Alan Schrock v. City of Baytown ( 2015 )

Opinion issued December 10, 2015
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-13-00618-CV
———————————
ALAN SCHROCK, Appellant
V.
CITY OF BAYTOWN, Appellee
On Appeal from County Civil Court at Law No. 1
Harris County, Texas
Trial Court Case No. 1007923
MEMORANDUM OPINION ON REHEARING
Appellee, the City of Baytown (“the City”), has filed a motion for rehearing
of our April 23, 2015 opinion and judgment. We deny the motion for rehearing,
withdraw our opinion and judgment of April 23, 2015, and issue this opinion and a
new judgment in their stead.1
Appellant, Alan Schrock, challenges the trial court’s rendition of summary
judgment against him in his lawsuit against the City for a declaratory judgment2
and for taking his property. 3 In five issues, Schrock contends that the trial court
erred in granting the City summary judgment dismissing his lawsuit.
We reverse and remand.
Background
In his second amended petition, Schrock alleges that in 1993, he purchased a
house at 606 Vista Avenue in the City to use as a rental property (the “property”).
From 1993 to 2008, each time he leased the property to a new tenant, the City
required, before it connected utility services (water, sewer, and trash disposal) in
the tenant’s name, that the tenant pay it a deposit and provide it a copy of the lease.
Each time he leased the property, Schrock provided the City with a copy of the
lease agreement, either by furnishing the new tenant with an extra copy to give to
the City or by providing a copy of the lease agreement directly to the City.
1
In regard to the City’s alternative request for en banc reconsideration, the request
is rendered moot by the withdrawal and reissuing of our opinion. See Kennamer v.
Estate of Noblitt, 332 S.W.3d 559, 561–62 (Tex. App.—Houston [1st Dist.] 2009,
pet. denied); Brookshire Bros. v. Smith, 176 S.W.3d 30, 41 n.4 (Tex. App.—
Houston [1st Dist.] 2004, pet. denied).
2
See TEX. CIV. PRAC. & REM. CODE ANN. §§ 37.001–.011 (Vernon 2015).
3
See TEX. CONST. art. I, § 17.
2
In 2009, the City notified Schrock that he owed it $1,999.67 for utility
services provided to ten of his prior tenants, dating back to 1993. It gave him
copies of billing invoices, listing the names and account numbers of the prior
tenants. And the City demanded that Schrock pay the outstanding sum within
fourteen days to avoid having a lien placed on the property. After a hearing, the
City reduced the amount due to $1,157.39 for unpaid utility bills that had accrued
over the preceding four years, rather than the preceding sixteen years. And it gave
Schrock fourteen days to pay. However, Schrock did not receive notice of the
City’s decision, and, after he did not pay the sum assessed, the City filed a lien
against the property. According to Schrock, the City failed to perfect its lien or
provide him with notice of the lien. And the City continued to provide utility
services to the property until January 20, 2010, when it refused to provide services
to Schrock’s new tenant.
Schrock further alleges that he first learned in 2009 that the City had in 1991
enacted an ordinance that requires landlords who wish to prevent the City from
filing liens against their rental properties and discontinuing utility services to those
properties, to submit a “declaration” that their properties are “rental propert[ies],
which [they] d[o] not wish to be security” [sic] for a tenant’s utility bills.4
According to Schrock, he complied with the ordinance each time he had leased the
4
See Baytown, Tex., Code of Ordinances, ch. 98, art. III, § 98-65(i) (1967)
(amended 1991).
3
property to a new tenant by providing a copy of the lease to the City. Thus, the
City at all times had notice that he was using the property as rental property. Also,
he complied with the Texas Local Government Code, which provides that a
“municipality’s lien shall not apply to bills for service connected in a tenant’s
name after notice by the property owner to the municipality that the property is
rental property.” 5 And he notes that the statute prohibits requiring, as a condition
of connecting service, a third-party guarantee of a customer’s utility bill or
requiring, as a condition of connecting or continuing service, a customer to pay for
service previously furnished to another customer at the same address. 6
In 2011, the City amended its ordinance, removing the requirement that
landlords file rental property declarations. Rather, if the City “knows” that a
property is occupied by a tenant, it may not file a lien against the property;
however, it may report the tenant’s delinquency to a credit bureau. In 2012, the
City further amended its ordinance, allowing utility services to continue to be
provided to a property in accordance with the Local Government Code.
