Kms Retail Rowlett, Lp F/K/A Kms Retail Huntsville, Lp v. City of Rowlett, Texas

IN THE SUPREME COURT OF TEXAS
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No. 17-0850
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KMS RETAIL ROWLETT, LP
F/K/A KMS RETAIL HUNTSVILLE, LP, PETITIONER,
v.
CITY OF ROWLETT, TEXAS, RESPONDENT
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ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE FIFTH DISTRICT OF TEXAS
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JUSTICE BLACKLOCK, joined by JUSTICE LEHRMANN and JUSTICE BOYD, dissenting.
“The protection of property rights, central to the functioning of our society, should not—
indeed, cannot—be charged to the same people who seek to take those rights away.” City of Dallas
v. Stewart, 361 S.W.3d 562, 580 (Tex. 2012). Yet that is exactly what happens when courts give
“deference” to the government’s self-serving declaration that its decision to condemn private
property satisfies Article I, Section 17 of the Texas Constitution.
I concede that the majority’s approach to Article I, Section 17—Texas’s Takings Clause—
is grounded in this Court’s precedent, which does seem to dictate the unduly deferential and
unnecessarily complicated legal standards the majority carefully applies. The problem is that these
judicially crafted standards are not grounded in the current text of the Texas Constitution. The
Court’s submissive approach originated in cases that pre-date the 2009 amendment to the Texas
Takings Clause. That amendment afforded property owners greater protection against eminent
domain in the wake of the United States Supreme Court’s controversial decision in Kelo v. City of
New London, 545 U.S. 469 (2005). The Texas Takings Clause as amended—not outdated judicial
gloss interpreting superseded constitutional text—ought to provide the bedrock for arguments
about the constitutionality of the government’s attempt to take private property. Instead of
deriving the governing legal standards from case law that pre-dates the 2009 amendment, the Court
should seek to derive those standards from the current text of the Texas Constitution.
This Court began to move away from an unduly deferential approach in City of Austin v.
Whittington, in which we stressed that the “question of what is a public use is a question for the
determination of the courts.” 384 S.W.3d 766, 777 (Tex. 2012) (quoting Hous. Auth. of Dall. v.
Higginbotham, 143 S.W.2d 79, 83 (Tex. 1940)). Around the same time, we likewise stated that
“[u]nadorned assertions of public use are constitutionally insufficient” in determining whether a
use will “in fact be public rather than private.” Tex. Rice Land Partners, Ltd. v. Denbury Green
Pipeline-Tex., LLC, 363 S.W.3d 192, 195 (Tex. 2012). We should continue heading in the right
direction.
Applying Article I, Section 17 as amended, I would require the government to affirmatively
establish that its proposed taking satisfies every requirement the constitutional (or statutory) text
imposes. Rather than hold the City to that burden—the same burden any other plaintiff must
carry—the Court’s precedent reverses the burden by assuming the constitutionality of the taking
based on the City’s say-so and then requiring the property owner to prove unconstitutionality.
After shifting the burden of proof, the precedent oddly restricts the property owner to just three
possible defenses—fraud, bad faith, and arbitrariness—all of them affirmative defenses property
owners must prove. This limited menu of confusingly labelled defenses has very little to do with
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the Constitution, certainly not in its post-2009 form. The Court should eliminate deference to the
government in takings cases, undo its unjustified burden-shifting rule, and get rid of artificial
restrictions on the defenses available to property owners. Rather than picking their way through a
court-created procedural maze that has no basis in the text of the Constitution, the parties should
be arguing about what the updated constitutional text means and whether the proposed taking
complies with it. Jettisoning decades of case law may seem radical, but it ought to be expected
when the Constitution itself—on which the case law is ostensibly based—changes. And it’s
exactly what Texans seem to have intended when they amended their Constitution in response to
Kelo. We should honor that choice instead of clinging to outdated and confusing judicial
constructs derived from a constitutional text the voters deemed inadequate to protect their rights.
Because the majority does otherwise, I respectfully dissent.
