City of North Richland Hills v. Partners

340 S.W.3d 900

CITY OF NORTH RICHLAND HILLS, Appellant

v.HOME TOWN URBAN PARTNERS, LTD. and Arcadia Land Partners 25, Ltd., Appellees.andCity of North Richland Hills, Appellant,

v.Arcadia Land Partners 25, Ltd. and Arcadia Holdings.

Nos. 02–10–00224–CV

02–10–00236–CV.

Court of Appeals of Texas, Fort Worth.

April 28, 2011.

Taylor Olson Adkins Sralla & Elam LLP and George Staples, Daniel R. Barrett (of Counsel) and Fredrick “Fritz” Quast, Fort Worth, TX, for Appellant.Winstead PC and Arthur J. Anderson, Dallas, TX, Winstead PC and David F. Johnson and Joseph P. Regan, Fort Worth, TX, for Appellees.PANEL: GARDNER, WALKER, and GABRIEL, JJ.

OPINION ON REHEARING

ANNE GARDNER, Justice.

We have considered Appellees' motion for rehearing of our February 17, 2011 opinion and Appellant's response. We grant the motion for rehearing, and we withdraw our February 17, 2011 opinion and judgments and substitute the following.

I. Introduction

In these consolidated interlocutory appeals, the City of North Richland Hills (the City) challenges the trial courts' respective denials of the City's partial pleas to the jurisdiction in the lawsuits filed against it by Appellees Hometown Urban Partners, Ltd. (Urban Partners), Arcadia Land Partners 25, Ltd., and Arcadia Holdings (collectively, Arcadia).¹ The City contends that governmental immunity protects it from the breach of contract claims, two of the declaratory judgment claims, and one of the inverse condemnation claims asserted against it by Appellees. The City also contends that Urban Partners does not have standing to challenge a zoning amendment based on lack of statutorily required notice. We affirm in part and reverse in part.

II. Background

A. Factual Background ²

This case concerns the Home Town Development (the Development) in the City of North Richland Hills, Texas. Arcadia was the original developer, and Urban Partners owns real estate within the Development.

In 1999, the City adopted a regulating plan to zone the area within the Development, approved a preliminary plat for the Development, and created a Tax Increment Financing (TIF) District to capture increased property tax valuations generated by the Development. The regulating plan and preliminary plat included a general street layout, development plan, and sites for a library and a recreation center.

In 2001, the City and Arcadia entered into the Home Town North Richland Hills Comprehensive Development Agreement (the Development Agreement). Among other things, the Development Agreement set forth the City's and Arcadia's responsibilities for the design, construction, and eventual acceptance by the City of public improvements in the Development. The public improvements included water and sewer improvements, drainage improvements, irrigation, streets, street signs and lights, parks, and landscaping. The Development Agreement also provided that if certain conditions were met, Arcadia would convey a tract of land to the City for construction of a recreation center and would grant the City an easement for 400 parking spaces (to be constructed by the City) adjacent to the proposed site.

In 2004, the City adopted an amended preliminary plat for the Development. The amended plat included a new elementary school site but retained the original sites for the library and recreation center. The library was built and opened in accordance with the preliminary plat, regulating plan, and Development Agreement, but the recreation center has not been constructed within the Development because the City purchased a ten-acre tract outside the Development to construct the recreation center. Appellees allege that the City breached the Development Agreement by changing the location of the recreation center without Appellees' consent.

When the City created the initial zoning district for the Development, multi-family uses were allowed within the zoning district as a matter of right without further approval from the City. In 2007, however, the City amended the zoning district to allow multi-family use only with a specific use permit (SUP) from the City. Appellees allege that this zoning amendment occurred despite the City's knowledge that Urban Partners had built a multi-story apartment building in the Development and was buying another thirty acres from Arcadia to develop additional multi-family uses. Appellees also allege that they were not previously notified of the proposed zoning amendment or the City's approval of the zoning amendment and that Urban Partners purchased the thirty acres for several million dollars without knowledge of the zoning amendment. Appellees further allege that Urban Partners applied for a SUP for multi-family use on the thirty-acre tract after the zoning amendment and that the City imposed numerous impossible conditions and eventually denied the SUP applications.

Private developers have spent more than $20 million and have invested more than $140 million for land development and park improvements in the Development. Approximately seventy percent of the Development has been constructed, and approximately thirty acres has been or will be dedicated to the City for public improvements.

