State v. Fiesta Mart, Inc.

• Decision Date: 03 July 2007
• Docket Number: No. 14-06-00826-CV.,14-06-00826-CV.
• Parties: The STATE of Texas, Appellant v. FIESTA MART, INC., Appellee.
• Court: Texas Court of Appeals

233 S.W.3d 50

The STATE of Texas, Appellant v. FIESTA MART, INC., Appellee.

No. 14-06-00826-CV.

Court of Appeals of Texas, Houston (14th Dist.).

July 3, 2007.

Rehearing Overruled September 20, 2007.

Kristofer S Monson, Lisa Marie Nieman, Walter C. Brocato, Austin, TX, for appellants.

Billy C. Dyer, H. Dixon Montague, Houston, TX, for Appellee.

Panel consists of Chief Justice HEDGES and Justices HUDSON and GUZMAN.

OPINION

J. HARVEY HUDSON, Justice.

The State of Texas brings this interlocutory appeal from a county court decision denying its plea to the jurisdiction. In five issues, the State complains that the court erred in denying its plea to the jurisdiction because (1) Fiesta, as a lessee of the property, does not have an ownership interest in the property being seized, (2) Fiesta cannot recover lost profits because it has not alleged impairment of access, and (3) Fiesta has failed to exhaust its administrative remedies in seeking relocation benefits. We affirm.

I. BACKGROUND

Fiesta leases 7.3704 acres of land from Weingarten Realty Investors on the northwest corner of Old Katy Road and Blalock in Houston, Texas. The property consists of a Fiesta grocery store, which occupies 91,414 square feet, a retail strip center, which occupies 13,500 square feet, and a parking lot consisting of approximately 437 parking spaces. Fiesta leases the grocery store plus "all appurtenances thereunto" on a long-term basis from Weingarten. As part of the Katy Freeway expansion project, the State filed a petition against Weingarten, Fiesta, and Vivo, Ltd.,¹ to take 1.2362 acres of the property by eminent domain. Fiesta alleges this taking eliminated 185 parking spaces from the parking lot. Three disinterested freeholders of Harris County, empaneled as Special Commissioners of the County Civil Court at Law No. 3, awarded Vivo, Weingarten, and Fiesta $7,721,575.00 in damages under section 21.042 of the Texas Property Code.² All parties appealed the commissioners' award to the trial court. Fiesta subsequently filed a counterclaim alleging inverse condemnation and seeking to recover damages to its personal property and its business losses caused by the State's taking.

The taking of a portion of Fiesta's parking lot has left Fiesta with two options. Fiesta can relocate its business in which case the State would be responsible to pay Fiesta for the entire property, or Fiesta can remain on the property and accept the State's "cure plan." The State proposed to cure Fiesta's parking shortage by condemning the retail strip center and converting that space to parking. In its objections to the commissioners' award Fiesta is pursuing both remedies in the alternative. Fiesta contends it cannot make a final decision as to whether to remain on the property until the State completes the freeway expansion.

Prior to trial, the State filed a plea to the jurisdiction in which it alleged that the trial court did not have jurisdiction over the State's condemnation claim because the State had not taken Fiesta's real property, but only the parking lot, which was not leased by Fiesta. The State further alleged the trial court had no jurisdiction over Fiesta's inverse condemnation claim because Fiesta was not entitled to recover lost profits or reimbursement for relocation expenses. The trial court denied the State's plea. On Fiesta's request, the trial court entered an order severing the State's statutory condemnation claim from Fiesta's inverse condemnation claim. The State filed this interlocutory appeal challenging the trial court's ruling on its plea to the jurisdiction in both cases.

II. STANDARD OF REVIEW

A person may appeal from an interlocutory order of a county court at law that grants or denies a plea to the jurisdiction by a governmental unit. TEX. CIV. PRAC. & REM.CODE § 51.014(a)(8) (Vernon Supp.2006). A plea to the jurisdiction contests the trial court's authority to adjudicate the subject matter of the cause of action. Texas Dep't of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex.1999). When reviewing a challenge to a trial court's subject matter jurisdiction, we review the trial court's ruling de novo. Texas Natural Resource Conservation Comm'n v. IT-Davy, 74 S.W.3d 849, 855 (Tex.2002). In reviewing the denial of a plea to the jurisdiction, we do not review the merits of the case. Chocolate Bayou Water Co. & Sand Supply v. Texas Natural Resource Conservation Comm'n, 124 S.W.3d 844, 849 (Tex.App.-Austin 2003, pet. denied). Because the statute authorizing interlocutory appeals is a narrow exception to the general rule that only final judgments and orders are appealable, we must give it a strict construction. Bally Total Fitness Corp. v. Jackson, 53 S.W.3d 352, 355 (Tex. 2001). Thus, we limit our discussion to the narrow issue of whether the trial court erred in denying the State's plea to the jurisdiction.

