CITY OF LORENA, Texas, Petitioner, v. BMTP HOLDINGS, L.P., Respondent.
Argued Nov. 6, 2012. -- August 30, 2013
R. John Cullar, for Petitioner.Julia Brooks Jurgensen, Melissa D. Waden, Richard E. Brophy Jr., for Respondent.
Municipalities must ensure that essential public facilities are available to their residents. To assist in accomplishing this goal, the Legislature has allowed municipalities under Chapter 212 of the Local Government Code to enact temporary moratoria on “property development” if they can demonstrate the moratoria are needed to prevent a shortage of essential public facilities. That right, however, is subject to certain limitations. One limitation is that a municipality may not enact such a moratorium unless it contains a summary of evidence showing that it is limited to property that has not been approved for development,1 which the statute defines to include subdivision or construction.
Here, the municipality approved a subdivision plat and subsequently enforced a moratorium against the property, citing the municipality's additional sewage system capacity requirements. The landowner sued for a declaratory judgment that the moratorium did not apply against its approved development and for damages arising from a regulatory taking under an inverse condemnation claim. The trial court granted summary judgment in favor of the municipality on the declaratory judgment and inverse condemnation claims and awarded attorney's fees to the municipality. The court of appeals reversed, holding that the moratorium could not apply to the property in question because it had been approved for development before the moratorium took effect. The court remanded the inverse condemnation and attorney's fees claims. We hold that the moratorium cannot apply to the property because the municipality approved the property for subdivision before it enacted the moratorium, and the owner is therefore entitled to prevail on its declaratory judgment claim. We further conclude that, with respect to the inverse condemnation claim, the trial court must resolve factual disputes pertaining to the extent of the government's interference with the owner's use and enjoyment of its property before the merits of the takings claim are judicially addressed. Accordingly, we affirm the judgment of the court of appeals and remand this cause to the trial court for further proceedings.
This appeal concerns a series of moratoria on sewer connections the City of Lorena (City) applied to seven residential lots due to capacity issues with the municipal sewer system. Various statutes and regulations require municipalities to be proactive with regard to the capacity of their utilities. For example, Chapter 212 of the Local Government Code requires a municipality to confirm that when it approves a development plat, the plat conforms with the municipality's plans and ordinances concerning current and future utilities. Tex. Loc. Gov't CodeE § 212.047(1). Additionally, the Texas Commission on Environmental Quality (TCEQ) requires municipalities whose sewers reach 75% capacity to make plans to increase capacity and obtain TCEQ authorization to commence construction of that additional capacity when the system reaches 90% capacity. 30 Tex. Admin. Code § 305.126.
The TCEQ initiated enforcement proceedings against the City regarding its sewer system in late 2004. At that point in time, the City had preliminary studies and plans for a replacement sewage treatment plant but had not begun construction.
BMTP Holdings, L.P. (BMTP) is a residential real estate developer operating in the City. As a developer, BMTP does not construct residences. Rather, it obtains municipal approval of plats to divide property into residential lots and build community infrastructure such as roads, storm drains, curbs, and taps into the municipality's sewer system. BMTP then sells the subdivided property to builders who obtain municipal permits and construct houses on the lots. Prior to 2003, BMTP began subdividing the property at issue for a residential subdivision named South Meadows Estates. The project was divided into five phases, and this appeal concerns seven lots in the fourth and fifth phases.
In January 2006, the City Council approved the final plat for phase five of South Meadows Estates, having already granted final approval of phase four. The City Manager then executed the plat, indicating the City's acceptance of it and its eligibility for filing with the county clerk's office. In the spring of 2006, BMTP began building the infrastructure for the fifth phase of the development, which it completed in May 2006.
Also during the spring of 2006, engineers the City retained to evaluate its sewage system informed the City that the system was over capacity and could pose problems if the volume of sewage continued to increase. The engineers recommended a temporary moratorium on sewer tap permits to allow the City time to remedy the problem.
The City enacted a moratorium on June 5, 2006, which stated:
[N]o city employee ․ shall accept for filing any applications for the issuance of one or more sewer taps. Applications, together with any documents or fees accompanying the applications, which are submitted during the duration of this ordinance, shall be returned to the applicant as unfiled.
The moratorium was to last 120 days and specifically exempted pending sewer tap applications and completed but inactive sewer tap construction. The moratorium also allowed aggrieved applicants to appeal to the City Manager or his designee, showing why the moratorium would deprive the applicant of vested property rights. Importantly, though the moratorium contained some of the written findings and a portion of the summary of the evidence required by Chapter 212 of the Local Government Code, it contained no findings or a summary showing that the moratorium was limited to property that had not been approved for development. See Tex. Loc. Gov't CodeE § 212.135(b)(2)(B).
Shortly after the moratorium's adoption, the City Manager delivered the final approved plat to a manager of BMTP. The City Manager informed BMTP's manager that the City had adopted a moratorium on the issuance of sewer tap permits and intended to enforce that moratorium against South Meadows Estates.
