Ali Yazdchi v. State of Texas--Appeal from 61st District Court of Harris County

Annotate this Case
Dismissed and Memorandum Opinion filed September 8, 2005

Dismissed and Memorandum Opinion filed September 8, 2005.

In The

Fourteenth Court of Appeals


NO. 14-04-00500-CV


ALI YAZDCHI, Appellant



On Appeal from the 61st District Court

Harris County, Texas

Trial Court Cause No. 04-02083


Appellant, Ali Yazdchi, appeals the trial court=s dismissal of his suit for lack of jurisdiction. Specifically, appellant complains the court erred in granting the State=s plea to the jurisdiction because: (1) the State consented to suit by originally filing suit against him; (2) alternatively, consent is not required because his claim is not one for damages against the State; and (3) consent is not required because his claim is ultimately a Atakings@ claim under the Texas Constitution. We dismiss the appeal for want of jurisdiction.

Factual and Procedural Background

It appears from the record that appellant and numerous members of his family coordinated a large consumer fraud scheme whereby they sold automobiles with tampered odometer readings and/or falsified vehicle histories for vehicles that were previously damaged, flooded, wrecked, or stolen. As a result of appellant=s fraudulent activities, the State confiscated and/or froze all of appellant=s property and assets. Subsequently, the State, through the Texas Attorney General Consumer Protection Division, filed suit against him in the 61st District Court of Harris County, Texas, in cause number 1999-57020.

On April 14, 2000, appellant and the State entered into an agreed judgment and permanent injunction in the case. The twelve-page judgment provided explicit instructions that appellant refrain from any activity involving the purchase or sale of any motor vehicle. The judgment also ordered the appointment of a receiver to manage the collection of appellant=s assets and finances, and further detailed the actions that were to be taken by the State to reimburse defrauded consumers. Specifically, the judgment ordered the following disbursement of appellant=s property: (1) $650,000, title to a 1997 Lexus automobile, and keys to a condominium to appellant as his personal property; (2) $111,500 and title to a Honda automobile to appellant=s ex-wife as her personal property; (3) $100,000 to a Permanent Receiver=s Attorney Trust Account to cover costs of the receiver=s fees, with any remainder going to the State to cover its attorneys fees; (4) $280,000 directly to the State for reimbursement of attorneys fees, investigative costs, and other expenses incurred by the State; (5) $25,000 to the State as a civil fine against appellant; (6) all remaining sums of money to the State to distribute as restitution to defrauded consumers, with the State having Afull discretion@ to distribute the money as long as it obtains releases from the victims in favor of appellant;[1] and (7) all motor vehicles owned by appellant to be sold and the proceeds to be given to the State to distribute to defrauded consumers as the State sees fit.[2]

Four years after entering into the agreed judgment, appellant returned to the 61st District Court and filed suit against the State in cause number 2004-02083. Specifically, appellant sought to: (1) enforce the terms of the agreed judgment; (2) obtain an accounting of monies received and distributed by the State; (3) inspect any releases obtained by the State; and (4) determine the property rights of any excess funds remaining after full distribution to consumers. The State filed a plea to the jurisdiction claiming sovereign immunity. The court held a hearing on the issue on May 7, 2004, and after reviewing the agreed judgment in cause number 1999-57020, granted the State=s plea to the jurisdiction. Accordingly, the court dismissed appellant=s suit.

Plea to the Jurisdiction

In Texas, sovereign immunity deprives a trial court of subject matter jurisdiction for lawsuits in which the state or certain governmental units have been sued, unless the state consents to suit. Tex. Dep=t of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999). In a suit against a governmental entity, the plaintiff must affirmatively demonstrate the court=s jurisdiction by alleging a valid waiver of immunity, and pleading facts showing that the trial court has jurisdiction. Tex. Dep=t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). Where the jurisdictional facts are lacking, the State can file a plea to the jurisdiction. Id.; Jones, 8 S.W.3d at 637. A plea to the jurisdiction is a dilatory plea, the purpose of which is to Adefeat a cause of action without regard to whether the claims asserted have merit.@ Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000). The plea ultimately challenges the trial court=s authority to determine the subject matter of a pleaded cause of action. City of Midland v. Sullivan, 33 S.W.3d 1, 6 (Tex. App.CEl Paso 2000, pet. dism=d w.o.j.); State v. Benavides, 772 S.W.2d 271, 273 (Tex. App.CCorpus Christi 1989, writ denied).

