Clear Lake City Water Authority v. Clear Lake Country Club, L.P. and Plainfield Offshore Holdings XI, Inc.

Opinion issued February

24, 2011

In The

Court of

Appeals

For The

First District

of Texas

————————————

NO. 01-09-00198-CV

———————————

CLEAR LAKE CITY WATER AUTHORITY , Appellant

V.

CLEAR LAKE COUNTRY CLUB, L.P.

and PlainfielD offshore holdings xi, inc. , Appellees

On Appeal from the County Civil Court at Law No. 1

Harris County, Texas

Trial Court Case No. 890,796

O P I N I O N

The Clear Lake City Water

Authority (“the Water Authority”) appeals the trial court’s judgment dismissing

its condemnation action in which the Water Authority sought to acquire a

178-acre defunct golf course owned by Clear Lake Country Club, L.P. (“the Country

Club”) for the purpose of constructing a storm water detention facility. On appeal, the Water Authority raises three

issues with a number of sub-points. We

address the following dispositive issue raised by the Water Authority: whether

the trial court erred when it denied the Water Authority’s motion for judgment

notwithstanding the verdict which challenged the jury’s findings that the Water

Authority’s determination to take the property for detention purposes was fraudulent

and arbitrary and capricious.

We reverse and remand.

Background

The Water Authority is a

water control and improvement district created pursuant to article XVI, section

59, of the Texas Constitution. See Tex.

Const. art. XVI, § 59. The Water

Authority’s responsibilities include the control and storage of storm and flood

water. See Tex. Water Code Ann.

§ 51.121 (Vernon 2008). To

accomplish its defined objectives, the Water Authority has the legislative

right to acquire land by condemnation. See Tex.

Water Code Ann. § 49.222(a) (Vernon 2008).

In the 1960s, Friendswood

Development Company, a company owned by Exxon Land Development, developed a master-planned

residential community in Clear Lake City.

The community is located in the geographical district controlled by the

Water Authority. The master-planned community

included a 178-acre tract of property (“the Property”) on which a golf course

was constructed. Deed restrictions were

placed on the Property prohibiting it from being used as anything other than a golf

course or other recreational facility until the deed restrictions expire in 2021.

In January 2002, the Country

Club purchased the Property for $2.3 million.

For the next several years, the Country Club operated the Property as a golf

course. In early 2005, the golf course

became unprofitable. The Country Club

announced that it would be closing the facility, seeking removal of the deed

restrictions, and selling the Property for residential and commercial

development.

In response to the

announcement, the Clear Lake City Civic League (the “Civic League”) a local

civic group, formed a subcommittee named the Green Space Preservation Committee

(the “Green Space Committee”) to oppose redevelopment of the Property and to preserve

it as a green space. At the time, the

Water Authority’s board of directors (“the Board”) consisted of President Gayle

Yoder, Vice President John Branch (“Branch”), Secretary Bob Savely (“Savely”),

Vince Johnson, and John Ferguson. See Tex.

Water Code Ann. §§ 49.051, 49.053, 49.102. Two of the Water Authority’s directors,

Branch and Savely, were also co-chairs of the Green Space Committee.

In the spring of 2005, Savely

presented to the Board a draft resolution providing that the Authority

unanimously and wholeheartedly supported the Green Space Committee’s mission. The Board members generally indicated support

for the resolution but decided to have the Water Authority’s attorney review it. A board vote was never taken on the

resolution.

The Green Space Committee believed

that the abandoned golf course served as a de facto detention pond for the area

because, when it rained, water would pond on the Property. In April 2005, Green Space Committee

co-chair, Katie Chementi, contacted Larry Dunbar, a licensed engineer-hydrologist

and attorney, to conduct a study to determine whether this theory was

correct. Dunbar provided the Green Space

Committee with a proposed engagement agreement.

The proposal indicated that the primary purpose of Dunbar’s work would

be to study the flooding conditions associated with two creeks running through

the Property and to determine the potential effect of developing the Property.

Ultimately, the Green Space

Committee did not retain Dunbar.

Instead, Dunbar was hired by the Water Authority as an engineering

consultant to provide hydrology services similar to those he had proposed to

the Green Space Committee. In July 2005,

Dunbar prepared a report discussing the flooding associated with the two creeks

and regarding the effect of redeveloping the Property. Nothing in Dunbar’s July report indicated a

need for regional detention ponds to be constructed. The following month, an engineering firm

hired by the Country Club prepared a report regarding the drainage issues

associated with redeveloping the Property.

The report indicated that construction of detention facilities on the

Property would alleviate any increased drainage resulting from redevelopment and

could help flooding in the area generally.

