Recent Texas Cases of Interest to Cities

Note: Included cases are primarily from November 11, 2018 through December 10, 2018.

Taxation: Ward Cty. Appraisal Dist. v. EES Leasing LLC, No. 15-0965, 2018 WL 6004939 (Tex. Nov. 16, 2018). The Texas Supreme Court issued several connected opinions relating to the proper taxing entity for compressor equipment and pipelines.

EXLP Leasing, LLC, (EXLP) owns and leases compressor stations used to deliver natural gas into pipelines, with some of the pipelines located in Ward County and some in Midland County. EXLP began paying taxes on the compressors located in Ward County to Midland County, where EXLP contends it “maintain[s] a yard from which its inventory … is leased, to which leased compressors are returned after [the] leases expire[s], and where the inventory in the area is serviced.” But Ward County continued to tax full market value. EXLP filed suit arguing Tax Code provisions amended in 2012 are unconstitutional on their face and as applied because the statutory formula for valuing leased heavy equipment bears no relationship to any measure of market value as required by the Texas Constitution. The court, on October 10, 2018, issued an opinion in EXLP Leasing, LLC v. Galveston Cent. Appraisal Dist., 554 S.W.3d 572 (Tex. 2018), which disposed of the issues by holding taxable situs for dealer-held heavy equipment was the location where the dealer maintained its inventory, rather than the various locations where leased equipment might have otherwise been physically located.

The Texas Supreme Court adopted its reasoning in EXLP Leasing to the varying claims and facts in the consolidated cases. The court upheld the constitutionality of the Tax Code provisions but held EXLP neither expects nor intends for the compressors located in Ward County to permanently remain in Ward County. Their “permanent” home is the inventory yard and therefore, the proper place for taxation of inventory. However, specific to this case, the county argued the specific compressors were not “heavy equipment” as listed in the Tax Code. The court held the definition of “heavy equipment” applied to self-powered machines. The legislature intended “self-powered” to mean a piece of a machinery or equipment supplied with mechanical power through an internal motor or engine. As a result, EXLP Leasing’s engines are “heavy equipment” falling under the same Tax Code provisions.*

Takings: San Jacinto River Auth. v. Burney, No. 01-18-00365-CV, 2018 WL 6318506 (Tex. App.—Houston [1st Dist.] Dec. 4, 2018). In consolidated cases for the flooding of homes during Hurricane Harvey, the First Court of Appeals found that homeowners had stated sufficient facts in their petition for takings claims to overcome governmental immunity, but that the trial court lacked jurisdiction over the inverse-condemnation claims.

During Hurricane Harvey, the San Jacinto River Authority released water from Lake Conroe into the San Jacinto River, flooding homes in Kingwood, Texas.  Homeowners brought inverse-condemnation and statutory takings claims against the river authority.

Of interest to litigators, the First Court of Appeals determined it could not take judicial notice of any attached evidence put forth as “adjudicative facts” in reviewing the river authority’s motion to dismiss. The court found Rule 91a expressly forbids courts from looking at any evidence outside of the petition and its attachments.

The First Court of Appeals also determined that the Harris County civil courts at law had exclusive jurisdiction over the inverse-condemnation claims pursuant to Government Code Section 25.1032(c). The court reasoned that the amendment to the statute in 2015 giving district courts jurisdiction over cases where the amount in controversy exceeds $200,000 only applied to statutory condemnation claims, not inverse condemnation. Thus, the district court lacked jurisdiction over the inverse-condemnation claims.

The court held the homeowners had sufficiently pleaded a constitutional takings claim and a statutory takings claim under Chapter 2007 of the Government Code. The court determined that Chapter 2007 of the Government Code applied to physical takings like flooding. The court determined that the homeowners had pled sufficient facts to allege the river authority’s release of water was intended to, or was known to be substantially certain to, result in the flooding or exacerbated flooding of the specific properties. The court also found the allegations were sufficient to establish recurrent flooding. The court further decided the homeowners’ allegations that the river authority’s governmental actions protected the stability and integrity of the dam, among other things, were sufficient to establish a public use.

