Opinion filed August 30 , 201 3



### In The 

# Eleventh Court of Appeals

__________ No. 11

- 11

- 00 237

- CV

__________ JUD WALTON , Appellant V. CITY OF MIDLAND , Appellee

On Appeal from the 23 8th District Court Midland County, Texas Trial Court Cause No . CV

- 47 , 184

O P I N I O N Jud Walton appeals the trial court’s order granting the City of Midland’s plea to the jurisdiction. In his sole issue, Walton contends that the trial court erred in granting the City’s plea to the jurisdiction. We affirm. Background Facts
Walton owns the surface estate of a 35.4

- acre tract located inside the city limits of Midland. Endeavor owns an oil and gas lease that includes Walton’ s tract. Endeavor applied for a permit from the Cit y to drill a well on Walton’ s tract. The City initially denied Endeavor’ s application. Endeavor subsequently file d suit
,2 contending that the City’ s decision constituted inverse condemnation. Endeavor and the City ultimately reached a settlement agreement, and as part of their agreement, the Ci ty granted the previously denied drilling permit application. Walton alleges that the City’ s act of granting Endeavor a permit to drill constitutes

a regulatory taking under T EX

. C ONST

. art. I, § 17. In his trial court pleadings, Walton asserted that th e granting of the permit to drill on his property constituted a physical invasion of his surface estate. He additionally alleged that a provision of the permit that required the drilling of a water well for maintaining trees constituted an invasion of his groundwater. He
asserted a cause of action for inverse condemnation based upon these allegations. On appeal, Walton f ocuses primarily on the water well requirement of the drilling permit. He asserts that this provision constitutes a physical invasion o f his property that is indefinite and without restriction. The requirement provides in relevant part as fo llows: Operator shall drill one (1) freshwater well for the provision of irrigation water to maintain the trees required above. Said water well shall not be closer than five hundred (500) feet to the permitted oil and gas well. Operator shall maintain all required trees in a healthy and growing condition. The operator is authorized to drill only one well for irrigation p urposes

. The drilling permit also required Endeavor to place trees around the well and to provide for their care for a period of time. Walton contends that the water well requirement required Endeavor to drill a water well on his property for landscaping

purpos es and that this requirement exceeded Endeavor’s right to use water under
i ts oil and gas lease. Standard of Review A plea to the jurisdiction chall enges a court’ s subject

- matter jurisdiction and is a question of law tha t is reviewed de novo. Tex. Dep’t of Parks & Wildlife v.3 Miranda , 133 S.W.3d 217, 227

– 28 (Tex. 2004). Subject

- matter jurisdiction is essential for a court to have the authority to resolve a case. Tex. Dep’t of Transp. v. Jones , 8 S.W.3d 636, 638

– 39 (Tex. 1999)

. To invoke the subject

- matter jurisdiction of a court, the one bringing the claim must allege facts that affirmatively demonstrate that the court has jurisdiction to hear it. Miranda
, 133 S.W.3d at 226; Tex. Ass’ n of Bus. v. Tex. Air Control Bd. , 852 S.W.2d 440, 446 (Te x. 1993). To prevail on a plea to the jurisdiction, a defendant must show an incurable jurisdictional defect apparent from the face of the pleadings that makes it impossible for the plaintiff’ s petition to confer jurisdiction on the d istrict court. Bybee v. Fireman’s Fund Ins. Co. , 331 S.W.2d 910, 914 (Tex. 1960). Courts must consider evidence when necessary to decide jurisdictional issues. Miranda , 133 S.W.3d at 221; Tex. Natural Res. Conservation Comm’ n v. White , 46 S.W.3d 864, 868 (Tex. 2001); Bland Indep. Sch. Dist. v. Blue , 34 S.W.3d 547, 554

– 55 (Tex. 2000). We do not look to the merits of the plaintiff’ s case in conducting our review, but consider only the plaintif f ’ s pleadings and the evidence pertinent to the jurisdictional inquiry. Miranda , 13 3 S.W.3d at 225

