City of McKinney v. Hank's Restaurant Group, L.P.

Affirm in part, Reverse in part, Render in part and Remand Opinion Filed September 18,

2013

S

In The

Court of Appeals

Fifth District of Texas at Dallas

No. 05-12-01359-CV

CITY OF MCKINNEY, TEXAS, Appellant

V.

HANK’S RESTAURANT GROUP, L.P., Appellee

On Appeal from the 366th Judicial District Court

Collin County, Texas

Trial Court Cause No. 366-03124-2012

OPINION

Before Justices FitzGerald and Lewis1

Opinion by Justice FitzGerald

This is an interlocutory appeal from the trial court’s order denying pleas to the

jurisdiction filed by appellant City of McKinney, Texas. We affirm in part and reverse in part.

I. BACKGROUND

A. Summary of the allegations

Appellee Hank’s Restaurant Group, L.P. (HRG) operates a restaurant and live-music

venue in McKinney, Texas, named Hank’s Texas Grill. According to HRG, the City has

harassed HRG, its employees, and its customers ever since Hank’s Texas Grill opened in 2003.

The City denies HRG’s allegations. Further, the City alleges that the premises of Hank’s Texas

1

The Honorable Mary L. Murphy was on the panel and participated at the submission of this case. Due to her resignation from the Court on

June 7, 2013, she did not participate in the issuance of this opinion. See TEX. R. APP. P. 41.1(a), (b).

Grill violate numerous fire, building, and food-service regulations found in the City’s

ordinances. Each side seeks injunctive relief against the other.

B. Procedural history

This interlocutory appeal arises from a pair of lawsuits that were consolidated into one on

the same day the trial judge denied the City’s pleas to the jurisdiction.

HRG won the race to the courthouse, filing its lawsuit against the City on August 23,

2012. In its original petition, HRG alleged that City police officers had engaged in a ten-year

campaign of harassment and intimidation against the customers and staff of Hank’s Texas Grill.

HRG further alleged that City police officers and firefighters disrupted live-music events at

Hank’s Texas Grill by falsely claiming that the occupancy load for the premises had been

exceeded. HRG also alleged that the City conducted an inspection of the premises in June 2012

and claimed that the premises contained about eighty code violations. HRG further alleged that

on August 9, 2012, the City sent HRG a letter threatening to sue HRG if HRG did not within

seven business days sign a “compliance plan” agreeing to do everything required by the City.

HRG alleged that the City’s conduct was illegal for various reasons, such as the inapplicability or

unenforceability of the City ordinances on which the City was relying. HRG sought a

declaratory judgment that the City’s conduct was improper, as well as temporary and permanent

injunctive relief against the City. The trial judge signed a temporary restraining order in favor of

HRG the same day.

The next day, August 24, 2012, the City filed its original petition against HRG under

Chapters 54 and 211 of the local government code. The City alleged that it had conducted a site

inspection of Hank’s Texas Grill in June 2012 and discovered numerous violations of fire,

building, and food-service ordinances. The City further alleged that the violations created a

danger to the public’s life, health, property, and safety. The City sought a declaratory judgment

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that HRG was in violation of City ordinances, temporary and permanent injunctive relief, and

attorneys’ fees under the Texas Uniform Declaratory Judgments Act. The City’s lawsuit was

assigned to the same trial court as HRG’s first-filed lawsuit, the 366th Judicial District Court.

In HRG’s suit, the City filed an original answer on September 4, a first amended answer

on September 6, and a second amended answer on September 24. Each pleading contained a

plea to the jurisdiction contesting the court’s subject-matter jurisdiction over HRG’s claims.

Each pleading also contained a request for an award of attorneys’ fees under the Declaratory

Judgments Act. The City did not otherwise assert any counterclaims against HRG in its

pleadings.

In the City’s suit, HRG filed an answer, counterclaim, and application for injunctive

relief. In that pleading, HRG substantially repeated the factual allegations and the claims for

declaratory and injunctive relief that it had pleaded in its own first-filed lawsuit. HRG also

alleged that the City’s conduct had proximately caused HRG to suffer up to $250,000 in

damages. On September 18, the trial judge heard and granted HRG’s request for a temporary

restraining order. In the TRO, the judge set HRG’s request for a temporary injunction for

hearing on September 24. On September 24, the City filed its original answer to HRG’s

counterclaim. The original answer included a plea to the jurisdiction and a request for attorneys’

fees under the Declaratory Judgments Act.

The trial judge held a hearing on September 24, 2012. The reporter’s record from the

hearing reflects that there was some disagreement about which motions were set for hearing at

that time. It apparently was undisputed that HRG’s request for a temporary injunction in its case

and the City’s request for a temporary injunction in its case were both set for hearing. The City

took the position that its plea to the jurisdiction in HRG’s case was also set for hearing, but HRG

disagreed. The judge decided that he would hear the City’s pleas to the jurisdiction in both cases

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and then give HRG time to file additional briefing on the jurisdictional issues. The judge gave

the parties a deadline of October 1 to file jurisdictional briefing and advised the parties that he

would rule on the pleas to the jurisdiction on October 2 without a second hearing.

On October 1, HRG filed a response to the City’s plea to the jurisdiction in each of the

two cases, and the City filed a brief in support of its plea to the jurisdiction in HRG’s case. On

that same day, HRG also filed an identical amended pleading in each of the two cases. The

amended pleading is largely the same as HRG’s answer to the City’s lawsuit, but it contains

additional material in response to the City’s claim of immunity, and its prayer for relief is

slightly different from the prayer in HRG’s prior answer.

On October 2, the trial judge signed two orders. In one order, the judge sua sponte

consolidated the two cases, specifically consolidating the City’s case into HRG’s first-filed case.

The other order is entitled “Order Denying Plea to the Jurisdiction.” In that order, the judge

denied the City’s pleas to the jurisdiction but also acknowledged that the City retained its

immunity from claims for monetary relief in excess of any amounts necessary to offset the City’s

monetary claims.

