Town of Flower Mound v. Stafford Estates

• Decision Date: 07 May 2004
• Docket Number: No. 02-0369.,02-0369.
• Parties: TOWN OF FLOWER MOUND, Texas, Petitioner, v. STAFFORD ESTATES LIMITED PARTNERSHIP, Respondent.
• Court: Texas Supreme Court

135 S.W.3d 620

TOWN OF FLOWER MOUND, Texas, Petitioner, v. STAFFORD ESTATES LIMITED PARTNERSHIP, Respondent.

No. 02-0369.

Supreme Court of Texas.

Argued March 5, 2003.

Decided May 7, 2004.

April M. Virnig, Taylor Olson Adkins Sralla, Fort Worth, for Amicus Curiae City of Aledo et al.

Sarah J. Fullenwider, Asst. City Atty., Fort Worth, for Amicus Curiae City of Fort Worth.

Debbie Lopez-Carr, Office of City Atty., Irving, for Amicus Curiae City of Irving, Texas.

L. Stanton Lowry, Boyle & Lowry, LLP, Irving, for Amicus Curiae City of Keller, Texas.

Christopher G. Senior, for Amicus Curiae National Association of Home Builders.

J. David Breemer, James S. Burling, Sacramento, CA, for Amicus Curiae Pacific Legal Foundation.

Kimberly R. Lafferty, Piano Asst. Atty., Piano, for Amicus Curiae Piano Assistant Attorney.

Arthur J. Anderson, Winstead Sechrest & Minick, P.C., Dallas, for Amicus Curiae Texas Association of Builders.

Scott Houston, Austin, for Amicus Curiae Texas Municipal League et al.

Gary S. Spencer, Sunnyvale, for Amicus Curiae Town of Sunnyvale, Texas.

Robert F. Brown, Terrence S. Welch, Brown & Hofmeister, Dallas, for Petitioner.

Bruce W. Bringardner, Thompson Coe Cousins & Irons, LLP, John L. Freeman, Moseley Martens, LLP, Dallas, Gregory P. Standerfer, Standerfer Law Firm, Southlake, for Respondent.

Justice HECHT delivered the opinion of the Court.

The Town of Flower Mound's Land Development Code requires that a subdivision developer improve abutting streets that do not meet specified standards, even if the improvements are not necessary to accommodate the impact of the subdivision. Accordingly, the Town conditioned its approval of Stafford Estates Limited Partnership's development of a residential subdivision on Stafford's rebuilding an abutting road. Stafford rebuilt the road and then sued the Town to recover the cost. The district court held that the condition imposed on Stafford's development was a taking without compensation in violation of article I, section 17 of the Texas Constitution,¹ the Fifth Amendment to the United States Constitution,² and the federal Civil Rights Act of 1871,³ and awarded Stafford the cost of improvements not necessitated by increased traffic from the subdivision. The district court also awarded Stafford expert witness fees and attorney fees under the federal Civil Rights Attorney's Fees Awards Act of 1976.⁴ The court of appeals reversed the award of expert witness fees and attorney fees and otherwise affirmed.⁵

The three principal questions now before us are whether Stafford could wait until after making the improvements to sue, whether the Town's condition on Stafford's development amounted to a compensable taking, and whether Stafford is entitled to recover fees under federal civil rights laws. We agree with the court of appeals that Stafford is entitled under the Texas Constitution to adequate compensation for the taking of its property but is not entitled to recover under federal civil rights laws. We thus affirm the judgment of the court of appeals.

I

The Town of Flower Mound is a fastgrowing suburban municipality (1990 pop. 15,527; 2000 pop. 50,702) in between Dallas, Fort Worth, and Denton. The Town's Stafford Estates subdivision consists of some 247 homes on 90 acres bounded on the north by McKamy Creek Road and on the west by Simmons Road. Both roads are in the Town's right-of-way and are not part of the subdivision.

Over a period from 1994 to 1997, the Town approved the development of Stafford Estates in three roughly equal phases. Phases II and III abutted Simmons Road, which was at the time a two-lane asphalt road designated by the Town as a "rural collector roadway". Section 4.04(o) of the Town's Land Development Code provided that for all subdivisions and industrial areas, "[a]butting substandard local and collector streets shall be constructed or reconstructed as necessary by the developer to bring them up to minimum standards, and all right-of-way ... dedicated to the Town, with no cost participation from the Town."⁶ One such minimum standard, prescribed by section 4.04(b) of the Code, was that "all builders/developers shall be required to construct concrete streets according to the Engineering Standards Manual."⁷ Based on these provisions, the Town conditioned its approval of the plats for Phases II and III on Stafford's rebuilding Simmons Road with concrete instead of asphalt.