The City Council voted to extend the moratorium seven times, each time for a 120–day period. The first extension contained substantially the same language as the original moratorium with two additions. First, at the request of BMTP, the extension exempted fifteen lots in South Meadows Estates that BMTP had contracted to sell prior to the moratorium. The City refused to exempt BMTP's remaining seven unsold lots. Second, the extension contained a new finding that the City was taking steps to become a member of the Waco Metropolitan Area Regional Sewerage System (WMARSS).
The second extension largely contained the terms of the first extension but changed the phrase “sewer taps” to “sewer connections.”2 The third and fourth extensions contained the same language and findings as the second extension.
After the City enacted the fourth extension, BMTP sent a letter to the City Attorney asking the City to reconsider its application of the moratorium and extensions to BMTP's seven remaining lots. Specifically, BMTP asserted that the City had already approved the plats for the seven lots, thus exempting them by law from any moratorium. The City Attorney responded that the seven lots would not be exempted because the City had only approved the lots for subdivision-not construction. The City's fifth extension contained the same language as the previous extensions.
In its sixth extension, the City added a new finding that the exemptions set forth in the original moratorium and its extensions demonstrated that the moratorium was reasonably limited to property that had not been approved for the construction of residential or commercial buildings. The sixth extension also stated that the City had paid the equity cost to become a member of WMARSS and the cost of new treatment capacity to WMARSS but that such additional capacity would not be available until after the expiration of the extension.
Meanwhile, BMTP fielded inquiries about its seven non-exempt lots, but no potential buyer maintained interest in the lots once BMTP disclosed the moratorium. BMTP asserts that the value of these seven lots fell 83% while the moratorium and extensions were in effect. With the sixth extension still in effect, BMTP sought a declaratory judgment that the moratorium and its extensions could not be enforced against its remaining seven lots.
Subsequently, the City extended its 2006 moratorium for the seventh and final time, mirroring the language of the sixth extension. The City later re-initiated the moratorium process and adopted a new moratorium in November 2008, which was substantively similar to the sixth and seventh extensions.
In February 2009, BMTP amended its petition to include the new moratorium and added a claim for inverse condemnation, asserting that the wrongful application of the moratorium amounted to a regulatory taking. Both parties moved for summary judgment on the declaratory judgment claim, and the City also moved for summary judgment on the inverse condemnation claim. The trial court granted summary judgment to the City, first on the declaratory judgment claim and subsequently on the inverse condemnation claim, and awarded attorney's fees and costs to the City.
The court of appeals reversed, holding that section 212.135 of the Local Government Code prohibits municipalities from enforcing moratoria against approved development. 359 S.W.3d 239, 245. The court of appeals also remanded the inverse condemnation claim, finding that the trial court's summary judgment could have been based on its ruling on the declaratory judgment claim. Id. at 246. Finally, the court of appeals remanded the issue of attorney's fees for a determination of whether the grant remained equitable and just. Id. at 247; see Tex. Civ. Prac. & Rem.Code § 37.009.
The City argues that BMTP's claims are not ripe because BMTP failed to comply with the procedures set forth in the moratorium. Additionally, the City asserts the moratorium validly applies to BMTP's seven lots and, therefore, BMTP's inverse condemnation claim is meritless. We address each argument in turn.
Initially, the City contends that BMTP's claims are not ripe because BMTP has not complied with the moratorium's application, appeal, or waiver procedures. The City's argument concerning the application process is unavailing because the process does not give rise to a mandatory requirement and, as structured, would nonetheless be futile. The moratorium provided that “no city employee ․ shall accept for filing any applications for the issuance of one or more sewer connections,” and that the “[a]pplications, together with any documents or fees accompanying the applications ․ shall be returned to the applicant as unfiled.” We first note that this procedure does not impose a requirement that an aggrieved landowner file an application; rather, it is a process by which the City will return any applications to the owner as unfiled. Moreover, this process would effectively render futile any attempt by BMTP to file an application as it would have been summarily returned. See Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 933 (Tex.1998) (holding that “futile variance requests or re-applications are not required” to make regulatory takings claims ripe). Thus, the moratorium's application process is not a bar to BMTP's claims.
Regarding the appeal procedure, the moratorium stated that an “applicant for a sewer connection application aggrieved by the City's decision not to accept for filing or to further process such application may appeal for relief to the City Manager, or his designee.” We have recognized that “administrative bodies only have the powers conferred on them by clear and express statutory language or implied powers that are reasonably necessary to carry out the Legislature's intent.” Thomas v. Long, 207 S.W.3d 334, 340 (Tex.2006). If the Legislature grants an administrative body sole authority to make a determination in a dispute, the municipality has exclusive jurisdiction over the dispute and “a party must exhaust all administrative remedies before seeking judicial review of the decision.” Id. Here, the parties have not cited to, nor are we aware of, any such Legislative grant of sole authority. Accordingly, we cannot say that failure to exhaust administrative remedies bars BMTP's claims.
