NANCY F. ATLAS, District Judge.
Before the Court in this property dispute is Defendant Union Pacific Railroad Company's ("Union Pacific") Motion for Summary Judgment ("Motion") [Doc. # 54]. Plaintiffs filed a response,
This lawsuit is a property dispute between two landowners and Defendant Union Pacific.
A single right-of-way, the Seabrook Industrial Lead, crosses all five properties. Ownership of the right-of-way has changed multiple times since it was conveyed in the 1890s. Most recently, Union Pacific acquired it in 1998. In August 2017, Union Pacific transferred its interest in the Seabrook Industrial Lead to the Texas Department of Transportation ("TXDOT").
Plaintiffs brought this lawsuit in Texas state court on September 16, 2017.
In their Third Amended Complaint, Plaintiffs allege that Union Pacific lacked a valid interest in the right-of-way running over their properties to transfer to TXDOT.
On April 17, 2019, after the close of discovery, Union Pacific moved for summary judgment on Plaintiffs three claims.
Under Federal Rule of Civil Procedure 56, "[a] party may move for summary judgment, identifying each claim or defense—or the part of each claim or defense—on which summary judgment is sought." FED. R. CIV. P. 56(a). Summary judgment on a claim or part of a claim is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Seacor Holdings, Inc. v. Commonwealth Ins. Co., 635 F.3d 675, 680 (5th Cir. 2011) (quoting FED. R. CIV. P. 56(a)).
A party asserting that certain facts cannot be genuinely disputed "has the initial responsibility of informing the court of the basis for its motion and identifying those portions of the pleadings and materials in the record, if any, which it believes demonstrate the absence of a genuine [dispute] of material fact." See Deutsche Bank Nat'l Tr. Co. v. Cardona, No. 7:16-CV-448, 2017 WL 2999272, at *1 (S.D. Tex. Apr. 20, 2017) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). See also FED. R. CIV. P. 56(c)(1). The moving party, however, "need not negate the elements of the nonmovant's case." Coastal Agric. Supply, Inc. v. JP Morgan Chase Bank, N.A., 759 F.3d 498, 505 (5th Cir. 2014) (quoting Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir. 2005)). Instead, the moving party may meet its burden by pointing out "the absence of evidence supporting the nonmoving party's case." Malacara v. Garber, 353 F.3d 393, 404 (5th Cir. 2003). If the moving party meets this initial burden, the burden shifts to the nonmovant to set forth specific facts showing the existence of a genuine issue for trial. See Brandon v. Sage Corp., 808 F.3d 266, 270 (5th Cir. 2015) (citing Bayle v. Allstate Ins. Co., 615 F.3d 350, 355 (5th Cir. 2010)). "The court need consider only the cited materials, but it may consider other materials in the record." FED. R. CIV. P. 56(c)(3).
Union Pacific seeks summary judgment on Plaintiffs' three claims: (1) quiet title, (2) declaratory judgment, and (3) trespass. Union Pacific first argues the Court should reject Plaintiffs' attempt to have Union Pacific's right-of-way over Plaintiffs' properties declared invalid. Union Pacific contends that this attempt fails as a matter of law because the relevant right-of-way conveyances impose covenants, not conditions, whose breach cannot cause termination of the easements. Union Pacific further contends Plaintiffs' trespass claim is time barred because it was brought outside of the applicable two-year statute of limitations. Union Pacific's positions are persuasive. The Court therefore
Plaintiffs cite and attach to their Response a transcription of a grant dated April 2, 1895, which Plaintiffs label the "Nicholson Grant."
Plaintiffs contend this language creates a condition subsequent to the conveyance and that one of Union Pacific's predecessors at some point breached by demolishing the train station. In response, Union Pacific argues that the language creates a covenant, and that the remedy for its breach, if it occurred, is damages and not termination of the easement. See Dilbeck v. Bill Gaynier, Inc., 368 S.W.2d 804, 807 (Tex. Civ. App.-Dallas 1963, writ ref'd n.r.e.) ("The chief distinction between a covenant and a condition subsequent has to do with the remedy in the event of a breach. If a covenant, the remedy is an action for damages, but the breach of a condition subsequent results in a forfeiture of the estate."). The Court concludes that the Nicholson Grant imposes a covenant, not a condition subsequent. Thus, breach of the covenant, if it occurred, cannot result in termination of the easement.
