We did a post a while back about a Houston barbecue restaurant which had some troubles with the Harris County, Texas, Metropolitan Transit Authority. The court of appeals held that the restaurant's lost profits could not be recovered in an inverse condemnation action.
Well, that same court has rendered an opinion in a case involving a different restaurant impacted by the same transit authority. Doneraki serves Mexican fare (although our first impression was that a restaurant with "doner" in the name was probably a Turkish joint; we stand corrected). Or should we say "served Mexican fare," because alas, the place -- as the photo above shows -- is now boarded up and out of business.
The owners alleged it was the Transit Authority's construction of the rail, and the resulting rail line (also shown) that caused it to fail. The rail did not condemn any of Doneraki's property. The owners contended only that rail construction interfered with access to their establishment, and that "once construction was completed, access to the restaurant was possible but difficult." They sued in inverse condemnation, seeking to "recover lost profits allegedly caused by the temporary, total denial of access to the restaurant during the construction of the North Line." They also "sought to recover for the permanent diminution in the value of the property caused by the alleged material and substantial impairment of access once the North Line construction was completed." The trial court dismissed the complaint.
The court of appeals reversed. Padilla v. Metropolitan Transit Authority of Harris County, No. 14-14-00939 (May 24, 2016). The loss of access was not, as the Authority argued, a "community damage" shared by all. Or at least there was a factual dispute about whether it was, and whether the construction caused a "temporary, total denial of access to appellants' restaurant." Slip op. at 10. Yes, the Authority submitted evidence that it didn't interfere in such a way and that it was careful and "always made arrangements for access to the restaurant and parking areas for the use of the restaurant's patrons," but the owners also submitted testimony that "virtually every day," and for months at a time "all the entrances and exits were blocked." Slip op. at 11. This wasn't a conclusory statement as the Authority alleged, but was testimony that raised a genuine dispute of fact. There being a dispute of fact, the court concluded that -- should Doneraki be able to prove access was blocked -- these were not the type of non-compensable inconveniences associated with all government transportation projects[.]"
The court also rejected the Authority's claim that it didn't have the intent to take Doneraki's property (and thus, under Texas law, there can be no inverse condemnation). The Authority pointed out that it contractors and their subs performed the work, and if there was a denial of access, it was on them and not the Authority. Thus, it argued, we didn't intend to cause specific damage to Doneraki.
The court disagreed, holding that it was enough to show intent that the rail project was "an authorized Metro project." Its own contracts with its contractors contained provisions requiring them to "minimize the impact of construction on surrounding property owners."Slip op. at 14. Which means the Authority anticipated such impacts. Thus, the Authority was not completely in the dark about the possibility of causing the type of impacts that Doneraki alleged. Again, an issue of fact.
Reversed and remanded.