Texas Judiciary = Online

Galveston County, = Texas

Trial Court Cause No.=20 03CV1419

O P I N I O N

=20 This declaratory judgment action requires us to construe = Texas=20 Local Government Code section 307.042(e),[1]=20 which enabled the City of Galveston (=93the City=94) to sell the = Flagship Pier=20 and Hotel=97property the Legislature requires be used for public = park=20 purposes=97to Landry=92s Restaurants, Inc. = (=93Landry=92s=94). The City and Landry=92s = contend the=20 trial court erred in interpreting the statute to allow the General = Land=20 Office (=93GLO=94) to assess an annual lease payment for = Landry=92s use of the=20 State-owned submerged land beneath the pier and hotel. We agree with the trial = court=92s=20 determination and therefore affirm.

Background

=20 In 1941, the Legislature granted to any coastal city with a = population over 60,000 the right to use and occupy, for public = park=20 purposes, the State-owned tidelands, water, and bed of the Gulf of = Mexico=20 (=93State-owned submerged land=94). =20 See Act of Feb. 11, 1941, 47th Leg., R.S., ch. 7, = 1941 Tex.=20 Gen. Laws 10, 11 (amended 2001) (current version at Tex. Loc. Gov=92t Code = Ann. =A7=20 307.001 (Vernon 2005)). = The=20 statute gave eligible cities the right to erect a pier over the=20 State-owned submerged land, and further delineated the types of = facilities=20 that the Legislature deemed suitable to build on the pier: a = theatre,=20 restaurant, convention hall, dance hall, aquarium, fishing = platform,=20 exhibition hall, stadium for aquatic sports, spaces and platforms = for=20 concessions, walkways, toilet facilities, and resting facilities = for the=20 comfort of the public. =20 See Act of Feb. 11, 1941, 47th Leg., R.S., ch. 7, = 1941 Tex.=20 Gen. Laws 10, 12, amended by Act of May 24, 1961, 57th = Leg., R.S.,=20 ch. 525, 1961 Tex. Gen. Laws 1166, 1167, amended by Act of = Apr. 30,=20 1987, 70th Leg., R.S., ch. 149, 1987 Tex. Gen. Laws 707, = 1091=9692. The statute authorized = eligible=20 cities to borrow money, issue negotiable bonds, and levy taxes to = defray=20 the costs both of building the pier and acquiring any privately = owned land=20 to be used in connection with the pier. See Act of Feb. = 11, 1941,=20 47th Leg., R.S., ch. 7, 1941 Tex. Gen. Laws 10, 12 (amended 1987) = (current=20 version at Tex. Loc. = Gov=92t Code=20 Ann. =A7 307.041(a) (Vernon 2005)). As security for any = bonds issued,=20 the statute enabled eligible cities to mortgage the pier and any=20 improvements thereon, and under the terms of any such mortgage, to = grant=20 to the purchaser under sale or foreclosure a franchise to operate = the=20 properties purchased for a 35-year period. See Act of Feb. = 11, 1941,=20 47th Leg., R.S., ch. 7, 1941 Tex. Gen. Laws 10, 13, amended = by Act=20 of May 20, 1965, 59th Leg., R.S., ch. 671, 1965 Tex. Gen. Laws = 1534, 1534,=20 amended by Act of May 11, 2001, 77th Leg., R.S., ch. 598, = 2001 Tex.=20 Gen. Laws 1139, 1140. = In=20 1942, pursuant to this statute, the City constructed a pier = commonly known=20 as the Flagship Pier.

=20 In 1961, the Legislature amended the statute by including, = among=20 other things, authorization to build a hotel on the pier with bond = funds. See = Act of May=20 24, 1961, 57th Leg., R.S., ch. 525, 1961 Tex. Gen. Laws 1166, 1167 = (amended 1987) (current version at Tex. Loc. Gov=92t Code = Ann. =A7=20 307.021 (Vernon 2005)). = Four=20 years later, the Legislature amended the statute again to extend = the=20 permissible franchise period pursuant to a foreclosure sale from=20 thirty-five years to seventy-five years. See Act of May = 20, 1965,=20 59th Leg., R.S., ch. 671, 1965 Tex. Gen. Laws 1534, 1534 (amended = 2001)=20 (current version at Tex. = Loc.=20 Gov=92t Code Ann. =A7 307.042(c) (Vernon 2005)). The City used bond = proceeds to=20 build the Flagship Hotel on the pier. Eventually, the City = retired the=20 bonds it had issued for constructing the hotel and=20 pier.

