$91 million inverse condemnation award thrown out; court says SD's airport proposal, traffic didn't damage property rights; Legaldigest

One of the largest takings awards in California history has been thrown out by a state appellate court, which ruled that preliminary airport planning and traffic circulation changes by the City of San Diego did not amount to a taking of a developer's...

De la Fuente sued the city in 1995, alleging the city had breachedthe development agreement, and in 1998 amended the lawsuit to allegethat the city's actions amounted to inverse condemnation (a taking of private property). Judge DiFiglia ruled for the developer, sending the damages portion of the case to a jury, which ordered the city to pay the developer $65.3 million in January 2001. The jury awarded an additional $29.2 million for breach of contract.

The decision stunned the city. Although inverse condemnation lawsuits by developers and landowners are not uncommon, actual awards of damages are rare in California. Moreover, in this case, the damages stemmed from the apparently routine government activities of long-term airport planning and a traffic re-routing. At the time, the San DiegoUnion-Tribune said, "If DiFiglia's interpretation stands, governments everywhere will be liable every time they do anything that affects private property. Good luck building a new airport, highway or any public project of any sort."

The city got the case moved to Orange County, where Judge Ikola accepted the city's request for a new trial on the breach of contract claim. Still, Ikola upheld the inverse condemnation decision. Both sides appealed, and a unanimous three-judge panel of the Fourth District, Division Two, ruled squarely for the city.

Regarding airport planning, de la Fuente argued that the city acted unreasonably because it failed to ascertain Mexico's interest in the twin port plan or the sharing of airspace. The assertion was based on Klopping v. City of Whittier, (1972) 8 Cal.3d 39, in which the state Supreme Court ruled that "when the condemner acts unreasonably in issuing pre-condemnation 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."

The Fourth District ruled that de la Fuente was not eligible for aKlopping claim because the developer "failed to adduce any evidence that the city's announcements concerning the proposed Otay Mesa airport subjected it to direct and special injury."

"If the plaintiff's situation is 'no different than that of any other landowner' in the area to be affected by the proposed plan, Klopping does not apply," Justice Art McKinster wrote for the court, citing Selby Realty Co. v. City of San Buenaventura, (1973) 10 Cal.3rd 110, 120). The city's airport proposal affected 4,000 to 6,000 acres, sode la Fuente's inverse condemnation claim "fails as a matter of law," the court concluded.

Truck traffic became an issue during 1995, when the city re-routedtruck traffic while it improved the primary thoroughfare for about nine months. Truck traffic was sent through the business park, and backups lasted for hours. Some truck traffic diminished after the city finished work on the arterial, and the problem was largely solved by about the time of the trial court's ruling when the city completed a permanent, new truck route to the border.

De la Fuente argued that there was "total gridlock" around and through the business park, denying him the right of access. But the Fourth District rejected the claim, finding that there was always some access, even during the critical period of 1995.

"At most, the traffic backups required tenants of the park to use an entrance which was less convenient. Interference with access whichmerely requires greater 'circuity of travel' is not compensable," McKinster wrote.

Bartolotta contended that the court ignored evidence that trucks lined up bumper-to-bumper for hours on end, forcing tenants to drive off-road to reach their businesses. "This was so far beyond the pale of normality, it boggles the mind of anyone with common sense," he said.

The developer's attorney also said the fact that airport planning affected multiple property owners should not impact an inverse condemnation claim. "How can that be the law?" he asked.

As for a new trial on the alleged development agreement breach, the Fourth District ruled that claims for damages prior to June 23, 1994, were time-barred because of a decision in a different case involving de la Fuente and the city. The court upheld Judge Ikola's decisionordering a new trial on both liability and damages which occurred after that date.

Bartolotta said he may ask the state Supreme Court to review the development agreement part of the case, too, but he welcomed a new trial. "Our damages are even bigger than they were before," he said.

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