Santa Ana
Project Authority v. Castle & Cooke
Filed 8/24/12 Santa Ana Watershed Project Authority v. Castle & Cooke Lake Elsinore West
CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
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as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for purposes
of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF
FOURTH APPELLATE DISTRICT
DIVISION TWO
SANTA ANA
WATERSHED PROJECT AUTHORITY,
Plaintiff
and Respondent,
v.
CASTLE & COOKE LAKE ELSINORE WEST, INC. et al.,
Defendants
and Appellants.
E052217
(Super.Ct.No.
RIC495874)
OPINION
APPEAL from the Superior
Court of
County. Gloria Trask,
Judge. Reversed.
Cox, Castle & Nicholson, Edward C.
Dygert, Kenneth B. Bley and James R. Repking for Defendants and Appellants.
Aklufi and Wysocki, Joseph S.
Aklufi, David L. Wysocki; Greines, Martin, Stein & Richland and Robert
Olson for Plaintiff and Respondent.
Castle & Cooke Lake Elsinore
West, Inc., and Castle & Cook Alberhill Ranch, LLC, defendants and
appellants (hereafter collectively referred to as Castle & Cooke), appeal
from the stipulated judgment entered in this
court granted the motion of Santa Ana Watershed Project Authority, defendant
and respondent (hereafter SAWPA), to exclude evidence of severance damages at
trial. The parties stipulated to entry
of judgment awarding Castle & Cooke $5,179 as the fair market value of the
real property SAWPA took for a pipeline easement. In this appeal, Castle & Cooke contend
the trial court’s ruling was wrong and therefore the judgment must be reversed. We agree, for reasons we explain below.
SUMMARY OF
FACTS
The circumstances giving rise to this eminent domain action are not in
dispute.
(referred to as Reach V) of the Santa Ana Regional Interceptor System (SARI) in
Lake Elsinore on what it believed were existing public rights of way. SARI is a regional pipeline that carries up
to 30,000,000 gallons per day of nonreclaimable wastewater (referred to as salt
water, or brine) from the Santa Ana River Watershed to treatment facilities in Orange
County and eventual disposal in the Pacific Ocean. In 2006, Castle & Cooke, which own 400
acres of real property in Lake Elsinore,
their property, and not within existing public rights of way as SAWPA
originally thought.
title="">[3]
As a result of Castle & Cooke’s discovery, in March 2008 SAWPA
filed the eminent domain action that is the subject of this appeal to acquire
nonexclusive easements for the segments of the SARI pipeline on Castle &
Cooke’s property. SAWPA sought and
obtained prejudgment possession of the subject property, and deposited with the
court $7,455, the fair market value of the property taken, and therefore the
compensation SAWPA estimated it owed to Castle & Cooke as a result of the
taking.
Before trial, SAWPA filed various motions in limine including one to
preclude Castle & Cooke from introducing evidence to show severance
damages, i.e., damage to Castle & Cooke’s remaining property caused by the
SARI pipeline. Castle & Cooke, in turn,
filed a motion in limine asking the trial court to define the larger parcel,
which they contend is the first step in calculating severance damages.
A hearing on both motions began March 3, 2010, and ended on August 12,
2010. Four witnesses testified at the
hearing—SAWPA’s appraiser, its project manager, Castle & Cooke’s
development engineer, and their appraiser.
SAWPA’s appraiser testified, in pertinent part, that in his opinion the
pipeline did not cause damage to Castle and Cooke’s remaining property and therefore
there were no severance damages. Because
he was of the opinion there were no severance damages, SAWPA’s appraiser did
not define the larger parcel. Castle and
Cooke’s appraiser, in turn, testified that the pipeline (which runs through
three separate parcels of property) will make it more difficult to develop the
remaining property and therefore it reduces the fair market value of the
remaining property as a result of which they were entitled to severance
damages.
Ultimately, the trial court found that Castle & Cooke failed to
support their severance damage claim with evidence that the SARI “pipeline
interfered with, or diminished the value of, the use and developability [
improperly based on conceptual, unapproved, speculative plans for development
that had no other purpose than to attempt to enhance their damage claim.†Because the trial court found Castle &
Cooke had not established their severance damage claim, it ruled that all
evidence of such damages was inadmissible at trial on the issue of just
compensation. In other words, the trial
court found as a matter of law that Castle & Cooke was not entitled to
severance damages.
