IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 18-50494

CHERRY KNOLL, L.L.C., 

 Plaintiff - Appellant

v.

STEVEN JONES; HDR ENGINEERING, INCORPORATED; THE CITY OF 

LAKEWAY, 

 Defendants - Appellees

Appeal from the United States District Court 

for the Western District of Texas

Before STEWART, Chief Judge, DAVIS and ELROD, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

Plaintiff-Appellant, Cherry Knoll, L.L.C., appeals the Rule 12(b)(6) 

dismissal of its complaint against Defendants-Appellees, the City of Lakeway,

Texas, City Manager Steven Jones, and HDR Engineering, Inc. For the 

reasons set forth below, we REVERSE and REMAND.

I.

Cherry Knoll alleges the following facts in its Second Amended 

Complaint, which, at the motion to dismiss stage, we assume to be true.1 In 

 

1 See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

United States Court of Appeals

Fifth Circuit

FILED

April 22, 2019

Lyle W. Cayce

Clerk

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November 2006, Cherry Knoll acquired 27.7 acres in the City of Lakeway (“the 

City”) and sought to develop the property for mostly single-family residential 

lots, with a small portion for commercial purposes. Larry Aiken, a developer 

and member of Cherry Knoll, spearheaded the company’s development efforts. 

In September 2007, the City approved a subdivision plat for the property, but 

that plat was never recorded. Cherry Knoll subsequently modified its plans 

for the property, determining that the property should be platted in two 

subdivisions, one commercial and the other residential. 

By the spring of 2008, however, the development project was having 

financial difficulties, and Aiken advised the City Engineer, Paul Duncan, that 

Cherry Knoll was placing the project on hold until further notice. Aiken and 

Duncan agreed that it was best to preserve the progress that had already been 

made, in case the project was later resurrected. Therefore, Cherry Knoll 

prepared two Subdivision Plats, one commercial and one residential, that 

reflected the configuration of the proposed development project as it existed at 

that time. Aiken delivered the plats to Duncan, who agreed to hold the plats 

until such time (if any) that Cherry Knoll was able financially to proceed with 

the project. Cherry Knoll specifically alleges: “At no time whatsoever did Aiken 

authorize Duncan to record the Subdivision Plats, and at no time did Duncan 

suggest that the City might do so.”

The development project was never resurrected. Aiken ultimately sold 

his interest in Cherry Knoll in April 2009 to two of its other members. Since 

then, Cherry Knoll has explored other options for the property, having 

determined that single-family residential use is no longer feasible because of 

significant development of the surrounding area, including the 2012 opening 

of Lakeway Regional Medical Center, a large medical campus located a few 

hundred feet from the property. 

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In 2013, approximately five years after Aiken delivered the Subdivision 

Plats to Duncan, the City began moving forward with a planned improvement 

of Flint Rock Road, which is adjacent to Cherry Knoll’s property. The City 

hired an independent contractor, Schwendinger Advisory Services, L.L.C., for 

consulting and project management services. The City hired another 

independent contractor, HDR Engineering, Inc. (“HDR”), to provide a wide 

range of services for the road improvement project, including “land acquisition” 

services. Specifically, HDR was hired to handle all aspects of the City’s

acquisition of property from the various landowners affected by the City’s road 

project, from the initial contact with the landowner through the closing of the 

sale. HDR also was responsible for obtaining an independent condemnation 

appraisal report for the City.2 

On March 12, 2014, the City wrote a letter to Cherry Knoll, stating that 

its road improvement project made it “necessary for the City of Lakeway to 

acquire a portion of property [Cherry Knoll] own[ed].”3 As detailed in the 

survey attached to the letter, the City needed to acquire 1.741 acres, described 

as Parcel 16. The letter also explained the steps the City would have to 

complete in acquiring the property, starting with an appraisal of the property. 

The letter stated that the City was required by law to provide Cherry Knoll 

with a copy of the appraisal and that, after the appraisal was completed, an 

agent from HDR would contact Cherry Knoll to discuss an offer. The letter 

also enclosed a summary of the state statutes governing the process for the 

 

2 Under state law, such reports establish the minimum amount a would-be condemnor 

must offer to pay the landowner for the affected property prior to instituting a condemnation 

proceeding. TEX. PROP. CODE § 21.0113(b)(4), (5).

