Escondido School Dist. v. Casa Sueños, D043104.

• Decision Date: 26 May 2005
• Docket Number: No. D043104.,D043104.
• Citation: 29 Cal.Rptr.3d 89,129 Cal.App.4th 944
• Court: California Court of Appeals Court of Appeals
• Parties: ESCONDIDO UNION SCHOOL DISTRICT, Plaintiff and Appellant, v. CASA SUEÑOS DE ORO, INC., Defendant and Appellant.

29 Cal.Rptr.3d 89

129 Cal.App.4th 944

ESCONDIDO UNION SCHOOL DISTRICT, Plaintiff and Appellant, v. CASA SUEÑOS DE ORO, INC., Defendant and Appellant.

No. D043104.

Court of Appeal, Fourth District, Division 1.

May 26, 2005.

Best Best & Krieger, Bruce W. Beach, Karen Freeman Landers and Adria Allen, San Diego, for Plaintiff and Appellant.

Mahaffey & Associates, Douglas L. Mahaffey, Irvine, and Sean T. McGee, Ottawa, ON, Canada, for Defendant and Appellant.

IRION, J.

These appeals from a $495,850 eminent domain judgment involve two parcels, each containing a manufactured home, owned by Casa Sueños De Oro, Inc. (Casa Sueños) and condemned by the Escondido Union School District (District) for construction of an elementary school.

District appeals, contending the judgment must be reversed because Casa Sueños was erroneously awarded compensation for the manufactured homes. In this regard, District attacks the trial court's findings that (1) Health and Safety Code section 18551 was inapplicable to this condemnation proceeding and (2) the manufactured homes were improvements pertaining to the realty under Code of Civil Procedure sections 1263.205 and 1263.210.¹ District also contends the court erred in admitting the testimony of Casa Sueños's real estate appraiser, contending his valuation was incorrect on various grounds and his statement of valuation data was not timely exchanged under the pertinent discovery statutes.

Casa Sueños also appeals, contending the court abused its discretion by denying litigation expenses.

PROCEDURAL AND FACTUAL BACKGROUND

In 1999, Casa Sueños purchased a half-acre parcel on Fig Street in Escondido with the intention of dividing it into two lots and placing a manufactured home on each lot for resale. A manufactured home is a prefabricated structure designed for residential occupancy and built on a permanent chassis that is transported to a building site for assembly and installation.

In March 2000, District notified Casa Sueños that its Fig Street property would be needed for the construction of an elementary school and offered to purchase it. Casa Sueños rejected District's initial purchase offers for the unimproved land.

By April 2000, Casa Sueños had obtained final approval to build its two-lot subdivision from the City of Escondido.

For about a year, Casa Sueños did not develop the property, adopting a "hold pattern" as District attempted to obtain state funding to purchase the land for the proposed school. In May 2001, Casa Sueños learned that District had dropped plans to purchase the property because its funding sources had dried up.

In mid-July 2001, Casa Sueños started to grade the property and also ordered the two manufactured homes it planned to assemble and install on the property. Through the summer and early fall, Casa Sueños continued to prepare the property for delivery of the manufactured homes. After the lots were graded, the contractor prepared the land for wood building pads by digging an approximate three-foot-deep area on each lot to match the footprint of the particular manufactured home to be placed on the lot. Next, one-foot-wide, 18-inch-deep trenches were dug around the perimeters of the building pads, steel rebar was placed in the trenches, and the trenches were filled with concrete; these became the reinforced concrete footings for the manufactured homes.

Casa Sueños also began marketing the lots by advertising in local newspapers, distributing flyers and placing a sign on the property. The lot with the smaller manufactured home was sold on July 28; the lot with the larger manufactured home was sold on August 1.²

Meanwhile, District revived its plans to obtain the property and build an elementary school on it. On October 5, District offered to purchase the property from Casa Sueños pursuant to Government Code section 7267.2, subdivision (a). Casa Sueños did not accept the offer. On October 31, District sent Casa Sueños a notice of intent to adopt a resolution of necessity.

On November 9, the first of the two manufactured homes (the larger one) was delivered to the site. It arrived in three sections that were loaded on the semitrailer of a large truck. The trailer was maneuvered over the wood building pad and perimeter footings and parked. Next the truck was unhooked, the plastic protecting the three sections was stripped off, and the sections were raised to remove the axles and hitches. The sections were then lagged together and lowered onto the foundation piers, which stood approximately 12 inches off the ground. When the three sections were in place on the piers and pad, the home was bolted together. The roof was bolted together to make the structure weathertight at the roof line.

