U.S. v. 15.65 Acres of Land in Marin County, State of Cal.

• Citation: 689 F.2d 1329
• Decision Date: 10 September 1982
• Docket Number: 81-4101,Nos. 81-4062,s. 81-4062
• Parties: UNITED STATES of America, Plaintiff-Appellant/Cross-Appellee, v. 15.65 ACRES OF LAND in the COUNTY OF MARIN, STATE OF CALIFORNIA; Marin Ridgeland Company, a joint venture comprised of O.D.C. of California, Inc., a corporation; and J. H. Scheuer, a.k.a. James H. Scheuer; Housing Authority of the County of Marin; Redevelopment Agency of the County of Marin; County of Marin; and Unknown Owners, Defendants-Appellees/Cross-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1329

689 F.2d 1329

UNITED STATES of America, Plaintiff-Appellant/Cross-Appellee, v. 15.65 ACRES OF LAND in the COUNTY OF MARIN, STATE OF CALIFORNIA; Marin Ridgeland Company, a joint venture comprised of O.D.C. of California, Inc., a corporation; and J. H. Scheuer, a.k.a. James H. Scheuer; Housing Authority of the County of Marin; Redevelopment Agency of the County of Marin; County of Marin; and Unknown Owners Defendants-Appellees/Cross-Appellants.

Nos. 81-4062, 81-4101.

United States Court of Appeals Ninth Circuit.

Argued and Submitted March 9, 1982.

Decided May 25, 1982.

As Amended on Denial of Rehearing and Rehearing En Banc

Sept. 10, 1982.

Martin Green, Washington, D. C., argued, for the U. S.; Jacques B. Gelin, Dept. of Justice, Land and Natural Resources Div., Washington, D. C., on brief.

Jess Jackson, Burlingame, Cal., argued, for defendants-appellees/cross-appellants; Burton J. Goldstein, Goldstein, Barceloux & Goldstein, San Francisco, Cal., on brief.

Appeal from the United States District Court for the Northern District of California.

Before CHOY, SNEED, and SCHROEDER, Circuit Judges.

SNEED, Circuit Judge:

James H. Scheuer and Marin Ridgeland (both hereafter designated as the Company) owned a 164.03 acre tract, which they were developing for residential use. Their neighbors, Glass and Fitzsimmons, also intended to develop their lands. A condition to the latter developments was the dedication to public use of a road, which would provide southern access to the Company's property (see diagram, Appendix A). Optimal development of the Company's land depended upon such access.

In 1977, the government instituted contemporaneous condemnation actions against Glass, Fitzsimmons and the Company to acquire land for the Golden Gate National Recreation Area (G.G.N.R.A.). The condemnation trial for 15.65 acres of the Company's land began on July 28, 1980. The jury awarded $623,196 in "severance damages." In determining this amount, they were permitted, over objection, to consider the effect of both loss of access and a probable change to a much more restrictive zoning classification. The government contends that neither should have been considered. The Company cross-appeals the denial of its motion for post-judgment interest. Our jurisdiction rests on 28 U.S.C. § 1291. We reverse the judgment with respect to severance damages and remand for further proceedings. We also reverse the denial of the Company's motion regarding interest.

I. SEVERANCE DAMAGES

(1-3) Unless there is a taking, ¹ the government is not required to compensate a landowner even though its actions affect the value of his land. United States v. Fuller, 409 U.S. 488, 492, 93 S.Ct. 801, 804, 35 L.Ed.2d 16 (1973); Campbell v. United States, 266 U.S. 368, 371, 45 S.Ct. 115, 116, 69 L.Ed. 328 (1924). When there is a taking, the Fifth Amendment mandates payment of the value of the taken lands. Several rules have been developed for determining the extent to which this value includes so-called severance damages. First, severance damages, consisting of a diminution in value of the remainder resulting from the taking and use of the part of the land, are recoverable. United States v. Miller, 317 U.S. 369, 376, 63 S.Ct. 276, 281, 87 L.Ed. 336 (1943); United States v. 91.90 Acres of Land, 586 F.2d 79, 86 (8th Cir. 1978), cert. denied, 441 U.S. 944, 99 S.Ct. 2162, 60 L.Ed.2d 1045 (1979). Second, severance damages do not include any diminution in value arising solely from "the acquisition and use of adjoining lands of others for the same undertaking." Campbell v. United States, 266 U.S. at 372, 45 S.Ct. at 117; see also United States v. 10.0 Acres of Land, 533 F.2d 1092, 1097 (9th Cir. 1976) (Carter, J., dissenting); Gibson & Perin Co. v. Cincinnati, 480 F.2d 936, 944-45 (6th Cir.), cert. denied, 414 U.S. 1068, 94 S.Ct. 577, 38 L.Ed.2d 473 (1973).

