Opinion
Nos. 01-00-01163-CV, 01-00-01169-CV.
Opinion issued June 5, 2003.
Appeal from the County Civil Court At Law No. 3, Harris County, Texas, Trial Court Cause Nos. 691,631 691,632.
Panel consists of Justices TAFT, KEYES, and HIGLEY.
MEMORANDUM OPINION
Appellant, Malcomson Road Utility District ("the District"), appeals from two final judgments that denied the District's motions for partial summary judgment; granted the motions for summary judgment of appellee, Frank George Newsom; denied the District the right to condemn Newsom's property; awarded Newsom attorney's fees and possession of and improvements on the property that the District had sought to condemn; and dismissed the causes for want of jurisdiction. We determine if fact issues exist precluding summary judgment for either party on the following matters: (1) whether the property was sought for public uses; (2) whether the District's determinations of public necessity were arbitrary and capricious or were made in bad faith; (3) whether the District made good-faith offers of damages before filing suit; (4) whether the takings violated due process or equal protection; and (5) whether the District improperly "delegated" its eminent domain powers to private developers competing with Newsom. We reverse the judgments and remand the causes.
Background
Newsom owned a northern and a southern tract of undeveloped land outside the District's boundaries. A drainage ditch lay along the eastern boundary of Newsom's northern tract. David Garrett, the vice-president of a corporate landowner that wished to develop its nearby tract into a residential subdivision, tried to purchase 2.6178 acres along the eastern edge of Newsom's northern tract to expand the drainage ditch, which Harris County Flood Control District ("HCFCD") required for development of Garrett's subdivision, called Lakewood Grove. Similarly, John Santasiero, the owner of nearby property that included a residential subdivision, tried to purchase 2.58 acres at the southern end of Newsom's southern tract to build a detention pond that HCFCD required for development of Santasiero's subdivision, called Villagio. Newsom rejected the offers.
After Newsom rejected their offers, the developers asked the District to condemn the portions of Newsom's land that they had tried to purchase. The District's board eventually determined that the taking of Newsom's land in the requested amounts for the detention pond and ditch expansion was a public necessity that would serve the public purpose of drainage. The District made an offer to Newsom for each piece of land. Newsom rejected outright the placement of a pond on his property. He also rejected the amount offered for the land for the ditch expansion and counter-offered with a higher price.
Upon Newsom's rejections and counter-offer, the District filed separate condemnation proceedings in county court for each piece of property. See Tex. Prop. Code Ann. §§ 21.012, 21.013 (Vernon 1984). In each case, the trial court appointed special commissioners, who, after a hearing, awarded damages of $49,021 in the pond case and of $49,739 in the ditch case. See Tex. Prop. Code Ann. §§ 21.014, 21.015 (Vernon 1984). The District deposited the determined amounts into the court's registry, took possession of those portions of Newsom's land, and began improvements on the property. See Tex. Prop. Code Ann. § 21.021(a)(2) (Vernon 1984).
We designate these suits the "pond case" (trial court cause number 691,631; appellate cause number 01-00-01163-CV) and the "ditch case" (trial court cause number 691,632; appellate cause number 01-00-01169-CV), denoting the purpose for which the District sought to condemn the land.
Newsom timely filed original and amended objections to the commissioners' awards. See Tex. Prop. Code Ann. § 21.018(a) (Vernon 1984). He simultaneously filed original and amended pleas to the jurisdiction, arguing that the District had not made good-faith offers of damages before filing suit, that his property was being taken for private uses and without public necessity, that the takings were arbitrary and capricious and fraudulent, and that the District improperly "delegated" its eminent-domain powers to the nearby competing developers.
By original and supplemental motions for partial summary judgment, the District argued that (1) under rule 166a(c), it had satisfied all conditions entitling it to condemnation, leaving only the land's value for determination, and that (2) under rule 166a(i), Newsom could produce no evidence supporting his defenses that the District's determinations of public necessity for the condemnations were arbitrary and capricious or unreasonable. See Tex.R.Civ.P. 166a(c), (i). By his own motions for summary judgment under rule 166a(c), Newsom argued in both cases that (1) the District's determinations of public use and necessity were arbitrary and capricious, resulted from fraud or bad faith, or were abuses of discretion; (2) the District did not make good-faith offers of damages before filing suit for condemnation; (3) the District improperly delegated its eminent-domain powers to the competing developers; and (4) the takings violated equal protection and due process.
Without specifying its reasoning, the trial court denied the District's motions for partial summary judgment, granted Newsom's motions for summary judgment, and dismissed the causes for want of jurisdiction. The District appealed. During the trial court's plenary power, Newsom moved to recover statutory attorney's fees, damages arising from the District's temporary taking of Newsom's property, and possession of the property that the District had temporarily taken. See Tex. Prop. Code Ann. § 21.019 (Vernon 1984 Supp. 2003), §§ 21.044(a), 21.062 (Vernon 2000). While appeal was pending, we granted the parties' joint motion to abate the appeal and to remand the cause for the trial court to dispose of Newsom's pending motions. On remand, the trial court entered final judgments in each cause, reaffirming its summary judgment rulings, dismissing the District's condemnation suits for want of jurisdiction, awarding Newsom his attorney's fees from trial and contingent attorney's fees for appeal, awarding Newsom damages for the District's temporary taking of his property, and returning to him possession of the disputed property, including awarding him the improvements made by the District to that property during the District's temporary possession.
Standard of Review and Burden of Proof
The parties moved for rule-166a(c) and rule-166a(i) summary judgments. On appeal, both argue that we must apply the standards of review applicable to motions for summary judgment. We do so.
