Chisholm Trail SUD Stakeholders Group v. Chisholm Trail Special Utility District and District Directors Delton Robinson, Ed Pastor, Mike Sweeney, James Pletcher, Robert Kostka, David Maserang, Gary Goodman, and Robert Johnson, Jr. The Public Utility Commission of Texas

ACCEPTED
03-16-00214-CV
10956428
THIRD COURT OF APPEALS
AUSTIN, TEXAS
6/3/2016 9:53:23 AM
JEFFREY D. KYLE
CLERK
No. 03-16-00214-CV
FILED IN
3rd COURT OF APPEALS
IN THE AUSTIN, TEXAS
COURT OF APPEALS 6/3/2016 9:53:23 AM
FOR THE JEFFREY D. KYLE
Clerk
THIRD DISTRICT OF TEXAS
CHISHOLM TRAIL SUD STAKEHOLDERS GROUP,
Appellant,
v.
CHISHOLM TRAIL SPECIAL UTILITY DISTRICT, AND DISTRICT
DIRECTORS DELTON ROBINSON, ED PASTOR, MIKE SWEENEY, JAMES
PLETCHER, ROBERT KOSTKA, DAVID MASERANG, GARY GOODMAN,
AND ROBERT JOHNSON, JR.; THE PUBLIC UTILITY COMMISSION OF
TEXAS; ET AL.,
Appellees.
From the 419th Judicial District Court of
Travis County, Texas
APPELLANT'S BRIEF
ORAL ARGUMENT REQUESTED
James P. Allison
SBN: 01090000
j.allison@allison-bass.com
ALLISON, BASS & MAGEE, LLP
A.O. Watson House
402 W. 12th Street
Austin, Texas 78701
(512) 482-0701 telephone
(512) 480-0902 facsimile
Appellant's Brief Page 1
IDENTITY OF PARTIES & COUNSEL
Appellants certify that the following is a complete list of the parties, the
attorneys, and any other person who has any interest in the outcome of this lawsuit:
Appellant:
Chisholm Trail SUD Stakeholders Group.
Counsel for Appellants:
James P. Allison
SBN: 01090000
j.allison @allison-bass.com
J. Eric Magee
SBN: 24007585
e.magee @allison-bass.com
Phillip Ledbetter
SBN: 24041316
p.ledbetter@allison-bass.com
ALLISON, BASS & MAGEE, LLP
A.O. Watson House
402 W. 12th Street
Austin, Texas 78701
(512) 482-0701 telephone
(512) 480-0902 facsimile
Appellees:
Chisholm Trail Special Utility District ("CTSUD")
CTSUD Directors:
Delton Robinson,
C.E. ("Ed") Pastor,
Mike Sweeney,
Robert Kotska,
James Pletcher,
Appellant's Brief Page 2
David Maserang,
Pat Gower,
Gary Goodman, and
Robert Johnson, Jr.,
In their official capacities
The Public Utility Commission of Texas ("PUC")
PUC Commissioners:
Donna L. Nelson,
Kenneth W. Anderson, Jr., and
Bandy Marty Marquez
In their official capacities.
The City of Georgetown, Texas
Counsel for Appellees:
Jose E. De La Fuente
SBN: 00793605
jdelafuente@lglawfinn.com
Lambeth Townsend
SBN: 20167500
!townsend@lglawfinn.com
Ashley D. Thomas
SBN: 24090430
athomas@ lglawfirm.com
Lloyd Gosselink, Rochelle & Townsend, P.C.
816 Congress Avenue, Suite 1900
Austin, Texas 78701
Telephone: (512) 322-5800
Facsimile: (512) 472-0532
Lead Attorneys for Appellees the City of Georgetown, Chisholm Trail Special
Utility District and the District Directors.
Appellant's Brief Page 3
Daniel C. Wiseman
SBN: 2402178
Daniel. wiseman @texasattomeygeneral. gov
Office of the Texas Attorney General
Environmental Protection Division (MC-066)
P.O. Box 12548
Austin, Texas 78711-2548
Telephone: (512) 463-2012
Facsimile: (512) 320-0911
Lead Attorney for Appellees the Public Utility Commission of Texas,
Commissioner Donna L. Nelson, Commissioners Kenneth W Anderson, Jr., and
Commissioners Brandy Marty Marquez.
Breck Harrison
SBN: 24007325
bharrison @ jw .com
Leonard Dougal
SBN: 06031400
ldougal @ jw .com
Jackson Walker, L.L.P.
100 Congress Avenue, Suite 1100
Austin, Texas 78701
Telephone: (512) 236-2000
Facsimile: (512) 236-2002
Attorneys for Appellees Chisholm Trail Special Utility District and District
Directors Delton Robinson, Ed Pastor, Mike Sweeney, James Pletcher, Robert
Kostka, David Maserang, Gary Goodman, and Robert Johnson, Jr.
Art Rodriguez
Russell & Rodriguez, L.L.P.
1633 Williams Drive, Building 2, Suite 200
Georgetown, Texas 78628-3659
(512) 930-1317
(866) 929-1641 (Fax)
arodriguez @txadminlaw.com
Attorney for Appellee the City of Georgetown
Appellant's Brief Page 4
Kerry E. Russell
Russell & Rodriguez, L.L.P.
1633 Williams Drive, Building 2, Suite 200
Georgetown, Texas 78628
(512) 930-1317
(866) 929-1641 (Fax)
krussell @txadminlaw .com
Sam Chang
Staff Attorney
Public Utility Commission of Texas
Legal Division
1701 N. Congress Ave.
Austin, Texas 78711-3326
(512) 936-7261
(512) 936-7268 (fax)
sam.chang@puc.texas.gov
Attorney for the Public Utility Commission of Texas Staff
Appellant's Brief Page 5
TABLE OF CONTENTS
IDENTITY OF PARTIES & COUNSEL .................................................................................... 2
TABLE OF CONTENTS .............................................................................................................. 6
INDEX OF AUTHORITIES ......................................................................................................... ?
APPELLANT'S BRIEF .............................................................................................................. 13
STATEMENT OF THE CASE ................................................................................................... 13
STATEMENT OF JURISDICTION .......................................................................................... l5
STATEMENT ON ORAL ARGUMENT .................................................................................. 15
ISSUE PRESENTED ................................................................................................................... 15
STATEMENT OF FACTS .......................................................................................................... 16
SUMMARY OF AGRUMENT ................................................................................................... 33
ARGUMENT ................................................................................................................................ 35
CONCLUSION ............................................................................................................................ 81
PRAYER ....................................................................................................................................... 81
CERTIFICATION OF COMPLIANCE ................................................................................... 83
CERTIFICATE OF SERVICE .................................................................................................. 83
APPENDIX TO APPELLANT'S BRIEF .................................................................................. 85
Appellant's Brief Page 6
INDEX OF AUTHORITIES
Cases
Austin Nursing Ctr., Inc. v. Lovato,
171 S.W.3d 845 (Tex.2005) ................................................................................ 78
Bexar Metro. Water Dist. v. Texas Com'n on Envtl. Quality, 185ch S.W.3d 546
(Tex. App.-Austin 2006, pet. denied) ........................................... 62, 63
Bohannon v. Texas Bd. of Criminal Justice,
942 S.W.2d 113 (Tex.App.-Austin 1997, writ denied) ...................................... 40
Byrd v. City of Dallas,
6 S.W.2d 7380 (Comm'n App. 1928) .................................................................. 42
Cash Am. Int'l Inc. v. Bennett,
35 S.W.3d 12 (Tex.2000) .................................................................................... 73
Central Power & Light Co. v. Public Uti!. Comm 'n,
17 S.W.3d 780 (Tex. App.-Austin 2000, pet. denied) ........................................ 72
City of Austin v. McCall, 68 S.W. 791 (1902) ....................................... 80
City of Beaumont v. Bouillion,
896 S.W.2d 143 (Tex.1995) ................................................................................ 40
City of El Paso v. Heinrich,
284 S.W.3d 366 (Tex. 2009) ............................................................. 37, 51, 53, 54
City of Elsa v. M.A.L.,
226 S.W.3d 390 (Tex. 2007) ............................................................................... 51
City of Ingleside v. City of Corpus Christi,
469 S.W.3d 589 (Tex.2015) .......................................................................... 36, 70
City of Lubbock v. Phillips Petroleum Co.,
41 S.W.3d 149 (Tex. App.-Amarillo 2000, no pet.) ........................................... 69
City of The Colony v. N. Texas Mun. Water Dist.,
272 S.W.3d 699 (Tex. App.- Fort Worth, 2008, no pet.) .................................. 62
City of Waco v. Kirwan,
298 S.W.3d 618 (Tex.2009) ................................................................................ 35
Cobb v. Harrington,
190 S.W.2d 709 (Tex. 1945) ............................................................................... 53
Continental Coffee Prods. Co. v. Cazarez,
937 S.W.2d 444 (Tex.1996) .......................................................................... 73, 78
Crofts v. Court of Civil Appeals,
362 S.W.2d 101 (Tex.1962) ................................................................................ 73
Dallas Area Rapid Transit v. Whitley,
104 S.W.3d 540 (Tex. 2003) ............................................................................... 43
Appellant's Brief Page 7
Davis v. City of Lubbock,
326 S.W.2d 6990 (Tex. 1959) .............................................................................. 42
De Leon v. City of El Paso,
353 S.W.3d 285 (Tex.App.-El Paso 2011, no pet.) ............................................ 40
De Los Santos v. City of Robstown,
No. 13-11-00278-CV, 2012 WL 67067808 (Tex. App.-Corpus Christi Dec. 13,
2012, no pet.) ....................................................................................................... 51
Edgewood Indep. Sch. Dist. v. Meno,
917 S.W.2d 717 (Tex.1995) ................................................................................ 68
Ehlinger v. Rankin,
9 Tex. Civ. App. 424, 29 S.W. 240 (1895) ......................................................... 41
Fed. Sign v. Tex. S. Univ.,
951 S.W.2d 401 (Tex.1997) .......................................................................... 53, 54
Frasier v. Yanes,
9 S.W.3d 422 (Tex. App.-Austin 1999, no pet.) ........................................... 39, 41
Garcia v. Corpus Christi Civil Serv. Bd.,
No. 13-07-00585-CV, 2009 WL 2058892 (Tex. App.-Corpus Christi July 16,
2009, no pet.) ....................................................................................................... 40
Gatesco Q.M., Ltd. v. City of Houston,
333 S.W.3d 3388 (Tex. App.-Houston [14th Dist.] 2010, no pet.) ..................... 51
Harris Cnty. Flood Control Dist. v. Mann,
140 S.W.2d 1098 (Tex. 1940) ............................................................................. 37
Hays County v. Hays County Water Planning P'ship,
106 S.W.3d 3497 (Tex.App.-Austin 2003, no pet.) ............................................. 79
Hendee v. Dewhurst,
228 S.W.3d 354 (Tex. App.-Austin 2007, pet. denied) ...................................... 39
Hindman v. Harding,
No. 03-04-00479-CV, 2005 WL 1038828 (Tex. App.-Austin May 5, 2005, no
pet.) ...................................................................................................................... 70
Houston Belt & Terminal Ry. Co. v. City of Houston,
No. 14-0459, 2016 WL 1312910 (Tex. Apr. 1, 2016) .................................. 53, 54
In re Smith,
333 S.W.3d 5825 (Tex.2011) ............................................................................... 54
Jones v. Ross,
173 S.W.2d 1022 (Tex. 1943) ............................................................................. 39
Key v. Comm'rs Court of Marion Cnty.,
727 S.W.2d 667 (Tex. App.-Texarkana 1987, no writ) ............................... 38,42
Appellant's Brief Page 8
Lewis v. Davis,
199 S.W.2d 146 (Tex. 1947) ......................................................................... 38, 67
Lone Star Coil. Sys. v. Immigration Reform Coal. of Texas (IRCOT),
418 S.W.3d 263 (Tex. App.-Houston [14th Dist.] 2013, pet. denied) ................ 51
MAG-T, L.P. v. Travis Cent. Appraisal Dist.,
161 S.W.3d 617 (Tex. App.-Austin 2005, pet. denied) ...................................... 74
Magnolia Bend Volunteer Fire Dep't, Inc. v. McDonnell, No.
09-03-051CV, 2003 WL 22922799 (Tex. App.-Beaumont Dec. 11, 2003, no
pet.) ...................................................................................................................... 39
Mart. v. Martin, Martin & Richards, Inc.,
12 S.W.3d 120 (Tex. App.-Fort Worth 1999, no pet.) ....................................... 70
Miller v. S. E. Texas Reg'l Planning Comm'n, No. 03-11-00817-CV,
2013 WL 3724716 (Tex. App.-Austin July 11, 2013, no pet.) ............................ 43
Mitchell Cty. v. City Nat. Bank
43 S.W. 8801 (Tex. 1898) .................................................................................... 41
Morales v. Hidalgo Cty. Irrigation Dist. No.6,
No. 13-14-00205-CV, 2015 WL 5655802 (Tex. App.-Corpus Christi Sept. 24,
2015, pet. denied) ........................................................................................... 38, 42
Motorola v. Tarrant County Appraisal Dist.,
980 S.W.2d 899 (Tex.App.-Fort Worth 1998, no pet.) ...................................... 41
Niagara Fire Ins. Co. v. Numismatic Co. of Fort Worth,
380 S.W.2d 830 (Tex. Civ. App.-Fort Worth 1964, writ ref'd n.r.e) ................. 80
Nueces Cty. v. Ferguson,
97 S.W.3d 205 (Tex. App.-Corpus Christi 2002, no pet.) .................................. 40
Philadelphia Indem. Ins. Co. v. White,
No. 14-0086, 2016 WL 2848487 (Tex. May 13, 2016) ...................................... 38
Plano Surgery Ctr. v. New You Weight Mgmt. Ctr.,
265 S.W.3d 496 (Tex.App.-Dallas 2008, no pet.) .............................................. 39
Ritchey v. Vasquez,
986 S.W.2d 611 (Tex.1999) ................................................................................ 73
Roberts Express, Inc. v. Expert Transp., Inc.,
842 S.W.2d 766 (Tex. App.-Dallas 1992, no writ) ...................................... 72, 73
San Antonio Indep. Sch. Dist. v. Board ofTrs. of San Antonio Elec. & Gas Sys.,
204 S.W.2d 22 (Tex. Civ. App.-El Paso 1947, writ refd n.r.e.) ........................ 37
Save Our Springs Alliance, Inc. v. City of Dripping Springs,
304 S.W.3d 871 (Tex. App.-Austin 2010, pet. denied) ..................................... 79
Sneed v. Webre,
465 S.W.3d 169 (Tex. 2015) ............................................................................... 78
Appellant's Brief Page 9
Spring Branch Mgmt. Dist. v. Valco Instruments Co., L.P.,
No. 01-11-00164-CV, 2012 WL 2923151 (Tex. App.-Houston [1st Dist.] July
12, 2012, no pet.) ................................................................................................. 40
Steele v. City of Houston,
603 S.W.2d 786 (Tex.1980) ................................................................................ 40
Strayhorn v. Lexington Ins. Co.,
128 S.W.3d 772 (Tex. App.-Austin 2004) .......................................................... 74
Subaru of Am., Inc. v. David McDavid Nissan, Inc.,
84 S.W.3d 212 (Tex. 2002) ................................................................................. 72
Tex. Educ. Agency v. Leeper,
893 S.W.2d 432 (Tex.1994) ................................................................................ 53
Tex. Lottery Comm 'n v. First State Bank of De Queen,
325 S.W.3d 628 (Tex. 2010) ............................................................................... 51
Tex. Natural Res. Conservation Comm 'n v. White,
46 S.W.3d 864 (Tex.2001) ................................................................................... 43
Tex. Parks & Wildlife Dep't v. Sawyer Trust,
354 S.W.3d 3843 (Tex.2011) ............................................................................... 53
Texas A & M Univ. Sys. v. Koseoglu,
233 S.W.3d 835 (Tex. 2007) ............................................................................... 36
Texas Ass'n of Bus. v. Texas Air Control Bd.,
852 S.W.2d 440 (Tex. 1993) ......................................................................... 43, 78
Texas Dep't of Ins. v. Reconveyance Servs., Inc.,
306 S.W.3d 256, 258 (Tex. 2010) ...................................................... 51
Texas Dep 't of Parks & Wildlife v. Miranda,
133 S.W.3d 217 (Tex. 2004) ............................................................. 35, 36, 37, 70
Texas Dep 't of Transp. v. Sefzik,
355 S.W.3d 618 (Tex. 2011) ............................................................................... 51
Texas Educ. Agency v. Cypress-Fairbanks Indep. Sch. Dist.,
830 S.W.2d 88 (Tex.1992) .................................................................................. 73
Texas Mun. League Intergovernmental Risk Pool v. Texas Workers' Comp.
Comm'n,
74 S.W.3d 3773 (Tex. 2002) .......................................................................... 41, 68
Texas Nat. Res. Conservation Comm'n v. IT-Davy,
74 S.W.3d 849 (Tex. 2002) ........................................................................... 44, 45
Texas State Bd. of Examiners in Optometry v. Carp,
162 Tex. 1, 343 S.W.2d 242 (1961) ................................................................... 73
Texas Tech Univ. Health Scis. Ctr. v. Rao,
105 S.W.3d 763 (Tex. App. 2003-Amarillo, pet. dism'd) .................................. 40
Appellant's Brief Page 10
Texas Water Comm'n v. City of Fort Worth,
875 S.W.2d 332 (Tex. App.- Fort Worth, 1994 writ denied) ........................... 63
Thomas v. Beaumont Heritage Soc.,
339 S.W.3d 900 (Tex. App.- Beaumont 2011, pet.denied) .............................. 79
Town of Flower Mound v. Rembert Enters.,
369 S.W.3d 465, 474 (Tex. App.-Fort Worth 2012, pet.denied) .................... 51
Wichita Falls State Hosp. v. Taylor,
106 S.W.3d 692 (Tex. 2003) ............................................................................... 39
Willacy Cnty. Water Control & Improvement Dist. No.1 v. Abendroth,
177 S.W.2d 936 (Tex. 1944) ............................................................................... 38
Statutes
Tex. Civ. Prac. & Rem Code§ 51.014(a)(8) .................................................... 15, 32
Tex. Civ. Prac. & Rem. Code§ 37.006(b) .............................................................. 51
Tex. Civ. Prac. & Rem. Code§ 51.014(b), (c) ....................................................... 32
Tex. Const. art III, §52 ................................................................................... passim
Tex. Const. art XI, § 3 ...................................................................... 37
Tex. Const. art. XVI,§ 59 ................................................................................. 38, 58
Tex. Gov't Code§ 791.001 ................................................................. 62
Tex. Gov't Code§ 791.011(e) ................................................................................. 64
Tex. Gov't Code§ 791.026(a)(l), (g) ...................................................................... 62
Tex. Gov't Code §§ 22.201, 22.220 ........................................................................ 15
Tex. Gov't Code § 791.011(c) .......................................................................... 58, 62
Tex. Gov't Code§§ 2001.045, 2001.146(c), 2001.171 .......................................... 77
Tex. Water Code, Chapter 13 ............................................................................ 27, 28
Tex. Water Code, Chapter 65 ...................................................................... 16, 58, 65
Tex. Water Code§ 13.002(19) ................................................................................ 46
Tex. Water Code§ 49.002 ...................................................................................... 59
Tex. Water Code§ 13.248 ...................................................................................... 24
Tex. Water Code§ 49.321 ...................................................................................... 27
Tex. Water Code§ 65.011 ...................................................................................... 58
Tex. Water Code§ 65.012(1) .................................................................................. 58
Tex. Water Code§§ 65.012, 65.201 ....................................................................... 65
Tex. Water Code§§ 65.723-65.726 ..................................................................... 27
Tex. Water Code§ 65.727 ...................................................................................... 26
Appellant's Brief Page 11
Regulations
16 Tex. Admin. Code§ 22.264(c) ........................................................................... 76
Other Authorities
35 Tex. Prac., County And Special District Law§ 5.14 ......................................... 62
Antitrust Jurisdiction and Remedies in an Electric Utility Price Squeeze,
52 U. Chi. L.Rev. 1090 (1985) ........................................................................... 73
HB 1600 ............................................................................................................ 50, 52
HB 1700 .................................................................................................................. 48
HB 4172 .................................................................................................................. 25
SB 567 ......................................................................................................... 48, 50, 52
Tex. Att'y Gen. Op. No. JC-0335 (2001) ................................................................ 38
Appellant's Brief Page 12
No. 03-16-00214-CV
IN THE
COURT OF APPEALS
FOR THE
THIRD DISTRICT OF TEXAS
CHISHOLM TRAIL SUD STAKEHOLDERS GROUP,
Appellant,
v.
CHISHOLM TRAIL SPECIAL UTILITY DISTRICT, AND DISTRICT
DIRECTORS DELTON ROBINSON, ED PASTOR, MIKE SWEENEY, JAMES
PLETCHER, ROBERT KOSTKA, DAVID MASERANG, GARY GOODMAN,
AND ROBERT JOHNSON, JR.; THE PUBLIC UTILITY COMMISSION OF
TEXAS; ET AL.,
Appellees.
From the 4191h Judicial District Court of
Travis County, Texas
APPELLANT'S BRIEF
I.
STATEMENT OF THE CASE 1
1.1 This case concerns the ability of Texas citizens to seek judicial relief for the
unauthorized, improper acts of their public officials, political subdivisions, and
state agencies act in violation of the Texas Constitution and statutes. The ruling of
1
This Statement is supported by the record below which consists of the original Clerk's Record, reference to which
is by "CR"; and the original Reporter's Record, reference to which is by "RR".
Appellant's Brief Page 13
the District Court has denied these citizens the opportunity to present evidence of
these wrongful acts.
1.2 Chisholm Trail Special Utility District ("CTSUD") is a water district created
to serve a rural area in portions of Bell, Burnet and Williamson Counties. CR 477,
481. CTSUD's Directors resolved to transfer the entire water system, the
Certificate of Convenience and Necessity, and all assets to the City of Georgetown
("City"). CR 485. CTSUD and the City thereafter entered into an asset transfer
agreement and requested the Public Utility Commission's approval of the
transaction. CR 486-488. The transaction would: (i) grant CTUSD's assets to the
City in violation of Article III, § 52(a) of the Texas Constitution; (ii) render
CTUSD legally incapable of providing water utility service to its constituents; (iii)
illegally nullify CTSUD landowners' and consumers' statutory right to vote on
water utility issues; and (iv) affect an dissolution of CTSUD. CR 492-507.
Accordingly, the Chisholm Trail SUD Stakeholders Group ("Appellant") filed suit
for declaratory and injunctive relief necessary to remedy the Appellee's
unconstitutional, unlawful, and ultra vires acts. CR 509-517. Appellees asserted
pleas to the jurisdiction claiming that the doctrines of sovereign immunity,
governmental immunity, primary jurisdiction and/or exclusive jurisdiction shield
their unlawful actions from judicial review. CR 3-5, 15-16, 22-24, 31-35. The
Appellant's Brief Page 14
trial court erroneously granted those pleas and dismissed Appellant's claims with
prejudice. CR 657-661. Therefore, Appellant brings this interlocutory appeal,
respectfully requesting that the Court of Appeals reverse the trial court order
granting the Appellees' pleas to the jurisdiction, and remand this lawsuit for further
proceedings. See e.g., CR 662-663.
II.
STATEMENT OF JURISDICTION
2.2 This Court has appellate jurisdiction to review civil interlocutory
orders of Travis County district courts that grant pleas to the jurisdiction filed by
governmental units. Tex. Gov't Code §§ 22.201, 22.220; Tex. Civ. Prac. & Rem
Code§ 51.014(a)(8).
III.
STATEMENT ON ORAL ARGUMENT
3.1 Appellants request the opportunity to present oral argument to: (a)
provide the Court a more complete understanding of the facts presented in this
appeal; (b) allow the Court to better analyze the complicated legal issues presented
in this appeal; and (c) significantly aid the Court in deciding this case.
IV.
ISSUE PRESENTED
Issue 1: Whether the trial court erred in granting Appellees' pleas to the
jurisdiction.
Appellant's Brief Page 15
v.
STATEMENT OF FACTS
A. Identification of Parties.
5.1 Appellant Chisholm Trail SUD Stakeholders Group ("Appellant") is a
domestic nonprofit corporation. CR 477. Appellant is organized to advocate for
and protect the interests of residents and landowners in the rural areas of Bell,
Burnet and Williamson Counties in receiving adequate water utility service. /d.
5.2 Appellee Chisholm Trail Special Utility District ("CTSUD" or
"District") is a special utility district created in 1990 by order of the Texas Natural
Resources Conservation Commission (now, the Texas Commission on
Environmental Quality ("TCEQ")), pursuant to Chapter 65 of the Texas Water
Code. CR 481-482. The District's geographic area covers approximately 257,116
acres and encompasses portions of Bell, Burnet, and Williamson Counties. CR
4 77. The District does not include any portion of the incorporated area of the City
of Georgetown. /d. The District has provided retail water utility service to this
area pursuant to a Certificate of Convenience & Necessity ("CCN") No. 11590
issued by the TCEQ; jurisdiction over this certificate has now been statutorily
transferred to the Public Utility Commission ("PUC"). CR 477-478. The District
serves more than 7,000 water utility customers. CR 482. The District is governed
by a seven-member board of directors, elected at-large by the qualified voters in
Appellant's Brief Page 16
the District. /d. The District has operated as a viable retail water utility for more
than twenty years. CR 481-485,493.
