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City of San Antonio by and through The San Antonio Water System v. Campbellton Road, LTD
Case Number: 04-20-00569-CV
Judge: Liza A. Rodriguez
Fourth Court of Appeals San Antonio, Texas
On appeal from the 150th Judicial District Court, Bexar County, Texas
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Defendant's Attorney: S. Mark Murray Lisa S. Barkley Lamont A. Jefferson
San Antonio, Texas – Breach of Contract lawyer represented Appellant with defending a breach of contract claim.
On July 29, 2020, Appellee Campbellton Road Ltd. (“Campbellton”) brought a breach of contract and declaratory judgment action against SAWS. SAWS is a water, wastewater, and water re-use agency of the City of San Antonio. In its live petition, Campbellton alleges that it is the owner of 585 acres of real property located within the extra-territorial jurisdiction of the City of San Antonio. According to the petition, Campbellton’s intent was to develop the 585 acres into two residential subdivisions to be known as Hickory Hollow and Copper Ridge. In order to ensure sufficient wastewater capacity for the two developments, Campbellton entered into a contract with SAWS. This Outer Service Area Sewer Service Contract was attached to Campbellton’s petition. The contract required SAWS to provide sewer service to Campbellton for its proposed residential developments subject to Campbellton satisfying conditions enumerated in the contract. First, the contract required Campbellton to participate in the construction of the Southside Independent School District Wastewater Consolidation System (“SSISD Project”), which was oversized to accommodate flows from Campbellton’s proposed developments. Second, Campbellton was required to pay an impact fee1 for both collection and treatment components prior to service connection. Section III(D), titled “Recognition of Vested Rights,” provided the following: [Campbellton] shall acquire a vested right to capacity in the off-site sanitary sewer collection and treatment servicing the tract in the amount established in Subsection E herein upon payment of the collection and/or treatment facilities components of the impact fees as sound out in Section II(D) herein above. (emphasis added). Subsection E, titled “Capacity,” provided the following: 1. The Flow generated from the approximate 585-acre tract Hickory Hollow/Copper Ridge Tract shall not exceed average daily flow in the amount of 450,000 gallons per day (gpd), which equates to a maximum of 1,500 1 An impact fee is a regulatory fee imposed by the City Council of the City of San Antonio. See TEX. LOC. GOV’T CODE §§ 395.001-.081. 04-20-00569-CV - 3 - equivalent dwelling units (EDUs). Note: One EDU equates to 300 GPD of average flows, and 750 peak GPD per EDU for sizing of mains. 2. Proposed land uses shall be indicated on [Campbellton]’s Project Master Plan at the time of plat approval and shall be periodically updated by [Campbellton] as further in Section II(A), above, herein. 3. The Director of Infrastructure Development or his designated representative, shall evaluate [Campbellton]’s projected maximum capacity needs and make a final determination of the maximum allowable capacity flows prior to any plat approval. However if [Campbellton] complies with its obligations under this contract in all material respects, the Director of Infrastructure Development may not reduce the capacity referenced above. 4. [SAWS] shall maintain accurate records regarding [Campbellton]’s capacity rights in the off-site system, and in the event [Campbellton] exceeds those rights as a result of any subsequent platting, replatting of tract properties, [SAWS] shall have the right to either deny plat approval or refuse to accept flows into the regional wastewater transportation and treatment system that are in excess of the capacity rights reserved to [Campbellton]. 5. The above notwithstanding, [SAWS] shall have the right to connect wastewater flows from other developments to [Campbellton]’s on-site and/or off-site systems, regardless of whether such systems are oversized to accommodate such additional flows, but only in accordance with the terms and conditions of the Unified Development Code and any amendment, revisions, recodifications thereto. (emphasis added). Section II(D) in turn provided the following: [Campbellton] shall be assessed and pay an impact fee for both collection and treatment components prior to service connection. The impact fee assessment shall be calculated in accordance with the fees in effect as time of plat recordation or the latest date allowable by law. A portion, or all, of the collection component of