City of Midlothian, Texas v. ECOM Real Estate Management, Inc. ( 2010 )

IN THE
TENTH COURT OF APPEALS
No. 10-09-00039-CV
CITY OF MIDLOTHIAN, TEXAS,
Appellant
v.
ECOM REAL ESTATE MANAGEMENT, INC.,
Appellee
From the 40th District Court
Ellis County, Texas
Trial Court No. 68846
MEMORANDUM OPINION
The City of Midlothian, in the course of expanding its wastewater operations,
approached ECOM Real Estate Management, Inc. about obtaining an easement on
ECOM’s property. The parties entered an easement agreement for construction of a
sewer system. The City agreed to construct five stubout connections, which allow
ECOM to access the sewer system, and agreed that ECOM could provide its own water.
After the City installed the sewer system and stubouts, the city council passed an
ordinance requiring parties to purchase water from the City in order to use the sewer
systems. The City denied ECOM’s application for an exemption. ECOM sued the City,
alleging breach of contract, fraud, and fraudulent inducement and seeking a declaratory
judgment, attorney’s fees, and exemplary damages.1 The trial court denied the City’s
partial plea to the jurisdiction. In five issues, the City challenges the denial of its plea.
We reverse and render.
STANDARD OF REVIEW
A plea to the jurisdiction challenges the trial court’s “power to determine the
subject matter of the suit.” Vela v. Waco Indep. Sch. Dist., 69 S.W.3d 695, 698 (Tex.
App.—Waco 2002, pet. withdrawn). We review a plea “based on sovereign immunity
de novo because the question of whether a court has subject matter jurisdiction is a
matter of law.” Hoff v. Nueces County, 153 S.W.3d 45, 48 (Tex. 2004); see Vela, 69 S.W.3d
at 698. Where “the pleading requirement has been met and evidence has been
submitted to support the plea that implicates the merits of the case, we take as true all
evidence favorable to the nonmovant.” Tex. Dep’t of Parks & Wildlife v. Miranda, 133
S.W.3d 217, 228 (Tex. 2004) (citing Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911
(Tex. 1997)). “We indulge every reasonable inference and resolve any doubts in the
nonmovant’s favor.” Id.
BREACH OF CONTRACT
In issue one, the City argues that the trial court lacks subject matter jurisdiction
over ECOM’s breach of contract claim.
1 ECOM also alleged a takings claim under article I, sections 17 and 19 of the Texas Constitution.
See TEX. CONST. art. I, §§ 17, 19. These claims were not part of the City’s partial plea to the jurisdiction
and are not before us.
City of Midlothian v. ECOM Real Estate Mgmt., Inc. Page 2
ECOM does not contend that the Legislature has waived immunity from suit for
the breach of contract action alleged in this case. See TEX. LOCAL GOV. CODE ANN. §§
271.151-.152 (Vernon 2005); see also City of San Antonio v. Reed S. Lehman Grain, Ltd., No.
04-04-00930-CV, 2007 Tex. App. LEXIS 7515, at *6-7 n.2 (Tex. App.—San Antonio Mar.
14, 2007, pet. denied) (mem. op.). Rather, ECOM argues that it may pursue its breach of
contract claim under Texas A&M University-Kingsville v. Lawson, 87 S.W.3d 518 (Tex.
2002), (plurality op.) and City of Carrollton v. Singer, 232 S.W.3d 790 (Tex. App.—Fort
Worth 2007, pet. denied).
In Lawson, the trial court granted the University’s plea to the jurisdiction as to all
but Lawson’s whistleblower and constitutional claims, which the parties settled. See
Lawson, 87 S.W.3d at 518-19. Lawson later sued the University for breach of the
settlement agreement. Id. at 519. The trial court denied the University’s plea to the
jurisdiction. Id. Noting that the Legislature has waived immunity for whistleblower
claims, the Texas Supreme Court held:
[W]hen a governmental entity is exposed to suit because of a waiver of
immunity, it cannot nullify that waiver by settling the claim with an
agreement on which it cannot be sued. The government cannot recover
waived immunity by settling without defeating the purpose of the waiver
in the first place. Such a rule would limit settlement agreements with the
government to those fully performed before dismissal of the lawsuit
because any executory provision could not thereafter be enforced.
