McIntyre et al v. Castro et al

Filing 44

ORDER DENYING 21 Motion for Sanctions; DENYING 23 Motion to supplement; DENYING 24 Motion for Leave to File; MOOTING 25 Motion to Dismiss for Lack of Jurisdiction ; MOOTING 28 Motion to Consolidate Cases; MOOTING 33 Motion for Hearing; MOOTING 38 Motion for Referral to ADR/Mediation. Signed by Judge Robert Pitman. (jf) (Additional attachment(s) added on 4/25/2017: # 1 Sixth Amended Original Complaint) (jf).

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION

DAVID McINTYRE,
and
MADELEINE CONNOR
Plaintiffs,
vs.
ERIC CASTRO,
NANCY NAEVE
GARY SERTICH,
LEAH STEWART
and
CHUCK McCORMICK,
Defendants.

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NO. 1:15-CV-001100-RP

SIXTH AMENDED ORIGINAL COMPLAINT FOR DECLARATORY JUDGMENT,
DAMAGES UNDER 42 U.S.C. § 1983 FOR THE DEPRIVATION OF
CONSTITUTIONAL RIGHTS, AND APPLICATION FOR TEMPORARY AND
PERMANENT INJUNCTIONS
TO THE HONORABLE U.S. DISTRICT JUDGE ROBERT PITMAN:
David McIntyre and Madeleine Connor, Plaintiffs, file this Sixth Amended Original Complaint
for Declaratory Judgment, Damages under 42 U.S.C § 1983 for Deprivation of Constitutional
Rights, and Application for Temporary and Permanent Injunctions.
PARTIES
1.
Plaintiff David McIntyre is an individual who resides and owns real property in Travis
County, within the boundaries of the Lost Creek Municipal Utility District/Lost Creek Limited
District. Plaintiff pays ad valorem taxes and utility fees to the District.
2.
Plaintiff Madeleine Connor is an individual who resides and owns real property in Travis
County, within the boundaries of the Lost Creek Municipal Utility District/Lost Creek Limited
District. Plaintiff pays ad valorem taxes and utility fees to the District.
3.
Eric Castro was a Director and President of the Lost Creek Municipal Utility District.
This suit seeks injunctive relief and declaratory judgment against Mr. Castro in his official capacity
as a MUD Director. Plaintiff Connor also sues for compensatory and punitive damages under 42
U.S.C. § 1983 against Mr. Castro in his individual capacity for the deprivation of First and
Fourteenth Amendment rights and for retaliation for engaging in the same.

1

4.
Nancy Naeve was a Director of the Lost Creek Municipal Utility District. This suit seeks
injunctive relief and declaratory judgment against Ms. Naeve in her official capacity as a MUD
Director. Plaintiff Connor also sues for compensatory and punitive damages under 42 U.S.C. §
1983 against Ms. Naeve in her individual capacity for the deprivation of First and Fourteenth
Amendment rights and for retaliation for engaging in the same.
5.
Gary Sertich was a Director of the Lost Creek Municipal Utility District. Plaintiffs bring
this suit seeking injunctive relief and declaratory judgment against Mr. Sertich in his official
capacity as a MUD Director. Plaintiff Connor also sues for compensatory and punitive damages
under 42 U.S.C. § 1983 against Mr. Sertich in his individual capacity for the deprivation of First
and Fourteenth Amendment rights and for retaliation for engaging in the same.
6.
Leah Stewart was a Director of the Lost Creek Municipal Utility District. This suit seeks
injunctive relief and declaratory judgment against Ms. Stewart in her official capacity as a MUD
Director. Plaintiff Connor also sues for compensatory and punitive damages under 42 U.S.C. §
1983 against Ms. Stewart in her individual capacity for the deprivation of First and Fourteenth
Amendment rights and for retaliation for engaging in the same.
7.
Chuck McCormick was a Director of the Lost Creek Municipal Utility District. This suit
seeks injunctive relief and declaratory judgment against Mr. McCormick in his official capacity as
a MUD Director. Plaintiff Connor also sues for compensatory and punitive damages under 42
U.S.C. § 1983 against Mr. McCormick in his individual capacity for the deprivation of First and
Fourteenth Amendment rights and for retaliation for engaging in the same.
JURISDICTION AND VENUE
8.
The Court has subject-matter and supplemental jurisdiction of Plaintiffs’ state-law claims
under the Texas Uniform Declaratory Judgment Act. See 28 U.S.C. § 1367; Tex. Civ. Prac. &
Rem Code § 37.003-.004; Tex. Const. Art. 5, § 8; and Tex. Gov’t Code §§ 24.007 & 24.008.
Under its supplemental jurisdiction, the Court may decide Plaintiffs’ state-law claims of first
impression in accordance with Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938). The Court has
federal-question jurisdiction of Plaintiffs’ First Amendment retaliation claims under 28 U.S.C. §
1331.
9.
Venue is proper in the Western District of Texas, Austin Division, pursuant to Tex. Civ.
Prac. & Rem. Code §§ 15.002(a)(1) and 42 U.S.C. § 1983, as all of the events alleged took place
in Travis County, Texas.
10.
Governmental immunity does not protect government officials sued in their official
capacity for illegal acts performed outside the scope of their government employment. See
Hawkins, et. al, v. El Paso First Health Plan, Inc., 214 SW3d 709 (Tex. App.—Austin 2007, pet.
denied) (trial court correctly denied the Commission’s plea to the jurisdiction because sovereign
immunity does not protect a state agency from a suit brought by a party claiming that the state
agency has acted outside of its authority and seeking to determine the proper construction of the
applicable statutes and to obtain a declaration of the party’s rights under the statutes).

