not entitled to any declaratory relief. The court also noted that there were multiple defendants, including the property in rem, but only Polecat responded to the summary judgment on behalf of itself alone. As a result, the other defendants could only attack the granting of the summary judgment by asserting the City failed to carry its burden of proof. The City met its burden to establish entitlement to summary judgment and permanent injunctive relief. Further, “[i]n a regulatory taking, it is the passage of the ordinance that injures a property’s value or usefulness.” Polecat does not challenge the passage of any ordinance. Instead, the petition focused on whether the City’s intentional actions resulted in inverse condemnation.  However, since the City did not destroy all economically viable use of the property, there can be no taking. Additionally, Polecat’s summary judgment evidence (which Polecat argued created a fact issue) contained mainly affidavits that were unsigned and unnotarized. As a result, Polecat failed to create a fact issue with proper summary judgment evidence. The trial court properly entered judgment for the City.

If you would like to read this opinion click here. Panel consists of Chief Justice Morris and Justices Burgess and Carter. Opinion by Justice Burgess.

First Court of Appeals holds 380 development agreement was an agreement for goods and services (waiving immunity) but dismissed all other claims brought against the City by the developer

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Town Park Center, LLC v. City of Sealy, Texas, Janice Whitehead, Mayor, Lloyd Merrell, City Manager and Warren Escovy, Assistant City Manager, 01-19-00768-CV, (Tex. App – Hou [1st], Oct. 28, 2021)

In this contract dispute, the First Court of Appeals in Houston affirmed in part and reversed in part the City’s plea to the jurisdiction. This is the third lawsuit involving the parties and underlying dispute.

Town Park Center and the City executed a “380” Economic Development Agreement (“the EDA”) to develop a commercial shopping center on Town Park’s property. Town Park Center agreed to develop and construct the shopping center according to a development plan that the City had approved. The City agreed to pay annual economic development grant payments (based on sales tax collections) to Town Park Center “as an incentive to comply with this Agreement.” Town Park Center first filed suit against the City and officials, asserting breach of contract and other claims. The basis was an assertion the EDA required the City to sell stormwater detention capacity to Town Park and failed. The City filed a plea to the jurisdiction, which was granted as to the city but not the individual officials. The officials appealed but Town Park non-suited. Town Park then filed a second suit against other officials, but which was otherwise identical.  Town Park later non-suited, only to file a third suit seeking mandamus, declaratory, injunctive relief, takings, ultra vires claims and claims under the “vested rights provision” of Local Government Code chapter 245. The factual allegations were nearly identical to the first and second suit. The City filed a plea to the jurisdiction and argued immunity as well as res judicata “ish” arguments. The trial court granted the plea and Town Park Center appealed.

The court noted that res judicata is an affirmative defense and could not be raised in a plea to the jurisdiction. It declined to consider the arguments through the lens of a summary judgment noting the trial court consideration lacked the hallmarks of a true summary judgment proceeding, including the required 21 days’ notice of a hearing date. However, the City also raised immunity defenses. The court held the EDA constituted a contract for goods or services which can trigger a waiver of immunity. The EDA included a provision for Town Park Central to build and dedicate a road to the City as part of the development, which therefore constitutes a service.  The trial court therefore erred in granting the plea as to the breach of contract claim. However, as to the Chapter 245 vested rights claim, Town Park Center did not identify any City order, regulation, ordinance, rule, or other requirement in effect when its rights in the project vested that mandates the sale of the capacity at issue. With no change in order or rule, Chapter 245 is inapplicable. As to Town Park’s takings claim, it failed to establish the City’s refusal to allow the purchase of detention capacity deprived them of the beneficial use of the property. Specifically, the court noted Town Park Center finished the development and sold it to host a grocery store. The City, therefore, did not deprive it of all economic use of the property. As to the ultra vires claims, the court first chastised the parties for failing to follow proper pleadings rules, making the determination more difficult on the court, specifically by labeling various amended pleadings as supplemental pleadings. Considering the pleadings as filed, the court held the City officials ended up joining the City’s plea as part of a supplement (without objection from the other side). Merely failing to comply with a contract does not give rise to an ultra vires claim.  While Town Park Central points to a city resolution allowing for detention capacity purchases, it does not mandate the sale of detention capacity. It instead only provides that the City may sell detention capacity, which is discretionary. As a result, the ultra vires claims were properly dismissed.

In short, the court reversed the dismissal of the breach of contract claim, ultimately affirmed the dismissal of all other claims, and remanded for trial.