Civil Rights/Torts: Washington v. City of Arlington Police Dep’t, No. 02-17-00337-CV, 2018 WL 4782160 (Tex. App.—Fort Worth Oct. 4, 2018) (mem. op.). This is a civil rights and tort case where the Fort Worth Court of Appeals affirmed the dismissal of the plaintiff’s claims.

Washington was arrested on three outstanding warrants for offenses related to drugs. A jury convicted Washington of one of the drug offenses. The criminal judgment was affirmed by the court of appeals. However, prior to the criminal affirmation, Washington filed suit against the police department and the prosecutors. The police department filed a summary judgment motion asserting the criminal conviction precluded Washington from bringing a civil suit. The trial court construed the motion as a plea to the jurisdiction and granted the plea. Washington appealed.

The crux of Washington’s claims against each named defendant is that law enforcement and legal counsel worked in tandem to have Washington falsely arrested and convicted of delivery of cocaine. An inmate plaintiff’s civil-rights or tort claims based on facts that, if true, would undermine the validity of his conviction are not legally cognizable unless the plaintiff can show that the conviction was reversed on direct appeal, expunged by executive order, declared invalid by an authorized state tribunal, or called into question by a federal court’s issuance of a writ of habeas corpus. Heck v. Humphrey, 512 U.S. 477, 486–87 (1994). Washington argued the state dismissed two of the three charges and that he is not seeking release from jail, only money. Washington was arrested based on three warrants, one of which led to his conviction. Even assuming the two indictments were dismissed, the dismissals would not qualify as the relief required under Heck because Washington was validly held on the remaining warrant until his conviction.  In other words, the facts Washington sought to litigate regarding his civil suit are facts essential to his conviction. No amount of repleading could cure these defects so Washington was not entitled to replead. The court of appeals held the trial court lacked subject matter jurisdiction to hear the claims. The dismissal was affirmed.* 

Minimum Wage: Texas Ass’n of Bus. v. City of Austin, No. 03-18-00445-CV, 2018 WL 6005551 (Tex. App.—Austin Nov. 16, 2018).  This case stems from an interlocutory appeal of the trial court’s order upholding the City of Austin’s paid-sick-leave ordinance.

The city adopted an ordinance that required private employers to provide paid-sick leave to their employees.  The Texas Association of Business and other entities (private parties), and later the State of Texas as intervenor, sued the city and its city manager asserting that the paid sick leave ordinance was unconstitutional and sought temporary and permanent injunctive relief.  The city challenged the district court’s jurisdiction, arguing that the claims against it were unripe and not viable and the State lacks standing to intervene. The district court denied the application for a temporary injunction and the city’s jurisdictional challenges.  The private parties filed an appeal asserting that the paid sick leave ordinance was preempted by the Texas Minimum Wage Act.

The court of appeals determined that paid sick leave equates to “wages” under the Texas Minimum Wage Act (Act).  As a result, the ordinance was preempted by the Act and violates the Texas Constitution. The court remanded the case back to the trial court for issuance of a temporary injunction and further proceedings in accordance with the ruling.

Chapter 143: Hood v. Munoz, No. 04-17-00563-CV, 2018 WL 6331139 (Tex. App.—San Antonio Dec. 5, 2018) (mem. op.).  This case stems from an appeal by Fire Chief Hood of the trial court’s decision related to filling a vacancy under Chapter 143 of the Local Government Code.

Three firefighters, Valencia, Vallejo, and Alva, retired on July 31, 2015.  Chief Hood filled the vacancies created by their retirements, effective August 1, 2015, from a promotional list. The three fire fighters who would have been eligible to fill the vacancies from the promotional list effective on July 31, 2015, sued seeking a declaratory judgement that Chief Hood violated Chapter 143 by utilizing the August 1, 2015, promotional list to fill the vacancies. The trial court declared that Chief Hood violated Chapter 143 by using the August 1, 2015, promotional list.  Chief Hood appealed.

Section 143.036(a) provides that a vacancy in a firefighter position occurs on the date the position is vacated by resignation, retirement, death, promotion, or issuance of an indefinite suspension. The court determined that Valencia, Vallejo, and Alva retired on July 31, 2015, because the firefighters: (1) still occupied their positions on their retirement date; (2) were subject to all rules and regulations applicable to employees on that date; and (3) remained on the payroll and were eligible for all employee benefits through that date. Accordingly, the firefighters did not surrender occupancy of their position until August 1, 2015, because that was the date on which they did not have a job with the fire department. The court reversed the trial court’s judgement.

