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NUMBER
13-07-055-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

BROWN WATER
MARINE SERVICE, INC. Appellants,

AND HUGH T.
CHAPMAN,

v.

ARANSAS
COUNTY NAVIGATION

DISTRICT NO.
1, Appellee.

On appeal from the
36th District Court

of Aransas County, Texas.

MEMORANDUM OPINION

Before Justices Yañez, Benavides, and
Vela

Memorandum Opinion by Justice Vela

This is an appeal from a summary
judgment order granted in favor of appellee, Aransas County Navigation
District No.1 ("the District") and against appellants, Brown Water Marine
Services, Inc. and Hugh T. Chapman (collectively "Brown Water"). The
District's motion asked for judgment on the issues of governmental
immunity, inverse condemnation, and breach of contract. The trial court
granted the District's traditional and no-evidence motions for summary
judgment. The three issues raised by Brown Water on appeal are (1) whether
the trial court erred by granting summary judgment on the District's claim
of immunity, (2) whether the trial court erred in granting summary
judgment on Brown Water's inverse condemnation claim, and (3) whether the
trial court erred in granting summary judgment on the contract claim. We
affirm.

I. Background

In 1990, the
District began leasing to Brown Water a submerged
portion of the District's Cove Harbor property in Rockport, Texas. While
negotiating a renewal of this lease in 2004, the District granted Brown
Water a right of first refusal to lease Lots 78 and 79 of the Cove Harbor
property. This was accomplished by letter, dated December 8, 2004. These
lots have bulkheads and adjoin Brown Water's submerged lease.

In January of 2006, the District
leased Lots 78 and 79 to an outside company without first offering Brown
Water the opportunity to refuse to lease the lots. Brown Water sued the
District for breach of contract, wrongful taking, and inverse
condemnation.

The 36th District Court of Aransas
County, Texas, granted Brown Water a temporary injunction effective until
the end of 2006, enjoining the District from entering into any lease
longer than six-months with a party other than Brown Water. In January of
2007, the trial court granted the District's traditional and no-evidence
motions for summary judgment.

II. Standard of
Review

On appeal, a summary judgment is
reviewed de novo. Provident Life & Acc. Ins. Co. v. Knott,
128 S.W.3d 211, 215 (Tex. 2003). A summary judgment can only be
upheld on grounds expressly set forth in the written motion. Roberts
v. Sw. Tex. Methodist Hosp., 811 S.W.2d 141, 144-45 (Tex. App.-San
Antonio 1991, writ denied). Summary judgment is appropriate when there is
no genuine issue of material fact and judgment should be granted in favor
of the movant as a matter of law. KPMG v. Harrison County Hous. Fin.
Corp., 988 S.W.2d 746, 748 (Tex. 1999). Governmental immunity can
properly be asserted in a motion for summary judgment. See Harris
County v. Sykes, 136 S.W.3d 635, 638 (Tex. 2004). When a trial court
grants a summary judgment without stating specific grounds, the summary
judgment must be affirmed if any of the grounds are meritorious. Dow
Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001).

III. Analysis

a. Governmental Immunity

Brown Water claims that the trial
court erred in granting summary judgment in favor of the District on the
issue of governmental immunity, arguing that its agreement with the
District for a right of first refusal in leasing Lots 78 and 79 was a
maritime contract, and the application of maritime law defeats the
District's immunity defense.

The District is a unit of government
created in the manner prescribed in the Texas Water Code. Tex. Water Code
Ann. § 62.021 (Vernon 2004). A navigation district is considered a local
governmental entity. Tex. Loc. Gov't Code Ann. § 271.151(3)(c) (Vernon
2005). While a governmental entity waives its immunity from liability when
it enters into a contract, it does not waive its immunity from suit.
Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006). A waiver
of immunity must be clear and unambiguous. Id. at 332-33. Brown
Water concedes that its contract is barred by immunity if Texas law
applies.
(1) It urges this Court to recognize the agreement between the
parties as a maritime contract and analyze the District's immunity defense
under federal law. Brown Water claims that under federal law, the District
does not enjoy immunity.

