Farmers Ins. Exchange v. State of California

Decision Date10 December 1985
Citation221 Cal.Rptr. 225,175 Cal.App.3d 494
CourtCalifornia Court of Appeals Court of Appeals
PartiesFARMERS INSURANCE EXCHANGE, et al., Plaintiffs/Appellants, v. STATE of California, et al, Defendants/Respondents. H000211.
William T. Mayo, San Francisco, for plaintiffs/appellants

John K. Van de Kamp, Atty. Gen., James R. Schwartz, Deputy Atty. Gen., Susan R. Oie, Deputy Atty. Gen., Sacramento, for defendants/respondents.

BRAUER, Associate Justice.

This action arises out of the Mediterranean fruit fly eradication program. The chemical mixture employed by the State in its wide-scale aerial spraying caused erosion of the painted surface of automobiles. Plaintiffs/appellants are five insurance companies which were obliged to pay numerous claims of their policy holders for costs of new paint jobs. By this action they seek recompense from the State.

Plaintiffs' second amended complaint stated eight causes of action. Three defendants--the State, the State Controller Kenneth Cory, and Jerry Scribner, the Project Manager of the medfly eradication program--filed general demurrers. By order dated November 23, 1983, these were sustained without leave to amend as to seven causes of action. The eighth cause of action was voluntarily dismissed without prejudice.

Plaintiffs appeal from the November 23 order. Initially we note that an order sustaining a demurrer is not appealable. (Munoz v. Davis (1983) 141 Cal.App.3d 420, 431, 190 Cal.Rptr. 400.) No judgment of dismissal appears in the record. The matter has been fully briefed, however, and dismissal of the appeal at this stage due to a technical defect would serve no purpose. Therefore, in the interests of justice, we will deem the trial court's order to incorporate a judgment of dismissal and treat plaintiffs' notice of appeal as applying to the judgment. (California State Employees' Assn. v. State of California (1973) 32 Cal.App.3d 103, 106, 108 Cal.Rptr. 60.) For reasons discussed below we affirm the trial court's order as to the first six causes of action and order that plaintiffs be granted leave to amend their seventh cause of action.


We briefly review the statutory background of the medfly eradication program.

Agriculture Code sections 5321 et seq. provide the Director of the Department of As the infestation proved to be beyond the control of the personnel and equipment of the affected counties, the Governor on December 24, 1980 declared a state of emergency pursuant to the Emergency Services Act (Government Code sections 8625, et seq.), and directed that state facilities and personnel be utilized. Government Code section 8627 provides: "During a state of emergency the Governor shall, to the extent he deems necessary, have complete authority over all agencies of the state government and the right to exercise within the area designated all police power vested in the state by the Constitution and laws of the State of California in order to effectuate the purposes of this chapter. In exercise thereof, he shall promulgate, issue, and enforce such orders and regulations as he deems necessary, in accordance with the provisions of Section 8567." 3 The Governor's proclamation directed all agencies of the State government to employ State personnel, equipment and facilities to

                Food and Agriculture the authority to establish those regulations which, in his discretion, are necessary to prevent the spread of any pest in the state. 1  Pursuant to this statutory authority on June 27, 1980 the Director filed regulation 3591.5 of Title 3 of the California Administrative Code.  This regulation designated specific eradication areas and set forth various means and methods which might be employed in the eradication program, including "the use of insecticides, chemicals, or other materials as spray, dust, bait, or in any other manner as often as necessary to effect control."  (Cal.Admin.Code § 3591.5, subd.  (c)(1).)   In addition, regulation 3591.5 provided that all those areas of the state where the medfly [175 Cal.App.3d 500] was known to exist were subject to the provisions of Article 4, Chapter 8, Part 1, Division 4 of the Agriculture Code (sections 5761, et seq.).  Section 5762 states that any "premises, plants and things" exposed to infestation within the eradication area are public nuisances and subject to all relevant laws relating to the prevention and abatement of public nuisances. 2
                alleviate the emergency.  Thereafter wide-scale [175 Cal.App.3d 501] aerial spraying with the insecticide malathion was undertaken until eradication of the medfly was declared in September of 1982

Since the case comes to us after a demurrer was sustained in the lower court, review is limited to the question of the sufficiency of plaintiffs' pleadings. We take up each cause of action in order as set forth in plaintiffs' second amended complaint.

