City of McKinney v.
Hank’s Restaurant Group, L.P.
Dallas Court of Appeals, No. 05-12-01359-CV (September 18, 2013)
Justices FitzGerald (Opinion) and Lewis
Dallas Court of Appeals, No. 05-12-01359-CV (September 18, 2013)
Justices FitzGerald (Opinion) and Lewis
In an interlocutory appeal from a nasty, long-running dispute between the City of McKinney and a local restaurant and live-music venue there, the Dallas Court of Appeals addressed a variety of governmental immunity issues, issuing an opinion that will be a helpful roadmap to such issues in the future. The trial court had denied the City’s plea to jurisdiction based on governmental immunity. The appeals court affirmed in part and reversed in part—affirming jurisdiction over the restaurant’s claim for damages up to an amount not exceeding that necessary to offset the City’s own monetary claims, but otherwise reversing the trial court’s denial of the City’s plea to jurisdiction. Where it reversed, the Court rendered judgment for the City on some issues while remanding on others to allow the restaurant to replead and attempt to establish various exceptions to the City’s immunity.
Hank’s Restaurant Group (“HRG”) operates Hank’s Texas Grill, a restaurant and live music venue in McKinney. HRG contends the City has harassed HRG, its employees, and its patrons ever since Hank’s opened in 2003. The City contends Hank’s has violated numerous fire, building, and food-service regulations in the City’s Ordinances. The two squared off in court in August of 2012, with HRG filing first and the City filing the next day. Each sought declaratory and injunctive relief against the other, as well as attorney’s fees; each filed counterclaims in the other’s case (with HRG adding a claim for actual damages). The City filed pleas to jurisdiction in response to HRG’s claims and counterclaims against it, based on governmental immunity. The trial court consolidated the two cases and denied the City’s pleas to jurisdiction, a decision the City challenged by interlocutory appeal.
The specifics of the dispute, while colorful, are of less interest to those beyond the parties themselves than are the legal principles articulated and explained by the Court of Appeals. Among the points clarified or explicated by the Court:
- HRG’s amended pleading filed after the hearing on the pleas to jurisdiction, but before the trial court’s decision and its deadline for supplemental briefing on the issue, was timely. “The rules of civil procedure do not prescribe a deadline for filing amended pleadings before the hearing or submission of a plea to the jurisdiction,” because such a hearing is not a “trial” under TEX. R. CIV. P. 63
- Sovereign or “governmental immunity” comprises both immunity from liability and immunity from suit, depriving a court of jurisdiction over suits or claims to which it applies. But a governmental entity is not immune from monetary claims connected with its own affirmative claims, to the extent those monetary claims offset the entity’s claims for monetary relief.
- The Declaratory Judgments Act waives a municipality’s immunity for claims challenging the validity of its ordinances. But it does not waive immunity for claims seeking only interpretation of a statute or ordinance or challenging its application. Such challenges must be brought against a government officer, rather than the entity itself, to survive a plea to jurisdiction.
- There is no “inequitable conduct” exception to governmental immunity (except possibly in a breach of contract case)—i.e., allegations of “egregious, intentional, and inequitable” conduct by the City are not sufficient to waive or create an exception to governmental immunity.
- The City’s merely having pleaded affirmative claims does not create a blanket waiver of immunity (except for claims for monetary relief up to an offset of the City’s own such claims).
- Where a claimant’s pleadings do not articulate facts sufficient to demonstrate the propriety of jurisdiction (i.e., the applicability of an exception to governmental immunity), but also do not demonstrate incurable defects, the plea to jurisdiction will be sustained but the claimant must be afforded the opportunity to amend and replead.
Applying all these principles to the pleadings and circumstances in this case, the Court of Appeals (i) affirmed the denial of the City’s plea to jurisdiction regarding HRG’s monetary claims, but only to the extent of an offset to the City’s own monetary claims against HRG, (ii) reversed the trial court’s denial of the City’s plea to jurisdiction on all other grounds, (iii) rendered judgment for the City to the extent HRG’s claims incurably sought declarations or injunctive relief based on interpretations or applications of the City’s ordinances and regulations, and (iv) remanded to allow HRG to replead those claims that might be predicated on arguments that the ordinances or regulations at issue are invalid.
