Texas Supreme Court flip-flops on hearing City of Houston same-sex spousal benefits case

In a rare move, Texas Supreme Court reinstates petition for review in City of Houston same-sex benefits case on motion for rehearing, and sets it for oral argument on March 1, 2017. The high court routinely denies petitions for review without comment. It did not explain this reversal either. Numerous amicus curiae briefs may have played a role. Link to docket here. 

Gist of the Argument 

(Table of Contents from Motion for Reconsideration) 

Houston Court of Appeals 

OPINION OF THE HOUSTON COURT OF APPEALS 
IN PARKER V PIDGEON 

477 S.W.3d 353 (2015)

Mayor Annise PARKER and City of Houston, Appellants

v.

Jack PIDGEON and Larry Hicks, Appellees.

NO. 14-14-00899-CV, NO. 14-14-00932-CV.

Court of Appeals of Texas, Houston (14th Dist.).

Opinion filed July 28, 2015.

David L. Red, Darah L. Eckert, Judith Lee Ramsey, Kathleen Hopkins Alsina, Houston, TX, for appellant.

354Jared R. Woodfill, Robert Talton, Houston, TX, Leif Alexander Olson, Humble, TX, Johnathan M. Saenz, Austin, TX, for appellee.

Panel consists of Justices Boyce, McCally, and Donovan.

PER CURIAM OPINION

PER CURIAM

Appellees Jack Pidgeon and Larry Hicks (collectively, Appellees) sued to enjoin Mayor Annise Parker and the City of Houston (collectively, the City) from providing employee benefits to the same-sex spouses of employees legally married in another state. Appellees relied on provisions of the Texas Constitution and Family Code banning recognition of same-sex marriage in Texas, declaring same-sex marriages against public policy and void, and prohibiting political subdivisions from giving effect to same-sex marriages from other states. See Tex. Const. art. I, § 32; Tex. Fam.Code § 6.204. The trial court signed a temporary injunction requested by the Appellees,^[1] determining that:

4. Spending funds in that manner will recognize a union between two people of the same sex as a status identical to the Texas Constitution's definition of marriage. That expenditure is thus barred by the Texas Constitution.

5. Spending funds in that manner recognizes and validates a marriage between persons of the same sex. That expenditure is thus barred by the Family Code.

6. Spending funds in that manner gives effect to a right or claim to benefits asserted as the result of a marriage between persons of the same sex. That expenditure is thus barred by the Family Code.

7. Spending funds in that manner will furnish employment benefits to persons who are not an employee's legal spouse or dependent children. That expenditure is thus barred by the City's charter.

Thus, the trial court concluded that "[t]he City is prohibited from furnishing benefits to persons who are married in other jurisdictions to City employees of the same sex."

In light of recent decisions from the United States Supreme Court and the United States Court of Appeals for the Fifth Circuit,^[2] we conclude that we must reverse the trial court's injunction. 

In Obergefell, the United States Supreme Court determined that "same sex couples may exercise their fundamental right to marry in all States." Obergefell, ___ U.S. ___, 135 S.Ct. 2584, 2604-05, 2607, 192 L.Ed.2d 609 (2015). The United States Supreme Court held that "there is no lawful basis for a State to refuse to recognize a lawful same-sex marriage performed in another State on the ground of its same-sex character." Id. at 2607-08. Further, in De Leon, a federal district court found that article I, section 32 of the Texas Constitution and Texas Family Code section 6.204 are unconstitutional and enjoined the State of Texas from enforcing them; the 355*355 United States Court of Appeals for the Fifth Circuit affirmed the trial court's determination in light of Obergefell. De Leon, 791 F.3d 619, 624-25 (5th Cir.2015).

Because of the substantial change in the law regarding same-sex marriage since the temporary injunction was signed,^[3] we reverse the trial court's temporary injunction and remand for proceedings consistent with Obergefell and De Leon.

[1] The City challenged Appellees' standing to sue. Appellees' pleading that they are residents of Houston, Texas, Harris County, and "taxpayer[s] ... residing within the boundaries of the City of Houston and Defendants are expending significant public funds on an illegal activity," construed liberally, supports Appellees' standing to sue as taxpayers without showing a particularized injury. See Lone Star Coll. Sys. v. Immigration Reform Coal. of Tex. (IRCOT), 418 S.W.3d 263, 267-68, 274 (Tex.App.Houston [14th Dist.] 2013, pet. denied) (op. on reh'g).

