Steve Dann and Wife Diana Dann v. Athens Municipal Water Authority ( 2007 )

MARY'S OPINION HEADING

                                                NO. 12-07-00087-CV

IN THE COURT OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT

TYLER, TEXAS

STEVE DANN AND WIFE,            §                      APPEAL FROM THE 173RD

DIANA DANN,

APPELLANTS

V.        §                      JUDICIAL DISTRICT COURT OF

ATHENS MUNICIPAL WATER

AUTHORITY,

APPELLEE   §                      HENDERSON COUNTY, TEXAS

MEMORANDUM OPINION

            Steve Dann and Diana Dann appeal the trial court’s dismissal of their suit against the Athens Municipal Water Authority (AMWA) for want of jurisdiction, based on the Danns’ failure to plead a cause of action for which an express statutory waiver exists from the doctrine of sovereign immunity.  In three issues, the Danns contend that their pleadings are sufficient to raise fact issues regarding their claims of inverse condemnation and easement by estoppel.  We affirm.

Background

            The AMWA owns all the land surrounding Lake Athens up to 448 feet mean sea level (“448 MSL”). AMWA also owns approximately thirty-one acres above the 448 MSL contour.  The AMWA Board has determined the thirty-one acres to be excess land and subject to sale under section 49.226(a) of the Texas Water Code. 

            In February 2001, the Danns were contemplating the purchase of 12.979 acres near the lake but not abutting the shoreline at any point and ending 181.5 feet from the 448 MSL contour around Lake Athens.  AMWA owned the property between the lake and the land the Danns wanted.  Mose Trimble, an inspector and agent for AMWA, assured the Danns that if they bought the 12.979 acres, they could have access over the AMWA property to the lake the same as any lakefront property owner. Trimble, they contend, also stated that if they built the boat house and dock they planned, they would have access across AMWA’s land to the boat house and dock so long as they owned the property. Based on Trimble’s assurances, the Danns purchased the 12.979 acres, and applied for a permit for a boat house on Lake Athens (on AMWA land).  AMWA granted the Danns a variance and issued a boat house permit and an annual “ingress and egress permit” providing access to the boat house across AMWA land lying between the Danns’ property and the lake.  By 2003, the Danns had completed the boat house and dock at a cost of over $15,000.00.  AMWA continued to issue annual ingress and egress permits until March 31, 2006 when the permit issued April 1, 2005 expired.  In March 2006, AMWA’s board of directors voted not to renew the Danns’ permit in conjunction with its decision to sell the excess land.

            The Danns filed suit in August 2006.  AMWA answered asserting, inter alia, a plea to jurisdiction.  After a nonevidentiary hearing, the trial court found that the Danns’ petition did not state a claim against a governmental entity upon which relief might be granted, and dismissed the case for want of jurisdiction.

Sovereign Immunity

            The AMWA is a conservation and reclamation district created by the Texas Legislature for the primary purpose of supplying water to the City of Athens, Texas.  It is undisputed that it is a governmental entity entitled to the protection of sovereign immunity.

            Sovereign immunity bars suits against governmental entities unless there is a clear and explicit constitutional or statutory waiver of immunity.  Federal Sign v. Texas S. Univ., 951 S.W.2d 401, 405 (Tex. 1997).  The doctrine of sovereign immunity has two components —immunity from suit and immunity from liability.  Tex. Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999).  Immunity from suit bars a lawsuit against the state unless the legislature has expressly consented to the suit.  Id.  The legislature may consent to suit by statute, but such consent must be by clear and unambiguous language.  Federal Sign, 951 S.W.2d at 405.   “A party suing a governmental entity must establish the state’s consent, which may be alleged either by reference to a statute or to express legislative permission.”  Jones, 8 S.W.3d at 638.  Absent such consent, the trial court does not have subject matter jurisdiction.  Id.  Because sovereign immunity defeats a trial court’s jurisdiction, it is properly asserted in a plea to the jurisdiction.  Harris County v. Sykes, 136 S.W.3d 635, 638 (Tex. 2004).

