Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_14-cv-01781/USCOURTS-cand-3_14-cv-01781-15/pdf.json

Parties Involved:
1.41 Acres of Land
Defendant
East Bay Regional Park District
Defendant
The State of California
Defendant
United States of America
Plaintiff

Document Text:

United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA,

Plaintiff,

 v.

1.41 ACRES OF LAND, more or less,

situated in the City of Alameda, Alameda

County, State of California, and THE

STATE OF CALIFORNIA, acting by and

through its Department of Parks and

Recreation, and the EAST BAY

REGIONAL PARK DISTRICT,

Defendants. /

No. C 14-01781 WHA

ORDER DENYING MOTION

FOR SUMMARY JUDGMENT OF

THE UNITED STATES

INTRODUCTION

In this condemnation action, the United States, acting on behalf of the General Services

Administration, has condemned a portion of McKay Avenue in Alameda County. The United

States now moves for summary judgment that only nominal compensation is due for the taking

in this case. For the reasons stated below, the motion of the United States is DENIED.

STATEMENT

This motion concerns just compensation for the condemnation of McKay Avenue, which

is in the City of Alameda. Prior to 1961, McKay Avenue served as an access point to the United

States Maritime Service Officer’s Training School, and the United States held all rights to the

property. In 1961, the United States conveyed over ninety acres of land, including McKay

Avenue, to defendant California and retained 7.6 acres on the west side of McKay Avenue for a

Case 3:14-cv-01781-WHA Document 113 Filed 08/14/15 Page 1 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

federal government office facility. The United States also reserved an easement in McKay

Avenue for utility-access and street-use purposes. California developed the land conveyed in

that transaction on the east side of McKay Avenue into a state-owned beach and park, which

defendant East Bay Regional Park District now operates pursuant to an agreement with the state. 

Pursuant to that same agreement, East Bay operated and still operates McKay Avenue as the

primary access to Crown Beach. Although there is some parking available on the Crown Beach

property, there are also 70 parking spaces along McKay Avenue which the public has been

permitted to use when visiting Crown Beach (Carney Rep. at 41). 

In April 2014, the United States commenced this action in order to condemn McKay

Avenue. In its amended declaration of taking, the United States described the property to be

condemned and reserved, inter alia, “[a] non-exclusive easement for pedestrian and vehicular

ingress and egress” for the benefit of California and preserved “any existing rights of ingress

and egress benefitting adjoining property.” All easements in McKay Avenue are subject to

conditions that use “must not unreasonably interfere with use of the property by the United

States,” and “[t]he United States may designate routes of travel, restrict the areas of the property

that are available for each purpose and change the configuration and improvements from time to

time” (Amd. Decl. Taking, Sched. C). 

A June 2015 order granted the United States’ motion for partial summary judgment,

finding the taking of McKay Avenue was authorized and for a public use. The United States

now moves for summary judgment on the issue of just compensation. This order follows full

briefing and oral argument.

ANALYSIS

Generally, “just compensation” for property taken pursuant to the eminent domain

authority of the United States is based on the market value of the property on the date of the

taking. Kirby Forest Industries, Inc. v. United States, 467 U.S. 1, 3–4 (1984). The parties agree,

however, that the proper measure of just compensation for McKay Avenue itself is based on the

actual costs of constructing a substitute facility, which is the proper measure for the taking of

property, such as roads, for which there is no market. That is, a public entity is entitled to

Case 3:14-cv-01781-WHA Document 113 Filed 08/14/15 Page 2 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

compensation for the “taking of a street, road or public highway only to the extent that, as a

result of such taking, it is compelled to construct a substitute highway.” Washington v.

United States (“Hanford”), 214 F.2d 33, 39 (9th Cir. 1954) (emphasis in original). Where it is

unnecessary to replace a road or provide a substitute, however, the condemnee is entitled only to

nominal compensation. Ibid. The landowner bears the burden of proof in the determination of

just compensation. United States v. 4.0 Acres, 175 F.3d 1133, 1140 (9th Cir. 1999). The

question of whether a substitute facility is reasonably necessary is a question for the court. 

United States v. Reynolds, 397 U.S. 14, 19 (1970); FRCP 71.1(h).

1. SUBSTITUTE FACILITY.

The United States argues that no substitute facility is necessary as a result of the taking

of McKay Avenue because the taking herein reserved sufficient rights to defendants and

surrounding landowners to obviate any need for a substitute facility. Defendants reply that the

United States has taken the rights to parking along McKay Avenue, which necessitates the

construction of substitute parking facilities for the benefit of the adjacent public park, Crown

Beach (Carney Rep. at 83–84).