Generally, in resolving issues raised by a plea to the jurisdiction, courts are to look solely to the allegations in the pleadings to determine if sufficient jurisdictional facts are alleged. County of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002). However, when a plea to the jurisdiction challenges the existence of jurisdictional facts, implicating the merits of the plaintiff=s cause of action, the trial court also reviews any relevant jurisdictional evidence. Miranda, 133 S.W.3d at 227; Blue, 34 S.W.3d at 555. In turn, we review a trial court=s ruling on a plea to the jurisdiction under a de novo standard because subject matter jurisdiction is a question of law. See Tex. Natural Res. Conservation Comm=n v. IT Davy, 74 S.W.3d 849, 855 (Tex. 2002).

Here, appellant complains that the trial court=s dismissal of his suit was improper because sovereign immunity does not protect the State in this case. He argues that because his lawsuit arises from or is incident to the prior case, cause number 1999-57020, originally brought by the State, the State necessarily consented to be sued. Alternatively, appellant contends the State has no pecuniary interest in the case and, therefore, sovereign immunity does not apply because the case is not one against the State for money damages. More specifically, appellant analogizes the State=s duty in this case to that of a trustee and claims that because the State has no interest in the funds, he is not suing the State for money damages in a manner that would implicate sovereign immunity. Finally, appellant argues that because the judgment leaves him with a type of remainder interest in any property not distributed to defrauded consumers, his lawsuit necessarily involves a Atakings@ claim under the Texas Constitution to which the State is not immune.

To the contrary, the State contends that appellant may not maintain suit against it because the case involves interpretation of and enforcement of the agreed judgment.[3] Ultimately, the State claims this type of suit is a breach of contract action which is limited by the its sovereign immunity. In addition, the State argues that the case involves no Atakings@ claim because, by consenting to the agreed judgment, appellant gave up any rights he otherwise had to the property. To support this conclusion, the State explains that paragraph 3 of the judgment provides the only property rights retained by appellant, i.e., $650,000, a Lexus automobile, and keys to a condominium explicitly given to appellant as his personal property. All other property, the State argues, is vested in the State to distribute at its discretion.

In ths case, the State=s plea to the jurisdiction challenged the jurisdictional facts which directly implicated the merits of appellant=s cause of action. See Miranda, 133 S.W.3d at 227. Namely, the State challenged appellant=s right to assert the action on grounds that he has no claim other than one for breach of contract. In other words, whether or not the trial court has jurisdiction is entirely predicated on whether or not appellant has any property rights in the disputed property. This inherently requires us to examine the agreed judgment and enforce the judgment accordingly.

An agreed judgment must be interpreted as if it were a contract between the parties and the interpretation is, accordingly, governed by the laws relating to contracts. See Hutchings v. Bates, 406 S.W.2d 419, 420 (Tex. 1966) (holding a child support agreement is largely governed by the rules relating to contracts); Wagner v. Warnasch, 295 S.W.2d 890, 893 (Tex. 1956) (holding a judgment by consent is contractual in nature); Biaza v. Simon, 879 S.W.2d 349, 355 (Tex. App.CHouston [14th Dist.] 1994, writ denied) (holding an agreed or consent judgment is governed by the law of contracts); see also Pate v. Pate, 874 S.W.2d 186, 188 (Tex. App.CHouston [14 Dist.] 1994, writ denied) (AAgreed judgments, once rendered, are contracts between the parties that excuse error and operate to end all controversy between the parties.@). Moreover, the proper way to enforce an agreed judgment such as the instant one is by a lawsuit in the nature of a contract action. Ex parte Jones, 163 Tex. 513, 358 S.W.2d 370, 375 (Tex. 1962). Therefore, by suing to enforce the agreed judgment from cause number 1999-57020, appellant is ultimately suing the State for failure to uphold its agreement, viz., a breach of contract.[4]

