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Yetter Coleman Seals a Major Victory for San Jacinto River Authority In Dispute on $500 Million of Government Bonds

Yetter Coleman won a victory in the Texas Supreme Court on behalf of the San Jacinto River Authority in its dispute with the Cities of Conroe, Magnolia, and Splendora over contracts that secure a half-billion dollars in public bonds. The Court agreed with SJRA that it can use the Expedited Declaratory Judgment Act’s fast-track procedure to decide—quickly and as to all interested parties—whether the contracts between SJRA and its 80+ participants are valid and binding. Those contracts are the sole security for $500 million in public bonds that SJRA issued to finance the building of a water treatment plant on Lake Conroe.

In its now-issued opinion, the Texas Supreme Court adopted our position that SJRA can use the fast-track statute to seek a validity declaration as to those agreements. In the course of reaching that holding, the Court found that the Government Code makes the contracts “incontestable” and “valid, binding, and enforceable according to [their] terms.” Conroe had attempted to contest the contracts on fraud grounds.

The Court also ruled for SJRA on whether the cities have governmental immunity from an EDJA proceeding. The Court found that no such immunity existed, rejecting the cities’ argument that immunity posed a jurisdictional bar to the proceeding. After the mandate issues, SJRA will get to ask the EDJA court in Travis County for a declaration of contract validity.

Contrary to our argument for SJRA, the Court concluded that the validity of a specific rate cannot be heard in an EDJA action. That issue will have to be litigated in a regular proceeding in Montgomery County. SJRA had sought to use the EDJA to obtain a faster and less expensive resolution.

The Court also denied a separate mandamus filed by the cities to enforce a venue provision that would have sent the case back to Montgomery County.

April Farris argued the appeal at the Texas Supreme Court. Jim Zucker led the trial team, with Wyatt Dowling, Reagan Simpson, and Charles Parker contributing to the win.

Read the court’s opinion here: City of Conroe v. San Jacinto River Authority, No. 18-0989.