HOLTZ v. SAN FRANCISCO BAY AREA RAPID TRANSIT DISTRICT

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

Max HOLTZ and Harry Holtz, Plaintiffs and Respondents, v. SAN FRANCISCO BAY AREA RAPID TRANSIT DISTRICT, Defendant and Appellant.

Civ. 35166.

Decided: October 10, 1975

John H. Tallet, Rogers, Vizzard & Tallett, San Francisco, for defendant and appellant. William J. Bush, Hanson, Bridgett, Marcus & Jenkins, San Francisco, for plaintiffs and respondents. Harry S. Fenton, Chief Counsel, Sacramento, John P. Horgan, William R. Edgar, Robert R. Buell, San Francisco, for amicus curiae.

A building owned by Max and Harry Holtz (hereinafter referred to as Holtz) was damaged by the withdrawal of lateral support caused by excavation of an adjacent building by the San Francisco Bay Area Rapid Transit District (BART).

Holtz prosecuted an action in inverse condemnation for damages against BART, and obtained a jury verdict in the sum of $30,000. The trial court, in addition, ordered that Holtz have judgment against BART in the sum of $12,744.23 for interest on the jury verdict ‘from the date of damage.’ The trial court further ordered that Holtz recover costs, which included $2,125 expert appraiser's fee, $1,470 expert engineering witness' fee, and $12,500 attorneys' fees, pursuant to Code of Civil Procedure section 1246.3. It is from that portion of the judgment awarding interest and costs that BART appeals.

The facts essentially are not in dispute. Holtz owned a multiple-story building on Market Street in San Francisco. In 1967 BART notified Holtz that it was going to excavate for and construct a subway on Market Street. Holtz retained an engineer to survey the condition of their building. He found no structural weaknesses or instability. BART excavated for utility lines adjacent to the Holtz building. The building is constructed on loose dune sane which tends to flow out from under the foundation, resulting in the foundation's settling. The engineer reexamined the building and found it had settled. BART was notified, and to forestall further settling temporary steel columns with screw jacks at the bottom to support the walls of Holtz' building were installed. Further settling occurred. Repairs were undertaken as well as other work which is admitted to have been unrelated to the repairs. The total damage to Holtz' building, attributed to excavation by BART, was determined to be $30,000 as fixed by the jury in its verdict.

We have given leave to the California Department of Transportation (Department) to file an amicus curiae brief. Its brief is limited to the interpretation of Code of Civil Procedure section 1246.3.

I. BART and Department contend that the trial court erred in awarding expert witness fees and attorneys' fees to Holtz pursuant to Code of Civil Procedure section 1246.3 when there was no actual taking of property.

A. The California Constitution provides that ‘private property shall not be taken or damaged for public use without just compensation . . .’ (art. I, § 14).1

It is clear that there is no constitutional right to attorneys' fees or expert witness fees in condemnation actions. (County of Los Angeles v. Ortiz (1971) 6 Cal.3d 141, 148–149, 98 Cal.Rptr. 454, 490 P.2d 1142; Klopping v. City of Whittier (1972) 8 Cal.3d 39, 51–54, 104 Cal.Rptr. 1, 500 P.2d 1345.) Therefore, whatever right Holtz has to such an allowance is to be determined by statute. Code of Civil Procedure section 1246.3 is a statutory exception to the general rule that litigation expenses are not allowable costs required by the ‘just compensation’ provision of article 1, section 14 of the California Constitution. (Cf. Code Civ.Proc. § 1021.)

Code of Civil Procedure section 1246.3 provides:

In any inverse condemnation proceeding brought for taking of any interest in real property, the court rendering judgment for the plaintiff by awarding compensation for such taking, or the attorney representing the public entity who effects a settlement of such proceeding, shall determine and award or allow to such plaintiff, as a part of such judgment or settlement, such sum as will, in the opinion of the court or such attorney, reimburse such plaintiff for his reasonable costs, disbursements, and expenses, including reasonable attorney, appraisal, and engineering fees, actually incurred because of such proceeding.