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11.
Taxpayer standing is an exception to the general rule that the plaintiff must show a
particularized injury distinct from that suffered by the public. See Bland Indep. Sch. Dist., 34
S.W.3d at 555-56; Hendee v. Dewhurst, 228 S.W.3d 354, 373-74 (Tex. App.—Austin 2007, pet.
denied). A plaintiff relying on taxpayer standing can seek to enjoin prospective expenditures of
public funds, but cannot recover funds already expended. Williams v. Huff, 52 S.W.3d 171, 180
(Tex. 2001). To establish taxpayer standing, a plaintiff must show that (1) he is a taxpayer, and (2)
public funds are to be expended on the allegedly illegal activity. Id. at 179.
12.
Qualified immunity is an affirmative defense which shields government officials from
personal liability for civil damages under § 1983 “insofar as their conduct does not violate clearly
established statutory or constitutional rights of which a reasonable person would have known.”
Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982). Qualified immunity does not protect the “plainly
incompetent or those who knowingly violate the law.” Malley v. Briggs, 475 U.S. 335, 341 (1986).
When qualified immunity is asserted, a court must determine: (1) whether the allegations or facts,
viewed in the light most favorable to the plaintiff, show that the defendant-officer violated a
constitutional right and (2) if so, whether the constitutional right was clearly established at the time
of the violation. Saucier v. Katz, 533 U.S. 194, 201-02 (2001). The evidence will show that
Defendants are not entitled to a qualified immunity defense, as the rights asserted are clearly
established; and Defendants’ conduct was motivated by evil motive and intent, or that it involved
reckless or callous indifference to the federally protected rights of Plaintiffs. See Smith v, Wade,
461 U.S. 30, 55 (1983) (a plaintiff may recover punitive damages from an officer sued in his
individual capacity). See also, Ex parte Young, 209 U.S. 123 (1908) (holding that suits in federal
courts against state officials in their individual capacity may proceed when the official has acted
unconstitutionally).
FACTS
13.
The Lost Creek Municipal Utility District was created under and was subject to the
authority of Article XVI, Section 59, of the Texas Constitution. See Tex. Const. Art. 16, § 59;
Tex. Water Code §§ 49, et seq.; 54.011, 54.201. A MUD is a political subdivision of the State and
is one of several types of special districts that function as independent, limited governments.
MUDs are authorized by the Texas Commission of Environmental Quality to provide water,
sewage, drainage, fire prevention, and other services within the MUD boundaries. A MUD is
managed by a Board of Directors elected by property owners within the District. Directors serve
four-year terms.
14.
The Lost Creek Municipal Utility District was converted to a Limited District upon fullpurpose annexation by the City of Austin on December 15, 2015. At the time of annexation, all
MUD Directors became Limited District Directors. The tax funds and utility surpluses then
existing with the MUD were transferred to the Limited District upon annexation.
15.
During the early development of the Lost Creek neighborhood, the homeowners were
initially required to fund and build sidewalks in front of their homes. For a variety of reasons, two
likely being practicality and unsightliness, many homeowners never built their sidewalks. For
example, some homeowners could not build a sidewalk without incurring huge expenses because
retaining walls and major excavation would be necessary. More specifically, some homes are
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situated on hills or steep grades that slope directly down to the street curb, which would make the
construction of a sidewalk senseless and prohibitively expensive. And, in some areas, streets
narrowed considerably, due to the street’s passage through canyons and cliff-sides, making the
construction of a sidewalk virtually impossible. Inarguably, sidewalk construction in some parts
of the neighborhood was simply not practical or possible, and the MUD Directors who served for
nearly forty years, did not demand that homeowners build out their sidewalks.
16.
In 2012, a group of homeowners discovered that Director Naeve was to propose a massive
project to install new sidewalks throughout the District, using surpluses from its utility functions
and ad valorem taxes. Specifically, there was a movement initiated by the MUD to build all of the
sidewalks that had never been installed by each original homeowner. In response to the expensive,
unsightly, and impractical plan, a group of homeowners, including Plaintiffs, actively opposed the
plan, and ultimately proposed that the massive sidewalk installation plan be voted on by the
neighborhood. Accordingly, in September 2013, with 50% of the 1,200 homes participating, a
referendum on the sidewalk proposal was held. A super-majority of the voters rejected the plan
(as well as a smaller-scaled plan along Lost Creek Blvd). Plaintiffs and their fellow sidewalk
opponents rejoiced, but the fruit of their political efforts were short-lived.
17. By mid-2015, not only had the MUD secretly installed several stretches of sidewalks
throughout the District in opposition to its constituents’ vote, it began a campaign to install a fourblock length of sidewalks along Lost Creek Blvd.
18.
