City of Dallas v. Vsc Llc

• Decision Date: 30 September 2011
• Docket Number: No. 08–0265.,08–0265.
• Parties: CITY OF DALLAS, Petitioner,v.VSC, LLC, Respondent.
• Court: Texas Supreme Court

347 S.W.3d 231

54 Tex. Sup. Ct. J. 1319

CITY OF DALLAS, Petitioner,

v.VSC, LLC, Respondent.

No. 08–0265.

Supreme Court of Texas.

Argued Jan. 8, 2010.Decided July 1, 2011.Rehearing Denied Sept. 30, 2011.

Charles Steven Estee, Office of the Dallas City Attorney, Barbara E. Rosenberg, Shereen Ali El Domeiri, Assistant City Attorneys, Thomas P. Perkins, Jr., Dallas City Attorney and James B. Pinson, Assistant City Attorney, Dallas TX, for City of Dallas.James C. Mosser, Mosser PLLC Lawyers, Byron Kevin Henry, Cowles & Thomson, P.C., Alexis Katz Caughey, Mosser PLLC and Alexis F. Steinberg, Moser Law PLLC, Dallas TX, for VSC, LLC.James C. Ho, Gibson Dunn & Crutcher LLP, Dallas TX, Bill Davis, Office of the Attorney General of Texas, Office of Solicitor General, Austin TX, for amicus curiae Office of the Solicitor General of Texas.Chief Justice JEFFERSON delivered the opinion of the Court, joined by Justice HECHT, Justice MEDINA, Justice GREEN, Justice WILLETT, and Justice LEHRMANN.

We expect our government to retrieve stolen property and return it to the rightful owner. What happens, though, when a person claims an interest in property the government has seized? In this case, the City of Dallas seized vehicles, which it alleged were stolen, from a company that was entitled to petition for their return. See Tex.Code Crim. Proc. art. 47.01 a(a). Instead of pursuing its statutory remedy, the company sued, alleging that its interest in those vehicles had been taken without just compensation. We hold that the availability of the statutory remedy precludes a takings claim. We reverse the court of appeals' judgment and render judgment dismissing this suit.

I. Background

Beginning in the summer of 2002 and continuing through 2004, the City's police department seized a number of vehicles from VSC, a licensed vehicle storage facility.¹ VSC initially alleged that the City seized 326 vehicles.² City police officers testified that all of the seized vehicles had been reported stolen or otherwise displayed indicia of theft, such as altered vehicle identification numbers. VSC's records confirmed that many of these vehicles had been reported stolen.

Several days after the initial seizure, VSC sued the City, asserting a lien for fees related to the vehicles' storage and contending that the City's actions amounted to an unconstitutional taking. The City removed the suit to federal court, which took jurisdiction over all but the takings claim,³ which it remanded to state court along with the related declaratory judgment action.⁴ The City filed a plea to the trial court's jurisdiction on several grounds, which that court denied. The court of appeals affirmed with respect to all but one issue.⁵ 242 S.W.3d 584, 599. We granted the petition for review. 53 Tex. Sup.Ct. J. 13, 15 (Oct. 23, 2009).⁶

II. VSC's Takings Claim

A. The Statutory Remedy

Texas law permits a police officer to seize, without a warrant, vehicles that reasonably appear to have been stolen. Tex. Transp. CodeE § 501.158(a) (permitting the warrantless seizure of allegedly stolen vehicles if an officer has probable cause). Vehicles seized under that authority are treated as stolen for purposes of custody and disposition. Id. § 501.158(b). But it may turn out that the property was not stolen at all, that it has multiple owners, or that it is subject to other claims, like a lien or leasehold interest. For these and other reasons, the Legislature enacted chapter 47 of the Code of Criminal Procedure, which protects a person's claimed interest in seized property. When there is a dispute as to property ownership, an officer possessing allegedly stolen property must secure it until the court directs its disposition. Tex.Code Crim. Proc. art. 47.01(a). That officer must file with the court a schedule of the property and its value and must “notify the court of the names and addresses of each party known to the officer who has a claim to possession of the seized property.” Id. art. 47.03.

