HFH, LTD., Petitioner, v. THE SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; CITY OF CERRITOS et al., Real Parties in Interest.
L.A. No. 30382, L.A. No. 30383
In Bank
Nov. 12, 1975
December 24, 1975
15 Cal. 3d 508 | 542 P.2d 237 | 125 Cal. Rptr. 365
HFH, LTD., Petitioner, v. THE SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; CITY OF CERRITOS et al., Real Parties in Interest.
[L.A. No. 30383. In Bank. Nov. 12, 1975]
VON‘S GROCERY COMPANY, Petitioner, v. THE SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; CITY OF CERRITOS et al., Real Parties in Interest.
William J. Birney, Oliver, Stoever & Laskin, Richard Laskin, C. Edward Dilkes and Telanoff, Bobrowsky, Wallin & Dilkes for Petitioners.
Gordon Pearce, C. Edward Gibson, Luce, Forward, Hamilton & Scripps, C. Douglas Alford, Louis E. Goebel, Ronald W. Rouse, P. M. Barceloux, Burton J. Goldstein, Albert E. Levy, Ralph Golub, Keith S. Humphreys, Ronald E. Stewart, Goldstein, Barceloux & Goldstein, Paul Hamilton, Virgil Roberts, Pacht, Ross, Warne, Bernhard & Sears, M. Reed Hunter, Thom Seaton, Fulop, Rolston, Burns & McKittrick, Irwin M. Fulop, Marvin G. Burns, John Petrasich, Kenneth B. Bley, Edmund S. Schaeffer, Gideon Kanner, Donald G. Hagman, Michael Atherton, Malovos & Chasuk, Cox, Cummins & Lamphere, Desmond, Miller & Desmond, Fadem, Berger & Stocker, Feeney & Sparks, Bressani, Hansen & Blos, Jacobs, Jacobs, Nelson & Witmer, Nichols, Stead, Boileau & Lamb, Loube, Lewis & Blum, Thorpe, Sullivan, Workman, Thorpe & O‘Sullivan, Ronald A. Zumbrun, Donald M. Pach and Thomas E. Hookano as Amici Curiae on behalf of Petitioners.
No appearance for Respondent.
J. Kenneth Brown, City Attorney, Ebben & Brown and Thomas F. Winfield III for Real Parties in Interest.
Evelle J. Younger, Attorney General, Robert H. O‘Brien, Assistant Attorney General, Nicholas C. Yost and E. Clement Shute, Jr., Deputy Attorneys General, John H. Larson, County Counsel (Los Angeles), S. Robert Ambrose and William F. Stewart, Deputy County Counsel, Burt
OPINION
TOBRINER, J.—We face in these mandate proceedings1 the narrow issue of whether a complaint alleging that a zoning action taken by a city council reduced the market value of petitioners’ (hereafter plaintiffs) land states a cause of action in inverse condemnation; we conclude that it does not. We also face numerous amici, some of whom urge on us significant changes in the law of liability and compensation in public land use regulation; we have concluded that neither the state and federal Constitutions nor public policy compel or counsel these changes.
We take the facts in this case from the allegations of the complaints, assuming as we must the truth of any properly pleaded factual allegations. (E.g., Serrano v. Priest (1971) 5 Cal.3d 584, 591 [96 Cal.Rptr. 601, 487 P.2d 1241, 41 A.L.R.3d 1187].) Plaintiffs, a limited partnership (HFH) and a Delaware corporation (Von‘s), contracted to purchase the parcel in question from a common grantor. At the time the plaintiffs entered this contract with their grantor, the land in question lay in an agricultural zone and possessed no improvements of any kind. Plaintiffs conditioned the sale upon the grantor‘s ability to procure commercial zoning for the 5.87-acre tract; the City of Cerritos (the real party in interest) “in the latter part of the year 1965 or the early part of 1966” did classify the property as commercial, and in 1966 the plaintiffs became the owners of the parcel, according to the allegations of the complaint.