5.3 Appellees Delton Robinson, C.E. ("Ed") Pastor, Mike Sweeney,
Robert Kotska, James Pletcher, David Maserang, Pat Gower, Gary Goodman, and
Robert Johnson, Jr., are the individuals who are serving or have served as Directors
of CTSUD, a political subdivision of the State of Texas, duly formed and existing
under the laws of the State of Texas. CR 478. These Appellees (collectively
referred to as the District "Board Members" or "Directors") are being sued in their
official capacities as the current and former board members for CTSUD. /d.
5.4 Appellee the City of Georgetown ("City" or "Georgetown") is a home
rule, municipal corporation located in Williamson County, Texas. CR 482. The
City has a council-manager form of government. /d. The City provides retail
water utility services pursuant to a CCN issued by the TCEQ (i.e., CCN No.
12369). /d. The Georgetown Utility System ("GUS") is a division of the City of
Georgetown. /d. GUS is responsible for the management and operations of the
City's electric, water and wastewater systems. /d. GUS has an advisory board that
reviews policy, rates, and contracts and makes recommendations related to these
issues to the City Council. Recommendations by the GUS advisory board are
subject to ratification by the City Council. /d. The GUS advisory board is selected
Appellant's Brief Page 17
by the City Council. !d.
5.5 Appellees Donna L. Nelson, Kenneth W. Anderson, Jr., and Brandy
Marty Marquez ("Commissioners") are the individuals appointed to serve as the
three commissioners of the PUC, as prescribed by Tex. Util. Code § 12.051, and
are being sued in their official capacities. CR 478.
B. Asset Transfer and Administrative Proceedings.
5.6 In September 2013, the District and the City entered into a written
Asset Transfer and Utility System Consolidation Agreement ("Agreement" or
"Asset Transfer Agreement"). CR 485. The Agreement provided for the transfer
of the District's entire water system to the City, including all of the District's
facilities, property, virtually all of its cash, contracts, obligations, and all of the
District's certificated water service area. !d.
5. 7 The Agreement further provided that the closing of this transaction
was conditioned upon the parties obtaining consent from various parties, including
the "[a]pproval by the TCEQ for the transfer of the CTSUD CCN and the Assets."
CR 486. As such, in November 2013, the City filed an Application for Sale,
Transfer, or Merger of a Retail Public Utility" ("STM Application" or
"Application") with the TCEQ. !d.
Appellant's Brief Page 18
5.8 Numerous persons protested the proposed transaction and requested a
contested administrative hearing by the TCEQ, including the members of the
Appellant nonprofit corporation, the Bell County Commissioners Court, Texas
Senator Troy Fraser, and Texas Representative Jimmie Don Aycock. CR 486-487.
These protestors assert that the interests of the water utility customers, businesses,
and landowners within the District are best served by its continued operation as a
freestanding district that is governed by a board of directors who are electorally
and politically accountable to the voters within the District's boundaries. /d. The
protestants also assert that the transfer of the CTSUD's assets and CCN to City of
Georgetown would cede control of water utility service decisions for areas well
beyond the Georgetown city limits to the Georgetown City Council. /d.
Accordingly, the protestants additionally assert that this would disenfranchise,
alienate and politically isolate the customers, businesses, and landowners in the
rural area of the District, leaving them with no representation in their water matters
because all customers in the unincorporated areas of Williamson County (outside
the City of Georgetown), and the customers in Bell and Burnet Counties cannot
vote for the Georgetown City Council. /d. Consequently, the protestants assert
that this action would be detrimental to the interests and property values of
customers, businesses, and property owners in the portions of Bell, Burnet, and
Appellant's Brief Page 19
Williamson counties located outside Georgetown's city limits. /d. The protestants
assert that these actions by the District and the City of Georgetown violate
numerous statutes and provisions of the Texas Constitution. CR 490.
5.9 In May 2014, the matter was referred to the State Office of
Administrative Hearings ("SOAH") for a contested case hearing. CR 487.
Following a preliminary hearing, the Administrative Law Judge determined that
the TCEQ had jurisdiction over Georgetown's STM Application and admitted
parties, including five protestants ("Protestants"), three of whom are also
Appellant's members. /d.
5.10 On August 21, 2014, the District's Board adopted a resolution that
purports to: (a) authorize the District's president to execute an Amended Asset
Transfer Agreement with Georgetown; (b) authorize the District's president to
execute an Operations Agreement between the District and Georgetown; (c)
authorize the District's president to consummate the transactions contemplated by
the Amended Asset Transfer Agreement and Operations Agreement; and (d)
approve the adoption of a Transition Surcharge of $4.75 per meter per month for
District customers "to fund CTSUD's operating costs and expenses associated with
transitioning service to the City of Georgetown and with maintaining CTSUD's
Appellant's Brief Page 20
CCN." CR 487-488. The Amended Asset Transfer Agreement and the Operations
Agreements were not attached to or incorporated into the resolution. /d.
5.11 On September 1, 2014, Georgetown's STM Application was
statutorily transferred from the subject matter jurisdiction of the TCEQ to the PUC.
CR 488. The filings in that matter (SOAH DOCKET NO. XXX-XX-XXXX and PUC
DOCKET NO. 42861) are publicly available online. /d. 2
5.12 On September 12, 2014, CTSUD and the City executed a First
Amendment to Asset Transfer and Utility System Consolidation Agreement ("First
Amendment" or "First Amended Agreement") which incorporated several
documents related to the transaction, including a Service Area Operations and
Management Agreement ("Operations Agreement"). Id.
5.13 The aforementioned resolution provides that pursuant to the
Operations Agreement, "the City will provide water utility services within the
CTSUD CCN." Accordingly, the Operations Agreement generally provides that
the City will be responsible for operating the District's water system and have all
powers of District Management and staff. CR 488-489. Under the Agreement, the
parties claimed that the District shall continue to exercise all of the powers and
duties of the CCN holder for water utility service within the District's CCN. Id.
2
The filings in this docket may be accessed by VISiting
http://i nterchan ge .puc.texas.!!ov/W ebApp!Interchan ge/appl ication/dbapps/fi li ngs/pgSearch.asp and searching for
control number 42861. Those filings were incorporated by reference in the Appellant' s and Appellees' pleadings.
See e. g., RR 64-66.
Appellant's Brief Page 21
Nevertheless, under the First Amended Agreement, the District transferred all of its
water system to the City and adopted the City's policies and rate structure (not
including the Transition Surcharge). /d. Further, the District agreed that the City
will bill, collect, and retain water service revenues collected within the District's
CCN, less a portion of the aforementioned Transition Surcharge. /d.
5.14 Following the execution of the First Amendment, CTSUD
consummated the transaction, transferring its water system and nearly all of its
assets to the City. CR 489. Since the closing of the asset transfer, Appellants
allege that the District effectively ceased to exist. /d. The District no longer
operates an office. /d. Calls to the District's telephone number (254-793-3103)
were greeted with a recording stating that caller had reached "Georgetown Utility
Systems, formerly Chisholm Trial Special Utility District." /d. The recorded
messages also indicated that the District's phone number will be discontinued. /d.
Further, District customers now receive water utility bills from the "Georgetown
Utility Systems Western District Office." /d. The First Amendment and
Operations Agreement also made the City responsible for seeking approval to
transfer the District's CCN. /d.
5.15 The City produced a Financial Report for fiscal year 2014, which
provides that the City experienced a 91.8% increase in revenue over the prior year,
Appellant's Brief Page 22
including $71.5 million in capital grants and contributions due primarily to the
acquisition of CTSUD. CR 489-490. Hence, under the First Amendment to the
Asset Transfer Agreement, the City acquired the District's water system, which the
City has valued at more than $70 million, as well as the District's water reserves
and the revenues from its profitable retail water utility. Id. Appellant alleges that
the City's valuation fails to account for additional assets and receivables, including
water rights, and is considerably below market value. Id at n. 2.
5.16 In September 2014, the Protestants in the contested case hearing filed
a motion seeking the dismissal of Georgetown's STM Application. CR 490. The
Motion provided, inter alia, that Georgetown's STM Application seeks to illegally
revoke the District's CCN, dissolve the District, and transfer the District's assets to
Georgetown. Id. Further, the motion provided that the PUC lacks jurisdiction to
approve Georgetown's STM Application and affect an illegal dissolution of the
District, as well as an illegal acquisition of the District's water system and CCN.
Id. The PUC Staff responded by asserting that the PUC does not have jurisdiction
to evaluate whether the STM Application or Asset Transfer Agreement violates the
statutory requirements related to dissolution of special utility districts. Id. 3 The
Administrative Law Judge agreed and ordered that the proceeding continue solely
3
See Staff's Response to Protestants' Motion for Summary Disposition (Item No. 131) at pg. 3 (available online
here:
http://interchange.puc.texas .gov/WebAppllnterchange/app lication/dbapps/filin!!s/p!!Search Results.asp?TXT CNT
R N0=42861 &TXT ITEM NO= 13 1).
Appellant's Brief Page 23
regarding the issues regarding the proposed transfer of the District's CCN to
Georgetown. Id. The Public Utility Commissioners refused to hear an appeal of
that decision, and later issued a Preliminary Order identifying the issues that must
be addressed by the ALJ. Id. Notably, the Preliminary Order indicated that the
proceeding would not address the dissolution of the District or the approval of the
Asset Transfer Agreement. Id. 4
5.16 On January 15, 2015, Georgetown and the District entered into a
Second Amendment to the Asset Transfer and Utility System Consolidation
Agreement ("Second Amended Agreement" or "Second Amendment"). CR 491.
The Second Amendment served primarily to provide that Georgetown and the
District intended for the Asset Transfer Agreement to constitute a contract made
under Texas Water Code Section 13.248. Id. The PUC later determined that this
statute does not apply to Georgetown's Application. Id. 5 Nevertheless, the PUC
also indicated that Georgetown's Applications may be processed under other
provisions of the Water Code without any further amendment of the Application or
further notice being published regarding the same. Id. 6
4
See the PUC's Preliminary Order (Item No. 180) at pgs. 3-11 (available online here:
http://interchan ge .puc. texas. 'i!OVIW ebAppllnterchan 'i!e/application/dbappslfil i ngs/o!!Searc h Resul ts.asp ?TXT CNT
R N0=4 2861 &TXT ITEM NO= 182).
5
See PUC Preliminary Order (Item No. 182) at pg. 7.
6
See id. at pgs. 5-6.
Appellant's Brief Page 24
5.17 On April4, 2015, House Bill4172 was introduced in the Texas House
of Representatives relating to the dissolution of CTSUD. CR 491. This bill was
introduced in accordance with terms of the Asset Transfer Agreement providing
that CTSUD and Georgetown will pursue efforts to seek passage of legislation that
would authorize the immediate dissolution of the District. Id. The bill proposed
legislation that would have authorized the District board to adopt an order that
would dissolve the District and affect a transfer of its assets to Georgetown. Id.
House Bill 4172 would have attempted to further preclude any judicial review of
the Board's order dissolving the District. Id. On April 22, 2015, Defendant
CTSUD Directors Delton Robinson and Michael Sweeney as well as other CTSUD
and City representatives testified at a public hearing before the Texas House of
Representatives' Special Committee on Special Purposes Districts in favor of
House Bill 4172. !d. Conversely, several witnesses testified in opposition to
House Bill 4172 and submitted letters to members of the legislature opposing the
bill. /d. House Bill 4172 did not pass during the legislative sessiOn. /d. 7
Therefore, the CTSUD has not been legally dissolved. /d.
5.18 Appellant initiated this lawsuit on August 12, 2015. CR 636.
Appellant's lawsuit alleges, inter alia, that the PUC lacks the authority or
7
The legislative history for House Bill 4172 is publicly available on the Texas Legislature's website here:
hllp://www .le:is.state. tx. u IB i llLookup/History.asox ?Le;Sess=8-t R&B ill-HB4172.
Appellant's Brief Page 25
jurisdiction to process and approve Georgetown's Application because it affects an
illegal dissolution of the District and transfer of the District's CCN and assets. See
e.g., CR 499-506. The administrative proceeding, however, continued over the
Protestants' objection that the Application was being improperly considered
notwithstanding the pendency of this lawsuit challenging the illegality of the Asset
Transfer Agreement and the PUC's lack of jurisdiction over the Application. CR
503. Ultimately, the PUC issued a final order approving the Application. ld.
Thereafter, Protestants exhausted all available administrative remedies. Id.
5.19 On March 8, 2016, the Protestants petitioned a Travis County District
Court for judicial review of the PUC's final order. CR 522-634. Protestants, who
include members of the Appellant herein, petitioned in intervention of this lawsuit.
/d.
C. Instant Lawsuit and Pleas to the Jurisdiction.
5.20 On March 8, 2016, Appellant filed its First Amended Petition. CR
476-521. Appellant seeks declaratory and injunctive relief against all Appellees.
See CR 509-517. Notably, Appellant's First Amended Petition alleges and
requests the trial court to make the following declarations:
a. The District issued debt and/or loaned its credit, and therefore
cannot dissolve pursuant to Texas Water Code section 65.727;
Appellant's Brief Page 26
b. The District cannot consolidate with the City of Georgetown
pursuant to Texas Water Code sections 65.723- 65.726;
c. The District incurred bonded indebtedness and has not been
inactive for five consecutive years, and therefore cannot dissolve
pursuant to Texas Water Code section 49.321;
d. The District is not otherwise authorized by Texas law to dissolve;
e. The District, the District Directors, the City, the PUC and the
Commissioners have engaged in an unlawful dissolution of the
District;
f. The City's Application, seeking PUC approval to transfer
CTSUD' s CCN to Georgetown, will render CTSUD incapable of
providing water utility service within its own boundaries, in
violation of state law.
g. The District has transferred its public assets to the City in violation
of article III, section 52 of the Texas Constitution;
h. CTSUD transferred its water system to the City and cannot provide
water utility service within the District's boundaries in violation of
state law;
1. The Asset Transfer Agreement and its amendments, violate Texas
law, contravene public policy, and are void;
J. Georgetown's Application seeks PUC approval to affect an illegal
dissolution of the District and transfer of the District's CCN and
assets;
k. The PUC lacks jurisdiction over Georgetown's Application;
1. Chapter 13 of the Texas Water Code does not provide the PUC
with authority or jurisdiction to affect a dissolution of the District;
Appellant's Brief Page 27
m. Chapter 13 of the Texas Water Code does not provide the PUC
with authority or jurisdiction to render the District incapable of
providing water utility service within its own boundaries;
n. Chapter 13 of the Texas Water Code does not provide the PUC
with authority or jurisdiction to nullify the District landowners'
and consumers' statutory right to vote on water utility issues;
o. The Commissioners committed ultra vires acts outside of their
legal authority in approving the Application filed by Georgetown
to effectuate the Asset Transfer Agreement;
p. The District and the Defendant Directors of the District have
violated the Texas Open Meetings Act; and
q. The Defendant Directors of the District committed ultra vires acts
outside of their legal authority in approving and effectuating the
Asset Transfer Agreement.
CR 509-513.
Further, Appellant requested that the trial court Issue injunctive relief, both
temporary and permanent:
(a) enjoining the transfer of the District's assets and water system to the
City;
(b) enjoining Defendants from taking any further acts under the
Agreement (including amendments);
(c) enjoining the City from collecting any revenue from the customers of
the District, including the illegal surcharge;
(d) enjoining the PUC, the Commissioners, or any administrative law
judge from making any decision or final order regarding
Georgetown's Application;
Appellant's Brief Page 28
(e) staying or enjoining all proceedings before the PUC and State Office
of Administrative Hearings related to Georgetown's Application,
pending further order of the Court;
(f) voiding and/or enjoining the illegal and ultra vires acts of the PUC
and its Commissioners;
(g) enjoining the transfer of the District's CCN to the City;
(h) enjoining Defendants from taking further acts without lawful
authority, as set forth above;
(i) preventing the dissolution, transfer or waste of the District's assets
and water system;
G) issue injunctive relief necessary to remedy the PUC's illegal acts and
the Commissioners' ultra vires acts; and
(k) issue any injunctive relief necessary to remedy Defendants' illegal
expenditures of public funds under an contract that is void or illegal.
CR 513-514.
5.21 Appellees responded to Appellants' lawsuit by asserting pleas to the
jurisdiction. CR 3-37. The pleas to the jurisdiction filed by the City, CTSUD and
the Directors are very similar. See id. Accordingly, Appellant's will refer to them
collectively as the "Chisholm Defendants' Pleas to the Jurisdiction", except where
specifically indicated. All of the Appellees' pleas to the jurisdiction assert that the
Appellants' claims are barred by sovereign or governmental immunity. Id. The
Appellees also alleged that the PUC has either exclusive or primary jurisdiction
Appellant's Brief Page 29
over Appellant's claims which should subject this lawsuit to dismissal or
abatement. CR 34-35.
5.22 On March 8, 2016, the trial court conducted a hearing on the
Appellee's pleas to the jurisdiction. RR 6-75. Three days later, the presiding
judge signed the court's Order on Defendants' Pleas to the Jurisdiction and Special
Exception ("Order"). CR 657-661. The Order granted the pleas to the jurisdiction
filed by CTSUD's, the District's and Georgetown's (the "Chisholm Defendants"),
and ordered that the following claims be dismissed with prejudice:
a. Appellant's requests for a declaratory judgment that:
(i) the Chisolm Defendants have acted illegally and ultra vires by
acting to illegally dissolve CTSUD;
(ii) Defendants have acted illegally and ultra vires by acting to
illegally transfer CTSUD's assets to the City;
(iii) the Asset Transfer Agreement, including any amendments,
between CTSUD and the City is illegal and void;
(iv) Georgetown's Application seeks PUC approval to affect an
illegal dissolution of the District and transfer of the District
CCN and assets;
(v) PUC lacks jurisdiction over Georgetown's Application; and
b. Appellant's requests for injunctive relief:
(i) enjoining, staying, voiding, and reversing Defendants' illegal
and ultra vires acts;
Appellant's Brief Page 30
(ii) enjoining, staying, voiding, reversing, and preventing any acts
to implement the Asset Transfer Agreement;
(iii) enjoining the transfer of the District's CCN;
(iv) enjoining, staying, voiding, and reversing CTSUD's actions
related to the transfer of CTSUD's CCN to the City of
Georgetown and the transfer of CTSUD's assets pursuant to the
Asset Transfer Agreement and amendments; and
(v) enjoining, staying, reversing, voiding, and preventing the
effectiveness of the transfer of CTSUD's CCN to the City of
Georgetown and the transfer of CTSUD's assets pursuant to the
Asset Transfer Agreement and amendments.
CR 658-661.
Additionally, the Order granted the PUC's plea to the jurisdiction and ordered that
the following claims be dismissed with prejudice:
a. Appellant's requests for a declaratory judgment that:
(i) the PUC lacks jurisdiction over Georgetown's Application;
(ii) the Commissioners have acted illegally and ultra vires by
processing and approving Georgetown's Application; and
b. Appellant's requests for injunctive relief:
(i) enjoining, staying, voiding, and reversing Defendants' illegal
and ultra vires acts;
(ii) staying and enjoining all proceedings before the PUC and State
Office of Administrative Hearings related to Georgetown's
Application, including any amendments, pending further order
of the Court;
Appellant's Brief Page 31
(iii) enjoining, staying, voiding, and reversing any proposal for
decision or final order by the PUC and/or any presiding officer
who has or will conduct any hearing (including any
Administrative Law Judge with SOAH) related to Georgetown's
Application, including any amendments;
(iv) enjoining the transfer of the District's CCN to Georgetown;
CR 659-660.
5.23 The trial court's Order did not grant any Appellees' pleas to the
jurisdiction as to Appellant's claims under the Texas Open Meetings Act
("TOMA"). Rather, the trial court granted the City's special exceptions; ordering
Appellant to re-plead its claim that the Chisholm Defendants violated TOMA. CR
660-661. Pursuant to Section 51.014(a)(8) of the Civil Practice & Remedies Code,
Appellant appealed from the trial court's Order granting the pleas to the
jurisdiction of the governmental units. CR 662-671. Appellees' pleas to the
jurisdiction were filed and requested for submission or hearing earlier than the
1801h day after the Appellees filed their original answer in the trial court. See CR
3-5, 657-661. Accordingly, Appellant's interlocutory appeal stayed all other
proceedings in the trial court pending resolution of its appeal of the trial court's
Order granting Appellees' pleas to the jurisdiction. Tex. Civ. Prac. & Rem. Code§
51.014(b), (c). Therefore, this appeal does not address Appellant's claims under
TOMA or the trial court's order granting the City's special exceptions thereto.
Appellant's Brief Page 32
VI.
SUMMARY OF AGRUMENT
6.1 CTSUD is a water district created to serve a rural area in portions of
Bell, Burnet and Williamson Counties. CTSUD's Directors resolved to transfer its
entire water system, Certificate of Convenience and Necessity, and its assets to the
City of Georgetown ("City"). CTSUD and the City thereafter entered into an asset
transfer agreement, and requested the Public Utility Commission's approval of the
transaction. The transaction would: (i) grant CTUSD's assets to the City in
violation of Article III, § 52(a) of the Texas Constitution; (ii) render the CTUSD
legally incapable of providing water utility service to its constituents; (iii) illegally
nullify CTSUD landowners' and consumers' statutory right to vote on water utility
issues; and (iv) affect an dissolution of CTSUD. Appellant, a nonprofit
corporation, organized to advocate for and protect the interests of residents and
landowners in the rural areas of Bell, Burnet and Williamson Counties in receiving
adequate water utility service, has associational standing to sue Appellees for
declaratory and injunctive relief necessary to remedy their illegal acts and
expenditures. Accordingly, Appellant filed suit for declaratory and injunctive
relief necessary to remedy the Appellee's unconstitutional, unlawful, and ultra
vires acts. Particularly, Appellant's lawsuit claims that the asset transfer violates
Article III, Section 52(a) of the Texas Constitution and that the Agreement through
Appellant's Brief Page 33
which the transfer was effectuated is void. Additionally, Appellant claims that the
asset transfer, the Agreement, and the Application that the Chisholm Defendants
filed seeking the PUC's approval of the transaction would: (i) illegally render the
District incapable of providing water utility service to its constituents; (ii) illegally
nullify the District landowners' and consumers' statutory right to vote on water
utility issues; and (iii) effect an illegal dissolution of the District. Consequently,
Appellant sued CTSUD, the City and the Directors for violating a constitutional
prohibition and acting ultra vires beyond their statutory authority. Further,
Appellants assert that the PUC is acting outside its statutory powers and cannot
grant the Chisholm Defendants requested relief. Moreover, Appellants assert that
the Commissioners acted ultra vires in processing the Application.
6.2 Appellees filed pleas to the jurisdiction claiming that the doctrines of
sovereign immunity, governmental immunity, primary jurisdiction and/or
exclusive jurisdiction shield their unlawful actions from judicial review. The
Appellees' pleas were unfounded. The doctrines of sovereign and governmental
immunity do not shield Appellees from lawsuits regarding their violation of Article
III, Section 52(a) of the Texas Constitution. Similarly, the Directors' and
Commissioners' actions taken without legal authority fall within the "ultra vires
exception" to sovereign and governmental immunity. Further, the Uniform
Appellant's Brief Page 34
Declaratory Judgment Act waives the PUC's sovereign immunity to a suit
challenging its statutory authority. Moreover, the doctrines of primary or exclusive
jurisdiction do not apply to Appellant's lawsuit. Those doctrines are either
inapplicable or all available administrative remedies have been exhausted.
Accordingly, Appellant's pleadings clearly allege facts that affirmatively
demonstrated the trial court's subject matter jurisdiction.
6.3 Nevertheless, the trial court erroneously granted Appellees' pleas to
the jurisdiction, and dismissed Appellant's claims with prejudice. Therefore,
Appellant brings this interlocutory appeal, respectfully requesting that the Court of
Appeals reverse the trial court order granting the Appellees' pleas to the
jurisdiction and remand this lawsuit for further proceedings.
VII.
ARGUMENT
A. Pleas to the Jurisdiction- Standard of Review.
6.4 A defendant seeking dismissal of a case for want of jurisdiction may
file a plea to the jurisdiction challenging the plaintiffs pleadings or challenging the
existence of jurisdictional facts. See City of Waco v. Kirwan, 298 S.W.3d 618,
621-22 (Tex.2009). Where, as here, pleas to the jurisdiction challenge the
plaintiffs pleadings, courts determine whether the plaintiff has alleged facts that
affirmatively demonstrate the court's jurisdiction to hear the cause. See Texas Dep't
Appellant's Brief Page 35
of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). This is a
question of law which appellate courts review de novo. Id. To determine whether
the plaintiff has met this burden, courts liberally construe the pleadings, taking all
factual assertions as true and looking to the pleader's intent. City of Ingleside v.
