City of New Braunfels v. Carowest Land, Ltd.

Decision Date30 April 2014
Docket NumberNo. 03–11–00699–CV.,03–11–00699–CV.
Citation432 S.W.3d 501
PartiesCITY OF NEW BRAUNFELS, Texas, Appellant v. CAROWEST LAND, LTD., Appellee.
CourtTexas Court of Appeals

OPINION TEXT STARTS HERE

Adolfo Ruiz, McKamie Krueger, L.L.P., William M. McKamie, McKamie, Kruger & Knight, L.L.P., San Antonio, TX, Michael B. Smithers, Donald J. Jemela, Smithers & Jamela, New Braunfels, TX, J. Frank Onion, III, Assistant City Attorney, Valeria Acevedo, City Attorney's Office, Canyon Lake, TX, for Appellant.

Ryan G. Anderson, Mark R. Murphy, Jason M. Davis, The Davis Group Attorneys & Counselors, PC, San Antonio, TX, for Appellee.

Before Justices PURYEAR, PEMBERTON, and HENSON.

OPINION

BOB PEMBERTON, Justice.

The City of New Braunfels appeals a district court order denying a plea to the jurisdiction it has asserted in a suit brought against it by a local property owner, Carowest Land, Ltd. (Carowest).1 We will affirm the district court's order in part and reverse in part.

BACKGROUND

Although the rivers flowing through New Braunfels are renowned for their scenic beauty and sometimes-rowdy “tubers,” 2 they are also known to flood their surroundings periodically, and thus the City undertook the “South Tributary Regional Flood Control Project,” or “South Tributary Project,” a multi-million dollar public-works effort that entailed the construction of a large drainage channel to divert run-off waters into the Guadalupe River. To provide a portion of the drainage channel's route, appellee Carowest—a limited partnership associated with the Weston family—voluntarily conveyed to the City a strip of land (the Original Channel Tract) that traversed a tract of approximately 240 acres Carowest owned in the area. But there followed a succession of disputes between Carowest and the City, leading to the underlying litigation, which has been quite acrimonious at times. Although the parties advocate divergent views of these events, this appeal concerns only whether the district court possesses subject-matter jurisdiction to adjudicate the merits of the parties' claims, so we are to take as true the facts alleged by Carowest in its live pleadings or for which it has presented evidence except to the extent the City has presented evidence sufficient to negate those facts. 3 The following summary of relevant events accordingly reflects that analytical framework and the deference it requires to Carowest's side of the story.

According to Carowest, the origins of the parties' disputes lie in objections Carowest voiced to the City as early as 2008 regarding the configuration of the Original Channel Tract. The path of the Original Channel Tract bisected Carowest's 240–acre tract in a manner that severed approximately forty acres from the rest. Although there was evidence suggesting that its representatives had consented to this configuration or even specifically requested it, Carowest asked the City to agree to reroute the drainage channel to run instead along an outer boundary of the 240–acre tract, citing concerns with the larger tract's value and the well-being of Weston family members who resided there. A related concern, Carowest alleges, were indications from the City that it had designs on acquiring the severed forty-acre portion of Carowest's property. Despite repeated requests by Carowest, the City refused to agree to relocate the Original Channel Tract. Ultimately, in March 2009, Carowest asked the City to rescind Carowest's conveyance of the Original Channel Tract altogether in exchange for Carowest paying any expenses caused by removing it from the South Tributary Project. The City refused this request as well.

Thereafter, Carowest alleges, the City, principally through its then-City Manager, Mike Morrison, “undertook a malicious campaign to harm Carowest.” The campaign began, according to Carowest, with written notice in April 2009 that the City intended to condemn the severed forty-acre portion of Carowest's property for unspecified “public purposes,” although subsequent correspondence from the City Attorney's office purported to “clarify” that the City was interested only in obtaining a few acres of it for a long-anticipated expansion of the municipal sewer plant. Next, in early May 2009, “despite urgent pleas from Carowest not to proceed,” the City's contractor on the Project, YC Partners, Ltd. d/b/a Yantis Company (Yantis), allegedly at Morrison's direction, began excavating the drainage channel through the Original Channel Tract. Although Carowest acknowledges that it had previously conveyed the Original Channel Tract to the City, it alleges—and, indeed, there is undisputed evidence—that Carowest had a right to obtain, at its option, the dirt or fill that Yantis would dig up there and that Carowest had, in fact, indicated to the City that it wanted the fill.4 Nevertheless, Carowest complains, Morrison instructed Yantis to transport the excavated fill to an undisclosed off-site location and to “offer zero information” to Carowest.