=20 In September 2000, the Galveston City Council adopted a = resolution=20 asking the Legislature to amend the statute to enable the City to = sell the=20 Flagship Pier and Hotel (together the =93Flagship = Property=94). Galveston, Tex., City = Council=20 Resolution 00-045 (Sept. 14, 2000). =20 In 2001, the Legislature amended section 307.042 of the = statute to=20 add the following provision:

The municipality may sell the [Flagship = Property]=20 if no bonded indebtedness remains outstanding. If the municipality = sells the=20 property, the General Land Office may grant to the purchaser a = lease of=20 the state-owned tideland, water, and bed beneath the property or, = if=20 necessary, a larger area for a period of not more than 99 years = after the=20 purchase. The = purchaser and=20 the purchaser=92s heirs, successors, and assigns have the same = right of use=20 and occupancy to the state-owned tideland, water, and bed as is = granted to=20 the municipality under this chapter. =20 On termination of that period or on cessation of use of the = property for that purpose, the right of use and occupancy reverts = to the=20 municipality.

Act of May 11, 2001, = 77th Leg.,=20 R.S., ch. 598, 2001 Tex. Gen. Laws 1139, 1140 (codified at Tex. Loc. Gov=92t Code = Ann. =A7=20 307.042(e) (Vernon 2005)).

=20 The City subsequently sold the Flagship Property to = Landry=92s. Following the sale, the = GLO sought=20 to enter into a lease with Landry=92s for the State-owned = submerged land=20 beneath the Flagship Property. =20 Landry=92s and the City (together =93appellants=94) = responded by suing=20 for a declaratory judgment,[2]=20 alleging that the statute precludes the GLO from assessing an = annual=20 rental payment against Landry=92s because the City had never paid = rent to=20 the GLO for its use and occupancy of the State-owned submerged = land. After considering the = parties=92=20 cross-motions for summary judgment, the trial court granted the = GLO=92s=20 motion and denied appellants=92 motion. This appeal=20 followed.

Standard=20 of Review

=20 We review declaratory judgments under the same standards as = other=20 judgments and decrees. = Tex. Civ. Prac. & Rem. = Code=20 Ann. =A7 37.010 (Vernon 1997); City of Galveston v. = Giles, 902=20 S.W.2d 167, 170 (Tex. App.=97Houston [1st Dist.] 1995, no = writ). We look to the procedure = used to=20 resolve the issue at trial to determine the standard of review on=20 appeal. = Giles, 902=20 S.W.2d at 170. = Here, because=20 the trial court resolved the case on competing motions for summary = judgment, we review the propriety of the declaratory judgment = under the=20 same standards that we apply in reviewing a summary judgment. Lidawi v. Progressive = County=20 Mut. Ins. Co., 112 S.W.3d 725, 730 (Tex. App.=97Houston [14th = Dist.]=20 2003, no pet.).

Our review of a = summary=20 judgment is de novo. =20 Provident Life & Accident Ins. Co. v. Knott, 128 = S.W.3d=20 211, 215 (Tex. 2003). = Under=20 the traditional standard for summary judgment, the movant has the = burden=20 to show that no genuine issue of material fact exists and that = judgment=20 should be granted as a matter of law. Tex. R. Civ. P. = 166a(c); KPMG=20 Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d = 746, 748=20 (Tex. 1999). We = view all=20 evidence in a light favorable to the nonmovant and indulge every=20 reasonable inference in the nonmovant=92s favor. Provident Life, = 128 S.W.3d=20 at 215. When both = sides move=20 for summary judgment and the trial court grants one motion and = denies the=20 other, we consider both motions, their evidence, and their issues, = and we=20 may render the judgment that the trial court should have = rendered. See CU Lloyd=92s of = Tex. v.=20 Feldman, 977 S.W.2d 568, 569 (Tex. = 1998).

