ANNEXATION LITIGATION: THE MUNICIPAL PERSPECTIVE

ANNEXATION LITIGATION: THE MUNICIPAL PERSPECTIVE ROBERT F. BROWN Brown & Hofmeister, L.L.P. 740 East Campbell Road Suite 800 Richardson, Texas 75081 (214) 747-6130 www.bhlaw.net e-mail: rbrown@bhlaw.net State Bar of Texas 19 TH ANNUAL SUING AND DEFENDING GOVERNMENTAL ENTITIES COURSE July 12 13, 2007 San Antonio CHAPTER 3.1

TABLE OF CONTENTS I. INTRODUCTION... 1 II. THE IMPACT OF S.B. 89... 1 A. Annexation Procedural Schemes... 1 B. The Annexation Plan... 2 C. Annexation Procedures under Chapter C-1 for Areas Exempted from the Plan Requirement... 3 III. ANNEXATION LITIGATION... 4 A. General Overview of Annexation Litigation... 4 B. Quo Warranto... 5 1. City of Wichita Falls v. Pearce, 33 S.W.3d 415 (Tex. App. Fort Worth 2000, no pet.)...5 2. Sunchase Capital Group, Inc. v. City of Crandall, 69 S.W.3d 594 (Tex. App. Tyler 2001, no pet.)...5 C. Illustrative Annexation Cases... 6 1. City of San Antonio v. Hardee, 70 S.W. 3d 207, 210 (Tex.App. San Antonio 2001, no pet.)...6 2. City of Balch Springs v. Lucas, 101 S.W.3d 116 (Tex. App. Dallas 2002, no pet.)...7 3. Hartsell v. Town of Talty, 130 S.W.3d 325 (Tex. App Dallas 2004, pet. denied)...8 4. City of San Antonio v. City of Boerne, 111 S.W.3d 22 (Tex. 2003)...8 D. Recent Cases... 9 1. City of Cresson v. City of Granbury, S.W.3d, 2007 WL 1168444 (Tex.App.-Fort Worth April 19, 2007, no pet. h.)...9 2. In re Spiritas, 218 S.W.3d 887 (Tex.App.-Fort Worth 20 07, no pet.)...9 3. Karm v. City of Castroville, 219 S.W.3d 61 (Tex.App.-San Antonio 2006, no pet.)...10 4. City of Port Isabel v. HP Pinnell, 207 S.W.3d 394 (Tex.App.-Corpus Christi, 2006 no pet.)...10 5. JNC Partners Denton, LLC v. City of Denton, 190 S.W.3d 790 (Tex.App.-Fort Worth, 2006, pet. filed)...10 E. Hughes v. City of Rockwall: The Case to Watch... 11 1. The Sparsely Populated Annexation Exemption and Arbitration Requests...11 2. Hughes Facts...12 3. Rockwall s Arguments before the Supreme Court...12 4. The Estate s Arguments before the Supreme Court...13 F. Defenses to Suit... 13 1. Statute of Limitations...13 2. Plea to the Jurisdiction...16 3. Sovereign Immunity...16 4. Protection of Individual Defendants...16 5. Which Law Governs?...18 G. Proof Issues... 18 H. Defensive Strategies... 18 III. CONCLUSION... 19 i

ANNEXATION LITIGATION: THE MUNICIPAL PERSPECTIVE I. INTRODUCTION Annexation in Texas is perhaps one of the most frequently discussed, hotly debated and frankly confusing issues confronted by those employed or practicing in the municipal arena today. Whether it is the state legislator, the mayor, the city council member, city staff or citizens generally, the impact of a local government s annexation decision upon those involved typically is far-reaching, significant and controversial. This is no more apparent than in the daily press, where annexation disputes are often reported, and on the internet, where websites are established by watchdog groups such as Citizens Against Forced Annexation, who closely follow and tabulate unilateral or involuntary annexations around the state and the country. Prior to 1963, a Texas municipality could annex territory up to the corporate boundaries of another municipality. Since courts adhered to the first in time, first in right rule, that the first to commence annexation or incorporation proceedings was entitled to complete and relate the whole action back to the date of the commencement of the annexation, annexation contests often resulted between an area attempting to incorporate and a city racing to annex that same area prior to the initiation of incorporation proceedings by the first city. In 1963, the Texas Legislature enacted the Municipal Annexation Act, Tex.Rev.Civ.Stat.Ann. art. 970a (now codified at Chapters 42 and 43 of the Texas Local Government Code) to regulate such annexation activities. Additionally, the Municipal Annexation Act ( Act ) created, for the first time, the concept of extraterritorial jurisdiction ( ETJ ). Since that time, legal disputes between municipalities and landowners, and municipalities and other municipalities regarding annexation, have become commonplace, and have generated a definitive subset of litigation, in order to interpret the provisions of the Act and a municipality s actions taken under the Act. Not only have the provisions of the Act created significant activity in the courts, such disputes have resulted in numerous amendments to the Act. The most dramatic overhaul of the Act occurred in the 1999 legislative session and the passage of Senate Bill No. 89, which became effective September 1, 1999, and which significantly changed much of the annexation law landscape. As a result, some matters were clarified while other matters were made less clear concerning annexation rights and procedures. Litigation involving municipal annexations continues. This paper attempts to provide an overview of the types of issues involved in such cases. II. THE IMPACT OF S.B. 89 The 1999 legislative session was, to put it mildly, a raucous affair for both the proponents and opponents of municipal annexation. More than 70 annexation bills were filed, many of which sought to place additional annexation service requirements on cities, while some proposed the restriction of cities annexation powers and still others proposed the disannexation of previously annexed territory. Cities nonetheless were committed to addressing and resolving the needs of all parties, and representative groups such as the Texas Municipal League met with annexation reformers throughout the session in an attempt to avoid the loss of significant annexation authority in the absence of compromise. TML and city officials from across the state testified on numerous occasions, offered amendments and negotiated tirelessly to eliminate or modify the more burdensome provisions. The result culminated in a complex, often difficult to understand reconstruction of the Texas Municipal Annexation Act and Chapter 43 of the Texas Local Government Code. A. Annexation Procedural Schemes Under S.B. 89, there are two basic annexation procedural schemes, each of which is based either on the inclusion or exclusion of an area in a city s annexation plan: (a) Annexation of area that is exempt from the annexation plan requirement; and (b) Annexation after December 31, 2002 of area included in an annexation plan. 1 City officials initially must determine whether an area they wish to annex falls under one of the exemptions from the annexation plan requirement. See Tex. Loc. Gov t Code 43.052(h). 2 If an area is exempt, the city must follow the procedures set forth in the Code s Chapter 43, Subchapter C-1, Annexation Procedure for Areas Exempted from Municipal Annexation Plan. These procedures are virtually identical to those that previously existed, with the exception that certain notice requirements are more stringent. For example, 43.063(c) requires that notices of hearings be posted on the city s Internet website, if the city has one. Section 43.062(b) requires that for annexation of areas under 43.052(h)(1)(the 100-tracts exemption), additional written notice must be sent to each property owner in the 1 The December 31, 2002 date was the earliest date a city was authorized to annex territory included in its annexation plan. 2 All section references are to the Texas Local Government Code unless specifically noted otherwise. 1

