Court Opinion

ID: 3102930
Source: CourtListenerOpinion
Date Created: 2015-10-16 05:26:04.663757+00
Date Added: 2024-06-11T11:51:44.842745
License: Public Domain

Opinion issued June 12, 2014

                                    In The

                             Court of Appeals
                                   For The

                         First District of Texas
                          ————————————
                             NO. 01-12-01091-CV
                          ———————————
                   THE CITY OF HOUSTON, Appellant
                                       V.
          DOWNSTREAM ENVIRONMENTAL, L.L.C., Appellee

                  On Appeal from the 295th District Court
                           Harris County, Texas
                     Trial Court Case No. 2011-29293

                        OPINION ON REHEARING

     This is an interlocutory appeal from the trial court’s order denying the City

of Houston’s plea to the jurisdiction. See TEX. CIV. PRAC. & REM. CODE ANN.

§ 51.014(a)(8) (West Supp. 2012). Downstream Environmental, L.L.C. sued the
City for damages that allegedly arose when the discharge line between

Downstream’s liquid waste disposal facility and the City’s sewer system was

temporarily closed. The lawsuit also implicates rate increases and a billing dispute

that occurred after the temporary closure of the discharge valve. In addition to

seeking damages, Downstream seeks equitable and injunctive relief pursuant to its

claims under the Texas Bill of Rights.

      On April 13, 2014, we issued an original opinion in this case. On May 19,

2014, Downstream filed a motion for rehearing. We deny the motion for rehearing,

but withdraw our opinion and judgment of April 13, 2014, and issue this opinion in

its stead. The disposition remains unchanged: we reverse the trial court’s order in

part, and we hold that the City is immune from Downstream’s claims for money

damages arising from breach of contract, negligence, and alleged constitutional

violations. We remand the case to the trial court to allow the remaining requests for

injunctive relief based on constitutional claims to proceed.

                                    Background

      Downstream Environmental, LLC is a liquid waste disposal business that

operates a nonhazardous waste treatment plant in west Houston. It operates in

accordance with an industrial waste permit issued by the City of Houston

Department of Public Works and Engineering. This permit allows Downstream to

discharge into the City’s sanitary sewer system liquid wastes that comply with

                                          2
limitations on the type and concentration of certain pollutants. These wastes are

then processed at the City’s Beltway wastewater treatment plant.

      On the afternoon of May 25, 2010, a truck from G.I. Environmental Vacuum

Service, a waste transportation company, entered Downstream’s facility. After off-

loading a few hundred gallons of waste, a Downstream employee noticed that it

was darker than usual and had a foul odor, described as one of “rotting onions” or

an “industrial type odor.” Approximately 1,000 to 2,000 gallons of non-

conforming waste was off-loaded into Downstream’s facility that day before

employees rejected the remainder of the truck’s contents. The next day, the same

G.I. Environmental driver delivered a second load of non-conforming waste.

Downstream accepted no more than 1,000 gallons of non-conforming waste before

the truck and its contents were again rejected.

      Meanwhile, on the evening of May 25, the City of Houston Health

Department received complaints of an offensive odor near the Beltway wastewater

treatment plant. The next morning, the City began investigating the source of the

odor, and employees at the Beltway Wastewater Laboratory, which is located on

the same site as the Beltway wastewater treatment plant, were told to vacate the

building due to a pervasive and offensive odor. The then-unknown toxic substance

in the City’s sanitary sewer system killed all of the biological treatment

microorganisms at the wastewater treatment plant. Without these microorganisms,

                                          3
the plant cannot function, and death of the microorganisms created an emergency

situation for the City and required the sewer lines and lift stations to be

decontaminated and the plant to be re-seeded.

      On May 26, 2010, Dan Noyes, one of Downstream’s owners, met with the

City regarding the non-conforming waste. The City closed the discharge line

between Downstream’s facility and the City’s sanitary sewer. The parties disagree

about whether this action was undertaken voluntarily by Downstream to help

identify a third party responsible for putting non-conforming waste into the sewer

system by way of a manhole just outside Downstream’s property or whether the

City unilaterally plugged the discharge line in response to Downstream’s

acceptance of non-conforming waste. The City directed Downstream to conduct a

hazardous materials sweep, which revealed no hazardous materials at its facility.

      Nevertheless, the facility remained closed for 21 days while the City

investigated. While Downstream was shut down, the City decided to permanently

discontinue wastewater services to the facility. Downstream requested an

administrative hearing as authorized by the Houston municipal code. See CODE OF

ORDINANCES: CITY       OF   HOUSTON, TEX. § 47-208(a) (Supp. 2013). The

administrative judge ruled in favor of Downstream, and the City restored

wastewater services the next day. By the time Downstream restarted its operations,

waste had solidified in its equipment leading to what it characterized as

                                         4
“catastrophic”    failures.   Downstream       conducted   extensive    cleaning    and

replacement of component parts; however, it lost some of its business to a

competitor.