The determinative issue is whether the
agreement to grant Brown Water a right of first refusal is a maritime
contract. If it is not a maritime contract, we will apply Texas law, which
supports the District's claim of immunity. If it is, we examine the
propriety of the additional grounds urged in the District's motions for
summary judgment because the trial court granted both Brown Water's
traditional and no-evidence motions for summary judgment.

B. Maritime Contracts

Brown Water makes two claims. First,
it claims that the right of first refusal was a contract for wharfage and,
therefore, a maritime contract. Second, Brown Water urges that the right
of first refusal for lots 78 and 79 was related to a lease of adjacent
submerged lands. Because the adjacent submerged lands were under navigable
waters, the right of first refusal was a maritime contract. The Fifth
Circuit defines a maritime contract as "a contract relating to a ship . .
. or to commerce or navigation on navigable waters." J.A.R., Inc. v.
M/V Lady Lucille, 963 F.2d 96, 98 (5th Cir. 1992) (quoting
Thurmond v. Delta Well Surveyors, 836 F.2d 952, 954 (5th Cir.
1988) (citation omitted)). Agreements that are merely ancillary to
maritime contracts are not maritime contracts. See Theriot v. Bay
Drilling Corp., 783 F.2d 527, 538 (5th Cir.1986) (noting that there
must be a direct and proximate juridical link between the contract and
operating a ship to attach maritime character); Walter v. Marine
Office of Am., 537 F.2d 89, 94 (5th Cir. 1976) (noting that contracts
relating to the construction of vessels are ordinarily not considered
maritime contracts); Carter-Green-Redd, Inc. v. U.S.S. Cabot
Found, 756 F. Supp. 276, 279 (E.D. La. 1991) (noting that an option
contract and a right of first refusal in leasing a vessel did not
constitute a maritime contract because the option and the right did not
directly relate to navigation or operating a vessel). In
Carter-Green-Redd, the Louisiana district court reiterated that,
in order for a contract to be a maritime contract, the subject matter must
directly relate to the operation of a vessel and navigation. Id.
at 278. There, the court said that it was a contract made on land to be
performed on land and that there was no need or justification to resort to
the law of the sea. Id.

Wharfage is the use of a wharf
furnished in the ordinary course of navigation. The James T.
Furber, 129 F. 808, 810 (D.C. Me. 1904). As a general rule, the lease
of a pier or wharf is not a maritime contract unless the lease is tied to
a provision of wharfage for a specific vessel. Simon v. Marine
Terminals Corp., 882 F.2d 1435, 1441 (9th Cir. 1989). There is a
distinct difference between a claim for wharfage and a claim for rent of a
wharf. See id. at 1441. A claim relating to wharfage is a
maritime contract. See id. A contract for a lease of real
property is not a maritime contract. See Bd. of Comm'rs of The Orleans
Levee Dist. v. M/V Belle of Orleans, 439 F. Supp. 2d 1178, 1200 (S.D.
Ala. 2006).

In this case, Lots 78 and 79 have
bulkheads; the docks on its lots adjoin submerged lands, and a lessee
could readily use the docks for loading and unloading. A lessee could also
choose to utilize this property in a number of other ways. In fact, the
summary judgment evidence presented by the District was that Brown Water
intended to put its office on the property in which it claimed a right of
first refusal. The lease here was not for the use of a particular vessel.
The contemplated use of the property went beyond that of tying off boats.

Brown Water claims that its right of
first refusal relates to maritime activity through the lease of maritime
property. However, the agreement provides that if the District
chooses to lease Lots 78 and 79, it must first give Brown Water
the opportunity to either refuse to lease the property or lease the
property at the market rate. The right of first refusal, on its face, does
not relate to maritime law. Further, Brown Water does not hold a contract
with the District to service ships on navigable waters. It merely holds a
right to refuse a lease or further negotiate with the District for such
lease. Under these circumstances, the right of first refusal is too far
removed from maritime activity to abandon Texas law for maritime
law.

Brown Water's right of first refusal
does not directly relate to navigable waters or ships; it relates to a
lease. We will not construe this agreement as a maritime contract based
upon speculative or potential uses of a potential lessee. The agreement to
grant Brown Water the right of first refusal in leasing Lots 78 and 79 was
not a maritime contract. Under Texas law, the District is immune from
Brown Water's breach of contract suit because it is a governmental entity.
There was no waiver. Brown Water's first issue is overruled.