The City timely filed its notice of interlocutory appeal from the order denying its plea to

the jurisdiction. See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(8) (West Supp. 2012)

(authorizing interlocutory appeal from order denying a plea to the jurisdiction by a governmental

unit).

II. STANDARD AND SCOPE OF REVIEW

We review an order denying a plea to the jurisdiction de novo. Tex. Dep’t of Parks &

Wildlife v. Miranda, 133 S.W.3d 217, 228 (Tex. 2004).

A plea to the jurisdiction can challenge the sufficiency of the claimant’s pleadings or the

existence of necessary jurisdictional facts. See id. at 226–28. The City did not adduce any

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evidence to support its pleas to the jurisdiction, so the instant case involves a challenge to the

sufficiency of HRG’s pleadings. As the claimant, HRG bears the burden of pleading facts that

affirmatively demonstrate that governmental immunity has been waived and that the court has

subject-matter jurisdiction. See City of Dallas v. Turley, 316 S.W.3d 762, 767 (Tex. App.—

Dallas 2010, pet. denied). We construe the pleadings in the claimant’s favor and look to the

pleader’s intent. Miranda, 133 S.W.3d at 226. If the pleadings do not contain enough facts to

demonstrate the propriety of jurisdiction but do not affirmatively demonstrate incurable defects

in jurisdiction, the claimant should be afforded the opportunity to amend. Id. at 226–27. This

opportunity shall be given after a court determines that the pleadings are insufficient. Lazarides

v. Farris, 367 S.W.3d 788, 803–04 (Tex. App.—Houston [14th Dist.] 2012, no pet.). But if the

pleadings affirmatively negate the existence of jurisdiction, the plea may be granted without

giving the claimant an opportunity to amend. Miranda, 133 S.W.3d at 227.

The parties disagree whether HRG’s October 1, 2012 amended pleading is its live

pleading for purposes of our analysis. HRG assumes that the amended pleading is its live

pleading; the City argues in its reply brief that it is not. We conclude that it is. The trial judge

conducted a hearing on September 24, 2012, but the parties disputed whether the City’s pleas to

the jurisdiction were among the matters set for hearing at that time. The trial judge gave the

parties a deadline of October 1, 2012, to file jurisdictional briefs and advised that he would rule

on the pleas on October 2 without another hearing. HRG filed its amended pleading on October

1, and the judge’s October 2 order denying the City’s pleas to the jurisdiction recites simply that

the judge “reviewed the pleadings of the parties.” The rules of civil procedure do not prescribe a

deadline for filing amended pleadings before the hearing or submission of a plea to the

jurisdiction. See Grand Prairie Hosp. Auth. v. Tarrant Appraisal Dist., 707 S.W.2d 281, 283

(Tex. App.—Fort Worth 1986, writ ref’d n.r.e.) (holding that a hearing on a plea to the

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jurisdiction is not a “trial” under Rule 63, and so amended pleading filed after hearing but before

ruling was appellant’s live pleading); see also Rebecca Simmons & Suzette K. Patton, Plea to

the Jurisdiction: Defining the Undefined, 40 ST. MARY’S L.J. 627, 670–71 (2009) (noting the

“lack of clearly defined procedure” to govern pleas to the jurisdiction). Because the rules

prescribe no deadline for pleadings amendments before the hearing or submission of a plea to the

jurisdiction, and because the trial judge recited that he “reviewed the pleadings of the parties,”

we conclude that HRG’s amended pleadings were the live pleadings before the trial judge when

he denied the City’s pleas to the jurisdiction.2

III. GOVERNMENTAL IMMUNITY

A. The law of governmental immunity

Governmental immunity is a common-law doctrine. City of Dallas v. Albert, 354 S.W.3d

368, 373 (Tex. 2011). It applies to political subdivisions of the State, while the immunity of the

State itself is referred to as sovereign immunity. Id. at 372 n.2. “When performing

governmental functions, political subdivisions derive governmental immunity from the state’s

sovereign immunity.” City of Houston v. Williams, 353 S.W.3d 128, 134 (Tex. 2011) (footnote

omitted). Governmental immunity comprises both immunity from liability and immunity from

suit. Albert, 354 S.W.3d at 373. “Immunity from liability protects entities from judgment while

immunity from suit deprives courts of jurisdiction over suits against entities unless the

Legislature has expressly consented . . . .” Id. Thus, the legislature can waive a political

subdivision’s governmental immunity. See id. at 374 (“[W]aivers of sovereign immunity or

consent to sue governmental entities must generally be found in actions of the Legislature.”).

2

The City also objects to affidavits attached to HRG’s amended pleading and incorporated therein by reference. Because the City’s pleas to

the jurisdiction challenge only the sufficiency of HRG’s pleadings to invoke the trial court’s jurisdiction, we consider the affidavits only as

supplementing HRG’s pleaded factual allegations, and not as evidence. We need not address the City’s objections to them.

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Governmental immunity is not unlimited. Generally, a claim falls within the scope of

governmental immunity if the claimant seeks either to control government action or to subject

the governmental entity to liability. Anderson v. City of McKinney, 236 S.W.3d 481, 482–83

(Tex. App.—Dallas 2007, no pet.). But “a governmental entity does not have immunity from

suit for monetary claims against it that are ‘germane to, connected with, and properly defensive

to’ affirmative claims made by the entity, to the extent the claims against the entity offset the

entity’s claims.” Albert, 354 S.W.3d at 372 (quoting Reata Constr. Corp. v. City of Dallas, 197

S.W.3d 371, 378 (Tex. 2006)). Also, “suits for injunctive relief may be maintained against

governmental entities to remedy violations of the Texas Constitution.” City of Elsa v. M.A.L.,

