In The City of Dallas v. Stewart, No. 09–0257, 2011 WL 2586882, (Tex. 2011), the Texas Supreme Court ruled that homeowners may seek de novo review in district court if city officials make nuisance determinations and condemn property.
Before this decision, many municipalities had adopted the following procedure for abating properties:
First, an appointed administrative board would determine if a property was a nuisance that should be abated. Second, the property owner was given the opportunity to appeal the Board’s decision in district court, but judicial review was not de novo. Rather, judicial review in district court was limited to deciding whether substantial evidence supported the Board’s decision. Substantial evidence review requires only more than a mere scintilla to support an administrative board’s decision. Third, the municipality would obtain a judicial demolition warrant to abate the property. Fourth, the structure would be demolished.
In Stewart, a homeowner purchased and subsequently abandoned her home (“the Home”). Thereafter, the Home fell into disrepair and was “a regular stop for Dallas Code Enforcement officials.”
Due to the disrepair of the Home, the City of Dallas (“the City”) followed its standard procedure to have the Home demolished. First, the Dallas Urban Rehabilitation Standards Board (“the Board”) determined the Home was a nuisance and should be abated. Second, the homeowner was given an opportunity to appeal the Board’s decision, but judicial review was limited to deciding whether substantial evidence supported the Board’s decision. Third, the City obtained a judicial demolition warrant to abate the Home. Fourth, the City demolished the Home.
The homeowner filed a lawsuit in district court arguing that the City had taken the property without just compensation. A jury rejected the Board’s determination that the Home was a public nuisance and awarded the homeowner $ 75,707.67. The City appealed, arguing that the homeowner’s claim was precluded by the Board’s determination.
The issue before the Texas Supreme Court was whether the City’s procedure for demolishing homes was unconstitutional.
The majority held that substantial evidence review of a nuisance determination resulting in a home’s demolition does not sufficiently protect a person’s right under the Texas Constitution.
In making its decision, the Supreme Court explained that a city may not take a person’s property without first paying just compensation. Texas courts have long held that the government commits no taking, however, when it abates a public nuisance. As such, the Supreme Court stated:
We cannot accept that the centrality of personal property rights, explicitly protected by two provisions of our constitution, has no bearing on the procedural requirements placed on an administrative agency when it adjudicates a question of direct constitutional import. Our opinion emphasizes the importance of an individual property owner’s rights when aligned against an agency appointed by a City to represent the City’s interests. The character of the substantive rights protected, especially substantive constitutional rights, must be considered by a court determining what procedure is due.
The Supreme Court ultimately concluded that when a municipal board determines that a property is a nuisance and a structure should be demolished, the property owner is entitled to a de novo review – rather than a substantial evidence review – by the District Court.
Justice Guzman’s dissent highlights her concerns regarding the consequences of the majority’s opinion:
The Court’s decision opens the door to a host of takings challenges to agency determinations of every sort, and in every such challenge a right to trial de novo will be claimed. Judges at every level of our court system are invited by today’s decision to substitute their own factual determinations for that of an agency or even a lower court. The consequences of the Court’s decision will not be limited to the courtroom. As discussed above, cities are faced with complex challenges posed by a crisis level of abandoned and dangerous buildings, and one of the most important weapons provided by the Legislature to combat this problem is summary nuisance abatement.
All cities throughout the state should be aware that a citizen has a right to de novo review of a municipal board’s determination to demolish a structure. If cities demolish structures before a district court determines that the structure is a public nuisance, the homeowner will have the opportunity to sue the city. If the homeowner establishes that the structure was not a public nuisance, the city must pay the homeowner for the property.