Redevelopment Agency v. Contra Costa Theatre, Inc.

• Decision Date: 17 August 1982
• Citation: 135 Cal.App.3d 73,185 Cal.Rptr. 159
• Court: California Court of Appeals Court of Appeals
• Parties: REDEVELOPMENT AGENCY OF the CITY OF CONCORD, Plaintiff and Respondent, v. CONTRA COSTA THEATRE, INC., Defendant and Appellant. Civ. 51799.

Page 159

185 Cal.Rptr. 159

135 Cal.App.3d 73

REDEVELOPMENT AGENCY OF the CITY OF CONCORD, Plaintiff and Respondent, v. CONTRA COSTA THEATRE, INC., Defendant and Appellant.

Civ. 51799.

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

Aug. 17, 1982.

Hearing Denied Nov. 24, 1982.

Goldfarb & Lipman, Steven H. Goldfarb, Barry R. Lipman, Lee C. Rosenthal, Oakland, for plaintiff and respondent.

Angell, Holmes & Lea, Samuel L. Holmes, San Francisco, for defendant and appellant.

NEWSOM, Associate Justice.

Before us are cross-appeals from a jury verdict and judgment in an eminent domain action instituted by the Redevelopment Agency of the City of Concord (respondent) to condemn a leasehold interest owned by Contra Costa Theatre, Inc. (appellant).

During the course of the proceedings, appellant claimed that condemnation damages should include the diminution in value of his property interest caused by respondent's improper precondemnation denial of his application for a use permit, under the authority of Klopping v. City of Whittier (1972) 8 Cal.3d 39, 104 Cal.Rptr. 1, 500 P.2d 1345--so-called "Klopping damages." The lower court ordered a bifurcated trial in which evidence and instructions relevant to the claim of unlawful precondemnation conduct were withheld from the jury. The Klopping damages claim was heard by the trial court alone. Thereafter, the jury determined the value of appellant's leasehold interest, and thus the amount of damages to be awarded in the eminent domain action, according to the highest and best use of the property.

The jury awarded appellant damages for the market value of the leasehold interest, including loss of goodwill. The trial court then denied appellant any further compensation for Klopping damages. Appellant objects to both the trial court's judgment and the jury verdict. Respondent appeals from the jury verdict only.

In summary form, the following evidence was presented during the bifurcated proceeding.

Appellant was the owner of a leasehold interest in a 14-acre parcel located in the City of Concord, on which it operated a single-screen outdoor movie theatre. The leasehold interest consisted of a 30-year lease.

Appellant drafted plans for the addition of three additional screens on the property, and submitted an application for permission to operate a multi-screen theatre in April 1976. When the plan was informally proposed to the Commission in 1974, appellant was advised that it presented "no problems." However, the Commission voiced a negative response to the application soon after it was filed.

Coincidentally with the filing of appellant's application, the Commission was preparing a "General Plan" which did not provide for appellant's contemplated use of the property. An "Amended Redevelopment Plan" was also being considered and city officials were negotiating with a developer with a view toward municipal acquisition of appellant's leasehold interest by condemnation, resale of the property to the developer, and its eventual development in accordance with the redevelopment plan.

On September 7, 1977, appellant's application for installation of three additional outdoor theatre screens was heard and denied by the Commission for the stated reason that the proposed expanded use was "contrary to the goals of the General Plan, Central Area Plan, and Redevelopment Plan." Testimony relevant to the issue of Klopping damages, heard by the trial court alone, revealed, in the aggregate, only that city officials, including Commission employees, were aware of the contemplated condemnation and negotiations with the developer at the time the use permit was denied.

Approximately six months after the Commission's formal denial of the application, the Agency valued the leasehold interest and initiated the present condemnation action.

Appellant argues that the trial court erred when it bifurcated the trial and excluded all evidence relevant to the issue of Klopping damages from the consideration of the jury. Appellant's position is that the issue of damages resulting from improper precondemnation conduct is one for the jury rather than the trial court. Appellant relies upon the ruling in Klopping v. City of Whittier, supra, 8 Cal.3d 39, 104 Cal.Rptr. 1, 500 P.2d 1345 where the California Supreme Court announced that, "when the condemner acts unreasonably in issuing precondemnation statements, either by excessively delaying eminent domain action or by other oppressive conduct, our constitutional concern over property rights requires that the owner be compensated." (Id., at pp. 51-52, 104 Cal.Rptr. 1, 500 P.2d 1345.) The court concluded: "Accordingly ... a condemnee must be provided with an opportunity to demonstrate that (1) the public authority acted improperly either by unreasonably delaying eminent domain action following an announcement of intent to condemn or by other unreasonable conduct prior to condemnation; and (2) as a result of such action the property in question suffered a diminution in market value." (Id., at p. 52, 104 Cal.Rptr. 1, 500 P.2d 1345.)