      In September 2011, the City informed Downstream that it would begin using

a new sample location, a manhole outside of Downstream’s property, to determine

compliance with pollutant discharge limitations. In October 2011, the City

increased     Downstream’s    per-gallon   cost    of   discharging    wastewater   by

approximately 700%, which Downstream contends effectively put it out of

business. In April 2012 the City reduced that cost, however even the reduced rate

was 300% higher than the cost to Downstream before October 2011. Downstream

alleged that the City acted improperly by using faulty testing methods and a non-

credentialed in-house laboratory. It requested retesting by a credentialed external

laboratory, and the City refused.

      Downstream then sued the City for various causes of action pertaining to the

plugging of the discharge line in the spring of 2010, the increase in its wastewater

rates, and the discharge-sampling decisions. In its third amended petition,

Downstream alleged the following causes of action: (1) “due process” violations in

wrongfully terminating wastewater services and in wrongfully increasing the rates;

(2) “equal protection” violations in denying administrative hearings when

                                           5
requested and in failing to lower the charged rate upon proof from an external

laboratory; (3) breach of contract; and (4) negligence.

      Downstream generally pleaded for monetary damages for loss of sales

revenue, costs of plant repairs and hazardous materials clean-up, loss of good will,

loss of market share, loss of the market value of the company, attorneys’ fees, pre-

and post-judgment interest, and costs as allowed by law. With respect to its “due

process” and “equal protection” claims, 1 Downstream also sought injunctive relief

against future constitutional violations and the voiding of the City’s

“administrative actions regarding rate increases and frivolous violations.”

      The City filed a plea to the jurisdiction based on governmental immunity.

Downstream challenged the City’s assertion of immunity primarily on the basis

that the City was engaged in a proprietary—not governmental—function.

Downstream also alleged that the City had waived governmental immunity by its

actions in several respects. The trial court denied the jurisdictional plea in its

entirety, and the City timely appealed.

1
      Despite the use of this terminology, Downstream’s petition is expressly and
      exclusively premised on provisions of the Texas Bill of Rights which
      prohibit the deprivation of “life, liberty, property, privileges or immunities,”
      or any manner of disenfranchisement, “except by the due course of the law
      of the land,” TEX. CONST. art. I, § 19, and further provide that “[a]ll free
      men . . . have equal rights,” id. art. I, § 3.

                                          6
                                      Analysis

      The City contends that the trial court erred by denying its plea to the

jurisdiction because it is immune from suit for several reasons: (1) the operation of

the sanitary sewer system is a governmental function; (2) injunctive relief and

money damages are both unavailable on the “due process” claims; (3) the “equal

protection” claim is facially invalid; (4) there is no allegation of a contract subject

to the limited waiver of immunity under Local Government Code section 271; and

(5) the City retains immunity from intentional tort claims even if pleaded as

negligence. Downstream’s response centers on its contention that the City engaged

in a proprietary function by providing the industrial waste permits, and therefore it

is simply not immune from suit. To this end, Downstream argues that the City was

engaged in a proprietary function because it was functioning as a “public utility

provider,” and the Tort Claims Act provides that the operation and maintenance of

a public utility is a proprietary function. See TEX. CIV. PRAC. & REM. CODE ANN.

§ 101.0215(b) (West Supp. 2013).

I.    Governmental immunity as jurisdictional bar

      A plea to the jurisdiction based on governmental immunity questions a trial

court’s subject-matter jurisdiction. State v. Holland, 221 S.W.3d 639, 642 (Tex.

2007); Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 225–26 (Tex.

2004). We review de novo the trial court’s ruling on a plea to the jurisdiction. City

                                          7
of Houston v. Rhule, 417 S.W.3d 440, 442 (Tex. 2013) (per curiam). The plaintiff

must allege facts that affirmatively establish the trial court’s subject matter

jurisdiction. Holland, 221 S.W.3d at 642. In determining whether the plaintiff has

satisfied this burden, we construe the pleadings liberally in the plaintiff’s favor and

deny the plea if facts affirmatively demonstrating jurisdiction have been alleged.

Miranda, 133 S.W.3d at 227; Smith v. Galveston Cnty., 326 S.W.3d 695, 697–98

(Tex. App.—Houston [1st Dist.] 2010, no pet.).

      A plea to the jurisdiction may challenge the existence of jurisdictional facts.

Miranda, 133 S.W.3d at 227. In some cases, the challenged jurisdictional facts are

distinct from the merits of the case, but in other cases the challenged jurisdictional

facts are inextricably linked to the merits of the case. Id. “[I]n a case in which the

jurisdictional challenge implicates the merits of the plaintiffs’ cause of action and

the plea to the jurisdiction includes evidence, the trial court reviews the relevant

evidence to determine if a fact issue exists.” Id. The standard of review on appeal

“generally mirrors that of a summary judgment,” and the court of appeals will take

as true all evidence favorable to the nonmovant and indulge reasonable inferences

and resolve doubts in the nonmovant’s favor. Id. at 228.