Panel consists of Justices Kelly, Guerra, and Farris. Opinion by Justice Farris can be read here. Docket page with attorney information found here.

The plaintiff failed to show that damages were insufficient in a condemnation case where there was sufficient evidence supporting the judgment of the trial court.  

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Special contributing author Laura Mueller, City Attorney for Dripping Springs

Castellanos v. Harris County, Texas and City of Baytown, Texas., No. 01-20-00414-CV (Tex. App.—Houston [1st Dist.] Oct 7, 2021) (mem. op.).

In this appeal from a trial court’s judgment in a condemnation case, the First Court of Appeals in Houston affirmed the trial court’s judgment because there was sufficient evidence to support the amount in their judgment as it related to the condemned property.

The plaintiffs’ property was the subject of a condemnation case including a road easement, water line easement, a temporary construction easement, and damages for the remainder of the project. After the trial court issued its judgment, the plaintiffs appealed arguing that the amount of compensation in the judgment should have been higher and that their suggested jury instruction regarding compensation to make changes to the home post-condemnation should have been given.

The Texas Constitution requires adequate compensation to any property owner whose property is taken by a governmental entity.  Tex. Const. art. I, § 17(a).  This value is determined by fair market value on the date of the taking which can take into account both the current use and the highest and best use.  See Crosstex N. Tex. Pipeline, L.P. v. Gardiner, 505 S.W.3d 580, 611 (Tex. 2016).  When only a portion of the property is taken both the value of what is taken and the damages to the remainder are both used to determine compensation.  Morello v. Seaway Crude Pipeline Co., LLC, 585 S.W.3d 1, 29–31 (Tex. App.—Houston [1st Dist.] 2018, pet. denied).  In addition, to complain about a jury instruction on appeal, the plaintiff needs to make such objection at the trial.  Tex. R. Civ. P. 274; Tex. R. App. P. 33.1.  To properly bring a claim that a ground of recovery or defense was not considered, the avenue would have been a motion for judgment notwithstanding the verdict or a motion to disregard a jury finding. Those motions were not filed.  The Court of Appeals affirmed the trial jury’s compensation amount because the plaintiffs did not prove that the evidence presented at trial required a different fair market value for the property and did not properly object to the lack of award for changes to the house post-condemnation.

The court of appeals affirmed the trial court’s judgment because the plaintiffs failed to conclusively establish that the amount of compensation was insufficient.

If you would like to read this opinion click here.   Panel consists of Justices Kelly, Guerra, and Farris.  Opinion by Justice Kelly.

 

City retains immunity from sewer backup claims as not evidence existed of specific, affirmative action by the city which caused damage

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Special contributing author Laura Mueller, City Attorney for Dripping Springs

City of Robinson v. Gabriel and Irene Rodriguez., No. 10-21-00075-CV (Tex. App.—Waco Oct 6, 2021) (mem. op.).

In this appeal from a trial court’s denial of the city’s plea to the jurisdiction based on a takings claim, the Waco Court of Appeals reversed and rendered judgment against the plaintiff because the plaintiff had not provided sufficient evidence that a specific, affirmative act of the city had caused the sewer backup.

The plaintiffs sued the city after they experienced multiple sewer backups. The specific two backups at issue were both investigated by the city.  Both times the city stated that the issue was on the plaintiffs’ property, but this conclusion was disputed.  The plaintiffs sued under a takings claim.  The city filed a plea to the jurisdiction arguing that it was immune from suit because proof of negligent contact related to the sewer backups is insufficient for takings liability.  The trial court denied the city’s plea to the jurisdiction and the city appealed.

To plead a takings claim under the Texas Constitution, the plaintiff has to show that the city intentionally damaged property for public use.  See Tex. Const. I, § 17; Gen’l Servs. Comm’n v. Little-Tex Insulation, Inc., 39 S.W.3d 591, 598 (Tex. 2001)(emphasis added).   This requires proof of the city knowing that a specific act would cause the damage or that that the specific damage was a consequential result of the specific action of the city.  “Evidence of a governmental entity’s failure to avoid preventable damage may be evidence of negligence, but it is not necessarily evidence of the entity’s intent to damage the plaintiff’s property.” See City of San Antonio v. Pollack, 284 S.W.3d 809, 821 (Tex. 2009).  Even finding that the sewer backup was caused by a blockage on the city side, without evidence of a specific act, the city’s immunity is not waived.  The Court of Appeals reversed and rendered on the trial court’s denial on the plea to the jurisdiction, and held that the city’s immunity was not waived.

