In The Court of Appeals Seventh District of Texas at Amarillo
No. 07-23-00427-CV
CITY OF BUDA, APPELLANT
V.
N. M. EDIFICIOS, LLC, APPELLEE
On Appeal from the 453rd District Court Hays County, Texas Trial Court No. 19-2627, Honorable Sherri Tibbe, Presiding
July 2, 2024 MEMORANDUM OPINION 1 QUINN, C.J., and PARKER and DOSS, JJ.
Appellant, the City of Buda (Buda), appeals the trial court’s denial of its plea to the
jurisdiction seeking dismissal of the regulatory takings claim brought by appellee, N. M.
Edificios (Edificios). After considering the six issues Buda presented, we affirm the trial
court’s order.
1 This appeal was transferred to this court from the Third Court of Appeals. We apply the latter’s precedent where it conflicts with ours. See TEX. R. APP. P. 41.3. Background
Buda and Edificios’s predecessor-in-interest, Goforth, entered into the Buda
Business Park Agreement (BBP Agreement) and the Drainage Easement Agreement in
2007. Through those agreements, the developer was required to grant Buda a drainage
easement to help alleviate flooding throughout the city. The city was to “construct,
operate, maintain, replace, upgrade, and repair” drainage improvements that convey
surface water from the subject property and other nearby properties. Edificios purchased
the land in 2012 and submitted an updated plan in 2017, which the parties refer to as the
2017 Plans, to Buda’s planning department. Buda responded with instructions to Edificios
to provide for additional drainage improvements on the property. Edificios took the
position that it was Buda rather than Edificios who was obligated to provide these
additional drainage improvements under the BBP and easement agreements. And, in
arbitrarily conditioning acceptance and approval of Edificios’s development plan upon
assuming those duties, the City engaged in either an investment-backed or regulatory
taking. The ensuing dispute led to litigation initiated by Edificios in 2019.
We considered the city’s earlier filed plea to the jurisdiction in 2021. We affirmed
in part, reversed in part, and remanded the cause to the trial court to permit the parties to
develop the record on the jurisdictional inquiry related to Edificios’s takings claim. See
City of Buda v. N.M. Edificios, LLC (City of Buda I), No. 07-20-00284-CV, 2021 Tex. App.
LEXIS 2895 (Tex. App.—Amarillo Apr. 16, 2024, pet. denied) (mem. op.). That was done.
Edificios amended its petition, this time limiting its claims only to takings causes of action,
and Buda again responded with a plea to the jurisdiction.
2 Preliminary matter
Edificios contends that we should dismiss Buda’s appeal considering that the plea
to the jurisdiction and many of the same issues raised on appeal sound in terms similar
to those considered in association with City of Buda I. While we do note the similarity of
concerns, we observe that this court remanded the cause with instructions to further
develop the record and respective positions of the parties as it relates to the trial court’s
jurisdiction over Edificios’s claims of regulatory taking. That being so, this appeal was
contemplated by and consistent with our opinion in City of Buda I. We deny Edificios’s
request to dismiss the appeal.
Standard of Review
We review a trial court’s ruling on a plea to the jurisdiction de novo. City of Austin
v. Quinlan, 669 S.W.3d 813, 818 (Tex. 2023). For a plea that challenges the existence
of jurisdictional facts, our standard of review generally mirrors that of a traditional
summary judgment: a plaintiff must raise a genuine issue of material fact to overcome
the challenge to the trial court’s jurisdiction. Tex. Dep’t of Criminal Justice v. Rangel, 595
S.W.3d 198, 205 (Tex. 2020); Abbott v. Doe, No. 03-22-00126-CV, 2024 Tex. App. LEXIS
2258, at *20–21 (Tex. App.—Austin Mar. 29, 2024, no pet.). In undertaking such review,
courts take as true all evidence favorable to the nonmovant and indulge every reasonable
inference and resolve any doubts in the nonmovant’s favor. Abbott, 2024 Tex. App.
