State v. YS & LS & LS Partnership, Ltd. ( 2015 )

ACCEPTED
13-15-00494-CV
THIRTEENTH COURT OF APPEALS
CORPUS CHRISTI, TEXAS
11/18/2015 10:51:38 AM
Dorian E. Ramirez
CLERK
No. 13-15-00494-CV
__________________________________________________________________
FILED IN
13th COURT OF APPEALS
IN THE COURT OF APPEALS FOR THE THIRTEENTH DISTRICT TEXAS
CORPUS CHRISTI/EDINBURG,
AT CORPUS CHRISTI, TEXAS 11/18/2015 10:51:38 AM
__________________________________________________________________
DORIAN E. RAMIREZ
Clerk
THE STATE OF TEXAS,
Appellant,
V.
YS & LS & LS PARTNERSHIP, LTD.
Appellee.
_________________________________________________________________
On Appeal from the County Court at Law Number Three
of Nueces County, Texas; Cause No. 2013-CCV-62023-3
_________________________________________________________________
BRIEF OF APPELLANT THE STATE OF TEXAS
__________________________________________________________________
KEN PAXTON ANTHONY G. BROCATO, JR.
Attorney General of Texas Assistant Attorney General
State Bar No. 03039001
CHARLES E. ROY anthony.brocato@texasattorneygeneral.gov
First Assistant Attorney General Transportation Division
P. O. Box 12548
JAMES E. DAVIS Austin, Texas 78711-2548
Deputy Attorney General for Civil Telephone: (512) 463-2004
Litigation Fax Number: (512) 472-3855
RANDALL K. HILL COUNSEL FOR APPELLANT
Assistant Attorney General
Chief, Transportation Division
ORAL ARGUMENT REQUESTED
IDENTITY OF PARTIES AND COUNSEL
Parties
The State of Texas Plaintiff/Appellant
YS & LS & LS Partnership, Ltd. Defendant/Appellee
Prosperity Bank, Successor in Interest Defendant
by Merger with First Victoria National Bank
Counsel
Anthony G. Brocato, Jr. Trial and Appellate Counsel for
Assistant Attorney General The State of Texas
Transportation Division
P. O. Box 12548
Austin, Texas 78711-2548
Forrest J. “Jerry” Dorsey Counsel for YS & LS & LS
P. O. Box 30084 Partnership, Ltd.
Corpus Christi, Texas 78404
Christopher A. Dorsey
606 N. Carancahua St. Ste 1001
Corpus Christi, Texas 78476
James E. Cuellar Counsel for Prosperity Bank,
D. Brent Wells successor-by-merger with
Jeffrey D. Stewart First Victoria National Bank
Adam R. Swonke
WELLS & CUELLAR, P.C.
440 Louisiana, Suite 718
Houston Texas 77002
ii
TABLE OF CONTENTS
Page
IDENTITY OF PARTIES AND COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
INDEX OF AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
STATEMENT OF THE CASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
STATEMENT OF THE ISSUES PRESENTED.. . . . . . . . . . . . . . . . . . . . . . . . . viii
Whether YS & LS & LS Partnership, Ltd’s claims for damages and other relief
in its Counterclaim are barred by the State of Texas’s sovereign immunity.
