Tara Partners, Ltd. v. City of South Houston (Tex.App.- Houston [14th Dist.] Jan. 13, 2009)
(Seymore)(city governmental immunity), attorneys fees on UDJA claim immunity waiver, waiver by conduct)

We conclude that the trial court had jurisdiction over appellants' claims disputing
imposition of fees under the Water Code.  Accordingly, we reverse that part of the trial
court's order that dismissed appellants' claims disputing imposition of fees under the
Water Code and remand for further proceedings consistent with our opinion.  

We further conclude that the averments and allegations in appellants'  Third Amended
Petition are insufficient to support the trial court's jurisdiction over appellants' claims for
reimbursement of previously paid fees and Tara's claims pertaining to breach of a
purported settlement agreement.  Accordingly, we affirm that part of the trial court's order
dismissing appellants' claims for reimbursement of previously paid fees and Tara's claim
that the City breached a purported settlement agreement.            

AFFIRMED IN PART; REVERSED & REMANDED IN PART: Opinion by Justice Seymore  
Before Justices Frost, Seymore and Guzman
14-07-00330-CV  Tara Partners, Ltd., Granada Terrace, Ltd., David R. Wise, 1606 Savannah LLC, Windsor
Gardens Ltd., and Freeport Villa Brazos Apartments, Ltd. v. City of South Houston
Appeal from 157th District Court of Harris County
Trial Court Judge: Randy Wilson
Concurring Opinion by Justice Frost

M A J O R I T Y   O P I N I O N

In this suit for declaratory judgment and damages related to fees set by a water and sewer utility owned by the
City of South Houston, appellants Tara Partners, Ltd., Granada Terrace, Ltd., David R. Wise, 1606 Savannah
LLC, Windsor Gardens, Ltd., and Freeport Villa Brazos Apartments, Ltd. challenge an order granting the City's
plea to the jurisdiction and dismissing appellants' lawsuit without prejudice.  Concluding the district court had
jurisdiction over appellants' claims disputing the imposition of fees under the Texas Water Code, but not over
appellants' claims for reimbursement for previously paid fees or over Tara Partners, Ltd.'s claims related to an
alleged settlement agreement, we affirm in part, reverse in part, and remand for further proceedings consistent
with this opinion.

I.  Factual and Procedural Background

The City of South Houston (“the City") is a general law municipality located within Harris County.  The City
operates its own water and sewer utility systems.  Appellant Tara Partners, Ltd. (“Tara") owns apartments within
and outside the City's boundaries.  The remaining appellants own apartments solely within the City's boundaries.  
The City provides water to appellants' apartments.  From 1992 until 2004, the minimum bill for all city customers
was based on water meter size, with an additional charge based on water consumption.

In 2004, the City adopted an ordinance by which it charged residential, outside city residential, and commercial
residential users a minimum monthly base rate of $10.00 for water and $12.00 for sewer “for each available unit
connected to a meter, whether those units are occupied or vacant."  As before, there was also a usage charge.  
Appellants fell within the “commercial residential user" category, defined as “all multi-family units containing two or
more living units and including trailer parks, motels, apartment projects and hotels."[1]  Appellants' estimated
water and sewer charges for a two-hundred-unit apartment, with a three-inch meter, and using 750,000 gallons of
water a month would increase from $39,294 to $91,622 under the 2004 ordinance.

Appellants sued the City in Harris County District Court, and Tara also separately sought review before the Texas
Commission on Environmental Quality (“TCEQ") pursuant to Texas Water Code Section 13.043(b)(3).[2]  While
the district court case was proceeding, attorneys for Tara and the City signed a hand printed settlement
“resolution," which provided in part that the parties agreed the rates set forth in the 2004 ordinance were not “just
and reasonable" and “all increased amounts collected under [the 2004 ordinance] shall be returned to [Tara]
within 30 days."  According to appellants, the City did not comply with this agreement.  In amended pleadings in
district court, appellants then alleged the following “causes of action": unlawful and unconstitutional taxation in
violation of Texas law, unreasonable and unjustified rate discrimination under Texas common law, arbitrary and
unreasonable rates under Texas common law, breach of contract, and promissory estoppel (the latter two raised
only by Tara and referring to the handwritten resolution).  As additional “causes of action," appellants sought a
declaratory judgment, including a declaration the handwritten resolution was enforceable, actual damages
consisting of “all of the Surcharge collected by [the City]," and attorneys' fees under the Uniform Declaratory
Judgment Act.[3]

The City filed a plea to the jurisdiction, and alternatively, special exceptions.  The City argued (1) under the Texas
Water Code provisions regarding exclusive original and exclusive appellate jurisdiction, the district court lacked
subject matter jurisdiction over appellants' challenges to the water and sewer rates;[4] (2) to the extent appellants
were seeking common law tort damages, there was no waiver of governmental immunity or constitutional
authorization as would give the district court jurisdiction over such claims; and (3) the settlement resolution was
not a contract subject to the subchapter under which the legislature had waived governmental immunity for claims
for breach of contract.[5]  Following an  evidentiary hearing, the trial court granted the City's plea to the
jurisdiction.

II.  Legal Standards and Standard of Review

In four issues, appellants challenge the trial court's order granting the City's plea to  the jurisdiction.[6]  In its plea,
the City argued provisions of the Texas Water Code gave TCEQ exclusive appellate jurisdiction over the rate
claims and governmental immunity precluded the remaining claims.

