Date: 08-10-2017

Case Style: City of Bedford, Texas v. Apartment Association of Tarrant County, Inc.

Case Number: 02-16-00356-CV

Judge: Elizabeth Kerr

Court: Texas Court of Appeals, Second District on appeal from the 17th District Court of Tarrant County

Plaintiff's Attorney: John H. Cayce, Jr. and Israel Suster

Defendant's Attorney: Matthew Butler

Description: The Apartment Association of Tarrant County, Inc. is a trade association
whose members include multifamily-property owners in Bedford, Texas. In this
suit, the Association is representing and advocating for its members’ interests by
seeking to protect them from what it alleges are excessive fees, too-frequent
1See Tex. R. App. P. 47.4.
2
inspections, and unlawful taxes imposed by the City of Bedford, Texas. After the
Association sued the City, the City filed a plea to the jurisdiction arguing that the
trial court lacks jurisdiction over this suit because the City’s governmental
immunity has not been waived. The trial court disagreed and denied the City’s
plea. The City has appealed, raising what we construe as seven issues. We
affirm in part and reverse in part.
I. Background
In April 2016, the Association sued the City for declaratory and injunctive
relief, alleging that three city ordinances regulating multifamily properties in
Bedford were unconstitutional: Ordinance 2334 and Ordinances 16-3151 and 16-
3152. Ordinance 2334—enacted in October 2014—increased the annual license
and inspection fees for multifamily properties from $9.00 to $18.00 per unit.
Ordinances 16-3151 and 16-3152—enacted in March 2016—effectively repealed
Ordinance 2334 by increasing annual license and inspection fees based on a
three-tier rating system. Under the new scheme, annual license fees are
$13.20 per unit and inspection fees are $10.00 per unit per inspection. Because
the new ordinances require a minimum of two inspections per year, the annual
inspection fees per unit are at least $20.00 and can be as high as $40.00 per
unit. Thus, the total annual license and inspection fees range from $33.20 to
$53.20 per unit.
According to the Association, the fees assessed under Ordinances 16-
3151 and 16-3152 are the highest in the State of Texas, and the City has the
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highest mandatory-inspection rate in the state. The Association alleges that the
number of required annual inspections and the additional inspection fees will
have a “chilling and adverse effect” on the multifamily-property business in the
City and will devalue multifamily properties in the City by about $9 million.
The Association seeks (1) declarations that the fees assessed under all
three ordinances are unreasonable, excessive, and without a rational basis, and
that the ordinances thus violate multifamily-property owners’ substantive-dueprocess
rights under the Texas constitution2 and constitute an impermissible
occupation tax under the Texas constitution;3 (2) a declaration that multifamilyproperty
owners who paid fees under Ordinance 2334 are entitled to a refund;
and (3) an injunction against the City from enforcing Ordinances 16-3151 and 16-
3152 and from spending any illegal fees it collected under Ordinance 2334. The
Association also seeks its attorney’s fees under civil practice and remedies code
chapter 37.
In its jurisdictional plea, the City argued that its governmental immunity has
not been waived because (1) the Association lacks standing to pursue its claims
on behalf of its members; (2) the declaratory-judgments act does not waive the
City’s immunity with respect to the Association’s refund claim because it is really
a request for money damages; (3) declaratory relief is inappropriate because the
2Tex. Const. art. I, § 19.
3Tex. Const. art. VIII, § 1(f).
4
Association has not alleged any actual harm and instead seeks an impermissible
advisory ruling; (4) the Association has not pleaded any facts to support a claim
for injunctive relief against the City; and (5) the Association cannot recover
attorney’s fees under chapter 37 because it has not pleaded a proper claim for
relief.
The City later filed a combined summary-judgment motion and brief in
support of the plea to the jurisdiction. The City expanded on some of the
arguments it made in its jurisdictional plea and attached certified copies of the
ordinances—which contain legislative findings and the ordinances’ stated
purposes—along with an affidavit from the City’s “Strategic Services Manager”
explaining Ordinances 16-3151 and 16-3152’s purposes and the City’s method
for calculating the license and inspection fees.
After a nonevidentiary hearing, the trial court denied the City’s plea.
