Judge Teresa A. Beaudet, Case 22STCV33346 2022-12-06 Tentative Ruling

On October 12, 2022, Plaintiff Los Angeles County Metropolitan Transportation Authority (“LACMTA”) filed this eminent domain action against, inter alia, Century City Mall, LLC (“Century City”).

LACMTA seeks to acquire by eminent domain (1) four exclusive permanent subsurface easements; (2) a 6-month temporary construction easement; and (3) a 12-month access area for the installation, monitoring, and removal of liquid level gauge devices within the real property located at 1801 Avenue of the Stars and 1930 Century Park West, Los Angeles, California 90067 (also known as the Westfield Century City Mall). (Compl., ¶ 2.) LACMTA seeks to acquire these property interests for the development, construction, operation, and maintenance of the Westside Purple Line Extension Section 3 Project. (Compl., ¶ 4.)

LACMTA now moves for an order for prejudgment possession of certain real property interests that are contained within the real property located at 1801 Avenue of the Stars and 1930 Century Park West, Los Angeles, California 90067. Century City opposes.[1]

The Court rules on LACMTA’s evidentiary objections to the Declaration of Kimberly Brewer as follows:

The Court rules on LACMTA’s evidentiary objections to the Declaration of Lucinda Starrett as follows:

“At the time of filing the complaint or at any time after filing the complaint and prior to entry of judgment, the plaintiff may move the court for an order for possession under this article, demonstrating that the plaintiff is entitled to take the property by eminent domain and has deposited pursuant to Article 1 (commencing with Section 1255.010) an amount that satisfies the requirements of that article.” (Code Civ. Proc., § 1255.410, subd. (a).)

(C) There is an overriding need for the plaintiff to possess the property prior to the issuance of final judgment in the case, and the plaintiff will suffer a substantial hardship if the application for possession is denied or limited;

(D) The hardship that the plaintiff will suffer if possession is denied or limited outweighs any hardship on the defendant or occupant that would be caused by the granting of the order of possession.” (Code Civ. Proc., § 1255.410, subd. (d)(2).)

“It should be noted that the determination of the plaintiff’s right to take the property by eminent domain is preliminary only. The granting of an order for possession does not prejudice the defendant’s right to demur to the complaint or to contest the taking. Conversely, the denial of an order for possession does not require a dismissal of the proceeding and does not prejudice the plaintiff’s right to fully litigate the issue if raised by the defendant.” (Legislative Committee Comments to Code Civ. Proc., § 1255.410.)

Because Century City opposes this motion, LACMTA’s motion is governed by Code of Civil Procedure section 1255.410, subdivision (d)(2).

LACMTA seeks pre-judgment possession of the following property interests that are

within the real property located at 1801 Avenue of the Stars and 1930 Century Park West, Los Angeles, California 90067 (also known as the Westfield Century City Mall), in the County of Los Angeles (the “Property”): (1) four exclusive permanent subsurface easements; (2) one 6-month temporary construction easement (together, “Easements”); and (3) a 12-month access area for installation and monitoring of liquid level gauge devices (“Access Area”) (the Easements and the Access Area are collectively referred to as “the Property Interests”). (Crow Decl., ¶ 8.) LACMTA indicates that the Property Interests are necessary for Section 3 of the Westside Purple Line Extension Project (“Project”). (Crow Decl., ¶¶ 1, 8.)

LACMTA asserts that it is entitled to take the Property Interests by eminent domain.

Pursuant to Code of Civil Procedure section 1240.030, “[t]he power of eminent domain may be exercised to acquire property for a proposed project only if all of the following are established: (a) The public interest and necessity require the project. (b) The project is planned or located in the manner that will be most compatible with the greatest public good and the least private injury. (c) The property sought to be acquired is necessary for the project.” Pursuant to Code of Civil Procedure section 1245.250, subdivision (a), “[e]xcept as otherwise provided by statute, a resolution of necessity adopted by the governing body of the public entity pursuant to this article conclusively establishes the matters referred to in Section 1240.030.”

Here, LACMTA alleges in the Complaint that on or about May 27, 2021, the LACMTA Board of Directors (“Board”), by a vote of not less than two-thirds of its members and after providing due notice and an opportunity to be heard to all those entitled to same, adopted a Resolution of Necessity authorizing LACMTA to acquire the Property Interests by eminent domain. (Compl., ¶ 15, Ex. E.) The Resolution of Necessity provides, inter alia, that the Board has determined that the public interest and necessity require the proposed project; the proposed project is planned or located in the manner that will be most compatible with the greatest public good and the least private injury; the property sought to be acquired is necessary for the proposed project; the offer required by Government Code section 7267.2 has been made to the owner; and environmental review consistent with CEQA for the project has been previously certified by the Board. (Ibid.) Century City does not contest this aspect of LACMTA’s motion.

