A long title for today's post, but there's a lot that needs to be captured.
In Texas Dep't of Transportation v. Hankins, No. 01-14-00299-CV (Aug. 31, 2016), the Texas Court of Appeals threw out a jury verdict in an inverse condemnation case, concluding (sua sponte) that the property owner plaintiff didn't have standing.
Hankins owned a building, and after he tore it down because it had been damaged, he discovered the cause was an underground drainage pipe which apparently had been installed by the Highway Department decades before Hankins purchase. The prior owner had conveyed and recorded an easement to the Department, even though it was unclear whether that owner also authorized installation of the pipe.
Hankins brought an inverse condemnation lawsuit alleging a physical invasion taking because the pipe was not authorized, and alleged that until the demolition of the building, he had no idea the pipe was there. The Department claimed that nothing was wrong with the pipe, and it did not cause the damage to Hankins' building.
The jury came back with a verdict that the Department took or damaged Harkins' property without his consent, and the court entered a judgment for $34,000, the difference between the market value of the property before and after the taking.
On appeal, the Department didn't claim that Hankins lacked standing, but the court on its own motion asked for briefing on this issue. Standing is a jurisdictional issue, which may be raised at any time.
The court concluded that Hankins lacked standing because "a party must have a vested property interest in the subject property at the time of the alleged taking." Slip op. at 7. Hankins alleged the "taking" was the unauthorized installation of the pipe before he purchased the property.
The court rejected the argument -- relying on Palazzolo and Nolan -- that he didn't know about the pipe until tearing down the building, and thus his injury occurred during his ownership. Palazzolo, as you recall, held that transfer of the property after the offending regulations were adopted did not wipe out the takings claim. In Nollan, the majority opinion rejected dissenting Justice Brennan's argument that the Nollans purchased the property on notice of the exaction requirement, and thus had no claim.
But those cases involved regulatory and not physical takings, which according to the Texas court made them inapplicable, because when the government physically invades property, the fact and extent of the taking in known, while in regulatory situations, it takes an application of the regulation to the property for those to be understood. "Here, [the prior owner] granted the State a right-of-way easement, and there is no pleading or proof that no prior owner in the chain of title knew about the pipe. At the very least, [she] knew because she conveyed the right of way to the State." Slip op. at 12. In other words, Hankins' lack of proof that prior owners didn't know was the deciding factor.
In our view, the court's rationale doesn't fit Palazzolo, because the differences between regulatory and physical takes doesn't compel the court's conclusion. In Palazzolo, the Court distinguished physical and regulatory takings where the physical take is open and notorious, not where, as here, the physical invasion is claimed to be hidden. See Palazzolo v. Rhode Island, 533 U.S. 606, 628 (2001) ("In a direct condemnation action, or when a State has physically invaded the property without filing suit, the fact and extent of the taking are known. In such an instance, it is a general rule of the law of eminent domain that any award goes to the owner at the time of the taking, and that the right to compensation is not passed to a subsequent purchaser.").
Moreover, all owners were on notice of the easement by virtue of its recordation. But that doesn't say much about the installation of the pipe, so we don't see how lack of proof of an absence of knowledge of the pipe is the same as knowing about the pipe.
Texas Dep't of Transportation v. Hankins, No. 01-14-00299-CV (Tex. App. Aug. 31, 2016)
