When taking property by eminent domain, a city does not have to pay for the property's value as a potential garbage dump, the Third District Court of Appeal has ruled. The court held that the farmland's value as a landfill was too speculative under eminent domain law.
The case involved the City of Stockton's condemnation of land owned by Albert Brocchini Farms. Prior to the trial to determine the property's value, the city asked the court to prohibit the testimony of a Brocchini expert regarding the property's value as a landfill. The city argued that the expert failed to establish the likelihood of a private developer receiving permits to open a landfill on the site, and that the expert made speculative assumptions regarding landfill operating costs and income.
Brocchini countered that public and private landfills sit adjacent to the property in question. Brocchini also contended that a landfill was analogous to land with mineral rights, which must be considered when determining property value. Brocchini argued that private parties in the trash business use the discounted cash value for determining property value.
San Joaquin County Superior Court Judge Duane Martin ruled for the city, calling the expert's analysis too speculative. The appellate court agreed.
A fair value to be paid during an eminent domain procedure may take into account rental income from the property itself, but not income from business conducted on the property, the court held. In this case, the property owner sought compensation for a hypothetical business on the property, which the court viewed with skepticism.
The court further ruled that a proposed landfill was nothing like property with mineral rights. Mineral interests "are a commodity with an intrinsic value," Justice Rodney Davis wrote for the unanimous three-judge panel. The market for a landfill, however, is volatile and affected by the awarding of collection franchises, public opposition to siting, and the efficacy of conservation and recycling efforts. "Under these circumstances, a claimed expertise at fixing a value is chimerical," Davis wrote.
The court also considered an appeal from Stockton. The city had allowed Brocchini to continue farming the land until June 1997, 14 months after an order of possession took effect. Judge Martin ruled that Brocchini Farms was entitled to interest on the judgment during those 14 months, as the company was not paid until it surrendered the property.
The city argued that the interest should have been offset by consideration for Brocchini's use of the property. Brocchini argued — and the trial court agreed — that the offset was itself offset because Brocchini lost money on its final crop of alfalfa.
The Third District reversed the trial court on this point. Whether or not Brocchini made money while continuing to occupy the land was irrelevant, the court ruled. The city was entitled to the offset under Code of Civil Procedure § 1268.330, and there was no basis for the trial court to limit the offset. The law even presumes the offset amount to be equal to the rate of interest unless there is evidence otherwise. Such evidence did not exist in this case, the court ruled.
The Case:
City of Stockton v. Albert Brocchini Farms, Inc., No. C034813, 01 C.D.O.S. 8016. Filed September 10, 2001.
The Lawyers:
For Stockton: Richard Denhalter, city attorney, (209) 937-8333.
For Brocchini: John McKinley, Brown, Hall, Shore & McKinley, (209) 477-8171.
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