area proposed to be annexed and each service provider that provides services in such area. If an area is not exempt, the city must place it in an annexation plan and wait three years to annex the area under the procedures established by Chapter 43, Subchapter C, Annexation Procedure for Areas Annexed Under Municipal Annexation Plan. 3 B. The Annexation Plan S.B. 89 required that every city in Texas adopt an annexation plan that became effective no later than December 1, 1999. See 43.052, statutory note (b). The plan must identify annexations that will occur beginning three years after the date the plan is adopted. See 43.052(c). However, certain types of areas are exempt from the plan requirement. For example, if an area contains fewer than 100 separate tracts of land on which one or more residential dwellings are located on each tract, the area is not required to be placed in an annexation plan. See 43.052(h)(1). Also, if the land is annexed by petition of area landowners or voters, the area is not required to be in a plan. See 43.052(h)(2). 4 Thus, many cities will have a one-page plan stating that they do not intend to annex any area for which an annexation plan is required. 5 3 The three-year waiting period is a misnomer, because a city must begin notice, hearing and negotiation procedures almost immediately after placing an area in an annexation. 4 43.052(h) contains several other examples of exempt areas, including area that is or was the subject of an industrial district contract under 42.022 or a strategic partnership agreement under 43.0751; area that is located in a colonia; area that is annexed under 43.026, 43.027, 43.029 or 43.031; area that is located completely within a closed military installation. The section also does not apply if the city determines that the annexation is necessary to protect the area proposed for annexation from imminent destruction of property or injury to persons or a public or private nuisance. 5 In City of San Antonio v. Hardee, 70 S.W.3d 207 (Tex. App.-San Antonio 2001, no pet.), the plaintiff landowners challenged an annexation of their property by the City of San Antonio based on the fact that the city acted outside its authority by failing to adopt a required annexation plan under the new 43.052 (the landowners also argued that the city failed to request an inventory of services and facilities for an annexation service plan and to compile a comprehensive inventory of services for the annexation service plan under 43.052). The court rejected the argument, noting that Section 17 of S.B. 89 clearly states that a municipality may continue to annex any area during the period beginning December 31, 1999, and ending December 31, 2002, under Chapter 43, Local Government Code, as it existed immediately before September 1, 1999, if the area is not included in the annexation plan, and the former law is continued in effect for that purpose. This case appears to stand for the proposition that, even if a city never adopted an annexation plan, it nonetheless could conduct grandfathered annexations under 2 If land is required to be in a plan, nothing prohibits a city from amending the plan to include new areas, but the city may not annex such areas until three years after the area is included in the plan. See 43.052(c). If an area is removed from the plan within 18 months of being placed in the plan, the area cannot be placed back in the plan for one year. See 43.052(e). Similarly, if an area is removed from the plan after 18 months of being placed in the plan, the area cannot be placed back in the plan for two years. Id. If an area is placed in, and stays in, the plan, its annexation must be completed 31 days after the three-year hold period, or the city must wait five more years to annex the area. See 43.052(g). In addition, 43.052(f) requires that before the 90 th day after the city adopts or amends an annexation plan, the city is required to give written notice to: (a) Each property owner in the affected area, as indicated by the appraisal records furnished by the appraisal district for each county in which the affected area is located; (b) Each public entity, as defined by 43.053, 6 or private entity that provides services in the area proposed for annexation; and (c) Each railroad company that serves the municipality and is on the city s tax roll if the company s right-of-way is in the area proposed for annexation. One issue in particular has arisen with several cities. That question is whether land that is included by a city in an annexation plan, but that is not technically required to be in the plan, may be removed without incurring the time penalties in 43.052. At least one district court has held that the answer to that question is yes, the area may be removed without incurring penalties. In Lago Santa Fe Property Owners Association v. City of Santa Fe, Texas (Cause No. 01-CV-0981), the city s motion for summary judgment in the District Court, 212 th Judicial District, Galveston County, Texas, was granted in April of 2002, and the landowners did not appeal. This suit was one of the first to involve a claim under the amended annexation provisions of 43.052. The City of Santa Fe s annexation plan, which was passed and adopted on December 9, 1999, included the Lago Santa Fe subdivision. The city subsequently the old law before December 31, 2002 or exempt annexations under 43.052(h). 6 A public entity includes a municipality, county, fire protection service provider, including a volunteer fire department, emergency medical services provider, including a volunteer emergency medical services provider, or a special district, as that term is defined by 43.052. See 43.053(a).