226 S.W.3d 390, 392 (Tex. 2007) (per curiam) (internal quotation and citation omitted).

The Declaratory Judgments Act waives immunity as to certain claims, but it is not a

general waiver of immunity. See Tex. Parks & Wildlife Dep’t v. Sawyer Trust, 354 S.W.3d 384,

388 (Tex. 2011). The Act provides that a person whose rights, status, or other legal relations are

affected by a statute or ordinance “may have determined any question of construction or validity

arising under” the statute or ordinance and obtain a declaration of his rights, status, or other legal

relations thereunder. TEX. CIV. PRAC. & REM. CODE ANN. § 37.004(a) (West 2008). The Act

further provides that a municipality must be made a party to any proceeding involving the

validity of a municipal ordinance. Id. § 37.006(b). Accordingly, the supreme court has held that

the Act waives a municipality’s immunity against claims challenging the validity of its

ordinances. Albert, 354 S.W.3d at 378; City of El Paso v. Heinrich, 284 S.W.3d 366, 373 n.6

(Tex. 2009).

The law has been evolving on the question of whether the Act waives governmental

immunity against a claim seeking only the interpretation of a statute or a declaration of a party’s

statutory rights. In the past, we have said that the Act waives governmental immunity against

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such claims. See, e.g., City of Seagoville v. Lytle, 227 S.W.3d 401, 410 (Tex. App.—Dallas

2007, no pet.) (“A declaratory judgment action against the government seeking a declaration of a

party’s rights and status under a statute is not barred by governmental immunity.”); Bell v. City

of Grand Prairie, 221 S.W.3d 317, 324 (Tex. App.—Dallas 2007, no pet.) (same); City of Dallas

v. Martin, 214 S.W.3d 638, 644 (Tex. App.—Dallas 2006) (“[T]here is no governmental

immunity in suits to construe legislation.”), rev’d on other grounds, 361 S.W.3d 560 (Tex.

2011). Some Texas Supreme Court cases seemed to support this interpretation of the law of

immunity. See, e.g., Tex. Lottery Comm’n v. First State Bank of DeQueen, 325 S.W.3d 628,

634–35 (Tex. 2010); Tex. Natural Res. Conservation Comm’n v. IT–Davy, 74 S.W.3d 849, 859–

60 (Tex. 2002); Tex. Educ. Agency v. Leeper, 893 S.W.2d 432, 446 (Tex. 1994).

But our statements that governmental immunity does not bar suits to construe statutes or

declare parties’ statutory rights were contradicted by the supreme court in Heinrich and in Texas

Department of Transportation v. Sefzik, 355 S.W.3d 618 (Tex. 2011) (per curiam). In Heinrich,

the court held that the governmental entity retains its immunity from suit when the claimant does

not challenge the validity of a statute but rather challenges a government officer’s application of

a statute to the claimant. 284 S.W.3d at 372–73 & n.6. The claimant’s remedy is an ultra vires

suit against the government officer in his or her official capacity for prospective relief. Id. at

369–74. In Sefzik, the court explained and amplified Heinrich, stating that the Declaratory

Judgments Act “does not waive the state’s sovereign immunity when the plaintiff seeks a

declaration of his or her rights under a statute or other law.” 355 S.W.3d at 621.3 When the

plaintiff’s complaint is that a state official has “trampled on the plaintiff’s rights,” the proper

defendant is the official, not the state agency itself. Id.

3

This statement in Sefzik is the opposite of, and thus disapproves, our statements in Lytle and Bell that governmental immunity does not bar

a suit against a governmental entity seeking a declaration of a party’s rights and status under a statute. See Lytle, 227 S.W.3d at 410; Bell, 221

S.W.3d at 324.

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Thus, in City of Dallas v. Turley, we recognized that Heinrich had pruned back our

expansive holdings regarding the waiver of immunity found in cases like Bell, Lytle, and Martin.

316 S.W.3d 762, 770–71 & n.5 (Tex. App.—Dallas 2010, pet. denied). In Kaufman County v.

Combs, we further recognized that Sefzik means the Declaratory Judgments Act “does not waive

governmental immunity when a plaintiff seeks a declaration of rights under a statute or other

law,” 393 S.W.3d 336, 343 (Tex. App.—Dallas 2012, pet. denied), and we also noted that the

Act’s waiver “is limited to claims challenging the validity of ordinances or statutes,” id. at 342.

Finally, and most recently, we reviewed the Leeper, IT–Davy, and First State Bank of DeQueen

opinions anew and concluded that they do not support the proposition that governmental

immunity is waived whenever a party seeks an interpretation of a statute or ordinance. City of

Dallas v. Tex. EZPAWN, L.P., No. 05-12-01269-CV, 2013 WL 1320513, at *2–3 (Tex. App.—

Dallas Apr. 1, 2013, no pet.) (mem. op.). Thus, we held that governmental immunity was not

waived as to Texas EZPAWN’s suit seeking an interpretation of an ordinance and a declaration

that the ordinance did not apply to it. Id. at *3; see also Scott-Nixon v. Tex. Higher Educ.

Coordinating Bd., No. 03-10-00377-CV, 2012 WL 1582270, at *3 (Tex. App.—Austin May 4,

2012, no pet.) (mem. op.) (“[C]laims that seek to restrain actions that allegedly violate or exceed

authority under a statute but do not challenge the validity of the statute . . . cannot be brought

against the state, which retains immunity . . . .”) (internal quotations omitted).

To summarize, the Declaratory Judgments Act waives governmental immunity against

claims that a statute or ordinance is invalid. Heinrich, 284 S.W.3d at 373 n.6. The Act does not

waive immunity against claims seeking a declaration of the claimant’s statutory rights or an

interpretation of an ordinance. Sefzik, 355 S.W.3d at 621 (declaration of rights); Tex. EZPAWN,

2013 WL 1320513, at *2–3 (interpretation of an ordinance). The Act also does not waive a

governmental entity’s immunity against a claim that government actors have violated the law.

