Recent Texas Cases of Interest to Cities

Note: Included cases are primarily from September 11, 2018 through October 10, 2018.

Contractual Immunity: Wasson Interests, Ltd. v. City of Jacksonville, No. 17-0198, 2018 WL 4838309 (Tex. Oct. 5, 2018).  On petition for rehearing, the Texas Supreme Court withdrew the judgment issued on June 1, 2018, and determined that the contract claim arising out of the lease was a proprietary function of the city.  Therefore, the city was not entitled to sovereign immunity for the Wassons’ breach of contract claim.

The city constructed Lake Jacksonville in the late 1950s to serve as the city’s primary source of water. In the 1990s, the Wassons entered into long-term leases of lakefront property owned by the city. The leases incorporated the city’s rules and regulations governing Lake Jacksonville by reference. Those rules and regulations specify, among other things, that the property is to be used for residential purposes only. After living on the property for several years, the Wassons moved and conveyed their interest in the lease to Wasson Interests, Ltd. (“WIL”). WIL then began operating the property as a bed-and-breakfast and event center, which the city asserted violated the terms of the lease. The Wassons filed suit, alleging the city breached the lease agreement. The trial court found that entering into the lease was a governmental function and granted summary judgment on that ground. In doing so, the trial court did not consider other grounds put forth by the city.

Cities are entitled to sovereign immunity only when they perform governmental functions solely for the public benefit. In contrast, proprietary functions are those “performed by a city, in its discretion, primarily for the benefit of those within the corporate limits of the municipality,” and “not as an arm of the government.” In determining that the city engaged in a proprietary function when it entered the lease, the Texas Supreme Court considered “whether (1) the City’s act of entering into the leases was mandatory or discretionary, (2) the leases were intended to benefit the general public or the City’s residents, (3) the City was acting on the State’s behalf or its own behalf when it entered the leases, and (4) the City’s act of entering into the leases was sufficiently related to a governmental function to render the act governmental even if it would otherwise have been proprietary.”

The Texas Supreme Court concluded that all four factors weighed in favor of finding that the city engaged in a proprietary function rather than a governmental function when entering into the lease. First, entering into the lease was discretionary because the city did not have an obligation to lease lakefront lots to private parties. Second, the lease benefitted the city’s residents over the general public because the primary objective of leasing the property was to raise funds for the city’s budget. Third, the lease primarily benefitted the city’s residents and was not done on behalf of the State of Texas. Fourth, although the lease’s “overarching purpose” was to develop the water supply reservoir, merely being “associated” with a governmental function did not make entering into the lease a governmental function.  The action may be treated as governmental only when it is essential to the city’s governmental actions—the lease was not.

Because the Texas Supreme Court held that entering into the lease was a proprietary function, it reversed the court of appeals’ judgment and remanded to the trial court to consider the city’s additional grounds.

Texas Tort Claims Act: City of Houston v. Crawford, No. 01-18-00179-CV, 2018 WL 4868306 (Tex. App.—Houston [1st Dist.] Oct. 9, 2018) (mem. op.).  This is a premises defect case where the First District Court of Appeals in Houston affirmed the trial court order denying the city’s plea to the jurisdiction.

Crawford, a United Airlines passenger, was on a layover in the Houston airport.  Crawford alleged he slipped and fell due to a negligently maintained floor. Crawford asserted the city had actual knowledge of the defect and failed to correct it. Specifically, a greasy area of the floor had cones placed around the area. She asserted first she was an invitee, but even if a licensee, the city had actual knowledge of the danger. The city filed a plea to the jurisdiction. The trial court denied the plea and the city appealed.

