the City of Corinth, Texas v. Nurock Development, Inc., Nurock Corporation, NDG-Tower Ridge 1, LLC and Tower Ridge Corinth 1, Ltd.

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-07-422-CV
THE CITY OF CORINTH, TEXAS APPELLANT
V.
NUROCK DEVELOPMENT, INC., APPELLEES
NUROCK CORPORATION,
NDG-TOWER RIDGE 1, LLC AND
TOWER RIDGE CORINTH 1, LTD.
------------
FROM THE 362ND DISTRICT COURT OF DENTON COUNTY
------------
OPINION
------------
In this interlocutory appeal, appellant, the City of Corinth (the City),
challenges the trial court’s denial of its plea to the jurisdiction on sovereign
immunity grounds against claims asserted by appellees NuRock Development,
Inc., NuRock Corporation, NDG-Tower Ridge 1, LLC, and Tower Ridge Corinth
1, Ltd. (collectively, NuRock). We affirm in part and reverse and dismiss in part.
I. Background
This appeal arises from the City’s alleged breach of a settlement
agreement between the City and NuRock by which the parties settled NuRock’s
claims in an earlier federal lawsuit, NuRock Development, Inc. v. City of Corinth
(the Federal Action).1 In the Federal Action, NuRock sought damages and
injunctive relief from disputes stemming from NuRock’s efforts to develop and
construct an affordable housing project called Tower Ridge in Corinth (the
Apartments). NuRock claimed that the City violated both the Federal Fair
Housing Act 2 and the Texas Fair Housing Act 3 because the City’s actions
regarding the Apartments were intended to exclude families with children and
minorities. NuRock also asserted a takings claim under the Texas constitution,4
as well as a section 1983 claim.5
The April 2005 settlement agreement, as amended in July 2005 (the
Settlement Agreement), provided that NuRock would construct the Apartments
1
… No. 4:04cv277 (E.D. Tex. July 30, 2004).
2
… 42 U.S.C. §§ 3604, 3617 (2003).
3
… Tex. Prop. Code Ann. § 301.021 (Vernon 2007).
4
… Tex. Const. art. I,§ 17.
5
… 42 U.S.C. § 1983 (2003).
2
to certain specifications, that the City would acquire certain right-of-ways along
Tower Ridge Road, that NuRock would make specified improvements to Tower
Ridge Road, that NuRock would place $120,000.00 in escrow as collateral for
the improvements, and that the City would pay NuRock $120,000.00. The
parties agreed to dismiss the Federal Action and NuRock began construction of
the Apartments.
The City sued NuRock in state court in April 2006, alleging that NuRock
breached the Settlement Agreement by failing to place the funds in escrow.
NuRock filed counterclaims based on the City’s alleged breaches of the
Settlement Agreement, seeking damages, injunctive relief, and a declaratory
judgment. NuRock asserted that, despite the Settlement Agreement, the City
was interfering with and delaying construction of the Apartments, particularly
by refusing to perform inspections or issue building permits or certificates of
occupancy for the apartment buildings. At the City’s request, the trial court
realigned the parties so that NuRock was the plaintiff and the City was the
defendant.
In July 2006, the trial court entered a temporary injunction for NuRock,
which the City did not appeal. The injunction required the City to stop refusing
to issue temporary certificates of occupancy on the grounds that the Tower
Ridge Road improvements had not been completed.
3
In June 2007, the City filed a plea to the jurisdiction alleging sovereign
immunity. The trial court denied the plea and this appeal followed.
II. Standard of Review
We review the trial court’s ruling on a plea to the jurisdiction based on
immunity from suit under a de novo standard of review. 6 In reviewing the
denial of a plea to the jurisdiction, we do not review the merits of the case. 7
When a plea to the jurisdiction challenges the pleadings, we determine if
the pleader has alleged facts that affirmatively demonstrate the court’s
jurisdiction to hear the cause. 8 We construe the pleadings liberally in favor of
the plaintiffs and look to the pleader’s intent.9 If the pleadings do not contain
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
6
… See Tex. Dep’t of Parks & W ildlife v. Miranda, 133 S.W.3d 217,
225–26 (Tex. 2004); City of Carrollton v. Singer, 232 S.W.3d 790, 794 (Tex.
App.—Fort Worth 2007, pet. denied).
7
… See State v. Fiesta Mart, Inc., 233 S.W.3d 50, 53–54 (Tex.
App.—Houston [14th Dist.] 2007, pet. denied) (citing Chocolate Bayou Water
Co. & Sand Supply v. Tex. Natural Res. Conservation Comm’n, 124 S.W.3d
844, 849 (Tex. App.—Austin 2003, pet. denied)).
8
… See Miranda, 133 S.W.3d at 226.
9
… Id.; Singer, 232 S.W.3d at 795.
