Beruflich Dokumente
Kultur Dokumente
05-11-00036-CV
JAMES B. HARRIS
State Bar No. 09065400
STEPHEN F. FINK
State Bar No. 07013500
SCOTT P. STOLLEY
State Bar No. 19284350
RICHARD B. PHILLIPS, JR.
State Bar No. 24032833
THOMPSON & KNIGHT LLP
One Arts Plaza
1722 Routh Street, Suite 1500
Dallas, Texas 75201
Phone: (214) 969-1700
Fax: (214) 969-1751
Page
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
Index of Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
Arguments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-i-
Page
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Certificate of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Appendices
-ii-
R — Renderings of hotel projects from other cities . . . . . . . . . . Tab R
-iii-
INDEX OF AUTHORITIES
Page
CASES
Brown v. De La Cruz,
156 S.W.3d 560 (Tex. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Burks v. Yarbrough,
157 S.W.3d 876 (Tex. App.—Houston [14th Dist.]
2005, no pet) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
In re Doe,
19 S.W.3d 346 (Tex. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-iv-
Page
Moore v. Coffman,
200 S.W. 374 (Tex. 1918) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Vosburg v. McCrary,
77 Tex. 568, 14 S.W. 195 (1890) . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Welch v. McLean,
191 S.W.3d 147 (Tex. App.--Fort Worth 2005, no pet.) . . . . . . . . . . . . 5
STATUTES
-v-
Page
RULE
-vi-
SUMMARY OF THE ARGUMENTS
with only twelve hotel rooms designed to sleep 32 (3 RR 83), it is not a hotel
project. And if it is not a hotel project, it is not entitled to receive under Tax Code
section 351.102(c) the approximately $141 million in State taxes that the City has
Even if the Entertainment Center were a hotel project, it would still not
qualify for a refund of the State’s share of the mixed-beverage taxes it generates.
The record here does not show that any hotel project has ever received a refund
of the State’s share of the mixed-beverage tax under Government Code section
that section 2303.5055 does not provide statutory authority to refund such taxes
from general revenue. It is also well supported by the words that surround the
Government Code chapter 2303, and by the legislative history for this section.
The final judgment nevertheless incorrectly validates and requires the refund of
levied in accordance with the City’s charter. Here a parking tax and admission
tax were adopted at a special meeting of the city council, not a regular meeting as
the charter requires. Because the final judgment validates and protects that
ARGUMENTS
Although this Court has already denied the City’s motion to dismiss, the
City insists that the Taxpayers should not be parties to this appeal. (City’s Br. at
29-32.) The City’s only new argument is that the Taxpayers delayed filing their
petition for review in the Supreme Court. (Id. at 31.) But the Taxpayers asked for
and received only a two-week extension. The petition for review was filed on
Taxpayers asked for the short extension because of a long-planned family trip,
and the City did not oppose the motion. Therefore, the City should not now be
heard to complain about it. The rest of the City’s arguments were raised in their
motion to dismiss, and have already been rejected. Because the Taxpayers have
appealed the security bond and dismissal orders, they are permitted to
participate in this appeal of the final judgment, as the Bond Validation Act
2000).
temporary injunction does not decide the case on the merits because the
standards of appellate review are different. (Taxpayers’ Br. at 9.) The City’s only
exception because the trial was complete when the district court entered its final
judgment.1 (City’s Br. at 33.) But the Bond Validation Act requires decisions
standard whatever the status of the trial proceedings. TEX. GOV’T CODE ANN. §
Moreover, in the previous appeal this Court did not decide whether Tax
Code section 351.102(b) requires that the City show that there is a “hotel project,”
not simply a hotel, to qualify for the refund of certain state taxes. The prior
The Taxpayers also explained that in this appeal, the final judgment must
1
be reversed if any portion of the proposed bonds is illegal. (Taxpayers’ Br. at 7-9.)
The City did not contradict this analysis.
size in the project, section 351.102(b) was satisfied provided that all of the non-
hotel components were described in that section and were within 1,000 feet of a
2011 WL 259478 at *5-6 (Tex. App.—Dallas Jan. 27, 2011, pet. filed). This Court
found those conditions either satisfied or not disproved. Id. But the Taxpayers
have consistently argued that the presence of a hotel does not necessarily ensure
the existence of a “hotel project,” at least in the context of Tax Code chapter 351.
