TCAA NEWS
(Volume 6, Issue 2 February/March 2011)
"Your Source for Information About the Texas City Attorneys Association"
News and Updates

Join us for the TCAA Summer Conference on June 8-10, 2011, at the Isla Grand Beach Resort in South Padre Island! Earn up to 10 hours of MCLE credit, including 1.5 ethics hours.  To register for this conference, please go to www.texascityattorneys.org.

Hotel Information: The TCAA room block at the Isla Grand Beach Resort (formerly the Radisson Resort) will open at 8:00 a.m. on Monday, March 28, 2011. At that time, rooms will be available on a first-come, first-served basis.  To make your reservations, please call the Isla Grand Beach Resort directly at 800-292-7704 or 956-761-6511. (Refer to the “TCAA Summer Conference room block” to receive the conference rate.) TCAA has also secured several “overflow” hotels and will open those reservations at 9:00 a.m. on the same day.  For details on those hotels, please go to the conference registration link at www.texascityattorneys.org.

Conference topics include:

  • Ethics:  Social Media and Legal Ethics Update
  • Title VII and the Guidelines:  Promotional Exams and Recent Trends
  • How to Write a Prosecutor Friendly Ordinance
  • Making Public/Private Partnerships Work
  • “Sinful Activities” Regulation and the First Amendment
  • Budget Pitfalls
  • Recent Federal Cases of Interest to Cities
  • Recent State Cases of Interest to Cities
  • Zoning Board of Adjustment – Pitfalls to Avoid
  • Ethics:  Duties, Obligations, and Potential Liability for Signing Legal Opinion Letters
  • Advanced Employment Law Pitfalls – Dos and Don’ts
  • Legislative Update
  • Billboard and Sign Regulation:  Recent Cases and Trends
  • Top Ten Construction Procurement Mistakes
  • Effective Communications with the Police Department
  • Real Estate Issues:  Dealing with Liens and Other Issues

Special thanks to this year’s sponsors:

Reception Sponsors
Bickerstaff Heath Delgado Acosta, LLP
McKamie Krueger, LLP

Towel Sponsor
Lloyd, Gosselink, Rochelle & Townsend, P.C.

Additional Sponsors
Boyle & Lowry, L.L.P.
Brown & Hofmeister, L.L.P.
Davidson & Troilo, P.C.
Denton, Navarro, Rocha and Bernal, P.C.
McKibben, Woolsey & Villareal, L.L.P.
LexisNexis
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, Trevino & Guevara, LLP
Taylor, Olson, Adkins, Sralla & Elam, L.L.P.
Texas Municipal League Intergovernmental Risk Pool

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 “seminar materials” for attendees to download in advance, if they so desire. No written materials are provided at the seminar location.

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 2011 TCAA Summer Meeting in South Padre on June 8-10 is May 13, 2011.
  • 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 Conference 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 2011 Summer Conference in South Padre on June 8-10 is April 1, 2011.

For more information on these awards, please go to www.texascityattorneys.org.   

FREE CLE!  The 2010 TCAA Summer and Fall Conferences Available Online:  TCAA Online Seminars is a FREE SERVICE that allows TCAA members who are city attorneys, assistant city attorneys, or attorneys who regularly practice municipal law to purchase and view a video of past seminars in a single-session format. Viewing of the session, along with the completion of an evaluation and participation in the LisTCAA listserv, allows attorneys to receive participatory CLE credit with the State Bar. To view available seminars, please go to www.texascityattorneys.org and click on “TCAA Online Seminars.”  (Use the password “FreeCLE” to gain access to the sessions.)   

Scenic City Certification Program Now Accepting 2011 Applications:  Texas cities need every competitive edge for economic development and tourism.  Cities that boast high scenic standards for their roadways and public spaces have the advantage in attracting the attention of site selection specialists, meeting planners, and visitors.  The Scenic City Certification Program publicly recognizes cities with these established scenic standards.  The program is a joint project of the Texas Municipal League, American Planning Association, Urban Land Institute, Houston-Galveston Area Council, Houston Council of Engineering Companies, and Scenic Texas.  Scenic City applications are due by March 31, 2011.  The application, program details, list of 2010 winning cities, and contact information can be found at www.sceniccitycertification.org.  For additional information, please contact Anne Culver, executive vice president of Scenic Texas, or Holly Eaton, program director, at 713-979-4374, or email holly@sceniccitycertification.org or anne@sceniccitycertification.org.

