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NO.

219-01855-2015
(Consolidated with Cause No. 199-02143-215, Arch Resorts, LLC v. The City of
McKinney, Texas, by Order entered on July 15, 2015)
ARCH RESORTS, LLC,
Plaintiff and CounterDefendant,
v.
THE CITY OF MCKINNEY,
TEXAS,
Defendant, Counter-Plaintiff,
and Third-Party Plaintiff
v.
COLLIN COUNTY, TEXAS,
Third-Party Defendant

IN THE DISTRICT COURT

OF COLLIN COUNTY, TEXAS

366th JUDICIAL DISTRICT

CITY OF MCKINNEYS ORIGINAL THIRD-PARTY PETITION


Third-Party Plaintiff City of McKinney, Texas (City or McKinney),
pursuant to the courts August 25, 2016, order authorizing same (as amended by
orders dated September 30, 2016, and October 27, 2016), files this third-party
petition against Third-Party Defendant Collin County, Texas (County), and
respectfully shows the court the following:

CITY OF MCKINNEYS ORIGINAL THIRD-PARTY PETITION

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I.
Overview
1.

McKinney, as a home-rule municipality, has the inherent authority to

require developers of property in the Citys extraterritorial jurisdiction (ETJ) to


obtain building permits, inspections and approvals, and pay related fees. See Town
of Lakewood Village v. Bizios, 493 S.W.3d. 527, 530-31 (Tex. 2016).
2.

In contrast, the County may exercise only those powers expressly

conferred upon it by either the legislature or the Texas Constitution. City of San
Antonio v. City of Boerne, 111 S.W.3d 22, 28 (Tex.2003).
3.

The County does not have the statutory authority to require

commercial buildings permits other than for ensuring compliance with fire codes.
See Tex. Loc. Govt Code 233.063, 233.064. Additionally, while the County
may seek enforcement of a developers failure to comply with the International
Residential Code, the law does not authorize the County to inspect or issue permits
to enforce that Code. See Tex. Loc. Govt Code 233.154, 233.155.
4.

Moreover, state law expressly provides that in those situations where

a city has adopted a building code that applies in the ETJ, that the citys building
code controls and the countys building standards have no effect in the citys ETJ.
See Tex. Loc. Govt Code 233.153(c).

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5.

Furthermore, McKinney entered into an Interlocal Agreement with the

County on or about March 19, 2002, entitled CITY-COUNTY PLAT


APPROVAL AGREEMENT (Exclusive City Control) (Interlocal Agreement),
regarding delegation of approval authority over subdivision plats and related
permits in the Citys ETJ. The Interlocal Agreement granted the City exclusive
authority to review and approve plats and related permits for conformance with the
Citys subdivision ordinance and related development ordinances, which the City
contends includes issuing building permits in the ETJ.
6.

The County and the City, however, have a bona fide dispute over the

interpretation and application of the Interlocal Agreement, and the respective


powers of the County vis--vis the City to regulate construction in the Citys ETJ.
The City contends that the County has exceeded its statutory authority by issuing
building permits to properties developing in the Citys ETJ. As a result, the Citys
lawful authority to regulate development in the Citys ETJ is being substantially
and significantly impaired. While McKinney has actively attempted to negotiate
with the County over this dispute, such efforts have, unfortunately, been unavailing
and, accordingly, the City has been left with no other option than to institute this
proceeding against the County for declaratory relief, permanent injunctive relief
and attorneys fees.

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II.
Discovery Plan
7.

The City intends for discovery to be conducted in accordance with a

Level 3 discovery control plan as provided by Rule 190.3 of the Texas Rules of
Civil Procedure.
III.
Parties
8.

McKinney is

a home-rule municipality organized

under the

Constitution of the State of Texas, whose City Hall is located at 222 N. Tennessee
Street, McKinney, Texas, in Collin County, Texas. The City operates under a
Home-Rule Charter approved by its citizens pursuant to state law.
9.

