City of San Diego v. Neumann
| Decision Date | 18 August 1992 |
| Docket Number | No. D014683,D014683 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Previously published at 13 Cal.App.4th 1262, 18 Cal.App.4th 1615, 8 Cal.App.4th 1199 13 Cal.App.4th 1262, 18 Cal.App.4th 1615, 8 Cal.App.4th 1199 CITY OF SAN DIEGO, Plaintiff and Respondent, v. Fritz NEUMANN et al., Defendants and Appellants. |
Asaro & Keagy, Roscoe D. Keagy and Richard R. Freeland, San Diego, for defendants and appellants.
John W. Witt, City Atty., C. Alan Sumption, Chief Deputy City Atty., Leslie J. Girard, and Linda Bartz Kinsey, Deputy City Attys., for plaintiff and respondent.
This case involves a single issue which appears, at least in California, to be one of first impression. When a condemnation action takes land which is legally separate from other contiguous land commonly owned by the condemnee, is the condemnee entitled to recover "severance damages" as to the contiguous lots where all of the separate lots were held in anticipation of their later being joined and developed as a unit? The trial court ruled that because the separate lots here were not presently devoted to a unified use, the property lacked sufficient unity to allow the separate lots to be considered parts of a "larger parcel."
We conclude that if the landowner establishes there is a reasonable probability all of his contiguous commonly owned lots will be available for development or use as an integrated economic unit in the reasonably near future, all of the separate lots may be collectively considered as a larger parcel for the purpose of determining the just compensation for the property taken.
As of October 29, 1986 (the date of value) appellants Fritz and Betty Neumann (Neumanns) owned several lots south of San Ysidro Boulevard. Specifically, Neumanns owned the lots designated as 5, 6, 17, 19 and 23. Lots 5, 6 and 17 (the "taken" property) fronted the south side of the then existing San Ysidro Boulevard. Lots 19 and 23 (the "untaken" property) were contiguous with the southern boundaries of the taken property. Respondent City's condemnation effort designated two parcels: parcel 4, composed of lots 5 and 6, and parcel 9, composed of lot 17 plus a small strip of lot 19. (This small strip was of no moment in the issue raised on appeal, and hence we treat parcel 9 as a take of lot 17, and lots 19 and 23 as being untaken.)
Trial proceeded in three stages. In stage one the "right to take" issue was decided adversely to Neumanns. In the second stage--from which the current appellate issue emerged--the court, again sitting without a jury, heard arguments and evidence on the so-called "larger parcel" question. Trial of the "larger parcel" issue was conducted before the jury trial on damages was held, because no evidence of severance damages would be tendered to the jury unless the trial court first determined a larger parcel existed. Accordingly, the court heard the following evidence on the interrelationship of the taken and untaken property.
As of the date of the take, the untaken property was zoned residential and in use as a trailer park. However, the property was in an area designated as "future commercial" on respondent's community plan, and was in fact rezoned commercial prior to trial. The trailer park was an "interim use" and not the "highest and best use" of the property. Neumanns did not intend to develop the property themselves, but anticipated someone else would purchase and develop the taken and untaken property together at some future date.
As of the date of the take, the taken property was zoned commercial. Parcel 9 was used by Baja-Mex (an entity selling insurance) and a small currency exchange business. The existing users were on a month-to-month tenancy terminable on 30 days' notice. The existing use was not the highest and best use of parcel 9. Neumanns purchased parcel 9 so that when the untaken property was developed it would have frontage along and access to San Ysidro Boulevard across Parcel 9. It was physically possible to put a driveway from San Ysidro Boulevard to the untaken property over parcel 9. However, at the time of the take there was no physical access across parcel 9 and such parcel was separated from the untaken property by a fence.
The other taken parcel (parcel 4) was also purchased by Neumanns to provide frontage along and access to San Ysidro Boulevard from the untaken property. Parcel 4 was used by money exchanges and a used car lot, on a month-to-month tenancy terminable on 30 days' notice. The improvements on the property were temporary in character, and the existing use was not its highest and best use. At the time of the take there was no physical access from the untaken property across parcel 4 to San Ysidro Boulevard, and parcel 4 was separated from the untaken property by a fence and a 12-foot slope. Although a driveway across parcel 4 had been approved in concept, it had not yet been planned or built.