Regardless, the City, Schrock alleges, has since January 2010 refused to
provide water and wastewater services to the property. Without water and
wastewater services to the property, Schrock has not been able to use the property
as a rental property, and he has been denied all economically viable use of the
5
TEX. LOC. GOV’T CODE ANN. § 552.0025(e) (Vernon 2015).
6
See id. § 552.0025(a), (b).
4
property. As a result, the property has fallen into disrepair and has become
uninhabitable. Schrock further alleges that the City’s actions constitute an
unreasonable interference with his right to use and enjoy the property. And they
further constitute an “unlawful exercise of police power which primarily and
adversely affected a small number of landlords of single family residences.”7
Schrock notes that from 1991 to 2012, the City had filed eighteen liens against
rental properties, but only eight remained, including the lien on the property. 8 He
argues that the City’s enforcement of the ordinance was not “in response to a great
public necessity,” but constituted an “attempt to coerce a small number of
landlords into paying their tenants’ water bills” out of convenience because it was
difficult for the City to collect from tenants who had moved.
Schrock seeks “all actual damages resulting from the [City’s] inverse
condemnation of his [p]roperty.” He further seeks a declaration that certain
sections of the City’s ordinance9 are “invalid, illegal, and/or unconstitutional” and
7
See U.S. CONST. amend. V; TEX. CONST. art I, § 17.
8
Although the City asserts that it has released its lien against the property and has
attached a copy of a lien release to its brief, the City concedes that it did not file
the lien release in the trial court, did not present it to the trial court, and has not
made the lien release part of the record in this appeal. We must determine a case
on the record as filed, and may not consider documents attached as exhibits to
briefs. See Till v. Thomas, 10 S.W.3d 730, 733 (Tex. App.—Houston [1st Dist.]
1999, no pet.).
9
See Baytown, Tex., Code of Ordinances, ch. 98, art. III, § 98-65(i), (g).
5
conflict with statute. 10 And he seeks “clarification as to the validity of [the City’s]
utility lien,” which was put in place under the prior ordinance and remains in place
after the City’s amendment of the ordinance. Notwithstanding the amendment,
Schrock “still seeks clarification as to his rights under the current version of [the
ordinance] and whether [the City] can lawfully prevent [his] tenants from obtaining
utility service at the property.”
In its third amended answer, the City generally denied Schrock’s claims and
asserted the affirmative defenses of governmental immunity and limitations. The
City subsequently filed a summary-judgment motion, seeking dismissal of
Schrock’s claims for want of jurisdiction on the ground that no regulatory taking
occurred and, therefore, the City has not waived its immunity. It asserted that
Schrock “used [the] [p]roperty as rental property” and has, since 1993, rented the
property to eleven tenants, whom it lists by name and whom it alleged had vacated
the property owing outstanding utility payments to the City. It further asserted that
although Schrock, pursuant to its ordinance, could have filed a rental property
“declaration” “wherein [he could have] declare[d] the [p]roperty as rental property
and not [have been] subject to a lien for service to his tenants,” he failed to do so.
The City argued that no compensable regulatory taking had occurred because its
regulation did not deprive Schrock of all economically viable use of the property or
10
See TEX. LOC. GOV’T CODE ANN. § 552.0025.
6
unreasonably interfere with his right to use the property. Rather, according to the
City, Schrock held his property subject to the City’s valid exercise of police power,
and its practice of discontinuing utility services for the failure of tenants to pay
related charges is a valid exercise of its police power. The City noted that Schrock
tendered the outstanding balance to it on October 20, 2010, but left the utility
office without paying; it provided water service to the property at Schrock’s
request from February to April 2012; and the 2009 and 2012 appraised values of
the property remained steady at $24,999. Further, in its supplemental summary-
judgment motion, the City argued that Schrock’s declaratory-judgment claims are
“barred” because he “seeks to establish a right to relief for [his] monetary damages
demand.” And it further noted that the complained-of ordinance has been
amended.
