In The Courts

Water Cases

In Re Upstream Addicks and Barker (Texas) Flood-Control Reservoirs, 17-9001L, 219 WL 6873696 (Fed. Cl. Dec. 17, 2019).

The United States Court of Federal Claims, in a post-trial decision, determined that the government was liable for takings compensation to private property owners in the Houston metropolitan area following the landfall of Hurricane Harvey (“Harvey”) in August 2017.

In short, Harvey dumped 33.7 inches of rain over a four-day period across the region, flooding over 150,000 homes, including many upstream properties within the Addicks and Barker Reservoirs—located above the federally designed, built, and maintained Addicks and Barker Dams. During Harvey, the Addicks and Barker Dams collected storm water, which caused properties within the reservoir to flood from the impounded water. Therefore, the issue considered by the Court was whether the Federal Government was liable for the damages to certain properties within the Addicks and Barker Dams under the Takings Clause of the Fifth Amendment of the United States Constitution.

Naturally, the case was fact-intensive, and the Court spent much time addressing certain facts, which ultimately demonstrated the federal government’s pattern of behavior, which supported a successful takings claim by the plaintiffs. Those facts considered included certain studies conducted during the first half of the twentieth century, the dams’ design, certain recorded cost-benefit analyses conducted pursuant to said design, post-construction improvements and operations, and—among other things—a hydrologic study which contributed to an increased awareness of actual flood risks.
In a takings case, the plaintiff must establish (1) that he holds a property interest for purposes of the Fifth Amendment, and (2) that the governmental action at issue amounted to a compensable taking. As stated by the Court, such an inquiry is question of law based on factual underpinnings. The Court followed the United States Supreme Court precedent set in Arkansas Game & Fish v. US by employing the list of six factors necessary for consideration in determining whether a compensable taking has occurred. Those factors include (1) “time,” (2) “intent,” (3) “foreseeability,” (4) “character of the land,” (5) “reasonable investment-backed expectation,” and (6) “severity.”

Here, after finding that the plaintiffs had a compensable property interest at the time of the taking, the Court also found that through its construction, maintenance, and operation of the Addicks and Barker Dams in the past, present, and future—the federal government had taken permanent flowage easements on the properties (i.e., a permanent right to inundate the property with impounded flood waters).

Next, the Court found that the government’s actions were substantial and frequent enough to give rise to a taking, citing the significant harm endured by the plaintiffs as a result of the government’s aforesaid actions—including almost entirely preventing the normal use and enjoyment of their property. The Court also found that the federal government received a notable benefit (i.e., protection of downstream properties) at the expense of the affected upstream property owners. The Court found the federal government’s actions to be both intentional and foreseeable because the flooding experienced by the upstream properties was the natural and probable consequence of the inundation pool under extreme conditions. According to the Court, to an objectively reasonable person, it was not a matter of if flooding would occur, but a matter of when and how often. Moreover, the Court found that the property owners had reasonable investment-baked expectations regarding their properties’ uses.

For these reasons, the Court held that the government’s actions relating to the Addicks and Barker Dams, and the flooding of certain properties, constituted a taking of a flowage easement under the Fifth Amendment, for which the government was liable.

Salcetti v. AIG Prop. Cas. Co., No. CV H-19-1184, 2019 WL 6055232 (S. D. Tex. Nov. 15, 2019).

The facts here again emanate from Hurricane Harvey’s stall and downpour over the Houston metropolitan area in 2017. Here, Salcetti’s home, which was insured by an AIG homeowner’s policy (“Policy”), suffered significant flood damage after the U.S. Army Corps of Engineers released water from the Addicks and Barker Reservoirs. Salcetti filed a claim with AIG to cover the damage to his home. AIG denied the claim, Salcetti sued AIG, and both parties moved for pre-trial summary judgment.

The issues considered by the Federal District Court of Houston pertained to whether certain facts claimed by either side were sufficiently supported by evidence in the record to warrant granting either party’s summary judgment.

