Lamar Advantage Outdoor Company, L.P. v. Texas Department of Transportation ( 2020 )

In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-19-00368-CV
___________________________
LAMAR ADVANTAGE OUTDOOR COMPANY, L.P., Appellant
V.
TEXAS DEPARTMENT OF TRANSPORTATION, Appellee
On Appeal from the 96th District Court
Tarrant County, Texas
Trial Court No. 096-293180-17
Before Gabriel, Bassel, and Womack, JJ.
Memorandum Opinion by Justice Womack
MEMORANDUM OPINION
I. INTRODUCTION
Appellant Lamar Advantage Outdoor Company, L.P., the owner of a billboard,
filed suit seeking a declaratory judgment against appellee Texas Department of
Transportation (TxDOT) to void a highway construction project due to TxDOT’s
failure to prepare a Takings Impact Assessment (TIA) pursuant to the Private Real
Property Rights Preservation Act (Act). See Tex. Gov’t Code Ann. § 2007.044(a). In
response, TxDOT filed a plea to the jurisdiction contending that its actions were
exempt under the Act, Lamar could not prove damage under the Act, and Lamar
lacked standing under the Act. The trial court granted TxDOT’s plea to the
jurisdiction, and Lamar brought this appeal. Because Lamar does not have standing
to challenge the failure to prepare a TIA, we affirm the trial court’s judgment.
II. BACKGROUND
In February 2015, the Texas Transportation Commission, which governs
TxDOT,1 approved funding for the Interstate 30/State Highway 360 Interchange
Project (Project). The Project involves transforming the current cloverleaf design into
a fully directional interchange with connection ramps for all movements between I-30
and SH 360. Lamar contends that, to facilitate the Project, TxDOT, through the
1
Tex. Transp. Code Ann. § 201.201.
2
actions of the Commission, “adopted or issued resolutions, policies, guidelines or
similar measures that authorized, facilitated, and approve[d] the Project.”
Lamar owns a billboard located along the north side of I-30, 0.3 miles west of
SH 360. The billboard was erected in 1991 pursuant to a permit obtained from the
City of Arlington by a Lamar predecessor-in-interest. While Lamar has a lease that
allows it to operate the sign, it is not the owner of the land on which the structure is
located. According to Lamar’s petition, when support beams for the Project were
erected blocking the billboard, it had to cancel and refund contracts for the use of the
sign structure. Although Lamar contends that “actions taken by contractors that
TxDOT approved for the Project have imposed a physical invasion or required a
dedication or exaction of private real property outside of the formal exercise of the
power of eminent domain,” it does not allege any effect on the billboard other than
the support-beam blockage.
In July 2017, Lamar sued TxDOT under Section 2007.044 of the Act for a
declaration that the Project was invalid for failure to prepare a TIA.2 Tex. Gov’t Code
Ann. § 2007.044. In addition, it sought to recover attorney’s fees and court costs.
In response, TxDOT filed a general denial and a plea to the jurisdiction. The
plea contended that the trial court lacked jurisdiction because TxDOT’s actions were
2
TxDOT does not dispute that “there are no [TIAs] for the [P]roject and the
area.” In its response to requests for admissions, TxDOT also admitted that it did
not prepare a TIA for the Project.
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exempt under the Act, Lamar had not pled and could not prove compensable damage
under the Act, and Lamar lacked standing under the Act. After a hearing on the plea,
the trial court granted the plea and dismissed the case for lack of jurisdiction. The
trial court filed findings of fact and conclusions of law. This appeal followed.
III. DISCUSSION
In one issue challenging the trial court’s granting of the plea to the jurisdiction,
Lamar contends that it pled sufficient facts and presented evidence establishing the
trial court’s jurisdiction over Lamar’s claims that TxDOT failed to fulfill its statutory
duty under the Act. TxDOT responds that Lamar lacks standing to bring a claim
under the Act, and the Act does not require a TIA.
A. Standard of Review
A plea to the jurisdiction is a dilatory plea that seeks dismissal of a case for lack
of subject matter jurisdiction. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex.
2000). The claims asserted may form the context in which a dilatory plea is raised, but
the plea should be decided without delving into the merits of the case. Id. Whether a
court has subject matter jurisdiction is a legal question. State v. Gonzalez, 82 S.W.3d
322, 327 (Tex. 2002). A trial court’s ruling on a plea to the jurisdiction is reviewed de
novo. Suarez v. City of Tex. City, 465 S.W.3d 623, 632 (Tex. 2015).