Castle & Cooke challenge that ruling in this appeal.
DISCUSSION
The issue raised in this appeal—whether
the trial court correctly found that severance damage evidence was inadmissible
at a trial—was addressed and resolved in
Metropolitan Water Dist. of So.
California v. Campus Crusade for Christ, Inc. (2007) 41 Cal.4th 954 (
opinion.
1.
STANDARD
OF REVIEW
The trial court considered evidence presented by both SAWPA and Castle
& Cooke before granting SAWPA’s motion to exclude from trial all evidence
of severance damages. In granting
SAWPA’s motion, the trial court effectively granted summary adjudication in
favor of SAWPA and against Castle & Cooke on the severance damage
issue. In other words, the issue in this
appeal does not involve an exercise of the trial court’s discretion in
assessing the admissibility of evidence.
Instead, it involves an issue of law, namely whether the evidence
presented in the trial court created a factual issue regarding severance
damages. We review issues of law, and
orders granting summary adjudication, de novo.
(Hill Brothers Chemical Co. v.
Superior Court (2004) 123 Cal.App.4th 1001, 1005; Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 860; see
also City of Livermore v. Baca (2012)
205 Cal.App.4th 1460, which analogizes a trial court’s ruling on an in limine
motion to exclude all evidence on a particular issue as equivalent to a nonsuit
on that issue and thus subject to de novo review.)
2.
ANALYSIS
The severance damage issue in this appeal has both a substantive and a
procedural component. The substantive
component involves the meaning of the term “severance damage,†which is used to
describe both the injury, i.e., damage to the remaining property caused by the
taking, as well as the damages awarded when such an injury exists, i.e., the
difference in the fair market value of the remaining property before and after
the taking. More particularly, “When the
property taken is part of a larger parcel, the owner is compensated not merely
for the injury to the part taken[
but also for the injury, if any, to the remainder. [Citation.]
Compensation for the injury to the remainder is the amount of the damage
to the remainder caused by the taking, reduced by the amount of the benefit to
the remainder caused by the taking.
[Citation.] Such compensation is
commonly called ‘severance damages.’
[Citation.]†(
In other words, “‘“Where the property taken constitutes only a part of a
larger parcel, the owner is entitled to recover, inter alia, the difference in the fair market value of his property
in its ‘before’ condition and the fair market value of the remaining portion
thereof after the construction of the improvement on the portion taken. Items such as view, access to beach property,
freedom from noise, etc. are unquestionably matters which a willing buyer in
the open market would consider in determining the price he would pay for any
given piece of real property.â€
[Citation.] Severance damages are
not limited to special and direct damages, but can be based on
that causes a decline in the fair market value of the property.’ [Citation.]â€
(Campus Crusade, at p. 971.)
The procedural component of
severance damages relates to the fact that in eminent domain actions all issues
except compensation are decided by the court.
(Campus Crusade,
relating to compensation are resolved by the court. (Ibid.) Relying on the noted legal principle, the
plaintiff water district in Campus
constitutional and decisional law, all
issues having to do with the existence of, or entitlement to, severance damages
are entrusted to the trial judge,’ such that ‘[o]nly after the trial judge has
determined that severance damages exist does the jury consider the amount of
those severance damages.’†(
that questions relating to the measurement of severance damages can be readily
distinguished from questions relating to the entitlement to them in the first
place but, as [the Court has] previously cautioned, the two concepts are not
necessarily ‘so easily separable.’
[Citation.] Even if these two
concepts can be separated for purposes of allocating decisionmaking between the
court and the jury, [the plaintiff water district’s] proposed rule does not
find much support in the law. Severance
damages ‘normally are measured by comparing the fair market value of the
remainder before and after the taking.’
[Citation.] The fair market value
of a property is a fact to be determined by the jury. [Citations.]
‘The jury is entitled to and should consider those factors which a buyer
would take into consideration in arriving at a fair market value, were [the
buyer] contemplating a purchase of the property.’ [Citation.]â€
(Ibid.)