Id. at 521.2
2 We note that Lawson is a plurality opinion. A plurality opinion has little precedential value, if
any. See Univ. of Tex. Med. Branch v. York, 871 S.W.2d 175, 176 (Tex. 1994).
City of Midlothian v. ECOM Real Estate Mgmt., Inc. Page 3
In Singer, the City notified the Singers that it needed to acquire a portion of their
property to extend a road. See Singer, 232 S.W.3d at 792-93. The Singers agreed to
convey a right of way to the City in exchange for the City’s agreement to perform
certain promises. Id. The Singers later sued the City for breach of the agreement. Id. at
794. The trial court denied the City’s plea to the jurisdiction. Id. On appeal, the Singers
argued that the “City is not immune from suit in this instance because the agreement
between the parties was, in essence, a settlement of an eminent domain claim, for which
the City has no immunity by virtue of the Texas Constitution.” Id. at 795.
The Fort Worth Court agreed with the Singers. According to the Court, “An
agreement to convey property to a governmental authority for a public purpose has the
same effect as a formal condemnation proceeding.” Id. at 798.
[E]ven though the City had not yet instituted condemnation proceedings
against the Singers in court, it intentionally acquired the Singers’ land for
the public purpose of extending a road, for which a municipality is
statutorily authorized to institute condemnation proceedings…and it had
performed a condition precedent to instituting eminent domain
proceedings in court--negotiating with the Singers for adequate
compensation.
Id. at 799. “[I]f the Singers had not reached a settlement agreement with the City, the
City would have had to institute eminent domain proceedings against them to acquire
the land.” Id. The City “exposed itself to liability and suit by its threat of eminent
domain proceedings.” Id. at 800 (emphasis added).
[T]he City could not create immunity from suit for the Singers’ claim for
adequate compensation by contracting to purchase their property at an
agreed upon valuation in fulfillment of the condition precedent to filing
an eminent domain proceeding in court as set forth in the property code.
City of Midlothian v. ECOM Real Estate Mgmt., Inc. Page 4
Id. (internal citations omitted). The Fort Worth Court held that the City was not
immune from suit because the agreement was a “settlement of an eminent domain
proceeding in which the Singers would have a claim against the City for adequate
compensation for the City’s acquisition of their property, and for which the City would
not be immune.” Id.
Here, the City admits that it cannot prevail under Singer. However, relying on
Chief Justice Cayce’s dissent, the City argues that Singer was wrongly decided.
In his dissent, Chief Justice Cayce noted that the majority’s holding conflicted
with the rule that a governmental entity “does not, merely by entering into a contract,
waive immunity from suit.” Id. at 801 (Cayce, C.J., dissenting). He emphasized that,
unlike Lawson, the “City was not exposed to suit because of a waiver of immunity when
it entered into its agreement with the Singers.” Id. At the time of the agreement, the
Singers had “no cognizable claim under Texas law that could be brought against the
City based on their negotiations with the City, and they had not filed or threatened to
file a suit alleging a claim against the City for which the City’s immunity is waived.” Id.
He voiced several concerns with the majority’s conclusion that the “City exposed
itself to suit by ‘its threat of eminent domain proceedings,’ and that the parties’
agreement settled an eminent domain claim in which ‘the Singers would have a claim
against the City for adequate compensation.’” Id. at 802. First, the “alleged ‘threat’ of
eminent domain proceedings did not expose the City to a suit for adequate
compensation because the Singers could not have sued the City based on such a threat.”
