Hubenak v. San Jacinto Gas Transmission Co.

• Citation: 65 S.W.3d 791
• Decision Date: 13 December 2001
• Docket Number: No. 01-99-01359-CV.,No. 01-99-00691-CV.,No. 01-99-01360-CV.,No. 01-99-00959-CV.,01-99-00691-CV.,01-99-00959-CV.,01-99-01359-CV.,01-99-01360-CV.
• Parties: Thelma Blahuta HUBENAK and Emil Blahuta, Appellants, v. SAN JACINTO GAS TRANSMISSION COMPANY, Appellee. Kutach Family Trust, Darryl Wayne Kutach, Trustee, Appellant, v. San Jacinto Gas Transmission Company, Appellee. Rosie Wenzel, Wilma McAndrew, Betty McCleney, and Tilford Sulak, Appellants, v. San Jacinto Gas Transmission Company, Appellee. Thelma Blahuta Hubenak, Appellant, v. San Jacinto Gas Transmission Company, Appellee.
• Court: Texas Court of Appeals

65 S.W.3d 791

Thelma Blahuta HUBENAK and Emil Blahuta, Appellants, v. SAN JACINTO GAS TRANSMISSION COMPANY, Appellee.

Kutach Family Trust, Darryl Wayne Kutach, Trustee, Appellant, v. San Jacinto Gas Transmission Company, Appellee.

Rosie Wenzel, Wilma McAndrew, Betty McCleney, and Tilford Sulak, Appellants, v. San Jacinto Gas Transmission Company, Appellee.

Thelma Blahuta Hubenak, Appellant, v. San Jacinto Gas Transmission Company, Appellee.

No. 01-99-00691-CV.

No. 01-99-00959-CV.

No. 01-99-01359-CV.

No. 01-99-01360-CV.

Court of Appeals of Texas, Houston (1st Dist.).

December 13, 2001.

Rehearing Overruled January 23, 2002.

William D. Noel, Houston, for Appellant.

Thomas E. Sheffield, Sheffield & Warren, Houston, for Appellee.

Panel consists of Justices HEDGES, JENNINGS and PRICE.^*

OPINIONS ON MOTIONS FOR REHEARING

TERRY JENNINGS, Justice.

We grant appellee's motions for rehearing, withdraw our opinions and judgments dated July 27, 2000, and substitute these opinions in their stead.

These are four eminent domain cases, in which appellee, San Jacinto Gas Transmission Company (San Jacinto) brought condemnation proceedings against the appellants, various landowners (the Landowners), to condemn easements for the construction, operation, and maintenance of a 12 inch natural gas pipeline over the property of the Landowners.¹ The trial courts rendered partial summary judgments for San Jacinto, finding San Jacinto had conducted the statutorily required good faith negotiations, and the trial courts had jurisdiction. The cases were tried separately to juries on the issue of just compensation. The final judgments vested the easement rights in San Jacinto and awarded the Landowners compensation. The sole issue presented by the Landowners on appeal is limited to the jurisdictional question of whether San Jacinto engaged in good faith negotiations and made bona offers to them as is statutorily required under section 21.012 of the Texas Property Code. We affirm.

Background and Procedural Facts

San Jacinto is a gas utility with the power of eminent domain under sections 181.001, 181.004, and 181.008 of the Texas Utility Code. In 1996, San Jacinto undertook to build a 12 inch natural gas pipeline approximately ten miles long through Fort Bend County, Texas. The Landowners owned interests in the property across which San Jacinto sought permanent and temporary easements for its pipeline.

The record shows that San Jacinto's right-of-way agent made contact several times with each of the Landowners over a period of several weeks. Each of the Landowners made it clear to San Jacinto's agent they simply did not want the pipeline on their property. Some stated they would not sell a right of way at the time they were approached and demanded the pipeline be rerouted off their property. Others stated they did not want to hear any proposal and were opposed to the pipeline.

San Jacinto hired a state-certified general real estate appraiser to calculate the value of the easements. Based on the appraisals, San Jacinto offered the Landowners an amount far greater than the appraised value for the easements on their respective properties. David M. Dunwoody, San Jacinto's right-of-way manager, testified by affidavit that it is San Jacinto's policy, in order to avoid litigation, to pay more than fair market value for property it condemns. He stated that, as with all landowners along the route, the terms of any proposed easement were negotiable. He further stated that the Landowners, however, were not satisfied with the amount of money offered, and San Jacinto refused their demands because they vastly exceeded fair market value or required unacceptable terms.

The Landowners do not dispute the amount of the offers. Instead, the Landowners contend San Jacinto did not negotiate in good faith because its offers included three additional property rights they claim San Jacinto had no right to condemn: (1) the right to transport substances in addition to natural gas; (2) the obligation to warrant and defend title to the easement; and (3) the right to assign the easement to any person or entity.

