holding that “a specificity element runs through” Texas takings jurisprudence
How later courts described this case
- holding that “a specificity element runs through” Texas takings jurisprudence
- “[T]here is no evidence that the City knew, when it unclogged the sewer line, that any flooding damage would occur. Nor is there evidence that the act of unclogging was substantially certain to lead to such damage.”
Written by the judges who cited it.
The opinion
Affirmed in part and Reversed and Rendered in part and Memorandum
Opinion filed February 12, 2026.
In The
Fifteenth Court of Appeals
NO. 15-24-00088-CV
APPELLANT, PLS CHECK CASHERS OF TEXAS, INC.// CROSS-
APPELLANT, BOBBY WILKINSON, IN HIS OFFICIAL CAPACITY AS
EXECUTIVE DIRECTOR OF THE TEXAS DEPARTMENT OF HOUSING
AND COMMUNITY AFFAIRS
V.
APPELLEES, TEXAS DEPARTMENT OF HOUSING AND COMMUNITY
AFFAIRS, AND BOBBY WILKINSON, IN HIS OFFICIAL CAPACITY AS
EXECUTIVE DIRECTOR OF THE TEXAS DEPARTMENT OF HOUSING
AND COMMUNITY AFFAIRS// CROSS-APPELLEE, PLS CHECK
CASHERS OF TEXAS, INC.
On Appeal from the 201st District Court
Travis County, Texas
Trial Court Cause No. D-1-GN-24-002233
MEMORANDUM OPINION
The Texas Rent Relief program was one of several State programs that
provided financial assistance to Texans during the COVID-19 pandemic. The
program was federally funded and required the Texas Department of Housing and
Community Affairs (the Department) to comply with federal law in administering
it. When the Department determined that a handful of checks had been sent to
households that were ineligible for the funds, it issued stop payment orders on
those checks. That ensured compliance with federal law.
But it prevented PLS Check Cashers of Texas, Inc. from being reimbursed
after cashing those same checks for the ineligible recipients. PLS sued the
Department for inverse condemnation (a takings claim) and its executive director
for ultra vires conduct in denying the holder-in-due-course provisions of state law.
The trial court granted the plea to the jurisdiction against the takings claim but
denied it as to the ultra vires claim. We agree there is no takings claim because the
Department did not “take” PLS’s cash; the ineligible recipients did. But we hold
there can be no ultra vires claim either, as the defendants had no discretion to
disregard federal law barring payment to ineligible claimants. We therefore affirm
in part and reverse and render judgment in part.
BACKGROUND
The COVID-19 pandemic and the responses to it caused “profound
economic damage” throughout the country.1 To relieve some of the financial
hardship, Congress allocated billions of dollars to state and local governments as
part of the Consolidated Appropriations Act of 2021 (CAA)2 and the American
Rescue Plan Act of 2021 (ARPA).3 As relevant here, both Acts set aside funds for
rental assistance, and both placed the burden on the state and local administrators
to determine whether potential recipients met eligibility requirements prescribed by
1
Texas v. Yellen, 105 F.4th 755, 762 (5th Cir. 2024).
2
See Pub. L. No. 116-260, 134 Stat. 1182 (Dec. 27, 2020).
3
See Pub. L. No. 117-2, 135 Stat. 4 (Mar. 11, 2021).
2
Congress. In particular, an “eligible grantee” (defined to include a State)4 “shall
only use the funds” to provide “financial assistance” (primarily rent and utilities),5
to an “eligible household”—defined as “a household of 1 or more individuals who
are obligated to pay rent on a residential dwelling and with respect to which the
eligible grantee involved determines” they meet several income- and housing-
related requirements.6
To administer Texas’s share of the federal funds, the State turned to the
Department and its program, the Texas Rent Relief program (TRR). Launched in
February 2021, the TRR paid “[o]ver $2.2 billion in rent and utility assistance” to
help “more than 323,000” “low and moderate income Texas renters remain stably
housed during the COVID-19 pandemic.”7 The TRR program closed in the
summer of 2023,8 but not before a dispute arose between the Department and PLS
Check Cashers of Texas, Inc. involving the checks here.
PLS offers check-cashing services at multiple locations throughout Texas. It
claims to have cashed “over 8,000” TRR checks “totaling over $37 million.” But
4
See Pub. L. No. 116-260, 134 Stat. 2077 (CAA); Pub. L. No. 117-2, 135 Stat. 58
(ARPA).
