COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES v. WORLD WIDE ENTERPRISES INC

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Court of Appeal, Second District, Division 3, California.

COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, Plaintiff and Respondent, v. WORLD WIDE ENTERPRISES, INC., Defendant and Appellant.

No. B122176.

Decided: January 28, 2000

Laskin & Graham and Richard Laskin, Glendale, for Defendant and Appellant. Arthur J. Hazarabedian, Oliver, Vose, Sandifer, Murphy & Lee, David S. Cunningham, III, JoAnne Victor and Jackson & Lewis, Los Angeles, for Plaintiff and Respondent.

INTRODUCTION

Defendant, World Wide Enterprises Inc. (World Wide), appeals from the judgment and final order of condemnation assessing the fair market value of its real property at $850,000.   In its appeal, World Wide assigns as error three evidentiary rulings.   No error is demonstrated.   In the published portion of this opinion, we hold that the trial court did not err in precluding at the trial on just compensation the cross-examination of the condemning agency's appraiser about his prior inconsistent appraisal made for purposes of calculating the deposit of probable compensation.   Accordingly, we affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

In March 1996, the Community Redevelopment Agency of Los Angeles (CRA) entered into an agreement with the Metropolitan Transportation Authority (MTA) and the Los Angeles Housing Department (LAHD) for a joint mixed-use development project in connection with the MTA's Hollywood/Western Metro Red Line Station (the joint-powers project).   On March 21, 1996, the CRA designated certain property in the area for condemnation, including property owned by World Wide.

On March 29, 1996, the CRA filed a complaint seeking to condemn and acquire fee simple title to World Wide's real property (the property).   The property consisted of approximately 29,520 square feet of land located on the corner of Western Avenue and Carlton Way, just south of Hollywood Boulevard in Los Angeles.   In 1996, when the eminent domain action was filed, the property contained a dilapidated four-story multi-unit apartment building built in 1927, and two smaller two-story apartment buildings of 1916 vintage.   All of the buildings had extensive histories of building, electrical, and health code violations beginning in the 1980s.   The 1994 Northridge earthquake caused additional structural damage to the buildings.   Vacant since the earthquake, the buildings had been the subject of extensive vandalism.

Seeking an order for prejudgment possession, the CRA hired David A. Zoraster, a real estate appraiser, who estimated the property was worth $1,020,000, based on recent sales of comparable sites in the area.   On April 26, 1996, the CRA deposited that amount into court as probable compensation and obtained an order allowing it to take immediate possession of the property.1

In advance of trial, the parties exchanged appraisals of the property.   World Wide's appraiser, Lawrence Brown, opined the value of the property to be $2,500,000.   The CRA submitted Zoraster's second valuation of $810,000.   At trial, World Wide's appraiser testified that he had revised his appraisal to $1,665,000.   Zoraster testified to his opinion that the property's value was $810,000.   The jury entered a verdict valuing the property at $850,000.   Judgment was entered thereon and World Wide's appeal followed.

CONTENTIONS

World Wide assigns as trial court error the following rulings:  [[/]] (2) precluding World Wide from impeaching the CRA's appraiser during cross-examination about his prior inconsistent deposit-related valuation;  [[/]].

DISCUSSION

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2. The deposit-related appraisal.

World Wide contends that the trial court abused its discretion in granting the CRA's motion in limine to preclude World Wide from impeaching the CRA's appraiser, Zoraster, about inconsistencies between his two appraisals.   The court granted the CRA's motion in limine based on section 1255.060, subdivision (b), and on a finding that there were no inconsistencies between the two appraisals.   We conclude the ruling was correct.

The deposit of probable compensation is made by the condemning agency that wishes to obtain an order allowing it to take immediate possession of the property in advance of the just compensation trial.  (14 Cal. Real Estate Law & Practice (1999) Prejudgment Possession, § 505.01, p. 505-3.)   The deposit must be based on an appraisal by an expert appraiser. (§ 1255.010, subd. (b).)  Zoraster appraised the property twice.   The first appraisal, made for the purpose of calculating the deposit of probable compensation pursuant to section 1255.010, concluded that the property was worth $1,020,000.   Zoraster later conducted a second appraisal in connection with the trial of just compensation and opined that the value of the property was $810,000, a sizeable reduction from his earlier deposit-related appraisal.

