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McNair v. City of Cedar Park

decided as corrected: June 29, 1993.


Appeals from the United States District Court for the Western District of Texas. D.C. DOCKET NUMBER #A-88-CA-450. JUDGE Walter Smith

Before Politz, Chief Judge, Reavley and Barksdale, Circuit Judges.

Author: Politz

POLITZ, Chief Judge:

The City of Cedar Park, Texas, appeals an adverse verdict and judgment requiring it to refund approximately $650,000 to Roy McNair. McNair also appeals, seeking additional prejudgment interest and attorney's fees. For the reasons assigned, we reverse and render judgment in favor of the City and, concomitantly, reject McNair's appeal.


Cedar Park is a small city about 30 miles northwest of Austin. During the mid-1980s it experienced rapid growth, requiring the purchase of the private system from which it previously had obtained its water. Because that system was operating at maximum capacity, Cedar Park determined that a major capital expansion was required to accommodate new development. In 1985, the City followed in the footsteps of other cities throughout Texas and enacted an ordinance imposing a community impact fee on all newcomers,*fn1 based on a calculation of the average cost of expansion per living unit. This fee, which computed to $2,400, was charged to all new development and was intended to offset the cost of systemic expansion. Upon receipt of the fees, the City obligated itself to provide water and sewer services.

In March 1984, McNair paid $1,650,000 for approximately 100 acres of land in Cedar Park's jurisdiction on which he intended to construct an upscale trailer park accommodating 1,600 new residents. His plats of the tract were approved by the City Zoning Commission. This approval was revoked because McNair had failed to pay the community impact fee within the time allowed. He then secured an agreement from the City to subsequently recalculate the fee based on actual water use of the trailers. In the meantime, he paid the sum of $1.3 million based on the $2400 per unit fee for 542 units.

On March 2, 1987, having abandoned his plan to develop the trailer park, McNair demanded a complete refund of his fee, plus accrued interest.*fn2 By this time, Cedar Park was well into a five-year plan to construct a unified water system. About $2 million had been spent and the City had committed to spend an additional $8 million. The City was in the process of obtaining state regulatory permits to construct the planned waste-water treatment facilities.

McNair was never told that the fees would be refundable in whole or in part; the ordinance made no mention of refunds. He was the only developer who sought a refund, although others had abandoned their projects. Cedar Park remains obligated to provide water and sewer services to the McNair tract.

McNair sued the City in state court alleging unjust enrichment, assumpsit, and other theories. The case was removed to federal court when he added claims arising under federal law. The district court refused McNair's request to allow dismissal of the federal claims and thereafter a remand. With the exception of the assumpsit and unjust enrichment theories, all claims were disposed of under Fed.R.Civ.P. 56(c) and are not the subject of this appeal. The case proceeded to trial and a jury returned a verdict awarding McNair one-half of his fee; both Cedar Park and McNair timely appealed.


The City preserved a sufficiency question by first moving for directed verdict at the close of all the evidence and thereafter by moving for judgment notwithstanding the verdict.*fn3 The appellate standard of review of the insufficiency claim is the same as that applicable to the granting of a motion for directed verdict or judgment notwithstanding the verdict.*fn4 When determining whether a party is entitled to judgment as a matter of law, whether the motion comes before, during, or after the trial, the court must consult "the applicable substantive law to ascertain what factual issues are material."*fn5 The court must then review the evidence bearing on those issues, drawing all inferences in favor of the nonmovant/appellee, to determine whether a reasonable juror could arrive at a verdict in his favor.*fn6

McNair's recovery is based on assumpsit, an implied-in-law or quasi-contract. While Texas has not adopted the English common-law forms of action, it did adopt the common law of England insofar as it comported with its constitution and statutory enactments.*fn7 Texas recognizes a cause of action in contract based on implied-in-law obligations. While the old common-law writ of assumpsit--literally "he promised"--was a convenient means of enforcing implied obligations in the common-law, rather than the equity, courts of England, the form of the action is no longer of serious moment.*fn8 We therefore pretermit the procedural niceties and focus on that which is necessary to sustain recovery as specifically alleged herein--money had and received*fn9 and restitution.*fn10

Both theories are equitable and have at their base an implied-in-law contractual obligation to restore unjust enrichment.*fn11 Thus, McNair had to establish that the City should be treated*fn12 as having promised to return his payment, or some portion thereof, notwithstanding the absence of express contractual assent thereto. Before we may decide if there was a quasi-contractual basis ...

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