Recent Texas Cases of Interest to Cities

Note:  Included cases are from July 11, 2013 through August 10, 2013.

Annexation:  Cokins v. City of Lakeway, No. 03-12-00083-CV, 2013 WL 4007522  (Tex. App.—Austin July 25, 2013).  This case involves a challenge to the validity of Lakeway’s annexation ordinance for the North Brooks Hollow Road (NBHR) area.  The City of Lakeway used the abbreviated annexation procedures under Subchapter (C-1), Chapter 43 of the Local Government Code in annexing the NBHR area.  The Cokins challenged the validity of the annexation in the trial court on three grounds: (1) the city failed to complete the annexation within 90 days, (2) the NBHR area is less than 1,000 feet wide and is not contiguous to the city on two sides, and (3) the annexation did not comply with statutory procedural requirements.  The trial court granted the City of Lakeway’s plea to the jurisdiction, claiming that the pleadings negated the Cokins’ standing to bring their claims.

The court of appeals concluded that the trial court erred in granting the city’s plea to the jurisdiction.  Lakeway conceded in its argument that if the annexation was not completed in 90 days or if the NBHR area is not contiguous to the city on two sides, then the city lacked the authority to annex that particular area and, thus, the annexation is void.  Texas case law provides that a private party has standing to challenge an annexation only on the grounds that the annexation is void.  Thus, the court of appeals concluded that the Cokins did have standing to proceed on their first two complaints, but did not have standing in regards to their procedural complaint.  The court of appeals affirmed the part of the trial court’s judgment dismissing the Cokins’ procedural challenge to the annexation and reversed and remanded the judgment dismissing the Cokins’ claims that the annexation is void.

Immunity:  Miller v. Jefferson Cnty., No. 03-11-00521-CV, 2013 WL 3724766 (Tex. App.—Austin July 11, 2013) (mem. op.); Miller v. South E. Tex. Reg’l Planning Comm’n, No. 03-11-00817-CV, 2013 WL 3724716 (Tex. App.—Austin July 11, 2013) (mem. op.).   In these two related appeals, the trial court claims were severed where one set of claims resulted in the granting of a plea to the jurisdiction and one resulting in the granting of the county’s motion for summary judgment. The same five points of error were raised in each appeal and will be practically treated as one for purposes of this summary.  After several homes were damaged by Hurricane Ike, the homeowners brought suit seeking damages and declaratory relief against multiple governmental entities, officials, and others. They factually plead that their homes were built in the 100-year flood plain as a result of the “mishandling of information about the elevation…” They also sought damages arising out of the various entities’ participation in a Federal Emergency Management Agency (FEMA) flood buyout program. As part of this program, the homeowners sold their property to Jefferson County. Appellants alleged that defendants misled them and that funds were available to pay additional amounts to them for their property but were used for other purposes.

The Austin Court of Appeals held the entities were not required to have special exceptions sustained prior to obtaining the trial court’s ruling on their plea to the jurisdiction and dispositive motions since the special exceptions were not based on a lack of clarity of the pleadings, but on a failure to state viable claims. The court also seems to feel it compelling that the homeowners did not file responses to the special exceptions, did not ask for a continuance to file a response, or suggest how they could have cured any defects if allowed. The homeowners asserted they had a private cause of action under the Stafford Act—which addresses federal disaster relief and assistance—but the court disagreed. Further, even if such a private cause did exist, the trial court did not err by dismissing it since the homeowners did not plead or prove the entities violated any provision of the Stafford Act. Next, the homeowners asserted immunity was abrogated because the acts alleged were ministerial in nature (i.e. comply with the Stafford Act).