In September 2005, Dunbar prepared

a report establishing more stringent standards for redevelopment of the

Property. That same month, the Water

Authority amended its policies regarding drainage and flood for new development

to also apply to redevelopment of property.

In October 2005, the Country Club

closed the golf course on the Property.

At the request of the Board, Dunbar

conducted a broader study of flooding in the Water Authority’s district, specifically

flooding along Horsepen Bayou, the larger waterway into which the two creeks on

the Property flow. A large portion of

the Horsepen Bayou watershed lies within the Water Authority’s boundaries.

To alleviate flooding in the

district, Dunbar recommended that regional detention facilities be constructed

on the Property and also on another property south of Ellington Field. Dunbar presented this recommendation to the

Water Authority at a November 10, 2005 board meeting in an oral report and in a

PowerPoint presentation.

After Dunbar’s presentation, the

Board unanimously voted to pass a resolution (“the Resolution”) directing the

acquisition of the Property, and of the property near Ellington Field, by voluntary

acquisition or, if necessary, through condemnation proceedings, to establish storm

water detention facilities. The text of

the Resolution indicates: (1) the Board had consulted with staff and

consultants to study existing flooding problems, (2) the Water Authority had received

information that substantial detention facilities were necessary to address the

Water Authority’s existing flood-prone conditions; (3) the two tracts

identified are “apparently available and currently unoccupied tracts of land

capable of accommodating such detention facilities in a manner most rationally

related to the needs of the locations;” (4) the detention facilities “would

mitigate current and future flooding problems in a number of subdivisions in

Clear Lake City within the [Water] Authority;” and (5) the establishment of the

flood control facilities will “significantly decrease current flooding

situations” and “will likely lower the high water condition of Horsepen Bayou

some two to three feet in 100 year flood events thereby reducing the downstream

impact.”

Dunbar and Branch met with the

Harris County Flood Control District and the City of Houston regarding the

detention facilities. At the request of

those entities, Dunbar prepared a written report of his PowerPoint presentation

in September 2006.

On November 13, 2006, the Country

Club filed suit against Exxon Land Development seeking to have the deed restrictions

on the Property, precluding residential and commercial development of the

Property, declared unenforceable (the “Exxon Suit”). The Civic League and the Water Authority

intervened in the Exxon Suit. The Water

Authority and the Civic League were represented in the suit by the same law

firm of Wilson, Cribbs & Goren, P.C.

During the Texas Legislature’s 2007

session, House Bill 3232 (“HB 3232”), was introduced to address the

redevelopment of closed golf courses. [1] HB 3232 required land formerly used as golf

courses to be subjected to heightened standards for re-platting, including (i)

special public hearings, (ii) findings regarding the sufficiency of

infrastructure, and (iii) super-majority approval from the respective

municipality if just 20 percent of adjacent homeowners protested the re-plat in

writing. See Tex. Loc. Gov’t Code Ann .

§ 212.0155 (Vernon Supp. 2010).

When HB 3232 was scheduled for

hearing before the House’s Land and Natural Resources Committee, Branch

testified before the committee in support of the legislation. Branch did so in his capacities as a

representative of the Water Authority and as a representative of the Civic

League.

On April 18, 2007, the Water

Authority filed a petition in the trial court seeking to obtain the Property by

condemnation. The Water Authority

alleged that, since early 2005, it had engaged “in a deliberate and well

designed process to further reduce and, if possible, eliminate the events and

effects of flooding within its geographical boundaries.” It asserted that, pursuant to the November

10, 2005 resolution enacted by its board, “the Property was designated as part

of acreage to be utilized to reduce and, if possible, eliminate flooding

conditions.” The petition continues,

The interest sought to be

acquired by [the Water Authority] in the Property will be used for a purpose

for which [the Water Authority] possess the power of eminent domain; namely,

the construction, maintenance, and operation of facilities for the purpose of

storm water detention to reduce and control flooding to the maximum extent

possible.

. . . .

[The Water Authority] and

the owner of the Property have been unable to agree on the value of the land or

the damages. [The Water Authority] has

heretofore in good faith attempted to reach such agreement with [the Country

Club] and further attempts by [the Water Authority] to agree with [the Water

Authority] would be futile. Therefore,

[the Water Authority] has no recourse but to seek condemnation of the Property.

The trial court appointed three

special commissioners to determine the value of the Property. Following a hearing, the commissioners found

that the market value of the Property was $14,132,000. The Water Authority filed an objection to the

commissioners’ award asserting that “the amount of the damages awarded by the

Special Commissioners is grossly excessive in that it requires [the Water

Authority] to pay [the Country Club] far more than the fair market value of the

land taken.” The Water Authority further

asserted that the commissioners “failed to take into account the Deed

Restrictions upon the lands being condemned.”

The Water Authority requested “that this cause be tried and determined .

