San Diego Gas & Elec. Co. v. City of San Diego

• Decision Date: 17 May 1978
• Court: California Court of Appeals Court of Appeals
• Parties: SAN DIEGO GAS & ELECTRIC COMPANY, Plaintiff and Respondent, v. CITY OF SAN DIEGO et al., Defendants and Appellants. Civ. 16277.

Page 103

146 Cal.Rptr. 103

81 Cal.App.3d 844

SAN DIEGO GAS & ELECTRIC COMPANY, Plaintiff and Respondent, v. CITY OF SAN DIEGO et al., Defendants and Appellants.

Civ. 16277.

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

May 17, 1978.

As Modified on Denial of Rehearing June 13, 1978.

Hearing Granted July 13, 1978.

John W. Witt, City Atty. and C. Alan Sumption, Deputy City Atty., for defendants and appellants.

Luce, Forward, Hamilton & Scripps by Louis E. Goebel and Ronald W. Rouse, San Diego, for plaintiff and respondent.

Evelle J. Younger, Atty. Gen., E. Clement Shute, Jr., R. H. Connett, Asst. Attys. Gen., Richard C. Jacobs and Anthony C. Joseph, Deputy Attys. Gen., as amicus curiae in support of appellants.

Pacific Legal Foundation by Ronald A. Zumbrun, Donald M. Pach and Thomas E. Hookano, Sacramento, as Amicus Curiae in support of Respondent.

GERALD BROWN, Presiding Justice.

The City of San Diego (City) appeals the judgment after the court found it had inversely condemned property owned by San Diego Gas & Electric Company (Company) which the jury valued at $2,886,300. Additionally the jury found.$283,696 severance damages. The court ordered interest of 7% to be paid on the total, $3,169,996, from the date of taking, June 19, 1973, plus appraisal, engineering and attorneys' fees totaling $122,559.07.

The property is in Sorrento Valley in the northern part of the City, in the southwest quadrant of the intersection of Highway I-5 and Carmel Valley Road between I-5 and the Torrey Pines State Park; it is generally at low elevation, is a drainage basin, tidal basin or flood plain and is subject to standing water or "ponding;" part is subject to ocean tidal action and portions have been referred to as the Los Penasquitos Lagoon, an estuary and wildlife refuge; a portion is within the State Coastal Act zone.

Company assembled the approximately 412-acre parcel in 1966 and then discussed with City its plan to hold the land for possible future construction of a power plant. In 1972 City initiated rezoning hearings for the property which was then zoned industrial (M-1A zone) and agricultural or holding zone (A-1-1); at that time the City General Plan Map designated most of the property as industrial and the remainder as "area for future growth." At the same time, the City Planning Department was preparing an open space plan for the city which ultimately was entitled "A Plan for the Preservation of Natural Parks for San Diego" and included about 230 acres of Company's land. In addition, in early 1972, the Community Development Department prepared a staff report entitled "Park Reserve Systems," which discussed the financing and acquisition of park reserve lands and got estimated values for the proposed park properties, including the property in question here, as part of a bond proposal to be put before the electorate in September 1973.

The City Council, on June 7, 1973, downzoned some of the land from industrial to A-1-10 and part of the A-1-1 land was designated for future industrial development; the rest of the land in the industrial zone retained its industrial classification. ¹ On June 19, 1973 City adopted the open space element of the General Plan which covered all the land found condemned here, about 233 acres. In September 1973, the report of the Community Development Department was adopted and this property appeared on maps as one of the properties to be acquired if the bond issue passed. It failed. A year later Company filed suit.

The City claims its act in zoning the property for light industry and agriculture with an open space overlay do not constitute a taking or a damaging of property.

The power of eminent domain is the state's inherent power to take private property for public use (Rose v. State of California, 19 Cal.2d 713, 719, 123 P.2d 505). However, the state is limited in exercising this power by Article I, section 19 of the California Constitution which assures the private landowner he will be compensated if his land is taken or damaged.

In some instances the state will appropriate a person's property without paying for it in advance. This may occur in a variety of situations. The government may deliberately destroy private property in the public interest such as when it demolishes buildings to prevent the spread of fire; it may inadvertently damage property in the construction of public improvements; it may decrease the value of a person's property, for example, by constructing a freeway which cuts down light and air to a particular property; or it may decrease the value of a person's property by regulations which limit the use or development of the property. (10 Cal.Law Rev. Commission Reports, Recommendations and Studies, 1970-1971 at pp. 79-81.) In these instances the state is said to have acquired the property through inverse condemnation and the property owner can bring suit to recover the compensation due him.