      If “the pleadings do not contain sufficient facts to affirmatively demonstrate

the trial court’s jurisdiction but do not affirmatively demonstrate incurable defects

in jurisdiction, the issue is one of pleading sufficiency and the plaintiffs should be

                                          8
afforded the opportunity to amend.” Id. at 226–27. A court may grant a plea to the

jurisdiction without affording the plaintiff an opportunity to amend only if “the

pleadings affirmatively negate the existence of jurisdiction.” Id. at 227. “A trial

court is not required to deny an otherwise meritorious plea to the jurisdiction or a

motion for summary judgment based on a jurisdictional challenge concerning some

claims because the trial court has jurisdiction over other claims.” Thomas v. Long,

207 S.W.3d 334, 339 (Tex. 2006).

       “Sovereign immunity and its counterpart, governmental immunity, exist to

protect the State and its political subdivisions from lawsuits and liability for money

damages.” Mission Consol. Indep. Sch. Dist. v. Garcia, 253 S.W.3d 653, 655 (Tex.

2008). While sovereign immunity protects the State, its agencies, and their officers,

governmental immunity protects subdivisions of the State, such as municipalities.

Id. at 655 n.2 (citing Harris Cnty. v. Sykes, 136 S.W.3d 635, 638 (Tex. 2004)).

Both sovereign and governmental immunity “afford the same degree of protection

and both levels of government are subject to the Tort Claims Act.” Id.; see TEX.

CIV. PRAC. & REM. CODE ANN. §§ 101.001–.109; Sykes, 136 S.W.3d at 638.

      Governmental immunity includes both immunity from suit, which deprives a

court of subject-matter jurisdiction, and immunity from liability, which is an

affirmative defense. See Miranda, 133 S.W.3d at 224. “Immunity from suit bars a

suit against the State unless the Legislature expressly consents to the suit.” Tex.

                                          9
Natural Res. Conservation Comm’n v. IT–Davy, 74 S.W.3d 849, 853 (Tex. 2002).

“If the Legislature has not expressly waived immunity from suit, the State retains

such immunity even if its liability is not disputed.” Id. “Immunity from liability

protects the State from money judgments even if the Legislature has expressly

given consent to sue.” Id.

II.   Immunity from contract and tort claims

      Downstream has asserted a variety of theories of breach of contract as well

as negligence claims against the City. We will analyze these claims for money

damages together to determine whether the City has validly asserted a claim of

immunity from such claims.

      A. Proprietary-governmental function dichotomy

      In determining whether a governmental entity is immune from suit, we

consider whether the actions complained of were in furtherance of governmental or

proprietary functions. See Tooke v. City of Mexia, 197 S.W.3d 325, 343 (Tex.

2006). “[G]enerally speaking, a municipality’s proprietary functions are those

conducted ‘in its private capacity, for the benefit only of those within its corporate

limits, and not as an arm of the government,’ while its governmental functions are

‘in the performance of purely governmental matters solely for the public benefit.’”

Id. (quoting Dilley v. City of Houston, 222 S.W.2d 992, 993 (Tex. 1949)). “A

municipality is not immune from suit for torts committed in the performance of its

                                         10
proprietary functions as it is for torts committed in the performance of its

governmental functions.” Id. And although the Supreme Court of Texas has never

held that the same distinction applies to contracts, even if the City were not

immune from contract claims involving proprietary functions, a legislative

determination for purposes of tort liability that a certain activity is a governmental

function excludes contracts involving that governmental function from the scope of

waiver applicable to proprietary functions, in the absence of some reason why the

common-law classification would be different. Id. at 343–44.

      “The Texas Constitution authorizes the Legislature to ‘define for all

purposes those functions of a municipality that are to be considered governmental

and those that are proprietary, including reclassifying a function’s classification

assigned under prior statute or common law.’” Id. at 343 (quoting TEX. CONST. art.

XI, § 13); see also City of Tyler v. Likes, 962 S.W.2d 489, 503 (Tex. 1997). The

Legislature has described governmental functions as “those functions that are

enjoined on a municipality by law and are given it by the state as part of the state’s

sovereignty, to be exercised by the municipality in the interest of the general

public.” TEX. CIV. PRAC. & REM. CODE ANN. § 101.0215(a). The Legislature has

statutorily recognized a non-exclusive list of 36 governmental functions. Id. The

Legislature also defined proprietary functions as “those functions that a

municipality may, in its discretion, perform in the interest of the inhabitants of the

                                         11
municipality,” and the statute sets forth a non-exclusive list of three proprietary

functions. Id. §101.0215(b). Finally, the Legislature specified that the “proprietary

functions of a municipality do not include those governmental activities listed

under subsection (a).” Id. § 101.0215(c). Accordingly, we have no discretion to

determine that a municipality’s action is proprietary if it has been designated as a

governmental function by the Tort Claims Act. See City of Texas City v. Suarez,

No. 01-12-00848-CV, 2013 WL 867428, at *7 (Tex. App.—Houston [1st Dist.]

Mar. 7, 2013, pet. filed) (mem. op); accord City of Plano v. Homoky, 294 S.W.3d
809, 814 (Tex. App.—Dallas 2009, no pet.); Tex. River Barges v. City of San

Antonio, 21 S.W.3d 347, 357 (Tex. App.—San Antonio 2000, pet. denied).