The City attached to its summary-judgment motions Schrock’s discovery
responses; the affidavit of Gina Rivon, its Utility Billing Manager, who attested to
each of the tenants’ names, dates of utility services, and delinquent sums due; the
City’s letter of delinquency to Schrock; his tenants’ utility account invoices; the
City’s letter of decision in Schrock’s administrative appeal; and its lien on the
property.
In his response to the City’s summary-judgment motions, Schrock reiterated
that the City has had notice at all times that he was using the property as rental
7
property. And he asserted that the Local Government Code prohibits a
municipality from imposing a lien for utility service “connected in a tenant’s name
after notice by the property owner to the municipality that the property is rental
property.” 11 He further asserted that genuine issues of material fact exist as to
whether the City’s requirement that landlords submit rental property declarations,
in addition to the copies of the leases it has always required, is unreasonable and
whether the City’s enforcement of its ordinance is arbitrary. Schrock attached to
his response his affidavit; the affidavit of Gina Rivon, the City’s Utility Billing
Manager; and copies of the utility billing invoices, the ordinance at issue, and the
City’s lien against the property.
In his affidavit, Schrock testified that in January 2010, the City informed
him that it would not provide water service to the property until the lien was paid.
He then went to the City’s utility billing office and tendered a check for $1,251.59
as instructed. The City’s billing analyst, Z. Bawany, however, refused payment.
And, although the City’s ordinance requires that whenever a person “pays all
principal, interest and the filing fee of a lien validly filed pursuant to this section,
the supervisor of the utility billing division shall execute a release of that lien and
surrender it to the paying party,” 12 the City refused to release the lien unless
11
See id.
12
Baytown, Tex., Code of Ordinances, at § 98-65(h).
8
Schrock also paid the delinquent bill of yet another tenant. When Schrock again
attempted to satisfy the lien, Bawany again refused payment, stating that the lien
would not be released until Schrock satisfied all delinquent utility payments
pertaining to all of his previous tenants at all of his properties. At the time,
Schrock owned seventeen rental properties in the City.
Schrock further testified that without utilities and occupants to maintain the
property, it has fallen into disrepair and become uninhabitable; it will cost “at least
$8,000 to make the [p]roperty habitable again”; his tenant in January 2010
rescinded his lease, which provided for monthly payments of $600, and the City’s
actions have prevented him from renting the property to other tenants.
Subsequently, the City removed this case to a federal district court, which
dismissed Schrock’s federal claims for lack of ripeness and limitations, and it
remanded his state law claims back to state court.13 The City then filed in state
court a second supplemental motion for summary judgment, requesting dismissal
of Schrock’s remaining state constitutional and declaratory-judgment claims on the
ground that Schrock had failed to state a viable taking or declaratory-judgment
claim and, alternatively, that his claims are barred by limitations. The City
attached to its motion a copy of the federal district court’s opinion, copies of the
13
See Schrock v. City of Baytown, No. H-12-2455 (S.D. Tex. Mar. 11, 2013).
9
amended ordinance, and excerpts from the depositions of Schrock, Bawany, and
Rivon.
In his response, Schrock argued that a regulatory taking had occurred when
the City denied all water and wastewater services to the property because this
denied him all economically viable use of the property and unreasonably interfered
with his right to use and enjoy the property. He asserted that a ten-year limitations
period applies. And he further argued that he is entitled to bring his declaratory-
judgment action because there remains a question as to whether the City “has the
right to refuse to connect utility services based on a lien for utility services that
[he] didn’t incur.”
After a hearing, the trial court, without stating the grounds upon which it
relied, granted the City summary judgment dismissing Schrock’s claims. And it
subsequently denied Schrock’s motion for new trial.
