Honchariw v. County of Stanislaus

NICHOLAS HONCHARIW, as Trustee, etc.,

Plaintiff and Appellant,

v.

COUNTY OF STANISLAUS et al.,

Defendants and Appellants.

No. F069145

(Super. Ct. No. 680294)

California Courts of Appeal

Fifth Appellate District

Filed June 25, 2015

ORDER MODIFYING OPINION

AND DENYING REHEARING

[No Change in Judgment]

     THE COURT:

     It is ordered that the partially published opinion filed herein on June 3, 2015, be modified as follows:

1. On page 8, footnote 4 is deleted in its entirety, which will require renumbering of all subsequent footnotes. 

2. On pages 10 through 12, the paragraphs under subheading ?3.  Scope of Hensler Exception? are deleted in their entirety.  The following paragraphs are inserted in their place.

3.  Scope of the Hensler Exception

In Hensler, the Supreme Court stated that the exception to the statute of limitations applies only if the plaintiff in the inverse condemnation action ?alleges the existence of a final judgment establishing that there has been a compensable taking of the plaintiff?s land.?  (Hensler, supra, 8 Cal.4th at p. 7.)  Subsequently, the Supreme Court described its holding as follows:  ?In Hensler ?, we held that, if a property owner brings a timely action to set aside or void a regulation, he may but need not join a claim for damages.  Instead, he may bring a damages claim separately after successfully challenging the regulation.?  (Kavanau, supra, 16 Cal.4th at p. 779.)  The question before us it how to interpret these statements about what must be achieved in the initial mandamus action. 

In Honchariw?s view, the requirement for a final judgment establishing a compensable taking is no longer good law and all Kavanau requires is a final judgment establishing the invalidity of the challenged regulation or land use decision on any ground.  The practice guide quoted by Honchariw uses language that supports his position.  (See 2 Matteoni & Veit, Condemnation Practice in Cal., supra, §§ 16.4, 17.3, pp. 16-8 & 17-4.)  However, the excerpts did not explicitly frame and answer the question whether the initial mandamus action must include the constitutional claims as a basis for invalidating the regulation or administrative decision.

In contrast, another practice guide has addressed what issues must be resolved in the initial mandamus action before a second action for compensation or damages is permitted:

?Mandamus must be filed as a condition to an inverse condemnation action.  A property owner who claims that a condition to a development permit constitutes a taking generally must first exhaust the administrative remedies, file a mandamus action, and receive a judicial determination that the regulation is a taking before filing or pursuing an action for compensation.  If the statute of limitations expires on and bars the mandamus action, the owner is barred from seeking compensation.?  (9 Miller & Starr, Cal. Real Estate (3d ed. 2007) § 25:54, p. 25:249, italics added.)

Thus, the practice guides are not in explicit agreement about what Hensler and Kavanau require of the first step in the two-step procedure.

One approach to Kavanau?s one paragraph summary of Hensler is to consider whether that paragraph contained general observations unnecessary to the holding in Kavanau and, thus, was dicta with no force as precedent.  (9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 509, pp. 572-573; see Trope v. Katz (1995) 11 Cal.4th 274, 287 [Supreme Court?s statement that is not precedent does not abrogate an earlier statement that is precedent].)  It appears Kavanau?s summary of Hensler?s two-step procedure is dicta because the summary is not necessary to the reason ultimately given by the court for affirming the order sustaining the demurrer---that is, ?[t]he remedy of future rent adjustments available to Kavanau under the due process clause precludes a finding of a taking in this case.?  (Kavanau, supra, 16 Cal.4th at p. 786.)  The court could reach this conclusion without modifying the two-step procedure recognized in Hensler. 

Another approach is to consider whether the language used in Kavanau expresses an intention by the Supreme Court to modify Hensler.  In Kavanau, the court did not expressly acknowledge Hensler?s reference to a ?final judgment establishing ? a compensable taking.?  (Hensler, supra, 8 Cal.4th at p. 7.)  As a result, the court did not explicitly approve or disapprove that language.  Accordingly, we next consider whether the language used in Kavanau implies a modification of Hensler. 