The County is a Texas county and a corporate and political body of

the State of Texas, with its county seat located in the City of McKinney, Texas.
The County may be served by serving the County Judge, the Honorable Keith
Self, at 2300 Bloomdale Rd, Suite 4192, McKinney, TX 75071.
IV.
Jurisdiction and Venue
10.

Jurisdiction and venue are proper in this court under Section 15.015 of

the Texas Practice and Remedies Code. In addition, venue is proper in this court
under Section 15.002(1) of the Texas Practice and Remedies Code because Collin

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County, Texas, is the county in which all or a substantial part of the events or
omissions giving rise to the claims occurred.
11.

This court also has jurisdiction over this matter because this third-

party claim includes claims for declaratory relief, injunctive relief, and attorneys
fees. No monetary damages are sought against the County. The County has no
governmental immunity from the claims asserted by McKinney.
12.

Venue is also lawful in Collin County because it is the county in

which the underlying suit was filed and in which the court issued its August 25,
2016, order (as amended by orders dated September 30, 2016, and October 27,
2016) authorizing the filing of this third-party petition against the County.
V.
Procedural History
11.

On May 29, 2015, Plaintiff and Counter-Defendant Arch Resorts,

LLC (Arch), filed suit against McKinney seeking a declaration of its rights under
the purported building permit power of the County vis--vis the power to
McKinney to issue building permits for an RV park project while Archs property
was located in the Citys ETJ. Arch did not make the County a party to its
declaratory judgment requests.
12.

On June 18, 2015, McKinney filed its counterclaim similarly seeking

a declaration of the Citys right to require building permits in the Citys ETJ vis --

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vis the power of the County to issue such permits for the RV park at issue.
McKinney also did not make the County a party to its declaratory judgment
requests.
13.

On August 15, 2016, Arch filed amended special exceptions against

the City, one of which asserted that the County was an indispensable and necessary
party under Texas Rule of Civil Procedure 39 and that the County must be joined
into the instant proceeding between McKinney and Arch.
14.

By order entered on August 24, 2016, the court granted Archs request

and ordered that that the City either (1) amend its pleadings and defenses to
withdraw its challenges to the validity of the actions of Collin County in issuing
permits to Arch, or (2) name and serve the County as a party in this case prior to
September 30, 2016. The order further expressly authorizes, pursuant to
Tex.R.Civ.P 37, and grants leave of the court for, the City to join Collin County as
a Third-Party Defendant in this proceeding.

The deadline in that order was

extended to October 31, 2016, by order of the court dated September 30, 2016, and
further extended to November 30, 2016, by order of the court dated October 27,
2016.
VI.
Background Facts
15.

Arch is the owner and developer of an approximately 43.416 acre tract

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of land located in McKinney, Texas (Property).


16.

The Property, immediately prior to May 5, 2015, was fully within the

Citys ETJ and is now within the Citys corporate limits as the result of Citys
annexation of the Property on May 5, 2015. The Property was purchased for the
purpose of development as a recreational vehicle (RV) park (RV Project).
17.

Between December 9, 2014, and March 25, 2015, Arch filed eight (8)

permit applications with the County (collectively, the Applications) for


development of the Property as an RV park. The Applications indicate that the RV
Project will be developed in phases (Phases A E), and that the Property being
divided into 297 RV sites, 109 uncovered RV storage spaces, 11 80-foot long pull
through RV sites, a laundry room, meeting rooms and an office facility.
18.

The Applications call for each site, as well as the office and laundry

room, to be served with water and wastewater facilities. The wastewater facilities
consist of an On-Site Sewage Facility (OSSF). The Applications state the
business is open to the public, will have overnight facilities, have public restrooms
and sale of food.
19.

Between January 13, 2015 and March 31, 2015, the County issued

permits for various aspects of the RV Park development in Phases A and C, and in
Phase B (in part). No permits were issued for Phases D and E of the RV Park
Project.

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20.

