Bay Ridge Utility Dist. v. 4M Laundry, 01-85-0735-CV

• Citation: 717 S.W.2d 92
• Decision Date: 19 June 1986
• Docket Number: No. 01-85-0735-CV,01-85-0735-CV
• Parties: BAY RIDGE UTILITY DISTRICT, et al., Appellants, v. 4M LAUNDRY, et al., Appellees. (1st Dist.)
• Court: Texas Court of Appeals

Page 92

717 S.W.2d 92

BAY RIDGE UTILITY DISTRICT, et al., Appellants, v. 4M LAUNDRY, et al., Appellees.

No. 01-85-0735-CV.

Court of Appeals of Texas,

Houston (1st Dist.).

June 19, 1986.

Rehearing Denied July 17, 1986.

C. Charles Dippel, Charles R. Huber, Jr., Ronald E. Hood, Sears & Burns, Houston, for appellants.

Thomas W. McQuage, Barlow, Todd, Crews & Jordan, Galveston, for appellees.

Before HOYT, SAM BASS and DUNN, JJ.

OPINION

HOYT, Justice.

This is an appeal from a judgment awarding damages of $593,164, attorney's fees, and permanent injunctive relief against appellant, Bay Ridge Utility District ("District").

Suit was initially brought by 4M Laundry and Robert Moody against the District complaining of a denial of constitutional guarantees under 42 U.S.C. sec. 1983, tortious interference with business and contractual relations, conspiracy to restrain trade, diminution in land value, and breach of contractual obligations. A settlement of all aspects of the case as pled, except damages, was effected by an agreed order entered July 13, 1984, dismissing with prejudice all claims for injunctive relief against the District and its board members individually. After a severance of the damage claims, a final judgment was entered dismissing the injunctive relief claims.

In November 1984, a second suit was instituted by 4M Laundry and Uniform Company ("4M") seeking to invalidate a rate order entered by the District on June 27, 1984, and seeking injunctive relief to enforce the settlement agreement entered in the first suit. This cause of action was consolidated for trial purposes with the damage claims in the first cause of action and with Robert L. Moody's claim for damages from diminution in the value of his land. At trial, pursuant to an assignment of all causes of actions to Transitional Learning Community ("TLC"), TLC was substituted as the beneficial plaintiff because all interest in the laundry and all of Moody's interest in his land within the District had been transferred to TLC. Judgment was entered on behalf of TLC, and the District now appeals.

BACKGROUND

In 1981, 3R Trust (a trust set up by Robert L. Moody for his children) opened 4M for business in League City, Texas, as a washateria to service the residents of the Bay Ridge Subdivision. Moody's testimony indicated that the residents never really supported the washateria as he had hoped, and 4M turned to commercial accounts to generate business. Moody testified that when the washateria was established, the District assured him that it would provide 4M with all the water and sewer service necessary. Conversion from a washateria to a commercial laundry began in March of 1982, and by Spring of 1983, 4M was substantially a commercial linen business serving Galveston and Harris Counties.

During the first quarter of 1983, 4M's water consumption rose from 69,000 to 87,000 gallons of water per month, and for the remainder of 1983 its usage increased to approximately 180,000 gallons per month. At the time of trial 4M's consumption was approximately 35,000 gallons per day.

In April 1983, the District's plant operator noted the smell of a solvent or kerosene and a high pH in the plant. He observed that this high pH was destroying the bacteria necessary in the treatment process, thus, preventing the plant from properly treating the domestic sewage. The District notified 4M of this problem and directed it to install a pretreatment system to reduce the pH. After the installation of the pretreatment facility the problem did not cease, and the District by letter dated May 4, 1984, informed 4M that it would limit 4M's water supply to 127,000 gallons of water per month (its 1983 average supply) because the plant had been designed for domestic discharge only, and could not properly treat industrial discharge. After this notice of water limitations, suit for injunctive relief was brought by 4M to prevent the District from limiting 4M's water and sewer treatment supply.

The District has assigned 107 points of error. Sixty-three of the 107 points of error assert that there was either no evidence or factual insufficiency of the evidence to sustain the trial court's findings; 33 points of error challenge the trial court's conclusions of law and 11 relate to other matters.

The trial court found that Robert L. Moody's land was affected by the failure of the District to expand the treatment plant The remaining causes of action for the trial court's consideration and for our review are 4M's claim that the District violated its civil rights, violated article 26.176 of the Texas Water Code, and that 4M is entitled to damages and attorney's fees.

but concluded as a matter of law that no damages were proved. We note, however, that even if damages had been proved, no causal connection was ever established between the diminution in land value, if any, and the actions or inactions taken by the District. Because of this conclusion, we hold that Moody's cause of action was meritless.

