City not liable for takings claim because of alleged failure to enforce ordinances against neighboring property owner/developer

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City of Mason v. William Robin Lee, et al.  04-18-00275-CV (Tex. App. – San Antonio, Nov. 7, 2018).

This is an interlocutory appeal in a regulatory takings case where the Fourth Court of Appeals reversed the denial of the City’s plea to the jurisdiction and dismissed the takings claims.

The Zeschs’ trust asserted they owned property adjacent to or downhill from property owned by Tyler and Reyeses. The City approved a minor plat and Reyeses began constructing a single-family residence. The Zeschs assert the development caused increase water runoff damaging the property. Additionally, the Zeschs assert the construction generated nuisance level noise and dust. They assert the City committed a regulatory taking by approving the plat, then refusing to enforce various City ordinances against Reyeses. The City filed a plea to the jurisdiction, which was denied. The City took this interlocutory appeal.

The court first noted a justiciable controversy still exists even though the Zeschs settled with Tyler and Reyes and now own the property since a question remains as to whether the Zeschs’ property was damaged due to the City’s actions. Next, to state a valid takings claim, a plaintiff generally must allege: (1) an intentional governmental act; (2) that resulted in his property being taken; (3) for public use. The crux of the Zeschs claims is that the City failed to impose applicable regulations to the subdivision and to the property owned by the Reyeses. The Texas Supreme Court and the Fourth Court have recognized “the law does not recognize takings liability for a failure to” act. A municipality’s failure to enforce applicable zoning ordinances and special permit restrictions does not constitute a regulatory taking.  The court also cited to precedent noting that if the government’s alleged affirmative conduct is nothing beyond allowing private developers to use their property as they wish, the more appropriate remedy is a claim against the private developers rather than a novel taking claim against the government.  Interestingly, in a footnote, the court held that the Penn Central analysis (applicable when a regulation unreasonably interferes with a property owner’s use and enjoyment of the property) does not apply in this type of case because the Zeschs were not complaining of regulations applied to them, but of the lack of regulations applied to others. No intentional conduct occurred so the plea should have been granted.

If you would like to read this opinion click here. Justice Martinez, Justice Chapa and Justice Rios.  Memorandum Opinion by Justice Rios.  The docket page with attorney information can be found here.

Zoning amendment was not retroactive and property owner had no vested interest in perpetual use of his property for a specific purpose says Dallas Court of Appeals

 

Hinga Mbogo, et al. v. City of Dallas, et al. 05-17-00879-CV (Tex. App. – Dallas, June 19, 2018)

This is an appeal from an order granting the City Defendants’ plea to the jurisdiction in a constitutional challenge to zoning laws. The Dallas Court of Appeals affirmed the granting of the plea.

Hinga leased land and opened a general repair shop on Ross Avenue in Dallas, Texas, in 1986. At that time, the City’s zoning ordinances allowed automobile-related businesses on Ross Avenue. After performing a study which found automobile-repair shops were a concern in the area based on the connected roads and services in the area, the City amended its zoning ordinance in 1988 prohibiting such uses. At that time, Hinga was fully aware that continuing his business became a “nonconforming use.” In 1991, Hinga purchased the property, expanded and upgraded knowing the property was nonconforming. In 2005 the City again amended the zoning ordinance and codified specific provisions related to non-conforming uses and provided deadlines. A property owner could appeal to the board of adjustment to extend deadlines to comply with the requirements. The BOA gave Hinga a new compliance date of April 13, 2013. Hinga then received a zoning change and SUP which expired in 2015. Hinga applied for a new SUP in February 2016, which was denied. The City filed suit seeking a permanent injunction to prevent operations and sought fines of $1,000 per day. Hinga counterclaimed and brought in various City officials. The City defendants filed a plea to the jurisdiction, which was granted. Hinga appealed.

Hinga argues the City’s ordinances, as applied to him, are unconstitutionally retroactive. A retroactive law is one that extends to matters that occurred in the past. Hinga asserted in 2005 and 2013 he had no notice the City would at some point make his use illegal. However, a law is not retroactive because it upsets expectations based in prior law.  Further, there are strong policy arguments and a demonstrable public need for the fair and reasonable termination of nonconforming property uses. In 2005 the City’s ordinance change allowed the owner of a nonconforming use to apply for a later compliance date if the owner would not be able to recover his investment in the use by the designated conformance date. The ordinance did not change any use but rather, it prospectively altered a property owner’s future use of the property. The 2013 ordinance likewise set a deadline for when it expired. As a result, the ordinances are not retroactive. Additionally, the court noted not all retroactive laws are unconstitutional. Here, any interest that Hinga had in the use of his property is not “firmly vested.” There is no bright-line rule and, generally speaking, an individual has no protected property interest in the continued use of his property for a particular purpose. The process provided likewise did not deprive Hinga of due process or single him out in any respect. The City allowed Hinga to run a business from 1991 through 2015 as either a nonconforming use or under a SUP; however, his use became illegal once his SUP expired. Hinga’s position under his takings argument appears to be that any restriction on his desired use of the property results in unconstitutional damage or destruction to his property. That is simply not the case as he had no vested right to perpetual, guaranteed use of his property in a specific way. As a result the plea was properly granted.