The substance of BART and Department's contention is that in inverse condemnation actions where there is no actual taking acquisition of some property interest, but just damage to another's property, the costs set forth in section 1246.3 are not allowable. They contend that the statute is limited by its specific language to ‘any inverse condemnation proceeding brought for the taking of any interest in real property.’

Holtz urges a liberal construction of the meaning of ‘taking’ to embrace all instances of injury suffered by the property owner, including damage unaccompanied by either physical taking or the taking of any interest.

To adequately evaluate the scope of Code of Civil Procedure section 1246.3, it is necessary to discuss its history.

The United States Congress enacted the Uniform Relocation Assistance and Real Property Acquisition Policies for Federal and Federally Assisted Programs (emphasis added; 42 U.S.C. § 4601 et seq.; Pub.L. 91–646, § 101 et seq., 84 Stat. 1894 et seq.). The effective date for most of the sections was January 2, 1971. (Pub.L. 91–646, § 221(a).) Certain other sections were to be effective July 1, 1972 (42 U.S. C. §§ 4630, 4655; Pub.L. 91–646, § 221(b).) The purpose of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (short title, Pub.L. 91–646, § 1) as it relates to the acquisition of real property is set in section 4651, title 42, United States Code:

To encourage and expedite the acquisition of real property by agreements with owners, to avoid litigation and relieve congestion in the courts, to assure consistent treatment for owners in the many Federal programs, and to promote public confidence in Federal land acquisition practices.

(See 3 U.S.Code Cong. & Admin.News (1970), pp. 5850–5852.)

To those ends, certain policies detailed in section 4651(1)–(9) are to be followed, among which is: ‘No Federal agency head shall intentionally make it necessary for an owner to institute legal proceedings to prove the fact of the taking of his real property.’ (§ 4561(8).) One of the methods that Congress had provided to fulfill those policies is the payment of litigation expenses in certain instances.

Section 4654, title 42, United States Code provides:

(a) The Federal court having jurisdiction of a proceeding instituted by a Federal agency to acquire real property by condemnation shall award the owner of any right, or title to, or interest in, such real property such sum as will in the opinion of the court reimburse such owner for his reasonable costs, disbursements, and expenses, including reasonable attorney, appraisal, and engineering fees, actually incurred because of the condemnation proceedings, if—

(1) the final judgment is that the Federal agency cannot acquire the real property by condemnation; or

(2) the proceeding is abandoned by the United States.

(b) Any award made pursuant to subsection (a) of this section shall be paid by the head of the Federal agency for whose benefit the condemnation proceedings was instituted.

(c) The court rendering a judgment for the plaintiff in a proceeding brought under section 1346(a)(2) or 1491 of Title 28 awarding compensation for the taking of property by a Federal agency, or the Attorney General effecting a settlement of any such proceeding, shall determine and award or allow to such plaintiff, as a part of such judgment or settlement, such sum as will in the opinion of the court or the Attorney General reimburse such plaintiff for his reasonable costs, disbursements and expenses, including reasonable attorney, appraisal, and engineering fees, actually incurred because of such proceeding.

Section 1346(a)(2), title 28, United States Code, referred to in section 4654, provides that federal district courts shall have original jurisdiction, concurrent with the Court of Claims, of:

(2) Any other civil action or claim against the United Stated, not exceeding $10,000 in amount, founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort. For the purpose of this paragraph, an express or implied contract with the Army and Air Force Exchange Service, Nevy Exchanges, Marine Corps Exchanges, Coast Guard Exchanges, or Exchange Councils of the National Aeronautics and Space Administration shall be considered an express or implied contract with the United States. (Emphasis added.)

Section 1491, title 28, United States Code provides essentially the same jurisdiction for the Court of Claims.

The 1970 United States Code Congressional and Administrative News makes clear that section 4654 provides for the enumerated fees ‘actually incurred because of the taking of real property by Federal agencies . . . [¶] Ordinarily the Government should not be required to pay expenses incurred by the property owners in connection with condemnation proceedings. The invitation to increased litigation is evident.’ (Vol. 3, p. 5875; emphasis added.)