[2] See Obergefell v. Hodges, ___ U.S. ___, 135 S.Ct. 2584, 192 L.Ed.2d 609 (2015); De Leon v. Abbott, 791 F.3d 619 (5th Cir.2015).

[3] We have broad discretion to remand a case in the interest of justice after reversing the trial court's judgment. See Tex. R. App. P. 43.3(b); Ahmed v. Ahmed, 261 S.W.3d 190, 196 (Tex.App.-Houston [14th Dist.] 2008, no pet.); Chrismon v. Brown, 246 S.W.3d 102, 116 (Tex.App.-Houston [14th Dist.] 2007, no pet.). We may exercise our discretion to remand as long as there is a probability that the case, for any reason, has not been fully developed. See Ahmed, 261 S.W.3d at 196.

The time has come for an encore on a divisive issue 

City of Houston v. Esparza progeny: Another interlocutory appeal by the City in a car wreck case goes nowhere, but back to the trial court

The City of Houston v. Lackey, NO. 01-11-00248-CV (Tex.App. – Houston [1^st Dist.] May 31, 2012) (City’s jurisdictional defense in suit brought under the Texas Tort Claims Act rejected; trial court’s denial of city’s plea to the jurisdiction affirmed)



City of Houston - City Hall

MEMORANDUM OPINION

The City of Houston brings this interlocutory appeal from the trial court’s order denying its plea to the jurisdiction on the negligence claims of appellee, Rachel Lackey. [1]  In its sole issue, the City contends that, because Lackey chose to file suit against both the City and its employee, Will Reynolds, regarding the same subject matter, Lackey’s claims against the City are barred by section 101.106(b) of the Texas Tort Claims Act.[2]  We affirm.



Background

Lackey filed suit against both the City and Reynolds, alleging personal injuries sustained when the City vehicle operated by Reynolds backed into her vehicle as a result of Reynolds’ negligence while in the course and scope of his employment with the City and, as such, the City is liable under the doctrines of negligent entrustment and respondeat superior.

  

The City filed a general denial and asserted governmental immunity.  The City further asserted that it could not be held vicariously liable for acts of its agents and employees who are entitled to official immunity.  Reynolds filed a separate answer in which he generally denied Lackey’s allegations and claimed both governmental and official immunity.

    

Pursuant to the Texas Tort Claims Act,[3] the City subsequently moved to dismiss all of Lackey’s claims against Reynolds.  Lackey’s motion to “non-suit” her claims against Reynolds were granted.[4]  Thereafter, the City filed a plea to the jurisdiction, contending that because Lackey sued Reynolds, she had made an irrevocable election to proceed against Reynolds under section 101.106(b) of the Act’s election-of-remedies provision and was immediately and forever barred from any suit or recovery against the City regarding the same subject matter.[5]  The trial court denied the City’s plea to the jurisdiction and this interlocutory appeal followed.

   

Discussion

  

Standard of Review

  

A plea to the jurisdiction challenges the trial court’s subject-matter jurisdiction to hear a case.  Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000); Kamel v. Univ. of Tex. Health Sci. Ctr., 333 S.W.3d 676, 681 (Tex. App.—Houston [1st Dist.] 2010, pet. denied).  The existence of subject-matter jurisdiction is a question of law that we review de novo.  State Dep’t of Hwys. & Pub. Transp. v. Gonzalez, 82 S.W.3d 322, 327 (Tex. 2002); Kamel, 333 S.W.3d at 681.  We may not presume the existence of subject-matter jurisdiction; the burden is on the plaintiff to allege facts affirmatively demonstrating it.  Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443–44, 446 (Tex. 1993); Kamel, 333 S.W.3d at 681.

  

Whether a governmental entity is immune from suit is a question of subject‑matter jurisdiction.  Tex. Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638–39 (Tex. 1999).  Determination of that issue here turns on construction of the Act’s election-of-remedies provision.  See Tex. Civ. Prac. & Rem. Code Ann. § 101.106 (West 2011).  In construing a statute, our primary objective is to determine and give effect to the Legislature’s intent.  Gonzalez, 82 S.W.3d at 327.  “[W]e ‘read the statute as a whole and interpret it to give effect to every part.’”  Id. (quoting Jones v. Fowler, 969 S.W.2d 429, 432 (Tex. 1998)).  With respect to a statutory waiver of immunity, as in the Act, we interpret the waiver narrowly, as the Legislature’s intent to waive immunity must be clear and unambiguous.  Mission Consol. Indep. Sch. Dist. v. Garcia, 253 S.W.3d 653, 655 (Tex. 2008) (citing Tex. Gov’t Code Ann. § 311.034 (West Supp. 2011)).

