Court Opinion

ID: 9677212
Source: CourtListenerOpinion
Date Created: 2023-08-24 05:46:18.114937+00
Date Added: 2024-06-11T12:18:54.252466
License: Public Domain

GAULTNEY, Justice,
dissenting.
I respectfully dissent. I would hold the trial court correctly granted summary judgment; this action is barred by res judicata.
Here I use “res judicata” to refer to claim preclusion. Claim preclusion bars the relitigation of a claim or cause of action that has been finally adjudicated, as well as related matters that should have been litigated in the prior suit. Barr v. Resolution Trust Corp. ex rel. Sunbelt Fed. Sav., 837 S.W.2d 627, 628 (Tex.1992). A careful examination of the record demonstrates the value of these materials was, of necessity, litigated in the initial condemnation trial.
In November of 1996, Gawerc made a written offer to sell the building in question to Montgomery County for $1,350,000, including the build-out materials. The offer specified the following:
The Second Story/Floor is not yet fully built out. However, all of the materials necessary to accomplish this task have already been purchased and will be sold with the building and are included in the selling price, (emphasis added)
On June 3,1997, the special commissioners awarded Gawerc $933,663 in compensation. On November 16, 1998, Gawerc began a jury trial in his appeal of the compensation awarded by the special commissioners. Gawerc acknowledged in a recent deposition he was aware during the condemnation trial that the County was using the build-out materials to complete the interior of the building. On December 2, 1998, the trial court entered judgment on a jury verdict awarding Gawerc an additional $585,057 plus prejudgment interest — a total of over $1.5 million, compared to his 1996 offer to sell the building, including the build-out materials, for $1.35 million. The jury returned the $1.5 million award after being expressly instructed to include the value of any improvements to the property.2
A property owner whose property is condemned is entitled to be compensated for the value of the property as put to its “highest and best use.” See State v. Windham, 837 S.W.2d 73, 77 (Tex.1992). In deciding market value the jury is permitted to consider all the uses to which the property is reasonably adaptable and for which it is, or in all reasonable probability will become, available within the foreseeable future. City of Austin v. Cannizzo, 153 Tex. 324, 267 S.W.2d 808, 815 (1954).
The jury charge in the condemnation trial explicitly instructed the jury to this effect. Instruction No. 1 stated:
You are instimcted that the term “Fair Market Value” as used in this charge means the price that the property will bring when it is offered for sale by one who desires to sell but is not obligated to sell and is bought by one who desires to buy but is under no necessity to buy, taking into consideration all the uses to which the property is reasonably adaptable and for which it either is or in all reasonable probability will become available in the future, (emphasis added)
Instruction No. 2 stated:
In arriving at your determination of market value, you shall consider the *845“highest and best use” of the property, that is, the best or most valuable use to which the property is adaptable, (emphasis added)
The “highest and best use” of an unfinished office building must include building out the interior to make it fully habitable and usable as an office building. Building out the interior of an otherwise completed building is part of fitting it for “all the uses to which the property is reasonably adaptable.” The jury was asked in the condemnation case to award Gawerc the building’s value in its “highest and best use,” which necessarily meant fully built-out with the materials that had already been sealed inside the building for that purpose. Res judicata precludes a second action based on claims that were raised or could have been raised with due diligence in the first action. See Barr, 837 S.W.2d at 630-31. The jury’s award in the condemnation case necessarily reflects its determination, as finder of fact, of the value of the building once the interior was completed with the build-out materials.3 Gawerc’s action is barred by res judicata, since he seeks to relitigate an issue of fact which has been “finally adjudicated.” See Barr, 837 S.W.2d at 628.
Furthermore, the jury in the condemnation case awarded Gawerc the value of the property including improvements. Any build-out materials in the building had become “improvements” as a matter of law by the conclusion of the condemnation trial. The majority correctly cites Reames v. Hawthorne-Seving, Inc., 949 S.W.2d 758, 761 (Tex.App.—Dallas 1997, writ denied) for the proposition that personalty does not become an improvement or fixture until it is annexed to realty. The build-out materials had been “annexed to the realty” even before the interior work on the building was completed. Three factors are relevant in determining whether personalty has become a permanent part of the realty to which it is affixed: “(1) the mode and sufficiency of annexation, either real or constructive; (2) the adaptation of the personalty to the use or purpose of the realty[;] and (3) the intention of the owner who causes the personalty to be annexed to the realty.” Sonnier v. Chisholm-Ryder Co., 909 S.W.2d 475, 479 (Tex.1995) (citing Logan v. Mullis, 686 S.W.2d 605, 607 (Tex.1985)). Here, Mike Oakes, the original builder and owner of the building, stated his intent in placing the build-out materials in the building as follows:
The common practice in constructing multi-story buildings is to place the materials which will be necessary to build out the interior of the floors, on each floor, in the initial phases of the construction project. The reason for this is because it is extremely more difficult, expensive, and inconvenient to try to move the material, piecemeal, to the upper floors, after the exterior of the building is closed in. The most efficient and expedient way to construct such a building is to use a crane to place the bulky materials such as sheetrock and doors on the various floors, before the exterior walls are closed in. This was the process which was used in the construction of the Atrium Office Building[.]
It was always my intent, from the time I first purchased these materials and had them delivered to the building, that they be permanently affixed to the building *846during the completion of the construction ... [T]hey were a permanent part of the building, once they were placed on the various floors of the building, even though they had not yet been installed.
Additionally, once materials such as those ... are placed in a multi-story building, such as these materials were, it would not be economically feasible or practical to remove the material from the building. In the case of much of the building materials ..., removal from the building would in all probability, require the removal of exterior windows of the building and the construction of a temporary landing area at the level of each floor from which the bulky materials are being removed, to allow a crane to reach the materials.
Oakes’ affidavit establishes all three factors of the Sonnier analysis. It answers the question of the “mode and sufficiency of the annexation” by pointing out that the materials were essentially sealed inside the building; it answers the “adaptation of the article to the use or purpose of the realty” by establishing that the materials left on each floor were exactly those which Oakes thought would be needed to finish the interior of that floor; and it unequivocally states “the intention of the owner who causes the personalty to be annexed to the realty.” Sonnier, 909 S.W.2d at 479.
Since Gawerc necessarily was compensated for a building with a fully-finished interior in the condemnation trial — the highest and best use to which the building was reasonably adaptable — he is barred by res judicata from receiving double compensation for the build-out materials as separate property. He has already been compensated for the material used in the building. I would affirm the summary judgment.

. Jury Question No. 1 in the condemnation trial asked the jury to determine “the fair market value of the ... land, including all improvements, condemned by Montgomery County in this lawsuit on June 23, 1997[.]” (emphasis added)

. Even if we assume the sum awarded in the condemnation trial was less than the built-out value of the building, the built-out value is what Gawerc could and should have requested. See generally Texas Water Rights Comm’n v. Crow Iron Works, 582 S.W.2d 768, 772 (Tex.1979) (record did not show whether claim had been raised in earlier action, but because it might have been raised, claim was barred by res judicata).