Court Opinion

ID: 7806251
Source: CourtListenerOpinion
Date Created: 2022-09-05 00:16:04.852381+00
Date Added: 2024-06-11T16:30:11.373293
License: Public Domain

NO. 12-22-00118-CV

                              IN THE COURT OF APPEALS

                 TWELFTH COURT OF APPEALS DISTRICT

                                           TYLER, TEXAS

JAN EVAN PATE,                                            §       APPEAL FROM THE 369TH
APPELLANT

V.                                                        §       JUDICIAL DISTRICT COURT

CITY OF RUSK, TEXAS,
APPELLEE                                                  §       CHEROKEE COUNTY, TEXAS

                                        MEMORANDUM OPINION
        Jan Evan Pate appeals the trial court’s order granting Appellee City of Rusk, Texas’s plea
to the jurisdiction. In one issue, Pate argues that the trial court erred in granting the City’s plea.
We reverse and remand.

                                                 BACKGROUND
        Pate was hired by Perry Bass to demolish a residential structure located at 156 North
Main Street in Rusk, Texas. 1 As part of the consideration for this work, Pate was entitled to
receive any building materials he was able to salvage from the structure. On February 22, 2021,
Pate applied for and received a demolition permit from the City. The permit allowed him to
perform the necessary demolition work on Bass’s property. No expiration date or deadline
appears on the face of the permit. 2
        Thereafter, Pate began demolition work on the structure and salvaged materials as he did
so. In late June 2021, with Pate’s demolition of the structure not yet completed, the City sent a

         1
           The factual background is based on Pate’s statements in his original petition, insomuch as those facts are
not contradicted by evidence presented in conjunction with the City’s plea to the jurisdiction or Pate’s response
thereto. See Tex. Dept. of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 228 (Tex. 2004).
        2
           But see RUSK, TEX. MUN. CODE § 96.02(B)(11)(b) (demolition operations for which demolition permit
has been issued shall be completed within ten days from date work commenced).

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crew to the property to complete the demolition of the structure 3 and removed the building
materials. 4 After completing the demolition of the structure, the City disposed of the building
materials and sent Pate a “Notice of Statement of Costs” for the purported cost of the work to
complete the demolition of the structure.
         Pate filed the instant suit on September 30, 2021, in which he alleged that the City was
liable to him for inverse condemnation. He further sought a declaratory judgment that he was
not liable for the cost of the work to complete the demolition of the structure as represented in
the Notice of Statement of Costs the City sent him. The City filed a plea to the jurisdiction, to
which Pate responded. Ultimately, the trial court granted the City’s plea and rendered an order
dismissing his causes of action. This appeal followed.

                                      SUBJECT MATTER JURISDICTION
         In his sole issue, Pate argues that the trial court erred in granting the City’s plea to the
jurisdiction.
Standard of Review and Governing Law
         A plea to the jurisdiction is a dilatory plea by which a party challenges the trial court’s
subject matter jurisdiction. Harris Cty. v. Sykes, 136 S.W.3d 635, 638 (Tex. 2004); Bland
Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000). Its purpose is to defeat a cause of
action without regard to whether the claims asserted have merit. Blue, 34 S.W.3d at 554. The
trial court’s ruling on a plea to the jurisdiction is subject to de novo review. Suarez v. City of
Texas City, 465 S.W.3d 623, 632 (Tex. 2015).
         A plea to the jurisdiction may challenge either the sufficiency of jurisdictional allegations
in the pleadings or the existence of jurisdictional facts. Tex. Dep’t of Parks & Wildlife v.
Miranda, 133 S.W.3d 217, 226–27 (Tex. 2004). When a plea to the jurisdiction challenges the
sufficiency of the pleadings, we determine whether the plaintiff has met that burden by pleading

         3
           Pate alleges in his petition that the City conducted this demolition without notice to the property owner.
In its plea to the jurisdiction, the City attached as an exhibit a letter purporting to demonstrate that both Pate and
Bass received notice that the City considered the structure a public nuisance that must be demolished by a stated
compliance date of March 8, 2021. However, Pate objected to this unauthenticated exhibit, and the trial court
sustained his objection, stating that it would not consider the exhibit.
         4
           In his petition, Pate states that the City’s demolition workers removed the building materials he “was
salvaging.” It is unclear from the wording of this allegation whether he alleges that the City’s workers removed
only building materials comprising the, up to that point, undemolished structure or whether they also removed those
materials as well as the building materials salvaged by Pate during his partial demolition of the structure.