Standard of Review

            A grant of a plea to jurisdiction is reviewed de novo, applying the same standard as that used by the trial court.  Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 228 (Tex. 2004).  When it is apparent from the pleadings that a governmental unit is immune from suit, a grant of a plea to jurisdiction is proper.  Sykes, 136 S.W.3d at 639.  Although a reviewing court must construe the pleadings liberally in favor of the plaintiff, a plaintiff filing suit against a governmental entity must affirmatively demonstrate the court’s jurisdiction to hear the lawsuit under the Texas Tort Claims Act or some other statute that waives the entity’s immunity from suit.  See Tex. Dep’t of Criminal Justice v. Miller, 51 S.W.3d 583, 587 (Tex. 2001).  If the pleadings do not set forth sufficient facts to affirmatively demonstrate the trial court’s jurisdiction, but do not affirmatively demonstrate incurable defects in jurisdiction, the issue is one of pleading sufficiency and the plaintiffs should be afforded the opportunity to amend.  County of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002).

Inverse Condemnation

            The Danns complain that AMWA’s refusal to renew their annual license to cross AMWA land is a government action that restricts or limits their right to their property and is the producing cause of a reduction of at leasT twenty-five percent in the market value of their property.  They contend that, in the instant case, their property rights were adversely affected in (1) the land they purchased in reliance on having access to the dock, deck, boat house, and lake facilities, (2) the easement across AMWA’s property above the 448 elevation, (3) the improvements to the trail leading from their property across AMWA’s property and to the 448 elevation, and (4) the dock, deck, and boat house facilities that they constructed as a permanent structure on the lake in reliance on the representations of AMWA that they would have continued use of said facilities as long as they paid the yearly permit fee. The Danns complain that AMWA’s refusal to renew their annual permit and ingress egress license is government action detrimentally affecting their property and constitutes a taking of their property for public use without just compensation.

Applicable Law

            The Private Real Property Rights Preservation Act defines a government taking, as follows:

   (A) a governmental action that affects private real property, in whole or in part or temporarily or permanently, in a manner that requires the governmental entity to compensate the private real property owner as provided by the Fifth and Fourteenth Amendments to the United States Constitution or Section 17 or 19, Article I, Texas Constitution; or

                   (B) a governmental action that:

(i) affects an owner’s private real property that is the subject of the governmental action, in whole or in part or temporarily or permanently, in a manner that restricts or limits the owner’s right to the property that would otherwise exist in the absence of the governmental action; and

(ii) is the producing cause of a reduction of at least 25 percent in the market value of the affected private real property, determined by comparing the market value of the property as if the governmental action is not in effect and the market value of the property determined as if the governmental action is in effect.

Tex. Gov’t Code Ann. § 2007.002(5) (Vernon 2000).  The Act applies only to the following governmental actions:

(1)           the adoption or issuance of an ordinance, rule, regulatory requirement, resolution, policy, guideline, or similar measure;

                (2)           an action that imposes a physical invasion or requires a dedication or exaction of private real property;

                (3)           an action by a municipality that has effect in the extraterritorial jurisdiction of the municipality, excluding annexation, and that enacts or enforces an ordinance, rule, regulation, or plan that does not impose identical requirements or restrictions in the entire extraterritorial jurisdiction of the municipality; and

                (4)           enforcement of a governmental action listed in Subdivisions (1) through (3), whether the enforcement of the governmental action is accomplished through the use of permitting, citations, orders, judicial or quasi-judicial proceedings, or other similar means.

Tex. Gov’t Code Ann. § 2007.003(a) (Vernon 2000). 

            The Act specifically excludes from its scope “the discontinuance or modification of a program or regulation that provides a unilateral expectation that does not rise to the level of a recognized interest in private real property[.]”  Tex. Gov’t Code Ann. § 2007.003(b)(5) (Vernon 2000).  A license in real property conveys no interest in or title to the real property concerned and dispels the presumption of a grant on which a prescriptive right might be founded.  Davis v. Clark, 271 S.W. 190, 192 (Tex. Civ. App.–Fort Worth 1925, writ dism’d w.o.j.).

Discussion

            The Danns maintain that in reliance on Trimble’s oral representations that they would continue to have access to the lake across AMWA’s land as long as they paid the annual license and permit fee, they purchased their property, improved the pathway across AMWA’s land, and built a deck and boat house.  Therefore, they insist they have acquired a prescriptive right of passage across AMWA’s land. Therefore, they contend, AMWA’s refusal to renew the annual license amounts to a taking.  We disagree. 

