State v. Pr Investments and Specialty Retailers, Inc.

• Decision Date: 13 October 2005
• Docket Number: No. 14-00-00091-CV.,14-00-00091-CV.
• Citation: 180 S.W.3d 654
• Parties: The STATE of Texas, Appellant, v. PR INVESTMENTS AND SPECIALTY RETAILERS, INC., Appellees.
• Court: Texas Supreme Court

180 S.W.3d 654

The STATE of Texas, Appellant, v. PR INVESTMENTS AND SPECIALTY RETAILERS, INC., Appellees.

No. 14-00-00091-CV.

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

October 13, 2005.

COPYRIGHT MATERIAL OMITTED

Gregory S. Coleman, Joseph David Hughes, Austin, for appellant.

Billy C. Dyer, H. Dixon Montague, W. Allyn Hoaglund, Houston, for appellees.

Before the court en banc.

MAJORITY EN BANC OPINION

KEM THOMPSON FROST, Justice.

This is a condemnation case in which the State of Texas appeals from the trial court's dismissal of its suit for condemnation of a small portion of a privately-owned tract of land. The main issue in this appeal is the effect of the State's decision, five days before the date set for the trial de novo in the county court at law, to change the specifics of its planned highway project, without changing the allegations in its pleadings and without changing the property that it sought to condemn. The trial court concluded: (1) this change in plans by the State deprived the court of jurisdiction over the trial de novo; (2) this change meant that the State did not bring this condemnation proceeding properly under section 21.0195(c) of the Texas Property Code, thus justifying an award of all attorney's fees and expenses to the property owners; and (3) the trial court could properly dismiss the condemnation action and award attorney's fees and expenses as sanctions under Texas Rules of Civil Procedure 13 and 215, under the Frivolous Claims Act, and under the trial court's inherent power. Because the trial court erred in all of these conclusions, we reverse its judgment and remand for further proceedings consistent with this opinion.

I. FACTUAL AND PROCEDURAL BACKGROUND

Appellee PR Investments owns a 23-acre tract of land located on the east side of South Main Street approximately one half mile south of Loop 610 and just north of a proposed extension of West Belfort in Harris County. Appellee Specialty Retailers, Inc. owns a leasehold interest in a portion of the 23-acre tract. At this particular location, South Main Street consists of two lanes in each direction separated by a grass median. The Texas Department of Transportation has proposed to convert South Main Street from a four-lane road to Highway 90A—a controlled access highway, six lanes wide with frontage roads for vehicular access to and from the highway, and bridges over all major roads intersecting the highway (hereinafter the "Project"). As part of the construction plan, the State of Texas sought to condemn a strip of PR Investments's property approximately 23 feet, 8 inches wide at the southerly end of the property tapering north to the original right-of-way. This tract of land has a total area of .3407 acres.

The original plan did not provide for acceleration and deceleration lanes on the frontage road for Northbound Highway 90A near the juncture with the driveway from PR Investments's remaining property. (Because the evidence shows that this plan was later certified by Stuart Corder, a traffic engineer, it is hereinafter referred to as the "Corder Plan."). Even before the State filed its petition for condemnation, PR Investments and Specialty Retailers, a tenant doing business on PR Investments's property (hereinafter collectively referred to as the "Property Owners"), expressed concerns regarding whether the highway improvements would impair safe access to the remainder of the property. On November 12, 1997, the State filed its original petition for condemnation, describing the land to be condemned by metes and bounds, but not limiting the State to any particular plan for the Project. Both before and after the State filed the original petition, the State discussed potential modifications to the plan for the Project to accommodate the concerns expressed by the Property Owners. In an attempt to allay their concerns regarding safe access, the Texas Department of Transportation devised another proposed plan in February 1998, which provided a sheltered lane for deceleration of vehicles turning into the property and a corresponding acceleration lane for vehicles exiting the property and returning to the highway. (Because this plan was later certified by Stephen A. Sparks, a traffic engineer, it is hereinafter referred to as the "Sparks Plan.")

