LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY, Plaintiff and Appellant,
v.
CONTINENTAL DEVELOPMENT CORPORATION, Defendant and Appellant.
Supreme Court of California.
*697 COUNSEL
Nossaman, Guthner, Knox & Elliott, Mary Lou Byrne, Abraham C. Meltzer and James C. Powers for Plaintiff and Appellant.
James K. Hahn, City Attorney (Los Angeles), Patricia V. Tubert, Assistant City Attorney, and Kenneth Cirlin, Deputy City Attorney, as Amici Curiae on behalf of Plaintiff and Appellant.
*698 Palmieri, Tyler, Wiener, Wilhelm & Waldron, Angelo J. Palmieri, Bruce W. Dannemeyer and Frank C. Rothrock for Defendant and Appellant.
James S. Burling, Stephen E. Abraham, Sullivan, Workman & Dee, Henry K. Workman, Berger & Norton and Gideon Kanner as Amici Curiae on behalf of Defendant and Appellant.
OPINION
WERDEGAR, J.
The taking of private property in eminent domain is constrained by the California Constitution, which provides in relevant part that "[p]rivate property may be taken or damaged for public use only when just compensation, ascertained by a jury unless waived, has first been paid to, or into court for, the owner." (Cal. Const., art. I, § 19; see also U.S. Const., Amends. V, XIV.) By statute, the owner of property acquired by eminent domain is entitled to the fair market value of the property taken. (Code Civ. Proc., §§ 1263.010, 1263.310.)[1] When the property taken is part of a larger parcel, in addition to being compensated for the part taken, the owner is compensated for the injury, if any, to the remainder. (§ 1263.410, subd. (a).) Compensation for injury to the remainder is the amount of the damage to the remainder, or severance damages, reduced by the amount of benefit to the remainder. (§ 1263.410, subd. (b).)
In the early eminent domain case of Beveridge v. Lewis (1902)
Here, the Los Angeles County Metropolitan Transportation Authority (the MTA) brought a condemnation action to acquire a narrow strip of land for an easement along one side of a parcel owned by Continental Development Corporation (Continental) for the construction of a portion of an elevated *699 light rail line known as the Green Line. The Douglas Street Green Line station is located within a 10-minute walk from Continental's property.
In pretrial proceedings relating to Continental's severance damages claim, the MTA proffered evidence that the value of office buildings in other localities increased as a result of their proximity to public transit stations, as well as expert testimony that the value of Continental's property would increase by several million dollars as a result of the operation of the line. The trial court ruled the evidence inadmissible; the court reasoned that proximity to the transit station was not a special benefit because it was shared by numerous properties in the vicinity and, therefore, was not a feature peculiar or special to Continental's property. At the conclusion of the trial, the jury returned a verdict awarding Continental compensation for the property taken and for severance damages. On the MTA's appeal from the ensuing judgment, the Court of Appeal affirmed.
The MTA sought review, contending the lower courts had erred in concluding no special benefit existed here and arguing that the very distinction between general and special benefits is unworkable, produces inconsistent results when applied in different cases, and should be abolished.
For the reasons discussed below, we conclude the distinction between general and special benefits no longer finds support in the reasons articulated at its inception. We further conclude this lack of support and the difficulties inherent in courts' efforts consistently to apply the distinction warrant overruling this aspect of Beveridge and its progeny. We therefore reverse the judgment and remand the case for a new trial on severance damages. For guidance on retrial, we further explain that the Court of Appeal erred in finding the trial court abused its discretion in denying Continental's motion for litigation expenses.
FACTS
Continental owned a 14-acre parcel of land that was divided into 3 lots. One of the lots, the subject of these proceedings, is triangular in shape and approximately 4.43 acres in size. The lot is located on Rosecrans Avenue near Aviation Boulevard in the City of El Segundo. The property extends for some 655 feet along Rosecrans Avenue on the south and for some 785 feet along a railroad right-of-way on the northeast side. The third side of the triangle borders on other properties in an 86-acre corporate development known as Continental Park.
On September 4, 1990, the Los Angeles County Transportation Commission, the predecessor of the MTA, brought an eminent domain proceeding to *700 acquire three interests in a small part of the subject property. These three interests consist of an air rights easement for the area in which the Green Line guideway was constructed, a construction easement located under the air rights easement, and a small area taken in fee. The easements run along the entire northeast side of the property, approximately five feet in average width. The area of the fee is 373 square feet, located entirely within the area covered by the easements. When this suit was filed, the property was unimproved, although by the time of trial Continental had constructed a four-story office building on the site. At the time of trial, the Green Line had not yet begun operation.
Prior to trial, the court conducted a hearing to determine whether the MTA would be permitted to present evidence on the issue of severance damages that proximity to the Douglas Street Station was a special benefit that enhanced the value of Continental's remaining property. The question was decided on the parties' memoranda and declarations; no testimony was taken. Continental's appraiser, Joseph A. Hennessey, averred there were 565 separate parcels of property located within 1,700 feet of the Douglas Street Station, of which 7 were being condemned for the construction of the Green Line. Attached to the Hennessey declaration were two reports prepared for the MTA by consultants SGM Group and Desmond, Marcello & Amster. The SGM report sets forth its analysis of the effect on rents and property values of modern elevated rail lines in other cities. SGM found that buildings within walking distance of San Francisco Bay Area Rapid Transit (BART) stations enjoyed, on average, 11 percent lower vacancy rates and 20 percent higher rents than comparable buildings located beyond walking distance from BART stations. SGM concluded that location of the Douglas Street Station within walking distance of Continental's property enhanced its value by $4.1 million. The Desmond report concluded the value of Continental's property was enhanced by $3,760,000 due to proximity to the station.
The trial court ruled, however, that "[t]he benefit of being within walking distance of a rail transit station is merely the benefit of access. As such it confers no peculiar or unique benefit upon defendant's property." Accordingly, the court declined to permit introduction of evidence or cross-examination on the subject of enhancement in value to Continental's property resulting from such proximity. The MTA moved for reconsideration of the court's ruling, arguing that it would be mere speculation to attempt to predict future rents for Continental's property without taking into account all circumstances affecting future rent and future value, including the effect of proximity to a transit station. The court denied the motion, and the case proceeded to trial before a jury.
*701 On the issue of compensation for the property taken, the MTA valued the fee and easements taken at $99,532; Continental introduced evidence they were worth $141,666. The jury awarded Continental a total of $106,356 for the taking; that award is not here at issue.
On the issue of severance damages, Continental sought recovery based on three factors: building redesign, noise mitigation, and visual impact.
Continental presented evidence it spent $23,123 to have plans redrawn to resite the building farther from the elevated line. The MTA essentially did not dispute that claim. Continental also presented evidence that, to soundproof the portion of the building facing the elevated line, Continental laminated the windows on the northeast side and incurred related expenses. The parties disputed whether further soundproofing would ultimately be needed; the MTA contended the existing lamination would suffice, but Continental introduced evidence it would need to install double windowpanes at a cost of over $400,000.
