FLCT, Ltd. v. City of Frisco

• Decision Date: 26 May 2016
• Docket Number: NO. 02–14–00335–CV,02–14–00335–CV
• Citation: 493 S.W.3d 238
• Parties: FLCT, Ltd. and Field Street Development I, Ltd., Appellants v. City of Frisco, Texas, Appellee
• Court: Texas Court of Appeals

493 S.W.3d 238

FLCT, Ltd. and Field Street Development I, Ltd., Appellants

v.City of Frisco, Texas, Appellee

NO. 02–14–00335–CV

Court of Appeals of Texas, Fort Worth.

DELIVERED: May 26, 2016

Arthur J. Anderson, Winstead PC, Dallas, TX, Attorney for Appellants.

Richard M. Abernathy & Ross Wells, Abernathy, Roeder, Boyd & Hullett, P.C., McKinney, TX, Terry D. Morgan, Terry Morgan & Associates, PC, Dallas, TX, for Attorneys for Appellee.

PANEL: LIVINGSTON, C.J.; WALKER and SUDDERTH, JJ.

OPINION

TERRIE LIVINGSTON, CHIEF JUSTICE

This is an appeal from a final judgment granting the City of Frisco, Texas's plea to the jurisdiction and dismissing with prejudice all of the claims of appellants FLCT, Ltd. and Field Street Development I, Ltd. (collectively, Owners) against the City. In four issues, Owners contend that the trial court erred by granting the plea to the jurisdiction because (1) their case is ripe for adjudication, (2) they properly alleged a regulatory takings claim for which the City is not immune, (3) they pled sufficient facts to show that a December 2012 zoning ordinance amendment enacted by the City is “ and void” because the City did not deliver them proper notice under local government code section 211.007(c), and (4) the City's immunity from suit is waived as to Owners' declaratory judgments act claims because they asserted valid claims under chapter 245 of the local government code. We affirm in part and reverse and remand in part.

I. Background

Owners are two partnerships that own adjacent property in Frisco, Denton County, at the southeast corner of Teel Parkway and Eldorado Parkway. FLCT's tract is located on the actual corner where the two streets meet (the hard corner); Field's tract is located directly east of FLCT's and abuts both Eldorado and Teel. FLCT bought its tract in 2006, and Field bought its tract in 2007. At the time, Stephen Williamson was the president of the general partners of FLCT and Field.

The two tracts are located in the City's Commercial–1 (C–1) district. In both 2006 and 2007, the City's zoning ordinance permitted property owners in the C–1 district to sell beer and wine “by right,”¹ subject to certain restrictions. Of concern in this case, beer and wine package sales were prohibited within three hundred feet of a public school. However, no public school was located within three hundred feet of FLCT's or Field's tracts in either 2006 or 2007.

In 2008, Owners submitted a preliminary site plan application for the two tracts to the City. The plan included a proposed convenience store with gas pumps on the hard corner and “[s]ix medical office buildings, a restaurant, a bank, a retail building, [and] a car was[h]” on the remainder. Nothing on the application indicated that beer and wine sales were contemplated on either of the two tracts.

After Owners submitted the preliminary site plan, also in 2008, Frisco ISD began negotiating with Owners to purchase the southernmost part of FLCT's and Field's tracts for an elementary school. Williamson was concerned about whether, after the sale, the sale of beer and wine at a convenience store located on the remaining part of the two tracts would be prohibited. Williamson and Frisco ISD's representative, Richard Wilkerson, agreed that Wilkerson would meet with a City representative to confirm whether the City would allow a convenience store to sell beer and wine on Owners' remaining property (hereinafter referred to as the Property) if a school was built on the property to be sold to Frisco ISD. On January 22, 2009, the City's then Development Coordinator, Scott Ingalls, sent Wilkerson a letter stating that he understood the convenience store “does plan on selling beer and wine in addition to fuel and other items” and recognizing that “there is a concern about whether or not the store would be able to sell beer and wine if a school were built on the adjacent property.” Ingalls stated that “[i]t becomes a matter of which use is in for approval first.” Thus, he continued, “[s]ince there is an application for a preliminary site plan for the [convenience] store they become the first use in for approval[;] [a]s long as they continue to move forward with site plan approval and construction they will retain the ability to sell beer and wine at the [convenience] store.”

