Texas Department of Transportation v. C-5 Holdings, LLC and Stone Oak Storage Partners, Ltd. ( 2022 )

Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-21-00292-CV
TEXAS DEPARTMENT OF TRANSPORTATION,
Appellant
v.
C-5 HOLDINGS, LLC and Stone Oak Storage Partners, Ltd.,
Appellees
From the 73rd Judicial District Court, Bexar County, Texas
Trial Court No. 2018-CI-23191
Honorable Norma Gonzales, Judge Presiding
Opinion by: Irene Rios, Justice
Sitting: Patricia O. Alvarez, Justice
Irene Rios, Justice
Lori I. Valenzuela, Justice
Delivered and Filed: May 25, 2022
AFFIRMED IN PART; REVERSED AND RENDERED IN PART
In this interlocutory appeal, the Texas Department of Transportation (“TxDOT”)
challenges the trial court’s order denying its motion for summary judgment on sovereign immunity
grounds. We affirm in part, reverse and render in part, and remand the case to the trial court for
further proceedings consistent with this opinion.
BACKGROUND
C-5 Holdings, LLC (“C-5”) and Stone Oak Storage Partners, Ltd. (“Stone Oak Storage”)
(collectively, the “plaintiffs”) own undeveloped commercial property on U.S. Highway 281 north
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of Stone Oak Parkway (“U.S. 281”). The plaintiffs’ first development was a storage facility called
The Keep Storage-Stone Oak (“Keep Storage”). That facility lies at the center of this dispute.
Construction began on Keep Storage in October 2016. Construction plans included pad
sites for other businesses and three driveways to connect the plaintiffs’ property to U.S. 281; one
of the driveways would connect Keep Storage to U.S. 281. Before the plaintiffs completed the
driveways, TxDOT began construction on U.S. 281 along the plaintiffs’ property.
Webber, L.L.C. (“Webber”), the contractor for TxDOT, stockpiled dirt needed for the
project and for other construction along U.S. 281 in front of the plaintiffs’ property. The plaintiffs
described the stockpile as a massive dirt pile, 50 feet high and 1400 feet long. The dirt pile
prevented the plaintiffs from completing the driveway to connect Keep Storage to U.S. 281 and
was so big that drivers could not see Keep Storage from U.S. 281.
Rather than accessing Keep Storage via the 322-foot planned driveway, the dirt pile
required patrons to drive over a mile south on U.S. 281, then west on Stone Oak Parkway, then
north along the parking lot of a restaurant to a private roadway leading to Keep Storage.
The plaintiffs sued Webber and TxDOT for inverse condemnation, nuisance, negligence,
and promissory estoppel. TxDOT filed a motion for summary judgment arguing it had sovereign
immunity on plaintiffs’ inverse condemnation, nuisance, and promissory estoppel claims.
TxDOT filed objections to the plaintiffs’ summary judgment evidence. The trial court
overruled TxDOT’s objections and denied the motion for summary judgment without specifying
a reason. TxDOT appealed.
MOTION TO DISMISS
After the trial court denied its motion for summary judgment, TxDOT filed a notice of
appeal and characterized its appeal as a permissible interlocutory appeal. The plaintiffs filed a
motion to dismiss the appeal arguing TxDOT seeks an impermissible interlocutory appeal and
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requested we dismiss the appeal. Because TxDOT’s motion for summary judgment constituted a
plea to the jurisdiction for interlocutory appeal purposes, we deny the motion to dismiss this
appeal. See PHI, Inc. v. Texas Juv. Just. Dep’t, 593 S.W.3d 296, 301 n.1 (Tex. 2019) (“For
purposes of appellate jurisdiction over interlocutory orders, the court of appeals had jurisdiction
over the denial of the combined plea to the jurisdiction and motion for summary judgment,
regardless of how the trial-court pleading was styled, because the substance of the pleading was to
raise sovereign immunity, which implicates subject-matter jurisdiction.”); see also City of
Magnolia 4A Econ. Dev. Corp. v. Smedley, 533 S.W.3d 297, 299 (Tex. 2017) (citations omitted)
(“A party may appeal an interlocutory order that grants or denies a plea to the jurisdiction by a
governmental unit. This Court considers ‘plea to the jurisdiction’ not to refer to a ‘particular
procedural vehicle,’ but rather to the substance of the issue raised.”); Thomas v. Long, 207 S.W.3d
334, 339 (Tex. 2006) (“The [l]egislature provided for an interlocutory appeal when a trial court
denies a governmental unit’s challenge to subject matter jurisdiction, irrespective of the procedural
vehicle used.”).
