On December 22, 2003, the El Paso County Commissioners' Court voted 4-1 - in a special meeting unattended by the public - to "settle" a nearly decade-long legal battle, by selling 302 acres of county land to Chris Collins' Catalina Development.

In the deal - negotiated for the developers by attorneys David Escobar and Luther Jones - the developers agreed to pay the county $3 million for the land or the price set by an independent appraiser, whichever is higher. They also agreed to pay the county's $84,000 legal bill, accumulated over the years of litigation. The county, in addition, would keep 80 acres of frontage on Loop 375 and the new owners would provide water and sewer services to the site.

Within days, Rancho Real Development - an affiliate of Foster Schwartz Development Corp. - filed a lawsuit and won a temporary injunction against the sale. The lawsuit alleged that the Commissioners Court violated state law at the December 22 meeting by failing to allow others an opportunity to bid on the sale of property. Rancho Real's suit, in turn, was answered by a countersuit by Catalina, Carefree Homes, and Bobby Bowling's Tropicana Homes. The countersuit alleged that the December 22 settlement should be final and that Rancho Real had no standing in court.

On January 12, 2004, 171st District Judge Bonnie Rangel ruled to lift the temporary injunction and allow the December 22 agreement to stand. Shortly thereafter, Rancho Real filed an appeal with the 8th District Court of Appeals.

To date, the Court of Appeals has not ruled on the case.

Background

According to court documents, the County of El Paso originally acquired the land on December 9, 1992 in a land exchange with the General Land Office (GLO). The Commissioners' Court authorized then-County Judge Chacon to sign a warranty deed conveying 464.4 acres to the GLO, which in turn conveyed 381.90 acres of T&P Railroad property to the county.

On January 27, 1993, Commissioners' Court passed a motion providing that the land acquired from the GLO, described at this meeting as "the County Fairgrounds and Mixed Use Project property sec. 16," would be subject to sale by sealed bids. On March 17, 1993, the Court passed a resolution requiring the County either to obtain the appraisal of the property conducted by the GLO or, if the State's appraisal could not be obtained, to obtain an appraisal of the property from a private real estate appraisal firm. The county ultimately obtained the GLO's appraisal which valued the land at $2,554,000 as of May 14, 1992.

On September 24, and September 26 ,1994, the county purchasing agent, Piti Vasquez, placed an advertisement for sealed bids in the El Paso Times. The county received several inquiries in response to the first advertisement and four inquiries in response to the second. It gave information packets to two people, but received only one bid - from Catalina's Chris Collins. On or about September 26, 1994, Collins submitted a bid of $2,554,000 in the form of an earnest money contract and an earnest money check for $5,000.

On October 12, 1994, County Judge Chacon, and Commissioners Orlando Fonseca and Stuart Schwartz voted to accept Collins' bid to purchase the property; Commissioners Charles Hooten voted in opposition. The bid was accepted and Collins' earnest money check was deposited. Commissioners' Court then placed the authorization of the County Judge to sign the warranty deed conveying the property to Collins on the agenda for November 30, December 7, and December 14, 1994.

On November 30, the motion to sign the deed was tabled for one week. On December 7, the motion to sign the deed failed three votes to two, and was then tabled. On December 14, the Commissioners and County Judge Chacon unanimously voted to table the issue of signing the deed for six weeks.

On December 14, 1994, an assistant county attorney sent Collins a warranty deed and affidavit, which were to be used to close the transaction. Collins approved these documents. Two days later, Shapleigh placed the approval and signing of the deed on the Commissioners' Court agenda for December 21, 1994.

On the even of the session scheduled for December 21, 1994, the litigation that ultimately gave rise to the first series of lawsuits began.

The Litigation Begins

On December 20, 1994, County Judge-Elect Chuck Mattox, Commissioner Rogelio Sanchez and Commissioner Hooten filed suit as plaintiffs requesting a temporary restraining order, temporary injunction, and permanent injunction, each seeking to prevent Commissioners' Court from approving the sale and signing the deed to Collins.

They alleged that the county should be enjoined because it had failed to comply with the provisions in the Local Government Code [§263.007(b)(3)] governing the sale of real property by counties - specifically, that they had provided inadequate notice of the proposed sale. Further, they contended that the county had failed to obtain an appraisal that reflected the fair market value of the property before soliciting bids. Lastly, they alleged that the citizens of the county would suffer irreparable harm from the completion of the sale because the property was actually worth far more than the proposed purchase price, which was based on an outdated appraisal.

The trial court issued a temporary restraining order, setting the hearing for December 30, 1994.

Collins intervened as cross-plaintiff on December 23, 1994, filing suit against the county, County Judge Chacon, and Commissioners Fonseca and Schwartz. Collins alleged that he would suffer a loss in excess of $1,900,000 if the sale of the land were not completed, based on his estimates of the value of the property after his company developed it. Further, Collins alleged that as a result of accepting his bid and allowing him to deposit the entire purchase price with the title company, and became legally obligated to close the sale. Finally, he claimed that no legal excuse existed to stop the sale, because he had complied with all requirements for the sale.

