Opinion

Dismissed in Part, Reversed and Remanded in Part, and Opinion filed June

10, 2014.

In The

Fourteenth Court of Appeals

NO. 14-13-00233-CV

THE MONTROSE MANAGEMENT DISTRICT; THE PUBLIC

OFFICIALS: CLAUDE WYNN, RANDY MICHMORE, CASSIE STINSON,

KATHY HUBBARD, BRAD NAGAR, ROBERT JARA, BOBBY HUEGEL,

DANA THORPE, LANE LLEWELLYN, TAMMY MANNING, DAVID

ROBINSON, MICHAEL GROVER, AND RANDY ELLIS; AND BILL

CALDERON, EXECUTIVE DIRECTOR Appellants

V.

1620 HAWTHORNE, LTD., Appellee

On Appeal from the 333rd District Court

Harris County, Texas

Trial Court Cause No. 2012-20396

OPINION

This is an appeal from the trial court’s denial of a summary judgment motion

based on governmental immunity.1 The Montrose Management District (the

District), the Public Officials,2 and Executive Director Bill Calderon (collectively,

the Appellants) assert that the trial court erred in denying their summary judgment

motion on several grounds. In their first issue, which contains several sub-issues,

the Appellants assert the trial court erred in denying summary judgment on

jurisdictional grounds to the District. In its first sub-issue, the District contends

that 1620 Hawthorne, Ltd. failed to establish that the District waived its immunity

from suit because no waiver of immunity exists for complaints about the District’s

application of and actions under the Texas Local Government Code provision

regarding dissolving the District or for any challenge to this provision’s

constitutionality. Second, the District asserts that Hawthorne did not prove that the

District waived immunity from suit based on Hawthorne’s complaint that the

assessment order adopted by the West Montrose Management District (the West

District) is void because it was not signed by the requisite number of petitioners.

The District also argues that Hawthorne’s contention that neither the West District

nor the East Montrose Management District (the East District) complied with the

provision of the Local Government Code establishing the areas eligible for the

1

See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(8) (permitting an interlocutory

appeal of the denial of a jurisdictional plea based on an assertion of governmental immunity.

When the record does not contain an order granting or denying a plea to the jurisdiction, but does

include an order denying a motion for summary judgment in which the movant challenged the

trial court’s jurisdiction, an interlocutory appeal may be taken under subsection (a)(8)

irrespective of the selected procedural vehicle. Thomas v. Long, 207 S.W.3d 334, 339 (Tex.

2006).

2

The District’s board of directors consists of the following public officials sued in their

official capacity only: Calude Wynn, Randy Mitchmore, Cassie Stinson, Kathy Hubbard, Brad

Nagar, Robert Jara, Bobby Huegel, Dana Thorpe, Lane Llewellyn, Tammy Manny, David

Robinson, Michael Grover, and Randy Ellis.

2

creation of municipal management districts provides no basis for a waiver of

statutory immunity.

The Appellants assert in their second issue that the trial court erred in

denying the Public Officials’ summary judgment on jurisdictional grounds, again

including sub-issues. The Public Officials assert two bases for reversing the trial

court’s summary judgment: (1) for the same reasons that the District is immune

from suit, they are derivatively immune from suit, and (2) Hawthorne failed to

establish the existence of a waiver of their immunity from suit based upon viable

allegations of ultra vires conduct. Finally, in their third issue, the Appellants assert

that District Executive Director Bill Calderon is immune from suit because he is

not a member of the District’s board with legal authority to vote on any of the

actions about which Hawthorne complained.

After careful review of the summary judgment evidence, we determine that

Hawthorne has failed to establish any waiver of governmental immunity for the

District. Thus, the trial court lacked subject matter jurisdiction over the District.

We likewise conclude that the trial court lacked subject matter jurisdiction over

Calderon. We therefore order that all of Hawthorne’s claims against the District

and Calderon are dismissed for want of jurisdiction. However, we conclude that

Hawthorne raised a fact issue regarding the ultra vires conduct of the Public

Officials related to the assessment petition. Because we have concluded that this

portion of Hawthorne’s case should not be dismissed, we remand this cause for

proceedings consistent with this opinion.

I. BACKGROUND

The District is a municipal management district located in the Montrose area

of Houston. It resulted from the 2011 consolidation of the East District, created in

3

2005,3 and the West District, created in 2009.4 The Texas Legislature created the

East and West Districts through special legislation “to promote, develop,

encourage, and maintain employment, commerce, transportation, housing, tourism,

recreation, the arts, entertainment, economic development, safety, and the public

welfare in the area of the district[s].”5 The Public Officials are the volunteer

members of the District’s board of directors and Bill Calderon is its executive

director.

Hawthorne owns commercial property in the portion of the District formerly

known as the West District. In September 2011, Robert Rose, on behalf of

Hawthorne, delivered 998 individually signed petitions for dissolution

(collectively, the “Dissolution Petition”) to the District. The Dissolution Petition

from owners of property within the District subject to assessments by the District

requested the District’s board of directors—the Public Officials—to immediately

dissolve. The Public Officials engaged in public and private meetings and

ultimately determined that the Dissolution Petition did not represent the requisite

75% of District property owners for statutory dissolution of the District—in fact,

they determined that the validated signers to the Dissolution Petition only

represented owners of roughly 13% of the assessed value of property within the

District.6 Thus, the Public Officials refused to dissolve the District. By order

dated November 14, 2011, following a public meeting, the District adopted an

3

See Tex. Spec. Dist. Code Ann. §§ 3843.001–.005.

4

See id. § 3878.001–.005.

5

See id. §§ 3843.003(b), 3878.003(b).

6

See Tex. Loc. Gov’t Code Ann. § 375.262(1) (providing that, except for limitations not

present here, a board of directors of a municipal management district “shall dissolve the district

on written petition filed with the board by the owners of . . . 75 percent or more of the assessed

value of the property in the district based on the most recent certified county property tax rolls”

(emphasis added)).

4

order finding and concluding that the Dissolution Petition was insufficient to meet

the statutory requirement for dissolution.7

Hawthorne filed suit against the District on April 5, 2012; it later amended

its petition to add claims against the Public Officials and Calderon. In its petition,

Hawthorne asserted that it had “been illegally assessed and/or taxed by the

District.” It alleged that the 998 signers of the Dissolution Petition, “when added

together, constituted more than 75% of the owners within [the District] who were

subject to the assessments of [the District and] more than 75% of the assessed

value of the property in the District based upon the most recent certified county

property tax rolls.” Hawthorne contended that the Appellants refused to comply

with “their mandatory and ministerial duty to dissolve” by “interpreting the 75

percent requirement to include the total value of all the properties of all owners of

property, both residential and commercial, wherever located in the District.”