3 This Court may review documents attached to the complaint in an appeal of a Rule 

12(b)(6) dismissal. See Ironshore Europe DAC v. Schiff Hardin, L.L.P., 912 F.3d 759, 763 

(5th Cir. 2019). 

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City to acquire the property entitled “State of Texas Landowner’s Bill of 

Rights.” 

On March 25, 2014, Schwendinger emailed HDR Vice President, Teri 

Morgan, indicating that he had made contact with the principals of Cherry 

Knoll, Kay and Jim Wolverton. Although the City had sent a letter to Cherry 

Knoll stating that the process for acquiring the property would begin with an 

appraisal, Morgan replied that it was her understanding that she should 

discuss “waiving the appraisal and a donation of the property” with the 

Wolvertons. However, Schwendinger cautioned Morgan that they might “want 

to strategize a bit before [they] start[ed] the process with the Wolverton’s [sic].” 

Specifically, Schwendinger explained:

While we think there is a path to dedication, I don’t think that has 

been discussed with [the Wolvertons]. We may need to have a 

short conference call with [City Manager] Steve [Jones] on this 

because as I understand it, they came to the city a few years ago 

and submitted a plat but then never had it recorded. We need to 

know when that was and what was said or implied regarding any 

dedication.

Cherry Knoll alleges that this email shows that Schwendinger and Jones were 

aware that, several years previously, Cherry Knoll had submitted a plat to the 

City which Cherry Knoll never had recorded. Cherry Knoll further alleges that 

the email shows that Jones and Schwendinger understood that the unrecorded 

plat included a dedication to the City of part of Cherry Knoll’s property, which 

overlapped with some of the property the City needed for its road project. 

Cherry Knoll alleges that, in fact, the commercial subdivision plat Aiken 

submitted to Duncan in 2008 included a swath of land, described as a “future” 

right of way, that overlapped considerably with Parcel 16. Specifically, “[t]he 

overlapping area comprise[d] approximately 48% of Parcel 16.” 

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On or about April 7, 2014, Morgan called Kay Wolverton regarding the 

City’s acquisition of Parcel 16. They discussed Cherry Knoll’s prior efforts to 

develop the property and the “approved plats with the property to be set aside 

for [a] roadway.” Wolverton “confirmed that the plat was never recorded and 

[the] roadway was never dedicated to the City.” Morgan asked whether 

Wolverton would consider donating Parcel 16 to the City. Wolverton “did not 

think so” because potential buyers of Cherry Knoll’s property wanted the City 

to change the zoning, but “were told there was no way it would ever happen.” 

Morgan, Schwendinger, and Jones discussed the conversation that Morgan 

had with Wolverton, and Jones instructed Morgan to continue with the 

appraisal and offer process as outlined in the City’s letter to Cherry Knoll. On 

April 8, 2014, Morgan emailed Wolverton providing a summary of the 

appraisal and offer process that would follow and attached another copy of the 

“Landowner’s Bill of Rights.” 

On July 21, 2014, the appraisal firm (Atrium Real Estate Services) 

issued its appraisal report for Parcel 16. The report recommended a total 

compensation amount of $381,266. This first appraisal report was never sent 

to Cherry Knoll, and Cherry Knoll alleges that it only learned of the report’s

existence through discovery in this matter. 

On August 5, 2014, Schwendinger emailed Jones stating that if the 

appraisal of Parcel 16 “stood as currently appraised,” then they “would be 

forced into looking into other cost savings opportunities.” Schwendinger 

suggested re-designing the road to reduce the amount of land needed from 

Cherry Knoll’s property. Schwendinger stated that they could discuss this 

option at an upcoming meeting “regarding the appraisal.”