            The annual license conferred no property right, but only the right of ingress and egress for the period specified in the license.  Davis, 271 S.W. at 192.  The Danns had no more than a unilateral expectation that the AMWA would continue to issue permits as it had until its decision to sell the property.  That expectation does not rise to the level of a recognized interest in real property; therefore, refusal to renew the license is not a taking.  See Tex. Gov’t Code Ann. § 2007.003(b)(5). There is no waiver of sovereign immunity shown under the Danns’ inverse condemnation theory that would give the trial court subject matter jurisdiction.  The Danns’ first issue is overruled.

Easement By Estoppel

            In their second issue, the Danns complain that the trial court erred in dismissing their claims for easement by estoppel and for declaratory judgment.  They maintain that they were told by Trimble that they could obtain access to the lake across AMWA property by obtaining a license.  They obtained an annual ingress egress license and a boat house permit, which apparently affirmed the validity of Trimble’s representations.  Relying on that representation, the Danns spent $15,000.00 building a boat house and improving the way between their lot and the lake.  AMWA was not only aware of these improvements, the Danns insist, but encouraged their building by issuing a permit for them.  Therefore, they claim an implied easement or an easement by estoppel from their lot to the lake.

Applicable Law

            The general rule is that a unit of government exercising its governmental powers is not subject to estoppel.  City of Hutchins v. Prasifka, 450 S.W.2d 829, 835 (Tex. 1970) (citing City of San Angelo v. Deutsch, 126 Tex. 532, 91 S.W.2d 308[, 310] (1936)). The supreme court in Deutsch quoted the rule as stated in Ruling Case Law:

“No estoppel can grow out of dealings with public officers of limited authority, and the doctrine of equitable estoppel cannot ordinarily be invoked to defeat a municipality in the prosecution of its public affairs because of an error or mistake of, or because of a wrong committed by, one of its officers or agents which has been relied upon by a third party to his detriment.  So a municipality is not estopped by the unauthorized acts of its officer or agent, or by his wrongful act.  Nor can an estoppel result from official fraud and corruption.”  10 Ruling Case Law, sec. 35, pp. 707-708.  The text gives only two exceptions to the rule, and both are cases in which the city received benefits from the irregular or wrongful act and afterwards sought to repudiate it.  [citations omitted]

Deutsch, 126 Tex. at 536, 91 S.W.2d at 310.  In Prasifka, the court said that “a municipality may be estopped in those cases where justice requires its application, and there is no interference with the exercise of its governmental functions. But such doctrine is applied with caution and only in exceptional cases where the circumstances clearly demand its application to prevent manifest injustice.”  Prasifka, 450 S.W.2d at 836.  In Dillard v. Austin Independent School District, 806 S.W.2d 589 (Tex. App.–Austin 1991, writ denied), overruled on other grounds by Federal Sign, 951 S.W.2d 401), and superseded by statute on other grounds as stated in General Services Commission v. Little-Tex Insulation Co., 39 S.W.3d 591, 598 (Tex. 2001), the court observed that the supreme court in Deutsch clearly linked the use of estoppel against a governmental unit to the proprietary actions of a municipality.  Dillard, 806 S.W.2d at 595.  Because a school district has only governmental functions, the court held that estoppel could not apply to the Austin Independent School District.  Id.  “Water districts and like entities created under section 59 of article XVI of the Texas Constitution can only perform governmental functions.”  Loyd v. ECO Resources, Inc., 956 S.W.2d 110, 121-22 (Tex. App.–Houston [14th Dist.] 1997, no pet.) (citing Bennett v. Brown County Water Imp. Dist. No. 1, 153 Tex. 599, 272 S.W.2d 498, 500 (1951); Sears v. Colorado River Mun. Water Dist., 487 S.W.2d 810, 812 (Tex. Civ. App.–Eastland 1972, writ ref’d n.r.e.) (a water district is a political subdivision of the State, standing on the same footing as counties, rendering cases finding municipalities liable for proprietary functions inapplicable)); see also 35 David B. Brooks, Texas Practice: County and Special District Law § 2.6 (2d ed. 2002).