. . as in other civil cases.”

The case was set for a

jury trial. Before trial, the trial

court determined, as a matter of law, that the purpose for condemning the

Property — to establish storm water

detention facilities —wa s a public

use. The trial court also determined, as

a matter of law, that the Water Authority’s Board had determined that a public

necessity existed to take the Property to establish water detention facilities.

Although the parties stipulated that

all statutory prerequisites to condemnation had been satisfied, the Country

Club asserted, as affirmative defenses, that the Water Authority’s

determination that it was necessary to acquire the Property for detention

purposes was fraudulent and arbitrary and capricious. At trial, the Country Club argued and offered

evidence to show that the true reason for the Water Authority’s condemnation

was not storm water detention but to prevent redevelopment of the Property.

The trial lasted for one

month. At the charge conference, the

Water Authority offered numerous objections to the jury charge. Among the objections was the Water

Authority’s argument that the Country Club had to meet a heightened evidentiary

burden of proof to prevail on its allegations of arbitrariness and fraud. The Water Authority asserted that the extent

to which property is taken by condemnation is a legislative question, not a

judicial one, thus implicating separation of powers concerns. The Water Authority also objected to a number

of the trial court’s definitions and instructions, including the trial court’s

definition of fraud and arbitrariness.

The jury ultimately agreed with the

Country Club, finding that the Water Authority had acted fraudulently and

arbitrarily when it decided that the Property should be taken for the purpose

of constructing a storm water detention facility. The jury also determined that the fair market

value of the Property was $5,100,000. The

jury further found that the Country Club had incurred $1,188,000 in attorney’s

fees, $126,000 in appraiser’s fees, and in $116,000 in “other expenses.”

The Water Authority filed a motion

for judgment notwithstanding the verdict (JNOV) asserting that no evidence

supported the jury’s findings that the Water Authority had acted fraudulently

and acted arbitrarily and capriciously when it made its determination to acquire

the Property. The trial court denied the

motion.

Based on the jury’s

verdict, the trial court rendered judgment dismissing the Water Authority’s

condemnation proceeding and awarding the Country Club $1,430,000, the sum of

its attorney’s and appraiser’s fees, and other expenses. This appeal followed. On appeal, the Water Authority raises three

issues containing a number of sub-points. [2]

Denial of the Water Authority’s Motion

for JNOV

Among its appellate challenges, the

Water Authority asserts that the trial court erred when it denied its motion

for JNOV. The Water Authority asserts

that legally-insufficient evidence supports the jury’s findings that it acted

fraudulently and arbitrarily and capriciously when it determined that

condemnation of the Property was necessary for storm water detention.

A. Governing Legal Principles

1. Standard

of Review

A trial court may disregard a jury’s findings and grant a motion for

judgment notwithstanding the verdict only when a directed verdict would have

been proper. See Tex. R. Civ. P . 301; Fort Bend County Drainage Dist. v. Sbrusch ,

818 S.W.2d 392, 394 (Tex. 1991); B & W Supply, Inc. v. Beckman , 305

S.W.3d 10, 16 (Tex. App.—Houston [1st Dist.] 2009, pet. denied). We review challenges to a trial court’s

ruling on a motion for JNOV under the same legal-sufficiency test applied to

appellate no-evidence challenges. See Tanner v. Nationwide Mut. Fire Ins. Co.,

289 S.W.3d 828, 830 (Tex. 2009); City of

Keller v. Wilson , 168 S.W.3d 802, 822-23, 827 (Tex. 2005). Applying that standard, we consider the

evidence in the light most favorable to the verdict and indulge every

reasonable inference that would support it. City of

Keller , 168 S.W.3d at 822 . We credit

favorable evidence if reasonable jurors could, and disregard contrary evidence

unless reasonable jurors could not. Tanner , 289 S.W.3d at 830 . We also must be cognizant that, “[e]ven though

the evidence is viewed in the light most favorable to the verdict, it cannot be

considered in isolated bits and pieces divorced from its surroundings; it must

be viewed in its proper context with other evidence.” AutoZone,

Inc. v. Reyes , 272 S.W.3d 588, 592 (Tex. 2008) (citing City of Keller , 168 S.W.3d at 827 )

If more than a scintilla of probative evidence supports the finding, the

legal sufficiency challenge fails. Coastal Transp. Co. v. Crown Cent. Petroleum

Corp ., 136 S.W.3d 227, 233 (Tex. 2004). More than a scintilla of evidence exists when

the evidence “rises to a level that would enable reasonable and fair-minded

people to differ in their conclusions.” Transp. Ins. Co. v. Moriel , 879 S.W.2d

10, 25 (Tex. 1994). In contrast,

evidence that creates no more than “a mere surmise or suspicion of its

existence” is only a scintilla and, thus, no evidence. Ford

Motor Co. v. Ridgway , 135 S.W.3d 598, 601 (Tex. 2004) (quoting Kindred v. Con/Chem, Inc ., 650 S.W.2d

61, 63 (Tex. 1983)).