Because the parties ask us to apply the usual summary judgment standards, we need not determine the effect, if any, of this Court's decision in Hubenak v. San Jacinto Gas Transmission Co. on the standard of review. 65 S.W.3d 791 (Tex.App.-Houston [1st Dist.] 2001, pet. granted). In Hubenak, the landowners appealed from an adverse condemnation judgment, arguing that the trial court lacked subject-matter jurisdiction because the condemnor had failed to engage in good-faith negotiations, which, they argued, was a jurisdictional prerequisite to filing suit. Id. at 796. Although the judgment was rendered on cross-motions for summary judgment, we determined that the proper standard of review for determining whether the requisites to the attachment of the trial court's jurisdiction had been satisfied was legal sufficiency of the evidence. Id. at 797-98. That is, we deemed the trial court implicitly to have made a plenary factual determination that the condemnor had satisfied this jurisdictional prerequisite, even though the procedural mechanism for that implied ruling was summary judgment. See id. at 798. We then looked for more than a scintilla of evidence in the summary judgment record to support the implied ruling. See id. Of course, that standard of review is generally the inverse of the standard applicable to the granting of a summary judgment motion. Unlike in Hubenak, however, neither party in this case asks us to apply a no-evidence standard, and both affirmatively argue that the usual summary judgment standard applies. See Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993) ("We have held repeatedly that the courts of appeals may not reverse the judgment of a trial court for a reason not raised in a point of error.").
Summary judgment under rule 166a(c) is proper only when a movant establishes that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. Randall's Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995). A defendant is entitled to summary judgment if the evidence disproves as a matter of law at least one element of each of the plaintiff's causes of action or if it conclusively establishes all elements of an affirmative defense. Id.
A party may move for a "no-evidence" summary judgment under rule 166a(i) "if there is no evidence of one or more essential elements of a claim or defense on which an adverse party would have the burden of proof at trial." Flameout Design Fabrication, Inc. v. Pennzoil Caspian Corp., 994 S.W.2d 830, 834 (Tex.App.-Houston [1st Dist.] 1999, no pet.). A no-evidence summary judgment is, therefore, like a directed verdict. See id. "The trial court must grant the motion unless the nonmovant produces more than a scintilla of evidence raising a genuine issue of material fact on the challenged elements." Id. In reviewing either type of summary judgment, we indulge every reasonable inference in favor of the nonmovant, resolve any doubts in its favor, and take as true all evidence favorable to it. Johnson, 891 S.W.2d at 644; Flameout Design, 994 S.W.2d at 834.
When both sides move for summary judgment and the trial court grants one motion and denies the other, we can consider both motions, their evidence, and their issues and may render the judgment that the trial court should have rendered. See CU Lloyd's v. Feldman, 977 S.W.2d 568, 569 (Tex. 1998). When an order granting summary judgment does not specify the grounds upon which the trial court ruled, we must affirm to the extent that any of the summary judgment grounds is meritorious. See Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995).
Public Use
In issue one, the District argues that the trial court erred in denying its rule-166a(c) motions for partial summary judgment in each suit because the District proved that it had satisfied all conditions entitling it to condemnation. One of those conditions was that the acquisition of Newsom's property was for a public use. In his responses to the District's summary judgment motions, Newsom argued that fact issues existed on whether (1) the takings were for a public use because the improvements benefitted only the developers' lands or (2) the District fraudulently or arbitrarily and capriciously concluded that the takings were for a public use. In his rule-166a(c) summary judgment motions, Newsom argued that he had conclusively proved that the takings were not for a public use because the improvements allegedly benefitted only the developers' lands. In issue two, the District argues that the trial court erred in granting Newsom's rule-166a(c) summary judgment motions on this ground.
A. The District's Statutory Basis for Eminent Domain
The District is clothed with the following authority:
(a) A district shall have the functions, powers, authority, rights, and duties which will permit accomplishment of the purposes for which it was created.
(b) A district is authorized to purchase, construct, acquire, own, operate, maintain, repair, improve, or extend inside and outside its boundaries any and all works, improvements, facilities, plants, equipment, and appliances necessary to accomplish the purposes of its creation, including all works, improvements, facilities, plants, equipment, and appliances incident, helpful, or necessary to:
. . .
(3) gather, conduct, divert, and control local storm water or other local harmful excesses of water in a district; . . . .
Tex. Water Code Ann. § 54.201(a), (b)(3) (Vernon Supp. 2003).
The District sought to condemn Newsom's property under the following statute:
A district . . . may acquire by condemnation any land, easements, or other property inside or outside the district boundaries . . . necessary for water, sanitary sewer, storm drainage, or flood drainage or control purposes or for any of its projects or purposes, and may elect to condemn either the fee simple title or the lesser property interest.
Id. § 49.222(a) (Vernon 2000) (emphasis added); see also id. § 49.218(a)-(c) (Vernon Supp. 2003) (granting districts right to purchase land or interest in land considered necessary for districts' purposes).
B. The Requirement that the Taking be for Public Use
"The Constitution itself protects private property from any taking except for the public use. . . ." Borden v. Trespalacios Rice Irrigation Co., 86 S.W. 11, 15 (Tex. 1905); see Tex. Const. art. I, § 17. What constitutes a public use is a question of law for the court. Tenngasco Gas Gathering Co. v. Fischer, 653 S.W.2d 469, 474 (Tex.App.-Corpus Christi 1983, writ ref'd n.r.e.); Atwood v. Willacy County Navigation Dist., 271 S.W.2d 137, 140 (Tex.Civ.App.-San Antonio 1954, writ ref'd n.r.e.). However, "the legislative declaration that a use is public and the delegation of power of eminent domain is to be given great weight by the court in determining whether a particular use is public or private." Fischer, 653 S.W.2d at 475; accord Atwood, 271 S.W.2d at 140. Put another way, the legislative declaration is binding unless the use is "clearly and palpably" private. Housing Auth. of the City of Dallas v. Higginbotham, 143 S.W.2d 79, 83 (Tex. 1940).
