Consumer Serv. Alliance of Tex., Inc. v. City of Dall.

433 S.W.3d 796

CONSUMER SERVICE ALLIANCE OF TEXAS, INC., Titlemax of Texas, Inc., and Ace Cash Express, Inc., Appellants

v.CITY OF DALLAS, Texas, Appellee.

No. 05–13–00255–CV.

Court of Appeals of Texas, Dallas.

May 23, 2014.

Carol Payne, Anthony Patrick Miller, Tracey Dawn Estes, Michael Paige Lynn, Kent Krabill, Richard A. Smith, Dallas, for Appellants.

Barbara E. Rosenberg, Thomas P. Perkins Jr., Jennifer Wang, Peter B. Haskel, James B. Pinson, Dallas, for Appellee.

Before Justices FITZGERALD, FILLMORE, and EVANS.

OPINION

Opinion by Justice FILLMORE.

Consumer Service Alliance of Texas, Inc. (CSAT), TitleMax of Texas, Inc. (TitleMax), and Ace Cash Express, Inc. (Ace) (collectively appellants) appeal the trial court's order granting the City of Dallas, Texas's (the City) plea to the jurisdiction. We affirm the trial court's order.

Background

Chapter 393 of the finance code regulatescredit services organizations (CSOs).¹SeeTex. Fin.Code Ann. §§ 393.001–.628 (West 2006 & Supp.2013) (the Act). During the 2011 Legislative Session, the Texas Legislature amended the Act, as relevant here, to provide for the licensing and regulation of credit access businesses (CABs), a type of CSO.²See id. §§ 393.201(c), .221–.224, .601–.628 (West Supp.2013). The statutory amendments were effective January 1, 2012. See Act of May 23, 2011, 82d Leg., ch. 1301, § 3, 2011 Tex. Gen. Laws 3717, 3718; Act of May 23, 2011, 82d Leg., ch. 1302, § 10, 2011 Tex. Gen. Laws 3719, 3726.

On June 22, 2011, the Dallas City Council adopted Ordinance No. 28287 (the Ordinance) regulating CABs with physical locations within the City. The Ordinance was codified in chapter 50, article XI of the Revised Code of Civil and Criminal Ordinances of the City of Dallas, Texas. See Dallas, Tex., Code §§ 50–144–50–151. Like the amendments to the Act, the Ordinance became effective on January 1, 2012. Id. § 50–144. TitleMax and Ace are CABs with physical locations in the City and are members of CSAT, a trade association comprised of CABs.

On July 15, 2011, CSAT filed this lawsuit requesting a declaration that the Ordinance was preempted, in whole or in part, by the Act, and injunctive relief to prevent enforcement of the Ordinance. The City filed a plea to the jurisdiction and special exceptions to CSAT's pleading. In response, CSAT filed an amended petition, and TitleMax and Ace intervened in the lawsuit.

The City filed a second plea to the jurisdiction and special exceptions to CSAT's amended petition and TitleMax and Ace's plea in intervention. After the trial court granted some of the City's special exceptions, CSAT, TitleMax, and Ace filed a combined pleading consisting of CSAT's second amended petition and TitleMax and Ace's amended petition in intervention. The City filed special exceptions to the combined pleading asserting appellants had failed to plead a waiver of governmental immunity from suit or facts demonstrating a valid cause of action exists that falls within a constitutional or legislative waiver of governmental immunity from suit. Appellants agreed to amend their pleading and filed a second combined pleading consisting of CSAT's third amended petition and TitleMax and Ace's second amended petition in intervention.

In the second combined pleading, appellants alleged the Act “regulates the field of business in which CAB's [sic] operate in Texas,” and the Ordinance conflicted with the Act by placing restrictions on consumer credit that CABs could obtain for consumers, or assist consumers in obtaining, that were not contained in the Act. Appellants specifically complained about the restrictions in section 50–151.3 of the Ordinance.³ Appellants sought a declaration that the Ordinance was preempted and unenforceable because it conflicts with the Act. Alternatively, appellants sought a declaration that the credit restrictions in the Ordinance were preempted and unenforceable because the restrictions conflict with section 393.602(b) of the finance code by prohibiting CSAT's members from acting in a way expressly authorized by the Act.⁴ TitleMax sought a declaration that the Ordinance and the credit restrictions in the Ordinance are preempted and unenforceable because “they amount to a virtual prohibition against TitleMax's business operations in the city of Dallas.” Appellants also sought injunctive relief to prevent the City from enforcing the Ordinance. Appellants alleged the City's immunity from suit was waived because they sought a declaration that the Ordinance was invalid.

