Court Opinion

ID: 6834
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:21:49+00
Date Added: 2024-06-11T16:46:13.459596
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS

                          FOR THE FIFTH CIRCUIT

                                 No. 93-1127

CITY OF ARLINGTON, TEXAS,
                                                Plaintiff-Counter Defendant
                                                Appellant-Cross Appellee,

                                   versus

GOLDDUST TWINS REALTY CORPORATION,
                                                Defendant-Counter Plaintiff
                                                Appellee-Cross Appellant,

B/R RANGERS ASSOCIATES, LTD.,
                                                Defendant-Appellee.

           Appeals from the United States District Court
                 for the Northern District of Texas

                           (December 21, 1994)

Before    JOHNSON, HIGGINBOTHAM, and DAVIS, Circuit Judges.

HIGGINBOTHAM, Circuit Judge:

     The City of Arlington, Texas appeals the district court's

judgment invalidating      Arlington's      condemnation   of    a   leasehold

interest owned by the Resolution Trust Corporation and Golddust

Twins Realty Corporation.        We find that Arlington exercised its

eminent domain power for a valid public purpose.           That Arlington's

stated purpose for taking the property differed from its actual

purpose   is   not   a   basis   for   invalidating   this      condemnation.

Accordingly, we reverse and remand so that the district court may

determine the compensation due the condemnees.
                                   I.

                                   A.

     Arlington owns parcel C, the land at issue in this case.

Parcel C was encumbered by a long-term lease of which the RTC and

Golddust each owned a fifty percent interest.1          In October 1989,

Arlington and the Texas Rangers baseball club began discussing the

feasibility of creating a new ballpark complex at the site of the

old baseball stadium.       The Rangers considered the old stadium

inadequate   and   were   considering   moving   to   another    city.    On

December 4, 1990, Arlington and the Rangers entered into a Master

Agreement for the development of a new ballpark complex.           Pursuant

to the Agreement, Arlington created the Arlington Sports Facilities

Development Authority, Inc. (ASFDA), which was charged with acting

on behalf of Arlington in the construction, development, and

financing of the project. Under the Master Agreement, ASFDA agreed

to build a new ballpark, a ballpark for children, a learning center

for children, a hall of fame facility, an amphitheater, a ballpark

complex transportation system, a riverwalk, and a linear park.

     The Master Agreement also provided for a land swap.                 The

Agreement contemplated that the Rangers would transfer to Arlington

12.714 acres of land, designated as parcels A and B.            In exchange,

Arlington would transfer to the Rangers parcel C, containing

roughly the same acreage.     These parcels of land are close to the

     1
          The RTC has since assigned its interest in this lawsuit
to B/R Rangers Associates, Ltd. The Rangers elected not to file a
brief in this appeal, and the organization does not adopt the
position of either Arlington or Golddust. The remainder of this
opinion refers to RTC and Golddust as simply "Golddust."

                                    2
new ballpark.     See Appendix.       The Master Agreement does not

restrict the Rangers' use of parcel C, and Golddust introduced

evidence that the Rangers intended to construct office buildings on

the land at some future time.

     On November 12, 1991, the Board of ASFDA passed a resolution

declaring a need to acquire the land encumbered by the leasehold

estate.    Realizing that it would be awkward for ASFDA to condemn

land owned by Arlington, ASFDA decided to let Arlington condemn the

leasehold interest.     On December 3, 1991, the Arlington City

Council resolved to condemn the leasehold interest so that the land

could "be improved and used as a parking facility . . . ."    On May

5, 1992, Arlington took possession of the unimproved property.

Shortly thereafter, Arlington graded and asphalted the tract at a

cost of more than $644,000.    Parcel C was used for parking for the

old stadium during the 1992 baseball season.    The Rangers operated

the parking lot and received all parking revenue. For the priority

use privileges and right to receive all revenue generated by the

leasehold property, the Rangers agreed to pay Arlington $1.00 per

year.   This arrangement would terminate once Arlington transferred

the property to the Rangers.