      Downstream’s claims are based on its contention that in the spring of 2010

the City plugged the wastewater discharge line between Downstream’s facility and

the City’s sanitary sewer system. The statutory list of governmental functions

includes “sanitary and storm sewers.” TEX. CIV. PRAC. & REM. CODE ANN.

§ 101.0215(a)(9). Downstream nevertheless argues that the industrial wastewater

services at issue in this case differ from sanitary sewer service and that the City’s

actions are proprietary because (1) the City has discretion in permitting a

significant industrial user to discharge treated wastewater into its sanitary sewer

system, (2) the City profits from this service, and (3) the service primarily benefits

a party within the City’s limits rather than the general public.

                                          12
      To support its argument that this particular action is a proprietary function

not “arising from” its governmental function of operating a sanitary sewer system,

id., Downstream relies on Parker v. Distel Construction, Inc., No. 10CA18, 2011
WL 4346670 (Ohio App. 4th Sept. 6, 2011), an unpublished Ohio court of appeals

case. Parker sued a city in tort for injuries sustained when she fell into a 25-inch

hole adjacent to a water meter, which was part of the city’s water supply system.

Parker, 2011 WL 4346670, at *1. Although the key issue was whether the city had

engaged in proprietary or governmental activities, Parker is distinguishable

because, unlike the Texas Tort Claims Act, the relevant Ohio statute specifically

defined the “establishment, maintenance, and operation of a utility, including . . . a

municipal corporation water supply system” as a “proprietary function.” Id. at *3

(citing OHIO REV. CODE ANN. § 2744.01 (West 2012)). Unlike the Texas statute,

the Ohio statute also defines the “maintenance, destruction, operation, and upkeep

of a sewer system” as a “proprietary function.” OHIO REV. CODE ANN. § 2744.01.

      Downstream also relies on Josephine E. Abercrombie Interests, Inc. v. City

of Houston, 830 S.W.2d 305 (Tex. App.—Corpus Christi 1992, writ denied), and

City of Houston v. Southwest Concrete Construction, Inc., 835 S.W.2d 728 (Tex.

App.—Houston [14th Dist.] 1992, writ denied), as examples in which an appellate

court determined that a city’s actions were proprietary and not governmental.

However, those cases are not controlling; both of them have been acknowledged

                                         13
by our court as having been abrogated by a subsequent amendment to the Tort

Claims Act. See E. Hous. Estate Apts., L.L.C. v. City of Houston, 294 S.W.3d 723,

732–33 (Tex. App.—Houston [1st Dist.] 2009, no pet.) (citing TEX. CIV. PRAC. &

REM. CODE ANN. § 101.0215(a)(34)).

      The Tort Claims Act classifies “health and sanitation services,” “sanitary

and storm sewers,” and “water and sewer service” as governmental functions. TEX.

CIV. PRAC. & REM. CODE ANN. § 101.0215(a)(2), (9), (32). The line that was

plugged was the connection between Downstream’s facility and the City’s sanitary

sewer. Thus, Downstream’s claims arise from the City’s governmental functions of

providing and operating “sanitary . . . sewers” and “sewer service.”

      Downstream also contends that this case is governed by the “service within a

service” rule which creates liability for a city that adds discretionary services to its

normal governmental functions. See Temple v. City of Houston, 189 S.W.3d 816,

818–21 (Tex. App.—Houston [1st Dist.] 2006, no pet.). It argues that services that

merely touch upon governmental services do not transform a proprietary function

into a governmental function. See City of Corpus Christi v. Absolute Indus., 120
S.W.3d 1, 4 (Tex. App.—Corpus Christi 2001, pet. denied).

      A similar argument was rejected in Tooke v. City of Mexia, 197 S.W.3d 325

(Tex. 2006), in which J. E. Tooke & Sons contracted with Mexia to furnish labor

and equipment for collecting brush and leaves curbside within the city. 197 S.W.3d
14
at 329. When Tooke sued Mexia for breach of contract, the city asserted immunity,

but the trial court denied the jurisdictional plea. Id. at 330. Among other

arguments,   the   Supreme     Court   considered    the   governmental-proprietary

dichotomy. Id. at 343. It noted that the Tort Claims Act included among a

municipality’s governmental functions “garbage and solid waste removal,

collection, and disposal,” and it reasoned, “[w]e think this describes the services

the Tookes agreed to provide.” Id. at 343–44. Thus the Supreme Court rejected the

Tookes’ argument that the claim implicated proprietary functions when the activity

was indistinguishable from a governmental function.