Analysis

=20 Statutory interpretation is a question of law. In re Canales, 52 = S.W.3d=20 698, 701 (Tex. 2001). = Our=20 primary goal in interpreting a statute is to ascertain and to = effectuate=20 the Legislature=92s intent. =20 Id. at 702. = In=20 doing so, we begin with the statute=92s plain language. Helena Chem. Co. v.=20 Wilkins, 47 S.W.3d 486, 493 (Tex. 2001); Fitzgerald v. = Advanced=20 Spine Fixation Sys., Inc., 996 S.W.2d 864, 865=9666 (Tex. = 1999). We begin with the plain = language=20 because we assume that the Legislature tried to say what it meant; = therefore, the statute=92s words should be the surest guide to the = Legislature=92s intent. =20 Fitzgerald, 996 S.W.2d at 866.

=20 In ascertaining legislative intent, we do not confine our = review to=20 isolated statutory words, phrases, or clauses; rather, we examine = the=20 entire act. = Meritor Auto.,=20 Inc. v. Ruan Leasing Co., 44 S.W.3d 86, 90 (Tex. 2001); see = also Tex. Gov=92t = Code=20 Ann. =A7 311.011(a) (Vernon 2005) (instructing courts to = read words=20 and phrases in context). We=20 construe words and phrases according to the rules of grammar and = common=20 usage. Tex. Gov=92t Code Ann. = =A7=20 311.011(a). = Moreover, words=20 and phrases that have acquired a technical or particular meaning = must be=20 construed accordingly. =20 Id. =A7 311.011(b).

The Code Construction = Act lists=20 factors that may be considered in construing a statute, whether or = not the=20 statute is ambiguous on its face. =20 Id. =A7 311.023. =20 These factors include, among other things, (1) the = statute=92s=20 objectives, (2) the circumstances under which the statute was = enacted, (3)=20 the statute=92s legislative history, (4) former statutory = provisions, and=20 (5) the consequences of a particular construction. Id. =A7 = 311.023(1)=96(7). We presume that the = Legislature=20 intended a just and reasonable result. Id. =A7=20 311.021(3).

The=20 Statute

=20 Local Government Code section 307.042(e) provides as=20 follows:

The municipality may sell the property = described=20 by Subsection (b)[3]=20 if no bonded indebtedness remains outstanding.[4] If the municipality = sells the=20 property, the General Land Office may grant to the purchaser a = lease of=20 the state-owned tideland, water, and bed beneath the property or, = if=20 necessary, a larger area for a period of not more than 99 years = after the=20 purchase. The = purchaser and=20 the purchaser=92s heirs, successors, and assigns have the same = right of use=20 and occupancy to the state-owned tideland, water, and bed as is = granted to=20 the municipality under this chapter. On termination of that = period or=20 on cessation of use of the property for that purpose, the right of = use and=20 occupancy reverts to the municipality.

Tex.=20 Loc. Gov=92t Code Ann. =A7 307.042(e) = (emphasis=20 added).

=20 Appellants rely on the portion of the statute that states = =93[t]he=20 purchaser . . . ha[s] the same right of use and occupancy to the=20 state-owned tideland, water, and bed as is granted to the = municipality=20 under this chapter.=94 =20 Id. = Appellants=20 urge that this statutory provision allows Landry=92s to use and = occupy the=20 State-owned submerged land beneath the pier without paying rent to = the GLO=20 because the GLO did not charge the City rent for more than fifty = years,=20 and the statute gives the Flagship purchaser =93the same right of = use and=20 occupancy=94 as the City.