When Plaintiffs and other taxpayers learned in mid-2015 that the MUD had been installing
sidewalks and were proposing more, in direct contravention of their vote, they sprang into action.
As a result of several open-records requests to Travis County, Plaintiffs discovered that the MUD
and Directors named individually herein were improperly lobbying the County for matching bond
moneys in order to install the sidewalks. It is believed that Director Naeve and Director Stewart
met with County officials and indicated that the neighborhood had changed its position on the
sidewalks (due to an April 1, 2015, cyclist’s fatality on Lost Creek Blvd.) and that the
neighborhood was fully behind the plan to install sidewalks along Lost Creek Blvd. Furthermore,
communications between Director Naeve, Director Stewart, Tom Clark (the former general
manager), and others, revealed that one or more of the Directors improperly influenced a county
engineer (Joe Hall) to issue a report concluding that a sidewalk along Lost Creek Blvd. would
enhance safety. 1
19.
At a regularly-called MUD meeting in August, the Directors issued false data, purporting
to show that all of the homeowners directly affected by the project (with homes bordering Lost
Creek Blvd.) were in favor of the project, except for Plaintiff McIntyre (and one not responding).
Their data, reflected in a map with the homes responding “yes” shaded in blue, indicated that 9 out
of the 11 homes had approved the project. However, one homeowner who was in the audience
respectfully raised his hand and tried to object to the data as incorrect (at least with respect to his
“yes” vote), but he was gaveled down by Director Castro and not allowed to speak. Other
homeowners in the audience tried to speak, apparently to contest the data, and they were gaveled
down by Director Castro as well.
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http://www.statesman.com/news/news/local/lost-creek-board-pursues-sidewalk-plans/nnT6L/
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20. On October 26, 2015, Plaintiff McIntyre presented an application for a temporary restraining
order to the duty judge that week, the Honorable Karin Crump. McIntyre was prepared to argue
that the Directors were poised to vote on the 4-block sidewalk project along Lost Creek Blvd., at
the next regularly-called MUD meeting on October 27, 2015, and that such an action ripened the
controversy. Judge Crump refused the application and noted the refusal on the Court’s docket
sheet. Judge Crump further indicated that McIntyre could return to present his TRO for hearing
after the circumstances presented an emergency.
21.
The next day, at the regularly-called meeting on October 27, 2015, the Directors voted not
to go forward with half of the project; specifically, the part of the project that would have directly
abutted Plaintiff McIntyre’s real property was not approved. However, without any enforceable
agreement to the contrary, the MUD/LD Directors could change course and vote to approve the
project. More importantly, Plaintiffs have alleged throughout this lawsuit that the MUD Directors
lack the authority to spend the funds on the project, and as a result, they enjoy taxpayer standing
to oppose the sidewalk project and future sidewalk projects. See Williams v. Lara, 52 S.W.3d 171,
178-79 (Tex. 2001); cf. Wilson v. Whitmire, NO. 01-03-01059-CV (Tex. App.—Houston [1st.
Dist.] 2004) (plaintiff lacked standing because he did not seek to enjoin future, allegedly illegal
expenditure of public funds).
22.
After his initial application for a temporary restraining order was refused, Plaintiff
McIntyre presented two subsequent applications to the Court for temporary injunctive relief,
because the sidewalk project complained of had commenced and was ongoing. However,
McIntyre’s requests to temporarily stop the project and maintain the status quo were denied. The
improper denial of the TROs, which would have preserved the status quo until a temporary
injunction could be heard, did not eliminate a justiciable controversy. See id.; Pinnacle Gas
Treating, Inc. v. Read, 104 S.W.3d 544, 545 (Tex.2003); see Tex. Civ. Pract. & Rem. Code §
51.014(a)(4) (interlocutory appeal for denial of a temporary injunction).
23.
In an effort to remedy the clear error where Plaintiff McIntyre’s three TROs were denied,
he filed an application for mandamus relief, but it was also denied. See In re David McIntyre, No.
03-15-00707-CV (Tex. App.—Austin 2015) (orig. proceeding). Since McIntyre’s three TROs
were denied, one purportedly for lack of ripeness, and two subsequent denials wherein once the
duty judge stated his reasoning was that “the MUD can do whatever it wants,” Defendants have
argued mootness. See Doc. 3 at ¶¶ 18-19.
24.
During the pendency of this suit and prior to this suit, Plaintiffs have publically criticized
the MUD Directors for the use of tax and utility surplus funds to build sidewalks throughout the
District. Both Plaintiffs have spoken out during citizen comment at MUD meetings and,
additionally, Connor posted complaints of the MUD Directors’ actions on a neighborhood message
board, NextDoor. 2 The Statesman also published an article, wherein Connor was quoted about the
grounds of the lawsuit. http://www.statesman.com/news/news/local/lawsuit-sidewalkunwanted/npfJQ/
Defendants have transcribed and kept a log of Connor’s statements at citizen comment. No other
citizen subject to the MUD/LD’s taxing authority has had their public comments transcribed and
preserved.
2