      Likewise, other courts of appeals have held that “governmental functions

encompass activities that are closely related to or necessary for performance of the

governmental activities designated by statute.” City of Houston v. Petroleum

Traders Corp., 261 S.W.3d 350, 356 (Tex. App.—Houston [14th Dist.] 2008, no

pet.). For example, in Ethio Express Shuttle Service, Inc. v. City of Houston, 164
S.W.3d 751 (Tex. App.—Houston [14th Dist.] 2005, no pet.), Ethio Express sued

Houston over a dispute about a permit to operate an airport-shuttle service within

the city limits. 164 S.W.3d at 753. The Fourteenth Court of Appeals observed that

the Tort Claims Act lists airports, regulation of traffic, and transportation systems

as governmental functions, and it held that Houston’s regulation of airport-shuttle

services was a governmental function because “Ethio is a transportation system

                                         15
transporting travelers to [Houston’s] airports and [Houston] regulates its business.”

Id. at 756. The court added, “We would be remiss to hold that the City’s activities

are proprietary in a case in which they are so well aligned with the functions the

Legislature has designated as governmental.” Id.; see also City of San Antonio v.

Butler, 131 S.W.3d 170, 177–78 (Tex. App.—San Antonio 2004, pet. denied); Tex.

River Barges, 21 S.W.3d at 356–57.

      In this case, the line that was plugged by the City connected Downstream’s

facility directly to the City’s sanitary sewer system. In his affidavit Walid

Samarneh, a professional engineer who works as the managing engineer of the

City’s Public Works and Engineering Department, Wastewater Operations,

explained that the release of an unknown toxic substance contaminated the sewer

lines and killed all the biological treatment microorganisms. Samarneh averred that

this “created an emergency situation for the City” which required corrective

measures:

      The microorganisms are a necessary component of the wastewater
      treatment process and without them the Beltway Plant could not
      function properly or meet its TPDES effluent permit limits. The plant
      had to be re-seeded with new microorganisms. The sewer lines and lift
      stations also had to be decontaminated so that they did not re-damage
      the Beltway Plant.

      The record contains conflicting evidence as to whether Downstream was

involuntarily shut down by the City, or whether it instead voluntarily capped the

                                         16
discharge line to prove that it was not the source of the nonconforming discharge.

On rehearing, Downstream contends that there was no evidence that it was

necessary for the City to close its discharge line. This argument misses the point.

The record shows that the investigation and closure of the discharge line—whether

accomplished voluntarily by Downstream or required by the City—were part and

parcel of the City’s emergency actions to return its sanitary sewer system to

operational status. This does more than touch upon a governmental service because

these actions are intertwined with a function that the Legislature has determined to

be governmental, i.e., sanitary sewer services. See Ethio Express Shuttle Svc., 164
S.W.3d at 756; Absolute Indus., 120 S.W.3d at 4. Whether the investigation

eventually determined that Downstream was the culprit has no bearing on the

question of whether the City’s actions were governmental or proprietary. The

service the City provided to Downstream was sanitary sewer service to the extent

that all the wastewater went through the same sanitary sewer lines to the City’s

publicly owned treatment works.

      Similarly, the City’s issuance of permits to discharge industrial wastewater

did not constitute the undertaking of a proprietary function. Rather, that process

established the conditions under which Downstream and others are allowed to use

the sanitary sewer system—the operation and maintenance of which is a

governmental function—for industrial wastes. The City’s challenged activities do

                                        17
more than “touch upon” sanitary sewers and sewer services: they are in fact the

very same thing. This case does not involve a “service within a service”; it is a case

involving a service that the Legislature has already determined to be a

governmental function. Accordingly, we hold that the City’s actions in plugging

the discharge line between Downstream’s facility and the City’s sewer system

involved a governmental function for which the City has immunity.

      Downstream further argues at length that the City’s actions with regard to

permitting the discharge of industrial waste and the operation of the sewer system

and wastewater treatment plant constitute the operation and maintenance of a

public utility. Downstream thus contends that the City was engaged in a

proprietary function because it was functioning as a “public utility provider,” and

the Tort Claims Act provides that the operation and maintenance of a public utility

is a proprietary function. See TEX. CIV. PRAC. & REM. CODE ANN. § 101.0215(b).

We need not, however, separately analyze whether the City’s services at issue in

this case can be classified as a proprietary “public utility” function, because the

Tort Claims Act expressly forecloses the possibility of conflict between the

statutorily defined governmental and proprietary functions. It specifies that “[t]he

proprietary functions of a municipality do not include those governmental

activities listed under Subsection (a).” Id. § 101.0215(c). Since we have concluded

that the actions at issue in this case arise from the operation of a sanitary sewer,

                                         18
constituting a governmental function under section 101.0215(a), we need not

further consider whether it could also or alternatively be considered a public utility

under section 101.0215(b). Under the plain language of section 101.0215(c), it

cannot. See id.

      B. Waiver of immunity

      Finally, even when we have determined that a municipality’s action giving

rise to a claim was governmental in nature, we still must consider whether

immunity nevertheless has been waived. See, e.g., Tooke, 197 S.W.3d at 344;

McDonald v. City of the Colony, No. 02-08-263-CV, 2009 WL 1815648, at *5

(Tex. App.—Fort Worth June 25, 2009, no pet.) (mem. op.). Express consent by

the Legislature is ordinarily necessary to waive governmental immunity. Tooke,
197 S.W.3d at 332–33; Tex. Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex.