2. Relevant

Condemnation Law

The applicable eminent domain

statute in this case provides,

A [water] district . . . may

acquire by condemnation any land, easements, or other property inside or

outside the district boundaries . . . necessary for water, sanitary sewer,

storm drainage, or flood drainage or control purposes or for any of its

projects or purposes, and may elect to condemn either the fee simple title or a

lesser property interest.

See Tex. Water Code Ann. § 49.222(a).

With regard to condemnation

generally, a governmental entity may prevail on an eminent domain claim only if

the condemnation is for a “public use.” Whittington v. City of Austin (“Whittington

I”) , 174 S.W.3d 889, 896 (Tex. App. — Austin 2005, pet. denied). “There

are two aspects to the ‘public use’ requirement. First, the condemnor must intend a use for the

property that constitutes a ‘public use’ under Texas law. Second, the condemnation must actually be

necessary to advance or achieve the ostensible public use.” Id .

We have previously recognized, “The

condemnor’s discretion to determine what and how much land to condemn for its

purposes — that is, to determine public

necessity — is nearly absolute.” Malcomson

Road Util. Dist. v. Newsom , 171 S.W.3d 257, 268 (Tex. App.—Houston [1st

Dist.] 2005, pet. denied). When, as

here, a statute vests a governmental entity with discretionary authority to

condemn, the entity’s determination of public necessity is presumptively

correct, absent proof by the landowner of the entity’s fraud or proof that the

condemning authority acted arbitrarily or capriciously in its condemnation of

the property. See FKM P’ship, Ltd. v. Bd. of Regents of the Univ. of Houston Sys .,

255 S.W.3d 619, 629 (Tex. 2008); see also

Hous. Auth. of City of Dallas v. Higginbotham , 143 S.W.2d 79, 88 (Tex. 1940) (“The law is

well established in this state that where the power of eminent domain is

granted, a determination by the condemnor of the necessity for acquiring

certain property is conclusive in the absence of fraud.”); Whittington I , 174 S.W.3d at 898 (explaining that once presumption

of necessity arises, landowner can contest fact of necessity only by

establishing affirmative defenses such as fraud, bad faith, or arbitrariness). In short, without a showing that the

condemnor acted fraudulently, in bad faith, or arbitrarily, the presumption

that the taking was necessary is conclusive.

See Anderson v. Teco Pipeline Co .,

985 S.W.2d 559, 565 (Tex. App. — San Antonio

1998, pet. denied).

Whether the condemnor acted

fraudulently, in bad faith, or arbitrarily is a fact question that may properly

be decided by a jury. See id . at 566. Because they are affirmative defenses, the

landowner has the burden to show that the condemnor acted arbitrarily or

fraudulently. See Malcomson Road Util. Dist. , 171 S.W.3d at 269 (citing Ludewig v. Houston Pipeline Co ., 773

S.W.2d 610, 614 (Tex. App. — Corpus

Christi 1989, writ denied) and Snellen v.

Brazoria County , 224 S.W.2d 305, 310 (Tex. Civ. App. — Galveston 1949, writ ref’d n.r.e.)). The landowner can only establish these

affirmative defenses by negating “any reasonable basis” for determining what

and how much land to condemn. See id. ; Wagoner v. City of Arlington , 345 S.W.2d 759, 763 (Tex. Civ. App. — Fort Worth 1961, writ ref’d n.r.e.).

With these principles in mind, we

review whether the trial court erred when it denied the Water Authority’s

motion for JNOV.

B. Analysis

The Water Authority

contends that the evidence is legally insufficient to support the jury’s

findings that its decision to condemn the Property was fraudulent and arbitrary

and capricious. With respect to whether

the Water Authority acted arbitrarily and capriciously, the jury was asked, “From

a preponderance of the evidence, do you find that the Water Authority’s action

in determining to take the Property for detention purposes was arbitrary and

capricious?” The jury was instructed, “‘Arbitrary

and capricious’ means willful and unreasoning action, action without consideration

and in disregard of the facts and circumstances that existed at the time

condemnation was decided upon, or within the foreseeable future.” The jury responded affirmatively.

With respect to whether the Water

Authority acted fraudulently, the jury was asked, “From a preponderance of the

evidence, do you find that the Water Authority’s action in determining to take

the Property for detention purposes was fraudulent?” The jury was instructed, “‘Fraudulent’ means

any act, omission or concealment, which involves a breach of legal duty, trust

or confidence, justly reposed, and is injurious to another, or by which an

undue and unconscientious advantage is taken of another.” [3] Again, the jury responded affirmatively.