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facts that affirmatively demonstrate the trial court’s subject matter jurisdiction. Id. at 226. In so
doing, we construe the pleadings liberally in favor of the plaintiff, look to the pleader’s intent,
and accept as true the factual allegations in the pleadings. Id. at 226, 228. If the pleadings are
insufficient to establish jurisdiction but do not affirmatively demonstrate an incurable defect,
then the issue is one of pleading sufficiency and the plaintiff should be afforded the opportunity
to amend. State v. Holland, 221 S.W.3d 639, 643 (Tex. 2007); Miranda, 133 S.W.3d at 226–27.
On the other hand, if the pleadings affirmatively negate the existence of the trial
court’s jurisdiction, then a plea to the jurisdiction may be granted without allowing the plaintiff
an opportunity to amend. Miranda, 133 S.W.3d at 226–27.
        When a plea to the jurisdiction challenges the existence of jurisdictional facts, we
consider relevant evidence submitted by the parties to the extent necessary to resolve
the jurisdictional issues, just as the trial court is required to do. Id. at 227. When a plea to
the jurisdiction includes evidence, and the jurisdictional challenge implicates the merits of the
plaintiff’s cause of action, the trial court will review the relevant evidence to determine whether
a fact issue exists. Id. at 227. If the evidence presents a jurisdictional fact question, a plea to
the jurisdiction may not be granted and the fact finder should resolve the fact issue. Id. at 228.
If, however, the relevant evidence is undisputed or fails to raise a fact question on
the jurisdictional issue, then the plea to the jurisdiction may be ruled on as a matter of law. Id.
        In Texas, sovereign 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. See id. at 224; Kerrville State Hosp. v. Fernandez, 28 S.W.3d 1, 3 (Tex. 2000); Tex.
Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999); see also Reata Const. Corp. v. City
of Dallas, 197 S.W.3d 371, 374 (Tex. 2006) (political subdivisions of the state, including cities,
are entitled to such immunity—referred to as governmental immunity—unless it has been
waived). 5    Sovereign immunity includes two distinct principles, immunity from suit and
immunity from liability. Miranda, 133 S.W.3d at 224. Immunity from liability is an affirmative
defense, while immunity from suit deprives a court of subject matter jurisdiction. Miranda, 133
S.W.3d at 224.

        5
         For ease of reference, we will, at times, use the term “sovereign immunity” to reference both sovereign
immunity and governmental immunity. See Reata Const. Corp. v. City of Dallas, 197 S.W.3d 371, 374 n.1 (Tex.
2006).

