WASHINGTON WATER AND LIGHT COMPANY v. EAST YOLO COMMUNITY SERVICES DISTRICT

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Court of Appeal, Third District, California.

WASHINGTON WATER AND LIGHT COMPANY, Plaintiff and Appellant, v. EAST YOLO COMMUNITY SERVICES DISTRICT et al., Defendants and Respondents.

Civ. 19070.

Decided: June 15, 1981

Weyman I. Lundquist, J. Philip Martin, Heller, Ehrman, White & McAuliffe, San Francisco, for plaintiff and appellant. Kronick, Moskovitz, Tiedemann & Girard, Frederick G. Girard and Charles A. Barrett, Sacramento, for defendants and respondents.

We are asked to determine whether plaintiff and appellant Washington Water and Light Company (Washington) has stated causes of action in inverse condemnation against defendants East Yolo Community Services District (District), its Board of Directors, and the State of California.

On March 2, 1978, the District invoked the jurisdiction of the Public Utilities Commission (Pub. Util. Code, § 1401 et seq.; see also Code Civ.Proc., § 1230.060) to determine just compensation for its acquisition of Washington's property.1 More than seven months later, on October 27, 1978, Washington filed the underlying complaint in the superior court for damages allegedly caused the “precondemnation” activities of the defendants. Citing Agins v. City of Tiburon (1979) 24 Cal.3d 266, 157 Cal.Rptr. 372, 598 P.2d 25, the court sustained demurrers to all eight counts on the ground that none stated facts sufficient to constitute a cause of action for inverse condemnation. In addition, the court sustained demurrers to the fourth, sixth, seventh, and eighth causes to the extent that they alleged tort actions against public entities independent of an inverse condemnation theory, because Washington had not filed a claim as required by Government Code section 900 et seq. Finally, the court sustained demurrers to causes five, six, seven and eight on the ground that the eminent domain valuation proceeding pending before the Public Utilities Commission addressed those same issues. The court gave Washington leave to amend causes five through eight. Washington chose not to amend and a judgment of dismissal was entered.

I.

In our review of the ruling sustaining the demurrers, we accept as true all facts well pleaded and matters of which we may take judicial notice. (Furey v. City of Sacramento (1979) 24 Cal.3d 862, 866, 157 Cal.Rptr. 684, 598 P.2d 844; Evid.Code, §§ 452, 459.) Washington is a corporation, a privately owed utility, which owns and operates a water distribution system in the unincorporated communities of Broderick, Bryte, West Sacramento, and adjacent areas of Yolo County. District is a public community services district established pursuant to Government Code section 61000 et seq.; it came into being on September 2, 1976.

For purposes of our review, we treat all causes of action of the complaint as based on a theory of inverse condemnation.2 The first alleges that the Legislature enacted an emergency statute, effective June 25, 1976, and operative until July 1, 1978, which prohibited expansion activities by Washington.3 At the time of enactment, the Legislature knew that an election had been called in East Yolo County to form the District and that the District was being formed to acquire and supplant Washington's water service. The legislative intent of the provision allegedly was to “facilitate the District's acquisition of [Washington's] water distribution system by reducing that system's fair market value;” as a proximate result of the enactment (1) Washington was prevented from performing necessary maintenance and making capital additions and replacements; (2) its property suffered unnecessary depreciation; (3) its right to maintain its system was appropriate; (4) the fair market value of its property was reduced, and (5) Public Utilities Commission denied it a “necessary” rate increase.

The second cause alleges damages based on the similarly debilitating and value-de-pressing effects of a later amendment to the aforedescribed statutory enactment. The amendment was effective September 11, 1978, and extended the moratorium on expansion activities until January 1, 1980.4

The third cause alleges that on September 6, 1978, the Public Utilities Commission denied Washington “necessary” rate increases causing Washington to lose substantial revenues because the District and its Board of Directors had brought the moratorium statutes and the District's intent to acquire Washington's water system by eminent domain to the commission's attention. The fourth incorporates the first three causes and alleges a conspiracy by the State of California and the District to depress the value of Washington's property prior to condemnation.

