Town of Flower Mound v. Eagleridge Operating, LLC

THE TOWN OF FLOWER MOUND, TEXAS; THE ZONING BOARD OF ADJUSTMENT FORTHE TOWN OF FLOWER MOUND, TEXAS; AND THE OIL & GAS BOARD OFAPPEALS FOR THE TOWN OF FLOWER MOUND, TEXAS, Appellants v. EAGLERIDGE OPERATING, LLC, Appellee

No. 02-18-00392-CV

Court of Appeals Second Appellate District of Texas at Fort Worth

August 22, 2019

On Appeal from the 431st District Court Denton County, Texas

Trial Court No. 18-9622-431

Before Sudderth, C.J.; Gabriel, J., and Wallach, J.¹

Memorandum Opinion by Visiting Judge Mike Wallach, Sitting by Assignment Concurring and Dissenting Memorandum Opinion by Justice SudderthMEMORANDUM OPINION

This is an interlocutory appeal from the issuance of a temporary injunction authorized by Texas Civil Practice and Remedies Code section 51.014(a)(4). See Tex. Civ. Prac. & Rem. Code Ann. § 51.014. For the reasons stated below, the temporary injunction issued by the trial court is reversed and the case is remanded to the trial court.

I. SUMMARY OF THE FACTS

In December 2012, Appellee EagleRidge Operating, LLC, assumed operation of a number of oil and gas wells located in the Town of Flower Mound, Texas (the Town). Appellee agreed to conduct all drilling, completing, and producing well operations of the previously approved permits for those wells. Appellee subsequently assumed operations of additional wells by permit transfer. A byproduct of Appellee's oil and gas operations is wastewater, which is removed from the well sites by tanker truck to storage or treatment facilities.

Prior to Appellee initially assuming operation of the wells, the Town had enacted Section 34-422(g) of the Code of Ordinances ("the Ordinance"), which provided:

Work hours for oil and gas well permits. Site development, other than drilling, shall be conducted only between 7:00 a.m. and 7:00 p.m. Monday through Friday and between 9:00 a.m. and 5:00 p.m. on Saturday. Truck deliveries of equipment and materials associated with drilling and/or production, well servicing, site preparation and other related work conducted on the well site shall be limited to the same work hour restrictions identified above except in cases of fires, blowouts,explosions, and any other emergencies or where the delivery of equipment is necessary to prevent the cessation of drilling or production. The operator may request a variance from the oil and gas board of appeals, pursuant to section 34-432 of this article.

Flower Mound, Tex., Code of Ordinances § 34-422(g) (2019). The Ordinance was enacted, in part, because "natural gas drilling and production operations involve or otherwise impact the Town's environment, infrastructure[,] and related public health, welfare[,] and safety matters[.]" Flower Mound, Tex., Ordinance 29-11 (July 18, 2011). It was also expressly stated that the purpose of such regulations in the Code of Ordinances was "to protect the health, safety and general welfare of the public; minimize the potential impact to property and mineral rights owners[;] protect the quality of the environment[;] and encourage the orderly production of available mineral, oil, and gas resources." Flower Mound, Tex., Code of Ordinances § 34-416 (2019). The Town first enacted the Ordinance in 2003. From its initial operation of oil and gas wells in Flower Mound until approximately August 2018, Appellee complied with the Ordinance with the exception of a single incident. Specifically, Appellee complied with the Ordinance by hauling away wastewater during the hours required by the Ordinance. In fact, Appellants did not become aware that Appellee had an issue with the Ordinance's work-hours restriction until May 2018.

In 2018, Appellee filed three separate actions with the Town's Zoning Board of Adjustments ("BOA") and the Town's Oil & Gas Board of Appeals ("OGB"). First,Appellee requested a variance to the Ordinance from the OGB to permit the removal of wastewater from gas well sites outside the hours established in the Ordinance.

Second, Appellee appealed to the BOA and OGB the determination by Town staff that the Ordinance applied to the collection and hauling of wastewater, arguing in part that the Ordinance does not apply to such activities.

Third, Appellee appealed to the BOA and OGB the Town Manager's determination that Chapter 621 of the Texas Transportation Code did not preempt the Town's authority to restrict wastewater hauling under the Ordinance. During the pendency of Appellee's appeals to the BOA, the Town did not attempt to enforce the provisions of the Ordinance being appealed by Appellee.

