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City of Dallas v. Sabine River Authority of Texas

Court of Appeals of Texas, Third District, Austin

June 7, 2017

City of Dallas, Appellant
v.
The Sabine River Authority of Texas, Appellee

         FROM THE DISTRICT COURT OF TRAVIS COUNTY, 53RD JUDICIAL DISTRICT NO. D-1-GN-15-000398, HONORABLE STEPHEN YELENOSKY, JUDGE PRESIDING

          Before Chief Justice Rose, Justices Pemberton and Bourland

          MEMORANDUM OPINION

          Cindy Olson Bourland, Justice

         The City of Dallas appeals from the trial court's order granting the plea to the jurisdiction filed by the Sabine River Authority (SRA). The City filed a petition for review with the Public Utilities Commission (PUC) concerning the increased rate SRA began charging the City for wholesale water. See generally 16 Tex. Admin. Code §§ 24.128-.138 (Pub. Util. Comm'n) (setting forth guidelines and procedural requirements for petitions for review concerning wholesale water rates).[1] The parties disputed whether the increased rate had been set pursuant to a written contract, and the administrative law judge (ALJ) abated the proceeding. See id. § 24.131(d) (Comm'n's Review of Petition or Appeal) (providing that if seller and buyer do not agree that rate is charged pursuant to written contract, ALJ shall abate proceedings until contract dispute over whether rate is part of contract has been resolved by court of proper jurisdiction). The City then sued SRA in district court under the Uniform Declaratory Judgments Act (UDJA), seeking a declaration that the water rate set by SRA was not charged pursuant to the written contract between the parties. See Tex. Civ. Prac. & Rem. Code §§ 37.001-.011. SRA filed its plea to the jurisdiction, claiming governmental immunity. For the reasons that follow, we affirm the trial court's order granting SRA's plea to the jurisdiction.

         BACKGROUND

         SRA is a political subdivision of the State created in 1949 pursuant to Article XVI, Section 59 of the Texas Constitution. See Tex. Const. art. XVI, § 59 (declaring development of storm and flood waters and water of rivers and streams of State for irrigation, power, and all other useful purposes to be public purpose and authorizing creation of conservation and reclamation districts); Act of Apr. 27, 1949, 51st Leg., R.S., ch. 110, §§ 1-32, 1949 Tex. Gen. Laws 193, 193-205, amended by Act of May 21, 1973, 63d Leg. R.S., ch. 238, §§ 1-4, secs. 14, 18, 1973 Tex. Gen. Laws 557, 557-65 (SRA Enabling Statute). SRA provides wholesale raw water to the City pursuant to a set of written contracts (the Contract) that SRA entered into with the City and the City's predecessors. The Contract contained a provision for automatic renewal effective November 1, 2014, for a 40-year term. The renewal provision stated:

The amount of compensation that [SRA] shall be entitled to receive during any renewal term (exclusive of the City's pro rata share of the Service Charge) shall be determined by mutual agreement between the City and [SRA], taking into account such price as is prevailing in the general area at the time for like contract sales of water of similar quality, quantity and contract period. . . . In the event that the City and [SRA] are unable to agree upon the amount of such compensation prior to expiration of the term, the [PUC] may establish interim compensation to be paid by the City to [SRA].

         The City and SRA were unable to reach an agreement as to the amount of compensation, and on October 13, 2014, SRA notified the City that on October 9, 2014, its board of directors had unilaterally approved a new compensation payment amount for the next forty-year renewal term.[2]

         The City filed a petition with the PUC for review of the October 9, 2014 action, complaining of the renewal rate and requesting interim rates. See Tex. Water Code § 12.013(a) (setting out PUC's rate-fixing power over wholesale water rates), (d) (outlining PUC's jurisdiction under section 12.013), (e) (providing that PUC may establish interim rates during pendency of rate proceeding). The PUC referred the case to the State Office of Administrative Hearings (SOAH). See 16 Tex. Admin. Code § 24.131(a) (Comm'n's Review of Petition or Appeal) (providing that if PUC determines that petition meets requirements, it shall forward petition to SOAH for evidentiary hearing). Following a prehearing conference, the ALJ issued an order stating that if the parties did not agree that the rate was charged pursuant to a written contract, he must abate the proceeding, and setting a pretrial conference to establish interim rates. See id. § 24.131(b) (providing that petition or appeal of rate charged pursuant to written contract is to be forwarded to SOAH for evidentiary hearing on public interest), (c) (providing that petition or appeal of rate not charged pursuant to written contract is to be forwarded to SOAH for evidentiary hearing on rate), (d) (providing that if seller and buyer do not agree that rate is charged pursuant to written contract, ALJ shall abate proceedings until contract dispute over whether rate is part of contract has been resolved by court of proper jurisdiction). The City did not agree that SRA had set the rate pursuant to the Contract, and the ALJ abated the proceeding. See id. § 24.141(d).

