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Caltrans Gets Dinged for Basing Offer on Illegal Nonconforming Use

The final offer that Caltrans made to a landowner whose property was the subject of an eminent domain action was unreasonable and, therefore, the landowner is due litigation expenses from the state, the Fourth District Court of Appeal has ruled. The court ruled that Caltrans's offer was unreasonable because it was based on an illegal nonconforming use of the site. The decision comes in a case involving the widening of Interstate 5 in Buena Park, a city in northern Orange County. In 1990, Caltrans filed an eminent domain action against the Woodson family, which owned a two-acre mobile home park. Caltrans needed the property to accommodate the freeway project. Shortly before the case went to trial, the Woodsons demanded $1,695,000. Caltrans's final offer was $1,400,000. Just before the trial, Caltrans sought a continuance and the trial was postponed for 3 1/2 months. The Woodsons then demanded an additional $100,000 to cover the cost of preparing for trial twice. Eventually, a jury awarded the Woodsons $1,876,750. The Woodsons then sought litigation expenses, but the trial court judge denied the request. At both the trial court level and on appeal, the case turned on the definition of "reasonable." The trial court found Caltrans's final offer to be reasonable and, therefore, denied the Woodson's request; the appellate court did not. Under Code of Civil Procedure 1250.410, the court can award litigation expenses to the landowner if the court finds that the government agency in an eminent domain action makes an unreasonable final offer and the property owner made a reasonable demand. The Fourth District first considered mathematical factors. The Caltrans offer was only 74% of the jury award, which was $476,750 greater than the state's offer. Based on precedent, those figures placed the case in a gray area of reasonableness, the court found. However, the state Supreme Court in Los Angeles County Metropolitan Transportation Authority v. Continental Development Corp., (1997) 16 Ca.4th 694 (see CP&DR Legal Digest, September 1997), cautioned lower courts against using mathematical factors as the sole basis for determining reasonableness. The courts are also to consider "good faith, care and accuracy factors." "Those are the factors on which Caltrans hangs its hat," Justice Eileen Moore wrote for the unanimous three-judge panel. "But Caltrans does not fare well on the care and accuracy front." In setting a value of $1,188,000, the Caltrans appraiser found that the highest and best use of the property was its existing use as a mobile home park. The Woodsons' appraiser determined the property to be worth $1,876,750 based on using the property for a self-storage facility. "The problem with Caltrans's appraisal," Moore wrote, "is that the mobile home park was a nonconforming use that was specifically required by ordinance to be terminated." The mobile home park had been developed during the 1950s. In 1972, the city zoned the site as Light Industrial and required the mobile home park to close by 1992. The Caltrans appraiser conceded she knew the mobile home park was nonconforming, but she thought it was a legal nonconforming use and that the city would not shut it down anyway. She also noted that about half of the comparable sales she used as a basis for valuing the site were of nonconforming mobile home parks in Orange County. "But these arguments miss the point," Moore wrote. "Very simply put, there is a Buena Park Zoning Ordinance requiring the nonconforming use to be terminated. This zoning ordinance cannot be ignored." Because Caltrans's final offer was based on a nonconforming use that was legally required to be terminated, the "final offer was unreasonable under the good faith, care and accuracy analysis," the court held. Therefore, Caltrans is responsible for the landowner's legal expenses. The Case: The People ex rel. Department of Transportation v. Bertrand H. Woodson, No. G024913, 01 C.D.O.S. 9704. Filed November 14, 2001. The Lawyers: For Caltrans: William McMillan, Caltrans, (916) 654-4583. For Woodson: K. Erik Friess, Nossaman, Guthner, Knox & Elliott, (949) 833-7800.