San Diego v. D.R. Horton San Diego Holding

Decision Date07 February 2005
Docket NumberNo. D043425.,D043425.
Citation24 Cal.Rptr.3d 338,126 Cal.App.4th 668
CourtCalifornia Court of Appeals Court of Appeals
PartiesCITY OF SAN DIEGO, Plaintiff and Appellant, v. D.R. HORTON SAN DIEGO HOLDING COMPANY, INC., Defendant and Respondent.

Meyers, Nave, Riback, Silver & Wilson, David W. Skinner, Robert C. Chojnacki and Stefanie Y. Gandolfi, Oakland, for Plaintiff and Appellant.

Rutan & Tucker, Jeffrey M. Oderman and Douglas J. Dennington, Costa Mesa, for Defendant and Respondent.

O'ROURKE, J.

In this eminent domain action, the City of San Diego (City) sought to acquire approximately 12.69 acres of property from a larger parcel owned by D.R. Horton San Diego Holding Company, Inc. (Horton) for a particular segment of the State Route 56 freeway project. In a special verdict, the jury determined that the fair market value of the property taken was $5,589,200, that severance damages to the remainder parcel before consideration of the project's benefits was $5,324,000, and that the project benefits were $5,443,800. Based on these figures, the jury determined there were no net severance damages and the total compensation to be awarded Horton was $5,589,200. On Horton's motion for new trial, the trial court concluded the jury's determination of the value of the property taken in its special verdict was based on a valuation of $445,000 per net developable acre, and its award of severance damages was based on a figure derived from a value of $850,000 per net developable acre. The court granted the motion on the ground the jury's findings as to these components were internally inconsistent and thus against the law.

City contends the court erred in granting a new trial because each of the jury's separate valuation findings, including its finding as to severance damages before consideration of benefits, was within the range of values provided by the parties' expert appraisers and therefore the verdict was not against the law. It further argues a reasonable interpretation of the record demonstrates substantial evidence supporting the jury's findings as to the value of the property taken and severance damages before consideration of project benefits. Alternatively, City argues the jury's finding, if found to be inconsistent, was invited by the jury instructions and special verdict form, and also is harmless error. Finally, City argues the jury's verdict must stand as a matter of public policy because to rule otherwise would divest juries in eminent domain actions of their broad discretion in determining the appropriate amount of just compensation.

We conclude the jury implicitly made inconsistent findings of fact in its special verdict, rendering the verdict against the law. We reject City's other contentions and accordingly, affirm the trial court's order.

FACTUAL AND PROCEDURAL BACKGROUND

City filed the present eminent domain action to acquire approximately 12.69 acres of a larger 39.38-gross-acre parcel of land for a certain segment—Unit 2 of the middle segment—of State Route 56 (SR-56).1 Horton owned the approximately 39-acre parcel (the larger parcel), which was to be bisected diagonally by SR-56, leaving two isolated remnant parcels to the north and south (collectively the remainder).

At trial, the ultimate issue of just compensation for the 12.69 acres to be taken by City turned upon the development potential of the larger parcel absent the SR-56 Unit 2 project (hereafter the freeway project). Both parties agreed that there was a reasonable probability of a zone change, but they differed as to the extent of the allowable development that would be approved. City's expert real estate appraiser, Stephen Roach, opined that without the freeway (the "before" condition), the highest and best use of the subject property was for development at one residential unit per two gross acres. Based on that use, Roach valued the part taken at $4,925,000. He arrived at this conclusion by using a market data/sales comparison analysis, which resulted in his conclusion that the fair market value of the larger parcel was $400,000 per net acre. Roach applied that value to the 37.09 net developable acres he found within the larger parcel to arrive at a total value of $14,836,000 for the larger parcel, and applied the same value to the 12.31 net acres of the part taken. As to the value of the remainder with the freeway project in place (the "after" condition), Roach concluded there were no net severance damages because the benefits from the freeway project amounted to $5,443,800, thereby exceeding the severance damages.2