While under defendants’ control, McKay Avenue has functioned as a public street. 

Neither defendants nor the City of Alameda have imposed long-term parking restrictions apart

from some reserved spaces for resident parking. The United States contends that defendants, and

by extension, the public, retain any parking rights that existed prior to the taking. To evaluate

that contention, it is useful to summarize the history of the easements in McKay Avenue.

Prior to 1961, the United States owned McKay Avenue in fee, subject to several

easements for the benefit of nearby private landowners. In 1961, the United States transferred

ownership of McKay Avenue (along with the property that became Crown Beach) to California. 

With that transaction, California took McKay Avenue in fee, subject to the easements of record

as well as an easement in favor of the United States for “non-exclusive street use.” With the

instant taking, the United States took McKay Avenue in fee, subject to “any existing rights of

ingress and egress benefitting adjoining property.” It also reserved “a non-exclusive easement

for pedestrian and vehicular ingress and egress” in favor of defendants. 

Case 3:14-cv-01781-WHA Document 113 Filed 08/14/15 Page 3 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

The United States argues that “the State and the United States have traded shoes” and

maintains that “if prior easements gave parking rights . . . such rights continue to exist after the

taking” (United States’ Mot. at 16). That argument misses the point. Prior to this condemnation,

defendants never held an easement in McKay Avenue, and the easements they now hold are for

“ingress and egress,” not for “street use,” as the easements of record — and the easement that the

United States previously held — provided. Defendants’ previous parking rights derived from

ownership of McKay Avenue, and the public’s rights derived from defendants’ rights. Those

rights inured to the holder of the fee interest of the property, which is now the United States.

The United States argues that the reservation of “ingress and egress” rights implicitly

included the right to park in the same manner as before this taking, but it offers no authority

suggesting such an implication, and a plain reading of that language does not permit such an

interpretation.

Finally, the United States argues that the possibility that it may prevent defendants from

using McKay Avenue for parking purposes in the future is too speculative to find that

compensation for the construction of a substitute facility is “reasonably necessary.” That is, to

compensate defendants for the construction of a substitute parking facility while there is no

evidence that parking on McKay Avenue will be affected would give defendants a windfall.

Defendants admit that parking currently remains available on McKay Avenue (Defs.’

Opp. at 16). The only evidence defendants offer in support of their claim that the United States

would restrict parking or other access rights on McKay Avenue in the future is an unanswered

letter, sent by East Bay prior to the commencement of this action, expressing concerns about

parking to the United States (Amspoker Decl. Exh. D). That evidence does not establish the

United States’ intentions with regards to parking on McKay Avenue. Defendants also contend,

however, that just compensation must be based on the rights actually taken, and they are entitled

to assume the “most injurious use” of the condemned property when evaluating the need for a

substitute facility. 

Defendants cite to United States v. 201.19 Acres, 478 F.2d 1042, 1046 (9th Cir. 1973),

for the contention that a condemnee is entitled to measure just compensation based on the “most

Case 3:14-cv-01781-WHA Document 113 Filed 08/14/15 Page 4 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

injurious use” of the condemned property. The United States argues that decision is inapposite

because it did not involve compensation for the cost of a substitute facility, but offers no

principled reason that analysis should not apply to a determination of the necessity of a substitute

facility. Indeed, as the United States notes in support of its argument on severance damages,

discussed below, compensation for the cost of a substitute facility is intended to serve as “an

alternative method of compensation that entirely replaces the market value concept.” United

States v. Streets, Alleys and Public Ways in the Village of Stoutsville, 531 F.2d 882, 884 n.7 (8th

Cir. 1976). Accordingly, this order finds it is appropriate to consider the need for a substitute

facility based on the property rights actually condemned, rather than based on an unreliable

assumption that the current permissive use will persist in perpetuity. It is true that this could

result in a windfall to defendants should the United States or any subsequent owner decline to

restrict parking along McKay Avenue, but the converse would result in a windfall for the United

States, which easily could have avoided this result by reserving a parking easement for the

benefit of defendants.

The United States argues that the condemnation of McKay Avenue ultimately relieved

defendants of the costs of maintaining and improving that street. Even if true, that does not

obviate the need for a substitute facility. Rather, the value of any eliminated costs must be

considered as an offset to the cost of the substitute facility. That pertains to the amount of just

compensation, which is a question for the jury.

Accordingly, the motion for summary judgment of the United States that nominal

damages are sufficient to compensate defendants is DENIED. Defendants have submitted

evidence of the actual cost of constructing additional parking spaces (Carney Rep. at 83–84). 