Before Owners closed on the sale to Frisco ISD, they filed an amended preliminary site plan application with the City, which deleted the property to be sold to Frisco ISD and on which the medical office buildings were to have been built. The City approved the amended preliminary site plan application on February 24, 2009. The description of the plan stated, “A restaurant with a drive-thru, a bank, a car wash, and a convenience store with gas pumps on 4.2±> acres on the southeast corner of Eldorado Parkway and Teel Parkway. Zoned Commercial–1. Neighborhood # 45.” On March 24, 2009, the City's Planning and Zoning Commission approved a conveyance plat for the George & Debra Purefoy Elementary School, which showed the division between the Property and the Frisco ISD tract. Owners executed a deed to Frisco ISD on March 25, 2009, which was recorded in the Denton County property records.

Also on March 25, 2009, Owners and Frisco ISD entered into a Development Agreement and Restrictive Covenants, which was likewise recorded in the Denton County property records. In the development agreement, beer and wine sales are addressed as follows: “The Parties acknowledge that [Owners] intend [ ] to sell, and the City of Frisco, Texas will allow the sale of, alcoholic beverages on Tract B [the Property].” The City issued a building permit for the school in April 2009.

In late August 2009, the City Council amended the zoning ordinance regarding alcohol sales. It deleted the definition of beer and wine package sales and replaced it with the following: “Package Sales—an establishment principally for the retail sale of alcoholic beverages, as defined in the Texas Alcoholic Beverage Code, as amended, to the general public for off-premise consumption and rendering services that are incidental to the sale of such goods.” [Emphasis added.] It further amended the former restriction on beer and wine package sales within three hundred feet of a school to provide that “[a] Package Sales Establishment shall not be located within ... [t]hree hundred (300) feet from a ... public school.”

Owners subsequently began negotiating with Racetrac to purchase the hard corner of the Property for a convenience store and gas station. The City accepted an application for a site plan and conveyance plat for the Racetrac development on November 9, 2009. But on November 11, 2009, Ingalls told Williamson that the City would not allow the sale of alcoholic beverages on the Property “due to the close proximity of [the] elementary school that is under construction.” Ingalls documented this conversation in a letter dated November 17, 2009. Ingalls had a similar conversation with counsel for Racetrac on November 13, 2009. As a result, Racetrac terminated negotiations with Owners and eventually bought property at the northwest corner of Teel and Eldorado, just over three hundred feet from the school. The City issued a certificate of occupancy for the school on August 3, 2010, and it has been in continuous operation ever since.

On August 5, 2010, Owners' engineer submitted a request to extend the expiration date on the site plan for the Property, which the City granted until February 28, 2011. Owners directed the engineer to prepare a final site plan application for the Property, which he submitted on February 21, 2011. The City approved the final site plan, which was consistent with the preliminary site plan that the City had approved earlier, on May 10, 2011, effective until February 21, 2013. The final site plan showed proposed fuel tanks and a canopy on the side of the Property located closest to Eldorado and a proposed gas station on the southern side of the Property, with ingress and egress to both Eldorado and Teel.

When the engineer submitted the final site plan application, FLCT was negotiating to lease the hard corner to 7–Eleven, Inc. for the operation of a convenience store with gas pumps and beer and wine sales. In March 2012, FLCT and 7–Eleven signed a ground lease, for which FLCT filed a substantially conforming site plan, similar to the final site plan, on June 25, 2012. The City approved the plan on July 19, 2012, effective until February 21, 2013. 7–Eleven applied for a building permit before the expiration of the substantially conforming and final site plans. The continued validity of the ground lease was conditioned on 7–Eleven's being able to obtain all permits, licenses, and approvals necessary to sell “beer, wine and alcoholic products.”

In late September 2012, 7–Eleven Beverage Company, Inc.² completed a Texas Alcoholic Beverage Commission (TABC) permit application to sell beer and wine on its proposed premises. The application form required a certification from the City Secretary that the location was either in a wet or dry area and whether the sale of beer and wine is prohibited by charter or ordinance.³ Owners presented as evidence an affidavit in which Williamson stated that 7–Eleven also submitted the application to the City Secretary in September 2012, but the City presented evidence that 7–Eleven did not submit the application to the City Secretary until around November 5, 2012.

Around October 1, 2012, counsel for Owners sent a demand letter to the City attorney contending that they and 7–Eleven had the right to sell beer and wine on the Property. Counsel for Owners and the City, as well as the City's Planning Director, John Lettelier, met on October 10, 2012. According to an affidavit of Owners' counsel, Lettelier “experienced surprise that the City's current ordinances did not prohibit alcohol sales at convenience stores on properties similar to” the Property.

On October 23, 2012, the City Council enacted a new...