OBJECTIONS TO SUMMARY JUDGMENT EVIDENCE
In its fourth issue, TxDOT argues the trial court erred when it overruled TxDOT’s
objections to the plaintiffs’ summary judgment evidence.
“We review a trial court’s ruling on objections to summary judgment evidence for an abuse
of discretion.” See E-Learning LLC v. AT&T Corp., 517 S.W.3d 849, 854 (Tex. App.—
San Antonio 2017, no pet.) (citing Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43
(Tex. 1998)). “A trial court abuses its discretion if its ruling is arbitrary or unreasonable or without
reference to any guiding rules and principles.” E-Learning LLC, 517 S.W.3d at 854. An abuse of
discretion is not demonstrated “[m]erely because a trial court may decide a discretionary matter
differently than the appellate court . . . .” In re Est. of Denman, 362 S.W.3d 134, 141 (Tex. App.—
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San Antonio 2011, no pet.). We will uphold a trial court’s evidentiary ruling if there is any
legitimate basis for the ruling and will reverse a trial court for an erroneous evidentiary ruling only
if the error probably caused the rendition of an improper judgment. Malone, 972 S.W.2d at 43.
TxDOT objected to William C. Stein’s and Daniel Conway’s statements that the plaintiffs
were denied access to their property during TxDOT’s highway construction. Stein is the plaintiffs’
expert engineer and Conway is the plaintiffs’ expert on real estate economics. TxDOT argued the
statements conflicted with the plaintiffs’ discovery admissions. In their admissions, the plaintiffs
admitted “that customers and members of the public have been using the [private roadway] to
access the subject property by driving from Stone Oak Parkway to Keep Storage . . . .” Although
the plaintiffs had a way to access Keep Storage, the reasonableness of that access, and the
availability of access via public roads, lie at the center of this dispute—not simply whether the
plaintiffs found a way to access Keep Storage. The plaintiffs’ admissions do not conflict with Stein
or Conway’s statements.
TxDOT also complains Stein’s and Conway’s statements—that the plaintiffs did not have
access to their property—were conclusory because other evidence showed the plaintiffs could
access their property by using the private roadway. Stein and Conway provided expert opinions
supporting their conclusions about the reasonableness of access. The statements are not conclusory
just because TxDOT may be able to dispute Stein’s and Conway’s assertions. The trial court’s
decision to overrule TxDOT’s objections to these statements was not arbitrary or unreasonable.
Accordingly, the trial court did not abuse its discretion when it overruled TxDOT’s objections.
TxDOT also objected to Casey Ory Kalenkosky’s declaration that the private roadway the
plaintiffs used to access their property is not located on property owned by Stone Oak Storage.
TxDOT claims the testimony is conclusory because it “was not supported by any actual facts.”
Kalenkosky was the “Project Manager” for the development between 2017 and 2018 and has
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served as the “Director of Development” since 2018. Kalenkosky attested his statement regarding
the private roadway was based on his own personal knowledge of the project and circumstances.
While TxDOT may dispute Kalenkosky’s assertion, the assertion—based on personal
knowledge—is not conclusory. The trial court’s decision to overrule TxDOT’s objections to these
statements was not arbitrary or unreasonable. Accordingly, the trial court did not abuse its
discretion when it overruled TxDOT’s objection.