If you would like to read this opinion click here. Panel consists of Justice Bridges, Justice Myers and Justice Schenck. Memorandum Opinion by Justice Bridges. The docket page with attorney information can be found here.

Tenant’s lease language meant it did not have standing in condemnation suit

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Pizza Hut of America, LLC v. Houston Community College System, 01-17-00101-CV (Tex. App. – Houston [1st Dist.], December 19, 2017).

This is a condemnation suit where the central issue is a tenant’s standing in a condemnation suit and claim for a pro rata share of the award. The First Court of Appeals held the tenant had no standing.

Pizza Hut was a tenant of the Woodridge Plaza Shopping Center when the Houston Community College  System (“HCCS”) condemned the property. As part of the condemnation proceedings, a condemnation award of $427,100 was designated to be paid to all of Woodridge Plaza’s tenants, and Pizza Hut sought $7,100 as its pro rata share.  The trial court concluded, based on language in Pizza Hut’s lease, it had no standing and was not entitled to any of the award. Pizza Hut appealed.

The Pizza Hut lease with the prior owners had a condemnation clause noting “[t]he Condemnation Award shall belong to the Landlord, however, Tenant shall be entitled to the Unamortized Cost of Tenant Improvements, plus Tenant’s relocation expenses as determined by the condemning entity or court of law.”  After condemnation, Pizza Hut continued operating its business at the Woodridge Plaza location—using its established equipment and improvements—at a profit and without interruption of physical impairment by the condemnation. In April 2016, while the condemnation proceedings were still pending, Pizza Hut sold all ninety of its Houston locations, including the Woodridge Plaza location. The sale price included improvements to the Woodridge Plaza location but not the leasehold interest. A lessee generally has standing in condemnation proceedings and is entitled to share in a condemnation award when part of its leasehold interest is lost by condemnation. However, a tenant may waive this right in the lease or elsewhere. By the definition in the lease, Pizza Hutt suffered no impairment. The court rejected Pizza Hutt’s argument that the uncertainty created by the condemnation constituted an impairment. It operated with no change in profit and did not establish the “uncertainty” had any impact on its operation. As a result, it lacked standing to sustain a claim against HCCS.

If you would like to read this opinion click here. Panel consists of Chief Justice Radack
Justice, Justice Keyes and Justice Caughey. Memorandum Opinion by Justice Keyes.

Trial court properly dismissed subsequent purchaser’s TTCA and Takings claims after City demolished house

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Jorge Rodriguez v. City of Fort Worth, 07-16-00037-CV (Tex.App. – Amarillo, December 8, 2017)

This is a takings/condemnation and TTCA case where the Fort Worth Court of Appeals affirmed the granting of the City’s plea to the jurisdiction.

Prior to Rodriguez’s ownership of a residential structure, the City’s Building Standards Commission found it to be substandard and hazardous to public health. A copy of the order was mailed to the then owner and filed in the deed records of Tarrant County on October 19, 2012.  Rodriguez purchased the property on December 12, 2012, without personal knowledge of the Commission’s order, but the court found Rodriguez possessed constructive knowledge due to the filing in the deed records. The property was demolished on June 28, 2013 by a contractor hired by the City.   Rodriguez brought suit, alleging the City intentionally destroyed the building (takings) or negligently destroyed it under the Texas Tort Claims Act. The City filed a plea to the jurisdiction which the trial court granted. Rodriguez appealed.

As to Rodriguez’ tort claims, nothing in the record shows City employees were involved with the demolition by “operating” or “using” motor-driven vehicles or equipment or by exercising any control over the independent contractor or its employees. No City owned motor-driven vehicles or equipment were used in the demolition.  As a result, the City has not waived its immunity under the Texas Tort Claims Act. As to Rodriguez’ takings claim, Rodriguez did not allege any facts demonstrating that demolition of his property was for public use.  The improvements on the property were found to be substandard and hazardous to public health; however, the owner was given the opportunity to bring those improvements up to code in order to prevent their demolition. When the owner failed to comply, the City removed the public health hazard. As such, Rodriguez’s claims do not allege a constitutional takings.   Rodriguez also asserted he requested leave to amend his pleadings and was denied. However, Rodriguez was given and took advantage of two prior amendments to address the City’s plea and supplemental plea. Because Rodriguez had a reasonable opportunity to amend he cannot now complain about being deprived of an opportunity to amend.  Furthermore, even if Rodriguez were afforded an opportunity to amend his live pleading indicates incurable defects – specifically, the use of an independent contractor of the tort claims and lack of a public purpose for takings. As a result, the plea was properly granted.