The City also ignores a key distinction between the two appeals. When the
imposition of the bond, they bore the burden of proof. Putnam, 2011 WL 259478
at *5 (noting that the Taxpayers had not put on evidence to support one of their
contentions). But with respect to the final judgment, it is the City that bears the
burden of proof. TEX. GOV’T CODE ANN. § 1205.021 (Vernon 2000) (noting that the
City is the plaintiff). That difference in the burden of proof is further reason for
The City fails to address the first question that must be answered under
because it includes a hotel. (City’s Br. at 34.) The Taxpayers’ earlier Disney World
Sidestepping once again grammar and ordinary usage, the City counters that
for litigation. (City’s Br. at 34.) That approach is fruitless for at least two reasons.
amendments in S.B. 1247 are not legislative history and provide little guidance as
to what the legislature collectively intended. Entergy Gulf States, Inc. v. Summers,
282 S.W.3d 433, 443-44 (Tex. 2009) (citing In re Doe, 19 S.W.3d 346 (Tex. 2000));
Brown v. De La Cruz, 156 S.W.3d 560, 568 n.45 (Tex. 2004); In re Doe, 19 S.W.3d
346, 352 (Tex. 2000); C & H Nationwide, Inc. v. Thompson, 903 S.W.2d 315, 328 (Tex.
1994) (Hecht, J., concurring and dissenting) (citations omitted); LTS Charter
School, Inc. v. Palasota, 293 S.W.3d 830, 836 (Tex. App.—Dallas 2009, pet. filed);
Welch v. McLean, 191 S.W.3d 147, 169-70 (Tex. App.—Fort Worth 2005, no pet.).
Second, the statements in Senator Harris’ letter are at odds with the legislative
history of S.B. 1247. At the time S.B. 1247 was introduced by Senator Harris on
Group made no mention of hotel rooms. (DX 3.) Therefore, S.B. 1247 could not
have contemplated a hotel that the Las Colinas Group was not contractually
only one change to Tax Code section 351.102. (App. Tab P at 5.) It would have
population of more than 325,000. (Id.) That change would not have affected the
City of Irving. (PX 3.) S.B. 1247 remained unchanged when it was reported out of
The changes to section 351.102 on which the City relies were all added to S.B.
1247 in the House, under the sponsorship of Representative Paula Peirson. (App.
Tab P at 3.) Nothing in the legislative history of S.B. 1247 in the House supports
any of Senator Harris’ comments in his letter. (App. Tab O.) S.B. 1247 was
modified by the House and returned to the Senate on the second-to-last day of
the Session. (App. Tab P at 1.) It did not return to the Senate Economic
Amendments. (Id.)
If S.B. 1247 had been intended by Senator Harris to accomplish what Senator
that was approved by his Senate committee. They were not. Because Senator
although Senator Harris now claims that S.B. 1247 was specifically intended to
benefit Irving, he had nothing to do with the amendments that the City claims
were intended to benefit it, and the published legislative history does not
The Taxpayers do not dispute that if the project were a “hotel project,” then
plain usage. Because “hotel” is the adjective that modifies “project,” the project
can be a “hotel project” only if the hotel is the defining characteristic of the
2 The published bill analysis and fiscal notes for S.B. 1247 are attached at
Appendix Tab O. They can also be found at Texas Legislature Online
(http://www.capitol.state.tx.us) by searching for S.B. 1247 in the Regular Session
of the 81st Legislature.
328 S.W.3d 654 (Tex. App.—Dallas 2010, no pet.) directly supports the
Taxpayers’ argument based on grammar and ordinary usage. The City responds
that if the Taxpayers truly thought Ohnesorge controlled this case, they would
have cited it in their motion for rehearing in the previous appeal. (City’s Br. at
35.) The Taxpayers did. (Motion for Rehearing at 15.) The City also argues that
the analysis in Ohnesorge is limited solely to its facts. (City’s Br. at 35-36.) In other
words, the City suggests that because this case does not involve a charter school
Taxpayers rely on Ohnesorge for principles of statutory construction, and the City
has made no effort to explain why those principles do not apply here.