realized that the subdivision was exempt from the annexation plan requirement under 43.052(h)(1) and that it was authorized to annex the area immediately. The city notified the landowners that they had been removed from the plan and that the city would annex them immediately. The landowners petitioned the city to be placed back in the annexation plan and argued unsuccessfully that, while the city was authorized to remove them from the plan, the city would be bound by the waiting periods under 43.052. The court rejected the landowners argument and granted summary judgment in favor of the city. Thus, the question of whether land that was included by a city in an annexation plan, but that was not technically required to be in the plan, may be removed without incurring the time penalties in 43.052, has been answered affirmatively by at least one state district court. C. Annexation Procedures under Chapter C-1 for Areas Exempted from the Plan Requirement To begin the annexation process, a city council must direct its planning department or other appropriate city department to prepare a service plan that provides for the specific municipal services that will be provided to the area to be annexed. See 43.065(a). Before a city may institute annexation proceedings, the city council must give notice of, and conduct, two public hearings at which persons interested in the annexation are given an opportunity to be heard. See 43.063(a). The city council must call the first public hearing on the proposed annexation and cause a copy of the notice of the hearing to be published. The notice of each hearing must be published in a newspaper of general circulation in the city and the area proposed for annexation at least once on or after the 20 th day but before the 10 th day before the date of each hearing. 7 See 43.063(c). The newspaper should execute a notarized affidavit stating that the hearing notice was published. The city also must give written notice to any school district in the area at this time. See 43.905. This procedure is repeated for the second hearing. All persons attending the hearings must be given an opportunity to express their views regarding the proposed annexation and the service plan. The hearings must be conducted on or after the 40 th day and before the 20 th day before the date of the institution of the proceedings. See 43.063(a). 8 The date of the institution of proceedings 7 When counting the ten-day interval, do not include either the day the notice was published or the day of the hearing. 8 Note that a city is required to hold the two public hearings in the specified time frame. Nothing prohibits a city from holding more than two hearings, and so long as at least two of the hearings are within the prescribed time frame, the statutory requirements have been met. See Woodruff v. City of Laredo, 3 is the date the annexation ordinance is introduced on first reading. If a city requires only one reading, the proceedings are instituted and completed at the same time. In addition, the annexation of an area must be completed within 90 days after the date the city council institutes the annexation proceedings or the proceedings are void. See 43.064(a). The charters of some homerule cities require that an annexation ordinance must be introduced at one meeting before it can be passed at a subsequent meeting, or that the ordinance be read and voted on at two, sometimes three, separate meetings before finally being passed. Thus, the ordinance in a city requiring multiple readings must be finally passed within 90 days of the first reading. If the annexation is exempt by virtue of 43.052(h)(1)(the 100-tracts exemption), written notice must be sent before the 30 th day before the date of the first hearing to each property owner in the area to be annexed, and each public entity, as defined by 43.053, 9 or private entity that provides services in the area. See 43.062(b). All annexations under Subchapter C-1 require written notice to each railroad company with right-of-way on the area proposed for annexation. See 43.063(c). In addition, the city must post notice of the hearings on the city s website, if the city has a website. See 43.063(c). 10 If a written protest is filed by more than 10 percent of the adult residents of the area proposed for annexation within 10 days after publication of the notice, at least one of the public hearings must be held in the area proposed for annexation if a suitable site is reasonably available. See 43.063(b). Finally, the city council, acting at a meeting that is separate from the two required hearings, adopts an ordinance annexing the tract and approving the service plan for the tract. When the annexation ordinance is passed, a copy of the service plan is attached to the ordinance, and the plan becomes a contractual obligation of the city. In sum, the sequence for annexation of an area exempt from an annexation plan under Chapter C-1 of 686 S.W.2d 692, 696 (Tex. App.-San Antonio 1985, writ ref d n.r.e.). 9 Public entity includes a municipality, county, fire protection service provider, including a volunteer fire department, emergency medical services provider, including a volunteer emergency medical services provider, or a special district, as that term is defined by 43.052. See 43.053(a). The time requirements for posting are the same for the website, except the notice must remain on the site until the date of the hearing. 10 The time requirements for posting are the same for the website, except the notice must remain on the site until the date of the hearing.