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B. Applicable Law
The Act allows private real-property owners to sue political subdivisions for
certain governmental actions that require compensation under the Fifth or Fourteenth
Amendments to the United States Constitution or Article I, Sections 17 or 19 of the
Texas Constitution. Hallco Tex., Inc. v. McMullen Cty., 221 S.W.3d 50, 61 (Tex. 2006)
(citing Tex. Gov’t Code Ann. § 2007.021). The Act creates two causes of action in
favor of real-property owners: (1) a statutory cause of action for taking; and (2) a
cause of action based on governmental action taken without preparing a TIA, when
the Act requires a TIA. Bragg v. Edwards Aquifer Auth., 71 S.W.3d 729, 734–35 (Tex.
2002) (citing Tex. Gov’t Code Ann. §§ 2007.021, .044). The Act applies to
“governmental entities”3 whose actions are generally subject to the requirements of
the Act unless an exception to the Act’s coverage applies. Tex. Gov’t Code Ann.
§§ 2007.002(1)(B), .003(b)–(e).
The Act applies only to certain governmental actions:
(1) the adoption or issuance of an ordinance, rule, regulatory
requirement, resolution, policy, guideline, or similar measure;
(2) an action that imposes a physical invasion or requires a dedication or
exaction of private real property;
(3) an action by a municipality that has effect in the extraterritorial
jurisdiction of the municipality, excluding annexation, and that enacts or
enforces an ordinance, rule, regulation, or plan that does not impose
3
In its response to requests for admissions, TxDOT admitted that it is a
“governmental entity as defined by Chapter 2007.002(1) of the Government Code.”
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identical requirements or restrictions in the entire extraterritorial
jurisdiction of the municipality; and
(4) enforcement of a governmental action listed in Subdivisions (1)
through (3), whether the enforcement of the governmental action is
accomplished through the use of permitting, citations, orders, judicial or
quasi-judicial proceedings, or other similar means.
Id. § 2007.003(a). There are numerous exemptions to the Act’s applicability, including
the following “governmental actions”:
(4) an action, including an action of a political subdivision, that is
reasonably taken to fulfill an obligation mandated by federal law or an
action of a political subdivision that is reasonably taken to fulfill an
obligation mandated by state law; [or]
....
(8) a formal exercise of the power of eminent domain[.]
Id. §§ 2007.003(b)(4), (8).
If the Act applies to a particular action, the governmental entity is required to
prepare a TIA, which must
(1) describe the specific purpose of the proposed action and identify:
(A) whether and how the proposed action substantially advances
its stated purpose; and
(B) the burdens imposed on private real property and the benefits
to society resulting from the proposed use of private real
property;
(2) determine whether engaging in the proposed governmental action
will constitute a taking; and
(3) describe reasonable alternative actions that could accomplish the
specified purpose and compare, evaluate, and explain:
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(A) how an alternative action would further the specified purpose;
and
(B) whether an alternative action would constitute a taking.
Id. § 2007.043(b).
If a governmental entity is required to prepare a TIA and fails to do so,
sovereign immunity to suit and liability under the Act is waived “to the extent of
liability created by [the Act].” Id. § 2007.004(a). A governmental action requiring a
TIA is void if the TIA is not prepared, and a “private real property owner affected by
a governmental action taken without the preparation of a [TIA]” may bring suit for a
declaration of the invalidity of the governmental action. Id. § 2007.044(a).
C. Application of Law to Facts
We begin by addressing Lamar’s standing. Standing is a necessary component
of subject-matter jurisdiction and is a constitutional prerequisite to maintaining a
lawsuit. Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443–44 (Tex. 1993).
To satisfy the test for standing, there must be a real controversy between the parties,
and the controversy must be actually determined by the judicial declaration sought.
Id. at 446. The issue of standing focuses on whether a party has a sufficient
relationship with the lawsuit so as to have a justiciable interest in its outcome. Austin
Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005). “A court has no
jurisdiction over a claim made by a plaintiff without standing to assert it.”
DaimlerChrysler Corp. v. Inman, 252 S.W.3d 299, 304 (Tex. 2008). Standing is properly
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raised in a plea to the jurisdiction. City of Houston v. Guthrie, 332 S.W.3d 578, 588 (Tex.
App.—Houston [1st Dist.] 2009, pet. denied). It is a question of law. Brunson v.
Woolsey, 63 S.W.3d 583, 587 (Tex. App.—Fort Worth 2001, no pet.).
Here, Lamar brought suit under Section 2007.044 of the Act, which allows a
“private real property owner affected by a governmental action taken without the
preparation of a [TIA]” to “bring suit for a declaration of the invalidity of the
governmental action.” Tex. Gov’t Code Ann. § 2007.044. Because Lamar is only a
lessee, TxDOT contends that Lamar does not own any “private real property” that is
“affected” by TxDOT’s actions; therefore, Lamar lacks statutory standing regardless
of whether a TIA was required. We agree.