The court first determined Crawford was a licensee as slippery floors fall under ordinary premise defect theories. Next, to prove actual knowledge, the licensee must show that the owner actually knew of a “dangerous condition at the time of the accident.” The airport supervisor testified she reviewed the records and reports in the Airport Safety and Operations Compliance System (ASOCS) and found “no records or reports concerning notice of a dangerous condition, including grease or other liquid or foreign substance, or of any person slipping and falling or any incidents, in Terminal A for June 18, 2015,” or for the six months prior to that date. Crawford’s husband testified he was walking ahead of her and observed cones around the greasy area of the floor but, that his wife did not see them prior to slipping. “Warnings must be taken in context of the totality of the circumstances.”  Crawford’s husband further testified that the cones failed to encompass the entire defective area, and that she slipped and fell outside the coned area. Accepting as true all evidence favorable to Crawford, indulging all inferences in her favor, and resolving all doubts in her favor, the court concluded Crawford raised a fact issue regarding whether the city adequately warned her of the extent of the dangerous condition. The plea was therefore properly denied.*

Eight Liners: City of Fort Worth v. Rylie, No. 02-17-00185-CV, 2018 WL 4782291 (Tex. App.—Fort Worth Oct. 4, 2018). The Second Court of Appeals reversed the trial court’s holding that the Texas Alcoholic Beverage Code does not preempt the city’s “game room alcohol ordinance.” The court affirmed the trial court’s holding that portions of a city’s zoning ordinance conflicted with Chapter 2153 of the Texas Occupations Code, and found that the Texas Occupations Code does not completely preempt cities from regulating “skill or pleasure coin-operated” machines. The court also reversed and rendered judgment on the city’s declaratory-judgment counterclaim for want of jurisdiction.

The lower court granted summary judgment to the operators because some of the ordinances’ zoning and sealing-fee provisions conflicted with and were partially preempted by the Occupations Code, but denied summary judgment to the operators on the alcohol restrictions issue and their argument that the Texas Occupations Code completely preempted the ordinances. The lower court denied summary judgment to the city on the issue of the constitutionality of the fuzzy-animal exception.

The Texas Constitution directs and allows the legislature to pass laws prohibiting “lotteries,” and Texas passed a law banning “gambling devices.” However, the ban does not proscribe devices designed solely for amusement purposes and that reward non-cash merchandise (prizes, toys, etc.); this exception is called the “fuzzy-animal exception.” The appellees are operators who own, lease, and exhibit electronic gaming machines that produce tickets/coupons that can be redeemed for a prize. The city passed two ordinances regulating these machines. One placed zoning restrictions on where the machines can be located in order to protect certain areas from alleged deleterious effects on surrounding businesses and the quality of the areas. The other placed an alcohol restriction on the “game rooms” in which the machines were located. The operators sued and argued that the ordinances were void under the Texas Occupations Code and the Texas Alcoholic Beverage Code. The city counterclaimed and argued that the “fuzzy-animal exception” was unconstitutional under the Texas constitution’s ban of “lotteries.”

The city argued that Chapter 2153 of the Texas Occupations Code did not preempt the ordinances because the machines were not “skill or pleasure coin-operated machines.” The city further argued that the fuzzy-animal exception in the Penal Code is unconstitutional because it legalizes lotteries. The Second Court of Appeals held that the machines are “skill or pleasure coin operated machines” under Chapter 2153 Texas Occupations Code, and that the power to regulate the machines, therefore, generally belonged to the state legislature rather than cities. The court rejected the city’s argument that machines were illegal and unconstitutional. Instead, the court found Chapter 2153 of the Texas Occupations Code applies to all legal and illegal skill or pleasure coin-operated machines and declined to issue an advisory opinion on the constitutionality of the fuzzy-animal exception. When considering the operators’ contention that Chapter 2153 entirely preempted the city’s regulations, the court found that Chapter 2153 does not reflect legislative intent to completely and totally preempt any local regulation of coin-operated machines. The court affirmed the trial court’s ruling that Chapter 2153 partially preempted the ordinance.

The court also held that Section 109.57 of the Texas Alcoholic Beverage Code dictates that the manufacture and sale of alcoholic beverages are exclusively governed by state law. This explicitly precludes cities from passing ordinances that go beyond the scope of state law, and the city’s attempt to ban the sale of all alcohol in “game rooms” containing the gaming machines in question goes beyond the narrow circumstances in which the Alcoholic Beverage Code allows cities to pass alcohol restrictions.

