Terminals Equipment Co. v. City and County of San Francisco

• Citation: 270 Cal.Rptr. 329,221 Cal.App.3d 234
• Decision Date: 25 May 1990
• Docket Number: No. A046428,A046428
• Court: California Court of Appeals
• Parties: TERMINALS EQUIPMENT CO., INC., et al., Plaintiffs and Appellants, v. CITY AND COUNTY OF SAN FRANCISCO et al., Defendants and Respondents.

Page 329

270 Cal.Rptr. 329

221 Cal.App.3d 234

TERMINALS EQUIPMENT CO., INC., et al., Plaintiffs and Appellants, v. CITY AND COUNTY OF SAN FRANCISCO et al., Defendants and Respondents.

No. A046428.

Court of Appeal, First District, Division 3, California.

May 25, 1990.

Review Denied Aug. 23, 1990.

Howard N. Ellman, John D. Hoffman, Ellman, Burke & Cassidy, Mary-Noel Pepys, San Francisco, for plaintiffs and appellants.

John H. Erickson, Alice M. Beasley, Erickson, Beasley & Hewitt, John D. Rogers, Louise H. Renne, City Atty., Andrew W. Schwartz, Deputy City Atty., San Francisco, for defendants and respondents.

WHITE, Presiding Justice.

Terminals Equipment Co., Inc. (TEC), and Marine Terminals Corporation (MTC) appeal from the judgment dismissing their complaint and from an order staying discovery in this matter. Both the judgment and the order appealed from were entered following the sustaining of demurrers to the complaint, with leave to amend, on the grounds of failure to allege facts sufficient to state a cause of action. We affirm.

I

We review the facts alleged in the complaint in the light of the well-established principle that in any appeal from a judgment of dismissal sustaining a demurrer to a complaint, allegations of the complaint which are not contrary to law or to a fact of which this court may take judicial notice must be deemed to be true. (Dale v. City of Mountain View (1976) 55 Cal.App.3d 101, 105, 127 Cal.Rptr. 520.)

Appellants' complaint alleges that appellant TEC is the owner of certain real property (hereinafter referred to as the Property) located at 261-289 Steuart Street in San Francisco, and that it has leased all or part thereof to appellant MTC, an "affiliated" company. TEC and MTC are engaged in the business of providing stevedoring services at various ports in California. The property comprises approximately 31,400 square feet and is improved with a two-story office building together with a smaller building used for offices and warehousing. It has been used by TEC and MTC for their business and corporate headquarters since approximately 1947.

According to appellants' complaint, as of 1978 the buildings on the Property had become "antiquated and outmoded, and ... inadequate for [appellants'] purposes because of the growth of their businesses and related office operations." Appellants wanted to demolish the old buildings and construct a much larger, multi-story office building on the Property.

In 1977, the Board of Supervisors of respondent City and County of San Francisco (City) adopted a resolution designating a portion of the City's northeast waterfront a "Survey Area" to be studied for possible redevelopment. Appellants' Property was included in this Survey Area. Thereafter, respondents San Francisco Redevelopment Agency (Agency) and City undertook a study of the Survey Area, and formulated various redevelopment "scenarios."

On August 23, 1979, the City Planning Commission adopted a resolution establishing a "Development Program" calling for appellants' Property and adjacent parcels to be redeveloped as a public waterfront park and open-space area, with improvements limited to a single restaurant and plaza, and with the Embarcadero roadway rerouted to the west. Under the Planning Commission resolution, this Development Program was adopted as the basis for "discretionary review" of all permit applications within the Survey Area.

On October 9, 1979, TEC filed an application with the City's Central Permit Bureau for a building permit to demolish the existing two-story office building on the Property, and to build a new eight-story office building comprising approximately 207,000 square feet of rentable space. The ground floor of the new building would be rented for commercial and restaurant use, and a portion of the upper seven stories would be used for appellants' corporate headquarters. The remainder of the new space would be rented to third parties. Pursuant to its resolution concerning the Development Program for the Survey Area, the City Planning Commission exercised its authority of discretionary review and refused to approve TEC's building permit.