City of Corpus Christi, 469 S.W.3d 589, 590 (Tex.2015) (per curiam). 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 amend. Texas A & M Univ. Sys. v. Koseoglu, 233
S.W.3d 835, 839 (Tex. 2007); Miranda, 133 S.W.3d at 227. Only if the pleadings
affirmatively negate jurisdiction should the plea to the jurisdiction be granted
without affording the plaintiff an opportunity to re-plead. Miranda, 133 S.W.3d at
227.
6.5 If a plea to the jurisdiction challenges the existence of jurisdictional
facts, courts may consider relevant evidence submitted by the parties when
necessary to resolve the jurisdictional issues raised. 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 issue will be resolved by the fact finder.
However, if the relevant evidence is undisputed or fails to raise a fact question on
Appellant's Brief Page 36
the jurisdictional issue, the trial court rules on the plea to the jurisdiction as a
matter of law. Id, at 227-28. This standard mirrors the standard of review for
summary judgments; the courts therefore take as true all evidence favorable to the
plaintiff, indulging every reasonable inference and resolving any doubts in its
favor. City of El Paso v. Heinrich, 284 S.W.3d 366, 378 (Tex. 2009).
B. The trial court has jurisdiction pursuant to Article ill, § 52(a) and
Article V, § 8, of the Texas Constitution.
6.6 The Texas Constitution places limits on the power of a local
government to transfer funds to any other entity. Article III, section 52(a) of the
Texas Constitution ("Section 52(a)") provides that the legislature may not
authorize any county, city, or other political corporation of the state "to lend its
credit or to grant public money or thing of value in aid of, or to any individual,
association or corporation whatsoever." Tex. Const. art. III, § 52(a); see also id.
art. XI, § 3 (similar provision). These provisions bar donations of funds from one
governmental entity to another, as well as donations from governmental entities to
private entities. See e.g., Harris Cnty. Flood Control Dist. v. Mann, 140 S.W.2d
1098 (Tex. 1940); San Antonio Indep. Sch. Dist. v. Board of Trs. of San Antonio
Elec. & Gas Sys., 204 S.W.2d 22 (Tex. Civ. App.-El Paso 1947, writ refd n.r.e.);
Tex. Att'y Gen. Op. No. JC-0335 (2001).
6. 7 When a political subdivision transfers funds, it must be for a public
Appellant's Brief Page 37
purpose with a clear public benefit received in return. See Mann, 140 S.W.2d at
258-59. To insure that the political subdivision receives its consideration, viz.,
accomplishment of the public purpose, the political subdivision must retain some
degree of control over the performance of the contract. Key v. Comm'rs. Court of
Marion Cnty., 727 S.W.2d 667, 669 (Tex. App.-Texarkana 1987, no writ).
Hence, a political subdivision cannot grant funds to a municipal corporation, but it
may contract with it to provide services or accomplish a purpose that the political
subdivision is authorized to provide. See Tex. Att'y Gen. Op. No. JC-0335 (2001).
6.8 Water districts are political subdivisions. See Tex. Const. art. XVI, §
59; Willacy Cnty. Water Control & Improvement Dist. No. 1 v. Abendroth, 177
S.W.2d 936 (Tex. 1944). As such, the Texas Constitution prevents a special utility
district from making a gift or grant of public funds or property to another public or
private entity. Therefore, Article III, section 52(a) of the Texas Constitution
applies to the actions of CTSUD and its Directors.
6.9 A contract to do a thing which cannot be performed without a
violation of the law is void. Philadelphia Indem. Ins. Co. v. White, No. 14-0086,
2016 WL 2848487, at *11 (Tex. May 13, 2016); Lewis v. Davis, 199 S.W.2d 146,
148-49 (Tex. 1947); Morales v. Hidalgo Cty. Irrigation Dist. No. 6, No. 13-14-
00205-CV, 2015 WL 5655802, at *2 (Tex. App.-Corpus Christi Sept. 24, 2015,
Appellant's Brief Page 38
pet. denied) (examining whether employment contract authorized a payment of
public funds in violation of Section 52(a)); Plano Surgery Ctr. v. New You Weight
Mgmt. Ctr., 265 S.W.3d 496, 501 (Tex.App.-Dallas 2008, no pet.). Therefore, a
contract that violates Section 52(a) is void. See e.g., Magnolia Bend Volunteer
Fire Dep't, Inc. v. McDonnell, No. 09-03-051CV, 2003 WL 22922799, at *1 (Tex.
App.-Beaumont Dec. 11, 2003, no pet.) (holding that deed placing title to the
property in fire department's name was void as prohibited by Section 52(a)); see
also Hendee v. Dewhurst, 228 S.W.3d 354, 378 (Tex. App.-Austin 2007, pet.
denied) (recognizing that taxpayers have standing to sue in equity to enjoin the
illegal expenditure of public funds, even without showing a distinct injury).
6.10 It is fundamental that the Constitution is the paramount law of the
state. Jones v. Ross, 173 S.W.2d 1022, 1024 (Tex. 1943). Accordingly, common
law doctrine like sovereign immunity generally may not abrogate the Texas
Constitution. See e.g., Frasier v. Yanes, 9 S.W.3d 422, 426 (Tex. App.-Austin
1999, no pet.) (holding sovereign immunity does not bar cause of action under
Article III, Section 52e of the Texas Constitution); see also Wichita Falls State
Hosp. v. Taylor, 106 S.W.3d 692, 695 (Tex. 2003) (holding that consent to suit
may be found in a constitutional provision). Certain provisions of the Texas
Constitution are self-executing or "self-enacting," and thus provide a right of
Appellant's Brief Page 39
action against the government for violations without the need for legislative
consent. Steele v. City of Houston, 603 S.W.2d 786, 791 (Tex.1980); Spring
Branch Mgmt. Dist. v. Valco Instruments Co., L.P., No. 01-11-00164-CV, 2012
WL 2923151, at *8 (Tex. App.-Houston [1st Dist.] July 12, 2012, no pet.); Nueces
Cty. v. Ferguson, 97 S.W.3d 205, 221 (Tex. App.-Corpus Christi 2002, no pet).
Such an action may seek declaratory and injunctive relief for violations of the
Texas Constitution. City of Beaumont v. Bouillion, 896 S.W.2d 143, 149
(Tex.1995) (stating that "suits for equitable remedies for violations of
constitutional rights are not prohibited"); Spring Branch Mgmt. Dist. v. Valco
Instruments Co., L.P., 2012 WL 2923151, at *8 (holding plaintiff was entitled to
seek declaratory and injunctive relief for violations of the Texas Constitution); De
Leon v. City of El Paso, 353 S.W.3d 285, 290-91 (Tex.App.-El Paso 2011, no pet.)
(holding that city was not immune from equal protection claim for "declaratory
and injunctive relief' because "governmental immunity does not bar suits for
equitable relief for violations of the Texas Constitution"); Garcia v. Corpus Christi
Civil Serv. Bd., No. 13-07-00585-CV, 2009 WL 2058892, at *2 (Tex. App.-Corpus
Christi July 16, 2009, no pet.); Texas Tech Univ. Health Scis. Ctr. v. Rao, 105
S.W.3d 763, 767 (Tex. App. 2003-Amarillo, pet. dism'd); Bohannon v. Texas Bd.
of Criminal Justice, 942 S.W.2d 113, 118 (Tex.App.-Austin 1997, writ denied)
Appellant's Brief Page 40
("Although there is no cause of action for damages, a plaintiff whose constitutional
rights have been violated may sue for equitable relief').
6.11 A constitutional provision is self-executing or self-enacting if it
requires no legislative action to put it into force and effect. Ehlinger v. Rankin, 9
Tex. Civ. App. 424, 426, 29 S.W. 240, 241 (1895). Such provisions are also said
to be self-enacting when they supply a rule sufficient to protect the right given or
permit enforcement of the duty imposed. Frasier v. Yanes, 9 S.W.3d 422, 426
(Tex. App. 1999); Motorola v. Tarrant County Appraisal Dist., 980 S.W.2d 899,
902 (Tex.App.-Fort Worth 1998, no pet.). Article III, Section 52(a) is self-
executing or self-enacting because it is a clear constitutional prohibition that
requires no legislative action to put it into force and effect, and imposes a duty of
compliance that is readily capable of enforcement. See e.g., Mitchell Cty. v. City
Nat. Bank, 43 S.W. 880, 881 (Tex. 1898) (recognizing that section 9 of article 8
and section 7 of article 11 are self-executing as all laws in conflict with these
prohibitions are void). Accordingly, the courts have consistently exercised their
jurisdiction to determine whether Section 52(a) has been violated. See e.g., Texas
Mun. League Intergovernmental Risk Pool v. Texas Workers' Comp. Comm'n, 74
S.W.3d 377, 383 (Tex. 2002) (discussing three-part test courts have developed to
determine if act or payment accomplishes a public purpose consistent with section
Appellant's Brief Page 41
52(a)); Davis v. City of Lubbock, 326 S.W.2d 699, 710 (Tex. 1959); Byrd v. City of
Dallas, 6 S.W.2d 738, 740 (Comm'n App. 1928); Morales v. Hidalgo Cty.
Irrigation Dist. No. 6, 2015 WL 5655802, at *2; Key v. Commissioners Court of
Marion Cty., 727 S.W.2d at 668. Therefore, Section 52(a) provides a right of
action against the government for violations of that provision without the need for
legislative consent or waiver of immunity.
6.12 Appellant's lawsuit alleges that CTSUD transferred its public assets to
the City in violation Section 52(a), and that the Asset Transfer Agreement through
which the transfer was effectuated is void. See CR 494-496. Accordingly,
Appellant requests declaratory and injunctive relief setting aside the
unconstitutional asset transfer and voiding the Asset Transfer Agreement. CR 509-
517. As explained above, CTSUD's transfer of assets in violation of Section 52(a)
provided Appellant the right to bring an action for declaratory and injunctive relief
against Appellees for unconstitutional acts without the need for legislative consent
or waiver of immunity. Stated another way; Section 52(a) is a constitutional
waiver of Appellees' governmental immunity. Therefore, the trial court erred in
granting the Order dismissing Appellant's claims for injunctive and declaratory
relief for violations of Section 52(a), Texas Constitution.
Appellant's Brief Page 42
C. Appellant adequately pled claims against the CTSUD and City
concerning constitutional violations.
6.13 Pleaders are generally required to allege facts that affirmatively
demonstrate the court's jurisdiction to hear the cause. Texas Ass'n of Bus. v. Texas
Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993). In a suit against a
governmental unit the pleader must affirmatively demonstrate the court's
jurisdiction by alleging a valid waiver of immunity or that immunity is
inapplicable. Dallas Area Rapid Transit v. Whitley, 104 S.W.3d 540, 542 (Tex.
2003); Miller v. S. E. Texas Reg'l Planning Comm'n, No. 03-11-00817-CV, 2013
WL 3724716, at *3 (Tex. App.-Austin July 11, 2013, no pet.). To determine if the
plaintiff has met that burden, courts consider the facts alleged by the plaintiff and,
to the extent it is relevant to the jurisdictional issue, the evidence submitted by the
parties. Id; Tex. Natural Res. Conservation Comm'n v. White, 46 S.W.3d 864, 868
(Tex.2001).
6.14 Appellant's lawsuit alleges that CTSUD transferred its public assets to
the City in violation of Section 52(a) and that the Asset Transfer Agreement
through which the transfer was effectuated is void. See CR 494-496. As explained
immediately above, Section 52(a) provides citizens such as Appellants the right to
bring an action for declaratory and injunctive relief against Appellees for violations
of Section 52(a) without the need for legislative consent or waiver of immunity.
Appellant's Brief Page 43
Accordingly, Appellant's pleadings affirmatively demonstrated the court's
jurisdiction to hear the cause and that governmental immunity was either waived or
inapplicable.
6.15 The Chisholm Defendants' pleas to the jurisdiction, meanwhile, assert
without explanation, that the District and City are "immune from suit." CR 5, 16.
Shortly before the hearing on Appellee's pleas to the jurisdiction, the Chisholm
Defendants filed a brief in support of their pleas to the jurisdiction. See CR 38 et
seq. In that brief, the Chisholm Defendants elaborate that "Plaintiff cites no
statutory authority that clearly and unambiguously waives the City's or District's
immunity." CR 49. The Chisholm Defendants wholly failed to consider or
acknowledge that governmental immunity has been waived and/or is inapplicable
under Section 52(a). Accordingly, the Chisholm Defendants' pleas to the
jurisdiction as to CTSUD's and the City's alleged governmental immunity were
erroneous, as was the trial court's Order granting the Chisholm Defendants' pleas
against the alleged violation of the Texas Constitution.
6.16 The Chisholm Defendants also erroneously argued that the City and
CTSUD are immune from Appellant's suit for declarations invalidating the Asset
Transfer Agreement. CR 49-51. In making this argument, the Chisholm
Defendants relied upon Texas Nat. Res. Conservation Comm'n v. IT-Davy, 74
Appellant's Brief Page 44
S.W.3d 849, 855-856 (Tex. 2002). Their reliance was misplaced. The portion of
the IT-Davy opinion cited by the Chisholm Defendants concerns whether sovereign
immunity bars a general contractor from suing a state agency for breach of
contract. See id. at 851-852. The court held that immunity does bar such a suit,
and that "private parties cannot circumvent the State's sovereign immunity from
suit by characterizing a suit for money damages, such as a contract dispute, as a
declaratory-judgment claim." Id. at 856. Hence, the pertinent holding in IT-Davy
is that the UDJA does not provide courts with subject-matter jurisdiction over
contract damage claims that are otherwise barred by sovereign or governmental
immunity. However, as explained above, Section 52(a) provides Appellant an
independent right to bring an action for declaratory and injunctive relief against
Appellees for violations of Section 52(a) without the need for legislative consent or
waiver of immunity. Appellant is not seeking damages against the Appellees. To
the contrary, Appellant is seeking to enjoin an illegal act by Appellees. The use of
a contract to consummate the illegal act does not exclude the illegal act from
judicial scrutiny. Violations of the Texas Constitution and ultra vires acts cannot
be covered by a contractual fig leaf to prevent the light of truth from exposing
these wrongful acts. Accordingly, IT-Davy is not applicable and does not support
the Chisholm Defendant's claim that the City and CTSUD are immune from
Appellant's Brief Page 45
Appellant's request for declaratory relief. Therefore, it was error for the trial court
to grant the Order dismissing Appellant's claims for injunctive and declaratory
relief for violations of Section 52(a).
D. Trial court has jurisdiction over Appellant's claims against PUC.
6.17 Appellant's lawsuit includes claims that the PUC lacks authority and
jurisdiction to: (a) take action that would render CTSUD (a special utility district
created under legislative authority to provide water utility service within its own
boundaries) legally incapable of carrying out its statutory purpose; (b) take action
that would nullify the District landowners' and consumers' statutory right to vote
for a Board of Directors with authority to manage the District and govern its
provision of water utility service; (c) take action that would effectively dissolve the
District; or (d) process or approve an application that would effectively perform
the three aforementioned actions. See e.g., CR 511-512.
6.18 Georgetown and CTSUD are retail public utilities. See Tex. Water
Code § 13.002(19). Each was granted a CCN to provide retail water utility service
to their respective service areas. A retail public utility generally may not furnish,
make available, render, or extend retail water utility service to any area to which
retail water utility service is being lawfully furnished by another retail public
utility without first having obtained a CCN that includes the area in which the
Appellant's Brief Page 46
consuming facility is located. /d. § 13.242(a); see also id. §§ 13.252, 13.254. In
other words, a CCN provides a retail public utility with the exclusive right (i.e., a
monopoly) to provide retail water service within its certificated territory.
Therefore, revoking CTSUD's CCN and amending Georgetown's CCN to include
CTSUD's service area would render the District legally incapable of providing its
own constituents with water utility service.
6.19 The District is a political subdivision that was created and conferred
with statutory authority to provide its constituents with water utility service. See
e.g., id. §§ 49.211, 65.012. Accordingly, the laws of this State provide the
landowners, consumers and qualified voters of CTSUD with the statutory right to
vote for the management of their district. /d.§§ 65.022, 65.101-65.103. CTSUD
does not encompass any portion of the incorporated area of Georgetown, and vice
versa. Accordingly, a PUC order revoking the District's CCN and amending
Georgetown's CCN to include the District's service area would: (i) render the
District legally incapable of providing water utility service to its constituents; (ii)
preclude the District and its Directors from governing the manner in which water
utility service is provided to their constituents; (iii) nullify the District landowners'
and consumers' statutory right to vote on water utility issues affecting them; and
(iv) would effect an illegal dissolution of the District.
Appellant's Brief Page 47
6.20 Chapter 13 of the Water Code regulates water rates and services. See
id §§ 13.001 - 13.523. Subchapter G deals specifically with certificates of
convenience and necessity. See id. §§ 13.241- 13.257.
6.21 The 83rd Texas Legislature adopted acts transferring the economic
regulation of water and sewer service from the TCEQ to the PUC. See Act of May
13, 2013, 83rd Leg., R.S., ch. 170 (HB 1700), § 2.96; 2013 Tex. Gen. Laws 725,
730; Act of May 13, 2013, 83rd Leg., R.S. ch. 171 (SB 567), § 96, 2013 Tex. Gen.
Laws 772. Accordingly, effective September 1, 2014, Chapter 13 transferred
jurisdiction over CCN applications from the TCEQ to the PUC. Consequently, in
order to obtain a CCN for a particular area, a retail public utility generally must file
an application requesting the PUC to either grant or amend its CCN. /d. §§ 31.241
- 13.244. Likewise, an application must be filed to revoke a retail public utility's
CCN (i.e., exclusive right) to provide water utility service to any portion of its
service territory. See id. § 13.254.
6.22 The PUC was only granted authority to exercise economic regulation
over water utility services. Chapter 13 of the Water Code does not govern the
creation, operation, or governance of special utility districts. Those matters are
addressed by Chapters 49 (General Law Districts) and 65 (Special Utility
Districts). See id. 65.001(4), 65.011 - 65.023. For example, Subchapter 65(H)
Appellant's Brief Page 48
governs the process manner in which special utility districts may be consolidated
or dissolved. See id. §§ 65.723- 65.732. These statutes do not provide the PUC
with any jurisdiction or authority in the dissolution or regulation of districts.
Rather, Chapters 49 and 65 provide the Texas Commission on Environmental
Quality with broad regulatory authority over districts. See id. §§ 49.001(2)
(defining "commission" as the Texas Natural Resource Conservation Commission
(a predecessor agency to TCEQ) and using "commission" throughout to identify
the agency responsible for carrying out the duties of regulating general law
districts); 65.001(4) (also defining "commission" as the Texas Natural Resource
Conservation Commission and using "commission" throughout to identify the
agency responsible for carrying out the duties of regulating an special utility
districts). Accordingly, the PUC generally lacks jurisdiction to regulate special
utility districts. Therefore, the PUC has no jurisdiction to take regulatory action in
a manner that: (i) renders the District legally incapable of providing water utility
service to its constituents; (ii) precludes the District and its Directors from
govemmg the manner in which water utility service is provided to their
constituents; (iii) nullifies the District landowners' and consumers' statutory right
to vote on water utility issues affecting them; or (iv) effects the District's
dissolution.
Appellant's Brief Page 49
6.23 The PUC, nevertheless, claims that provisions in Chapter 13 of the
Water Code provide it with jurisdiction to wholly revoke the District's CCN and
amend Georgetown's CCN to include the District's entire service area. CR 34.
This would exceed the PUC's statutory grant of economic regulatory authority.
This action would also improperly encroach upon the authority of special utility
districts (including their directors and voters who elect them) to operate, and the
TCEQ's statutory regulatory authority over such districts. Accordingly,
Appellant's pleadings include a challenge to the PUC interpretation of the statutes
in Chapter 13 governing the revocation and amendment of water CCN's, including
its construction of the acts of the 83rd Legislature that transferred the functions
relating to the economic regulation of water and sewer service from the TCEQ to
the PUC (i.e., HB 1600 and SB 567). See CR 499-506.
6.24 Appellant's pleadings also assert that the PUC lacks the authority and
jurisdiction to revoke the District's CCN and amend Georgetown's CCN to include
the District's service area, and that the Commissioners, in their official capacities,
have acted ultra vires by adopting such an order.
6.25 The Uniform Declaratory Judgment Act requires that the relevant
governmental entities be made parties to a declaratory judgment action that
challenges the validity of ordinances or statutes, and thereby waives sovereign
Appellant's Brief Page 50
immunity. Tex. Civ. Prac. & Rem. Code § 37.006(b); Texas Dep't of Transp. v.
Sefzik, 355 S.W.3d 618, 622 (Tex. 2011); City of El Paso v. Heinrich, 284 S.W.3d
366, 373 n. 6 (Tex. 2009). Statutory challenges include claims that a statute is
invalid for constitutional or non-constitutional reasons, and claims seeking
interpretation or clarification of a statute. See Tex. Lottery Comm 'n v. First State
Bank of DeQueen, 325 S.W.3d 628, 634-635 (Tex. 2010); City of Elsa v. M.A.L.,
226 S.W.3d 390, 391-92 (Tex. 2007); Lone Star Coli. Sys. v. Immigration Reform
Coal. of Texas (IRCOT), 418 S.W.3d 263, 271 (Tex. App.-Houston [14th Dist.]
2013, pet. denied); Town of Flower Mound v. Rembert Enters., 369 S.W.3d 465,
474 (Tex. App.-Fort Worth 2012, pet. denied); Gatesco Q.M., Ltd. v. City of
Houston, 333 S.W.3d 338, 347-48 (Tex. App.-Houston [14th Dist.] 2010, no pet.).
It is also well settled that suits asserting that government officers acted without
legal authority or that seek to compel governmental officials to comply with
statutory or constitutional provisions are ultra vires suits and are not subject to
pleas of sovereign or governmental immunity. Texas Dep't of Ins. v. Reconveyance
Servs., Inc., 306 S.W.3d 256, 258 (Tex. 2010); Heinrich, 284 S.W.3d at 372.
Courts may exercise jurisdiction over lawsuits where both type of claims are
combined. Lone Star Coli. Sys., 418 S.W.3d at 271 (citing De Los Santos v. City of
Robstown, No. 13-11-00278-CV, 2012 WL 6706780, at *3-8 (Tex. App.-Corpus
Appellant's Brief Page 51
Christi Dec. 13, 2012, no pet.)).
6.26 Appellant's First Amended Petition includes a declaratory judgment
action challenging the PUC's interpretation of the statutes in Chapter 13 governing
the revocation and amendment of water CCN' s, including its construction of the
acts of the 83rd Legislature that transferred the functions relating to the economic
regulation of water and sewer service from the TCEQ to the PUC (i.e., HB 1600
and SB 567). The PUC claims jurisdiction under these statutes and thus is a
relevant governmental entity which shall be made a party to Appellant's
declaratory judgment action. Accordingly, the PUC's claim that it is immune from
this suit is incorrect and inapposite. The Uniform Declaratory Judgment Act
provides a cause of action to seek declaratory and injunctive relief from the
improper construction of these legislative acts by the PUC. This improper
construction has usurped the rights of the Appellant and resulted in ultra vires acts
by the PUC. Consequently, the PUC's Plea to the Jurisdiction should have been
denied. Therefore, the trial court erred when it entered the Order dismissing
Appellant's claims for declaratory and injunctive relief against the PUC and its
Commissioners.
E. Appellant's ultra vires claims do not implicate sovereign or
governmental immunity.
Appellant's Brief Page 52
6.27 A government official commits an ultra vires act when he or she acts
without lawful authority. Heinrich, 284 S.W.3d at 372. An official acts without
lawful authority when he violates state law, acts beyond the limits of his authority,
or misinterprets a law he is charged with administering. See id.; Tex. Educ. Agency
v. Leeper, 893 S.W.2d 432 (Tex.1994) (suit challenging state officials' construction
of compulsory school-attendance law); Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401,
405 (Tex.1997) ("A private litigant does not need legislative permission to sue the
State for a state official's violations of state law."); Cobb v. Harrington, 190
S.W.2d 709, 712 (Tex. 1945) (suit to declare government officials were wrongfully
compelling plaintiffs to pay certain taxes).
6.28 Governmental immunity only extends to those government officers
who are acting consistently with the law. Houston Belt & Terminal Ry. Co. v. City
of Houston, No. 14-0459, 2016 WL 1312910, at *6 (Tex. Apr. 1, 2016); Heinrich,
284 S.W.3d at 372. Accordingly, while governmental immunity provides
protection to the state and its officers, it does not bar a suit against a government
officer for acting outside his authority-i.e., an ultra vires suit. Houston Belt &
Terminal Ry. Co., 2016 WL 1312910, at *3; Tex. Parks & Wildlife Dep't v. Sawyer
Trust, 354 S.W.3d 384, 393 (Tex.2011). To fall within this "ultra vires exception,"
a suit must allege that the officer acted without legal authority or failed to perform
Appellant's Brief Page 53
a purely ministerial act. Heinrich, 284 S.W.3d at 372; Fed. Sign, 951 S.W.2d at
404. As a general rule, "a public officer has no discretion or authority to
misinterpret the law." Houston Belt & Terminal Ry. Co., 2016 WL 1312910, at *5
(quoting In re Smith, 333 S.W.3d 582, 585 (Tex.2011) (orig. proceeding)). Thus, a
suit alleging that an officer's exercise of judgment or limited discretion without
reference to, or in conflict with, the constraints of the law authorizing the official
to act falls within the "ultra vires exception." Id; Heinrich, 284 S.W.3d at 372.
