Recent Texas Cases of Interest to Cities

Note: Included cases are from January 11 through February 10, 2019.

Election Contest:  Pressley v. Casar, No. 17-0052, 2019 WL 321196 (Tex. Jan. 25, 2019). This is an election contest case for a city council seat where the losing party and her attorney were sanctioned for bringing a frivolous claim. The Texas Supreme Court reversed the award of sanctions and dismissed the case as currently moot.

Gregorio Casar and Laura Pressley finished first and second, respectively, in the 2014 City of Austin general election for the District 4 city council seat. Pressley filed a request for recount, which included a recount of the electronic voting system information. For the manual recount, the CVR file for each voter was printed and counted by hand. The manual recount found no discrepancies with the original canvass and confirmed the original results that Casar won. Pressley next filed an election contest, arguing that CVRs are not “ballot images” or “images of ballots cast,” as the Election Code requires. She also asserted the election officials failed to allow her and the poll watchers the ability to observe the retrieving of the images from the machines. Casar filed traditional and no-evidence summary judgment motions and moved for Chapter 10 sanctions, which the trial court granted and the court of appeals affirmed.

The appellate court first noted Casar was reelected and began his second term in 2017. Because Pressley’s petition for review was filed after the completion of Casar’s contested term, the first issue the court decided was whether the election contest was moot. Casar argued the election contest was moot because no remedy exists to contest an expired term of office. The court agreed and found no exception to the mootness doctrine applied. However, even though the election contest provision was moot, the court still considered the sanctions holdings. Chapter 10 of the Civil Practice and Remedies Code permits sanctions for pleadings that are filed for an improper purpose or that lack legal or factual support. Pleaded claims must be warranted by existing law or a nonfrivolous argument to change existing law. The trial court sanctioned Pressley for three claims: (1) election irregularities, (2) criminal violation by election officials, and (3) voter disenfranchisement. After analyzing each, the court held at least some evidence exists to support the claims asserted. There was nothing frivolous about presenting a statistical analysis showing that the results were unlikely as persuasive support. Pressley’s computer-science and data expert testified that he found at least nine corruption errors in the files, which constituted irregularities and were also an indicator of potential corruption. The seals on the election machines were also broken. Pressley did not need to be right or produce enough evidence to prevail on her entire suit to avoid sanctions. Pressley’s claims had some evidentiary support, which was enough to make them non-frivolous. The sanctions order was reversed and the remainder dismissed as moot.*

Dangerous Dog Appeal: In re Pool, No. 03-18-00299-CV, 2019 WL 287940 (Tex. App.—Austin Jan. 23, 2019) (mem. op.). This case stems from a writ of mandamus to compel a county court at law to vacate an order issued by the City of Austin Municipal Court denying a jury trial in a matter pertaining to a dangerous dog.

Pool owns a dog named Pepper who allegedly attacked a jogger named Hoffman. Following a hearing by an independent hearing examiner at which Pool and Hoffman provided sworn testimony, the examiner determined that Pepper was a “dangerous dog” under Section 822.041(2) of the Texas Health and Safety Code.  Pool appealed the decision to the municipal court. The municipal judge, without a jury, held a hearing and confirmed Pepper was a dangerous dog. Pool appealed to the county court at law and requested a jury trial de novo. In response, the State of Texas argued that because the municipal court is a municipal court of record, Section 30.00014(b) of the Government Code prohibits a trial de novo. The court agreed and held that Pool was not entitled to a de novo review. Pool brought this mandamus action to compel a jury trial.

