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NO. 07-06-0301-CV

IN THE COURT OF
APPEALS

FOR THE SEVENTH DISTRICT OF
TEXAS

AT AMARILLO

PANEL C

MARCH 31, 2008

______________________________

THE
CITY OF GREY FOREST, APPELLANT

V.

GLEN W. VERNON AND DENISE G.
VERNON

AND PAUL GRANADO,
APPELLEES

_________________________________

FROM THE 131ST DISTRICT COURT OF
BEXAR COUNTY;

NO. 2002-CI-09980; HONORABLE JOE
F. BROWN, JR., JUDGE

_______________________________

Before QUINN, C.J. and HANCOCK
and PIRTLE, JJ.

OPINION

The
City of Grey Forest (“Grey Forest”) appeals the trial court’s judgment in
favor of appellees, Glen W. Vernon, Denise G. Vernon, and Paul Granado,
and award of damages and attorney fees. We reverse and render
judgment.

BackgroundOn August 18, 1971,
Grey Forest annexed 47.67 acres of land, commonly referred to as the
“Coggeshall subdivision,” into the city limits. On February 26, 1995, the
Vernons entered into an earnest money contract with Mac Peck and Douglas
Peterson to purchase 5.0106 of an 11.4178 acre tract of land within the
Coggeshall subdivision for $23,000. In the earnest money contract, a
provision stated that the buyers were accepting the property in its
present condition. Further, the earnest money contract stated that it was
the Vernons’ intent to use the property as a single family dwelling and
provided the Vernons with the option to terminate the contract to purchase
the property if the Vernons “ascertain that applicable zoning ordinances,
easements, restrictions or governmental laws, rules, or regulations
prevent such intended use or that such required utilities are not
available  . . . .” The closing date for the sale of
the property was set by the parties as November 24, 1997. On April 14,
1995, Grey Forest recorded a sanitary control easement on a property
adjacent to the Vernons’ property that prohibited all construction or
operations that could create an unsanitary condition within, upon, or
across the city’s property. The city’s property contained two wells used
as a source of water for the city’s public water system.

On
September 6, 1995, the city council of Grey Forest voted to begin an
inquiry into the feasibility of providing utility services to the
Coggeshall subdivision including the possibility of paving Requa Road. On
February 14, 1996, the Mayor of Grey Forest, Edwin Faust, sent a letter to
the property owners of the Coggeshall subdivision informing the owners
that the city, “in an effort to obtain city services to [the homes],” was
seeking the owners’ commitment to convey an easement to the City. The
letter also expressed that “we [the city] would like to continue the
existing easements to create a continuous road.” Attached to the letter, a
proposed roadway was highlighted that proceeded north-south through the
Vernons’ property and turned east-west along the southern border of the
Vernons’ property and the city’s property. Both ends of the proposed Requa
Road curved to the west and connected to another roadway, Nottingham
Lane.

On
April 16, 1997, a second letter on City of Grey Forest letterhead was sent
to the mortgage companies with property interests in the Coggeshall
subdivision. This second letter explained that Coggeshall residents had
requested that private access to their property become public access and
that Grey Forest had agreed to provide services and a paved roadway once
the existing easements had been designated as public. On July 1, 1997, the
property owners, including Peck and Peterson, dedicated a street and
utility easement to Grey Forest. Attached to the easement dedication
showing the easement granted to the city was a plat showing a proposed
roadway differing from the proposed easement attached to the February 14,
1996 letter. The deviation changed the easement along the southern
boundary of the city’s property to an easement through the city’s
property. However, Grey Forest is not listed as a grantor on the street
and utility easement dedication. Instead, Grey Forest was the recipient of
the easement.

On
November 24, 1997, the Vernons closed on the subject property and received
a warranty deed for the property. At the time of closing, no roadway
existed on the property. Although the earnest money contract contained a
provision allowing the Vernons to terminate the contract if applicable
easements prevented the intended use of the property, no evidence was
presented as to whether the Vernons questioned the reduction of acreage in
the conveyance, or questioned Peck and Peterson as to the conveyance of an
easement in exchange for the promise of utilities or a paved road. On
February 23, 1999, the Grey Forest city council voted and passed Ordinance
118 accepting the dedication of the street and utility easement of July 1,
1997 as a public street and right of way.