The amount of just compensation as measured by the cost of a substitute facility must be

determined by a jury trial.

2. SEVERANCE DAMAGES.

Defendants contend that, in addition to compensation for McKay Avenue itself, they are

entitled to “severance damages” for the diminution in value of Crown Beach as a result of the

taking. “When the government takes only part of a person’s property, and when the value of the

Case 3:14-cv-01781-WHA Document 113 Filed 08/14/15 Page 5 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

remainder depreciates because of the proposed use on the condemned parcel, the owner is

entitled to compensation both for that which is physically appropriated and for the diminution

in value to the non-condemned property.” United States v. 33.5 Acres, 789 F.2d 1396, 1398

(9th Cir. 1986). The United States contends that compensation for the cost of a substitute facility

is meant to serve as the exclusive measure of just compensation to the exclusion of any measure

based on market value, so compensation for severance damages would constitute an

impermissible windfall to defendants.

Defendants point to United States v. Miller, 317 U.S. 369, 373–74 (1943), in which the

Supreme Court considered that a condemnee’s just compensation “should be measured in

various ways depending on the circumstances of each case and that no general formula should be

used for the purpose.” Thus, defendants argue, the measure of just compensation here should be

crafted to account for the unique circumstances of this taking. The United States makes no

attempt to distinguish Miller. Instead, at oral argument, the United States merely argued that

decision should be disregarded in favor of more recent decisions of the Supreme Court and our

court of appeals.

The United States primarily rests its argument that the actual cost of a substitute facility

must be the exclusive method of just compensation on the decision in United States v. 50 Acres,

469 U.S. 24, 30 (1984). In that decision, the Supreme Court held that just compensation could

not be measured by the actual cost of a substitute for a sanitary landfill property because “the

testimony at trial established a fairly robust market for” such properties. Where there was an

ascertainable market value for the property condemned, just compensation for the taking of that

property was required to be measured by that market value. But that decision involved the

condemnation of a single parcel of land, without regard to its effect on any adjacent property or

any additional costs that needed to be expended apart from the construction of the substitute

facility, so that decision is not analogous to our case.

The United States also cites Washington v. United States (“Hanford”), 214 F.2d 33, 39

(9th Cir. 1954), for the contention that when a substitute facility is necessary, just compensation

is limited to the cost of that substitute facility. There, the United States condemned a highway

Case 3:14-cv-01781-WHA Document 113 Filed 08/14/15 Page 6 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7

that belonged to Washington, for which a substitute highway had to be constructed. That

decision found that the only issue relating to just compensation was “the amount necessary to

provide the necessary substitute,” although Washington did not contend it was entitled to

compensation for any injury other than the loss of the facility. Thus, that decision is inapplicable

here for the same reason as 50 Acres. Both decisions held that just compensation for the

condemnation of a public facility for which there is no market is the actual cost of constructing a

reasonably necessary substitute facility. Neither goes so far as to find that the cost of a substitute

facility must be the only measure of damages, even where other damages result beyond the loss

of a facility.

Our court of appeals has not addressed this question, though one district court in our

circuit has. In United States v. 10.56 Acres, No. 07-1261. 2008 WL 3977614, at *4 (W.D. Wash.

Aug. 22, 2008) (Judge Richard Jones), the United States condemned several rights of way for an

interstate, which had been owned by Washington. Washington sought compensation both for the

construction of a substitute facility and for the increased costs of operating and maintaining that

facility. The United States relied on Hanford, suggesting, as it does here, that decision provides

for two mutually exclusive methods of compensation (United States’ Mot. at 17). Judge Jones

rejected that argument and found that “neither Hanford nor any other authority bars a court from

awarding ‘just compensation’ that combines a substitute facility with a monetary award.” He

further determined “the court’s duty [was] to fashion an award that permit[ted] the State to

‘readjust its . . . highway system to serve [its] requirements and needs in as adequate a manner

and extent and with equal utility as such system would have provided had the facility in question

not been condemned, so far as this is reasonably practical.” Ibid. (quoting City of Fort Worth v.

United States, 188 F.2d 217, 222 (5th Cir. 1951)). Accordingly, the condemnee was entitled to

compensation for costs incurred in excess of the cost of constructing a substitute facility.

This order finds the reasoning in 10.56 Acres persuasive. As there, a jury could find that

our defendants have suffered harms to their property interests beyond what can be accounted for

by the construction of a substitute for McKay Avenue. Those harms mirror the two-pronged

recovery contemplated in 33.5 Acres, 789 F.2d at 1398: (i) the loss of the facility of McKay

Case 3:14-cv-01781-WHA Document 113 Filed 08/14/15 Page 7 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8

Avenue itself and (ii) the diminution in value of Crown Beach as a result of that condemnation. 

