Providence Behavioral Health v. Grant Rd. Pub. Util. Dist.

• Decision Date: 28 August 2018
• Docket Number: No. 17-20571,17-20571
• Citation: 902 F.3d 448
• Parties: PROVIDENCE BEHAVIORAL HEALTH; Texas Providence Investments, Plaintiffs - Appellants Cross-Appellees, v. GRANT ROAD PUBLIC UTILITY DISTRICT, Robert Krzeszkiewicz, in his official capacity; William Rock, in his official capacity; Jack Scott, in his official capacity; John Oneacre, in his official capacity; Thomas Breedlove, in his official capacity, Defendants - Appellees Cross-Appellants Board of Directors of the Grant Road Public Utilities District, Defendant - Appellee
• Court: U.S. Court of Appeals — Fifth Circuit

902 F.3d 448

PROVIDENCE BEHAVIORAL HEALTH; Texas Providence Investments, Plaintiffs - Appellants Cross-Appellees,

v. GRANT ROAD PUBLIC UTILITY DISTRICT, Robert Krzeszkiewicz, in his official capacity; William Rock, in his official capacity; Jack Scott, in his official capacity; John Oneacre, in his official capacity; Thomas Breedlove, in his official capacity, Defendants - Appellees Cross-AppellantsBoard of Directors of the Grant Road Public Utilities District, Defendant - Appellee

No. 17-20571

United States Court of Appeals, Fifth Circuit.

FILED August 28, 2018

Mark S. Whitburn, Whitburn & Pevsner, P.L.L.C., Arlington, TX, for Plaintiffs - Appellants Cross-Appellees.

Simon Wesley Hendershot, Katherine Tempone Cowart, Raymond Lee Panneton, Esq., Hendershot, Cannon & Hisey, P.C., Houston, TX, for Defendants - Appellees Cross-Appellants.

Simon Wesley Hendershot, Raymond Lee Panneton, Esq., Hendershot, Cannon & Hisey, P.C., Houston, TX, for Defendant - Appellee.

Before STEWART, Chief Judge, and JONES and ENGELHARDT, Circuit Judges.

CARL E. STEWART, Chief Judge:

Providence Behavioral Health ("Providence Health") and Texas Providence Investments ("Providence Investments") (collectively, "Providence") brought this lawsuit against Grant Road Public Utility District, the Board of Directors of the Grant Road Public Utility District ("Grant Road Board"), and Grant Road Board members, Robert Krzeszkiewicz ("Krzeszkiewicz"), William Rock ("Rock"), Jack Scott ("Scott"), John Oneacre ("Oneacre"), and Thomas Breedlove ("Breedlove"), in their official capacities (collectively, "Grant Road") after Grant Road denied water, drainage, and septic services to Providence's intended psychiatric facility. Providence believes improper, discriminatory motives played a role in Grant Road's decision to deny Providence access to water, drainage, and septic services. Providence contends that Grant Road's actions constituted violations of the Americans with Disabilities Act ("ADA"), federal Fair Housing Act ("FHA"), and Texas Fair Housing Act ("TFHA").

Following a three-day bench trial, where both parties presented evidence relating to whether there were discriminatory motives underlying Grant Road's decision, the district court issued findings of fact and conclusions of law to support its judgment dismissing Providence's claims. On appeal, Providence asserts that the district court erroneously concluded that Grant Road's denial decision was not discriminatory. For the reasons set out below, we AFFIRM the district court's judgment.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

a. Factual Background

The issues in this case revolve around Providence's application to Grant Road seeking annexation for its Providence Health facility to obtain water, drainage, and septic services. After all, without water, drainage, and sewage capabilities, the Providence Health facility cannot function as it should.

1. Providence Investments and Providence Health

Providence Investments owns a 12.9 acre tract of land in Cypress, Texas where it currently is constructing a facility that will be operated by Providence Health. The facility is intended to be a for-profit mental health treatment center for patients under eighteen years of age who have mental health diagnoses, including autism spectrum disorder, bipolar disorder, and schizophrenia. Dr. Luis Valdes ("Dr. Valdes") and Dr. Javier Ruiz ("Dr. Ruiz") are expected to lead operations of the Providence Health facility. The Providence Health facility aims to provide more than just outpatient psychiatric care for its patients. One of the featured aspirations for the facility is to create a home-like atmosphere where patients have the option to live at the facility for up to a year's time, if necessary.