Prior to its annexation, the Property was subject to development

standards required for projects in the Citys ETJ, including the Citys subdivision
ordinance and the requirement that development in the Citys ETJ comply with the
Citys building codes and obtain development permits from the City.
21.

McKinney has the authority to require development in the ETJ to

obtain building permits, inspections and approvals (and pay related fees) for
development of property, pursuant to its inherent authority as a home-rule city. See
Town of Lakewood Village v. Bizios, 493 S.W.3d. 527, 530-31 (Tex. 2016).
22.

Furthermore, McKinney entered into the Interlocal Agreement with

the County on or about March 19, 2002, regarding delegation of approval authority
over subdivision plats and related permits in the Citys ETJ.

The Interlocal

Agreement granted the City exclusive authority to review and approve plats and
related permits for conformance with the Citys subdivision ordinance and related
development ordinances. The pertinent section of the Interlocal Agreement states
that the parties agree that City shall be granted exclusive jurisdiction to regulate
all subdivision plats and approve all related permits in its ETJ in accordance with
Chapter 212 of the Local Government Code, its adopted Subdivision Regulations
or other applicable codes or ordinances, and County shall no longer exercise any of
these functions in the Citys ETJ (emphasis added). [R]elated permits includes
building permits.

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23.

Accordingly, the permits issued by the County to Arch are void ab

initio and without any legal effect. The Property was in the Citys ETJ at the time
the Applications were made and was not released from the Citys ETJ at any time
prior to its annexation.
24.

Additionally, the County did not have jurisdiction to issue the permits

upon which Arch relies because the County does not the statutory authority to
require commercial buildings permits other than for ensuring compliance with fire
codes. See Texas Local Government Code Chapter 233, Subchapter C.
25.

It is undisputed that (a) the Property was within the Citys ETJ at all

times in which the County issued permits to Arch; (b) through the Interlocal
Agreement with the County, McKinney has exclusive jurisdiction to review plats
and issue related development permits in its ETJ; and (c) Arch has unlawfully
commenced development of the Property for the RV Project in disregard of the
Citys ordinances and in reliance on the Countys issuance of permits.
26.

The County permits ostensibly authorized Arch to commence the RV

Project, which construction project is wholly at odds with the Citys


comprehensive plan and its subdivision ordinance.
27.

Arch, through the filing of its lawsuit against McKinney, has created a

justiciable controversy regarding the County as it is clear that Arch asserts that its
Property, which was lawfully annexed by the City in May, 2015, is not subject to

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the Citys laws governing the use and development of land because, prior to the
annexation, Arch received permits for development of the Property from the
County, and that Arch is therefore exempt from the reach of the Citys laws
because of the application of Section 43.002 and Chapter 245, Texas Local
Government Code.
28.

The County, however, did not have jurisdiction to issue the permits

upon which Arch relies because permitting of that nature in the Citys ETJ is
reserved to McKinney by both (a) the terms of the Interlocal Agreement between
the City and the County and (b) the power of home rule cities to require platting
and the obtaining of building and other development permits in their ETJs.
29.

The County entered into the Interlocal Agreement with McKinney in

2002 in response to the requirements of House Bill 1445, passed by the 77th
Legislature of the State of Texas, and as amended by House Bill 1204, passed by
the 78th Legislature of the State of Texas, and which bills are now codified at
Texas Local Government Code Chapter 242. As discussed in greater detail below,
the right and authority of the City to enforce its subdivision ordinance and related
building codes in the Citys ETJ is supported by Texas Local Government Code
Chapter 242 and the Citys inherent powers as a home-rule city.
30.

More particularly, Texas Local Government Code 242.001(c)

provides, in pertinent part, as follows:

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. . . [A] municipality and a county may not both regulate


subdivisions and approve related permits in the
extraterritorial jurisdiction of a municipality after an
agreement under Subsection (d) is executed. The
municipality and the county shall enter into a written
agreement that identifies the governmental entity
authorized to regulate subdivision plats and approve
related permits in the extraterritorial jurisdiction. For a
municipality in existence on September 1, 2001, the
municipality and county shall enter into a written
agreement under this subsection on or before April 1,
2002. . . . .
31.