STATEMENT OF FACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A. The State’s Petition for Condemnation and Defendant’s
Counterclaim.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SUMMARY OF THE ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARGUMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
YS & LS & LS Partnership, Ltd’s claims for damages and other relief in its
Counterclaim are barred by the State’s sovereign immunity... . . . . . . . . . . . 5
A. Standard of review... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
B. Plea to the jurisdiction and sovereign immunity... . . . . . . . . . 5
C. YS & LS & LS Partnership, Ltd’s claims for damages and other
relief under article 1, Section 17 of the Texas Constitution are
barred by sovereign immunity... . . . . . . . . . . . . . . . . . . . . . . . . 7
PRAYER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
iii
CERTIFICATE OF SERVICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
APPENDIX
A. Order of September 24, 2015
iv
INDEX OF AUTHORITIES
Cases Page
Allen v. City of Texas City, 775 S.W.2d 863 (Tex. App.— Houston
[1st Dist.] 1989, writ denied). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
City of Blue Mound v. SW. Water Co., 449 S.W.3d 678
(Tex. App.— Fort Worth 2014, no pet.). . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
City of Houston v. Biggers, 380 S.W.2d 700 (Tex. Civ. App.— Houston 1964,
writ ref’d n.r.e.), cert. denied, 380 U.S. 962 (1965). . . . . . . . . . . . . . . . . . . 8
City of Midlothian v. Black,
271 S.W.2d 791 (Tex. App.—Waco 2008, no pet.). . . . . . . . . . . . . . . . . . 6, 7
Dall.Cnty. Mental Health & Retardation v. Bossley,
968 S.W.2d 339 (Tex. 1998).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Hearts Bluff Game Ranch, Inc. v. State, 381 S.W.3d 468 (Tex. 2012). . . . . . . . 8, 9
Hubler v. City of Corpus Christi, 564 S.W.2d 816
(Tex. Civ. App.— Corpus Christi 1978, writ ref’d n. r.e.).. . . . . . . . . . . . . . 8
Schriver v. Tex. Dep’t of Transp., 293 S.W.3d 846
(Tex. App.— Fort Worth 2009, no pet.). . . . . . . . . . . . . . . . . . . . . . . . . . 9, 10
State v. Lueck, 290 S.W.3d 876 (Tex. 2009).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
State v. Vaughn, 319 S.W.2d 349 (Tex. Civ. App.— Austin 1958, no writ). . . . 5, 8
Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217 (Tex. 2004).. . . . . 5, 6
Tex. Dep’t of Transp. v. Jones, 8 S.W.3d 636
(Tex. 1999) (per curiam). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 6
v
Tex. Dep’t of Transp. v. Sefzik, 355 S.W.3d 618
(Tex. 2011) (per curiam). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Westgate v. State, 843 SW.2d 448 (Tex. 1992).. . . . . . . . . . . . . . . . . . 3, 4, 5, 7, 8, 9
Wilkinson v. Dallas/Fort Worth Int’l Airport Bd.,
54 S.W.3d 1 (Tex. App.— Dallas 2001, pet. denied),
cert denied, 534 U.S. 1128 (2002).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Constitutional Provisions, Statutes, and Rules
Tex. Const. art. 1, § 17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 4, 7
vi
STATEMENT OF THE CASE
Nature of the Case: Defendant YS & LS & LS Partnership, Ltd. filed a
Counterclaim against the State of Texas, seeking
damages and other relief for alleged lost rental income
due to the State’s condemnation of a strip of
Defendant’s property fronting the highway. CR 77– 84.
Trial Court: Honorable Deeanne Galvan, Judge of the County Court
at Law Number 3 of Nueces County, Texas
Trial Court Disposition: The trial court denied the State’s plea to the
jurisdiction. CR 122 (App A).
vii
STATEMENT OF ISSUE PRESENTED
Whether YS & LS & LS Partnership, Ltd’s claims for damages and other
relief in its Counterclaim are barred by the State of Texas’s sovereign
immunity.
viii
No. 13-15-00494-CV
__________________________________________________________________
IN THE COURT OF APPEALS FOR THE THIRTEENTH DISTRICT
AT CORPUS CHRISTI, TEXAS
__________________________________________________________________
THE STATE OF TEXAS,
Appellant,
V.
YS & LS & LS PARTNERSHIP, LTD.
Appellee.
