Dahl ex rel. Dahl v. State

• Decision Date: 12 December 2002
• Docket Number: No. 14-02-00279-CV.,14-02-00279-CV.
• Citation: 92 S.W.3d 856
• Parties: Rosalie DAHL, as Next Friend of Tina DAHL and Todd Dahl, Minor Children, Beneficiaries of the Victoria Koci Malcolm Estate Trust, Rosalie Dahl, Beneficiary of the Victoria Koci Malcolm Estate Trust, and Ted E. Dahl, as Trustee of the Victoria Koci Malcolm Estate Trust, Appellants, v. The STATE of Texas, Appellee.
• Court: Texas Court of Appeals

92 S.W.3d 856

Rosalie DAHL, as Next Friend of Tina DAHL and Todd Dahl, Minor Children, Beneficiaries of the Victoria Koci Malcolm Estate Trust, Rosalie Dahl, Beneficiary of the Victoria Koci Malcolm Estate Trust, and Ted E. Dahl, as Trustee of the Victoria Koci Malcolm Estate Trust, Appellants, v. The STATE of Texas, Appellee.

No. 14-02-00279-CV.

Court of Appeals of Texas, Houston (14th Dist.).

December 12, 2002.

COPYRIGHT MATERIAL OMITTED

Timothy A. Hootman, Houston, for appellants.

Gary E. Patterson, Michael E. Denosky, Austin, Thomas Michael Pickford, Houston, for appellee.

Panel consists of Justices YATES, ANDERSON and HUDSON.

OPINION

JOHN S. ANDERSON, Justice.

Appellee, the State of Texas, initiated eminent domain proceedings for a whole taking of a 1.004 acre tract of land and any improvements on the tract. The land had previously been conveyed to Leonidas Vezos by the Victoria Koci Malcolm Estate Trust, with the Trust retaining the improvements and two purchase-money mortgages. In the eminent domain proceedings, the State joined appellant Ted E. Dahl, Trustee of the Trust, along with Vezos and other parties.

The Trust and appellant Rosalie Dahl ("appellants") counterclaimed against the State, alleging inverse condemnation of their superior right and interest to the money Vezos owed under the promissory notes, which were secured by deeds of trust to the real property the State was condemning.¹ Asserting sovereign immunity, the State moved to dismiss this counterclaim for want of jurisdiction. The trial court granted the State's motion and dismissed appellants' inverse condemnation claim with prejudice.

The principal issue in this interlocutory appeal is the following: when the State, in a statutory eminent domain proceeding, condemns a whole tract of land that secures a purchase-money mortgage note, does the mortgagee (the holder of the note) have a valid inverse condemnation claim for the balance remaining on the note in excess of the condemnation award?² We conclude he does not, and affirm.

FACTUAL AND PROCEDURAL BACKGROUND

On May 27, 1998, the Trust sold two parcels of land to Vezos, and the same day executed two deeds of trust and security agreements on the respective tracts for the total amount of $611,060. The Trust retained the existing improvements on the property (described by the State as a house and a shed).

On February 8, 2001, the State, by and through its Transportation Commission, filed a petition for statutory condemnation of the property. The Trust, Vezos, and several other entities were parties to the condemnation proceedings and were notified of the Special Commissioners' hearing. Dahl, as Trustee, answered asserting the Trust's ownership of the retained improvements and the lien on the real property. The Trust sought damages for condemnation of the improvements and compensation for the unpaid balance of the mortgage lien.

At the Special Commissioners' hearing on May 23, 2001, the commissioners awarded $400,000 total damages for condemnation of the land and improvements, if any.³ In early June, 2001, the Trust filed a motion to withdraw funds from the registry of the court. In mid-June, Dahl, as Trustee, filed objections to the award, invoking the right to trial de novo by jury in the county civil court at law.

In mid October, 2001, appellants filed their counterclaim against the State and various other parties, alleging the State had taken their purchase-money mortgage security interest by inverse condemnation. Specifically, appellants asserted, "The property taken was [appellants'] superior right and interest to the monies owed by Leonidas Vezos pursuant to a promissory note and secured by a deed of trust regarding the real property in question." Appellants further alleged they were suing "to recover the taking of the balance due and owing on the promissory note." Appellants subsequently amended their counterclaim to allege the State "may not take the property until the lien is paid in full." The State answered with a general denial and a jury demand.

On February 12, 2002, the State filed a motion to dismiss appellants' amended counterclaim for lack of subject matter jurisdiction. The State alleged there could be no inverse condemnation because the State had initiated statutory condemnation proceedings for a whole taking of the tract. The State asserted sovereign immunity and sought dismissal with prejudice. On February 18, appellants filed their response. They referred to the taking of "their note without compensation," but not to the State's taking of improvements on the property. There is nothing in the record to indicate appellants sought to amend their pleadings to include taking of the improvements in the inverse condemnation claim. On February 19, the trial court granted the State's motion and dismissed appellants' counterclaim with prejudice. On March 11, 2002, appellants filed this interlocutory appeal challenging the dismissal.⁴

DISCUSSION

Appellants present nine issues for review. In issues one through three appellants directly challenge the trial court's order dismissing their counterclaim with prejudice. In issues four through six, they argue the merits of their takings claims under the state constitution. In issues seven through nine, they argue the merits under the federal constitution. Before addressing appellants' issues, we set forth the principles guiding the trial court's action and our review.