Id. The Singers would not have an “actionable claim against the City for adequate
City of Midlothian v. ECOM Real Estate Mgmt., Inc. Page 5
compensation” unless the City “actually commenced eminent domain proceedings to
take the property--which the City did not do.” Id. Second, the agreement “evidences an
intent that the Singers convey their property to the City in consideration for the City’s
promise[s],” not an intent to “settle an alleged eminent domain or adequate
compensation claim.” Id. Third, the Singers had “no adequate compensation claim to
settle when they entered into the agreement because they had already reached an
agreement with the City on the amount of compensation:”
Before initiating an eminent domain proceeding, a municipality must first
attempt to purchase the property by agreement. When the municipality
purchases the property by agreement, there is no condemnation or
“taking” of the property by the power of eminent domain. In such a case,
the person from whom the property was purchased has no justiciable
claim for adequate compensation under the condemnation statutes or the
takings clause.
Id.
Finally, Chief Justice Cayce warned that “characterizing the agreement as settling
an eminent domain claim” ignores the “distinction between a municipality’s power to
purchase property by contract and to take property by eminent domain.” Id. at 803.
The evidence conclusively shows that the City was acting within a color of
right under contract when it negotiated the agreement with the Singers to
purchase their property and not under its eminent domain powers. The
Singers were not forced to negotiate with the City. They could have
refused to negotiate, insisted that the City take the property, if at all, by
eminent domain, and asserted a claim for adequate compensation.
Having agreed to convey their property to the City voluntarily, however,
the Singers should not be allowed to now assert that the City has taken or
attempted to take their property against their will by eminent domain.
Id.
City of Midlothian v. ECOM Real Estate Mgmt., Inc. Page 6
To support the holding in Singer, ECOM cites San Antonio v. Grandjean, 91 Tex.
430, 41 S.W. 477 (1897), State v. Brewer, 141 Tex. 1, 169 S.W.2d 468 (1943), Howard v.
County of Nolan, 319 S.W.2d 947 (Tex. Civ. App.—Eastland 1959, no writ), and
Weingarten Realty Investors v. Albertson’s, Inc., 66 F. Supp. 2d 825 (S.D. Tex 1999). ECOM
argues these cases clarify that a “conveyance in lieu of condemnation is the equivalent
of a condemnation.”
In Grandjean, the city council declared that the Grandjeans’ property should be
condemned and the City condemned the property, naming only Ulysses Grandjean in
the petition. See Grandjean, 41 S.W. at 477, 480. Marie Grandjean accepted one half of
the proceeds, but later sued to recover the property. Id. at 477-78. The Texas Supreme
Court held that Marie could not recover the property. Id. at 480. The Court noted that
eminent domain is “essentially a right to take, and does not involve the necessity of any
grant or conveyance on part of the owner, or of any judicial decree.” Id. at 478.
[S]ince the State has the inherent and paramount right to the property,
when needed for public purposes, the determination by the proper
authority that the necessity for the taking exists, the taking, and the
adjustment with the owner of the question of compensation, however
affected, completes the appropriation and devotes the property to the
public use. The conditional paramount title of the government becomes
absolute when the compensation is assessed or agreed upon and paid, or
when its payment is waived. The doctrine of eminent domain implies that
it is to be exercised against the will of the owner. It is his want of consent
that renders its exercise necessary, and hence it is not consistent with the
theory of the doctrine, that any conveyance from the owner or decree of
court is essential to pass the title. The dissent of the owner to the taking is
unavailing. His right under our Constitution, except as against the State
itself, is to demand that before the property be taken, his compensation
shall be paid. When he accepts as compensation a sum of money,
whatever the amount and in whatever manner arrived at, his property, to
the extent of the taking, is expropriated and appropriated to the use of the
City of Midlothian v. ECOM Real Estate Mgmt., Inc. Page 7
public. The question of compensation out of the way, he must yield to the
inevitable. The State’s right is to take or accept without a conveyance, and
hence, when the compensation is adjusted, no conveyance is necessary.
Id. at 479; Dorsett v. State, 422 S.W.2d 828, 831 (Tex. Civ. App.—Waco 1967, writ ref’d
n.r.e.).