the sewer impact fees may be satisfied by the payment of the design and construction cost of the off-site line built by [Campbellton], which is to be dedicated to the System for ownership and maintenance. The as-built cost of the off-site main is taken and divided by the cost of the collection component per EDU to come up with EDU Credits, when used within the contracted tract but on a dollar per dollar basis if used outside the contracted tract under this contract. . . . [Campbellton] shall pay a portion of the assessed amount for the sanitary sewer facilities (collection) component of the impact fee prior to plat recordation if such assessed amount is greater than the actual design and construction costs of the offsite line to be built by [Campbellton] . . . . In such case, [Campbellton] shall only pay a net impact fee amount equivalent to the difference between such amounts. 04-20-00569-CV - 4 - In the event the actual design and construction costs of the off-site line built by [Campbellton] is greater than the assessed amount of the sewer collection component of the impact fee, then [Campbellton] shall earn collection component EDU credits in accordance with Section IV, Credits, herein. [Campbellton] shall both be assessed and required to pay the entire treatment component of the sewer impact fee in effect at the time of fee payment. Any impact fee [Campbellton] shall pay is subject to the right to refund provisions of Chapter 395 of the Local Government Code . . . and the City’s Impact Fee Ordinance. (emphasis added). Section II(E) in turn provided the following: In accordance with the applicable impact fee statutes and ordinances, upon acceptance of an impact fee, [SAWS] shall be obligated to supply sewer service to [Campbellton] within 5 (five) years OR upon completion of the oversized project being constructed by [SAWS] in cooperation with Southside Independent School District (the “S.S.I.S.D. Project”), whichever occurs first. The above notwithstanding, it is specifically acknowledged and agreed to by both parties that, in accordance with Chapter 395, Local Government Code, such obligation to provide sewer service upon completion of the oversized project being constructed by [SAWS] in cooperation with the Southside Independent School District does not require the construction of a specific facility to provide such sewer service, other than the SSID Project. Should [Campbellton] request sewer service to the Project earlier than upon completion of the oversized project being constructed by [SAWS] in cooperation with the Southside Independent School District, any costs which are directly attributable to supplying such sewer service within such earlier period shall be paid by [Campbellton]. Section XII of the contract provided that the terms of the contract would expire in ten years: XII. TERMS OF CONTRACT The provisions of this Contract shall remain in full force and effect for (10) years from the effective date of this Contract. In the event ten (10) years elapse from the effective date of this Contract and the Development has not completed construction of the off-site line and/or not paid all impact fees required herein order to earn vested rights and collection component credits in accordance with the Contract and the City’s Impact Fee Ordinance, the parties hereby agree to the following: A. The System [SAWS] will continue to (i) accept project wastewater flows for transportation and treatment: (ii) recognize the Developer’s right to the remaining unused project capacity; and (iii) exercise the credit procedures set 04-20-00569-CV - 5 - forth herein until all eligible costs are recouped by the Developer’s performance record in complying with the provisions of this Contract. . . . B. The parties agree to review the provisions of this Contract for possible [a]mendment and re-execution for a term agreed to by the Parties. (emphasis added). The contract, which was attached to Campbellton’s petition, was executed on June 6, 2003. Thus, according to the contract, the provisions of the contract remained “in full force and effect” until June 6, 2013. Pursuant to the plain language of the contract, if ten years passed from the effective date and Campbellton had not completed construction of the off-site facilities and/or not paid “all impact fees required herein [in] order to earn vested rights and collection component credits,” then Campbellton would only have a “right to the remaining unused capacity” and the ability to “exercise the credit procedures set forth” in the contract “until all eligible costs” were recouped by Campbellton. Campbellton’s petition alleged that SAWS had breached the contract by selling “upsized