In a plea to the jurisdiction, a party challenges the trial court's authority to determine the subject matter of the
cause of action.  City of Mont Belvieu v. Enter. Prod. Operating, L.P., 222 S.W.3d 515, 518 (Tex. App.- Houston
[14th Dist] 2007, no pet.).  Because subject matter jurisdiction is a question of law, we review the trial court's
decision de novo.  Id.  In deciding a plea to the jurisdiction, we may not weigh the merits of the claim, but must
consider only the plaintiff's pleadings and the evidence pertinent to the jurisdictional inquiry. See Tex. Natural
Res. Conservation Comm'n v. White, 46 S.W.3d 864, 868 (Tex. 2001);  Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d
547, 554-55 (Tex. 2000). When we consider a trial court's order on a plea to the jurisdiction, we construe the
pleadings in the plaintiff's favor and look to the pleader's intent.  See Tex. Ass'n of Bus. v. Tex. Air Control Bd.,
852 S.W.2d 440, 446 (Tex. 1993).  To prevail, the party asserting the plea must show that, even if all the
allegations in the plaintiff's pleadings are taken as true, an incurable jurisdictional defect appears on the face of
the pleadings, rendering it impossible for the plaintiff's petition to confer jurisdiction on the trial court. City of Mont
Belvieu, 222 S.W.3d at 518.            If a plaintiff fails to plead sufficient facts affirmatively demonstrating the trial
court's jurisdiction, but the pleadings do not affirmatively demonstrate incurable defects in jurisdiction, the issue is
one of pleading sufficiency and the plaintiff should be afforded the opportunity to amend. Tex. Dep't of Parks &
Wildlife v. Miranda, 133 S.W.3d 217, 226-27 (Tex. 2004); County of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex.
2002).  However, if the pleadings affirmatively negate the existence of jurisdiction, a plea to the jurisdiction may be
granted without allowing the plaintiff an opportunity to amend. Miranda, 133 S.W.3d at 227; Brown, 80 S.W.3d at
555.  Also, through inaction, a plaintiff may lose the opportunity to amend.  See Haddix v. Am. Zurich Ins. Co., 253
S.W.3d 339, 347 (Tex. App.- Eastland 2008, no pet.).[7]

III.  Appellants' Claims and the City's Plea

A.  Appellants' Rate Claims and the Texas Water Code

In their first issue, appellants argue the trial court erred in dismissing their rate claims.  Appellants' first three
causes of action against the City were cast as (1) “Unlawful and Unconstitutional Taxation in Violation of Texas
Law," (2) “Unreasonable and Unjustified Rate Discrimination" under Texas common law, and (3) “Arbitrary and
Unreasonable Rates" under Texas common law.  In each of these “causes of action," appellants attacked the
increase in rates resulting from passage of the 2004 ordinance.  Appellants alleged the increased rates were not
related to the City's costs in providing service, were excessive in comparison to charges for other customers, and
were not based on evidence or analysis.  Appellants' sixth cause of action was a request for a declaration
incorporating appellants' allegations in the first three causes of action, as well as seeking declarations (1) they
were entitled to reimbursement for past payment and (2) the settlement agreement signed by counsel for Tara
and the City was enforceable.

In its plea to the jurisdiction, the City argued, in part, that appellants' lawsuit was “essentially a challenge to the
rates that the City charges for utility services."  Citing Texas Water Code section 13.042(d), the City then
contended the TCEQ had exclusive appellate jurisdiction over that dispute and therefore the district court lacked
jurisdiction.

Texas district courts are courts of general jurisdiction and have jurisdiction over all actions, proceedings and
remedies “except in cases where exclusive, appellate, or original jurisdiction may be conferred by [the Texas]
Constitution or other law on some other court, tribunal, or administrative body."  Tex. Const. Art. V, ' 8.  An agency
has exclusive jurisdiction when a pervasive regulatory scheme indicates that the legislature intended for the
regulatory process to be the exclusive means of remedying the problem to which the regulation is addressed.  In
re Entergy Corp., 142 S.W.3d 316, 322 (Tex. 2004).

The question in the present case, therefore, is whether the legislature intended the regulatory process as the
exclusive means of remedying a rate dispute between a municipally owned water and sewer utility and ratepayers
living within the corporate limits of that municipality.  We conclude it did not.

Water Code section 13.042 provides for a municipality's original jurisdiction and for  TCEQ's original and
appellate jurisdiction:

(a) Subject to the limitations imposed in this chapter and for the purpose of regulating rates and services so that
those rates may be fair, just, and reasonable and the services adequate and efficient, the governing body of each
municipality has exclusive original jurisdiction over all water and sewer utility rates, operations, and services
provided by a water and sewer utility within its corporate limits.

(b) The governing body of a municipality by ordinance may elect to have the commission exercise exclusive
original jurisdiction over the utility rates, operation, and services of utilities, within the incorporated limits of the
municipality.

(c) The governing body of a municipality that surrenders its jurisdiction to the commission may reinstate its
jurisdiction by ordinance at any time after the second anniversary of the date on which the municipality
surrendered its jurisdiction to the commission, except that the municipality may not reinstate its jurisdiction during
the pendency of a rate proceeding before the commission.  The municipality may not surrender its jurisdiction
again until the second anniversary of the date on which the municipality reinstates jurisdiction.

(d) The commission shall have exclusive appellate jurisdiction to review orders or ordinances of those
municipalities as provided in this chapter.

(e) The commission shall have exclusive original jurisdiction over water and sewer utility rates, operations, and
services not within the incorporated limits of a municipality exercising exclusive original jurisdiction over those
rates, operations, and services as provided in this chapter.

(f) This subchapter does not give the commission power or jurisdiction to regulate or supervise the rates or
service of a utility owned and operated by a municipality, directly or through a municipally owned corporation,
within its corporate limits or to affect or limit the power, jurisdiction, or duties of a municipality that regulates land
and supervises water and sewer utilities within its corporate limits, except as provided by this code.