The fifth cause of action is based on the service duplication provisions of Public Utilities Code section 1501 et seq. (see San Gabriel Valley Water Co. v. City of Montebello (1978) 84 Cal.App.3d 757, 148 Cal.Rptr. 830); it alleges that Washington had entered into negotiations culminating in an agreement on or about September 11, 1978, with the Port of Sacramento Industrial Park (P.S.I.P.) to convey P.S.I.P.'s water production, storage, treatment, and distribution facilities to Washington and make them a part of Washington's water system. Subsequent to those negotiations and agreement, the District entered into an agreement with P.S.I.P. to acquire the P.S.I.P. facilities for itself. However, the parties concede that this fifth cause of action is now moot since Washington eventually acquired the facilities. Nevertheless, Washington still maintains as viable the sixth through eighth causes of action also based on the District's asserted interference with negotiations. According to these claims, the District's negotiations with P.S.I.P. resulted in Washington's delayed acquisition of the P.S.I.P. facilities; damages are claimed on the theory that the interfering actions of the District were part of precondemnation activity which depressed the value of the water system in the eminent domain proceeding.

II.

The major premise of Washington's basic argument on appeal is that Agins v. City of Tiburon, supra, 24 Cal.3d 266, 157 Cal.Rptr. 372, 598 P.2d 25, does not foreclose a claim for damages in inverse condemnation when founded upon unreasonable or oppressive precondemnation conduct as a prelude to public acquisition. This contention is well taken.

Inverse condemnation is one of two basic procedural devices for guaranteeing that private property will not be unconstitutionally “taken” for public use without just compensation. (Cal.Const. art. I, § 19; U.S.Const., 5th Amend.; see also Code Civ.Proc., §§ 1036; 1245.060, 1245.260.) Its corollary is a direct action in 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 and pay just compensation therefor. (Klopping v. City of Whittier (1972) 8 Cal.3d 39, 43, 104 Cal.Rptr. 1, 500 P.2d 1345; Agins v. Tiburon (1980) 447 U.S. 255, 257, 100 S.Ct. 2138, 2139, 65 L.Ed.2d 106, 110, fn. 2; United States v. Clarke (1980) 445 U.S. 253, 255, 100 S.Ct. 1127, 1128, 63 L.Ed.2d 373, 376-377.)

Our Supreme Court in Agins held only that an action in inverse condemnation does not lie to obtain compensation for an unconstitutional application of a zoning law to a particular property. (24 Cal.3d at p. 275, 157 Cal.Rptr. 372, 598 P.2d 25.) Balancing the constitutional rights of a landowner against the legitimate needs of government in effective land-use planning and noting the “chilling effect” that utilization of an inverse condemnation remedy would have on the exercise of such local regulatory powers, the Court determined that mandamus and declaratory relief are the appropriate remedies available to an aggrieved property owner rather than the inverse condemnation remedy which would transmute an excessive land use regulation into a taking with consequent compensation. (Agins, supra, at pp. 274-277, 157 Cal.Rptr. 372, 598 P.2d 25.) The decision did not eliminate an inverse condemnation action for damages caused by unreasonable precondemnation conduct by the condemner under the guidelines of Klopping v. City of Whittier, supra, 8 Cal.3d 39, 104 Cal.Rptr. 1, 500 P.2d 1345. (Agins v. City of Tiburon, supra, 24 Cal.3d at p. 278, 157 Cal.Rptr. 372, 598 P.2d 25; accord Toso v. City of Santa Barbara (1980) 101 Cal.App.3d 934, 951-952, 162 Cal.Rptr. 210; see also HFH, Ltd. v. Superior Court (1975) 15 Cal.3d 508, 516-517, fn. 14, 125 Cal.Rptr. 365, 542 P.2d 237; Cal.Law Revision Com. com. to Code Civ.Proc., § 1245.260, para. (3).) As outlined in Klopping, “when the condemner acts unreasonably in issuing precondemnation statements, either by excessively delaying eminent domain action or by other oppressive conduct, our constitutional concern over property rights requires that the owner be compensated. This requirement applies even though the activities which give rise to such damages may be significantly less than those which would constitute a de facto taking of the property so as to measure the fair market value as of a date earlier than that set statutorily ․ [¶] Accordingly … 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) as a result of such action the property in question suffered a diminution in market value.” (Fn. omitted; Klopping v. City of Whittier, supra, 8 Cal.3d at pp. 51-52, 104 Cal.Rptr. 1, 500 P.2d 1345.) The Klopping court specifically held that a condemner could be liable either in inverse or direct condemnation for diminution in market value, including the consequential loss of rentals, resulting from such unreasonable precondemnation conduct. (Klopping, supra, 8 Cal.3d at p. 58, 104 Cal.Rptr. 1, 500 P.2d 1345; City of Los Angeles v. Monahan (1976) 55 Cal.App.3d 846, 852, 127 Cal.Rptr. 763.)5