The CRA argued at the hearing on its motion in limine to exclude reference to the deposit-related appraisal that while Zoraster's two appraisals were different, they were not inconsistent.   The deposit-related appraisal had been made subject to the assumption that the property was free of toxic substances, including asbestos.   That appraisal contained no analysis of the effect of asbestos on valuation.   Once the CRA filed its deposit of probable compensation and obtained possession of the property, it was able to investigate the condition of the buildings and found a significant amount of asbestos in the interior.   Additionally, the condition of the buildings' interiors was so poor as to render the buildings valueless.   Hence, Zoraster testified that in his second appraisal he deducted from his estimation of the property's value, the cost of demolition and asbestos abatement.

Section 1255.060 expressly forbids the impeachment of a witness by reference to any appraisal report made in connection with the deposit of probable compensation. (§ 1255.060, subds. (a)-(b).)   Section 1255.060, subdivisions (a) and (b) state, “(a) The amount deposited or withdrawn pursuant to this chapter shall not be given in evidence or referred to in the trial of the issue of compensation. [¶] (b) In the trial of the issue of compensation, a witness may not be impeached by reference to any appraisal report, written statement and summary of an appraisal, or other statements made in connection with a deposit or withdrawal pursuant to this chapter, nor shall such a report or statement and summary be considered to be an admission of any party.”  (Italics added.)

The Law Revision Commission Comment to section 1255.060 states that “․ the purpose of subdivision[ ] (b) ․ is to encourage the plaintiff [condemning agency] to make an adequate deposit by protecting the plaintiff [condemning agency] from the defendant's [landowner's] use of the evidence upon which the deposit is based in the trial on the issue of compensation.   If such evidence could be so used, it is likely that the plaintiff would make an inadequate deposit in order to protect itself against the use at the trial of evidence submitted in connection with the deposit․ Subdivision (b) precludes impeachment of a witness at the trial by reference to appraisal reports ․ or other statements made in connection with the deposit and notice thereof and proceedings to determine or redetermine the amount of the deposit.”

Based on section 1255.060, subdivision (b), the trial court did not err in granting the CRA's motion in limine to preclude reference in the cross-examination of Zoraster to his deposit-related appraisal.

Citing County of Contra Costa v. Pinole Point Properties, Inc. (1994) 27 Cal.App.4th 1105, 33 Cal.Rptr.2d 38, World Wide contends that the ruling was error.   In that case, the trial court cited section 1255.060, and based thereon precluded the landowner, Pinole Point, from cross-examining the county's appraiser about his deposit-related appraisal.   To challenge the court's ruling, Pinole Point argued that the county had waived the privilege when it called its appraiser to testify at trial.   The appellate court agreed with Pinole Point, stating “․ when a condemner calls an expert witness to testify at trial to valuation of the subject property, section 1255.060, subdivision (b) does not proscribe his impeachment by use of an appraisal that the witness theretofore made in connection with the condemner's deposit for pretrial possession of that property.”  (Id., at p. 1113, 33 Cal.Rptr.2d 38, original italics.)

The Pinole Point court gave two reasons for its conclusion.   First, the court was concerned that section 1255.060 raised a constitutional problem, because at bottom a condemnation action serves to determine the property's fair market value.   A rule prohibiting a landowner from questioning a witness about a prior inconsistent opinion in the Pinole Point court's view, interfered with the constitutional right to compensation “in a very fundamental way.”   (Id., at p. 1112, 33 Cal.Rptr.2d 38.)   The court also noted that historically courts have allowed impeachment of appraisers with prior inconsistent opinions.  (County of Contra Costa v. Pinole Point Properties, Inc., supra, 27 Cal.App.4th at p. 1112, 33 Cal.Rptr.2d 38.)

