In the Courts

Water Cases

Weatherford Int’l, LLC v. City of Midland, No. 11-20-00255-CV, 2022 WL 3904001 (Tex. App.—Eastland Aug. 31, 2022, no pet. h.).

This case focuses on whether a company was able to show that the waiver of governmental immunity contained in the Solid Waste Disposal Act (“SWDA”) applied to a city. Weatherford International, LLC and Weatherford U.S., L.P. (“Weatherford”) purchased a property and discovered that a water well located on the property contained contaminants. Weatherford was unable, however, to determine the source of the contamination. The Texas Commission on Environmental Quality (“TCEQ”) determined that Weatherford was the party responsible for the contamination and required Weatherford to engage in monitoring and remediation.

Eventually, Weatherford came to believe that the source of the contamination was a leaking sewer system running adjacent to the property. The City of Midland (the “City”) owned and operated the sewer system. Weatherford sued the City, claiming that the City was partially responsible under SWDA for the cleanup costs. The City filed a plea to the jurisdiction arguing that Weatherford’s factual allegations did not give rise to any liability under SWDA and that governmental immunity barred Weatherford’s claims—the trial court agreed and granted the City’s plea. On appeal, the appellate court concluded that SWDA does waive governmental immunity in certain circumstances, but that Weatherford only raised the issue of how the City handled sewage, not solid waste. Critically, Weatherford failed to raise any issue relating to solid waste. In affirming the trial court’s decision, the appellate court stated, “we agree with the City that neither its actions nor the allegations in Weatherford’s pleadings subject the City to the provisions of SWDA upon which Weatherford relies. Therefore, Weatherford failed to establish a waiver of the City’s immunity under the [SWDA].”

Gatehouse Water LLC v. Lost Pines Groundwater Conservation Dist., No. A-22-CV-00131-LY, 2022 WL 3362287 (W.D. Tex. Aug. 15, 2022).

This report and recommendation to Judge Lee Yeakel of the United States District Court of the Western District of Texas by Magistrate Judge Dustin Howell focused on Defendant Lost Pines Groundwater Conservation District’s (“LPGCD’s”) motion to dismiss Plaintiff Gatehouse Water LLC’s (“Gatehouse’s”) complaint for lack of subject matter jurisdiction and for failure to state a claim.

Gatehouse acquired certain wells, groundwater leases, and groundwater permits from its predecessor-in-interest, Forestar. The groundwater permits that Gatehouse acquired from Forestar, under their express terms, required Gatehouse to have a binding contract or contracts to provide at least 12,000 acre-feet of water per year. Gatehouse presented a contract with a third party to LPGCD in an attempt to fulfill this requirement, but LPGCD determined that the contract did not comply with the requirement. This determination effectively halted Gatehouse’s ability to use its permits. Gatehouse responded by filing a lawsuit and asserting eight causes of action against LPGCD, including takings claims, an equal protection claim, a procedural due process claim, a substantive due process claim, and ultra vires claims. LPGCD moved to dismiss the claims alleging, among other things, that it was protected by legislative immunity, quasi-judicial immunity, and qualified immunity.

This report and recommendation addressed why each of LPGCD’s arguments regarding immunity should fail at this stage of the proceeding and addressed the validity of LPGCD’s other arguments as to why Gatehouse’s claims should each be dismissed for their individual flaws. The recommendation suggested granting LPGCD’s motion to dismiss in part and denying it in part. Judge Yeakel has not yet issued a decision on the matter.

Litigation Cases

Texas Supreme Court places substance over form in measuring sufficiency of notice under Texas Tort Claims Act and city charters.

In Leonarda Leach v. City of Tyler, the Supreme Court held that a Plaintiff who substantively satisfies the notice requirements of the Texas Tort Claims Act and a city charter will not be denied jurisdiction due to a failure to properly fill out a city’s notice form. No. 21-0606, — S.W.3d —, —, 2022 WL 42830382 (Tex. Sept. 16, 2022) (per curiam). In providing its reasoning for holding that notice was provided under the city charter despite the failures of the notice form, the Court stated that “[t]he charter is the law; the form merely facilitates its implementation.” Id. at *3.

According to the allegations, Plaintiff, Leonardo Leach, was driving a truck for his employer, Ameri-Tex Services, when an improperly secured piece of lumber fell off of a truck owned by the City of Tyler. The lumber hit Leach and the company vehicle—both suffered injury. When Leach brought his claim, the City asserted in summary judgment that Leach had failed to provide the City with proper notice of his claim under the Texas Tort Claims Act and the City of Tyler’s charter.

