TXI Operations, LP v. City of McKinney

Decision Date11 January 2023
Docket NumberCivil Action 4:20-cv-353,4:20-cv-609
CourtU.S. District Court — Eastern District of Texas


Pending before the Court are Plaintiff's Motion for Partial Summary Judgment (Dkt. #59), City Defendants' Amended Motion for Summary Judgment (Dkt. #65), City Defendants' Objections to Plaintiff's Summary Judgment Evidence and Motion to Strike (Dkt. #74), and Plaintiff's Resubmission of its Objections to Defendants' Summary Judgment Evidence and Motion to Strike (Dkt. #88).

Having considered the motions and the relevant pleadings, the Court finds that Plaintiff's Motion for Partial Summary Judgment (Dkt. #59) should be DENIED, City Defendant's Amended Motion for Summary Judgment (Dkt #65) should be GRANTED in part and DENIED in part, Plaintiff's Resubmission of its Objections to Defendants' Summary Judgment Evidence and Motion to Strike (Dkt. #88) should be DENIED, and City Defendants' Objections to Plaintiff's Summary Judgment Evidence and Motion to Strike (Dkt. #74) should be GRANTED in part and DENIED in part.


The parties to this suit have a long history which has culminated in the current lawsuit. TXI Operations, LP (TXI) is suing the City of McKinney and the Board of Adjustments for the City of McKinney (Board) (collectively, the “City”) for breach of contract and a plethora of violations of TXI's state and constitutional rights relating to property it owns within the City of McKinney. According to TXI, the City improperly used its municipal powers to deprive TXI of the lawful use of its property, a use it was entitled to by contract. The City, on the other hand, contends that it was merely using its governmental authority to bring TXI's property into conformity with its new comprehensive zoning plan. The City contends that the new plan was necessary because of the growth the City is experiencing.

I. The Prior Litigation and Settlement Agreement

The conflict between these parties began over two decades ago and stems from a previous lawsuit involving the City of McKinney J.R. Marriott, B.O. Marriott, Marriott Brothers, Inc. (collectively, the Marriott Brothers), TXI, Chemical Lime, Ltd. (“Chemical Lime”), and Martin Marietta Materials Southwest, Ltd. (Martin Marietta).[1] The Marriott Brothers, TXI's predecessors-in-interest, owned and leased out property in the City of McKinney. The various businesses on the property were operating under a temporary certificate of occupancy, which later expired. Upon expiration of the certificate of occupancy, the property was not issued a new certificate because the City Council of McKinney (City Council) did not approve a new site plan. Nonetheless, the entities on the Marriot Brothers' property continued to operate. However, without the new certificate, the City of McKinney claimed that the Marriott Brothers' property was in violation of city ordinances. According to the City of McKinney, although the property would not be in violation of the proposed, but rejected, site plan, the property was being run in a manner inconsistent with the prior site plan. In other words, the businesses were operating the property in a manner that would have been lawful if the City Council had not rejected the proposed site plan. Thus, litigation between the parties ensued.

The Marriott Brothers and the City of McKinney resolved the conflict when they entered into a settlement agreement (“Settlement Agreement”) in 2001 (Dkt. #59-10, Exhibit 2 at pp. 210).[2] In the Settlement Agreement, the parties agreed that each party to the conflict would dismiss with prejudice all citations and lawsuits. For the citations and lawsuits to be dismissed though, the Marriot Brothers were required to submit and comply with an approved site plan and the City, upon completion of the improvements in the approved site plan, was required to issue a permanent certificate of occupancy to the Marriott Brothers' property. TXI, for its role in the Settlement Agreement, agreed to reasonably accommodate the Marriott Brothers' efforts to comply with the approved site plan. The Settlement Agreement was synthesized in an Agreed Judgment (“Agreed Judgment”). After entry of the Agreed Judgment, TXI completed the improvements required under the approved site plan and the City issued a permanent certificate of occupancy. To receive the permanent certificate of occupancy, the Marriott Brothers had to comply with the terms of the Settlement Agreement and Agreed Judgment. As mentioned, the Marriott Brothers are TXI's predecessors-in-interest to the property at issue in the current suit.