The major contested issue at trial was Continental's claimed damages stemming from the effect of the elevated line on views from offices on the northeast side of the building. Hennessey, Continental's appraiser, testified he believed those offices would command lower rents; he capitalized the projected lower rents to arrive at an opinion the property would lose $1,038,300 in value from the visual impact of the Green Line. The MTA presented the testimony of Lawrence Goldstein, who had studied the economic effects of urban transit lines on real estate values. Goldstein testified he compared rents for properties within 90 feet of elevated rail lines in Washington, D.C., and in areas served by the BART system in the San Francisco Bay Area, with rents of comparable properties located substantially farther from the lines. He concluded commercial office buildings located next to modern elevated rail lines suffered no decrease in rents.
The jury's total severance damages award was $1,015,793. Because the trial court denied the MTA's request for a special verdict form that would have required the jury to state separately the amounts awarded for different elements of severance damages, no such allocation was made. Nevertheless, assuming the jury awarded Continental the full amount it sought for noise mitigation ($416,604), it is clear a substantial part of the award represented damages for visual impact.
The MTA moved for a new trial, contending (1) the award of severance damages for visual impact was not supported by substantial evidence, (2) the trial court erred in refusing to allow the MTA, during its cross-examination *702 of Hennessey, to raise the issue of enhanced value to Continental's property resulting from proximity to a transit station, and (3) the trial court erred in refusing to admit evidence of such enhancement and in failing to instruct the jury to state separately in its verdict the amount of any benefits resulting from proximity to the station. The court denied the MTA's new trial motion; the court also denied Continental's motion for litigation expenses pursuant to section 1250.410. The Court of Appeal affirmed the judgment, but reversed the order denying Continental's motion.
DISCUSSION
Just Compensation: Offset of Benefits Against Severance Damages
"Just" compensation for severance damages has been defined in different ways during different periods in California history. The original formula for calculating just compensation in the case of a partial taking was articulated in the context of condemnation by a private railroad company. With the Railroad Act of 1861 (Stats. 1861, ch. DXXXII, § 30, p. 621 (the Railroad Act)), the Legislature had authorized private railroad companies to exercise the power of eminent domain, taking the view that in providing a means of transportation to isolated areas of the state, the railroads performed a public service. In S.F., A. & S.R.R. Co. v. Caldwell (1866)
The Railroad Act directed that the value of any benefits accruing to the landowner's remaining property, as a result of the railway, be set off in full or partial satisfaction of the compensation owing for the property taken.[2] The central question in Caldwell was whether this provision unconstitutionally denied landowners just compensation. The Caldwell court observed: *703 "The opinions of jurists on this subject are found, on examination, to be widely diverse from each other. On the one side it has been maintained that compensation to the extent of the value of the land taken must be made in all cases, without any deduction on account of any benefit or advantage which may accrue to other property of the owner, by reason of the public improvement for which the property is taken. [Citations.] [¶] In support of this view it is argued that the enhancement of the value of other property of the owner of the land proposed to be condemned to public use, which may be of the parcel of that taken, is merely the measure of such owner's share in the general good produced by the public improvement; and why, it is asked, is not the owner in such case justly entitled to the increase in the value of the property thus fortuitously occasioned, without paying for it? His share in the benefits resulting may be larger than falls to the lot of others owning property in the same vicinity, and it may not be so large, and yet he alone is made to contribute to the improvement by a deduction from the compensation which is awarded him by sovereign behest as a pure matter of right, though others whose property may adjoin the public work are equally with himself benefited by it. On the other side it is maintained that the public is only dealing with those whose property is necessarily taken for public use, and that if the property of such persons immediately connected with that taken, but which remains unappropriated, is enhanced in value by reason of the improvement then, thereby the owners receive a just compensation for the lands taken to the extent of such enhancement, and if thereby fully compensated they cannot in justice ask for anything more. [Citations.] [¶] The weight of authority appears to be in favor of allowing benefits and advantages to be considered in ascertaining what is a just compensation to be awarded in such cases, and it seems to us that the reasons in support of this view of the subject are unanswerable. [¶] Just compensation requires a full indemnity and nothing more. When the value of the benefit is ascertained there can be no valid reason assigned against estimating it as a part of the compensation rendered for the particular property taken, as all the Constitution secures in such cases is a just compensation, which is all that the owner of property taken for public use can justly demand." (Caldwell, supra, 31 Cal. at pp. 373-374.)
This court revisited the setoff issue in California P.R.R. Co. v. Armstrong (1873)
The Armstrong court lost no time in rejecting the landowner's first proposition, that he was entitled to the cost of building the railroad on his land, noting: "Neither the Constitution nor the statute contemplates that a person, whose land is taken in the exercise of the right of eminent domain, shall be entitled to anything beyond a `just compensation.' He is to be paid the damage he actually suffers, and nothing more." (
The Armstrong court also rejected the landowner's second argument, that only special benefits should be set off against severance damages: "[T]here is no valid reason for this distinction. The theory of the statute is, that the land owner shall receive a fair, just compensation for the damage he suffers, and if that portion of his tract which is not taken will be enhanced in value by the construction of a railroad, his damages will be diminished to the extent of the enhancement, and hence the statute contemplates that by deducting this benefit from the damages, the sum which remains will constitute a `just compensation' in the sense of the Constitution. This was the view of the question announced in the case of the San Francisco, Alameda, and Stockton Railroad Company v. Caldwell,
The decisions in Caldwell, supra,
*705 Some years later, in Beveridge, supra,
Former section 1248, like present section 1263.410, authorized a setoff of "benefits," without limitation, in all cases in which property is taken for a public use. In contrast to the statutory provision, former article I, section 14 of the state Constitution provided: "Private property shall not be taken or damaged for public use without just compensation having been first made to, or paid into court for, the owner, and no right of way shall be appropriated to the use of any corporation other than municipal until full compensation therefor be first made in money or ascertained and paid into court for the owner, irrespective of any benefit from any improvement proposed by such corporation, which compensation shall be ascertained by a jury, unless a jury be waived, as in other civil cases in a court of record, as shall be prescribed by law." (Italics added.)
Article I, section 14 was added to the Constitution in reaction to the private railroad companies' speculative computation of benefits. (See Note, Benefits and Just Compensation in California (1969) 20 Hastings L.J. 764.) As noted above, the Railroad Act had invested private railroad companies with the power of eminent domain, inasmuch as providing a means of transportation to isolated areas of the state was viewed as a public service. At the same time, however, the railroad companies were operated for private gain. To minimize the cost of obtaining rights of way, railroad companies frequently would take a portion of a landowner's tract and, under the before-and-after rule of Caldwell, supra,
*706 Examination of the constitutional debates of 1878 generally confirms that, as relevant here, the framers' intent with respect to former article I, section 14 of the Caifornia Constitution was to preclude private railroad companies both from taking land without first compensating the owner and from setting off from the damages owed any benefits to the remainder. (See Cal. Const., former art. I, § 14; 1 Debates & Proceedings, Cal. Const. Convention (1878-1879) p. 346 et seq. (Debates & Proceedings).) Delegate James M. Dudley of Solano, who offered the amendment that, as revised, was adopted as former article I, section 14, successfully moved for inclusion of the phrase "other than municipal" after the word "corporation" so as to exempt municipalities from the provision, thereby allaying the concern of other delegates that, as originally drafted, the amendment would have unduly hindered the development of county roads, town streets, and other government-sponsored public works. (Debates & Proceedings, supra, pp. 347, 349.)