the Texas Local Government Code could unfold as follows: (a) Preparation of the service plan; (b) Provide written notice to property owners, railroads and public and private entities, if required; (c) City council calls two public hearings to be held at some time not less than 10 nor more than 20 days from the date of publication of the notice of the hearings; (d) Notice of the hearings is published in a newspaper of general circulation in the city and the area to be annexed and on the city s Internet website, if the city has a website, and written notice is sent to school districts in the area; (e) A 10- to 20-day interval follows between the date of publication and each of the hearings; (f) Public hearings are held on the proposed annexation at which all interested persons are heard; (g) A 20- to 40-day interval follows between the hearings and the date the annexation ordinance is passed; (h) The city council meets and passes the annexation ordinance; and (i) Proper post-annexation preclearance and notice is completed. III. ANNEXATION LITIGATION A. General Overview of Annexation Litigation Annexation litigation typically involves the competing rights and interests of various parties, including landowners, residents and municipalities. This is particularly apparent in a unilateral annexation situation which, by its nature, is likely to incite interested parties to question the ability of the city to seize territory without anyone s consent. As a governmental body, a city enjoys a certain level of protection from such challenges, although this protection is not unlimited. For instance, not all interested parties have standing to bring an action to challenge annexation. City of Missouri City v. Senior, 583 S.W.2d 444 (Tex.App.-Houston [1st Dist.] 1979, writ ref d n.r.e.). Annexation challenges must be brought by competing municipalities, landowners or residents, or the State of Texas, in a special type of legal proceeding known as a quo warranto proceeding. Courts have nonetheless allowed private lawsuits to be brought in certain circumstances to challenge annexations using other traditional lawsuit approaches, and in a declaratory judgment action, the threat of an award of attorney s fees to be paid by the losing side adds an additional consideration. Since the emotions in such cases are already at a high level, the addition of those factors adds a certain economic pressure to the dispute that can make litigation involving annexation a highly charged affair. The motive or purpose of the municipality for the annexation is legally irrelevant. Courts will not review the purposes of an annexation to determine its validity, even if it was solely for taxation purposes. Larkin v. City of Denison, 683 S.W.2d 754, 756 (Tex.App. Dallas 1984, no writ) (reviewing court may not consider the motives behind annexation because to do so invades the legislative process). Judicial review of an annexation proceeding is, therefore, limited. The validity of annexation must be brought as a direct challenge to the annexation ordinance in a declaratory judgment action as to jurisdictional matters, or by the state in quo warranto proceedings because of procedural irregularities. Another municipality, the State, landowners or residents of the annexed territory have standing to challenge annexation for lack of jurisdiction in which the annexation is said to be void, that is, where a city is wholly without authority to enact the annexation. Alexander Oil Co. v. City of Sequin, 825 S.W.2d 434 (Tex. 1991). Procedural irregularities, however, may only be challenged by the State through a quo warranto proceeding in which the annexation is said to be voidable. Id. To summarize this distinction, annexation may only be attacked by quo warranto proceedings unless the annexation is void. The following are examples of void and voidable annexation proceedings, showing the types of differences in the issues addressed in each: Void Annexations (private actions allowed): 1. Annexation of territory exceeding the city s statutory size limitations. Deacon v. Euless, 405 S.W.2d 64 (Tex. 1996). 2. Annexation of territory exceeding a city s yearly allotment and narrow-strip annexations. Alexander Oil Co., 825 S.W.2d at 438. 3. Annexation of territory of another municipality or its ETJ. Vern v. San Antonio, 406 S.W.2d 236 (Tex.App.-Corpus Christi 1966, writ ref d n.r.e.); and City of West Orange v. State ex rel. City of Orange, 613 S.W.2d 236, 238 (Tex. 1981). 4. Annexation of territory not contiguous to the city s boundaries. City of Waco v. City of McGregor, 523 S.W.2d 649, 652 (Tex. 1975). 5. Annexation of an area where the boundary description does not close. State ex rel. Rose v. City of La Porte, 386 S.W.2d 782, 789 (Tex. 1965). 6. Failure to receive the required number of votes for passage of an ordinance. City of Northlake v. East Justin Joint Venture, 873 S.W.2d 413, 417 (Tex.App.-Fort Worth 1994, writ denied). 4

Voidable Annexations (quo warranto proceeding required): 1. Procedural irregularities such as failure to comply with statutory notice and public hearing requirements. Alexander Oil, 825 S.W.2d at 438. 2. Question of a valid incorporation. City of Hurst v. City of Colleyville, 501 S.W.2d 140 (Tex.App.- Fort Worth 1973, writ ref d n.r.e.). B. Quo Warranto The determination whether an alleged annexation irregularity causes the annexation to be considered either void or voidable is a legal issue that is decided by the court, although the cases have provided some clear answers. Annexation which is voidable may only be challenged through a quo warranto proceeding, which is an action by the state on relation of a private party. Larkin, 683 S.W.2d at 754. Although a private party is named, the state is the real party in interest. State ex rel. Simmons v. City of Azle, 588 S.W.2d 666 (Tex.App.-Fort Worth 1979, writ ref d n.r.e.); Alexander Oil, 825 S.W.2d at 437. Quo warranto actions are governed by Chapter 66 of the Texas Civil Practice and Remedies Code. The action is brought in the district court and in the name of the State of Texas. Tex.Civ.Prac. & Rem.Code Ann 66.002. Quo warranto actions may be brought only by the Attorney General, county or district attorney, either on his own motion or at the request of an individual relator. Tex.Civ.Prac. & Rem. Code 66.022(c). The action is brought on behalf of the public and is a proceeding put in place to avoid a multiplicity of suits by private parties and conflicting results. The action is also discretionary, in that the state has the discretion whether to file the action; the state cannot be compelled to file the action. The state, therefore, controls the action, although the relator may secure independent counsel to assist the state (with the approval of the state s counsel). McFarlin v. State ex rel. Barnard, 272 S.W.2d 630 (Tex.App.