Finally, the appellants raised a “substantive-due-course-of-law” argument that the ordinances’ real world effect was not rationally related to the city’s interests. However, because the appellants did not raise this issue until appeal, the court refused to consider it.

Contracts and Personal Jurisdiction of Out-of-State Entities: City of White Settlement v. Emmons, No. 02-17-00358-CV, 2018 WL 4625823 (Tex. App.—Fort Worth Sept. 27, 2018) (mem. op.).  While involving a city, this case is more about personal jurisdiction over an out-of-state financial institution involved in an economic development corporation (EDC) project. It will likely only be of interest to litigators and contract drafters.

In September 2013, the city and EDC entered into a transaction with Hawaiian Parks – White Settlement, LLC (HPARKS) where the city would ground lease land to HPARKS to construct a water and adventure park and would pay up to $12.5 million for the construction, to be financed by debt obligations issued by either the city or the EDC. The ground lease agreement allowed HPARKS to encumber the leasehold interest and capital improvements but only with the city’s consent. The owners of HPARKS mortgaged the park in order to finance the park construction. HPARKS ran out of money and could not meet its past due obligations or complete construction. Capital One and the Source Capital Lenders issued notices of default. As part of a financial reorganization, the city and EDC agreed that HPARKS could execute documents granting a lien on all of its right, title, and interest under the ground lease and that Capital One could foreclose on that interest in an event of default of its loan to HPARKS. Despite receiving new loans and changing ownership, HPARKS failed to make good on its obligations to the city or bank. The city sued the owners and lenders claiming the banking entities falsely represented that the city would be provided payment in exchange for allowing the encumbrances and not declaring a default. Further, instead of making the October 2015 lease payment and ensuring that the park had enough income, the defendants diverted HPARKS’s income to operate other parks in other cities. The Source Capital defendants filed a special appearance noting a lack of personal jurisdiction. The trial court granted the special appearance without holding a live hearing. The city and EDC appealed.

A Texas court may assert personal jurisdiction over a nonresident defendant only if the requirements of the Texas long-arm statute and of due process under the Fourteenth Amendment are satisfied. A trial court may exercise specific jurisdiction over a defendant only if the suit arises out of or relates to the defendant’s forum contacts. This depends on the existence of activity or an occurrence that takes place in the forum state and, therefore, the party is subject to the state’s regulation. The court went through a lengthy listing of evidence and testimony. The evidence showed the various defendants were physically present in the state and made allegedly fraudulent representations on which the city and EDC relied. The court held the Source Capital defendants purposefully availed themselves of the privilege of conducting business and investment activity in Texas sufficient to confer specific jurisdiction on the trial court for fraud and torts. However, personal jurisdiction over the individual agents of Source Capital does not extend to the breach of contract claim. Unlike in a tort context, a corporate agent who is not individually a party to a contract may not be held liable for breaching a contract to which only his principal is a party. As a result, the trial court’s order is affirmed-in-part and reversed-in-part.*

Junk Vehicles: In re Pixler, No. 02-18-00181-CV, 2018 WL 3580637 (Tex. App.—Fort Worth July 26, 2018). This is a mandamus suit where the Fort Worth Court of Appeals held the district court had jurisdiction over the City of Newark’s enforcement of its junk vehicle ordinance, but that the city ordinance did not properly create an alternative mechanism to allow for administrative penalties.

Pixler owns an auto-tech business and would sometimes store vehicles in parking spaces on the neighboring property. Pixler was given eight complaints which were submitted to an administrative board under the city’s ordinances. The board determined the vehicles were junk vehicles and assessed $8,000 in administrative penalties. Pixler did not challenge the board decision directly. The city then filed a petition in district court seeking: (1) to enjoin Pixler from further violating its ordinances; (2) to collect the $8,000 in administrative penalties; and (3) to impose separate civil penalties against Pixler for continuing to violate its ordinances. The city won a partial summary judgment motion and awarded penalties totaling $80,000.00, but since the City’s Texas Uniform Fraudulent Transfers Act claim is still pending, no final judgment has been entered.  Pixler filed this mandamus proceeding challenging the district court’s subject matter jurisdiction over the matter.

