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.