It is in light of this history that we must read the Beveridge court's analysis of the distinction between general and special benefits. In Beveridge, the court addressed two issues. Plaintiff Philo J. Beveridge, an agent for the Los Angeles Pacific Railway, instituted the condemnation proceedings to secure a right-of-way over defendant Mary Lewis's land solely in order to convey it to the railway, which planned to build, own, and operate a railroad. In assessing the compensation due a landowner, former section 1248, as mentioned, authorized setoff of all benefits, "in all cases." Lewis, in an effort to avoid any setoff, sought to introduce evidence of Beveridge's status as an agent for the railway, on the theory that under former article I, section 14 of the California Constitution, setoff of benefits in condemnation actions by corporations "other than municipal" was precluded.
Acknowledging the difference between the constitutional provision's prohibition against setoff when the condemner was a private corporation and the statute's uniform rule of setoff in all cases, the Beveridge court first considered whether state constitutional equal protection principles would permit awarding a lesser sum to a landowner whose property was taken by a natural person than that awarded a landowner whose property was taken by a private corporation, especially when the natural person could immediately transfer the property to a corporation. The Beveridge court concluded such a result was constitutionally impermissible. (Beveridge, supra,
The Beveridge court then turned to the question that concerns us, i.e., what benefits must be set off in calculating an award for severance damages. The *707 court commenced its analysis by returning to what might be termed the first principle of takings law, that a landowner must receive "just compensation" for a taking. The court noted that a compensation law, to be valid, must at the least fully compensate the owner, it must apply uniformly, and it must compensate in money, rather than "conjectured advantage." (Beveridge, supra,
Against this background, in particular the prohibition against compensation in the form of "conjectured advantage," the Beveridge court turned its attention to the distinction between general and special benefits. "Benefits are said to be of two kinds, general and special," the court observed. (Beveridge, supra,
Thus, the Beveridge court distinguished general and special benefits along two distinct dimensions: generality versus peculiarity and conjecture versus certainty. The opinion does not, however, definitively state whether, to support a finding of a "general" benefit, the value of an alleged enhancement must both be conjectural or uncertain and lack peculiarity to the remainder property, or whether lack of peculiarity alone would suffice. That is, Beveridge does not resolve whether a reasonably certain, nonspeculative, nonconjectural enhancement that is not peculiar to the property in question, but is shared by a number of properties in the neighborhood, can nevertheless constitute a special benefit.
As indicated, the Beveridge court described special benefits as "peculiar to the land in question." Although the term "peculiarity" connotes singularity or uniqueness, it also refers to the characteristic of belonging especially or exclusively to a particular group. (See Webster's New Internat. Dict. (2d ed. 1958) p. 1801.) The parties agree a benefit need not be absolutely unique to the property in order to be considered special. That consensus scarcely advances our inquiry, however, as Beveridge gives no direction as to how widely a benefit may be shared and still be considered special rather than general.
*708 Related to the ambiguity of the term "peculiar" is the Beveridge court's failure to define the "community" relevant to the determination of general or special benefits, whether as the immediate neighborhood of the affected property, the town or city in which it is located, or, more broadly, the county or region. The more expansively the community is defined, the more likely the benefit will be deemed peculiar and, hence, a special benefit entitling the condemner to a setoff. In the present case, for example, if the relevant community is defined as those properties within walking distance of the Douglas Street Station, then the benefit of proximity is universally shared within the community and is thus self-evidently general. If, on the other hand, we define the relevant community as the greater Los Angeles metropolitan area (as we might do if our conception of community includes all those whose taxes presumably help pay for the transit system and all who might be expected to use it), then the benefit of proximity begins to appear much more peculiar to properties, such as Continental's, that are within walking distance of the Douglas Street Station.
Since Beveridge was decided, we have not attempted to clarify the rule it announced. Our most recent decision bearing on the general/special benefit dichotomy, Pierpont Inn, supra,
The difficulty of the distinction has been widely remarked. As then Presiding Justice Richardson said, in his opinion for the Court of Appeal, Third Appellate District, in People ex rel. Dept. Pub. Wks. v. Giumarra Farms, Inc. (1971)
The difficulty of determining whether a particular benefit is special or general, and the resulting inconsistency among published decisions on the subject, is clear in a comparison of the present case with earlier cases in which the benefit was that of enhanced access to the property. In City of Hayward v. Unger (1961)
(1a) The MTA suggests section 1263.450, which became operative in 1976, is inconsistent with the Beveridge rule distinguishing general and special benefits. That statute provides as follows: "Compensation for the injury to the remainder shall be based on the project as proposed. Any features of the project which mitigate the damage or provide benefit to the remainder, including but not limited to easements, crossings, underpasses, *710 access roads, fencing, drainage facilities, and cattle guards, shall be taken into account in determining the compensation for injury to the remainder." The MTA implicitly reasons that because the statute does not limit the fact finder to consideration of beneficial project features not affecting neighboring properties, adherence to the Beveridge rule would diverge from the apparent legislative intent. This point is unpersuasive. As Continental points out, the Law Revision Commission comment to section 1263.450 focuses on consideration of "physical solutions" devised by the condemner to mitigate damages. (Cal. Law Revision Com. com., 19A West's Ann. Code Civ. Proc. (1982 ed.) foll. § 1263.450, p. 84.) Moreover, as Continental further notes, the Law Revision Commission comment to section 1263.430, the statute defining "benefit to the remainder" for purposes of offsetting severance damages, professes to "codif[y] prior law" and "does not abrogate any court-developed rules relating to the offset of benefits nor does it impair the ability of the courts to continue to develop the law in this area. See Beveridge v. Lewis,
The MTA further argues that the Beveridge court's emphasis on the conjectural nature of general benefits suggests the salient difference between general and special damages lies in whether they are speculative, on one hand, or probable and provable, on the other. The MTA points out that, at various points in its opinion, the Beveridge majority appeared to equate general benefits with those that are "uncertain, incapable of estimation, and future," while identifying special benefits as those reasonably certain to result from the construction of the work. (E.g., Beveridge, supra, 137 Cal. at pp. 624-626 ["The property-owner, therefore, cannot be compelled to receive his compensation in such vague speculations as to future advantages, in which a jury may be induced to indulge."].) The MTA contends the Beveridge court sought to prevent frustration of the right to just compensation by precluding setoff of asserted benefits that might never materialize. Consequently, the MTA suggests, when the evidence shows the property will enjoy immediate advantage from the improvement, the benefit should be held special regardless of how many other properties are similarly affected.
As the constitutional debates previously referred to demonstrate, the evil that primarily concerned the framers of former article I, section 14 of the California Constitution and to which the Beveridge court responded, was the *711 railroad companies' practice of taking property and paying owners no money in return, on the mere promise of future economic growth. Current law, however, entitles an owner to the fair market value of any property taken, without setoff (§§ 1263.010, 1263.410); thus, because today no taking per se may go uncompensated, irrespective of any benefit to the remaining property, the sharp practices of the 19th century railroad corporations have no close analogue.