– 26. We presume all well

pleaded facts to be true and construe the pleadings liberally in favor of conferring jurisdiction. Id

. at 226

– 28. Sovereign immunity, unless waived, protects the State and its various divisions from damage suits. Wichita Falls State Hosp. v. Taylor , 106 S.W.3d 692,
6 94 (Tex. 2003); Gen. Servs. Comm’ n v. Little

- Tex Insulation Co. , 39 S.W.3d 591, 594 (Tex. 2001). As opposed to the State and i ts various divisions, the term

“ govern mental immunity” is the appropriate term to apply to immunity enjoyed by political subdivisions of the State, including counties, cities, and school districts. Wichita Falls State Hosp. , 106 S.W.3d at 694 n.3. Governmental immunity has two components: immunity from suit and immunity from liability. Tooke v. City of
Mexia , 197 S.W.3d 325, 332 (Tex. 2006). Immunity from suit bars suit against a4 government al entity altogether. Id

. When a political subdivision of the S tate is immune from suit under the doctrine of govern mental immunity, a court lacks subject

- matter juris diction over the suit. Jones , 8 S.W.3d at 638. Immunity from suit can be waived only by statute or legislative resolution. Fed

. Sign v. Tex. S.
Univ. , 951 S.W.2d 401, 405 (Tex. 1997). Governmental immu nity from suit is properly asserted in a plea to the jurisdiction. See Miranda , 133 S.W.3d at 225

– 26

. Analysis Walton has alleged a claim for inverse condemnation against the City.
When a landowner’ s property has been taken or damaged for public use without compensation, the landowner may bring an inve rse condemnation proceeding. See City of Carrollton v. HEB Parkway South, Ltd.
, 317 S.W.3d 787, 792 (Tex. App.

— Fort Worth 2010 , no pet. ) . T he proceeding is “inverse” because the property owner brings t he suit, as compared to a condemnation proceeding brought by a governmental entity to appropriate private property for a public purpose. Id

. The
Texas c onstitution provides a clear and unambiguous waiver of immunity from suit
for inverse condemnation cla ims under the t akings c lause. T EX

. C ONST . art. I, § 17; El Dorado Land Co., L.P. v. City of McKinney
, 395 S.W.3d 798, 801 (Tex. 2013); Steele v. City of Houston , 603 S.W.2d 786, 791 (Tex. 1980)

. However, a trial court lacks jurisdiction and should grant a plea to the jurisdiction where a plaintiff cannot es tablish a viable takings claim. Tex. Dep’t of Transp. v. A.P.I. Pipe & Supply, LLC , 397 S.W.3d 162, 167 (Tex. 2013)

. The elements of an inverse condemnation claim are (1) the gove rnmental entity intentionally performed an act in the exercise of its lawful authority, (2) that resulted in the taking, damaging, or destruction of the claimant’ s property, (3) for public use. See City of Houston v. Trail Enters., Inc. , 377 S.W.3d 873, 8 78 (Tex. App.

— Houston [14th Dist.] 2012, pet. filed). An inverse condemnation claim may be based on a physical or regulatory taking. Mayhew v. Town of Sunnyvale , 9645 S.W.2d 922, 933 (Tex. 1998)

. Walton’s inverse condemnation claim involves an alleged regulatory taking. The Texas Supreme Court recently addressed regulatory takings in Edwards Aquifer Authority v. Day , 369 S.W.3d 814, 837

– 41 (Tex. 2012). Citing Sheffield Development Co. v. City of Glenn Heights , 140 S.W.3d 660 (Tex. 2004), the court noted that Texas courts have generally been guided by the United States Supreme Court’s construction and application of the similar guarantee provided by the Fifth Amendment to the United States Constitution. The court recognized that the Supreme Court has developed three analytical categories for regulatory takings as
summarized in Lingle v. Chevron U.S.A. Inc. , 544 U.S. 528 (2005). The court quoted the foll owing text from Lingle : Our precedents stake out two categories of regulatory action that generally will be deemed per se takings for Fifth Amendment purposes. First, where government requires an owner to suffer a permanent physical invasion of her property

