Tarrant Regional Water Dist. v. Gragg

• Decision Date: 25 June 2004
• Docket Number: No. 01-0362.,01-0362.
• Parties: TARRANT REGIONAL WATER DISTRICT, Petitioner, v. Billy Harden GRAGG, As Independent Executor of the Estate of O.L. Gragg, Deceased, et al., Respondents.
• Court: Texas Supreme Court

151 S.W.3d 546

TARRANT REGIONAL WATER DISTRICT, Petitioner, v. Billy Harden GRAGG, As Independent Executor of the Estate of O.L. Gragg, Deceased, et al., Respondents.

No. 01-0362.

Supreme Court of Texas.

Argued October 16, 2002.

Decided June 25, 2004.

Rehearing Denied January 14, 2005.

Denise A. Driskell, Asst. City Atty., Dallas, Hodgson Eckel, Asst. Gen. Counsel, Christain W. Kadas, Austin, James H. Routh Jr., Naman Howell Smith & Lee, LLP, Waco, Douglas G. Caroom, Bickerstaff Heath Smiley Pollan Kever McDaniel, L.L.P., Austin, Cora Z. Garcia, Asst. City Atty., Houston, J.B. Love Jr., Love Law Office, Marathon, Frank R. Booth, Aransas Pass, TX, for Amicus Curaie.

George F. Christie, Stan Harrell, Hal R. Ray Jr., Pope Hardwicke Christie Harrell Schell & Kelly, Fort Worth, Milton Reed Jackson, Fairfield, Marc O. Knisely, McGinnis Lochridge & Kilgore, L.L.P., Shannon H. Ratliff, Ratliff Law Firm, P.L.L.C., Austin, for Petitioner.

Mike A. Hatchell, Raul A. Gonzalez, Locke Liddell & Sapp LLP, Austin, Ron Edmondson, Jacobson & Edmondson, Glenn Sodd, Micah C. Haden, Clay Beard, Dawson & Sodd, P.C., Corsicana, Warren W. Harris, Bracewell & Patterson, L.L.P., Houston, E. Lee Parsley, E. Lee Parsley, P.C., Austin, Molly H. Hatchell, Hatchell P.C., Tyler, for Respondents.

Justice O'NEILL delivered the opinion of the Court.

In this case, we must decide whether the evidence is legally sufficient to support the trial court's determination that construction and operation of the Tarrant Regional Water District's Richland-Chambers Reservoir caused a significant change in flooding characteristics that damaged the Gragg Ranch. If it is, we must decide (1) whether a taking resulted, (2) whether the trial court erred in trying the condemnation and compensation issues together, and (3) whether the compensation issue was properly submitted or the jury's award properly supported. We hold that the evidence presented is legally sufficient to support the trial court's findings that the reservoir caused recurrent destructive changes in flooding characteristics that directly impacted the Gragg property such that it was no longer usable for its intended purpose and was taken. We also hold that the trial court did not abuse its discretion in refusing to order separate trials on the questions of inverse condemnation and compensation. Finally, we hold that the trial court's submission of the compensation issue is not reversible and the jury's compensation award is supported by legally sufficient evidence. Accordingly, we affirm the court of appeals' judgment. 43 S.W.3d 609.

I. Background

In 1990, the Tarrant Regional Water District began releasing water for the first time from the Richland-Chambers Reservoir on the Trinity River about eight river miles¹ upstream from the 12,516-acre Gragg Ranch. The Gragg family has owned the Ranch since 1949. The Gragg Ranch is one of the largest in East Texas, lying partly in Anderson County and partly in Freestone County. The Trinity River borders the Ranch in some places and bisects the property around the Ranch's mid-point. In all, the Ranch has seventeen miles of river frontage. The Gragg property consists of 1,722 upland acres and 10,794 acres of bottomland within the Trinity River's flood plain where cattle normally graze.

A number of factors have made the Ranch particularly suitable for cattle ranching. Regular flooding in the past contributed to the bottomlands' exceptional fertility. A number of elevated levee roads traversing the bottomlands enabled large trucks to timely evacuate cattle in slowly rising flood waters. Because the Ranch's acreage is contiguous and the bottomlands' fertility produced a steady natural food supply, a very small staff could conduct a large-scale, highly profitable cattle-ranching operation. In 1989, O.L. Gragg leased the property to the Schwertner-Priest partnership. The partnership further increased the Ranch's profitability by instituting the Schwertner Select program in which recently weaned calves, which are generally highly sensitive to stress and disease, are pre-conditioned for thirty to forty-five days before being transported to feedlots or stocker operations. The property's open terrain, contiguity, and fertility, made it uniquely suited to this pre-conditioning program.

