TCAA NEWS
(Volume 5, Issue 2—February 2010)
"Your Source for Information About the Texas City Attorneys Association"
News and Updates

Join us for the TCAA South Padre Conference to be held on June 9-11, 2010, at the Isla Grand Beach Resort! This year's theme is "Ex Mari Veritas" (From the Sea, Truth). Earn up to 10 hours of MCLE credit, including 2 ethics hours. Topics include:

  • Ethics—Lessons from 40 Years as City Attorney
  • Seeking Effective Amicus Support
  • The Legislative Process—How It Really Works
  • Municipal Court: The Basics
  • Personnel: The Disciplinary Action Process
  • Recent Federal and State Cases of Interest to Cities
  • Bankruptcy: What Every City Attorney Should Know
  • Nuisances: Code Enforcement
  • Ethics: The City Attorney as "Investigator"
  • The Home Rule Charter Review Process
  • Recent Developments at the PUC, RRC, and TWDB
  • Civil Service Update
  • General Ethics
  • Contractor Default/Surety Performance
  • Cell Tower Siting Update
  • Selling Municipal Property for Economic Development
  • The Impact of Social Networking on Cities

Special Thanks to this Year's Sponsors:

Abernathy, Roeder, Boyd & Joplin, P.C.
Banowsky & Levine, P.C.
Bickerstaff Heath Delgado Acosta, LLP
Brown & Hofmeister, L.L.P.
Davidson & Troilo, P.C.
Denton, Navarro, Rocha and Bernal, P.C.
McKibben, Woolsey & Villareal, L.L.P.
LexisNexis
Lloyd, Gosselink, Rochelle & Townsend, P.C.
McKamie Krueger, LLP
Messer, Campbell & Brady, LLP
Municipal Code Corporation
Nichols, Jackson, Dillard, Hager & Smith, L.L.P.
Olson & Olson, L.L.P.
Potter Minton, P.C.
Ross, Banks, May, Cron & Cavin, P.C.
Russell & Rodriguez, LLP
Shotts, Pardue Trevino & Guevara, LLP
Strasburger & Price, L.L.P.
Taylor, Olson, Adkins, Sralla & Elam, L.L.P.
Texas Municipal League Intergovernmental Risk Pool

Special Note on Seminar Materials: TCAA no longer provides binders for speaker papers or printed materials of any kind. Instead, TCAA puts all speaker papers on the TCAA Web site under "speaker papers" for attendees to download in advance, if they so desire. No written materials are provided at the seminar location.

For hotel or other information, or to register, please go to www.texascityattorneys.org.

TCAA Awards: TCAA has several programs that are designed to bring recognition to the unique qualities of those who practice municipal law in Texas:

  • TCAA's Municipal Certification Program recognizes attorneys who demonstrate advanced knowledge and experience in municipal law. The program includes separate certifications for municipal prosecutors, municipal civil law attorneys, and office certifications. The deadline to apply for certification to be awarded at the 2010 TCAA Summer Meeting in South Padre on June 9-11 is May 7, 2010.
  • TCAA's Galen Sparks Awards for Outstanding Public Service by an Assistant City Attorney. Galen Sparks served as an assistant city attorney and dedicated public servant for the City of Dallas for more than 27 years. He distinguished himself in a variety of areas of municipal law and generously shared his time and expertise in a way that substantially enhanced the professionalism of his fellow municipal lawyers. These awards are intended to recognize and honor a current or former assistant city attorney for significant and distinguished career achievements in the field of municipal law. (Note: In 2009, the TCAA Board voted to grant two awards each year, one for an assistant city attorney from Texas' eight largest cities (Arlington, Austin, Corpus Christi, Dallas, El Paso, Fort Worth, Houston, or San Antonio) and one to an assistant city attorney from the remaining cities.

The recipients of this award will be honored at the TCAA Summer Meeting in South Padre. In addition, TCAA will waive the recipients' seminar registration fees and reimburse the recipients up to $500 for transportation and lodging for the meeting. The deadline to apply to receive the award at the 2010 Summer Meeting in South Padre on June 9-11 is April 2, 2010. For more information on these awards, please go to www.texascityattorneys.org.

LisTCAA Listserv: Many Texas city attorneys participate in the International Municipal Lawyers Association Municode listserv. Now's your chance to glean and share information on a listserv that consists only of Texas attorneys! To join, please go to www.texascityattorneys.org, and click on the LisTCAA link on the left side of the page.

IMLA Conferences: The International Municipal Lawyers Association conducts various seminars that complement the TCAA programs. This month's featured seminar is IMLA's 2010 mid-year seminar. The seminar will be held on April 18-20, 2010, at the Omni Shoreham Hotel in Washington, D.C. For more information or to register, go to www.imla.org and click on "events."

