IN THE

TENTH COURT OF APPEALS

No. 10-09-00039-CV

CITY OF MIDLOTHIAN, TEXAS,

Appellant

v.

ECOM REAL ESTATE MANAGEMENT, INC.,

Appellee

From the 40th District Court

Ellis County, Texas

Trial Court No. 68846

D I S S E N T I N G O P I N I O N

Strip away another protection of landowners. Will they notice this time?

In a long string of events, the legislature and the courts have systematically 

carved away at one of the most fundamental of the rights given to the government—

that private property may be taken only upon the payment of adequate/just 

compensation. To begin, the reader must understand that the Constitution, of both the 

United States and Texas, is a grant of certain powers inherently possessed by free 

people to the government. In those constitutions, the people granted to the government 

the authority to take private property for public use. But there was a fundamental 

protection or limitation embedded with that grant of authority. The protection is 
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obviously designed to limit the use of this authority. The government could only 

exercise the authority to take property for a public use upon giving the owner adequate 

compensation for the property taken. The United States Constitution phrases it as 

follows:

No person shall be held to answer for a capital, or otherwise infamous 

crime, unless on a presentment or indictment of a Grand Jury, except in 

cases arising in the land or naval forces, or in the militia, when in actual 

service in time of war or public danger; nor shall any person be subject for 

the same offence to be twice put in jeopardy of life or limb; nor shall be 

compelled in any criminal case to be a witness, against himself, nor be 

deprived of life, liberty, or property, without due process of law; nor shall 

private property be taken for public use, without just compensation.

U. S. CONST. amend. V (emphasis added).

The Texas Constitution states it thusly: 

No person's property shall be taken, damaged or destroyed for or applied 

to public use without adequate compensation being made, unless by the 

consent of such person; and, when taken, except for the use of the State, 

such compensation shall be first made, or secured by a deposit of money; 

and no irrevocable or uncontrollable grant of special privileges or 

immunities, shall be made; but all privileges and franchises granted by the 

Legislature, or created under its authority shall be subject to the control 

thereof.

TEX. CONST. art. I, § 17.

Over the years, the terms in these two provisions have been construed by the 

courts of the United States of America and Texas. Additionally the legislature has 

expanded the list of those entities that can take property and defined the procedures by 

which private property can be taken. The courts’ construction and the legislative acts 

have almost always been in favor of expanding the authority of the government or 

other condemning authority’s right to take the property or reduce the level of 

compensation that had to be paid to take the property. Notwithstanding this long and 
City of Midlothian v. ECOM Real Estate Mgmt, Inc. Page 3

steady trend, citizens expressed both surprise and outrage when the United States 

Supreme Court held in Kelo v. City of New London that a “public use” could be to 

increase its tax revenue by taking underutilized property from a landowner for the 

purpose of selling or even donating it to a private entity for economic development 

purposes. See Kelo v. City of New London, 545 U.S. 469, 125 S. Ct. 2655, 162 L.Ed.2d 439 

(2005). From a legal standpoint, this was not surprising.

For years there appears to have been a systematic erosion of the protection of 

landowners from their government. Hearing them first as a citizen, then as a lawyer, 

and now as a judge, stories abound that condemning authorities browbeat landowners 

into settlement agreements by threatening them with a condemnation suit. The stories 

generally continue as follows. The condemning authorities are quick to point out that 

the value of the property will be determined by citizens on the jury that understand that 

they will also be the persons having to pay for the property through their taxes or 

higher prices for commodities like gas or electricity. Fearing inadequate valuation 

through litigation, as well as to avoid the cost of litigation, a cost which is ignored in 

what the condemning authority or government must pay in compensation, the 

landowner settles. Sometimes the settlement agreement is not just for money. The 

agreement may involve any number of additional considerations such as right-of-way 

access by certain means or driveway entrances at certain locations, placement of specific 

improvements like curbs and gutters, sound barriers, and sidewalks or possibly the 

waiver of fees or taxes, or, as in this case, access to sewage facilities without a 

corresponding requirement to purchase water from the same entity.
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Today the majority of this Court strips the landowner of the right to sue the 

governmental entity that made the settlement agreement, took title to the property 

under the threat of eminent domain proceedings, and then refused to fulfill its 

agreement to compensate the landowner. I would not. I respectfully dissent.

