COUNTY OF VENTURA, Plаintiff and Appellant, v. CHANNEL ISLANDS MARINA, INC., Defendant and Respondent.
No. B183532
Second Dist., Div. Six.
Jan. 30, 2008.
159 Cal. App. 4th 615
COUNTY OF VENTURA, Plaintiff and Appellant, v. CHANNEL ISLANDS MARINA, INC., Defendant and Respondent.
Noel A. Klebaum, County Counsel, Roberto R. Orellana, Assistant County Counsel; Demetriou, Del Guercio, Springer & Francis, Jeffrey Z. B. Springer, John E. Mackel III, Isabel Birrueta; Greines, Martin, Stein & Richland and Timothy T. Coates for Plaintiff and Appellant.
Ferguson, Case, Orr, Paterson & Cunningham, Michael W. Case and Douglas E. Kupler for Defendant and Respondent.
GILBERT, P. J.—Bad behavior does not establish damages: causation does. Taking claims do not arise from a breach of contract.
With these two principles in mind, we discuss this case concerning a dispute over leasehold improvements installed by a private party on land leased from the County of Ventura (County). At the end of the lease term, County sued the lessee to prevent it from removing the improvements. The lessee cross-complained for breaсh of lease and inverse condemnation. The trial court found that County took the lessee‘s property and breached the lease by not consenting to removal of the improvements. But the court also found that had County consented, California Coastal Commission regulations would have prevented removal of the improvements.
Nevertheless, the trial court submitted the question of damages to the jury based on inverse condemnation and instructed the jury to value the improvements in place. The jury returned a verdict against County for $3.5 million.
We conclude that inverse condemnation is not an appropriate theory of recovery where the wrong is nothing more than a breach of lease. We also conclude that under any other theory of recovery, in-place value is not an appropriate measure of damages where the lease has ended. Here, the California Coastal Commission regulations, not County, were the cause of any loss suffered by the lessee. We reverse.
FACTS
Channel Islands Harbor (harbor) is located in the City of Oxnard and is owned by the County of Ventura.
On April 30, 1963, County entered into a lease (the ground lease) with Channel Islands Marina, Inc. (CIM), to construct and operate a marina at the harbor. The duration of the ground lease was for 40 years and expired on April 30, 2003. There were no improvements on the real property when the lease was executed.
Pursuant to the terms of the ground lease, CIM constructed both waterside and landside improvements, which include numerous boat slips and three buildings. CIM subleased the individual slips to boat owners.
In late 1998, CIM sought to renegotiate the ground lease. By 2002, the parties reached an impasse.
In December 2002, counsel for CIM, Michael Case, wrote to Lyn Krieger, the harbor director, outlining the parties’ impasse. Case challenged Krieger‘s allegation that County only need pay CIM salvage value for the improvements. It was Case‘s opinion that County was required to pay fair market value. Case stated that, if the matter could not be resolved, CIM would notify the live-aboards by January 2003 that their leases would expire in March.
On January 5, 2003, CIM sent 60-day eviction notices to the live-aboards, directing them to move so demolition could begin. Several weeks later, CIM offered to sell the improvements to County for $3.2 million.
CIM notified Krieger by letter that it would investigate the processes for acquiring the necessary permits, should it become necessary to remove the
On April 18, 2003, County offered to purchase the improvements for $50,000. CIM rejected County‘s offer. CIM‘s appraiser valued the improvements at $3.5 million; County‘s appraiser submitted a value under $50,000.
County‘s Complaint
On April 22, 2003, County filed an action against CIM and applied for a preliminary injunction and temporary restraining order enjoining CIM from evicting tenants and removing leasehold improvements. The trial court denied County‘s request for injunctive relief.
In its first amended complaint (filed June 24, 2003), County asserted causes of action for breach of the ground lease, public nuisance, and declaratory relief, seeking reentry and damages. It claimed that CIM breached the ground lease by issuing the notices of termination. County contended that CIM had not obtained the legally required permits to demolish the waterside improvements (such as dоcks and slips), nor was it likely to obtain the permits within the time period required under the lease. County stated that the required permits included a coastal development (CD) permit from the California Coastal Commission (Coastal Commission) as well as approval from the Regional Water Quality Control Board, the County of Ventura, the United States Army Corps of Engineers, and the California Department of Fish and Game.