Municipal Attorney Job Openings: For the most recent Texas Municipal League classifieds postings, please click here.

Attorney General Opinion REQUESTS of Interest to Cities

Does your city impose impact fees? If so, the following attorney general opinion requests may be of interest to you. Please forward to your planning department as well, if applicable:

RQ-0854-GA—Calculation of impact fees for a platted subdivision (Briefs are due by March 3, 2010): http://www.oag.state.tx.us/opinions/opinions/50abbott/rq/2010/pdf/RQ0854GA.pdf

RQ-0860-GA—Whether, under Chapter 395, Local Government Code, a municipality may grant a credit on sewer impact fees for a water line project (Briefs are due by March 24, 2010): http://www.oag.state.tx.us/opinions/opinions/50abbott/rq/2010/pdf/RQ0860GA.pdf

TML/TCAA Legal Defense Program Amicus Brief, Attorney General Opinion, and State Agency Comments Filed

Tort Claims Act: City of Dallas v. Carbajal, No. 09-0427 (Tex. 2009). The issue in this case is what constitutes "actual notice" to a city under the Tort Claims Act. In this case, a woman was injured when she drove her car into a ditch in a street that wasn't properly barricaded. She sued the City of Dallas, and the city claimed that the trial court did not have jurisdiction because she never gave proper notice to the city prior to filing the suit. The woman claimed that the police report documenting the incident gave the city actual notice of its fault. TML and TCAA argued that a basic police report alone cannot give a city a subjective awareness of its fault under the Tort Claims Act. The brief was filed January 25, 2010.

Takings: City of Midland v. Jud Walton, No. 09-0155 (Tex. 2009). In this case, Walton filed a takings claim based on his allegation that the City of Midland's municipal effluent disposal system contaminated his groundwater. TML and TCAA supported the city's position that, to establish a takings claim under Article I, Section 17, of the Texas Constitution, a landowner must prove that the city intentionally performed certain acts that resulted in a taking of property for public use. The city's intent must be examined at the time it made its decision to construct the effluent disposal system, not after years of hindsight. Establishing intent at any subsequent time implicates negligence, not a taking. Absent intent at the time of the planning and construction of the effluent disposal plant, there is no basis from which to infer a taking. The brief was filed on January 25, 2010.

Governmental Immunity: The City of Houston v. Steve Williams, No. 09-0770 (Tex. 2009). The issue in this case is whether the waiver of immunity provisions for contract claims in the Local Government Code apply to back wage claims. Sovereign immunity legislation passed in 2007 (H.B. 1473 - codified as Section 180.006 of the Texas Local Government Code) was intended to change the result of City of Houston v. Williams, et al., 216 S.W.3d 827 (Tex. 2007), which is prospective only. TML and TCAA argued that any attempt to recast this dispute as a breach of contract case—in order to take advantage of unrelated sovereign immunity legislation from 2005—would undermine the careful legislative compromise reached in 2007 over this very case. The brief was filed in January 2010.

Recent Texas Cases of Interest to Cities
Note: Included cases are from the period beginning on the 10th of the previous month through the 10th of the current month.

Zoning—Planned Use Developments: 2800 La Frontera No. 1A, LTD., et al., v. City of Round Rock, No. 03-08-00790-CV (Tex. App.—Austin Jan 12, 2010) (mem. op.). In 1999, the city created Planned Unit Development No. 39 (PUD 39) on the application of a developer. PUD 39 is better known as La Frontera, a mixed-use development consisting of multifamily housing, shopping centers, and office buildings.

When PUD 39 was created, the developer, which owned the entire 194-acre tract, entered into an "agreement and development plan" with the city. The owners claim that the agreement specified that amendments, changes, or modifications to PUD 39 could not be made without the approval of everyone who owned real property within the PUD at the time the amendment was proposed.

The original plan for PUD 39 allowed a maximum of 900 apartment units to be built on the site. Two apartment complexes were built within PUD 39, containing a total of 777 units. Thus, when the owners bought the complexes, they assumed that only 123 additional multi-family units could be built in the PUD. Because they thought that a 123-unit apartment complex would be too small to be commercially viable, and because they believed that the city would need their consent to allow additional multi-family units in PUD 39, the owners assumed that they effectively had 123 additional units in reserve for future expansion.

In April 2006, the developer and other property owners in PUD 39 submitted an application to amend the PUD to increase the total number of multifamily units allowed. The city asked the owners for their consent to the amendment, pursuant to the parties' understanding of the agreement and development plan. The owners refused, and the amendment failed. In what the owners claim was an “end run around” the consent requirements for amending PUD 39, the developer later filed applications to create two new PUDs out of land within the boundaries of PUD 39. After holding public meetings, the city passed ordinances creating PUD 70, which was zoned for 360 additional multi-family units, and PUD 72.