These provisions were made obligatory upon the states by section 4655, which provides:

Notwithstanding any other law, the head of a Federal agency shall not approve any program or project or any grant to, or contract or agreement with, a State agency under which Federal financial assistance will be available to pay all or part of the cost of any program or project which will result in the acquisition of real property on and after January 2, 1971, unless he receives satisfactory assurances from such State agency that——

(1) in acquiring real property it will be guided, to the greatest extent practicable under State law, by the land acquisition policies in section 4651 of this title and the provisions of section 4652 of this title, and

(2) property owners will be paid or reimbursed for necessary expenses a specified in sections 4653 and 4654 of this title.

Following the federal directions, California enacted Code of Civil Procedure sections 1246.3 and 1246.4. (See, generally, Leg. Counsel Op., 5 Sen.Journal (1971) 8256–8257; Relocation Assistance in California Legislative Response to the Federal Program (1972) 3 Pac.L.J. 114, 138–139; Parker v. City of Los Angeles (1974) 44 Cal.App.3d 556, 566, 118 Cal.Rptr. 687.) Thus, Code of Civil Procedure section 1246.3 fulfills the requirements of section 4654(c) of title 42, United States Code.

Section 4655 requires the states to enact legislation similar to section 4654 in order to effectuate the purposes set forth in section 4651. Such is required as a condition of obtaining federal funds for real property acquisitions. It is reasonable to conclude that section 1246.3 does not confer upon the property owner any greater right than he would have under the federal legislation. The language of section 1346(a)(2), ‘in cases not sounding in tort,’ supports BART and Department's position that the federal legislation and California counterpart were intended to exclude what and customarily tort claims, i. e., damage actions.

Federal cases construing section 1346(a)(2) have operated against the back ground of the Fifth Amendment to the United States Constitution, which provide in part: ‘. . . nor shall private property be taken for public use, without just compensation.’ Thus the federal cases dealing with the Fifth Amendment and a statute which dealt with ‘acquisition’ etc. have held that there must be an actual taking of property and that consequential damages are insufficient to sustain recovery under the federal statute. (United States v. Wald (10 Cir. 1964) 330 F.2d 871; Batten v. United States ( 10 Cir. 1962) 306 F.2d 580, cert. den. 371 U.S. 955, 83 S.Ct. 506 9 L.Ed.2d 502, rehearing den. 372 U.S. 925, 83 S.Ct. 718, 9 L.Ed.2d 731; see also Kirk v. United States (10 Cir. 1971) 451 F.2d 690.)

Holtz contends that California, in enacting section 1246.3 of the Code of Civil Precedure, meant to do more than comply with the federal minimum of awarding the enumerated fees where there has been a ‘taking.’ Holtz argues that California meant to confirm similar benefits under the broader California constitutional provisions and further, that ‘damage’ is within ‘taking.’

Section 1246.3 is in title 7 of the Code of Civil Procedure, entitled ‘Of Eminent Domain.’ Section 1237 defines eminent domain as ‘the right of the people or Government to take private property for public use.’ (Emphasis added.) On the face of the statute, the fees sought here may only be awarded when any interest in real property is taken. Clearly, no interest in the Holtz property was taken. BART has no easement, as in Parker v. City of Los Angeles, supra, and Mehl v. People ex rel. for any ‘such taking’ because there was no Dept. Pub. Works (1975) 13 Cal.3d 710, 119 Cal.Rptr. 625, 532 P.2d 489, nor does BART have any other interest in the property. Nor was the compensation awarded taking of any interest.

B. Unless ‘damages' is included within ‘taking,’ the fees sought here are not within section 1246.3.

Under the 1849 California Constitution the provision for just compensation read: ‘. . . nor shall private property be taken for public use without just compensation.’ (Cal.Const. (1849) art. I, § 8.) The 1879 revision inserted the ‘or damaged’ language quoted above. The first and leading case which interpreted the ‘or damaged’ language is Reardon v. San Francisco (1885) 66 Cal. 492, 6 P. 317. There the court made clear the distinction.

