Court Opinion

ID: 4230409
Source: CourtListenerOpinion
Date Created: 2017-12-20 04:35:50.596886+00
Date Added: 2024-06-11T14:42:31.668363
License: Public Domain

Opinion issued December 19, 2017

                                     In The

                              Court of Appeals
                                     For The

                          First District of Texas
                            ————————————
                              NO. 01-17-00101-CV
                           ———————————
                PIZZA HUT OF AMERICA, L.L.C., Appellant
                                        V.
         HOUSTON COMMUNITY COLLEGE SYSTEM, Appellee

             On Appeal from the County Civil Court at Law No. 4
                           Harris County, Texas
                       Trial Court Case No. 1043516

                         MEMORANDUM OPINION

      In this condemnation proceeding, appellant Pizza Hut of America, L.L.C.

(“Pizza Hut”), challenges the trial court’s judgment dismissing its claims for lack

of standing. Pizza Hut was a tenant of the Woodridge Plaza Shopping Center

(“Woodridge Plaza”) at the time that appellee Houston Community College
System (“HCCS”) condemned the property. As part of the condemnation

proceedings, a condemnation award of $427,100 was designated to be paid to all of

Woodridge Plaza’s tenants, and Pizza Hut sought $7,100 as its pro rata share from

that amount. The trial court concluded, based on language in Pizza Hut’s lease for

the Woodridge Plaza location, that Pizza Hut had suffered no impairment of its use

of the premises as a result of the condemnation proceedings and, thus, Pizza Hut

lacked standing and was not entitled to any portion of the condemnation award. In

its sole issue on appeal, Pizza Hut contends that it has standing to participate in the

condemnation proceedings and to seek a portion of those funds awarded to the

Woodridge Plaza tenants.

      We affirm.

                                    Background

      In February 2014, HCCS filed its petition for condemnation against

Compass Investors Group, L.L.C. (“Compass”) to acquire Woodridge Plaza for

educational purposes and the case was referred to special commissioners. In

October 2014, the special commissioners awarded Compass $12,500,000 for its

ownership interest in Woodridge Plaza. HCCS then filed a second condemnation

petition naming the tenants of Woodridge Plaza as defendants. After two hearings,

the special commissioners awarded $427,100 to all of the Woodridge Plaza

tenants. The special commissioners specifically apportioned $7,100 of the total

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funds to Pizza Hut because it was a tenant at the time of the special

commissioners’ hearings. HCCS then deposited the $427,100 into the registry of

the court. All parties contested the special commissioners’ award, and the trial

court consolidated causes of action against Compass and the tenants for further

judicial proceedings.

      In October 2015, HCCS gained possession of Woodridge Plaza and

continued operating it based on the operating leases the tenants had with Compass,

including Pizza Hut’s lease with Compass. That lease for Pizza Hut’s restaurant

space was a standard form lease provided by Pizza Hut. It contained a section

pertaining to remedies in the event of a condemnation. The lease stated:

             Condemnation means any impairment of Tenant’s use of the
      Premises or the Common Area, or both, by act or omission of
      government authority, including without limitation, a change in
      applicable law, exercise of the power of eminent domain, or exercise
      of other government authority such as alteration of a public street
      directly serving the Premises or the Common Area, or both. . . .
             The Condemnation Award shall belong to the Landlord,
      however, Tenant shall be entitled to the Unamortized Cost of Tenant
      Improvements, plus Tenant’s relocation expenses as determined by
      the condemning entity or court of law. Unamortized Cost of Tenant
      Improvements means that portion of all costs of developing and
      constructing Tenant Improvement which, if amortized on a straight
      line basis over the Term, has not been recovered by Tenant as of the
      date of the Condemnation. . . .

      Under HCCS’s operation as the premises owner, Pizza Hut continued

operating its business at the Woodridge Plaza location—using its established

equipment and improvements—at a profit and without interruption of physical

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impairment by the condemnation. In April 2016, while the condemnation

proceedings were still pending, Pizza Hut sold all ninety of its Houston locations,

including the Woodridge Plaza location. The sale price included improvements to

the Woodridge Plaza location but not the leasehold interest. Pizza Hut retained the

leasehold interest due to the pending condemnation proceedings.

      In December 2016, HCCS filed a plea to the jurisdiction challenging Pizza

Hut’s standing as a party to the condemnation proceedings. The trial court granted

HCCS’s motion and dismissed Pizza Hut as a party from the proceeding without

prejudice. The remaining parties subsequently settled and the trial court granted a

joint motion to dismiss with prejudice. This appeal between Pizza Hut and HCCS

followed.

                                      Standing

      In its sole issue, Pizza Hut argues that, as an owner of a leasehold interest at

the time of the taking, it had standing to participate in the condemnation

proceeding.

A.    Standard of Review and Applicable Law

      Standing is implicit in the concept of subject-matter jurisdiction, and

subject-matter jurisdiction is essential to the authority of a court to decide a case.

Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443 (Tex. 1993). Thus,

standing is never presumed, cannot be waived, and can be raised for the first time

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on appeal. Id. at 443–45. We review standing under the same standard by which

we review subject-matter jurisdiction generally. Id. at 446. Whether the trial court

has subject-matter jurisdiction is a question of law that we review de novo. Tex.

Dep’t of Transp. v. A.P.I. Pipe & Supply, LLC, 397 S.W.3d 162, 166 (Tex. 2013);

Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex 2004).

      A trial court decides a plea to the jurisdiction by reviewing the pleadings and

any evidence relevant to the jurisdictional inquiry. See Bland Indep. Sch. Dist. v.