6.29 Appellant's pleadings assert that the CTSUD Directors and Public
Utility Commissioners are acting without legal authority. With regard to the
Commissioners, Appellant's First Amended Petition alleges that they have
engaged in ultra vires acts while processing and approving Georgetown's
Application. CR 506-507, 512-514. In support of this ultra vires claim the First
Amended Petition further alleges that the Commissioners have engaged in ultra
vires acts by processing and approving an application that would unlawfully: (i)
render the District legally incapable of providing water utility service to its
constituents; (ii) nullify the District landowners' and consumers' statutory right to
vote on water utility issues; and (iii) affect a dissolution of the District. CR 507,
509-510. These ultra vires claims were made after the PUC filed its plea to the
jurisdiction, which argued that Appellant's claims must be made against the
Appellant's Brief Page 54
Commissioners rather than the PUC. See CR 32-33; cf 506-507. The PUC,
nevertheless, verbally requested dismissal of Appellant's ultra vires claims against
the Commissioners without any explanation or authority and further declined the
trial court's invitation to submit a written response or plea to the jurisdiction
regarding Appellant's ultra vires claims. CR 66-68. The Commissioners
presented no basis for a dismissal of the ultra vires claims against them.
Accordingly, the PUC failed to present any jurisdictional challenge to those claims,
and it was error for the court to enter the Order dismissing the ultra vires claims
against the PUC Commissioners.
6.30 As to the CTSUD Directors, Appellant alleges that the Directors acted
ultra vires by approving the Asset Transfer Agreement and the amendments
thereto. CR 499. In support of this ultra vires claim, Appellant further alleges that
the Directors have engaged in ultra vires acts in violation of the Texas
Constitution, the Texas Water Code and other statutes by approving: (1) an
agreement to illegally grant CTSUD's water system and other public assets to the
City; (2) an agreement to illegally dissolve CTSUD; (3) an agreement to transfer
illegally CTSUD's CCN to the City; and (4) expenditure of public funds to obtain
the illegal dissolution of the District and the illegal transfer its assets to the City.
CR 509. As briefed above, a lawsuit alleging that a government official acted
Appellant's Brief Page 55
without legal authority falls within the "ultra vires exception" to sovereign and
governmental immunity. Appellant's pleadings clearly allege that the District
Directors and Commissioners acted ultra vires. Consequently, it was error for the
trial court to enter the Order dismissing Appellant's ultra vires claims for
declaratory and injunctive relief against the District Directors.
F. Chisholm Defendants raised flawed arguments concerning Appellant's
ultra vires claims.
6.31 The Chisholm Defendants acknowledge that ultra vires suits are not
barred by governmental immunity. CR 51. Accordingly, the basis of their plea to
the jurisdiction concerning Appellant's ultra vires suit is their argument that,
"Plaintiff does not allege any facts that affirmatively demonstrate the court's
jurisdiction with regard to its claims that the Directors entered into an illegal
contract, illegally dissolved the District, or illegally granted public funds." CR 52
(emphasis added). However, this argument and the Chisholm Defendants' pleas to
the jurisdiction are erroneous.
6.32 Appellant's pleadings allege that the District Directors approved an
Agreement (and amendments thereto) to provide the City with: (i) CTSUD's retail
water utility system; (ii) virtually all of CTSUD assets which the City valued at
more than $70 million; (iii) CTSUD's contractual right to more than 11,000 acre
feet of raw water per annum from the Brazos River Authority; and (iii) CTSUD's
Appellant's Brief Page 56
CCN. See CR 485-490, 495-496. Appellant's pleadings additionally allege that
CTSUD consummated the asset transfer. CR 489. Accordingly, Appellant alleges
that the Director's approval of the Agreements caused CTSUD to be physically,
financially, and legally incapable of providing retail water utility service to the
District's customers and landowners. Hence, Appellant alleges that the Director's
approval of the Agreement effectively dissolved the District, which has since
ceased operating as a water utility. Consequently, Appellant alleges that the
Director's acts resulted in the District granting virtually all of its public funds and
property without a lawful purpose or clear public benefit received in return.
Moreover, Appellant alleges that the asset transfer left the District without
effective control over the provision of retail water utility service within the
District's territory. These acts contravene the constitutional and statutory duties of
the District Directors. Therefore, Appellant alleges that the Director's acted ultra
vires in approving the Agreement because the Directors exceeded their statutory
authority and violated Section 52(a), Texas Constitution.
6.33 Appellant's ultra vires claims include that the Director's lacked
statutory authority to approve the Agreement. Particularly, Appellant alleges the
Directors lacked authority to contract for the wholesale conveyance of CTSUD's
assets and further lacked authority to dissolve the District.
Appellant's Brief Page 57
6.34 CTSUD is a special utility district created pursuant to Chapter 65 of
the Texas Water Code and is considered a conservation and reclamation district
under Article XVI, Section 59, of the Texas Constitution. Tex. Const. art. XVI, §
59; Tex. Water Code § 65.011. Such a district may be created "to purchase, own,
hold, lease, and otherwise acquire sources of water supply; to build, operate, and
maintain facilities for the transportation of water; and to sell water to towns, cities,
and other political subdivisions of this state, to private business entities, and to
individuals." Tex. Water Code § 65.012(1). A district has the functions, powers,
authority, and rights that will permit accomplishment of the purposes for which it
is created. !d. § 65.201. Their assets and authorities may not be transferred or sold
for purposes other than to carry out their lawful rights and duties. See id. § 49.213;
Tex. Gov't Code § 791.011(c). Moreover, their assets may not be transferred in
violation of Section 52( a). Tex. Const. art. III, § 52( a).
1. CTSUD had no legal authority to enter the Agreement.
6.35 In arguing that Appellant did not allege any facts that affirmatively
demonstrate the court's jurisdiction, the Chisholm Defendants claim provisions in
Chapter 49 of the Water Code provide the District had legal authority to enter into
the Agreement. See CR 52-53. However, the Chisholm Defendants are incorrect.
6.36 "[Chapter 49] applies to all general and special law districts to the
Appellant's Brief Page 58
extent that the provisions of this chapter do not directly conflict with a provision in
any other chapter of this code or any Act creating or affecting a special law district.
In the event of such conflict, the specific provisions in such other chapter or Act
shall control." Tex. Water Code § 49.002 (emphasis added). Section 49.213
addressed the authority to issue contracts. It authorizes a district to enter into
contracts "the board may consider desirable, fair, and advantageous for. .. the
exercise of any other rights, powers, and duties granted to a district." !d. §
49.213(c)(7). As such, section 49.213 confirms that districts can enter contracts
only to carry out their lawful rights, powers and duties.
6.37 The Chisholm Defendants, meanwhile, claim Sections 49.213(a) and
49.227 provides the District with authority to transfer all of its assets. They do not.
Rather, both of those sections address the authority of a district to act jointly with
another entity in the performance of the district's lawful duties. Section 49.213(a)
provides:
A district may contract with a person or any public or private entity
for the joint construction, financing, ownership, and operation of any
works, improvements, facilities, plants, equipment, and appliances
necessary to accomplish any purpose or function permitted by a
district, or a district may purchase an interest in any project used for
any purpose or function permitted by a district.
!d. § 49.213(a) (emphasis added).
Section 49.227, entitled "Authority to Act Jointly," similarly provides "[a] district
Appellant's Brief Page 59
or water supply corporation may act jointly with any other person or entity, private
or public, whether within the State of Texas or the United States, in the
performance of any of the powers and duties permitted by this code or any other
laws." !d. § 49.227 (emphasis added). These statutory provisions do not authorize
a district to transfer all of its assets, or delegate its powers and responsibilities to
another entity. Rather, they clearly contemplate that a district may act jointly with
another entity in the performance of the district's lawful duties. Statutes may not
be construed to accomplish an unconstitutional result. Appellant asserts that the
Agreement renders CTSUD incapable of performing its lawful duties and violates
Section 52(a). Sections 49.213(a) and 49.227 cannot authorize this Agreement,
and Appellant is entitled to a hearing on the merits to present evidence of this
constitutional violation.
6.38 The Chisholm Defendants also cite Section 49.226 and Section
791.026(a) of the Interlocal Cooperation Act as authority for the Agreement.
Again, they are incorrect. Section 49.226 addresses the manner in which real and
personal property may be sold or exchanged. Subsection 49.226(b) provides:
Any property dedicated to or acquired by the district without
expending district funds may be abandoned or released to the original
grantor, the grantor's heirs, assigns, executors, or successors upon
terms and conditions deemed necessary or advantageous to the district
and without receiving compensation for such abandonment or release.
District property may also be abandoned, released, exchanged, or
Appellant's Brief Page 60
transferred to another district, municipality, county, countywide
agency, or authority upon terms and conditions deemed necessary or
advantageous to the district. Narrow strips of property resulting from
boundary or surveying conflicts or similar causes, or from
insubstantial encroachments by abutting property owners, or property
of larger configuration that has been subject to encroachments by
abutting property owners for more than 25 years may be abandoned,
released, exchanged, or transferred to such abutting owners upon
terms and conditions deemed necessary or advantageous to the
district. Chapter 272, Local Government Code, does not apply to this
section.
/d. § 49.226(b).
6.39 Section 49 .226(b) does not grant contracting authority or authorize a
district to transfer assets in a manner that violates Section 52(a). Nor does Section
49 .226(b) authorize a special utility district to engage in any act that is inconsistent
with purposes for which it was created under Chapter 65. Cf. id. 65.201 ("A
district has the functions, powers, authority, and rights that will permit
accomplishment of the purposes for which it is created."). Accordingly, Section
49.226(b) does not authorize this Agreement, because (as Appellant's allege) it
renders CTSUD incapable of providing retail water utility service to the very
constituents it was created to serve.
6.40 Section 791.026 of the Interlocal Cooperation Act likewise provides
no authority for the Agreement. That Act permits various local governments to
contract among themselves for the performance of a governmental function or
Appellant's Brief Page 61
service that each party to the contract is authorized to perform individually. See
Tex. Gov't Code § 79l.Oll(c). The Act's purpose is to increase efficiency and
effectiveness of local governments by expressly authorizing them to contract with
one another and with agencies of the state. See id. § 791.001; City of The Colony
v. N. Texas Mun. Water Dist., 272 S.W.3d 699, 728 (Tex. App. - Fort Worth,
2008, no pet.). The Act itself does not grant additional powers to any government.
35 Tex. Prac., County And Special District Law § 5.14 (2d ed.). Section 791.026,
provides in pertinent part:"
(a) A municipality, district, or river authority of this state may
contract with another municipality, district, or river authority of this
state to obtain or provide part or all of: (1) water supply or
wastewater treatment facilities;
(g) The powers granted by this section prevail over a limitation
contained in another law.
Tex. Gov't Code § 791.026(a)(1), (g).
Reviewing this statute, the Third and Fourth Courts of Appeals have acknowledged
that this provision does not authorize retail public water utilities to contract around
the limitations found in the Water Code. In Bexar Metro. Water Dist. v. Texas
Com'n on Envtl. Quality, 185ch S.W.3d 546 (Tex. App.-Austin 2006, pet.
denied), the Third Court of Appeals acknowledged that interlocal contracts may be
Appellant's Brief Page 62
employed to fulfill the obligations of a CCN holder, but do not prevail over the
provisions in the Water Code. See Bexar Metro, 185 S.W.3d at 552 ("To be sure,
the Interlocal Cooperation Act does not supersede the specific requirements for
certificate [of convenience and necessity] applicants. It makes clear, however, the
legislature's intent to allow municipalities to obtain the required capabilities to
operate and construct water systems through contracts with river authorities and its
belief that these contracts increase the efficiency and effectiveness of local
government.") (emphasis added). The Fourth Court of Appeals similarly held that
the Interlocal Cooperation Act does not provide water utilities with greater rights
or obligations than those afforded the Water Code; providing as follows:
Fort Worth also asserts that even if the Commission has jurisdiction
over wholesale wastewater rates set by contracts, the Commission
cannot alter a rate set by a contract between two cities, because
Section 791.026 of the Texas Government Code (the "Interlocal
Cooperation Act") places such contract rates beyond the
Commission's jurisdiction. The lnterlocal Cooperation Act merely
allows municipalities to enter into contracts with each other. The
statutory provision that the power to enter into contracts "prevails
over a limitation in any other law" refers to other statutes and charters
that might directly prohibit a municipality from signing contracts and
does not preclude later legislative action regarding such a contract.
The Water Code gives the Commission jurisdiction over contractual
rates, including contractual rates agreed upon between municipalities.
Texas Water Comm'n v. City of Fort Worth, 875 S.W.2d 332, 335
(Tex. App.- Fort Worth, 1994 writ denied) (emphasis added).
As such, section 791.026 of the Interlocal Cooperation Act does not provide the
Appellant's Brief Page 63
District with any greater authority than it has under the Water Code. The Water
Code does not provide retail public water utilities with the authority to sell their
entire water systems. As the Appellant has alleged, such a transaction does not
enable CTSUD to carry out its rights or obligations and does not fairly compensate
it for any function or services performed. Further, it affects an illegal dissolution
of the District. Therefore, section 791.026 of the Interlocal Cooperation Act does
not authorize the District's asset transfer, and Appellant is entitled to a hearing on
the merits to establish these facts.
6.41 The asset transfer also violates the Interlocal Cooperation Act because
it fails to provide adequate compensation. Section 791.011 expressly requires that
"[a]n interlocal contractual payment must be in an amount that fairly compensates
the performing party for the services or functions performed under the contract."
Tex. Gov't Code § 791.01l(e). However, as discussed above, under the
Agreement, Georgetown acquired the District's water system, which the City
indicates had assets valued at more than $70 million, as well as the District's water
reserves and the revenues from its profitable retail water utility. Further, the
Operations Agreement provided Georgetown with all revenues from the District's
water utility service, less a portion of a supplemental surcharge the District
imposed specifically to cover its own costs while Georgetown sought PUC
Appellant's Brief Page 64
approval for the transfer. CTSUD received no clear public benefit in return for this
transaction, and thus the Agreement failed to provide the District with anything
that could be considered fair compensation. As such, section 791.026 does not
authorize the asset transfer. Therefore, to the extent that trial court concluded that
the general contracting authority set out in Interlocal Cooperation Act and/or
Chapter 49 of the Water Code authorized the Agreement, this was error. For
jurisdictional purposes, these allegations of lack of fair consideration are
considered true. Appellants are entitled to a hearing on the merits on these
allegations.
2. Agreement Illegally Dissolved CTSUD.
6.42 In arguing that Appellant did not allege any facts affirmatively
demonstrating the court's jurisdiction over its ultra vires claims, the Chisholm
Defendants also argue that Directors actions have not affected the dissolution of
the District. See CR 53-54. This argument is erroneous.
6.43 CTSUD was created in 1990 by order of the Texas Natural Resources
Conservation Commission (now, TCEQ), pursuant to Chapter 65 of the Texas
Water Code. CR 481. A principal purpose for its creation is to provide water
utility service. See Tex. Water Code §§ 65.012, 65.201. Accordingly, CTSUD
served as the exclusive retail water utility provider within the District's territory
Appellant's Brief Page 65
for more than 20 years.
6.44 The Agreement provides for the transfer of CTSUD's entire retail
water utility system and CCN to the City. Accordingly, as explained in
Appellant's First Amended Petition, the Agreement provided that the District
would be physically, financially, and legally incapable of providing retail water
utility service to the very constituents it was created to serve. See e.g., CR 496-
499. The Chisholm Defendants generally do not dispute this.
6.45 In sections 65.727 through 65.731 of the Water Code, the Texas
Legislature provided the sole method by which the directors of such a district are
authorized to dissolve it. Appellant alleges and requests judicial declarations that
CTSUD lacks authority to dissolve under these or any other authority. Again, the
Chisholm Defendants generally do not dispute that the Directors lack authority to
legally dissolve CTSUD. Accordingly, the Agreement expressly provided that
CTSUD and the City would seek passage of legislature authorizing the Directors to
dissolve the District. The Chisholm Defendants acknowledge that their efforts to
obtain such legislative authority were unsuccessful. See CR 54.
6.46 CTSUD illegally consummated the transfer provided for in the
Agreement, nonetheless. Hence, Appellant alleges that the District Directors acted
without legal authority while taking action that effectively, and illegally, dissolved
Appellant's Brief Page 66
CTSUD. Accordingly, Appellant's lawsuit clearly alleges that the District
Directors acted ultra vires and thereby invoked the trial court's jurisdiction.
Consequently, it was error for the trial court to enter the Order dismissing
Appellant's ultra vires claims for declaratory and injunctive relief.
6.47 The Chisholm Defendants, nevertheless, dispute Appellant's ultra
vires claim by arguing that Agreement did not dissolve CTSUD. CR 54. In other
words, the Chisholm Defendants cite their own failure to obtain authority from the
Legislature to dissolve CTSUD in efforts to claim Appellant failed to allege any
facts affirmatively demonstrating the court's jurisdiction over its ultra vires claims.
This circular argument does not defeat Appellant's ultra vires claim because the
Agreement, on its face, evidences a dissolution and calls for the parties to obtain
the requisite legal authorization, and Appellant has further alleged facts showing
an illegal dissolution. See e.g., Lewis v. Davis, 472, 199 S.W.2d at 149 (holding
contract may be held void where illegality appears on the face of the contract or
where facts show its illegality). Accordingly, to the extent that trial court
concluded that Appellant's allegations that the Directors acted without authority to
dissolve CTSUD failed to invoke the jurisdiction of the court, this was error.
Therefore, the trial court's order dismissing Appellant's ultra vires claims should
be reversed, and Appellant should be granted a hearing on the merits of its claims.
Appellant's Brief Page 67
3. Asset Transfer provided for an illegal grant of public funds.
6.48 In arguing that Appellant did not allege any facts affirmatively
demonstrating the court's jurisdiction over its ultra vires claims, the Chisholm
Defendants finally argue that the Agreement did not provide for an illegal grant of
public funds. CR 54-58. Principally, the Chisholm Defendants argue that
Appellant's cannot claim that CTSUD transferred its assets to the City without
adequate consideration. /d. This argument is erroneous.
6.49 Generally speaking, Section 52(a) of the Texas Constitution is
intended to prevent the gratuitous grant of public funds to any individual,
corporation, or purpose whatsoever. Edgewood Indep. Sch. Dist. v. Meno, 917
S.W.2d 717, 740 (Tex.1995). Accordingly, when a political subdivision transfers
funds, it must be for a public purpose with a clear public benefit received in return.
Texas Mun. League Intergovernmental Risk Pool, 74 S.W.3d at 383. The Supreme
Court has announced a three-part test to determine if a transaction accomplishes a
public purpose consistent with Section 52(a). Specifically, the test prescribes that
a political subdivision must: (1) ensure that the predominant purpose is to
accomplish a public purpose, not to benefit private parties; (2) retain public control
over the funds to ensure that the public purpose is accomplished and to protect the
public's investment; and (3) ensure that the political subdivision receives a return
Appellant's Brief Page 68
benefit. Id.
6.50 Appellant assert that the Agreement violates Section 52(a) because it
was not for a public purpose and did not provide a clear benefit to the District, the
District's customers, or landowners within the District. CR 494-498. For instance,
Appellant claims the Agreement rendered the District legally incapable of
providing water utility service to its constituents; (ii) illegally nullified the District
landowners' and consumers' statutory right to vote on water utility issues, and
affected an illegal dissolution of the District. See CR 509-510. Appellant's claim
is not limited to an allegation of inadequate consideration on the face of the
Agreement. Cf City of Lubbock v. Phillips Petroleum Co., 41 S.W.3d 149, 161
(Tex. App.-Amarillo 2000, no pet.) (city claiming Section 52(a) violation solely on
basis that consideration under agreement was inadequate). Hence, that issue could
not be dispositive of Appellant's claims of an illegal public grant of funds or its
ultra vires claims.
6.51 Nevertheless, assuming arguendo that common law rules developed
in actions on written contracts to assess the adequacy of consideration may be
applicable to Appellant's claims, they do not support the trial court's Order of
dismissal. The Chisholm Defendant's claim consideration is to be deemed
inadequate if there is such a gross disparity in the relative values exchanged that it
Appellant's Brief Page 69
shocks the conscience and is tantamount to fraud. See CR 55 (citing Hindman v.
Harding, No. 03-04-00479-CV, 2005 WL 1038828, at *4 (Tex. App.-Austin May
5, 2005, no pet.)). This is a factual issue to be resolved by the trial court on a
hearing on the merits. For example, in Hindman, the Third Court of Appeals
reversed a trial court's partial summary judgment on consideration adequacy and
remanded the matter for trial. Hindman, 2005 WL 1038828, at *4-5; see also
Martin v. Martin, Martin & Richards, Inc., 12 S.W.3d 120, 125 (Tex. App.-Fort
Worth 1999, no pet.) (reversing summary judgment because evidence raised
genuine issue of material fact as to consideration). Appellant alleges that
Agreement provided the City with a net acquisition of the District's water system,
which the City has valued at more than $70 million, as well as the District's water
reserves and the revenues from its profitable retail water utility, notwithstanding
CTSUD's claim that the City contributed a total of $5,285,070.45 toward the
defeasance of the District's debt. See CR 489-490, 495-496. Further, Appellant
alleges that the City greatly undervalued the assets it acquired. CR 490 n. 2.
These claims more than adequately allege facts of grossly inadequate
consideration. See e.g., City of Ingleside v. City of Corpus Christi, 469 S.W.3d at
590 (courts liberally construe the pleadings, taking all factual assertions as true);
cf. Miranda, 133 S.W.3d at 227 (trial court cannot grant the plea to the jurisdiction
Appellant's Brief Page 70
on a fact question regarding the jurisdictional issue; issue will be resolved by the
fact finder). Accordingly, to the extent that trial court concluded that Appellant
failed to allege that Agreement lacked adequate consideration or violated Section
52(a), or that the Directors acted without authority, this was error. Therefore, the
trial court's order dismissing Appellant's ultra vires claims should be reversed and
the matter remanded for a hearing on the merits.
4. Summary- Appellant invoked the trial court's jurisdiction
over its ultra vires claims.
6.52 As explained above, a lawsuit alleging that a government official
acted without legal authority falls within the "ultra vires exception" to sovereign
and governmental immunity. Otherwise, citizens would be left without recourse or
remedy for such improper, unauthorized acts. Appellant's pleadings clearly allege
facts affirmatively asserting that the District Directors and Commissioners acted
ultra vires in excess of their constitutional and statutory authority. Consequently,
it was error for the trial court to enter the Order dismissing Appellant's ultra vires
claims for declaratory and injunctive relief.
G. PUC's alleged primary or exclusive jurisdiction does not affect the trial
court's jurisdiction over Appellant's claims.
6.53 Appellees sought dismissal of Appellant's lawsuit by arguing that the
PUC has either exclusive or primary jurisdiction over Appellant's claims which
Appellant's Brief Page 71
should subject this lawsuit to dismissal or abatement. See CR 34-35, 59-60. These
arguments are also incorrect and inapposite.
6.54 The concepts of exclusive and pnmary jurisdiction anse under
distinctly different doctrines. The primary jurisdiction doctrine operates to allocate
power between courts and agencies when both have authority to make initial
determinations in a dispute. Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84
S.W.3d 212, 221 (Tex. 2002). Trial courts should allow an administrative agency
to initially decide an issue when: ( 1) an agency is typically staffed with experts
trained in handling the complex problems in the agency's purview; and (2) great
benefit is derived from an agency uniformly interpreting its laws, rules, and
regulations, whereas courts and juries may reach different results under similar fact
situations. Id. If the primary jurisdiction doctrine requires a trial court to defer to
an agency to make an initial determination, the court should abate the lawsuit and
suspend finally adjudicating the claim until the agency has an opportunity to act on
the matter. Id. (citing Central Power & Light Co. v. Public Util. Comm'n, 17
S.W.3d 780, 787 (Tex. App.-Austin 2000, pet. denied); Roberts Express, Inc. v.
Expert Transp., Inc., 842 S.W.2d 766, 771 (Tex. App.-Dallas 1992, no writ)).
6.55 Under the exclusive jurisdiction doctrine, "the Legislature grants an
administrative agency the sole authority to make an initial determination in a
Appellant's Brief Page 72
dispute." !d. (citing Cash Am. Int'l Inc. v. Bennett, 35 S.W.3d 12, 15 (Tex.2000)).
An agency has exclusive jurisdiction "when a pervasive regulatory scheme
indicates that Congress intended for the regulatory process to be the exclusive
means of remedying the problem to which the regulation is addressed." !d.
(quoting Humphrey, Comment, Antitrust Jurisdiction and Remedies in an Electric
Utility Price Squeeze, 52 U. Chi. L.Rev. 1090, 1107 n. 73 (1985)). Whether an
agency has exclusive jurisdiction depends on statutory interpretation. !d. (citing
Cash Am., 35 S.W.3d at 16; Continental Coffee Prods. Co. v. Cazarez, 937 S.W.2d
444, 447 (Tex.1996)). Typically, if an agency has exclusive jurisdiction, a party
must exhaust all administrative remedies before seeking judicial review of the
agency's action. !d. (citing Cash Am., 35 S.W.3d at 15). Until then, the trial court
lacks subject matter jurisdiction and must dismiss the claims within the agency's
exclusive jurisdiction. !d. (citing Texas Educ. Agency v. Cypress-Fairbanks Indep.