The significant difference between the general planning designations held noncompensable in Agins and the unreasonable precondemnation activity held compensable in Klopping is that in the latter, the condemner is pursuing a course of conduct physically to acquire property for public use and so unreasonably delays eminent domain proceedings following disclosure of intent to condemn or so seriously engages in value-depressing activity as to constitute an invasion of a property right which directly and specifically affects the property owner to his injury. (Jones v. People ex rel. Dept. of Transportation (1978) 22 Cal.3d 144, 151, 152, 148 Cal.Rptr. 640, 583 P.2d 165; People ex rel. Dept. Pub. Wks. v. Peninsula Enterprises, Inc. (1979) 91 Cal.App.3d 332, 355, 356, 153 Cal.Rptr. 895; Jones v. City of Los Angeles (1979) 88 Cal.App.3d 965, 971-972, 152 Cal.Rptr. 256; see also 4 Nichols, The Law of Eminent Domain, supra, § 12.3151[5].)

The factual allegations of the complaint as hereinabove set forth, clearly show that the superior court was in error when it sustained defendants' demurrers on the basis of the Agins decision.

III.

The question nonetheless remains whether Washington has stated any valid claims in inverse condemnation. Hence we consider additional complexities of the case.

A.

At the outset, we note that any Klopping type damages alleged to have occurred subsequent to the date upon which the District filed its now-pending condemnation action with the Public Utilities Commission are not compensable in an independent inverse condemnation action. The statutorily defined, or de jure, time of taking in a direct condemnation proceeding before the Public Utilities Commission is the date upon which the petition therein is filed; just compensation is fixed as of that date. (Pub.Util.Code, § 1411; see also similarly Code Civ.Proc. § 1263.120.) Whether the condemner's unreasonable precondemnation conduct be characterized as a de facto taking, which has the effect of moving the date of acquisition backward to reflect an earlier property value, or as “condemnation blight,” which leaves the date of taking unchanged but permits the condemnee to be compensated for the loss in value traceable to the unreasonable precondemnation activity, a condemnee's “precondemnation” recovery generally is limited to a time frame before the date of de jure taking, or valuation. (Klopping, supra, 8 Cal.3d at pp. 44, 46, 104 Cal.Rptr. 1, 500 P.2d 1345; see also People ex rel. Dept. Pub. Wks. v. Peninsula Enterprises, Inc., supra, 91 Cal.App.3d at p. 358, 153 Cal.Rptr. 895; 4 Nichols, supra, § 12.3151[5].)

Here Washington as the condemnee utility has an available remedy by petition to the Public Utilities Commission for increases in the compensation for the condemned property because of “acts or occurrences” subsequent to the date the District filed the original petition with the Public Utilities Commission. (Pub.Util.Code, § 1417.) Where a public agency elects to condemn the property of a utility under Public Utilities Code section 1401 et seq., “increases or decreases in the original award covering the period after the filing of the petition and until the condemner takes possession shall be made exclusively by the commission under section 1417-1419; …” (Emphasis added; City of North Sacramento v. Citizens Utilities Co. (1963) 218 Cal.App.2d 178, 191, 32 Cal.Rptr. 308.) Such exclusive jurisdiction alone precludes such damages in a superior court.

We take judicial notice of the fact that the District's original petition in eminent domain was filed on March 2, 1978. Since Washington's second, fifth (which is moot), sixth, seventh, and eighth causes of action all allege unreasonable activity subsequent to that date, the superior court properly sustained the demurrers to these respective causes of action, regardless of the reasons it gave. (Patton v. Board of Harbor Commissioners (1970) 13 Cal.App.3d 536, 544, fn. 7, 91 Cal.Rptr. 832.)

B.

Remaining for consideration are the first, third, and fourth causes of action, all relating to alleged damages caused by the first emergency statute Chapter 261, effective on June 25, 1976.