capacity to others.” Campbellton did not recognize that the contract had expired according to its terms; instead, Campbellton alleged that SAWS had attempted to avoid liability under the contract “by passing a ‘rule’” that stated any wastewater commitments for which SAWS had previously issued but did not specify an “end date” or “termination date” would automatically terminate fifteen years “from the date made.” Campbellton sought specific performance, requesting the trial court order SAWS to “specifically perform its obligations and promises under the contract with [Campbellton] and supply [Campbellton] with the 1,500 EDUs2 which it contracted to provide.” Campbellton further sought monetary damages pursuant to section 271.153 of the Texas Local Government Code. In addition to its breach of contract claim, Campbellton sought a declaratory 2 “EDU” stands for Equivalent Dwelling Units. 04-20-00569-CV - 6 - judgment that “the purported ‘rule’ passed by SAWS which attempts to terminate the contractual obligations of SAWS to [Campbellton] herein does not apply to the agreement between [Campbellton] and SAWS.” Campbellton further sought costs and attorney’s fees. In response to the lawsuit, SAWS filed a general denial. It also alleged the following defenses and affirmative defenses by stating that Campbellton’s claims were barred by (1) the doctrine of sovereign/governmental immunity, (2) Campbellton’s failure to perform conditions precedent, (3) Campbellton’s material breaches of contract, and (3) the doctrines of waiver and estoppel. SAWS then filed a “Plea to the Jurisdiction and Motion to Dismiss for Lack of Subject Matter Jurisdiction,” arguing that Campbellton’s claims were barred by governmental immunity. After a hearing, the trial court denied SAWS’s plea. SAWS then filed this interlocutory appeal. GOVERNMENTAL IMMUNITY “SAWS is a governmental entity owned by the City of San Antonio that provides water and wastewater in Bexar and neighboring counties.” San Antonio Water Sys. v. Nicholas, 461 S.W.3d 131, 135 (Tex. 2015). “As a governmental entity, it is generally immune from suit” absent the state’s express waiver. Id.; see also San Jacinto River Auth. v. Medina, 627 S.W.3d 618, 622 (Tex. 2021). Immunity from suit deprives the trial court of subject matter jurisdiction. Tex. Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999). “In the context of contract claims, since one of the ‘fundamental reason[s] why immunity exists [is] to prevent governmental entities from being bound by the policy decisions of their predecessors,’ ‘[w]e defer to the Legislature to waive immunity’ because ‘legislative control over sovereign immunity allows the Legislature to respond to changing conditions and revise existing agreements if doing so would benefit the public.’” Bexar Metro. Water Dist. v. Educ. & Econ. Dev. Joint Venture, 220 S.W.3d 25, 27 (Tex. App.—San Antonio 2006, pet. dism’d) (quoting Catalina Dev., Inc. v. County of El Paso, 121 S.W.3d 704, 706 (Tex. 2003), and Tex. Natural 04-20-00569-CV - 7 - Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 854 (Tex. 2002)) (alteration in original). Thus, “[t]o ensure that this legislative control is not lightly disturbed,” we interpret waivers of immunity narrowly. Id. (quoting Tooke, 197 S.W.3d at 323-33); see also Mission Consol. Indep. Sch. Dist. v. Garcia, 253 S.W.3d 653, 655 (Tex. 2008). The Legislature’s intent to waive immunity must be “clear and unambiguous.” TEX. GOV’T CODE § 311.034 (requiring immunity waivers to be “effected by clear and unambiguous language”). “We review [a] trial court’s ruling on a plea to the jurisdiction based on governmental immunity from suit de novo.” Bexar Metro., 220 S.W.3d at 27-28. “We focus first on the plaintiff’s petition to determine whether the facts pled affirmatively demonstrate that jurisdiction exists.” State v. Holland, 221 S.W.3d 639, 642 (Tex. 2007). In doing so, we “construe the pleadings liberally, looking to the pleaders’ intent.” Id. at 643. “If the pleadings are insufficient to establish jurisdiction but do not affirmatively demonstrate an incurable defect, the plaintiff should be afforded the opportunity to replead.” Id. “In some instances, however, a plea to the jurisdiction may require the court to consider evidence pertaining to jurisdictional facts.” Id. “A plea should not be granted if a fact issue is presented as to the court’s jurisdiction, but if the relevant undisputed evidence negates jurisdiction, then the plea to the jurisdiction must be granted.” Id. A. Texas Local Government Code Chapter 271 In this case, Campbellton argues the state has waived governmental immunity pursuant to chapter 271 of the Texas Local Government Code. Section 271.152 of the Texas Local Government Code provides for limited waiver of governmental immunity: A local governmental entity that is authorized by statute or the constitution to enter into a contract and that enters into a contract subject to this subchapter waives sovereign immunity to suit for the purpose of adjudicating a claim for breach of the contract, subject to the terms and conditions of this subchapter. 