Opinion ID: 2829374
Heading Depth: 1
Heading Rank: 3

Heading: VSC’s State Takings Claim

Text: Because I would not hold that VSC’s failure to seek possession of the vehicles specifically under Chapter 47 precludes its takings claim, I now proceed to analyze the merits of the dispute. The City asserts the trial court erred in denying its plea to the jurisdiction to VSC’s takings claim. The City does not have immunity from a valid takings claim. See Gen. Servs . Comm’n v. Little-Tex Insulation Co. , 39 S.W.3d 591, 598 (Tex. 2001). However, if the plaintiff fails to allege a valid takings claim, the City retains its immunity from suit. See id . ( affirming a grant of a governmental entity’s plea to the jurisdiction where the plaintiff’s constitutional takings claim failed). Whether particular facts constitute a taking is a question of law. Id . (citation omitted). Article one, section seventeen of the Texas Constitution provides: “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 . . . .” Tex. Const . art. I, § 17. A takings claim consists of three elements: (1) an intentional act by the government under its lawful authority, (2) resulting in a taking of the plaintiff’s property, (3) for public use. See Little-Tex Insulation Co. , 39 S.W.3d at 598; see also State v. Holland , 221 S.W.3d 639, 643 (Tex. 2007); City of Dallas v. Jennings , 142 S.W.3d 310, 313 (Tex. 2004). The City challenges VSC’s takings claims on four grounds: (1) VSC could not have a property interest in stolen vehicles; (2) the City did not seize VSC’s liens or debts, only the vehicles; (3) the seizure was not for “public use”; and (4) the seizure occurred under the proper and reasonable exercise of the City’s “police power” or some other exception to a takings claim.
I would hold, as the Court “assume[s],” ___ S.W.3d ___ n.10, that VSC had a cognizable property interest in the vehicles through the “ garageman’s lien” in the Property Code. “A garageman with whom a motor vehicle . . . is left for care has a lien . . . for the amount of the charges for the care, including reasonable charges for towing . . . to the garageman’s place of business and excluding charges for repairs.” Tex. Prop. Code § 70.003(c). The Property Code does not define “ garageman ” or identify exactly what “care” is required for the lien to attach. The dictionary defines “care” as “protection; charge; temporary keeping as for the benefit of or until claimed by the owner.” Random House Unabridged Dictionary (1987). Vehicle Storage Facilities must provide protection and keep vehicles for the benefit or until claimed by the owner. They must also provide reasonable storage efforts to protect vehicles, “such as locking doors, rolling up windows, and closing doors, hatchbacks, sunroofs, trunks, hoods, or convertible tops” and putting tarps over vehicles whose interiors are open to the elements. 16 Tex. Admin. Code § 85.719(a), (b). Thus, under the plain language of the Property Code, a vehicle storage facility that follows the requirements of the statute would qualify as a “ garageman .” The City argues that the VSFA precludes VSC’s claim to garageman’s lien rights because only the VSFA determines the rights and interests of a “Vehicle Storage Facility.” Although that act regulates the operation of “Vehicle Storage Facilities” which, among other things, store at least ten vehicles each year without the owners’ consent, Tex. Occ. Code §§ 2303.001–.003, .151–.161, no language in the VSFA excludes Vehicle Storage Facilities from the benefits of the garageman’s lien. Further, the VSFA allows a vehicle storage facility to withhold a vehicle from its owner or operator “if the owner or operator of the vehicle does not pay the charges associated with delivery or storage of the vehicle . . . .” Id . § 2303.160(c). And the garageman’s lien statute specifically recognizes that a garageman may come into possession of a vehicle not only through the consent of the owner of the vehicle but also “under a state law or city ordinance.” Tex. Prop. Code § 70.004(a). The VSFA specifically permits Vehicle Storage Facilities to retain possession of vehicles if an owner refuses to pay the storage charges, and the garageman’s lien statute recognizes that a garageman can come into possession of a vehicle in a manner other than it being left by the owner. The two statutes are not mutually exclusive, but complementary. Further, the garageman’s lien statute can reasonably be read to include vehicles “left for care” by those other than the vehicles’ owners. The statute uses the passive voice—“is left for care”—indicating that who leaves the vehicle with the garageman is inconsequential to whether the lien attaches. Id . § 70.003(c). The next section of the Property Code specifically contemplates a garageman’s lien in favor of one who stores a vehicle without the owner’s consent. “A holder of a lien under Section 70.003 on a motor vehicle . . . who obtains possession . . . under a state law or city ordinance shall give notice . . . to the last known registered owner and each lienholder of record . . . .” Id .§ 70.004. The garageman’s lien statute grants a lien to an entity, including a Vehicle Storage Facility, who came into possession of the vehicle lawfully. See Tex. Prop. Code § 70.003(c) (“A garageman with whom a motor vehicle . . . is left for care has a lien . . . .”). VSC may acquire a garagemen’s lien on vehicles “left for care” with them, regardless of whether they were left voluntarily or without the owners’ consent. I would hold that if VSC can show these vehicles were left for care with them and that they followed the proper procedures under both the VSFA and the Property Code, VSC establishes a valid garageman’s lien in the vehicles and thus a valid property interest worthy of protection under the takings clause.