The Fort Worth Court of Appeals divided its holding into roughly three parts: district court jurisdiction over junk-vehicle determinations, district court jurisdiction over administrative penalties assessed by the administrative board, and the district court’s jurisdiction over the additional civil penalties. Subchapter B of Chapter 54 of the Texas Local Government Code addresses health and safety ordinances and allows a district court to have jurisdiction over enforcement of such ordinances. Section 54.016 permits a city to obtain injunctive relief against the owner of the premises that is allegedly in violation of the ordinance. Since the city ordinance declares any junked vehicle visible from a public place to be detrimental to the safety and welfare of the public, enforcement is proper in the district court.  And since Section 54.017 allows civil penalties of no more than $1,000 per day, the district court has jurisdiction over the civil penalties. However, for administrative penalties assessed by the administrative board, the city’s ordinances did not comply with the statutory requirements. The city’s ordinances adopt the procedures established under the Texas Transportation Code Chapter 683 for abatement of junked vehicles. But, the procedures adopted address enforcement in municipal court before a judge.  And while Subchapter E of Chapter 683 allows a city to adopt an alternative procedure for junked vehicles and Section 54.044 of the Local Government Code likewise allows a city to adopt a general alternative procedure, none of the City of Newark’s ordinances actually did that. The court acknowledged the city has the statutory authority to adopt an alternative administrative procedure, but to do so, the city must adopt a specific ordinance setting out the process. Simply because the city has a municipal court of record does not, by default, mean it can utilize an alternative administrative procedure. Because the city utilized that procedure when its ordinances did not adopt one, the administrative board lacked authority to assess the $8,000 administrative penalty.*

Special Defect: City of Lancaster v. LaFlore, No. 05-17-01443-CV, 2018 WL 4907843 (Tex. App.—Dallas Oct. 10, 2018) (mem. op.). This appeal stems from the trial court’s denial of the City of Lancaster’s plea to the jurisdiction and motion to dismiss in a case involving injuries sustained by LaFlore and his children after LaFlore drove across a city street and ran over a manhole with a partially dislodged cover.

In its appeal, the city argued that: (1) the partially dislodged manhole cover was not a “special defect”; (2) the city had no knowledge of the condition at the time of LaFlore’s accident; and (3) it is immune from LaFlore’s claims for property damage. The court of appeals reversed the trial court’s order denying the city’s plea to the jurisdiction and rendered judgment dismissing LaFlore’s claim for lack of subject matter jurisdiction.

The court, applying its own precedent, found that the partially dislodged manhole cover was not a special defect because it was not of the same kind or class as an excavation or obstruction. The court contrasted the size of the manhole, which was two feet in diameter, in the center of the road, along the center strip between two opposing lanes of traffic, to a pothole, ten feet in diameter and five to six inches deep, that the court had, in another case, held to be a special defect. It also compared the dislodged manhole cover to another case in which the court found a hole in the road that varied from six to ten inches in depth, was four to nine feet wide, and extended over ninety percent of the width of the highway was a special defect. Using these cases as precedent and the Texas Supreme Court’s clear direction to construe the Texas Tort Claims Act narrowly, the court found that the dislodged manhole cover was not a special defect.

Because the court found that the dislodged manhole cover was not a special defect, and the city needed only to establish that it did not have actual knowledge of the condition to prevail on a premise defect claim. The city proffered evidence that it had not received any reports, calls, or other notices that the manhole’s cover was missing, dislodged, or defective in any way or of any accident caused by or related to the manhole or its cover.

With respect to waiver of immunity, a city does not waive immunity from claims for property damage unless the damage is caused by the negligent act or omission of a city employee and arises from the operation of motor-driven equipment. Because LaFlore did not plead that property damage arose from the city’s operation of a motor-driven vehicle or equipment, the court sustained the city’s argument.

