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Houston Belt & Terminal Railway Co. v. City of Houston

Court of Appeals of Texas, Fourteenth District, Houston

January 23, 2014

HOUSTON BELT & TERMINAL RAILWAY COMPANY, BNSF RAILWAY COMPANY, AND UNION PACIFIC RAILROAD COMPANY, Appellants
v.
THE CITY OF HOUSTON, TEXAS, AND DANIEL KRUEGER, IN HIS OFFICIAL CAPACITY AS DIRECTOR OF PUBLIC WORKS AND ENGINEERING, Appellees

Page 664

On Appeal from the 61st District Court, Harris County, Texas. Trial Court Cause No. 2012-62909.

For APPELLANT: James B. Harris, Richard Barrett Phillips, Jr., DALLAS, TX; Robert Lawton Paddock, HOUSTON, TX.

For APPELLEE: David M. Feldman, John B. Wallace, Judith Lee Ramsey, HOUSTON, TX.

Panel consists of Christopher, Donovan, and Brown, Justices.

OPINION

Marc W. Brown, Justice.

Page 665

Appellants, Houston Belt & Terminal Railway Co., BNSF Railway Co., and Union Pacific Railroad Co., (collectively, the " Railroads" ) present this accelerated appeal from the trial court's order partially sustaining the plea to the jurisdiction filed by appellees, the City of Houston, Texas (the " City" ), and Daniel Krueger, in his official capacity as Director of Public Works and Engineering, based on governmental immunity in a declaratory judgment

Page 666

action. The trial court sustained the City and Krueger's plea to the jurisdiction with regard to, and dismissed for want of jurisdiction, the Railroads' ultra vires causes of action. We reverse in part with regard to the Railroads' claims that Krueger has violated or exceeded his legal authority under chapter 47, article XIV, of the City's Code of Ordinances (the " drainage fee ordinance" ) by imposing drainage charges on certain of the Railroads' properties that are not " benefitted properties." We affirm in part as to the Railroads' claims that Krueger has violated or exceeded his legal authority under the drainage fee ordinance with regard to the amount of fees imposed on the Railroads' properties subject to drainage charges. We remand for proceedings consistent with this opinion.

I. Factual and Procedural Background

In April 2011, the City enacted Ordinance No. 2011-254, the drainage fee ordinance. See Houston, Tex., Code of Ordinances, ch. 47, art. XIV (" Code of Ordinances" ). The drainage fee ordinance created a municipal drainage utility, a public utility, " [i]n the interest of public health and safety and a more efficient and economic operation of drainage facilities of the city." Code of Ordinances, § 47-803. Under the drainage fee ordinance, the City shall " establish a schedule of drainage charges against all real property in the city subject to such charges" ; provide drainage " for all real property in the city on payment of drainage charges unless the property is exempt from such payment" ; and " offer drainage service on nondiscriminatory, reasonable and equitable terms." Id. § 47-801. The drainage charges are imposed " [t]o recover the city's cost of service to provide drainage to benefitted properties" and are to be used exclusively for various expenses " associated with the cost of service to provide drainage services within the service area." Id. § § 47-821, 47-822(a). Drainage charges are calculated based on the specified rate (either residential or non-residential, and if residential, whether curb-and-gutter or open-ditch) per " square foot of impervious surface of a benefitted property." Id. § 47-822(b), (c). The drainage fee ordinance provides for various categories of exemptions from the imposition of a drainage charge. Id. § 47-822(f). The director of the City's department of public works and engineering " shall be responsible for the administration of this article [XIV. Municipal Drainage Utility System]." Id. § 47-805. The drainage fee ordinance provides that the director " shall establish and implement a system of verification and correction of drainage charges for each property subject to the drainage charges." Id. § 47-824(a).

In May 2011, the Railroads received notice of proposed drainage charges Krueger had determined for each of the hundreds of parcels of property that the Railroads own in the City based on each property's impervious square footage. The Railroads submitted requests for verification and correction of their initial drainage charges, specifically indicating which of their properties were not " benefitted properties" subject to charges--those not discharging stormwater run-off to the City's drainage utility system. See id . § 47-824(b). The Railroads also requested verification and correction of areas of their properties they claimed Krueger had incorrectly determined as impervious. See id . After these requests were denied, the Railroads requested an appeal. See id . § 47-824(e). The hearing examiner made no material changes to the Railroads' assessed drainage charges. The Railroads then appealed this decision to a three-member panel of

Page 667

hearing examiners. The panel upheld the hearing examiner's decision.

In October 2012, the Railroads sued both the City and Krueger in his official capacity. The Railroads sought declarations with respect to the validity of the drainage fee ordinance and, if valid, whether Krueger acted in violation of the ordinance by imposing drainage charges on their non-" benefitted properties" and in determining the amount of drainage charges imposed on their properties. The City and Krueger filed ...


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