American Sav. and Loan Ass'n v. Marin County

• Decision Date: 06 April 1981
• Docket Number: No. 77-3703,77-3703
• Parties: AMERICAN SAVINGS AND LOAN ASSOCIATION, a California Corporation, Plaintiff-Appellant, v. COUNTY OF MARIN, a Public Entity et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 364

653 F.2d 364

AMERICAN SAVINGS AND LOAN ASSOCIATION, a California Corporation, Plaintiff-Appellant, v. COUNTY OF MARIN, a Public Entity et al., Defendants-Appellees.

No. 77-3703.

United States Court of Appeals Ninth Circuit.

Argued and Submitted March 18, 1980.

Reargued and Resubmitted Oct. 16, 1980.

Decided April 6, 1981.

Edmund L. Regalia, Miller, Starr & Regalia, Oakland, Cal., for plaintiff-appellant.

Douglas J. Maloney, San Rafael, Cal., for defendants-appellees.

Appeal from the United States District Court for the Northern District of California.

Before MERRILL, SKOPIL and ALARCON, Circuit Judges.

SKOPIL, Circuit Judge:

Rehearing has been granted. The opinion filed on June 13, 1980 is withdrawn and is replaced by this opinion.

Appellant, American Savings & Loan, appeals from the district court's grant of summary judgment in favor of Marin County ("the County"). The broad issue presented is whether a county zoning ordinance effects an unconstitutional "taking" of appellant's land, a spit extending into San Francisco Bay. The spit is zoned to require very

low housing density. Appellant's contiguous land is zoned to allow a substantially higher density. In granting summary judgment, the trial court held that for "taking" purposes all of the plaintiff's contiguous land was to be considered as a single parcel. Because the zoning designations merely lowered the value of the parcel, there was no taking. We reverse and remand for further proceedings.

FACTS

Appellant owns Strawberry Point ("the Point"), about 20 acres, and Strawberry Spit ("the Spit"), about 48 acres. They are contiguous. The Spit was the result of a landfill operation begun in 1953 by the appellant's predecessor in interest, Neider. In 1967 Berkeley Savings & Loan, appellant's predecessor in interest, acquired the Spit and the Point. Appellant entered into an option agreement with Eichler Homes. Eichler could develop and buy the property within two years. In 1965 Eichler declared bankruptcy, and development stopped. The bankruptcy court found appellant's agreement with Eichler resembled a mortgage more than an option. In 1973, at a bankruptcy sale, appellant purchased the land for $4,791,772.73 (less all principal amounts and interest appellant had previously expended for the property).

Meanwhile, the County was in the process of formulating a county-wide plan. In 1968 the City-County Planning Council recommended that the County acquire water-edge lowlands of Richardson Bay. The acquisition would include the Spit. In 1973 a citizen's group approved this approach in the Strawberry Community Plan. In January 1973 the Strawberry Park and Recreation District passed a resolution stating that it would "seek all means available to keep (the Spit) permanently and in public trust as open areas and research areas". In May 1973 the County Park, Recreation and Open Space Commission resolved that the Spit was "of Countywide significance as a Wildlife Preserve" and suggested that acquisition be considered. In August 1974 the County adopted a plan that incorporated this concept in general terms. Water-edged lowlands, including the Spit, were depicted on a map accompanying the plan as "urban open space".

On May 14, 1974 (before adoption of the County's plan) the County adopted zoning ordinance no. 2091 ("the ordinance"). The ordinance rezoned over 12,500 acres of ridge and upland greenbelt areas. The Spit was downzoned to allow one "multiple residential unit" per five acres. The Point was rezoned to allow four "multiple residential units" per acre. ¹

The planner who coordinated the process of drafting the ordinance said the lowered density on the Spit was due to "particular environmental problems or certain environmental concerns that would have to be met in development". The record shows that the Spit fill should subside over a forty-year period. Planners also felt the site would be particularly susceptible to tsunami (tidal waves). No specific studies were made of either possibility. The ordinance was based primarily on the earlier studies and recommendations of community and public groups. At the time the ordinance was adopted, no separate economic or traffic studies were made.

In August 1974 appellant filed a written claim with the County. Damages for inverse condemnation were claimed under Cal. Gov't Code § 900, et seq. The County rejected the claim. At no time did appellant seek approval for development of its land under the ordinance.

In November 1974 appellant filed suit in federal district court. It alleged that the ordinance was unconstitutional facially and as applied to the Spit and the Point. It requested the court to enjoin enforcement of the ordinance or to award damages for inverse condemnation.

