City of Austin v. Liberty Mut. Ins.

• Decision Date: 16 May 2014
• Docket Number: No. 03–13–00551–CV.,03–13–00551–CV.
• Citation: 431 S.W.3d 817
• Parties: The CITY OF AUSTIN d/b/a Austin Energy, Appellant v. LIBERTY MUTUAL INSURANCE; Safeco Insurance Company of Indiana; Travelers Casualty Insurance Company of America; Travelers Lloyds of Texas Insurance Company; The Travelers Home and Marine Insurance Company; Travelers Commercial Insurance Company; Daniel and Katherine Sterns, Individually and as Next Friend of [redacted], a Minor; William McCurley; Elizabeth Harpine; and Anne Elise and Michael A. Stock, Appellees.
• Court: Texas Court of Appeals

431 S.W.3d 817

The CITY OF AUSTIN d/b/a Austin Energy, Appellant

v.LIBERTY MUTUAL INSURANCE; Safeco Insurance Company of Indiana; Travelers Casualty Insurance Company of America; Travelers Lloyds of Texas Insurance Company; The Travelers Home and Marine Insurance Company; Travelers Commercial Insurance Company; Daniel and Katherine Sterns, Individually and as Next Friend of [redacted], a Minor; William McCurley; Elizabeth Harpine; and Anne Elise and Michael A. Stock, Appellees.

No. 03–13–00551–CV.

Court of Appeals of Texas,

Austin.

May 16, 2014.

Ryan M. Pierce, Beverly G. Reeves, Paul Schlaud, Reeves & Brightwell, LLP, Luke McHenry, Austin, for Appellant.

Brett Burlison, Austin, Jeffrey E. Farrell, Martin, Disiere, Jefferson & Wisdom, L.L.P., Reagan W. Simpson, Marc S. Tabolsky, Yetter Coleman LLP, Houston, Gregory Vincent Gallagher, San Antonio, for Appellees.

Before Chief Justice JONES, Justices PEMBERTON and ROSE.

OPINION

J. WOODFIN JONES, Chief Justice.

The City of Austin d/b/a Austin Energy (“the City”) appeals the trial court's denial of its Rule 91a motion to dismiss inverse-condemnation claims and common-law tort claims asserted against it by appellees Liberty Mutual Insurance; Safeco Insurance Company of Indiana; Travelers Casualty Insurance Company of America; Travelers Lloyds of Texas Insurance Company; The Travelers Home and Marine Insurance Company; Travelers Commercial Insurance Company (collectively, “the Insurers”); and Daniel and Katherine Sterns, Individually and as Next Friend of [redacted], a Minor; William McCurley; Elizabeth Harpine; and Anne Elise and Michael A. Stock (collectively, “the Homeowners”). SeeTex.R. Civ. P. 91a (permitting party to move to dismiss cause of action on grounds that it has no basis in law or fact). The trial court found that the Insurers and the Homeowners had pleaded claims within the court's jurisdictionand denied the City's Rule 91a motion. The City perfected this appeal and in three issues contends the trial court erred in denying its Rule 91a motion because the appellees' pleadings were insufficient to allege a cognizable inverse-condemnation claim, the appellees' common-law tort claims were barred by governmental immunity, and each of the appellees failed to comply with a notice-of-injury requirement contained in the Austin City Charter. The City invoked this Court's jurisdiction over interlocutory appeals from the denial of a challenge to the trial court's subject-matter jurisdiction. SeeTex. Civ. Prac. & Rem.Code § 51.014(a)(8). We will affirm the judgment in part and reverse and dismiss in part.

FACTUAL AND PROCEDURAL BACKGROUND

Appellees' claims arise out of a wildfire that started on September 4, 2011, in a vacant lot in western Travis County and spread into the Steiner Ranch neighborhood, causing personal injury and extensive property damage. The Insurers brought their actions as subrogation claims on behalf of a number of their insured property owners. The Homeowners comprise three families bringing claims for uninsured fire losses, including property damage and personal injury. Appellees assert that the City is responsible for the fire, which they allege started when the electric utility's overhead distribution lines came in contact with each other during high winds, causing electrical arcing, which in turn caused “molten metal globules” to fall to the ground and ignite dry vegetation. The fire grew quickly, and wind-borne embers from the fire caused it to cross Highway 620 and spread into the Steiner Ranch neighborhood.

The first petition relating to the fire was filed in November 2012. Thereafter, a number of parties, including the Insurers and the Homeowners, intervened in the suit asserting the same three causes of action: (1) inverse condemnation; (2) negligence; and (3) trespass. Appellees alleged that the presence of excessive slack in the overhead distribution lines was the result of the City's earlier decision, made as a cost-saving measure, to forgo regular inspections of its overhead distribution lines, as well as the City's failure to implement a preventive-maintenance plan but instead adopting a repair-as-needed approach. Appellees alleged that, as a consequence, the extremely high wind conditions that occurred during a time when Central Texas was experiencing a severe drought caused the distribution lines to come into contact with each other, resulting in a wildfire that burned out of control and caused substantial property damage and personal injury.

