Prop. Reserve, Inc. v. Superior Court of San Joaquin Cnty.

• Decision Date: 21 July 2016
• Docket Number: No. S217738.,S217738.
• Citation: 375 P.3d 887,1 Cal.5th 151,204 Cal.Rptr.3d 770
• Court: California Supreme Court
• Parties: PROPERTY RESERVE, INC., Petitioner, v. The SUPERIOR COURT of San Joaquin County, Respondent; Department of Water Resources, Real Party in Interest. Carolyn A. Nichols, as Trustee, etc. et al., Petitioners, v. The Superior Court of San Joaquin County, Respondent; Department of Water Resources, Real Party in Interest Department of Water Resources Cases.

1 Cal.5th 151

375 P.3d 887

204 Cal.Rptr.3d 770

PROPERTY RESERVE, INC., Petitioner,

v.The SUPERIOR COURT of San Joaquin County, Respondent;

Department of Water Resources, Real Party in Interest.

Carolyn A. Nichols, as Trustee, etc. et al., Petitioners,

v.The Superior Court of San Joaquin County, Respondent;

Department of Water Resources, Real Party in Interest

Department of Water Resources Cases.

No. S217738.

Supreme Court of California

July 21, 2016.

Matteoni, O'Laughlin & Hechtman, Norman E. Matteoni, Gerry Houlihan, San Jose; Kirton & McConkie and Christopher S. Hill for Petitioner Property Reserve, Inc.

Freeman, D'Aiuto, Pierce, Gurev, Keeling & Wolf, Thomas H. Keeling, Arnold J. Wolf, Stockton; Nomellini, Grilli & McDaniel and Dante J. Nomellini, Jr., for

Petitioners Mark G. Scribner, Jr., Randy J. Baranek, Siara Andrews, J.H. Jonson & Sons, Inc., Arnaudo Bros., Delta Wetlands Properties, The 2000 teVelde Family Trust, The Biagi Living Trust Agreement, The Carolyn Nichols Revocable Living Trust dated 12/09/1999, Carolyn A. Nichols as Trustee, Venice Island, Coney Island Farms, Inc., Robert A. DalPorto, Jr., Islands, Inc., Richard Brann as Trustee, S.S. & S.M. Oates Family Trust, Wilson Vineyard Properties, Eileen V. Nichols Revocable Living Trust dated 12/09/1999, Eileen V. Nichols as Trustee, Victoria Island, L.P., Lucille L. Christensen Family Trust dated 8/31/2004, Lucille J. Christensen as Trustee, Smith and Karen Cunningham, Zuckerman Mandeville, Inc., and Heritage Land Co., Inc.

Downey Brand and Scott D. McElhern, Sacramento, for Petitioners CCRC Farms, LLC and Tuscany Research Institute.

Somach Simmons & Dunn, Stuart L. Somach and Daniel Kelly, Sacramento, for Petitioners Sutter Home Winery, Inc., and Delta Ranch Partnership.

J. David Breemer and Jonathan Wood, Sacramento, for Pacific Legal Foundation as Amicus Curiae on behalf of Petitioners.

Luke A. Wake; Damon Key Leong Kupchak Hastert, Robert H. Thomas; Manatt, Phelps & Phillips and Edward G. Burg, Los Angeles, for Owners' Counsel of America and National Federation of Independent Business Small Business Legal Center as Amici Curiae on behalf of Petitioners.

Jenny & Jenny and Scott E. Jenny, Martinez, as Amici Curiae on behalf of Petitioners.

Nancy N. McDonough, Sacramento, and Kari E. Fisher for California Farm Bureau Federation as Amicus Curiae on behalf of Petitioners.

No appearance for Respondent.

Kamala D. Harris, Attorney General, Steven M. Gevercer and Kristin G. Hogue, Assistant Attorneys General, Alberto González, John M. Feser, Jr., Michael P. Cayaban, James C. Phillips, Neli N. Palma and Gregory D. Brown, Deputy Attorneys General, for Real Party in Interest.

Jeanne Scherer, Sacramento, David Gossage and Lucille Y. Baca, San Francisco, for California Department of Transportation as Amicus Curiae on behalf of Real Party in Interest.

Meyers, Nave, Riback, Silver & Wilson and David W. Skinner, Oakland, for League of California Cities, California State Association of Counties and Association of California Water Agencies as Amici Curiae on behalf of Real Party in Interest.

Woodruff, Spradlin & Smart, Gary C. Weisberg and Laura A. Morgan, Costa Mesa, for Orange County Transportation Authority as Amicus Curiae on behalf of Real Party in Interest.

Stephanie D. Morris, San Francisco, for State Water Contractors as Amicus Curiae on behalf of Real Party in Interest.