On August 6, 2014, a meeting occurred at Lakeway City Hall to discuss 

the appraisal of Parcel 16. Morgan emailed a meeting notification to Jones and 

Schwendinger, as well as other representatives of HDR and Atrium. The next 

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day, Troy Anderson, the City’s Building and Development Services Manager, 

sent a letter to Cherry Knoll stating the following:

It has recently come to my attention that the approved 

subdivision plat documents known as CHERRY KNOLL FARMS 

SUBDIVISION PLAT and CHERRY KNOLL FARMS 

COMMERCIAL PLAT were found in our offices, having not been 

filed. Please allow this letter to serve as notice that the plat 

documents have since been executed by Water Control and 

Improvement District (WCID) No. 17, the Code Official, the Zoning 

and Planning Commission Chair and the Mayor and will be filed 

with the Travis County Clerk in the next five (5) to seven (7) days. 

We apologize for any inconvenience this may have caused you.

If you have any questions or comments please feel free to 

contact me directly at 512-314-7542 or via e-mail at 

troyanderson@lakeway-tx.gov.

In response, on August 12, 2014, Jim Wolverton emailed Anderson the 

following message:

Mr. Anderson: Let this E-Mail serve as notice, That the 

Owners of Cherry Knoll do not wish to have you file the plats in 

question.

We find it interesting that The City of Lakeway now chooses 

to act on a SEVEN (7) year old plat which was not filed by the 

current owners, and furthermore, we cannot find any fee paid by 

the owners associated with the plat. The owners request a meeting 

with you and the City to discuss this issue. ONCE again do not 

file The PLATS in question.

Wolverton did not receive a response to his email. Cherry Knoll alleges that 

Wolverton tried to reach Anderson over the ensuing days by phone and email, 

but Wolverton’s messages were not returned. 

On the same day that Wolverton emailed Anderson, Schwendinger 

emailed HDR representative Bob Leahey (with a copy to Jones and Morgan)

explaining the City’s decision to record the Subdivision Plats. Schwendinger 

wrote:

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After lots of consideration and legal counsel the city has decided to 

record the 2008 plat which included a dedication of a right of way 

for [Flint Rock Road]. It is not in the exact location but certainly 

overlaps . . . . We sent notice to the property owner last Friday of 

our intent to record the plat and we intend to record it this Friday. 

We have concluded that we need to get them to the table to discuss 

a resolution and this creates pressure for them to act. . . . Part of 

our dilemma in determining our position is that it is apparent that 

Atrium, the appraiser, was not given documents which included 

key features of the property that the city feels materially impact 

the valuation of parcel #16. We are talking here about the flood 

plain and the power line easements plus other aspects. So it seems 

that Atrium will need to rework the appraisal once that 

information is provided to them. We expect the cost per square foot 

to be reduced for the [right-of-way] take once all the aspects are 

incorporated. Plus once the plat is recorded, we would be in a 

position to better negotiate a settlement or at least have to only 

buy the net difference between the 2008 dedication and the current 

[right of way] take.

On August 15, 2014, Morgan contacted Kay Wolverton to set up a meeting “in 

response to [Jim Wolverton’s] communications regarding the plat and sale of 

the property and [right of way].” On August 18, 2014, although aware of 

Cherry Knoll’s opposition and without meeting with the Wolvertons, the City 

filed the Subdivision Plats in the Travis County Official Public Records. 

Morgan (as instructed by Schwendinger) requested Atrium to complete 

another appraisal of Parcel 16, but this time using “the flood plain and buffer 

zones outlined on the [recently recorded] plat for appraisal and valuation 

purposes,” instead of the FEMA flood plain studies apparently used in the first 

appraisal. Considering the flood plain data in the recorded Subdivision Plats, 

the second appraisal report, issued on August 22, 2014, recommended a total 

compensation amount of $262,956 for Parcel 16. This appraisal report was not 

disclosed to Cherry Knoll, and Cherry Knoll alleges that it only learned of the 

report’s existence through discovery in this case.

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On August 29, 2014, Schwendinger, Jones, and Morgan met with Cherry 

Knoll representatives. The City did not disclose the appraisals of Parcel 16 

completed as of that date. Instead, the City made an offer to purchase the 

parcel for approximately $130,000. The meeting did not result in any type of 

agreement between the City and Cherry Knoll. 

On August 31, 2014, Schwendinger emailed Leahey to request a new 

survey and appraisal. Specifically, Schwendinger stated:

As a result of our recent meeting with representatives of 

Cherry Knoll LLC it now seems that we will need to go ahead and 

conduct a survey and obtain an appraisal on the portion of the 

required [right of way] which was not included in the prior 

dedication.