To support

its affirmative defenses, the Country Club offered evidence that can be divided

into three general categories: (1) evidence that Dunbar’s recommendation to

construct storm water detention facilities on the Property lacked a sound basis

in hydrological engineering; (2) evidence that the Water Authority lacked the

financial information and funding to construct the detention facilities; and

(3) evidence, including statements attributable to the Water Authority and its

Board members, showing that the Water Authority desired to prevent

redevelopment of the Property. We

discuss each category of evidence in turn.

1. Dunbar’s Recommendation

The Water Authority asserted that it based its decision to

condemn the Property for the purpose of storm water detention on the

recommendation and analysis of professional engineer and hydrologist Dunbar,

whom the Water Authority had hired as a consultant regarding flooding issues

within its district. Thus, to show that

the Water Authority acted arbitrarily or fraudulently when it decided to take

the Property, the Country Club was required to show that it did not have a reasonable

basis to rely on Dunbar’s recommendation.

See Malcomson Road Util. Dist. , 171 S.W.3d at 269 ; Wagoner ,

345 S.W.2d at 763 . In other words, if it

was reasonable for the Water Authority to follow Dunbar’s recommendation

regarding taking the Property for storm water detention, then the Water

Authority did not act arbitrarily or fraudulently. See Malcomson

Road Util. Dist. , 171 S.W.3d at 269 ; Wagoner ,

345 S.W.2d at 763 .

At trial, the evidence showed that

land within the Water Authority’s boundaries lie within either the 100-year or the

500-year flood plain. Nearly 4,000 of

the residences in the district lay within the 500-year flood plain. The evidence further showed that residential

flooding has occurred within the district and is a continuing concern.

It is not disputed that the Water Authority has not only the

right, but the duty to take action to control flood waters within its

boundaries. See Tex. Water Code Ann. § 51.121; see also Tex. Water Code

Ann. § 49.222. In this

regard, the jury in this case was instructed as follows:

The Water Authority has the right and duty to control

flood waters. Since the power to control

flood waters exists, it carries with it the usual established and well

recognized methods of control. One such

method is storage reservoirs or retarding basins for impounding flood waters, controlling

the streams and preventing floods.

As mentioned, Dunbar gave an oral report along with a

PowerPoint presentation to the Water Authority at the November 10, 2005 board

meeting. In his presentation, Dunbar

recommended that the Property be used as a storm water detention facility t o alleviate flooding in the district. Following Dunbar’s presentation, the Board

passed the Resolution to obtain the Property to construct storm water detention

facilities.

During his presentation to the

Board, Dunbar showed maps from the Tropical Storm Allison Recovery Project

depicting the extent of the 100 and 500 year flood plains of Horsepen Bayou, an

area that lies within the Water Authority’s district. Dunbar indicated that 1,727 acres of storage

capacity for storm-water runoff could be created by converting the 178-acre

golf course into a series of interconnected detention ponds.

The evidence showed that Dunbar

presented a general description of the configuration of the proposed detention ponds.

He explained to the Board that the Property

would be excavated to an average depth of 11 feet, with three-to-one side

slopes. Dunbar further explained that

2,047 acres of surface area would drain into the ponds. Using the maps as visual aids, Dunbar showed

how the area would drain into the detention ponds. He told the Board that the golf course pond

system would reduce flows into Horsepen Bayou downstream of El Dorado Boulevard

by 2,500 cubic feet per second, or 20 percent.

This would reduce 100-year flood levels in Horsepen Bayou by

approximately 1.5 feet and in Armand Bayou, into which Horsepen Bayou flows, by

approximately 2,300 cubic feet per second, or by 10 percent.

At trial, the Country Club offered the

testimony of Andrew Yung, its engineering hydrologist expert. Yung had experience in both the public and

private sector working in the field of hydrology, including public sector experience

planning regional detention basins.

Yung reviewed numerous documents, including Dunbar’s reports

and his PowerPoint presentation, to analyze whether the Water Authority’s

determination to condemn the Property for storm-water detention was supported

by sound engineering analysis. For a

number of reasons, Yung concluded it was not.

In support of his conclusion, Yung noted that the properties in the

vicinity of the golf course are outside the 100-year floodplain. He pointed out that Dunbar’s July 2005 report

demonstrated that the neighborhoods around the Property experience flooding due

to inadequate storm-sewer systems, not lack of detention capacity. According to Yung, Dunbar provided no

analysis quantifying the benefits of a regional detention facility to the areas

surrounding the Property.

