Soncy Road Property, Ltd v. Chapman
| Decision Date | 25 April 2003 |
| Docket Number | No. CIV.A.2-01CV-0379.,CIV.A.2-01CV-0379. |
| Citation | 259 F.Supp.2d 522 |
| Parties | SONCY ROAD PROPERTY, LTD, Amarillo Cottonseed Hull Co., Inc., Golden Spread Energy Inc., City Machine & Welding, Inc., Krause Landscape, Inc., and Lance Plunk, Plaintiffs, v. George CHAPMAN, Karen Corp., and City of Amarillo, Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Joe W. Hayes, Brian P. Heinrich, Templeton Smithee Hayes Field Young & Heinrich, Amarillo, TX, for Karen Corp.
Michael H. Loftin, Daniel Leon Schaap, Underwood Law Firm, Amarillo, TX, for City of Amarillo.
Joe L. Lovell, Lovell Lovell Newsom & Isern, Amarillo, TX, Nancy J. Stone, Law Office of Nancy J. Stone, Amarillo, TX, for Amarillo Cottonseed Hull Co., Inc.
G.E. Carlisle, Amarillo, TX, pro se.
Geneva Carlisle, Amarillo, TX, pro se.
Anna Bell Batenhorst, Levelland, TX, pro se.
Gary Rankins, Amarillo, TX, pro se.
Jimmie Ann Batenhorst, Levelland, TX, pro se.
Lee Roy Rea, Bushland, TX, pro se.
Linda Rankins, Bushland, TX, pro se.
Amarillo 3-B Inc., Amarillo, TX, pro se.
Richard C. Naylor, Law Office of Richard C. Naylor, Amarillo, TX, for Amarillo 3-B, Inc.
Plaintiffs own land abutting a railroad corridor which was abandoned by the Burlington Northern and Santa Fe Railway Company (BNSF) railroad.1 Defendants Karen Corp. and the City of Amarillo, as "Buyer," entered into a contract to buy the abandoned railroad corridor for $506,000.00. Pursuant to the contract, the railroad agreed to convey, and did convey, a specific separate portion of the corridor, the Western Corridor, to Karen Corp. and a different portion, the Eastern Corridor, to the City. In fact, Karen Corp. paid the entire consideration and paid an additional $100,000.00 to the City. Plaintiffs challenge the transaction and allege that it deprived them of property rights in the Western Corridor in violation of the due process and taking provisions of the United States Constitution. They contend inter alia that under Texas statutes, Karen Corp. should be required in equity to convey the portion of the corridor abutting each Plaintiffs land to that Plaintiff for an apportioned amount of the consideration paid by Karen Corp.. The case was tried to the Court without a jury.
Texas statutory law controls how a City may dispose of property. Texas Local Government Code § 272.001 provides, in relevant part:
(a) Except for the types of land and interests covered by Subsection (b), ... before land owned by a political subdivision of the state may be sold or exchanged for other land, notice to the general public of the offer of the land for sale or exchange must be published in a newspaper of general circulation in ... the county in which the land is located.... The notice must include a description of the land, including its location, and the procedure by which sealed bids to purchase the land or offers to exchange the land may be submitted. The notice must be published on two separate dates and the sale or exchange may not be made until after the 14th day after the date of the second publication.
(b) The notice and bidding requirements of Subsection (a) do not apply to the types of land and real property interests described by this subsection and owned by a political subdivision. The land and those interests described by this subsection may not be conveyed, sold, or exchanged for less than the fair market value of the land or interest unless the conveyance, sale, or exchange is with one or more abutting property owners who own the underlying fee simple. The fair market value is determined by an appraisal obtained by the political subdivision that owns the land or interest or, in the case of land or an interest owned by a home-rule municipality, the fair market value may be determined by the price obtained by the municipality at a public auction for which notice to the general public is published in the manner described by Subsection (a). The notice of the auction must include, instead of the content required by Subsection (a), a description of the land, including its location, the date, time, and location of the auction, and the procedures to be followed at the auction. The appraisal or public auction price is conclusive of the fair market value of the land or interest, regardless of any contrary provision of a home-rule charter.
This subsection applies to:
(1) narrow strips of land, or land that because of its shape, lack of access to public roads, or small area cannot be used independently under its current zoning or under applicable subdivision or other development control ordinances;
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(c) The land or interests described by Subsection (b)(1) and (2) may be sold to:
(1) abutting property owners in the same subdivision if the land has been subdivided; or
(2) abutting property owners in proportion to their abutting ownership, and the division between owners must be made in an equitable manner.