Hawthorne argued that the 75% requirement for dissolution must only apply “to

those commercial landowners who are subject to the assessment and/or tax, such

that 75 percent of that group may petition to obliterate the existence of the District

if they so choose.” According to Hawthorne, if this requirement were interpreted

any other way, it was constitutionally infirm.

Hawthorne further asserted that the West District’s assessment order was

void and illegal ab initio. The West District’s board was not permitted to impose

an assessment or finance a service or improvement project unless a written petition

requesting the improvement or service had been filed with it. 8 This petition must

have been signed by “at least 25 owners of real property in the district that will be

7

This order was amended and restated on February 13, 2012, after another public

meeting.

8

Tex. Spec. Dist. Code Ann. § 3878.204(a).

5

subject to the assessment, if more than 25 persons own real property subject to the

assessment in the district according to the most recent certified tax appraisal roll

for Harris County.”9 Hawthorne identified three allegedly ineligible petition

signers from the August 2009 petition that resulted in the assessment about which

it complains.

Finally, Hawthorne contended that, before September 1, 2011, the only areas

eligible to become an improvement district under statutory authority were those

that existed in “an area devoted primarily to commercial development and business

activity inside the boundaries of a municipality.” 10 Hawthorne alleged that neither

the East nor the West District met these criteria because “the land within this area

was not devoted primarily to commercial development and business activity.”

Based on these allegations, Hawthorne asserted that it had standing as a

“taxpayer” to bring claims for declaratory and injunctive relief against the

Appellants that the District’s unspent tax assessments are illegal or

unconstitutional. Hawthorne emphasized that it was only seeking prospective

relief: declaratory and injunctive relief that the District does not have the authority

to spend previously assessed and collected but not yet spent taxes. Hawthorne

further claimed a waiver of governmental immunity under the ultra vires exception

to governmental immunity for the acts of the Public Officials. Finally, it asserted a

waiver of governmental immunity under the Texas Uniform Declaratory

Judgments Act (UDJA)11 based on its constitutional claims for equal protection.

9

Id. § 3878.204(b)(2).

10

This language is taken from section 375.021 of the Texas Local Government Code.

This section has been repealed. See Act of March 1, 1991, 72nd Leg., R.S., ch. 912, § 13.05,

1991 Tex. Gen. Laws 347, 349, repealed by Act of May 23, 2011, 82nd Leg., R.S., ch. 912, § 20,

2011 Tex. Sess. Law Serv. 2309, 2313.

11

Tex. Civ. Prac. & Rem. Code Ann. §§ 37.001–.011.

6

In its petition, Hawthorne sought the following declaratory relief: (1) the

District’s order refusing to dissolve is void on its face because the Public Officials

wrongfully interpreted subsection 375.262(1) of the Texas Local Government

Code; (2) the Dissolution Petition met the factual and legal requisites of this

subsection of the Local Government Code because the signers constitute owners of

“75 percent or more of the assessed value of property in the District based upon the

most recent certified county property tax rolls” within the meaning of the statute;

(3) the District has a “clear and unambiguous ministerial duty to dissolve and its

failure to do so constitutes a clear abuse of discretion”; (4) to the extent that

Chapter 375 of the Texas Local Government Code authorizes imposing a financial

burden only on commercial properties to the benefit of all properties in the District,

the law is unconstitutional in that it violates the equal protection provisions and the

due process guarantees and due course of law provision of the federal and state

constitutions; (5) all of the West District’s “assessments and/or taxes” that have

been instituted since August 2009 are void and to the extent not already spent

should be reimbursed to those who were forced to pay the illegal assessments or

taxes; and (6) neither the East nor the West District met the criteria established

before September 1, 2011; specifically, neither was eligible to become an

improvement district under the law in effect at the time it was formed because it

was not “an area devoted primarily to commercial development and business

activity inside the boundaries of a municipality.”

The Appellants responded with pleas to the jurisdiction, which were

consolidated into a summary judgment motion asserting both jurisdictional and

merits-based grounds. In their motion, the Appellants asserted that the trial court

lacked jurisdiction over Hawthorne’s claims for the following reasons:

7

 The District’s governmental immunity is not waived under the

Declaratory Judgments Act for complaints about its actions

under a statute. The Public Officials properly interpreted

section 375.262(1) of the Texas Local Government Code to

mean that before the board must dissolve the District,

petitioners must submit a petition filed by 75 percent or more of

the assessed value of all of the property located within the

District. Because the Public Officials interpretation of this

statute is “both rational and correct,” they have likewise not

waived their governmental immunity.

 Hawthorne failed to state a sufficiently viable constitutional

challenge to section 375.262(1) or Chapter 375 of the Texas

Local Government Code to waive governmental immunity.

Hawthorne failed to allege and cannot prove that the

Legislature could not have had any conceivably legitimate,

debatable, or rational basis for section 375.261(1) and chapter

375 of the Local Government Code; thus its due process and

equal protection claims fail as a matter of law.

 Hawthorne’s failure to serve the Attorney General with a copy

of its pleadings challenging the constitutionality of Chapter 35

of the Local Government Code requires dismissal of its

constitutional claims.

 Two of the three signatories to the West District’s assessment

petition about which Hawthorne complains own property

containing both commercial and residential uses. “By virtue of

its commercial use,” these properties are and were commercial

property subject to assessment at the time the petition was

submitted to the West District’s board.

 Hawthorne did not exhaust its statutory and judicial remedies

pursuant to Texas Local Government Code section 375.123 for

contesting the assessments about which it complains, which

deprives the trial court of subject matter jurisdiction over its

request to reimburse property owners for assessments that have

already been paid. Likewise, Hawthorne lacks standing to

obtain relief for any other property owners because they failed

to exhaust statutory remedies.

 Both the District and the Public Officials are immune from

Hawthorne’s complaints about the formation of the District

8

because Hawthorne failed to exhaust its statutory and judicial

remedies and section 375.021 is inapplicable to the District

because the District was created by special legislation, not

pursuant to Chapter 375.