In response to House Bill 1445, the Interlocal Agreement was

prepared by the County and entered into by and between the County and
McKinney effective as of March 19, 2002.

The Interlocal Agreement clearly

provides that the County and the City have agreed that the City has the exclusive
right to enforce its Subdivision Ordinance and related codes in the Citys ETJ.
More particularly, Paragraph No. 1 of the Interlocal Agreement reads as follows:
1.

City Granted Exclusive Jurisdiction. The parties agree


that City shall be granted exclusive jurisdiction to
regulate all subdivision plats and approve all related
permits in its ETJ in accordance with Chapter 212 of the
Local Government Code, its adopted Subdivision
Regulations or other applicable codes or ordinances, and
County shall no longer exercise any of these functions in
the Citys ETJ.

See Interlocal Agreement, Paragraph No. 1.


32.

This Interlocal Agreement conforms to all of the requirements of

Texas Local Government Code 242.001(c) as it provides exclusive authority over

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the regulation of subdivision plats and related permits to the City. Paragraph No. 4
of the Interlocal Agreement also clarifies that the expansion or contraction of the
Citys ETJ shall not require amendment of the Interlocal Agreement; that the
City shall continue to be granted exclusive jurisdiction to regulate plats and
approve related permits in its ETJ regardless of expansion or contraction of the
ETJ; and that the County has jurisdiction of areas outside the Citys ETJ. See
Interlocal Agreement, Paragraph No. 4.
33.

Importantly, the Interlocal Agreement contains no language that limits

or prohibits the Citys authority and exclusive jurisdiction to enforce its building,
fire and construction-related codes in the ETJ.

In addition, the Interlocal

Agreement contains no language that requires the City to enforce less-stringent


county regulations in the Citys ETJ in lieu of the Citys ordinances. The entire
purpose and intent behind House Bill 1445, and the adoption of agreements like
the Interlocal Agreement, was to eliminate the problem of developers and property
owners being whipsawed back and forth between county regulators and cities
trying to comply with different and conflicting development regulations and
multiple overlapping processes.
34.

Consequently, the Applications that were submitted to the County for

development permits in the Citys ETJ should have been returned by the County to
Arch, and the County should have requested Arch to submit those development

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applications instead to McKinney for its review and possible approval. In any
event, as the County was without jurisdiction to issue the permits, the permits are
void ab initio and they cannot be used to justify any use of the Property as an RV
park as either continued or beginning, as such are contemplated under Texas
Local Government Code 43.002(a).
35.

Because the County has issued development permits to Arch contrary

to the provisions of the Interlocal Agreement, and without lawful authority to do


so, which actions are inconsistent with the Citys regulatory rights over the
Property, McKinney brings this third-party petition against the County seeking
declaratory and injunctive relief, and attorneys fees pursuant to the request and
orders of the Court so that the respective rights of the City and County can be
determined.
VII.
Count One: REQUEST FOR DECLARATORY JUDGMENT,
ATTORNEYS FEES AND COSTS
36.

McKinney incorporates by reference paragraphs 1 through 35, herein.

37.

Pursuant to Sections 37.001-.011 of the Texas Civil Practice and

Remedies Code (the Texas Uniform Declaratory Judgments Act), the City
requests that the court find, declare, and decree the following:
a.

The City has the lawful authority to require development permits in its
ETJ, and requires that such permits be obtained to develop in the
Citys ETJ.

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b.

The Citys ordinances and regulations that require plat approval,


building permits, inspections and approvals, and payment of related
fees, for development of property in the Citys ETJ -- were adopted
pursuant to and in accordance with state law and are a lawful and
proper exercise of the Citys authority and jurisdiction.

c.

The Citys actions requiring Arch to obtain plat approval, building


permits, inspections and approvals, and pay related fees, for
development of the Property while the Property was in the Citys ETJ
were taken pursuant to and in accordance with all applicable laws and
are a lawful and proper exercise of the Citys authority and
jurisdiction.

d.