To have standing to bring a claim under the Act, plaintiffs must be “owners”
who allege a “taking.” Guthrie, 332 S.W.3d at 588. The Act defines “owner” as “a
person with legal or equitable title to affected private real property at the time a taking
occurs.” Tex. Gov’t Code Ann. § 2007.002(2). “Private real property” means “an
interest in real property recognized by common law, including a groundwater or
surface water right of any kind, that is not owned by the federal government, this
state, or a political subdivision of this state.” Id. § 2007.002(4). “Taking” means
(A) a governmental action that affects private real property, in whole or
in part or temporarily or permanently, in a manner that requires the
governmental entity to compensate the private real property owner as
provided by the Fifth and Fourteenth Amendments to the United States
Constitution or Section 17 or 19, Article I, Texas Constitution; or
(B) a governmental action that:
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(i) affects an owner’s private real property that is the subject of
the governmental action, in whole or in part or temporarily or
permanently, in a manner that restricts or limits the owner’s right
to the property that would otherwise exist in the absence of the
governmental action; and
(ii) is the producing cause of a reduction of at least 25 percent in
the market value of the affected private real property, determined
by comparing the market value of the property as if the
governmental action is not in effect and the market value of the
property determined as if the governmental action is in effect.
Id. § 2007.002(5).
Lamar acknowledges that it does not own any land impacted by the Project.4
Instead, Lamar alleges that “its ownership of a real property fixture gives [it] standing
as a private real property owner under the Act.” TxDOT responds that neither
Lamar’s leasehold interest nor ownership of a “real property fixture” gives it standing
under the Act.
Lamar’s leasehold interest is not real property subject to the Act. See Guthrie,
332 S.W.3d at 588. In Guthrie, the fireworks operators were only lessees of the
building used to sell fireworks, with actual title to the land being held by the property
owners. Id. The fireworks operators argued that they had standing to sue under the
Act because their leasehold interest gave them sufficient interest in the real property
to assert a claim under the Act. Id. The court disagreed, holding that the Act’s use of
4
In response to an interrogatory, Lamar stated that it “is not claiming that its
real property interests have been physically invaded or exacted, but Lamar believes
other property was physically invaded or exacted by TxDOT for the Project.”
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the term “title” in the definition of “owner” indicates title to a real property interest—
whether surface, water, mineral, or some combination thereof—must be held before a
party has standing to sue under the Act. Id. The fireworks operators also argued that
a leasehold interest is the equivalent of having “equitable title” in real property. Id.
The court again disagreed, holding that “‘[e]quitable title’ is a right, enforceable in
equity, to have the legal title to real estate transferred to the owner of the right upon
performance of specified conditions.” Id.
Similar to the fireworks operators in Guthrie, Lamar has only a leasehold
interest in the real property on which the billboard is located. However, Lamar argues
that Guthrie is distinguishable because Lamar owns the billboard, which it states is a
real property fixture. See State v. Clear Channel Outdoor, Inc., 463 S.W.3d 488, 495–96
(Tex. 2015); State v. Moore Outdoor Props., L.P., 416 S.W.3d 237, 243–45 (Tex. App.—El
Paso 2013, pet. denied). Citing Clear Channel, Lamar contends that its sign structure
qualifies as “private real property” under the Act because it is “an interest in real
property recognized by common law,” and as such, Lamar is an “owner” under the
Act. See Tex. Gov’t Code Ann. §§ 2007.002(2), (4).
In Clear Channel, which involved claims not arising under the Act, the parties
disputed the compensation due for condemnation of land with free-standing
billboards used for outdoor advertising. 463 S.W.3d at 490. Clear Channel alleged
that because of the condemnation of the underlying land, “[a]t the State’s direction,
Clear Channel [the owner of the billboards] dismantled the signboards, cut the poles
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into pieces, and removed the materials from the property.” Id. Centering its
argument on Logan v. Mullis, 686 S.W.2d 605 (Tex. 1985),5 the State argued that the
billboards were not fixtures but personalty and could have been removed. Clear
Channel, 463 S.W.3d at 493. Disagreeing, the Texas Supreme Court determined that
the billboard structures at issue in that case were fixtures that should have been valued
as part of the land. Id. at 496. However, the court noted that “[t]his is not to say that
all sign structures are necessarily fixtures.” Id. Rather, courts are “to determine
whether any particular billboard is a fixture . . . based on the Logan test as framed
from the perspective of a holder of the unified fee.” Id.
