The opinion of the court was delivered by: CHARLES A. LEGGE
OPINION AND ORDER FOR JUDGMENT
Plaintiffs John and David Herrington brought this action against the County of Sonoma, initially alleging violations of procedural due process, substantive due process, and equal protection under the Fourteenth Amendment, and a taking of property under the Fifth Amendment. The dispute arises from the County's determination that the Herrington's 32-lot subdivision proposal for their property was inconsistent with the County's 1978 General Plan.
During the first trial, plaintiffs abandoned their claim of a taking of property. The jury found liability in favor of plaintiffs and against the County, and awarded $ 2,500,600 damages to plaintiffs on their Fourteenth Amendment claims under 42 U.S.C. § 1983. The court then entered a stipulated order finding the County's inconsistency determination to be invalid. The validity of the General Plan and the West Sebastopol Specific Plan were not affected by the judgment.
The Ninth Circuit affirmed the finding of liability and the order invalidating the County's inconsistency determination, but it vacated the award of damages. Herrington v. Sonoma County, 834 F.2d 1488, 1503 (9th Cir. 1987), amended by, 857 F.2d 567 (9th Cir. 1988). The case was remanded for a new trial on the issue of damages.
On remand, the parties waived a jury and a court trial was held. The court has heard and reviewed the evidence.
The court has also considered the record, the arguments of counsel, and the applicable authorities. This opinion constitutes the court's finding of facts and conclusions of law as provided in Rule 52(a) of the Federal Rules of Civil Procedure. The facts are found by a measure of a preponderance of the evidence.
At the first trial, the Herringtons claimed $ 810,000 for "lost value" to their property. That figure represented the difference between an estimated value of $ 1.3 million, assuming the potential to construct 32 lots on the property, and an estimated value of $ 490,000 assuming no development at all. Those values were derived from the testimony of plaintiffs' expert and of plaintiff David Herrington.
The Ninth Circuit discussed those valuations in its opinion. It held that the $ 1.3 million figure was too high because approval of a 32-lot subdivision by the County was speculative. 834 F.2d at 1504. The Court also decided that the $ 490,000 figure was too low, because it was based on a theory of the total deprivation of economic use of the land a total taking. Id. at 1505. "However, the Herringtons abandoned their taking claim, and cannot now argue that they were left with no economically viable use of their land." Id. Thus, the Ninth Circuit held that the $ 810,000 lost value figure was overstated. As will be discussed below, one of the Circuit's decisions which is central to this retrial is that the harm to plaintiffs from the County's conduct was a temporary taking of their ability to use or develop the property. Id. at 1505, 1506.
At the retrial, plaintiffs sought to introduce testimony that the value of the property with a 32-lot subdivision potential was substantially more than $ 1.3 million, and that the value of the property with no development at all was less than $ 490,000. Plaintiffs seek to argue that the lost value exceeds $ 810,000.
However, the principle of the law of the case precludes a court from reexamining an issue previously decided by the same court, or a higher appellate court in the same case. Moore v. Jas. H. Matthews & Co., 682 F.2d 830, 833 (9th Cir. 1982). This principle is an analogous but less absolute bar to relitigation than res judicata. The law of the case is an equitable doctrine, United States v. Maybusher, 735 F.2d 366, 370 (9th Cir. 1984), cert. denied 469 U.S. 1110, 83 L. Ed. 2d 783, 105 S. Ct. 790 (1985), that should not be applied "woodenly" when doing so would be inconsistent with "considerations of substantial justice." United States v. Imperial Irrigation District, 559 F.2d 509, 520 (9th Cir. 1977) rev'd in part, vacated in part on other grounds, 447 U.S. 352, 65 L. Ed. 2d 184, 100 S. Ct. 2232 (1979). "While the 'law of the case' doctrine is not an inexorable command, a decision of a legal issue or issues by an appellate court establishes the 'law of the case' and must be followed in all subsequent proceedings in the same case in the trial court. . ." White v. Murtha, 377 F.2d 428, 431-32 (5th Cir. 1967) (cited in Moore, 682 F.2d at 834).
In addition, factual issues cannot be retried under the so-called mandate rule, which is broader than the rule of the law of the case. A district court is free to decide anything not foreclosed by the mandate. United States v. State of Louisiana, 669 F.2d 314 (5th Cir. 1982). However, a district court may not exceed the directions of the mandate by retrying facts or altering findings. Id. General principles of estoppel also prevent the Herringtons from claiming values that depart from the Ninth Circuit's analysis.