To what kind of damage does this word ‘damaged’ refer? We think it refers to something more than a direct or immediate damage to private property, such as its invasion or spoliation. There is no reason why this word should be construed in any other than its ordinary and popular sense. It embraces more than the taking. If it did not refer to more than the damage above mentioned, the word ‘damaged’ in the clause relied on would be superfluous. It seems to us that the direct invasions spoken of would come within the clause as it stood in the constitution of 1849. If the word ‘damaged’ only embarrassed physical invasions of property, the right secured by this word would add nothing to the guaranty as it formerly stood. In the case above cited from 99 U.S., the court said, referring to a clause in the constitution of Illinois similar to that in the constitution of this state in force since 1879, that ‘this is an extension of the common provision for the protection of private property.’ (Page 642.) This remark may have been obiter, as the case before the court was one occurring prior to the insertion of the clause in the Illinois constitution; but it seems to have been concurred in by the whole court, and if not so concurred in, it was the dictum of an able and learned jurist, whose judgment is entitled to and should receive great respect. And it will occur to any one reflecting on the import of the clause, that if it is not an additional guaranty to the common and usual one, its insertion was idle and unmeaning.

(66 Cal. 501–502, emphasis added; cf. Albers v. County of Los Angdeles (1965) 62 Cal.2d 250, 42 Cal.Rptr. 89, 6 P. 322, 398 P.2d 129; Steiger v. City of San Diego (1958), 163 Cal.App.2d 110, 329 P.2d 94.) It is clear that ‘damaged’ refers to something other than ‘taking.’ That is, there are many instances in which the public agency's actions may ‘damage’ property without there being a ‘taking.’

Where the Legislature uses terms already judicially construed, the presumption is almost irresistible that it used them in the precise and technical sense which had been placed upon them by the courts. (People v. Curtis (1969) 70 Cal.2d 347, 355, 74 Cal.Rptr. 713, 450 P.2d 33, and cases there cited; 45 Cal.Jur.2d, Statutes, §§ 101–102, pp. 615–617; cf. Perry v. Jordan (1949) 34 Cal.2d 87, 207 P.2d 47.) As Holtz has not put before this court any evidence to dispel that presumption, we presume that when the Legislature enacted section 1246.3, it was aware of the distinction between ‘taken’ and ‘damaged.’

Holtz urges that we should liberally construe the meaning of ‘taking’ to include also ‘damage.’ Holtz relies upon Frustuck v. City of Fairfax (1963) 212 Cal.App.2d 345, 28 Cal.Rptr. 357; Hilltop Properties v. State of California (1965) 233 Cal.App.2d 349, 43 Cal.Rptr. 605, and Pacific Telephone etc. Co. v. Eshelman (1913) 166 Cal. 640, 137 P. 1119, for the proposition that ‘damage’ is within ‘taking.’ In the context of the facts of those cases, not necessary to detail here, the court was demonstrating that a dispossession or change of possession as such was not necessary to sustain an inverse condemnation action. These cases in no way support Holtz' contention.

Holtz also cites Parker v. City of Los Angeles (1975) 44 Cal.App.3d 556, 118 Cal.Rptr. 687. In that case, decided after section 1246.3 was enacted, the court affirmed an order for attorney's fees. There, however, the trial court had found that the continued use of jet aircraft in landing at a public airport interfered with the use of the property and was a ‘taking’ of property rights for public use, entitling the owners to compensation. This case is of no assistance to Holtz. Here, the facts clearly establish a damaging of property rather than a taking of property.

Had the Legislature intended to bestow the additional benefit of litigation expenses upon landowners prosecuting inverse condemnation actions for damages to their property, they would have added the words ‘or damaged’ to section 1246.3. We conclude that a property owner is not entitled to expert witness fees and attorneys' fees pursuant to Code of Civil Procedure section 1246.3 in an inverse condemnation proceeding where the sole conduct on the part of the public entity constitutes physical damaging of the condemnee's property.

C. Holtz urges that this construction of section 1246.3 constitutes a denial of equal protection to Holtz, and that to ‘allow successful plaintiffs in inverse condemnation cases to recover section 1246.3 fees if their property was taken, while denying the same right to those whose property was merely damaged serves no rational legislative objective, since both classes of property owners are just as apt to incur the various fees for which the statute permits compensation.’ Holtz relies in Brown v. Merlo (1973) 8 Cal.2d 855, 861, 106 Cal.Rptr. 388, 506 P.2d 212, 216, which states: ‘A classification ‘must be reasonable, not arbitrary, and must rest upon some ground of difference having a fair and substantial relation to the object of the legislation, so that all persons similarly circumstanced shall be treated alike.’'