If you would like to read this opinion click here. Panel consists of Chief Justice Quinn, Justice Campbell and Justice Pirtle.  Memorandum Opinion by Justice Pirtle. The attorney listed for Rodriguez is Timothy E. Brown.  The attorney listed for the City is Harvey L. Frye.

Texas Supreme Court rules court of appeals has interlocutory jurisdiction for denied MSJ even though plea was denied months earlier

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City of Magnolia 4A Economic Development Corporation and City of Magnolia 4B Community Development Corporation v. David Smedley, 16-0718 (Tex. October 27, 2017).

This is a flooding case, however, the issue for the Supreme Court is a litigation procedural one. The Court of Appeals held that it did not have interlocutory jurisdiction over claims which were re-raised in a subsequent motion. However, the  Texas Supreme Court held the intermediary courts have interlocutory jurisdiction separately for each motion filed.

The underlying claims are Smedley sued the City and the economic development corporations and contracted entities alleging that the defendants caused the Smedley Property to flood and retain standing water, causing damages after they facilitated a Chicken Express going onto the lot next to his. The City was dismissed based on its plea to the jurisdiction. However, the EDCs filed their own pleas/Rule 91a motions which were partially denied. The EDCs later filed summary judgment motions, which were likewise denied. When the EDCs attempted to take an interlocutory appeal of the denial of the MSJ, the court of appeals stated the grounds were identical to those raised in the pleas. Therefore the court lacked interlocutory appeal jurisdiction under Tex. Civ. Prac. & Rem. Code §51.014. The EDCs filed a petition for review which the Supreme Court granted.

The crucial question is whether the twenty-day period to bring an interlocutory appeal ran from the trial court’s denial of the plea/91a motion or the date of denial of the MSJ. See TEX. R. APP. P. 26.1(b) (providing that a timely interlocutory appeal must be filed within twenty days after the challenged order was signed). The court of appeals held the proper trigger date was the denial of the plea. See case summary here. The Texas Supreme Court, citing its own prior precedence, noted that if an amended plea was merely a motion to reconsider, then the twenty-day clock did not reset.  City of Houston v. Estate of Jones, 388 S.W.3d 663 (Tex. 2012).  The Court noted it was compelling that the original plea was a pleadings challenge only and the later motion was an evidence-based motion.  The EDCs asserted that in light of the discovered evidence, there was no evidence as to the claims under the Water Code or Takings Clause, and that there was affirmative evidence the EDCs did not own or control the lot, preventing them from being able to provide injunctive relief.  The Court cautioned that the procedural mechanisms, alone, is not dispositive and a court must analyze the substance of the motions. However, after doing so, the Court held the EDCs MSJ cannot be considered a mere motion for reconsideration of the initial plea. As the MSJ was a distinct motion from the plea, the court of appeals had interlocutory jurisdiction to hear the appeal. It remanded the case back to the court of appeals for analysis.

If you would like to read this opinion click here. This is a per curiam opinion. The docket page with attorney information is found here.

Property Owner Rule entitled representative to testify as to value of damage to remainder of property after road expansion

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The State of Texas v. Speedway Grapevine I, LLC, A Texas Limited Liability Company, and First Commercial Bank, N. A 02-16-00144-CV (Tex.App—Fort Worth, October 19, 2017)

This is a condemnation case where the Fort Worth Court of Appeals affirmed the jury verdict condemnation award, including the admission of valuation evidence by the owner’s representative.

Speedway owned real property which included a car wash and an express lube on a specific lot. In connection with a road-widening improvement project the State condemned a portion of the frontage. However, Speedway asserted the condemnation affected the ability to operate the two businesses.  The State appealed the commissioner’s award but the jury awarded more than the commissioner’s award. The State’s expert opined Speedway’s remainder property had sustained damages in the amount of $0, excluding a total cost to cure of $105,826.00.  Adding the value of the part condemned ($159,789.00), it opined Speedway was entitled to total compensation in the amount of $265,615.00. Speedway’s experts opined the remainder property suffered a total damage of $2,609,420.00. Adding the value of the part condemned to that figure, Speedway asserted it was entitled to compensation in the total amount of $2,748,822.00.  After a jury trial, the jury found the part condemned had a market value of $92,190.00 and that Speedway’s remainder property was damaged in the amount of $4,401,028.00. The State appealed.

