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Perez v. Turner

Court of Appeals of Texas, First District

October 17, 2019

ELIZABETH C. PEREZ, Appellant
v.
SYLVESTER TURNER, MAYOR, KARUN SREERAMA, DIRECTOR OF PUBLIC WORKS AND ENGINEERING, AND THE CITY OF HOUSTON, Appellees

          On Appeal from the 11th District Court Harris County, Texas Trial Court Case No. 2015-34786

          Panel consists of Justices Keyes, Lloyd, and Kelly.

          OPINION ON REHEARING

          EVELYN V. KEYES JUSTICE

         This is a suit contesting a City of Houston drainage fee ordinance. Appellees-Mayor Sylvester Turner, the Director of Public Works and Engineering Karun Sreerama, and the City of Houston (collectively, "the City")- moved for rehearing of the case. We granted the motion. We now withdraw our opinion and judgment issued on August 30, 2018, and issue the following opinion and judgment in their place.[1]

         Appellant, Elizabeth C. Perez, appeals the trial court's December 9, 2016 order granting the plea to the jurisdiction filed by the City and dismissing all of her claims.[2] Perez seeks a judgment declaring the drainage fee ordinance invalid; an injunction against the assessment, collection, and expenditure of taxes and fees pursuant to the ordinance; and reimbursement, "on behalf of herself and all other similarly situated persons or entities," of taxes and fees assessed and collected pursuant to the ordinance and paid "under duress."

         In four points of error, Perez argues that (1) she has standing to assert a legal claim for reimbursement for wrongfully-collected drainage charges that she paid under duress pursuant to the purportedly invalid city ordinance; (2) the named individual defendants-the Mayor and the Director of Public Works and Engineering-do not have governmental immunity from her claims based on their enforcement of the purportedly invalid city ordinance, and, therefore, the trial court has subject-matter jurisdiction over her claims for declaratory and injunctive relief against these defendants; (3) the City's governmental immunity from her declaratory and injunctive relief claims was waived by the statutory requirement that the City be joined as a necessary party to her claims asserting the unconstitutionality and/or the illegality of specific city ordinances conferring the authority to assess, collect and expend drainage charges for street improvements; and (4) the trial court wrongly dismissed her constitutional claims on the ground that they were not ripe. We affirm.

         Background

         A. The Charter Amendment

         Houston is a home rule city governed by a city charter. In 2010, a citizen-initiated petition sought to amend the charter to address the need for drainage and street improvements through Proposition One, which would change the method of financing such projects from bond debt to "Pay-As-You-Go." The amendment proposed a Dedicated Drainage and Street Renewal (DDSR) Fund that would be funded from various sources including a fixed percentage of ad valorem tax revenue shifted from debt service to the DDSR Fund, federal grants, and drainage fee and developer impact fee revenue. Because the percentage of ad valorem tax revenue shifted to the DDSR Fund and the drainage and developer fees added by the charter amendment could affect Houston's revenue caps, [3] the amendment provided that "funding for the [DDSR Fund] that is not derived from ad valorem taxes levied by the City (i.e., that portion derived from fees, charges and third party payments) shall not be included in those ad valorem tax revenues limited by this Charter."

         On November 2, 2010, the City of Houston voters voted on and approved "PROPOSITION I-CHARTER AMENDMENT PROPOSITION Relating to the Creation of a Dedicated Funding Source to Enhance, Improve and Renew Drainage Systems and Streets." The body of Proposition I stated, in its entirety, "Shall the City Charter of the City of Houston be amended to provide for the enhancement, improvement and ongoing renewal of Houston's drainage and streets by creating a Dedicated Pay-As-You-Go Fund for Drainage and Streets?"

         Perez and two other registered voters filed an election contest in December 2010 to challenge the legality of Proposition I, asserting that the Proposition's language was defective and illegally deceptive. This case proceeded through the trial court, which granted summary judgment in favor of the City and the Mayor, and the appellate court, which affirmed the trial court's judgment (Dacus I), to the Texas Supreme Court, which reversed the judgment of the appellate court and ruled in favor of Perez and her co-plaintiffs. Dacus v. Parker, 466 S.W.3d 820, 822 (Tex. 2015) (Dacus II). The supreme court held that because Proposition I failed to mention that drainage charges would be imposed on most real property owners, and therefore omitted a chief feature of the measure, the measure was not submitted "with such definiteness and certainty that voters would not be misled." Id. at 828-29. The court remanded the case to the trial court "for further proceedings consistent with [its] opinion." Id. at 829.

         On remand from Dacus II, the trial court granted summary judgment in favor of Perez and her co-plaintiffs. It held that the November 2, 2010 election on Proposition I, amending the City's charter, was void. The Fourteenth Court of Appeals affirmed, and the Texas Supreme Court denied the City's subsequent petition for review. City of Houston v. Dacus, No. 14-16-00123-CV, 2017 WL 536647, at *2, 5 (Tex. App.-Houston [14th Dist.] Feb. 9, 2017, pet. denied) (mem. op.) (Dacus III).

