Opinion
No. 01-05-00335-CV.
January 18, 2007.
On Appeal from the 405th District Court Galveston County, Texas, Trial Court Cause No. 04CV1057.
Panel consists of Chief Justice RADACK and Justices JENNINGS and HANKS.
OPINION ON REHEARING
We withdraw our Opinion of August 31, 2005 and issue this one in its stead. We grant appellants' motion for rehearing.
Appellants, Joseph Knute Nivens, Wilbur Dunten, and Marvin Fontenot, (collectively "the taxpayers"), challenge the trial court's order granting a plea to the jurisdiction in favor of appellee, the City of League City ("the City"). We affirm the order of the trial court.
Factual and Procedural Background
In 1981, the City consented to create Municipal Utility Districts ("MUDs") One through Six, which are located within the boundaries of the City. The City executed contracts ("utility agreements") with each MUD. The utility agreements were for the acquisition and construction of water, sewer, and drainage systems. Each utility agreement also noted that both the City and the MUD would levy and collect ad valorem taxes on the taxable property in each MUD and the City would allocate 40% of the taxes it collected from the residents to the respective MUD. Seven years later, the City amended its utility agreements with MUD Numbers Two and Three and stated that the allocation percentage payable by the City to each MUD was to be determined in accordance with a "complex formula." The next year, the City also amended its original utility agreement with MUD Number Six to reflect the same change.
In accordance with chapter 54 if the Texas Water Code, the MUDs were created by an order of the Texas Water Rights Commission, now known as the Texas Commission on Environmental Quality. TEX. Water Code ANN. §§ 54.001 et seq. (Vernon 2002 Supp. 2006)
A few years later, the taxpayers, who resided in the MUDs, sued the City, MUD Numbers Two, Three, and Six, and their respective directors to recover damages equal to the taxes that they had paid on their property. The taxpayers, asserting claims against the City for money had and received and breach of contract, allege that, under the utility agreements, the City collected ad valorem taxes from them in excess of the amount that it was legally permitted to collect pursuant to section 54.016(f) of the Texas Water Code. The taxpayers argue that section 54.016(f) provides that the contracts must contain "an allocation agreement to assure that the total ad valorem taxes collected by [the City] and the [MUDs] from the taxable property within the [municipal utility] district does not exceed an amount greater than the [C]ity's ad valorem taxes on such property." The taxpayers also argue that the tax limitations contained in section 54.016(f) became part of and govern the utility agreements.
In response, the City filed its first amended answer and plea to the jurisdiction. In its plea, the City alleged that the trial court lacked jurisdiction over the taxpayers' case because the taxpayers failed to plead sufficient facts to overcome the City's immunity from suit. The trial court granted the City's plea to the jurisdiction and dismissed the taxpayers' case for want of jurisdiction.
Plea to the Jurisdiction
In their sole issue, the taxpayers argue that the trial court erred in granting the City's plea to the jurisdiction.
A plea to the jurisdiction is a dilatory plea challenging a trial court's authority to determine the subject matter of the cause of action without defeating the merits of the case. City of Houston v. Northwood Mun. Util. Dist. No. 1, 73 S.W.3d 304, 308 (Tex.App. — Houston [1st Dist.] 2001, pet. denied) (citing Bland I.S.D. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000)). While the underlying claims may form the context in which a plea to the jurisdiction is raised, the purpose of the plea is not to preview or delve into the merits of the case, but to establish the reason why the merits of the underlying claims should never be reached. Id. In a plea to the jurisdiction, "the pleader must allege facts that affirmatively demonstrate the court's jurisdiction to hear the cause." City of Houston v. Rushing, 7 S.W.3d 909, 913 (Tex.App.-Houston [1st Dist.] 1999, pet. denied). A trial court's ruling on a plea to the jurisdiction presents a legal question which is reviewed de novo. See Northwood, 73 S.W.3d at 308. Questions involving the application of the principles of sovereign and governmental immunity and a party's standing to bring an action are the proper subjects of a plea to the jurisdiction. See Brown v. Todd, 53 S.W.3d 297, 300-01 (Tex. 2001).
Governmental Immunity
In response to the taxpayers' issue, the City asserts that this entire action is barred by the principle of governmental immunity and that the taxpayers have not pleaded sufficient facts to overcome this immunity. We agree.
Governmental immunity protects political subdivisions of the State from suit, unless immunity from suit has been waived. See Gen. Servs. Comm'n v. Little-Tex Insulation Co., 39 S.W.3d 591, 594 (Tex. 2001). Governmental immunity inures to the benefit of a municipality insofar as the municipality engages in the exercise of governmental functions, except when that immunity has been waived. Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 840 (Tex. 2000).
Governmental immunity from suit defeats a trial court's subject-matter jurisdiction and is properly asserted in a plea to the jurisdiction. Tex. Dep't of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999). Generally, a party suing a governmental entity must establish consent to sue, which may be alleged either by reference to a statute or to express legislative permission. See Mo. Pac. R.R. Co. v. Brownsville Navigation Dist., 453 S.W.2d 812, 814 (Tex. 1970).
However, where a claim for declaratory or injunctive relief is brought seeking the refund of illegally collected tax payments, sovereign 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, 71 S.W.2d 242, 246 (Tex. 1934). No legislative consent to sue is needed under these circumstances. In this case, the taxpayers have not pleaded sufficient facts to establish that their claim for money had and received is not barred by the City's governmental immunity. In their First Amended Petition, the taxpayers assert a claim for "money had and received" and allege that "the money collected by the DEFENDANTS for illegal taxes rightfully belongs to PLAINTIFFS and in equity and good conscience should be returned to PLAINTIFFS." The taxpayers also assert a claim for breach of contract. These pleadings do not seek declaratory and/or injunctive relief regarding the levy and refund of illegal taxes and do not allege that the taxpayers made any payments as a result of fraud, mutual mistake of fact, or duress. Accordingly, the claims for money had and received and breach of contract are barred by sovereign immunity. Camacho, 954 S.W.2d at 826. The taxpayers also assert that the City's immunity to this suit has been expressly waived by section 51.075 of the Texas Local Government Code. This section provides that a home rule municipality such as the City "may plead and be impleaded in any court." Tex. Loc. Gov't Code Ann. § 51.075 (Vernon 1999). However, recently, in Tooke v. City of Mexia, 197 S.W.3d 325 (Tex. 2006), the Texas Supreme Court ruled that this statute does not constitute a clear and unambiguous waiver of immunity from suit. Accordingly, we hold that the trial court did not err in granting the City's plea to the jurisdiction on the basis of governmental immunity.
A claim for money had and recieved arises when the defendant obtains money which in equity and good conscience belongs to the plaintiff. It is an equitabe doctrine applied to prevent unjust enrichment. See Hunt v. Baldwin, 68 S.W.3d 117 (Tex.App.-Houston [14th Dist.] 2001, no pet.)
For the first time on appeal, the taxpayers argue that the trial court violated their Due Process rights under the 14th Amendment to the United States Constitution by granting the City's plea to the jurisdiction. Contrary to the Taxpayers' arguments, we do not read the taxpayers' pleading or briefing as raising this issue before the trial court and we find that this argument has not been preserved on appeal. TEX.R.APP. 9.33.1. The taxpayers also, argue that, despite the holding in Tooke v. City of Mexia, 197 S.W.3d 325 (Tex. 2006), we should abate this appeal and allow them to amend their answer to include an alternative waiver of immunity, The taxpayers, however, have cited no authority for such an abatement under these circumstances.
Conclusion
We affirm the order of the trial court.