     On June 23, 1992, ASFDA leased the new ballpark facilities to

the Rangers.    Although parcel C is not considered part of the

facilities, section 5.1(b) of the Master Lease requires that the

Rangers:

     agree[] to consider, and to cause the provision for, adequate
     parking space and facilities for the Facilities in connection
     with any proposed development of . . . (ii) the land
     designated as Parcel C . . . . The term "adequate" as used in

                                  3
     this Section 5.1(b) shall mean in compliance with all
     applicable zoning and code requirements of the City and the
     rules and regulations of the Commissioner and the League.

                                      B.

     This    appeal    arises   out   of   the   condemnation    proceeding

Arlington filed in 1991 against the RTC and Golddust.             Arlington

filed the action in state court, but the RTC removed to federal

court.      Golddust challenged Arlington's right to condemn the

leasehold, claiming that the actual use to which Arlington sought

to put the condemned land was not a public use.

     The district court bifurcated the trial.             The first phase

would determine the propriety of Arlington's condemnation, and the

second would examine the issue of statutory recovery. In the first

phase the court asked the jury the following question:

     Do you find from a preponderance of the evidence that when
     City of Arlington undertook to condemn the leasehold estate in
     question it did so with the intent that the property in
     question would be improved and used as a parking facility?

The jury answered "No."         The district court properly hedged the

question of whether the issues were for judge or jury by adding its

own finding.     The court found that "[t]he evidence developed by

Golddust and RTC . . . made an exceptionally strong case that

[Arlington] has not been honest in its assertions that the taking

was for use of the property as a parking facility . . . ."              Once

the evidence established that Arlington had not been honest in its

statement of purpose, the court held that the burden was on

Arlington to come forward with a valid public purpose.            The court

recognized    that    "any   public   purpose    might   be   deemed   to   be

sufficient to uphold [Arlington's] taking inasmuch as there is no

                                      4
remainder of the property taken that must be valued in the light of

the use to which the property taken is to be put."                Believing that

Arlington's failure to discharge its burden to state a true public

purpose was dispositive, it concluded that Arlington had not

properly exercised its eminent domain power.             The court also held,

however,   that    Golddust    was    not    entitled    to    damages    because

Arlington's temporary possession did not reduce the value of the

leasehold.     The court awarded costs and fees to Golddust and the

RTC.

       Arlington   appeals    the    district   court's       finding    that   the

condemnation    was   wrongful,      and    Golddust    appeals    the   district

court's refusal to award damages.

                                      II.

                                       A.

       Article I, section 17 of the Texas Constitution mandates that

"[n]o person's property shall be taken, damaged or destroyed for or

applied to public use without adequate compensation . . . ."                    The

public use limitation of the Texas Constitution is also found in

the Legislature's delegation to municipalities of the power of

eminent domain.    See Tex. Loc. Gov't Code Ann. § 251.001(a) (Vernon

1988).   Section 251.001(a)(5) authorizes a municipality to condemn

land "for any . . . municipal purpose the governing body considers

advisable."     However, taking property for private use under the

guise of public use violates due process and constitutes a legal

fraud upon property owners even if there is no fraudulent intent.

                                       5
Saunders v. Titas County Fresh Water Supply Dist. No. 1, 847 S.W.2d
424, 427 (Tex. App.--Texarkana 1993, no writ); Whitfield v. Klein

Indep. Sch. Dist., 463 S.W.2d 232, 235 (Tex. Civ. App.--Houston

[14th Dist.], writ ref'd n.r.e.), cert. denied, 404 U.S. 882

(1971); City of Wichita Falls v. Thompson, 431 S.W.2d 909, 910

(Tex. Civ. App.--Fort Worth 1968, writ ref'd n.r.e.).

      Public use presents a judicial question.               Maher v. Lasater,

354 S.W.2d 923, 925 (Tex. 1962); Davis v. City of Lubbock, 326
S.W.2d 699, 704 (Tex. 1959); Housing Auth. of City of Dallas v.