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Heinrich, 284 S.W.3d at 372–73; Scott-Nixon, 2012 WL 1582270, at *3. But immunity does not

bar a suit for prospective injunctive relief against government actors in their official capacity for

violating the law. Heinrich, 284 S.W.3d at 373–77.

B. Application of the law to HRG’s live pleading

We now apply the law of governmental immunity to each of HRG’s claims, dividing

them into claims for declaratory, injunctive, and monetary relief.

1. Declaratory judgment

First, HRG seeks a declaratory judgment against the City. Specifically, HRG prays for

the following declarations:

1.) the City is attempted [sic] to enforce its list of alleged violation[s] with

unenforceable provisions of the Code of Ordinances, City of McKinney,

Texas;

2.) the City attempted to enforce its list of alleged violations with inapplicable

International Electrical, Building, Plumbing and Fire Codes;

3.) the City attempted to enforce it[s] list of alleged violations with

inapplicable provisions of the International Electrical, Building, Plumbing

and Fire Codes;

4.) the City failed to follow its own procedures for handling code disputes

under the ICC fire code;

5.) the City entered without permission, invitation, or probable cause the

property of Hank’s Texas Grill;

6.) the City has stopped people leaving Hank’s Texas Grill without probable

cause; and,

7.) the City’s conduct was egregious and inequitable.

As discussed above, the City does not enjoy immunity from declaratory-judgment claims

challenging the validity of City ordinances, but the City is immune from claims seeking

interpretations of City ordinances, declarations of HRG’s statutory rights, and declarations that

City officials have violated or are violating the law. See Sefzik, 355 S.W.3d at 621; Heinrich,

284 S.W.3d at 372–73; Tex. EZPAWN, 2013 WL 1320513, at *2–3. Categories two through

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seven of HRG’s prayer for declaratory relief all involve claims that City officials are violating or

misapplying the law in some respect. Accordingly, the City is immune from those claims unless

some other waiver of immunity applies.

In its first request for declaratory relief, HRG seeks a declaration that the City is

attempting to enforce “unenforceable provisions of the Code of Ordinances” against HRG. HRG

does not specify which ordinances are unenforceable, nor does it specify why these ordinances

are unenforceable. To avoid the bar of immunity, HRG must challenge the ordinances because

they are invalid for some reason. Because HRG does not plead specifically that any City

ordinances are unenforceable because they are invalid, we conclude its first request for

declaratory relief does not affirmatively demonstrate that the claim is outside the scope of the

City’s governmental immunity. But its first claim for declaratory judgment does not

affirmatively demonstrate that it is barred by immunity either. Accordingly, although the trial

judge should not have denied the City’s pleas to the jurisdiction as to the first request for

declaratory judgment, HRG is entitled to an opportunity to amend. See Miranda, 133 S.W.3d at

226–27.

We next consider HRG’s arguments that the City’s immunity to HRG’s declaratory-

judgment claims has been waived under other legal theories.

a. Waiver of immunity by inequitable conduct

HRG’s main argument against the City’s assertion of immunity is that the City has

waived its immunity through its egregious, intentional, and inequitable course of conduct. For

purposes of this argument, we assume the truth of HRG’s factual allegations that the City has

attempted to force the closure of Hank’s Texas Grill through a campaign of harassment and

intimidation of HRG, its employees, and its customers. The specific incidents alleged by HRG

include two occasions on which City police officers detained HRG managers, multiple occasions

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when police or fire officials stopped live-music performances without warrants to do so, and

instances of police intimidation of customers by oppressive surveillance of the parking lot and by

stopping customers as they were leaving the restaurant. HRG also alleges that the City has

changed the occupancy load for Hank’s Texas Grill several times and that the City is trying to

compel HRG to fix numerous alleged code violations that are not actually violations because the

code provisions are inapplicable or unenforceable.

HRG relies on dicta in two Texas Supreme Court cases to support the proposition that

there is an inequitable-conduct exception to governmental immunity. See Catalina Dev., Inc. v.

Cnty. of El Paso, 121 S.W.3d 704 (Tex. 2003); Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401 (Tex.

1997). In each case, a claimant sued a governmental entity for breach of contract, failed to prove

a legislative waiver of immunity from suit, and argued that the court should establish an

equitable doctrine of waiver by conduct applicable to its contract claim. Catalina Dev., 121

S.W.3d at 705–06; Fed. Sign, 951 S.W.2d at 403–05. In each case, the court held that there was

no waiver by conduct on the facts of the case. Catalina Dev., 121 S.W.3d at 706–07; Fed. Sign,

951 S.W.2d at 408 & n.1. In Federal Sign, the court left the door open to the possibility of

waiver by conduct under some circumstances: “There may be other circumstances where the

State may waive its immunity by conduct other than simply executing a contract so that it is not

always immune from suit when it contracts.” 951 S.W.2d at 408 n.1; see also Catalina Dev.,

121 S.W.3d at 705 (quoting footnote 1 of Federal Sign).

We reject HRG’s waiver-by-conduct argument. First, the supreme court has never held

that such a doctrine exists, and the court recently emphasized that waivers of immunity generally

should be left to the legislature. See Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d

407, 414 (Tex. 2011). Any judicial abrogation of governmental immunity should be undertaken

by the supreme court. See Leach v. Tex. Tech Univ., 335 S.W.3d 386, 401 (Tex. App.—Amarillo

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2011, pet. denied) (stating that the existence of waiver-by-conduct doctrine “is a matter for the

Supreme Court (or Texas Legislature) to resolve”). Moreover, judicial discussions of the

possibility of waiver by conduct seem to have arisen only in the context of breach-of-contract

claims. See, e.g., Sharyland Water Supply Corp., 354 S.W.3d at 414; Catalina Dev., 121 S.W.3d

at 705; Fed. Sign, 951 S.W.2d at 408 & n.1. HRG cites only one intermediate appellate decision

adopting the waiver-by-conduct doctrine and applying it in favor of a claimant, and that was a

breach-of-contract case. Tex. S. Univ. v. State St. Bank & Trust Co., 212 S.W.3d 893, 904–08

(Tex. App.—Houston [1st Dist.] 2007, pet. denied). We find no warrant in the limited case law

on the subject to apply the waiver-by-conduct doctrine to any legal theory except breach of

contract. HRG has not pleaded a breach-of-contract claim in this case. Finally, HRG proposes

no principles or standards to guide or constrain the application of the waiver-by-conduct

doctrine, and the amorphous nature of the doctrine further weighs against its adoption.

