TCAA NEWS
(Volume 4, Issue 10 – November 2009)
“Your Source for Information About the Texas City Attorneys Association”
News and Updates

2009 Riley Fletcher Basic Municipal Law Seminar to be held in Dallas: The Eleventh Annual Riley Fletcher Basic Municipal Law Seminar will be held in Dallas in February of 2010. Details forthcoming!

Take Advantage of the Texas Municipal League as a Resource: As a supplement to TCAA News, be sure to check the TML Legislative Update newsletter and TML’s Connect News Service.   In addition, the Legal page of www.tml.org contains a wealth of information.

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

IMLA Conferences: The International Municipal Lawyers Association conducts various seminars that complement the TCAA programs. This month’s featured seminar is titled “Voting Rights Litigation: Dealing with the 2010 Census.” The seminar will be held from 8:00 a.m. – 5:00 p.m. on December 10th, 2009, at the Radisson Hotel in Columbia, South Carolina. For more information or to register, go to www.imla.org and click on “events.”

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.

Governmental Immunity: Castro v. McNabb, No. 08-07-00074-CV (Tex. App.—El Paso Oct. 28, 2009). In September 2005, the El Paso City Council voted to settle a wrongful termination lawsuit brought against the city by former assistant city attorney Rita Rodriguez. The city elected to settle for $500,000 on the advice of the insurance carrier and outside counsel retained by the insurer. Prior to this vote, El Paso City Attorney Charles McNabb advised the city council of his potential conflict of interest in the litigation because he had been the supervisor to the former assistant city attorney and had been identified as a person with knowledge of relevant facts. He advised that he would not involve himself in any aspect of the litigation unless he received waivers from both the city council and the plaintiff. The council unanimously voted to waive all potential and existing conflicts of interest.

After the suit was settled, El Paso councilmember Melina Castro, who was the only member of council to vote against settling the lawsuit, began to question McNabb’s relationship with the former attorney and his involvement in the lawsuit. She requested several categories of information relating to the Rodriguez litigation, and the city requested a letter ruling from the attorney general on the matter. The attorney general determined that, because Castro requested the documents in her official capacity as a councilmember, she did not act as a member of the public in doing so. Thus, the information had to be disclosed to her.

On December 7, 2005, Castro filed a declaratory judgment action against McNabb. Castro sought a judicial declaration that: (1) McNabb had an attorney-client relationship with her; (2) McNabb had a fiduciary duty to make a full disclosure prior to seeking a waiver of his conflict of interest regarding the Rodriguez litigation; (3) Castro had a right to see any and all documents created or obtained in connection with the city’s defense of the Rodriguez suit; and (4) the Public Information Act was inapplicable to Castro’s request for information and the city council’s action in excluding her from certain executive sessions was unlawful.

The trial court entered an order in which it found that Castro was not acting in her official capacity by filing the lawsuit, that the claims should have been brought against the City of El Paso under Section 101.106 of the Civil Practices and Remedies Code, and that Castro lacked standing because she improperly sought to have the court adjudicate matters that could have, or already had been, determined by the city or the attorney general. The trial court therefore lacked subject matter jurisdiction, and McNabb was entitled to all applicable court costs and attorney’s fees.

On appeal, the court first addressed the trial court’s dismissal of the action under Texas Civil Practices and Remedies Code Section 101.106(f). That section provides that, when a suit is filed against an employee whose conduct was within the scope of his employment and the suit could have been brought against the governmental unit under the Texas Tort Claims Act, recovery against an individual employee is barred and must be sought against the governmental unit. Relying upon prior case law, the court of appeals pointed out that the Declaratory Judgments Act waives sovereign immunity for governmental entities. See Texas Education Agency v. Leeper, 893 S.W.2d 432, 436 (Tex. 1994). Therefore, the court held, the trial court erred in dismissing Castro’s suit pursuant to Section 101.106(f) because the declaratory judgment action could not have been brought against the City of El Paso under the Tort Claims Act.

Next, the court of appeals addressed whether or not the trial court had jurisdiction to address the allegations in Castro’s petition. As to the declaration that McNabb had an attorney-client relationship with Castro and owed her a fiduciary duty, the court took the position that Castro was using her petition for declaratory judgment to establish a critical element in a tort cause of action against McNabb. As an individual councilmember, Castro did not have standing to investigate McNabb or sue him for any conduct committed by him with regard to his representation of the city in the Rodriguez suit. Further, the court of appeals reasoned that because the city council unanimously waived any conflict of interest and settled the Rodriguez suit, the declaration being sought is moot. Any declaration would amount to an advisory opinion, and the courts are not empowered to issue advisory opinions under the Declaratory Judgment Act.