The Appellants also asserted in their summary judgment motion that the District’s

Executive Director, Bill Calderon, is not a proper defendant to a viable ultra vires

claim because he is not a member of the District’s board with legal authority to

vote on any of the actions about which Hawthorne complains. The Appellants

further challenged the merits of Hawthorne’s suit in their motion. However, the

trial court notified the parties that it would only consider the jurisdictional grounds

raised in the summary judgment motion at submission.

In its response to the jurisdictional arguments raised in the Appellants’

summary judgment motion, Hawthorne asserted that the Public Officials had

refused to dissolve the District, despite the requisite number of signers to the

Dissolution Petition.12 It argued that “to interpret [subsection 375.261(1)] any

other way[] would be to ensure that it is unconstitutional.” Hawthorne further

asserted that two of the three signers of the West District’s assessment petition

owned property for which they claimed residential homestead exemptions

according to the certified tax appraisal rolls of the Harris County Assessment

District (HCAD) at the time of their signing of the petition. A third signer’s

property was designated as residential property. Hawthorne provided some

evidence in support of these allegations. Hawthorne reiterated its standing and

waiver of governmental immunity assertions alleged in its pleadings, described

12

Hawthorne earlier had filed with the trial court a compact disc containing a copy of the

“very voluminous” Dissolution Petition. Because Hawthorne could not electronically file the

compact disc, it informed the trial court and opposing counsel of its intent to rely upon this CD

for purposes of its summary judgment response as if it were physically attached to the response

as Exhibit A.

9

above, in its summary judgment response, providing legal authority in support of

these arguments.

Hawthorne urged that the exhaustion of remedies doctrine does not apply

under the facts of this case because it was not complaining about the amount of the

tax assessment, but was instead claiming that the Appellants lacked authority to

make the assessment. Finally, Hawthorne claimed, and provided some evidence,

that it timely notified the Texas Attorney General of its constitutional challenge to

Chapter 35.

The trial court heard the summary judgment motion on January 18, 2013.

On February 25, it denied the motion “with respect to jurisdictional grounds only.”

It included the following clarifying language in its order denying the motion:

Although Defendants’ Motion for Summary Judgment includes

evidence and issues beyond subject matter jurisdiction, the sole and

exclusive issue that the Court is ruling on at this time is subject matter

jurisdiction. Additionally, Defendants’ Motion for Summary

Judgment includes two affidavits signed by David Hawes (see Exhibit

2 and Exhibit 3 of Appendix in support of Defendants’ Motion for

Summary Judgment). By prior ruling of the Court on December 7,

2012, neither affidavit was considered by the Court in this ruling and

should not be considered part of the Appendix.

From this interlocutory order, the Appellants appeal.13

II. ANALYSIS

A. Standard of Review and Applicable Law

A summary judgment motion challenging jurisdiction may challenge either

the pleadings or the existence of jurisdictional facts. See Tex. Dep’t of Parks &

Wildlife v. Miranda, 133 S.W.3d 217, 226–27 (Tex. 2004). When such a motion

13

See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(8).

10

challenges the existence of jurisdictional facts, we consider relevant evidence

submitted by the parties to resolve the jurisdictional issues raised, as the trial court

is required to do. See id. at 227. If a fact question is presented by the evidence

regarding a jurisdictional issue, then the trial court is precluded from granting

summary judgment on the jurisdictional challenge, and fact issues will be resolved

by the fact-finder. Id. at 227–28. However, if the relevant evidence is undisputed

or fails to raise a genuine fact issue regarding the jurisdictional challenge, the trial

court grants summary judgment as a matter of law. Id. at 228. We review a trial

court’s ruling on a plea to the jurisdiction de novo. Id.

The District is a political subdivision of the State and retains immunity from

suit, except where the Legislature has waived it. See Tex. Loc. Gov’t Code Ann.

§ 375.004(a) (municipal management districts are political subdivisions of the

State); City of Houston v. Williams, 353 S.W.3d 128, 134 (Tex. 2011) (“When

performing governmental functions, political subdivisions derive governmental

immunity from the state’s sovereign immunity); see also Tooke v. City of Mexia,

197 S.W.3d 325, 331–32 (Tex. 2006) (explaining that states can only be sued when

they consent). But a suit for declaratory or injunctive relief against a state official

to compel compliance with statutory or constitutional provisions is not a suit

against the State. City of El Paso v. Heinrich, 284 S.W.3d 366, 370 (Tex. 2009).

Such a suit is not barred by governmental immunity. Id. “To fall within this ultra

vires exception, a suit must not complain of a government officer’s exercise of

discretion, but rather must allege, and ultimately prove, that the officer acted

without legal authority or failed to perform a purely ministerial act.” Id. at 372.

The Texas Declaratory Judgments Act contains a waiver of immunity from

suit. See Tex. Civ. Prac. & Rem. Code Ann. § 37.006(b); Heinrich, 284 S.W.3d at

373 n.6. If a party joins a governmental entity and seeks a declaration that a statute

11

or ordinance is invalid based on either constitutional or non-constitutional grounds,

immunity from suit is waived. See City of Elsa v. M.A.L., 226 S.W.3d 390, 391–92

(Tex. 2007); Heinrich, 284 S.W.3d at 373 n.6; Gatesco Q.M., Ltd. v. City of

Houston, 333 S.W. 3d 338, 347–48 (Tex. App.—Houston [14th Dist.] 2010, no

pet.). Similarly, if a party joins such a governmental entity and seeks a declaration

construing an ordinance or statute, immunity from suit is waived. See Tex. Lottery

Comm’n v. First State Bank of DeQueen, 325 S.W.3d 628, 633–35 (Tex. 2010);

Heinrich, 284 S.W.3d at 373 n.6; Gatesco, 333 S.W.3d at 348. However,

governmental immunity will bar an otherwise proper UDJA claim that has the

effect of establishing a right to relief against a governmental entity for which the

Legislature has not waived immunity. See Tex. Parks & Wildlife Dep’t v. Sawyer

Trust, 354 S.W.3d 384, 388 (Tex. 2011).

With these principles in mind, we turn to the issues raised in this appeal.

B. Issues Presented

The Appellants raise three main issues and numerous sub-issues on appeal.

