Housley v. City of Poway

• Decision Date: 02 November 1993
• Docket Number: No. D016527,D016527
• Citation: 24 Cal.Rptr.2d 554,20 Cal.App.4th 801
• Court: California Court of Appeals Court of Appeals
• Parties: John HOUSLEY, Plaintiff and Respondent, v. The CITY OF POWAY et al., Defendants and Appellants.

Page 554

24 Cal.Rptr.2d 554

20 Cal.App.4th 801

John HOUSLEY, Plaintiff and Respondent, v. The CITY OF POWAY et al., Defendants and Appellants.

No. D016527.

Court of Appeal, Fourth District, Division 1, California.

Nov. 2, 1993.

LaRocque, Wilson, Mitchell & Skola, Mitchell & Skola, Arthur H. Skola, Bryan A. Gianesin and Jack Mitchell, San Diego, for defendants and appellants.

McDougal and Associates and Sandra J. Brower, El Cajon, for plaintiff and respondent.

FROEHLICH, Associate Justice.

Appellants the City of Poway (City) and CF Pomerado (Developer) appeal from the judgment in favor of respondent John Housley (Housley). The jury awarded $40,000 against City as damages for inverse condemnation and $112,452 against Developer for fraud damages. The central issue on appeal is whether the damage instructions were correct. ¹

I. Facts

Housley was the longtime owner of a one-acre parcel in Poway. He had built and occupied a residence on that parcel. The parcel, which abutted Pomerado Road, was in the path of the expansion of Pomerado Road, and the events surrounding the expansion of that road gave rise to this lawsuit.

Developer, who owned and developed a business park in Poway, was required as part of its development to widen Pomerado Road to handle anticipated traffic increases. This road widening required acquisition of rights-of-way and road-widening easements from abutting property owners, one of whom was Housley.

In early 1987, Developer contacted Housley to discuss acquiring a right-of-way, along with the necessary easements, to allow widening of the road. In mid-1987, Developer submitted its offer of $7,250 (the appraised value of the land) for the right-of-way and a "slope easement," and requested Housley's response.

In the discussions between Housley and Mr. Bothwell (Developer's representative), Bothwell requested a "slope easement" be granted. Housley refused his request. Bothwell testified he told Housley that if the slope were a "2-to-1" slope, City would require an access easement in order to maintain the slope to assure its long-term viability. However, Bothwell testified he told Housley that he, Bothwell, would explore whether City would accept a flatter slope (i.e., a "4-to-1" or "5-to-1" slope) in lieu of the easement.

Housley eventually signed a grant deed for the right-of-way, from which deed all prior references to the "slope easement" The construction was far different from what Developer had represented to Housley. Developer placed a huge slope on Housley's property without permission. At its highest encroaching point the slope rose five feet two inches above original grade, and at its widest point the toe of the slope extended 42 feet onto Housley's property. The area under the slope is 10,238 square feet.

                had been deleted. 2  Housley testified Bothwell had assured him that the road would be elevated only 18 inches.  Housley repeatedly told Bothwell that he, Housley, would not consent to an easement or slope, and Housley made sure the grant of a "slope [20 Cal.App.4th 806] easement" had been deleted from the grant deed for the right-of-way before he signed it.  In short, Housley understood and believed no slope would be placed on his land
                

Housley complained during construction that the slope was well beyond that which he had accepted. His complaints brought no relief, however, and the slope became a permanent feature on his land.

The evidence on damages was divergent. Only Appellants' expert testified concerning the value of the "taken" land--the 10,000-plus slope area. He opined the value of the entire fee interest of the "taken" land was $40,400. He further testified that only an easement for the slope was "taken" (with Housley retaining the rest of the rights in the land), and such slope easement was worth only $10,100.

Housley introduced no evidence on the fair market value of the land. Instead, he introduced the testimony of a civil engineer to show "cost of repair." The engineer testified it would be possible to remove the entire slope and replace it with a retaining wall to provide the lateral support for the road. He prepared a cost estimate for that project, estimating the total cost to restore the original grade and provide the retaining wall for lateral road bed support to be $152,452.

II. The Lawsuit

Housley's complaint against City was for damages based on inverse condemnation. It claimed that the slope was effectively a "taking" for which compensation was due. Housley's complaint against Developer was for fraud, claiming Developer falsely represented that no slope would be built in order to induce Housley to grant the right-of-way for the offered price.