Texas Whistleblower Act: Sims v. City of Madisonville, No. 08-15-00113-CV, 2018 WL 4659572 (Tex. App.—El Paso Sept. 28, 2018). David Sims (Sims) was a police officer with the City of Madisonville Police Department from November 2004 to July 27, 2012.  In July 2012, Sims reported to the chief of police that his supervising officer, Sergeant Covington, and another officer were attempting to recruit individuals to plant narcotics in the vehicles of Covington’s ex-wife, with whom Covington was in a contentious custody dispute. The police chief immediately dismissed this information.  Sims also discovered that Covington was compiling an investigative file on him seeking to dismiss him.  Sims asked the police chief if he was being investigated and Sims was told he was not being investigated. On July 26, 2012, Sims met with the police chief and Covington. Prior to the meeting, Sims accessed the office computers and found Covington’s investigative notes and other information that he took to the meeting.  Sims was accused of dereliction of duties and was placed on six months probation. The next day, the police chief dishonorably discharged Sims for accessing the police department’s computer, stating that it was a violation of the computer-use policies.

Sims appealed his “dishonorable” discharge through the State Office of Administrative Hearings (SOAH). During the SOAH hearing, the police chief testified that he had authorized an internal investigation on Sims. This was the first time the police chief had admitted he authorized the investigation. After Sims prevailed at SOAH, Sims filed a suit under the Texas Whistleblower’s Act. His claim was based on the chief’s testimony during the SOAH hearing.

The city filed a plea to the jurisdiction asserting the trial court lacked jurisdiction and that Sims’ case should be dismissed as untimely. The city did not seek a disposition of its plea to the jurisdiction based on challenges to the jurisdictional facts of Sims’ case but, relied, in part, on Section 311.0347 of the Government Code to argue that the statutory prerequisites to suit are jurisdictional requirements in all suits against a governmental entity and that the timely filing of a lawsuit is a statutory, jurisdictional prerequisite to suits against a governmental entity. During the plea to the jurisdiction hearing, Sims informed the trial court that Texas courts had determined that timeliness is not jurisdictional under the Texas Whistleblower Act.  The trial court granted the plea to the jurisdiction based on the reasons stated in the city’s plea to the jurisdiction.

Originally, the Eighth Court of Appeals dismissed Sims’ appeal for lack of jurisdiction. However, the court granted his motion for rehearing, withdrew its original opinion and judgment (issued on June 8, 2018) and substituted this opinion and judgment.

The court did a de novo review of the trial court’s ruling regarding subject matter jurisdiction. Sims argued that the trial court erred in granting the city’s plea to the jurisdiction because non-compliance with the Texas Whistleblower Act’s limitations provision is not jurisdictional and, an affirmative defense of limitation cannot be raised in a plea to the jurisdiction, but must be proven in summary judgment proceedings. Sims based his argument on State v. Lueck, 290 S.W.3d 881 (Tex. 2009), where the Texas Supreme Court held that the facts necessary to allege a violation under Section 554.002 of the Government Code were jurisdictional because they were indispensable to the jurisdictional questions of the waiver of sovereign immunity in Section 554.0035.  The Eighth Court of Appeals agreed with Sims.

The court found that the city did not challenge the specific jurisdictional facts of Sims’ case regarding waiver of sovereign immunity. Instead, the city argued the untimeliness of Sims’ suit based on Prairie View A&M Univ. v. Chatha, 381 S.W.3d 500 (2012), where the Texas Supreme Court granted the university’s plea to the jurisdiction based on the untimeliness of a suit filed under the Texas Commission of Human Right Act (TCHRA).  However, based on Lueck and several other rulings by sister courts that untimeliness of a whistleblower’s suit is not a statutory prerequisite, the court determined that the trial court erred in granting the city’s plea to the jurisdiction, reversed the judgment of the trial court, and remanded the case for further proceedings.

Texas Tort Claims Act: City of Beaumont v. Mahmood, No. 09-18-00145-CV, 2018 WL 4623420 (Tex. App.—Beaumont Sept. 27, 2018). In this case, the Ninth Court of Appeals affirms the trial court’s denial of the City of Beaumont’s plea to the jurisdiction on the grounds that there was a fact issue that would allow a reasonable jury to conclude that the city’s operation and use of a motor vehicle and fiberglass manhole caused the plaintiff’s injuries.

