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  • City of Santa Clara vs D.E. II Restaurants, Inc. Eminent Domain/Inv Cond Unlimited (14)  document preview
  • City of Santa Clara vs D.E. II Restaurants, Inc. Eminent Domain/Inv Cond Unlimited (14)  document preview
  • City of Santa Clara vs D.E. II Restaurants, Inc. Eminent Domain/Inv Cond Unlimited (14)  document preview
  • City of Santa Clara vs D.E. II Restaurants, Inc. Eminent Domain/Inv Cond Unlimited (14)  document preview
  • City of Santa Clara vs D.E. II Restaurants, Inc. Eminent Domain/Inv Cond Unlimited (14)  document preview
  • City of Santa Clara vs D.E. II Restaurants, Inc. Eminent Domain/Inv Cond Unlimited (14)  document preview
  • City of Santa Clara vs D.E. II Restaurants, Inc. Eminent Domain/Inv Cond Unlimited (14)  document preview
  • City of Santa Clara vs D.E. II Restaurants, Inc. Eminent Domain/Inv Cond Unlimited (14)  document preview
						
                                

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ie SUPERIOR COURT OF CALIFORNIA RCTS COUNTY OF SANTA CLARA Se MINUTE ORDER City of Santa Clara vs D.E. Il Restaurants, Inc. Hearing Start Time 9:00 AM 19CV340508 Hearing Type: Hearing: Motion to Strike Date of Hearing: 08/20/2019 Comments: Heard By: Kirwan, Peter Location: Department 19 Courtroom Reporter: - No Court Reporter Courtroom Clerk Ingrid C Stewart Court Interpreter: Court Investigator: Parties Present: Future Hearings: Connor, F Gale Attorney Jenny, Scott Edward Attorney Exhibits: - CONTESTED TENTATIVE Tentative ruling is contested by _ plaintiff by attorney Gale Connor. Motion is argued and submitted. The Tentative Ruling is adopted. See below: Calendar Line 3 Case Name: City of Santa Clara v. D.E. II Restaurants, Inc., et al. Case No.: 19CV340508 Motion to Strike Cross-Complaint Factual and Procedural Background Plaintiff City of Santa Clara ( City ) is vested with the power of eminent domain to acquire real property. (First Amended Complaint ( FAC ), 1.) Plaintiff City seeks to acquire real property for a public use, to wit, the relocation of Stars and Stripes Drive and development of Avenues A, B, and C ( Project ). (FAC, 2.) The Project will provide necessary infrastructure for the City Place Project. (Id.) As relocated, Stars and Stripes Drive would cut through a City-owned building located at 5131 Stars and Stripes Drive which is presently leased to defendant D.E. || Restaurants, Inc. ( Defendant ) pursuant to a Lease Agreement for the Santa Clara Banquet and Meeting Facility between City and Defendant, dated July 1999, as amended by that certain First Amendment to Lease Agreement dated July 1, 2010 ( Lease ). (FAC, 4.) Defendant s rights and interests under the Lease are hereby referred to as the Property. (Id.) The Project will result in the destruction of the City-owned building constituting the premises under the Lease as a result of which the City must acquire Defendant s leasehold estate. (FAC, 5.) On January 2, 2019, plaintiff City filed a Complaint in Eminent Domain against Defendant. On March 11, 2019, plaintiff City filed the operative FAC which also seeks eminent domain. On April 10, 2019, Defendant filed its answer to the FAC and also filed a cross-complaint which incorporates Printed: 8/20/2019 08/20/2019 Hearing: Motion to Strike - 19CV340508 Page 1 of 5 aS Ge SUPERIOR COURT OF CALIFORNIA ae COUNTY OF SANTA CLARA = MINUTE ORDER the allegations of the FAC by reference. (Cross-Complaint, 5.) Defendant asserts City has taken action against Defendant which decreased the value of Defendant s business prior to the condemnation action being filed. (Cross-Complaint, 8 9.) The actions of the City has been continuous since January 2014 and did not stabilize until the filing of the eminent domain action. (Cross-Complaint, 10.) The actions of the City and its agents interfered with the use of the subject property and the ability to generate the highest levels of income and profit. (Cross-Complaint, 11 12.) The actions of the City decreased the amount of Defendant s customers and caused customers not to book large functions and parties at Defendant s restaurant, including canceling events and parties. (Id.) Defendant s cross-complaint asserts a claim for inverse condemnation and precondemnation damages. On June 18, 2019, plaintiff/cross-defendant City filed a motion to strike the cross-complaint. |. Plaintiff/cross-defendant City s motion to strike cross-complaint is DENIED. City moves to strike Defendant s cross-complaint on the ground that in eminent domain proceedings, Defendant may only seek damages in a cross-complaint if they are not recoverable (by way of an answer) in the direct condemnation action. City contends the allegations found in Defendant s cross-complaint mirror allegations already found in Defendant s answer to City s complaint except that Defendant s cross-complaint also seeks attorney s fees which would not otherwise be recoverable in an eminent domain action, but are recoverable by a successful plaintiff in an inverse condemnation action.1 City characterizes the primary relief that Defendant seeks by way of its cross-complaint as Klopping damages. In 8 Witkin, Summary of California Law (11th ed. 2019) Constitutional Law, 1373, the treatise describes the Klopping rule as