Court Opinion

ID: 3081718
Source: CourtListenerOpinion
Date Created: 2015-10-16 01:59:53.050919+00
Date Added: 2024-06-11T09:50:49.987401
License: Public Domain

Opinion issued March 5, 2015

                                      In The

                              Court of Appeals
                                     For The

                          First District of Texas
                             ————————————
                              NO. 01-13-00864-CV
                            ———————————
                          HS TEJAS, LTD., Appellant
                                        V.
                        CITY OF HOUSTON, Appellee

                 On Appeal from the Civil Court at Law No. 2
                            Harris County, Texas
                       Trial Court Case No. 926497

                                  OPINION

      This is the third appeal in this regulatory takings case arising from an

ordinance that temporarily restricted a landowner’s ability to develop several

parcels of real estate. After two previous interlocutory appeals, the trial court

granted the City of Houston’s merits-oriented plea to the jurisdiction and dismissed
the case. HS Tejas, Ltd. appeals the dismissal, arguing among other things that the

trial court erred because the City raised only “no-evidence” points in its

jurisdictional plea. Because this procedure improperly attempted to shift the City’s

burden to disprove jurisdictional factual allegations, we reverse and remand for

further proceedings.

                                   Background

      The background to this case is described in detail in City of Houston v. HS

Tejas, Ltd., 305 S.W.3d 178 (Tex. App.—Houston [1st Dist.] 2009, no pet.) (HS

Tejas I). HS Tejas sued the City, claiming that 2006 amendments to an ordinance 1

effectively prohibited it from developing or making improvements to three

separate tracts of four, six, and ten acres acquired in 2003, as well as another 118-

acre tract.2 While the City Engineer had discretion to issue building permits for the

parcels of land under the prior version of ordinance, the version as amended

effective October 1, 2006 substantially limited that discretion. See HS Tejas I, 305
S.W.3d at 181. The ordinance was then amended again, effective September 1,

1
      See Houston, Tex., Ordinance 2006–894, § 26 (Aug. 30, 2006).
2
      City of Houston v. HS Tejas, Ltd., 305 S.W.3d 178, 182 (Tex. App.—
      Houston [1st Dist.] 2009, no pet.). The HS Tejas I opinion stated that HS
      Tejas acquired the large tract in 1995. See 305 S.W.3d at 181. In this appeal,
      the City contends that the large tract was actually acquired by HS Tejas days
      after the 2006 ordinance went into effect. HS Tejas acquired the large parcel
      from Holley-Strother Kingwood Lake Estates, Ltd., an entity related to HS
      Tejas’s founding partner Ronald Holley.

                                         2
2008, to restore the City Engineer’s discretion in issuing permits for the

development of land in the floodways. Id. at 181–82; Houston, Tex., Ordinance

2008–658, § 10 (July 23, 2008) (codified at Houston, Tex., Code of Ordinances

§ 19–43 (2009)).

      The first appeal to this court arose from the denial of a plea to the

jurisdiction, in which the City argued that the claims were unripe for adjudication

because HS Tejas had not alleged a concrete injury arising from a specific

development or sale impacted by the 2006 ordinance. HS Tejas I, 305 S.W.3d at

182. We agreed and held, at that stage of the proceedings, that HS Tejas had failed

to allege a concrete injury sufficient to support its regulatory takings claim; but we

also remanded the case to allow for an opportunity to amend the pleadings. Id. at

185–86.

      On remand, HS Tejas filed its second amended petition, and the City filed

another plea to the jurisdiction. City of Houston v. HS Tejas, Ltd., No. 01-11-

00431-CV, 2012 WL 682298, at *2 (Tex. App.—Houston [1st Dist.] Mar. 1, 2012,

no pet.) (mem. op.) (HS Tejas II). The trial court again denied the City’s plea, and

a second interlocutory appeal followed. HS Tejas II, 2012 WL 682298, at *2. The

City again claimed that the pleadings failed to allege a concrete injury sufficient to

meet the standard for ripeness articulated in HS Tejas I. Id. We held that the second

amended petition, on its face, alleged a concrete injury sufficient to confer subject-

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matter jurisdiction. Id. at *4. Because the allegations, on their face, conferred

subject-matter jurisdiction, we did not reach the City’s second issue regarding

whether the trial court erred in considering documents attached to the petition. Id.