Under Texas law, a governmental entity must “receive notice of a claim against it” within six months of the alleged injury. Tex. Civ. Prac. & Rem. Code
§ 101.101(a). Separate notice requirements under city ordinances and charters that have been ratified and approved by Congress must also be satisfied.
Id. § 101.101(b). The City of Tyler’s charter requires notice of tort claims within thirty days. See Tyler, Tex., Charter, art. IX § 79 (1990). Thus, a party attempting to file a tort claim against the City of Tyler must satisfy both. The City of Tyler had promulgated a “Claims Notice” form that claimants could submit to comply with the City Charter’s requirement.

Ameri-Tex completed and filed the City’s “Claims Notice” form seven days after the incident, attempting to do so on behalf of both Ameri-Tex and Leach. Ameri-Tex made an error in the form, failing to list Leach as an additional claimant under the form’s space “Name of Claimant.” However, the rest of the document described Leach, provided his contact information, and detailed the injury Leach incurred as a result of the City’s failure to secure its lumber. Additionally, under the witness section of the form, Leach was not listed but others were.

The dispute before the Texas Supreme Court was whether this notice was sufficient to satisfy the notice requirements under both Section 101.101(a) and the City Charter. The trial court and the court of appeals held that this form failed to provide the City with timely notice of Leach’s claim because it failed to list Leach under the “Name of Claimant” section. The trial court agreed with the City, and found it had no jurisdiction to hear Leach’s claim. The Supreme Court reversed and determined notice was sufficient under both Section 101.101(a) and the City Charter.

The Court held that Section 101.101(a) was satisfied because the substance of the notice form, when read as a whole, satisfied the statute’s notice requirements. Section 101.101(a) requires that a notice be provided within six months of the incident and “reasonably describe: (1) the damage or injury claimed;
(2) the time and place of the incident; and (3) the incident.” Tex. Civ. Prac. & Rem. Code § 101.101(a). The Court pointed out that Ameri-Tex’s filing described Leach’s injury, provided the time and place of the injury and the manner in which it occurred. Thus, the substance of the form satisfied the statute’s requirement for notice of Leach’s claim.

The Court additionally held that, even if the content of the notice was unsatisfactory, it would not matter because Leach filed his lawsuit four months after the incident. See Colquitt v. Brazoria County, 324 S.W.3d 539, 541 (Tex. 2010) (addressing Section 101.101(a)’s notice requirement and holding that “a lawsuit itself, served on the governmental unit within six months of the incident and containing all the requisite information, constitutes proper notice under the [Texas Tort Claims] Act”).

Under the notice requirement of the City Charter, the Court also held that the form submitted was satisfactory. The City Charter expressly anticipated a third party providing notice and was similarly satisfied by account of Leach’s injuries: when and where the incident occurred, how it occurred, and the precise nature of Leach’s injuries.

The City argued that this notice was unsatisfactory in light of the fact that Leach was not a named claimant. However, the Court pointed out that Leach’s name was repeatedly on the notice, his injury and how it came about were clearly identified and made a focus of the description, his contact information was provided, and he was not listed under the form’s space for identifying witnesses. For the Court, the substance of the form showed a clear intent to convey notice of Leach’s injury and included the requisite elements required by both the statute and City Charter.

The City further argued that by holding against the City, the Court’s decision would run counter to the public policy of the statute and charter which was to provide sufficient investigative information for the City. The Court responded that the City did, in fact, have sufficient information to investigate based on the notice provided. Moreover, the Court pointed out that injured citizens are bound by enacted text, not underlying legislative motivations.

Leach’s notice having substantively complied with the plain language of the statute and City Charter, the Court held for Leach and remanded the case to the trial court for further proceedings.

Fourth Circuit Holds Gender Dysphoria is Covered by ADA.

The United States Court of Appeals for the Fourth Circuit recently held that gender dysphoria qualifies as a “disability” under the Americans with Disabilities Act (“ADA”). In Williams v. Kincaid, plaintiff Kesha Williams, a transgender woman with gender dysphoria, spent six months incarcerated in a detention center. Initially assigned to women’s housing, Williams was transferred to men’s housing upon learning that she was transgender and had male genitals. No. 21-2030, 2022 WL 3364824 (4th Cir. Aug. 16, 2022). Williams allegedly experienced delays in medical treatment for her dysphoria (including hormonal treatment) and also claimed to have been harassed by prison staff on the basis of her sexual identity. Williams subsequently filed a lawsuit seeking relief under ADA; however, the trial court dismissed Williams’s claim, reasoning that ADA specifically excludes from the definition of “disability” “gender identity disorders not resulting from physical impairments.” 42 U.S.C. § 12211(b).

