Gallagher Headquarters Ranch Development, Ltd v. City of San Antonio. (pdf),
No. 08-0773 (Tex. Feb. 12, 2010)(per curiam) (petition for review in the Supreme Court put on hold pending
submission of findings of fact requested from the trial court)(scope and reach of release in settlement at
issue)
[W]e abate the petition and remand the case to the trial court to conduct all necessary
proceedings [...] and prepare findings of fact on the issue of whether this case is
encompassed within the scope of the Agreement. The trial court shall submit its
findings to this Court no later than May 3, 2010. The parties may, within thirty days
after the trial court’s findings are submitted, provide a supplementary brief to this
Court, no longer than twenty-five pages, addressing those findings and the following
two issues: (1) whether the Agreement moots the case before the Court, and (2)
whether petitioner Hooper has standing to pursue the litigation.
GALLAGHER HEADQUARTERS RANCH DEVELOPMENT, LTD., CHRIS HILL AND JULIE HOOPER v. CITY
OF SAN ANTONIO AND CITY PUBLIC SERVICE; from Bexar County;
4th district (04-07-00325-CV, 269 SW3d 628, 07-23-08) abatement order issued
[Note: The petition is abated and remanded to the trial court for findings of fact. The trial court shall submit its
findings to this Court no later than May 3, 2010. The parties may, within thirty days after the trial court's
findings are submitted, provide a supplementary brief to this Court.]
Per Curiam Opinion
(Justice Hecht not sitting)
See E-Briefs in GALLAGHER HEADQUARTERS RANCH DEVELOPMENT, LTD. v. CITY OF SAN ANTONIO
═════════════════════════════════════════════════════════════════════
═
Gallagher Headquarters Ranch Development, Ltd. v. City of S.A. (Tex. 2010)
(per curiam)
═════════════════════════════════════════════════════════════════════
═
Per Curiam
Order Remanding for Findings of Fact
Petitioners Gallagher Headquarters Ranch Development, Ltd., Chris Hill, and Julie Hooper sued
Respondent City of San Antonio and its agencies for breaching a “contract with the voters” because the City
allegedly used money dedicated to purchase land for conservation purposes to instead purchase land from
Gallagher to build an electrical grid. Funding for the project had been approved by voter referendum. The
trial court granted summary judgment to the City and awarded the City attorneys’ fees. The court of appeals
affirmed on the merits, but remanded the attorney fees claim for a new trial. Petitioners appealed the court of
appeals’ affirmance of the summary judgment.
During the pendency of the petition at this Court, the City filed a motion to dismiss pursuant to settlement.
The City alleges that it settled three cases, including this case, and filed with its motion a Mediated
Settlement Agreement (the “Agreement”), signed less than a month after the court of appeals issued its
opinion in this case. The Agreement recites two condemnation cases in probate courts in Bexar County,
against Christopher C. Hill, et al., and Gallagher Headquarters Ranch Development, et al. [Fn 1] The
Agreement does not include the caption for the case before this Court, and was not signed by Hooper.
However, the parties agreed that the previously mentioned condemnation cases and “all related claims and
controversies” between the signatories “are hereby settled.” The City also agreed to waive its claim for
attorney fees in this case, an issue on which it was successful at the court of appeals. Finally, the release
language states that each party to the Agreement releases the other “from any and all claims . . . whether or
not asserted in the above case . . . arising from or related to the events and transactions which are the
subject matter of this cause.” The City contends that the issues in this case—whether the City violated the
“contract with the voters” by using tracts of land through a program called Proposition 3 to build part of an
electrical grid—were related to the controversies in the condemnation actions.
Petitioners argue that the Agreement does not cover this petition. First, petitioners note that Julie Hooper
is not a signatory to the Agreement. Second, Petitioners argue that the Agreement only resolves the
specifically enumerated condemnation cases and the severable attorneys fees claim. Finally, Petitioners
argue that the motion is premature, as the parties agreed that any dispute over the interpretation or
performance of the Agreement would be brought to the original mediator in an attempt to resolve the same.
The City replies that the language of the Agreement controls the outcome of this case; that agreeing to drop
the attorneys fees issue without also dismissing this lawsuit is a nonsensical reading of the Agreement; and
that Julie Hooper has no standing to continue as a petitioner, or, in the alternative, that the petition should be
dismissed as to the other petitioners.
Interpretation of an unambiguous contract is an issue of law. E.g., SAS Institute, Inc. v. Breitenfeld, 167 S.
W.3d 840, 841 (Tex. 2005). However, when a contract is ambiguous, extrinsic evidence may be used to
determine the intent of the parties. E.g., Progressive County Mut. Ins. Co. v. Kelley, 284 S.W.3d 805, 807–08
(Tex. 2009) (considering extrinsic evidence in interpreting an insurance agreement due to a latent ambiguity
as to the intent of the parties). Here, a latent ambiguity appears to exist, as it is unclear whether the case at
issue here is covered by the Agreement and release, even construing the release language narrowly. See
Victoria Bank & Trust Co. v. Brady, 811 S.W.2d 931, 938 (Tex. 1991) (recognizing that a claim must be
“mention[ed]” in a settlement release to be effective, and that general, categorical releases are narrowly
construed). Further, whether this case “aris[es] from or [is] related to the events and transactions which are
the subject matter of this cause” will guide resolution of the motion to dismiss, yet the parties provide little
briefing and almost no evidence for this Court to determine whether the Agreement’s release encompasses
the issues underlying this petition.