* * *
Since at least 1876, the Texas Constitution has protected private property against any
government taking that is not for “public use.” 1 Until 2009, the “public use” clause of Article I,
Section 17 resembled the “public use” language of the federal Constitution’s Takings Clause. 2 See
U.S. CONST. amend. V. That is no longer the case. In 2009, Texans voted to amend their
Constitution by placing further restrictions on the government’s exercise of eminent domain.
Article I, Section 17 now says:
1
“No person’s property shall be taken, damaged or destroyed for or applied to public use without adequate
compensation being made, unless by the consent of such person; and, when taken, except for the use of the State, such
compensation shall be first made, or secured by a deposit of money . . . .” TEX. CONST. art. I, § 17 (amended 2009).
2
Compare TEX. CONST. art. I, § 17 (amended 2009) (“No person’s property shall be taken, damaged or
destroyed for or applied to public use without adequate compensation being made . . . .”), with U.S. CONST. amend. V
(“[N]or shall private property be taken for public use, without just compensation.”).
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(a) No person’s property shall be taken, damaged, or destroyed for or applied to
public use without adequate compensation being made, unless by the consent of
such person, and only if the taking, damage, or destruction is for:
(1) the ownership, use, and enjoyment of the property, notwithstanding an
incidental use, by:
(A) the State, a political subdivision of the State, or the public at
large; or
(B) an entity granted the power of eminent domain under law; or
(2) the elimination of urban blight on a particular parcel of property.
(b) In this section, “public use” does not include the taking of property under
Subsection (a) of this section for transfer to a private entity for the primary purpose
of economic development or enhancement of tax revenues.
TEX. CONST. art. I, § 17 (a)–(b) (2009 additions underlined).
The impetus for the 2009 constitutional amendment was Kelo v. City of New London. S.
Comm. on State Affairs, Bill Analysis, Tex. S.J.R. 42, 81st Leg., R.S. (2009) (“This constitutional
amendment addresses Kelo v. City of [New] London, 545 U.S. 469 (2005).”). Understanding Kelo
helps illuminate the amendment’s language. In Kelo, a city took private property through eminent
domain only to turn it over to other private parties for economic development. 545 U.S. at 473–
75. In a five-to-four decision, the Supreme Court held that this taking did not violate the “public
use” requirement of the Fifth Amendment’s Takings Clause. Id. at 484. Central to the Supreme
Court’s reasoning was a line of precedent that “eschewed rigid formulas and intrusive scrutiny in
favor of affording legislatures broad latitude in determining what public needs justify the use of
the takings power.” Id. at 483. The Court also relied heavily on prior cases under which the Fifth
Amendment’s “public use” requirement had been interpreted to encompass any “public purpose,”
without regard to who would actually “use” the property. See id. at 479–82. Incorporating these
two concepts, the majority in Kelo summarized its understanding of the constitutional standard:
“The disposition of this case therefore turns on the question whether the City’s development plan
serves a ‘public purpose.’ Without exception, our cases have defined that concept broadly,
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reflecting our longstanding policy of deference to legislative judgments in this field.” Id. at 480.
This deferential formulation bears no small resemblance to our Court’s statement in 1940 that
“[w]here the Legislature declares a particular use to be public use the presumption is in favor of
this declaration, and will be binding upon the courts unless such use is clearly and palpably of a
private character.” Hous. Auth. of Dall., 143 S.W.2d at 83 (quoting West v. Whitehead, 238 S.W.
976, 978 (Tex. App.—San Antonio 1922, writ ref’d)).
Justices O’Connor and Thomas dissented in Kelo. Justice O’Connor criticized the
majority’s holding “that the sovereign may take private property currently put to ordinary private
use, and give it over for new, ordinary private use, so long as the new use is predicted to generate
some secondary benefit for the public.” Kelo, 545 U.S. at 501 (O’Connor, J., dissenting). She
would have construed the Court’s existing precedent to prohibit such a taking. Id. at 498. Justice
Thomas, on the other hand, advocated for abandonment of the precedent. Id. at 506 (Thomas, J.,
dissenting). He criticized the majority—and the precedent it relied on—for merging “public use”
with “public purpose” and for deferring to legislative determinations of public use. Id. at 514–15.
