In City of Baytown v. Schrock, No. 20-0309 (May 13, 2022), the Texas Supreme Court held that it isn’t a taking when a city, in violation of state law, cuts off utility services to property.
The issue, as the court restated it, was “whether a claim of economic harm to property resulting from the improper enforcement of a municipal collection ordinance alleges a regulatory taking.” Slip op. at 6. Schrock owned property in Baytown on which he had a mobile home he planned to rent. The water bill wasn’t paid, and Baytown has an ordinance that requires property owners to guarantee utility payments, or file a statement that the owner would not guarantee these payments. Schrock didn’t file a disavowal statement until after had already assessed him nearly two grand for unpaid water bills. Slip op. at 3.
He didn’t pay, so when one one of Schrock’s prospective tenants asked for a water connection, the city refused (Texas law prohibits this kind of thing). The prospective tenant walked, and the property “fell into disrepair and was vandalized.” Slip op. at 3.
Inverse condemnation lawsuit followed, “alleging that the City’s refusal to reconnect his utility service violated section 552.0025 [the state statute that prohibits municipalities from conditioning utility hook ups on the satisfaction of outstanding bills from other customers] and caused damage to his property.” Slip op. at 3. The court tried the Penn Central claim, but when Schrock rested, the court issued a directed verdict in favor of the city, because Schrock had failed to adduce evidence of a taking.” Slip op. at 5. The court of appeals reversed, concluding that there was a dispute about the effects of the city’s acts on Schrock’s investment-backed expectations.
The Texas Supreme Court disagreed. It acknowledged that the right to own, use, and enjoy property is a fundamental right, slip op. at 7, but held that the city’s ordinance didn’t “directly” regulate land use. Slip op at 8-9. “The City’s provision of utilities to the property was a service; its regulation of that service was not a regulation of the property itself.” Slip op. at 9. The court noted that “courts historically have limited regulatory takings claims to those arising directly from land-use restrictions.” Slip op. at 8.
Oh really? That might be news to the U.S. Supreme Court, which has not so limited the reach of the regulatory takings doctrine. We can think of a few cases off the top of our head, that didn’t involve the regulation of land uses, such as Horne (USDA regulation of raisins), the IOLTA cases (taking of interest), that one about eagle feathers (regulation of ownership of feathers), Webb’s Fabulous Pharmacies (again with the interest), and a few more. Yes, many regulatory takings cases are land use cases, but no, the takings doctrine is about “private property,” and asking whether a case is about a land-use regulation doesn’t answer the question of whether the regulation or govt action being challenged might result in a taking.
But maybe the Texas court was merely getting at this: the “true nature of Schrock’s claim lies in the City’s wrongful enforcement of its ordinance, not in an intentional taking or damage of his property for public use.” Slip op. at 9. In other words a tort and not a taking (and the city is generally immune from torts).
While we do not foreclose the possibility that enforcement of an ordinance that does not directly regulate land use could amount to a taking, this one does not. A regulation with “a condition of use ‘so onerous that its effect is tantamount to a direct appropriation or ouster’” may impair a property “so restrictively, or intrude on property rights so extensively, that it effectively ‘takes’ the property.” However, “nearly every civil-enforcement action results in a property loss of some kind.” Property damage due to civil enforcement of an ordinance unrelated to land use, standing on its own, is not enough to sustain a regulatory takings claim.
Slip op. at 10 (footnote omitted).
Even if Penn Central were applied, “Schrock did not show that the economic impact of the City’s ordinance so interfered with his property rights that its actions appropriated the property from him.” Slip op. at 12 (footnote omitted).
One Justice concurred to re-emphasize that the Texas Constitution’s property protections are not the same as under the Fifth Amendment:
Parties frequently litigate takings cases as if the two Takings Clauses were the same. For that reason (and maybe others), judicial opinions also sometimes have described the two clauses as if they were the same. I write separately today to emphasize one key point: They are not the same.
Conc. Op. at 2. The concurring opinion exhorted property owners to emphasize the distinction, and present their Texas Constitutional claims “as an alternative rather than duplicative source of law.” Had Schrock done so, “today’s case may have turned out differently. Or maybe not. We cannot know for sure until we have a case like this one that includes arguments tailored to our state constitutional law.” Id. at 5.
Come on litigants and friends, help us help you:
We cannot meaningfully answer those questions unless litigants undertake substantial additional work beyond invoking federal takings doctrines. To analyze a Texas constitutional claim, we would need comprehensive briefing from the parties (and, I would hope, from amici) on the precise scope of the right to compensation that the Texas Constitution affords. Antecedent questions concerning the nature of the property interests at issue, and whether they can support a claim under our Constitution, also would likely require careful attention.
Id. Have at it, property owners, you now have your Texas roadmap.
- Fla App: No Taking, Because COVID Is A Really Good Reason To Shut Bars Down
- Who Let The Dogs In? Property Owners Challenge Virginia’s “Right to Retrieve” Law That Allows Hunters (& Dogs) To Trespass
- “Something is very wrong with this picture.” Cal Ct App Calls Out CEQA (“fearsome weapon”), Tiburon’s “official hostility,” And “combined animus of two levels of local government”