It is also now settled that liability for unlawful precondemnation activities may be considered a part of a single eminent domain proceeding. (People ex rel. Dept. Pub. Wks. v. Southern Pacific Trans. Co. (1973) 33 Cal.App.3d 960, 965, 109 Cal.Rptr. 525.) In Klopping, our high court held that a condemner could be liable in either inverse or direct condemnation for diminution in market value resulting from unreasonable precondemnation conduct. (Klopping, supra, 8 Cal.3d at p. 58, 104 Cal.Rptr. 1, 500 P.2d 1345; Washington Water & Light Co. v. East Yolo Community Services Dist. (1981) 120 Cal.App.3d 388, 395, 174 Cal.Rptr. 612; City of Los Angeles v. Monahan (1976) 55 Cal.App.3d 846, 852, 127 Cal.Rptr. 763; ¹ People ex rel Dept. Pub. Wks. v. Peninsula Enterprises, Inc. (1979) 91 Cal.App.3d 332, 353, 153 Cal.Rptr. 895; Richmond Redevelopment Agency v. Western Tile Guaranty Co. (1975) 48 Cal.App.3d 343, 350, 122 Cal.Rptr. 434.) ² Thus, Klopping damages may be sought in an eminent domain proceeding; a separate claim is not required.

However, the threshold question of liability for unreasonable precondemnation conduct is to be determined by the court, with the issue of the amount of damages to be thereafter submitted to the jury only upon a sufficient showing of liability by the condemnee. (City of Los Angeles v. Lowensohn (1976) 54 Cal.App.3d 625, 632-633, 127 Cal.Rptr. 417.) If liability for unlawful precondemnation conduct is not established, the trial court may exclude proffered evidence of alleged resulting damages from the jury. (Ibid.)

We accordingly find no error in the bifurcated proceeding employed by the trial court in this case. A bifurcated trial is commonly used in eminent domain and inverse condemnation actions (Orpheum Bldg. Co. v. San Francisco Bay Area Rapid Transit Dist. (1978) 80 Cal.App.3d 863, 868, 146 Cal.Rptr. 5), where "all issues except the sole issue relating to compensation, are to be tried by the court, ..." (People v. Ricciardi (1943) 23 Cal.2d 390, 402, 144 P.2d 799; County of San Diego v. Miller (1980) 102 Cal.App.3d 424, 433, 162 Cal.Rptr. 480.) "The right to a jury trial in condemnation proceedings goes only to the amount of compensation." (People ex rel. Dept. of Water Resources v. Gianni (1972) 29 Cal.App.3d 151, 157, 105 Cal.Rptr. 248, emphasis added.)

We further find ample support in the record for the trial court's conclusion that appellant failed to establish unlawful precondemnation conduct under the guidelines established by Klopping and its successor cases.

The parameters of Klopping are yet unsettled, and "must be developed and refined on a case-by-case basis." (City of Los Angeles v. Waller (1979) 90 Cal.App.3d 766, 779, 154 Cal.Rptr. 12), but it is established that mere denial of a use permit prior to condemnation is not compensable in money damages under its authority.

In Selby Realty Co. v. City of San Buenaventura (1973) 10 Cal.3d 110, 109 Cal.Rptr. 799, 514 P.2d 111, the city denied plaintiff's application for a building permit after adoption of general plan, and plaintiff thereafter brought declaratory relief and mandamus actions, along with a Klopping inverse condemnation suit. (Id., at p. 119, 109 Cal.Rptr. 799, 514 P.2d 111.) Plaintiff alleged a "scheme" to take its land without compensation, and that "in furtherance of that 'scheme' the city denied plaintiff a permit ... for the purpose of 'extorting' plaintiff's land." (Id., at p. 127, 109 Cal.Rptr. 799, 514 P.2d 111.) The court found no taking of property, and further concluded: "Nor is a cause of action in inverse condemnation stated for the denial of a building permit. The gravamen of plaintiff's complaint is that the city refused to issue the permit unless plaintiff complied with an assertedly invalid condition. [p] The appropriate method by which to consider such a claim is by a proceeding in mandamus under section 1094.5 of the Code of Civil Procedure. (See Gong v. City of Fremont, supra, 250 Cal.App.2d 568, 575 ; Mid-way Cabinet etc. Mfg. v. County of San Joaquin (1967) 257 Cal.App.2d 181, 191 ....)" (Id., at p. 128, 109 Cal.Rptr. 799, 514 P.2d 111.)

In City of Walnut Creek v. Leadership Housing Systems, Inc. (1977) 73 Cal.App.3d 611, 140 Cal.Rptr. 690, a claim for Klopping damages was based upon the city's denial of property development permits during the period in which the land developer held an option on property condemned soon thereafter. Relying on Selby, this court rejected the inverse condemnation action with the following explanation: "A petition for writ of mandate, not inverse condemnation or an action for damages, is the appropriate remedy for abuse of discretion in refusing a permit." (Id., at p. 621, 140 Cal.Rptr. 690; see also Briggs v. State of California ex rel. Dept. Parks & Recreation (1979) 98 Cal.App.3d 190, 202-203, 159 Cal.Rptr. 390.)

The same rule has been applied to...