One amicus curiae, however, argues the problem of the 19th century "sanguine promoter" (see Beveridge, supra,
The Beveridge majority advanced another rationale for its rule against setting off general benefits: "The chance that land will increase in value as population increases and new facilities for transportation and new markets are created is an element of value quite generally taken into consideration in the purchase of land in estimating its present market value. This chance for gain is the property of the land-owner. If a part of his property is taken for the construction of the railway, he stands in reference to the other property not taken like similar property-owners in the neighborhood. His neighbors are not required to surrender this prospective enhancement of value in order *712 to secure the increased facilities which the railroad will afford. If he is compelled to contribute all that he could possibly gain by the improvement, while others in all respects similarly affected by it are not required to do so, he does not receive the equal protection of the law. The work is not being done for his benefit, but for the pecuniary advantage of those who are constructing it. The law will not imply a promise on his part to pay anything toward it." (Beveridge, supra,
Continental's equal protection argument is flawed in that it fails to account for a significant difference, in terms of the availability of compensation for the detrimental effects of the Green Line, between Continental and its neighbors from whom no property is taken. Having had part of its property condemned, Continental is entitled to severance damages, whereas its neighbors are not. Severance damages, as noted, consist generally of the diminution in the fair market value of the remainder property caused by the project. (§ 1263.420.) (3) As we said in Pierpont Inn, supra,
Although Continental urges that severance damages, like offsettable benefits, must be "special," the landowner seeking severance damages need only prove the value of his or her property has been impaired, not that other members of the public are not similarly affected. (Cf. Bacich v. Board of Control (1943)
Nothing in City of Berkeley v. Von Adelung (1963)
(4) The recovery of neighboring landowners in an inverse condemnation or nuisance action, in contrast, requires more than a showing that the value of the property has diminished as a result of the project: Such landowners must establish that the consequences of the project are "not far removed" from a direct physical intrusion or amount to a nuisance (see Varjabedian v. City of Madera (1977)
As the Beveridge majority appears not to have considered the differing availability of damages for the detrimental effects of public works projects as between the landowner in condemnation proceedings and the neighbor from whom no property is taken, its reasoning should not be read as an authoritative statement about the requirements in this context of the equal protection clause of the California Constitution. (Cf. Meehan v. Hopps (1955)
*715 The just compensation clause, as discussed above, is primarily aimed at making a landowner whole for any governmental taking or damage to his or her property. Indeed, certain language in opinions arising under this provision suggests that as long as Continental is fully compensated for the taking of its property and for loss in property value resulting from the project, it can have no complaint. As Caldwell acknowledged, "Just compensation requires a full indemnity and nothing more." (Caldwell, supra,
The United States Supreme Court has written to the same effect in Bauman v. Ross, supra,
Yet these principles may be said to collide with another value implicit in the just compensation clause. We have recognized that the policy underlying the just compensation clause is to ensure that the owner of damaged property is not forced to "`"contribute more than his proper share to the public undertaking"'"; in other words, the clause aims "`"to distribute throughout the community the loss inflicted upon the individual by the making of the *716 public improvements"...'" (Locklin v. City of Lafayette (1994)
In examining this question, we are forced to confront an obdurate fact: Applying existing rules, to distribute the cost of this project across the community with perfect equality is impossible. If Continental is subjected to setoff of general benefits resulting from proximity to the Douglas Street station, one might say it pays more than its proper share of the cost of this transit project because it loses an expectation of gain that other property owners, from whom no land is taken, are allowed to keep. If, on the other hand, Continental is permitted both to recover severance damages and to retain the general enhancement in the value of its property, one could with equal validity say it thereby pays less than its proper share of the project cost vis-a-vis those property owners from whom no property is taken, and who cannot recover damages for the diminution in the value of their property resulting from the operation of the transit line, when those effects are not sufficiently deleterious to support an action in inverse condemnation or nuisance. The law has no mechanism by which to ensure an absolutely fair distribution of costs and benefits across the entire community. We must instead search for the rule of greatest relative fairness, or least unfairness.
One general principle relevant to this determination is that taxpayers should not be required to pay more than reasonably necessary for public works projects. Stated another way, compensation for taking or damage to property must be just to the public as well as to the landowner. (United States v. Commodities Corp. (1950)
*717 Another question we might ask is whether the landowner's expectancy interest in the increased value of remainder property is entitled to the same protection under the just compensation clause as his or her more tangible property rights. The very exercise of the power of eminent domain in effect defeats a landowner's expectation of holding onto the condemned property and reaping any eventual enhancement in its value, since just compensation requires only that the owner be paid the fair market value of the property, measured on the date of valuation. (§ 1263.320, subd. (a).) In this regard, we note that if the government condemns an entire tract of land, the fair market value of the property in general does not include any increase in the value of the property that is attributable to the project for which the property is taken. (§ 1263.330; see Merced Irrigation Dist. v. Woolstenhulme (1971)
A rule permitting offset of all reasonably certain, immediate and nonspeculative benefits has the virtue of treating benefits and severance damages evenhandedly. (Cf. §§ 1263.420, subd. (b), 1263.430 [parallel definitions of severance damage and benefit].) Continental was entitled to, and did, present evidence that the effects of the Green Line operation on perceptions of view, light and noise within its building would lower expected future rents. Contrary to a suggestion in Continental's brief, the increase in rental value that the MTA sought to prove appears to be no more speculative or uncertain, and no less immediate, than the decrease in rental value that Continental was permitted to prove. Continental insists the existing Beveridge rule does treat benefits and severance damages equally because "only damage that is special to the defendant's property is compensable." The contention is surely incorrect if the term "special" retains any connotation of singularity, uniqueness or peculiarity, inasmuch as the Green Line obviously will affect views, light and noise levels of other properties in the neighborhood of Continental's, property as to some of which no compensation will be paid. (Cf. Bacich, supra,
On balance, and acknowledging that Continental's position is not without some force, we overrule Beveridge, supra,
We acknowledge that the rule we adopt today is not the majority view in the United States. (See 3 Nichols on Eminent Domain (rev. 3d ed. 1992) § 8A.03, pp. 8A-26 to 8A-31 and cases cited therein.) In adopting this rule, however, we join a quite respectable minority. (Ill. State Toll Hwy. v. Am. Nat. Bank, supra,
Costs
(5a) For guidance on retrial, we next address the MTA's argument the Court of Appeal erred in reversing the trial court's denial of Continental's posttrial motion for litigation expenses.
Awards of litigation expenses in eminent domain actions are governed by section 1250.410, which provides, in pertinent part, as follows: "(a) At least 30 days prior to the date of the trial on issues relating to compensation, the plaintiff shall file with the court and serve on the defendant its final offer of compensation in the proceeding and the defendant shall file and serve on the plaintiff its final demand for compensation in the proceeding. Such offers and demands shall be the only offers and demands considered by the court in determining the entitlement, if any, to litigation expenses.... [¶] (b) If the court, on motion of the defendant made within 30 days after entry of judgment, finds that the offer of the plaintiff was unreasonable and that the demand of the defendant was reasonable viewed in the light of the evidence admitted and the compensation awarded in the proceeding, the costs allowed pursuant to Section 1268.710 shall include the defendant's litigation expenses. [¶] ... [¶] (c) If timely made, the offers and demands as provided in subdivision (a) shall be considered by the court on the issue of determining an entitlement to litigation expenses."
