Bahamas Laguna Azure LLC v. City of Royse City, Texas — Entry #1
Case: Bahamas Laguna Azure LLC v. City of Royse City, Texas txnd · 3:23-cv-01517
filed July 07, 2023
What this document is
Docket entry #1 · filed July 07, 2023
Who is involved
- Bahamas Laguna Azure LLC
- City of Royse City, Texas
Why we have it
We follow this case because it names a company we track, although that company is not a party:
- Applied Digital: its name “Applied Digital Corporation” appears in a filing in this case.
…LLC 90 3:23-cv-01805-E McConnell v. Applied Digital Corporation et al 91 3:23-cv-01832-8 Doe v. Dallas…
A free copy from the RECAP archive of federal court filings (mirrored at the Internet Archive), retrieved October 25, 2026. Federal court filings are public records.
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15 page(s), 29,487 characters, converted from the PDF's text layer · plain text.
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IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
BAHAMAS LAGUNA AZURE, LLC, §
Plaintiff, §
§
vs. § CIVIL ACTION NO. _________________
§
CITY OF ROYSE CITY, § Jury Demanded
Defendant. §
PLAINTIFF’S ORIGINAL COMPLAINT
Plaintiff Bahamas Laguna Azure, LLC (“Bahamas”), files its Original Complaint against
the City of Royse City (“City”):
INTRODUCTION
1. This civil action is brought pursuant to 42 U.S.C. §§1983 and 1988, to redress the
City’s unlawful retaliation against Bahamas for exercising its First Amendment right to petition
government for redress of its grievances.
2. Bahamas owns and is attempting to develop certain property (the “Bahamas
Property”) located within the City’s corporate limits and within its extraterritorial jurisdiction
(“ETJ”).
3. Development of the Bahamas Property requires Bahamas to secure water and sewer
utility service and to plat its property.
4. Under Texas law, Bahamas has the right to obtain the requisite utility services from
the City pursuant to City Certificates of Convenience and Necessity (“CCNs”) or, if the City
refuses to provide them, to provide those services for itself through other lawful means. Either
route requires that the City communicate with Bahamas about, and act upon, Bahamas’
development requests.
5. Under current Texas law, to proceed with development of its property, Bahamas is
required to plat its property in accordance with the City’s subdivision ordinance.
ORIGINAL COMPLAINT – PAGE 1
6. In a circular fashion, the City’s subdivision ordinance requires that Bahamas
simultaneously: (a) obtain final plat approval of the Bahamas Property before the City will provide
Bahamas with water and sewer service under the City CCNs; and (b) demonstrate that adequate
water and sewer capacity exists to serve the Bahamas Property, before Bahamas’ final plat can be
approved.
7. The City purports to implement its development ordinances and requirements for
property within its ETJ through City staff, based upon various unwritten policies and procedures
which the City does not publish and which it has actively concealed from Bahamas.
8. According to the City, when a property owner seeks to develop property within the
City’s ETJ, the City’s ordinary custom, policy, and practice is to engage in a collaborative process
involving: (a) a determination whether the property is located within the City’s CCN service area;
(b) a dialogue to discuss what utility infrastructure may be required to comply with the City’s
subdivision ordinance; and (c) the negotiation and entry into a service agreement.
9. The City admits that no development in its ETJ has ever obtained final plat approval
(and utility services under the City CCNs), without the City engaging in the collaborative process
described in Paragraph 8.
10. After more than a year of unsuccessful attempts to obtain information from the City
concerning its various unwritten customs, policies, and practices for obtaining water and sewer
utility services under the City CCNs, and as an alternative path to obtain to obtain the requisite
services necessary for it to develop the Bahamas Property, Bahamas exercised its constitutionally-
protected right to petition for redress, by filing state judicial and administrative proceedings to
obtain the requisite information and to compel the City to comply with its statutory obligations or
to pursue other lawful alternatives for service.
