Fkm Partnership v. Board of Regents

• Citation: 255 S.W.3d 619
• Decision Date: 06 June 2008
• Docket Number: No. 05-0661.,05-0661.
• Parties: FKM PARTNERSHIP, LTD., A Texas Limited Partnership, Petitioner, v. BOARD OF REGENTS OF the UNIVERSITY OF HOUSTON SYSTEM, Respondent.
• Court: Texas Supreme Court

255 S.W.3d 619

FKM PARTNERSHIP, LTD., A Texas Limited Partnership, Petitioner, v. BOARD OF REGENTS OF the UNIVERSITY OF HOUSTON SYSTEM, Respondent.

No. 05-0661.

Supreme Court of Texas.

Argued March 21, 2007.

Decided June 6, 2008.

H. Dixon Montague, Billy Coe Dyer, Gwen J. Samora, Vinson Elkins, L.L.P., Houston, for FKM Partnership, Ltd., A Texas Limited Partnership.

Barry Ross McBee, Edward D. Burbach, Rafael Edward Cruz, Danica Lynn Milios, Office of the Attorney General, Kristofer S. Monson, Assistant Solicitor General, Cavitt Wendlandt, David S. Morales, Office of Attorney General of Texas, Greg Abbott, Atty. Gen., Kent C. Sullivan, First Asst. Atty. Gen., Austin, for Board of Regents of the University of Houston System.

Ken Wright, Kenneth A. Wright, Dallas, for Amicus Curiae Horace H. Elam.

Justice JOHNSON delivered the opinion of the Court, in which Chief Justice JEFFERSON, Justice HECHT, Justice O'NEILL, Justice WAINWRIGHT, Justice BRISTER, Justice MEDINA, and Justice GREEN joined.

PHIL JOHNSON, Justice.

In this case, we consider whether a trial court retains jurisdiction over a condemnation action after the condemning authority amends its petition to reduce the amount of property to be taken by over ninety-seven percent. We hold that it does. We also hold that the condemning authority is liable for certain fees and expenses to the landowner because the reduction in property condemned is so great as to be in effect a functional dismissal of the original condemnation proceeding.

I. Factual and Procedural Background

FKM Partnership, Ltd. owns 1.0792 acres (approximately 47,008 square feet) of property along the northeastern edge of the University of Houston campus in Harris County (the larger tract). This roughly triangular tract abuts Calhoun Road for approximately 252 feet on one side and State Highway 35 on the other. In January 1998, the University offered to buy the larger tract, but FKM declined to sell. The University's Board of Regents¹ then met and approved condemnation of the larger tract. In February 1999, the University filed a condemnation petition, setting out the property's intended use "to expand the campus of the University of Houston System." See TEX. PROP.CODE § 21.012.² Pursuant to section 21.014, the trial court appointed special commissioners who assessed FKM's damages at $275,000. The University deposited this sum into the court's registry and took possession of the property. See TEX. PROP.CODE § 21.021. FKM timely objected to the commissioners' findings and requested a de novo jury trial. See TEX. PROP.CODE § 21.018.

Beginning with its second amended petition filed in April 2001, the University reduced the size of its proposed acquisition. By its amended pleadings, the University sought only a strip of the larger tract that ran the length of the property line between the larger tract and the Calhoun Road right-of-way and set out that FKM would retain an easement across the tract for driveway access to Calhoun Road. That tract, being five feet wide and approximately 252 feet long (the smaller tract), contained about 1,260 square feet out of the larger tract. When the University filed its second amended petition, it surrendered possession to FKM of all the larger tract except for the five-foot-wide strip. The University's amended pleadings (collectively, the amended petition) clarified plans for the smaller tract by setting out that the University's intended use of the smaller tract was "to expand the campus of the University of Houston System; specifically, to allow for the conversion of the Calhoun Road right-of-way, in part, to parking for students and faculty" and that improvements to the tract would be limited to landscaping.

FKM responded to the University's change in plans by filing pleadings styled "Defendant's Plea to the Jurisdiction and Motion to Dismiss" (collectively, the motion to dismiss). In its motion to dismiss, FKM alleged that the University had (1) no public necessity for the taking, (2) failed to comply with statutory prerequisites, and (3) failed to negotiate in good faith. The University filed motions for summary judgment.

