Opinion ID: 2599726
Heading Depth: 2
Heading Rank: 1

Heading: The Reasonable Probability of Rezoning

Text: The Court of Appeal found that the trial court improperly excludedand thus prevented Campus Crusade's appraisal experts from relying onevidence that the highest and best use of the property was comprehensive development for residential, commercial, industrial, and recreational uses. In the view of the Court of Appeal (and echoed by Campus Crusade here), the trier of fact should have been allowed to consider these prospective uses in assessing the value of the property taken and the damage to the remainder; instead, the trial court usurped the jury's role by deciding for itself, prior to trial, whether there was a reasonable probability the property could be rezoned to permit these other uses. MWD, by contrast, argues that the question whether there was a reasonable probability of the property being rezoned is properly entrusted to the court, not the jury, and that the court's pretrial determination that rezoning was not reasonably probable here is supported by substantial evidence. There is no dispute that the existing zoning did not authorize the development envisioned by Campus Crusade. The portion of the property lying within the City of San Bernardino was zoned residential low, which imposed a maximum density of 3.1 dwelling units per gross acre and does not allow commercial uses. The remaining property was zoned rural living, which imposed a minimum three-acre lot size; single residential, which permitted a slightly higher density; and resource conservation, which imposed a minimum 40-acre lot size. The existing buildings on the property, including the hotel, predated the current zoning and were operating as legal nonconforming uses. Prior to trial, MWD filed a motion in limine for an order prohibiting the presentation of any evidence treating Campus Crusade's property as zoned for anything other than the uses permitted by the Resource Conservation zone unless, and until, Campus Crusade has borne its burden of proof and convinced the Court, outside of the jury's presence, that there is substantial evidence of a reasonable probability of rezoning on the date of value. After conducting a pretrial evidentiary hearing, Judge Wade granted the motion. He agreed with MWD that the question whether a reasonable probability of rezoning existed in the near future was for the court to decide, and he determined, based on the evidence presented by both sides at the pretrial hearing, that it is not reasonably probable that the subject property would be rezoned in the reasonably near future. As a result, Judge Wade prohibited Campus Crusade's appraisers from valuing the remainder as anything other than Resource Conservation. Unfortunately, the trial court thereby usurped the role of the jury in valuing the property. Where due to zoning restrictions the condemned property is not presently available for use to which it is otherwise geographically and economically adaptable, the condemnee is entitled to show a reasonable probability of a zoning change in the near future and thus to establish such use as the highest and best use of the property. ( City of Los Angeles v. Decker (1977) 18 Cal.3d 860, 867, 135 Cal.Rptr. 647, 558 P.2d 545.) The jury's role in this assessment is settled. `[T]he determination as to whether or not there is a reasonable probability of a[use] change is ordinarily a question of fact for the jury.' ( Redevelopment Agency v. Contra Costa Theatre, Inc. (1982) 135 Cal.App.3d 73, 84, 185 Cal.Rptr. 159, quoting People ex rel. Dept. Pub. Wks. v. Arthofer (1966) 245 Cal.App.2d 454, 467, 54 Cal.Rptr. 878; see Community Redevelopment Agency v. Henderson (1967) 251 Cal.App.2d 336, 345, 59 Cal.Rptr. 311 [the court ... correctly left to the jury the determination whether there was a reasonable probability of a zone change]; see also City of Los Angeles v. Decker, supra, 18 Cal.3d at p. 872, 135 Cal.Rptr. 647, 558 P.2d 545 [the purported need for airport parking and the suitability of defendant's property for that purpose were critical to the issue of valuation]; People ex rel. Dept. of Public Works v. Donovan (1962) 57 Cal.2d 346, 354, 19 Cal.Rptr. 473, 369 P.2d 1 [criticizing defendant's proffered jury instruction concerning the probability of rezoning where the evidence was conflicting because of the possible implication that the court had concluded as a matter of law that there was a reasonable probability of a zoning change]; accord, 4 Nichols on Eminent Domain, supra, § 12C.03[3], p. 1282 [The existence of a reasonable probability of an imminent change in zoning is a question of fact]; id., § 12C.03[3], p. 1288 [it is for the jury to consider the weight to be given the testimony based on such probability, whether there is such probability, and its effect on the fair market value].) Before such evidence may be presented to the jury, however, the trial court must first determine whether there is sufficient evidence that would permit a jury to conclude there is a reasonable probability of rezoning in the near future. Evidence of a reasonable probability of a zoning change in the near future `must at least be in accordance with the usual minimum evidentiary requirements, and that which is purely speculative, wholly guess work and conjectural, is inadmissible.' ( City of Los Angeles v. Decker, supra, 18 Cal.3d at p. 868, 135 Cal.Rptr. 647, 558 P.2d 545.) The evidence, if credited, must also be sufficient to establish that rezoning is reasonably probable. ( People ex rel. Dept. Pub. Wks. v. Arthofer, supra, 245 Cal.App.2d at p. 466, 54 Cal.Rptr. 878 [upholding the exclusion of testimony from an expert whose opinion was based on a `reasonable possibility' instead of a `reasonable probability' of zone change].) If the trial court determines that no fact finder could find a reasonable probability of rezoning on the record presented, it may exclude all evidence and opinions of value based