  

Analysis

   

Relying on Garcia, the City argues that the election-of-remedies provision requires Lackey to sue either the City or its employee, and a claimant who sues both loses the opportunity to sue the City under section 101.106(b), or, in the City’s words, because Lackey “chose to file suit against [the City’s] employee, Reynolds, regarding the same subject matter, all her tort claims against [the City] were dead on arrival the moment suit was filed.”  See Garcia, 253 S.W.3d at 655; see also Tex. Civ. Prac. & Rem. Code Ann. § 101.106.  Lackey responds arguing, inter alia, that section (b) is inapplicable to her suit.

   

During the pendency of this appeal, this Court has recently considered—and rejected—the same arguments urged by the City in City of Houston v. Esparza.  No. 01-11-00046-CV, 2011 WL 4925990, at *4 (Tex. App.—Houston [1st Dist.] Oct. 7, 2011, pet. filed) (rejecting City’s contention that 101.106(b) bars suit against governmental unit when suit originally filed against both governmental unit and employee); see also Tex. Dep’t of Aging and Disability Servs. v. Johnson, No. 01‑11‑00526‑CV, 2012 WL 27728, at *2–3 (Tex. App.—Houston [1 Dist.] Jan. 5, 2012, no pet.) (mem. op.) (following Esparza; holding trial court did not err in denying plea to jurisdiction).  Thus, we hold that the trial court properly denied the City’s plea to the jurisdiction and we overrule the City’s sole issue.   

  

Conclusion

   

We affirm the order of the trial court.

   

                                                                      Jim Sharp

                                                                      Justice

Panel consists of Justices Keyes, Bland, and Sharp.

--------------------------------------------------------------------------------

[1]         See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(8) (West Supp. 2011) (permitting interlocutory appeals from court order that grants or denies plea to jurisdiction by governmental unit).

[2]         See Tex. Civ. Prac. & Rem. Code Ann. § 101.106(b) (West 2011). 

[3]         See Tex. Civ. Prac. & Rem. Code Ann. § 101.106(e) (West 2011). 

[4]         Although characterized as a “non-suit,” this was technically a voluntary partial dismissal of claims.  See C/S Solutions, Inc. v. Energy Maint. Servs. Grp. LLC, 274 S.W.3d 299, 306–07 (Tex. App.—Houston [1st Dist.] 2008, no pet.).  Presumably because it granted Lackey’s “non-suit,” the trial court never ruled on the City’s section 101.106(e) motion.

[5]         See Tex. Civ. Prac. & Rem. Code Ann. § 101.106(b).

The City of Houston v. Guzman

More of the same: City of Houston insists on going forward with appeals on immunity issue it has already lost on in several prior cases. Here is the first of two more such tort claims cases decided by the First Court of Appeals on the last day of May:

   

The City of Houston v. Guzman 

NO. 01-11-00234-CV (Tex.App.- Houston May 31, 2012)

(denial of city's plea to the jurisdiction affirmed)

   

MEMORANDUM OPINION

 

The City of Houston brings this interlocutory appeal from the trial court’s order denying its plea to the jurisdiction on the negligence claims of appellee, Enrique Guzman.[1]  In its sole issue, the City contends that because Guzman chose to file suit against both the City and its employee, Brent Foltz, regarding the same subject matter, Guzman’s claims against the City were barred by section 101.106(b) of the Texas Tort Claims Act.[2]  We affirm.

Background

Guzman filed suit against both the City and Foltz, alleging personal injuries when the Houston Police Department patrol car driven by Sgt. Foltz ran into his vehicle.  According to Guzman, Foltz, who was driving the wrong way down a one‑way street at 1:30 a.m., ran a red light and struck a citizen’s vehicle.  His patrol car then rebounded from that collision and smashed into Harris County Deputy Sheriff Guzman’s vehicle as it was stopped at a red light.  Guzman asserts that Foltz was in the course and scope of his City employment and, as such, the City is liable under the doctrines of negligent entrustment, negligent hiring, failure to properly train, failure to properly supervise, and respondeat superior.  Foltz, who was never served and never appeared in this case, was later removed as a defendant by Guzman. 

