Our state courts may be closed on this Good Friday, but the courts of most other states' are not, Texas courts included. So here's an opinion issued today by the Texas Supreme Court, El Dorado Land Co. v. City of McKinney, No. 11-0834 (Mar. 29, 2013).
[Update: more on the case here from the Supreme Court of Texas Blog, including links to the briefs and the oral arguments.]
El Dorado sold the city some land for use as a park. The conveyance required that the land "shall be used only as a Community Park," and if not used for that purpose, then El Dorado would have the right to buy the land back.
Ten years later the city built a public library on part of the land, which resulted in El Dorado reminding the city about that "park" use requirement by giving notice that it was going to buy the land back. "El Dorado's letter further asked the City within ten days to acknowledge its obligations under the deed and to suggest an acceptable closing date." Slip op. at 1. Cheeky buggers!
When the city predictably did not respond as El Dorado suggested, El Dorado brought an inverse condemnation lawsuit, claiming that the reversionary interest was property which had been taken by the city's failure to sell. It could not sue the city for breach of contract because the city had not waived its immunity. The trial court dismissed the case for failure to state a claim because El Dorado's interests were mere contract rights, and not property. The court of appeals affirmed.
The Texas Supreme Court held in El Dorado's favor that the deed restriction was a "right of reentry," which is a conditional future interest, and "property" under Texas law. The court relied on the reasoning of Leeco Gas & Oil Co. v. Nueces County, 736 S.W.2d 629 (Tex. 1987), a case with similar facts which held that "a future interest in real property is compensable" under the Texas Constitution's Takings Clause. Slip op. at 6-7. In Leeco, the deed provided that the property would automatically revert if the county did not use it as a park. The court rejected the city's attempt to distinguish the future interest at issue in Leeco from El Dorado's, holding that it made no difference that in Leeco the interest was self-executing, and El Dorado's interest gave it the right to repurchase.
While we agree that Leeco’s possibility of reverter and El Dorado’s right of reentry are different types of reversionary interests, it is not apparent why their technical differences make one a compensable property interest and the other a worthless right. In both, the termination of the possessory estate rests on the occurrence of a condition subsequent imposed upon the conveyance. That a right of reentry requires its holder to make an election does not make it any less a property right, particularly where as here the holder has made the required election.
Slip op. at 7.
The court also rejected the city's argument that the fact that it purchased the land from El Dorado, while in Leeco the property had been donated to the county, made a difference.
Finally, the opinion closed with a good quote if you need to explain to your courts what "inverse condemnation" is:
When private property is taken for a public purpose, our constitution requires that the government compensate the owner. Tex. Const. art I, § 17. A condemnation proceeding is the formal process by which that compensation is determined. But when the government takes private property without paying for it, the owner must bring suit for inverse condemnation. Westgate, Ltd. v. State, 843 S.W.2d 448, 452 (Tex. 1992). The action is termed “inverse” because it is initiated by the private property owner instead of the government, but its purpose and procedure are generally no different. Stewart, 361 S.W.3d at 567.
Slip op. at 10-11.
Besides the holiday schedule for Good Friday, another diffrence between Texas' courts and Hawaii's is the approach to contingent future interests. Contrast El Dorado with the opinion of the Hawaii Intermediate Court of Appeals in a case asking whether the right to future littoral accretion is "property." The Hawaii court held it was not, because the accretion might never take place and thus was not "vested." The Hawaii Supreme Court denied review, as did the U.S. Supreme Court, despite our amicus brief arguing that the property being taken was not the future accreted land, but rather the present right to future accretion, itself a recognized and compensable property right. Shoulda brought the case in Texas!
El Dorado Land Co. v. City of McKinney, No. 11-0834 (Tex. Mar.29, 2013)