In Brewer, the Brewers conveyed land to the State for construction of a highway
and later sued for damage to their remaining property. See Brewer, 169 S.W.2d at 469,
471. The Texas Supreme Court explained that:
The conveyance of land for a public purpose will ordinarily vest in the
grantee the same rights as though the land had been acquired by
condemnation. The conveyance will be held to be a release of all damages
which would be presumed to be included in the award of damages if the
property had been condemned.
Id. at 471 (quoting 2 JOHN LEWIS, A TREATISE ON THE LAW OF EMINENT DOMAIN IN THE
UNITED STATES § 474 (3d ed. 1909)). The Brewers could not recover for damage to their
property. See id. at 472-73.
In Howard, the Howards conveyed land to the State and Nolan County for
“highway purposes” and later sued to set aside the deed. Howard, 319 S.W.2d at 948.
The power to acquire property for public use is inherent in the State
without regard to consent of the owner, when adequate consideration is
paid. However, when an owner consents to the taking and use of his
property, such consent is a defense to an action to recover its possession.
It is also held that whenever the owner accepts a sum of money as
compensation for land for such a use, his property, to the extent of the
taking, is expropriated to the use of the public.
Id. at 950 (internal citations omitted). The Howards could not set aside the deed, but
were “limited to an action for damages for additional servitude on their land.” Id.
City of Midlothian v. ECOM Real Estate Mgmt., Inc. Page 8
In Weingarten, Albertson’s leased a space from Weingarten. See Weingarten, 66 F.
Supp. 2d at 834. The lease contained a provision regarding eminent domain. Id. at 835.
TxDOT later sent correspondence entitled “Proposed Condemnation Proceedings.” Id.
Weingarten conveyed the property to TxDOT. Id. The deed provided that the
consideration “represents a settlement and compromise by all parties as to the value of
the property…in order to avoid formal eminent domain proceedings...” Id. at 843.
Albertson’s terminated the lease and later sued for breach of contract to recover a
portion of the proceeds. See id. at 836-37. The Court noted that the “institution of
formal condemnation proceedings was not required because Weingarten agreed to
convey the property to TxDOT.” Id. at 843.
An agreement to convey property to a governmental authority has the
same effect as a formal condemnation proceeding. “The conveyance of
land for a public purpose will ordinarily vest in the grantee the same
rights as though the land had been acquired by condemnation
proceedings.” Indeed, “whenever the owner accepts a sum of money as
compensation for land for such a use, his property, to the extent of the
taking, is expropriated to the use of the public.”
Id. at 843 (internal citations omitted). The Court rejected Weingarten’s argument that no
taking occurred. See id. at 843-45.
These cases recognize that both a voluntary conveyance of property by a
landowner to a governmental entity and a taking by eminent domain have the same
result. See Grandjean, 41 S.W. at 479; see also Brewer, 169 S.W.2d at 471; Howard, 319
S.W.2d at 950; Weingarten, 66 F. Supp. 2d at 843. As Chief Justice Cayce notes, there
exists a distinction between a governmental entity’s right to purchase property versus
its right to take property. See Osborne v. Keith, 142 Tex. 262, 177 S.W.2d 198, 201 (1944);
City of Midlothian v. ECOM Real Estate Mgmt., Inc. Page 9
see also Weingarten, 66 F. Supp. 2d at 842 (“Generally, in Texas, ‘the government
compensates the owner before appropriating property, either by paying a mutually
agreed price or by paying the value as determined in a statutory condemnation
proceeding.’”); TEX. PROP. CODE ANN. § 21.012 (Vernon Supp. 2008); TEX. LOCAL GOV.
CODE ANN. § 273.001 (Vernon 2005). Under either method, the entity has the same
rights to the property. See Grandjean, 41 S.W. at 479; see also Brewer, 169 S.W.2d at 471;
Weingarten, 66 F. Supp. 2d at 843. Despite having the same result, the difference
between the two methods of acquisition is that eminent domain is “exercised against
the will of the owner,” while a purchase involves the owner’s voluntary consent.