Guzman’s employer, Harris County, filed an original petition in intervention for subrogated interests, seeking to collect for the benefits it had provided Guzman and expenses it had incurred as a self-insured worker’s compensation provider and any related damages to which Guzman was entitled to under the law, plus any property damage losses or loss of revenue sustained by the County.  Guzman subsequently filed his second amended petition, naming only the City as a defendant.

The City’s subsequent plea to the jurisdiction contended that, because Guzman initially filed suit against Foltz for damages arising from the same subject matter as his claims against the City, all his tort claims against the City were barred by section 101.106(b) of the Tort Claims Act.

The trial court denied the City’s plea to the jurisdiction, and this interlocutory appeal followed.

Discussion
   

Standard of Review

A plea to the jurisdiction challenges the trial court’s subject-matter jurisdiction to hear a case.  Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000); Kamel v. Univ. of Tex. Health Sci. Ctr., 333 S.W.3d 676, 681 (Tex. App.—Houston [1st Dist.] 2010, pet. denied).  The existence of subject-matter jurisdiction is a question of law that we review de novo.  State Dep’t of Hwys. & Pub. Transp. v. Gonzalez, 82 S.W.3d 322, 327 (Tex. 2002); Kamel, 333 S.W.3d at 681.  We may not presume the existence of subject-matter jurisdiction; the burden is on the plaintiff to allege facts affirmatively demonstrating it.  Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443–44, 446 (Tex. 1993); Kamel, 333 S.W.3d at 681.

Whether a governmental entity is immune from suit is a question of subject‑matter jurisdiction.  Tex. Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638–39 (Tex. 1999).  Determination of that issue here turns on construction of the Tort Claims Act’s election-of-remedies provision.  See Tex. Civ. Prac. & Rem. Code Ann. § 101.106.  In construing a statute, our primary objective is to determine and give effect to the Legislature’s intent.  Gonzalez, 82 S.W.3d at 327.  “[W]e ‘read the statute as a whole and interpret it to give effect to every part.’”  Id. (quoting Jones v. Fowler, 969 S.W.2d 429, 432 (Tex. 1998)).  With respect to a statutory waiver of immunity, as in the Tort Claims Act, we interpret the waiver narrowly, as the Legislature’s intent to waive immunity must be clear and unambiguous.  Mission Consol. Indep. Sch. Dist. v. Garcia, 253 S.W.3d 653, 655 (Tex. 2008) (citing Tex. Gov’t Code Ann. § 311.034 (West Supp. 2011)).

Analysis

Relying on Garcia, the City argues that the election-of-remedies provision requires Guzman to sue either the City or its employee, and a claimant who sues both loses the opportunity to sue the City under section 101.106(b).  See Garcia, 253 S.W.3d at 655; see also Tex. Civ. Prac. & Rem. Code Ann. § 101.106.  Guzman responds arguing, inter alia, that section (b) is inapplicable to his suit.

During the pendency of this appeal, this Court has recently considered—and rejected—the same arguments advanced by the City in City of Houston v. Esparza.  No. 01–11–00046–CV, 2011 WL 4925990, at *4 (Tex. App.—Houston [1st Dist.] Oct. 7, 2011, pet. filed) (rejecting City’s contention that § 101.106(b) bars suit against governmental unit when suit originally filed against both governmental unit and employee); see also Tex. Dep’t of Aging and Disability Servs. v. Johnson, No. 01-11-00526-CV, 2012 WL 27728, at *2–3 (Tex. App.—Houston [1st Dist.] Jan. 5, 2012, no pet.) (mem. op.) (following Esparza; holding trial court did not err in denying plea to jurisdiction).  As such, this Court’s jurisprudence dictates our holding that the trial court properly denied the City’s plea to the jurisdiction with respect to Guzman’s claims and, because the County’s claims are derivative of Guzman’s claims, properly denied the City’s plea to the jurisdiction with respect to those claims as well.  See generally City of Hous. v. Twin City Fire Ins. Co., 578 S.W.2d 806, 808 (Tex. Civ. App.—Houston [1st Dist.] 1979, writ ref’d n.r.e.) (holding employee’s failure to comply with notice requirement barred his claim against city, as well as insurer’s subrogation suit, which was derivative of employee’s and dependent upon employee’s recovery).

