In Joffe v. City of Huntington Park, No. B222880 (published Dec. 2, 2011), the California Court of Appeal affirmed the trial court's dismissal (technically, the trial court "demurred" -- remember, this is California) of the plantiffs' claim for inequitable precondemnation activities under Klopping v. City of Whittier, 8 Cal.3d 39 (1972).
Plaintiff manufactures furniture at its property in Huntington Park, California, and
[b]eginning in 2002, the City defendants and the developer defendants repeatedly expressed the intent and desire to acquire and develop two adjacent 40 acre sites for the purpose of building and developing 920,000 square feet of buildings which would include numerous retailers, shops and restaurants. . . . It specifically included the property owned by Joffe, where Plycraft conducted its furniture manufacturing business. The project development was designated "El Centro de Huntington Park" (hereafter, the project).During the period 2002 through 2008, plaintiffs were repeatedly informed by both the City defendants and the developer defendants that the project was on track and that Joffe‟s property was going to be acquired by the City defendants and utilized as part of the project.
Slip op. at 3-4. As a result, the plaintiff lost customers and eventually went out of business at that location, See slip op. at 7-8. They sued under an inverse condemnation theory. The trial court, as noted above, dismissed.
The Court of Appeal affirmed. It concluded that under Klopping (in which the California Supreme Court "held that a valid claim for inverse condemnation could be based on governmental actions preceding an actual, or even a de facto, taking of property," slip op. at 14 (emphasis original)), the plaintiffs did not "unreasonably delay" filing an eminent domain action, and did not undertake "other unreasonable conduct." The court first contrasted the facts in Klopping, asserting in that case "there was no doubt that the city of Whittier has announced its intent to condemn" and actually commenced with with condemnation. Slip op. at 17. By contrast, "[i]n the instant case, however, the City defendants' conduct is not quite so clear." Id. Huntington Park had not adopted a resolution of necessity, and the court concluded the city had not undertaken enough action that resulted "in a special and direct interference with the owner's property." Id. In other words, the plaintiff must have been singled out from other landowners.
Putting it another way, the Klopping court explained that precondemnation announcements alone should not subject public entities to liablity, and that landowners must bear some incidental loss resulting from such general planning announcements. Thus, liability can attach only when the public entity‟s conduct has passed from the planning stage into the acquiring stage.....The great bulk of the conduct of the City defendants, on which plaintiffs seek to base their Klopping cause of action, constitutes general planning with no specific and direct interference with plaintiffs' property.
Slip op. at 18-19 (emphasis original). The court concluded that none of the activities undertaken by the city went from "mere" planning into actual acquisition, and it did not matter that the city had appraised the property (and caused the plaintiff to appraise the property), and the mayor told the property owner that it would either have to sell or be taken. "Thus, obtaining an appraisal of plaintiffs' land and business constituted a necessary preliminary step toward possibly acquiring the property. We are not prepared to hold that when a public entity obtains an appraisal of a property with an eye toward potential acquisition, the public entity‟s conduct has evolved from '“planning' to 'acquiring.'" Id. at 20.
Nor did the plaintiffs state a claim for other unreasonable conduct. Acknowledging that "the law is unclear as to whether Klopping requires an announcement of intent to condemn if liablity is based on unreasonable conduct other than postannouncement delay," slip op. at 23, the court held that the plaintiffs had not alleged anything but delay.
Plaintiffs allege only that the City defendants announced a project, sought a grant to fund the project, obtained an appraisal preliminary to making an offer for a parcel for the project, and informally told a landowner that the property would be acquired for the project. None of these acts can possibly constitute unreasonable conduct – at least, not in the absence of additional allegations.
Slip op. at 25. Finally, the court held that the plaintiffs had not alleged promissory estoppel. Id. at 26-28.
This is the same Court of Appeal that reached a similar conclusion in a similar case (different Division, however), and this case raises the same question: if these actions were not the city making the preliminary steps to take the property by eminent domain, then just what are we supposed to imagine the city was doing?
These were typical ("mere," in the court's view) "planning" activities, which, in order to remain above the due process and takings baselines, are supposed to only be considering regulation of property and not acquisition, since the government's exercise of its police power is not the same as an exercise of the eminent domain power. Despite Midkiff's conflation of the two powers, they remain distinct and are (supposed to) be subject to distinct limitations. Do municipal government routinely inform property owners that they intend to take their land, that appraisals are necessary, and that it's best to sell because otherwise we will take? Yes, when they intend to take property. But that doesn't sound like planning--mere or otherwise--to us, unless the court is really just reminding us all that we should understand that our property really isn't ours and is always subject to condemnation, so until the government takes some formal step to acquisition, the distinct economic losses that stem from these actions are just something that comes with the territory. While it is undoubtedly true as a general proposition that private property is always subject to being condemned for public use, the city's activities in this case seemed to go well beyond that general understanding and cross over into concrete steps towards actual acquisition.
What seems to have driven this decision is a desire to keep the government from having to actually pay for the damage it causes when it clouds the use of property. We're guessing that when the city started down this path, it had the funds to pay for the property, but that in the intervening time those funds dried up, and it put the redevelopment on hold. And if happy days are here again? We're betting that the project starts right up again.
And the very real damages resulting from the cloud on use while the government gets it act together? Why that's just incidental.
Joffe v. City of Huntington Park, No. B222880 (published 12/2/2011)
