San Diego Gas & Elec. Co. v. City of San Diego, 450 U.S. 621 (1981)

JUSTICE BLACKMUN delivered the opinion of the Court.

Appellant San Diego Gas & Electric Company, a California corporation, ask this Court to rule that a Sate must provide a monetary remedy to a landowner whose property allegedly has been "taken" by a regulatory ordinance claimed to violate the Just Compensation Clause of the Fifth Amendment.{1} This question was left open last Term in Agins v. City of Tiburon, 447 U.S. 255, 263 (1980). Because we conclude that we lack jurisdiction in this case, we again must leave the issue undecided.

Appellant owns a 412-acre parcel of land in Sorrento Valley, an area in the northwest part of the city of San Diego, Cal. It assembled and acquired the acreage in 1966, at a cost of about $1,770,000, as a possible site for a nuclear power plant to be constructed in the 1980’s. Approximately 214 acres of the parcel lie within or near an estuary known as the Los Penasquitos Lagoon.{2} These acres are low-lying land which serves as a drainage basin for three river systems. About a third of the land is subject to tidal action from the nearby Pacific Ocean. The 214 acres are unimproved, except for sewer and utility lines.{3}

When appellant acquired the 214 acres, most of the land was zoned either for industrial use or in an agricultural "holding" category.{4} The city’s master plan, adopted in 1967, designated nearly all the area for industrial use.

Several events that occurred in 1973 gave rise to this litigation. First, the San Diego City Council rezoned parts of the property. It changed 39 acres from industrial to agricultural, and increased the minimum lot size in some of the agricultural areas from 1 acre to 10 acres. The Council recommended, however, that 50 acres of the agricultural land be considered for industrial development upon the submission of specific development plans.

Second, the city, pursuant to Cal.Gov’t Code Ann. § 65563 (West Supp. 1981), established an open-space plan. This statute required each California city and county to adopt a plan "for the comprehensive and long-range preservation and conservation of open-space land within its jurisdiction." The plan adopted by the city of San Diego placed appellant’s property among the city’s open-space areas, which it defined as

any urban land or water surface that is essentially open or natural in character, and which has appreciable utility for park and recreation purposes, conservation of land, water or other natural resources or historic or scenic purposes.

App. 159. The plan acknowledged appellant’s intention to construct a nuclear power plant on the property, stating that such a plant would not necessarily be incompatible with the open-space designation.{5} The plan proposed, however, that the city acquire the property to preserve it as parkland.

Third, the City Council proposed a bond issue in order to obtain funds to acquire open-space lands. The Council identified appellant’s land as among those properties to be acquired with the proceeds of the bond issue. The proposition, however, failed to win the voters’ approval. The open-space plan has remained in effect, but the city has made no attempt to acquire appellant’s property.

On August 15, 1974, appellant instituted this action in the Superior Court for the County of San Diego against the city and a number of its officials. It alleged that the city had taken its property without just compensation, in violation of the Constitutions of the United States and California. Appellant’s theory was that the city had deprived it of the entire beneficial use of the property through the rezoning and the adoption of the open-space plan. It alleged that the city followed a policy of refusing to approve any development that was inconsistent with the plan, and that the only beneficial use of the property was as an industrial park, a use that would be inconsistent with the open-space designation.{6} The city disputed this allegation, arguing that appellant had never asked its approval for any development plan for the property. It also contended that, as a charter city, it was not bound by the open-space plan, even if appellant’s proposed development would be inconsistent with the plan, citing Cal.Gov’t Code Ann. §§ 65700, 65803 (West 1966 and Supp. 1981).

Appellant sought damages of $6,150,000 in inverse condemnation, as well as mandamus and declaratory relief. Prior to trial, the court dismissed the mandamus claim, holding that "mandamus is not the proper remedy to challenge the validity of a legislative act." Clerk’s Tr. 42. After a nonjury trial on the issue of liability, the court granted judgment for appellant, finding that:

29. [Due to the] continuing course of conduct of the defendant City culminating in June of 1973, and, in particular, the designation of substantially all of the subject property as open space . . . , plaintiff has been deprived of all practical, beneficial or economic use of the property designated as open space, and has further suffered severance damage with respect to the balance of the subject property.