The District asserts that the trial court erred in denying it summary judgment on

jurisdictional grounds because Hawthorne failed to affirmatively establish the

existence of an express waiver of the District’s immunity from suit for its

requested declaratory relief that: (1) the District dissolve under Texas Local

Government Code subsection 375.262(1); (2) the assessment order adopted by the

West District is void because the supporting petition was not signed by the

requisite number of petitions; and (3) neither the East nor the West District

complied with Texas Local Government Code section 375.021 when they formed.

The Public Officials contend that (a) the trial court erroneously denied them

summary judgment on jurisdictional grounds for the same reasons as it erred in

denying the District summary judgment on jurisdictional grounds and

12

(b) Hawthorne bore the burden of not “merely claiming” that they engaged in ultra

vires conduct to waive their immunity from suit, but that Hawthorn had to assert a

viable claim against them by alleging facts negating their immunity from suit.

Finally, Executive Director Calderon argues that the trial court erred in denying his

jurisdictional challenge because he is not a member of the District’s board with

legal authority to vote on any of the actions about which Hawthorne has

complained. For ease of review, we will first consider each of Hawthorne’s

requests for declaratory relief and the relevant arguments presented by the

Appellants.

C. Interpretation of Subsection 375.262(1)

Hawthorne’s first two requested declarations, as well as the first portion of

its third, concern the interpretation of subsection 375.262(1) of the Texas Local

Government Code:

a) the November 14, 2011 Order of the District is void on its face due

to the fact that the District wrongfully misinterpreted the 75

percent requirement contained in Section 375.262(1) of the Texas

Local Government Code to include properties assessed by other

entities rather than just by the District itself;

b) the Dissolution Petition met the factual and legal requisites of

Section 375.262(1) because it constituted “75 percent or more of

the assessed value of the property in the District based upon the

most recent certified county property tax rolls,” within the meaning

of that statute; [and]

c) the District had and has a clear and unambiguous ministerial duty

to dissolve and its failure to do so constitutes a clear abuse of

discretion.

We begin our analysis by noting that Hawthorne asserts that the UDJA

waives the District’s immunity from suit. See Tex. Civ. Prac. & Rem. Code Ann.

§§ 37.004(a), 37.006(b); Tex. Nat. Res. Conservation Comm’n v. IT-Davy, 74

13

S.W.3d 849, 859–60 (Tex. 2002). As noted above, the UDJA waives a

governmental entity’s immunity for a declaration construing an ordinance or

statute. See Tex. Lottery Comm’n, 325 S.W.3d at 633–35. Thus, had Hawthorne

simply sought construction of this statute, the District’s immunity from suit likely

would have been waived. However, governmental immunity is not waived under

the UDJA for complaints about a government entity’s actions under a statute. See

Tex. Dep’t of Transp. v. Sefzik, 355 S.W.3d 618, 622 (Tex. 2011) (“Sefzik is not

challenging the validity of a statute; instead, he is challenging TxDOT’s actions

under it, and he does not direct us to any provision under the UDJA that expressly

waives immunity for his claim.”); Tex. Dep’t of Ins. v. Reconveyance Servs., Inc.,

306 S.W.3d 256, 258–59 (Tex. 2010) (per curiam) (explaining that when

allegations and requested declarations are, substantively, ultra vires claims, the

governmental entity retains immunity from suit, and immunity is waived only for

the government officers in their official capacity); cf. Sawyer Trust, 354 S.W.3d at

388 (“[S]overeign immunity will bar an otherwise proper DJA claim that has the

effect of establishing a right to relief against the State for which the Legislature has

not waived immunity.”).

As to these three requested declarations, Hawthorne seeks far more than

construction of section 375.262; he seeks relief for the District’s actions under this

section. Accordingly, Hawthorne has failed to establish a waiver of immunity for

the District as to this requested relief. See Sefzik, 355 S.W.3d at 622; Sawyer

Trust, 354 S.W.3d at 388. We thus sustain the District’s first issue to the extent it

relates to these requests for declaratory relief.

These requested declarations, however, also implicate the ultra vires

exception to governmental immunity for the Public Officials. As noted above,

Hawthorne asserts that the Dissolution Petition triggers the mandatory dissolution

14

requirement of subsection 375.262(1) because it contains signatures from owners

of 75% or more of the assessed value of property subject to assessment by the

District. According to Hawthorne, the Public Officials failed in their ministerial

duty to dissolve the District when faced with the Dissolution Petition. See

Heinrich, 284 S.W.3d at 372 (explaining that to fall within the ultra vires

exception, a party must allege that the public officer failed to perform a purely

ministerial act or acted without legal authority). There is no dispute that the

Dissolution Petition does not contain signatures from owners of 75% or more of

the assessed value of all property in the District.

To determine whether the facts pleaded by Hawthorne demonstrate the ultra

vires nature of the Public Officials’ actions in denying the Dissolution Petition, we

necessarily must construe section 375.262 of the Texas Local Government Code.14

Cf. City of Houston v. Little Nell Apartments, L.P., —S.W.3d—, 2014 WL 257977,

at *5–6 (Tex. App.—Houston [14th Dist.] Jan. 23, 2014) (construing city

ordinance to determine whether facts pleaded demonstrated public official acted in

ultra vires manner); McLane Co. v. Strayhorn, 148 S.W.3d 644, 650 (Tex. App.—

Austin 2004, pet. denied) (“Therefore, to determine whether McLane may maintain

its declaratory judgment suit against the Comptroller, we must decide whether the

Comptroller validly exercised her discretion or acted outside her legal authority in

in refusing to accept the letter of credit, which in turn requires us to construe [Tex.

Tax Code Ann.] section 154.051.”).

14

Although we must construe this statute to determine whether the Public Officials’

action in denying the Dissolution Petition constitutes an ultra vires claim, in these particular

requested declarations Hawthorne is not challenging the validity of the statute. Cf. Tex. Lottery

Comm’n, 325 S.W.3d at 633–34 (“In Heinrich we distinguished between claims seeking

declaratory relief in an ultra vires suit, which must be brought against governmental officials,

and suits challenging the validity of an ordinance or statute[, which require the relevant

governmental entities be made parties].”).