Company claims City has inversely condemned its land because the zoning regulations combined with the open space element of the general plan make it impossible to use the land.

The state derives its authority to zone property from the police power, the government's power to enact regulations to protect the health, safety and welfare of its citizens. Unlike the person whose property is taken in eminent domain, the individual who is deprived of his property due to the state's exercise of its police power is not entitled to compensation (Consolidated Rock Products Co. v. City of Los Angeles, 57 Cal.2d 515, 530, 20 Cal.Rptr. 638, 370 P.2d 342). In California the general rule is that a rezoning which reduces the market value of the land does not give rise to a cause of action in inverse condemnation (HFH, Ltd. v. Superior Court, 15 Cal.3d 508, 514, 125 Cal.Rptr. 365, 542 P.2d 237). However, there are exceptions to the rule. For example, the state may abuse its use of the police power by placing unreasonable or arbitrary regulations on land under the guise of zoning (Pinheiro v. County of Marin, 60 Cal.App.3d 323, 326, 131 Cal.Rptr. 633). A regulation may be unreasonable if it deprives the landowner of any beneficial use of his property (Eldridge v. City of Palo Alto, 57 Cal.App.3d 613, 624, 129 Cal.Rptr. 575) or if it deprives the owner of his property so it can be used by the public. Likewise, if the state downzones a property to decrease its value as a prelude to later acquiring the property, the zoning may be found to have been a condemnation. Or, if zoning classifications are used to evade the requirement that land used by the public must be acquired by the public, such zoning is condemnation (HFH, Ltd. v. Superior Court, supra, 15 Cal.3d 508, 516, fn. 14, 520, 125 Cal.Rptr. 365, 542 P.2d 237). The question whether a particular zoning restriction results in a taking by inverse condemnation is "a question of fact to be determined by trial of the issue." (Eldridge v. City of Palo Alto, supra, 57 Cal.App.3d 613, 628, 129 Cal.Rptr. 575, 584.) On review, the appellate court looks for substantial evidence to support the finding below (Foreman & Clark Corp. v. Fallon, 3 Cal.3d 875, 881, 92 Cal.Rptr. 162, 479 P.2d 362).

When the government restricts a landowner's use of his property, it is important to determine whether it is doing so under the police power or under the power of eminent domain because this is what governs the question of compensation. However, there is no set formula to distinguish a regulation from a taking or to draw the line where regulation ends and taking begins. Cases which involve the appropriation of land by the state or use of the land by the public clearly demand the state to take title and pay for the taking; cases where the landowner is prohibited from noxious use of his land, for example as a gravel pit, ² no compensation is due even though the landowner may be effectively prevented from all use of his land. From another point of view, where the government acts in its enterprise capacity, acquiring assets from the citizenry for its own account, as it were, then payment must be made; where the government mediates disputes among competing alternatives, such as prohibiting pigs in the backyard, it is merely regulating the private interests in the community. One commentator has suggested that the compensation clause in the Constitution never was meant to preserve the economic status quo; rather, it is to serve as a curb on arbitrary government action (Sax, Takings and the Police Power, 74 Yale L.J., 36, 37-40, 58, 62-63). However, these guidelines are not always of great help in answering whether a governmental action is a regulation or a taking.

Stripped to its bare essentials, we are asked here whether a person with land zoned for agriculture and manufacturing but lying within the open space area of the general plan can be denied all use of his land and denied compensation. It is easy to say the public will enjoy the open space and the state has acquired the property in its enterprise capacity, thus warranting payment; it is equally easy to say that any use of the property is noxious and the government can regulate it by preventing all (noxious) uses. Recognizing that a downzoning, as long as it is reasonable, is not a basis for inverse condemnation, what effect do the regulations of the general plan have?

Zoning and the general plan are closely interrelated because they both deal with land use, but each performs an essentially different function. Zoning is very precise and legally restricts present land use, while the general plan is merely a planning document which is to serve as a guide to future land use. In California general plans are mandatory (Gov.Code § 65300 et seq.); provision is made for their amendment three times a year (Gov.Code § 65361) which highlights the fact that they are not final documents neither completed nor inflexible. San Diego's General Plan states in the legend:

"NOTE: This map presents General Plan...