Petition for Writ of Certiorari — Guetersloh v. Texas
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Supreme Court, U.S.
t
97 93 2 DEC - 3 1997
OFFICE OF THE CLERK
NO. 97-
In The
Supreme Court of the Gnited States
October Term, 1997
M. F. GUETERSLOH, JR.,
Petitioner,
VS.
THE STATE OF TEXAS; THE PUBLIC UTILITY
COMMISSION; THE TEXAS WATER COMMISSION;
THE CITY OF LUBBOCK; and JAME. AILLER,
RECEIVER OF THE CARLISLE WATER SUPPLY
COMPANY,
Respondents.
On Petition For Writ of Certiorari
To The Texas Court of Appeals, Third District, at Austin
PETITION FOR WRIT OF CERTIORARI
JAMES DOUGLAS RAY
406 W. 13th Street, Suite 200
Austin, Texas 78701
Tel: (512) 478-8698
Fax: (512) 478-2778
ATTORNEY FOR THE PETITIONER
December 3, 1997
———
NO. 97-
In The
Supreme Court of the Gnited States
October Term, 1997
M. F. GUETERSLOH, JR.,
Petitioner,
VS.
THE STATE OF TEXAS; THE PUBLIC UTILITY
COMMISSION; THE TEXAS WATER COMMISSION;
THE CITY OF LUBBOCK; and JAMES MILLER,
RECEIVER OF THE CARLISLE WATER SUPPLY
Respondents.
On Petition For Writ of Certiorari
To The Texas Court of Appeals, Third District, at Austin
PETITION FOR WRIT OF CERTIORARI
JAMES DOUGLAS RAY
406 W. 13th Street, Suite 200
Austin, Texas 78701
Tel: (512) 478-8698
Fax: (512) 478-2778
ATTORNEY FOR THE PETITIONER
December 3, 1997
=—
i prea
QUESTION PRESENTED FOR REVIEW
In the event of a taking, does res judicata bar property
owners from litigating their Fifth Amendment right to just
compensation once they have been unsuccessful in their attempt
to obtain compensation through procedures provided by the state?
LIST OF PARTIES
The parties to the proceeding below were the Petitioner,
M. F. Guetersloh, Jr., and the Respondents, the State of Texas, the
Public Utility Commission, the Texas Water Commission, the
City of Lubbock, and James Miller as Receiver of the Carlisle
Water Supply Company.
li
TABLE OF CONTENTS
Question Presented for Review ..........++eeee reece: i
ee rrr rrr rn Te rer il
is EC, C8. oo kia'n cc cd endw ern we chen te Oeka ili
Tihs ot RIES 6 oo inc ns ck aedee deni neeeerenes iv
Opinions Below ......... 2. ee eee eee cece eee eeeeees 2
re rr 4
Constitutional Provisions and
a sino k-4n 46 eee ee es a ed eee ed 5
I gi. ks hn oe tN OS ee 7
Reasons for Granting the Writ ..........cccsceccseess 10
The Texas Courts Failed To Properly Analyze The
Federal Constitutional Principles Involved When They
Barred This Property Owner From Asserting His Fifth
Amendment RightTo Just Compensation ........... 10
Even If Compelled By State Procedural Law, The
Judgment Rendered In Guetersloh I Results In A Denial
Of Due Process, And Is Not Entitled To Preclusive
RE =. od in sists ramadan ere COU a eS ewes 23
i eR Ewart eee es Cre Ne ea pare 30
PEE 6. Gucci ceaeeowene conan seseseres Al-N1
iil
TABLE OF AUTHORITIES
Cases: Page
Allen v. McCurry, 449 U.S. 90 (1980) ...........000.. 22
Armstrong v. United States,
pe Nf Pee eT eT CTT re er er Torre 29
Armstrong World Indus., Inc. v. Adams,
OGL Fe Ge Cre Ge CO ao acc c an cccans dawineenews 15
Barr v. Resolution Trust Corp.,
O37 S.W. JO GET CHM. IGGE) oc ccccscccesesesseusees 18
Bivens v. Six Unknown Agents, 403 U.S.
bod ig) ee eee ee eee Pe ee ey eee er ye Perr 28
Boilermakers v. Hardeman, 401 U.S. 233
CTFTED neve cctcdceceetbendewhewankneséteeino 28
Chicago, Burlington & Quincy R.R. v.
City of Chicago, 166 U.S. 226 (1897) .............. 25-27
City of El Paso v. Madero, 803 S.W.2d
396 (Tex. App.--El Paso 1991, writ denied),
cert. damlad, SG3 UB. 1GTSCAGIED oc occ ccckccvccceces 15
City of Grand Prairie v. Sisters of Holy
Family of Nazareth, 868 S.W.2d 835 (Tex.App.—
Dallas 1993, writ denied), cert. denied,
FES Us TEP Ceo xh ks rd ee eae ee kee ee 10, 18
Cope v. Anderson, 331 U.S. 461 (1947) ...........005. 18
iV
TABLE OF AUTHORITIES (Continued)
Cases: Page
Davenport v. Garcia, 834 S.W.2d 4 (Tex. 1992) ........ 24
Empire Trust Co., v. United States, 324 F.2d
507 (Sth Cir. 1963) ..... cece cece nee eeeeeeeees 19-20
England v. Louisiana State Bd. of Med. Examiners,
375 U.S. 411 (1964)... cece reece eee rer evevceeee 22-23
First English Evangelical Lutheran Church v. County
of Los Angeles, 482 U.S. 304 (1987) ......-+s05055: 16, 25
Fields v. Sarasota Manatee Airport Auth.,
953 F.2d 1299 (11th Cir. 1992 ........-0 ee eee 9, 11, 21-23
Foster v. City of Detroit, 254 F. Supp. 655
(E.D. Mich. 1966) aff'd, 405 F.2d 138
(6th Cir. 1968) ...... cece cece cece cece eeeeeeees 25-26
Getty Oil Co. v. Insurance Co. of North America,
845 S.W.2d 794 (Tex. 1992) .......cceccccceevcveees 19
Guetersloh v. Public Utility Comm'n,
No. 3-90-161-CV (Tex. App.—Austin August 14,
1991, writ denied) .... 3,8, 12-14, 17, 18, 21, 23, 25, 27-28
Guetersloh v. State of Texas, No. 93-8729 (5" Cir.
June 3, 1994) cert. denied, 513 U.S. 1076 (1995) ...... 2,8
Guetersloh v. State of Texas, 930 S.W.2d 284
(Tex. App.—Austin 1996, writ denied) ...... 2, 4, 19, 21, 23
TABLE OF AUTHORITIES (Continued)
Cases: Page
Hodel v. Virginia Surface Mining &
Reclamation Ass'n, 452 U.S. 264 (1981). 20.0... .00005. 10
Holmes v. Jones, 738 F.2d 711
a EN, oa ail cae s6 sc Gdewen iene ad desk tase ene 21
Hudson v. Palmer, 468 U.S. 517 (1984) ............ 24-25
Jennings v. Caddo Parish School Bd.,
$31 F.2d 1331 (Sth Cir.), cert. denied,
er ee UE 6 sih'e Oe aha es 00 bees ee 9, 21-23
Kremer v. Chemical Constr. Corp.,
STD ENS 25 oo echoed bec see 6 h4 00% oa 24, 25
Lake Lucerne Civic Ass'n v. Dolphin Stadium
Corp., 878 F.2d 1360 (11th Cir. 1989),
cert. denied, 493 U.S. 1079 (1990) ....... 11, 12, 15-16, 20
Lewis v. East Feliciana Parish School Bd.,
Se Wade UO CG EOD ee kb 0 0 cab eecdecceccen 23
Lucas v. South Carolina Coastal Council,
ee er re 16-17, 27-28
MacDonald, Sommer & Frates v. Yolo County,
STE Sele cnc eeca.beud xs cheba weauceas 20
Martin v. Brodrick, 177 F.2d 886, 888
ere rae ne ee naene 20
vi
NS cen ees staan des
= ee PS ee ee eS eee eee
TABLE OF AUTHORITIES (Continued)
Cases: Page
McCoy v. Union Elevated Ry., 247 US.
BEA CIGID) occ ccc cccscvescesseccsccsseseccceccees 26
Migra v. Warren City School Dist. Bad. of Educ.,
465 U.S. 75 (1984) .. 2c ceeec ccc ceseneeeerenes 17,22
Monongahela Navigation Co. v. United States,
148 U.S. 312 (1893)... . cee ee cece reece ceeereeeees 26
Nixon v. Mr. Property Management Co.,
675 S.W.2d 585 (Tex. 1984) «0... . cee reece erent 24
Nollan v. California Coastal Comm'n,
483 U.S. 825 (1987)... . cece ee eee cree cence 17, 27-28
Norco Constr. Co., Inc. v. King County,
801 F.2d 1143 (9th Cir. 1986) 2... cee eee renee rere 20
Oregon v. Kennedy,
456 U.S. 667 (1982)... ccc eee e eer e eer eeeeereeees 24
Peduto v. City of North Wildwood,
878 F.2d 725 (3d Cir. 1989) ...... ee eee eee renee 12, 25
Pennsylvania Coal Co. v. Mahon,
260 U.S. 393 (1922)... cece cccecerecesecrerceees 16
Pruneyard Shopping Center v. Robins,
447 U.S. 74 (1980) 24
TABLE OF AUTHORITIES (Continued)
Cases: Page
Rawlings v. Ray, 312 U.S. 96 (1941) .............00. 18
Richmond Elks Hall Ass'n v. Richmond Dev.,
Re Em te Ry, ee 26
Samaad v. City of Dallas,
& & «- &. | Beare ne 11, 23
Sax v. Votteler, 648 S.W.2d 661 (Tex. 1983) ........... 24
Southern Jam, Inc. v Robinson, 675 F.2d 94
Caer GEE, SE ns dec ee neweebeiuan te ee es 18
Taub v. City of Deer Park, 882 S.W.2d 824
en mmo De ee ere ar 29
Town of Sunnyville v. Mayhew, 905 S.W.2d 234
(Tex. App.--Dallas 1994, writ granted) ............. 15, 16
Williamson County Regional Planning
Comm'n v. Hamilton Bank, 473 U.S. 172 (1985) .... passim
Constitutional Provisions
SN II in 4 bin nan wk Sans wha auaws Passim
CR en NEE bs pi Cen Weceanbeecedehiaees 21
WUD. GAOT, GOIN, FEE noses ccnssvcccecscees passim
Se RL BRET ¢.n.n0's sccineckeaessaen 8, 13-14, 24
Vili
TABLE OF AUTHORITIES (Continued)
Statutes and Regulations
28 U.S.C. § 1257(a)
28 U.S.C. § 1738
tok | rere rrrerrr rr rer errr. 4, 6, 20
, Sh. Ok & BPP eTrrerrrirre eee. 6, 18, 20
; RR SF & Peererrrrrrre rere ee 6, 18-19, 20
Other Authorities
18 AM. JUR., Eminent Domain §§ 144, 145 pp.
FRE Gh cee Sethe desarevedednwecsaesceevess 26
Thomas E. Roberts, Fifth Amendment Taking Claims In
Federal Court: The State Compensation Requirement and
Principles of Res Judicata, 24 URB. 479 (1992) ......... 1]
ix
NO. 97-
In The
Supreme Court of the Gnited States
October Term, 1997
M. F. GUETERSLOH, JR..,
Petitioner,
vs.
THE STATE OF TEXAS; THE PUBLIC UTILITY
COMMISSION; THE TEXAS WATER COMMISSION;
THE CITY OF LUBBOCK; and JAMES MILLER,
RECEIVER OF THE CARLISLE WATER SUPPLY
COMPANY,
Respondents.
ON PETITION FOR WRIT OF CERTIORARI
TO THE TEXAS COURT OF APPEALS,
THIRD DISTRICT, AT AUSTIN
PETITION FOR WRIT OF CERTIORARI
PETITIONER, M.F. GUETERSLOH, Jr., respectfully prays
that a writ of certiorari issue to review the judgment and opinion
of the Texas Court of Appeals, Third District, at Austin, entered
in the above-referenced cause on September 18, 1996. The
Supreme Court of Texas denied discretionary review of that
published decision on July 31, 1997, and overruled Petitioner’s
timely-filed Motion for Rehearing on September 4, 1997.
l
OPINIONS BELOW
The September 18, 1996 opinion and judgment of the
Texas Court of Appeals, Third District, at Austin in Case No. 03-
95-00626-CV, is reported at 930 S.W.2d 284 and is reprinted and
attached hereto, as Appendix “A,” infra, at page App. A-1.
On September 6, 1995, the 261% Judicial District Court of
Texas, granted summary judgment in favor of the State of Texas,
the Public Utilities Commission, the Texas Water Commission,
the City of Lubbock, and James Miller in Cause No. 95-07117.
That decision is not reported. The Order Granting Summary
Judgment is reprinted and attached hereto as Appendix “B,” infra,
at page App. B-1.
On July 31, 1997, the Texas Supreme Court denied
discretionary review of Petitioner’s timely filed Application for
Writ of Error, in Case No. 96-1257 with the notation of “Writ
Denied.” A memorandum of that decision is reprinted and
attached hereto as Appendix “C,” infra, at page App. C-1.
On September 4, 1997, the Texas Supreme Court
overruled Petitioner’s Motion for Rehearing of the Application for
Writ of Error filed in Cause No. 96-1257, without opinion. A
memorandum of that decision is reprinted and attached hereto as
Appendix “D,” infra, at page App. D-1.
**
On June 3, 1994, the United States Court of Appeals for
the Fifth Circuit, issued an unpublished opinion in Case No. 93-
8729. A copy of that opinion is reprinted and attached hereto as
Appendix “E,” infra, at page App. E-1.
On September 17, 1993, the United States District Court
for the Western District of Texas Austin Division, issued a written
Order in Case No. A-92-CA-359. A copy of that unpublished
order is reprinted and attached hereto as Appendix “F,” infra, at
page App. F-1.
On January 9, 1995, the United States Supreme Court
denied the petition for writ of certiorari in Cause No. 94-393. A
copy of that denial is reprinted and attached hereto as Appendix
“G,” infra, at page App. G-1.
*** *
On August 14, 1991, the Texas Court of Appeals, Third
District at Austin, issued an unpublished opinion in Cause No. 3-
90-161-CV. A copy of that opinion is reprinted and attached
hereto as Appendix “H,” infra, at page App. H-1.