If you would like to read this opinion click here.   Panel consists of Chief Justice Gray, and Justices Johnson and Rose.  Chief Justice Gray dissenting.  Opinion by Justice Johnson.

 

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

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

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

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

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

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

Junk vehicle owner failed to establish ownership in municipal court, so was not entitled to sue for taking in later suit

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Jane Vorwerk v. City of Bartlett and John Landry Pack, Mayor, 03-21-00001-CV, (Tex. App – Austin, August 6, 2021)

The Bartlett Municipal Court declaring a 1986 Toyota mobile home to be a junk vehicle. The municipal court found that defendant James Fredrick Hisle was the owner or person in lawful possession of the mobile home, he was properly notified and appeared in person before the court, and he was afforded ample time to remove the mobile home from his property under Ordinance. It was also declared to be a public nuisance. The court ordered removal and if Hisle did not remove it the City could.  Vorwerk filed suit in justice court asserting she owned the vehicle and the City committed a taking. The City’s filed a plea to the jurisdiction which was granted.

Vorwerk asserted she created a fact issue regarding the ownership of the vehicle. Vorwerk did not submit any evidence that she owned the mobile home at the time of the municipal-court proceeding. Therefore, because the relevant evidence presented by the City and the Mayor was undisputed, that is, that Vorwerk was not the registered owner, and because Vorwerk did not present any evidence that she was the owner of the mobile home at the time of the municipal-court proceeding, the court conclude that she did not raise a fact issue concerning her ownership of the mobile home at the time of the municipal court hearing. The JP properly dismissed the case for lack of jurisdiction.

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

 

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

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

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

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

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

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

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

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

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

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

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

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

U.S. 5th Circuit holds property owner’s federal Clean Water Act claim against Town for improper discharge was proper due to lack of comparable state regulation

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Stringer v. Town of Jonesboro, 20-30192 (5th Cir. Jan. 18, 2021)

In this §1983 taking suit and federal Clean Water Act (“CWA”) case, the U.S. 5th Circuit held the Plaintiff’s §1983 suit for damages due to sewage backup was barred, but not her Clean Water Act claim.

Stringer alleges that, since at least 2011, the Town’s wastewater treatment system has malfunctioned during periods of heavy rain, with chronic failures of a specific pump. She asserts the Town failed to respond to her complaints as political payback she ran against the mayor in an election.  She was also an alderwoman. The Louisiana Department of Health (LDOH) and the Louisiana Department of Environmental Quality (LDEQ) were aware of the overtaxed system. LDEQ sent the Town warning letters and issued compliance orders. LDOH also enforced the State Sanitary Code, issued the Town a compliance order imposed mandatory ameliorative measures and assessed a daily fine. Stringer brought a “citizen suit” under the CWA, 33 U.S.C. § 1365, as well as constitutional takings claims under 42 U.S.C. § 1983. She also sued the Mayor asserting he retaliated against her. The Defendants filed a motion to dismiss which the trial court granted. Stringer appealed.

The CWA creates a regime of water pollution regulation that harnesses state and federal power but also allows citizen suits. However, such citizen suits are not permitted if the applicable state is already prosecuting comparable enforcement actions. A state statute is “comparable” to the CWA so long as the state law contains comparable penalty provisions, has the same overall goals, provides interested citizens a meaningful opportunity to participate at significant stages of the decision-making process, and has adequate safeguards. The Louisiana Sanitary Code provides no formal or structured means for interested citizens to become aware of LDOH’s enforcement efforts, nor any mechanism by which they can call for further action. However, LEQA’s enforcement mechanisms provide for interested parties to obtain “periodic notice” of “all violations, compliance orders and penalty assessments,” because it mandates public comment before a proposed settlement is finalized, and because it permits third parties to “intervene in an adjudicatory hearing, or petition for an adjudicatory hearing if none is held.” However, LDEQ was not the focus of the Defendants’ diligent prosecution argument in the district court. Further, whether LDEQ has “diligently” pursued a comparable action under § 1319(g) may be “a fact-intensive question that can only be answered after the proper development of a record.”  As a result, the CWA claims should not have been dismissed. However, Stringer’s §1983 takings claim had a one-year statute of limitations. Stringer’s complaint confirms she was aware of the pertinent underlying facts as early as November 2011. A cause of action accrues when the plaintiff learns the facts giving rise to her injury. As a result, such claims were properly dismissed. Finally, Stringer’s First Amendment retaliation claim was also time-barred.

If you would like to read this opinion click here. Panel consists of Justices Elrod, Duncan and Wilson. Opinion by Justice Duncan.

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.