Huntington Park Redevelopment Agency v. Duncan

• Decision Date: 22 March 1983
• Parties: HUNTINGTON PARK REDEVELOPMENT AGENCY, etc., Plaintiff and Appellant, v. David DUNCAN, et al., Defendants and Respondents. Civ. 65177.
• Court: California Court of Appeals Court of Appeals

Page 744

190 Cal.Rptr. 744

142 Cal.App.3d 17

HUNTINGTON PARK REDEVELOPMENT AGENCY, etc., Plaintiff and Appellant, v. David DUNCAN, et al., Defendants and Respondents.

Civ. 65177.

Court of Appeal, Second District, Division 3, California.

March 22, 1983.

As Modified on Denial of Rehearing

April 21, 1983.

Hearing Denied May 18, 1983.

Michael B. Montgomery, Agency Atty., and Steven N. Skolnik, Special Counsel, San Marino, for plaintiff and appellant.

Bruce E. Clark, Los Angeles, for defendants and respondents.

POTTER, Acting Presiding Justice.

The Huntington Park Redevelopment Agency (hereinafter "Agency") appeals from a judgment dismissing its eminent domain proceedings against the owners of a parcel of real property within its redevelopment area after a legal issue trial on the question of whether the property was subject to condemnation.

Evidence at the trial established that defendants, David and Marilyn F. Duncan, are the owners of a parcel of real property located within the boundaries of an area designated as the Huntington Park Industrial Redevelopment Project (hereinafter "Project"). ¹ The Duncans own and operate a wholesale industrial bolt supply business on a portion of the property. The other portion of the property is used as a parking lot by their month-to-month tenant. Frank and Erlys Spitzer own property adjoining the Duncan property where they currently operate a manufacturing business. The Spitzers submitted a proposal to expand their business onto that portion of the Duncan property which is used as a parking lot ("the parcel").

By letter dated August 21, 1979, the Agency officially notified the Duncans that it was "considering the acquisition" of the parcel and that discussions with the Spitzers "have recently revealed that the project may be feasible and that the Redevelopment Agency may pursue an Owner's Participation Agreement with them...."

On September 14, 1979, defendants submitted to the Agency a "Statement of Interest in Participating," summarily indicating their plan to improve the parcel with a machine shop "to fabricate metal to customers' requirements." In a letter dated October 1, 1979, James Funk, Executive Director of the Agency, acknowledged receipt of the Duncans' "Statement of Interest" and requested more details regarding the Duncans' proposed use of the subject property, including the "floor area of the proposed building, the location of the buildings on the parcel, the proposed schedule of construction, and [their] willingness to enter into an owner participation agreement with the Redevelopment Agency that would guarantee completion of the project within two years." By this letter, the Duncans were informed that all proposals would be released at a scheduled public meeting.

On October 17, 1979, the Agency held its first public meeting to consider proposals for development of the parcel. It was attended by the Duncans, the Spitzers, their respective counsel, and Agency members. At the meeting, the details of the Spitzer plan were disclosed. The Spitzers proposed to expand their manufacturing business by erecting a 10,800 square foot industrial structure with a market value of "at least $108,000." The Spitzers made a commitment to complete the development and construction of the project within a year.

At that meeting, the Duncans also submitted a detailed version of their construction plan to the Agency. The Duncans proposed to construct a 8,820 square foot metal machine shop. The proposal estimated construction costs of $87,628 but did not give a time estimate for completion of construction.

The meeting was adjourned until October 29, 1979, and an expert consultant was retained to analyze the competing plans. During the interval, counsel for the Duncans spoke with the consultant who "encouraged" the Duncans "to call him." During this period, the Duncans also obtained a copy of the Spitzer plan.

Prior to the October 29, 1979 meeting, the consultant submitted a report to the Agency which analyzed the two proposals and recommended acceptance of the Spitzers' proposal, as that project would "be of higher intensity and of greater value relative to the size of the parcel than the development proposed by the [Duncans]." The report noted that the Spitzer proposal would provide 35 jobs and would raise the annual sales of the Spitzer company by $2,000,000, an increase of 100 percent. The Spitzer plan would also result in a tax increment to the Agency of $1,080 per year. In contrast, the consultant concluded that the Duncan plan would result in only eight assured new jobs and a tax increment of $880.

