Opinion
No. 05-08-01018-CV
Opinion issued August 25, 2009.
On Appeal from the 101 st Judicial District Court Dallas County, Texas, Trial Court Cause No. 07-05687-E.
Before Justices MORRIS, WRIGHT, and MOSELEY.
MEMORANDUM OPINION
In this interlocutory appeal, the City of Carrollton challenges the trial court's order denying its plea to the jurisdiction on a claim for inverse condemnation. The claim was brought by David McPhee d/b/a Import Specialist after the City issued a stop-work order on McPhee's remodeling project. In two issues, the City asserts the trial court should have granted its plea because: (1) governmental immunity barred McPhee's claim and (2) McPhee failed to exhaust his administrative remedies. For the reasons that follow, we affirm the trial court's order.
I.
McPhee owns property in Carrollton, Texas on which he operates a business repairing and selling pre-owned vehicles. McPhee desired to remodel his business space. He prepared drawings and presented his plans to the City with an application and the required fees. The plans were approved and the City issued a permit for the work on September 29, 2006. After the permit was issued, McPhee began the remodeling work. On Friday, February 23, 2007, the City served McPhee with a stop-work order indicating the structure did not meet current city codes or was being constructed without a permit. According to McPhee, the point at which the stop-work order was served left the work in an obviously precarious state and he requested permission to do enough additional work to stabilize the construction. His request was denied. That weekend, high winds blew down the new work.
When McPhee visited the City's building inspection department to address the stop-work order, he was ultimately told his original permit was dead and he had to submit new drawings with significantly more rigorous construction requirements. McPhee asserts that had he known about these more rigorous standards when he first applied for a permit, he would not have pursued the remodeling project. He alleges the City's actions in granting the permit and then issuing the stop-work order in the middle of the remodel are tantamount to the City sending someone out to the original building to demolish it. He sought damages for the loss of the business he would have and could have continued to conduct in the original structure as well as the loss of the increased business and opportunities he would have had as a result of the improved structure. He also sought out-of-pocket losses for the materials to be used on the project.
McPhee sued the city for negligent misrepresentation, promissory estoppel, inverse condemnation, and declaratory judgment. The City filed a plea to the jurisdiction asserting that governmental immunity barred McPhee's claims and McPhee failed to exhaust his administrative remedies. After a hearing, the trial court granted the City's plea and dismissed all of McPhee's claims except his claim for inverse condemnation. As permitted by section 51.014(a)(8) of the Texas Civil Practice and Remedies Code, the City now appeals the denial of its plea to the jurisdiction with respect to McPhee's inverse condemnation claim.
The trial court's rulings granting the plea to the jurisdiction on McPhee's other claims are not before us.
II.
We review the trial court's ruling on a plea to the jurisdiction under a de novo standard. Tex. Dep't of Parks Wildlife v. Miranda, 133 S.W.3d 217, 228 (Tex. 2004). When the plea challenges the sufficiency of a claimant's pleadings, the pleadings must be liberally construed in the claimant's favor to determine whether the claimant has or could, by amendment, allege facts demonstrating jurisdiction. See id. at 226-27. If the plea challenges the existence of jurisdictional facts, we review the evidence submitted to the trial court on the jurisdictional issue under a standard similar to that applied in summary judgment in which the government has the burden of proof. See id. at 228.
Governmental immunity protects a City from suit when it exercises its governmental functions unless that immunity is clearly waived. See City of Dallas v. Blanton, 200 S.W.3d 266, 271 (Tex. App.-Dallas 2006, no pet.). The Texas constitution waives governmental immunity for a valid inverse condemnation claim. Tex. Const. art. I. § 17; Gen. Servs. Comm'n v. Little-Tex Insulation Co., 39 S.W.3d 591, 598 (Tex. 2001). An inverse condemnation claim can be based on physical taking or regulatory taking. Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 933 (Tex. 1998). A physical taking involves an unwarranted physical appropriation or invasion of the property. Id. In contrast, a regulatory taking occurs when the government imposes restrictions that either deprive the owner of all economically viable use of the property or unreasonably interfere with his right to use and enjoy the property. Id. at 935. Whether particular facts are sufficient to allege a constitutional taking is a question of law. Blanton, 200 S.W.3d at 271-72. When a plaintiff does not allege a valid inverse condemnation claim, governmental immunity applies and a plea to the jurisdiction should be granted. Id.