The matter was tried to both the judge (on the issue of whether there had been a taking) and the jury (on the just compensation issue against City and on the fraud claim against Developer). The court determined there had been a taking, which determination is not challenged here. The jury then awarded $40,000 as against City and $112,452 as against Developer. Following the motion to tax costs, this appeal was filed.

III. Issues on Appeal

The central issues on appeal relate to the damage award. The court rejected City's effort to limit the damage instruction to "fair market value" of the taken property, and instead instructed the jury it could consider other measures of damage for inverse condemnation, including cost of repair. Appellants also assert the fraud damages were improper.

IV. The Instruction on Inverse Condemnation Damages Was Erroneous

City attempted to restrict the damage component of trial to "fair market value" and to preclude the jury from considering "cost of repair" as the measure of Just compensation must be paid to an owner for the taking [of] or damage to his property, by a public entity for public use or benefit. There's no fixed rule for the measure of damages in inverse condemnation. The measure of damages may be the cost of repairs, the diminution in value of the property, or any other method that measures the damages resulting from the injury to the property.

                damage. 3  The court rebuffed City's efforts, specially instructing on damages
                

City argues, and we agree, that the court erred in giving this instruction. In an action for inverse condemnation the owner effectively concedes, and indeed affirmatively contends, that the governmental action has taken the property, and thus the focus is on the amount of compensation to be awarded rather than on the propriety of the taking. (Salton Bay Marina, Inc. v. Imperial Irrigation Dist. (1985) 172 Cal.App.3d 914, 963, 218 Cal.Rptr. 839.) By suing for damages rather than for ejectment or injunction, the owner essentially "tenders" the taken land and demands just compensation.

The normal measure of "just compensation" in most inverse condemnation cases is the same as that which applies in eminent domain proceedings: "fair market value." (Tilem v. City of Los Angeles (1983) 142 Cal.App.3d 694, 707, 191 Cal.Rptr. 229.) This measure is not based on what the taker has gained, but rather is based on what the owner has lost. (Id., at p. 702, 191 Cal.Rptr. 229.)

The courts have recognized, however, that "just compensation" may, under unusual circumstances, require an application of a different measure. (Pacific Gas & Elec. Co. v. County of San Mateo (1965) 233 Cal.App.2d 268, 274-275, 43 Cal.Rptr. 450.) Because the court's instruction below did not limit the jury to "fair market value," but allowed it to choose as its guideline "cost of repair" or diminution in value or "any other method that measures the damages," we must evaluate whether this case is one of the extraordinary cases in which the alternative measure of "cost of repair" is necessary for just compensation. ⁴

We are convinced that the factors which have led the courts to depart from the ordinary "fair market value" approach in favor of the "cost of repair" approach are absent here. We are aware of only one case involving inverse condemnation which actually applied cost of repair in lieu of fair market value. The peculiar facts of Pacific Gas & Elec. Co. v. County of San Mateo, supra, 233 Cal.App.2d 268, 43 Cal.Rptr. 450 convinced the court that "cost of repair" was a more appropriate measure. There, the owner (a gas company) had an easement on which it had installed a gas pipeline. The "taking" involved burying sections of the pipe under 12 additional feet of dirt, which depth was incompatible with the gas company's engineering policies and would make repair and maintenance more difficult. (Id. at pp. 270-271, 43 Cal.Rptr. 450.) The court concluded the cost to relocate the pipe--cost of repair--was appropriate because safety concerns, as well as the interest in ensuring the continued flow of gas, mandated that the owner have reasonable access for repairs and maintenance even after the taking. (Id. at p. 274, 43 Cal.Rptr. 450.) Thus, "cost of repair" was used because the system as a whole would be detrimentally affected without relocation of the pipe. Here, nothing suggests that, absent repair, Housley's ability to As noted, Pacific Gas & Elec. Co. is the only case we have found which actually used "cost of repair" in place of "fair market value." The other cases which mention the propriety of "cost of repair" in lieu of "fair market value" provide no aid to Housley's argument. While Frustuck v. City of Fairfax, supra, 212 Cal.App.2d 345, 28 Cal.Rptr. 357 did list "cost of repair" as one of its alternative measures, that reference was pure dictum, because the court ultimately held that "[w]hatever the proper measure of damages may be in a given case," the award was too speculative to stand. ⁶ (212 Cal.App.2d at pp. 367-368, 28 Cal.Rptr. 357.) Frustuck relied on two cases, Natural Soda Prod. Co. v. City of L.A. (1943) 23 Cal.2d 193, 143 P.2d 12 and LeBrun v. Richards (1930) 210 Cal. 308, 291 P. 825, to support its statement that "cost of repair" is an alternative. Neither...