In Redevelopment Agency v. Gilmore (1985)
(6) Several factors have emerged as general guidelines for determining the reasonableness or unreasonableness of offers. They are "`(1) the amount of the difference between the offer and the compensation awarded, (2) the percentage of the difference between the offer and award ... and (3) the good faith, care and accuracy in how the amount of offer and the amount of demand, respectively, were determined.'" (State of California ex rel. State Pub. Works Bd. v. Turner (1979)
Some Court of Appeal decisions have strayed from the principle that the mathematical disparity between the offer and the award is but one factor for the trial court to consider. For example, in San Diego Gas & Electric Co. v. Daley, supra,
(5b) In the present case, the MTA's final offer was $200,000 and Continental's final demand was $500,000. The trial court denied Continental's motion for litigation expenses, reasoning as follows: "Plaintiff's expert determined that just compensation totaled $76,500 and found no severance damages. Plaintiff's offer of $200,000 clearly did not ignore defendant's expert's opinion in its entirety. [¶] Two compensation issues separated the parties: loss due to noise and visual impact. Defendant's final demand apparently gave no weight to its own experts' opinion regarding loss due to visual impact. This conclusion follows from the fact that defendant's demand of $500,000 could not have included any amount for visual impact since, according to defendant's expert, the taking of the fee interest, the easements and the noise damage together exceeded $500,000. Since defendants gave no credence to its own expert's opinion regarding visual impact, it would be unfair to hold that plaintiff's failure to give any weight to that opinion was unreasonable. [¶] Continental also asserts that, in light of the evidence presented at trial, plaintiff's offer was unreasonable. Continental points out that plaintiff conceded severance damages of $25,000 for new architectural drawings and $85,000 for special window glazing to mitigate noise. Under cross examination, plaintiff's expert also admitted that he incorrectly discounted sums in his valuation of the temporary easement by $23,000. Since these sums, when added to those for the fee and the permanent easement as calculated by the plaintiff total $209,500, defendant argues that plaintiff's offer of $200,000 on its face was unreasonable. The court finds this difference to be insufficient to base a finding of unreasonableness against the plaintiff. [¶] It is clear plaintiff's offer and defendant's demand were so far apart because of the different manner in which their respective experts valued the noise and visual impact issues. As to the noise experts, each made highly technical presentations which the court found equally plausible in so far as it was able to understand the opinions. The court believes it would be unfair to determine that plaintiff acted unreasonably by relying on its own noise expert in light of the exceedingly technical nature of the evidence presented. [¶] With respect to the visual impact issue, the court observes that, in ruling on the motion for new trial,[[7]] it had occasion to carefully review Mr. Hennessey's testimony. Although the court found *722 Hennessey's testimony sufficient to defeat the motion, the court would be less than candid if it did not indicate that such testimony was not particularly impressive. Moreover, Hennessey refused to consider data from other markets, although he admitted this evidence might be relevant. Plaintiff's appraisers, who made in-depth studies of other markets, concluded that the overwhelming evidence showed that there were no severance damages. Under these circumstances, the court is unable to conclude that the plaintiff acted unreasonably."
In concluding the trial court abused its discretion in denying Continental's motion, the Court of Appeal relied primarily on the fact the MTA's offer ($200,000) was less than 18 percent of the severance damages awarded by the jury, and on the absolute disparity between the offer and the award. The Court of Appeal also took into account its view of the evidence bearing on the MTA's good faith, care and accuracy in determining the amount of the offer, concluding the MTA acted unreasonably in adhering to the view that proximity to the Douglas Street station was a special benefit that would enhance the value of Continental's property, despite the trial court's ruling excluding the MTA's proffered evidence to that effect. Of course, since we have concluded all reasonably certain, nonspeculative benefits resulting from the project may be offset against severance damages, it can hardly be said, in retrospect, that the MTA acted unreasonably. In any event, given that Hennessey's testimony, according to the trial court, was "less than impressive," and that Continental itself apparently did not give much weight to that testimony in formulating its offer, the MTA cannot be said to have made its offer unreasonably or in bad faith. On this record, the trial court did not "exceed[] the bounds of reason" in denying Continental's motion. (In re Marriage of Connolly (1979)
DISPOSITION
The judgment of the Court of Appeal is reversed and the cause remanded for further proceedings consistent with this opinion.
George, C.J., Mosk, J., Chin, J., and Brown, J., concurred.
KENNARD, J., Concurring and Dissenting.
Without any good reason for doing so, the majority abandons California's adherence to a long-established rule of American law followed by most other states. The rule in question operates in the field of just compensation for property taken for use by the government, specifically in cases where the government appropriates only a *723 portion of a landowner's parcel of real property. In such cases, the landowner receives, in addition to compensation for the portion taken, compensation for damages to the remainder not taken. (Code Civ. Proc., §§ 1263.310, 1263.410.) The Legislature has provided by statute that damages to the remainder are to be offset by the amount of any "benefit to the remainder." (Id., § 1263.410, subd. (b).) The rule at issue here, which California courts have followed since 1902, provides that special benefits to the remainder, but not general benefits, are deducted from the damages to the remainder that are otherwise compensable. (Beveridge v. Lewis (1902)
The majority rejects the special benefit rule and holds that the landowner's recovery for damage to the remainder should be reduced by the amount of all benefits, whether special or general, to the remainder. Because the existing rule limiting the reduction of a landowner's damages to only the amount of special benefits is fairer than the majority's holding and because it is a workable rule that has withstood the test of time, I dissent.
I
Defendant Continental Development Corporation (Continental) owned a triangular-shaped parcel of property, approximately 4.43 acres in area. Plaintiff Los Angeles Metropolitan Transportation Authority (MTA), in connection with the construction of its Green Line rail transit project, desired to run its elevated rail guideway along the northeast side of Continental's parcel. That side of Continental's property was 785 feet long and bordered an existing railroad right-of-way. The MTA filed an action to take an air rights easement approximately 5 feet wide running the entire length of the north-east side of Continental's parcel, 375 square feet of land in fee located within the easement, and a temporary construction easement.
When the MTA filed the condemnation action, Continental already had plans to construct an office building, but had not yet commenced construction. Because the taking necessitated setting back the building from the elevated rail guideway to provide a fire line, Continental revised its plans, relocating the building about 30 feet from the Green Line. By the time of trial, it had constructed a four-story office building on the lot. Continental also incurred expenses for laminating the building's windows on the side facing the Green Line in order to reduce noise.
*724 Continental claimed damages to the remainder of its severed parcel as follows: (1) the cost of revising its building plans ($23,123); (2) the cost of laminating the windows on the side of the building facing the Green Line and additional future costs to design, manufacture, and install double-paned windows to further reduce noise levels ($416,604); and (3) the capitalized reduction in rental value due to view and light impairment of offices located on the Green Line side of the building (over $1 million).
One of the Green Line stations, the Douglas Street Station, is located approximately 1,613 feet from Continental's parcel. At a pretrial hearing, the MTA claimed that the proximity of Continental's parcel to the Douglas Street Station was a special benefit worth millions of dollars which should be offset against Continental's claimed severance damages. The trial court ruled that the proximity of the Douglas Street Station to the remainder of Continental's parcel was not a special benefit.
