Kopplow Development, Inc. v. the City of San Antonio

IN THE SUPREME COURT OF TEXAS
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NO . 11-0104
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KOPPLOW DEVELOPMENT, INC., PETITIONER,
v.
THE CITY OF SAN ANTONIO, RESPONDENT
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ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE FOURTH DISTRICT OF TEXAS
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Argued September 13, 2012
JUSTICE GUZMAN delivered the opinion of the Court.
In this case we determine whether an inverse condemnation claim is premature when
premised on the owner’s inability to develop its property as the city previously approved. The
landowner purchased the property for the purpose of developing the land, obtained permits, and
filled the portion of the property at issue in this proceeding to the 100-year flood level. The
municipality then constructed a facility partly on the property that would detain storm water on the
property in a significant flood, thus causing the property to again be below the 100-year flood level
and undevelopable without additional fill. The landowner sought damages under statutory and
inverse condemnation theories. The jury awarded damages of $694,600 and the trial court entered
judgment on the verdict. The court of appeals reversed as to the inverse condemnation claim,
holding the claim was premature because the property had not yet flooded. Because we conclude
that the landowner’s claim is for the present inability to develop the property as previously approved
unless the property is filled, we hold the claim is not premature. Accordingly, we reverse the
judgment of the court of appeals and remand to the court of appeals for further proceedings.
I. Background
Kopplow Development, Inc. (Kopplow) purchased 18.451 acres of land adjoining Loop 410
in San Antonio in 1996 or early 1997.1 After retaining an engineering firm, Kopplow filed a plat
application on November 27, 1996 and obtained utility and construction easements on the adjoining
tract south of its property to connect sewer service. Because Kopplow’s property was below the 100-
year floodplain elevation of 741 feet above mean sea level, as defined by the Federal Emergency
Management Agency (FEMA), Kopplow obtained a floodplain permit from the City of San Antonio
(City) and filled most of the property to 741 feet in 2000. About one fourth of the property still fell
within the 100-year floodplain, and Kopplow dedicated a drainage easement over this area. In 2004,
the City granted Kopplow a vested rights permit, allowing it to develop the property under the rules
in effect in November 1996 when Kopplow filed its plat application. A vested rights permit
insulates pending development from most future ordinance changes. But certain floodplain
regulation changes apply retroactively even against vested rights holders. See TEX . LOC. GOV ’T
CODE §§ 245.002, 245.004(9).
1
The record does not reflect when Kopplow acquired the property. Company president Edward Kopplow
testified that Kopplow acquired the property “in 1996. It might have been early ‘97.” Kopplow’s plat application of
November 27, 1996 lists it as the owner. Kopplow originally purchased a larger tract and sold two portions to develop
as restaurants in early 1997.
2
San Antonio experienced 100-year floods in 1998 and 2002. The City then planned a
regional storm water detention facility for the Leon Creek watershed south of Kopplow’s property
to mitigate downstream flooding. It determined in 2002 that the project would inundate portions of
Kopplow’s property and the tract south of Kopplow’s property. The City asked Kopplow in late
2003 to donate an easement that the City planned to inundate as part of the project. Kopplow
refused. The City obtained a 207-acre drainage easement from the owner of the property south of
the Kopplow tract in January 2004 and then built a concrete in-flow wall on the portion of the
adjoining tract that includes Kopplow’s easements (where Kopplow’s easements and the City’s
drainage easement overlap on the property south of the Kopplow tract). The City also built a large
berm or dam south of the Kopplow property. The dam’s peak elevation is 748 feet. Once Leon
Creek reaches the height of the in-flow wall in a 10-year flood, the wall will guide storm water to
be detained by the berm until storm water in Leon Creek subsides, allowing drainage pipes in the
berm to open and slowly return the detained water into Leon Creek.
The parties agree the facility will cause increased inundation on Kopplow’s property and that
the FEMA 100-year floodplain is two feet higher on Kopplow’s property because of the facility. But
the City asserts that the in-flow wall does not cause the increased inundation because it is under
water in a 100-year flood and instead that the berm causes the increased inundation.
The City also changed its regulatory 100-year floodplain to account for future, upstream
development.2 A City representative testified that, although Kopplow must file for a floodplain
2
By contrast, FEMA’s 100-year floodplain accounts for only existing conditions.
