City of Houston v. Festival Properties, Inc.

In The

Court of Appeals

Ninth District of Texas at Beaumont

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NO. 09-24-00158-CV
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CITY OF HOUSTON, Appellant
v.

FESTIVAL PROPERTIES, INC., Appellee

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On Appeal from the 457th District Court
Montgomery County, Texas
Trial Cause No. 23-09-13859-CV
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MEMORANDUM OPINION

In this interlocutory appeal, the City of Houston (the City) appeals from the

trial court’s order denying the City’s Plea to the Jurisdiction against Festival

Properties, Inc. (Festival). See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(8).

For the reasons discussed below, we reverse the trial court’s order and render a

decision in favor of the City dismissing Festival’s claims.

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Background

Festival owns a 10.446-acre property on the south side of Northpark Drive,

east of Highway 59 in Montgomery County. On that property, surrounded by other

buildings and businesses, is a large multiplex movie theater. In 2022, the City

approved the “Northpark Drive Project[,]” an expansion of 2.18 miles to make

Northpark Drive a six-lane highway, including adding overpasses. In its Original

Petition, Festival alleges the City’s Northpark Drive Project closed two “Critical

Drives” that are “outside the acquisition area” which provide “critical ingress and

egress to the property.” 1 Festival claims these “Critical Drives” are the only direct
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access point to the movie theater parking lot on its property, and Festival’s main

access to Northpark Drive. Festival claims that those “Critical Drives” work in

tandem to create a loop to help traffic flow in and out of the movie theater parking

lot during peak, high-congestion times. According to Festival, the “Critical Drives”

are imperative in operating a movie theater and are “crucial to the commercial

viability of Festival’s property.” In its petition, Festival pled for inverse

condemnation, arguing the City’s taking of the two “Critical Drives” for its

Northpark Drive Project “materially and substantially” impairs the use of its

1The parties refer to these access points as both “Critical Drives,” and “Critical

Access Drives.” For consistency, we will refer to them as “Critical Drives.”
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property as a multiplex movie theater and seeking monetary relief of more than

$1,000,000. Festival’s Original Petition includes the following illustrative graphic

regarding access to the property.

After answering with a general denial and various affirmative defenses, the

City filed a Plea to the Jurisdiction, seeking dismissal of Festival’s claims based on

governmental immunity. According to the City, to overcome governmental

immunity and assert a claim for inverse condemnation under Article I, Section 17 of

the Texas Constitution, Festival must show that access to the property “is materially

and substantially impaired” by the City’s actions. This, the City says Festival cannot

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do because there are still several public road access points by which patrons continue

to have access to the movie theater.

Festival filed a response to the City’s Plea to the Jurisdiction, arguing the

remaining access points are insufficient for the movie theater traffic on its property.

According to Festival, the other driveways require customers to drive through fast-

food parking lots or behind the movie theater, an area typically used for commercial

vehicles, before reaching the movie theater parking lot. In reply, the City argues that

requiring patrons to take a “a more ‘circuitous route to reach the property in

question[,]’” is not actionable.

After a hearing, the trial court denied the City’s Plea to the Jurisdiction. The

City then timely filed this interlocutory appeal, arguing in a single issue that the trial

court erred in denying its Plea to the Jurisdiction based on governmental immunity.

Governmental Immunity

As a municipal government, the City of Houston is generally entitled to

governmental immunity which shields the City from suit unless such immunity has

been waived. City of Hous. v. Carlson, 451 S.W.3d 828, 830 (Tex. 2014). Courts are

without jurisdiction to adjudicate claims against a municipality in the absence of a

waiver of immunity, but it is well established that the Texas Constitution waives

government immunity for inverse condemnation claims. Id. See Tex. Const. art. I, §

17. “Nevertheless, such a claim is predicated upon a viable allegation of taking.” Id.
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The City retains immunity in the absence of a properly pleaded takings claim. Hearts

Bluff Game Ranch v. State, 381 S.W.3d 468, 476 (Tex. 2012). “Under such

circumstances, a court must sustain a properly raised plea to the jurisdiction.”

