ExxonMobil Pipeline Co. v. Bell

84 S.W.3d 800 (2002)

EXXONMOBIL PIPELINE COMPANY, Appellant,
v.
William S. BELL, Appellee.

No. 01-01-00153-CV.

Court of Appeals of Texas, Houston (1st Dist.).

August 22, 2002. Rehearing Overruled October 10, 2002.

Joy M. Soloway, Stephen K. Carroll, Fulbright & Jaworski L.L.P., Houston, for Appellant.

Richard L. McElya, Angleton, for Appellee.

Panel consists of Justices NUCHIA, RADACK, and PRICE.^[*]

OPINION

SAM NUCHIA, Justice.

FACTUAL BACKGROUND

On March 1, 1995, the board of directors of appellant, ExxonMobil, passed a resolution determining that there was a public necessity to construct a common carrier pipeline from Katy Gas Plant in Waller County, Texas, through Fort Bend County to a location in Brazoria County. Exxon Mobil negotiated with appellee, William S. Bell, to acquire an easement for its common carrier pipeline. On May 11, 1995, ExxonMobil made a final offer to Bell for the easement and ancillary rights it was taking. The offer was for (1) the condemnable easement, (2) the right to assign the proposed easement, and (3) an obligation on Bell to warrant and defend title of the proposed easement to ExxonMobil. ExxonMobil's final offer was for $4,296, which was determined to be the fair market value of the easement by an independent appraiser. ExxonMobil's final offer was contained in a final offer letter, and attached to the letter was a form of easement and right-of-way agreement. Bell received ExxonMobil's final offer letter and did not respond.

On July 14, 1995, ExxonMobil's board of directors adopted a second resolution finding that good faith efforts to acquire an easement from Bell by negotiations had been unsuccessful. ExxonMobil's resolution confirmed that a public necessity existed for a common carrier pipeline that required an easement across Bell's property in Waller County.

On July 20, 1995, ExxonMobil filed its statement and petition in condemnation requesting that three special commissioners be appointed to determine the amount of damages to be awarded to Bell. Bell did not appear at the special commissioners' hearing, which determined the amount of compensation ExxonMobil was to pay for the easement. ExxonMobil deposited the amount of compensation determined by the commissioners, took possession of the easement, and installed a pipeline.

PROCEDURAL HISTORY

Bell filed objections to the award of the special commissioners and demanded a jury trial. See Tex. Prop.Code Ann. § 21.018 (Vernon 2001). ExxonMobil moved for a partial summary judgment on its right to condemn and asserted that no disputed facts were before the court. Bell filed a response to ExxonMobil's motion for partial summary judgment and combined it with a cross-motion for partial summary judgment. In his cross-motion, Bell contended that ExxonMobil had failed to negotiate in good faith. Following a hearing on the motion and cross-motion for partial summary judgment, the trial court granted ExxonMobil's motion for partial summary judgment. In granting the motion, the trial court found that ExxonMobil had negotiated in good faith and Exxon Mobil and Bell were unable to agree.

On August 10, 2000, Bell filed a plea to the jurisdiction and motion to dismiss for want of jurisdiction based on an opinion issued from this court on July 27, 2000 in Hubenak v. San Jacinto Gas Transmission Co., No. 01-99-00691-CV, 2000 WL 1056416 (Tex.App.-Houston [1st Dist.] July 27, 2000), withdrawn, 65 S.W.3d 791, 796 (Tex.App.-Houston [1st Dist], 2002). Specifically, Bell argued that ExxonMobil did not negotiate in good faith prior to filing its statement and petition in condemnation and failed to satisfy the "unable to agree requirement" under section 21.012 of the Texas Property Code, and, therefore, the trial court did not have subject matter jurisdiction. The trial court granted Bell's motion to dismiss and dismissed ExxonMobil's statement and petition in condemnation. ExxonMobil moved for a new trial, and the trial court overruled ExxonMobil's motion for a new trial.

On December 13, 2001, this Court withdrew its original Hubenak opinion and issued a new opinion. See Hubenak, 65 S.W.3d at 791.

DISCUSSION

The Hubenak Cases

In Hubenak, the trial court ordered four condemnation cases dismissed, holding that the condemnor of the land had failed to satisfy the "unable to agree requirement," which is a statutory prerequisite to jurisdiction. See No. 01-99-00691-CV, 2000 WL 1056416, at *5. The trial court held that the "unable to agree" requirement is not satisfied unless the condemnor's corporate resolution specifies each property right being negotiated. The original Hubenak opinion stated that,

regardless of whether San Jacinto could have condemned for the three rights, San Jacinto's board of director's resolution did not outline those three rights as necessary. San Jacinto should have first made an offer only for the rights that were outlined in the board of director's resolution. That offer would have been bona fide.

Id. at *5.