Grandjean, 41 S.W. at 479. If the owner consents to a purchase, the process of eminent
domain is unnecessary. See id. We agree with Chief Justice Cayce’s conclusion that
Singer ignores this important distinction.
Additionally, Singer ignores the fact that Lawson involved a pending lawsuit.
The San Antonio Court recently declined to apply Lawson absent pending litigation:
Unlike Lawson, Gracia did not have a statutorily recognized claim pending
in the trial court when he entered into an agreement with the District. The
settlement agreement in this case was executed just as Gracia was
instituting the administrative process that the State created for challenging
the termination of teaching contracts. In short, Gracia settled a claim that,
at that point in time, had no adjudicative value in our court system.
City of Midlothian v. ECOM Real Estate Mgmt., Inc. Page 10
Donna Indep. Sch. Dist. v. Gracia, 286 S.W.3d 392, 395 (Tex. App.—Corpus Christi 2008,
no pet.).3 In Porretto v. Patterson, 251 S.W.3d 701 (Tex. App.—Houston [1st Dist.] 2007,
no pet.), the First Court cited Lawson as follows:
[A] governmental entity that agrees to settle a lawsuit from which it is not
immune cannot claim immunity from suit for breach of the settlement
agreement relating to that claim. The policy supporting this holding is
that the government should not regain immunity it previously has waived
by settling a case.
Porretto, 251 S.W.3d at 712 (“Because the GLO is not immune from the Porrettos’ takings
claim, under Lawson, the Porrettos’ breach of contract claim can proceed, but only to the
extent it arises out of the takings claim.”) (emphasis added) (internal citations omitted).
We agree with this interpretation of Lawson.
In doing so, we note that this case does not involve a situation where the City
was exposed to suit. See Singer, 232 S.W.3d at 802-03 (Cayce, C.J., dissenting). When the
parties entered the easement agreement, no eminent domain proceeding was pending
because no petition had been filed in the proper court. See TEX. PROP. CODE ANN. §
21.012(a). ECOM, however, argues that the City threatened to file eminent domain
proceedings and would have commenced proceedings had an agreement not been
reached; thus, the agreement was made under a threat of eminent domain.4 This
3 ECOM distinguishes Gracia on grounds that Gracia had an administrative remedy. See Donna
Indep. Sch. Dist. v. Gracia, 286 S.W.3d 392, 395 (Tex. App.—Corpus Christi 2008, no pet.) (“The Texas
Supreme Court…has forestalled the waiver-by-conduct exception to sovereign immunity in situations
where an administrative remedy is available.”). Despite this factual distinction, the San Antonio Court’s
reasoning that Lawson is inapplicable absent a pending lawsuit is still relevant to our analysis.
4 Although the record lacks evidence suggesting that the City actually did threaten to commence
eminent domain proceedings, ECOM’s first amended original petition states: “representatives of
Midlothian indicated to ECOM the city’s need for a sewer line across a portion of the Master Tract and
that it would acquire the land by eminent domain if an agreement between Midlothian and ECOM could
City of Midlothian v. ECOM Real Estate Mgmt., Inc. Page 11
argument is inconsistent with our interpretation of Lawson. See Porretto, 251 S.W.3d at
712. ECOM could not assert a claim for adequate compensation until the City filed a
petition to take the property by eminent domain. See Singer, 232 S.W.3d at 802 (Cayce,
C.J., dissenting). Thus, ECOM had no claim to settle at the time the agreement was
reached. Id. More importantly, the easement agreement itself contains no language
suggesting an intent to settle an eminent domain claim. See Valence Operating Co. v.
Dorsett, 164 S.W.3d 656, 662 (Tex. 2005) (“In construing a written contract, the primary
concern of the court is to ascertain the true intentions of the parties as expressed in the
instrument.”); see also Weingarten, 66 F. Supp. 2d at 843 (Deed contained language
evidencing an intent to settle and avoid eminent domain proceedings).