Higginbotham, 143 S.W.2d 79, 83 (Tex. 1940).            At the same time, a

legislative declaration of public use is entitled to considerable

deference.   See Maher, 354 S.W.2d at 925; see also Tenngasco Gas

Gathering Co. v. Fischer, 653 S.W.2d 469, 475 (Tex. App.--Corpus

Christi 1983, writ ref'd n.r.e.) (legislative declaration "is

binding on the court unless it is manifestly wrong or unreasonable,

or the purpose for which the declaration is enacted is clearly and

[palpably]   private")      (citation       and   internal    quotation    marks

omitted); Daniel B. Benbow, Public Use as a Limitation on the Power

of Eminent Domain in Texas, 44 Tex. L. Rev. 1499, 1502 (1966) ("The

issue is not . . . whether the use is public, but rather whether

the   legislature   could     have   reasonably       considered    it    to   be

public.").   A municipality's exercise of the power of eminent

domain is a legislative act.         Luby v. City of Dallas, 396 S.W.2d
192, 197 (Tex. Civ. App.--Dallas 1965, writ ref'd n.r.e.); see also

Burch v. City of San Antonio, 518 S.W.2d 540, 542-43 (Tex. 1975).

                                        6
                                         B.

       The district court held that since parking was not the true

purpose of the condemnation, Arlington had the burden to state an

alternative purpose. When Arlington failed to come forward with an

alternative purpose, the court concluded that Arlington wrongfully

condemned Golddust's interest.2              We must disagree.      The district

court's decision is narrowly tailored and does not purport to hold

that Arlington condemned for an impermissible private purpose or

that Arlington's true purpose was a permissible public purpose. As

we see it, burdens of proof notwithstanding, Golddust's evidence

that       Arlington   was   dishonest       in   its   statement   of   purpose,

ironically,       established    that     Arlington's      actual    purpose   in

condemning parcel C was a public purpose.

       The district court relied on Franklin County Water Dist. v.

Majors, 476 S.W.2d 371 (Tex. Civ. App.--Texarkana 1972, writ ref'd

n.r.e.).       In Majors, the property owners challenged the water

district's right to condemn land above a certain elevation on the

       2
          Both state and federal procedure require that a
condemning authority state the purpose for which it intends to
condemn a property interest. See Fed. R. Civ. P. 71A(c)(2) (must
state "use"); Tex. Prop. Code Ann. § 21.012(b)(2) (Vernon 1984)
(must state "purpose"). The district court relied on Texas law for
this requirement; however, Rule 71A(k) mandates that, except for
the issue of whether a jury may hear the case, a federal court
hearing a condemnation case under a state's power of eminent domain
must follow the procedures in Rule 71A. See Village of Walthill,
Neb. v. Iowa Elec. Light & Power, 228 F.2d 647, 653 (8th Cir.
1956).   The district court's erroneous application of section
21.012 was not harmful because Rule 71A(c)(2), like section 21.012,
requires that the condemnor's complaint contain a statement of the
purpose or use for which the property is to be taken. See Davis,
326 S.W.2d at 709 ("The words 'public purpose' are no narrower than
the words 'public use'").

                                         7
basis that it was taken for the improper purpose of cabin sites and

trailer camps.        The court upheld the Majors' challenge on the

grounds that when the district condemned excess lands for purposes

not authorized by the statute, it abused its discretion as a matter

of law.    Id. at 374.

       We disagree with the district court's reading of the rule in

Majors.    In Majors, the landowners demonstrated that the district

condemned their property for the unauthorized purpose of leasing

the land for cabin sites and trailer camps.                  Id. at 373-74.       In

this   case,    by    contrast,     the   district   court     found     only   that

Arlington did not intend to condemn parcel C for use as parking;

the    court    did   not   make    any   findings   as   to    actual    purpose.

Golddust's burden should have been to show that Arlington condemned

parcel C for an unauthorized purpose.            See Thompson, 431 S.W.2d at

910.    Texas cases evidence a reluctance to invalidate an exercise

of    eminent    domain     power   except    when   there     is   a   finding   of

unauthorized purpose.          See Majors, 476 S.W.2d at 373-74; Brazos

River Conservation & Reclamation Dist. v. Harmon, 178 S.W.2d 281,

289-90 (Tex. Civ. App.--Eastland 1944, writ ref'd w.o.m.).

       Golddust argues that misstatement of purpose alone invalidates

a condemnation, pointing to cases holding that land condemned for

one purpose cannot be used permanently for a different purpose.

