Schneider v. County of San Diego, 00-55709.

• Citation: 285 F.3d 784
• Decision Date: 21 March 2002
• Docket Number: No. 00-55709.,00-55709.
• Parties: Louis SCHNEIDER, Plaintiff-Appellant, v. COUNTY OF SAN DIEGO, and Reybro, Inc., a California corporation, dba, Quality Auto Recycling, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

285 F.3d 784

Louis SCHNEIDER, Plaintiff-Appellant, v. COUNTY OF SAN DIEGO, and Reybro, Inc., a California corporation, dba, Quality Auto Recycling, Defendants-Appellees.

No. 00-55709.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 12, 2001.

Filed March 21, 2002.

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Louise E. Goebel, San Diego, CA, and Kenneth Chesebro, Cambridge, MA, for the plaintiff-appellant.

John J. Sansone and Morris G. Hill, County of San Diego, San Diego, CA, for the defendants-appellees.

Appeal from the United States District Court for the Southern District of California; Marilyn L. Huff, Chief Judge, Presiding. D.C. No. CV-90-1738-H.

Before: WARDLAW, PAEZ and TALLMAN, Circuit Judges.

WARDLAW, Circuit Judge.

Louis Schneider appeals the district court's order awarding prejudgment interest and refusing to award nominal damages. After Schneider successfully sued the County of San Diego and Gregory Reynolds, dba Reybro, Inc. (collectively, the "County") for violation of the Takings and Due Process Clauses of the Fifth Amendment under 42 U.S.C. § 1983, the district court awarded Schneider "prejudgment interest" to compensate him for the delay in payment of just compensation for the takings. It refused to award nominal damages for Schneider's due process claim.

We must decide whether Schneider is entitled to prejudgment interest as part of the constitutionally required "just compensation" for his property or whether, as the County contends, he is merely entitled to damages for delay of payment. Like the district court, we conclude that where, as here, the property owner was not compensated until long after the taking, "just compensation" requires an award of prejudgment interest. However, unlike the district court, we conclude that the amount of prejudgment interest is appropriately calculated in a manner that will ensure that the property owner receives the constitutionally mandated award. We also conclude that because we previously had held that Schneider's procedural due process rights were violated as a matter of law, he is entitled to judgment and nominal damages therefor. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm in part, reverse in part, and remand.

I. Factual and Procedural Background

Schneider filed this Section 1983 action arising from the County's removal of several vehicles from his property over a decade ago. These consolidated appeals¹ represent his third appearance before us in this action. We set forth the relevant facts previously summarized by a panel of our court:

In 1989, Schneider owned a 1.4 acre lot in a rural, agriculturally zoned part of San Diego County, not far from the City of Oceanside. Schneider did not reside on the property but rented out the house located on the lot. He did, however, park nine buses, two motorhomes, and two automobiles on the lot in an open field approximately 240 feet from the house. These vehicles were visible from the public road that runs in front of Schneider's lot.

After receiving a number of complaints about the vehicles, the County instituted an investigation. County officers determined that the vehicles were parked on the lot in violation of county zoning ordinances and that they constituted a public nuisance. The County was not successful in persuading Schneider to abate the nuisance voluntarily and on September 26, 1989, it posted a NOTICE AND ORDER TO ABATE on the property.

Schneider v. County of San Diego, et al., 28 F.3d 89, 90-91 (9th Cir.1994). Schneider requested an appeal hearing, which was held. As a result, he was again ordered to remove the vehicles. However,

Schneider took no action to remove the vehicles from his property, nor did he seek judicial review of the abatement order. On December 21, 1989, the County, through its agent Reybro, abated the nuisance by towing the vehicles from the lot. Subsequently, Reybro dismantled or destroyed the vehicles and sold the remains as scrap.

Id. at 91.

On December 13, 1990, Schneider filed this action in the District Court for the Southern District of California, naming the County of San Diego, towing company Reybro, Inc., and ten County officials as defendants. Schneider alleged violations of the Fourth Amendment Search and Seizures Clause, the Fifth Amendment Due Process and Takings Clauses, and various other statutory and common law claims. On July 30, 1992, the district court granted summary judgment in favor of the County on all claims and dismissed from the action the County officials. Schneider appealed, and we reversed the district court's grant of summary judgment as to the due process and takings claims. Id.