04-20-00569-CV - 8 - TEX. LOC. GOV’T CODE § 271.152 (emphasis added). As relevant in this case, a “contract subject to this subchapter” means the following: a written contract stating the essential terms of the agreement for providing goods or services to the local governmental entity that is properly executed on behalf of the local governmental entity . . . . TEX. LOC. GOV’T CODE § 271.151(2)(A). Thus, the issue on appeal is whether the contract at issue between SAWS and Campbellton was an agreement for providing goods or services to SAWS. “[T]he term ‘services’ [as used in section 271.151] is broad and encompasses a wide array of activities.” Lubbock Cty. Water Control & Imp. Dist. v. Church & Akin, L.L.C., 442 S.W.3d 297, 305 (Tex. 2014). However, the supreme court has explained that “services” under section 271.151 should be construed with section 271.153(a)’s limitation on damages. Id. at 304. Under section 271.153(a), a successful claimant’s recovery is limited to “the balance due and owed by the local governmental entity under the contract,” “the amount owed for change orders or additional work the contractor is directed to perform by a local governmental entity in connection with the contract,” “reasonable and necessary attorney’s fees,” and interest. See TEX. LOC. GOV’T CODE § 271.153(a). Subsection (b) expressly excludes the recovery of exemplary damages and most consequential damages. See id. § 271.153(b). The supreme court explained that in “[c]onstruing section 271.152’s waiver of immunity with section 271.153(a)’s limitation on damages to which the waiver applies, the waiver will typically apply only to contracts in which the governmental entity agrees to pay the claimant for the goods or services that the claimant agrees to provide to the governmental entity.” Lubbock Cty., 442S.W.3d at 304. “While a party may agree to provide goods or services in exchange for something other than payment, the absence of any agreement by the governmental entity to pay for goods or services may indicate that the claimant did not in fact agree to provide goods or services to the governmental entity.” Id. at 305. 04-20-00569-CV - 9 - In considering whether the contract at issue was an agreement for providing goods or services to SAWS, we look to the language of the contract itself. That is, when reviewing a contract, our goal is to determine the parties’ true intentions as expressed in the instrument. Plains Exploration & Prod. Co. v. Torch Energy Advisors, Inc., 473 S.W.3d 296, 305 (Tex. 2015). We construe a contract from the four corners of the document and “consider the entire writing, harmonizing and giving effect to all the contract provisions so that none will be rendered meaningless.” Id. We “give words their plain, common, or generally accepted meaning unless the contract shows that the parties used words in a technical or different sense.” Id. If the contract’s language can be given a definite legal meaning or interpretation, then it is not ambiguous and we will construe the contract as a matter of law. El Paso Field Servs., L.P. v. MasTec N. Am., Inc., 389 S.W.3d 802, 806 (Tex. 2012). In the contract at issue, Campbellton, a private land developer, sought sewer service from SAWS to accommodate its plan to develop two residential subdivisions. The contract contained provisions regarding Campbellton’s installation and conveyance of certain on-site and off-site facilities to SAWS, which Campbellton argues was providing a service to SAWS. However, the purpose of “upsizing” these systems was to increase the capacity of the available sewer service so that Campbellton’s two developments could obtain sewer services. Under the contract, SAWS had no right to receive services. Indeed, pursuant to the terms of the contract, Campbellton could have unilaterally decided not to proceed with the developments and not complete any provisions of the contract, and SAWS would not have had any legal recourse. We thus conclude the purpose of the contract was for Campbellton’s developments to receive sewer services from SAWS. Campbellton in its brief emphasizes the benefit obtained by SAWS, arguing that Campbellton’s work on the on-site and off-site facilities resulted in an increase in capacity of 781 gallons per minute at two different facilities, which correspond to the 1,500 EDUs reserved for 04-20-00569-CV - 10 - Campbellton’s proposed developments. In support of its argument that this work constitutes a service to SAWS, Campbellton cites Kirby Lake Development, Ltd. v. Clear Lake City Water Authority, 320 S.W.3d 829 (Tex. 2010); Clear Lake City Water Authority v. MCR Corp., No. 01- 08-00955-CV, 2010 WL 1053057 (Tex. App.