            The Danns argue that AMWA’s issuance of an annual license and permit for four consecutive years, coupled with Trimble’s statement that such a permit could be obtained, estops AMWA from denying their right to a permanent easement across AMWA land. However, those who hold licenses or permits that expire annually assume the risk that the license or permit may not be renewed.  AMWA received no benefit beyond the annual fee charged.  A license in real property conveys no interest in or title to the real property concerned and dispels the presumption of a grant on which a prescriptive right might be founded.  Davis, 271 S.W. at 192.  The creation of a permanent easement for the benefit of the Danns would interfere with AMWA’s statutory authority to sell surplus land.  See  Tex. Water Code Ann. § 49.226 (Vernon Supp. 2006).  AMWA’s refusal to renew the license and permit does not interfere with or deprive the Danns of any use of their property that they possessed on the day they bought it.  Even if estoppel were applicable to governmental entities other than municipalities, we do not believe an estoppel could arise from these facts.

            Since all functions of a water district must be considered governmental functions, the exceptions holding municipalities subject to estoppel are not applicable in the instant case.  The cases relied on by the Danns either involve the invocation of estoppel against municipalities or private entities or individuals and are inapposite.  We conclude that the Danns’ attempt to invoke estoppel against AMWA is barred by sovereign immunity.

            The Danns also seek declaratory relief confirming the creation of “an easement by promissory estoppel, quasi-easement, estoppel in pais and/or easement in pais” across AMWA’s property.  A request for declaratory relief does not change the basic character of a suit or confer jurisdiction on the court.  State v. Morales, 869 S.W.2d 941, 947 (Tex. 1994).  For instance, a party cannot avoid the bar of sovereign immunity by characterizing a suit to enforce the State’s alleged contractual obligations under a shell dredging permit as a suit for declaratory judgment. W.D. Haden Co. v. Dodgen, 158 Tex. 74, 77-78, 308 S.W.2d 838, 840 (Tex. 1958); see also Tex. Nat. Res. Conservation Comm’n v. IT-Davy, 745 S.W.3d 849, 856 (Tex. 2002).  The character of the Danns’ claims in their petition for declaratory relief do not differ from those we have already addressed.  Recasting them as a request for declaratory relief does not avoid the State’s sovereign immunity.  In Davy, the supreme court rejected the plaintiffs’ claim that the State had waived its immunity from suit on a contract by accepting the contract’s benefits.  Davy, 74 S.W.3d at 857.  The supreme court determined that “[c]reating a waiver–by–conduct exception would force the State to expend its resources to litigate the waiver–by–conduct issue before enjoying sovereign immunity’s protections — and this would defeat many of the doctrine’s underlying policies.”  Id.  Consequently, we conclude that the Danns’ request for declaratory relief is also barred by sovereign immunity. 

            The Danns’ second issue is overruled.

Existence of Fact Issues

            In their third issue, the Danns contend the trial court erred in dismissing their claim for lack of jurisdiction “because there are fact issues concerning whether the defendant’s systems and procedures are reasonable and whether defendant failed to follow its own regulations with regard to the plaintiffs.”

            The Danns do not point to any specific rule or rules as unreasonable, but make a general allegation that the rules adopted induced individuals to construct decks, docks, and boat houses at great expense on government property, but after construction allow the government to grant or deny a permit approving the construction and access to the permanent structures completed.  However, the Danns acknowledge that had AMWA followed its published rules and regulations, this dispute would not have arisen.  Instead, they maintain that Mose Trimble, with AMWA’s express permission, was allowed to advise them that they could have access to the lake across AMWA property.  They also complain that AMWA made no takings impacts assessment before deciding to sell the surplus property and deny renewal of their license and permit.  The Danns’ allegations are simply a restatement of their estoppel theory, which we have addressed and rejected as inapplicable.     Parties “suing a governmental entity must establish the state’s consent, which may be alleged either by reference to a statute or to express legislative permission.”  Jones, 8 S.W.3d at 637.  The Danns fail to point to any express constitutional or statutory waiver of sovereign immunity applicable to the facts alleged.  The Danns’ third issue is overruled.

Disposition

            Having overruled the Danns’ three issues, the order granting AMWA’s plea to the jurisdiction is affirmed.

                                                                                                    BILL BASS   

                                                                                                            Justice

Opinion delivered August 31, 2007.

Panel consisted of Worthen, C.J., Griffith, J., and Bass, Retired Justice, Twelfth Court of Appeals, Tyler, sitting by assignment.

(PUBLISH)