II. The Change in Zoning and Use of TXI's Property

When TXI began operating its concrete batch plant, the area was zoned as a Light Manufacturing District in the front portion of the property and a Heavy Manufacturing District on the remainder of the property. The actual concrete batch plant is located on the area of the property that was zoned as a Heavy Manufacturing District. Operating a concrete batch plant is a legal use of property in a Heavy Manufacturing District. TXI legally operated the plant on its property pursuant to the Settlement Agreement until early 2019, when rezoning of the property was approved by the City of McKinney's Planning and Zoning Commission (Commission) and the City Council. The City contends that the rezoning was necessary; otherwise, the property would never come into conformity with the ONE McKinney 2040 Plan (“Comprehensive Plan”) that the City adopted in 2018 (Dkt. 66-1, Exhibit 2).

A. The Comprehensive Plan

In 2015, the City of McKinney began the process of updating its Comprehensive Plan. On October 2, 2018, the City Council adopted the Comprehensive Plan. The Comprehensive Plan's Vision Statement calls for [s]mart public & private investments [to] ensure that McKinney remains a top choice for people to live, work, play & visit through 2040 & beyond” (Dkt. #66-1, Exhibit 2 at p. 3). According to the City, the Comprehensive Plan is meant to support the City's economy and people.

As part of the Comprehensive Plan, the City wanted to revamp what it labels the Southgate District of McKinney. The Southgate District is the area located around the intersection of State Highway 5 and State Highway 121. The changes to the Southgate District include a new professional campus-which the City hopes will attract new corporations and better take advantage of the surrounding amenities. According to the Comprehensive Plan, the City expects that the professional campus will be located on the land currently occupied by TXI's concrete batch plant.

B. The City Rezones TXI's Property

In line with the Comprehensive Plan, the City submitted a proposal to the Commission requesting that the Commission approve the rezoning of TXI's property, as well as two adjacent properties owned by CowTown Redi-Mix, Inc. (“CowTown”) and Lhoist North American of Texas (“Lhoist”), from a combined Light Manufacturing District and Heavy Manufacturing District to a Regional Office District in its entirety. On March 26, 2019, the Commission unanimously approved the rezoning of TXI's property. A few weeks later, on April 16, 2019, the City Council also approved the City's rezoning request.

Texas law and the City's own ordinances require that property owners receive notice before their property may be rezoned. The City claims that it gave proper notice to TXI. Meanwhile, TXI claims that it never received notice from the City before the City voted to rezone TXI's property.

C. The City Amortizes TXI's Property

On November 5, 2019, the City Council enacted an ordinance that established the authority of the Board to amortize property. Under the amortization ordinance, upon the request of a majority of the City Council, the Board is allowed to set a date for mandatory compliance of any nonconforming land use. On December 3, 2019, the City Council voted to request that the Board consider the amortization of TXI's property. The Board originally scheduled a hearing on amortizing the property on either February 11, 2020, or February 12, 2020, it is unclear; however, the hearing was actually held on February 26, 2020. According to the City, it provided public notice through the newspaper of both hearing dates. TXI disputes that any notice was ever posted. Regardless, at the February 26, 2020 hearing, the Board voted to initiate an amortization of TXI's property, as it was not in compliance with a Regional Office District type of zoning.

The City then hired Scott Hakala to perform a business valuation on TXI and conduct an amortization analysis to aid the City in determining the remaining life of TXI's concrete batch plant. According to the City, it issued a subpoena duces tecum to TXI, requesting that TXI produce records to assist with determining the amortization period and establish a compliance date. In addition, the subpoena informed TXI of a July 29, 2020 hearing to consider, discuss, and act on determining an amortization period and establish a compliance date. However, TXI did not respond to the subpoena. Accordingly, TXI did not produce any records and the amortization report was created without TXI's records.

TXI attended the hearing, but TXI's ability to participate in the hearing was limited. According to the City, the City did not allow TXI to make certain challenges at the meeting because it waived those challenges when it failed to respond to the subpoena. Instead, TXI was given three minutes to speak, the time...

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