4
amend.10 If the pleadings affirmatively negate the existence of jurisdiction, then
a plea to the jurisdiction may be granted without allowing the plaintiffs an
opportunity to amend.11 However, if a plea to the jurisdiction challenges the
existence of jurisdictional facts, we consider relevant evidence submitted by the
parties when necessary to resolve the jurisdictional issues raised, as the trial
court is required to do.12
III. Governmental Immunity
A. Settlement Agreement
In its first and second issues, the City asserts that it had immunity from
NuRock’s claims for breach of the Settlement Agreement, which settled the
Federal Fair Housing Act claim among others.13 Governmental immunity
protects governmental entities from lawsuits for damages absent legislative
consent.14 The doctrine of governmental immunity encompasses two distinct
concepts: (1) immunity from suit (barring a lawsuit unless the legislature
10
… Miranda, 133 S.W.3d at 226–27.
11
… Id at 227.
12
… Id.
13
… See 42 U.S.C. §§ 3604, 3617.
14
… See Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 405 (Tex. 1997);
Singer, 232 S.W.3d at 795.
5
expressly gives its consent to suit) and (2) immunity from liability (even if the
legislature has expressly given its consent to the suit). 15 “Immunity from
liability is an affirmative defense, while immunity from suit deprives a court of
subject matter jurisdiction.” 16
The City possesses immunity from suit and from liability.17 Although a
governmental entity like the City waives its immunity from liability when it
contracts with private citizens, it does not waive its immunity from suit solely
by entering into such a contract.18 Rather, express legislative consent in clear
and unambiguous language is required to show that immunity from a breach of
contract suit has been waived. 19
In Texas A & M University–Kingsville v. Lawson,20 a plurality of the
Supreme Court of Texas concluded that when a governmental entity settles a
15
… See Fed. Sign, 951 S.W.2d at 405; Singer, 232 S.W.3d at 795.
16
… Singer, 232 S.W.3d at 795 (quoting Miranda, 133 S.W.3d at 224).
17
… See Singer, 232 S.W.3d at 795; see also Fed. Sign, 951 S.W.2d at
405.
18
… See Catalina Dev., Inc. v. County of El Paso, 121 S.W.3d 704, 705
(Tex. 2003); Gen. Servs. Comm’n v. Little-Tex Insulation Co., 39 S.W.3d 591,
594 (Tex. 2001).
19
… See Tex. Gov’t Code Ann. § 311.034 (Vernon Supp. 2008); Travis
County v. Pelzel & Assocs., Inc., 77 S.W.3d 246, 248 (Tex. 2002).
20
… 87 S.W.3d 518 (Tex. 2002).
6
claim for which immunity from suit has been waived, immunity from suit is also
waived for a breach of the settlement agreement.21 The plurality reasoned that
“when 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.” 22
The City asserts that Lawson does not apply here because NuRock has
not pleaded in this action any state law claim in the underlying Federal Action
for which immunity was waived.23 The City reasons that the holding in Lawson
is limited to waivers of immunity by the Texas Legislature under state law, and
that because NuRock did not assert a claim in the Federal Action for which the
immunity is waived under state law, there is no basis for finding a waiver of
immunity from the settlement of the Federal Action.24
21
… Id. at 521–22.
22
… Id. at 521; see also Singer, 232 S.W.3d at 796, 799–800 (stating
that in Lawson, “the [Supreme Court of Texas] determined that a governmental
entity that has been exposed to a claim for which liability from suit has been
waived cannot regain that immunity by entering into a settlement of that
claim”(emphasis omitted)).
23
… The City also contends that because Lawson is a plurality opinion, it
is not binding and we should not follow it. Whether the City is correct or not,
this court has already elected to follow the Lawson plurality. See Singer, 232
S.W.3d at 800.
24
… The City asserts that the only state statute that could arguably have
waived its immunity in the Federal Action was the Texas Fair Housing Act, but
7
The City’s argument is based on the concepts of federalism that are
embodied in the Eleventh Amendment to the United States Constitution.25 The
Supreme Court of the United States has stated that the Eleventh Amendment
presupposes two ideas: “first, that each State is a sovereign entity in our
federal system; and second, that ‘[i]t is inherent in the nature of sovereignty not
to be amenable to the suit of an individual without its consent.’” 26 Under the
Eleventh Amendment, the State of Texas and its agencies are immune from
claims based on federal law, whether brought in federal or state court, absent
either a clear indication by the United States Congress that it intends to
abrogate the immunity afforded to states under the Eleventh Amendment to the
federal Constitution,27 or a waiver of immunity by the Texas Legislature.28
that the Act does not actually waive immunity. See Tex. Prop. Code Ann. §§
301.001–.171 (Vernon 2007). Because of our disposition of the City’s first
and second issues, we need not and do not address this assertion. See Tex.