The Tarrant Regional Water District is a water control and improvement district created under article XVI, section 59, of the Texas Constitution. One of the District's functions is to provide for the control, storage, preservation, distribution, conservation, and reclamation of water, including flood water. Tex. Water Code § 51.121(b)(1), (3). It may also control, abate, or change any shortage or harmful excess of water. Id. § 51.121(b)(5). The District is authorized to acquire easements considered necessary, incident, or helpful to accomplish its purpose. Id. § 51.121(c). The District is a political subdivision of the State generally entitled to sovereign immunity, although it is subject to the strictures of article I, section 17, of the Texas Constitution, the so-called "takings" clause.

In 1987, the District completed construction of the 1.2 million acre-foot Richland-Chambers Reservoir, which it built to supply water to Tarrant County and surrounding areas. The 44,000-acre reservoir impounds the waters of Richland and Chambers Creeks, two tributaries of the Trinity River. The creeks' watersheds comprise about sixty percent of an eighty-mile stretch of the Trinity's watershed between the Trinidad Gauge, located near Trinidad Lake (between Corsicana and Athens), and the Oakwood Gauge (southwest of Palestine). The dam that holds the creeks' waters back is located about a mile from the Trinity River. A narrow, steeply banked, straight discharge channel connects the dam and the river and blocks a large portion of the Trinity's flood plain. The reservoir was not constructed to control floods but to supply water. Consistent with its intended function, the District keeps the reservoir as full as possible at a level only two feet below the overflow point.

In March 1990, extremely heavy rains caused extensive flooding throughout the Trinity Basin, and the District released water through the reservoir's floodgates for the first time. For the first time in its history, the Gragg Ranch suffered extensive flood damage. That flooding breached levee roads in several places, and gouged large sections of land out of the Ranch's bottomlands. O.L. Gragg and the Schwertner-Priest Partnership and its partners sued the District, alleging that its construction and operation of the reservoir had inversely condemned their property in violation of Article I, Section 17, of the Texas Constitution.² The District denied liability, but asserted a counterclaim asking the trial court to award it fee simple title, or alternatively, a permanent and perpetual flowage easement over any property the court might find it had inversely condemned.

The case was tried in 1998, by which time the Ranch had experienced a large number of floods similar in severity to the one in 1990 that prompted this suit. After a fifteen-day trial, the court held that the District had inversely condemned a flood easement on the Ranch, and submitted the case to the jury to determine just compensation. The jury found the difference between the market value of Gragg's fee simple interest immediately before and immediately after condemnation to be $10,214,122, and the before-and-after value of the Schwertner-Priest Partnership's leasehold estate to be $4,268,547. The trial court rendered judgment on that verdict and also awarded the District a permanent and perpetual flowage easement over the property. The court made numerous findings of fact and conclusions of law supporting its inverse condemnation holding. The court of appeals affirmed the trial court's judgment. 43 S.W.3d 609. We granted review to determine whether the District's construction and operation of the reservoir resulted in a taking of the Gragg property, and other related issues.

II. Inverse Condemnation

The District argues that Gragg failed to establish a taking for two reasons. First it claims that Gragg failed to adduce any competent or reliable evidence that the reservoir's construction and operation caused the flood damage that the Ranch experienced. Second, if Gragg established causation, the District claims that its actions were merely negligent and do not, as a matter of law, constitute a taking. See City of Tyler v. Likes, 962 S.W.2d 489, 505 (Tex.1997). We address each of these contentions in turn.

A. Causation

The District begins its attack on the causation evidence by challenging the reliability of Gragg's experts' opinions, specifically those of hydrologists Dwayne Stubblefield and Gary Pettit. The District contends that Gragg failed to show that the X-FOR computer model upon which these experts relied meets the standard for reliability we established in Merrell Dow Pharmaceuticals, Inc. v. Havner, 953 S.W.2d 706, 726-28 (Tex.1997), E.I. duPont de Nemours & Co., Inc. v. Robinson, 923 S.W.2d 549, 557-58 (Tex.1995), and related authorities. Gragg responds that (1) the District failed to properly preserve its objections, (2) the X-FOR model was merely cumulative of other evidence that was admitted without objection, (3) the X-FOR model was not central to Stubblefield's and Pettit's opinions on causation, which were based primarily on other evidence that has not been challenged as unreliable, (4) the X-FOR model was nonetheless shown to be reliable, and (5) causation was established by the District's own records and witnesses irrespective of Stubblefield's and Pettit's testimony. We begin with the latter point because, if there is causation evidence from other sources that supports the trial court's findings, the District's reliability challenge is immaterial.

It is undisputed that before the reservoir's construction, the Trinity River had regularly...