II. Standard of Review
A plea to the jurisdiction is a dilatory plea that seeks dismissal of a case for
lack of subject-matter jurisdiction. Harris Cty. v. Sykes, 136 S.W.3d 635,
638 (Tex. 2004). Such a plea may challenge whether the plaintiff has met its
burden of alleging jurisdictional facts or may challenge the existence of
jurisdictional facts. See Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d
217, 226–27 (Tex. 2004). We review de novo a trial court’s ruling on a plea to the
jurisdiction. Id. at 228. When the plea challenges the pleadings, we determine
whether the plaintiff has met its burden of alleging facts affirmatively
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demonstrating that the trial court has subject-matter jurisdiction. City of Keller v.
Hall, 433 S.W.3d 708, 712–13 (Tex. App.—Fort Worth 2014, pet. denied). We
construe the pleadings liberally in the plaintiff’s favor, accept all factual
allegations as true, and look to the plaintiff’s intent. Heckman v. Williamson Cty.,
369 S.W.3d 137, 150 (Tex. 2012). If the pleadings are insufficient to establish
jurisdiction but do not affirmatively demonstrate an incurable defect in jurisdiction,
the plaintiff should be afforded the opportunity to amend. See Miranda,
133 S.W.3d at 226–27.
When a plea to the jurisdiction challenges the existence of jurisdictional
facts, our review mirrors that of a traditional summary-judgment motion. Mission
Consol. Indep. Sch. Dist. v. Garcia, 372 S.W.3d 629, 635 (Tex. 2012); see Tex.
R. Civ. P. 166a(c). We take as true all evidence favorable to the plaintiff, and we
indulge every reasonable inference and resolve any doubts in the plaintiff’s favor.
Miranda, 133 S.W.3d at 228. The defendant carries the initial burden of
establishing that the trial court lacks jurisdiction. Garcia, 372 S.W.3d at 635. If the
defendant meets that burden, the plaintiff must then demonstrate that a disputed
material fact exists regarding the jurisdictional issue. Id. If a fact issue exists, the
trial court should deny the plea. Id. But if the evidence is undisputed or the
plaintiff fails to raise a fact question on the jurisdictional issue, the plea must be
granted as a matter of law. See id.
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III. The Association’s Standing
The City does not challenge the Association’s standing in a separate issue,
but as part of its argument it asserts that the Association lacks standing to seek
money damages on its members’ behalf. We construe this argument as the City’s
seventh issue and address it separately because standing is a component of
subject-matter jurisdiction and must be established to maintain a lawsuit. See
Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 444–46 (Tex. 1993).
An association has standing to sue on its members’ behalf when (1) its
members would otherwise have standing to sue in their own right, (2) the
interests it seeks to protect are germane to the organization’s purpose, and
(3) neither the claim asserted nor the relief requested requires each of the
individual members’ participation in the lawsuit. Big Rock Investors Ass’n v. Big
Rock Petroleum, Inc., 409 S.W.3d 845, 848 (Tex. App.—Fort Worth 2013, pet.
denied) (citing Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S. 333, 343,
97 S. Ct. 2434, 2441 (1977); Tex. Ass’n of Bus., 852 S.W.2d at 447). The City
does not dispute—and we agree—that the Association has satisfied the first two
prongs for the associational-standing test. But the City claimed in the trial court4
and maintains on appeal that the Association cannot meet the test’s third prong,
4A plea to the jurisdiction is proper to challenge a party’s lack of standing.
Big Rock, 409 S.W.3d at 848 (citing M.D. Anderson Cancer Ctr. v. Novak,
52 S.W.3d 704, 710–11 (Tex. 2001); Waco Indep. Sch. Dist. v. Gibson,
22 S.W.3d 849, 850 (Tex. 2000)).
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asserting that if the Association is seeking money damages on its members’
behalf, then the Association does not have associational standing.
That third prong—requiring that neither the claim asserted nor the relief
requested requires the individual members’ participation—focuses on the matters
of administrative convenience and efficiency, not on elements of a case or
controversy within the Constitution’s meaning. Id. at 849 (citing United Food &
Comm’l Workers Union Local 751 v. Brown Grp., Inc., 517 U.S. 544, 557,
116 S. Ct. 1529, 1536 (1996)). That is, this prong is not constitutional but rather
is prudential and is based on judicial-economy concerns. Id. (citing United Food,
517 U.S. at 556–57, 116 S. Ct. at 1536). As we recognized in Big Rock, sifting
through an association’s claims and its requested relief to decide which kinds of
things would (or would not) require its individual members to participate in the
litigation, and thus to evaluate any resulting impact on prudential concerns, is
“somewhat tricky.” Id. Usually, standing issues bar an association’s claim for
damages on its members’ behalf because such suits typically require each
individual member to participate as a party to establish its own damages. Id. An
association lacks standing to seek money damages unique to its individual
members as a normal rule, but it does generally have standing to seek
declaratory relief, injunctive relief, or some other type of prospective equitable
relief on its members’ behalf. Id. at 850. When an association seeks these latter
forms of relief, it can reasonably be supposed that the remedy, if granted, will
benefit those association members actually injured; prudential concerns are thus
8
advanced, and the association may have standing to invoke the court’s remedial
powers on its members’ behalf. Id.; see, e.g., Hunt, 432 U.S. at 344, 97 S. Ct. at
2442 (recognizing that neither the commission’s “interstate commerce claim nor
[its] request for declaratory and injunctive relief requires individualized proof and
both are thus properly resolved in a group context”); Tex. Ass’n of Bus.,
852 S.W.2d at 448 (holding that “TAB seeks only prospective relief, raises only
issues of law, and need not prove the individual circumstances of its members to
obtain that relief, thus meeting the third prong” of the associational-standing test).