ORIGINAL COMPLAINT – PAGE 2
11. Specifically, Bahamas filed: (a) a petition for pre-suit discovery in Rockwall
County District Court pursuant to TEX. R. CIV. P. 202, to obtain information about what the City
contended Bahamas must do to obtain utility services pursuant to the City CCNs; (b) an application
with the Texas Commission on Environmental Quality (“TCEQ”) for a wastewater permit to
provide service to its property; (c) administrative proceedings with the Texas Public Utility
Commission (“PUC”), to compel the City to honor its obligations under its CCNs; (d) an
administrative proceeding before the TCEQ, for authority to form a municipal utility district to
provide certain utility services; and (e) a petition with the City seeking to deannex certain Bahamas
property located within the City’s corporate limits (collectively, “the Petitioning Conduct”).
12. Because of Bahamas’ Petitioning Conduct, and in retaliation for Bahamas
exercising its constitutionally-protected rights of access to the Texas courts and administrative
agencies, the City: (a) sued Bahamas and two of its corporate officials, disclaiming that Bahamas
had any right to the information or relief it sought; and (b) refused to engage with Bahamas in the
collaborative process that, under the City’s unwritten policies and procedures, the City admits is a
condition precedent to obtain plat approval (and the corresponding utility service required for plat
approval).
13. The City’s conduct interferes with Bahamas’ First Amendment right to petition
Texas courts and administrative agencies for redress of Bahamas’ various grievances against the
City and has caused, and continues to cause, Bahamas to incur damages, costs, expenses, and
attorneys’ fees compensable under 42 U.S.C. §§1983 and 1988.
PARTIES
14. Plaintiff Bahamas Laguna Azure, LLC, is a Wyoming limited liability company
with its principal place of business located at 2101 Cedar Springs Road, Suite 700, Dallas, Texas
75201.
ORIGINAL COMPLAINT – PAGE 3
15. Defendant City of Royse City is a Texas home-rule municipal corporation with its
principal office in Royse City, Texas. The City may be served by delivering a copy of the summons
and of the complaint to the City Secretary, 305 N. Arch Street, Royse City, Texas 75189.
JURISDICTION AND VENUE
16. The Court has jurisdiction under 28 U.S.C. §1331, because this is a civil action
arising under the Constitution and laws of the United States.
17. The Court also has jurisdiction over this lawsuit under 28 U.S.C. §1343(a)(3) and
(a)(4), to redress the City’s deprivation of Bahamas’ First Amendment rights under color of law,
ordinance, regulation, or custom.
18. Venue is proper in this District and Division under 28 U.S.C. §1391(b)(1) and (2)
because the City is a municipal corporation that lies within this District and Division and a
substantial part of the events or omissions giving rise to Bahamas’ claims occurred in this District
and Division.
FACTUAL BACKGROUND
A. The Bahamas Development.
19. Bahamas owns and is developing the Bahamas Property – approximately 541.94
acres of property located generally south of the City in Rockwall County. The Bahamas Property
includes 111.311 acres inside the City’s corporate limits and 430.626 acres outside the City’s
corporate limits but within the City’s ETJ.
20. All of the Bahamas Property is located within areas covered by City CCNs for water
and wastewater service.
21. Under Texas law, Bahamas has statutory rights either to obtain the requisite utility
services from the City under the CCNs or, if the City refuses to provide those services, to provide
ORIGINAL COMPLAINT – PAGE 4
them for itself through other lawful means. Either route requires that the City communicate with
Bahamas about, and act upon, Bahamas’ development requests.
B. The City’s Unwritten Policies for Implementing its Development Ordinances.
22. Under the City’s utility ordinance, a property owner cannot obtain water or sanitary
sewer service under the City’s CCNs unless and until the City has approved a final plat for the
property.
23. However, under the City’s subdivision ordinance, a property owner cannot obtain
a final plat for a development unless and until it has demonstrated the adequacy of water and sewer
system capacity to service the proposed development site.
24. The prevalent municipal standard and practice by which a Texas property owner
demonstrates as part of the platting process that sufficient future utility capacity will be in place to
service a proposed development, is to request and obtain from a utility provider what is commonly
referred to as a “Will Serve” letter. A “Will Serve” letter evidences that a utility provider will have
sufficient utility capacity to serve a proposed development and that, subject to whatever conditions
may be stated in the letter, the utility provider commits to do so.