Yung also stated that Dunbar’s reports

were inadequate because they were conceptual only. Yung opined that the reports did not contain

information justifying the need for the proposed detention facilities or the

type of project detail agencies ordinarily would require before initiating the

acquisition of property for detention purposes. Yung testified that the Dunbar’s reports lacked

analysis regarding the design of hydraulic structures necessary to divert

drainage of 1,649 acres uphill from one of the creeks on the Property and lacked

evidence that the county flood control district would authorize such a

diversion. Yung further opined that

Dunbar’s analysis lacked any hydraulic analysis to support his assertions

regarding the impact that the proposed detention facilities would have on the

100-year floodplain and flood levels along Horsepen Bayou.

On appeal, the Country Club also points out that Dunbar’s own

trial testimony shows that his PowerPoint presentation and September 2006,

report did not address (i) the necessary drainage interconnections, (ii) the

drainage design to allow water to drain uphill, (iii) the drainage conduit to

connect detention facilities across El Dorado Boulevard, and (iv) the drainage

outlet structures to connect the detention to the Harris County Flood Control

District’s ditches. Dunbar also

testified that he did not estimate the cost of the detention facility for the

Water Authority, and he did not prepare specific designs for the detention facility.

Yung also testified that the detention

facility would benefit only 15 to 20 homes along Horsepen Bayou. He believed that the better, more

cost-efficient option would be to buy out these homes. For this reason, Yung characterized the Water

Authority’s decision to construct the detention facility on the Property as

“excessive.”

In contrast, Dunbar, Branch, and

another hydrology expert, Dr. Philip Bedient, a professor at Rice University,

hired by the Water Authority, opined that the “conceptual plan” presented by

Dunbar to the Board was sufficient to support the decision by the Water

Authority to obtain the Property for construction of a detention facility. To address Yung’s criticism that Dunbar had

not done a hydraulic study of Horepen Bayou to support his recommendation, Dr.

Bedient testified that the type of study Yung claimed was needed would cost the

Water Authority several hundred thousand dollars and was unnecessary to support

the Water Authority’s decision.

A difference in opinion between the Country

Club’s hydrology expert and the Water Authority’s experts regarding what

constitutes a sufficient basis in engineering to support the Board’s Resolution

to take the property for detention purposes does not support a finding that the

Water Authority acted in a arbitrary or fraudulent manner. When “there is room for two opinions, an

action cannot be deemed arbitrary when it is exercised honestly and upon due

consideration, regardless of how strongly one believes an erroneous conclusion

was reached.” Ludewig , 773 S.W.2d at 614 ; see

Meaney v. Nueces County Navigation Dist.

No. 1 , 222 S.W.2d 402, 405, 408 (Tex. Civ. App. — San Antonio 1949, writ ref’d)

(explaining with regard to determining whether condemning authority’s action

was arbitrary and fraudulent that “mere differences of opinion do not raise

fact issues for a jury in cases of this character”); Wagoner , 345 S.W.2d at 764 (“Neither may it be stated that in said

connection a condemnee has met the requisites of proof sufficient to present a

judicial issue where the record shows that there was room for two opinions, at

the time the condemning authority determined upon the basis of one of such

opinions that the land sought should be condemned.”).

The record shows that the Water

Authority hired Dunbar as a consultant regarding flooding issues. In July 2005, the Water Authority asked

Dunbar to expand the scope of his work beyond the Property and address flooding

concerns along Horsepen Bayou. As part

of his assignment, Dunbar made recommendations to the Board regarding how to

address the flooding problems in the district.

Dunbar testified that constructing the detention facility on the

Property was his idea. He believed that

it was the best solution to address the flooding problems. On November 10, 2005, Dunbar made a

presentation to the Board at which he explained the benefits of building the

detention facility on the Property. After

listening to the presentation, the Board voted to adopt the Resolution

authorizing the taking of the Property for storm water detention. The Country Club’s evidence questioning the

soundness of the underlying engineering analysis does not show that the Water Authority’s

reliance on the Dunbar’s recommendation was not rational or legitimate.

No evidence was presented that the

detention facilities will not benefit the constituents of the Water Authority’s

district. Rather, the Country Club,

through Yung, asserts that the taking of the property is “excessive” in

comparison to the benefit reaped. Contrary

to the Country Club’s position, a showing that alternate plans are feasible or

better does not make the condemnation determination fraudulent or arbitrary or

capricious. See Zboyan v. Far Hills Util. Dist ., 221 S.W.3d 924, 930 (Tex. App. — Beaumont 2007, no pet.); Ludewig , 773 S.W.2d at 614 ; Wagoner , 345 S.W.2d at 763 . Courts afford broad discretion to those in

whom the power of eminent domain is vested. See Pizzitola

v. Houston Indep. Sch. Dist ., No. 13-05-249-CV, 2006 WL 1360838 , at *4

(Tex. App.—Corpus Christi May 18, 2006, no pet.) (mem. op.) (citing Webb v. Dameron , 219 S.W.2d 581, 584

(Tex. Civ. App. — Amarillo 1949, writ ref’d n.r.e.)). When property is taken for a legitimate

reason, the taking is not arbitrary even if the possibility of utilizing the

purpose for which it is taken is “remote.”