Schwendinger’s email included a table showing the reduced amount of acreage 

to be surveyed and appraised. This smaller tract of land was referred to as 

Parcel 16A and was a little over half the size of Parcel 16. 

The appraisal report for Parcel 16A recommended a total compensation 

amount of $134,532. On October 13, 2014, City Manager Jones sent a letter to 

Cherry Knoll extending the City’s written “initial offer” to buy Parcel 16A for 

the appraised amount and enclosing a copy of the appraisal. Cherry Knoll did 

not accept the City’s initial offer or its “final offer” for the same amount. On 

January 21, 2015, the City filed a condemnation suit in state court seeking 

ownership of Parcel 16A for the road improvement project. 

Just prior to receipt of the City’s final offer, Cherry Knoll entered into a 

contract to sell its property to Coastal Rim Properties, Inc. for $4.2 million. 

However, Coastal Rim wanted to develop the property into a “mixed-use” 

project, which required the City to change the zoning classification for the 

property. Therefore, the purchase contract was contingent upon the zoning 

change and other governmental approvals. The contract also authorized 

Coastal Rim to take the lead in negotiations with the City over the acquisition 

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of the land needed for its road project and the removal of the Subdivision Plats 

from the public record.

The City and Cherry Knoll ultimately entered into a settlement 

agreement, entitled “Memorandum of Understanding,” in which the City 

agreed to purchase Parcel 16 for $240,659. The City further agreed to vacate 

the Subdivision Plats from the public record and terminate the condemnation 

suit. Cherry Knoll agreed to allow the City early entry onto the property and 

to execute a release in favor of the City. 

Cherry Knoll, however, alleges that the settlement agreement is invalid 

because Cherry Knoll entered into the agreement based on “at least three 

mistaken beliefs and understandings of material fact.” Cherry Knoll asserts 

that these mistakes were innocently shared by the City (mutual mistake) or 

alternatively were fraudulently induced by the City. First, Cherry Knoll 

believed that the filing of the Subdivision Plats was effective as a matter of 

real property law and resulted in the City’s ownership of and immediate right 

to possess a portion of Parcel 16. Second, Cherry Knoll believed that the City 

had no appraisal for Parcel 16. Third, Cherry Knoll believed that Jones had 

actually consulted with the City Council about rezoning the property for 

development by Coastal Rim and that the council was at least willing to 

consider the possibility of rezoning in good faith.

II.

In its complaint, Cherry Knoll asserts numerous federal and state law 

causes of action based on the above facts. Pertinent to the issues on appeal, 

Cherry Knoll asserts a claim against the City under 42 U.S.C. § 1983 for 

violating its rights to procedural due process, substantive due process, and 

equal protection. Specifically, Cherry Knoll contends that by filing the 

Subdivision Plats without its consent and over its objection, the City deprived 

Cherry Knoll of its right to determine the use and configuration of its property, 

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deprived Cherry Knoll of its right to decide whether and when to dedicate 

property to public use, and imposed an unauthorized, burdensome, and costly 

encumbrance on the property. Alternatively, Cherry Knoll asserts § 1983 

claims against City Manager Jones and HDR.4 It contends that these 

defendants agreed upon and jointly executed a plan to file the plats unlawfully 

for the specific but hidden and coercive purpose of driving down the cost of 

acquiring Parcel 16 and leveraging Cherry Knoll into a sale on favorable terms. 

With respect to Jones, Cherry Knoll specifically alleges that he is not entitled 

to qualified immunity. As to HDR, Cherry Knoll contends that although HDR 

is a private contractor, it “acted under color of law.” 

All of the defendants filed motions to dismiss pursuant to Rule 12(b)(6). 

The district court, adopting the magistrate judge’s report and 

recommendation, granted the motions. The district court determined that the 

City was entitled to dismissal because the allegations did not demonstrate a 

municipal “policy or custom” making the decision to file the plats attributable 

to the City, that Jones was entitled to qualified immunity, and that HDR 

should be dismissed because it was not part of a conspiracy to file the 

Subdivision Plats over Cherry Knoll’s objections. Because the federal claims 

were subject to dismissal, the district court declined to exercise supplemental 

jurisdiction over the state law claims and dismissed all claims without 

prejudice. Cherry Knoll timely appealed.5

III.