25. The City, however, does not follow the prevalent municipal standard and practice
for issuing utility service commitments.
26. Instead, the City has an unwritten and undisclosed municipal policy that: (a) it will
not provide a property owner with a “Will Serve” letter (or utility commitment); (b) it will not
respond to any utility request that it interprets to be a request for a future utility commitment or a
“Will Serve” letter; and (c) it does not disclose to property owners who seek “Will Serve” letters
or utility commitments either that it has a policy against issuing any such commitment or that it
also has a policy of not responding to any such request.
27. The City claims that it follows an unwritten and “case-specific” practice of
ORIGINAL COMPLAINT – PAGE 5
requiring a property owner/developer who seeks utility services under the City’s CCNs to engage
in a dialogue with the City Engineer and certain other City staff about a proposed development’s
projected water and sewer requirements and the City’s present and future capacity to fulfill those
requirements.
28. The City Engineer makes the final determination whether City water and sanitary
sewer systems are capable of handling the density required by a developer’s service request and
whether a developer will or will not receive water and sewer service under City CCNs.
29. The City has no written standards or published policies which govern the City
Engineer’s review and assessment of a property owner’s request for water or sewer service.
Instead, the City Engineer and City staff reviews all such requests on a case-by-case basis.
30. Assuming that the City participates in the collaborative dialogue with a property
owner that it claims is its customary practice and condition for obtaining final plat approval (and
satisfaction of the requirement to demonstrate the adequacy of future utility services), the City
requires a property owner to enter into a service agreement with terms acceptable to the City.
31. The City’s policy and practice of following unwritten policies and procedures to
respond to requests for utility services on an ad hoc and case-by-case basis effectively affords the
City an absolute veto right over any proposed development that does not satisfy the City –
regardless of however arbitrary or capricious the City’s demands may be.
32. If the City refuses to engage in a collaborative dialogue with a property owner about
the required level of utility service, and refuses to enter into a service agreement, a property owner
cannot plat its property and, consequently, cannot develop its property.
33. That is precisely what has happened here.
34. Once Bahamas initiated judicial and administrative proceedings regarding its utility
service and development requests, and because Bahamas engaged in its Petitioning Conduct, the
ORIGINAL COMPLAINT – PAGE 6
City sued Bahamas and refused to engage with Bahamas in the collaborative process that, under
the City’s unwritten policies and procedures, the City admits is a condition precedent for a property
owner to obtain plat approval (and the corresponding utility service required for plat approval).
35. The actions by the City in suing Bahamas and refusing to engage with Bahamas in
a collaborative dialogue regarding Bahamas’ desired development of the Bahamas Property is
retaliatory conduct pursuant to a municipal custom, policy, and practice directed and authorized
by its City Council, City Attorney and/or other City legal counsel.
C. Bahamas’ Water and Sewer Commitment Request to the City.
36. On March 3, 2022, Bahamas submitted a Request for Water and Sanitary Sewer
Commitment to the City (the “2022 Request”).
37. On multiple occasions thereafter, Bahamas sought updates from the City about the
status of its pending 2022 Request, but the City did not: (a) respond to the 2022 Request; (b)
disclose to Bahamas that the City considered the 2022 Request to be a request for a “Will Serve”
letter and that under the City’s unwritten policies, the City would not grant a “Will Serve” request;
(c) disclose to Bahamas that under its unwritten policies, the City would not respond to such a
request; or (d) disclose to Bahamas that under its unwritten policies, Bahamas would be expected
to engage in a collaborative dialogue initiated by the City and be required to enter into a service
agreement containing terms satisfactory to the City.
D. Bahamas’ Petitioning Conduct Related to Its 2022 Request.
38. On July 1, 2022, Bahamas filed an application for a TCEQ wastewater permit to
provide service to its property (the “TCEQ Permit Application”).
39. On September 8, 2022, due to the City’s refusal to act upon or respond to the 2022
Request, Bahamas filed a TEX. R. CIV. P. 202 petition in Rockwall County District Court, seeking
ORIGINAL COMPLAINT – PAGE 7
to obtain information about the rationale for the City’s inaction and refusal to communicate about
the 2022 Request (the “Rule 202 Petition”).
