City of Arlington v. State Farm Lloyds

In City of Arlington v. State Farm Lloyds, 145 S.W.3d 165 (Tex. 2004), raw sewage backed up into a home on two occasions causing significant damage. The homeowners' insurer, State Farm, paid the homeowners for the damages and brought a subrogation suit against the City of Arlington to recover the monies paid, alleging that the City's operation of the sewer lines constituted a nuisance and an unconstitutional taking under Article 1, Section 17. Id. State Farm did not allege that the City operated the sewer improperly; instead, it argued that "backups of raw, noxious sewage into private residences" are "inherent in the nature" of sewer systems. Id. It argued that the City should be liable for the damage caused by the sewer system because the City intentionally maintained the system for the benefit of its citizenry, knowing that backups such as the ones involved in the case are inherent in the operation of sewer systems. Id. A jury found that the sewer system created a nuisance that proximately caused damages to the house, and that the second sewage flood (but not the first) constituted a taking of property by the City of Arlington. Id. at 167. The Fort Worth Court of Appeals found that the City of Arlington waived the issues presented on appeal due to inadequate briefing. City of Arlington v. State Farm Lloyds, 141 S.W.3d 216, 218 (Tex.App.--Fort Worth 2003). The Supreme Court first determined that the City of Arlington's issues were not waived. City of Arlington, 145 S.W.3d at 167-68. It then held, citing City of Dallas v. Jennings, 142 S.W.3d 310 (Tex. 2004), that mere intentional operation of a sewer system is insufficient to support liability for a takings claim under Article I, Section 17. The court reviewed the evidence and found there was no evidence that the City of Arlington knew a specific act was causing identifiable harm or knew that the specific property damage is substantially certain to result from an authorized government action. City of Arlington, 145 S.W.3d at 168. Thus, the court held the City of Arlington did not engage in an unconstitutional taking. Id.