The State first objected to Speedway’s appraisal expert, McRoberts. The State argued he speculated on post-condemnation nonconforming treatment, that Texas law did not recognize his income approach, and that he had improperly relied upon noncompensable impairment of access.  The trial court excluded McRoberts’s income approach but not his cost approach. It also permitted him to testify regarding internal traffic circulation difficulties, unsafe access, and nonconformance with zoning regulations.  Mr. High, Speedway’s representative as the owner, testified about his experience in the car wash industry, the reasons why Speedway located the car wash where it did, the market value of the whole property, problems with a cure plan devised for the State, and the viability of the car wash after the condemnation. The State acknowledges that a property owner may testify to the value of his property, as High did here, but it argued the owner’s valuation testimony must still meet the same requirements as any other opinion evidence.  The court rejected this argument in part. The Property Owner Rule “is an exception to the requirement that a witness must otherwise establish his qualifications to express an opinion on land values.” Based on the presumptions that an owner is familiar with his property and will know its value, the Rule accepts that a property owner is qualified to testify.  However, qualification is not the same as the basis of the opinion. The property owner “must [still] provide the factual basis on which his opinion rests.” But the burden is not difficult or complex. “Evidence of price paid, nearby sales, tax valuations, appraisals, online resources, and any other relevant factors may be offered to support the claim.” High’s testimony covered a range of topics that, taken together, provided some probative evidence to factually support his valuation opinion.  Such included his great level of experience in, and knowledge about, the car wash industry and the effects of such property reductions. The testimony was properly admitted. McRoberts testified that the condemnation had affected the property’s functionality so greatly that the property had experienced a change in its highest and best use to something like a small veterinary clinic or an office. McRoberts did not base his opinions on only his word, or on mere conjecture; he based it on the issues that began affecting Speedway’s property only after the condemnation—unsafe access, internal circulation, and zoning nonconformities.  McRoberts thus provided a reasoned basis to support his damage opinions, reinforced by well-established case law, logic, and mathematics.  The court held “[b]oiled down, the State’s argument is nothing more than an evidentiary sufficiency challenge improperly masquerading as an expert opinion admissibility issue. When the highest and best use of property is disputed, the jury is responsible for deciding which use is appropriate when it determines market value.”  Sufficient evidence exists in the record to support the jury’s verdict. As a result, the verdict is affirmed.

If you want to read this opinion click here. The panel consists of Justice Puryear Justices, Field, and Bourland. Justice Bill Meier delivered the opinion of the court. To see the docket page with the list of attorneys click here.

State immune from suit for mineral interest relating back to Spanish land grant

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Galan Family Trust v. State of Texas, et al, 03-15-00816-CV (Tex.App— Austin, February 24, 2017)

This is an inverse-condemnation/trespass-to-try-title case where the Austin Court of Appeals affirmed the dismissal of the Plaintiff’s claims.

The Galan Family Trust (“Trust” or “Plaintiff”) sued the State of Texas for mineral interests the Trust asserts they own due to a 1767 Spanish land grant. A patent in favor of the Galan heirs was issued in 1852 by the Texas Legislature, but the patent was cancelled by the State of Texas in 1874. In this context, “patent” is an instrument by which the State conveys land to a private person. The State filed a plea to the jurisdiction and a Rule 91a motion to dismiss, asserting that the State is immune to trespass-to-try-title claims and, further, that the Trust’s claims are barred by limitations. The trial court dismissed the Trust’s suit and the Trust appealed.

The court first reaffirmed long-standing case law that governmental entities are immune from trespass-to-try-title claims. Additionally, while individual officials in their official capacities may not be immune from trespass-to-try-title claims, the Trust’s pleadings negate the right of possession.  This right is necessary to establish a trespass-to-try-title claim against an official. Once the State canceled the patent, the State became the titleholder. Further, the Trust did not sue for a takings claim until more than 140 years after the cancellation. This delay in filing far exceeds the ten-year limitations period established for takings claims. The State was only required to establish when the cause of action accrued to establish limitations, not to provide uncontroverted evidence of every element of the defense.  Given the elements for the statute of limitations defense are contained within the pleadings. And, when taken as true for purposes of the Rule 91a motion, the State established it is entitled to dismissal. The trial court’s order is affirmed.

If you would like to read this opinion click here. The Panel includes Chief Justice Rose, Justice Goodwin, and Justice Bourland. Chief Justice delivered the opinion of the court. To see the Representatives for the Appellant and Appellees click here.

