JNC Land Co., Inc. v. the City of El Paso, Texas , 479 S.W.3d 903 ( 2015 )

COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
§
JNC LAND COMPANY, INC., No. 08-13-00165-CV
§
Appellant, Appeal from
§
v. 205th District Court
§
THE CITY OF EL PASO, TEXAS, of El Paso County, Texas
§
Appellee. (TC # 2010-4955)
§
OPINION
JNC Land Company, Inc. appeals from an order granting the City of El Paso’s plea to the
jurisdiction. For the reasons that follow, we reverse and remand.
FACTUAL SUMMARY
JNC Land Company owns approximately 121.20 acres of land in El Paso County. Prior
to 1999, the property was outside of the city limits of El Paso. On December 9, 1999, the City
and JNC entered into an agreement to annex the property to El Paso (the Annexation
Agreement). Under the Annexation Agreement, JNC agreed to develop the property in
accordance with the rules and regulations of the City of El Paso. The Annexation Agreement
required JNC to apply for and secure approval of a subdivision in accordance with the
procedures of the El Paso Municipal Code prior to issuing any building permits or certificates of
occupancy. Further, JNC agreed to dedicate and improve as part of any subdivision applications
covering the property the necessary right-of-way for extensions of any arterial streets shown
within the City’s official “Major Thoroughfare Plan.”
JNC’s petition alleges that it subsequently improved the property and made street
improvements on arterial streets. This included the construction of two streets designated on the
City’s official Major Thoroughfare Plan in excess of the width determined by the Traffic Impact
Study. JNC incurred costs of more than $300,000 to construct these two streets and it sought
reimbursement for the excess-width paving, but the City refused to pay.
JNC filed suit against the City for breach of contract. 1 The City filed a plea to the
jurisdiction asserting its immunity had not been waived. The trial court granted the plea and
dismissed the suit.
PLEA TO THE JURISDICTION
In Issue One, JNC challenges the trial court’s order granting the plea and dismissing its
breach of contract claim. The City alleged in its plea to the jurisdiction that the Annexation
Agreement is not a contract for which immunity is waived by Section 271.152 of the Local
Government Code. See TEX.LOCAL GOV’T CODE ANN. § 271.152 (West 2005). The City
directed its plea to the jurisdiction at both the pleadings and certain jurisdictional facts. See
Texas Department of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226-27 (Tex. 2004)
(observing that a defendant may direct a plea to the jurisdiction at the plaintiff’s pleadings, the
existence of jurisdictional facts, or both).
Standard of Review
A plea to the jurisdiction is a dilatory plea by which a party challenges the court's
authority to determine the subject matter of the action. Harris County v. Sykes, 136 S.W.3d 635,
1
The petition also sought a declaratory judgment and raised other claims but JNC has restricted its appeal to the
breach of contract claim.
-2-
638 (Tex. 2004); Bland Independent School District v. Blue, 34 S.W.3d 547, 554 (Tex. 2000).
The burden is on the plaintiff to allege facts affirmatively demonstrating that the trial court has
subject matter jurisdiction. Texas Department of Criminal Justice v. Miller, 51 S.W.3d 583, 587
(Tex. 2001); City of El Paso v. Mazie’s, L.P., 408 S.W.3d 13, 18 (Tex.App.--El Paso 2012, pet.
denied). Whether a party has alleged facts that affirmatively demonstrate a trial court’s subject
matter jurisdiction is a question of law which is subject to de novo review. Miranda, 133 S.W.3d
at 226; Mazie’s, 408 S.W.3d at 18. Likewise, whether undisputed evidence of jurisdictional facts
establishes a trial court’s jurisdiction is also a question of law subject to de novo review.
Miranda, 133 S.W.3d at 226.
When a plea to the jurisdiction challenges the pleadings, we look to the pleader’s intent,
construe the pleadings liberally in favor of jurisdiction, and accept the allegations in the
pleadings as true to determine if the pleader has alleged sufficient facts to affirmatively
demonstrate the trial court’s jurisdiction to hear the case. Heckman v. Williamson County, 369
S.W.3d 137, 150 (Tex. 2012). If the pleadings affirmatively negate the existence of jurisdiction,
then a plea to the jurisdiction may be granted without allowing the plaintiff an opportunity to
amend its pleading. Miranda, 133 S.W.3d at 226-27.
When a plea to the jurisdiction challenges the existence of jurisdictional facts, the
appellate court considers relevant evidence on that issue even where those facts may implicate
the merits of the cause of action. City of Waco v. Kirwan, 298 S.W.3d 618, 622 (Tex. 2009);
Miranda, 133 S.W.3d at 227. The standard of review for a jurisdictional plea based on evidence
“generally mirrors that of a summary judgment under Texas Rule of Civil Procedure 166a(c).”