15

When interpreting a statute, our primary objective is to give effect to the

Legislature’s intent. Epco Holdings, Inc. v. Chicago Bridge & Iron Co., 352

S.W.3d 265, 269–70 (Tex. App.—Houston [14th Dist.] 2011, pet. dism’d); see

Tex. Gov’t Code Ann. § 312.005. We look to the statute’s plain meaning because

we presume the Legislature intends the plain meaning of its words. Epco

Holdings, Inc., 352 S.W.3d at 270. ‘“We presume that the Legislature chooses a

statute’s language with care, including each word chosen for a purpose, while

purposefully omitting words not chosen.”’ Id. (quoting TGS–NOPEC Geophysical

Co. v. Combs, 340 S.W.3d 432, 439 (Tex. 2011)). Every word in a statute is

presumed to have been used for a purpose; each sentence, clause and word is to be

given effect if reasonable and possible. Id. (quoting Tex. Workers’ Comp. Ins.

Fund v. Del Indus., Inc., 35 S.W.3d 591, 593 (Tex. 2000)). Thus, we should not

adopt a construction that renders a statutory provision meaningless. Id.

Section 375.262, entitled “Dissolution by Petition by Owners,” provides as

follows:

Except as limited by [a section inapplicable here], the board shall

dissolve the district on written petition filed with the board by the

owners of:

(1) 75 percent or more of the assessed value of the property in

the district based on the most recent certified county

property tax rolls; or

(2) 75 percent or more of the surface area of the district,

excluding roads, streets, highways, utility rights-of-way,

other public areas, and other property exempt from

assessment under Sections 375.161 [certain residential

property], 375.163 [recreational, park, or scenic use

property], and 375.164 [residential property exempted from

the board], according to the most recent certified county

property tax rolls.

Tex. Loc. Gov’t Code Ann. § 375.262.

16

The Public Officials assert that their decision to deny the Dissolution

Petition was correct because it was based on the plain language of subsection

375.262(1). According to the Public Officials, this subsection mandates that,

before a board must dissolve a district, petitioners must submit a petition filed by

the owners of 75% or more of the assessed value of all property located within the

district according to the most recent certified county property tax roll. Hawthorne,

on the other hand, asserts that the 75% requirement referred to in subsection

375.262(1) must refer only to the value of property subject to assessment by the

District. Otherwise, according to Hawthorne, the commercial property owners in

the District alone would never be able to dissolve it because the total value of their

property within the District is well below the 75% threshold.

We agree with the Public Officials’ interpretation of subsection 375.262(1).

The Legislature’s decision to exclude any language in subsection 375.262(1)

stating that only “property subject to assessment” should be included in the

calculation of the required percentage of “the assessed value of the property in the

district” demonstrates that language and concept was omitted for a reason. See

Combs, 340 S.W.3d at 439 (stating that Legislature purposefully omits words in a

statute not chosen); Epco Holdings, Inc., 352 S.W.3d at 270. As excerpted above,

subsection 375.262(2), which authorizes dissolution based upon a petition signed

by owners of 75% of “the surface area of the district” expressly excludes from the

calculation property “exempt from assessment.” If the Legislature had intended

for the formula in subsection 375.262(1) to refer only to property subject to

assessment in the District, it knew how to say so, as subsection 375.262(2) aptly

demonstrates. See Combs, 340 S.W.3d at 439; In re Smith, 333 S.W.3d 582, 586

(Tex. 2011) (explaining that courts should consider it a “fair assumption that the

Legislature tries to say what it means, and therefore the words it chooses should be

17

the surest guide to legislative intent”) (internal quotations omitted); see also

Morrison v. Chan, 699 S.W.2d 205, 208 (Tex. 1985) (“Every word excluded from

a statute must be presumed to have been excluded for a reason.”).

This interpretation is bolstered by the language used in Texas Local

Government Code section 375.022, which provides for the creation of a municipal

management district (MMD) by petition. This section provides that, to create an

MMD, the Texas Commission on Environmental Quality must receive a petition

signed by “the owners of a majority of the assessed value of the real property in the

proposed district, according to the most recent certified county property tax rolls.”

Tex. Loc. Gov’t Code Ann. § 375.022(a), (b)(1). Before an MMD is created, there

is no property “subject to assessment.” Thus, in this section, “assessed value”

must refer to the value of all property in the proposed MMD. The use of this

identical phrase later in the statutory scheme when describing how an MMD may

be dissolved by petition supports the Public Officials’ interpretation of subsection

375.262(1).15

Because there is no dispute that the Dissolution Petition was not supported

by signatures from owners of 75% of the assessed value of the property in the

District, the Public Officials did not have a ministerial duty to dissolve the District.

Id. § 375.262(1). Thus, Hawthorne’s asserted facts do not support a claim of ultra

vires action by the Public Officials. As to the declarations excerpted above,

15

Accord Tex. Spec. Distr. Code Ann. § 3843.204 (providing that the East District’s

board may not impose an assessment or finance a service or improvement project unless a

petition signed by “the owners of a majority of the assessed value of the real property in the

district or in the area of the district that will be subject to the assessment” or “at least 25 persons

who own real property in the district or the area of the district that will be subject to the

assessment” (emphasis added)); id. § 3878.204 (similarly stating that, before the West District’s

board of directors may impose an assessment or finance a service project, they must receive a

petition signed by “the owners of a majority of the assessed value of real property in the district

subject to assessment” or “at least 25 owners of real property in the district that will be subject to

the assessment” (emphasis added)).

18

Hawthorne is not seeking declaratory relief against state officials failing to perform

a ministerial act. See Heinrich, 284 S.W.3d at 372 (providing that if a plaintiff

alleges only facts demonstrating acts within a public official’s legal authority or

discretion, the claim seeks to control state action and is barred by sovereign

immunity). Hawthorne may not maintain these claims for declaratory relief

against them.

For the foregoing reasons, Hawthorne has failed to establish either a waiver

of governmental immunity or alleged an ultra vires act regarding the following

declaratory relief:

a) the November 14, 2011 Order of the District is void on its face due

to the fact that the District wrongfully misinterpreted the 75

percent requirement contained in Section 375.262(1) of the Texas

Local Government Code to include properties assessed by other

entities rather than just by the District itself;

b) the Dissolution Petition met the factual and legal requisites of

Section 375.262(1) because it constituted “75 percent or more of

the assessed property in the District based upon the most recent

certified county property tax rolls,” within the meaning of that

statute; [and]

c) the District had and has a clear and unambiguous ministerial duty

to dissolve and its failure to do so constitutes a clear abuse of

discretion.