The
Grey Forest council then requested bids from contractors for the Requa
project. In its request, the city asked for bids for the project as a
whole as well as for bids separating the project into two parts, lower
Requa Road and upper Requa Road. The city council voted, on July 1, 1999,
to reject the sole bid that Grey Forest received on the Requa Road project
as a whole. Instead, the city accepted a bid for lower Requa Road and the
council voted, on January 25, 2000, to end the project at the southern
boundary of the Vernons’ property. The city’s decision resulted in the
Vernons having the paved Requa Road and utility lines end at their
southermost property line. In February of 2000, the Vernons sold a
subsection of their property nearest the city’s property to Paul Granado;
the Granado property did not have access to the paved Requa Road or the
utility lines ending at the Vernons’ property. Shortly after the sale of
property to Granado, the city erected a fence around its property in order
to safeguard the city’s water supply which had the effect of blocking
direct access to Nottingham Lane from Vernons’ and Granado’s
property.

The
Vernons filed suit seeking a declaratory judgment against the city to
enforce an agreement they alleged that the city made to build a continuous
road and provide utilities in exchange for a grant of an easement over
their property. Additionally, the Vernons contended that Grey Forest
breached a contract to build a continuous road and provide utilities or,
in the alternative, were estopped from denying a duty to build the road
and provide utilities in exchange for the granting of an easement. Granado
joined as an intervenor seeking to enforce a similar agreement contending
that he relied, to his detriment, on the city’s promise to build a
continuous road and utilities. In addition, the Vernons complained that,
although Grey Forest had never affirmatively granted them permission to
access their property from Nottingham Lane across the city’s property, the
agreement to build a continuous loop obligated the city to allow them
access to Nottingham Lane across the city’s property. A trial was held
before the court on January 30 through February 1, 2006. At the conclusion
of the trial, the trial court ruled in favor of the Vernons and Granado
and awarded the Vernons $23,000 and Granado $18,000 in damages, with the
Vernons and Granado also recovering attorney fees.

Additionally,
the trial court made findings of fact and conclusions of law. The trial
court found that Grey Forest had agreed, by motion of the city council, to
pursue the feasibility of constructing a continuous loop between Requa
Road and Nottingham Lane. The trial court also found that Grey Forest had
agreed to create a continuous loop through the subdivision in exchange for
an easement and that Grey Forest ratified the agreement to pave Requa Road
and provide utilities by acknowledging the Requa Road project during
council meetings, but that the city had failed to pave upper Requa Road.
Additionally, the trial court found that the Vernons and Granado
substantially and reasonably relied, to their detriment, upon Grey
Forest’s promise to build a continuous loop, and further found that the
Vernons and Granado were damaged by Grey Forest’s failure to pave upper
Requa Road.

However,
the trial court also concluded that the Vernons entered into an earnest
money agreement on or about February 27, 1995, and that Grey Forest did
not, by vote of council, promise the Vernons or Granado that it would
construct a loop between Requa Road and Nottingham Lane. Additionally, the
trial court concluded that the Vernons and Granado did not have reasonable
access to their property. The trial court further concluded that Grey
Forest’s decisions to end construction of the paved road at the southern
border of the Vernon’s property, to fence off its well site property,
whether or not to improve an easement, and when to open a dedicated street
for public use, were all governmental functions supported by legitimate
governmental interests.

Grey
Forest appeals the judgment by eight issues contending that the trial
court erred by (1) finding that Grey Forest agreed to improve and pave a
loop in exchange for an easement; (2) finding that Grey Forest recognized
or ratified the alleged agreement; (3) finding that the Vernons and
Granado substantially and reasonably relied upon the agreement to their
detriment; (4) admitting city council minutes to prove the ratification of
the agreement; (5) finding that the Vernons and Granado had standing
because they did not have adequate city services equal to other citizens;
(6) finding that Grey Forest denied the Vernons and Granado access to
their property by barricading the city’s well site; (7) awarding damages;
and (8) awarding attorney fees. Because of the relatedness of the issues,
we will begin our analysis by reviewing issues one, two, and
three.