ECOM suggests that to hold that the easement agreement did not settle an
eminent domain claim renders the negotiation process a “mere charade to create
immunity.” To say that the easement agreement settled an eminent domain claim,
when it contains no language to this effect5 and no eminent domain proceeding was
pending, further blurs the distinction between an entity’s power to purchase and its
power to take. See Singer, 232 S.W.3d at 803 (Cayce, C.J., dissenting); see also Travis
County v. Pelzel & Assocs., 77 S.W.3d 246, 248 (Tex. 2002) (“[A] governmental entity does
not waive immunity from suit simply by contracting with a private party.”).
not be reached.” We must take ECOM’s pleadings as true. See Tex. Dep’t of Parks & Wildlife v. Miranda,
133 S.W.3d 217, 228 (Tex. 2004).
5 ECOM maintains that its pleadings establish that the easement agreement is actually a settlement
of an eminent domain claim. While we must take ECOM’s pleadings as true, “we are not bound by legal
conclusions nor by any illogical factual conclusions drawn from the facts pled.” Aledo Indep. Sch. Dist. v.
Choctaw Props., 17 S.W.3d 260, 262 (Tex. App.—Waco 2000, no pet.), overruled on other grounds by Thomas v.
Long, 207 S.W.3d 334 (Tex. 2006).
City of Midlothian v. ECOM Real Estate Mgmt., Inc. Page 12
Accordingly, we conclude that the City was “acting within a color of right under
contract when it negotiated the agreement with [ECOM] to purchase [] property and not
under its eminent domain powers.” Singer, 232 S.W.3d at 803 (Cayce, C.J., dissenting).
Because the trial court erred by denying the City’s plea to the jurisdiction as to ECOM’s
breach of contract claim, we sustain issue one.
DECLARATORY JUDGMENT
The City argues, in issue two, that the trial court has no subject matter
jurisdiction over ECOM’s declaratory judgment claim because it is an improper attempt
to enforce performance of the easement agreement and is so intertwined with ECOM’s
breach of contract claim as to be an attempt to recast its breach of contract claim as a
declaratory judgment claim.
A person interested under a deed, will, written contract, or other writings
constituting a contract or 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 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(a) (Vernon 2008). “[D]eclaratory-judgment
suits against state officials seeking to establish a contract’s validity, to enforce
performance under a contract, or to impose contractual liabilities are suits against the
State” for which immunity is not waived. Tex. Natural Res. Conservation Comm’n v. IT-
Davy, 74 S.W.3d 849, 855-56 (Tex. 2002). “[P]rivate parties cannot circumvent the State’s
City of Midlothian v. ECOM Real Estate Mgmt., Inc. Page 13
sovereign immunity from suit by characterizing a suit for money damages, such as a
contract dispute, as a declaratory-judgment claim.” Id. at 856.
ECOM’s breach of contract claim is phrased, in pertinent part, as follows:
Through the Ordinance, Midlothian breached the settlement
agreement/contract. Midlothian’s refusal to allow ECOM and the future
residents of the Master Tract access to Midlothian’s sewer system without
the purchase of water from Midlothian is a breach of the
settlement/agreement contract, which has proximately caused damages to
ECOM…
ECOM’s declaratory judgment claim states, in pertinent part:
As the dispute arises from the interpretation of a written instrument,
ECOM requests the Court enter a declaratory judgment as to the meaning
of the easement. Specifically, ECOM asks the Court to adjudicate the
intent of the parties as reflected in the easement was to allow future
residents of the Master Tract access to Midlothian’s sewer system without
necessity of purchasing water from Midlothian.
ECOM requested a similar finding if the trial court determined that the agreement was
ambiguous and, alternatively, requested rescission in the event there was no meeting of
the minds between the parties.
ECOM maintains that it simply seeks a declaration as to “whether the easement
agreement in conjunction with the ordinance requires that ECOM purchase water from
the City if it likewise wants to connect to the sewer system.” We disagree.
In Texas Parks & Wildlife Department v. Callaway, 971 S.W.2d 145 (Tex. App.—
Austin 1998, no pet.), Callaway owned property on which the Texas Parks and Wildlife
Department had an easement for a waterway. See Callaway, 971 S.W.2d at 147.
