CAUSE NO, DC-14-01443 ‘TRINITY EAST ENERGY, LLC, IN THE DISTRICT COURT Plaintiff, v. 192"? JUDICIAL DISTRICT CITY OF DALLAS, TEXAS, on ean un con eon en een eon en Defendant. DALLAS COUNTY, TEXAS RESPONSE TO DEFENDANT’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION 001 FILED DALLAS COUNTY ‘4/2016 5:36:99 PAt FELICIA PITRE DISTRICT CLERKTABLE OF CONTENTS TO DE ENDANT’S AMENDED SUPPLEMENTAL PLEA TO SDICTION AND SECOND SUPPLEMENTAL PLEA TO THE, JURISDICTION . escnenesee TABLE OF CONTENTS. 1 INTRODUCTION... IL LEGAL STANDARDs Il. EVIDENCE IN SUPPORT OF RESPONSI The City of Dallas Contemplates Gas Drilling Leases to Generate Revenue to Help Cover $90,000,000 Budget Shortfall. B. The City Requests Proposals for “Gas Well Drilling and Production Leases.” C. The City Adopts Its First Gas Drilling Ordinance. .. D. Trinity Responds to the REP and Secures Right to Lease Groups 1 and 2A Properties... E, Trinity and the City Negotiate Leases for Gas Drilling Almost Entirely Comprised of Park Land, While City Staff Advises the Council that There Will Be No Drilling on Park Land. F. The City Was Acutely Aware of Trinity’s Need for Drill Sites. he City Confirms Its Assurances of Drill Sites to Trinity, Executes the Leases, and Pockets More Than $19,000,000. H. _ InReliance on the City’s Assurances, Trinity Set Out to Obtain the Necessary Permits, Engineering, and Site Plans to Drill in the City, a I, Trinity Submits its SUP Applications to the City J. City Staff Recommends Approval of the SUPs, but the Plan Commission and City Council Vote to Deny... PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION PAGE i 002K, Denial of the Three SUPs Effectively Ended Any Opportunity for Trinity to Drill in the City of Dallas. .. L. inity Has Suffered Substantial Damages. 1V. ARGUMENT AND AUTHORITI ES A. The City Is Not Immune to Trinity's Breach of Contract Claim....... 1. The Governmental-Proprietary Dichotomy Remains Valid Texas Law. .. . 2. The Dichotomy Applies to Breach of Contract Claims....... 3. The Legislature Has Not Abrogated the Dichotomy as to Contracts. 4, The City Was Engaged in a Proprietary Function When it Executed the Lease Agreements and is, Therefore, Not Immune to Trinity’s Breach of CONTRACT CLAim. 5. The Lease Agreement Cannot (and Does Not) Waive Subject Matter Jurisdiction. B, _ Even if Chapter 271 Applies, Immunity From Suit for the Lease ‘Agreement Has Nevertheless Been Waived... 60 C. The City Is Not Immune to Trinity's Properly Plead Promissory Estoppel Claim, 63 D. Trinity Has Alleged A Proper Breach Of Contract Claim Against ‘The City Over Which This Court Has Jurisdiction. 1, The City Breached the Leases With Trinity Because it Prevented Trinity From Drilling on the Leased Property. .. 2, Trinity’s SUP Applications Satisfied the Criteria Set Forth in the Code to Grant an SUP. os 3. Because the City had Uniformly Approved SUPs Where the City Was the Applicant, the Decision to Approve Trinity’s SUPs on City Land Were Ministerial, E, The City Is Not Immune to Trinity's Claim for Declaratory Judgmen PLAINTIFF’S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA 003 TION ~ PAGE iilG. PLAINTIFF'S Ri The City Is Not Immune To Trinity’s Inverse Condemnation Clai 1. 14, 15, 16. The City Is Not Immune to 1 SPONSE TO THE CITY OF DALLAS’S ‘The Court Has Jurisdiction Over Trinity's Inverse ‘Condemnation Claims. Trinity’s Inverse Condemnation Cause of Action is Ripe for Adjudication. . The City Reached a Final Decision as to the Group 1 and 2a Properties. Pursuing Other Applications Would Have Been Futile, Dallas’ New Drilling Ordinance Rendered Further Sup Attempts Futile ‘Trinity's Inverse Claims Are Not Moot. Intent To Take Is Evidenced By The City’s Drilling Prohibition. Trinity Has Alleged A Valid Takings Claim. Trinity Has Pled and Raised Disputed Facts As to its Penn Central Claim... ‘The City’s Taking had an Adverse Economic Impact. ‘Trinity’s Investment Backed Expectations Were Reasonable. ‘There is a Disputed Fact Issue as to the Character of the Governmental Action... 2105 ‘The City has Denied Trinity all Economically Viable use of its Leasehold Interest. - 106 ‘The City Caused the Taking. 108 Carlson Does Not Apply... senses 109 Parcel as a Whole. 109 110 AMENDED SUPPLEMEN' PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDI 004L. M. N. V. PRAYER. PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLE! Plaintiff Has Pleaded Sufficient Facts For Its Common Law Fraud Claim... sensnnne 110 Plaintiff Has Pleaded Sufficient Facts For Its Fraud By Nondisclosure Claim. sn. : veel 12 Plaintiff Has Pleaded Sufficient Facts For Its Statutory Fraud Claim. 114 Plaintiff Has Pleaded Sufficient Facts For Its Negligent Misrepresentation Claim... és 47 Immunity Has Been Waived As To Plaintiff's Attorneys’ Fees Claim. seve LIB Immunity Has Been Waived As To Prejudament And Postjudgment Interest. . wo ID Trinity Was Not Required To Make A Presentment Of Claim... 119 120 TAL, PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA 0 THE JURISDICTION ~ PAGE Y 005Plain Trinity East Energy, LLC (“Plaintiff? or “Trinity”) files this Response to Defendant’s Second Supplemental Plea to the Jurisdiction asserted by Defendant City of Dallas (“Defendant” or the “City”) and would respectfully show the Court the following: L INTRODUCTION This case involves several claims against the City arising from the City’s proprietary decision to enter into gas leases to generate millions of dollars in revenue to the City. The City expressly agreed to provide drill sites required for those leases to have any value. Then, using its regulatory might, the City thwarted the intent of the parties and the entire purpose of the Leases by denying the right to drill within the city, thus rendering the leases worthless. ' In its Second Amended Petition, Trinity asserts the following causes of action against the City: breach of contract, inverse condemnation, common law fraud, statutory fraud, promissory estoppel, negligent misrepresentation, and attomey’s fees. In its Plea, the City wrongly asserts the Court lacks subject matter jurisdiction over this case. However, the City is not immune to Trinity East's claims. This Court does have jurisdiction over the same, Under the Lease and its numerous amendments, the City sold the minerals at issue to Trinity, giving Trinity the exclusive and sole right to exploit gas reserves located on City land. As demonstrated below, the activities contemplated represent a proprietary activity of the City as a matter of law, for which the City has neither immunity from suit ' See Plaintiff's Second Amended Petition PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL TO THE JURISDICTION AND SECOND SUPPLEMENTAL (0-THE JURISDICTION ~ PAGE 1 006nor liability. As a result, the City is not subject to any limi jons on remedies or damages except for those set forth in the Lease. Moreover, the City is subject to tort claims for its acts and omissions, and those of its agents, in connection with this proprietary activity to the same extent a private corporation would be subject to tort claims from engaging a similar activity. ‘The City is also subject to Trinity’s inverse condemnation claim which is ripe and over which this Court has jurisdiction. For the reasons set forth below, the Court should find that it does have subject matter jurisdiction and deny the City’s Plea. 1. LEGAL STANDARDS 1. The purpose of a plea to the jurisdiction is to dismiss a cause of action without regard to whether the claim has merit. Bland Indep. Sch. Dist. v. Blue, 34 $.W.3d 547, 554 (Tex. 2000). It is a dilatory plea that challenges the court’s power to adjudicate the subject matter of the controversy. Harris County v. Sykes, 136 $.W.3d 635, 638 (Tex. 2004); Bland, 34 S.W.3d at 554; Tex. Dep't of Transp. v. Arzate, 159 S.W.3d 188, 190 (Tex. App—El Paso 2004, no pet.). Subject matter jurisdiction is essential to the authority of a court to decide a case, Bland, 34 $.W.3d at 553-54, Subject matter jurisdiction cannot be conferred by consent and cannot be waived, Carroll v. Carroll, 304 $.W.3d 366, 367 (Tex. 2010); Continental Coffee Products Co. v. Cazarez, 937 8.W.2d 444, 448 n.2 (Tex. 1996). Whether a party has alleged facts that affirmatively demonstrate a court’s subject matter jurisdiction and whether undisputed evidence of jurisdictional facts establishes a trial court’s jurisdiction are PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 2 007questions of law. Tex. Dep’t of Parks & Wildlife v. Miranda, 133 8.W.3d 217, 226 (Tex. 2004); Tex. Natural Res. Conserv. Comm'n y. IT Davy, 74 8.W.3d 849, 855 (Tex. 2002). 2, Ripeness is an element of subject matter jurisdiction. Town of Mayhew v. Sunnyvale, 964 8.W.2d 972, 928 (Tex. 1990). A challenge to the subject matter jurisdiction of the court cannot be waived, and can be raised at any time during judicial proceedings, including for the first time on appeal. Waco ISD v. Gibson, 22 S.W.3d 849, 850 (Tex, 2000); Tex. Assn. of Bus. v. Tex. Air Control Bd., 852 $.W.2d 440, 445 (Tex. 1993); TCI West End, Inc. v. City of Dallas, 274 8.W.3d 913 (Tex. App—Dallas 2008, no pet.), 3. “When a plea to the jurisdiction challenges the pleadings, [courts] determine if the pleader has alleged facts that affirmatively demonstrate the court's jurisdiction to hear the cause.” Ryder Integrated Logistics, Inc. v. Fayette County, 453 S.W.3d 922, 927 (Tex. 2015) (quoting Miranda, 133 S.W.3d at 226). "In doing so, ‘[courts] construe the pleadings liberally in favor of the plaintifi{] and look to the pleader{‘s} intent.” Jd. (quoting Miranda, 133 $.W.3d at 226). ”Where the pleadings generate a “fact question regarding the jurisdictional issue,” a court cannot sustain the plea to the jurisdiction. Jd. (quoting Miranda, 133 $.W.3d at 228). 4, Review of a plea challenging the existence of jurisdictional facts mirrors that of a matter-of-law summary-judgment motion. Mission Consol. Indep. Sch. Dist. v Garcia, 372 8.W.3d 629, 635 (Tex. 2012); City of Houston v, Guthrie, 332 8.W.3d 578, 587 (Tex. App—Houston [Ist Dist] 2009, pet. denied) (“[T]his standard generally mirrors that of a summary judgment under Texas Rule of Civil Procedure 166a(c). ... By PLAINTIFFS RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TOT 008requiring the [political subdivision] to meet the summary judgment standard of proof. we protect the plaintiffs from having to put on their case simply to establish jurisdiction.”); see also Tex. R. Civ. P. 166a(c). A court may consider evidence as necessary to resolve a dispute over the jurisdictional facts, even if the evidence “implicates both the subject matter jurisdiction of the court and the merits of the case.” Miranda, 133 $.W.3d at 226, Courts must take as true all evidence favorable to the nonmovant and indulge every reasonable inference and resolve any doubts in the nonmovant’s favor, Id. at 227; see also Heckman v. Williamson Cnty. , 369 8.W.3d 137, 150 (Tex. 2012). If the defendant meets its burden to establish that the trial court lacks jurisdiction, the plaintiff is then required to show that there is a disputed material fact fictional issue. Miranda, 133 $,W.3d at 228. If the evidence raises a sue regarding jurisdiction, the plea cannot be granted and a fact finder must resolve the issue, Jd, at 227-28. On the other hand, if the evidence is undisputed or fails to raise a fact issue, the plea must be determined as a matter of law. Id. in. EVIDENCE IN SUPPORT OF RESPONSE In support of this Response, Trinity incorporates by reference the exhibit identified and attached to the Appendix of Exhibits filed herewith as if set forth herein word for word. PLAINTIFF’S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL ICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION — PAGE 4 009mu. STATEMENT OF FACTS In support of this Response, Trinity offers the following statement of uncontroverted facts that were specifically pleaded in Trinity’s Second Amended Petition or are consistent with those pleaded facts and that have been substantiated through discovery. ‘The City of Dallas Contemplates Gas Di Help Cover $90,000,000 Budget Shortfall. ing Leases to Generate Revenue to 5, In 2006, at the direction of the Council, the City began to explore the leasing of mineral rights on City property, partly because other cities were generating “a substantial amount of money for the lease bonus for their property.” (Deposition of Mary Suhm (“Suhm”), pp. 68, 72); (Deposition of Mark Duebner (“Duebner”), pp. 28-29). City staff members assigned to exploring this option and analyzing other cities’ drilling, practices and revenues were City Executive General Manager, Mark Duebner, Assistant City Attorneys, and employees in the City’s budget office. (Suhm, pp. 70-71). 6. In 2007, the City faced a significant budgetary shortfall with an initial projected revenue gap of approximately $90,000,000.00. (Suhm, pp. 72-73, Ex. 16). As a result, the City faced the dilemma of severely curtailing services or raising taxes, and the City Council advised City staff that it “[did) not want to consider tax rate increases.” (Suhm, Ex. 24, at pp. COD_008999 — COD_009000, Ex. 16, at pp. COD_019181 — COD_019184), The Dallas City Council charged staff to “aggressively develop new sources of revenue.” (Suhm, p. 74, Ex. 16). As a result of these efforts, then-City PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL ‘TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLE JU ON PAGES o10Manager Mary Suhm pointed out to the Council that numerous cities, counties, and the DEW Airport were leasing their mineral rights and receiving significant payments from gas companies. (Suhm, p. 72, Ex. 16). City officials decided that obtaining revenue from gas wells drilled on City-owned land would help relieve the projected $90,000,000 shortfall. ‘The 2007 budget included projected revenues of $20,000,000.00 from gas drilling leases (Suhm, p. 79, Ex. 5, 6, 16). 7. After the City decided to lease mineral rights, it designated Ducbner to research municipal oil and gas leasing and devise the process by which to lease the City’s minerals and to advertise the leasing by a request for proposal process. (Duebner, pp. 31- 32). Because the City lacked expertise in oil and gas leasing, Duebner was tasked with becoming the City’s expert on that subject. (Id.). 8. Around the same time in 2007, the City was considering potential amendments to the Dallas Development Code to enhance drilling options within corporate limits. (Cossum, pp. 25-26, Ex. 49, 50). The City’s desire to lease its mineral interests and recognize the substantial revenue from those leases was so urgent that, although the City did not have a gas drilling ordinance in place at the time, City staff recommended moving forward with the RFP process and solicitation of bids. For example, on June 26, 2007, City Planning Director Theresa O'Donnell emailed Mary Suhm regarding the slow pace of the gas drilling ordinance amendment. (Suhm, Ex. 9). She explained that this timing should not prevent Mark Duebner “from getting an RFP together and advertising for bids.” (Suhm, Ex. 9). She added that “(o)btaining an SUP PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURIS on CTION ~ PAGE 6[for a drill site location] is another 4 or 5 months approval, so Mark should defi going now.” (Suhm, Ex. 9). B. The City Requests Proposals for “Gas Well Drilling and Production Leases.” 9. On or around July 20, 2007, the City packaged City-owned mineral interests totaling roughly 7,500 acres into four groups to be leased through the RFP process (Duebner, p. 45) and published the RFP, entitled “Request for Proposals BEZO713” for “Gas Well Drilling & Production Leases.” (Suhm, Ex. 12, 14; Duebner, pp. 84-88)). The REP and related correspondence included the following statements regarding drilling and permitting of gas wells within the City. ‘A. List of “Potential Drilling Sites” (City Plea, Ex. 1); B. “We have also included locations in order to offer drilling sites on city-owned property to benefit the lease play.” (City Plea, Ex. 1); C. There are currently three gas wells that have been permitted by the Texas Railroad Commission within the City of Dallas. Permits are being processed by the City of Dallas, and we anticipate this process to be complete in the near future.” (City Plea, Ex. 1); D, “POTENTIAL SURFACE USE: The City of Dallas has identified and included a list of possible drilling site locations. A map and chart of the potential sites is attached as Exhibit G.” (City Plea, Ex. 1s “Proposals submitted shall provide for the City of Dallas’ preferred terms as outlined below: . . . (6) Evidence of Respondent’s access to ing rigs.” (City Plea, Ex. 1); F, “EXHIBIT G PROPERTY AVAILABLE FOR POTENTIAL, SURFACE USE” (City Plea, Ex. 1) 10. The RFP also included a draft form lease stating, “Lessor grants and leases exclusively unto Lessee the following described land (the “Land”) in Dallas County, PLAINTIFF'S RESPONSE 10 THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL HE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 7 o12Texas, for the sole purpose of exploring, drilling, and producing oil and gas, laying pipelines, and building roads and tanks thereon to produce, save, treat, process, store, and transport oil and gas and other products manufactured from oil and gas produced from the Land...” (City Plea, Ex. 1). 11, The City not only published the REP, it solicited bids from targeted oil and gas producers in the state. (Suhm, Ex. 14, Duebner, pp. 85-86). The original deadline for responses to the REP was August 3, 2007. (Duebner, pp. 55-56, Ex. 12). Response to the REP, however, was “meager,” and a significant gas drilling company, Chesapeake Energy, decided not to respond to the RFP. (Duebner, p. 55, Ex. 37; Suhm Ex. 4, 13). ‘The lack of responses was such a concern to the City that in August 2007 the City contacted the State’s top 30 gas production companies about the RFP (Suhm, pp. 38-9, Ex. 13) and extended the deadline to respond due to the lack of interest (Suhm, p. 122). 12. One of the companies the City contacted was Trinity. (Fort Aff, 14). The City requested that Trinity respond to the City’s REP to acquire leases for the purpose of Grilling for natural gas on various City-owned lands. (Fort Aff., 44). 13, At this time, the City was also proposing its budget for the 2007-2008 annum, which would include a projection about revenues that the City could expect from gas leasing, (Duebner, p. 68). Duebner provided projected estimates of revenue to be raised from gas leases before the RFP had closed. (Id. at 69). ‘The estimate was based on the value that other cities had received for gas leases. (Id. at 70). 14, The City’s sole purpose for entering the gas leases was to raise revenue. (Id. at 71). The City was not obligated by statute, code, or otherwise to lease its minerals. PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS"S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO TH 013(Duebner, pp. 71-72). The City chose the RFP process to lease the City's property in order to maximize revenue. (Jd. at 70). Based on the City’s stated intent to lease City- ‘owned property and allow drilling within the City, the 2007-08 City of Dallas budget included $20 million in revenue from gas leases. (Suhm, p. 79, Ex. 5, 6). C. The City Adopts Its First Gas Drilling Ordinance. 15. Based on the meager response to the REP, the City realized it was not maximizing its opportunity to obtain bids on the Gas Well Drilling & Production Leases REP because the City had not yet finalized its gas well drilling ordinance. (Suhm, Ex. 4). Accordingly, in an effort to clarify the rules applicable to gas drilling in the City for potential RFP respondents (Duebner, pp. 47-48), on or about September 12, 2007, the Dallas City Council adopted a gas drilling ordinance (the “Dallas Drilling Ordinance”) that would allow drilling on park land but would also require a specific use permit (“SUP”) for drilling on any City property. (Cossum, Ex. 52). 16. Asa further example of the pressure to complete the RFP process and secure the lease bonus money, in August, 2007, Duebner sent an e-mail to then-Assistant Director of Sustainable Development and Construct, David Cossum, indicating that Mary Suhm was upset that the gas drilling ordinance had not been completed and approved by ity Council and was disappointed that a public hearing on the ordinance would be delayed a week until September 12, 2007. (Duebner, p 65, Ex. 39). PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 9 014D. Trinity Responds to the RFP and Secures Right to Lease Groups 1 and 2A Properties. 17. Inresponse to the City’s specific invitation for Trinity to submit a proposal, Tri ity submitted a bid on four groups of city-owned properties, including the groups known as Group 1 and Group 2A which are the subject of this lawsuit, on or about November 9, 2007. (City Plea, Ex. 62, 63, 64, and 65 (the “Bid Responses”), Trinity submitted the Bid Responses contingent on the negotiation of lease terms, title review, and other matters. (Fort Aff., 6). Along with the Bid Responses, Trinity paid deposits totaling $400,000 to the City; $100,000 each for the four bids. (Fort Aff., 47). 18, Ultimately, despite the City’s efforts to maximize the number of proposals, only Trinity and XTO Energy Inc. responded to the RFP with bids for City leases. (Fort Aff,, $ 8; Duebner, p. 78; Suhm, p. 143, Ex. 14). 19. Once the parties submitted their proposals in response to the RFP, the RFP process closed, any prohibition on communications between respondents and City staff expired, and the effort became one of negotiating and finalizing the leases. (Duebner, p. 80; Fort Aff, Ex. B). E. Trinity and the City Negotiate Leases for Gas Drilling Almost Entirely Comprised of Park Land, While City Staff Advises the Council that There Will Be No Drilling on Park Land. 20. On or about November 27, 2007, Steve Adrian with the City called Steve Fort, ‘resident and General Counsel of Trinity, and told him to expect a call from Shayne Moses to start working on the form for the leases with the City. (Fort Aff., 9). From December 30, 2007, until February 27, 2008, Fort negotiated the form of the gas leases PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 10 015on City property with the following City representatives designated as Trinity's points of contact for lease negotiation: David Howe in the City Attorney’s office, Mark Duebner in the City Manager’s Office, and Shayne Moses, a private attorney retained by the City to negotiate and finalize the leases with Trinity. (Fort Aff., 4 10; Suhm, p. 141). 