MOUND LODGE NO 166 IOOF v. CITY OF HOLLISTER

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Court of Appeal, Sixth District, California.

MOUND LODGE NO. 166 IOOF, Plaintiff and Appellant, v. CITY OF HOLLISTER, Defendant and Respondent.

Steve ROVELLA, Plaintiff and Appellant, v. CITY OF HOLLISTER, Defendant and Respondent.

Nos. H007623, H007605.

Decided: May 24, 1991

Gordon J. Finwall, The Morgan Law Offices, San Jose, for plaintiff and appellant. Vincent P. Hurley, Atchison & Anderson, Santa Cruz, for defendant and respondent.

In consolidated 1 cases plaintiffs Mound Lodge No. 166 IOOF and its tenant Steve Rovella (hereafter collectively “Odd Fellows”) appeal from the trial court's orders sustaining defendant City of Hollister's demurrers to their complaints without leave to amend.   Odd Fellows complain that City's destruction of their building the day after the October 1989 earthquake was unwarranted.   At issue is the sufficiency of plaintiffs' pleading of a cause of action for inverse condemnation.   We reverse for the reasons stated below.

BACKGROUND

The earthquake on October 17, 1989 at 5:04 p.m. damaged the second story of the Odd Fellows Hall in Hollister, in San Benito County.   The front facade of the building fell off, exposing the second floor inside the building.   The building was evacuated and cordoned off.   The next day, City officials determined that the building was unsafe.   City officials ordered the building destroyed, which it was, the day after the earthquake.   The Odd Fellows were not permitted to retrieve property from the building before it was torn down, or from the site after the destruction.   Steve Rovella leased part of the building from Mound Lodge, and operated a business and lived on the premises.

The Odd Fellows sued City for inverse condemnation and negligence.   Odd Fellows allege the destruction of their hall was a taking of private property for which they should be justly compensated.   The Odd Fellows do not challenge on appeal the trial court's ruling on the negligence cause of action.

City demurred on the ground plaintiffs failed to state sufficient facts to constitute causes of action.   City asked the court to take judicial notice of the fact that the Lieutenant Governor declared a state of emergency in Bay Area counties at 3:36 a.m. on October 18, 1989.   City's theory was that demolition of plaintiffs' building was a proper exercise of the City's police power, and not a compensable taking.   The trial court sustained the demurrer without leave to amend.

DISCUSSION

 Although plaintiffs appeal from nonappealable orders sustaining demurrers without leave to amend, we deem those orders to include judgments of dismissal and treat the notices of appeal as applying to the judgments.  (Farmers Ins. Exchange v. State of California (1985) 175 Cal.App.3d 494, 499, 221 Cal.Rptr. 225.)

The issue is whether a property-owner whose building is destroyed after an earthquake by a public entity pursuant to the police power may state a claim for inverse condemnation.   All we examine here is whether the trial court may rule, as a matter of law on demurrer, that plaintiffs can state no claim.   The issue is not whether plaintiffs will recover damages for inverse condemnation from City, but whether plaintiffs' claim can be resolved without a factual hearing.   For purposes of reviewing a ruling on demurrer, we take the facts pleaded in the complaint as true, and also consider matters properly judicially noticed.  (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58.)   Since the demurrer was sustained without leave to amend below, our review is limited to the sufficiency of plaintiffs' pleadings.  (Farmers Ins. Exchange v. State of California, supra, 175 Cal.App.3d at p. 501, 221 Cal.Rptr. 225.)

 To resolve this issue we must consider the interaction between the constitutional right to be reimbursed for governmental takings and the doctrine of exercise of the police power including the provisions of the Emergency Services Act of 1970 (Gov.Code, § 8550 et seq.)  Article I, section 19 of the California Constitution provides in part:  “[p]rivate property may be taken or damaged for public use only when just compensation ․ has first been paid to, or into court for, the owner.”   A long recognized exception to this rule is that damages inflicted in the course of a proper exercise of the police power are not compensable.  (Holtz v. Superior Court (1970) 3 Cal.3d 296, 305, 90 Cal.Rptr. 345, 475 P.2d 441.)   The doctrine of noncompensable taking or damaging of property comes into play under emergency conditions, when damage is inflicted by the government to avert an impending peril.  (Ibid.)  Because a broad interpretation of the doctrine of noncompensable loss would vitiate the constitutional requirement of just compensation (Rose v. State of California (1942) 19 Cal.2d 713, 730–731, 123 P.2d 505), courts have narrowly circumscribed the types of emergencies that exempt the public entity from liability.  (Holtz v. Superior Court, supra, 3 Cal.3d at p. 305, 90 Cal.Rptr. 345, 475 P.2d 441.)  “Instances of this character are the demolition of all or parts of buildings to prevent the spread of conflagration, or the destruction of diseased animals, or rotten fruit, or infected trees where life or health is jeopardized.”  (House v. L.A. County Flood Control Dist. (1944) 25 Cal.2d 384, 391, 153 P.2d 950.)