3
development permit to further develop its property, the City will permit Kopplow to develop its
property if it fills the property to the new level of the 100-year floodplain. Ultimately, Kopplow
must fill the portion of its property to be developed from the existing 741-foot level to 745.16 feet:
two feet due to the detention facility and two feet due to the City’s ordinance change.
Kopplow sued the City for a taking in May 2004 while it was constructing the facility. The
City counterclaimed for condemnation of Kopplow’s easement. Before trial, the trial court granted
the City’s motion that Kopplow’s vested rights permit was not effective against subsequent
floodplain ordinances and excluded Kopplow’s evidence pertaining to two of the four feet of
additional fill needed to develop the property.3 The jury found that: (1) the value of the part taken
was $4,600; (2) the City’s use of the part taken proximately caused damages to the remainder; and
(3) Kopplow’s remainder damages were $690,000.
The City and Kopplow both appealed. The court of appeals affirmed the $4,600 damage
award for the part taken under the statutory takings claim. 335 S.W.3d 288, 296. It reversed the
award of remainder damages under the statutory takings theory, holding that the inflow wall would
not inundate Kopplow’s property, even during a 100-year flood. Id. at 294–95. The court also held
the remainder damages unrecoverable under Kopplow’s inverse condemnation theory because the
property had not yet flooded and the inverse condemnation claim was therefore premature. Id. at
3
See T EX . L O C . G O V ’T C O D E § 245.004(9) (vested rights do not apply against “regulations to prevent imminent
destruction of property or injury to persons from flooding that are effective only within a flood plain established by a
federal flood control program and enacted to prevent the flooding of buildings intended for public occupancy”).
4
296. In light of its holding, the court of appeals did not reach the City’s factual sufficiency challenge
or Kopplow’s two cross-appeal points.4 Id. at 296–97.
II. Discussion
We have described the right to own private property as “fundamental, natural, inherent,
inalienable, not derived from the legislature and as preexisting even constitutions.” Eggemeyer v.
Eggemeyer, 554 S.W.2d 137, 140 (Tex. 1977). One of the most important purposes of our
government is to protect private property rights. Id. The Texas Constitution resolves the tension
between private property rights and the government’s ability to take private property by requiring
takings to be for public use, with the government paying the landowner just compensation. TEX .
CONST . art. I, § 17 (“No person’s property shall be taken, damaged, or destroyed for or applied to
public use without adequate compensation being made . . . .”). The United States Supreme Court
has stated that the rationale for compensating landowners for takings for public use is “to bar
Government from forcing some people alone to bear public burdens which, in all fairness and justice,
should be borne by the public as a whole.” Armstrong v. United States, 364 U.S. 40, 49 (1960).
When only part of a tract is taken, Texas law assures just compensation by entitling the landowner
to the value of the part taken as well as the damage to the owner’s remaining property. TEX . PROP .
CODE § 21.042(c).
Takings may be categorized as either statutory (if the government compensates the owner for
the taking) or inverse (if the owner must file suit because the government took, damaged, or
4
Kopplow asserted that: (1) Kopplow’s vested right to develop the property meant that the trial court erred in
excluding evidence of the value of the entire property; and (2) the trial court erred by including a proximate cause
question. 335 S.W .3d at 296.
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destroyed the property without paying compensation). Westgate, Ltd. v. State, 843 S.W.2d 448, 452
(Tex. 1992). This proceeding has involved statutory and inverse claims. Initially, Kopplow sued
because the City did not admit to damaging the property, which sounds in inverse condemnation.
335 S.W.3d at 291. The City later counterclaimed for a statutory taking, admitting it had taken
Kopplow’s easement. Id.
A. Waiver
The City contends, and the court of appeals held, that Kopplow’s inverse condemnation claim
is not yet ripe. We disagree. As an initial matter, the City asserts that Kopplow did not plead or try
an inverse condemnation claim. But Texas is a notice pleading jurisdiction, and a “petition is
sufficient if it gives fair and adequate notice of the facts upon which the pleader bases his claim. The
purpose of this rule is to give the opposing party information sufficient to enable him to prepare a
defense.” Roark v. Allen, 633 S.W.2d 804, 810 (Tex. 1982). The City responded to Kopplow’s
pleading by asserting that Kopplow’s claim was not yet ripe (a response to an inverse condemnation
claim) and the inverse condemnation claim failed because there was no intentional taking. The City
moved for summary judgment on Kopplow’s claim, stating that Kopplow alleges that “the City has
inversely condemned a portion of its . . . property” but that “there is no evidence to support
Plaintiff’s claim for inverse condemnation.” The City’s subsequent motion for summary judgment
stated: “[t]his is an inverse condemnation case wherein Plaintiff’s damages are based on the increase
in the flood plain elevation on its property . . . .” The City also specially excepted to the inverse
condemnation claim, TEX . R. CIV . P. 90, but it failed to obtain a ruling before the case was submitted
to the jury. In sum, the City understood Kopplow was pleading an inverse condemnation claim and
6
prepared the defense that the claim was not yet ripe but failed to obtain a ruling on its special
exception. See Roark, 633 S.W.2d at 810 (party waived pleading defect issue by failing to specially
except).