 

City held to be acting both in a proprietary capacity and a governmental capacity involving lease for mineral interests says Dallas Court of Appeals

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The City of Dallas v. Trinity East Energy, LLC, 05-16-00349-CV(Tex.App— Dallas, February 7, 2017)

This is an interlocutory appeal from the granting-in-part and denial-in-part of a plea to the jurisdiction involving an inverse condemnation claim for mineral interests. The Dallas Court of Appeals affirmed-in-part, reversed-in-part, and remanded.

The City was suffering a budgetary shortfall and decided to seek an additional source of revenue by leasing the minerals on City-owned property to a private party for developing the oil and gas. Trinity asserted, if it bid, it would need surface access to two City sites.  Trinity and the City entered into two leases for mineral interests. Afterwards, Trinity began the long process of preparing to drill, including geological and engineering tests, designing drill sites, roads, and pipelines, and multiple City meetings. Trinity sought permits to drill on the designated sites. However, in the spring of 2013 the Planning Commission voted to deny the applications. Trinity appealed to the City Council. But because the Planning Commission had denied the applications, the Council was required to override that denial by a vote of three-fourths of its members; the vote to approve received only a majority of the votes of the Council members. Consequently, the applications were denied. Later, the City passed new ordinances changing setback requirements and making the sites impossible for Trinity to use for drilling. The leases then expired.  Trinity sued. The City filed pleas to the jurisdiction in which it asserted it was immune from suit with regard to Trinity’s claims for breach of contract, tort, and declaratory relief, and that Trinity had not alleged a viable claim for inverse condemnation. Trinity responded that the City’s actions were proprietary for which immunity did not apply. The trial court granted parts and denied parts. Both parties appealed.

Citing the Texas Supreme Court’s expansion in Wasson Interests, Ltd. v. City of Jacksonville, 489 S.W.3d 427 (Tex. 2016) of the proprietary-governmental dichotomy to contracts the Dallas Court of Appeals held the City was acting in its proprietary capacity. Mineral leases, even if on park or flood plains, are proprietary as to the ownership use or lease. Further, since immunity does not already exist, Chapter 271 of the Texas Local Government Code (waiving immunity for goods or services) does not apply.  The City was acting as a property owner as to the lease, however, the City was also acting as a regulatory agency as to the permits. Thus, the denial of the permit can also act as an inverse condemnation of a property interest.  Given the change in ordinances making drilling impossible, Trinity presented evidence the City denied all economically viable use of the mineral leases. As a result, the trial court erred in granting the plea as to Trinity’s claims for breach of contract, tort, and declaratory relief but properly denied it as to the takings claim.

If you would like to read this opinion click here. The Panel Includes Justice Lang-Miers, Justice Myers, and Retired Justice O’ Neil. Justice Lang-Miers delivered the opinion of the court. If you would like to see the representatives for The City of Dallas and Trinity East Energy, LLC click here.

City not responsible for prosecuting condemnation suit unless and until served with citation by objecting property owner says 6th Court of Appeals

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James B. Bonham Corp v. The City of Corsicana, 06-16-00026-CV (Tex. App— Texarkana, November 29,2016)

This is an eminent domain proceeding where the Sixth Court of Appeals affirmed the dismissal of an appeal from a special commissioner’s assessment.

The City initiated eminent domain proceedings and a special commissioner’s panel assessed damages. The City deposited the amount into the registry of the court and the property owner corporation timely objected and filed suit. However, it did not serve the City with proper citation. More than seven years later the trial court dismissed the Corporation’s objections for want of prosecution. The Corporation appealed.

The Corporation argues that its failure to proceed to trial was excused because the City was responsible for prosecuting the case. “[W]hen a condemnee properly contests a condemnor’s right to condemn, the condemnor bears the burden to go forward to trial on that issue.” Thus, when an objection is filed, the “proceeding converts into a normal pending cause in the court with the condemnor as plaintiff and the condemnee as defendant.” However the statute expressly states “[t]he objecting party must secure service of citation on the adverse party and try the case in the manner of other civil causes.” “While the condemnor becomes the plaintiff for the purpose of proving his right to condemn, the condemnee still must secure the service of citation on the condemnor.”   Tex. Civ. Prac. & Rem. Code Ann. §17.024(b) and its interpreting case law states service is proper against a City only by serving the mayor, clerk, secretary, or treasurer. No such service occurred in this case. And while a condemning entity has the burden to show the right and power to condemn at trial, it was under no legal obligation to do so unless and until it had been served with citation.  The trial court was within its power to dismiss the case. Further, the Corporation failed to preserve its estoppel arguments.

