State trial court lacks jurisdiction over property dispute when U.S. government has a potential interest in the property

Rio Grande City Consolidated Independent School District v. City of Rio Grande, et al., 04-17-00346-CV (Tex. App. – San Antonio, June 27, 2018)

In this property dispute, the San Antonio Court of Appeals affirmed-in-part and reversed-in-part a trial court’s order granting the City’s plea to the jurisdiction.

The Rio Grande City Consolidated Independent School District (“District”) asserts it owns a 0.64 acre tract of land. It sued the City of Rio Grande (“City”) for trespass to try title and declaratory judgment. The U.S. government filed an intervention to preserve its interest in the property.  The City filed a plea/MSJ which the trial court granted. The District appealed.

Pursuant to 28 U.S.C. § 1346(f), federal district courts have exclusive original jurisdiction in trespass to try title claims where the U.S. government has an interest in property. As a result, the state trial court lacked jurisdiction to hear the title claim. The school district amended its pleading after the plea was filed to allege an unconstitutional taking. The plea/MSJ was not amended. Because the record shows the school district’s unconstitutional taking claim was not addressed in the plea to the jurisdiction/summary judgment motion, the trial court erred in disposing of this claim.

If you would like to read this opinion, click here.  Panel consists of Justice Angelini, Justice Barnard, and Justice Martinez. Memorandum Opinion by Justice Angelini.  The docket page with attorney information is found here.

Zoning amendment was not retroactive and property owner had no vested interest in perpetual use of his property for a specific purpose says Dallas Court of Appeals

 

Hinga Mbogo, et al. v. City of Dallas, et al. 05-17-00879-CV (Tex. App. – Dallas, June 19, 2018)

This is an appeal from an order granting the City Defendants’ plea to the jurisdiction in a constitutional challenge to zoning laws. The Dallas Court of Appeals affirmed the granting of the plea.

Hinga leased land and opened a general repair shop on Ross Avenue in Dallas, Texas, in 1986. At that time, the City’s zoning ordinances allowed automobile-related businesses on Ross Avenue. After performing a study which found automobile-repair shops were a concern in the area based on the connected roads and services in the area, the City amended its zoning ordinance in 1988 prohibiting such uses. At that time, Hinga was fully aware that continuing his business became a “nonconforming use.” In 1991, Hinga purchased the property, expanded and upgraded knowing the property was nonconforming. In 2005 the City again amended the zoning ordinance and codified specific provisions related to non-conforming uses and provided deadlines. A property owner could appeal to the board of adjustment to extend deadlines to comply with the requirements. The BOA gave Hinga a new compliance date of April 13, 2013. Hinga then received a zoning change and SUP which expired in 2015. Hinga applied for a new SUP in February 2016, which was denied. The City filed suit seeking a permanent injunction to prevent operations and sought fines of $1,000 per day. Hinga counterclaimed and brought in various City officials. The City defendants filed a plea to the jurisdiction, which was granted. Hinga appealed.

Hinga argues the City’s ordinances, as applied to him, are unconstitutionally retroactive. A retroactive law is one that extends to matters that occurred in the past. Hinga asserted in 2005 and 2013 he had no notice the City would at some point make his use illegal. However, a law is not retroactive because it upsets expectations based in prior law.  Further, there are strong policy arguments and a demonstrable public need for the fair and reasonable termination of nonconforming property uses. In 2005 the City’s ordinance change allowed the owner of a nonconforming use to apply for a later compliance date if the owner would not be able to recover his investment in the use by the designated conformance date. The ordinance did not change any use but rather, it prospectively altered a property owner’s future use of the property. The 2013 ordinance likewise set a deadline for when it expired. As a result, the ordinances are not retroactive. Additionally, the court noted not all retroactive laws are unconstitutional. Here, any interest that Hinga had in the use of his property is not “firmly vested.” There is no bright-line rule and, generally speaking, an individual has no protected property interest in the continued use of his property for a particular purpose. The process provided likewise did not deprive Hinga of due process or single him out in any respect. The City allowed Hinga to run a business from 1991 through 2015 as either a nonconforming use or under a SUP; however, his use became illegal once his SUP expired. Hinga’s position under his takings argument appears to be that any restriction on his desired use of the property results in unconstitutional damage or destruction to his property. That is simply not the case as he had no vested right to perpetual, guaranteed use of his property in a specific way. As a result the plea was properly granted.

If you would like to read this opinion click here. Panel consists of Justice Bridges, Justice Myers and Justice Schenck. Memorandum Opinion by Justice Bridges. The docket page with attorney information can be found here.

Tenant’s lease language meant it did not have standing in condemnation suit

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Pizza Hut of America, LLC v. Houston Community College System, 01-17-00101-CV (Tex. App. – Houston [1st Dist.], December 19, 2017).

This is a condemnation suit where the central issue is a tenant’s standing in a condemnation suit and claim for a pro rata share of the award. The First Court of Appeals held the tenant had no standing.

Pizza Hut was a tenant of the Woodridge Plaza Shopping Center when the Houston Community College  System (“HCCS”) condemned the property. As part of the condemnation proceedings, a condemnation award of $427,100 was designated to be paid to all of Woodridge Plaza’s tenants, and Pizza Hut sought $7,100 as its pro rata share.  The trial court concluded, based on language in Pizza Hut’s lease, it had no standing and was not entitled to any of the award. Pizza Hut appealed.

