Regency Outdoor Advertising v. City

• Decision Date: 07 August 2006
• Docket Number: No. S132619.,S132619.
• Citation: 46 Cal.Rptr.3d 742,39 Cal.4th 507,139 P.3d 119
• Court: California Supreme Court
• Parties: REGENCY OUTDOOR ADVERTISING, INC., Plaintiff and Appellant, v. CITY OF LOS ANGELES et al., Defendants and Respondents.

46 Cal.Rptr.3d 742

39 Cal.4th 507

139 P.3d 119

REGENCY OUTDOOR ADVERTISING, INC., Plaintiff and Appellant, v. CITY OF LOS ANGELES et al., Defendants and Respondents.

No. S132619.

Supreme Court of California.

August 7, 2006.

Berger & Norton, Manatt, Phelps & Phillips, Michael M. Berger and Edward G. Burg, Los Angeles, for Plaintiff and Appellant.

Rockard J. Delgadillo, City Attorney, Eduardo A. Angeles, Assistant City Attorney, and D. Timothy Dazé, Deputy City Attorney, for Defendants and Respondents.

Sabine and Morrison and Randal R. Morrison, San Diego, for League of California Cities as Amicus Curiae on behalf of Defendants and Respondents.

MORENO, J.

[139 P.3d 512]

As part of a roadway beautification project in advance of the 2000 Democratic National Convention, the City of Los Angeles (City) planted a number of palm trees on City-owned property along a public street. Plaintiff Regency Outdoor Advertising, Inc. (Regency) claims that the trees made several of its roadside billboards less visible, at least as seen from particular perspectives along the boulevard. Regency asserts that the City must compensate it for the allegedly lessened value of its billboards pursuant to inverse condemnation principles, as well as under state law concerning billboards specifically. The superior court conducted a bench trial on Regency's inverse condemnation claim, ultimately ruling against the firm. The trial court then awarded the City costs and expert witness fees pursuant to Code of Civil Procedure section 998, with this award including an amount attributable to expert witness fees that the City incurred before, as well as after, it extended its offer to compromise. [139 P.3d 513]

When Regency appealed, the Court of Appeal affirmed, resolving the inverse condemnation issue by determining that the property right for which Regency demands compensation—the right to be seen from a public way—simply does not exist under the circumstances presented. The Court of Appeal also rebuffed Regency's reliance on state law pertaining to billboards, reasoning that the planting of palm trees near Regency's displays did not mean that the billboards had been "removed," nor their "maintenance or use . . . limited," as is necessary for compensation under Business and Professions Code section 5412. Finally, the Court of Appeal affirmed the award of costs and fees, in full. We granted review, and now affirm.

With regard to the inverse condemnation issue, we conclude that owners and occupiers of roadside property do not possess a "right to be seen" that requires the payment of compensation for municipal landscaping efforts having no injurious effect on any property rights other than the claimed right to visibility. We also agree with the Court of Appeal that the planting of trees in the vicinity of Regency's billboards did not implicate the compensation requirement set forth in Business and Professions Code section 5412. Finally, we affirm the award of costs and fees, rejecting Regency's arguments that Code of Civil Procedure section 998 categorically does not apply to offers made by defendants in inverse condemnation actions, that the City's offer to compromise was so low as to bar it from the subsequent recovery of costs and fees, and that Code of Civil Procedure section 998 does not authorize an award, to a defendant, of expert witness fees incurred before the defendant extends its offer to compromise.

I. FACTUAL AND PROCEDURAL BACKGROUND

In June 2000, the City undertook a beautification program aimed at enhancing the appearance of Century Boulevard, a primary access route to and from Los Angeles International Airport. As part of this project, the City planted mature palm trees along the north and south sides of the road, and in the median of the roadway. This landscaping all occurred on property owned by the City.

At the relevant times, Regency owned numerous billboard facings located near Los Angeles International Airport. Several of these displays lined Century Boulevard, occupying property leased by Regency for commercial advertisement purposes. Regency protested when the City planted the palm trees along the road. While Regency acknowledges that the plantings did not physically occupy any land owned by its lessors, and does not contend that the trees have interfered with ingress to or egress from these parcels, it claims that the trees screened at least six of its billboard facings from motorists

[139 P.3d 514]

traveling along Century Boulevard. Since fewer people could see its billboards clearly with the trees in the way, Regency argues that the City must compensate it for the supposedly reduced value of the obscured facings.