See Muhle v. New York, Tex. & Mexican Ry. Co., 25 S.W. 607, 609

(Tex. 1894); O'Neal v. City of Sherman, 14 S.W. 31 (Tex. 1890); see

also 32 Tex. Jur. 3d Eminent Domain § 92 (1984); Dan Moody, Jr.,

Condemnation of Land for Highway or Expressway, 33 Tex. L. Rev.
8
357, 364 (1955).      Golddust also cites dicta in City of Dallas v.

Malloy, 214 S.W.2d 154, 156-57 (Tex. Civ. App.--El Paso 1948, writ

dism'd), for the proposition that

     while property condemned for one purpose may be used
     temporarily for another, it may not be condemned for one
     purpose and appropriated to another use. . . . [T]he City
     having designated the purpose to which the property was to be
     devoted as the site of a City Auditorium, it may not abandon
     that purpose and devote it permanently to an automobile pound,
     or if it had the intention to so use it rather than for the
     purpose stated, then the property owner had the right to
     challenge the use and make proof of the allegations if it
     could be done.

     In rebuttal, Arlington points to Malloy's concurring opinion,

in which two of the three judges took issue with the majority

author's dicta, stating:

     [W]here the use for which property is sought to be taken under
     the power of eminent domain is public, the necessity and
     expediency of exercising the power, and the extent to which
     the property thereunder is to be taken, are political or
     legislative, and not judicial, questions, the legislative
     determination of which is conclusive, and not reviewable by
     the courts.      These questions rest solely within the
     legislative discretion. . . . If it had any ulterior motive as
     to its intended use of the property, the better rule and the
     usual practice is that such may not be shown in the
     condemnation proceeding.

Id. at 157 (concurring opinion) (emphasis added; internal quotation

marks omitted).

     We   are   persuaded   that     the   concurring   opinion   in   Malloy

correctly states Texas law.        Golddust and the majority author in

Malloy both rely on cases involving condemnation of an easement or

of property for a specific use.             In those cases, an accurate

statement of purpose is necessary to provide the appropriate

measurement     of   damages.   In    O'Neal   v.   City   of   Sherman,   for

instance, the landowners deeded a portion of their property to the

                                       9
city "for street purposes and none other." 14 S.W. at 31.   When

the city began boring a number of wells on the property, the

O'Neals sought an injunction.     The court held for the O'Neals,

explaining that "[t]he rule that land taken by the public for a

certain use cannot be appropriated to another use to the detriment

of the owner affords the only adequate protection of the citizen's

constitutional right to be compensated for the condemnation or use

of his property for the public benefit."        Id. at 32; see also

Muhle, 25 S.W. at 609; Lyon v. McDonald, 14 S.W. 261, 263 (Tex.

1890).   If the taking is of the entire interest, on the other hand,

the condemnor's intended use of the property is irrelevant to the

issue of damages.    See Uehlinger v. State, 387 S.W.2d 427, 432

(Tex. Civ. App.--Corpus Christi 1965, writ ref'd n.r.e.) (where

entire property is condemned, court cannot consider the condemnor's

purpose in fixing the owner's compensation).3

     In sum, as the district court noted, there is a significant

distinction between condemning property for a specific use and

condemning an entire fee. A court's invalidation of a condemnation

on the grounds that land condemned for one purpose may not be used

for another is only proper when the situation specifically requires

an accurate statement of purpose.     We are persuaded that under

Texas law when a political entity condemns the entire interest in

land, stating that the condemnation is for A when, fully stated,

     3
          Because Arlington owns the underlying fee interest in
parcel C, when it condemned Golddust's leasehold interest, the
result was that it owned the entire fee. Thus, this case does not
fall into the category of a partial taking.

                                 10
the purpose includes B there is no cause for setting aside the

condemnation, so long as B is also a public purpose.                See Malloy,
214 S.W.2d at 157 (concurring opinion).

                                      C.

     Jurisdictions define "public use" in different ways.                  Some

have adopted a "public benefit" or "public advantage" approach

under which "any use which serves to enlarge resources, encourage

industry, or promote the general public welfare is a valid public

use."      Benbow,   supra,   44 Tex. L.   Rev.   at   1500   n.8.   Other

jurisdictions, including Texas, have adopted a narrower view.