With regard to Castro’s requested declaration that her exclusion from executive session by the city council was unlawful, the court of appeals held that a declaration against the named party, McNabb, would not bind the city in any way, and would also amount to a purely advisory decision that is prohibited by the Declaratory Judgment Act. As to the final declarations sought by Castro that she was entitled to review the Rodriguez litigation file and that the Public Information Act did not apply to her request to review the file, the court similarly held that any declaration it made would be advisory only, and therefore impermissible. Section 37.006(a) of the Civil Practices and Remedies Code provides that “when declaratory relief is sought, all persons who have or claim any interest that would be affected by the declaration must be made parties.” Here, reasoned the court, the Rodriguez litigation file belonged to the city, not to the city attorney. Therefore, Castro should have made the city a party to the suit. Because she did not, any decision by the trial court on the merits would not have resolved the controversy, and would have been advisory in nature.

The court of appeals determined that the trial court lacked subject matter jurisdiction and dismissed Castro’s lawsuit. The trial court’s awarding of attorney’s fees to McNabb was affirmed.

Building Permits: William L. Lindig and Peggy L. Lindig v. City of Johnson City, et al., No. 03-08-00574-CV (Tex. App.—Austin Oct. 21, 2009). The court of appeals originally issued an opinion in this case on August 11, 2009 (see summary in the September 2009 edition of the TCAA newsletter). The court, upon a motion for rehearing by the Lindigs, withdrew that opinion and substituted a new one on October 21, 2009.

The Lindigs originally received permission from the city to do construction work on their residence and began construction while their building permit application was being processed. When the application was processed, the city informed the Lindigs that the building permit fee would be $1,000. The Lindigs refused to pay and the city issued a stop work order on the construction. The city also filed suit under Texas Local Government Code Section 54.012 against the Lindigs to restrain them from further construction, and under Section 54.017 seeking civil penalties from the Lindigs’ violation of the stop-work order, arguing that the Lindigs had not ceased work in compliance with the city’s ordinance.

The Lindigs responded that the city could not enforce the building permit ordinance against them under the principles of estoppel and waiver and that the city had waived enforcement of the building permit by failing to enforce it against other residents with similar violations. The Lindigs also counterclaimed against the city alleging (among other issues) that: (1) the building fee permit ordinance is invalid and unconstitutional and building permit fees must be refunded to them and everyone else who had paid them; (2) the city’s stop-work order was illegal, void, and unenforceable; and (3) the city owed the Lindigs damages for an unlawful taking of their property. The Lindigs based their allegations on evidence from the building permit official that the city does not have a building permit fee schedule. In the trial court, all of the Lindigs’ claims were dismissed.

At the trial court, the court found that the Lindigs did not have standing to dispute the validity of the building code under the Declaratory Judgment Act. The Act provides that a person whose rights, status, or other legal relations are affected by a statute may have determined any question of construction or validity arising under the statute and may obtain a declaration of rights, status, or other legal relations. TEX. CIV. PRAC. & REM.CODE § 37.004(a). However, an action for declaratory judgment – by itself – cannot extend a court’s jurisdiction. Tex. Natural Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 855 (Tex. 2002).

On appeals, the city argued that the Lindigs did not have standing to argue that all of the residential building permit fees should be paid back to all of the other residents in the city who had ever paid them. Unless standing is conferred by statute, a person seeking to enjoin the actions of a governmental body must allege and show how he has been damaged or injured other than as a member of the general public. Scott v. Bd. of Adjustment, 405 S.W.2d 55, 56 (Tex. 1966); Walker v. City of Georgetown, 86 S.W.3d 249, 253 (Tex. App.—Austin 2002, pet. denied). In this case, the Lindigs do not have standing because they have not argued that the city’s practice of charging fees to other citizens has resulted in any injury to them personally.

As to the fee charged to the Lindigs, the city argued that they did not have standing to dispute the charge since they did not pay it. In many cases, plaintiffs are required to pay the tax or fee under protest before bringing suit to challenge its validity. However, such procedures are mandatory only where expressly required by statute. See Dallas County Cmty. College Dist. v. Bolton, 185 S.W.3d 868, 879 (Tex. 2005) (citing TEX. TAX CODE §§ 31.115; 112.051; 403.202). In this case, the Lindigs do have standing to dispute the fee because the city did not show any statute that would require the Lindigs to pay a building permit fee before they can dispute it.