follows: Although announcement of a public project often enhances neighboring property values (see supra, 1372), the converse may also be true. For example, publicity that a refuse dump will be located somewhere within a 10-square-mile area may tend to depress the value of all land within the area because of the adverse impact a dump might have on other property in close proximity. (Klopping v. Whittier (1972) 8 C.3d 39, 45, 104 CR. 1, 500 P.2d 1345.) (See C.E.B., 1 Condemnation Practice 3d, 4.3 et seq.; 5 A.L.R.3d 901 [depreciation due to project for which land is condemned as factor].) The traditional rule excluded this element from consideration unless the conduct of the condemnor goes so far as to constitute a de facto taking. But in Klopping v. Whittier, supra, the court, disapproving earlier cases (8 C.3d 49), took a different approach. Defendant city initiated condemnation proceedings for a parking district by a resolution of May 11, 1965, and an action filed November 10, 1965. But an action challenging assessments caused the city to adopt a resolution of postponement and dismissal on July 7, 1966. The dismissal was entered November 16, 1966. Because the resolution announced an intention to reinstate proceedings when the other litigation terminated favorably, plaintiffs, property owners in the proposed area, brought this action for inverse condemnation. Their theory was that the precondemnation publicity caused a decline in market value by rendering it difficult to rent their lands. Held, they were entitled to offer evidence of this fact on the issue of valuation. Because the city's announcements were directed at plaintiffs’ properties, rather than at an undesignated area, the case did not involve typical condemnation blight. Rather, plaintiffs claimed that, because the condemnation cloud hovered over their lands, they were unable to fully use their properties and that this 1 An inverse condemnation action is the corrollary of a suit for eminent domain; the significant difference between the two is that in the former the property owner commences the litigation for compensatory damages, while in the latter the public entity takes the initiative to condemn the property. (Redevelopment Agency v. Contra Costa Theatre, Inc. (1982) 135 Cal.App.3d 73, 79, fn. 1.) damage, reflected in loss of rental income, was recoverable. (8 C.3d 46.) They did not contend that there had been actual physical invasion or direct legal restraint amounting to a de facto taking; their position was that the decrease in market value caused by the condemnation announcements should be disregarded in valuing Printed: 8/20/2019 08/20/2019 Hearing: Motion to Strike - 19CV340508 Page 2 of 5 ie SUPERIOR COURT OF CALIFORNIA RCTS COUNTY OF SANTA CLARA Se MINUTE ORDER the property. (8 C.3d 48.) Total exclusion of evidence of loss in value resulting from acts of the condemning authority is not justified; but allowance of proof of all loss would be equally improper. It might deter public agencies from announcing sufficiently in advance their intention to condemn. Hence, it may be necessary for the condemnee to bear some incidental loss. But when the condemnor acts unreasonably, by excessively delaying the eminent domain proceeding or by other oppressive conduct, the owner is entitled to compensation. (8 C.3d 49, 51, 52.) Accordingly we hold that a condemnee must be provided with an opportunity to demonstrate that (1) the public authority acted improperly either by unreasonably delaying eminent domain action following an announcement of intent to condemn or by other unreasonable conduct prior to condemnation; and (2) asa result of such action the property in question suffered a diminution in market value. (8 C.3d 52.) This right to damages for unreasonable conduct is independent of the right to recover costs on abandonment of condemnation (see infra, 1404, 1405. The remedies are distinct and no election is required. (8 C.3d 57.) The Klopping rule has been extensively invoked and applied. With an explanation of the Klopping rule, City cites Redevelopment Agency v. Contra Costa Theatre, Inc. (1982) 135 Cal.App.3d 73, 79 (Redevelopment) where the court wrote: It is also now settled that liability for unlawful precondemnation activities may be considered a part of a single eminent domain proceeding. (People ex rel. Dept. Pub. Wks. v. Southern Pacific Trans. Co. (1973) 33 Cal.App.3d 960, 965 [109 Cal.Rptr. 525].) In Klopping, our high court held that a condemner could be liable in either inverse or direct condemnation for diminution in market value resulting from unreasonable precondemnation conduct. (1), (See fn. 1.) (2)(See fn. 2.) (Klopping, supra., 8 Cal.3d at p. 58; City of Los Angeles v. Monahan (1976) 55 Cal.App.3d 846, 852 [127 Cal.Rptr. 763]; [Footnote omitted.] People ex rel. Dept. Pub. Wks. v. Peninsula Enterprises, Inc. (1979) 91 Cal.App.3d 332, 353 [153 Cal.Rptr. 895]; Richmond Redevelopment Agency v. Western Title Guaranty Co. (1975) 48 Cal.App.3d 343, 350 [122 Cal. Rptr. 434].) [Footnote omitted.] Thus, Klopping damages may be sought in an eminent domain proceeding; a separate claim is not required. City invites this court to interpret this passage from Redevelopment to mean that Defendant may only seek Klopping precondemnation damages by way of an