R. App. P. 47.1.
25
… U.S. Const. amend. XI.
26
… Alden v. Maine, 527 U.S. 706, 729, 119 S. Ct. 2240, 2254 (1999)
(quoting Hans v. Louisiana, 134 U.S. 1, 13, 10 S. Ct. 504, 506 (1890)).
27
… See, e.g., Idaho v. Coeur d’Alene Tribe of Idaho, 521 U.S. 261, 279,
117 S. Ct. 2028, 2039 (1997) (explaining that state is not immune from claim
for damages under federal Title VII because Congress can abrogate Eleventh
Amendment immunity when exercising remedial powers under section five of
Fourteenth Amendment); Univ. of Tex. at El Paso v. Herrera, 281 S.W.3d 575,
579 (Tex. App.—El Paso Nov. 25, 2008, pet. filed) (“Federal courts have no
jurisdiction over federal or state law claims against a state or state agency
8
Eleventh Amendment immunity, however, does not extend to
municipalities. “[T]he [United States Supreme] Court has consistently refused
to construe the [Eleventh] Amendment to afford protection to political
subdivisions such as counties and municipalities, even though such entities
exercise a ‘slice of state power.’” 29 Accordingly, notwithstanding the fact that
the State may enjoy immunity from Federal Fair Housing Act claims, the City
has no immunity from such claims.30
unless Eleventh Amendment immunity has been expressly waived by the state
or abrogated by Congress pursuant to proper constitutional authority.”) (citing
Hoff v. Nueces County, 153 S.W.3d 45, 48 (Tex. 2004)).
28
… See, e.g., Tex. A & M. Univ. Sys. v. Koseoglu, 233 S.W.3d 835,
838–39 (Tex. 2007) (holding that because state has not waived immunity from
money damages against federal claim based on § 1983, Lawson is not
implicated by claim that state official breached agreement settling § 1983
claim).
29
… Lake Country Estates, Inc. v. Tahoe Reg’l Planning Agency, 440 U.S.
391, 401, 99 S. Ct. 1171, 1177 (1979); see also Lincoln County v. Luning,
133 U.S. 529, 530, 10 S. Ct. 363, 363 (1890) (concluding that Eleventh
Amendment immunity extends only to States, not to counties or municipal
corporations).
30
… See Howlett v. Rose, 496 U.S. 356, 376–77, 110 S. Ct. 2430,
2443 (1990) (holding that state law sovereign immunity defense is not available
to school board in § 1983 action brought in state court that otherwise has
jurisdiction when such defense would not be available if action were brought
in federal court); see also Keith v. Volpe, 858 F.2d 467, 482 (9th Cir. 1988)
(citing U.S. v. City of Parma, 661 F.2d 562, 572 (6th Cir. 1981), cert. denied,
456 U.S. 926 (1982)); People Helpers, Inc. v. City of Richmond, 789 F. Supp.
725, 734 (E.D. Va. 1992) (“[M]unicipalities are ‘persons’ who can be sued
under the [federal] Fair Housing Act.”).
9
Therefore, because the City has no immunity against NuRock’s Federal
Fair Housing Act claims, and, because the City is not immune from a claim for
breach of an agreement settling a claim for which it has no immunity, we hold
that the City is not immune from NuRock’s claim for breach of the Settlement
Agreement.31 We overrule the City’s first and second issues.
B. Inverse Condemnation
In its third issue, the City argues that the trial court did not have
jurisdiction over NuRock’s exaction-type inverse condemnation claim because
NuRock agreed to make the improvements to Tower Ridge Road which are the
basis of its takings claim. The City concedes that it does not have immunity
from a valid takings claim.32 But, when the government entity’s taking is
pursuant to colorable contract rights, it does not constitute a compensable
taking under article I, section 17 of the Texas constitution.33
It is undisputed that the Tower Ridge Road construction was part of the
consideration NuRock voluntarily promised to provide in the context of the
31
… See Koseoglu, 233 S.W.3d at 838–39 (suggesting that breach of
settlement claim based on agreement settling federal claim for which immunity
was waived would implicate Lawson).
32
… See Gen. Servs. Comm’n, 39 S.W.3d at 598.
33
… See State v. Holland, 221 S.W.3d 639, 644 (Tex. 2007); see Tex.
Const. art. I, §17.
10
Settlement Agreement. Thus, the City accepted the improvements NuRock
made to the road under color of its contract with NuRock, and not pursuant to
its powers of eminent domain. The City is, therefore, not subject to liability
under article I, section 17 of the Texas constitution.34
NuRock contends, however, that because the City breached the
Settlement Agreement before the improvements were made, the agreement
was no longer enforceable, and, therefore, the City’s requirements that the
improvements be completed constitute an illegal taking. But, the City’s alleged
breach of the agreement is immaterial to whether the City had the requisite
intent to take the improvements when the agreement was executed.35 While
the City’s alleged breach may have excused NuRock from making the
improvements, 36 it does not alter the fact that the improvements were agreed
to well before the alleged breach occurred.37 We sustain the City’s third issue.
