Court Opinion

ID: 9751573
Source: CourtListenerOpinion
Date Created: 2023-08-28 16:37:18.37372+00
Date Added: 2024-06-11T07:26:52.384051
License: Public Domain

COFFEE, J., Dissenting.
I respectfully dissent.
The lynchpin of the majority’s reversal of the jury’s award of damages in this case is its mistaken position that Channel Islands Marina, Inc.’s (CIM) improvements had only salvage value at the end of the lease. On the contrary, as set forth frequently in the statement of decision of the trial judge, the land and waterside improvements had a “fair market value” to each party to the lease. Evidence of the existence of this value, among other things, can be found in the actions of the County of Ventura (County) in preventing CIM from removing the improvements.
The majority points to the trial court’s finding that “the evidence established . . . that the Coastal Commission would not have issued a coastal development permit without a replacement plan, which CIM was clearly in no condition to satisfy.” However, in the same paragraph, the court also found that, “[b]ased on the evidence, it appears that, if County had received a request from CIM for consent to its applications to state and federal permitting authorities, County would have refused.”
The County actively prevented CIM from obtaining the necessary permits, some of which were under the County’s direct control. It asserted in its complaint that CIM was required to obtain permits from the County and the City of Oxnard, and the approval of the harbor director. The County alleged that only after CIM had received these permits, could it obtain approval from the Coastal Commission to remove the improvements.
CIM was thwarted at every turn. In an attempt to comply with the initial permitting requirements, CIM obtained a demolition permit from the City of Oxnard. The City later rescinded the permit, informing CIM that it must first obtain permission from the County. The County filed its lawsuit to prevent CIM from proceeding with the permitting process for the removal of the improvements. The County disingenuously contended in its complaint that CIM had no legal right to remove the improvements because it lacked the *631necessary permits. The County, by its actions, prevented CIM from proceeding with the steps necessary to bring it before the Coastal Commission.
The County acknowledges the fair market value of the improvements in its dealings with Vintage Marina Partners LP (Vintage). Vintage operates another marina in Channel Islands Harbor and has had a longtime interest in CIM’s marina property. In March 2000, while CIM and the County were negotiating a lease renewal, Vintage offered $4.5 million to CIM to purchase its leasehold interest. CIM told the harbor master, Lyn Krieger, about the offer. She seemed surprised and indicated that negotiations had not gone as well as she had hoped. Krieger asked CIM if it could enter into immediate discussion about extending the lease. CIM agreed and put the offer from Vintage on hold while it pursued discussions with the County. In October 2002, Vintage offered CIM $2.5 million for the remaining term of the leasehold.
On November 1, 2002, after the negotiations between CIM and the County had begun to falter, Vintage wrote to Krieger indicating its interest in acquiring CIM’s leasehold. During this time, Vintage held individual meetings concerning the CIM lease with members of the board of supervisors, the County’s chief administrative officer and the County Harbor Department. In June 2003, Vintage submitted to Krieger a redevelopment proposal for the permitting, design and construction of waterside and landside improvements. The redevelopment was divided into four phases and was to span five years.
Vintage indicated in the proposal that, if it were awarded the lease, it “could potentially indemnify the County” for any liability in terminating the existing lease. Vintage’s general manager later testified that Vintage was willing to indemnify the County for up to $3 million. The terms of the new lease were premised on the continued use and benefit of CIM’s improvements.
The County reviewed the terms of the Vintage lease in a meeting on August 5, 2003, several weeks before expiration of the CIM lease. The Vintage lease was finalized in December.1 Krieger testified that the County wanted the CIM waterside improvements to stay in place until permits could be obtained for new construction. Krieger hoped the permits could be obtained within 18 months, and she anticipated that construction could take three to four years. The buildings might be renovated, but Krieger testified there were no plans to demolish them.
*632The County’s assertion on appeal that the improvements had only salvage value is belied by the substantial dollar value associated with their acquisition: Vintage’s offers to CIM of $4.5 million and $2.5 million. This is arguably the most robust evidence of the fair market value of the improvements.
In the damages phase of the trial, the court and counsel labored extensively over the instructions defining fair market value, and the court ultimately selected the measure of damages as set forth in Almota Farmers Elevator & Whse. Co. v. U. S. (1973) 409 U.S. 470, 474-475 [35 L.Ed.2d 1, 93 S.Ct. 791]. The trial court instructed the jury to determine the fair market value of the improvements as of September 1, 2003, taking into account their useful life. The compensation was to be based on the “in place” value of the improvements without considering the time remaining on the CIM lease.2 The County asked the jury to return a verdict of $800,000 to $850,000.