On February 23, 1990, the 353 Judicial District Court of
Travis County, Texas, issued a Final Judgment Order in Case No.
461-447. A copy of that order is reprinted and attached hereto as
Appendix “I,” infra, at page App. I-1.
On February 13, 1989, the 137" Judicial District Court of
Lubbock County, Texas, granted Defendant’s Summary Judgment
in Case No. 85-512,245. A copy of that order is reprinted and
attached hereto as Appendix “J,” infra, at page App. J-1.
On February 13, 1989, the 137" Judicial District Court of
Lubbock County, Texas, Denied Plaintiff's Motion for Summary
Judgment and Granted Defendant’s Motion for Summary
Judgment in Cause No. 85-512,245. A copy of that order is
reprinted and attached hereto as Appendix “K,” infra, at page K-1.
On February 13, 1989, the 137" Judicial District Court of
Lubbock County, Texas, issued a Final Summary Judgment Order
in Cause No. 85-512,245. A copy of that order is reprinted and
attached hereto as Appendix “L,” infra, at page App. L-1.
On February 5, 1992 the Supreme Court of Texas denied
Petitioner’s Application for Writ of Error in Case No. D-1725. A
copy of that order is reprinted and attached hereto as Appendix
“M,” infra, at page App. M-1.
On March 4, 1992, the Supreme Court of Texas denied the
of Motion for Rehearing in Case No. D-1725. A copy of that
order is reprinted and attached hereto as Appendix “N,” infra, at
page App. “N-1".
STATEMENT OF JURISDICTION
Asserting an entitlement to just compensation under the
Fifth and Fourteenth Amendments, as well as under 42 U.S.C.
§1983, the petitioner brought suit in the 261" Judicial District
Court of Texas. Summary judgment was granted in favor of all
defendants on the sole basis of res judicata. Petitioner seeks
review of the September 18, 1996 opinion and judgment of the
Texas Court of Appeals, Third District, at Austin, upholding that
summary judgment. Petitioner’s timely-filed application for
discretionary review was denied by the Texas Supreme Court on
July 31, 1997, and Petitioner’s subsequent Motion for Rehearing
was overruled on September 4, 1997. The Supreme Court has
jurisdiction to review such cases from state courts by virtue of 28
U.S.C. § 1257(a).
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
The Fifth Amendment of the Constitution of the United
States provides, in pertinent part, that “private property [shall not]
be taken for public use without just compensation.”
The Fourteenth Amendment of the United States
Constitution provides, in pertinent part, that “No State shall ...
deprive any person of life, liberty, or property, without due
process of law; nor deny to any person within its jurisdiction the
equal protection of the laws.”
28 U.S.C. § 1738 states that:
“The Acts of legislature of any State, Territory, or
Possession of the United States, or copies thereof, shall be
authenticated by affixing the seal of such State, Territory or
Possession thereto.
The records and judicial proceedings of any court of any
such State, Territory or Possession, or copies thereof, shall be
proved or admitted in other courts within the United States and its
Territories and Possessions by the attestation of the clerk and seal
of the court annexed, if a seal exists, together with a certificate of
a judge of the court that the said attestation is in proper form.
Such Acts, records and judicial proceedings or copies
thereof, so authenticated, shall have the same full faith and credit
in every court within the United States and its Territories and
Possessions as they have by law or usage in the courts of such
State, Territory or Possession from which they are taken.”
42 U.S.C. § 1983 provides, in relevant part:
“Every person who, under color of any statute, ordinance,
regulation, custom, or usage, of any State ... subjects, or causes to
be subjected, any citizen of the United States ... to the deprivation
of any rights, privileges, or immunities secured by the
Constitution and laws, shall be liable to the party injured in an
action at law, suit in equity, or other proper proceeding for
redress.”
Rule 48 of the Texas Rules of Civil Procedure provides
that “a party may set forth two or more statements of a claim or
defense alternatively or hypothetically, either in one count or
defense or in separate counts or defenses....”
Rule 51 of the Texas Rules of Civil Procedure provides,
in pertinent part, that:
(a) Joinder of Claims. “The plaintiff in his petition ... may
join either as independent or as alternate claims as many claims
either legal or equitable or both as he may have against an
opposing party....”
(b) Joinder of Remedies. “Whenever a claim is one
heretofore cognizable only after another claim has been
prosecuted to a conclusion, the two claims may be joined in a
single action; but the court shall grant relief in that action only in
accordance with the relative substantive right of the parties...”
STATEMENT OF THE CASE
This is an inverse condemnation action in which
Petitioner’s suit for just compensation under the Fifth and
Fourteenth Amendments was procedurally barred, in state court,
under the sole theory of res judicata. In 1978, M.F. Guetersloh,
Jr., “Petitioner,” sold a private water supply company, retaining
a vendor's lien and deed of trust to secure payment for his facility.
Several years after that sale, the State placed the utility in
receivership. During the pendency of that receivership, Mr.
Guetersloh was paid nothing on his underlying lien, and he
foreclosed on his security. Following that foreclosure, the State
of Texas judicially enjoined Petitioner from entering onto, or
otherwise interfering with the State's use of his property.
For nearly five years, the receivership continued, and
residents of the community of Carlisle, Texas, were charged a fee
for water service provided by Mr. Guetersloh’s facility. However,
despite the availability of alternative water providers in the area,
Petitioner was paid nothing, during the period of that receivership,
for the protracted use and destruction of his facility.
Ultimately, the City of Lubbock annexed the Carlisle
service area and built a new water system, but Petitioner’s water
supply was kept in receivership until the new water system was
completed and began providing water servic* # Mr. Guetersloh’s
former customers. Once the City’s nev ‘ater system was
completed, the receivership was concluded,. 1 Mr. Guetersioh
was granted permission to reclaim possession of his utility. By
that time, all of Petitioner’s customers were gone, the facility was
worn out and badly in need of repair, and his water system was
completely worthless, as a utility.
In 1985, while the receivership was still pending, Mr.
Guetersloh unsuccessfully sued the State of Texas and various of
its agencies and representatives for an uncompensated "taking."
7
Although initially asserting an entitlement to just or adequate
compensation according to the dictates of the Fifth and Fourteenth
Amendments, as well as Article 1, Section 17 of the Texas
Constitution, Petitioner subsequently deleted his federal
constitutional claims, and pursued only his state compensation
remedies once he became aware of this Court's holding in
Williamson County v. Hamilton Bank, 473 U.S. 172 (1985). In
Williamson County, this Court held that due to their "special
nature," claims for just compensation premised on the Fifth
Amendment are premature or unripe until a property owner "has
unsuccessfully attempted to obtain just compensation through the
procedures provided by the State for obtaining such
compensation." Jd., at 195.
In Guetersloh I, the Texas Court of Appeals upheld
summary judgment in favor of the State and the City of Lubbock
because the court determined that the alleged taking constituted
a valid exercise of the state’s police power, for which no
compensation is required. Guetersloh v. Public Utility Comm..,
etal., No. 3-90-161-CV(Tex. App.-- Austin Aug. 14, 1991, writ
denied)(not designated for publication). Without even so much as
commenting upon the economic consequences of the regulation,
as applied, the Court of Appeals found that such a valid exercise
of police power does not constitute a compensable“taking”
where:“(1) the regulation is adopted to accomplish a legitimate
goal, ...; and (2) the regulation is reasonable, not arbitrary.” (Slip
Op. at 6-7). The Texas Supreme Court denied discretionary
review, and Petitioner brought suit in federal court, asserting an
entitlement to just compensation for his now “ripened” Fifth and
Fourteenth Amendment claims.
The federal courts, however, held that the Eleventh
Amendment precluded that suit in federal court. Guetersloh v.
State of Texas, No. 93-8729 (Sth Cir. June 3, 1994)(not designated
for publication), cert. denied, 513 U.S. 1076 (1995). Petitioner
then asserted the present Fifth Amendment takings claim in state
:
i rcienieeieninnianeaienmmemiaaiiil
:
2
court. The State, along with the City of Lubbock, again filed
motions for summary judgment which the trial court granted on
the sole basis of res judicata. The Austin Court of Appeals
affirmed.
Perhaps in some concession to the obvious inconsistency
of having a question of federal constitutional law that is
simultaneously “ripe” for adjudication in state court, and “unripe”
or “premature” in a federal court, the Austin Court of Appeals
offered an alternative holding. In reaching its result, the Court
stated that it had applied the holding of Fields v. Sarasota
Manatee Airport Auth. 953 F.2d 1299 (11" Cir. 1992), to
conclude that Mr. Guetersloh had somehow waived his federal
constitutional claims by failing to make a “Jennings” reservation
of his federal claims for subsequent litigation in federal court. See
Jennings v. Caddo Parish School Bd., 531 F.2d 1331 (5" Cir.
1976), cert. denied, 429 U.S. 897 (1976).
The Texas Supreme Court again denied Petitioner’s
timely-filed request for discretionary review, and on September 4,
1997, Petitioner’s Motion for Rehearing was rejected.
REASONS FOR GRANTING THE WRIT
THE TEXAS COURTS FAILED TO PROPERLY ANALYZE THE
FEDERAL CONSTITUTIONAL PRINCIPLES INVOLVED WHEN
THEY BARRED THIS PROPERTY OWNER FROM ASSERTING HIS
FIFTH AMENDMENT RIGHT TO JUST COMPENSATION .
This Petition invites the Court to clarify and put to rest an
important conflict that persists in the always troublesome field of
regulatory takings law. Since this Court decided Williamson
County Regional Planning Comm'n v. Hamilton Bank, 473 U.S.
172 (1985), property owners have struggled in their attempt to
balance the jurisdictional dilemma created by that holding, with
the necessary interplay of 28 U.S.C.A. §1738 and traditional
notions of res judicata.' The question that remains to be answered
is whether property owners who suffer takings under the guise of
state regulation are entitled to litigate their Fifth Amendment right
to just compensation once they have satisfied the “ripeness”
requirements announced in that decision.
Today, virtually every court that has dealt with the matter
recognizes that the Fifth Amendment does not proscribe the
taking of property; it proscribes takings without just
compensation. See, e.g., City of Grand Prairie v. Sisters of Holy
Family of Nazareth, 868 S.W.2d 835, 844 (Tex. App. -- Dallas,
writ denied), cert. denied, 513 U.S. 929 (1994); citing Hodel v.
Virginia Surface Mining & Reclamation Ass'n, 452 U.S. 264, 297
n.40 (1981). For that reason, litigants who wish to assert a
"takings" claim under the Fifth and Fourteenth Amendments must
' 28 U.S.C. Section 1738 provides that:
“(The Acts of the legislature of any State, Territory, or Possession of
the United States or] ... records and judicial proceedings or copies thereof, so
authenticated, shall have the same full faith and credit in every court with in the
United States and its Territories and Possessions as they have by law or usage
in the courts of such State, Territory or Possession from which they are taken.”
10
establish two elements or "ripeness" requirements; (1) that a
"taking" occurred, and (2) that the owner has unsuccessfully
sought compensation from the state. Williamson County 473 U.S.
at 194; see also, Samaad v. City of Dallas, 940 F.2d 925, 933 (Sth
Cir. 1991).
As will be apparent upon review of the published decision
in this case, property owners now find it increasingly difficult, if
not impossible, to litigate their entitlement to just compensation
under the Fifth Amendment once those ripeness requirements
have actually been satisfied. The reason for this difficulty is that
when litigants attempt to assert their takings claims under relevant
state procedures, most state courts recognize res judicata doctrines
that require state court litigants to assert their federal takings
claims, under penalty of bar, concurrently with their state
compensation claims. See, e.g., Fields v. Sarasota Manatee
Airport Auth. , 953 F.2d 1299, 1303 (11" Cir. 1992). This is so
despite the clearly acknowledged holding of this Court that the
federal constitution is not violated until just compensation has
been denied by the state. Williamson County, 473 U.S. at 194,
n.13; see also, Lake Lucerne Civic Assn., Inc. v. Dolphin
Stadium Corp, 878 F.2d 1360, 1372 (11" Cir. 1989), cert. denied,
493 U.S. 1079 (1990).
The present case illustrates the dilemma faced by property
owners in this context, and affords this Court a unique opportunity
to narrowly and directly address the recurring question of when,
and under what circumstances, litigants should properly assert
their entitlement to just compensation under the Fifth and
Fourteenth Amendments. That issue has generated considerable
confusion among state and federal courts, alike. See, e.g., Thomas
E. Roberts, Fifth Amendment Taking Claims In Federal Court:
The State Compensation Requirement and Principles of Res
Judicata, 24 URB. 479 (1992). Applying traditional notions of res
judicata to federal “takings” challenges, the Eleventh Circuit has
allowed property owners to advance their takings claims in federal
1]
court despite prior unsuccessful state court litigation. Lake
Lucerne Civic Ass'n v. Dolphin Stadium Corp., 878 F.2d at 1372-
73. In Peduto v.City of North Wildwood, 878 F.2d 725 (3rd Cir.
1989), the Third Circuit has reached the opposite result.
Until this important question is addressed and resolved by
this Honorable Court, property owners who are unfortunate
enough to be required to litigate such "takings" claims against a
state or its agencies will continue to find themselves on the horns
of this dilemma. If they attempt to assert their Fifth Amendment
rights along with available state remedies, their federal takings
claims are routinely dismissed as "unripe." On the other hand,
litigants such as this Petitioner, who adhere to the commands of
this Court and wait to assert their federal constitutional rights until
they have actually accrued, find that they are procedurally barred
from litigating those claims by principles of res judicata. As is
illustrated by Petitioner’s plight, this "heads I win, tails you lose"
approach to such an important constitutional entitlement
effectively converts the Fifth Amendment promise of just
compensation into a constitutional right without a remedy.
In Guetersloh I, it was determined that a receivership
imposed on the Carlisle Water Supply constituted a legitimate
exercise of the State's police power. As authorized by the State,
that receivership purported to allow government agents to come
onto Mr. Guetersloh’s land, seize his assets, run his utility as if it
were their own, charge for its benefits, and pay nothing for the
privilege. That those actions were taken for a beneficial purpose -
from the public’s point of view, adds nothing to the debate.
There is no contest that the order of the Commission
qualifies under the “public purpose” requirement of the Fifth
Amendment- it does. Rather, what is significant here is that under
these facts, it is the established policy of the state to do what it
did, without consideration of the rights of the true owner.