As set forth by the Supreme Court, “[t]o survive a motion to dismiss, a 

complaint must contain sufficient factual matter, accepted as true, to ‘state a 

 

4 Cherry Knoll also asserted claims against three other City officials (Troy Anderson, 

David DeOme, and Ron Massa), James Schwendinger, and Schwendinger Advisory Services, 

L.L.C.

5 Cherry Knoll appeals only the dismissal of the City, Jones, and HDR.

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claim to relief that is plausible on its face.’”6 “A claim has facial plausibility 

when the plaintiff pleads factual content that allows the court to draw the 

reasonable inference that the defendant is liable for the misconduct alleged.”7 

“The plausibility standard is not akin to a ‘probability requirement,’ but it asks 

for more than a sheer possibility that a defendant has acted unlawfully.”8 

“Determining whether a complaint states a plausible claim for relief” is “a 

context-specific task that requires the reviewing court to draw on its judicial 

experience and common sense.”9 We review dismissals under Rule 12(b)(6) de 

novo.10

A. Cherry Knoll’s 42 U.S.C. § 1983 Claim Against the City.

In Monell v. New York City Department of Social Services, the Supreme 

Court held that municipal liability under § 1983 is limited to deprivations of 

federally protected rights caused by action taken “pursuant to official 

municipal policy of some nature.” 11 In Pembaur v. City of Cincinnati, the Court 

determined that this requirement may be satisfied by “a single decision by 

municipal policymakers under appropriate circumstances.”12 Specifically, the 

Court held “that municipal liability under § 1983 attaches where—and only

where—a deliberate choice to follow a course of action is made from among 

various alternatives by the official or officials responsible for establishing final 

policy with respect to the subject matter in question.”13

 

6 Ashcroft, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 

(2007)).

7 Id. (citation omitted).

8 Id. (citation omitted).

9 Id. (citation omitted).

10 Magee v. Reed, 912 F.3d 820, 822 (5th Cir. 2019).

11 436 U.S. 658, 691 (1978). The Court also specifically concluded that “a municipality 

cannot be held liable solely because it employs a tortfeasor—or, in other words, a municipality 

cannot be held liable under § 1983 on a respondeat superior theory.” Id.

12 475 U.S. 469, 480 (1986).

13 Id. at 483 (citation omitted).

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As stated above, Cherry Knoll asserts a § 1983 claim against the City for 

violating its rights to procedural due process, substantive due process, and 

equal protection by filing the Subdivision Plats without its consent and over 

its objection. Cherry Knoll alleges that this single decision was made “by City 

authorities at the highest level—after careful consideration and legal advice.” 

Cherry Knoll further alleges that the Lakeway City Council has “final 

policymaking authority in substantially all areas of City governance, including 

the areas of land acquisition and public works projects.” It asserts that the 

“decision to record the Subdivision Plats and wield them as leverage in the 

land-acquisition effort was made and approved by the City Council,” which

made the decision initially in private, and then “later expressly ratified” its 

decision in a public meeting. 

As support for its allegations, Cherry Knoll points to the various exhibits 

attached to its complaint, including: (1) Schwendinger’s August 12, 2014 email 

to HDR representative Bob Leahey, stating that “[a]fter lots of consideration 

and legal counsel the city has decided to record the 2008 plat,” (2) the City’s 

response to requests for admissions suggesting that the City Council was 

consulted about filing the Subdivision Plats, (3) the City’s admissions that it 

“caused the Recorded Subdivision Plats to be recorded on August 18, 2014” and 

that it was aware that Cherry Knoll was opposed to the plats’ recordation when 

it did so, (4) documentary evidence showing that the City Council used the 

leverage that the recorded Subdivision Plats created by authorizing the filing 

of a condemnation suit to acquire Parcel 16A, instead of Parcel 16, and (5) the 

City Council’s ratification of the settlement agreement with Cherry Knoll. 