5
See Pub. L. No. 116-260, 134 Stat. 2072–73 (CAA); Pub. L. No. 117-2, 135 Stat. 56
(ARPA) (emphasis added).
6
Under the CAA, an eligible grantee had to determine “(i) that 1 or more individuals
within the household has (I) qualified for unemployment benefits or (II) experienced a reduction
in household income, incurred significant costs, or experienced other financial hardship due,
directly or indirectly, to the novel coronavirus disease (COVID-19) outbreak, which the
applicant shall attest in writing; (ii) that 1 or more individuals within the household can
demonstrate a risk of experiencing homelessness or housing instability …, and (iii) the
household has a household income that is not more than 80% of the area median income for the
household.” Pub. L. No. 116-260, 134 Stat. 2077–78. The ARPA redefined a low-income family
under part (iii) but otherwise provided the same. See Pub. L. No. 117-2, 135 Stat. 58.
7
Texas Rent Relief and the Texas Eviction Diversion Program, Texas Department of
Housing and Community Affairs, https://www.tdhca.texas.gov/texas-rent-relief-and-texas-
eviction-diversion-program.
8
Id.
3
for 30 of those checks “totaling over $150,000”—.3% of the TRR checks PLS
cashed and .4% of the amounts it paid—PLS encountered a problem on the back
end. According to PLS, it cashed those checks for the named recipients and then
deposited them, but the checks were returned to PLS unpaid because, unbeknownst
to PLS, the Department had placed stop-payment orders on them. PLS and the
Department subsequently engaged in “months of communications,” during which
PLS demanded to be reimbursed due to its status as a holder in due course, but the
Department refused, opining that “legal liability for loss” lay with PLS (according
to PLS’s account).
PLS eventually sued the Department for inverse condemnation and its
Executive Director Bobby Wilkinson for a declaration that he acted ultra vires. On
the inverse condemnation claim, PLS alleged that it has “a property interest in the
value of the Checks by virtue of its holder-in-due-course status pursuant to
Sections 3.301 and 3.302 of the Texas Business and Commerce Code,” that the
Department “refused to honor the Checks and reimburse PLS, thereby taking
PLS’s property without compensation,” and that the Department acted
intentionally in taking PLS’s property, which it did for public use. On the ultra
vires claim, PLS alleged that, given its status as a holder in due course, the
Director “acted without legal authority” and in “direct[] conflict[] with the
requirements of the Texas Business and Commerce Code” by “refusing to honor
the Checks and pay PLS.” PLS also sought a writ of mandamus “compelling the
Director to perform these ministerial acts and to comply with the law.”
The Department and the Director answered and filed a plea to the
jurisdiction asserting sovereign immunity.9 The Department argued that PLS failed
to allege a valid inverse condemnation claim because it lacks a vested property
9
The Department and the Director alternatively sought dismissal under Rule 91a for the
same reasons.
4
interest in the value of the checks. The Director argued that PLS failed to allege
viable ultra vires and mandamus claims because he acted within the authority
delegated to him under the Texas Government Code and consistent with the
provisions of the federal acts requiring state and local government grantees to
determine funds eligibility.
After a hearing, the trial court granted the plea to the jurisdiction as to PLS’s
inverse condemnation claim, finding that PLS “voluntarily and with its own
consent cashed the checks.” But the trial court denied the plea on the ultra vires
and mandamus claims. PLS appeals the dismissal of its inverse condemnation
claim, and the Director appeals the failure to dismiss PLS’s ultra vires and
mandamus claims.
DISCUSSION
We first consider PLS’s appeal, followed by The Director’s. The question is
the same in both: whether PLS adequately pleaded a claim for which the
defendants do not have sovereign immunity.
Sovereign immunity from suit defeats a trial court’s subject-matter
jurisdiction. Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 225–26
(Tex. 2004). When, as here, a plea to the jurisdiction challenges the pleadings, we
determine if the pleader alleged facts that affirmatively demonstrate the court’s
jurisdiction to hear the case. Id. at 226. We construe the pleadings liberally in favor
of the plaintiff while looking to the pleader’s intent. Id. We review the trial court’s
order de novo. Matzen v. McLane, 659 S.W.3d 381, 388 (Tex. 2021).