34
… See State v. Holland, 221 S.W.3d at 644.
35
… See id. at 643 (holding that focus is whether the state has the
“requisite intent” to take property for public use when the contract is formed).
36
… See Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195,
196 (Tex. 2004) (“It is a fundamental principle of contract law that when one
party to a contract commits a material breach of that contract, the other party
is discharged or excused from further performance.”).
37
… NuRock contends that Town of Flower Mound v. Stafford Estates,
Ltd., 135 S.W.3d 620 (Tex. 2004), compels a different result because the
Texas Supreme Court permitted the developer in that case to maintain a takings
11
C. Declaratory and Injunctive Relief
In its fourth issue, the City asserts that the trial court should have
dismissed NuRock’s claims for declaratory and injunctive relief.
1. Declaratory Relief
The Uniform Declaratory Judgments Act 38 does not extend the jurisdiction
of Texas courts; it only provides a procedure by which a trial court may
“decid[e] cases already within [the] court’s jurisdiction.” 39 Thus, a declaratory
judgment claim can be maintained only where there is a justiciable controversy
between the parties as to their rights and status that the declaration would
actually resolve. 40
The Supreme Court of Texas has distinguished between suits against
governmental units in which a party seeks a declaration to clarify rights under
cause of action even though the developer “voluntarily” completed the roadway
improvements and transferred them to the town. Contrary to NuRock’s reading
of Stafford, however, the developer’s construction of the improvements in that
case was not voluntary, but, instead, was made under protest “at every
administrative level in the Town.” Id. at 624.
38
… See Tex. Civ. Prac. & Rem. Code Ann. §§ 37.001–.011 (Vernon
2008).
39
… Chenault v. Phillips, 914 S.W.2d 140, 141 (Tex. 1996) (quoting
State v. Morales, 869 S.W.2d 941, 947 (Tex. 1994)); see also Tex. Civ. Prac.
& Rem. Code Ann. §§ 37.001–.011.
40
… See Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440,
446 (Tex. 1993).
12
a statute or regulation, for which the Declaratory Judgments Act provides a
waiver of immunity, and suits in which the request for declaratory relief is no
more than a recasting of a claim for money damages, for which the Act does
not provide a waiver of immunity.41
NuRock asserts that it is seeking declaratory relief to construe a
legislative act by the City and attempts to categorize the Settlement Agreement
as the equivalent of a statute or municipal ordinance. We disagree. The
Settlement Agreement, however, is a contract, not a statute. Statutes or
ordinances enacted by legislative bodies are designed to address broad
questions of public policy and to promulgate laws that those subject to the
government’s power must follow in future conduct.42 The Settlement
41
… Compare Tex. Educ. Agency v. Leeper, 893 S.W.2d 432, 446 (Tex.
1994) (holding that court had jurisdiction where plaintiff sought declaratory
judgment challenging state agency’s construction of compulsory school
attendance law), with Tex. Natural Res. Conservation Comm’n v. IT-Davy, 74
S.W.3d 849, 859–60 (Tex. 2002) (plurality op.) (holding that court lacked
jurisdiction where plaintiff sought declaration that state agency breached
contract, as such claim was “only . . . an attempt to have the trial court decide
its breach-of-contract claim [for which immunity was not waived]”); see also
de Miño v. Sheridan, 176 S.W.3d 359, 368 (Tex. App.—Houston [1st Dist.]
2004, no pet.) (concluding that request for declaratory relief “merely recast[]
[plaintiff’s] defamation claims” and, therefore, was “not within the proper scope
of an action for declaratory relief”).
42
… See Macias v. Rylander, 995 S.W.2d 829, 833 (Tex. App.—Austin
1999, no pet.) (“Generally, an administrative agency acts in a legislative
capacity when it addresses broad questions of public policy and promulgates
rules for future application ‘to all or some part of those subject to its power.’”).
13
Agreement clearly lacks these characteristics. Instead, it memorializes a
specific act to resolve a specific, isolated dispute between specific parties. It
establishes no rule or law that all members of the public must adhere to in
future conduct. 4 3 Thus, the Settlement Agreement involves the construction
of a contract, not the interpretation of a statute.
NuRock sought declaratory relief that it did not materially breach the
Settlement Agreement or otherwise fail to meet its obligations to the City. This
is not a permissible use of the Declaratory Judgments Act.44 Consequently, the
City’s immunity is not waived as to NuRock’s Declaratory Judgments Act
claim.45
2. Injunctive Relief
NuRock also sought permanent injunctive relief against the City.