- Waco 1954, writ ref d n.r.e.). A quo warranto action may be joined with a declaratory judgment action, in which a private party challenges annexation as void. City of Bridge City, 792 S.W.2d at 217. It is in such instances that the line between void and voidable are sometimes confused (reminder: void means a private action is available; voidable means the quo warranto action is necessary). 1. City of Wichita Falls v. Pearce, 33 S.W.3d 415 (Tex. App. Fort Worth 2000, no pet.) In this case, residents of an area annexed in 1997 sought disannexation based on the fact that the city s service plan did not provide for the extension of full municipal services because its plan required residents to pay the cost of extensions for water and sewer service. In other words, the residents claimed that the city s service plan was facially invalid. The citizens brought suit under 43.141(b), which provides that a majority of residents of an annexed area may bring a cause of action in district court if a city fails to provide services under a plan. In finding for the city, the court held that the plaintiffs did not contend, as 43.141 requires, that the city failed to perform in accordance with the plan, but rather they argued that the plan was invalid on its face. This is an attack on the validity of the annexation ordinance and its incorporated service plan, and thus is not governed by 43.141. Rather, the proper method for attacking the validity of the ordinance is a quo warranto proceeding because a quo warranto action binds all the property owners and settles the validity of the ordinance. 2. Sunchase Capital Group, Inc. v. City of Crandall, 69 S.W.3d 594 (Tex. App. Tyler 2001, no pet.) In this case, Sunchase planned to develop a residential subdivision in the county, in accordance with the county s subdivision requirements. In preparation for the development, Sunchase purchased the water pipe it planned to install and incurred unspecified expenses for engineering services. Mr. Null, another plaintiff in the case, owned property near Sunchase. Along with other landowners, Mr. Null petitioned the County Judge to incorporate the new Town of Quail Country, which would have included Null s property and the Sunchase tract. The plaintiffs contended that they were damaged by being prohibited from incorporating Quail Country and that Sunchase was now required to comply with the City of Crandall s more costly subdivision rules and regulations (the purchased water pipe did not meet the city s standards and specifications, since they were now within the ETJ of the City of Crandall as a result of annexation by the city). The court held that the owners did not have standing to challenge the annexation ordinances. A private party who does not own property within an annexed area does not have standing to challenge an annexation ordinance, even though the party owns property within the city s expanded ETJ and had planned on incorporating as a town. Being prohibited from incorporating a municipality or being subject to a city s subdivision requirements are not peculiar burdens, nor does the purchase of supplies or services in anticipation of continuation of an existing regulatory scheme rise to the level of a peculiar burden or justiciable interest of a property owner in an ETJ to give him standing to collaterally attack the annexation ordinance which expanded the ETJ. Instead, the proper remedy is to petition the State of Texas to bring a quo warranto action challenging the annexation, if the parties can convince the State that their claims are meritorious. 5

The court could find no authority in which any particular burden, other than a tax, was deemed sufficient to confer standing in such a case. The Sunchase tract is not within the annexed area, and as such is not subject to a tax. In essence, Sunchase s argument is that it does not want to be in the city s ETJ because it does not want to be subject to the city s subdivision requirements, which are more stringent than the county s requirements. The court found that being prohibited from incorporating a municipality or being subject to the city s subdivision requirements are not particular burdens because they are the ordinary consequences which burden the general public whose land falls within the city s ETJ. C. Illustrative Annexation Cases The distinction between a void and voidable annexation is also equivalent to the distinction between questioning a city s authority to annex (therefore alleging the annexation is void) and questioning the city s annexation procedures (therefore alleging the annexation is voidable). The following cases underscore how even this distinction can be confused, as well as how other matters related to annexation find there way into our court system. 1. City of San Antonio v. Hardee, 70 S.W. 3d 207, 210 (Tex.App. San Antonio 2001, no pet.) The court differentiated between the city s authority to annex and whether the city s procedures complied with Chapter 43 of the Texas Local Government Code. The result is somewhat confusing, since the overarching issue concerned whether the city followed proper notice procedures. In December 2000, the City of San Antonio annexed an area owned by the plaintiffs. The plaintiffs filed suit to challenge the annexation claiming the City did not comply with various annexation statutes. The City filed a plea to the jurisdiction to this challenge claiming that the plaintiffs complained of procedural irregularities which, at most, made the annexation voidable and not void, and therefore subject to attack only through a quo warranto proceeding. In response, the plaintiffs contended that the City acted outside its authority by failing to adopt the required annexation plan. The trial court denied the City s plea to the jurisdiction and the City immediately appealed. The Fourth Court of Appeals in San Antonio held that the City s failure to adopt an annexation plan did not implicate the City s authority to annex and, therefore, the individual plaintiffs did not have standing to challenge the annexation. The court of appeals upheld the City s plea to the jurisdiction. The appeals court determined that the requirement that the City adopt an annexation plan was merely a procedural requirement, not affecting the City s authority to annex, because that requirement did not limit the