In rejecting the plaintiff water
district’s “theory that entitlement to severance damages is for the court and
only the amount thereof is for the jury,†the Supreme Court acknowledged that
in some cases there are issues the court must resolve as “a predicate to the
award of severance damages.†(
For example, the Supreme Court has held when the facts of a case raise
the question, the trial court must determine as an issue of law what
constitutes the larger parcel, and whether separate parcels may be aggregated
and considered as one large parcel. (
In this case, as in
constructed a pipeline on property the agency acquired by eminent domain, and
the completed pipeline runs through property owned by the condemnee. In this case, as in Campus Crusade, the condemnee identified various factors created by
the pipeline’s presence on the condemnee’s remaining property that affect the
fair market value of that remaining property.
Those factors in Campus Crusade
included whether the improvement—a segment of the Inland Feeder project, which
is a 43-mile pipeline carrying water from Devil Canyon to Diamond Valley (
pipeline is only four feet below the surface where it crosses the San Andreas
Fault in order to facilitate repair in the event it ruptures during an
earthquake (ibid.)); the adverse or
negative visual and aesthetic impacts on landscaping resulting from the shallow
placement of the pipe; and limitations on development caused by grading
restrictions and pipeline placement. (
effect of these factors on the fair market value [of the remaining property] is
not conjectural, speculative, or remote, it is for the jury to decide the extent to which they may affect the value of the
property. [Citations.]†(Id.
at pp. 972-973.) Therefore, when “the
property owner produces evidence tending to show that some other aspect of the
taking—such as risk of a pipeline rupture—‘naturally tends to and actually does
decrease the market value’ of the remaining property, it is for the jury to
weigh its effect on the value of the [remaining] property, as long as the
effect is not speculative, conjectural, or remote. [Citation.]â€
(Id. at p. 973.)
Castle & Cooke argued in the trial court that the fair market
value of its remaining property, i.e., the property through which the SARI
pipeline runs, was reduced by the pipeline because (a) structures that might be
built as part of future development of the property cannot be built on top of
the pipeline easements, a factor referred to in the trial court as site
constraints; (b) the pipeline might rupture and cause damage to surrounding
property; (c) the pipeline could make it more difficult to connect utilities to
structures that might be built as part of future development of the property;
(d) the fact that the pipeline carries “hazardous waste†or brine would have to
be disclosed to potential buyers; (e) the pipeline could affect future grading
on the remaining property because SAWPA might limit the amount of dirt a future
developer would be allowed to place over the pipeline; and (f) future
development of the property might require a prospective buyer to obtain
approval from SAWPA before developing the property, which adds an additional layer
of administrative discretion.
As previously stated, “Where the property taken constitutes only a
part of a larger parcel, the owner is entitled to recover, inter alia, the difference in the fair market value of his property
in its ‘before’ condition and the fair market value of the remaining portion
thereof after the construction of the improvement on the portion taken. Items such as view, access to beach property,
freedom from noise, etc. are unquestionably matters which a willing buyer in
the open market would consider in determining the price he would pay for any
given piece of real property.†(
(1969) 70 Cal.2d 282, 295.) Severance
damages are not limited to special and direct damages, but can be based on any
factor, resulting from the project, that causes a decline in the fair market
value of the property. (
(1988) 205 Cal.App.3d 1334, 1345.)
We think it fairly obvious that in determining the fair market value
of the remaining property, a willing buyer would want to know about the SARI
pipeline, and therefore the seller would have to disclose the existence of the
pipeline.
willing buyer would consider each of the factors Castle & Cooke cited in
the trial court, and set out above, in determining what price to pay for the
remaining property. In short, the
location of the pipeline and its effect on the placement of future structures,
the fact that the pipeline carries millions of gallons of brine, the
possibility it might rupture, that the presence of the pipeline could make it
more difficult to connect utilities, that it might affect future grading plans,
and that SAWPA might insist on approving future development of the property all
are factors that naturally tend to affect the fair market value of the
property. Castle & Cooke’s engineer
testified that the pipeline is a development constraint that a future developer
would have to work around, and their appraiser testified that the cited factors
actually do decrease the market value of the property.
