Westgate, Ltd. v. State

¶1dissenting.

¶2July 1, 1992.

¶3Many people talk about the clumsiness of governmental bureaucracies. Few, however, embrace it as warmly as the majority does today. Abandoning the standard of conduct traditionally applied in this and other jurisdictions, the majority gives its seal of approval to bureaucratic bungling that can cause millions of dollars in damages to Texas landowners. I dissent.

¶4Article I, section 17 of the Texas Constitution guarantees that “[n]o person’s property shall be taken, damaged or destroyed for or applied to public use without adequate compensation being made ...” Because of the words “damaged or destroyed,” a landowner may be entitled to compensation even in the absence of a direct physical invasion of the property. DuPuy v. City of Waco, 396 S.W.2d 103, 108 (Tex.1965). Acts short of physical invasion can amount to a compensable taking when the government unreasonably interferes with access to property or otherwise imposes restrictions that constitute an unreasonable interference with the landowner’s right to use and enjoy the property. See Hubler v. City of Corpus Christi, 564 S.W.2d 816, 820-21 (Tex.Civ.App.—Corpus Christi 1978, writ ref’d n.r.e.), and cases cited therein. The issue in this case is whether the government’s mishandling of a condemnation proceeding may constitute an unreasonable interference with the landowner’s right to use and enjoy the property.

¶5The condemnation process may, in some circumstances, require months or even years of deliberation. The government should not be expected to rush hastily through the acquisition of land; adequate time must be allowed for full, open consideration of all aspects of the taking, including concerns relating to the environment.

¶6The government should, however, be expected to act reasonably. An unreasonable delay in the condemnation process unnecessarily prolongs the time during which the property’s value is affected, potentially causing significant, unjustifiable injury to the landowner. In the present case, for example, the jury determined that the government’s unreasonable delay cost West-gate $633,000 in lost profits.

¶7Other jurisdictions would hold the government accountable for the harm caused by an unreasonable delay. See, e.g., State ex rel. Morrison v. Helm, 86 Ariz. 275, 345 P.2d 202, 207 (1959), appeal dismissed, 362 U.S. 609, 80 S.Ct. 960, 4 L.Ed.2d 1009 (1960); Klopping v. Whittier, 8 Cal.3d 39, 104 Cal.Rptr. 1, 11, 500 P.2d 1345, 1355 (1972); Levine v. City of New Haven, 30 Conn.Supp. 13, 294 A.2d 644, 645 (1972); Roach v. Winnetka, 366 Ill. 578, 10 N.E.2d 356, 359 (1937); Nadler v. City of Mason City, 387 N.W.2d 587 (Iowa 1986); State v. Maynard, 565 So.2d 532, 535-36 (La.App.), rev’d. on other grounds, 572 So.2d 39 (La.1990); Standard Indus., Inc. v. Depart*459ment of Transp., 183 Mich.App. 53, 454 N.W.2d 417, 419 (1990); State ex rel. St. Louis v. Beck, 333 Mo. 1118, 63 S.W.2d 814, 815 (1933); City of Sparks v. Armstrong, 103 Nev. 619, 748 P.2d 7, 8-9 (1987); Durika v. School Dist. of Derry Township, 415 Pa. 480, 203 A.2d 474, 475 (1964).

¶8The majority, though, chooses to excuse the delay. Rejecting the approach that prevails elsewhere, the majority asserts that holding the government responsible for unreasonable delay would inhibit the consideration of competing interests. The reasonableness of a given delay, the majority implies, cannot be accurately determined by a jury of ordinary Texans. Allowing the jury to decide what is or is not reasonable “would so skew governmental decision-making,” at 454, that the question of reasonableness should be left solely to the government itself.

¶9I disagree. The citizens of Texas are fully capable of appreciating the need for public debate, environmental review, and consideration of alternatives. If those tasks actually require a four-year delay in completing the condemnation process, the jury should be trusted to find such a delay reasonable. Conversely, if those tasks do not actually require a four-year delay, a jury should be allowed to determine that the government has acted unreasonably. There is no justification for shielding the process from scrutiny; under our constitution, the government remains answerable to the public even when it condemns land.

¶10Allowing Westgate to recover for the unreasonable delay in this case would be consistent with the approach taken in cases involving restrictions of access. See City of Austin v. Avenue Corp., 704 S.W.2d 11, 13 (Tex.1986) (recovery permissible for temporary restriction that is negligently performed or unduly delayed). In either situation, the government’s unreasonable delay constitutes an unreasonable interference with the landowner’s right to use and enjoy the property.