TxDOT’s fourth issue is overruled.
STANDARD OF REVIEW
We review a trial court’s ruling on a summary judgment motion de novo. Tarr v.
Timberwood Park Owners Assoc., Inc., 556 S.W.3d 274, 278 (Tex. 2018); see also City of
El Paso v. Heinrich, 284 S.W.3d 366, 378 (Tex. 2009) (holding the standard of review for a plea
to the jurisdiction mirrors that of a summary judgment). To prevail on a traditional summary
judgment motion, the movant must show that no genuine issue of material fact exists and that
it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); Provident Life &
Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215–16 (Tex. 2003). In reviewing a trial court’s
summary judgment ruling, we take as true all evidence favorable to the nonmovant,
indulging every reasonable inference and resolving any doubts in the nonmovant’s favor.
Knott, 128 S.W.3d at 215.
INVERSE CONDEMNATION CLAIM
In its first issue, TxDOT argues the trial court erred when it denied summary judgment on
the plaintiffs’ inverse condemnation claim.
“Inverse condemnation is a cause of action against the government to recover the value of
property that has been in fact taken, even though the government agency did not formally exercise
the power of eminent domain or initiate condemnation proceedings.” State v. Momin Props., Inc.,
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409 S.W.3d 1, 6 (Tex. App.—Houston [1st Dist.] 2013, pet. denied) (citing Hearts Bluff Game
Ranch, Inc. v. State, 381 S.W.3d 468, 476 (Tex. 2012)). Sovereign immunity generally protects
the State from lawsuits for monetary damages, but it does not protect the State from an inverse
condemnation claim brought under article I, section 17 of the Texas Constitution. 1 See Momin
Props., 409 S.W.3d at 6. Sovereign immunity “offers no shield against an inverse condemnation
claim brought under article I, section 17 of the Texas Constitution, which waives immunity for the
taking, damaging, or destruction of property for public use and authorizes compensation for such
destruction.” State v. Bhalesha, 273 S.W.3d 694, 697 (Tex. App.—Houston [14th Dist.] 2008, no
pet.). To recover on an inverse condemnation claim, a property owner must establish that (1) the
State intentionally performed an act, (2) that resulted in the taking, damaging, or destruction of the
property, (3) for public use. Momin Props., 409 S.W.3d at 6.
A property owner can receive compensation for diminution in property value by proving a
material and substantial impairment of access to the property. Id. A property owner can show a
material and substantial impairment of access by proving “a temporary limited restriction of access
caused by . . . negligent activity.” City of Austin v. Ave. Corp., 704 S.W.2d 11, 13 (Tex. 1986). A
landowner may receive compensation when a public improvement destroys all reasonable access
to the property. State v. Heal, 917 S.W.2d 6, 9–10 (Tex. 1996); see also State v. Bristol Hotel Asset
Co., 293 S.W.3d 170, 174 (Tex. 2009) (“[D]iminished access to a landowner’s remaining property
is not compensable so long as reasonable access to the property remains.”). “Even when an entire
access point is closed, access to a business is not materially and substantially impaired if another
access point on a public street remains unaffected.” Momin Props., 409 S.W.3d at 7 (emphasis
added). Whether the State materially and substantially impaired access is a question of law, but
1
The plaintiffs sued under article I, section 17 of the Texas Constitution.
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fact questions about reasonable access preclude summary judgment. See City of San Antonio v.
Guidry, 801 S.W.2d 142, 146 (Tex. App.—San Antonio 1990, no writ) (“Whether the placing of
the obstructions in the street in this instance was reasonable or unreasonable was a question for the
jury to determine under all the facts and circumstances of the case.” (quoting L–M–S Inc. v.
Blackwell, 233 S.W.2d 286 (Tex. 1950))); see also Momin Props., 409 S.W.3d at 6.