_________________________________________________________________
On Appeal from the County Court at Law Number Three
of Nueces County, Texas; Cause No. 2013-CCV-62023-3
_________________________________________________________________
BRIEF OF APPELLANT THE STATE OF TEXAS
__________________________________________________________________
TO THE HONORABLE COURT OF APPEALS:
Appellant, the State of Texas, submits this brief requesting that Appellee YS
& LS & LS Partnership, Ltd’s claims for damages and other relief in its Counterclaim
be dismissed for want of jurisdiction.
STATEMENT OF FACTS
A. The State’s Petition for Condemnation and Defendant’s Counterclaim
On October 31, 2013, Appellant State of Texas (“the State”) filed its Petition
for Condemnation seeking to condemn 0.034 of an acre, or 1,500 square feet, of land
owned by Appellee YS & LS & LS Partnership, Ltd. (“YS”) that fronts State
Highway 358 (South Padre Island Drive). CR 5–11. The Special Commissioners held
a hearing and awarded the defendants, jointly, the sum of $150,000 (SCR).1
Thereafter, the State timely filed objections to the award. CR 74–76. YS responded
by filing its Original Answer, Request for Disclosures, Plea in Abatement, and
Counterclaim. CR 77–84.
In its Counterclaim, YS asserted that it owned property that is also described
as Parcel 43 in the Exhibit 2 of the Petition for Condemnation. CR 81. YS claimed
that the State noticed its intent to take the property on November 9, 2007. Further,
YS alleged that its property has a single exit and entry point to and from South Padre
Island Drive. CR 81. According to YS, when YS attempted to lease the property to
prospective tenants, YS was unable to find a suitable tenant “due to the impending
construction and condemnation.” YS contends that it was required to disclose this to
prospective tenants and that “the State’s action caused a direct, immediate, and
substantial interference with the use and enjoyment of the property, including a cloud
on the title for which [YS] has a right to damages.” According to YS, the State acted
with a “lack of care and diligence with which its decision has been carried out.” YS
argued that this action constitutes “an intentional damaging or taking of the property
1
Appellant has requested a Supplemental Clerk’s Record (SCR) that contains the Special
Commissioners’ Award.
2
in violation of Section 17 of Article 1 of the Constitution of the State of Texas.” YS
concludes by arguing that “the State had actual knowledge of the taking and that harm
would be substantially certain to occur.” CR 81. On August 3, 2015, the State
scheduled its plea to the jurisdiction for hearing on August 19, 2015 at 1:30 p.m. CR
111–112. On August 18, 2015, the State filed its Supplement to its Plea to the
Jurisdiction to Defendant YS & LS LS Partnership, Ltd.’s Counterclaim. In this
Supplement, the state argued that YS’s claims were barred by sovereign immunity as
the claims were not recognized as recoverable under the Texas Supreme Court’s case
of Westgate v. State, 843 S.W.2d 448, 454 (Tex. 1992). CR 113–115. YS filed its
response to the State’s plea and supplement on August 19, 2015 at 11:30 a.m. CR
116–121. Counsel for both parties presented their arguments at the hearing on
August 19, 2015. No evidence was presented at the hearing. RR 1–15. The State’s
counsel argued that YS’s claims are barred by sovereign immunity and the Westgate
opinion, while YS’s counsel argued that Westgate was inapplicable. RR 1–15.
Subsequently, on September 24, 2015, the Court denied the State’s plea to the
jurisdiction and its supplement. CR 122. From the Court’s order, the State appeals.
CR 123–124.
SUMMARY OF THE ARGUMENT
Sovereign immunity deprives a trial court of subject matter jurisdiction for
lawsuits in which the State has been sued unless the State consents to suit. Sovereign
immunity can be waived only by statute or legislative approval. The burden is on the
3
claimant, here YS, to establish subject matter jurisdiction by showing that immunity
has been waived. If the pleadings affirmatively negate the existence of jurisdiction,
the trial court may grant the plea to the jurisdiction without allowing the opportunity
to amend.