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Inverse Condemnation - Standing
       We first consider Pate’s cause of action for inverse condemnation. There is a clear and
unambiguous waiver of immunity from suit for inverse-condemnation claims within the ambit of
Article I, Section 17 of the Texas Constitution (hereinafter Takings Clause). See TEX.
CONST. art. I, § 17 (West Supp. 2021). Therefore, governmental immunity does not shield the
City from a claim for compensation under the Takings Clause. See id.; State v. Holland, 221
S.W.3d 639, 643 (Tex. 2007); Kirby Lake Dev. v. Clear Lake City Water, 321 S.W.3d 1, 5 (Tex.
App.–Houston [14th Dist.] 2008), aff’d sub nom., 320 S.W.3d 829 (Tex. 2010).
       The Takings Clause mandates that no person’s property shall be taken, damaged or
destroyed for or applied to public use without adequate compensation being made, unless by the
consent of such person. See TEX. CONST. art. I, § 17.           Generally, governmental entities
compensate property owners before appropriating their property, either by paying a mutually
agreed price or by paying the value as determined in a statutory condemnation proceeding.
See Westgate, Ltd. v. State, 843 S.W.2d 448, 452 (Tex. 1992); Kirby Lake Dev., 321 S.W.3d at
5. If, however, these entities appropriate property without paying adequate compensation, the
property owner may recover the resulting damages through an inverse-condemnation claim. See
Kirby Lake Dev., 321 S.W.3d at 5. An inverse condemnation may occur when a governmental
entity physically appropriates or invades the property, or when it unreasonably interferes with the
landowner’s right to use and enjoy the property, such as by restricting access or denying a permit
for development.     See id.   To properly assert an inverse-condemnation claim against a
governmental entity, a party must plead the following elements: (1) the governmental entity
intentionally performed an act in the exercise of its lawful authority; (2) that resulted in the
taking, damaging, or destruction of the party’s property; (3) for public use. City of Midlothian v.
Black, 271 S.W.3d 791, 799 (Tex. App.–Waco 2008, no pet.).
       Here, the City argues that because Pate was not the owner of the property at issue, he
lacks standing to bring suit for inverse condemnation. A plaintiff must have both standing and
capacity to bring a lawsuit. Coastal Liquids Transp. L.P. v. Harris Cty. Appraisal Dist., 46
S.W.3d 880, 884 (Tex. 2001); R&R White Family Ltd. P’ship v. Jones, 182 S.W.3d 454, 457
(Tex. App.–Texarkana 2006, no pet.). Standing is implicit in the concept of subject matter
jurisdiction, which is essential to the authority of a court to decide a case. See Tex. Ass’n of

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Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443–44 (Tex. 1993). Subject matter jurisdiction
is never presumed and cannot be waived. Id.
         The general test for standing in Texas requires that there (1) shall be a real controversy
between the parties, which (2) will be actually determined by the judicial declaration sought. See
Nootsie, Ltd. v. Williamson Cty. Appraisal Dist., 925 S.W.2d 659, 662 (Tex. 1996) (citing Tex.
Air Control Bd., 852 S.W.2d at 446). Standing pertains to a person’s justiciable interest in a suit
and is a component of subject matter jurisdiction. See Tex. Air Control Bd., 852 S.W.2d at 443,
445–46. A controversy is justiciable only if there exists a real and substantial controversy
involving a genuine conflict of tangible interests and not merely a theoretical dispute. See
Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995).
         Pate argues that his agreement with Bass resulted in his ownership of the salvaged
building materials. To have standing to sue for inverse condemnation, a party must have a
property interest at the time of the alleged taking. Tex. S. Univ. v. State St. Bank & Tr. Co., 212
S.W.3d 893, 903 (Tex. App.–Houston [1st Dist.] 2007, pet. denied). Not any property interest
will do; that interest must have risen to the level of a vested right. Id. A vested property right is
one that has some definitive, rather than merely potential, existence. See id.; see also Garcia v.
City of Willis, 593 S.W.3d 201, 210 (Tex. 2019) (plaintiff had standing to pursue constitutional
takings claim for retrospective relief based on imposition of fines imposed related to statute
authorizing use of red-light cameras).
         In this case, whether Pate has an interest in the salvaged building materials at issue is
determined by the terms of his agreement with Bass.                       The City argues that an ordinance
establishes that Pate’s permit to conduct demolition operations on the property expired ten days
after it issued. 6 Thus, it contends that because he did not apply for another permit after the initial
permit expired, any subsequent demolition operations on the property amounted to his operating
under an illegal contract, which is void. Therefore, the City proposes that any such unpermitted
operations could not result in Pate’s having a vested, contractual interest in the salvaged building
materials yielded thereby. We disagree.

         6
           The City also argues, without citation to authority, that Pate’s failure to apply for another permit after his
original permit expired amounts to a failure to exhaust administrative remedies on his inverse condemnation claim.
We have found no authority to support and, thus, cannot conclude that an action Pate declined to take prior to the
taking he alleges occurred amounts to a failure to exhaust an administrative remedy.

