Texas Supreme Court Heard Condemnation Case Today - $48,000 or $21 million?


Today the Texas Supreme Court heard an oral argument to decide whether a pipeline company will pay $48,000 or $21 million to condemn 24 acres for a gas processing facility.

Rent was less than $23,000 annually; the condemnation award was $48,000; the trial judgment was $21 million.

In 1973, Avinger Timber leased 24 acres to Tonkawa Gas for the construction and operation of gas processing facilities. The lease would renew every 10 years for another 10 years as a continuing option. Upon renewal, the $500 annual rent would be renegotiated or would be decided in arbitration. Tonkawa built a large gas processing plant on the site and over the years, 15 natural gas pipelines were connected to the plant by various third party companies.

The lease was renegotiated several times. The final lease had a three-year term, with annual rent of $22,265. It no longer contained a term providing for the lessee's right of never-ending renewal. Every successive lessee had been a private company, but in 2004 the lessee merged into Enbridge Pipeline, a public utility with the power of eminent domain. Enbridge offered $35,685 to purchase the land in fee simple. When that offer was rejected, Enbridge filed a petition in condemnation. Avinger did not attend the special commissioners hearing at which an award of $47,580 was entered. Avinger objected and the case went to trial in Marion County, Texas.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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