A recent example of such an emergency is the Mediterranean fruit fly infestation followed by an eradication program begun in 1980.  (Farmers Ins. Exchange v. State of California, supra, 175 Cal.App.3d at pp. 498–501, 221 Cal.Rptr. 225.)   The Governor declared an emergency and authorized state officers to take appropriate measures to eradicate the Medfly.  (Id. at pp. 500–501, 221 Cal.Rptr. 225.)   The spraying of insecticides damaged automobiles that were insured by plaintiffs, five insurance companies.  (Id. at p. 498, 221 Cal.Rptr. 225.)   After the trial court sustained a demurrer without leave to amend, this court considered, among other things, whether plaintiffs could state a cause of action for inverse condemnation in light of the declared emergency.  (Id. at p. 501, 221 Cal.Rptr. 225.)   Was the damage to the automobiles damnum absque injuria because it resulted from a proper exercise of the police power?  (Ibid.)  There this court stated:  “The point is made that it is a question of fact whether the exercise of the police power is reasonable or proper under the circumstances, a matter which therefore cannot be resolved at the pleading stage.   This may be so in those cases where it is unclear whether the public agency is exercising a regulatory police power or an eminent domain power constituting a taking.  (Citations.)   Where there exists an obvious emergent public interest, however, such analysis is unnecessary.”   (Id. at pp. 501–502, 221 Cal.Rptr. 225.)   We held plaintiffs could not state a claim.  (Id. at p. 503, 221 Cal.Rptr. 225.)

We disagree with the analysis in Farmers Ins. Exchange.   Although the sort of underlying emergency which justifies a proper police power taking without incurring liability may be clear and undisputed, there might still remain a factual question as to whether the particular taking was a proper exercise of the police power, i.e. that it was legitimately necessary for the public welfare.  “In view of the organic rights to acquire, possess and protect property and to due process and equal protection of the laws, the principles of nonliability and damnum absque injuria are not applicable when, in the exercise of the police power, private, personal and property rights are interfered with, injured or impaired in a manner or by a means, or to an extent that is not necessary to service a public purpose for the general welfare.”  (House v. L.A. County Flood Dist., supra, 25 Cal.2d at p. 392, 153 P.2d 950.)

The Emergency Services Act empowers the Governor of the State to act to preserve lives and property in the State when he has declared a state of emergency.  (Gov.Code, § 8550.)   The purpose of the act is to ensure that emergency services are provided and co-ordinated.  (Ibid.)  Section 8655 of the Emergency Services Act provides:  “The state or its political subdivisions shall not be liable for any claim based upon the exercise or performance, or the failure to exercise or perform, a discretionary function or duty on the part of a state or local agency or any employee of the state or its political subdivisions in carrying out the provisions of this chapter.”   The purpose of this provision is to allow the state to quell the emergency, without fear of incurring liability.  (Farmers Ins. Exchange v. State of California, supra, 175 Cal.App.3d at p. 505, 221 Cal.Rptr. 225.)

 The crux of the matter as we see it is whether in implementing its discretionary functions during the underlying emergency, City correctly determined that the Odd Fellows Hall posed an imminent peril to the public.   We do not question that the underlying situation, the aftermath of a massive earthquake, constituted an emergency.   Neither do we question the Governor's right to declare a state of emergency, and his triggering of the provisions of the Emergency Services Act.   We question only whether the trial court could decide as a matter of law on demurrer that the damaged building was such a peril to the public that its destruction was necessary.   If its destruction was necessary, the Odd Fellows cannot recover;  if it was not necessary, the Odd Fellows have a right to recovery.  (See Annot., Destruction of Buildings (1950) 14 A.L.R.2d 73, 78.)   In other words, if the Odd Fellows Hall was in imminent danger of falling down and causing injury to persons and surrounding property, it is beyond dispute that the City was entitled to destroy the building, for the public good, without compensating the Odd Fellows.   However the Odd Fellows allege in their complaint that the building was structurally sound, and that City's destruction of it was an improper exercise of the police power.   To our mind, whether or not the Odd Fellows Hall was about to fall down, or whether there was a true peril, is a factual issue, which is by definition incapable of resolution on demurrer.