Accordingly, we abate the petition and remand the case to the trial court to conduct all necessary
proceedings [Fn 2] and prepare findings of fact on the issue of whether this case is encompassed within the
scope of the Agreement. The trial court shall submit its findings to this Court no later than May 3, 2010. The
parties may, within thirty days after the trial court’s findings are submitted, provide a supplementary brief to
this Court, no longer than twenty-five pages, addressing those findings and the following two issues: (1)
whether the Agreement moots the case before the Court, and (2) whether petitioner Hooper has standing to
pursue the litigation.
OPINION DELIVERED: February 12, 2010
--------------------------------------------------------------------------------
1 City of San Antonio, Texas, acting by and through the City Public Service Board of San Antonio v. Christopher Hill, et al., No.
2005-ED-0029 (Probate Court No. 1, Bexar County, Texas); City of San Antonio, Texas, acting by and through the City Public
Service Board of San Antonio v. Gallagher Headquarters Ranch Development, Ltd., et al., No. 2005-ED-0031 (Probate Court
No. 2, Bexar County, Texas).
2 Paragraph 9 of the settlement agreement requires the parties to attempt further mediation if a dispute arises “with regard to
the interpretation and/or performance of this Agreement.” As part of the remand proceedings, the trial court may order the
parties to mediate this dispute if they have not already done so.
═════════════════════════════════════════════════════════════════════
═
OPINION OF THE FOURTH COURT OF APPEALS BELOW
Gallagher Headquarters Ranch Development, Ltd. v. City of San Antonio, (21-page pdf file)
269 S.W.3d (Tex.App.- San Antonio [4th Dist.] 2008, pet. filed)per curiam)
═════════════════════════════════════════════════════════════════════
═
Per Curiam
269 S.W.3d 628 (2008)
GALLAGHER HEADQUARTERS RANCH DEVELOPMENT, LTD., Christopher Hill, and Julie Hooper,
Appellants,
v.
CITY OF SAN ANTONIO, City Public Service, and San Antonio Water System,
Appellees.
No. 04-07-00325-CV.
Court of Appeals of Texas, San Antonio.
July 23, 2008.
Sitting: ALMA L. LÓPEZ, Chief Justice, PHYLIS J. SPEEDLIN, Justice, REBECCA SIMMONS, Justice.
OPINION
Opinion by PHYLIS J. SPEEDLIN, Justice.
Gallagher Headquarters Ranch Development, Ltd., Christopher Hill and Julie Hooper (collectively referred to as "Hill") appeal
the trial court's summary judgment in favor of the defendants, the City of San Antonio, City Public Service, and San Antonio
Water System (collectively, the "City"). The underlying lawsuit concerns the City's placement of an electrical transmission line
across open space park land. The land was acquired by the City as an approved venue project and funded through a venue
tax. Hill brought several injunctive and declaratory judgment claims against the City, but his appeal is based only on his claim
that the City breached its "contract with the voters." Because we are constrained by the plain language of section 334.041(b) of
the Local Government Code, which grants the City broad authority to convey or otherwise dispose of an interest in an approved
venue project, we affirm the trial court's judgment.[1]
FACTUAL AND PROCEDURAL BACKGROUND
On May 6, 2000, City of San Antonio voters approved Proposition 3 which authorized an additional 1/8 of 1% sales and use tax,
or "venue tax," to fund the City's acquisition of land for use as linear parks along Salado and Leon Creeks and as open space
parks over the Edwards Aquifer Recharge Zone; the project was designated an "approved venue project" under Chapter 334 of
the Texas Local Government Code. In February 2002, using funds from the Proposition 3 venue tax, the City purchased a
portion of the Mayberry Ranch on the west side of Highway 211. In October 2003, using Proposition 3 venue tax funds, the City
purchased the Chris Hill Tract—an unimproved 710 acre tract on the west side of Highway 211 which lies entirely in the
Edwards Aquifer Recharge Zone.
In early 2004, the City granted the San Antonio Water System (SAWS) a conservation easement in perpetuity on the Chris 632
Hill Tract, restricting the development and use of the property to low impact human activities like hiking and camping, and
related maintenance and infrastructure, and prohibiting any residential, commercial or industrial use. Also in early 2004, after
considering other alternatives to address increased demand for electricity in the hill country, City Public Service (CPS) and the
Lower Colorado River Authority (LCRA) proposed constructing a 345,000 volt electrical transmission line from the LCRA's
Cagnon substation to CPS's Kendall substation (the "Project"). As proposed, the transmission line would run along the edge
of the Mayberry and Chris Hill Tracts following an existing right-of-way adjacent to Highway 211, and would require placement
of up to five 17-story transmission towers. In January 2005, despite the City Planning Commission's rejection of the placement
of the Project across Proposition 3 land, the City Council approved Ordinance 100326, granting CPS a limited easement over
the two Proposition 3 tracts for purposes of constructing, maintaining and operating the Project. In a separate intra-
jurisdictional agreement, CPS agreed to convey to the City 40 acres of additional open space land as compensating property.
Approximately one week after the City Council approved the Project, Hill filed suit in state district court seeking injunctive and
declaratory relief; Hill also challenged the Project in federal court and before the Public Utility Commission. Hill pled several
declaratory judgment claims in the state case, including that Ordinance 100326 granting CPS an easement for the Project
was void as a breach of the "contract with the voters" created by Proposition 3 and its enabling resolution and ordinances. The
parties filed multiple partial summary judgment motions on the various claims raised by Hill. The trial court granted summary
judgment in favor of the City on Hill's claims under Article XI, § 11 of the Texas Constitution, the Texas Open Meetings Act and
the City Charter. None of those orders are challenged on appeal. The parties also filed cross-motions for summary judgment
on Hill's common law claim for breach of the City's "contract with the voters," as well as his statutory claims under Chapter 334
of the Local Government Code and Chapter 26 of the Texas Parks and Wildlife Code. The trial court overruled all of the parties'
objections to the summary judgment evidence, denied Hill's summary judgment motion, and granted the City's summary
judgment motion as to all of Hill's remaining claims. The trial court further ordered Hill to pay $884,332 in attorney's fees to the
City.[2]
ISSUE PRESENTED
On appeal, Hill challenges only the summary judgment in favor of the City on his common law breach of the "contract with the
voters" claim, and asserts the trial court instead should have granted summary judgment for Hill on that claim. Hill also
challenges the award of attorney's fees because they were not segregated by claim. The City's position in the trial court, and
on appeal, is that it properly conveyed to CPS a limited easement to use a small portion of the Proposition 3 land for the
Project pursuant to the express statutory authority granted to it in section 334.041(b) of the Local Government Code. 633 TEX.