Specifically, it asked that the City be ordered “[t]o cease and desist from
43
… See Beacon Nat’l Ins. Co. v. Montemayor, 86 S.W.3d 260, 268–69
(Tex. App.—Austin 2002, no pet.) (holding declaratory judgment action not
available to insurer because series of letters and draft consent decree are not
a “rule” for purposes of statute authorizing declaratory judgment action to
construe agency rules); Macias, 995 S.W.2d at 833 (“In determining whether
an administrative agency was acting in a legislative or judicial capacity, we ask
whether the administrative action implements broad public policy or concerns
only the parties immediately affected.”).
44
… See IT-Davy, 74 S.W.3d at 855–56; de Miño, 176 S.W.3d at 368.
45
… See IT-Davy, 74 S.W.3d at 855–56.
14
arbitrarily and capriciously applying the ordinances and variances therefrom of
the City of Corinth.” The City contends that the injunctive relief NuRock sought
regarding the City’s approval of certificates of occupancy for the Apartments
is not ripe and, therefore, the trial court had no jurisdiction to grant the relief.
NuRock contends that because the City failed to challenge NuRock’s request
for injunctive relief in its plea and supplemental plea to the jurisdiction, the City
cannot seek relief from that request in this appeal.46 We disagree.
Ripeness implicates subject matter jurisdiction.47 This court is obligated
to consider subject matter jurisdiction, even when it was not raised in the trial
court or asserted by either party on appeal.48
46
… See City of Dallas v. VSC, LLC, 242 S.W.3d 584, 598 (Tex.
App.—Dallas 2008, pet. filed) (holding that appellate court has interlocutory
jurisdiction only to consider issues that were raised in plea to jurisdiction).
47
… See, e.g., Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928
(Tex. 1998), cert. denied, 526 U.S. 1144 (1999).
48
… See Tex. Ass’n of Bus., 852 S.W.2d at 445–46; see also Waco
Indep. Sch. Dist. v. Gibson, 22 S.W.3d 849, 850–51 (Tex. 2000) (holding that
jurisdictional grounds not raised in plea to jurisdiction can be raised for first time
on interlocutory appeal); see also Dominguez v. City of Fort Worth, No. 02-06-
00196-CV, 2008 WL 623583, at *3 & n.16 (Tex. App.–Fort Worth Mar. 6,
2008, pet. denied) (mem. op.) (considering immunity argument raised for first
time in interlocutory appeal and noting that “[g]enerally, a challenge to subject
matter jurisdiction may be raised at any time”).
15
A case is ripe when facts have developed sufficiently that an injury has
occurred or is likely to occur.49 A case is not ripe if the injury is contingent or
remote.50 The possibility of future arbitrary and capricious conduct concerning
the Apartments is too remote to support a claim for a permanent injunction.
Accordingly, we conclude that NuRock’s request for a permanent injunction is
not ripe and, therefore, that the trial court lacked jurisdiction over that request.
We sustain the City’s fourth issue.
D. Attorney’s Fees
In its fifth issue, the City asserts that NuRock is not entitled to attorney’s
fees under either its declaratory judgment or its breach of the Settlement
Agreement claims. We agree. Because we conclude that NuRock’s declaratory
judgment claim must be dismissed, there is no basis for NuRock to recover fees
pursuant to the Declaratory Judgments Act.51
49
… Patterson v. Planned Parenthood of Houston & Se. Tex., Inc., 971
S.W.2d 439, 442 (Tex. 1998).
50
… Id.
51
… See OAIC Commercial Assets, L.L.C. v. Stonegate Village, L.P., 234
S.W.3d 726, 746 (Tex. App.—Dallas 2007, pet. denied) (holding that where
party lacked standing to bring declaratory judgment action, party could not
recover attorney’s fees under Declaratory Judgments Act); Cytogenix, Inc. v.
Waldroff, 213 S.W.3d 479, 490 (Tex. App.—Houston [1st Dist.] 2006, pet.
denied) (holding that party may not recover attorney’s fees under Declaratory
Judgments Act where claim for declaratory relief mirrored breach of contract
claim).
16
NuRock, however, asserts that it may recover attorney’s fees under
section 38.001(8) of the Texas Civil Practice and Remedies Code. 52 This
section provides that “[a] person may recover reasonable attorney’s fees from
an individual or corporation . . . if the claim is for . . . an oral or written
contract.” 53 NuRock asserts that the City is “an individual” for purposes of
section 38.001(8). We disagree.