However, a purpose of section 1246.3 is, in effect, to penalize a public entity for unreasonably forcing property owners to bring actions in inverse condemnation when property is taken. (Cf. 42 U.S.C. § 4651(8); 3 U.S.Code Cong. & Admin.News (1970) pp. 5871–5873.) There appears to be little reason to impose such additional financial burden on the public entity when property is damaged. Additionally, it appears that to permit such litigation expenses renders the property owner whole when he is forced to obtain compensation through inverse condemnation proceedings when the public agency should have commenced eminent domain proceedings. A public entity presumably knows when it intends to take property. However, it may not be aware that it is damaging property when it undertakes some action. Even if it is aware that such a possibility exists and damage does result, the public entity is more in the position of an ordinary tortfeasor. The section is constitutional even though property owners who are merely damaged are not within its scope.

II. BART contends the the trial court erred in awarding prejudgment interest. The contention is that because the damages were uncertain in amount and were not capable of being calculated, interest should have been awarded from the date of judgment, not from the date of the damage.

BART cites Civil Code section 3287 in support of its contention. However, Code of Civil Procedure section 1255b provides, in pertinent part, as follows:

(a) The compensation and damages awarded in an eminent domain proceeding shall draw legal interest from the earliest of the following dates:

(1) The date of the entry of judgment.

(2) The date that the possession of the property sought to be condemned is taken or the damage thereto occurs.

(3) The date after which the plaintiff may take possession of the property as stated in an order authorizing the plaintiff to take possession.

(b) If after the date that interest begins to accrue the defendant continues in actual possession of or receives rents, issues and profits from the property, the value of such possession and of such rents, issues and profits shall be offset against the interest that accrues during the period the defendant continues in actual possession or receives such rents, issues or profits.

The right to prejudgment interest applies to the recovery in an action for inverse condemnation for damages to private property. (Heimann v. City of Los Angeles (1947) 30 Cla.2d 746, 185 P.2d 597; Youngblood v. Los Angeles County Flood Control Dist. (1961) 56 Cal.2d 603, 15 Cal.Rptr. 904, 364 P.2d 840.)

There is ample evidence to support the trial court's finding of September 8, 1967 as the date of the damage. The court did not err in awarding Holtz interest from the date of damage.

BART further urges that if Holtz is entitled to interest from the date of damage BART is entitled to offsets for rent and profits in accordance with section 1255 b, subdivision (b). When there has been no dispossession of the condemnee's property but merely damage thereto, as in the case at bench, the provisions of section 1255b, subdivision (b) do not apply.

As stated in Parker v. City of Los Angeles (1975) 44 Cal.App.3d 556, at page 565, footnote 3, 118 Cal.Rptr. 689: ‘The City also contends that the trial court should have offset against its award of prejudgment interest the value to plaintiffs of their continued possession of their properties following the ‘taking’ thereof by the City on June 23, 1967. This contention is without merit. The taking involved here was not a dispossession of plaintiffs. It was instead a continuing injury to the fair market values of their properties. Their remaining in possession of their properties in no way diminished the injury for which damages were awarded. [¶] We have found nothing in either the language or legislative history of Code of Civil Procedure section 1255b, subdivision (b), indicating the Legislature intended this subsection to apply to nondispossession cases in inverse condemnation.'

Judgment awarding attorneys' fees and expert witness fees is reversed. Judgment awarding prejudgment interest is affirmed. Each party to bear his own costs on appeal.

FOOTNOTES

1.  In 1974 this section was replaced by article I, section 19, which provides: ‘Private property may be taken or damaged for public use only when just compensation . . .’ The language change has no effect upon the application of Code of Civil Procedure section 1246.3.

SCOTT, Associate Justice.

DRAPER, P. J., and CARKEET, J.,*, concur.