         B. The Drainage Fee Ordinance

         In April 2011, after the Dacus case was filed, and while it was still pending, the City passed an ordinance under Local Government Code Chapter 552, the "Municipal Drainage Utility Systems Act," creating a drainage utility and allowing that utility to assess, collect, and spend drainage fees (the Drainage Fee Ordinance). The Drainage Fee Ordinance defines "drainage" as including streets, curbs, and other manmade or natural "conduits . . . that are used to draw off surface water from land, carry the water away, collect, store, or treat the water, or divert the water into natural or artificial watercourses or into which the surface water flows." The Ordinance identifies the authority to collect drainage fees as arising from both Chapter 552 and the City's home rule authority.

         The City subsequently collected drainage fees from Perez and others. For example, Perez presented evidence that she paid a monthly drainage fee of $11.38 on her current residence.

         Following the Texas Supreme Court's ruling in Dacus II, and while that suit was pending on remand, on June 17, 2015, Perez filed her original petition in this suit[4] against the City and City officers charged with implementing the Drainage Fee Ordinance, challenging the legality of the Ordinance and seeking declaratory and injunctive relief and reimbursement of taxes paid pursuant to it. Perez alleged that the City and the individual defendants "unconstitutionally and illegally assessed, collected and expended hundreds of millions of dollars from 2011 to 2105 purportedly for drainage and street improvements and repairs" from "Houston taxpayers and landowners pursuant to a void Charter Amendment," Proposition I, and "a void City Ordinance," the Drainage Fee Ordinance.

          Perez claimed, "Simply put, the [Drainage Fee Ordinance] is void, and has always been void." Perez claimed that she has standing to bring claims against the City and the "ultra vires defendants" because she "is a municipal taxpayer who paid, and continues to pay, the [i]llegal [drainage] [t]ax under duress." She alleged that the drainage fee has been illegally assessed and collected "pursuant to a void Charter Amendment and/or to a void City Ordinance" and that the current mayor, Sylvester Turner, has announced his intention to continue to assess and collect the drainage fee. She also sought declaratory and injunctive relief to stop the City and individual defendants from passing future budgets or future spending of public monies which "exceed the caps of the Revenue Cap and/or the Spending Cap contained in the Houston City Charter," as, she alleged, the City had been doing under "the now Void Charter Amendment." She claimed standing to sue as a resident, municipal taxpayer, and registered voter who had paid the drainage fee "under duress."

         In her original petition, Perez sought a judicial declaration that the drainage fee imposed by the Drainage Fee Ordinance is "illegal and/or unconstitutional" and that "all assessed amounts must be reimbursed to those persons and entities that paid them." She also sought reimbursement for past payment of the monthly drainage fee charged to her residence, and she sought an injunction against the expenditure of all amounts assessed but not yet spent and against further assessments, with any money collected to be paid into the registry of the Court.

         The City filed a plea to the jurisdiction or, in the alternative, a motion for summary judgment, asserting, in relevant part, that Perez lacked standing to bring her claims because she had suffered no particularized injury. The City further argued that Perez lacked standing to seek money damages and that governmental immunity barred her claims for a refund of amounts paid. The trial court held a hearing on the plea to the jurisdiction and expressed concerns regarding Perez's standing based on her original pleadings; accordingly, the trial court afforded Perez the opportunity to replead her claims.

         Perez filed an amended petition, continuing to assert that "the City and/or the Ultra Vires Defendants had unconstitutionally and illegally assessed, collected and expended hundreds of millions of dollars from 2011 to 2015 purportedly for drainage and street improvements and repairs" pursuant to "a void Charter Amendment . . . and/or pursuant to a void City Ordinance." Perez argues that the drainage fees have been used illegally because they have been used not only for drainage projects but for "projects clearly unrelated to drainage systems such as traffic signal reconstruction, bridge replacement, street intersection improvements, concrete panel replacement, and asphalt overlays, among others." She continued to seek a judgment declaring that the drainage fee is "illegal and/or unconstitutional, that all assessed amounts must be reimbursed to those persons and entities that paid them," that "all assessed but not yet to be spent amounts must not be expended but segregated and protected and paid into the registry" of the trial court, and that "no further [drainage fee] assessments be assessed or collected." Perez also asserted a variety of constitutional claims challenging the City's Charter Amendment and the implementation of the drainage utility, including the assessment and collection of fees, authorized by the Drainage Fee Ordinance.

         Specifically relevant to her standing, Perez pleaded the following allegations and facts:

• "Perez has been a named party in [the] related [Dacus] litigation which is the sole and exclusive reason why the current lawsuit is now available to reimburse everyone for their pro ...

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