Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Tulare County No. 08-228195. Patrick J. O’Hara, Judge.
Freeman, D’Aiuto, Pierce, Gurev, Keeling & Wolf and Arnold J. Wolf for Defendants and Appellants.
Ronald W. Beals, Thomas C. Fellenz, Joann Georgallis, Claire P. Leflore and John K. Hoxie for Plaintiff and Respondent.
OPINION
LEVY, J.
Respondent, California’s Department of Transportation, condemned 18.13 acres of land belonging to appellants, Charles and Julie Bakker and the Bakker Dairy, as part of a state highway improvement project. Of the 18.13 condemned acres, 4.4 acres were subject to an existing roadway easement.
A jury awarded appellants $15,500 per acre, including the 4.4 acres subject to the roadway easement. On respondent’s motion, the court granted judgment notwithstanding the verdict on the roadway easement property and reduced that award from $68,200 to $200. The court held that, as a matter of law, the roadway easement property had nominal value. The court also denied appellants’ motion for litigation expenses finding that respondent’s final offer was not unreasonable.
Appellants challenge the judgment notwithstanding the verdict and the denial of their motion for litigation expenses. According to appellants, they provided evidence through their expert witness that the roadway easement property had a per acre value of $16,000 as part of their gross acreage. Further, appellants argue, respondent offered no evidence that could support a finding that its final offer was made in good faith and therefore, the trial court erred in denying their litigation expenses motion.
As discussed below, the trial court properly reduced the award on the roadway easement property. Further, the trial court’s finding that respondent’s final offer was reasonable is supported by substantial evidence. Accordingly, the judgment will be affirmed.
BACKGROUND
Respondent condemned 18.13 acres for a highway improvement project from appellants’ approximately 160 acre parcel. Of these 18.13 acres, 4.4 acres are contained entirely within the rights-of-way of state and county roads surrounding appellants’ property. The 160 acre parcel is the site of appellants’ dairy and single family residences.
Before litigation commenced, respondent made a statutorily required pre-condemnation offer of $300,000 for the land and improvements. This offer did not include any amount for the reduction in appellants’ dairy herd.
Respondent filed three complaints to acquire this property. According to respondent, it proceeded in this manner because there were three different deposits on each of three parcels, different parties as to each parcel, and tenants remaining on one of the parcels. These actions were later consolidated.
Respondent’s trial appraiser determined that $400,000 was just compensation for the condemned property. Based on this appraisal, respondent made a final offer of $450,000. This amount included interest and costs. Appellants made a final demand of $550,000, excluding interest and costs.
At trial, appellants presented appraisal evidence through their expert witness, Tim Simon. Simon concluded that the land had a value of $16,000 per acre, including the 4.4 acres subject to a roadway easement. According to Simon, properties are always sold by gross area of the parcel without regard to roadway easements. In contrast, respondent’s appraiser valued the land at $15,000 per acre, excluding the roadway easement property.
The jury valued the land at $15,500 per acre and awarded appellants $212,815 for the land not subject to the roadway easement and $68,200 for the land subject to the easement. The jury also awarded $127,602 for improvements and $187,200 for the reduction in appellants’ dairy herd for a total award of $595,817.
Respondent moved for judgment notwithstanding the verdict regarding the jury award of $68,200 for the roadway easement property. Respondent argued that appellants must show special value of the underlying fee acreage to be awarded anything other than a nominal value. The trial court agreed and reduced this portion of the award from $68,200 to $200, leaving a total award of $527,817.
Appellants then moved for recovery of their litigation expenses under Code of Civil Procedure section 1250.410. The court determined that neither respondent’s final offer nor appellants’ final demand was unreasonable. Accordingly, the court denied appellants’ motion.
DISCUSSION
1. The trial court correctly reduced the jury’s award on the easement property.
“ ‘An owner is entitled to just compensation for property taken for public use.’ ” (City of Carlsbad v. Rudvalis (2003) 109 Cal.App.4th 667, 678.) Such compensation is measured by what the owner has lost rather than what the condemner has gained. (Ibid.) The property owner must be made whole, but is not entitled to more. (County Sanitation Dist. v. Watson Land Co. (1993) 17 Cal.App.4th 1268, 1279.) “ ‘In other words, the condemnee is entitled to be reimbursed for the actual value of what he or she has lost -- no more and no less.’ ” (Ibid.)
It is the law in California that “when there is an easement on the surface of condemned land, in the absence of proof of some special value attaching to it, the underlying fee is to be considered as only of nominal value.” (People ex rel. Dept. P. W. v. Schultz Co. (1954) 123 Cal.App.2d 925, 937(Schultz).) This is because a right to use the surface of the land, such as with a roadway easement, takes essentially the entire fee interest, leaving the owner of the fee with only a nominal value or right of reverter. (County Sanitation Dist. v. Watson Land Co., supra, 17 Cal.App.4th at p. 1280.)
As noted above, the trial court ruled that, as a matter of law, the 4.4 acres of roadway easement property had nominal value. Accordingly, the trial court granted respondent’s motion for judgment notwithstanding the verdict and reduced the jury’s award on this property to $200.
Appellants argue that Schultz merely creates a presumption that property subject to a surface easement has nominal value and that they presented proof that their roadway easement property had more than nominal value. To support this claim, appellants point to their expert’s testimony that, as part of the property’s gross acreage, the roadway easement had a value of $16,000 per acre. Appellants rely on the following exchange:
“Q. Have you ever seen the concept of an underlying fee impact the value of a real estate transaction?