¶11A showing of bad faith has never been required in access cases; nor should it be required in this case. As the dissenting opinion by Justice Doggett notes, “bad faith” means more than mere negligence; it implies “an intent to injure, or some other improper motive.” at 461 (citing King v. Swanson, 291 S.W.2d 773, 775 (Tex.Civ.App.—Eastland 1956, no writ)). Thus, under a bad faith standard, the government may routinely and unreasonably delay condemnation proceedings, at landowners’ expense, without fear of being held accountable.

¶12The problem with bureaucracy is not that bureaucrats intend to injure the public. The problem is that the government becomes so absorbed in its own needs that it forgets those of the public. That problem would be addressed by an objective reasonableness standard; but it will not be addressed by a subjective bad faith standard.1

¶13I would hold that the jury’s finding of an unreasonable delay fully supports the inverse condemnation award. In addition, I agree fully with the views expressed in Parts II, III and IV of Justice Doggett’s dissenting opinion, concerning the majority’s failure to remand on the bad faith issue and its retreat from broad form submission. Therefore, I dissent.

¶15dissenting.

¶16July 1, 1992

¶17Governmental accountability is the true issue before us in this inverse condemnation case. Today’s opinion implicitly acknowledges that this objective is furthered by openness in governmental decisionmak-ing and the availability of meaningful judicial remedies for abuse of governmental power. Yet the majority wrongfully deprives the business involved here1 of any *460chance to hold these particular bureaucracies responsible for their alleged bad faith. This business is left with no remedy for what may have been an improper delay.2

¶18I write today because of concerns about the majority’s willingness to: (1) condone the potential abuse of an independent business by government; (2) embrace a new standard for remand which contradicts that announced within the last six months; and (3) reject our commitment to broad form submission of jury issues.

¶19I.

¶20I agree that “sound public policy” demands that automatic liability not be imposed on a governmental entity that simply announces future plans for a public project that requires later acquisition of the property in question, at 453. A contrary rule would only motivate governmental secrecy, since the condemning agency would be advantaged by keeping silent its future plans. By avoiding such encouragement, even this majority must accept the court’s unanimous preference for “openness at every stage of [governmental] deliberations.” Acker v. Texas Water Com’n, 790 S.W.2d 299, 300 (Tex.1990).

¶21I also agree that a rule imposing liability solely on the basis of “unreasonable” delay could result in hurried decisionmaking without allowing sufficient time for necessary public debate regarding the social, economic and environmental costs and benefits of a particular public project, at 454. By allowing the condemning authority to proceed cautiously, we both encourage thoughtful consideration and ensure a genuine opportunity for public input in the process. See Acker, 790 S.W.2d at 300 (the public is “entitled to more than a result. They are entitled not only to know what government decides but to observe how and why every decision is reached.”).

¶22While not supported solely by a showing of delay, an inverse condemnation claim should be permitted “where the condemning authority is accused of intentionally injuring a landowner.” at 454. This approach is consistent with the general rule that there must be “good faith on the part of the condemnor” to avoid liability. 27 Am.Jur.2d § 461, at 381 (1966). With an action available for governmental “bad faith in delaying the condemnation proceedings,” at 454, claimants who demonstrate a condemning authority’s improper intent should be able to recover for inverse condemnation actions. As I have previously written on behalf of this court:

Businesses ensnarled in ... bureaucratic traps cannot provide the productive force so vital to our state’s prosperity.... [PJointless delays stifle the ... flame of initiative.... We must not have the type of cumbersome government that an earlier generation described as leaving its citizens “[s]kewered through and through with officepens, and bound hand and foot with red tape.”

¶23Texas-New Mexico Power Co. v. Texas Indus. Energy Consumers, 806 S.W.2d 230, 232 (Tex.1991) (quoting Charles Dickens, David Copperfield 606 (Dodd, Mead & Co. ed. 1936)). Allowance of bad faith claims properly holds the bureaucracy responsible for its actions without inhibiting public debate and open proceedings.

¶24*461“Bad faith” means more than negligence or lack of diligence. Citizens Bridge Co. v. Guerra, 152 Tex. 361, 258 S.W.2d 64, 69 (1953). It implies an intent to injure, or some other improper motive. See King v. Swanson, 291 S.W.2d 773, 775 (Tex.Civ.App.—Eastland 1956, no writ). Mere bad judgment does not qualify as bad faith. Rather, a claimant must show a knowing “disregard” of their rights. Guerra, 258 S.W.2d at 69. There is no public benefit in allowing a governmental entity to act with such indifference. As aptly stated by one amicus, “misuse of the condemnation process can cause catastrophic personal losses that are neither compensated nor similarly borne by other members of the community”3

¶25II.