Mahmood was driving a minivan down a city street when a large fiberglass manhole fell from one of the city’s trucks, striking Mahmood’s vehicle. The city-owned truck was being driven by a city employee named Christopher Norman. Two years later, Mahmood sued the City of Beaumont, claiming that he was injured during the accident and that: (1) Norman was in the course and scope of his employment when the incident occurred; (2) the city (through its employees) negligently secured the manhole to the truck; and (3) Norman’s negligent operation of the truck was the reason the manhole fell from the truck. The city challenged the trial court’s jurisdiction by filing a plea to the jurisdiction. In the plea, the city argued (based on information from discovery, Mahmood’s deposition, Norman’s deposition, & the deposition of an employee witness) that: (1) Mahmood could not show a nexus between his alleged injuries and the city’s use of motor-driven equipment; and (2) Mahmood could not show that his injuries were caused by the use of property by a city employee. The trial court denied the city’s plea and the city appealed.

The Ninth Court of Appeals held that trial courts do not have jurisdiction over a suit against the government unless there is a state statute waiving the government’s immunity for the type of claim in the suit. Under the Texas Tort Claims Act, the government’s immunity is waived for certain torts. Accordingly, a court must deny a city’s plea to the jurisdiction if a reasonable jury could find that the city’s operation or use of its vehicle caused an injurious collision to occur. Mahmood asserted that the manhole fell off the truck as he was driving behind it, rolled toward him, and struck his car as he attempted to avoid it. Conversely, Norman claimed that when the manhole fell of the truck, Mahmood struck it after the employees had stopped the truck, gotten out to retrieve the manhole, and were rolling it back toward the truck. The city failed to conclusively prove that the collision occurred as the city described and not as Mahmood described. Therefore, a reasonable jury could potentially conclude that there was a nexus between the city’s negligence and the accident. Also, a reasonable jury could conclude that the manhole was in use by the city employees even though it had not been installed. The court affirmed the denial of the city’s plea to the jurisdiction.

Texas Tort Claims Act: City of Fort Worth v. Hart, No. 10-17-00258-CV, 2018 WL 4925810 (Tex. App.—Waco Oct. 10, 2018) (mem. op.). In this case, the Tenth Court of Appeals reverses the trial court’s denial of the city’s plea to the jurisdiction.

Hart, on behalf of his minor child, sued the City of Fort Worth for injuries the child suffered as the result of an auto accident involving a city police officer (Officer Castaneda). At the time of the accident, Officer Castaneda was driving a city-owned vehicle on his way to work. In support of its plea to the jurisdiction, the city presented certain evidence to which Hart objected. The trial court denied the city’s plea to the jurisdiction and sustained objections to the exhibits, orally stating: “I do not find that the fact issue does exist as to whether or not the Officer was acting within the course and scope of his duties.” The city appealed arguing: (1) the objections to the city’s evidence should not have been sustained; and (2) Hart failed to demonstrate the officer was acting in the course and scope.

The appellate court concluded that the trial court’s order granting the objections to the city’s evidence was an abuse of discretion. The Tenth Court of Appeals also concluded that the evidence presented by the city showed that Officer Castaneda, at the time of the accident, was off-duty, not being paid for his time, had no official duties, and was merely commuting to work. Harts arguments that: (1) the accident occurred during the hours the officer was scheduled to work; (2) city policy only allowed the officer to use the vehicle for city business; (3) the officer was on-call at all times; (4) Castaneda identified himself as an officer; (5) the police report identified the city as the financially responsible party; and (6) Castaneda was required to, but did not, report off-duty usage of the vehicle were insufficient to raise a fact issue about whether the officer was in the course and scope. The trial court’s order denying the city’s plea to the jurisdiction is reversed.

Governmental Immunity: Ray’s Drive Inn Inc. v. Angelina Cty. & Cities Health Dist., No. 12-18-00076-CV, 2018 WL 4474054 (Tex. App.—Tyler Sept. 19, 2018) (mem. op.). In this case, the Twelfth Court of Appeals affirms the granting of a motion to dismiss for lack of jurisdiction on the grounds that the health district’s actions were within its authority and were not ultra vires acts.