21. On February 6, 2008, Mark Duebner briefed the City Council on the gas drilling lease issues. (Suhm, Ex. 14, 24; Duebner, pp. 91-93, 97-98). The Group 1 properties depicted in the Couneil’s briefing reflected that all the Group 1 properties were in park land, except for a small cross-hatched area adjacent to IH35E and what would become known as the Radio Tower Tract (Suhm, pp. 127, 138, Ex. 14-15). According to Duebner’s February 2008 briefing, however, no drilling would be allowed on City of Dallas park land. (Suhm, Ex. 15, p. 24). The briefing states that “only 5 sites of City property are available for potential on-site drilling” (Jd). Further, the briefing noted that the RFP limited drilling to certain designated drill sites (/d.). While the City’s gas drilling ordinance would allow drilling in park land with an SUP, City staff was advising, the Couneil that there would be no drilling on City park land. (Suhm, p. 146) 22. On or about February 27, 2008, after negotiations with Trinity, the Dallas City Council expressly authorized Suhm to negotiate and execute oil and gas leases with Trinity. (Suhm, p. 158, Ex. 16). 23, On February 27, 2008, the City and Trinity executed Leasing Agreements covering the Group | and Group 2A properties and including a negotiated lease form as an exhibit providing for surface operations on City property. (Fort Aff., Ex. C, D). Pursuant to the Leasing Agreements, Trinity paid the City deposits totaling PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL ON -PAGE 11$2,456,805.60 for the two groups of properties. (Fort Aff., 11, Ex. E), These deposits were in addition to the $100,000 deposits paid on each of four groups by Trinity. (Fort Aff, 11). 24, Through the Leasing Agreements, the City locked in its bonus amount per acre and its royalty amount for the leases and gave Trinity a 90-day period to conduct its title work in return for the deposit, which would be forfeited if Trinity did not complete the leasing process due to reasons other than title defects. (Fort Aff., Ex. C, D). The City Was Acutely Aware of Trinity's Need for Drill Sites. 25, Oil and gas leases have no value without the ability to explore for, drill, and produce oil and gas. (Fort Aff., § 16, 19). Before entering into the Leasing Agreements and, subsequently the leases, the City knew that drilling and drill sites were essential for the leases to have value to Trinity. (Duebner, pp.91-92, 98-100; Suhm, Ex. 24 at pp. COD_008980 — SOD_008981, COD_008987 — COD_008989). Early in the lease negotiation process, Trinity advised Shayne Moses and Mark Duebner that, for Trinity to maximize its development of the Leases from the City, as well as Trinity's privately leased acreage, Trinity required drill sites on the City-owned property. (Fort Aff. $13). Obtaining suitable drill site access in the final leasing terms was essential to Trinity's willingness to close the leasing transaction and pay the City the lease bonus. (Fort Aff., 413). 26. Accordingly, from February 27, 2008, until the leases were executed by the City on or about August 15, 2008, Trinity, by and through Fort, continued to have discussions with designated City representatives Shayne Moses, David Howe, and Mark PLAINTIFF'S RESPONSE 10 THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 12 017Duebner regarding the properties covered by the Leases and drill site locations. (Fort Aff, $12). 27. On or about June 6, 2008, Trinity informed the City that a 22-acre tract known as the “Radio Tower Tract” belonged to the City and that it should have been included in the Group 1 lease tracts. (Fort Aff, {| 14). The City was not aware that it owned the Radio Tower Tract at that time, but later confirmed that Trinity’s research was correct, (Fort Aff, { 14; Suhm, Ex. 16). ‘The Radio Tower Tract is a 22-acre tract of land on the west side of the City-owned Luna Vista Golf Course. (Fort Aff,, 14, Ex. F). This parcel of land is situated in a semi-rural portion of the City where the nearest structures in Dallas are used for industrial purposes or liquor sales. (Fort Aff, 14). 28. On June 6, 2008, Fort requested a meeting with Shayne Moses to discuss issues affecting the closing of the leases, the most critical of which was the requirement of designated drill sites. (Fort Aft, { 15). 29. Much of the property leased to Trinity by the City and by nearby private property owners was not suitable for surface drilling activities or allowable under existing City ordinances at the time due to proximity to existing structures and uses. (Fort Aff, nntified in the 16). ‘The properties uniquely suited for development were those Leases, specifically the Radio Tower Tract and the Gun Club Tract and the privately- owned Luna South site, (Fort Aff, 16). All of the City-owned properties identified as proposed drill sites that were not precluded from drilling due to proximity to existing or planned structures or uses were either park land, in the floodplain, or both. (Fort Aff., PLAINTIFF’S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JU TION PAGE 1316). This included both the Radio Tower Tract and the Gun Club ‘Tract. (Fort Aff, 16). 30. Thus, the City Manager’s Office, which was responsible for finalizing the Leases and securing the millions of dollars in bonus money, was stuck between a rock and a hard place. On one hand, the City Couneil had demanded new substantial sources of revenue and specifically tasked the City Manager with offering gas drilling leases to generate the desired revenue. (Suhm, p. 74, Ex. 16; Duebner, pp. 31-32, 45, 84-88). At the same time, however, the City Council was demanding assurances from the City Manager's Office that no drilling would be allowed on park land, despite the fact that a substantial portion of the City-owned property subject to oil and gas leasing—indeed virtually all of the Group 1 Properties dedicated to ‘Trinity—was in park land. (Suhm, pp. 127, 138, 146, E . 14, 15, 24; Duebner, pp. 91-93, 97-98). Consequently, Duebner, and later Suhm, told Trinity what they thought Trinity wanted to hear in order to close the deal and pay the lease bonus (Duebner, p. 156; Suhm, Ex. 23), even though they knew the City Council was at least partially and vocally opposed to drilling in park land. (Suhm, Ex. 24). 31. On or about June 25, 2008, the City Council unanimously supported a Chapter 26 public hearing regarding the leasing of City park land. (Duebner, Ex. 43, at pp. COD_129786 — COD_129798). At this meeting, the Council was also informed by staff that the Radio Tower Tract was included in Trinity's proposed lease. (Id.). The City Park Director advised the Council that the Radio Tower Tract was “an old property . PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA 10 THE JURISDICTION ~ PAGE 14 o19we've not used for years, It has reverted back to parkland and is currently next to the golf course and would not in any way impact the park system or park use.” (Id.). 32, Nevertheless, the City Council again was informed that surface drilling would not be allowed on City park land and that only sub-surface drilling would be permitted, (Duebner, Ex. 43, at pp. COD_129786 - COD_129798). City staff members told the Council that surface use of the Radio Tower Tract would require separate Council approval of a new lease agreement and a separate Chapter 26 hearing. (Id.). 33. On or about June 26, 2008, Fort met with Duebner, Moses, and Dennis, Browning (of Trinity) at City Hall and informed them that it was necessary for the City to provide for the surface use of the Radio Tower Tract and the Gun Club Tract (which is also adjacent to the Luna Vista Golf Course) as drill sites in order for Trinity to proceed with leasing the City’s property. (Fort Aff., 17, Ex. G). Fort advised Duebner that the Radio Tower Tract was integral to the parties reaching an agreement because it was a key location desired by Trinity for surface operations and was positioned to allow maximum coverage for drilling and production purposes. (Fort Aff, {]17). A drill site must meet certain geological, engineering, proximity, and access criteria, and Trinity identified the Radio Tower and Gun Club Tracts as optimum for drill sites. (Fort Aff., 17). 34. To secure assurance of the City’s commitment to provide drill sites, in discussions with Duebner at the June 26, 2008 meeting Fort asked that City Council approval be obtained for drill sites on the Radio Tower Tract and the Gun Club Tract, prior to closing on the Leases. (Fort Aff., | 18). Duebner advised in response that pre- closing approval was not possible. (Fort Aff., 4 18). When asked why it was not PLAINTIFFS RESPONSE TO THE CITY OF DALLAS"S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO TH 020possible, Duebner stated that it would take too long and might require another REP by the City. (Fort Aff, #18). During that June 26, 2008, meeting, however, Duebner assured Fort that the City “can make [the approval of the Radio Tower Tract as a drill site] happen,” and would use best efforts to obtain approval on the Gun Club Tract. (Fort Aff., 4/18). Duebner claims not to recall having made these assurances but does not deny that he did. (Duebner, p. 156). Instead, Duebner testified that he “would have been enthusiastic to try and get [Fort] to agree to execute the lease and pay [the City] the lease bonus.” (Duebner, p. 156). Without those assurances, Trinity would not have proceeded with the closing and would not have paid the City $19,107,992.00 for the two Leases. (Port Aff, § 18). 35, The only possible use of gas leases is the drilling for and production of gas, which requires drill sites, (Fort Aff, 4 19). It was understood by all parties that drill sites were necessary and would be allowed, or the Leases would be illusory. (Fort Aft. 419). In fact, the very title of the RFP to which Trinity responded was “Request for Proposals (REP) for Gas Well Drilling and Production”. (Fort Aff, | 19; Ex. B). If Trinity had known that the City would not allow drilling on sites such as the Radio Tower Tract, the Gun Club Tract, and the privately-owned Luna South drill site, which complied with the Dallas Drilling Ordinance and were approved and recommended by the City staff, Trinity would not have proceeded with the closing and would not have paid the City $19,107,992.00. (Fort Aff., 4 19). 36. To confirm the discussion during the June 26, 2008, meeting, Fort sent a letter to Shayne Moses dated June 26, 2008, stating that Trinity would proceed with S'S AMENDED SUPPLEMEN' ENTAL PLEA TO THE JU 021 PLAINTIE PLEA TO. "S RESPONSE 10 THE CITY OF DAL = PAGE IGacquisition of the leases only if the Radio Tower Tract was included in the Group 1 properties and only if the City provided for the use of the Radio Tower Tract as a drill site. (Fort Aff., 4 20, Ex. H). 37. During negotiation of the Leases, Trinity made City representatives aware that Trinity had leased and continued to lease privately-owned mineral estates in the area surrounding the City-owned and leased property and that Trinity intended on developing some of those properties through drill sites on the Radio Tower Tract and on privately- owned and leased property under the Dallas Drilling Ordinance. (Fort Aff, § 21; Duebener, pp. 107, 110-11). City staff was, therefore, made aware of Trinity's intent to use these drill sites as a means to drill and develop not only City acreage, but also some of the mineral acreage adjoining the City-owned property. (Fort Aff, ¢ 21). City staff was also made aware of Trinity’s need to drill on City-owned and privately-owned property for Trinity’s leases (both public and private) to have any value. (Fort Aff, 421). G. The City Confirms Its Assurances of Drill Sites to Trinity, Executes the Leases, and Pockets More Than $19,000,000. 38. Prior to the execution of the Leases, Trinity requested that the City execute a letter agreement with Trinity confirming the City’s intent to provide the Radio Tower Tract as a drill site. (Fort Aff., ¥ 26). In response, Suhm, in her capacity as City Manager, signed a letter to Trinity East stating that she was “reasonably confident” that Trinity would ob ing operations. (Fort the right to use the Radio Tower Tract for Aff., 26, Ex. N; Suhm, pp. 173-174, Ex. 23). Without those assurances, Trinity would PLAINTIE PLEA TO THE JURISDICTION AND SECOND SUPPLE 022 § RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL ENTAL PLEA TO THE JURISDICTION ~ PAGE 17not have proceeded with the closing and would not have paid the City $19,107,992.00. (Fort Aff, $26). 39. As Trinity had previously advised Duebner and Moses that Trinity would not continue the process of closing on the Leases if the City did not include a drill site on the Radio Tower Tract, and use best efforts to provide a drill site on the Gun Club Tract, the City knew that Trinity would not have proceeded without the representations and assurances that Trinity would have at least one surface location on City property from which to drill oil and gas wells. (Fort Aff, 20, 27, Ex. H). Suhm’s letter was consistent with and confirmed the City’s representations that Trinity would have access to at least one drill site and the City’s commitment that it would provide any and all necessary approvals to allow Trinity to perform under the Leases. (Fort Aff., § 27). The letter’s statement that the City could not make any guarantees was included to limit the City’s obligations to circumstances under the City’s control. (Fort Aff., 27). The City ‘was not, for instance, ensuring that Trinity would obtain all requisite third-party permits like approval from the United States Army Corps of Engineers or the Texas Railroad Commission. (Fort Aff, 27) 40. On or about August 15, 2008, City Manager Mary Suhm signed two leases with Trinity (the “Leases”) that expressly included the Radio Tower Tract and the Gun Club Tract as surface locations for use as proposed drill sites. (Fort Aff., § 22, Bx. I,J). ‘The Leases contain material terms that differ from the form leases in the RFP. (Fort Aff., 422). Those terms were negotiated and mutually agreed to by the parties. (Fort Aff, 922). PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURI 023 JICTION ~ PAGE 1841, Oil and gas leases like the Leases with the City only have value to the lessee—the oil and gas operator—if the operator has the right to enter upon the land and drill for oil and gas, (Fort Aff, $ 16, 19). Here, the Leases on their face purported to give Trinity that right: . . . Lessor grants and leases exclusively unto Lessee the following described land (the “Land”) in Dallas County, Texas, for the sole purpose of exploring, drilling, and producing oil and gas, laying pipelines, and building roads and tanks thereon to produce, save, treat, process, store, and transport oil and gas and other products ... produced from the Land, subject to the express limitations set forth in paragraph 5... . of this lease. (Fort Aff., Ex. I,J). 42, The limitations of Paragraph 5 state in relevant part that: Drill site locations and all operations (as defined herein) shall be limited to designated portions of the Land. Such locations are identified on Exhibit A to this Lease. (Fort Aff., Ex. , J). 43. Further, the Leases provided that “[iJf Lessee [Trinity] seeks a variance or waiver of any city, county or other governmental entity ordinance, rule, regulation, order or other requirement relating to drilling, completing, operating, or producing an oil or gas well drilled on the Land or in the area of the Land, then Lessor [the City] shall not unreasonably oppose Lessee’s request for such variance or waiver.” (Fort Aff., Ex. I, J) (Emphasis added). 44, Exhibit A to the Lease for the Group 1 Tracts identified no fewer than three (3) drill site locations on City property, including the Radio Tower Tract and the Gun Club Tract. (Fort Aff., 423, Ex. I). In exchange for the Leases and the exclusive right to explore, drill, and produce oil and gas on and from the leased acreage, Trinity paid the INTIFF’S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL 10. [RISDICTION AND SECOND SUPPLEMENTAL 024City $19,107,992.00 as a lease bonus and agreed to pay the City royalties from produc mn. (Fort Aff, 23, Bx. K, L, M). 45, In the gas drilling industry, a lease bonus, typically calculated on a per-acre basis, represents the initial consideration paid by the lessee/operator for the exclusive right to drill and produce from the leased property. (Fort Aff., { 24; Duebner, p. 41-42) Typically the lessor—the owner of the minerals being leased to the operator; in this case, the City—also receives the right to be paid royalties on production of oil, gas, or other minerals produced from the leased property. (Fort Aff., 24). 46. Under the Leases, the royalties to be received by the City were 25% of the physical oil or gas produced to be delivered to the City in kind or delivered into a pipeline for the credit of the City by Trinity or, upon election by the City, a cash royalty equal to 25% of the higher of the amount received by Lessee or the market value of the ‘gas produced and sold. (Fort Aff., § 24, Ex. I, J; Duebner, p. 43). 47. In reliance on the City’s invitation to submit a bid and proposal to lease City property for oil and gas exploration and the City’s express representations that drill sites in general, and drill sites on City property in particular, would be permitted, Trinity paid $16,251,187.00 on or about August 15, 2008, bringing the total bonus consideration paid to the City to $19,107,992.00, (Fort Aff, 428). Based on the terms of the REP, the terms of the Leases, conversations with City staff and Moses, the express purpose of the Leases, and Suhm’s letter agreement, it was apparent to Trinity that both parties anticipated routine approval of subsequent permit applications. (Fort Aff., 4 28). Otherwise, the Leases were not granting Trinity the exclusive right to drill and produce as. PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLE. 1B JURISDICTION ~ PAGE 20 025they purported to, but were instead granting only the illusory right to apply for permits, the approval or denial of which rested in the City’s arbitrary discretion. (Fort Aff., 128). Tri ity would not have paid $19,107,992.00 for the right to seek permit ; Trinity paid for the exclusive right to drill and produce gas. (Fort Aff., 428). 48. Trinity’s reasonable investment-backed expectation when executing the Leases and paying the City the substantial bonus was that the City would allow drilling on City-owned property and on private property for the development of the Leases negotiated and executed pursuant to the RFP “for Gas Well Drilling and Production” and containing specifically identified and negotiated proposed drill site locations. (Fort Aff, 28-29). 49, On or about August 20, 2008, subsurface drilling activities into park land were approved by the City Council after a Chapter 26 public hearing process. (Fort Aff. H. _ In Reliance on the City’s Assurances, Trinity Set Out to Obtain the Necessary Permits, Engineering, and Site Plans to Drill in the City. 50. Trinity then began the lengthy, costly, and necessary process of engineering and planning activities, designing a system of drill sites, roads, and pipelines to allow the Grilling and production of the minerals underlying the leasehold acres obtained from the City and leasehold acres obtained from other mineral owners. ‘These engineering and planning activities included the following: (Fort Aff., 4 31). A. Trinity initiated discussion with City of Dallas Parks and Recreation Department (“City Parks”) staff in February 2009 to discuss options for reducing impacts to City Park facilities. These discussions led to analysis of floodplain development options and final determinations of conceptual TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL, (TAL PLEA 10 THE JURISDICTION ~ PAGE 21pipeline alignments and drilling site development that fundamentally reduced substantial impacts to City park lands. On July 21, 2010, a meeting with City Parks’ staff provided the basis for finalizing site and pipeline alignments with on-the-ground field surveying, which was completed by the end of August 2010, In September 2010, two field meetings were conducted with City Parks’ staff and a City arborist for the purpose of finalizing site limits and pipeline alignments. Final plans were presented and discussed in a City pre-Development meeting on October 12, 2010, attended by both City Parks and Planning staffs. On November 22, 2010, a meeting was completed with the staff’ member of the City Parks Senior Management who was assigned to the project, to establish the specific requirements needed by City Parks’ staff to advance a request for Public Hearing, These requirements and the timeline were reconfirmed in a meeting in late January 2011. ‘The formal letter requesting the public hearing and the supporting documentation required were then submitted to City Parks’ management within the next few weeks. B, Trinity initiated discussion with the City Planning Department that led to the October 12, 2010 Pre-Development meeting to present the project and discuss project issues. The SUP process was discussed as was the City staff's uncertainty as to whether the action to be taken by City Parks and the Public Hearing needed to precede the SUP or whether it could be accomplished concurrently. On November 11, 2010, Trinity attended a meeting with the Planning Department to discuss the SUP process In this meeting, Trinity was informed by City staff that two things affected the best timing for the SUP Application: a. The reduction of the planning staff from seven planners to two planners and the likelihood that the SUP typical approval process would now take much longer; and b. The growing concems of the City Council regarding general environmental impacts perceived to exist in the area of gas drilling. With upcoming City elections, City Staff suggested that the optimal time for publicly considering such applications might be after the election in May. Trinity nevertheless advanced completion of the SUP Applications for the drilling sites. During this time frame, there were changes in the filing standards and required fees which created some confusion, PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS"S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO TH 027 CMON ~ PAGE 22sl. PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS"s AMENDED SUPPL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PL Due to the delays caused by the City in processing the SUP” requested and received an extension of the Oil and Gas Leases. ‘Thi extension was granted to another exploration company, XTO. Trinity Trinity contacted both Bonnie Meeder and David Cossum at the City regarding the issue of amending the City Code to add gas well drilling as an approved activity in the floodplain. Trinity met with City staff on October 12, 2010 and again on November 11, 2010 to discuss this and other issues. Mr. Cossum was present at both of those meetings. Numerous inquiries by email followed, culminating with an email from Mr. Cossum on December 3, 2010 containing a tentative plan to begin advancing the code amendment within a couple of months. Trinity was told repeatedly by the City that the process was advancing. Trinity contacted the City’s Floodplain Administrator on July 8, 2010, explaining the project and requesting guidance. The Floodplain Administrator noted that if the facts matched the description, the property might be considered for a floodplain alteration permit which could be approved at the department level provided the request included a site plan, hydraulic modeling, and met ten point engineering criteria. On October 5, 2010, representatives of Trinity attended the required pre-application meeting for floodplain permitting with the City’s Floodplain Administrator and was presented with the required information, Ultimately it was determined that a floodplain alteration permit was not required Trinity secured the services of a licensed surveyor to complete a tree survey in October 2010. This survey was used by Trinity to position proposed facilities and reduce impact to existing trees. Trinity then worked with City Parks management to complete tree surveys on City Park lands. ‘After nearly two (2) years of work and a major capital investment by Trinity, City staff recommended that ‘Trinity delay the process in that the timing for public application consideration might not be appropriate at that time in light of the upcoming City Council elections and the potential for the issue of gas well drilling to become politicized. (Fort Aff., $31). These activities were conducted in concert with the Dallas Parks Department staff, U. $. Corp of Engineers, Dallas Floodplain Administrator, Dallas City Real Estate division staff, Dallas City attorney's office, a process that lasted nearly five JON -PAGE 23 028(5) years, (Fort Aff, $32). Th included a sixteen (16) month abeyance by the Ci connection with a gas drilling task force created in April 2011, just as Trinity was submitting its SUP Applications. (Fort Aff., 32). 