Furey v. City of Sacramento

• Decision Date: 03 August 1984
• Docket Number: No. CIV.S-74-571 RAR.,CIV.S-74-571 RAR.
• Citation: 592 F. Supp. 463
• Parties: Lawrence E. FUREY, Trustee, Plaintiff, v. CITY OF SACRAMENTO, et al., Defendants.
• Court: U.S. District Court — Eastern District of California

592 F. Supp. 463

Lawrence E. FUREY, Trustee, Plaintiff, v. CITY OF SACRAMENTO, et al., Defendants.

No. CIV.S-74-571 RAR.

United States District Court, E.D. California.

August 3, 1984.

COPYRIGHT MATERIAL OMITTED

Arne D. Wagner, Steven Brockhage, Thelen, Marrin, Johnson & Bridges, San Francisco, Cal., for plaintiff.

Henry W. Crowle, Memering & DeMers, L.E. Elam, County Counsel, Sacramento County, James P. Jackson, Leliand J. Savage, Sacramento, Cal., for defendants.

MEMORANDUM AND ORDER

RAMIREZ, District Judge.

The question presented by the instant litigation is this: is a landowner who improves his property solely on his own initiative and in the expectation of realizing a substantial profit entitled to the restitution of the cost of the improvements when the local zoning authority declines to rezone the property in a manner necessary to realize that profit?

FACTUAL AND PROCEDURAL BACKGROUND

The plaintiff, as trustee,¹ is the legal owner of certain real property located within the limits of the City of Sacramento.² The real property in question is now and at all relevant times has been zoned and used for agricultural purposes.

In the late 1950s and the early 1960s both the plaintiff and the defendants confidently expected the plaintiff's land to be transformed from agricultural uses to residential and commercial uses within a foreseeable period of time. This expectation is reflected in the numerous planning documents published by the defendants roughly contemporaneously with the events described herein. Because the conversion of the land from agricultural uses to residential and commercial uses would have required the installation of sewers, proceedings were instituted by the landowners pursuant to the Improvement Act of 1911, Cal. Sts. & Hy.Code §§ 5000, et seq. As a direct result of these proceedings, the Natomas Sewer Assessment District was formed, sewers were installed on the plaintiff's land, and the costs of the sewers were calculated and assessed against the plaintiff's land on a pro rata basis. Bonds secured by the plaintiff's land were issued, sold, and ultimately redeemed by the plaintiff by periodic payments of the assessments plus interest. To date, the plaintiff has paid approximately $826,447.00 in principal and interest for the installation of sewers on his land. Although the project was completed in 1965, the plaintiff has never applied for a rezoning of his property to permit more intensive uses.³

In 1970, the State of California enacted the Open Space Lands Act, Cal. Gov't. Code §§ 65560, et seq., which required every city and county in the State of California to adopt a "local open-space plan."⁴ In 1973, to comply with California Government Code § 65563, the City of Sacramento amended its general plan and zoning ordinances to include an "open-space element." In particular, certain portions of the city, including the plaintiff's land which was then being and had always been used for agricultural purposes, were designated "Open Space Reserve." Under this designation, the plaintiff could continue to use his land for agricultural, or other consistent, purposes but was precluded from using the land for residential or commercial purposes. This designation of the plaintiff's land as "Open Space Reserve" effected no change in the zoning of the plaintiff's property.

The City's designation of the plaintiff's land as part of the City's "Open Space Reserve" frustrated the plaintiff's inchoate plans to subdivide and develop his property for residential and commercial uses and rendered his investment in sewers essentially worthless. In response, plaintiff brought suit against the City and the County in both state and federal courts alleging, inter alia, that by designating his land as "Open Space Reserve" the defendants had inversely condemned his land, for which he was entitled to just compensation, and had deprived him of his investment in sewers, for which he was entitled to reimbursement.⁵ By Order of October 9, 1974, this Court decided to abstain in favor of the state court but to retain jurisdiction over the federal constitutional claims for adjudication, if necessary, after adjudication of the state law issues. Railroad Commission v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941).