It is well settled that sovereign immunity protects the State from claims for breach of contract. See, e.g., Travis County v. Pelzel & Assocs., Inc., 77 S.W.3d 246, 248 (Tex. 2002) (explaining that express legislative consent is required to show that immunity from a breach of contract suit has been waived); Gen. Servs. Comm=n v. Little Tex Insulation Co., 39 S.W.3d 591, 593 (Tex. 2001) (A[T]he State does not waive its immunity from suit for breach of contract simply by entering into a contract . . .@); Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 408 (Tex. 1997) (holding that the act of contracting alone does not waive the State=s immunity from suit and further explaining that legislative consent is still required in order for a private citizen to sue the State on a breach of contract claim). Thus, because appellant=s suit ultimately requires us to interpret the agreed judgment according to contract law principles, his suit directly implicates the State=s immunity from suit for breach of contract. See generally Ex parte Jones, 358 S.W.2d at 375 (explaining that the proper way to enforce an agreed judgment is by a lawsuit in the nature of a contract action); Pate, 874 S.W.2d at 188 (holding that agreed judgments are Acontracts between the parties that . . . operate to end all controversy between the parties@). Therefore, the State is immune from appellant=s lawsuit as far as it seeks to interpret and enforce the agreed judgment.[5]

Takings Claim

Finally, appellant contends he may maintain suit against the State for an unlawful Ataking@of his property. It is true that sovereign immunity does not bar claims brought under the Texas Constitution. See Steele v. City of Houston, 603 S.W.2d 786, 791 (Tex. 1980); Texas Parks & Wildlife Dep=t v. Callaway, 971 S.W.2d 145, 149 (Tex. App.CAustin 1998, no pet.). More specifically, sovereign immunity does not bar an individual from suing under Article I, section 17 of the Texas Constitution, which prohibits the taking, damaging, destruction, or application of private property for public use without adequate compensation. Steele, 603 S.W.2d at 791; see also City of Beaumont v. Bouillion, 896 S.W.2d 143, 149 (Tex. 1995) (explaining that Article I, section 17 provides a limited right to sue the State for compensation).

Section 17 provides, in relevant part, ANo person=s property shall be taken, damaged, or destroyed for or applied to public use without adequate compensation being made, unless by consent of such person.@ Tex. Const. art. I, ' 17 (emphasis added). When a person agrees to give the State his property or otherwise consents to the State=s action, no Ataking@ occurs and the person is precluded from suing the State for compensation.[6]

Here, appellant voluntarily entered into the agreed judgment in cause number 1999-57020. Under the terms of the judgment, he consented to give the State all property and assets other than those specifically listed in paragraph 3. In doing so, he waived his right to sue the State for an unlawful taking. See Green Int=l, Inc., 877 S.W.2d 428, 434B36; Steck Co., 236 S.W.2d at 869. Therefore, appellant has no Atakings@ claim to assert, and the trial court did not err in granting the State=s plea to the jurisdiction.[7]

Accordingly, we overrule appellant=s contentions and, like the trial court, dismiss for want of jurisdiction.

/s/ J. Harvey Hudson


Judgment rendered and Memorandum Opinion filed September 8, 2005.

Panel consists of Justices Yates, Anderson, and Hudson.

[1] Specifically, paragraph 8 of the agreed judgment states, AALL remaining sums of money . . . [should be] transferred to the [State] to be distributed as restitution to injured consumers and business entities. . . . The [State] shall have judgment against [appellant] in the amount of such remaining sums of money. [The State] shall have full discretion to distribute restitution to injured victims and business entities provided that they obtain a release from said victims/entities in favor of [appellant].@ (emphasis added).

[2] Paragraph 9 explained that the State is to Adistribute such proceeds to injured consumers and business entities as [the State] sees fit. [The State] is awarded judgment in the amount of all the net proceeds from the sale of said vehicles.@

[3] The State filed no appellate brief. Thus, in ascertaining the State=s position, we have looked to the original pleadings and the record of the oral hearing held on May 7, 2004.

[4] In fact, both parties have conceded that interpretation of and enforcement of an agreed judgment directly implicate the law regarding breach of contract. Significantly, appellant states in various pleadings AThe State and [appellant] agree on one major point. An Agreed Judgment is to construed [sic] under the principles of contract law. The State and [appellant] obviously disagree over the construction of the Agreed Judgment.@ (Emphasis added.) Thus, appellant=s dispute is essentially one involving interpretation of and enforcement of the agreed judgment as in a dispute involving breach of contract.