For all these reasons, we reject HRG’s contention that it has successfully pleaded a

waiver of immunity by inequitable conduct.

b. Waiver under Chapter 245 of the Texas Local Government Code

HRG also argues that its claims come within the waiver of immunity found in section

245.006 of the local government code. Chapter 245 of the code is entitled “Issuance of Local

Permits,” and it has been called the “Vested Rights Act.” See Md. Manor Assocs. v. City of

Houston, 816 F. Supp. 2d 394, 409 (S.D. Tex. 2011). Chapter 245 establishes a general rule that

municipal regulatory agencies must consider a permit application under the terms of the

ordinances, rules, and other applicable regulations that are in effect at the time the permit

application is filed. See generally TEX. LOC. GOV’T CODE ANN. § 245.002(a) (West 2005).

Certain permits and certain kinds of regulations are exempted from Chapter 245’s operation. See

id. § 245.004. Chapter 245 may be enforced only through mandamus or declaratory or injunctive

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relief, and “[a] political subdivision’s immunity from suit is waived in regard to an action under”

Chapter 245. Id. § 245.006(a), (b).

Relying on section 245.006, HRG argues that the City is not immune from HRG’s claims

seeking declarations that the City is improperly seeking to enforce against HRG certain codes

and ordinances that were not in effect when HRG applied for its permits in 2002. The first three

categories of declaratory relief sought by HRG in the prayer of its live pleading potentially fit the

section 245.006 waiver: (1) the City is attempting to enforce unenforceable ordinances against

HRG, (2) the City is attempting to enforce inapplicable electrical, building, plumbing, and fire

codes against HRG, and (3) the City is attempting to enforce inapplicable provisions of

electrical, building, plumbing, and fire codes against HRG. Categories four through seven4

clearly are not claims under Chapter 245, so section 245.006 does not waive the City’s immunity

as to those claims.

The City does not address Chapter 245 in its opening brief, but in its reply brief it argues

that none of HRG’s declaratory-judgment claims qualify for the section 245.006 waiver of

immunity because all of those claims are exempted from Chapter 245 by section 245.004. The

City relies specifically on the following provisions of section 245.004:

This chapter does not apply to:

(1) a permit that is at least two years old, is issued for the construction of a

building or structure intended for human occupancy or habitation, and is issued

under laws, ordinances, procedures, rules, or regulations adopting only:

(A) uniform building, fire, electrical, plumbing, or mechanical codes adopted

by a recognized national code organization; or

(B) local amendments to those codes enacted solely to address imminent

threats of destruction of property or injury to persons;

4

To reiterate, these are claims for declarations (4) that the City failed to follow its own procedures for handling code disputes under the ICC

fire code, (5) that the City entered Hank’s Texas Grill without permission, invitation, or probable cause, (6) that the City has stopped people

leaving Hank’s Texas Grill without probable cause, and (7) that the City’s conduct was egregious and inequitable.

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(2) municipal zoning regulations that do not affect landscaping or tree

preservation, open space or park dedication, property classification, lot size, lot

dimensions, lot coverage, or building size or that do not change development

permitted by a restrictive covenant required by a municipality;

...

(6) fees imposed in conjunction with development permits;

...

(8) regulations for utility connections;

. . . or

(11) regulations to prevent the imminent destruction of property or injury to

persons if the regulations do not:

(A) affect landscaping or tree preservation, open space or park dedication, lot

size, lot dimensions, lot coverage, building size, residential or commercial

density, or the timing of a project; or

(B) change development permitted by a restrictive covenant required by a

municipality.

Id. § 245.004.

To invoke the waiver of immunity found in section 245.006, HRG should allege facts

sufficient to demonstrate that its declaratory-judgment claims come within the scope of Chapter

245, including facts sufficient to demonstrate that the exemptions found in section 245.004 do

not apply to HRG’s claims. See Turley, 316 S.W.3d at 767 (“The plaintiff bears the burden to

plead facts that affirmatively demonstrate that governmental immunity has been waived . . . .”).

Given the detailed exemptions found in section 245.004 and the vagueness of HRG’s first three

requests for declaratory relief, we conclude that HRG’s pleading does not contain sufficient facts

to affirmatively demonstrate the propriety of the trial court’s jurisdiction under Chapter 245. But

HRG’s pleading also does not affirmatively demonstrate incurable defects in jurisdiction.

Accordingly, HRG must be given an opportunity to replead those claims. See Miranda, 133

S.W.3d at 226–27.

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c. Waiver by pleading affirmative claims

HRG argues that the trial judge properly denied the City’s pleas to the jurisdiction

because the City waived its immunity by seeking affirmative relief. HRG relies on Reata

Construction Corp. v. City of Dallas, 197 S.W.3d 371 (Tex. 2006). In that case, the court held

that when a governmental entity sues a defendant for damages, the entity has no immunity from

counterclaims that are connected to, germane to, and properly defensive to the matters on which

the entity bases its claim for damages. Id. at 377. The entity remains immune, however, from a

counterclaim for damages in excess of the amount sufficient to offset the entity’s recovery, if

any. Id. Thus, the Reata rule does not permit an affirmative recovery against a governmental

entity; it permits only an offset against the entity’s recovery, if any.