In its summary judgment motion, TxDOT maintained the plaintiffs cannot prove a
“material and substantial impairment” of access to their property because the plaintiffs had
reasonable access to Keep Storage using a public road. To support its claim, TxDOT submitted
expert opinions in the form of affidavits by Eduardo Reyes, a TxDOT engineer. Reyes opined that
the plaintiffs had continual, uninterrupted access to their property since the beginning of the
U.S. 281 construction project via Stone Oak Parkway. However, no public road connects Stone
Oak Parkway to Keep Storage. See Smith v. City of League City, 338 S.W.3d 114, 125 (Tex.
App.—Houston [14th Dist.] 2011, no pet.) (explaining a “taking that leaves only a private roadway
is significantly different from a taking that leaves a public roadway because, in the former, there
is uncertainty concerning the complainant’s ability and right to access his property via the private
roadway, and this uncertainty could diminish the value of a complainant’s property or cloud the
title”). Other summary judgment evidence showed the only way to access Keep Storage was to use
a public road—Stone Oak Parkway—and a private road.
Kalenkosky testified in his deposition that customers accessed Keep Storage from U.S. 281
by turning onto Stone Oak Parkway, then entering through a private roadway behind Olive Garden
through a roundabout. According to Kalenkosky, a driver had to take a right turn outside a
roundabout, go forward for fifty yards, go right, then left onto the private roadway behind Olive
Garden, and lastly take a private roadway to Keep Storage.
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Gregory L. Gibson 2 also testified in his deposition that a driver could access Keep Storage
via a private roadway that runs from Stone Oak Parkway to Keep Storage. According to Gibson,
a driver travelling south on U.S. 281 must exit Stone Oak Parkway, take a right on Stone Oak
Parkway, turn right by the pad site near Longhorn Steakhouse, go back towards the Chase campus,
veer right at the roundabout, go back behind Olive Garden, and then take the private roadway to
Keep Storage. Although TxDOT’s summary judgment evidence shows C-5 owns the property with
the private roadway and plaintiff Stone Oak Storage Partners has an easement to use the private
roadway, TxDOT relies on legal authority where access was achieved through public roads—not
a combination of public roads and private roads. Reyes’s attestations, and Kalenkosky’s and
Gibson’s testimony in their depositions raise genuine issues of material facts on whether the
plaintiffs and their customers had reasonable access to Keep Storage and whether the plaintiffs
and their customers could access Keep Storage using public roads.
The summary judgment evidence also raised other genuine issues of material fact. For
example, plaintiffs’ expert-engineer Stein opined in his expert report that TxDOT and Webber
failed to “make every effort to maintain access to [the plaintiffs] private property at all times during
[construction] operations.” Stein further opined TxDOT and Webber failed to “[p]rovide
uninterrupted access to adjacent property” and failed to “keep from land-locking a property where
such land locking is solely the result of action by TxDOT.” According to Stein, “TxDOT and
Webber did not maintain an acceptable standard of care . . . prescribed by . . . TxDOT manuals,
specifications and other relevant public documents.”
In response, TxDOT expert Reyes attested in his affidavit that Stein incorrectly assumed
the plaintiffs’ property was landlocked when the dirt pile was placed in front of the plaintiffs’
2
Because the record only contains a portion of Gibson’s testimony, it is unclear what title Gibson holds and how
Gibson is familiar with the dispute. Neither party objected to Gibson’s deposition testimony.
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property. According to Reyes, the plaintiffs’ property had continual, uninterrupted access since the
inception of the U.S. 281 construction project by using Stone Oak Parkway—a public street
adjacent to the plaintiffs’ property—until the time the plaintiffs’ southern driveway opened to
U.S. 281 in 2020.
Plaintiffs’ real estate economics expert Conway disagreed. Conway opined in his expert
report that the placement of the dirt pile eliminated public access and visibility of the plaintiffs’
properties beginning in October 2017 through the second quarter of 2020. According to Conway,
the long pile of dirt had been in place almost 1,000 days, delayed lease and rental rates, and resulted
in lost profits in excess of $1 million.