Kopplow also pursued the claim at trial and on appeal. The City asserted at the pre-trial
conference that Kopplow must decide whether to proceed on the statutory or inverse claim but failed
to obtain a specific ruling from the trial court that Kopplow could not proceed on the inverse claim.
In the court of appeals, Kopplow noted that, “[t]o the extent that Kopplow’s damage claim could be
correctly characterized as an inverse condemnation claim, the [trial] Court found as a matter of law
that the claim was compensable.” Kopplow maintained the position in this Court that its claim was
both statutory and inverse in nature. We conclude Kopplow preserved its inverse condemnation
claim.
B. Ripeness
Substantively, the court of appeals held that, to the extent Kopplow’s claim was for inverse
condemnation, it was premature. 335 S.W.3d at 296. The court of appeals relied primarily on
Tarrant Regional Water District v. Gragg, 151 S.W.3d 546, 555 (Tex. 2004). Gragg involved a
water supply reservoir that the Tarrant Regional Water District built. Id. at 550. Heavy rains caused
the District to open the reservoir floodgates in 1990, extensively flooding the Gragg Ranch. Id. at
550. Gragg sued for inverse condemnation, and by the time the case was tried in 1998, the ranch had
experienced a large number of floods. Id. The District argued that the reservoir did not add more
downstream water than would naturally pass through, and if it did, it was mere negligence and there
was not sufficient intent to support an inverse condemnation claim. Id. at 554.
7
We observed that mere negligence that eventually contributes to property damage will not
qualify as a taking, primarily because the public would bear the burden of paying for damage for
which it receives no benefit. Id. at 554–55. We also noted that, “[i]n the case of flood-water
impacts, recurrence is a probative factor in determining the extent of the taking and whether it is
necessarily incident to authorized government activity, and therefore substantially certain to occur.”
Id. at 555. We held that, “[w]hile nonrecurrent flooding may cause damage, a single flood event
does not generally rise to the level of a taking” because “its benefit to the public, [is] too temporal
or speculative to warrant compensation.” Id.
In a companion case, we clarified that “the requisite intent is present when a governmental
entity knows that a specific act is causing identifiable harm or knows that the harm is substantially
certain to result.” Id. (citing City of Dallas v. Jennings, 142 S.W.3d 310, 314 (Tex. 2004)). With
flood water impacts, recurrence is a probative factor in assessing intent and the extent of the taking.
Id. We rejected the District’s argument that it was, at most, only negligent and found some evidence
to support the taking because the reservoir changed the character of the flooding on the Gragg Ranch
to make the flood waters arrive sooner, flow faster and more forcefully, and last longer. Id. We
observed this could be attributable to the reservoir’s ability to hold only eight percent excess storage,
compared to twenty-five to one hundred percent for other reservoirs. Id. at 556.
In Gragg, we reaffirmed a statement we made over 50 years ago:
[g]overnmental agencies and authorities are necessities. They are capable of
rendering great and beneficent public services. But any appeal to the tradition of our
laws which omits a decent regard for private property rights is both inaccurate and
distorted. It is because of this regard that our governmental agencies and authorities
in acquiring properties for their public purposes are generally required to proceed
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under the power of eminent domain rather than under the police power. Such a
policy has not resulted in a destruction of flood control and improvement agencies
in the past and there is no reason to apprehend that the continuation of such policy
will prove overly costly or inimical to the American way of life in the future.
Id. at 556 (quoting Brazos River Auth. v. City of Graham, 354 S.W.2d 99, 107 (Tex. 1961)).