The Pizza Hut lease with the prior owners had a condemnation clause noting “[t]he Condemnation Award shall belong to the Landlord, however, Tenant shall be entitled to the Unamortized Cost of Tenant Improvements, plus Tenant’s relocation expenses as determined by the condemning entity or court of law.”  After condemnation, Pizza Hut continued operating its business at the Woodridge Plaza location—using its established equipment and improvements—at a profit and without interruption of physical impairment by the condemnation. In April 2016, while the condemnation proceedings were still pending, Pizza Hut sold all ninety of its Houston locations, including the Woodridge Plaza location. The sale price included improvements to the Woodridge Plaza location but not the leasehold interest. A lessee generally has standing in condemnation proceedings and is entitled to share in a condemnation award when part of its leasehold interest is lost by condemnation. However, a tenant may waive this right in the lease or elsewhere. By the definition in the lease, Pizza Hutt suffered no impairment. The court rejected Pizza Hutt’s argument that the uncertainty created by the condemnation constituted an impairment. It operated with no change in profit and did not establish the “uncertainty” had any impact on its operation. As a result, it lacked standing to sustain a claim against HCCS.

If you would like to read this opinion click here. Panel consists of Chief Justice Radack
Justice, Justice Keyes and Justice Caughey. Memorandum Opinion by Justice Keyes.

Texas Supreme Court rules court of appeals has interlocutory jurisdiction for denied MSJ even though plea was denied months earlier

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City of Magnolia 4A Economic Development Corporation and City of Magnolia 4B Community Development Corporation v. David Smedley, 16-0718 (Tex. October 27, 2017).

This is a flooding case, however, the issue for the Supreme Court is a litigation procedural one. The Court of Appeals held that it did not have interlocutory jurisdiction over claims which were re-raised in a subsequent motion. However, the  Texas Supreme Court held the intermediary courts have interlocutory jurisdiction separately for each motion filed.

The underlying claims are Smedley sued the City and the economic development corporations and contracted entities alleging that the defendants caused the Smedley Property to flood and retain standing water, causing damages after they facilitated a Chicken Express going onto the lot next to his. The City was dismissed based on its plea to the jurisdiction. However, the EDCs filed their own pleas/Rule 91a motions which were partially denied. The EDCs later filed summary judgment motions, which were likewise denied. When the EDCs attempted to take an interlocutory appeal of the denial of the MSJ, the court of appeals stated the grounds were identical to those raised in the pleas. Therefore the court lacked interlocutory appeal jurisdiction under Tex. Civ. Prac. & Rem. Code §51.014. The EDCs filed a petition for review which the Supreme Court granted.

The crucial question is whether the twenty-day period to bring an interlocutory appeal ran from the trial court’s denial of the plea/91a motion or the date of denial of the MSJ. See TEX. R. APP. P. 26.1(b) (providing that a timely interlocutory appeal must be filed within twenty days after the challenged order was signed). The court of appeals held the proper trigger date was the denial of the plea. See case summary here. The Texas Supreme Court, citing its own prior precedence, noted that if an amended plea was merely a motion to reconsider, then the twenty-day clock did not reset.  City of Houston v. Estate of Jones, 388 S.W.3d 663 (Tex. 2012).  The Court noted it was compelling that the original plea was a pleadings challenge only and the later motion was an evidence-based motion.  The EDCs asserted that in light of the discovered evidence, there was no evidence as to the claims under the Water Code or Takings Clause, and that there was affirmative evidence the EDCs did not own or control the lot, preventing them from being able to provide injunctive relief.  The Court cautioned that the procedural mechanisms, alone, is not dispositive and a court must analyze the substance of the motions. However, after doing so, the Court held the EDCs MSJ cannot be considered a mere motion for reconsideration of the initial plea. As the MSJ was a distinct motion from the plea, the court of appeals had interlocutory jurisdiction to hear the appeal. It remanded the case back to the court of appeals for analysis.

If you would like to read this opinion click here. This is a per curiam opinion. The docket page with attorney information is found here.

Property Owner Rule entitled representative to testify as to value of damage to remainder of property after road expansion

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The State of Texas v. Speedway Grapevine I, LLC, A Texas Limited Liability Company, and First Commercial Bank, N. A 02-16-00144-CV (Tex.App—Fort Worth, October 19, 2017)

This is a condemnation case where the Fort Worth Court of Appeals affirmed the jury verdict condemnation award, including the admission of valuation evidence by the owner’s representative.

Speedway owned real property which included a car wash and an express lube on a specific lot. In connection with a road-widening improvement project the State condemned a portion of the frontage. However, Speedway asserted the condemnation affected the ability to operate the two businesses.  The State appealed the commissioner’s award but the jury awarded more than the commissioner’s award. The State’s expert opined Speedway’s remainder property had sustained damages in the amount of $0, excluding a total cost to cure of $105,826.00.  Adding the value of the part condemned ($159,789.00), it opined Speedway was entitled to total compensation in the amount of $265,615.00. Speedway’s experts opined the remainder property suffered a total damage of $2,609,420.00. Adding the value of the part condemned to that figure, Speedway asserted it was entitled to compensation in the total amount of $2,748,822.00.  After a jury trial, the jury found the part condemned had a market value of $92,190.00 and that Speedway’s remainder property was damaged in the amount of $4,401,028.00. The State appealed.