52. Trinity obtained approval for three drill sites and 2,400 linear feet of pipeline in the floodplain subject to compliance a nationwide permit from the Department of the Army, Fort Worth District, Corps of Engineers (“USACE”) on or about February 22, 2011. (Fort Aff., 433, Ex. O). 1. Trinity Submits its SUP Applications to the City. 53, Trinity spent over $450,000.00 on engineering, surveys, consultants, permits, planning, environmental testing, insurance, bonds, and other matters required in connection with three (3) SUP Applications, numbered 2101-220, 221 and 248, filed by Trinity in March and April 2011 in accordance with applicable law for use of the Radio Tower Tract (2101-221), Gun Club Tract (2101-220), and the privately-owned Luna South Tract (2101-248) as surface locations for dri 1g and production operations (the “SUP Applications”). (Fort Aff., $ 34, Ex. P,Q, R, 8). 54. Trinity would have had to undertake similar activities and expend a similar sum to apply for SUPs on any alternative locations for drilling in the City of Dallas, including on the Group 2A properties. Due to geologic and surface constraints, the three tracts on which Trinity sought its SUPs were the most desirable from the perspective of geology and proximity to existing uses. (Fort Aft, 35). 55. On March 11, 2011, Bonnie Meeder, Assistant Director, Sustainable Development & Construction Real Estate Division of the City of Dallas executed two PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 24 029letters to the City of Dallas Current Planning Division stating that the City of Dallas, tions for the Radio Tower Tract being the owner of property subject to the SUP Ap; and the Gun Club Tract, “hereby authorizes, approves, adopts and consents to, the subject, application, and agrees to submit, upon request, supplemental information in support of the Application” (emphasis added) (the “SUP Approval Letters”). (Fort Aff., 4 36, Ex. T, vu). 56. Trinity reasonably believed that the City would honor the terms of the ‘Leases, and that it would act in good faith to fulfill the only purpose of the Leases, which is to drill and produce gas. (Fort Aff., 37). As gas drilling in the Dallas city limits was prohibited without an SUP, Trinity viewed the SUP Applications as requests for a waiver or variance of that prohibition to which the City had agreed not to unreasonably withhold its consent under the Leases, (Fort Aff., 37). Trinity also reasonably believed that the City Council would approve Trinity's SUP Applications because it was the City's practice to approve zoning applications where the City, as the landowner, signed or authorized the application for an SUP on city-owned property, on the Radio Tower and Gun Club Tracts, (Fort Aff., 37). Trinity also reasonably believed that the City (by and through the Plan Commission and/or the City Council) would approve Trinity's SUP Applications on both City property and private property barring unforeseen extemal barriers beyond the City’s control because without such approval the express purpose of the Leases would be negated and the Leases would be completely illusory and worthless. (ort Aff., $37). Trinity was also aware that the City had previously approved several prior SUP Applications for gas drilling operations within the City. (Fort Aff., 437). PLAINTIFF'S RESPON PLEA TO THE JURISDICTION AND SECOND SUPPLE 030 OTHE CITY OF DALLAS’S AMENDED SUPPLEMENTAL ENTAL PLEA 10 THE JURISDICTION ~ PAGE 25Trinity's reasonable investment-backed expectations that the City would approve Trinity’s SUP Applications and allow drilling on City-owned and private property in Dallas were strengthened by these actions. (Fort Aff., 437). 57. Trinity's application for an SUP on the privately-owned Luna South Tract, is significant because the City knew that Trinity intended to obtain additional drill sites on private lands under the Dallas Drilling Ordinance. (Fort Aff., § 38). The City further knew that those drill sites, and specifically the Luna South Tract, would be used to produce gas from private lands under lease to Trinity, as well as portions of the City- owned property under lease to Trinity. (Fort Aff., § 38). That site complied with the Dallas Drilling Ordinance and was approved and recommended for approval by City staff, in concert with the City Attorney’s office. (Fort Aff., 4 38). ‘Trinity also agreed to the staff's recommended conditions to approval of the SUPs. (Fort Aff., 38). In one meeting with staff, after reviewing all of the particulars of the site and the surrounding, industrial uses, Fort overheard one upper level staff member state to another staffer that the site “really is a good site for this use”. (Fort Aff, 138), 58, The City has a professional planning staff that makes recommendations on specific zoning applications. (Cossum, Pipeline Projects, 52, 53). The general provisions for a Specific Use Permit in Section $1A-4.219 of the Dallas Development Code state: a) The SUP provides a means for developing certain uses in a manner in which the specific use will be consistent with the character of the neighborhood; b) Each SUP Application must be evaluated as to its probable effect on the adjacent property and the community welfare and may be approved or denied as the findings indicate appropriate; PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS"S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 26 031©) The city council shall not grant an SUP for a use except upon a finding that the use will: (A) complement or be compatible with the surrounding uses and community facilities; (B) contribute to, enhance, or promote the welfare of the area of request and adjacent, properties; (C) not be detrimental to the public health, safety, or general welfare; and (D) conform in all other respects to all applicable zoning regulations and standards. 59. The existing or planned uses and facilities which surrounded the three drill sites for which Trinity sought SUPs were identical both when the City signed the Leases and when Trinity’s SUP Applications were submitted and denied, (Fort Aff, §) 39). They did not change from the time the Leases were executed until the City Council voted on the SUP Applications. (Fort Aff., 39). J, City Staff Recommends Approval of the SUPs, but the Plan Commission and City Council Vote to Deny. 60, On or about December 20, 2012, the City’s planning staff issued staff recommendations on Trinity’s applications and found that the SUPs each met the ordinance requirements for SUP approval: a) Recommending the approval of SUP Z101-220, (Gun Club Tract), zoned an “IR Industrial Research District.” Staff noted that the nearest residential lot was approximately 1,500” to the northwest in the City of Irving. (City Plea, Ex. 35). b) Recommending the approval of SUP Z101-221, (Radio Tower Tract), on the south side of Royal Lane, west of Luna Road, zoned an “IR Industrial Research District.” Staff noted that the nearest lential lot was approximately 2,400” to the northwest and 3,000” to the southwest in the City of Irving. (City Plea, Ex. 36). ©) Recommending the approval of SUP Z101-248, (Luna South site), on the east side of Luna Road, zoned an “IR Industrial Research District.” Staff noted that the nearest residential lot was approximately 5,000° to the west and being in the City of Irving. (City Plea, Ex. 37). PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 27 03261. In complete disregard of the City’s constitutional and contractual obligations and the City staff's recommendations of approval, on or about December 20, 2012, the City Plan Commission (“CPC”) voted 11-to-1 to deny Trinity's SUP requests. (City Plea, Ex. 39), By a 6-to-5 vote, however, the CPC voted to reconsider the denial on January 7, 2013. (City Plea, Ex. 39), These hearings were postponed again on February 7, 2013. (City Plea, Ex. 46). Finally, on or about March 21, 2013, the CPC again denied the SUP requests by a 9-to-6 vote. (City Plea, Ex. $1). Pursuant to City ordinance, Trinity had a right to appeal the denial of the SUPs to the City Council. In accordance with the City’s ordinance, Trinity appealed the SUP denials to the City Council. (City Plea, Ex. 52). 62, Due to the CPC denial, however, a super-maj ity of 3/4ths of the City Council membership was required to vote to approve the SUP Applications in order to grant Trinity the necessary permissions to drill on properties for which Trinity had long, ago paid the City $19,107,992.00. Again ignoring its constitutional and contractual obligations, however, the Dallas City Council voted on or about August 28, 2013, with only a simple majority voting to approve the SUP Applications, thus failing to meet the 3/4ths vote approval requirement. (City Plea, Ex. 57). The City’s refusal to approve the SUPs was arbitrary, capricious, and a breach of the City’s obligation under the Leases to not unreasonably withhold consent to Trinity’s use of the land, 63, Recognizing that the City had probably just breached a contract, committed fraud, and taken Trinity’s property without just compensation, City Mayor Rawlings stated on the record that the City was subjecting itself to significant litigation risk: PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE: 28 033“Today is not about being pro or con on a theoretical issue,” he said. “We have a contract with a business. ... There is a chance that by voting no we could cost the city of Dallas millions of dollars of legal and other expenses.” (Brown Aff., Ex. E, p. 171). Despite Mayor Rawlings’ understanding of the City’s considerable liability, the City has refused to compensate Trinity for the loss of value of the taken property or to pay Trinity the damages it suffered as a result of the City’s actions. The Ci s refusal to allow Trinity to perform under the Leases is a breach of contract and has deprived Trinity of its constitutionally protected property rights. K. __ Denial of the Three SUPs Effectively Ended Any Opportunity for Trinity to Drill in the City of Dallas. 64, The City’s denial of all three permits rendered any attempt by Trinity to secure SUPs for alternative locations futile. (Fort Aff, 4 40). Trinity's SUP Applications complied with all applicable laws, codes, and regulations, and were recommended for approval by City staff, yet they were denied, (Fort Aff., 40). Trinity, therefore, had no reason to expect that the expenditure of another $450,000 for SUP y would be any more fruitful than those Applications on property elsewhere in the Ci SUP Applications recommended for approval by City Parks, the City Floodplain ‘Administrator, and City staff. (Fort Af, $40). 65. Other than the drill sites proposed in Trinity’s three SUP Applications, Trinity did not and does not have access to other economically feasible surface locations from which to access the minerals under the Leases or under Trinity’s private leases in the area of the property covered by the Leases. (Fort Aff., | 42-43; Browning Aff, 4 13). PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS"S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 29 034Thus, the City’s denial of Trinity’s SUP Applications and, consequently, the City’s refusal to allow Trinity to drill an oil or gas well on any property within the City damaged and destroyed all of Trinity’s property rights in the Leases and Trinity’s private leases. (Fort Aff, 42-43; Browning Aff. 4] 13). 66, Following the City’s denial of Trinity’s SUP Applications, the City adopted a new gas well drilling ordinance in December 2013 that was based, in part, upon the recommendations by the gas ing task force referenced herein. (Fort Aff, § 41; Brown Aff, Ex, D), The new gas well drilling ordinance negated any possibility that Trinity could locate a drill site within the City and access the Group 1 or Group 2A properties, (Fort Aff., 41). Specifically, the new gas well drilling ordinance included a 1,500-foot setback provision that prohibited a gas well drilling pad within 1,500 feet of an protected use and 300 feet of a habitable structure. (Fort Aff, §41; Brown Aff. Ex. D). Based upon the recommendations that the City adopt such a setback, Trinity prepared two aerial graphics depicting the Group 1 properties and the surrounding ibited under the property and the areas in which gas well drilling would be prol recommendations. (Fort Aff., 41). One recommendation was for a 1,000-foot setback and the other, which the City ultimately adopted, called for the 1,500-foot setback. (Fort Aff., 141). The aerials demonstrate that; (1) Trinity's proposed drill site locations on the Radio Tower Tract, the Gun Club Tract, and the Luna South Tract would be impermissible under either setback regime; and (2) Trinity could not locate a permissible well within the City limits that could access the Group I properties if the setback was just PLAINTIEF’S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND: ‘SUPPLEMENTAL PLEA TO THE JURIS 0351,000 feet. (Fort Aff., § 41). A similar result is anticipated for the Group 2A properties based on their proximity to existing uses and structures. (Fort Aff, 4 41, Ex. V, W). L. Trinity Has Suffered Substantial Damages. 67. Asa result of the City Council’s refusal to allow Trinity to drill for gas within the City, Trinity has suffered significant damages, including without limitatior ) the $19,107,992.00 paid to the City in bonus money for the Leases that the City rendered worthless by denying Trinity the opportunity to drill; (b) Trinity’s out-of-pocket costs incurred in reliance on the City’s representations and assurances of Trinity's access to at least one drill site location on City property, and the representations and express language that the Leases were being sold for drilling and production purposes, including costs associated with applying for the SUPs and the other engineering, surveying, design, testing, studies, and planning undertaken by Trinity to prepare obtain the right to drill and to acquire or install the infrastructure necessary to access the minerals under lease and transport those minerals to a market for the benefit of Trinity and its royalty owners, including the City, a well as Trinity’s leasing and landman costs associated with researching title and acquiring acreage surrounding the City’s leased acreage to maximize development of recoverable reserves; (c) the diminished market value of Trinity's mineral interests in the City of Dallas and nearby areas accessible from the City-owned property and private land resulting from the City’s denial of Trinity's right to drill; (d) Trinity’s lost profits in the form of the lost mineral reserves to which the City denied Trinity access after leasing those minerals to ‘Trinity for that express purpose in exchange for more than $19,000,000.00; (¢) Trinity’s lost profits in the form of the lost mineral PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 31 036reserves to which the City denied Trinity access on private lands; (f) Trinity's attomeys? fees and costs incurred in connection with the enforcement of its legal rights in this ation. (Fort Aff., § 44). Iv. ARGUMENT AND AUTHORITIES A. The City Is Not Immune to Trinity’s Breach of Contract Claim. In its Plea, the City misstates Trinity’s primary argument regarding immunity as one of waiver under subchapter I, chapter 271, Texas Local Government Code (“Chapter 271”). (City Supp. Plea at 15). Although Tri does allege waiver under Chapter 271 (discussed, infra), such an allegation is presented in the alternative to Trinity’s primary argument that the City, under the facts presented, has no immunity to waive in the first place because negotiating, executing, and entering into the Leases with Trinity was a proprietary function for which no governmental immunity attaches. 1. The Governmental-Proprietary Dichotomy Remains Valid Texas Law. The City would have this Court hastily and without mandatory authority discard the governmental-proprietary dichotomy (the “Dichotomy”), a long-held, fundamental, and well-reasoned tenet of state law. However, contrary to the City’s argument, the Dichotomy remains valid and applicable and this Court should not indulge the City’s arguments to the contrary. Although courts—and the City in its Plea—frequently conflate the terms and the concepts, the State of Texas and its political subdivisions are imbued with distinet forms of immunity: sovereign or governmental. Unlike the State, which through sovereign PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL TO THE JURISDICTION AND SECOND SU PLEA TO THE JURISDICTION ~ PAGE 32 037immunity enjoys the greatest level of protection from suit and liability, the City is relegated to mere governmental immunity. Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 694 (Tex. 2003) (“Governmental immunity, on the other hand, protects political subdivisions of the State, including counties, cities, and schoo! districts.”) (citing City of LaPorte v. Barfield, 898 8.W.2d 288, 291 (Tex. 1995)); see also Mission Consol. Indep. Sch. Dist. v. Garcia, 253 $.W.3d at 655 n.2 (“Sovereign immunity protects the State, state agencies, and their officers, while governmental immunity protects subdivisions of the State, including municipalities and school districts”), The very substance of the distinction between sovereign and governmental immunity lies within the Dichotomy. The State enjoys sovereign immunity because “the State can only act in governmental capacity,” and the “distinetion between proprietary and governmental functions does not apply to functions performed by the State”. Hencerling v. Texas A&M Univ. 986 $.W.2d 373, 374-75 (Tex. App.—Houston [1" District] 1999, pet. denied) (citing Guillory v. Port of Houston Auth, 845 8.W.2d 812, 814-15 (Tex. 1993) Municipalities, however, are subject to the Dichotomy. Jd. at 375. Thus, sovereign immunity is the default position of the State, presumed to exist in the absence of an express, clear, and unambiguous waiver by the constitution or the Legislature. Natural Res. Conservation Comm’n y. IT-Davy, 74 8.W.3d at 854. But cities do not enjoy the same presumption, Whether governmental immunity exists depends on the resolution of the Dichotomy, i.e., whether the city was engaged in a governmental or proprietary function or activity. City of Galveston v. Posnainky, 62 Tex. 118, 127 (1884); Gates v. City of Dallas, 704 8.W.2d 737, 739 (Tex. 1986); see also Ben PLAINTIFF”S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 33 038Bolt-Palito. Blanco Consol. Indep. Sch. Dist. v. Tex. Political Subdivisions Property/Casualty Joint Self-Ins. Fund, 212 8.W.3d 320, 327 (Tex. 2006) (holding a political subdivision’s immunity derives from its performance of governmental functions); City of Georgetown v. Lower Colo. River Auth., 413 8.W.3d 803, 807 (Tex. App.—Austin 2013, pet. dism’d by agr.) (“Because the municipality is not acting on behalf of the state when it performs proprietary functions, the municipality traditionally is not entitled to governmental immunity for those functions, and thus has ‘the same duties and liabilities as those incurred by private persons or corporations.”) (citing City of Terrell v. McFarland, 766 $.W.2d 809, 813 (Tex. App—Dallas 1988, writ denied)). Neither the Posnainky, Gates, nor Georgetown courts distinguished the efficacy of the Dichotomy on the underlying cause of action. According to the Texas Supreme Court, “[mJunicipal corporations exereise their broad powers through two different roles: proprietary and governmental.” Gates, 704 S.W.2d at 738. Governmental functions are generally defined as “those acts which are public in nature and performed by the municipality as the agent of the State in furtherance of general law for the interest of the public at large.” Id. at 738 (internal cites omitted); see also TEX, CIV. PRAC. & REM. CODE § 101.0215(a) (2015) (defining, governmental functions as “those functions that are enjoined on a municipality by law and are given it by the state as part of the state’s sovereignty, to be exercised by the municipality in the interest of the general public”), Proprietary functions, however, “are those functions performed by a city, in its discretion, primarily for the benefit of those within the corporate limits of the municipality.” Gates, 704 $.W.2d at 739; see also TEX. PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION PAGE 34 039Civ. PRAC. & REM. CODE § 101.0215(b) (describing. prop: ary functions as “those functions that a municipality may, in its discretion, perform in the interest of the inhabitants of the municipality”). “Unlike governmental functions, for which municipal corporations have traditionally been afforded some degree of governmental immunity, proprietary functions have subjected municipal corporations to the same duties and liabilities as those incurred by private persons and corporations.” Gates, 704 $.W.2d at 739; Ethio Express Shuttle Serv. v. City of Houston, 164 8.W.3d 751, 754 (Tex. App.