In his view, “[o]nce one permits takings for public purposes in addition to public uses, no coherent
principle limits what could constitute a valid public use.” Id. at 520. He interpreted the Fifth
Amendment to authorize “takings for public use only if the government or the public actually uses
the taken property.” Id. at 514 (emphasis added). As for deference, Justice Thomas wrote that “a
court owes no deference to a legislature’s judgment concerning the quintessentially legal question
of whether the government owns, or the public has a legal right to use, the taken property.” Id. at
517. He continued:
We would not defer to a legislature’s determination of the various circumstances
that establish, for example, when a search of a home would be reasonable, or when
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a convicted double-murderer may be shackled during a sentencing proceeding
without on-the-record findings, or when state law creates a property interest
protected by the Due Process Clause.
Still worse, it is backwards to adopt a searching standard of constitutional review
for nontraditional property interests, such as welfare benefits, while deferring to the
legislature’s determination as to what constitutes a public use when it exercises the
power of eminent domain, and thereby invades individuals’ traditional rights in real
property.
Id. at 518 (citations omitted). Rather than the deferential approach dictated by the Court’s
precedent, he advocated for straightforward application of the Public Use Clause based on its text
and history. Under such an approach, courts would determine de novo whether a taking satisfies
the Public Use Clause by asking whether “the government owns, or the public has a legal right to
use, the taken property.” Id. at 517.
With the debate over Kelo as the backdrop, it becomes apparent that the 2009 amendments
to the Texas Takings Clause flow directly from these two dissenting opinions. The new subsection
(b) prohibits “taking of property . . . for transfer to a private entity for the primary purpose of
economic development or enhancement of tax revenues.” TEX. CONST. art. I, § 17(b). This
provision directly rejects the Kelo majority’s holding, essentially adopting into the Texas
Constitution the rule Justice O’Connor would have employed. In this case, KMS does not allege
that the City of Rowlett condemned its property “for transfer to a private entity.” It does, however,
allege that the taking fails the constitutional “public use” requirement. This implicates the changes
to subsection (a), which states the “public use” requirement. Those changes incorporate into the
Texas Constitution something very similar to Justice Thomas’s understanding of public use, which
looks to whether “the government or the public actually uses the taken property,” Kelo, 545 U.S.
at 514 (Thomas, J., dissenting), and “whether the government owns, or the public has a legal right
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to use, the taken property.” Id. at 517. Under this approach, “[t]he term ‘public use,’ then, means
that either the government or its citizens as a whole must actually ‘employ’ the taken property.”
Id. at 508–09. The amended Texas Takings Clause now incorporates a similar standard. Under
the 2009 amendment, governments in Texas may take property “only if the taking . . . is for . . .
the ownership, use, and enjoyment of the property, notwithstanding an incidental use, by . . . the
State, a political subdivision of the State, or the public at large . . . .” TEX. CONST. art. I, § 17(a)
(emphasis added).
Prior to the changes to subsection (a), judicial deference to legislative determinations of
“public use” may have had some conceivable justification. The text of the Constitution did not
elaborate on the words “public use,” and courts may have worried about judicially second-guessing
elected officials’ determinations of what is and is not a valid public use. I agree with Justice
Thomas that the words “public use,” standing alone, are readily amenable to judicial application
and provide no valid basis for judicial deference to other branches of government. See Kelo, 545
U.S. 469 (Thomas, J., dissenting). But even if reasonable minds can disagree on what an
unexplained constitutional reference to “public use” means, in Texas that is now a purely academic
question. We no longer have a Constitution containing an unexplained “public use” requirement.
We now have a Constitution containing the same “public use” requirement that has always been
there and a further requirement that the taking must be for “the ownership, use, and enjoyment of
the property . . . by . . . [the government] . . . or the public at large.” TEX. CONST. art. I, § 17(a).
