Hfh, Ltd. v. Superior Court

• Citation: 15 Cal.3d 508,125 Cal.Rptr. 365,542 P.2d 237
• Court: United States State Supreme Court (California)
• Decision Date: 12 November 1975
• Parties: , 542 P.2d 237, 6 Envtl. L. Rep. 20,062 HFH. LTD., Petitioner, v. The SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; CITY OF CERRITOS et al., Real Parties in Interest. VON'S GEOCERY COMPANY, Petitioner, v. The SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; CITY OF CERRITOS et al., Real Parties in Interest. L.A. 30382, 30383.

Page 365

125 Cal.Rptr. 365

15 Cal.3d 508, 542 P.2d 237, 6 Envtl. L. Rep. 20,062

HFH. LTD., Petitioner, v. The SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent;

CITY OF CERRITOS et al., Real Parties in Interest.

VON'S GEOCERY COMPANY, Petitioner, v. The SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent;

CITY OF CERRITOS et al., Real Parties in Interest.

L.A. 30382, 30383.

Supreme Court of California In Bank.

Nov. 12, 1975.

As Modified on Denial of Rehearing Dec. 24, 1975.

William J. Birney, Oliver, Stoever & Laskin, Richard Laskin and C. Edward Dilkes, Los Angeles for petitioners.

No appearance for respondent.

J. Kenneth Brown, City Atty., Ebben & Brown and Thomas F. Winfield III, Los Angeles for ral parties in interest.

Evelle J. Younger, Atty. Gen., Robert H. O'Brien, Asst. Atty. Gen., Nicholas C. Yost and E. Clement Shute, Jr., Deputy Attys. Gen., John H. Larson, County Counsel (Los Angeles), S. Robert Ambrose and William F. Stewart, Deputy County Counsel, Burt Pines, City Atty. (Los Angeles), Claude E. Hilker, Asst. City Atty., Sally Disco, Deputy City Atty., Fred Caploe, Atkinson, Farasyn & Smith, Mountain View, Rutan & Tucker, James E. Erickson, John J. Murphy, Roger A. Grable, Thomas P. Clark, Jr., Santa Ana, Richard R. Hanna, So. Lake Tahoe, Gary A. Owen, Riverside, Kenneth C. Rollston, Carlyle W. Hall, Jr., Timothy B. Flynn, Pacific Palisades, A. Thomas Hunt, John R. Phillips, Brent N. Rushforth and Fredric P. Sutherland, Los Angeles, as Amici Curiae on behalf of real parties in interest.

Gordon Pearce, Los Angeles, C. Edward Gibson, Luce, Forward, Hamilton & Scripps, C. Douglas Alford, Louis E. Goebel, Ronald W. Rouse, San Diego, P. M. Barceloux, Burton J. Goldstein, Albert E. Levy, Ralph Golub, San Francisco, Keith S. Humphreys, Ronald E. Stewart, Chico, Goldstein, Barceloux & Goldstein, San Francisco, Paul Hamilton, Virgil Roberts, Pacht, Ross, Warne, Bernhard & Sears Los Angeles, M. Reed Hunter, Thomas Seaton, San Francisco, Fulop, Rolston, Burns & McKittrick, Irwin W. Fulop, Marvin G. Burns, Beverly Hills, John Petrasich, Hollywood, Kenneth B. Bley, Los Angeles, Edmund S. Schaffer, Beverly Hills, Gideon Kanner, Donald G. Hagman, Los Angeles, Michael Atherton Malovos & Chasuk, Mountain View, Cox Cummins & Lamphere, Martinez, Desmond, Miller & Desmond, Sacramento, Fadem, Berger & Stocker, Beverly Hills, Feeney & Sparks, San Francisco, Bressani, Hansen & Blos, San Jose, Jacobs, Jacobs, Nelson & Witmer, Santa Ana, Nichols, Stead, Boileau & Lamb, Pomona, Loube, Lewis & Blum, Oakland, Thorpe, Sullivan, Workman, Thorpe & O'Sullivan, Ronald A. Zumbrun, Donald M. Pach, Sacramento, and Thomas E. Hookano, Davis, as Amici Curiae on behalf of petitioners.

TOBRINER, Justice.

We face in these mandate proceedings ¹ the narrow issue of whether a complaint alleging that a zoning action taken by a city council reduced the market value of petitioners' (hereafter plaintiffs) land state a cause of action in inverse condemnation; we conclude that it does not. We also face numerous amici, some of whom urge on us significant changes in the law of liability and compensation in public land use regulation; we have concluded that neither the state and federal Constitutions nor public policy compel or counsel these changes.

