EL DORADO LAND CO. v. City of McKinney
349 S.W.3d 215
Tex. App.2011Background
- El Dorado sold land to the City in 1999 for $150,000 under a deed restriction: property to be used as a Community Park.
- The deed granted El Dorado a purchase option if the City violated the restriction or elected not to develop the property as a Community Park, at a price equal to the lesser of FMV or the original purchase price.
- In 2009 the City built a library on the property; El Dorado informed the City of alleged deed-restriction violation and invoked the option to purchase on September 15, 2009.
- The City did not respond to El Dorado’s notice; El Dorado claimed the City’s failure to convey or condemn the reversionary/option rights effected a taking without compensation.
- El Dorado sued for inverse condemnation under article I, section 17 of the Texas Constitution; the City filed a plea to the jurisdiction arguing lack of a compensable property interest and lack of standing.
- The trial court granted the plea and dismissed; the court of appeals agreed, holding El Dorado’s option is not a compensable property interest and thus cannot support inverse condemnation; governmental immunity bars the suit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether El Dorado’s purchase option is a compensable property interest. | El Dorado asserts the option is a property interest and supports inverse condemnation. | City contends the option is a contractual, non-compensable interest and does not support a takings claim. | No; option is not a compensable property interest; inverse condemnation not viable. |
Key Cases Cited
- City of Austin v. Teague, 570 S.W.2d 389 (Tex. 1978) (inverse condemnation remedial framework for taking an economic interest)
- Tex. S. Univ. v. State St. Bank & Trust Co., 212 S.W.3d 893 (Tex.App.-Houston [1st Dist.] 2007) (requires vested property interest at time of taking)
- Pitman v. Sanditen, 626 S.W.2d 496 (Tex. 1981) (unilateral option becomes binding contract upon exercise)
- Cypress Forest Pub. Util. Dist. v. Kleinwood Mun. Util. Dist., 309 S.W.3d 667 (Tex.App.-Houston [14th Dist.] 2010) (extension of condemned property rights to contract rights not adopted)
- Luckel v. White, 819 S.W.2d 459 (Tex.1991) (definition of possibility of reverter; not present here)
- State v. Brownlow, 319 S.W.3d 649 (Tex.2010) (inverse condemnation framework; focus on property interests)