The City contends that even if VSC had a property interest in liens on the stored vehicles, the recovery by police of stolen vehicles cannot be the basis of a compensable taking. The City erects a strawman , contending that the vehicles were stolen. First and foremost, there is no judicial determination in the record that any of the vehicles at issue were in fact stolen. There appears to have been a sufficient basis for DPD initially to obtain possession. See Tex. Transp. Code § 501.158(b). However, whether the vehicles were stolen is a factual matter to be determined at the trial court. Because the City has not shown the vehicles to have been stolen, the City’s contention that a lien cannot attach to a stolen vehicle that has been innocently stored need not be addressed. 9 The United States Supreme Court considered a similar takings claim in Armstrong v. United States , 364 U.S. 40 (1960). 1 0 In Armstrong , materialmen delivered materials to a prime contractor for use in constructing U.S. Navy personnel boats. Under state law, they obtained liens on the vessels. Id . at 41. The prime contractor defaulted on his obligations to the United States, and the government took title to and possession of the uncompleted hulls and unused materials. Id . The United States government argued that any destruction of the plaintiffs’ liens could not constitute a taking due to the government’s immunity. Id . at 47. The Court held: The total destruction by the Government of all value of these liens , which constitute compensable property, has every possible element of a Fifth Amendment “taking” and is not a mere “consequential incidence” of a valid regulatory measure. Before the liens were destroyed, the lienholders admittedly had compensable property. Immediately afterwards, they had none. This was not because their property vanished into thin air. It was because the Government for its own advantage destroyed the value of the liens . . . . Neither the boats’ immunity, after being acquired by the Government, from enforcement of the liens nor the use of a contract to take title relieves the Government from its constitutional obligation to pay just compensation for the value of the liens the petitioners lost and of which loss the Government was the direct, positive beneficiary. Id . at 48–49. Thus, the state violates the takings clause by destroying valid liens on property for public use without just compensation. See also United States v. Sec. Indus. Bank , 459 U.S. 70, 75, 78 (1982) (holding that liens were property protected by the takings clause of the Fifth Amendment); Ft. Worth Improvement Dist. No. 1 v. City of Fort Worth , 158 S.W. 164, 168 (Tex. 1913) (“The word ‘property,’ as used in [article one, section seventeen of the Texas Constitution], is doubtless used in its legal sense, and means not only the thing owned, but also every right which accompanies ownership and is its incident.”). Whether the City destroyed VSC’s liens is a question of fact that the trial court did not have an opportunity to decide, as that question is the subject of an interlocutory appeal of a plea to the jurisdiction. Rather, the question to this Court is whether VSC can overcome the City’s plea to the jurisdiction and state a valid takings claim. According to its various pleadings, VSC alleges that the City, after seizing the vehicles, took one of three possible actions: (1) it stored the vehicles and is still storing them (though, by the time of the Sixth Amended Complaint, it seems that VSC believed that the City had disposed of all of the vehicles); (2) it returned the vehicles to their rightful owners; or (3) it sold the vehicles and kept the proceeds. In all three scenarios, VSC claims it was deprived of fees for its storage of the vehicles. Regardless of whether VSC’s lien is possessory or nonpossessory , VSC’s lien could be foreclosed on, and VSC can pursue its lien rights for storage fees because it did not voluntarily relinquish possession of the vehicles. See Paul v. Nance Buick Co. , 487 S.W.2d 426, 427–28 (Tex. Civ. App.—El Paso 1972, no writ) (distinguishing between possessory and nonpossessory liens and noting that even in possessory liens, the lien and right to possession are not lost if the property is relinquished voluntarily). VSC is free to pursue its property interests allegedly taken in the seized vehicles in its state district court case or under Chapter 47 of the Code of Criminal Procedure. Tex. Code Crim. Proc . §§ 47.01a, .02. It is unclear how the City disposed of these vehicles, a crucial question of fact as to whether VSC can assert a valid takings claim. VSC claims the City destroyed its liens on the vehicles. The City offers no evidence to rebut this claim nor even an assertion of the disposition of the vehicles. Therefore, a fact question remains, and I would hold that the trial court was correct to deny the City’s plea to the jurisdiction.