LACMTA filed a Notice of Deposit on October 14, 2022 indicating that it deposited with the State Treasurer the sum of $716,100 as the probable just compensation to be awarded to defendants. (LACMTA’s RJN No. 2.)

In the opposition, Century City notes that “[e]xcept as otherwise provided by statute, all improvements pertaining to the realty shall be taken into account in determining compensation.”
(Code Civ. Proc., § 1263.210, subd. (a).) “Subdivision (a) requires that the property taken by eminent domain be valued as it stands improved. If the improvements serve to enhance the value of the property over its unimproved condition, the property receives the enhanced value; if the improvements serve to decrease the value of the property below its unimproved condition, the property suffers the decreased value. See, e.g., City of Los Angeles v. Sabatasso, 3 Cal.App.3d 973, 83 Cal.Rptr. 898 (1970) (lessee may recover severance damages for reduction in value of equipment used in place on remainder).” (Legislative Committee Comments to Code Civ. Proc., § 1263.210, emphasis added.)

Century City asserts that LACMTA’s appraisal values just the land, not the improvements of the shopping center. On October 14, 2022, LACMTA filed a “Summary of the Basis for Appraisal Opinion – Action in Eminent Domain.” (LACMTA’s RJN No. 3.) Century City notes that LACMTA’s appraiser states, “[b]ased upon the transactions and appropriate adjustments to the comparable sales data, I determined the indicated fair market value of the land associated with the Subject Property to be $1,651,958,280.” (Finestone Decl., ¶ 10.) Century City asserts that “[t]he appraiser admittedly did not value the property as improved, and therefore the appraisal blatantly fails to comply with Section 1263.210 of the Code of Civil Procedure.” (Opp’n at p. 6:18-19.) Century City contends that LACMTA accordingly has not met the requirements for an order for prejudgment possession.

In the reply, LACMTA asserts that “the most significant property interests taken by eminent domain – the four underground exclusive permanent subsurface easements – are not improved. They are anywhere between 48 and 115 feet below grade. (See Complaint, ¶ 5.).” (Reply at p. 2:4-6.) But LACMTA does not cite any authority for the notion that the taking of part of an improved parcel that is below ground eliminates the requirement to value the taking as part of improved “realty.” Additionally, this assertion does not address the other property interests LACMTA seeks to acquire, specifically, the 6-month temporary construction easement and the 12-month access area for installation, monitoring, and eventual removal of liquid level gauge devices. (Crow Decl., ¶ 8.)

LACMTA also asserts that Century City has not brought a motion to challenge the amount of the deposit. They note that pursuant to Code of Civil Procedure section 1255.030, subdivision (a), “[a]t any time after a deposit has been made pursuant to this article, the court shall, upon motion of the plaintiff or of any party having an interest in the property for which the deposit was made, determine or redetermine whether the amount deposited is the probable amount of compensation that will be awarded in the proceeding.” But as set forth above, pursuant to Code of Civil Procedure section 1255.410, subdivision (d)(2)(B), “[i]f the motion is opposed by a defendant or occupant within 30 days of service, the court may make an order for possession of the property upon consideration of the relevant facts and any opposition, and upon completion of a hearing on the motion, if the court finds each of the following:…(B) The plaintiff has deposited pursuant to Article 1 (commencing with Section 1255.010) an amount that satisfies the requirements of that article.”

LACMTA also submits a declaration of Beth Finestone in connection with its reply, in which Ms. Finestone indicates that “[t]he Easements being condemned are deep subterranean easements with a minimum depth from the surface of 50 feet that have no physical impact on the surface structural or site improvements. No improvements, other than a vehicular service entrance driveway, are being directly impacted by the proposed acquisition of the Easements. As such, I appraised the land associated with the Subject Property as the basis for valuing the

permanent acquisitions.” (Finestone Reply Decl., ¶ 9.) Ms. Finestone also indicates, “I concluded that the proposed acquisitions would not impact the value of the property as improved in the before or after condition and as such, did not feel valuing the property as improved was necessary.” (Finestone Reply Decl., ¶ 14.) However, the foregoing statements are not made in LACMTA’s October 14, 2022 Summary of the Basis for Appraisal Opinion. In its sur-reply, Century City notes that pursuant to Code of Civil Procedure section 1255.010, subdivision (a), “[a]t any time before entry of judgment, the plaintiff may deposit with the State Treasury the probable amount of compensation, based on an appraisal, that will be awarded in the proceeding. The appraisal upon which the deposit is based shall be one that satisfies the requirements of subdivision (b). The deposit may be made whether or not the plaintiff applies for an order for possession or intends to do so.” Code of Civil Procedure section 1255.010, subdivision (b) provides, inter alia, that “[b]efore making a deposit under this section, the plaintiff shall have an expert qualified to express an opinion as to the value of the property (1) make an appraisal of the property and (2) prepare a written statement of, or summary of the basis for, the appraisal.” (Emphasis added.)