area or type of land that the City could legally annex; instead, that requirement merely addressed issues related to the planning process, a procedural requirement, and was not a limit on the City s authority to annex. As a result, the complaint could only be brought through a quo warranto action. Plaintiffs had also complained that the City had violated the Texas Open Meetings Act in its annexation actions. Here, the Court of Appeals found that such an allegation was subject to an individual challenge and did not require that the case be brought by a quo warranto action. The appeals court recognized a conflict between the traditional view prohibiting private challenges to procedural violations and the individual-standing provision in the Texas Open Meetings Act. The court determined that annexation challenges were not exempt from this standing provision, upheld the denial of the City s plea to the jurisdiction, and remanded the case to the trial court for further proceedings. This case illustrates the difficulty in determining what amounts to a city exceeding its annexation authority. Both of the statutes at issue involved the issue of notice, which is one of the areas traditionally held not to affect annexation authority. Section 43.052 of the Texas Local Government Code requires the adoption of a three-year annexation plan, presumably for the purpose of providing notice to the public; the Open Meetings Act s provisions also give notice to the public of a governmental entity s actions. In this case, one statute conferred individual standing and the other did not. The Court of Appeals identified the lack of notice as one of the historically procedural faults subject only to attack by a quo warranto action. The court further identified notice as the public policy consideration behind 43.052: The new section 43.052 does not limit the area or type of land a city may annex; rather, it prescribes a three year planning process, presumably to give the public better notice of proposed city growth and services. Therefore, it appears Tex. Loc. Gov t Code Ann. 43.052(b)-(c) is a procedural requirement for annexation rather than a limit on the City s authority to annex. City of San Antonio, 70 S.W.3d at 212. The court, however, identified that same public policy as the reason why the Open Meetings Act authorizes individual lawsuits: Additionally, there are public policy reasons for holding that an annexation action taken by a city should be subject to challenge for violation of the Open Meetings Act. The Open Meetings Act is designed to allow the public notice concerning the transactions of public business. 6

Id., 70 S.W.3d at 213 (citation omitted). The court further relied on Alexander Oil, noting that that case contains language which might indicate that a lack of proper notice is fatal to a city s authority to annex. Id. The Supreme Court in Alexander Oil affirmed summary judgment for the city in that case based on the establishment in the record that the city gave proper notice. The Court did not address whether the mere allegation of failure of notice could provide the basis for a collateral attack. In fact, the Court stated that the city s [annexation] jurisdiction was activated by giving notice required by statute. Alexander Oil Co., 825 S.W.2d at 437. Since no petition for review was filed in the City of San Antonio v. Hardee case, we will not know if it conflicts in principle with Alexander Oil or any other case, until the next challenge proceeds through the court system. What can be noted is that the distinguishing factor in City of San Antonio v. Hardee is the existence of the individual-standing provision in the Open Meetings Act. Yet, the same public policy consideration that was found to be both sufficient and insufficient to allow a private collateral attack underscores the difficulty in determining, prior to suit, what will constitute a permissible challenge to a city exceeding its authority or an impermissible procedural challenge. The most important consequence of the City of San Antonio v. Hardee case is to be aware that courts might now look to other independent grounds for authority to maintain an individual s action challenging an annexation. 2. City of Balch Springs v. Lucas, 101 S.W.3d 116 (Tex. App. Dallas 2002, no pet.) This case is noteworthy because it provides a good summary of the principles that govern an analysis of the distinction between a city s authority to act and a city s compliance with the procedural requirements of annexing property. Here, the city sought to annex three tracts of land (about 480 acres) which included land owned by the plaintiffs. The annexation was initiated during the transition period before the SB 89 amendments to the annexation provisions of the Texas Local Government Code became effective. After publishing notice of upcoming public hearings regarding the proposed annexation, the city conducted the public hearings in April 2002. Consideration of the annexation ordinance for city council was scheduled for the council s May 13, 2002, meeting. On May 3, 2002, plaintiffs filed their original petition and application for declaratory and injunctive relief, claiming that the city s proposed annexation was unlawful because it did not comply with the requirements of the new 43.052(b)-(c). On May 13, 2002, before the city council could consider the proposed annexation ordinance, the plaintiffs sought and obtained a temporary restraining order preventing the annexation. After a hearing, the trial court entered a temporary injunction preventing the city from completing its proposed annexation, and specifically ordering the city to comply with the new provisions of 43.052. The city filed a plea to the trial court s jurisdiction, challenging the plaintiffs standing to bring the lawsuit, because their complaints only concerned procedural complaints rather than attacking the city s authority to annex their property. As a result, the city asserted that the only proper action was to proceed with a quo warranto action brought by the State, not a private action. Thus, not only did the plaintiffs have no standing, but also the city asserted that the trial court had no jurisdiction to hear this collateral attack. The trial court denied the city s plea to the jurisdiction. Based on statutory authority, the city filed an immediate appeal, both of the entry by the trial court of the temporary injunction as well as the denial of the plea to the jurisdiction by the trial court. The Dallas Court of Appeals agreed with the city, vacated the trial court s order denying the