What is important in the public-use determination is the character of the right inuring to the public, not the extent to which the public's right is exercised. Fischer, 653 S.W.2d at 475. As our Supreme Court has explained,
[i]t is immaterial if the use is limited to citizens of a local neighborhood, or that the number of citizens likely to avail themselves of it is inconsiderable, so long as it is open to all who choose to avail themselves of it. The mere fact that the advantage of the use inures to a particular individual or enterprise, or group thereof, will not deprive it of its public character.
Higginbotham, 143 S.W.2d at 84 (quoting West v. Whitehead, 238 S.W. 976, 978 (Tex.Civ.App.-San Antonio 1922, writ ref'd)). "Public use" has, accordingly, been defined in various ways, one of which is that the use is public when the public obtains some definite right or use in the undertaking to which the property is devoted. See Coastal States Gas Prod. Co. v. Pate, 309 S.W.2d 828, 833 (Tex. 1958). The Texas Supreme Court thus construes "public use" rather liberally, although the court has rejected a definition that means nothing more than public welfare or good or under which any business that promotes the community's prosperity or comfort might be aided. See id.
C. Application of the Law to the Summary Judgment Evidence
We begin by noting that the Legislature has declared that the District's purposes, for which it has been delegated the power of eminent domain, extend to conducting activities like the building of detention ponds and the expanding of drainage ditches. See Tex. Water Code Ann. § 54.201(a), (b)(3). This is a legislative determination that such projects are public uses. That declaration is binding unless the uses are "clearly and palpably" private. See Higginbotham, 143 S.W.2d at 83.
The District's board determined that both the ditch expansion and the detention pond were for public uses. The District presented summary judgment evidence that the expanded ditch and the pond were for the public purpose of regulating excess or flood waters. There was also evidence that any water to the north of the pond, not just water from the Santasiero property, could drain into the pond. In response, Newsom pointed to the following evidence: (1) the District's board resolutions stated that the pond was necessary to "serve" Santasiero's property and that the expansion was necessary to widen the "Lakewood Grove ditch"; (2) the pond was of a size to handle the amount of estimated overflow from the Santasiero developments only, even though the pond could receive water from anywhere upland; and (3) the ditch was being built to facilitate HCFCD's approval of the Lakewood Grove subdivision.
We do not address here the remainder of Newsom's summary judgment arguments under this issue because they concerned where the projects were to be located or the need for them at all, rather than whether the projects were generally for public uses.
The Legislature has indicated that projects like these are for public purposes. See Tex. Water Code Ann. § 54.201(a), (b)(3). This legislative determination was to be given great weight by the trial court. Fischer, 653 S.W.2d at 475. The District produced evidence that both the ditch expansion and the pond construction would serve the public purpose of draining excess water from the area. That showing sufficed. It is immaterial whether the District wanted the pond and the ditch expansion to assist certain properties, as long as the public could benefit from or use the improvements and the improvements were not "clearly and palpably private." See Higginbotham, 143 S.W.2d at 83; Pate, 309 S.W.2d at 833.
Furthermore, with respect to the detention pond, no one disputes that water from any uphill areas could flow into it. This fact distinguishes the pond from the private roads in the cases on which Newsom relies. Given that water from the public generally can flow into the pond, it is immaterial that the pond was built in the size necessary to accommodate estimated water run-off from Santasiero's development. What is important is that water from anywhere upland could flow into the pond, not the extent to which others' water would flow there or the extent to which the pond might not, with later development in the area, suffice adequately to serve all properties. See Higginbotham, 143 S.W.2d at 84 ("It is immaterial if the use is limited to the citizens of a local neighborhood, or that the number of citizens likely to avail themselves of it is inconsiderable, so long as it is open to all who choose to avail themselves of it."); Fischer, 653 S.W.2d at 475 (explaining that character of right inuring to public, not the extent to which public's right is exercised, is the important consideration).
See Maher v. Lasater, 354 S.W.2d 923, 924, 926 (Tex. 1962) (holding unconstitutional statute that allowed commissioners' court to declare private road as public highway so that one landlocked individual, condemnees' neighbor, would have means of egress from his property, when subject road did not serve as means of access to any other land and no residents lived along its course); Phillips v. Naumann, 275 S.W.2d 464, 467-68 (Tex. 1955) (private road declared public to allow one landowner's ingress and egress); Tod v. Massey, 30 S.W.2d 532 (Tex.Civ.App.-Galveston 1930, no writ) (similar).
D. Conclusion
The District thus conclusively proved that the detention pond and the ditch expansion were for public uses. Newsom did not raise fact issues on these matters or conclusively prove that these improvements would be used only by private entities.
Accordingly, the trial court erred to the extent that it denied the District's motions for partial summary judgment on the ground of public use and to the extent that it granted Newsom's motions for summary judgment on the ground that no public use existed as a matter of law.
We sustain those portions of issues one and two concerning the takings' being for public uses.
Public Necessity
Also under issue one, the District argues that the trial court erred in denying its rule-166a(c) motions for partial summary judgment in each suit because the District proved that there was a public necessity for the acquisition of Newsom's property. In issue two, the District argues that the trial court erred in overruling its rule-166a(i) motions for partial summary judgment on Newsom's defense that the District's determinations of public necessity were arbitrary and capricious or unreasonable. In his responses to the District's summary judgment motions, Newsom argued that fact issues existed on whether the District fraudulently or arbitrarily and capriciously concluded that using his property for the projects was necessary. In his rule-166a(c) summary judgment motions, Newsom argued that he had conclusively proved the same thing. In issue two, the District argues that the trial court erred in granting Newsom's rule-166a(c) summary judgment motions on this ground.
