Sefzik v. City of McKinney, 05-04-00609-CV.

• Decision Date: 15 August 2006
• Docket Number: No. 05-04-00609-CV.,05-04-00609-CV.
• Parties: Roger SEFZIK and Jennifer Sefzik, Appellants, v. CITY OF McKINNEY, Appellee.
• Court: Texas Court of Appeals

198 S.W.3d 884

Roger SEFZIK and Jennifer Sefzik, Appellants, v. CITY OF McKINNEY, Appellee.

No. 05-04-00609-CV.

Court of Appeals of Texas, Dallas.

August 15, 2006.

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Steven Baggett, James B. Harris, Thompson & Knight, L.L.P., Dallas, TX, for appellants.

Mark E. Goldstucker, Brown & Hofmeister, L.L.P., Richardson, TX, Edwin P. Voss, Jr., Robert F. Brown, Brown & Hofmeister, L.L.P., Dallas, TX, for appellee.

Before Justices WRIGHT, MOSELEY, and LANG.

OPINION

Opinion by Justice MOSELEY.

The City of McKinney conditioned approval of a subdivision development on the payment of certain road construction costs. The developer's assignees, Roger and Jennifer Sefzik, alleged the City imposed an improper exaction as a condition to obtaining a building permit to develop the land, thereby taking private property without providing adequate compensation in violation of article I, section 17 of the Texas Constitution. Both parties moved for summary judgment. The trial court denied the Sefziks' motion and granted the City's motion on the basis of waiver and estoppel. The Sefziks contend that the trial court erred in granting the City's motion for summary judgment. Because none of the grounds urged in the City's motion can support summary judgment for the City, we reverse the trial court's final judgment and remand this case for further proceedings.

I. FACTUAL AND PROCEDURAL BACKGROUND

The property at issue here is a parcel of approximately fifteen acres known as Lot 1, Block A of the Creek Point Addition of the City. The property was to be developed as an apartment complex. The property is bounded on the west by State Highway 5. Wilmeth Road intersects with State Highway 5 in a "T" configuration, close to the southern boundary of the property. Wilmeth Road extends west from that intersection, but does not extend east of State Highway 5. The City's thoroughfare plan shows a future extension of Wilmeth Road (New Wilmeth Road) east across State Highway 5, which will cross the southwest corner of the property as well as a flood plain. However, when and if it is built New Wilmeth Road will not directly access the development.

In September 1999, the Sefziks, who owned the property, contracted to sell it to Picerne Development Corporation. Picerne later assigned the contract to the developer, Creek Point, L.P. Under the contract of assignment, the closing on the purchase of the property was to occur in late May 2000.

Creek Point applied to the City for approval to develop an apartment complex on the property. The development was designed to qualify for tax exempt bonds issued by the State of Texas to assist in developing affordable housing. Creek Point had succeeded in reserving such bonds, subject to a non-negotiable expiration date in late May 2000. Thus Creek Point had to close on the purchase of the property and have the City's approval of the project in place by late May 2000, or else it would lose its tax-exempt bond financing.

In mid-April 2000, the City informed Kurt P. Kehoe (a Picerne officer who was in charge of the approval process) and Creek Point representatives that, as a condition to the City's approval of the proposed development, Creek Point would have to construct the part of New Wilmeth Road that crossed the property. The City contended that the thoroughfare plan, showing the road crossing the property, and section 40-6 of the McKinney City Code required Creek Point to construct, at the time of or prior to construction of the primary development, the portion of the Wilmeth Road extension crossing its property.¹ Kehoe and others complained to the City about this requirement. Kehoe believed the construction of the road across a flood plain would "require extensive effort and expense."

At an April 11, 2000 planning and zoning commission meeting to review the site plan, Creek Point representatives objected to the requirement to build New Wilmeth Road. However, City representatives told Creek Point that it would have to either construct a portion of New Wilmeth Road or enter into a Facilities Agreement² to pay $269,360 for a portion of the road.³ At the May 16, 2000 hearing of the city council, Kehoe presented his concerns regarding the propriety and fairness of the "ultimatum" to build or pay for part of New Wilmeth Road as a condition to developing the property. At that hearing, the Sefziks argued that New Wilmeth Road would never benefit the property due to the lack of access and the flood plain, and proposed to modify the Facilities Agreement by limiting the payment to roadway impact fees only, not the assessment of New Wilmeth Road construction costs. The city council rejected the proposal, voting to accept the Facilities Agreement.

