Cuna v. L.A. County Mta

Decision Date30 April 2003
Docket NumberNo. B149100.,B149100.
Citation133 Cal.Rptr.2d 470,108 Cal.App.4th 382
CourtCalifornia Court of Appeals
PartiesCUNA MUTUAL LIFE INSURANCE COMPANY, Plaintiff and Appellant, v. LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY, Defendant and Respondent.

Hill, Fairer & Burrill, Kevin H. Brogan and Dean E. Dennis, Los Angeles, for Plaintiff and Appellant.

Wasserman, Comden, Casselman & Pearson, David B. Casselman, Rebecca J. Schroer, Tarzana, Elsa H. Jones, Los Angeles, and Jeffrey F. Kagan for Defendant and Respondent.

RUBIN, J.

This appeal arises out of an inverse condemnation action brought by CUNA Mutual Life Insurance Company, the owner of the historic El Capitan Theater Building, against the Los Angeles County Metropolitan Transportation Authority to recover costs CUNA incurred to protect the Building from damage it anticipated would be caused by excavation for and construction of the Hollywood/Highland Metro Rail Station.1 After a simultaneous court and jury trial on the issues of liability and damages, respectively, the trial court dismissed the jury and entered judgment in favor of MTA, finding "insufficient evidence that the ... station construction ... caused damage to the El Capitan. Without actual or prospective damage proved, there can be no inverse condemnation award."

On appeal, we consider two questions: (1) did the trial court utilize the correct legal standard in deciding that CUNA's mitigation expenses were not recoverable; and (2) is compensable physical injury necessary before a property owner may recover mitigation expenses.2 We conclude: (1) a property owner is entitled to recover reasonable costs incurred to mitigate damage to the property that the property owner reasonably and in good faith believed would be caused by a work of public improvement even if post-mitigation events indicate there would have been no damage; (2) the trial court prejudicially erred by requiring CUNA to show that, "but for" the mitigation repairs, the Building in fact would have been damaged; and (3) actual physical damage to the subject property is not a prerequisite to an award of mitigation damages. Accordingly, we reverse and remand for a new trial.

FACTUAL AND PROCEDURAL BACKGROUND

Built in 1926, the Building is listed on the National Register of Historic Places, and the Los Angeles Conservancy holds a conservation easement that requires the Building owner to preserve it in good repair. Constructed of reinforced concrete, the Building is comprised of a six-story office building located on the northern most portion of the lot, facing onto the Hollywood Walk of Fame on Hollywood Boulevard. An attached theater is situated behind the office building. A full basement below the footprint of the office building extends beyond the north property line to below the Walk of Fame. A subbasement is located below the footprint of the office building. Except for the basement walls beneath the Walk of Fame, the foundation for the Building consists of a series of piles, the tips of which are driven into old alluvium soil.3

The tunnels for the Hollywood/Highland Metro Rail Station (the station) run beneath Hollywood Boulevard and pass directly north of the Building. The station itself is located just beyond the Building's northeast corner. In preparation for construction of the subway system, MTA commissioned a series of investigations resulting in reports regarding the geotechnical characteristics of the land affected by the project. According to a May 1990 report: "The need for underpinning the adjacent existing buildings depends on whether their foundations are adequate or whether the buildings can satisfactorily undergo the anticipated settlements due to excavation and construction. Each adjacent building should be evaluated on a case-by-case basis."

According to a January 1992 report, the Building was located "outside the zone of influence of the tunneling. However[,] the basement vault beneath the Hollywood Boulevard sidewalk, which is not pile supported, will be affected by the tunneling." This report anticipated minor cracking to the Building facade, but recommended any damage be repaired after tunneling was completed.

A November 1993 report predicted station excavation could cause "some ground settlement or angular distortion at ground surface within 60 to 70 feet of station outline." At its closest point, the excavation for the station was expected to be approximately 14 feet from the face of the Building. The November 1993 report opined settlement and angular distortion would "generally be small, if proper construction techniques are followed."4

In January 1994, the Building was extensively damaged in the Northridge earthquake. The most serious damage occurred at the Building's west wall, primarily at the south end, less so at the north end. Seismic upgrades to the west wall began that summer and were completed by September 1994.