In order to remove the landside improvements (restrooms, gates and yacht club building), County alleged that CIM had to obtain a CD permit containing a “finding of consistency“—a finding that the demolition was consistent with the harbor‘s public works plan. The CD permit had to be obtained from County and certified by the Coastal Commission. Only then could the City of Oxnard issue a demolition permit.
County alleged that it was unlikely that any permit to demolish the slips would comply with the
CIM‘s Cross-complaint
In mid-June 2003, while the litigation was pending, CIM issued 60-day notices to quit to the live-aboards and indicated that 30-day notices would be issued to non-live-aboards in July 2003. CIM subsequently reevaluated its position and concluded it could not obtain the required permits and that further attempts were futile. It withdrew or abandoned the various permit applications. On July 21, 2003, CIM sent letters to the live-aboards retracting the notices of termination.
On July 22, 2003, CIM filed an answer to County‘s first amended complaint and cross-complained for breach of contract, inverse condemnation, conversion, constructive trust and declaratory relief. It sought $3.5 million damages, representing the fair market value of the improvements. The cause of action for conversion was later dismissed because it was barred by governmental immunity.
CIM acknowledged that the ground lease was entered into before adoption of the Coastal Act and the creation of the Coastal Commission. It stated that the requirements imposed under the Coastal Act made the demolition or removal of the improvements substantially more expensive and time consuming than originally contemplated by the parties.
CIM recited that the City of Oxnard had issued a demolition permit for the three buildings. The city, however, later rescinded the permit and informed CIM that it would be required to submit a site plan and obtain permission from, among others, the Coastal Commission and County. CIM argued that obtaining County‘s permission was futile, since County has already taken the position that CIM had no right to remove improvements, irrespective of whether permits were granted.
CIM alleged that County had breached the express terms of the contract and an implied covenant of good faith and fair dealing. It claimed that
On August 1, 2003, County declared an “absence of agreement.” After the ground lease expired on August 31, 2003, County took possession of the improvements without payment. It leased the property to Vintage Marina Pаrtners LP (Vintage), who began operating the marina in January 2004.
PROCEDURE
Trial—Phase I—Statement of Decision
By stipulation, the parties submitted liability issues to the court. Following phase I of the trial, the court issued a statement of decision. It stated that “County‘s refusals to consent or permit [the demolition], the requirements of the Coastal Act, the [Army Corps of Engineers‘] new requirements, the adoption of the Harbor‘s Public Works Plan” and the formation of the Coastal Commission requirements neither existed nor were foreseen. According to the testimony of Tom Volk, who was the harbor director when the lease was negotiated, only a demolition permit was contemplated when the ground lease was executed in 1963.
The trial court found that County did not fulfill its duty to cooperate so that both parties could perform as contemplated by the ground leasе. It interfered with CIM‘s attempts to remove the improvements by denying that CIM owned them and had a right to remove them, which was directly contrary to the lease provisions. County withheld its permission for removal; discouraged the cooperation of the City of Oxnard; and actively sought to obtain title to the improvements without paying for them. The court concluded that County had taken the improvements without paying for them, and breached the implied covenant of good faith and fair dealing in the ground lease.
The trial court also found, however, that “[e]ven had [County consented to CIM‘s applications to permitting authorities], the evidence established . . . that the Coastal Commission would not have issued a coastal development permit without a replacement plan, which CIM was clearly in no condition to satisfy.” (Italics added.)
The court rejected County‘s contention that CIM had breached the ground lease by serving notices of termination on the subtenants. The court noted that CIM was entitled under the ground lease to remove the improvements, and terminating the subleases was a necessary prerequisite.
Declaratory Relief
The court found that CIM owned the improvements; that it had the right to remove them at lease expiration, pursuant to article 19 of the ground lease; and that CIM was entitled to compensation for County‘s use of the improvements.
Damages
The court ruled that damages would be decided at the second phase of the trial. It said that CIM could not recover damages for both breach of contract and inverse condemnation, and must make a selection. Because the improvemеnts are difficult to value, the court requested the parties to consider a “just and equitable” method of evaluation. (
Trial—Phase II
At the second phase of trial, CIM elected to recover damages under an inverse condemnation theory. After conferring with counsel, the court instructed the jury to determine the fair market value of the improvements as of September 1, 2003, taking into account their useful life. The compensation was to be based on the “in place” value of the improvements without considering the time remaining on the CIM lease.3
The jury awarded CIM $3.5 million damages. County filed a motion for a new trial, whiсh the trial court denied. It awarded CIM attorney‘s fees of $729,800.