The report also concluded that the Duncans' proposed construction could be adequately accommodated on the remaining property owned by the Duncans. The report further noted that the Spitzers had made a commitment to complete the project within a year while the Duncans had "declined to commit to a definitive construction schedule."

It appears that counsel for the Duncans received the expert's report at the October 29 meeting. ²

At this hearing, Duncan would not commit himself to a definite starting date. According to Duncan's own testimony, Agency members asked him "when [he] could start construction. They wanted a definite [starting] date ... and [he] said, 'I would need a little time to think it over' and that was the end of the conversation." ³ At the conclusion of the hearing, the Agency approved the Spitzer proposal.

Duncan refused the Agency's offer to purchase the property. At a public meeting, held January 21, 1980, the Agency passed "A RESOLUTION ... FINDING AND DETERMINING THAT THE PUBLIC INTEREST, CONVENIENCE AND NECESSITY REQUIRE THE ACQUISITION OF CERTAIN REAL PROPERTY FOR PUBLIC PURPOSES," which is a prerequisite for the initiation of eminent domain proceedings. (Code Civ.Proc., § 1245.220.) At that hearing, the Duncans objected to the adoption of the resolution. The Agency found, inter alia:

"(1) The public interest and necessity require the proposed project; and

"(2) The proposed project is planned or located in the manner that will be most compatible with the greatest public good and the least private injury; and

"(3) The property ... is necessary for the proposed project."

Pursuant to the adoption of the Resolution of Necessity, the Agency filed its complaint in eminent domain against the Duncans to acquire the parcel. As a defense, ⁴ the Duncans urged that the Agency abused its discretion in adopting the Resolution of Necessity specifying the Agency's refusal to give proper consideration to their request for owner participation. The Duncans further urged that the Agency made an agreement to allow the Spitzers to develop the property prior to notifying the Duncans that the taking of the parcel was under consideration.

At trial, defendants did not present a complete record of the proceedings of October 17, 1979, October 29, 1979, or January 21, 1980. Rather, some of the parties who were present at the proceedings on October 17 and October 29 testified as to their recollection of the proceedings as recited above. There was no evidence of the proceedings of January 21, 1980. All of the documents referred to above, including the two competing proposals and the independent consultant's report, were received in evidence pursuant to stipulation of counsel.

Based on the foregoing, the trial court concluded that the Agency was "not entitled to take the real property of defendants" and in its Findings of Fact and Conclusions of Law, the court determined:

"17. The adoption of the Resolution of Necessity on January 21, 1980, purporting to authorize the taking of a portion of said defendants' real property did not have the conclusive effect prescribed in C.C.P. Section 1245.250 because its adoption was influenced or affected by a gross abuse of discretion by the governing body.

"18. The public interest and necessity do not require the project for which this action was commenced.

"19. The project for which this action was commenced is not planned or located in the manner that will be most compatible with the greatest public good and the least private injury.

"20. The property sought to be acquired in this action is not necessary for the Huntington Park Industrial Redevelopment Project, except as to improvement by defendants pursuant to owner participation under said project."

The trial court dismissed the complaint and this appeal followed.

Contentions

Appellant contends that the trial court erred in dismissing the eminent domain complaint in that: (1) the Agency did not abuse its discretion in adopting the Resolution of Necessity; (2) the judgment is not supported by substantial evidence, as respondents failed to sustain their burden of showing that the requirements for issuance of the Resolution were not met; (3) the alleged denial of owner participation rights does not constitute an independent defense to the right to take in an eminent domain action; and (4) the alleged abuse of discretion in enacting the Resolution does not constitute an independent defense to eminent domain.

Respondents contend the order of dismissal was proper in that: (1) the Agency abused its discretion by its failure to apply a standard of reasonableness and good faith in its owner participation decision; (2) the denial of statutorily mandated owner participation constitutes a violation of the constitutional rights of property owners; and (3) the proposal selected violates the space limitation requirements of the Redevelopment Plan.

Discussion

Summary

The proper scope of the trial court's inquiry was limited to the question of whether the Agency committed a gross abuse of discretion in adopting the Resolution of Necessity. To show gross abuse of discretion, defendants were required to sustain their burden of proving the lack of substantial evidence to support the Resolution. Defendants' status as owners desiring participation did not preclude Agency from exercising its...