Lastly, we cannot agree with the City's argument that BMTP's claims must fail because it did not obtain a waiver as provided by the moratorium. The moratorium sets forth a waiver procedure for aggrieved applicants who “claim[ ] a right obtained under a development agreement” or “provid[e], at the applicant's expense, the additional capacity to the City's wastewater treatment plant․” This waiver procedure tracks the statutory requirement for a waiver procedure for rights obtained under a development agreement or for a landowner that will fund public facilities at its own cost. Tex. Loc. Gov't CodeE § 212.137(a). But BMTP claims no right under a development agreement and has not volunteered to fund additional sewage system capacity; hence, the moratorium's waiver procedure does not apply to BMTP. In sum, we conclude the City's ripeness assertions regarding the application, appeal, and waiver procedures in the moratorium do not bar BMTP's claims.
B. Declaratory Judgment
Having resolved the City's ripeness arguments, we now turn to whether the moratorium validly applies to BMTP's seven lots. The crux of this case involves statutory construction. Our goal in interpreting any statute is to “ascertain and give effect to the Legislature's intent as expressed by the language of the statute.” City of Rockwall v. Hughes, 246 S.W.3d 621, 625 (Tex.2008). To determine that intent, we look first to the “plain and common meaning of the statute's words.” State v. Gonzalez, 82 S.W.3d 322, 327 (Tex.2002). We examine statutes as a whole to contextually give meaning to every provision. Id. “Municipal ordinances must conform to the limitations imposed by the superior statutes, and only where the ordinance is consistent with them, and each of them, will it be enforced.” Bolton v. Sparks, 362 S.W.2d 946, 950 (Tex.1962); see also Quick v. City of Austin, 7 S.W.3d 109, 116 (Tex.1998) (“[I]n reviewing an ordinance, the court is to consider all the circumstances and determine as a matter of law whether the legislation is invalidated by a relevant statute or constitutional provision.”).
As an initial matter, we determine that the moratorium relevant to BMTP's declaratory judgment claim is the November 2008 moratorium. BMTP filed its live pleading in March 2009, which sought “[a] declaration that under Chapter 212 of the Local Government Code, any and all existing moratoriums ․ do not apply to any of the lots contained in South Meadows Estates ․“ (emphasis added). At the time of this amended pleading, only the November 2008 moratorium was in effect. Accordingly, any declaration must be in regard to the November 2008 moratorium.3
We now turn to whether the November 2008 moratorium complied with Chapter 212 of the Local Government Code. Section 212.133 states that “[a] municipality may not adopt a moratorium on property development unless the municipality: ․ makes written findings as provided by Section 212.135․” Tex. Loc. Gov't CodeE § 212.133(2). Section 212.135 provides that “[a] moratorium is justified by demonstrating a need to prevent the shortage of essential public facilities. The municipality must issue written findings based on reasonably reliable information.” Id. § 212.135(a). One such required finding is “a summary of: ․ evidence demonstrating that the moratorium is reasonably limited to ․ property that has not been approved for development because of the insufficiency of existing essential public facilities.” Id. § 212.135(b)(2)(B). Thus, in context, the plain language of these statutes provides that a moratorium regarding a shortage of essential public facilities must not affect approved development. Id. §§ 212.133(2), 212.135. It therefore follows that a moratorium enacted to prevent a shortage of essential public facilities that affects approved development conflicts with the controlling statute and is invalid. Id. § 212.135; see Bolton, 362 S.W.2d at 950.
At this juncture, the parties dispute what constitutes approved development under Chapter 212, which defines development as “the construction, reconstruction, or other alteration or improvement of residential or commercial buildings or the subdivision or replatting of a subdivision of residential or commercial property.” tex. Loc. Gov't Code § 212.131(3). The City contends that because development is subdivision “or” construction, it may place a moratorium on construction for property it has approved for subdivision. BMTP responds, and the court of appeals agreed, that because Chapter 212 defines development as subdivision or construction, the City may not enforce a moratorium on property it previously approved for subdivision or construction. We agree with BMTP and the court of appeals.
Chapter 212 defines development as “the construction, ․ of residential or commercial buildings or the subdivision ․ of residential or commercial property.” Id. Under the plain language of the statute, subdivision constitutes development; thus, a moratorium may not affect property previously approved for subdivision (or construction). Id. The two types of development (subdivision and construction) have separate approval processes and often involve, as here, separate entities pursuing subdivision and construction for the same property. See id. § 212.001 et seq. (regulating municipal platting process for subdivisions); id. § 245.001 et seq. (regulating issuance of permits for construction). We have previously held that the Legislature's use of the disjunctive word “or” is significant when interpreting statutes. See Spradlin v. Jim Walter Homes, Inc., 34 S.W.3d 578, 581 (Tex.2000) (“This reading is supported by the use of the disjunctive conjunction ‘or’ between the two phrases, which signifies a separation between two distinct ideas.”). By using the word “or” in defining “development,” the Legislature indicated that these distinct aspects are brought within the singular scope of the term development. Id. (noting that the use of the word “or” signifies separation of distinct ideas).4 Giving effect to the statute's plain language, a property need not be approved for both the subdivision and construction aspects of development to be insulated from moratoria regarding shortages of essential public facilities; it is insulated from such subsequent moratoria when the municipality approves either subdivision or construction. See Tex. Loc. Gov't CodeE §§ 212.131(3), 212.135(b)(2)(B).