— Houston [14"" Dist.] 2005, no pet.). As the City admits in its Plea, the Dichotomy and its role in determining immunity es has been a mainstay of Texas law for over 125 years: It would seem that, in so far as municipal corporations of any class, and however incorporated, exercise powers conferred on them for purposes essentially public—purposes pertaining to the administration of general laws made to enforce the general policy of the state—they should be deemed agencies of the state, and not subject to be sued for any act or omission occurring while in the exercise of such power, unless, by statute, the action be given; that, in reference to such matters, they should stand as does sovereignty, whose agents they are, subject to be sued only when the state, by statute, declares they may be. ... In so far, however, as they exercise powers not of this character, voluntarily assumed—powers intended for the private advantage and benefit of the locality and its inhabitants—there seems to be no sufficient reason why they should be relieved from the liability to suit and measure of actual damage to which an individual or private corporation exercising the same powers for a purpose essentially private would be liable. Posnainky, 62 Tex. at 127; City Supp. Plea, 13 (“Texas courts have been applying the dichotomy since 1884 and are capable of continuing to do so”). In addition, as early as 1898, the concept was applied equally and expressly to contracts: PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS"S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 35 040tis well settled that so long as the State is engaged in making or enforcing laws or in the discharge of any other governmental function it is to be regarded as a sovereign and has prerogatives which do not appertain to the individual citizen, but when it becomes a suite in its own courts or a party to a contract with a citizen the same law applies to it as under like conditions governs the contracts of an ual, Fristoe v, Blum, 45 S.W. 998, 999 (Tex. 1898) (emphasis added). A city has never, at least not since Posnainsky, enjoyed immunity from either liability or suit when engaged in a proprietary function or activity and, contrary to the City’s arguments, the Legislature has done nothing to change this fundamental principle, which is applicable equally to home-rule and general-law cities. Moreover, Texas courts, including the Fifth Court of Appeals and Supreme Court, have continuously applied the Dichotomy to determine whether a city enjoys immunity or not.” In i Plea, the City goes to great lengths to undermine the legitimacy of the Dichotomy and cites to out-of-state cases as well as secondary materials in support. However, many states continue to apply the Dichotomy to contracts entered into by 2 See, e.g., PKG Contracting, Inc. v. City of Mesquite, 197 S.W.3d 388 (Tex. 2006) (per curiam); Tooke . City of Mexia, 179 $.W.3d 325 (Tex. 2006); City of Gladewater v. Pike, 727 S.W.2d 514 (Tex. 1987); City of Round Rock v. Smith, 687 8.W.2d 300 (Tex. 1980); San Antonio Indep. Sch. Dist. v. City of San Antonio, $50 S.W 24 262 (Tex. 1976); Corpus Christ v. Gregg, 289 8.W.2d 746 (Tex. 1956); City of San “Angelo v. Deutsch, 91 $.W.2d 308 (Tex. 1936); Williams v. Dallas Area Rapid Transit, No. 05-14-01303- CV, 2016 Tex. App. LEXIS 1011 (Tex. App.—Dallas Feb. 1, 2016, no. pet. h.) (mem. op.); Douglas v City of Kemp, No. 05-14-00475-CV, 2015 Tex. App. LEXIS 5796 (Tex. App.—Dallas June 9, 2015, 10 pet. h.) (mem. op.); City af Georgetown v. Lower Colo, River Auth,, 413 S.W.3d 803 (Tex. App—Austi 2013, pet. dism’d by agr.); Baker v. City of Robinson, 305 S.W.3d 783 (Tex. App.—Waco 2009, pet. denied); City of Plano v. Homoky, 294 $.W.3d 809 (Tex. App—2009, no pet.); Williams v. City of Midland, 932 S.W.2d 679 (Tex. App—El Paso 1996, no writ); Gen. Elec. Co. v. City of Abilene, 795 $.W.24 311 (Tex. App.—Eastland 1990, no writ); Int'l Bank of Commerce of Laredo v. Union Nat'l Bank of Laredo, 653 8.W.24 539 (Tex. App—San Antonio 1983, writ ref'd n.r.); City of Crosbyton v. Texas- New Mexico Util. Co., 157 8.W.2d 419 (Tex. App—Amarillo 1941, wrt rePd w.o.m), PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS"S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 36 041governmental units, including municipalities.’ Of course, while the common-law of other states may be of some academic interest to the City, none of its binding on this Court and, given the plethora of Texas cases on the matter, the utility of these other state’s opinions is not readily apparent. See City of Galveston v. State, 217 S.W.3d 466, 472 (Tex. 2007) (“And while the common law of governmental immunity in Maryland certainly interesting, it is entirely alien to our own...”). In similar fashion, jaims the Dichotomy has been “uniformly criticized.” City Supp. Plea, 13. But > See, e.g., Copper County Mobile Home Park v. Globe, 641 P.2d 243, 246 (Az. App. 1981) (stating the rule that municipalities are bound by contracts made by officials when the subject of the contract is a proprictary activity); Board of Trustees v. City of Los Angeles, 49 Cal. App. 34 45, 47 (Cal. App. 1975) (holding a state agency acted in its proprietary capacity by leasing agency property to private operators); Colowyo Coal Co. v. City of Col. Springs, 879 P.2d 438, 444 (Col. App. 1994) (applying the dichotomy to hold a contract for the long terms supply of coal use in municipal power plants a proprietary function); City of MeDonough v. Campbell, 710 S.E.2d 537, 539 (Georgia 201 1) (approving of the application to the dichotomy to contracts made by municipalities); Newman Mem. Hosp. v. Walton Constr. Co., 149 P.3d 525, 537 (Kan. App. 2007) (holding a county engaged in a proprietary function when it contracted for the construction and lease of a medical office building); BFI Waste Sys, of N. Am, Inc, v. Huntington Woods Neighborhood Ass'n, 134 S.W.3d 624, 631 (Ky. App. 2003) (applying the dichotomy to a contract for the expansion of a county landfill); Baltimore County v. RTKL Assocs., 846 A.24 433, 435 (Maryland App. 2004) (stating that municipalities are subject to suit for contracts made in the performance of both ‘governmental and proprietary functions); Hazel Park v. Potter, 426 N.W.2d 789, 792 (Mich. App. 1988) (Gistinguishing between governmental and proprietary contracts of a municipality); Town of Sandy Creek v. E, Coast Contr, Inc., 741 S.E.24 673, 677 (N.C. App. 2013) (applying the dichotomy to a government contracts for engineering and construction companies); De Santis v. Troy, 371 N.Y 8.24 310, 312 (N.Y. Supreme Court 1975) (stating a municipality may contract in either its governmental or proprietary capacity); Howard v. Hamilion County Dep't of Human Sves., 735 N.E.2d 944, 946 (Ohio App. 1999) (holding a state agency contracted with a private party in a governmental capacity); Maney v. Okla. City, 300 P. 642, 646 (Okla. 1931) (applying dichotomy to city contracts surrounding the city's water supply system); Shady Cove Water Dist. v. Jackson County, 179 P.3d 698, 700 (Oregon App. 2008) (noting that 1 legislature may bind its successors to contractual relationships involving proprietary as opposed to government functions); Beaver Dam Outdoors Club v. Hazelton City Auth, 944 A.24 91, 108 (Pa. Commw. Ct. 2008) (holding the making of a lease of land owned by the Authority a proprietary as opposed to governmental function); Rhode Island Student Loan Auth, v. Nels, Inc., 50 A.2d 624, 626 (RL. 1988) (applying the dichotomy to a contract for the administration and servicing of student loans); City of Beaufort v. BeaufortsJasper County Water & Sewer Auth, 480 S.E.2d 728, 731 (SC. 1997) Giscussing whether special purpose district contracted for the sale of water in its governmental or proprietary capacity); Uintah Basin med. Cir. v. Hardy, 110 P.3d 168, 170 (Utah App. 2005) (applying the dichotomy to employment agreement between in which a county hospital was @ party); State v. Burns v. City of Seattle, 164 P.3d 475, 478 (Wash. 2007) (holding a municipal franchise agreement was entered CITY OF DALLAS’S AMEND! .D SECOND SUPPL PLAINTIPE’S RESPONSE TO TI PLE 042the City exaggerates as other commenters have expressed support for the Dichotomy generally and in the context of contract claims.’ In addition, much of the commentary relied upon by the City focuses of the application of the Dichotomy in contexts other than contracts. The City incorrectly a: rts that the Dichotomy is somehow flawed because it treats certain governmental entities differently than municipalities for immunity purposes. (City Supp. Plea at 18). But this is a fundamental misstatement of Texas immunity law. As cited above, the only governmental entity in the State of Texas entitled to sovereign immunity is the stat elf. Alll other governmental units—including counties and cities alike—are only entitled to governmental immunity and subject to the Dichotomy and its consequences on equal terms. Taylor, 106 $.W.3d at 694. There is simply no merit to the City’s contention to the contrary. The City’s claim that home-rule municipalities are not subject to the Dichotomy is, incorrect, illogical, and contrary to the City’s other arguments. First, the argument that the Dichotomy is not applicable to home-rule cities suggests that it is applicable to general-law cities, which would defeat the City’s prior argument that the Dichotomy is no into in a proprietary capacity); Save Elkhart Lake v. Village of Elkhart Lake, $12 N.W.2d 202, 206 (Wis 1993) (holding municipality acted in its proprietary capacity by entering into a development contract. * See, e.g., Mary S. Hack, Sovereign Immunity and Public Entities in Missouri: Clarifying the Status of Hybrid Entities, 58 MO. L. REV. 743, 748 (1993) (arguing a city behaving as a private party, such as contracting for proprietary activities, should be treated as a private party); David M. Lawrence, Judicial Doctrines that Differentiate Local Governments and Private Persons or Entities, UNC LOC. GOV'T L. BULLETIN, May 2014, at 22 (arguing the dichotomy should apply to quasi-contract claims against a municipality and liability should apply to proprietary activities and noting that immunity only exists for governmental functions); David N. Anthony & Beth V. McMahon, Sovereign Immunity: Can the King Still Do No Wrong?, VIRGINIA LAWYER, April 2000, at 10, 11, 14 (noting the dichotomy remains the test for determining municipal liability and that governmental units enjoy no immunity for contract claims). PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 38 043,longer valid law. Second, the City argues that “how a governmental entity was formed is not a valid basis for imposing the governmental/proprietary distin ” (City Supp. Plea, p, 21). But 5 pages later, the fact the City was formed as a home-rule city makes a difference. Id, at 26. Moreover, by equating itself with the State, the City’s argument here attempts inflate is governmental immunity to that of sovereign immunity, which it may not do. The Dichotomy is not isolated to common law, either. The Texas Legislature expressly adopted and codified the Dichotomy in the Texas Tort Claims Act. Chapter 101, TEX. Civ. PRAC, & REM. CODE (2015). Asa result, Texas municipalities and courts routinely apply and consider the Dichotomy in connection with the TTCA with no objection, However, the City has provided no sound explanation for why the Dichotomy is “unworkable”—both generally and in the context of contracts—but perfectly acceptable in context of torts. It is unreasonable for the City to disparage the institution of the Dichotomy while simultaneously relying on it for its defense against Trinity’s tort, claims. Put simply, the City cannot have its cake and eat it too. ‘The Dichotomy is alive and well in Texas. The City’s suggestion that it should be abandoned is not supported by the case law or statutes on the subject. Moreover, rejection of the Dichotomy as logically requires the simultaneous abandonment of the distinction between sovereign and governmental immunity altogether, an absurd and insupportable position. In essence, the City would have his Court undeservedly bestow upon it the sovereign immunity reserved to the State rather than the governmental immunity for which it is only entitled, As a result, this Court would be wise to ignore the PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS"S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 39 04gCity’s suggestion to discard the Dichotomy and should consider the same to this case pursuant to the well-settled law of this State. 2. The Dichotomy Applies to Breach of Contract Claims. Contrary to the City’s assertions, the Dichotomy is readily applicable to claims against a city for breach of contract, including claims brought under an oil and gas lease. Nowhere in the primary Posnainsky case did the Court limit its opinion to torts, or draw any connection between a municipality’s immunity to the underlying claim or cause of action. See Posnainsky, 62 Tex. at 118. More recently, in Gates, the Texas Supreme Court remarked favorably that, “[cJontracts made by municipal corporations have been held to be governed by the same rules as contracts between individuals.” 704 $.W.2d at 739. The City incorrectly argues the Dichotomy no longer applies to contracts due to the enactment of Chapter 271 and would have this Court believe, that Posnainsky, Gregg, and Gates—Texas Supreme Court cases establishing, recognizing, and reinforcing the Dichotomy in the contexts of both torts and contracts—are outdated and their holdings in, this regard supplanted by the Legislature when it passed Chapter 271. However, this very issue is the wedge that has led to a split among the Texas courts of appeal since the enactment of Chapter 271 and is the subject of at least two cases presently before the Supreme Court, See Wheelabrator Air Pollution Control, Inc. v. City of San Antonio, No. 15-0029, 2015 Tex. LEXIS 1145 (Tex. 2015); Wasson Interests, Ltd. v. City of Jacksonville, No. 14-0645, 2015 Tex. LEXIS 1152 (Tex. 2015). In promoting its position, the City leans heavily on the recent and misguided opinions of the Forth Court of Appeals. See City of San Antonio v, Wheelabrator Air PLAINTIEE’S RESPONSE 10 THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL PLEA TO THE |CTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 40 045Pollition Control, Inc., 381 S.W.3d 597 (Tex. App.—San Antonio 2012, pet. denied) (Wheelabrator I”); Wheelabrator Air Pollution Control, Inc. v. City of Pub, Serv. Bd. Of San Antonio, No.04-14-00451-CV, 2014 Tex. App. LEXIS 12763 (Tex. App—San Antonio Nov. 26, 2014, pet. granted) (“Wheelabrator If”). In Wheelabrator I, the Fourth Court of Appeals incorrectly held that the Dichotomy did not apply to determine a city’s immunity from a quasi-contract claim involving a proprietary activity. Relying on Gates for the proposition that “[cJontracts made by municipal corporations in their proprietary capacity have been held to be governed by the same rules as contracts between individuals,” the plaintiff argued the public utility operated by the city was a proprietary function, and therefore the city had no immunity on the quantum meruit claim. Wheelabrator J, 381 8.W.3d at 603. In making its erroneous holding, the Fourth court correctly determined that (1) Chapter 271 abrogated the Dichotomy as to contracts (discussed, infra) and (2) the Supreme Court had expressly indicated that the Dichotomy did not apply to contracts. In furtherance of this questionable position, the City, along with the Fourth court of appeals, cites to Tooke v. City of Mexia, in which the Texas Supreme Court considered whether the phrase “plead and be impleaded” within the local government code was an effective waiver of immunity for a breach of contract case against a municipality shortly after Chapter 271 was enacted. See 197 S.W.3d 325, 329 (Tex. 2006). In Tooke, the trial court rendered a judgment against the city based on consequential damages, which were outside the limited waiver of immunity from suit in Chapter 271. Jd. at 330. The plaintiff claimed the City was not immune to a breach of contract lawsuit because the PLAINT Q 's’S AMENDED SUPPLEMENTAL L PLEA TO THE JURISDICTION ~ PAGE 41 RESPONSE TO THE CITY OF DAL TO THE JURISDICTION AND SECOND SUcontract involved a proprietary function, Jd, at 343. In its discussion of this issue, the Court explicitly recognized the Dichotomy in the tort context, and did not reject it in the contract context despite the opportunity to do so: ‘The proprietary-governmental dichotomy has been used to determine a municipality's immunity from suit for tortious conduct. ... A municipality is not immune from suit for torts committed in the performance of its proprietary functions, as it is for torts committed in the performance of its governmental functions. But we have never held that this same distinction determines whether immunity from suit is waived for breach of contract claims, and we need not determine that issue here. Id, at 343 (emphasis added). Despite the foregoing, the Supreme Court applied the Dichotomy to the Tooke’s contract claim anyway, and holds that the subject matter of the contract would be deemed governmental for the purpose of tort liability and “we see no reason to the think the classification would be different under the common law.” Id. at 343-44. The City of Dallas, here though, would twist the words of the Court—uttered in what can only be described as dicta—as an affirmative expression that the Dichotomy does not apply to contract claims. But, in the same breath, the Court expressly declined to determine the issue and it is odd that the Court would then apply the Dichotomy immediately after dismissing it. Jd. Moreover, it is unlikely that the Court intended to do away with over a century of settled Texas law in such an unceremonious fashion without providing a single point of justification or rationale. See id; Georgetown, 413 8.W.3d at 811 (“Although Tooke brought this issue into question, it did not suggest...any principled reason why the [Dichotomy] should apply to tort claims but not contract claims under the common law.”) PLAINTIFF'S RESPONSE TO THE CITY OF DAI PLEA TO THE JURISDICTION AND SECOND. = PAGE a2Much of the split in authority plaguing the intermediate courts is attributable to this utterance. Prior to Tooke, “the Texas appellate courts—including [the Third Court of Appeals}—also unanimously applied the proprietary-governmental dichotomy to claims for contract damages.” City of Georgetown v. Lower Colorado River Authority, 413 S.W.3d 803, at 810 (Tex. App-—Austin 2013, pet. dism’d by agr) (citing cases out of Dallas, Houston [1*] Houston [14"], San Antonio, Fort Worth, Waco, El Paso, Corpus Christi, Eastland, Beaumont, and Amarillo). In a remarkably well-reasoned and -written opinion, the Third Court of Appeals in City of Georgetown v. Lower Colorado River Authority attempted to reconcile the Tooke utterance with Gates, and expressed confusion over the Court’s claim that it has never held the Dichotomy applicable to contracts: “Given that the disposition in Gates appears to have required the application of the [Dichotomy] to a contract claim, it is not entirely clear what the court [sic] in Tooke meant when it said, in dicta, that it had never held that the [Dichotomy] applies to such. claims.” Georgetown, 413 S.W.3d at 810 n.5. Another court has resolved the puzzling. discrepancy as follows: ‘The Texas Supreme Court has never held that this same distinction determines whether immunity from suit is waived for breach of contract claims. Jd, Nevertheless, the Texas Supreme Court has stated, “Contracts, made by municipal corporations in their proprietary capacity have been held to be governed by the same rules as contracts between individuals.” Gates v. City of Dallas, 704 8.W.2d 737, 738-39 (Tex. 1986). It has also stated that a city that contracts in its proprietary role is “clothed with the same authority and subject to the same liabilities as a private citizen.” Jd. Based on these statements, we proceed in our analysis with the assumption that the proprietary-governmental dichotomy extends to breach of contract, claims. PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA 10 THE JURISDICTION — PAGE 43 048City of Weslaco v. Borne, 210 8.W.3d 782, 789 (Tex. App—Corpus Christi 2006, pet. denied) (emphasis in original) In light of this inconsistency and the sudden, radical departure from established law suggested by the City, along with the Supreme Court’s recent willingness to directly consider the issue, this Court should be reluctant to read Tooke as aggressively as the City. Rather, this Court should follow the path of the Third Court of Appeals and rely on the nearly unanimous opinions of Texas intermediate courts that hold the Dichotomy applies to contract claims with equal force as it does to tort claims. See id. at 810-811. Subsequent to Tooke, a number of Texas courts of appeal continue to apply the Dichotomy to breach of contract cases involving municipalities. In Georgetown, the Third Court of Appeals squarely addresses the issue and takes the Fourth Court of Appeals to task on its decision in Wheelabrator I. 413 8.W.3d at 812 (To the extent Wheelabrator’s analysis suggests that Tooke changed the common law, we respectfully disagree”). In Georgetown, the LCRA entered into a standard wholesale power agreement with the city in 1974. Jd. at 805. Following some disagreements between the parties, the LCRA filed suit against the city for declaratory judgment. Id. at 806. In dismissing the city’s assertion of immunity, the court addresses and answers the 5 See, e.g., East Houston Estate Apartments, LLC. v. City of Houston, 294 $.W.34 723, 731-32 (Tex. App:—Houston [1* Dist.] 2009, no pet.); Smith v. City of Blanco, No. 03-08-00784-CV, 2009 Tex. App. LEXIS 7889, 2009 WL 3230836, at *3 (Tex. App-—Austin Oct. 8, 2009, no pet.) (mem. op.); Casso ¥. City of Mcallen, No. 13-08-00618, 2009 Tex. App. LEXIS 2049, at *5-7 (Tex. App-—Corpus Cl Mar. 26, 2009, pet. denied) (mem. op.); Georgetown, 413 S.W.3d at 811; City of Emory v. Lusk, 278 S.W.3d 77, 83 (Tex. App.—Tyler 2009, no pet.; City of Houston v. Petroleum Traders Corp., 261 W.3d 350, 355-56 (Tex. App—Houston [14th Dist.] 2008, no pet.); City of Weslaco v. Borne, 210 S.W.3d 782, 791-92 (Tex. App.