Interstate Northborough v. State

• Decision Date: 25 October 2001
• Docket Number: No. 00-0070.,00-0070.
• Parties: INTERSTATE NORTHBOROUGH PARTNERSHIP, et al., Petitioners, v. STATE of Texas, Respondent.
• Court: Texas Supreme Court

66 S.W.3d 213

INTERSTATE NORTHBOROUGH PARTNERSHIP, et al., Petitioners, v. STATE of Texas, Respondent.

No. 00-0070.

Supreme Court of Texas.

Argued January 3, 2001.

Decided October 25, 2001.

H. Dixon Montague, Marie R. Yeates, Billy Coe Dyer, Sandra Garza Rodriguez, Vinson & Elkins, Houston, petitioners.

Randall M. Ward, John Cornyn, Andy Taylor, Locke, Liddell & Sapp, Linda Eads, Grady Click, Howard G. Baldwin, Deputy Atty. Gen. for Child Support., Susan Desmarais Bonnen, Walter C. Brocato, Jeffrey S. Boyd, Austin, for respondent.

Justice BAKER delivered the opinion of the Court.

We deny the State's motion for rehearing. We withdraw our opinion dated May 10, 2001, and substitute the following in its place.

This condemnation case presents two issues: (1) whether damages resulting from a commercial property's increased proximity to a roadway, with attendant loss of curb appeal, green space, and "buffer" zone, are special rather than community damages, and (2) whether evidence about unsafe access to the remainder property and the cost to cure is admissible to show special compensable damages. We conclude that, under the facts in this case, damages due to increased proximity to the roadway are special damages and thus compensable and that the trial court properly admitted evidence about these damages. Further, because unsafe access to remainder property and the cost to cure are special damages, we conclude that the trial court properly admitted evidence about these damages. We also conclude that the trial court properly refused the State's requested instruction that denial of access to former driveways resulting in longer travel or increased inconvenience is noncompensable. Finally, assuming without deciding that the trial court abused its discretion in excluding certain evidence the State offered, the error was harmless and did not cause the trial court to render an improper judgment. Accordingly, we reverse the court of appeals' judgment and render judgment for Interstate Northborough Partnership.

I. BACKGROUND

In September 1991, the State brought a condemnation suit to acquire a part of Interstate Northborough Partnership's property located at the corner of Interstate Highway 45 and Meadowfern Drive in Houston. The State acquired 0.365 acres of INP's property as part of its project to widen I-45 and its frontage road. The State used the condemned land to construct new frontage road lanes. The State also erected two 6.5 feet tall retaining walls between INP's property and the frontage road near the northern and southern driveways to INP's land.

Before the condemnation, INP's property consisted of a 4.8 acre tract with an eight-story building, a two-story parking garage in the rear, and a surface parking area in the front. The building was 96 feet away from the frontage road and had a landscaped front yard that INP refers to as its "buffer" zone. After the condemnation, however, the building was only 22.5 feet from the frontage road. Also, because the condemnation left the building only 12 feet from the State's existing right-of-way, it violated Houston's building setback ordinance and a deed restriction. Moreover, the condemnation shortened the driveways to the surface parking lot and parking garage and caused INP to lose several surface-lot parking spaces. INP claims that its increased proximity to the frontage road, which resulted in the loss of curb appeal, green space, and "buffer" zone, significantly decreased the remainder property's market value. Further, INP alleges that the condemnation necessitated certain modifications to the remainder property to ensure safety to cars entering and leaving the property.

Before trial, the State moved to exclude evidence about diminished access to INP's remainder property, claiming that was a noncompensable injury because reasonable access to the remainder property still existed. The trial court denied the motion and determined that the condemnation caused a material and substantial impairment of access as a matter of law. The State also moved to exclude evidence about INP's increased proximity to the frontage road, arguing that this was a noncompensable injury because it flowed from the State's use of its existing right of way. The trial court also denied this motion.

At trial, the jury considered one issue: the difference in market value of INP's whole property immediately before the taking and the market value of the remainder property immediately after the taking. INP's expert testified that the condemnation damages totaled $1,949,845. This figure includes the decrease in the remainder property's market value, as well as renovation costs to the remainder that the condemnation necessitated. The jury awarded $1,000,000 in damages, and the trial court rendered judgment on the verdict.