2. Grant Road and the Annexation Process

At its core, Grant Road is a water well and distribution system, and a sewer collection and treatment system. The mission of Grant Road is to provide water, septic, and drainage services to properties within the boundaries of its district. Grant Road is funded by water and sewage revenues and ad valorem taxes from properties within Grant Road's district. If a piece of property outside of Grant Road's district boundaries wishes to come under the umbrella of services that Grant Road provides, then the land developer or representative for the property must request annexation of the property by Grant Road. Specifically, "annexation" is bringing into Grant Road's water district a property that lies outside of Grant Road's district boundaries for purposes of providing utility services to that property. Typically, Grant Road has no obligation to provide annexation to property outside of Grant Road's jurisdictional boundaries. The Grant Road Board, a five-person elected board of directors, governs the Grant Road Public Utility District and is centrally involved in the annexation decision-making process.

3. Grant Road's Refusal to Annex Providence's Facility

In the summer of 2009, Providence hired Steven Grossman ("Grossman") as a project architect to assist with the building process for the Providence Health facility. At the bench trial, Grossman testified that before Grant Road's annexation denial in 2014, he had never been connected to a building project that resulted in an annexation denial by a public utility district. Grossman contacted Grant Road so that the topic of annexation for the Providence Health facility could be placed on the agenda for the Grant Road Board meeting for October 2009. At the October 2009 meeting, Grossman presented to the Grant Road Board full-scale drawings, features, and general dimensions of the Providence Health facility. At trial, Grossman described that the Grant Road Board members "were interested" and he thought the reaction to the presentation "was absolutely favorable." In February 2010, Grant Road sent a letter to Providence noting its preliminary approval of the annexation for the Providence Health facility and advising Providence of the additional requirements Providence needed to satisfy to complete the process. This included paying a customary deposit to Grant Road, projected to be $7,500. However, delays in the construction project due to financing issues, and professional challenges for the operators of the Providence Health facility, caused the 2009–10 annexation process to be derailed and later terminated by Providence.

In the summer of 2014, Providence again set the annexation process in motion for its Providence Health facility. Grossman's expectation for this new annexation proposal for the Providence Health facility was "the same song, second verse" ending with Providence obtaining approval for annexation. This time around, though, the building project included some new features not present when Providence submitted the 2009–10 annexation proposal. For example, the building project proposal from 2009–10 entailed a twenty-four bed facility that was expandable to accommodate thirty-two beds. In contrast, the new 2014 annexation proposal for the facility was proposed as a thirty-six bed facility able to expand to accommodate fifty-two beds. The additional beds added to the facility increased the amount of service units for the facility from twenty-seven to thirty-one.¹

In September 2014, Grossman, accompanied by Dr. Valdes as one of the principal operators for the facility, presented to the Grant Road Board once more, requesting that the Providence Health facility be annexed. Grossman testified at the bench trial that, although the 2014 annexation presentation was more extensive than the 2009–10 annexation presentation that received preliminary approval, the Grant Road Board was "hostile" to the 2014 presentation, and he and Dr. Valdes received little questioning from the board members. Grossman described that "the members would turn their back on the presentation. Some would look out the window. They were ... disinterested in entertaining our proposal whatsoever or had prejudged the case or something to that effect." Grossman went on to articulate that the Grant Road Board asked no questions about tax abatements, project history, investors, or financing. The Grant Road Board did, however, ask questions about the individuals anticipated to receive mental health treatment at the Providence Health facility.

Providence's hopes to achieve preliminary approval for annexation were soon dashed. After Grossman and Dr. Valdes presented to the Grant Road Board at the September 2014 meeting, the Grant Road Board met and unanimously voted against annexation for the Providence Health facility. The Grant Road Board did not state any specific reasons for its rejection of the annexation request. Testimony from board members Scott and Krzeszkiewicz at the bench trial revealed that over a thirty-year period, out of the approximately twelve to fifteen annexation requests that the Grant Road Board received, annexation had only been denied on two other occasions.

At the bench trial, Grant Road Board members testified about why they voted to reject the annexation request, focusing on financial implications posed by annexing the property. Particularly, board members explained they were concerned that tax abatements for the facility would ultimately impact the revenue of the district. The Grant Road Board believed that medical facilities are usually one of the types of facilities able to get tax abatements. Testimony from the bench trial further revealed that a high-end residential development annexed into the Grant Road district was projected to produce more revenue to the Grant Road tax base than a single facility, like the Providence Health facility. Additionally, the Providence Health facility was said to have other feasible avenues for obtaining water and sewage, such as obtaining a well and septic system permit or a Texas Commission on Environmental Quality permit for an onsite sewage and wastewater treatment plant. At a subsequent November 2014 Grant Road Board...