DISCUSSION
I
County contends there can be no inverse condemnation arising from breach of a contract or lease.
The
Federal courts refuse to recognize takings claims where the property taken arises from contract or lease. Thus in Marathon Oil Co. v. U.S. (1989) 16 Cl. Ct. 332, 339, the court rejected a takings claim arising from disputed royalties under a lease agreement on the theory that there can be no taking “since plaintiff‘s rights, if any, are circumscribed by the lease and regulations.” (See also Castle v. U.S. (Fed. Cir. 2002) 301 F.3d 1328, 1342 [breach of contract is not a taking because “plaintiffs retained the full range of remedies associated with any contractual property right they possessed“].)
CIM argues that federal courts allow takings claims to vindicate rights that exist independently of the contract at issue. (Citing Scan-Tech Security, L.P. v. U.S. (2000) 46 Fed.Cl. 326, 342 [court refused to dismiss takings claim at pleading stage where court could not determine what rights are covered by contract].) It is true the lease gave CIM the right to remove
The federal cases persuade us that CIM has no cause of action in inverse condemnation. The rights and duties of the parties spring from the lease. So, too, liabilities arising from breach of the lease are creatures of the agreement. There is no reason to impose extracontractual liability for breach, simply because the breaching рarty is a governmental entity. To say that a breach of contract or lease implicates the
CIM‘s reliance on California cases is misplaced. In Albers v. County of Los Angeles (1965) 62 Cal.2d 250 [42 Cal.Rptr. 89, 398 P.2d 129] (Albers), the county was granted an easement by landowner-developers to construct a road. With the consent of the developers, the county placed 175,000 cubic yards of dirt on the easement and on either side of the easement. The dirt caused a massive landslide that affected not only the developers’ property, but neighboring property as well. The developers and other property owners sued for negligence, nuisance, trespass and inverse condemnation. The trial court found no liability for negligence, nuisance or trespass, but awarded damages for inverse condemnation.
On appeal the county argued it should not be liable for inverse condemnation where, under the same facts, there would be no cause of action against a private party. Our Supreme Court rejected the argument under the “or damaged” provision of the California Constitution. The court concluded “any actual physical injury to real property proximately caused by [a public improvement] as deliberately designed and constructed is compensable under article I, section 14, of our Constitution. . . .” (Albers, supra, 62 Cal.2d at pp. 263-264.)
The Supreme Court also rejected the county‘s argument that the developers were estopped from recovering damages due to their grant of an easement and consent to the placement of the dirt. The court stated the developers were not estоpped to claim inverse condemnation damages that were not reasonably foreseeable. (Albers, supra, 62 Cal.2d at p. 265.) Such damages are not within the scope of the developers’ consent. (Ibid.)
In Reinking v. County of Orange (1970) 9 Cal.App.3d 1024 [88 Cal.Rptr. 695] (Reinking), the county leased property from the plaintiff for use as a landfill.
Both Albers and Reinking were decided under thе “or damaged” provision of the California Constitution. Both cases involve physical injury to property. Indeed, the holding in Albers, on which Reinking relies, is limited to “actual physical injury.” (Albers, supra, 62 Cal.2d at p. 263; see also Belair v. Riverside County Flood Control Dist. (1988) 47 Cal.3d 550, 558 [253 Cal.Rptr. 693, 764 P.2d 1070] [confirming Albers is limited to actual physical injury].) Here County did not physically injure CIM‘s property. Moreover, in Albers and Reinking, the damage was to the underlying fee. The plaintiffs’ interest as owners of the underlying fees exist independently of the lease agreements. Albers and Reinking are like those federal cases that allow takings claims to vindicate rights that exist independently of the contract.
Similarly, in Mehl v. People ex rel. Dept. Pub. Wks. (1975) 13 Cal.3d 710 [119 Cal.Rptr. 625, 532 P.2d 489], Mehl unsuccessfully sued the state in inverse condemnation when the construction of a freeway on neighboring property diverted runoff water onto his land. Mehl‘s property rights arose from his fee interest in his land. Inverse condemnation was his only recourse. Unlike this case, Mehl was not suing in inverse condemnation for what is essentially а breach of lease. Mehl‘s interest in his land was independent of any agreement with a governmental entity.