LOC. GOV'T CODE ANN. § 334.041(b) (Vernon 2005) (providing in relevant part, "[a] municipality ... may acquire, sell, lease,
convey, or otherwise dispose of property or an interest in property, including an approved venue project, under terms and
conditions determined by the municipality ..."). The basis of the City's Third Motion for Partial Summary Judgment on Hill's
"contract with the voters" claim was that the specific and broad grant of authority in section 334.041(b) conflicts with, and thus
supersedes, the common law doctrine of "contract with the voters." On the other hand, Hill's summary judgment motion
asserted, in relevant part, that the City had not "conveyed" an interest in the property to CPS under section 334.041(b), but
rather the Ordinance had simply and plainly changed the dedicated use of the approved venue project and was thus
unenforceable as a matter of law. Hill also asserted that Chapter 334 does not abrogate or "trump" the common law doctrine
of "contract with the voters," but instead works in harmony with, and is "subject to," the doctrine. While the trial court's order
granting summary judgment for the City does not recite the specific grounds on which it is based, the sole ground in the City's
summary judgment motion with respect to Hill's "contract with the voters" claim was that the express statutory language in
section 334.041(b) directly conflicts with, and thus supersedes, the common law contract with the voters created by
Proposition 3, and its enabling resolutions and ordinances.
SUMMARY JUDGMENT
Standard of Review
When both parties move for summary judgment, and the trial court grants one motion and denies the other, the appellate court
considers the summary judgment evidence presented by both sides, determines all questions presented, and, if it
determines the trial court erred, renders the judgment the trial court should have rendered. Valence Operating Co. v. Dorsett,
164 S.W.3d 656, 661 (Tex.2005); FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex.2000). We review the trial
court's summary judgment de novo. Provident Life and Acc. Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.2003). When reviewing
a summary judgment, we take as true all evidence favorable to the nonmovant, indulging every reasonable inference and
resolving any doubts in the nonmovant's favor. Id. A party moving for a traditional summary judgment must show that no
genuine issue of material fact exists and that it is entitled to summary judgment as a matter of law. Id. at 215-16; TEX.R. CIV.
P. 166a(c). When the trial court's order does not specify the grounds for granting summary judgment, the appellate court must
affirm if any of the theories presented in the summary judgment motion have merit. Knott, 128 S.W.3d at 216; Cincinnati Life
Ins. Co. v. Cates, 927 S.W.2d 623, 626 (Tex.1996). Statutory construction is a question of law that we review de novo. Tex. Dep't
of Transp. v. Needham, 82 S.W.3d 314, 318 (Tex.2002).
"Contract with the Voters" Doctrine
The doctrine of "contract with the voters" derives from article I, section 16 of the Texas Constitution which prohibits laws
impairing the obligation of contracts. TEX. CONST. art. I, § 16. The constitutional underpinnings of the doctrine have long been
recognized by the Texas Supreme Court. In San Saba County v. McCraw, the seminal "contract with the voters" case, the
Supreme Court held that "the vital conditions and safeguards surrounding the tax voted at the time of the election thereon
become a part of the very election itself," and any law that impairs 634 and destroys the voters' rights existing at the time of the
vote violates article 1, section 16 of the Texas Constitution. San Saba County v. McCraw, 130 Tex. 54, 108 S.W.2d 200, 202-03
(1937) (also acknowledging that "where the Constitution authorizes the levy of a special tax by a vote of the taxpaying voters of
a municipality... such tax is not levied by the municipality ... but by the voters to whom has been delegated the taxing power"). In
McCraw, a majority of the voters approved a fifteen-cent road tax to be levied by the county, as required by the Constitution; the
implementing statute further provided that the voters could repeal the road tax after two years, and that no bonds could be
issued. Id. at 201. The legislature subsequently enacted a statute authorizing the commissioners' court to issue 40-year
bonds on its own motion that would constitute a charge against the fifteen-cent road tax. Id. at 202. The Supreme Court
concluded that, by authorizing the county commissioners' court to issue the 40-year road-funding bonds without a taxpayer
vote, the legislature had impaired the voters' rights created at the time they approved the fifteen-cent road tax, including the
right to repeal the tax, thus violating not only the particular constitutional provision authorizing the road tax to be imposed by the
voters, but also article I, section 16 prohibiting the impairment of contracts. Id. at 203; see also San Antonio River Auth. v.
Shepperd, 157 Tex. 73, 299 S.W.2d 920, 924-26 (1957) (recognizing and applying the "contract with the voters" concept).[3]
As noted by both parties in their briefs, the "contract with the voters" doctrine encompasses two related principles governing (i)
the expenditure of the tax funds for the approved purpose, and (ii) the continued use of the project for the approved purpose.
Applying the first principle, when the voters approve a specific project, the proceeds of the tax or bond are "`earmarked' with the
character of a trust fund which may not be diverted to another purpose or project." Op. Tex. Att'y Gen. No. GA-0156, 2004 WL
367365, at *6 (2004) (citing Black v. Strength, 112 Tex. 188, 246 S.W. 79 (1922), and Fletcher v. Ely, 53 S.W.2d 817, 818 (Tex.