Sch. Dist., 830 S.W.2d 88, 90 (Tex.1992); Texas State Bd. of Examiners in
Optometry v. Carp, 162 Tex. 1, 343 S.W.2d 242, 246 (1961)). Because such
dismissal does not implicate the claims' merits, the trial court must dismiss the
claims without prejudice. !d. (citing Ritchey v. Vasquez, 986 S.W.2d 611, 612
(Tex.1999); Crofts v. Court of Civil Appeals, 362 S.W.2d 101, 104 (Tex.1962)).
6.56 An aggrieved party is excused from exhausting its administrative
Appellant's Brief Page 73
remedies if certain exceptions apply, including when: (i) an administrative agency
purports to act outside its statutory powers; (ii) where the administrative agency
cannot grant the requested relief; (iii) the issue presented is purely a question of
law; (iv) certain constitutional issues are involved; and (v) the administrative
remedies are inadequate and the exhaustion of administrative remedies would
cause irreparable injury. MAG-T, L.P. v. Travis Cent. Appraisal Dist., 161 S.W.3d
617, 625 (Tex. App.-Austin 2005, pet. denied); Strayhorn v. Lexington Ins. Co.,
128 S.W.3d 772, 780 (Tex. App.-Austin 2004), aff'd, 209 S.W.3d 83 (Tex. 2006).
6.57 Although, the PUC's Plea to the Jurisdiction generally claimed that it
has primary or exclusive jurisdiction, the arguments raised therein only address
exclusive jurisdiction. See CR 34-35; cf. id. at n. 10 ("Alternatively, the
Commission has primary jurisdiction over the issues raised by Plaintiff, and the
Court should abate the case pending the finality of the Commission's order.").
Particularly, the PUC claims it has exclusive jurisdiction over CCN applications
and suggests that this Court must await the filing of a suit for judicial review of the
PUC's decision regarding such an application before it may exercise jurisdiction
over this lawsuit. See id. The Chisholm Defendants make a similar argument.
CR 22-23.
6.58 As explained above, Appellant asserts that the PUC lacks authority
Appellant's Brief Page 74
and jurisdiction to exercise its economic regulatory authority regarding CCNs to:
(a) take action that would render a special utility district ("SUD") created under
legislative authority to provide water utility service within its own boundaries
legally incapable of carrying out its statutory purpose; (b) take action that would
nullify a SUD's landowners' and consumers' statutory right to vote for a Board of
Directors with the authority to manage the district and govern its provision of
water utility service; (c) take action that would affect the dissolution of an SUD; or
(d) process or approve an CCN application that would effectively perform the three
aforementioned actions. See e.g., CR 511-512. Accordingly, Appellant's
pleadings challenge the PUC's interpretation, construction and application of the
statutes that regulate CCNs and includes claims that the Commissioners acted ultra
vires in processing a CCN application and adopting a final order to revoke the
CCN of an SUD (i.e., CTSUD) and amend the CCN of a municipal utility (i.e.,
Georgetown) to include all of the SUD's territory. Moreover, Appellant's
pleadings seek injunctive relief as to the PUC because it cannot statutorily grant
the relief requested by the Chisholm Defendants. CR 513-515. Appellant's lawsuit
does not simply question the propriety of the PUC's decision to grant an otherwise
valid CCN application pursuant. Further, the Legislature did not grant the PUC
exclusive authority to resolve disputes concerning the construction of laws
Appellant's Brief Page 75
governmg CCNs or SUDs. Consequently, the PUC does not have exclusive
jurisdiction over Appellant's claims concerning the interpretation and construction
of the applicable statutes. Alternatively, assuming arguendo that the PUC has
exclusive jurisdiction, Appellant is excused from exhausting its administrative
remedies because the PUC is acting outside its statutory powers, the PUC cannot
grant the requested relief, and this lawsuit presents issues that are pure questions of
law. Appellants are entitled to a judicial construction of the statutes. Therefore,
the PUC's Plea to the Jurisdiction should be denied.
6.59 Regardless of whether the exclusive or primary jurisdiction doctrines
might apply, neither would support the dismissal or abatement of Appellant's
claims. The administrative proceeding to which the PUC's plea to the Jurisdiction
refers is now completed. As the PUC's plea to the jurisdiction noted, a final order
was issued on January 13, 2016. CR 33. Protestants to the Application filed a
timely motion for rehearing on February 5, 2016. CR 525, 545. On February 10,
2016, the PUC notified the parties that none of the Commissioners voted to add the
motion for rehearing to an open meeting agenda, which would be required for the
Commissioners to issue an order granting or denying said motion. See 16 Tex.
Admin. Code § 22.264(c). Accordingly, Protestants exhausted all administrative
remedies that may be applicable or available. CR 525. On March 8, 2016, the
Appellant's Brief Page 76
Protestants' aforementioned motion for rehearing was overruled by operation of
law, and thus became final and appealable. See Tex. Gov't Code §§ 2001.045,
2001.146(c), 2001.171; see also CR525. That same day, Protestants petitioned a
Travis County District Court for judicial review of the PUC's final order. See
CR522. Protestants, who include members of the Appellant herein, petitioned in
intervention of this lawsuit. CR 523-525. Accordingly, Appellees' arguments in
favor of dismissal or abatement (under either the exclusive or primary jurisdiction
doctrines) are incorrect and inapposite. Consequently, the Appellee's Plea to the
Jurisdiction should be denied. Therefore, the trial court's Order dismissing
Appellant's claims should be reversed and these claims should be remanded for a
hearing on the merits.
H. Appellant has Standing.
6.60 The Chisholm Defendants also incorrectly claim that Appellant lacks
standing to assert claims against them. Appellant's First Amended Petition
establishes that the Chisholm Trail SUD Stakeholders Group is a domestic
nonprofit corporation, organized to advocate for and protect the interests of
residents and landowners in the rural areas of Bell, Burnet and Williamson
Counties in receiving adequate water utility service. See CR 477. Further,
Appellant's Petition provides that the Appellant and its members, including
Appellant's Brief Page 77
District customers and property owners, oppose and have protested CTSUD and
the City's efforts to: (i) enter into the illegal Asset Transfer Agreement; (ii)
illegally transfer CTSUD's CCN, assets, and water system to the City; and (iii)
illegally dissolve the District. See e.g., id. at 486-488. As such, Appellant's
Petition demonstrates that a real controversy exists between the Appellant
(including its members) and the Appellees concerning the validity of the Asset
Transfer Agreement and the illegality of the Appellees' actions.
6.61 When standing is not expressly conferred by statute, the general test
for standing in Texas requires that there (a) shall be a real controversy between the
parties, which (b) will be actually determined by the judicial declaration sought.
Sneed v. Webre, 465 S.W.3d 169, 180 (Tex. 2015); Austin Nursing Ctr., Inc. v.
Lovato, 171 S.W.3d 845, 848 (Tex.2005). When considering the standing of a
nonprofit corporation, the Texas Supreme Court has adopted the standard for
associational standing, which provides that an association has standing to sue on
behalf of its members when "(a) its members would otherwise have standing to sue
in their own right; (b) the interests it seeks to protect are germane to the
organization's purpose; and (c) neither the claim asserted nor the relief requested
requires the participation of individual members in the lawsuit. Texas Ass'n of Bus.
v. Texas Air Control Bd., 852 S.W.2d 440, 447 (Tex. 1993). The first prong of
Appellant's Brief Page 78
associational standing may be satisfied if at least one of the organization's
members would have standing individually. See Save Our Springs Alliance, Inc. v.
City of Dripping Springs, 304 S.W.3d 871, 878 (Tex. App.-Austin 2010, pet.
denied); Hays County v. Hays County Water Planning P'ship, 106 S.W.3d 349,
357 (Tex.App.-Austin 2003, no pet.).
6.62 As explained above, Appellant is a nonprofit corporation organized to
advocate for and protect the interests of residents and landowners in the rural areas
of Bell, Burnet and Williamson Counties in receiving adequate water utility
service. Appellant's members include District customers and property owners who
opposed the Agreement and have protested CTSUD and the City's efforts to enter
into the illegal Asset Transfer Agreement, illegally transfer CTSUD's CCN, assets,
and water system to the City, and illegally dissolve the District. Accordingly,
Appellant has standing because: (a) at least one of its members would have
standing to sue the Defendants; (b) the interests Appellant seeks to protect in this
lawsuit are germane to the Chisholm Trail SUD Stakeholder Group's purpose; and
(c) neither the claims asserted nor the relief requested in this lawsuit requires the
participation of individual members in the lawsuit. Further, Appellant has standing
under TOMA because it qualifies as an interested person under that Act. See e.g.,
Thomas v. Beaumont Heritage Soc., 339 S.W.3d 893, 900 (Tex.- Beaumont 2011,
Appellant's Brief Page 79
pet. denied). Therefore, Appellant has standing to assert the claims raised in its
petition, and Appellees' Pleas to the Jurisdiction should have been denied.
6.63 The Chisholm Defendants, nevertheless, assert that Appellant lacks
standing because it is not a party or third-party beneficiary to the Agreement. CR
62-63. In making this argument, the Chisholm Defendants rely upon case
involving private litigants; not cases involving political subdivisions or public
officers bound by constitutional and statutory limitations on their contracting
authority and expenditure of public funds. See e.g., id (citing Niagara Fire Ins.
Co. v. Numismatic Co. of Fort Worth, 380 S.W.2d 830 (Tex. Civ. App.-Fort Worth
1964, writ ref' d n.r.e) (holding that property insurer of corporation lacked standing
to have sale of rare coins to the corporation by a corporate officer set aside on
ground of self-dealing for unfairness)). Such cases are inapplicable to the instant
lawsuit. Appellant is not seeking a benefit or to enforce a right under the
Agreement. Cf. City of Austin v. McCall, 68 S.W. 791 (1902) (city taxpayer may
enjoin the city from entering into a wrongful contract for purchase of water and
electric light works). Accordingly, the trial court erred to the extent that it relied
upon the Chisholm Defendants' "stranger to the Agreement" argument to grant
Appellees' pleas to the jurisdiction. Therefore, the trial court's Order dismissing
Appellant's claims should be reversed.
Appellant's Brief Page 80
VII.
CONCLUSION
7.1 The Texas Constitution and common law recogrnze that Texas
citizens have the standing and authority to obtain declaratory and injunctive relief
when elected officials, political subdivisions, state agencies act in violation of the
Texas Constitution and statutes. Appellant's lawsuit seeks to remedy the
unconstitutional, unlawful and ultra vires acts of the Appellees. The doctrines of
sovereign immunity, governmental immunity, primary jurisdiction, and exclusive
jurisdiction do not shield the Appellees from Appellant's lawsuit for declaratory
and injunctive relief. Judicial proceedings are the only potential remedy for
unconstitutional, unlawful acts; otherwise, citizens will have no protection from
abuses by government officials. Accordingly, Appellant affirmatively established
that the trial court has subject matter jurisdiction over this lawsuit. Therefore, the
trial court erroneously granted Appellees' pleas to the jurisdiction, and dismissed
Appellant's claims with prejudice.
VIII.
PRAYER
8.1 For these reasons, Appellants request that this Court reverse the
decision of the trial court granting the Appellees' pleas to the jurisdiction and
remand this matter to the trial court for further proceedings.
Appellant's Brief Page 81
Respectfully submitted,
Is/ James P. Allison
James P. Allison
SBN: 01090000
j .allison@allison-bass.com
J. Eric Magee
SBN: 24007585
e.magee @allison-bass.com
Phillip Ledbetter
SBN: 24041316
p.ledbetter@allison-bass.com
ALLISON, BASS & MAGEE, L.L.P.
A.O. Watson House
402 W. 12th Street
Austin, Texas 78701
(512) 482-0701 telephone
(512) 480-0902facsimile
Appellant's Brief Page 82
CERTIFICATION OF COMPLIANCE
I certify that the Appellants' Brief in the Court of Appeals for the Third
District of Texas is a computer-generated document that contains 14,657 words,
which is less than 15,000 words, and complies with the word limit for such a brief
under Tex. R. App. P. 9.4.
Is/ James P. Allison
James P. Allison
CERTIFICATE OF SERVICE
I certify that a copy of Appellants' Brief was served via certified mail, return
receipt requested, facsimile, e-mail and/or electronically on this 2nd day of June,
2016, to the following:
Jose E. De La Fuente Daniel C. Wiseman
SBN: 00793605 SBN: 2402178
jdelafuente@lglawfitm.com Daniel. wiseman @texasattomeygenera
Lambeth Townsend l.gov
SBN: 20167500 Office of the Texas Attorney General
1townsend@lglawfiim.com Environmental Protection Division
Ashley D. Thomas (MC-066)
SBN: 24090430 P.O. Box 12548
athomas @lglawfirm.com Austin, Texas 78711-2548
Lloyd Gosselink, Rochelle & Telephone: (512) 463-2012
Townsend, P.C. Facsimile: (512) 320-0911
816 Congress Avenue, Suite 1900 Lead Attorney for Appellees the
Austin, Texas 78701 Public Utility Commission of Texas,
Telephone: (512) 322-5800 Commissioner Donna L. Nelson,
Facsimile: (512) 472-0532 Commissioners Kenneth W Anderson,
Lead Attorneys for Appellees the City Jr., and Commissioners Brandy Marty
of Georgetown, Chisholm Trail Marquez.
Special Utility District and the
District Directors.
Appellant's Brief Page 83
Breck Harrison (866) 929-1641 (Fax)
SBN: 24007325 arodriguez @txadm.inlaw .com
bharrison @jw.com Attorney for Appellee the City of
Leonard Dougal Georgetown
SBN: 06031400
Idougal@ jw .com Kerry E. Russell
Jackson Walker, L.L.P. Russell & Rodriguez, L.L.P.
100 Congress Avenue, Suite 1100 1633 Williams Drive, Building 2,
Austin,Texas78701 Suite 200
Telephone: (512) 236-2000 Georgetown, Texas 78628
Facsimile: (512) 236-2002 (512) 930-1317
Attorneys for Appellees Chisholm (866) 929-1641 (Fax)
Trail Special Utility District and krussell @txadminlaw .com
District Directors Delton Robinson,
Ed Pastor, Mike Sweeney, James Sam Chang
Pletcher, Robert Kostka, David Staff Attorney
Maserang, Gary Goodman, and Public Utility Commission of Texas
Robert Johnson, Jr. Legal Division
1701 N. Congress Ave.
Art Rodriguez Austin, Texas 78711-3326
Russell & Rodriguez, L.L.P. (512) 936-7261
1633 Williams Drive, Building 2, (512) 936-7268 (fax)
Suite 200 sam.chang @puc. texas. gov
Georgetown, Texas 78628-3659 Attorney for the Public Utility
(512) 930-1317 Commission of Texas Staff
Is/ James P. Allison
James P. Allison
Appellant's Brief Page 84
No. 03-16-00214-CV
IN THE
COURT OF APPEALS
FOR THE
THIRD DISTRICT OF TEXAS
CHISHOLM TRAIL SUD STAKEHOLDERS GROUP,
Appellant,
v.
CHISHOLM TRAIL SPECIAL UTILITY DISTRICT, AND DISTRICT
DIRECTORS DELTON ROBINSON, ED PASTOR, MIKE SWEENEY, JAMES
PLETCHER, ROBERT KOSTKA, DAVID MASERANG, GARY GOODMAN,
AND ROBERT JOHNSON, JR.; THE PUBLIC UTILITY COMMISSION OF
TEXAS; ET AL.,
Appellees.
From the 419th Judicial District Court of
Travis County, Texas
APPENDIX TO APPELLANT'S BRIEF
Appellant submits the following documents in support of its Brief.
TABLE OF CONTENTS
Order On Defendants' Pleas to the Jurisdiction and Special Tab A
Exceptions
Plaintiff's First Amended Petition TabB
Appellant's Brief Page 85
TABA
CAUSE NO. D-1-GN-15-003337
CHISHOLM TRAIL STAKEHOLDERS § IN THE DISTRICT COURT
GROUP, §
Plaintiff, §
§ ~~~~d in Tha District Court
v. § of Travis County, Texas
§
THE CHISHOLM TRAIL SPECIAL § MAR f 1 2016~
UTILITY DISTRICT, DELTON §
ROBINSON, C.E. ("ED") §
PASTOR, MIKE SWEENEY, §
JAMES PLETCHER, PAT GOWER, §
ROBERT KOSTKA, §
DAVID MASERANG, §
GARY GOODMAN, AND ROBERT § 419TH JUDICIAL DISTRICT
JOHNSON, JR., IN THEIR OFFICIAL §
CAPACITIES AS DIRECTORS OF THE §
CHISHOLM TRAIL SPECIAL §
UTILITY DISTRICT, §
§
and §
§
THE CITY OF GEORGETOWN, TEXAS §
§
and §
§
THE PUBLIC UTILITY COMMISSION §
OF TEXAS, §
Defendants. § TRAVIS COUNTY, TEXAS
ORDER ON DEFENDANTS' PLEAS TO THE JURISDICTION
AND SPECIAL EXCEPTIONS
On March 8, 2016, the Court considered the following: (1) Pleas to the Jurisdiction and
Special Exceptions of Defendants Delton Robinson, C.E. "Ed" Pastor, Mike Sweeney, James
Pletcher, Pat Gower, Robert Kostka, David Maserang, Gary Goodman, Robert Jolmson, Jr.
(together, all of the board members are the "Directors" and individually, a "Director"), the
Chisholm Trail Special Utility District (the "District"), and the City of Georgetown (the "City")
(collectively herein "Chisolm Defendants") against Plaintiff Chisolm Trail Stakeholders Group
Pag~ ltJ f 5
ORDER ON PLEAS TO THE JURISDICTION AND SPECIAL EXCEPTIONS
as to the claims for relief asserted in its First Amended Petition; (2) Pleas to the Jurisdiction of
Defendants Public Utility Commission of Texas, Donna A. Nelson, Kenneth W. Anderson, Jr.,
and Brandy Marty Marquez, in their Official Capacities as Public Utility Commissioners of
Texas (collectively herein "PUC Defendants"); and (3) Defendant City of Georgetown's Special
Exceptions to Plaintiffs Original Petition.
Plaintiff appeared through its attorney of record, James P. Allison, and announced ready.
Chisolm Defendants appeared through their attorney of record, Jose E. De La Fuente, and
announced ready. PUC Defendants appeared their attorney of record, Daniel Wiseman, and
announced ready. The record of testimony was duly reported by Della Rothermel, the court reporter
for the 250th Judicial District Court.
After considering Defendants' Pleas to the Jurisdiction, the Special Exceptions, Plaintiffs'
Response, the parties' supplemental briefing, the pleadings on file, the arguments of counsel, and
the applicable law, the Court mles as follows:
(1) IT IS ORDERED that Chisolm Defendants' Pleas to the Jurisdiction are
GRANTED as to Claim for Relief (A) in Plaintiffs First Amended Petition. Accordingly,
Plaintiffs request for a declaratory judgment that the Chisolm Defendants have acted illegally
and ultra vires by acting to illegally dissolve CTSUD is hereby DISMISSED with prejudice to
refiling.
(2) IT IS ORDERED that Chisolm Defendants' Pleas to the Jurisdiction are
GRANTED as to Claim for Relief (B) in Plaintiffs First Amended Petition. Accordingly,
Plaintiffs request for a declaratory judgment that Defendants have acted illegally and ultra vires
by acting to illegally transfer CTSUD's assets to the City is hereby DISMISSED with prejudice
to refiling.
Page 2 ofS
ORDER ON PLEAS TO THE JURISDICTION AND SPECIAL EXCEPTIONS
(3) IT IS ORDERED that Chisolm Defendants' Pleas to the Jurisdiction are
GRANTED as to Claim for Relief (C) in Plaintiffs First Amended Petition. Accordingly,
Plaintiffs request for a declaratory judgment that the Asset Transfer Agreement, including any
amendments, between CTSUD and the City is illegal and void hereby is hereby DISMISSED
with prejudice to refiling.
(4) IT IS ORDERED that Chisolm Defendants' Pleas to the Jurisdiction are
GRANTED as to Claim for Relief (D) in Plaintiffs First Amended Petition. Accordingly,
Plaintiffs request for a declaratory judgment that Georgetown's Application seeks PUC
approval to affect an illegal dissolution of the District and transfer of the District CCN and assets
is hereby DISMISSED with prejudice to refiling.
(5) IT IS ORDERED that PUC Defendants' Pleas to the Jurisdiction are GRANTED
as to Claim for Relief (E) in Plaintiffs First Amended Petition. Accordingly, Plaintiffs request
for a declaratory judgment that the PUC lacks jurisdiction over Georgetown's Application is
hereby DISMISSED with prejudice to refiling.
(6) IT IS ORDERED that PUC Defendants' Pleas to the Jurisdiction are GRANTED
as to Claim for Relief (F) in Plaintiffs First Amended Petition. Accordingly, Plaintiffs request
for a declaratory judgment that the Commissioners have acted illegally and ultra vires by
processing and approving Georgetown's Application is hereby DISMISSED with prejudice to
refiling.
(7) IT IS ORDERED that the Pleas to the Jurisdiction of Chisolm Defendants and
PUC Defendants are GRANTED as to Claim for Relief(G) in Plaintiffs First Amended Petition.
Accordingly, Plaintiffs request for injunctive relief enjoining, staying, voiding, and reversing
Defendants' illegal and ultra vires acts is hereby DISMISSED with prejudice to refiling.
Page J ofS
ORDER ON PLEAS TO TilE JURISDICTION AND SPECIAL EXCEP r!ON!:>
(8) IT IS ORDERED that Chisolm Defendants' Pleas to the Jurisdiction are
GRANTED as to Claim for Relief (H) in Plaintiffs First Amended Petition. Accordingly,
Plaintiff's request for injunctive relief enjoining, staying, voiding, reversing, and preventing any
acts to implement the Asset Transfer Agreement, including any amendments is hereby
DISMISSED with prejudice to refiling.
(9) IT IS ORDERED that PUC Defendants' Pleas to the Jurisdiction are GRANTED
as to Claim for Relief (I) in Plaintiff's First Amended Petition. Accordingly, Plaintiff's request
for injunctive relief staying and enjoining all proceedings before the PUC and State Office of
Administrative Hearings related to Georgetown's Application, including any amendments,
pending further order of the Court is hereby DISMISSED with prejudice to refiling.
(10) IT IS ORDERED that PUC Defendants' Pleas to the Jurisdiction are GRANTED
as to Claim for Relief (J) in Plaintiff's First Amended Petition. Accordingly, Plaintiff's request
for injunctive relief enjoining, staying, voiding, and reversing any proposal for decision or final
order by the PUC and/or any presiding officer who has or will conduct any hearing (including
any Administrative Law Judge with SOAH) related to Georgetown's Application, including any
amendments is hereby DISMISSED with prejudice to refiling.
(11) IT IS ORDERED that the Pleas to the Jurisdiction of Chisolm Defendants and
PUC Defendants are GRANTED as to Claim for Relief (K) in Plaintiff's First Amended Petition.
Accordingly, Plaintiff's request for injunctive relief enjoining the transfer of the District' s CCN
to Georgetown is hereby DISMISSED with prejudice to refiling.
(12) IT IS ORDERED that Defendant City of Georgetown's Special Exceptions to
Claims for Relief (L), (M), and (P) in Plaintiff's First Amended Petition is SUSTAINED. By no
later than April 11, 2016, Plaintiff shall replead with sufficient factual allegations to support a
Page -' uf 5
ORDER ON PLEAS TO THE JURISDICTION AND SPECIAL EXCEPTIONS
claim that Chisolm Defendants violated the Texas Open Meetings Act. If Plaintiff fails to
replead appropriately, Claims for Relief (L), (M), and (P) in Plaintiff's First Amended Petition
shall be dismissed.
(13) IT IS ORDERED that Chisolm Defendants' Pleas to the Jurisdiction are
GRANTED as to Claim for Relief (N) in Plaintiff's First Amended Petition. Accordingly,
Plaintiffs request for a permanent injunction enjoining, staying, voiding, and reversing
CTSUD' s actions related to the transfer of CTSUD's CCN to the City of Georgetown and the
transfer of CTSUD's assets pursuant to the Asset Transfer Agreement and amendments is hereby
DISMISSED with prejudice to refiling.
(14) IT IS ORDERED that Chisolm Defendants' Pleas to the Jurisdiction are
GRANTED as to Claim for Relief (0) in Plaintiffs First Amended Petition. Accordingly,
Plaintiff's request for a permanent injunction enjoining, staying, reversing, voiding, and
preventing the effectiveness ofthe transfer ofCTSUD's CCN to the City of Georgetown and the
transfer of CTSUD's assets pursuant to the Asset Transfer Agreement and amendments is
DISMISSED with prejudice to refiling.
' --(t
SIGNED on the JL :a;ofMarch, 2016.