The Comptroller has consistently taken the position that Government Code
section 2303.5055 does not authorize the refund of the State’s share of the mixed-
beverage tax. That was the Comptroller’s position in the district court, (3 RR 11),
Means Committee on Monday, April 4, 2011. The House Ways and Means
district includes a portion of Irving.4 Among the changes included in the bill was
State. In other words, one purpose of the bill was to change the law to adopt the
City’s position in this appeal. A lobbyist for the City told the committee that the
proposed amendment would not change existing law. A committee member then
would change the law, making the State’s share of the mixed-beverage tax
That Section 2303.5055 in its present form does not authorize the refund of
4The bill is authored by Rafael Anchia of District 103. A map of District 103’s
boundaries is attached at Appendix Tab Q. The text and current status of the bill,
H.B. 3341 can be found at Texas Legislature Online (http://www.capitol.state.tx.
us) by searching for H.B. 3341 in the Regular Session of the 82nd Legislature.
5 The audio recording of this hearing is available at Texas Legislature Online
(http://www.capitol.state.tx.us), by clicking on the link for House video
broadcasts, then clicking the link for the 82nd session committee broadcasts,
clicking the link for the Ways & Means Committee, and then selecting the April
4, 2011 hearing. The discussion cited above begins at 4 hours and 44 minutes into
the recording. The Taxpayers request that the Court take judicial notice of the
hearing recording. TEX. R. EVID. 201.
offerings of Houston, San Antonio, and Dallas for their bona fide “hotel projects”
under Tax Code section 351.102(b). Although those bond offerings are not part of
the record, they were included by the City as an appendix to its brief.6 None of
them includes a pledge of the State’s share of the mixed-beverage tax for
repayment, although in one case, the local share of the mixed-beverage tax is
pledged for repayment.7 Therefore, there is no evidence that any hotel project in
Texas has ever received a refund of the State’s share of the mixed-beverage tax.
With this background in mind, it is not surprising that Senator Harris’ letter
is at best equivocal about the City’s entitlement to the State’s share of the mixed-
beverage tax. That letter does say that Senator Harris thought the City’s project
6 The City also chose to be very selective in what it included. The Taxpayers
have attached relevant and material sections of the bond offerings left out by the
City. For instance, this Court may be interested in what a bona fide hotel project
looks like, so renderings that are part of the bond offerings are included at
Appendix Tabs R, S, T, and U. The full bond files comprise several hundred
pages each and are available at http://www.emma.msrb.org. The bond files can
be found by entering the proper CUSIP into the “Muni Search” box. The CUSIPs
are as follows: (1) for the Houston project: 44237N, (2) for the San Antonio
project: 796245; (3) for the Dallas project: 235417.
7 The official statement for the Houston hotel project, in which the City’s
attorney in this appeal, Vinson & Elkins, served as co-bond counsel (App. Tab S
at J-9) specifically discusses section 2303.5055 and provides that only the local
share of the State’s mixed-beverage tax will be refunded and used to repay the
bonds. (Id. at 35.)
Government Code including … mixed beverage taxes.” (PX 22.) But it never says
explicitly that the State’s share of the mixed-beverage tax is in fact covered by
To remedy that omission, the City represents that section 2303.5055 was
mixed-beverage tax, and that Senator Harris’ intended the amendment to have
that result. (City’s Br. at 26-27) But section 2303.5055 was not amended in 2009. TEX.
GOV’T CODE ANN. § 2303.5055 historical note (Vernon 2008) (noting that the
statute was added in 1995 and has never been amended). In particular, S.B. 1247
there was no amendment to section 2303.5055, Senator Harris could not have
intended any result. Therefore, the City’s reliance on Senator Harris’ purported
intent is inexplicable.
B. When read in context, the term “governmental body” does not include
the State.
The City and the Las Colinas Group argue that the words “governmental
body” unambiguously include the State. (City’s Br. at 21-22; LCG’s Br. at 4-6.)
But the question for this Court is not the meaning of the words “governmental
body” standing alone. The Taxpayers have already shown that it can mean
“governmental body” mean in the context of the statute in which they appear?
greatly to meaning. In Kasten v. Saint Gabion Performance Plastics Corp., No. 09-
834, 2011 WL 977061 (U.S. March 22, 2011), the issue was whether the phrase
“filed any complaint” includes an oral complaint. The plaintiff argued that “any
observed, in dissent, although the words “any bank” standing alone may seem
unambiguously comprehensive, “the phrase ‘to cash a check in any bank’ does
not refer to a riverbank, or even a bloodbank.” Id. at *14. In context, even the
ordinarily unrestrictive “any” does not expand the meaning of the word “bank”
Likewise here, the words “governmental body” standing alone could seem
statute book in one hand and a dictionary in the other who supposedly divines
at 2.) But if the same citizen took the time to carefully and thoughtfully read all of
the words of the statute in which “governmental body” appears, she could only
“governmental body” must be limited to local entities and not the State.