1999). Such a waiver of immunity must be clear and unambiguous. Tooke, 197
S.W.3d at 333.

      In the trial court, Downtream argued that the City had waived governmental

immunity in several ways apart from allegedly engaging in a proprietary function.

Downstream argued that the City waived immunity from suit by “bringing claims

against [it] for a disputed $286,296.40 wastewater bill and filing notice of lien on

real property” for the same amount. But Downstream’s claims in this appeal are

not actually counterclaims filed in response to a suit initiated by the City; rather

                                         19
Downstream initiated the suit as a plaintiff asserting various causes of action

against the City. The Supreme Court has held that the Local Government Code, by

providing that a “municipality may plead and be impleaded in any court,” see TEX.

LOC. GOV’T CODE ANN. § 51.075 (West 2008), did not indicate “a clear legislative

intent to waive immunity from suit.” Tooke, 197 S.W.3d at 342. Thus, we conclude

there is no merit to Downstream’s argument that the City waived immunity merely

by seeking to collect a past-due wastewater bill in a separate action.

      The Local Government Code also includes an express waiver of immunity

from suit for breach of a written contract for provision of goods or services to the

local governmental entity or for the “sale or delivery of not less than 1,000 acre-

feet of reclaimed water by a local governmental entity intended for industrial use.”

TEX. LOC. GOV’T CODE ANN. §§ 271.151(2) (West Supp. 2013), 271.152 (West

2005). Downstream has not pleaded the existence of a written contract for the

provision of goods or services to the City, and the waiver of immunity in the Local

Government Code does not apply to this case.

      Finally, in its Second and Third Amended Petitions, Downstream argued

that the City waived immunity by actions constituting “duress, coercion, and

bullying.” The Legislature has granted a limited waiver of governmental immunity

in the Tort Claims Act, “allowing suits to be brought against governmental units

only in certain, narrowly defined circumstances.” Tex. Dep’t of Criminal Justice v.

                                         20
Miller, 51 S.W.3d 583, 587 (Tex. 2001). These circumstances do not include

duress, coercion, bullying, or harassment. Rather, the Tort Claims Act provides

that a governmental unit is liable for:

       property damage . . . proximately caused by the wrongful act or
       omission or the negligence of an employee acting within his scope of
       employment if:

             (A) the property damage . . . arises from the operation or use
       of a motor-driven vehicle or motor-driven equipment; and

             (B) the employee would be personally liable to the claimant
       according to Texas law . . . .

TEX. CIV. PRAC. & REM. CODE ANN. § 101.021(1) (West 2011). No such allegation

appears in Downstream’s live pleading, and we conclude that the Legislature has

not waived the City’s immunity as to Downstream’s negligence claim.

       Accordingly we find no applicable waiver of the City’s immunity as to

Downstream’s contract and negligence claims for monetary damages, and we hold

that the trial court erred by failing to grant the City’s plea to the jurisdiction as to

those claims.

III.   Constitutional claims

       Downstream also alleged “due process” and “equal protection” claims in

relation to the termination of services and imposition of rate increases and past-due

charges. Downstream’s live pleading in the trial court and briefing in this court

expressly invoke state constitutional protections.

                                          21
      Invoking Article I, section 19 of the Texas Constitution, the first count of

Downstream’s live pleading alleged wrongful termination of utilities and a

wrongful rate hike “without due process.” Section 19 provides that “No citizen of

this State shall be deprived of life, liberty, property, privileges or immunities, or in

any manner disfranchised, except by the due course of the law of the land.” TEX.

CONST. art. I, § 19. Downstream alleged that “the City’s refusal to provide

wastewater disposal utility water services to the property and illegal sampling and

testing methods, and illegal rate hikes, are unconstitutional and illegal, and

constitutes an arbitrary, capricious, and irrational action by the City.” Downstream

alleged that it has been overcharged by $286,296.40 and that it has been denied an

administrative hearing to address the overcharge. It also alleged the City’s failure

to abide by its “termination and rate setting laws set out in [the] Houston Code of

Ordinances . . . . constitute[d] a violation of [its] rights to notice, hearing, and due

process.”

      Downstream also invoked Article 1, section 3 of the Texas Constitution in

support of allegations of an “equal protection” violation for alleged ongoing

harassment. Section 3 provides that “All free men, when they form a social

compact, have equal rights, and no man, or set of men, is entitled to exclusive

separate public emoluments, or privileges, but in consideration of public services.”

TEX. CONST. art. I, § 3.

                                          22
      A. Injunctive relief

      In its petition Downstream sought “equitable relief from the violation of

rights to due process.” By its pleadings it sought to enjoin the City from denying it

“due process” and “equal protection,” and to void the City’s administrative actions

regarding rate increases.

      In its live pleading, Downstream complains that the denial of its requests for

administrative hearings in regard to billing and related matters violate its “due

process” and “equal protection” rights. By alleging that the denial of review

violates the City’s own ordinances, Downstream has also alleged a deprivation of

rights in violation of the due course of the law. See TEX. CONST. art. I, § 19. By

alleging disparate treatment in the denial of the right to be heard, Downstream has

alleged denial of equal rights under the law. See id. art. I, § 3.