on a use other than that authorized by the existing zoning. ( Id. at p. 467, 54 Cal.Rptr. 878; accord, City of San Diego v. Neumann, supra 6 Cal.4th at p. 744, 25 Cal.Rptr.2d 480, 863 P.2d 725 [evidence of a probability of rezoning is relevant only `to the extent that the probability of such a prospective use affects the market value'].) If, on the other hand, the trial court determines that there is sufficient evidence of a reasonable probability of rezoning to warrant submitting the issue to the jury, it is for the jury, in considering the weight to be given valuation testimony based upon a reasonable probability of rezoning, to determine whether there was a reasonable probability of rezoning and, if so, its effect on the market value of the property. Thus, before a jury may even reach the question whether a use which was unauthorized by the existing zoning otherwise meets the criteria of a highest and best use, the jury must first find that there was a reasonable probability of rezoning to permit that use. Once that has been established, neither party bears the burden to persuade the fact finder of the effect of this probability on the valuation of the property. (§ 1260.210, subd. (b); accord, 2 Judicial Council of Cal. Civ. Jury Instns. (2007) CACI No. 3503; cf. Evid.Code, § 403, subd. (c)(1), (2).) Relying on language in certain Court of Appeal decisions, MWD contends that the property owner bears the burden of proving that a reasonable probability of rezoning exists. MWD relies in particular on County of San Diego v. Rancho Vista Del Mar, Inc. (1993) 16 Cal.App.4th 1046, 1058, 20 Cal.Rptr.2d 675 ( Rancho Vista Del Mar ), which asserted that [t]he property owner has the burden of showing a reasonable probability of a change in the restrictions on the property, as well as on City of San Diego v. Rancho Penasquitos Partnership (2003) 105 Cal.App.4th 1013, 1028, 130 Cal.Rptr.2d 108, and City of San Diego v. Barratt American, Inc. (2005) 128 Cal.App.4th 917, 934, 27 Cal.Rptr.3d 527, which simply quote this passage from Rancho Vista Del Mar. But these statements must be interpreted against the backdrop of section 1260.210, which provides: (a) The defendant shall present his evidence on the issue of compensation first and shall commence and conclude the argument. [¶] (b) Except as otherwise provided by statute, neither the plaintiff nor the defendant has the burden of proof on the issue of compensation. What does section 1260.210, subdivision (b) mean when it says that neither party has the burden of proof on the issue of compensation? We begin with a discussion of key terms: burden of proof and burden of producing evidence. Attorneys, judges, and commentators often have confused these terms and the concepts they represent. As the United States Supreme Court observed, `For many years the term burden of proof was ambiguous because the term was used to describe two distinct concepts. Burden of proof was frequently used to refer to what we now call the burden of persuasionthe notion that if the evidence is evenly balanced, the party that bears the burden of persuasion must lose. But it was also used to refer to what we call the burden of productiona party's obligation to come forward with evidence to support its claim.' ( Sargent Fletcher, Inc. v. Able Corp. (2003) 110 Cal. App.4th 1658, 1666-1667, 3 Cal.Rptr.3d 279, italics omitted.) With those definitions in mind, we can now construe section 1260.210. Subdivision (a) articulates a burden of production, which is merely the burden of going forward with (or producing) some evidence of a material fact. ( Redevelopment Agency v. Metropolitan Theatres Corp. (1989) 215 Cal.App.3d 808, 811, fn. 3, 263 Cal.Rptr. 637; see generally Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 862, 107 Cal.Rptr.2d 841, 24 P.3d 493.) Here, the property owner has the burden to produce evidence to support a finding that rezoning is reasonably probable. Once that burden has been satisfied, however, subdivision (b) makes it clear that neither party bears a particular burden of persuasion with respect to convincing the trier of fact that the reasonable probability exists or what effect such probability would have on the valuation of the property. We thus understand the burden described in Rancho Vista Del Mar, supra, 16 Cal.App.4th 1046, 1058, 20 Cal.Rptr.2d 675, and its progeny to be the burden of production, not the burden of persuasion. This accords with the Law Revision Commission Comment to section 1260.210, which explains that [a]bsent the production of evidence by one party, the trier of fact will determine compensation solely from the other party's evidence, but neither party should be made to appear to bear some greater burden of persuasion than the other. [3] (Cal. Law Revision Com. com., 19 West's Ann.Code Civ. Proc. (1982 ed.) foll. § 1260.210, p. 746.) Accordingly, when presented with a proffer that there is a highest and best use that is not permitted by the property's current zoning, the trial court should examine whether the proffer supplies sufficient evidence to permit the jury to find that there was a reasonable probability of rezoning to permit that use in the near future. The jury should then be instructed that it may consider the change in use, provided that it first finds a reasonable probability the property could be rezoned in the near future. In this case, however, the trial court collapsed these two steps into one by deciding, prior to trial, whether it was convinced there was a reasonable probability of rezoning. Because the trial court examined the evidence of rezoning under an unduly rigorous standard, we direct the Court of Appeal to remand the matter to the trial court to reexamine the record under the correct standard in the first instance. (E.g., Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785, 802-803, 85 Cal.Rptr.2d 844, 978 P.2d 2; Linden stadt v. Staff Builders, Inc. (1997) 55 Cal. App.4th 882, 889, 64 Cal.Rptr.2d 484.)