On one hand, AIG argues that it denied Salcetti’s claim because the Policy excludes coverage for “any loss caused by flood, surface water… or overflow of a body of water…whether or not caused by rain.” Under AIG’s theory, some of the rain water fell outside the Reservoirs as surface water, while other rain water fell or drained into a series of creeks, which AIG claims feed into Buffalo Bayou and the Addicks and Barker Reservoirs. According to AIG, the Reservoirs and Buffalo Bayou are “natural watercourses” and the water from the Reservoirs, upon its release, flowed into Buffalo Bayou and immediately became Buffalo Bayou water.

On the other hand, Salcetti claims that the water in the Reservoirs was “impounded water” that, when released, did not flow into Buffalo Bayou because the bayou “was full and already outside its banks at the time of the release….” Thus, the undetermined facts on which both motions for summary judgment rely turn on whether the nature of the water that damaged Salcetti’s home was impounded water or surface water. Presumably, if the water is deemed “impounded water,” then Salcetti’s claim is more likely to fall within the coverage of the Policy. Conversely, if the water that damaged the home is surface water, it is more likely to fall within the Policy’s exclusions.

Since the evidence provided in support of the pre-trial motions did not result in an agreed stipulation of facts, the record is insufficient to support either’s position. Therefore, the Court denied both motions.

In Re Schlumberger Tech. Corp., No. 11-19-00204-CV, 2019 WL 5617632 (Tex. App. – Eastland Oct. 24, 2019, no pet.).

The Court of Appeals in Eastland conditionally granted a petition for a writ of mandamus in which the trial court denied a motion to dismiss, which was entered pursuant to an executed abatement agreement. At issue here was whether the trial court abused its discretion by denying the motion to dismiss, and whether the party seeking dismissal has an adequate remedy.

In 2009, The Texas Commission on Environmental Quality (“TCEQ”) tested the groundwater beneath the Cotton Flat community in Midland, Texas and found that it was contaminated with hexavalent chromium. The United States Environmental Protection Agency (“EPA”) then designated the impacted area as a “Superfund Site.” Over 300 individuals (collectively, the “Real Parties in Interest” or “Real Parties”) sued Schlumberger Technology Corporation and Dow Chemical Company (collectively, the “Relators”), alleging they were the cause of the contamination, which caused harm to the Real Parties in Interest. The suit saw virtually no movement until late 2016, when the Real Parties served the Relators with written discovery. At that time, the Relators moved for a protective order and a Lone Pine order, which would require the Real Parties to provide certain information on each individual’s alleged exposure to the contamination and specify the injuries suffered. Prior to the hearing, the parties entered an agreement under Rule 11 of the Texas Rules of Civil Procedure, whereby the Relators would agree to table the motion in favor of an administrative abatement. Under the agreement, if the EPA did not determine that the Relators were the source of the contamination before April 13, 2019 (ten years after the TCEQ found contamination), then the case would be dismissed. Pursuant to the agreement, an abatement order was entered on the terms of the underlying agreement.

The EPA did not find the Relators to be the source of the contamination before April 13, 2019, and the Relators therefore filed a motion to dismiss. The Real Parties moved to stay the Abatement Order, claiming the agreed upon abatement period was intended to provide the EPA sufficient time to make a finding by finishing its investigation and declaring a source of contamination. The EPA had made no findings. Thus, according to the Real Parties, the intent of the agreement was not met. The trial court judge agreed, and signed an order denying the dismissal motion from the Relators.

Ultimately, the Texas Court of Appeals in Eastland construed the language of the agreement and the abatement order as unambiguous and granted the writ for mandamus, directing the trial court to vacate its order and enter an order that dismisses the case.

Neches & Trinity Valleys Groundwater Conservation Dist. v. Mountain Pure TX, LLC , No. 12-19-00172-CV, 2019 WL 4462677 (Tex. App.—Tyler Sept. 18, 2019, no pet.h.).