We have found no cases holding that a governmental entity’s filing of affirmative claims

under the Declaratory Judgments Act waives the entity’s immunity from declaratory-judgment

counterclaims under Reata. Since Reata, the supreme court has indicated that the Reata rule is

limited to offsetting counterclaims for monetary relief. In Albert, the supreme court said, “a

governmental entity does not have immunity from suit for monetary claims against it that are

‘germane to, connected with, and properly defensive to’ affirmative claims made by the entity, to

the extent the claims against the entity offset the entity’s claims.” 354 S.W.3d at 372 (emphasis

added) (quoting Reata, 197 S.W.3d at 378). We conclude a governmental entity’s affirmative

claim for declaratory relief does not have any effect on the entity’s immunity from counterclaims

for declaratory relief.

d. Conclusion

The trial judge erred by denying the City’s pleas to the jurisdiction with respect to HRG’s

claims for declaratory judgment. But because HRG may be able to plead declaratory-judgment

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claims against the City that are not barred by immunity, we will remand so that the trial judge

may afford HRG a reasonable opportunity to amend its pleadings.

2. Injunctive relief

HRG also seeks temporary and permanent injunctive relief against the City. Specifically,

HRG seeks temporary and permanent injunctions prohibiting the City from the following

conduct: (1) undertaking any enforcement efforts regarding the items attached to the City’s

August 9, 2012 letter until the City has complied with the board-of-appeals procedure set out in

the fire code; (2) undertaking any enforcement efforts in connection with items described as

violations in the City’s August 9, 2012 letter; (3) forcing HRG to provide a fire watch if HRG is

in compliance with the occupancy load set by the City on December 17, 2008; and

(4) undertaking any enforcement efforts for which no demand for compliance has been made.

HRG also seeks an injunction (5) ordering City police and fire personnel to stay out of HRG’s

property without permission, an invitation, or probable cause, and (6) ordering the City’s police

department to refrain from stopping anyone leaving Hank’s Texas Grill without probable cause.

In the past, we have said that governmental immunity does not bar a claim that a

municipality has misinterpreted the law and that includes requested injunctive relief. Anderson,

236 S.W.3d at 483–84. But, as explained above, the supreme court has clarified the law of

government immunity in Heinrich. Under that case, governmental entities retain immunity from

claims for injunctive relief based on allegations that government officials are violating the law or

exceeding their powers under the law. See 284 S.W.3d at 372–73. Such claims must be brought

against the responsible government actors in their official capacities. See id. All of HRG’s

claims for injunctive relief are directed to requiring City officials and employees to comply with

the law. Under Heinrich, the City retains its immunity from HRG’s claims for injunctive relief.

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We have already analyzed HRG’s arguments that the City’s immunity from suit has been

waived by the City’s inequitable conduct, by Chapter 245 of the local government code, and by

the City’s assertion of affirmative claims for relief. The same analysis applies to HRG’s claims

for injunctive relief. HRG’s arguments based on inequitable conduct and on the City’s

affirmative claims for relief are without merit. HRG’s pleadings are not sufficient to establish a

waiver of immunity under Chapter 245, but it is entitled to an opportunity to amend its pleadings.

Accordingly, we conclude that the trial judge erred by denying the City’s pleas to the jurisdiction

as to HRG’s claims for injunctive relief, and we will remand so that HRG may have an

opportunity to replead.

3. Monetary relief

The City asserts that it is immune from HRG’s suit “to the extent [HRG] is attempting to

allege a claim for damages.” This formulation highlights a threshold question, which is whether

HRG is actually asserting a claim for money damages against the City at all. We conclude that

HRG has pleaded a claim for money damages.

HRG’s live pleading is not a model of clarity. Sections I through VII of the pleading

comprise HRG’s answer to the City’s lawsuit. Section VIII is entitled “Factual Background to

Answer, Counterclaims and Request for Injunctive Relief.” After a long factual recitation

making up the bulk of section VIII, HRG alleges that the City’s conduct has proximately caused

damages to HRG that are “in excess of the minimum jurisdictional limits of the Court but do not

exceed $250,000.00.” Section IX is entitled “Counterclaim,” and it consists of a single

paragraph requesting declaratory relief. Section X is entitled “Application for Temporary

Injunction and Permanent Injunction,” and although HRG devotes most of that section to

describing the desired injunctive relief, section X also contains one sentence mentioning

attorneys’ fees: “The nature of the lawsuit will be for declaratory relief and attorney fees

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incurred in response to the enforcement actions.” HRG’s prayer for relief does not contain a

request for damages or attorneys’ fees. HRG’s prayer is devoted mostly to specifying the

declaratory and injunctive relief desired, and it concludes with a general prayer for “such other

and further relief, in law or in equity, to which [HRG] may show itself justly entitled.” The trial

judge apparently construed HRG’s pleadings to include a request for monetary relief. In his

order denying the City’s pleas to the jurisdiction, the judge recited that HRG could “offset its

claims for monetary relief up to an amount not exceeding the amount necessary to offset the

City’s monetary claims.”

In its appellate brief, HRG says little about its claim, if any, for monetary damages. HRG

does not mention any such claim in its statement of the facts. In its summary of the argument,

HRG says only that it is entitled to mount a defense against the City’s lawsuit, “a defense which

can include both declaratory and injunctive relief and, [HRG] contends, monetary damages.”

Finally, in a heading that appears in the argument section of its brief, HRG asserts that the “Trial

Court Properly Denied the City’s Plea to the Jurisdiction Regarding Hank’s Alleged Claim for

Monetary Relief.” (Emphasis added.) Even this heading is ambiguous—it seems to be an

averment that HRG has alleged a claim for monetary relief, but it could mean only that the City

alleges that HRG has made a claim for monetary relief.