We overrule the City’s sole issue.

Conclusion

We affirm the order of the trial court.

                                                                      Jim Sharp

                                                                      Justice

Panel consists of Justices Keyes, Bland, and Sharp.

--------------------------------------------------------------------------------

[1]         See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(8) (West Supp. 2011) (permitting interlocutory appeals from court order that grants or denies plea to jurisdiction by governmental unit).

[2]         See Tex. Civ. Prac. & Rem. Code Ann. § 101.106(b) (West 2011).   
  

City of Houston v. Buttitta (Tex.App.- Houston 2008)

First Court of Appeals says NO to City's attempt to get Civil Service Commission ruling in dispute over disciplinary action overturned by the courts. Uniform Declaratory Judgments Act is not to be used to create basis for lawsuit where judicial review is not authorized by statute. Appeal is only available to an aggrieved firefighter or police officer, not to the City.

City of Houston v. Buttitta

(Tex.App.- Houston [1st Dist.] July 17, 2008)(Hanks) (City of Houston litigation, public employment, firefighters and policemen, disciplinary action, plea to the jurisdiction against city proper, DJA not available here)

OPINION BY JUSTICE GEORGE C. HANKS, JR

The City of Houston appeals the trial court's order granting the plea to its jurisdiction. The City contends that the trial court erred in granting the plea because the City's pleadings sufficiently set out facts establishing jurisdiction under the Declaratory Judgment Act. We affirm.

Background

In 2006, an investigation conducted by the Houston Police Department ("HPD") determined that officer Joseph A. Buttitta had engaged in conduct that violated various HPD policies. In lieu of other disciplinary action, the City accepted Buttitta's request to receive a voluntary two-level demotion. A letter from the chief of police explaining Buttitta's misconduct and demotion was prepared and placed in Buttitta's permanent personnel file, pursuant to Local Government Code section 143.089. (1) Buttitta filed a motion with the Police Officers' Civil Service Commission ("Commission"), requesting that the letter be removed from his personnel file. After hearing oral argument on the motion, the Commission granted Buttitta's request and ordered that the letter be removed from his personnel file. The letter was removed and returned to the chief of police, who, after consultation with the City's legal department, directed that the letter be placed back in Buttitta's file.

Due to the controversy as to whether the letter should be placed in Buttitta's file, the City filed a petition in district court requesting a declaration that (1) the Commission did not have jurisdiction to order that the letter be removed and (2) the letter be returned to Buttitta's file. Buttitta filed a plea to the court's jurisdiction. The court granted Buttitta's plea and the City's petition was dismissed. The City now appeals.
Plea to the Jurisdiction

In its sole issue, the City complains that the trial court improperly granted Buttitta's plea to the jurisdiction. Specifically, the City argues that its petition set out sufficient factual allegations to establish jurisdiction under the Declaratory Judgment Act. [...]
Analysis

The City contends that its petition sufficiently alleged facts establishing questions of statutory construction regarding the rights, status, and legal relations of the parties, specifically about whether the Commission's order is legal and enforceable and whether the letter must be removed from Buttitta's personnel file. According to the City, it showed that there is a substantial justiciable controversy between the parties that involves a genuine conflict of tangible interests. See Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995). Therefore, the City concludes that it has pled facts that fall within the scope of the Declaratory Judgment Act ("DJA") (2) and establish the trial court's jurisdiction to hear the case.

We disagree.

It is well settled that the DJA is not a grant of jurisdiction, but "merely a procedural device for deciding cases already within a court's jurisdiction." Chenault v. Phillips, 914 S.W.2d 140, 141 (Tex. 1996) (quoting State v. Morales, 869 S.W.2d 941, 947 (Tex. 1994)); see also Tex. Civ. Prac. & Rem. Code Ann. § 37.003 (Vernon 1997) ("A court of record within its jurisdiction has power to declare rights, status, and other legal relations whether or not further relief is or could be claimed.") (emphasis added). Regardless of whether the petitioner established a controversy resolvable under the DJA, a court must first have subject matter jurisdiction before it can render a declaratory judgment. See County of Galveston v. Tolle, 176 S.W.3d 859, 862 (Tex. App.--Houston [1st Dist.] 2005, pet. denied).
Section 143.015 of the Local Government Code provides that fire fighters and police officers dissatisfied with a Commission decision may file a petition in district court asking that the decision be set aside, but does not state that the municipality involved may do the same. Tex. Loc. Gov't Code Ann. § 143.015(a) (Vernon 2008).