Carlson, 451 S.W.3d at 830. We review a trial court’s ruling on a plea to the

jurisdiction de novo. Id. Construing the pleadings favorably to the plaintiff, we

determine whether the pleadings “allege sufficient facts affirmatively demonstrating

the court’s jurisdiction to hear the case.” Hearts Bluff, 381 S.W.3d at 476.

Constitutional Takings and Inverse Condemnation

The Texas Constitution provides, “No person’s property shall be taken,

damaged, or destroyed for or applied to public use without adequate compensation

being made[.]” Tex. Const. art. I, § 17(a). “In order to recover under the theory that

property has been taken under this section of the Constitution, [a] plaintiff must

establish that the governmental entity intentionally performed certain acts that

resulted in a ‘taking’ of one’s property for public use.” Sabine River Auth. of Tex. v.

Hughes, 92 S.W.3d 640, 641-42 (Tex. App.—Beaumont 2002, pet. denied). “A

taking is the acquisition, damage, or destruction of property via physical or

regulatory means.” Carlson, 451 S.W.3d at 831. “[P]roperty has been damaged for

a public use within the meaning of the Constitution when access is materially and

substantially impaired even though there has not been a deprivation of all reasonable

access.” City of Waco v. Texland Corp., 446 S.W.2d 1, 2 (Tex. 1969)).
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Whether the property has been materially and substantially impaired is a

threshold question we review de novo. State v. Dawmar Partners, Ltd., 267 S.W.3d

875, 878 (Tex. 2008). To determine what constitutes reasonable access we examine

not only the closed access points but also the remaining access points to the property.

See City of San Antonio v. TPLP Off. Park Props., 218 S.W.3d 60, 66 (Tex. 2007).

“Closing an access point and merely causing diversion of traffic or circuity of travel

does not result in a compensable taking.” Id. at 66-67. “[N]o right to compensation

extends to a property owner who has reasonable access to his property after the

construction of the public improvement because the benefits of private ownership

have been preserved.” State v. Heal, 917 S.W.2d 6, 10 (Tex. 1996) (citation omitted)

(emphasis in original).

Analysis

Festival’s petition alleges the City’s project expanding Northpark Drive

includes closing two driveways which previously provided access to Festival’s

property via Northpark. The graphic included in Festival’s petition labels the two

driveways on Northpark as “critical access drives.” According to Festival, “the

original owner of the shopping center established deed restrictions that guaranteed

multiple ‘Critical Drives’ benefitting Festival’s property. Festival alleges,

The remaining driveways are primarily suited to serve the shopping
center’s outparcels and are not adequate for Festival’s purposes. Upon
the loss of these driveways, Festival’s property will not be able to
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accommodate the volume of moviegoers who regularly enter and exit
simultaneously at peak times. As a result, the property will be
considerably less valuable to multiplex tenants and potential buyers and
may require repurposing. This impairment of access is material and
substantial in light of the existing use of the property, resulting in
substantial damages to Festival and to the market value of its property
that it seeks to recover in this proceeding.

In its plea to the jurisdiction, the City asserts Festival’s petition fails to allege

a viable inverse condemnation claim because access to the property will not be

materially and substantially impaired by the closing of two access points on

Northpark since other access points will remain open to all three thoroughfares

bordering the property. See TPLP Off. Park Props., 218 S.W.3d at 66; Heal, 917

S.W.2d at 9. In response, Festival does not deny that the property still has multiple

access points surrounding its property, but contends that the loss of the two access

drives along Northpark are unique to the property’s use as a movie theater with high

traffic entering and exiting the parking lot simultaneously and are “imperative to its

successful function in the competitive multiplex market, where demand is highly

reactive to access issues due to the time-sensitive nature of the movie theater

experience.”

We are unpersuaded by Festival’s arguments. While we may consider the

property’s specific use in determining whether a property was materially and

substantially impaired by a government taking under Article I, Section 17 of the

Texas Constitution, changes in traffic patterns, diversion in traffic, and even
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extended time reaching the property do not render access to the property materially

and substantially impaired. See State v. Schmidt, 867 S.W.2d 769, 774 (Tex. 1993)

(“we have often disallowed, and never allowed, recovery in an inverse condemnation

case for damages resulting from a diversion of traffic or a circuity of travel[]”); Tex.