Texas courts have a "strong constructional preference for restrictive covenants as opposed to conditions subsequent" and "will construe anything less than clear, plain and unequivocal language as creating merely a restrictive covenant." See Humphrey v. C.G. Jung Educ. Ctr. of Hous., 714 F.2d 477, 483 (5th Cir. 1983); Hearne v. Bradshaw, 312 S.W.2d 948, 951 (Tex. 1958) ("Conditions subsequent are not favored by the courts, and the promise or obligation of the grantee will be construed as a covenant unless an intention to create a conditional estate is clearly and unequivocally revealed by the language of the instrument."); Tex. Elec. Ry. Co. v. Neal, 252 S.W.2d 451, 456 (Tex. 1952) ("Conditions and limitations that work forfeiture or termination of title are not favored, and in case of doubtful language the promise or obligation of the grantee will be construed to be a covenant."); KIT Projects, LLC v. PLT P'ship, 479 S.W.3d 519, 526 (Tex. App.-Houston [14th Dist.] 2015, no pet.) ("Because conditions tend to be harsh in operation, conditions are not favored in the law."). "The use of the technical word `condition' or `covenant' in the deed is not determinative of the character of the clause or provision to which it refers." Dilbeck, 368 S.W.2d at 807 (emphasis added).
In Neal, the Texas Supreme Court construed analogous language to the Nicholson Grant as creating a covenant, not a condition. See 252 S.W.2d at 456. There, the right-of-way grant in question provided that the conveyance was done "upon the further condition and consideration that" the grantee would establish and maintain a stop on the granted right of way. See id. at 453. The Court found the grant's language doubtful, despite its use of the term "condition" because it did "not expressly provide that title shall revert to the grantor in case of nonperformance on the part of the grantee" or "provide that title shall terminate when the stop is no longer maintained." See id. at 456. In accord with Neal, Texas courts have required some words indicating that the conveyed interest terminates or reverts upon breach to conclude that the parties intended to impose a condition. See Ogilvie v. Hill, 563 S.W.2d 846, 849 (Tex. Civ. App.-Texarkana 1978, writ ref'd n.r.e.) ("The contract here contains no stipulation for termination or forfeiture with reference to the road obligation. In those circumstances the provision will be construed to be not a condition but a covenant . . . ."); Rosek v. Kotzur, 267 S.W. 759, 761-62 (Tex. Civ. App.-San Antonio 1924, no writ) ("It is well settled by a long line of authorities . . ., that before a promise will be treated as a `condition subsequent,' to destroy the conveyance, it must clearly appear by apt language in the very conveyance itself, and it must provide that such breach would operate to destroy the estate and reinvest it in the grantor." (emphasis added)).
Here, similarly to the grant in Neal, the Nicholson Grant does not "expressly provide that title shall revert to the grantor in case of nonperformance on the part of the grantee" or "provide that title shall terminate when the [station] is no longer maintained." See 252 S.W.2d at 456. See also Ogilvie, 563 S.W.2d at 849; Rosek, 267 S.W. at 761-62. While the Nicholson Grant does state that the grant of the right-of-way is "made on the condition" that the station be maintained, the use of the word "condition" is not determinative, as demonstrated in Neal. See Neal, 252 S.W.2d at 456; Dilbeck, 368 S.W.2d at 807. Plaintiffs identify no other features of the grant, other than the "condition" language, indicating that the parties' predecessors intended to create a condition rather than a covenant. Because the Nicholson Grant imposes a covenant, not a condition, the alleged breach of the covenant cannot, as a matter of law, cause the easement's termination.