Standard of Review
To prevail on a summary-judgment motion, a movant has the burden of
establishing that it is entitled to judgment as a matter of law and there is no
genuine issue of material fact. TEX. R. CIV. P. 166a(c); Cathey v. Booth, 900
S.W.2d 339, 341 (Tex. 1995). When a defendant moves for summary judgment, it
must either (1) disprove at least one essential element of the plaintiff’s cause of
action or (2) plead and conclusively establish each essential element of its
10
affirmative defense, thereby defeating the plaintiff’s cause of action. Cathey, 900
S.W.2d at 341; Yazdchi v. Bank One, Tex., N.A., 177 S.W.3d 399, 404 (Tex.
App.—Houston [1st Dist.] 2005, pet. denied). When deciding whether there is a
disputed, material fact issue precluding summary judgment, evidence favorable to
the non-movant will be taken as true. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d
546, 548–49 (Tex. 1985). Every reasonable inference must be indulged in favor of
the non-movant and any doubts must be resolved in its favor. Id. at 549. When a
summary judgment does not specify the grounds on which the trial court relied, the
reviewing court will affirm the judgment if any theory advanced in the motion is
meritorious. Harwell v. State Farm Mut. Auto. Ins. Co., 896 S.W.2d 170, 173
(Tex. 1995); Summers v. Fort Crockett Hotel, Ltd., 902 S.W.2d 20, 25 (Tex.
App.—Houston [1st Dist.] 1995, writ denied). Declaratory judgments rendered by
summary judgment are reviewed under the same standards that govern summary
judgments generally. Bowers v. Taylor, 263 S.W.3d 260, 264 (Tex. App.—
Houston [1st Dist.] 2007, no pet.).
Regulatory-Takings Claim
In his first and second issues, Schrock argues that the trial court erred in
granting the City summary judgment and dismissing his regulatory-takings claim
on the ground of governmental immunity because he presented the court with a
valid claim and, thus, the State has waived the City’s governmental immunity. In
11
his third issue, Schrock argues that the trial court erred in granting the City
summary judgment on his regulatory-takings claim on the ground of limitations
because he commenced his lawsuit well within the ten-year limitations period
applicable to his claim.
Under the doctrine of governmental immunity, a unit of government may not
be sued without the express consent of the legislature. See City of Hous. v. Hous.
Firefighters’ Relief & Ret. Fund, 196 S.W.3d 271, 277 (Tex. App.—Houston [1st
Dist.] 2006, no pet.). In the absence of a waiver of governmental immunity, a
court has no subject matter jurisdiction to entertain a suit against a governmental
unit. See Tex. Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999). The
doctrine of governmental immunity does not, however, shield a governmental
entity from valid claims for compensation under the Takings Clause of the Texas
Constitution. Gen. Servs. Comm’n v. Little–Tex Insulation Co., 39 S.W.3d 591,
598 (Tex. 2001); City of Hous. v. Guthrie, 332 S.W.3d 578, 591–92 (Tex. App.—
Houston [1st Dist.] 2009, pet. denied) (citing TEX. CONST. art. I, § 17). A plaintiff
who prevails on his takings claim is entitled to compensation and the claim is not
barred by immunity “even though the judgment would require the government to
pay money for property previously taken.” City of El Paso v. Heinrich, 284
S.W.3d 366, 376 (Tex. 2009).
12
“The ultimate determination of whether an ordinance constitutes a
compensable taking is a question of law, but we depend on the district court to
resolve disputed facts regarding the extent of the governmental intrusion on the
property.” City of Lorena v. BMTP Holdings, L.P., 409 S.W.3d 634, 645 (Tex.
2013). “Thus, we must determine whether any disputed issues of fact exist
concerning the extent of the City’s intrusion on [Schrock’s] property—in which
case we must remand to the trial court to resolve the dispute and determine the
extent of the government’s intrusion.” Id.
Courts have “generally eschewed any ‘set formula’ for determining how far
is too far,” when performing a regulatory takings analysis, “preferring to ‘engag[e]
in . . . essentially ad hoc, factual inquiries.’” Lucas v. S.C. Coastal Council, 505
U.S. 1003, 1015, 112 S. Ct. 2886, 2893 (1992) (quoting Penn Cent. Transp. Co. v.