In City of Needles v. Griswold (1992) 6 Cal.App.4th 1881, 1888 [8 Cal.Rptr.2d 753], the city did not contest that the plaintiff had the right to bring an inverse condemnation action. Thus the court did not discuss whether the plaintiff had that right. The only question was whether the city had to pay prior to or concurrently with the taking. A case is not authority for matters not discussed therein. (Contra Costa Water Dist. v. Bar-C Properties (1992) 5 Cal.App.4th 652, 660 [7 Cal.Rptr.2d 91].)
Similarly, in Smart v. City of Los Angeles (1980) 112 Cal.App.3d 232, 239 [169 Cal.Rptr. 174], the city argued the plaintiff could not recover on a nuisance theory in the same action in which inverse condemnation was alleged. Whether the plaintiff could recover in an inverse condemnation action for what is essentially a breach of contract was not an issue in the case. Smart did not even involve a contract.
II
Under any theory of liability, there is no justification for awarding damages based on the value of CIM‘s improvements in place.
A
Compensatory damages for breach of contract are not measured by the gain to the breaching party. Instead, general damages are to compensate the aggrieved party for loss of the benefits he would have received by performance. (See 1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 869, p. 956.)
The question is what did CIM lose because of County‘s breach? CIM argues that at the time the lease was made, the parties contemplated a different negotiating process for determining the value of the improvements at the lease‘s end. CIM contends that County was required to pay CIM a substantial amount for the improvements аt the end of the lease to avoid the economic disruption that would ensue if the improvements were removed.
But the process CIM claims the parties contemplated was frustrated when the Coastal Commission enacted a regulation requiring any removal of the improvements to be accompanied by replacements. As the trial court found, the Coastal Commission regulation prevented removal. County could consider the effect of the regulation in its negotiations with CIM.
Moreover, although CIM may have contemplated that the threat of removal would force County to purchase the improvements at a substantial price, such a contemplation is not a legal right. Nothing in the lease required County to purchase CIM‘s improvements. If the parties failed to agrеe on a price, CIM‘s only recourse was to remove the improvements. In fact, that is what CIM attempted to do.
The trial court found that County breached the lease by refusing to cooperate and in actively opposing CIM‘s attempts to obtain the necessary permits for removal. Had CIM been able to exercise its right to remove the improvements, it would have obtained only salvage value. Thus any damages that may have been caused by County‘s breach would be limited to the salvage value of the improvements.
But the trial court found that even had County cooperated with CIM, the Coastal Commission would not have allowed the removal of the improvements. Thus the cause of CIM‘s loss was not County‘s breach of the lease,
B
The same result occurs under inverse condemnation. A property owner is entitled to recover just compensation measured by the fair market value of the property at the time of the taking. (Klopping v. City of Whittier (1972) 8 Cal.3d 39, 43 [104 Cal.Rptr. 1, 500 P.2d 1345].) Fair market value is determined by “the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available.” (
CIM relies on Almota Farmers Elevator & Whse. Co. v. U.S. (1973) 409 U.S. 470 [35 L.Ed.2d 1, 93 S.Ct. 791]. There a grain elevator operator had seven years left on its lease when the federal government brought eminent domain proceedings. The government offered only salvage value for the leasehold improvements. The court held that the property owner was entitled to market value; that is, what a willing buyer would pay in cash to a willing seller. (Id. at p. 474.) The court concluded that the leasehold improvements should be valued in place over their useful life, taking into account the possibility the lease would be renewed as well as the possibility it might not. (Ibid.) The lessee should be in no better or worse position than if he had sold his leasehold to a private buyer. (Id. at p. 478.) But for the condemnation action, the lessee could have sold the leasehold along with the improvements to a willing buyer. The improvements would have in-place value over the remaining lease term plus any renewed term.
Here in contrast, a potential purchaser of CIM‘s interest would have to take into account that the lease had expired; that the only remaining right CIM had under the lease was to remove the improvements; and that removal of the improvements was barred by Coastal Commission regulations. In other words, CIM has nothing substantial to sell. That Vintage offered CIM substantial compensation for the sale of the lease prior to its expiration, says nothing about the value of CIM‘s interest after the lease expired.
CIM‘s reliance on Lanning v. City of Monterey (1986) 181 Cal.App.3d 352 [226 Cal.Rptr. 258] is misplaced. There a lessee constructed substantial
In Lanning, had the city acquired the property by eminent domain, the lessee, as provided in the terms of the lease, would have received compensation for the improvements. No different result should pertain where the city acts under threat of eminent domain.