      The Texas Constitution authorizes suits for equitable or injunctive relief for

violations of the Texas Bill of Rights. City of Beaumont v. Bouillion, 896 S.W.2d
143, 148–49 (1995) (citing TEX. CONST. art. I § 29). But this limited waiver of

immunity exists only to the extent the plaintiff has pleaded a viable constitutional

claim. City of Houston v. Johnson, 353 S.W.3d 499, 504 (Tex. App.—Houston

[14th Dist.] 2011, pet. denied).

      Texas courts have held that to assert an equal-rights claim under article I,

section 3, a claimant must allege that it was treated differently from other similarly

                                           23
situated parties, without a reasonable basis. See, e.g., City of Dallas v. Jones, 331
S.W.3d 781, 787 (Tex. App.—Dallas 2010, pet. dism’d). The City asserted

immunity from Downstream’s equal-rights claim on the basis that it is not

supported by the facts. In the trial court, the City argued that because it claimed a

rational basis for plugging the discharge line from Downstream’s plant to the

sewer, the claim was not viable and therefore the court lacked jurisdiction. On

appeal the City also argues that the claim is facially invalid because the allegation

that Downstream’s plant was closed for 27 days pending an investigation does not

state a cognizable constitutional claim.

      Although the City did not raise the facial invalidity of Downstream’s equal-

rights claim in its plea to the jurisdiction, we address it because jurisdictional

arguments may be raised for the first time on appeal. See, e.g., Rhule, 417 S.W.3d

at 442; Rusk State Hosp. v. Black, 392 S.W.3d 88, 94 (Tex. 2012). In so doing, we

construe Downstream’s pleadings liberally. See Miranda, 133 S.W.3d at 226.

Downstream alleged that various actions taken by the City were “arbitrary,

capricious, and irrational” and constituted harassment, including termination of

wastewater services, the issuance of frivolous violations, illegal sampling, non-

approved testing of samples, overcharging in the amount of $286,296.40, and

serving notice of intent to file a lien. Downstream alleged that the City plugged the

discharge line from its plant to the sewer system and kept it plugged despite

                                           24
evidence that other transporters, not Downstream, were responsible for illegally

dumping waste into the City’s sewer system through a manhole. Similarly,

Downstream alleged that after cleaning its plant, the City refused to reopen the

discharge line, telling Downstream’s owner that the situation had become

“political.” Downstream alleged that the City’s rate hikes were “arbitrary and

capricious” and that it had been “singled out . . . with disparate treatment that has

no rational basis.” As to the sampling, Downstream alleged that it was “the only

customer in the City having samples drawn from an off-site location.” Downstream

alleged that it had been “singled out for maltreatment, bullying, and harassment,”

and that “[n]o other industrial customer in the City has been treated like

Downstream.” It alleged that it was the only customer “that has been repeatedly

denied Administrative hearings to address over-charging, and has not had the

wastewater rate lowered upon demonstrating (by use of an independent lab) that

the City’s lab scores were wildly erroneous.”

      Construing its pleading liberally, we conclude that Downstream’s allegations

of arbitrary, capricious, irrational, and disparate treatment state a constitutional

claim based upon an unequal application of the law without any reasonable basis.

As such, the equal-rights claims are sufficient to survive a plea to the jurisdiction

based solely on the pleadings, and we overrule the City’s arguments that such

claims are facially invalid.

                                         25
      The City also argued that the court lacked jurisdiction because evidence

shows that it acted reasonably in plugging Downstream’s discharge line. See

Johnson, 353 S.W.3d at 504. To the extent a rational basis for discriminatory

treatment may constitute a defense to Downstream’s claims, this argument

implicates the merits of the case. Ordinarily a plea to the jurisdiction “should be

decided without delving into the merits of the case.” Bland Indep. Sch. Dist. v.

Blue, 34 S.W.3d 547, 554 (Tex. 2000); see Miranda, 133 S.W.3d at 223. Although

a court may consider evidence relevant to the jurisdictional issue, “a dilatory plea

does not authorize an inquiry so far into the substance of the claims presented that

plaintiffs are required to put on their case simply to establish jurisdiction.” Bland

Indep. Sch. Dist., 34 S.W.3d at 554. Rather, when the jurisdictional challenge

implicates the merits of the plaintiff’s cause of action, the court reviews relevant

evidence to determine if a fact issue exists, in the same manner as a traditional

motion for summary judgment. Miranda, 133 S.W.3d at 227–28. Like a traditional

motion for summary judgment, a party asserting a plea to the jurisdiction must

conclusively negate a jurisdictional fact before the burden shifts to the nonmovant

to present evidence raising a question of fact. See id.; Tex. S. Univ. v. Gilford, 277
S.W.3d 65, 70 (Tex. App.—Houston [1st Dist.] 2009, pet. denied).

