Judge: William D. Claster, Case: 22-01251890, Date: 2022-12-02 Tentative Ruling
Plaintiff Orange County Sanitation District's Notice of Motion and Motion for Order for Pre-Judgment Possession ROA 55
Plaintiff Orange County Sanitation District’s (“OC San”) motion for prejudgment possession is GRANTED.
OC San’s evidentiary objection No. 5 is SUSTAINED on hearsay grounds. The Court declines to rule on the remaining objections, which involve evidence immaterial to this ruling.
GROUNDS FOR RULING
This eminent domain case involves OC San’s intent to take various property interests currently owned by Defendant Bayside Village Marina, LLC (“BVM”) in connection with a sewer replacement/refurbishment project.
I. Procedural Prerequisites
CCP § 1255.410(a)-(b) list a number of procedural prerequisites to bringing a motion for prejudgment possession. BVM does not challenge OC San’s compliance with subdivision (a), but it does challenge OC San’s compliance with the requirements of subdivision (b), which requires all occupants of the property to be served 90 days before the motion is heard.
BVM leases a portion of its property to commercial tenants. These businesses were timely served. (See ROAs 60, 62, 64.) But BVM also leases boat slips and storage space to a number of tenants. OC San did not serve the slip and storage tenants. BVM contends that its leases with the slip and storage tenants create a real property interest that requires they be served. The sole basis for this claim is the testimony of BVM’s president, Michael Gelfand, generally describing the contents and effect of the leases. Because the Court has sustained a hearsay objection to this testimony (in that Gelfand is describing the contents of the leases for the truth of the matter asserted), there is no evidence of the interest, if any, conveyed by the leases.
In any event, as OC San points out in reply, slip and storage tenants are not the sort of “occupants” who must be served under § 1255.410(b). The statute provides that “[i]f the property is lawfully occupied by a person dwelling thereon or by a farm or business operation,” a motion for prejudgment possession can be heard 90 days after service on the record owner and the occupants. BVM’s slip and storage tenants are not “persons dwelling thereon,” farms, or businesses. As a result, they did not have to be served.
II. Standard of Review
Because OC San’s motion is opposed, the standard of review is set forth in CCP § 1255.410(d)(2):
If 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:
(A) The plaintiff is entitled to take the property by eminent domain.
(B) The plaintiff has deposited pursuant to Article 1 (commencing with Section 1255.010) an amount that satisfies the requirements of that article.
(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.
III. Entitlement to Take Property
As to the first element, OC San is a county sanitation district organized under the County Sanitation District Act, Health & Saf. Code § 4700 et seq. It has the power to acquire property by eminent domain as necessary or convenient for the construction, operation, and maintenance of a sewer system. (Id. § 4740.) Before OC San may commence an eminent domain proceeding, it must adopt a resolution of necessity finding and determining (1) that the public interest and necessity require the project; (2) that the project is planned in a manner that will be compatible with the greatest public good and least private injury; and (3) that the property sought to be acquired is necessary for the project. (CCP §§ 1245.220, 1245.230.) The Resolution of Necessity (Complaint Ex. 1) contains all findings required by the Code of Civil Procedure. OC San is therefore entitled to take the property by eminent domain, unless BVM can point to some reason it isn’t.
A. CEQA Challenge
First, BVM contends that OC San hasn’t complied with CEQA, pointing to its related ongoing CEQA case against OC San. It correctly cites City of Stockton v. Marina Towers LLC (2009) 171 Cal.App.4th 93 for the proposition that “CEQA is mandatory before a public entity may condemn property for a proposed project. Thus, if the public entity fails to prepare a valid EIR or negative declaration for the proposed project prior to condemning the property, the trial court is authorized to dismiss the action.” (Id., at p. 109.) Similarly, Burbank-Glendale-Pasadena Airport Authority v. Hensler (1991) 233 Cal.App.3d 577 provides, “[A] successful CEQA challenge to the adoption of a resolution of necessity would also constitute a defense to an eminent domain proceeding.” (Id., at p. 589.)