The jury awarded Continental $1,122,149 in damages, including: (1) the value of the land taken in fee ($11,936); (2) the value of the air easement and temporary construction easement ($94,420); and (3) damages to the remainder ($1,015,793).
Continental moved for litigation expenses under Code of Civil Procedure section 1250.410,[1] which allows a court to award litigation expenses upon finding that the condemner's offer was unreasonable and the condemnee's demand was reasonable "viewed in the light of the evidence admitted and the compensation awarded in the proceeding." The trial court denied Continental's motion for expenses.
On appeal, the Court of Appeal affirmed the trial court's determination that proximity to the Douglas Street Station was a general benefit, and therefore the MTA was not entitled to offset that benefit against the damages to the remainder. The Court of Appeal reversed the trial court's denial of Continental's litigation expenses.
II
I begin with a description of the constitutional and statutory provisions for just compensation that are relevant to the question of what benefits should be offset against the damages to the remainder when a partial taking occurs. Our state Constitution requires the government to pay "just compensation" for property "taken or damaged." (Cal. Const., art. I, § 19.) To fulfill this *725 constitutional obligation, the Legislature has created a detailed statutory scheme for providing just compensation. This statutory scheme specifically addresses the determination of just compensation in partial takings cases.
The Legislature has recognized that when the government takes only a portion of a parcel of land, the landowner's losses are not necessarily limited to the value of the portion actually taken. In order to account for both the value of the portion taken and the landowner's other losses, it has provided the following.
First, the landowner receives the fair market value of the portion of the parcel that is actually taken. (§ 1263.310.) This amount is separately computed independent of any other losses. (§ 1260.230, subd. (a).) The portion taken is valued by itself, without regard to the fact that it was part of a larger parcel. (§ 1263.320.) Also disregarded is any increase or decrease in value attributable to the project itself. (§ 1263.330.) Compensation for the portion taken is never reduced by any benefit the project provides to the remainder. (§ 1263.410.) Thus, compensation for the portion taken is limited to its fair market value as an independent unit of property, without regard to the taken portion's existence as a part of a larger parcel, the effect of the project on the portion taken, or the effect of the project on the remainder of the parcel.
Next, the damage caused to the remainder by the severance of the portion taken from the remainder is computed. (§§ 1260.230, subd. (b)(1), 1263.420, subd. (a).) Conceptually, this amount can be conceived of as the difference between the fair market value (absent the project) of the parcel as a whole and the sum of the fair market values (computed separately and without regard to any benefits or depreciation caused by the project) of the property taken and of the remainder.
In providing that the landowner may recover for the damage caused by the severance of the portion taken from the remainder, the Legislature has implicitly recognized that the value of a whole parcel of land is often greater than the sum of its parts. A larger parcel presents more opportunities for use and development than do a number of isolated smaller parcels of similar condition with the same total area. A tall building feasible technically and economically on a large parcel may be more than twice as large as the buildings that may be feasibly built on two separate parcels each half the area of the large parcel; a large parcel that can be economically farmed as a unit may be uneconomic for that use when it is divided by a limited-access freeway that requires farm machinery to be transported long distances between the two portions of the remainder. *726 Returning to the statutory method of calculating damages for a partial taking, the next step is as follows: Any damage to the remainder caused by the effects of the project's construction and use is calculated, and is then added to the previously calculated damage resulting from severance of the portion taken from the remainder. (§ 1263.420, subd. (b).)
Finally, this sum of damages to the remainder is reduced by "the amount of the benefit to the remainder" (§ 1263.410, subd. (b).) The "[b]enefit to the remainder is the benefit, if any, caused by the construction and use of the project for which the property is taken." (§ 1263.430.)
Although the statutes in question that use the term "benefit," sections 1263.410 and 1263.430, do not define it, their legislative history reveals that the Legislature intended to continue existing law with its distinction between special and general benefits, while permitting that body of law to continue to evolve judicially. These statutes were enacted in 1975 as part of a comprehensive revision of the statutes governing eminent domain law proposed by the California Law Revision Commission and adopted by the Legislature. (Stats. 1975, ch. 1275, § 2, p. 3452.) In its commentary to section 1263.430, the Law Revision Commission stated: "Section 1263.430 codifies prior law by defining the benefit to the remainder that may be offset against damage to the remainder in an eminent domain proceeding.... Section 1263.430 does not abrogate any court-developed rules relating to the offset of benefits nor does it impair the ability of the courts to continue to develop the law in this area. See Beveridge v. Lewis,
As the Law Revision Commission's commentary notes, this court in 1902 first adopted the distinction between general and special benefits in Beveridge v. Lewis, supra,
Special benefits, by contrast, have some direct and peculiar relationship to the remainder, often arising from the contiguity of the remainder and the project. (Beveridge v. Lewis, supra,
*728 III
With this statutory framework in mind, I now turn to the question in this case: In offsetting the landowner's damages by the "amount of the benefit to the remainder" pursuant to section 1263.410, should the term "benefit" continue to be limited to only special benefits? The majority answers "no" to this question of statutory interpretation, asserting that the distinction between special and general benefits is impossible of consistent application and results in unfair overcompensation to landowners, and should be overruled. I disagree.
I see no need to upset this long-settled rule of California law. This court adopted the distinction between special and general benefits in 1902 in Beveridge v. Lewis, supra,
Considerations of stare decisis require that this court not overrule its past precedent without substantial justification. "[I]t is not enough that a different rule might seem preferable to us now.... `"It is, of course, a fundamental jurisprudential policy that prior applicable precedent usually must be followed even though the case, if considered anew, might be decided differently by the current justices."'" (People v. Cuevas (1995)
Moreover, we should be particularly hesitant to abandon the rule that only special benefits may be offset given the Legislature's approval of this rule when it revised the eminent domain laws in 1975. As set forth above, the legislative history of section 1263.430 states that the section "codifies prior law." Although the Legislature may not have prohibited the result the majority reaches today, given the statement in the legislative history that "[s]ection 1263.430 does not ... impair the ability of the courts to continue to develop the law in this area" (Cal. Law Revision Com. com., 19A West's Ann. Code Civ. Proc., supra, foll. § 1263.430, p. 82), it seems likely the Legislature presumed that the development of this area of the law would continue within a framework that preserved the distinction between special and general benefits, not that that framework would be abandoned.
There is no substantial justification for abandoning the distinction between special and general benefits. In resolving the statutory question of how broadly to interpret the term "benefit to the remainder" (§§ 1263.410, *729 subd. (b), 1263.430), one should keep in mind that it implements the just compensation provision of the California Constitution. The goal of that constitutional provision is to ensure that the landowner is compensated for the value of what has been taken or damaged by the government and does not "contribute more than his proper share to the public undertaking." (Clement v. State Reclamation Board (1950)
This purpose is furthered by deducting only special and not general benefits from the damages to the remainder, for that rule produces a fairer determination of just compensation in the circumstances of a partial taking. As our statutory scheme recognizes, when a portion of a larger parcel is taken, the landowner's loss is not limited to the value of that portion. The landowner loses the synergistic value of the parcel the extent to which its value as a whole exceeds the separate values of the portion taken and the remainder (because, as noted, a larger parcel offers more opportunities for development and use). The general benefits to the remainder, however, would have been the landowner's even in the absence of any taking. It is unfair to the landowner who has suffered a severance of his or her property to reduce his or her compensation by offsetting general benefits to the remainder against the severance and other damages to the remainder. All properties in the locality of the project receive those general benefits, yet only the landowner whose property has been in part physically taken is made, by forgoing compensation for his or her other losses, to pay for those general benefits.