Then the crew started bolting the 12-inch-tall piers directly to the metal frame on the bottom of the structure. The bottoms of the piers were connected to the pad resting on the concrete footings. Casa Sueños maintained this manufactured home was completely attached to the pier-and-pad foundation system and permanently in place, standing approximately one foot off the ground by the end of the workday on November 10.

The crew began constructing a concrete block retaining wall around the perimeter of the structure to prevent dirt from getting underneath during the subsequent backfilling of the lot. After the retaining wall was completed on November 14, there was a gap of three or four inches between the wall and the bottom of the manufactured home in which a mudsill was to be installed. A mudsill is a buffer between the block wall and the manufactured home that prevents debris from getting under the structure.

District adopted its resolution of necessity on November 15, declaring that acquisition of the property by eminent domain was necessary for the construction of the elementary school and authorizing eminent domain proceedings to acquire the property. On November 16, District filed its complaint in eminent domain. Casa Sueños was served with the complaint on November 19.

The second manufactured home had been delivered to the site in two sections on November 16. The crew began installing the structure and attaching it to the pier and foundation system. Casa Sueños maintained this structure was permanently affixed to the foundation on November 17. On November 19, the crew started building the perimeter block wall for this manufactured home, but work on the wall stopped in the afternoon after Casa Sueños was served with District's eminent domain complaint.³

On November 20, District deposited probable compensation of $110,000⁴ with the San Diego County Treasurer in connection with its application for an order of possession under the "quick-take" statutory scheme of the Eminent Domain Law. (See §§ 1255.010 et seq., 1255.410.)

On December 21, District and Casa Sueños stipulated to District's possession of the parcel as of that date, with District assuming any risk of loss for the manufactured homes. The stipulation also established the date of value as December 11 and required District to add $10,000 to its deposit as probable compensation, raising the total to $120,000. The court subsequently issued an order for possession based on the terms of the stipulation.

On April 29, 2002, the parties entered another stipulation for transferring possession to Casa Sueños of the two yet-to-be-finished manufactured homes (see fn. 3, ante) in exchange for a $114,300 credit on the final judgment in the eminent domain lawsuit "in the event [of] an ultimate determination . . . that the manufactured homes are improvements pertaining to the realty."⁵ The stipulation noted the parties' disagreement "as to whether the manufactured homes are to be taken into account in determining compensation" and provided the "parties reserved all . . . rights pertaining to . . . the amount of just compensation owed by the District to Casa Sueños." The stipulation also noted District's intention to proceed with the elementary school project and the necessity "to remove, relocate or demolish all existing structures." As part of the stipulation, District agreed to pay $48,800 to cover the costs of removing and relocating the manufactured homes to a different site.⁶ Upon relocation, the stipulation provided that Casa Sueños assumed the risk of loss for the manufactured homes.

On July 12, District filed and served a demand for exchange of valuation data in compliance with section 1258.210. On November 18, District and Casa Sueños served their lists of expert witnesses and statements of valuation data. Casa Sueños's statement of valuation data dealt with only one of the two parcels and was based on an incorrect date of value.

On December 5, District took the deposition of John Betteker, Casa Sueños's appraisal expert, who revealed he had appraised only one of the two lots and had used the wrong date of value.

On December 17, the parties exchanged final offers and demands; Casa Sueños demanded $250,000, and District offered $180,000.⁷ Although trial did not begin until May 12, 2003, the trial court twice refused to reopen discovery in the interim.

On April 7, 2003, Casa Sueños served District with a revised statement of valuation data for Betteker; the statement included appraisals for both lots based on the correct date of valuation. The court denied District's in limine motion to exclude or limit Betteker's testimony.

On May 5, District filed a revised final offer of $200,000.

During the first phase of the trial, the court, sitting without a jury,⁸ ruled the two manufactured homes were "improvements pertaining to the realty" and therefore compensable under eminent domain law. (§§ 1263.205, 1263.210.) Among other things, the court noted that the manufactured homes "were affixed to their foundations by use of their weight, anchor bolts, and piers and pads in such a manner that they would permanently be kept in place" and the "removal of the manufactured homes required a great amount of...