Construing the definition of development to encompass both subdivision and construction also comports with the broader statute. See Gonzalez, 82 S.W.3d at 327. When a municipality approves a plat, Chapter 212 requires it to confirm that the plat conforms with its plans and ordinances concerning current and future utilities. Tex. Loc. Gov't CodeE § 212.047(1). This requires the municipality to assess at the start of the development process the impact on utilities the development will have when completed. The Legislature's requirement that the municipality engage in this assessment at the outset buttresses the conclusion that the Legislature intended Chapter 212 to prevent moratoria regarding shortages of essential public facilities from applying to either approved subdivision or approved construction.
The City responds that the difference between Chapters 212 and 245 of the Local Government Code compel the conclusion that Chapter 212 grants it the right to place a moratorium on construction that applies to approved subdivision.5 Chapter 245 of the Local Government Code grants vested rights to entities in most circumstances to develop property under the ordinances in effect when they first filed their plat applications. Id. § 245.002. The City notes that Chapter 245 collectively defines the various approvals needed for a project as a single series of permits. Id. § 245.002(b). The City reasons that the Legislature could have collectively identified property development as a project in Chapter 212 as it did in Chapter 245 and prohibit moratoria from affecting development that was approved at any stage. But the City's argument ignores that the Legislature can accomplish the same goal with different language, as it did here. Just as Chapter 245 addresses a project in terms of a series of permits from the original plat application to completion, Chapter 212 addresses approved development as approved subdivision or approved construction. The chapters use different phraseology but both cover the spectrum from the beginning to the end of the development process. See Hartsell v. Town of Talty, 130 S.W.3d 325, 328 (Tex.App.-Dallas 2004, pet. denied) (holding Chapter 245 does not distinguish between subdivision and construction). The comparison of Chapters 212 and 245 only bolsters the weight we give to the Legislature's plain language.
Moreover, the City's reading would yield a labyrinthine statutory framework. The definition of development uses the word “or” six times. See Tex. Loc. Gov't CodeE § 212.131(3) (“ ‘Property development’ means the construction, reconstruction, or other alteration or improvement of residential or commercial buildings or the subdivision or replatting of a subdivision of residential or commercial property.” (emphases added)). We construe statutes to provide consistent meaning to the same word used throughout a statute. Tex. Dep't. of Transp. v. Needham, 82 S.W.3d 314, 318 (Tex.2002). Accepting the City's interpretation yields a series of twelve subcategories of development subject to a municipality's moratoria regarding a shortage of essential public facilities. See id.6 Rather than establishing twelve subcategories of development, the Legislature broadly defined development to include all of its discrete aspects, which prevents a moratorium regarding a shortage of essential public facilities from applying to development approved at any point in that process.
Amicus Texas Municipal League claims our interpretation will allow developers to delay developing their approved plats until municipalities pass moratoria (thereby insulating themselves from competition and potentially obtaining higher profits). But the Legislature has already contemplated such a scenario and enacted section 245.005 to allow local governments to establish ordinances related to dormant projects. Tex. Loc. Gov't CodeE § 245.005. Moreover, this problem may also be avoided if municipalities assess the impact of development on utilities when approving that development, as section 212.047 requires. The a micus's concerns are therefore unwarranted, and we decline the invitation to rewrite the Legislature's definition of development based on a concern the Legislature addressed elsewhere in the Local Government Code.
Applying the plain language of Chapter 212 to the moratorium at issue, the City approved BMTP's final plat in January 2006—almost two years before it passed the moratorium at issue and four months before it passed any moratorium. Because the City approved the residential subdivision for the seven lots at issue, the property constitutes approved development under Chapter 212. Id. §§ 212.131(3), 212.135(b)(2)(B). Accordingly, the moratorium cannot validly apply against BMTP's seven lots, and we therefore affirm the judgment of the court of appeals with respect to BMTP's declaratory judgment claim. Id.; see Bolton, 362 S.W.2d at 950.7
C. Inverse Condemnation
BMTP also seeks damages for the City's application of the moratorium against its seven lots under an inverse condemnation claim for a regulatory taking. We have held that a regulatory taking occurs when the government has unreasonably interfered with a claimant's use and enjoyment of its property. See Hearts Bluff Game Ranch, Inc. v. State, 381 S.W.3d 468, 489 (Tex.2012). To determine whether such an interference has occurred, we follow the Penn Central inquiry, which requires us to consider all of the circumstances surrounding the alleged taking. Id. (citing Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 124, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978)); Sheffield Dev. Co., Inc. v. City of Glenn Heights, 140 S.W.3d 660, 672–73 (Tex.2004). The United States Supreme Court has identified three key factors to guide our analysis: (1) the economic impact on the claimant; (2) the extent of interference with the claimant's investment-backed expectations; and (3) the character of the government's action. Penn Cent., 438 U.S. at 124.