As we stated almost a century ago in Beveridge v. Lewis, supra,
The preeminent commentary on eminent domain law puts it similarly: "General benefits may not be used to offset damages because the owner whose land is taken would be placed in a worse position than his neighbor whose estate lies outside the path of the improvement and who shares in the increased value without any pecuniary loss.... The condemnee pays in *730 taxation for his share of general benefits, just as other members of the public, and therefore, is entitled to receive his fair portion of the general advantages brought about by a public improvement." (3 Nichols on Eminent Domain, supra, § 8A.05, pp. 8A-57 to 8A-58.)
Nor is this a novel insight. A leading treatise on eminent domain law relied on by this court in Beveridge v. Lewis, supra,
This rule is the majority rule among the jurisdictions in the United States: "[I]t has been almost universally accepted that only special benefits may be deducted from damages to the remainder." (3 Nichols on Eminent Domain, supra, § 8A.05, p. 8A-61; accord, Annot., Eminent Domain: Deduction of Benefits in Determining Compensation or Damages in Proceedings Involving Opening, Widening, or Otherwise Altering Highway, supra,
IV
The majority takes the position, however, that the distinction between special and general benefits is uncertain and thus cannot be consistently *731 applied. In considering this assertion, it is important to recognize that calculating the amount of just compensation due when the government takes property is not an exact science. Determining fair market value, the lodestar for compensation calculations, is an exercise in hypothesis, not the discovery of a fact of nature. "[E]ven in the ordinary case, assessment of market value involves the use of assumptions, which make it unlikely that the appraisal will reflect true value with nicety." (United States v. Miller (1943)
In such circumstances, the role of the courts is not to search for a deceptive precision by abstracting the definition of "benefit" to the point where it becomes unnecessary to distinguish between special and general benefits. To do so would sacrifice the additional measure of fairness provided by the special benefit rule's more individualized determination of the injury inflicted by a taking. It is both futile and misleading to attempt "to reduce the concept of `just compensation' to a formula." (United States v. Cors (1949)
In this sense, the special benefit rule is akin to the reasonable person standard of negligence liability. That standard, which asks whether the *732 defendant used the amount of care that a reasonable person would, given all of the circumstances, similarly yields conclusions that are "inherently situational" and that cannot be generalized into fixed rules of conduct that do not vary with the surrounding circumstances, for "the amount of care deemed reasonable in any particular case will vary." (Flowers v. Torrance Memorial Hospital Medical Center (1994)
Nor is the majority correct that the special benefit rule is too uncertain and inconsistent to guide adjudication. The rule's long history belies that assertion. Courts both in California and elsewhere have been able to coherently apply the distinction between special and general benefits. (See, e.g., United States v. River Rouge Co., supra,
In an attempt to demonstrate that the special benefit rule breeds inconsistency, the majority asserts that the rule's application in Pierpont Inn, Inc. v. State of California, supra,
In City of Hayward v. Unger, supra,
In Pierpont Inn, Inc. v. State of California, supra,
Moreover, the results in these three cases are consistent as well with the theory of special and general benefits. In most cases, merely being in the general vicinity of a freeway interchange, as in Pierpont Inn, Inc. v. State of California, supra,
Thus, the majority has failed to demonstrate any instance in our case law in which the special benefit rule has led to inconsistent results.
Nor will it necessarily be easier to calculate general and special benefits together than it is to calculate special benefits alone. General benefits, being *734 more diffuse geographically, also often may be less capable of quantification in a definite amount. It is one thing to say that a freeway interchange may bring some general benefit to all the properties in the large area served by the surface streets connecting with the interchange; it is quite another thing to attempt to quantify that benefit. Because special benefits are more specific to one or a limited number of properties and usually arise from a more direct relationship between the property benefited and the project, they are in general more easily quantifiable. Additionally, as this court observed in Beveridge v. Lewis, supra,
Finally, the majority takes the position that it is fairer to deduct general benefits as well as special benefits. The majority asserts that the landowner may obtain compensation for damages from the project that are generally shared throughout the locality as well as special damages peculiar to the property severed, and therefore offsetting only special benefits results in an unfair overcompensation to landowners. The premise of the majority's argument is erroneous, for the damages that a landowner may recover are more limited than the majority acknowledges. A landowner may not recover for damages to the remainder that are "general to all property owners in the neighborhood, and not special to [the landowner]." (City of Berkeley v. Von Adelung (1963)
*735 V
I now turn to the application of the special benefit rule in this case. The trial court applied the special benefit rule and concluded that any benefit to the remainder arising from its proximity to the Douglas Street Station, almost one-third of a mile distant, was not a special benefit but a general benefit shared by all properties in the vicinity of the station. Accordingly, it offset no benefits against the damages to Continental's remainder. The Court of Appeal upheld this determination. There is substantial evidence to support the trial court's conclusion that the benefit of proximity to the station was general and not special. There are 565 other properties as close or closer to the Douglas Street Station as Continental's remainder, and no evidence that the benefit of proximity to the remainder was in any way distinguishable from the same benefit shared by all properties within the vicinity of the station. Accordingly, I would affirm the judgment of the Court of Appeal to the extent that it affirms the trial court's determination that the proximity of Continental's remainder to the Douglas Street Station was not a special benefit to be offset against the damage to the remainder.
Finally, I concur in that portion of the majority opinion which concludes, contrary to the Court of Appeal, that the trial court did not abuse its discretion in denying Continental its litigation costs.
CONCLUSION
When a parcel of property is severed by a government taking, any damages to the remainder are part of the injury the landowner suffers. To *736 refuse to compensate the landowner for those damages by offsetting against them the general benefits that all in the vicinity of the project receive unfairly forces the landowner to pay for benefits that others receive for free. Limiting offsets only to special benefits more equitably distributes among the entire community the benefits and burdens of the project: The landowner is not forced to pay for the general benefits that others receive without charge, the community pays for the damage that the project causes to the remainder, yet the landowner is denied the windfall of receiving both the special benefits to the remainder and the full value of the damages to the remainder.
For the reasons discussed above, the long-standing special benefit rule has proven itself practical and workable, as well as fair, and I would retain it. Accordingly, I would affirm that portion of the judgment of the Court of Appeal affirming the trial court's decision that there were no benefits to offset the damages due Continental, and reverse that portion of the Court of Appeals' judgment reversing the trial court's order denying Continental its litigation costs.
Baxter, J., concurred.
BAXTER, J., Concurring and Dissenting.
In great part, I agree with Justice Kennard's thoughtful criticism of the majority's new "setoff" rule for partial-takings cases. For the first time in modern California history, a public agency that condemns part of a larger parcel may reduce its monetary liability for severance damages by "setting off" benefits to the remainder which are widely shared by condemned and uncondemned parcels alike. There has been no change in the well-established laws governing eminent domain valuation that would compel this radical alteration, and, as Justice Kennard indicates, the majority provide no other persuasive justification for decreeing it.