Civ.App.-Amarillo 1932, writ ref'd)); see also Lewis v. City of Fort Worth, 126 Tex. 458, 89 S.W.2d 975, 978 (1936) ("the
proceeds of bonds voted by the people must be expended for the purposes for which they were voted"); Barrington v. Cokinos,
161 Tex. 136, 338 S.W.2d 133, 142 (1960) 635 (same). For example, in Op. Tex. Att'y Gen. No. GA-0156, the Attorney General
concluded that the terms of the election pursuant to which Terrell County voters approved a venue tax for park improvements
under Chapter 334 of the Local Government Code constituted a "contract with the voters," and the county commissioners' court
was only authorized to use the venue tax funds for the specific improvements outlined in the election orders. Op. Tex. Att'y Gen.
No. GA-0156, 2004 WL 367365, at *9.
Under the second principle of the "contract with the voters" doctrine, when land is purchased with voter-approved funds it
becomes dedicated to that purpose and cannot be used for any other purpose that would interfere with the stated public use.
City of Beaumont v. Moore, 146 Tex. 46, 202 S.W.2d 448, 452 (1947) (where city purchased land with proceeds of municipal
bonds approved for acquiring an airport, land became dedicated for public use as an airport and could not be used for any
other inconsistent purpose until its use as an airport was lawfully abandoned). Generally, when land has been dedicated to a
public use, such as for a park, no inconsistent use may be made as long as the public is still using the land as a park. Zachry
v. City of San Antonio, 157 Tex. 551, 305 S.W.2d 558, 560 (1957). In Zachry, the court held that where the land had been
dedicated to the city and used as a public park for more than 100 years, without any abandonment, the city's attempted lease
of a portion of the park to an individual for use as an underground parking garage was void. Id. at 562-63, 305 S.W.2d 558
(abandonment of dedicated property occurs when the dedicated use becomes impossible to execute, or the object of the use
must fail).
Applying both concepts of a "contract with the voters" to this case, the City would be obligated to: (i) use the venue tax funds for
their approved purpose, i.e., acquisition of land for use as open space and linear parks; and (ii) use the land acquired with the
venue tax funds for the approved or "dedicated" purpose, i.e., as open space or linear parks. There is no dispute that the City
complied with its first obligation by acquiring the Mayberry and Chris Hill Tracts with the venue tax funds for use as public park
land, as contemplated by Proposition 3. The dispute arises out of whether the City has breached its second obligation under
its "contract with the voters"—to use the land for the approved public park purpose—by granting CPS a limited easement for
construction of the electrical transmission line, thereby "changing the use" of the approved venue project. The City concedes
that, for purposes of reviewing the summary judgment granted by the trial court, we must take as true Hill's allegation that the
Project constitutes an "inconsistent use" of the Proposition 3 land.
Section 334.041 of the Texas Local Government Code
Under Chapter 334 of the Local Government Code, enacted in 1997 and entitled "Sports and Community Venues," a county or
municipality may plan, acquire, establish, develop, construct, or renovate a venue project, and may raise funds to accomplish
such tasks, if, among other things, the voters approve the project. TEX. LOC. GOV'T CODE ANN. § 334.021 (Vernon 2005). An
"approved venue project" means a sports and community venue project that has been approved under Chapter 334 by the
voters of a municipality or county.[4] 636 TEX. LOC. GOV'T CODE ANN. § 334.001(1) (Vernon 2005). Chapter 334 requires that
a resolution and ballot language proposing a venue project describe the specific venue project, and provides that sales and
use taxes deposited in a venue-project fund may be expended only for voter-approved venue projects. See TEX. LOC. GOV'T
CODE ANN. §§ 334.021 (resolution authorizing project and method of financing), .024 (election), .042 (venue project fund)
(Vernon 2005); see also Op. Tex. Att'y Gen. No. GA-0156, 2004 WL 367365, at *5.
The particular statute at issue in this case, section 334.041, entitled "General Powers," grants broad authority to municipalities
and counties with regard to venue projects. Subsections (a) and (b), relevant to this appeal, provide as follows:
(a) A municipality or county may perform any act necessary to the full exercise of the municipality's or county's powers under
this chapter.
(b) A municipality or county may acquire, sell, lease, convey, or otherwise dispose of property or an interest in property,
including an approved venue project, under terms and conditions determined by the municipality or county. In a transaction
with another public entity that is made as provided by this subsection, the public purpose found by the legislature under
Section 334.044 is adequate consideration for the municipality or county and the other public entity.
TEX. LOC. GOV'T CODE ANN. § 334.041(a), (b) (Vernon 2005) (emphasis added); see TEX. LOC. GOV'T CODE ANN. §
334.044(a) (Vernon 2005) (stating that, "the legislature finds for all constitutional and statutory purposes that an approved
venue project is owned, used, and held for public purposes by the municipality or county").
Analysis
Hill's main argument on appeal is that, while section 334.041(b) permits the City to convey an interest in an approved venue
project, it does not say that the City may change the approved use of the venue project. Hill argues the omission of express
authority to change the use of a venue project from section 334.041(b) gives rise to the "clear implication" that the use of an
approved venue project must not change—regardless of the City's conveyance of the project to a private third party or other
public entity. In essence, then, Hill argues that section 334.041(b) is "subject to," or incorporates, both principles of the
"contract with the voters" doctrine. Therefore, this appeal requires us to address the interplay between section 334.041(b) and
the common law "contract with the voters" concept with respect to the approved use of the Proposition 3 land.
The City asserted at oral argument that the dispute can be resolved by answering two questions: (1) did the legislature have
the authority to supersede the common law "contract with the voters" doctrine by contrary legislation? and (2) if so, did the
legislature do so in section 334.041(b)? The City contends the answer to both questions is "yes," and we are constrained to
agree.