30. No development could proceed on the property designated as open space unless it was consistent with open space. In light of the particular characteristics of the said property, there exists no practical, beneficial or economic use of the said property designated as open space which is consistent with open space.

31. Since June 19, 1973, the property designated as open space has been devoted to use by the public as open space.

32. Following the actions of the defendant City in June of 1973, it would have been totally impractical and futile for plaintiff to have applied to defendant City for the approval of any development of the property designated as open space or the remainder of the subject property.

33. Since the actions of the defendant City in June of 1973, the property designated as open space and the remainder of the larger parcel is unmarketable in that no other person would be willing to purchase the property, and the property has, at most, a nominal fair market value.

App. 41-42.

The court concluded that these findings established that the city had taken the property and that just compensation was required by the Constitutions of both the United States and California. A subsequent jury trial on the question of damages resulted in a judgment for appellant for over $3 million.

On appeal, the California Court of Appeal, Fourth District, affirmed. App. to Juris.Statement 1; see 146 Cal.Rptr. 103 (1978). It held that neither a change in zoning nor the adoption of an open-space plan automatically entitled a property owner to compensation for any resulting diminution in the value of the property. In this case, however, the record revealed that the city followed the policy of enacting and enforcing zoning ordinance that were consistent with its open-space plan. The Court of Appeal also found that the evidence supported the conclusion that industrial use was the only feasible use for the property, and that the city would have denied any application for industrial development because it would be incompatible with the open-space designation. Appellant’s failure to present a plan for developing the property therefore did not preclude an award of damages in its favor. The Court of Appeal, with one judge dissenting, denied the city’s petition for rehearing. See 146 Cal.Rptr. at 118.

The Supreme Court of California, however, on July 13, 1978, granted the city’s petition for a hearing. This action automatically vacated the Court of Appeal’s decision, depriving it of all effect. Knouse v. Nimocks, 8 Cal.2d 482, 483-484, 66 P.2d 43 (1937). See also Cal.Rules of Court 976(d) and 977 (West 1981). Before the hearing, the Supreme Court, in June, 1979, retransferred the case to the Court of Appeal for reconsideration in light of the intervening decision in Agins v. City of Tiburon, 24 Cal.3d 266, 598 P.2d 25 (1979), aff’d,447 U.S. 255 (1980).{7} The California court, in Agins, held that an owner who is deprived of substantially all beneficial use of his land by a zoning regulation is not entitled to an award of damages in an inverse condemnation proceeding. Rather, his exclusive remedy is invalidation of the regulation in an action for mandamus or declaratory relief.{8} Agins also held that the plaintiffs in that case were not entitled to such relief because the zoning ordinance at issue permitted the building of up to five residences on their property. Therefore, the court held, it did not deprive those plaintiffs of substantially all reasonable use of their land.{9}

When the present case was retransferred, the Court of Appeal, in an unpublished opinion, reversed the judgment of the Superior Court. App. 63. It relied upon the California decision in Agins and held that appellant could not recover compensation through inverse condemnation. It, however, did not invalidate either the zoning ordinance or the open-space plan. Instead, it held that factual disputes precluded such relief on the present state of the record:

[Appellant] complains it has been denied all use of its land which is zoned for agriculture and manufacturing but lies within the open space area of the general plan. It has not made application to use or improve the property, nor has it asked [the] City what development might be permitted. Even assuming no use is acceptable to the City, [appellant’s] complaint deals with the alleged overzealous use of the police power by [the] City. Its remedy is mandamus or declaratory relief, not inverse condemnation. [Appellant] did in its complaint seek these remedies, asserting that [the] City had arbitrarily exercised its police power by enacting an unconstitutional zoning law and general plan element or by applying the zoning and general plan unconstitutionally. However, on the present record, these are disputed fact issues not covered by the trial court in its findings and conclusions. They can be dealt with anew should [appellant] elect to retry the case.

App. 66.