Regency pursued these arguments by way of an inverse condemnation claim alleged in a complaint filed in Los Angeles Superior Court. Regency subsequently filed an amended complaint that added a claim alleging that the plantings breached a contract between itself and the City, pursuant to which the City had agreed not to obstruct the visibility of Regency's billboards. The superior court granted the City's motion for summary adjudication with regard to the contract claim, but allowed the inverse condemnation claim to go to trial. Prior to this bench trial, the City sent Regency an offer to compromise pursuant to Code of Civil Procedure section 998. This proposal offered to settle the matter by paying Regency $1,000 and removing one of the offending trees. Regency rejected the offer, and the parties proceeded to argue the case.

At trial, the parties agreed about certain facts, but disputed others. The parties stipulated that the palm trees along Century Boulevard were situated on public property owned by the City, "dedicated for public use," but they disagreed about whether the trees, in and of themselves, had lessened the value of Regency's billboards. According to Regency, the trees had occluded several billboard facings so severely that they impaired or destroyed altogether the billboards' ongoing economic value.¹ The City's expert, meanwhile, testified that Regency's billboards remained visible from multiple perspectives along the road even after the trees were in place. This expert testified that the billboards had an apparent value of $4,594,000 before the landscaping and $3,955,000 afterward. However, the City's expert opined that this reduced value was attributable to factors such as a decline in billboard advertising generally and a failure by Regency to aggressively market its billboards after the trees were planted. In his view, the planting of the trees, by itself, did not cause Regency to suffer any unavoidable damages.

The superior court ultimately ruled in the City's favor. The court concluded that Regency had failed to prove that "the loss of visibility, if any, decreased the fair market value of [its] property." The court also determined that

[139 P.3d 515]

"defendant's planting of the trees on Century [Boulevard] as part of the highway beautification project does not amount to a taking of plaintiff's property." In denying Regency's motion for a new trial, the superior court concluded that the "bottom line is that the plaintiff really has not proved a loss, and [plaintiff's evidence] was all hearsay. It was all speculative evidence and not reliable evidence whatsoever." The superior court also awarded the City $99,145.64 in costs and fees, a sum that included an amount attributable to expert witness fees incurred by the City before it extended its offer to compromise.

On Regency's appeal, the Court of Appeal affirmed. With regard to Regency's inverse condemnation claim, the Court of Appeal analyzed numerous California appellate decisions discussing a right to a reasonable view of one's property from a public way, ultimately concluding that a reduction of visibility has only warranted compensation in situations where the government's actions also infringe upon a separate and distinct property right, such as the right of access to and from the road. Addressing Business and Professions Code section 5412, a statute that Regency had not relied upon before the trial court, the Court of Appeal concluded that the City's actions had neither "removed" the firm's billboards nor "limited" their "customary maintenance or use," as is required for compensation under the statute. The Court of Appeal then disposed of Regency's arguments that the City should not have received costs and fees under Code of Civil Procedure section 998, finding the offer to compromise statute applicable to inverse condemnation proceedings, regarding the City's offer to compromise as reasonable under the circumstances, and concluding that the statute allows defendants in the City's position to recover expert witness fees incurred both before and after they extend their compromise offers.

We granted review.

II. DISCUSSION

The following discussion addresses in turn Regency's arguments that (1) the City has "taken or damaged" its property within the meaning of article I, section 19 of the California Constitution, and therefore must compensate the firm for its claimed losses; (2) Regency's billboards have been "removed," or their "customary maintenance or use" "limited," such that the City must provide compensation under Business and Professions Code section 5412; and (3) the Court of Appeal erred in affirming the award of costs and fees.

A. Inverse Condemnation

Article I, section 19 of the California Constitution provides, in pertinent part, that "[p]rivate property may be taken or damaged for public

[139 P.3d 516]

use only when just compensation, ascertained by a jury unless waived, has first been paid to, or into court for, the owner."² Inverse condemnation actions provide a vehicle for property owners to obtain "just compensation." (San Diego Gas & Electric Co. v. Superior Court (1996) 13 Cal.4th 893, 939, 55 Cal.Rptr.2d 724, 920 P.2d 669; Baker v. Burbank-Glendale-Pasadena Airport Authority (1985) 39 Cal.3d 862,...