—Houston [1st Dist.] 2010, pet. denied); Clear Lake City Water Authority v. Friendswood Development Co., 256 S.W.3d 735 (Tex. App.—Houston [14th Dist.] 2008, pet. dism’d); Town of Flower Mound v. Rembert Enterprises, Inc., 369 S.W.3d 465 (Tex. App.—Fort Worth 2012, pet. denied); Wright Realty Interests, Ltd. v. City of Friendswood, 333 S.W.3d 792 (Tex. App.—Houston [1st Dist.] 2010, no pet.); and Houston Community College Systems v. HV BTW, LP, 589 S.W.3d 204 (Tex. App.—Houston [14th Dist.] 2019, no pet.). Those cases, however, are distinguishable from the facts presented here. In five of these cases, the government entity agreed to pay a purchase price for services rendered. Indeed, in the first three cases, the contracts at issue were titled “Sales Agreement and Lease of Facilities.” See Kirby Lake Development, 320 S.W.3d at 832; MCR Corp., 2010 WL 1053057, at *1; Friendswood Development, 256 S.W.3d at 738. In Kirby Lake Development, 320 S.W.3d at 832, the government entity contracted with developers for the developers to build water and sewer facilities, which the developers would lease to the governmental entity until the governmental entity purchased the facilities. Pursuant to the “sales agreement,” “the [d]eveloper agree[d] to sell and the [a]uthority agree[d] to purchase all completed portions of the [f]acilities . . . .” Id. at 833. Thus, the government entity agreed to purchase services for which the developer was contracted to provide. See id. at 839. Similarly, in MCR Corp., 2010 WL 1053057, at *1, the “sales agreement” required the developer to construct water distribution lines, sewer lines, drainage facilities, and specified street improvements, in exchange for which the water authority paid a purchase price. The contract stated that the developer “agree[d] to sell and the [a]uthority agree[d] to purchase all completed portions of the [f]acilities . . . in consideration of the purchase 04-20-00569-CV - 11 - price.” Id. at *7. The court concluded the agreement was one that provided services to the water authority. Id. at 9. Finally, the “sales agreement” in Friendswood Development, 256 S.W.3d at 739, stated that the water authority agreed to purchase or lease water and sewer line facilities to be constructed by a developer. In the instant case, however, there is no similar purchase language in the contract between Campbellton and SAWS. The contract does not require SAWS to purchase anything from Campbellton. Indeed, as noted previously, under the terms of the contract, Campbellton could decide not to build the facilities in question at all, and SAWS would have no recourse except to simply not provide sewer service to Campbellton’s developments. Like the three cases cited above, two other cases cited by Campbellton contain purchase language relating to services rendered. The first case, Town of Flower Mound, 369 S.W.3d at 470, when a developer applied to the city for approval of development permits, the city required the developer to construct “Auburn Drive on the property and other land” the developer did not initially own as a condition of approval. The city and the developer then entered into three separate development agreements, which required the city to reimburse the developer “the full cost of constructing Auburn Drive through a combination of impact fee credits and direct reimbursement.” Id. (emphasis added). The parties’ dispute centered around the city’s alleged failure to pay the developer the full amount of the construction costs. See id. In the second case cited by Campbellton, Wright Realty Interests, 333 S.W.3d at 794, the developer and the city “executed an earnest money contract, requiring [the developer] to acquire the two adjoining tracts, construct improvements on the properties for the purpose of developing the recreational facilities, and sell the recreational facilities and real property, with the required improvements, to the [c]ity.” The contract required the city to purchase the three tracts from the developer and set “forth a specific purchase price for each tract.” Id. Thus, the contract guaranteed the city’s payment to the 04-20-00569-CV - 12 - private company in exchange for the construction and the dispute centered around the city’s failure to