                                                           5
       A contract to do a thing which cannot be performed without violation of the law violates
public policy and is void. See Villanueva v. Gonzalez, 123 S.W.3d 461, 464 (Tex. App.–San
Antonio, 2003, no pet.). The purpose behind the principle is to benefit and protect the public, not
to punish or protect a party to the contract. Id.          If the illegality does not appear on
the contract’s face, a court will not find it void unless facts showing the illegality are before the
court. See Chi Hung Luu, 312 S.W.3d at 945.            Importantly, if the parties could perform
the contract in a legal manner, the contract is not void merely because the parties may have
performed the contract in an illegal manner or committed illegal acts in carrying out
the contract. See id. at 945–46; Denson v. Dallas Cty. Credit Union, 262 S.W.3d 846, 852 (Tex.
App.–Dallas 2008, no pet.).
       In our consideration of Pate’s first issue, the Dallas Civil Court of Appeals’ opinion in
Wade v. Jones is instructive. See Wade v. Jones, 526 S.W.2d 160 (Tex. Civ. App.–Dallas 1975,
no writ.). There, the plaintiff sued for the recovery of the agreed price for a house he sold to the
defendants and moved to their land. See id. at 161. A Dallas city ordinance, which required
house movers to be licensed, bonded, and insured, also required a permit for each building
moved into the city. See id. at 162–63. The defendants alleged the contract was illegal because
the plaintiff did not obtain a permit from the city to move the house. See id. at 163. The court of
appeals concluded that the illegality of the contract had not been established as a matter of law
because the evidence did not show the plaintiff could not have obtained a permit or that he could
not have performed the contract in a legal manner. See id.
       In the instant case, as the City acknowledges in its brief, Pate could have applied for
another demolition permit. As such, his agreement with Bass is not rendered void due to the
expiration of his demolition permit. See id. Moreover, whether Pate engaged in demolition
operations while the permit was valid, does not affect whether his contractual interest in the
salvaged building materials vested. See id.
       Pate’s pleadings are relatively vague regarding the terms of his agreement with Bass.
What we reasonably can surmise from his pleadings is that he began demolition operations on
the property after he received the demolition permit on February 22, 2021, and that between that
time and late June 2021, he partially demolished the residential structure at issue and salvaged
building materials as he did so. Of course, despite the fact that Pate salvaged the materials as he
conducted demolition operations, he only had a vested interest in these already-salvaged

                                                 6
materials as long as the terms of his agreement with Bass permitted Pate to “receive,” i.e.,
assume ownership of, the materials as he salvaged them rather than only entitling him to receive
the salvaged materials upon completion of the demolition of the structure. 7 Neither Pate’s
pleadings, nor the evidence presented to the trial court in conjunction with the City’s plea and
Pate’s response thereto, answer this question critical to the issue of Pate’s standing as an inverse-
condemnation plaintiff.        Nonetheless, we conclude that this deficiency in Pate’s pleading
potentially could have been corrected had the trial court afforded him the opportunity to amend
his pleadings. See Holland, 221 S.W.3d at 643. Therefore, because the jurisdictional pleading
deficiencies on Pate’s inverse-condemnation cause of action, though deficient, potentially could
have been corrected by more specific allegations regarding the terms of Pate’s agreement with
Bass, we hold that the trial court erred in granting the City’s plea to the jurisdiction on this cause
of action.
Declaratory Judgment - Mootness and Exhaustion of Administrative Remedies
        In his petition, Pate sought a declaratory judgment that “he does not owe the [City]
anything and is not required to pay the ‘Notice of Statement of Costs’ the [City] sent to [him]
because such an assessment is not permitted by either the [City’s] municipal ordinances, or by
Texas state law.” See, e.g., TEX. CIV. PRAC. & REM. CODE ANN. § 37.004(a) (West 2020).
        In response to the City’s plea, Pate submitted the Notice of Statement of Costs as an
exhibit. We note that the notice is addressed to Pate in his individual capacity, but the property
is described as being under his “custody, control, and care.” It sets forth the total amount
purportedly owed by Pate as $4,555.74 and states that the outstanding balance must be paid in
full by July 27, 2021. The City argues that the trial court properly dismissed Pate’s declaratory
judgment action as moot because the Notice of Statement of Costs mistakenly was sent to Pate
instead of the property owner.
        The mootness doctrine implicates subject matter jurisdiction.                      City of Dallas v.
Woodfield, 305 S.W.3d 412, 416 (Tex. App.–Dallas 2010, no pet.). For a plaintiff to have
standing, a controversy must exist between the parties at every stage of the legal proceedings.
Williams v. Lara, 52 S.W.3d 171, 184 (Tex. 2001). If a controversy ceases to exist—“the issues
presented are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome”—

        7
          We cannot interpret Pate’s pleadings to describe a scenario in which he had a vested interest in the not-
yet-salvaged building materials remaining in the structure when the City undertook its own demolition operations.