Construing HRG’s pleading in favor of HRG and attempting to discern HRG’s intent, we

conclude that HRG intended to plead a claim for damages against the City. We base our

conclusion principally on paragraph 36 of section VIII of HRG’s pleading, which reads, “[HRG]

has been damaged. These damages proximately caused by the conduct of the City are in excess

of the minimum jurisdictional limits of the Court but do not exceed $250,000.00.” HRG had no

reason to aver that its damages were in excess of the minimum jurisdictional limits of the trial

court unless HRG intended for the court to award damages to HRG. Thus, we construe HRG’s

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live pleading to assert a claim for damages based on the facts alleged by HRG. We do not,

however, construe HRG’s pleading as including a claim for attorneys’ fees. The only mention of

attorneys’ fees in the pleading is a statement that the “nature” of HRG’s lawsuit “will be for

declaratory relief and attorney fees.” A statement that HRG will, in the future, make a claim for

attorneys’ fees is not an actual claim for attorneys’ fees. HRG makes no request for attorneys’

fees in its prayer for relief, and a “general prayer for relief will not support an award of

attorney’s fees because it is a request for affirmative relief that must be supported by the

pleadings.” Alan Reuber Chevrolet, Inc. v. Grady Chevrolet, Ltd., 287 S.W.3d 877, 884 (Tex.

App.—Dallas 2009, no pet.).

The City argues that it is immune from HRG’s claim for damages (1) because HRG has

pleaded no legislative waiver of immunity from suit, and (2) because the rule of Reata

Construction Corp., does not apply given the procedural posture of this case. As to the City’s

first argument, HRG argues that the City’s immunity to HRG’s claim for damages has been

waived by the City’s inequitable conduct and by Chapter 245 of the local government code. We

have already rejected HRG’s waiver-by-conduct argument. HRG’s argument based on Chapter

245 is also unavailing. Section 245.006(a) is clear: “This chapter may be enforced only through

mandamus or declaratory or injunctive relief.” TEX. LOC. GOV’T CODE ANN. § 245.006(a).

Thus, the Chapter 245 waiver of the City’s immunity does not waive the City’s immunity from a

suit for damages. We agree with the City that HRG has not pleaded a legislative waiver of the

City’s governmental immunity to suit for damages.

We turn to the City’s second argument, which addresses the Reata doctrine. Under

Reata, a governmental entity is not immune from suit for monetary claims against it that are

“‘germane to, connected with, and properly defensive to’ affirmative claims made by the entity,

to the extent the claims against the entity offset the entity’s claims.” Albert, 354 S.W.3d at 372

–20–

(quoting Reata Constr. Corp., 197 S.W.3d at 378). The City contends that its claims for

attorneys’ fees under the Declaratory Judgments Act do not qualify as “affirmative claims” under

the Reata rule. It relies on Texas Department of Criminal Justice v. McBride, 317 S.W.3d 731

(Tex. 2010), and City of Dallas v. VRC LLC, 260 S.W.3d 60 (Tex. App.—Dallas 2008, no pet.),

for support. In McBride, a claimant sued the TDCJ for declaratory judgment and injunctive

relief, and the TDCJ answered, asserted sovereign immunity, and requested its attorneys’ fees.

317 S.W.3d at 732. The supreme court held that the TDCJ’s request for fees did not result in a

waiver of immunity under Reata. Id. at 732–33. The court distinguished Reata on the basis that

the TDCJ’s request for fees was “purely defensive in nature, unconnected to any claim for

monetary relief.” Id. at 733. In VRC, we likewise held that a defendant municipality’s defensive

request for attorneys’ fees did not waive immunity. 260 S.W.3d at 64. Thus, the City’s

defensive request for fees in its answer to HRG’s first-filed lawsuit triggered no waiver of

immunity.

But unlike the fee claims in McBride and VRC, the City’s requests for fees in this case are

not solely defensive. In this consolidated case, the City seeks to recover not only attorneys’ fees

incurred in defending HRG’s suit but also its fees incurred in prosecuting its own affirmative

claims against HRG. The consolidation of the two suits did not change the substance of the

parties’ claims; it merely merged the two suits into one. See Perry v. Del Rio, 53 S.W.3d 818,

825 n.6 (Tex. App.—Austin) (“When actions are properly consolidated they become merged and

are thereafter treated as one suit . . . .”) (internal quotations and citation omitted), pet. dism’d, 66

S.W.3d 239 (Tex. 2001). So the question is whether the City’s claim for attorneys’ fees under

the Declaratory Judgments Act, asserted in its own lawsuit against HRG, constituted an

affirmative claim for relief under Reata. We conclude that it did. In Reata, the court said, “Once

it asserts affirmative claims for monetary recovery, the City must participate in the litigation

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process as an ordinary litigant, save for the limitation that the City continues to have immunity

from affirmative damages claims against it for monetary relief exceeding amounts necessary to

offset the City’s claims.” 197 S.W.3d at 377. Here, the City’s request for attorneys’ fees

incurred in prosecuting the City’s claims against HRG constitutes an affirmative claim for

monetary recovery. Accordingly, HRG may assert its own damages claims against the City

defensively as an offset against the City’s recovery, if any, of attorneys’ fees. Of course, those

damages claims must also satisfy the Reata criterion of being “germane to, connected with and

properly defensive to” the City’s claims. Id. But the City does not argue on appeal that HRG’s

claims fail to satisfy this test, so we express no opinion on this question.

For the foregoing reasons we reject the City’s argument that the trial judge erred by

denying the City’s plea to the jurisdiction as to HRG’s claim for damages up to the amount

necessary to offset the City’s claims.

IV. THE CITY’S OTHER ARGUMENTS

The City raises four additional arguments attacking the trial court’s subject-matter

jurisdiction specifically over HRG’s claims for injunctive relief. We discuss them briefly.