On or about January 5, 1981, the Agency and the City Board of Supervisors approved and adopted a redevelopment plan (the Plan) for substantially the same area as was covered by the Survey Area. This redevelopment Plan enunciated substantially the same proposed uses, plans and objectives as had been set forth in the Development Program. Appellants' Property was included in the area covered by the Plan, which designated the Property for development as a recreational waterfront park, the rerouting of the Embarcadero roadway and limited development of up to 12,000 square feet for restaurant purposes; no provision is made for any other commercial uses. According to appellants' complaint, the redevelopment Plan provides that: real property located within the area at issue may be acquired by purchase, condemnation, or eminent domain if a building within the Plan area "... 'must be removed in order to effect a change in land use as provided in [the] Plan' "; the zoning of all property within the Plan area shall be revised " 'to conform to the land uses and development authorized by this Plan' "; all building permit applications for property within the Plan area will be referred to the Agency prior to approval by the City; and " 'no building permit shall be issued unless it conforms' " to the redevelopment Plan.

On or about January 15, 1981, the City Planning Commission disapproved appellant TEC's application for a building permit on the basis of its inconsistency with the redevelopment Plan. Because of the Planning Commission's disapproval, the City's Central Permit Bureau refused to process the building permit application further. There is no allegation in the complaint that appellants challenged this decision, either by appealing to the City's Board of Permit Appeals or by petitioning for a writ of mandate in Superior Court.

The complaint next alleges that in or about April through June 1981, discussions took place between the City, the Agency, and appellants concerning the latter's possible participation in projects under the redevelopment Plan. These discussions were not fruitful. On or about July 14, 1981, the Agency denied appellant TEC's request that its Property be aggregated with other parcels in the Plan area for development as a hotel. Appellants then informed respondent that they would not voluntarily participate in the Plan either by leasing the Property to respondents or by undertaking a joint venture with respondents, because they could not obtain "a reasonable economic return" thereby. Instead, appellants proposed that the Agency purchase the entire Property.

The complaint alleges that thereafter, although appellants made "numerous inquiries" of the Agency and of various City agencies to ascertain when acquisition of the Property would proceed, it never obtained a firm response. According to the complaint, although City and Agency officials have on "numerous occasions ... assured" appellants that the Property would eventually be acquired by negotiation or through the power of eminent domain at some future date, "[t]he Agency has stated ... that it is not able to proceed with acquisition" because of various matters affecting the Plan and the proposed projects thereunder, including the future of the Embarcadero freeway, public transportation facilities in the area, and other subjects. There is no allegation in the complaint that either respondent has commenced negotiations with appellants to purchase the Property, has made any offers to purchase the Property, or has made any statements indicating a present intention to acquire the Property by condemnation or otherwise.

For seven years, the matter continued in this state of limbo. According to the complaint, in or about March 1987, appellants made some more inquiries to respondents about possible acquisition of the Property, without success. Finally, on June 10, 1988, appellants filed the instant complaint for inverse condemnation and pre-condemnation damages. On April 14, 1989, the trial court sustained respondents' demurrers on grounds of failure to state a cause of action, and granted leave to amend.

Thereafter, a hearing was held on appellants' previously stayed discovery motions seeking to compel production from respondents of certain internal memoranda. Following the hearing, the trial court found that "until [appellants] can state a valid cause of action, they cannot make the requisite showing to overcome the government privilege stated in Evidence Code section 1040," and ordered that the stay of discovery remain in effect "until [appellants] file an amended complaint that is not subject to demurrer." Rather than amend their complaint, appellants elected to stipulate to judgment. On June 7, 1989, the trial court filed the stipulated judgment.

II

The central issue on appeal is whether the trial court was correct in sustaining the demurrers to appellants' complaint for failure to state facts constituting a cause of action. We conclude that there was no error.

In our review of this judgment of dismissal sustaining a demurrer to a complaint, we are guided by well-settled principles governing the testing of the sufficiency of the complaint. "A demurrer admits all material and issuable facts properly pleaded. [Citations.] However, it does not admit contentions, deductions or conclusions of fact or law alleged therein. [Citations.]" (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713, 63 Cal.Rptr. 724, 433 P.2d 732; see also White v. Davis (1975) 13 Cal.3d 757, 765, 120 Cal.Rptr. 94, 533 P.2d 222.) Thus, while allegations of the complaint are deemed to be true in ruling on a demurrer, "where an allegation is contrary to law or to a fact of which a court may take judicial notice, it is to be treated as a nullity [citation]." (Dale v. City of Mountain...