Eight-Liners/Declaratory Judgement: City of Pearsall v. Correa, No. 04-18-00331-CV, 2018 WL 5928494 (Tex. App.—San Antonio Nov. 14, 2018) (mem. op.). This case stems from an appeal by the City of Pearsall of the trial court’s denial of the city’s plea to the jurisdiction with regard to a claim that the city’s gaming room ordinance was invalid or unconstitutional.

In 2012, the city passed an ordinance which allowed residents to own and operate a gaming room with eight-liner machines provided that the owner paid an annual permit application fee of $3,000 per game room, and an annual inspection permit fee of $1,800 per machine. In September 2016, the city seized 48 eight-liner machines owned by Sergio Correa (Correa) asserting that the seizure was authorized by ordinance. Correa sued the city alleging numerous claims, including a claim seeking a declaration that the ordinance was unconstitutional. The city filed a plea to the jurisdiction with respect to all of Correa’s claims. The trial court granted the plea as to all claims except the claim seeking a declaration that the ordinance was unconstitutional.  The city appealed the ruling asserting governmental immunity. Correa asserted that the city’s immunity was waived under the Uniform Declaratory Judgement Act (UDJA).

The court found that the Texas Supreme Court has expressly recognized that the UDJA waives a city’s immunity in a suit that involves the validity of a city ordinance.  Additionally, the city’s ordinance directly affected Correa’s right to own and operate a gaming room with eight-liner machines; therefore, a justiciable controversy existed as to the validity of the ordinance.  Accordingly, the city’s immunity was waived, and the trial court did not err in denying the city’s plea.

Takings: City of Mason v. Lee, No. 04-18-00275-CV, 2018 WL 5808260 (Tex. App.—San Antonio, Nov. 7, 2018) (mem. op.). This is an interlocutory appeal in a regulatory takings case where the Fourth Court of Appeals reversed the denial of the city’s plea to the jurisdiction and dismissed the takings claims.

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

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

Official Immunity:  City of Dallas v. Hernandez-Guerrero, No. 05-18-00033-CV, 2018 WL 6427641 (Tex. App.—Dallas Dec. 7, 2018). This case stems from an appeal by the City of Dallas of the trial court’s denial of the city’s plea to the jurisdiction in a case involving a motor vehicle accident.

Blanca Hernandez-Guerrero (Hernandez-Guerrero) was a passenger in a vehicle that was struck by the unknown driver of a city-owned marked police car. The city asserted that one of its police officer was dispatched to an emergency call at a group home where a man had stolen a purse, threatened to kill staff and residents, and was potentially armed with a knife. The officer activated his emergency lights and siren and proceeded to the location.  At an intersection where the traffic light was red, the officer applied his brakes and slowed to clear the intersection, then proceeded when he believed the intersection was safe. As the officer proceeded through the intersection, a vehicle in which Hernandez-Guerrero was a passenger collided with the officer. The dash camera video from the police officer’s vehicle showed that the officer’s emergency lights and siren were engaged for five minutes before he approached the intersection, and at least thirteen vehicles pulled over for him. After she filed suit for negligence, injury by motor vehicle and respondeat superior, the city filed a plea to the jurisdiction asserting that the police officer was entitled to official immunity because he was performing a discretionary function within the scope of his employment and acting in good faith. The plea was denied, and the city appealed.

A governmental employee has official immunity for the performance of discretionary duties within the scope of the employee’s authority, provided the employee acts in good faith. In the context of an emergency response, a need versus risk analysis is applied.   The court reviewed the officer’s affidavit and found that: (1) the need to which the officer was responding was a potentially life threatening emergency at a group home; (2) the officer slowed at the intersection; (3) he believed in good faith that the need to get to the emergency call outweighed the perceived minimal risk of an accident; (4) the road was dry; (5) the vehicles the officer observed were stopped in the eastbound and westbound lanes of traffic; (6) the officer’s emergency lights and siren were activated; (7) the officer did not perceive that proceeding through the intersection would cause any danger to any other driver close to him; and (8) the potential danger posed by proceeding through the intersection was far less than the danger posed to the potential victims at the location of the reported emergency disturbance.  As a result, the court concluded that the police officer acted in good faith and reversed the court’s order denying the city’s plea to the jurisdiction.*

Immunity: Zaidi v. North Texas Tollway Auth., No. 05-17-01056-CV, 2018 WL 6426798 (Tex. App.—Dallas Dec. 6, 2018) (mem. op.). This case stems from an interlocutory appeal by Azhar S. Zaidi (Zaidi) of the trial court’s denial of his motion for continuance and granting of North Texas Tollway Authority’s (NTTA) plea.