Tex. Water Code Ann. ' 13.042.  In addition, Water Code section 13.043(b)(3) provides that  ratepayers residing
outside the corporate limits of a municipality Amay appeal the decision of the governing body of the entity
affecting their water, drainage, or sewer rates to the commission."  Id. ' 13.043(b).

Our ultimate goal in construing a statute is to give effect to the legislature's intent as expressed in the language of
the statute.  F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680, 683 (Tex. 2007); Horizon/CMS
Healthcare Corp. v. Auld, 34 S.W.3d 887, 892 (Tex. 2000).  In doing so, we must always consider the statute as a
whole rather than its isolated provisions.  Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 493 (Tex. 2001).  “We
should not give one provision a meaning out of harmony or inconsistent with other provisions, although it might be
susceptible to such a construction standing alone."  Id.  Instead, we presume that both the statute and the
legislative act are intended to be effective in their entirety.  Allegheny Mut. Cas. v. State, 710 S.W.2d 139, 141
(Tex. App.-Houston [14th Dist.] 1986, pet. ref'd).  Thus, in construing a statute - regardless of whether it is
ambiguous on its face - we may consider, among other matters, the following:  the object sought to be attained;
the circumstances under which the statute was enacted; common law or former statutory provisions, including laws
on the same or similar subjects; and the consequences of a particular construction.  See Tex. Gov't Code Ann. '
311.023 (Vernon 2005).[8]

In arguing TCEQ has exclusive jurisdiction over appellants' rate claims, the City relies primarily on Water Code
subsection 13.042(d).  Unlike subsections (a), (b), and (e), however, subsection (d) contains no reference to
“rates."  See Tex. Water Code Ann. ' 13.042(a), (b), (d), (e).  Instead, subsection (d) grants the commission
exclusive appellate jurisdiction to “review orders or ordinances."  Id. (d).  Additionally, to interpret subsection (d)
as granting TCEQ exclusive appellate jurisdiction over rate decisions by the governing bodies of municipally
owned water and sewer utilities would render superfluous the section which permits non-resident ratepayers to
appeal to TCEQ a “decision of the governing body of the entity affecting their water, drainage, or sewer rates."  Id.
'13.043(b)(3); see F.F.P. Operating Partners, L.P., 237 S.W.3d at 711 (acknowledging fundamental rule that court
must give effect to every sentence, clause, and word of a statute so no part will be rendered superfluous).

Finally, subsection 13.042(f) specifically cautions that the Water Code subchapter relating to jurisdiction “does not
give [TCEQ] power or jurisdiction to regulate or supervise the rates or service of a utility owned and operated by a
municipality . . . . except as provided by this code."   Tex. Water Code Ann. ' 13.043(f).  This limitation is
consistent with the legislative history of public utility regulation in Texas, which “represents an attempt to retain
local regulation of public utilities while empowering the Commission to regulate regional service or service outside
municipal limits."  Pub. Util. Comm'n v. City of Austin, 728 S.W.2d 907, 913 (Tex. App.-Austin 1987, writ ref'd n.r.
e.); see also City of Sherman v. Pub. Util. Comm'n, 643 S.W.2d 681, 683 (Tex. 1983) (describing municipalities'
opposition to state regulation of municipally owned utilities and explaining statutory compromise of retaining
municipal regulation within a municipality's territorial boundaries and exempting municipalities from most of the
statute's regulatory provisions).[9]

Based on the plain language of the Texas Water Code and the history of predecessor statutes, we conclude the
Texas Water Code does not confer exclusive appellate jurisdiction over the rates charged by a municipally owned
utility to ratepayers residing within its territorial boundaries.  See City of W. Tawakoni v. Williams, 742 S.W.2d 489,
490-91, 493 & 493 n.2 (Tex. App.-Dallas 1987, writ denied) (indicating same in relation to predecessor of present
Water Code).

The City, however, relies on the following cases, in which courts construed section 13.042(d) as vesting TCEQ
with exclusive appellate jurisdiction over the claims in question:  City of Galveston v. Flagship Hotel, Ltd., 73 S.W.
3d 422 (Tex. App.- Houston [1st Dist.] 2002, no pet.) (“Flagship I"); Flagship Hotel, Ltd. v. City of Galveston, 117 S.
W.3d 552 (Tex. App.- Texarkana 2003, pet. denied) (“Flagship II"); and City of Donna v. Victoria Palms Resort,
Inc., No. 13-03-375-CV, 2005 WL 1831593 (Tex. App.- Corpus Christi Aug. 4, 2005, pet. denied) (mem. op.).[10]  
In these cases, however, courts were either not reviewing rates or provided only minimal reasoning in support of
their conclusions.

In Flagship I, the issue was whether the district court had jurisdiction to issue a temporary injunction to prevent
cessation of water service to a hotel because of the hotel's alleged arrearage in payment of its water bills.  73 S.W.
3d at 423-24.  The court  quoted sections 13.042(a) and (d).  Id. at 426.  It then quoted the definition of an
“order":  “An 'order' of a municipality is 'the whole or part of the final disposition, whether affirmative, negative,
injunctive, or declaratory in form, of the regulatory authority in a matter other than rulemaking . . . .'"  Id. (quoting
Tex. Water Code Ann. ' 13.002(14)).  Without further analysis of section 13.042 or other provisions of the code,
the court then concluded “exclusive original jurisdiction over the City's decision to shut off Flagship's water is
vested with the City.  Further, we conclude exclusive appellate jurisdiction over the City's final disposition of this
dispute is vested with the TNRCC."  Id. at 427.[11]

The court next rejected the hotel's contention that, under section 13.042(f), TNRCC (now TCEQ) had no power to
reverse a decision by the city to shut off the hotel's water.  Id.[12]  In quoting the section, the court emphasized
the last phrase (“except as provided by this code") and then observed that section 13.042(f) “merely limits the
power of the TNRCC to enforce the legislative purpose of the Water Code 'to assure rates, operations, and
services that are just and reasonable to the consumers and to the retail public utilities.'" Id. (quoting Tex. Water
Code Ann. ' 13.042(f)).  Although the hotel had claimed breach of contract and sought declaratory relief, the
appellate court specifically limited its jurisdictional holding to the hotel's request for injunctive relief.  Id. at 423-24,
428.