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

Articles

Cities Refuse to Accept Utility Rate Hikes Without a Fight, Thomas Brocato and Daniel Gonzales, Lloyd Gosselink.  Texas cities have a long history of participation in the ratemaking process for both gas and electric utilities in the State of Texas.  Prior to the enactment of the Public Utility Regulatory Act (“PURA”) in 1975 and the Gas Utility Regulatory Act (“GURA”) in 1983, utility rates were set exclusively at the city level, with any appeals of municipal rate ordinances decided in the courts.  Currently, under PURA and GURA, cities have original jurisdiction over the utility rates within their city limits.  Read more

Redistricting at the Local Level: The Basics, Julie Y. Fort, McKamie Krueger, LLP. Our legislators are busy in Austin this session redrawing the federal and state lines for legislative offices.  Many cities and other local governmental entities that elect local officials from districts, wards, or places that are not at-large must also tackle redrawing the local district lines in light of the 2010 Census information.  Some folks in Austin anticipate, and even seem to accept, that the legislators will not be able to agree on new district maps or that the new district maps will end up in court.  It is possible for local governmental entities to adopt new local district maps that will pass pre-clearance and avoid a court battle.  However, maps should be prepared in a manner to withstand any legal challenges that may arise. Read more.

Are Cities Immune from Prompt Payment Act Claims?  In Short: Yes. Jeffrey S. Chapman, Ford, Nassen & Baldwin, P.C. When cities contract for construction services, the funds payable to prime contractors, subcontractors, and suppliers are subject to interest penalties under the Texas Public Prompt Payment Act if amounts are not paid in a timely manner.  However, according to a recent court decision, judicial actions seeking to enforce Prompt Payment Act remedies against cities are prohibited by sovereign immunity from suit.  Read more.

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

Discharge of Firearms:  RQ-0937-GA; Authority of a type A general law municipality to adopt and enforce a firearm discharge ban on property located within its corporate limits.  TML and TCAA argued that the City of Wimberley, or any incorporated city for that matter, has full authority to regulate or prohibit the discharge of firearms within the city’s originally-incorporated limits. 

Municipal Advisors:  SEC Release No. 34-63576, File No. S7-45-10; Registration of Municipal Advisors.  TML filed comments with the Securities and Exchange Commission (SEC) opposing the proposed rule on the grounds that it would require appointed board members of municipal entities that issue municipal securities or that invest public funds to register as “municipal advisors” with the SEC and Municipal Securities Rulemaking Board.  Those appointed board or commission members required to register would incur annual registration fees, be subject to accompanying record-keeping and administrative compliance requirements, and be subject to a heightened fiduciary standard of care.  The comments were filed with the SEC on January 30, 2011.   

Property Taxation of Stored Natural Gas: Harrison Central Appraisal District v. The Peoples Gas, Light and Coke Co., 10-896 (Jan. 2011) in the Supreme Court of the United States.  This case concerns when goods are constitutionally protected from property taxation under the Commerce Clause of the United States Constitution. U.S. Const., Art. I, § 8, cls. 1 & 3.  Specifically, the question presented is whether the Commerce Clause prohibits the taxation of natural gas that is stored in one state before being transferred to another state for final distribution.  TML, TCAA, the National League of Cities, the International Municipal Lawyers Association, and other state and national leagues filed a brief arguing that natural gas that is stored, even in a tank connected to an interstate pipeline, is constitutionally taxed by local entities because the gas enjoys the benefits of local governments.  [TML also joined an amicus brief by the Texas Association of School Boards in a similar case filed at the same time, Midland Central Appraisal District v. BP American Production Co., 10-890 (Jan. 2011).]

Recent Federal 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. These case analyses are reprinted with permission from the International Municipal Lawyers Association.

Governmental Immunity: San Patricio Municipal Water District, et al. v. City of Corpus Christi, No. 13-10-00272-CV (Tex. App.—Corpus Christi, Jan. 13, 2011) (mem. op.).