40. On September 14, 2022, Bahamas filed a PUC complaint, alleging City impairment
of water and sanitary sewer service, based upon the City’s refusal or failure to commit to providing
retail water service and retail wastewater service to the Bahamas Property within the territory
covered by the City’s CCNs (the “PUC Complaint”).
41. On September 14, 2022, Bahamas petitioned the TCEQ to create Rockwall County
Municipal Utility District No. 11 (the “TCEQ Petition”), to facilitate Bahamas’ future ability to
provide the requisite utility services to its property should the City continue to refuse to do so.
E. The City’s Suit against Bahamas and Refusal to Process Bahamas’ 2022 Request and
2023 Request Due to Bahamas’ Petitioning Conduct.
42. In retaliation for Bahamas’ Petitioning Conduct, on November 3, 2022, the City
sued Bahamas and two of its corporate officials in Texas state court, disclaiming that Bahamas
had any right to the information or relief it sought concerning the development of its property.
43. Pursuant to its unannounced municipal policy of not processing development
requests once the City became adverse to a property owner in judicial or administrative
proceedings, after Bahamas engaged in its Petitioning Conduct, , City staff did not engage with
Bahamas on its development requests.
44. The City, however, did not inform Bahamas that, because of its Petitioning
Conduct, the City would not communicate with Bahamas about its development requests or take
any actions on any such requests.
45. Not until mid-November 2022, did the City reveal in a filing with the PUC what it
claimed were its previously undisclosed procedures for processing inquiries from property owners
about water and sewer utility services under the City CCNs.
ORIGINAL COMPLAINT – PAGE 8
46. On November 18, 2022, the City formally responded to the PUC Complaint,
claiming for the first time that “it is not the policy of the City to issue ‘Will Serve’ letters,” (even
though Bahamas’ 2022 Request had been submitted on March 3, 2022 – eight months earlier) and
that Bahamas had not followed various heretofore undisclosed and unwritten City procedures to
obtain water or sanitary sewer services from the City. According to the City, the “typical
procedure” it follows when it receives a utility service request is to: “(i) require a CCN check to
ensure that the property to be served is within the City’s CCN service area; (ii) engage in pre-
application meetings with the applicant to discuss what utility infrastructure will be needed in order
to connect to the City’s existing facilities, in accordance with the City’s subdivision regulations;
and then (iii) negotiate and enter into a service agreement.” Per the City, under its unwritten and
previously-undisclosed procedure, “[t]hen, and only then, service capacity may be reserved by the
applicant.”
47. Conspicuously absent from the City’s PUC response was any disclosure that: (a)
when a property owner seeks legal relief from a judicial or administrative body (like the PUC), as
a matter of municipal policy the City stops processing utility service requests under its “typical
procedure”; (b) the City’s supposed “typical procedure” for processing utility service requests is
an unwritten practice that is nowhere published and is applied on an ad hoc and case-by-case basis;
(c) the City has an unwritten and undisclosed policy of neither granting nor responding to what the
City considers to be a “Will Serve” letter request; and (d) the City has no procedure for accepting
or evaluating any application for water or sewer utility service under its CCNs, because no such
application exists for what it terms “non-standard” service requests.
48. On November 30, 2022, Bahamas and the City met to discuss various development
issues related to the Bahamas Property, but the City still refused to engage with Bahamas or act
on the 2022 Request.
ORIGINAL COMPLAINT – PAGE 9
49. On January 5, 2023, Bahamas asked the City whether additional information was
necessary for approval of the 2022 Request, but the City still did not respond.
50. On March 10, 2023, the City formally responded to the TCEQ Petition, claiming
for the first time that Bahamas had not provided “a reliable, consistent quantity of water and sewer
service needed for [the Bahamas Property].”
51. Conspicuously absent from City’s TCEQ response was any disclosure that,
pursuant to municipal policy, the City earlier had stopped all processing of the 2022 Request once
Bahamas filed the TCEQ Permit Application, Rule 202 Petition, the PUC Complaint, and the
TCEQ Petition, and City staff had stopped engaging with Bahamas on the 2022 Request.