pay. Id. In the instant case, there is no similar purchase language. Although the final case cited by Campbellton, Houston Community College, 589 S.W.3d at 208, does not contain purchase language similar to those discussed above, it is also distinguishable from the facts presented in the instant case. In Houston Community College, a private company agreed to build a parking lot for the college in exchange for the college granting an easement to the company across the college’s land. Id. The court held that at the center of the agreement was the construction of the parking facilities, a direct benefit to the college. Id. at 212. Here, however, the increased capacity of the on-site and off-site facilities was not for the direct benefit of SAWS; the benefit underlying the contract at issue was for the increased capacity to benefit Campbellton and allow sewer service to be provided to its developments. Hence the reason the increased sewer service capacity equaled 1,500 EDUs was because it was needed by the developments. The purpose of the benefit of increased sewer service, as enunciated in the contract, was for the proposed developments. The benefit obtained by SAWS as a result of Campbellton not going forward in a timely manner in developing the two subdivisions was indirect. In CHW-Lattas Creek, L.P. v. City of Alice, 565 S.W.3d 779, 788-89 (Tex. App.—San Antonio 2018, pet. denied), this court considered whether services were being provided to a governmental entity for purposes of waiving immunity by considering whether any benefit received by the governmental entity was direct or indirect. In CHW-Lattas, a landowner entered into a “Development Agreement” with the city whereby the landowner agreed to sell twenty-two acres and dedicate eighteen acres to the city “and the city, will in turn, construct a multi-use complex, including an amphitheater, aquatic center [as defined in the agreement] and conference center, and will facilitate the construction of a hotel within said forty acres.” Id. at 782-83. While the agreement provided for a purchase price of $7,000 per acre, it also provided that “the 04-20-00569-CV - 13 - conveyance was contingent upon: (1) the city completing construction of the Aquatic Center (as defined in the agreement) within thirty-six months; and (2) substantially completing an amphitheater as described in a master plan on file with the city’s secretary.” Id. at 783. “Absent substantial completion of those structures, all or a portion of the Purchased Property was subject to being re-conveyed to [the landowner] at the same per acre price paid by the [c]ity.” Id. “Similarly, although the [c]ity was only required to facilitate the construction of a hotel by a third party, if the hotel was not constructed, [the landowner] was granted a right of first refusal to purchase the lot or lots on which the hotel was to be constructed in the event the [c]ity sought to sell the lot or lots.” Id. In determining whether governmental immunity had been waived under chapter 271, this court emphasized that pursuant to the “Development Agreement,” the landowner and the City had “agreed to undertake various activities to develop the Developer Property and to cooperate with each other in doing so.” Id. at 788. However, the agreement “did not obligate or require [the landowner] to provide any services to the [c]ity, and the [c]ity did not agree to pay [the landowner] for any services.” Id. This court then noted that “[w]hen a party has no right under a contract to receive services, the mere fact that it may receive services as a result of the contract is insufficient to invoke chapter 271’s waiver of immunity.” Id. (quoting Lubbock Cty. Water Control & Improvement Dist., 442 S.W.3d 297, 303 (Tex. 2014)). “At best, such services are only an ‘indirect’ and ‘attenuated’ benefit under the contract.” Id. (quoting Lubbock, 442 S.W.3d at 303). “Although [the landowner] points to the actions it took in furtherance of the development, these actions were in furtherance of [its] desire to develop its land and were not services provided to the [c]ity under the essential terms of the Development Agreement.” Id. Thus, this court held that the “Development Agreement was not an agreement for providing services to the [c]ity, the [c]ity’s immunity was not waived.” Id. at 789. 