12
The present case assumes the legitimacy of that
undertaking, but focuses on the way and manner in which the
State applied its receivership powers to Mr. Guetersloh.
Regardless of when or how these claims arise, the State contends
that a prior summary judgment which completely ignored the
economic impact of this regulation is dispositive of Mr.
Guetersloh’s complaint. Petitioner respectfully asserts that that
argument is premised upon a faulty application of res judicata, and
misperceives the underlying Fifth and Fourteenth Amendment
rights at issue.
Background of the Litigation
In 1985, Mr. Guetersloh foreclosed on a deed of trust and
became the owner of the Carlisle Water Supply. Subsequent to
his foreclosure, the State obtained a temporary restraining order
prohibiting him from interfering with a state-appointed receiver's
right to possession of the property. Petitioner filed his initial
lawsuit three days later, asserting a taking under the Texas
Constitution. That lawsuit was filed on December 9, 1985, and
forms the basis for what has been referred to in these proceedings
as Guetersloh I. All issues addressed in that lawsuit were
disposed of by summary judgment, and those summary judgments
were upheld on appeal.
It is undisputed that during the pendency of this five year
receivership, the State used Mr. Guetersloh's utility to provide
retail water service to the residents of Carlisle. Despite the
availability of not less than four other available utilities, Mr.
Guetersloh's property was required to provide this public service
because it was the "best" of the available alternatives. Petitioner’s
customers were charged for this service, but Mr. Guetersloh was
paid nothing in return. Once there was no further need for his
property, the State returned a worthless and worn out set of
pumps, pipes, and a depleted water well that had absolutely no
further value as a utility.
13
Guetersloh | was filed approximately twenty-seven (27)
months into a receivership that lasted nearly five years. In his
initial cause of action, Petitioner first attacked the legitimacy of
the State's action, and asserted that imposition of the receivership,
together with the intended use of the facility by the State,
constituted a compensable taking event. In his initial prayer for
relief, Mr. Guetersloh requested an injunction against the State
defendants from taking his property without first paying just
compensation. On April 15, 1987, approximately sixteen months
after Mr. Guetersloh filed his initial lawsuit, the Carlisle service
area was annexed by the City of Lubbock. Once the City of
Lubbock began providing water services to the residents of
Carlisle, the receivership was dissolved. Guetersloh I was then
amended to include a complaint about the effect of extending the
City of Lubbock's water service into the Carlisle service area.
Those amended complaints were reviewed pursuant only to
Article 1, Section 17 of the Texas Constitution.
In affirming summary judgment for the State, the Austin
Court of Appeals held that "the Commission's authority to seek a
receivership against this utility was a valid exercise of the state's
police power rather than a "taking." Slip Op. at p.7 (Guetersioh
I)(emphasis added). The State argued below that under the
“transactional” approach to res judicata adopted by this state,
Petitioner should have brought his Fifth Amendment claim in that
prior proceeding. That assertion, however, ignores the fact that at
the time of Guetersloh I, such a claim did not exist.
As this Court has previously held, if the state has provided
an adequate process for obtaining compensation, and if resort to
that process "yield[s] just compensation,” then the property owner
“has no claim against the Government" for a taking. Williamson
County, 473 U.S. at 194, n.13. As a result, property owners, such
as Mr.Guetersloh,“cannot claim a violation of the Just
Compensation Clause until it has used the procedure and been
denied compensation." Jd., at 195. According to the Eleventh
14
a
Circuit, "absent the state's denial to a property owner of just
compensation, there can be no cognizable harm to any federal
constitutional right.". Lake Lucerne Civic Ass'n v. Dolphin
Stadium Corp., 878 F.2d at 1368.
Nonetheless, the State argued in the courts below that
‘once the State's inverse condemnation proceedings were
unsuccessfully concluded, Mr. Guetersloh's present claim for just
compensation under the Fifth Amendment was barred by ordinary
rules of res judicata. Under the approach suggested by the State,
once a property owner's Fifth Amendment claim is perfected, it
would also be precluded.
Properly understood, the present claim for an
uncompensated Fifth Amendment taking constitutes a separate
and distinct cause of action from that litigated previously. Lake
Lucerne, 878 F.2d at 1370. To hold that Mr. Guetersloh forfeited
his right to just compensation because he did not assert that claim
before it existed, would subordinate this basic constitutional right
to a wholly unwarranted concept of res judicata.
As construed by state and federal appellate courts, the
primary issue addressed by this ripeness doctrine is when a party
may properly assert a cause of action. See, e.g, Town of
Sunnyvale v. Mayhew, 905 S.W.2d 234, 244 (Tex. App.--Dallas
1994, writ granted); see also, Armstrong World Indus., Inc. v.
Adams, 961 F.2d 405, 411 (3d Cir.1992). Its purpose is to avoid
premature adjudication and to prevent courts from becoming
entangled in abstract disagreements over administrative policies,
and protects administrative agencies from judicial interference
until they have formalized their administrative decision and the
challenging parties are able to feel the effects of that decision in
a concrete way. See, City of El Paso v. Madero, 803 S.W.2d 396,
398-99 (Tex. App.--El Paso 1991, writ denied), cert. denied, 502
U.S. 1073 (1992). More importantly, however, ripeness involves
the issue of subject matter jurisdiction, and the power of a court
to render particular relief. Jd., at 399. As the Texas courts have
15
made clear, the same standards addressed by this Court in
Williamson County apply in the state courts as well. Town of
Sunnyvale, 905 S.W.2d at 245-48.
No one contends that the receivership made the subject of
this proceeding was initially unnecessary or improper. What is
complained of is that Mr. Guetersloh was singled out to bear a
public burden that rightfully should have not been borne by him,
alone. Petitioner concedes that as a fundamental attribute of
sovereignty, states may exercise their police power to "take"
private property where it is deemed beneficial to the public
interest. However, the obligation of government to pay just
compensation for what it takes is a "condition placed on the
otherwise rightful exercise of that power." First English
Evangelical Lutheran Church v. County of Los Angeles, 482 U.S.
304, 314 (1987).
As a result, federal takings law recognizes that under
certain circumstances, a statute or regulation may meet the
standards necessary for a valid exercise of the police powers, and
nonetheless constitute a taking. Lake Lucerne, at 1371; see also,
Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922); First
English v. County of Los Angeles, 482 U.S. at 316-20. Even
regulations that are rationally related to a legitimate state interest
may nonetheless violate the "takings" provision of the Fifth
Amendment. Lucas v. South Carolina Coastal Comm'n, 505 U.S.
1003, 1013-15 (1992). Where, as here, a taking is alleged from
regulations which deprive property of all value, the test is whether
the deprivation is contrary to reasonable, investment-backed
expectations. Lucas, 505 U.S. at 1034 (Kennedy, J., concurring).
Under this Fifth Amendment standard, otherwise valid
laws may constitutionally obligate state or local governments to
compensate property owners. Stated another way, the standards
necessary for the proper exercise of the police power may be met,
but nevertheless result in a compensable taking under the Fifth
Amendment.
16
In Guetersloh | it was determined that under Texas law,
regulatory takings focus solely on the reasonableness of the
regulation at issue. See, Slip Op. at p. 7. Under the relevant Fifth
Amendment standard, once it is determined that the offending
regulation substantially advances a legitimate state interest, the
inquiry then focuses on whether that regulation denies an owner
of economically viable use of that property. Nollan v. California
Coastal Comm'n., 483 U.S. 825 (1987); Lucas, 505 U.S. at 1030-
31. Unlike Texas law, the Fifth Amendment requires that:
[A] regulation that declares "off limits" all
economically productive or beneficial uses of land
goes beyond what the relevant background
principles would dictate, [and] compensation
must be paid to sustain it.
Lucas, 505 U.S. at 1030. Thus, the applicable standards for
compensating property owners under the Fifth Amendment and
under the Texas Constitution are quite different.
At oral argument before the court of appeals, the City of
Lubbock candidly admitted that the present claim would not be
barred by res judicata if asserted against them in federal court.
Yet traditional rules of preclusion are generally applicable in the
cross-forum context. State judicial proceedings are due the same
credit in a federal court that they are entitled to by law or usage in
the courts of the rendering state. 28 U.S.C. §1738; see also,
Migra v. Warren City School Dist. Bd. Of Educ., 465 U.S. 75, 80-
81 (1984). Accordingly, a federal court must give a state-court
judgment the same preclusive effect that it would have under the
law of the state in which the judgment was rendered, even when,
as here, the basis of the federal claim is the Civil Rights Act.
Migra, 465 U.S. at 81, 83-84. If res judicata does not bar this
claim in federal court, the claim should be available in state court,
as well.
17
Could Have Been Brought?
The question of when a federal cause of action is complete
so that it may be enforced by a lawsuit, and thus has accrued, is a
federal question. Cope v. Anderson, 331 U.S. 461, 464 (1947);
Rawlings v. Ray, 312 U.S. 96, 98 (1941). Under Williamson
County, Fifth Amendment takings claims are supplemental to a
state takings claim, and may not be brought until the property
owner has unsuccessfully sought compensation under state
remedies. Williamson County, 473 U.S. at 194-95. Consequently,
the original state suit cannot be the same transaction for res
judicata purposes because the exhaustion of the state court appeal
in Guetersloh I is the second element of the federal cause of
action. That element only arises at the conclusion of the state
court proceeding. City of Grand Prairie v. Sisters of Holy Family
of Nazareth, 868 S.W.2d 835, 844 (Tex. App., - Dallas 1993, writ
denied), cert. denied, 513 U.S. 909 (1994); see also Southern Jam,
Inc. v. Robinson, 675 F.2d 94 (Sth Cir. 1982).
Nonetheless, the Texas courts have concluded that Fifth
Amendment taking claims are the type of “alternative” or
"contingent" claims that must be brought under TEXAS RULES OF
CIVIL PROCEDURE 48 and 51(b) before the second required
element has occurred, in order to avoid the preclusive effect of res
judicata. Tex. R. Civ. P. 48 and 51(b). Under the "transactional"
approach to res judicata adopted in Texas, a claim is precluded "if
it arises out of the same subject matter of a previous suit and
which through the exercise of diligence, could have been litigated
in a prior suit." Barr v. Resolution Trust Corp., 837 S.W.2d 627,
631 (Tex.,1992). For purposes of this standard, the dispositive
question becomes whether, given the “special nature” of the Fifth
Amendment’s Takings Clause, Petitioner’s federal-law and
state-law claims are truly separate and distinct, or are merely two
alternative theories by which recovery is sought for the same
alleged taking.
18
Although conceding that at least facially, Petitioner’s
argument sounds appealing, the Austin Court found that the Texas
Rules of Civil Procedure expressly provide for the simultaneous
presentation of multiple claims, alternative theories, and
contingent causes of action. According to these rules of procedure,
the mere fact that a cause of action is contingent on the outcome
of another suit does not prevent the two claims from being raised
and litigated simultaneously in the same suit.
Relying on Getty Oil Co. v. Insurance Co. of North
America, 845 S.W.2d 794 (Tex.,1992), which concerned a
contract action for indemnity, the court found that under Rule
51(b) of the Texas Rules of Civil Procedure, claims for just
compensation asserted under the Fifth Amendment represent the
kind of contingent claims that must be asserted under Texas
procedural law in order to escape the bar of res judicata.
Guetersloh v. State, 930 S.W.2d 284, 287-88 (Tex. App.-- Austin
1996, writ denied).
However, claims for just compensation under the Fifth
Amendment are not at all “like” contract actions for indemnity
brought against an insurance company. At the time of suit, facts
which give rise to such contract actions have already occurred. In
the context of these Fifth Amendment claims, however, an
unsuccessful conclusion of state compensation remedies is a
necessary element of the claim, itself. Carried to its logical
conclusion, property owners who seek to avoid the bar of res
judicata would be required, under this rule, to actually sue the
State for money damages on the mere presumption that the state
will somehow act unconstitutionally toward them at some future,
but unknown date. Setting aside the fact that states are not only
presumed, but are actually compelled to act in a constitutional
manner, it would be difficult to envision a scenario in which a
property owner could ever actually prevail in such a proceeding.
It has long been the rule that "a claim is not barred until it
comes into being and can be appropriately asserted." Empire Trust
19
Co. v. United States, 324 F.2d 507, 508 (Sth Cir. 1963), quoting
Martin v. Brodrick, 177 F.2d 886, 888 (10th Cir. 1949).
Furthermore, a judgment in one cause of action does not bar a
second cause of action which is based upon new facts created by
the first judgment. The fact that both actions arise out of the same
subject matter is immaterial. Jd. With all due deference to the
reasoning of the Texas courts, it is difficult to discern how it could
be that takings claims under the Fifth and Fourteenth
Amendments must be brought as an alternative or contingent
claim under Texas procedure, even though the claim is not "ripe"
under federal law and no constitutional violation occurs until the
property owner has unsuccessfully pursued State compensation
procedures. See MacDonald, Sommer & Frates v. Yolo County,
477 U.S. 340, 348 (1986).
The ripeness holding of Williamson County, which
requires exhaustion of the state court suit first, is analogous to
holdings on when a cause of action accrues for limitations
purposes. In suits for wrongful deprivations of property under 42
U.S.C. §1983, the same considerations that render a claim
premature prevent accrual of that claim for limitations purposes.
Those claims do not accrue until the relevant governmental
authorities have made a final decision on the fate of the property
involved. Norco Construction Co., Inc. v. King County, 801 F.2d
1143, 1146 (9th Cir. 1986). At bottom, this is not the kind of
contingent claim that is contemplated under Rules 51 and 48 of
the Texas Rules of Civil Procedure.
Whether Petitioner’s Fifth Amendment rights were
violated presents a different legal inquiry than that litigated
previously. He was entitled, and indeed was required, to utilize
available state compensation remedies before asserting a violation
of the Just Compensation Clause. Substantially different questions
are raised in these proceedings, and res judicata simply does not
apply. See, e.g., Lake Lucerne Civic Ass'n v. Dolphin Stadium
Corp., 878 F.2d at 1368.