If you would like to read this opinion click here. The Panel includes Chief Justice III Morriss, Justice Moseley, and Justice Burgess. Justice Burgess delivered the opinion of the court. John H. Jackson and James B. Bonham representing the Corporation. Attorney for the City is listed as Terry L. Jacobson.

Utility properly asserted jurisdiction against LCRA officials for water right declaration

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Phil Wilson , in his official capacity as general manager of the Lower Colorado River Authority, et al.  v. New Braunfels Utilities, 03-16-00077-CV ( Tex. App—Austin, July 22, 2016)

This is a dispute between two entities regarding water rights where the Austin Court of Appeals held the New Braunfels Utilities (“NBU”) properly pled jurisdiction to declare who owns such rights.

NBU claimed that it held “record and equitable title to the water rights originally held under Certified Filing No. 135,” that it was the “sole owner of the water rights,” that LCRA wrongfully claimed an ownership interest in the water rights, that NBU was asserting a trespass to try title claim with respect to the water rights, and that LCRA had “clouded NBU’s title to its water rights.”  Essentially, LCRA held such water rights, then transferred them to NBU, but later asserted a reverter interest. NBU sued various LCRA officials seeking to declare the different water rights.  LCRA Defendants filed a plea to the jurisdiction, which the trial court denied. LCRA Defendants appealed.

The LCRA officials first assert they, individually, do not claim any water rights and NBU’s claim is a contract claim against the entity. However, the court held NBU’s claims against the officials is an ultra vires claim, which is proper when addressing a title dispute. As a result, based on Texas Parks & Wildlife Dep’t v. Sawyer Trust, 354 S.W.3d 384 (Tex. 2011) NBU properly asserted jurisdiction against the LCRA officials. Additionally, even though the Supreme Court precedent regarding trespass-to-try-title claims dealt with real property, water rights and reversionary interests are property rights which can fall under the ultra vires exception to immunity. As a result, the trial court properly denied the plea.

If you would like to read this opinion click here. The panel includes Justice Puryear, Justice Goodwin, and Justice Field. Justice Goodwin delivered the opinion of the court.  The attorney listed for the Appellant is Mr. James N. Rader. The attorneys listed for NBU are Alan Waldrop and Mr. Ryan D.V. Greene.

Trial court properly declined to appoint condemnation commission before hearing plea to the jurisdiction says Texas Supreme Court

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In Re Lazy W District No. 1. , 15-0117 (Tex. May 27, 2016)

This original mandamus proceeding involves two governmental entities, one of which petitioned for condemnation of a water pipeline easement across the other’s land.

The Tarrant Regional Water District (“the Water District”) supplies water to some two million Texans across 11 counties. The Water District and the City of Dallas agreed to build a 150-mile pipeline to transport water owned by Dallas in Lake Palestine. LazyW District No. 1 is a municipal utility district which owns land over which an easement is necessary to run the pipeline. Politics exist behind the scene which the Court discussed but which is unnecessary for this summary. The Water District petitioned for condemnation in the district court. The district court appointed three special commissioners to determine the value of the proposed easement. When the Lazy W learned of the order it filed a plea to the jurisdiction, asserting its immunity as a governmental entity and requesting that the appointments be vacated and the petition dismissed. Normally, the trial court is not to interfere in the commissioners’ proceedings and does not become involved again until the commissioners file their award.  The district court vacated its appointment and declined to proceed with anything else before hearing and ruling on the plea. The Water District sought mandamus relief in the court of appeals. That court held that “the trial court was without jurisdiction to refuse to appoint special commissioners.” Lazy W appealed.

The Court went through Chapter 21 of the Property Code regarding condemnation and the procedures noting the administrative nature of the commission and the judicial appeal aspects of the court.  The Water District contended that the trial court cannot rule on the Lazy W’s plea to the jurisdiction until the commissioners issue their award.  However, the Court disagreed  holding “[s]ection 21.014 is certainly mandatory, but it is not restrictive. It requires the court to appoint commissioners, but it does not forbid any other action.” The Court went through different instances where it is proper to challenge the jurisdiction of the trial court to appoint commissioners. “Courts always have jurisdiction to determine their own jurisdiction.”  “We have never held that a trial court in a condemnation case is powerless to determine its own subject matter jurisdiction before appointing commissioners.” “We do not hold that a trial court must make an early ruling in every situation, only that the trial court did not abuse its discretion in determining to do so here.”  However, the Court was quick to add it expressed no view on whether the Lazy W is immune from suit and expressly declined to address that issue here.

If you would like to read this opinion click here. Chief Justice Hecht delivered the opinion of the Court. The docket page with attorney information is found here.