As stated previously, the original Hubenak opinion was withdrawn and another opinion was issued on motions for rehearing. In the substituted opinion, which is now the opinion of this Court, the Court held that, in conferring jurisdiction, the section 21.012 Texas Property Code requires no more than the condemning entity's offer of what it feels is just or adequate compensation, based on a reasonably thorough investigation and honest assessment of the property taken. Hubenak, 65 S.W.3d at 801. A condemning entity is not precluded from negotiating for, offering to buy, and buying more than it may condemn. Id. As long as just or adequate compensation is offered for the property to be taken, section 21.012 of the Texas Property Code permits jurisdiction when a condemning entity makes a combined offer for those property rights it may condemn along with any additional property rights. Id.

If the condemnor makes a bona fide offer and the condemnor and landowner are unable to agree, then the condemnor has acted in good faith and may proceed with the condemnation. See Hubenak, 65 S.W.3d at 796. A single offer by a condemnor will satisfy the unableto-agree requirement, if it is a bona fide offer. Id. at 798. A condemnor is not required to continue to attempt negotiations, when any further attempts to agree with the landowner appear to be futile. When an attempt to agree on the value of the property in question would be futile, no attempt need be made. Id.

The only point of error is whether the trial court's order dismissing ExxonMobil's condemnation, which was premised on the since-withdrawn opinion and is inconsistent with the substituted opinion, should be reversed.

Eminent Domain

ExxonMobil, as a common carrier, is accorded the power of eminent domain. See Tex. Bus. Corp. Act Ann. art. 2.01(B)(3)(b) (Vernon Supp.2001). Eminent domain is the right or power of a sovereign state to appropriate private property for the promotion of the general welfare of its citizens. Tex. Highway Dep't v. Weber, 147 Tex. 628, 219 S.W.2d 70, 72 (1949). The State of Texas has the power through its legislature to delegate the power of eminent domain to certain private entities such as common carrier pipelines. Mercier v. MidTexas Pipeline Co., 28 S.W.3d 712, 716-18 (Tex.App.-Corpus Christi 2000, pet. denied). The determination of whether there is a public necessity for a particular project is left to the discretion of the entity that has been granted the power of eminent domain. A resolution of the board of directors of a corporation with the power of eminent domain is the proper method for determining public convenience and necessity. Phillips Pipeline Co. v. Woods, 610 S.W.2d 204, 207 (Tex.App.-Houston [14th Dist.]1980, writ ref'd n.r.e.).

Statutorily Required Good Faith Negotiations

After the condemnor determines the necessity of the taking, it negotiates with the landowner, and it must make a bona fide attempt to agree with the landowner. Hubenak, 65 S.W.3d at 796. Section 21.012 of the Texas Property Code provides, in pertinent part,

(a) If ... a corporation with eminent domain authority ... wants to acquire property for public use but is unable to agree with the owner of the property on the amount of damages, the condemning entity may begin a condemnation proceeding by filing a petition in the proper court.

(b) The petition must:

....

(4) state that the entity and the property owner are unable to agree on the damages. TEX. PROP. CODE ANN. § 21.012 (Vernon 2001) (emphasis added).

The condemnor's duty to engage in good faith negotiations to acquire the property is a jurisdictional requirement to filing suit under section 21.012. Hubenak, 65 S.W.3d at 797. To show the jurisdiction of the court in a condemnation case, the condemnor must prove strict compliance with section 21.012. Id. at 796. The "unable to agree" condition refers to a bona fide offer by the condemnor to pay the estimated true value of the land. Hubenak, 65 S.W.3d at 797; State v. Schmidt, 894 S.W.2d 543, 544-45 (Tex.App.-Austin 1995, no writ). The condemnor has the burden of pleading and proving that before it initiated the condemnation proceeding, it was "unable to agree" with the landowner as to the amount of damages that would result from the taking. Hubenak, 65 S.W.3d at 796. Without such pleading and proof, the trial court has no jurisdiction to entertain the proceeding or grant the requested relief. Id.

Analysis

On appeal, Bell rests his entire argument on the fact that ExxonMobil sought property rights in addition to the condemnable easement. Bell argues that the negotiations were not in good faith because not only did ExxonMobil seek the easement, but also the right to assign the easement and a warranty of title on the easement. This is the same argument that Bell made in his plea to the jurisdiction and motion to dismiss for want of jurisdiction.

Bell relies on MidTexas Pipeline Company v. Dernehl from the Texarkana Court of Appeals for support. 71 S.W.3d 852, 857-58 (Tex.App.-Texarkana, 2002, no pet. hist.). Even though MidTexas Pipeline supports his contention, it is in direct conflict with the Hubenak opinion issued by this Court. We follow the precedent from our own court laid out in Hubenak and respectfully decline to follow the Texarkana opinion. We hold that a condemnor is not limited to negotiating for only the condemned easement and may negotiate for and offer to buy more than it condemns.^[1] We sustain ExxonMobil's sole point of error.

Conclusion

We reverse the court's order to dismiss and remand the cause to the trial court.

NOTES

[*] The Honorable Frank C. Price, former Justice, Court of Appeals, First District of Texas at Houston, participating by assignment.

[1] Since a condemnor may negotiate for more rights than it may condemn we need not address whether assignability of the easement and warranty were condemnable.