A. The Requirement That the Taking be Necessary for the Declared Public Use
The applicable eminent-domain statute requires that takings be necessary for the declared public purposes. See Tex. Prop. Code Ann. § 49.222(a) (Vernon 2000). The condemnor's discretion to determine what and how much land to condemn for its purposes — that is, to determine public necessity — is nearly absolute. See Jones v. City of Mineola, 203 S.W.2d 1020, 1022 (Tex.Civ.App.-Texarkana 1947, writ ref'd); Ludewig v. Houston Pipeline Co., 773 S.W.2d 610, 614 (Tex.App.-Corpus Christi 1989, writ denied). Courts do not review the exercise of that discretion without a showing that the condemnor acted fraudulently, in bad faith, or arbitrarily and capriciously, i.e., that the condemnor clearly abused its discretion. Meaney v. Nueces County Navigation Dist. No. 1, 222 S.W.2d 402, 405, 408 (Tex.Civ.App.-San Antonio 1949, writ ref'd); Ludewig, 773 S.W.2d at 614; Bradford v. Magnolia Pipeline Co., 262 S.W.2d 242, 246 (Tex.Civ.App.-Eastland 1953, no writ) (holding same even when eminent-domain statute requires finding of necessity, as does the statute at issue in present case). The rationale for this rule is that, otherwise, one factfinder
might hold on competent evidence that land in question in the suit (a constituent part of the whole of a larger amount necessary to the accomplishment of the objective of the condemning authority) was not necessary to such purposes and the accomplishments of an entire project destroyed because of the inability to obtain the small part of land which made the subject of the particular condemnation suit.
Wagoner v. City of Arlington, 345 S.W.2d 759, 763 (Tex.Civ.App. Fort Worth 1961, writ ref'd n.r.e.); accord Bradford, 262 S.W.2d at 246. The landowner has the burden to establish these defenses. Ludewig, 773 S.W.2d at 614; Snellen v. Brazoria County, 224 S.W.2d 305, 310 (Tex.Civ.App.-Galveston 1949, writ ref'd n.r.e.).
In the condemnation context, fraud means "any act, omission or concealment, which involved a breach of legal duty, trust or confidence, justly reposed and is injurious to another, or by which an undue and unconscientious advantage is taken of another." Wagoner, 345 S.W.2d at 763; accord Boucher v. Texas Turnpike Auth., 317 S.W.2d 594, 601 (Tex.Civ.App.-Texarkana 1958, no writ).
In the same context, arbitrary and capricious, like abuse of discretion, means "willful and unreasoning action, action without consideration and in disregard of the facts and circumstances. . . ." Wagoner, 345 S.W.2d at 763; see Brazos River Conservation Reclamation Dist. v. Harmon, 178 S.W.2d 281, 292-93 (Tex.Civ.App.-Eastland 1944, writ ref'd w.o.m.) (explaining abuse of discretion in terms of arbitrariness, capriciousness, partiality, and the like). Therefore, when "there is room for two opinions, an action cannot be deemed arbitrary when it is exercised honestly and upon due consideration, regardless of how strongly one believes an erroneous conclusion was reached." Ludewig, 773 S.W.2d at 614; see Meaney, 222 S.W.2d at 408; Wagoner, 345 S.W.2d at 763, 764. Similarly, a showing that alternate plans are feasible or better does not make the condemnation determination arbitrary or capricious. Ludewig, 773 S.W.2d at 614; Wagoner, 345 S.W.2d at 763.
Accordingly, to show that the District acted arbitrarily and capriciously, Newsom had to negate any reasonable basis for determining what and how much land to condemn for the pond and the ditch expansion. See Wagoner, 345 S.W.2d at 763 (noting that non-movant landowner could "have raised the issue [of arbitrary and capricious determination of necessity] only if it was unquestionably established in the evidence that there could have been no actual public necessity for the city to seek the land in question . . ."); cf. Ludewig, 773 S.W.2d at 614-15 (in reviewing the granting of JNOV in favor of condemnor, despite jury's answer that condemnor acted arbitrarily and capriciously in determining route and amount of land to be condemned, holding that landowners' evidence that condemnor could have adopted plans circumventing landowners' property or taking less of it was no evidence of arbitrary or capricious behavior). Newsom could also prevail by showing that the District completely abdicated its responsibilities in determining whether, what, or how much to condemn, i.e., by showing that the District declined to exercise discretion that the law required it to exercise. Cf. W. Wendell Hall, Standards of Review in Texas, 34 St. Mary's L. J. 1, 15-16 (2002) (citing Landon v. Jean-Paul Budinger, Inc., 724 S.W.2d 931, 938-40 (Tex.App.-Austin 1987, no writ) and other cases for proposition that trial court abuses discretion, for example, by declining to exercise discretionary power vested in court by law when circumstances require that power be exercised or by purporting to exercise discretion without sufficient information upon which rational decision may be made); Starr County v. Starr Indus. Servs., Inc., 584 S.W.2d 352, 355-56 (Tex.Civ.App.-Austin 1979, writ ref'd n.r.e.) ("In determining whether an agency has acted arbitrarily or capriciously the reviewing court must decide whether the agency order was based on a consideration of all relevant factors. . . . There must appear a rational connection between the facts and the decision of the agency. Stated differently, the reviewing court must remand `. . . if it concludes that the agency has not actually taken a hard look at the salient problems and has not genuinely engaged in reasoned decision-making.'") (emphasis added; citations omitted).