—Corpus Christi 2006, pet. denied); Temple v. City of Houston, 189 S.W.3d 816, 821 (Tex. App—Houston [Ist Dist] 2006, no pet.) PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS"S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 44 049following two, critical questions of law: (1) does the Dichotomy apply to contract claims under the common law and (2) if so, has the Legislature abrogated the common law? Id. at 808, Ultimately, the court answers the first in the affirmative and the second in the negative. Id. at 814. In the opinion, the court clarifies a critical point necessary for the correct resolution of the City of Dallas’ Plea, which is that “it is also well established that before a court considers whether governmental immunity has been waived, the court must determine whether governmental immunity exists in the first place.” Jd. at 808 (citing City of El Paso v. Heinrich, 284 $.W.3d 366, 371-72 (Tex. 2009)). It is true that the courts generally defer to the Legislature to waive immunity because the Legislature is better suited to address the conflicting policy issues involved. Reata Constr. Corp. v. City of Dallas, 197 $.W.3d 371, 375 (Tex. 2006). But it is not the province of the Legislature to grant immunity to the state or its subdivisions because “[iJmmunity was not bestowed by legislative or executive act; it arose as a common-law creation of the judiciary.” City of Galveston v. State, 217 $.W.3d 466, 473 (Tex. 2007). Thus, “it remains the judiciary’s responsibility to define the boundaries of the common-law doctrine and to determine under what circumstances sovereign immunity exists in the first instance.” Id. at 471 (quoting Reata, 197 $.W.3d at 375). This explains why the question of whether a city may crouch behind the shield of governmental immunity is a two-prong analysis. Baker, 305 $.W.3d at 789; Ethio Express Shutle Serv. v. City of Houston, 164 $.W.3d 751, 754 n4 (Tex. App.—Houston {14 Dist.] 2005, no pet.). First, a court must determine whether the function or activity p DALLAS’S AMENDED SUPPLEME? 10 § RESPONSE 10 THE CITY 110N AND SECOND SUPPLEMENTAL PL THON ~ PAGE 45 050complained of is governmental or proprietary. Id. (citing City of White Settlement v. Super Wash, Inc., 198 S.W.3d 770, 776 n4 (Tex. 2006). Then, only if the function or activity is governmental will the court consider whether immunity has been waived. Id. (citing Tex. Bay Cherry Hill, L.P. v. City of Fort Worth, 257 $.W.3d 379, 389 (Tex. App.—Fort Worth 2008, no pet.); Ethio, 164 S.W.3d at 754 (“Only if we decide that the City’s regulation was a governmental function would we decide whether Ethio pleaded a valid waiver of [governmental] immunity.”). If the function is proprietary, the inquiry is at an end because there is no immunity for proprietary functions, Canario’s, Inc. v. City of Austin, No. 13-14-00455-CV, 2015 Tex. App. LEXIS 8923 *5 (Tex. App—Austin Aug. 26, 2015, pet. filed). In its Plea, the City claims there is no valid policy basis to adopt the Dichotomy to contract claims. The City’s position here mischaracterizes the status of the law by suggesting the Dichotomy is not already applicable to contracts. This Court need not bother itself with whether sound policy requires the adoption of the Dichotomy to contracts because the Texas Supreme Court has consistently made that determination for over a century, beginning with Posnainsky and Fristoe, followed by Crosbyton and Gates. In any event, the City’s bias in this regard is obvious, as it would enjoy the ability to enter into substantial contracts with private parties with the ability to freely breach those agreements to its advantage and to the detriment of the other party. This outcome and conflict of interest captures precisely the policy rationale behind preserving the dichotomy for proprietary functions, as well the Legislature's motive in waiving PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL ISDICTION ~ PAGE 46 0stgovernmental immunity with Chapter 271 with respect to contracts entered into in a city’s governmental capacity: CSHB 2039 would bring fairness to business relationships between contractors and local government entities, thus encouraging top contractors to take on government contracts. Under current law, a plaintiff cannot sue a local government entity for a claim that arises from a contract. This creates a fundamentally unfair situation that denies redress, for example, to a contractor who completed a project for a city that refused to pay. As a result, to protect themselves from potentially irrecoverable losses, certain contractors do not bid for local government contracts. Some of the best and most experienced contractors choose to bid only on other contracts while small contractors effectively are shut out of the bidding process because they cannot afford the risk of contracting with local governments. In the end, all that local government entities may be left with to receive bids are sub-par contractor. House Research Org., Bill Analysis, Tex. H.B. 2039 (CSHB 2039), 79" Leg., RS, 2005, at 2-3; see also, Brief of Amicus Curiae, Joseph M. Nixon at 2, Wasson Interests, Ltd. v. City of Jacksonville, No. 14-0645 (Tex. 2015) (discussed, infra). 3 The Legislature Has Not Abrogated the Dichotomy as to Contracts. ‘The City argues that subsequent to the enactment of Chapter 271, the Dichotomy has no place in determining a city’s munity to a breach of contract claim. Again, the City’s presents an incomplete and unsound analysis to support its position. As noted above, it is not the province of the Legislature to either grant or bestow immunity because “it remains the judiciary’s responsibility to define the boundaries of the common-law doctrine and to determine under what circumstances sovereign immunity exists in the first instance.” City of Galveston, 217 8.W.3d at 471 (quoting Reata, 197 8.W.3d at 375). Recognizing this fundamental premise of Texas immunity law, the Legislature PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 47 052explicitly indicated that Chapter 271 is not a grant of immunity: “Nothing in this subchapter shall constitute a grant of immunity to suit to a local governmental entity.” . Loc. Gov’? Cope § 271.158. In construing the words of the Legislature, a court “presumes the Legislature deliberately and purposefully selects words and phrases it enacts, as well as deliberately and purposefully omits words and phrases it does not enact.” Tex. Mut. Ins. Co. v. Ruttinger, 381 8.W.3d 430, 451 (Tex. 2012). The only explanation for the Legislature’s inclusion of section 271.158 is that it was aware of the Dichotomy’s role in contract immunity and did not want to be misunderstood as expanding immunity to proprietary contracts. But the City’s argument completely ignores section 271.158 and would have this, Court do the same. To be sure, the Court cannot disregard the first prong of the governmental immunity analysis, i , the Dichotomy, without running directly afoul of section 271.158. By ignoring whether a contract was entered in a proprietary capacity, jumping right to the question of waiver, this Court would impermissibly impress upon the Legislature the ability to define the bounds of immunity and grant municipalities immunity where it previously did not exist; e.g, a city could be incorrectly found immune to a contract claim under a proprietary contract that does not otherwise satisfy the conditions of Chapter 271. Both the common-law and Chapter 271 itself agree that such a legal maneuver is outside the framework of Texas immunity law. As the City correctly points out, there is no reference to the Dichotomy anywhere within Chapter 271, But this should not be understood as an affirmative rejection of the Dichotomy by the Legislature, Given that the courts recognize a legislative abrogation of PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA 10 THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 48 053a common-law principle only when the Legislature speaks with express clarity of its intent to do so, it is unreasonable to either read or recognize such an abrogation in Chapter 271. See Cash Am. Int'l, Inc. v. Bennett, 35 8.W.3d 12, 16 (Tex. 2000) (citing Bruce v. Jim Walters Homes, Inc., 943 $.W.2d 121, 122-23 (Tex. App—San Antonio 1997, writ denied). As a result, “there is no plain statutory text from which [a court] can determine whether the legislature intended to abandon the dichotomy for contract claims.” Georgetown, 413 $.W.3d at 812. Silence on the part of the Legislature may, however, be easily explained by the fact the courts unanimously applied the Dichotomy to contracts prior to the enactment of Chapter 271 and assuming, as the court must, that the Legislature was aware of this, there was simply no need to reference it because the question of waiver is logically and legally subsequent to the question of whether immunity exists at all, See Georgetown, 413 $.W.3d at 813. In the words of the Third Court of Appeals: Finally, as we have explained, the proprietary-governmental dichotomy concerns whether governmental immunity exists in the first place, not whether it has been waived. ‘Therefore, the statutory provision that waives governmental immunity in chapter 271 does not logically implicate the proprietary-governmental dichotomy, which applies before consideration of waiver. As a result, the legislature could have reasonably believed not need to reiterate the validity of the dichotomy in section 271.152. This, interpretation is directly supported by section 271.158, in which the legislature expressly stated that nothing in section 271.152 “shall constitute a grant of immunity to suit to a local governmental entity.” Georgetown, 413 S.W.3d at 814. Moreover, the legislative history behind Chapter 271 indicates it was intended to limit, not expand, govemmental immunity. Put another way, the legislative history PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL 054strongly indicates that Chapter 271 was adopted to broaden a private litigant’s access to the courthouse against a municipality. Georgetown, 413 8.W.3d at 814, According to the analysis by the House Committee on Civil Practices, “[Chapter 271] is intended to clarify and re-express the Legislature’s intent that all local governmental entities that have been given or are given the statutory authority to enter into contracts shall not be immune from suits arising from those contracts, subject to the limitations set forth in C.S.H.B, 2039.” House Comm. on Civ. Prac., Bill Analysis, Tex. H.B. 2039, 79” Leg, R.S. 2005 (emphasis added); see also Kirby Lake Dev., Ltd. v. Clear Lake City Water Auth., 320 $.W.3d 829, 837 (Tex. 2010) (noting that blanket immunity from breach of contract claims created a fundamentally unfair situation that denied redress, for example, to a contractor who completed a project for a city that refused to pay). In this case, the Court has the rare benefit of the first-hand recollection and commentary of Rep. Joe M. ‘Nixon, author of an amicus brief in the Wasson case pending before the Texas Supreme Court and the very House Representative that sponsored H.B. 2039: While the Torts Claim Act protects taxpayers as to liability and monetary exposure related to governmental functions, the Legislature and courts have historically recognized that when a city acts like a private party it should be treated like a private party in the courts. This policy is even more applicable to breach of contract claims against cities. ... At the time the legislature enacted Chapter 271, Texas courts had uniformly applied the proprietary-governmental dichotomy to claims for contract damages. . .. 1 have found no legislative history suggesting the proprietary/governmental distinction was to be abolished. Instead, the entire purpose of the immunity waiver bill was to eliminate one-sided contracts, illusory contracts, and unenforceable contracts. The Legislature sought to eliminate the risks associated with entering into an unenforceable contract, which would then promote active bidding and participation by the business sector. PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURI 055 ICTION ~ PAGE SOBrief of Amicus Curiae, Joseph M. Nixon at 2, Wasson Interests, Ltd. v. City of Jacksonville, No. 14-0645 (Tex. 2015). As above, the City relies on the Fourth Court of Appeals for support in this regard, However, the Fourth Court of Appeals errs in its complete failure to consider the plain language section 271.158, as well as the controlling precedent of Posniansky, Gregg, and Gates. ‘The Fourth Court of Appeals makes much of the fact that the Legislature expressly adopted the Dichotomy in the Texas Tort Claims Act (“TTCA”), but failed to do so in Chapter 271: “As it had already done in the tort-claims context, the Legislature could have incorporated the proprietary/governmental distinction into the statutory waiver scheme for contract claims; however, it chose not to incorporate that distinction into a contract setting. Wheelabrator I, 381 8.W.3d at 604-05. But, as argued above, the Legislator’s decision not to reference does not necessarily or even reasonably signal its ent to not incorporate the Dichotomy into the functional framework of Chapter 271 or abrogate the Dichotomy as to contracts altogether. Again, for more than 125 years, the Texas Supreme Court has recognized that municipalities have no immunity either from liability or from suit arising from their proprietary functions. There has been no restriction placed by the Legislature on contract or quasi-contract claims against municipalities arising from proprietary activities. Clearly, nothing in Chapter 271 changes the common law that when engaging in proprietary activities, municipalities are liable for their contracts (and generally for their torts, except as limited by the Texas Tort Claims Act or other law) to the same extent private corporations are, and, as 1d above, section 271.158 indicates the PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE S1 056Legislature’s intent nor to change the common law rule of no immunity for a municipality's proprietary contracts by reason of Chapter 271. No statement of legislative intent could be plainer or more obvious; it was not buried in committee hearin, s or testimony or other legislative history—it is right there in the same subchapter simple, straightforward language. As such, the Fourth Court of Appeals was wrong in Wheelabrator I when it failed to apply the Dichotomy and failed to recognize the precedence of Gates and Posniansky. ‘Therefore, this Court should not follow the erroneous Wheelabrator opinion and find that the Dichotomy applies to determine whether the City is immune to Trinity’s breach of contract elaim. 4. The City Was Engaged in a Proprietary Function When it Executed the Lease Agreements and is, Therefore, Not Immune to Trinity’s Breach of CONTRACT CLAim. The City incorrectly states that the Leases were not entered into by the City in its proprietary capacity. But for 60 years it has been black-letter, Texas Jaw that a municipality acts in its private, proprietary capacity when it enters into an oil and gas lease. City of Corpus Christi v. Gregg, 289 8.W.2d 746, 750 (Tex. 1956) (“In making the leases upon which suit was brought, the city acted in its proprietary capacity and not in its governmental capacity; therefore it is subject to the legal principle of estoppel”). Thus, in making the Leases upon which Trinity now sues, the City acted in its proprietary capacity and not in its governmental capacity; therefore, the City is subject to 1 inity’s breach of contract claim and the Plea should be denied. See id. In Gregg, the City of Corpus Christi leased city-owned lands to Gregg, a private party, for the purpose of exploring and extracting oil and gas. /d. at 749. Corpus Christi PLAINTIFF'S RESPONSE TO THE CITY OF DAL PLEA TO THE JURISDICTION AND SECOND SUPP 'S AMENDED SUPPLEMENTAL EMENTAL PLEA TO THE JURISDICTION ~ PAGE 52 057advertised its intent to make oil and gas leases on city property and that the leasing would be awarded upon sealed bid. Jd. at 752. Gregg was the winning bidder and three leases, approved as to form by the City Attomey, were executed by and between Gregg and the city. Id. Gregg remitted and the city accepted a total of $38,000 in bonus payments ($334,677 in 2016 dollars). Jd. Eventually, the city sought to set aside the leases over allegations of fraud and conspiracy, but only after accepting the benefits of the leases, including the bonus payments and royalty payments and only after the “City stood by and encouraged and permitted Gregg to spend his funds and take the chances of a dry hole on. the City land, and made no objection.” Id. at 753. Of course, Gregg sued for validation of the leases and the Court determined that Corpus Christi could not hide behind governmental immunity and was subject to the suit because, as the lessor under the leases, it was engaged in a proprietary function: “In making the leases upon which suit was brought the City acted in its proprietary capacity and not its governmental capacity; therefore, it is subject to the legal principles of estoppel.” Id. at 749. In so holding, the Court indicated that “the doctrine of estoppel is predicated upon common honesty and muni ies as well as individuals are affected by it.” Id. ‘The fai s of Gregg are strikingly analogous to the disappointing events surrounding Trinity’s relationship with the City of Dallas. Like in Gregg, the City advertised publically its desire to exploit the minerals underneath its privately owned property and enticed oil and gas companies to make bids on otherwise desirable land. See Gregg, 289 $.W.2d at 749. Both Gregg and Trinity prevailed in the bidding process; were awarded the dubious privilege of executing oil and gas leases with a municipality, PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURE 058 ICTION ~ PAGE $3duly approved by the City Attorney; and paid significant sums in the form of bonuses. See id. at 752, Thereafter, like Corpus Christi, the City of Dallas unilaterally, and without just cause, seeks to avoid its obligations under the lease. See id. Moreover, both Trinity and Gregg were encouraged to execute the leases by the City, In his deposition, Mr, Cossum admits that because the City was the fee owner of the drill-sites the City had to sign the SUP Applications as evidence of its consent to the SUP request. (Cossum, p. 43), Similarly, Trinity was consistently being reassured by City staff that the Council would approve the SUPs, (Duebner, p. 158), that staff would assist in obtaining the necessary approvals in order to drill, (id. at 164-66), and that staff was “reasonably confident” that Trinity would be granted the right to drill on the Radio Tower tract, (id. at 170). Both Trinity and Gregg filed suit to preserve their investments, and were met with claims of immunity by the opposing city. But just like Corpus Christi, the City of Dallas executed the Leases in its proprietary capacity, not in the furtherance of the general law for the interest of the public at large, but primarily and only for the financial benefit of its citizens and, as a result, the City is not immune to Trinity’s breach of contract claim. See id. Given the obvious value to Trinity, the City argues that Gregg does not apply because governmental functions were involved and because Gregg did not address the specific location of the drill sites, These distinctions are without effect because, as argued below through Baker v, City of Robinson, just because some aspect of the facts supporting a plaintiff's underlying claim may have been laced with governmental functions, does not alone work to bestow immunity. Moreover, there is nothing to PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURIS 059 ON PAGE 54suggest that Gregg would have come out differently had the Court considered the specific location of each drill site contemplated under the proprietary, oil and gas leases. ‘Thus, Gregg is fully applicable to this case and this Court’s ruling on the Plea. Under Gregg alone, this Court can easily conclude that the City was engaged in a proprietary function when it leased city-owned land to Trinity for the exploration of oil and gas in exchange for a $19,000,000.00 bonus payment, But the Court can safely arrive to the same conclusion by simply consider ng the uncontroverted definitions of governmental and proprietary functions as well as the balance of the body of case law. * City of Gladewater v, Pike, 727 $.W.2d 514 (Tex. 1987) (operation of a municipal cemetery was a proprietary function); Gates v. Dallas, 704 S.W.2d 737 (Tex. 1986) (entering into a health insurance contract with city employee and city’s Subsequent failure to pay health insurance benefits under city plan was proprietary); City of Round Rock v, Smith, 687 8.W.2d 300 (Tex. 1980) (maintenance of storm sewer was a proprietary function); San Antonio Indep. Sch. Dist. v. City of San Antonio, 550 $.W.24 262 (Tex. 1976) (owning and operating public utility was proprietary); Corpus Christi v. Gregg, 289 $.W.24 746 (Tex. 1956) (city execution of oil and gas leases was proprietary); Camario’s, Inc. v. City of Austin, No. 03+14-00455-CV, 2015 Tex. App. LEXIS 8923 (Tex. App.—Austin Aug. 26, 2015, pet. filed) (contract between corporation and city for collecting, holding, and distributing escrow funds was proprietary); Casso v. City of Medllen, No. 13-08-00618, 2009 Tex. App. LEXIS 2049 (Tex. App.—Corpus Christi Mar. 26, 2009, pet. denied)(mem. op.) (provision of health insurance to city employees was proprietary); City of New Braunfels v. Carowest Land, Lid., 432 S.W.3d 501, 519 n.2 (Tex. App.—Austin 2014) ("[w]e note that the Texas Supreme Court has assumed, without deciding, that if the proprietary-governmental dichotomy applies beyond tort claims . . . courts should nonetheless defer to the [Tort Claims] Act’s classifications of proprietary-versus-governmental functions [ ] in applying the dichotomy as a matter of| the common law."; City of Georgetown v. Lower Colo. River Auth., 413 S.W.34 803 (Tex. App.—Austin 2013, pet. dism'd by agr.) (contract for exclusive wholesale purchase of electricity was proprietary); Hudson v, City of Houston, 392 S.W.3d 714 (Tex. App-—Houston [1” Dist] 2011, pet. denied) (City’s act of providing a defense and indemnity to its employees for liability claims through self-insurance was @ proprietary function); Baker v. City of Robinson, 305 $,W.34 783 (Tex. App.