C. The City and Las Colinas Group disregard key legislative history and
structural support for the Taxpayers’ construction of section 2303.5055.
section 2303.5055 does not include the State. (Taxpayers’ Br. at 21-31.) The City
addresses (and attempts to explain away) some of those reasons. (City’s Br. at 23-
28.) But the City ignores four of the Taxpayers’ arguments. The only reasonable
conclusion to draw from this omission is that the City cannot reconcile its
• Government Code section 2303.5055 was enacted in the same bill as Tax
Code section 151.429(h). The City’s construction of Government Code
section 2303.5055 would render Tax Code section 151.429(h) redundant
because both statutes would address the State’s portion of sales and use
and hotel occupancy taxes. (Taxpayers’ Br. at 25-26.)
• The bill analyses for the bill that enacted section 2303.5055 repeatedly
emphasize that the bill would permit “local taxing entities” to rebate “local
hotel occupancy tax, local sales and use tax, local mixed beverage tax, and
local ad valorem taxes.” (Id. at 27 (the bill analyses are included in the
Taxpayers’ appendix at Tabs J, K, L, and M).)
• Because all of the taxes in section 2303.5055 are local taxes, there is no
reason to interpret “governmental body” to include the State. Only local
taxing entities can agree to rebate all of the taxes listed in section 2303.5055.
(Id. at 28.)
D. The City’s and Las Colinas Group’s alleged aids to construction do not
support their interpretation.
The City and Las Colinas Group offer their own arguments based on
legislative history and the structure of chapter 2303, but these contentions are
unavailing. None of the City’s or Las Colinas Group’s points supports their
Both the City and Las Colinas Group rely on a failed attempt to amend
section 2303.5055 (City’s Br. at 26; LCG’s Br. at 22.) This argument fails for two
reasons. First, the Texas Supreme Court has repeatedly held that un-enacted
Inc. v. Summers, 282 S.W.3d 433, 442-43 (Tex. 2009). Second, the fact that the
proposed amendment was removed from the bill is equally consistent with the
Taxpayers’ interpretation. If, as the City suggests, the 75th Legislature intended
to limit section 2303.5055 to local taxing entities, the proposed amendment may
have been abandoned simply because the Legislature concluded that the
limitation was already in place and the amendment was not necessary.
The City and Las Colinas Group misapprehend the overall structure of
taxes, and other sections – 2303.502, 2303.503 and 2303.504 – are explicitly limited
without mentioning the State, means that section 2303.5055 includes the State.
But the structure actually supports the Taxpayers. Section 2303.501 applies to
both state and local regulation. TEX. GOV’T CODE ANN. § 2303.501 (Vernon 2008).
Then, sections 2303.502, 2303.503, and 2303.504 all address the state. Id. §
preferences); id. § 2303.504 (addressing state tax refunds). Sections 2303.505 and
2303.506 address local entities. Id. § 2303.505 (addressing local sales and use tax
refunds); id. § 506 (addressing reduction or elimination of local fees and taxes).
Sandwiching section 2303.5055 between sections 505 and 506 logically supports
— and, in fact, should compel — an interpretation that it, too, applies only to
local entities.
4. The trial court’s judgment must be reversed because the parking tax
and admission tax were not properly levied.
The City does not dispute that the ordinances levying the parking tax and
claims that this is permissible under the charter. (Id. at 37-38.) The City’s
argument is that an “order” is the same thing as an “ordinance” and the charter
permits orders to be passed at special meetings. (Id.) The charter states that “[a]ll
any special or called meeting called for that purpose.” IRVING, TEX. CHARTER, art.
IV, § 17 (attached as App. Tab N to the Taxpayers’ Brief). But the City’s
that when drafters use two different words, they are intended to have different
meanings. See, e.g., Hammond v. City of Dallas, 712 S.W.2d 496, 498 (Tex. 1986)
(holding that in construing a city charter, the court must “consider every word,
phrase, and expression as if each had been deliberately chosen and used for a
(Tex. App.—Dallas Jan. 27, 2011, pet. filed) (“[C]onstruing ‘orders’ and
‘ordinances’ to mean the same thing would render meaningless the use of the
Second, the City’s interpretation would also render the prior sentence in
may be passed at any regular meeting of the council unless otherwise provided.”