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25.
Shortly after removing this case to federal court, the MUD Directors issued an electronic
communication to the District residents, commenting in a pejorative way about both Plaintiffs and
the instant suit. See December 9, 2015, Lost Creek Municipal Utility District’s e-UPDATE,
reproduced at http://lostcreekmud.org/default.aspx?section=news&id=490
26.
Since filing the instant suit and complaining about the MUD Directors’ actions, the MUD
Directors have orchestrated a campaign of personal destruction against Plaintiffs. The Directors
and their agents and assigns have lied about Connor and defamed her, and caused her to be
ridiculed in the District for the express reason of filing the lawsuit on behalf of Plaintiff McIntyre.
Further, all of the Defendants participated in an action to recall Plaintiff Connor from her position
as Lost Creek Neighborhood Association president, for the express reason of filing the instant suit
on behalf of Plaintiff McIntyre.3 All of the Defendants were present and facilitated an aggressive
mob on December 13, 2015, wherein approximately 125 residents jeered, shouted down, booed,
cat called, and laughed at Plaintiff Connor for more than two hours during a neighborhood
association meeting, causing Connor severe emotional distress. When residents complained on
NextDoor of Connor’s treatment by the mob, their postings were removed by the NextDoor
neighborhood “leads,” who are friends and/or supporters of the Directors and have stated that they
were angry about the suit brought by Connor. Connor’s access to the website was removed to
completely silence her dissent concerning the deprivation of her first-amendment rights and
retaliation for engaging in the same.
REQUESTS FOR DECLARATORY RELIEF
COUNT ONE
27.
Plaintiffs seek a judicial determination under Texas Uniform Declaratory Judgment Act,
Tex. Civ. Prac. & Rem. Code Ch. 37, that the expenditures of taxpayer and utility-surplus funds
on the construction of sidewalks within the District exceeds the Directors’ authority under the
Texas Constitution and the Texas Water Code, chapters 13, 49 and 54. Specifically, the Directors
have allocated tax funds and utility surpluses to construct sidewalks, and attempt to justify the tax
and utility surplus expenditures by labeling such projects as “recreational facilities” under the
Water Code or for the general “safety” of pedestrians.
28.
Plaintiffs seek a construction of the statute under the Code Construction Act, to determine
whether a “sidewalk” can be construed as a “recreational facility.” See Tex. Civ. Prac. & Rem.
Code § 37.004 (a person whose rights, status, or other legal relations are affected by a statute may
have determined any question of construction or validity arising under the statute and obtain a
declaration of rights, status, or other legal relations thereunder); Tex. Gov’t Code § 311.011(a)
(words shall be read in context with other provisions and construed according to the rules of
grammar and common usage), § 311.021(3) (a just and reasonable result is intended).
29.
The powers and duties of a MUD are limited to the following: the supply of water,
conservation, irrigation, drainage, firefighting, solid waste collection and disposal (including
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All of the Directors signed an undated Petition to recall Connor except for Director Sertich. All of the Directors’
spouses signed the petition. Again, the primary reason for the petition recites that Connor, President of the Lost
Creek Neighborhood Association had a “conflict of interest” in filing the instant lawsuit against the Directors.
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recycling activities), wastewater treatment, deed restriction enforcement, and recreational
facilities. While a MUD can develop, maintain, or acquire parks or “recreational facilities,” MUDs
are prohibited from issuing bonds to pay for these facilities. They can, however, set and charge
user fees. See Tex. Water Code § Sec. 54.201 (“a district shall have the functions, powers,
authority, rights, and duties which will permit accomplishment of the purposes for which it was
created”); see also, Texas Commission on Environmental Quality website,
https://www.tceq.texas.gov/publications/gi/gi-043.html (guide on water districts’ powers).
30.
The construction of sidewalks is not an enumerated power of a MUD, unless a “sidewalk”
is construed to be a “recreational facility,” in and of itself, pursuant to Tex. Water Code §§ 49.461464. That is, even though the Water Code appears to include “sidewalk” in the definition of a
“recreational facility,” the definition is not reasonable or related to the purpose of a MUD, and
must be construed along with other provisions of the Water Code. Tex. Gov’t Code §§ 311.011(a),
.021(3).
31.
The Texas Legislature could not have intended that a “sidewalk,” or a “landscaping,” or a
“greenbelt” standing alone, to be a “recreational facility,” because when construed with other
relevant provisions, such a construction would not make sense. Fleming Foods of Tex., Inc. v.
Rylander, 6 S.W.3d 278, 284 (Tex. 1999) (the cardinal rule of statutory construction is that the
judiciary is to give effect to the intent of the legislature). A sidewalk that follows only one city