—Waco 2009, pet. denied) (City did not establish that action was governmental for purposes of summary judgment winere the City sold real property and purchaser believed city misrepresented zoning on the property); Temple v. City of Houston, 189 S.W.3d 816 (Tex. App—Houston [Ist Dist] 2006, no pet.) (provision of life insurance benefits to employees was proprietary); Oldfield v. City of Houston, 12 S.W.3d 219 (Tex. App—Houston [14 Dist] 2000, no pet.) (enforcement of deed restrictions was proprietary because city was not required ‘or enjoined to do so); Bailey v. City of Austin, 972 8.W.2d 180 (Tex. App.—Austin 1998, pet. denied) (provision of health insurance to city employees was proprietary); Williams v. City of Midland, 932 $,W.2d 679 (Tex. App—El Paso 1996, no writ) (holding that recruitment of police officers was proprietary because itis a competitive activity between cities such that the hiring of officers is of primary benefit to the citizens of the city rather than the public at large); Schertz v. Parker, 754 S.W.2d 336 (Tex. App.—San Antonio 1988) (refusal of permits for mobile homes and recreational vehicles on the property PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURI: .D SECOND SUPPLEMENTAL PLEA TO THI 060Recalling the definitions recited above, and that the “key difference is that governmental functions are what a municipality must do for its citizens and proprietary functions are what a municipality may, in its discretion, perform for its inhabitants,” it is clear that playing the role of lessor to an oil and gas lease is quintessentially proprietary and not governmental. See, Canario’s, Inc. v. Ci ity of Austin, No. 03-14-00455-CV, 2015 Tex. App. LEXIS 8923, *8 (Tex. App.—Austin Aug. 26, 2015, pet. filed) (citing Oldfield v. City of Houston, 15 8.W.3d 219, 226 (Tex. App—Houston [14" Di 2000, pet. denied) (emphas in original)), The City has not identified, and Trinity has not found, any law—federal, state, or local—requiring the City to execute oil and gas leases with private parties for the exploitation of rals under city-owned property. Conversely, conveying estates in city-owned land, be they leasehold or fee simple determinable, so that the City may generate immediate and later revenue to remedy budgetary shortfalls for the benefit of its citizens, and no other Texas resident, can only be said to be proprietary. In his deposition, Mr. Duebner states that the City decided to lease mineral rights (Duebner, pp. 28-29) and began to explore the leasing of mineral rights on City property because other cities were generating “a substantial amount of money for the lease bonus for their ‘was proprietary where the hook-up fees required by the permit process did not provide for city-owned and operated sewer service); Int'l Bank of Commerce of Laredo v. Union Nat'l Bank of Laredo, 653 S.W.2d 539 (Tex. App—San Antonio 1983, writ refd n.re.) (stating that the provision of gas and electric service is proprietary because it is primarily for the benefit of the city's inhabitants rather than the public at large); Boiles v. City of Abilene, 276 S.W.2d 922 (Tex. App-—Eastland 1955, writ ref'd) (holding that City's power to acquire water works and furnish water under contract is proprietary because it is not governmental nor legislative in its character but strictly proprietary); City of Crosbyton v. Texas-New Mexico Util. Co., 157 S.W.24 419 (Tex. App—Amarillo 1941, writ rePd w.o.m) (exclusive contract to PLAINTIEE’S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 56 061property,” (Id. at 31-32). Mr. Duebner further admits that the sole purpose for which the City entered into the Leases was to raise revenue and that “the City is not required to lease its minerals.” (Id. at 71). Nor was the City required to pursue such leasing through the public-bidding process and could have negotiated the leases directly without issuing any RFPs. (Jd. at 76-78). Mr. Cossum’s deposition testimony is consistent and makes clear that, in 2007, the City Council considered potential amendments to the Dallas Development Code to enhance drilling options within the City and the effort was commensurate with the City’s efforts to obtain revenues to offset the City’s significant budgetary deficits. (Cossum at 59-60). Texas case law is replete with opinions in which courts have determined municipal conduct to be proprietary. See, supra, note 6. Ultimately, the City’s involvement with Trinity was quintessentially proprietary and throughout the process the City was conducting itself and carrying on as a purely private owner of land would have. Thus, the City is not immune to suit to for its breach of the Least ‘The City argues that because City code required Trinity to obtain a specific use permit to drill—a city zoning approval—that it was acting in its governmental capacity. But the fact that an SUP sounds in zoning and land-use law, however, does nothing to morph the proprietary nature of making the Leases into governmental activity. See Baker ¥ City of Robinson, 305 8.W.3d 783, 786 (Tex. App.—Waco 2009, pet. denied). In Baker, the court refused to hold a city immune to claims for breach of contract and fraud purchase electricity from power company for the purpose of powering pumps for city’s water works system was proprietary). PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS"S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE $7 062where Baker alleged the city misrepresented the zoning classification on property he purchased from the city. Id, The facts of Baker are similar to the facts here. Id. at 786. In Baker, the city sought to dispose of real property and put the property out to bid; Baker ‘was the high-bidder and purchased the property. Id. at 786. Baker claimed that the city advised him that the property was zoned for commercial, which would have accommodated Baker’s intended redevelopment and use of the property as multifamily. Id, at 786. During construction, the city informed Baker that the property was actually zoned single-family and, as a result, his multifamily development would require a zoning change. Jd, at 787. Baker acquiesced and, following application to the City, obtained the necessary change in zoning. Jd. Nevertheless, Baker brought suit for breach of contract and fraud due to the city’s misrepresentation of the zoning prior to Baker’s purchase of the same. Jd, The Court dismissed the city’s argument that it was immune because the “true crux” of Baker's claim pertained to zoning—a governmental function. Id, at 790, Rather, the court held that the fundamental nature of Baker's claim was not a zoning dispute, but a fraud claim because the city misrepresented the zoning to induce him to the purchase the property. ‘The mere fact the city perpetrated the fraud through the zoning process did not cloak the city with immunity. Id. ‘As in Baker, the City of Dallas cannot avoid the jurisdiction of this Court simply because they baked a zoning requirement into the Leases. The reasoning in Baker is compelling because allowing a city to cleanse itself of liability simply by grafting upon a proprietary function some superficial component of a governmental function would permit an ambitious city to unduly bypass the Dichotomy altogether; converting its PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLE: PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JI 063 TAL ICTION ~ PAGE $8governmental immunity to sovereign immunity and unilaterally promoting itself to the position of the State, By allowing the City of Dallas to avoid liability for its breach of the Leases simply because through its zoning ordinance it has instituted a regime by which all drilling must obtain an SUP, the Court would be facilitating the self-aggrandizing behavior described above. The very purpose of the Dichotomy is to prevent a city from leveraging its unique status as the government and its attendant police power in its favor when participating in the private market. The Baker opinion makes clear that a city cannot stack-the-deck when it elects to interact with private parties in a proprietary capacity and thereby avoid liability. See id. at 790, At best, the City’s activity with respect to the Leases is partly governmental and partly proprietary. But where an activity is considered partly proprietary and partly governmental, it should be considered proprietary for purposes of the immunity analysis. City of Houston v. Shilling, 240 8.W.2d 1010 (Tex. 1951). If any portion is proprietary, then the City has no immunity as to torts and contracts. {d, Thus, even if the City’s conduct surrounding the Leases are only partially proprietary, this Court should nevertheless rule that the City not immune from Trinity's breach of contract claim. See id. 5. The Lease Agreement Cannot (and Does Not) Waive Subject Matter jurisdiction, Trinity denies that anything in the Leases constitutes an admission regarding the nature of the City’s functions in connection with the Leases. Nevertheless, the City’s argument that Trinity contractually admitted that governmental functions were ‘SE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL pMENTAL PLEA TO THE JURISDICTION ~ PAGE 9 064involved—even if taken as true—has no bearing on the legal questions presented to this Court. As outlined above, it is understood that subject matter jurisdiction cannot be conferred by consent and cannot be waived. Carroll, 304 $.W.3d at 367; Continental Coffee, 937 S.W.2d at 448 n.2. In other words, contracting parties cannot agree that a particular court will or will not have subject matter jurisdiction over the contract. See id. Thus, no matter what the Leases say about the City’s police power, it does not have the effect of robbing this Court of its jurisdiction to hear Trinity’s otherwise properly pleaded claims. See id. B. _ Even if Chapter 271 Applies, Immunity From Suit for the Lease Agreement Has Nevertheless Been Waived. Should the Court determine that either the Dichotomy does not apply to the Leases or that the City was acting in a governmental capacity when it executed the Leases, the City’s immunity has nevertheless been waived under Chapter 271. Section 271.152, Texas Local Government Code, contains an express waiver of immunity from suit as to certain breach-of-contract claims. Subchapter 1, Chapter 271, TEX. Loc. Gov't CoDE (2015). For the waiver to apply, (1) the party against whom waiver is asserted must be a local governmental entity, (2) authorized by statute or the constitution to enter into contracts, and (3) the local governmental entity must have in fact entered into a “contract subject to this subchapter.” TEX. Loc. Gov’T Cope § 271.152. The statute defines “a contract subject to this subchapter” as “a written contract stating the essential terms of the agreement for providing goods or services to the local governmental entity that is properly executed on behalf of the local governmental entity.” Jd. § 271.151(2)(A). The PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 60 065statutory waiver of immunity is limited to a “suit for the purpose of adjui for breach of the contract.” Id. § 271.152. The terms “goods or services” in Chapter 271 are generally construed broadly so as to encompass a wide array of activities. Kirby Lake, 320 8.W.3d at 839. The Texas Supreme Court has indicated that a service “incudes generally any act performed for the benefit of another under some arrangement or agreement whereby such act was to have been performed.” Id, The Court has also made clear that a contract may fall under Chapter 271 even if the services provided were not the primary purpose of the agreement, Jd. Importantly, section 271.153, calling for a “balance due and owed,” is intended “to limit the amount due by a governmental agency on a contract once liability has been established, not to foreclose the determination of whether liability exists.” Id. at 840, Moreover, Chapter 271 does not require strictly a written contract that is an agreement for providing goods and services; rather, Chapter 271 merely requires a “written contract stating the essential of the agreement for providing goods and services.” Lubbock County Water Control v. church & Akin, LLC, 442 S.W.3d 297, 301 (Tex. 2014). In addition, “a contractual relationship can include both the granting of a property interest and an agreement to provide goods or services.” Za. (citing Coinmarch Corp. v Aspenwood Apt. Corp., 417 8.W.3d 909, 925 (Tex. 2013) (emphasis in original). Thus, a municipality waives immunity for a contract that leases or conveys a real property interest so long as the contract also provides for the provision of goods or services to the municipality and even if such provision is not the primary purpose of the contract. See id, at 302; TEX. Loc. Gov't Cope § 271.152. PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS"S AMENDED SUPPLEMENTAI if JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURI 068 ON PAGE 61In its Plea, the City argues against waiver on the grounds the Leases were not a contract for goods or services rendered to the City. But under Texas law, when an oil and gas lease is signed, all minerals are owned by the lessee. Under the express terms of the Leas in this case, royalty is to be paid in-kin: in natural gas. The royalty clause in the lease provides that the “Jesse agrees to deliver free of cost to the City at the well(s) or to the City’s credit at the pipeline to which the well(s) may be connected, the royalty fraction in kind of all gas produced and saved from the land.” Once gas is produced, i.e. severed from the ground, it is a “good” under the U.C.C. as a matter of law. ‘TEX. BUS. & COMM. CODE § 2.105(a); Aquila SW Pipeline, Inc. v. Harmony Expl., Inc., 48 8.W.3d 225, 234 (Tex. App-—San Antonio 2001, pet denied). Under this royalty clause, the City was to be paid by Trinity by having these goods, i.e. the severed gas, delivered to the City to its credit at the pipeline which constitutes providing a “good” and a “service” to the City. The good being the produced gas, with the services being the delivery of the City’s fractional share of the gas to a pipeline. In his deposition, Mr. Duebner concedes that when he was procuring contracts on behalf of the City, he considered a service to be where the counterparty promised to deliver something to the City. (Duebner, p. 193). ‘There are in-kind royalty clauses wherein the landowner must make his/her own marketing accommodations at the wellhead. Here, was providing that service, along with measurement, treatment, dehydration, processing, gathering and compression to the City. Thus, the Leases, as written, were “contract{s] that stated the essential terms of an agreement for providing goods or PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA 10 THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDI 067 PAGE 62services” and the City’s immunit; any—to Trinity’s claim for breach of the Leases has been waived. See TEX. LOCAL Gov’? Cope § 271.151(2)(A). C. The City Is Not Immune to Trinity’s Properly Plead Promissory Estoppel Claim. ‘The Cit is not immune to Trinity’s promissory estoppel claim because the City, at all relevant times, was engaged in a proprietary activity for which, as argued above, no immunity attached. The City enjoys no immunity from claims resulting from or flowing, out of its proprietary activities. See Gates, 704 $.W.3d at 739. The doctrine of promissory estoppel refers to: A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promise and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. Fretz Constr. Co. v. S, Nat'l Bank, 626 8.W.2d 478, 480 (Tex. 1981). The Texas Supreme Court has made it clear that, although “a city cannot be estopped from exercising its governmental functions...the same does not hold true, however, when a city is performing its proprietary functions.” City of White Settlement v, Super Wash, Inc., 198 $.W.770, 773 n.3 (Tex. 2006) (citing Gregg, 289 S.W.2d at 750). In addition, Gregg, which is directly on point, makes clear that the City’s execution of the Leases was a proprietary activity. See Gregg, 289 8.W.2d at 750. In Gregg, the Texas Supreme Court held that because the execution of an oil and gas lease was a proprietary function, the city-lessor was “subject to the legal principle of estoppel.” Id. Thus, contrary to the City’s assertion, the Dichotomy does apply to quasi-contract claims and because the City’s execution of the Leases and attendant conduct were proprietary PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL, ‘TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 63 068activities, this Court has jurisdiction over Trinity’s promissory estoppel claim. See Super Wash, 198 8.W.2d at 773 n.3; Gregg, 289 S.W.2d at 750. But even if the Dichotomy did not apply, or the Leases governmental, this Court may nevertheless hold the City accountable for its wrongful conduct, even if carried out under the banner of a governmental function. See Super Wash, 198 $.W.3d at 774. In Super Wash, the Court recognized that “a municipality may be estopped in those cases where justice requires its application, and there is no interference with the exercise of its governmental functions.” Id. (citing City of Hutchins v. Prasifka, 450 S.W.2d 829, 836 (Tex. 1970)). To be sure, the exception is limited to exceptional cases where the circumstances demand its application to prevent manifest injustice. Jd. This is a question of law. Id. The Court exercised this exception in Roberts v. Haltom City. $43 $.W.24 75. In Roberts, a city was estopped from enforcing a notice of claim rule where the aggrieved party presented evidence that city officials made misleading statements indicating that the claim “would be taken care of” and that the notice requirement was waived. Id. at 76-77. The evidence presented precluded summary judgment and presented an appropriate application of the exception enunciated in Prasifka. Super Wash, 198 8.W.3d at 774; see also City of San Antonio v. Schautteet, 706 S.W.2d 103, 105 (Tex. 1986) (holding that “summary judgment is improper where there are genuine issues of material fact whether a city, through its officials, led the claimant to believe no further steps needed to be taken until the city completed its investigation.”). Like in Prasifka, Roberts, and Schautteet, justice requires Trinity be heard on its promissory estoppel claim because Trinity was PLAIN PLEA TO THE JURISDICTION 18'S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL 1D SECOND SUPPLEMENTAL PLEA TO THE JU HON PAGE 64 069misled by statements from City officials regarding the nature of the SUP requests and that Trinity would obtain all necessary approvals to drill on the Radio Tower Tract. (Suhm, p. 174, Ex. 23). Moreover, enforcing Trinity’s promissory estoppel claim against the City will not interfere with any governmental functions. See Super Wash, 198 8.W.3d at 774. In this context, courts must determine “whether estopping the city in a single instance will bar the future performance of that governmental function or impede the city’s ability to perform its other governmental functions.” Id. at 776. Trinity cannot conceive of how estopping the City from denying Trinity its rights under the Leases would interfere with any governmental function. Trinity has alleged a valid promissory estoppel claim. The elements of a promissory estoppel claim are: (1) a promise; (2) foreseeability of reliance thereon by the promisor; and (3) substantial reliance by the promisee to his detriment. English v. Fischer, 660 8.W.2d 521, 524 (Tex. 1983). Trinity has alleged the City promised to approve at least one surface drilling location on City property. (Pl. Sec. Am. Pet. at 26.) Trinity has further alleged that, not only was it foreseeable that ‘Trinity would rely on the promise, but that the City had actual knowledge of Trinity’s reliance on the promise. (Id. at 26-27.) Lastly, Trinity, to its detriment, substan ly relied on the promise in entering the Lease Agreement and making application for the SUPs. (Id. at 27.) Thus, the City is s properly plead promissory estoppel claim, and the Court has jurisdiction over the same. PLAINTIFF'S RESPON PLEA TO THE JURISDICI 10 THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL ON AND SECOND SUPPLEMENTAL PLEA TO THE JURI 070 ICHION ~ PAGE 65Trinity Has Alleged A Proper Breach Of Contract Claim Against The City Over Which This Court Has Jurisdiction. 