Maguire Oil Co. v. City of Houston

• Citation: 69 S.W.3d 350
• Decision Date: 15 February 2002
• Docket Number: No. 06-01-00061-CV.,06-01-00061-CV.
• Parties: MAGUIRE OIL COMPANY, et al., Appellants, v. CITY OF HOUSTON, Appellee.
• Court: Court of Appeals of Texas

69 S.W.3d 350

MAGUIRE OIL COMPANY, et al., Appellants, v. CITY OF HOUSTON, Appellee.

No. 06-01-00061-CV.

Court of Appeals of Texas, Texarkana.

Submitted August 28, 2001.

Decided February 15, 2002.

Rehearing Overruled March 6, 2002.

Donald E. Herrmann, Todd W. Spake, Kelly, Hart & Hallman, PC, Fort Worth, for appellants.

J. Mark Breeding, Mayor, Day, Caldwell & Keeton, Robert L. Cambrice, City of Houston Legal Dept., Houston, for appellee.

A. Scott Anderson, Austin, for TX Independent Producers & Royalty Owners.

Before CORNELIUS, C.J., GRANT and ROSS, JJ.

OPINION

Opinion by Justice ROSS.

Maguire Oil Company¹ (Maguire) appeals the summary judgment granted in favor of the City of Houston. Maguire sued the City alleging damages when the City revoked a permit authorizing Maguire to drill a gas well near Lake Houston, a freshwater reservoir and the City's main source of drinking water.

In its petition, Maguire claimed it applied for and received a permit from the City on May 7, 1991. The City ratified and modified the permit on May 22, 1991, and extended the permit on August 5,1991. The location of the well was on the shore of Lake Houston, approximately 300 feet from the lake.

Maguire claimed it began preparing the land for drilling, signed a drilling contract, purchased nearby leases for the purpose of offset drilling, and began moving equipment onto the drilling site. On October 31, 1991, the City issued a stop work order. In a separate letter sent to Maguire's attorney, the City acknowledged the permit "appear[ed] to have been issued in error" and revoked it, effective immediately. The letter referenced Houston Code of Ordinances Sections 23-101 and 23-102, which at the time prohibited drilling a well within the City's extraterritorial jurisdiction (ETJ)² and 1,000 feet of the normal water's edge of Lake Houston.

Maguire sought a judgment declaring the permit valid. It also sought a declaration that Section 23-102 is unreasonable in that it makes no provision for special circumstances and it discriminates against oil and gas wells by allowing other types of wells to be drilled within the 1,000-foot limit.³ Maguire sought a further declaration that the City engaged in selective enforcement of Section 23-102 by allowing other oil and gas wells to be drilled within the 1,000-foot limit.

Further, Maguire alleged the City's actions amounted to inverse condemnation of its mineral interests in violation of the Due Process Clauses of the Fifth and Fourteenth Amendments to the United States Constitution and the Due Course of Law provision of the Texas Constitution. Maguire contended it was entitled to recover the value of the minerals in place.

As an alternative to its inverse condemnation claim, Maguire alleged it was entitled to reliance damages it incurred under either a negligent misrepresentation theory, if the permit was invalid, or under a promissory estoppel theory, if the permit was valid. Maguire further alleged the City was estopped from denying the validity of the permit.

The parties each filed motions for summary judgment. In its motion, the City contended Maguire's inverse condemnation claim was barred by the statute of limitations. It also contended Maguire's reliance on the permit was unreasonable, and thus Maguire could not prevail on its estoppel theory. In its motion for partial summary judgment, Maguire contended it should prevail on its inverse condemnation claim as a matter of law. The trial court overruled both motions.

The City later filed a motion to exclude the testimony of one of Maguire's expert witnesses. The trial court granted the City's motion. The City then filed another motion for summary judgment and a motion to have the trial court reconsider its previous motion for summary judgment.

In its second motion for summary judgment, the City contended there was no evidence Maguire suffered economic loss as a result of the City's action and no evidence the City engaged in selective enforcement of Section 23-102. Further, the City contended Section 23-102 was rationally related to a legitimate public purpose and therefore did not discriminate against Maguire. The City also alleged Maguire's negligent misrepresentation, promissory estoppel, and estoppel claims were barred by sovereign immunity. After a hearing, the trial court granted the City's motions.