Here, the Association pleaded claims for declaratory and injunctive relief
that benefited its members and does not seek money damages on its members’
behalf. It seeks a declaration that the ordinances are invalid, an injunction
preventing the City from acting under those ordinances, and a declaration that
multifamily-property owners in Bedford are entitled to a refund of excessive fees
if Ordinance 2334 is declared to have been invalid. The Association does not
seek actual refunds for those property owners. Whether multifamily-property
owners in Bedford are entitled to a refund as an overarching matter does not
require any individual inquiries. Cf. Self-Ins. Inst. of Am., Inc. v. Korioth, 53 F.3d
694, 696 (5th Cir. 1995) (op. on reh’g) (reversing order refunding taxes and fees
because association challenging tax had standing to seek injunctive relief but not
to claim a refund on its members’ behalf because of necessity of determining
eligibility and amount of individual refunds). Neither the claims asserted nor the
9
relief sought requires the members’ individual participation, and the Association’s
claims and the relief sought will apply equally to its members.
We conclude that the Association has satisfied the associational-standing
test’s third prong and thus may raise the claims brought in this suit. We overrule
the City’s seventh issue.
IV. The Association’s Declaratory-Judgment Claims
In what we construe as four issues, the City argues that the trial court
erred by denying the City’s plea to the jurisdiction with respect to the
Association’s declaratory-judgment claims because (1) immunity is not waived
where the Association failed to allege facts demonstrating a valid constitutional
claim, (2) the Association cannot plead a justiciable controversy over a repealed
ordinance, (3) the declaratory-judgments act does not waive immunity for a claim
challenging a repealed ordinance’s validity, and (4) the declaratory-judgments act
does not waive immunity for the Association’s refund claim because the
Association pleaded this claim solely to recover money damages.
A. Governmental immunity for declaratory-judgment claims
Unless the state consents to suit, sovereign immunity deprives a trial court
of jurisdiction for lawsuits against the state or certain governmental units.
Miranda, 133 S.W.3d at 224. Cities are political subdivisions of the state and,
absent waiver, are entitled to governmental immunity. Reata Constr. Corp. v. City
of Dallas, 197 S.W.3d 371, 374 (Tex. 2006) (op. on reh’g). The declaratoryjudgments
act (“the Act”) allows a person whose “rights, status, or other legal
10
relations are affected by a . . . municipal ordinance” to “have determined any
question of construction or validity arising under the . . . ordinance” and to “obtain
a declaration of rights, status, or other legal relations thereunder.” Tex. Civ. Prac.
& Rem. Code Ann. § 37.004(a) (West 2015). The Act thus provides a limited
governmental-immunity waiver for declaratory-judgment claims against
municipalities. City of New Braunfels v. Carowest Land, Ltd., 432 S.W.3d 501,
530 (Tex. App.—Austin 2014, no pet.); see Tex. Civ. Prac. & Rem. Code Ann.
§ 37.006(b) (West 2015) (“In any proceeding that involves the validity of a
municipal ordinance or franchise, the municipality must be made a party and is
entitled to be heard . . . .”). Immunity is waived when a party seeks a declaration
that an ordinance or statute is invalid. City of N. Richland Hills v. Home Town
Urban Partners Ltd., 340 S.W.3d 900, 911 (Tex. App.—Fort Worth 2011, no pet.)
(op. on reh’g); see Tex. Dep’t of Transp. v. Sefzik, 355 S.W.3d 618, 622 &
n.3 (Tex. 2011); City of El Paso v. Heinrich, 284 S.W.3d 366, 373 n.6 (Tex.
