the Town of Double Oak v. Michael McDaniel ( 2009 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-09-046-CV
THE TOWN OF DOUBLE OAK APPELLANT
V.
MICHAEL MCDANIEL APPELLEE
------------
FROM THE 367TH DISTRICT COURT OF DENTON COUNTY
------------
MEMORANDUM OPINION 1
------------
I. Introduction
In this interlocutory appeal,2 Appellant, the Town of Double Oak,
complains that the trial court erred by denying its plea to the jurisdiction
because Appellee Michael McDaniel seeks damages in his suit for declaratory
judgment. We reverse and remand.
1
… See Tex. R. App. P. 47.4.
2
… See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(8) (Vernon 2008).
II. Background
McDaniel sued Double Oak for declarations that Double Oak overcharged
him for building permit fees and a sewer connection fee and that he is therefore
entitled to a refund of the overcharges.3 In its plea to the jurisdiction, Double
Oak argued that it had governmental immunity from these claims. We address
McDaniel’s specific allegations in greater detail below.
III. Plea to the Jurisdiction
In its sole point, Double Oak argues that the trial court erred by denying
its plea to the jurisdiction.
A. Standard of Review
A party asserting governmental immunity to suit challenges the trial
court’s jurisdiction. Harris County Hosp. Dist. v. Tomball Reg’l Hosp., 283
S.W.3d 838, 842 (Tex. 2009). A plea asserting such immunity involves a
question of law that we review de novo. Id.
We focus first on the plaintiff’s pleadings to determine whether the facts
pleaded affirmatively demonstrate that jurisdiction exists. See City of El Paso
v. Heinrich, 284 S.W.3d 366, 378 (Tex. 2009); Wise Reg’l Health Sys. v.
3
… In McDaniel’s most recent petition, he adds claims for violations of the
Texas constitution. These claims were not addressed in Double Oak’s plea to
the jurisdiction.
2
Brittain, 268 S.W.3d 799, 804 (Tex. App.—Fort Worth 2008, no pet.). The
pleader has the initial burden of alleging facts that affirmatively demonstrate the
trial court’s jurisdiction to hear the case. Wise Reg’l Health Sys., 268 S.W.3d
at 804 (citing Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226
(Tex. 2004)). We construe the pleadings liberally in favor of the plaintiff,
looking to the pleader’s intent. Id. If the pleadings are insufficient to establish
jurisdiction but do not affirmatively demonstrate an incurable defect in
jurisdiction, the plaintiff should be afforded the opportunity to amend. Id.
B. Governmental Immunity
Governmental immunity protects political subdivisions of the state from
lawsuits for damages. Harris County Hosp. Dist., 283 S.W.3d at 842. It
encompasses two distinct concepts: (1) immunity from suit (barring a lawsuit
unless the legislature expressly gives its consent to suit) and (2) immunity from
liability (even if the legislature has expressly given its consent to suit). City of
Carrollton v. Singer, 232 S.W.3d 790, 795 (Tex. App.—Fort Worth 2007, pet.
denied). Immunity from liability is an affirmative defense; immunity from suit
deprives a court of subject matter jurisdiction. Id.; see also Harris County Hosp.
Dist., 283 S.W.3d at 842 (stating that immunity from suit is jurisdictional and
bars suit; immunity from liability is not jurisdictional and protects from
judgments). Governmental immunity from suit generally protects the State’s
3
subdivisions from lawsuits for damages absent legislative consent to suit
through a statute or express legislative permission. See Tex. Dep’t of Transp.
v. Jones, 8 S.W.3d 636, 638 (Tex. 1999); Rylander v. Caldwell, 23 S.W.3d
132, 135 (Tex. App.—Austin 2000, no pet.) (citing Fed. Sign v. Tex. S. Univ.,
951 S.W.2d 401, 405 (Tex. 1997)).
C. McDaniel’s Pleadings
In his original and subsequent petitions, McDaniel claims that he is
entitled to equitable declarations that Double Oak (1) “overcharged [him] for his
pro rata share of the sewer lines and that [he] is entitled to a refund of the
overcharged amount,” and (2) “overcharged [him] for his building permit fees
by more than $36,930.00 and [Double Oak] is required to refund the amounts
improperly charged.”
In support of his sewer connection fee overcharge claim, McDaniel alleges
the following: that he purchased land from Crossroads Bible Church (“CBC”)
to develop a self-storage facility; that because CBC had already installed
municipal sewer lines, at a cost of $77,550, McDaniel agreed to pay a pro-rata
share of the installation costs; and that Double Oak should have invoiced him
for his connection to the sewer lines pursuant to an ordinance and a pro-rata
agreement with CBC, with the ordinance providing that Double Oak would
collect the pro-rata share to be refunded to CBC ($38,775), less ten percent for
4
Double Oak’s administrative costs.4 McDaniel complains that Double Oak
instead added ten percent to the $38,775, for a total invoiced cost of
$42,649.49. He states that when he attempted to explain the miscalculation
to Double Oak’s mayor, the mayor refused to adjust the calculation and
“effectively told [McDaniel] just pay it because it was the right thing to do.”
