COMMUNITY REDEVELOPMENT AGENCY OF CITY OF HAWTHORNE v. FRIEDMAN

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Court of Appeal, Second District, Division 5, California.

The COMMUNITY REDEVELOPMENT AGENCY OF CITY OF HAWTHORNE, Plaintiff and Respondent, v. Albert FRIEDMAN, Adelaide S. Friedman, Austin Rheingold, and Shirley E. Rheingold, Defendants and Appellants.

Civ. 50339.

Decided: September 19, 1977

Fadem, Berger, McIntire & Norton by Michael M. Berger, Santa Monica, for defendants and appellants. Kenneth L. Nelson, City Atty., Oliver, Stoever & Laskin, a professional corp., William B. Barr, Ronald J. Einboden, Los Angeles, for plaintiff and respondent.

Following judgment in a condemnation action, defendant property owners made a timely motion for award of litigation costs under former Code of Civil Procedure section 1249.3. The motion was denied and the property owners appeal from the order denying the motion. We affirm.

In June 1969, the City of Hawthorne announced the Hawthorne Plaza Redevelopment Plan, which provided for the acquisition of the subject property by eminent domain proceedings. Because the Redevelopment Agency did not file its complaint until November 16, 1973, the trial judge found that the period from January 1, 1971 to November 16, 1973 constituted an unreasonable delay in instituting the present action, which entitled the property owners to the loss of rental income caused by the delay, pursuant to Klopping v. City of Whittier, 8 Cal.3d 39, 104 Cal.Rptr. 1, 500 P.2d 1345.[FN1] Of the $63,780 recovered by the property owners at trial, $56,000 represented the jury's verdict as the value of the property, and $7,780 was the stipulated amount of the damages occasioned by the delay. Immediately before trial, the Agency's offer pursuant to section 1249.3 was $48,000, while that of the property owners was $60,000. Shortly thereafter but still before trial, the property owners offered to settle for $58,500. The property owners' figure included rent loss.[FN2] Following the trial, the court denied the property owners' motion under section 1249.3 for reimbursement of their litigation costs on the ground that the Agency's offer was reasonable.

Discussion

The Legislative Committee Comment to section 1250.410 states: “Section 1250.410 continues the substance of former section 1249.3. . . . Section 1250.410 . . . requires the court to consider the evidence produced at trial in making its determination whether the offer of the plaintiff was reasonable and the demand of the defendant was unreasonable.”[FN3] (Emphasis added.) Thus, while we do not condone the trial court's disparagement of juries, the fact remains that “(t)he measures of reasonableness is in the first instance a factual matter for the trial court.” (County of Los Angeles v. Kranz, 65 Cal.App.3d 656, 659, 135 Cal.Rptr. 473, 475.) Both former section 1249.3 and its replacement, section 1250.410, lack specific guidelines for resolving the question of reasonableness, for the reason that the Legislature has rejected a formulaic or otherwise arbitrary approach in favor of a discretionary one.[FN4]

The record clearly indicates that the Judge's finding of reasonableness was based on evidence furnished by relevant market data and the valuation opinions of expert witnesses; the jury's determination was recognized as an additional factual ingredient. Thus, as a factual determination supported by the evidence, the trial court's finding of reasonableness is entitled, along with the judgment, to a broad presumption of validity on appeal. (Mehl v. People ex. rel. Dept. of Public Works, 13 Cal.3d 710, 715-716, 119 Cal.Rptr. 625, 628, 532 P.2d 489, 492.) Since appellants have failed to show that the “contrary conclusion (to that reached by the trier of fact) is the only one that can reasonably be drawn from the evidence” (id.), we must uphold the decision of the trial court.

Although the Agency's offer at the final pretrial conference ($48,000) was about 75% Of the $63,780 recovery, there was remaining an honest dispute as to Klopping damages. Although County of Los Angeles v. Kranz, supra, held that under the facts of that case a settlement offer which was less than 80% Of the verdict was so “significantly disproportionate to the adjudicated value of the property,” that the offer was unreasonable as a matter of law (id., 65 Cal.App.3d at p. 659, 135 Cal.Rptr. at p. 475), we do not interpret Kranz as establishing arbitrary schedules divorced from other relevant factors. Nor are we persuaded by the fact that the Agency's offer was significantly lower in absolute terms by $15,780 ($16,000 in Kranz ) than the jury verdict. Once the Klopping damage issue had been resolved, the Agency's offer was raised $10,000, which reduced the difference to $5,780. The verbalization of the required analysis which the trial court must adopt (“It seems to us that reasonableness depends not only on the monetary amounts or the percentage of difference. Reasonableness depends also on the good faith, care and accuracy in how the amount of the offer and the amount of the demand respectively, were determined” (City of Los Angeles v. Cannon, 57 Cal.App.3d 559, 562, 127 Cal.Rptr. 709, 711-712)) closely comports with the obvious legislative intent. The Cannon court recognized crucial factors as being properly within the province of the trier of fact when it upheld an order denying a motion under section 1249.3. To merely consider the offers which were made prior to trial and before the determination of the Klopping issue would achieve a very unfair result. To do so would recognize a disparity of more than 20%; to include the $10,000 which the agency added to the offer reduces the disparity to approximately 9%. Moreover, given the unique character of real property, it is a matter of common sense that “(w)hile expert witnesses testifying on behalf of the public authority and those on behalf of the property owner may differ widely on their opinion as to the value of the property taken, this difference usually reflects the elusive nature of the fair market value concept” (Klopping, supra, 8 Cal.3d at 43-44, 104 Cal.Rptr. at 5, 500 P.2d at 1349). There is always an element of bargaining inherent in the adversary relationship between a purchaser and seller and the consequent disparity of offers and this factor must not be obliterated by a mechanistic view to the jury verdict.

Here, to allow the approach as argued by appellant in Kranz to overshadow the trial court's findings merely on account of superficially similar facts would not only ignore important differences in evidence, but would discourage their discernment, to the expense of justice. Thus, absent in the instant case but emphasized in Kranz was evidence that the county had displayed the sort of uncompromising posture necessitating trial which the statute was designed to discourage.

The judgment is affirmed.

FOOTNOTES

1.  Although Code of Civil Procedure s 1249.3 provides that the reasonableness of the condemnor's offer be assessed “in the light of the determination as to the value of the subject property,” the amount of damages under Klopping are not to be subtracted from each side's offer, inasmuch as section 1249.3 contemplated “that the offer and demand are to cover all of the compensation in the proceeding.” (Legislative Committee Comment, s 1250.410, Code Civ.Proc.)

2.  During trial and after, the court found that the Redevelopment Agency had unreasonably delayed instituting this action, thus rendering the Agency liable for $7,780 damages for delay. Thereafter, the Agency increased its offer by $10,000, and while this was only $2,220 more than the stipulated liability for damages caused by the Agency's unreasonable delay, it raised the total offer to $58,000.

3.  Despite the fact that s 1250.410 (effective July 1, 1976) does not officially apply to this proceeding (see Code Civ.Proc. s 1230.065(c) and (d)), we acknowledge its clarifying effect in interpreting section 1249.3. (See Kranz, supra, at 659, fn. 1, 135 Cal.Rptr. 473.)

4.  In 1972, AB 415 was proposed, providing for payment of reasonable attorney's fees if the compensation exceeded 25% Of the public entity's last offer prior to trial. In 1973, SB 476 proposed the awarding of litigation expenses, including attorney's and appraiser's fees, where the compensation paid exceeded by 5% The written offer of the public entity. Neither bill was enacted.

STEPHENS, Associate Justice.

KAUS, P. J., and ASHBY, J., concur.

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