block, and does not connect to any other walkway, sidewalk or trail, cannot be simply labeled a
“recreational facility” in an attempt to justify the expenditure of nearly $100,000 of utility surplus
and tax revenue on the project.
32.
Furthermore, a sidewalk that goes nowhere and serves no one cannot be construed as a
“recreational facility” because a MUD would never be able to “charge fees directly to the users of
the [sidewalk]” or “to water and wastewater customers of the district to pay for all or part of the
cost of their development and maintenance,” or enforce the payment of unpaid fees to use a
sidewalk through legal restitution, etc. See Tex. Water Code § 49.464. Therefore, Plaintiffs seek
a construction of the Water Code to hold that the Legislature did not intend to provide for the
construction of sidewalks as self-contained “recreational facilities,” such as a park, pool, or athletic
facility. Rather, the Legislature clearly intended that the word “sidewalk” meant a walkway within
or servicing a true recreational facility, and that such a walkway could be properly constructed
with taxpayer funds. Accordingly, Plaintiffs seek a declaration that the use of taxpayer funds on
sidewalks, as self-contained “recreational facilities” within the District is not authorized by the
Water Code, and are thus, are non-discretionary, ultra-vires acts under Texas law.
COUNT TWO
33.
Plaintiffs seek a declaration that sidewalks may not be built within the District with bond
funds supported by ad valorem taxes. See Tex. Water Code § 49.464 (a district may not issue
bonds supported by ad valorem taxes to pay for the development and maintenance of recreational
facilities). Defendants argue that § 49.464 is inapplicable because the MUD did not issue the
bonds. However, the bonds were purportedly issued by Travis County, which were arguably
supported by ad valorem taxes, at least paid in part by taxpayers within the District. As such,
Plaintiffs seek a declaration that the sidewalk project at issue in this suit violates the funding
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provisions of the Texas Water Code, specifically section 49.464. In any event, Plaintiffs have been
informed that the funds at issue had been “reassigned” by Travis County after the 2013 referendum,
and at the very least, Plaintiffs should be entitled to discovery on the source of the funds supporting
the project and the measures taken by the Directors to obtain the funds.
COUNT THREE
34.
Plaintiffs seek a declaration that certain Directors attempted to improperly influence a
county engineer and a county commissioner, in order to falsely provide legitimacy to the sidewalk
project, and that such actions were not discretionary but ultra vires under Texas law. The powers
and duties of a MUD director are specifically enumerated under the constitution and the water
code. There is nothing in either authority to suggest that MUD directors have the discretion to
manipulate the findings of an independent investigation to influence support for an unauthorized
project. Similarly, there is no authority which authorizes the use of tax and utility surplus funds
for construction projects for general “safety.” The Directors actions were thus ultra vires acts, for
which the law provides a remedy. See City of El Paso v. Heinrich, 284 S.W.3d 366, 372 (Tex.
2009).
COUNT FOUR
35.
Plaintiffs further seek a judicial determination that the sidewalk project approved is
contrary to the will of the Directors’ constituents, and thus should be restrained through the Court’s
equitable powers. Specifically, the Court should decree that Plaintiffs are entitled to equitable
relief because the 2013 ballot initiative constitutes a super-majority vote that demonstrates equities
in Plaintiffs’ favor; i.e., that the Court should exercise its equitable powers and prevent the
construction of the sidewalks on equitable grounds.
36.
Plaintiffs will show imminent harm in that the Directors have constructed a portion of the
plan, which will bring irreparable injury to Plaintiff and the taxpayers of the District. See Texas
Civil Practices and Remedies Code § 65.011 (2/5) (a party performs or is about to perform or is
procuring or allowing the performance of an act relating to the subject of pending litigation, in
violation of the rights of the applicant, and the act would tend to render the judgment in that
litigation ineffectual; irreparable injury to real or personal property is threatened, irrespective of
any remedy at law).
COUNT FIVE
37.
Plaintiffs seek a declaration that the Directors failed to comply with Tex. Water Code §
54.602(b) in establishing its 2015 MUD tax rate, and such a failure renders the action void or
voidable by the Court. Specifically, the water code provides that “in determining the actual rate
to be levied in each year, the board shall consider among other things: (1) the amount which should
be levied for maintenance and operation purposes, if a maintenance tax has been authorized; (2)
the amount which should be levied for the payment of principal, interest, and redemption price of
each series of bonds or notes payable in whole or in part from taxes; (3) the amount which should
be levied for the purpose of paying all other contractual obligations of the district payable in whole
or in part from taxes; and (4) the percentage of anticipated tax collections and the cost of collecting
the taxes.”