The State first objected to Speedway’s appraisal expert, McRoberts. The State argued he speculated on post-condemnation nonconforming treatment, that Texas law did not recognize his income approach, and that he had improperly relied upon noncompensable impairment of access.  The trial court excluded McRoberts’s income approach but not his cost approach. It also permitted him to testify regarding internal traffic circulation difficulties, unsafe access, and nonconformance with zoning regulations.  Mr. High, Speedway’s representative as the owner, testified about his experience in the car wash industry, the reasons why Speedway located the car wash where it did, the market value of the whole property, problems with a cure plan devised for the State, and the viability of the car wash after the condemnation. The State acknowledges that a property owner may testify to the value of his property, as High did here, but it argued the owner’s valuation testimony must still meet the same requirements as any other opinion evidence.  The court rejected this argument in part. The Property Owner Rule “is an exception to the requirement that a witness must otherwise establish his qualifications to express an opinion on land values.” Based on the presumptions that an owner is familiar with his property and will know its value, the Rule accepts that a property owner is qualified to testify.  However, qualification is not the same as the basis of the opinion. The property owner “must [still] provide the factual basis on which his opinion rests.” But the burden is not difficult or complex. “Evidence of price paid, nearby sales, tax valuations, appraisals, online resources, and any other relevant factors may be offered to support the claim.” High’s testimony covered a range of topics that, taken together, provided some probative evidence to factually support his valuation opinion.  Such included his great level of experience in, and knowledge about, the car wash industry and the effects of such property reductions. The testimony was properly admitted. McRoberts testified that the condemnation had affected the property’s functionality so greatly that the property had experienced a change in its highest and best use to something like a small veterinary clinic or an office. McRoberts did not base his opinions on only his word, or on mere conjecture; he based it on the issues that began affecting Speedway’s property only after the condemnation—unsafe access, internal circulation, and zoning nonconformities.  McRoberts thus provided a reasoned basis to support his damage opinions, reinforced by well-established case law, logic, and mathematics.  The court held “[b]oiled down, the State’s argument is nothing more than an evidentiary sufficiency challenge improperly masquerading as an expert opinion admissibility issue. When the highest and best use of property is disputed, the jury is responsible for deciding which use is appropriate when it determines market value.”  Sufficient evidence exists in the record to support the jury’s verdict. As a result, the verdict is affirmed.

If you want to read this opinion click here. The panel consists of Justice Puryear Justices, Field, and Bourland. Justice Bill Meier delivered the opinion of the court. To see the docket page with the list of attorneys click here.

Town immune from claims to invalidate vote where no ordinance was actually adopted says Fort Worth Court of Appeals

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Peter Schmitz, et al  v. Town of Ponder, Texas, et al. 02-16-00114-CV, (Tex. App. – Fort Worth, August 31, 2017).

This is an appeal from a final judgment against the Plaintiffs who attempted to force the Town to enforce its zoning laws against other property owners. The Fort Worth Court of Appeals affirmed the dismissal of the Town. However, the court reversed the dismissal of the other property owner.

In 2014 the Denton County Cowboy Church (“Church”) purchased property zoned single family residential under the Town of Ponder’s zoning ordinance.  The Church’s property is adjacent to the Plaintiffs’ property. According to Ponder’s comprehensive plan, the Plaintiffs’ properties are designated for future low-density residential zoning. In 2015 the Church began construction of an arena. The Town issued a building permit for an open arena. Plaintiffs sued the Church and Town of Ponder, seeking injunctions prohibiting the Church from continuing construction. They also brought claims under §1983 for due process, takings, and equal protection violations.   At this time the Town voted to amend the zoning code and issued a SUP to the Church, but did not pass an ordinance. The Town (and Church) filed a plea to the jurisdiction, which the trial court granted. The Plaintiffs appealed.

The Uniform Declaratory Judgment Act (“UDJA”) does not waive immunity of a governmental entity. The proper defendant in an ultra vires action is the official who allegedly acted without authority, not the governmental entity itself. The Plaintiffs did not sue any officials. The UDJA waives governmental immunity against claims that an ordinance, or an amendment to an ordinance, is invalid.  Plaintiffs claim they are challenging the amended ordinance so have jurisdiction. However, the record shows Ponder did not amend its zoning ordinance, it merely voted on motions to change the zoning classification. Open motions and votes are not ordinances and here the zoning ordinance was not changed. The Town’s vote to grant an SUP was not made by ordinance but did not have to be. Plaintiffs, therefore, are not able to challenge a non-existent ordinance and cannot show a waiver of immunity. The court also held that since the Texas Open Meetings Act and notice allegations also stem from the challenge to a non-existent ordinance, they likewise were properly dismissed. The Plaintiffs next assert the Town waived immunity by its own ordinance.  However, the court held that even if the Town had the authority to waive its own immunity, the language in their ordinance is not a clear and unambiguous waiver of immunity. It authorized a property owner to sue an offending property owner, not the Town. As to the §1983 analysis, claims based upon a government entity’s refusal or failure to enforce its own regulations do not equate to such claims.  The court held repleading would not change the lack of jurisdiction. The Town’s plea was properly granted.  The court errored by dismissing the Church.

If you would like to read the opinion click here. Panel includes Chief Justice Livingston, Justice Gabriel, and Justice Pittman.  The attorneys listed for the Plaintiffs are Gregory Sawko and Robert E. Hager.  The attorneys listed for the Town are Matthew Butler and John F. Boyle Jr.

State immune from suit for mineral interest relating back to Spanish land grant

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Galan Family Trust v. State of Texas, et al, 03-15-00816-CV (Tex.App— Austin, February 24, 2017)

This is an inverse-condemnation/trespass-to-try-title case where the Austin Court of Appeals affirmed the dismissal of the Plaintiff’s claims.

The Galan Family Trust (“Trust” or “Plaintiff”) sued the State of Texas for mineral interests the Trust asserts they own due to a 1767 Spanish land grant. A patent in favor of the Galan heirs was issued in 1852 by the Texas Legislature, but the patent was cancelled by the State of Texas in 1874. In this context, “patent” is an instrument by which the State conveys land to a private person. The State filed a plea to the jurisdiction and a Rule 91a motion to dismiss, asserting that the State is immune to trespass-to-try-title claims and, further, that the Trust’s claims are barred by limitations. The trial court dismissed the Trust’s suit and the Trust appealed.