Blue, 34 S.W.3d 547, 555 (Tex. 2000); see also A.P.I. Pipe & Supply, LLC, 397
S.W.3d at 166 (“Evidence can be introduced and considered at the plea to the

jurisdiction stage if needed to determine jurisdiction.”). We review a trial court’s

ruling on a plea to the jurisdiction de novo, construing the pleadings liberally in

favor of the plaintiff while considering the pleader’s intent. Miranda, 133 S.W.3d

at 226–28.

      When a party cannot establish a viable takings claim, the trial court “lacks

jurisdiction and should grant a plea to the jurisdiction.” A.P.I. Pipe & Supply, LLC,
397 S.W.3d at 166; see also Tex. Ass’n of Bus., 852 S.W.2d at 446 (“The general

test for standing in Texas requires that there (a) shall be a real controversy between

the parties, which (b) will be actually determined by the judicial declaration

sought.” (internal quotation omitted)). “Further, ‘[i]t is fundamental that, to recover

under the constitutional takings clause, one must first demonstrate an ownership

                                          5
interest in the property taken.’” A.P.I. Pipe & Supply, LLC, 397 S.W.3d at 166

(quoting Tex. Dep’t of Transp. v. City of Sunset Valley, 146 S.W.3d 637, 644 (Tex.

2004)). A lessee generally has standing in condemnation proceedings and is

entitled to share in a condemnation award when part of its leasehold interest is lost

by condemnation. Texaco Ref. & Mktg., Inc. v. Crown Plaza Grp., 845 S.W.2d
340, 342 (Tex. App.—Houston [1st Dist.] 1992, no writ). However, a tenant may

waive this right in the lease or elsewhere. See, e.g., Motiva Enters., LLC, v.

McCrabb, 248 S.W.3d 211, 214 (Tex. App.—Houston [1st Dist.] 2007, pet.

denied) (holding that where parties contracted for lease to terminate in event of

condemnation of leased premises, lessee of condemned property had no

compensable leasehold interest following automatic termination of its lease); Fort

Worth Concrete Co. v. State, 416 S.W.2d 518, 521 (Tex. Civ. App.—Fort Worth

1967, writ ref’d n.r.e.) (“A tenant whose lease provides for its termination upon the

taking of the leased premises for a public use, is entitled to no compensation when

it is condemned.”).

B.    Analysis

      Pizza Hut argues on appeal that it has standing in the condemnation

proceedings with HCCS because, as a lessee, it is entitled to share in the

condemnation award. However, to have standing, Pizza Hut must establish more

than its mere identity as a leaseholder—it must show that it has a viable takings

                                          6
claim. See A.P.I. Pipe & Supply, LLC, 397 S.W.3d at 166. Here, that involves

construing Pizza Hut’s lease that sets forth specific terms concerning its interest in

the event of a condemnation. See Motiva Enters., LLC, 248 S.W.3d at 214

(recognizing that parties have right to contract for different remedies in event of

condemnation such as, in that case, termination of lease in event of condemnation).

      In construing a written lease, we must “ascertain the true intentions of the

parties as expressed in the instrument.” Valence Operating Co. v. Dorsett, 164
S.W.3d 656, 662 (Tex. 2005). The terms of the lease must be “given their plain,

ordinary, and generally accepted meanings unless the [lease] itself shows them to

be used in a technical or different sense.” Id.

      The lease states that “[c]ondemnation means any impairment of Tenant’s use

of the Premises or the Common Area, or both, by act or omission of government

authority” and that, although any “Condemnation Award shall belong to the

Landlord,” Pizza Hut as the tenant is entitled to “the Unamortized Cost of Tenant

Improvements, plus Tenant’s relocation expenses as determined by the

condemning entity or court of law.” Thus, without a showing of impairment—

specifically, costs of tenant improvements and relocation expenses—Pizza Hut

cannot show a viable takings claim or any harm resulting from the condemnation

that would be resolved by its continuing as a party to the condemnation

proceedings. See A.P.I. Pipe & Supply, LLC, 397 S.W.3d at 166 (discussing

                                           7
standing principles in constitutional takings cases); see also Tex. Ass’n of Bus., 852
S.W.2d at 446 (discussing general standing principles).

      Pizza Hut acknowledges that the condemnation did not impair its physical

access to or use of the Woodridge Plaza location; rather, it argues that the

uncertainty created by the condemnation constituted an impairment. Pizza Hut

asserts that it did not know how long it would be able to continue operating in the

building after HCCS became the owner. However, the uncontested jurisdictional

evidence indicates that during the time HCCS had control over Woodridge Plaza,

Pizza Hut was able to continue operating in that location at a profit until it sold its

franchise for that location to a third-party buyer in April 2016, when it was paid for

the costs of all improvements to the store by the new owner. There was likewise no

evidence that Pizza Hut incurred any relocation costs related to the condemnation.

      We conclude that Pizza Hut has failed to demonstrate, under the terms of its

lease, a viable interest in HCCS’s condemnation of Woodridge Plaza. Accordingly,

the trial court properly dismissed it from the case. See A.P.I. Pipe & Supply, LLC,
397 S.W.3d at 166; see also Tex. Ass’n of Bus., 852 S.W.2d at 446.

                                          8
                                   Conclusion

      We affirm the judgment of the trial court.

                                             Evelyn V. Keyes
                                             Justice

Panel consists of Chief Justice Radack and Justices Keyes and Caughey.

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