20
The Jennings Reservation
Petitioner respectfully submits that the Court of Appeals
also erred in relying on Fields v. Sarasota Manatee Airport Auth.,
953 F.2d 1299 (11th Cir. 1992), to conclude that Mr. Guetersloh
should have made a "Jennings reservation" to preserve his federal
claim for federal court. Preserving the availability of a federal
forum for a federal question is just one factor in the federal res
judicata analysis of whether to grant preclusive effect to a state
court judgment. The purpose of a Jennings reservation is to place
the trial court on notice of a party's intention to reserve his right
to litigate federal questions in a federal forum. Holmes v. Jones,
738 F.2d 711, 714 (Sth Cir. 1984). Under the circumstances of this
case, however, a Jennings reservation fails of its intended purpose
because of the Eleventh Amendment. The Court of Appeals notes
as much in its Opinion. 930 S.W.2d at 287.
Under his federal appeal, to which this Court previously
denied certiorari, it was determined that Mr. Guetersloh never had
any right to a federal forum because of the Eleventh Amendment
bar. A Jennings reservation would therefore not be applicable
under the facts of this case. Requiring a Jennings reservation,
under these circumstances, would only serve to further create a
federal and state procedural morass and insure that this Petitioner
never gets his day in court, in any forum, on his federal
constitutional claim.
The Court of Appeals further erred in applying the Fields
case retroactively to Mr. Guetersloh. Jennings v. Caddo Parish
School Bd., 531 F.2d 1331 (Sth Cir.), cert. denied, 429 U.S. 897
(1976), was not a takings case. Moreover, the Fields decision
applying a Jennings reservation requirement to a Fifth
Amendment takings case was rendered after the Texas Supreme
Court had denied writ on the appeal of Guetersloh I. Petitioner
could not have reasonably anticipated in 1985 what the Fields
court itself admits is a strained analysis. Nor could Mr.
Guetersloh have reasonably anticipated that he was supposed to
21
make such a Jennings reservation to preserve a federal claim
which he could not present in federal court anyway. Petitioner
certainly had no clue that he needed to make a Jennings
reservation to avoid a procedural bar that was created after the
fact. In short, retroactively applying Jennings and Fields in this
way simply creates a trap for the petitioner which is totally
unnecessary.
Furthermore, the Fields decision itself is rare because the
court admits that it has engaged in strained reasoning in order to
avoid overruling Jennings, which it suggests should no longer be
good law. Applying the Fields opinion to Guetersloh raises the
very dilemma that the Eleventh Circuit panel states as its basis for
questioning the Jennings reservation:
[I]t would be a very odd result if the federal courts
were effectively barred from hearing claims
arising under the takings clause, except through
Supreme Court review via the writ of certiorari, of
state court decisions interpreting the clause. The
real question is not whether the state courts are
unable to enforce the takings clause -- they most
assuredly are -- rather, the question is whether the
citizens of this country are to be barred from ever
vindicating a federal constitutional right through
the federal court system. This premise seems to
go beyond Allen [v. McCurry, 449 U.S. 90 (1980)]
and Migra [v. Warren City School Dist. Bd. of
Educ., 465 U.S. 75 (1984)] and is at present
foreclosed in this Circuit by operation of
Jennings. Thus, our concern about the wisdom of
Jennings relates to the Jennings Court's ostensible
reliance on England to reach its result, not to the
result itself. Although the result in Jennings seems
to us to be a reasonable one, we are doubtful that
22
England [v. Louisiana State Bd. of Med.
Examiners., 375 U.S. 411 (1964)] compels it.
Fields, 953 F.2d at 1307 n.8 (citations added).
Finally, applying Fields to Petitioner results in circular
reasoning. As explained by the Fifth Circuit, there was nothing to
reserve because the Fifth Amendment cause of action does not
exist and therefore does not accrue until the constitutional
violation occurs (i.¢., until all state compensation procedures
prove ineffective). Samaad v. City of Dallas, 940 F.2d 925, 935
(Sth Cir.1991). As the Fields court itself notes, in Lewis v. East
Feliciana Parish School Bd., 820 F.2d 143, 146 n.1 (Sth Cir.
1987), a panel of the Fifth Circuit has "severely questioned the
continuing validity of Jennings." Fields, 953 F.2d at 1305 n.4.
Neither Jennings, nor Fields should be applied in such a way as
to deny this appellant a day in court on his federal takings claim.
Even If Compelled By State Procedural Law,
The Judgment Rendered In Guetersloh I
Results In A Denial of Due Process, And Is Not
Entitled To Preclusive Effect.
Even if this claim could have been asserted as an
alternative or contingent claim under the Texas Rules of Civil
Procedure, the doctrine of res judicata should not be applied,
under these circumstances, to preclude Mr. Guetersloh from
asserting his right to "just compensation" under the Fifth and
Fourteenth Amendments. Apparently, the Texas courts concluded,
incorrectly, that "Guetersloh bases his argument against the
application of res judicata entirely on his interpretation of
Williamson County Regional Planning Commission v. Hamilton
Bank, 473 U.S. 172 (1985)." Guetersloh, 930 S.W.2d at 287. To
the contrary, a substantial body of state and federal jurisprudence
would allow recovery under circumstances where, as here, a state
has impermissibly interpreted its own laws to deny a minimum
level of protection afforded by the federal constitution.
23
State constitutions cannot subtract from the rights
guaranteed by the United States Constitution. See, e.g., Oregon
v. Kennedy, 456 U.S. 667, 102 S.Ct. 2083, 72 L.Ed.2d 416
(1982); Pruneyard Shopping Center v. Robins, 447 U.S. 74, 100
S.Ct. 2035, 64 L.Ed.2d 741 (1980). At least as interpreted by the
Texas courts, "the only limit on the states is that, in relying on
their constitutions, they may not deny individuals the minimum
level of protection mandated by the Federal Constitution."
Davenport v. Garcia, 834 S.W.2d 4, 15 (Tex. 1992); see also, Sax
v. Votteler, 648 S.W.2d 661, 664 (Tex. 1983). "This approach has
been referred to as a ‘federal safety net,' ensuring that individuals
receive all available guarantees of their rights." Davenport, 834
S.W.2d at 15. Such a "constitutional safety net" would be
meaningless, however, if litigants have no right to actually pursue
their federal remedies once it is determined that a judgment
entered according to state law denies relief that is compelled by
the federal constitution.
A recurring theme in this litigation is that Texas courts are
open to both statutory and inverse condemnation claims brought
against agencies of the state on the basis of the Fifth and
Fourteenth Amendments, as well as on the basis of the Texas
Constitution and laws. In fulfilling that obligation, however,
states must satisfy all applicable requirements of the Due Process
Clause. Kremer v. Chemical Const.Corp., 456 U.S. 461, 482
(1982). Where they do not, it is well established that a "state may
not grant preclusive effect in its own courts to a constitutionally
infirm judgment..." Jd.
The Summary Judgment Standard
This case comes to the Court by way of summary
judgment. Under the well-established rules of summary judgment
practice, evidence favorable to this Petitioner should be taken as
true, and every reasonable inference must be indulged in his favor.
Nixon v. Mr. Property Management Co., 675 S.W.2d 585 (Tex.
1984)(applying Texas law); see also, Hudson v. Palmer, 468 U.S.
24
517, 540 (1984)(applying the federal rules). For purposes of this
appeal, it should be conceded that Mr. Guetersloh has established
a prima facia case for an uncompensated "taking" within the
meaning of the Fifth and Fourteenth Amendments.
Applying res judicata principles to the holding of
Guetersioh, I would entitle this property owner to no
compensation, whatsoever, for what amounts to a taking, as a
matter of law. Such a judgment is entitled to preclusive effect
only if it comports with due process. If it does not, it is well-
established that federal courts can refuse to accord preclusive
effect to a state court judgment where application of that state’s
preclusion law would violate due process. Peduto v. City of
North Wildwood, 878 F .2d 725, 728 (3" Cir. 1989); citing Kremer
v. Chemical Construction Corp., 456 U.S. 461, 482 (1982).
Due Process Requires Just Compensation
The requirement of "just compensation" for the taking of
private property is constitutionally required under the Fifth
Amendment, and for almost a century, has been held to be
applicable to the states because of its incorporation into the
meaning of "due process" as found in the Fourteenth Amendment.
Chicago, Burlington and Quincy R.R. v. City of Chicago, 166 U.S.
226, 236 (1897); First English Evangelical Lutheran Church v.
County of Los Angeles, 482 U.S. 304, 310 n.4 (1987). Questions
going to "property," "taking," "just compensation," and "payment"
are all facets of this central federal question of denial of due
process. Foster v. City of Detroit, 254 F.Supp 655, n.14 (E.D.
Mich. 1966), aff'd, 405 F.2d 138 (6th Cir. 1968).
The ultimate question to be resolved in these proceedings
is not merely whether the procedure by which Mr. Guetersloh's
property was "taken" complied with the requirements of
procedural due process. Rather, the issue is whether the state,
although complying with its own rules of procedure, has
nevertheless violated the Fifth and Fourteenth Amendments by
25
taking this man's property without just compensation. As Mr.
Justice Harlan stated for the Court in the seminal case of Chicago,
Burlington & Quincy R.R. v. City of Chicago:
A state may not, by any of its agencies, disregard
the prohibitions of the fourteenth amendment. Its
judicial authorities may keep within the letter of
the statute prescribing forms of procedure in the
courts, and give the parties interested the fullest
opportunity to be heard, and yet it might be that
its final action would be inconsistent with that
amendment. In determining what is due process
of law, regard must be had to substance, not to
form.
Chicago, Burlington & Quincy R.R., 166 U.S. at 234.
Under such circumstances, it has long been recognized
that there is the possibility of a federal question in every taking
under state authority, even if all conditions of state law have been
complied with. See McCoy v. Union Elevated Ry., 247 U.S. 354
(1918); Monongahela Navigation Co. v. United States, 148 U.S.
312 (1893); Chicago Burlington and Quincy R.R., 166 U.S. at 236
(1897); Foster v. City of Detroit, 254 F.Supp. 655, n.14;
Richmond Elks Hall Ass'n v. Richmond Dev., 561 F.2d 1327, 1330
(9th Cir. 1977); 18 AM. JUR. Eminent Domain §§ 144, 145 pp.
772-3 (1938). Zero compensation, under these circumstances,
would sanction the taking of private property without due process.
The legislature may prescribe a form of procedure
to be observed in the taking of private property for
public use, but it is not due process of law if
provision be not made for compensation... The
mere form of the proceeding instituted against the
owner, even if he be admitted to defend, cannot
convert the process used into due process of law,
26
if the necessary result be to deprive him of his
property without compensation.
Chicago, Burlington & Quincy R.R., 166 U.S. at 236-37. The
decision rendered in Guetersloh | did not compensate this litigant
for a Fifth Amendment "taking." Because that judgment would
offend due process, it is not entitled to preclusive effect.
In Guetersloh I, the issue before the court was whether a
compensable event occurred under state law. The answer was
"no." The issue in the present case is whether the state can
enforce a policy that is so inconsistent with the "just
compensation" mandate of the Fifth and Fourteenth Amendments.
In Guetersloh I, the Texas Courts held that "the Commission's
authority to seek a receivership against this utility was a valid
exercise of the state's police power, for which no compensation is
required.” Slip Op. at p. 7(Guetersloh I)(emphasis added). Under
the federal standard, however,
The rights conferred by the Takings Clause and
the police power of the State may coexist without
conflict. Property is bought and sold, investments
are made, subject to the State's power to regulate.
Where a taking is alleged from regulations which
deprive the property of all value, the test must be
whether the deprivation is contrary to reasonable,
investment-backed expectations.
Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1034,
(1992) (Kennedy, J., concurring).
Guetersloh_I demonstrates that under Texas law,
regulatory takings focus solely on the reasonableness of the
regulation at issue. See, Slip Op. at p. 7 (Guetersloh I). Yet under
the federal constitutional standard, once it is determined that the
offending regulation substantially advances a legitimate state
interest, the inquiry then focuses on whether that regulation denies
an owner of economically viable use of his property. Nollan v.
27
California Coastal Comm'n, 483 U.S. 825, 834 (1987); Lucas, 505
U. S. at 1030. Unlike the analysis of Texas law in Guetersloh I,
the Fifth Amendment requires that:
[A] regulation that declares "off limits” all
economically productive or beneficial uses of land
goes beyond what the relevant background
principles would dictate, [and] compensation
must be paid to sustain it.
Lucas, 505 U.S. at 1030. As he was required to do under the plain
language of Williamson County, Petitioner first-utilized the
procedure prescribed by Texas law to assert his inverse
condemnation claim before asserting a violation of the Just
Compensation Clause. See, e.g., Williamson County, 473 U.S. at
194. When tested against the requirements of the Fifth
Amendment, the judgment in Guetersloh | results in a denial of
due process, and effects an unconstitutional taking of property
without just compensation. In the event of such an
uncompensated taking, the federal right to just compensation
becomes not only a defense to the state law action, but also
becomes an independent claim that is both necessary and proper.
Cf Bivens v. Six Unknown Agents, 403 U.S. 388 (1971);
Boilermakers v. Hardeman, 401 U.S. 233, 241 (1971).
As this Court has previously held, the Property Clause of
the Fifth Amendment "constitutes more than a pleading
requirement, and compliance with it [requires] more than an
exercise in cleverness and imagination.” Nollan v. California
Coastal Commission, 483 U.S. 825, 841 (1986). Under these
circumstances, the prior judgment in Guetersloh | is not entitled
to preclusive effect, and res judicata should not apply.
To date, the merits of Mr. Guetersloh's claim for just
compensation under the Fifth Amendment have not been
addressed. Perhaps the most that can be stated with authority
regarding the matter is that state and federal appellate courts are
28
deeply divided, and internally inconsistent, in the way and manner
in which property owners are allowed to assert those Fifth
Amendment rights. What is certain, however, is that in regulating
the health, safety, and general welfare of its citizens, states may
not simply transform private property into public property without
compensation.
Nothing inherent in the private property rights of Mr.
Guetersloh, as a lienholder, Suggests that he is somehow
undeserving of this constitutional protection. To the contrary, this
Court as well as the Texas courts have expressly held otherwise.
Taub v. City of Deer Park, 882 S.W.2d 824, 826 (Tex. 1994),
citing Armstrong v. United States, 364 U.S. 40, 48 (1960)("total
destruction by the Government of all value of [certain] liens" is a
taking). Nonetheless, Mr. Guetersioh has received nothing for the
extended period during which his taking was effective.
This Petitioner unsuccessfully utilized state and federal
compensation procedures. Now, having satisfied all known
conditions precedent for this Fifth Amendment action, his
constitutional claim is finally ripe, but is Procedurally barred.