First, the City argues that the trial court has no jurisdiction to enjoin the City from

enforcing penal ordinances because HRG has not alleged that any ordinances are

unconstitutional or that enforcement of the ordinances would irreparably injure HRG’s vested

property rights. See State v. Morales, 869 S.W.2d 941, 942 (Tex. 1994) (setting forth

circumstances under which civil courts have jurisdiction to enjoin enforcement of criminal

statutes). We note that the City does not cite any particular ordinances in connection with this

argument, nor does it demonstrate that any of the ordinances involved in this case are penal

ordinances within the meaning of Morales. HRG’s live pleading does not contain a request for

an injunction against the enforcement of any particular City ordinance. Accordingly, the City

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has not shown any error in the trial judge’s ruling under Morales. In the event HRG repleads its

claims for injunctive relief, the City can reassert in the trial court its argument based on Morales.

Next, the City argues that the trial court does not have subject-matter jurisdiction to issue

an injunction that orders the continuation of a violation of law. We disagree. The authorities

cited by the City do not support the proposition that an injunction ordering the continuation of an

illegal act suffers from a jurisdictional defect. They hold only that such an injunction would be

erroneous. See, e.g., Ahmed v. Shimi Ventures, L.P., 99 S.W.3d 682, 692 (Tex. App.—Houston

[1st Dist.] 2003, no pet.) (“A trial court . . . abuses its discretion when it issues an injunction that

orders an illegal act, even when done in the name of preserving the status quo.”). We reject the

City’s argument.

Next, the City argues that the trial court lacks jurisdiction to enjoin the City from

enforcing the alcoholic beverage code or state food-establishment regulations. HRG responds by

denying that it intends to seek judicial protection against enforcement of those state laws. HRG

also argues that the City’s argument goes to the propriety of the injunctive relief sought, not to

the trial court’s jurisdiction. The City cites no authority to support the proposition that the trial

court lacks jurisdiction to enjoin a municipality from enforcing state laws, and we have found

none. We conclude that, although such an injunction might be erroneous and reversible, the trial

court does not lack subject-matter jurisdiction to rule on a request for such an injunction.

Finally, the City argues that the trial court lacks jurisdiction to enjoin the City’s police

department from stopping anyone leaving Hank’s Texas Grill without probable cause. The City

contends that HRG lacks standing to assert such a claim. The City’s entire argument consists of

four sentences—three sentences setting forth abstract propositions of the law of standing, and

one sentence stating the conclusion that HRG lacks standing to seek this relief. The City

provides no analysis explaining how the general law of standing should apply to this case. Nor

–23–

does the City explain why HRG’s assertion that the police department’s conduct is harming

HRG’s business is not sufficient to confer standing on HRG at the pleading stage of the case. In

sum, the City’s briefing of this argument is inadequate, so we do not address it. See In re Estate

of Miller, 243 S.W.3d 831, 840 (Tex. App.—Dallas 2008, no pet.) (concluding that issue was

waived because appellant did not analyze legal authority and made “no suggested application of

it to the facts”); In re M.A.S., 233 S.W.3d 915, 924 (Tex. App.—Dallas 2007, pet. denied)

(“Failure to provide substantive analysis waives an issue on appeal.”).

V. DISPOSITION

We affirm the trial judge’s order denying the City’s pleas to the jurisdiction to the extent

the judge ruled that HRG could proceed with its claims for monetary relief in an amount not to

exceed the amount necessary to offset the City’s claim for attorneys’ fees in connection with the

City’s affirmative claim for declaratory relief. We reverse the part of the trial court’s order

denying the City’s pleas to the jurisdiction with respect to HRG’s claims for declaratory

judgment and injunctive relief. We render judgment dismissing HRG’s claims for declaratory

judgment that (1) the City failed to follow its own procedures for handling code disputes under

the ICC fire code; (2) the City entered without permission, invitation, or probable cause the

property of Hank’s Texas Grill; (3) the City has stopped people leaving Hank’s Texas Grill

without probable cause; and, (4) the City’s conduct was egregious and inequitable.

–24–

We remand this cause to the trial court so that the trial court may give HRG an

opportunity to amend its pleadings with respect to its other claims for declaratory judgment and

with respect to its claims for injunctive relief.

121359F.P05 /Kerry P. FitzGerald/

KERRY P. FITZGERALD

JUSTICE

–25–

S

Court of Appeals

Fifth District of Texas at Dallas

JUDGMENT

CITY OF MCKINNEY, TEXAS, Appellant On Appeal from the 366th Judicial District

Court, Collin County, Texas

No. 05-12-01359-CV V. Trial Court Cause No. 366-03124-2012.

Opinion delivered by Justice FitzGerald.

HANK’S RESTAURANT GROUP, L.P., Justice Lewis participating.

Appellee

In accordance with this Court’s opinion of this date, the trial court’s Order Denying Plea

to the Jurisdiction is AFFIRMED in part and REVERSED in part. We REVERSE that portion

of the trial court’s Order denying appellant City of McKinney, Texas’s plea to the jurisdiction

with respect to appellee Hank’s Restaurant Group, L.P.’s claims for declaratory judgment and

injunctive relief. We RENDER judgment dismissing appellee Hank’s Restaurant Group, L.P.’s

claims for declaratory judgment that (1) the City failed to follow its own procedures for handling

code disputes under the ICC fire code; (2) the City entered without permission, invitation, or

probable cause the property of Hank’s Texas Grill; (3) the City has stopped people leaving

Hank’s Texas Grill without probable cause; and, (4) the City’s conduct was egregious and

inequitable. We REMAND this cause to the trial court so that the trial court may give appellee

Hank’s Restaurant Group, L.P. an opportunity to amend its pleadings with respect to its other

claims for declaratory judgment and with respect to its claims for injunctive relief. We

AFFIRM the Order with respect to appellee Hank’s Restaurant Group, L.P.’s claim for damages

up to an amount not exceeding the amount necessary to offset the City’s monetary claims.

It is ORDERED that appellant City of McKinney, Texas recover its costs of this appeal

from appellee Hank’s Restaurant Group, L.P.

Judgment entered September 18, 2013

/Kerry P. FitzGerald/

KERRY P. FITZGERALD

JUSTICE

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