September 22, 2006, by
The City of San Diego won a reversal on two inverse condemnation claims, reversing the $65.3 million dollar judgment against it . (Border Business Park, Inc. v. City of San Diego, Sept. 1 9, 2006, Fourth Appellate District, Div. Two, E035881).
Border Business Park is a real estate development company which was developing a business park in Otay Mesa (an unincorporated area in San Diego County annexed by the City). Border alleged two inverse condemnation claims against the City . The first was a "Klopping" claim alleging that unreasonable "pre-condemnation" actions taken by the public agency directly affect ed the landowner to its detriment . According to Border, the City acted unreasonably by "announcing" it was considering developing an international airport in Otay Mesa which went directly through Border's ( and other land owner's) property. The second inverse condemnation claim alleged that the City substantially impaired access to the business park by diverting truck traffic in such a way that the traffic backed up so no one could drive in or out of the park. Border alleged the congestion was so bad it was affecting sales of the property by preventing access to or limiting the number of prospective tenants. The jury awarded Border a total of $94.5 million dollars - $25.5 million in damages for the City's airport planning activities; $39.8 million for the truck traffic; and $29.2 million for the City's breach of the development agreement with Border.
The City filed a motion for new trial on all three claims. The trial court granted the City's motion on the issue of the breach of contract. The City then appealed the judgment. On Border's Klopping claim, the City argued that Border failed to present evidence of an announced intention to condemn the property, and that the claim, therefore, failed as a matter of law. The City also argued that Border, like numerous other land owners in the vicinity, did not suffer a "distinct or unique injury" as the law required. On Border's second inverse claim, the City argued that the evidence did not support Border's position of complete "gridlock" and virtually no access. Rather, the City argued that the evidence showed that traffic flowed, albeit slowly at times, and there was always at least one access to and from park.
The court of appeal reversed the judgment. On Border's Klopping claim, the appellate court did not determine whether an announcement of an intent to condemn is required. But, the appellate court did agree with the City in holding that there was "no evidence that the airport proposal directly and specially affected Border, as opposed to the entire area of Otay Mesa within the proposed airport site...." As to the second inverse claim (relating to the traffic congestion and affect on access), the appellate court found that the evidence failed "to show that there was ever a time when there was no access by means of at least one entrance to the park" and "interference with access which merely requires greater "circuity of travel" is not compensable." Finally, the court upheld the lower court's decision granting the City's motion for a new trial on Border's breach of contract claim.
According to press reports, Border is planning to petition the California Supreme Court for review of the appellate court's decision.
F or more information about this case, please contact David Skinner at (510) 808-2000 or email@example.com.
For more information regarding "Klopping" claims, see the seminal case, Klopping v. City of Whittier, 8 Cal.3d 39, 52 (1972).
Claudia J. Gorham, Eminent Domain Department