plea to the jurisdiction, dissolved the temporary injunction, and dismissed plaintiffs case in its entirety. After reviewing the standards applicable to issues concerning standing, a city s plea to the jurisdiction, private causes of action and quo warranto proceedings (specifically reviewing the decisions in Alexander Oil and Hardee, for instance), the appeals court found that plaintiffs challenge did not attack the city s inherent authority to annex the property in question. Instead, the plaintiffs claims were properly analyzed as procedural complaints. The plaintiffs specifically argued that the Hardee case was improperly decided by the San Antonio Court of Appeals to avoid the same result; the Dallas Court of Appeals here rejected that argument, and found that the plaintiffs claims, even if proven, only amounted to making the city s annexation voidable, not void. As a result, the exclusive remedy available is a quo warranto proceeding. Since plaintiffs action was instead a private action, they did not have standing to complain, and the trial court was without jurisdiction to consider the plaintiffs claims. Further, even if this case had been brought as a quo warranto proceeding, the appeals court found that the amended version of 43.052 did not apply to the city s annexation, and plaintiffs arguments that the city did not comply with the amended version of the statute were without merit. Recently, the Lucas case was distinguished under a set of facts similar to those in Lucas. In Hughes v. City of Rockwall, 153 S.W.3d 709 (Tex.App.-Dallas 2005, pet. granted), the affected landowner complained of the city s failure to comply with 43.052. The Hughes court distinguished Lucas by concluding that the three (3) year transitional aspect of 43.052 under review at the time rendered the Lucas plaintiff s complaint as one complaining of procedure only. Hughes, 153 S.W.3d at 712-713. In Hughes, the plaintiff s complaint sought 7

relief under an arguably more substantive aspect of the Act, i.e., requiring the city to participate in arbitration to resolve the annexation dispute as required by 43.053(i). Id. As a result, Lucas was not found controlling. 3. Hartsell v. Town of Talty, 130 S.W.3d 325 (Tex. App Dallas 2004, pet. denied) In this case, the developer Hartsell filed preliminary plats for property within the ETJ of the Town of Talty. The Town approved the plats prior to amending the Town s ordinance to extend its building codes into its ETJ. A similar situation could easily be envisioned when a city annexes an area to its limits, thereby extending its ETJ into the additional adjacent area, in which it has an ordinance similar to the one in Talty, and a builder has already begun the process of development in the new ETJ area. Hartsell began constructing single-family residences without first applying for building permits from the Town. The Town objected, and Hartsell brought suit for an injunction to restrain the Town from applying its building codes to his construction, and further sought a declaratory judgment regarding application of the building codes to his construction. The issue was whether preliminary plat applications filed by Hartsell prior to the adoption by the Town of its ordinance was a project distinct and separate from the construction of an individual residence within a subdivision, sufficient to trigger the Vested Rights Statute (Chapter 245 of the Texas Local Government Code). The trial court found that these were separate projects, upheld the validity of the Town s ordinance extending its building codes into the Town s ETJ, and enjoined Hartsell from continuing any construction until he complied with the Town s building codes. The Dallas Court of Appeals reversed, and held that the filing of a preliminary plat application triggers the application of the property owner s vested rights. The appeals court found that obtaining a permit to construct an individual residence within a subdivision is part of the series of permits that originated with the approval of the preliminary plat. Under Chapter 245 of the Texas Local Government Code, the regulations and ordinances in effect at the time of the first in the series of permits shall be the basis for all subsequent permits required for completion of the project. Further, Chapter 245 provides that a series of permits may be required for completion of a project and all permits required for the project are to be considered a single series of permits. Here, the appeals court found the preliminary plat application to be a part of the series of permits required for the project, and was not part of a separate project that would not trigger the protections in Chapter 245. 4. City of San Antonio v. City of Boerne, 111 S.W.3d 22 (Tex. 2003) In a case that has the flavor of the old race-to-thecourthouse days of early 1960s annexations, the City of San Antonio, in 1987, passed on first reading an annexation ordinance annexing a strip of land in northern Bexar County. The San Antonio ordinance would not be effective until December 31, 1987. After San Antonio initiated the annexation process, certain landowners near the neighboring City of Boerne reacted by requesting inclusion in Boerne s ETJ. The Boerne City Council accepted the landowners petition and passed ordinances accepting the properties into Boerne s ETJ, effective December 28, 1987. Boerne also accepted certain county roads that were linking the properties into Boerne s ETJ. The petitions to include these roads were submitted to Boerne by the County Commissioners of Comal and Kendall counties. After San Antonio completed its annexation, portions of the areas claimed by the two cities overlapped. The trial court granted summary judgment in favor of the City of Boerne. The Court of Appeals held that: (1) the ETJ of Boerne began when the city completed the ETJ expansion process; (2) San Antonio s ETJ was extended once its annexation was complete; and (3) county commissioners, as agents for the state, had the power to petition for inclusion of county roads in the ETJ of the City of Boerne. Specifically, the appeals court held that passage on first reading will act as a bar to encroachment by other on the land to be annexed, but state law does not indicate that ETJ expansion is fixed earlier than upon a completed annexation. To hold that ETJ attaches prior to when the land is formally annexed would be to read something more into the statute beyond what the language of the statute plainly states, according to the court of appeals. Until an annexation is achieved, no new ETJ is generated; in other