Our holding in Gragg does not, as the court of appeals concluded, compel a holding here that
Kopplow’s inverse condemnation claim is premature. The focus of Gragg is that the government’s
negligent acts that result in an occasional flood do not benefit the public and cannot qualify as a
taking. Id. at 555. The governmental entity in Gragg intentionally constructed a reservoir with
minimal overflow capacity, and the frequent flooding at the ranch indicated this was not mere
negligence. Id. at 556. Here, we need not look to evidence of the frequency of flooding to deduce
the government’s intent: the City knew the project would inundate part of Kopplow’s property before
it ever began construction, prompting the City to seek a drainage easement from Kopplow. The
project would only result in one tract other than Kopplow’s being below the 100-year flood level,
and the City obtained a drainage easement for the applicable portion of that tract. Based on these
facts, there is little dispute that the City intended to take Kopplow’s property for the project, and
Gragg does not bar the inverse condemnation claim. Id. at 555; Jennings, 142 S.W.3d at 314.
The court of appeals also relied on Howard v. City of Kerrville, 75 S.W.3d 112 (Tex.
App.—San Antonio 2002, pet. denied), to support its holding that Kopplow’s inverse condemnation
claim is not yet ripe. 335 S.W.3d at 296. In Howard, a flood destroyed a dam, which the city rebuilt
with the same specifications. 75 S.W.3d at 115. But the earlier FEMA floodplain maps did not
account for the impact of the dam or increased flow in the Guadalupe River. Id. The new flood level
9
was above the level to which Howard had previously filled his property. Id. At various times during
city regulation changes, Howard filed and withdrew applications to develop the property and later
sued, in part, for a regulatory taking. Id. at 116. The court of appeals held that Howard’s regulatory
takings claim was not ripe because he had no application on file and the court could not determine
what use he sought and what uses the city would or would not allow. Id. at 118. In contrast, here,
there was undisputed testimony that Kopplow sought to develop its property pursuant to the
previously approved plat and that the City would require Kopplow to fill its property to 745.16 feet
to so develop it. Unlike the record in Howard, on this record, we are able to determine whether the
municipality will approve the use the landowner seeks.
The City further contends that Kopplow’s inverse condemnation claim is not yet ripe under
Westgate, 843 S.W.2d at 453. There, Westgate, Ltd. (Westgate) completed construction of
commercial buildings shortly before the government announced plans to build a highway at a route
directly through one of the new buildings. Id. at 450. Westgate was having difficulty leasing the
space in light of the proposed roadway. Id. at 450–51. When the government brought statutory
takings proceedings, Westgate counterclaimed for inverse condemnation to recover its lost profits
accrued before the government acquired the property. Id. at 451. The trial court awarded Westgate
$2,734,000 for the statutory takings claim as the difference in value of Westgate’s entire tract before
and after the taking. Id. It also awarded Westgate $633,000 in lost profits for its inverse
condemnation claim. Id. We affirmed the reversal of the award of lost profits under the inverse
condemnation claim because the government’s proposed taking was not a direct restriction on
Westgate’s property before it actually acquired the property. Id. at 452–53.
10
We cited approvingly in Westgate two court of appeals cases where a future loss of property
did not give rise to a present takings claim. Id. at 452–53. Both Allen v. City of Texas City5 and
Hubler v. City of Corpus Christi6 involved city drainage systems that rendered the owners’ properties
more susceptible to flooding. Westgate, 843 S.W.2d at 453. In Allen, a class of plaintiffs affected
by a levee pleaded an inverse condemnation claim, alleging the levee diminished the value of their
land and made it more susceptible to flooding. 775 S.W.2d 863, 864 (Tex. App.—Houston [1st
Dist.] 1989, writ denied). The Allen court disallowed the claim because no flooding had occurred
and the government had not otherwise appropriated the property. Id. at 865. In Hubler, the plaintiff
asserted that the combined effect of a current drainage project and several proposed others would
increase the surface waters on his land and that the city should have taken a drainage easement. 564
S.W.2d 816, 821 (Tex. App.—Corpus Christi 1978, writ ref’d n.r.e.). The Hubler court disallowed
the claim because no flooding had occurred as a result of the completed projects. Id.
Reliance on Allen and Hubler is misplaced because they address when an inverse
condemnation claim for flooding is premature. Kopplow’s claim is about development, not flooding.