In contrast, John M. McInturff, a TxDOT expert traffic engineer, opined in his expert report
that reasonable access had been continuously available to the plaintiffs’ property since January
2017. This disputed evidence raises genuine issues of material fact on whether the plaintiffs’
property was landlocked, whether TxDOT met its standard of care, whether the plaintiffs had
continual and reasonable access to their property, and whether the plaintiffs experienced a
temporary limited restriction of access caused by negligent activity.
In the following aerial photo—attached to the summary judgment evidence—the green line
depicts the planned 322-foot drive from Keep Storage to U.S. 281; the blue line depicts the only
route the plaintiffs could use after Webber placed the dirt pile in front of the plaintiffs’ property.
The private drive runs along the top blue line, beginning at the third bend in the blue line. Keep
Storage is the facility above the green numbers.
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The plaintiffs argued the situation depicted by the photo restricted their access for
approximately two and a half years. By viewing the photo, the trial court could have determined
genuine issues of material fact existed as to the reasonableness of access flowing from the
placement of the dirt pile and whether the alleged restricted access was caused by TxDOT’s
negligent activity. Accordingly, TxDOT failed to show no genuine issue of material fact exists on
the plaintiffs’ inverse condemnation claim. Because the summary judgment evidence raised
genuine issues of material fact, the trial court properly denied TxDOT’s motion for summary
judgment on plaintiffs’ inverse condemnation claim.
TxDOT’s first issue is overruled.
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NUISANCE
In their pleadings, the plaintiffs allege TxDOT created a nuisance when it built the pile of
dirt in front of the plaintiffs’ driveway that “substantially impaired [p]laintiffs’ ability to use,
enjoy[,] and/or market their properties . . . .” In its second issue, TxDOT argues sovereign
immunity shields it from the plaintiffs’ nuisance claim.
“Nuisance liability arises only when governmental immunity is clearly and unambiguously
waived.” City of San Antonio v. De Miguel, 311 S.W.3d 22, 25 (Tex. App.—San Antonio 2010,
no pet.). A governmental entity may be liable for a non-negligent nuisance rising to the level of a
constitutional taking. Id. (“In some cases, a [governmental entity] may be held liable for a non-
negligent nuisance—that is, one that rises to the level of a constitutional taking.”). Consequently,
if the plaintiffs’ inverse condemnation claim survives summary judgment, their nuisance claim
may likewise survive because the government’s alleged constitutional taking constitutes a waiver
of its sovereign immunity from the nuisance claim. See City of Dallas v. Jennings, 142 S.W.3d
310, 316 (Tex. 2004) (“[A] city may be held liable for a nuisance that rises to the level of a
constitutional taking.”); see also Warwick Towers Council of Co-Owners ex rel St. Paul Fire &
Marine Ins. Co. v. Park Warwick, L.P., 298 S.W.3d 436, 446 (Tex. App.—Houston [14th.] 2009,
no pet.). “To properly assert a non-negligent nuisance claim against a governmental entity, a party
must plead and show . . . (1) the governmental entity intentionally performed an act in the exercise
of its lawful authority; (2) that resulted in the taking, damaging, or destruction of the party’s
property; (3) for public use.” De Miguel, 311 S.W.3d at 26.
As mentioned above, genuine issues of material fact precluded summary judgment on the
plaintiffs’ inverse condemnation claim. See Ahmed v. Metro. Transit Auth., 257 S.W.3d 29, 32
(Tex. App.—Houston [14th Dist.] 2008, no pet.) (stating an inverse condemnation is a
constitutional taking). Because plaintiffs have raised fact issues on whether TxDOT’s actions are
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a constitutional taking, TxDOT is not entitled to judgment as a matter of law based on sovereign
immunity from plaintiffs’ nuisance claim. Accordingly, the trial court properly denied TxDOT’s
motion for summary judgment on the plaintiffs’ nuisance claim.
TxDOT’s second issue is overruled.