Callaway sued the Department, alleging that the Department’s opening of the
waterway to the public resulted in a taking without compensation. Id. at 148. Callaway
City of Midlothian v. ECOM Real Estate Mgmt., Inc. Page 14
sought a declaration that the “Department has authority to keep the [waterway] closed
to the public” and “must use this authority in complying with the easement’s
conditions and restrict public boating in the [waterway].” Id. at 151. The trial court
denied the Department’s plea to the jurisdiction. See id. at 147. The Austin Court held:
Although Callaway’s request for declaratory judgment is not premised
expressly on breach of contract, it is analogous to such a claim. In essence,
Callaway seeks a declaration of his rights under the easement and an
order enforcing those rights. There is no basis for the injunctive relief or
the contractual damages that Callaway seeks unless he can establish that
the easement constituted a contract, binding on the Department, which he
can enforce. Whether the Department’s decision that it was legally
required to open the Pass was correct or incorrect, a suit to test it by
seeking enforcement of contract rights is necessarily a suit against the
state that cannot be maintained without legislative permission.
Id. at 152.
In Lehman Grain, Reed dedicated a sewer line easement to the City of San
Antonio in exchange for the City’s agreement that Reed could connect to the sewer line
as long as “Reed ‘ma[de] a proper application’ and ‘enter[ed] into an agreement with
the City for such sewer service.’” Lehman Grain, 2007 Tex. App. LEXIS 7515, at *1-2.
Reed later sued the City when it denied sewer service. See id. at *2. Reed sought a
declaration that “the City is obligated to comply with the terms of the Dedication
Agreement by granting Lehman the privilege of connecting to the sewer line.” Id. at
*10. The trial court denied the City’s plea to the jurisdiction. See id. at *3-4. The San
Antonio Court held that Reed’s declaratory judgment claim sought to “enforce
performance under the easement dedication contract.” Id. at *10.
City of Midlothian v. ECOM Real Estate Mgmt., Inc. Page 15
In State v. Allodial Limited Partnership, 280 S.W.3d 922 (Tex. App.—Dallas 2009, no
pet.), Allodial’s successor sold a twelve acre tract to the State, but retained a two acre
tract, which it later sold to Allodial. See Allodial, 280 S.W.3d at 924-25. Allodial later
sued TxDOT. Id. at 925. Allodial sought a declaration that the “deed covenants
required TxDOT to take no steps to deprive the 2.843 acre tract of on-grade access to the
service road and that TxDOT's actions constituted a taking under article I, section 17 of
the Texas Constitution.” Id. at 927. The trial court denied TxDOT's plea to the
jurisdiction. See id. at 925. Citing Calloway, the Dallas Court held that Allodial’s claim
for breach of deed covenants was “analogous to breach of contract claims.” Id. at 928.
In light of these authorities, ECOM’s declaratory judgment claim is analogous to
a breach of contract claim. ECOM not only seeks a declaration of its rights under the
easement agreement, but further attempts, in essence, to enforce performance of the
agreement. See Callaway, 971 S.W.2d at 152; see also Allodial, 280 S.W.3d at 928; Lehman
Grain, 2007 Tex. App. LEXIS 7515, at *10. Accordingly, the trial court erred by denying
the City’s plea to the jurisdiction as to ECOM’s declaratory judgment claim. 6 We
sustain issue two.
FRAUD/FRAUDULENT INDUCEMENT
In issue three, the City contends that the trial court lacks subject matter
jurisdiction over ECOM’s fraud and fraudulent inducement claims.
6 ECOM cites cases in which a governmental entity was not immune from declaratory judgment
actions on takings claims. See Koch v. Tex. Gen. Land Office, 273 S.W.3d 451, 457-60 (Tex. App.—Austin
2008, pet. filed); see also State v. BP Am. Prod. Co., 290 S.W.3d 345, 365-66 (Tex. App.—Austin 2009, pet.
filed). The City’s partial plea to the jurisdiction does not challenge ECOM’s takings claim; thus, the issue
is not before us.