(d) This section does not require the governing body of a political subdivision to accept any bid or offer or to complete a sale or exchange.
TEX. LOC. GOV'T CODE ANN. § 272.001(a)—(d) (Vernon 1999 & Supp. 2002).
This lawsuit centers around the sale of a railroad corridor owned by BNSF running from SW 7th Street in Amarillo, Texas, west to Bushland, Texas, for approximately 11.5 miles. The corridor is roughly 100 feet wide along its entire length. Negotiations for the sale took place over more than an eighteen month period.
On May 31, 1996, a notice of intent to abandon the corridor was published in a local newspaper. BNSF used Catellus Management Corporation to broker the sale of the corridor. Catellus had Steve Rogers appraise the corridor. Mr. Rogers appraised the corridor at $506,000.00 as of June 18, 1997.
Dee Miller, as Trustee of the Chapman Children's trusts, was initially interested in acquiring the railroad corridor from Coulter Street west to Soncy Road because it adjoined property that was owned by Defendant George Chapman or one of the Chapman entities. Chapman sought to acquire the railroad property from BNSF. However, BNSF would not sell the railroad property to Chapman. BNSF preferred to sell to a governmental entity. BNSF offered the entire corridor to the City.
The City was interested in acquiring only the Eastern Corridor, approximately 3.5 miles running from SW 7th Street west to Coulter Street, for the development of a linear park. It was not willing to pay the stated price for the corridor. BNSF was not willing to sell just the part within the City limits.
City Manager John Ward and the Director of Community Services J.D. Smith met with George Chapman and Dee Miller in November 1997 to explore whether the City would assist Chapman in obtaining an easement across the corridor that he needed to develop his property for a cinema. At this meeting, they discussed the purchase of the corridor. The City and Chapman were aware of the price asked by the railroad, and Chapman expressed his willingness to pay the entire price and let the City have the land east of Coulter Street.
The corridor was formally abandoned on January 12, 1998.
In early 1998, Mathew Hickey of Catellus called John Ward who responded that the City was not interested in purchasing the corridor. Nevertheless, on February 17, 1998, Hickey faxed a proposed contract to Ward, offering the entire corridor to the City. J.D. Smith faxed the contract to Dee Miller two days later.
On February 23, 1998, Chapman obtained the easement he was seeking for the cinema.
On February 25, 1998, Ward counter-offered $250,000 for the entire corridor, stating
We felt confident that we could sell all of the railroad property west of Coulter to this property owner (or the highest bidder) for at least the $506,000 asking price, and then end up with the portion that we need for the park at no cost. Since last August however, the developer that owns the property in question has made substantial progress without the right of way, and it is our understanding that the BNSF has granted him access easements across the right of way. We believe this greatly diminishes the need for the developer to buy the remaining right of way, and consequently we believe the value has been lowered accordingly.
Hickey would not lower the asking price.
On March 21, 1998, the City distributed and published a request for proposal as follows:
The City of Amarillo, Texas a municipal corporation located in Potter and Randall Counties is seeking proposals for a joint venture on the purchase of property to be disposed of by the Burlington-Northern and Santa Fe Railway Company. The Burlington-Northern and Santa Fe Railway Company property to be disposed of ranges in widths of from 50 to 100 feet and extends from approximately SW Seventh Avenue within the Amarillo city limits to the east edge of Bushland, Texas, a distance of approximately 11.5 miles. The City of Amarillo proposed keeping the ownership of the portion of the railroad right-of-way extending from SW Seventh Avenue west to the east right-of-way line of Coulter Street a distance of approximately 3.5 miles.... The remaining property from Coulter Avenue West will become the property of the city's partner in this joint venture.
This joint venture proposal is subject to the following conditions.
1. The City of Amarillo has the right to accept a proposal or reject all proposals.
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7. A division of interests is conditioned on the City of Amarillo obtaining the right-of-way from the Burlington-Northern and Santa Fe Railway Company.
The applicant can propose participation in this joint venture by a cash payment, land, improvements to property or a combination of the above. The City of Amarillo will review all proposals and determine the best proposal of those submitted. The successful applicant will be required to enter into a contract with the City of Amarillo providing for the details of the...
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