By amending the Constitution after Kelo to explicitly require that condemnation of private
property be for the public’s “ownership, use, and enjoyment of the property,” Texas voters rejected
the deferential judicial standards that gave rise to Kelo and that existed not just in U.S. Supreme
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Court precedent but in this Court’s precedent. The new constitutional language clarifies that
“public use,” not “public purpose,” is the touchstone. And the text’s new “ownership, use, and
enjoyment” requirement provides a judicially administrable legal standard under which deference
to the condemnor has no justification. The difficulties that may arise in the application of this text
to particular cases are no different from the usual problems courts confront when applying
constitutional provisions or statutes. The amended subsection (a) is surely clearer than many parts
of the Tort Claims Act or other challenging legal texts courts routinely apply without deferring to
the opinions of legislatures or city councils. A governmental body’s declaration that its proposed
taking satisfies this text is nothing more than one litigant’s expression of belief in its own litigating
position. I can imagine no valid basis for a court to afford any deference whatsoever to a city
council’s opinion on whether the city’s invasion of “the sacred and inviolable rights of private
property” complies with the amended Texas Takings Clause. 1 WILLIAM BLACKSTONE,
COMMENTARIES *134–35.
Because there is no good reason to defer to the city’s opinion that it complied with the
Constitution, there is also no good reason to shift the burden of proof to the property owner. The
government is the plaintiff in a condemnation case. See TEX. PROP. CODE § 21.012. Like any
other plaintiff, it ought to be required to prove its case. One element of that case is compliance
with Article I, Section 17, which still requires a showing—as it always has—that the taking is for
a public use. This Court previously described the existing “public use” requirement as follows:
This Court has defined public use in similar circumstances as when the public
obtains some definite right or use in the undertaking to which the property is
devoted. Public use, however, does not include a benefit to the public welfare or
good under which any business that promotes the community’s comfort or
prosperity might be benefitted from the taking.
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Whittington, 384 S.W.3d at 779 (citations omitted). Under the amended Article I, Section 17, these
and other previously announced standards governing “public use” remain in effect. The
Constitution now requires at least two more discrete showings from the condemnor—that its taking
is for both public ownership and public enjoyment. Whether those showings will be easy or
difficult for the government to make will depend on the case. The contours of the previously
unexplored public-ownership and public-enjoyment requirements cannot be fully enunciated ex
ante. Courts should start with the basic principle that the constitutional text means what it says.
Cramer v. Sheppard, 167 S.W.2d 147, 154 (Tex. 1942) (“[T]hose who are called upon to construe
the Constitution are not authorized to thwart the will of the people by reading into the Constitution
language not contained therein, or by construing it differently from its plain meaning.”). Beyond
that, the application of this new constitutional text to various factual scenarios must be litigated,
and such litigation may yield judicial precedent that further illuminates the text.
Another quirk of the Court’s approach is its cabining of a property owner’s constitutional
defenses to “fraud, bad faith, and arbitrariness.” These three labels understandably confuse
litigants and lower courts because, particularly in the case of fraud, they can mean something
entirely different in the condemnation context than they do elsewhere. It should be no surprise
that the court of appeals “mistakenly” defined fraud to mean “any act, omission or concealment,
which involved a breach of legal duty, trust or confidence, justly reposed and is injurious to
another, or by which an undue and unconscientious advantage is taken of another.” 559 S.W.3d
192, 201 (Tex. App.—Dallas 2017) (quoting Malcomson Rd. Util. Dist. v. Newsom, 171 S.W.3d
257, 269 (Tex. App.—Houston [1st Dist.] 2005, pet. denied)). In other words, the court of appeals
mistakenly thought fraud meant fraud. Only a very careful examination of the precedent—
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skipping over the cases that make the same mistake the court of appeals made—would have
revealed that, when it comes to condemnation cases, fraud really means that “contrary to the
ostensible public use, the taking would actually confer only a private benefit.” Ante at ___ (quoting
FKM P’ship, Ltd. v. Bd. of Regents of Univ. of Hous. Sys., 255 S.W.3d 619, 629 n.9 (Tex. 2008)). 3
An important consideration, to be sure, but one that sounds little like fraud.
This odd mislabeling of a property owner’s three defenses—fraud, bad faith, and
arbitrariness—not only confuses all involved, it also stacks the deck against the property owner
with both judge and jury by requiring him to allege and prove what sounds like nefarious behavior
by the condemnor when all he really wants to do is argue that the taking does not comply with the
Texas Takings Clause. Add that burden to the requirement of deference to the condemnor, and it
becomes difficult to imagine a property owner successfully vindicating his constitutional right to
be free from prohibited takings.