THE LITERARY MAP

We will start with understanding the difference between Kelo v. City of New 

London and this case. Then I will mention the holding in City of Carrollton v. Singer. City 

of Carrollton v. Singer, 232 S.W.3d 790 (Tex. App.—Fort Worth 2007, pet. denied). But 

the reader must examine that case, both majority and dissent, because in the case we are 

deciding, this Court discusses it at length and decides to go with the dissent rather than 

the majority. I will then comment upon some of the practical problems and 

implications of the Court’s analysis and holding as it applies to the facts of this case. 

Finally, I will mention a simple solution that should be utilized.

KELO V. CITY OF NEW LONDON DISTINGUISHED FROM THIS CASE

The Kelo case involved defining a “public use.” Kelo was about taking property 

from one citizen so that it can be sold or given to another citizen who will improve the 

property and thus increase the taxable value of the property for the benefit of the 

government by providing increased taxes. 

Whereas this case, at its most fundamental level, is about whether a landowner 

can sue the government for breach of the settlement agreement for refusing to pay for 

what is taken. And the reader must recognize that payment can be in many forms other 

than money. Likewise, what is taken, or damaged by the taking, can be more than just 

title to real property. 
City of Midlothian v. ECOM Real Estate Mgmt, Inc. Page 5

In this case, the City of Midlothian was installing a wastewater collection system 

otherwise known as a sewage line. They determined they needed to place the line on 

property owned by ECOM. Rather than suffer the uncertainties of a jury determination 

of value of the property rights taken and damage to the remainder of the tract if the City 

condemned an easement across it, the parties negotiated an agreement that involved 

benefits other than the payment of money. 

The agreement provided that ECOM would convey an easement to the City on 

which the sewage line could be constructed. As compensation for the easement, 

ECOM, who is a developer of property, would be allowed to connect to the sewage line 

through connections placed in the line, and thereby discharge the sewage from a 

defined area of property ECOM was developing, which included the area where the 

easement was to be located. ECOM had its own source of potable water for the persons

buying property in its development. The persons in the area developed by ECOM 

would thus be allowed to discharge the sewage into the system at no cost and without 

the corresponding obligation incurred by other users of the sewage system to purchase 

their water from the City. 

The City built the sewage line on the easement conveyed to it by ECOM and, as 

agreed, the constructed sewage line had stub-outs or points at which the purchasers in 

ECOM’s development were to connect. But then the City passed an ordinance that 

provided that no user could discharge sewage into the City system unless they also 

purchased water from the City. The effect of the ordinance was to destroy the benefit to 

ECOM of the agreement under which it had conveyed a property right, the easement, in 

which the sewage line was constructed. No one contends that the use of the property 
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for the construction of a sewage line is not a public use. The issue in this case is 

whether the City can be sued for breach of the agreement.

So the issue in this case is substantially different than the issue in Kelo. The Court 

holds that the City cannot be sued for breach of the agreement. This holding is based 

on the determination that formal condemnation proceedings had not begun and is 

consistent with the dissenting opinion’s analysis in City of Carrolton v. Singer, 232 S.W.3d 

790 (Tex. App.—Fort Worth 2007, pet. denied).

CITY OF CARROLLTON V. SINGER

We now must move to the case relied upon by ECOM as authority for its ability 

to sue the City. 

In City of Carrolton v. Singer, Singer asserted that the City of Carrolton had 

breached an agreement whereby Singer had agreed to convey property to the City and 

the City had agreed to make certain improvements to Singer’s remaining property.

The issue in Singer was the same as the issue before this Court: Could Singer sue 

the City? The court in Singer held the City could be sued for breach of an agreement if 

the agreement was a settlement of an eminent domain proceeding. The facts in Singer

are so similar to the facts in this case that the City of Midlothian concedes that if the 

holding in Singer is applied, the City cannot prevail. In what must be mental 

gymnastics for the City’s counsel, which is the same firm that represented Singer and 

prevailed, the City argues that Singer was wrongly decided and that in this proceeding 

we should adopt the dissenting opinion from Singer. The Court does, I would not.
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The legal positions and arguments are fully discussed in Singer. They apply 

equally to this proceeding. I cannot add anything of real value to that analysis so I will 

not attempt to do so.