The trial court held the taken lots were not part of a "larger parcel" encompassing lots 19 and 23, and accordingly ruled Neumanns would not be permitted to introduce evidence of "severance damages" accruing to lots 19 and 23 from the taking of parcels 4 and 9. The trial court's ruling was based on its understanding that existing law permitted legally separate lots to be considered portions of a larger parcel only if there was sufficient present "unity of use." Since the existing uses were diverse and not currently interdependent, the trial court ruled severance damages would not be allowed.
In the subsequent valuation trial, expert appraisers presented evidence of the values of the taken property. The City's expert valued parcel 4 at $66,300 and parcel 9 at $64,875.
Neumanns' expert valued parcel 4 at $215,625 and parcel 9 at $90,840, explaining that his opinion on the market value of the parcels was based on their being part of a larger parcel including the untaken property. In other words, his valuation of the taken parcels was based on their being joined to the untaken property and providing access to the untaken property. However, the "incremental" value he ascribed to the taken parcels as "access providers" was not identical to the amount he would have calculated as severance damages.
The jury awarded $164,110, allocating $95,300 for parcel 4, $63,000 for parcel 9, and an additional $5,810 for severance damages to parcel 9. Following entry of judgment thereon, Neumanns appealed.
A condemnee is entitled to receive just compensation for property taken by eminent domain. Just compensation is measured by the amount the owner has lost, not by the amount the condemnor has gained (County of San Diego v. Bressi (1986) 184 Cal.App.3d 112, 123, 229 Cal.Rptr. 44), because "[t]he principle sought to be achieved by the concept of just compensation is to reimburse the owner for the property interest taken and to place the owner in as good a position pecuniarily as if the property had not been taken." (People ex rel. Dept. of Transportation v. Southern Pac. Transportation Co. (1978) 84 Cal.App.3d 315, 324, 148 Cal.Rptr. 535.)
A primary component of just compensation is the fair market value of the property taken (Code Civ.Proc., § 1263.310), that is, the value a willing buyer would pay a willing seller, "each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available." (County of San Diego v. Bressi, supra, 184 Cal.App.3d at p. 122, 229 Cal.Rptr. 44, emphasis in original.) In determining fair market value, the condemnee is not limited to the value of the land in its existing condition and usage. Instead, the condemnee may introduce evidence of all uses for which the property is available and to which it is adaptable. Such evidence may also include the highest and most profitable use to which the property might be put in the reasonably near future, to show that such prospective higher use affects its market value. (Redevelopment Agency v. Contra Costa Theatre, Inc. (1982) 135 Cal.App.3d 73, 83-84, 185 Cal.Rptr. 159.)
A second component of damages, denominated "severance damages," is available if the taken property is only a portion of a "larger parcel." Where such a "partial taking" occurs, the condemnee may recover an amount to compensate for any injury to the remainder, measured by the amount of damage to the remainder reduced by the amount of benefit to the remainder. (Code Civ.Proc., § 1263.410.)
No severance damages can be recovered unless the part taken was part of a "larger parcel." (People ex rel. Dept. Pub. Wks. v. International Tel. & Tel. Corp. (1972) 22 Cal.App.3d 829, 833-834, 99 Cal.Rptr. 836.) What constitutes a "larger parcel" is a question of law for determination by the trial court. (Ibid; People ex rel. Dept. Pub. Wks. v. Younger (1970) 5 Cal.App.3d 575, 582, 86 Cal.Rptr. 237.) While legal determinations are subject to de novo review, we are required to resolve any factual disputes in favor of the respondent if there is substantial evidence in support thereof. (People ex rel. Dept. Pub. Wks. v. International Tel. & Tel. Corp., supra, 22 Cal.App.3d at p. 835, 99 Cal.Rptr. 836.)
Against the foregoing background we turn to the issue presented: whether diversity of current uses on adjacent parcels owned by the same condemnee conclusively precludes the untaken parcel from being considered part of a larger parcel as relates to the taken parcel.
As discussed above, the trial...
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City of San Diego v. Neumann
...v. Fritz NEUMANN et al., Appellants. No. S029018. Supreme Court of California, In Bank. Nov. 12, 1992. Prior report: Cal.App., 10 Cal.Rptr.2d 901. Respondent's petition for review MOSK, PANELLI, KENNARD and ARABIAN, JJ., concur. ...