BVM discusses prior CEQA proceedings before Judge Wilson, noting that at a hearing, he made a number of comments suggesting he would find CEQA violations. BVM appears to argue that a finding of CEQA violations in this Court (after reassignment from Judge Wilson) is all but assured, meaning there is a complete defense to eminent domain here.
But as Hensler points out, noncompliance with CEQA is an affirmative defense. (Hensler, supra, 233 Cal.App.3d at p. 589.) BVM thus bears the burden of proof. It can’t meet that burden simply by pointing to the existence of a CEQA suit, and it identifies no authorities holding that the existence of a CEQA suit defeats a motion for prejudgment possession. In any event, Judge Wilson’s comments are simply comments. They have no ability to bind this Court in its subsequent consideration of BVM’s CEQA petition. Furthermore, as OC San points out, Judge Wilson recused himself from the CEQA matter for cause under CCP § 170.6(a)(6)(A)(iii). As a result, to the extent anything he said arguably is binding on this Court, it is either void or voidable. (See Christie v. City of El Centro (2006) 135 Cal.App.4th 767, 776 [“The acts of a judge subject to disqualification are void or, according to some authorities, voidable.”].)
Accordingly, BVM’s CEQA arguments do not defeat OC San’s right to take at this stage.
B. Other Right-to-Take Challenges
BVM contends it has asserted a number of other right to take challenges that should be adjudicated before prejudgment possession is granted. (See Opp. at p. 13.) Both sides point to different language from the same Legislative Committee comment on CCP § 1255.410:
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.
OC San focuses on the first half: this is a preliminary motion, and BVM will be able to litigate its right-to-take challenges later. BVM focuses on the second half: OC San can still ultimately take possession even if the Court denies the motion now, which it should do.
The Court is ultimately swayed by a point OC San makes in reply. It has made the necessary findings in a Resolution of Necessity. The Resolution of Necessity itself is subject to an extremely forgiving “gross abuse of discretion” standard. (See Anaheim Redevelopment Agency v. Dusek (1987) 193 Cal.App.3d 249, 258.) BVM’s non-CEQA challenges to the right to take must meet that standard. What evidence would allow the Court to reach the (preliminary, non-binding) conclusion that OC San committed a gross abuse of discretion in adopting the Resolution of Necessity? On the present record, the Court does not see how it could reach that conclusion. Accordingly, OC San has sufficiently established its right to take for present purposes.
IV. Deposit of Sufficient Amount
As to the second element, OC San submits the DuVall Declaration to establish the fair market value of the property interests to be taken. He is a licensed appraiser. (DuVall Decl., ¶ 2.) He prepared an appraisal report that contains the information required by CCP § 1255.010(b). (Id., Ex. F.) He values the property interests at $4,417,486. (Ibid.) OC San, through its counsel, deposited this amount with the State Treasurer. (Weisberg Decl., ¶ 2 & Ex. 4.)
Defendants do not appear to contest either the appraisal value or the fact of the deposit. OC San has satisfied this element.
V. OC San’s Overriding Need and Substantial Hardship
OC San seeks to take these property interests in connection with a major sewer replacement/refurbishment project. Robert Thompson, OC San’s assistant manager, explains that current sewer equipment (pumping stations, pipelines, etc.) is out of date, posing a serious risk of sewage spill into Newport Bay. (Thompson Decl. ¶¶ 6-10.) He also explains the purpose of each property acquisition. (Id., ¶¶ 11-16.) He anticipates that bidding for the project will begin in late 2023, with construction beginning in mid-2024. OC San is currently in the permitting stages of the Project, which he anticipates will take nine months to a year. (Id., ¶ 17.) The Project will require permits from both the Coastal Commission and the City of Newport Beach. (Id., ¶ 18.)
Andrew Brown, the manager for the Project, testifies that under the Newport Beach Municipal Code, only a property owner or an authorized agent with written consent may apply for the necessary permits. (Brown Decl. ¶¶ 7-9 & Ex. D.)
Gary Weisberg, counsel for OC San, declares that he sought BVM’s written authorization to proceed with permitting (i.e., letting OC San apply to the City as BVM’s authorized agent) without prejudice to the pending CEQA case and any defenses here. BVM refused. (Weisberg Decl. ¶ 6 & Ex. J.)