Both rules lead to sensible results. A private seller, upon receiving a bid for a portion of his land and responding thereto in a rational manner, will fix his asking price at an amount that will compensate him for any diminution in value of the remainder of his land. The buyer must pay this price if he wishes to acquire the portion he seeks. On the other hand, a private landowner whose property has its value reduced by the acquisition and use of an adjoining neighbor's land by a third party buyer ordinarily cannot recoup this loss from either the neighbor or the third party buyer. Only the imposition of a duty by operation of law can alter this result. In the absence of such a duty, the third party buyer, having no need for any of the injured landowner's property, will pay him nothing, and the neighbor obviously will not be moved to share voluntarily the proceeds of his sale. Under these circumstances the injured landowner has no remedy. The government in condemnation proceedings is subject to the burdens, as well as the benefits, of these economic realities inasmuch as its liability, as the Court in Campbell explained, is no broader than that of a private party. 266 U.S. at 372, 45 S.Ct. at 116-117.

The application of these rules becomes complex when the injury to the landowner may be said to flow both from the taking and use of but a portion of his property and from the use to which the government puts land taken from a third party neighbor. At first blush the problem appears to be merely that of choosing which of the above two rules should apply. Reflection and case authority suggest, however, that a third rule is required. This rule appears in United States v. Pope & Talbot, Inc., 293 F.2d 822 (9th Cir. 1961), in which payment for reduced accessibility of land not taken was permitted when a dam project undertaken by the condemnor government flooded a road which traversed both the government's land and the property taken from the condemnee landowner. In that case we noted the existence of three factors that distinguished it from Campbell, the source of the second rule stated above: (1) the land taken from the condemnee landowner was indispensable to the dam project; (2) the land taken constituted a substantial (not inconsequential) part of the tract devoted to the project; and (3) the damages resulting to the land not taken from the use of the land taken were inseparable from those to the same land flowing from the condemnor government's use of its adjoining land in the dam project. 293 F.2d at 825. Thus, three elements, indispensability, substantiality, and inseparability, are necessary to negate the application of Campbell.

The necessity of these elements is also quite sensible. The element of indispensability assures that the government is being required to pay no more than a private buyer confronted with the same compulsion. In either event, indispensability affords the landowner the ability to demand payment for the injury to his remaining property, just as he is able to do so under the first rule stated above. Substantiality tends to assure the existence, in fact, of indispensability, and inseparability tends to assure that the injury to the land not taken does not arise from a use independent of the project with respect to which the property taken was indispensable.

The Company in this case did not attempt to utilize these elements in its efforts to recover for the decline in value of the land retained attributable to the loss of access and down-zoning. Nor can we conclude from the record that the district judge considered these elements. ² The jury charge itself lends support to this conclusion. ³ It may be that these elements nonetheless can be established on remand.

Notwithstanding the necessity of establishing the Pope & Talbot, Inc. linkage when compensation is sought for a decline in value attributable in part to the taking of a neighbor's property, the Company in this case would be entitled to compensation for such decline in value in its retained 148.38 acres if it were able to show by a preponderance of the evidence that this decline is solely attributable to the taking and use of its 15.65 acres. Obviously any decline attributable to the taking and use of the Glass and Fitzsimmons tracts would not be compensable under this approach. The loss of southern access would not appear to be compensable under this approach; ⁴ but the state of the record precludes a ready answer with regard to down-zoning. ⁵ Perhaps the Company can demonstrate that the probability of down-zoning was solely attributable to the taking and use of the 15.65 acres. In any event, on remand it is entitled to try.

For the reasons set forth above we must reverse the judgment below insofar as it awards severance damages in the amount of $623,196, and remand for further proceedings that are in accord with this portion of our opinion.

II.

THE CROSS-APPEAL: POST JUDGMENT INTEREST

The Company cross-appeals the denial of its motion for post judgment interest.

Although interest is usually not available on a judgment against the United States absent a statute, DeLucca v. United States, 670 F.2d 843 (9th Cir. 1982), the Fifth Amendment makes interest available when a taking precedes payment. United States v. 174.12 Acres of Land, 671 F.2d 313 (9th Cir. 1982); United States v. Johns, 146 F.2d 92, 93 (9th Cir. 1944). However, condemnees are not entitled to interest before the date of the taking. Danforth v. United States, 308 U.S. 271, 286, 60 S.Ct. 231, 237, 84 L.Ed. 240 (1939); United States v. 156.81 Acres of Land, 671 F.2d 336 (9th Cir. 1982). The issue before us, therefore, is when, if ever, did a taking occur?

The trial court held that the government had not yet taken the land because it had neither filed a declaration of taking nor entered into possession. However, there is no simple formula for establishing when property has been taken. Kaiser Aetna v. United States, 444 U.S. 164, 175, 100 S.Ct. 383, 390, 62 L.Ed.2d 332 (1979). Rather, deciding when a taking occurs requires an ad hoc inquiry into when " ...