The Dallas Court of Appeals has ruled in favor of the landowner in a dispute with the Texas Department of Transportation over the right to repurchase previously condemned property under Chapter 21, Property Code.
The State of Texas; The Texas Department of Transportation; The Texas Transportation Commission; J. Bruce Bugg; and James M. Bass v. LBJ/Brookhaven Investors, L.P. (No. 05-21-00518-CV) arose from the condemnation of a three-acre tract of land along LBJ Freeway for a TXDOT highway project. The owner, LBJ/Brookhaven, objected to the special commissioners’ award and invoked the trial court’s jurisdiction. While the litigation was pending, TXDOT found out that an Atmos Energy natural gas pipeline ran under the property and had to be rerouted. The agency determined that it had to take another 22.7 acres of LBJ/Brookhaven’s property for that purpose, and in order to stage construction material and equipment for the highway project. TXDOT and LBJ/Brookhaven subsequently entered into an agreed judgment in 2011. The judgment apportioned the property into two parcels, the original three-acre strip and the added 22.7 acres (the parcel at issue). TXDOT agreed to pay $42.5 million for the two tracts, upon which were located commercial office buildings. TXDOT knocked down the buildings, built the project, and put the 22.7 acres up for sale as surplus property without notifying LBJ/Brookhaven. When LBJ/Brookhaven found out about the sale, it sued TXDOT to enforce §§ 21.101-.103, Property Code, the right to repurchase provisions. TXDOT filed a plea to the jurisdiction, which the trial court denied. TXDOT appealed.
In an opinion by Justice Reichek, the court of appeals affirmed. Somewhat complicating the case was the uncertainty about which version of the repurchase statutes applied. The original statute, adopted in 2003, required the governmental entity to notify the former owner if the public use for the condemned property had been canceled. If the owner informed the entity of its intent to repurchase, the entity had to offer the property for sale to the owner for the fair market value at the time the public use was canceled, if the public use was canceled within 10 years of acquisition and the property was not right-of-way under the jurisdiction of TXDOT, a county, or a city. In 2011, a few months after the agreed judgment was signed in this case, the Legislature amended the statute to change the conditions of purchase and eliminate the right-of-way exclusion. TXDOT made three arguments on appeal: (1) the 2011 amendments did not apply, so the right-of-way exclusion barred LBJ/Brookhaven’s claim; (2) even if the 2011 amendments applied, TXDOT used the property in the construction project; and (3) the former owner had no right to repurchase because the property was conveyed by deed, not condemned as required by the statute.
The court did not take the bait on arguments one and two. It agreed with LBJ/Brookhaven that the only issue before the court was whether the statute waived the state’s sovereign immunity, not which statute applied or the use to which the property was put. This brought the court to TXDOT’s contention that the property was conveyed by deed and not by the agreed judgment in the condemnation proceeding. TXDOT asserted that it only condemned the three-acre tract, whereas the 22.7-acre tract was acquired by voluntary sale. Because only the three-acre tract was identified in the condemnation proceeding, that was the only property subject to the judgment. The court rejected this argument on Dubai grounds: if the trial court’s jurisdiction extended strictly to the condemnation petition and not subsequent issues that arose in a trial de novo from the special commissioners proceeding, any judgment would be subject to collateral attack and voided. Thus Chapter 21’s process for initiating a condemnation proceeding is mandatory, not jurisdictional. Moreover, once a condemnation proceeding gets to a court, it is just like any other civil action, in which parties may try issues by consent and without necessity of amending pleadings.
Turning to the plain language of the judgment, the court found it clear and unambiguous that TXDOT was “condemning and acquiring” the property described in the exhibits, which detailed both tracts and provided compensation accordingly. Citing the parol evidence rule, the court ruled that any extrinsic evidence that added to, varied, or contradicted the terms of the unambiguous judgment must be excluded (citations omitted). Agreed judgments are the same as any other, and if they are clearly stated, that’s the end of the matter. Consequently, the court ruled that TXDOT acquired the 22.7 acres by eminent domain and the subsequent warranty deed for the property “cannot contradict the judgment.”
TXDOT asserted further that Chapter 21 does not waive sovereign immunity but only creates an “‘exclusive remedy’ when the State fails to determine property is eligible for repurchase.” While agreeing with TXDOT that Chapter 21 does not contain “the ‘magic words’ of ‘clear waiver’ found in other statutes,” the statute wouldn’t make any sense if it did not waive immunity. The court reasoned that the Legislature would not have created a remedy for former property owners to regain their property but deny them the ability to enforce the remedy in a civil lawsuit. Parsing § 21.003, which vests in the district court authority to determine all issues in a condemnation proceeding in which the condemnor is a party and that involves a claim for property or damages to property occupied by the condemnor, the court concluded that the right of repurchase is “a claim for property or for damages to property occupied by the party under the party’s eminent domain authority.” As the court observed, “[I]t would make little sense to give landowners the right to repurchase property previously taken by eminent domain yet deny them the ability to exercise the right. For us to conclude, as the State urges, that a landowner’s sole recourse is to request the government to determine if the property is eligible—while shielding the government if it fails to make a determination or errs in its determination—does not give effect to the legislature’s intent.”
Finally, the court rejected TXDOT’s argument that the statutory conditions for the right to repurchase are jurisdictional, that is, the property owner must prove the facts supporting jurisdiction in order for the court to exercise jurisdiction. The court did not bite on this subtle argument. Noting that “[N]othing in the wording of either version of section 21.101 conditions the bringing of suit on the elements of the claim. The 2011 version of section 21.101 provides that a person from whom a property interest is acquired by eminent domain ‘is entitled to repurchase the property as provided by this subchapter’ if certain conditions are met.” The 2004 statute, by contrast, “merely sets out the applicability of the subchapter and the exclusions, neither of which is linked to the filing of the lawsuit.” For purposes of determining the trial court’s jurisdiction, it was not necessary for the court to determine which version of the statute applied or whether the triggering conditions had been met. Those issues are for the trial court.
This case represents a pretty significant win for landowners in that, unless it is reversed on appeal, it establishes that Chapter 21 waives governmental immunity for landowner claims arising out of a condemnation initiated by a person with the power of eminent domain. What happens next is an interesting question. If the jurisdictional issues that TXDOT argued to the court of appeals really are something to fall on the sword about, then off to SCOTX we go. Of course, we have no idea if this is the right case at the right time for the agency, but it did take a big hit. In any event, LBJ/Brookhaven at least gets something for its trouble and for having its office buildings demolished to make way for badly needed additional highway capacity.