On appeal, the Fourth Circuit reversed, holding that “gender dysphoria” is separate and materially distinct from “gender identity disorder,” and that the distress suffered from gender dysphoria qualifies for protections under ADA. At the time of the enactment of Section 12211(b), the term “gender identity disorder” referred only to the condition of perceiving one’s identity to be distinct for that person’s sex assigned at birth. The Court reasoned that, unlike gender identity disorder, gender dysphoria “concerns itself with the distress and other disabling symptoms, rather than simply being transgender.” Kincaid, 2022 WL 3364824 at *11-12. The distinction between the state of being transgender and the distress that arises from that state meant that gender dysphoria was not specifically excluded by ADA. While being transgender is not covered by ADA, the court held that gender dysphoria falls under ADA’s definition of disability, which includes any “physical or mental impairment that substantially limits one or more major life activities of such individual.”
42 U.S.C. § 12102(1)(A).

The Court further held that the plaintiff’s gender dysphoria resulted from physical impairments because she took hormone therapy for fifteen years to manage and alleviate the condition, and she experienced physical distress without the therapy. Therefore, gender dysphoria “result[ed] from physical impairments,” and the condition was not excluded from the definition of disability under ADA.

The Court lastly stated that both gender dysphoria and “gender identity disorder” are very closely connected to transgender identity. The Court opined that a law excluding from ADA protection both “gender identity disorders” and gender dysphoria would discriminate against transgender people as a class, and would likely implicate the Equal Protection Clause of the Fourteenth Amendment.

Utility Cases

Texas Cities Sue Streaming Giants for Franchise Fees.

On August 4, 2022, 25 cities including Austin, Houston, and Dallas sued Netflix, Hulu, and Disney+ for the streaming services’ failure to pay municipal franchise fees. Pursuant to the Texas Public Utility Regulatory Act of 2005, if a video service provider delivers programming over wireline facilities located within a municipality’s right of way, the service provider must pay the municipality a 5% franchise fee. However, according to the cities, the streaming services have failed to pay these franchise fees dating back to 2007. As such, the cities sued the streaming services seeking reimbursement of franchise fees plus interest.

Traditionally, municipalities rely on fees related to a cable provider’s use of physical communication lines over a municipality’s right of way. Thus, as telecommunication providers transition from traditional landline to wireless services, municipalities have incurred significant revenue losses. Accordingly, cities around the country have brought similar lawsuits against the streaming giants alleging that, although the streaming services are not traditional cable providers, the providers still use the public right of way and, therefore, are subject to franchise fees. The litigation is ongoing, and we will report more as it proceeds.

In re Brazos Elec. Power Cooperative, Inc., No. 21-30725 (Bankr. S.D. Tex. 2021).

On September 13, 2022, Brazos Electric Power Cooperative (“Brazos”) and the Electric Reliability Council of Texas (“ERCOT”) reached an agreement regarding Winter Storm Uri related energy costs. During Winter Storm Uri, Brazos incurred $2.1 billion in energy fees after ERCOT capped electricity prices at $9,000 per megawatt hour. Due to these extraordinary charges, Brazos filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas on March 1, 2021. Subsequently, pursuant to its internal procedures, ERCOT recovered Brazos’s debt from other market participants.

In its bankruptcy case, Brazos alleged that ERCOT violated the terms of their market participant contract by charging Brazos $9,000 per megawatt hour. As such, according to Brazos, it owed ERCOT $770 million rather than $2.1 billion. ERCOT asserted that, because it was following the Public Utility Commission of Texas’s emergency order to implement scarcity prices, it did not violate Brazos’s market participant contract. However, Brazos and ERCOT reached a settlement agreement whereby Brazos would pay ERCOT roughly $1.4 billion for the energy consumed during Winter Storm Uri. Pursuant to federal bankruptcy laws, the agreement is now subject to Brazos’s creditors’ approval.

If Brazos’s creditors approve the settlement, ERCOT would reimburse market participants a substantial portion of their initial payments, although the amount is currently unclear. It is apparent, however, that market participants will remain responsible for Brazos’s default amount of roughly $700 million.

“In the Courts” is prepared by James Muela in the Firm’s Water Practice Group; Wyatt Conoly in the Firm’s Litigation Practice Group; Mattie Isturiz in the Firm’s Air and Waste Practice Group; and Samantha Miller and Rick Arnett in the Firm’s Energy and Utility Practice Group. If you would like additional information or have questions related to these cases or other matters, please contact James at 512.322.5866 or jmuela@lglawfirm.com, or Wyatt at 512.322.5805 or, or Mattie at 512.322.5804 or misturiz@lglawfirm.com, or Samantha at 512.322.5808 or smiller@lglawfirm.com, or Rick at 512.322.5855 or rarnett@lglawfirm.com.