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the case becomes moot. Id. If a case becomes moot, the parties lose their standing to maintain
their claims.     Woodfield, 305 S.W.3d at 416.               In rare circumstances, an exception to the
mootness doctrine exists when a plaintiff proves that (1) the challenged action was too short in
duration to be litigated fully before the action ceased or expired and (2) a reasonable expectation
exists that the same complaining party will be subjected to the same action again. Williams, 52
S.W.3d at 184.
        A plaintiff who seeks a declaratory judgment must show an actual or threatened injury
and that the declaration sought will resolve the controversy. Id.; see Brooks v. Northglen Ass’n,
141 S.W.3d 158, 163–64 (Tex. 2004); M.D. Anderson Cancer Ctr. v. Novak, 52 S.W.3d 704,
707–08 (Tex. 2001). If he cannot show an actual or threatened injury, then his claims for a
declaratory judgment must be dismissed. See Groden, 550 S.W.3d at 722.
    Stipulation
        Here, Pate argues that the claim is not moot because the City has declined to stipulate that
he does not owe the amount set forth in the statement of costs addressed to him. The City states
in its brief as follows:

        [T]he City understands that the property owner is the responsible party. No collection activity has
        been or will be initiated against Pate because Pate has no interest in the property. The City
        procedure in place is [to] send the relevant Notice to the person who requested the permit because
        that person is typically the owner of the property. In this case that happened to not be true. The
        City has repeatedly agreed that it has no cause to seek any collection from Pate for completing the
        demolition because he had no interest in the property that was removed. It has done so both in and
        out of Court.

Yet, on the heels of this apparent concession, the City continues,

                 Pate is actively arguing that he was the owner of property taken to establish his standing
        to validate the claims he has brought against the City related to inverse condemnation and
        asserting an active interest in the relevant property; and, yet, at the same time arguing in his
        declaratory relief claim that he is seeking the Court to declare that he is not legally responsible to
        pay the fees reflected in the Notice for the completion of the demolition of the residence. Pate is
        asking this Court to allow him to proceed with diametrically opposed claims. Either he has an
        ownership interest in the property that was taken or he does not. The City will gladly stipulate that
        Pate is not personally responsible for the fees contained in the relevant notice [(emphasis added)].

In its plea to the jurisdiction, the City chose similarly equivocal language, stating, that it “does
not currently seek any personal payment for the abatement described in the Notice of Statement
of Costs” against Pate (emphasis added). The matter was addressed at the hearing on the City’s

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plea, and its attorney’s repeated statements on the question of whether it would withdraw its
Notice of Statement of Costs likewise fell short of anything amounting to a definitive stipulation.
       A stipulation is a type of judicial admission, it must be a clear, deliberate, and
unequivocal statement. See Regency Advantage Ltd. P’ship v. Bingo Idea-Watauga, Inc., 936
S.W.2d 275, 278 (Tex. 1996). Based on our review of the record and the City’s brief on appeal,
we conclude that the City has not adequately stipulated that Pate is not liable for the amount he
purportedly owed in the Notice of Statement of Costs addressed to him. Therefore, Pate’s
declaratory judgment cause of action against the City is not moot and the trial court erred in
granting the City’s plea on this basis.
   Exhaustion of Administrative Remedies
       The City further argues that Pate failed to exhaust an available administrative remedy
prior to seeking this declaratory judgment. The governing body of a municipality may enforce
each rule, ordinance, or police regulation of the municipality and may punish a violation of a
rule, ordinance, or police regulation. TEX. LOC. GOV’T CODE ANN. § 54.001 (West 2021). City
of Rusk Municipal Code, Section 96.15 provides, “An offender may contest [a] citation by
completing an administrative appeal form and returning it to the City Clerk within ten days from
the issuance of the administrative citation.” See RUSK, TEX. MUN. CODE § 96.15(A). It further
provides that “[i]f the offender files a timely request for review, the requirement to pay the fine
shall be suspended and the payment of the fine, if any, shall be in accordance with the decision
of the Review Officer.” See id. 96.15(B).
       When the legislature has provided a method of administrative review, a complainant must
exhaust administrative remedies before filing suit. See City of Houston v. Williams, 99 S.W.3d
709, 714 (Tex. App.–Houston [14th Dist.] 2003, no pet.). Here, it is undisputed that Pate did not
appeal the Notice of Statement of Costs he received.          However, a plaintiff is permitted
immediate access to Texas courts when, among other reasons, administrative remedies are
inadequate. See id.
       As set forth above, Section 96.15 provides that, upon appeal, “payment of the fine, if any,
shall be in accordance with the decision of the Review Officer.” See RUSK, TEX. MUN. CODE
§ 96.15(B) (emphasis added). In the instant case, Pate’s position is that he is not liable for the
costs assessed because he is not the real property owner of record. Thus, had he filed an
administrative appeal under Section 96.15(A), the review officer could have determined that the