The majority’s conclusion that the improvements had only salvage value is based solely on the County’s April 2003 letter to CIM offering to purchase the improvements for $50,000. The majority’s conclusion is contradicted by (1) the trial court’s finding that the improvements had fair market value; (2) the jury instructions on fair market value; and (3) the jury’s determination of the amount of that fair market value, based on the evidence offered by both CIM and the County.
If the improvements had only salvage value, why insist they remain? Why would the County independently bargain with a third party to operate the marina using those improvements? Why would that third party agree to a seven-figure indemnity payment to cover an adverse verdict in the County’s lawsuit against CIM? Given Vintage’s substantial offers to CIM of $4.5 million and $2.5 million, is it merely coincidental that the jury determined fair market value to be $3.5 million?
The majority states that federal case law persuades it that CIM’s remedy is in contract, thus it has no cause of action in inverse condemnation. It relies on three federal cases, cited below, two of which were issued by the Federal Court of Claims. However, federal case law is not precedent and we are not *633bound by the decisions of the lower federal courts. (Tully v. World Savings & Loan Assn. (1997) 56 Cal.App.4th 654, 663 [65 Cal.Rptr.2d 545].)
The cited cases concern takings claims that are premised on the loss of royalties, employment income and investments. (Marathon Oil Co. v. U.S. (1989) 16 Cl. Ct. 332 [plaintiff’s claim that excessive royalty payments on an oil lease constituted a taking]; Scan-Tech Security, L.P. v. U.S. (2000) 46 Fed.Cl. 326 [contractor’s allegation that government’s failure to pay him for creating a prototype was a taking]; Castle v. U.S. (2002) 301 F.3d 1328 [regulatory taking allegedly occurred when shareholders of troubled savings and loan lost their investments due to the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act].) These authorities do not explain how the CIM lease agreement provides redress for the County’s interference with CIM’s property rights. Moreover, the cases are factually disparate. None concern a financial loss stemming from the government’s act of forcibly obtaining title to private property and its unauthorized use of that property to operate a business.
Under United States Supreme Court precedent, California case authority and the California statutory scheme, a tenant is entitled to just compensation for leasehold improvements taken by eminent domain. (Almota Farmers Elevator & Whse. Co. v. U. S., supra, 409 U.S. 470, 474—475; Lanning v. City of Monterey (1986) 181 Cal.App.3d 352, 356 [226 Cal.Rptr. 258]; Concrete Service Co. v. State of California ex rel. Dept. Pub. Wks. (1969) 274 Cal.App.2d 142, 147 [78 Cal.Rptr. 923] (Concrete I); Concrete Service Co. v. State of California ex rel. Dept. Pub. Wks. (1972) 29 Cal.App.3d 664, 666 [105 Cal.Rptr. 721]; Code Civ. Proc., § 1263.210.)
Just compensation is measured by the fair market value of the property at the time of the taking. (Almota Farmers Elevator & Whse. Co. v. U. S., supra, 409 U.S. at p. 474.) In the context of tenant-owned leasehold improvements, fair market value is defined as “the continued ability of the buyer to use the improvements over their useful life.” {Id. at p. 475.) This applies whether the lessee “sold the improvements to the fee owner or to a new lessee at the end of the lease term . . . .” {Id. at p. 474.)
A public entity’s actions may constitute a taking, even when it acquires the property under threat of condemnation. (Johnston v. Sonoma County Agricultural Preservation & Open Space Dist. (2002) 100 Cal.App.4th 973, 987 [123 Cal.Rptr.2d 226]; Lanning v. City of Monterey, supra, 181 Cal.App.3d at p. 356; see also Concrete I, supra, 274 Cal.App.2d at p. 147.) *634This triggers the law of inverse condemnation. {Johnston, at pp. 987-988, fn. 8.) In the case at bar, the County did more than threaten condemnation. It forcibly took title to CIM’s improvements and began using them without paying just compensation. Inverse condemnation is an appropriate remedy and CIM is entitled to compensation, measured by the fair market value of the improvements.
I would affirm the judgment.
Respondent’s petition for review by the Supreme Court was denied May 21, 2008, S161617. Kennard, J., Baxter, J., and Werdegar, J., were of the opinion that the petition should be granted.

 The general manager of Vintage testified that its lease with the County requires Vintage to meet certain criteria within a five-year period in order to obtain a 40-year lease. One of the requirements is that, by the end of the five years, Vintage must have obtained the permits and financing to begin construction of new waterside improvements.

 The jury was instructed, “Do not consider any personal value of the leasehold improvements to Channel Islands Marina, Inc. or its need for the leasehold improvements. Also, do not consider the particular need of the County of Ventura for the leasehold improvements. [][] The compensation for the leasehold improvements in this case is to be based on their ‘in place’ value, without any limitation to the time remaining on the former lease between Channel Islands Marina, Inc. and the County or any other lease. [][] In determining the fair market value of the leasehold improvements on September 1, 2003, you are to consider the useful life of the leasehold improvements. []□ In determining the fair market value of the leasehold improvements taken, you should not include any increase or decrease in the value of the leasehold improvements that is attributable to the project for which the property was taken.”