Accordingly, only aggrieved fire fighters and police officers have a right to seek judicial review of a Commission decision--not municipalities. See City of Houston v. Clark, 197 S.W.3d 314, 318-20 (Tex. 2006) (recognizing that the Local Government Code affords appellate rights from a Commission decision only to aggrieved officers, because the Commission is closely aligned with the municipality); City Of Garland v. Byrd, 97 S.W.3d 601, 607-08 (Tex. App.--Dallas 2002, pet. denied).

Because the City had no right to ask the trial court to set aside the Commission's decision, the court had no subject matter jurisdiction over the underlying dispute, and, therefore, could not grant the City's requested declaratory relief. We hold that the trial court did not err in granting Buttitta's plea to the jurisdiction.
The City also asserts that it should have been given an opportunity to cure any defect in its pleadings. However, because the jurisdictional defect is incurable, the City has no right to seek judicial review of the Commission's decision, the City's cause was properly dismissed. Peek, 779 S.W.2d at 805.
We overrule the City's sole point of error.Conclusion
We affirm the judgment of the trial court.

George C. Hanks, Jr.
Justice

AFFIRM TC JUDGMENT: Opinion by Justice Hanks
Panel members: Before Justices Alcala, Hanks and Higley
Appellate cause number: 01-07-00323-CV
Full style of case: City of Houston v. Joseph A. Buttitta
Appeal from 113th District Court of Harris County
Trial Court Judge: Hon. Patricia Hancock

City's fight against firefighter ends, but unresolved legal issues smolder on

After multiple appeals, including one to the Texas Supreme Court, the disagreements over authority and jurisdiction in connection with judicial review of decision of independent hearing examiners in disciplinary disputes involving firefighters are still not fully extinguished. 

City of Houston Fire Station

In the latest court decision, on remand from the Supreme Court, a panel of the Fourteenth Court of Appeals holds that the the trial court did not have jurisdiction over the city's appeal from independent hearing examiner's decision, but one justice wrote separately, concurring in the result on different grounds. The firefighter prevails, but not on the merits. Unfortunately more litigation involving similar fact scenarios may be in the offing, as a key issue of first impression was not reached for a precedent-setting decision on the merits given the court's holding that the trial court lacked jurisdiction, and that the proper course of action for the reviewing court was to vacate the judgment below.

City of Houston v. Clark No. 14-03-00399-CV (Tex.App.- Houston [14th Dist.] Mar. 18, 2008)(Post-remand Majority Opinion by Frost) (firefighter litigation, disciplinary actions, no judicial review of merits of independent hearing examiner's decision, immunity plea, claim, lack of jurisdiction over dispute, case with multiple appeals)
The City of Houston v. Donald ClarkAppeal from 333rd District Court of Harris County
Trial Court Judge: Hon. Joseph J. Halbach
Disposition: Affirmed in part, dismissed in part
Concurring Opinion by Justice Edelman

City of Houston sought to enrich itself with illegal fee - Court of Appeals denies immunity defense and reverses trial court

Texas cities and other government entities like to wrap themselves with the legal trappings of "sovereign" immunity, and thus defeat law suits against them on jurisdictional grounds that they might otherwise lose on the merits. Here the City of Houston fails in this scheme as the Fourteenth Court of Appeals, in an opinion by Justice John Anderson, holds that it was collecting an illegal fee, which the plaintiff had paid under duress. New civil county court at law judge Jacqueline Lucci-Smith , formerly with the Harris County Attorney's Office, gets reversed for the first in her new career as a county court judge over the immunity issue.