B. Procedural Background

Urban Partners filed suit in the 96th District Court of Tarrant County in March 2009 (the Urban Partners suit), seeking declaratory, mandamus, and injunctive relief and monetary damages relating to the City's multi-family use zoning amendment, and Arcadia subsequently intervened in the Urban Partners suit. The live pleading in the Urban Partners suit alleges claims against the City for declaratory relief, violations of due process, inverse condemnation, estoppel, and breach of the Development Agreement.

In addition, Arcadia filed suit against the City in the 67th District Court of Tarrant County (the Arcadia suit). In the Arcadia suit, Arcadia alleges causes of action for declaratory relief, inverse condemnation, estoppel, and breach of the Development Agreement.

The City filed partial pleas to the jurisdiction in both cases, and after hearings, each trial court denied the City's pleas to the jurisdiction. These interlocutory appeals followed.

III. Applicable Law

Whether the trial court had subject matter jurisdiction is a question of law that we review de novo. Tex. Natural Res. Conservation Comm'n v. IT–Davy, 74 S.W.3d 849, 855 (Tex.2002). A plea to the jurisdiction is a dilatory plea that challenges the trial court's subject matter jurisdiction. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex.2000). It is used to defeat a cause of action without regard to whether the claims asserted have merit. Id.

“[S]overeign immunity deprives a trial court of subject matter jurisdiction for lawsuits in which the state or certain governmental units have been sued[,] unless the state consents to suit.” Miranda, 133 S.W.3d at 224. In Texas, sovereign immunity has two components: immunity from liability and immunity from suit. Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex.2006); Miranda, 133 S.W.3d at 224. Immunity from liability “bars enforcement of a judgment against a governmental entity” and is an affirmative defense. Tooke, 197 S.W.3d at 332; Miranda, 133 S.W.3d at 224. Immunity from suit, on the other hand, “bars suit against the [governmental] entity altogether” because it “deprives a court of subject matter jurisdiction.” Tooke, 197 S.W.3d at 332; Miranda, 133 S.W.3d at 224. This appeal involves immunity from suit.

When a governmental entity such as the City enters into a contract, it waives immunity from liability but does not waive immunity from suit unless the legislature has clearly and unambiguously waived the governmental entity's immunity from suit. Tooke, 197 S.W.3d at 332–33. To invoke the trial court's subject matter jurisdiction over a claim arising out of a governmental entity's contractual obligations, the plaintiff must allege a valid waiver of immunity from suit and plead sufficient facts demonstrating the trial court's jurisdiction. Miranda, 133 S.W.3d at 226; Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446 (Tex.1993). We construe the pleadings liberally in favor of the plaintiff, look to the pleader's intent, and accept the pleadings' factual allegations as true. Miranda, 133 S.W.3d at 226. If, as in this case, a plea to the jurisdiction challenges the existence of jurisdictional facts, we consider relevant evidence submitted by the parties that is necessary to resolve the jurisdictional issues. Id. at 227; Bland, 34 S.W.3d at 555. We take as true all evidence favorable to the nonmovant, and we indulge every reasonable inference and resolve any doubts in the nonmovant's favor. Wise Reg'l Health Sys. v. Brittain, 268 S.W.3d 799, 805 (Tex.App.-Fort Worth 2008, no pet.) (citing Miranda, 133 S.W.3d at 228). If the evidence creates a fact question regarding jurisdiction, the trial court must deny the plea to the jurisdiction and leave its resolution to the factfinder. Miranda, 133 S.W.3d at 227–28. But if the evidence is undisputed or fails to raise a fact question on the jurisdictional issue, the trial court rules on the plea to the jurisdiction as a matter of law. Id. at 228.

IV. Parties' Contract Involved Services

The City contends in its first issue that the trial courts do not have subject matter jurisdiction over Appellees' breach of contract claims. The City argues that the Development Agreement is not a qualifying agreement under local government code section 271.152 because it does not involve the provision of goods or services to the City. Appellees respond that they provided several services to the City that fall within the waiver of the City's immunity from suit and that the trial courts therefore have subject matter jurisdiction over their breach of contract claims.

Section 271.152 of the local government code states:

A local governmental entity that is authorized by statute or the constitution to enter into a contract and that enters into a...