Around the same time, according to Carowest, Morrison advised the New Braunfels City Council, through the written agenda for the Council's May 11, 2009 meeting, that Carowest had “notified the [C]ity that they no longer wish to have the fill placed on their property.” Carowest decries this representation as “false and made in bad faith,” and one or more Carowest representatives responded by going to the May 11 Council meeting and “attempt [ing], in the interest of transparency, to provide the City Council with relevant information in open session.” [P]rompted by Morrison,” Carowest alleges, “the Mayor literally ‘pulled the plug’ on the microphone of Carowest's representative when he attempted to publicly discuss these issues and to correct Morrison's false representations.” Then, Carowest adds, the Council “improperly convened in closed executive session to deliberate the Carowest fill issue.”

Following the Council meeting, Carowest claims, it “sent additional letters on May 12 and 14 requesting that digging cease and that fill no longer be removed from the Property,” but the City nevertheless “continued and even accelerated excavation from May 11 to May 14.” However, by May 15, the City relented, agreeing to temporarily stop excavation on the Original Channel Tract. By then, over 15,000 cubic yards of fill had been removed—according to Carowest, “enough to cover over 100 football fields with dirt an inch thick”—and valued by Carowest in excess of $100,000.

Thereafter, Carowest and the City negotiated and ultimately executed a June 27, 2009 letter agreement (Letter Agreement) “to resolve issues related to The South Tributary Project.” The material terms of the Letter Agreement included the following:

• Carowest would provide a “professionally engineered design modification” to re-route the portion of the Project that crossed Carowest's 240–acre tract. Likewise, Carowest would be responsible for maintaining the modified channel after construction.

• Upon City approval of the modified design, the parties would work in good faith to execute documents effecting “a return of ownership of the current channel tract in exchange for the granting of a permanent easement for the modified channel tract to the City and other conveyances as provided for below.”

• Carowest agreed to compensate the City for any difference in value between the Original Channel Tract and the modified one, and to pay for any engineering, permitting, review, and construction costs attributable to the modification exceeding those that the City would have incurred without the modification.

• Similarly, Carowest agreed to indemnify the City and hold it harmless for any claims brought by Yantis for any modification costs Yantis incurred, “such as delay costs claimed by Yantis and directly attributable to the Modification.”

• Any fill generated from the South Tributary Project thereafter would be placed on Carowest's property, at the City's expense, within one-half mile of the source. Further, Carowest was afforded the option to obtain fill that would be generated by another anticipated City flood-control project known as the “North Tributary Project,” including 13,944 cubic yards—“the amount represented by the City to be equal to the amount of fill removed from [the] Carowest Property”—that would be provided at no cost to Carowest.

“In a spirit of cooperation, and to address and resolve prior discussions concerning possible condemnation of Carowest Property for NBU [New Braunfels Utilities] purposes,” Carowest agreed to sell the City approximately six acres of Carowest property “primarily for use in a NBU future expansion,” at a price to be determined through an appraisal process.

• Carowest agreed to donate to the City an easement near the modified channel route for use as a hike-and-bike trail.

Subsequently, to effectuate these terms of the Letter Agreement, Carowest and the City executed: (1) a September 2009 “Drainage Channel Development Agreement” whereby Carowest assumed control over channel construction on its property and the City agreed to make certain payments toward the construction; (2) a November 2009 “Drainage Channel Easement” granting the City the easement along the modified route of the drainage channel; (3) a November 2009 “Deed Without Warranty” (Deed) whereby Carowest conveyed to the City approximately five acres for the sole “purpose of expanding the existing sewage treatment facilities operated by New Braunfels Utilities located adjacent ... or other uses directly related to that purpose” (the NBU expansion tract); and (4) a November 2009 “Recreational Easement” permitting use of certain Carowest property as a hike-and-bike trail. Each of these agreements was expressly made in consideration for the parties' respective obligations under the Letter Agreement and incorporated that earlier contract in full.

The disputes between Carowest and the City would resume, however, with both sides accusing the other of materially breaching the Letter...

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