McDaniel paid it “so he could complete his development on time.”
In support of his building permit fees overcharge claim, McDaniel alleges
that Double Oak invoiced him $48,855.50 for his Storage Facility Building
Permit, which itemized the building square footage permit fee at $38,143. He
claims that Double Oak “ignored the designations, use and facilities and charged
[him] as if all four buildings were commercial buildings ($38,775.00) rather than
$.75 per square foot for the commercial portion of Proposed Building #1
($1,125.00) plus $180.00 for each additional accessory building ($720.00), for
the correct total building permit fee of $1,845.00,” effectively charging him
4
… McDaniel quotes section 1.04 of Double Oak Ordinance number 19 in
his petition:
Ten percent (10%) of the pro rata collected shall be retained by the
Town to cover [the] administrative costs. . . . The amount of pro
rata charged to the owner seeking a connection shall not exceed
the original construction cost of the sanitary sewer main less ten
percent (10%) for administrative costs withheld by the Town.
5
$36,930 more than it was entitled to charge. 5 McDaniel complains that both
invoices damaged him financially, rendering him “unable to successfully operate
his storage facility.”
D. Analysis
McDaniel characterizes his pleadings as seeking declaratory relief; Double
Oak characterizes them as “artifices which, in truth, seek monetary damages.”
The Declaratory Judgments Act (“DJA”) states, “A person . . . whose
rights, status, or other legal relations are affected by a . . . municipal ordinance
. . . may have determined any question of construction or validity arising under
the . . . ordinance . . . and obtain a declaration of rights, status, or other legal
5
… McDaniel recites the following in his petition in support of these
allegations:
Double Oak City Ordinance 4.000(a) sets the commercial
building permit/inspection fee at $.75 per square foot plus all
required permits and 4.000(b) sets the accessory building
permit/inspection fee at $180.00.
The [special use permit] approved by the Town Council
designated only a small portion (approximately 1500 square feet)
of Proposed Building #1 as an Onsite Leasing Office and Upstairs
Apartment. The remainder of Proposed Building #1, and Proposed
Buildings #2, #3, and #4 (roughly 47,912 square feet) are all
accessory buildings under Section 4.000(b) as they contain only
electric and are only being used for storage.
6
relations thereunder.” Tex. Civ. Prac. & Rem. Code Ann. § 37.004(a) (Vernon
2008). The DJA contains an express waiver of immunity, but only as to the
declaration of rights, not as to damages. See id. § 37.006(b) (Vernon 2008)
(“In any proceeding that involves the validity of a municipal ordinance or
franchise, the municipality must be made a party and is entitled to be heard[.]”);
Tex. Natural Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 856 (Tex.
2002) (stating that private parties cannot circumvent immunity from suit by
characterizing a suit for money damages as a declaratory judgment claim).
Legislative consent to sue is not required for a claim for declaratory relief
seeking a refund of illegally collected fees if the plaintiff alleges that the
payments were made as a result of fraud, mutual mistake of fact, or duress.
See Tara Partners, Ltd. v. City of S. Houston, 282 S.W.3d 564, 576–77 (Tex.
App.—Houston [14th Dist.] 2009, pet. filed) (citing Dallas County Cmty. Coll.
Dist. v. Bolton, 185 S.W.3d 868, 876–79 (Tex. 2005), and Camacho v.
Samaniego, 954 S.W.2d 811, 822 (Tex. App.—El Paso 1997, pet. denied)); see
also Saturn Capital Corp. v. City of Houston, 246 S.W.3d 242, 245 (Tex.
App.—Houston [14th Dist.] 2007, pet. denied) (defining “fee” as a fixed charge
or a charge for a service).
In his pleadings, McDaniel “alleges that he is entitled to an equitable
declaration of his legal rights and responsibilities under the subject Ordinances,”
7
and in particular, that he is entitled to equitable declarations that he was
overcharged under both ordinances and that he is entitled to a refund of the
overcharged amounts. On the record before us, McDaniel’s request for
declarations that he is entitled to a refund of money appears to be fatal to
jurisdiction because retrospective monetary claims are generally barred by
immunity.6 See Heinrich, 284 S.W.3d at 374–75; see also City of Houston v.
Williams, 216 S.W.3d 827, 829 (Tex. 2007) (“[I]n every suit against a
governmental entity for money damages, a court must first determine the
parties’ contract or statutory rights; if the sole purpose of such a declaration is
to obtain a money judgment, immunity is not waived.”); IT-Davy, 74 S.W.3d
at 855 (stating that a litigant’s request for declaratory relief does not change
a suit’s underlying nature); Humana Ins. Co. v. Tex. Health Ins. Risk Pool, 257
S.W.3d 402, 408, 411 (Tex. App.—Corpus Christi 2008, no pet. h.) (holding
that insurance company that filed declaratory judgment suit claiming entitlement
to a refund was seeking money damages and not declaratory relief, so plea to
the jurisdiction should have been granted to the extent company’s claims for
declaratory relief sought damages); City of Dallas v. Blanton, 200 S.W.3d 266,
6
… And if McDaniel had alleged a claim for prospective relief, to the
extent that the ultra vires exception discussed in Heinrich might apply to defeat
governmental immunity here, McDaniel has failed to join a specific official in his
suit against Double Oak. See Heinrich, 284 S.W.3d at 373.