The vehicle Zaidi’s son was driving collided with a downed light pole on the tollway. Zaidi sued the NTTA. NTTA filed a plea to the jurisdiction asserting governmental immunity. NTTA supported its plea with: (1) evidence regarding the design and construction of the relevant portion of the tollway, including light poles; (2) affidavits from NTTA’s engineers; (3) maintenance and inspection records for the light pole; (4) Texas Department of Public Safety crash reports; and (5) records from the NTTA Safety Operations Center from the date of the accident. Zaidi filed a responsive brief, but did not present any evidence to controvert NTTA’s plea. However, he filed a motion for continuance to conduct additional discovery five days before the hearing on NTTA’s plea and over nine weeks after NTTA had filed its plea. The trial court denied the motion and granted NTTA’s plea. Zaidi appealed.

A trial court abuses its discretion when its ruling is so arbitrary and unreasonable so as to amount to a clear and prejudicial error of law. The court looked to the following factors to determine if the trial court had abused its discretion in denying Zaidi’s motion for continuance: (1) the length of time the case has been on file; (2) the materiality and purpose of the requested discovery; and (3) whether the party seeking the continuance has exercised due diligence in obtaining the discovery sought, including providing a description of the evidence sought, and its materiality. The court determined that Zaidi’s motion did not outline his due diligence effort to obtain the discovery requested and his counsel could not confirm whether he had attempted to notice the depositions of the NTAA since receiving the plea. As a result, the court concluded that the trial court did not abuse its discretion in denying Zaidi’s motion for a continuance.

With respect to the plea to the jurisdiction, NTTA asserted that Zaidi’s premises defect or special defect claim failed to trigger the waiver of immunity provisions under Section 101.021 of the Texas Civil Practices and Remedies Act because NTTA lacked the requisite knowledge of the alleged defect and Zaidi could not establish NTTA failed to use ordinary care to protect Zaidi’s son from danger. The court concluded that because NTTA did not have actual knowledge of any dangerous condition caused by the pole until one minute before Zaidi’s son collided with it, NTTA’s immunity was not waived.  Accordingly, the trial court’s judgement was affirmed.

Breach of Contract/Easement: North Texas Mun. Water Dist. v. Jinright, No. 05-18-00152-CV, 2018 WL 6187632 (Tex. App.—Dallas Nov. 27, 2018) (mem. op.).  This case arises from an appeal by the North Texas Municipal Water District for a portion of the trial court’s order denying the district’s plea in a case involving an easement.

The district requested an easement from certain property owners so that it could build an underground water pipeline. The district conducted tree surveys that identified which trees on the property would be preserved and which trees would be removed or replaced, and offered to pay the landowners $151,200 for settlement of the easement.  The sum included sums for: (1) the district’s removal of 373 trees, as identified in the tree surveys; and (2) the landowner’s removal of a fence and the installation of a gate on the property so that the district could access the easement. Following receipt of the district’s letter, the landowners expressed concerns regarding the district’s obligations in the event it damaged their property while working in the easement. To address these concerns, the district’s land agent forwarded two pages from its “contractor specs,” which, among other provisions, provided that: (1) the “Contractor” assumed full responsibility for any damage to the property; (2) the “Contractor” was required to clear all trees within the easement; and (3) described the “Contractor’s” obligations to replace or compensate the “Owner” for any trees that were removed without the “Owner’s” consent.

