Pr Investments and Specialty Reta. v. State

• Decision Date: 15 February 2008
• Docket Number: No. 04-0431.,04-0431.
• Citation: 251 S.W.3d 472
• Parties: PR INVESTMENTS AND SPECIALTY RETAILERS, INC., Petitioners, v. The STATE of Texas, Respondent.
• Court: Texas Supreme Court

251 S.W.3d 472

PR INVESTMENTS AND SPECIALTY RETAILERS, INC., Petitioners, v. The STATE of Texas, Respondent.

No. 04-0431.

Supreme Court of Texas.

Argued March 21, 2007.

Decided February 15, 2008.

Rehearing Denied May 30, 2008.

Greg Abbott, Attorney General of Texas, Barry Ross McBee, Edward D. Burbach, Rafael Edward Cruz, Joseph Hughes, Susan Desmarais Bonnen, Danica Lynn Milios, David S. Morales, Office of the Attorney General, Kristofer S. Monson, Assistant Solicitor General, Kent C. Sullivan, First Assistant Attorney General, Austin, TX, for Respondent.

H. Dixon Montague, Gwen J. Samora, Billy Coe Dyer, Charles Black McFarland, Vinson & Elkins, L.L.P., W. Allyn Hoaglund, Hoaglund Law Firm, Houston, TX, for Petitioner.

Stephen I. Adler, Barron Adler & Anderson, LLP, Austin, TX, Amicus Curiae.

Justice WILLETT delivered the opinion of the Court.

In this condemnation case, we consider whether the trial court retains jurisdiction in proceedings under chapter 21 of the Property Code when the condemning authority's road-design plan varies from what was considered by the special commissioners. We hold that a condemning authority's decision to change the traffic-flow design (revising the road's signs and stripes but not its intended use) does not divest the trial court of jurisdiction over the trial de novo. Accordingly, the trial court erred in dismissing the State's condemnation action on jurisdictional grounds and in imposing more than $650,000 in fees and costs as a sanction. We affirm the court of appeals' judgment.

I. Background

In 1997, the Texas Department of Transportation (TxDOT) filed a condemnation petition in a county court at law in Harris County, seeking to condemn a .3407-acre portion of a developed, twenty-three-acre tract owned by Petitioner PR Investments (PRI) bordering South Main Street (Highway 90A) in Houston. Petitioner Specialty Retailers, Inc. leased an office complex and distribution facility on PRI's property. TxDOT condemned the .3407-acre strip in order to construct a frontage road along PRI's property as part of TxDOT's project to widen South Main Street and convert it from a four-lane divided highway to a six-lane, controlled-access highway.

Under Property Code section 21.014, the court appointed three special commissioners to conduct an administrative hearing and assess the appropriate condemnation damages.

TxDOT's initial design plan for the frontage road (the Corder Plan) included two one-way lanes that narrowed to a single lane at the driveway to PRI's remaining property. Prior to the special commissioners' hearing, however, and in response to concerns from PRI and Specialty Retailers about safe access to and from the property, TxDOT devised a new plan for striping and signing the road (the Sparks Plan) that would provide a dedicated deceleration and acceleration lane for vehicles entering and exiting the property.

The commissioners learned at the hearing that TxDOT would be following the Sparks Plan, and there is no evidence that TxDOT was not committed to the Sparks Plan at the time of the commissioners' hearing. Specialty Retailers was satisfied with the Sparks Plan and did not participate in the hearing. PRI, however, offered evidence that the Sparks Plan would limit its ability to build additional driveways, thus impairing access and depressing the remaining property's value. The commissioners assessed $166,000 in damages. TxDOT and PRI each appealed under section 21.018, returning the case to the county court at law for trial de novo.

Shortly before trial, TxDOT abandoned the Sparks Plan, which the commissioners had considered, in favor of the initial Corder Plan. TxDOT notified PRI of the change a few days before trial but did not notify Specialty Retailers. Petitioners contend that TxDOT's reversion to the Corder Plan materially altered the compensation issues before the trial court and rendered the earlier special commissioners' proceeding a worthless exercise. Petitioners cite the Property Code provisions that the amount of damages assessed turns in part on "the effect of the condemnation on the value of the property owner's remaining property"¹ and that "the special commissioners shall admit evidence on . . . the use of the property for the purpose of the condemnation."²

The trial court heard argument on whether it could or should proceed in light of TxDOT's change in highway plans. It decided that TxDOT would not be allowed to try the case based on the Corder Plan, and that TxDOT could either dismiss the case and start over with a second administrative hearing, or try the case based on the Sparks Plan. TxDOT objected to this choice, because it believed the trial could proceed under the Corder Plan and because it had no intention of actually building the relevant portion of the highway under the Sparks Plan. Nonetheless, TxDOT stated that it would "proceed in protest" under the Sparks Plan. This position led to further debate about whether the case should proceed under a fiction. In the course of arguing whether and how to proceed, TxDOT repeatedly moved for a continuance. Petitioners moved for sanctions and for dismissal of the case, arguing that the court lacked jurisdiction to proceed. From the bench the court granted the motion for sanctions and the motion to dismiss for lack of jurisdiction.

