The Texas Supreme Court has reversed a Fort Worth Court of Appeals decision that dismissed a landowner’s inverse condemnation claim against TxDOT based on sovereign immunity. The Court likewise reversed the court of appeals’ conclusion that the landowners could proceed on their negligence claim under the Texas Tort Claims Act.
Texas Department of Transportation v. Mark Self and Birgit Self (No. 22-0585; May 17, 2024) arose from plaintiffs’ claims that TxDOT and its contractor were negligent and committed a trespass when the contractor removed trees on their property outside the right-of-way. They further asserted an inverse condemnation claim. TxDOT filed a plea to the jurisdiction, arguing that plaintiffs had failed to establish a waiver of governmental immunity under the Texas Tort Claims Act (TTCA) and that their inverse condemnation claim likewise failed. The trial court denied the plea.
The Fort Worth Court of Appeals sustained TxDOT’s plea in part and denied it in part. First, the court determined that the trial court erred in finding that TxDOT exercised sufficient control over the motor-drive equipment the contractor used to remove the trees (the use of a motor-driven vehicle or motor-driven equipment necessary to a waiver of immunity under the TTCA) “to mean that TxDOT was operating or using that equipment.” However, the court concluded that the trial court “did not err by finding that a fact issue existed regarding whether the contractor was not an independent contractor but instead was a TxDOT employee.” As to plaintiffs’ inverse condemnation claim, the court sustained TxDOT’s plea on the basis that “the act that the [plaintiffs] rely on to support their inverse-condemnation claim was not intentional in the sense required to support such a claim.”
In an opinion by Justice Busby, SCOTX reversed, dismissing the negligence claim but allowing the inverse condemnation claim to proceed. The first issue before the Court was the court of appeals’ determination that a fact question existed as to whether the contractor’s employees were employees of TxDOT for purposes of the TTCA. For purposes of the TTCA, an employee means “a person, including an officer or agent, who is in the paid service of a governmental unit by competent authority.” § 101.001(2), CPRC. The definition excludes “an independent contractor, an agent or employee of an independent contractor, or a person who performs tasks the details of which the governmental unit does not have the legal right to control.” Id. As the court of appeals summarized, “[t]o qualify as an employee, the State must pay the person and exercise control over him” (citation omitted). The analysis then turns to the party who “has the right to control the progress, details, and methods of operations of the work” (citation omitted). The court looks to contractual agreements that assign control of the work or, in the absence of that, “evidence of actual control over the manner in which the work was performer” (citations omitted).
The problem with the court of appeals’ analysis, however, was that it failed to consider whether the contractor was “in the paid service of” TxDOT. The Court first rejected TxDOT’s argument that this issue should be determined using a “paycheck test,” i.e., if the contractor’s paycheck was not issued by the governmetal entity, the contractor could not be in the paid service of the entity. Finding this test too restrictive and contrary to the statute, the Court nevertheless did not find it necessary “to develope a more comprehensive test for ‘paid service’ in this case. Instead, the facts here showed that the contractor in question was not hired directly by TxDOT, but by another third-party contractor retained by the agency. The subcontract between the two contractors explicitly provided that the payment provisions of the prime contractor’s contract with TxDOT were not part of the agreement and not incorporated by reference. Further, there was no evidence that TxDOT’s payments to the prime contractor flowed through to the subcontractor or its employees. The Court thus had no difficulty concluding that the subcontractor’s employees were not in the paid service of TxDOT for purposes of § 101.001(2)’s definition of “employees whose operations or use of motor drive equipment could provide the basis for a waiver of immunity under Section 101.021 of the Tort Claims Act.”
The Court turned next to Plaintiffs’ argument that TxDOT exercised “direct and mandatory control” over the use of the motor-driven equipment operated by the subcontractor’s employees in cutting down the trees. Here the Court noted a split in intermediate appellate authority between cases that found waiver when a third-party contractor’s employees operated the equipment under the control of a governmental entity and those that required the governmental entity’s employees themselves to negligently operate the equipment. The Court opted not to resolve the split because the case could be disposed of by concluding that TxDOT’s actions “did not rise to the level of control that” other cases “determined was sufficient to create a fact question on whether they were operating or using the equipment.” All TxDOT did was to give instructions to its prime contractor to clear trees beside the highway “within certain parameters.” The prime contractor then hired the sub to do the work. In the absence of direct control, SCOTX held that the TCA does not waive immunity for Plaintiff’s negligence claim.
Turning to the landowners’ inverse condemnation claim, the Court held that the landowners “have alleged and offered evidence of each required element of their claim for inverse condemnation.” “The elements of an inverse condemnation claim or ‘takings’ claim,” Justice Busby wrote, “are that (1) an entity with eminent domain power intentionally performed certain acts (2) that resulted in taking, damaging, or destroying property for, or applying it to, (3) public use” (citations omitted). As to the “intent” element, the Court concluded that TxDOT intended to damage the property by cutting down the landowners’ trees, at least 20 of which were outside TxDOT’s right-of-way, without their consent. TxDOT’s contractor removed the trees, resulting in alleged damage to the landowner of about $250,000. The trees were removed “to maintain the highway right-of-way for public use,” satisfying the third element. Here the Court distinguished its holding in City of Dallas v. Jennings, 142 S.W.3d 310 (Tex. 2004), which the court of appeals relief on to dismiss the landowners’ inverse condemnation claim, on the basis that “the government ‘intend[ed] to cause the damage’” and that “TxDOT employees intended to physically destroy the trees for a public use and directly ordered TxDOT’s agents to cut them down, which they did.” The intentional government conduct, consequently, “was not the cause of an eventual taking—it was the taking.” The Court further rejected TxDOT’s argument that it didn’t know the contractor was cutting trees outside the right-of-way, holding that “the governmebnt must pay compensation when it intentionally takes private property for public use—even if the government mistakenly believes it has a legal right to do so apart from the power of eminent domain.”
This decision seems likely to send TxDOT lawyers scrambling to scrub their highway right-of-way easements and make sure their maintenance contractors know where they are. In a larger sense, it may have the unintended (or who knows, perhaps the Court intends this) consequence of eviscerating sovereign immunity in cases in which the governmental entity inadvertently damages some private property in maintaining a public road or highway. Since the Court took the view that the takings clause imposes a strict liability standard for which no immunity is available under any circumstances, it would appear that the Tort Claims Act in these types of cases may be a dead letter. In any event, things are going to get more expensive for taxpayers.