In 1997, the City of Corpus Christi and the San Patricio Municipal Water District entered into an agreement for the city to provide treated water to the district.  The district sued the city in 2008, alleging that the city had improperly charged it for storm water and drainage services that the district did not receive.  The district alleged that this was an unconstitutional taking, that the city had been unjustly enriched, and that the city had breached the contracts governing the water sale agreement between the two entities.  The city filed a plea to the jurisdiction, arguing that the trial court lacked jurisdiction over the causes of action brought by the district, because jurisdiction over the appropriateness of water rates rests with the Texas Commission on Environmental Quality (TCEQ) under Texas Water Code Section 13.042, and that the city was immune from suit under the doctrine of sovereign immunity.  The trial court granted the city’s plea and dismissed all of the district’s claims with prejudice.  The district appealed.  In this memorandum opinion, the court of appeals reviewed the trial court’s granting of the city’s pleas on each ground enumerated. 

The court first examined the city’s assertion that exclusive jurisdiction over the rate dispute resided with the TCEQ.  The court held that while Section 13.042 of the Texas Water Code grants the TCEQ “exclusive original jurisdiction over water and sewer utility rates, operations and services not within the incorporated limits of a municipality,” the definition of “rate” is not broad enough to encompass charges that are not attributable to water or sewer services.  The court cited Texas Water Code Section 13.002, stating that the definition of a “rate” in the plain language of the statute includes only charges attributable to water and sewer services.  Thus, a dispute with regard to a portion of the city’s rate that was attributable to storm water and drainage services would not be subject to the TCEQ’s exclusive jurisdiction.  See Tex. Water Code §13.042(e).  The court further found that the rates in question were related to storm water and drainage service and sustained the district’s first issue, holding that the trial court erred if it granted the city’s plea on this ground.

In its analysis of the issue of sovereign immunity, the court noted in a footnote that for ease of reference, the terms sovereign immunity and governmental immunity could be used interchangeably, though governmental immunity would technically apply in this case.  The court went on to discuss the nature of sovereign immunity in Texas, which has two components:  immunity from liability and immunity from suit.  Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex.2006); Kan. City So. v. Port of Corpus Christi Auth., 305 S.W.3d 296, 304 (Tex.App—Corpus Christi 2009, pet. denied).  While the city waived its immunity from liability by entering into a contract, that act did not waive the city’s immunity from suit, which may be waived only by clear and unambiguous statutory language.  Tooke, 197 S.W.3d at 332-333, see Tex. Gov’t Code §311.034.  However, the court pointed out that the doctrine of sovereign immunity is not applicable to certain requests for declaratory relief; specifically, declaratory relief against a governmental entity that acted without legal or statutory authority.  See Tex. Civ. Prac. & Rem. Code §37.001-.011; see also Tex. Natural Re. Conservation Comm’n v.  IT-Davy, 74 S.W.3d 849, 855 (Tex. 2002).  The district sought declaratory relief in the form of a refund of the allegedly illegally collected charges, as well as attorneys’ fees and costs.  The city contended that the underlying nature of this request for declaratory relief was merely a demand for money damages.  The court agreed with the city, finding that the district’s declaratory judgment action sought clarification of the parties’  rights under the contracts in question and thus constituted attempts to “enforce performance of a contract,” which is barred by sovereign immunity.  See id.  While the district also argued that the city did in fact lack authority under the Municipal Drainage Utility Services Act (Tex. Loc. Gov’t Code §§552.0041-.054) to impose charges for storm water and drainage service outside city limits, the court held that because those claims were not made at the trial court and thus could not have been considered by that court in its decision to grant the city’s plea to the jurisdiction, they could not now be considered on appeal.  The court held that the district’s claims for declaratory relief before the trial court were only those that attempted to impose contractual liabilities on the city, and upheld the trial court’s finding that those claims were barred by sovereign immunity.

The district also alleged a cause of action for unjust enrichment and constructive trust, arguing that this claim was authorized under the Texas Tort Claims Act (TTCA).  See Tex. Civ. Prac. & Rem. Code §§ 101.001-.109.  However, the TTCA requires certain mandatory prerequisites for suit, which the district could not prove that it had met.  See id. § 101.101.  The court upheld the trial court’s granting of the city’s plea to the jurisdiction with respect to this claim.