To the extent the trial court determined otherwise in its summary judgment order,

it erred. We thus sustain in part the Appellants’ first and second issues.

D. Constitutional Claims for Relief

In two of its requests for declaratory relief, Hawthorne asks that the court

declare that section 375.262(1) and Chapter 375 of the Local Government Code are

unconstitutional, both facially and as applied to it. Specifically, Hawthorne seeks

declarations that

19

the taxation of only commercial property owners, whether referred to

as a tax or as an assessment, coupled with the fact that those burdened

by the tax cannot dissolve the taxing authority because of the 75

percent rule, is in violation of the equal protection provisions of both

the Texas and United States Constitutions, e.g., Article III, Section 1

of the Texas Constitution and Amendment XIV of the United States

Constitution, and also is a violation of the substantive due process

guarantees found in the 5th and 14th Amendments to the United

States Constitution and the due course of law provision of Article 1,

Section 19 of the Texas Constitution[.]

The facts Hawthorne alleges in support of its constitutional claims are the

following:

It is not reasonable to assume that non-commercial owners of real

property and improvements within the District, who reap the benefits

of the assessment and/or tax expenditures but do not have to pay for

any services or improvements, will be inclined to dissolve the District.

Their motivation is exactly the opposite—they will want to keep the

District alive and continue to enjoy the free services and

improvements windfall created by the Texas Legislature.

[W]hen understood in this context, it is obvious that dissolution

must be an option to those commercial landowners who are subject to

the assessment and/or tax, such that 75 percent of that group may

petition to obliterate the existence of the District if they so choose.

Indeed, [the District]’s own website and official records admit that it

has no legal authority whatsoever to assess any property owners other

than commercial property owners. For example, the District has

admitted that the property subject to assessment will solely be the land

and improvements of the commercial property owners within the

boundaries of the District. The District has further admitted that the

following property will be exempt from assessment: single-family

detached residential, duplexes, triplexes, quadraplexes,

condominiums, municipalities, counties, other political subdivisions,

etc.

Thus, the fact that the District may not assess and/or tax non-

commercial property owners is not even subject to legitimate debate,

as the Texas Legislature has clearly specified that the [District] may

not assess any land or improvements unless owned by commercial

20

property owners. [I]t is obvious that the 75 percent threshold clearly

and unambiguously relates to 75 percent of the assessed value of the

commercial properties within the District who have been assessed by

the District, not by 75 percent of the owners within the geographical

boundaries of the District who are not (and cannot ever legally be)

assessed by the District but have been assessed by other

instrumentalities of government, such as an ad valorem tax by Harris

County. [Hawthorne] alleges that, to interpret this law any other way,

would be to ensure that it is unconstitutional.

As noted above, when a party joins a governmental entity and seeks a

declaration than a statute is invalid based on constitutional grounds, immunity

from suit is waived. Gatesco, 333 S.W.3d at 347–48. But we must presume the

constitutionality of the statute challenged here, and Hawthorne bears the burden of

proving it unconstitutional. See Alobaidi v. Univ. of Tex. Health Sci. Ctr. at

Houston, 243 S.W.3d 741, 756–47 (Tex. App.—Houston [14th Dist.] 2007, pet.

denied) (determining, in a plea to the jurisdiction, whether certain section of the

Texas Labor Code violate the equal protection clauses of the state and federal

constitutions). If the plaintiff fails to plead a viable claim, a governmental

defendant remains immune from suit for an alleged constitutional violation. See

Andrade v. NAACP of Austin, 345 S.W.3d 1, 10–12 (Tex. 2011).

We analyze equal protection challenges under the state constitution in the

same way as those under the federal constitution. Bell v. Low Income Women of

Tex., 95 S.W.3d 253, 266 (Tex. 2002). Like the United States constitution, the

equal protection clause of the Texas constitution directs governmental actors to

treat all similarly situated persons alike. Sanders v. Palunsky, 36 S.W.3d 222,

224–25 (Tex. App.—Houston [14th Dist.] 2001, no pet.) (citing City of Cleburne v.

Cleburne Living Ctr., 473 U.S. 432, 439, (1985)). Where, as here, neither a

suspect classification nor a fundamental right is involved, the challenged law

survives constitutional scrutiny if it is rationally related to a legitimate government

21

purpose. See Romer v. Evans, 517 U.S. 620, 634–35 (1996). Courts applying this

standard must determine (1) whether the challenged legislation has a legitimate

purpose, and (2) whether it was reasonable for lawmakers to believe that the use of

the challenged classification would promote that purpose. First Am. Title Ins. Co.

v. Combs, 258 S.W.3d 627, 639 (Tex. 2008).

A violation of substantive due process occurs when the government deprives

individuals of constitutionally protected rights by an arbitrary use of its power.

Byers v. Patterson, 219 S.W.3d 514, 525 (Tex. App.—Tyler 2007, no pet.) (citing

Simi Inv. Co. v. Harris Cnty., Tex., 236 F.3d 240, 249 (5th Cir. 2000)). Under the

federal constitution, we review the government’s action against the deferential

“rational basis” test that governs substantive due process claims. Id. A

government action satisfies this test if evidence in the record shows it to be at least

fairly debatable that the action was rationally related to a legitimate government

interest. City of San Antonio v. TPLP Office Park Props., 218 S.W.3d 60, 65 (Tex.

2007). Some decisions indicate that a more rigorous standard applies to challenges

brought under the due course of law clause of the state constitution. See Tex.

Workers’ Comp. Comm’n v. Garcia, 893 S.W.2d 504, 525 (Tex. 1995); Patel v.

Tex. Dep’t of Lic. & Reg., No. 03-11-00057-CV, 2012 WL 3055479, at *9 (Tex.

App.—Austin July 25, 2012, pet. granted) (asking whether statute is reasonably

necessary to accomplish purpose within scope of police power and uses reasonable

manner of accomplishing goal). Under either standard, we conclude that the

challenged statutes are sufficiently rational and reasonable to satisfy constitutional

requirements.

One of the declarations Hawthorne seeks is that taxing commercial property

owners in the district to benefit all property in the district is unconstitutional. We

disagree. As the Supreme Court of the United States explained in rejecting an

22

equal protection challenge to the differential tax treatment of corporate and

individual property, “the States have large leeway in making classifications and

drawing lines which in their judgment produce reasonable systems of taxation.”

Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356, 359 (1973).