LEXIS 2258, at *21. Courts must also take care not to weigh the merits of the case. See
Cnty. of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002); City of Kyle v. Knight, No.
03-21-00378-CV, 2023 Tex. App. LEXIS 6752, at *10–11 (Tex. App.—Austin Aug. 30,
2023, no pet.) (mem. op.).
3 Issue 1—Ripeness
Edificios’s remaining claim against Buda alleges unconstitutional regulatory taking
based on two theories: 1) investment-backed expectations and 2) land-use exaction.
Buda maintains that, even after the record was further developed on the issue of
jurisdiction, Edificios has failed to allege facts that affirmatively demonstrate that its
takings claim is ripe such that the trial court would be vested with subject-matter
jurisdiction over the controversy. A case must be ripe in order for the trial court to have
subject-matter jurisdiction. See Sw. Elec. Power Co. v. Lynch, 595 S.W.3d 678, 683 (Tex.
2020).
More specifically, Buda maintains that, because there was never a final decision
on Edificios’s application, Edificios’s takings claim must fail. See Mayhew v. Town of
Sunnyvale, 964 S.W.2d 922, 929 (Tex. 1998) (“[I]n order for a regulatory takings claim to
be ripe, there must be a final decision regarding the application of the regulations to the
property at issue.”). Buda argues that a final decision typically requires both a rejected
development plan and the denial of a variance from the controlling regulations. See
Howard v. City of Kerrville, 75 S.W.3d 112, 118 (Tex. App.—San Antonio 2002, pet.
denied). The matter is not ripe unless the governmental entity charged with implementing
the regulation has reached a final decision, Buda emphasizes. See Maguire Oil Co. v.
City of Houston, 243 S.W.3d 714, 718 (Tex. App.—Houston [14th Dist.] 2007, pet.
denied). Buda also cites amendments to Edficios’s allegations in an attempt to
demonstrate that Edificios no longer alleges that there has been a rejection of its
application. Our reading of said amendments does not support Buda’s conclusion.
4 The Planning and Zoning Commission and the City Council were never asked to
consider Edificios’s 2017 Preliminary Plan, Buda asserts. Assuming that to be accurate,
a fact issue remains necessitating resolution by a factfinder. See Tex. Dep’t of Parks &
Wildlife v. Miranda, 133 S.W.3d 217, 227–28 (Tex. 2004) (stating that where the evidence
creates a fact question regarding the jurisdictional issue, then the trial court cannot grant
the plea to the jurisdiction, and the factfinder must resolve the factual dispute). Of record
is the affidavit of Edificios’s manager. He avers within it that the City “halted the
application process of NME’s Preliminary Plan entirely” at the “direction of” the City’s
“legal counsel.”
Mayhew does speak of a “final decision” “usually” requiring both a rejected
development plan and the denial of a variance. Mayhew, 964 S.W.2d at 929. Yet,
“usually” does not imply a hard and fast rule but, rather, a determination dependent on
relevant circumstances. Indeed, futility may be one of those circumstances, that is,
requiring a complaint to engage in futile ventures. See id. (stating that “futile variance
requests or re-applications are not required”); accord City of Crowley v. Ray, 558 S.W.3d
335, 344–45 (Tex. App.—Fort Worth 2018, pet. denied) (observing that the futility of
complying with administrative procedures has been recognized as an exception to the
ripeness doctrine in takings cases). Thus, a “final decision” may take different forms.
And, we cannot see why exclusion from the castle should be less definitive because it
came from the captain as opposed to the king. It is not farfetched to conclude that
directives from the City’s legal counsel to those at the gate could be found sufficient to
render futile additional attempts by Edificios to gain entry into the realm of the city council.
5 And, to the extent we have an affiant attesting that such directives were made, there
exists a question of fact pretermitting our adoption of the City’s position on ripeness.
