City of McKinney v. Hank's Restaurant Group, L.P.
2013 Tex. App. LEXIS 11812
| Tex. App. | 2013Background
- Hank’s Restaurant Group (HRG) operates Hank’s Texas Grill in McKinney and alleges a decade-long campaign of harassment and improper enforcement by City police and fire personnel, including disruptions of live music and an August 2012 demand letter threatening suit unless HRG signed a compliance plan.
- HRG filed the first suit (Aug. 23, 2012) seeking declaratory and injunctive relief; the City filed its own suit the next day alleging code violations and seeking declaratory and injunctive relief and attorneys’ fees.
- The trial court consolidated the cases and denied the City’s pleas to the jurisdiction; the City filed an interlocutory appeal under Tex. Civ. Prac. & Rem. Code § 51.014(a)(8).
- The principal jurisdictional question was whether governmental immunity barred HRG’s declaratory, injunctive, and monetary claims, and whether any waivers (Declaratory Judgments Act, Local Gov’t Code ch. 245, or waiver by conduct/affirmative claims) applied.
- The trial court allowed HRG to proceed as to some monetary relief; the Court of Appeals reviewed de novo whether HRG’s pleadings sufficiently alleged facts waiving immunity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether declaratory-judgment claims are barred by governmental immunity | HRG: DJA and Ch. 245 waive immunity; also alleges City waived immunity by inequitable conduct | City: Immunity not waived for declarations of statutory rights, misapplication of law, or officer conduct; exemptions under Ch. 245 apply | Court: Declatory claims challenging ordinance validity may proceed under DJA; HRG’s pleadings otherwise insufficient — remand to allow amendment; several declaratory claims dismissed |
| Whether injunctive relief against the City is barred by immunity | HRG: Injunctive relief proper to stop City misconduct and enforcement actions | City: Immunity bars equitable relief challenging governmental actors’ application of law; injunctive requests implicate enforcement of penal/state laws | Court: Injunctive claims against the City are barred (Heinrich); trial court erred in denying plea; remand for HRG to replead limited claims |
| Whether HRG pleaded a claim for monetary relief and whether immunity is waived | HRG: Seeks damages and offset as defense to City’s affirmative claims; Ch. 245 or conduct waiver applies | City: No legislative waiver for damages; Reata waiver inapplicable because City’s fee claims are defensive | Court: HRG did plead damages; City’s affirmative claim for attorneys’ fees in its own suit constitutes an affirmative monetary claim under Reata, so HRG may seek damages defensively up to amount necessary to offset City’s recovery |
| Whether a waiver-by-conduct or other equitable waiver exists | HRG: City’s allegedly egregious conduct waives immunity | City: Immunity cannot be waived by conduct; waiver must come from legislature or be recognized by Supreme Court | Court: Rejects waiver-by-conduct; no general judicially created doctrine here; waiver limited to legislative provisions (e.g., Ch.245) where applicable |
Key Cases Cited
- Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217 (Tex. 2004) (standard for reviewing pleas to the jurisdiction and pleading burden to show waiver)
- City of Dallas v. Albert, 354 S.W.3d 368 (Tex. 2011) (distinguishes immunity from liability and suit; limited waiver for counterclaims to offset governmental recovery)
- City of El Paso v. Heinrich, 284 S.W.3d 366 (Tex. 2009) (DJA does not waive immunity for declarations of rights under a statute; proper remedy for illegal official action is an ultra vires suit against officers)
- Reata Constr. Corp. v. City of Dallas, 197 S.W.3d 371 (Tex. 2006) (governmental entity’s affirmative monetary claims permit defensive counterclaims germane to and limited by offset)
- Tex. Dep’t of Transp. v. Sefzik, 355 S.W.3d 618 (Tex. 2011) (clarifies that DJA does not waive sovereign immunity for declarations of statutory rights)