We affirmed the trial court’s order denying the City’s plea to the jurisdiction. Id. at

*5.

      After our decision in HS Tejas II, the City filed a motion for summary

judgment on no-evidence grounds, along with yet another plea to the jurisdiction.

In support of both, the City argued that the trial court should dismiss the claims for

lack of subject-matter jurisdiction because no evidence existed to establish either a

permanent or temporary taking. Specifically, the City challenged the existence of

jurisdictional facts by arguing that HS Tejas could offer no evidence that (1) the

City acted intentionally in its exercise of lawful authority; (2) any such act resulted

in the taking, damaging, or destroying of any property that HS Tejas owns; and

(3) the property was taken for public use. The City did not attach any evidence of

its own, nor did it make any other jurisdictional arguments. HS Tejas filed a

response, attaching evidence responding to the specific allegations made by the

City. That evidence included the challenged ordinance and a valuation report

suggesting that the lost rental value of the property during the operative time of the

challenged ordinance was $300,000.

                                          4
      The trial court conducted an evidentiary hearing on the summary-judgment

motion and plea to the jurisdiction. The trial court made no ruling on the motion

for summary judgment, but it granted the plea to the jurisdiction and entered an

order dismissing the claims against the City. HS Tejas now appeals from the final

judgment entered by the trial court.

                                       Analysis

I.    No-evidence plea to the jurisdiction

      In its second issue, HS Tejas argues that the trial court erred by granting the

plea to the jurisdiction because the City failed to present any evidence negating

jurisdiction.

      A plea to the jurisdiction may challenge the sufficiency of the petition’s

factual allegations to demonstrate the court’s jurisdiction over the case, or it may

challenge the very existence of the alleged 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 adequacy of the facts pleaded in a petition, courts must

construe the pleadings liberally in favor of the plaintiff. Id. at 226. If the pleadings

do not allege sufficient facts to affirmatively demonstrate the trial court’s

jurisdiction, the trial court is required to provide the plaintiff an opportunity to

amend its pleadings. Id. at 226–27. If, however, the pleadings affirmatively negate

                                           5
the existence of jurisdiction, the trial court may grant the plea without allowing the

plaintiff an opportunity to amend. Id. at 227.

      In contrast, when the plea challenges the existence of jurisdictional facts, the

trial court is required to consider relevant evidence submitted by the parties. Id. If

the evidence creates a fact issue regarding jurisdiction, the trial court does not rule

on the plea, but instead submits the issue to the factfinder in a trial on the merits.

Id. at 228.

      The procedure for a plea to the jurisdiction when evidence has been

submitted to the trial court mirrors that of a traditional motion for summary

judgment. Id.; see also TEX. R. CIV. P. 166a(c). Thus, the burden is on the movant

to present evidence establishing that the trial court lacks jurisdiction as a matter of

law. Miranda, 133 S.W.3d at 228. Thereafter, the burden shifts to the plaintiff to

demonstrate that a disputed issue of material fact exists regarding the jurisdictional

issue. Id. Accordingly, the defendant cannot simply deny the existence of

jurisdictional facts and force the plaintiff to demonstrate the existence of a fact

issue. See Green Tree Servicing, LLC v. Woods, 388 S.W.3d 785, 794 (Tex.

App.—Houston [1st Dist.] 2012, no pet.) (holding that a trial court’s subject-matter

jurisdiction cannot be challenged by a no-evidence motion for summary

judgment); see also Thornton v. Northeast Harris Cnty. MUD I, 447 S.W.3d 23,

38–40 (Tex. App.—Houston [14th Dist.] 2014, pet. filed) (holding that trial court

                                          6
improperly dismissed takings claim for lack of jurisdiction based on no-evidence

motion for summary judgment). In other words, a plaintiff generally will not be

required to marshal evidence and prove a claim just to overcome a plea to the

jurisdiction. See Mission Consol. Indep. Sch. Dist. v. Garcia, 372 S.W.3d 629, 637

(Tex. 2012). If the plaintiff has alleged basic facts adequate to establish the

elements of a claim such that the court can determine whether it is barred by

sovereign immunity, then the plaintiff will only be required to submit evidence if

the defendant presents evidence negating one of those basic facts. Id. “[E]ven then,

the plaintiff’s burden of proof with respect to those jurisdictional facts must not

‘involve a significant inquiry into the substance of the claims.’” Id. at 637–38.

