Westgate, Ltd. v. State
36 Tex. Sup. Ct. J. 282, 1992 Tex. LEXIS 160, 843 S.W.2d 448 (1992)
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Rule of Law:
Economic damages arising from a government's public announcement of a future condemnation project and subsequent pre-condemnation delay are not compensable as a taking under the Texas Constitution, unless the government has imposed a direct restriction on the property's use, such as a physical invasion, denial of access, or legal restraint.
Facts:
- In September 1984, Westgate, Ltd. purchased a tract of land in Austin for commercial development.
- In April 1985, Westgate began constructing a shopping center, having received site plan approval and a building permit from the government, which did not disclose its own pre-existing plans to expand an adjacent highway.
- In October 1985, shortly after Westgate substantially completed construction, it learned from a newspaper that the planned highway expansion would pass directly through one of its new buildings.
- The public announcement of the highway project diminished the property's marketability, making tenants reluctant to lease space in the shopping center.
- In July 1986, Westgate requested an expedited acquisition due to financial hardship, which the government approved in November 1986.
- In June 1987, the government made an offer for the property, which Westgate rejected, and the parties failed to agree on a price.
Procedural Posture:
- In September 1988, the State and City commenced statutory condemnation proceedings against Westgate in a state trial court.
- Westgate filed a counterclaim for inverse condemnation, alleging a taking had occurred due to the project's announcement and subsequent delay.
- A jury found in favor of Westgate on its counterclaim, finding the government was negligent and had unreasonably delayed the acquisition.
- The trial court entered judgment for Westgate, awarding damages for both the inverse condemnation claim and the statutory condemnation claim.
- The government, as appellant, appealed to the Texas Court of Appeals.
- The intermediate court of appeals reversed the inverse condemnation award, holding no compensable taking had occurred, and remanded for a new trial on the statutory condemnation damages.
- Westgate, as petitioner, sought review from the Supreme Court of Texas.
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Issue:
Does a government's public announcement of a future condemnation project, coupled with a subsequent delay in acquiring the property, constitute a compensable taking under the Texas Constitution when there has been no direct physical or legal restriction on the property's use?
Opinions:
Majority - Chief Justice Phillips
No. A landowner may not recover damages for inverse condemnation where the government has not physically appropriated, denied access to, or otherwise directly restricted the use of the landowner’s property. An inverse condemnation requires more than a decline in marketability caused by the government's proposal to condemn in the future. Sound public policy supports this rule, as imposing liability for pre-condemnation announcements and delays would impede public works projects, encourage government secrecy, and hinder public debate and environmental review. While a cause of action for a condemning authority's bad faith delay might exist, Westgate failed to preserve that claim by only requesting jury issues on negligence and unreasonable delay.
Dissenting - Justice Mauzy
Yes. The government's unreasonable delay in the condemnation process constitutes an unreasonable interference with the landowner's right to use and enjoy the property, which should be compensable as a taking. The majority's decision excuses 'bureaucratic bungling' at the expense of landowners. Juries are capable of determining whether a delay is reasonable, and the government should be held accountable under an objective reasonableness standard, not a subjective bad faith standard which sets the bar for recovery too high.
Dissenting - Justice Doggett
No, but the case should be remanded. While a simple announcement or unreasonable delay does not automatically create liability, an inverse condemnation claim based on the government's bad faith in delaying proceedings should be permitted to ensure governmental accountability. The majority erred in concluding Westgate did not plead a bad faith claim, as its pleadings alleged the government acted deliberately and with conscious disregard for Westgate's rights. Even if Westgate proceeded on an incorrect legal theory, the court should have remanded the case in the interest of justice to allow Westgate an opportunity to prove its bad faith claim, consistent with prior precedent.
Dissenting - Justice Gammage
Yes, on a bad faith standard with a remand. I agree with Justice Doggett that a bad faith standard for inverse condemnation claims based on delay is appropriate. The majority adopts an overly restrictive standard for remanding in the interest of justice and abandons its commitment to broad-form jury submissions, which is contrary to both precedent and the rules of civil procedure.
Analysis:
This decision establishes a bright-line rule in Texas that protects government entities from inverse condemnation liability for 'condemnation blight'—the economic harm caused by announcing future projects. By rejecting a 'reasonableness' standard for delay, the court prioritizes governmental planning flexibility and public discourse over the economic interests of individual landowners. The opinion signals that while a claim based on 'bad faith' might be theoretically possible, it will be a difficult claim to bring and must be explicitly preserved at trial, thus providing significant protection to the government for the lengthy delays often inherent in public works projects.