¶26Where I sharply diverge from the reasoning of the majority, however, is in its conclusion that “Westgate’s legal theory in the trial court and on appeal [is] that the government acted unreasonably, not that the government acted in bad faith....” Id.The record simply does not support this conclusion. Westgate specifically claimed in its Answer and Cross-Action that:

The Condemnees told the City and State on numerous occasions that the threatened condemnation was destroying their ability to lease their shopping center to prospective tenants. In spite of this knowledge, the Condemnors continued to fail and refuse to condemn the premises, to compensate the Condemnees, or to otherwise act to mitigate Condemnee’s losses_ This [conduct] was undertaken by the Condemnors deliberately and with full knowledge of the injuries being inflicted on these Cross-Plaintiffs and in conscious and contemptuous disregard for the rights and interests of these litigants.

¶27(emphasis added). This certainly appears from the face of the pleading to be a claim of bad faith in the sense of deliberately “disregarding” Westgate’s rights. Even if doubt remains, we will generally construe the petition “as favorably as possible for the pleader.” Gulf, Colorado & Santa Fe Ry. Co. v. Bliss, 368 S.W.2d 594, 599 (Tex.1963). Furthermore, “[t]he court will look to the pleader’s intendment ... even if some element of a cause of action has not been specifically alleged.” Id.

¶28After pleading what reasonably appears to be bad faith, Westgate introduced supportive evidence of this claim. The condemning authority approved Westgate’s expedited application for hardship in November 1986, agreeing to purchase the property on an “early basis,” yet did not commence legal proceedings until almost two years later. This delay occurred despite action initiated as early as April 1986 to resolve the acquisition of a nearby shopping center for the same highway project. Additionally, Westgate offered evidence that it was unable to sell or modify its property during the considerable time in question, indicating that a true injury may have been suffered.

¶29The majority thus errs in concluding that there was no bad faith action brought here. Where the record could support a claim, here for bad faith, this court has usually remanded in the interest of justice when a party failed to offer probative evidence on a critical fact, and when the record had apparently not been fully developed. See Texas Real Estate Com’n v. Nagle, 767 S.W.2d 691, 695 (Tex.1989); Aetna Ins. Co. v. Klein, 160 Tex. 61, 325 S.W.2d 376, 379 (1959); Sanford Ind. School Dist. v. Sanford, 159 Tex. 155, 317 S.W.2d 188, 189 (1958); Dahlberg v. Holden, 150 Tex. 179, 238 S.W.2d 699, 704 (1951).

¶30Even if no bad faith action had been brought, however, the majority’s own reasoning still compels a remand in the interest of justice. See Tex.R.App.P. 180. Had Westgate proceeded on an incorrect legal theory of “unreasonable” delay, as the majority contends, we have in the past remanded in the interest of justice when a party simply proceeds under the wrong legal theory. See, e.g., Morrow v. Shotwell, 477 S.W.2d 538, 541-42 (Tex.1972) (remanding to allow a purchaser to make an argu*462ment not advanced at the first trial); Davis v. Gale, 160 Tex. 309, 330 S.W.2d 610, 613 (1960) (“This court has often remanded a cause to give parties an opportunity to supply additional evidence and to amend pleadings.”); Benoit v. Wilson, 150 Tex. 273, 239 S.W.2d 792, 799 (1951); United Gas Corp. v. Shepherd Laundries Co., Inc., 144 Tex. 164, 189 S.W.2d 485, 492 (1945) (“since the cause has been tried upon an erroneous theory we think justice will best be served by remanding the cause”).4

¶31Particularly persuasive in support of a remand is City of San Antonio v. Pigeonhole Parking of Texas, Inc., 158 Tex. 318, 311 S.W.2d 218 (1958), in which a parking-garage owner sought relief against a city that denied a permit to build a driveway across the sidewalk, asserting an absolute right of street access. This court held that the City’s police power authorized denial of street access if such denial was not “oppressive or arbitrary.” Id.311 S.W.2d at 223. We remanded to the trial court to give the landowner an opportunity to present any evidence of such oppression or arbitrariness, even though it had not advanced this argument or presented relevant evidence. Id.311 S.W.2d at 223-24. Today the majority similarly announces that an inverse condemnation recovery will not be allowed absent bad faith, but then unfairly refuses to allow Westgate any opportunity to present evidence of bad faith on remand.5

¶32III.