Miranda, 133 S.W.3d at 228. Under this standard, when reviewing a plea in which the pleading
requirement has been met, we credit as true all evidence favoring the non-movant and draw all
-3-
reasonable inferences and resolve any doubts in the non-movant’s favor. Id. The movant must
assert the absence of subject-matter jurisdiction and present conclusive proof that the trial court
lacks subject-matter jurisdiction. Id. If the movant discharges this burden, the non-movant must
present evidence sufficient to raise a material issue of fact regarding jurisdiction, or the plea will
be sustained. Id. If the evidence creates a fact question regarding the jurisdictional issue, then
the trial court cannot grant the plea to the jurisdiction, and the fact question will be resolved by
the fact finder. Id. at 227-28. The trial court rules on the plea to the jurisdiction as a matter of
law if the relevant jurisdictional evidence is undisputed or it fails to raise a fact question on the
jurisdictional issue. Id. at 228.
Governmental Immunity
Sovereign immunity protects the State from lawsuits for money damages. Reata
Construction Corporation v. City of Dallas, 197 S.W.3d 371, 374 (Tex. 2006); Texas Natural
Resource Conservation Commission v. IT-Davy, 74 S.W.3d 849, 853 (Tex. 2002). It also
deprives a trial court of subject-matter jurisdiction. Miranda, 133 S.W.3d at 224. Political
subdivisions of the state, including cities, are entitled to such immunity--referred to as
governmental immunity--unless it has been waived. Reata, 197 S.W.3d at 374; City of El Paso
v. High Ridge Construction, Inc., 442 S.W.3d 660 (Tex.App.--El Paso 2014, pet. filed).
Waiver of Immunity -- Section 271.152
The Texas Legislature enacted Section 271.152 to waive local governmental entities’
immunity from suit for certain breach of contract claims. City of Houston v. Williams, 353
S.W.3d 128, 134 (Tex. 2011). The statute provides that:
A local governmental entity that is authorized by statute or the constitution to
enter into a contract and that enters into a contract subject to this subchapter
waives sovereign immunity to suit for the purpose of adjudicating a claim for
breach of the contract, subject to the terms and conditions of this subchapter.
-4-
TEX.LOCAL GOV’T CODE ANN. § 271.152. The Supreme Court has held that Section 271.152,
when applicable, waives a governmental entity’s immunity from suit for breach of written
contract by clear and unambiguous language. Williams, 353 S.W.3d at 134. Three elements
must be established in order for Section 271.152’s waiver of immunity to apply: (1) the party
against whom the waiver is asserted must be a “local governmental entity” as defined by Section
271.151(3); (2) the entity must be authorized by statute or the Constitution to enter into
contracts; and (3) the entity must in fact have entered into a contract that is “subject to this
subchapter” as defined by Section 271.151 and 271.152 of the Local Government Code.
Williams, 353 S.W.3d at 134-35; see El Paso Education Initiative, Inc. v. Amex Properties, LLC,
385 S.W.3d 701, 706 (Tex.App.--El Paso 2012, pet. denied). In its plea, the City restricted its
jurisdictional challenge to the third element of Section 271.152 and we shall do likewise.2
For a contract to be subject to Section 271.152’s waiver of immunity: (1) the contract
must be in writing, (2) state the essential terms of the agreement, (3) provide for goods or
services, (4) to the local governmental entity, and (5) be executed on behalf of the local
governmental entity. Willliams, 353 S.W.3d at 135. It is undisputed that the Annexation
Agreement is in writing and was executed on behalf of the City. JNC’s arguments and the City’s
responses implicate the second, third, and fourth elements.
2
The City of El Paso is an incorporated home-rule city. EL PASO CITY CHARTER § 1.1; see Moreno v. City of El
Paso, 71 S.W.3d 898, 901 (Tex.App.--El Paso 2002, pet. denied)(stating that the City of El Paso is a home rule city
existing under Article XI, Section 5 of the Texas Constitution). A home-rule city is a type of municipality.
Williams, 353 S.W.3d at 135. The Local Government Code’s definition of “local governmental entity” includes a
municipality. TEX.LOC.GOV’T CODE ANN. § 271.151(3)(A)(West Supp. 2014). It is also undisputed that the City is
authorized to enter into contracts. See EL PASO CITY CHARTER § 1.1 (“The City of El Paso shall continue as a body
politic, exercising all powers of local self-government which are or come to be conferred upon constitutional home
rule cities in the State of Texas.”); Williams, 353 S.W.3d at 135; Proctor v. Andrews, 972 S.W.2d 729, 733 (Tex.