L/1//-- ; ·i
JUDGE
.•'
.P RESIDING
I
KARIN CRUMP
,/ I
( /
-
Pngc 5of5
ORDER ON PLEAS fO THE JURISDICTION AND SPECIAL EXCEPTIONS
TABB
3/8/2016 10:59:14 AM
Velva L. Price
District Clerk
Travis County
D-1-GN-15-003337
No. D-1-GN-15-003337 Patsy Ybarra
CHISHOLM TRAIL SUD § IN THE DISTRICT COURT
STAKEHOLDERS GROUP, §
Plaintiff, §
§
V. §
§
THE CHISHOLM TRAIL SPECIAL §
UTILITY DISTRICT, DELTON §
ROBINSON, C.E. ("ED') §
PASTOR, MIKE SWEENEY, §
JAMES PLETCHER, PAT GOWER, §
ROBERT KOSTKA, DAVID MASERANG, §
GARY GOODMAN, AND ROBERT §
JOHNSON, JR., IN THEIR OFFICIAL §
CAPACITIES AS DIRECTORS OF THE §
CHISHOLM TRAIL SPECIAL UTILITY §
DISTRICT, §
§
and §
§
THE CITY OF GEORGETOWN, TEXAS, § 419TH DISTRICT OF
§
and §
§
THE PUBLIC UTILITY COMMISSION OF §
TEXAS, §
§
and §
§
DONNA L. NELSON, KENNETH W. §
ANDERSON, JR., AND BRANDY MARTY §
MARQUEZ, IN THEIR OFFICIAL §
CAPACITIES AS PUBLIC UTILITY §
COMMISSIONERS OF TEXAS, §
§ TRAVIS COUNTY, TEXAS
Defendants.
PLAINTIFF'S FIRST AMENDED PETITION
TO THE HONORABLE JUDGE OF SAID COURT:
Plaintiff's First Amended Petition Page 1
NOW COMES Chisholm Trail SUD Stakeholders Group, Plaintiff herein, and would
show unto the Court as follows:
I.
DISCOVERY CONTROL PLAN
1. Discovery is intended to be conducted under a Level 2 a Discovery Control Plan,
pursuant to Texas Rules of Civil Procedure 190.3.
II.
CLAIMS FOR RELIEF
2.1 Plaintiff seeks nonmonetary and monetary relief of $100,000 or less, including
damages of any kind, penalties, court costs, expenses, prejudgment interest, and attorney fees.
See TEX. R. CN. P. 47.
III.
PARTIES
3.1 Plaintiff Chisholm Trail SUD Stakeholders Group ("Plaintiff') is a domestic
nonprofit corporation. Plaintiff is organized to advocate for and protect the interests of residents
and landowners in the rural areas of Bell, Burnet and Williamson Counties in receiving adequate
water utility service. Its principal business address is 235 Sharp Cemetery Road, Killeen, Texas
76542-5146. Plaintiff has not been issued a driver's license number or a Social Security number.
See TEX. CN. PRAC. & REM. CODE ANN.§ 30.014(a).
3.2 Defendant Chisholm Trail Special Utility District ("CTSUD" or "District") is a
special utility district created in 1990 by order of the Texas Natural Resources Conservation
Commission (now, the Texas Commission on Environmental Quality ("TCEQ")), pursuant to
Chapter 65 of the Texas Water Code. The District's geographic area covers approximately
257, 116 acres and encompasses portions of Bell, Burnet, and Williamson Counties. The District
does not include the City of Georgetown and vice versa. The District provides retail water utility
Plaintiffs First Amended Petition Page 2
service to this area pursuant to a Certificate of Convenience & Necessity ("CCN") No. 11590
issued by the TCEQ, jurisdiction over this certificate has now been statutorily transferred to the
Public Utility Commission ("PUC"). Citation has been issued and served upon Defendant
Chisholm Trail Special Utility District as provided by law.
3.3 Defendants Delton Robinson, C.E. ("Ed") Pastor, Mike Sweeney, Robert Kotska,
James Pletcher, David Maserang, Pat Gower, Gary Goodman, and Robert Johnson, Jr., are the
individuals who are serving or have served as Directors of the Chisholm Trail Special Utility
District, a political subdivision of the State of Texas, duly formed and existing under the laws of
the State of Texas. These Defendants (collectively referred to as the District "Board Members"
or "Directors") are being sued in their official capacities as the current and former board
members for the Chisholm Trail Special Utility District. Citations have been issued and served
upon each Defendant Director as provided by law.
3.4 Defendant, the City of Georgetown ("Georgetown") is a home rule, municipal
corporation located in Williamson County, Texas. Citation has been issued and served upon
Defendant Georgetown as provided by law.
3.5 Defendant the Public Utility Commission of Texas ("PUC") is a political
subdivision of the State of Texas. The PUC's principal office is located in Austin, Texas. TEX.
UTIL. CODE§ 12.002. Citation has been issued and served upon the PUC as provided by law.
3.6 Defendants Donna L. Nelson, Kenneth W. Anderson, Jr., and Bandy Marty
Marquez ("Commissioners") are the individuals appointed to serve as the three commissioners of
the PUC, as prescribed by Tex. Uti!. Code § 12.051, and are being sued in their official
capacities.
A. Citation may be served on Defendant Donna L. Nelson at her usual place
of business, the PUC Office, which is physically located in the William B.
Plaintiffs First Amended Petition Page 3
Travis Bldg., 1701 N. Congress Avenue, 7th Floor, Austin, TX 78701.
The mailing address for Defendant Donna L. Nelson's usual place of
business is 1701 N. Congress Avenue, P. 0. Box 13326, Austin, TX
78711-3326. Alternatively, Defendant Nelson may be served with citation
wherever she may be found.
B. Citation may be served on Defendant Kenneth W. Anderson, Jr., at his usual place
of business, the PUC Office, which is physically located in the William B. Travis
Bldg., 1701 N. Congress Avenue, 7th Floor, Austin, TX 78701. The mailing
address for Defendant Kenneth W. Anderson, Jr.'s usual place of business is 170 l
N. Congress Avenue, P. 0. Box 13326, Austin, TX 78711-3326. Alternatively,
Defendant Kenneth W. Anderson, Jr., may be served with citation wherever she
may be found.
C. Citation may be served on Defendant Bandy Marty Marquez at her usual place of
business, the PUC Office, which is physically located in the William B. Travis
Bldg., 1701 N. Congress Avenue, 7th Floor, Austin, TX 78701. The mailing
address for Defendant Bandy Marty Marquez's usual place of business is 1701 N.
Congress Avenue, P. 0. Box 13326, Austin, TX 78711-3326. Alternatively,
Defendant Bandy Marty Marquez may be served with citation wherever she may
be found.
3.7 CTSUD, the District's Board Members, Georgetown, the PUC, and the
Commissioners are all necessary parties. All persons who have any interest that would be
affected by the declaration must be made parties. TEX. CIV. PRAC. & REM. CODE § 37.006(a).
Further, all parties to an agreement are indispensable parties to any litigation that seeks to declare
the agreement void and/or seeks injunctive relief that effectively sets aside the agreement. Texas
Logos, L.P. v. Bri11/mzeyer, 254 S.W.3d 644, 658 (Tex. App.-Austin 2008, no pet.); Texas River
Barges v. City of San Antonio, 21 S.W.3d 347, 357 (Tex.App.--San Antonio 2000, pet. denied)
(party to a contract "is an indispensable party to any litigation that seeks to declare the contract
void ") (emphasis added); McC/zaren v. Bailey, 87 S.W.2d 284, 285 (Tex.Civ.App.--Eastland
1935, no writ) ("Where the injunction in effect sets aside a contract all parties to the contract are
necessary parties."). Further, under Texas law all parties against whom an injunction must run
should be named in a suit for injunctive relief. AVCO Corp. v. Interstate Sw., Ltd., 145 S.W.3d
Plaintiff's First Amended Petition Page 4
257, 266 (Tex. App.-Houston [l41h Dist.] 2004, no pet.); Lone Starr Multi Theatres, Inc. v.
State, 922 S.W.2d 295, 297-98 (Tex.App.-Austin 1996, no writ). Plaintiff seeks declaratory and
injunctive relief against all Defendants. Particularly, Plaintiff requests declaratory and injunctive
relief setting aside an Asset Transfer Agreement between CTSUD and Georgetown.
Additionally, Plaintiff requests declaratory and injunctive relief from CTSUD and its Board
Members' illegal and ultra vires acts. Further, Plaintiff request declaratory and injunctive relief
regarding CTSUD and Georgetown's efforts to affect an illegal dissolution and transfer of
CTSUD's assets and CCN. Moreover, Plaintiffs request declaratory and injunctive relief
regarding the PUC's lack of jurisdiction to affect an illegal dissolution and transfer of CTSUD's
assets and CCN, as well as the Commissioners' related ultra vires acts.
IV.
JURISDICTION AND VENUE
4.1 The Honorable Court has jurisdiction over the controversy and the parties
pursuant to Article III, § 52 and Article V, § 8, of the Texas Constitution; Texas Government
Code § 24.007, and the Uniform Declaratory Judgments Act, TEx. Crv. & REM CODE§ 37.004.
The Court has jurisdiction to compel compliance with statutory or constitutional provisions, and
to enjoin public officials from expending public funds under a contract that is void or illegal. See
Tex. Parks & Wildlife Dep't v. Sawyer Trust, 354 S.W.3d 384, 393 (Tex. 2011); Osborne v.
Keith, 177 S.W.2d 198, 200 (Tex. 1944). The amount in controversy exceeds this Court's
minimum jurisdictional requirements.
4.2 Governmental immunity is not implicated, or, in the alternative, is waived.
4.3 Venue is proper in Travis County, Texas pursuant to Sections 15.002, 15.012 and
15.005 of the Texas Civil Practice & Remedies Code. This lawsuit involves a written agreement
between CTSUD and Georgetown to perform various obligations, including efforts to obtain
Plaintiffs First Amended Petition Page 5
approval of the agreement from the TCEQ (now, PUC) and to prepare and seek the passage of
legislation authorizing CTSUD's dissolution. CTSUD, the Directors, and Georgetown have been
actively pursuing both efforts, all of which have been and are still occurring in Travis County.
The efforts of CTSUD, the Directors, and Georgetown have also resulted in the closure of
CTSUD's principal office in this state. Further, venue is proper in Travis County because the
Defendant Commissioners and the PUC's principal office are located in Austin, Texas.
Moreover, venue is mandatory in Travis County because this lawsuit seeks to stay proceedings
before the PUC and State Office of Administrative Hearings, which are pending in Austin,
Texas. The PUC does not contest that Travis County, Texas is the proper venue. All of
Plaintiffs claims or actions arise out of the same transaction, occurrence, or series of
transactions or occurrences. Therefore, Travis County is the proper venue.
v.
CONDITIONS PRECEDENT
5.1 All conditions precedent to Plaintiffs claims for relief have been performed or
have occurred.
VI.
FACTUAL BACKGROUND
6.1 The Chisholm Trail Special Utility District was created in 1990 by order of the
Texas Natural Resources Conservation Commission (now, TCEQ), pursuant to Chapter 65 of the
Texas Water Code. The District's geographic area is generally bounded on the east by Interstate
Highway 35, to the south by the South San Gabriel River, to the west by the Burnet
County/Williamson County, and to the North by the Lampasas River. The area is approximately
340 square miles and encompasses portions of Bell, Burnet, and Williamson counties. The
District does not include the City of Georgetown and vice versa. The District provides retail
Plaintiffs First Amended Petition Page 6
water utility service to this area pursuant to a Certificate of Convenience & Necessity ("CCN")
No. 11590 issued by the TCEQ (now, statutorily transferred to the PUC). Currently, the District
serves more than 7,000 water utility customers. The District is governed by a seven-member
board of directors, elected at-large by the qualified voters in the District.
6.2. The City of Georgetown (the "City" or "Georgetown") is a home rule city located
in Williamson County. The City has a council-manager form of government. The City provides
retail water utility services pursuant to a CCN issued by the TCEQ (i.e., CCN No. 12369). The
Georgetown Utility System r'GUS") is a division of the City of Georgetown. GUS is responsible
for the management and operations of the City's electric, water and wastewater systems. GUS
has an advisory board that reviews policy, rates, and contracts and makes recommendations
related to these issues to the City Council. Recommendations by the GUS advisory board are
subject to ratification by the City Council. The GUS advisory board is selected by the City
Council.
6.3 In 2007, the District entered into an agreement with the City of Georgetown to
increase the capacity of a surface water treatment plant that would serve both the District and the
City. Under the Agreement, the District contributed several million dollars towards the
expansion of the North Lake Georgetown Water Treatment Plant and obtained the right to an
additional 5 million gallons per day of treated surface water. The expansion was due to be
completed no later than the spring of 2011, but the Georgetown City Council delayed its
completion. The additional treated water capacity the District had planned to get from the North
Lake Georgetown plant was not available as scheduled due to the impacts of the 2011 drought.
Thus, the District needed to rely upon its groundwater wells. One of those wells was found to
have an obstruction that prevented lowering the intake valve to the proper level, resulting in
Plaintiffs First Amended Petition Page 7
supply problems as the drought affected groundwater levels. All of this resulted in the District
implementing water stage 4 water use restrictions on its customers' water use. These were
primarily aimed at restricting landscape watering.
6.4 During the stage 4 water restrictions, all of the District's groundwater wells were
brought back on line. The North Lake Georgetown Water Treatment Plant expansion project was
completed by the City of Georgetown in the fall of 2011. By that time, the District had more
treated water capacity than it had demand and was fully able to meet the needs of its customers.
6.5 After the Stage 4 watering restrictions were implemented, the District received
complaints from customers in suburban areas near the City of Georgetown. This included
complaints by Defendants Mike Sweeney and Delton Robinson, as representatives of ad hoc
water committees for their respective neighborhoods. In 2012, those ad hoc water committees
begun actively advocating for the District to pursue a transaction wherein the District would be
dissolved and all of its water system and assets would be acquired by the City. Representatives
from these ad hoc water committees sought to elect Delton Robinson and Mike Sweeney to the
District's board in efforts to ensure that the District would be dissolved and acquired by the City.
Defendants Delton Robinson and Mike Sweeney were elected in November 2012.
6.6 Under pressure from District customers who were unhappy with the District's
water restrictions, the District entered into discussions with the City about possible options to
regionalize water supply. The City, however, was interested only in acquiring all of the District's
water, water system, and CCN. In April 2013, the District's Board rejected the City's proposal
for an asset purchase agreement. The agreement would have provided the City with all the
benefits of acquiring a viable water system and provided little or no public benefit in return.
Notably, the agreement failed to increase regional water supply or capacity, failed to provide the
Plaintiffs First Amended Petition Page 8
District customers with any commitments to provide better rates of service, and failed to provide
customers or landowners with any effective electoral representation. It also included the City's
acquisition of the District's assets without paying adequate compensation.
6.7 The District Board did not authorize any continued negotiations with the City
after the April 18, 2013 meeting. Nevertheless, representatives of the City continued efforts to
pursue the District's water and assets. The District directors most sympathetic to such a
transaction then formed an ad hoc negotiating committee which took it upon itself to reopen
negotiations with the City. During a meeting of the Board on July 18, 2013, Defendant Pat
Gower suggested that the District have legal counsel prepare a contract providing for the transfer
of all District assets and service territory to the City and for the District to be dissolved.
Defendant Gower further suggested the draft contract be put to a final vote by the Board. The
Board represented to the public that its legal counsel would be responsible for protecting the
interests of the District's customers in connection with the preparation of the agreement.
6.8 During the next board meeting on August 1, 2013, the District's attorney, Mr.
Tony Corbett, resigned his position. Defendant Pat Gower explained that Mr. Corbett felt the
agreement he was instructed to prepare did not adequately protect the District's customers.
During the same board meeting, Defendant Ed Pastor announced that he was resigning his
position on the Board of Directors and that his resignation would be effective immediately. The
Board then took a vote regarding whether to approve the asset transfer agreement. The board did
not approve the agreement. At the end of the August 1 board meeting, Defendant Pat Gower
indicated that he would table the board's consideration of the asset transfer agreement and set the
matter for another vote on August 15, 2013. He also indicated that he would retain another
Plaintiff's First Amended Petition Page 9
attorney, Mr. Leonard Dougal, to review the asset transfer agreement prior to the August 15th
meeting.
6.9 The District held another board meeting on August 14, 2013. During the meeting,
Mr. Dougal made a presentation to the board recommending that it amend the District's policies
regarding indemnity and legal costs. Such amendments were intended to protect board members
in the event they were sued related to their participation in the process of approving an asset
transfer agreement with the City. The board adopted the recommended amendments.
Additionally, Defendant Pat Gower made a motion to reseat Defendant Ed Pastor as a District
Board member. The Board then approved Defendant Pastor being reseated.
6.10 The following day (August 15, 2013), the District held another board meeting,
and voted to adopt District Resolution No. 2013-0815-01 authorizing the execution of an
agreement transferring substantially all of the District's property and assets, including its water
system assets, to the City. Marcus Canipe was the only Director who voted against the
resolution. Resolution No. 2013-0815-0 1did not identify the particular terms of the asset transfer
agreement and did not attach a copy the asset transfer agreement it purported to authorize.
6.11 In September 2013, the District and the City entered into a written Asset Transfer
and Utility System Consolidation Agreement ("Agreement" or "Asset Transfer Agreement").
The effective date of the Agreement was October 15, 2013. The Agreement provided for the
transfer of the District's entire water system to the City, including all of the District's facilities,
property, cash, contracts, obligations, and all of the District's certificated water service area.
6.12 The Agreement placed a book value of $61,730,888.00 on the District's assets,
and indicated that the District had approximately $15,611,627.00 in outstanding long-term debt.
The Agreement did not place a value on the District's water rights, including the District's right
Plaintiffs First Amended Petition Page 10
to more than 11,000 acre feet of raw water per annum from the Brazos River Authority. As
such, the Agreement provides for the City's acquisition of well more than $46 million in value of
net assets, without regard to the value of the District's water rights. The Agreement further
provided that the parties agreed to use best efforts to seek passage of legislation that would
authorize the immediate dissolution of the District. Accordingly, the Agreement provided no
consideration to the District or public benefit. The District would simply transfer its assets and
stop operating. The District would effectively be abolished and would no longer exist for any
legal purpose.
6.13. The Agreement further provided that the closing of this transaction was
conditioned upon the parties obtaining consent from various parties, including the "[a]pproval by
the TCEQ for the transfer of the CTSUD CCN and the Assets." As such, in November 2013, the
City filed an Application for Sale, Transfer, or Merger of a Retail Public Utility" ("STM
Application" or "Application") with the TCEQ. The STM Application sought approval of the
following proposed actions: (1) the sale of and acquisition of the water system under the
District's CCN No. 11590; (2) transfer of the District's entire CCN to the City; (3) amendment
of the City's CCN No. 12369; and (4) cancellation of the District's CCN. The Application and
the accompanying notices that were delivered to District customers and other affected persons
declaring the District's "INTENT TO SELL FACll.JTIES AND TRANSFER CERTIFICATE
OF CONVENIENCE AND NECESSITY (CCN) NO. 11590 TO THE CITY OF
GEORGETOWN."
6.14. Numerous persons protested the proposed transaction and requested a contested
administrative hearing by the TCEQ, including the members of the Plaintiff nonprofit
corporation, the Bell County Commissioners Court, Texas Senator Troy Fraser, and Texas
Plaintiffs First Amended Petition Page 11
Representative Jimmie Don Aycock. These protestors explained that the interests of the water
utility customers, businesses, and landowners within the District are best served by its continued
operation as a freestanding district that is governed by a board of directors who are electorally
and politically accountable to the voters within the District's boundaries. The proposed transfer
of the CTSUD's assets and CCN to City of Georgetown would cede control of water utility
service decisions for areas well beyond the Georgetown city limits to the Georgetown City
Council. This would alienate and politically isolate the customers, businesses, and landowners in
the rural area of the District, leaving them with no representation in their water matters because
all customers in the unincorporated areas of Williamson County (outside the City of
Georgetown), and the customers in Bell and Burnet Counties cannot vote for the Georgetown
City Council. This action would be detrimental to the interests and property values of customers,
businesses, and property owners in the portions of Bell, Burnet, and Williamson counties located
outside Georgetown's city limits.
6.15 In May 2014, the matter was referred to the State Office of Administrative
Hearings ("SOAH") for a contested case hearing. Following a preliminary hearing, the
Administrative Law Judge determined that the TCEQ had jurisdiction over Georgetown's STM
Application and admitted parties, including five Protestants ("Protestants"), three of whom are
also Plaintiffs members.
6.16 On August 21, 2014, the District's Board adopted a resolution that purports to:
( 1) authorize the District's president to execute an Amended Asset Transfer Agreement with
Georgetown; (2) authorize the District's president to execute an Operations Agreement between
the District and Georgetown; (3) authorize the District's president to consummate the
transactions contemplated by the Amended Asset Transfer Agreement and Operations
Plaintiffs First Amended Petition Page 12
Agreement; and (4) approve the adoption of a Transition Surcharge of $4.75 per meter per for
District customers "to fund CTSUD's operating costs and expenses associated with transitioning
service to the City of Georgetown and with maintaining CTSUD's CCN." The Amended Asset
Transfer Agreement and the Operations Agreements were not attached to or incorporated into the
resolution.
6.17. On September I, 2014, Georgetown's STM Application was statutorily
transferred from the subject matter jurisdiction of the TCEQ to the PUC. The filings in that
matter (SOAH DOCKET NO. XXX-XX-XXXX and PUC DOCKET NO. 42861) are publicly
available online. 1
6.18. On September 12, 2014, CTSUD and the City executed a First Amendment to
Asset Transfer and Utility System Consolidation Agreement ("First Amendment" or "First
Amended Agreement") which incorporated several documents related to the transaction,
including a Service Area Operations and Management Agreement ("Operations Agreement").
Also included was a Flow of Funds Memorandum, which outlines the flow of funds in
connection with First Amendment, including the efforts of the City to defease a portion of the
District's bonded indebtedness.
The First Amendment contains several notable changes, including that:
( 1) the District will no longer be obligated to transfer its CCN to the City at the
closing of their asset transfer; and
(2) the parties agreed to waive the requirement that the TCEQ approve the asset
transfer agreement as a condition of their closing.
1
The filings in this docket may be accessed by visiting
llltp:/hntcrchangq1uc .lc\.1~ .!!ll\ / \\ chr\pp/lnrcrchJn!!d.lpplu.:.tl h lll/tlbapp'/f i!Jng.,/p!!l.,cw ch .J'-P and searching for
control number 42861 .
Plaintiffs First Amended Petition Page 13
6.19 The aforementioned resolution provides that pursuant to the Operations
Agreement, "the City will provide water utility services within the CTSUD CCN." Accordingly,
the Operations Agreement generally provides that the City will be responsible for operating the
District's water system and have all powers of District Management and staff. Under the
Agreement, the parties claim that the District shall continue to exercise all of the powers and
duties of the CCN holder for water utility service within the District's CCN. Nevertheless, under
the First Amended Agreement, the District transferred all of its water system to the City and
adopted the City's policies and rate structure (not including the Transition Surcharge). Further,
the District agreed that the City will bill, collect, and retain water service revenues collected
within the District's CCN, less a portion of the aforementioned Transition Surcharge.
6.20 Following the execution of the First Amendment, CTSUD illegally consummated
the transaction, transferring its waters system and nearly all of its assets to the City. Since the
closing of the asset transfer, the District effectively ceased to exist. The District no longer
operates an office. Calls to the District's telephone number (254-793-3103) were greeted with a
recording stating that caller had reached "Georgetown Utility Systems, formerly Chisholm Trial
Special Utility District." The recorded messages also indicate that the District's phone number
will be discontinued. Further, District customers now receive water utility bills from the
"Georgetown Utility Systems Western District Office." The First Amendment and Operations
Agreement also made the City responsible for seeking approval to transfer the District's CCN.
6.21 The Flow of Funds Memorandum produced by the District regarding the payment
of its obligations pursuant to the Amended Asset Transfer Agreement indicates that the City
contributed a total of $5,285,070.45 toward the defeasance of the District's debt. Further, the
City has produced a Financial Report for fiscal year 2014, which provides that the City
Plaintiffs First Amended Petition Page 14
experienced a 91.8% increase in revenue over the prior year, including $71.5 million in capital
grants and contributions due primarily to the acquisition of CTSUD. Hence, under the First
Amendment to the Asset Transfer Agreement, the City acquired the District's water system,
which the City has valued at more than $70 rnillion 1, as well as the District's water reserves and
the revenues from its profitable retail water utility.