— however minor

— it must provide just compensation. See Loretto v. Teleprompter Manhattan CATV Corp. , [458 U.S. 419, 102 S .Ct. 3164, 73 L.Ed.2d 868] (1982) (state law requiring landlords to permit cable companies to install cable facilities in apartment buildings effected a taking). A second categorical rule applies to regulations that completely deprive an owner of “ all econ omically beneficial us[e]” of her property. [ Lucas v. South Carolina Coastal Council , 505 U.S. 1003, 1019, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992) (emphasis in original).]

. . . Outside these two relatively narrow categories (and the special context of land

- use exactions ... ), regulatory takings challenges are governed by the standards set forth in Penn Central Transp. Co. v. New York City , [438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631] (1978). The Court in Penn Central acknowledged that it had hitherto been “unable to develop any ‘set formula’” for evaluating regulatory takings claims, but identified “several factors that h ave particular significance.” [ Id

. at 124, 98 S.Ct. 2646.] Primary among those6 factors are “[t]he economic impact of the regulation on the claimant and, particularly, the extent to which the regulation has interfered with distinct investment

- backed expectations.” Ibid

. In addition, the “character of the governmental action”

— for instance whether it amounts to a physical invasion or inst ead merely affects property interests through “some public program adjusting the benefits and burdens of economic life to promote the common good”

— may be relevant in discerning whether a taking has occurred. Ibid

. The Penn Central factors

— though each has g iven rise to vexing subsidiary questions

— have served as the principal guidelines for resolving regulatory takings claims that do not fall within the physical takings

or Lucas rules.
Although our regulatory takings jurisprudence cannot be characterized as unified, these three inquiries (reflected in Loretto , Lucas , and Penn Central ) share a common touchstone. Each aims to identify regulatory actions that are functionally equivalent to the classic taking in which government directly appropriates private prop erty or ousts the owner from his domain. Accordingly, each of these tests focuses directly upon the severity of the burden that government imposes upon private property rights.
Day , 369 S.W.3d at 838

– 39 ( quoting Lingle
, 544 U.S. at 538

– 39 ) (alterations in original). Walton contends that the water well requirement in the permit constitutes a taking under Loretto because it required him to suffer a pe rmanent physical
invasion of his property . We disagree. We initially note that the provision did not require Endeavor to drill the water well on Walton’s property. The requirement only provided that the water well wa s to be located no closer than 500 feet to the permitted oil and gas well. Thus, t he water well could have been drilled on someone else’s p roperty and still have complied with the permit’s requirement.
Accordi ngly, the water well provision did not require Walton to suffer a permanent physical invasion of his property.7 Additionally , a drilling permit granted to Endeavor to drill an oil and gas well did not compel Walton to suffer a physical invasion of his property. The Texas Supreme Court held in Magnolia Petroleum Co. v. Railroad Comm issio n , 170 S.W.2d 189, 191 (Tex. 1943) , that a permit to drill an oil and gas well is “purely a negative pronouncement” that “grants no affirmative rights to the permittee to occupy the property.” The court recently reaffirmed the holding in Magnolia Petroleum Co. in FPL Farming Ltd. v. Environmental Processing Systems, L.C. , 351 S.W.3d 306, 3 10

– 12 (Tex. 2011) , wherein the court hel d that,

a s a general rule, a permit granted by an agency does not act to immunize the permit holder from civil tort liability from private parties for actions arising out of the use of the perm it. The court in FPL Farming cited a recent opinion from the Amarillo Court of Appeals for the following proposition: “ ‘ [O]btaining a permit

s imply means that the government’ s concerns and interests, at the time, have been addressed; so, it, as a regulatory body, will not stop the applicant from proceeding under the conditions imposed, if any. ’ ” 351 S.W.3d at 3 11 (alteration in original) ( quoting Berkley v. R .R. Com m ’n of Tex

. , 282 S.W.3d 240, 24 3 (Tex. App.