Because the officer may not know the identity of all persons with a claim to possession, the statute provides that any person with a property interest may assert that interest directly with the court.⁷ Id. art. 47.01 a(a) (“[U]pon the petition of an interested person” a judge “may hold a hearing to determine the right to possession of the property.”). During that hearing “any interested person” may present evidence establishing ownership. Id. art. 47.01 a(c). The individual proving the superior right to the property is entitled to its return, subject to the State's use of it in prosecuting related crimes.⁸ Id. arts. 47.01a(a)(1)–(a)(2), 47.04. Occasionally—perhaps frequently—the property is never claimed and the government either sells or destroys it. Id. arts. 18.17, 47.06. If the property is sold, its true owner may recover the proceeds. Id. arts. 18.17(e), 47.07.⁹

Here, forty-seven of the seized vehicles were the subject of chapter 47 proceedings initiated by the City and adjudicated in municipal court. The court awarded some of the cars to VSC, some to the cars' owners, and others to the owners on the condition that VSC's fees were first satisfied. Thus, in many cases, VSC regained possession of the vehicles that the City had seized, and in others it was awarded compensation. VSC concedes that this procedure, when properly used, adequately protects its interests. As such, VSC has not brought takings claims with respect to the vehicles for which municipal court hearings were held.

For the other 270 vehicles, VSC claims that it does not know how the City disposed of them—or if it did. Though VSC could have initiated chapter 47 proceedings to assert its interest in the vehicles, it argues here that if the City wished to dispose of the vehicles, it was required to give VSC notice prior to hearings on their disposition. Any failure to do so, VSC argues, amounts to an unconstitutional taking of its asserted lien interest. ¹⁰ We disagree and hold that because VSC had actual knowledge of the vehicles' seizure—VSC knew the cars were seized from its lot, and it knew who seized them—it was required to pursue the chapter 47 proceedings.¹¹ We hold further that VSC must have utilized those procedures before a takings suit can be viable.

The constitution waives immunity for suits brought under the Takings Clause,¹² but this does not mean that a constitutional suit may be brought in every instance. The Legislature's broad authority to prescribe compensatory remedies for takings is well-established, so long as those methods comply with due process and other constitutional requirements. See, e.g., Secombe v. R.R. Co., 90 U.S. 108, 117–18, 23 Wall. 108, 23 L.Ed. 67 (1874) (holding that the Legislature has broad authority to create eminent domain procedures). When the Legislature creates such a statutory procedure, recourse may be had to a constitutional suit only where the procedure proves inadequate, for it is not the taking of property, as such, that raises constitutional concerns, but the taking of property without just compensation. See Williamson Cnty. Reg'l Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 194, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985) (“The [Takings Clause] does not proscribe the taking of property; it proscribes taking without just compensation.”).¹³ When there exists provision for compensation—or, as here, for the property's return—a constitutional claim is necessarily premature. See id. at 194–95, 105 S.Ct. 3108 (“If the government has provided an adequate process for obtaining compensation, and if resort to that process ‘[yields] just compensation,’ then the property owner ‘has no claim against the Government’ for a taking.” (quoting Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1013, 1018 n. 21, 104 S.Ct. 2862, 81 L.Ed.2d 815 (1984)) (alteration in original)); see also Yearsley v. W.A. Ross Constr. Co., 309 U.S. 18, 21, 60 S.Ct. 413, 84 L.Ed. 554 (1940) (refusing to pass upon a takings claim because of the existence of a statute “afford[ing] a plain and adequate remedy”); Hurley v. Kincaid, 285 U.S. 95, 104, 52 S.Ct. 267, 76 L.Ed. 637 (1932) (holding that governmental action was not unconstitutional because “the complainant can recover just compensation under the Tucker Act in an action at law ... [and t]he compensation which he may obtain in such a proceeding will be the same as that which he” is entitled to under the constitution); Crozier v. Fried. Krupp Aktiengesellschaft, 224 U.S. 290, 306–07, 32 S.Ct. 488, 56 L.Ed. 771 (1912) (rejecting a constitutional challenge on the basis of the Takings Clause because the relevant statute provided a compensatory mechanism).¹⁴

Immediately following the vehicles' seizure, however, when VSC filed its district court lawsuit, VSC had a legal avenue through which it could potentially regain possession or compensation. As the dissent acknowledges, operation of the chapter 47 procedure might have “moot[ed] VSC's takings claim.” 347 S.W.3d at 249. This is significant, because if a remedial procedure might have obviated the need for a takings suit, then the property simply had not, prior to the procedure's use, been taken without just compensation. Because VSC could seek possession or compensation through a remedial statutory scheme, it could not ignore that scheme in favor of initiating a constitutional takings suit.

Hays v. Port of Seattle, 251 U.S. 233, 40 S.Ct. 125, 64 L.Ed. 243 (1920), is a good illustration of this rule. There, the Supreme Court refused to permit a claimant to bring a takings suit, despite the fact that the government had seized his property for a public purpose. Hays, 251 U.S. at 238, 40 S.Ct. 125. The Court emphasized that the state provided a procedure by which the claimant could seek just compensation. Id. (“[T]his statute constitutes an adequate provision for assured payment of any compensation due to complainant....”). Thus, the Supreme Court held that there could be no taking because the claimant bypassed...