Here, unlike Lanning, County did not acquire the underlying fee by threat of eminent domain and then terminate CIM‘s lease. County owned the underlying fee throughout the term of the lease, and the lease terminated on its own terms. Nor did County obtain the improvements by threat of eminent domain. As the trial court found, it was the Coastal Commission regulations that prevented CIM from removing the improvements.4
C
The dissent argues the fair market value of the improvements is $3.5 million. It is to County, but not to CIM. County owns the water and land on which the improvements float and sit. Had County acted in good faith and went to the ends of the earth to obtain permits for CIM, and had the Coastal Commission in fact allowed CIM to remove its improvements, CIM‘s damages would be salvage value, not the fair market value to the lessor. This rosy turn of events could not have occurred. The court‘s undisputed finding was that removal of the improvements was as a practical matter impossible. No matter what County did, the Coastal Commission would not have granted CIM permission to remove the improvements without replacing them. The California cases cited by the dissent are not applicable. Even if inverse
Whatever County‘s actions or motivаtions, it has to cause damage to be liable.
The judgment is reversed. Costs are awarded to appellant.
Yegan, J., concurred.
COFFEE, J., Dissenting.—I respectfully dissent.
The lynchpin of the majority‘s reversal of the jury‘s award of damages in this case is its mistaken position that Channel Islands Marina, Inc.‘s (CIM) improvements had only salvage value at the end of the lease. On the contrary, as set forth frequently in the statement of decision of the trial judge, the land and waterside improvements had a “fair market value” to each party to the lease. Evidence of the existence of this value, among other things, can be found in the actions of the County of Ventura (County) in preventing CIM from removing the improvements.
The majority points to the trial court‘s finding that “the evidence established . . . that the Coastal Commission would not have issued a coastal development permit without a replacement plan, which CIM was clearly in no condition to satisfy.” However, in the same paragraph, the court also found that, “[b]ased on the evidence, it appears that, if County had received a request from CIM for consent to its applications to state and federal permitting authorities, County would have refused.”
The County actively prevented CIM from obtaining the necessary permits, some of which were under the County‘s direct control. It asserted in its complaint that CIM was required to obtain permits from the County and the City of Oxnard, and the approval of the harbor director. The County alleged that only after CIM had received these permits, could it obtain approval from the Coastal Commission to remove the improvements.
CIM was thwarted at every turn. In an attempt to comply with the initial permitting requirements, CIM obtained a demolitiоn permit from the City of Oxnard. The City later rescinded the permit, informing CIM that it must first obtain permission from the County. The County filed its lawsuit to prevent CIM from proceeding with the permitting process for the removal of the improvements. The County disingenuously contended in its complaint that CIM had no legal right to remove the improvements because it lacked the
The County acknowledges the fair market value of the improvements in its dealings with Vintage Marina Partners LP (Vintage). Vintage operates another marina in Channel Islands Harbor and has had a longtime interest in CIM‘s marina property. In March 2000, while CIM and the County were negotiating a lease renewal, Vintage offered $4.5 million to CIM to purchase its leasehold interest. CIM told the harbor master, Lyn Krieger, about the offer. She seemed surprised and indicated that negotiations had not gone as well as she had hoped. Krieger asked CIM if it could enter into immediate discussion about extending the lease. CIM agreed and put the offer from Vintage on hold while it pursued discussions with the County. In October 2002, Vintage offered CIM $2.5 million for the remaining term of the leasehold.
On November 1, 2002, after the negotiations between CIM and the County had begun to falter, Vintage wrote to Krieger indicating its interest in acquiring CIM‘s leasehold. During this time, Vintage held individual meetings concerning the CIM lease with members of the board of supervisors, the County‘s chief administrative officer and the County Harbor Department. In June 2003, Vintage submitted to Krieger a redevelopment proposal for the permitting, design and construction of waterside and landside improvements. The redevelopment was divided into four phases and was to span five years.
Vintage indicated in the proposal that, if it were awarded the lease, it “could potentially indemnify the County” for any liability in terminating the existing lease. Vintage‘s general manager later testified that Vintage was willing to indemnify the County for up to $3 million. The terms of the new lease were premised on the continued use and benefit of CIM‘s improvements.
The County reviewed the terms of the Vintage lease in a meeting on August 5, 2003, several weeks before expiration of the CIM lease. The Vintage lease was finalized in December.¹ Krieger testified that the County wanted the CIM waterside improvements to stay in place until permits could be obtained for new construction. Kriеger hoped the permits could be obtained within 18 months, and she anticipated that construction could take three to four years. The buildings might be renovated, but Krieger testified there were no plans to demolish them.