Buda also contends that the alleged duties which form the basis of Edificios’s
takings claims “are merely illusory and fabricated through cleverly crafted pleading
allegations.” In other words, Buda maintains that the language of the agreements cannot
reasonably support the conclusion that the land developer was intended to be relieved
from the obligation to improve the drainage channel as needed for any non-governmental
use. Initially, we note that this court concluded to the contrary in City of Buda I. We
interpreted the agreements as, at a minimum, raising the issue as to the respective duties
and rights in the context of a regulatory taking:
Edificios’s purported reasonable investment-backed expectation consisted of Buda’s contractual duty to construct all drainage facilities. It acquired the project from Goforth with that expectation in mind. Buda’s effort to shirk that duty and demand that Edificios perform certain drainage improvements unreasonably interferes with the aforementioned expectation.
City of Buda I, 2021 Tex. App. LEXIS 2895, at *12–13. That being so, we are disinclined
to decide differently when presented with the exact agreements a second time. “Under
the law of the case doctrine, a court of appeals is ordinarily bound by its initial decision if
there is a subsequent appeal in the same case; but a determination to revisit an earlier
decision is within the discretion of the court under the particular circumstances of each
case.” Gotham Ins. Co. v. Warren E & P, Inc., 455 S.W.3d 558, 562 n.8 (Tex. 2014). We
see no circumstances warranting reconsideration of our decision in Buda I.
Further, the issue as presented by Buda sounds more like an attack on the merits
of Edificios’s cause of action rather than a jurisdictional inquiry. As said previously,
consideration of the underlying merits of the claim generally lies outside the scope of
6 review when addressing pleas to the trial court’s jurisdiction. Such review will happen, if
it happens at all, after the trial court has been presented with a fully developed record and
comes to a final substantive judgment on the matter.
We overrule Buda’s first issue.
Issue 2—Striking Declaration of City Clerk
Buda next contends the trial court abused its discretion when it struck the
declaration of the City of Buda Clerk Alicia Ramirez. 2 Allegedly, in doing so, the trial court
failed in its duty to move beyond the pleadings and consider evidence to resolve the
jurisdictional issues raised in the city’s plea to the jurisdiction. Edificios responds that the
trial court’s striking of the declaration was reasonable given the less than forty-eight hours
of notice it was afforded by Buda’s filing of the reply to which the Ramirez declaration was
attached. Edificios also notes that, despite its numerous attempts to seek deposition
testimony from such a witness on this very topic, Buda consistently refused to present
one. Both of those reasons were proffered in its motion to strike the affidavit.
Given that the trial court did not specify upon what ground it acted, the burden fell
to the City to address and negate the legitimacy of each. Yet, it said nothing of its alleged
refusal to permit discovery on the substance of the affiant’s statement and why the court
could not rely on that to support its discretionary ruling. See Ersek v. Davis & Davis, P.C.,
69 S.W.3d 268, 270 (Tex. App.—Austin 2002, pet. denied) (noting that a decision to strike
an affidavit is reviewed under the standard of abused discretion); see also In re T.M., 33
S.W.3d 341, 348 (Tex. App.—Amarillo 2000, no pet.) (stating that when determining if the
trial court abused its discretion, the reviewing court is required to affirm the decision on
2 The affiant purported to explain that the city council had yet to render a final decision on Edificios’s
development application. 7 any conceivable ground, even if it was not one mentioned below). So, Buda failed to
carry its appellate burden.
Furthermore, even if the trial court erred, the substance of the affidavit would not
negate the existence of a material question of fact on the matter of ripeness. So, the
purported error would be harmless.
We overrule Buda’s second issue.
Issue 3—Intent, Intentional Act
Next, Buda again attempts to characterize the underlying matter as a simple
contract dispute. Therefore, it maintains Buda cannot have “the requisite intent under
constitutional-takings jurisprudence” as the matter is simply one in which the city is
“withhold[ing] property or money from an entity in a contract dispute.” See MBP Corp. v.