1. The City Breached the Leases With Trinity Because it Prevented Trinity From Drilling on the Leased Property. In the Leases, under which the City agreed to lease mineral rights on City-owned property to Trinity, the City promised to “not unreasonably oppose” Trinity's request for a variance or waiver of any “ordinance, rule, regulation, order or other requirement relating to drilling, completing, operating, or producing an oil or gas well drilled on the Land or in the area of the Land.” (Def. Ex. 15, Section 21(q)). Generally, the City's Gas Drilling Ordinance prohibited gas drilling. The Ordinance provided a waiver or variance from the general prohibition on gas drilling where an applicant obtained an SUP. Accordingly, the SUPs that Trinity sought were the “variance” or “waiver” from an ordinance or rule relating to gas drilling in the City, which the City promised to not unreasonably oppose. The City also promised to “not [ ] unreasonably with{o}ld” the granting of access rights to the property to Trinity. (Ex. 15, Section 5(c)). The City unreasonably opposed Trinity’s SUP Applications when it denied them, because Trinity satisfied the requirements for which the City Council grants SUPs as set forth in the City Code. Furthermore, because the City routinely approved zoning applications where the City was the applicant over time, the approval of Trinity’s SUPs was an administrative function rather than a discretionary, legislative function. Accordingly, the City’s der of Trinity's compliant SUP Applications was unreasonable and therefore constituted a breach of the Oil and Gas Lease. PLAINTIFF'S RESPON PLEA TO THE JURISDICTION 0 THE CITY OF DALLAS’S AME? SECOND SUPP yD SUPPLEMENTAL JURISDICTION ~ PAGE 66 o”12. Trinity's SUP Applications Satisfied the Criteria Set Forth in the Code to Grant an SUP. The City unreasonably denied Trinity's SUP Applications because the applications complied with the necessary requirements to approve SUPs as set forth in the City Code. The City treats SUP Applications differently than applications for straight district rezoning, (Cossum, pp. 37-39). Unlike a straight zoning district, approval of an SUP requires that specific criteria be met. (Cossum, pp. 50-53, 54). Section 51A-4.219(a)(3), Dallas Development Code, states that the Council may grant an SUP when it finds the proposed use will: (a) be compatible with the surrounding uses and community facilities; (b) contribute to the welfare of the area of request and adjacent properties; (c) not be detrimental to the public health, safety, or general welfare; and (4) conform in all other respects to all zoning regulations and standards. (Def. Ex. 60). The Development Code does not list public opinion as a factor to be considered when deciding to grant an SUP. According to David Cossum, the highest-ranking employee in the planning department at the City at the time, compatibility with surrounding uses and distance from incompatible uses are a “primary factor” in deciding whether to approve SUPs. (Cossum, p. 34). When asked whether the Council had an absolute right to deny an SUP in a February 6, 2007, City Council briefing, City Attorney Tom Perkins stated “we don’t have an absolute right to deny an SUP,” because there are specific ordinance criteria that the Council is supposed to consider. (Ex. 24, COD_009051). Cossum agreed that the council must approve the SUP Applications in accordance with the four ordinance criteria PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL. PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO. IRISDICTION ~ PAGE 67 072and that the Council’s decision could not be arbitrary and capricious. (Cossum, pp. 68- 69). Cossum testified that the City planning staff is highly qualified to. make recommendations on development permit applications, and the City Council relies on the planning staff to “make the professional recommendation on the zoning case.” (Cossum, p. 53). In this case, the City planning experts determined that Trinity’s drill sites were indeed compatible with the primarily industrial uses in the vicinity, and enjoyed significant distances from incompatible uses. (Cossum, pp. 34-35). ‘The nearest house to the Gun Club Site was 1,500 feet away, five times the then-existing 300-foot required distance from a protected use. (Cossum, p. 185). The nearest house to the Radio Tower Tract was 2,400-3,000 feet away from the drilling site, which was 8-10 times the ‘minimum distance required by the Development Code at the time. (Cossum, p. 189). On the privately-owned Luna South site, the nearest residential use was 5,000 feet away and a soccer complex, which was not a protected use at the time, was 600 feet away, which were roughly 16 times and twice the distance respectively required by the Code (Cossum, p. 192). Furthermore, the planning experts opined that Trinity’s applications met all of the specific ordinance criteria required to approve an SUP Application. (Cossum, p. 51). ‘The staff determined that the Gun Club site was consistent with the character of the neighborhood, would not adversely impact community welfare, and met all of the four ordinance criteria for approval. (Cossum, pp. 184, 186-87). The planning experts determined that the Radio Tower site was a good drilling site and would not adversely 10 THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL ON AND SECOND SUPP! TURE ICTION ~ PAGE 68impact surrounding uses, including recreational uses. (Cossum, pp. 190-91). The professional planners determined that if Trinity's drilling operation complied with the applicable governmental regulations, drilling operations on any of the three sites would not adversely impact on public health or safety. (Cossum, pp. 197-200). The planning experts were confident that Trinity’s applications would be approved because they complied with basic land use principles. (Cossum, p. 35). The City treats the SUP Application process differently than a straight rezoning process also by requiring a site plan, imposing specific conditions to minimize the potential negative impact of the use on surrounding properties, and inclusion of an expiration date, (Cossum, pp. 37-39, 56). In this case, Mr. Cossum testified that if the City was concemed about potential impacts of Trinity’s gas drilling operation, it could address these concerns by affixing conditions to the approval. (Cossum, p. 39). Cossum testified that Trinity complied with all of the additional staff conditions, and that there were no further conditions that Trinity could have agreed to that would have resulted in approval of their SUP Applications. (Cossum, pp. 194-95). In virtually every situation, the City Council guards against potential negative effects of approved uses also by imposing time limits on an SUP, which in Trinity’s case was 20 years. (Cossum, p. 56, 183). In all, only one landowner within 200-1,000 feet of the SUP Applications filed a written protest opposing the SUP Applications. (Cossum, pp. 218-20). Because the City denied Trinity’s SUP Applications that not only met but exceeded the requirements set forth in the City Code, the City’s denial was unreasonable and constituted a breach the Leases with Trinity. PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 69 074Because the City had Uniformly Approved SUPs Where the City Was the Applicant, the Decision to Approve Trinity’s SUPs on City Land Were Ministerial. The City’s consistent approval of SUP Applications over time in which the City was the applicant rendered its decision to approve Trinity's SUPs to be merely ministerial. ‘Texas case law supports the proposition that a governmental entity's continued course of conduct over time can turn a discretionary function into a ministerial function. In State v. Biggar, the Court held that landowners stated a cause of action sufficient to support a damages award for inverse condemnation where the State denied an exchange of easements necessary for the landowners to develop their property in accordance with a city-approved site development plan. 848 S.W.2d 291, 293, 298 (Tex. ‘App—Austin 1993, motion for reh’g overruled). Due to restrictive development and zoning ordinances, the site had little development potential without the site development plan, which was set to expire unless the landowners met certain conditions, one of which was securing the exchange of easements with the State, which the State ultimately refused, Jd, at 293. The court stated, “we hold that the landowners stated a claim for inverse condemnation when they pleaded facts alleging that they had a right to lawfully develop their property and the State sought to suppress that right . . . at the landowners expense.” Jd, at 297. The court did not distinguish between the granting of permits versus the exchange of a real property interest for purposes of the inverse condemnation claim, because “all [ ] concern the grant or denial of a public benefit . . . [w]e see no justification for adopting the State’s position merely because the discretionary benefit sought by the landowners can be characterized as a real-property interest.” Id. PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 70 075In response to the State’s assertion that the granting of easements was discretionary and therefore that it had no duty to grant the easements, the Court opined, “[t]he State’s discretion in granting an exchange is not, however, dispositive of the issue before us.” Id, The court heavily weighed testimony from several witnesses indicating, that the State “routinely granted” the easement exchanges at issue: “[i}ndeed, none of the witnesses were aware of any previous instance in which the State had denied an exchange once the applicant had secured initial technical approval, as the landowners had.” Id. Because the city had established a course of conduct in which it always approved the casement exchanges at issue, the State was “obligated to allow development of the landowners’ tract if he met those technical requirements.” Jd. Otherwise, it had to compensate the landowners. Here, because the City of Dallas was the landowner for two of the SUP sites, it was required to sign two of the corresponding SUP Applications (Cossum, p. 43). ‘According to Mr. Cossum, he was aware of approximately 15 zoning applications on City-owned land. (Cossum, p. 45). Like the easement exchanges in Biggar, of those 15 applications, he was unaware of the City Council ever denying such an application prior to denying Trinity's SUP. (Cossum, p. 44). Mr. Cossum testified that “as the City's applicant, typically those are approved, yes, sir.” (Cossum, p. 46). City Executive General Manager, Mark Duebner, testified that in all of his experience with leasing on behalf of the City, he cannot think of another situation where the City accepted up-front payments for a use of a particular property and then disallowed the use for which the money was given, (Duebner, p. 214). Cossum similarly testified that other than the gas CITY OF DALLAS’S AMENDED SUPPLEMENTAL ‘SECOND SUPPLEMENTAL PLEA TO THE JU! PLAINTIFF'S RESPONSE TOT 10 THE JURISDICTION At CHION ~ PAGE.7I 076drilling Leases in this case, the City had never accepted a lease rent payment and then prohibited the lessee from using the property. (Cossum, pp.128-30). Accordingly, like the State's approval of easement exchanges in Biggar, the City had established a course of conduct by which SUP Applications on City-owned property were routinely granted. ‘Therefore, approval of Trinity's SUP Applications should have been ministerial. See Biggar, 848 S.W.24 at 293. Just as the landowner in Biggar complied with the technical requirements to secure the easement exchange, Trinity complied with the explicit SUP requirements as discussed above. In addition, Trinity satisfied other technical requirements to secure Grillsites, which included the fact that Trinity’s proposed wells were on legal building sites, and had enjoyed support from the Parks Department based on its determination that the proposed wells would not interfere with park facilities or activities. (Cossum, p. 135- 36, 142-43). Because the City always approved SUP Applications on City land, and because Trinity’s SUP Applications met all of the technical requirements in order to obtain an SUP, the City’s denial of Trinity's applications was unreasonable. ‘The City Is Not Immune to Trinity’s Claim for Declaratory Judgment. The City is not immune to Trinity’s declaratory judgment action seeking a declaration that the Leases is null and void as a matter of law because: (1) as argued above, executing the Leases was a proprietary function for which no immunity applies, regardless of the underlying action and including claims for declaratory judgment; and (2) even if the Leases were governmental in nature, no waiver is required because, inter alia, Trinity does not seek damages in connection with the declaratory judgment action. PLAINTIFF'S RESPONS! EA TO THE JURISDICTION AND SECOND SUPPLEMENTAL 077The Uniform Declaratory Judgment Act, codified as chapter 37, Texas Civil Practice and Remedies Code (“Chapter 37”), is a remedial statute designed “to settle and to afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations.” TEX. C1v, PRAC. & REM. CODE § 37.002(b) (2015); Natural Res. Conservation Comm'n v. IT-Davy, 74 8.W.3d 849, 855 (Tex. 2002). ‘The Act provides: A person interested under a deed, will, written contract, or other writings constituting a contract or whose rights, status, or other legal relations are affected by a statute, municipal ordinance, contract, or franchise may have determined any question of construction or validity arising under the instrument, statute, ordinance, contract, or franchise and obtain a declaration of rights, status, or other legal relations thereunder. TEX. CIV. PRAC. & REM. CODE § 37.004(a). Chapter 37 does not extend a trial court's jurisdiction, and a litigant’s request for declaratory relief does not confer jurisdiction on a court or change a suit’s underlying nature. I7-Davy, 74 8.W.3d at 855. When a claimant seeks a declaratory judgment against the government, the Texas Supreme Court has consistently distinguished between suits in which only a declaration of rights against the State is sought and suits seeking money damages against the State.” Fed. Sign v. Tex. S. Univ., 951 $.W.2d 401, 404 (Tex. 1997); W. D. Haden Co. v. Dodgen, 158 Tex. 74, 308 8.W.2d 838, 841 (1958); Cobb v. Harrington, 144 Tex. 360, 190 $.W.2d 709, 712 (1945); see also Dewhurst v. Gulf Marine Inst. of Tech., 55 S.W.3d 91, 97 (Tex. App.-Corpus Christi 2001, pet. denied). The former are not considered suits against the State for damages and so no legislative consent is required. Cobb, 190 S.W.2d at 712. Moreover, declaratory-judgment suits against the State seeking to PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 73 o78establish a contract’s validity, to enforce performance under a contract, or to impose contractual liabilities are suits against the State. I7-Davy, 74 S.W.3d at 855. That is because such suits attempt to control state action by imposing liability on the State. Jd. at 856. Consequently, such suits cannot be maintained without legislative permission, Id.; see also Fed. Sign, 951 S.W.2d at 404, However, a suit which is brought ostensibly for the purpose of declaring rights, but actually secks to impose liability on the State for damages, is a suit against the State barred by sovereign immunity. Tex. Natural Res Conservation Comm'n v. IT-Davy, 74 8.W.3d at 856; see also Cobb, 190 8.W.2d at 712; Dodgen, 308 8.W.2d at 841-42. Rescission is an equitable remedy that seeks to set aside an otherwise legal contract due to fraud, mistake, or for some other reason, i.e., lack of mutuality, when it is necessary to avoid unjust enrichment of the non-complaining party to the contract, so that the parties thereto may be restored, insofar as is possible, to the status or position they were in prior to execution of the contract. City of The Colony v. N. Tex. Mun. Water Dist., 272 8.W.3d 699, 732 (Tex. App.—Fort Worth 2008, pet. dsm’d); Martin v. Cadle Co. 133 8.W.3d 897, 903 (Tex. App. Dallas 2004, pet. denied). Rescission is thus an “undoing” of the contract and generally used as a substitute for monetary damages. The Colony, 272 S.W.3d at 732. Upon rescission, the rights and liabilities of the parties are extinguished; any consideration paid is returned, together with such further special damage or expense as may have been reasonably incurred by the party wronged; and the 7 Because this argument in the alternative assumes this Court has determined the City executed the Lease ‘Agreement in its governmental capacity, the rules applicable tothe State apply equally to the City PLAINTIEF’S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA 10 THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION 079 PAGE 74parties are restored to their respective positions as if no contract had ever existed. HEB, LLC. v. Ardinger, 369 $.W.3d 496, 509 (Tex. App—Fort Worth 2012, no pet.). Rescission of the contract and a restoration of each party to the position he occupied before the contract was made is the proper relief, unless it is alleged and proved that some other would be more just and equitable, Landrum v. Thomas, 149 S.W. 813, 815 (Tex. Civ. App.—Austin 1912, no writ). Through its declaratory judgment action, Trinity does not seek monetary damages from the City, nor to establish the validity of the Leases, enforce performance under the Leases, or impose contractual liabilities on the City. Rather, Trinity seeks to establish the invalidity of the Leases and a declaration that the same is unenforceable as a matter of law because it lacked mutuality of obligation and, as a result, lacks valuable consideration, See Fed. Sign, 951 8.W.2d at 408-09; see also Arabella Petroleum Co., LLC v, Baldwin, No, 04-11-00370-CV, 2012 Tex. App. LEXIS 5084, at *5 (Tex. App— San Antonio Jun, 27, 2012, pet. denied) (“A contract must be based upon a valid consideration, and a contract in which there is no consideration moving from one party, or no obligation upon him, lacks mutuality, is unilateral, and unenforceable”), Because Trinity's declaratory judgment action does not seek damages from the City, but merely a declaration of rights, it is not an action against the City and no legislative waiver is required. See Fed. Sign, 951 $.W.2d at 404, Thus, this Court has jurisdiction over Trinity's declaratory judgment action for the reasons stated above and the Court should deny the Plea with respect to Trinity's claim for a declaratory judgment. TY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURI 080 DICTION ~ PAGE 75F, The City Is Not Immune To Trinity’s Inverse Condemnation Claim. The Court Has Jurisdiction Over Trinity’s Inverse Condemnation Claims. Article I, section 17 of the Texas Constitution provides that no “person’s property shall be taken, damaged or destroyed for or applied to public use without adequate compensation being made...” TEX. CONST. art. 1, §17; Mayhew v. Town of Sunnyvale, 964 8.W.2d at 922, 933 (Tex. 1998). “At the heart of the takings clause lies the premise that the government should not ‘fore{e] some people alone to bear public burdens which, in all faimess and justice, should be bome by the public as a whole,” Tarrant Reg'l Water Dist. v. Gragg, 151 8.W.3d 546, 554 (Tex. 2004) (quoting Steele v. City of Houston, 603 $.W.24 786, 789 (Tex. 1980)). Takings can be classified as physical or regulatory. Mayhew, 964 S.W.2d at 933 Physical takings occur when the government authorizes an unwarranted physical ‘occupation of an individual’s property. Mayhew, 964 8.W.2d at 933. In contrast to a physical taking, a restriction on the permissible uses of property or a diminution in its value resulting from regulatory action within the government's police power may or may not be a compensable taking depending on the circumstances. Id. “[A]Il property is held subject to the valid exercise of a police power’ and thus not every regulation is a compensable taking, although some are.” Id. at 670 (quoting City of College Station v. Turtle Rock Corp., 680 S.W.2d 802, 804 (Tex. 1984)). A plaintiff may invoke multiple distinct theories in challenging a government regulation as an unconstitutional taking. The plaintiff may assert: (1) a physical taking, PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS"S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDIC 081which occurs when regulatory action requires an owner to suffer physical invasion of his, property; (2) a Lucas-type total regulatory taking, which occurs when regulatory action completely deprives an owner of all economically beneficial use of his property; (3) Penn Central taking, which occurs when regulatory action unreasonably interferes with a property owner’s right to use and enjoy is property; or (4) a land use exaction, which ‘occurs when the government requires an owner to give up his right to just compensation for property taken in exchange for a discretionary benefit conferred by the government. Lingle v. Chevron U.S.A. Inc., 544 USS. 528, 548 (2005); see Sheffield, 140 S.W.3d at 671-72, “{RJegulations that completely deprive an owner of ‘all economically beneficial usfe]’” of his property are deemed per se takings. Lingle, 544 U.S. at 538 (quoting Lucas v. S. Carolina Coastal Council, 505 U.S. 1003 (1992)) (emphasis in original); see also Sheffield, 140 $.W.3d at 671. A regulatory taking occurs when the government has unreasonably interfered with a property owner's right to use and enjoy his property considering the following three factors: (1) “the economic impact of the regulation on the claimant;” (2) “the extent to which the regulation has interfered with distinct investment-backed expectations;” and (3) “the character of the governmental action.” See Penn Cent, Transp. Co. v. New York City, 438 U.S. 104, 124 (1978); Sheffield, 140 S.W.3d at 672. The City’s Plea claims that Trinity lacks a constitutionally protected property right in this case. Trinity’s mineral interest right is a compensable property interest protected against governmental “taking” under Article I, §17 of the Texas Constitution, which provides that “[n]o person’s property shall be taken, damaged or destroyed or applied to PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEATO TH PLEA TO THE JURE:public use without adequate compensation being made, unless by the consent of such person...” TEX. CONST. art. 1§ 17. The right to enter upon land and explore for and develop minerals like natural gas is a property right. Norris v. Vaughan, 260 8.W.2d 676, 678-79 (1953); Dearing, Ine. . Spiller, 824 $.W.2d 728, 732 (Tex. App—Fort Worth 1992, writ denied). In fact, under an oil and gas lease, the lessee owns the mineral estate to the land in fee simple determinable, Natural Gas Pipeline Co. of Am. v. Pool, 124 8.W.3d 188, 192 (Tex. 2003); Jupiter Oil Co. v, Snow, 819 S.W.2d 466, 468 (Tex. 1991); Norris, 260 8.W.2d at 678-79. The fee is determinable because the lessee’s continued interest in the estate depends upon the development and production of the minerals. Gulf Oil Corp. v. Reid, 337 S.W.2d 267, 269 (Tex. 1960); Norris, 260 $.W.2d at 678-79. ‘Thus, if a lessee or operator cannot explore for and develop the minerals, the property interest will revert to the lessor under the lease’s terms. Gulf Oil Corp., 337 S.W.2d at 269; see also Pool, 124 S.W.3d at 192. That is exactly what happened in this case, yet the City has the audacity to claim that Trinity has failed to sufficiently plead a breach of contract or a takings claim, 2. Trinity’s Inverse Condemnation Cause of Action is Ripe for Adjudication. Despite the City Couneil’s express denial of all of Trinity's requests for drilling permit approval at locations agreed to with the City during the Lease negotiations, the City argues that Trinity’s inverse condemnation claim is not ripe for adjudication. (City Supp. Plea, p. 34). Ripeness is an element of subject matter jurisdiction and, as such, is PLAINTIFFS RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMEN’ vO TH 083subject to de novo review. Mayhew v, Town of Sunnyvale, 964 8.W.2d 922, 928-29 (Tex. 1998), An essential prerequisite to the ripeness of a regulatory takings claim is a final decision regarding the application of the regulation at issue. Id., at 929; see also Hallco Tex., Inc. v. MeCullen County, 221 $.W.3d 50, 59 (Tex. 2006). The requirement of a final decision, in context of an inverse condemnation case, concems whether the governmental entity charged with implementing the regulation that allegedly caused the taking has fixed some legal relationship between the parties. Texas-New Mexico Power Co. v. Tex. Indust. Energy Consumers, 806 8.W.2d 230, 232 (Tex. 1991). While there is no single rule that controls all questions of finality, at the very least, a decision by a governmental entity is final if it is: (1) definitive; (2) promulgated in a formal manner; and (3) one with which the agency expects compliance. Texas-New Mexico Power Co., 806 8.W.2d at 232. Otherwise, “[a]dministrative orders are generally final and appealable if ‘they impose an obligation, deny a right or fix some legal relationship as a consummation of the administrative process. Id. (quoting Sierra Club v. U.S, Nuclear Regulatory Comm 'n, 862 F.2d 222, 224 (9th Cir. 1988). Furthermore, the Texas Supreme Court recently held that a case is ripe if processing additional applications would be futile. City of Lorena v. BMTP Holdings, LP, 409 $.W.3d 634 (Tex. 2013). “A court cannot determine whether a regulation has gone ‘too far’ unless it knows how far the regulation goes.” Mayhew, at 929. The City’s denial of all Trinity drilling opportunities in this case has gone “too far" and constitutes a taking. See id. PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL EA 10 THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JU 084 DICTION ~ PAGE 79Trinity spent millions of dollars related to its Lease negotiations with the City and hundreds of thousands of dollars to prepare and process the SUP Applications (Fort Aff. 9934, 44). T ity and City staff closely negotiated the location of potential drilling sites (Fort Aff,, $21). A drilling site must meet numerous technical engineering criteria (Fort Aff, $31). The Dallas City Council was briefed in 2008 that only five surface sites could be drilled (Suhm, Ex. 15). ry submitted three SUPs for drilling sites on different types of land that were acceptable to City staff (Fort Aff, 934). Following a massive show of opposition by anti-drilling opponents, both the City Plan Commission and the City Council denied all three SUPs (Ex. 42). At its August 28, 2013 meeting, the Mayor and several councilmembers spoke openly on the record that a “No” vote would result in the filing of this lawsuit (Brown Aff, Ex. E). No additional SUP Applications were submitted by Trinity because: (a) the City Couneil resoundingly rejected all three drilling requests; (b) on December 11, 2013, the City Council adopted a new drilling ordinance that foreclosed additional drilling opportunities within the City; (c) it would cost Trinity several hundred thousand dollars to submit new SUP Applications; and (@) other potential sites did not meet the necessary engineering criteria (Fort Aff. 41). ‘The City cites to several elderly federal court opinions for its ripeness theory. (City Supp. Plea, pp. 34-38). Trinity refers to recent state court opinions closer to home to support its position that its claims are ripe. See Anderton v. City of Cedar Hill, 447 S.W.3d 84 (Tex. App-—Dallas 2014, pet. denied). In Anderton, Cedar Hill argued that the landowner’s takings claim was not ripe because a variance request was not made. The Dallas Court of Appeals held for the landowner because the City had denied a PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 80 08srezoning application and there was no legal avenue for the landowner to process a variance request.