In order to properly address each of appellants' points of error, we have grouped them according to subject matter. Six general topics will be discussed as follows: (a) Assignment of the Causes of Actions; (b) Civil Rights Violation Claim; (c) The Agreed Order; (d) Notice Under the Texas Open Meeting Act; (e) The Rate Orders; and, (f) The Damage Award.

ASSIGNMENT OF THE CAUSES OF ACTION

In points of error 1-4, the District contends that it was reversible error for the trial court to permit TLC to proceed as plaintiff because the causes of action were not assignable as a matter of law. Appellant contends that a civil rights cause of action is personal to the party injured, and others may not sue to recover under it. Jenkins v. Carruth, 583 F.Supp. 613 (E.D.Tenn.1982).

The District concludes that the civil rights cause of action was personal to 4M, and because 42 U.S.C. sec. 1983 does not contain a provision stating that a cause of action under sec. 1983 survives the death of the injured party, the cause was not assignable, and TLC could not recover as a matter of law.

4M asserts that any cause of action may be assigned, and the suit may be brought by the equitable holder. Citizens State Bank v. O'Leary, 140 Tex. 345, 350; 167 S.W.2d 719, 721 (1942). Quoting from Wolff v. Commercial Standard Insurance Co., 345 S.W.2d 565, 568 (Tex.Civ.App.--Houston 1961, writ ref'd n.r.e.), 4M asserts that "[t]he assignment of things in action is now the rule and nonassignability the exception. Practically the only classes of choses in action which are not assignable are those for torts for personal injuries, wrongs done to the person, ... and contracts of a purely personal nature, such as promises of marriage."

Whether a civil rights action under 42 U.S.C. sec. 1983 is assignable is determined by the law of the forum state. Robertson v. Wegmann, 436 U.S. 584, 98 S.Ct. 1991, 56 L.Ed.2d 554 (1978); Carter v. Romines, 593 F.2d 823 (8th Cir.1979). Under Texas law, in the absence of an express statutory provision to the contrary, a statutory cause of action is not assignable if it is personal to the one who holds it and would not survive his death. Dearborn Stove Co. v. Caples, 149 Tex. 563, 236 S.W.2d 486 (1951).

The District's assertion that 4M's cause of action under 42 U.S.C. sec. 1983 is nonassignable is based on misplaced reliance on decisions relating to civil rights violations causing injury to the person, rather than the business or property of the person. A cause of action subject to a private right of action under 42 U.S.C. sec. 1983 is fully assignable if it arises in connection with an injury to the plaintiff's business or property. Nelson v. Knox, 230 F.2d 483, 484 (6th Cir.1956).

In Knox, the plaintiff sued various city officials alleging that various actions of the city officials destroyed his business. Upon plaintiff's death, his executrix was substituted as plaintiff, and the district court dismissed the cause of action. The circuit court reversed the trial court and outlined the distinction between a civil rights cause of action that seeks damages for personal and individual harm as opposed to one that seeks damages for property rights. This reasoning has been followed by this Court in Peniche v. Aeromexico, 580 S.W.2d 152, 156-57 (Tex.Civ.App.--Houston [1st Dist.] 1979, no writ); Wolff v. Commercial Standard The District cites First National Bank v. Hackworth, 673 S.W.2d 218 (Tex.App.--San Antonio 1984, no writ), for the principle that a statutory cause of action that is personal is not assignable. We agree, when, as in Hackworth the question related to recovery of punitive damages for a personal claim, not a tort against property rights.

Insurance Co., 345 S.W.2d 565, 568 (Tex.Civ.App.--Houston 1961, writ ref'd n.r.e.).

Finally, the District asserts that the nature of the cause of action challenging the rate orders of the District was essentially a declaratory judgment action and that such action required a justiciable controversy, i.e., the relationship of District and customer during the period of time service was rendered. Because TLC did not become a user of the District's services until it obtained ownership of the laundry on March 22, 1985, it could not complain of rates charged by the District against 4M prior to TLC's acquisition because TLC had no justiciable interest in 4M's rates at the time the rates were set.

4M responded by citing Tex.Prop. Code Ann. sec. 12.014 (Vernon 1984), which provides that an interest in a cause of action on which suit has been filed may be sold, "regardless of whether the judgment or cause of action is assignable in law or equity, if the transfer is in writing." So long as the original parties remain in the suit and the rights of the person who was plaintiff at the time of the commencement of the suit remain in issue, the assignment does not affect the justiciability of the cause of action. See Fort Worth & Denver Railway Co. v. Ferguson,...