The court first reaffirmed long-standing case law that governmental entities are immune from trespass-to-try-title claims. Additionally, while individual officials in their official capacities may not be immune from trespass-to-try-title claims, the Trust’s pleadings negate the right of possession.  This right is necessary to establish a trespass-to-try-title claim against an official. Once the State canceled the patent, the State became the titleholder. Further, the Trust did not sue for a takings claim until more than 140 years after the cancellation. This delay in filing far exceeds the ten-year limitations period established for takings claims. The State was only required to establish when the cause of action accrued to establish limitations, not to provide uncontroverted evidence of every element of the defense.  Given the elements for the statute of limitations defense are contained within the pleadings. And, when taken as true for purposes of the Rule 91a motion, the State established it is entitled to dismissal. The trial court’s order is affirmed.

If you would like to read this opinion click here. The Panel includes Chief Justice Rose, Justice Goodwin, and Justice Bourland. Chief Justice delivered the opinion of the court. To see the Representatives for the Appellant and Appellees click here.

 

City held to be acting both in a proprietary capacity and a governmental capacity involving lease for mineral interests says Dallas Court of Appeals

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The City of Dallas v. Trinity East Energy, LLC, 05-16-00349-CV(Tex.App— Dallas, February 7, 2017)

This is an interlocutory appeal from the granting-in-part and denial-in-part of a plea to the jurisdiction involving an inverse condemnation claim for mineral interests. The Dallas Court of Appeals affirmed-in-part, reversed-in-part, and remanded.

The City was suffering a budgetary shortfall and decided to seek an additional source of revenue by leasing the minerals on City-owned property to a private party for developing the oil and gas. Trinity asserted, if it bid, it would need surface access to two City sites.  Trinity and the City entered into two leases for mineral interests. Afterwards, Trinity began the long process of preparing to drill, including geological and engineering tests, designing drill sites, roads, and pipelines, and multiple City meetings. Trinity sought permits to drill on the designated sites. However, in the spring of 2013 the Planning Commission voted to deny the applications. Trinity appealed to the City Council. But because the Planning Commission had denied the applications, the Council was required to override that denial by a vote of three-fourths of its members; the vote to approve received only a majority of the votes of the Council members. Consequently, the applications were denied. Later, the City passed new ordinances changing setback requirements and making the sites impossible for Trinity to use for drilling. The leases then expired.  Trinity sued. The City filed pleas to the jurisdiction in which it asserted it was immune from suit with regard to Trinity’s claims for breach of contract, tort, and declaratory relief, and that Trinity had not alleged a viable claim for inverse condemnation. Trinity responded that the City’s actions were proprietary for which immunity did not apply. The trial court granted parts and denied parts. Both parties appealed.

Citing the Texas Supreme Court’s expansion in Wasson Interests, Ltd. v. City of Jacksonville, 489 S.W.3d 427 (Tex. 2016) of the proprietary-governmental dichotomy to contracts the Dallas Court of Appeals held the City was acting in its proprietary capacity. Mineral leases, even if on park or flood plains, are proprietary as to the ownership use or lease. Further, since immunity does not already exist, Chapter 271 of the Texas Local Government Code (waiving immunity for goods or services) does not apply.  The City was acting as a property owner as to the lease, however, the City was also acting as a regulatory agency as to the permits. Thus, the denial of the permit can also act as an inverse condemnation of a property interest.  Given the change in ordinances making drilling impossible, Trinity presented evidence the City denied all economically viable use of the mineral leases. As a result, the trial court erred in granting the plea as to Trinity’s claims for breach of contract, tort, and declaratory relief but properly denied it as to the takings claim.

If you would like to read this opinion click here. The Panel Includes Justice Lang-Miers, Justice Myers, and Retired Justice O’ Neil. Justice Lang-Miers delivered the opinion of the court. If you would like to see the representatives for The City of Dallas and Trinity East Energy, LLC click here.

Town entitled to enforce mediation agreement against property owner over sand dispute

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Doyle Wells, Sea Oats Investments I, L.P. f/k/a Lamkin Properties Limited Partnership, and Quixote Dunes, Inc. v. Texas Department of Transportation and Town of South Padre Island, 13-15-00175-CV (Tex.App— Corpus Christi, February 2, 2017)

This is a takings case involving allegations the City took sand from the Plaintiff’s property without due process or just compensation. However, this opinion focuses on a subsequent settlement and its enforceability.

Wells purportedly owns various properties along Park Road 100 on South Padre Island. The Texas Department of Transportation (“TxDOT”) maintains Park Road 100, including keeping the roadway clear of sand.  Wells filed suit against the Town of South Padre Island (“SPI” or “Town”) and TxDOT alleging TxDOT removed sand from his property adjacent to the Road and transported it to SPI beaches. The Town filed a summary judgment asserting, amongst other things, that it only provided trucks via a subcontractor and did not actually remove or take anything.  After granting the Town’s motion (which was interlocutory), the trial court ordered the parties to mediation.  At mediation the parties settled and sign the mediated settlement agreement (“MSA”).  However, one month later Wells withdrew his consent asserting it was not a knowing and willful consent. The Town counterclaimed to enforce the MSA and filed an additional summary judgment motion.   The trial court denied the Town’s enforcement motion, but severed the case so the original MSJ could become final. The parties appealed and cross-appealed.

