City of Escondido v. Pac. Harmony Grove Dev., LLC

68 Cal.App.5th 213

283 Cal.Rptr.3d 540

CITY OF ESCONDIDO, Plaintiff and Respondent,

v.PACIFIC HARMONY GROVE DEVELOPMENT, LLC, et al., Defendants and Appellants.

D077549

Court of Appeal, Fourth District, Division 1, California.

Filed August 26, 2021

Blanchard Krasner & French, Steven M Silva, John F. Whittemore, La Jolla; Morrison & Foerster, Benjamin J. Fox, Matthew E. Ladew, Los Angeles, Mark C. Zebrowski, San Diego, and James R. Sigel, San Francisco, for Defendants and Appellants.

Dean Gazzo Roistacher, Lee H. Roistacher, Scott Noya, Solana Beach; Daley & Heft, and Dennis W. Daley, Solana Beach, for Plaintiff and Respondent.

HALLER, Acting P. J. Pacific Harmony Grove Development, LLC and Mission Valley Corporate Center, Ltd. (Owners) appeal the judgment entered in a condemnation case following the first phase of a bifurcated trial at which the trial court resolved certain legal issues concerning how to value the condemned property.

The City of Escondido (City) sought to acquire by condemnation from Owners a 72-foot-wide strip of land (the strip) across a mostly undeveloped 17.72-acre parcel (the Property) to join two disconnected segments of Citracado Parkway, a major road that runs through portions of the City's industrial areas on either side of the Property.¹ The City argued below that the strip should be valued under the Porterville doctrine ( City of Porterville v. Young (1987) 195 Cal.App.3d 1260, 241 Cal.Rptr. 349 ( Porterville )), which values condemned property at its undeveloped state (here, about $50,000) when the condemning agency can establish that (1) it would have conditioned development of the remainder of the property on dedication of the condemned portion, and (2) such a dedication requirement would be constitutional under Nollan v. California Coastal Commission (1987) 483 U.S. 825, 107 S.Ct. 3141, 97 L.Ed.2d 677 ( Nollan ) and Dolan v. City of Tigard (1994) 512 U.S. 374, 114 S.Ct. 2309, 129 L.Ed.2d 304 ( Dolan ), which require that a dedication requirement have an essential nexus and be roughly proportional to the public interest that would be served by denying development approval.

Owners argued the Porterville doctrine did not apply, and that the court should instead apply the "project effect rule," which disregards for valuation purposes a condemner's belated imposition of a dedication requirement as a means to drive down the price of property the condemner is likely to condemn. (See City of Perris v. Stamper (2016) 1 Cal.5th 576, 585, 205 Cal.Rptr.3d 797, 376 P.3d 1221 ( Stamper ); Code Civ. Proc.,² § 1263.330.) Owners maintained the City violated this rule by imposing dedication requirements on the Property long after it became probable that the City would condemn the strip to complete the Citracado Parkway extension project. Thus, Owners maintained the strip should be valued based on its highest and best use, without regard for the dedication requirement (about $960,176).

Owners also argued they were entitled to precondemnation damages caused by the City's unreasonable delay in pursuing condemnation proceedings and other unreasonable conduct. The City countered that it did not engage in unreasonable delay or conduct because it commenced condemnation proceedings shortly after it annexed the Property from county jurisdiction in 2015.

After a four-day bench trial, the court issued a comprehensive statement of decision ruling in the City's favor on all issues. The parties then stipulated to a judgment, which the court entered.

Owners appeal, contending the trial court erred by finding the Porterville doctrine applied, the project effect rule did not, and the City was not liable for precondemnation damages. For reasons we will explain, we find the City's positions more persuasive, and affirm the judgment.

PROCEDURAL AND FACTUAL BACKGROUND

Pretrial Procedure

On March 23, 2016, the City adopted a resolution of necessity declaring its intent to condemn the strip (and other portions of the Property not at issue here).

Two days later, on March 25, the City filed an eminent domain complaint against Owners. The City deposited funds with the state treasurer and took immediate possession of the strip.

