City of Friendswood v. Horn

• Decision Date: 11 February 2016
• Docket Number: NO. 01–15–00436–CV,01–15–00436–CV
• Parties: The City of Friendswood and Kevin Holland, Appellants v. Paul and Carolyn Horn, Mike and Lucy Stacy, Pete and Judy Garcia, and Janice Frankie, Appellees
• Court: Texas Court of Appeals

489 S.W.3d 515

The City of Friendswood and Kevin Holland, Appellants

v.Paul and Carolyn Horn, Mike and Lucy Stacy, Pete and Judy Garcia, and Janice Frankie, Appellees

NO. 01–15–00436–CV

Court of Appeals of Texas, Houston (1st Dist.).

Opinion issued February 11, 2016

Rehearing Overruled April 21, 2016

William S. Helfand, Charles T. Jeremiah, for Appellants.

Aaron Pool, James T. Sunosky, Houston, Texas, for Appellees.

Panel consists of Chief Justice Radack and Justices Bland and Huddle.

OPINION

Jane Bland

, Justice

After Tropical Storm Allison destroyed the Imperial Estates Section One subdivision, the City of Friendswood acquired most of the subdivision's 42 lots through a federally-subsidized flooding mitigation program. The program required the local government to use the subsidy to buy out homeowners and then leave the lots—purchased with the subsidy funds and within the federally and state declared disaster areas—as open space for the public benefit. The owners of four of the 42 lots declined to participate in the program. These homeowners, Paul and Carolyn Horn, Mike and Lucy Stacy, Pete and Judy Garcia, and Janice Frankie, rebuilt their homes. The surrounding lots remained undeveloped.

About 10 years later, the City decided to develop the property it had acquired into a public park, within the parameters of the uses permitted by federal regulation. The plans for a park did not comport with the subdivision's original deed restrictions, which contemplate residential development only. The City then amended the restrictions as to its 38 lots.

The homeowners sued the City and its mayor, Kevin Holland, challenging their actions to develop the City's property. The homeowners sought declaratory relief based on a breach of the subdivision's original deed restrictions and damages for claims of misrepresentation, inverse condemnation, and nuisance. The City and Mayor Holland filed a plea to the jurisdiction in the trial court, contending that governmental and official immunity bar the homeowners' suit. The trial court denied the plea, and the City and Mayor Holland appeal. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(5)

. Because the City is immune from the homeowners' suit, we vacate the trial court's order and dismiss the suit for lack of subject-matter jurisdiction.

BACKGROUND

I. Friendswood's acquisition of property in Imperial Estates

Imperial Estates Section One was platted in 1958, bordering on Clear Creek. In June 2001, Tropical Storm Allison caused catastrophic flooding in the area, which severely damaged or destroyed the then-existing homes in the subdivision. The federal and state governments declared the subdivision a natural disaster area. As a result, federal funds became available through the Federal Emergency Management Agency (FEMA). FEMA in turn subsidized a buyout of private property through a hazard mitigation program. The State of Texas and the local governments in areas subject to severe or repetitive flooding administered the program. Using these funds, the City of Friendswood acquired the flood-devastated properties in Imperial Estates from all but the homeowners who bring this suit.

Through its Federal Insurance and Mitigation Administration, FEMA manages both the federal flood insurance and hazard mitigation programs, which are programs designed to reduce or eliminate the long-term risk to people and property from natural hazards. The goal of these programs is to reduce the impact of flooding on private and public structures through (1) providing affordable insurance for property owners; (2) encouraging communities to adopt and enforce floodplain management regulations, and (3) promoting and subsidizing state and local hazard mitigation.¹ States may apply for federal hazard mitigation funds and qualify for those funds based on an approved state mitigation plan. 44 C.F.R. 206.435(a)

. The State “establishes procedures and priorities for the selection of mitigation measures” for distribution of those funds to local governments. 44 C.F.R. § 206(b).

Commensurate with the hazard mitigation program's goals, federal law conditions receipt of funding on limiting the property's use to open space for the public benefit. See 42 U.S.C. § 5170c(b)(2)(B)(i)

. The governmental entity using the FEMA subsidy to buy property under the program must agree that:

(ii) no new structure will be erected on property acquired, accepted or from which a structure was removed under the acquisition or relocation program other than—

(I) a public facility that is open on all sides and functionally related to a designated open space;

(II) a rest room; or

(III) a structure that the [FEMA] Director approves in writing before the commencement of the construction of the structure.

42 U.S.C. § 5170c(b)(2)(B)(ii)

.