Best, Best & Krieger, Stefanie D. Hedlund and Kendall H. MacVey, Riverside, for Riverside County Transportation Commission as Amicus Curiae on behalf of Real Party in Interest.

CANTIL–SAKAUYE, C.J.

In an effort to improve the reliability of the water supply system in California as well as to address environmental and ecological concerns, the California Department of Water Resources (hereafter, the Department) undertook to investigate the feasibility of constructing a new tunnel or canal in the Sacramento–San Joaquin Delta as a means of delivering fresh water from Northern California to Central and Southern California. As part of the preliminary steps in going forward with the project, the Department sought to conduct environmental and geological studies and testing on more than 150 privately owned parcels of land that the state, in the future, might seek to acquire for the project through negotiation or eminent domain.

In pursuing the proposed studies and testing, the Department proceeded through the specific statutory procedure established by the California Eminent Domain Law (Code Civ. Proc., pt. 3, tit. 7) relating to precondemnation entry and testing. (Code Civ. Proc., §§ 1245.010 –1245.060.)¹ The Department filed petitions in superior court relating to the privately owned properties, seeking a court order granting the Department authority to enter the properties and undertake various environmental and geological testing activities. The Department maintained that these activities were necessary to determine the suitability of each property for the project and to comply with the numerous state and federal environmental laws governing such a project.

After a four-day hearing, the trial court issued a detailed and lengthy order authorizing the Department to enter all of the private properties and conduct various environmental studies and testing under specified limitations. After a separate hearing, the trial court denied the Department's request to conduct geological testing—testing that contemplated the drilling and refilling of deep test holes on certain properties in question— on the ground that the Department's authority to conduct that drilling could be obtained only through a classic condemnation action rather than through the statutory precondemnation procedure.²

Both the landowners and the Department sought review of the trial court's rulings in the Court of Appeal. The Court of Appeal, in a two-to-one decision, upheld the trial court's denial of the Department's request to enter and to conduct geological testing, but reversed the trial court's grant of authority to conduct environmental testing. The majority in the Court of Appeal concluded (1) that the procedure established by the precondemnation entry and testing statutes does not satisfy the demands of the takings clause of the California Constitution with regard to any precondemnation entry and testing activity that would constitute a taking or damaging of property within the meaning of the state takings clause, and (2) that both the geological testing sought by the Department and the environmental activities authorized by the trial court fell within that category. The Court of Appeal majority held that in order to conduct such activities, the Department was required to proceed to condemn a temporary easement through a classic condemnation action, rather than proceeding by means of the procedure established by the precondemnation entry and testing statutes.

The Department sought review of the Court of Appeal decision in this court.

We granted review and posed three questions for briefing and argument: (1) Do the geological testing activities proposed by the Department constitute a taking? (2) Do the environmental testing activities authorized by the trial court's order constitute a taking? (3) If so, do the precondemnation entry and testing statutes provide a constitutionally valid eminent domain proceeding for the activities?

For the reasons set forth below, we conclude that there is no need to determine under the first two questions whether the authorized environmental testing activities or the proposed geological testing activities constitute a taking or damaging of property for purposes of the state constitutional takings clause. (Cal. Const. art. I, § 19, subd. (a).) Assuming, without deciding, that both the environmental and the geological activities in question amount to a taking or damaging of property for which just compensation must be paid under the California takings clause, we conclude that in answer to our third question the procedure established by the precondemnation entry and testing statutes satisfies the requirements of the California takings clause when the procedure is reformed to comply with the jury trial requirement of that clause. As we explain, the precondemnation entry and testing statutes (1) require a public entity, before undertaking such entry and testing, to seek and obtain a court order specifically authorizing the activities that are to be conducted on the property and to deposit in court an amount that the court determines is the probable compensation for the authorized activities, and (2) permit the property owner to obtain damages in the same proceeding for any actual damage and substantial interference with the possession or use of the property caused by the public entity's entry and testing activities. This procedure satisfies the California takings clause when reformed to permit the property owner to obtain a jury determination of damages in the proceeding if the property owner so chooses.

Accordingly, we conclude that the Court of Appeal judgment should be reversed in its entirety, both insofar as the Court of Appeal affirmed the trial court's denial of the Department's proposed geological testing and insofar as it reversed the trial court's authorization of environmental testing.

I. Facts and Proceedings Below

In this case, the Department proposed to enter more than 150 privately owned properties in the Sacramento–San Joaquin Delta area (Delta) in order to conduct environmental and geological studies and testing needed to investigate the feasibility of adding new water conveyance facilities—such as tunnels or additional canals—in the Delta and to determine the suitability of potential alternative routes for the contemplated project. The proposed new facilities would become part of the Bay Delta Conservation Plan and are intended to improve the reliability of the water supply statewide as well as to restore the Delta ecosystem and native fish populations.³

Because the alternative potential locations...