Under the "use by the public" approach, property can only be taken

when "there results to the public some definite right or use in the

business or undertaking to which the property is devoted."                Borden

v. Trespalacios Rice & Irrigation Co., 86 S.W. 11, 14 (Tex. 1905),

aff'd per curiam, 204 U.S. 667 (1907); see also Coastal States Gas

Producing Co. v. Pate, 309 S.W.2d 828, 833 (Tex. 1958).              It follows

then that one of the tests for public use is whether the property

taken is "reasonably essential" to successful completion of a

project.     Atwood v. Willacy County Navigation Dist., 271 S.W.2d
137, 142 (Tex. Civ. App.--San Antonio 1954, writ ref'd n.r.e.),

appeal dismissed, 350 U.S. 804 (1955).

        Neither Golddust nor Arlington disputes the fact that stadium

parking is a valid public use.             Instead, Golddust claims that

transferring the property to the Rangers with the alleged knowledge

that at some future date the property will be the site of an office

complex renders the use private.          However, the evidence introduced

                                      11
at trial establishes that Arlington's taking was for a public use.

It is undisputed that parcel C is currently being used for parking.

In addition, section 5.1(b) of the Master Lease obligates the

Rangers   to   provide   adequate   parking   space    for   the   ballpark

facilities.    Finally, the Master Agreement's land swap provision

that necessitated the condemnation of parcel C's leasehold estate

was part of the larger ballpark project.      Tom Schieffer, president

of the Rangers, testified that inclusion of the land swap provision

in the Master Agreement was "essential" to the Agreement.

     These undisputed facts tie the condemnation to a public use.

In Davis, the Texas Supreme Court upheld the Urban Renewal Law

against a challenge that it authorized taking of property for

private use.   The law authorized cities to condemn land designated

a slum area.     The land would then be cleared for development by

private enterprise. The court held that the property was condemned

for an authorized public purpose because "the property may not

simply be resold for private use; it must be sold subject to

restrictions and covenants which are designed to insure that (1)

the plans for renewal will be carried out, and (2) that the slum

conditions will not recur within the foreseeable future." 326
S.W.2d at 706.    One commentator, remarking on the Davis decision,

noted that the opinion "at best must be viewed as honoring the

narrow public-use concept only in the breach."         Benbow, supra, 44
Tex. L. Rev. at 1508.

     A similar result was reached in Atwood.          Atwood involved the

condemnation of land "for the purpose of constructing a port and

                                    12
attendant facilities to be used in connection with the development

and operation of navigable waters of the State." 271 S.W.2d at

139.     The    landowners     challenged        the   constitutionality   of   a

provision in the enabling statute that authorized the condemning

authority   to      lease   condemned     land    to   private   individuals    or

corporations.       The court rejected this argument, "hold[ing] that

the acquisition of land for the purpose of leasing the same as

industrial sites in proximity of a port is reasonably necessary to

the successful operation of such port."                Id. at 142.

       Finally, in Coastal States, the court upheld the taking of an

easement for the purpose of drilling an oil well because one-fourth

of the production was reserved to the state and dedicated to the

Permanent School Fund. 309 S.W.2d at 833.         In connection with its

holding, the court found that "[t]he lessee may make a profit out

of the venture, but this in itself does not make the use private

rather than public.         Since the public has a direct, tangible and

substantial interest and right in the undertaking, it is our

opinion that the land will be devoted to a public use within the

meaning of the Constitution."           Id.

       By holding that Arlington had the burden to state its actual

purpose for condemning parcel C, the district court overlooked the

fact that the very evidence offered to prove that the stated

purpose was false itself offered a valid public purpose.                So, true

statement      of   purpose   or   not,    Arlington      condemned   Golddust's

interest for a public purpose.            We lack the authority to intrude

into the legislative domain to invalidate an exercise of eminent

                                          13
domain power that so clearly falls within the constitutional limits

of public use.

                               III.

     We REVERSE the decision of the district court and REMAND for

proceedings to determine the compensation due to Golddust for the

condemnation.

                                14