In addition, the district alleged that the city’s taking of the district’s property in the form of monetary resources constituted an unconstitutional taking.  See Tex. Const. Art. I, § 17.  While the doctrine of sovereign immunity would not protect the city from an action for compensation under the takings clause, the court found that when a governmental entity takes or withholds property in a contract dispute, it is acting like a private citizen, not under any sovereign powers, and lacks the requisite intent for the establishment of a takings claim.  See Gen. Servs. Comm’n v. Little-Tex Insulation Co., 39 S.W.3d 591, 598-99 (Tex. 2001).  Because the district had not alleged the necessary elements of an unconstitutional taking, the court held that the city’s sovereign immunity was not waived with respect to the claim.

Finally, the city argued in its plea to the jurisdiction that it was immune to the district’s breach of contract claims, which the district argued under several claims, including Chapter 271 of the Texas Local Government Code (see Tex. Loc. Gov’t Code §§ 271.151-.160).  That chapter provides that a “local governmental entity” that has the authority to enter into a contract and does so waives sovereign immunity to suit for the purpose of claims of breach of contract, subject to certain terms outlined in the chapter.  See id.  The chapter defines a contract subject to the requirements included therein as dealing with “providing goods and services to [a] local governmental entity.”  See id. § 271.151(2).  While the city argued that the contract did not provide any goods or services to the city and did not fall under Chapter 271, the district contended that the Texas Supreme Court has taken a broad view of the waiver, holding that it is applicable whether goods and services are provided to or from the local governmental entity.  See Ben Bolt-Palito Blano Consol. Indep. Sch. Dist. v. Tex. Political Subdivisions Prop./Cas. Joint Self-Ins. Fund, 212 S.W.3d 320, 327.  The court held that whether the waiver is interpreted broadly was irrelevant, as the contract in question called for the provision of goods or services to a local governmental entity (the district), which falls under the definition in the chapter.  Tex. Loc . Gov’t Code § 271.151(3)(c).  The court held that the damages claimed by the district qualified as an alleged “balance due and owed” by the city, as permitted by Chapter 271, and held that the city’s immunity was waived with respect to the breach of contract claims.  See id. § 271.153.  The court reversed the judgment of the trial court dismissing the district’s breach of contract claims for lack of jurisdiction, remanded those claims to the trial court for further proceedings, and affirmed the remainder of the trial court’s judgment for the city.

Annexation:  Round Rock Life Connection Church, Inc. v. City of Round Rock, No. 03-09-00523-CV, 2011 WL 589832 (Tex. App.—Austin Feb. 18, 2011).  In February 2009, the City of Round Rock informed the plaintiff landowners that it intended to annex their properties.  The landowners petitioned the city to include their properties in the city’s three-year annexation plan under Local Government Code Section 43.052(i), which provides:

(h) This section does not apply to an area proposed for annexation if:
(1) the area contains fewer than 100 separate tracts of land on which one or more residential dwellings are located on each tract . . . 

(i) A municipality may not circumvent the requirements of this section by proposing to separately annex two or more areas described by Subsection (h)(1) if no reason exists under generally accepted municipal planning principles and practices for separately annexing the areas.  If a municipality proposes to separately annex areas in violation of this section, a person residing or owning land in the area may petition the municipality to include the area in the municipality’s [three-year] annexation plan . . . .

Tex. Loc. Gov’t Code § 43.052 (emphasis added).

The city denied the landowners’ request.  The landowners filed suit, seeking a temporary injunction to enjoin the city from annexing their land and from requiring them to pay the costs of hooking up to the city’s water and sewer utility lines.  The landowners also sought a judgment declaring the city’s annexation ordinance void.  In the alternative, the landowners sought a writ of mandamus requiring the city to provide municipal services on the effective date of the annexation.  The trial court dismissed the landowners’ challenge for lack of standing. 

The appellate court affirmed the part of the trial court’s judgment dismissing for lack of standing.  The appellate court explained that “[u]nless an annexation is wholly void, that is, exceeding municipality’s power or authority to annex, or the Legislature has expressly granted  a private right to challenge the annexation . . . , a quo warranto proceeding brought by the State is the only proper means of attacking a municipality’s annexation in court.”

The appellate court went on to hold that Section 43.052(i) is not a limitation on a city’s annexation authority, but is rather part of Subchapter C, which is procedural in nature.  Because the landowners alleged noncompliance with Section 43.052, the annexation would at most be voidable, not void.  For this reason, the appellate court held the landowners had no standing to challenge the annexation.