We take the facts in this case from the allegations of the complaints, assuming as we must the truth of any properly pleaded factual allegations. (E.g., Serrano v. Priest (1971) 5 Cal.3d 584, 591, 96 Cal.Rptr. 601, 487 P.2d 1241.) Plaintiffs, a limited partnership (HFH) and a Delaware corporation (Von's), contracted to purchase the parcel in question from a common grantor. At the time the plaintiffs entered this contract with their grantor, the land in qustion lay in an agricultural zone and possessed no improvements of any kind. Plaintiffs conditioned the sale upon the grantor's ability to procure commercial zoning for the 5.87-acre tract; the City of Cerritos (the real party in interest) 'in the latter part of the year 1965 or the early part of 1966' did classify the property as commercial, and in 1966 the plaintiffs became the owners of the parcel, according to the allegations of the complaint.

Plaintiffs thereafter submitted, and the city approved, a parcel map on which the plaintiffs subdivided the property in a manner appropriate for commercial uses. Subsequently, however, a period of some five years elapsed; during that time plaintiffs do not claim any development or establishment of a more intensive use of the land. In July 1971, with the land still in this undeveloped state, according to the allegations before us, the city placed a moratorium upon more intensive uses of the property by temporarily zoning it as agricultural, the classification it had borne before plaintiffs acquired it. Plaintiffs do not allege that this moratorium interfered with any use of the land which they then planned nor do they allege that they then challenged this reclassification.

In October 1971, the city adopted a general plan indicating that some land in the area of plaintiffs' properties was appropriate for 'neighborhood commercial uses,' but did not alter the agricultural classification of plaintiffs' tracts. The 1971 general plan designated the bulk of the land in the area of plaintiffs' properties for 'low density residential' uses. (City of Cerritos October 1971 General Plan Map; Evid.Code, § 452, subd. (b).)

Having apparently concluded that their interests would best be served by selling rather than developing the land, plaintiffs in early 1972 entered into a $400,000 contract of sale with Diversified Associates, Inc. (not party to this action) conditioned upon the reclassification of the tract as commercial. In an attempt to bring about the condition which would enable them profitably to sell their land, plaintiffs applied to the planning commission for commercial zoning of the tract. Both the commission and the city council, to which plaintiffs took an appeal, rejected this application, and instead zoned the property as single family residential. Concurrently with taking this action, the city zoned as commercial other properties on different corners of an intersection on which plaintiffs' land abuts. Plaintiffs, of course, had hoped to secure for their land a commercial classification in order to effectuate the conveyance of the land under the conditions of the contract of sale with Diversified Associates, Inc.

Plaintiffs allege that the situation of their properties rendered them 'useless' for single family residential purposes; they do not, however, allege that the properties are useless for Other purposes consonant with the zoning category in which they now lie. ² As a consequence, accordingly to plaintiffs, their land, which they purchased for some $388,000 and hoped to sell for $400,000, suffered a decline in market value to $75,000.

The trial court sustained a demurrer without leave to amend to plaintiffs' cause of action in inverse condemnation and plaintiffs sought review. ³

1. Inverse condemnation does not lie in zoning actions in which the complaint alleges mere reduction of market value.

The courts of this state have recognized the constitutional values served by actions in inverse condemnation and have not hesitated to validate complaints appropriately employing this theory of recovery. ⁴ At the same time, we have recognized mandamus as the proper remedy for allegedly arbitrary or discriminatory zoning, ⁵ and have in appropriate cases struck down land use restrictions which suffered from procedural or substantive deficiencies. ⁶

We have never, however, suggested that inverse condemnation lay to challenge a zoning action whose only alleged effect was a diminution in the market value of the property in question. (E.g., Morse v. County of San Luis Obispo (1967) 247 Cal.App.2d 600, 55 Cal.Rptr. 710.) While this state of the law is sufficiently clear to admit of little doubt, we shall briefly review its development and basis.

Zoning developed slowly in the later part of the 19th century. In its early stages it was frequently indistinguishable from the power to abate public nuisances, ⁷ but the first decades of this century saw the enactment of more comprehensive zoning laws and the development of the concept of city planning. ⁸ Shortly after these changes began to take effect, challenges in both state and federal courts raised the question of the constitutionality of these restrictions of the individual's previous ability to do with his land what he chose, bounded only by the laws of public and private nuisance. While the legal context in which this question arose differed from case to case, the courts of this state and the United States Supreme Court firmly rejected the notion that the diminution of the value of previously unrestricted land by the imposition of zoning could constitute a taking impermissible in the absence of compensation. ⁹ We have long adhered to that position. ¹⁰

To demonstrate the settled nature of the issue before us we point out that the United States Supreme Court faced the same question in the first major constitutional challenge to modern zoning to come before it. (Euclid v. Ambler Realty Co. (1926) 272 U.S. 365, 47 S.Ct. 114, 71 L.Ed. 303.) Tendering allegations almost identical to those urged here, the appellee in Euclid claimed that 'the tract of land in question is vacant and has been held for years for the purpose of selling and developing it for industrial uses, for which it is especially adapted, being immediately in the path of progressive industrial development; that for such uses it has a market value of about $10,000 per acre, but if the use be limited to residential purposes the market value is not in excess of $2,500 per acre . . ..' (Id., at p. 384, 47 S.Ct. at p. 117.) The court upheld the zoning against the claim that it constituted a taking of the property in question, settling some half century ago the question in the...