City of Austin v. Avenue Corp.
1986 Tex. LEXIS 973, 29 Tex. Sup. Ct. J. 171, 704 S.W.2d 11 (1986)
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Rule of Law:
A temporary and partial loss of access to property due to lawful, non-negligent public construction is not a compensable "damaging" of property under the Texas Constitution. To be compensable, a restriction of access must be total (even if temporary), permanent (even if partial), or result from illegal, negligent, or unduly delayed government action.
Facts:
- The Avenue Corporation operated a restaurant.
- The City of Austin initiated a project to reconstruct the street and sidewalk directly in front of the restaurant.
- The construction project lasted for approximately nine months.
- During the construction period, access to the restaurant was partially, but not totally, restricted.
- It was undisputed that the construction was a necessary public improvement and was performed legally in a non-negligent manner.
Procedural Posture:
- The Avenue Corporation sued the City of Austin in trial court for inverse condemnation.
- The trial court found for The Avenue Corporation as a matter of law, and a jury awarded damages for lost profits.
- The City of Austin, as appellant, appealed the judgment to the court of appeals.
- The court of appeals affirmed the judgment of the trial court in favor of The Avenue Corporation, the appellee.
- The City of Austin then appealed to the Supreme Court of Texas.
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Issue:
Does a partial and temporary restriction of access to a property, caused by necessary and non-negligently performed public construction, give rise to a claim for inverse condemnation for lost profits under the Texas Constitution?
Opinions:
Majority - Justice Wallace
No. A partial, temporary restriction of access resulting from lawful and necessary public works does not constitute a compensable damaging of property. The court reasoned that the inconveniences and damages property owners suffer from such temporary obstructions are incidents of city life that must be endured. Property owners recoup their damages through the shared benefit of the ultimate public improvement. The court distinguished this case from those involving a total restriction of access, a permanent restriction of access, or restrictions caused by illegal, unreasonable, or unnecessarily prolonged construction. Citing L.M.S. Inc. v. Blackwell, the court held that because The Avenue Corporation's access was only partially and temporarily restricted by a legal and non-negligent project, it did not fit into any of the categories that would warrant compensation for a 'damaging' of property under Article I, Section 17 of the Texas Constitution.
Analysis:
This case significantly clarifies the scope of inverse condemnation claims in Texas related to temporary impairments of access from public works projects. It establishes a clear framework that shields government entities from liability for lost profits caused by the ordinary and necessary disruptions of infrastructure improvements. The decision balances the constitutional protection of private property against the public necessity of maintaining and improving infrastructure, ultimately placing the burden of temporary, partial inconvenience on the property owner. This precedent makes it substantially more difficult for businesses to recover damages for lost profits during lawful construction unless they can prove a total blockage of access or government negligence.