C. Inverse Condemnation

Brown Water contends that the trial
court erred in granting summary judgment in favor of the District on the
issue of inverse condemnation. It attempts to circumvent the District's
immunity from a breach of contract suit by contending that the District
deprived it of a property interest--the right of first refusal--without
compensation and due course of law.

Sovereign immunity bars a
breach-of-contract claim, but it does not shield a governmental entity
from a takings clause action for compensation. Gen. Servs. Comm'n v.
Little-Tex Insulation Co., Inc., 39 S.W.3d 591, 598 (Tex.
2001).

To show a takings under article I,
section 17, of the Texas Constitution, Brown Water "must show that a
governmental actor acted intentionally to take or damage property for a
public use." State v. Holland, 221 S.W.3d 639, 643 (Tex. 2007)
(citing Little-Tex, 39 S.W.3d at 598). Whether particular facts
are enough to constitute a "taking" is a question of law. Little-Tex
Insulation Co., Inc., 39 S.W.3d at 598.

Importantly, the State may "wear two
hats." Id. at 599. The State may act as a party to a contract and
as sovereign. Id. The State, by acting within a color of right to
take or withhold property in a contractual situation, may also act as a
private citizen and not under any sovereign powers. Id.; see
also Holland, 221 S.W.3d at 643-44 (wherein the State was
acting in its contractual capacity when it used a plaintiff's patent;
accordingly, the State was immune from suit because it lacked the
requisite intent to take under its eminent domain powers). The absence of
an express contract between the State and the opposing party, or
uncertainties about the existence of their implied contract, are
immaterial when determining the capacity in which the State is acting.
Holland, 221 S.W.3d at 643.

The District was acting in its
contractual capacity when dealing with Brown Water. Whether the parties
actually formed a contract or not, the District dealt with Brown Water in
a contractual setting. Their dealings resulted in an apparent agreement to
grant Brown Water a right of first refusal in leasing Lots 78 and 79.
Similar to the State's action in Holland, the District lacked the
requisite intent to take under its eminent domain powers when it failed to
give Brown Water its right of first refusal. There was also no evidence
that the District intentionally performed acts resulting in a taking of
property for public use. There was no taking on the part of the District
in this case. We overrule Brown Water's second issue.

IV. Disposition

We hold that the agreement to
grant Brown Water a right of first refusal was not a maritime contract.
Under applicable Texas law, the District is immune from Brown Water's
breach of contract suit. Because the District is immune from Brown Water's
breach of contract suit, this Court need not rule on the trial court's
granting of summary judgment on the issue of breach of contract. Tex. R.
App. P. 47.1.

We further hold that the District did
not act under its eminent domain powers when it deprived Brown Water of
its right of first refusal. The District dealt with Brown Water in a
contractual capacity and thus lacked the necessary intent to perform a
taking under the Texas Constitution. It is unnecessary for the Court to
address Brown Water's third issue as it is not dispositive. See
Tex. R. App. P. 47.1.

We overrule Brown Water's issues and
affirm the trial court's granting of summary judgment in favor of the
District on the issues of immunity and inverse condemnation.

ROSE VELA

Justice

Memorandum Opinion delivered and

filed this 24th day of April, 2008.

1. We note that neither party raises the applicability
of the provision of the Texas Local Government Code providing for a waiver
of immunity if there is a "written contract stating the essential terms of
the agreement for providing goods or services to the local governmental
entity." Tex. Loc. Gov't Code Ann. § 271.151(2) (Vernon 2005). Section
271.151(2) of the local government code does not apply because the claim
at issue here does not concern goods or services. Rather, it involves an
interest in real property. See City of San Antonio v. Reed S.
Lehman Grain, Ltd., No. 04-04-00930-CV, 2007 WL 752197, at *2 (Tex.
App.-San Antonio Mar. 14, 2007, pet. denied) (noting that an easement
dedication contract conveyed only an interest in real property and is not
an agreement for providing goods and services).