04-20-00569-CV - 14 - Similarly, here, the improvements made to the lift stations by Campbellton were in furtherance of its desire to develop its two subdivisions so that those subdivisions could obtain sewer service. See id. Any benefit that SAWS received as a result of Campbellton not developing its subdivisions timely pursuant to the agreement was indirect and not part of the essential terms of the agreement. See id. Therefore, we hold that SAWS’s immunity has not been waived under chapter 271. C. Texas Local Government Code Chapter 245 and Texas Civil Practice and Remedies Code Chapter 37 Pursuant to chapter 245 of the Local Government Code, “once an application for the first permit required to complete a property-development project is filed with the agency that regulates such use of the property, the agency’s regulations applicable to the project are effectively ‘frozen’ in their then-current state.” Hatchett v. W. Travis Cty. Pub. Util. Agency, 598 S.W.3d 744, 754 (Tex. App.—Austin 2020, pet. denied). “[T]he agency is prohibited from subsequent regulatory changes to further restrict the property’s use.” Id.; see TEX. LOC. GOV’T CODE § 245.002(a) (“Each regulatory agency shall consider the approval, disapproval, or conditional approval of an application for a permit solely on the basis of any orders, regulations, ordinances, rules, expiration dates, or other properly adopted requirements in effect at the time . . . the original application for the permit is filed for review for any purpose.”). Chapter 245 defines a “permit” as a license, certificate, approval, registration, consent, permit, contract or other agreement for construction related to, or provision of, service from a water or wastewater utility owned, operated, or controlled by a regulatory agency, or other form of authorization required by law, rule, regulation, order, or ordinance that a person must obtain to perform an action or initiate, continue, or complete a project for which the permit is sought. TEX. LOC. GOV’T CODE § 245.001(1) (emphasis added). Upon filing of the first permit application, the project is considered to have “vested rights” and “is not subject to intervening regulations or changes after the vesting date.” City of San Antonio v. Rogers Shavano Ranch, Ltd., 383 S.W.3d 04-20-00569-CV - 15 - 234, 245 (Tex. App.—San Antonio 2012, pet. denied); see TEX. LOC. GOV’T CODE § 245.002(a). Section 245.006 provides that “[t]his chapter may be enforced only through mandamus or declaratory or injunctive relief” and that a “political subdivision’s immunity from suit is waived in regard to an action under this chapter.”3 TEX. LOC. GOV’T CODE § 245.006. However, section 245.004(8) specifically states that chapter 245 does not apply to “regulations for utility connections.” Id. § 245.004(8). The parties dispute whether section 245.004(8) means that chapter 245 does not apply to the agreement between Campbellton and SAWS. However, for the reasons below, we need not determine in this case whether section 245.004(8) applies. In its petition, Campbellton seeks a declaratory judgment pursuant to chapter 245 of the Texas Local Government Code and chapter 37 of the Texas Civil Practice and Remedies Code “that the purported ‘rule’ passed by SAWS, which attempts to terminate the contractual obligations of SAWS to [Campbellton] does not apply to the agreement between [Campbellton] and SAWS.” The “rule” referred to by SAWS is USR 5.11, which provides that any “wastewater commitments and sewer contracts” for which SAWS had previously issued but did not specify an expiration date would automatically terminate “[fifteen] years from February 18, 2003.”4 SAWS agrees with Campbellton that USR 5.11 does not apply to the agreement between it and Campbellton because, according to SAWS, the agreement expired by its own terms. SAWS 3 Campbellton makes clear in its brief that it is not relying on the Declaratory Judgments Act in chapter 37 of the Texas Civil Practice and Remedies Code as a separate waiver of governmental immunity. Instead, Campbellton clarifies that chapter 245 of the Texas Local Government Code explicitly allows a declaratory judgment action as the procedural means of bringing a claim against a governmental entity for a violation of chapter 245. 4 USR 5.11 is a Utility Service Regulation that was approved by the SAWS Board of Trustees. See San Antonio Water System Utility Service Regulations, § 5.11, at 23 (Feb. 9, 2016), available at https://apps.saws.org/business_center/Developer/utilityserviceregs/docs/SAWS_USR_2016_Revisions_20160209.p df. Utility Service Regulations are enacted pursuant to the laws and regulations of the State of Texas and the City of San Antonio, including the authority granted by the Texas Local Government Code, Title 13, Water and Wastewater Utilities, the Texas Water Code Annotated, Title 2, Water Administration, the City Charter of the City of San Antonio, and Ordinance No. 75686, dated April 30, 1992, and other ordinances adopted by the City Council of San Antonio. See id. § 1.3, at 1. 