1. Legislative Authority to Supersede Common Law
637 In construing statutes, courts begin by interpreting the statutory language in a manner that renders it consistent with
constitutional requirements, if possible, because the legislature is presumed to have intended compliance with the
constitution. City of Houston v. Clark, 197 S.W.3d 314, 320 (Tex.2006); see also TEX. GOV'T CODE ANN. § 311.021(1) (Vernon
2005) ("[i]n enacting a statute, it is presumed that ... compliance with the constitutions of this state and the United States is
intended"). The courts further presume that statutes are enacted by the legislature with full knowledge of, and reference to, the
existing law. City of San Antonio v. Hardee, 70 S.W.3d 207, 213 (Tex.App.-San Antonio 2001, no pet.). When a statute directly
conflicts with a common law principle or claim, the statutory provision controls and preempts the common law. Cash America
Int'l Inc. v. Bennett, 35 S.W.3d 12, 16 (Tex.2000) (abrogating common law claims is "disfavored and requires a clear
repugnance between the common-law and statutory causes of action"); Bartley v. Guillot, 990 S.W.2d 481, 485 (Tex.App.-
Houston [14th Dist.] 1999, pet. denied) (where the common law is revised by statute, the statute controls). A statute may be
interpreted as abrogating a common law principle only when its express terms or necessary implications clearly indicate the
legislature's intent to do so. Bruce v. Jim Walters Homes, Inc., 943 S.W.2d 121, 122-23 (Tex.App.-San Antonio 1997, writ
denied). "If a statute deprives a person of a common law right, the statute must be strictly construed and will not be extended
beyond its plain meaning." Id. at 123 (citing Smith v. Sewell, 858 S.W.2d 350, 354 (Tex. 1993)). Therefore, the answer to the
first question concerning whether the legislature may enact legislation that preempts or supersedes a common law principle,
even one that is constitutionally-derived, is affirmative.
2. Interplay between § 334.041(b) and "Contract with Voters"
Reaching the crux of this appeal, we must next determine whether section 334.041(b) evidences the legislature's intent to
supersede the common law concept of "contract with the voters," particularly the second principle requiring continuous use for
the dedicated public purpose. In the trial court and on appeal, the City asserts that, under the plain language of section
334.041(b), its "contract with the voters" only extended to the first principle, i.e., the initial expenditure of the venue tax funds to
acquire the property for use as park land. The City contends the broad grant of authority in section 334.041(b) supersedes or
preempts the second principle of "contract with the voters," and it therefore has no continuing obligation or duty to continue
using the acquired land for the dedicated public purpose, i.e., as open or linear park land. To illustrate, the City acknowledged
at oral argument that, according to its reading of the statute, it could use a voter-approved venue tax to acquire land for
construction of a major league baseball field as a Chapter 334 "approved venue project," and then later, under the authority of
section 334.041(b), convey that land, or a portion thereof, to a private third party for use as a toxic waste dump without violating
its "contract with the voters."[5]
When construing a statute, the court's primary purpose is to give effect to the legislature's intent. Tex. Water Comm'n v. Brushy
CreekMun. Util. Dist., 638 917 S.W.2d 19, 21 (Tex.1996). To determine the legislative intent, a court may consider the language
of the statute, the legislative history,[6] the circumstances of the statute's enactment, the object the legislature was seeking to
attain, the common law and former statutory provisions on the same or similar subjects, administrative construction of the
statute, and the consequences of particular constructions. TEX. GOV'T CODE ANN. § 311.023 (Vernon 2005); Union Bankers
Ins. Co. v. Shelton, 889 S.W.2d 278, 280 (Tex.1994). The court must, however, look first to the plain and common meaning of
the statute's words, and if the statutory text is unambiguous the court must adopt the interpretation supported by the plain
language—unless that interpretation would lead to absurd results. Tex. Dep't of Protective and Regulatory Servs. v. Mega Child
Care, Inc., 145 S.W.3d 170, 177 (Tex.2004); Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 865-66 (Tex.
1999) (if a statute is unambiguous, rules of construction or other extrinsic aids cannot be used to create ambiguity). Finally, the
construction of a statute by an agency charged with its execution is entitled to "serious consideration" unless the agency's
construction is clearly inconsistent with the legislature's intent. Brushy Creek, 917 S.W.2d at 21; TEX. GOV'T CODE ANN. §
311.023(6) ("in construing a statute ... a court may consider... administrative construction of the statute").
Here, we are faced with conflicting interpretations of section 334.041(b), with the City arguing the statute directly conflicts with,
and thus supersedes, the continuous-use principle of the common law "contract with the voters" doctrine, and Hill arguing the
statute is consistent with, and "subject to," the common law concept. Applying the above principles of statutory construction,
we must begin with the presumptions that, when it enacted section 334.041(b), the legislature intended it to comply with the
Constitution and it was aware of the constitutionally-derived, common law concept of "contract with the voters." Next, we must
construe the legislature's intent behind section 334.041(b) based on the statute's plain language, considering it as a whole
and within the context of Chapter 334. If we conclude the statutory text is unambiguous, we must adopt the interpretation
supported by the plain language, unless it leads to absurd results. If we determine that the statute directly conflicts with the
common law, the statute controls.