In this case, YS has not shown that sovereign immunity has been waived for
its counterclaims against the State. The facts alleged by YS do not amount to a claim
for a constitutional taking as shown by the Supreme Court’s case of Westgate v. State,
843 S.W.3d 448 (Tex. 1992). In that case, the Supreme Court held that damages
allegedly caused by the State’s announcement of a project are not recoverable under
Texas Constitution, Article 1, Section 17 when the government has not “physically
appropriated, denied access to, or otherwise directly restricted use of the landowner’s
property.” The Supreme Court reasoned that sound public policy supports this result.
Further, the Supreme Court referred to four appellate court cases that denied recovery
under Section 17 because although the properties suffered diminished market value,
there was not actual physical appropriation of the properties.
The Westgate case is directly applicable to YS’s claim for damages and other
relief in its Counterclaim against the State. Like the landowner in Westgate, YS
claims 1) the State’s taking caused an interference with the use and enjoyment of the
property; 2) the State’s action caused a cloud on the title of the landowner; and 3) the
State’s actions caused an unreasonable delay in acquisition after the State’s
4
announcement of the project. Because YS’s claims do not amount to a constitutional
taking under Westgate, YS’ claims for damages and other relief in its Counterclaim
are without merit and are barred sovereign immunity. YS’s claims for damages and
other relief in its Counterclaim against the State should be dismissed for lack of
subject matter jurisdiction.
ARGUMENT
YS & LS & LS Partnership, Ltd’s claims for damages and other relief in
its Counterclaim are barred by the State’s sovereign immunity.
A. Standard of review.
This Court reviews an order denying a plea to the jurisdiction de novo. Tex.
Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 228 (Tex. 2004).
B. Plea to the jurisdiction and sovereign immunity.
“In Texas, sovereign immunity deprives a trial court of subject matter
jurisdiction for lawsuits in which the state or certain governmental units have been
sued unless the state consents to suit.” Miranda, 133 S.W.3d at 224. Sovereign
immunity from suit defeats a trial court’s jurisdiction and is properly raised in a plea
to the jurisdiction. State v. Lueck, 290 S.W.3d 876, 880 (Tex. 2009); Tex. Dep’t of
Transp. v. Jones, 8 S.W.3d 636, 638–39 (Tex. 1999) (per curiam). Sovereign
immunity can be waived only by statute or legislative approval. Tex. Dep’t of Transp.
v. Sefzik, 355 S.W.3d 618, 620 (Tex. 2011) (per curiam).
5
The burden is on the claimant to establish subject matter jurisdiction by showing
that immunity from suit has been waived. Jones, 8 S.W.3d at 638. This involves a
two-step inquiry. First, there must exist a cause of action for which immunity has
been waived. Second, the claimant must state a claim within that cause of action.
The courts review the pleadings and any evidence submitted to determine whether the
“real substance” of the claim falls within that cause of action. See, Dall. Cnty. Mental
Health & Retardation v. Bossley, 968 S.W.2d 339, 343–45 (Tex. 1998). The plea in
this case is based solely on the pleadings. “If the pleadings affirmatively negate the
existence of jurisdiction, then a plea to the jurisdiction may be granted without
allowing the opportunity to amend.” Miranda, 133 S.W.3d at 227.
Except when the government files a statutory condemnation action, if a
governmental entity takes property without paying adequate compensation, a property
owner generally can file an inverse condemnation claim. City of Midlothian v. Black,
271 S.W.2d 791, 799 (Tex. App.—Waco 2008, no pet.). For an inverse
condemnation claim, a landowner has the burden of pleading the following elements:
“(1) the governmental entity intentionally performed an act in the exercise of its
lawful authority; (2) that resulted in the taking, damaging, or destruction of the
party’s property; (3) for public use.” Id. However, “if the plaintiff’s petition does not
properly plead the elements of an inverse condemnation claim, the immunity applies
and the inverse condemnation claim must be dismissed for lack of subject matter
6
jurisdiction.” Id. Whether the facts alleged constitute a “taking” is a question of
law. Id.