The appellate court remanded the following issues because they were not addressed in the trial court’s judgment: (1) the landowner’s request for a temporary injunction and judgment declaring the city is prohibited from requiring the landowners to incur the expense of connecting to the city’s water and sewer lines; and (2) the landowner’s request for a writ of mandamus requiring the city to provide municipal services on the effective date of the annexation.

Governmental Immunity-Tort: City of North Richland Hills v. Friend, No 02-09-00166-CV (Tex. App.—Fort Worth February 24, 2011).  On July 24, 2004, twelve-year-old Sarah Elizabeth Friend collapsed while standing in line waiting for a ride at an amusement park. The collapse was due to a hypertrophic cardiomyopathic condition (a heart condition causing thickening of heart muscle, which can lead to irregular heart rhythm and heart failure). Although the park was equipped with at least two automated external defibrillator devices (AEDs), Friend did not receive external defibrillation until the North Richland Hills Fire Department arrived twenty minutes after she collapsed. Friend was transported and admitted to a hospital but subsequently died.

Defects

The Friends claimed that the city “failed to provide an AED device and/or other resuscitative equipment or devices.”  The Texas Tort Claims Act (TTCA), Texas Civil Practice and Remedies Code Section 101.022 states:


(a)  Except as provided in Subsection (c), if a claim arises from a premise defect, the governmental unit owes to the claimant only the duty that a private person owes to a licensee on private property, unless the claimant pays for the use of the premises.

(b)  The limitation of duty in this section does not apply to the duty to warn of special defects such as excavations or obstructions on highways, roads, or streets or to the duty to warn of the absence, condition, or malfunction of traffic signs, signals, or warning devices as is required by Section 101.060.

The allegation of failure to provide or place the AEDs near the structure does not constitute a “special defect” because no highway, road, or street is involved. The Friends’ allegations do not waive the city’s immunity based on the existence of special defect.

The Friends also allege an ordinary premises defect. Section 75.001(2) of the Civil Practices and Remedies Code defines premises:

(2)  “Premises” includes land, roads, water, watercourse, private ways, and buildings, structures, machinery, and equipment attached to or located on the land, road, water, watercourse, or private way.

The Friends’ pleading that the city failed to provide an AED device does not involve a building or its grounds or appurtenances; the allegations of the defect are based on the “want of something necessary for completeness;” and it does not allege a premises defect. See also Nunez v. Sansom Park, 197 S.W.3d 837, 842 (Tex. App.—Fort Worth 2006, no pet.), State v. Burris, 877 S.W.2d 298, 299 (Tex. 1994).

Personal Property

The Friends further argue that the AED was “removed… in a location where… it could not be timely obtained and used.” The court concluded that those allegations are not sufficient to establish a waiver of immunity. See Tex. Dep’t of Criminal Justice v. Miller, 51 S.W.3d 583, 58788 (Tex. 2001). The placement or availability of resuscitative equipment so it could not be timely obtained or used are nothing more than allegations that the AEDs were not used by the city. Non-use allegations do not waive immunity under the TTCA. See Kassen v. Hatley, 887 S.W.2d 4, 14 (Tex. 1994). The allegation of placing the equipment elsewhere was not a “use” or “misuse” under the TTCA, and changing storage locations cannot be characterized as putting or bringing them into action or service, or employing or applying them to a given purpose.  See Miller, 51 S. W.3d at 588.

The Friends also allege that the city “used or misused the portable radio communication devices in calling for the necessary resuscitative equipment.” But this alleged use or misuse did not actually cause the injury or death as required by the TTCA.  See Miller, 51 S.W.3d at 588. Thus, the court of appeals stated that neither personal property  allegation waived the city’s immunity.

Safety Component

Waiver based on lack of an integral safety component is limited to narrow circumstances. Tex. A & M Univ. v. Bishop, 156 S.W.3d 580, 585 (Tex. 2005); Tex. State Technical Coll. v. Beavers, 218 S.W.3d 258, 261 (Tex, App.-Texarkana 2007, no pet.). The property used must lack an integral safety component that led to the injuries.  The doctrine does not waive immunity when the property could have simply been safer with an added safety feature. See Bishop, 156 S.W.3d at 581, 584.  However, even if immunity is waived by lack of a integral safety component, an exception to waiver exists when:

an employee while responding to an emergency call or an emergency situation if the action is in compliance with the laws and ordinances applicable to emergency action, or in the absence of such a law or ordinance, if the action is not taken with conscious indifference or reckless disregard for the safety of others.