      The City argued in the trial court, as it does on appeal, that the facts do not

support the equal-rights claim because there was no dispute that its facility had

                                         26
been contaminated, that it acted reasonably in plugging the line from Downstream

to the sewer, and this action was rationally related to the legitimate governmental

function of providing sewer service. While this evidence may establish the

reasonableness of initially closing the discharge line between Downstream’s

facility and the City’s sewer,2 none of it conclusively proves that the City had a

rational basis for keeping the line closed for 27 days. Nor does it address

Downstream’s other separate allegations of unequal treatment with respect to

sampling, testing, or rate increases. We therefore conclude that the City did not

conclusively negate the viability of Downstream’s equal-rights claims, and we hold

that the trial court did not err by denying the City’s plea to the jurisdiction as to

such claims.

      As to the due-course-of-law claim, which includes the complaint that

Downstream has been denied administrative hearings, the City contends that the

court lacks jurisdiction because Downstream failed to allege a declaratory-

judgment action. Specifically, the City argues that a due course of law claim is the

wrong procedural vehicle for raising complaints about the City’s administrative

actions and rate increases. The City further argues that because the Declaratory

2
      The City’s evidence included Downstream’s permit, several affidavits that
      described the events of May 25 and 26 and immediate need to plug the
      discharge line, excerpts from a show cause hearing in which one of
      Downstream’s owners said he asked for the line to be “capped,”
      Downstream’s answer in a lawsuit filed by G.I. Environmental Vacuum
      Service, and provisions of the City’s municipal code.

                                         27
Judgments Act provides an express waiver of governmental immunity for

declaratory relief but not for monetary damages, see Gatesco, Inc. Ltd. v. City of

Rosenberg, 312 S.W.3d 140, 144 (Tex. App.—Houston [14th Dist.] 2010, no pet.),

Downstream should have raised its claims seeking the voiding of the City’s prior

administrative action by way of a declaratory-judgment action. To the extent that

the City’s claim of immunity is reducible to an objection about the procedural

device by which Downstream raises its claims, that argument is one of pleading

sufficiency and we hold that the trial court did not err in denying the City’s plea to

the jurisdiction as to such a claim, because, at a minimum, Downstream should be

afforded an opportunity to amend and cure the deficiency. Miranda, 133 S.W.3d at

226–27.

      The City also argues that Downstream’s request for injunctive relief is moot

to the extent it is premised upon a complaint about the wrongful termination of

utilities which have since been restored. However, Downstream’s allegations and

request for injunctive relief are not limited to the past termination of wastewater

services. Rather, Downstream has alleged that unfair treatment by the City is

“ongoing,” and that the City has “repeatedly denied Administrative hearings” to

address the unequal treatment that Downstream claims it has received.

Accordingly, Downstream’s constitutional allegations are not solely backward-

looking, and we conclude that the requests for injunctive relief are not moot.

                                         28
      Finally, the City argues that to the extent Downstream is attempting to raise

an inverse condemnation claim, the district court lacked subject matter jurisdiction

as a matter of law. “A county civil court at law has exclusive jurisdiction in Harris

County of eminent domain proceedings, both statutory and inverse, regardless of

the amount in controversy.” TEX. GOV’T CODE ANN. § 25.1032(c) (West Supp.

2013). However, Downstream’s live pleading at the time the trial court denied the

City’s plea to the jurisdiction was its Third Amended Petition, and that pleading

contained no claim for inverse condemnation. See Villarreal v. Harris Cnty., 226
S.W.3d 537, 542 (Tex. App.—Houston [1st Dist.] 2006, no pet.) (“Inverse

condemnation occurs when (1) a property owner seeks (2) compensation for

(3) property taken for public use (4) without process or a proper condemnation

proceeding.”). Accordingly, there is no jurisdictional barrier to Downstream

proceeding in the district court, because it no longer asserts an inverse

condemnation claim.

      B. Claim for money damages

      As a remedy for the alleged “due process” violations, Downstream also

sought monetary damages “within the jurisdictional limits of this court.” The City

argues that such damages are legally unavailable, and we agree. There is no

implied right of action to recover money damages for violation of the due-course-

of-law provision in the Texas Bill of Rights. See, e.g., Tex. S. Univ. v. Araserve

                                         29
Campus Dining Servs. of Tex., Inc., 981 S.W.2d 929, 935 (Tex. App.—Houston

[1st Dist.] 1998, pet. denied). Thus we conclude that the trial court erred by

denying the City’s plea to the jurisdiction as to Downstream’s claim for monetary

damages on its due-course-of-law cause of action.

                                    Conclusion

      We reverse the order of the trial court in part, hold that the City is immune

from all of Downstream’s contract and negligence causes of action as well as its

claims for monetary relief based on constitutional violations, and we render

judgment of dismissal on those claims. We conclude that the jurisdictional plea

was correctly denied with respect to constitutional claims for injunctive relief, and

we remand for further proceedings on the remainder of the case.

                                              Michael Massengale
                                              Justice

Panel consists of Justices Keyes, Higley, and Massengale.

Justice Keyes, dissenting.

                                         30