City entitled to civil penalties for zoning code violations says Dallas Court of Appeals

Texas West End, Inc v. City of Dallas, Texas Historical Commission 05-11-00582-CV (Tex. App. – Dallas, March 9, 2016)

This is a civil enforcement case which is on remand from the Texas Supreme Court. After analyzing the case based on the Supreme Court’s order, the Dallas Court of Appeals switched its prior holding and upheld the award of civil penalties issued by the trial court. This is a long case with a lot of statutory construction involved. The main thing to take away is that the City can receive civil penalties for non-compliance with zoning ordinances such as those applicable in a historic overlay district.

The central issue is whether the City of Dallas may recover civil penalties from TCI West End, Inc. based on TCI’s demolition of the MKT Freight Station without prior approval. According to the City, prior approval of the landmark commission was required by city ordinance. The Dallas Court of Appeals original opinion held, among other things, the civil penalty provision for health and safety violations did not apply to zoning ordinances. The Texas Supreme Court disagreed, holding that the penalty provision could be applied.

TCI attempted to avoid enforcement in a variety of ways and arguments, mostly of technical challenges to ordinance wording. TCI would have the court read the cited case law “.. to mean that every requirement pertaining to ordinances, regardless of the language used in the requirement, must be rigidly performed or the ordinance is invalid.”  The court expressly declined to do so. The fact the City did not file a structure list with the County before enforcing the ordinance does not mean the ordinance is not effective. Using statutory construction principles, the court held the express language of the ordinance does not make enforceability contingent upon such a filing. TCI next contended the ordinance does not require landmark commission approval for demolition unless the building sought to be demolished is a “contributing structure.” TCI’s construction of the ordinances is incorrect. Whether a building is a “contributing structure” determines which of two application processes the property owner must follow. The property owner must still obtain the approval of the landmark commission before demolishing a building under either process. Next the court held the general rule is that when a statute is adopted by reference, the adoption takes the statute as it exists at that time, and the subsequent amendment of the statute is not incorporated into the terms of the adopting act. The phrase “as amended” has been found to incorporate future amendments to statutes adopted by reference.  However, such amendments apply to the sections referenced, in this case only to demolition and removal procedures. “The clear intent was that ordinance 22158 was to work in conjunction with the city development code. To hold that future amendments to the development code were not incorporated into section 7.1 would lead to unnecessary confusion in the application process and make it even more difficult for those seeking demolition or removal permits to determine what is required of them.” Having concluded that the jury properly found that TCI violated the ordinances, the court then examined once again whether the City was entitled to recover a civil penalty. The City’s only burden under the instruction given was to show that, after TCI was notified of its violation, TCI either committed acts in violation of the ordinances or took no action to comply with the ordinances. TCI argued that since it had already demolished the building when it received notice it could not do anything to cure or come into compliance. “Impossibility is a plea in avoidance on which the party making the plea bears the burden of pleading and proof.” Since TCI did not plead the defense at trial, the award cannot be reviewed based on the doctrine of impossibility. The $750,000 penalty in the trial court’s judgment does not hold TCI liable for the demolition itself, but for TCI’s post-demolition failure to take action to comply with the ordinance. This is an ongoing violation until TCI takes the required action. Because TCI never submitted an application to the landmark commission, (even after demolition) the possible daily penalty continued to accrue. Accordingly, the jury could have awarded over $1 million in penalties, but chose to award $750,000. The Court of Appeals appeared reluctant to accept the Supreme Court’s interpretation, but it sustained the civil penalty award in the end.

If you would like to read this opinion click here. Panel: Justice Fillmore, Justice Evans and Justice Whitehill. Opinion by Justice Evans. The attorneys listed for the City are Christopher J. Caso, Thomas P. Perkins Jr., James B. Pinson, Barbara E. Rosenberg, and Christopher D. Bowers. The attorneys listed for Texas West End are Thomas V. Murto III, Melissa A. Johnson, and Mitchell Madden.