After creation of the new PUDs, the owners sued the city, asserting claims of contract zoning, inverse condemnation, and various others. The district court granted the city's motion for summary judgment, dismissing all of the owners' causes of action with prejudice. The owners appealed, asserting the existence of genuine issues of material fact.

The city asserted that the owners' claims concerning the agreement amount to impermissible “contract zoning,” which occurs when a governmental entity agrees to zone land in a certain way in exchange for a landowner's agreement to use the land in a certain way. The court concluded that the agreement amounted to the city's surrendering its “authority to determine proper land use by contract.” Zoning decisions must occur via the legislative process and not by “special arrangement” with a property owner.

As to the owners' inverse condemnation claim, the court conducted its “ad hoc, factual inquiry” using the following guiding factors: (1) the economic impact of the regulation on the claimant; (2) the extent to which the regulation has interfered with the claimant's reasonable investment-backed expectations; and (3) the character of the governmental action. The court addressed each factor in turn:

  • The regulation's economic impact on the claimant was undisputed for the purpose of the appeal. The owners presented expert testimony that the value of their properties was reduced from $65.6 million to $62.9 million. The city's expert testimony suggested a smaller diminution in value, but the city stipulated to the owners' figure for the purposes of this appeal. While significant in absolute terms, this diminution in value of $2.7 million reflected a loss of only about four percent.
  • The owners did not convince the court to a sufficient extent that the regulation interfered with their reasonable investment-backed expectations because the city retains its legislative authority to re-zone at any time as public necessity demands. The court was unpersuaded by the owners' attempt to distinguish a PUD from “classic” zoning.
  • The character of the governmental action is the least concrete, and also appears to carry the least weight. This factor's purpose, when viewed in light of the goal of the takings test—to determine if the constitution requires the burden of the regulation to be borne by the public or the landowner—is to elicit consideration of whether a regulation disproportionately harms a particular property. The owners' fact questions relate to this third factor as well as the circumstances of the ordinance's enactment. The owners presented evidence that could lead a reasonable fact-finder to conclude that one of the city's purposes, or perhaps even its primary purpose, for enacting the ordinances was to benefit the developer. That evidence does not preclude summary judgment for the city, however, because the other two factors—particularly the first—weigh so heavily against the owners that, as a matter of law, there is no taking here.

After brief discussion, the court also affirmed the trial court's holdings denying the owners' other issues.

GRIP: Cities of Allen, et al. v. R.R. Comm'n of Tex., No. 03-06-00691-CV (Tex. App.—Austin Feb. 05, 2010). In this case, multiple cities joined to argue that the trial court erred in denying their requested declaratory relief because the Texas Railroad Commission exceeded its authority in adopting the Gas Reliability Infrastructure Program (GRIP) rule and denying them the opportunity for an adjudicatory hearing on contested matters related to GRIP applications. The court concluded that, in light of the GRIP statute's legislative history, administrative construction, inherent ratepayer protections, and lack of express language providing for adjudicative hearings at the commission, the statute does not contemplate either adjudicative hearings or a substantive review at the time of a GRIP filing. Rather, the legislature intended to encourage investment in new infrastructure by creating a streamlined method of allowing utilities to immediately begin recovering on new investments without having to wait for the completion of a costly and time-consuming rate case. A ministerial review for compliance with the statute is all that is required, as the cities are entitled to a substantive review of a utility's GRIP filing during the utility's next rate case. On that basis, the court held that the trial court did not err in denying the cities' request for declaratory relief.

Takings:City of Midlothian v. ECOM Real Estate Mgmt., Inc., No. 10-09-00039-CV (Tex. App.—Waco Jan 27, 2010) (mem. op.). The City of Midlothian and ECOM Real Estate Management, Inc. (ECOM) entered into an easement agreement for construction of a sewer system. Pursuant to the agreement, the city agreed to construct five sewer connections for ECOM, and agreed that ECOM could provide its own water. After the sewer system was installed, the city adopted an ordinance requiring citizens to purchase water from the city in order to use the city's sewer system. ECOM sued the city for breach of contract and fraud, and also sought a declaratory judgment. The trial court denied the city's plea to the jurisdiction, and the city appealed.

On appeal, the city contended that the trial court lacked subject matter jurisdiction over ECOM's breach of contract claim. ECOM relied on the decision in City of Carrollton v. Singer for the proposition that it could pursue its breach of contract claim against the city. 232 S.W.3d 790 (Tex. App.—Fort Worth, 2007, pet. denied). Addressing a similar situation, the court in Singer held that “an agreement to convey property to a governmental authority for a public purpose has the same effect as a formal condemnation proceeding.” 232 S.W.3d at 798.