By stipulation, the trial court bifurcated the trial so it could determine in the first phase whether the Porterville doctrine or project effect rule applied, and whether the City was liable for precondemnation damages. In the second phase, if needed, a jury would determine the amount of compensation and precondemnation damages the City owed Owners.

Trial – Phase One

Overview

The trial court heard the first phase of trial over four days in December 2018.

To support its position that the Porterville doctrine applied, the City presented evidence showing (1) the City would have required Owners to dedicate the strip in exchange for approval to develop the Property because (a) the city enacted an ordinance in 1993 generally requiring such dedications, (b) the City's long-term planning documents contemplated since 2002 that Citracado Parkway would eventually connect across the Property via the strip, and (c) the City had required other landowners in the area to make similar dedications to mitigate the impacts of industrial development; and (2) the dedication requirement would have been constitutional because it (a) had an essential nexus to mitigating traffic impacts caused by development of the Property, and (b) was roughly proportional to the extent of those development impacts as established by traffic studies and other analyses.

To support their position that the project effect rule applied instead, Owners maintained (1) it became probable that the City would condemn the strip in 2006 because the City entered into a development agreement that year with a hospital district and obligated itself to connect the Citracado Parkway segments; and (2) the City's dedication requirement did not arise until later, when the City amended its general plan in 2012 to restrict access to the Property from another road, thus requiring that primary access be taken from the Citracado Parkway extension.

Similarly, to support their claim for precondemnation damages, Owners maintained the 2006 agreement with the hospital district constituted the City's formal announcement of its intent to condemn the strip, which the City did not fulfill until 10 years later.

The City's Case

Witnesses

The City called two witnesses, both of whom were designated as percipient and expert witnesses.

Julie Procopio is the City's Director of Engineering Services and City Engineer. Her duties include reviewing development proposals to ensure they comply with City codes and standards, and to "evaluate the ... burdens associated with [a proposed] development and to weigh in on how those ... are mitigated to insure adequate infrastructure is provided." This includes assessing impacts on traffic, fire and life safety, utilities, drainage, and water quality.

John Martin is the City's Director of Community Development. His duties include implementing the City's planning documents, reviewing project submittals, and conducting environmental reviews.

Development and Regulatory History

Before 2015, the Property was within County of San Diego (County) jurisdiction, not City jurisdiction. Thus, the City could not approve its development or impose development conditions on it.

Nevertheless, as early as 1988, the circulation element of the City's general plan showed Citracado Parkway running through portions of the Property from north to south (though not in its currently proposed alignment). Procopio testified that a general plan is a long-range development plan that the state requires each city and county to maintain. All developments within a jurisdiction must either conform to the general plan, or amend it to allow the proposed development. A circulation element is the component of a general plan that shows existing and proposed street networks "intended to support the long-term orderly development of a city."

In 1993, the City adopted an ordinance setting forth general dedication requirements for property developers. The ordinance provided that "[a]ny applicant who constructs any new building ... shall also construct public improvements across all unimproved or underimproved frontage and shall grant necessary public dedication." The ordinance defined "public dedication" as "the dedication ... of all easements and rights of way by the applicant to the city, in conformance with the circulation element of the general plan ...." The City amended portions of this ordinance several times, but none of those amendments substantively altered these public dedication requirements.

Procopio testified that when a developer seeks City approval of a project, the City reviews the proposal for completeness and compliance with City land use requirements. This includes enforcing the 1993 ordinance by ensuring the proposed development dedicates and constructs sufficient infrastructure to support the development and mitigate its impacts "in conformance with the general plan." Procopio testified that under the California Environmental Quality Act (CEQA), "a project would have to show that it can mitigate its impacts or ... the city would be compelled to deny that project."

Martin similarly testified that the City would ensure that "any development proposal ... was in conformance with [the] general plan before [the City] would allow approval."

In the early 2000's, Owners purchased the property directly east of the Property (Pacific Oaks Place). In exchange for City approval to subdivide this property into nine lots, Owners expanded Harmony Grove Road on the property's northern frontage, and dedicated and built a new interior industrial classification road within the property.

In 2002, the City approved development of "a high quality industrial/business park," commonly known as the Escondido Research and Technology Corridor (ERTC), north of the Property. The City thus amended its general plan and...