The actual cost of constructing a substitute facility compensates defendants for the former and as

the United States argues, “entirely replaces the market value concept” for the valuation of the

condemned facility. United States v. Streets, Alleys and Public Ways in the Village of

Stoutsville, 531 F.2d 882, 884 n.7 (8th Cir. 1976). The United States has offered no authority —

nor even a principle — demonstrating that the construction of a substitute facility also

compensates for the harm to the remainder property. 

Defendants are entitled to make a case to the jury for both categories of damages. To

find otherwise would be to decide that an owner of a parking lot that services a public building

suffers no additional harm above the harm an owner of a stand-alone parking lot of the same size

and utility would suffer from the condemnation of that lot. Instead, it is appropriate to follow the

direction of Miller and to craft a measure of damages appropriate for the circumstances of our

case, rather than to consider a solitary formula for the calculation of just compensation. 

Defendants have submitted an appraisal demonstrating they have suffered some

severance damages beyond the loss of McKay Avenue as a facility. That appraisal includes

damages such as the loss of control over the primary access point to Crown Beach and aesthetic

damages that will result from the construction of a substitute facility. To the extent the United

States argues any specific line-items in that appraisal are duplicative of compensation for a

substitute facility, such objections are best considered on a motion in limine. To the extent the

United States disputes the accuracy or substantiality of defendants’ valuation methodology, that

is an issue properly resolved in a Daubert motion or through cross-examination. Defendants

have demonstrated that a jury trial is necessary to resolve the amount of just compensation due

as a result of damages to the remainder property.

The United States also argues that severance damages are inappropriate here because

such damages require that the severed parcels share a unity of ownership and use of the

properties in question. It is true that a unity of ownership must exist among all parts of a larger

parcel in order for severance damages to apply. United States v. 57.09 Acres, 706 F.2d 280, 281

(9th Cir. 1970). Although both parcels were held in fee by California, the United States argues

Case 3:14-cv-01781-WHA Document 113 Filed 08/14/15 Page 8 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

9

that McKay Avenue was subject to access easements held by others, which was not true of the

remaining parcel at Crown Beach, so, it argues, ownership of the parcels cannot be said to be in

unity. The decision in 57.09 Acres did not establish so strict an understanding of unity, however. 

There, the defendant held a leasehold in the remainder parcel but held only an easement in the

condemned tract. Nevertheless, the defendant was entitled to severance damages. 

Similarly, in United States v. 429.59 Acres, 612 F.2d 459 (9th Cir. 1980), related but

separate entities owned contiguous property and were each entitled to severance damages. The

United States attempts to distinguish that decision arguing that the parcels there were

“essentially all controlled by the same person,” and that the touchstone for severance damages

was that the property taken and the contiguous remainder must be “held by the same entities in

the same manner.” Id. at 464. That decision went on, however, to state “[e]ven if we disregard

the joint ownership and management of the [defendants] and consider them as separate entities,

severance damages would nevertheless be appropriate in this case. Each [defendant] owned fee

interests in both land that was taken and land that is part of a contiguous remainder . . . .” Ibid.

It does not go so far as to find that ownership in the “same manner” requires both parcels at issue

to be completely unencumbered. Nor here. This order finds that a jury could find California’s

ownership of a fee interest in both parcels and East Bay’s leasehold over both parcels are

sufficient to find unity of ownership for the purposes of severance damages.

The United States also argues that McKay Avenue and Crown Beach do not share unity

of use, because the former is a road while the latter is a park. This ignores the fact that

defendants claim they operated the two parcels in unity in order to support public access to

Crown Beach and the facilities there. A jury could find defendants’ operation of those two

parcels constitutes a unity of use for the purposes of finding severance damages.

Defendants have shown there is a triable issue of fact as to the extent of severance

damages, and the United States has failed to demonstrate that defendants’ theory of severance

damages fails as a matter of law. Thus, the harm to the value of Crown Beach as a result of the

taking of McKay Avenue must be determined by a jury.

Case 3:14-cv-01781-WHA Document 113 Filed 08/14/15 Page 9 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

10

CONCLUSION

For the reasons stated above , the motion for summary judgment of the United States is

DENIED. 

IT IS SO ORDERED.

Dated: August 14, 2015. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

Case 3:14-cv-01781-WHA Document 113 Filed 08/14/15 Page 10 of 10