The only California case we have found about demolition of a building after an earthquake is Rose v. City of Coalinga (1987) 190 Cal.App.3d 1627, 236 Cal.Rptr. 124.   Appellants owned a commercial building in downtown Coalinga which was damaged in an earthquake on May 2, 1983.  (Id. at pp. 1629–1630, 236 Cal.Rptr. 124.)   Eight days after the earthquake City officials met with downtown property-owners and informed them that most of the buildings would have to be demolished due to earthquake damage.   Several buildings were excepted from the demolition order but not appellants'.  (Id. at p. 1630, 236 Cal.Rptr. 124.)   An architect, two structural engineers who worked for the State Office of Emergency Services, and a contractor all believed appellants' building was not a hazard and could be repaired.  (Id. at pp. 1630–1631, 236 Cal.Rptr. 124.)   Appellants attempted to convince City officials that their building should not be demolished, but to no avail.  (Id. at pp. 1630–1632, 236 Cal.Rptr. 124.)   City argued on a summary judgment motion that appellants' cause of action for inverse condemnation was barred because their only remedy was in tort, and they failed to file a claim against the governmental entity.  (Id. at p. 1632, 236 Cal.Rptr. 124.)   The trial court granted the motion, apparently in part because it believed that an emergency exercise of the police power, even if wrongful, could not support an inverse condemnation action.  (Id. at pp. 1632–1633, 236 Cal.Rptr. 124.)

The appellate court noted that the constitutional provision for just compensation for takings is self-executing, so that there could be no requirement of filing a claim.  (Id. at p. 1633, 236 Cal.Rptr. 124.)  “When private property is wrongfully damaged or destroyed in the course of governmental action and the government has not first undertaken procedures to guarantee due process to the owner, such as an action in eminent domain or proceedings to declare a condition a nuisance, then, ․ an action in inverse condemnation by the owner against the governmental agency will lie to establish the damages suffered by the owner.  (Citations.)”  (Id. at p. 1633, 236 Cal.Rptr. 124.)   In an emergency the City may act to abate a nuisance or to avoid a peril, but in such a case it should be prepared to establish that imminent peril or some other form of emergency requiring immediacy of response actually existed.  (Id. at p. 1635, 236 Cal.Rptr. 124, citing Leppo v. City of Petaluma (1971) 20 Cal.App.3d 711, 719, 97 Cal.Rptr. 840.)   Finding a triable issue of fact regarding whether a true emergency required the demolition of the appellants' building, 57 days after the earthquake and after it was certified safe by numerous experts, the court reversed the grant of summary judgment.  (Id. 190 Cal.App.3d at p. 1635, 236 Cal.Rptr. 124.)

In the instant case the Odd Fellows and Rovella have stated causes of action for inverse condemnation, and the demurrers ought to have been overruled.   If there is to be any check on governmental power in an emergency, one whose property is taken must have a due process right to a factual hearing.   One who is about to be injured could, for example, seek an injunction or writ relief to prevent the destruction of a building.   In a case such as this one, after the taking, the factual issue lends itself to resolution by summary judgment.   If City produced affidavits showing the necessity of destroying the Odd Fellows Hall on the day after the earthquake, a universally recognized emergency situation, it is likely that City could demonstrate the legitimacy of its emergency response.   Assuming a proper exercise of the police power, City would be absolutely immune under the Emergency Services Act.

DISPOSITION

The judgments of dismissal and the orders sustaining the demurrers are reversed.   The cases are remanded and the trial court is directed to enter new orders overruling City's demurrers.   Costs are awarded to appellants.

FOOTNOTES

1.   We ordered these cases consolidated because they present identical issues.

PREMO, Acting Presiding Justice.

COTTLE and ELIA, JJ., concur.