The city also argued on appeal that the Lindigs did not have standing to dispute the building fee ordinance or fee at issue because they did not exhaust their administrative remedies under the city’s ordinances. Section 211.011 of the Local Government Code permits “a person aggrieved by a decision of the board [of adjustment]” to “present to a district court, county court, or county court at law a verified petition stating that the decision of the board of adjustment is illegal in whole or in part and specifying the grounds of the illegality.” TEX. LOC. GOV'T CODE §211.011(a)(1). This is the procedure that the legislature has provided for appealing a board of adjustment’s action. City of San Antonio v. El Dorado Amusement Co., 195 S.W.3d 238, 249 (Tex. App.—San Antonio 2006, pet. denied). Section 211.011 is the administrative remedy provided for in the Local Government Code and must be exhausted before a court has jurisdiction. Lamar Corp. v. City of Longview, 270 S.W.3d 609, 613 (Tex.App.—Texarkana 2008, no pet.). However, in some cases, a jurisdictional defect created by a failure to exhaust administrative remedies may be cured rather than require dismissal for lack of subject-matter jurisdiction. Marble Falls Indep. Sch. Dist. v. Scott, 275 S.W.3d 558, 565 (Tex. App.—Austin 2008, pet. filed). In this case, the Lindigs were able to cure their lack of appeal to the board of adjustment, the board of adjustment made a finding, and the court held that this finding was final, even though it was forced by a writ of certiorari. Therefore, the Lindigs did have standing to bring their claims.

The Lindigs also claimed that the city’s issuance of a stop-work order was an unconstitutional taking and requested declaratory relief to that effect. The city challenged this claim by arguing that the claim was not ripe because the appeal had not been taken to the board of adjustment. Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 929 (Tex. 1998); Williamson County Reg’l Planning Comm’n v. Hamilton Bank, 473 U.S. 172, 186 (1985). The court pointed out that several Texas courts have held that once a taking issue is brought, it may be considered even if other claims are held to be barred by a failure to exhaust administrative remedies under Texas Local Government Code Section 211.011. See Lamar Corp., 270 S.W.3d at 614-15; Hitchcock v. Board of Trustees, Cypress-Fairbanks Indep. Sch. Dist., 232 S.W.3d 209, 219 (Tex. App – Houston [1st Dist.] 2007, no pet.). The court also held that, even without this issue in play, the mere fact that the Lindigs filed their petition within ten days after the zoning board decision was enough to give the court subject matter jurisdiction, and the Lindigs could bring a takings claim against the city. Davis v. Zoning Bd. Of Adjustment, 865 S.W.2d 941, 942 & n.3 (Tex. 1993).

While the Lindigs asserted that the city was barred from enforcing its building fee ordinance against them by the principles of estoppel and waiver, the city argued that the doctrine of estoppel does not generally apply against a governmental unit exercising its public or governmental functions, except where justice requires its application. See City of White Settlement v. Super Wash, Inc., 198 S.W.3d 770, 773 (Tex. 2006); City of Hutchins v. Prasifka, 450 S.W.2d 829, 835 (Tex. 1970); Rolison v. Puckett, 198 S.W.2d 74, 77 (Tex. 1946). The city argued that the trial court lacked jurisdiction due to these issues. The court held that while the case at hand may not establish a situation where justice requires the application of estoppel, the city did not show that as a proper basis for a jurisdiction challenge. Thus, the city’s argument was rejected, as the court held that the defensive assertion of estoppel brought by the Lindigs was not a “claim” over which the trial court needed subject-matter jurisdiction, and sustained the Lindigs’ issue regarding estoppel and waiver.

The Lindigs also asserted claims against individual city personnel involved with the case in their individual and official capacities as well as the board of adjustment, in their official capacities. The court held that to the extent that the court determined that the trial court had subject-matter jurisdiction over certain of the Lindigs’ claims, it was not proper to dismiss the claims against the city personnel. The city argued that because the claims against the board were identical to the claims against the city, the claims against the board should be dismissed as duplicative. The court held that the board of adjustment cited no case supporting that argument, nor could the court find one. Thus, the court held that Lindigs’ claims against the board were improperly dismissed by the trial court.

The Lindigs’ valid claims were remanded to the trial court.

