Cernosek Enterprises, Inc. v. City of Mont Belvieu

338 S.W.3d 655, 172 Oil & Gas Rep. 711, 2011 Tex. App. LEXIS 1770, 2011 WL 839690
CourtCourt of Appeals of Texas
DecidedMarch 10, 2011
Docket01-09-00706-CV
StatusPublished
Cited by13 cases

This text of 338 S.W.3d 655 (Cernosek Enterprises, Inc. v. City of Mont Belvieu) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cernosek Enterprises, Inc. v. City of Mont Belvieu, 338 S.W.3d 655, 172 Oil & Gas Rep. 711, 2011 Tex. App. LEXIS 1770, 2011 WL 839690 (Tex. Ct. App. 2011).

Opinion

OPINION

EVELYN V. KEYES, Justice.

This appeal arises out of a prior settlement agreement between appellees, the City of Mont Belvieu and Enterprise Products Operating, LLC, Mont Belvieu Caverns, LLC, and Enterprise Texas Pipeline, Inc. See City of Mont Belvieu v. Enter. Prods. Operating, LP, 222 S.W.3d 515 (Tex.App.-Houston [14th Dist.] 2007, no pet.). Appellants Cernosek Enterprises, Inc., CJN Investments, Inc., and Anthony Cernosek, collectively, own Hill Lumber, which is located and does business in the City of Mont Belvieu. 1

In 2005, Enterprise began drilling within the City limits to create an underground hydrocarbon storage facility. Id. at 517. Enterprise had a drilling permit from the Texas Railroad Commission, but did not have City permits. Id. The City sued Enterprise, and Enterprise filed a plea to the jurisdiction alleging that the trial court *659 lacked subject-matter jurisdiction to overturn the Commission’s decision to issue a permit, which the trial court granted. Id. at 517-18.

After the Fourteenth Court of Appeals reversed the trial court, the City and Enterprise entered into a July 2007 settlement agreement. Among other things, the settlement agreement required that Enterprise purchase, at three times the tax value of the most recent tax appraisal, homes of people located on the salt dome who resided there before an explosion that occurred in the 1980s and who did not participate in the previous buyout offer. See Maranatha Temple, Inc. v. Enter. Prods. Co., 893 S.W.2d 92, 95-96 (Tex.App.-Houston [1st Dist.] 1994, writ denied) (discussing 1980s buyout). Enterprise also purchased City property such as the old city hall. Excluded from the settlement agreement were commercial entities and residents who moved to the area after the initial buyout. Finally, pursuant to the settlement agreement, the City issued drilling permits to Enterprise for wells that were previously permitted by the Railroad Commission.

In June 2008, Hill Lumber sued the City and Enterprise, alleging that they had knowingly violated Mont Belvieu’s municipal ordinances — specifically, chapter 10 of the City Code, regarding the issuance of permits, and chapter 25, the City’s zoning ordinance regulating the drilling and subsequent operation of hydrocarbon storage wells — and that the City had violated the Open Meetings Act 2 in entering into the settlement agreement. Hill Lumber claimed that these violations gave rise to liability on the part of the City for due-process violations and inverse condemnation and gave rise to liability in tort on the part of Enterprise for fraud, conspiracy, and breach of fiduciary duty.

Specifically, Hill Lumber contended that the City’s ordinances required the written consent of all property owners within 2,500 feet of a storage well site before drilling could be permitted and that two of the wells the City had permitted Enterprise to drill were drilled within 2,500 feet of Hill Lumber’s location without its written consent. Hill Lumber also contended that the City gave inadequate notice of the permits. It acknowledges that the City Council held a special meeting on July 16, 2007 to discuss in public the City’s settlement agreement with Enterprise and that it gave three-days prior notice of that meeting. It also acknowledges that the City Council subsequently held a public meeting on July 23, 2007 at which the drilling permits were approved. Hill Lumber does not deny that it had actual notice of these meetings, but it contends that the notice of the drilling permits was “not sufficient” because not all of the notice requirements in the ordinances were satisfied.

In its prayer, Hill Lumber sought revocation of the well permits for the two wells drilled within 2,500 feet of its property, an order requiring Enterprise to remove all structures it had built as a result of the permits and to shut down and plug the wells, a declaratory judgment that the City had violated its ordinances, preliminary and permanent injunctions against the drilling and operation of the wells, and actual and exemplary damages against Enterprise. However, although Enterprise drilled the two wells within 2,500 feet of Hill Lumber’s location, the record does not reflect that Hill Lumber actively pursued injunctive relief to stop the wells.

Both the City and Enterprise filed special exceptions, claiming Hill Lumber had not alleged facts sufficient to show that the *660 trial court had jurisdiction over its claims. The City and Enterprise alleged that Hill Lumber had not shown that the ordinances Hill Lumber claimed they had violated created a private cause of action. Nor had it stated facts showing that it had any particular individual interest in the issuance of the permits apart from a general community interest. The City and Enterprise also alleged that Hill Lumber had not pleaded facts that showed the City was not allowed to use the exceptions and waivers found in the ordinances, which permitted the City Council to grant exceptions to its permitting requirements at the request of an applicant “upon such conditions it determines necessary to protect public health and safety.” They also pointed out that the City’s ordinances required that the City consider the application at a city-council meeting at which “anyone may speak out for or against granting the application” for a permit and that Hill Lumber had not stated facts showing that the July 16 and July 28 meetings were not open meetings or that notice of the meetings was inadequate. The City and Enterprise further alleged that Hill Lumber had failed to show that it had standing to challenge the settlement agreement on contract or tort grounds. The City also specially excepted to Hill Lumber’s pleadings of violations of due process on the ground that Hill Lumber had not shown how it had been deprived of due process, and it specially excepted to Hill Lumber’s inverse-condemnation claim on the ground that it had failed to allege how the well permits interfered with its use and enjoyment of its property economically or how they affected the value of Hill Lumber or caused the severe economic impact Hill Lumber claimed.

Enterprise filed a plea to the jurisdiction, contending that Hill Lumber had no standing to use the lawsuit to enforce the municipal ordinances. The City filed a similar plea to the jurisdiction based on standing, and it also asserted its immunity from suit. In November 2008, the trial court granted the City’s plea to the jurisdiction and special exceptions, except on Hill Lumber’s claims for alleged violations of the Open Meetings Act. On December 18, 2008, the trial court granted Enterprise’s plea to the jurisdiction and special exceptions, holding that Hill Lumber could not amend its petition to assert any valid claims or causes of action. After Hill Lumber dismissed its remaining Open Meetings Act claim against the City, the trial court signed a final judgment in July 2009 dismissing with prejudice all of Hill Lumber’s claims.

The City’s Governmental Immunity

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Cite This Page — Counsel Stack

Bluebook (online)
338 S.W.3d 655, 172 Oil & Gas Rep. 711, 2011 Tex. App. LEXIS 1770, 2011 WL 839690, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cernosek-enterprises-inc-v-city-of-mont-belvieu-texapp-2011.