The court held that in addition to the above analysis, improperly implementing ministerial acts is an ultra vires claim, which can only be brought against an official in his official capacity. The homeowners did not plead or establish they entered into a contract with any entity “for providing goods or services” so there is no waiver of immunity under Chapter 271 of the Texas Local Government Code.  Immunity also protects the entities since the homeowners did not allege personal injury, death, or the negligent operation of a motor vehicle or equipment. While they attempt to assert a premise defect, they failed to show how the entities “possessed, owned, occupied, or controlled the premises.”  The only official sued was the chief appraiser and the only one capable of being sued for ultra vires acts; however, the trial court properly dismissed him pursuant to Texas Civil Practice and Remedies Code Section 101.106(e). Since there was no “public use” involved, the takings claims were properly dismissed. Without much explanation, the court stated that the homeowners did not plead or establish any facts to support their claims or contest summary judgment for their claims under Amendments I and V of the U.S. Constitution and 42 U.S.C. Sections 1983 (civil action for “deprivation of any rights, privileges, or immunities secured by Constitution and law”), 1985 (civil action for “conspiracy to interfere with civil rights”), or 1988 (addressing “[p]roceeding in vindication of civil rights”).  And since a declaratory judgment action cannot be used to circumvent a claim for monetary relief, the dismissal of the declaratory claims was proper. As to the only remaining claims against the county, the homeowners assert the county entered into contracts to buy out the homes but failed to pay the required 25% match under FEMA regulations.  Additionally, the releases included in the buyouts were not enforceable because they were under duress or without consideration. The court held the county was not obligated to use other funding to pay the maximum of 25%, the homeowners retained the benefit of the bargains, the “duress” was not the type of threat which destroyed free will, and did not create any fact issue to overcome summary judgment.*

Contractual Immunity: Webb Cnty. v. Khaledi Props., No. 04-12-00251-CV, 2013 WL 3871060 (Tex. App.—San Antonio July 24, 2013).   This is a contractual immunity case in which the county appealed the denial of a plea to the jurisdiction. Through a long history of events, Khaledi Properties sued for specific performance for the sale of real property. Webb County solicited bids to sell a 294.24-acre property known as the Webb County Detention Center. Khaledi and Killam Ranch Properties Limited each submitted a sealed bid and the county awarded the sale to Khaledi.  Killam Ranch sued asserting competitive bid requirements were not met, but the trial court dismissed on summary judgment. The Killam Ranch lawsuit is pending in the Texas Supreme Court. After growing tired of waiting due to the Killam Ranch lawsuit, Khaledi sued the county for specific performance of the sale.  The county filed a plea to the jurisdiction, which the trial court denied. The county appealed.

The San Antonio Court of Appeals first held that the language in the contract in the section entitled “Default and Remedies” which allowed for specific performance, was not a waiver of sovereign immunity.  Only the legislature can waive immunity from suit, so there is no waiver by contract. Khaledi next argued waiver by conduct. The court went through a history of the concept of waiver by conduct starting with the footnote in Federal Sign.  It explained that most courts have refused to recognize it and the court could point to only one court of appeals case which found a waiver by conduct. Assuming such a waiver is possible (although the court appears to doubt it), the court noted no extreme equitable circumstances exist in this case to justify it. As a result, there is no waiver by conduct in this case. The trial court erred in denying the plea to the jurisdiction.  The case was reversed and rendered.*

Employment:  Biesenbach v. City of San Antonio, No. 04-11-00900-CV, 2013 WL 3780160 (Tex. App.—San Antonio July 17, 2013).  Gary Biesenbach, a firefighter with the City of San Antonio, was issued eleven notices of proposed suspension by the fire chief.  These notices cited violations of civil service rules.  After a meeting regarding the notices, Biesenbach and the fire chief entered into an agreement that the city would forego disciplinary action in exchange for Biesenbach agreeing to various terms.  Biesenbach violated one of these terms and was issued a notice of indefinite suspension.

Although the notice that Biesenbach was issued stated he had the right to appeal his suspension, the agreement entered into by Biesenbach and the chief stated he would be indefinitely suspended with no right to appeal if Biesenbach failed to comply.  Biesenbach appealed the suspension to a hearing examiner who ordered reinstatement after determining the agreement was void. The city filed a declaratory judgment action in district court arguing that Biesenbach did not have the right to appeal his suspension to a hearing examiner.  Instead, only the issue of whether or not Biesenbach violated the agreement with the city should have been arbitrated.

The district court agreed with the city, and Biesenbach brought this appeal. The court of appeals determined that since the notice provided to Biesenbach specifically stated he had the right to appeal; the city waived its right to compel arbitration. Biesenbach had his case properly heard before a hearing examiner.  The hearing examiner had not, though, resolved the issue of attorney’s fees.  Because of this, his order was interlocutory and not subject to appeal to the district court. Only final orders can be appealed.  Therefore, the trial court’s judgment was reversed and the matter remanded to the hearing examiner.