I. PLS’s Appeal
PLS contends that its pleadings are “sufficient as a matter of law to waive
sovereign immunity for its inverse condemnation claim” because the Department’s
plea to the jurisdiction challenged only the sufficiency of PLS’s pleadings, which
5
must be “taken as true.” Although we do liberally construe PLS’s pleadings in its
favor, sovereign immunity is waived under the Texas Constitution’s Takings
Clause only if PLS pleaded “a viable allegation of taking.”10 Without “a properly
pled takings claim,” the Department “retains immunity.” Id. Whether pleaded facts
are sufficient to state a viable takings claim is a question of law.11
“When the government takes private property without first paying for it, the
owner may recover damages for inverse condemnation.” Tex. Dep’t of Transp. v.
Self, 690 S.W.3d 12, 25 (Tex. 2024). “To prevail on an inverse-condemnation
claim, the owner must plead and prove that (1) the government engaged in
affirmative conduct (2) that proximately caused (3) the taking, damaging,
destroying, or applying (4) of specific private property (5) for a public use
(6) without paying the owner adequate compensation (7) and did so intentionally
or with knowledge that the result was substantially certain to occur.”12 PLS failed
to plead a valid inverse condemnation claim for at least two reasons.
First, PLS did not properly plead that the Department affirmatively took its
property. The government can “take” property either physically or by regulation.13
“Physical takings occur when the government authorizes an unwarranted physical
occupation of an individual’s property.”14 “A regulatory taking is a condition of
use so onerous that its effect is tantamount to a direct appropriation or ouster.”15
PLS alleged that the Department took its property when it “refused to honor
the checks and reimburse PLS,” which it claims occurred in “the summer of 2022,
10
City of Houston v. Carlson, 451 S.W.3d 828, 830 (Tex. 2014) (emphasis added).
11
Gen. Servs. Comm’n v. Little-Tex Insulation Co., 39 S.W.3d 591, 598 (Tex. 2001).
12
Commons of Lake Houston, Ltd. v. City of Houston, 711 S.W.3d 666, 676 (Tex. 2025).
13
Jim Olive Photography v. Univ. of Houston Sys., 624 S.W.3d 764, 771–72 (Tex. 2021).
14
Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 933 (Tex. 1998).
15
Carlson, 451 S.W.3d at 831.
6
after PLS and TDHCA’s staff engaged in discussions regarding the Checks.” But
failing to “honor” (i.e., to pay) a check is a failure to act, not an affirmative act; as
the Texas Supreme Court has said, “We have not recognized a takings claim for
nonfeasance.”16 The ineligible recipients took PLS’s cash; the Department just
declined to replace it. We cannot imply affirmative conduct from inaction without
potentially turning every government decision not to act into a taking.
Second, even if the Department’s stop-payment orders could be
characterized as an affirmative “taking,” the Department lacked the requisite intent
to take PLS’s property. An entity acts intentionally when it either (1) “intend[s] to
cause the damage” or (2) “knows that a specific act is causing identifiable harm” or
that “the specific property damage is substantially certain to result.” City of Dallas
v. Jennings, 142 S.W.3d 310, 314 (Tex. 2004).
The record does not reflect exactly when the Department issued the stop-
payment orders, but it necessarily was before the Department and PLS “engaged in
discussions regarding the Checks.” While it is reasonable to infer that the
Department knew issuing the orders would mean the named recipients would not
get paid (as that was the purpose), there is no allegation or inference that at that
time it knew or was substantially certain PLS would cash the checks and request
reimbursement. It is not enough that the government knows someone, “somewhere,
someday,” would cash the stopped checks; it must know whose property it is
taking.17 Other than the payees named on the checks (who the Department
determined were not entitled to them), there is no allegation that the Department
had the slightest idea that PLS would cash checks for which stop-payment orders
16
Harris Cnty. Flood Control Distr. v. Kerr, 499 S.W.3d 793, 800 (Tex. 2016).
17
Id. at 799, 800 (holding that “a specificity element runs through” Texas takings
jurisprudence).
7
had issued.18
The trial court did not err by granting the Department’s plea to the
jurisdiction because PLS failed to allege a valid inverse condemnation claim.
II. The Director’s Cross-Appeal
In his cross-appeal, the Director challenges the trial court’s failure to dismiss
the ultra vires claim against him based on sovereign immunity. “Plaintiffs who
seek to bypass sovereign immunity using an ultra vires claim must plead, and
ultimately prove, that the defendant government official acted without legal
authority or failed to perform a ministerial act.”19
By federal law, the Director could pay funds “only” to eligible households.20
Congress appropriated the money behind this program, and has the power under
the Spending Clause to “condition[] receipt of federal moneys upon compliance by
the recipient with federal statutory and administrative directives.” South Dakota v.