The State appealed, arguing that the trial court's judgment is based on evidence of noncompensable damages. Specifically, the State asserted that the trial court erred by admitting evidence about INP's increased proximity to the frontage road and diminished access to the remainder property. The State also argued that the trial court erred by refusing the State's requested jury instruction that denial of access to former driveways that results in longer travel and increased inconvenience is not compensable.

The court of appeals reversed the trial court's judgment, holding that damages due to increased proximity to the frontage road are noncompensable community damages that INP shared in common with other landowners in the area. 8 S.W.3d 4, 13. It also held that the trial court erred by finding a material and substantial impairment of access to INP's remainder property. 8 S.W.3d at 10. However, the court of appeals concluded that INP's evidence at trial actually pertained to unsafe access to the remainder property and the cost to cure, rather than material and substantial impairment of access. 8 S.W.3d at 10. The court of appeals determined that this evidence reflects special damages, and thus it held that the trial court properly admitted this evidence and did not abuse its discretion by refusing to submit the State's requested jury instruction. 8 S.W.3d at 10. Because the trial court's judgment was based partly on evidence of noncompensable damages, the court of appeals reversed and remanded the cause for a new trial. 8 S.W.3d at 14. The dissent argued that INP's increased-proximity damages are compensable because this was not an injury suffered in common with other properties. 8 S.W.3d at 14-15.

II. APPLICABLE LAW

A. Condemnation Damages

The Texas Constitution provides that "[n]o person's property shall be taken, damaged or destroyed for or applied to public use without adequate compensation being made." Tex. Const. art. I, § 17. The Texas Property Code provides for condemnation damages:

If a portion of a tract or parcel of real property is condemned, the special commissioners shall determine the damage to the property owner after estimating the extent of the injury and benefit to the property owner, including the effect of the condemnation on the value of the property owner's remaining property.

Tex. Prop.Code § 21.042(c). We calculate condemnation damages to remainder property when only part was taken for public use by ascertaining the difference between the market value of the remainder property immediately before the condemnation and the market value of the remainder property immediately after the condemnation, taking into consideration the nature of any improvements and the use of the land taken. State v. Carpenter, 126 Tex. 604, 89 S.W.2d 194, 197 (1936).

In State v. Schmidt, we recognized that not all condemnation damages are compensable. 867 S.W.2d 769 (Tex.1993). There, the State condemned strips of property as part of its project to convert a roadway into a controlled-access highway. The landowners sought compensation for the remainder properties' decrease in market value due to traffic diversion, increased circuity of travel to the property, lessened visibility to passersby, and the inconvenience of construction activities. Schmidt, 867 S.W.2d at 770-71. The State argued that such damages are noncompensable under the Constitution and the Property Code. Schmidt, 867 S.W.2d at 773. For two distinct reasons, we agreed.

First, we considered the State's contention that the damages were noncompensable because they resulted from the State's new use of its existing right-of-way and property taken from other landowners. Schmidt, 867 S.W.2d at 777-78. We explained that section 21.042 of the Property Code allows recovery only for the effects of the State's use of the condemned land on the value of the remainder property. This rule exists, we further explained, because the effects of condemnation on the remainder property differ from the effects of the State's new use of its existing right-of-way or adjoining land. Schmidt, 867 S.W.2d at 777-78. And, we recognized that this rule, established by the United States Supreme Court in Campbell v. United States, 266 U.S. 368, 372, 45 S.Ct. 115, 69 L.Ed. 328 (1924), applies unless:

(1) the land taken from the condemnee landowner was indispensable to the ... project; (2) the land taken constituted a substantial (not inconsequential) part of the tract devoted to the project; and (3) the damages resulting to the land not taken from the use of the land taken were inseparable from those to the same land flowing from the condemnor government's use of its adjoining land in the... project.

Schmidt, 867 S.W.2d at 778 (quoting United States v. 15.65 Acres of Land, 689 F.2d 1329, 1332 (9th Cir.1982)).

Applying the Campbell rule, we concluded that the State's converting the roadway to a controlled-access highway, and not the State's using the condemned strips of land, caused the traffic diversion, circuity of travel, and impaired visibility damages. Because the exception did not apply, we held that the landowners could not recover...