The Supreme Court of California denied further review. App. to Juris.Statement I-1. Appellant appealed to this Court, arguing that the Fifth and Fourteenth Amendments require that compensation be paid whenever private property is taken for public use. Appellant takes issue with the California Supreme Court’s holding in Agins that its remedy is limited to invalidation of the ordinance in a proceeding for mandamus or declaratory relief. We postponed consideration of our jurisdiction until the hearing on the merits. 447 U.S. 919 (1980). We now conclude that the appeal must be dismissed because of the absence of a final judgment.{10}

II

In Agins, the California Supreme Court held that mandamus or declaratory relief is available whenever a zoning regulation is claimed to effect an uncompensated taking in violation of the Fifth and Fourteenth Amendments. The Court of Appeal’s failure, therefore, to award such relief in this case clearly indicates its conclusion that the record does not support appellant’s claim that an uncompensated taking has occurred.{11} Because the court found that the record presented "disputed fact issues not covered by the trial court in its findings and conclusions," App. 66,{12} it held that mandamus and declaratory relief would be available "should [appellant] elect to retry the case." Ibid. While this phrase appears to us to be somewhat ambiguous, we read it as meaning that appellant is to have an opportunity on remand to convince the trial court to resolve the disputed issues in its favor. We do not believe that the Court of Appeal was holding that judgment must be entered for the city. It certainly did not so direct. This indicates that appellant is free to pursue its quest for relief in the Superior Court. The logical course of action for an appellate court that finds unresolved factual disputes in the record is to remand the case for the resolution of those disputes. We therefore conclude that the Court of Appeal’s decision contemplates further proceedings in the trial court.{13}

III

Ever since this Court’s decision in Grays Harbor Co. v. Coats-Fordney Co., 243 U.S. 251 (1917), a state court’s holding that private property has been taken in violation of the Fifth and Fourteenth Amendments and that further proceedings are necessary to determine the compensation that must be paid has been regarded as a classic example of a decision not reviewable in this Court because it is not "final." In such a case, "the remaining litigation may raise other federal questions that may later come here." Radio Station WOW, Inc. v. Johnson, 326 U.S. 120, 127 (1945). This is because

the federal constitutional question embraces not only a taking, but a taking on payment of just compensation. A state judgment is not final unless it covers both aspects of that integral problem.

North Dakota Board of Pharmacy v. Snyder’s Drug Stores, Inc., 414 U.S. 156, 163 (1973).

This case presents the reverse aspect of that situation. The Court of Appeal has decided that monetary compensation is not an appropriate remedy for any taking of appellant’s property that may have occurred, but it has not decided whether any other remedy is available, because it has not decided whether any taking in fact has occurred. Thus, however we might rule with respect to the Court of Appeal’s decision that appellant is not entitled to a monetary remedy -- and we are frank to say that the federal constitutional aspects of that issue are not to be cast aside lightly -- further proceedings are necessary to resolve the federal question whether there has been a taking at all. The court’s decision, therefore, is not final, and we are without jurisdiction to review it.

Because § 1257 permits us to review only "[f]inal judgments or decrees" of a state court, the appeal must be, and is, dismissed.

It is so ordered.

1. "[N]or shall private property be taken for public use, without just compensation."

The Fifth Amendment’s prohibition applies against the States through the Fourteenth Amendment. Chicago, B. & Q. R. Co. v. Chicago, 166 U.S. 226, 239 (1897); Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 160 (1980).

2. Appellant claims that only the 214 acres have been taken by the city of San Diego. Throughout this opinion, "the property" and any similar phrase refers to this smaller portion of the 412 acres owned by appellant.

3. Apparently other portions of the 412-acre parcel have been developed to some extent, and some parts sold.

4. The city had classified 116 acres as M-1A (industrial) and 112 acres as A-1-1 (agricultural). The latter classification was reserved for "undeveloped areas not yet ready for urbanization and awaiting development, those areas where agricultural usage may be reasonably expected to persist or areas designated as open space in the general plan." San Diego Ordinance No. 8706 (New Series) 101.0404 (1962), reproduced in Brief for Appellees C-1. A small amount of the land was zoned for residential development. (These figures total more than 214 acres. When the California courts described the zoning of the property, they did not distinguish between the 214 acres that allegedly were taken and 15 other acres that the trial court found had been damaged by the severance.)