Hawthorne’s principal constitutional claim is, at its core, that the

commercial property owners in the District are the only property owners burdened

by assessments that benefit all property owners, including those exempt from

assessment, yet these commercial property owners may not dissolve the District

because of the “75 percent rule” imposed by section 375.262(1). Hawthorne’s

complaint is based on the presumption that the commercial property owners

subject to assessment have no opportunity to dissolve the District because of this

“rule.” Hawthorne’s contention is simply wrong. As noted above, not only may

commercial property owners dissolve a district under subsection (1) by garnering

petitions from the owners of 75% of the assessed value of property within the

district, but subsection (2) provides for dissolution of a district when the owners of

75% of the surface area of property subject to assessment within the district file a

written petition with the board. See Tex. Loc. Gov’t Code Ann. § 375.262. Other

means of dissolution of a district are also provided for in Chapter 375. The board

of directors may, with certain limitations depending on bond indebtedness,

dissolve the district by a majority vote. Tex. Local Gov’t Code Ann. § 375.261.

Additionally, the governing body of a municipality in which a district is wholly

located may dissolve a district by adopting an ordinance doing so by a vote of not

less than two-thirds of its membership. Id. § 375.263(a).

There is nothing irrational or unreasonable in the Legislature’s determination

that dissolution of a district can occur based upon varying degrees of support from

a district’s board of directors, the governing body of the municipality, the owners

23

of substantial majority of the area in a district subject to assessment, or the owners

of a substantial portion of the total assessed value of the property in a district. In

fact, a petition to create a district must be signed by “the owners of a majority of

the assessed value of the real property in the proposed district, according to the

most recent certified county property tax rolls.” Tex. Loc. Gov’t Code Ann.

§ 375.022. As the District explained in its summary judgment motion,

given the practical problems that likely would result if a district were

dissolved by a property owner petition, it makes sense that the

Legislature imposed a higher percentage requirement of the total

assessed property value to dissolve a district (75% or more of the

assessed value) than the Legislature required to create a district by

petition under Chapter 375 (50% of the assessed value of the real

property in such a district).

In short, Hawthorne cannot negate any rational or reasonable basis for

subsection 375.262(1) and Chapter 375, which vitiates both its due process and

equal protection claims for declaratory relief. Thus, the District has not waived its

immunity from suit regarding Hawthorne’s requests for declaratory relief based on

the alleged constitutional infirmity of these statutes. We sustain in part the

District’s first issue regarding Hawthorne’s request for declaratory relief that

subsection 375.262(1) or Chapter 375 of the Local Government Code are

unconstitutional facially or as applied.

E. Validity of Original Assessment Petition

Regarding the validity of the original assessment petition, Hawthorne sought

a declaration from the trial court that “all of the West Montrose Management

District’s assessments and/or taxes which have been instituted since August of

2009 are void and, to the extent not already spent, must be reimbursed to those

who were forced to pay those illegal assessments and/or taxes.” First, this

requested declaration is directed to the conduct of the Public Officials because it is

24

an allegation that they failed to act in conformity with the requirements of section

3878.204 of the Special District Local Laws Code. See Heinrich, 284 S.W.3d at

372 (to fall within the ultra vires exception, public official must be alleged to be

acting without legal authority or failing to perform purely ministerial act). This

section provides that the West District board of directors, i.e., the Public Officials,

may not impose an assessment or finance a service or improvement project unless

a written petition signed by at least 25 owners of real property in the district that

will be subject to the assessment requesting the improvement or service has been

filed with the board. See Tex. Spec. Dist. Code Ann. § 3878.204.

In response to this requested declaratory relief, the Public Officials first

assert that the trial court lacked subject matter jurisdiction because Hawthorne

failed to exhaust its statutory remedies prior to filing suit. Specifically, they assert

that Hawthorne failed to comply with section 375.123 of the Local Government

Code, which provides for an appeal of the determination of an assessment to a

district’s board by filing a notice of appeal within 30 days after the district adopts

an assessment. Tex. Loc. Gov’t Code Ann. § 375.123(a). Failure to timely file a

notice of appeal results in the loss of the right to appeal the assessment. Id. §

375.123(c).

Generally, courts do not interfere with the statutorily conferred duties and

functions of an administrative agency. Appraisal Review Bd. of Harris Cnty.

Appraisal Dist. v. O’Connor & Assocs., 267 S.W.3d 413, 418–19 (Tex. App.—

Houston [14th Dist.] 2008, no pet.). Courts may intervene in administrative

proceedings, however, when an agency exercises authority beyond its statutorily

conferred powers. Id. at 419; see also Lazarides v. Farris, 367 S.W.3d 788, 798

(Tex. App.—Houston [14th Dist.] 2012, no pet.). Because Hawthorne’s complaint

is that the West District’s board of directors acted entirely without statutory

25

authority in imposing the assessment, we conclude that Hawthorne was not

required to exhaust administrative remedies in this case prior to filing suit.16 Cf.

Appraisal Review Bd. of Harris Cnty. Appraisal Dist., 267 S.W.3d at 419

(distinguishing between complaints that a taxing authority did not fully comply

with procedural requirements, which requires exhaustion of administrative

remedies, and allegations that these authorities are acting “wholly outside the Tax

Code provisions,” which does not require exhaustion of administrative remedies).

Next, the Public Officials assert that the summary judgment record

conclusively establishes that the petition submitted in support of the West

District’s assessment order contained the requisite number of signatures of eligible

property owners. As noted above, Hawthorne asserted that three of the signers of

the assessment petition were not eligible to sign it. See Tex. Spec. Dist. Code Ann.

§ 3878.204. The Public Officials provided uncontroverted evidence that 26

property owners signed the assessment petition. Thus, in support of their claim

that the requisite number of property owners signed the assessment petition, the

Public Officials provided certified copies of the official public records of the

HCAD for two of the three challenged signers. Although the copies contained in

our record are not entirely legible, these records both indicate that the property is

classified as “F1: Real, Commercial.”

In response, Hawthorne provided copies of the HCAD’s “Real Property

Account Information” statements for these owners, which Rose, on behalf of

16

The Appellants rely on In re Nestle, USA, Inc. and Caspary v. Corpus Christi

Downtown Management District to support their contention that Hawthorne was required to

exhaust its administrative remedies before it could appeal from the West District’s assessment

scheme. See In re Nestle, USA, Inc., 359 S.W.3d 207, 208 (Tex. 2012); Caspary v. Corpus

Christi Downtown Mgmt. Dist., 942 S.W.2d 223 (Tex. App.—Corpus Christi 1997, writ denied).