PROMISSORY ESTOPPEL
In their pleadings, the plaintiffs based their promissory estoppel claim on TxDOT’s
promise they would have three access driveways to U.S. 281 or its access road. 3 The plaintiffs
constructed the three driveways at U.S. 281’s then-current elevation but could not connect the
driveways to U.S. 281 because Webber placed the dirt pile between the plaintiffs’ property and
U.S. 281. The plaintiffs complained about the dirt pile, including how the dirt pile prevented them
from completing the driveways within the time allowed by the permits. TxDOT later issued a
change order lowering the elevation of the U.S. 281 access road. The change required
reconstruction and regrading of two of the plaintiffs’ driveways. According to plaintiffs, TxDOT
refused to reimburse the plaintiffs for the cost of reconstruction and regrading “claiming it is not
obligated to do so because [the plaintiffs] allowed their permits to expire before tying [the
driveways] into the access road.”
As a general rule, a governmental unit exercising its governmental powers is not subject to
estoppel. City of Hutchins v. Prasifka, 450 S.W.2d 829, 835 (Tex. 1970). The Supreme Court of
Texas, however, has recognized a narrow exception to the general rule as it applies to
municipalities “where justice requires its application, and there is no interference with the exercise
of . . . governmental functions.” Id. at 836. The supreme court instructed the exception should be
applied “with caution and only in exceptional cases where the circumstances clearly demand its
3
TxDOT issued permits for the three driveways.
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application to prevent manifest injustice.” Id.; see also Tex. Dep’t of Transp. v. A.P.I. Pipe &
Supply, LLC, 397 S.W.3d 162, 170 n.36 (Tex. 2013) (indicating the exception has only been
applied twice). “For estoppel to apply against the government, two requirements must exist: (1)
“the circumstances [must] clearly demand [estoppel’s] application to prevent manifest injustice,”
and (2) no governmental function can be impaired.” A.P.I. Pipe & Supply, LLC, 397 S.W.3d at
170 (emphasis omitted).
Since that time, Texas courts have declined to extend the exception beyond municipalities
and the exception has never been applied to TxDOT. See, e.g., S.W. ex rel. A.W. v. Arlington Indep.
Sch. Dist., 435 S.W.3d 414, 422 (Tex. App.—Fort Worth 2014, no pet.) (explaining the exception
does not apply to waive school district’s immunity from promissory estoppel claim); Kojo Wih
Nkansah v. Univ. of Tex. at Arlington, No. 02–10–00322–CV, 2011 WL 4916355, at *4 (Tex.
App.—Fort Worth Oct. 13, 2011, pet. denied) (mem. op.) (declining to extend exception to state
university); Donna Indep. Sch. Dist. v. Gracia, 286 S.W.3d 392, 396 (Tex. App.—Corpus Christi–
Edinburg 2008, no pet.) (stating the exception has never been applied to school districts).
“As to the first requirement, [the Texas Supreme Court has] applied estoppel to prevent
manifest injustice if[] officials acted deliberately to induce a party to act in a way that benefitted
the government.” A.P.I. Pipe & Supply, LLC, 397 S.W.3d at 170 (alterations omitted). Here, the
record does not show that TxDOT deliberately induced the plaintiffs to act in a way that benefitted
TxDOT. Adhering to the supreme court’s caution, we decline to apply the exception here.
Accordingly, we hold the trial court erred when it denied summary judgment on the plaintiffs’
promissory estoppel claim.
TxDOT’s third issue is sustained.
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CONCLUSION
The plaintiffs’ motion to dismiss is denied. We affirm the portion of the trial court’s order
denying summary judgment on the plaintiffs’ inverse condemnation and nuisance claims. We
reverse the portion of the trial court’s order denying summary judgment on plaintiffs’ promissory
estoppel claim and render judgment in favor of TxDOT on that claim. We remand the case to the
trial court for further proceedings consistent with this opinion.
Irene Rios, Justice
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