[5] In addition, we are not persuaded by appellant=s argument that the State consented to his lawsuit simply because it originally filed an action against him in cause number 1999-57020. Appellant cites two cases for the proposition that once the State sues an individual, that person can, in turn, sue the State for any and all claims which arise from or are incident to the State=s original lawsuit. See State v. Brunson, 461 S.W.2d 681, 684 (Tex. Civ. App.CCorpus Christi 1970, writ ref=d n.r.e.); Trinity River Auth. v. Badders, 453 S.W.2d 304, 308B09 (Tex. Civ. App.CHouston [14th Dist.] 1970, no writ). However, these cases are distinguishable.

First, Brunson and Badders each involved a condemnation action by the State that directly involved the parties= constitutional rights under Article I, section 17 of the Texas Constitution. Therefore, in both cases, the State could not escape liability by claiming sovereign immunity. See Brunson, 461 S.W.2d at 683B84; Badders, 453 S.W.2d at 308B09. Second, the parties never agreed to give their personal property to the State and were seeking payment as just compensation for the Ataking@Cnot enforcement of an agreement with the State. The courts in both cases explained that the parties= lawsuits were so intertwined with the State=s original lawsuits, they necessarily arose from and were a part of the same controversy. See Brunson, 461 S.W.2d at 683B84; Badders, 453 S.W.2d at 308B09. Accordingly, the courts held that sovereign immunity did not protect the State from the lawsuits. See Brunson, 461 S.W.2d at 683B84; Badders, 453 S.W.2d at 308B09.

Although he argues to the contrary, we find appellant=s requested relief is ultimately one for breach of contractCnot one involving his constitutional rights. Moreover, appellant=s current lawsuitCbrought four years after the State=s original suitCseeks an entirely different remedy and, unlike the parties in Brunson and Badders, is not so intertwined as to necessarily be part of the same controversy.

[6] See Green Int=l, Inc. v. State, 877 S.W.2d 428, 434B36 (Tex. App.CAustin 1994, writ dism=d) (holding that even when the State intends to enact a taking, the plaintiff must establish that the State obtained possession without the plaintiff=s consent); Hale v. Lavaca County Flood Control Dist., 344 S.W.2d 245, 248 (Tex. Civ. App.CHouston 1961, no writ) (AArticle I, Sec. 17 of the [Texas] Constitution contemplates that a person=s property may be taken without compensation if such person consents thereto.@) (emphasis added); State v. Steck Co., 236 S.W.2d 866, 869 (Tex. Civ. App.CAustin 1951, writ ref=d) (AWhen an entity voluntarily enters into a contract and delivers [property] to the state pursuant to that contract, the entity thereby consents to the state=s possession of the property.@); see also Palacios Seafood, Inc. v. Piling,Inc., 888 F.2d 1509, 1515 (5th Cir. 1989) (applying Texas law) (AConstitutional taking claims are barred if the aggrieved party consents to the damage.@).

[7] Arguably, appellant also lacks standing to bring his current lawsuit. Standing is an element of subject matter jurisdiction, which a court can raise sua sponte. Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998); Tex. Ass=n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 444B45 (Tex. 1993). When inquiring into standing issues, we look at the pleadings and may consider any additional evidence relevant to the standing issues. See Blue, 34 S.W.3d at 554B55. Therefore, we review the issue of standing as we would review the issue of subject matter jurisdictionCde novo. See Mayhew, 964 S.W.2d at 928.

To establish standing, a person must demonstrate that he maintains a personal stake in the controversy at hand. Tex. Ass=n of Bus., 852 S.W.2d at 446; Hunt v. Bass, 664 S.W.2d 323, 324 (Tex. 1984). To establish standing in order to sue under Article I, section 17 of the Texas Constitution, appellant was required to show the State=s action resulted in a Ataking@ of vested property rights. City of Houston v. Northwood Mun. Util. Dist. No. 1, 73 S.W.3d 304, 309 (Tex. App.CHouston [1st Dist.] 2001, pet. denied). Thus, it was appellant=s responsibility to include enough evidence in the record to show he has an interest in the property and assets at issue. See Ramirez. v. State, 916 S.W.2d 32, 34 (Tex. App.CHouston [1st Dist.] 1995, no pet.). In the absence of such evidence in the record, we will not assume appellant has any interest in the property. See id.