At the first trial, plaintiffs sought three components of damages: loss of value, loss of profits, and loss of return on those two elements. The jury awarded all elements of damages, for a total exceeding $ 2.5 million. In reversing that award, the Ninth Circuit noted that the damages "components are excessive or cumulative in at least three respects:
1) the valuation of each component is speculatively based on the assumption that the County could not legally have foreclosed development of approximately 32 units and on the assumption that the only alternative to the Herringtons' 32-lot proposal was no development at all; 2) because the Herringtons retained ownership of their land and because they have obtained invalidation of the inconsistency determination, the damage suffered is largely temporary rather than permanent; and 3) the awards for lost value and lost profits are cumulative.
Id. at 1504. Although the Court proceeded to evaluate the potential measure of damages under these three components, it specifically declined to express an opinion "as to whether any of the three components of damage asserted by the Herringtons are appropriate in this case," holding only "that, for the reasons stated above, these components are excessive and cumulative." Id. at 1506.
The Ninth Circuit anticipated that on remand there would be difficulties in calculating defendant's damages caused by the due process violation. It said that "the trial court may well be at sea in its attempt to fix damages." 834 F.2d at 1506 n.23 The Court held that the Herringtons' "loss was temporary, not permanent," id. at 1505, and that "we know neither the proper length of the delay nor the 'highest and best permissible use.'" Id. at 1506 n.23. The Court also indicated that the "harm caused by the County's unconstitutional acts derives primarily from a in the proper consideration of the Herringtons' subdivision application." (emphasis added.) Id. at 1506. The dissenting opinion noted that "the County's rejection of their development plan may have been a final decision about the proposed subdivision, but it was not a final, definitive statement of how the County would apply the general plan to the Herringtons' land." Id. at 1507. This court concludes from the holdings and statements of the Ninth Circuit that the Court has ruled that plaintiffs can recover only damages based on the temporary loss of use of their property.
The opinion suggested that a surrogate measure of damages could be employed by this court as a possible solution to the damages difficulties. Id. at 1506 n.23. The Circuit suggested that as a surrogate measure of damages, this court might look to "the difference between the value of the property immediately before the County's inconsistency determination and its value immediately after that determination." Id.
On remand, this court held several pretrial hearings to decide the appropriate measure of damages on which evidence would be received. In accord with the Ninth Circuit opinion, this court viewed the Herringtons' loss as temporary rather than permanent in nature. Thus, the damages had to be analogous to a "temporary taking" of property.
At the time this action was filed, only injunctive relief was available as a remedy for a temporary taking in California. See Agins v. City of Tiburon, 24 Cal. 3d 266, 277, 157 Cal. Rptr. 372, 598 P.2d 25 (1979) ("mandamus or declaratory relief . . . is the appropriate relief under the circumstances.") aff'd 447 U.S. 255, 65 L. Ed. 2d 106, 100 S. Ct. 2138 (1980); HFH, Ltd. v. Superior Court of Los Angeles County, 15 Cal. 3d 508, 519, 125 Cal. Rptr. 365, 542 P.2d 237 (1975), cert. denied, 425 U.S. 904, 47 L. Ed. 2d 754, 96 S. Ct. 1495 (1976) ("judicial remedy in the undoing of the wrongful legislation, not in money damages against the state."). In First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304, 96 L. Ed. 2d 250, 107 S. Ct. 2378 (1987), the U.S. Supreme Court ended the longstanding practice in California and other states of limiting relief for temporary takings to invalidation of the unconstitutional governmental acts.
Cases defining the damages for a temporary taking have generally applied some variation of the "before and after" valuation method. See Nemmers v. City of Dubuque, 764 F.2d 502, 505 (8th Cir. 1985); Wheeler v. City of Pleasant Grove, 833 F.2d 267, 271 (11th Cir. 1987) (trial court should award "market rate computed over the period of the temporary taking on the difference between the property's fair market value without the regulatory restriction and its fair market value with the restriction."). This method of determining lost value requires this court to determine what valid restrictions could be placed on plaintiffs' land, in order to set an "after" value. The Ninth Circuit noted that "the Herrington's never had a 'right' to construct a 32-unit subdivision," 834 F.2d at 1504, and that "[a] consistency determination is a preliminary determination which merely gives the developer the 'green light' to proceed with its development application." Id. "The County is not, and never has been, precluded from rejecting the Herringtons' 32-lot proposal, as long as that rejection is not irrational and arbitrary." Id. at 1505. The Ninth Circuit also noted that "the Herringtons' apparent contention that the 32-lot proposal would eventually have been approved had it been found consistent with the General Plan is entirely speculative." 834 F.2d at 1504.