Collective Bargaining:  Wolff v. Deputy Constables Assoc. of Bexar Cnty., No. 04-13-00080-CV, 2013 WL 3722481 (Tex. App.—San Antonio July 17, 2013).  This is a statutory construction case brought by interlocutory appeal regarding the right of employees to collectively bargain under Chapter 174 of the Texas Local Government Code (the Fire and Police Employee Relations Act).

Without much of a factual background, the San Antonio Court of Appeals took a literal approach as to which public employees may collectively bargain. Bexar County, through its officials, would not provide collective bargaining recognition to the deputy constables of the county. In Texas, “police officers” have the right to organize and bargain collectively with their public employer as defined under Texas Local Government Code Chapter 174. Tex. Loc. Gov’t Code § 174.023. Under that chapter, only firefighters and “police officers” have standing to assert the right to collectively bargain. According to Section 174.003, a “police officer” is (1) a paid employee who is (2) sworn, (3) certified, (4) full-time, and (5) who regularly serves in a professional law enforcement capacity in the police department of a political subdivision.  Id. § 174.003.  Appellate courts have determined the sheriff’s office to be the “police department” of a county. Citing to City of San Antonio v. San Antonio Park Rangers Assoc., 850 S.W.2d 189, 192-93 (Tex. App—San Antonio 1992, writ denied), the court noted that constables do not work “in the police department” of the county and, therefore, have no right to collectively bargain. As a result, the trial court was without jurisdiction to hear the Deputy Constables Association’s challenge to compel bargaining.*

Worker’s Compensation Retaliation:  Burt v. Andrews Cnty. Hosp. Dist., No. 08-11-00109-CV, 2013 WL 3943075 (Tex. App.—El Paso July 24, 2013). This is a worker’s compensation retaliation case in which the court recognized the applicability of the Texas Supreme Court’s opinion in Travis Cent. Appraisal Dist. v. Norman, 342 S.W.3d 54 (Tex. 2011), noting the Worker’s Compensation Act amendments no longer waiver sovereign immunity for governmental entities for retaliation claims. Plaintiff Burt filed suit against her former employer, Andrews County Hospital District, alleging retaliatory discharge under Chapter 451 of the Texas Labor Code and intentional infliction of emotional distress.  Little factual background is given regarding the case because it was irrelevant to the holding. The trial court granted the hospital district’s summary judgment and Burt appealed. Twenty-five days after Burt filed her notice of appeal, the Texas Supreme Court issued its opinion in Norman.  The Eighth Court of Appeals noted that when applicable law changes during the pendency of an appeal, it must render its decision in light of the change.  And since the hospital district retains immunity from suit, which is jurisdictional, the hospital district’s argument based on the Norman decision can be raised for the first time on appeal.*

Immunity:  Sampson v. Texas Dep’t Pub. Safety, No. 09-12-00537-CV, 2013 WL 3488255 (Tex. App.—Beaumont July 11, 2013). This is a Section 1983 and state tort claim case arising from an arrest and dismissal for marihuana. Sampson was arrested after a search of his vehicle resulted in the discovery of marihuana. Charges were later dismissed when another individual took responsibility for the drugs. Sampson sued the Texas Department of Public Safety (“DPS”), the District Attorney Ligon, and another defendant Lhnen for a variety of claims. The trial court granted DPS’ and Ligon’s plea to the jurisdiction and Lhnen because he had not been served. Sampson appealed. The Beaumont Court of Appeals began with an analysis of sovereign immunity for the state law claims. Sampson’s claims of false imprisonment, false arrest, trespass, coercion, and abuse of process and authority were intentional torts for which a governmental entity is immune and were dismissed.  DPS also retains immunity for claims grounded in fraud, such as conspiracy to defraud, racketeering, and dishonor in commerce. Since “extortion” claims are not recognized but treated as unlawful conversion (also an intentional tort) it was dismissed.  Obstruction of justice is a criminal offense with no private civil cause of action.  Citing to U.S. Supreme Court precedence, the court went on to hold that the Eleventh Amendment protects states from suit in state court for violations of federal law.  A suit against an official in his official capacity is essentially a suit against the state and since a state is not a “person” under 42 U.C.C. Section 1983, such claims were properly dismissed. The claims against District Attorney Ligon were also those performed as a prosecutor and he retains immunity from such claims. Finally, the court held that Sampson was under a continuing duty to use due diligence in serving the third defendant and since he never even requested service, specified any manner of service, or requested reinstatement, the dismissal of Lhnen, without prejudice, was proper.*