¶33The majority attempts to justify its refusal to remand not by reliance on any existing law, but rather by rejection of precedent and creation of a new quasi-standard requiring a party to have pled, proven, and requested a jury issue on a specific alternate legal theory to warrant a remand, at 455. The majority then apparently concludes that no such alternate legal theory exists. An alternate theory is present here, however, for the majority explicitly leaves open the possibility of bringing a cause of action based on bad faith. Because the potential of bringing such a cause of action remains, Westgate should be allowed to do so.6

¶34This new pseudo-standard, offered with no supporting citations and little explanation, is remarkable both for its logical inconsistency and its total rejection of recent precedent. The majority concludes that by proceeding solely on a negligence theory, Westgate has essentially waived its right to a remand on a bad faith theory. This is despite the fact that neither this nor any other Texas court had even suggested a bad faith standard in any context relating to inverse condemnation. Furthermore, Westgate did not just submit an issue on negligence, as claimed by the majority, but instead submitted separate issues on negligence and on unreasonableness, both of which went to the jury. These submissions encompassed all existing legal standards in the area of inverse condemnation. The majority, rejecting all of Westgate’s efforts, now requires impressive prescience on the part of litigants, who apparently must request jury issues not only on existing *463causes of action, but also on any other standard or cause of action that this court may recognize at some future date or even that may someday exist in other jurisdictions.

¶35But for its result, today’s opinion is remarkably reminiscent of that in Caller-Times Publishing Co., Inc. v. Triad Communications, Inc., 826 S.W.2d 576 (Tex.1992) (opinion on motion for rehearing). In the original opinion there, the majority developed a new test designed to limit the previously existing prohibition on predatory pricing under the Texas Free Enterprise and Antitrust Act of 1983. Tex.Bus. & Com.Code §§ 15.01-15.51. Initially, like today, the majority failed to remand the case. See 826 S.W.2d at 589 (Doggett, J., dissenting). Then, on motion for rehearing, the court substituted a new opinion belatedly correcting this mistake and remanding for further proceedings in the interest of justice. The majority explicitly stated in this case “of first impression,” 826 S.W.2d at 578, that “Texas antitrust law is sufficiently unsettled that we remand for a new trial on the antitrust question.” Id. at 589. In an utterly inconsistent statement, the court today in a case where we “ha[ve] not previously addressed th[e] issue,” at 452, rules that in circumstances where “the law of this state is unsettled and the rule in other jurisdictions is not uniform,” the court will “decline to remand.” at 455. It appears that at the ripe old age of six months, Caller-Times has already been added to the majority’s rapidly expanding collection of abandoned precedent.

¶36IV.

¶37Tucked into a footnote is the majority’s very significant challenge to broad form submission. Today’s opinion suggests that Westgate should have submitted a specific jury issue on bad faith, at 455 n. 5. To avoid inadvertent omissions of issues that result in unnecessary reversals and thwart the jury’s resolution of a case, the Texas Rules of Civil Procedure mandate broad-form submission of jury issues whenever feasible. Tex.R.Civ.P. 277. See Matt Rubin, The Scope of Special Issues in Negligence Cases: Pleadings, Proof, and Rule 277, 15 Hous.L.Rev. 735, 737 (1978); Biggs v. First Nat’l Bank of Lubbock, 808 S.W.2d 232 (Tex.App.1991); see also Lemos v. Montez, 680 S.W.2d 798, 801 (Tex.1984). Before today, we have consistently embraced this rule to encourage such submissions. See Texas Dep’t of Hum. Serv. v. E.B., 802 S.W.2d 647 (Tex.1990); see also Burk Royalty Co. v. Walls, 616 S.W.2d 911, 924 (Tex.1981). Now the majority merely pays lip-service to such precedent, while clearly turning from it. As unanimously declared in E.B., “[ujnless extraordinary circumstances exist, a court must submit such broad-form questions.” 802 S.W.2d at 649 (emphasis added). Now the majority concludes that in the perfectly common instance of unsettled law or questions of first impression, a broad form instruction is no longer required. With no way of knowing that a bad faith standard would be adopted in this state, Westgate should not suffer from this burden. Such a rule lacks any persuasive logic, for broad form instructions should be most helpful precisely when the law is unsettled, since it is more difficult to frame particularized or limited jury issues in such circumstances.7

¶38V.

¶39By denying a Texas business the opportunity to show it has been victimized by bureaucratic bad faith, the majority fails to follow the course taken in prior cases such as Pigeonhole Parking. As was the case in Caller-Times, it is my hope that the majority will admit and correct its error on motion for rehearing, as well as abandoning both its assault on broad form submis*464sion and its destructive new remand standard.