The court in Kavanau referred to Hensler as identifying ?an exception to the general rule against splitting claims.?  (Kavanau, supra, 16 Cal.4th at p. 779.)  This statement implies that the two-step procedure is invoked when a plaintiff?s cause of action alleging an unconstitutional taking is split between the mandamus action and a subsequent action seeking damages.  In other words, if the mandamus action does not allege an unconstitutional taking, that cause of action has not been ?split? into (1) a claim challenging the validity of administrative action and (2) a subsequent claim for damages.  (See generally, 4 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 45, pp. 108-109 [rule against splitting a cause of action].)  Therefore, we infer from the statement in Kavanau about ?an exception to the general rule against splitting claims? that the court continued to intend that the initial mandamus petition include the unconstitutional taking cause of action even though it was not required to seek compensation for the alleged taking.  (Kavanau, supra, at p. 779.)

In addition, the circumstances and issues presented in Kavanau gave the Supreme Court little reason to consider and alter the formulation of the first step of the two-step procedure.  First, the application of the two-step procedure was not contested in Kavanau and, therefore, the issues raised did not involve the timeliness of the second action.  Second, the challenged rent control regulations had not been adopted under the Subdivision Map Act and, therefore section 66499.37 was not mentioned.  Third, the circumstances presented did not cause the court in Kavanau to address the policies underlying the adoption of the two-step procedure.  Therefore, the inference that the Supreme Court intended to modify the requirements adopted in Hensler is weak.

The reason the mandamus proceeding must include the constitutional taking issue is that the court?s determination that a regulatory taking has occurred triggers a range of options for the public entity---it could approve the project as proposed, conditionally approve the project, or exercise the power of eminent domain.  (Hensler, supra, 8 Cal.4th at p. 11.)  Which of these options is adopted by the public entity affects the scope of the taking and, thus, the just compensation due to land owner.  For example, if the public entity approves the project as proposed, the land owner?s recovery would be limited to compensation for a temporary taking.  At the other end of the range of options, if the public entity were to exercise eminent domain, the land owner then would be entitled to compensation for a permanent taking.  The existence of this range of options means that the use of the two-step procedure is a convenient and efficient way to administer the decisions an agency must make to choose among those options.

Based on the foregoing, we read the Supreme Court?s description of the Hensler decision as follows:

?In Hensler ?, we held that, if a property owner brings a timely [mandamus] action to set aside or void a regulation [on constitutional grounds], he may but need not join a claim for damages.   Instead, he may bring a damages claim separately after successfully challenging the regulation [on constitutional grounds].  [Citation.]  Thus, in Hensler we identified an exception to the general rule against splitting claims.  [Citations.]  In accordance with Hensler, Kavanau brought his present claim for damages, alleging two causes of action.?  (Kavanau, supra, 16 Cal.4th at p. 779.) 

As a result, the two-step procedure approved in Hensler allows a plaintiff to postpone bringing a claim for damages caused by an unconstitutional taking until a mandamus proceeding has been completed, provided that the mandamus judgment or order establishes an unconstitutional taking or due process violation.

As to Honchariw?s argument that he could not have obtained a ?judgment establishing that there had been a compensable taking? (Hensler, supra, 8 Cal.4th at p. 7, italics added) because that claim was not ripe, we conclude that Hensler requires, at a minimum, the mandamus action to challenge the validity of the regulation or administrative decision on the ground it effected an unconstitutional taking.  Such a challenge to the validity would be ripe when the mandamus petition is filed and, therefore, section 66499.37 requires that challenge to be brought within 90 days even though the exact parameters of any compensation for the taking cannot be determined until after the local agency has made a final decision about which option it will adopt in response to any judgment obtained in the mandamus proceeding.  (Hensler, supra, at p. 11.)

3. On page 13, after the last paragraph ending in ?under section 66499.37? add the following paragraph. 

Alternatively, even if the exception applied and the statute of limitations did not begin to run until the Board?s May 22, 2012, approval of the project, Honchariw?s inverse condemnation complaint was untimely because it was filed in December 2012, well after the 90 days allowed by section 66499.37. 

There is no change in judgment. 

Appellant?s petition for rehearing filed on June 19, 2015, is denied. 

     FRANSON, J.

WE CONCUR:

GOMES, Acting P.J.

POOCHIGIAN, J.