Recent Texas Cases of Interest to Cities

Note:  Included cases are from April 11, 2014 through May 10, 2014.

Tort Claims Act:  City of Houston v. Cogburn, No. 01-11000318-CV, 2014 WL 1778279 (Tex. App.—Houston [1st Dist.] May 1, 2014) (mem. op. on reh’g).  In this case, a man tripped over some tree roots on his way to put money in a parking meter and was severely injured.  He sued the city under the Tort Claims Act under a theory of special defect.  In March 2013, the court of appeals held that the city was open to liability for a special defect and sent the case back to the trial court for a trial on the merits.  The city requested rehearing, and the plaintiff failed to submit a response.  On rehearing, the court held that the city had proven that the “defect” in question, tree roots, was a naturally occurring phenomenon that was open and obvious, and thus, the city could not be held liable for injuries caused by the tree roots.  The court rendered judgment for the city.

Tort Claims Act:  City of Houston v. Davis, No. 01-13-1678907, 2014 WL 1678907 (Tex. App.—Houston [1st Dist.] Apr. 24, 2014) (mem. op.).  A police dog, Berro, bit Mr. Davis after he encountered the police dog during a traffic stop of another vehicle that had been trying to run Davis’s car off the road.  Davis’s wife had told the officer that a car had been trying to run their car off the road. The officer pulled the car over and the Davises also pulled over.  Mr. Davis got out of his car and was attacked by the police dog after the police dog had exited the car through an open door without prompting from the officer.  The Davises sued the city under the Tort Claims Act (Act), claiming that the officer was negligent in leaving the car door open and that the dog would not have bitten him if the car had been properly equipped to keep the dog in the car.  The city argued that it retained immunity under the “emergency exception” to the Tort Claims Act.  Tex. Civ. Prac. & Rem. Code § 101.055(2).   The court held that the traffic stop constituted an emergency protected by the Act based on the facts given by both parties, which was that the Davises requested the officer’s immediate assistance and he was providing that assistance when the attack occurred. The court also held that the officer did not show reckless disregard or conscious indifference for the possibility of injury when he left the car door open.

Takings:  City of Keller v. Hall, No. 02-12-00061-CV, 2014 WL 1712163 (Tex. App.—Fort Worth May 1, 2014). This case includes a detailed discussion of flooding laws and studies and how these issues can affect takings claims against cities where the property in question is in a flood plain.  The Halls had flooding issues on their property that they partially blamed on city road work and other development.  They filed suit against the city for inverse condemnation based on the repeated flooding of their property.  The city filed a plea to the jurisdiction and argued that: (1) the city did not cause the damage; (2) the city did not know its actions would cause the damage; and (3) the Halls did not give the city notice about a potential takings claim in a timely manner.  The court of appeals held that these were fact based questions that required looking at the merits and that the city did not have to intentionally cause damage for it to be a takings claim.  The court held that a city only needs to know that “specific damage is substantially certain to result from its conduct.”  2014 WL 1712163, *3 (quoting City of Dallas v. Jennings, 142 S.W.3d 310, 314 (Tex. 2004)).  Despite presenting evidence of the fact that Halls’ property was in a flood plain and that it was the “rain” that caused the damage, the court held that there was sufficient evidence that the city’s actions worsened or exacerbated the flooding to allow the takings claim to go forward.  Evidence also showed that the Halls had informed the city of their concerns with the city’s actions and worsening flooding of their property.  The court was unimpressed with the “humor” in the city’s brief as well.  The court allowed the Halls’ takings claims to go forward.

Takings: City of New Braunfels v. Carowest Land, Ltd.,No. 03-11-00699-CV, 2014 WL 1774535 (Tex. App.—Austin Apr. 30, 2014).  This is an interlocutory appeal from the denial of a plea to the jurisdiction arising out of a dispute between the City of New Braunfels and a local property owner, Carowest Land Ltd. (Carowest).   The city’s public works department took on a project to help control flooding by diverting flow from tributaries to the Guadalupe River.  To provide a portion of the drainage channel’s route, Carowest conveyed a strip of land to the city that crossed property Carowest owned in the area.  A series of disputes between the city and Carowest lead to an extensive history between the two.