Tex. Civ. Prac. & Rem. Code § 101.055.  When an exception applies, the TTCA cannot be provided as a waiver of immunity even if the facts fall within a waiver found in Section 101.021. See City of San Antonio v. Hartman, 201 S.W.3d 667, 671-72 (Tex. 2006).

The allegation that the city was negligent because the equipment held by the city included some emergency equipment, but not the AED, is sufficient to establish lack of an integral safety component and therefore, without an exception to waiver, could waive the city’s governmental immunity.  The city argued that: (1) the situation involved emergency response under Section 101.055; and (2) there was no argument presented that the city did not follow its ordinances or other law or that the city acted with “conscious indifference or reckless disregard for the safety of others.” The Friends alleged that the city did act with gross negligence when it did not use readily-available equipment that city staff was trained to use, and knew or should have known was the appropriate equipment for the situation.  Thus, the lack of the integral safety component of an AED device, coupled with its availability and the city’s lack of use of the device, were sufficient allegations to waive the city’s immunity to suit under the TTCA.

The appellate court affirmed the trial court’s denial of the city’s plea to the jurisdiction as to the claim of a waiver of governmental immunity for injuries arising from use or misuse of tangible personal property based on the lack of a safety component and negligence by employees.  The appellate court reversed the trial court’s denial of the city’s plea to the jurisdiction on the other allegations and dismissed those allegations for lack of subject matter jurisdiction.

Takings:  City of North Richland Hills v. Home Town Urban Partners, Nos. 02-10-00224-CV, 02-10-00236-CV   (Tex.App.—Fort Worth, Feb. 17, 2011).  In 1999, the City of North Richland Hills adopted a plan to zone an area within the Home Town Development (developed by Arcadia Land Partners, collectively referred to as “appellees”), and created a tax increment financing district to capture the resulting increases in property tax valuations.  In 2001, the city and Arcadia entered into a comprehensive development agreement that provided, among other things, that Arcadia would convey a tract of land to the city for construction of a recreation center.  By 2007, the city had not constructed the recreation center because the city purchased a ten-acre tract outside the development to construct the center.  The city also had amended the initial zoning district, which allowed multi-family uses, to allow multi-family use only with a specific use permit. 

Appellees sued the city alleging that the city breached the development agreement by changing the location of the recreation center without appellees’ consent.  Appellees also sought declaratory, mandamus, and injunctive relief and monetary damages relating to the city’s multi-family use zoning amendment.  The city filed partial pleas to the jurisdiction in trial court, which denied them. 

On appeal, the city first argued that the trial court lacked subject matter jurisdiction over the appellees’ breach of contract claims.  The appellees contended that, by entering into a contract, the city waived sovereign immunity to suit for the purpose of adjudicating a claim for breach of contract.  See Tex. Loc. Gov’t Code § 271.152.  A contract that waives sovereign immunity pursuant to Local Government Code Section 271.152 must be “a written contract stating the essential terms of the agreement for providing goods or services to the local governmental entity.”  Tex. Loc. Gov’t Code § 271.151(2).  Although the city argued that the development agreement was merely a conveyance of real property, and not a contract for “goods or services,” appellees countered that they had to provide various services to the city under the development agreement.  The court relied on two Supreme Court decisions in determining that, because the appellees provided certain services under the agreement, including the retention of third-party contractors, that the city’s immunity from suit with regard to the development agreement was waived.  Kirby Lake Dev., Ltd. V. Clear Lake City Water Auth., 320 S.W.3d 829 (Tex. 2010); Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist. V. Tex. Political Subdiv. Prop./Cas. Joint Self-Ins. Fund, 212 S.W.3d 320 (Tex. 2006).  

Next, the city argued that the breach of contract damages do not fall within those available under Local Government Code Section 271.153, thereby depriving the trial court of subject matter jurisdiction.  Breach of contract damages against a city are limited to “the balance due and owed by the [city] under the contract.”  Tex. Loc. Gov’t Code § 271.153(a)(1).  The city contended that appellees’ potential damages are consequential in nature, as there is no balance “due and owed” to the appellees.  Agreeing with appellees, the court determined that appellees sufficiently pled that possible amounts “due and owed” to the appellees under the development agreement include construction costs relating to the recreation center that was relocated by the city.