answer to the eminent domain proceedings and not ina cross-complaint. However, the language in Redevelopment is permissive Klopping damages may be sought in an eminent domain proceeding. City also cites Red Mountain, LLC. v. Fallbrook Public Utility Dist. (2006) 143 Cal.App.4th 333 (Red Mountain), but the decision actually supports Defendant. Of relevance, the court in Red Mountain explained: Neither Klopping nor Richmond precluded Red Mountain from pursuing its breach of contract/inverse condemnation claims after Fallbrook filed its eminent domain action. Applying former eminent domain statutes, Richmond held that a property owner's inverse condemnation cross-complaint was properly struck because it sought the same type of damages the property owner was required to seek by answer to the direct condemnation complaint and would have obtained as part of the eminent domain award. However, Richmond was decided under obsolete eminent domain statutes that required the defendant property owner to allege the amount of damages claimed by reason of the taking in the answer to the eminent domain complaint. (See Richmond, supra, 48 Cal.App.3d at p. 351, 122 Cal.Rptr. 434.) In any event, Richmond does not apply here because Red Mountain did not seek the same type of damages or compensation in its inverse condemnation cause of action that it could recover in Fallbrook's direct condemnation action. The inverse condemnation damages Red Mountain sought were for the diminution in the value of its land that occurred before Fallbrook decided to bring the direct condemnation action. Klopping held that that as between a city's eminent domain action and an inverse condemnation action Printed: 8/20/2019 08/20/2019 Hearing: Motion to Strike - 19CV340508 Page 3 of 5 aS Ge SUPERIOR COURT OF CALIFORNIA ae COUNTY OF SANTA CLARA = MINUTE ORDER involving the same property, the case that proceeds to judgment first is res judicata as to issues common to both actions and bars recovery in the other action of any damages that were or could have been recovered in the action that proceeded to judgment first. (Klopping, supra, 8 Cal.3d at p. 58, 104 Cal.Rptr. 1, 500 P.2d 1345.) Klopping is inapposite because Fallbrook's eminent domain action and Red Mountain's inverse condemnation action were consolidated and proceeded to judgment together, and the two actions did not involve the exact same property, legal issues or damages. In any event, Klopping does not support the proposition that an inverse condemnation action cannot exist contemporaneously with an eminent domain action involving the same property. Klopping contemplates separate, unconsolidated actions pending simultaneously, with one of the actions proceeding to judgment first and precluding a later judgment in the other action on the same issues. The trial court did not err in allowing both Red Mountain's inverse condemnation action and Fallbrook's eminent domain action to proceed. (Red Mountain, supra, 143 Cal.App.4th at pp. 356 357.) The concern raised in Red Mountain of res judicata is not present here as the inverse condemnation claim is being asserted in a cross-complaint in the same proceeding. Presumably then, City s argument is that a cross- complaint for inverse condemnation is unnecessary or redundant. However, as Defendant points out in opposition, while a cross-complaint may be unnecessary if the action proceeds to trial, there is a possibility that City may abandon its eminent domain action and, without a cross-complaint, Defendant would have to initiate a separate action which could potentially be subject to a statute of limitations argument. In light of such a potential scenario, the court disagrees with City s argument that a cross-complaint is unnecessary. Defendant also notes in opposition that the Law Revision Commission Comments to Code of Civil Procedure section 426.702 further supports the filing of a cross-complaint because it states, Subdi ion (a) of Section 426.70 by making this article applicable to eminent domain proceedings codifies the principle that a related cause of action must be asserted against the plaintiff in an eminent domain action or it is barred. Klopping v. City of Whittier, 8 Cal.3d 39, 58, 500 P.2d 1345, 1360, 104 Cal.Rptr. 1, 16 (1972) (damages caused by pre- condemnation announcements). The related cause must be asserted as a cross-complaint. See Section 426.30. The court finds this comment to be further persuasive legal authority for denying the instant motion to strike. Accordingly, cross-defendant City s motion to strike cross-complaint is DENIED. 2 Code Civ. Proc., 426.70 states: (a) Notwithstanding subdivision (a) of Section 426.60, this article applies to eminent domain proceedings. (b) The related cause of action may be asserted by cross-complaint in an eminent domain proceeding whether or not the party asserting such cause of action has presented a claim in compliance with Part 3 (commencing with Section 900) of Division 3.6 of Title 1 of the Government Code to the plaintiff in the original eminent domain proceeding. Printed: 8/20/2019 08/20/2019 Hearing: Motion to Strike - 19CV340508 Page 4 of 5 ae 2 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA SE MINUTE ORDER Printed: 8/20/2019 08/20/2019 Hearing: Motion to Strike - 19CV340508 Page 5 of 5