Horton's expert witnesses testified that the highest and best use of the larger parcel in the before condition was the same suburban residential density (low-to-medium residential) as had been actually approved on the remainder with the freeway project. In accordance with this conclusion Horton's expert real estate appraiser, Michael Waldron, testified that the fair market value of the property taken by City's condemnation was $10,676,000. He reached this result by using a sales comparison approach to determine that with that level of density, the fair market value of the larger parcel in the before condition would be about $850,000 per net acre, or approximately $31 million. Applying this same value, Waldron calculated the value of the property taken at $10,676,000, and then with subtraction, determined the value of the remainder property to be $20,324,000. Relying again on his sales comparison approach to determine that the fair market value of the remainder property in the after condition was $15 million (or $747,757 per acre), he testified that severance damages amounted to $5,324,000. Waldron bolstered his conclusion by using a different method of calculating severance damages by totaling increased costs, impacts, and inefficiencies stemming from SR-56 Unit 2 as different components,3 resulting in severance damages in the range of $5.4 million. Waldron further concluded that there were no project benefits, and therefore nothing to off-set his conclusion as to severance damages. Thus, he ultimately opined that the total just compensation to Horton was $16 million.

Both parties submitted their own version of a special verdict form; the trial court used City's form without objection by Horton's counsel. Thereafter, the jury were instructed they were to separately determine: (1) the fair market value of the 12.69 acres of property taken as of the stipulated November 16, 2001 date of valuation; (2) the severance damages sustained as a result of City's taking and/or the construction and use of the project in the manner proposed by City; and (3) the benefits, if any, the project conferred on the remainder parcel. They were further instructed: "You must determine the fair market value of the subject property and the severance damages, if any, and benefits, if any, only from the opinion of the witnesses who have testified. You may not find that the market value of the property being acquired by the plaintiff and the severance damages, if any, of the benefits, if any, to be less than or more than that testified to by any witness. [¶] While expert witnesses may express opinions on the issue of value, those opinions are worth no more than the reasons and factual data upon which they are based."

After closing arguments, the court explained the verdict form to the jury. In part, it said: "In this case, the special verdict form consists of two pages. On the form are a series of questions. For example, Question No. 1 asks you to determine the fair market value of the part taken as of the November 16, 2001 date of value. Now you can find the fair market value is a value testified to by one of the witnesses, or you can find it's some value in between the highest and lowest value stated by the witnesses. That's your decision."

The jury's verdict was as follows, with handwriting in "{}" brackets:

"We the jury in the above-entitled action, make the following findings:

"1. The fair market value of the `part taken' as of the November 16, 2001 date of value is $ {5,589,200}.

"2. Net severance damages

"a) The severance damages to the `remainder' as a result of the City's acquisition of the `part taken,' and/or as a result of the SR 56[P]roject are $ {5,324,000}.

"b) The benefits (if any) to the `remainder' as a result of the SR 56 Project are $ {5,443,800}.

"c) The net severance damages to the `remainder' (subtract (b) from (a)) are $ {0}.

"[Note: The net severance damage cannot be less than O. If (b) exceeds (a), the net severance damage should be 0.]

"3. The final just compensation to be paid by the plaintiff to defendant (add 1 to 2(c)) is $ {5,589,200}."

Horton moved for a new trial on grounds the jury's responses to the special verdict questions were "mutually inconsistent and irreconcilable and unsupported by any evidence" and that its damage award was inadequate, warranting a new trial under Code of Civil Procedure section 657, subdivisions (5) and (6). It pointed out the jury's finding as to fair market value of the part taken worked out to a value of $445,000 per net developable acre. However, this finding, Horton argued, was hopelessly inconsistent with the jury's finding of $5,324,000 in severance damages, which corresponded exactly to the amount testified to by the defendant's appraiser based on a $850,000 per developable acre valuation. It maintained the inconsistency in the jury's verdict rendered it against the law, requiring a new trial under Code of Civil Procedure section 657, subdivision (6).

In response, City argued the jury's verdict on severance damages fell within the range of the experts' testimony, and that its total compensation award was not based on doubt or confusion because it was in an amount falling in between the two parties' requested awards. It further argued that the jury's findings, even if inconsistent, amounted to harmless error because even assuming the jury should have awarded a...

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