“Individual” is not defined in section 38.001 or in the Code Construction
Act. Webster’s Third New International Dictionary defines “individual” to mean
“a single human being as contrasted with a social group or institution.” 54
”Person,” on the other hand, is defined broadly in the Code Construction Act
to include governmental entities.55
In light of the definition the legislature has given the word “person” in the
Code Construction Act, the fact that the legislature chose to use the word
“individual” in section 38.001, instead of the word “person,” indicates a clear
52
… See Tex. Civ. Prac. & Rem. Code Ann. § 38.001(8) (Vernon 2008).
53
… Id.(emphasis supplied).
54
… Webster’s Third New International Dictionary 1152 (2002).
55
… See Tex. Gov’t Code Ann. § 311.005(2) (Vernon 2005) (“‘Person’
includes corporation, organization, government or governmental subdivision or
agency, business trust, estate, trust, partnership, association, and any other
legal entity.”).
17
legislative intent to exclude government entities from those against whom
attorney’s fees may be recovered under the statute. Moreover, the legislature
expressly exempted municipalities from being a “corporation” under section
38.001.56 It would be incongruous to conclude that the legislature,
nonetheless, meant to implicitly include municipalities under the term
“individual.” Accordingly, we hold that section 38.001(8) does not authorize
recovery of attorney’s fees by NuRock against the City. The City’s fifth issue
is sustained.
Conclusion
The City is not immune from NuRock’s claims for breach of the
Settlement Agreement. The trial court, therefore, properly denied the City’s
plea to the jurisdiction as to this claim. The trial court erred, however, by
denying the City’s plea as to NuRock’s takings claim, requests for declaratory
and injunctive relief, and for attorney’s fees. Accordingly, we affirm that part
of the trial court’s order denying the City’s plea to the jurisdiction as to
NuRock’s breach of Settlement Agreement. We reverse that part of the order
56
… See Tex. Loc. Gov’t Code Ann. § 5.904(a) (Vernon 2008) (“A
municipality may not be considered a corporation under a state statute
governing corporations unless the statute extends its application to a
municipality by express use of the term ‘municipal corporation,’ ‘municipality,’
‘city,’ ‘town,’ or ‘village.’”).
18
denying the City’s plea as to NuRock’s takings claim, requests for declaratory
and injunctive relief, and for attorney’s fees, and dismiss those claims.
JOHN CAYCE
CHIEF JUSTICE
PANEL: CAYCE, C.J.; LIVINGSTON, J.; and DIXON W. HOLMAN (Senior
Justice, Retired, Sitting by Assignment).
LIVINGSTON, J. filed a concurring opinion.
DELIVERED: July 30, 2009
19
COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-07-422-CV
THE CITY OF CORINTH, TEXAS APPELLANT
V.
NUROCK DEVELOPMENT, INC.,
NUROCK CORPORATION,
NDG-TOWER RIDGE 1, LLC AND
TOWER RIDGE CORINTH 1, LTD. APPELLEES
------------
FROM THE 362ND DISTRICT COURT OF DENTON COUNTY
------------
CONCURRING OPINION
------------
I concur in the result reached by the majority, but I write separately to
clarify and express disagreement with some of the statements contained in the
majority opinion and to emphasize that the majority’s holding does not affect
the precedent established by a previous opinion from our court, City of
Carrollton v. Singer. 232 S.W.3d 790, 800 (Tex. App.—Fort Worth 2007, pet.
denied) (following Tex. A&M Univ.-Kingsville v. Lawson, 87 S.W.3d 518,
522–23 (Tex. 2002) (holding that when a governmental entity is exposed to
suit because of a waiver of immunity, it cannot settle that suit and
subsequently deny waiver of immunity for enforcement thereof)).
Chapter 271 of the local government code
The majority opinion acknowledges that governmental entities like Corinth
waive immunity from liability when they enter into contracts with private
citizens. Majority op. at 6. And discussing a city’s immunity from suit, the
majority observes that governmental entities do not automatically waive
immunity from suit simply by entering into contracts. Id.; see Catalina Dev.,
Inc. v. County of El Paso, 121 S.W.3d 704, 705 (Tex. 2003).
However, under chapter 271 of the local government code, when a party
provides goods or services to a local government, the local government waives
immunity from suit as well for the purpose of adjudicating a claim for breach of
the contract if the contract is properly authorized and executed. See Tex. Loc.
Gov’t Code Ann. §§ 271.151–.152 (Vernon 2005);1 Singer, 232 S.W.3d at
1
… The waiver of immunity for a claim under chapter 271 applies
retroactively to contracts executed before the effective date of the statute,
September 1, 2005, if sovereign immunity had not been waived with respect
to the claim before that date. See Tex. Loc. Gov’t Code Ann.
§§ 271.152–.154 historical note (Vernon 2005) [Act of May 23, 2005, 79th
Leg., R.S., ch. 604, § 2, 2005 Tex. Gen. Laws 1548, 1549]; Tooke v. City of
Mexia, 197 S.W.3d 325, 344–45 (Tex. 2006); Boyer, Inc. v. Trinity River
Auth. of Tex., 279 S.W.3d 354, 358 (Tex. App.—Fort Worth 2008, pet. filed).