1998)(observing that home-rule cities possess all powers of the state not inconsistent with the Constitution, the
general laws, or the city’s charter).
-5-
Written Contract to Provide Goods or Services to the City
The City claimed in its plea that the Annexation Agreement is not a contract for which
immunity is waived by Section 271.152 because it is not an agreement to provide goods or
services to the City. The Supreme Court recently stated that: “Any written, authorized contract
that states the essential terms of an agreement for providing services to the governmental entity
triggers the waiver of immunity under chapter 271.” Lubbock County Water Control and
Improvement District v. Church & Akin, L.L.C., 442 S.W.3d 297, 302 (Tex. 2014). The
agreement to provide goods or services to the governmental entity “need not be the primary
purpose of the agreement.” Id. at 302, quoting Kirby Lake Development, Ltd. v. Clear Lake City
Water Authority, 320 S.W.3d 829, 839 (Tex. 2010).
JNC maintains that the agreement at issue here is the Annexation Agreement and certain
municipal ordinances. The Texas Supreme Court has recognized that ordinances and related
documents may be read together as a single agreement and “a court may determine, as a matter
of law, that multiple documents comprise a written contract.” Williams, 353 S.W.3d at 137,
quoting Fort Worth Independent School District v. City of Fort Worth, 22 S.W.3d 831, 840-41
(Tex. 2000). JNC’s breach of contract claim alleges that the City breached the Annexation
Agreement by failing to reimburse JNC for excess-width paving of two arterial streets. Under
the Annexation Agreement, JNC agreed to develop the property “in accordance with the rules
and regulations of the City.” Under Paragraph Ten of the Annexation Agreement, JNC agreed to
dedicate and improve as part of any subdivision application the necessary right-of-way for
extensions of any arterial streets shown within the City’s official Major Thoroughfare Plan.
Section 19.28.010(A) of the El Paso Municipal Code requires the subdivider, upon
recording of the approved subdivision, to proceed with construction of the required
-6-
improvements. EL PASO MUNIC. CODE § 19.28.010(A). Required improvements include streets
and other rights-of-way. Id. § 19.28.050(C). The Municipal Code requires the subdivider to
make street improvements at its sole cost, except when excess-width paving is required.
EL PASO MUNIC. CODE § 19.28.040(A)(1). Excess-width paving is defined by the Municipal
Code as paving not attributable to the development of the subdivision, based on a Traffic Impact
Study, on an arterial street designated on a Major Thoroughfare Plan. EL PASO MUNIC. CODE §
19.28.040(A)(1). In such a case, Section 19.28.040(A)(2) specifies that “the cost attributable to
the excess width of the arterial street improvement shall be borne by the city.” Id. §
19.28.040(A)(2).
The City complains that JNC’s breach of contract claim based on Section 19.28.040 is
attempting to import an external term into the Annexation Agreement, but the Agreement
requires JNC to develop the property in accordance with the City’s rules and regulations and it
expressly references Title 19 of the Municipal Code. Section 19.28.040 is directly related to the
provisions with which JNC was required to comply. We conclude that the agreement between
the parties consists of the Annexation Agreement and the pertinent municipal ordinances,
including Section 19.28.040.
The remaining question is whether the Annexation Agreement is a contract for providing
goods or services to the City. Chapter 271 does not define the term “services” as it is used in
Section 271.152 even though the Legislature has defined it in other contexts. Kirby Lake, 320
S.W.3d at 839; High Ridge Construction, 442 S.W.3d at 668. Absent a definition, the term is
sufficiently broad to encompass a wide array of activities. Id., citing Van Zandt v. Fort Worth
Press, 359 S.W.2d 893, 895 (Tex. 1962)(stating that the term “services” has a rather broad and
general meaning and it includes generally any act performed for the benefit of another under
-7-
some arrangement or agreement whereby such act was to have been performed.”). For the
contract to come within the reach of Section 271.152, the benefit that the local governmental
entity would receive must be direct and unattenuated. High Ridge Construction, 442 S.W.3d at
669; Berkman v. City of Keene, 311 S.W.3d 523, 527 (Tex.App.--Waco 2009, pet. denied).
The City cites Lubbock County Water Control and Improvement District v. Church &
Akin in support of its position that any benefit to the City from the Annexation Agreement is
indirect and attenuated. The Lubbock County Water Control & Improvement District (WCID)
operates Buffalo Springs Lake and patrons are required to pay for access to the lake through a
controlled gate. Lubbock County Water Control and Improvement District, 442 S.W.3d at 299.