As the second reason for its conclusion, the Pinole Point court cited the statute's legislative history:  Former section 1243.5, subdivision (e), prohibited parties from mentioning the amount of the security deposit at trial.   The rule eliminated the possibility that deposit appraisals could be used against condemning agencies at trial, thereby encouraging agencies to make adequate deposits.  (County of Contra Costa v. Pinole Point Properties, Inc., supra, 27 Cal.App.4th at pp. 1112-1113, 33 Cal.Rptr.2d 38.)   However, as the result of judicial interpretation of former section 1243.5, subdivision (e), while the amount of the deposit was inadmissible, landowners could call as a witness at trial the appraiser who helped the condemning agency prepare its deposit.   Concluding that this judicial interpretation of former section 1243.5, subdivision (e) “defeat[ed] the spirit of the rule,” the California Law Revision Commission recommended enactment of the current statute, section 1255.060, to close the “loophole.”  (Recommendations Relating to Eminent Domain Law (Dec.1976) 13 Cal. Law Revision Com. Rep. (1976) p. 1048;  County of Contra Costa v. Pinole Point Properties, Inc., supra, at p. 1113, 33 Cal.Rptr.2d 38.)   Based on this history, the Pinole Point court concluded that section 1255.060 was enacted for the purpose of preventing a landowner from calling the appraiser who helped the condemning agency prepare its deposit.  (Id., at pp. 1112-1113, 33 Cal.Rptr.2d 38.)

For these reasons, the Pinole Point court concluded that subdivision (b) of section 1255.060 does not prevent the impeachment of the condemning agency's appraiser by reference to his or her deposit-related appraisal, if the agency calls that appraiser at the valuation trial.  (County of Contra Costa v. Pinole Point Properties, Inc., supra, at p. 1113, 33 Cal.Rptr.2d 38.)   Yet, despite this analysis, the Pinole Point court went on to hold that any error was not pivotal because the landowner was able to place the appraisal-related evidence in front of the jury.  (Ibid.)

Even if the discussion in Pinole Point about section 1255.060 were dictum, we respectfully conclude Pinole Point was wrongly decided and decline to follow it.

Section 1255.060 does not ban cross-examination, either generally or based on inconsistent statements, as Pinole Point suggests and World Wide would have us believe.   Section 1255.060 merely precludes cross-examination on one restricted topic, namely the deposit appraisal.   Thus, the rule constitutes a reasonable, statute-based, evidentiary exclusion.  “The Evidence Code contains a host of rules excluding evidence which is both relevant and nonprivileged, but the admission of which would tend to frustrate public policy.  [Citations.]”  (People v. Crow (1994) 28 Cal.App.4th 440, 449, 33 Cal.Rptr.2d 624, citing Evid.Code, §§ 1100-1159.)  “[O]ffers to compromise a claim, as well as conduct and statements occurring in the course of negotiations for the settlement of a claim, are inadmissible to prove either the validity or invalidity of the claim.  [Citations.]   The exclusion of that evidence ‘is based upon the public policy in favor of the settlement of disputes without litigation.’  [Citation.]”  (Ibid., citing Evid.Code, §§ 1152-1154, Recommendation Proposing an Evidence Code (Jan.1965) 7 Cal. Law Revision Com. Rep. (1965) p. 218.)   Section 1255.060 is a limitation similar to that applied to testimony concerning compromise offers.  (Evid.Code, §§ 1152, 1154.)   The express purpose of the exclusion of deposit-related testimony is to “encourage the plaintiff [condemnor] to make adequate deposits.”  (13 Cal. Law Revision Com. Rep. (1976) p. 1048.)