New York City, 438 U.S. 104, 124, 98 S. Ct. 2646, 2659 (1978)); Hearts Bluff
Game Ranch, Inc. v. State, 381 S.W.3d 468, 477 (Tex. 2012) (stating “whether a
particular property restriction constitutes a taking depends largely upon the
particular circumstances in that case”). Generally, we consider (1) the economic
impact of the regulation on the claimant, (2) the character of the government
action, and (3) the extent to which the regulation has interfered with the economic
expectations of the property owner. Penn Cent. Transp. Co., 438 U.S. 124, 98 S.
Ct. at 2659.
13
In regard to the second factor, “where courts have found direct governmental
actions in which the governmental defendant had regulatory authority over the
matter causing the plaintiff’s harm, they have generally found a taking.” Hearts
Bluff Game Ranch, 381 S.W.3d at 480. Here, it is undisputed that the City had
direct regulatory authority over the matter causing the harm that Schrock alleges.
In regard to the first and third factors, a taking arises when a governmental
regulation (1) denies a landowner all economically viable uses of his property or
(2) unreasonably interferes with the landowner’s right to use and enjoy his
property. See id. at 489–91; Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 935–
96 (Tex. 1998). Determining whether all economically viable use of a property has
been denied requires an analysis of whether value remains in the property after the
governmental action. Mayhew, 964 S.W.2d at 936. Determining whether the
government has unreasonably interfered with a landowner’s right to use and enjoy
property requires consideration of the economic impact of the regulation and the
extent to which the regulation interferes with the investment-backed expectations
of the landowner. Id.
The City asserts, and its summary-judgment evidence shows, that the Harris
County Appraisal District valued the property, both in 2009 and 2012, at $29,000.
See Hearts Bluff Game Ranch, Inc., 381 S.W.3d at 490. Schrock testified that the
property, as a result of having no water or wastewater services, sat without
14
occupants for so long that it has become uninhabitable and infested with rats and
mold. And it will “cost at least $8,000 to make the [p]roperty habitable again.”
Further, Schrock purchased the property with the expectation of using it as a rental
property, and he has operated it as such since 1993. “The existing and permitted
uses of the property constitute the ‘primary expectation’ of the landowner that is
affected by regulation.” Mayhew, 964 S.W.2d at 935. And a property owner has a
constitutionally protected property interest in lost rents. See Hidden Oaks Ltd. v.
City of Austin, 138 F.3d 1036, 1046 (5th Cir. 1998); see also Sheffield Dev. Co.,
Inc. v. City of Glenn Heights, 140 S.W.3d 660, 677 (Tex. 2004) (“The City argues
that evidence of lost profits should be ignored, but we agree with the court of
appeals that lost profits are clearly one relevant factor to consider in assessing the
value of property and the severity of the economic impact . . . on a landowner.”);
Vill. of Tiki Island v. Ronquille, 463 S.W.3d 562, 579 (Tex. App.—Houston [1st
Dist.] 2015, no pet.).
The City asserts that its “practice of discontinuing utility services due to the
failure to pay related charges is well settled in law and is within [its] valid exercise
of its police power.” Its summary-judgment evidence shows that Schrock owns the
property, $1,157.39 is owed for unpaid utility services that the City provided to
tenants at the property, Schrock did not pay the amount owed, and the City placed
a lien on the property and discontinued further utility services. The City asserts
15
that Schrock did not, pursuant to its ordinance, file a declaration that he did not
want the property to be used as security for the tenants’ utility services.
A “municipality may take the necessary action to operate and maintain [a
water] system and to require water customers to pay charges imposed for the water
furnished.” TEX. LOC. GOV’T CODE ANN. § 552.017(c) (Vernon 2015) (governing
water systems in home-rule municipalities). Courts have recognized that control of
water and waste disposal services are essential health matters, fall within the police
powers of a city, and include the right to discontinue utility services to a person
who has become delinquent in the payment of service fees. City of Breckenridge v.