IRVING, TEX. CHARTER, art. IV, § 17. This sentence categorically bars the passage
But this bar would be rendered meaningless by the next sentence in the charter if
the City is correct, because the next sentence permits all orders to be passed at
one of the sentences meaningless, the City claims that the two sentences together
mean that all ordinances, orders, and resolutions can be passed at either regular
called meetings. (City’s Br. at 37.) But that interpretation ignores the plain
language of the last sentence, which states that “all orders” may be passed at
“any special or called meeting.” Therefore, if order and ordinance mean the same
Fourth, the City incorrectly claims (without any citation to authority) that
“the City Council does not pass ‘orders’ at all.” (City’s Br. at 38.) This statement
ignores the cases cited in the Taxpayers’ brief describing a city’s adjudicative
8 The City does not contend that the tax ordinances were emergency
measures.
Coffman, 200 S.W. 374, 375 (Tex. 1918) (describing a city council’s adjudicative
interpretation in the past. (City’s Br. at 38.) Section 17 is not ambiguous, and this
Court need not give any weight to the City’s alleged prior construction of that
section. Cf. Mid-Century Ins. Co. v. Tex. Workers’ Compensation Comm’n, 187 S.W.3d
that “it can and will place the ordinances on a future agenda and re-adopt them
in order to remove any suggestion that the original levying of these voter-
approved taxes was improper.” (City’s Br. at 40.) This might have sufficed to
correct the problem before the trial court entered judgment, but any action the
City takes now cannot affect the trial court’s judgment, which specifically
validates the August 25, 2010, adoption of the ordinances. The trial court’s
and the Admission Tax have been duly and validly enacted by the City Council,
and the City is authorized to enforce the collection thereof pursuant to such
Tab A to the Taxpayers’ Brief).) Because the trial court erred in validating the
The City presents no authority for its argument that passing new ordinances
can somehow rectify the trial court’s error in validating the August 25
ordinances. The open meetings act cases cited by the City are inapposite. None of
action valid. Instead, the cases stand for the proposition that actions taken in
violation of the open meetings act do not preclude the same action from being
taken in the future, if the action then complies with the open meetings act. See
Smith Cnty. v. Thornton, 726 S.W.2d 2, 3 (Tex. 1986); Lower Colorado River Auth. v.
City of San Marcos, 523 S.W.2d 641, 646 (Tex. 1975); Burks v. Yarbrough, 157 S.W.3d
876, 883 (Tex. App.—Houston [14th Dist.] 2005, no pet); City of Bells v. Greater
Texoma Util. Auth., 790 S.W.2d 6, 11 (Tex. App.—Dallas 1990, writ denied).
Moreover, in Lower Colorado River Authority, the Texas Supreme Court held that a
later ratification that did comply with the open meetings act could not act
action could be valid only prospectively after it was taken in compliance with the
The Taxpayers do not deny that the City may re-adopt the ordinances at a
regular meeting. But because the City did not do so before the judgment was
signed, the City would have to seek a new judgment validating the new
The City also argues that chapter 1205 permits the City to seek a judgment
immaterial here, because the City did not obtain such a judgment. The judgment
does not purport to validate any proposed ordinances regarding the parking tax
or the ticket tax. It validates only the ordinances purportedly adopted on August
25.
Finally, this Court should not affirm the judgment based on speculative
future action by the City Council. The City has provided no evidence that the
ordinances have been set for consideration at a regular meeting. And even if they
are presented at some future regular meeting, there is no guarantee that the
these ordinances until they have actually been adopted in accordance with the
City’s charter.
CONCLUSION
At the end of the day, reasonable people can disagree about whether the
Entertainment Center is a good idea. Some may think it is unwise, but the law
does not prevent cities from doing unwise things. It does prohibit cities from
Courts must step in regardless of how well intentioned the public project may be
Here, pledging State taxes to refund the city’s bonds where there is no
statutory authority to do so is illegal. Likewise, pledging local taxes that have not
been properly imposed is illegal. The Taxpayers ask that the Court apply the law,
find certain taxes are not legally available, and reverse the judgment validating
By: ______________________________
James B. Harris
State Bar No. 09065400
Stephen C. Fink
State Bar No. 07013500
Scott P. Stolley
State Bar No. 1928450
On April 11, 2011, a copy of this brief was served on the following counsel by
certified mail, return receipt requested:
E. Ray Hutchison
VINSON & ELKINS LLP
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201
_________________________________
Richard B. Phillips, Jr.