Preserving America’s Cities

Obtaining Damages for an Illegal

Demolition of a Landmark:
a Dallas Case Study
Chris Bowers
Miklos Law, PLLC

June 13, 2017

Washington, D.C.
 Christopher D. Bowers
Of Counsel
Miklos Law, PLLC
Litigation background
• Practices civil trial and appellate law with emphasis on property matters.
• Obtained reversal of $6.4 million judgment in regulatory takings case.
• Persuaded U.S. Supreme Court to grant petition for certiorari and vacate
Fifth Circuit’s adverse judgment in tow truck regulation case.
• Convinced court of appeals to affirm trial court’s ruling that Dallas’ denial of
demolition permit for historic building did not result in taking of property
rights.
• Persuaded Texas Supreme Court to reverse court of appeals and trial
court and to uphold Dallas board of adjustment’s denial of zoning variance.

Historic preservation background

• Advised Dallas Landmark Commission in 1990-93 and 1995.

• Served on board of directors of National Alliance of Preservation
Commissions (NAPC) from 1993-2001, and chaired it from 1999-2001.
• Served on City of Plano Heritage Commission from 1999-2002.
• Has spoken around country on historic preservation law
Attorney Disclaimers
• Strictly my views

• Each state has its

own laws

• Consult your attorney

• Use these ideas at

your own risk
The MKT Freight Station
(circa 1980)
The MKT Freight Station
(circa 1995?)
 City of Dallas and THC v. TCI West End, Inc.
FACTS

• 30,000 SF freight depot built around 1925

• In National Register district and city historic

district

• Transcontinental Realty Investors purchased

property in 1997
 City of Dallas and THC v. TCI West End, Inc.
FACTS
• Consultant told Transcontinental that Landmark
Commission approval to demolish structure was a
“long shot” in 2004

• Transcontinental’s principals formed TCI West End,

Inc., a single-asset subsidiary, in February 2006

• Transcontinental sold the property to TCI in March

2006
 City of Dallas and THC v. TCI West End, Inc.
FACTS
• TCI applied for demolition permit in April 2006
• Described building as 500 SF “guard shack”

• Did not check box for landmarks

• When building official realized permit had been issued:

• revoked permit verbally with 2 contractors hired by TCI

• placed “red tag” on building

 City of Dallas and THC v. TCI West End, Inc.

FACTS

• TCI’s third contractor demolished on April 29,

2006 without Landmark Commission approval
or valid demolition permit from building official

• During lawsuit, TCI sold property to third party,

which sold it to another for $8.6 million
City of Dallas and THC v. TCI West End, Inc.
City of Dallas and THC v. TCI West End, Inc.
 City of Dallas and THC v. TCI West End, Inc.

LAWSUIT

• City sued TCI and contractor 3 weeks after demolition

• City filed lis pendens in deed records

• Texas Historical Commission (THC), represented by

AG’s Office, joined lawsuit 10 months later
 City of Dallas and THC v. TCI West End, Inc.
LAWSUIT
• City sought:
• $1,000 in civil penalties for each day that TCI did not obtain
approvals from Landmark Commission or building official
• Order establishing constructive trust on property
• Requested order requiring TCI to reconstruct building
• Alternatively, requested order requiring TCI to pay City for
increase in FMV of property due to demolition ($1.9 million)
• Requested exemplary damages for fraud in obtaining permit
 City of Dallas and THC v. TCI West End, Inc.
LAWSUIT

• City sought:

• Injunction requiring structure to be rebuilt

• Order voiding fraudulent transfer of property

during lawsuit

• Civil penalties for 9 other code violations on

property
 City of Dallas and THC v. TCI West End, Inc.
LAWSUIT

• THC made similar claims with 3 differences:

• THC sought damages equal to replacement value

of historic structure ($4.6 million)

• THC did not make claims regarding code

violations

• THC did not seek injunctive relief under

constructive trust remedy
 City of Dallas and THC v. TCI West End, Inc.

FIRST APPEAL

• 1st interlocutory appeal: Lis pendens

• TCI requested trial judge to cancel lis pendens

• When he refused, TCI filed petitions with court of

appeals and Texas Supreme Court

• Both courts declined to mandamus trial judge

 City of Dallas and THC v. TCI West End, Inc.
SECOND APPEAL
• 2nd interlocutory appeal: Dismissal of TCI’s claims

• TCI filed taking and conspiracy counterclaims against City and

THC seeking $13 million

• Trial judge granted City’s and THC’s plea to jurisdiction and

dismissed TCI’s counterclaims

• On appeal, court of appeals ruled:

• THC’s filing of lawsuit seeking damages and penalties for an unlawful

demolition did not result in taking

• TCI's taking claim against City was not ripe for adjudication because it
had not appealed revocation of demolition permit
 City of Dallas and THC v. TCI West End, Inc.
TRIAL

• Jury rulings
• Jury found that TCI obtained demolition permit through
fraud
• Jury awarded THC $500,000 in actual damages and
$1 million in exemplary damages.
 
• Jury also awarded City $750,000 in civil penalties and $619
in exemplary damages

• Judge refused to award exemplary damages to THC

or City
 City of Dallas and THC v. TCI West End, Inc.
THIRD APPEAL
•Dallas Court of Appeals reversed trial court’s judgment, holding:

• THC could not recover damages because the City had not filed a
listing of historic properties in the County property records
• The City could not recover civil penalties because:
• the City had not enacted an ordinance adopting civil penalties for the
violation as required by Chapter 211 of the Local Government Code

• Chapter 54 of the Local Government Code did not authorize cities to

recover civil penalties for zoning violations that do not involve health or
safety, and

• the City was required to notify TCI of its ordinance prior to demolition
 City of Dallas and THC v. TCI West End, Inc.