Saturn Capital Corporation v. The City of Houston, No. (Tex.App. - Houston [14th Dist.] Dec. 11, 2007)(Opinion by Justice Anderson)(sovereign governmental immunity, government entity law, municipalities, illegal fee tax, economic duress)
Panel members: Chief Justice Adele O. Hedges, Justices John Anderson and Charles Seymore
Full style: Saturn Capital Corporation v. The City of Houston ---> See law suits involving City of Houston
Appeal from County Civil Court at Law No 2 [CCCL#2] of Harris County (Hon. Jacqueline Lucci-Smith)

O P I N I O N

Appellant, Saturn Capital Corporation ("Saturn"), appeals the trial court’s granting of the City of Houston’s (the "City") Plea to the Jurisdiction. Finding the trial court erred when it granted the City’s Plea, we reverse and remand to the trial court for further proceedings in accordance with this opinion.

Factual and Procedural Background

In 1992, the City demolished buildings on the property located at 8526 Pitner Road. The City assessed a fee for the cost of the demolition against the Pitner Road property which was owned by L.A. Investments, Inc. When L.A. Investments did not pay the demolition fee, the City filed a demolition lien on the Pitner Road property. On February 15, 2000, the City, Spring Branch Independent School District ("SBISD"), and other taxing authorities, obtained a judgment against L.A. Investments for delinquent taxes on the Pitner Road property. On May 15, 2000, an Order of Sale in Tax Suit was obtained and on June 22, 2000, the constable gave notice that the property would be sold at a public tax sale. With the approval of L.A. Investments, Saturn purchased the tax lien from SBISD and later foreclosed on the tax lien at a public tax foreclosure sale. Saturn purchased the Pitner Road property at the tax sale. The City did not bid at the tax sale. At the time Saturn purchased the Pitner Road property, Saturn, taking the position that the tax sale extinguished all inferior liens, did not pay off the City’s demolition lien.

In 2003, Saturn agreed to sell the Pitner Road property to Pitner Road Affordable Housing, Ltd. However, the title company would not issue title insurance and close the sale unless the City released its demolition lien on the property. In addition, the purchaser was unwilling to go forward with the deal as long as the City refused to release its lien. Saturn, arguing the demolition lien was invalid because it had been extinguished by the tax sale, made demand on the City that it release the lien. The City refused to release the demolition lien until the lien had been paid in full.

Faced with the loss of the sale of the Pitner Road property, Saturn paid the City the full amount of the demolition lien, $88,500.32, under protest and with full reservation of rights to litigate and recover the funds paid. Saturn then filed suit against the City seeking to recover its payment of the demolition lien. The City filed a plea to the jurisdiction arguing it was immune from Saturn’s suit, which the trial court granted. This appeal followed.

Discussion

In a single issue on appeal, Saturn contends the trial court erred when it granted the City’s Plea to the Jurisdiction on the basis of sovereign immunity.

A. The Standard of Review

Sovereign immunity from suit defeats a trial court’s subject matter jurisdiction and is properly asserted through a plea to the jurisdiction. Texas Dept. of Parks and Wildlife v. Miranda, 133 S.W.3d 217, 225-26 (Tex. 2004). Whether a trial court has subject matter jurisdiction is a question of law reviewed de novo. Id. at 228. In deciding a plea to the jurisdiction, a court may not consider the merits of the case, but only the pleadings and the evidence relevant to the jurisdictional inquiry. Moore v. University of Houston-Clear Lake, 165 S.W.3d 97, 101 (Tex. App.- Houston [14th Dist.] 2005, no pet.). When reviewing a trial court’s ruling on a plea to the jurisdiction, we construe the plaintiff’s pleadings liberally in the plaintiff’s favor and look to the pleader’s intent. Miranda, 133 S.W.3d at 226. We take as true all evidence favorable to the nonmovant and indulge every reasonable inference and resolve any doubts in the nonmovant’s favor. Id. at 228. In addition, the question of whether undisputed evidence, which is the situation we are presented with here, establishes a trial court’s jurisdiction, is a question of law. Id. at 226.

B. Is the City Immune From Saturn’s Suit?

Texas has long recognized, and the City conceded during oral argument, that sovereign immunity does not prevent a party who paid illegal government taxes and fees under duress from filing a lawsuit to seek their repayment. Dallas County Community College District v. Bolton, 185 S.W.3d 868, 877 (Tex. 2005). Thus, to resolve the issue of whether or not the City is immune from Saturn’s suit, two questions must be answered: (1) does Saturn’s payment of the demolition lien constitute the payment of an illegal tax or fee; and (2) if so, did Saturn pay off the demolition lien under duress?