2009). But rather than creating or enlarging a trial court’s jurisdiction, the Act is
simply a procedural device for deciding cases already within the court’s
jurisdiction. Sefzik, 355 S.W.3d at 621–22.
B. The sufficiency of the Association’s pleadings
In its first issue, the City recognizes that the Association’s declaratoryjudgment
claims challenge the ordinances’ validity but contends that the
Association has not alleged facts affirmatively demonstrating that the trial court
has subject-matter jurisdiction over those claims. In support of its requests for
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declaratory relief, the Association alleged that the ordinances’ license and
inspection fees are unreasonable, excessive, and without a rational basis, and
thus constitute an impermissible occupation tax in violation of article VIII, section
1(f) of the Texas constitution and violate multifamily-property owners’
substantive-due-process rights under article I, section 19 of the Texas
constitution. The Association also alleged that the City uses the fees to cover the
costs of its police and fire-department personnel.
We conclude that these factual allegations suffice to demonstrate subjectmatter
jurisdiction over the Association’s declaratory-judgment claims challenging
the ordinances’ validity. If arbitrary and unreasonable, a city’s action violates
substantive due process. See Mayhew v. Town of Sunnyvale, 964 S.W.2d 922,
938 (Tex. 1998), cert. denied, 526 U.S. 1144 (1999). And a fee’s reasonableness
determines, in part, whether the fee is an occupation tax, which a city may not
levy if the tax exceeds “one half of the tax levied by the State for the same period
on such profession or business.” Tex. Const. art. VIII, § 1(f). This constitutional
provision also (logically) prohibits a municipality from levying an occupation tax
where the State has not previously levied such a tax in the first place. City of
Houston v. Harris Cty. Outdoor Advert. Ass’n, 879 S.W.2d 322, 326 (Tex. App.—
Houston [14th Dist.] 1994, writ denied), cert. denied, 516 U.S. 822 (1995).
To determine whether an assessment is a fee or a tax under article VIII,
section 1(f), courts consider whether the assessment’s primary purpose is
regulation or revenue-raising. See Lowenberg v. City of Dallas, 261 S.W.3d 54,
12
57–58 (Tex. 2008) (citing Hurt v. Cooper, 110 S.W.2d 896, 899 (Tex. 1937));
Harris Cty. Outdoor Advert. Ass’n, 879 S.W.2d at 326. If the primary purpose is
to regulate, then it is a license fee, but if the primary purpose is to raise revenue,
then the ordinance is an occupation tax. Harris Cty. Outdoor Advert. Ass’n,
879 S.W.2d at 326. The “critical issue” in determining the assessment’s primary
purpose is “whether the assessment is intended to raise revenue in excess of
that reasonably needed for regulation.” Tex. Boll Weevil Eradication Found., Inc.
v. Lewellen, 952 S.W.2d 454, 461 (Tex. 1997). “To be reasonable, a license fee
cannot be excessive nor more than reasonably necessary to cover the cost of
granting the license and of exercising proper police regulation, or it must bear
some reasonable relationship to the legitimate object of the licensing ordinance.”
Harris Cty. Outdoor Advert. Ass’n, 879 S.W.2d at 326–27. Here, the Association
pleaded that the fees were unreasonable and excessive and that the ordinances
were intended to raise revenue. We thus conclude that the Association alleged
sufficient facts to invoke the immunity waiver under the Act.
In addition to challenging the sufficiency of the Association’s pleadings, the
City asserts that the Association’s ability to prove its case is a prerequisite to
invoking the Act’s governmental-immunity waiver. The City claims that the
ordinances’ legislative findings and stated purposes establish that the City’s
actions were not arbitrary and capricious and that the City’s calculation of the fee
amounts—based, as it says, on the estimated costs of regulating multifamily
properties in Bedford—proves that the license and inspection fees “are based on
13
the cost of a regulatory scheme and police regulation.” The City argues that
because it proved that the license and inspection fees are not arbitrary or
unreasonable and are not an illegal tax, the ordinances are valid. And, according
to the City, because the ordinances are valid, the trial court lacks subject-matter
jurisdiction over the Association’s claims challenging those ordinances’ validity.5
The City wrongly contends, though, that an immunity waiver under the Act
is conditioned on a plaintiff’s proving liability. In considering this contention, one
of our sister courts has stated:
The [Act] does not include a statutory expression, like the
expression in the Texas Tort Claims Act, that conditions waiver of
governmental immunity on a showing of potential liability. Under the
[Act], governmental immunity is waived if the proceeding involves
5The City’s plea to the jurisdiction challenged only the trial court’s
jurisdiction over the Association’s Ordinance 2334 claims. The City challenged
the trial court’s jurisdiction over the Association’s remaining claims in its brief in
support of its plea, but the trial court did not consider the arguments in, or the
evidence attached to, that brief. The Association asserts that we should consider
only the arguments in the City’s plea to the jurisdiction and ignore those first
appearing in the later-filed supporting brief. The Association cites City of Dallas v.
