### TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-03-00272-CV

EPGT Texas Pipeline, L.P., Appellant

v.

K-W Construction, Inc., Appellee

FROM THE COUNTY COURT AT LAW NO. 1 OF HAYS COUNTY,

NO. 6568-C, HONORABLE LINDA A. RODRIGUEZ, JUDGE PRESIDING

M E M O R A N D U M O P I N I O N

In this inve rse condemnation case, appellant, EPGT Texas Pipeline, L.P. (“Pipeline”),

appeals from a trial court judgment in favor of K-W Construction, Inc. (“K-W”). The trial court

aw arded damages and costs to K-W for a pipeline easement running across K-W’s property that

Pipeline’s predecessor in interest acquired by inverse condemnation. The parties agree that the sole

issue on appeal is whether K-W’s claim is barred by the ten-year statute of limitations applicable to

certain adverse possession claims. Pipeline asserts that because the limitations period begins upon

intrusion onto the land, which occurred thirty-five years before K-W brought its claim, K-W’s claim

is barred. Because Pipeline did not establish that K-W or its predecessors in interest had notice of

the pipeline before August 1998, we hold that K-W’s c laim is not time-barred and affirm the

judgment of the district court.2 BACKGROUND

T he parties have stipulated to the facts of this case. K-W owns a one-acre tract of

land in Hays County that it acquired in 1984 from a landowner who had owned the tract since 1956.

Pipeline is a limi ted partnership that owns an intrastate natural gas pipeline crossing under and

through part of the tract. The pipeline has continuously occupied a subsurface portion of the tract

since 1965, before K-W’s purchase of the property. Pipeline acquired the pipeline in 1987 as a

successor in interest to Valero Transmission Company. Both Pipeline and Valero are gas utilities

with the power of eminent domain. S ee Tex. Util. Code Ann. §§ 101.003(7), 121.001(1), 181.004

(West 1998 & Supp. 2003). K-W did not discover the pipeline until August 1998, when K-W found

one of Pipeline’s employees on the property.

K-W brought suit in December 2000, then added Pipeline as a defendant in November

2001. K-W asserted, among other claims, a cause of action based on inverse condemnation. K-W

abandoned its other claims, and the parties tried the inverse condemnation claim to the bench. At

trial, Pipeline asserted that the ten-year statute of limitations applicable to adverse possession barred

K-W’s claim. The trial court, after determining that K-W’s claim was not time-barred, rendered

judgment in favor of K-W, awarding damages and expenses totaling $37,978.25.

Although Pipeline has the power of e minent domain, the parties agree that neither

Pipeline nor its predecessors in interest acquired the right to occupy any portion of the land through

an eminent domain proceeding. The parties further agree that the pipeline has occupied a subsurface

portion of the property since 1965 and t hat this occupation constitutes a taking, because no

agreement exists to grant Pipeline or its predecessors an easement or a right to occupy any portion3

of t he property. The parties further agree that K-W has established all elements of its inverse

condemnation claim, with the sole issue on appeal being whether the ten-year statute of limitations

bars its claim.

ANALYSIS

The trial court determined as a matter of law that K-W’s inverse condemnation claim

was not time-barred. We review a trial court’s conclusions of law d e novo

. B lack v. City of Killeen

,

78 S.W.3d 686, 691 (Tex. App.—Austin 2002, pet. denied). Pipeline contends that the ten-year

statute of limitations applicable to adverse possession cases bars K-W’s inverse condemnation claim

because t he period began to run from the date of encroachment, which was 1965. S ee Tex. Civ.

Prac. & Rem. Code Ann. § 16.026(a) (West 2002). Pipeline further argues that it does not have to

prove the elements of adverse possession, only the date of encroachment. K-W counters that

Pipeline must satisfy the elements of adverse possession and has failed t o demonstrate that the

intrusion was “visible.” I d. § 16.021(1) (West 2002). The parties stipulate that K-W did not

discover the pipeline until August 1998. But, although Pipeline does not contest whether the

pipeline was visible, it claims that the equipment required to construct a natural gas pipeline was so

obvious as to impute actual notice on K-W’s predecessors.

The ten-year statute of limitations period to acquire land by adverse possession

governs inverse condemnation claims. B razos River Auth. v. City of Graham

, 354 S.W.2d 99, 110

(Tex. 1961); Trail Enters., Inc. v. City of Houston

, 957 S.W.2d 625, 631 (Tex. App.—Houston [14th

Dist.] 1997, pet. denied); H udson v. Arkansas La. Gas Co.

, 626 S.W.2d 561, 563 (Te x

.