The parties signed the easement and the district commenced construction of the pipeline.  Following disputes regarding damage to the property owners’ fence, damage to trees that had not been slated for removal, and off-easement use of the property for equipment storage, the property owners filed suit asserting breach of contract, inverse condemnation, trespass, unjust enrichment, reformation of instrument, and mandamus relief. The property owners also asserted that the district intentionally withheld the portion of the specs that defined the terms “Owner” and “Contractor,” and were therefore misled into believing that they were the “Owners” who were owed obligations by the “Contractor,” who in their view was the district. The trial court granted the district’s plea with respect to the property owners’ claims for trespass, unjust enrichment, and mandamus relief, and denied the plea as to the property owners’ claims for breach of contract, inverse condemnation, and reformation of instrument. The district appealed.

With respect to the breach of contract claim, the court looked at whether the property owners sought contract damages to which a waiver of immunity extends under Chapter 271 of the Local Government Code. The court determined that Section 271.152’s waiver of immunity from suit does not extend to claims for damages not recoverable under Section 271.153. The property owners did not seek recovery of any “balance due and owed” by the district as payment for the property owners’ fence removal and gate installation services, nor did they dispute the district’s contention that it had already paid this amount. Instead, they sought damages for the restoration of the property necessitated by the district’s actions and for delays in the construction of one of the property owner’s home as a result of the actions. The court concluded that these damages were consequential damages which are not recoverable under Section 271.153. Accordingly, the trial court erred in denying the district’s plea with respect to the breach of contract claim.

Regarding the inverse condemnation claim, the court affirmed the trial court’s denial of the district’s plea to the extent that such claim related to takings other than the taking of trees. The court determined that the property owner had alleged facts establishing that the district exercised a right neither granted by the easement nor reasonably necessary for the district to fully enjoy the easement for the purpose it was granted.

With respect to the property owners’ claim that they were induced to sign the easement based on the district’s letter and the “contractor’s specs,” the court determined that the trial court lacked jurisdiction to hear the property owners’ reformation claim. The court found that even if the easement was reformed to include the additional terms, the property owners did not allege any contract damages covered by the waiver of immunity applicable to contract claims.

Public Information Act: Texas Tech Univ. v. Dolcefino Comm.,  LLC, No. 07-18-00225-CV, 2018 WL 6332572 (Tex.  App.—Amarillo Dec. 4, 2018). This is a Public Information Act (PIA) case where the Amarillo Court of Appeals reversed the denial of a plea to the jurisdiction and held Texas Tech University properly complied with the PIA.

Dolcefino Communications, LLC (Dolcefino) requested various records from the university under the PIA. The university produced some, but not all, of the records requested. Dolcefino filed a petition for mandamus relief under Texas Government Code Section 552.321. The university filed a plea to the jurisdiction, which was denied. Texas Tech University appealed.

The legislature has prescribed that all statutory prerequisites to suit are jurisdictional in suits against governmental entities.  While the PIA waives immunity to a limited extent, the waiver is not all-encompassing. Under the PIA, a requestor may file suit only upon showing that the governmental body “refuses to supply public information” or “refuses to request an attorney general’s decision.”  Such are statutory prerequisites to suit. The bulk of Dolcefino’s requests at issue were deemed “withdrawn as a matter of law” by the university because Dolcefino did not respond in writing to the itemized statement of costs or provide a bond within the time period. Dolcefino did not: (1) accept the estimated charges, (2) modify its requests, or (3) send a complaint to the attorney general.  Dolcefino and the university did engage in what Dolcefino characterizes as a “back-and-forth” regarding the charges due.  However, an ongoing parleying over price does not provide a basis for overriding the statutory scheme for responding to an estimate of charges. The request was properly considered withdrawn.

The court also dismissed Dolcefino’s argument that the university waived the withdrawal language since estoppel does not run against a governmental entity.  Regarding the remaining portions of the request, the university asserts no responsive documents exist. However, a movant in a plea to the jurisdiction must assert and support with evidence the trial court’s lack of subject matter jurisdiction.  The court analyzed the emails back and forth with Dolcefino where Texas Tech University asserted it did not have certain specific documents. Dolcefino asserted the statements were conclusory and not competent evidence. The court held “[a]s sparse as this additional data may be, it nevertheless insulates Texas Tech’s reply from a potential attack as conclusory.” The university produced some evidence that it was not “refusing” to provide public information to Dolcefino.  As a result, the plea should have been granted.*