In Flagship II, on appeal after remand of Flagship I, one issue was whether the district court erred in granting the
city's plea to the jurisdiction over Flagship's claim for declaratory relief requesting a judgment that its alleged
water and sewer arrearage was barred by the statute of limitations and agreements between the city manager and
Flagship.  Flagship II, 117 S.W.3d at 562-63.  Without discussion, the Flagship II court found the Flagship I  
court's reasoning “persuasive," and held “Flagship must exhaust its administrative remedies through the Texas
Commission on Environmental Quality, formerly the TNRCC."  Id. at 563.

Finally, in City of Donna, Victoria Palms sued the city over its refusal to credit an amount of alleged water
overcharges and its threat to disconnect water service.  2005 WL 1831593, at *3.  The appellate court reasoned:

The City's refusal to credit Victoria Palms with the amount of alleged overcharges constitutes a whole or part of a
final disposition of the City, other than rulemaking; that decision therefore constitutes an order under the water
code.  [Tex. Water Code Ann. '] 13.002(14).  The TCEQ has exclusive appellate jurisdiction to review orders or
ordinances of the City.  See id. at ' 13.042(d).

Id. at *4.  The court also relied on Flagship I, referring to its conclusion that the predecessor to TCEQ had
exclusive appellate jurisdiction over the city's final disposition of a dispute with a hotel over discontinuing water
service for nonpayment of fees.  Id. (citing Flagship I, 73 S.W.3d at 427).

We do not find Flagship I and II and City of Donna persuasive authority for the present case because they either
do not involve review of rates or contain only minimal reasoning in support of their results.  Instead, for the
reasons discussed above, we conclude the legislature has not conferred exclusive appellate jurisdiction on TCEQ
over water and sewer rates a municipally owned water and sewer utility charges ratepayers residing within its
corporate limits.  Accordingly, we hold the district court has jurisdiction over appellants' Water Code claims.  See
Tex. Const. Art. V, ' 8 (granting district courts general jurisdiction unless exclusive, appellate, or original
jurisdiction conferred on other entity).

We therefore sustain appellants' first issue in part.  We reverse the district court's dismissal of appellants' first
three claims in their third amended petition and dismissal of appellants' claim for declaratory judgment (sixth claim)
insofar as appellants requested a declaration regarding rates, but not insofar as they requested a declaration
regarding reimbursement for past amounts paid or enforceability of the settlement agreement.

B.  Appellants' Common Law, Breach of Contract, and Declaratory Judgment  Claims

In issue two, appellants argue the trial court erred in dismissing their “common law and breach of contract claims"
because they fall outside the purview of TCEQ's exclusive jurisdiction.  Appellants first refer to their “several
common law claims for unlawful and unconstitutional taxation, unreasonable and unjustified rate discrimination,
and arbitrary and unreasonable water and sewer rates, as well as numerous requests for declaratory judgment."  
As discussed in Section III. A., above, these causes of action are, in essence, attacks on the increase in rates
resulting from passage of the 2004 ordinance; and we have concluded the district court has jurisdiction over
these claims.

In issue two, appellants also refer to Tara's claims for breach of contract and promissory estoppel.  We discuss
those claims in Section III. D., below, in response to appellants' fourth issue.  Because of our resolution of
appellants' first and fourth issues, we do not discuss their second issue.

C.  Appellants' Claims for Equitable Relief and Attorneys' Fees

In issue three, appellants argue, if the ordinance is declared void ab initio, they have a right to recover unlawful
water and sewer fees and attorneys' fees.  Under this issue, appellants contend (1) the City is not immune from
suits for equitable relief, (2) appellants should be allowed to seek reimbursement of the surcharges already paid
pursuant to the Water Code's requirement that the City have just and reasonable rates, (3) the trial court has
jurisdiction to order reimbursement under the Uniform Declaratory Judgment Act (“UDJA"), (4) it would be against
public policy for the City to receive a windfall, and (5) the UDJA waives governmental immunity for attorneys' fees.  
In short, in issue three, appellants focus on the monetary awards they seek (1) for previously paid water and
sewer fees and (2) for attorneys' fees.

The City responds by invoking governmental immunity.  The City observes that, despite having filed their third
amended petition after the City filed its plea to the jurisdiction, appellants did not allege waiver of governmental
immunity.  More specifically, the City argues that appellants “have yet to plead a legislative waiver of the City's
immunity to a common law claim for monetary or equitable relief."[13]

In Texas, sovereign immunity protects the state against lawsuits for damages unless the state has consented to
suit.  See Miranda, 133 S.W.3d at 224.  Cities, as political subdivisions of the state, are entitled to immunity unless
it has been waived.  See San Antonio Indep. Sch. Dist. v. McKinney, 936 S.W.2d 279, 283 (Tex. 1996).  Sovereign
immunity encompasses two distinct principles: immunity from suit and immunity from liability.  Miranda, 133 S.W.3d
at 224.[14] Although immunity from liability is an affirmative defense, immunity from suit deprives a court of subject
matter jurisdiction.  Id.  Because immunity from suit, unlike immunity from liability, affects the court's jurisdiction,
immunity from suit is properly raised in a plea to the jurisdiction.  See Wichita Falls State Hosp. v. Taylor, 106 S.W.
3d 692, 696 (Tex. 2003).