Heard for the proposition that this court’s jurisdiction is limited to reviewing the
grounds raised in the City’s plea to the jurisdiction. 252 S.W.3d 98, 103 (Tex.
App.—Dallas 2008, pet. denied) (“[An appellate court’s] jurisdiction is limited to
reviewing the grant or denial of the plea to the jurisdiction that was filed.”). But
several years later, the Texas Supreme Court disapproved the line of cases upon
which Heard relied, holding in Rusk State Hospital v. Black that “if immunity is
first asserted on interlocutory appeal, section 51.014(a) does not preclude the
appellate court from having to consider the issue at the outset in order to
determine whether it has jurisdiction to address the merits.” 392 S.W.3d 88, 95 &
n.3 (Tex. 2012). We therefore address all the City’s immunity arguments. See
Dallas Metrocare Servs. v. Juarez, 420 S.W.3d 39, 41 (Tex. 2013) (“Under Rusk,
an appellate court must consider all of a defendant’s immunity arguments,
whether the governmental entity raised other jurisdictional arguments in the trial
court or none at all.”).
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the validity of a municipal ordinance. Nothing more. Nothing less.
For jurisdictional purposes, what is required is a pleading that would
support the invalidation of the ordinance. . . .
City of Dallas v. E. Vill. Ass’n, 480 S.W.3d 37, 46 (Tex. App.—Dallas 2015, pet.
denied) (op. on reh’g). Thus, we need not evaluate the Association’s claims’
merit.6 See id. Because the Association has pleaded bases upon which the
ordinances would be void, it has pleaded a claim under the Act for which
immunity is waived. We overrule the City’s first issue.
C. The repealed ordinance (Ordinance 2334)
In its second, third, and fourth issues, the City specifically challenges
jurisdiction over the Association’s declaratory-judgment claims regarding
Ordinance 2334. The City argues that because this ordinance has been
repealed, immunity is not waived under the Act and that the Association is
seeking an improper advisory ruling. The City also argues that immunity is not
waived because the Association pleaded this declaratory-judgment claim solely
to recover money damages. We address each of these arguments in turn.
1. The Association is not seeking an advisory ruling.
In support of its second issue, the City argues that any declaration
regarding Ordinance 2334’s validity would be advisory because (1) no
6At oral argument, the City asserted that we should examine its evidence in
determining jurisdiction over the Association’s declaratory-judgment claims as we
did in determining whether the plaintiff stated a valid inverse-condemnation claim
waiving governmental immunity in City of Argyle v. Pierce. 258 S.W.3d 674, 682–
86 (Tex. App.—Fort Worth 2008, pet. dism’d). But this is not an inversecondemnation
case, and so Pierce does not apply.
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controversy exists about the Association’s members’ rights and status under the
ordinance because it has been repealed, (2) the Association is asking for a
declaration that multifamily-property owners who paid the fees are entitled to a
refund but has not joined those members, and (3) a declaration that the
Association’s members are entitled to a refund would create controversy rather
than resolve it.
A declaratory-judgment action “requires a justiciable controversy as to the
rights and status of parties actually before the court for adjudication, and the
declaration sought must actually resolve the controversy.” Brooks v. Northglen
Ass’n, 141 S.W.3d 158, 163–64 (Tex. 2004). A justiciable controversy is a real
and substantial controversy involving a genuine conflict of tangible interests and
not just a theoretical dispute. Bonham State Bank v. Beadle, 907 S.W.2d 465,
467 (Tex. 1995). The Act is “merely a procedural device for deciding cases
already within a court’s jurisdiction rather than a legislative enlargement of a
court’s power, permitting the rendition of advisory opinions,” which are prohibited
under both the Texas and federal constitutions. Tex. Ass’n of Bus., 852 S.W.2d
at 444.
Even though the City does not couch it as such, its contention that the
Association fails to allege a justiciable controversy regarding Ordinance
2334 because it has been repealed is a mootness argument. The constitutional
roots of justiciability doctrines, such as ripeness, standing, and mootness, lie in
the prohibition on advisory opinions. Patterson v. Planned Parenthood of
16
Houston & Se. Tex. Inc., 971 S.W.2d 439, 442 (Tex. 1998); see Matthews v.