B. Application of the Law to the Summary Judgment Evidence
1. The District's Evidence
Regarding the pond, a land planner testified for the District that, as HCFCD had concluded, a pond was necessary. Santasiero's engineer, Newsom's engineer, and Newsom's land planner agreed that a detention pond was necessary, but did not specify a location. HCFCD did not require that the pond be placed on Newsom's property, but Ray Zobel, president of the District's board, testified that the board selected Newsom's property for the pond because that location would have allowed Villagio to have more homes, thus increasing the tax base more than if Newsom had been allowed to develop his own land.
Regarding the ditch expansion, an engineer and a land planner testified for the District that, as HCFCD had concluded, the project was necessary. Newsom's own land planner agreed that HCFCD "would prudently require" the ditch expansion. The existing ditch ran along the eastern boundary of Newsom's northern tract of land. The only direction in which the ditch could be expanded was westward, onto Newsom's property, because the land to the east of the ditch had already been developed.
2. Newsom's Evidence
Regarding the pond, it was undisputed that HCFCD did not care where the pond was placed, and none of HCFCD's regulations required that the pond be placed on Newsom's property. Rather, HCFCD recognized that the pond could have been placed on Santasiero's property, on Newsom's property, or in a downland location on neither's property. For this reason, HCFCD did not tell anyone with the District that Newsom's land had to be condemned for the pond. Santasiero's engineer also concluded that the pond could be placed in any of those three places, although he was not asked to assess which location was best. Nonetheless, the District's offer letter to Newsom stated that HCFCD required the taking specifically of his property for the pond, although board president Zobel later admitted that HCFCD required only a pond, not the placement of that pond on Newsom's property.
The District's summary judgment evidence showed that the board chose Newsom's land for the pond because doing so would increase the tax base more than if Newsom had been allowed to keep his land and develop it himself. However, board president Zobel admitted that the District did not have its engineer confirm Santasiero's claim that it would be more profitable for the District to place the pond on Newsom's property, i.e., that developing Villagio would increase the tax base more than developing Newsom's land. Rather, the District evidently took Santasiero's word as true, even though his interest was adverse to Newsom's. In fact, it was Santasiero who chose the pond's location. Likewise, the District did not ask its own engineer to evaluate the need for this condemnation, even though the District would have looked to its engineer to advise it whether to condemn this land. Additionally, board president Zobel admitted that he was not advised that Santasiero's engineer had identified alternative locations for the pond. Zobel also testified that he had "no idea" why the board took Newsom's land in fee simple, rather than in easement.
Regarding the ditch expansion, Newsom produced evidence that the District did not consider or investigate the scope of the taking. For example, HCFCD did not require that the rights-of-way for drainage ditches such as this be taken in fee simple, but instead required only easements. HCFCD would have approved Villagio's expansion had only an easement been taken here. Nonetheless, the District sought to condemn Newsom's land in fee simple, even though the sole alleged basis for the taking was that HCFCD required the ditch expansion, and despite the fact that HCFCD never required a taking in fee. In fact, board president Zobel could not recall anyone consulting the board on why Newsom's land was being taken in fee, rather than in easement, and Zobel himself did not know the difference between a fee interest and an easement.
Viewing the evidence in the light most favorable to Newsom and taking all reasonable inferences in his favor, for purposes of the District's motions for partial summary judgment, we hold that the above evidence raises a fact issue on whether the District declined to exercise its discretion in determining whose land to condemn for the pond and in deciding whether to condemn Newsom's land in easement or in fee for the ditch expansion. That is, the evidence raised a fact issue on whether the District reached its condemnation decisions arbitrarily and capriciously or by abusing its discretion. Cf. Landon, 724 S.W.2d at 938-40. We also hold that, viewing the evidence in the light most favorable to the District and taking all reasonable inferences in its favor, for purposes of Newsom's motions for summary judgment, Newsom did not conclusively prove that the District acted arbitrarily and capriciously in determining necessity.
Further evidence regarding both tracts of land raises a fact issue, as well. The District signed agreements with both Santasiero and Garrett (the "condemnation agreements") soon after it voted to condemn Newsom's property. In the condemnation agreements, the developers agreed to pay all costs of condemnation, including attorney's, expert, and appraisal fees. If the condemnation succeeded, and if bonds were passed and approved, the District agreed to reimburse the developers pursuant to previously-executed prefunding agreements with the same developers. The condemnation agreements further provided as follows: "If the condemnation of the above referenced tract is held to be invalid either judicially or otherwise, you will not be reimbursed by the District for any of the costs associated with the condemnation." The developers also agreed to furnish the following items, among others, to the District: a legal description of the sought-after property, plans and specifications for the pond and the ditch enlargement, and an appraisal of the sought-after land.
A "prefunding agreement" allows a developer to proceed with preparations for and construction of various facilities — such as those for water, sanitary sewage, drainage, detention, and recreation — while waiting for a condemning entity to issue and to get approval on bonds to acquire the facilities and to reimburse the developer for related costs and expenses. The developer builds in advance at its own risk: if the condemning entity cannot issue bonds or get approval, if the developer constructs the project contrary to regulation or agreement, or under like circumstances, the developer generally will not be reimbursed. The rules of the Texas Commission on Environmental Quality ("TCEQ") (formerly known as the Texas Natural Resource and Conservation Commission), which rules govern the pond and ditch projects and the condemnation proceedings here, expressly allow for prefunding agreements for the financing and construction of water, wastewater, drainage, and recreational facilities under certain conditions. See 30 Tex. Admin. Code §§ 293.46, 293.47, 293.50 (2002) (Tex. Comm'n on Envtl. Quality). The summary judgment evidence showed that it is common and accepted practice for developers to prefund projects such as the building of water, sewage, drainage, and recreational facilities until the water district can reimburse the developers through bond funds.
