City of San Diego v. Neumann

• Decision Date: 20 December 1993
• Docket Number: No. S029018,S029018
• Citation: 6 Cal.4th 738,25 Cal.Rptr.2d 480,863 P.2d 725
• Court: California Supreme Court
• Parties: , 863 P.2d 725 CITY OF SAN DIEGO, Plaintiff and Respondent, v. Fritz NEUMANN et al., Defendants and Appellants.

Page 480

25 Cal.Rptr.2d 480

6 Cal.4th 738, 863 P.2d 725

CITY OF SAN DIEGO, Plaintiff and Respondent, v. Fritz NEUMANN et al., Defendants and Appellants.

No. S029018.

Supreme Court of California In Bank.

Dec. 20, 1993.

[6 Cal.4th 741] [863 P.2d 726] Leslie J. Girard, City Atty., City of San Diego, Litigation Div., San Diego, for plaintiff and respondent.

Gideon Kanner, Crosby, Heafey, Roach & May, Los Angeles, for defendants and appellants.

PANELLI, Justice.

When property acquired by eminent domain is part of a larger parcel, compensation must be awarded for the injury, if any, to the remainder (Cal. Const., art. I, § 19; U.S. Const., 5th Amend.; Code Civ.Proc., § 1263.410, subd. (a)). Such compensation is commonly called severance damages. When the property taken is but part of a single legal parcel, the property owner need only demonstrate injury to the portion that remains to recover severance damages. The question presented here is whether, and under what circumstances, separate but contiguous legal parcels in common ownership currently devoted to diverse uses may be We conclude that such separate legal parcels may be aggregated and considered as one "larger parcel" when the owner establishes a reasonable probability that all of the contiguous commonly owned lots will be available for development or use as an integrated economic unit in the reasonably foreseeable future. We do not hold that the property owners here are entitled to an award of severance damages; rather, we conclude that the matter must be remanded to the trial court so that the property owners may be given the opportunity to demonstrate that there exists a reasonable probability that the contiguous commonly owned lots will be available for development as an integrated economic unit in the reasonably foreseeable future. Should the owners succeed in that attempt, they may then proceed to prove the injury, if any, caused by the government's condemnation of a portion of the "larger parcel."

aggregated to form a [863 P.2d 727] "larger parcel" in order to prove entitlement to severance damages.

FACTS

Defendants owned a trailer park in the City of San Diego. (Lots 19 and 23; see map in appen.) In addition to the trailer park, defendants owned two parcels of land: parcel 4, containing lots 5 and 6, and parcel 9, containing lot 17. These two parcels jutted out from the trailer park and abutted San Ysidro Boulevard. Parcels 4 and 9 were separated by intervening lots owned by other persons. The parcels adjoined the trailer park, but were separated from it in the case of lot 17, by a fence, and in the case of lots 5 and 6, by a 12-foot slope. At the time of the condemnation, the larger lot 19 was zoned residential and the smaller lot 23 was zoned commercial. The city community plan noted that lot 19 was to be designated "future commercial." The entirety of parcels 4 and 9 was zoned commercial at the time of the taking. There was no access from the trailer park to San Ysidro Boulevard across parcel 4 or 9; rather, access to the trailer park was on a side road. At the time of the condemnation, defendants had leased parcels 4 and 9 to persons who ran businesses in small sheds or temporary structures on the lots, including an insurance business, a currency exchange business, and a used car lot.

Plaintiff, the City of San Diego (hereafter City), brought actions to condemn a strip of land for the purpose of broadening San Ysidro Boulevard. The strip to be condemned included defendants' parcels 4 and 9. The actions were consolidated, and the issues of plaintiff's right to take the land and of valuation were bifurcated. Plaintiff prevailed on the right-to-take issue.

