Case Summary: In 2001, the City of Austin (City) condemned property owned by Harry M. Whittington and his family. The City built a parking garage and an Austin Energy chilling plant on the property. A trial court found the condemnation invalid because it was made in bad faith. The Third Court of Appeals upheld the lower court’s decision and held that the bad faith finding was sufficient because there was evidence that the City knowingly misrepresented the necessity of building the chilling plant on the property. The City contends that no bad faith exception exists in Texas jurisprudence and it has no basis in constitutional or statutory law. The Whittingtons respond that the Supreme Court and the courts of appeal uniformly recognize bad faith as an affirmative defense to condemnation and cite cases, including Supreme Court cases, that show the affirmative defenses of fraud, bad faith or arbitrariness can be used to contest the presumption of necessity in a condemnation proceeding.
Another argument is whether Senate Bill 7, passed in the 2005 Legislative Session, applies retroactively to condemnations initiated before 2005. Senate Bill 7 restricts condemnations for economic development and was remedial in nature since it was intended to address the 2005 Supreme Court of the United States case Kelo v. City of New London. The prohibition against retroactive application of laws doesn’t apply to “procedural, remedial or jurisdictional statutes.” Since this statute was intended as a remedial action, it should apply to this case and others that were initiated before 2005.
Significance: Two key legal questions are whether there is a bad faith exception to condemnation proceedings, and whether Senate Bill 7 that passed in 2005 applies retroactively to condemnations initiated before 2005.
TFB Involvement: TFB submitted an amicus brief with the Texas Supreme Court supporting the Whittingtons on Jan. 6, 2011. The TFB amicus brief asserts that bad faith is an affirmative defense to condemnation, and that Senate Bill 7 from the 2005 Legislative Session restricting condemnation for economic development applies retroactively to cases initiated before 2005.
Status: This case was appealed to the Texas Supreme Court and oral argument was heard Sept. 14, 2011. The court reversed the court of appeals’ opinion on Aug. 31, 2012. The court determined that this property was necessary for public use. The court did affirm a key legal point made by TFB that a bad faith exception does exist in condemnation proceedings; however, the court did not find bad faith in this particular instance.
Additionally, the Court affirmed TFB’s second legal point that provisions from SB 7 passed in 2005 do retroactively apply to condemnations initiated before 2005. The Court held that, since the provisions are procedural and remedial and do not affect vested rights, they do apply retroactively in this case.