Ordinance 30 day limitation to appeal BOA determination was not a statutory prerequisite, so trial court retained jurisdiction of takings claim

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Nancy Wedgeworth v. City of Amarillo, et al. 07-15-00301-CV (Tex. App. – Amarillo, May 17, 2016)

This is a structural standards case where the Amarillo Court of Appeals reversed the trial court’s granting of a plea to the jurisdiction.

Wedgeworth owned a house which was damaged by fire. The property was vacated and two years later the City informed Wedgeworth she had two months to repair the structure. The City posted the property for condemnation.  The City Council conducted a hearing at which Wedgeworth appeared and declared the structure a public nuisance. The City demolished the structure three months later. After demolition, Wedgworth sued alleging a takings claim. The City filed a plea to the jurisdiction asserting Wedgeworth did not appeal the demolition resolution to district court within 30 days as she was entitled to, therefore she did not exhaust her administrative remedies. The trial court granted the City’s plea and Wedgeworth appealed.

The Court of Appeals first determined its own jurisdiction noting that the City was served but not all defendants were served. This gives the appearance the order was interlocutory. However, the court held there was no indication (other than the petition) that Wedgeworth intended to proceed against the unserved individuals, so the court treated those claims as abandoned. Therefore, the order granting the plea is final and appealable. Next, even under a takings claim, immunity from suit is not waived by a governmental unit until a claimant complies with all statutory prerequisites to suit. See Tex. Gov’t Code § 311.034 (West 2013). However, the thirty-day window to file suit and challenge the Council’s determination is created by ordinance and does not qualify as a statutory prerequisite. Therefore, the trial court was not deprived of its jurisdiction and the plea should not have been granted as to those defendants who had entered an appearance.

If you would like to read this opinion click here. Panel: Justice Campbell, Justice Hancock and Justice Pirtle. Memorandum Opinion by Justice Campbell.  The attorney listed for the City is Bryan McWilliams.  Wedgeworth appeared pro se.

In this condemnation case the Texas Supreme Court held it was harmful error to exclude the property owner’s evidence on project diminishment

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CAFFE RIBS, INCORPORATED v. STATE OF TEXAS 14-0193 (Tex. April 1, 2016)

This is a condemnation case where the Texas Supreme Court held the property owners were entitled to admit evidence regarding the State’s interference with mitigating property to improve value.

Caffe Ribs, Inc. (“Caffe”) purchased the condemned property in 1995 from Reeves and Weatherford. The property was contaminated so Reeves and Weatherford agreed to clean up the contamination. In 2000 Reeves and Weatherford had identified the source of contamination and placed the property with the TCEQ for voluntary cleanup. In 2003, the State notified Caffe Ribs that it intended to condemn the property, or at least part of it, in connection with the Texas Department of Transportation’s project to expand Interstate 10.  However, the TCEQ kept delaying any determination the property was properly cleaned up. Essentially, the TCEQ required four additional groundwatering wells be installed, but the TxDOT’s condemnation required all wells be plugged and abandoned, and any new wells be installed after construction was complete.  The contamination was then used by the State to argue a decreased value of the property in condemnation proceedings. When CAffe moved to admit evidence of the State’s interference with clean-up processes, the State moved to exclude which was granted. After a jury returned a verdict with a valuation of the property, Caffe appealed. The Court of Appeals determined the error was harmless.

In condemnation proceedings the constitution requires payment of the “market value” of the condemned property—that is, “the price which the property would bring when it is offered for sale by one who desires, but is not obligated to sell, and is bought by one who is under no necessity of buying.” An impending condemnation project, however, can distort the value of property. The inflationary effects of such a project are referred to as “project enhancement,” while the deflationary effects are referred to as “condemnation blight,” or “project diminishment.” Since neither project enhancement nor project diminishment reflects true “market value” they are subject to exclusion. However, exclusion is not mandatory and “[w]e believe the use of a proper instruction, as opposed to an evidentiary exclusion, is particularly appropriate…”when dealing with project diminishment. “In this case, the trial court enforced the project-influence rule with a sweeping evidentiary exclusion.” As the United States Supreme Court has observed, “it would be manifestly unjust to permit a public authority to depreciate property values by a threat of the construction of a government project and then to take advantage of this depression in the price which it must pay for the property when eventually condemned.” United States v. Va. Elec. Power Co., 365 U.S. 624, 636 (1961).  Because the Texas Supreme Court believed that is exactly what the State did, it concluded the exclusion was harmful error. The case was remanded for a new trial.

If you would like to read this opinion click here. Justice Devine delivered the opinion of the Court.  The docket page with attorney listings is found here.