In its third issue, the city argued that the trial court lacked subject matter jurisdiction over the appellees’ requests for declaratory relief regarding the city’s relocation of the recreation center and the city’s denial of specific use permit applications.  With regard to the relocation of the recreation center, the appellees sought a declaratory judgment that the city violated the development agreement, tax increment financing plan, and plats by relocating without appellees’ approval.  The court determined that the only objective of appellees’ requested declaration was to recast their claim for breach of contract, which is prohibited by the Declaratory Judgment Act.  See Tex. Natural Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 860 (Tex. 2002).

At trial, appellees also sought declaratory relief on the grounds that the city did not comply with its ordinances and state law in denying the specific use permit applications.  Instead, reasoned the appellees, the city denied specific use permit requests because the city did not want additional multi-family development.  The court viewed this argument by appellees as an ultra vires claim alleging that city officials acted without legal authority in denying specific use permit applications, which could only be brought against city officials in their official capacities.  Further, the court held that appellees could not recover attorney’s fees for any declarations over which the city’s immunity from suit had not been waived. 

The city also contended that appellees lacked standing to seek a declaration challenging the city’s zoning ordinance amendment based on the lack of required notice.  It was undisputed that the city did not provide proper notice of the public hearing pursuant to Local Government Code Section 211.007(c), but the issue on appeal was whether the lack of notice voided the zoning amendment, or was merely a procedural irregularity that may only be brought by the state in a quo warranto proceeding.  Analogizing to annexation ordinances, the court held that private parties do not have standing to challenge city zoning ordinances for procedural irregularities.  See Laidlaw Waste Sys. (Dallas), Inc. v. City of Wilmer, 904 S.W.2d 656 (Tex. 1995).  Appellees lacked standing to challenge the zoning amendment, and a quo warranto proceeding was the proper action because the general public had the same interest in the city’s decision-making process as the appellees.  

Finally, the city asserted that the trial court did not have subject matter jurisdiction over appellees’ inverse condemnation claims because it was merely a restatement of the breach of contract claim.  The court disagreed, holding that appellees alleged that the city deprived them of their reasonable investment-backed expectations associated with the zoning, plats, building permits, development agreement, and tax increment financing documents.  These allegations were deemed sufficient to allege a regulatory taking that unreasonably interfered with appellees’ investment-backed expectations. 

Jurisdiction: City of San Antonio v. Ash, No. 04-09-00732-CV (Tex. App—San Antonio February 9, 2011).  The court held that a county court could retain jurisdiction over an amended petition that included damages in excess of its jurisdiction if the damages were incurred because of the passage of time and the plaintiff did not have to explicitly state in its amended petition that the damages were incurred due to the passage of time. 

Real Property: Mantos v. City of Mansfield, No. 02-09-00315-CV (Tex. App.—Fort Worth February 10, 2011).  The court of appeals held, among other things, that Mantos had not sufficiently argued that the city’s sale of property was void at the time of sale and thus could not overcome the effects of the validation statute (Section 51.003 of the Texas Local Government Code) on the sale of property.

Governmental Immunity—Contract: City of San Antonio v. KGME, Inc., No. 04-10-00263-CV (Tex. App—San Antonio February 16, 2011).  The court of appeals held that the city waived governmental immunity to KGME, Inc.’s contract claim and Prompt Payment Act claims up to the amount of the city’s counterclaim under common law and thus the city could be liable for damages in excess of Section 271.153 of the Texas Local Government Code.   (Note:  See article elsewhere in this edition.)

Employment Discrimination: City of El Paso v. Granados, No. 08-08-00316-CV (Tex. App. — El Paso February 23, 2011) (op.).  The court of appeals held that the point when the clock starts running on the time to file a Texas Commission on Human Rights Act employment discrimination claim when the action is taken do not restart the clock or give the employee additional time to file the claim.  

Governmental Immunity—Tort: Strother v. City of Tyler, No. 12-10-00127-CV (Tex. App — Tyler February 23, 2011) (mem. op.).  The court of appeals held that the fact that a traffic light may have confused a motorist whose accident was allegedly caused by the confusion, was insufficient to show a “condition” of personal property that would waive the city’s governmental immunity under the Tort Claims Act, Section 101.060 of the Texas Local Government Code.