The condemnation agreements were separate contracts from the prefunding agreements. The condemnation agreements paralleled the earlier prefunding agreements in that the condemnation agreements required the developers to front all costs of condemnation and allowed for reimbursement "pursuant to the Prefunding Agreement[s]" if condemnation was completed and bonds were sold and approved. The condemnation agreements differed from the earlier prefunding agreements, however, in that the condemnation agreements essentially indemnified the District from any costs should condemnation fail for any reason.
The District argues that the condemnation agreements were merely prefunding agreements, the use of which is common and legal. Newsom does not contest the validity of prefunding agreements generally. Rather, Newsom's position is that the condemnation agreements exceeded mere prefunding agreements to the extent that they provided that the District would not have to reimburse the developers if the condemnation proceedings were unsuccessful for any reason — allegedly taking away the District's statutory disincentive to condemn property improperly or without adequate investigation. Additionally, Newsom points out the fact that the condemnation agreements made the competing developers solely responsible for determining the appraised value and the parameters of the land to be taken. He argues that this provision supports his theory that the District abdicated its duty to determine whether and what to condemn.
Without deciding the legality or propriety of this type of agreement generally, we note that the condemnation agreements here relieved the District of certain statutory burdens that are intended as safeguards for landowners. Those safeguards are found in Property Code section 21.019. See Tex. Prop. Code Ann. § 21.019 (Vernon 1984 Supp. 2003). Section 21.019 either requires or allows the trial court to award damages against the condemnor and in favor of the landowner when a condemnation is voluntarily or involuntarily dismissed or when the trial court denies the right to condemn. See id. § 21.019(a)-(c). The effect of section 21.019(c), which applies here because it applies when the trial court grants the landowner's motion to dismiss or otherwise denies condemnation, is to allow the landowner to be made whole if he prevails and to discourage the condemnor from seeking condemnation unfairly or irresponsibly. Cf. State v. Tamminga, 928 S.W.2d 737, 740 (Tex.App.-Waco 1996, no writ) (holding that purpose of section 21.019(b), concerning voluntary dismissal, is to reimburse landowner for expenses incurred in abandoned condemnation proceeding and "to discourage the commencement and subsequent abandonment of condemnation proceedings"); Brazos County Water Control Imp. Dist. No. 1 v. Salvaggio, 698 S.W.2d 173, 176 (Tex.App.-Houston [1st Dist.] 1985, no writ) (enactment of predecessor to section 21.019(b) in 1969 "indicate[d] the legislature's intent to require condemnors to act more responsibly and fairly toward landowners").
The applicable regulations and statutes do not expressly mention condemnation agreements. For example, the TCEQ regulations allowing developers to prefund the financing and construction of water, wastewater, drainage, and recreational facilities do not expressly mention prefunding of costs and fees related to condemnation. See 30 Tex. Admin. Code §§ 293.46, 293.47, 293.50 (2002). Similarly, the TCEQ regulations governing water districts' land and easement acquisition do not mention a developer's ability to prefund costs associated with acquiring another's property. See id. § 293.51 (2002) (providing that district may pay expenses and costs related to land and easement purchases). That said, as the District argues, nothing in the TCEQ regulations or the Water Code expressly disallows this type of agreement, and the Code does allow water districts to use their funds for reimbursement generally. See Tex. Water Code Ann. § 49.155(a)(5), (9), (12), (13), (14) (Vernon Supp. 2003) (allowing bond funds to be expended on district's expenses, including professional fees, surveys, costs during construction periods, investigation and planning costs, and "land required for stormwater control"); id. § 49.155(c) (allowing reimbursement for money advanced for purposes stated in section (a)); see also id. § 49.213(a)-(c) (Vernon 2000) (allowing district to enter into contracts in performing duties, including for development of land and property within district through purchase, construction, or installation of works, improvements, facilities, plants, equipment, and appliances). The District argues that the condemnation agreements here cannot raise a fact issue in Newsom's favor unless they are illegal, which it claims that they are not under the above authority. We disagree that the condemnation agreements have to be illegal to raise a fact issue in Newsom's favor, and we accordingly decline to rule on the condemnation agreements' legality or propriety. We simply note that the condemnation agreements, when viewed in the required light, and when considered with the other evidence that Newsom adduced, raise a fact issue on whether the District arbitrarily and capriciously determined that the takings were necessary.
Viewed in the appropriate light, the condemnation agreements at issue here removed that disincentive by effectively indemnifying the District from any costs or fees associated with the condemnation proceedings, regardless of whether the District acted arbitrarily, capriciously, or fraudulently. In light of Newsom's other evidence, from which one can reasonably infer that the District abdicated its discretion in deciding what land to condemn for the pond and whether to condemn Newsom's land in easement or in fee for the ditch expansion, the condemnation agreements raise an inference that the District abdicated its discretion because it knew that it would not have to pay should condemnation fail for whatever reason — including, for example, because the District's decisions to condemn were later found to be arbitrary or capricious.
C. Conclusion
We hold that Newsom raised a fact issue on whether the District abdicated its discretion to determine whether and how much to condemn, i.e., that the District acted arbitrarily and capriciously. Cf. Landon, 724 S.W.2d at 938-40. Therefore, the trial court did not err to the extent that it denied the District's rule-166a(c) and rule-166a(i) motions for partial summary judgment on the grounds of the District's determination of public necessity or on Newsom's defenses to that determination. However, we further hold that Newsom did not prove conclusively his entitlement to summary judgment on his defenses to the District's determination of public necessity. Therefore, the trial court erred to the extent that it granted summary judgment for Newsom on this ground.