In an interlocutory appeal, the Court of Appeals in Tyler reversed the trial court’s denial of plea to the jurisdiction pursuant to the principles of governmental immunity. Here, the Neches and Trinity Valleys Groundwater Conservation District (“District”) sued Mountain Pure (“Mountain,”), alleging that Mountain was drawing water from a well under its authority and that Mountain should be forced to comply with the Texas Water Code and the District’s rules.
Mountain generally denied the District’s allegations and filed a counterclaim, alleging that the District’s attempt to enforce its rules caused Mountain to lose a lucrative contract with Ice River, who had contracted to purchase Mountain’s facility. In a series of amended counterclaims, Mountain alleged that the District’s acts amounted to tortious interference, and a general taking. The trial court denied the District’s plea to the jurisdiction, and the District filed an interlocutory appeal.

The Texas Court of Appeals noted that while the Texas Constitution waives sovereign immunity with regard to inverse condemnation, such claims must be properly pleaded in a takings claim. Otherwise, the District retains immunity, and a court must sustain a properly raised plea to the jurisdiction.

In determining whether a government-imposed restriction constitutes a regulatory taking by unreasonably interfering with the landowner’s rights to use and enjoy his property (i.e. inverse condemnation), the court must consider (1) the economic impact of the regulation and (2) the extent to which the regulation interferes with distinct investment-backed expectations.

The issue of whether the District’s rules apply had not yet been addressed by the trial court, and therefore the District’s rules had not yet been enforced. Since the loss of anticipated gains or future profits is not generally considered in the application of inverse condemnation claims, and Mountain failed to show how the application of the District’s rules would interfere with its operation if they were to apply, the court found the District’s plea to the jurisdiction to be proper.

Thus, the appeals court held that the trial court erred in denying the District’s plea to the jurisdiction, and remanded for further proceedings.

Harris County v. S.K. and Bros., Inc., No. 14-17-00984-CV, 2019 WL 5704244 (Tex. App.—Houston [14th. Dist.] Nov. 5, 2019, no pet. h.).

In 2011, Harris County (“County”) filed suit against S.K. and Brothers, a dry cleaners owner, and other owners in the shopping center where the dry cleaners is located (collectively “Defendants”), alleging that the dry cleaners had contaminated the underlying groundwater with perchloroethylene (“PCE”) and had failed to timely submit certain Annual Waste Summaries, and that the Defendants had taken no actions to mitigate the contamination. The County’s allegations also claimed that the Defendants failed to file an application with the Texas Commission on Environmental Quality (“TCEQ”) Dry Cleaner Remediation Program under the Texas Health and Safety Code (“THSC”). The County, who also joined TCEQ as a statutorily indispensable party, sought civil penalties and injunctive relief under the Texas Water Code (“TWC”), the THSC, and various rules and regulations enacted pursuant to those statutes.

After a mistrial, the court assessed sanctions against the Defendants, additional discovery, and environmental testing. Defendants entered a plea to the jurisdiction, claiming neither Harris County nor TCEQ have standing because the Dry Cleaner Remediation Program provides the exclusive remedy for addressing environmental issues related to retail dry cleaners. The trial court granted the plea and dismissed the case.

On appeal, the Houston Court of Appeals considered the meaning THSC § 374.002 (regarding conflicts of law with Chapter 361 of the THSC) and whether such law precludes certain actions brought under the TWC.

The appellate court held that THSC § 374.002 does not preempt all other environmental enforcement laws because it expressly states that the Dry Cleaner Environmental Response statute prevails over other law only to the extent Chapter 374 “is inconsistent or in conflict with” that other law. Nothing in the language limits the authority of local governments to pursue enforcement actions against a retail dry cleaners outside the framework of Chapter 374. Thus, the County and TCEQ properly brought actions under TWC § 7.351, which expressly authorizes local governments to file civil suits seeking civil penalties and injunctive relief against those who are responsible for unauthorized discharges of municipal and industrial waste into or adjacent to any water in the state.