Looking at section 334.041 as a whole, and within the context of Chapter 334, section 334.041 delineates the "powers and
duties" of a municipality with respect to the "planning, acquisition, establishment, development, construction, or renovation" of
sports and community venue projects. TEX. LOC. GOV'T CODE ANN. §§ 334.021(a), 639 334.041 (Vernon 2005). As noted,
subsection (a) of section 334.041 grants a municipality the sweeping power to "perform any act necessary to the full exercise
of [its] powers" under Chapter 334. TEX. LOC. GOV'T CODE ANN. § 334.041(a); see Op. Tex. Att'y Gen. No. GA-0602, 2008 WL
410391, at *1 (2008) (recognizing broad scope of power under subsection (a)). The remaining subsections (b) through (f)
more specifically describe the municipality's power to enter into contracts and take certain actions with respect to acquiring
and developing approved venue projects; subsection (f) restricts the municipality's use of ad valorem taxes for an approved
venue project. TEX. LOC. GOV'T CODE ANN. § 334.041(b)-(f) (Vernon 2005).
Turning to the provision at issue, subsection (b) of section 334.041, the plain language of the first sentence gives a broad
unequivocal grant of authority to a municipality to "acquire, sell, lease, convey, or otherwise dispose of property or an interest in
property, including an approved venue project, under terms and conditions determined by the municipality." TEX. LOC. GOV'T
CODE ANN. § 334.041(b) (emphasis added). By its plain language, it leaves the "terms and conditions" of such transactions
completely to the municipality's discretion, and contains no express limitation or restriction on the municipality's power to
"convey or otherwise dispose of" an interest in an approved venue project. Reading subsection (b) together with subsection
(a)'s similarly unrestricted grant of authority to "perform any act necessary" to exercise the municipality's powers under Chapter
334 compels us to conclude that by enacting section 334.041 the legislature intended to provide municipalities with almost
unlimited discretion and authority to "acquire, sell, lease, convey, or otherwise dispose of" approved venue projects, or
portions thereof.
Hill argues that the second sentence of section 334.041(b) shows the legislature intended that the venue project property
continue to be used for the dedicated purpose, despite any conveyance under subsection (b). The second sentence provides
that, in a subsection (b) transaction between a municipality or county and another public entity, the "public purpose" recognized
in section 334.044 is adequate consideration for the transaction. TEX. LOC. GOV'T CODE ANN. §§ 334.041(b), 334.044
(stating that an approved venue project is held by the municipality or county for public purposes). Hill asserts the second
sentence of subsection (b) modifies the broad powers granted in the first sentence, and clearly shows the legislature
intended to authorize a municipality to convey or dispose of an interest in an approved venue project, but only if `the dedicated
public purpose was continued'. We respectfully disagree. If the legislature had intended to restrict a municipality's broad grant
of power to dispose of an interest in a venue project by making it "subject to" the continuous use of the project for the
dedicated purpose, it could have easily so provided. It chose not to.[7] See Fitzgerald, 996 S.W.2d at 866 ("it is a 640 fair
assumption that the Legislature tries to say what it means, and therefore the words it chooses should be the surest guide to
legislative intent"); see also Hardee, 70 S.W.3d at 213 (stating that if legislature wanted to exempt annexation challenges from
mandamus and injunctive remedies provided for violations of Open Meetings Act, it could have done so, but did not). As noted
by the Supreme Court, when courts "stray from the plain language of a statute, [they] risk encroaching on the Legislature's
function to decide what the law should be." Fitzgerald, 996 S.W.2d at 866.
Finally, Hill makes an alternative argument that the City's actions are not authorized by section 334.041(b) because the City
cannot viably "convey" a property interest to CPS since it is merely a City agency and cannot hold title to property. See
Guadalupe-Blanco River Auth. v. Tuttle, 171 S.W.2d 520, 521, 526 (Tex.Civ. App-San Antonio 1943, writ ref'd w.o.m., 141 Tex.
523, 174 S.W.2d 589) (title to the system is not vested in CPS Board, but is held by the city); San Antonio Indep. Sch. Dist. v.
Water Works Bd. of Trustees, 120 S.W.2d 861, 865 (Tex. Civ. App-Beaumont 1938, writ ref'd) (CPS Board is agent of the city,
and its "possession" and "holding" of property for purpose of supplying electricity and gas to the people is a "possession" and
"holding" by the city); see also Tex. Att'y Gen. Op. LO-98-058, 1998 WL 457327, at *1 (1998) (utility board is agent of the city and
board cannot own real property). The City responded at length, asserting that transfers of such property rights like easements
and right-of-ways between the City, CPS and SAWS are distinguishable from transfers of fee simple property interests, and
are proper "conveyances" of property interests under Chapter 334; it also asserted that transfers of such limited rights of
access are commonplace and necessary, attaching several examples of such agreements and conveyances to its
supplement to its Third Motion for Summary Judgment. We agree. The City's conveyance of a limited easement to CPS for
extension of its electrical system, as occurred in this case, is distinguishable from the cases relied on by Hill because it is not
a transfer of fee simple title to real property, but merely a limited right of access necessary for the utility company to fulfill its
independent duty to maintain its utility system. See City of Robstown v. Barrera, 779 S.W.2d 83, 85 (Tex.App.-Corpus Christi
1989, no writ); Bd. of Trustees of the City of Eagle Pass Water Works Sys. v. Deer Run Props., Inc., 619 S.W.2d 609, 612 (Tex.
Civ. App.-San Antonio 1981, no writ).