C. YS & LS & LS Partnership, Ltd’s claims for damages and other
relief under article 1, Section 17 of the Texas Constitution are
barred by sovereign immunity.
“Tex. Const. art 1, § 17 provides that ‘[n]o person’s property shall be taken,
damaged or destroyed for or applied to public use without just compensation being
made . . .’” Westgate v. State, 843 S.W.2d 448, 452 (Tex. 1992). In Westgate, the
Supreme Court addressed a counterclaim for inverse condemnation under the Texas
Constitution for damages incurred when the city and the State announced plans to
condemn the defendant’s property and allegedly the property suffered a decline in
marketability, and the defendant argued that the government unreasonably delayed
the actual acquisition. Id. The Supreme Court held that “the damages were not taken
or damaged within the meaning of Tex. Const. art 1, § 17 . . .” Id. at 456.
The Supreme Court held that damages are not recoverable when the
government has not “physically appropriated, denied access to, or otherwise directly
restricted use of the landowner’s property.” Id. at 450. The Supreme Court reasoned
that sound public policy supported this result. The Supreme Court stated,
Construction of public works projects would be severely impeded if the
government could incur inverse-condemnation liability merely by
announcing plans to condemn property in the future. Such a rule would
encourage the government to maintain the secrecy of proposed projects
as long as possible, hindering public debate and increasing waste and
7
inefficiency . . .
Id. at 453. The Supreme Court referred to four appellate opinions to support its
conclusion.
In City of Houston v. Biggers, 380 S.W.2d 700 (Tex. Civ. App.—Houston
1964, writ ref’d n.r.e.), cert. denied, 380 U.S. 962 (1965), the appellate court held
that passage of an ordinance authorizing construction of a civic center on the
landowner’s property did not constitute a taking under the Texas Constitution where
the government did not impose a current, direct restriction on the property’s use.
Similarly, in State v. Vaughn, 319 S.W.2d 349 (Tex. Civ. App.—Austin 1958, no
writ), the appellate court held that the fact that tenants were vacating the landowner’s
building out of fear of the future condemnation did not amount to a constitutional
taking. The courts of appeals in two additional cases held that construction of a
rainwater levee in the first, and a proposed new drainage system in the second, did
not give rise to a constitutional taking claim because although the properties suffered
diminished market value, there was not actual physical appropriation of the
properties. See Allen v. City of Texas City, 775 S.W.2d 863, 885 (Tex. App.—
Houston [1st Dist.] 1989, writ. denied); Hubler v. City of Corpus Christi, 564 S.W.2d
816 (Tex. Civ. App.—Corpus Christi 1978, writ ref’d n. r.e.).
The Texas Supreme Court has recently approved its holding in Westgate. In
Hearts Bluff Game Ranch, Inc. v. State, 381 S.W.3d 468, 480 (Tex. 2012), quoting,
8
Westgate, 843 S.W.3d at 453, the Court stated, referring to Westgate, “We held that
‘publicly targeting a property for condemnation’ in the future does not give rise to an
inverse condemnation.” The Court stated, “although the announcement resulted in
economic harm to the plaintiff, we confirmed that the ‘impact of the future project on
the present market value of the land was a noncompensable consequential damage.”
Id. Further, the Court stated, “We concluded that, in order for an inverse
condemnation claim to be valid, there must be a ‘current, direct restriction’ on the use
of the land, referring to a physical act or legal restriction on the property’s use, ‘such
as a blocking of access or denial of a permit for development.’” Id. at 481, quoting,
Westgate, 843 S.W.3d at 452.
The Westgate case is directly applicable to YS’s claim for damages and other
relief in its Counterclaim against the State. Like the property owner in Westgate, YS’s
principle complaint is that it lost income due to the State’s announcement of damages.