The central issue for the appeal is the Town’s right to enforcement of the settlement agreement. SPI produced conclusive evidence to establish a valid contract. The terms of the MSA state that in consideration of $10,000 paid by SPI to Wells within twenty-one days Wells agreed to execute a full and final release and would dismiss SPI with prejudice. The MSA states it is enforceable as a Rule 11 agreement. Wells did not establish the lack of an essential term (i.e. the ownership disposition of the sand) as his own affidavit states the ownership interest was transferred to TxDOT, not the Town. So the Town could not agree on the ownership of property it does not own. Second, despite Wells’ complaints about his own counsel, he signed the MSA and the Town conclusively established it complied with the terms by tendering payment by the deadline. As a result, the trial court should have granted the summary judgment motion on the Town’s counterclaim.

If you would like to read this opinion click here. The Panel includes Chief Justice Valdez, Justice Benavides, and Justice Hinojosa. Justice Benavides delivered the opinion of the court. To see the docket page with attorney information click here.

City’s summary judgment reversed and remanded under failure to address Patel due-course-of-law analysis; dismissal of all other constitutional challenges to utility late fee ordinance affirmed

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Gatesco Q.M. Ltd d/b/a Quail Meadows Apartments, a Texas Limited Partnership v. City of Houston, 14-14-01017-CV (Tex. App— Houston [ 14th Dist.], October 20, 2016)

In this case the 14th Court of Appeals affirmed-in-part and reversed-in-part the granting of the City’s summary judgment motion in this constitutional challenge to the City utility charging late fees and shutting off a customer’s water service. It’s a 21-page opinion so the summary is a bit long. However, the case is good analysis of constitutional ordinance challenges and the new Patel due-course-of-law test.

Gatesco owns an apartment complex known as the Quail Meadows Apartments. The only available supplier of water for the Apartments comes from the City. Gatesco, a longtime water customer, paid its water bill to the City one day late. The City assessed a ten-percent late fee of $1,020.03 (the “Late Fee”) pursuant to an adopted ordinance. Gatesco did not want to pay the Late Fee and challenged it in an administrative proceeding. Though unsuccessful in this proceeding, Gatesco still did not pay the Late Fee. To avoid having its water shut off, Gatesco obtained a temporary restraining order but the trial court denied Gatesco’s request for temporary injunction. Within two hours Gatesco paid the Late Fee, although the City says Gatesco paid the fee at the wrong location. The City shut off the water to the entire complex 17 minutes after Gatesco paid the fee, but turned the water on later that afternoon. But, because the water had been turned off, the City required a cash security deposit of $35,200.00, an estimate of three months of water bills to turn it back on. After the case went up and back to the court of appeals on a plea to the jurisdiction, the trial court granted the City’s summary judgment motions. Gatesco appealed.

Gatesco first sought a declaratory judgment the Late Fee is an excessive fine under the Texas Constitution. Whether the constitutional prohibition has been violated is a question for the court to decide under the facts of each particular case. Generally, prescribing fines is a matter within the City’s discretion. A fine is not unconstitutionally excessive “‘except in extraordinary cases, where it becomes so manifestly violative of the constitutional inhibition as to shock the sense of mankind.’” This ordinance applies a bright-line, ten-percent late charge to all people paying late, subject to a few exceptions. The charge is proportional to the unpaid amount owed and is thus proportional to the amount of water and sewer services consumed.  The City has discretion to prescribe fees to be assessed for late payment for the City’s water and sewer services with the object of incentivizing timely payment for these services. There are no “extraordinary circumstances” here to justify an excessive fee under the Texas Constitution, so the summary judgment is affirmed in that regard. Gatesco also asserts the Houston Ordinance is an unconstitutional tax. In order to determine whether the Late Fee is a regulatory charge or a tax, the court applies the “primary purpose” test. Under this test, the court does not examine the specific regulatory costs incurred by the City as to this one delinquent payment by Gatesco; instead, its looks at whether the aggregate late fees collected exceeds the amount reasonably needed for regulation. The court examines the regulation as a whole to determine whether the late fees imposed are intended to raise revenue or compensate the reasonable costs for regulation. In analyzing the facts and admissions, the court held whether the City incurred any collection costs before charging Gatesco the Late Fee is not material. The record does not show the fees were unreasonable in relation to overall costs of the system. As a result, the trial court did not err in granting summary judgment on this question. As to Gatesco’s equal protection claims, Gatesco bears the burden of showing that it has been treated differently from others similarly situated and that the treatment is not rationally related to a legitimate governmental interest. The summary-judgment evidence does not address how the City treated similarly situated customers, so the trial court did not error in grating summary judgment.  Next, the City violates federal Substantive Due Process if it exercises its power in an arbitrary and unreasonable way. Since no suspect class or fundamental right is involved, the analysis is under the rational basis test. The summary-judgment evidence does not raise a genuine fact issue as to whether it is not at least fairly debatable that each component of the challenged conduct was rationally related to a legitimate governmental interest. The trial court did not error in granting summary judgment on this issue.

The court, however, utilized a different standard for the substantive-due-course-of-law violation under the Texas Constitution. The court analyzed the Supreme Court’s holding in Patel v. Texas Dep’t of Licensing and Regulation. See 469 S.W.3d 69 (Tex. 2015). The high court held that the proponent of an as-applied challenge to an economic-regulation statute under article I, section 19’s substantive-due-course-of-law protections must demonstrate that either (1) the statute’s purpose could not arguably be rationally related to a legitimate governmental interest; or (2) when considered as a whole, the statute’s actual, real-world effect as applied to the challenging party could not arguably be rationally related to, or is so burdensome as to be oppressive in light of, the governmental interest.  However, since the timing of the Patel opinion is so new, the City’s no-evidence summary judgment evidence did not address or incorporate the “oppressive” arguments or elements, which are essential to a no-evidence determination. Accordingly, the court reversed the trial court’s judgment as to these claims and remanded.  Since the substantive-due-course-of-law claims are remanded, so too must the claim for injunctive relief and attorney’s fees.

