449 S.W.3d 678
Tex. App.2014Background
- City of Blue Mound seeks to condemn Monarch Utilities' Blue Mound Water and Wastewater System in district court to own and operate it.
- Condemnation petition asserts authority under Texas Local Government Code §251.001 and Texas Property Code ch. 21 to acquire the entire system, including real property, fixtures, easements, wells, lines, and CCNs.
- Three special commissioners awarded $2,748,000 for land described in the petition; Monarch and Southwest Water challenge jurisdiction and authority.
- City provides Resolution No. 10-11 authorizing eminent domain of the utility company (not merely real property).
- Appellees move for summary judgment arguing no statutory authority to condemn a going‑concern utility in district court and that compensation for going‑concern value is required but not provided by the cited statutes.
- Trial court abated pending HB 1160 attempts; after veto, the court reinstated and granted summary judgment for Appellees; final judgments dismiss the case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Texas law authorizes condemning a going concern utility in district court | Blue Mound contends condemnation of the entire system is authorized as a property taking. | Monarch/Southwest assert statutes do not authorize going-concern condemnation in district court and require a different process. | No authority under general condemnation statutes to condemn a going-concern utility in district court. |
| Whether going-concern value must be compensated and whether statutes provide a mechanism | Going-concern value should be compensated as part of a taking of a utility system. | General condemnation statutes do not authorize such compensation; no mechanism exists in the cited statutes. | Going-concern compensation is required by federal law, but Texas statutes do not provide a mechanism; thus no district-court taking authority. |
| Whether Local Government Code §§251.001, 273.001, or §552.001 and Property Code ch. 21 authorize such condemnation | These statutes authorize municipal condemnation of public/private property and acquisition of property or a utility with CCNs. | The cited statutes do not authorize condemning a going-concern utility or providing going-concern valuation. | These statutes do not authorize condemning a going-concern utility in district court. |
| Whether the City can proceed before the TCEQ/PUC under the Water Code | The Water Code framework could govern transfer of CCNs and regulation. | The issue is whether, and not to decide, the appropriate forum; the court analyzes only statutory authorization for district-court condemnation. | Court declines to resolve forum mechanics,holding only that general condemnation statutes do not authorize the district-court going-concern taking. |
Key Cases Cited
- Lone Star Gas Co. v. City of Fort Worth, 98 S.W.2d 799 (Tex. 1936) (holding condemnation of a going-concern utility requires compensation; general statutes insufficient)
- Kimball Laundry Co. v. United States, 338 U.S. 1 (Supreme Court 1949) (utility taken for government use requires going-concern value compensation)
- City of Omaha v. Omaha Water Co., 218 U.S. 180 (Supreme Court 1910) (public-utility takings require compensation when government continues operation)
- Barshop v. Medina County Underground Water Conservation Dist., 925 S.W.2d 618 (Tex. 1996) (assumes compensation for taking vested rights if a specific statute provides mechanism)
- Texas Building Owners & Managers Association, Inc. v. Public Utility Commission of Texas, 110 S.W.3d 527 (Tex. 2003) (rules provide mechanism for compensation in building-access/telecom context; not facially unconstitutional when such mechanism exists)
- City of Houston v. Southern Water Corporation, 678 S.W.2d 570 (Tex. App.—Houston [14th Dist.] 1984) (condemnation of private utility as going concern barred absent compensation mechanism)
- AMV-HOU, Ltd. v. Capital Metro. Transp. Auth., 262 S.W.3d 574 (Tex. App.—Austin 2008) (disagrees with Kimball analysis in AMV-HOU’s context; cited to discuss going-concern concept)