Accordingly, we overrule that portion of issue one and sustain the corresponding portion of issue two concerning the necessity for taking Newsom's land.
Good-Faith Negotiations
In issue one, the District argues that the trial court erred in denying its rule-166a(c) motions for partial summary judgment on the ground that the District proved that it had made a good-faith offer of damages before filing suit. Newsom's summary judgment responses argued that fact issues precluded the granting of summary judgment on this ground. He later moved for rule-166a(c) summary judgment on the ground that he had conclusively negated the existence of good-faith offers of damages. In issue two, the District argues that the trial court erred in granting Newsom's rule-166a(c) summary judgment motions on this ground.
A. The Requirement of Good-Faith Offer of Damages
The District had the burden to plead and to prove that, before it filed the condemnation proceeding, it was "unable to agree" with Newsom on the amount of damages that would result from the taking. Hubenak v. San Jacinto Gas Transmission Co., 65 S.W.3d 791, 796 (Tex.App.-Houston [1st Dist.] 2001, pet. granted) (citing State v. Hipp, 832 S.W.2d 71, 75 (Tex.App.-Austin 1992), rev'd on other grounds, 867 S.W.2d 781 (Tex. 1993)); see Tex. Prop. Code Ann. § 21.012(a), (b)(4) (Vernon 1984) (allowing condemnor that is "unable to agree" with the landowner on amount of damages to begin condemnation proceeding and requiring petition to allege same).
The rejection of a condemnor's single, bona fide offer satisfies the unable-to-agree requirement. Hubenak, 63 S.W.3d at 798. A bona fide offer is one that is
made "[i]n or with good faith; honestly, openly, and sincerely; without deceit or fraud." In the context of eminent domain proceedings, the offer must not be arbitrary and capricious; rather, it must be based on a reasonably thorough investigation and honest assessment of the amount of just compensation due the landowner as a result of the taking.
Hipp, 832 S.W.2d at 78 (citations omitted); accord Hubenak, 63 S.W.3d at 798. "It takes very little to satisfy the negotiate-in-good-faith requirement." Hubenak, 63 S.W.3d at 798. A condemnor is generally not required to continue to attempt negotiations when further attempts appear futile. Id.
B. Application of the Law to the Summary Judgment Evidence
The District points to the following summary judgment evidence that it produced below: (1) the appraiser based his valuation of $19,000 per acre ($49,020 and $49,738 for the land for the pond and for the ditch, respectively) in part on recent sales of local property lacking utilities, which Newsom's property also lacked; (2) the District offered these amounts to Newsom and even increased the offer in an unspecified amount for the land for the pond; (3) Newsom rejected the offers, demanding $43,560 per acre for the land for the ditch, requiring a commitment that his entire property would be annexed and serviced by the District and would be able to drain into the ditch, and rejecting altogether the placement of a pond on his property; and (4) Newsom's appraiser, David Bolton, concluded that both tracts would have an unspecified lower value than the value that the tracts were given in Bolton's appraisal if they could not get access to utilities.
Regarding the last piece of evidence, the District claims that Bolton testified that Newsom's property would not be worth the amount offered by the District unless the property were annexed and furnished utilities, but this was not Bolton's testimony.
However, Newsom produced the following summary judgment evidence in response, in addition to the evidence discussed under public necessity. The condemnation agreements required the developers to furnish, among other things, an appraisal of the sought-after property. The appraiser for both tracts of Newsom's property was recommended for the job by Garrett's lender and by the attorney for the Santasiero developments. The appraiser had previously appraised the Lakewood Grove subdivision and one other subdivision for Garrett's lender. The appraiser conferred with Santasiero and Garrett in preparing the appraisals of Newsom's land, including receiving data about lot sales, "velocity," prices, and "so forth" in the area from the developers. At the District's attorneys' instructions, the appraiser sent a copy of his appraisal reports to both developers on August 27, 1997. However, the District's board did not authorize the appraisals until five days later. The District's offers to Newsom were based on these appraisals. After Newsom rejected the District's offers and had counter-offered on the land for the ditch, the District's attorneys sent notice of Newsom's counter-offer to the developers, but did not present the counter-offer to the District's board or even inform board president Zobel of the counter-offer. Zobel agreed "in retrospect" that it "might" be "fundamentally unfair" for the developers to select the appraiser when the developers were paying for the condemnations that enabled them not to use their land for the required improvements. Again, because of the condemnation agreements, the District was shielded from condemnation costs if its suits were dismissed for any reason, even for arbitrary and capricious decisions or decisions made in bad faith.
Viewing the evidence in the light most favorable to Newsom and taking all reasonable inferences in his favor for purposes of the District's motions for partial summary judgment, we hold that Newsom's evidence discussed here and in previous portions of this opinion raised a fact issue on whether the District's offers were in good faith. From this evidence, the trial court, acting as factfinder, could reasonably conclude, for example, that the District declined to exercise any discretion of its own in determining what to offer and simply deferred to developers who had interests adverse to those of Newsom. Alternatively, the factfinder could reasonably infer from this evidence that (1) the District allowed the competing developers to control the condemnation proceedings and, specifically, the basis for the offers to Newsom; (2) the developers could influence the appraisal (perhaps to achieve a lower valuation) because they or a related entity recommended the appraiser and because they provided data to him; and (3) the District had incentive to let the developers influence or control the proceedings because (i) if the condemnation failed for any reason (including, for example, for lack of good faith in the amount of an offer), the District would not have to reimburse the developers for condemnation-related costs and fees and (ii) it would be in the District's interest to have a lower appraisal, should condemnation succeed. However, taking the same evidence in the light most favorable to the District and taking all reasonable inferences in its favor for purposes of Newsom's own summary judgment motions, we also hold that Newsom did not conclusively prove that no good-faith offer was made.