City of Midlothian v. ECOM Real Estate Mgmt., Inc. Page 16
In the tort context, “[d]etermining a municipality’s amenability to suit is a two-
step inquiry:” (1) whether the function is governmental or proprietary; and (2) if
governmental, whether immunity has been waived by statute. City of Houston v.
Petroleum Traders Corp., 261 S.W.3d 350, 355 (Tex. App.—Houston [14th Dist.] 2008, no
pet.) (quoting Ethio Express Shuttle Serv., Inc. v. City of Houston, 164 S.W.3d 751, 754 n.4
(Tex. App.—Houston [14th Dist.] 2005, no pet.)).
ECOM argues that if the City was not exercising its eminent domain powers at
the time of the easement agreement, then it was acting in a proprietary capacity for
which it has no immunity. However, the Legislature has identified sanitary and storm
sewers and water and sewer service as governmental functions. See TEX. CIV. PRAC. &
REM. CODE ANN. § 101.0215(a)(9), (32) (Vernon 2005). By entering a contract for the
“purpose of installing, repairing, maintaining, removing, and operating a sanitary
sewer line,” the City performed a governmental function. See id.; see also Lehman Grain,
2007 Tex. App. LEXIS 7515, at *8 (“City was acting in a governmental capacity when it
contracted with Reed to acquire the easement for the installation of the sewer line.”).
Moreover, ECOM has not alleged (1) property damage, personal injury, or death
proximately caused by the operation or use of a motor-driven vehicle or motor-driven
equipment; (2) personal injury or death so caused by a condition or use of tangible
personal or real property; or (3) a claim arising from a premises defect. TEX. CIV. PRAC.
& REM. CODE ANN. § 101.021 (Vernon 2005); TEX. CIV. PRAC. & REM. CODE ANN. §
101.022 (Vernon Supp. 2008). Additionally, the Tort Claims Act does not apply to
claims “arising out of assault, battery, false imprisonment, or any other intentional tort.”
City of Midlothian v. ECOM Real Estate Mgmt., Inc. Page 17
TEX. CIV. PRAC. & REM. CODE ANN. § 101.057(2) (Vernon 2005); see Sanders v. City of
Grapevine, 218 S.W.3d 772, 779 (Tex. App.—Fort Worth 2007, pet. denied) (Trial court
lacked jurisdiction over fraud claim because “fraud is an intentional tort.”).
In summary, the trial court erred by denying the City’s plea to the jurisdiction as
to ECOM’s fraud and fraudulent inducement claims. We sustain issue three.
EXEMPLARY DAMAGES AND ATTORNEY’S FEES
In its fourth and fifth issues, the City argues that the trial court lacks subject
matter jurisdiction over ECOM’s claims for exemplary damages and attorney’s fees.
Because the trial court has no subject matter jurisdiction to consider ECOM’s
breach of contract, declaratory judgment, fraud, or fraudulent inducement claims,
ECOM cannot recover attorney’s fees or exemplary damages associated with these
claims. See Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 95 (Tex. 1999) (“[A] prevailing
party cannot recover attorney’s fees from an opposing party unless permitted by statute
or a contract between the parties.”); see also Twin City Fire Ins. Co. v. Davis, 904 S.W.2d
663, 665 (Tex. 1995) (“[R]ecovery of punitive damages requires a finding of an
independent tort with accompanying actual damages.”). We sustain issues four and
five.
We reverse the trial court’s judgment and render judgment dismissing ECOM’s
breach of contract, declaratory judgment, fraud, and fraudulent inducement claims.
FELIPE REYNA
Justice
City of Midlothian v. ECOM Real Estate Mgmt., Inc. Page 18
Before Chief Justice Gray,
Justice Reyna, and
Justice Davis
(Chief Justice Gray dissenting)
Reversed and rendered
Opinion delivered and filed January 27, 2010
[CV06]
City of Midlothian v. ECOM Real Estate Mgmt., Inc. Page 19