With regard to defendant State of California, no Klopping inverse condemnation action lies and the superior court properly dismissed these causes of action against it. As we read Klopping and other relevant authority, it is the condemner alone which is held responsible in damages for unreasonable precondemnation activity. (Klopping, supra, 8 Cal.3d at pp. 51-52, 104 Cal.Rptr. 1, 500 P.2d 345; see also Jones v. People ex rel. Dept. of Transportation, supra, 22 Cal.3d at pp. 152-153, 148 Cal.Rptr. 640, 583 P.2d 165; 4 Nichols, supra, § 12.3151[5].) Here the state, acting through the Legislature, was not the condemning authority. Thus Washington's available remedy against the state, if any, was by mandamus or declaratory relief, not by inverse condemnation. (Agins v. City of Tiburon, supra, 24 Cal.3d at pp. 276-277, 157 Cal.Rptr. 372, 598 P.2d 25.)

With regard to the District's liability in inverse condemnation on these causes of action, the District contends it was not in existence on June 25, 1976, and therefore could not be liable for damages caused by legislation effective on that date. Washington apparently agrees, since it conceded in the superior court that it had not stated a cause of action against the District on the basis of damages caused by the enactment of chapter 261. In any event the point is well taken, and the disclosure by the District to the Commission on September 6, 1978, of chapter 261 and its purpose (third cause of action) cannot alone be actionable. (Matossian v. Fahmie (1980) 101 Cal.App.3d 128, 161 Cal.Rptr. 532.)

No cause of action in inverse condemnation remains. Consequently, for the reasons we have discussed (and not those supplied by the superior court), we affirm the judgment of dismissal as to all defendants.6 In so doing we emphasize that although Washington has not prevailed in this action, it is not without remedy (see ante, section II).

The judgment is affirmed.

FOOTNOTES

1.  The District also had the option to bring the condemnation action in the superior court. (Code Civ.Proc., § 1250.010 et seq.)

2.  Washington does not contend on appeal that it has viable tort actions against defendants independent of inverse condemnation damages, and we deem such arguments abandoned.

3.  The enactment, chapter 261 of the statutes of 1976, provided as follows:“SECTION 1. The Legislature finds and declares that a special statute is required to prohibit the expansion of the Washington Water and Light Company, a private water corporation operating in an unincorporated area of Yolo County, wherein an election has been called for June 8, 1976, to form a community services district to, among other things, provide water service. This act specifies the period when such expansion shall be prohibited.“SEC. 2. No water corporation, as defined in Section 241 of the Public Utilities Code, operating in Yolo County shall engage in any construction work, for the period specified in Section 3 of this act except where necessary:“(1) To extend service to customers;“(2) To maintain the existing water system;“(3) To meet an emergency; or“(4) To protect the safety and health of the public or any portion thereof.“SEC. 3. No construction work, except as specified in Section 2 of this act, shall be done from the effective date of this act until July 1, 1978. If the proposition creating the community services district is rejected by the voters of east Yolo County on June 8, 1976, this act shall become inoperative.“SEC. 4. This act is an urgency statute necessary for the immediate preservation of the public peace, health or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting such necessity are:“This act is necessary to meet the time requirements for the formation of a community services district in Yolo County. In order that the purposes of this act may not be frustrated, it is essential that this act take immediate effect.”

4.  The amendment, chapter 690 of the Statutes of 1978, provided:“SECTION 1. Section 1 of Chapter 261 of the Statutes of 1976 is amended to read:“Section 1. The Legislature finds and declares that a special statute is required to prohibit the expansion of the Washington Water and Light Company, a private water corporation operating in an unincorporated area of Yolo County, wherein a community services district has been formed to, among other things, provide public water service. This act specifies the period when such expansion shall be prohibited.“SEC. 2. Section 3 of Chapter 261 of the Statutes of 1976 is amended to read:“Sec. 3. No construction work, except as specified in Section 2 of this act, shall be done from the effective date of this act until January 1, 1980.SEC. 2. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting such necessity are: “In order that the voters in the recently formed community services district in east Yolo County may vote on the question of acquiring the facilities of the existing water corporation in the service area of the district before any extensive capital construction projects are undertaken, it is necessary for this act to take effect immediately.”

5.  Klopping subsumes loss of rental as an element of damages for diminution in value of the property taken. More accurately, however, loss of rentals is an element different from diminution in fair market value, although both are subsets under the more general category of “just compensation.” (See 4 Nichols, The Law of Eminent Domain (3d ed. rev. 1979) § 12.3151[5], p. 506.)

6.  In light of our disposition of the case, it is unnecessary to reach the District's other contentions supporting the judgment of dismissal.

PARAS, Associate Justice.

REGAN, Acting P. J., and REYNOSO, J., concur.