      In this case, the City challenged subject-matter jurisdiction on the express

premise that no evidence supported the pleadings. As this court held in Green Tree

Servicing, and as the City acknowledges on appeal, that is a forbidden procedure.

The City did not contend that the facts alleged by HS Tejas failed to establish

jurisdiction even if assumed to be true, and the City failed to present its own

evidence to establish that the trial court lacked jurisdiction as a matter of law. By

not presenting any evidence to establish that the trial court lacked jurisdiction as a

matter of law, the City failed to meet its burden to challenge jurisdiction. See

Miranda, 133 S.W.3d at 228; Green Tree Servicing, 388 S.W.3d at 794.

Accordingly, we sustain HS Tejas’s second issue and hold that the plea to the

                                          7
jurisdiction should have been denied based on the arguments presented in the trial

court.

II.      Newly asserted challenges to subject-matter jurisdiction

         The City also contends that the defect in its plea to the jurisdiction was

harmless because the record—supplemented by certain matters we are asked to

judicially notice—nevertheless establishes a lack of subject-matter jurisdiction.

The City thus argues that we should affirm the dismissal of HS Tejas’s claims

because the existing record establishes “the lack of a taking, the lack of causation,

and the lack of damages.”

         In so arguing on appeal, the City advances new arguments in support of its

position that the ordinance did not constitute a regulatory taking. First, it asserts

that part of the property lay outside of the area designated as a floodway, meaning

that some of the property at issue was not covered by the ordinance. Second, it

argues that HS Tejas was not deprived of all economically beneficial or productive

use of its property, based on evidence (from a bankruptcy trustee’s report, which

we are asked to judicially notice) that dirt was sold from the property after the

ordinance took effect, and because the property could have been used as a wetlands

mitigation bank. Third, the City argues that the ordinance did not amount to a

legally cognizable temporary taking because:

               • HS Tejas did not purchase the large tract until after the
                 ordinance went into effect;

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             • a predecessor in interest had not developed the property;

             • the large tract of land could not be developed because it
               lacked road access;

             • the large tract of land was subject to encumbrances prior to
               the ordinance; and

             • the large tract lay within the 100-year floodplain.

The City further argues that this same evidence establishes a lack of causation and

damages necessary to a takings claim, and that HS Tejas’s expert testimony on

damages was conclusory. Fourth, the City asserts that the lack of evidence

concerning plans to develop the three smaller tracts of land demonstrates a lack of

damages as to those properties. And to the extent that no evidence establishes any

use of the smaller tracts, the City contends that evidence regarding the larger tract

should inform the court’s analysis, such that claims over the smaller tracts also fail

to constitute a regulatory taking because the evidence about sales of fill dirt

indicates that the property retained an economically viable use.

      Ordinarily new issues may not be raised for the first time on appeal, though

there is an exception for issues demonstrating an absence of subject-matter

jurisdiction. See Rusk State Hosp. v. Black, 392 S.W.3d 88, 95–97 (Tex. 2012).

Nevertheless, in some circumstances a challenge to subject-matter jurisdiction

raised for the first time on appeal may deprive the plaintiff of the opportunity to

amend its pleadings to cure defects or to develop the record with relevant evidence.

                                          9
Id. at 96. As a safeguard, we therefore must construe the petition in favor of the

party invoking the court’s jurisdiction and review the entire record to determine

whether any evidence supports that assertion. Id. If the pleadings and record

neither demonstrate jurisdiction nor conclusively negate it, then to obtain dismissal

of the plaintiff’s claim, the defendant must demonstrate that the plaintiff failed to

show jurisdiction despite having had full and fair opportunity in the trial court to

develop the record and amend the pleadings. Id. Or, if the plaintiff was not given

an adequate opportunity to develop the record and amend the pleadings, then the

defendant must demonstrate that the plaintiff would be unable to show the

existence of jurisdiction even if the cause were remanded to the trial court and the

plaintiff were given such an opportunity. Id.

      In its current posture, the record does not conclusively negate jurisdiction.