After extensive discovery, the County moved for summary judgment. It contended that the Point and the Spit were legally a single parcel because they were contiguous, owned by the appellant, and intended for the same use. Because the Point retained monetary value (about $2 million), it suggested that the effect of the ordinance was merely to diminish the value of the parcel as a whole. This diminution in value was not an unconstitutional taking. The appellant maintained that the validity of the ordinance must be judged by the effect of a given zoning designation on a particular parcel. Because the Spit and the Point were zoned differently, the effect of the ordinance must be judged differently. Appellant contended that the Spit's zoning deprived it of any substantial beneficial use of the Spit and so was a taking.

Summary judgment for the County was orally granted, holding:

"(W)here a single party has a single contiguous parcel of property affected by a community zoning program, and where that program permits a reasonable profitable use of the property taken as a whole, that no claim has been made for a (sic) unlawful taking ..." ²

The trial judge did not consider whether the Spit itself would have a substantial beneficial use under its current zoning classification. Appellant appeals. We note jurisdiction under 28 U.S.C. § 1291.

DISCUSSION

The district court held as a matter of law that the Spit and Point constitute a single parcel for taking purposes.

Single Parcel Theory

We begin by discussing the relationship between the taking issue and the severance damage issue in eminent domain proceedings. Government regulation can "be so onerous as to constitute a taking which constitutionally requires compensation". Goldblatt v. Town of Hempstead, 369 U.S. 590, 594, 82 S.Ct. 987, 990, 8 L.Ed.2d 130 (1962). There is no set formula for determining when an economic injury occasioned by regulation must be compensated by government. Penn Central Transportation Co. v. New York City, 438 U.S. 104, 124, 98 S.Ct. 2646, 2659, 57 L.Ed.2d 631 (1978). A police power regulation is not invalid simply because it prevents the highest and best use of the land. Id. at 125, 98 S.Ct. at 2659-2660; Haas v. City & County of San Francisco, 605 F.2d 1117, 1120 (9th Cir. 1979). Nor is a regulation invalid merely because it dramatically reduces the value of property. E. g., Hadacheck v. Sebastian, 239 U.S. 394, 36 S.Ct. 143, 60 L.Ed. 348 (1915) (value reduced from $800,000 to $60,000). The validity of the ordinance must be judged "by focusing on the uses the regulations permit". Penn Central, 438 U.S. at 131, 98 S.Ct. at 2663. If the regulation is a valid exercise of the police power, it is not a taking if a reasonable use of the property remains. See Agins v. City of Tiburon, 447 U.S. 255, 100 S.Ct. 2138, 2141, 65 L.Ed.2d 106 (1980).

The appellant conceded below that the Point had not been taken. The Point is still worth about $2 million and can be economically developed under current zoning. Nevertheless, the appellant maintains that there is no economically feasible use for the Spit, and so it has been taken. The County contends that condemnation cases concerned with severance damages require us to treat the Spit and the Point as a single parcel. Under this single-parcel theory a reasonable use remains for the parcel as a whole (the Point plus the Spit) because a reasonable use remains for the Point.

Severance damages are awarded when government condemns only a portion of a larger parcel:

"(W)hen part only of a parcel of land is taken for a highway, the value of that part is not the sole measure of the compensation or damages to be paid to the owner; but the incidental injury or benefit to the part not taken is also to be considered. When the part not taken is left in such shape of condition, as to be in itself of less value than before, the owner is entitled to additional damages on that account."

Bauman v. Ross, 167 U.S. 548, 17 S.Ct. 966, 42 L.Ed. 270 (1897). See also United States v. 429.59 Acres, 612 F.2d 459, 464 (9th Cir. 1980).

This rule applies only when the part taken and the remainder are together a single parcel. For severance damages purposes the criteria for determining property is a single parcel are: (1) physical contiguity; (2) unity of ownership; and (3) unity of use. City of Los Angeles v. Wolfe, 6 Cal.3d 326, 491 P.2d 813, 99 Cal.Rptr. 21 (1971); People v. Thompson, 43 Cal.2d 13, 271 P.2d 507 (1954); Sharp v. United States, 191 U.S. 341, 24 S.Ct. 114, 48 L.Ed. 211 (1903); 4A Sackman, Nichols on Eminent Domain, 1431, et seq. These criteria are not absolutely inflexible. They are working rules courts have adopted to do substantial justice in eminent domain proceedings. United States v. Miller, 317 U.S. 369, 375-76, 63 S.Ct. 276, 280-281, 87 L.Ed. 336 (1943); United States v. 429.59 Acres, 612 F.2d at 463-64.

The County acknowledges that these cases concern damages in condemnation actions. It suggests that "they are the only available judicial analysis of this issue and plaintiff is suing in inverse condemnation." We reject this suggestion. The issue is not the same in condemnation cases and in inverse condemnation cases. In...