WCID operated a marina on the lake for many years, but in 2007 it ceased operations leased the
premises to Church & Akin. Id. Under the lease, the parties agreed that the premises would be
used only as a marina, restaurant, and for the sale of gasoline and sundry items as a recreational
facility unless WCID consented to some other use. Id. At the end of the initial lease term,
Church & Akin exercised its option to extend the lease and WCID accepted payment, but it
terminated the lease six months later. Id. Church & Akin filed suit alleging breach of contract
and WCID filed a plea to the jurisdiction. Id. The trial court denied the plea and WCID
appealed. Id. The Seventh Court of Appeals affirmed because it concluded that WCID’s
immunity from suit for breach of contract was waived under Chapter 271. Id. Church & Akin
argued that the lease included agreements to provide services to the WCID because Church &
Akin agreed to operate the marina, issue and redeem catering tickets, and return a percentage of
its profits from sundry sales. Id. at 302. The Supreme Court concluded that the lease prohibited
Church & Akin from using the premises for any purpose other than a marina but it did not
require Church & Akin to operate the premises as a marina. Id. at 303. Because WCID did not
-8-
have a right under the lease to receive services, the Supreme Court determined that the mere fact
that the WCID may have received services as a result of the lease is insufficient to invoke
Chapter 271’s waiver of immunity. Id. The Supreme Court concluded that any services received
by WCID under the lease were indirect and attenuated. Id.
The City is correct that JNC’s development of the property was voluntary and it could not
demand that JNC develop the subdivision, but once JNC proceeded with that development, the
City had a right under the Annexation Agreement and the pertinent municipal ordinances to
compel JNC to develop the property in accordance with the rules and regulations of the City.
Consequently, the instant case is distinguishable from Church & Akin. The Annexation
Agreement and the pertinent municipal ordinances required JNC to (1) improve certain right-of-
way extensions and dedicate them to the City; (2) dedicate and improve neighborhood and public
community parkland; and (3) set aside real property for future acquisition by the City. These
services provide a direct and unattenuated benefit to the City. See Kirby Lake, 320 S.W.3d at
832 (holding that development agreements requiring developers to build water and sewer
facilities and lease the facilities to the water authority free of charge provided services directly to
the water authority because the developers contracted to construct, develop, lease, and bear all
risk of loss or damage to the facilities); Town of Flower Mound v. Rembert Enterprises, Inc., 369
S.W.3d 465, 472-74 (Tex.App.--Fort Worth 2012, pet. denied) (holding that a development
agreement with town requiring developer to construct a road was a contract to provide services
to the town). Issue One is sustained.
RIPENESS DOCTRINE
-9-
In Issue Two, JNC contends that the trial court erred by sustaining the City’s plea to the
jurisdiction based on its argument that the breach of contract claim is not ripe because JNC failed
to present its claim to the City Council as required by the City Charter.
Standard of Review
Ripeness is an element of subject matter jurisdiction, and is a legal question subject to de
novo review. Robinson v. Parker, 353 S.W.3d 753, 755 (Tex. 2011); Mayhew v. Town of
Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998). In evaluating ripeness, we consider whether, at
the time a lawsuit is filed, the facts are sufficiently developed so that an injury has occurred or is
likely to occur, rather than being contingent or remote. Robinson, 353 S.W.3d at 755; Waco
Independent School District v. Gibson, 22 S.W.3d 849, 851 (Tex. 2000); Patterson v. Planned
Parenthood of Houston & Southeast Texas, Inc., 971 S.W.2d 439, 442 (Tex. 1998). The ripeness
analysis focuses on whether the case involves uncertain or contingent future events that may not
occur as anticipated or may not occur at all. Robinson, 353 S.W.3d at 755. A case is not ripe
when determining whether a plaintiff has a concrete injury depends on contingent or hypothetical
facts. Waco Independent School District, 22 S.W.3d at 852. The ripeness doctrine serves to
avoid premature adjudication. Patterson, 971 S.W.2d at 442.