Here, the trial court granted the City's motion for summary judgment on BMTP's inverse condemnation claim, and we must determine whether that ruling was error in light of our holding that BMTP was entitled to prevail on its declaratory judgment claim. In its summary judgment motion on the inverse condemnation claim the City asserted that none of the three grounds for a regulatory taking existed here because: (1) the moratorium existed for a valid purpose; (2) some economic value remained in the property; and (3) the moratorium was a reasonable interference with BMTP's use and enjoyment of its property. See Sheffield, 140 S.W.3d at 671–72.8 The trial court granted summary judgment in favor of the City on the inverse condemnation claim without specifying the grounds, which the court of appeals reversed and remanded. 359 S.W.3d at 246–47. Because any one of the these three regulatory takings theories could potentially support BMTP's inverse condemnation claim, the City must have conclusively disproven all three theories for the trial court's grant of summary judgment to be proper.
We review the trial court's grant of summary judgment de novo. Exxon Corp. v. Emerald Oil & Gas Co., L. C., 331 S.W.3d 419, 422 (Tex.2010). The ultimate determination of whether an ordinance constitutes a compensable taking is a question of law, but “we depend on the district court to resolve disputed facts regarding the extent of the governmental intrusion on the property.” Sheffield, 140 S.W.3d at 673 (quoting Mayhew, 964 S.W.2d at 933). Thus, we must determine whether any disputed issues of fact exist concerning the extent of the City's intrusion on BMTP's property—in which case we must remand to the trial court to resolve the dispute and determine the extent of the government's intrusion. Id.
In the summary judgment context, we review the record “in the light most favorable to the nonmovant, indulging every reasonable inference and resolving any doubts against the motion.” City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex.2005). BMTP may defeat summary judgment by showing the existence of factual disputes regarding the extent of the moratorium's intrusion on BMTP's property, which the trial court must resolve. Sheffield, 140 S.W.3d at 673. In Sheffield, we found there was no taking under the Penn Central test when: (1) the record was devoid of evidence of the economic impact on the owner; (2) the record was devoid of evidence of frustration of the owner's investment-backed expectations; and (3) the moratorium was validly enacted. Id. at 680.
By contrast, here BMTP has presented evidence that raises factual disputes with regard to the extent of the moratorium's intrusion on BMTP's property. Regarding the economic impact on the owner, the City asserts the seven lots have lost no value because BMTP never lowered the sales price of those lots when the moratorium was in effect and because BMTP's manager testified that he hoped to sell the lots for approximately $25,000 each when the moratorium is lifted (compared to sale prices of approximately $20,000 for lots sold before the moratorium took effect). BMTP argues the value of the lots has diminished by as much as 83% due to the moratorium based on a comparison of the value of lots sold before the moratorium took effect to the tax appraisal value while the moratorium was in place.9 See Natural Gas Pipeline Co. of Am. v. Justiss, 397 S.W.3d 150, 159 (Tex.2012) (noting that when a property owner testifies as to the value of his property, “[e]vidence of price paid, nearby sales, tax valuations, appraisals, online resources, and any other relevant factors may be offered to support the claim”).
Regarding the frustration of the owner's investment-backed expectations, the City argues that BMTP's manager testified he was expecting to sell the lots for approximately $25,000 each once the moratorium is lifted and that the lots will be some of the only developed lots available in the area. BMTP counters with testimony from its manager that his expectation was that BMTP would be able to sell the lots to builders once the subdivision was completed, as it had done for the previous lots in South Meadows Estates. Despite interest in the remaining seven lots from potential buyers, BMTP has been unable to sell the lots as a result of the moratorium.
And regarding the character of the government's action, we held in Part II.B, supra, that the November 2008 moratorium could not be enforced against BMTP because the City had previously approved the subdivision of the seven lots in question. See Tex. Loc. Gov't CodeE § 212.135(b)(2)(B). Likewise, the City enforced the June 2006 moratorium and its extensions against BMTP's approved development. Id. We must also view the character of the government's specific actions toward the landowner with the broader purpose of the government's action, which here was to assure an adequate supply of necessary public facilities. See Sheffield, 140 S.W.3d at 680 (assessing poor character of governmental action with respect to delaying rezoning during moratorium with broader character of zoning for planned development).10
These facts, viewed in the light most favorable to the nonmovant, indicate that the extent of the moratorium's intrusion on BMTP's property is still in dispute. City of Keller, 168 S.W.3d at 824. Thus, we cannot determine as a matter of law whether the moratorium's intrusion on BMTP's property went so far as to constitute a taking under Penn Central. See Hearts Bluff, 381 S.W.3d at 489. For this reason, the City has failed to meet its burden of establishing that no issues of material fact exist with respect to its interference with BMTP's use and enjoyment of its property and that it is entitled to judgment as a matter of law. Sheffield, 140 S.W.3d at 673. We therefore conclude the trial court's grant of summary judgment was error and remand for resolution of these factual disputes and to determine the extent of governmental intrusion before assessing whether a regulatory taking has occurred.11
D. Attorney's Fees
Finally, we must consider the trial court's award of attorney's fees. The trial court awarded the City attorney's fees when it ruled in favor of the City on the declaratory judgment claim. Under the Declaratory Judgment Act, a “court may award costs and reasonable and necessary attorney's fees as are equitable and just.” Tex. Civ. Prac. & Rem.Code § 37.009. The decision of whether to award attorney's fees is within the discretion of the trial court, but the question of whether attorney's fees are equitable and just is a question of law. Bocquet v. Herring, 972 S.W.2d 19, 20–21 (Tex.1998). The trial court's grant of attorney's fees here was based on its determination that BMTP was not entitled to a declaratory judgment that the moratorium could not apply to its seven lots. Because we have held the moratorium cannot apply against BMTP's seven lots, we remand the issue of attorney's fees to the trial court to determine whether its grant remains equitable and just in light of our holding.