Even more troubling, as Justice Kennard points out, is that the majority expressly overrule a principle of fundamental fairness long followed in this state and elsewhere as a matter of constitutional doctrine. It has been widely understood that the owner of a parcel taken in part is denied "just" compensation for "damage[]" to the remainder (Cal. Const., art. I, § 19; see also Code Civ. Proc., §§ 1263.230, subd. (b), 1263.420) if required to forfeit, as a setoff against such compensation, benefits to the remainder which are shared in common with untouched parcels, and which the latter are allowed to retain. (Beveridge v. Lewis (1902)
For this very reason, I would go further than Justice Kennard's dissent explicitly goes. Even if prior cases have not stated the rule in precisely this way, I would make clear that when part of a larger parcel is taken for a public project, the value of any benefit conferred by the project upon the remainder may be deemed "special," and may thus be set off against otherwise cognizable severance damages to the remainder, only when the benefit is "reasonably certain and nonspeculative" (maj. opn., ante, at p. 716) and is shared, if at all, only by other parcels similarly subjected to a partial taking. In other words, any benefit conferred by the project upon condemned and uncondemned parcels alike must be considered "general," and not subject to offset, even if the benefit is clear and present, and its diffusion throughout the community is not particularly broad.
The following example will illustrate the rule I believe to be correct: A new rail transit line will travel, for its entire distance, along the boundary between parcels A and B, two large plots of developed commercial land in separate ownership. A station will be constructed midway along the line to allow passengers to embark and disembark in either direction. By fortuity, both the right-of-way and the land needed for the station will be taken only from parcel A, leaving parcel B untouched, but the station itself will serve both parcels as its primary function, and both will have equal access to it. Parcels A and B will thus enjoy similar immediate and concrete benefits from the line, of a kind and degree not shared by the community in general. Nonetheless, I submit that for purposes of eminent domain law, it is a "general" benefit which may not be offset against severance damages to the untaken portion of parcel A.
If the rule is otherwise, parcel A not only suffers an involuntary severance not imposed upon parcel B, but is required to forfeit, by means of an offset, the monetary value of related benefits that its otherwise identically situated neighbor, parcel B, may retain without cost. Such a formula denies the "just" compensation our state's Constitution requires insofar as it forces the owner of condemned property, in particular, to "`"contribute more than his proper share to the public undertaking."'" (Locklin v. City of Lafayette (1994)
By distinguishing special from general benefits in the just and simple fashion I have suggested, we also do much to solve the problems of clarity *738 and definition that have prompted the majority, unwisely, to abandon the distinction altogether. The majority complain that the Beveridge court "distinguished general and special benefits along two distinct dimensions: generality versus peculiarity and conjecture versus certainty," but did not explain what result was appropriate when a benefit was peculiar but conjectural, or certain but widespread. (Maj. opn., ante, at p. 707.) We may end any confusion on the point by saying that a special benefit subject to offset is one both reasonably certain and immediate and unique to parcels which have been subjected to a partial physical taking. Under this definition, all other benefits become general and immune from offset.
As all recognize, no amount of legal refinement can solve every difficulty in applying the special/general benefits rule to individual cases. In practice, real estate appraisal is an art, not a science. Legitimate disputes may always be expected to arise about the value of a particular alleged benefit, as well its certainty and peculiarity. The answer, however, is not to abandon a doctrine which, for nearly a century, has justly protected the rights of California property owners against abuse of the awesome sovereign power of eminent domain. On the contrary, the rule should be clarified and strengthened to permit full realization of the sound constitutional policy this court recognized in Beveridge. The solution I propose serves that purpose.
Under that standard, the trial court and the Court of Appeal were obviously correct in concluding that defendant Continental Development Corporation (Continental) gleaned only a general benefit from the proximity of its remainder parcel to the Douglas Street Green Line station. Numerous uncondemned parcels enjoyed an equal or greater proximity to the station. I would therefore affirm the judgment of the Court of Appeal to that extent. Like Justice Kennard, I concur in that portion of the majority judgment which concludes, contrary to the Court of Appeal, that the trial court did not abuse its discretion in denying Continental its litigation costs.
The petition of appellant Continental Development Corporation for a rehearing was denied November 12, 1997. Kennard, J., and Baxter, J., were of the opinion that the petition should be granted.
NOTES
[1] Unless otherwise noted, further statutory references are to the Code of Civil Procedure.
[2] The Railroad Act, in permitting setoff of benefits against both compensation owing for the property taken and severance damages, thus employed a variation of the standard currently operative in federal condemnation law, i.e., what has become known as the before-and-after rule. (See United States v. River Rouge Co. (1926)
Notes
[3] We do not read Bacich, supra,
[4] We note, too, that whereas the Beveridge majority was concerned with the prospect of "corporations other than municipal" (Cal. Const., former art. I, § 14) taking property without compensating owners therefor and constructing railroads that those corporations proceeded to operate for their own "pecuniary advantage" (
[5] In urging that, under our holding, it will not be "easier to calculate general and special benefits together than it is to calculate special benefits alone" because general benefits often are "less capable of quantification in a definite amount" (conc. & dis. opn. of Kennard, J., post, at pp. 733-734), the concurring and dissenting opinion does not acknowledge that the jury shall be permitted to consider only competent evidence that is neither speculative nor conjectural.
We note that the trial of condemnation actions shall continue to comply with the Eminent Domain Law, title 7 of part 3 of the Code of Civil Procedure, in particular section 1260.230 thereof, which provides: "As far as practicable, the trier of fact shall assess separately each of the following: [¶] (a) Compensation for the property taken.... [¶] (b) Where the property acquired is part of a larger parcel: [¶] (1) The amount of damage, if any, to the remainder.... [¶] (2) The amount of benefit, if any, to the remainder.... [¶] (c) Compensation for loss of goodwill, if any...."
[6] Amicus curiae Building Owners and Managers Association of Greater Los Angeles asserts that the mere existence of the governmental power to specially assess (see Pub. Util. Code, § 33000) should be sufficient to bar any offset of special benefits whenever the affected property is close enough to a transit station to justify its inclusion in an assessment district. This question was not raised below, and we need not decide it. Suffice it to say that, as the MTA points out, the record contains no evidence there ever have been or will be any proceedings to form a special assessment district for the transit project at issue in this case, and nothing we say here in any way affects the rule in Oro Loma Sanitary Dist. v. Valley (1948)
[7] The MTA's motion for new trial urged that the jury's severance damage award was not supported by the evidence and that the trial court had erred in refusing to permit the MTA to cross-examine Hennessey, Continental's valuation expert, on the issue of enhancement of the value of the property due to proximity to a transit station and in excluding evidence of such enhancement.
[1] All further statutory citations are to the Code of Civil Procedure.
[2] Bacich v. Board of Control (1943)
Moreover, as the Bacich court made clear in a passage quoted by the majority, the damaging of a property right is necessarily a special damage peculiar to the owner of the right in question and not shared by the public in general: "If he has a property right and it has been impaired, the damage is necessarily peculiar to himself and is different in kind from that suffered by him as a member of the public or by the public generally, for his particular property right as a property owner and not as a member of the public has been damaged." (Bacich v. Board of Control, supra,