* Variances were not available to Anderton under the facts in that case. Id. at 94. In addition, the court of appeals noted that Anderton had submitted a zoning application which was denied by the City Council: “(D)he City Council subsequently denied the Andertons’ request to change the zoning. As courts have repeatedly acknowledged, futile re-applications or variance requests are not required for a property owner's inverse condemnation claim to ripen. Mayhew, 964 S.W.2d at 929. ‘Thus the Andertons submitted a request, which the City denied. The articles the City relies on to provide possible remedies do not apply... . Accordingly, we conelude the Andertons” inverse condemnation claim is ripe.” Id. at 95. Just as the Andertons were requesting rezoning approval of their specific landscaping materials sales use, so did Trinity attempt to obtain SUP approval for its specific gas dri ing use. (Ex. 34), The Dallas Court of Appeals reached a similar result in City of Sherman v. Wayne, 266 8.W.3d 34 (Tex, App—Dallas 2008, no pet.). After buying property for a commercial use, the city informed Wayne that it would enforce the residential zoning on the property. Id. at 39, The Sherman city council subsequently denied Wayne’s zoning change application and request for specific use permit. Jd. Similar to Trinity, Wayne had agreed to several conditions in the rezoning to address potential impacts on area landowners. Id. at 40; (Cossum, Ex. 80-82). ilar to the City of Dallas, Sherman argued that Wayne could have applied for other zoning districts or specific use permits. Id. at 42. The Dallas Court of Appeals saw The Court also acknowledged that Cedar Hill was the plaintiff and had filed its petition, which was partial evidence that it had made a final decision on the matter. PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL TO THE JURISDICTION ~ PAGE 81 086through this smokescreen and stated that the uses the city would allow are “known to a reasonable degree of certainty.” Jd. It warned that the government can use the ripeness doctrine like the ry of Dallas is attempting here “to whipsaw a landowner.” Id. (citing Hallco, 221 $.W.3d at 63 (Hecht, J., dissenting)). ‘The Dallas Court of Appeals held that the denial of the rezoning/SUP Applications and Wayne’s agreement to conditions “were sufficient to allow the city to reach a final decision regarding the use of the property.” Id. at 42, In addition, the court held that additional efforts by Wayne (similar to Trinity) to file additional rezoning applications would have been futile. Id, As referenced in the staff reports on the SUP Applications presented to the Council, Trinity was amenable to the imposition of numerous conditions on approval (Cossum, p. 194), ‘The City staff’s recommendation of approval incorporated some of the conditions being considered by the City’s gas drilling task force (Cossum, pp. 103-4). The conditions imposed on Trinity’s SUP Application were more stringent than the other gas drilling SUP Applications approved by the City (Cossum, p. 196). According to the City’s professional planning staff, there were no further conditions that Trinity could have agreed to that would have resulted in approval of the SUP Applications (Cossum Depo, p. 195). Trinity clearly meets the ripeness test established by the Dallas Court of Appeals in Anderton and Wayne. The Texas Supreme Court also relaxed the ripeness requirement in Koplow Dev, Inc. v. City of San Antonio, 399 8.W.3d 532 (Tex. 2013). Kopplow purchased property, obtained permits, and filled that portion of the property to take it out of the 100 year FEMA flood plain. San Antonio then constructed a detention facility that would result in PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL TO THE JURISDICTION AND SECOND SUPPLEMENT, .A-TO THE JURISDICTION ~ PAGE 82 087a portion of the property being included within the 100 year flood plain and undevelopable without additional fill. The court of appeals held that Kopplow’s inverse condemnation claim was not ripe because the property had not yet flooded, and its holding was reversed by the Supreme Court, Id. at 533, Even without actual flooding, San Antonio knew that the results of its actions would result in future flooding, thus making the case ripe. Id, at 537. Similarly, the City of Dallas knew that Trinity would be unable to exploit its mineral interest when the council denied Trinity’s SUP Applications (Fort Aff., $27, Duebner, pp. 42, 99, 219- 220). In Kopplow, the Supreme Court noted that the developability of the site (not actual flooding) was the issue: “Even if the Kopplow property never actually floods, the property is nonetheless undevelopable unless filled because of the project. The direct, immediate restriction on Kopplow’s property is that it can no longer develop the property as previously approved, and, on these facts, a lack of ripeness does not bar Kopplow’s inverse condemnation claim.” Kopplow, 399 S.W.3d at 538, The City’s case law reference to a denial of a variance as a component of rejection of a meaningful development plan does not apply in this case (City Supp. Plea, pp. 37-8). According to the City’s jurisdictional evidence, there are no ordinances that provided the opportunity for Trinity to request an additional variance under these facts. In addition, the City’s Supplemental Plea does not point to any variance application process available to Trinity (City Supp. Plea, pp. 37-8). Variances were not required to establish ripeness in Anderton and Wayne, and a variance is not required of Trinity in this case. PLAINTIFF'S RES! (0 THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL MENTAL PLE, 083. The City Reached a Final Decision as to the Group 1 and 2a Properties. Bither the City is ignorant of the selection process for gas drilling sites or devious in arguing that an SUP application would be required to be processed for every parcel in the Group 1 and Group 2A Properties to meet the case law ripeness standard (City Supp. Plea, pp. 38-40). The City does not cite to an appellate opinion supporting its position. There are numerous reasons why Trinity is not required to submit over 100 additional SUP Applications in order to meet the ripeness request. First, the City had previously limited the potential drilling site locations available to Trinity. The City Council was briefed on the gas drilling lease issues on February 6, 2008. (Suhm Depo, Ex. 14). The briefing states that “only 5 sites of City property are available for potential on-site drilling.” (Jd.). Further, the briefing noted that the RFP’s limited drilling to certain designated drill sites. (Id.). According to the February 2008 briefing, no drilling would be allowed on City of Dallas park land. (Suhm, Ex. 15, p. 24). ‘The Group 1 Properties depicted in the briefing, however, showed all of the property being park land except for a small cross-hatched area adjacent to TH35E and the Radio ‘Tower Tract, which at that time was not part of the Group | Properties. (Suhm, p. 127, 138, Ex. 14-15). Afier the Lease Agreements were executed, Trinity’s Steve Fort told the City that it was critical for the Radio Tower Tract to be a drill site even though that tract was not referenced as a potential site in the February 2008 briefing (Fort Aff., 27; Suhm, p. 163). The City Council was briefed on the Radio Tower Tract issue at its June 25, 2008 meeting (Suhm, Ex. 3, p. 11). On June 26, 2008, Steve Fort forwarded a letter to PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S Al “TION AND SECOND SUPPLEME! ENDED SUPPLEMENTAL THE JURISDICTION ~ PAGE 84 089Shayne Moses that set forth Trinity's requested lease terms (Fort Aff, {| 20; Suhm Depo, Ex. 20, p. 164). The proposal referenced the Group 1 land package plus the Radio Tower Tract, which would be “used as a drill site” (Jd). After the Radio Tract Tower was confirmed to be City-owned property, the tract was included in the Group 1 Lease (Suhm, Ex. 3, p. 16). Second, the three SUP Application sites were selected following numerous conversations and meetings with Trinity and City representatives (Fort Aff. $34). The SUP Application sites were three of the few available locations to drill on the leased properties that could satisfy this criteria (Id). The City would never have signed the rezoning applications for any other gas drilling SUPs on City-owned land (City Supp. Plea, p. 38). Third, there was considerable discussion at the August 28, 2013, City Council meeting where various councilmembers and the Mayor stated expressly on the record that denial of Trinity's SUPs would result in a lawsuit (Council Meeting Transcript) Councilmember Allen stated that “If we deny the SUP . . .we will be sued.” (Transcript, p. 12), Mayor Rawlings acknowledged there was a contract in place: “By voting no, we could cost the City of Dallas millions of dollars of legal and other expenses.” (Transcript, p. 16). He also stated that the City “cannot take the .. . mineral rights.” (Id. at p. 18). Councilmember Kadane called the Luna South tract “a perfect site for a drilling site” inasmuch as it was not located on City property or in a floodplain. (Id. at p. 23). Everyone on the Council knew, therefore, that voting down the SUPs was the City’s final decision on drilling with respect to the Group | and 2A Properties. PLAINTIFF'S PLEA TO THE JURE: ONSE 10 THE CITY OF DALLAS'S AMENDED SUPPLEMENTAL, ND SUPPLEMENTAL PLEA TO THE JURISDIC 090 1ON- PAGE 854. Pursuing Other Applications Would Have Been Futile. Following the City’s categorical denial of Trinity’s three SUP Applications, any attempt to secure an SUP on an alternate location would have been futile. Trinity's SUP Applications complied with all applicable laws, codes, and regulations. They were for locations specifically identified and negotiated by Trinity and the City as drill sites. The City staff had recommended approval of the SUP Applications due to their compliance applicable regulations. Trinity’s SUP Applications were diverse relative to their locational characteristi (Cossum, Ex. 80-82). Trinity's SUP Applications involved land both within and outside the floodplain, park and non-park land and both private and publicly owned (id.). Despite this diversity, each SUP Application was recommended for denial by the Dallas Planning Commission and was denied by an identical vote by the City Council despite the differences in the applications. In its Supplemental Plea, the City fails to cite to any jurisdictional evidence that the Council would have approved a different SUP Application on a different tract within the Group 1 and 2A Properties. In fact, the City’s planning staff testified that there were no additional conditions Trinity could have agreed to in order to obtain SUP approval (Cossum Depo, p. 195). Thus, the denial of the SUPs had nothing to do with their merits and everything to do with the City’s acquiescence to anti-drilling activists. Trinity's SUP Applications ‘were denied due to increased opposition by environmental groups. (Cossum, p. 201-03). David Cossum confirmed that no additional SUP Applications from Trinity would have been approved by the City Couneil (Cossum, pp. 236-7), ED SUPPLEMENTAL PLEA TO THE JURIS! PAGES6It should also be noted that it is very expensive to process a gas drilling SUP Application. According to Trinity, its expenses to process the SUP Applications on the Group 1 properties that were denied totaled approximately $450,000.00. (Fort Aff, 34). Similar expenses would have been required for further SUP appli including on the Group 2A Properties. (Fort Aff., 4 34). ‘The City’s argument that pursuing other SUP Applications would not be futile is contradicted by the jurisdictional evidence (City Supp. Plea, pp. 40-1). There is no evidence that the City can point to supporting its proposition. ‘The City also fails to articulate or present valid jurisdictional evidence that the City’s prior approvals of other SUP drilling applications means that the City would have approved an SUP on a different tract within the Group 1 or 2A Properties (City Supp. Plea, p. 41). ‘The City points to no Texas case law or jurisdictional evidence that pursuing other SUP Applications would not have been futile (City Supp. Plea, pp. 40-1). The City’s arguments that futility cannot be established because it might have been possible to drill in other nearby locations are controverted by Trinity’s jurisdictional evidence. In response to the City’s unsupported assertion that feasible drilling sites in other Texas municipalities were available, Trinity has produced jurisdictional evidence that no such alternative sites exist (Fort Aff.,4 41). 5. Dallas’ New Drilling Ordinance Rendered Further Sup Attempts Futile. ‘The Dallas City Council passed a new gas drilling ordinance in December 2013, which effectively prohibited any potential drill sites for Trinity (Fort Aff., 41, Ex. V, (0 THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL |ON AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 87 092 PLEA TO THE JURE:W). According to the ordinance, a gas drilling and production use must be spaced at least 1,500 feet from a protected use. (Sec. 51A-4.203(b)(3.2)(F)(ii)). For example, the Luna Road SUP site is located within 600 feet of a soccer field which would prevent the use of the site under the new ordinance. (CC Transcript p. 24) The new ordinance also requires that a gas drilling and production use be spaced 300 feet from a habitable structure. (Sec. 51A-4.203(b\(3.2(F)(i))..' The Code broadly defines a habitable structure as “any use or structure that is not a protected use but has a ‘means of ingress and egress, light, and ventilation. Habitable structure does not include an accessory structure, such as a garage or shed.” (Sec. Sec. 51A~4.203(b)(3.2(A)(iv)). Trinity prepared two aerial graphics depicting the Group 1 Properties and the surrounding property and the areas in which gas well drilling would be prohibited depending on which setbacks were ultimately adopted (Fort Aff., 141). Trinity's proposed ite locations are impermissible under the current setback regime, and Trinity is virtually prohibited from accessing the Group 1 and Group 2A Properties under the new restrictions at all (Fort Aff., 41). Trinity alerted the City in a January 10, 2012, letter that the then-contemplated regulations would effectively prohibit Trinity from finding a permissible drill site on the Group 1 Properties. (Cossum, Ex. 91). In addition, the same drilling restrictions apply to the Group 2A Properties. (Fort Aff., 441) ‘According to the City’s professional planning staff, there are no other potential drilling sites on the properties leased by Trinity where the City Council would have approved a gas drilling SUP (Cossum, p. 236). If an SUP were submitted by Trinity PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUP "TION ~ PAGE 88.today, it would not meet the new Dallas Development Code provisions on gas drilling (Id, p. 237) The City apparently argues that Trinity could have refiled applications for the tracts where the SUP Applications were denied (City Supp. Plea, p. 40). As the City is aware, however, its own ordinances prohibited such a reapplication. Section 51A- 4,701(d) of the Dallas Development Code prohibits new applications for a two year time period after the denial, As a result, Trinity could not file new SUP Applications on those sites until August 27, 2015, which is after the Lease term expired (Fort Aff., 44; City Plea, Ex.33). For the reasons set forth above, filing new SUP Applications was infeasible from both an engineering and political standpoint. The City can point to no ‘Texas case law or jurisdictional evidence showing that the Dallas City Council had not made a final decision in this case. Because this court has jurisdiction over Trinity's inverse condemnation claims, the City’s Supplemental Pleas should be denied. 6. Trinity’s Inverse Claims Are Not Moot. ‘The City illogically argues that Trinity’s inverse condemnation is both unripe and moot, (City Plea, pp. 42-3). Apparently, Trinity's claim is both premature and terminated. Of course, the City cannot point to a Texas appellate opinion supporting its argument in a regulatory takings context, The City’s claim that Trinity’s inverse cause of action is moot because Trinity failed to file additional SUPs is addressed hereinabove in the ripeness discussion. Trinity incorporates those arguments in its Response on mootness. PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO TIE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 89 094While the City is correct that Trinity no longer owns its previous mineral interest in the Group 1 and Group 2A Properties, that fact does not moot the controversy. Due to the City’s illegal denial of the SUP Applications, Trinity was forced to allow its leasehold interests in the City Leases and in Trinity’s private leases to expire. (Fort Aff, 42). Without valid drilling sites allowing the exploitation of the minerals, the Leases were worthless to Trinity (Fort Aff. $42; Browning Aff., | 13). The Mayor and members of the Council clearly articulated at the Council meeting that the denial of the SUPs would result in the termination of the Leases and the filing of this lawsuit (Brown Aff., Ex. E). Therefore, Trinity’s inverse condemnation cause of action is not moot. The Leases expired because the City foreclosed any drilling opportunities to exploit the mineral interests (Fort Aff., § 42). The City’s destroying Trinity’s property interest does not moot the controversy. In City of Dallas v. Stewart, 361 8.W.3d 562 (Tex. 2012), the City illegally destroyed Stewart's house following a faulty administrative hearing. Although Stewart's property interest in his house had been deprived by the City, this did not moot Stewart's valid regulatory takings claim, Jd. at 580. Because the City deprived Trinity of its mineral property interests which resulted in the termination of the Leases, Trinity’s inverse condemnation claims are not moot 7. Intent To Take Is Evidenced By The City’s Drilling Prohibition. ‘The City argues that the City had no intent to take Trinity’s property rights because it has pled only a contract breach cause of action (City Supp. Plea, pp. 46-7). PLAINTIFF'S RESPONSE TO THE CITY OF DALL/ PLEA TO THE JURISDICTION AND SECOND SUPPL '$ AMENDED SUPPLEMENTAL NTAL PLEA 10 THE JURISDICTION ~ PAGE 90 095Trinity's Second Amended Petition on its face, however, contains both contract and inverse condemnation causes of action. Trinity has also correctly pled its acquisitory intent takings claim in accordance with Biggar, 873 SW2d at 13, and City of Austin v. Teague, 570 SW2d 389, 393 (Tex. 1978). By denying the SUP Applications, the City was able to keep the $19 million lease bonus, prevent the use of its surface for gas drilling purposes, and retain its mineral interests for future sales opportunities. The City of Dallas took similar measures in City of Dallas v. Millwee, 2014 Tex. App. LEXIS 3691 at * 3 (Tex. App. — Dallas, April 4, 2014, pet. denied). In that case, the City took “unfair advantage” of Millwee when it closed Alamo Street to prevent development of Millwee's property. Id. at 6. The court of appeals denied the City's plea to the jurisdiction accordingly. Jd. at 9, ‘Trinity has been taken unfair advantage of and the City's plea should be denied here as well. This issue was also addressed by the Fort Worth Court of Appeals in Town of Flower Mound v. Rembert, 369 8.W.3d 465 (Tex. App-—Fort Worth 2012, pet. denied). Flower Mound made the same argument as Dallas has in this case about requisite intent. Id, at 480. The Fort Worth Court of Appeals ruled against the Town for two reasons. First, “Rembert clearly pleaded its inverse condemnation claim in the alternative to its breach of contract claim.” Id. Trinity has also clearly pleaded alternative clauses. Second, the Fort Worth court stated that the case law relied upon Flower Mound, which is the same case law relied upon by Dallas on page 46 of the Supplemental Plea was PLAINTIFF'S RESPONSE TO THE CITY OF DALLAS’S AMENDED SUPPLEMENTAL PLEA TO THE JURISDICTION AND SECOND SUPPLEMENTAL PLEA TO THE JURISDICTION ~ PAGE 91 096