Furthermore, this Court notes that the Subdivision Plats indicate that they 

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were “approved and authorized for record by the City Council of the City of 

Lakeway.”14

Although the district court acknowledged that Cherry Knoll had alleged 

policymaker involvement, it determined that Cherry Knoll “implausibly 

attempt[ed] to elevate the decision it alleges was made by staff to policy made 

by the City Council.” We respectfully disagree. Cherry Knoll’s well-pleaded 

factual allegations make it plausible that the City Council made the deliberate 

decision in 2014 to file the Subdivision Plats over Cherry Knoll’s objection and 

to use the filed plats as leverage in its land-acquisition effort. These 

allegations satisfy the standard for official municipal policy under Pembaur, 

and the district court erred in finding otherwise.

B. Cherry Knoll’s § 1983 Claim Against City Manager Jones.

In the alternative to its municipal liability claim under § 1983 against 

the City, Cherry Knoll alleges that City Manager Jones, along with 

Schwendinger and HDR, “agreed upon and jointly executed a plan by which 

the Subdivision Plats would be filed unlawfully, without Cherry Knoll’s 

permission and over its objection” to drive down the cost of Parcel 16 and 

leverage Cherry Knoll into a sale on favorable terms, all in violation of § 1983. 

In response, Jones moved to dismiss on the basis of qualified immunity.

“Qualified immunity shields government officials from liability when 

they are acting within their discretionary authority and their conduct does not 

violate clearly established statutory or constitutional law of which a reasonable 

person would have known.”15 “In this circuit, the qualified immunity defense 

 

14 This is inconsistent with Cherry Knoll’s alternative allegation that the City 

Council’s approval had been falsified. However, Federal Rule of Civil Procedure 8(d)(2) 

allows for alternative pleading.

15 Gates v. Tex. Dep’t of Protective & Regulatory Servs., 537 F.3d 404, 418 (5th Cir. 

2008) (citations omitted).

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involves a shifting burden of proof.”16 The defendant official must first satisfy 

his burden of establishing that the challenged conduct was within the scope of 

his discretionary authority.17 “An official acts within his discretionary 

authority when he performs non-ministerial acts within the boundaries of his 

official capacity.”18 Once the defendant establishes that the challenged 

conduct was within the scope of his discretionary authority, the burden then 

shifts to the plaintiff to rebut the qualified immunity defense.19 In evaluating 

whether the plaintiff has rebutted the defense, we first determine whether the 

plaintiff has alleged the violation of a clearly established constitutional right.20 

If the right was clearly established at the time of the incident at issue, we next 

determine whether the defendant’s conduct was objectively reasonable in light 

of the clearly established legal rules at the time of the alleged violation.21

In this case, the threshold inquiry ends our analysis because Jones has 

not satisfied his burden to show that the challenged conduct was within the 

scope of his discretionary authority.22 Cherry Knoll asserts that under Texas 

law, the right to subdivide land belongs to the landowner.23 The landowner 

must prepare a plat and submit it to municipal authorities for approval.24 The 

City has enacted ordinances outlining its approval procedure.25 As Cherry 

Knoll points out, the ordinances require the “applicant” for plat approval to 

have the plat recorded with the county clerk within sixty days after the City 

 

16 Salas v. Carpenter, 980 F.2d 299, 306 (5th Cir. 1992).

17 Id.

18 Cronen v. Tex. Dep’t of Human Servs., 977 F.2d 934, 939 (5th Cir. 1992).

19 Salas, 980 F.2d at 306. 

20 Bazan ex rel. Bazan v. Hidalgo Cty., 246 F.3d 481, 490 (5th Cir. 2001).

21 Id.

22 See Salas, 980 F.2d at 306.

23 See TEX. LOC. GOV’T CODE ANN. § 212.004 (providing procedures “owner of a tract 

of land” must follow in order to subdivide property).

24 See id. § 212.008–010.

25 See Lakeway City Code §§ 28.03.001-010.

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Council approves a final plat.26 The ordinances further require the applicant 

to file a corporate surety bond or letter of credit after council approval but prior 

to recordation of the plat.27 Cherry Knoll asserts that under state law and the 

City’s charter and ordinances, the City (and its officials) had no authority to 

file plats affecting private property without the consent of the landowner. 