If you would like to read this opinion click here. The Panel includes Chief Justice Frost, Justice Boyce, and Justice Jamison. Chief Justice Frost delivered the opinion of the court. Attorneys for the Gatesco are listed as Robert Gaines Gibson and Steven Doyle Poock. Attorneys for the City are listed as Mary Stevenson and Darah L. Eckert.

City immune from delay in zoning approval due to City Attorney’s mistaken understanding of municipal boundary line

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City of Floresville, et al.  v. Starnes Investment Group, LLC, 04-16-00038 (Tex.App— San Antonio, September 28,2016)

This is an interlocutory appeal from the denial of a plea to the jurisdiction in a case where a city employee mistakenly informed a property developer they were outside city limits.  The San Antonio Court of Appeals reversed the denial and dismissed the claims.

Starnes Investment Group, LLC (“Starnes”) began looking at property to develop as a commercial recreational vehicle park. Starnes filed a rezoning application to allow for the RV park. The City Attorney advised the property was outside of the City limits and not subject to zoning restrictions. However, after Starnes purchased the property and the City completed a map digitization initiative, it discovered the property was partially inside and partially outside of the City limits. The City ultimately approved a zoning change application to allow the RV park. However, Starnes still sued. The premise of Starnes’s lawsuit is that it was harmed by the City’s delay in approving its zoning application and delay in providing water and sewage due to the misunderstanding. The City filed a plea to the jurisdiction which the trial court denied. The City appealed.

The first issue the court resolved was procedurally, the trial court granted the City’s special exceptions and denied the plea in the same order. While Starnes filed an amended petition, it did so after the denial of the plea.  However, since the plea is jurisdictional, the court considers all of the matters during the appeal, including those which were not before the trial court at the time of the original order.  Next, a governmental entity does not have immunity from a valid takings claim. In a takings case, “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 rest on the mere negligence of the government. Moreover, “[w]hen damage is merely the accidental result of the government’s intentional act, there is no public benefit and the property cannot be said to have been taken or damaged for public use.” Starnes’s amended petition alleges no facts that the information was the result of anything more than either a mistake or negligence on the City Attorney’s part. As a result, there is no takings claim. Next, to state a valid due process or due course of law claim, a plaintiff must first allege the existence of a protected right. Starnes’s zoning application merely sought a governmental benefit to which it was not already entitled. As such, Starnes only had an expectation of the governmental benefit which is not a protected property right. To assert an equal protection claim, the deprived party must establish two elements: (1) that it was treated differently than other similarly-situated parties; and (2) it was treated differently without a reasonable basis. Other than a conclusory statement that it was treated differently from others similarly situated, Starnes failed to allege any facts describing similarly situated parties. As a result, there is no equal protection violation. Chapter 245 of the Texas Local Government Code (often referred to as a vested rights/grandfather statute) creates a narrow exception enforcing changing regulations stating, after receiving a development application or plan, a regulatory agency changes its land-use regulations, the agency cannot enforce such a change. Starnes does not point to any change in the City’s existing “orders, regulations, ordinances, rules, expiration dates, or other properly adopted requirements” that occurred after Starnes filed its zoning application.  The property was always partially in and partially outside of the City limits. An employee’s mistaken belief of the location of the boundary line is not a change in adopted regulation. Additionally, Chapter 245 is enforceable only through mandamus, injunctive or declaratory relief, none of which Starnes sought. Finally, Starnes had the opportunity to, and did in fact, amend its pleadings in the trial court after the City filed its special exceptions.  The court need not provide any further opportunity to amend. The court reversed and rendered in favor of the City.

If you would like to read this opinion click here. The Panel includes Chief Justice Marion, Justice Barnard and Justice Pulliam. Chief Justice Marion delivered the opinion of the court. Attorneys representing the parties can be found on the docket page  here.

 

Homeowners properly pled a taking by flooding due to channel reconstruction and temporary embankments says El Paso Court of Appeals

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CITY OF SOCORRO, Texas v.  SAMUEL CAMPOS, et al, 08-14-00295-CV (Tex.App— El Paso, September 14,2016)

This is a takings/flooding case where the El Paso Court of Appeals held the Plaintiffs properly pled a takings case.

The residents contend that the City of Socorro intentionally caused flooding by constructing a ditch, and later two embankments, that were intended to protect one subdivision (Valley Ridge) at the expense of their neighborhood (Patti Jo Neighborhood). In 2006 El Paso and it surrounding area suffered a historic rain event. To remedy the flooding in the Valley Ridge Subdivision, the City of Socorro in 2009 built a diversion channel designed to intercept water and mud coming down the Sparks Arroyo and redirect it towards another existing drainage channel. These channels would redirect the flow around the Valley Ridge Subdivision and deposit it onto a tract of land to the east. In 2010, the United States Army Corps of Engineers issued a report noting that Socorro’s actions had diverted water from its original flow path. That same year, the El Paso Water Utilities, El Paso County, and the Texas Water Development Board released a master storm water plan that recognized Socorro’s efforts were “intended to relocate the arroyo flow path.” The storm water plan made detailed recommendations to address the risk of flooding to downstream communities caused by Socorro’s actions, but the City did not implement them. In a three-day period in September 2013, the area received over six inches of rainfall. Socorro’s diversion channel worked in the sense that the Valley Ridge subdivision was spared any flooding from the upstream direction, but the water and mud from the Spark’s arroyo collected on the east side of Thunder Road to such an extent that the Valley Ridge subdivision was once again threatened with flooding. So the City created two temporary sand embankments to stop the flooding. Unfortunately, the redirection of water poured onto the Patti Jo Neighborhood, flooding the Plaintiffs’ homes. Plaintiffs asserted both through the original 2009 diversion channel, and the 2013 Thunder Road embankments, Socorro purposely redirected the flow of water from the Valley Ridge subdivision towards the Patti Jo Neighborhood. They allege that the City of Socorro was “substantially certain” these actions would cause flooding and damage to their homes.  The City filed a plea to the jurisdiction which the trial court denied.