The City filed a motion to dismiss pursuant to Rule 91a of the Texas Rules of Civil Procedure. Entitled “Dismissal of Baseless Causes of Action,” Rule 91a allows a party to move to dismiss a cause of action on the ground that it has no basis in law or in fact. SeeTex.R. Civ. P. 91a. The rule is in addition to, and does not supersede or affect, other procedures that authorize dismissal. Id. R. 91a.9. As specified in the rule:

A cause of action has no basis in law if the allegations, taken as true, together with inferences reasonably drawn from them, do not entitle the claimant to the relief sought. A cause of action has no basis in fact if no reasonable person could believe the facts pleaded.

Id. R. 91a.1. A motion to dismiss must identify each cause of action to which it is addressed and must state specifically the reasons the cause of action has no basis in law, no basis in fact, or both. Id. R. 91a.2. The trial court may not consider evidence in ruling on the motion. Id. R. 91a.6.

In its motion, the City asserted that appellees' petitions did not sufficiently allege the “intent” and “public use” elements required for governmental action to qualify as a taking. The City contended that because appellees failed to plead a valid takings claim, the City retained its governmental immunity. With respect to the tort claims, the City asserted that the activities alleged to have caused harm to appellees were not proprietary functions for which the City could be subject to suit, but instead constituted the governmental activities of “fire protection and control” and “engineering functions,” for which it is immune from suit absent a clear and unambiguous legislative waiver of that immunity. The City also argued that appellees' failure to comply with notice provisions contained in the Austin City Charter constituted incurable jurisdictional defects. In essence, the City asserted that appellees failed to allege viable causes of action not barred by governmental immunity and that its immunity deprived the trial court of subject-matter jurisdiction. The trial court denied the City's Rule 91a motion, reciting in its order that appellees had sufficiently stated claims within the court's jurisdiction. The City perfected this appeal.

In the present case, the Rule 91a motion challenged the trial court's subject-matter jurisdiction over the claims asserted; therefore, section 51.014(a)(8) affords the City a right to an interlocutory appeal of the trial court's denial of the motion.

STANDARD OF REVIEW

Whether a court has subject-matter jurisdiction over a case is a question of law, which we review de novo. Texas Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex.2004).¹ There are two general categories of pleas to the jurisdiction: (1) those that challenge only the pleadings, and (2) those that present evidence to challenge the existence of jurisdictional facts. Id. When, as here, a plea to the jurisdiction challenges only the pleadings, we determine whether the pleader has alleged facts that affirmatively demonstrate the court's jurisdiction to hear the case. Id. Our de novo review of such challenges looks to the pleader's intent and construes the pleadings in its favor. Id. If the pleadings lack 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 plaintiff should generally be given an opportunity to amend. Id. at 226–27.

DISCUSSION

“Sovereign immunity protects the State from lawsuits for money damages.” Texas Natural Res. Conservation Comm'n v. IT–Davy, 74 S.W.3d 849, 853 (Tex.2002). Political subdivisions of the state, including cities, are entitled to such immunity—referred to in this context as “governmental immunity”—unless it has been waived by statute or the constitution. Reata Constr. Corp. v. City of Dallas, 197 S.W.3d 371, 374 (Tex.2006); Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 694 n. 3, 695 (Tex.2003). Appellees assert that Article I, section 17 of the Texas Constitution, known as the “takings clause,” waives the City's immunity from their inverse-condemnation claim. SeeTex. Const. art. I, § 17; State v. Holland, 221 S.W.3d 639, 643 (Tex.2007) (“Article I, section 17 waives immunity for takings.”); City of New Braunfels v. Carowest Land, Ltd., No. 03–11–00699–CV, 432 S.W.3d 501, 513–14, 2014 WL 1774535, at *6 (Tex.App.-Austin Apr. 30, 2014, no pet. h.) (“Because this cause of action is created by the Texas Constitution, a valid takings claim is not barred by common-law doctrines of sovereign and governmental immunity.”) (citing Holland, 221 S.W.3d at 643 and General Servs. Comm'n v. Little–Tex Insulation Co., 39 S.W.3d 591, 598 (Tex.2001)). The City counters that appellees' pleadings failed to assert a valid takings claim, in the absence of which the City retained its immunity from their causes of action for inverse condemnation. See Little–Tex Insulation Co., 39 S.W.3d at 598–99 (immunity retained in absence of properly pleaded takings claim); Carowest Land, Ltd., 432 S.W.3d at 513–14, 2014 WL 1774535, at *6 (if plaintiff cannot establish viable takings claim against governmental entity, claim would implicate immunity and potentially be barred by it) (citing Texas Dep't of Transp. v. A.P.I. Pipe & Supply, LLC, 397 S.W.3d 162, 166 (Tex.2013)).

With respect to their tort claims, appellees assert that the City's...