Dole, 483 U.S. 203, 206 (1987). Congress expressly mandated that the states “shall
only use the funds” to provide rent and utility assistance to “eligible households.”21
The Department and its Director were authorized by the Texas Legislature to
oversee these and other similar programs by several statutory grants.22 Congress
18
See Jennings, 142 S.W.3d at 315 (“[T]here is no evidence that the City knew, when it
unclogged the sewer line, that any flooding damage would occur. Nor is there evidence that the
act of unclogging was substantially certain to lead to such damage.”).
19
Matzen, 659 S.W.3d at 388.
20
Pub. L. No. 116-260, 134 Stat. 2072 (CAA); Pub. L. No. 117-2, 135 Stat. 56 (ARPA).
21
Pub. L. No. 116-260, 134 Stat. 2072 (CAA); Pub. L. No. 117-2, 135 Stat. 56 (ARPA).
22
See TEX. GOV’T CODE § 2306.053(b) (“The department may … (10) administer federal
housing, community affairs, or community development programs, including the low income
housing tax credit program; (11) establish eligibility criteria for individuals and families of low,
very low, and families of moderate income to participate in and benefit from programs
administered by the department; … and (14) do all things necessary, convenient, or desirable to
carry out the powers expressly granted or necessarily implied by this chapter.”); § 2306.071(a)
(“The department may request, contract for, receive, and spend for its purposes an appropriation,
8
placed the burden upon them to determine whether a household met the eligibility
requirements,23 a discretionary act that PLS does not challenge. Under this
framework, the Director did not commit an ultra vires act by complying with his
legal duty to stop payments to ineligible recipients.
PLS argues that it is a holder in due course under state law (which the
Department does not dispute), so the Director had no legal authority to refuse to
pay the checks24 absent any statutory defenses listed in § 3.305 of the Business and
Commerce Code, none of which apply here.25 But under the Supremacy Clause,
state law could not limit the Director’s legal authority (and duty) to comply with
federal law.26 This is one of those few cases where “a higher power has deprived
the official of all of his or her discretion. In other words, the higher authority has
created a ministerial (nondiscretionary) duty for the subordinate official to engage
in conduct the plaintiff claims is wrongful.”27 Not only did the Director not act
beyond his legal authority, he had no other choice.
The Director’s alleged failure to comply with the “collateral” holder-in-due
grant, allocation, subsidy, rent supplement, guarantee, aid, contribution, gift, service, labor, or
material from this state, the federal government, or another public or private source.”);
§ 2306.052(b) (“The director shall (1) administer and organize the work of the department …;
(4) administer all money entrusted to the department …”).
23
See Pub. L. No. 116-260, 134 Stat. 2077–78 (CAA); Pub. L. No. 117-2, 135 Stat. 58
(ARPA).
24
In its briefing below, PLS argued that it was not challenging the Director’s “eligibility
determinations,” but rather his refusal to pay the checks after the checks had already issued. But
neither of the federal acts contain a timeframe within which eligibility determinations had to be
made; they simply require that the federal funds not be paid to ineligible households.
25
See TEX. BUS. COM. CODE §§ 3.104, 3.301, 3.302, 3.305.
26
See U.S. CONST. art. VI, clause 2 (“This Constitution, and the Laws of the United States
which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under
the Authority of the United States, shall be the supreme Law of the Land; and the Judges in
every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the
Contrary notwithstanding.”).
27
Hall v. McRaven, 508 S.W.3d 232, 239 (Tex. 2017).
9
course provisions of the Business and Commerce Code does not state a viable ultra
vires claim.28 The trial court erred by denying the Director’s plea to the jurisdiction
and by failing to dismiss PLS’s interrelated request for a writ of mandamus.
CONCLUSION
We affirm the trial court’s order granting the Department’s plea to the
jurisdiction as to PLS’s inverse condemnation claim, but we reverse the trial
court’s order denying the Director’s plea to the jurisdiction on PLS’s ultra vires
and mandamus claims and render judgment dismissing those claims.
/s/ Scott A. Brister
Scott A. Brister
Chief Justice
Before Chief Justice Brister and Justices Field and Farris.
28
Id. at 242.
10