Bd. of Trustees of Galveston Wharves, 297 S.W.3d 483, 489 (Tex. App.—Houston [14th
Dist.] 2009, no pet.). As we explained in City of Buda I, though the facts involve a contract,
the takings claim alleged is to be distinguished from a simple contract dispute. To
reiterate,
Edificios is not suing for breach of contract. Nor is it suing to compel Buda to construct the drainage facilities. Rather, the investor seeks to be relieved of having to perform obligations that Buda had contracted to do under the Agreement. That Buda had so contracted is the expectation allegedly taken from Edificios.
City of Buda I, 2021 Tex. App. LEXIS 2895 at *19 n.4. We see no reason that the position
Buda re-urges in this appeal should result in a different conclusion at this juncture. We
previously addressed this matter and need not reconsider it.
In a related sub-issue, Buda contends that Edificios failed to allege an affirmative
act on the part of Buda and such a failure is fatal to its takings claim. Allegedly, a “failure
8 to act is not enough to rise to the level of taking; it is merely an allegation of negligent
conduct.” Edificios responds by distinguishing the facts of the cases on which Buda relies
and noting that the case at bar involves a regulatory taking. That taking consists of
preventing Edificios from developing its property unless Edificios makes extensive
drainage improvements to benefit the surrounding area. As Edificios observes, this is not
necessarily a matter of Buda’s failing to do one thing or another; it is Buda’s active refusal
to allow development that is the basis for Edificios’s takings claim.
We agree with Edificios’s characterization. It is Buda’s alleged refusal to accept
Edificios’s 2017 Plans for filing without Edificios first acceding to impermissible conditions
that effectively prevented Edificios from developing the land. Those are affirmative acts.
Additionally, the Texas Supreme Court recognized that a claim for regulatory taking may
lie in a municipality’s declining permission to a developer to implement its development
proposal. See Mayhew, 964 S.W.2d at 935–38 (analyzing in terms of regulatory taking a
developer’s claim about the city’s denial of planned development proposal).
We overrule Buda’s third issue.
Issue Four—Challenges to Takings Theories
By its fourth issue, Buda lodges at least four challenges to Edificios’s takings claim
based on investment-backed expectations. These challenges also fall short.
First, Buda asserts that Edificios has not cited a specific regulation on which it can
base an investment-backed expectations takings claim. Without such a regulation, there
can be no regulatory taking, per Buda. The Texas Supreme Court has addressed the
distinction to be made between physical and regulatory takings:
Takings can be classified as either physical or regulatory takings. Physical takings occur when the government authorizes an unwarranted physical
9 occupation of an individual’s property. See Yee v. City of Escondido, 503 U.S. 519, 522, 118 L. Ed. 2d 153, 112 S. Ct. 1522 (1992). The Mayhews do not claim that the Town has physically taken their property. Rather, the Mayhews allege that the denial of their planned development constitutes a regulatory taking.
Mayhew, 964 S.W.2d at 933. Furthermore, “[a]n act short of actual physical invasion,
appropriation, or occupation can amount to a compensable taking when a governmental
agency has imposed restrictions that constitute an unreasonable interference with the
landowner’s right to use and enjoy the property.” Taub v. City of Deer Park, 882 S.W.2d
824, 826 (Tex. 1994) (emphasis added).
Buda also misstates the nature of a regulatory takings claim. Regulatory takings
claims may involve decisions by a governmental authority that do not directly implicate a
regulation, contrary to Buda’s position. Our Supreme Court implicitly recognized as much
when saying “a restriction in the permissible uses of property or a diminution in its value,
resulting from regulatory action within the government’s police power, may or may not
be a compensable taking.” Sheffield Dev. Co. v. City of Glenn Heights, 140 S.W.3d 660,
669-70 (Tex. 2004) (emphasis added). “Regulatory action” insinuates that the nature of
the body acting (i.e., a regulatory agency) not just the application of a particular regulation
may render the action a compensable taking. Indeed, it seems farcical to suggest that a
governmental entity escapes a takings claim when the decision of its regulatory
subdivision is utterly arbitrary due to the absence of a “regulation” permitting it to do what
it did. The City’s argument invites that prospect, and we rebuff the invitation.