The court of appeals determined that this was an issue of statutory interpretation. Section 30.00014(b) of the Government Code provides that an appellate court shall determine each appeal from a municipal court of record conviction, and that such appeal may not be by trial de novo. However, under Section 822.0424(a) of the Health and Safety Code, a party to an appeal of a decision of a municipal court may appeal the decision and is entitled to a jury trial on request. In harmonizing these two sections, the court noted that in one of its prior decisions, it had concluded that a municipal court of record’s dangerous dog determination was a civil judgment rather than a criminal conviction.  Because the term “conviction” refers to a judicial decision in a criminal matter, while a “judgement” commonly refers to a judicial decision in a civil case, Section 30.00014(b) does not apply to an appeal of a dangerous dog determination from a municipal court of record. Accordingly, Pool was entitled to a jury trial upon request. The court further held, in a footnote, that even if the two statutes could not be harmonized, Section 822.0424 would still prevail as it is the most recent and specific statute.*

Breach of Contract: Kempner Water Supply Corp. v. City of Lampasas, No. 13-17-00047-CV, 2019 WL 386136 (Tex. App.—Corpus Christi Jan. 31, 2019) (mem. op.). This is a breach of contract case for water treatment where the Corpus Christi Court of Appeals held as a matter of law the City of Lampasas was entitled to damages in its breach of contract claim, but remanded the case for a determination on a damage amount.

The city sued appellant Kempner Water Supply Corporation (Kempner) for a breach of contract claim. The city assigned its raw water reservation right to a third-party named Central Texas in order for Central Texas to treat the water and deliver it to Kempner for final delivery. Kempner and the city have differing interpretations of the contract, which focused on the city’s payments for water treatment performed by Central Texas and whether the contract intended to cover payment for water treatments performed directly by Kempner. When the parties entered into the contract, Kempner did not have its own water treatment facility, but later built one. Kempner charged the city for water it treated as well as treatments performed by Central Texas which Kempner distributed. The trial court granted the city’s motion for summary judgment and denied Kempner’s. Kempner appealed.

After a lengthy contract construction analysis, the court held the contract states the city agreed to pay Kempner for costs Kempner incurred for water treated by Central Texas.  It did not obligate the city to pay Kempner for water that Kempner treated. The city conclusively established Kempner breached the contract by charging it for Kempner-treated water.  However, when analyzing damages, the court noted the record did not separate out the allowable damages. As a result, the case was remanded back to the trial court for a hearing on damages.*

Property Tax Collection: Harris Cty. v. Falcon Hunter, LLC, No. 14-18-00247-CV, 2019 WL 470400 (Tex. App.—Houston [14th Dist.] Feb. 7, 2019) (mem. op.). This is a delinquent tax case where the taxpayer company, Falcon Hunter, LLC. (Falcon), sued for a refund of penalties and interest paid. The Fourteenth Court of Appeals reversed the denial of the taxing entities’ plea to the jurisdiction and dismissed the case.

After the taxing units sent the tax bill to an incorrect address, Falcon, failed to pay property taxes. When it discovered it was listed as delinquent, Falcon paid the taxes including penalties and interest. Three years later, Falcon applied for a refund of the penalties and interest, but did not seek a refund of any property taxes paid. When Falcon did not receive a response, it sued for the amount in penalties and interest, plus collection fees and attorney’s fees. The taxing units filed a plea to the jurisdiction, which was denied. The taxing units appealed.

Taking Falcon’s pleadings as true for purposes of the analysis, the Texas Tax Code Section 31.11(k) states that, after a request for refund has been denied, the taxpayer may file suit against the taxing unit in district court to compel the payment of the refund within 60 days. However, it applies when a tax bill is returned to the taxing unit by the post office under certain conditions. To secure the benefit, the taxpayer must submit a request for waiver of penalties and interest under the code. The request must be made before the 181st day after the delinquency date. Since Falcon waited almost three years, it did not timely request a waiver and did not exhaust its administrative remedies.

Section 31.11 waived immunity for a refund of “taxes.” However, the legislature took care to clearly distinguish the terms “penalty” and “interest” from the term “tax.”  A taxpayer has three years to seek a refund of the tax. However, if a taxpayer wants penalties and interest on a delinquent tax waived, the taxpayer has, as relevant here, 180 days from the delinquency date to request the waiver in writing. Falcon sought a refund of penalties and interest, not the tax. As a result, no waiver of immunity exists for a refund of penalties and interest outside the 180-day limitation. The plea should have been granted.*

*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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