As a result, the city did not prevail on the breach of contract issue in that case because the court held that the agreement was a settlement of an eminent domain proceeding for which the city was not immune. Id. at 799. Citing the dissenting opinion in Singer, the appellate court agreed with the city's argument that the Singer case was incorrectly decided. The court concluded that the city was acting within its rights under contract law when it negotiated the easement agreement with ECOM, and not under its eminent domain authority. Therefore, the trial court erred by denying the city's plea to the jurisdiction as to ECOM's breach of contract claim.

The city also argued on appeal that the trial court lacked subject matter jurisdiction over ECOM's declaratory judgment claim. The court of appeals agreed, holding that ECOM's declaratory judgment claim was analogous to its breach of contract claim. In seeking a declaration of its rights under the easement agreement, the court held that ECOM was also seeking to circumvent the city's immunity from suit by characterizing the contract dispute as a declaratory judgment action.

In its third issue, the city argued that the trial court lacked jurisdiction over ECOM's fraud and fraudulent inducement claims. Agreeing with the city, the court of appeals held that because the contract was for the installation and maintenance of a sewer line, that the city performed a governmental function and ECOM did not allege a claim for which immunity would be waived under the Tort Claims Act. Additionally, the court held that Section 101.057(2) of the Civil Practices and Remedies Code provides that the Tort Claims Act does not apply to claims arising from intentional torts such as fraud. Because the court of appeals held that the trial court did not have subject matter jurisdiction to consider ECOM's breach of contract, declaratory judgment, and fraud claims, ECOM could not recover attorney's fees or exemplary damages.

Employment: City of Laredo v. Hilda Negrete, No. 04-08-00737-CV, Tex. App.—San Antonio, Feb. 10, 2010) (mem. op.). The court of appeals affirmed the trial court's judgment against the city because the city's harassment policy did not protect the employee from harassment and the employee took advantage of the city's preventative and corrective opportunities.

Governmental Immunity:City of Houston v. Sherif Chemam, et al. No. 01-08-01005-CV (Tex. App.— Houston [1st Dist.] Jan 14, 2010) (mem. op.). The court of appeals dismissed Chemam's claims for damages for detrimental reliance, estoppel, tort claims, declaratory judgment, selective enforcement, and takings. Chemam did not show that the city waived immunity by conduct, nor did it cause property damage by the use of a city vehicle. The court dismissed the declaratory judgment claim because Chemam did not present an underlying statutory cause of action or right as required by the Declaratory Judgment Act. The claim for selective enforcement was dismissed because the city has immunity from monetary damages. The district court did not have jurisdiction over Chemam's takings claims because county courts at law have exclusive jurisdiction over those claims.

Mootness: City of Dallas v. Paul C. Woodfield, No. 05-08-01652-CV (Tex. App.—Dallas Jan 29, 2010). Woodfield's case against the city's bicycle helmet ordinance is moot because the criminal case was dismissed at the municipal court level and because the challenged action is capable of repetition, but does not evade review.

Governmental Immunity: City of San Antonio v. Emeterio de Miguel, No. 04-09-00289-CV (Tex.—App. San Antonio Feb 3, 2010). The court of appeals dismissed the plaintiff's case for takings and nuisance because the city's action against the plaintiff's property was negligent, not intentional as required by takings law.

Property Tax: Phil Seiflein et al., v. City of Houston, et al., No. 01-09-00361-CV (Tex. App.— Houston [1st Dist.] Feb 4, 2010) (mem. op.). The court of appeals affirmed the trial court's judgment granting the taxing entities taxes and penalties because Seiflein was unable to show competent evidence to invalidate the assessments.

Open Beaches Act: Angela Mae Brannan, et al., v. State of Texas, et al., No. 01-08-00179-CV (Tex. App.— Houston [1st Dist.] Feb 4, 2010). The court of appeals discusses the Open Beaches Act and holds that the plaintiffs' homes are an encroachment on the beach under the Act. The houses' encroachment does not provide a takings claim to the owners because the public right to the beach is a dedicated right under common law.

You can view attorney general opinions at www.oag.state.tx.us. On the same site, you can also sign up to receive e-mail updates of opinion requests and newly released opinions.

As a supplement to TCAA News, please check the TML Legislative Update Newsletter and TML's Connect News Service .
Please contact Scott Houston, TCAA General Counsel, with your news, questions, and/or comments by e-mail at legalgovt@tml.org or by phone at 512-231-7400.
TCAA members may use the information herein for any purpose. No other person may reproduce, duplicate, or distribute any part of this document without the written authorization of the Texas City Attorneys Association.
Texas City Attorneys Association
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