See Ludewig , 773 S.W.2d at 614–15

(upholding trial court’s decision to disregard jury’s arbitrariness finding

against condemnor when property taken for legitimate purposes of maintenance,

even though condemnor admitted that needing to conduct maintenance likely a

remote possibility).

There is also no evidence that the Water Authority has ever admitted

that the Property is not needed as a detention facility or that it has no

intention of using the Property for storm water detention. In this regard, this case is distinguishable

from others in which jury findings of arbitrariness or fraud have been

upheld. See, e.g., City of Austin v. Whittington (“Whittington II”) , No.

03-07-00729-CV, 2010 WL 567153, at *3 (Tex. App.—Austin Feb. 18, 2010, pet.

filed) (mem. op.) (affirming jury findings of arbitrariness and fraud when

condemning authority’s representative had admitted in a letter that taking of

property was not necessary for purpose for which it was taken); City of Houston v. Hamons , 496 S.W.2d 662 , 664–65 (Tex. Civ. App.—Houston [14th Dist.]

1973, writ ref’d n.r.e.) (holding evidence sufficient to support jury’s

arbitrariness finding when city officials admitted that city had no intent to

use condemned property for expressly stated purpose for which it was taken).

2. Funding and Feasibility of the Detention

Facilities

To

support its affirmative defenses of fraud and arbitrariness, the Country Club relied

on evidence showing that the Water Authority had not been informed of the potential

construction and engineering costs associated with building the proposed

detention facilities before passing the Resolution to acquire the Property. The Country Club also pointed out that the

Water Authority did not have the $19 million estimated by Yung to complete the

detention project. The Country Club

further cited evidence that the Water Authority had not obtained approval or

permits from the county flood control district or the City of Houston regarding

the drainage plan or the use of existing structures integral to the detention

project.

Again, we must view evidence in its proper context with other evidence; evidence cannot

be considered in isolated bits and pieces divorced from its surroundings; it

must be viewed in its proper context with other evidence. AutoZone ,

272 S.W.3d at 592 (citing City of Keller ,

168 S.W.3d at 827 ). Here, Branch

testified that the Water Authority issues bonds to fund its “large capital

projects.” Branch testified that the

Water Authority has had no difficulty in funding other improvement projects

costing even more than the proposed detention facility. He testified that the Water Authority has the

ability to fund the detention project at issue.

The Country Club offered no evidence to prove otherwise. Simply showing that the Water Authority was

unaware of the cost of the detention project at the time of the Resolution’s

passage is not evidence of fraud or arbitrariness. See Pizzitola ,

2006 WL 1360838 , at *4 (holding that landowner’s showing that condemning

authority failed to allocate specific funds for acquisition of property before

deciding to take property was not evidence that decision to take property was

arbitrary and capricious).

Evidence was presented

that it is standard practice for Harris County and federal entities charged

with flood control to receive a cost estimate before approving the acquisition

of the land needed for the detention facility.

However, this evidence, suggesting an industry standard, does not

address the circumstances of this case specifically enough to constitute

evidence that the Water Authority acted fraudulently or arbitrarily. See Circle

X Land & Cattle Co., Ltd. v. Mumford Indep. Sch. Dist. , 325 S.W.3d 859,

868 (Tex. App.—Houston [14th Dist.] 2010, no pet. h.) (holding, in summary-judgment

context, that landowner’s evidence of industry standard, which failed to

specifically discuss circumstances of case at hand, did not raise material

raise fact issue concerning whether condemning authority had acted in arbitrary

and capricious manner).

In addition, courts have explained

that it is not arbitrary or capricious to base a condemnation on a reasoned

prediction of future need or demand. See id ; Pizzitola , 2006 WL 1360838 , at *5. It follows that evidence that the Water

Authority had not secured the necessary permits or permission from other

governmental agencies to construct the detention facility is not evidence that its

condemnation decision was fraudulent or arbitrary and capricious.

3. Evidence of the Water Authority’s Desire

to Stop Redevelopment

At trial, the Country Club argued that

the Water Authority’s true motivation for condemning the Property was to

prevent its redevelopment and to preserve the Property as a green space. In support of this theory, the Country Club places

particular significance on a February 2007 engagement letter from an attorney

at Wilson, Cribbs & Goren ,

the firm representing the Civic League and the Water Authority in the Exxon

Litigation. As mentioned, the Water

Authority and the Civic League intervened in the suit to prevent the Country

Club from succeeding in the removal of the deed restrictions on the Property,

which prevented its redevelopment.