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38.
The Directors considered exactly none of the foregoing factors in setting the 2015 MUD
tax rate; rather, the Directors looked to other functioning MUDs that are were then providing utility
services to their residents (Tanglewood, Anderson Mill, etc.) as the sole source of reference for
the imposition of the highest tax rate possible. The evidence will show that the Lost Creek MUD,
then in effect, was providing virtually no authorized services, yet, without considering any of the
factors listed in Tex. Water Code § 54.602(b), the Directors voted to levy a tax on the District’s
taxpayers, including Plaintiffs, at the highest tax rate possible within half a cent. The authorization
of such a tax was not discretionary, but rather, ultra vires, as the MUD was not providing any of
the services authorized under Tex. Water Code § Sec. 54.201. Thus, Plaintiffs seek a declaration
that the Directors failed to comply with the Water Code in setting its tax rate. See id.; Tex. Water
Code § 13.001 (chapter 13 is intended to assure that rates, operations, and services “are just and
reasonable to the consumers and to the retail public utilities”).
COUNT SIX
39.
Plaintiffs seek a declaration that the Defendants’ expenditure of tax funds on sidewalks
violates Article III, § 52 of the Texas Constitution, which prohibits the use of tax funds to enrich
individuals. More precisely, since the creation of the District, individual property owners were
required to pay for the construction of sidewalks from their own personal funds. However, the
current MUD Directors have paid for the construction of sidewalks from ad valorem taxes and
utility surplus funds, causing the unjust enrichment of some residents at the expense of others.
Article III, § 52 of the Texas Constitution provides that “the Legislature shall have no
power to authorize any county, city, town or other political corporation or subdivision of the State
to lend its credit or to grant public money or thing of value in aid of, or to any individual,
association or corporation whatsoever….” Thus, to the extent that sidewalks are held to be a
benefit to individual property values, Plaintiffs seek a declaration that the Directors’ expenditure
of tax funds have benefitted some residents at the expense of others.
REQUEST FOR DAMAGES UNDER 42 U.S.C. § 1983
FOR FIRST AMENDMENT RETALIATION
COUNT SEVEN
40.
Plaintiffs sue the Directors in their individual capacities for compensatory and punitive
damages under 42 U.S.C. § 1983 for the deprivation of their clearly established first and fourteenth
amendment rights to free speech, assembly, and the right to petition the government for redress of
grievances. U.S. Const. amends. I, XIV, §§ 1,5; 42 U.S.C. § 1983; Will v. Michigan Dept. of State
Police, 491 U.S. 58 (1989).
42 U.S.C. § 1983 provides in pertinent part:
Every person who, under color of any statute, ordinance, regulation, custom, or
usage, of any State or Territory or the District of Columbia, subjects, or causes to
be subjected, any citizen of the United States or other person within the jurisdiction
thereof to the deprivation of any rights, privileges, or immunities secured by the