6.22 In September 2014, the Protestants in the contested case hearing filed a motion
seeking the dismissal of Georgetown's STM Application. The Motion provided, inter alia, that
Georgetown's STM Application seeks to illegally revoke the District's CCN, dissolve the
District, and transfer the District's assets to Georgetown. Further, the motion provided that the
PUC lacks jurisdiction to approve Georgetown's STM Application and affect an illegal
dissolution of the District, as well as an illegal acquisition of the District's water system and
CCN. The PUC Staff responded by asserting that the PUC does not have jurisdiction to evaluate
whether the STM Application or Asset Transfer Agreement violates the statutory requirements
related to dissolution of special utility districts. 3 The Administrative Law Judge agreed and
ordered that the proceeding continue solely regarding the issues regarding the proposed transfer
of the District's CCN to Georgetown. The Public Utility Commissioners refused to hear an
appeal of that decision, and later issued a Preliminary Order identifying the issues that must be
addressed by the AU. Notably, the Preliminary Order indicated that the proceeding would not
address the dissolution of the District or the approval of the Asset Transfer Agreement. 4
2
Plaintiff maintains that this valuation fails to account for additional assets and receivables, including water rights,
and is considerably below market value.
3
See Staffs Response to Protestants' Motion for Summary Disposition (Item No. 131) at pg. 3 (available online
here:
http://i mere h.tn !!e. pu.: .1.: \:ts.2u\/\V ch,Anp/1 n_Lc.r.: h:l[l_gcJQu.n! ical inn/Jbapp~JI'i Iin ~~/p '..!Sc :m: h Rcsul l~ . a~.n '.'TXT C NT
R N0=-L!Xf1 I &TXT ITH.·I NO= 131 ).
~ See the PUC's Preliminary Order (Item No. 180) at pgs. 3-11 (available online here:
ht I p:/h mer.: htlll!!e .puc .lc \ as .!!U\ /W cbApp/1 nlcrchan !.!l!!appl1c:u iun/dhapp~/li Iin !!'>lp!.!Scarch Rc~y!!., . a~p..7.JXJ l"}}.I
R NU=..J.2X61 & TXT ITE M NO= I X2 ).
Plaintiffs First Amended Petition Page 15
6.23 On January 15, 2015, Georgetown and the District entered into a Second
Amendment to the Asset Transfer and Utility System Consolidation Agreement ("Second
Amended Agreement" or "Second Amendment"). The Second Amendment served primarily to
provide that Georgetown and the District intended for the Asset Transfer Agreement to constitute
a contract made under Texas Water Code Section 13.248. The PUC later determined that this
statute does not apply to Georgetown's Application. 5 Nevertheless, the PUC also indicated that
Georgetown's Applications may be processed under other provisions of the Water Code without
any further amendment of the Application or further notice being published regarding the sarne. 6
6.24 On April 4, 2015, House Bill 4172 was introduced in the Texas House of
Representatives relating to the dissolution of CTSUD. This bill was introduced in accordance
with terms of the Asset Transfer Agreement providing that CTSUD and Georgetown will pursue
efforts to seek passage of legislation that would authorize the immediate dissolution of the
District. The bill proposed legislation that would have authorized the District board to adopt an
order that would dissolve the District and affect a transfer of its assets to Georgetown. House Bill
4712 would have attempted to further preclude any judicial review of the Board's order
dissolving the District. On April 22, 2015, Defendant CTSUD Directors Delton Robinson and
Michael Sweeney as well as other CTSUD and City representatives testified at a public hearing
before the Texas House of Representatives' Special Committee on Special Purposes Districts in
favor of House Bill 4172. Conversely, several witnesses testified in opposition to House Bill
4172 and submitted letters to members of congress opposing the bill. House Bill 4172 did not
7
pass during the legislative session. Therefore, the CTSUD has not been legally dissolved.
5
See PUC Preliminary Order (Item No. 182) at pg. 7.
6
See id. at pgs. 5-6.
7
The legislative history for House Bi114172 is publicly available on the Texas Legislature's website here:
b!.!QJI\\ '' \\ .k!.':l~.-.t,tlc t' u ~/13 iiiLlH)(..up/1-li,t tlrv .•t-.px. .1Le!.!Sc,.,=R-lR&B iii=HB-ll72 .
Plaintiffs First Amended Petition Page 16
VII.
CAUSES OF ACTION & AUTHORITIES
Illegal Dissolution and/or Consolidation
7.1 As described above, the Asset Transfer Agreement provides that the City and
District agree to use best efforts to seek passage of legislation that would authorize the
immediate dissolution of the District. This is necessary because the City and District lack the
requisite statutory authority to dissolve or consolidate the District.
7.2 A political subdivision authorized to be created pursuant to legislative authority
may be dissolved only pursuant to legislative authority. See Ringling v. City of Hempstead, 193
F. 596, 599 (5th Cir. 1911); Hamess v. State, 13 S.W. 535, 537 (Tex. 1890); Largen v. State ex
rei. Abney, 13 S.W. 161, 163 (Tex. 1890); Watts v. Double Oak Indep. Sch. Dist., 377 S.W.2d
779, 780 (Tex. Civ. App.-Fort Worth 1964, no writ); Tex. Att'y Gen. No. GA-0663 (2008). As
the Texas Supreme Court has described, '"[t]he state creates such [municipal] corporations for
public ends, and they will and must continue until the legislature annuls or destroys them, or
authorizes it to be done."' Tex. Att'y Gen. Op. No. GA-0663 (2008) (citing Largen, 13 S.W. at
162; see also Ringling, 193 F. at 599 ("It is well settled that a municipal corporation can only be
dissolved by legislative action."); Hamess, 13 S.W. at 537 (stating that "[m]unicipal
corporations can be created only in the manner provided by law, and when created must continue
until abolished in some legal method"). This principle applies to political subdivisions other than
cities. See Watts, 377 S.W.2d at 780; Tex. Att'y Gen. Op. No. GA-0663.
7.3 The District is a special utility district created pursuant to Chapter 65 of the Texas
Water Code. In sections 65.727 through 65.731 of the Water Code, the Texas Legislature has
provided the sole method by which the directors of such a district are authorized to dissolve it.
Section 65.727 specifically provides that a district's board may dissolve a special utility district,
Plaintiffs First Amended Petition Page 17
"if the board considers it advisable before the issuance of any bonds, notes, or other
indebtedness." TEX. WATER CODE§ 65.727(a) (emphasis added). To effect such a dissolution, a
majority of the board must find "before the issuance of bonds, notes, or other obligations or the
final lending of its credit in another form that the proposed undertaking for any reason is
impracticable or apparently cannot be successfully and beneficially accomplished" and must
hold a public hearing on a proposal to dissolve the district. !d. §§ 65.727(b), 65.728, 65.729. "If
the board unanimously determines from the evidence that the best interests of the persons and
property in the district will be served by dissolving the district, the board shall enter the
appropriate findings and order in its records dissolving the district. Otherwise the board shall
enter its order providing that the district has not been dissolved." !d. § 65.730 (emphasis added).
A board's decree to dissolve a special utility district is subject to appeaL/d. § 65.731.
7.4 The District has been operating as a viable retail water utility for more than
twenty years. The Asset Transfer Agreement acknowledged that the District had more than $60
million in assets and approximately $15 million in outstanding debt obligations. Only six
members of the District's Board approved the Agreement. The District's Board has not
conducted a public hearing on a proposal to dissolve the District. As such, it is clear that the
District cannot dissolve pursuant to section 65.727. Nevertheless, the terms of the District's
Asset Transfer Agreement and the First Amendment expressly incorporate terms providing for
and causing CTSUD's dissolution. Therefore, the Asset Transfer Agreement and First
Amendment affect an illegal dissolution.
7.5 Chapter 65 also includes provisions authorizing the consolidation of two special
utility districts. See TEX. WATER CODE§§ 65.723- 65.726. This process requires the electoral
approval of both district's qualified voters. !d. § 65.724. The City is not a special utility district,
Plaintiffs First Amended Petition Page 18
and the District has not conducted an election authorizing its consolidation with the City. As
such, it is clear that the District cannot dissolve pursuant to Chapter 65 of the Water Code.
7.6. Chapter 49 of the Water Code contains additional provisions generally applicable
to special utility districts. This Chapter provides the TCEQ with the authority to dissolve a
district that is inactive for a period of five consecutive years and has no outstanding bonded
indebtedness. /d. § 49.321. This process requires the TCEQ to conduct its own investigation
regarding the propriety of dissolution, conduct a public hearing, and adopt an order providing for
dissolution. ld. §§ 49.322. Such an order may be appealed to a district court for de novo review.
/d.§ 49.326.
7.7. The Asset Transfer Agreement acknowledges that in September 2013, the District
was active and had outstanding bonded indebtedness. As such, it is clear that the District cannot
dissolve pursuant to Chapter 49 of the Water Code. Nevertheless, the terms of the District's
Asset Transfer Agreement and the First Amendment expressly incorporate terms providing for
and causing CTSUD's dissolution. Therefore, the Asset Transfer Agreement and First
Amendment affect an illegal dissolution.
7.8 A contract to fulfill an obligation which cannot be performed without violating
the law contravenes public policy and is void. Lewis v. Davis, 199 S.W.2d 146, 149 (Tex. 1947).
Therefore, the Asset Transfer Agreement and the amendments thereto are void.
Illegal Gram of Public Funds
7.9. The Texas Constitution places limits on the power of a local government to
transfer funds to any other entity. Article ill, section 52 of the Texas Constitution provides that
the legislature may not authorize any county, city, or other political corporation of the state "to
lend its credit or to grant public money or thing of value in aid of, or to any individual,
Plaintiffs First Amended Petition Page 19
association or corporation whatsoever." TEX. CONST. art. III, § 52; see also id. art. XI, § 3
(similar provision). These provisions bar donations of funds from one governmental entity to
another, as well as donations from governmental entities to private entities. See Harris Cnty.
Flood Control Dist. v. Mann, 140 S.W.2d 1098 (Tex. 1940); San Antonio Indep. Sclz. Dist. v.
Board of Trs. of San Antonio Elec. & Gas Sys., 204 S.W.2d 22 (Tex. Civ. App.-El Paso 1947,
writ refd n.r.e.); Tex. Att'y Gen. Op. No. JC-0335 (2001).
7.10 When a political subdivision transfers funds, it must be for a public purpose with
a clear public benefit received in return. See Mann, 140 S.W.2d at 258-59. To insure that the
political subdivision receives its consideration, viz., accomplishment of the public purpose, the
political subdivision must retain some degree of control over the performance of the contract.
Key v. Comm'rs. Court ofMarimz Cnty., 727 S.W.2d 667, 669 (Tex. App.-Texarkana 1987, no
writ). Hence, a political subdivision cannot grant funds to a municipal corporation, but it may
contract with it to provide services or accomplish a purpose that the political subdivision is
authorized to provide. See Tex. Att'y Gen. Op. No. JC-0335 (2001).
7.11 Water districts are political subdivisions. See TEX. CON ST. art. XVI, § 59; Willacy
Cnty. Water Control & Improvement Dist. No. 1 v. Abendroth, 177 S. W .2d 936 (Tex. 1944). As
such, the Texas Constitution prevents a special utility district from making a gift or grant of
public funds or property to another public or private entity.
7.12 As discussed above, the Asset Transfer Agreement indicates that the District has
more than $60 million in assets, and provides that the City with a net acquisition of assets valued
at more than $46 million. In September 2014, CTSUD illegally consummated the asset transfer
pursuant to the First Amended Asset Transfer Agreement. The City has produced a Financial
Report for fiscal year 2014 which reports that Georgetown experienced a 91.8% increase in
Plaintiffs First Amended Petition Page 20
revenue over the prior year, including $71.5 million in capital grants and contributions due
primarily to the acquisition of CTSUD. Hence, under the First Amendment to the Asset Transfer
Agreement, the City acquired the District's water system, which the City has valued at more than
$70 million, as well as the District's water reserves and the revenues from its profitable retail
water utility.
7.13 The First Amended Asset Transfer Agreement affected a transfer of the District's
entire water system to the City without consideration. This transaction clearly is a financial
benefit to the City, but does not provide any clear public benefit to the District, the District's
customers, or landowners within the District. Rather, it transferred the District's water utility
system to Georgetown and imposed an improper surcharge of $4.75 per meter per month for
District customers to fund Georgetown's operation of the water system under CTSUD's CCN.
Further, the Asset Agreement provides for the District's dissolution and negates any method to
insure that any public purpose could be accomplished. Therefore, it provides an illegal grant of
public funds.
7.14 A contract to fulfill an obligation which cannot be performed without violating
the law contravenes public policy and is void. Lewis v. Davis, 199 S.W.2d at 149. Therefore, the
Asset Transfer Agreement and the amendments thereto are void.
Ultra Vires Acts of District Board Members
7.15 A government official commits an ultra vires act when he or she acts without
lawful authority. City of El Paso v. Heinrich, 284 S.W.3d 366, 372 (Tex. 2009). An official acts
without lawful authority when he violates state law, acts beyond the limits of his authority, or
misinterprets a law he is charged with administering. See id.; Tex. Educ. Agency v. Leeper, 893
S.W.2d 432 (Tex.1994) (suit challenging state officials' construction of compulsory school-
Plaintiffs First Amended Petition Page 21
attendance law); Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401,405 (Tex.l997) ("A private litigant
does not need legislative permission to sue the State for a state official's violations of state
law."); Cobb v. Harrington, 190 S.W.2d 709, 712 (Tex. 1945) (suit to declare government
officials were wrongfully compelling plaintiffs to pay certain taxes). Sovereign immunity does
not bar a suit against government officials whose acts are ultra vires. Heinrich, 284 S.W.3d at
372.
7.16 CTSUD is a special utility district created pursuant to Chapter 65 of the Texas
Water Code and is considered a conservation and reclamation district under Article XVI, Section
59, of the Texas Constitution. TEX. CONST. art. XVI,§ 59; TEX. WATER CODE§ 65.011. Such a
district may be created "to purchase, own, hold, lease, and otherwise acquire sources of water
supply; to build, operate, and maintain facilities for the transportation of water; and to sell water
to towns, cities, and other political subdivisions of this state, to private business entities, and to
individuals." TEX. WATER CODE§ 65.012(1). A district has the functions, powers, authority, and
rights that will permit accomplishment of the purposes for which it is created. /d. § 65.20 l.
Their assets and authorities may not be transferred of sold for purposes other than to carry out
their lawful rights and duties. See id. § 49.213; TEX. Gov'TCODE § 79l.Oll(c).
7.17. Special utility districts are governed by a board of elected directors. TEX. WATER
CODE §§ 65.101, 65 . 103. In sections 65.727 through 65.731 of the Water Code, the Texas
Legislature has provided the sole method by which the directors of such a district are authorized
to dissolve the district. See id. §§ 65.727-.731. Section 65.727 specifically provides that a
district's board may dissolve a special utility district, "if the board considers it advisable before
the issuance of any bonds, notes, or other indebtedness." /d. § 65.727(a) (emphasis added). This
Plaintiffs First Amended Petition Page 22
District, however, is not eligible to dissolve pursuant to section 65.727 because it has issued
indebtedness.
7.18 A special utility district generally may not furnish, make available, render, or
extend retail water or sewer utility service to any area to which retail water utility service is
being lawfully furnished by another retail public utility without first having obtained a CCN that
includes the area in which the consuming facility is located. See id. §§ 13.242(a), .252, .254.
Further, municipally owned or operated utilities are generally prohibited from providing retail
water utility service within the area certificated to another retail public utility without first having
obtained from the utility commission a CCN that includes the areas to be served. /d. § 13.247(a).
In order to obtain a CCN for a particular area, a retail public utility generally must file an
application requesting the PUC to either grant or amend its CCN. /d. §§ 13.241-.244. The
District holds a CCN for covering nearly all of the land within its territory. As such, the City may
not lawfully provide water utility service to any area within CTSUD's CCN. Conversely, if
CTSUD transfers its CCN to the City, CTSUD will not be able to lawfully provide water utility
service to any areas within its own territory. As such, CTSUD's agreement to seek approval to
transfer its CCN to the City will render it incapable of providing water utility service to its own
areas and customers and thus will negate its ability to carry out the purpose for which it was
created under Texas law.
7.19 The terms of the Asset Transfer Agreement (including amendments) provide for
the transfer of the CTSUD's water system, water rights, and virtually all of its assets to the City.
The Agreement further provides for the transfer of CTSUD's CCN to the City. Accordingly, the
Agreement expressly provides for a transaction that will make it impossible for CTSUD to
accomplish of the purposes for which it is created. Pursuant to the First Amended Agreement,
Plaintiffs First Amended Petition Page 23
the CTSUD and the City affected dissolution of the District and an illegal grant of the District's
assets to the City. Moreover, the Amended Transfer Agreement expressly provides that CTSUD
and the City will seek ex post facto legislative ratification for the dissolution, which they are now
actively pursuing. These are all acts which are outside of the legal authority of the District's
directors. Therefore, when the CTSUD Directors approved the original Asset Transfer
Agreement and the amendments thereto, the directors committed ultra vires acts outside their
authority.
PUC Approval Sought to Affect an Illegal Asset and CCN Transfer
7.20 Georgetown and CTSUD are retail public utilities. See TEX. WATER CODE §
13.002(19). Each holds a CCN to provide retail water utility service to their respective service
areas. A retail public utility generally may not furnish, make available, render, or extend retail
water utility service to any area to which retail water utility service is being lawfully furnished
by another retail public utility without first having obtained a CCN that includes the area in
which the consuming facility is located. /d. § l3.242(a); see also id. §§ 13.252, 13.254. In other
words, a CCN provides a retail public utility with the exclusive right (i.e., a monopoly) to
provide retail water service within its certificated territory. In order to obtain a CCN for a
particular area (including an area served by another CCN holder), a retail public utility generally
must file an application requesting the PUC to either grant or amend its CCN. /d.§§ 31.241-
13.244.
7.21 The Asset Transfer Agreement provides for the transfer of the District's entire
CCN to Georgetown. An agreement to transfer all of the customers and the entire CCN of one of
the retail public utility to another necessarily seeks to decertify one retail public utility while
amending the CCN of the other. Accordingly, the PUC issued a Preliminary Order providing
Plaintiffs First Amended Petition Page 24
that Georgetown's Application must meet the standards set out it the Texas Water Code Section
13.254 and associated PUC rules for the revocation of the a CCN, as well as Texas Water Code
Sections 13.241 andl3 .246 and associated rules to amend a CCN to incorporate new service
areas.
7.22 There are no provisions in Chapter 13 of the Water Code authorizing the
wholesale transfer of a political subdivision's or municipality's CCN. The sole provision in
Chapter 13 addressing the transfer of an entire CCN applies only to a "utility" or a "water supply
or sewer service corporation," both of which are defined to exclude municipal corporations and
political subdivisions (e .g., special utility districts). See id. § § 13.002(23), 13.301. This is
understandable because special utility districts like the Chisholm Trail Special Utility District are
created by statute to operate and maintain water utility services for the public benefit. See TEX.
CONST. art. XVI,§ 59; TEX. WATER CODE§ 65.012. Special utility districts' assets and rights
may not be transferred or sold for purposes other than to carry out those districts' lawful rights
and duties. See TEX. WATER CODE§ 49.213; TEX. Gov'T CODE§ 791.011(c). An agreement to
transfer the entire service area, all of the customers, and the entire CCN of a special utility
district to another retail public utility would be antithetical to the purpose for which such a
district is created. Therefore, Georgetown's Application seeks PUC approval to affect an illegal
transfer of the District's CCN.
7.23. Section 13.254 of the Water Code governs the process whereby the PUC may
revoke the CCN of a water utility. See id. § 13.254. It specifically applies to situations where a
certificate holder has agreed in writing to allow another retail public utility to provide service
within its service area without amending its certificate. !d. § 13.254(a)(3). Such a revocation
requires that the PUC provide notice, conduct a hearing, and enter an order pursuant to section
Plaintiffs First Amended Petition Page 25
13.254. A retail public utility may not in any way render retail water service directly or
indirectly to the public in an area that has been decertified under this section without providing
compensation for any property that the PUC determines is rendered useless or valueless to the
decertified retail public utility as a result of the decertification. !d. § 13.254(d). The amount of
compensation shall be determined by a qualified individual or firm serving as a certified
appraiser. /d. § 13.254(f). The compensation must be just and adequate taking numerous factors
into consideration, including but not limited to: the value of the service facilities of the retail
public utility located within the area in question; the amount of any expenditures for planning,
design, or construction of service facilities that are allocable to service to the area in question;
the amount of the retail public utility's contractual obligations allocable to the area in question;
any demonstrated impairment of service or increase of cost to consumers of the retail public
utility remaining after the decertification; the impact on future revenues lost from existing
customers; and necessary and reasonable legal expenses and professional fees. /d. § 13.254(g).
7 .24. In support of its Application, Georgetown has asserted that decertifying the
District's CCN would not render any of the District's property useless or valueless because
Georgetown acquired the District's assets prior to the PUC ordering a decertification. As
discussed above, Georgetown did not compensate the District for any of its assets; it simply
acquired them. Georgetown and the District did not consult an independent appraiser or use any
of the factors identified in Section 13.254 to value the District's assets. Rather, Georgetown
acquired the District's assets prior to decertification, in order to circumvent the statutory process
for ensuring that the District and its customers receive adequate compensation for its assets.
Therefore, Georgetown's Application seeks PUC approval to affect an illegal revocation of the
District's CCN.
Plaintiffs First Amended Petition Page 26
7.25 As discussed above, a retail public utility must amend its CCN to incorporate
another utility's water service area before it may provide retail water service to another utility's
customers. Sections 13.241 and 13.246 of the Texas Water Code provide the standards for CCN
amendments. In determining whether to grant or amend a CCN, the PUC shall ensure that the
applicant possesses the financial, managerial, and technical capability to provide continuous and
adequate service. TEX. WATER CODE § 13.241(a). In making this determination, the PUC must
consider numerous public interest factors including whether an applicant has the financial ability
of the applicant to pay for the facilities necessary to provide continuous and adequate service and
the financial stability of the applicant. /d. § 13.246(c). Georgetown's Application plainly
provides that it intends to utilize the District's water system and assets to obtain the financial and
technical capability to provide water service to the District's customers and service area.
Georgetown's Application necessarily assumes the legality of the Asset Transfer Agreement.
Meanwhile, the PUC indicated that Georgetown's Application would be addressed without
considering the dissolution of the District or the asset transfer between the District and
Georgetown. Nevertheless, granting Georgetown's Application will necessarily will render the
District financially and legally incapable of providing retail water utility service to its own
service territory. According, Georgetown's Application will result in an illegal dissolution of the
District. Therefore, Georgetown's Application seeks PUC approval to affect an illegal
revocation of the District's CCN.
7.26 The PUC lacks jurisdiction over applications and proceedings that are not
permitted by law, including proceedings referred to the State Office of Administrative Hearings.
There is no statutory authority for a transfer of the District's water system and CCN.
Accordingly, Georgetown's Application and Asset Transfer Agreement seek PUC approval to
Plaintiffs First Amended Petition Page 27
affect an illegal dissolution of the District and transfer of the District's CCN and assets.
Therefore, the PUC lacks jurisdiction over Georgetown's Application.
7.27 Following the initiation of Plaintiffs lawsuit, the PUC asserted that it possessed
jurisdiction to process and approve Georgetown's Application notwithstanding that it affect an
illegal dissolution of the District and transfer of the District's CCN and assets. Accordingly, the
administrative proceeding continued over the Protestants' objection that the Application was
being improperly considered notwithstanding the pendency of this lawsuit challenging the
illegality of the Asset Transfer Agreement and the PUC's lack jurisdiction over the Application.
Ultimately, the PUC issued an order approving the Application, based in large part upon the
erroneous assumption that the Asset Transfer Agreement was not unlawful and that the PUC had
jurisdiction to affect an illegal dissolution of CTSUD and transfer of its assets and CCN to
Georgetown. The PUC issued is final order on January 13, 2016. The Protestants filed a timely
motion for rehearing. None of the Commissioners voted to add the motion for rehearing to an
open meeting agenda, which would be required for the Commissioners to grant said motion. See
16 Tex. Admin. Code § 22.264(c) ("An affirmative vote by one commissioner is required for
consideration of the motion at an open meeting"). Accordingly, the Protestants' motion for
rehearing will be overruled by operation of law, and the PUC's order will be appealable on
March 8, 2016. See Tex. Gov't Code§§ 2001.045, 2001.146(c) ("[a] state agency shall act on a
motion for rehearing not later than the 55th day after the date the decision or order that is the
subject of the motion is signed or the motion for rehearing is overruled by operation of law."),
2001.171. Consequently, Protestants properly exhausted all administrative remedies.
7.28 The PUC asserts that is properly exercised jurisdiction over Georgetown's
Application pursuant provisions of the Texas Water Code governing the manner in which water
Plaintiffs First Amended Petition Page 28
utility CCN may be granted, revoked or amended. See e.g., The PUC Plea to the Jurisdiction at
pg. 4 (citing Tex. Water Code §§ 13.241, 13 .254). This claim is erroneous for numerous
reasons.
7.29 Chapter 13 of the Water Code regulates water rates and services. See id §§
13.001- 13.523. Subchapter G deals specifically with certificates of convenience and necessity.
See id. §§ 13.241- 13.257. The 83rd Texas Legislature adopted acts transferring the economic
regulation of water and sewer service from the Texas Commission on Environmental Quality
("TCEQ") to the PUC. See Act of May 13, 2013, 83rd Leg., R.S., ch. 170 (HB 1700), § 2.96;
2013 Tex. Gen. Laws 725, 730; Act of May 13, 2013, 83rd Leg., R.S. ch. 171 (SB 567), § 96,
2013 Tex. Gen. Laws 772. According, effective September 1, 2014, Chapter 13 was amended
transferred jurisdiction over CCN applications from the TCEQ to the PUC. Consequently, in
order to obtain a CCN for a particular area, a retail public utility generally must file an
application requesting the PUC to either grant or amend its CCN. ld. §§ 31.241 - 13.244.