The City argues that the vehicle seizures were a valid exercise of police power exempted from takings liability. 1 1 The distinction between the state’s eminent domain power and police power has been the subject of much consternation, and attempts to distinguish the powers can involve courts in a “sophistic Miltonian Serbonian Bog.” Sheffield Dev. Co. v. City of Glenn Heights , 140 S.W.3d 660, 671 (Tex. 2004) (quoting City of Austin v. Teague , 570 S.W.2d 389, 391 (Tex. 1978) (further quotation and citation omitted)). In DuPuy v. City of Waco , this Court noted that the distinction is said to rest on “the relation which the property affected bears to the danger or evil which is to be provided against.” 396 S.W.2d 103, 107 n.2 (quotation omitted) . Police power involves the regulation of property that harms the community in order to prevent the harm; eminent domain involves the taking or destruction of private property for public use. Id . at 107 n.3 (quotation omitted); see also Tahoe-Sierra , 535 U.S. at 323 (“This longstanding distinction between acquisitions of property for public use, on the one hand, and regulations prohibiting private uses, on the other, makes it inappropriate to treat cases involving physical takings as controlling precedents for the evaluation of a claim that there has been a ‘regulatory taking,’ and vice versa.”). But as the Court conceded in DuPuy , “our refusal to compartmentalize an exercise of sovereignty as either police power or eminent domain for the resolution of problems arising under Article I, Sec. 17, of the Constitution rests upon the manifest illusoriness of distinctions between them.” 396 S.W.2d at 107. On the other hand, it is universally conceded that when land or other property is actually taken from the owner and put to use by the public authorities, the constitutional obligation to make just compensation arises, however much the use to which the property is put may enhance the public health, morals or safety. Id . at 107 n.3 (citations omitted) . Put another way, “[w]hen the government physically takes possession of an interest in property for some public purpose, it has a categorical duty to compensate the former owner . . . regardless of whether the interest that is taken constitutes an entire parcel or merely a part thereof.” Tahoe-Sierra , 535 U.S. at 322 (citation omitted). The police power distinction may lead courts into a bog, but the law of physical takings rests on firm, dry land. We have recognized that “[a] city is not required to make compensation for losses occasioned by the proper and reasonable exercise of its police power.” City of Coll. Station v. Turtle Rock Corp. , 680 S.W.2d 802, 804 (Tex. 1984). However, the state cannot commit a physical taking, by taking or destroying property, and escape liability for compensation by merely “labeling the taking as an exercise of police powers.” Steele v. City of Houston , 603 S.W.2d 786, 789 (Tex. 1980). The City argues that its actions do not amount to a physical taking because even if VSC’s liens were somehow taken, they are intangible property and thus cannot be physically taken. But the liens in Armstrong were the same type of property interest as those here, and as the Court stated there, “[t]he total destruction by the Government of all value of these liens , which constitute compensable property, has every possible element of a Fifth Amendment ‘taking’ and is not a mere ‘consequential incidence’ of a valid regulatory measure .” 364 U.S. at 48 (emphasis added). The Court has affirmed this characterization of the government’s destruction of liens in Armstrong as a physical taking. “The Government seeks to distinguish Armstrong on the ground that it was a classical ‘taking’ in the sense that the Government acquired for itself the property in question . . . . The classical taking is of the sort that the Government describes . . . .” Sec. Indus. Bank , 459 U.S. at 77–78. I see no reason why intangible and valuable property interests cannot be physically taken and why the police power exception provides a free pass when government officials try. Further, while the reasonable, necessary, and proper application of the police power may excuse a governmental unit from providing just compensation, there is nothing here to suggest that there is any police power interest in the taking of VSC’s liens. The valid exercise of the police power over potentially stolen vehicles does not extinguish an undisputed and legally applied lien on the vehicle. Thus, these seizures and alleged sales of the vehicles do not constitute the proper exercise of the police power over VSC’s liens, and Turtle Rock is not applicable to the situation at bar, despite its perhaps broad language. VSC alleges that the City seized vehicles from their storage facility, disposed of them (thereby destroying all property interest they had in the form of liens), and kept the proceeds for itself. These actions satisfy the basic elements of a physical taking—taking or destroying property for public use. As we have said, “[t]he social desirability of leaving government free to seek its own enrichment at the expense of those whom it governs under the guise that it has the power to regulate harmful conduct is not readily apparent.” Teague , 570 S.W.2d at 393–94 . The final destination of the seized vehicles is absent from the record, and we decline to speculate. But the City cannot avoid paying compensation to VSC by “labeling the taking as an exercise of police powers.” Steele , 603 S.W.2d at 789 .
Finally, the City argues that we should carve out a special exception to a physical takings claim for the recovery of stolen property. 1 2 The City focuses its analysis on cases confirming the absence of takings liability for civil forfeiture proceedings against “innocent” owners, citing Bennis v. Michigan , 516 U.S. 442 (1996), and State v. Richards , 301 S.W.2d 597 (Tex. 1957). But Bennis and Richards , civil forfeiture cases whose holdings rest on the unique nature of forfeiture as a criminal deterrent, are inapposite. Further, they affirm that an “innocent” owner’s property cannot be forfeited when the property was taken without privity or consent. Bennis , 516 U.S. at 448–52 & n.5; Richards , 301 S.W.2d at 599–600. VSC has a valid lien, the loss of which may be compensable as a taking if the City, without notice, disposed of the vehicles and kept their proceeds. Because fact questions exist in this case, VSC has pled and submitted sufficient evidence to withstand the City’s plea to the jurisdiction. I would thus hold that the immunity does not bar VSC’s state takings claim at this stage. 1 3