Plain Language and = Legislative=20 History

=20 Appellants=92 contention that the phrase =93the same right = of use and=20 occupancy=94 as the City imposes rent-free =93use and = occupancy=94 of the=20 State-owned submerged land is not supported by either the plain = language=20 or the legislative history of section 307.042(e), when read = together with=20 the remainder of the statutory provision. The amended statute = prefaces the=20 right of occupancy description with the corresponding phrase that = the GLO=20 =93may grant to the purchaser a lease=94 of the State-owned = submerged land for=20 a term not to exceed ninety-nine years, a provision not found in = the=20 earlier version of the statute. =20 Id. = The amended=20 statute thus contemplates that the GLO may require consideration, = namely=20 rent, in exchange for =93the same right of use and = occupancy.=94 See Black=92s Law = Dictionary 898 (7th=20 ed. 1999) (defining =93lease=94 as =93[a] contract by which a = rightful possessor=20 of real property conveys the right to use and occupy that property = in=20 exchange for consideration, usu. rent=94). The City never had any = lease=20 arrangement with the GLO, but the amendment authorizes one. Moreover, the statute = does not=20 require the GLO to grant a lease; rather, the GLO =93may = grant=94 it,=20 conferring the latitude to the GLO to negotiate a bargained-for=20 agreement. Tex. Loc. Gov=92t Code = Ann. =A7=20 307.042(e).

Similarly, the = legislative=20 history does not indicate that the Legislature intended for the = Flagship=20 purchaser to enjoy rent-free use of the State-owned submerged land = beneath=20 the pier. = Specifically, the=20 bill analysis prepared by the House Research Organization=97the = only=20 legislative history for section 307.042(e)=97states as=20 follows:

HOUSE RESEARCH = ORGANIZATION=20 DAILY FLOOR REPORT

Allowing a 99-year lease for the = Flagship Hotel in=20 Galveston

. . . .

In 1965, the 59th Legislature granted = the City of=20 Galveston a 75-year lease for the state-owned submerged land under = the=20 city pier that extends out into the Gulf of Mexico.[5] The city issued bonds = and sold=20 them to a developer, who built the Flagship Hotel. The bonds were retired = in 25=20 years. The City = owns the=20 hotel. The = authority for the=20 project is contained in Local Government Code, ch. 307, which = applies only=20 to the Flagship Hotel in the City of Galveston, based on the = description=20 of the land and other features.

. . . .

SB 673 is needed to support the city of = Galveston=20 in its sale of this historic coastal property. The Flagship Hotel in = Galveston is=20 in need of serious repairs and improvements, and the city would = like to=20 sell the property to a developer for redevelopment. Developers have been = uninterested,=20 however, in buying the hotel and investing the money for these=20 improvements when they would have only 34 years of the original = 75-year=20 lease to recoup their investment. =20 SB 673 would allow the GLO to grant a 99-year lease to a = developer=20 to make this sale possible. =20 The GLO would not be required to grant the lease. If granted, the state = would=20 benefit from the continued annual lease payments, and the = city=20 would benefit from the investment.

House=20 Research Organization, Bill Analysis, Tex. S.B. 673, 77th = Leg., R.S.=20 51=9652 (2001) (emphasis added). =20 Of course, the City had not been making annual lease = payments to=20 the GLO, and the bill analysis is therefore mistaken in its = assertion that=20 the State would benefit from continued annual lease = payments. Importantly, however, = instead of=20 indicating that the Flagship purchaser would enjoy rent-free use = of the=20 State-owned submerged land, the bill analysis contemplates a lease = in=20 exchange for the purchaser=92s right to use and occupy the = State-owned=20 submerged land. = Hence,=20 appellants=92 assertion that Landry=92s is entitled to rent-free = use and=20 occupancy is not borne out by the legislative history of the=20 statute.

=20 Appellants further contend the city council resolution that = prompted the Legislature to enact section 307.042(e) supports = their=20 position. The = resolution=20 states as follows:

The City Council of the City of = Galveston, Texas,=20 hereby respectfully requests the Texas Legislature to amend = Chapter 307 of=20 the Texas Local Government Code to re-establish the easement to = the=20 submerged land underlying the pier for a 99 year period in order = to=20 facilitate the City=92s ability to sell the Flagship pier and = hotel in order=20 for it to be improved and enhanced as a major tourist attraction = and to=20 provide a potential purchaser with the ability to substantially = improve=20 the property for its appropriate long term = use.

Galveston, Tex., City = Council=20 Resolution 00-045 (Sept. 14, 2000). =20 Appellants maintain that continued rent-free use of the = State-owned=20 submerged land was a necessary incentive to attract buyers who = would be=20 willing to pay for substantial improvements to the Flagship=20 Property.