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Constitution and laws, shall be liable to the party injured in an action at law, suit in
equity, or other proper proceeding for redress….
The First Amendment provides that “Congress shall make no law . . . abridging the freedom of
speech . . . or the right of the people peaceably to assemble, and to petition the Government for a
redress of grievances.” U.S. Const. amend. I.
41.

The evidence will show that Plaintiff Connor:

i. Engaged in speech and assembly when she criticized the Directors’ actions during citizen
comment at the Board of Directors’ meetings;
ii. Engaged in speech and assembly when she criticized the Directors’ actions on the
neighborhood message board, NextDoor;
iii. Was retaliated against for speaking out about the Directors’ misuse of tax funds, among
other non-discretionary acts;
iv. Was retaliated against and punished for appearing as counsel of record for Plaintiff McIntyre
in the instant suit;
v. Was retaliated against and punished by a broadly devised campaign of personal destruction,
defamation, and intimidation, at the direction and behest of Defendants, for engaging in her
First Amendment rights.
42.
Defendants, under color of law, took retaliatory action against Plaintiff Connor, either
individually or through agents and assigns, in the following ways:
(a) Connor was slandered and her speech was misquoted in several posts in a neighborhood
message board, in a manner to bring harm, embarrassment, shame, and severe emotional
distress to Plaintiff and her family, and to chill her (and other residents’) federally protected
rights to speak out against government officials. Defendants’ retaliatory actions were
motivated by evil intent, and involved reckless and callous indifference to the federally
protected rights of Connor.
(b) Connor was publically criticized and ridiculed for representing McIntyre in the instant
lawsuit, in a manner to bring harm, embarrassment, shame, and severe emotional distress to
Plaintiff and her family. Defendants’ retaliatory actions, including, inter alia, threats of
professional misconduct for speaking out as a citizen, and organizing a defamatory
campaign to publically punish Connor by misrepresenting Connor’s actions to her
neighbors, with the intent to chill Connor’s speech. Defendants were motivated by evil
intent, and involved reckless and callous indifference to the federally protected rights of
Connor.
(c) Connor was informed on December 2, 2015, that the Lost Creek Neighborhood Association
Board had obtained enough petitions for Connor’s recall as President of that organization
because of the fact that Connor represented McIntyre in the instant lawsuit. All of the
Directors (except one) and their spouses signed the recall petition. Based on the order and
grouping of the signatures, it is evident that the Directors organized and facilitated the recall
effort. As such, Connor has been retaliated against for exercising her right to free speech
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and for representing McIntyre in the instant lawsuit, in a manner to bring harm,
embarrassment, shame, and severe emotional distress to Plaintiff and her family.
Defendants’ retaliatory actions, made through various agents and assigns of the Lost Creek
Neighborhood Association, complain of Connor’s clearly-established protected speech and
repeatedly mention the instant lawsuit and the MUD Directors, which are meant to further
chill Connor’s speech and McIntyre’s right to redress the government of his grievances, and
was motivated by evil intent, and involved reckless and callous indifference to the federally
protected rights of Connor.
(d) Defendants organized and directed a mob of residents and supporters to appear at a Lost
Creek Neighborhood Association meeting on December 13, 2015, in order to punish Connor
for engaging in her First Amendment rights. All of the Directors appeared at the December
13, 2015, meeting and demonstrated agreement and facilitation of the verbally assaultive
mob, in an obvious effort to subject Connor to public scorn, hatred, and ridicule, and cause
her emotional distress, merely for engaging in her First Amendment rights and for
representing McIntyre in the instant suit. In this regard, Defendants’ retaliatory actions were
motivated by evil intent, and involved reckless and callous indifference to the federally
protected rights of Connor.
(e) To further abridge and retaliate against Connor for her speech, Defendants directed the
NextDoor neighborhood “leads” to remove Connor and her supporters’ postings criticizing
the Directors and the Neighborhood Association Board for their retaliatory actions against
Connor. Defendants were also subsequently successful in entirely eliminating any discourse
on the subject by blocking Connor’s access, and at least one other resident’s access, to the
web forum, for speaking out against the Defendants. In this regard, the Directors were
motivated by evil intent, and involved reckless and callous indifference to the federally
protected rights of Connor.
43.