Quite obviously, this is not the place or the time to reach the
merits of Petitioner’s entitlement to compensation under the Fifth
Amendment. That is for the lower courts to determine upon a full
and complete development of the record on remand. However, if
the Petition is granted, this Court may wish to use this Opportunity
to revisit its Williamson County ripeness holding for the purpose
of clarifying the question of when, and under what circumstances,
such Fifth Amendment claims should properly be asserted. It may
be that the Court would wish to somewhat distance itself from its
prior position by holding that ripeness, in this context, is not an
unwaivable element of subject matter jurisdiction, but merely
Serves as a prudential limitation imposed upon federal, but not
State courts. Or the Court may wish to confirm this ripeness
standard and perhaps constitutionalize the rule of res judicata in
29
this context, so that the outcome of property owners’ claims will
no longer depend upon the vagaries of state procedural law.
Whatever is finally determined, Petitioner respectfully
requests that the Court apply its decision prospectively, and order
that this cause be remanded for a more constitutionally defensible
analysis of the just compensation rights afforded to Mr.
Guetersloh by the Fifth and Fourteenth Amendments.
CONCLUSION
For all of the reasons stated above, this Petition for a Writ
of Certiorari should be granted, and the Court should allow
Petitioner to file his brief so that he may articulate, more
comprehensively, why the Texas Courts failed to properly analyze
the federal constitutional principles involved when it imposed the
bar of res judicata to deny this property owner an opportunity in
which to litigate the merits of this uncompensated regulatory
taking. If this published decision goes unreviewed, it will mean
that property owners who are forced to endure such
uncompensated takings at the hands of a state, and who faithfully
follow the dictates of this Court to ripen those claims, will find
that their promise of Just Compensation under the Fifth and
Fourteenth Amendments has been converted to a mere illusion.
Respectfully Submitted,
JAMES DOUGLAS RAY
ATTORNEY FOR THE PETITIONER
406 W. 13” Street, Suite 200
Austin, Texas 78701
(Tel.) 512/478-8698
(Fax.) 512/478-2778
DECEMBER 3, 1997
30
APPENDIX
Appendix “A”
M.F. GUETERSLOH, Jr., Appellant,
Vv.
The STATE OF TEXAS, The Public Utility
Commission, The Texas Water Commission, The
City of Lubbock, and James Miller, Receiver of the
Carlisle Water Supply Company, Appellees.
No. 03-95-00626-CV.
Court of Appeals of Texas, Austin.
Sept. 18, 1996.
Rehearing Overruled Oct. 30, 1996.
Owner of water supply company brought action against
State, Public Utility Commission (PUC), Texas Water
Commission, city, and receiver of company, asserting takings
claim under Fifth and Fourteenth Amendments. Defendants
moved for summary judgment. The District Court, Travis County,
261st Judicial District, John Dietz, J., granted motion on res
judicata grounds. Owner appealed. The Court of Appeals, Jones,
J., held that: (1) owner's Fifth and Fourteenth Amendment takings
claim could have been raised in owner's prior state-court inverse
condemnation action and, thus, claim was barred by res judicata,
despite contention that owner's federal takings claim had not yet
accrued until disposition of his state-law constitutional takings
claim in prior action, and (2) owner did not come within exception
to res judicata for federal takings claims, as owner failed in prior
action to make proper reservation of his federal-law claim for
possible litigation and resolution by federal court.
App. A-1
Affirmed. 930 S.W.2d 284, Guetersloh v. State, (Tex.
App.-Austin 1996)
Marilyn Phelan, Lubbock, for Appellant. Jeff Hartsell,
City of Lubbock, Office of the City Attorney, Lubbock, Dan
Morales, Attorney General, James Todd, Assistant Attorney
General, General Litigation Division, Austin, for Appellees.
Before POWERS, JONES and B.A. SMITH, JJ.
JONES, Justice.
Appellant, M.F. Guetersloh, Jr., sued the State of Texas,
the Public Utility Commission, the Texas Water Commission,
(FN1) the City of Lubbock, and James Miller, Receiver of the
Carlisle Water Supply Company, appellees, asserting a takings
claim under the Fifth and Fourteenth Amendments to the United
States Constitution. The district court granted summary judgment
against Guetersloh on the ground that his federal takings claim
was barred by res judicata because the claim could have been
brought in his prior inverse-condemnation suit. In a single point
of error, Guetersloh asserts that his federal takings claim was not
ripe until his earlier suit was concluded, so he could not have
brought the federal claim in the prior suit. We will affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Guetersloh was previously the owner and operator of the
Carlisle Water Supply Company, a small water utility that
supplied water to a handful of families in the Carlisle community
outside of Lubbock. In 1978 Guetersloh sold the utility, retaining
a vendor's lien and deed of trust on the property as security for a
promissory note. In 1983 the new owner allegedly violated an
order of the Public Utility Commission, resulting in the
appointment of a receiver to manage the utility's assets. During
the receivership, the owner defaulted on his payments to
Guetersloh, who foreclosed on the utility in 1985. The State,
App. A-2
however, judicially enjoined Guetersloh from entering the
property or interfering with the receiver's right of legal possession.
In 1987 the City of Lubbock annexed the Carlisle area and
built a new water system, continuing the receivership of
Guetersloh's utility until the new water system was completed and
began providing water services to all the residents of Carlisle.
After the customers of Carlisle Water Supply were transferred to
the City of Lubbock, Guetersloh was granted permission to take
possession of the utility. By that time, however, all the utility's
customers were gone and its pipes and workings were badly in
need of repair. At no time did the State pay Guetersloh for any
use of or injury to the utility.
During the time the receiver was Operating the utility,
Guetersloh filed an inverse-condemnation claim against the City
of Lubbock and the receiver in Lubbock County district court,
initially asserting causes of action under the takings clauses of
both the Texas Constitution (FN2) ("the state-law claim") and the
United States Constitution (FN3) ("the federal-law claim"). The
State of Texas, on behalf of the Public Utility Commission,
intervened in the suit. Guetersloh later added the Texas Water
Commission as a defendant. Without comment or explanation,
Guetersloh subsequently dropped the federal-law claim from his
suit, leaving only the state-law claim. The district court in
Lubbock County granted an interlocutory summary judgment in
favor of all defendants except the Public Utility Commission. The
court then transferred venue in the case to Travis County. The
district court in Travis County later rendered a final summary
judgment in favor of the Public Utility Commission; this had the
effect of making the interlocutory summary judgment in favor of
the other defendants final also.
Guetersloh appealed the trial court's judgment rejecting
his state-law claim. This Court affirmed, reasoning that the
alleged taking was a valid exercise of state police power, for
which no compensation is required. Guetersloh v. Public Util.
App. A-3
Comm'n, No. 3-90-161-CV (Tex.App.-Austin Aug. 14, 1991, writ
denied) (not designated for publication). Guetersloh's application
for writ of error to the Texas Supreme Court was denied.
Guetersloh then filed suit on his federal-law claim in
federal district court. Named as defendants, among others, were
the State of Texas, the Public Utility Commission, the Texas
Water Commission, and the receiver. The district court dismissed
the claim, ruling that it was barred by the statute of limitations, res
judicata, and the Eleventh Amendment to the U.S. Constitution.
The Fifth Circuit Court of Appeals modified the judgment to hold
that Guetersloh's claim was barred solely by the Eleventh
Amendment. Guetersloh v. State of Texas, No. 93-8729, 25 F.3d
1044 (Sth Cir. June 3, 1994) (not designated for publication), cert.
denied, 513 U.S. 1076, 115 S.Ct. 721, 130 L.Ed.2d 627 (1995).
The U.S. Supreme Court denied Guetersloh's application for a writ
of certiorari.
Guetersloh then filed the present suit in Travis County
district court, reurging his federal-law claim. The court granted
appellees' motion for summary judgment, ruling that Guetersloh's
federal-law claim was barred by res judicata. It is from this
judgment that Guetersloh now appeals.
DISCUSSION
[1] [2] Under the "transactional" approach to res judicata
adopted in Texas, a claim is precluded "if it arises out of the same
subject matter of a previous suit and which through the exercise
of diligence, could have been litigated in a prior suit." Barr v.
Resolution Trust Corp., 837 S.W.2d 627, 631 (Tex.1992). In the
present case, Guetersloh's federal-law and state-law claims are
simply two alternative theories by which he attempts to recover
for the same alleged taking, so there is no issue of whether the two
claims arose out of the same factual transaction. Thus, the
dispositive issue here is whether Guetersloh's federal-law claim
App. A-4
could have been litigated in the prior suit in which he pursued his
state-law claim to a final judgment.
Guetersloh bases his argument against the application of
res judicata entirely on his interpretation of Williamson County
Regional Planning Commission v. Hamilton Bank, 473 U.S. 172,
105 S.Ct. 3108, 87 L.Ed.2d 126 (1985), where the United States
Supreme Court held that "if a State provides an adequate
procedure for seeking just compensation [for a taking], the
property owner cannot claim a violation of the [federal] Just
Compensation Clause until it has used the [state] procedure and
been denied just compensation." Id. at 195, 105 S.Ct. at 3121.
He asserts that he was precluded from asserting his federal-law
claim in his first suit because, under the holding of Williamson
County, that claim was not yet ripe. Guetersloh argues that he
was required to unsuccessfully seek compensation in the state
courts under Article I section 17 of the Texas Constitution before
his federal-law claim even existed; that only upon denial of just
compensation from the state was his federal-law claim mature;
and that therefore the nonexistent, unripe federal claim could not
have been litigated in his state inverse-condemnation suit. In
Guetersloh's view, if he were now precluded by res judicata from
bringing his federal-law claim, the effect would be to deny him
altogether a forum in which to argue the merits of his Fifth
Amendment takings claim.
[3] Facially, Guetersloh's arguments sound appealing. The
Supreme Court in Williamson County held that a plaintiff seeking
to assert a federal takings claim under the Fifth Amendment must
first have unsuccessfully sought compensation through the state
procedures for doing so. 473 U.S. at 194, 105 S.Ct. at 3120. "The
Fifth Amendment does not proscribe the taking of property; it
proscribes taking without just compensation." Id. In the present
case, Guetersloh contends that this requirement was not and could
not be met until he pursued his state-law claim in the state courts
and was denied relief. Thus, Guetersloh argues that his
App. A-5
federal-law claim was not ripe for determination by the state court
at that time, could not have been brought with his state claim, and,
therefore, could not be subject to res judicata. We disagree.
[4] First, state courts clearly have jurisdiction to resolve
takings claims based on federal law. Moreover, the Texas Rules
of Civil Procedure expressly provide for the simultaneous
presentation of multiple claims, alternative theories, and
contingent causes of action:
RULE 48. ALTERNATIVE CLAIMS FOR RELIEF
A party may set forth two or more statements of a claim
or defense alternatively or hypothetically, either in one count or
defense or in separate counts or defenses...
RULE 51. JOINDER OF CLAIMS AND REMEDIES
(a) Joinder of Claims. The plaintiff in his petition ... may
join either as independent or as alternate claims as many claims
either legal or equitable or both as he may have against an
opposing party....
(b) Joinder of Remedies. Whenever a claim is one
heretofore cognizable only after another claim has been
prosecuted to a conclusion, the two claims may be joined in a
single action; but the court shall grant relief in that action only in
accordance with the relative substantive right of the parties....
Tex. R. Civ. P. 48, 51.
[5] Thus, with limited exceptions not applicable here,
under Texas law the mere fact that a cause of action is contingent
on the outcome of another suit does not prevent the two claims
from being raised and litigated simultaneously in the same suit.
For example, in Getty Oil Co. v. Insurance Co. of North America,
845 S.W.2d 794 (Tex.1992), Getty Oil purchased chemicals from
NL Industries, Inc. under a contract that arguably required NL to
obtain insurance on Getty's behalf. An accident involving the
App. A-6
Ee Se re Meee mee Me MT
chemicals occurred. After the parties litigated various liability
issues favorably to NL, Getty sued NL for insurance coverage.
Getty sought to avoid a res judicata bar by arguing that its
insurance claims against NL did not accrue until judgment in the
first suit was rendered resolving the liability issues. Relying on
rule 51(b), the supreme court rejected this argument:
Getty argues that res judicata cannot bar its present claims
against NL because these claims did not accrue until judgment
was rendered in the [Getty Oil Corp. v.] Duncan {721 S.W.2d 475
(Tex. App--Corpus Christi 1986)] suit. That is, Getty had no
liability and hence no need for insurance coverage until liability
was assigned. The contingent nature of these claims, however,
does not preclude the operation of res judicata. We held in Barr
that "[a] subsequent suit will be barred if it arises out of the same
subject matter of a previous suit and which, through the exercise
of diligence, could have been litigated in a prior suit." 837 S.W.2d
at 631. Getty could have asserted its present claims in the
Duncan suit, with their resolution being contingent on the
plaintiffs’ claims.
Id. at 799.
Likewise, in the present case, Guetersloh's federal-law
claim was contingent on an unsuccessful outcome in his
state-court suit involving his state-law claim. Under rules 51 and
48 of the Texas Rules of Civil Procedure and the supreme court's
holding in Getty Oil, nothing prevented Guetersloh from
simultaneously raising his federal-law and State-law claims in the
same suit. Accordingly, his "not yet accrued” argument does not
provide him an escape from the bar of res judicata.
[6] Nonetheless, Guetersloh also contends that he has a
right to litigate his federal-law claim in federal court. He argues
that, since federal courts will not relitigate a federal-law issue that
has already been tried in state court, a procedure whereby he is
required to present both his state-law and his federal-law claims
App. A-7
initially in state court would effectively preclude him from ever
having his federal-law claim decided by a federal court.
[7] [8] [9] Leaving aside the question of the Eleventh
Amendment, a plaintiff generally has the right to have his
federal-law claim litigated in a federal court. The United States
Supreme Court has recognized "the primacy of the federal
judiciary in deciding questions of federal law." England v.