=20 The bill analysis, however, clarifies that potential = developers=20 were uninterested in buying the Flagship hotel and thereafter = investing=20 substantial sums to improve the property =93when they would have = only 34=20 years of the original 75-year lease to recoup their = investment.=94 House Research Organization, = Bill=20 Analysis, Tex. S.B. 673, 77th Leg., R.S. 52 (2001). It therefore appears = that the=20 impetus behind the legislation was to enable the GLO to grant the = Flagship=20 purchaser a 99-year lease, thereby alleviating the problem = by=20 giving the purchaser an additional sixty-five years to recoup its=20 investment. In = other words,=20 the legislative history is concerned not with whether a potential = buyer=20 would be unwilling to pay for improvements to the fixtures because = it=20 might also have to pay rent for the land beneath, but rather = whether a=20 potential buyer would be unwilling to pay for improvements to the = fixtures=20 because the buyer would have only a short time to recoup its = investment=20 before its right of occupancy lapsed. This emphasis on lease=20 length, as opposed to lease payments, is reflected = in the=20 subject line of the bill analysis (=93[a]llowing a 99-year lease = for the=20 Flagship Hotel in Galveston=94), in the text of the bill analysis = as=20 previously discussed, and in the city council resolution on which=20 appellants rely. = House Research Organization, = Bill=20 Analysis, Tex. S.B. 673, 77th Leg., R.S. 51=9652 (2001); = Galveston,=20 Tex., City Council Resolution 00-045 (Sept. 14, 2000). The resolution does not = mention=20 rent-free use of the State-owned submerged land, but rather asks = the=20 Legislature =93to re-establish the easement . . . for a 99 year = period in order to facilitate the City=92s ability to sell the = Flagship=20 pier and hotel in order for it to be improved and enhanced as a = major=20 tourist attraction and to provide a potential purchaser with = the=20 ability to substantially improve the property for its appropriate = long=20 term use.=94 = Galveston,=20 Tex., City Council Resolution 00-045 (Sept. 14, 2000) (emphasis=20 added).

Harmonizing the = Statutory=20 Provisions

=20 The two statutory provisions at issue in this case may = easily be=20 harmonized. See = Black v.=20 Am. Bankers Ins. Co., 478 S.W.2d 434, 437 (Tex. 1972) (=93It = is a=20 cardinal rule of statutory construction that all sections, words = and=20 phrases of an entire act must be considered together; every = provision=20 should be construed with every other portion to produce a = harmonious=20 whole; and one provision will not be given a meaning out of = harmony or=20 inconsistent with other provisions, although it might be = susceptible of=20 such construction if standing alone.=94). The first provision, = =93[i]f the=20 municipality sells the property, the General Land Office may grant = to the=20 purchaser a lease of the state-owned tideland, water, and bed = beneath the=20 property of, if necessary, a larger area for a period of not more = than 99=20 years after the purchase[,]=94 means exactly what it says. Tex. Loc. Gov=92t Code = Ann. =A7=20 307.042(e). In the = event the=20 City sells the Flagship Property, the GLO may, but is not required = to,=20 grant a 99-year lease to the purchaser. The lease covers the = State-owned=20 tideland, water, and bed already occupied by the City, and may be = extended=20 to cover a larger area if necessary.

=20 The second provision, =93[t]he purchaser . . . ha[s] the = same right=20 of use and occupancy to the state-owned tideland, water, and bed = as is=20 granted to the municipality under this chapter[,]=94 means that = the GLO may=20 not restrict the Flagship purchaser=92s use of the State-owned = submerged=20 land to anything less than the manner in which the City had been = using the=20 land. = Id. Nor is the GLO required, = in=20 negotiating a lease with the purchaser, to allow the purchaser to = make=20 greater use of the submerged land than that made by the City. In other words, this = statutory=20 provision contemplates that the Flagship purchaser has the right = to=20 continue to use and occupy the State-owned submerged land as a = public=20 park, in the same manner as the City had done for the past fifty=20 years. Any = consideration that=20 the purchaser must pay for that right is a separate matter=20 entirely.

Rental=20 Payments

=20 Appellants concede that section 307.042(e) permits the GLO = to enter=20 into a lease with the Flagship purchaser. Appellants assert, = however, that=20 the GLO should not be allowed to charge rent pursuant to that = lease=20 because section 307.042(e) does not expressly authorize the GLO to = charge=20 rent.