At the hearing on its motion to dismiss, FKM argued the entire case should be dismissed on jurisdictional grounds because (1) no Board resolution authorized condemnation of the smaller tract, (2) the trial court lacked its ordinary "appellate" jurisdiction in condemnation proceedings because the special commissioners had only considered the value of the larger tract, and (3) the University, by belatedly seeking to condemn only the small tract, had divested the trial court of jurisdiction. The trial court granted FKM's motion and set the issues of fees, expenses, and damages for jury trial. In its written order granting FKM's motion to dismiss, the court stated that it was granting the motion, the University's condemnation petition and case were dismissed, and FKM was entitled to recover (1) all its fees and expenses under section 21.019(c), and (2) damages for temporary possession under section 21.044. Following trial, the jury determined FKM's (1) reasonable and necessary appraisal fees and expenses were $67,031.71; (2) reasonable and necessary attorneys fees and expenses for preparation and trial were $495,642.05 and for appeal were $150,000; and (3) damages resulting from the University's possession of the property to the time of trial were $323,026. Based on the jury's verdict, the trial court entered judgment in favor of FKM for the amounts found by the jury together with FKM's court costs for a total judgment of $1,048,881.40, subject to reduction for appellate fees if the University did not appeal. The court stated in its judgment that it did not have jurisdiction to proceed under the Fourth Amended Petition and the University did not have the legal right to acquire the smaller tract. The court dismissed the condemnation case.

The court of appeals reversed. It held that the trial court erred in dismissing the University's suit and remanded the case for further proceedings, including determination of fees and expenses incurred in relation to the ninety-seven percent of the larger tract no longer sought to be condemned. 178 S.W.3d 1, 9. Both parties filed petitions for review.

II. Discussion

A. Dismissal of the Lawsuit

FKM argues that the University, by amending its pleadings to reduce the amount of property it sought to condemn, introduced new compensation issues into the suit and thereby destroyed the trial court's "appellate" jurisdiction. FKM also argues that the trial court properly dismissed the suit because the University lacked any public necessity for condemning only the smaller tract and because the University failed to negotiate damages as to the smaller tract. We agree with the court of appeals that none of the grounds warranted dismissal.

1. Dismissal for Introducing New Compensation Issues

FKM contends that State v. Nelson, 160 Tex. 515, 334 S.W.2d 788 (1960), limits the trial court's appellate jurisdiction in condemnation cases to those compensation issues raised before the special commissioners. It asserts that when the University so drastically reduced the amount of property sought, it introduced materially different compensation issues — the value of the smaller tract and injury to the remaining tract — than those the special commissioners considered. See TEX. PROP.CODE §§ 21.041, 21.042.

We recently rejected those arguments in PR Investments v. State, 251 S.W.3d 472, 479 (2008), although that case did not involve a change in the area of property taken.³ In that case, we reviewed Nelson and the statutory framework for condemnation proceedings and rejected the view that the trial court can consider only the matters, evidence, and compensation issues presented to the commissioners. We explained that once a party files objections to the commissioners' findings and seeks de novo review in the trial court, pursuant to section 21.018(b), the case is to be tried in the same manner as other civil cases. That includes allowing amendments to pleadings. We held that the trial court's de novo proceeding is not limited to the exact compensation facts and issues presented to the commissioners. Id. at 475.

In Nelson and earlier in Texas Power & Light Co. v. Cole, 158 Tex. 495, 313 S.W.2d 524 (1958), we recognized that a condemnor can, after the administrative phase, reduce the amount of property it seeks and that such a change does not divest the trial court of jurisdiction. Nelson, 334 S.W.2d at 790; Cole, 313 S.W.2d at 529-31; see also Thompson v. Janes, 151 Tex. 495, 251 S.W.2d 953, 954-55 (1952) ("[T]he condemning agency is accorded the right to dismiss as to a portion of the land when it decides that its purpose may be accomplished with less land than was initially sought."). FKM contends that these cases only allow such an amendment if the landowner will not be prejudiced. We agree that Nelson and Cole contain language to the effect that amendment is allowed if it will not prejudice the landowner.⁴ We do not think, however, that FKM established such prejudice as would preclude the University from amending its pleadings. First, a landowner ordinarily will not be harmed if a condemning authority decides to take less land since the landowner gets to keep the land it did not want to sell to begin with, and the landowner is entitled to be fully compensated for damages suffered as a result of whatever property is eventually taken.⁵ Except for a small strip of land the University now seeks to condemn, FKM gets to keep the property it refused to sell the University. In regard to expenses FKM incurred in litigating because the University originally sought to take the larger tract, FKM may recover those expenses the Legislature has provided for, as we discuss below.⁶ Even if recovery of expenses is unavailable, however, FKM does not persuade us that a condemnor may not amend its petition to seek a smaller tract....