Money had and received.  

Appellants rest their claim for monetary damages primarily on the equitable doctrine of money had and received.
[15]  As the First Court of Appeals recently explained:

[W]here a claim for declaratory or injunctive relief is brought seeking the refund of illegally collected tax payments,
governmental immunity will not apply if the taxpayer alleges that the payments were made as a result of fraud,
mutual mistake of fact, or duress, whether express or implied.  See Dallas County Cmty. College Dist. v. Bolton,
185 S.W.3d 868, 876-79 (Tex. 2005) (holding that a taxpayer cannot bring a suit for the return of illegally
collected taxes if the payments were made voluntarily); see also Camacho v. Samaniego, 954 S.W.2d 811, 822
(Tex. App.-El Paso 1997, pet. denied).  The revenue generated from a tax determined to be illegal should not be
treated as property of the State or municipality to which the principles of sovereign immunity apply, and an illegally
collected fee should be refunded if paid as a result of fraud, mutual mistake of fact, or duress, without respect to
waiver of sovereign immunity.  See Camacho, 954 S.W.2d at 822; Austin Nat'l Bank of Austin v. Sheppard, 123
Tex. 272, 71 S.W.2d 242, 246 (1934).  No legislative consent to sue is needed under these circumstances.

Nivens v. City of League City, 245 S.W.3d 470, 474 (Tex. App.-Houston [1st Dist.] 2007,  pet. denied).

In Nivens, taxpayers asserted claims for money had and received, breach of contract, and mistake, but had not
sought declaratory or injunctive relief regarding levy and refund of allegedly illegal municipal utility district taxes.  
Id. at 475.  The taxpayers also did not allege they made any payments as a result of fraud, mutual mistake of fact,
or duress.  Id.  The appellate court held appellants' claims were barred by governmental immunity.  Id.

Appellants in the present case argue they alleged duress as follows:  “Since December 1, 2004, under the [2004]
Ordinance, Plaintiffs have been forced to pay arbitrary, unreasonable, excessive, confiscatory, and discriminatory
charges for water and sewer service."  They further request this court to take judicial notice of provisions in the
City's Code of Ordinances, under which the City is authorized to impose late payment charges and discontinue
water service for delinquent accounts.  Appellants now contend they would be subject to “punishment" under
these provisions.  See Dallas County Comm. College Dist. v. Bolton, 185 S.W.3d 868, 877 (Tex. 2005) (stating
reimbursement of illegal fees and taxes allowed when public entity compels compliance with void law and subjects
person to punishment if he refuses or fails to comply).

Despite having included multiple paragraphs setting forth specific facts related to the enactment and effects of the
2004 Ordinance, appellants never pleaded the potential for penalties of late  payment charges and cessation of
water service.  They never characterized late charges and cessation of water as “punishment" or duress.  Their
reference to being “forced" to pay the 2004 water and sewer charges appears in a paragraph completely
separate from their jurisdictional paragraphs.

Even construing appellants' pleadings liberally, we conclude that, like the taxpayers in Nivens, appellants did not
allege facts indicating they made water and sewer payments as a result of fraud, mutual mistake of fact, or
duress.  Nivens, 245 S.W.3d at 475.  Just as were the taxpayers' claims in Nivens, appellants' claims in the
present case are barred by governmental immunity.  See id.

Appellants, however, contend that, if they have not pleaded sufficient facts to allege a claim for money had and
received, they should be allowed to amend their petition.  See Hull v. Davis, 211 S.W.3d 461, 463 (Tex. App.-
Houston [14th Dist.] 2006, no pet.) (stating when plaintiff fails to plead facts establishing jurisdiction, but petition
does not affirmatively demonstrate incurable defects in jurisdiction, issue is one of pleading sufficiency, and
plaintiff should be afforded the opportunity to amend).  

We note that appellants amended their petition after the City filed its plea to the jurisdiction but did not include
facts or allegations that pertain to late fees and cessation of service.  However, we acknowledge that appellants'
pleadings do not affirmatively negate the trial court's jurisdiction over their money had and received claim.  After
the trial court granted the City's plea to the jurisdiction, appellants did not seek or request an opportunity for
another amendment to their petition.  See Tex. A & M Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 839-40 (Tex.
2007) (indicating plaintiff should be given opportunity to amend after a trial court finds merit in a plea to the
jurisdiction).

Although the general rule reflects a preference for allowing amendment, a plaintiff may forfeit this opportunity
through inaction.  Haddix, 253 S.W.3d at 347.  By failing to seek permission to amend after the trial court found
the City's plea meritorious, appellants forfeited the opportunity to amend while this case was pending in the trial
court.  See id.; see also Dahl ex rel. Dahl v. State, 92 S.W.3d 856, 862 n.6 (Tex. App.-Houston [14th Dist.] 2002,
no pet.) (noting plaintiffs arguably waived complaint that trial court failed to provide them opportunity to amend
pleadings when they did not seek leave to amend).[16]

Monetary damages under the UDJA.  