Cozart, 478 S.W.2d 162, 165 (Tex. App.—Eastland 1972, writ ref’d n.r.e.).
However, the City, as a home-rule city, is prohibited from enacting an ordinance
that “contain[s] any provision inconsistent with the Constitution of the State, or of
the general laws enacted by the Legislature of this State.” TEX. CONST. art. XI,
§ 5; see City of Carrollton v. Tex. Comm’n on Envtl. Quality, 170 S.W.3d 204, 208
(Tex. App.—Austin 2005, no pet.) (noting although home-rule cities “have a vast
amount of power, their authority is not without limitations”).
Texas Local Government Code section 552.0025 provides, in pertinent part:
(a) A municipality may not require a customer to pay for utility
service previously furnished to another customer at the same
service connection as a condition of connecting or continuing
service.
16
(b) A municipality may not require a customer’s utility bill to be
guaranteed by a third party as a condition of connecting or
continuing service.
....
(e) The municipality’s lien shall not apply to bills for service
connected in a tenant’s name after notice by the property owner
to the municipality that the property is rental property.
TEX. LOC. GOV’T CODE ANN. § 552.0025(a), (b), and (e) (Vernon 2015).
Schrock testified that he has been renting the property to tenants since 1991;
the City has always required that a new tenant submit a copy of his lease
agreement to the City and pay a deposit before utility services could be connected;
and, each time that he has rented to a tenant, he has provided the City with a copy
of the lease agreement, either by furnishing the tenant with an extra copy to give to
the City or by providing a copy of the lease agreement directly to the City. Thus,
Schrock presented evidence that the City has had notice at all times that he was
using the property as rental property. And the City’s own summary-judgment
evidence establishes that it knew that the outstanding utility payments that it
sought to collect from Schrock, by placing a lien on the property and conditioning
future water and wastewater services to the property on his payment, pertained to
other utility customers and not to Schrock himself.
After taking as true all evidence favorable to Schrock, as the non-movant,
and indulging every reasonable inference in his favor, we conclude that the City
has not conclusively negated Schrock’s regulatory-takings claim. See Cathey, 900
17
S.W.2d at 341; Yazdchi, 177 S.W.3d at 404; Nixon, 690 S.W.2d at 548–49.
Accordingly, we hold that the trial court erred in granting the City summary
judgment and dismissing Schrock’s regulatory-takings claim on the ground of
governmental immunity.
We sustain Schrock’s first and second issues.
In regard to limitations, Schrock asserts that his claim accrued on January
20, 2010, when the City refused water service to his tenant, and he filed his lawsuit
on January 19, 2012, well within the ten-year limitations period. The City asserts
that Schrock has alleged a property-damage claim, which is subject to a two-year
limitations period; Schrock’s claim accrued in June 2009, when it filed a lien on
the property; and he did not file his lawsuit until January 19, 2012, which was after
the limitations period had expired.
There is not a statutory provision that provides a certain limitations period
for inverse-condemnation actions. Grunwald v. City of Castle Hills, 100 S.W.3d
350, 353–54 (Tex. App.—San Antonio 2002, no pet.); see also Hallco Tex. Inc. v.
McMullen Cnty., 221 S.W.3d 50, 74 (Tex. 2007) (Hecht, J., dissenting) (“It is not
entirely clear what statute of limitations applies to such claims . . . .”). Courts have
held that a regulatory-taking action is barred after the expiration of a ten-year
period of limitations, but that an action for damage to property is governed by a
two-year period of limitations. Maguire Oil Co. v. City of Hous., 69 S.W.3d 350,
18
358 n.4 (Tex. App.—Texarkana 2002, pet. denied) (“There is no specific statute of
limitations for an inverse condemnation claim. However, courts have held the ten-
year statute of limitations to acquire land by adverse possession applies.”); Trail
Enters., Inc. v. City of Hous., 957 S.W.2d 625, 631 (Tex. App.—Houston [14th
Dist.] 1997, pet. denied); see TEX. CIV. PRAC. & REM. CODE ANN. §§ 16.003(a)
(Vernon Supp. 2014) (governing injury to property), 16.026(a) (Vernon 2002)
(governing adverse possession).