2
795 n.4. The majority failed to note this statutory exception in its broad
statement regarding lack of immunity from suit in breach of contract claims.
While NuRock did not explicitly rely on chapter 271 as a basis for its argument
about Corinth’s waived immunity, several courts, including our supreme court,
are remanding cases where chapter 271 likely applies.
For example, the Dallas Court of Appeals remanded two different cities’
firefighters’ cases against Grand Prairie and Dallas, respectively, to allow the
trial court an opportunity to determine whether sections 271.151–.160 might
apply. See Bell v. City of Grand Prairie, 221 S.W.3d 317, 323 n.4 (Tex.
App.—Dallas 2007, no pet.) (op. on reh’g); City of Dallas v. Albert, 214 S.W.3d
631, 636–37 (Tex. App.—Dallas 2006, pet. filed) (op. on reh’g); see also City
of Houston v. Clear Channel Outdoor, Inc., 197 S.W.3d 386, 386–87 (Tex.
2006) (holding that remand is proper to give the proponent of waiver of
immunity an opportunity to argue that chapter 271 applies because it applies
retroactively); McMahon Contracting, L.P. v. City of Carrollton, 197 S.W.3d
387 (Tex. 2006) (same).
I recognize that the cited cases were in the appellate process when the
revisions to chapter 271 took place, as opposed to this case, which was not
even filed until after its effective date. However, we should not ignore the
posture of this case when filed: Corinth was the original plaintiff for the very
3
breach of contract action—breach of the Settlement Agreement—it now seeks
to avoid. Corinth first filed suit in April 2006. At the time NuRock filed its
answer, Corinth had not challenged jurisdiction. And by the time Corinth first
asserted its plea to the jurisdiction, in June 2007, all pleadings were on file and
discovery was complete.
Furthermore, the issue regarding the applicability of chapter 271 was
before the trial court regardless. Corinth raised its applicability in its plea to the
jurisdiction, in its seconded amended answer, and in its alternative motion for
summary judgment. In fact, Corinth alternatively asserted that section
271.153(b) could apply, which could serve to protect Corinth from some of the
damages it claimed would be excluded by the chapter itself. See Tex. Local
Gov’t Code Ann. § 271.153(b) (Vernon 2005) (excluding consequential and
exemplary damages from recovery under chapter 271). On this record, we can
not tell whether the trial court applied this statute when it denied Corinth’s plea
to the jurisdiction.
The majority opinion only concedes lack of immunity on one theory: that
the underlying suit was based upon breaches of the Federal Fair Housing Act
wherein a state’s immunity from suit is maintained but a city’s immunity from
suit is not. Majority op. at 9. In affirming the trial court’s judgment denying
Corinth’s plea to the jurisdiction, I would also instruct the trial court to
4
determine the applicability of this statute on waiver of immunity from suit. See
Tex. Loc. Gov’t Code Ann §§ 271.151–.160.
The effect of the dismissal of Corinth’s affirmative claims
NuRock also cited Reata Construction Corporation v. City of Dallas
(“Reata II”) to argue that Corinth waived its immunity against NuRock’s claim
for a breach of the settlement agreement by asserting its own monetary claim
for a breach of that agreement. 197 S.W.3d 371, 376–77 (Tex. 2006).
Corinth responded by stating that it has withdrawn all of its claims for
affirmative relief and that the reasoning of Reata II, which allows private parties
to assert otherwise immunity-barred claims as offsets against a governmental
entity’s recovery, cannot therefore apply. Id. at 377. Although the majority did
not discuss the effect of Reata II, I disagree with the notion that a
governmental entity may totally regain immunity that it has lost through filing
affirmative claims by simply dismissing or nonsuiting those claims much later
in the litigation; such a process would allow the entity to participate in litigation
without any risk of loss and flies in the face of the supreme court’s procedural
rules and related case law. See Tex. R. Civ. P. 162 (stating a dismissal shall
not prejudice the right of an adverse party regarding a pending claim for relief
or the right of the trial court to tax costs); Reynolds v. Murphy, 266 S.W.3d
141, 145 (Tex. App.—Fort Worth 2008, pet. denied); see also Joachim v.
5
Travelers Ins. Co., 279 S.W.3d 812, 815 (Tex. App.—Amarillo 2008, pet.
filed). But see City of Dallas v. Albert, 214 S.W.3d 631, 636 (Tex.
App.—Dallas 2006, pet. filed and briefing proceeding in the Supreme Court of
Texas) (op. on reh’g) (holding that “the City’s now withdrawn counterclaims
cannot form the basis of the trial court’s jurisdiction”); cf. City of Dallas v.