C. Conclusion
We hold that the trial court properly denied the District's rule-166a(c) motions for partial summary judgment on the ground that the District made good-faith offers of damages before filing suit. Because fact issues exist, we further hold that the trial court erred to the extent that it granted Newsom's rule-166a(c) summary judgment motions on the ground that he conclusively proved that the District did not make good-faith offers of damages before filing suit.
Accordingly, we overrule that portion of issue one and sustain the corresponding portion of issue two concerning good-faith offers of damages.
Improper Delegation
In issue two, the District argues that the trial court erred in granting Newsom's rule-166a(c) summary judgment motions on the ground that the District improperly delegated its eminent-domain powers to the competing developers.
Newsom's argument below was that the District "improperly delegated its legislative and discretionary authority to the Developers and essentially abdicated its power of eminent domain to these Developers and thus deprived Mr. Newsom of the necessary constitutional and statutory safeguards ordinarily guaranteed potential condemnees." The facts on which he relied in support were essentially those on which he relied in his other summary judgment grounds. Newsom also argued that the District "sold" its eminent-domain powers by entering into the condemnation agreements. These arguments are merely other ways of alleging that the District determined where, what, and how much to condemn by fraudulent or arbitrary means. We have already held that fact issues preclude summary judgment on those defenses.
Newsom relied on the test set out in Protcor v. Andrews, a case in which the plaintiffs alleged that a statute improperly delegated legislative authority to private entities. 972 S.W.2d 729, 732, 734-35 (Tex. 1998). As the District points out in its reply brief, no such statute or rule delegated legislative authority to the developers here, and Proctor's non-delegation paradigm simply does not fit under the facts of this case. Here, the District exercised the power of condemnation, albeit, Newsom alleges, in collusion with the developers. And whether the District colluded or acted improperly with local developers, as Newsom alleges, is a matter that relates to fraud or arbitrariness in the District's condemnation decision, rather than a matter showing that the District improperly delegated the power to condemn altogether.
Accordingly, we hold that the trial court erred to the extent that it granted Newsom's rule-166a(c) summary judgment motions on this ground. We thus sustain that portion of issue two concerning improper delegation.
Equal Protection and Due Process
In issue two, the District argues that the trial court erred in granting Newsom's rule-166a(c) summary judgment motions on the ground that the exercise of eminent domain to take his property for the developers' benefit violated due process and equal protection. See Saunders v. Titus County Fresh Water Supply Dist. No. 1, 847 S.W.2d 424, 427 (Tex.App.-Texarkana 1993, no writ) (noting that condemnation of property for non-public use may violate due process); King v. Harris County Flood Contr. Dist., 210 S.W.2d 438, 440 (Tex.Civ.App.-Galveston 1948, writ ref'd n.r.e.) (same). In support of this ground, Newsom relied on the same facts on which he relied in his other summary judgment grounds. Because we have held that Newsom did not prove as a matter of law any of his other challenges to the condemnation, we hold that he did not prove this summary judgment ground conclusively, either. Therefore, the trial court could not properly have rendered summary judgment for Newsom on this ground.
Accordingly, we hold that the trial court erred in granting Newsom's rule-166a(c) summary judgment motions on this ground. We thus sustain that portion of issue two concerning equal protection and due process.
Conclusions Concerning Summary Judgment
We hold as follows:
• The trial court erred in granting Newsom's rule-166a(c) summary judgment motions in all respects.
• The trial court erred in denying the District's rule-166a(c) motions for partial summary judgment on the ground that the condemnations were for public uses.
• The trial court did not err in denying the District's rule-166a(i) motions for partial summary judgment on Newsom's defense of fraud, bad faith, and arbitrariness to the District's determination of public necessity.
• The trial court did not err in denying the District's rule-166a(c) motions for partial summary judgment on the grounds that the District negotiated in good faith before filing suit and that the takings were public necessities.
The District's Supplemental Issues
By supplemental brief, the District challenges the trial court's final judgment in the following respects: (1) the trial court erred in awarding Newsom contingent appellate attorney's fees because the Property Code allows the award of attorney's fees only through judgment and (2) the trial court erred in awarding Newsom the improvements made by the District during its temporary possession of his property because the trial court dismissed the suit for want of jurisdiction, which disposition allegedly precludes awarding possession.
Given that we reverse the final judgments, we need not reach the District's supplemental issues.
Conclusion
We reverse the judgments and remand the causes.
The District raises one more challenge that we overrule as immaterial. The trial court sustained Newsom's objections to an affidavit, offered by the District in support of its motions for partial summary judgment, of James Bonham, an attorney who had represented other utility districts. The District notes that other summary judgment evidence set out the essential points that Bonham made in his affidavit, "probably" making Bonham's affidavit "not critical." However, in the event that we were to determine that Bonham's affidavit contained material and unique testimony, the District conditionally challenged the exclusion of that affidavit under issue three. We have reviewed Bonham's affidavit, and we agree that it contains nothing relevant that is not also contained in or that cannot be inferred from other summary judgment evidence. Additionally, to the extent that Bonham's affidavit recites the law applicable to condemnation proceedings and eminent domain, the affidavit states nothing that, as the District acknowledges, this Court cannot determine by itself. Accordingly, we overrule issue three.