The Sparks Plan and the Corder Plan are depicted on the following diagrams:

NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE

The county court at law appointed special commissioners, and the commissioners conducted a hearing on May 6, 1998. Although the Sparks Plan did not contain all of the modifications to the Corder Plan requested by the Property Owners, Specialty Retailers was satisfied that the Sparks Plan sufficiently addressed its concerns regarding the Project. Therefore, Specialty Retailers did not participate in the special commissioners' hearing. When considering the amount of compensation due to PR Investments, the commissioners were apprised of the proposed plan to construct a sheltered lane for deceleration and acceleration when entering or leaving the remainder of PR Investments's property. Under section 21.042 of the Texas Property Code,¹ at the conclusion of the hearing the commissioners assessed $166,000 as the damages to be paid by the State jointly to PR Investments and Special Retailers. PR Investments and the State both objected to the amount of compensation, and the county court at law ultimately scheduled the trial de novo in the condemnation action for December 6, 1999.

Prior to trial, in late 1999, the Texas Transportation Institute conducted a study in which it concluded the frontage road in front of PR Investments's property "would operate better without the dedicated deceleration lane." Moreover, the Texas Department of Transportation concluded that the proposed deceleration and acceleration lanes would prevent construction of additional driveways into PR Investments's property, thereby limiting access in the future. Accordingly, on December 1, 1999, the Texas Department of Transportation decided to return to the Corder Plan, which did not contain the deceleration and acceleration lanes contained in the Sparks Plan. The State's attorney advised PR Investments of the Corder Plan the same day it was certified; however, he did not advise Specialty Retailers of this change. Although the State provided a copy of the Corder Plan to PR Investments, it did not supplement various discovery responses that should have been supplemented to reflect the December 1, 1999 switch back to the Corder Plan.

On December 2, 1999, the State filed a motion for leave to file a first amended petition for condemnation. The field notes attached to the amended petition differed slightly from those attached to the original petition. In both sets of field notes, the surveyor first described a point of commencement. From this initial point of reference, the surveyor then directs the reader to the "point of beginning," namely, a corner of the .3407 acre tract sought to be condemned. Though the field notes differ on the exact path from the point of commencement to the point of beginning, the "point of beginning" is the same in both sets of field notes. Thus, the property at issue is the same .3407 acre tract of land in both petitions.² As with the original petition, nothing in the amended petition referred to the Sparks Plan or the Corder Plan or required the State to use either of these plans. Although the State filed its motion for leave to amend the petition the day after it decided to go back to the Corder Plan, this motion did not relate to this change in plans.

On December 7, 1999, at a hearing on the State's motion for leave to file its first amended petition for condemnation, the State's attorney argued that the filing of the amended petition

... would create no prejudice to the [Property Owners]. There's nothing about the corrected field notes which would in any way materially affect any issue that [the Property Owners] may raise as to compensation or any other issue with respect to any relief that any party seeks in the lawsuit.

PR Investments objected to the State's motion for leave and put on evidence showing that the Texas Department of Transportation had abandoned its intention to implement the Sparks Plan and decided to implement the Corder Plan, which would eliminate a dedicated lane for the deceleration and acceleration of vehicles entering and leaving the remainder of PR Investments's property. PR Investments argued that the State sought leave to amend its petition in connection with its switch to the Corder Plan and that the motion for leave should be denied because the Corder Plan substantially restricted safe access to the property, thus decreasing the value of PR Investments's remaining property. The trial court determined that the amended petition had nothing to do with the change from the Sparks Plan to the Corder Plan and that it simply made a technical correction to the field notes. Therefore, the trial court granted the State's motion for leave to file its first amended petition.

At the same hearing and immediately after the trial court granted the State's motion for leave to file the amended petition, PR Investments made an oral motion to dismiss for lack jurisdiction. PR Investments argued that the December 1, 1999 change by the State from the Sparks Plan to the Corder Plan deprived the county court at law of jurisdiction over the trial de novo in the condemnation action for the following stated reasons:

(1) The State's change from the Sparks Plan to the Corder Plan deprives the Property Owners of greater rights and imposes greater burdens on the remaining property than did the Sparks Plan; and

(2) The State's change from the Sparks Plan to the Corder Plan affects the damage issues and deprives the court of jurisdiction because the compensation issues presented to the finder of fact in the trial de novo must be the same as...