Archs Property was located within the Citys ETJ at the time Arch
made development applications with the County;

e.

The City has properly exercised its authority to extend the application
and enforcement of its subdivision ordinance to its ETJ, and to require
building permits and other development permits in its ETJ;

f.

Archs development constitutes a subdivision of land under


applicable law and as such, it is subject to the Citys subdivision
ordinance;

g.

The County issued building permits to Arch for construction on the


Property when the County did not possess authority to do so under the
Interlocal Agreement and/or under state law;

h.

The County did not have jurisdiction to issue the permits upon which
Arch relies because the County does not have the statutory authority
to require commercial buildings permits other than for ensuring
compliance with fire codes. See Texas Local Government Code
Chapter 233, Subchapter C.

i.

The building permits issued by the County were unauthorized and


contrary to the Citys subdivision ordinance, Subchapter B of Chapter
212 of the Texas Local Government Code, the terms of the Interlocal
Agreement; and beyond the statutory authority granted to the County
under state law.

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j.

The permits issued by the County were and are void and do not
legally authorize Arch to commence and continue the ongoing
construction activities on the Property;

k.

The City be awarded its reasonable and necessary attorneys fees and
costs pursuant to the provisions of the Texas Declaratory Judgment
Act;

l.

Section 43.002 of the Texas Local Government Code does not


authorize Arch to continue and complete the RV Project in accordance
with the Applications and corresponding permits issued and approved
by the County;

m.

Chapter 245 of the Texas Local Government Code does not authorize
Arch to continue and complete the RV Project in accordance with the
Applications and corresponding permits issued and approved by the
County; and

n.

The Interlocal Agreement authorizes the City to require on-site


building permits and the City has such authority under its home rule
authority.

38.

McKinney requests, under Section 37.009 of the Texas Civil Practice

and Remedies Code, the award of costs and reasonable and necessary attorneys
fees through trial and appeal as are equitable and just.
VIII.
Count Two: REQUEST FOR PERMANENT INJUNCTION
39.

McKinney incorporates by reference paragraphs 1 through 38, herein.

40.

After a full disposition on the merits, the City requests that the court

enter a permanent injunction enjoining the County from issuing building permits
for development occurring in the Citys ETJ.
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IX.
CONDITIONS PRECEDENT
41.

All conditions precedent to McKinney being entitled to bring this

action and recover the relief requested herein have been performed, have occurred,
or have been waived.
42.

The County has no governmental immunity from suit for declaratory

judgment claims and for injunctive relief. Consequently, McKinney has standing to
assert this third-party petition.
WHEREFORE, PREMISES CONSIDERED, Third-Party Plaintiff City
of McKinney, Texas, requests the following relief:
(1)
above;

A declaratory judgment finding those items set out in paragraph 37,

(2) A permanent injunction enjoining the County, its agents, servants, and
employees, and anyone acting in its behalf or in concert with it, from issuing
building permits for development occurring in the Citys ETJ without express
written consent by the City;
(3) All costs of court and reasonable and necessary attorneys fees
through trial and all levels of appeal; and
(4)

All other relief to which the City is justly entitled.

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Respectfully submitted,
BROWN & HOFMEISTER, L.L.P.
740 East Campbell Road, Suite 800
Richardson, Texas 75081
(214) 747-6100 Telephone
(214) 747-6111 Telecopier
Robert F. Brown
State Bar No. 03164725
By:

/s/ Robert F. Brown

ATTORNEYS FOR THIRD-PARTY


PLAINTIFF CITY OF MCKINNEY, TEXAS

CERTIFICATE OF SERVICE
A copy of the foregoing document was served by electronic service upon
counsel for Plaintiff and Counter-Defendant, Mr. Arthur J. Anderson, Winstead
PC, 500 Winstead Building, 2728 N. Harwood Street, Dallas, Texas 75201, on this
16th day of November, 2016.
/s/ Robert F. Brown

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