A takings claim consists of three elements: (1) an intentional act by the government under its lawful authority, (2) resulting in a taking, damaging, or destruction of the plaintiff’s property, and (3) for public use. The intent element requires those seeking redress to show that the government “intentionally took or damaged their property . . . or was substantially certain that would be the result.” It is not enough that the act causing the harm is intentional; the governmental entity must know to a substantial certainty that the harm complained of would occur. Accordingly, a takings claim cannot rest on mere negligence. The court held that the mere possibility of future flooding would not rise to the level of a constitutional taking.  However, the petition as a whole alleges that the diversion of water and mud from the 2009 ditch plus the funneling of that water across by the sand embankments is what extensively damaged their property. The pleadings allege the City was substantially certain the embankments combining of the diversion water from the channels would result in flooding of their homes. And while the court held the case law supports that a single flood event is not usually the basis of a taking, the court held multiple floods are not a requirement. As a result, the Plaintiffs properly pled that the City was substantially certain that the combined channel plus temporary embankments equates to an intentional taking.  The court did note that such a determination was limited to analyzing the four corners of the pleadings only and should this case ever return on a factual record the court may determine a taking is not supported under the facts. But, from a pleadings standpoint, the Plaintiffs are permitted to go forward.

If you would like to read this opinion click here. The Panel includes Chief Justice McClure, Justice Rodriguez and Senior Judge Larsen.  Chief Justice McClure delivered the opinion on the court. Attorneys listed for the City are Kurt Paxson,. James A. Martinez and John P. Mobbs. Attorneys listed for the Plaintiffs are Christopher C. Benoit, Lynn Anne Coyle,  Francisco  X. Dominguez , Michael Russell, Robert Doggett and Alberto Mesta Jr.

Town’s Interlocutory appeal timely under scheduling order, but permissive appeal by Plaintiff was untimely

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Sarah Swanson v. Town of Shady Shores, 02-15-00351-CV (Tex.App— Fort Worth, August 18,2016)

This is a Texas Whistleblower Act, Texas Open Meetings Act, due process, free speech and Sabine Pilot case, but the main thrust of the appeal is litigation/appellate procedure. So, this case will be of primary focus to litigators.

Swanson is the former Town Secretary for Shady Shores. She brought claims asserting she was wrongfully discharged. The Town filed a plea to the jurisdiction on the Sabine Pilot and Whistleblower Act claims. After Swanson amended, the Town filed traditional and no-evidence summary judgment motions for the remaining claims. The trial court granted the Town’s plea to the jurisdiction and Swanson did not file an interlocutory appeal. In separate orders, the trial court denied the Town’s traditional and no-evidence motions for summary judgment.  The Town filed an interlocutory appeal and asserted the automatic stay was in place. On October 30, 2015, the Town filed a motion requesting the trial court to enter an order acknowledging that all of the trial court proceedings had been stayed since Swanson was continuing to file motions and request hearings. According to the Town, during one hearing, the trial court granted Swanson leave to file a motion for a permissive interlocutory appeal. When Swanson attempted to hold further proceedings and obtain an order on the permissive appeal the Town filed a separate mandamus action (which was consolidated for purposes of appeal). The San Antonio Court of Appeals stayed all proceedings during the appeal.

In its mandamus petition, the Town asks this court to direct the trial court to stay the underlying proceedings and to enter an order voiding all actions taken in the trial court since the Town filed its notice of interlocutory appeal. The Town is appealing the denial of the summary judgment motions on immunity grounds. As a result, the automatic stay applies. The automatic stay is only available, however, if the jurisdictional motion was filed and a hearing requested within a defined timeframe. The scheduling order required all dispositive motions be filed and heard by October 1, 2015. The Town filed its motions for summary judgment and a hearing was set for September 23, 2015. Even though the motions were not heard until October 21, the motions were filed and a hearing was requested prior to October 1. Thus, the automatic stay was triggered. The trial court abused its discretion in conducting hearings in violation of the automatic stay.  However, the trial court did not sign any orders. Therefore, there is nothing in the record indicating any relief can be granted, even though a violation occurred in this case. The mandamus is therefore denied.

Swanson claims that regardless of the fact she filed her appeal over forty days after the order granting the Town’s plea to the jurisdiction was signed, her appeal is timely under rule 26.1(d), which provides that “if any party timely files a notice of appeal, another party may file a notice of appeal within the applicable period stated above or 14 days after the first filed notice of appeal, whichever is later.”  Swanson asserts that she filed her notice of appeal (for the plea to the jurisdiction) within 14 days of the Town’s notice of appeal for the summary judgments. However, Swanson cites no cases nor did the court find any authority supporting her contention that she can utilize Rule 26.1(d) in this way.  As a result, her appeal is untimely. Swanson also filed a petition for permission to appeal, but it did not contain an order signed by the trial court granting her permission to appeal (mainly because the court of appeals stayed any further proceedings). Swanson failed to comply with the requirements for bringing a permissive appeal from an interlocutory order because she failed to obtain a written order granting permission to appeal.