In its final judgment that included findings of fact and conclusions of law, the trial court dismissed the case without prejudice, awarded Petitioners $650,651.47 (all their expert-witness and attorneys' fees and expenses), and ordered TxDOT to surrender possession of the .3407-acre tract. In its conclusions of law, the court held that it "lacked jurisdiction to proceed" under the Corder Plan because "it was reasonable to conclude from the evidence and representations of counsel that the [Corder Plan] deprived the Property Owners of greater rights and imposed greater burdens on the remainder Property than did the [Sparks Plan]."

As independent bases for awarding Petitioners all their fees and expenses, the trial court concluded that such fees and expenses should be awarded: (1) because under Property Code section 21.0195(c) TxDOT failed "to bring the proceeding properly"; (2) as a sanction for filing a frivolous claim under Texas Rule of Civil Procedure 13, chapter 105 of the Civil Practice and Remedies Code (applicable to frivolous claims by a State agency), and the court's inherent powers; and (3) as discovery sanctions under Texas Rule of Civil Procedure 215. Relevant to discovery sanctions, the trial court found that twelve experts had been deposed during discovery and that the examination of all of them was "done in reliance" on the Sparks Plan.

TxDOT appealed. A panel of the court of appeals affirmed,³ holding that the trial court did not have jurisdiction to hear the case because the Corder Plan had not been considered by the special commissioners.⁴ The panel also upheld the award of fees and expenses to Petitioners.⁵

Sitting en banc, the court of appeals withdrew the panel decision, and in a 5-4 decision reversed the trial court's judgment and remanded the case for further proceedings.⁶ The en banc court held that the trial court had jurisdiction to proceed under the Corder Plan.⁷ It also held that fees and expenses were not properly awarded under Property Code section 21.0195, Rules 13 and 215, chapter 105 of the Civil Practice and Remedies Code, or the trial court's inherent power.⁸ The en banc court held that while TxDOT might have engaged in conduct warranting discovery sanctions, the award of fees and expenses was unjust and excessive; it remanded the case for further proceedings "including but not limited to the trial court's consideration of what amount of monetary sanctions against the State would be just and not excessive."⁹

II. Discussion

A. Trial Court Jurisdiction

The trial court held that TxDOT's change in the road's lane patterns after the special commissioners' hearing deprived the court of jurisdiction to hear the case. PRI argues that the trial court's jurisdictional ruling was correct because, in a condemnation proceeding, the trial court's jurisdiction is "appellate" and therefore TxDOT is prohibited from changing the roadway design in a manner that materially alters the "compensation issues on appeal" to the trial court. It argues that "the trial court, acting as an appellate court, should refuse to address compensation facts materially different from those considered by the special commissioners" if doing so would prejudice the property owner and "deprive him of a meaningful hearing before the special commissioners." PRI points out that Property Code section 21.018 is titled "Appeal from Commissioner's Findings." It also argues that in State v. Nelson we made reference to the county court's "appellate" jurisdiction in a condemnation case.¹⁰ Specialty Retailers essentially makes the same arguments.

Assuming that TxDOT's pretrial shift to the Corder Plan altered facts relevant to the compensation due Petitioners for the taking of their property, this change of plans did not divest the trial court of jurisdiction to hear the case. There is no requirement that, for the trial court to retain jurisdiction over a condemnation case, all material facts relevant to damages must remain static after the special commissioners have ruled.

The trial court's function in a condemnation proceeding is "appellate" in the sense that the case is first considered by the special commissioners, and hence, as we noted in Nelson, the court's jurisdiction "is appellate as distinguished from original or concurrent."¹¹ The court's jurisdiction is not, however, "appellate" in the sense that the evidence is fixed in the record of the proceedings below and the court is confined to that paper record, as ordinarily occurs when an appellate court reviews a case. Quite the opposite, the statutory scheme makes no provision for the commissioners' hearing to be...