1. First Cause of Action. Inverse Condemnation

It is not disputed that the State's actions in launching and carrying out the eradication program were taken pursuant to statutory authority. It is also not in dispute that such actions were in response to a state-wide emergency of potentially huge proportion.

Plaintiffs' claim, that the incidental damage to automobile paint caused by the spraying must be fully compensated, is based on Article I, Section 19 of the California Constitution. This article provides in part that "[p]rivate property may be taken or damaged for public use only when just compensation, ascertained by a jury unless waived, has first been paid to, or into court for, the owner." There is, however, a well-known exception to the general rule stated in the Constitution. Damages inflicted in the course of a proper exercise of the state's police power are noncompensable. (Holtz v. Superior Court (1970) 3 Cal.3d 296, 305, 90 Cal.Rptr. 345, 475 P.2d 441.) " '[T]he constitutional guarantee of just compensation attached to an exercise of the power of eminent domain does not extend to the state's exercise of its police power, and damage resulting from a proper exercise of the police power is simply damnum absque injuria. [Citation.].' " (Freeman v. Contra Costa County Water District (1971) 18 Cal.App.3d 404, 408, 95 Cal.Rptr. 852.) A government's action will be upheld as a valid exercise of police power if it is "reasonably necessary to 'protect the order, safety, health, morals, and general welfare of society.' [Citation.]." (Ibid.)

The point is made that it is a question of fact whether the exercise of the police power is reasonable or proper under the circumstances, a matter which therefore cannot be resolved at the pleading stage. This may be so in those cases where it is unclear whether the public agency is exercising a regulatory police power or an eminent domain power constituting a taking. (Associated Home Builders, etc. Inc. v. City of Walnut Creek (1971) 4 Cal.3d 633, 638, 94 Cal.Rptr. 630, 484 P.2d 606; Morshead v. California Regional Water Quality Control Bd. (1975) 45 Cal.App.3d 442, 450, 119 Cal.Rptr. 586.) Where there exists an obvious emergent public interest, however, such analysis is unnecessary. "In such cases calling for immediate action the emergency constitutes full justification for the measures taken to control the menacing condition, and private interests must be held wholly subservient to the right of the state to proceed in such manner as it deems appropriate for the protection of the public health or safety." (House v. L.A. County Flood Control Dist. (1944) 25 Cal.2d 384, 391, 153 P.2d 950.) Among the types of emergencies which justify police action without calling for compensation are "the demolition of all or parts of buildings to prevent the spread of conflagration, or the destruction of diseased animals, of rotten fruit, or infected trees where life or health is jeopardized." (Ibid.)

In our view there is no question but that the case at bar falls squarely within the police power exception to the just compensation rule stated in California Constitution Article I, section 19. Thus the State and its agents are afforded complete immunity from liability on this theory.

Plaintiffs next contend that Government Code sections 8572 and 8652 of the Emergency Services Act provide a statutory basis for their inverse condemnation claim. These sections provide that the State pay the reasonable value of property commandeered or utilized during a state of emergency. The emphasized language describes a "taking" of private property for public use. As discussed above, the medfly eradication program was a valid exercise of the State's police power to abate a public nuisance. Damage to automobile paint incidental to the exercise of this power does not rise to the level of a "taking" and is thus non-compensable. (Skinner v. Coy (1939) 13 Cal.2d 407, 421, 90 P.2d 296.)

Finally, plaintiffs make the argument that any immunity the state might have by virtue of the police power or the immunity provision of the Emergency Services Act (discussed in Section 4, herein) has been affirmatively waived by the passage of Assembly Bill 3383, effective June 30, 1982. This bill established a "Medfly Claims Fund" and appropriated $4,000,000 to it. Section I of the bill states that this claims fund is to be "the exclusive source of funding for payment of all legitimate costs, claims, judgments or other liabilities arising from the Mediterranean fruit fly infestation. Compensation for damage to automobiles is limited to $698 or 20% of the value of the car, whichever is less." We do not find it inconsistent that the State assert its right to exercise its police power without incurring unlimited liability for damage caused thereby, and still provide a limited fund for partial reimbursement to those so damaged. Establishing such a fund therefore does not amount to a waiver of governmental immunity.

The State's police power,...

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