“A. No, I have not.
“Q. Why is that?
“A. It has been my experience that property is bought and sold on the gross area. And the market does not differentiate whether there is a roadway easement on a small portion of the property. Or it’s always the gross acreage that’s used.
“Q. Now, in addition to being a real estate appraiser, do you have a broker’s license?
“A. Yes.
“Q. And do you put up properties for sale?
“A. Yes.
“Q. Do you put up properties for sale that are subject to roadway easements?
“A. Yes.
“Q. And when you put those properties up for sale, do you sell them with the gross acreage or net of the roadway easement?
“A. It has been my experience it is always the gross area of the parcel.”
Contrary to appellants’ position, this testimony does not provide proof of a special value attaching to the roadway easement property. If the fact that a parcel is usually sold based on gross acreage proved that the portion of the property subject to a roadway easement had special value, the rule set forth in Schultz would never apply. Such a result contravenes established California law.
Appellants are entitled to be reimbursed for the actual value of what they lost. Part of this loss was property subject to a roadway easement and no proof of special value was presented. Since appellants did not meet their burden of proving that the 4.4 acres of roadway easement property had more than nominal value, the trial court correctly reduced the jury’s award.
2. The trial court did not abuse its discretion in denying appellants’ motion for litigation expenses.
The defendant in a condemnation proceeding may be awarded litigation expenses if the court finds “that the offer of the plaintiff was unreasonable and that the demand of the defendant was reasonable viewed in the light of the evidence admitted and the compensation awarded.…” (Code Civ. Proc., § 1250.410, subd. (b).) Thus, settlement of condemnation actions is encouraged by providing incentives for parties to submit reasonable offers or demands before trial. (People ex rel. Dept. of Transportation v. Yuki (1995) 31 Cal.App.4th 1754, 1763.)
“Several factors have emerged as general guidelines for determining the reasonableness or unreasonableness of offers. They are ‘ “ ‘(1) the amount of the difference between the offer and the compensation awarded, (2) the percentage of the difference between the offer and award … and (3) the good faith, care and accuracy in how the amount of offer and the amount of demand, respectively, were determined.’ ” ’ ” (Los Angeles County Metropolitan Transportation Authority v. Continental Development Corp. (1997) 16 Cal.4th 694, 720.)
As a general guideline, courts have found that final offers that are 60 percent or less of the award are unreasonable while offers that are above 85 percent have been considered reasonable per se. (People ex rel. Dept. of Transportation v. Yuki, supra, 31 Cal.App.4th at p. 1764.) Those in the middle range can fall within either group. (Ibid.) Nevertheless, the mathematical relation between the condemner’s highest offer and the award is only one factor that should enter into the trial court’s determination. (Los Angeles County Metropolitan Transportation Authority v. Continental Development Corp., supra, 16 Cal.4th at p. 720.) A trial court errs if it finds unreasonableness as a matter of law based purely on mathematical disparity. (Ibid.)
In reviewing a ruling on a litigation expenses motion in a condemnation proceeding, the appellate court’s task is not to determine whether the condemner’s offer was reasonable. That was the trial court’s task. (People ex rel. Dept. of Transportation v. Acosta (2009) 178 Cal.App.4th 762, 775.) Accordingly, the denial of litigation expenses must be affirmed if supported by substantial evidence. (Tracy Joint Unified School Dist. v. Pombo (2010) 189 Cal.App.4th 889, 903.) In the absence of an abuse of discretion, the reviewing court will defer to the trial court’s decision. (People ex rel. Dept. of Transportation v. Acosta, supra, 178 Cal.App.4th at p. 775; City of Carlsbad v. Rudvalis, supra, 109 Cal.App.4th at p. 690.)
Appellants argue that the trial court failed to consider the factors that determine reasonableness. However, a review of the court’s ruling demonstrates that this was not the case.
The trial court first noted that respondent’s final offer was $450,000, including interest and statutory costs and appellants’ final demand was $550,000, exclusive of interest and costs. Less interest and costs, respondent’s final offer was $438,000. As discussed above, respondent’s expert valued appellants’ loss at $400,000.
The court then used the revised jury verdict of $527,817 as a comparison. Using the net final offer, i.e., $438,000, the trial court calculated respondent’s offer to be 83 percent of the final award. In reaching this conclusion, the trial court would have also considered the difference between the offer and the amount awarded. Thus, contrary to appellants’ position, the court properly considered the mathematical disparity between the offer and the award.
The court further considered whether respondent was unyielding and the extent of the “ ‘good faith, care, and accuracy in the method of determining of offer and demand.’ ” The court noted that there appeared to have been two stumbling blocks to settlement of the case. Respondent had failed to adequately value the loss of the dairy herd and appellants had insisted on receiving full value for the 4.4 acre parcel that was subject to the roadway easement. The court then observed that, notwithstanding the ultimate resolution of these issues, both sides made cogent arguments, supported by expert testimony. Accordingly, the court concluded that neither the offer nor the demand was unreasonable.
Contrary to appellants’ position, the trial court properly analyzed the offer and demand in reaching its decision. The court considered the general guidelines, applied those guidelines to the evidence, and concluded that respondent’s offer was reasonable. Accordingly, this court will defer to the trial court and affirm the denial of litigation expenses.
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to respondent.
WE CONCUR: WISEMAN, Acting P. J. GOMES, J.