Once it determined that the billboard structures were fixtures, the court next
looked at what compensation was due for the sign structures. Id. Despite Clear
Channel’s argument that the value of the billboards should be based on the profits
generated by their use in advertising, the court held that “while the advertising
business income generated by a billboard should be reflected in the valuation of the
5
In Logan, the Texas Supreme Court stated,
Three factors are relevant in determining whether personalty has become
a fixture, that is, 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 article to the use or purpose of the realty; and
(3) the intention of the party who annexed the chattel to the realty.
686 S.W.2d at 607.
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land at its highest and best use, the loss of the business is not compensable and
cannot be used to determine the value of the billboard structure.” Id. at 490.
Clear Channel is not dispositive because unlike in Clear Channel, the land on
which Lamar’s billboard sits was not taken, and the billboard was not dismantled and
removed from the property. Here, Lamar still has both its leasehold interest and the
billboard. While Lamar explains in its reply brief that it cannot seek relief under an
inverse condemnation or eminent domain cause of action, that fact alone does not
give it standing to proceed under the Act. That is because, even if the billboard is a
“fixture,” which is a determination we do not make here, Lamar cannot show it was
“affected” by a governmental action. Tex. Gov’t Code Ann. § 2007.044.
As set out above, the definition of “owner” connects the word “affected” to a
“taking” under the Act. Id. § 2007.002(2). To have a taking, there must be a
constitutional taking, see id. § 2007.002(5)(A), or a governmental action that affects an
owner’s private real property in whole or in part or restricts or limits the owner’s right
to the property that otherwise exists and is the producing cause of a reduction of at
least 25% in the market value of the property. Id. § 2007.002(5)(B); see also Gillium v.
Santa Fe Indep. School Dist., No. 01-10-00351-CV, 2011 WL 1938476, at *4 (Tex.
App.—Houston [1st Dist.] May 12, 2011, no pet.) (mem. op.) (stating that the Act
waives immunity for “governmental actions” alleged to have caused (1) a
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constitutional taking or (2) a reduction of at least 25% in the market value of the
affected private real property).6
Even though Lamar contends that it lost business as a result of the decreased
visibility of its billboard, loss of visibility is not compensable. State v. Schmidt,
867 S.W.2d 769, 774 (Tex. 1993). “Just as a landowner has no vested interest in the
volume or route of passersby, he has no right to insist that his premises be visible to
them.” Id. Where a billboard is a fixture to be valued with the land, the fact that the
billboard could generate advertising business income should be reflected in the total
valuation of the land on which the fixture is located at its highest and best use. See
Clear Channel, 463 S.W.3d at 497 (quoting State v. Cent. Expressway Sign Assocs.,
302 S.W.3d 866, 874 (Tex. 2009): “‘[E]vidence of valuation based on advertising
income’ is inadmissible, while ‘[g]eneral estimates of what the property would sell for
considering its possible use as a billboard site are acceptable.’”). The loss of the
business itself is not compensable to the fixture owner and cannot be used to
6
In its reply brief, Lamar complains that TxDOT’s arguments “fail to
distinguish the Act’s definition of a ‘taking’ from the common law definition of
‘taking.’” Contending that the Act “was made precisely for the scenario in which [it]
finds itself,” Lamar states that it cannot seek relief under inverse condemnation laws
or through Chapter 21 of the Property Code “because the government’s action in this
regard would not constitute a ‘taking’ under common law, even though the
government’s action affected the ‘market value’ of Lamar’s property.” We must
presume the legislature was aware of the common law when it passed the Act. See
Phillips v. Beaber, 995 S.W.2d 655, 658 (Tex. 1999). Lamar’s argument also ignores the
fact that the definition of “private real property” in the Act incorporates common
law. Tex. Gov’t Code Ann. § 2007.002(4) (“‘Private real property’ means an interest
in real property recognized by common law . . . .”).
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determine the market value of the billboard structure. Id. at 490. The fixture owner is
entitled to compensation only for the physical structure itself. Id. at 498. As such,
Lamar has not pleaded any facts that can show it has sustained the 25% reduction in
market value that is required by the Act.
To allege a cause of action under the Act, a plaintiff must be a “private real
property owner affected by a governmental action.” Tex. Gov’t Code Ann.
§ 2007.004. Because Lamar holds only a leasehold interest in a billboard located on
real property where neither the land on which the billboard sits nor the billboard itself
was taken for the Project, it does not have standing to bring a claim under the Act.
We overrule Lamar’s issue.
IV. CONCLUSION
Having overruled Lamar’s sole issue, we affirm the trial court’s judgment.
/s/ Dana Womack
Dana Womack
Justice
Delivered: September 24, 2020
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