E. Response to the Dissent
The dissent laments that: (1) there will be “sewage in the streets;” (2) municipalities will be “out of luck” and have no mechanism to solve their problems; and (3) section 212.135(b)(2)(A) validates the moratorium here. All three assertions are misguided.
Simply put, the Legislature in Chapter 212 requires municipalities to be proactive and assess the impact of development on utilities when they approve the development. Tex. Loc. Gov't CodeE § 212.047(1). If utility issues nonetheless persist, municipalities may place moratoria on new development in affected areas in accordance with the procedural requirements of Chapter 212. Id. §§ 212.133, .135. If issues still persist and threaten the public safety and welfare, municipalities have police powers and powers to abate nuisances at their disposal. See supra notes 5, 8. Thus, the Legislature has weighed the competing interests of developers and municipalities and resolved the conflict by allowing developers to continue building approved development and equipping municipalities with mechanisms at the various stages of utility issues to adequately address such problems. By using the mechanisms at their disposal, municipalities may avoid “sewage in the streets” and are never “out of luck” when addressing a shortage of public facilities.12
The dissent also relies heavily on section 212.135(b)(2)(A) as a basis for validating the moratorium. Section 212.135 requires the moratorium to contain a summary of evidence demonstrating the moratorium is reasonably limited to:
(A) areas of the municipality where a shortage of essential public facilities would otherwise occur; and
(B) property that has not been approved for development because of the insufficiency of existing essential public facilities.
Tex. Loc. Gov't CodeE § 212.135(b)(2). The dissent reasons that “(B) is a complete subset of (A): the areas of town where shortages will occur include every area where development has not been approved because of existing shortages.” ––– S.W.3d at –––– (Hecht, J., dissenting). The dissent concludes that under our interpretation, “only (B) must be met,” and subsection (A) is rendered meaningless. Id. at ––––.
Aside from the fact that no party or judge has claimed that subsection (A) is in any way relevant to this moratorium, the premise that subsection (B) is wholly subsumed by subsection (A) is flawed. There will undoubtedly be occurrences when a shortage of essential public facilities only affects part of a municipality. In such a circumstance, the municipality may impose a moratorium only on the affected area under subsection (A) and only on new development in that area under subsection (B). Subsection (A) is not rendered meaningless. It prevents municipalities from imposing moratoria on new development in unaffected areas. Because one sewer served the entire City here, no party has argued that subsection (A) has any bearing on the validity of the moratorium at issue.
Chapter 212 of the Local Government Code prevents moratoria regarding a shortage of essential public facilities from affecting previously approved development. It also defines development to include subdivision or construction. Because the City approved BMTP's subdivision for the seven lots at issue before it passed the moratorium, the seven lots constitute approved development that the moratorium cannot affect. Thus, BMTP is entitled to prevail on its declaratory judgment claim. Regarding the inverse condemnation claim, factual disputes persist that the trial court must resolve with respect to the extent of the moratorium's interference with BMTP's use and enjoyment of its property before a court may determine if a taking has occurred. Finally, the grant of attorney's fees was based on the trial court's finding that the moratorium was valid. Because we have affirmed the court of appeals' reversal of this ruling, the trial court must assess whether its award of attorney's fees remains equitable and just. Accordingly, we affirm the judgment of the court of appeals, which rendered judgment for BMTP on its declaratory judgment claim and remanded the inverse condemnation and attorney's fee claims to the trial court for further proceedings.
In the spring of 2006, the City of Lorena was informed by retained engineers that its sewage system was over capacity. The City was further warned that, if the sewage volume continued to increase, excess sewage could contaminate nearby water sources. Needless to say, the receipt of this information put the City on notice that it needed to take action to protect its citizens. Title 7 of the Texas Local Government Code provides municipalities with authority to regulate the development of property, including the imposition of moratoria in certain circumstances. See Tex. Loc. Gov't CodeE §§ 212.131–.139. Today we are presented with the question of whether the statute at issue prohibited the City from using this form of protective action—the adoption of a moratorium—to protect its residents under the circumstances of this case.