Saucedo-Falls, 172 S.W.3d 703, 708 (Tex. App.—Dallas 2005), rev’d, 218
S.W.3d 79 (Tex. 2007).
For these reasons, I agree with the majority’s disposition of Corinth’s first
and second issues by overruling them, but I disagree with the limited basis upon
which that disposition was reached.
The continuing validity of our Singer opinion
As the majority notes, a governmental entity may waive immunity from
suit by entering and breaching an agreement that settles a claim for which the
entity did not have immunity. Lawson, 87 S.W.3d at 518, 522–23; see
majority op. at 7. For instance, when a governmental entity enters into a
contract under the threat of and in lieu of condemnation proceedings, for which
the entity does not have immunity, the entity does not have immunity for a
breach of that contract. Singer, 232 S.W.3d at 798–800. I agree with the
majority’s expression in its resolution of Corinth’s third issue that a
governmental entity’s act under colorable contract rights alone cannot be a
6
taking and that immunity applies in such a situation, but I note that the inverse
circumstance—where the entity enters a contract with a threat of a colorable
taking—does not maintain immunity for a breach of a contract that resolves the
threat. See majority op. at 11; State v. Holland, 221 S.W.3d 639, 644 (Tex.
2007); Singer, 232 S.W.3d at 800.
The ripeness of NuRock’s claim for injunctive relief
Finally, I cannot agree with the majority that NuRock’s claim for injunctive
relief is not ripe for adjudication. See majority op. at 14–16. The majority
holds that the “possibility of future arbitrary and capricious conduct concerning
the Apartments is too remote to support a claim for a permanent injunction.”
Id. at 16. But the prevention of imminent, nonspeculative future conduct is
indeed a valid purpose of an injunction, and ripeness only requires a showing
that an injury is likely to occur. See Patterson v. Planned Parenthood of
Houston & Se. Tex., Inc., 971 S.W.2d 439, 442 (Tex. 1998); Democracy Coal.
v. City of Austin, 141 S.W.3d 282, 296 (Tex. App.—Austin 2004, no pet.).
Preceding NuRock’s request in its pleading that Corinth and its
representatives be enjoined from arbitrarily and capriciously applying Corinth’s
ordinances and variances, NuRock alleged that its construction and leasing of
its apartments had already been delayed because, in summary, (1) Corinth
arbitrarily canceled and refused to perform inspections, (2) Corinth refused to
7
issue permits and certificates of occupancy for reasons not contemplated by
and in contravention to the parties’ agreement settling their federal case, and
(3) Corinth refused to meet with NuRock’s representatives about issues related
to NuRock’s construction. And contrary to a statement in Corinth’s reply brief,
NuRock did plead “immediate and irreparable injury” based on Corinth’s
allegedly wrongful continued interference in NuRock’s development project.
I believe that NuRock’s pleading, when construed liberally as required by
our standard of review, provided the trial court with a sufficient basis to
determine that an injury was likely to occur by similar future conduct by
Corinth, and I would hold that whether the allegations comprise the type of
harm that would entitle NuRock to injunctive relief concerns the merits of
NuRock’s claim, not the ripeness of the claim. See Hays County v. Hays
County Water Planning P’ship, 69 S.W.3d 253, 260 (Tex. App.—Austin 2002,
no pet.); cf. Tex. Bay Cherry Hill, L.P. v. City of Fort Worth, 257 S.W.3d 379,
394 (Tex. App.—Fort Worth 2008, no pet.) (concluding that a claim for an
injunction against an eminent domain action was not ripe because the City of
Fort Worth expressly stated that it would not exercise its eminent domain
authority); Coble v. City of Mansfield, 134 S.W.3d 449, 458 (Tex. App.—Fort
Worth 2004, no pet.) (holding that a regulatory taking claim was not ripe
because the City of Mansfield had not acted to apply its ordinance at issue to
8
specific property). However, because I believe that the majority’s decision to
dismiss appellees’ injunctive relief claim against Corinth is supported by an
independent ground argued by Corinth in its brief (related to the proper
governmental defendant for injunctive relief when the injunction does not
involve constitutional violations), I concur with the majority’s disposition
overruling that claim. See City of Elsa v. M.A.L., 226 S.W.3d 390, 391–92
(Tex. 2007); City of Alton v. Sharyland Water Supply Corp., 277 S.W.3d 132,
156 (Tex. App.—Corpus Christi 2009, pet. filed) (op. on reh’g); Meroney v. City
of Colleyville, 200 S.W.3d 707, 711 (Tex. App.—Fort Worth 2006, pet.
granted, judgm’t vacated w.r.m.).
For the reasons stated, I concur only with the majority’s judgment and its
disposition of this appeal.
TERRIE LIVINGSTON
JUSTICE
DELIVERED: July 30, 2009
9