State v. Munday Enterprises

Decision Date15 January 1992
Docket NumberNo. 3-90-236-CV,3-90-236-CV
PartiesSTATE of Texas and City of Austin, Appellants, v. MUNDAY ENTERPRISES, Texas Commerce Bank-Austin, N.A. and First City National Bank of Austin, f/k/a City National Bank of Austin, Appellees.
CourtTexas Court of Appeals

Iris J. Jones, City Atty., John J. Greene, Asst. City Atty., Austin, for appellants.

John McClish, Womack & McClish, P.C., Austin, for appellees.

Before CARROLL, C.J., and ABOUSSIE and KIDD, JJ.

KIDD, Justice.

Appellants, the State of Texas and City of Austin (collectively, the "State"), appeal from a jury verdict and trial-court judgment

in favor of appellee, Munday Enterprises ("Munday"). 1

THE CONTROVERSY

This is another in a series of condemnation actions by the State to obtain property for the widening of U.S. Highway 183 within the city limits of Austin, Texas. This condemnation proceeding concerned a 1.65-acre taking out of a 15.84-acre tract owned by condemnee, Munday. The project in question involves the conversion of U.S. Highway 183 to a controlled-access highway. To eliminate grade crossings, the State intends to raise the main traffic lanes in front of Munday's property some thirty-seven feet in the air. These elevated lanes will connect at intervals to entrance and exit ramps. These ramps will connect in turn to parallel three-lane frontage roads. After completion of the project, Munday's property will adjoin one of the frontage roads. On the new freeway system, motor vehicles on the main traffic lanes will have only indirect access, by way of the frontage roads and ramps, to and from Munday's property.

The condemned property in question is an automobile dealership with several buildings and paved parking areas. Munday contends that immediately prior to the condemnation action, the property in question was one of the finest automobile dealership locations in the City of Austin. Munday alleges that because of the taking, which actually included some buildings and which moved the right-of-way line unacceptably close to other buildings, the existing car dealership could no longer continue to operate. Munday ultimately contends that due to the nature of the new freeway, the remainder property will no longer be adaptable to automobile dealership use and, therefore, the remainder property, following the condemnation project, will be damaged and its fair market value reduced.

To prove these contentions at trial, the condemnees offered substantial documentary evidence including a three-dimensional model of the property before and after the taking, numerous photographs and plats of the property, maps and drawings of the proposed freeway facility, and photographs showing construction activities similar to those to be undertaken within the part of the property actually condemned. Munday produced testimony from a land planner experienced in the planning and constructing of automobile dealerships; three former high-ranking General Motors executives, who among them had some fifty years of experience in selecting sites for automobile dealerships; two real estate appraisal witnesses with a total of more than sixty years of experience and extensive backgrounds in appraising automobile dealerships for acquisition and development; and the landowner, Bill Munday.

The condemnee's evidence was premised on the fact that the remainder property, following this condemnation action, would be less valuable than before because it would be damaged for its use as an automobile dealership site. In sum, Munday's witnesses testified that a willing buyer would not pay a willing seller as much money for the Munday tract following the completed freeway project. To justify their opinion of the diminution in value of the remainder property, Munday's experts testified that use of the remainder property as an automobile dealership would suffer because: (1) raising the main traffic lanes and constructing U.S. Highway 183 as a controlled-access freeway would result in more difficult access for prospective customers to reach the automobile dealership; (2) elevating the main traffic lanes would reduce the automobile dealership's visibility from those lanes, which is an important element in any commercial undertaking and especially new or used automobile sales; and (3) construction activities on the project would interfere with use of the tract during highway construction, which the undisputed testimony indicated would be over a lengthy period of years; all of which would The State argued in the trial court below, and contends in its points of error on appeal, that all of this testimony from Munday's expert witnesses was inadmissible and injected non-compensable elements of damage into this condemnation proceeding. The State contends that, since these elements of damages are non-compensable, the trial court erred in not instructing the jury that they could not consider these damage elements for any purpose. Furthermore, the State contends that the damages to the remainder property are the same as those suffered by the community in general and are therefore non-recoverable. The State's experts testified that the remainder property could be redeveloped as an automobile dealership, and that Munday's remaining land would not be affected at all by the condemnation or construction project.

make the property less desirable to a willing buyer.

The trial court submitted the entire cause, which was tried on the sole issue of damages, in a single jury question which required the jury to find the difference between the fair market value of the entire Munday property before the condemnation as contrasted with the value of the remainder property afterwards, considering the effect of the condemnation on the value of the remainder property. See Tex.Prop.Code Ann. § 21.042(c) (1984). The State assigns error in this broad-form submission.

There were also significant pretrial discovery disputes between the parties. Indeed, at one point the trial court entered an order striking all experts for both sides. When the original trial was postponed and reset for June 1990, the trial court, after motion and hearing, allowed both sides to supplement their discovery responses and to present their expert witnesses at the time of trial. The State assigns this action of the trial court as error.

DISCUSSION AND HOLDING

The Texas Const. art. I, § 17 provides as follows:

No person's property shall be taken, damaged or destroyed for or applied to the public use, without adequate compensation being made, unless by the consent of such person; and, when taken, except for the use of the State, such compensation shall first be made, or secured by a deposit of money; and no irrevocable or uncontrollable grant of special privileges or immunities, shall be made; but all privileges and franchises granted by the Legislature, or created under its authority shall be subject to the control thereof.

The Texas Property Code provides that in the assessment of damages the special commissioners (and trial jury) may consider the following:

(b) If an entire tract or parcel of real property is condemned, the damage to the property owner is the local market value of the property at the time of the special commissioners' hearing.

(c) 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 Ann. § 21.042(b), (c) (1984).

Texas is one of only twenty-six states that provides by its constitution, as well as by statute, that the landowner is entitled to recover not only the value of the portion of the land that is actually taken, but also any damage or destruction that is done to the remaining property as a result of the condemnation project. See F. Russell Kendall, Special and Community Damages--A Confusion in Definition, 10 Hous.L.Rev. 282 (1973). This damage to the remainder property is the issue in this cause. In the landmark case of State v. Carpenter, 126 Tex. 604, 89 S.W.2d 194 (1936), the Texas Supreme Court set out the evidentiary rules for establishing the damages recoverable by a landowner in a condemnation case. The Carpenter court determined that the ultimate question was one of market value and the depreciation, if any, in

the market value of the remainder property as a result of the condemnation action. The Court defined market value in terms of what the property would bring in a transaction between a willing seller and willing buyer. Carpenter, 89 S.W.2d at 201-02; see also City of Austin v. Cannizzo, 153 Tex. 324, 267 S.W.2d 808, 812 (1954). Following Carpenter and Cannizzo, the Texas Supreme Court has repeatedly and specifically acknowledged the "willing-seller/willing-buyer" test of market value in partial taking cases. See Spindor v. Lo-Vaca Gathering Co., 529 S.W.2d 63 (Tex.1975); State v. Walker, 441 S.W.2d 168 (Tex.1969).

Evidence of Non-Compensable Damages

In points of error two and three, the State argues that the jury's verdict is not supported by admissible evidence because the trial court erred in allowing Munday's witnesses to testify to non-compensable elements of damage in arriving at their opinions regarding the diminution in value of the remainder tract. In points of error four, five, six, and seven, the State argues that the court improperly failed to instruct the jury that they could not consider non-compensable elements of damage and failed to instruct the jury that community damages were not recoverable. Finally, in its eighth point of error, the State contends that the trial court erred in denying its motion for mistrial because of Munday's reliance upon non-compensable elements of damage.

At the outset, we should note that Munday's witnesses did not...

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