Takings:  City of McAllen v. Ramirez, No. 13–09–00067–CV, 2013 WL 3770912 (Tex. App.—Corpus Christi July 18, 2013).  Arnaldo Ramirez, Jr. and others (“plaintiffs”) brought suit against the City of McAllen, arguing that the city council’s decision to deny renewal of the conditional use permit (CUP) for the Collage nightclub—due primarily to numerous noise complaints from residents living near the nightclub—was arbitrary and capricious and amounted to a taking in violation of Article 1, Section 17 of the Texas Constitution.  The trial court rendered judgment in favor of the plaintiffs and concluded that the city was liable to plaintiffs for the total amount of $4.5 million plus interest.

On appeal, the city made numerous arguments that the evidence was legally and factually insufficient to support the trial court’s findings that there was a compensable taking.  Ultimately, the court of appeals affirmed the trial court’s decision because the city’s denial of the CUP was a regulatory action that unreasonably interfered with the property owner’s right to use and enjoy his property under the three factors set forth in Penn Cent. Transp. Co. v. New York City, 438 U.S. 104 (1978).  First, the court concluded that there was sufficient evidence at trial that the city’s denial of the CUP led to a severe economic impact on the plaintiffs, since the evidence showed that plaintiffs invested significant amounts of money to comply with city noise regulations to continue operating Collage.  Next, the court relied upon the opinions in City of San Antonio v. El Dorado, 195 S.W.3d 238 (Tex. App—San Antonio 2006, pet. denied) and Sheffield Dev. Co. v. City of Glenn Heights, 140 S.W.3d 660 (Tex. 2004) to determine that the plaintiffs possessed reasonable investment-backed expectations to operate Collage with a CUP.  Although the court weighed the third Penn Central factor in favor of the city because the city’s zoning ordinance was better characterized as a “public program adjusting the benefits and burdens of economic life to promote the common good” instead of as a “physical invasion by government,” the court still determined that the facts were sufficient to constitute a taking under the Penn Central standards.  The court affirmed the judgment of the trial court and concluded that the trial court awarded damages properly.

Torts:  City of Houston v. Ranjel, No. 14-12-00458-CV, 2013 WL 3945971 (Tex. App.—Houston [14th Dist.] Aug. 1, 2013).  This is an interlocutory appeal from the denial of a plea to the jurisdiction in a Texas Tort Claims Act (“TTCA”) case.  The incident occurred at the Bush Intercontinental Airport (airport) owned by the City of Houston. The airport has a complex automated people mover, or APM system, which is a remotely controlled, aboveground train that transports passengers along elevated guide-ways from terminal to terminal.  Houston retained Johnson Controls, Inc. to operate and maintain the APM due to its complexity in operation. During an expansion project, a Johnson employee let three contractor employees into a new guide-way area to finish part of the expansion work. The work area was separate from the area that was in operation; however, at some point several contractor employees walked into the operational area and were struck by trains. Different lawsuits were brought but ultimately were consolidated.  The estates of the employees sued the City of Houston alleging the city did not provide a safe operating system, negligently operated the trains, failed to have safety policies, and failed to maintain the system properly.

The evidence shows that the city owned the APM system but did not operate or maintain it on a day-to-day basis because its employees lacked the knowledge and expertise to do so. Johnson operated and maintained the system and the city had no involvement. The City of Houston had no ability to directly affect the daily operation of trains other than shutting down electrical main feeds. It is undisputed that at the time of the train strike and immediately beforehand, there were no city employees present in the control center.

The Fourteenth Court of Appeals held that for a waiver to exist under the TTCA, a governmental employee must be the one operating, taking control of, or using the motor-driven equipment or tangible personal property. Therefore, even though the APM is motor driven equipment, there is no waiver of immunity here. The court seemed to focus heavily on the fact that the city had no contractual right to override the direct operation of the APM and Johnson was a truly independent contractor (not an employee). And since Johnson’s cross-claim for contribution is derivative of the plaintiff’s claims, there is likewise no waiver of immunity.  The court reversed and rendered dismissing all claims against the city.*

*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.