Appellants=92 = argument fails for=20 several reasons. = First, in=20 interpreting statutory language, =93[w]ords and phrases shall be = read in=20 context and construed according to the rules of grammar and common = usage.=94 Tex. Gov=92t Code Ann. = =A7=20 311.011(a). As we = previously=20 discussed, in common usage, the term =93lease=94 implies that = rental payments=20 may be the required consideration provided in exchange for the = right to=20 use and occupy certain property. =20 See Black=92s Law=20 Dictionary 898 (7th ed. 1999) (defining =93lease=94 as = =93[a] contract by=20 which a rightful possessor of real property conveys the right to = use and=20 occupy that property in exchange for consideration, usu. rent=94); = Merriam Webster=92s Collegiate = Dictionary 708 (11th ed. 2003) (defining =93lease=94 as = =93a contract by=20 which one conveys real estate, equipment, or facilities for a = specified=20 term and for a specified rent=94); 8 Oxford English = Dictionary 769 (2d=20 ed. 1989) (defining =93lease=94 as =93[a] contract between = parties, by which the=20 one conveys lands or tenements to the other for life, for years, = or at=20 will, usually in consideration of rent or other periodical=20 compensation=94). = Thus, the=20 commonly used and understood meaning of =93lease=94 encompasses = the concept of=20 rental payments. = While the=20 City benefits from a private entity=92s willingness to improve its = distressed fixtures, section 307.042(e) does not preclude the GLO = from=20 seeking rent, as part of a lease agreement, in exchange for the = use of=20 State-owned submerged land.

Second, the = legislative history=20 presumes that the GLO will charge rent in the event it decides to = enter=20 into a lease with the Flagship purchaser. Specifically, the bill = analysis=20 states as follows: =93The GLO would not be required to grant the = lease. If granted, the state = would=20 benefit from the continued annual lease payments . . . .=94 House Research Organization, = Bill=20 Analysis, Tex. S.B. 673, 77th Leg., R.S. 52 (2001). Hence, the legislative = history=20 indicates that the Legislature intended the term =93lease=94 to = encompass=20 rental payments.

Finally, = =93legislative grants of=20 property, rights, or privileges must be construed strictly in = favor of the=20 state on grounds of public policy, and whatever is not = unequivocally=20 granted in clear and explicit terms is withheld.=94 Empire Gas & Fuel = Co. v.=20 State, 121 Tex. 138, 158, 47 S.W.2d 265, 272 (1932). Here, with no express = provision=20 precluding the GLO from charging rent for the use of State-owned = submerged=20 land=97either to Landry=92s or to the City as its predecessor=97we = will not=20 impute such a restriction.

* *=20 *

Local Government Code = section=20 307.042(e) authorizes the GLO to require the Flagship purchaser to = enter=20 into a lease for the State-owned submerged land beneath the = pier. In the event the GLO = decides to=20 lease the land, nothing in the statute restricts the GLO from = seeking=20 consideration in the form of rental payments for the right to use = and=20 occupy the land. = The=20 legislative history of section 307.042(e) further indicates that = the=20 Legislature intended for the GLO to assess an annual lease = payment. This interpretation of = the statute=20 comports with the common usage of the term =93lease,=94 which = encompasses the=20 concept of rental payments as among the forms of consideration = offered in=20 exchange for the right to use and occupy certain property. Moreover, this = interpretation may=20 be harmonized with the =93same right of use and occupancy=94 = language of the=20 statute by construing the latter to mean simply that the purchaser = may=20 continue to use the Flagship Property in the same manner in which = the City=20 had used it=97as a public park. =20 Accordingly, we conclude that, pursuant to section = 307.042(e), the=20 GLO may require Landry=92s to enter into a lease, with annual = rental=20 payments, for the right to use and occupy the State-owned = submerged land=20 beneath the Flagship Property.[6]

Conclusion

=20 We affirm the judgment of the trial = court.

=20

&nbs= p; = ; = &= nbsp; =20 Jane Bland

&nbs= p; = ; = &= nbsp; =20 Justice

Panel consists of = Justices=20 Taft, Higley, and Bland.