State v. Clear Channel Outdoor, Inc.
No. 13-0053
Case Summary written by Ben Agee, Staff Member.
CHIEF JUSTICE HECHT delivered the opinion of the Court.
Facts: In an effort to widen a freeway in Downtown Houston, the State of Texas condemned some highway frontage land on which sat some billboards owned by Clear Channel. The area of the highway being widened was a high-traffic area, and the billboards were located in a coveted spot because of the high volume of drivers and passengers who would see them. Furthermore, the billboards were built in such a way as to render them practically permanent, and could not be moved and relocated, but only demolished.
After condemning the land, the State settled with the landowners and with Clear Channel in regard to compensation for disruption of ownership and lease interests, respectively. Clear Channel, however, wanted compensation for the loss of business they would suffer by no longer having the billboards near the highway, and sued the State for damages. The State argued that the billboards were personal property not subject to such damages, but that even if Clear Channel was entitled to any compensation, it would be for the cost of the billboards alone, and not any business loss.
At trial, each side presented expert witnesses to determine the actual value of the billboards. Each party’s expert came up with roughly equal figures: between $15,000–$30,000 for each billboard. Clear Channel also had an expert testify as to the value of lost revenue Clear Channel would suffer because of the State’s actions, which he estimated to be between $692,000–$722,300. The jury awarded Clear Channel $268,235.27, and the court of appeals affirmed.
Issues: (1) Were the billboards fixtures or removable personal property on the land; and (2) could Clear Channel be compensated for the loss of business they asserted?
Analysis: In deciding the first issue, the Court stated that because the billboards were built in such a way that they could not be moved without being destroyed, they were fixtures. The Court qualified this statement by saying that there may be some situations in which billboards should be considered personal property, but under the facts of this case, the billboards were definitely permanent fixtures.
As for the second issue, the Court held that Clear Channel could not be compensated for any potential loss in revenue. The Court agreed with the State’s arguments that Clear Channel could only be compensated for the actual value of the billboards. Future profits, the Court decided, are speculative, and cannot be compensated, even if there is evidence that the location was a crucial factor of a business’s profits. The Court cited to State v. Central Expressway Sign Associates, in which they held that “income from a business operated on the property is not recoverable and should not be included in a condemnation award.” State v. Central Expressway Sign Associates, 302 S.W.3d 866, 871 (Tex. 2009).
Holding: Because the billboards were fixtures, but Texas does not allow for the recovery of damages for potential lost profits, the Court reversed and remanded the case to the trial court so that proper damages could be determined and issued.