Town Park Ctr., LLC v. City of Sealy
| Decision Date | 28 October 2021 |
| Docket Number | NO. 01-19-00768-CV,01-19-00768-CV |
| Citation | 639 S.W.3d 170 |
| Parties | TOWN PARK CENTER, LLC, Appellant v. CITY OF SEALY, Texas ; Janice Whitehead, Mayor; Lloyd Merrell, City Manager; and Warren Escovy, Assistant City Manager, Appellees |
| Court | Texas Court of Appeals |
William Scott Helfand, Houston, Gregg Alan Clements, Andrew Gray, Austin, for Appellee.
Andy Taylor, Houston, for Appellant.
Panel consists of Justices Kelly, Guerra, and Farris.
Following two prior nonsuits, plaintiff Town Park Center, LLC, filed the instant lawsuit against defendants City of Sealy, mayor Janice Whitehead, city manager Lloyd Merrell, and assistant city manager Warren Escovy (together, "City Officials") in their official capacities. The trial court dismissed the lawsuit against all defendants with prejudice.
In four issues, Town Park Center argues that the trial court erred by (1) granting the City's plea to the jurisdiction based on res judicata when res judicata is a merits defense; (2) dismissing the lawsuit on res judicata grounds when no prior final adjudication on the merits exists and the alleged defects in a prior lawsuit were curable, but no opportunity to amend was provided in the prior suit; (3) dismissing the claims against the City Officials when only the City of Sealy filed a plea to the jurisdiction, and (4) failing to recognize that governmental immunity does not bar any of the claims against the defendants. We affirm in part and reverse in part.
Town Park Center owns a 71-acre tract of land along Interstate 10 within Sealy city limits. On April 28, 2015, Town Park Center and the City executed an Economic Development Agreement ("the Agreement" or "the EDA") to develop a commercial shopping center on the property. The Agreement stated that development of the property "will result in the creation of numerous employment opportunities for the citizens of the City, shall promote state and local economic development and stimulate business and commercial activity in the City," will "ultimately better enhance the City's economic growth," and will "substantially advance a legitimate interest of the City including increases of property tax base, local employment opportunities and city sales tax revenue." The parties expressly stated that they entered into the Agreement pursuant to Local Government Code Chapter 380, which allows municipalities to establish grant programs to promote local economic development. See TEX. LOC. GOV'T CODE § 380.001(a).
Under the Agreement, Town Park Center agreed to develop and construct the shopping center according to a development plan that the City had approved. Proposed tenants included several restaurants, a bank, a hotel, and a major grocery store. The Agreement set out approved and prohibited land uses for the property, as well as architectural design requirements. The City agreed to pay annual economic development grant payments to Town Park Center "as an incentive to comply with this Agreement." The payments to Town Park Center would be based on the City's share of municipal sales and use tax revenue collected from within the project's boundaries.
The Agreement required Town Park Center to design, construct, and maintain a storm water collection and drainage system. The parties agreed:
Developer, at his option, may participate in the B&PW Park regional storm water detention pond in an amount not to exceed any available remaining capacity, at a cost of $15,000 per acre foot of capacity. Purchase of said capacity shall be the responsibility of the Developer. Upon Developer request, City agrees to reserve all remaining excess capacity for the Project on the submittal of a deposit of $2000/acre foot of capacity, which deposit reservation will apply to purchase price as capacity is needed. The deposit will be forfeited if the complete purchase is not completed within 5 years of execution of this Agreement.
Town Park Center also bore the obligation to "provide the infrastructure for water and wastewater service into the Project from existing service lines adjacent to the property." It further agreed to construct all internal access streets, as well as "Town Park Drive," which would be funded entirely by Town Park Center but would become a public right-of-way. The EDA also included provisions concerning the design, funding, and construction of a frontage road along I-10.
On February 8, 2017, Town Park Center first filed suit against the City, as well as mayor Mark Stolarski, city manager Larry Kuciemba, and city engineer David Kelly (collectively, "the individual defendants"). Town Park Center asserted claims for breach of contract and sought declaratory and injunctive relief. It alleged that the City's governmental immunity was waived because the EDA constituted a contract for goods or services as defined by Local Government Code Chapter 271. Town Park Center further argued that the individual defendants were not immune because Town Park Center was suing them for ultra vires acts.