San Jacinto filed petitions in condemnation, contending it was "unable to agree" with the Landowners on the amount of damages. The petitions in condemnation did not include the three rights, set out above, which had been included in the original offers. The county court appointed special commissioners to assess damages. TEX. PROP.CODE ANN. § 21.014 (Vernon 1984). The Landowners objected to the special commissioners' awards and demanded jury trials. TEX. PROP.CODE ANN. § 21.018 (Vernon 1984).

About ten months later, San Jacinto filed motions for partial summary judgment, arguing that: (1) the county courts had jurisdiction; (2) San Jacinto satisfied all statutory prerequisites under section 21.012 of the Texas Property Code to bring the condemnation actions; and (3) the only fact issues remaining for trial were the amounts of damages. In response, the Landowners filed pleas to the jurisdiction and cross-motions for partial summary judgment. The Landowners argued that the trial courts did not have jurisdiction because San Jacinto did not conduct the statutorily required good faith negotiations. San Jacinto responded that it had acted in good faith because its bona fide offers were based on a reasonably thorough investigation and an honest assessment of the amounts of just compensation.

The trial courts granted San Jacinto's motions for partial summary judgment and denied the Landowners' cross-motions, finding San Jacinto "met all other statutory requirements to begin its eminent domain proceeding and to invoke the jurisdiction of the Court, including the requirement that it engage in good faith negotiations." These cases were tried separately to juries on the issue of just compensation. The final judgments vested the easement rights in San Jacinto and awarded the Landowners compensation, based on the respective jury verdicts. The Landowners do not complain about the jury verdicts, but limit their appeals to the jurisdictional issue of the statutorily required good faith negotiations.

Eminent Domain Proceedings

The Texas land condemnation scheme is a two-part procedure consisting of an initial administrative proceeding and then, if necessary, a judicial proceeding. Amason v. Natural Gas Pipeline Co., 682 S.W.2d 240, 241-42 (Tex.1984). When settlement cannot be reached between a condemnor and a landowner, the condemnor must file a petition in condemnation in the proper court of the county in which the land is located. TEX. PROP.CODE ANN. §§ 21.001, .012, .013 (Vernon 1984 & Supp.2001). Filing the petition is the first step in the proceeding, and it is by virtue of this step that jurisdiction over the subject matter is acquired. State v. Nelson, 160 Tex. 515, 334 S.W.2d 788, 790 (1960). After the petition is filed, the trial court appoints three special commissioners who conduct hearings, assess damages, and file an award reflecting their opinion of the value of the land. TEX. PROP.CODE ANN. §§ 21.014, .015, .016 (Vernon 1984). The proceedings are administrative in nature from the time the petition in condemnation is filed until the special commissioners' award is made. Amason, 682 S.W.2d at 242. If satisfied with the commissioners' award, the condemnor may either pay the amount to the landowner or deposit the amount into the registry of the court. TEX. PROP.CODE ANN. § 21.021(a)(1) (Vernon 1984).

If either party is dissatisfied with the award, timely objections may be filed with the appropriate court. TEX. PROP. CODE ANN. § 21.018(a). Filing timely objections vacates the special commissioners' award and converts the administrative proceedings into a normal pending cause, with the condemnor as plaintiff and landowner as defendant. Amason, 682 S.W.2d at 242. The trial court's jurisdiction as a court is invoked when the objections are filed. John v. State, 826 S.W.2d 138, 141 n. 5 (Tex.1992).

Statutorily Required Good Faith Negotiations

The Landowners contend the trial courts erred in granting San Jacinto's motions for partial summary judgment. Specifically, the Landowners argue that the trial courts lacked jurisdiction because San Jacinto did not engage in the statutorily required good faith negotiations. Section 21.012 of the Property Code provides:

(a) If ... a corporation with eminent domain authority ... wants to acquire real property for public use but is unable to agree with the owner of the property on the amount of damages, the condemning entity may begin a condemnation proceeding by filing a petition in the proper court.

(b) The petition must:

....

(4) state that the entity and the property owner are unable to agree on the damages.

TEX. PROP.CODE ANN. § 21.012 (Vernon 1984) (emphasis added).

The condemnor has the burden of pleading and proving that before it initiated the condemnation proceeding, it was "unable to agree" with the landowner as to the amount of damages that would result from the taking of the landowner's property. State v. Hipp, 832 S.W.2d 71, 75 (Tex. App.-Austin 1992), rev'd on other grounds, 867 S.W.2d 781 (Tex.1993). Without such pleading and proof, the trial court has no jurisdiction to entertain the proceeding or grant the requested relief. Id. To show the jurisdiction of the court to try a condemnation case, the condemnor must prove strict compliance with section 21.012. See Anderson v. Clajon Gas Co., 677 S.W.2d 702, 704 (Tex.App.-Houston [1st Dist.] 1984, no writ) (holding that to show jurisdiction, condemnor must prove strict compliance with former statute governing notice and return of service).²

The "unable-to-agree" condition refers to a bona fide attempt to agree on damages and includes a bona fide offer by the condemnor to pay the estimated true value of land. State v. Schmidt, 894 S.W.2d 543, 544-45 (Tex.App.-Austin 1995, no writ). The condemnor's duty to engage in good faith negotiations to acquire the...