52. On May 11, 2023, to address and resolve whatever uncertainty the City feigned
about the quantity of water and sewer service Bahamas desired, Bahamas resubmitted its water
and sanitary sewer service request (the “2023 Request”).
53. In its 2023 Request, Bahamas recited the number of reliable consistent quality
equivalents needed for the Bahamas Property and made no reference to any request for a supposed
“Will Serve” letter. Bahamas also attached an updated development plan.
54. The City still has not taken any action on either the 2022 Request or the 2023
Request, although it has recently represented that it will meet with Bahamas Because of the City’s
repeated obfuscation, delays and retaliatory conduct, however, Bahamas has already sustained
damages and incurred needless expenses as the direct result of the City’s retaliatory conduct.
F. The City Has Retaliated against Bahamas for Exercising Its First Amendment Rights.
55. The City’s persistent inaction, failure to communicate, failure to disclose, and
active concealment of what it now contends after-the-fact are its various unwritten policies and
procedures for obtaining water and utility service prompted Bahamas to file the TCEQ Permit
Application, Rule 202 Petition, PUC Complaint, and TCEQ Petition, to obtain redress.
ORIGINAL COMPLAINT – PAGE 10
56. Bahamas’ Petitioning Conduct is conduct protected under the First Amendment to
the United States Constitution, specifically including the rights of access to the courts and relevant
administrative agencies.
57. In direct response to and in retaliation for Bahamas’ Petitioning Conduct, pursuant
to a municipal custom, policy, and practice directed and authorized by its City Attorney and/or
other City legal counsel, the City refused to respond to the 2022 Request, refused to respond to the
2023 Request, and refused to engage in what the City claims is its “typical procedure” for
processing utility service requests.
58. In so doing, the City has unlawfully retaliated against Bahamas for Bahamas’
exercise of its First Amendment right to petition the government for redress of its grievances.
G. The City Is a “Person” under 42 U.S.C. §1983.
59. The City is a suable person under 42 U.S.C. §1983.
60. At all relevant times, the City officials and staff who have refused to respond to
Bahamas’ 2022 Request and 2023 Request, and who have refused to engage in what the City now
claims is its “typical procedure” for processing utility service requests under the City CCNs
(including but not limited to the City Attorney or other City legal counsel and City Engineer), were
municipal officials, agents, and/or employees of the City and duly authorized to take those actions
on the City’s behalf.
61. The referenced municipal officials were clothed by the City with the authority to
make official municipal government policy and decisions with respect to the provision of utility
services under the City’s CCNs, and to implement such policies and decisions.
62. The retaliatory conduct by City officials therefore represents the City’s official
governmental policy – albeit unwritten.
ORIGINAL COMPLAINT – PAGE 11
CAUSE OF ACTION
Civil Action under 42 U.S.C. §1983 for Deprivation of Bahamas’
First Amendment Right to Petition the Government for Redress of Grievances
63. Bahamas incorporates the foregoing paragraphs as if specifically restated at length
herein.
64. The City’s deprivation of Bahamas’ right to petition violates 42 U.S.C. §1983.
65. At all relevant times, Bahamas possessed a clearly-established right to petition the
government for redress of its grievances under the First Amendment to the United States
Constitution.
66. At all relevant times, Bahamas’ right to petition the government for redress of its
grievances encompassed its right to avail itself of: (a) the Texas state courts, by filing the Rule 202
Petition in Rockwall County District Court on September 8, 2022, and (b) the Texas administrative
agencies, by filing the TCEQ Permit Application on July 1, 2002 and the PUC Complaint and the
TCEQ Petition on September 14, 2022.
67. The City has intentionally interfered with and violated Bahamas’ right to petition
the government for redress of its grievances by deliberately stopping consideration of, and refusing
to process, Bahamas’ development requests and requests for utility services, because of Bahamas’
Petitioning Conduct.