Kountze Indep. Sch. Dist., 484 S.W.3d 416, 418 (Tex. 2016) (stating that the
mootness doctrine prevents courts from rendering advisory opinions). “A case
becomes moot if a controversy ceases to exist or the parties lack a legally
cognizable interest in the outcome.” Allstate Ins. Co. v. Hallman, 159 S.W.3d
640, 642 (Tex. 2005). Mootness implicates subject-matter jurisdiction. City of
Dallas v. Woodfield, 305 S.W.3d 412, 416 (Tex. App.—Dallas 2010, no pet.).
The mootness doctrine dictates that courts avoid rendering advisory
opinions by deciding only issues presenting a “live” controversy at the time of the
decision. Young v. Young, 168 S.W.3d 276, 287 (Tex. App.—Dallas 2005, no
pet.) (citing Camarena v. Tex. Emp’t Comm’n, 754 S.W.2d 149, 151 (Tex. 1988)).
An issue becomes moot (1) when it appears that one seeks to obtain a judgment
on some controversy that in reality does not exist or (2) when one seeks a
judgment on some matter that, when rendered for any reason, cannot have any
practical legal effect on a then-existing controversy. Id.
But repeal of Ordinance 2334 does not moot the Association’s claims.
Even after repeal, the question remains whether that ordinance violated the
constitution and, if so, what relief should be entered. Put another way, the repeal
obviated the Association’s need to seek a declaration voiding the ordinance, but
the repeal did not remedy any harm the ordinance might have caused the
Association’s members. We thus conclude that the Association’s claims are not
moot. See Lowenberg, 261 S.W.3d at 59 (rendering judgment for plaintiffs in
17
declaratory-judgment tax-refund suit and explaining that city “cannot extract
millions in unlawful fees and fines, decide the whole thing was a mistake, keep
the money, and insist the whole matter is moot” and that “[f]or those who paid,
the controversy remains real”).
In addition to its mootness argument, the City also argues that any ruling
concerning Ordinance 2334’s validity would be advisory because the Association
has asked for a declaration that its members who paid the illegal fees are entitled
to a refund, but the Association is not entitled to that relief; its members are, but
they have not been joined as parties. See Tex. Civ. Prac. & Rem. Code Ann.
§ 37.006(a) (“When declaratory relief is sought, all persons who have or claim
any interest that would be affected by the declaration must be made parties. A
declaration does not prejudice the rights of a person not a party to the
proceeding.”). But the failure to join an affected party to a declaratory-judgment
action does not deprive a trial court of subject-matter jurisdiction over the case.
Brooks, 141 S.W.3d at 162; Mining v. Hays Cty. Bail Bond Bd., No. 03-05-00448-
CV, 2006 WL 952402, at *5 (Tex. App.—Austin Apr. 14, 2006, no pet.) (mem.
op.); Wilchester W. Concerned Homeowners LDEF, Inc. v. Wilchester W. Fund,
Inc., 177 S.W.3d 552, 559–60 (Tex. App.—Houston [1st Dist.] 2005, pet. denied)
(op. on reh’g); see Cooper v. Tex. Gulf Indus., Inc., 513 S.W.2d 200, 204 (Tex.
1974) (stating that “it would be rare indeed if there were a person whose
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presence was so indispensable in the sense that his absence deprives the court
of jurisdiction to adjudicate between the parties already joined”).7
The City also speculates that any declaration that the Association’s
members are entitled to a refund will create not resolve controversy “as
apartment complex owners would line[ ]up at the courthouse steps to seek their
‘entitled’ refund.” But the controversy before the trial court is Ordinance 2334’s
validity, and the declarations that the Association seeks—that the ordinance is
invalid and that Bedford multifamily-property owners are entitled to a refund of
any excessive fees—would in fact resolve that controversy. Any individual
multifamily-property owner’s right to a refund is for a later date, and the
controversy the City posits is merely hypothetical.
We overrule the City’s second issue.
2. The Act’s immunity waiver is not limited to ordinances currently in
effect.
In its third issue, the City contends that the immunity waiver under the Act
is limited to claims challenging the validity of ordinances currently in effect.
Without citing any legal authority, the City asserts that because Ordinance
2334 has been repealed and replaced, immunity is not waived because “there
can be no question of validity with regard to an ordinance that doesn’t exist.” But
the Act’s language does not limit the immunity waiver only to ordinances
7As the Association pointed out, joining its members “would defeat the very
basis for associational standing.”