Where these three affirmative defenses draw their constitutional provenance—other than
the Court’s say-so—remains unclear. None of our cases explain why these three are the only
defenses available to property owners. And none of our cases explain why property owners, unlike
all other litigants, are not free to make any inventive arguments they can think of to defeat the
government’s claim that its taking of their property complies with the Constitution. The reasoning
3
There are at least two problems with this formulation of the “fraud” standard. First, it juxtaposes “public
use” and “private benefit” as though they were opposites. But public uses can have both public and private benefits,
as can private uses. “Ownership, use, and enjoyment” are the textual touchstones. Introducing the concept of “benefit”
confuses rather than enlightens. Second, requiring a property owner to show that the taking confers only a private
benefit means he must show that it confers zero public benefits. It is nearly impossible to imagine a taking that would
fail this standard, even if the “ownership, use, and enjoyment” of the property were purely private. The taking at issue
in Kelo, for instance, probably provided some secondary public benefits. That does not mean it would satisfy the
Texas Constitution. If the mislabeled fraud defense is here to stay, a more helpful formulation comes from
Whittington, which described fraud as “the taking of property for private use under the guise of public use.” 384
S.W.3d at 779.
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seems to be that because deference must be afforded the condemnor’s determinations due to the
difficulty in making judicial determinations of public use, only these limited defenses should be
countenanced. Thus, like the deference to the government and the burden-shifting, the limitation
on defenses also seems to derive from a single source at the root of the Court’s precedent—the
notion that it is difficult for courts to know what “public use” means. That may have been the case
before 2009, though I doubt it. After 2009, the voters have resolved the difficulty by telling us
exactly what they mean. They mean to authorize takings “only if the taking . . . is for . . . the
ownership, use, and enjoyment of the property, notwithstanding an incidental use, by . . . the State,
a political subdivision of the State, or the public at large.” TEX. CONST. art. I, § 17(a). They expect
us to apply their Constitution as they amended it, not as we previously interpreted it prior to their
amendment. We should try to do that.
* * *
Neither the parties nor the court of appeals has yet considered whether the City’s taking of
KMS’s property complies with the Texas Takings Clause without the confusing and unnecessary
overlay of court decisions that did not consider the Clause’s new language. As described above, I
would jettison the superseded precedent, eliminate deference to government declarations of public
use, treat condemnors like regular plaintiffs, treat property owners like regular defendants, and
otherwise normalize the judicial standards governing condemnation cases. I would then remand
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to the trial court to allow the parties to argue over how the amended Texas Takings Clause applies
to their case. Because the majority does otherwise, I respectfully dissent. 4
__________________________________
James D. Blacklock
Justice
OPINION DELIVERED: May 17, 2018
4
I concur in the majority’s disposition of KMS’s arguments under section 2206 of the Government Code. I
also join the majority’s disposition of KMS’s argument that the taking was not “necessary” under section 251.001 of
the Local Government Code. Section 251.001 itself commits the necessity determination to the condemning local
government: “When the governing body of a municipality considers it necessary, the municipality may exercise the
right of eminent domain for a public use to acquire public or private property, whether located inside or outside the
municipality, for any of the following uses: [list of uses].” LOC. GOV’T CODE § 251.001(a). Unlike the constitutional
public use requirement, the statutory necessity requirement is textually committed to the discretion of the
governmental body. Judicial deference is not just appropriate, it is required, because under the statute a municipality
may exercise the right of eminent domain “when the governing body of a municipality considers it necessary,” not
when a court or a jury does. Of course, the legislature has no authority to authorize a municipality to violate the
Constitution, no matter what the municipality considers necessary. Article I, Section 17 is an absolute limit on
municipal condemnation authority, even if that authority is exercised in conformance with section 251.001. Given
the statutorily required deference to the City’s statutory necessity determination, I have no objection to applying the
Court’s burden-shifting approach and the “fraud, bad faith, and arbitrariness” analysis to the necessity question.
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