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Council of San Benito County Governments v. Hollister Inn

September 19, 2012

COUNCIL OF SAN BENITO COUNTY GOVERNMENTS, PLAINTIFF AND APPELLANT,
v.
HOLLISTER INN, INC., DEFENDANT AND RESPONDENT.



Super. Ct. Nos. CU-06-00051, CU-06-00054 Trial Court: San Benito County Superior Court Trial Judge: Hon. Stephen Reese Henry

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

CERTIFIED FOR PUBLICATION

San Benito County

This case involves two consolidated actions in eminent domain brought by the Council of San Benito County Governments (COG), a joint powers authority created under a joint powers agreement between the County of San Benito, the City of Hollister, and the City of San Juan Bautista, to acquire property for the Highway 25 Bypass Project. In the eminent domain proceedings, COG sought to condemn real property or interests in real property belonging to "Janet P. Roberts, Trustee of The Janet P. Roberts Family Trust, created under Agreement dated November 24, 1982, as amended and restated" (Roberts) and respondent Hollister Inn, Inc. (Hollister Inn). The project resulted in the elimination of a roadway easement over Roberts's private property connecting Hollister Inn's property to Highway 25.

On appeal from the final judgment in condemnation, COG challenges (1) the trial court's order of conditional dismissal that dismissed the action unless COG cured what the court found to be a gross abuse of discretion in adopting resolutions of necessity and (2) the trial court's associated order awarding reasonable litigation expenses in the amount of $233,750 to respondent Hollister Inn. Both orders were incorporated into the final judgment, which recognized that COG had taken corrective action before judgment to comply with the order of conditional dismissal. COG contends the trial court's orders were erroneous because, among other reasons, the court misconstrued Code of Civil Procedure section 1240.350.*fn1 We agree.

We conclude that the trial court erred in finding that COG had committed a gross abuse of discretion, issuing the order of conditional dismissal, and awarding reasonable litigation expenses to Hollister Inn.

I

Procedural Background

COG gave written notice to respondent Hollister Inn that, at its meeting of February 16, 2006, it would be considering the adoption of a resolution of necessity to condemn real property, a portion of Assessor's Parcel No. (APN) 053-380-008, for the "Highway 25 Hollister Bypass Project." The staff report for the meeting indicated that the bypass project involved the acquisition of real property interests from 30 property owners, COG had negotiated voluntary agreements with 13 property owners at that point in time, and the staff was recommending that COG adopt the resolutions of necessity authorizing the filing of eminent domain actions. In the report, staff explained: "Access from Hollister Inn['s property] onto the existing Highway 25 will be closed, and a sign for the Inn and a dumpster will be relocated. The access must be closed due to the curved configuration of the connection of the Bypass to Highway 25."

At the hearing Ann Arnold, who represented Hollister Inn, stated that there had not been a showing that the acquisition would result in the least private injury to her client. She pointed out that the project would eliminate the connection between Hollister Inn's property, on which it operated a Best Western hotel, and Highway 25. She indicated that right of way that COG was seeking to acquire was "the main entrance and exit to the hotel" and acquisition would "severely damage business and impact . . . profits." She expressed frustration that she had just recently learned that the plans showing an alternative easement were not current.

A female, who is unnamed in the transcript of the proceedings but who the parties identify in their appellate briefs as the project manager for the bypass project, stated that the driveway was not in a safe location. The female speaker acknowledged that access would be eliminated and the possibility of relocating the driveway had been previously investigated and rejected because Hollister Inn was not the owner of the property that would have been condemned and the project could not condemn someone else's property (in this case Roberts's property) for the benefit of an adjacent property owner. Shortly thereafter, Carla, presumably Carla Vincent,*fn2 who the briefs indicate was the same female speaker, mentioned the possibility of Hollister Inn negotiating an alternative easement somewhere farther north along the bypass, which would be in a safer location.

Ann Arnold spoke again. She indicated that 80 to 90 percent of the hotel's business came in from Highway 25 and condemnation would cause "severe repercussions to the profits and bottom line of our client . . . ." She explained that, in addition to eliminating ingress and egress to the hotel on Highway 25, the project was adding a center median on San Felipe Road, which was going to prevent truckers and drivers traveling north on that road from making a direct left into the hotel and 18-wheelers were not going to be able to make a u-turn on that road. She asserted that the severance damages had not been properly addressed.

The chairwoman of COG's board indicated that presumably an easement could be negotiated but COG could not take Roberts's property to create a substitute access easement for Hollister Inn's property because that would be taking private property rights for the benefit of another private entity.

On February 16, 2006, the Board of Directors of COG adopted, among others, Resolution of Necessity 6-18 (APN 053-380-009) to acquire a fee simple interest in certain property belonging to Roberts. In that resolution, COG's board found and determined the requisite facts, including that "[t]he proposed Project is planned and located in the manner that will be most compatible with the greatest public good and the least private injury." Resolution of Necessity 6-13 (APN 053-380-008) to acquire Hollister Inn's nonexclusive right of way for road purposes did not pass on February 16, 2006.