While the conclusion the Court reaches today may seem harsh, in my view, the plain language of the statute leaves no plausible alternative. Section 212.135 clearly requires municipalities to issue written findings summarizing evidence demonstrating both “the extent of the need beyond estimated capacity of existing essential public facilities” and “that the moratorium is reasonably limited to: (A) areas of the municipality where a shortage of essential public facilities would otherwise occur; and (B) property that has not been approved for development because of the insufficiency of existing essential public facilities.” Id. § 212.135(b). The definition of “property development” in section 212.131 unambiguously includes not only building construction, but also the subdivision of residential or commercial property. Id. § 212.131(3). In other words, property that has been approved for subdivision has necessarily been approved for development and is therefore not properly subject to a moratorium under section 212.135.
I agree with the dissent that, if the purpose of a moratorium is to prevent a shortage of essential public facilities, restricting the moratorium to only those properties that have not been approved for development is arguably insufficient to accomplish that goal. After all, exempting property that has been approved for development will necessarily lead to an increase in the volume of sewage burdening an already-taxed system. However, for the reasons advanced by the Court, I cannot say that such a result is absurd. Cities simply must be very careful when evaluating whether to grant permits authorizing development in the first instance.
All of this is not to say that cities are powerless to protect their citizens. To the contrary, municipalities must have an effective mechanism to do so in the event of a public threat. And while I agree with the dissent that reliance on the police power may not be the preferred method of accomplishing such a necessary goal, that is not for this Court to decide. Because this option allows municipalities to take protective action when necessary and proper, without rising to the level of a constitutional taking, I concur in the Court's opinion and judgment.
The way the Court begins its opinion—“[m]unicipalities must ensure that essential public facilities are available to their residents”1 —the ending comes as a surprise: “a moratorium regarding a shortage of essential public facilities must not affect approved development.”2 To be honest, the Court should begin instead: “Municipalities cannot ensure that essential public facilities are available to their residents if it interferes with approved development. The Legislature has forbidden it.” Surely the staunchest cynic of the legislative process would pause to accuse the Legislature of preferring development over, say, sewage in the streets—development run amuck, as it were.
What can a city do to prevent continuing development from depriving residents of essential public facilities? Two things. It can waste tax revenues on buying out the developer or litigating with him (probably unsuccessfully, as I will explain, but nevertheless expensively), instead of spending the funds to improve facilities so that development can continue without threatening public health and safety, thereby benefitting both the developer and the public. Or it can just let matters run their course, polluting the environment and endangering the public. The Court's solution to this predicament is for cities to be very careful—reluctant, even—in approving development—a wonderful irony in a case won by a developer. Which is all well and good, except that nothing suggests the city in this case was promiscuous in approving development, and in any event, the unexpected may occur—it may have in this case—and facilities that seemed adequate when development was approved prove insufficient before construction is begun or completed. There will be times when a city is just ․ out of luck.
It would be bad enough if all this were the Court's concoction, but what is worse, the Court blames it on the Legislature. Requiring cities to risk either public revenue or public health, or both, in approving development is all the Legislature's idea. And this, says the Court, is clear from “the plain language” of Sections 212.133 and 212.135 of the Local Government Code.3 What is missing from the Court's analysis—which turns on the meaning of one word, “and”—is any thought that there ought to be some rationale for its interpretation of these statutes, or what that rationale might be. The words are crucial, to be sure, but they are the product of a legislative process, the hallmark of which is not precision but purpose. To address the reality that even the most carefully chosen words may be misunderstood, the Legislature has stated that “[i]n enacting a statute,” it intends “a just and reasonable result”.4 Requiring cities to waste tax dollars? Polluting streets and waterways? Stalling economic growth? Those are the possible results of the Court's statutory interpretation. Which does it think are reasonable?
Fidelity to text is achieved more by discerning its purpose than by parsing its grammar. In my view, the Court misreads the statutory text in this case, but its error is not merely grammatical. The Court refuses to be guided in its interpretation by legislative purpose, and that systemic failing will affect—is affecting—other cases.
The essential facts of this case are simple. Several months after the Lorena City Council approved BMTP Holdings' plat for the latest phase of its residential development, the City's engineering firm reported that if the sewage volume continued to increase, the system could become overloaded, violate state regulations, and send excess sewage into nearby water sources. The City Manager had known all along that the sewer system was inadequate but was not aware a crisis was brewing. Following the engineer's recommendation, the City adopted a moratorium on sewer tap permits, preventing homes constructed on BMTP's lots from connecting to the sewer system. When BMTP pointed out that it had already sold fifteen of the vacant lots to homebuilders, the City exempted those lots from the moratorium, but it refused to exempt BMTP's seven unsold lots. Two years later, after trying unsuccessfully to sell residential lots without sewer connections, BMTP sued for a declaration that the moratorium was invalid under Chapter 212 of the Local Government Code, and for damages, alleging inverse condemnation.
Sections 212.1335 and 212.1356 provide that a city may not adopt a moratorium on property development to prevent a shortage of essential public facilities unless it makes findings on two subjects. One is “the extent of need beyond the estimated capacity of existing essential public facilities that is expected to result from new property development”.7 The other is that the moratorium is reasonably limited to:
(A) areas of the municipality where a shortage of essential public facilities would otherwise occur; and
(B) property that has not been approved for development because of the insufficiency of existing essential public facilities.8
The Court treats (A) and (B) as conditions which must both be met for a moratorium to apply in an area, based on their joinder by “and”. The problem with this interpretation is that (B) is a complete subset of (A): the areas of town where shortages will occur include every area where development has not been approved because of existing shortages. Because (A) includes areas not in (B), and all areas in (B) are in (A), if both (A) and (B) must be met, then only (B) must be met. That is what the Court concludes.
