People By and Through Dept. of Public Works v. Glen Arms Estate, Inc.

• Decision Date: 23 November 1964
• Citation: 41 Cal.Rptr. 303,230 Cal.App.2d 841
• Parties: PEOPLE of the State of California, Acting by and Through the DEPARTMENT OF PUBLIC WORKS, Plaintiff and Respondent, v. GLEN ARMS ESTATE, INC., a Corporation, Defendant and Appellant. Div. 21468.
• Court: California Court of Appeals Court of Appeals

Page 303

41 Cal.Rptr. 303

230 Cal.App.2d 841

PEOPLE of the State of California, Acting by and Through the DEPARTMENT OF PUBLIC WORKS, Plaintiff and Respondent, v. GLEN ARMS ESTATE, INC., a Corporation, Defendant and Appellant.

Div. 21468.

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

Nov. 23, 1964.

Hearing Denied Jan. 20, 1965.

Breed, Robinson & Stewart, Oakland, for appellant.

Harry S. Fenton, Sacramento, Holloway Jones, Jack M. Howard, John D. Rogers, Richard S. Levenberg, William R. Edgar, San Francisco, for respondent.

SULLIVAN, Presiding Justice.

In this eminent domain proceeding brought to acquire certain real property for state highway purposes, defendant owner appeals from a judgment entered upon a jury verdict awarding compensation in the sum of $55,000 together with severance damages in the sum of $2,500. We are called upon to determine two questions: (1) Whether the trial court erred in excluding from evidence the appraisal report of the state's employee Nowicki on the ground that it was protected by that attorney-client privilege; and (2) whether the court erred in excluding from evidence certain statements of the state's employee Schlarmann made in the course of certain settlement negotiations but claimed to be admissions independent of any offer in compromise. As we shall hereafter explain, we have concluded that the ruling of the learned trial judge was correct in each instance and that the judgment should be affirmed.

We set forth the pertinent facts. On the second day of the trial in proceedings outside the presence of the jury, defendant's counsel made known to the court his intention to call plaintiff's appraiser Nowicki as a witness and to offer in evidence a certain appraisal report prepared by the latter. Plaintiff's counsel thereupon asserted the attorney-client privilege but suggested to the court that the appraisal report be submitted by plaintiff to the court in camera without waiving any matter of confidentiality insofar as its contents were concerned. ¹ The record discloses that neither defendant nor its counsel had ever seen the report either through discovery procedures or otherwise.

Plaintiff, in order to meet its burden of establishing that the particular matters were privileged (see Tanzola v. De Rita (1955), 45 Cal.2d 1, 6, 285 P.2d 897; Chronicle Pub. Co. v. Superior Court (1960), 54 Cal.2d 548, 565, 7 Cal.Rptr. 109, 354 P.2d 637; San Diego Professional Ass'n. v. Superior Court (1962), 58 Cal.2d 194, 199, 23 Cal.Rptr. 384, 373 P.2d 448, 97 A.L.R.2d 761; D. I. Chadbourne, Inc. v. Superior Court (1964), 60 Cal.2d 723, 729, 36 Cal.Rptr. 468, 388 P.2d 700), thereupon called Nowicki, the author of the report.

Nowicki testified in substance as follows: He was a right-of-way agent for the State Division of Highways and a public employee. He made an appraisal dated August 30, 1961, of the property subject of the condemnation proceedings. This appraisal was communicated to plaintiff's attorneys and was considered confidential.

The witness further testified that the purpose of the appraisal was as stated in the report: 'The appraisals contained herein have been prepared for departmental use only and for the sole purpose of carrying on negotiations with the owners thereof, and as a basis upon which offers of settlement may be made which are considered to be fair and equitable to both the owners and the Department. In the event of a trial involving any issue of value, damages (severance or consequential), or benefits, then each and every, all and singular, matter, fact or thing specified, set forth and referred to in these appraisals, shall be deemed to have been made solely by way of an offer of settlement of pending litigation, and not otherwise.' ²

Nowicki stated that he made the report to one Daniels, the Metropolitan District right-of-way agent. Both Nowicki and Daniels signed the report. Eventually the report was disapproved.

On cross-examination Nowicki testified that in the process of appraising the property he talked with Armstrong, defendant's president, and that his final valuation of the property was 'affected' by such conversations.