But neither of these cases involved a claim, as we have here, that the government official was

entirely without authority to act in the manner in which she did—i.e., that the act complained-of

is void.

26

Hawthorne, verified in his affidavit were “true and correct copies” of the HCAD

data sheets. These copies indicated that the properties owned by these signatories

are classified as “F1 – Real, Commercial.” However, these statements also

reflected that the property owners were subject to a residential homestead

exemption for these properties. Rose also testified in his affidavit that, because

these property owners claimed residential homestead exemptions, their property

“has not been subject to the assessment.”

After a political subdivision of the State, like the District, “asserts and

supports with evidence that the trial court lacks subject matter jurisdiction, we

simply require the plaintiffs, when the facts underlying the merits and subject

matter jurisdiction are intertwined, to show that there is a disputed material fact

regarding the jurisdictional issue.” See Miranda, 133 S.W.3d at 227–28. We

believe that Hawthorne has sufficiently established that there is a disputed fact

question regarding the evidence underlying this jurisdictional issue, which impacts

the merits of Hawthorne’s claim for declaratory relief.

We thus conclude that, as to Hawthorne’s requested declaration that the

West District’s assessment order is void, it has created a fact issue on jurisdiction.

Because there is a fact issue on jurisdiction, the trial court properly denied the

Public Officials’ summary judgment as to this particular claim. Accordingly, we

overrule in part the Appellants’ second issue.

F. Eligibility of District to Become an Improvement District

In Hawthorne’s final request for declaratory relief, it sought a declaration

that

neither the East Montrose Management District nor the West

Montrose Management District met the criteria established prior to

September 1, 2011; namely, that the only areas eligible to become an

27

improvement district under [Texas Local Government Code] section

375.021 were those which existed in “an area devoted primarily to

commercial development and business activity inside the boundaries

of a municipality.”

In their motion for summary judgment, the Appellants urged that they remain

immune from this complaint because section 375.021 was inapplicable to the East

and West Districts because they were created by special legislation, not pursuant to

a Chapter 375 petition under the Local Government Code. Appellants asserted that

this provision, since repealed, is inapplicable to the legislatively created Districts.

We agree.

Subchapter B of Chapter 375 of the Local Government Code is entitled

“Creation of District.” It contains statutes detailing how an MMD may be created,

including the requisites for a petition to create an MMD, a hearing before the

Texas Commission on Environmental Quality regarding the creation of an MMD,

public notice for the hearing, the procedures for the hearing, and the requirements

for an order creating the district, including stating the specific purposes for which

the district is created and appointing the initial directors. See Tex. Loc. Gov’t

Code Ann. §§ 375.022–.026. Section 375.021, now repealed, was formerly a part

of this subchapter. See Act of March 1, 1991, 72nd Leg., R.S., ch. 912, § 13.05,

1991 Tex. Gen. Laws 347, 349, repealed by Act of May 23, 2011, 82nd Leg., R.S.,

ch. 912, § 20, 2011 Tex. Sess. Law Serv. 2309, 2313.

Both the East and West Districts, however, were not created by the

procedures set forth in subchapter B of Chapter 375. Rather, they were created by

special legislation. See Tex. Spec. Dist. Code Ann. §§ 3843.002–.005 (creating

East District, defining the East District’s territory, declaring the East District’s

purpose, and making findings of benefit and public purpose of the East District);

id. §§ 3878.002–.005 (same for West District); see also id. §§ 3878.251–.257

28

(providing authority for the consolidation of the West District with “one other

municipal management district that adjoins or has a boundary that is within a two-

mile radius of any boundary of the district”). Therefore, former section 375.021

did not apply to their formation. Because Hawthorne asserts that there is an

irreconcilable conflict between former section 375.021 and the creation of the East

and West Districts, the special legislation creating these districts would govern

their creation. See Tex. Gov’t Code Ann. § 311.026 (providing that special or

local provisions prevail over general provision in the event of an irreconcilable

conflict).

Accordingly, Hawthorne has not established any waiver of the Appellants’

immunity for this requested declaration. We therefore sustain the Appellants’ first

and second issues to the extent they relate to this requested declaration.

G. Executive Director Calderon’s Immunity from Suit

In the Appellants’ third issue, they assert that Calderon is immune from suit

because he lacked authority to vote on any of the issues raised by Hawthorne. In

their summary judgment motion, the Appellants provided a footnote stating “Bill

Calderon, the District’s Executive Director, is not a proper defendant to even a

viable ultra vires claim because he is not a member of the District Board with legal

authority to vote on any of the actions about which [Hawthorne] complains.”

Hawthorne states in its pleadings that Calderon is “the Executive Director

for the Montrose Management District” and lists him separately from the other

“Board Defendants.” Accordingly, based on Hawthorne’s own pleadings,

Calderon is not listed as a member of the board of directors of the District. The

proper defendants in an ultra vires action are those officials whose acts or

omissions allegedly violated the plaintiff’s rights. Sefzik, 355 S.W.3d at 621.

29

Here, the relevant jurisdictional evidence regarding Calderon is undisputed

or fails to raise a genuine fact issue regarding the Appellants’ jurisdictional

challenge. Thus, the trial court should have granted summary judgment to him as a

matter of law. Miranda, 133 S.W.3d at 228. Accordingly, we sustain the

Appellants’ third issue.

III. CONCLUSION

We have sustained in full the Appellants’ first issue, determining that the

District is immune from suit as to all of Hawthorne’s claims. We have also

sustained the Appellants’ third issue and conclude that Bill Calderon is likewise

immune from suit as to all of Hawthorne’s claims. We therefore order all of

Hawthorne’s claims against the District and Calderon dismissed.

However, we have determined that Hawthorne has raised a fact issue

concerning its requested declaration that the assessment order is void, which is an

allegation that the Public Officials acted in an ultra vires manner in adopting it.

We therefore have overruled this issue in part as it relates to this particular

requested declaratory relief. The remainder of Hawthorne’s claims against the

Public Officials are dismissed.

We remand this cause to the trial court for proceedings consistent with this

opinion.

/s/ Sharon McCally

Justice

Panel consists of Justices McCally, Busby, and Donovan.

30