App.—Texarkana 1981, writ ref’d n.r.e.); see Tex. Civ. Prac. & Rem. Code Ann. § 16.026(a).4

Adve rse possession is “an actual and v isible appropriation of real property, commenced and

continued under a claim of righ t that is inconsistent with and is hostile to the claim of another

person.” Tex. Civ. Prac. & Rem. Code Ann. § 16.021(a) (emphasis added). The statute of

limitations for adverse possession b egins to run when entry on the land is made. H ickman v.

Ferguson

, 164 S.W. 1085, 1087 (Tex. Civ . App.—Austin 1914, writ ref’d). When there are

circumstances to show notice of adverse possession upon a previous owner, the statute of limitations

begins to run and will not be tolled by a subsequent purchaser claiming lack of notice. E astham v.

Gibbs , 125 S.W. 372, 374 (Tex. Civ. App.—Fort Worth 1910, no writ).

Based on its reading of Hickman

, Pipeline argues that its entry upon the land in 1965,

w ithout more, was sufficient to begin the limitations period. In H ickman

, however, the pe rson

adversely possessing the land did more than simply enter the land. He openly and visibly fenced,

built houses on, and farmed the land for over twenty years. 164 S.W. at 1086.

Pipeline further relies on two other cases for the propositions that the statute of

limitations begins to run from the date of encroachment and that it need not prove the elements of

adverse possession. The holding in one case hinged on a pleading defect. In W addy v. City of

Houston

, because “Waddy did not assert in an y pleading properly before the trial court that his

predecessors in title did not have notice of the ‘taking’ of the land,” the court held that the City had

proven that a taking occurred when the sewer line was installed in 1919. 834 S.W.2d 97, 103 (Tex.

App.—Houston [1st Dist.] 1992, writ denied). The issue of whether the City needed to establish the

elements of adverse possession was not before the court. The other case on which Pipeline relies,

Trail Enterprises

, citing only Waddy , stated that “[w]e do not read the cases applying the ten-year1 In so holding, we are mindful that other courts have addressed the applicability of the

discovery rule to inverse condemnation claims. In Trail Enterprises, Inc. v. City of Houston

, because

the appellant “did not plead or prove that it did not discover its cause of action until a later date,

. . . the City had no burden to negate the discovery rule

. Therefore, the City established its limitations

d efense as a matter of law.” 957 S.W.2d 625, 633 (Tex. App.—Houston [14th Dist.] 1997, pet.

denied) (emphasis added). In H udson v. Arkansas Louisiana Gas Co.

, which had facts similar to the

instant case, a company discovered in 1977 the existence of a pipeline on property that it had bought

in 1955. 626 S.W.2d 561, 562 (Tex. App.—Texarkana 1981, writ ref’d n.r.e.). The pipeline had

been on the property since 1940. The trial court granted summary judgment in favor of the pipeline

5 limitations period to inverse condemnation claims as requiring the defendant to establish the

elements of adverse possession.” 957 S.W.2d at 632. T rail cited no other authority, and we find

none, for the proposition that a party defending an inverse condemnation claim need not prove the

elements of adverse possession. Furthermore in T rail

, because the appellant “did not plead or prove

that it did not discover its cause of action until a lat er date . . . the City established its limitations

defense as a matter of law.” I d. at 633. T

rail left open the possibility that discovery of entry on the

land, not the entry itself, could establish the time that limitations began to run.

Here, K-W asserted in its pleading that “[n]either Plaintiff nor its pre decessors in

interest knew of this taking.” Pipeline responded in its brief that “as a practical matter, it is unlikely

that K-W’s predecessors in interest did not notice this obvious taking, which necessarily involved

heavy equipment coming onto the property.” But Pipeline directs us to no evidence refuting K-W’s

claim of lack of notice. What we do have as proof are the parties’ stipulations. The parties agree

that K-W did not discover the existence of the pipeline on its property until August 1998. Because

Pipeline failed to establish that K-W or its predecessors in interest had notice before August 1998,

we hold that the statute of limitations for K-W’s inverse condemnation claim did not begin to run

until August 1998. K-W thus brought its claim well within the ten-year statute of limitations period. 1company because of a two-year statute of limitations for damages. I d. at 563. The court of appeals

reversed and remanded the case because the trial court should have considered the ten-year statute

of limitations for takings.

6 CONCLUSION

We overrule Pipeline’s issue and affirm the judgment of the trial court.

Jan P. Patterson, Justice

Before Chief Justice Law, Justices B. A. Smith and Patterson

Affirmed

Filed: October 16, 2003