While the City asserts numerous reasons it believes the ordinance has neither

destroyed all economically viable use of the property nor unreasonably interfered

with the use and enjoyment of the property, HS Tejas has replied with explanations

as to why the City’s evidence is incomplete or unreliable, pending further

opportunity to develop the record. In particular, HS Tejas contends that the receipts

for fill dirt relied upon by the City are unreliable because there is no evidence that

the money was ever paid to HS Tejas, thus obscuring the true value, if any, of the

dirt. It observes that the City’s evidence that the land could have been used for

                                         10
wetlands mitigation comes from an appraisal report of the land as of October 1,

2008, after the ordinance was amended to permit development, and that the report

appraised only 10.8 acres of the large 118-acre tract. Further, it asserts that the

City’s evidence that 21.5 acres of the large tract lie outside of the floodway is

immaterial without further evidence that development or use of those 21.5 acres

was economically feasible.

      The Supreme Court of Texas has acknowledged that arguments of the kind

now raised by the City for the first time in this appeal depend “largely ‘upon the

particular circumstances [in that] case.’” Hearts Bluff Game Ranch, Inc. v. State,

381 S.W.3d 468, 477 (Tex. 2012) (quoting Penn Cent. Transp. Co. v. New York

City, 438 U.S. 104, 124, 98 S. Ct. 2646 (1978)). As such, “courts generally eschew

any ‘set formula’ in determining how far is too far when performing a regulatory

takings analysis, preferring to “‘engag[e] in . . . essentially ad hoc, factual

inquiries.”’” Id. (quoting Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1015, 112
S. Ct. 2886 (1992), and Penn Cent., 438 U.S. at 124, 98 S. Ct. 2646)). Considered

in that light, it is apparent that HS Tejas has not had an opportunity to develop the

record as to the issues the City now raises, and the City makes no argument that

HS Tejas would be unable to demonstrate jurisdiction if the case is remanded. HS

Tejas asserts in its reply briefing that it would have examined the witnesses

differently and offered other documentary evidence had the City raised these issues

                                         11
in the trial court. Accordingly, it now must be afforded an opportunity to develop

the record regarding the new issues the City argues on appeal. See Rusk State

Hosp., 392 S.W.3d at 96.

      The City also contends that the federal takings claims in particular were

properly dismissed because they are not technically ripe until the state takings

claim is resolved. To the extent the City presents this as a bright-line rule, it is

mistaken. 3 As recently recognized by our Supreme Court, in at least some

circumstances courts may “consider the federal and state takings claims together,

as the analysis for both is complementary.” Hearts Bluff, 381 S.W.3d 468, 477

(citing City of Austin v. Travis Cnty. Landfill Co., 73 S.W.3d 234, 238–39 (Tex.

2002); Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 933–38 (Tex. 1988)). The

City presents no arguments to explain why these particular federal takings claims

are unripe pending the resolution of parallel state takings claims that apparently

hinge on precisely the same legal arguments, and none are apparent to us.

3
      The City quotes and relies upon Hallco Texas, Inc. v. McMullen Cnty., 221
S.W.3d 50 (Tex. 2006), for the proposition that “a federal takings claim ‘is
      not ripe until state court proceedings have been concluded.’” Hallco, 221
S.W.3d at 59 (quoted by the City’s brief at 12). This quotation is taken out
      of context and grossly oversimplifies the complex interplay of state and
      federal takings claims with regard to their ripeness for adjudication. To the
      extent the same oversimplification is reflected in this court’s opinion in City
      of Houston v. Guthrie, 332 S.W.3d 578, 592 (Tex. App.—Houston [1st
      Dist.] 2009, pet. denied), also noted in the City’s brief, that opinion has been
      supplanted by the more accurate and more recent statement of the law by the
      Supreme Court of Texas in Hearts Bluff, quoted above.

                                         12
Accordingly, we decline to affirm the dismissal of the federal claims on ripeness

grounds that have not been adequately presented.

                                    Conclusion

      We overrule the trial court’s order dismissing HS Tejas’s claims, and we

remand the case for further proceedings consistent with this opinion.

                                             Michael Massengale
                                             Justice

Panel consists of Justices Jennings, Massengale, and Lloyd.

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