04-20-00569-CV - 16 - emphatically states that it is not relying on USR 5.11 in defense of this lawsuit. As noted previously, Section XII of the agreement between Campbellton and SAWS provided that “[t]he provisions of this Contract shall remain in full force and effect for (10) years from the effective date of this Contract.” It is undisputed that ten years from the effective date of the contract was June 6, 2013. Section XII further provided the following: In the event ten (10) years elapse from the effective date of this Contract and [Campbellton] has not completed construction of the off-site line and/or not paid all impact fees required herein [in] order to earn vested rights and collection component credits in accordance with the Contract and the City’s Impact Fee Ordinance, the parties hereby agree to the following: A. The System [SAWS] will continue to (i) accept project wastewater flows for transportation and treatment: (ii) recognize the Developer’s right to the remaining unused project capacity; and (iii) exercise the credit procedures set forth herein until all eligible costs are recouped by the Developer’s performance record in complying with the provisions of this Contract. . . . B. The parties agree to review the provisions of this Contract for possible [a]mendment and re-execution for a term agreed to by the Parties. (emphasis added). It is undisputed that before the provisions of the contract expired on June 6, 2013, Campbellton completed construction of the off-site facilities as required by the contract. However, the record is unclear whether Campbellton before June 6, 2013 paid “all impact fees required herein [in] order to earn vested rights.” Campbellton’s live petition alleges that in 2019, more than ten years after execution of the contract, Campbellton engaged in negotiations to sell a portion of the 585 acres “to a developer to commence development of the Project as was originally planned.” Campbellton further alleged that in 2019, its engineers approached personnel at SAWS to confirm the availability of wastewater disposal capacity to the site, they were informed that SAWS had allocated (sold) that capacity to other developments in the area and that the current infrastructure which [Campbellton] had helped construct and pay for could not provide the promised capacity for development of the Tract as was promised and agreed to by SAWS. 04-20-00569-CV - 17 - Thus, it is undisputed that Campbellton did not seek to develop the tracts in question until more than ten years after the effective date of the contract. However, on this record, we cannot say as a matter of law that Campbellton failed to pay all the required impact fees, especially as the contract provides that “a portion, or all, of the collection component of the sewer impact fees may be satisfied by the payment of the design and construction cost of the off-site line built.” (emphasis added). Accordingly, it is unclear whether Campbellton acquired “vested rights to capacity” under the agreement. It is clear, however, that Campbellton only had until June 6, 2013 to acquire those rights. Thus, one way or the other, as a matter of law USR 5.11 would not affect any vested rights acquired by Campbellton under the agreement. See TEX. LOC. GOV’T CODE § 245.002(a); Shumaker Enters., Inc. v. City of Austin, 325 S.W.3d 812, 814 (Tex. App.—Austin 2010, no pet.) (explaining that while “[g]enerally, the right to develop property is subject to intervening regulatory changes,” section 245.002(a) “creates a narrow exception to this rule by ensuring that if after receiving a development application or plan, a regulatory agency changes its land-use regulations, the agency cannot enforce such regulatory change to the detriment of the applicant”) (emphasis added). Thus, the record does not show any applicable wavier of immunity under Chapter 245
Outcome: This record affirmatively shows that no waiver of governmental immunity applies under either chapter 271 or chapter 245 of the Texas Local Government Code. See Holland, 221 S.W.3d at 643 (when pleadings and undisputed facts affirmatively demonstrate an incurable defect, the plaintiff is not entitled to an opportunity to replead). Therefore, we hold the trial court erred in denying SAWS’s plea to the jurisdiction. We note that in its plea, SAWS requested attorney’s fees and costs as the prevailing party under the Uniform Declaratory Judgments Act. We thus reverse the trial court’s order and remand this cause to the trial court with instructions to render a judgment 04-20-00569-CV - 18 - of dismissal and to determine any relief to which a party may show itself justly entitled, including attorney’s fees and costs.