68. The City’s interference with Bahamas’ Petitioning Conduct is evidenced, among
other things, by the fact that the City Engineer – who the City has identified as its final policymaker
regarding the adequacy of water and sanitary sewer service capacity for a development site like
the Bahamas Property – has testified that, pursuant to City policy promulgated by the City Attorney
and/or the City’s other legal counsel, because of Bahamas’ Petitioning Conduct, she and City staff
stopped any efforts to follow the City’s typical procedure for processing utility requests under the
City CCNs, with respect to the Bahamas Property.
ORIGINAL COMPLAINT – PAGE 12
69. The City’s refusal to follow its typical procedure for processing Bahamas’ request
for utility service under the City CCNs, because of Bahamas’ Petitioning Conduct, is a retaliatory
action violative of Bahamas’ First Amendment right to petition the government for redress of its
grievances.
70. The City’s retaliatory actions, which have caused Bahamas’ injury, are the result of
official City policy, custom and practice, which has been the moving force for the violation of
Bahamas’ constitutional rights.
71. The City’s retaliatory actions reflect the City’s official policy, custom and practice,
as made and implemented by: (a) its City Council through formal action on October 25, 2022,
when in a public meeting the City Council expressly authorized the City Attorney to take “any
legal action necessary to defend against the claims put forth by Bahamas;” as well as (b) those
whose edicts or acts may fairly be said to represent official policy, which includes both the City
Attorney and City Engineer.
72. Either the conduct by the City Attorney, City Engineer, and City staff is being
carried out pursuant to the official City policy, expressly authorized by City Council, in which
event it represents the official municipal policy, custom and practice of the City, for which the
City is liable under 42 U.S.C. §1983; or, if not, then the conduct by the City Attorney, City
Engineer and City staff, which violates Bahamas’ clearly-established constitutional right to
petition under the First Amendment to the United States Constitution, is ultra vires, those
individual public officials are not entitled to immunity for their actions, and they ultimately may
be held personally liable for their retaliatory conduct.
73. As a result of the City’s retaliatory conduct, Bahamas has been unduly delayed and
unable to proceed with its development of the Bahamas Property, which has caused it to sustain
ORIGINAL COMPLAINT – PAGE 13
damages including, but not limited to, lost or foregone development profits, increased costs, and
expenses, including fees attributable to its professional advisors.
74. All of Bahamas’ damages have been proximately caused by the conduct of City
officials, agents, and/or employees acting in their official capacities, under color of law and
pursuant to official municipal policies, customs, and/or practices.
75. In addition to compensatory damages, Bahamas seeks a declaratory judgment that
the City has violated its First Amendment right to petition pursuant to 28 U.S.C. §§2201(a) and
2202.
76. Bahamas also seeks reasonable attorneys’ fees as part of the costs authorized to the
prevailing party in an action pursuant to 42 U.S.C. §1983, predicated upon 42 U.S.C. §1988.
JURY DEMAND
77. Bahamas demands a jury trial on all issues so triable.
PRAYER
78. Bahamas requests the following relief:
a. A declaration that the City deprived Bahamas of Bahamas’ First Amendment
right to petition the government for redress of grievances;
b. Compensatory damages in the amount proven at trial;
c. Reasonable attorneys’ fees and costs pursuant to 42 U.S.C. §1988(b);
d. Any and all expert fees incurred by Bahamas, pursuant to 42 U.S.C. §1988(c);
and
e. Such other and further relief as this Court may deem just and proper.
ORIGINAL COMPLAINT – PAGE 14
Respectfully submitted,
/s/ Barry Abrams
Barry Abrams
Attorney-in-Charge
Texas Bar No. 00822700
BLANK ROME LLP
717 Texas Avenue, Suite 1400
Houston, Texas 77002
(713) 228-6601
(713) 228-6605 (fax)
[email protected]
Jeffrey M. Tillotson
Texas Bar 20039200
TILLOTSON JOHNSON & PATTON
1201 Main Street, Suite 1300
Dallas, Texas 75202
(214) 382-3040
[email protected]
ATTORNEYS FOR PLAINTIFF
BAHAMAS LAGUNA AZURE, LLC
ORIGINAL COMPLAINT – PAGE 15