BCY Water Supply Corp. v. Residential Investments Inc.

Because the Legislature chose not to include the words "arising from" in Texas Water Code �13.042(e), it intended to limit the TCEQ's jurisdiction specifically to matters directly related to water and sewer utility rates, operations, and services, such as was initially pleaded in the instant case, but later abandoned.

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Click here for the full text of this decision FACTS:BCY is a nonprofit corporation that provides water service to certain parts of Anderson county. Residential Investments was considering purchasing an 8.02-acre tract of land in Anderson county, which it intended to subdivide into four parcels and improve with frame houses. The subject property was located in BCY’s water supply coverage area. John Brown, on behalf of Residential Investments, went to BCY’s office to inquire about water service for the subject property. When Brown arrived, only two persons were present at BCY’s office � Barry Thornton, who performed maintenance work for BCY, and Lana Hart, BCY’s office secretary and bookkeeper. Brown inquired of Thornton concerning whether it would be possible to get water service at the subject property. According to Brown, Thornton responded that there would be no problem getting water service for the property. Brown testified that, based on Thornton’s statement, Residential Investments purchased the subject property and began making improvements. Subsequently, a BCY board member notified Brown that he could not get water service until he upgraded to a four-inch water line at his own expense. Residential Investments ultimately sold the subject property. Residential Investments filed suit in April 2000 alleging that BCY improperly refused to provide water services to it. Subsequently, Residential Investments amended its pleadings, deleting its denial of service allegations and adding common law claims of negligent misrepresentation and promissory estoppel. The matter proceeded to trial. A jury found BCY liable for negligent misrepresentation, awarding Residential Investments compensatory damages in the amount of $18,000 and exemplary damages in the amount of $1. This appeal followed. HOLDING:The court of appeals reverses the trial court’s judgment and renders judgment that Residential Investments take nothing on its claims against BCY. BCY argues that the trial court lacked subject matter jurisdiction to consider the lawsuit filed by Residential Investments because the suit arose from BCY’s denial of water service. Based on the express language of 14.042(e), the TCEQ’s jurisdiction under certain circumstances is exclusive. BCY acknowledges that Residential Investments’s amended pleadings seek redress based on common law causes of action. It argues, however, that since such claims arise from its allegations that it was improperly denied water service by BCY, the suit falls under the TCEQ’s exclusive jurisdiction pursuant to 14.042(e). In support of its argument, BCY relies heavily on Jordan v. Staff Water Supply Corp., 919 S.W.2d 833 (Tex. App. – Eastland 1996, no writ). There is no presumption that administrative agencies are authorized to resolve disputes and that such agencies may exercise only those powers the law, in clear and express statutory language, confers upon them. BCY’s interpretation of 13.042(e) to include matters arising from water and sewer utility rates, operations and services is neither supported by the express language of the statute nor the case law upon which BCY relies. The words “arising from” do not appear in 13.042(e). Rather, the court presumes that, because the legislature chose not to include the words “arising from” in 13.042(e), it intended to limit the TCEQ’s jurisdiction specifically to matters directly related to water and sewer utility rates, operations and services, such as was initially pleaded by Residential Investments in the instant case, but later abandoned. A plaintiff’s petition defines the issues in the lawsuit. An amended document causes the instrument for which it is substituted to no longer be regarded as a part of the pleading in the record. Texas Rule of Civil Procedure 65. Here, the second amended petition filed by Residential Investments raises common law claims for negligent misrepresentation and promissory estoppel. By omitting it from its second amended petition, Residential Investments abandoned its denial of service cause of action. Considering the express language of the statute, the court concludes that such common law causes of action do not fall within the TCEQ’s exclusive jurisdiction. The court holds that the trial court did not err in declining to dismiss the action. BCY argues that the evidence is both legally and factually insufficient to support the jury’s finding as to negligent misrepresentation. In a cause of action for negligent misrepresentation, the misrepresentation at issue must be one of existing fact. A promise to do or refrain from doing an act in the future is not actionable because it does not concern an existing fact. Thornton’s statement, even when considered in a light that tends to support the jury’s verdict, is not one of existing fact. The court holds that the evidence was legally insufficient to support the jury’s verdict. OPINION:Diane Devasto, J.; Worthen, C.J., Griffith and DeVasto, JJ.

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