Employment: City of San Antonio v. Gonzalez, No. 04-08-00829-CV (Tex. App.—San Antonio Nov. 4, 2009). Pedro Gonzalez filed a suit against the city (acting by and through its agent – CPS Energy) alleging gender discrimination after he was terminated. He claimed at the trial level that a similarly situated female employee, Yvonne Lewis, was not terminated for committing the same security violation as Gonzalez, and the jury found that gender was a motivating factor in the decision to terminate. The court of appeals reversed, holding that Gonzalez’s misconduct and Lewis’s misconduct were not of “comparable seriousness,” and therefore there was no evidence that the two employees were similarly situated.

Governmental Immunity: Bret “Doc” Berkman v. City of Keene, No. 10-08-00073-CV (Tex. App.—Waco Nov. 4, 2009). Berkman filed suit against the city alleging that the city was obligated to furnish water and sewer services to his property at no charge pursuant to an agreement reached between the city and the previous property owner. On appeal, the city contended that it was immune from suit and therefore the trial court lacked subject matter jurisdiction. Berkman argued that the city had waived immunity from suit based breach of contract pursuant to Local Government Code Section 271.152, which relates to contracts for “goods and services.” The court of appeals held that the agreement, at most, only related to the provision of indirect or attenuated services to the city, and therefore the city’s immunity for suit was not waived under Section 271.152. The case was dismissed for lack of jurisdiction.

Takings: City of Houston v. Trail Enterprises, Inc., No. 08-0413 (Tex. Oct. 30, 2009). The Supreme Court of Texas addressed whether or not the court of appeals erred by rendering a money judgment against the city on the regulatory takings claim. At the trial level, the jury awarded damages to the mineral interest owners totaling nearly $17 million, but the trial court granted the city’s motion for summary judgment on ripeness grounds before entering final judgment. On appeal, the court of appeals determined the action was ripe, and rendered judgment based on the trial court’s finding of liability. The Court held that because the trial court relied only on the jurisdictional ripeness issue in disposing of the case, it was improper for the court of appeals to render judgment based on the jury verdict. Without hearing oral argument, the Court reversed the court of appeals’ rendition of judgment, and remanded to the trial court for further proceedings.

Takings: City of Houston v. HS Tejas, LTD., No. 01-09-00393-CV (Tex. App.—Houston [1st Dist.] Oct. 22, 2009). Landowner, HS Tejas, brought an inverse condemnation suit against the city alleging that the application of the city’s ordinance regulating development in floodways resulted in a taking of its property. The court of appeals held that HS Tejas failed to allege a concrete injury sufficient to establish a ripe controversy, as the takings claim is based only on the hypothetical possibility of improving or selling the property at issue. HS Tejas did not state a cause of action upon which the trial court had jurisdiction, so the trial court erred in denying the city’s plea to the jurisdiction. The case was remanded to the trial court to give HS Tejas the opportunity to amend its petition.

Property Tax: Jennifer Gillum v. Harris County, et al., No. 01-08-00551-CV (Tex. App.—Houston [1st Dist.] Oct. 22, 2009). The court of appeals held that the involved taxing authorities (including the City of Houston) met their initial burden to show that taxes were due and delinquent, at which point the burden shifted to Gillum to introduce evidence to invalidate the assessments. Because Gillum offered no evidence to support her contentions, the trial court properly held in favor of the taxing units.

Zoning: Canty v. City of Nacogdoches, No. 12-08-00001-CV (Tex. App.—Tyler Oct. 14, 2009). Plaintiffs filed a suit against the city seeking a declaratory judgment that a city ordinance changing a zoning classification was void because the city failed to follow the proper procedures to enact the zoning change. The court of appeals held that the plaintiffs were unable to indicate that the rezoning at issue led to an injury different than what would be suffered by any other member of the general public, or was anything more than hypothetical in nature. Consequently, the plaintiffs lacked standing, and the case was dismissed for lack of jurisdiction.

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.

Opinion No. GA-0740 (Appraisals): Concludes that an appraisal district and its participating taxing units are not authorized to submit an issue to the voters for an election to require a particular appraisal schedule, whether initiated by petition or otherwise. Sections 23.01, 23.23, and 25.18 of the Tax Code do not prohibit conducting appraisals every third year rather than annually.

Opinion No. GA-0741 (Police Employment): Concludes that there is no case law or statutory provision that says that a police officer who voluntarily resigns from a police department and is subsequently reappointed to the department pursuant to Local Government Code Section 143.1251 is subject to the section 143.105 prohibition against certifying a person forty-five years or older for a beginning position in the police department.

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.
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