Plaintiffs thereafter submitted, and the city approved, a parcel map on which the plaintiffs subdivided the property in a manner appropriate for commercial uses. Subsequently, however, a period of some five years elapsed; during that time plaintiffs do not claim any development or
In October 1971, the city adopted a general plan indicating that some land in the area of plaintiffs’ properties was appropriate for “neighborhood commercial uses,” but did not alter the agricultural classification of plaintiffs’ tracts. The 1971 general plan designated the bulk of the land in the area of plaintiffs’ properties for “low density residential” uses. (City of Cerritos October 1971 General Plan Map;
Having apparently concluded that their interests would best be served by selling rather than developing the land, plaintiffs in early 1972 entered into a $400,000 contract of sale with Diversified Associates, Inc. (not party to this action) conditioned upon the reclassification of the tract as commercial. In an attempt to bring about the condition which would enable them profitably to sell their land, plaintiffs applied to the planning commission for commercial zoning of the tract. Both the commission and the city council, to which plaintiffs took an appeal, rejected this application, and instead zoned the property as single family residential. Concurrently with taking this action, the city zoned as commercial other properties on different corners of an intersection on which plaintiffs’ land abuts. Plaintiffs, of course, had hoped to secure for their land a commercial classification in order to effectuate the conveyance of the land under the conditions of the contract of sale with Diversified Associates, Inc.
Plaintiffs allege that the situation of their properties rendered them “useless” for single family residential purposes; they do not, however, allege that the properties are useless for other purposes consonant with the zoning category in which they now lie.2 As a consequence, according to plaintiffs, their land, which they purchased for some $388,000 and hoped to sell for $400,000, suffered a decline in market value to $75,000.
1. Inverse condemnation does not lie in zoning actions in which the complaint alleges mere reduction of market value.
The courts of this state have recognized the constitutional values served by actions in inverse condemnation and have not hesitated to validate complaints appropriately employing this theory of recovery.4 At the same time, we have recognized mandamus as the proper remedy for allegedly arbitrary or discriminatory zoning,5 and have in appropriate
We have never, however, suggested that inverse condemnation lay to challenge a zoning action whose only alleged effect was a diminution in the market value of the property in question. (E.g., Morse v. County of San Luis Obispo (1967) 247 Cal.App.2d 600 [55 Cal.Rptr. 710].) While this state of the law is sufficiently clear to admit of little doubt, we shall briefly review its development and basis.
Zoning developed slowly in the latter part of the 19th century. In its early stages it was frequently indistinguishable from the power to abate public nuisances,7 but the first decades of this century saw the enactment of more comprehensive zoning laws and the development of the concept of city planning.8 Shortly after these changes began to take effect, challenges in both state and federal courts raised the question of the constitutionality of these restrictions of the individual‘s previous ability to do with his land what he chose, bounded only by the laws of public and private nuisance. While the legal context in which this question arose differed from case to case, the courts of this state and the United States Supreme Court firmly rejected the notion that the diminution of the value of previously unrestricted land by the imposition of zoning could constitute a taking impermissible in the absence of compensation.9 We have long adhered to that position.10
To demonstrate the settled nature of the issue before us we point out that the United States Supreme Court faced the same question in the first major constitutional challenge to modern zoning to come before it. (Euclid v. Ambler Realty Co. (1926) 272 U.S. 365 [71 L.Ed. 303, 47 S.Ct. 114, 54 A.L.R. 1016].) Tendering allegations almost identical to those
The record of this court stands equally clear. In one of the seminal zoning cases coming before us, in considering and rejecting a contention that a zoning ordinance forbidding the establishment of a nonconforming use in a residential area unconstitutionally deprived the landowners of their property, we quoted with approval the following language of the Wisconsin Supreme Court: ” ‘It is thoroughly established in this country that the rights preserved to the individual by these constitutional provisions are held in subordination to the rights of society. Although one owns property, he may not do with it as he pleases any more than he may act in accordance with his personal desires. . . . [I]ncidental damages to property resulting from governmental activities, or laws passed in the promotion of the public welfare are not considered a taking of the property for which compensation must be made.’ (Carter v. Harper [1923] 182 Wis. 148 [, 153]. . .)” (Miller v. Board of Public Works, supra, 195 Cal. 477, 488.)