Ms. Finestone also indicates in her supplemental declaration that “[b]efore performing my appraisal, I attended a meeting with representatives of the owner, Defendant Century City Mall, LLC, with their appraiser present, in which we all discussed using this appraisal approach, i.e., a land-only appraisal. All parties were in agreement and no objections were raised by the defendant-owner or its appraiser to the proposed appraisal approach presented at the meeting.” (Finestone Reply Decl., ¶ 15.) LACMTA indicates that LACMTA and the “owner” met on July 24, 2019 to discuss the appraisal scope of work and general timeline for appraisal updates. (Justesen Decl., ¶ 4.) LACMTA indicates that attorneys for “the owner” forwarded a May 14, 2020 letter to LACMTA that they had received from the owner’s appraiser, Robert Dietrich, which indicates, inter alia, “[a]s agreed by the owner and Metro, our analysis deals with land value only assuming it is available for development to its highest and best use.” (Justesen Decl., ¶ 4, Ex. A.) LACMTA thus asserts that Century City should be estopped from making the argument that the appraisal is inadequate.

In the sur-reply Century City asserts that “those settlement discussions cannot justify a failure to follow the specific requirements of the Eminent Domain Law, especially where the Finestone Appraisal was purportedly done in September 2022—years after the settlement discussion with the Owner’s appraisers.” (Sur-Reply at p. 4:17-21.)[4] Additionally, Century City provides the Declaration of Robert E. Dietrich in connection with the sur-reply. Mr. Dietrich asserts that although his team’s “Westfield Appraisal” dealt with land value assuming it is available for development to its highest and best use, compensation for the acquisitions by LACMTA cannot be calculated by ignoring the existing improvements at the subject property. (Dietrich Decl., ¶¶ 2, 6-7.) Mr. Dietrich indicates that the May 14, 2020 letter referenced by LACMTA estimated the value of the subject subsurface easements to be $4,234,658, and asserts that this value takes into account the improvements pertaining to the Subject Property. (Dietrich Decl., ¶¶ 2, 9.)

Based on the foregoing, the Court does not find that LACMTA has established that it “deposited pursuant to Article 1 (commencing with Section 1255.010) an amount that satisfies the requirements of that article,” (Code Civ. Proc., § 1255.410, subd. (d)(2)(B)) because it has not shown in its Summary of the Basis for Appraisal Opinion that improvements pertaining to the realty were taken into account in determining compensation. (Code Civ. Proc., § 1263.210, subd. (a).)

LACMTA contends that there is an overriding need for possession prior to final judgment. LACMTA states that it “needs prejudgment possession of the Property Interests as soon as possible, in order to allow sufficient time for LACMTA to inspect the condemned Property Interests prior to tunneling. The Property Interests must be acquired immediately so that construction of the Project can proceed in a coordinated, technically choreographed fashion, without delay. (Crow Decl., ¶ 11.)

LACMTA also indicates that “[i]n order to protect and safeguard the improvements owned by the landowner defendant (i.e., the Westfield Century City Mall), certain pre-construction activities, such as the installation and testing of geotechnical instrumentation throughout the Easements and the Access Area, must begin immediately to allow baseline conditions to be established several weeks prior to any tunneling under the Property. The tunneling beneath the Property is scheduled to occur on or about December 26, 2022. A delay in LACMTA’s possession of the Property Interests may create delays for the Project as a whole, starting with the many pre-construction activities and safety measures (e.g., the installation, testing, and baselining of geotechnical instrumentation) that should be completed before any tunneling under the Property.” (Ibid.)

In addition, LACMTA asserts that any delay in obtaining immediate prejudgment possession of the Property Interests would result in a series of cascading delays for the entire Project, resulting in increased costs and construction impacts affecting the surrounding businesses and community. (Crow Decl., ¶ 12.) LACMTA states that “[f]ailure to meet the Project construction schedule and budget would also violate the terms of the Federal Transit Administration’s Full Funding Grant Agreement executed between LACMTA and the Federal Transit Administration on March 17, 2020, to help build the third and final phase of the Project.” (Ibid.) Century City does not appear to dispute that there is an overriding need for LACMTA to possess the subject property prior to the issuance of a final judgment in this case.

LACMTA asserts that delaying possession will create a substantial hardship for LACMTA and the public, while granting early possession of the Property will not create a hardship for defendants.

LACMTA contends that “[b]ecause the Project provides for the construction, operation, and maintenance of the Purple Line extension and promotes the public’s travel throughout the City and reduced air pollution, if LACMTA is unable to obtain prejudgment possession of the

Property Interests immediately, it will suffer great hardship.” (Crow Decl., ¶ 13.)