Maguire contends the trial court erred in granting summary judgment because (1) Maguire presented evidence of damages to support its inverse condemnation claim; (2) Maguire's inverse condemnation claim was not barred by a statute of limitations; (3) sovereign immunity did not bar Maguire's promissory estoppel and negligent misrepresentation claims because fact issues existed under a well-settled exception to sovereign immunity; and (4) Maguire presented evidence to support its selective enforcement claim.

The City moved for summary judgment under Tex.R. Crv. P. 166a(b). To prevail on such a motion, the movant must establish that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Tex.R. Crv. P. 166a(c). Summary judgment for a defendant is proper when the defendant negates at least one element of each of the plaintiffs theories of recovery, or pleads and conclusively establishes each element of an affirmative defense. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex.1997). When reviewing a summary judgment, we take as true all evidence favorable to the nonmovant. Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex.1999). We indulge every reasonable inference and resolve any doubt in the nonmovant's favor. Id. On appeal, the movant still bears the burden of showing that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Id.

Because the City moved for summary judgment in part on the ground the statute of limitations had run, it must have (1) conclusively proved when the cause of action accrued, and (2) negated the discovery rule, if it applies and was pleaded or otherwise raised, by proving as a matter of law there is no genuine issue of material fact about when Maguire discovered, or in the exercise of reasonable diligence should have discovered, its cause of action. See KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex.1999). If the City established the action was barred by the statute of limitations, Maguire must then have adduced summary judgment proof raising a fact issue in avoidance of the statute of limitations. See id.

The City also moved for a no-evidence summary judgment under Tex.R. Crv. P. 166a(i). When a party moves for a no-evidence summary judgment, that party does not bear the burden of establishing each element of its own claim or defense, as under Rule 166(a) or (b). Garrett v. L.P. McCuistion Cmty. Hosp., 30 S.W.3d 653, 655 ((Tex.App.-Texarkana 2000, no pet.). Rather, although the nonmoving party is not required to marshal its proof, that party must present evidence that raises a genuine fact issue on the challenged elements of the claims on which the nonmovant would have the burden of proof at trial. Id.

Because a no-evidence summary judgment is essentially a pretrial directed verdict, we apply the same legal sufficiency standard as we apply in reviewing a directed verdict. Id. We consider all the evidence in the light most favorable to the nonmovant, disregarding all contrary evidence and inferences. Id. A no-evidence summary judgment is improperly granted if the nonmovant presents more than a scintilla of probative evidence to raise a genuine issue of material fact. Id. More than a scintilla of evidence exists when the evidence rises to a level that would enable reasonable and fair-minded people to differ in their conclusions. Id.

Inverse Condemnation Claim

The Fifth Amendment to the United States Constitution provides private property shall not be taken for public use without just compensation. U.S. Const. amend. V. The provision is applicable to the states under the Due Process Clause of the Fourteenth Amendment. U.S. Const, amend. XIV. The Texas Constitution also contains a "takings clause," which provides in part "[n]o person's property shall be taken, damaged or destroyed for or applied to public use without adequate compensation being made, unless by the consent of such person, ...." Tex. Const. art. 1, § 17.

If the government appropriates property without paying adequate compensation, the owner may recover the resulting damages in an inverse condemnation suit. Westgate, Ltd. v. State, 843 S.W.2d 448, 452 (Tex. 1992). An inverse condemnation may occur when the government physically appropriates or invades the property, or when it unreasonably interferes with the landowner's right to use and enjoy the property, such as by restricting access or denying a permit for development. Id. To maintain a cause of action for inverse condemnation, the plaintiff must prove (1) an intentional governmental act, (2) resulting in the taking, damaging, or destruction of the plaintiffs property, (3) for public use. Gen, Servs. Comm'n v. Little-Tex Insulation Co., 39 S.W.3d 591, 598 (Tex.2001).

Statute of Limitations

In its first motion for summary judgment, the City contended the statute of limitations barred Maguire's inverse condemnation claim. The City's theory is that Section 23-102 was enacted in 1967; therefore, Maguire had to file any inverse condemnation cause of action within ten years of that date.⁴ It cites Trail Enters., Inc. v. City of Houston, 957 S.W.2d 625, 628 ((Tex.App.-Houston [14th Dist.] 1997, pet. denied), in which the appellant asserted an inverse condemnation cause of action after it sought to drill on land within 1,000 feet of Lake Houston. The court of appeals held the cause of action accrued in 1967, the date the ordinance was enacted and, therefore, the date the City first interfered with the appellant's right to use the property....