In an attempt to escape the clear import of such rulings plaintiffs emphasize that their complaint sounds in inverse condemnation, and that they therefore need only show some diminution in value rather than the arbitrary or confiscatory action imposed by the line of cases they seek to avoid. Several appellate courts in California have considered and rejected precisely this contention.11
The Court of Appeal in Morse v. County of San Luis Obispo, supra, 247 Cal.App.2d 600, spoke as follows in affirming a judgment of dismissal following the sustaining of a demurrer to a complaint seeking damages in inverse condemnation for the down-zoning of property:
“Plaintiffs are apparently attempting to recover profits they might have earned if they had been successful in getting their land rezoned to permit subdivision into small residential lots, but landowners have no vested right in existing or anticipated zoning ordinances. (Anderson v. City Council [1964] 229 Cal.App.2d 79, 88-90 [40 Cal.Rptr. 41].) A purchaser of land merely acquires a right to continue a use instituted before the enactment of a more restrictive zoning.12 Public entities are not bound to reimburse individuals for losses due to changes in zoning, for within the limits of the police power ‘some uncompensated hardships must be borne by individuals as the price of living in a modern enlightened and progressive community.’ (Metro Realty v. County of El Dorado [1963] 222 Cal.App.2d 508. . . .
)” (247 Cal.App.2d at pp. 602-603; italics added.)
We have only recently reaffirmed this principle in Selby Realty Co. v. City of San Buenaventura, supra, 10 Cal.3d 110;13 we held in that case that a landowner could not employ inverse condemnation to challenge a zoning ordinance which required him to dedicate part of his land to the city as a condition of receiving a building permit: “The sixth cause of action sounds in inverse condemnation and alleges that the city has ‘taken’ plaintiff‘s property without compensation. Again, insofar as this cause of action is based upon the adoption of the general plan, there is no ‘taking’ of the property. . . .” (10 Cal.3d at pp. 127-128.)14
This court has recognized the broader protections granted landowners by the addition of “or damaged” to the language of our state‘s compensation clause. (Albers v. County of Los Angeles (1965) 62 Cal.2d 250 [42 Cal.Rptr. 89, 398 P.2d 129]; Reardon v. San Francisco (1879) 66 Cal. 492 [6 P. 317]; cf. County of San Diego v. Miller (1975) 13 Cal.3d 684 [119 Cal.Rptr. 491, 532 P.2d 139].) Yet in arguing that the additional phrase covers this case, plaintiffs mistake its meaning. Intended to reach
(Klopping v. City of Whittier (1972) 8 Cal.3d 39 [104 Cal.Rptr. 1, 500 P.2d 1345]; Peacock v. County of Sacramento (1969) 271 Cal.App.2d 845 [77 Cal.Rptr. 391]); or from zoning classifications invoked in order to evade the requirement that land used by the public must be acquired in eminent domain proceedings (Sneed v. County of Riverside (1963) 218 Cal.App.2d 205 [32 Cal.Rptr. 318]). Thus in Klopping the city in question made public announcements that it intended to acquire the plaintiff‘s land, then unreasonably delayed commencement of eminent domain proceedings, with the predictable result that the property became commercially useless and suffered a decline in market value. We held only that the plaintiff should be able to include in his eminent domain damages the decline in value attributable to this unreasonable precondemnation action by the city. The case thus in no way resembles the instant one, in which plaintiffs make no allegations that the city intends to condemn the tract in question.
Similarly in Peacock the county had refused to permit any development of the land in question (barring even the growth of most vegetation), while assuring the owner that the restrictions were of no consequence because the county intended to acquire the land for an airport. When, after denying the owner any use of his property for five years, the county renounced its intent to acquire the land, the Court of Appeal affirmed a trial court finding that “[t]he exceptional and extraordinary circumstances heretofore enumerated . . . constituted a take [sic] of the subject property by inverse condemnation.” (271 Cal.App.2d at p. 854.) Again one sees that the down-zoning rises to a taking only in connection with inequitable precondemnation actions by the public agency.
Finally, the cases hold that a public agency may not use a zoning ordinance to evade the requirement that the state acquire property which it uses for public purposes. Thus in Sneed, the county, rather than acquiring land for an air navigation easement, simply enacted a zoning ordinance forbidding any structure or vegetation more than three inches high and proceeded to operate flights over the area thus restricted. The Court of Appeal held that the plaintiff had stated a cause of action in inverse condemnation. Unlike the instant case, Sneed involved a zoning ordinance creating an actual public use of the property.