Louisiana State Bd. of Medical Examiners, 375 U.S. 411, 415-16,
84 S.Ct. 461, 465, 11 L.Ed.2d 440 (1964). In the present case,
however, Guetersloh did not avail himself of the procedure by
which he could have preserved his federal-law claim while
proceeding to litigate his state-law claim in state court. In
England, an abstention case, the Supreme Court set forth a
procedure by which would-be federal-law claimants may litigate
their state-law claims and still return to federal district court on
their federal-law claims if the results in state court are
unfavorable. The court held that, following federal-court
abstention, a plaintiff is not required to litigate his federal claims
in the state court; he has only to inform the state court what his
federal claims are, so that the state statute or requirement can be
construed "in light of" those claims. Id. at 420, 84 S.Ct. at 467.
This "reservation" by the would-be federal claimant was held to
occur in three steps: (1) the litigant first files in federal court; (2)
the federal court abstains and stays the federal proceedings until
the state courts resolve all state-law questions; and (3) the litigant
informs the state courts of his intention to return, if necessary, to
federal court on his federal constitutional questions after the
State-court proceedings are concluded. Id. at 416-22, 84 S.Ct. at
465-68. When a proper reservation has been made, the litigant's
right to return to the federal courts must in all events be preserved.
Id. at 421-22, 84 S.Ct. at 468. However, if a party is found to
have freely sought a binding adjudication of all his claims in state
court, and he has failed to make a proper reservation to the
disposition of the entire case by the state courts, then that party
App. A-8
has in effect foregone his right to return to federal court to bring
his federal claim. Id. at 419, 84 S.Ct. at 467.
The Fifth Circuit applied the England procedural
requirements broadly in Jennings v. Caddo Parish Schoo! Board,
531 F.2d 1331 (Sth Cir.1976). Although not an abstention case,
the court held that "had appellant wished to reserve her
constitutional claims for subsequent litigation in federal court, she
could have done so by making on the state record a reservation to
the disposition of the entire case by the state courts." Id. at 1332.
Although England and Jennings were in the contexts of
medical licensees and racial discrimination, respectively, the
Eleventh Circuit's decision in Fields v. Sarasota Manatee Airport
Authority, 953 F.2d 1299 (11th Cir.1992), is squarely on point.
Fields resolves the question of how Williamson County and
England work together in the context of a takings case. Fields
points out that the three-step England process is not applicable to
a takings clause claim, because Williamson County ripeness
requirements effectively prevent a litigant from first filing in a
federal court. Fields, 953 F.2d at 1305. The Fields court held,
however, that a " Jennings reservation" (i.e., a reservation not
preceded by federal court abstention) can be made only if the
would-be federal court litigant is pursuing state-court proceedings
"involuntarily." Id. at 1306 (construing Migra v. Warren City
School Dist. Bd. of Educ., 465 U.S. 75, 104 S.Ct. 892, 79 L.Ed.2d
56 (1984)). The court held that a litigant is “involuntarily” in state
court if one of two prerequisites is met: (1) the litigant is a
defendant in a non-removable state-court action and wishes to
pursue a federal counterclaim, or (2) federal law imposes an
exhaustion requirement upon a would-be federal court litigant as
a precondition of bringing his federal claim in federal court. 953
F.2d at 1306. By operation of Williamson County, federal
takings claims satisfy the second prerequisite. Id. Hence, the
Fields court held that, if the appropriate reservation is made in
State court, would-be federal court litigants who are forced to
App. A-9
pursue state court proceedings in order to satisfy exhaustion
requirements imposed by federal law incident to a takings clause
claim are "involuntarily" in state courts, and therefore qualify for
the exception to generally applicable res judicata principles.
Id.
In the present case, Guetersloh was involuntarily in state
court, because he was fulfilling the Williamson County
requirements. However, the record does not show that he made
or attempted to make any reservation of his federal-law claim
through the procedures outlined above. Thus, although he could,
with the exercise of diligence, have preserved his right to return
to federal court to litigate his federal-law claim, he did not do so.
CONCLUSION
We conclude that Guetersloh's federal-law claim could
have been raised in his first state-court suit, thus making res
judicata principles applicable. We also conclude that Guetersloh
does not come within an exception to res judicata, because he
failed to make a proper reservation of his federal-law claim for
possible litigation in and resolution by a federal court. We
overrule Guetersloh's point of error and affirm the trial court's
judgment. ;
FN1. The Texas Water Commission has since been converted into
the Texas Natural Resource Conservation Commission. See Act
of July 30, 1991, 72d Leg., Ist C.S., ch. 3, § 1.085, 1991 Tex.
Gen. Laws 4, 42.
FN2. "No person's property shall be taken, damaged or destroyed
for or applied to public use without adequate compensation being
made, unless by the consent of such person." Tex. Const. art. I,
§ 17.
FN3. "[NJor shall private property be taken for public use, without
just compensation." U.S. Const. amend V.
App. A-10
Appendix “B”
No. 95-07117
M. F. GUETERSLOBH, JR., § IN THE DISTRICT
§ COURT
Plaintiff §
§
VS. §
§
THE STATE OF TEXAS; § OF TRAVIS COUNTY,
§ TEXAS
THE PUBLIC UTILITIES §
COMMISSION; THE TEXAS §
WATER COMMISSION; THE §
CITY OF LUBBOCK AND §
JAMES MILLER, RECEIVER §
OF THE CARLISLE WATER §
SUPPLY COMPANY, §
§ 261" JUDICIAL
Defendants § DISTRICT
ORDER GRANTING SUMMARY JUDGMENT
The Court, after examining the pleadings, briefs, and the
Summary Judgment filed by the Defendants and Movants, THE
STATE OF TEXAS, THE PUBLIC UTILITIES COMMISSION,
THE TEXAS WATER COMMISSION, THE CITY OF
LUBBOCK, AND JAMES MILLER, is of the opinion that the
Motions of Defendants well founded and should be GRANTED
on the basis of res judicata.
IT IS THEREFORE ORDERED, ADJUDGED, and
DECREED that Plaintiff, M. F. GUETERSLOH, JR.., take nothing
against the aforementioned Defendants.
IT IS FURTHER ORDERED, ADJUDGED, and
DECREED that Defendants, THE STATE OF TEXAS, THE
PUBLIC UTILITIES COMMISSION, THE TEXAS WATER
App. B-]
irre
~
COMMISSION, THE CITY OF LUBBOCK, AND JAMES
MILLER, recover their costs herein, for which execution may
issue.
All relief requested and not expressly granted is denied
SIGNED this 6" day of September, 1995.
Original signed by the Honorable
John K. Dietz, PRESIDING JUDGE
APPROVED AS TO FORM AND CONTENT:
Original signed by
Jeff Hartsell, Attorney for the City of Lubbock
Original signed by
James Todd, Attorney for the State of Texas,
The Public Utilities Commission, The Texas
Water Commission, and James Miller
App. B-2
Appendix “C”’
No. 96-1257
IN THE SUPREME COURT OF TEXAS
M. F. GUETERSLOH, JR.
v.
THE STATE OF TEXAS; THE PUBLIC UTILITY
COMMISSION; THE TEXAS WATER COMMISSION;
THE CITY OF LUBBOCK; and JAMES MILLER, receiver
of the CARLISLE WATER SUPPLY COMPANY
July 31, 1997
Dear Counsel:
Today, the Supreme Court of Texas denied the above
referenced application for writ of error with the notation “Writ
Denied”.
Sincerely,
John T. Adams, Clerk
by
Original signed by
Michael C. Murphey, Deputy
App. C-1
Appendix “D”
No. 96-1257
IN THE SUPREME COURT OF TEXAS
M. F. GUETERSLOH, JR.
v.
THE STATE OF TEXAS; THE PUBLIC UTILITY
COMMISSION; THE TEXAS WATER COMMISSION;
THE CITY OF LUBBOCK; and JAMES MILLER, receiver
of the CARLISLE WATER SUPPLY COMPANY
September 4, 1997
Dear Counsel:
Today, the Supreme Court of Texas overruled
petitioner’s motion for rehearing of the application for writ of
error in the above styled case.
Sincerely,
John T. Adams, Clerk
by
Original signed by
Blanca E. Morin, Deputy
App. D-1
Appendix “E”’
NO. 93-8729
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
M. F. GUETERSLOH, JR.,
Plaintiff-Appellant,
V.
STATE OF TEXAS, ET AL,
Defendant-Appellee.
Appeal from the United States
District Court for the Western
District of Texas
Before GARWOOD, JOLLY and SMITH, Circuit Judges”
PER CURIAM:
This is an inverse condemnation suit for money damages
only brought by Plaintiff-Appellant, M. F. Guetersloh, Jr.,
(Guetersloh) in the court below against the State of Texas and
certain of its agencies and officers in their official Capacities
under 42 U.S.C. § 1983 and the takings clause of the Fifth
Amendment, as extended to the states by the Fourteenth
opinion should not be published.
App. E-1
Amendment.' Guetersloh claimed a temporary taking during and
by virtue of a receivership, which had terminated prior to the
judgment below, of a water company on the assets of which he
had a lien which he had foreclosed before the receivership ended.
Although defendants raised the Eleventh Amendment as a
jurisdictional bar to this federal court suit, and the court below
found that the suit was barred by the Eleventh Amendment, it
nevertheless reached the merits and found Guetersloh's claims
barred by limitations and res judicata, that there was no
compensable taking, and that no damages were proved; and
accordingly it dismissed the suit.
It is settled that the Eleventh Amendment is a
jurisdictional bar to a suit for damages in federal court against a
state or any state agency or state officer in his official capacity,
and that any abrogation or waiver of such bar must be express and
unequivocal. Quern v. Jordan, 99 S.Ct. 1139, 1146 (1979);
Penhurst State Sch. & Hosp. v. Halderman, 104 S.Ct. 900, 907-8
(1984); Ford Motor Co. vs. Department of Treasury, 65 S.Ct. 347,
350 (1945). Waiver of sovereign immunity in state courts does
not waive Eleventh Amendment immunity from suit in federal
court. Penhurst at 907 n.9. Under the circumstances, it is clear
that the instant suit should have been dismissed for want of
jurisdiction under the Eleventh Amendment. See Barry v.
Fordice, 814 F.Supp. 511 (S.D. Miss. 1992), aff'd on the basis of
the district court opinion, 8 F.3d 1 (Sth Cir. 1993); John G. &
Marie Stella Kenedy Mem. Found. v. Mauro, No. 92-7714, slip
op. 4415 (5th Cir. May 27, 1994); Harrison v. Hickel, 6 F.3d 1347
(9th Cir. 1993). We note in this connection that, as the State of
' To the extent that Guetersloh may have sought damages from any of the state
officers in their individual capacities, he does not complain on appeal of the
dismissal on the merits of any such claims; nor do we perceive any error in any
such dismissal, as it is plain, inter alia, that any such claim would be defeated
by qualified immunity.
App. E-2
Texas through its Attorney General confirms and as Guetersloh
admits, the courts of the State of Texas are open to inverse
condemnation damage claims against state agencies on the basis
of the Fifth Amendment, as applied to the states through the
Fourteenth Amendment, as well as on the basis of the Texas
constitution and laws. See, e. g., Estate of Scott v. Victoria
County, 778 S.W.2d 585, 589-91 (Tex. App.-Corpus Christi 1989;
n.w.h.) (Benavides, J.). In short, application of the Eleventh
Amendment does not of itself deny a judicial forum, with ultimate
review available in the United States Supreme Court, for
resolution of Guetersloh's Fifth Amendment takings claim. Cf.
Harrison at 1352-54.
We accordingly modify the judgment below so that the
dismissal of Guetersloh's claims against the State of Texas, the
state agencies, and the state officers in their official Capacities is
for want of jurisdiction under the Eleventh Amendment; and, as
so modified, the judgment is affirmed.
MODIFIED and AFFIRMED AS MODIFIED.
App. E-3
Appendix “F”
NO. A-92-CA-359
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
M. F. GUETERSLOH, JR.,
¥.
THE STATE OF TEXAS, ET AL.
ORDER
Comes now the Court and enters the following final Order
in the above-styled cause of action.
BACKGROUND
The Court makes the following finding of facts:
In 1982, Plaintiff had a lienholder’s interest in a privately
owned rural water system near Lubbock, Texas. Plaintiff sold the
water system to a Mr. Ray Nichols and retained a vendor's lien
and deed of trust as security for the purchase price. The
Defendant put on evidence that the water system was in poor
condition at the time of the sale from Plaintiff to Mr. Nichols.
After receiving complaints, the Public Utility Commission
("PUC") conducted an investigation into Nichols’ alleged
mismanagement of the system. The PUC entered an Order on
October 22, 1982, directing Nichols to take certain steps and
advising him that his failure to do so might result in the
imposition of a receivership. Time passed, the violations
continued, and the PUC obtained an Order from 2 Texas District
Court on July 21, 1983, in The State of Texas v. Ray Nichols,
d/b/a Carlisle Water Supply, Cause Number 343,820, in the 250th
Judicial District of Travis County (the "receivership suit") naming
App. F-1
a receiver to take possession and Operate the water service in
compliance with appropriate health standards.? Defendant Miller,
by the same Court Order, was appointed as the Receiver for the
utility. Attorneys from the Attorney General's Office gave notice
to the Plaintiff of various matters that were going on in the
receivership proceedings. More time passed, and in 1985 the
Plaintiff foreclosed and took legal title of the land. In December,
1985, the Plaintiff attempted to re-enter and take possession of the
system, including physically removing one of the pumps from the
plant, and the receiver obtained injunctive relief that prevented
Plaintiff from having access onto the property. The application to
vacate the receivership was filed on February 1, 1988. The Court
entered an order vacating the receivership on March 25, 1988.
The Plaintiff now has control of the water system.
Thus the Plaintiff had from 1985 through March, 1988, to
intervene in the receivership case and assert any legal rights he
had concerning the water supply system. The Plaintiff made a
conscious decision not to intervene in the state receivership
action. Instead, the Plaintiff filed a suit in the district court of
Lubbock County, Texas, against the receiver, Miller, and the City
of Lubbock (the "state suit"). In that state case, Plaintiff
originally brought claims under both the State and federal
constitutions alleging a “taking, damaging, or destroying .. .
without adequate compensation." Plaintiff then amended his
intervene in the receivership, although he had the legal right to do so. The
Plaintiff has no explanation for his failure to do so beyond his subjective belief
waste and coliusion by the City of Lubbock as well as objecting to the final
accounting and obtaining judicial review of the district court's oversight of the
receiver.