In the letter, the attorney discloses that his firm is

representing a civic group in another lawsuit against the principal of the Country

Club. The attorney then states, “In both

situations, our client’s goal is to stop redevelopment and retain the areas as

common use/greenspace.” The engagement

letter was signed by the Water Authority’s president. The Country Club asserts that this letter

reveals the Water Authority’s true reason for acquiring the Property: to

prevent redevelopment. The Country Club

also pointed (1) to the Water Authority’s support of the legislation that makes

it more difficult to redevelop abandoned golf courses, (2) to various

statements by Branch indicating that he wanted the Property not to be

developed, (3) to Savely’s and Branch’s individual involvement with the Green

Space Committee, (4) to Savely’s proposed resolution for the Water Authority to

support the goals of the Green Space Committee, and (5) to other evidence

indicating that the Water Authority and its Board members desired to prevent

the Property from being redeveloped.

On appeal, the Water Authority does

not dispute that it desires to prevent the Property’s redevelopment. We agree with the Water Authority that this

does not equate to a finding that it acted fraudulently or arbitrarily in

deciding to acquire the Property for storm water detention purposes. A desire to stop redevelopment and a desire

to construct a storm water detention facility on the Property are not goals

that are inimical to one another. To the

contrary, evidence at trial showed that both objectives are relevant to flood

control, an issue statutorily delegated to the Water Authority.

The prevention of redevelopment is inherent in the

construction of the detention facility, but does not rise to an inference that such

prevention was the true purpose of the acquisition of the property. See

Boucher v. Tex. Turnpike Auth. , 317 S.W.2d 594, 600 (Tex. Civ. App. —Texarkana

1958, no writ) (noting that purpose that landowner claimed was “true” purpose

of taking was inherent in stated purpose for the acquisition of the property). Rather, it is the purpose for which

condemnation was sought that is to be examined in resolving the question of whether

the Water Authority acted fraudulently and arbitrarily. Wagoner , 345

S.W.2d at 763 . If the purpose is a

legitimate one, evidence that the Water Authority benefited in some other way

is not evidence that can establish fraud or arbitrariness. See id.

As discussed, the evidence is legally insufficient to show

that the Water Authority was unjustified in relying on Dunbar’s recommendation

to construct a storm water detention facility on the Property to address flood control

issues within the district. The evidence

failed to negate Dunbar’s recommendation as a reasonable basis for the Water

Authority’s acquisition of the Property.

See id. Evidence that the decision to acquire the

Property also benefitted the Water Authority by realizing its desire to stop

redevelopment does not support the jury’s finding that the Water Authority

acted fraudulently and arbitrarily in making its decision. See id. ;

see also Circle X Land & Cattle Co., Ltd , 325 S.W.3d at 867 (concluding that

changing use of the condemned land after condemnation decision made does not

evidence that condemnor acted

arbitrarily).

We conclude that the

evidence admitted at trial is legally insufficient to support the jury’s

findings that the Water Authority acted fraudulently or acted arbitrarily and

capriciously in determining to acquire the Property for storm water detention

purposes. We hold that the trial court

erred when it denied the Water Authority’s motion for judgment notwithstanding

the verdict. Had it properly granted the

motion, the trial court would have rendered judgment permitting the Water

Authority to condemn and acquire the Property on payment of $5.1 million,

representing the fair market value of the Property, as found by the jury. We sustain the Water Authority’s first issue in

this regard. [4]

Conclusion

We reverse the trial

court’s judgment and remand for further proceedings to permit the trial court

to render the proper condemnation judgment in accordance with this opinion.

Laura

Carter Higley

Justice

Panel consists of Justices Jennings, Keyes, and Higley.

[1] Act of May 27, 2007, 80th Leg., R.S., ch. 1092, § 1,

2007 Tex. Gen. Laws 3721 (amended 2009) (current version at Tex. Loc. Gov’t Code Ann . § 212.0155

(Vernon Supp. 2010).

[2] Plainfield Offshore Holdings XI, Inc.

is the lien holder on the Property.

Plainfield Offshore participated in the trial but has not filed an

appellee’s brief in this appeal.

[3] As mentioned, the Water Authority

objected to the trial court’s definitions with respect to fraud and

arbitrariness. The Water Authority also

argued that a higher evidentiary burden than preponderance of the evidence

applied. The Water Authority also raises

these complaints on appeal. We do not

address these complaints, however, because, as discussed infra , the evidence was

legally insufficient to support the jury’s findings under the charge as

given.

[4] Because this issue is dispositive, we

do not reach the remainder of the Water Authority’s issues presented on

appeal.