Thus, the trial court erred when it granted the plea to the jurisdiction, and the Court of Appeals reversed the trial court’s order granting the plea to the jurisdiction and dismissing County’s and TCEQ’s causes of action, and remanded the case for further proceedings.

Litigation Cases

Town of Shady Shores v. Swanson, No. 18-0413, 2019 WL 6794327 (Tex. Dec. 13, 2019).

The Texas Supreme Court held in Town of Shady Shores v. Swanson that (1) a no-evidence motion for summary judgement could be used to defeat jurisdiction on the basis of governmental immunity and (2) the Texas Open meetings Act’s (“TOMA”) clear and unambiguous waiver of immunity did not extend to suits for declaratory relief.

The underlying controversy in Swanson stemmed from an employment dispute between the Town of Shady Shores (“Town”) and its former secretary, Swanson, after the Town’s council voted to terminate Swanson’s employment in executive session at an open meeting. Among other motions, the Town brought no-evidence motions for summary judgement, arguing the Town was entitled to governmental immunity on particular claims. The trial court denied the Town’s traditional and no-evidence motions for summary judgment, and the Town appealed.

The appellate court reasoned that allowing a jurisdictional challenge on immunity grounds via a no-evidence motion would improperly shift the initial burden of the governmental entity to “negate the existence of jurisdictional facts before a plaintiff has any burden to produce evidence raising a fact question on jurisdiction” by requiring a plaintiff to “marshal evidence showing jurisdiction” before the governmental entity has produced evidence negating it.

Then, the Texas Supreme Court rejected that view, reasoning that a no-evidence summary judgment motion may be used to defeat jurisdiction on the basis of governmental immunity because such motion has the procedural safeguards of (1) a non-movant is required only to produce more than a scintilla to create a genuine issue of material fact and (2) that no-evidence motions are permissible only after adequate time for discovery.

In addition, the Court held that TOMA does not waive governmental immunity for declaratory judgment claims. The Court reasoned that the specific statutory language of TOMA that a suit “by mandamus or injunction to stop, prevent, or reverse a violation or threatened violation” constituted a clear and unambiguous waiver of immunity for, and only for, suits seeking injunctive and mandamus relief. The Court also found compelling that the legislature had authorized a suit for declaratory judgment against the government in other statutes and had not done so for TOMA.

Texas Supreme Court to take up scope of Expedited Declaratory Judgments Act

The Texas Supreme Court granted review in Cities of Conroe, Magnolia, & Splendora v. Paxton on October 4, 2019. In that case, a conservation and reclamation district brought an action under Expedited Declaratory Judgments Act (“EDJA”) seeking declarations regarding legality and validity of its contracts with the Cities that generate the revenues that are pledged to repay SJRA’s bonds.

As a matter of first impression, the court of appeals held that the EDJA does not include an implied exclusion of claims that would implicate interests having due process protection. Thus, SJRA could adjudicate the question of the contract’s validity in an EDJA suit despite the EDJA’s truncated procedures.

The Texas Supreme Court held oral argument on the case on January 9, 2020. Questioning from Justice Busby focused on the notice aspects of the EDJA and how they relate to a suit seeking to adjudicate the validity of a contract between identifiable parties (as opposed to questions like rates and expenditures that affect the public as a whole). Meanwhile, Justices Guzman and Boyd focused their questioning on what aspects of contract formation and validity were subject to the EDJA under the statute’s language. The opinion in this case is expected in May.

Wasson Interests, Ltd. v. City of Jacksonville, Texas, 12-13-00262-CV, 2019 WL 7373851 (Tex. App.—Tyler Dec. 31, 2019, no pet. h.).