The City filed a plea to the jurisdiction to the second combined pleading. The City asserted appellants had not pleaded facts demonstrating a valid cause of action exists that falls within a constitutional or legislative waiver of its governmental immunity from suit. The City specifically argued (1) the trial court lacked subject matter jurisdiction to construe, declare invalid, or enjoin enforcement of a penal ordinance; (2) appellants had not asserted, and could not assert, a valid preemption claim to establish waiver of governmental immunity from suit; (3) there is no waiver of immunity for appellants' request for attorney's fees; and (4) CSAT lacked organizational standing to assert a claim.

Appellants responded to the plea to the jurisdiction arguing the trial court had jurisdiction because they had no other means of challenging the constitutionality of the Ordinance and because the Ordinance impaired vested property rights. They also argued the City was not immune from suit because they were seeking a declaration under the Uniform Declaratory Judgment Act (the DJA) ⁵ that the Ordinance is invalid. Appellants finally argued CSAT had organizational standing to sue on behalf of its members because the legal and factual bases of the arguments it asserted did not depend on the circumstances of any one member. The trial court granted the City's plea to the jurisdiction without specifying the ground for doing so.

Standard of Review

Whether the trial court has subject matter jurisdiction is a question of law that we review de novo. Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226, 228 (Tex.2004); Perez v. City of Dallas, 180 S.W.3d 906, 909 (Tex.App.-Dallas 2005, no pet.). The claimant has the burden to affirmatively demonstrate the trial court has subject matter jurisdiction. Heckman v. Williamson Cnty., 369 S.W.3d 137, 150 (Tex.2012); Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446 (Tex.1993).

A plea to the jurisdiction is a dilatory plea that challenges the trial court's subject matter jurisdiction. Heckman, 369 S.W.3d at 149; 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. Bland Indep. Sch. Dist., 34 S.W.3d at 554. A plea to the jurisdiction can challenge the sufficiency of the claimant's pleadings or the existence of necessary jurisdictional facts. See Miranda, 133 S.W.3d at 226–28. When the plea challenges the claimant's pleadings, we determine whether the claimant has pleaded facts that affirmatively demonstrate the trial court's jurisdiction, construing the pleadings liberally and in favor of the claimant. Miranda, 133 S.W.3d at 226. If the pleadings affirmatively negate jurisdiction, the plea should be granted. Heckman, 369 S.W.3d at 150. When the plea challenges jurisdictional facts, we consider evidence submitted by the parties. Miranda, 133 S.W.3d at 227. In performing our review, we do not look to the merits of the claimant's case, but consider only the pleadings and the evidence pertinent to the jurisdictional inquiry. Heckman, 369 S.W.3d at 150; Rawlings v. Gonzalez, 407 S.W.3d 420, 425 (Tex.App.-Dallas 2013, no pet.).

If the pleadings do not contain enough facts to demonstrate the propriety of jurisdiction, but do not affirmatively demonstrate incurable defects in jurisdiction, the claimant should be afforded the opportunity to amend. Miranda, 133 S.W.3d at 226–27. But if the pleadings affirmatively negate the existence of jurisdiction, the plea may be granted without giving the claimant an opportunity to amend. Miranda, 133 S.W.3d at 227; City of McKinney v. Hank's Rest. Grp., L.P., 412 S.W.3d 102, 109–10 (Tex.App.-Dallas 2013, no pet.); see also In re John G. & Marie Stella Kenedy Mem'l Found., 315 S.W.3d 519, 522 (Tex.2010) (orig. proceeding)(when claimant is unable to establish jurisdiction, the trial court lacks authority to enter any order other than to dismiss) (citing State v. Morales, 869 S.W.2d 941, 949 (Tex.1994)).

Subject Matter Jurisdiction

In one issue, appellants contend the trial court erred by granting the plea to the jurisdiction because (1) although the Ordinance is penal, the trial court had jurisdiction to construe it, (2) the City's governmental immunity is waived for proceedings involving the validity of a municipal ordinance, and (3) CSAT has organizational standing to sue on behalf of its members.

Penal Ordinance

The basic test as to whether a law is penal is whether the wrong sought to be redressed is a wrong to the public or a wrong to an individual. Huntington v. Attrill, 146 U.S. 657, 668, 13 S.Ct. 224, 36 L.Ed. 1123 (1892). Public wrongs involve a violation of public rights and duties, which affect the whole community, considered as a community, and are considered crimes; whereas individual wrongs are infringements of private or civil rights belonging to individuals, considered as individuals, and constitute civil injuries. Id. at 668–69; see also Trop v. Dulles, 356 U.S. 86, 96, 78 S.Ct. 590, 2 L.Ed.2d 630 (1958) (“In deciding whether or not a law is penal, this Court has generally based its determination upon the purpose of the statute. If the statute imposes a disability for the purposes of punishment—that is, to reprimand the wrongdoer, to deter others, etc., it has been considered penal.”).

Here, the Ordinance states its primary purpose is “to protect the welfare of the...