In reference to the state court action, defendants filed a demurrer to the plaintiff's complaint which was sustained by the trial court without leave to amend. On appeal, the California Supreme Court reversed and remanded the case for further proceedings. Furey v. City of Sacramento, 24 Cal.3d 862, 157 Cal.Rptr. 684, 598 P.2d 844 (1979). In reversing the lower court, the California Supreme Court held that insofar as the plaintiff contended that a designation of his property as "Open Space Reserve" was a taking of that property, the plaintiff had not stated a claim upon which relief could be granted. The law in California is that unless a particular type of zoning deprives the landowner of substantially all of the reasonable use of the land, there is no taking. Designating land which has always been, is currently being used, and may continue to be used for agricultural purposes as "Open Space Reserve" is not a taking since the landowner clearly has a reasonable ongoing use of the property. The Court also held that insofar as the plaintiff contended that the inclusion of his property in "Open Space Reserve" was a taking of the sewers which the plaintiff alleged had been installed upon the initiative of the defendants, the plaintiff had stated a claim. The defendants, having induced the plaintiff to expend large sums for the installation of sewers on his property, could not thereafter zone the land so as to preclude the plaintiff from recouping his investment.⁶ Because the decision of the California Supreme Court was made upon the review of the sustaining of a demurrer, where all the allegations of the complaint are assumed to be true, the Supreme Court remanded the action to the Superior Court for further proceedings.

Since remand to the Superior Court, the plaintiff has not actively litigated his action in that forum. Instead the plaintiff has reactivated his action in federal court, and the parties appear to be agreed that the difficult issues of state law which had warranted abstention by this Court have been resolved.

In July 1982 the parties, having stipulated that there were no material issues of fact in dispute, brought on cross-motions for partial summary judgment. By their motions the parties asked this Court to determine the limited issue of who instigated the proceedings which culminated in the formation of the Natomas Sewer Assessment District. The parties perceived this issue as significant because of the decision of the California Supreme Court that the plaintiff was entitled to reimbursement of his assessments or permission to develop his property for residential uses if and only if he could prove his allegations that it was the City or the County who initiated and promoted the installation of sewers. Furey v. City of Sacramento, 24 Cal.3d at 875, n. 8, 157 Cal.Rptr. 684, 598 P.2d 844 (dicta). In response to their respective motions, this Court determined that the Natomas Sewer Assessment District was formed solely on the initiative of the landowners in the area to be assessed and that neither the City nor the County in any way induced or promoted the formation of the district. Relevant portions of the Court's written disposition of these motions is attached herein as Appendix A. That question having been resolved, the parties brought on the instant motions for summary judgment.

DISCUSSION

The gravamen of the plaintiff's action is that his property has been inversely condemned by the City's inclusion of his property in its "Open Space Reserve." See generally United States v. Clarke, 445 U.S. 253, 100 S.Ct. 1127, 63 L.Ed.2d 373 (1980). In this regard, plaintiff makes two, alternative, contentions: the City's designation of his property as part of its "Open Space Reserve" constitutes a taking of his entire property without just compensation, or that the City's designation of his property as "Open Space Reserve" constitutes a taking of his investment in the sewers. These contentions will be discussed separately.

A

The United States Supreme Court has repeatedly observed that the concept of a "taking" defies ready definition. Ruckelshaus v. Monsanto Co., ___ U.S. ___, ___ -___, 104 S.Ct. 2862, 2874, 81 L.Ed.2d 815 (1984); Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 426, 102 S.Ct. 3164, 3171, 73 L.Ed.2d 868 (1982); Kaiser Aetna v. United States, 444 U.S. 164, 174-75, 100 S.Ct. 383, 389-90, 62 L.Ed.2d 332 (1979); Penn Central Transportation Co. v. City of New York, 438 U.S. 104, 123-24, 98 S.Ct. 2646, 2658-59, 57 L.Ed.2d 631 (1978). See also Pruneyard Shopping Center v. Robins, 447 U.S. 74, 82-83, 100 S.Ct. 2035, 2041, 64 L.Ed.2d 741 (1980); Andrus v. Allard, 444 U.S. 51, 65, 100 S.Ct. 318, 326, 62 L.Ed.2d 210 (1979). The point at which a governmental regulation "goes too far" and thus constitutes a taking, Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415, 43 S.Ct. 158, 160, 67 L.Ed. 322 (1922), can only be identified in the context of an "ad hoc, factual inquiry." Ruckelshaus v. Monsanto Co., ___ U.S. at ___, 104 S.Ct. at 2874; Hodel v. Virginia Surface Mining & Reclamation Association, 452 U.S. 264, 294-95, 101 S.Ct. 2352, 2369-70, 69 L.Ed.2d 1 (1981); Kaiser Aetna v. United States, 444 U.S. at 175, 100 S.Ct. at 390; Penn Central Transportation Co. v. City of New York, 438 U.S. at 124, 98 S.Ct. at 2659. This Court takes as its touchstone, however, the observation of the Court in Agins v. City of Tiburon:

The application of a general zoning law to a particular property effects a taking if the ordinance does not substantially advance legitimate state interests, see Nectow v. Cambridge, 277 U.S. 183, 188, 48 S.Ct. 447, 448, 72 L.Ed.2d 842 (1928), or denies an

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