8
280 (Tex. App.—Dallas 2006, no pet.) (holding that appellees’ suit for
declaration that ordinance required city to pay expense of transferring their
plumbing and reconnecting it to new sewer main sought to impose liability for
damages prohibited by governmental immunity); cf. Hawkins v. El Paso First
Health Plans, Inc., 214 S.W.3d 709, 717–18, 725 (Tex. App.—Austin 2007,
pet. denied) (holding that the trial court correctly denied state agency’s plea to
the jurisdiction when appellees sued for declaration that agency acted outside
of its authority, for construction of the applicable statutes, and for declaration
of appellees’ rights under the statutes; appellees joined agency’s executive
director in the suit and expressly asserted that they were not seeking money
damages from the agency); Comptroller of Pub. Accounts of Tex. v. Waites,
No. 01-06-00536-CV, 2006 WL 3751565, at *3 (Tex. App.—Houston [1st
Dist.] Dec. 21, 2006, no pet.) (mem. op.) (holding that suit was not for money
damages and did not implicate sovereign immunity when plaintiff expressly
limited her suit solely to a determination of whether the officer who violated her
civil rights was entitled to indemnification by the State under civil practice and
remedies code chapter 104).
Furthermore, McDaniel does not allege express legislative permission to
sue, and his allegations that he paid the sewer connection fee overcharge “so
he could complete his development on time” and that he has been damaged
9
financially by the “over-inclusive invoicing” such that he cannot “successfully
operate” his storage facility do not appear to rise to the level of duress.7 See
Tex. Dep’t of Transp., 8 S.W.3d at 638 (requiring legislative consent by statute
or express legislative permission); Saturn Capital Corp., 246 S.W.3d at 246
(describing duress necessary to authorize illegal fee recovery as “when the
unauthorized . . . fee is required, necessary, or shall be paid to avoid the
government’s ability to charge penalties or halt a person from earning a living
or operating a business”); see also Dallas County Cmty. Coll. Dist., 185 S.W.3d
at 877–79 (stating that the Texas Supreme Court has “consistently recognized
business compulsion arising from payment of government fees and taxes
coerced by financial penalties, loss of livelihood, or substantial damage to a
business,” and that reimbursement of illegal fees and taxes is allowed, in
essence, when the public entity compels compliance with a void law and
subjects the person to punishment if he refuses or fails to comply); Crow v.
City of Corpus Christi, 146 Tex. 558, 562–63, 209 S.W.2d 922, 924–25
7
… In his pleadings, McDaniel attributes his inability to successfully
operate his facility both to the “over-inclusive invoicing” with regard to the fees
and to Double Oak’s refusal to admit that his business’s monument sign had
been approved—the sign is not at issue before us. He does not allege that the
invoicing prevents him from operating at all, and we are unable to determine
from the pleadings how much of his lack of success is attributable to the
invoicing and how much is attributable to the sign issue.
10
(1948) (discussing duress with regard to cases in which businesses were faced
with either paying illegal fees or forfeiting their right to do business). McDaniel
also does not allege that either of the overcharges resulted from fraud or mutual
mistake of fact. See, e.g., Nivens v. City of League City, 245 S.W.3d 470,
474–75 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) (holding that the
trial court did not err by granting the city’s plea to the jurisdiction when
plaintiffs’ pleadings failed to seek declaratory or injunctive relief regarding
refund of excessive tax payments and failed to allege that they made any
payments as a result of fraud, mutual mistake of fact, or duress); see also Tara
Partners, Ltd., 282 S.W.3d at 577 (holding that, even construed liberally,
plaintiffs’ petition failed to allege facts indicating that they made payments as
a result of fraud, mistake of fact, or duress when they failed to plead the
potential for penalties or late payment charges and cessation of service).
Therefore, we sustain Double Oak’s sole point.
11
IV. Conclusion
Sustaining Double Oak’s sole point, we reverse the trial court’s denial of
Double Oak’s plea to the jurisdiction and remand McDaniel’s declaratory
judgment claims to the trial court to afford McDaniel the opportunity to amend
his pleadings. See Tex. A & M Univ. Sys. v. Koseoglu, 233 S.W.3d 835,
839–40 (Tex. 2007); Wise Reg’l Health Sys., 268 S.W.3d at 804; see also
Heinrich, 284 S.W.3d 372–74, 376.
BOB MCCOY
JUSTICE
PANEL: GARDNER, WALKER, and MCCOY, JJ.
DELIVERED: August 20, 2009
12