Plaintiffs bring a claim for trespass, alleging that Union Pacific's conduct exceeded the scope of its right-of-way easements by unlawfully granting underground easements and authorizing non-railroad third parties to occupy the surface of the easement. Union Pacific contends Plaintiffs' trespass claim is barred under Texas's two-year statute of limitation period. See TEX. CIV. PRAC. & REM. CODE ANN. § 16.003(a). In response, Plaintiffs do not contest that they had notice of Union Pacific's and its predecessors' allegedly violative conduct more than two years before filing suit. Plaintiffs, however, contend that their trespass claim is not time barred under Texas's "discovery rule" because they had no actual notice that Union Pacific and its predecessors were not fee simple owners of the property in question.
Plaintiffs' invocation of the discovery rule is unpersuasive. The Court concludes that Plaintiffs had constructive notice of the limited scope of Union Pacific's rights more than two years before filing suit. The Court therefore concludes that Plaintiffs' trespass claim is time barred.
"Trespass to real property requires a showing of an unauthorized physical entry onto another's property by some person or thing." Yalamanchili v. Mousa, 316 S.W.3d 33, 40 (Tex. App.-Houston [14th Dist.] 2010, pet. denied). The statute of limitations for trespass to real property is two years from the date the cause of action accrues. See TEX. CIV. PRAC. & REM. CODE ANN. § 16.003(a). "A trespass cause of action accrues upon discovery of the first physical invasion of the thing on the plaintiff's property." Yalamanchili, 316 S.W.3d at 40.
"The discovery rule is a limited exception to strict compliance with the statute of limitations." Comput. Assocs. Int'l, Inc. v. Altai, Inc., 918 S.W.2d 453, 457 (Tex. 1996). "Texas courts generally apply the discovery rule to causes of action for damage to property," such as trespass claims. See W.W. Laubach Tr./The Georgetown Corp. v. The Georgetown Corp./W.W. Laubach Tr., 80 S.W.3d 149, 159 (Tex. App.-Austin 2002, pet. denied). The rule "defers accrual of a cause of action until the plaintiff knew or, exercising reasonable diligence, should have known of the facts giving rise to the cause of action." Comput. Assocs. Int'l, 918 S.W.2d at 457.
"Constructive notice is notice the law imputes to a person not having personal information or knowledge." Hue Nguyen v. Chapa, 305 S.W.3d 316, 324 (Tex. App.-Houston [14th Dist.] 2009, pet. denied). "Constructive notice creates an irrebuttable presumption of actual notice." HECI Expl. Co. v. Neel, 982 S.W.2d 881, 887 (Tex. 1998). The Texas Property Code provides that an "instrument that is properly recorded in the proper county is . . . notice to all persons of the existence of the instrument." TEX. PROP. CODE ANN. § 13.002. This section also "provides all persons . . . with notice of the deed's contents as well." See Cosgrove v. Cade, 468 S.W.3d 32, 34 (Tex. 2015). Purchasers of real property are deemed to have constructive notice of matters reflected in real property records chain of title. See Noble Mortg. & Inv., LLC v. D & M Vision Inv., LLC, 340 S.W.3d 65, 76 (Tex. App.-Houston [1st Dist.] 2011, no pet.) ("Recorded instruments in a grantee's chain of title generally establish an irrebuttable presumption of notice."); Jones v. Fuller, 856 S.W.2d 597, 603 (Tex. App.-Waco 1993, writ denied) ("A purchaser of real property is constructively charged with notice of the existence of instruments recorded in the county where the property is situated and of instruments constituting his chain of title, whether or not they are recorded. Thus, an instrument that is properly recorded in the proper county is notice to all persons of its existence." (internal citations omitted)).
Here, Plaintiffs argue that the relevant grants were old and they did not discover them until shortly before this litigation. Plaintiffs, however, do not contests that the relevant deeds produced in this litigation were properly recorded and were previously discoverable through reasonable diligence. These deeds put Plaintiffs on constructive notice of the scope of Union Pacific's rights when Plaintiffs purchased the relevant properties. Plaintiffs trespass claim is time barred because Plaintiffs had constructive notice of the scope of Union Pacific's easement when Plaintiffs obtained the relevant properties, which occurred more than two years before Plaintiffs sued. Accordingly, the Court
For the foregoing reasons, Union Pacific is entitled to summary judgment on Plaintiffs' quiet title, declaratory judgment, and trespass claims. It is therefore
A final, appealable order will separately issue.
