THE CITY OF KELLER v. JOHN W. WILSON, GRACE S. WILSON, JOHNNY L. WILSON AND NANCY A. WILSON (concurring)

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No. 02-1012

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The City of Keller, Petitioner

v.

John W. Wilson, Grace S. Wilson, Johnny L. Wilson

and Nancy A. Wilson, Respondents

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On Petition for Review from the

Court of Appeals for the Second District of Texas

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 Argued October 19, 2004

Justice O Neill, joined by Justice Medina, concurring.

The Court does an excellent job of explaining the appropriate scope of no-evidence review: the reviewing court must view the evidence in the light favorable to the verdict, crediting favorable evidence if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not. ___ S.W.3d at ___. I agree with this standard and join Parts I through IV of the Court s opinion. But I cannot join Part V, because the Court misapplies the standard that it so carefully articulates by crediting evidence the jury could reasonably disregard.

The City of Keller s Master Drainage Plan required it in part to condemn a 2.8-acre drainage easement on the Wilson property for construction of an earthen channel forty-five feet wide and five feet deep that would funnel water from the adjoining Sebastian property over the Wilson property into the Little Bear Creek Watershed. The City chose not to proceed with this portion of the plan, though, claiming reliance on engineers assurances that the developers installation of retention ponds on neighboring land could prevent flooding. The drainage channel that was actually built ended at the edge of the Sebastian property and funneled water directly onto the Wilsons land, destroying eight acres of farmland worth almost $300,000. The Court holds that the jury was required to believe the City s testimony that it relied on the engineers assurances and thus did not know flooding was substantially certain to occur, stating that when a case requires expert testimony jurors cannot disregard a party s reliance on experts hired for that very purpose without some evidence supplying a reasonable basis for doing so. ___ S.W.3d at ___. Even if this were an appropriate review standardCwhich it hasn t been until todayCI believe the jury had a reasonable basis upon which to disregard the City s professed reliance; the City had a financial incentive to disclaim knowledge of the flooding, and the Wilsons presented some evidence that the City had independent knowledge flooding was substantially certain to occur. In my view, the jury was the proper body to weigh the witnesses credibility and resolve these disputed fact issues. I nevertheless agree that the City cannot be liable for a taking in this case because I believe that a city s mere act of approving a private development plan cannot constitute a taking for public use. Accordingly, I concur in the Court s judgment but not its reasoning.

I

Questions of intent are generally proved only by circumstantial evidence; as the court of appeals in this case aptly noted, defendants will rarely admit knowing to a substantial certainty that given results would follow from their actions, and therefore the jury must be free to discredit defendants protestations that no harm was intended and to draw inferences necessary to establish intent. 86 S.W.3d 693, 704. I agree with the Court that the jury s ability to disbelieve the City s protestations is not itself evidence of liability. ___ S.W.3d at ___. Instead, the jury s ability to weigh the witnesses credibility means that the City s testimony did not conclusively establish its lack of liability. Because liability is not conclusively negated, we must examine the record to see if there is legally sufficient evidence from which the jury could infer that the City knew flooding was substantially certain to occur. I would hold that the evidence of intent that was presented in this case allowed the jury to draw such an inference.

At trial, the Wilsons presented evidence that the City had independent sources of knowledge that flooding was substantially certain to occur. First, they demonstrated that the developers plan itself was flawed. Rather than incorporate a drainage ditch running across the Wilson property, as the City s Master Plan required, the developers plan ended the drainage ditch abruptly at the edge of the Wilson property. The Wilsons expert testified that the plan s implementation would necessarily increase the volume and flow of water across the Wilson property from the rate of fifty five cubic feet per second to ninety three cubic feet per second. 86 S.W.3d at 703. Second, the City was aware that water flowed across the Wilson property before the development commenced, and, as the court of appeals pointed out, the City s Director of Public Works admitted that the City knew the development would increase the water s flow and velocity; specifically, he testified that the City knew the upstream water would be absorbed less and would flow faster due to the removal of trees and vegetation from the developments and from the forty-five-foot-wide earthen channel that ended at the Wilson property s edge. Id. at 705. Finally, there was evidence that the City received a letter warning that the developers plan would subject the Wilson property to flooding.