Before trial commenced on the issue of valuation, plaintiff moved to preclude defendants from presenting evidence that the two parcels taken were part of a larger parcel that included the trailer park (lots 19 and 23). Defendants sought to show that lots 19 and 23, considered in conjunction with parcels 4 and 9, were suitable for commercial development, and particularly for use as a shopping center because parcels 4 and 9 provided a means of direct access to lots 19 and 23 from a major thoroughfare, San Ysidro Boulevard. The loss of parcels 4 and 9 through condemnation, therefore, would damage the value of the remaining lots 19 and 23. Defendants had no plan to undertake this future commercial development themselves, but hoped instead to sell the entire property to a developer. No sale was imminent. The court determined that defendants were not entitled to severance damages for lots 19 and 23 because there was no present unity of use between those lots and the land that was taken. Defendants argued that potential future unity of use between the land taken and the remainder should be sufficient to show entitlement to severance damages. The court rejected defendants' contention and granted plaintiff's motion. The trial as to valuation proceeded, and a jury awarded $164,110 for the two condemned parcels.

Defendants appealed, claiming entitlement to severance damages as to lots 19 and 23. The Court of Appeal reversed, holding 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."   The Court of Appeal directed the trial court to reconsider whether defendants' property was a single, larger parcel under this definition.  We granted the City's petition for review
                

DISCUSSION

Article I, section 19, of the California Constitution requires that the owner whose private property is taken or damaged for a public use be paid just compensation. The federal Constitution similarly provides that private property not be taken for public use without just compensation. (U.S. Const., 5th Amend.) What comprises just compensation has necessarily been the subject of both judicial and legislative activity because "[t]he value of property springs from subjective needs and attitudes; its value to the owner may therefore differ widely from its value to the taker." (Kimball Laundry Co. v. United States (1949) 338 U.S. 1, 5, 69 S.Ct. 1434, 1437, 93 L.Ed. 1765; see also S.F., A & S. R.R. Co. v. Caldwell (1866) 31 Cal. 367, 374-375 ["[w]hat shall be the measure of compensation to the owner of land taken for public use, is involved in considerable confusion in the decisions of Courts on the subject."].) As the United States Supreme Court has recognized, however, most property is subject to a general demand that gives it "a value transferable from one owner to another. As opposed to such personal and variant standards as value to the particular owner whose property has been taken, this transferable value has an external validity which makes it a fair measure of public obligation to compensate the loss incurred by an owner as a result of the taking of his property for public use. In view, however, of the liability of all property to condemnation for the common good, loss to the owner of nontransferable values deriving from his unique need for property or idiosyncratic attachment to it, like loss due to an exercise of the police power, is properly treated as part of the burden of common citizenship." (Kimball Laundry Co. v. United States, supra, 338 U.S. at p. 5, 69 S.Ct. at p. 1437.)

In striking this balance between the public's need and the owner's loss, our Legislature has provided that the measure of compensation for property taken pursuant to the government's powers of eminent domain is its "fair market value." (Code Civ.Proc., § 1263.310.) ¹ It has defined "fair market value" as "the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available." (§ 1263.320, italics added.)

As section 1263.320 indicates, the fair market value of property taken has not been limited to the value of the property as used at the time of the taking, but has long taken into account the "highest and most profitable use to which the property might be put in the reasonably near future, to the extent that the probability of such a prospective use affects the market value." (People ex rel. State Public Works Bd. v. Talleur (1978) 79 Cal.App.3d 690, 695, 145 Cal.Rptr. 150; Redevelopment Agency v. Contra Costa Theatre, Inc. (1982) 135 Cal.App.3d 73, 83, 185 Cal.Rptr. 159; see also People v. Ocean Shore Railroad (1948) 32 Cal.2d 406, 425-426, 196 P.2d 570 [hereafter Ocean Shore ] ["the highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future is to be considered, not as the measure of value, but to the extent that the prospect of such use affects the market value of the land...."] ) This same principle of valuation of applies when the government takes more than one Under both the federal and state Constitutions, however, just compensation consists not only in an award of the value of the property that has been taken, but also of an award to compensate the owner for damage caused by the taking to the property that remains. (Cal. Const., art. I, § 19 ["Private property may be taken or damaged for public use only when just compensation ... has first been paid...." (Italics added.) ]; Sharp v. United States (1903) 191 U.S. 341, 351-352, 24 S.Ct. 114, 116, 48 L.Ed. 211.) Therefore, as we recognized in City of Los Angeles v. Wolfe (1971) 6 Cal.3d 326, 330, 99 Cal.Rptr. 21, 491 P.2d 813, while the Legislature has...