Plea to the Jurisdiction: Standard of Review and Legal Principles

The State's motion to dismiss in this case is the functional equivalent of a plea to the jurisdiction. See MICHOL O'CONNOR, ET AL., O'CONNOR'S TEXAS RULES CIVIL TRIALS § 2.1 at 171 (2001). We review a trial court's ruling on a plea to the jurisdiction under a de novo standard of review. Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex.1998); University of Houston v. Elthon, 9 S.W.3d 351, 355 (Tex.App.-Houston [14th Dist.] 1999, pet. dism'd w.o.j .).

A plea to the jurisdiction is a dilatory plea intended to defeat a cause of action without regard to the merits of the asserted claims. See Bland I.S.D. v. Blue, 34 S.W.3d 547, 554 (Tex.2000). In a plea to the jurisdiction, a defendant contends that, even if all the allegations in a plaintiff's pleadings are true, there is an incurable jurisdictional defect preventing the court from hearing the case on the merits. State v. Sledge, 36 S.W.3d 152, 155 (Tex. App.-Houston [1st Dist.] 2000, pet. denied); see City of Houston v. Lazell-Mosier, 5 S.W.3d 887, 889 (Tex.App.-Houston [14th Dist.] 1999, no pet.). Although the underlying claims may form the context in which a party raises a plea to the jurisdiction, the court should decide the plea without delving into the merits of the case. Bland I.S.D., 34 S.W.3d at 554.

The plaintiff has the burden to plead facts affirmatively showing the trial court has jurisdiction. See Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 446 (Tex.1993). In deciding a plea to the jurisdiction, a court is to construe these factual allegations in favor of the plaintiff and looks to the pleader's intent. Id. Accordingly, a trial court must accept the allegations in the petition as true unless the defendant pleads and proves that the plaintiff fraudulently made the allegations to confer jurisdiction. See Elthon, 9 S.W.3d at 355-56.

To determine whether jurisdiction exists, a court need not look solely at the pleadings, but may also consider evidence to prove the jurisdictional issues raised. Bland I.S.D., 34 S.W.3d at 555. Nevertheless, the court should confine itself to the evidence relevant to the jurisdictional issues. Id.

A trial court may grant a plea to the jurisdiction only if the pleading, even after amendment, does not state a cause of action upon which to invoke the trial court's jurisdiction. See Bybee v. Fireman's Fund Ins. Co., 160 Tex. 429, 331 S.W.2d 910, 917 (1960). Thus, if a plaintiff's pleadings are insufficient to demonstrate, but do not affirmatively negate jurisdiction, the proper remedy is to allow the plaintiff an opportunity to amend before dismissing. City of Austin v. L.S. Ranch, Ltd., 970 S.W.2d 750, 753 (Tex. App.-Austin 1998, no pet.) (citing Texas Ass'n of Business, 852 S.W.2d at 446; Peek v. Equipment Serv. Co., 779 S.W.2d 802, 805 (Tex.1989)). If, however, a party pleads facts that affirmatively demonstrate an absence of jurisdiction, such a defect is incurable, and immediate dismissal of the case is proper. L.S. Ranch, 970 S.W.2d at 753 (citing Peek, 779 S.W.2d at 804; City of Garland v. Louton, 691 S.W.2d 603, 605 (Tex.1985)). Similarly, a plaintiffs argument it should be given an opportunity to amend is not persuasive when, as in sovereign immunity cases, the lack of subject matter jurisdiction can be cured only by the opposing party's consent to be sued. See Liberty Mut. Ins. Co. v. Sharp, 874 S.W.2d 736, 739 (Tex.App.-Austin 1994, writ denied) (affirming dismissal with prejudice in governmental immunity case).

Inverse Condemnation Claims and Sovereign Immunity

Condemnation is the procedure by which a sovereign state exercises its right to take private property for public use, without consent, but on payment of just compensation. A.C. Aukerman Co. v. State, 902 S.W.2d 576, 577 (Tex.App.-Houston [1st Dist.] 1995, writ denied); State v. Westgate, Ltd., 798 S.W.2d 903, 906 (Tex.App.-Austin 1990), aff'd and remanded, 843 S.W.2d 448 (Tex.1992); Hubler v. City of Corpus Christi, 564 S.W.2d 816, 820 (Tex.Civ.App.-Corpus Christi 1978, writ ref'd n.r.e.). An action for inverse condemnation is the appropriate avenue of relief for a property owner whose property has been taken for public use without due process or without institution of proper condemnation proceedings, and who wishes to recover compensation for that loss. City of Abilene v. Burk Royalty Co., 470 S.W.2d 643, 646 (Tex.1971); Westgate, 798 S.W.2d at 906; Hubler, 564 S.W.2d at 820. By definition, therefore, a...