Appellee also submitted an application to the Town seeking a determination that the Ordinance was preempted by Section 81.0523 of the Texas Natural Resources Code. Tex. Nat. Res. Code Ann. § 81.0523. The Town advised Appellee it could not issue a determination on this matter on the basis that it did not have enough information, which had been requested from Appellee and which was not produced. On October 10, 2018, the BOA and OGB denied Appellee's requested variance and appeals. On October 12, the Town's Oil and Gas Well Inspector gave notice by email to Appellee that the Town had received complaints about after-hours hauling in violation of the Ordinance, and the Town would issue citations for such violations. As per the Town's Code of Ordinances, any violation of the Ordinance is considered "unlawful" and is punishable by a fine. Flower Mound, Tex., Code of Ordinances§ 34-433(a) (2019). On October 14, the Town issued Appellee a citation for hauling produced wastewater on a Sunday in violation of the Ordinance. The citation specifically stated that Appellee was in violation of the Ordinance.

On October 16, Appellee filed its Original Petition and Application for Writ of Certiorari. On October 17, Appellee filed its Application for Temporary Restraining Order and Temporary Injunction, which sought to enjoin the enforcement of the Ordinance against Appellee. On November 8, Appellants filed their Response to Appellee's Application for Temporary Injunction, which challenged the trial court's subject-matter jurisdiction to grant equitable relief relating to the Ordinance, which they alleged is penal in nature. Specifically, Appellants argued that (1) a court has no jurisdiction to enjoin the enforcement of a penal ordinance unless the ordinance is void or unconstitutional and its enforcement causes irreparable injury to vested property rights and (2) "[t]here is no vested right to haul water outside the work hours" established by the Ordinance.

The trial court held a hearing on Appellee's Application on November 8. Later that day, the court granted Appellee's requested temporary injunction, which enjoined Appellants from engaging in:

[a]ny enforcement action against [Appellee] Eagle[R]idge Operating, LLC, its employees or contractors, under or pursuant to Section 34-422(g) of the Town's ordinances, relating to work hours for oil and gas well permits, that has the intent or effect of restricting the hours in which Eagle[R]idge Operating, LLC, its employees or contractors may haul-off produced water from Eagle[R]idge Operating, LLC's oil and gas production facilities, including without limitation, the issuance ofmunicipal citations to Eagle[R]idge Operating, LLC, its employees or contractors.

In granting the temporary injunction, the trial court found it had subject-matter jurisdiction to enjoin the enforcement of the Ordinance, and also entered the temporary injunction despite alleged insufficient evidence of a vested property right and alleged insufficient evidence of an irreparable injury.

II. STANDARD OF REVIEW

The sole point raised by Appellants is that the trial court lacked subject matter jurisdiction to grant the injunction because the Ordinance is a penal ordinance and Appellee failed to meet its burden to demonstrate an irreparable injury to a vested property right. Civil courts lack jurisdiction to enjoin the enforcement of a penal ordinance unless the movant establishes that 1) the ordinance is unconstitutional or otherwise void, and 2) enforcement of the ordinance will result in an irreparable injury to vested property rights. Tex. Education Agency v. Leeper, 893 S.W.2d 432, 441 (Tex. 1994); Passel v. Fort Worth Indep. Sch. Dist., 440 S.W.2d 61, 63 (Tex. 1969); Azadpour v. City of Grapevine, No. 02-13-00323-CV, 2014 WL 2566024, at *2 (Tex. App—Fort Worth June 5, 2014, pet. denied) (mem. op.); City of Houston v. MEF Enters., Inc., 730 S.W.2d 62, 63 (Tex. App.—Houston [14th Dist.] 1987, no writ.). The first prong of the test regarding validity has not been raised in this appeal.

Although an appellate court generally reviews a trial court's decision to grant a temporary injunction using an abuse of discretion standard, City of Corpus Christi v.Maldonado, 398 S.W. 3d 266, 269 (Tex. App.—Corpus Christi 2011, no pet.), whether a trial court has subject-matter jurisdiction to grant a temporary injunction presents a question of law and is reviewed de novo. Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 225-28 (Tex. 2004); Tex. Nat. Res. Conservation Comm'n v. IT-Davy, 74 S.W.3d 849, 855 (Tex. 2002); City of Grapevine v. CBS Outdoor, Inc., No. 02-12-00040-CV, 2013 WL 5302713, at *2 (Tex. App—Fort Worth Sept. 19, 2013, no pet.) (mem. op. on reh'g). When reviewing a question of subject-matter jurisdiction, the appellate court may examine the pleadings and consider evidence which is relevant to the jurisdictional issues raised. City of Waco v. Kirwan, 298 S.W.3d 618, 622 (Tex. 2009); City of Grapevine, 2013 WL 5302713 at *2; Ryan v. Rosenthal, 314 S.W.3d 136, 141 (Tex. App.—Houston [14th Dist.] 2010, pet. denied); Morrow v. Truckload Fireworks, Inc., 230 S.W.3d 232, 236 (Tex. App.—Eastland 2007, pet. dism'd as moot). In considering the evidence, the appellate court takes as true all of the evidence favorable to the non-movant and indulges every reasonable inference and resolves any doubts in the non-movant's favor. City of Grapevine, 2013 WL 5302713 at *2 (citi...