As part of issue four, appellants contend the district court had jurisdiction to order reimbursement under UDJA
section 37.011.  Section 37.011 provides in relevant part:  “Further relief based on a declaratory judgment or
decree may be granted whenever necessary or proper.  The application must be by petition to a court having
jurisdiction to grant the relief."  Tex. Civ. Prac. & Rem. Code Ann. ' 37.011  (Vernon 2008).  As appellants admit,
“further relief" under section 37.011 is typically injunctive relief.  See State v. Anderson Courier Serv., 222 S.W.3d
62, 66 (Tex. App.- Austin 2005, pet. denied) (“Typically, further relief under section 37.011 is granted in the form
of an injunction for the purpose of enforcing a declaratory judgment where the evidence shows that a party will not
comply with the judgment.").  Private parties cannot circumvent governmental immunity by characterizing a suit for
money damages as a declaratory‑judgment claim.  City of Houston v. Williams, 216 S.W.3d 827, 828-29 (Tex.
2007).

Attorneys' fees under the UDJA.  

Finally, appellants argue the UDJA waives governmental immunity for an award of attorneys' fees.  We agree.  
See Tex. Educ. Agency v. Leeper, 893 S.W.2d 432, 446 (Tex. 1994) (concluding that, by authorizing declaratory
judgment actions to construe legislative enactments of governmental entities and authorizing awards of attorney
fees, UDJA necessarily waives governmental immunity for such awards).  That the UDJA waives immunity for
attorneys' fees awards, however, does not mean it waives immunity for damages awards.

We overrule appellants' third issue to the extent it relates to the district court's jurisdiction over claims for
monetary damages.  We sustain appellants' third issue only to extent it relates to the district court's jurisdiction
over an award of attorneys' fees if such an award is warranted.

D.  Breach of Contract and Promissory Estoppel Based on the Settlement Agreement

In issue four, Tara argues that the district court had jurisdiction to enforce the “settlement agreement" (an
undated handwritten “resolution" signed by appellants' counsel and the City's counsel) which purportedly arose
from the proceedings before TCEQ.  Tara initially contends the trial court has jurisdiction because the agreement
arose from a forum where liability had been waived.

In support, appellants cite Texas A & M University-Kingsville v. Lawson, 87 S.W.3d 518, 521 (Tex. 2002) (plurality
op.).  Writing for the plurality in Lawson, Justice Hecht observed, A[W]hen a governmental entity is exposed to suit
because of a waiver of immunity, it cannot nullify that waiver by settling the claim with an agreement on which it
cannot be sued."  Id.

The City responds that no settlement agreement exists because the city council never authorized the resolution,
and therefore statutory provisions allowing for adjudication of claims arising under written contract with local
governmental units do not apply.[17]  Under Texas Local Government Code section 271.152, a local
governmental entity authorized by statute or constitution to enter into contract, and which enters into a contract
subject to the subchapter, waives sovereign immunity to suit for purpose of adjudicating a claim for breach of the
contract.  Tex. Loc. Gov't Code Ann. ' 271.152 (Vernon 2005).  A contract subject to the subchapter is  “a written
contract stating the essential terms of the agreement for providing goods or services to the local governmental
entity that is properly executed on behalf of the local governmental entity") (emphasis added).  Id. ' .151(2).

Tara relies solely on the handwritten “resolution" executed by its counsel and counsel for the City.  As an initial
matter, we note the following language in that document:  “Now therefore be it resolved by The City Council . . . ."  
At the hearing on the plea to the jurisdiction, City Secretary Maria Vega testified she had searched the City's
records back to 2004 and had not found the handwritten resolution.  Neither had she found any record of the
City's having adopted or authorized the resolution.  She had attended all the city council meetings for “the last
couple of years" and was not aware of the city council's having authorized such a resolution.  The resolution was
not in a form that she would present or execute for the City.

A city's governing body may not delegate the right to make decisions affecting the transaction of city business.  
City of San Benito v. Rio Grande Valley Gas Co., 109 S.W.3d 750, 757 (Tex. 2003).  Although cities may delegate
to others the right to perform acts and duties necessary to the transaction of the city's business, they can do so
only by resolution or ordinance, by a majority vote.  Id.

Thus, even if we assume the proceeding before the TCEQ was one in which the City's immunity had been waived,
we cannot conclude the handwritten resolution constituted an agreement between Tara and the City.  The
plurality opinion in Lawson does not support a waiver of the City's immunity in the present case.

Tara also contends the district court has jurisdiction over its breach of contract and equitable estoppel claims
under “Federal Sign's 'Equitable Waiver by Conduct' Exception" to governmental immunity.  See Fed. Sign v. Tex.
S. Univ., 951 S.W.2d 401, 408 n.1 (Tex. 1997) (stating there may be circumstances when “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").  Tara specifically directs this court's attention to Texas Southern University v. State Street Bank &
Trust, 212 S.W.3d 893 (Tex. App.-Houston [1st Dist.] 2007, pets. denied).[18]

In State Street Bank the First Court of Appeals held, because of the extraordinary factual circumstances of the
case, the State was not immune from suit.  Id. at 907-08.  In that case, Texas Southern University had entered into
a contract for equipment and services.  Id. at 908.   After receiving approximately $13 million in equipment and
services, the university refused to pay, claiming the contracts were invalid.  Id.  Additionally, one of the plaintiffs
argued that the injustice was even worse than the facts found by the trial court because the case also included an
additional fact not appearing in any of the prior cases:  “'The government officials lured [plaintiff] into the Master
Lease with false promises that the contract would be valid and enforceable, then disclaimed any obligation on the
contract by taking the position that the contract was not valid after all.'"  Id.