THIRD APPEAL (cont.)

•THC did not appeal

•The City appealed to Texas Supreme Court

•The National Trust for Historic Preservation,

Preservation Texas, Preservation Dallas, Historic Fort
Worth, Inc., and the City of Irving submitted or joined
amicus briefs in support
City of Dallas and THC v. TCI West End, Inc.
 City of Dallas and THC v. TCI West End, Inc.
THIRD APPEAL

• Texas Supreme Court ruled for the City, holding

Chapter 54 of the Local Government Code
authorizes cities to recover civil penalties:

•for zoning violations that do not involve health or safety

•if a defendant failed to take action necessary for compliance

with the ordinance after receiving notice of the violation
City of Dallas and THC v. TCI West End, Inc.
THIRD APPEAL

• Texas Supreme Court remanded the case to

the Dallas Court of Appeals to determine
whether TCI could have taken action to comply
with the ordinance after receiving actual notice
of the ordinance violation
 City of Dallas and THC v. TCI West End, Inc.
THIRD APPEAL
•The Dallas Court of Appeals ruled for the City, holding:
• The ordinance was enforceable against TCI even though the
City had not recorded it in the deed records as required by the
City Code

• The trial court did not err when it instructed the jury that
Landmark Commission approval was required before
demolishing a structure in the West End Historic District

• TCI never sought Landmark Commission approval

• TCI failed to plead, argue, or prove in the trial court that

obtaining Landmark Commission approval was impossible
 City of Dallas and THC v. TCI West End, Inc.
THIRD APPEAL
•The Dallas Court of Appeals also:

• rejected TCI’s argument that the maximum amount of civil

penalties that may be imposed on it was $2,000 because the
demolition took two days and state law authorized a maximum
civil penalty of $1,000 per day

• found the civil penalty was for TCI’s failure to take action to
comply with the ordinance during the 1,500 days between the
demolition and the trial

• upheld the jury award of $750,000 in civil penalties against TCI

City of Dallas and THC v. TCI West End, Inc.

THIRD APPEAL

• TCI appealed to the

Texas Supreme Court

• The Court declined to

hear the appeal on
September 2, 2016
City of Dallas and THC v. TCI West End, Inc.
THIRD APPEAL
•Could case go to U.S. Supreme Court?
City of Dallas and THC v. TCI West End, Inc.
IMPORTANCE OF VICTORY
•Local real estate community knows that Dallas will
not allow landmarks to be illegally demolished
•Statewide impact because THC and Attorney
General have sent strong message
 

•Largest amount ever awarded in Texas for illegal

demolition of landmark
•Confirms that the City can seek compliance:
• for zoning violations that do not involve health or safety
• after the violation has occurred
 City of Dallas and THC v. TCI West End, Inc.

POSTSCRIPT

• The new owner:

• obtained Landmark Commission approval of the

demolition in November 2012

• constructed a 5-story, 267-unit apartment

complex and 6-story parking garage
City of Dallas and THC v. TCI West End, Inc.

WHAT’S NEXT?

•The City sent post-judgment discovery

•TCI is a single-asset entity

• sold its sole asset in 2009

• could declare bankruptcy

•Suing the parent corporation may not be easy

 Takeaways
• Seek allies

• Follow your ordinance and state law

• Record ordinances and designations in deed records

• Revoke permits in writing and deliver promptly

• Photograph placement of red tags

• Send letter to potential violator notifying of ordinance

• Place lis pendens on property when structure illegally demolished

• Have lawsuit seeking TRO already drafted

 Appendix
CASES AND STATUTES REFERENCED
In re TCI West End, No. 05-07-00197-CV, 2007 WL 852891 (Tex. App.—Dallas March 22,
2007) (unpublished) (denying mandamus)
TCI West End, Inc. v. City of Dallas, 274 S.W.3d 913 (Tex. App.—Dallas 2008, no pet.)
(affirming dismissal of TCI’s counterclaims)
TCI West End, Inc. v. City of Dallas, 407 S.W.3d 292 (Tex. App.—Dallas 2013), rev’d, 463
S.W.3d 53 (Tex. 2015) (Texas Supreme Court held Chapter 54 of Local Government Code
authorized City to recover civil penalties against TCI if TCI violated ordinance after receiving
notice of the ordinance’s provisions or failed to take action to comply after receiving such
notice)
TCI West End v. City of Dallas, 486 S.W.3d 692 (Tex. App.—Dallas 2016, pet. denied) (holding
City entitled to civil penalties because TCI never complied with the City’s ordinances after
receiving notice after the demolition, nor did TCI plead, argue or prove that it was impossible
to comply)
 Appendix
CASES AND STATUTES REFERENCED
City of Chicago v. Roppolo, 447 N.E.2d 870 (Ill. Ct. App. 1983) (holding a
constructive trust on owner’s property arose by operation of law because
owner intentionally deceived City into issuing demolition permit for
destruction of landmark)
Tex. Loc. Gov’t Code § 54.012 et seq.
Tex. Loc. Gov’t Code § 211.012
Tex. Loc. Gov’t Code § 315.006
Tex. Gov’t Code § 442.016
Dallas City Code § 51A-4.501