— Amarillo 2 009 , no pet. ) )

. Under the authorities cited above, the permit issued by the City did not grant any affirmative rig h ts to Endeavor to occupy or use Walton’s property. The permit
did not authorize Endeavor to undertake any action that was not otherwise authorized, and it did not shield Endeavor from any liability to Walton. 1 S ecuring a permit does not immunize the recipient from the consequences of its actions if those actions affect the rights of third parties. Berkley , 282 S.W.3d at 243

. Furthermore, a permit also does not a uthorize the recipient to act with impunity
toward third parties. Id

.

1 We express no opinion regarding Endeavor’s potential liability to Walton for any action it took on his property.8 The ordinance at issue in Loretto provided that a landlord “ must permit a cable television company to install its cable facilities upon his property .” 458 U.S.
at 421. The ordinance in Loretto also contain ed a provision that limited the com

pensation due the landlord from the cable company to a one

- time payment of one
dollar for the intrusion

. 458 U.S. at 423

– 24

. Loretto is inapplicable to the facts in this case because the permit issued by the City does not require Walton to acquiesce in any action taken by Endeavor. Furthermore, the permit does not contain any provisions limiting the compensation that Walton could seek from
Endeavor. 2
Walton also contends that he asserted a viable claim under Lucas . As noted previously, L ucas applies to regulations that completely deprive an owner of all economically beneficial use or productive use of his or her property. Day , 369
S. W.3d at 838 ; Sheffield , 140 S.W.3d at 671. A Lucas taking is sometimes referred to as a total regulatory taking

. Lingle , 544 U.S. at 538, 548; Hallco Tex., Inc. v. McMullen Cnty

. , 221 S.W.3d 50, 56 (Tex. 2006) . It is limited to the extraordinary circumstance when no productive or economically beneficial use of land is permitted and t he landowner is left with a token interest. Sheffield , 140
S.W.3d at 671. Walton contends that the City’s act of granting a permit to Endeavor to drill an oil and gas well on his property deprived him of all economically beneficial use of the property. In asserting this contention, Walton states that , at the time that he acquired his property, he did not anticipate that the City would permit the owner of
the mineral e state to drill on his property. We conclude that Walton has not

2 Walton contends that the permit contains “coercive” provisions designed to force a landowner to acqu iesce in the drilling of a water well on his property. He contends that, if the landowner consents to the water well, the permit requires the operator to periodically test the water well but that
, if the land

owner does not consent, the operator is not re quired to test the well. However, Walton has not cited a provision in the permit setting out this requirement for the water well to be dri lled for landscaping purposes.9 asserted a viable claim under Lucas . Walton’s evidence indicates that his property
ha d a value of at least $3,000 per acre after Endeavor drilled the well. Accordingly, the granting of the permit did not deprive him of all economically beneficial use of the property to the extent that he was on ly left with a token
interest. Walton concedes that he acquired the property subject to the mineral severance in favor of Endeavor and its predecessor s. As noted by Walton, “the City simply allowed what the title itself would have allowed.” Thus, the City’s act of granting a permit to Endeavor to drill an oil and gas well comports with the parties’ already existin g property rights. As noted previousl y, the permit did not confer any rights to Endeavor that it did not otherwise possess. A ccordingly, the permit granted by the City to Endeavor simply does not rise to the level of a taking. Walton’s sole issue on appeal is overruled. This Court’s Ruling
We affirm t he judgment of the trial court

.

TERRY McCALL
JUSTICE

August 30, 2013 Panel consists of: Wright, C.J., McCall, J., and Judge Herod. 3
Willson, J., not participating.

3 Steven R. Herod, Judge, 91st District Court, Eastland, sitting by assignment.