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currently in effect. See Tex. Civ. Prac. & Rem. Code Ann. § 37.006(b) (“In any
proceeding that involves the validity of a municipal ordinance or franchise, the
municipality must be made a party . . . .”). We therefore overrule the City’s third
issue.
3. The Association’s refund claim is not a claim for money damages.
In what we construe as its fourth issue, the City argues that the trial court
lacked jurisdiction over the Association’s claim requesting a declaration that
multifamily-property owners are entitled to a refund of excess fees paid under
Ordinance 2334 because “[i]t is well settled that ‘private parties cannot
circumvent the State’s sovereign immunity from suit by characterizing a suit for
money damages . . . as a declaratory-judgment claim.’” Heinrich, 284 S.W.3d at
371 (quoting Tex. Nat. Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849,
856 (Tex. 2002)). True; but it is also well settled that a person who pays
government fees and taxes under business compulsion, duress, implied duress,
fraud, or mutual mistake of fact has a claim for their repayment that is not barred
by governmental immunity. See Gatesco, Inc. v. City of Rosenberg, 312 S.W.3d
140, 144 (Tex. App.—Houston [14th Dist.] 2010, no pet.) (stating that
“governmental immunity will not defeat a claim for declaratory or injunctive relief
seeking the refund of illegally collected taxes or fees if the plaintiff alleges ‘that
the payments were made as a result of fraud, mutual mistake of fact, or duress,
whether express or implied’” (quoting Nivens v. City of League City, 245 S.W.3d
470, 474 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) (op. on reh’g))); see
20
also Lowenberg, 261 S.W.3d at 59 (rendering declaratory judgment against City
in declaratory-judgment tax-refund suit); McDaniel v. Town of Double Oak, No.
02-10-00452-CV, 2012 WL 662367, at *8 (Tex. App.—Fort Worth Mar. 1, 2012,
pet. denied) (mem. op.) (collecting cases). As one of our sister courts explained:
Governmental immunity from suit defeats a trial court’s
subject-matter jurisdiction and is properly asserted in a plea to the
jurisdiction. Generally, a party suing a governmental entity must
establish consent to sue, which may be alleged either by reference
to a statute or to express legislative permission.
However, where a claim for declaratory or injunctive relief is
brought seeking the refund of illegally collected tax payments,
governmental immunity will not apply if the taxpayer alleges that the
payments were made as a result of fraud, mutual mistake of fact, or
duress, whether express or implied. The revenue generated from a
tax determined to be illegal should not be treated as property of the
State or municipality to which the principles of sovereign immunity
apply, and an illegally collected fee should be refunded if paid as a
result of fraud, mutual mistake of fact, or duress, without respect to
waiver of sovereign immunity. No legislative consent to sue is
needed under these circumstances.
Nivens, 245 S.W.3d at 474 (citations omitted).
But even construing its pleadings liberally, the Association has not
adequately pleaded facts necessary to invoke the trial court’s jurisdiction under
this doctrine; the Association does not allege that its members paid fees under
business compulsion, duress, implied duress, fraud, or mutual mistake of fact.
See, e.g., Dallas Cty. Cmty. Coll. Dist. v. Bolton, 185 S.W.3d 868, 877–79 (Tex.
2005) (stating that the Texas Supreme Court has “consistently recognized
business compulsion arising from payment of government fees and taxes
coerced by financial penalties, loss of livelihood, or substantial damage to a
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business,” and that reimbursement of illegal fees and taxes is allowed, in
essence, when the public entity compels compliance with a void law and subjects
the person to punishment if he refuses or fails to comply); Crow v. City of Corpus
Christi, 209 S.W.2d 922, 924–25 (Tex. 1948) (discussing business compulsion
and duress with regard to cases in which businesses were faced with either
paying illegal fees or forfeiting their right to do business); Tara Partners, Ltd. v.