The parties entered into a letter settlement to try and resolve the dispute. However, both sides later asserted material breaches of the settlement by the other party. One breach claim was that, under the agreement, Carowest would be liable to the contractor for any delay damages caused by Carowest.  Carowest sued the city, and the city filed counterclaims. The city filed two pleas to the jurisdiction (one voluntarily dismissed and the second the subject of this appeal), while Carowest filed for a temporary restraining order (TRO). The trial court denied both the city’s plea to the jurisdiction and Carowest’s TRO.  The city then filed this appeal.

The court first analyzed Carowest’s inverse condemnation claims for the dirt and fill from the drainage channel that Carowest claims the city promised him.  The court noted that Carowest did not own the tract of land (since he dedicated it) that the fill was taken out of, which would normally preclude a takings claim.  However, the court noted the documents on file indicate Carowest may have, via deed and contract, a reversionary interest in the fill through an option clause. The court then noted that there is a difference between when the city acts as a sovereign and when it acts as a contract party. Carowest pled, at most, an ordinary breach of contract claim which does not rise to a taking.  The court concluded that the district court erred in denying the city’s plea to the jurisdiction, as to this claim.

The court next addressed Carowest’s equal protection and substantive due process claims. Just as the takings claim failed, these claims also failed since they were predicated on the same facts and “subsumed” into the takings claims.

Next, the court looked at Carowest’s common-law monetary claims for contract and tort.  Since the city’s actions were governmental not proprietary, the city maintained immunity. The court noted that the Texas Supreme Court has rejected a general waiver by conduct theory and such a theory would only apply as to whether immunity existed in the first place. Carowest’s only colorable argument was that the city filed counter-claims and thereby waived its immunity from suit. The fact immunity is waived only as to the offset of the city’s counterclaims is a merit argument, not a restriction on the initial jurisdiction of the court. The city must establish it complied with its obligations under the contract in order to bring a breach claim for failing to indemnify for delay damages; Carowest’s breach claims are germane and connected with the counter-claim waiver as are the associated attorney’s fees. The tort claims are also germane to the counter-claims. The court noted that even if the city did not waive immunity from suit by filing counter-claims, Carowest’s contracts are subject to the waiver contained in subchapter I of Chapter 271 of the Texas Local Government Code.

The court next analyzed the three declaratory judgment claims: Open Meetings Act violations, the validity of the city’s contract with contractor to build the trench, and the validity of contractor’s delay claims against the city (which implicate city’s indemnification counter-claim). Carowest alleged the city council improperly convened in executive session.  The city argued that the trial court did not have jurisdiction to decide this claim.  The court of appeal concluded that the city’s arguments implicated only the merits of Carowest’s claims, not the trial court’s jurisdiction.

The validity of the trench contract was challenged under Chapter 252 of the Local Government Code.  The city argued that Carowest lacked standing to assert this claim because it is not a “property tax paying resident” of the city, as required by Chapter 252.  However, the court concluded that the district court could have concluded that Carowest pays taxes and is a resident of the city.  Therefore, the district court did not err in denying the city’s plea as to this issue.

The third and final declaratory claim at issue concerned the validity of the delay claim.  The court concluded that because this issue is tied to the waiver under Subchapter I of Chapter 271, the district court had jurisdiction.  Thus, the court affirmed the district court’s order denying the city’s plea to the jurisdiction as to Carowest’s declaratory claims.

Age Discrimination: City of Austin v. Chandler, No. 03-12-00057-CV, 2014 WL 1568689 (Tex. App.—Austin Apr. 18, 2014).  This is a substituted opinion for one the court issued on February 7, 2014. Essentially, several public safety officers over 40 years of age sued the City of Austin when they lost rank and years of service due to a merger of the Public Safety Emergency Management Department (PSEM) and the Austin Police Department.  The trial court ruled for the officers. The city appealed arguing the officer’s disparate impact claims were not in their Equal Employment Opportunity Commission (EEOC) charge. The court held that while the EEOC charges do not use the terms “disparate impact” or “facially neutral policy” the substance of the complaints identify a facially neutral policy having the specific negative impact on older officers. The court noted that given 33 of the officers identified the policy, the EEOC would reasonably be expected to investigate the case under both a disparate-treatment and disparate-impact theory. The court then went through a lengthy analysis of the testimony and evidence and determined the evidence was legally and factually sufficient to support the jury’s verdict. For an attorney dealing with impacts due to benefits as well as pay, this analysis can be helpful in understanding what to avoid.*