In response, Jones points to the various City ordinances governing the 

plat approval process. Although these ordinances delineate the various steps 

a landowner/applicant must complete in order to obtain the City’s approval of 

a subdivision plat, none of the ordinances authorize the City, or any of its 

officials, to file approved plats. The ordinances also do not indicate that the 

City’s plat approval process includes its filing of an approved plat, or that when 

a landowner requests approval of a plat, he is thereby also giving the City or 

any of its officials the authority to file the approved plat. 

Jones has failed to meet his burden of showing that the filing of the 

Subdivision Plats was within the scope of his discretionary authority. 

Therefore, the district court erred in determining that Jones was entitled to 

the protection of qualified immunity at the Rule 12(b)(6) stage.

C. Cherry Knoll’s § 1983 Claim Against HDR.

In its complaint, Cherry Knoll asserts that HDR “acted under color of 

law” as contemplated by the “joint activity test.” Under Supreme Court 

precedent, “to act ‘under color of’ state law for § 1983 purposes does not require 

that the defendant be an officer of the State. It is enough that he is a willful 

participant in joint action with the State or its agents.”28 “Private persons, 

 

26 See id. § 28.03.003(m). 27 See id. §§ 28.03.003(n), 28.07.006. 

28 Dennis v. Sparks, 449 U.S. 24, 27 (1980).

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jointly engaged with state [or municipal] officials in the challenged action, are 

acting ‘under color’ of law for purposes of § 1983 actions.”29 

The district court determined that Cherry Knoll’s allegations against 

HDR did “little more than demonstrate that the City had indeed engaged HDR” 

as a consultant on the road project and that HDR “acted on instructions and 

information provided by Jones and the City on steps that were ancillary to the 

legitimate goals of their engagement.” The district court concluded that the 

allegations “d[id] not plausibly give rise to the conclusions that the Subdivision 

Plats were filed over Cherry Knoll’s objection as a result of a conspiracy 

concocted by Jones, Schwendinger, and HDR.” 

As Cherry Knoll argues, however, its complaint specifically alleges that 

HDR was more than a consultant; it was hired by the City to handle all aspects 

of the City’s acquisition of property from the various landowners affected by 

the City’s road project. The documents attached to Cherry Knoll’s complaint 

reflect that HDR representative Morgan was informed of the history of Cherry 

Knoll’s prior efforts to develop the property and the fact that a plat had been 

submitted to the City but never recorded; was told by Schwendinger (who was 

informed by Jones) of a potential “path to dedication” during Morgan’s early 

negotiation efforts with Wolverton; was present at the meeting with Jones and 

others at Lakeway City Hall when the first appraisal was discussed, which 

meeting occurred the day before the City sent its letter informing Cherry Knoll 

that it intended to file the Subdivision Plats; contacted Kay Wolverton “in 

response to” Jim Wolverton’s communications to the City objecting to the filing 

of the Subdivision Plats; and scheduled a meeting with the Wolvertons to take 

place after the City filed the Subdivision Plats over Cherry Knoll’s specific 

objection. 

 

29 Id. at 27– 28 (citations omitted).

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We find that Cherry Knoll’s well-pleaded factual allegations and 

supporting documents make plausible its claim that HDR was a “willful 

participant in joint action” with Jones and Schwendinger for purposes of 

§ 1983. The district court erred in determining otherwise.

IV.

Based on the foregoing, the district court’s judgment dismissing Cherry 

Knoll’s § 1983 claims against the City of Lakeway, City Manager Steven Jones, 

and HDR Engineering, Inc., is REVERSED, and this matter is REMANDED.30 

This Court further REINSTATES Cherry Knoll’s state law claims over which 

the district court may now exercise supplemental jurisdiction under 28 U.S.C. 

§ 1367(a). 

 

30 We emphasize that our ruling today is made within the confines of the plausibility 

standard under Rule 12(b)(6) and does not preclude defendants from moving for summary 

judgment at an appropriate time, if the evidence produced in discovery so warrants. 

 Case: 18-50494 Document: 00514925503 Page: 17 Date Filed: 04/22/2019