On January 4, 1995, the trial court issued a temporary injunction preventing the county from completing the sale of the property, declaring the attempted sale "illegal and void" for failure to comply with the notice and appraisal requirements of the Local Government Code. Then, on May 11, 1995, the county filed a motion for summary judgment, contending that Sec. 263.007 controlled the attempted sale, and that it was impossible to demonstrate the its requirements had be satisfied.

Following a hearing, County Court No. 4 Judge Kitty Schild granted summary judgment to the county. Shortly thereafter, Collins filed an appeal with the 8th District Court of Appeals, bringing two points of error: (1) that the trial court erred in granting summary judgment for the county; and (2) that the trial court erred in granting relief that the county did not request.

On September 25, 1997, the Court of Appeals reversed the grant of summary judgment in favor of Collins, because the county had not demonstrated that they adopted the bid procedure they claimed they did not comply with, the newspaper ad taken out by the county gave proper notice of the sale, and the county failed to show that the appraisal was inadequate. [Because of the ruling on the first point of error, the second was not considered by the court.]

Sovereign Immunity

Sovereign Immunity: The doctrine that the government, state or federal, is immune to lawsuit unless it gives its consent. (Source: National Association for Court Management - NACM)

In a separate action - filed on February 17, 2000 - based on the same facts as above, Collins sued the county for breach of contract and for specific performance, because the property was never conveyed to Catalina Development or Collins. Collins argued that there was a legally binding contract formed between themselves and the county and that the county waived immunity from being sued by accepting and partially performing the contract. The county, on the other hand, argued that there was no waiver by conduct and that it was entitled to sovereign immunity from suit.

The County Court of Law No. 7 granted a motion by the county for summary judgment on the issue of sovereign immunity; and Collins appealed.

The 8th District Court of Appeals issued an opinion on January 11, 2002 in favor of the county, rejecting a waiver-by-conduct doctrine and affirming that the county was entitled to sovereign immunity from suit.

Chief Justice Richard Barajas wrote in his opinion:

Because the Supreme Court refused to judicially adopt a waiver-by-conduct doctrine and because this court has consistently held that the waiver of sovereign immunity is a matter addressed to the Legislature and the Legislature must waive sovereign immunity by clear and unambiguous language, we overrule Appellants' issue and affirm the judgment of the trial court.

Collins appealed again, this time to the Texas Supreme Court.

Before the Texas Supreme Court, Collins claimed that the facts support a finding that the county, by its conduct, waived immunity from suit. Specifically, Collins asserted that the county waived immunity by advertising for bids to sell the land, accepted Collins' bid, accepted and deposited Collins' earnest money, and sent Collins an earnest money contract to sign.

The county responded that these activities constituted nothing more than acts of contract formation, which the Texas Supreme Court has already stated in previous opinions do not, by themselves, waive immunity from suit.

The Texas Supreme Court agreed with the County of El Paso.

Justice Harriet O'Neill, in her opinion, wrote that the actions that the county took were the kind that are necessary and expected during contract formation; and the the Texas Supreme Court had made it clear in the past that contract formation, by itself, is not sufficient to waive a governmental unit's immunity from suit.

Justice O'Neill also pointed out that Collins did not seek to recover goods already conveyed, but instead, wished to "force a sale" of land belonging to the people of El Paso County. Indeed, she wrote, the facts presented in the case illustrated a fundamental reason why immunity exists - to prevent governmental entities from being bound by the policy decisions of their predecessors. She continued:

In this case, the County, upon an electoral change in the commissioners court, determined that selling the property to Collins was a poor decision. Rather than lock El Paso County residents into a contract not in their best interest, the court acted within its discretion to protect the perceived interests of the public by rejecting the contract. In doing so, the County did not profit unfairly at Collins's expense.

The opinion further emphasized that although the county had taken a number of steps toward closing the sale, it ultimately declined to complete the transaction - making it clear that the county was under no statutory obligation either to accept any potential bids or to complete a transaction if it did decide to accept a bid.

"Settlement" or "Sale"?

Given that the Texas Supreme Court has issued a decision that the county is not obligated to this sale of property to Collins, how should the December 22, 2004 "settlement" between the County of El Paso and Collins be construed?

Regarding the first series of lawsuits - prior to the Rancho Real series -- there had been no pending issue at the time of "settlement." The county had already received a final judgment in their favor.

While attorneys David Escobar and Luther Jones had threatened to continue an appeal to the US Supreme Court, they must be aware, as most attorneys are, that the US Supreme Court hears issues relating to federal statutes or those involving principles related to the US Constitution.

Collins did not raise any federal issues at the state trial or appellate level.

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