                                                 9
amount set forth in the Notice of Statements of Costs should be zero, removing the burden of the
fine set forth in the Notice of Statement of Costs and obviating the need for Pate to seek a
declaratory judgment related thereto. It is apparent from the plain language of the ordinance that
it provides an appeal to dispute the amount claimed to be owed, which is the basis of Pate’s
declaratory judgment cause of action.               Therefore, because the administrative appeal under
Section 96.15 was adequate to resolve the dispute that is the subject of Pate’s declaratory
judgment cause of action, we conclude that he was required to exhaust such an administrative
remedy before filing suit on that basis. See Williams, 99 S.W.3d at 714.            Therefore, because
Pate did not exhaust this available administrative remedy, we conclude that the trial court did not
err in granting the City’s plea on that basis.
Summation
         The jurisdictional pleading deficiencies on Pate’s inverse condemnation cause of action
potentially could have been corrected by more specific pleadings regarding the terms of Pate’s
agreement with Bass, and the demolition permit process did not amount to an administrative
remedy he was required to exhaust before filing suit for inverse condemnation. Furthermore,
Pate’s declaratory judgment cause of action is not moot, but the administrative appeal remedy
available to Pate, which was adequate to resolve the matter at issue, was not exhausted.
Therefore, we hold that the trial court erred in granting the City’s plea to the jurisdiction on
Pate’s inverse-condemnation cause of action, but properly granted the City’s plea on Pate’s
declaratory judgment cause of action. Pate’s sole issue is sustained in part and overruled in part.

                                                  DISPOSITION
         Having sustained Pate’s sole issue in part, we reverse the trial court’s order of dismissal
of his inverse-condemnation cause of action and remand that cause for further proceedings
consistent with this opinion. Having overruled the remainder of Pate’s sole issue, we affirm the
trial court’s order of dismissal of his declaratory judgment cause of action.

                                                                    JAMES T. WORTHEN
                                                                       Chief Justice

Opinion delivered August 30, 2022.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.

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                                  COURT OF APPEALS

      TWELFTH COURT OF APPEALS DISTRICT OF TEXAS

                                          JUDGMENT

                                          AUGUST 30, 2022

                                        NO. 12-22-00118-CV

                                        JAN EVAN PATE,
                                            Appellant
                                               V.
                                     CITY OF RUSK, TEXAS,
                                            Appellee

                               Appeal from the 369th District Court
                     of Cherokee County, Texas (Tr.Ct.No. 2021-09-0267)

                        THIS CAUSE came to be heard on the appellate record and briefs filed
herein, and the same being considered, because it is the opinion of this Court that there was error
in the trial court’s order of dismissal of the court below, it is ORDERED, ADJUDGED and
DECREED by this Court that the trial court’s order of dismissal of Pate’s inverse-condemnation
cause of action be reversed and the cause remanded to the trial court for further proceedings
consistent with this opinion in accordance with the opinion of this Court; that the remainder of
the trial court’s order of dismissal be affirmed; and that this decision be certified to the court
below for observance.
                   James T. Worthen, Chief Justice.
                   Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.

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