And, at the very least, we have an arguable “restriction” in the sense mentioned in
Taub. It appears in the form of the City’s purportedly requiring Edificios to assume various
impermissible burdens before its development application can proceed.
10 Second, Buda contends that, because a stormwater permit and no-rise certification
were required by municipal code at the time of the agreements, Edificios’s expectations
that Buda would bear the burden of drainage improvements per the agreements was not
reasonable as a matter of law. As Edificios observes, this position appears to be a
continuation of the one asserted in City of Buda I. There, we observed that while existing
ordinances may diminish the reasonableness of an expectation, “the aspects . . . of the
Unified Development Code to which Buda alluded do not alone” do so here. City of Buda
I, 2021 Tex. App. LEXIS 2895, at *15–16. They do not alone “negate the reasonableness
of Edificios’s expectation” that the City would construct all drainage facilities under the
agreements. Id. Having already decided this issue, we need not revisit it. See Gotham
Ins. Co., 455 S.W.3d at 562 n.8.
As for Buda’s remaining sub-point, it seems to suggest that because the BBP
Agreement allegedly ended since the last appeal per its own terms or the application of
the law, the underlying controversy and claim evaporated. Yet, the taking of which
Edificios complained allegedly occurred much earlier, assuming of course a taking is
proven at trial. Moreover, Edificios sued to collect the resulting damages from the injury.
See Edwards Aquifer Auth. v. Bragg, 421 S.W.3d 118, 151–52 (Tex. App.—San Antonio
2013, pet. denied) (describing the measure of damages applicable to an investment-
backed takings claim). Buda does not explain how the previously accrued takings claims
with its accrued injury and concomitant damages, if any, vanish due to the supposed
expiration of the BBP Agreement. And, we have no obligation to sua sponte contrive
argument to fill that void.
We overrule Buda’s fourth issue.
11 Issue Five—Limitations
Buda next contends Edificios’s claims are barred by limitations. Buda’s position is
premised on the applicability of the two-year statute of limitations governing a claim that
a governmental entity damaged real property. See TEX. CIV. & PRAC. REM. CODE ANN.
§ 16.003. Because Edificios filed its petition two years and two months after the last
possible action that might be said to be a final decision, limitations purportedly lapsed.
Both Buda and Edificios acknowledge that some uncertainty lingers as to which
limitations period applies to a regulatory taking. The Texas Supreme Court has not clearly
spoken on the matter, and neither this court nor the sister court from which the cause was
transferred appears to have taken a definitive position on the matter. Another sister court
addressed the uncertainty on analogous facts and concluded that the ten-year limitations
period applied. See Edwards Aquifer Auth., 421 S.W.3d at 134 (and cases cited therein).
“[W]here, as here, a regulatory taking results from an unreasonable interference with the
landowner’s right to use and enjoy the property—such as by restricting access or denying
a permit for development—the ten-year statute of limitations applies.” Id.; see Tucker v.
City of Corpus Christi, 622 S.W.3d 404, 408 (Tex. App.—Corpus Christi 2020, pet.
denied) (discussing distinction between application of two-year and ten-year limitations
periods and observing that “[a] takings claim premised on a governmental entity’s taking
of real property is governed by the ten-year limitations period to acquire land by adverse
possession”). Relying on the authority and analysis provided by sister courts, the sounder
reasoning favors application of the ten-year statute of limitations to a regulatory takings
claim.
We overrule Buda’s fifth issue.
12 Issue Six—Opportunity to Amend
Buda’s sixth issue is one contingent on our having found a pleading or factual
deficiency or having concluded that jurisdiction was affirmatively negated. Not having so
found, we need not address issues about denying Edificios an opportunity to amend.
We overrule Buda’s sixth and final issue.
Having overruled each of Buda’s issues, we affirm the trial court’s order denying
Buda’s plea to the jurisdiction.
Brian Quinn Chief Justice