Kopplow purchased the property to develop it, obtained development permits (including a vested
rights permit), and filled the property to the 100-year flood level to develop it before the City
constructed the project that rendered the land undevelopable unless filled again. Even if the
Kopplow property never actually floods, the property is nonetheless undevelopable unless filled
because of the project. The direct, immediate restriction on Kopplow’s property is that it can no
5
775 S.W .2d 863 (Tex. App.— Houston [1st Dist.] 1989, writ denied).
6
564 S.W .2d 816 (Tex. App.— Corpus Christi 1978, writ ref’d n.r.e.).
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longer develop the property as previously approved, and, on these facts, a lack of ripeness does not
bar Kopplow’s inverse condemnation claim.
We next address two remaining questions: (1) whether proximate cause affects the inverse
condemnation claim, and (2) whether the damages awarded by the jury are recoverable under the
inverse condemnation claim. Here, the charge asked the jury whether the use of the part taken
proximately caused damage to the remainder. The jury answered in the affirmative. The City
challenged the sufficiency of the evidence supporting that answer on appeal, arguing that the use of
the part taken was for the in-flow wall only and would not impound flood waters on Kopplow’s
remainder. 335 S.W.3d at 292. A proximate cause question is properly submitted in a partial
statutory takings case where the parties dispute whether the use of the part taken damaged the
remainder. State v. Petropoulos, 346 S.W.3d 525, 531 (Tex. 2011). Moreover, causation is still
relevant in an inverse condemnation claim: owners of inversely condemned property cannot recover
damages the government did not cause. See Gragg, 151 S.W.3d at 555 (holding that the government
need not pay even for negligent takings because they do not benefit the public). But while causation
in a partial statutory taking focuses on whether the use of the part taken damaged the remainder,
causation in an inverse condemnation focuses on the extent of the government’s restriction on the
property. See Hearts Bluff Game Ranch, Inc. v. State, 381 S.W.3d 468, 477 (Tex. 2012).
Even if the City’s challenge to the sufficiency of the evidence also applies to Kopplow’s
inverse condemnation claim, it would be legally insignificant as the parties agree that the berm will
impound flood waters on Kopplow’s property in a 100-year flood, causing the property to again be
below the 100-year flood level. Likewise, the parties agree that Kopplow must fill its property to
12
the new 100-year flood level in order to develop it as previously approved. Thus, there is no dispute
as to causation for Kopplow’s inverse condemnation claim.
Moreover, the damages the jury awarded are proper for Kopplow’s inverse condemnation
claim. The damages the jury found for the easement ($4,600)7 and the remainder of Kopplow’s
property ($690,000) are recoverable under the inverse condemnation claim, and Kopplow submitted
a single question that would have resulted in this amount. See Westgate, 843 S.W.2d at 457 (holding
broad form condemnation charges should ask the difference in value of the property before and after
the taking). Instead, the City requested, and the trial court approved, a separate question for damages
for the easement and the remainder of the property. It was not harmful error under our Rules and
precedent to charge the jury here separately as to the damages for the easement under the statutory
takings claim and the remainder of the property under the inverse condemnation claim because the
ultimate result was the same. See id. at 451 (damages to property and lost profits pled under separate
theories), 457 (level of recovery for condemnation is the difference in value of the property before
and after the taking). Accordingly, because Kopplow’s inverse condemnation claim is ripe and was
not waived, it supports the $690,000 damage award.
III. Conclusion
Kopplow purchased the property to develop it, obtained floodplain and vested rights permits,
and filled the property to the 100-year flood level before the City built a flood control project partly
on its property to detain storm water on the property. That project prevents Kopplow from
7
The trial court entered judgment on this award, and the court of appeals affirmed. 335 S.W .3d at 297. Neither
party challenges that ruling here.
13
developing the property as planned unless it fills it to the new 100-year flood level. Kopplow’s
inverse condemnation claim sought damages for the fill. The fact that flooding has not yet occurred
does not render the claim premature because the claim is based on the thwarting of approved
development, not flooding. We thus conclude the award of remainder damages is recoverable under
Kopplow’s inverse condemnation claim. In light of the court of appeals’ ruling, it failed to reach
Kopplow’s cross-appeal point that the trial court erred in excluding some of the evidence of the cost
of the fill. Accordingly, we reverse the judgment of the court of appeals and remand to the court of
appeals for further proceedings consistent with this opinion.
___________________________
Eva M. Guzman
Justice
OPINION DELIVERED: March 8, 2013
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