In its first issue, the City asserts McPhee's inverse condemnation claim should be dismissed because he did not and cannot allege the elements of a valid inverse condemnation claim. On appeal, the City asserts that nowhere in his pleadings or proof did McPhee establish an intentional act of the City that resulted in a taking for public use.
In its plea to the jurisdiction, the City challenged the sufficiency of McPhee's pleadings with respect to his inverse condemnation claim. The City did not attach any evidence to its plea to the jurisdiction and did not challenge the existence of any jurisdictional fact with respect to the elements of McPhee's inverse condemnation claim.
A compensable regulatory taking occurs when a governmental agency imposes restrictions that unreasonably interfere with a landowner's right to use and enjoy his property, such as denying a permit for development. See Mayhew, 964 S.W.2d at 933. Liberally construing McPhee's pleadings in his favor, the gist of his complaint is that the City's issuance of a permit and subsequent stop-work order for his remodeling project caused the destruction of appellee's structure and ultimately prevented construction of the project, thereby unreasonably interfering with his use and benefit of the property. As we read McPhee's petition, it alleges the City intentionally acted by issuing the permit and subsequent stop-work order that resulted in a taking, which, as alleged, was McPhee's inability to perform the remodel work the City originally approved. On appeal, the City also indicates that McPhee's inverse condemnation claim must fail because he failed to allege and cannot allege the stop-work order was issued for a public use. A public use is not a necessary component of a regulatory taking. See City of San Antonio v. El Dorado Amusement Co., Inc., 195 S.W.3d 238, 244 (Tex. App.-San Antonio 2006, pet. denied). Because McPhee's allegations assert a valid taking claim and affirmatively demonstrate the trial court has jurisdiction to hear the claim, we resolve the City's first issue against it.
At the hearing on the plea to the jurisdiction, Bret King, assistant building official and permit manager for the City testified that after observing McPhee's construction, he ordered the issuance of the stop-work order because the permit held by McPhee did not cover the type of construction that was happening and the type of construction was a little unusual. King also testified that he observed that the original building was demolished and a new structure was under construction. He indicated the permit McPhee had obtained did not allow demolition of part of a structure and the erection of another in its place. In an affidavit, McPhee testified that the City approved his plans, stamped each of his drawings "approved" and issued him a permit for the work. The record does not provide the plans McPhee submitted to the City or any other evidence about the construction.
In its second issue, the City argues appellee's claim should be dismissed because he failed
to exhaust available administrative remedies. At the hearing on the City's plea to the jurisdiction it was undisputed that McPhee never filed an administrative appeal of the City's stop-work order. The evidence before the trial court, however, raised a fact issue with respect to whether such an administrative appeal existed. The City introduced into evidence a copy of section 34.04 of the Carrollton Code of Ordinances, which establishes a Construction Advisory and Appeals Board. In relevant part, this section requires the Board to hear and decide appeals of orders, decisions, or determinations made by the building official relative to the application and interpretation of building, electrical, plumbing, and mechanical codes. But the City also introduced evidence that it had adopted the International Building Code, 2003 Edition. The International Building Code defines the building official as the official in charge of the Department of Building Safety. It is undisputed that the City does not have a Department of Building Safety. The permit and stop-work order in this case were issued by the Carrollton Building Inspection Department. There is no evidence in the record that the building official referenced in section 34.04 included an officer in the Carrollton Building Inspection Department. In fact, at the hearing, McPhee testified that when he asked an official in the Building Inspection Department who else he could talk to about the permit dispute, he was told there was nothing else he could do and that he had to get another permit. Based on the record before us, we cannot conclude the City met its burden of showing that appellee failed to exhaust his administrative remedies. We resolve the City's second issue against it.
Having concluded the City's arguments lack merit, we affirm the trial court's order denying the plea to the jurisdiction on McPhee's inverse condemnation claim.