City of S. Houston, 282 S.W.3d 564, 577 (Tex. App.—Houston [14th Dist.] 2009,
pet. denied) (holding that, even construed liberally, plaintiffs’ petition failed to
allege facts indicating that they made payments as a result of fraud, mistake of
fact, or duress when they failed to plead the potential for penalties or late
payment charges and cessation of service); Saturn Capital Corp. v. City of
Houston, 246 S.W.3d 242, 246 (Tex. App.—Houston [14th Dist.] 2007, pet.
denied) (describing duress necessary to authorize illegal-fee recovery as “when
the unauthorized . . . fee is required, necessary, or shall be paid to avoid the
government’s ability to charge penalties or halt a person from earning a living or
operating a business”); cf. Nivens, 245 S.W.3d at 474–75 (holding that the trial
court did not err by granting the city’s jurisdictional plea when plaintiffs’ pleadings
failed to seek declaratory or injunctive relief regarding refund of excessive tax
payments and failed to allege that they made any payments as a result of fraud,
mutual mistake of fact, or duress).
We thus sustain the City’s fourth issue. Because the Association’s
pleadings with respect to its refund claim are insufficient to establish jurisdiction
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but do not affirmatively demonstrate an incurable jurisdictional defect, the
Association should be afforded the opportunity to amend its pleadings. See
Miranda, 133 S.W.3d at 226–27.
V. The Association’s Claims for Injunctive Relief
In its fifth issue, the City argues that the trial court erred by denying its plea
to the jurisdiction with respect to the Association’s claims for injunctive relief
because there is no immunity waiver for such claims against a municipality.
As the City notes, governmental entities retain immunity from claims for
injunctive relief based on allegations that government officials have violated the
law or have failed to perform a ministerial act. See Heinrich, 284 S.W.3d at 372–
73. Those claims must be brought against the responsible government actors in
their official capacities. See id. at 373 (holding that suits alleging ultra vires
actions by government officials “cannot be brought against the state, which
retains immunity, but must be brought against the state actors in their official
capacity” and explaining that “[t]his is true even though the suit is, for all practical
purposes, against the state”); see also Sefzik, 355 S.W.3d at 621 (recognizing
that proper defendant in ultra vires suit is official “whose acts or omissions
allegedly trampled on the plaintiff’s rights, not the state agency itself”).
Here, the Association seeks temporary and permanent relief enjoining the
City from (1) assessing or collecting any license or inspection fees exceeding
$18 per unit annually against the owners or any person in control of any
multifamily property in Bedford, (2) enforcing the fee rates in Ordinances 16-
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3151 and 16-3152, (3) spending any illegal fees collected from the City under
Ordinance 2334, and (4) inspecting any multifamily property in Bedford more
than twice per year. The Association has not alleged that City officials have acted
illegally or failed to act. Because the Association challenged the ordinances’
validity rather than complaining that City officials illegally acted or failed to act,
the ultra-vires exception does not apply, and the City is not immune from the
Association’s suit. See Patel v. Tex. Dep’t of Licensing & Regulation, 469 S.W.3d
69, 77 (Tex. 2015); see also City of Elsa v. M.A.L., 226 S.W.3d 390, 392 (Tex.
2007) (concluding that “the court of appeals did not err by refusing to dismiss the
plaintiffs’ claims [against the city] for injunctive relief based on alleged
constitutional violations”). We overrule the City’s fifth issue.
VI. The Association’s Attorney’s-Fees Claim
In its sixth issue, the City argues that the trial court does not have
jurisdiction to award the Association attorney’s fees because the Association did
not plead a valid declaratory-judgment claim against the City. See Home Town
Urban Partners, 340 S.W.3d at 913 (agreeing with city’s contention that a plaintiff
cannot recover attorney’s fees under the Act for any declarations over which the
city’s immunity from suit has not been waived).
Apart from the Association’s declaratory-judgment refund claim as
currently pleaded, the City’s immunity from suit with respect to the Association’s
declaratory-judgment claims has been waived. As a result, the City is not
immune from the Association’s claim for attorney’s fees under the Act. See Tex.
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Civ. Prac. & Rem. Code Ann. § 37.009 (West 2015) (“In any proceeding under
this chapter, the court may award costs and reasonable and necessary attorney’s
fees as are equitable and just.”); Tex. Educ. Agency v. Leeper, 893 S.W.2d 432,
446 (Tex. 1994) (“We conclude that by authorizing declaratory judgment actions
to construe the legislative enactments of governmental entities and authorizing
awards of attorney fees, the [Act] necessarily waives governmental immunity for
such awards.”). We overrule the City’s sixth issue.

Outcome: Having sustained the City’s fourth issue, we reverse that part of the trial
court’s order denying the City’s plea to the jurisdiction on the Association’s
declaratory-judgment refund claim and order the trial court to afford the
Association the opportunity to amend its pleadings on that claim. Having
overruled the City’s remaining issues, we affirm the remainder of the trial court’s
order denying the City’s plea to the jurisdiction.

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