Takings: Waller v. Sabine River Auth., No. 09-18-00040-CV, 2018 WL 6378510 (Tex. App.—Beaumont Dec. 6, 2018) (mem. op.). Following a historic flooding event in March of 2016, Jim Waller, along with one hundred other landowners (landowners) sued the Sabine River Authority of Texas (SRA-T) alleging their properties flooded after SRA-T released water from the Toledo Bend Dam. Despite acknowledging that the release was consistent with SRA-T’s FERC license, landowners sued for inverse condemnation, private nuisance, and trespass to real property. SRA-T filed a plea to the jurisdiction, arguing it was immune because landowners could not establish causation, could not establish that SRA-T had the requisite mens rea for a takings claim, and that landowners were preempted by federal law. The trial court granted SRA-T’s plea. The landowners appealed.

To establish a constitutional takings claim, a plaintiff must prove: (1) the state intentionally performed certain acts in the exercise of its lawful authority; (2) the acts resulted in a “taking” or damaging of property; and (3) the taking was for public use. Whether a taking occurs under inverse condemnation is a question of law. Similarly, under article I, section 17, a claim for nuisance is an alternative ground of recovery and exception to immunity if the nuisance rises to the level of a constitutional taking.

The court of appeals finds the facts in this case distinguishable from Arkansas Game & Fish Comm’n v. United States, 568 U.S. 23 (2012) (a case holding that a temporary flooding event could give rise to a governmental taking) because: (1) this case involves a hydroelectric power plant subject to FERC regulations; (2) the Toledo Bend Dam was not created for the specific purpose of controlling floods; and (3) the entity in Arkansas Game and Fish intentionally deviated on several occasions from the procedures spelled out in the dam’s operation manual, which resulted in downstream flooding, whereas, here, the dam was operated in compliance with its license.

As to the issue of causation, the court holds there are no findings that SRA-T deliberately damaged landowners’ property or that the act of opening the dam gates was a proximate cause of the damage to their property. In sum, the court found landowners failed to establish a takings claims.

As to the preemption claims, the court found that landowners were arguing that a duty to pre-release water should be imposed on SRA-T even though such action would have been inconsistent with federal law and regulations (the FERC license) that govern SRA-T’s operations. Landowners’ claims were conflict preempted. The trial court’s judgment is affirmed.

Tort Claims Act: Jefferson Cty. v. Reyes, No. 09-18-00236-CV, 2018 WL 5986004 (Tex. App.—Beaumont Nov. 15, 2018) (mem. op.). This is a vehicle accident/Texas Tort Claims Act (TTCA) case where the Beaumont Court of Appeals reversed the denial of the county’s plea to the jurisdiction based on formal written notice and dismissed the claims.

Reyes asserts a county employee, Flanagan, negligently drove a vehicle within the course and scope of his employment with the county and collided with his vehicle. Reyes’ attorney sent a letter less than two months after the accident to the county’s risk management advising of the collision. The county’s third-party administrator sent a notification letter the claim was received and was being handled. The county denied the claim within weeks. Reyes filed suit nearly two years later. The county filed a plea to the jurisdiction attacking compliance with notice provisions. The trial court denied the plea and the county appealed.

Reyes asserts he complied with Texas Civil Practice and Remedies Code Section 101.101 entirely, and substantially complied with Texas Local Government Code Section 89.004(a), which is a notice statute for county claims. After analyzing the claim letter language, the court held the written letter sent to the county’s risk management department did not include the requisite information as outlined in the TTCA notice provision Section 101.101(a). Specifically, the letter failed to provide a place description of the incident and failed to “reasonably describe” the incident. Thus, formal written notice was not received. The court then analyzed whether the county had actual notice of the claim. Even though the county’s third-party claims administrator acknowledged receipt of the claim, the court found this insufficient. The county explained its “investigation failed to find any negligent conduct on the part of the County or its employees which proximately caused [Reyes’s] damages.” The evidence established the county failed to uncover any negligent conduct in its investigation. Therefore, it lacked the subjective awareness necessary for actual notice. As a result, the plea should have been granted.*

Contractual Immunity: M.E.N. Water Supply Corp. v. City of Corsicana, No. 10-16-00364-CV, 2018 WL 5986953 (Tex. App.—Waco Nov. 14, 2018).  The Tenth Court of Appeals affirmed in part and reversed in part the trial court’s granting of the City of Corsicana’s motion to dismiss (on the ground of failure to satisfy a condition precedent to sue), motion for summary judgment (on the ground of lack of evidence), and plea to the jurisdiction (on the ground of governmental immunity from suit).