While I believe there is some evidence that the City knew flooding was substantially certain to occur, there is also some evidence that it did not. City officials testified that they relied on the representations of engineers who assured them retention ponds could substitute for a drainage easement and the Wilson property would not be damaged. If the jury accepted this evidence as true, I agree that the intent element would be negated, which would preclude the City s takings liability. But I do not agree that the jury was bound to accept the City s testimony as true. The Court itself notes that jurors may choose to believe one witness and disbelieve another, and that [c]ourts reviewing all the evidence in a light favorable to the verdict thus assume that jurors credited testimony favorable to the verdict and disbelieved testimony contrary to it. ___ S.W.3d at ___. This statement mirrors our prior jurisprudence, which has long provided that a jury has several alternatives available when presented with conflicting evidence because it may believe one witness and disbelieve others, may resolve inconsistencies in the testimony of any witness, and may accept lay testimony over that of experts. McGalliard v. Kuhlmann, 722 S.W.2d 694, 697 (Tex. 1986) (citations omitted).

As the Court itself states, jurors are required to credit undisputed testimony only when it is clear, positive, direct, otherwise credible, free from contradictions and inconsistencies, and could have been readily controverted. ___ S.W.3d at ___. The City s testimony does not meet this standard. The City Manager did testify that the City would not have approved the developments unless [it was] assured that the developments did not increase the velocity of water or the flow of water onto the neighboring property. 86 S.W.3d at 706. But the Wilsons disputed whether the City s protestations were credible, pointing out that the City had a powerful incentive to profess a lack of knowledge through reliance on the engineers assurances because it would then avoid the considerable expense of compensating the Wilsons for the property that would otherwise have been condemned under the Master Drainage Plan. See id. at 705.

Moreover, the Court s conclusion that juries cannot disregard a party s reliance on expert opinions is not consistent with our jurisprudence. The Court cites two cases for this proposition, but neither supports the Court s analysis; instead, both cases support the conclusion that the jury, as the finder of fact, should appropriately resolve factual disputes regarding a party s reliance on hired experts. Provident Am. Ins. Co. v. Casta eda, 988 S.W.2d 189, 194-95 (Tex. 1998); State Farm Lloyds v. Nicolau, 951 S.W.2d 444, 448-50 (Tex. 1997).

In Casta eda, a bad-faith insurance case, there was no question that the insurer had relied on an expert s assurances and thus no dispute about whether the jury could have disregarded that evidence. Casta eda, 988 S.W.2d at 194-95. In that case, we performed a traditional legal sufficiency analysis and concluded there was no evidence that the defendant acted in bad faith. Id. at 194. We did state that reliance on an expert s opinion will not preclude a finding of bad faith if the expert s opinion was unreliable and the insurer knew or should have known that to be the case. Id. However, we did not hold that the jury must credit a party s testimony that it relied on an expert.

We reiterated this point in Nicolau, another bad-faith insurance case. There, the Court noted we have never held that the mere fact that an insurer relies upon an expert s report to deny a claim automatically forecloses bad faith recovery as a matter of law, and again concluded that purported reliance upon an expert s report, standing alone, will not necessarily shield the defendant from liability. Nicolau, 951 S.W.2d at 448. The Court conceded that [w]ere we the trier of fact in this case, we may well have concluded that [the insurer] did not act in bad faith, but concluded that the determination is not ours to make because the Constitution allocates that task to the jury and prohibits us from reweighing the evidence. Id. at 450 (citing Tex. Const. art. I, 15, art. V, 6, 10).

The same is true in this case. The jury was not required to believe that the City did not know flooding was substantially certain to occur because it relied on assurances to the contrary; as a reviewing Court, we should assume that jurors credited testimony favorable to the verdict and disbelieved testimony contrary to it. ___ S.W.3d at ___. Such credibility determinations are uniquely suited and constitutionally committed to the fact finder. See Tex. Const. art. I, 15, art. V, 6; see also Nicolau, 951 S.W.2d at 450.

II

Although I disagree with the Court s conclusion that the jury was required to credit the City s testimony, I agree with its judgment in the City s favor because, in my view, the City s mere approval of the private development plans did not result in a taking for public use, as the constitutional standard requires for a compensable taking. Tex. Const. art. I, 17. The City did not appropriate or even regulate the use of the Wilsons land, nor did it design the drainage plan for the proposed subdivisions. Instead, the City merely approved subdivision plans designed by private developers, and that design included inadequate drainage capabilities. The City argues, and I agree, that its mere approval of private plans did not transfer responsibility for the content of those plans from the developers to the City. Municipalities review subdivision plats to ensure that subdivisions are safely constructed and to promote the orderly development of the community. City of Round Rock v. Smith, 687 S.W.2d 300, 302 (Tex. 1985); see Tex. Loc. Gov t Code 212.002. Such a review is intended to protect the city s residents; it is not intended to transfer responsibility for a flawed subdivision design from the developers to the municipality. See, e.g., City of Round Rock, 687 S.W.2d at 302; see also Cootey v. Sun Inv., Inc., 718 P.2d 1086, 1091 (Haw. 1986) (holding that [t]he permit process by which the County approves or disapproves the development of a proposed subdivision reflects an effort by government to require the developer to meet his responsibilities under the subdivision rules, regulations, and laws, and that the primary responsibility of providing an adequate and safe development rests with . . . the developer, and not with the County ).