If you would like to read this opinion click here. The Panel includes Justice Gardner, Justice Walker and Justice Gabriel. Justice Gardner delivered the opinion of the court. Attorney for the Appellant: Grace a. Weatherly. Attorney for Appellee: Thomas P. Brandt.

City immune from suit for reverter given language of deed says 4th Court of Appeals

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The City of Laredo v. Northtown Development, Inc. and Gateway Centennial Development, Co., 04-15-00736-CV (Tex. App—San Antonio, August 10,2016)

This is a takings case based on an alleged reverter in public property where the Fourth Court of Appeals reversed the denial of the City’s plea to the jurisdiction and dismissed the case.

Northtown Development, Inc. and Gateway Centennial Development Co. (“Northtown”) conveyed land to a utility district to build a wastewater treatment plan. It contained a reverter that if the property was ever stopped being used for a public purpose, the property would revert back to Northtown.  The utility district was eventually annexed by the City which assumed the waste water treatment plant and the property with the reverter. By 2011, the City had constructed a new wastewater treatment plant on the Property. The original plant was built on the western side of the Property, while the new plant was built on the eastern side.  Northtown took the position the City had abandoned the old plant on the western side which therefore reverted back to Northtown. The City asserted it had a force main, transmission lines, and other facilities still on the western side, it has plans to build a bigger plant by 2030 on the western side to accommodate growth as well as the fact the reverter language was only triggered if the entire parcel was abandoned.   Northtown sued for declaratory judgment and for a taking under the Texas Constitution. The City filed a plea to the jurisdiction which was denied. The City appealed.

The court first held Northtown’s declaratory judgment claim was nothing more than a recasting of its takings claim. A plaintiff cannot circumvent immunity by recasting a claim for monetary value as a declaratory judgment. Because Northtown’s sole purpose for obtaining a declaration that the possibility of reverter in the deed was triggered was to obtain a money judgment, the City’s immunity is not waived. Next, the court focused on only one of four arguments made by the City – the fact the reverter language is only triggered by complete abandonment of the property. The court analyzed the language within the deed carefully. Reading the plain language of the deed, the possibility of reverter addresses the use of the “tract” of land and upon the expiration of the use as to the “tract” of land, the determinable fee terminates and “title to the entirety” of the “tract” reverts to Northtown. The court held the deed only provides for a possibility of reverter of the “entirety” of the Property in the event none of the Property is used for purposes of operating a wastewater treatment plant or public purpose.  Since it is undisputed the eastern portion of the property operates the new plant, Northtown’s takings claim fails as a matter of law. The trial court should have granted the plea.  The order is reversed and the court rendered judgment for the City.

If you would like to read this opinion click here. The panel includes Chief Justice Marion, Justice Martinez, and Justice Pulliam. Justice Martinez delivered the opinion of the court. Attorneys for the City: Ryan  Henry and Artin DerOhanian. Attorneys for Northtown: Kelly Feicht, Albert M. Gutierrez and Carlos E. Flores.

County properly initiated clarification of interest in public road; statute of repose can be raised in plea to the jurisdiction

John Herbert Matthews v. Colorado County, 01-16-00092-CV (Tex. App—Houston [1st Dist.] July 26,2016)

This is a road abandonment case where the First District Court of Appeals affirmed the granting of the County’s plea to the jurisdiction.

In 1951, the Colorado County Commissioners Court commissioned the creation of a road map of all existing county roads of Colorado County. In 1953, the Commissioners Court ordered the discontinuation of a portion of County Road 79.  However, the County approved the road map it commenced in 1951 without any discontinuation of C.R. 79. In 2003, the Legislature adopted Chapter 258 of the Transportation Code which allows a Texas county to adopt a county road map in order to “clarify the existence of a public interest in a road.” The County initiated steps under the statute to clarify a public interest in all of 79 with no abandoned sections. On November 5, 2014, Matthews and seven other property owners filed an application for confirmation of discontinuance of abandoned public road. When the County denied the request, they filed suit. However, the trial court granted the County’s plea to the jurisdiction and they appealed.

Section 258.007 states that Chapter 258 “applies only to a county that initiates or completes compliance with the provisions of this chapter before September 1, 2011.”  Matthews argues the County failed to properly initiate the procedures under Chapter 258, so it therefore cannot take advantage of its application. However, the court examined the word “initiates” under a plain and ordinary meaning standard and held the County did initiate the process prior to the deadline. Specifically, the County hired legal counsel, conducted preliminary review of county maintained roads and identified those in which the county intended to claim a public interest, and created an index of roads in the ad valorem tax statements. The commissioner’s order specifically noted that it was uncertain whether the County would be able to complete the entire process prior to September 1, 2011, and that the order’s express purpose was “to document the facts set forth above, and to demonstrate that Colorado County has initiated steps reasonably designed and intended to comply in full with the requirements of Chapter 258, Texas Transportation Code.” The court agreed such acts qualify as “initiating” the process prior to the September 1, 2011 deadline. Next, §258.004 qualifies as a statute of repose, which begins to run from a specific date without regard to the accrual of a cause of action. A statute of repose creates a substantive right to be free of liability after a legislatively-determined period. Adopting the DeMagaloni line of cases, the court held a statute of repose is a jurisdictional defect in relation to a governmental entity so could be raised in a plea.  Matthews filed outside the statute so is time barred.

If you would like to read this opinion click here. The panel Includes Chief Justice Radack, Justice Jennings, and Justice Lloyd. Justice Lloyd delivered the opinion of the court.  The attorneys listed for Appellant are Steven C. Haley and Christopher Hardy. The attorney listed for the County is Robert Thrane Bass.