Plaintiffs fail to distinguish between the “damaged” property which is a requisite for a finding of compensability and the “damages” by which courts measure the compensation due. Reasoning backwards, plaintiffs erroneously contend that since they can calculate damages (by measuring decline in market value), they must have been “damaged” within the meaning of the state Constitution.
Because a zoning action which merely decreases the market value of property does not violate the constitutional provisions forbidding uncompensated taking or damaging, the trial court correctly sustained without leave to amend the demurrer to the cause of action in inverse condemnation.16 (
2. Plaintiffs may not seek damages in their pending mandate action.
Plaintiffs also urge, alternatively to the proposition that inverse condemnation lies for any reduction in market value induced by zoning, the desirability of interim damages incident to the mandate action for which the trial court granted leave to amend. They argue that even if they ultimately succeed in their efforts to obtain a court decision invalidating the challenged zoning ordinance, they will still suffer an uncompensated loss of use of the property in question during the period between the enactment of the challenged ordinance and its demise. Arguing by implicit analogy to tort law, they urge that invalidation of the offending zoning ordinance will not suffice to compensate them for the damage they suffered by reason of its existence.
Courts have thus recognized that “[o]f course, it is not a tort for Government to govern. . . .” (Dalehite v. United States (1952) 346 U.S. 15, 57 [97 L.Ed. 1427, 1452, 73 S.Ct. 956] (Jackson, J., dissenting); Muskopf v. Corning Hospital Dist. (1961) 55 Cal.2d 211, 220 [11 Cal.Rptr. 89, 359 P.2d 457].) Justice Jackson‘s mot expresses both a principle of law and a necessity of rational government; both constitutional and institutional understandings require that legislative acts, even if improper, find their judicial remedy in the undoing of the wrongful legislation, not in money damages awarded against the state. (Cf. City & County of San Francisco v. Cooper (1975) 13 Cal.3d 898 [120 Cal.Rptr. 707, 534 P.2d 403]; Fletcher v. Peck (1810) 10 U.S. (6 Cranch) 87 [3 L.Ed. 162].)
Thus acts within the area of legislative or administrative discretion have long enjoyed the shelter of immunity from tort liability; mere ministerial and “operational” acts, but not “basic policy decisions,” have led to governmental tort liability. (Johnson v. State of California (1968) 69 Cal.2d 782, 793 [73 Cal.Rptr. 240, 447 P.2d 352].) This distinction finds expression directly relevant to the instant case in the California Tort Claims Act, which provides that “[a] public entity is not liable for an injury caused by adopting or failing to adopt an enactment. . . .” (
Nor may plaintiffs avoid the clear meaning of Government Code section 818.2 and Veta by arguing that the damage claim sounds in inverse condemnation rather than in tort. The fallacy in the argument inheres in its failure to recognize that inverse condemnation lies only for
3. Although amici argue that “fairness” requires that inverse condemnation lie to challenge zoning actions, both considerations of policy and the limitations of judicial institutions lead to a contrary conclusion.
Numerous amici who have entered this case on behalf of the plaintiffs urge that the constitutional values of “fairness” protected by the compensation clauses of the state and federal Constitutions require us to hold that inverse condemnation lies for any zoning action which substantially reduces the market value of any tract of land.17 Without attempting a detailed discussion of the many points raised by amici or a review of the still more voluminous secondary literature on the taking issue,18 we shall briefly indicate the grounds for our declining to do so.