Likewise, an application must be filed to revoke a retail public utility's CCN (i.e., monopolistic
right) to provide water utility service to any portion of its service territory. See e.g., id. § 13.254.
7.30 The PUC was only granted authority to exercise economic regulation over water
utility services. Chapter 13 of the Water Code does not govern the creation, operation, or
governance of special utility districts. Chapter 13 of the Water Code does not provide the PUC
with authority to dissolve special utility districts or consolidate them with municipal utilities. As
discussed above, Chapters 49 and 65 of the Water Code contain the statutory provisions that
prescribe when and how special utility districts may consolidate or be dissolved. Notably,
Chapter 49 provides the TCEQ, not the PUC, with the authority to dissolve a district that is
inactive for a period of five consecutive years and has no outstanding bonded indebtedness. !d. §
Plaintiffs First Amended Petition Page 29
49.321. This process requires the TCEQ to conduct its own investigation regarding the propriety
of dissolution, conduct a public hearing, and adopt an order providing for dissolution. ld. §§
49.322. Such an order may be appealed to a district court for de novo review. ld. § 49.326. It is
undisputed that CTSUD is not eligible for dissolution under Chapters 49 or 65 of the Water
Code. Nevertheless, it is also undisputed that a PUC order revoking the District's CCN and
amending Georgetown's CCN to include the District's service area would render the District
legally incapable of provides its own constituents with water utility service. That is a purpose for
which the District was created and conferred statutory authority. See e.g., Tex. Water Code §§
49.211, 65.012. Accordingly, a PUC order revoking the District's CCN and amending
Georgetown's CCN to include the District's service area would affect an illegal dissolution of
the District. However, the PUC lacks jurisdiction under Chapter 13 of the Texas Water Code to
affect such a dissolution. Moreover, such action by the PUC would violate the provision in
Chapter 49 and 65 of the Water Code. Therefore, the PUC lacked the requisite statutory
authority to process or approve Georgetown's Application under Chapter 13 of the Water Code.
7.31 The PUC further lacks jurisdiction under Chapter 13 to take action that will
nullify statutory voting rights. The laws of this State provide landowners, consumers and
qualified voters of special utility districts with the statutory right to vote for the management of
their districts. See id. §§ 65.022, 65.101- 65.103. As explained above, amending Georgetown's
CCN to include CTSUD's certificated service area has the vital effect of giving Georgetown the
exclusive right to provide retail water utility service to CTSUD customers and landowners. See
id. §§ 13.002(19), 13.242, 13.252, 13.254. Accordingly, granting such a CCN amendment
would give Georgetown a monopoly in the area CTSUD was created to serve. See id. §
13.001(b) (finding that retail public utilities are by definition monopolies in the areas they serve).
Plaintiffs First Amended Petition Page 30
Consequently, the Texas Water Code clearly establishes that if such a CCN amendment is
approved, the District's consumers and landowners will lose the ability to vote for the governing
body of the political subdivision created to serve them. See id. Therefore, a PUC order revoking
the District's CCN and amending Georgetown's CCN to include the District's service area
would nullify the District landowners' and consumers' statutory right to vote on water utility
issues. There are no statutes providing the PUC with the jurisdiction or authority, however, to
take action that will affect statutory voting rights. Therefore, the PUC lacked the requisite
statutory authority to process or approve Georgetown's Application under Chapter 13 of the
Water Code.
Public Utility Commissioners lzave acted Ultra Vires.
7.32 A government official commits an ultra vires act when he or she acts without
lawful authority. Heinrich, 284 S.W.3d at 372. An official acts without lawful authority when he
violates state law, acts beyond the limits of his authority, or misinterprets a law he is charged
with administering. See id.; Tex. Educ. Agency v. Leeper, 893 S.W.2d 432 (Tex.l994) (suit
challenging state officials' construction of compulsory school-attendance law); Fed. Sign v. Tex.
S. Univ., 951 S.W.2d at 405 ("A private litigant does not need legislative permission to sue the
State for a state official's violations of state law."); Cobb v. Harrington, 190 S.W.2d at 712 (suit
to declare government officials were wrongfully compelling plaintiffs to pay certain taxes).
Sovereign immunity does not bar a suit against government officials whose acts are ultra vires.
Heinrich, 284 S.W.3d at 372.
7.33 CTSUD is a special utility district created pursuant to Chapter 65 of the Texas
Water Code and is considered a conservation and reclamation district under Article XVI, Section
59, of the Texas Constitution. TEX. CONST. art. XVI, § 59; TEX. WATER CODE§ 65.011. The
Plaintiffs First Amended Petition Page 31
District was created for the purpose of and conferred with the requisite statutory authority to
provide its constituents with water utility service. See id. §§ 49.211, 65.012. Accordingly, the
laws of this State provide CTSUD's landowners, consumers and qualified voters with the
statutory right to vote for the management of the Districts. See id. §§ 65.022, 65 .101 - 65.103.
Nevertheless, the Commissioners directed that Georgetown's Application be processed an
application to revoke the District's CCN and amend Georgetown's CCN to include the District's
service area would, notwithstanding the knowledge that their approval of such an application
would: (i) render the District legally incapable of providing water utility service to its
constituents; (ii) affect an illegal nullification of the District landowners' and consumers'
statutory right to vote on water utility issues; and (iii) affect an illegal dissolution of the District.
Moreover, on January 13, 2016 the Commissioners signed an order revoking CTSUD's CCN
amending Georgetown's CCN to include the District's revoked service area. Therefore, the
Commissioners, in their official capacities, have committed ultra vires acts outside their
authority.
Violations of the Texas Open Meetings Act
by CTSUD and the District Board Members
7.34 CTSUD and the District Board Members have violated the Texas Open Meetings
Act in multiple ways. The Texas Open Meetings Act requires that "every regular, special, or
called meeting of a governmental body shall be open to the public, except as provided by" the
Act. TEX. Gov'T CODE §551.002. However, CTSUD and the District Board Members' actions
related to the transfer of CTSUD's CCN and the transfer of CTSUD's assets pursuant to the
Asset Transfer Agreement and amendments were clouded by confusion and secrecy.
Throughout the transfer of CTSUD's CCN and the transfer of CTSUD's assets, CTSUD failed to
adequately apprise the public of its intended action, participated in walking quorums and
Plaintiffs First Amended Petition Page 32
improperly and illegally convened into closed session ("executive session") to discuss the
contract to transfer CTSUD's CCN and transfer of CTSUD's assets without invoking the proper
and applicable exceptions to the Texas Open Meetings Act ("TOMA") and/or without statutory
authority to have such discussions in executive session. Any actions taken in open session on the
transfer of CTSUD's CCN and the transfer of CTSUD's assets were merely a rubber stamp of
decisions made in improper executive sessions and/or outside of any public meeting.
7.35 The District Board Members attempted to avoid compliance with TOMA by
deliberating about public business without a quorum being physically present in one place at one
time but discussing the same public business between all members. The District Board Members
conducted serial meetings among various members related to the transfer of CTSUD's CCN and
the transfer of CTSUD' s assets and had communications as a group and/or partial group to
discuss various aspects of the transfer of CTSUD's CCN and the transfer of CTSUD's assets in
an attempt to avoid the requirements of open session.
7.36. In addition to walking quorums, CTSUD on a number of occasions violated
TOMA, including but not limited to:
a. The District Board Members discussed the transfer of CTSUD's CCN and
the transfer of CTSUD's assets, negotiated the terms of the transfer of
CTSUD's CCN and the transfer of CTSUD's assets, and agreed upon the
terms of the transfer of CTSUD's CCN and the transfer of CTSUD's
assets in secret meetings and in one or more executive session;
b. CTSUD failed to properly notice meetings concerning the transfer of
CTSUD's CCN and the transfer of CTSUD's assets by improperly
noticing discussions as executive session that were impermissible; and
Plaintiffs First Amended Petition Page 33
c. Discussions, decisions, and actions regarding the transfer of CTSUD's
CCN and the transfer of CTSUD's assets were improperly held in
executive session.
7.37 Because of the significant violations of the Texas Open Meetings Act, Chisholm
Trail Stakeholders Group requests this Court to enter a declaratory judgment reversing and
voiding all actions taken by CTSUD and its District Board Members concerning the transfer of
CTSUD's CCN and the transfer of CTSUD's assets.
VIII.
Claim for Declaratory Relief
8.1 The Asset Transfer Agreement (including amendments) provides for the illegal
transfer of the District's entire retail water utility system to the City and the CCN under which it
maintains the right to serve as the authorized entity providing retail water utility services within
its territory. The Agreement necessarily precludes the District from accomplishing the purposes
for which it was created and provides for its illegal dissolution. Accordingly, the District's
Directors have engaged in ultra vires acts in violation of the Texas Constitution, the Texas Water
Code and other statutes by approving: (1) an agreement to illegally grant CTSUD's water system
and other public assets to the City; (2) an agreement to illegally dissolve CTSUD; (3) an
agreement to transfer illegally CTSUD's CCN to the City; and (4) expending public funds to
obtain the illegal dissolution of the District and the illegal transfer its assets to the City. Further,
Georgetown's Application seeks PUC approval to affect an illegal dissolution ofthe District and
transfer of the District's CCN and assets.
8.2 The PUC lacks jurisdiction under Chapter 13 of the Water Code to consolidate the
District with Georgetown, or to dissolve the District. Further, PUC lacks jurisdiction under
Chapter 13 of the Water Code to nullify the District landowners' and consumers' statutory right
Plaintiffs First Amended Petition Page 34
to vote on water utility issues. Nevertheless, the Commissioners directed that Georgetown's
Application be processed an application to revoke the District's CCN and amend Georgetown's
CCN to include the District's service area would, notwithstanding the knowledge that their
approval of such an application would: (i) render the District legally incapable of providing
water utility service to its constituents; (ii) nullify the District landowners' and consumers'
statutory right to vote on water utility issues; and (iii) affect a dissolution of the District.
Moreover, on January 13, 2016 the Commissioners signed a final order revoking CTSUD's CCN
amending Georgetown's CCN to include the District's revoked service area.
8.3 This Court has jurisdiction to issue declaratory relief to compel compliance to
with statutory and constitutional provisions, and to enjoin public officials from expending public
funds under a contract that is void or illegal. See TEX. Crv. & REM CoDE§ 37.004; Sawyer Trust,
354 S.W.3d at 393; Osbome v. Keith, 177 S.W.2d at 200. Further, the Court has jurisdiction to
issue declaratory relief when a governmental entity lacks jurisdiction under a challenged statute
to take actions that will result affect an illegal dissolution of a political subdivision and/or
illegally nullify its constituents' statutory voting rights. See Tex. Civ. Prac. & Rem. Code §
37.006; Heinrich, 284 S.W.3d at 373 n. 6; Leeper, 893 S.W.2d at 446. Moreover, a justiciable
controversy regarding whether a state agency or officer has acted beyond statutory authority
provides a jurisdictional basis for a Uniform Declaratory Judgment Act action seeking
construction of that statutory authority. Leeper, 893 S.W.2d at 446; Texas Logos, L.P. v. Texas
Dep't of Transp., 241 S.W.3d 105, 114 (Tex. App.-Austin 2007, no pet.). Such suits do not
implicate sovereign immunity. See Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 405; Texas
Logos, L.P., 241 S.W.3d at 114.
Plaintiffs First Amended Petition Page 35
8.4. The Plaintiff represents the interests of landowners within the District's
certificated service area and the interests of District customers. As such, Plaintiff is an interested
party affected by the Agreement and under the provisions of the Texas Constitution and Texas
Water Code, among other Texas law's regulating special utility districts, and is entitled to bring
this action. Further, Plaintiff is an interested party affected by the PUC and its Commissioners
because they have acted without authority to approve and affect the Agreement. The Plaintiff's
members include District customers and property owners who oppose the Agreement and have
protested CTSUD and the City's efforts to enter into the illegal Asset Transfer Agreement,
illegally transfer CTSUD's CCN, assets, and water system to the City, and illegally dissolve the
District. This included efforts to protest Georgetown's Application and exhaust all administrative
remedies. Plaintiff was organized to advocate for and protect the interests of residents and
landowners in the rural areas of Bell, Burnet and Williamson Counties in receiving adequate
water utility service. As such, a controversy exists concerning the validity of the Agreement and
the actions and legal authority of Defendants. Accordingly, Plaintiff respectfully requests that the
Court: (1) determine the validity of the Agreement (including amendments) and Texas laws
relied upon by Defendants to affect the Agreement; (2) determine the ultra vires character of the
Defendants' acts; (3) issue declaratory relief to compel Defendants' compliance with statutory
and constitutional provisions; (4) issue declaratory relief to remedy Defendants' expenditures of
public funds under a contract that is void or illegal; and (5) issue declaratory relief to remedy
Defendants' illegal dissolution of the District and the illegal nullification of statutory voting
rights.
8.5 Plaintiff respectfully requests that the Court make the following declarations:
a. The District issued debt and/or loaned its credit, and therefore cannot dissolve
pursuant to Texas Water Code section 65.727;
Plaintiffs First Amended Petition Page 36
b. The District cannot consolidate with the City of Georgetown pursuant to
Texas Water Code sections 65.723- 65.726;
c. The District incurred bonded indebtedness and has not been inactive for five
consecutive years, and therefore cannot dissolve pursuant to Texas Water
Code section 49.321 ;
d. The District is not otherwise authorized by Texas law to dissolve;
e. The District, the District Directors, the City, the PUC and the Commissioners
have engaged in an unlawful dissolution of the District;
f. The City's Application, seeking PUC approval to transfer CTSUD's CCN to
Georgetown, will render CTSUD incapable of providing water utility service
within its own boundaries, in violation of state law.
g. The District has transferred its public assets to the City in violation of article
ill, section 52 of the Texas Constitution;
h. CTSUD transferred its water system to the City and cannot provide water
utility service within the District's boundaries in violation of state law;
i. The Asset Transfer Agreement and its amendments, violate Texas law,
contravene public policy, and are void;
j. Georgetown's Application seeks PUC approval to affect an illegal dissolution
of the District and transfer of the District's CCN and assets;
k. The PUC lacks jurisdiction over Georgetown's Application;
I. Chapter 13 of the Texas Water Code does not provide the PUC with authority
or jurisdiction to affect a dissolution of the District;
m. Chapter 13 of the Texas Water Code does not provide the PUC with authority
or jurisdiction to render the District incapable of providing water utility
service within its own boundaries;
n. Chapter 13 of the Texas Water Code does not provide the PUC with authority
or jurisdiction to nullify the District landowners' and consumers' statutory
right to vote on water utility issues;
o. The Commissioners committed ultra vires acts outside of their legal authority
in approving the Application filed by Georgetown to effectuate the Asset
Transfer Agreement;
Plaintiffs First Amended Petition Page 37
p. The District and the Defendant Directors of the District have violated the
Texas Open Meetings Act; and
q. The Defendant Directors of the District committed ultra vires acts outside of
their legal authority in approving and effectuating the Asset Transfer
Agreement.
IX.
CLAIM FOR INJUNCTIVE RELIEF
9.1. The Asset Transfer Agreement (including amendments) provides for the illegal
transfer of the District's entire retail water utility system to the City. The Agreement necessarily
precludes the District from accomplishing the purposes for which it was created, and provides
for its illegal dissolution. Accordingly, the District's directors have engaged in ultra vires acts
approving: (1) an agreement to illegally grant of CTSUD's water system and other public assets
to Georgetown; (2) an agreement to illegally dissolve CTSUD; (3) an agreement to transfer
CTSUD's CCN to Georgetown; and (4) other acts seeking the illegal dissolution of the District
and the illegal transfer its assets to Georgetown. Further, Georgetown's Application seeks PUC
approval to affect an illegal dissolution of the District and transfer of the District's CCN and
assets. Moreover, PUC lacks the authority and jurisdiction over an application that will render
the District legally incapable of providing its constituents with water utility service, nullify those
constituents' statutory voting rights, and affect the District's dissolution. Furthermore, the
Commissioners have engaged in ultra vires acts while processing and approving Georgetown's
Application.
9.2 This Court has jurisdiction to issue injunctive relief to compel compliance with
statutory and constitutional provisions and to enjoin public officials from expending public funds
under a contract that is void or illegal. See TEX. Crv. & REM CODE §§ 37.004, 37.011; Sawyer
Trust, 354 S.W.3d at 393; Osbome v. Keith, 177 S.W.2d at 200. Defendants continue to engage
Plaintiffs First Amended Petition Page 38
in these illegal and ultra vires acts. These violations will continue if the Court does not enjoin the
Defendants. Accordingly, Plaintiff respectfully requests that this Court issue injunctive relief,
both temporary and permanent: (1) enjoining the transfer of the District's assets and water
system to the City; (2) enjoining Defendants from taking any further acts under the Agreement
(including amendments); (3) enjoining the City from collecting any revenue from the customers
of the District, including the illegal surcharge; (4) enjoining the PUC, the Commissioners, or any
administrative law judge from making any decision or final order regarding Georgetown's
Application; (5) staying or enjoining all proceedings before the PUC and State Office of
Administrative Hearings related to Georgetown's Application, pending further order of the
Court; (6) voiding and/or enjoining the illegal and ultra vires acts of the PUC and its
Commissioners; (7) enjoining the transfer of the District's CCN to the City; (8) enjoining
Defendants from taking further acts without lawful authority, as set forth above; (9) preventing
the dissolution, transfer or waste of the District's assets and water system; {10) issue injunctive
relief necessary to remedy the PUC's illegal acts and the Commissioners' ultra vires acts; and
( 11) issue any injunctive relief necessary to remedy Defendants' illegal expenditures of public
funds under an contract that is void or illegal.
X.
PERMANENT INJUNCTION FOR VIOLATIONS OF THE TEXAS OPEN MEETINGS ACT
10.1 Upon final trial on the merits, the Chisholm Trail SUD Stakeholders Group seeks
a permanent injunction voiding and reversing any transfer of CTSUD's CCN to the City of
Georgetown and the transfer of CTSUD's assets pursuant to the Asset Transfer Agreement and
its amendments. CTSUD and its elected officials violated the Act prior to the illegal and void
attempted transfer of CTSUD's CCN and the illegal and void transfer of CTSUD's assets. There
is a likelihood of continued violations if this Court does not enjoin the CTSUD and its Board
Plaintiffs First Amended Petition Page 39
Members. As such, the Chisholm Trail Stakeholders Group requests that the Comt enjoin
CTSUD and its Board Members from continuing to violate the Texas Open Meetings Act, as set
forth above.
XI.
CLAil\11 FOR ATTORNEYS' FEES AND COSTS
11.1 Plaintiff is entitled to recover costs and reasonable and necessary attorney fees
under Texas Civil Practice & Remedies Code section 37.009 because this is a suit for declaratory
relief.
XII.
JURY DEMAND
12.1 Plaintiff demands a jury trial and tenders the appropriate fee with this petition.
XIII.
PRAYER
13.1. WHEREFORE, PREMISES CONSIDERED, Plaintiff prays that Defendants be
cited to appear and answer herein, and that on notice and hearing, the Court grant Plaintiff the
relief to which it is entitled, as described in more detail above, including but not limited to:
(A) A declaratory judgment that Defendants have acted illegally and ultra vires by
acting to illegally dissolve CTSUD;
(B) A declaratory judgment that Defendants have acted illegally and ultra vires by
acting to illegally transfer CTSUD's assets to the City;
(C) A declaratory judgment that the Asset Transfer Agreement, including any
amendments, between CTSUD and the City is illegal and void;
(D) A declaratory judgment that Georgetown's Application seeks PUC approval to
affect an illegal dissolution of the District and transfer of the District's CCN and
assets;
Plaintiffs First Amended Petition Page 40
(E) A declaratory judgment that the PUC lacks jurisdiction over Georgetown's
Application;
(F) A declaratory judgment that the Commissioners have acted illegally and ultra
vires by processing and approving Georgetown's Application;
(G) Injunctive relief enjoining, staying, voiding, and reversing Defendants' illegal and
ultra vires acts as requested above;
(H) Injunctive relief enjoining, staying, voiding, reversing, and preventing any acts to
implement the Asset Transfer Agreement, including any amendments;
(I) Injunctive relief staying and enjoining all proceedings before the PUC and State
Office of Administrative Hearings related to Georgetown's Application, including
any amendments, pending further order of the Court;
(J) Injunctive relief enjoining, staying, voiding, and reversing any proposal for
decision or final order by the PUC and/or any presiding officer who has or will
conduct any hearing (including any Administrative Law Judge with SOAH)
related to Georgetown's Application, including any amendments;
(K) Injunctive relief enjoining the transfer of the District's CCN to Georgetown;
(L) A declaratory judgment that CTSUD and the District's Board members violated
the Texas Open Meetings Act;
(M) A declaratory judgment that the transfer of CTSUD's CCN to the City of
Georgetown and the transfer of CTSUD's assets pursuant to the Asset Transfer
Agreement and amendments are unauthorized, void, and of no legal effect
because of violations of the Texas Open Meetings Act;
Plaintiffs First Amended Petition Page 41
(N) A permanent injunction enjoining, staying, voiding, and reversing CTSUD's
actions related to the transfer of CTSUD's CCN to the City of Georgetown and
the transfer of CTSUD's assets pursuant to the Asset Transfer Agreement and
amendments;
(0) A permanent injunction enjoining, staying, reversing, voiding, and preventing the
effectiveness of the transfer of CTSUD's CCN to the City of Georgetown and the
transfer of CTSUD's assets pursuant to the Asset Transfer Agreement and
amendments;
(P) A permanent injunction enjoining and preventing CTSUD and the District's
Board members from continuing to violate the Open Meetings Act;
(Q) An award of reasonable and necessary attorneys' fees;
(R) Costs of court; and
(S) Such other relief to which Plaintiff may be entitled at law or in equity.
SBN: 01090000
j .alli~on@ allison-bass.com
J. Eric Magee
SBN: 24007585
e.ma!!ee@allison-bass.com
Phillip L. Ledbetter
SBN: 24041316
p.ledbetter@ allison-bass.com
Plaintiffs First Amended Petition Page 42
ALLISON, BASS & MAGEE, L.L.P.
A.O. Watson House
402 W. 12th Street
Austin, Texas 78701
(512) 482-0701 telephone
(512) 480-0902 facsimile
Plaintiffs First Amended Petition Page 43
VERIFICATION
.. STATE OF TEXAS §
§
COUNTY OF TRAVIS §
Before me, the undersigned Notary Public, on this day personally appeared John Fisher,
who being first duly 'sworn on oath deposes and says that he has read the foregoing Plaintiff's
First Amended Petition, that he has personal knowledge of the facts stated therein, and that they
are true and correct.
SUBSCRJBED AND SWORN TO before me the undersigned Notary Public, on this~
day of March, 2016.
. JENN!FER STOKES
My Commission Expires My Commission Expires:
June 5, 2019
Plaintiff's First Amended Petition Page 43
--- - - -- - - -
CERTIFICATE OF SERVICE
I hereby certify that on the 8th day of March, 20 16, I served the foregoing document via
facsimile, electronically, and/or certified mail, return receipt requested to the following:
Jose E. De La Fuente
SBN: 00793605
jdcla rucntc@ I !!Ia \\ tirm.com
Lambeth Townsend
SBN: 20167500
ItO\\ n..,cn d @' h!ld\\ Ctrm.cnm
Ashley D. Thomas
SBN: 24090430
athom.t-.(g l!!l.m tirm.cnm
Lloyd Gosselink, Rochelle & Townsend, P.C.
816 Congress Avenue, Suite 1900
Austin, Texas 78701
Telephone: (512) 322-5800
Facsimile: (512) 472-0532
Attomeys for Defendants tlze City of
Georgetown, Clzislzolm Trail Special Utility
District and tlze District Directors.
Breck Harrison
SBN: 24007325
hharri ;,on (g j\v .com
Leonard Dougal
SBN: 06031400
ldou!!ul@ j1.\ .com
Jackson Walker, L.L.P.
100 Congress Avenue, Suite 1100
Austin, Texas 78701
Telephone: (512) 236-2000
Facsimile: (512) 236-2002
Attomeys for Defendants Chisholm Trail
Special Utility District and District Directors
Delton Robinson, Ed Pastor, Mike Sweeney,
James Pletcher, Robert Kostka, David
Maserang, Gary Goodman, and Robert
Johson, Jr.
Plaintiffs First Amended Petition Page 45
Daniel C. Wiseman
SBN: 24042178
Dan ic I. wi:-.c nwn (fl 1c' a-..tttonw\ >!Cnc ral. Q.CJ\
Office of the Texas Attorney General
Environmental Protection Division (MC-066)
P.O. Box 12548
Austin, Texas 78711-2548
Telephone: (512) 463-2012
Facsimile: (512) 320-0911
Attomeys for the Public Utility Commission of
Texas
Phillip L. Ledbetter
Plaintiffs First Amended Petition Page 46