This interpretation is flawed in two respects. It reads (A) out of the statute. Section 212.135(b)(2) would mean exactly the same thing if (A) were omitted. This violates the principle that all words of a statute be given effect and not treated as mere surplusage.9 But more importantly, it makes nonsense of the statute. The need for a moratorium in the (B) areas is not immediate; development there has already been halted due to existing shortages. All the (A) areas need the moratorium, not just those which are also (B) areas. In the Court's view, the Legislature prohibited cities from halting development except when it is already halted. Legislature to cities: you can protect the public from a loss of essential services, but only if protection is unnecessary.
Subsection (B) is better read as a specific instance of (A). It is not surplusage; it emphasizes one area included in (A). I suspect the Court would agree if the specific preceded the general, limiting a moratorium to “property that has not been approved for development because of the insufficiency of existing essential public facilities” and (i.e., as well as) “areas of the municipality where a shortage of essential public facilities would otherwise occur”. The specific illustrates or emphasizes an example of the general but does not limit the general; otherwise, the general would be irrelevant. Beginning with the general does not alter the meaning. For example, where a 60 mph speed limit for trucks is lower than the limit for other vehicles, a statute imposing the 60 mph limit for “vehicles and trucks” or “trucks and vehicles” accomplishes the same thing: reducing the speed limit for all vehicles to the current limit for trucks. A reasonable drafter could choose to include trucks specifically to point out that the difference in the legal limits has been removed. It would be unreasonable to suppose that the drafter intended by the phrase that the 60 mph limit would apply only to vehicles that are also trucks, thereby accomplishing nothing.
The Court's focus on the areas covered by a permissible moratorium is misdirected. Surely it goes without saying that a moratorium should be imposed on development only where essential public facilities are threatened. The Legislature's obvious purpose in enacting Sections 212.133 and 212.135 was not to limit where a moratorium on development can be imposed but how one can be imposed. By mandating a process in which a moratorium cannot be adopted without making specific findings justifying its necessity, the Legislature has deprived cities of the power to act for general policy reasons, or simply because they can. Absent the required fact-finding supported by evidence, a moratorium is prohibited. Not all the ordinances adopted by the City of Lorena may have complied with the statutes, but the final ordinance, which is the one the Court thinks matters, found that
(1) any new sewer connections will push the Lorena Wastewater Treatment Plant further beyond its capacity;
(2) operating beyond the capacity of the Lorena Wastewater Treatment Plant may result in failure of the entire plant, thereby causing all residents of the City currently connected to the Lorena Wastewater Treatment system to lose service; and
(3) operating beyond the capacity of the Lorena Wastewater Treatment Plant may result in illegal discharges from the plant, thereby subjecting the City to fines and penalties from the State of Texas and/or the federal government.
The Court does not consider these findings to be unsupported by the evidence or inadequate to support the moratorium. In fact, they are not pretextual; the City has been attempting to increase the sewage services available to its residents since the first moratorium.
Reasonably read, and completely unsurprisingly, Sections 212.133 and 212.135 do not prohibit cities from halting development, whether previously approved or not, to ensure essential public services for its residents, as the City did in this case. The surprise is that the Court reaches the opposite conclusion.
The Court also concludes that because the City's moratorium was invalid, BMTP has a viable takings claim. But valid or not, the threat to the public remains. One element of a takings claim, as the Court acknowledges, is that BMTP has been deprived of its reasonable, investment-backed expectations in the use of its seven lots.10 BMTP's expectations, the Court says, were that it “would be able to sell the lots to builders once the subdivision was completed, as it had done for the previous lots”.11 But sewer services available for the previous lots have come to be inadequate. No investor can reasonably expect that, having begun to develop his property without risk to the public, he will be entitled to continue that development when the risk arises. For that reason, a takings claim is unlikely to succeed. I think what the Court means is that it is reasonable to expect that approval of development guarantees that essential services will be available when needed. The Court's view, for now at least, is that the consequences of post-approval exigencies should reasonably be expected to fall on the public, not a landowner. This position flows from the Court's view that the Legislature has prohibited cities from halting approved development to protect public health and safety. But no authority supports such a view, and in the unlikely event BMTP should persuade a jury to award it damages against the City for trying to protect its citizens from having to drink improperly treated wastewater, I doubt the Court will adhere to that position.
I respectfully dissent.
Justice GUZMAN delivered the opinion of the Court, in which Justice GREEN, Justice JOHNSON, Justice WILLETT, Justice LEHRMANN, Justice BOYD, and Justice DEVINE joined.
Justice LEHRMANN filed a concurring opinion.Justice HECHT filed a dissenting opinion, in which Chief Justice JEFFERSON joined.