Conclusion
Given the statute's unambiguous, plain, and unrestricted language, we must conclude that there is a direct conflict between
section 334.041(b) and the second principle of the common law "contract with the voters." Faced with a direct conflict, the
statute controls over the common law "continuous use" concept. Therefore, the City had the authority to grant an easement to
CPS across the Proposition 3 land for construction of the electrical transmission line under the specific provisions of section
334.041(b). Accordingly, we hold the trial court did not err in granting summary judgment in favor of the City on Hill's "contract
with the voters" claim, and in denying summary judgment for Hill.[8]
641
ATTORNEY'S FEES
Because the City prevailed on summary judgment, the trial court awarded it $884,332 in unsegregated attorney's fees for
defending against Hill's various claims.[9] On appeal, Hill asserts the City was required to segregate its attorney's fees
between claims because not all the claims asserted by Hill authorized the recovery of attorney's fees — particularly, his claim
for injunctive relief based on a violation of Chapter 26 of the Texas Parks and Wildlife Code. See TEX. PARKS & WILDLIFE
CODE ANN. §§ 26.001, et seq. (Vernon 2002) (containing no provision for recovery of attorney's fees based on a violation of
the chapter). Hill does not claim the trial court abused its discretion in awarding attorney's fees to the City, or challenge the
amount of the fees as unreasonable. The City responds that (i) except for his request for an injunction, all of Hill's claims were
pled as claims for declaratory relief on which attorney's fees are recoverable, and (ii) Hill's request for injunctive relief was
intertwined with his substantive claims, and therefore the legal services pertaining to each need not be segregated. We apply
a hybrid standard of review to the issue of segregation because it is a mixed question of law and fact. Tony Gullo Motors I, L.P.
v. Chapa, 212 S.W.3d 299, 312-13 (Tex.2006).
Texas law does not permit the recovery of attorney's fees unless authorized by statute or contract. Gulf States Utils. Co. v. Low,
79 S.W.3d 561, 567 (Tex. 2002). In Chapa, the Supreme Court reaffirmed the general rule requiring segregation of attorney's
fees, recognizing that the exception had practically swallowed the rule. Chapa, 212 S.W.3d at 311-13. The Court held that
intertwined facts underlying claims for which attorney's fees are recoverable and unrecoverable do not excuse a party from
segregating fees between claims — "it is only when discrete legal services advance both a recoverable and unrecoverable
claim that they are so intertwined that they need not be segregated." Id. at 313-14; see Varner v. Cardenas, 218 S.W.3d 68, 69
(Tex.2007) (per curiam) (characterizing Chapa as holding that "a prevailing party must segregate recoverable from
unrecoverable attorney's fees in all cases"). Thus, the general duty to segregate fees applies, unless a party meets its burden
of establishing that the same discrete legal services were rendered with respect to both a recoverable and unrecoverable
claim. Chapa, 212 S.W.3d at 314; Hong Kong Dev., Inc. v. Nguyen, 229 S.W.3d 415, 455 (Tex.App.-Houston [1st Dist.] 2007, no
pet.).
In support of the fee award, the City first responds that because Hill pled all of his various claims as part of a declaratory
judgment action, for which attorney's fees are recoverable by statute, it had no duty to segregate fees because they all became
recoverable claims. See TEX. CIV. PRAC. & REM.CODE ANN. § 37.009 (Vernon 1997) (authorizing award of attorney's fees in
suit for declaratory judgment). However, a review of Hill's pleadings does 642 not support that statement. Hill filed a series of
amended petitions throughout the course of this lawsuit, which included many different causes of action broadly pled under
the following categories: (i) "constitutional violation" of article XI, § 11 of the Texas Constitution; (ii) violations of the Texas Open
Meetings Act; (iii) violation of Chapter 26 of the Texas Parks & Wildlife Code; (iv) breach of contract; (v) fraud; (vi) application for
temporary and permanent injunction; and (vii) "declaratory judgments" seeking "declaratory, injunctive and mandamus relief"
from enforcement of the City Council's approval of the Project based on the various alleged statutory violations, including
violations of Chapter 334 of the Local Government Code. Clearly then, Hill pled other claims besides just declaratory judgment
claims, particularly claims for fraud and for injunctive relief based on various grounds. Moreover, under Chapa, the
determining factor as to whether fees must be segregated is the type of legal services rendered with respect to the particular
claims, not simply the manner of pleading or the type of claim pled. Chapa, 212 S.W.3d at 313-14. The test under Chapa is
"whether discrete legal services advance both a claim or defense for which fees are recoverable and a claim or defense for
which fees are unrecoverable...." Nguyen, 229 S.W.3d at 455. The City's first attempt to justify the award of all its unsegregated
attorney's fees fails.
The City next asserts the exception to the general duty to segregate fees, contending that all of Hill's claims were "inextricably
intertwined." Based on the record before us, we cannot agree that the City met its burden of establishing the exception to the
general rule. First, Chapa clarified that intertwined facts alone are insufficient to excuse segregation. In Chapa the Court
expressly disavowed the prior rule that suggested that a common set of underlying facts necessarily makes all claims arising
therefrom "inseparable" and thus all legal fees recoverable. Chapa, 212 S.W.3d at 313-14; Varner, 218 S.W.3d at 69 (noting
that, "[i]n Chapa, we reestablished the rule that attorney's fees are recoverable only if necessary to recover on a contract or
statutory claim allowing them, and eliminated the exception for fees incurred solely on separate but arguably intertwined
claims") (emphasis added).
Further, the City presented no proof that the legal services rendered applied to all of Hill's claims, and could not be
segregated. The City's written request for attorney's fees was supported only by affidavits; there was no testimony or other
evidence presented at the hearing on attorney's fees. The affidavits by the City's attorneys summarize the total hours spent on
the case by attorney time and paralegal time, describe the hourly rates charged, and the total expenses incurred. Neither of the
affidavits details the actual legal work performed. Neither of the affidavits contains a statement that the legal services provided
were intertwined and inseparable between claims, including those for injunctive relief. In other words, the City presented no
proof to support a finding under the Chapa standard that the legal services provided in defending against the Chapter 26
injunction were the same as, or "inextricably intertwined" with, the legal services rendered to defend against Hill's other
claims. See Nguyen, 229 S.W.3d at 455 (party seeking attorney's fees bears burden of demonstrating that exception to duty to
segregate fees applies). Because the City failed to present any evidence supporting an exception, segregation of fees is
required. Based on this record, the trial court erred in awarding the City attorney's fees for the total number of hours spent on
the case. Accordingly, 643 we reverse the award of attorney's fees and remand for a new trial on the issue of attorney's fees.