Thus, in order to determine an "after" value for the Herringtons' property, this court would have to determine what level of development, if any, the County would have permitted. Based on the evidence, this determination could range from approximately seven to thirty-two units. The problem, to restate it for emphasis, is that any estimate of the "after" value of the property is dependent upon the level of development permitted by the County within the lawful exercise of its discretion.
Plaintiffs have argued for a theory of damages predicated on the assumption that the "highest and best use" of the property was a subdivision, and that such use was "taken" by the County for a period of nine years and three months. This argument takes into account the down zoning of the Herringtons' property on March 4, 1980, when the West Sebastopol Specific Plan was adopted and limited development of the property to seven units. Plaintiffs argue that their "highest and best use" was not returned until enactment of the 1989 General Plan, which increased the number of permissible units to a total of ten, because it was not economically feasible to develop the property at any lower level of density. This court rejected that measure of damages because it is predicated on a theory that plaintiffs were denied the economic value of developing their land. As stated by the Ninth Circuit, "the Herringtons abandoned their taking claim, and cannot now argue that the County denied them all economically viable use of their land." 834 F.2d at 1505.
In an attempt to define a measure of damages that avoids the speculativeness of determining how many units plaintiffs would have been permitted to develop, and the extremely divergent positions of the parties, this court proposed its own measure of damages, based primarily on a probability analysis. This measure of damages was presented to the parties, who had an opportunity to comment upon it during the series of pretrial hearings. The court's damages formula reduces the speculative aspects of the inquiry, by focusing on the relevant issues involved in the Herringtons' subdivision application and assessing the probability of approval based on criteria normally considered by the County in processing subdivision proposals. The probability analysis also eliminates the necessity for a separate determination of plaintiffs' duty to mitigate their damages, since probability subsumes that issue.
The formula defined below assigns a percentage of probability to the $ 1.3 million and the $ 490,000 "boundary" values. $ 1.3 million represents the value of the property with the potential to develop a subdivision of approximately 32 lots. $ 490,000 represents the value of the property with no development rights at all. The Herringtons could recover the maximum $ 810,000 differential in the "boundary" values only if their evidence at trial proved that there was a 100% probability that their subdivision proposal would have been approved but for the County's illegal acts.
The formula reduces speculation on what subdivision proposals might have been submitted, and on possible levels of development short of 32 lots that the County might have approved. The formula also factors in the reasonableness of the Herringtons' subdivision proposal and the County's procedures in handling subdivision applications after a consistency determination. During the retrial, the parties presented evidence on the likelihood of approval of the 32-lot proposal, by examining the completeness of the application, environmental impacts, water availability, soil percolation, drainage, street grades, views, impact on agriculture, and other relevant aspects of land use.
The formula then computes a reasonable rate of return to be applied to the lost use-value of the property. This component was identified by the Circuit: "Because the Herringtons retain their property, they have, at best, suffered a in receiving the $ 810,000. That delay is fully compensated by awarding interest (i.e., loss of return) for delay in receipt of the lost value." Id. at 1505.
The formula also addresses the length of time the Herringtons were delayed in the processing of their subdivision. This court determined that the beginning date of the delay period was the date of the inconsistency determination by the Board of Supervisors, December 11, 1979. The determination on that date was the final step of the process for a consistency determination, and a "green or red light" on whether to proceed with the development application. Normal administrative delays are not compensable in temporary takings. First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. at 321. Therefore, no recovery for any delay prior to the Board of Supervisor's decision on December 11, 1979 is appropriate.
This court also recognized, consistent with the Ninth Circuit's opinion, that plaintiffs might recover other delay costs, such as the increased costs of street and utility improvements, if justified by the evidence. Because no specific level of development is defined by the court's formula, the same percentage probability factor must be applied to any increased costs of development.
The formula defined by the court, and addressed by the parties and witnesses during the retrial, is the following:
a = probability of approval of ...