Appellants (the City of Frost, the City of Kerens, and multiple water supply corporations) sued the City of Corsicana for breach of contract claiming that the city was charging ratepayers higher water rates than those authorized by the contracts in question. Appellants requested specific performance of the contracts, and asserted that the City of Corsicana did not retain governmental immunity from the suit because the suit involved a proprietary function. The city responded by filing a plea to the jurisdiction, arguing that it did retain governmental immunity over the breach of contract claim. The city also moved to dismiss appellants’ claims, asserting that the City of Frost failed to satisfy a contractually required condition precedent to filing suit for a breach of contract. Additionally, the City of Corsicana moved for summary judgment based on lack of evidence of the existence, breach, and damages from breach of a valid contract. The trial court granted the City of Corsicana’s summary judgment motion, plea to the jurisdiction, and motion to dismiss. The trial court denied all relief requested by the appellants, and the appellants appealed.

The City of Corsicana incorrectly claimed that its contract with the City of Frost required an agreement or unappealable court order as a condition precedent to filing suit for breach of contract. In fact, nothing in the contractual language contemplated the filing of a lawsuit. The trial court’s dismissal order was premised on an erroneous finding concerning the presence of a condition precedent. Therefore, the trial court erred in dismissing the City of Frost’s claims for failure to satisfy a non-existent condition precedent. Moreover, the City of Kerens incorrectly interpreted its contract with the City of Corsicana; its actions did fall within the contractually authorized establishment of a rate based upon the volume of water purchased. Therefore, the City of Kerens failed to proffer the necessary amount of evidence to create a material fact issue as to the breach element of its breach of contract action, and the trial court correctly dismissed its overall breach claim. Additionally, the act of selling water wholesale to non-resident entities is not a proprietary act for which governmental immunity from suit is relinquished. Under the Texas Tort Claims Act, selling wholesale water falls under “water and sewer service” and is a governmental function, not a proprietary function. The City of Corsicana’s governmental immunity for breach of contract claims is also not waived under Section 271 of the Local Government Code. Section 271 does not extend to contracts where a city only receives indirect benefits. Therefore, the trial court correctly granted the City of Corsicana’s plea to the jurisdiction. The granting of the City of Corsicana’s motion to dismiss was reversed, and the granting of its motion for summary judgment and plea to the jurisdiction was affirmed.

Uniformed Services Employment and Reemployment Rights Act: Texas Dep’t of Pub. Safety v. Torres, No. 13-17-00659-CV, 2018 WL 6067300 (Tex. App.—Corpus Christi Nov. 20, 2018). This is a case of first impression considering whether sovereign immunity bars claims by private individuals against units of state government under the federal Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).

Leroy Torres was employed as a trooper with the Texas Department of Public Safety (DPS) when he was deployed to Iraq in 2007. In 2008, Torres was honorably discharged and sought to be reemployed by DPS. Due to a lung condition acquired in Iraq, Torres requested reemployment in a different position. DPS declined to offer him a different job, but offered a temporary duty position that Torres refused. Torres resigned and ultimately sued DPS in 2017. Torres claimed that DPS’s failure to offer him a job that would accommodate his disability violated USERRA, which prohibits adverse employment actions based on the employee’s military service. DPS filed a plea to the jurisdiction arguing that sovereign immunity applied and deprived the trial court of subject-matter jurisdiction. The trial court denied DPS’s plea, and DPS appealed.

The primary issue on appeal was whether DPS’s immunity to suit in state court for damages under USERRA was validly abrogated by the U.S. congress or validly waived by the Texas Legislature. In deciding the congressional abrogation question in favor of DPS, the court relied chiefly on the United States Supreme Court decision in Alden v. Maine, which held that “[t]he powers delegated to Congress under Article I of the United States Constitution do not include the power to subject nonconsenting States to private suits for damages in state courts.” 527 U.S.706, 712 (1999). Because USERRA was arguably enacted pursuant to Congress’s Article I War Powers, or alternatively, Article I’s “Necessary and Proper” clause, USERRA did not constitutionally abrogate DPS’s sovereign immunity to private suits for damages in Texas courts.