In both cases, the City agreed with the landowner that the City would do certain 

things besides the simple payment of money to obtain the property they needed. The 

litigation in both suits arose upon the alleged breach of the agreement. I would hold, as 

the court in Singer did, that the City can be sued by the landowner for breach of the 

agreement made under the threat of taking the property by eminent domain.

PRACTICAL PROBLEMS AND IMPLEMENTATION

The most fundamental problem of the Court’s holding is that ECOM’s suit for 

inverse condemnation remains, but the questions will be what did the City take, and 

how will it be valued? Did the City take the easement without payment so that now the 

City must pay for it? Did they take it by adverse entry and construction of the sewer 

line or by a municipal ordinance – also known as a regulatory taking? Or did the City 

take ECOM’s contractual rights, and how will those rights be valued? These and other 

issues, which are not before us in this interlocutory appeal, will plague the parties 

throughout the remainder of the proceeding.

Additionally, the dissent in Singer and the Court in this case seem to be 

concerned about the need for clarity. The Court states: “To say that the easement 

agreement settled an eminent domain claim, when it contains no language to this effect 

and no eminent domain proceeding was pending, further blurs the distinction between 

an entity’s power to purchase and its power to take.” Maj. Op., pg. 12 (citing Chief 

Justice Cayce’s dissent in Singer).
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It is precisely because the line is blurry between the right to purchase and the 

right to take that we should affirm the trial court’s judgment to not dismiss ECOM’s 

suit. The result in this appeal will have the adverse consequences of:

1. encouraging the parties to not agree and force litigation; and

2. preventing workouts and non-monetary modifications of projects 

that would otherwise benefit both the condemning authority and 

the landowner.

And, finally, to the extent the agreement remains wholly executory, I have no 

problem with the analysis of the dissent in Singer. But once the City takes possession of 

the property, or accepts title to it, the City has then exercised the threat of taking the 

property by eminent domain.

A SIMPLE SOLUTION

In the winner-takes-all split between the holding in Singer and the holding in this 

proceeding, I believe the answer is in the middle. The issue is actually a question of 

fact: Was the agreement upon which the landowner sues made under the threat of 

having property taken by eminent domain? If the evidence on this question is not 

conclusive, there will be a fact question that must be resolved. And there is already a 

reasonably well developed body of law on the question of whether property is taken 

under the threat of eminent domain. This body of law has grown up out of the tax code 

because if property is taken under the threat of eminent domain, the gain from the 

sale/conveyance/transfer of the property may receive favorable tax treatment. See

I.R.C. §§ 1231 and 1232 (2009).

Because I believe ECOM sufficiently pleaded allegations asserting that the 

agreement was made under the threat of eminent domain, and the City of Midlothian 
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did not conclusively negate that fact at the hearing on the plea to the jurisdiction, I 

would hold that ECOM may sue the City of Midlothian for breach of the agreement. 

Alternatively, I would hold that whether the agreement was made under the threat of 

taking the easement by eminent domain is an unresolved fact issue which must be 

decided to determine the trial court’s jurisdiction. Accordingly, I cannot join the 

judgment of the Court in this proceeding.1

TOM GRAY

Chief Justice

Dissenting opinion delivered and filed January 27, 2010

 

1 By its declaratory judgment claim, ECOM seeks a determination of its rights under the agreement and 

prospective relief against the City. This also seems to bring it within the trial court’s jurisdiction. See City 

of El Paso v. Heinrich, 284 S.W.3d 366 (Tex. 2009). Because the fraud and fraudulent inducement claims 

are, as I understand, alternative to the foregoing, I would not reach those, but do not find error in the 

Court’s analysis. Either the breach of contract action or the declaratory judgment action may support 

attorney fees, but no claim presented would support exemplary damages.