Law
and Analysis

Under
an abuse of discretion standard, the appellate court determines if the
trial court acted arbitrarily and unreasonably, and thus abused its discretion. See Morrow v. H.E.B., Inc., 714
S.W.2d 297, 298 (Tex.1986). The reviewing court may not reverse the trial
court for an abuse of discretion because it disagrees with the trial
court's decision so long as that decision is within the trial court's
discretionary authority. Beaumont
Bank v. Buller, 806 S.W.2d 223, 226 (Tex.1991); Downer v. Aquamarine Operators,
Inc., 701 S.W.2d 238, 242 (Tex.1985). Unless the trial court’s
factual determinations were arbitary and unreasonable, the reviewing court
may not substitute its judgment for the trial court’s decisions committed
to its discretion. See
Walker v. Packer, 827
S.W.2d 833, 840 (Tex. 1992). However, the trial court has no discretion in
regard to questions of law. See Walker, 827 S.W.2d at 840.
Interpretation of a statute is a pure question of law which is reviewed
de novo. See Tex. Gen. Indem. Co. v. Tex. Workers’
Comp. Comm’n, 36 S.W.3d 635, 640 (Tex.App.–Austin 2000, no pet.);
Mitchell Energy Corp. v.
Ashworth, 943 S.W.2d 436, 437 (Tex. 1997).

In
reviewing the court’s findings of fact, the trial court found that the
city council did not vote nor sign any contract that would obligate it to
pave a road or provide utilities to the residents of the Coggeshall
subdivision. Thus, deferring to the trial court’s findings, we conclude
that Grey Forest has not entered into an enforceable contract with the
Vernons or Granado. See
Walker, 827 S.W.2d at
840.

We
next review the trial court’s findings on the Vernons and Granado’s theory
of promissory estoppel. Although the trial court found that neither the
city council nor its mayor signed a contract, the trial court determined
that the city council ratified the mayor’s actions by taking actions
consistent with the mayor’s alleged promise to provide services in
exchange for the granting of an easement. Since this is a fact issue, we
again will defer to the trial court’s finding. See City of Dallas v. Vills. of Forest
Hills, L.P., 931 S.W.2d 601, 604 (Tex.App.–Dallas 1996, no writ)
(officer of a city generally cannot bind or estop the city in a matter
placed exclusively within the authority of the governing body unless the
evidence clearly shows the officer’s conduct so closely related to the
expressed will of the governing body as to constitute an act of the body
itself). And, though we defer to the trial court’s factual findings, we
review the trial court’s application of the facts to the law de
novo. See Tex. Gen. Indem. Co., 36 S.W.3d
at 640.

A
promisee is entitled to recover under the theory of promissory estoppel if
(1) there was a promise; (2) the promisor could have reasonably foreseen
that the promisee would rely on the promise; and (3) the promisee suffered
a detriment as a result of the substantial reliance on the promise. See Sipco Servs. Marine, Inc. v. Watt Field
Serv. Co., 857 S.W.2d 602, 605 (Tex.App.–Houston [1st
Dist.] 1993, no writ). By its first three issues, Grey Forest argues that
there was no agreement between Grey Forest and the Vernons or Granado,
that it could not have ratified any such agreement, and that the Vernons
or Granado could not have detrimentally relied on such an agreement. In
essence, Grey Forest contends that promissory estoppel is not an available
remedy to the Vernons or Granado. We agree.