Section 1.5 of the Charter
Section 1.5 of the City of El Paso Charter provides: “No suit shall be instituted against
the City unless the claimant shall aver and prove that, previous to filing the original petition, the
claim was presented to the Council and the Council failed either to grant or act upon the claim in
a timely fashion.” EL PASO CITY CHARTER § 1.5. On June 2, 2009, JNC sent a detailed two-
page demand letter addressed to Joyce Wilson, the El Paso City Manager, which began with the
sentence: “Pursuant to Section 1.5 of the City of El Paso Charter, Application for Remedy
- 10 -
Prerequisite to Suit Against City, the following claim is presented.” The letter explained the
history of the dispute regarding JNC’s claim for reimbursement for overwidth paving. The letter
described how JNC had refrained from filing suit because city employees had represented to JNC
for three years that its claim for overwidth paving would be paid and it had been told to submit
its claim for reimbursement. JNC expressed its surprise that it had recently been told that the
City had changed its position and the claim would not be paid. JNC requested that Wilson
review the matter and recommend to the City Council a settlement in the amount of overwidth
paving to which it was entitled. A file-stamp on the letter reflects it was received in the Mayor’s
Office on June 4, 2009. Two weeks later, an Assistant City Attorney sent a letter to counsel for
JNC stating that the Office of the City Attorney was in receipt of counsel’s letter dated June 2,
2009 and advising her that the letter failed to comply with the notice requirements of the El Paso
City Charter.
The City asserts that JNC’s suit is not ripe because JNC addressed its demand to the
“wrong recipient” and it should have presented its claim to the City Council as required by
Section 1.5. Even though JNC’s letter is addressed to the City Manager, the face of the letter
reflects that it was received in the Mayor’s Office on June 4, 2009. The Mayor is a member of
the City Council. EL PASO CITY CHARTER § 4.1(B). We conclude that JNC established it
presented its claim to the City Council as required by Section 1.5. Issue Two is sustained.
ARGUMENTS RELATED TO THE MERITS
In its final issue, JNC argues that the trial court erred by granting the plea to the
jurisdiction based on the arguments raised in the supplemental pleas to the jurisdiction which
relate to the merits of the dispute between the parties. The City disputes that any of its
arguments pertain to the merits of the breach of contract claim but it adds there is no evidence
- 11 -
the trial court based its decision on any such argument. The City presented multiple arguments
to the trial court in its plea and supplemental pleas to the jurisdiction and the trial court did not
state the basis of its ruling in the order sustaining the plea to the jurisdiction. Thus, JNC is
obligated to challenge any arguments raised by the City which could properly support the trial
court’s order. We understand JNC’s final issue as seeking to show that there is no other basis on
which the trial court’s order could properly be sustained.
The purpose of a plea to the jurisdiction is to defeat a cause of action without regard to
whether the asserted claim has merit. Bland Independent School District v. Blue, 34 S.W.3d 547,
554 (Tex. 2000). In deciding a plea to the jurisdiction, a court may not weigh the merits of the
claim. Id. The City argued in its plea that JNC’s contract claim is not valid because JNC was
merely performing a pre-existing duty and its promise to pay JNC Land for overwidth paving
was not supported by consideration. These arguments are related exclusively to the merits of
JNC’s breach of contract claim and cannot support the trial court’s order sustaining the City’s
plea and dismissing the suit for lack of jurisdiction.
The City also maintained that a provision of the Annexation Agreement prohibited JNC
from suing it for monetary damages, and therefore, JNC’s suit is “invalid on its face.” This
argument relates to a defense to JNC’s suit but is immaterial to the question whether the City’s
immunity from suit is waived by Section 271.152 of the Local Government Code. Thus, this
argument will not support the trial court’s order dismissing the suit.
The City also included an argument in its third supplemental plea to the jurisdiction that
JNC could not rely on statements made by City employees that JNC would be reimbursed for
overwidth paving. Whether the City can be bound by the statements of its employees is an issue
- 12 -
which relates to the merits of the breach of contract claim. This argument does not support the
trial court’s order dismissing the suit.
The City next argued in its third supplemental plea to the jurisdiction that JNC “is
attempting to recast a claim for promissory estoppel as a breach of contract claim that defeats
The City’s governmental immunity.” The City’s immunity is not waived for a promissory
estoppel claim. Thus, this argument does not relate to the merits of JNC’s breach of contract
claim and is properly raised in a plea to the jurisdiction. An examination of JNC’s pleadings
shows that it has alleged a claim for breach of contract, not promissory estoppel, and we have
held that the contract is one for which the City’s immunity from suit is waived pursuant to
Section 271.152 of the Local Government Code.
Finally, the City included an argument in its plea to the jurisdiction that it is not liable for
attorney’s fees on JNC’s breach of contract cause of action. As noted by JNC, this argument
pertains to a remedy potentially available to JNC and is not a basis on which the trial court could
have sustained the plea to the jurisdiction. For all of these reasons, we sustain Issue Three.
Having sustained each issue presented on appeal, we reverse the order dismissing JNC’s suit for
lack of jurisdiction and remand the cause to the trial court for trial.
June 26, 2015
ANN CRAWFORD McCLURE, Chief Justice
Before McClure, C.J., Rodriguez, and Parks, JJ.
Parks, J., sitting by assignment, not participating
- 13 -