In Wasson Interests, Ltd. v. City of Jacksonville, 489 S.W.3d 427, 433 (Tex. 2016), the Texas Supreme Court held that, with regard to the City of Jacksonville’s (the “City”) sovereign immunity, the proprietary-governmental dichotomy applies to breach of contract suits against a municipality. Further, in Wasson Interests, Ltd. v. City of Jacksonville, 559 S.W.3d 142 (Tex. 2018), the Court held that the City was acting in its proprietary capacity when it leased out lots of land to private citizens for residential development. After remand from the Texas Supreme Court a second time, in Wasson Interests, Ltd. v. City of Jacksonville, No. 12-13-00262-CV, 2019 Tex. App. LEXIS 11264 (Tex. App.—Tyler Dec. 31, 2019), the court of appeals held that even though the private lessees of the lots had breached their lease and the City had rightfully evicted them, the lessees were entitled to equitable reimbursement.

The controversy in this case stems from City-owned lots surrounding Lake Jacksonville. The City leased these lots – most of them for ninety-nine year terms – for private residential development. Wasson Interests, Ltd. (“WIL”) leased two lots surrounding Lake Jackson. Both leases incorporated the Lake Jacksonville Rules and Regulations, along with relevant city ordinances. Lake Jacksonville evicted WIL for violating a regulation forbidding short-term rentals.

Because the City could be sued and was acting in its proprietary function when it leased out the lots in question, the suit for breach of contract could ensue. The court of appeals held that, though WIL was in breach of the contract, they were entitled to equitable reimbursement from the City because “the very purpose of the lease was to authorize the lessee to construct private residences on the lots.” WIL, with the City’s knowledge and approval, made significant improvements to the leased land. Thus, the court concluded, the City would be unjustly enriched if allowed to retain the full value of the improvements.

Air and Waste Cases

Gao v. Blue Ridge Landfill TX, L.P., No. 19-40062, 783 Fed. Appx. 409 (5th Cir. Oct. 30, 2019).

On October 30, 2019, the United States Court of Appeals – Fifth Circuit in Gao v. Blue Ridge Landfill TX, L.P. affirmed the district court’s decision that homeowners who moved near a preexisting landfill were subject to a two-year statute of limitations to bring suit based on odors emanating from the landfill. The appellate court’s holding, which relied on Texas state law, suggests that nuisance claims must be brought quickly, and that even a change in operations or increase in odor complaints may be insufficient to reset the clock on the viability of nuisance claims.

The court in that case held that the odor from the Blue Ridge Landfill was a permanent nuisance, which accrues when the injury first occurs, whereas a temporary nuisance accrues upon each injury. With a permanent nuisance, a plaintiff has only two years to file suit under the statute of limitations, whereas with a temporary nuisance, the clock resets each time the nuisance occurs (i.e., each time an odor issue arises).

State of California v. EPA, 385 F. Supp. 3d 903 (N.D. Cal. May 2019).

On December 17, 2019, a California U.S. District Court rejected the EPA’s request to postpone a court-mandated deadline of November 6, 2019 for the U.S. Environmental Protection Agency (“EPA”) to promulgate a federal plan for states that have not approved a plan to comply with the EPA’s 2016 Emissions Guidelines (“Guidelines”). The Guidelines are aimed at air emissions from existing landfills.

The EPA sought to delay the deadline to provide plan until August, 2021. However, the court denied the EPA’s request, reasoning that the Agency will not face a substantial burden as it has already promulgated and received comments on the proposed federal plan. The Agency filed an appeal of this decision on December 10, 2019. As a result, the EPA must either issue the final plan now or wait for the Ninth Circuit Court of Appeals to render its opinion in the appeal.

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“In the Courts” is prepared by Lauren Thomas, an Associate in the Firm’s Water Practice Group; Lindsay Killeen, an Associate in the Firm’s Litigation Practice Group; and Samuel Ballard, an Associate in the Firm’s Air and Waste Practice Group. If you would like additional information, please contact Lauren at 512.322.5856 or lthomas@lglawfirm.com, Lindsay at 512.322.5891 or lkilleen@lglawfirm.com, or Sam at 512.322.5825 or sballard@lglawfirm.com.