A new notice informed Hollister Inn that COG's Board of Directors would reconsider the adoption of a resolution of necessity to acquire a portion of APN 053-380-008 on March 7, 2006. The staff report for that meeting stated in part: "Access from Hollister Inn onto the existing Highway 25 will be closed, and a sign for the Inn and a dumpster on the property will be relocated. The access must be closed due to the curved configuration of the connection of the Bypass to Highway 25. Maintaining the access would result in an unsafe entry point onto the Highway. A design that included this access would not meet Caltrans design standards and would not be consistent with general engineering requirements. [¶] Hollister Inn has an access easement with the Roberts family, owner of the parcel where the easement is located. Hollister Inn would have the opportunity to negotiate an easement with the Roberts family when the existing easement is acquired by COG."

At the March 7, 2006 meeting, Carla Vincent stated: "The existing driveway from the Hollister Inn, crosses a part of another property not owned by the Hollister Inn. . . . The driveway actually goes outside of the easement, but we are acquiring the easement. An offer was made in December of 2005 for acquiring that easement and acquiring the property we need from the adjacent property owner, the Roberts' property in order to build the project. [¶] We had attempted to design a relocated driveway, although it was determined that a second access was not necessary for this property, the Hollister Inn property. We did attempt to relocate the driveway, however it would have had to acquire property and indeed condemn property that didn't belong to the Hollister Inn in order to relocate their driveway further north to a safer location. The project can not [sic] condemn someone else's property for another private entity. . . . [S]o we couldn't do that relocation of the driveway. That's not to say that the private entities themselves, Hollister Inn and Jen Roberts, might not get together and identify another location for that driveway." She explained that leaving the driveway in the current location would not meet Caltrans's safety requirements.

Ann Arnold, speaking on behalf of the Hollister Inn, stated that its main objection was that the project was not designed to result in the least private injury. She indicated that the elimination of the inn's main entrance would result in the loss of substantial business from truckers and the owners were going to be in "a very precarious financial position" because they were already required to do about one million dollars in upgrades to remain a Best Western franchise. She urged COG to conduct an adequate appraisal statement before passing a resolution of necessity.

COG's board proceeded to pass the Resolution of Necessity 6-13 on March 7, 2006. In the resolution, the Board of Directors of COG found and determined the requisite facts, including that "[t]he proposed Project is planned or located in the manner that will be most compatible with the greatest public good and the least private injury."

On March 10, 2006, COG filed a complaint in eminent domain against Roberts and respondent Hollister Inn (County of San Benito, Superior Court Case No. CU-06-00051). It sought to acquire "partial fee simple interests in property located on San Felipe Road in Hollister, California, Assessor's Parcel No. 053-380-009, together with all improvements situated thereon and together with all rights appurtenant thereto . . . ." The complaint indicated that Roberts was the fee owner and identified respondent Hollister Inn as an "easement holder." It stated that COG had "duly and regularly passed and adopted Resolution No. 06-18 . . . ."

On March 15, 2006, COG filed a complaint against respondent Hollister Inn and the trustee and beneficiary under a deed of trust (County of San Benito, Superior Court Case No. CU-06-00054). It sought to acquire the Hollister Inn's "access rights at Highway 25 to and from a 30 foot wide appurtenant non-exclusive right of way for road purposes located on Bolsa Road in Hollister California, Assessor's Parcel No. 053-380-008, together with all rights appurtenant thereto . . . ." It recited that COG had "duly and regularly passed and adopted Resolution No. 06-13 . . . ."

Also on March 15, 2006, the court issued orders for immediate possession in both cases.

The two actions were consolidated for all purposes.

A trial on COG's right to take was held.*fn3 Counsel for Hollister Inn argued in opening that COG committed a gross abuse of discretion in three separate ways: (1) COG failed to adopt or even consider an alternative to taking Hollister Inn's property that would have reduced the private injury without reducing the public good, (2) there was no substantial evidence supporting the taking of Hollister Inn's property, (3) COG acted based upon an irrevocable commitment to take Hollister Inn's property regardless of the evidence presented. Its counsel asserted that COG's failure to consider the alternative of condemnation pursuant to the section 1240.350 to replace Hollister Inn's lost access to Highway 25 was itself an abuse of discretion.

At trial, the parties stipulated that there was an alternative driveway in the project plans from 1996 until a year and a half before the February 2006 hearing. Carla Vincent testified. She indicated that she had no changes to her deposition testimony indicating that a previous plan for the bypass project showed a relocated driveway access to Hollister Inn's property and, although it was possible to design a safe driveway to the Hollister Inn, that alternative was not pursued based on the understanding that property cannot be condemned on behalf of another private entity.

Following trial on the right to take, the trial court issued a statement of decision. The trial court found that COG did not have an irrevocable commitment to adopt the resolution. The court found, however, that COG committed a gross abuse of discretion by failing "to consider the possibility of taking the property of an adjoining landowner to provide [respondent Hollister Inn] access to Highway 25" pursuant to section 1240.350. The court further found that COG "failed to exercise its discretion to determine whether the project was planned or located in the manner that will be most compatible with the greatest public good and the least private injury. This is because a safe alternate access was removed from the plans and [COG] was warned by the trusted and competent project manager that the condemnation of the proposed alternate access from [respondent's] property to Highway 25 would violate ...


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