During the ensuing colloquy between court and counsel it was brought to the attention of the trial judge that the valuation arrived at by Nowicki was disclosed to defendant by one Schlarmann, a negotiator for the state. Counsel for defendant then stated to the court that 'we would offer to prove that Mr. Schlarmann said, 'I think the property is worth over $120,000, plus whatever severance is accrued to the property.' We would offer to prove that this is his statement, and we are willing to show that he had in effect in his own method appraised the property, by his words, himself.' It was plaintiff's position that such evidence was inadmissible for the reason that Schlarmann's statements were an integral and inseparable part of offers in compromise. The court thereupon suggested that defendant introduce further foundational testimony relevant to the evidence sought to be introduced.

In these proceedings still outside the jury's presence, defendant then called Armstrong, the president of defendant corporation. Mr. Armstrong testified on direct examination that he discussed the value of the property with Schlarmann on about three occasions in the latter part of 1961. It was stipulated that the latter was the right-of-way agent of the State Division of Highways negotiating the acquisition of the subject property. Armstrong stated that in December 1961 there was a meeting in the office of defendant's counsel Mr. Robinson, which was attended by Armstrong. Mr. Robinson, Schlarmann and another representative of the Division of Highways. The meeting lasted about three hours during which '[w]e discussed values, appraisals, everything * * * [and] Mr. Schlarmann said his value of the property as it existed at that time was $120,000.' Armstrong further testified that at this meeting Schlarmann also stated that the state appraisal was close to $96,000 and at a previous meeting said that the state appraisal was $95,000 to $96,000. On cross-examination Armstrong, when asked if the conversations testified to were had in an effort to compromise the instant lawsuit, responded: 'No compromise. We were discussing values, appraisals.'

Mr. Robinson, defendant's counsel, testified in substance as follows: During a conference at his office on December 27, 1961, attended by Schlarmann, another state highway representative, Armstrong and the witness, 'Mr. Schlarmann said that the State of California right-or-way appraisal was approximately or in the neighborhood of $95,000 to $96,000.' According to the witness, Schlarmann also said that he had previously been in the appraisal section of the right-of-way department and that the state appraisal of the property was '[a]ll wet.' ³

It developed during cross-examination of Mr. Robinson that Schlarmann had subsequently left the employ of the state and that counsel for defendant had taken his deposition. A copy of the deposition was thereupon submitted to the court. In its reply brief and at oral argument before us defendant contended that the trial court was precluded from considering Schlarmann's deposition because it was never actually introduced in evidence. The point is utterly devoid of merit. We have carefully examined the record which discloses that defendant's counsel declared he had no objection to the use of the deposition and its consideration by the judge. Indeed defendant's counsel furnished the judge with his copy of the deposition and upon the subsequent announcement by the court of its rulings based inter alia on the deposition not only failed to interpose an objection but even stated that he had no objection to it being part of the record. It is abundantly clear to us that defendant's counsel waived any defect there may have been in the procedure relevant to the deposition. (Seale v. Carr (1909), 155 Cal. 577, 578, 102 P. 262; Grunsky v. Field (1905), 1 Cal.App. 623, 626, 82 P. 979.)

In his deposition taken on July 3, 1962, Schlarmann testified as follows: He was and for about four years had been a right-of-way agent for the Division of Highways. While he had done both appraising and negotiating for the state, during all times here pertinent he was acting as a negotiator. He never at any time made an appraisal of the subject property. At first he dealt with Armstrong alone who, presumably then acting without counsel, made certain demands for settlement. Thereafter he had a meeting with both Armstrong and Robinson. He did not recall 'whether or not we got into any discussion of settlement or anything like that at the first meeting' but 'we were trying to arrive at a compromise settlement here and I did discuss generally with Mr. Robinson appraisal theory on properties of this type.' At the next meeting on December 27, 1961, Schlarmann endeavored to reach a solution with Armstrong and Robinson which he could recommend to the state. ⁴ In the ensuing conversations the parties sought to utilize certain approaches to value discussed by the witness with Robinson and 'for the sake of discussions' to accept certain lot values and development cost proposed by Armstrong. ⁵ 'I mean we all know that nobody is going to take a subdivision and sell all the lots in one day. I mean this thing, we were merely trying to work out a compromise. None of us ever said that this was market value or anything else. We were just trying to find something that was agreeable to everybody concerned.' The parties to the conference never came up with a definite figure but 'with a figure which represented a range.' Schlarmann was merely trying to arrive at a settlement 'to get him the best deal I could' although this was not necessarily what Armstrong was entitled to. ⁶ His estimates and valuation approaches were discussed only for the purpose of compromising the matter. He had no authorization...