The evidence will show that Plaintiff McIntyre:

i.

Engaged in protected first-amendment activity by publically complaining about the
MUD Directors’ plans and decisions to build sidewalks and for bringing this lawsuit
against the MUD for improper use of his tax funds, and for doing so, he was retaliated
against.

44.
Defendants, under color of law, took retaliatory action against Plaintiff McIntyre in the
following way:
(a) Defendants published and disseminated an “e-UPDATE” newsletter to all residents of Lost
Creek, which ridiculed and sought to embarrass Plaintiff McIntyre for bringing the instant
suit. More precisely, on December 9, 2015, the Directors sent an email communication to
all Lost Creek residents purporting to be an “update” about the lawsuit. However, the
“update” was clearly pejorative and complains of McIntyre’s clearly-established right to
redress the government of his grievances. The “update” was motivated by evil intent, and
involved reckless and callous indifference to the federally protected rights of McIntyre.

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45.
The Directors are not entitled to Qualified/Official Immunity because Plaintiffs’ firstamendment rights were clearly established, and no reasonable official would have conducted
themselves as alleged. Harlow v. Fitzgerald, 457 U.S. 800 (1982) (qualified immunity shields
government officials from actions “insofar as their conduct does not violate clearly established
statutory or constitutional rights of which a reasonable person would have known.”). Under the
First Amendment, it is clearly established that Plaintiffs had the right to free expression, to
peaceably assemble, and to petition the government for access to the courts; and that Defendants
should have known that it was permissible for Plaintiffs to engage in these rights without
punishment, retaliation, or reprisal.
PRAYER
46.
WHEREFORE, PREMSIES CONSDIERED, Plaintiffs McIntyre and Connor respectfully
request recovery of the following relief against Defendants:
a.
That the Court render a declaration under the UDJA that the use of ad valorem taxes and
utility surpluses are not authorized for the construction of sidewalks under the Texas Constitution
or the Texas Water Code;
b.
That the individual Lost Creek MUD Directors, their agents and assigns, are enjoined from
constructing or preparing to construct sidewalks within the District; or otherwise expending ad
valorem taxes or utility surpluses on the construction of sidewalks within the District, and that the
Court void any contract to build sidewalks within the District;
c.
That Plaintiff and similarly-situated taxpayers within the District receive a full refund of
the tax and utility expenditures made in violation of the declaration that the MUD Directors’ ultra
vires actions, as complained of herein, violates the Texas Constitution and the Texas Water Code;
d.
That Plaintiffs be awarded a declaration that the Lost Creek MUD Directors’ levying of
taxes, while providing virtually no authorized services to its taxpayers, violates Texas Water Code
§§ 13.01(c), 54.602(b);
e.
That Plaintiffs be awarded a declaration that expenditure of public funds on sidewalks
violates the Texas Constitution, Art. III, § 52;
f.
That Plaintiffs be awarded a Temporary and a Permanent Injunction, prohibiting that acts
as set forth in paragraphs a & b;
g.
That the Directors are not entitled to qualified/governmental immunity for the violation of
Plaintiffs’ constitutional rights to free speech, assembly, and to petition for redress of grievances;
h.
That the Directors are liable for compensatory and punitive damages under 42 U.S.C. §
1983 for the deprivation of Plaintiffs’ first and fourteenth amendment rights and for retaliation
against them for engaging in the same;
i.

That Plaintiffs be awarded costs of court and attorneys’ fees, and

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j.

Award all other and further relief to which Plaintiffs are justly entitled.
Respectfully submitted,
/s/ Madeleine Connor
Madeleine Connor
SBOT # 24031897
P.O. Box 161962
Austin, Texas 78716-1962
[phone]
No Telecopier
Attorney pro bono for David McIntyre
Attorney pro se for Madeleine Connor

CERTIFICIATE OF SERVICE
I certify that I served notice of the foregoing instrument as indicated on the following persons on
the 27th day of December, 2015:
Lowell Denton and Scott M. Tschirhart, 2500 W. William Cannon Drive, Suite 609, Austin, Texas,
by email at [e-mail] and [e-mail]; and Natalie
Scott, Coats Rose, 901 S. Mopac Expressway, Bldg. 1, Suite 400, Austin, Texas 78746, by email
at [e-mail].
/s/ Madeleine Connor
Madeleine Connor
Attorney pro bono for David McIntyre
Attorney pro se for Madeleine Connor

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