Substandard Structure:  Stewart v. City of San Antonio, No. 04-13-00720-CV, 2014 WL 1713532 (Tex. App.—San Antonio Apr. 30, 2014) (mem. op.).  The underlying suit arises out of a structural standards commission determination that a building was substandard and subsequent order of demolition. Stewart was a lienholder and possible property owner who appealed the determination but lost at the trial court. The court determined the appeal was frivolous since Stewart had no grounds, so she appealed to the San Antonio Court of Appeals. While she asserted her appeal was not frivolous, her focus centered on the trial courts failure to address her ownership interest. However, she did not contest the nuisance finding. As a result, Stewart’s arguments lacked an arguable basis in both law and in fact.  The court affirmed the determination that the appeal was frivolous.*

Tort Claims Act:  Molina v. Alvarado, No. 08-13-00157-CV, 2014 WL 1632991 (Tex. App.—El Paso Apr. 23, 2014).  This is an interlocutory appeal of the trial court’s denial of a motion for summary judgment.  Alvarado alleges that Molina struck and injured him while driving a City of McCamey vehicle under the influence of alcohol.  Alvarado sued the city and later amended his petition to include Molina.

Molina argues that the trial court incorrectly denied his motion for summary judgment.  He argues that under the Texas Tort Claims Act election-of-remedies provision (Texas Civil Practice and Remedies Code Section 101.106(a)), he is a governmental employee immune from suit.  In other words, Molina argues that for purposes of Section 101.106(a), he is completely outside the trial court’s jurisdiction because Alvarado filed suit against the city involving the same subject matter.

The appellate court affirmed the trial court’s denial of summary judgment, reasoning that Section 101.106(a) bars a suit against an employee only where that employee is sued in his official capacity, i.e., only where the employee is actually acting within the scope of his employment.  The court comments that it “seriously doubt[s] that the Texas Legislature intended to extend immunity to city employees driving vehicles under the influence of alcohol.”  Id. at *7.  Whether Molina was acting within the scope of employment was a question of fact for the trial court.

Religious Freedom:  Kountze Indep. Sch. Dist. v. Matthews, No. 09-13-00251-CV, 2014 WL 1857797 (Tex. App.—Beaumont May 8, 2014) (mem. op.). This is a religious freedom case brought to the court of appeals as an interlocutory appeal from the denial of a plea to the jurisdiction.  The parents of several cheerleaders (parents) brought suit after the school prohibited the cheerleaders from including religious-theme messages on the run-through banners. The trial court denied Kountze Independent School District’s (KISD) plea to the jurisdiction and granted, in part, the parent’s motion for summary judgment. The KISD appealed.

The cheerleaders would normally create run-through banners which the team would run through and destroy as it entered the field. In 2012, the cheerleaders decided to include biblical messages to provide a positive message of encouragement for the team and fans. Afterwards, the superintendent received a complaint from the Freedom from Religion Foundation complaining about the practice, which promptly resulted in the ban.  The parents asserted the “ban on banners” violated Chapter 106 (discrimination in governmental programs) and Chapter 110 (Texas Religious Freedom Restoration Act) of the Texas Civil Practice and Remedies Code. While going through the factual background the court, in a foot note, held that due to the procedural history of the case and evidence presented, the parents could not maintain a clam for any damages, including nominal. Only prospective relief is permissible. KISD asserts the parents’ claims are moot because after the lawsuit was filed, the KISD board initiated legislative proceedings to examine the issue and obtain community information resulting in the passage of a resolution holding the ban on religious banners is not required under the law so long as the messages are displaying fleeting expressions of community sentiment, even if the source is of a religious nature. Under Texas Supreme Court precedent, a challenge to a policy or official action can become moot if the statute, policy, or action is repealed or fundamentally altered. After a lengthy examination of this precedent, the court held the new resolution addressed the parents’ concerns and rendered the challenge moot. The court determined the alleged wrongful acts are not likely to be repetitious and no collateral consequences are apparent. As a result, the trial court erred in denying the plea. However, under the Uniform Declaratory Judgment Act, the parents may still be entitled to attorney’s fees since their actions resulted in the new resolution. The claim of attorney’s fees was therefore remanded.*

Substandard Structure:  City of Bryan/Bldg. & Standards Comm’n v. Cavitt, No. 12-000858-CV-361 (Tex. App.—Waco May 8, 2014).  This is an interlocutory appeal from the denial of a plea to the jurisdiction in a structural standards case. The Waco Court of Appeals affirmed the denial.