Further, like the landowner in Westgate, YS claims 1) the State’s action caused an
interference with the use and enjoyment of the property; 2) the State’s action caused
a cloud on the title of the landowner; and 3) the State’s actions caused an
unreasonable delay in acquisition after the State’s announcement of the project. CR
81. Because YS’s claims do not amount to a constitutional taking under Westgate,
YS’s claims for damages and other relief in its Counterclaim are without merit and
are thus barred by sovereign immunity. See also Schriver v. Tex. Dep’t of Transp.,
9
293 S.W.3d 846 (Tex. App.—Fort Worth 2009, no pet.) (holding that TxDOT’s mere
negotiations for the purchase of property do not entitle the landowner the right to
recover damages); Wilkinson v. Dallas/Fort Worth Int’l Airport Bd., 54 S.W.3d 1, 13
(Tex. App.—Dallas 2001, pet denied), cert denied, 534 U.S. 1128 (2002). (“Proving
merely that government action has caused a diminution in value or damaged the
marketability of property is insufficient.”); City of Blue Mound v. SW Water Co., 449
S.W.3d 678 (Tex. App.—Fort Worth 2014, no pet.) (“Damage, if any, to the going
concern of a business on condemned property is generally not compensable.”).
Therefore, YS’s claims for damages and other relief in its Counterclaim against the
State should be dismissed for lack of subject matter jurisdiction.
PRAYER
Appellant, the State of Texas respectfully prays that this Honorable Court of
Appeals grant the following relief:
1) reverse the trial court’s order of September 24, 2015;
2) dismiss all of Appellee YS & LS & LS Partnership, Ltd’s claims in its
Counterclaim against Appellant State of Texas for want of jurisdiction;
3) render judgment that Appellee YS & LS & LS Partnership, Ltd take
nothing by its Counterclaim against Appellant State of Texas; and
4) order that Appellee YS & LS & LS Partnership, Ltd pay all costs
incurred by Appellant State of Texas.
10
Respectfully submitted,
KEN PAXTON
ATTORNEY GENERAL OF TEXAS
CHARLES E. ROY
FIRST ASSISTANT ATTORNEY
GENERAL
JAMES E. DAVIS
DEPUTY ATTORNEY GENERAL FOR
CIVIL LITIGATION
RANDALL K. HILL
ASSISTANT ATTORNEY GENERAL
CHIEF, TRANSPORTATION DIVISION
/s/ Anthony G. Brocato, Jr.
ANTHONY G. BROCATO, JR.
Assistant Attorney General
State Bar No. 03039001
anthony.brocato@texasattorneygeneral.gov
Transportation Division
P.O. Box 12548
Austin, Texas 78711-2548
(512) 463-2004
(512) 472-3855 - Facsimile
COUNSEL FOR APPELLANT
THE STATE OF TEXAS
11
CERTIFICATE OF COMPLIANCE
I certify that this document contains 2,298 words as determined by the word
count of the computer program used to prepare this document, excluding the sections
of the document listed in Texas Rule of Appellate Procedure 9.4(i)(1).
CERTIFICATE OF SERVICE
This is to certify that on the 18th day of November, 2015, a true and correct
copy of the foregoing Brief of Appellants The State of Texas has been sent via
electronic filing and e-mail to the following:
Mr. Forrest J. “Jerry” Dorsey
P. O. Box 30084
Corpus Christi, Texas 78404
Mr. Christopher A. Dorsey
606 N. Carancahua St. Ste 1001
Corpus Christi, Texas 78476
Attorneys for Defendant,
YS & LS & LS Partnership, Ltd.
Mr. James E. Cuellar
Mr. D. Brent Wells
Mr. Jeffrey D. Stewart
Mr. Adam R. Swonke
WELLS & CUELLAR, P.C.
440 Louisiana, Suite 718
Houston Texas 77002
Attorneys for Defendant,
Prosperity Bank, successor-by-merger with
First Victoria National Bank
/s/ Anthony G. Brocato, Jr.
ANTHONY G. BROCATO, JR.
Assistant Attorney General
12
APPENDIX "A"