App. F-2
pleadings to delete the claims under the U.S. Constitution. More
time passed, and the state court terminated the receivership--
without objection from the Plaintiff--and the final accounting was
approved on April 5, 1988. The state district court soon thereafter
granted the defendants’ motion for summary judgment for all
parties other than the PUC and transferred the case to Travis:
County, Texas. The state district court--in the absence of any
evidence from the Plaintiff, even evidence of legal title to the
water supply system--granted summary judgment for the PUC.
The Plaintiff appealed these decisions through all of the state
appellate courts, including the Texas Supreme Court. The Texas
Supreme Court denied the Plaintiff's writ of error. The Plaintiff
has now filed this suit in federal court against a host of
Defendants under a number of theories.
PLAINTIFF'S CLAIMS FOR RELIEF
Plaintiff seeks relief under several theories. First, that the
State of Texas is liable under the fifth and fourteenth amendments
to the United States Constitution for "just compensation" under a
theory of "taking" by the state of Plaintiff's property. The claims
against the individual Defendants are less well defined, but
amount to liability under 42 U.S.C. § 1983 for their actions
relating to the "taking" or the tortious exercise of the state's police
power.
DEFENDANTS" RESPONSES
The State disputes that any permanent and compensable
"taking" of the Plaintiff's water system ever occurred. To the
contrary, the State argues, the PUC placed the Plaintiff's
"property", which was a utility, into receivership. This action, the
State contends, was not a permanent taking of property. The
Defendants argue that the state court receivership suit was the
proper forum to determine the Plaintiff's property rights with
regard to the water system. Thus the Plaintiff has no cause of
action to be compensated as opposed to if the water system had
App. F-3
been taken under the concept of eminent domain or inverse
condemnation.
The State relies heavily on the twin defenses of res
judicata and statute of limitations. The State also asserts the
defenses of the Eleventh Amendment and qualified immunity.
The Plaintiff has alleged 42 U.S.C. § 1983 claims against
the attorneys who represented the state in the state case. The
Court finds this claim to be spurious at best.
The Plaintiff's claims are barred by the qualified immunity
that the state's attorneys have in acting within the scope of their
employment in representing the state in litigation. The attorneys
for the PUC did no more in defending the Plaintiffs claims
against the PUC and the other state defendants than what all
attorneys are ethically bound to do: zealously represent their
client, and win their suits. The state's attorneys raised the defense
that Plaintiff's claims should have been raised in the receivership
action. At every level, the state courts ruled in favor of the
Defendant. In other words, the Plaintiff seeks to hold liable
attorneys that raised defenses that were endorsed by a state district
judge, by the state appellate court, and by the state supreme court.
The Court finds that the Plaintiff had actual notice of the
receivership lawsuit and made a conscious decision not to
intervene. After a careful review of Plaintiff's Exhibits P-3 and P-
4, this Court rejects Plaintiff's contention that he was prohibited
by any state court injunction from intervening in the receivership
action. The receivership court was the appropriate forum for the
Plaintiff to establish his rights concerning the water system.
Despite the fact that the Plaintiff litigated his claims in the
case he filed in state court, he requests this federal Court to
collaterally attack the state court litigation under the patina of a
App. F-4
federal civil rights claim. Plaintiff's claim that he was "deprived"
of his constitutional right to be heard in the state courts is without
merit. Plaintiff had notice of, but chose not to intervene in, the
receivership suit. Plaintiff filed and fully litigated an inverse
condemnation suit in Lubbock County, Texas. The PUC
intervened in this case and had it transferred to Travis County,
Texas. The Plaintiff prosecuted this case through the state court
system and he lost. The federal courts do not sit to determine
whether state courts properly decide legal issues. The Plaintiff
has failed to prove that he was deprived of any rights in the state
court system. He filed his suit. The Courts considered his claims
and the defenses raised by the state. The Plaintiff lost at the trial
court level, the appellate court level, and the supreme court level.
There is no merit to the Plaintiff's claim that these Defendants
deprived him of rights by raising a "new" defense for the first time
on appeal. The decision of whether the state's attorneys raised
improper legal arguments was for the state appellate and supreme
courts to decide, both of which ruled in favor of the Defendants
and the Plaintiff has failed to produce any evidence that the
actions of the state courts or the state's attorney deprived him of
any rights.
The Plaintiff has failed to establish by a preponderance of
the evidence that the conduct of the defendant attorneys violated
any Clearly established constitutional or federal statutory rights of
the Plaintiff of which an objective, reasonable person would have
known. These Defendants therefore enjoy immunity from
liability from the claims made by the Plaintiff. Harlow v.
Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727 (1982). The Court finds
further that, regardless of the state's attorneys right to immunity,
Plaintiff's claims against the state's attorneys have no merit.
The Plaintiff's claim against Attorney General Morales is
without merit given the total lack of any evidence that Defendant
Morales had any personal involvement in the lawsuit or that he
maintained any policies, practice, or custom that resulted in the
App. F-5
loss of the Plaintiff's civil rights. At best, Attorney General
Morales is the ultimate supervisor of the other attorneys general
named as Defendants. Defendant Morales was not even the
Attorney General at the time when most of the salient events
occurred. Supervisors are not vicariously liable for § 1983
violations of their subordinates. ial
Serv., 436 U.S. 658, 98 S.Ct. 20] 8 (1978). The Plaintiff presented
no evidence that Attorney General Morales knew or should have
known of any misconduct on the part of his subordinates--
especially since the Court has seen no evidence of any misconduct
on the part of the state's attorneys.
Defendant, James Miller, was appointed as the receiver for
the water system after Mr. Nichols was removed by state court
order. The evidence established that Defendant Miller took over
an aging water system that barely serviced the nine families still
on the system. Miller labored on the weekends to keep the system
in working order. He did not increase the monthly payment for
the service to the eight families and did not personally profit from
his tenure as receiver beyond guaranteeing his own family the
System as a source for water. He managed to keep the system in
sufficient working order until the City of Lubbock was willing
and able to provide a water source to the eight families. The
Court finds that the Defendants, in any combination, did not
conspire to deprive the Plaintiff of his rights concerning the water
system until the City of Lubbock made water available. To the
contrary, the Court commends Defendant Miller for his selfless
efforts to ensure a supply of water to the handful of customers
who were dependent on the water system.
Defendant Miller argues that he enjoys a quasi-judicial
immunity since he was acting as the receiver. The Court
disagrees and holds that Defendant Miller is not entitled to
judicial immunity. Defendant Miller next argues that as the
App. F-6
receiver he is entitled to qualified immunity under Harlow, supra.
The Court agrees. The Plaintiff is entitled to qualified immunity
for all actions he took as the receiver. To the extent that the
Plaintiff complains that there was a discrepancy in the inventory
that Defendant Miller executed on February 1, 1988, concerning
the outstanding debts of the water system; the Court finds that
these complaints should have been raised in the state court in the
receivership suit. The Court makes an additional finding that the
statute of limitations has run on any claim against Defendant
Miller.
The Court finds that the claims against this Defendant is
barred by the statute of limitations. Assuming that the Plaintiff
has a claim against this Defendant under 42 U.S.C. § 1983, that
cause of action accrued on May 5, 1988--the date that the Order
discharging the receiver became final and unappealable. The
statute of limitations applicable to a § 1983 claim is the two year
statute of limitations for personal injury actions. Tex. Civ. Prac.
& Rem. Code Ann. § 16.003 (Vernon 1986); Wilson y. Garcia,
195 S.Ct. 193 (1985).
3. The Claims Against John Hall.
Defendant, John Hall, holds a supervisory position with
the Texas Water Commission. The Plaintiff presented no
evidence of any kind against Defendant Hall. The Court heard no
evidence that would support any finding of liability against
Defendant Hall. Accordingly, the Court finds for Defendant Hall
on all of Plaintiff's claims.
4. The State of Texas, the Texas Water Commission, and the
PUC.
The Court finds that the Plaintiff has failed to prove that
these Defendants violated the Plaintiff's rights under the Fifth or
Fourteenth Amendments of the U.S. Constitution. The court
holds that the claims against these defendants for damages are
App. F-7
barred by the Eleventh Amendment of the United States
Constitution. 465 U.S.
79 (1984). These parties have not waived their right to immunity
under the Eleventh Amendment.
The Court finds that the claims against these Defendants
are barred by the statute of limitations. Assuming that the .
Plaintiff has a claim against any of the Defendants under 42 US.
The Court finds that the claim against these Defendants
are barred by the doctrine of res judicata. The Court holds that,
resolved in the state court. Allen v. McCurry, 101 S.Ct. 411
(1980); and i 871 F.2d 1297, 1287
(4th Cir. 1989). Plaintiff could have intervened in the
receivership action, but he failed to do so. He could have raised
these claims in his state court law suit but failed to do so. The
Court holds that the Plaintiff is precluded from Pursuing these
claims by the doctrine of res judicata.
The water system in question is not typical private
Property, rather it is a utility within the Statutory definition and
App. F-8
therefore is governed as is any operating utility, by the Public
Utilities Regulatory Act ("PURA"), Tex. Rev. Civ. Stat. Ann. Art.
1446(c) § 2 (Vernon 1992). This statute was in effect at the time
of the receivership proceedings. Under this statute, the PUC had
the express authority to impose a receivership on this utility, and
could do so without compensation from the state. Lucas v. South
Carolina Coastal Council, 112 S.Ct. 2886, 2900 (1992). The
Plaintiff has no legal right in this Court to force these Defendants
to compensate him for the use or deterioration of the water supply
system.
5. Plaintiff's Failure to Prove Damages.
The Court also makes the following determination
concerning Plaintiff's claim to damages. The Court specifically
rejects the Plaintiff's testimony that the water system was worth
$50,000 at the time the Receiver took it over. The Court accepts
as true and sworn testimony that only nine families, paying $15
per month, remained paying customers at the time of the
receivership. The Court finds that the plaintiff would not have
made a profit during the period of time that tne water system was
run by the receiver. To the contrary, the evidence is that he would
have lost money. There was credible testimony that the water
from the Carlisle water supply has been contaminated by the
actions of an Air Force base and is now without value. The Court
finds that there was nothing illegal or improper about the City of
Lubbock making water available to the customers who had
previously used Plaintiff's water system. Once these customers
had access to a better water system, there was nothing improper
about them changing to the new system. The Plaintiff has
attempted to frame this as a “taking.” The Court finds that no
taking occurred. To the contrary, the Plaintiff's water system was
operated by a receiver pursuant to a legitimate court order until a
better and more reliable source became available. The court finds
that the Plaintiff failed to prove that he has incurred any
compensable damages.
App. F-9
The Court holds that the plaintiff has failed to prove any
of his claims against any of the Defendants and that he has failed
to prove that he has suffered any compensable damages. The
court holds that the Plaintiff shall take nothing, and that the
Defendant shall have judgment for their costs.
SIGNED this the 17th day of September, 1993.
ALAN D. ALBRIGHT
UNITED STATES MAGISTRATE JUDGE
Appendix “G”
Supreme Court of the Gnited States
NO. 94-393
M.F. Guetersloh, Jr.,
Petitioner
v.
Texas, et al.
ON PETITION FOR WRIT OF CERTIORARI to the
United States Court of Appeals for the Fifth Circuit, No. 93-
8729.
ON CONSIDERATION of the petition for a writ of
certiorari herein to the United States Court of Appeals for the
Fifth Circuit.
IT IS ORDERED by this Court that the said petition be,
and the same is hereby, denied.
January, 9, 1995
A true copy by
WILLIAM K. SUTER,
Clerk of the Supreme Court
Of the United States
Signed by Frances Lorson,
Chief Deputy
App. G-1
Appendix “H”
NO. 3-90-161-CV
IN THE COURT OF APPEALS,
THIRD DISTRICT OF TEXAS,
AT AUSTIN
M. F. GUETERSLOH, JR.,
Appellant,
Ve
PUBLIC UTILITY COMMISSION OF TEXAS,
Appellee.
From the District Court of Travis
County, 353rd Judicial District,
No. 461,447, Honorable Hume
Cofer, Judge Presiding
Appellant, M. F. Guetersloh, Jr., complains that placing a
water supply company in receivership under the Public Utility
Regulatory Act, Tex. Rev. Civ. Stat. Ann. art. 1446c, §§ 3(c)(4)
& 71A (1980) ("PURA") (see also Tex. Water Code Ann. §
13.412 (1988)), constituted a "taking" of his interest as a lien
HISTORY OF THE LAWSUIT
Guetersloh sold the Carlisle Water System to Ray Nichols
in 1978, retaining a vendor's lien and deed-of-trust lien to secure
App. H-1
payment of the note executed by the purchaser. At the time the
Public Utilities Commission (the “Commission") was charged
with regulation of water systems in this state PURA § 3(c)(4)
(1980); jurisdiction to regulate water supply systems was
transferred to the Texas Water Commission on March 1, 1986.
1985 Tex. Gen. Laws, ch. 795, § 10.003 at 2820-21 [Tex. Water
Code Ann. §§13.001 - 13.515 (1988 & Supp. 1991)]. Because
Nichols violated a final order of the Commission regulating the
water system, the district court of Travis County appointed a
receiver in 1983 to manage the system's assets and to continue
service to its customers. In 1988 the court vacated the
receivership.
In December 1985, while the 1983 receivership was still
pending, Guetersloh alleged an "inverse concemnation action" as
a lienholder of the property. The appellate record does not reflect
when Guetersloh foreclosed his lien to regain possession of the
water system. The gravamen of Guetersioh's complaint is that
after the receiver took possession of the water system, Nichols
defaulted on the promissory note and by the time Guetersloh was
able to foreclose his lien, the City of Lubbock had extended water
service to the Carlisle area so that the water system had little or no
continuing value.
Guetersloh originally sued the receiver and the City of
Lubbock, alleging that institution of the receivership constituted
a "taking" of his property in violation of Article I, Section 17 of
the Texas Constitution and the Fifth and Fourteenth Amendments
of the federal constitution. The Commission intervened in the suit
and the Texas Water Commission and the individual
commissioners of each agency were added as defendants. All
defendants moved for summary judgment. In February 1989, the
district court in Lubbock County granted summary judgment in
favor of all defendants except the Commission and, on its own
motion, transferred the remaining action to the district court of
Travis County. Once in Travis County, the commission filed
App. H-2
another motion for summary judgment. In February 1990, the
Travis County court granted the Commission's motion for
summary judgment.