On May 24, 2000, after the city council meeting, Creek Point and the Sefziks amended their purchase contract to reduce the sales price. At the same time, and in exchange for the price reduction, Creek Point assigned the Sefziks any and all claims it had against the City. The Assignment and Agreement document states:

Both parties agree that the imposition of the Fees [in the amount of $269, 360 for the construction of New Wilmeth Road] by the City is based upon questionable legal grounds as the Road and bridge add no value or utility to the Property, but acknowledge that in order for the project to proceed after closing, [Creek Point] may be required to pay such Fees at the time the building permit is issued.

Creek Point signed the Facilities Agreement on July 19, 2000; the City signed it on July 28, 2000. The City issued a building permit to Creek Point in December 2000.

In July 2002, the Sefziks sued the City. In their first amended original petition, the Sefziks asserted that they had been assigned Creek Point's claims against the City for imposing the requirement to build or pay for New Wilmeth Road. They alleged the City conditioned the issuance of a building permit on a requirement that funding be provided for the future construction of a road not needed to handle traffic from the new development. Specifically, they alleged that New Wilmeth Road did not further any legitimate state interest in connection with the property because it did not address or lessen traffic impact resulting from the property development, and that there was no "rough proportionality" between the traffic generated by the property development and the need to extend Wilmeth Road because the extension, if it occurred at all, would be in the future after development was completed and additional traffic demand from the property was already imposed on the City's roadways. They requested that the court find that a taking had occurred and requested as damages adequate compensation, pursuant to article I, section 17 of the Texas Constitution and the Declaratory Judgments Act. They also pleaded for recovery of attorney's fees pursuant to section 37.009 of Declaratory Judgments Act.

After the Sefziks filed suit, the City realized Creek Point had not paid the $269,360; it then filed a third-party petition against Creek Point for breach of the Facilities Agreement. The City obtained an interlocutory summary judgment on its breach of contract claim against Creek Point, as well as costs, interest, and attorney's fees. Creek Point then paid the funds, which were escrowed for the future road construction. Subsequently, the trial court granted the City's motion to dismiss with prejudice all its claims against Creek Point.

The Sefziks filed a motion for summary judgment, and the City filed a "second motion" for summary judgment, urging several grounds. The Sefziks responded to the City's motion, addressing all of the City's grounds. The trial court's final judgment expressly denied the Sefziks' motion, granted the City's second motion for summary judgment "based on waiver and estoppel (by assignor entering into a valid and enforceable Facilities Agreement)," and denied the City's second motion on all grounds other than waiver and estoppel. This appeal timely followed.

II. STANDARD OF REVIEW

The standards for reviewing a summary judgment are well-established. The party moving for summary judgment has the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. See TEX.R. Civ. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex.1985); Swilley v. Hughes, 488 S.W.2d 64, 67 (Tex. 1972). A defendant moving for summary judgment must either (1) disprove at least one element of the plaintiff's theory of recovery, or (2) plead and conclusively establish each essential element of an affirmative defense. See City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678-79 (Tex.1979); Zep Mfg. Co. v. Harthcock, 824 S.W.2d 654, 657 (Tex.App.-Dallas 1992, no writ). We should consider not only all those grounds the trial court ruled on, but also those grounds the trial court did not rule on but that are preserved for appellate review. Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 625-26 (Tex. 1996). To preserve the grounds, the party must raise them in the summary judgment proceeding and present them in an issue or cross-point on appeal. Id. at 626; Carrico v. Kondos, 111 S.W.3d 582, 585 (Tex. App.-Fort Worth 2003, pet. denied). "When both parties move for summary judgment, the trial court may consider the combined summary-judgment evidence to decide how to rule on the motions." Jon Luce Builder, Inc. v. First Gibraltar Bank, F.S.B., 849 S.W.2d 451, 453 (Tex. App.-Austin 1993, writ denied) (per curiam).

III. APPLICABLE LAW

Article I, section 17 of the Texas Constitution prohibits the taking of private property for public use without just compensation. TEX. CONST. art. I, § 17; see Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 933 (Tex.1998). This provision and the Just Compensation Clause of the Fifth Amendment to the United States Constitution, applied to the individual states...