         The City then filed this suit against SRA in district court seeking declarations that the renewal rate set by SRA in its action of October 9, 2014, was not set pursuant to a written contract and that SRA's "legislative act in the nature of an ordinance or statute setting those rates" was invalid. SRA filed a plea to the jurisdiction on the basis of governmental immunity. After briefing and a hearing, the trial court granted SRA's plea, and the City filed this appeal.

         STANDARD OF REVIEW AND APPLICABLE LAW

         As a political subdivision of the State, SRA "possess[es] governmental immunity from suit unless the Legislature has waived that immunity . . . in 'clear and unambiguous language.'" See Byrdson Servs., LLC v. South E. Tex. Reg'l Planning Comm'n, __S.W.3d__, No. 15-0158, 2016 Tex. LEXIS 1152, at *4 (Tex. Dec. 23, 2016) (quoting Tooke v. City of Mexia, 197 S.W.3d 325, 328-29 (Tex. 2006)). Governmental immunity from suit implicates a court's subject matter jurisdiction and is therefore properly asserted in a plea to the jurisdiction. Houston Belt & Terminal Ry. Co. v. City of Hous., 487 S.W.3d 154, 160 (Tex. 2016); Texas Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). A plea questioning the trial court's subject matter jurisdiction raises a question of law that we review de novo. Westbrook v. Penley, 231 S.W.3d 389, 394 (Tex. 2007); Miranda, 133 S.W.3d at 226. "The burden is on the plaintiff to affirmatively demonstrate the trial court's jurisdiction." Heckman v. Williamson Cty., 369 S.W.3d 137, 150 (Tex. 2012); accord Ex parte Springsteen, 506 S.W.3d 789, 798 n.50 (Tex. App.-Austin 2016, pet. filed) (citing City of Elsa v. Gonzalez, 325 S.W.3d 622, 625 (Tex. 2010) (per curiam)). When, as here, a plea to the jurisdiction challenges the pleadings, we look to the pleader's intent, construe the pleadings liberally in favor of jurisdiction, and accept the allegations in the pleadings as true to determine if the pleader has alleged sufficient facts to affirmatively demonstrate the trial court's jurisdiction to hear the cause. Heckman, 369 S.W.3d at 150; City of El Paso v. Heinrich, 284 S.W.3d 366, 378 (Tex. 2009); Miranda, 133 S.W.3d at 226. When the pleadings fail to allege sufficient facts to affirmatively demonstrate the trial court's jurisdiction but do not affirmatively demonstrate an incurable jurisdictional defect, the issue is one of pleading sufficiency, and the plaintiff should be given an opportunity to amend. Miranda, 133 S.W.3d at 226-27. If the pleadings affirmatively negate the existence of jurisdiction, then a plea to the jurisdiction may be granted without allowing the plaintiff an opportunity to amend. Id. at 227.

         The UDJA gives Texas courts the power to "declare rights, status, and other legal relations whether or not further relief is or could be claimed." Tex. Civ. Prac. & Rem. Code § 37.003(a). "A person interested under a . . . written contract . . . or whose rights . . . are affected by a statute, municipal ordinance [or] contract . . . may have determined any question of construction or validity arising under the . . . statute, ordinance, [or] contract . . . and obtain a declaration of rights, status, or legal relations thereunder." Id. § 37.004(a). The UDJA, however, does not create or augment a trial court's subject matter jurisdiction (aside from its own limited waiver of immunity)-it is "merely a procedural device for deciding cases already within a court's jurisdiction . . . ." Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 444 (Tex. 1993); see Texas Dep't of Transp. v. Sefzik, 355 S.W.3d 618, 621-22 (Tex. 2011) (per curiam) (noting that Texas Supreme Court has consistently stated that "UDJA does not enlarge the trial court's jurisdiction but is 'merely a procedural device for deciding cases already within a court's jurisdiction'"); see also Strayhorn v. Raytheon E-Sys., Inc., 101 S.W.3d 558, 572 (Tex. App.-Austin 2003, pet. denied) ("To establish jurisdiction under the UDJA, a party must plead the existence of an 'underlying controversy' within the scope of section 37.004 of the [UDJA].").

         The UDJA "is not a general waiver of sovereign immunity" but only waives "immunity for certain claims." Texas Parks & Wildlife Dep't v. Sawyer Trust, 354 S.W.3d 384, 388 (Tex. 2011); McLane Co. v. Texas Alcoholic Beverage Comm'n, No. 03-16-00415-CV, __S.W.3d__, 2017 Tex.App. LEXIS 851, at *4 (Tex. App.-Austin Feb. 1, 2017, pet. filed). "For example, the state may be a proper party to a declaratory judgment action that challenges the validity of a statute." Sefzik, 355 S.W.3d at 622. "[T]he UDJA's sole feature that can impact trial-court jurisdiction to entertain a substantive claim is the statute's implied limited waiver of sovereign or governmental immunity that permits claims challenging the validity of ordinances or statutes." Ex parte Springsteen, 506 ...


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