REVIEW OF SUMMARY JUDGMENTS
“A summary judgment is not entitled to the same
deference as a judgment resulting from a trial on the merits."
v. W 788 S.W.2d 933, 935 (Tex. App. 1990, no
writ). “The movant must prove beyond question that it was
entitled to judgment as a matter of law or this court must remand
the case for a trial on the merits." Id.
The Texas Supreme Court has established the standard for
reviewing a summary judgment:
. The movant for summary
judgment has the burden of
showing that there is no genuine
issue of material fact and that it is
entitled to judgment as a matter
of law.
. In deciding whether there is a
disputed material fact issue
precluding summary judgment,
evidence favorable to the non-
movant will be taken as true.
. Every reasonable inference must
be indulged in favor of the non-
movant and any doubts resolved
in its favor.
App. H-3
Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49
(Tex. 1985).
COMMISSION'S ENFORCEMENT POWERS
PURA section 71A enables the Commission to request
that the court appoint a receiver for a water utility that has
violated a final order of the Commission:
(a) At the request of the commission,
the attorney general shall bring
suit for the appointment of a
receiver to collect the assets and
carry on the business of a water
or sewer utility that violates a
final order of the commission or
allows any property owned or
controlled by it to be used in
violation of a final order of the
commission.
(b) The court shall appoint a receiver
if such appointment is necessary
to guarantee the collection of
assessment, fees, penalties, or
interest, to guarantee continued
service to the customers of the
utility, or to prevent continued or
repeated violation of the final
order.
(c) The receiver shall execute a bond
to assure the proper performance
of the receiver's duties in an
amount to be set by the court.
App. H-4
(d) = After appointment and execution
of bond the receiver shall take
Possession of the assets of the
utility specified by the court.
Until discharged by the court, the
receiver shall perform the duties
that the court directs to preserve
the assets and Carry on the
business of the utility and shall
strictly observe the final order
involved.
(e) Upon a showing of good cause by
_ the utility, the court may dissolve
the receivership and order the
assets and control of the business
returned to the utility.
The summary judgment proof reveals that on July 21,
1983, the district court of Travis County appointed a receiver to
take possession of and preserve the assets of Carlisle Water
Supply, to carry on its business and continue servicing its
customers, and to comply with the rules and regulations of the
Texas Department of Health and the Commission. The order
cited Nichols (d/b/a Carlisle Water Supply) for violating the
Commission's final order in docket number 4647 based on the
failure to: (1) repair the system's pressure tank; (2) clean up the
plan site and correct improvised equipment; (3) install
chlorination equipment; (4) provide monthly bills to each
customer; (5) maintain adequate service at an adequate pressure
at all times; (6) obtain approval from the Texas Health
Department for the water Service; (7) provide the Commission
with monthly progress reports; and (8) report service interruptions
to the Commission as ordered. The summary judgment proof
further reveals that the district court in Travis County vacated the
receivership and discharged the receiver on April 5, 1988, after
approving the receiver's final accounting. Guetersioh failed to
controvert any of the Commission's summary judgment proof.
POINTS OF ERROR IN GRANTING SUMMARY
JUDGMENT
Guetersloh complains that the trial court erred in granting
summary judgment for the reasons set forth in three points of
error: (1) the doctrine of sovereign immunity does not apply in an
action based on a "taking" of property; (2) he had sufficient
interest in the property to be protected from an unconstitutional
"taking"; and (3) he had raised sufficient questions of fact
regarding the damage to his property to preclude summary
judgment in favor of the Commission.
In addressing Guetersloh's first point of error, we note that
the Commission did not assert sovereign immunity as a ground on
which the court might grant summary judgment. The
Commission asserted sovereign immunity in support of its plea to
the jurisdiction, which the court did not grant. A motion for
summary judgment must state the specific grounds on which it is
sought, and the court should render judgment only if "the moving
party is entitled to judgment as a matter of law on the issues
expressly set out in the motion.” Tex. R. Civ. P. Ann. 166a(c)
(Supp. 1991) (emphasis added). The record does not indicate that
the trial court granted summary judgment on the ground of
sovereign immunity, a ground not asserted in the motion. This
Court cannot reverse summary judgment on any ground not
presented in the motion or otherwise in writing to the trial court
in support of the motion. Id. City of Houston v. Clear Creek
Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). We overrule
Guetersloh's first point of error as it presents nothing for review.
Point of error two, asserting that Guetersloh had a
property interest protected by the constitutional prohibition
against a governmental "taking," also misses the mark. The
Commission's motion for summary judgment asserts that
App. H-6
Guetersloh falsely asserted fee-simple title to the water system
because the summary judgment proof established that, at the time
he brought this suit he had conveyed the system to Nichols, only
retaining a lien against the property. However, the motion did not
assert Guetersloh's failure to own the property as a ground for
granting summary judgment. Rather, the Commission's motion
asserted that the receivership did not destroy Guetersloh's lien,
even though as lien holder he was compelled to seek permission
of the court before interfering with the operation of the
receivership. Again Guetersloh has not shown that the trial court
granted summary judgment on issues other than those expressly
set forth in the motion. Neither the court's order nor the motion
asserts lack of ownership as a ground for granting summary
judgment. For the reasons set forth above, we overrule point of
error two as it presents nothing for review.
In his third point of error Guetersloh argues that he has
raised fact issues regarding the extent of damages to his interest
in the receivership property and that these fact issues preclude
summary judgment. The Commission sought summary judgment
on the express grounds that the undisputed facts affirmatively
negate Guetersloh's cause of action. The Commission relies on
the summary judgment proof that, during the pendency of the
receivership, the Commission was acting within its statutory
authority to enforce its final order and, therefore, Guetersloh had
no cause of action against the Commission. Once the court
discharged the receivership, the Commission did not have
Possession of the property in question. Guetersloh did not file a
verified response to the Commission's motion for summary
judgment and presented no controverting summary judgment
proof.
We are persuaded by the Commission's argument that this
inverse condemnation lawsuit is but a thinly disguised attack on
the statutory authority of the Commission, authority now
transferred to the Texas Water Commission, to enforce its orders
App. H-7
regulating water systems. The state constitution requires the State
to pay adequate compensation when taking private property for
public use. Tex. Const. Ann. art. I, § 17 (1984). All private
property is held subject to the valid exercise of the State's police
power, but the state need not compensate for losses occasioned by
the proper and reasonable exercise of its police power. Lombardo
v. City of Dallas, 73 S.W.2d 475, 478-79 (Tex. 1934).
A valid exercise of police power does not constitute a
"taking" if : (1) the regulation is adopted to accomplish a
legitimate goal, meaning the regulation is "substantially related"
to the health, safety, or general welfare of the people; and (2) the
regulation is reasonable, not arbitrary. City of College Station v.
Turtle Rock Corp., 680 S.W.2d 802, 805 (Tex. 1984). The
regulation of water systems is substantially related to the general
welfare of the people. See Tex. Water Code Ann. § 13.001 (1988)
(chapter regulating water rates and services was adopted to protect
the public interest by assuring just and reasonable rates,
operations and services). The power to request that a court
impose a receivership on any public utility that violates a final
order of the Commission is a reasonable enforcement power,
subject to the due process protection of a court hearing. As a
matter of law the summary judgment evidence negated any action
for inverse condemnation because the Commission's authority to
seek a receivership against this utility was a valid exercise of the
state's policy power, rather than a "taking." See City of College
Station, 680 S.W.2d at 804 (whether a police power regulation is
proper or whether it constitutes a compensable taking is a question
of law and not of fact). The Commission has met its burden of
showing that there is no genuine issue of material fact and that it
is entitled to judgment as a matter of law. Guetersloh has
presented no remaining disputed fact issues that precluded
summary judgment on this ground.
We overrule Guetersloh's third point of error and affirm
the judgment of the trial court.
App. H-8
Bea Ann Smith, Justice
[Before Chief Justice Carroll, Justices Jones
Affirmed
Filed: August 14, 199]
App. H-9
and B. A. Smith]
Appendix “I”
CAUSE NO. 461,447
M. F. GUETERSLOH, JR.., § IN THE DISTRICT COURT
Plaintiff § §
S
v. § OF TRAVIS COUNTY,
§ TEXAS
8
PUBLIC UTILITY §
COMMISSION OF TEXAS §
Defendant § 353®° JUDICIAL DISTRICT
FINAL JUDGMENT
On February 21, 1990, this cause was heard on Defendant
Public Utility Commission of Texas’ motion for summary
judgment. Plaintiff appeared on his own behalf and Defendant
appeared by and through the Office of Attorney General. The
court has considered the pleadings and affidavits and attached
exhibits, and has heard argument. It appears to the court, and the
court so finds, that there is no genuine issue as to any material
fact, and that defendant is entitled to judgment as a matter of law.
Wherefore, it is ORDERED, ADJUDGED, and
DECREED that summary judgment be, and it hereby is, entered
in favor of Defendant Public Utility Commission of Texas and
that Plaintiff have and recover nothing against Defendant Public
Utility Commission of Texas by his suit.
Signed February 23, 1990.
Original signed by the Honorable
HUME COFER, Presiding Judge
App. I-1
’ "
Appendix “J”
CAUSE NO. 85-512,245
M. F. GUETERSLOH, JR... IN THE DISTRICT
Plaintiff COURT
Vv.
JAMES MILLER, D/B/A
CARLISLE WATER SUPPLY,
CITY OF LUBBOCK, TEXAS,
THE PUBLIC UTILITY
COMMISSION AND ITS
COMMISSIONERS, PEGGY
ROSSON, DENNIS THOMAS,
JO CAMPBELL, HENRY
ROLLINS, GEORGE M.
COWDEN, TOMMIE
G. SMITH, THE TEXAS
WATER COMMISSION,
PAUL HOPKINS, RALPH
ROAMING, AND JOHN O.
HOUCHINS,
Defendants
OF LUBBOCK
COUNTY, TEXAS
137° JUDICIAL
DISTRICT
90? PP A AP LP LP LP LP LD LD LP OP A ED Chr CD CoD eas
2)
3
x
The Court, having considered the petition, pleadings and
Briefs in this cause, is of the opinion that the Motion for S
Judgment of the Defendants, Peggy Rosson, Dennis Thomas, Jo
Campbell, Henry Rollins, George M. Cowden, Tommie G. Smith,
Texas Water Commission, Paul Hopkins, Ralph Roaming, and
John O. Houchins is Proper and is hereby GRANTED.
SIGNED this the 13" day of February, 1989.
Original Signed By:
Cecil G. Puryear
Judge Presiding
App. J-1
a
Appendix “K”
CAUSE NO. 85-512,245
M. F. GUETERSLOH, JR.., IN THE DISTRICT
COURT
Plaintiff
v.
JAMES MILLER, D/B/A
CARLISLE WATER SUPPLY,
CITY OF LUBBOCK, TEXAS,
THE PUBLIC UTILITY
COMMISSION AND ITS
COMMISSIONERS, PEGGY
ROSSON, DENNIS THOMAS,
JO CAMPBELL, HENRY
ROLLINS, GEORGE M.
COWDEN, TOMMIE
G. SMITH, THE TEXAS
WATER COMMISSION,
PAUL HOPKINS, RALPH
ROAMING, AND JOHN O.
HOUCHINS,
OF LUBBOCK
COUNTY, TEXAS
137° JUDICIAL
DISTRICT
Defendants
:
:
The Court, having considered the petition, pleadings and
briefs in this cause, is of the opinion that:
(1) The Motion for Summary Judgment of Plaintiff,
M.F. GUETERSLOH, JR. is DENIED.
(2) | TheMotion for Summary Judgment of Defendant,
JAMES S. MILLER, is proper and hereby
GRANTED.
App. K-1
SIGNED this the 13% day of February, 1989.
Original Signed By:
Cecil G. Puryear
Judge Presiding
Appendix “L”
CAUSE NO. 85-512,245
M. F. GUETERSLOH, JR.., IN THE DISTRICT
COURT
Plaintiff
8
8
S
8
§
JAMES MILLER, D/B/A §
CARLISLE WATER SUPPLY, §
CITY OF LUBBOCK, TEXAS, §
THE PUBLIC UTILITY §
COMMISSION AND ITS §
COMMISSIONERS, PEGGY §
ROSSON, DENNIS THOMAS, §
JO CAMPBELL, HENRY §
ROLLINS, GEORGE M. §
COWDEN, TOMMIE :
G. SMITH, THE TEXAS 8
WATER COMMISSION, §
PAUL HOPKINS, RALPH §
ROAMING, ANDJOHNO. §
HOUCHINS, §
8
§
§
137* JUDICIAL
DISTRICT
FINAL SUMMARY JUDGMENT
The Court, after examining the pleadings, briefs, and the
Summary Judgment evidence before it in the Motion for Summary
Judgment filed by the Defendant and Movant, City of Lubbock,
Texas is of the opinion and finds that the City of Lubbock, Texas,
is entitled to Summary Judgment as follows.
IT IS THEREFORE ORDERED, ADJUDGED, and
DECREED that plaintiff, M.F. Guetersloh, Jr. take notion against
defendant, City of Lubbock, Texas.
Defendants
App. L-1
All relief requested and not expressly granted is denied.
SIGNED this the 13" day of February, 1989.
Original Signed By:
Cecil G. Puryear
Judge Presiding
APPROVED AS TO FORM:
Original Signed By:
Michael T. Griffin
State Bar No. 08463110
Attorney for Defendant
Appendix “M”
IN THE SUPREME COURT OF TEXAS
NO. D-1725. ) February 5, 1992
)
M.F. GUETERSLOH, JR. )
)
V. ) From TRAVIS County,
) 3™ District
PUBLIC UTILITY )
COMMISSION OF TEXAS)
Application of petitioner for writ of error to the Court of
Appeals for the Third District having been duly considered, and
the Court having determined that the application presents no error
of law which is of such importance to the jurisprudence of the
State as to require correction, or reversal of the judgment of the
Court of Appeals, it is ordered that said application be, and hereby
is, denied.
It is further ordered that applicant, M.F. Guetersloh, Jr.,
pay costs incurred on this application.
App. M-1
Appendix “N”
IN THE SUPREME COURT OF TEXAS
NO. D-1725. ) March 4, 1992
)
M.F. GUETERSLOH, JR. )
)
V. ) From TRAVIS County,
) 3™ District
PUBLIC UTILITY )
COMMISSION OF TEXAS)
Petitioner’s motion for rehearing of application for writ of
error having been duly considered, it is ordered that said motion
be, and hereby is overruled.
App. N-I
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