There is additional information here on the Homeowners of Texas site. Bottom line, this home site required special handling because it has expansive soil. This type of soil is very sensitive to moisture content and will swell and shrink as the water content varies. This puts a great deal of stress on a foundation and can lead to early failure. The International Residential Code and International Building code, which our city and the state of Texas have adopted as the baseline building code require special handling for expansive soils. Copies of these codes as adopted by various states can be downloaded here but be warned: these are several hundred pages.
Bottom line, the city can make a case that testing was not specifically required at this site. After all, it had already been done in 2004. They can't get by the fact that these building codes require special handling for foundations in areas of known expansive soil. They dropped the ball and didn't do that.
There is not much we can do for the Montgomeries now but we need to get on top of this because there are many homes in the city that are potentially at risk. Living in a home built on expansive soils requires special care. Simple things like where you plant a garden or how a swimming pool is built or how you water the lawn or use gutters and down spouts all impact expansive soils and the foundation of a home. We need to alert homeowners to the potential problems they face.