1. The Pitner Road Property Tax Sale Extinguished the City’s Demolition Lien

In Texas, a demolition lien is subordinate to a tax lien. See Tex. Loc. Gov’t Code Ann. ' 214.001(o) (Vernon 1999). Therefore, a tax foreclosure sale extinguishes a demolition lien on the subject property. See Tex. Tax Code Ann. ' 33.95 (Vernon 2001) ("A purchaser for value at or subsequent to the tax sale may conclusively presume the validity of the sale and takes free of any claim of a party with a prior interest in the property. . ."); see also Conseco Finance Servicing Corp. v. J & J Mobile Homes, Inc., 120 S.W.3d 878, 881B82 (Tex. App.- Fort Worth 2003, pet. denied) (stating that a junior lien does not survive the foreclosure of a superior tax lien). Here, because Saturn purchased the Pitner Road property at a properly conducted tax sale, the City’s inferior demolition lien was extinguished and Saturn took the Pitner Road property free from that lien.

2. Because the Demolition Lien Had Been Extinguished, the City’s Refusal to Release the Demolition Lien and Subsequent Acceptance of Saturn’s Payment of the Lien Amount Constitutes the Collection of an Illegal Fee

A fee is defined as a fixed charge or a charge for a service. The Merriam-webster Dictionary (New Edition, 2004). The City’s demolition lien imposed on the Pitner Road property was to cover the cost incurred by the City when it performed a service: demolishing dangerous buildings on the property. Therefore, the costs of the demolition constitute a fee. As discussed above, the demolition lien was extinguished as a result of the tax sale. Therefore, when the City sent, after the tax sale, a letter to the title company handling Saturn’s sale of the Pitner Road property stating "[The City] will issue releases for the Notice and the Order of Building Official (Clerk’s File Nos. T118848 and N576628, respectively), once the lien(s) have been paid in full," we hold this constitutes an effort to collect an illegal fee.

3. Saturn Paid Off the City’s Demolition Lien Under Duress

Saturn argues that it paid the City’s demolition lien under duress because it faced (1) the loss of the pending sale of the Pitner Road property if the City’s demolition lien was not paid off; and (2) the ultimate loss of the property because if the sale did not go through, it would be unable to continue paying the taxes on the property. In response, the City contends Saturn voluntarily paid the lien as the loss of a pending sale of the property is insufficient to constitute duress. We agree with Saturn.

The Texas Supreme Court has consistently recognized that business compulsion[1] arising from the payment of illegal or improper government fees and taxes coerced by financial penalties, loss of livelihood, or substantial damage to a business can constitute duress and allow for the recovery of an illegal tax or fee. Bolton, 185 S.W.3d at 878. The duress necessary to authorize the recovery of an illegal tax or fee is established when the unauthorized tax or fee is required, necessary, or shall be paid to avoid the government’s ability to charge penalties or halt a person from earning a living or operating a business. Id. at 879. Because the record demonstrates that (1) Saturn faced substantial damage to its business if the Pitner Road property sale did not go through; (2) the sale could not be completed unless the City released its extinguished demolition lien; and (3) Saturn paid off the extinguished demolition lien only after the City demanded payment in full before it would release the lien, the payment was not voluntary but made under duress. Accordingly, sovereign immunity is not at issue and does not preclude Saturn from pursuing its suit against the City.[2] We sustain Saturn’s only issue on appeal.

Conclusion

Having sustained Saturn’s only issue on appeal, we reverse the judgment of the trial court and remand this case to the trial court for further proceedings consistent with this opinion.

/s/ John S. Anderson
Justice

Judgment rendered and Opinion filed December 11, 2007.]

Panel consists of Chief Justice Hedges and Justices Anderson and Seymore.
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[1] "Business compulsion" has also been referred to as "economic duress" or "implied duress." Dallas County Community College District v. Bolton, 185 S.W.3d 868, 877-78 (Tex. 2005).

[2] In its brief, the City emphasizes the role of Alfred Antonini, the president of Saturn, and alleges that the transfer of the SBISD tax lien to Saturn violates the Fraudulent Transfer Act. These issues constitute affirmative defenses to Saturn’s suit and are not relevant to this appeal, which addresses only the trial court’s subject matter jurisdiction and does not reach the merits of the case. Moore v. University of Houston-Clear Lake, 165 S.W.3d 97, 101 (Tex. App. - Houston [14th Dist.] no pet.).