Having concluded that the City has not conclusively negated Schrock’s
regulatory-takings claim, which is based on his assertion that he has been deprived
of all economically viable use of the property, we further conclude that his claim is
subject to the ten-year limitations period. See Hudson v. Ark. La. Gas Co., 626
S.W.2d 561, 563 (Tex. App.—Texarkana 1981, writ ref’d n.r.e.) (reversing
summary judgment because trial court did not apply ten-year limitations period to
inverse condemnation claim). Whether Schrock’s claim accrued at the time that
the City placed the lien on the property or when it refused utility service to his
tenant on January 20, 2010, Schrock’s lawsuit, which he filed on January 19, 2012,
was commenced well within the ten-year limitations period. Accordingly, we hold
that the trial court erred in granting the City summary judgment and dismissing
Schrock’s regulatory-takings claim on the ground of limitations.
We sustain Schrock’s third issue.
19
Declaratory-Judgment Claim
In his fourth issue, Schrock argues that the trial court erred in granting the
City summary judgment and dismissing his declaratory-judgment action on the
ground of governmental immunity because he presented a valid claim and, thus,
the City’s governmental immunity is waived. In his fifth issue, Schrock asserts
that his declaratory-judgment action is not barred by limitations.
City of Baytown Code of Ordinances, section 98-65, provides in pertinent
part as follows:
(a) Water. Liens for unpaid water charges shall be filed according
to the following:
(1) After the city has terminated a customer’s
water . . . , the supervisor shall file a lien on the
property served by the terminated water service
and in the amount the customer whose service was
terminated owed to the city for water service at the
time of the termination of services.
....
(g) Reconnection of services. No water, garbage or sewer services
shall be provided to property encumbered by a lien filed
pursuant to this section. However, the supervisor of the utility
billing division shall be authorized to reconnect water, garbage
and wastewater services if the customer agrees in writing to pay
the accrued water and wastewater charges . . . .
....
(i) Rental property.
(1) The owner of any property . . . rented to another
[in which the] tenant carries city water, sewer or
garbage collection services in the tenant’s name,
may prevent the city from using that property as
security for the . . . charges for service to that
20
property and from filing any lien on such property
. . . by filing with the city utility billing division a
declaration in writing specifically naming the
service address of that property and declaring
such to be rental property which the owner does
not wish to be security for the water, sewer and
garbage collection services to that property.
(2) When such declaration has been filed with the city
prior to the time the account holder begins to
receive services, the city shall collect a deposit in
the amount of $125.00 . . . .
Baytown, Tex., Code of Ordinances, ch. 98, art. III, § 98-65 (1967) (amended
2012) (emphasis added).
In his declaratory-judgment action, Schrock seeks a declaration that sections
98-65(g) and (i) of the City’s ordinance are “invalid, illegal, and/or
unconstitutional” and conflict with Local Government Code section 55.0025. See
id.; TEX. LOC. GOV’T CODE ANN. § 552.0025. And he seeks “clarification as to the
validity of [the City’s] utility lien,” which was put in place under the prior
ordinance and remains in place after the City’s amendment of the ordinance.
Notwithstanding the amendment, Schrock “still seeks clarification as to his rights
under the current version of [the ordinance] and whether [the City] can lawfully
prevent [his] tenants from obtaining utility service at the property.”
Under the Uniform Declaratory Judgments Act (the “UDJA”),
A person interested under a deed . . . whose rights, status, or other
legal relations are affected by a statute, municipal ordinance, contract,
or franchise may have determined any question of construction or
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validity arising under the instrument, statute, ordinance, contract, or
franchise and obtain a declaration of rights, status, or other legal
relations thereunder.
TEX. CIV. PRAC. & REM. CODE ANN. § 37.004 (Vernon 2015) (emphasis added).
Although the UDJA “expressly allows persons to challenge ordinances,” it does
not constitute “a general waiver of sovereign immunity.” Tex. Dep’t of Transp. v.