In the damages phase of the trial, the court and counsel labored extensively over the instructions defining fair market value, and the court ultimately selected the measure of damages as set forth in Almota Farmers Elevator & Whse. Co. v. U. S. (1973) 409 U.S. 470, 474-475 [35 L.Ed.2d 1, 93 S.Ct. 791]. The trial court instructed the jury to determine the fair market value of the improvements as of September 1, 2003, taking into account their useful life. The compensation was to be based on the “in place” value of the improvements without considering the time remaining on the CIM lease.2 The County asked the jury to return a verdict of $800,000 to $850,000.
The majority‘s conclusion that the improvements had only salvage value is based solely on the County‘s April 2003 letter to CIM offering to purchase the improvements for $50,000. The majority‘s conclusion is contradicted by (1) the trial court‘s finding that the improvements had fair market value; (2) the jury instructions on fair market value; and (3) the jury‘s determination of the amount of that fair market value, based on the evidence offered by both CIM and the County.
If the improvements had only salvage value, why insist they remain? Why would the County independently bargain with a third party to operate the marina using those improvements? Why would that third рarty agree to a seven-figure indemnity payment to cover an adverse verdict in the County‘s lawsuit against CIM? Given Vintage‘s substantial offers to CIM of $4.5 million and $2.5 million, is it merely coincidental that the jury determined fair market value to be $3.5 million?
The majority states that federal case law persuades it that CIM‘s remedy is in contract, thus it has no cause of action in inverse condemnation. It relies on three federal cases, cited below, two of which were issued by the Federal Court of Claims. However, federal case law is not precedent and we are not
The cited cases concern takings claims that are premised on the loss of royalties, employment income and investments. (Marathon Oil Co. v. U.S. (1989) 16 Cl. Ct. 332 [plaintiff‘s claim that excessive royalty payments on an oil lease constituted a taking]; Scan-Tech Security, L.P. v. U.S. (2000) 46 Fed.Cl. 326 [contractor‘s аllegation that government‘s failure to pay him for creating a prototype was a taking]; Castle v. U.S. (2002) 301 F.3d 1328 [regulatory taking allegedly occurred when shareholders of troubled savings and loan lost their investments due to the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act].) These authorities do not explain how the CIM lease agreement provides redress for the County‘s interference with CIM‘s property rights. Moreover, the cases are factually disparate. None concern a financial loss stemming from the government‘s act of forcibly obtaining title to private property and its unauthorized use of that property to operate a business.
Under United States Supreme Court precedent, California case authority and the California statutory scheme, a tenаnt is entitled to just compensation for leasehold improvements taken by eminent domain. (Almota Farmers Elevator & Whse. Co. v. U. S., supra, 409 U.S. 470, 474-475; Lanning v. City of Monterey (1986) 181 Cal.App.3d 352, 356 [226 Cal.Rptr. 258]; Concrete Service Co. v. State of California ex rel. Dept. Pub. Wks. (1969) 274 Cal.App.2d 142, 147 [78 Cal.Rptr. 923] (Concrete I); Concrete Service Co. v. State of California ex rel. Dept. Pub. Wks. (1972) 29 Cal.App.3d 664, 666 [105 Cal.Rptr. 721];
Just compensation is measured by the fair market value of the property at the time of the taking. (Almota Farmers Elevator & Whse. Co. v. U. S., supra, 409 U.S. at p. 474.) In the context of tenant-owned leasehold improvements, fair market value is defined as “the continued ability of the buyer to use the improvements over their useful life.” (Id. at p. 475.) This applies whether the lessee “sold the improvements to the fee owner or to a new lessee at the end of the lease term. . . .” (Id. at p. 474.)
A public entity‘s actions may constitute a taking, even when it acquires the property under threat of condemnation. (Johnston v. Sonoma County Agricultural Preservation & Open Space Dist. (2002) 100 Cal.App.4th 973, 987 [123 Cal.Rptr.2d 226]; Lanning v. City of Monterey, supra, 181 Cal.App.3d at p. 356; see also Concrete I, supra, 274 Cal.App.2d at p. 147.)
I would affirm the judgment.
Respondent‘s petition for review by the Supreme Court was denied May 21, 2008, S161617. Kennard, J., Baxter, J., and Werdegar, J., were of the opinion that the petition should be granted.