In this case, as in most instances, zoning is not an arbitrary action depriving someone of property for the purpose of its use by the public or transfer to another; rather it involves reciprocal benefits and burdens which the circumstances of this case well illustrate. The shopping center which plaintiffs seem at various times to have contemplated erecting, would derive its value from the existence of residential housing in the surrounding area. That residential character of the neighborhood, we
The long settled state of zoning law renders the possibility of change in zoning clearly foreseeable to land speculators and other purchasers of property, who discount their estimate of its value by the probability of such change. The real possibility of zoning changes for the tract in question finds ample demonstration in plaintiffs’ insistence that their grantor procure such a change before conveying the land to them. Having obtained the benefits of such rezoning, but having failed to take advantage of it by building, they now assert that the termination of such rezoning rendered the city liable in damages. A distinguished commentator has thus described plaintiffs’ situation: “[They] bought land which [they] knew might be subjected to restrictions; and the price [they] paid should have been discounted by the possibility that restrictions would be imposed. Since [they] got exactly what [they] meant to buy, it can perhaps be said that society has effected no redistribution so far as [they are] concerned, any more than it does when it refuses to refund the price of [their] losing sweepstakes ticket.” (Michelman, Property, Utility, and Fairness: Comments on the Ethical Foundations of “Just Compensation” Law (1967) 80 Harv.L.Rev. 1165, 1238; see also Berger, A Policy Analysis of the Taking Problem (1974) 49 N.Y.U.L.Rev. 165, 195-196.)
We are urged in this case to redefine the state and federal constitutional requirements of just compensation and to require payment for any zoning action which results in the substantial diminution of market value. That we do not do so reflects less our belief that no problems exist with the present law in this area than our conviction that legislative rather than judicial action holds the key to any useful reform. The welter of proposals for action to remedy the inequities in the scheme of land use regulation which fall short of invoking constitutional protection bear
Finally, we note that our conclusion in no sense turns on the verbal distinction between “taking” and “police power.” While these terms have a venerable history in discussions of this question, at best they have served as a shorthand method of indicating the result; neither hard nor easy cases are decided by such merely verbal lines. Rather, the far more basic considerations of reciprocity discussed above have shaped the decisions in this area,23 decisions which reconcile property rights and social needs.
Plaintiffs in this case desire a change in long standing principles of the law of just compensation; they ask that we hold municipal zoning bodies liable for full compensation for any fall in market price due to zoning
Zoning and other land use regulation, long an established feature of our lives, expresses both a concern for our present quality of life and our collective fiduciary responsibility to the future; that it bears this weight and expresses this concern does not mean that it may fall short of constitutional standards. These considerations do, however, caution us not capriciously to discard established constitutional boundaries in this area.
The alternative writs are discharged, and the peremptory writs denied.
Wright, C. J., McComb, J., Mosk, J., Sullivan, J., and Richardson, J., concurred.
CLARK, J.—I dissent.
Article I, section 19 of the California Constitution provides: “Private property may be taken or damaged for public use only when just compensation . . . has first been paid to . . . the owner.” (Italics added.) While this court has usually applied the “or damaged” language in the context of physical damage to property (Albers v. County of Los Angeles (1965) 62 Cal.2d 250 [42 Cal.Rptr. 89, 398 P.2d 129]; Bacich v. Board of Control (1943) 23 Cal.2d 343 [144 P.2d 818]), we have never limited compensation to physical damage. In fact, in Reardon v. San Francisco (1885) 66 Cal. 492 [6 P. 317], this court rejected such an interpretation, noting that the word damaged “refers to something more than a direct or immediate damage to private property, such as its invasion or spoliation. There is no reason why this word should be construed in any other than its ordinary and popular sense. It embraces more than the taking.” (Id. at p. 501.) “The tendency under our system is too often to sacrifice the individual to the community; and it seems very difficult in reason to
The 80 percent decrease in fair market value of the subject property clearly constitutes damage to plaintiffs. The issue then is whether plaintiffs’ damage is compensable under the California Constitution.
California has long recognized that while “the police power is very broad in concept, it is not without restriction in relation to the taking or damaging of property. When it passes beyond proper bounds in its invasion of property rights, it in effect comes within the purview of the law of eminent domain and its exercise requires compensation. [Citations.]” (House v. L.A. County Flood Control Dist. (1944) 25 Cal.2d 384, 388 [153 P.2d 950]; see Berman v. Parker (1954) 348 U.S. 26 [99 L.Ed. 27, 75 S.Ct. 98].)