In neither its pleadings nor its responses to the City's plea to the jurisdiction, did Tara allege it was “lured" or
misled in relation to the handwritten resolution.[19]  By law, such a “resolution" would not be binding on the City
until passed by a majority vote at a duly assembled meeting.  See City of San Benito, 109 S.W.3d at 757.  Tara
was charged with notice of the limits of the authority of the City's counsel.  See State v. Ragland Clinic‑Hospital,
138 Tex. 393, 159 S.W.2d 105, 107 (1942) (stating, in context of suit against state, that because powers of all
state officers are fixed by law, all persons dealing with them are charged with notice of the limits of their authority
and are bound at their peril to ascertain whether contemplated contract is within power conferred).  The
circumstances of the present case do not rise to the level of the “extraordinary factual circumstances" in State
Street Bank.

We overrule Tara's fourth issue.

IV.  Conclusion

We conclude that the trial court had jurisdiction over appellants' claims disputing imposition of fees under the
Water Code.  Accordingly, we reverse that part of the trial court's order that dismissed appellants' claims disputing
imposition of fees under the Water Code and remand for further proceedings consistent with our opinion.  

We further conclude that the averments and allegations in appellants'  Third Amended Petition are insufficient to
support the trial court's jurisdiction over appellants' claims for reimbursement of previously paid fees and Tara's
claims pertaining to breach of a purported settlement agreement.  Accordingly, we affirm that part of the trial
court's order dismissing appellants' claims for reimbursement of previously paid fees and Tara's claim that the City
breached a purported settlement agreement.            

/s/        Charles Seymore

Justice

Panel consists of Justices Frost, Seymore, and Guzman (Frost, J., concurring).

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[1]  We refer to the ordinance at issue as the A2004 Ordinance."  The definition of “commercial residential user" was amended in
2005 to exclude hotels and motels.

[2]  Section 13.043(b) provides in relevant part:  “Ratepayers of the following entities may appeal the decision of the governing body
of the entity affecting their water, drainage, or sewer rates to the commission: . . . a municipally owned utility, if the ratepayers reside
outside the corporate limits of the municipality."  Tex. Water Code Ann. ' 13.043(b) (Vernon 2008).

[3]  See Tex. Civ. Prac. & Rem. Code Ann. '' 37.002, .009 (Vernon 2008).  In addition to Tara's requesting a declaration the
handwritten resolution was enforceable, appellants sought a declaration that:

(a) . . . the [2004] Ordinance is an unlawful ad valorem tax in violation of the Texas Constitution;

(b) . . . the [2004] Ordinance is a discriminatory utility rate under Texas law;

(c) . . . any presumption that the [2004] Ordinance is valid disappeared because the City acted arbitrarily rather than on the basis of
changed conditions when passing the [2004] Ordinance;

(d) . . . no conclusive or issuable fact or condition existed which would have authorized the City's passage of the [2004] Ordinance;

(e) . . . the City must have introduced substantive evidence and exercised legislative judgment on the basis of that substantive
evidence before it in order to validly pass the [2004] Ordinance;

(f) . . . the City did not introduce substantive evidence or exercise legislative judgment on any basis of substantive evidence before it
when passing the [2004] Ordinance;

(g) the action of the City Council in passing the [2004] Ordinance was arbitrary because it was based on absolutely no investigation
of the facts and certainly no investigation of the facts with regard to the City's expenses in providing water and sewer services or as
to what rates would enable the City to realize a reasonable return on its investment;

(h) the City's final water and sewer rates under the [2004] Ordinance must, but do not, relate to the actual cost (including only direct
and indirect costs) of providing the charged‑for service, water and sewer service;

(i) the City's “actual costs" of providing the charged‑for service - water and sewer service - under the [2004] Ordinance do not
include expenses related to other City departments, such as the police and fire departments, or expenses related to City‑wide
employee raises to the extent such employees are not a part of the water and sewer service department;
. . . .
(k) . . . the [2004] Ordinance is arbitrary, capricious, and/or unreasonable, and therefore, void ab initio;

(l) . . . [appellants] are entitled to, and the City shall pay, a reimbursement of water and sewer service fees from the City to
[appellants], such amount being the difference between the amount charged to [appellants] under the [2004] Ordinance from
December 1, 2004 until the date of the final judgment;

(m) . . . this Court declare that [appellants] only have to pay water and sewer rates under the Prior Ordinance until further order from
the Court or until such time that the [2004] Ordinance is lawfully amended in accordance with Texas law and other applicable law;
and

(n) . . . [appellants] are entitled to an award of attorneys' fees pursuant to Texas Civil Practice & Remedies Code ' 37.009.

In their prayer for damages, appellants limited damages to reimbursement for surcharges.  In another section of their petition,
however, they referred to having “additionally suffered revenue losses, reductions in property values, and the loss of current and
potential tenants, among other damages."

[4]  See Tex. Water Code Ann. '' 13.042, .043 (Vernon 2008).

[5]  See Tex. Loc. Gov't Code Ann. '' 271.151(2), .152 (Vernon 2005).

[6]  Specifically, appellants argue that (1) under the Texas Water Code, TCEQ does not have jurisdiction to review inside-city
ratepayers' claims; (2) TCEQ does not have exclusive jurisdiction to review appellants' common law, breach of contract, and
declaratory judgment claims; (3) appellants have the right to recover unlawful water and sewer fees and attorney's fees if the
ordinance is declared void ab initio; and (4) the trial court has jurisdiction to enforce the settlement agreement signed by Tara's
counsel and counsel for the City.

[7]  If a plea to the jurisdiction challenges the existence of jurisdictional facts, we consider relevant evidence submitted by the parties
when necessary to resolve the jurisdictional issues raised.  Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 227 (Tex.
2004).  If the evidence creates a fact question regarding the jurisdictional issue, then the plea to the jurisdiction must be denied.  Id.
at 227B28.  If the evidence is undisputed or fails to raise a fact question on the jurisdictional issue, then the trial court rules on the
plea to the jurisdiction as a matter of law.  Id. at 228.  As our concurring colleague observes, however, the City, in its plea to the
jurisdiction, challenged appellants' pleadings.