On remand, the district court conducted a jury trial on Schneider's due process and takings claims against the County. The jury rendered a verdict in favor of the County on both claims. Schneider filed a motion for judgment as a matter of law, which the district court denied. Schneider appealed, and on April 24, 1998, we again reversed. We held in an unpublished disposition that Schneider was entitled to judgment as a matter of law on his procedural due process and takings claims and remanded for a determination of damages.

On remand, Schneider sought compensatory relief under the Just Compensation Clause. Schneider requested entry of judgment of $1 nominal damages against each defendant on his due process claim during pre-trial proceedings. The district court agreed that Schneider was "entitled by law" to nominal damages for his due process claim and that prejudgment interest would be determined by the court after the jury trial on damages for the takings claim. After a one day trial, the jury awarded Schneider a total of $67,795.50 in just compensation for his takings claim. Schneider then filed a Rule 59(e) motion to amend the judgment, requesting $64,931.07 in prejudgment interest for the takings claim and $2 in nominal damages for the due process claim, which the County contested.

The district court ruled that because of the delay in time between the taking and the payment of compensation, Schneider was entitled to additional compensation to ensure that he was justly compensated for the taking. The court rejected the usual practice of applying the postjudgment rate of interest for the amount of prejudgment interest and Schneider's consistent suggestion of use of the 52 week treasury bill rate extant before the taking of his vehicles. It found that because substantial evidence showed that Schneider's property would not have increased in value during the time period of the delay and the "equities of the case," it was more appropriate to use a variable interest rate, computing each year separately. Using that formulation, the court awarded a total amount of $34,145.54 prejudgment interest to Schneider. The court declined to award nominal damages for the procedural due process violation on the grounds that Schneider had failed to present evidence to the jury as to damages and that an award of nominal damages would be duplicative of the damage award for the takings violation. Schneider appealed.

II. Prejudgment Interest

The County contends that the district court erred by awarding any prejudgment interest on the takings claim. Schneider argues that the district court correctly awarded prejudgment interest, but erred in calculating the amount due him by adopting variable annual interest rates. We agree that the district court erred, but not in the manner either party suggests. Interest awarded as just compensation for a takings violation is not the equivalent of the prejudgment interest awarded here. The two forms of interest serve similar purposes (to compensate for delay), but have been addressed under entirely separate analytical frameworks. As discussed below, prejudgment interest and post-takings compensation in the form of interest are supported by different theoretical foundations, reviewed under different legal standards, and frequently involve different rates of interest.

A. Prejudgment Interest as Compensation for a Taking

Prejudgment interest is a measure that "serves to compensate for the loss of use of money due as damages from the time the claim accrues until judgment is entered, thereby achieving full compensation for the injury those damages are intended to redress." West Virginia v. United States, 479 U.S. 305, 311 n. 2, 107 S.Ct. 702, 93 L.Ed.2d 639 (1987). Whether prejudgment interest is permitted in a particular case is a matter of statutory interpretation, federal common law, and, in some instances, state law. See Monessen Southwestern Ry. Co. v. Morgan, 486 U.S. 330, 337-38, 108 S.Ct. 1837, 100 L.Ed.2d 349 (1988) (examining congressional intent, federal common law, and state law in recognition of prejudgment interest). "We review a district court's decision to assess prejudgment interest rates for abuse of discretion." Saavedra v. Korean Air Lines Co., Ltd., 93 F.3d 547, 555(9th Cir.1996) (citing Vance v. Am. Hawaii Cruises, Inc., 789 F.2d 790 (9th Cir.1986)).

An award of prejudgment interest as compensation for a taking, however, takes on a constitutional dimension. The Fifth Amendment entitles an individual whose property is taken by the government to "just compensation." First English Evangelical Church of Glendale v. County of Los Angeles, 482 U.S. 304, 315, 107 S.Ct. 2378, 96 L.Ed.2d 250 (1987). "Under[the just compensation] standard, the owner is entitled to receive `what a willing buyer would pay in cash to a willing seller' at the time of the taking." Kirby Forest Indus., Inc. v. United States, 467 U.S. 1, 10, 104 S.Ct. 2187, 81 L.Ed.2d 1 (1984) (internal quotations and citations omitted). When payment of fair market value is deferred for a period following the taking, "something more than fair market value is required to make the property owner whole, to afford him `just compensation.'" Albrecht v. United States, 329 U.S. 599, 602, 67 S.Ct. 606, 91 L.Ed. 532 (19...