Sefzik, 355 S.W.3d 618, 621–22 (Tex. 2011); Tex. Nat. Res. Conservation Comm’n
v. IT–Davy, 74 S.W.3d 849, 859–60 (Tex. 2002). “For claims challenging the
validity of ordinances . . . , however, the [UDJA] requires that the relevant
governmental entities be made parties, and thereby waives immunity.” Heinrich,
284 S.W.3d at 373 (citing TEX. CIV. PRAC. & REM. CODE ANN. § 37.006(b) (“In
any proceeding that involves the validity of a municipal ordinance . . . , the
municipality must be made a party . . . .”)); see also Wichita Falls State Hosp. v.
Taylor, 106 S.W.3d 692, 697–98 (Tex. 2003) (noting where legislature requires
state be joined in lawsuit for which immunity would otherwise attach, “[the]
Legislature has intentionally waived the State’s immunity”).
The City asserts that Schrock’s “requested declaratory relief is not
justiciable because it merely restates his inverse condemnation claim.” See BHP
Petroleum Co. v. Millard, 800 S.W.2d 838, 841 (Tex. 1990) (“The Declaratory
Judgments Act is ‘not available to settle disputes already pending before a court.’”
(citations omitted)). Schrock, in his takings claim, seeks damages, i.e., property
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damage and lost rents, caused by the City’s deprivation of water and wastewater
services to the property. In contrast, Schrock, in his declaratory action, challenges
the validity of the sections of the City’s ordinance, under which the City still holds
a lien against his property.
The City further argues that Schrock’s declaratory action is moot because it
has released its lien against the property. It requests that we take judicial notice of
the copy of the lien release that it has attached to its brief. It is well established
that documents attached to an appellate brief which are not part of the record in the
trial court may not be considered on appeal. See WorldPeace v. Comm’n for
Lawyer Discipline, 183 S.W.3d 451, 465 n.23 (Tex. App.—Houston [14th Dist.]
2005, pet. denied) (“[W]e cannot consider documents attached as appendices to
briefs and must consider a case based solely upon the record filed.”). Here, it is
important to note that the City, as the movant for summary judgment, bore the
burden to present evidence in the trial court to conclusively establish its right to
judgment. See Cathey, 900 S.W.2d at 341. Moreover, even were we to take
judicial notice of the City’s lien release and conclude that the City’s lien against
Schrock’s property has been discharged, notwithstanding that the release attached
to the City’s brief contains no indicia of having been filed in the county’s real
property records, such a release of the City’s existing lien would not resolve the
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issue of whether the City had a valid right to take a lien against the property for
utility bills that arose under the prior ordinance and remain outstanding.
In its motion for rehearing, the City asserts that “the UDJA waives sovereign
immunity in particular cases, such as in a suit challenging the validity of a statute
or municipal ordinance” and “Shrock does not challenge the validity of an
ordinance.” However, Schrock, in his second amended petition, does expressly
seek a declaration that sections 98-65(g) and (i) of the City’s ordinance are
“invalid.”
We hold that Schrock’s declaratory-judgment action is not barred by
governmental immunity.
Further, because claims for declaratory relief necessarily derive from claims
for substantive relief, the statute of limitations for the underlying action at law
generally is applied to an accompanying action for declaratory relief. See Nw.
Austin Mun. Util. Dist. No. 1 v. City of Austin, 274 S.W.3d 820, 839 (Tex. App.—
Austin 2008, pet denied). Having concluded that the applicable limitations period
for Schock’s regulatory-takings claim is ten years, we further conclude that the
period applicable to Schrock’s declaratory-judgment action is also ten years. See
id. Thus, he filed his declaratory-judgment action within the applicable limitations
period.
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Accordingly, we hold that the trial court erred in granting the City summary
judgment and dismissing Schrock’s declaratory-judgment action.
We sustain Schrock’s fourth and fifth issues.
Conclusion
We reverse the judgment of the trial court and remand for further
proceedings consistent with this opinion.
Terry Jennings
Justice
Panel consists of Chief Justice Radack and Justices Jennings and Keyes.
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