[8]  The Code Construction Act applies to construction of the Water Code.  See Tex. Water Code Ann. ' 1.002(a) (Vernon 2008).

[9]  The City of Sherman and City of Austin courts were construing the Public Utilities Regulatory Act of 1975.  See City of Sherman v.
Pub. Util. Comm'n, 643 S.W.2d 681, 683 (Tex. 1983); Pub. Util. Comm'n v. City of Austin, 728 S.W.2d 907, 912B13 (Tex. App.-Austin
1987, writ ref'd n.r.e.).  The Water Code provisions at issue in the present case retain much of the language of that act.  See Act of
June 2, 1975, 64th Leg. R.S., ch. 721, '' 17, 20, 26, 1975 Tex. Gen. Laws 2327, 2334-37.  Compare Tex. Water Code '' 13.042(a)B(e), .
042(f), .043, respectively.

[10]  The City also cites City of Willow Park v. Squaw Creek Downs, L.P., 166 S.W.3d 336, 340 (Tex. App.- Fort Worth 2005, no pet.).  
The Squaw Creek Downs court held the trial court had jurisdiction over a presuit discovery petition and affirmed the trial court's order
denying the city's plea to the jurisdiction.  Id. at 338.  In passing, the court observed, A[T]he water code confers exclusive original
jurisdiction over water service disputes to the municipality and exclusive appellate jurisdiction over such disputes to the
Commission."  Id. at 340 (citing Galveston v. Flagship Hotel, Ltd., 73 S.W.3d 422, 427 (Tex. App.- Houston [1st Dist] 2002, no pet.)).

[11]  The City had apparently conceded the commission's appellate jurisdiction.  See City of Galveston v. Flagship Hotel, Ltd., 73 S.
W.3d 422, 427 (Tex. App.- Houston [1st Dist.] 2002, no pet.).

[12]  In 2001, the Texas Natural Resources Commission (TNRCC) was renamed the Texas Commission on Environmental Quality.  
Act of May 28, 2001, 77th Leg., R.S., ch. 965, ' 18.01, 2001 Tex. Gen. Laws 1933, 1985.

[13]  In its plea to the jurisdiction, the City invoked governmental immunity only insofar as appellants were seeking monetary
damages and Tara was seeking breach of contract damages related to the purported settlement agreement.  To defeat appellants'
other claims, the City relied on its assertion that the Water Code vested exclusive jurisdiction in the TCEQ.

[14]  Often, courts use the terms “sovereign immunity" and “governmental immunity" interchangeably.  Wichita Falls State Hosp. v.
Taylor, 106 S.W.3d 692, 694 n.3 (Tex. 2003).  They are, however, two distinct concepts.  Id.  “Sovereign immunity" refers to a State's
immunity from suit and liability.  Id.  Its protection extends not only to the State, but also to the varying divisions of state government,
including agencies, boards, hospitals, and universities.  Id. “Governmental immunity" protects political subdivisions of the State,
including counties, cities, and school districts.  Id.

[15]  They also contend they should be allowed to recover under the Water Code requirement that rates be just and reasonable and
it would be against public policy to allow the City a windfall.  In support of the first contention, they rely solely on Texas Natural
Resources Conservation Commission v. Lakeshore Utility Co., 164 S.W.3d 368, 377-79 (Tex. 2005).  Lakeshore Utility was an
enforcement action brought by TCEQ's predecessor against a non-municipally owned utility, and the court did not address the issue
of governmental immunity.  See id. at 369B70 & 370 n.2.  In support of the second contention, appellants rely solely on City of Port
Isabel v. Pinnell, 207 S.W.3d 394, 398, 406-07 (Tex. App.- Corpus Christi 2006, no pet.).  Pinnell involved a declaratory judgment and
injunctive relief.  See id. at 398.  The appellate court affirmed the trial court's judgment that certain city ordinances were void.  Id. at
398, 406-08.   Although the trial court awarded attorneys' fees, Pinnell did not involve an award of monetary damages resulting from
enactment of the void ordinances, and  governmental immunity was not an issue.  See id. at 401.  Lakeshore and Pinnell do not
support the trial court's jurisdiction over an action for monetary damages against the City.

[16]  We note that the City does not dispute the form or substance of the trial court's order granting its jurisdictional plea without
prejudice.  Accordingly, we confine our disposition to the judgment rendered. See Tex. R. App. P. 25.1(c) (stating, except for just
cause, appellate court may not grant party who does not file notice of appeal more favorable relief than the trial court).

[17]  The City further responds that the doctrine of promissory estoppel generally does not apply to a governmental unit exercising its
public or governmental functions.  See City of Hutchins v. Prasifka, 450 S.W.2d 829, 835 (Tex. 1970).

[18]  Tara also directs our attention to Catalina Development, Inc. v. County of El Paso, 121 S.W.3d 704 (Tex. 2003).  In Catalina
Development, the supreme court held the county, by its conduct, had not waived immunity from suit.  Id. at 704.

[19]  Tara contends, for the first time on appeal, that it was “lured into entering into this agreement by the false promises of the City
attorney and its litigation counsel."  In the trial court, Tara argued only that counsel for both sides had signed the document and a
fact question existed regarding whether there was any order or resolution granting the City's attorneys general or specific authority to
bind the City.  Tara then conceded it still had time to conduct discovery on that issue and informed the court “if we discover through
the discovery process pursuant to a continuance that there really is no evidence on the issues that we needed some discovery on,
then we'll rest on the arguments that we have made today as well as the evidence."