Demolition Cases Require More Stringent Review
by Jennifer Richie and Janet Spugnardi
Cities across the state address dilapidated structures by using administrative boards. These boards, made up of city council appointees, have the authority to order owners to repair, secure or demolish their properties and may assess civil penalties of $1,000 per day. Traditionally, Texas cities have relied on these boards almost exclusively to deal with the most dangerous buildings.
The Texas Local Government Code delineates a process for notice and hearing of substandard building issues and provides that the board’s orders on appeal are subject to the substantial evidence review. Substantial evidence review requires only a “scintilla of evidence” to support the board’s findings on appeal.
Courts have long held that cities do not commit a taking, and thus, do not have to compensate an owner when the city is abating a public nuisance. When these administrative boards issued demolition orders, they would make a finding that the property is a public nuisance. And prior to City of Dallas v. Heather Stewart, 361 S.W.3d 562 (Tex. 2012), many believed that any review of this finding would be by substantial evidence.
Recently, however, the Texas Supreme Court in the Stewart case held that “substantial evidence review of a nuisance determination resulting in a home’s demolition does not sufficiently protect a person’s rights under Article I, Section 17 of the Texas Constitution,” and that administrative boards’ “nuisance determinations cannot be accorded preclusive effect in a takings suit….” The Court held that nuisance determinations must be reviewed de novo.
Heather Stewart owned a house in Dallas, which she abandoned in 1991. During the subsequent 10 years, the Stewart home was plagued by constant code violations and, though boarded up, was broken into and occasionally occupied by vagrants. In September 2001, the Dallas’ Urban Rehabilitation Standards Board found that Stewart’s house constituted an urban nuisance and ordered its demolition. One year later, Stewart requested a rehearing before the board, which was denied, and the board affirmed the demolition order.
Before the demolition occurred, Stewart appealed the board’s decision to district court. The City subsequently demolished the home while the appeal was pending, and Stewart amended her complaint to include constitutional due process and state takings claims. The trial court severed Stewart’s appeal of the board’s order from her constitutional claims. The trial court, on substantial evidence review, affirmed the board’s finding that Stewart’s home was an urban nuisance and awarded the City its attorney’s fees. Stewart’s constitutional claims were then tried to a jury de novo. The jury rejected the City’s contention that Stewart’s home was a nuisance and awarded her $75,707.67 in damages.
On appeal, the Second Court of Appeals at Dallas affirmed the trial court’s judgment. The Supreme Court granted Dallas’ request for review and on July 1, 2011, issued its original opinion. While noting the major threat posed by dilapidated structures and the need of cities to abate these nuisances, the Court expressed concern in allowing “a panel of citizens untrained in constitutional law” to determine constitutional rights. The Court was troubled by the fact that nuisance determinations under the statutory scheme are decided by “an agency appointed by a [c]ity to represent a [c]ity’s interest” and that cities are incentivized to demolish properties because “abatement actions are motivated, at least in part, by a city’s bottom line.”
Dallas filed a motion for rehearing, and an onslaught of amicus curiae briefs shortly followed. On January 27, 2012, the court vacated its first opinionand substituted a new, almost identical opinion. The only change was the court’s addition of a section to address the concerns raised by the amici that cities would be exposed to 10-years’ worth of takings claim litigation and could not afford to litigate all nuisance cases in district court. The court dismissed these arguments by clarifying that a property owner must appeal the nuisance finding within 30 days to exhaust administrative remedies and must bring the takings claim within that appeal and that de novo review is only required when a nuisance determination (in a demolition order) is appealed.
Even in light of the clarification provided by the Texas Supreme Court’s January 27, 2012opinion, cities are still struggling to understand the reach and ramifications of the Stewart case on nuisance abatement, zoning, and other code enforcement activities. Many cities have reviewed and modified their substandard building processes post-Stewart, and some are utilizing alternatives, including filing civil cases in municipal or district courts.
Janet Spugnardi practices municipal law at Messer, Campbell & Brady in Frisco, Texas and can be reached at firstname.lastname@example.org. Jennifer Richie, the immediate past chair of the Government Law Section, is a Senior Assistant City Attorney for Irving, Texas. She can be reached at email@example.com.