LACMTA states that “[s]ince the tunneling operations are linear and sequential, a delay in acquiring possession of the Property Interests would result in a series of cascading delays for the Project. (Crow Decl., ¶ 13.) In addition, LACMTA states that if possession is delayed or denied, LACMTA will be exposed to claims for increased contract costs pursuant to agreements LACMTA has with its contractors. (Crow Decl., ¶ 14.) LACMTA also states that a delay to the sequential construction schedule is estimated to result in up to $5-$7 million of increased construction costs for each month the Project is delayed. (Crow Decl., ¶ 15.) LACMTA asserts that a delay in the construction of the Project would also delay the realization of significant benefits to the public. (Ibid.) LACMTA contends that if the Court limits or denies LACMTA’s early possession of the Property Interests, the defendants’ harm, if any, is not reduced, it is postponed.

In the opposition, Century City asserts that it will suffer hardship if the proposed order is granted without agreed-upon mitigation measures. In connection with the opposition, Century City submits the Declaration of Kimberly Brewer, who is responsible for construction-related issues and operations of the Century City Shopping Center owned by Unibail-Rodamco-Westfield. (Brewer Decl., ¶ 1.) However, the objections to the relevant pats of the Brewer testimony on this issue have been sustained.

LACMTA asserts that none of the requested accommodations are preconditions to LACMTA’s statutory ability to obtain prejudgment possession of the Property Interests, noting that pursuant to Code of Civil Procedure section 1255.410, subdivision (a), “[a]t the time of filing the complaint or at any time after filing the complaint and prior to entry of judgment, the plaintiff may move the court for an order for possession under this article, demonstrating that the plaintiff is entitled to take the property by eminent domain and has deposited pursuant to Article 1…an amount that satisfies the requirements of that article.” LACMTA also provides evidence in connection with the reply that “[a]ll of the accommodations that the Owner alleges that LACMTA agreed to are items that LACMTA was willing to offer as part of a global, negotiated settlement to resolve the issue of prejudgment possession,” and that a “final written agreement, incorporating these accommodations, was never executed because the parties came to an impasse regarding the terms of negotiations.” (Justesen Reply Decl., ¶¶ 7, 9.)

In addition, LACMTA asserts that Century City fails to submit sufficient evidence to prove that its hardship would outweigh the hardship of LACMTA if prejudgment possession were delayed or denied. Here again, based upon the evidentiary rulings, the evidence on this issue proffered through the Brewer Declaration has been excluded. Nevertheless, LACMTA asserts that it is willing to offer certain accommodations as conditions to the prejudgment possession order. (See Reply at p. 8:9-28.)

Lastly, Century City asserts that it appears LACMTA is seeking to condemn access for work that has already been agreed between the parties pursuant to a Right of Entry Permit and Indemnity Agreement. (Starrett Decl., ¶¶ 2, 3.) In the reply, LACMTA notes that in footnote one of the instant motion, it acknowledged that “[p]ursuant to a pre-litigation Right of Entry Agreement between LACMTA and the Landowner Defendant, LACMTA already has temporary possession rights to the Access Area. However, for purposes of this Motion, LACMTA is asking this Court to bless LACMTA’s prejudgment possession of the Access Area.” (Mot. at p. 1, fn. 1.) In any event, the Court does not see how this results in any hardship to Century City.

Century City also asserts that LACMTA is seeking in its order for prejudgment possession rights for a six-month construction easement for permeation grouting which they previously advised is no longer required. (Brewer Decl., ¶ 8.) LACMTA Counters that “[w]hile it is true that LACMTA representatives conveyed to the Owner that it was unlikely that LACMTA would end up using the permeation grouting easements, LACMTA’s operative Resolution of Necessity, which defines the scope of the taking, has not changed.” (Reply at p. 9:26-10:1.) The Court does not find that the motion should be denied on this basis.

Because LACMTA has not complied with the requirement of Code Civ. Proc. § 1263.210, subd.(a), the motion is denied without prejudice to resubmitting it with a code-compliant appraisal.

[1]On November 18, 2022, the Court issued a minute order continuing the hearing on the instant motion to December 2, 2022 and indicating, inter alia, “[t]he surreply must be filed and served by 4:00 p.m. on November 28, 2022, with courtesy copy to Department 50.” On November 28, 2022, Century City filed a sur-reply in opposition to LACMTA’s motion for prejudgment possession.

[2]The Court notes that this objection is incorrectly labeled as Objection No. 5.

[3]The Court notes that this objection is incorrectly labeled as Objection No. 6.

[4]The Court notes that the “Summary of the Basis for Appraisal Opinion – Action in Eminent Domain” filed on October 14, 2022 contains a declaration from Ms. Finestone signed on October 10, 2022.

Superior Court of California

County of Los Angeles

Department 50