At
the time that the mayor sent letters to the property owners of the
Coggeshall subdivision, the only possible basis of the ratified agreement,
the promisees would have been Peterson and Peck. But no evidence was
presented as to whether Peterson and Peck detrimentally relied on the
city’s promise. Instead, the evidence in this case focused on how the
Vernons and Granado were detrimentally affected based on a substantial
reliance on the ratified agreement; however, neither the Vernons nor
Granado were a promisee of the city’s ratified agreement. Therefore, we
conclude that, as a matter of law, Vernon and Granado have presented no
evidence demonstrating proof of each element necessary to establish
recovery based on promissory estoppel, specifically that the promisees,
Peterson and Peck, suffered to their detriment because of their
substantial reliance on the city’s ratified agreement.

The
Vernons and Granado also sought to estop the city from denying its
responsibility, under the ratified agreement, to provide a paved road and
utilities by asserting their status as successors in interest to the
promise made to Peterson and Peck. But unless the promise is found to be
enforceable, any potential beneficiary of such a promise does not gain
rights from the alleged promise. See Young Ref. Corp. v. Pennzoil
Co., 46 S.W.3d 380, 387 (Tex.App.–Houston [1st Dist.]
2001, pet. denied). In fact, without a showing that the Vernons and
Granado were intended beneficiaries, the presumption is against conferring
benefits to third parties. Id. The Vernons and Granado did
not present evidence demonstrating that Peterson and Peck detrimentally
suffered or that they were intended third party beneficiaries. Hence,
without establishing that Peterson and Peck could have relied on the
theory of promissory estoppel, the Vernons and Granado cannot, as third
party beneficiaries, estop the city under promissory estoppel. See id. Thus, we conclude that there
is no evidence to support the trial court’s judgment. Additionally, on
issue seven, we conclude that, with no evidence to support the judgment,
the Vernons and Granado are not entitled to damages under a contractual
theory or promissory estoppel.

In
our determination of issues one, two, and three, we have presumed as
correct the trial court’s decisions on admission of the city council’s
minutes (issue four), the determination that the Vernons and Granado did
not have services equal to other residents (issue five), and that the city
prevented access by the Vernons and Granado to Nottingham Lane by fencing
its property (issue six). All of these findings were factual
determinations within the trial court’s discretionary authority. Since we
have reversed the trial court’s judgment, even with these presumptions, we
will forego further discussion of those issues. Tex. R. App. P.
47.1.

On
issue eight, the decision to award attorney fees is reviewed under the
abuse of discretion standard. See Crouch v. Tenneco, Inc., 853
S.W.2d 643, 646 (Tex.App.–Waco 1993, writ denied). A review of the Vernons
and Granado’s Amended Petition for Writ of Mandamus, Injunction,
Declaratory Judgment, and Breach of Agreement shows that the Vernons and
Granado sought attorney fees under the Declaratory Judgments Act and as a
result of breach of the agreement. With the trial court having concluded
that there was no contract between Grey Forest and the Vernons or Granado,
and with our conclusion that the Vernons and Granado failed to establish
promissory estoppel as a party or as a third party beneficiary, the
Vernons and Granado are not entitled to damages or attorney fees under the
theories of breach of contract or promissory estoppel. Under the
Declaratory Judgments Act, the act provides that a person interested under
a deed or other writing constituting a contract may have the court
determine any question of construction or validity arising under the
instrument and obtain a declaration of rights, status, or other legal
relations under it. Tex. Civ. Prac.
& Rem.Code Ann. § 37.004(a) (Vernon Supp. 2007). It also
provides that the court may award costs and attorney fees. Id. § 37.009. However,
declaratory relief may not be used solely as a vehicle to obtain attorney
fees and is inappropriate if it will serve no useful purpose. Boatman v. Lites, 970 S.W.2d 41,
43 (Tex.App.–Tyler 1998, no pet.). The Vernons’ and Granado’s request for
declaratory judgment presented no issues beyond those already raised and
have no greater ramifications than the claims for breach of contract or
promissory estoppel. Therefore, we agree with Grey Forests’ eighth issue
and find no basis for the award of attorney fees to the Vernons and
Granado.

Conclusion

For
the foregoing reasons, we reverse and render a judgment that the Vernons
and Granado take nothing on their claims on damages and attorney fees
under breach of contract, promissory estoppel, or under the Declaratory
Judgments Act.

Mackey
K. Hancock

Justice