Stafford objected to this condition and requested an exception under section 4.04(a) of the Code, which stated:

The Town Council may grant an exception to the street design standards as contained in this section, provided that the Council finds and determines that such standards work a hardship on the basis of utility relocation costs, right-ofway acquisition costs, and other related factors.⁸

Stafford argued that it should not be required to pay more than half the cost of rebuilding Simmons Road with concrete. The asphalt surface was not in disrepair, and the Town had made no attempt to determine whether the required improvements were roughly proportional to the impact of the subdivision on Simmons Road in particular or on the Town's roadway system as a whole. Although the Town had exercised its discretion to grant exceptions to other developers on a project-by-project basis, Stafford's request was denied.

After objecting to the condition on its development at every administrative level in the Town, all to no avail, Stafford rebuilt Simmons Road with concrete as the Town had required at a cost of $484,303.79, transferred the improvements to the Town, and then demanded reimbursement for what it asserted was the Town's proportionate share of the expense. When the Town still refused to pay any part of the cost, Stafford sued, alleging that by conditioning development of Stafford Estates on improving Simmons Road, the Town had taken Stafford's property without compensation in violation of the state and federal constitutions and federal law.

By agreement, the takings issue was submitted to the district court on stipulated facts, although after the court announced its ruling, it allowed the Town to submit some testimony by way of a bill of exception,⁹ which the court appears to have considered in overruling the Town's request for reconsideration of its ruling. Stafford argued that the applicable standard under state and federal law for determining whether there was a taking in these circumstances was that announced by the United States Supreme Court in Nollan v. California Coastal Commission¹⁰ and Dolan v. City of Tigard.¹¹ The Town argued that Nollan and Dolan were inapplicable and that even by their standard the condition on Stafford's development was not a taking. The court agreed with Stafford and determined that the condition—

• "did not substantially advance a legitimate state interest attributable to the impact of the development of Stafford Estates";

• "was not roughly proportional to any services provided by the Town to Stafford Estates or a burden placed on the Town by Stafford Estates";

• was "in substantial excess of the special benefits accruing" to Stafford by the improvement of Simmons Road; and

• "constituted a taking of property for public use without just or adequate compensation in violation of Article I, § 17 of the Texas Constitution, the Fifth Amendment to the U.S. Constitution and 42 U.S.C. § 1983."

The court then heard evidence on damages, as well as on costs recoverable by federal statute. The Town stipulated that Stafford's expenses incurred in rebuilding Simmons Road with concrete were reasonable and necessary. The court awarded Stafford damages of only $425,426 without explaining the reduction of $58,877.79, or about 12.2%, from the actual cost. The court also awarded Stafford $20,000 expert witness fees, $175,000 attorney fees through judgment, $42,500 attorney fees post-judgment contingent on various appeals, and pre- and post-judgment interest.

Both parties appealed, Stafford complaining only that it was entitled to recover all of its construction costs.¹² At the outset, the court of appeals rejected the Town's argument that Stafford's action was barred because it did not sue before rebuilding Simmons Road and obtaining approval of its development plan, concluding that no statute or rule required Stafford to sue earlier than it did.¹³ Turning to the takings issue, the court read Nollan and Dolan to set forth a two-part test (set out below) for determining whether a compensable taking has occurred whenever "the government conditions the granting of permit approval, plat approval, or some other type of governmental approval on an exaction from the approval-seeking landowner." ¹⁴

"Generally," the court said, "any requirement that a developer provide or do something as a condition to receiving municipal approval is an exaction."¹⁵ The court rejected the Town's argument that the Nollan/Dolan test applies only when the government exaction is the dedication of an interest in property, not when permit approval is conditioned on an expenditure of money.¹⁶ The court determined that the Supreme Court had not so limited the test and reasoned that non-dedicatory exactions pose no less danger that the government may threaten withholding of approval in order to extract from an applicant some benefit or concession it could not otherwise require.¹⁷ The court did not reach the Town's argument that the Nollan/Dolan test applies only when the government acts on an ad hoc, adjudicative basis, as when making individual permitting decisions, as opposed to a general, legislative, policy basis, as when adopting ordinances and codes.¹⁸ Even if the Town were correct, the court concluded, the Town's denial of Stafford's request for an exception when it had granted exceptions to other developers showed that its decision was a discretionary one based on individual circumstances rather than a ministerial enforcement of its code based on general...