SAWPA, in turn, argued in the trial court, as it does in this appeal,
that the noted factors do not decrease the value of the remaining
property. For example, SAWPA contends
that the pipeline does not create site constraints first because it is buried
under existing or planned streets in two parcels and on the third parcel where
a part of the pipeline is not under existing or future streets, there are many
other parts of the property on which a buyer could build and therefore the
highest and best use of the property is unchanged.
be built on top of the pipeline. Whether
that fact affects the fair market value of the property is a question for a
jury to decide. If, as SAWPA contends,
it is not difficult to work around the pipeline because there are many site
configurations that do not involve building on top of the pipeline, then a jury
presumably would find that Castle & Cooke did not suffer damage as a result
of the limitation on site configurations caused by the pipeline.
pipeline could rupture and release thousands of gallons of brine. Instead, SAWPA argues that the possibility
does not affect the value of Castle & Cooke’s remaining property because
there was no evidence the content of the pipeline is hazardous to human health,
and unlike the pipeline in Campus Crusade,
there was no evidence the pipeline was designed to rupture in an
earthquake. Again, SAWPA’s argument does
not refute the possibility of a rupture or leak in the pipeline. In fact, Castle & Cooke presented
evidence in the trial court to show that in 2006 the pipeline leaked when a
contractor hit it, and the cost of cleaning up, which included disposing of
brine-saturated soil, was $700,000. As
with the other factors Castle & Cooke cited as supporting severance
damages, the possibility the SARI pipeline could rupture is an issue for a jury
to consider in deciding whether the presence of the pipeline affects the fair
market value of Castle & Cooke’s remaining property.
We recognize in reaching this conclusion that language in
suggests the trial court should make a threshold determination, as a matter of
law, whether the effect of the improvement is “speculative, conjectural, or
remote.†(Campus Crusade, supra, 41
Cal.4th at p. 973.) The issue regarding
severance damages in Gas & Electric
Co. v. Miller & Lux Inc. (1931) 118 Cal.App. 140 (Miller & Lux), which the Supreme Court cites in
quoted language, was whether injury caused not by the improvement (a gas line)
but by future speculative events such as employees of the gas company
trespassing on the remaining property and damaging crops, supports a severance
damage claim. As stated in
severance damage must be based upon some real physical disturbance of a
property right which naturally tends to and actually does decrease the market
value and that mere fears of remote or contingent possibilities of damage are
not sufficient. [Citations.]†(Miller
& Lux, at p. 144.)
In this case, as in Campus
Crusade, the physical disturbance of a property right consists of the
pipeline that runs through the condemnee’s remaining property. That disturbance is real, not conjectural or
speculative. Although SAWPA disputes
that the disturbance reduces the value of the remaining property, that issue
must be resolved by a jury. In short,
this is not a case in which severance damages are based on a speculative future
injury to the remaining property.
Castle & Cooke presented evidence to show the effect of the SARI
pipeline on each of the three parcels of real property through which the
pipeline runs. Their appraiser expressed
the opinion that the effects reduced the fair market value of the property from
what it was before the SARI pipeline was installed. Whether the effect exists and if so the
extent to which it reduces the fair market value of the remaining property
below what it was before the pipeline was installed is a question of fact for a
jury to determine. Therefore, we
conclude the trial court erred in ruling that severance damage evidence was
inadmissible at a trial in this case.
DISPOSITION
The judgment is reversed. Castle & Cooke to recover their costs on
appeal.
NOT TO BE PUBLISHED IN OFFICIAL
REPORTS
MCKINSTER
J.
We concur:
RAMIREZ
P.
J.
KING
J.
name="_ftn1" title=""> [1] Because they are not in dispute, we take the
majority of our facts from the parties’ briefs.
name="_ftn2" title=""> [2] SAWPA takes issue with this fact and contends
that Castle & Cooke actually own more than 900 contiguous acres, all but 31
of which are subject to the Alberhill Ranch Specific Plan. The number of acres Castle & Cooke
actually own is not relevant to any issue in this appeal.