TEX.R.APP. P. 44.1(b); see Chapa, 212 S.W.3d at 314; see also A.G. Edwards & Sons, Inc. v. Beyer, 235 S.W.3d 704, 710 (Tex.
2007).
CONCLUSION
Based on the foregoing reasons, we affirm the trial court's judgment in favor of the City, but reverse the award of attorney's fees
to the City and remand for a new trial on attorney's fees.
[1] Hill does not challenge the constitutionality of the statute on appeal.
[2] During the pendency of this litigation, the electrical transmission line was constructed. The City represents that four utility
poles were placed on the Chris Hill Tract, with no poles placed on the Mayberry Tract; each pole has a base of approximately
80 square feet. In addition, high wires span the poles, overlapping the existing right-of-way along State Highway 211. It is
undisputed that no Proposition 3 venue tax funds were used for construction of the Project.
[3] Although not binding on us, we note that recent opinions by the Texas Attorney General have recognized the constitutional
basis of the "contract with the voters" doctrine, as well as its continuing validity. See Op. Tex. Att'y Gen. No. GA-0156, 2004 WL
367365, at *5 (2004) (acknowledging that "Texas courts have held that the express terms of resolutions and orders calling a
tax or bond election, at which voters are asked to approve financial undertakings of a governmental body relating to the
purposes for which funds shall be used, become a contract with the voters who are entitled to receive substantially all of the
benefits and security of that contract"); Op. Tex. Att'y Gen. No. GA-0049, 2003 WL 1697188, at *3 (2003) (stating that a tax or
bond proposition, and its constitutional and statutory conditions and safeguards, form a "contract with the voters" and any
attempt to substantially alter the rights and expectations of the voters will be treated as a violation of article I, section 16 of the
Texas Constitution, prohibiting laws impairing the obligations of contracts); Op. Tex. Att'y Gen. No. JC-0400, 2001 WL 871791,
at *4 (2001) (stating that under the San Saba rule, the terms of an order calling an election at which voters are asked to
approve financial undertakings of a governmental body become a "solemn contract with the voters," and "any attempt to
substantially alter the rights and expectations of the voters will be treated as a violation of ... article I, section 16 of the Texas
Constitution").
[4] A "sports and community venue project" or "venue project" means a venue and related infrastructure that is planned,
acquired, developed, constructed or renovated under Chapter 334. Tex. Loc. Gov't Code Ann. § 334.001(5) (Vernon 2005). A
"venue" is defined to include a municipal parks and recreation system, or improvements or additions thereto, while "related
infrastructure" includes a store, restaurant, on-site hotel, concession, parking or transportation facility, road or street, water or
sewer facility, park, "other ... improvement that relates to and enhances the use, value, or appeal of a venue" and "any other
expenditure reasonably necessary to construct, improve, renovate, or expand a venue...." Id. § 334.001(3), (4)(D) (Vernon 2005).
[5] The City conceded that other statutes, such as environmental laws, might prevent that particular use of the land, but that
such a change in use would be permitted under section 334.041(b).
[6] Hill attached excerpts of the legislative history of a proposed 2003 amendment to Chapter 334 to his summary judgment
motion, arguing that legislators' statements during the debate show their intent that use of approved venue projects be
restricted to their dedicated public purpose, regardless of a conveyance under section 334.041(b). The proposed amendment
did not pass. Hill asserts that the amendment's failure to pass shows Chapter 334 was understood by the drafters to require
the continuation of the dedicated public use; therefore, an amendment stating this requirement was not necessary. Hill's
argument is based on speculation as to the reason the amendment did not pass. Moreover, legislators' statements during a
debate cannot change the plain meaning of the statute, which in this case grants broad unrestricted authority to municipalities
to make conveyances of approved venue projects. See Fleming Foods of Tex., Inc., v. Rylander, 6 S.W.3d 278, 284 (Tex.1999)
(legislative history cannot be used to alter or disregard express statutory terms when their meaning is clear in context of entire
code).
[7] On the other hand, we note the legislature did choose to expressly codify the first principle of "contract with the voters"
concerning the initial use of the venue tax fund. See TEX. LOC. GOV'T CODE ANN. § 334.042(d) (Vernon 2005) (providing, "[t]
he municipality or county may use money in the venue project fund to: (1) reimburse or pay the costs of planning, acquiring,
establishing, developing, constructing, or renovating one or more approved venue projects in the municipality or county; (2) pay
the principal of, interest on, and other costs relating to bonds or other obligations issued by the municipality or county or to
refund bonds, notes, or other obligations; or (3) pay the costs of operating or maintaining one or more approved venue
projects").
[8] We note, however, that the basic foundation of Hill's complaint is compelling—that at the time they approved Proposition 3
the voters had no actual notice that the City could subsequently, on its own initiative, without voter approval, convey an interest
in the approved venue project to a public or private entity for a different use of the property. If the legislature believes voters
should be informed, at the time they are asked to approve funding for a proposed venue project, that the municipality or county
has the statutory authority to subsequently convey the venue project, or an interest in the project, for a different use without
further voter approval, we suggest the legislature consider amending Chapter 334 to include that requirement.
[9] It is undisputed that the City made no attempt to segregate its attorney's fees. Further, we note that the attorney's fees were
assessed only against plaintiffs Chris Hill and Gallagher Headquarters Ranch Development, Ltd.; no fees were assessed
against Julie Hooper because she did not take an active role in the lawsuit.