 

 

Expert report on condemnation value was admissible, even through it was several months old says Fort Worth Court of Appeals

Ashwin J. Babaria and Bharti A. Babaria v. City of Southlake, Texas 02-14-00068-CV (Tex. App. – Fort Worth, January 14, 2016).

This is a condemnation case where the Fort Worth Court of Appeals affirmed the condemnation award issued by the trial court. This is a long opinion, so I apologize for the lengthy summary. Lawyers who deal with condemnation will find it helpful regarding what information they need to properly compile which will be upheld for condemnation proceedings. However, this case will be of more interested to litigators since it has to deal with admission of evidence.

Southlake planned to convert the road that runs in front of the Babarias’ property from a two-lane road into a four-lane divided road. The special commissioner’s court awarded $97,000. The Babarias  objected noting it was not sufficient. They appealed to district court. After a jury trial, the jury awarded $7,000 less than the Commissioners, bringing the total to $90,000. The Babarias again objected and brought this appeal, primarily complaining of the admission of evidence by the City.

The Babarias’ appraiser, Hawkins, testified the property taken was worth $167,000.  Mainly, his testimony centered around the part taken not being its own economic unit, but that given City regulations on lot size, the Babarias would lose the ability to plat off and sell a separate part of their property to use as a residential home. Southlake called city engineer Cheryl Taylor and appraisal expert Charles Stearman.  The Babarias’ attorney objected to Taylor asserting she was not an expert. The court sustained in part and overruled in part, essentially holding Taylor could testify that a portion of the property was previously dedicated, but not whether the subdivision ordinance would require a future platting. The Babarias then objected to Stearman  asserting he never supplemented his report, which was out of date in reference to the time of taking (essentially not taking into account alleged market changes). After a chiding of the Babarias’ attorney for interrupting the court, the objection to testimony was overruled.

After analyzing the discovery provided to the Babarias, the court held the date of Stearman’s report did not make it inadmissible. As a general rule, sales occurring within five years before the taking are not too remote to be admissible.  Further, Stearman’s testimony that the report is reliable only as to its issue date, was intended as a method to prevent unauthorized use of the report for some other purpose. It was not an assertion that the market was in flux.  “This is no different from any other expert’s testimony at trial based upon a report completed before trial.”  After a detailed analysis, the court held his methodology was also proper. After analyzing Taylor’s testimony, the court held it was not error for Taylor to testify as a fact witness regarding the Babarias’ dedication of portions of the land. The “testimony on that point was not an opinion about how the ordinance might hypothetically apply in the future, it was an assertion of fact about something that had already happened.”  As a result, the testimony was permissible. The Babarias’ issues are overruled and the jury finding is affirmed.

If you would like to read this opinion click here. Panel: Justice Dauphinot, Justice Gardner, and Justice Gabriel. Memorandum Opinion by Justice Dauphinot.  The attorney for the City is listed as Tim G. Sralla.  The attorney for the Plaintiffs is listed as E. Lawrence Vincent Jr.

Bona fide offer before condemnation can commence is not a jurisdictional prerequisite says 14th Court of Appeals

City of Rosenberg v. The State of Texas, 14-15-00745-CV (Tex. App.—Houston, [14th Dist], October 13, 2015)

The City of Rosenberg owns property the State is seeking to obtain for purposes of highway improvement over which it initiated condemnation proceedings against the City. The City responded to the State’s petition by filing a plea in abatement and a plea to the jurisdiction, alleging that the State had not met the prerequisite to filing suit of making a bona fide offer for the property. The trial court denied the City’s plea to the jurisdiction and the City filed this interlocutory appeal.

In condemnation proceedings of this nature, the condemning authority must make a bona fide offer for the property under Chapter 21 of the Property Code and, if rejected, can initiate a condemnation suit. In 2004, the Supreme Court of Texas concluded that §21.012’s requirements are not jurisdictional, although the requirement for a bona fide offer was not contained within the statute at that time. Hubenak v. San Jacinto Gas Transmission Co., 141 S.W.3d 172, 183 (Tex. 2004). After analyzing the Hubenak case and the 2011 legislative amendments, the court determined the bona fide offer requirement is likewise not jurisdictional.  As a result, it was proper for the trial court to deny the plea.

If you would like to read this opinion click here.  Panel: Justice Christopher, Justice McCally, and Justice Donovan.  Opinion given by Justice Christopher.  Attorneys for the Appellant are George E. Hyde, Scott M. Tschirhart, and Cynthis Trevino.  The attorneys for the Appellee are Susan Desmarais Bonnen, and Glorieni Azeredo.