The city determined the Cavitt property was dilapidated, hazardous, and a public nuisance. In numerous public meetings Cavitt requested the ability to bring the property up to code. The city’s building and standards commission (BSC) issued a repair schedule and ordered Cavitt to attend each BSC meeting to demonstrate compliance with the schedule. When Cavitt failed to comply with the schedule without adequate explanation, the BSC ordered demolition of the property. Cavitt appealed the order to district court. In his appeal, he also brought a takings claim. The city filed a plea to the jurisdiction arguing no taking could occur since the property was declared a public nuisance. The trial court denied the plea and the city appealed.

The appellate court held that this type of lawsuit is fundamentally a constitutional one, and pursuant to City of Dallas v. Stewart, 361 S.W.3d 562 (Tex. 2012), the determination of a nuisance ultimately must be made by a court, not a commission. Before a nuisance determination will act as a bar to a takings claim, the determination must be reviewed de novo by a court. As a result, the trial court retained jurisdiction. Both the appeal from the demolition order and the takings claim can be heard.*

Tort Claims Act:  City of Madisonville v. Murders, No. 10-13-00234-CV, 2014 WL 1518244 (Tex. App.—Waco Apr. 17, 2014) (mem. op.). This is a Texas Tort Claims Act (Act) case where the plaintiffs brought suit against the city and contractor alleging damages after the city replaced a sewer line in front of their business. The appellate court reversed the denial of the city’s plea to the jurisdiction and dismissed the case. The court did not go into great detail regarding the underlying facts. It simply noted that even giving the most liberal construction of the pleadings, there are no facts alleged which establish a waiver of immunity under the Act.  At most, they allege the city failed to simply maintain the system generally and was negligent in its efforts to help the contractors locate the sewer line which needed to be replaced. Further, the plaintiffs claims for mental anguish and nuisance do not fall under any waiver. As a result, the trial court erred in denying the plea.*

Governmental Immunity: City of Midland v. M.T.D. Envtl., L.L.P., No. 11-13-00117-CV, 2014 WL 1584508 (Tex. App.—Eastland Apr. 17, 2014). This is a governmental immunity in a breach of contract case where the Eastland Court of Appeals held that simply because immunity from suit is waived under Chapter 271 of Local Government Code, does not mean immunity from suit is waived under the Prompt Pay Act for claims of attorney’s fees and interest. [Note: the Legislature amended Chapter 271 in 2011 to prospectively allow interest, so this case’s holding should be viewed as applying to contracts entered into prior to the amendment.]

The city contracted with M.T.D. to grind yard waste (tree limbs and other yard waste) and the city agreed to pay M.T.D. by the ton.  The city believed M.T.D. dramatically overcharged it and refused to pay an invoice, over which M.T.D. sued. The city filed a plea to the jurisdiction noting a lack of subject matter jurisdiction for attorney’s fees and interest under the Prompt Pay Act. The trial court denied the plea and the city brought this interlocutory appeal. The parties did not contest jurisdiction for the underlying breach of contract claim.

This case involves the interplay between a waiver of immunity from suit and liability under Chapter 271 of the Texas Local Government Code (waiver for claims involving goods or services provided to an entity) and a waiver of immunity from liability under Section 2251.043 of the Texas Government Code (Prompt Pay Act). The city contends the Prompt Pay Act may waive immunity from liability, but it fails to waive immunity from suit. M.T.D. asserts that once immunity from suit is waived under Chapter 271, the issue is simply whether it is entitled to fees under the Prompt Pay Act and not whether the Act has to waive immunity on its own.  The court first held the Prompt Pay Act does not, by itself, waive immunity from suit.  When analyzing the history of Chapter 271 the court noted the waiver provision was changed in 2009 to allow attorney’s fees and again in 2011 to allow for recovery of interest. These changes are prospective only, thereby indicating an intent to retain immunity for contracts entered into prior to 2009 and 2011. As a result, the city retained immunity from suit and the court reversed the denial as to the Prompt Pay Act claims.*

Tort Claims Act:  Ortiz-Guevara v. City of Houston, No. 14-13-00384-CV, 2014 WL 1618371 (Tex. App.—Houston [14th Dist.] Apr. 22, 2014) (mem. op.). This is a Texas Tort Claims Act case arising from a vehicular accident, but the case turns on whether or not the city had “actual notice” of its fault since the plaintiff failed to provide formal written notice under the Act. The trial court granted the city’s plea to the jurisdiction but the court of appeals reversed.