III. STATE'S STATUTORY CONDEMNATION CLAIM

In its first issue for review, the State contends Fiesta failed to invoke the trial court's jurisdiction over its counterclaims by failing to allege facts in its pleadings sufficient to show a compensable taking under TEX. CONST. art. I, § 17.

The procedure for condemning public property is prescribed in sections 21.012 through 21.016 of the Texas Property Code. TEX. PROP.CODE ANN. § 21.011 (Vernon 2004). If the entity with eminent domain authority cannot agree with the property owner regarding the amount of damages, it must file a petition in the proper court with a description that contains the following: (1) the property to be condemned; (2) the purpose for which the entity intends to use the property; (3) the name of the property owner; and (4) a statement that the entity and the property owner are unable to agree on the damages. TEX. PROP.CODE § 21.012(a) (Vernon 2004). The judge of the court must then appoint three disinterested freeholders who reside in the county as special commissioners to assess the damages of the property owner. TEX. PROP.CODE § 21.014 (Vernon 2004). The special commissioners must conduct a hearing to determine the amount of damages. TEX. PROP.CODE § 21.015 (Vernon 2004). If either party timely files an objection to the commissioners' award, the county court is invested with jurisdiction of the subject matter of the case. Denton County v. Brammer, 361 S.W.2d 198, 200 (Tex.1962); see also TEX. PROP.CODE § 21.018 (Vernon 2004) (providing party to condemnation proceeding may file objections in court that has jurisdiction, which shall cite adverse party and try case in same manner as other civil causes).

The State filed a petition for condemnation and listed Vivo, Weingarten, and Fiesta as owners of the property. The special commissioners issued a joint award to be divided among Vivo, Weingarten, and Fiesta to which the State, Fiesta, and Weingarten objected. In its objection to the award of the special commissioners, Fiesta alleged it had not been awarded adequate compensation for its (1) real property interests, (2) personal property interests, and (3) business losses. Fiesta did not describe what, if any, interest it might have in the condemned property. Thus, the State contends Fiesta did not invoke the jurisdiction of the court.

"It is fundamental that, to recover under the constitutional takings clause, one must first demonstrate an ownership in the property taken." Texas Dep't of Transp. v. City of Sunset Valley, 146 S.W.3d 637, 644 (Tex.2004). However, here the State alleged in its petition for condemnation that Fiesta is an "owner" of the land. "It is the general rule that the pleadings in a particular case . . . are to be regarded as judicial admissions." Kirk v. Head, 137 Tex. 44, 152 S.W.2d 726, 729 (1941). Moreover, any fact admitted is conclusively established in the case without the introduction of the pleadings or presentation of other evidence. Houston First Am. Sav. v. Musick, 650 S.W.2d 764, 767 (Tex.1983). Accordingly, the trial court acquired subject matter jurisdiction by virtue of the State's petition for condemnation. The State's first issue is overruled.

In its second issue, the State contends that tenants have only a limited interest in the condemned property. Because none of Fiesta's leased property was condemned, but only a portion of the parking lot serving the leased property, the State claims Fiesta has not shown it is entitled to compensation. The owner of any legal right or interest in land must be adequately compensated when the land is taken. Zinsmeyer v. State, 646 S.W.2d 626, 628 (Tex.App.-San Antonio 1983, no writ). Thus, unless a contrary provision exists in the lease agreement, a lessee is entitled, as a matter of law, to share in a condemnation award when part of its leasehold interest is lost by condemnation. Texaco Ref. and Mktg., Inc. v. Crown Plaza Group, 845 S.W.2d 340, 342 (Tex.App.-Houston [1st Dist.] 1992, no writ). To what extent Fiesta's leasehold interest was diminished, if it was, by the condemnation of parking spaces is a fact issue yet to be determined. The purpose of a plea to the jurisdiction is to determine the narrow issue of the trial court's authority to entertain the cause of action—it is not a vehicle for prejudging the evidence, nor is it a substitute for a trial on the merits. The State's second issue is overruled.

In its third and fifth issues, the State contends Fiesta must, prior to filing its counterclaim, decide whether it will (1) surrender its leasehold interest and relocate, or (2) remain on the premises. The lease agreement provides that when, as here, the parking lot is reduced in size due to eminent domain proceedings below an area sufficient to provide a total of four parking spaces for each 1,000 square feet of leased space, Fiesta will have the option of terminating the lease. The State admits that Fiesta may have some compensable interest if it relocates, but argues Fiesta may have no compensable interest if it remains on the property because none of its leased space has been...