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Neches and Trinity Valleys Groundwater Conservation District v. Mountain Pure TX, LLC

Court of Appeals of Texas, Twelfth District, Tyler

September 18, 2019

NECHES AND TRINITY VALLEYS GROUNDWATER CONSERVATION DISTRICT, APPELLANT
v.
MOUNTAIN PURE TX, LLC, APPELLEE

          APPEAL FROM THE 2ND JUDICIAL DISTRICT COURT CHEROKEE COUNTY, TEXAS

          Panel consisted of Worthen, C.J., Hoyle, J., and Bass, Retired, J., Twelfth Court of Appeals, sitting by assignment.

          MEMORANDUM OPINION

          Bill Bass Justice.

         This is an accelerated appeal from the district court's denial of Neches and Trinity Valleys Groundwater Conservation District's plea to the jurisdiction alleging governmental immunity. In three issues, the District challenges the denial of its plea to the jurisdiction and its no evidence motion for partial summary judgment. Because we conclude that Mountain Pure TX, LLC's counterclaim against the District is barred by governmental immunity, we reverse the order of the trial court, render judgment dismissing Mountain Pure's counterclaim, and remand the cause to the trial court for further proceedings consistent with this opinion.

         Background

         The District is a groundwater conservation district charged with the duty to conserve, preserve, and prevent waste of groundwater in Cherokee, Anderson, and Henderson Counties.[1] Its powers also include the authority to make and enforce rules.[2] Its rules require all persons owning a groundwater well to obtain permits to drill and operate the well unless exempt under the provisions of Chapter 8863 of the Texas Special District Local Laws. Chapter 8863.151 permits the District to assess production fees.[3] Chapter 8863.103 permits the District to require a permit for the transfer of groundwater out of the district.[4]

         Mountain Pure owns a spring water bottling plant in Palestine, Texas. Mountain Pure refused to acknowledge that it owns or operates a water well, refused to apply for a permit to operate a water well, refused to apply for the transfer of water out of the district, and failed to file quarterly production reports or pay quarterly production fees. Mountain Pure maintained that the water it bottled and sold did not come from a water well, but from an "underground formation from which water flows naturally to the surface of the earth." It is Mountain Pure's position that the District therefore has no authority to regulate spring water.

         The District, claiming that Mountain Pure was drawing water from a well under its authority, filed suit against Mountain Pure and Ice River Springs Palestine, LLC to force their compliance with the Texas Water Code and the District's rules. The District asked the trial court to order Mountain Pure and Ice River to (1) submit to the District within thirty days applications for operating permits for all of their wells; (2) submit to the District within thirty days written reports stating the amount of groundwater produced from their wells for all quarters beginning with the first quarter of 2008; (3) cease from operating nonexempt wells in Anderson County without accurately metering the amount of water produced; (4) accurately report the amount of water produced from all of its wells to the District on a quarterly basis; and (5) pay to the District within thirty days all production fees due as determined by the quarterly reports required. The suit also asked for reasonable costs, attorney fees, and the assessment of civil penalties. Ice River, a tenant of Mountain Pure, was subsequently dismissed from the case.

         Mountain Pure generally denied the District's allegations and filed a counterclaim alleging that the District's enforcement attempts constituted tortious interference with their lucrative operating contract with Ice River. In its counterclaim, Mountain Pure stated that prior to the District's filing suit, Ice River contracted to purchase the facility. Ice River was also operating the facility and making substantial payments to Mountain Pure. Mountain Pure alleged that before filing suit, the District informed Ice River "that a $10,000 per day fine was being assessed because of an unreported and unmonitored water well that was drilled on the property." Mountain Pure further alleged "[a]s a result of this communication, Ice River Springs Palestine, LLC practically overnight withdrew from the facility and abandoned operation of the plant and quit making payments under the terms of the written agreement." Mountain Pure alleged that the District, by its actions, tortiously interfered with its contract with Ice River which resulted in $10,000,000 in damages to Mountain Pure from lost earnings and/or lost earning capacity, lost profits, and diminished market value.

         In its First Amended Counterclaim, in addition to the tortious interference claim, Mountain Pure alleged a general takings claim based on the same facts and same damages as the tortious interference claim. The trial court granted the District's plea to the jurisdiction as to the tortious interference claim but denied its plea to the jurisdiction as to the takings claim.

         In its Sixth Amended Counterclaim, Mountain Pure contended that the District's attempted regulation caused Ice River's withdrawal from the contract to operate the facility for Mountain Pure, denied access to the property, and caused a cessation of operations. The nature and amount of the damages are the same as those formerly claimed.

         The District, in its Third Plea to the Jurisdiction, maintained that Mountain Pure simply complained about the District enforcing its regulations and failed to allege a takings claim. The trial court denied the District's plea to the jurisdiction. The District appealed the interlocutory order.

         No rules or restrictions have as yet been imposed on Mountain Pure or its property and the question of the District's authority over the source of Mountain Pure's water remains pending before the trial court.

         Plea to ...


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