The restrictions imposed permit the property to be used for

[p]arks for outdoor recreational activities; wetlands management; nature reserves; cultivation; grazing; camping (except where adequate warning time is not available to allow evacuation); unimproved, unpaved parking lots; [and] buffer zones....

44 C.F.R. § 80.19(a)(1)

. But they prohibit the property's use for

[w]alled buildings, levees, dikes, or floodwalls, paved roads, highways, bridges, cemeteries, landfills, storage of any hazardous or toxic materials, above or below ground pumping and switching stations, above or below ground storage tanks, paved parking, off-site fill or other uses that obstruct the natural and beneficial functions of the floodplain.

Id. § 80.19(a)(1)(i)

. By accepting the subsidy, the State of Texas authorized FEMA to periodically inspect the subsidized property. See

id. § 80.19(c) -(e). If FEMA finds a violation of the use restrictions, it may enforce the terms of the grant by withholding future FEMA assistance from the state and the local governments; by requiring transfer of title and a return to compliance; or by bringing suit against the grantee. Id.

II. The Deed Restrictions

The 1958 deed restrictions for Imperial Estates dictated that lots were dedicated “for residential purposes only.” The restrictions expressly prohibit the development of any lots for “hospital, clinics, duplex houses, apartment houses, [or] hotel[s] ... [or other] commercial [or] professional uses....”

The deed restrictions contain a procedure for their amendment. After July 1, 1983, they may be

altered, amended and changed at any time by a written instrument duly executed and acknowledged by a majority of the record lot owners in this subdivision (provided, however, each lot shall have one vote irrespective of the number of record owners) and recorded in the deed records of Galveston County, Texas. The said covenants, restrictions and conditions shall continue in full force and effect subject to the aforesaid right of amendment, alteration, or change for successive ten year periods unless the majority of record lot owners in said entire Imperial Estates Section One Subdivision shall, by the procedure outlined above, elect to terminate the same.

Approximately 12 years after the City acquired the 38 lots in Imperial Estates through the FEMA-subsidized program, the City Secretary gave public notice and posted the agenda of a regular meeting of the City Council to be held July 3, 2013. Item 14 of the posted agenda stated: “Discussion and possible action regarding approving an instrument to amend the deed restrictions for Imperial Estates Section One.” The July 3 meeting minutes reflect that the “proposed amendments are to ensure no confusion regarding the City's right to create parkland on the property.” After discussion, the City Council passed the following amendments:

2 RESTRICTIONS.

2 1 Allowable lot Use and Buildings. All lots and improvements shall be maintained in perpetuity for uses compatible with open space, recreational or wetlands management practices.

2 2 No new structures will be built on the property except as indicated below:

(a) a public facility that is open on all sides and functionally related to a designated open space or recreational use,

(b) a rest room, and

(c) a structure that is compatible with open space, recreational, or wetlands management usage and proper floodplain management policies and practices, which the Director of the Federal Emergency Management Agency (FEMA) or an official to whom the Director of FEMA has expressly delegated authority to issue rules, before the construction of the structure begins.

On the document, the City, through Mayor Holland, attested: “the undersigned, being the owner of the requisite number of lots in the subdivision, hereby amends the Deed Restrictions applicable to [Imperial Estates].” The City Secretary also signed the amendments, and they were filed with the Galveston County Clerk on July 8, 2013. None of the homeowners attended the meeting or participated in the vote to amend the deed restrictions.

DISCUSSION

The homeowners contend that the City and Mayor Holland are not immune from this lawsuit because (1) the City's actions with regard to the lots were proprietary in nature and not governmental; and (2) even if the City's actions were governmental in character, the homeowners' claims for inverse condemnation and nuisance are not barred by governmental immunity.

I. Standard of Review

If a governmental unit has immunity from a claim pending against it, then a trial court lacks subject-matter jurisdiction as to that claim. Rusk State Hosp. v. Black, 392 S.W.3d 88, 95 (Tex.2012)

. The governmental unit may challenge the trial court's subject-matter jurisdiction by asserting a plea to the jurisdiction. Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 225–26 (Tex.2004) ; see City of Waco v. Kirwan, 298 S.W.3d 618, 621 (Tex.2009)

. In a plea to the jurisdiction, a party may challenge the pleadings, the existence of jurisdictional facts, or both. Miranda, 133 S.W.3d at 226–27. A trial court's ruling on a plea to the jurisdiction is a question of law that we review de novo. State v. Holland, 221 S.W.3d 639, 642 (Tex.2007) ; see

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