The point at which an injury becomes compensable is determined by balancing two fundamental—yet inconsistent—policy considerations. (Bacich v. Board of Control, supra, 23 Cal.2d 343.) “[O]n the one hand the policy underlying the eminent domain provision in the Constitution is to distribute throughout the community the loss inflicted upon the individual by the making of public improvements . . . On the other hand, fears have been expressed that compensation allowed too liberally will seriously impede, if not stop, beneficial public improvements because of the greatly increased cost.” (Id. at p. 350.)
This balancing of policies in determining the point at which compensation is constitutionally mandated also has long been recognized by the United States Supreme Court. In Pennsylvania Coal Co. v. Mahon (1922) 260 U.S. 393 [67 L.Ed. 322, 43 S.Ct. 158, 28 A.L.R. 1321], the court noted that “Government hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law. As long recognized, some values are enjoyed under an implied limitation and must yield to the police power. But obviously the implied limitation must have its limits. . . . One fact for consideration in determining such limits is the extent of the diminution. When it reaches a certain magnitude, in most if not in all cases there must be an exercise of eminent domain and compensation to sustain the act.” (Id. at p. 413 [67 L.Ed. at p. 325].)
As this court has recently recognized in viewing these conflicting policies, the ultimate test whether compensation is constitutionally
We should address any problem of loss suffered by governmental action as one demanding application of a rule of fairness. (Cf. Muskopf v. Corning Hospital Dist. (1961) 55 Cal.2d 211 [11 Cal.Rptr. 89, 359 P.2d 457].) Although earlier cases have failed to apply the rule of fairness to losses occasioned by downzoning, there is no justification for treating such losses differently from those due to other governmental action.
As Justice Traynor in his concurring opinion in House v. L.A. County Flood Control Dist., supra, 25 Cal.2d 384, 396-397, correctly pointed out, in determining fairness “[i]t is irrelevant whether or not the injury to the property is accompanied by a corresponding benefit to the public purpose to which the improvement is dedicated, since the measure of liability is not the benefit derived from the property, but the loss to the owner [citations].”
In conjunction with the statement of Justice Traynor, the cautionary note of the United States Supreme Court in Pennsylvania Coal Co. v. Mahon, supra, 260 U.S. 393, 416 [67 L.Ed. 322, 326], should not be overlooked. “We are in danger of forgetting that a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change.”
The great harm which might result from downzoning was recognized in Metro Realty v. County of El Dorado (1963) 222 Cal.App.2d 508, 516 [35 Cal.Rptr. 480], involving an ordinance of short duration. The court stated that although the temporary restriction was a mere inconvenience, “the same restriction indefinitely prolonged might possibly metamorphize into oppression.”
Compensation in appropriate downzoning cases also meets the policy reflected by the eminent domain provision. As recently reaffirmed by this court in Holtz v. Superior Court (1970) 3 Cal.3d 296, 303 [90 Cal.Rptr. 345, 475 P.2d 441], quoting from Clement v. State Reclamation Board
Zoning is enacted for the public benefit. The need for “resolute sophistication in the face of occasional insistence that compensation payments must be limited lest society find itself unable to afford beneficial plans and improvements,” was aptly stated by Professor Michelman in his well-noted law review article:2 “What society cannot, indeed, afford is to impoverish itself. It cannot afford to instigate measures whose costs, including costs which remain ‘unsocialized,’ exceed their benefits. Thus, it would appear that any measure which society cannot afford or, putting it another way, is unwilling to finance under conditions of full compensation, society cannot afford at all.”
Not all governmental downzoning must be compensated. However, the compensatory “or damaged” provision of the California Constitution should apply when by public action land has (1) suffered substantial decrease in value, (2) the decrease is of long or potentially infinite duration and (3) the owner would incur more than his fair share of the financial burden.
Applying this fairness test to the instant factual situation, plaintiffs have stated a valid cause of action in inverse condemnation. The 80 percent decrease in value of plaintiffs’ property—from a market value of $400,000 to $75,000—is obviously substantial. Because the action is taken pursuant to
Plaintiffs have stated a cause of action in inverse condemnation. Therefore, it was error for the trial court to sustain the demurrer without leave to amend. Accordingly I would grant the writ directing the trial court to overrule the demurrer.
The application of petitioner Von‘s Grocery Co. for a rehearing was denied December 24, 1975, and the opinion was modified to read as printed above. Clark, J., was of the opinion that the application should be granted.