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Los Angeles County Metropolitan Transportation Authority v. Alameda Produce Market

November 14, 2011


Court: Superior County: Los Angeles Judge: James R. Dunn Super. Ct. No. BC313010 Ct.App. 2/4 B212643

The opinion of the court was delivered by: Chin, J.

Under California's "quick-take" eminent domain procedure, a public entity filing a condemnation action may seek immediate possession of the condemned property upon depositing with the court the probable compensation for the property. (Mt. San Jacinto Community College Dist. v. Superior Court (2007) 40 Cal.4th 648, 653 (Mt. San Jacinto); see also Code Civ. Proc., §§ 1255.010, 1255.410.)*fn1 Any defendant in the condemnation action -- which includes anyone the public entity knows to have or claim an interest in the property (§ 1250.220, subd. (a)) -- may apply to the court to withdraw all or any portion of the deposit (§ 1255.210). Section 1255.260 provides that, "[i]f any portion" of the deposit "is withdrawn, the receipt of any such money shall constitute a waiver by operation of law of all claims and defenses in favor of the persons receiving such payment except a claim for greater compensation." The Court of Appeal in this case held that, under this statute, if a lender holding a lien on condemned property applies to withdraw a portion of the deposit, and the property owner does not object to the application, the lender's withdrawal of a portion of the deposit constitutes a waiver of the property owner's claims and defenses, except a claim for greater compensation. We find that the Court of Appeal's conclusion is inconsistent with the relevant statutory language and framework. We therefore reverse the Court of Appeal's judgment.


In January 2004, a federal court, to implement a 1996 consent decree requiring improvement in the quality of bus service in Los Angeles, ordered plaintiff Los Angeles County Metropolitan Transportation Authority (MTA) to place an additional 145 buses in service by year's end. To comply with this order, in March 2004, MTA's governing board adopted a resolution of necessity that authorized the taking of property in downtown Los Angeles owned by Alameda Produce Market, Inc. (APMI).*fn2 One week later, MTA filed a complaint seeking to acquire the property by eminent domain. At the same time, it applied to the court for an order for immediate possession of the property (§ 1255.410, subd. (a)) and deposited $6.3 million with the court as the probable amount of compensation for the property (§ 1255.010, subd. (a)).

On May 20, 2004, APMI filed an amended answer to the complaint raising numerous objections to the proposed taking. It argued in part that MTA's resolution of necessity was invalid because it did not meet the statutory requirements. APMI also objected to MTA's request for an order allowing it to take possession of the property. The court overruled APMI's objection to MTA's request for immediate possession and, on November 24, 2004, MTA took possession of the property. In June 2005, after making improvements, MTA began using the property for additional bus and employee parking.

Not long after MTA filed the complaint and deposited probable compensation, three lenders that held liens against the property (Lenders) -- VCC Alameda, LLC (VCC Alameda), Namco Capital Group, Inc. (Namco), and California National Bank -- applied to the court to withdraw a portion of the deposit.*fn3 Withdrawal applications are authorized by section 1255.210, which provides in part: "Prior to entry of judgment, any defendant may apply to the court for the withdrawal of all or any portion of the amount deposited."*fn4 As this section requires, Lenders served copies of their applications on MTA.

MTA objected to the applications under section 1255.230, subdivision (b)(1), which provides that a public agency seeking condemnation may object to a withdrawal application on the ground that "[o]ther parties to the proceeding are known or believed to have interests in the property." MTA's objection triggered section 1255.230, subdivision (c), which provides in relevant part: "If an objection is filed on the ground that other parties are known or believed to have interests in the property, the plaintiff shall serve or attempt to serve on such other parties a notice that they may appear within 10 days after such service and object to the withdrawal." In accordance with this provision, on April 27, 2004, MTA served noticed on APMI of its right to object to the withdrawal applications. The notice advised APMI that its "failure to object" to the applications would "result in waiver of any rights against the plaintiff to the extent of the amount withdrawn." APMI received the notice, but did not file an objection.

MTA later withdrew its objection to the withdrawal applications and, on June 8, 2004, several weeks after APMI filed its amended answer objecting to MTA's right to take the property, signed a stipulation with Lenders agreeing to the withdrawals. The stipulation, which APMI did not sign, stated that APMI was "not objecting to the instant withdrawal of funds." Pursuant to the stipulation, the court granted the withdrawal applications and authorized Lenders collectively to withdraw $6.1 million of the deposit, leaving $200,000 remaining. After using the funds to pay APMI's loans, Lenders filed disclaimers of interest with the court. In October 2004, on APMI's motion, MTA increased the deposit by $2.4 million. APMI has never applied to withdraw any of the deposited funds.

In July 2006, after conducting a bench trial on the merits, the trial court entered an ordering conditionally dismissing MTA's complaint, finding: (1) MTA's resolution of necessity was conditional in that it required MTA to negotiate further with the appropriate defendants on a mutually agreeable parking plan; and (2) MTA failed to engage in meaningful negotiations, rendering the conditional resolution invalid. The trial court ruled that it would dismiss the complaint unless, as the resolution of necessity contemplated, MTA engaged in fully informed, good faith negotiations. In September 2008, after the parties' mutually selected mediator reported that MTA had failed to negotiate in good faith, the trial court entered a final order dismissing MTA's complaint and requiring MTA to relinquish the property to APMI within 90 days.

At the bench trial and during subsequent proceedings, MTA argued that, under section 1255.260, APMI's earlier failure to object to Lenders' withdrawal applications constituted a waiver of APMI's right to challenge the taking, other than the amount of compensation. Although initially declining to address the argument, the trial court ultimately rejected it on its merits, finding that section 1255.260 was inapplicable because APMI had committed no affirmative act sufficient to constitute a waiver.

The Court of Appeal reversed, finding that Lenders' withdrawal of funds to satisfy APMI's loan obligations resulted in a waiver under section 1255.260. It relied principally on Redevelopment Agency of San Diego v. Mesdaq (2007) 154 Cal.App.4th 1111, 1138-1139 (Mesdaq), which found a waiver under section 1255.260 where a property owner, in a filed response to his mortgage lender's withdrawal application, informed the court he was not objecting to the withdrawal request. The Court of Appeal found "no valid basis" for distinguishing Mesdaq, noting that APMI had not objected to Lenders' withdrawal application and that the trial court, in granting the applications, had relied on Lenders' representation that APMI did not object. Given its conclusion, the Court of Appeal did not reach the merits of MTA's alternative attacks on the trial court's judgment.

We then granted APMI's petition for review. Shortly before oral argument, the parties notified us they had settled their dispute. Although the appeal is, therefore, now moot as to them, because there has been no request for dismissal and the issue presented is "of continuing public importance," we have elected to retain jurisdiction. (Lundquist v. Reusser (1994) 7 Cal.4th 1193, 1202, fn. 8.)


At issue is section 1255.260's proper interpretation. "As in any case involving statutory interpretation, our fundamental task here is to determine the Legislature's intent so as to effectuate the law's purpose." (People v. Murphy (2001) 25 Cal.4th 136, 142.) The well-established rules for performing this task require us to begin by examining the statutory language, giving it a plain and commonsense meaning. (Ibid.) We do not, however, consider the statutory language in isolation; rather, we look to the statute's entire substance in order to determine its scope and purposes. (Ibid.) That is, we construe the words in question in context, keeping in mind the statute's nature and obvious purposes. (Ibid.) We must harmonize the statute's various parts by considering it in the context of the statutory framework as a whole. (Ibid.) If the statutory language is unambiguous, then its plain meaning ...

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