Meanwhile in 1994, MTA had begun tunneling along Hollywood Boulevard in the first stage of construction of the Metro Rail Red Line. In August 1994, tunneling stopped because of excessive settlement. Tunneling eventually recommenced, and by March 1995, both the north and south tunnels had passed in front of the Building. The tunneling caused building settlement of almost 1/4 (0.23) inch.

In June 1995, the Building owner hired The J. Byer Group, Inc., a geotechnical consulting firm (J. Byer), to assist in the design and completion of seismic upgrading by evaluating the engineering properties of the earth materials beneath the Building. In this context, J. Byer employed various subsurface exploration techniques, including manometer surveys on the basement and sub-basement levels of the Building, in addition to using data obtained from MTA.5 J. Byer advised that the manometer surveys were also useable to quantify building settlement associated with construction of the station. In August 1995, Ryland Associates prepared a Seismic Hazard Evaluation of the Building using, among other things, data obtained from previous reports, including those obtained from MTA.

In October 1995, J. Byer informed the Building owner that surveys conducted on behalf of MTA between August 1993 and May 1995 established the Building had settled 1/4 of an inch. Similar surveys conducted on behalf of the Building owner concluded the Building had settled between 1/4 and 1/3 of an inch. J. Byer opined that construction of the station "will induce more than 1/4 inch of settlement on a portion of the building. [MTA reports indicated that] one episode of very rapid settlement accounted for most of the settlement during construction of the tunnels. It might be structurally unacceptable to incur inch or more of rapid settlement before defensive measures are taken. It is recommended that the structural engineer establish what the acceptable tolerances for differential settlement are. [¶] At least 1/4 inch of settlement within 50 feet of the station excavation should be expected. Therefore, defensive measures should be implemented now and not after additional settlement." J. Byer warned: "[deflection of the shoring system, settlement, and ground losses have occurred at other Metro Red Line station construction sites and should be anticipated for this site." Structural engineers Ismail Associates, Inc., advised the Building owner to ensure that MTA was taking steps to prevent problems relating to the proximity of the construction to the Building.

In a letter dated November 20, 1995, counsel for the Building owner requested MTA to underpin the front portion of the Building. At a meeting on March 13,1996, after several months of negotiations, MTA agreed to pay $23,500 for the design of an underpinning system and a portion of the construction costs of a support system for the north wall of the Building. The offer was confirmed in writing on March 28.6 At the time, work on the station was slated to begin on May 17. Less than two weeks later, the Building owner's structural engineering firm, Robert Englekirk Consulting Structural Engineers, Inc., (RE I) gave MTA its proposal for "the design of permanent underpinning for vertical loads of those elements of the Building affected by the construction of the MTA Hollywood/Highland Station" for an estimated fee of $50,000, on a time and material basis due to the "great uncertainty in work involving underpinning existing buildings." The design-build firm of Hayward Baker, Inc., proposed to do the construction work in accordance with the scope of work outlined by REI for $526,000.

At a meeting on April 29, REI provided MTA with a written description of the proposed underpinning scheme. MTA proposed an alternate scheme. The disadvantages of the MTA scheme, according to REI, were that it placed a new basement wall foundation system in unstable soil, did not provide specific protection of the pile foundations of the office tower columns, and required regular monitoring with a hydraulic jack, which could disrupt operation of the Building and make the basement unusable for some time.

In response to MTA's request for more information "on the issue of whether settlement is expected," REI explained its opinions were based on the 1995 J. Byer reports. REI concluded: "It is the opinion of REI that although the shoring system documents developed for the Station are well-designed, the system is not adequate to avoid settlement at the El Capitan Building...."

CUNA offered to accept $500,000, a portion of the estimated $800,000 total cost of underpinning in accordance with the REI scheme, in exchange for which MTA would receive a $500,000 credit against any claim of physical damage to the Building as a result of the station construction.

Unable to agree with MTA on a plan to underpin the Building, CUNA commenced on its own the underpinning project in accordance with its engineers' recommendations. The project was completed by May 28 for a total cost of $755,787.22....

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