DOT v. C-5 Holdings LLC, No. 04-21-00292-CV, 2023 Tex. App. LEXIS 7909, at

*11–12 (Tex. App.—San Antonio Oct. 18, 2023) (concluding the trial court erred

by denying the government’s plea to the jurisdiction where plaintiffs had continual

access to their property via another public road, although new route was circuitous

and significantly less convenient than the other direct access point); Church v. City

of Alvin, No. 01-13-00865-CV, 2015 Tex. App. LEXIS 10114, at *15 (Tex. App.—

Houston [1st Dist.] Sept. 29, 2015, no pet.) (mem. op.) (“In considering whether

impaired access is material and substantial, courts take into account existing uses of

the property that required particular access.”); see also Tex. Const. art. I, § 17. It is

undisputed that Festival maintains several access points to its property from three

separate public roads. Although only one of these driveways provides direct access

to the multiplex theater, courts have long rejected the proposition that increased

traffic congestion is a material and substantial impairment to demonstrate a taking

to overcome governmental immunity. See TPLP Off. Park Props., 218 S.W.3d at

66–67 (“diminished access is not compensable if suitable access remains,” even

where the lease holder lost profits and access was eliminated to one driveway used
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by 80% of the property’s tenants); Cnty. of Bexar v. Santikos, 144 S.W.3d 455, 460

(Tex. 2004) (explaining that circuity of travel within a property is not more

compensable than circuity of travel around it); Heal, 917 S.W.2d at 11 (evidence

demonstrating new highway configuration could cause confusion, increase traffic

congestion, and make left turns more difficult and hazardous established

inconvenience but did not constitute material and substantial impairment of access);

see also State v. Momin Props., Inc., 409 S.W.3d 1, 7 (Tex. App.—Houston [1st

Dist.] 2013, pet. denied) (citations omitted) (“It is also well-settled that diminution

in the value of property due to diversion of traffic, diminished exposure to traffic, or

altered accessibility to the roadway does not amount to a material and substantial

impairment of access.”); State v. Bhalesha, 273 S.W.3d 694, 702 (Tex. App.—

Houston [14th Dist.] 2008, no pet.) (citation omitted) (concluding that although the

traffic had to take a more circuitous route to get to a supermarket, access was not

materially and substantially impaired, because the supermarket had “never been

without access to a public road[]”); Burris v. Metro. Transit Auth. of Harris Cnty.,

266 S.W.3d 16, 24 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (holding that

although access to the plaintiff’s property was impaired, it was not a material and

substantial impairment because he retained public road access).

We conclude the trial court erred in denying the City’s plea to the jurisdiction,

because the factual allegations contained in Festival’s petition do not amount to a
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constitutional taking by material and substantial impairment of access to its property.

In its brief, Festival argues that if this Court determines that Festival’s pleading is

insufficient, Festival should be afforded the opportunity to amend its pleadings to

cure the defect. Where a pleading does not negate jurisdiction but merely fails to

allege facts sufficient to affirmatively demonstrate jurisdiction, “the issue is one of

pleading sufficiency and the plaintiffs should be afforded the opportunity to amend.”

Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 227 (Tex. 2004).

However, if a plaintiff pleads facts that affirmatively negate jurisdiction, the trial

court may grant the governmental unit’s plea to the jurisdiction without allowing the

plaintiff an opportunity to amend. Id. Here, Festival’s pleading affirmatively alleges

that after the closing of the two entrances on Northpark, the property continues to

have access points on Northpark, Loop 494 and Highway 59. The petition includes

a graphic affirmatively demonstrating the property continues to be served by

multiple access points. We conclude Festival’s pleading affirmatively negates

jurisdiction. This is not a curable pleading defect, and Festival is not entitled to an

opportunity to amend.

Conclusion

Having concluded that Festival’s petition does not allege a viable claim for

inverse condemnation, we reverse the trial court’s order denying the City’s Plea to

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the Jurisdiction and render judgment dismissing Festival’s claims for want of

jurisdiction.

REVERSED AND RENDERED.

KENT CHAMBERS
Justice

Submitted on February 27, 2025
Opinion Delivered May 1, 2025

Before Johnson, Wright and Chambers, JJ.

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