Determining that DPS’s sovereign immunity to private claims in state court had not been validly abrogated by USERRA, the court turned to whether the Texas legislature validly waived DPS’s sovereign immunity through “clear and unambiguous” statutory language. Torres claimed that the legislature demonstrated its intent to waive sovereign immunity by enacting Chapter 437 of the Government Code. Chapter 437 entitles a state employee (or employee of a political subdivision) to be restored to the position that the employee held when ordered to duty, authorizes an aggrieved person to file a complaint with the Texas Workforce Commission, and authorizes the complainant to bring a civil action against the employer within sixty days after receiving notice of a dismissal from the Texas Workforce Commission. The court held that to the extent Chapter 437 of the Government Code waives sovereign immunity, it does so only in cases in which the administrative process has been exhausted as set forth in the statute. In this case, there was no dispute that Torres did not exhaust his administrative remedies with respect to his claims against DPS.

DPS’s immunity to Torres’s suit was not validly abrogated by the U.S. congress or waived by the Texas legislature. The court reversed the trial court’s judgment and rendered judgment granting DPS’s plea to the jurisdiction.

Contractual Immunity: Tri-Stem, Ltd. v. City of Houston, No. 14-17-00545-CV, 2018 WL 6216868 (Tex. App.—Houston [14th Dist.] Nov. 29, 2018). The City of Houston contracted with Tri-Stem, Ltd. to audit the city’s utility bills and seek refunds for past billing errors and overcharges, specifically pertaining to the city’s unmetered streetlights and electric and natural-gas utility bills. The contract provided that the city was to pay Tri-Stem 45% of any cash refunds the city actually received as a result of Tri-Stem’s work for up to four years after the contract terminated. Tri-Star found city overcharges by CenterPoint Energy related to the city’s streetlights. When CenterPoint refused to refund the overcharges, the city sued CenterPoint. Ultimately, the city and CenterPoint reached a non-cash settlement to the lawsuit.

Tri-Stem sued the city for breach of contract, seeking to recover a percentage of any cash the city ultimately received under the city’s settlement with CenterPoint. In its motion for summary judgment, the city argued that because the city received no cash recovery in the CenterPoint settlement, it owes Tri-Stem nothing under the “cash recovery” provision of the contract. The trial court granted the city’s motion for summary judgment and rendered judgment that Tri-Stem take nothing by its suit. Tri-Stem appealed.

On appeal, Tri-Stem first argued that the trial court erred in granting the city’s motion for summary judgment before addressing whether it had subject-matter jurisdiction. Because the trial court did not dismiss the case for lack of jurisdiction but instead rendered a take-nothing judgment on Tri-Stem’s claims, the court of appeals held that the trial court implicitly rejected the city’s argument that the claims were barred by governmental immunity. The court further found this implied rejection of the city’s governmental immunity argument to be justified based upon recent case law relating to contractual immunity, most notably the Texas Supreme Court’s recent decision in Wasson Interests, Ltd. v. City of Jacksonville. The court concluded that the city performed a proprietary function in entering into its agreement with Tri-Stem, and therefore the trial court did not err in implicitly denying the city’s assertion of governmental immunity.

In its second issue, Tri-Stem contends that the trial court erred in denying its motion to continue the summary-judgment hearing so that it could conduct further discovery. When the city filed its summary-judgment motion, eleven months remained in the discovery period. The court concluded that the trial court abused its discretion in failing to grant Tri-Stem’s motion for a continuance, as the discovery Tri-Stem sought was material and there was ample time left in the discovery period. Tri-Stem exercised diligence in seeking the discovery but received no substantive reply.

The court reversed the trial court’s grant of summary judgment on the merits, and remanded the case to trial court for further proceedings consistent with its opinion.

*Indicates case summaries taken largely from the work of the Law Offices of Ryan Henry, PLLC, and reprinted with permission from Ryan Henry.  To sign up for the firm’s blog, go to www.rshlawfirm.com.

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