The Angelina County and Cities Health District (health district) is charged with enforcement of the Texas Food Establishment Rules. Ray’s is a restaurant in Lufkin and the health district refused to reissue a permit to Ray’s unless it replaced its two-compartment sink with a three-compartment sink. This was despite the fact that the health district had inspected Ray’s five times over the course of 2013-2015 and had never issued a complaint about the sinks. Ray’s sued, claiming that the health district’s refusal to reissue the permit was beyond its authority under the rules. The health district moved to dismiss Ray’s suit for want of jurisdiction, contending that it was barred by sovereign immunity. The trial court granted the motion to dismiss. Ray’s appealed and argued that the trial erred in granting the motion to dismiss for lack of subject matter jurisdiction.

As a general rule, governmental immunity deprives Texas courts of subject matter jurisdiction to review agency actions unless there is a legislatively granted right to judicial review. The Texas Uniform Declaratory Judgment Act is not a general waiver of sovereign immunity and does not enlarge a trial court’s jurisdiction. However, a suit against a state official who violated a private party’s rights without legal or statutory authority is not protected under sovereign immunity. Accordingly, failure to perform ministerial duties (which are performed with precision and are not subject to the official’s discretion) is not protected under sovereign immunity. Under Chapter 437 of the Texas Health and Safety Code, public health districts can determine whether food establishments are complying with state law, and can suspend or revoke a permit if such laws are not being properly followed. Whether a restaurant has complied with the code is within the health district’s discretion, and is not a strict ministerial decision. Though the code recommends that approval of a restaurant’s two-compartment sink by a regulatory authority is sufficient to maintain a permit, this is merely a guideline, not a law. The state legislature intended for health districts to have wide latitude to deal with the issues addressed in the Texas Health and Safety Code. The actions or failures to act that Ray’s described as beyond the health district’s authority are, in reality, within the health district’s authority, so the trial court did not err in granting the health district’s motion to dismiss for lack of subject matter jurisdiction.

Inverse Condemnation: APTBP, LLC v. City of Baytown, No. 14-17-00183-CV, 2018 WL 4427403  (Tex. App.—Houston [14th Dist.] Sept. 18, 2018) (mem. op.). In this case, the Fourteenth Court of Appeals affirms the granting of a city’s plea to the jurisdiction regarding a private company’s takings claim.

APTBP purchased Bay Pointe Apartments, which had been damaged by Hurricane Ike. APTBP began to repair the apartments and a dispute arose when the City of Baytown allegedly refused to restore electricity to repaired, vacant units in the apartment complex. Though the city eventually restored power to the complex, APTBP sued the city under Article 1, Section 17 of the Texas Constitution, claiming an inverse condemnation/regulatory taking. APTPB claimed that the city had arbitrarily refused to reinstate electricity to the repaired units until the entire complex obtained a certificate of occupancy. They argued that no other complex had to fulfill this requirement, and that they had lost revenue from ready-to-lease units. The city claimed governmental immunity and argued that APTBP lacked subject matter jurisdiction because there were insufficient facts to establish a viable takings claim. The city asserted that it had inspected the Bay Pointe Apartments and it did not meet minimum requirements to obtain a certificate of occupancy. They claimed that power was restored once the apartments were up to code. APTBP responded that the city had misapplied its ordinances. The trial court granted the city’s plea to the jurisdiction and dismissed APTPB’s claim against the city.

The court held that the city’s actions did not constitute a viable taking under the Texas Constitution. The Texas Supreme Court concluded in City of Houston v. Carlson that a complaint about the misapplication of a city’s safety regulations with regard to the owners’ property, or a complaint about the manner in which a city enforces its standards, is not a takings. APTBP did not challenge the city’s regulations or standards; they only challenged the city’s application of those regulations and standards. Therefore, they did not present a viable takings claim under Carlson. The Court held that the trial court properly granted the city’s plea to the jurisdiction.

*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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