Contract: Patterson v. City of Brenham, No. 14-10-00111-CV (Tex. App — Houston (14th Dist.) March 8, 2011).  The court held that there was insufficient evidence to support the city’s summary judgment on Patterson’s contract claim because there was evidence presented by Patterson from the Internal Revenue Service disputing the city’s main basis for summary judgment.

Governmental Immunity: Cernosek Enterprises, Inc. v. City of Mont Belvieu, No. 01-09-00706-CV (Tex. App — Houston (1st Dist.) March 10, 2011).  The court of appeals held, among other things, that: (1)  to make a valid ultra vires argument against city actions, the city official, not the city, must be sued; and (2) Section 245.006 of the Local Government Code does not waive governmental immunity when the party suing the city is not the permit applicant.

Governmental Immunity—Tort: Sullivan v. City of Fort Worth, No 02-10-00223-CV (Tex. App. — Fort Worth February 3, 2011) (mem. op.).  The court of appeals held that: (1) the operational decisions of the city were open to litigation under the Tort Claims Act; (2) the policy and design decisions related to the property where the individual was injured are immune from liability; and (3) the recreational use statute does not apply to an injury occurring during a wedding event.

Elections: Morton v. City of Boerne, No. 04-10-00293-CV (Tex. App. — San Antonio February 2, 2011).  The court of appeals held that the state district court cannot render an enforceable judgment requiring a city to have single-member districts, so long as a federal judgment was in effect on the same issue.

Tax:    Putnam v. City of Irving, No. 05-10-01269-CV (Tex. App — Dallas Jan. 27, 2011). The court of appeals withdrew its opinion of December 13, 2010, but again affirmed the trial court’s order requiring the taxpayers to post security and dismissed their intervention.

Attorneys Fees: Dallas Morning News, Inc., v. City of Arlington, No. 03-10-00192-CV (Tex. App. — Austin Jan. 21, 2011) (mem. op.). The court of appeals held that the Dallas Morning News was ineligible for attorneys fees under Section 522.323 of the Government Code, Public Information Act, because the paper did not “substantially prevail” in its suit against the city. 

Attorney General Opinions of Interest to Cities

Note: Included opinions are from the period beginning on the 10th of the previous month through the 10th of the current month. This double issue will include opinions from January 11th through March 10th.

Opinion No.  GA-0834 (PFIA):  Concludes that while a local governmental body may “invest” its funds in money market deposit accounts under Chapter 2256, Government Code, the Public Funds Investment Act, those funds are governed, when they exceed the maximum amount insured under federal law, by Chapter 2257, Government Code, the Public Funds Collateral Act.

Opinion No.  GA-0836 (Railway): Concludes that under Chapter 452, Transportation Code, the Regional Transportation Council does not have authority to close the Trinity Railway Express transit station located within the City of Richland Hills.

Opinion No.  GA-0838 (Newspaper): Concludes that, because the City of Ingleside’s designated newspaper publishes in Aransas County and is entered as second-class postal matter in that same county, it complies with the requirements of Government Code Section 2051.044(a)(3).

Opinion No. GA-0841 (Dual Office Holding): Concludes that Texas Constitution, Article XVI, Section 40, prohibits a compensated part-time municipal court judge from simultaneously serving as a member of the Board of Commissioners of the Jefferson County Drainage District No. 7.

Opinion No. GA-0842 (Civil Service):  Concludes that because a civil service commission lacks express statutory authority to impose a fee for an applicant to take a fire department civil service promotional examination, a civil service commission may not impose such a fee.

Opinion No. GA-0843 (Transfer Assets): Concludes that the board of directors of the Sandy Land Underground Water Conservation District has broad statutory authority to transfer certain assets to any individual or entity. Whether it may do so under article III, section 52(a) of the Texas Constitution depends upon whether such transfer comports with the public purpose analysis promulgated by the Texas Supreme Court in Texas Municipal League Intergovernmental Risk Pool v. Texas Workers' Compensation Commission, 74 S.W.3d 377 (Tex. 2002), and its progeny.

Opinion No. GA-0846 (Radar Enforcement):  Concludes that, by enactment of Transportation Code section 542.2035, the Legislature has prohibited a municipality from using any radar device that records the speed of a motor vehicle and obtains one or more photographs or other recorded images of the vehicle, its license plate, or its operator.

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 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.
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