Because the primary responsibility for a development s design rests with the developer, and because the plat-approval process does not transfer such responsibility to the municipality, mere plat approval cannot be a basis upon which to predicate takings liability. We have held that, to be liable for a taking, a governmental entity must perform certain acts in the exercise of its lawful authority . . . which resulted in the taking or damaging of plaintiffs property, and which acts were the proximate cause of the taking or damaging of such property. State v. Hale, 146 S.W.2d 731, 736 (Tex. 1941) (emphasis added). In this case, flooding resulted from the developers defective drainage design, not from the City s approval of the plat; thus, the City s approval was not the proximate cause of the damage to the Wilson property.

Other courts, faced with similar facts, have also concluded that a governmental entity cannot be liable for a taking when its only action is to approve a private development plan. See Phillips v. King County, 968 P.2d 871, 879 (Wash. 1998); see also Pepper v. J.J. Welcome Constr. Co., 871 P.2d 601, 606 (Wash. Ct. App. 1994). In Phillips, the Washington Supreme Court observed that there is no public aspect to a private development and concluded that [i]f the county or city were liable for the negligence of a private developer, based on approval under existing regulations, then the municipalities, and ultimately the taxpayers, would become the guarantors or insurers for the actions of private developers whose development damages neighboring properties. Phillips, 968 P.2d at 878. The court in Pepper similarly examined an inverse condemnation claim based upon a county s approval of private developments with defective drainage plans; it, too, concluded that the county s approval did not cause the resultant flooding and did not result in an unconstitutional taking. Pepper, 871 P.2d at 606. The court noted that the flooding was not the result of the County appropriating or regulating their use of the land, and held that [t]he fact that a county regulates development and requires compliance with road and drainage restrictions does not transform a private development into a public project. Id. The court concluded that because land use regulation of [the plaintiffs ] property did not cause the damages, no inverse condemnation was involved. Id. I am persuaded by the reasoning of the courts in Phillips and Pepper, and would similarly conclude that the City s plat approval in this case did not amount to an unconstitutional taking as a matter of law.

The court of appeals in this case advanced an alternative reason for affirming the trial court s judgment, suggesting that even if the City could not be liable for merely approving a subdivision plat, it could nevertheless be held liable for failing to condemn a drainage easement across the Wilson property. 86 S.W.3d at 707. The court of appeals stated that the City chose not to condemn any of the Wilson property, but instead allow[ed] the water flowing from the Sebastian easement to discharge, uncontrolled, across the Wilson property. Id. As noted above, however, it was the developers planCnot the City s actionsCthat allowed the water to flood the Wilson property. Because the City s action did not cause the flooding, I disagree that the City s failure to condemn an easement is relevant to takings liability. If the City were responsible for the flooding but chose not to condemn the property, it might be subject to inverse-condemnation liability. See Tarrant County Reg l Water Dist. v. Gragg, 151 S.W.3d 546, 554 (Tex. 2004) ( When the government takes private property without first paying for it, the owner may recover damages for inverse condemnation. ). However, if a governmental entity s actions are not the proximate cause of the taking or damaging of the property, then the entity cannot be liable for a taking. Hale, 146 S.W.2d at 736. Accordingly, the entity need not condemn property merely because a private entity is causing damage. This rule does not leave owners of flooded property without a remedy; when a private development floods neighboring land, the owner of the damaged property will ordinarily have recourse against the private parties causing the damage. See Tex. Water Code 11.086(a), (b) (providing that [n]o person may divert or impound the natural flow of surface waters in this state . . . in a manner that damages the property of another by the overflow of the water diverted or impounded and that [a] person whose property is injured by an overflow of water caused by an unlawful diversion or impounding has remedies at law and in equity and may recover damages occasioned by the overflow ). Because the developers design of the platCnot the City s approvalCcaused the flooding damage in this case, I would hold that the City cannot be held liable for an unconstitutional taking under Article I, Section 17 of the Texas Constitution.

III

Because I believe the Court fails to give due regard to the jury s right to make credibility determinations, I cannot join Part V of the Court s opinion. But because I conclude that the City s mere act of approving a private development plan did not cause the Wilson property to be taken, damaged or destroyed for or applied to public use, Tex. Const. art. I, 17, I agree that the City cannot be held liable for a taking in this case. Accordingly, I concur in the Court s judgment.

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Harriet O Neill

Justice

OPINION DELIVERED: June 10, 2005