Town Park Center's liability theory was that the EDA required the defendants to sell stormwater detention capacity to Town Park Center and the defendants had breached the agreement by failing to do so. Town Park Center owned approximately 12 acre feet of detention capacity in the JAC Park detention pond. The City-owned detention capacity in the B&PW Park Regional Detention Pond is close to the project site, and according to Town Park Center, approximately 21 acre feet of capacity remained at this location.
Pursuant to a city resolution, the City had previously issued a fee schedule reflecting that capacity in the B&PW Park detention pond was available for sale at $15,000 per acre foot of storage. The parties agreed in the EDA that Town Park Center could, at its option, purchase capacity in this detention pond. Upon request and payment of a deposit of $2,000 per acre foot of capacity by Town Park Center, the City agreed to reserve excess capacity for Town Park Center. Town Park Center alleged that from 2015 through 2017, the City refused to provide information concerning the remaining capacity in the B&PW Park detention pond, refused to sell any capacity from that pond to Town Park Center, and impermissibly imposed a limit on its use of capacity in the JAC Park detention pond that would not be sufficient to meet the off-site storage needs of an HEB grocery store, a potential major tenant of the project.
Town Park Center alleged that the City's actions with respect to the sale of capacity in the B&PW Park detention pond constituted a breach of the EDA, and it sought damages of over $1.8 million. Town Park Center also sought a declaratory judgment specifying the rights and obligations of the parties under the EDA. Town Park Center also asserted ultra vires claims against the individual defendants in connection with their actions relating to the refusal to sell storage capacity. Further, Town Park Center sought injunctive relief requiring the City to "formally approve and acknowledge both the existence and the availability to [Town Park Center] of the offsite detention."
The defendants immediately filed pleas to the jurisdiction asserting governmental immunity. The trial court granted the City's plea and denied the individual defendants’ plea on February 16, 2017. This order did not include any language dismissing Town Park Center's claims against the City.
The individual defendants filed an interlocutory appeal of the denial of their plea to the jurisdiction. See City of Sealy v. Town Park Ctr. , No. 01-17-00127-CV, 2017 WL 3634025 (Tex. App.—Houston [1st Dist.] Aug. 24, 2017, no pet.) (mem. op.) (per curiam). While this interlocutory appeal was pending, Town Park Center nonsuited all its claims and argued that the nonsuit made the appeal moot. The individual defendants filed a response brief in our Court, arguing that Town Park Center could not nonsuit its claims while the appeal was pending.
We issued an opinion agreeing with Town Park Center that the interlocutory appeal was moot. Specifically, we held that Town Park Center was not prohibited from nonsuiting its claims while the appeal was pending and that the nonsuit rendered the individual defendants’ interlocutory appeal moot. Id. at *2–3. Yet in so holding, we cautioned that "if the trial court's order granting the City's jurisdictional plea has become final, it has done so only by virtue of Town Park's nonsuit." Id. at *2 n.2 ().
While the individual defendants’ interlocutory appeal was pending, Town Park Center filed a second substantively identical lawsuit against the City, Stolarski, Kuciemba, and finance director Steven Kutra in March 2017. See id. at *1. Town Park Center later non-suited this petition "based on the assurances that such an action would enable the City to negotiate with [Town Park Center] a settlement agreement." The parties, however, were unable to settle the dispute.
In April 2019, Town Park Center filed a third suit against the City, mayor Janice Whitehead, city manager Lloyd Merrell, and assistant city manager Warren Escovy. Town Park Center alleged that governmental immunity was waived for its claims for mandamus, declaratory, and injunctive relief under the "vested rights provision" of Local Government Code section 245.006(b). Town Park Center further alleged that Local Government Code Chapter 271 waived immunity for its breach of contract and declaratory judgment claims because the EDA constituted a contract for goods or services.
The factual allegations in this third lawsuit were substantively identical to the...
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