 Additionally, contrary to the suggestion in Pinole Point, evidentiary exclusions do not generally rise to the level of a constitutional transgression.  (People v. Cudjo (1993) 6 Cal.4th 585, 611, 25 Cal.Rptr.2d 390, 863 P.2d 635.)   Even in criminal trials, “[c]ourts retain ․ a traditional and intrinsic power to exercise discretion to control the admission of evidence in the interests of orderly procedure and the avoidance of prejudice.  [Citations.]  ․' [Citation.]”  (Ibid.;  People v. Rodriguez (1999) 20 Cal.4th 1, 10, fn. 2, 82 Cal.Rptr.2d 413, 971 P.2d 618;  People v. Fitch (1997) 55 Cal.App.4th 172, 179, 63 Cal.Rptr.2d 753.)   Section 1255.060 does not preclude the landowner from presenting a case, from cross-examining the agency's appraiser, or from impeaching the appraiser with respect to inconsistencies.   All that section 1255.060 does is to prohibit anyone from raising at trial the deposit-related appraisal. (§ 1255.060, subd. (b).)

Furthermore, we think Pinole Point misreads the purpose of the amendments to section 1255.060.   While the precursor to section 1255.060 prevented use of the deposit amount in the just compensation trial, case law had created a “loophole” enabling landowners to call the condemning agency's appraiser as their own witnesses.   It is that loophole that the Law Revision Commission suggested be closed.  (13 Cal. Law Revision Com. Rep., supra, at p. 1048.)   Pinole Point concluded that in enacting section 1255.060 to “clos[e] the loophole,” the Legislature intended only “to prevent a landowner from calling the [condemning agency's] appraiser” but that “[n]othing in the legislative history suggests the statute was intended to protect a deposit appraiser when the condemning agency elects to call that appraiser as its valuation witness at trial.”  (County of Contra Costa v. Pinole Point Properties, Inc., supra, 27 Cal.App.4th at p. 1113, 33 Cal.Rptr.2d 38, original italics.)   We disagree.

 Section 1255.060 applies bilaterally i.e., to both sides of the valuation question.   The Law Revision Commission states plainly, “Subdivisions (b) and (c), apply, of course, to witnesses for the defendants as well as those for the plaintiff.”  (Italics added.)   The statute itself makes no preferential reference to witnesses called by one side or the other.   Rather, the statute refers to the appraisal-report witness in the generic sense, when it states, “․ a witness may not be impeached by reference to any appraisal report ․ made in connection with a deposit ․” (§ 1255.060, subd. (b), italics added.)   It appears to us the “loophole” that the Legislature sought to close in enacting section 1255.060, was the judicially created exception to the bilateral exclusion of all references to the deposit-related appraisals that allowed landowners to call the condemning agency's appraiser.   The Legislature closed this loophole by overruling the two offending cases (see Law Revision Comm. com. to § 1255.060, at pp. 691-692), and by making the statute apply to witnesses called by either the landowner or the condemning agency.   By allowing the landowner to impeach the condemning agency's appraiser when the agency calls its appraiser at the compensation trial, Pinole Point has created an entirely new exception to section 1255.060, subdivision (b), which exception enjoys no support in the Law Revision Commission report.

 Finally, as a matter of policy, we decline to conclude, as Pinole Point did, that the CRA waived the privilege by calling Zoraster to testify in the trial on just compensation.   A holding under which the condemning agency waives its privilege “defeats the spirit of the rule” and violates subdivision (a) of section 1255.060 which provides flatly that “[t]he amount deposited ․ shall not be given in evidence or referred to in the trial of the issue of compensation.”  (Italics added.)   Moreover, the effect of such a holding would be to encourage the agency to hire two appraisers, one for the deposit, and one for the trial, thereby increasing the cost to the condemning agency.   For all of these reasons, we disagree with Pinole Point, and respectfully decline to follow it.

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DISPOSITION

The judgment is affirmed.   Costs on appeal awarded to Respondent.

FOOTNOTES

1.   The date of valuation, therefore, is the date the CRA made the deposit.  (Code Civ. Proc., §§ 1263.110, 1263.120.)

ALDRICH, J.

CROSKEY, Acting P.J., and SCHNEIDER, J.,** concur.