words, there can be no new ETJ until there are new city limits. The City of San Antonio appealed the Court of Appeals decision to the Texas Supreme Court on the issue of whether county commissioners have the authority to petition a city to include county roads in the ETJ. After reviewing the basis of the statutory powers conferred upon a commissioners court, and after reviewing a brief history of the annexation laws in Texas, the Supreme Court held that a commissioners court is not entitled to petition a municipality for annexation. The Court found no statutory authority for a commissioners court, purportedly acting on behalf of the State, to advance purely provincial concerns for a subset of the counties landowners. City of San Antonio, 111 S.W.3d at 31. The Court noted that there were assumptions made by the parties about ownership of the subject roads which, under the Court s ruling, might change and necessarily change the analysis in the trial court. The decision granting judgment to Boerne was reversed, and 8

the case was remanded to the trial court for further proceedings. D. Recent Cases 1. City of Cresson v. City of Granbury, S.W.3d, 2007 WL 1168444 (Tex.App.-Fort Worth April 19, 2007, no pet. h.) On May 3, 2005, when Granbury adopted a resolution directing its staff to prepare a service plan to accomplish a series of five, one-mile annexations stretching along the highway between the Granbury and Cresson. The entire area described in the resolution began at the then-existing city limits of Granbury and terminated at Cresson s then-existing ETJ. After Granbury passed the resolution, several landowners included within the disputed tracts petitioned for their land to be included within Cresson s ETJ. On June 3, 2005, before the Granbury City Council could vote on the resolution s proposals, Cresson adopted and approved four ordinances accepting the landowners petitions, expanding Cresson s ETJ accordingly. On June 21, 2005, Granbury adopted the resolution s sequential annexation proposals. Cresson filed suit seeking a declaration that the final four annexations adopted by Granbury are void because the disputed tracts were already in Cresson s ETJ. Granbury filed an amended answer and counterclaim seeking to have all of Cresson s ETJ expansion ordinances declared void, and the parties filed competing motions for summary judgment. The trial court granted Granbury s motion, and signed a final judgment ordering that Cresson s ETJ expansion ordinances are void, and Granbury s five sequential annexation ordinances are valid. The court of appeals held that Granbury was not entitled to assert jurisdiction over the disputed tracts until final passage of the first of its five sequential ordinances. Under Sections 42.022(c) and 43.051 of the Local Government Code, Granbury did not acquire any ETJ in the Disputed Tracts until its first annexation was complete. The court of appeals reversed the summary judgment in favor of Granbury and rendered summary judgment in favor of Cresson. The Fort Worth Court of Appeals held that the municipality's expansion ordinances were valid, rendering the neighboring city's annexation ordinances void, as to those tracts encompassed by the municipality's expanded ETJ. 2. In re Spiritas, 218 S.W.3d 887 (Tex.App.-Fort Worth 20 07, no pet.) While this recent case out of the Fort Worth Court of Appeals is of relatively limited value as a wideranging precedent due to the unique procedural posture on appeal (mandamus of the denial of a TRO), it nevertheless serves a good backdrop of the types of disputes that we see under the new annexation scheme created by the legislature in 1999. This original proceeding concerned the Town of Little Elm s proposed annexation of property owned by relator Spiritas Ranch Enterprises, L.L.P. The main issue was whether the trial court should have issued a temporary restraining order prohibiting the Town from annexing or taking steps to annex Spiritas s property until after Spiritas had been given the opportunity to arbitrate whether the property could be annexed without inclusion in the Town s three-year annexation plan. The court of appeals determined that Spiritas was entitled to mandamus relief. Factually, the case arose in late September 2006, when the Town began the process of annexing approximately 1,103 acres of nonresidential properties located within its extraterritorial jurisdiction along State Highway 380 pursuant to 43.052(h)(1) of the Texas Local Government Code, which allows largely undeveloped property to be annexed without inclusion in the Town s three-year annexation plan and which the Fort Worth Court of Appeals referred to as a fast-track annexation, i.e., annexation of an area contain[ing] fewer than 100 separate tracts of land on which one or more residential dwellings are located on each tract without inclusion in a municipality s three-year annexation plan. Spiritas owns multiple tracts included within the Town s proposed fast-track annexation. Prior to the scheduled annexation hearings, Spiritas sent a letter to the Town asking that its property be included in the Town s three-year annexation plan rather than being annexed according to the fast-track procedures. The Town Council held public hearings on the fast-track annexation ordinance on November 21, 2006, but it did not vote on Spiritas s request at that time because there was not enough time to place it on the agenda. At a subsequent meeting on December 5, 2006, the Town Council voted not to include Spiritas s land in the three-year annexation plan and instead to proceed with the fast-track annexation of Spiritas s property. Accordingly, on December 6, 2006, Spiritas requested that the Town arbitrate the issue under 43.052(i). In a December 7, 2006 letter to Spiritas, the Town s attorney confirmed that the Council would consider whether to arbitrate at a meeting scheduled for December 19, 2006. On Monday, December 18, 2006, Spiritas filed suit against the Town, asking for a declaratory judgment and a temporary and permanent injunction. More specifically, Spiritas asked the trial court to enjoin the Town from taking any action to directly or indirectly annex the property according to the fast-track annexation procedures until arbitration is completed under 43.052(i), 43.0565, and 43.0564. Spiritas also filed an application for a TRO, asking the trial court to issue a TRO restraining the Town from directly or indirectly taking any steps to annex the property before notice could be given and a hearing held on Spiritas s temporary injunction request. That same day, the Town 9