Taking all of this together, OC San contends prejudgment possession is necessary because the City won’t let OC San apply for permits unless it’s (1) the property owner or (2) an authorized agent, and BVM refused the second option. Denial or delay of possession will delay the Project schedule and compromise OC San’s ability to replace an aging sewer system, the sort of thing the prejudgment possession scheme seeks to avoid. (See Mt. San Jacinto Community College Dist. v Superior Court (2007) 40 Cal.4th 648, 659.)
In opposition, BVM argues construction is years away, not starting until 2024 at the earliest. As a result, there is no need for possession now. Nor does OC San’s dispute with the City create an overriding need and substantial hardship. OC San could have worked cooperatively with the City, but it chose not to do so.
The Court finds OC San has established an overriding need for possession and that substantial hardship that will arise if prejudgment possession is denied. BVM misunderstands why OC San needs the property interests: not to begin construction, but to begin permitting. The City’s municipal code requires permit applicants to either be in possession of the property or be the owner’s authorized agent. Because BVM rejected OC San’s offer to act with authorization, OC San cannot apply for necessary permits unless it has possession. Under the current project timeline, those permits must be secured now to preserve a mid-2024 start date. Delays to the start date will compromise OC San’s ability to repair an aging sewer system that unrebutted testimony establishes is out-of-date and at risk of causing a sewage spill.
VI. Balancing of Hardships
BVM identifies several claimed hardships it will suffer. First, BVM argues its own redevelopment project will be impaired if prejudgment possession is granted. (Gelfand Decl., ¶¶ 4, 12.) But while BVM puts on evidence that its project is in the works, it fails to supply evidence of how the prejudgment possession will cause a hardship. All BVM’s president Michael Gelfand offers is a vague, unexplained statement that “the permanent access easement OC San seeks would significantly impair BVM’s ability to develop its remaining Property.” (Id., ¶ 12.)
Second, BVM will be impacted by a loss of rental income associated with slip and storage tenants, and potentially commercial tenants, relocating. But as OC San points out, lost rent is remediable with money damages. OC San has already deposited estimated just compensation, and BVM has not challenged the amount of that deposit. In any event, to the extent the deposit turns out to be insufficient, BVM may pursue damages from lost rent at trial.
Third, BVM asserts that its tenants will all be negatively impacted by the taking, and the boat and RV tenants will likely be forced to relocate, a lengthy, complicated process. But BVM cites no authority for the proposition that it can raise hardship to third parties in opposition. Furthermore, the Court notes that none of the three commercial tenants who was served has appeared to oppose this motion.
The Court therefore concludes that the hardships OC San will face if the motion is denied outweigh the hardships BVM will face if the motion is granted.
VII. Relocation Assistance
Finally, BVM argues that OC San must offer its slip and storage tenants relocation assistance under the Relocation Assistance Act and the California Code of Regulations, that OC San has failed to do so, and that this is a prerequisite to transfer of possession.
There are two problems with this argument. First, a claim for relocation assistance belongs to BVM’s tenants, not BVM. BVM cites no authority holding that it has standing to raise this argument.
Second, the claim cannot be pursued in an eminent domain trial. “One asserting the benefits of [the Relocation Assistance Act] must file a claim under the procedure therein provided.” (Orange County Flood Control Dist. v. Sunny Crest Dairy, Inc. (1978) 77 Cal.App.3d 742, 766.) “[B]enefits recoverable under it may not be asserted or proved in an eminent domain trial.” (Ibid.; see also Los Angeles Unified School Dist. v. Casanola (2010) 187 Cal.App.4th 189, 204 [“If a property owner is dissatisfied with the relocation benefits awarded by the condemning entity, he or she may seek judicial review through administrative mandamus, but he may not challenge the award in an eminent domain action.”].) Even if OC San totally fails to pay relocation assistance, that failure cannot be part of an eminent domain trial.
As a result, the alleged failure to pay relocation assistance is not a reason to deny the motion.