Officer Monroe rear-ended Ortiz-Guevara’s stopped car.  The investigating officer noted the sole cause was “failure to control speed” by Monroe. Ortiz-Guevara testified in her deposition that, at the accident scene, she told both officers that she was injured even though she did not go to the hospital.  The accident report showed no injury. It is undisputed Ortiz-Guevara did not provide written notice of her claim. However, formal notice is not required if the city had actual notice of (1) the city’s fault; (2) Ortiz-Guevara’s injury; and (3) the identity of the parties.

The court analyzed the general law regarding notice and actual notice to a governmental entity. Actual notice of the alleged fault requires the governmental unit’s “subjective awareness of its fault, as ultimately alleged by the claimant, in producing or contributing to the claimed injury.” The city contends no jurisdiction exists because a “police report is no more than a routine safety investigation and is insufficient to provide actual notice of a claim.”  However the report at issue did more than imply fault, it specifically assigned fault noting it was his failure to control speed as the sole cause. Further, “fault” is construed as contributing to the injury, not the complete and exclusive liability for the injury.  Additionally, the city was aware Ortiz-Guevara was claiming an injury, or at the very least a fact question exists as to the city’s understanding of her claim of injury at the scene. As a result, the trial court erred in granting the plea. The case was reversed and remanded.*

Governmental Immunity: National Pub. Fin. Guarantee Corp. v. Harris Cnty.-Houston Sports Auth., No. 01-13-00401-CV, 2014 WL 1464654 (Tex. App.—Houston [14th Dist.] Apr. 15, 2014). National Public Finance Guarantee Corporation (NPFGC) and MBIA Insurance Corporation sued to force the Harris County-Houston Sports Authority (Sports Authority) and the Harris County Sports and Convention Corporation (Convention Corporation) to raise taxes in order to cover minimum bond repayment obligations and the court held it contractually waived its own immunity.

Harris County and the City of Houston created the venue district under Texas Local Government Code Section 335.021 which issued a series of bonds pursuant to a written Indenture of Trust. The Convention Corporation is a local government entity created to serve as the landlord of Reliant Stadium which was a subject for bond issuance. The funding agreement notes the bonds are to be paid by hotel occupancy taxes and taxes on admissions and parking; however, the taxes shall not exceed $2 per ticket and $1 per car. NPFGC insured the bonds. The Sports Authority also entered into Reimbursement and Indemnity Agreements which provided NPFGC would guarantee regularly scheduled principal and interest payments on the bonds. In exchange, the Sports Authority agreed to indemnify NPFGC against any failure by it to perform or comply with the covenants or conditions of the Reimbursement Agreements.

On several occasions the revenues were insufficient for the minimum payments on the bonds and the Sports Authority made claims with NPFGC to cover the shortfalls. NPFGC claimed these impermissibly reduced the reserve fund and because state statute authorized an admission tax up to 10% of ticket price and parking tax up to $3 per vehicle, the Sports Authority was required by the Indenture to raise admission and parking taxes to legislative maximums. The Sports Authority refused to raise these taxes on the grounds they were capped at $2 per ticket and $1 per car, and even if not capped, such a tax increase required voter approval. NPFGC sued the Sports Authority, claiming that it had breached the Indenture by refusing to impose admissions and parking taxes at the legislative maximum. The trial court granted the pleas to the jurisdiction filed by the Sports Authority and Convention Corporation based on governmental immunity and NPFGC appealed.

The appellate court first held that the legislature added Section 1371.059(c) to the Texas Government Code, which provides that “[a]n issuer in the proceedings to authorize obligations or a credit agreement, or in a credit agreement, may agree to waive sovereign immunity from suit or liability for the purpose of adjudicating a claim to enforce the credit agreement or obligation or for damages for breach of the credit agreement or obligation.” After analyzing the statutory language and amendments after Tooke v. City of Mexia, 197 S.W.3d 325 (Tex. 2006) held the Sports Authority waived its immunity under the Reimbursement Agreement.   As a result, the plea should not have been granted as to the Sports Authority.

NPFGC contended that as it was a third-party beneficiary, the Convention Corporation waived its immunity under its funding and lease agreements with the Sports Authority under Subchapter I of Chapter 271 of the Local Government Code (dealing with waiver of immunity in contracts).  However, without analyzing whether the contracts were for goods or services (triggering the waiver under subchapter I), the court noted Subchapter I only allows suit for breach of contract. NPFGC did not assert a breach of contract claim against the Convention Corporation and based on the alleged facts, could not. As a result, the trial court properly granted the plea as to Convention Corporation.*

*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