5. The portion of the plan that discussed the Los Penasquitos Lagoon area stated:

[T]he San Diego Gas & Electric Company has a large (240-acre) ownership which it intends to utilize as the location of a nuclear power plant sometime in the 1980’s. . . . [S]uch a facility, if sensitively designed and sited, could be compatible with open-space preservation in this subsystem; however, a number of approvals and clearances must be obtained prior to the plant’s construction’s becoming a reality.

App. 160.

6. Appellant abandoned its plan to construct a nuclear power plant after the discovery of an off-shore fault that rendered the project unfeasible. Tr. 73. Its witnesses acknowledged that only about 150 acres were usable as an industrial park, and that 1.25 million cubic yards of fill would be needed to undertake such a development. Id. at 711, 906.

7. The retransfer order cited Agins as 23 Cal.3d 605. App. to Juris.Statement 1. The courts opinion, however, later was modified and reprinted with the citations noted in the text.

8. Contrary to the dissent’s argument, the California Supreme Court’s Agins decision did not hold that a zoning ordinance never could be a "taking," and thus never could violate the Just Compensation Clause. It simply limited the remedy available for any such violation to nonmonetary relief. Immediately following the passage quoted by the dissent, post at 640-641, that court stated:

This conclusion is supported by a leading authority (1 Nichols, Eminent Domain (3d rev. ed.1978) Nature and Origin of Power, § 1.42 (1), pp. l-116 21), who expresses his view in this manner: "Not only is an actual physical appropriation, under an attempted exercise of the police power, in practical effect an exercise of the power of eminent domain, but if regulative legislation is so unreasonable or arbitrary as virtually to deprive a person of the complete use and enjoyment of his property, it comes within the purview of the law of eminent domain. Such legislation is an invalid exercise of the police power, since it is clearly unreasonable and arbitrary. It is invalid as an exercise of the power of eminent domain, since no provision is made for compensation."

24 Cal.3d at 272, 598 P.2d at 28. (Emphasis added by the California court.) See also id. at 273-274, 598 P.2d at 29:

While acknowledging the power of government to preserve and improve the quality of life for its citizens through the regulation of the use of private land, we cannot countenance the service of this legitimate need through the uncompensated destruction of private property rights.

And see id. at 276, 598 P.2d at 30:

"Determining that a particular land use control requires compensation is an appropriate function of the judiciary. . . . But it seems a usurpation of legislative power for a court to force compensation,"

quoting Note, Inverse Condemnation: Its Availability in Challenging the Validity of a Zoning Ordinance, 26 Stan.L.Rev. 1439, 1451 (1974).

When Agins was appealed here, we unanimously agreed that

[t]he State Supreme Court determined that the appellants could not recover damages for inverse condemnation even if the zoning ordinances constituted a taking. The court stated that only mandamus and declaratory judgment are remedies available to such a landowner.

447 U.S. at 263. We believe, therefore, that it is the dissent that "fundamentally mischaracterizes," post at 637, the California ruling.

9. This Court’s affirmance of the California court’s judgment in Agins was on the ground that there was no taking. 447 U.S. at 263.

10. Title 28 U.S.C. § 1257 grants jurisdiction to this Court to review only "[f]inal judgments or decrees rendered by the highest court of a State in which a decision could be had." Because the finality requirement of § 1257 applies to this Court’s review of state court judgments both by appeal and by certiorari, we do not address the city’s contention that, inasmuch as the Court of Appeal did not uphold any statute against a constitutional challenge, this is not a proper appeal under § 1257(2).

11. We recognize that this is inconsistent with the Court of Appeal’s first ruling in this case, but, as has been noted, that decision was deprived of all effect by the Supreme Court’s order granting a hearing.

The dissent’s statement that the Court of Appeal "concluded as a matter of law that no Fifth Amendment `taking’ had occurred," post at 645, is premised upon its misreading of the Agins opinion. Seen. 8, supra. The Court of Appeal simply refused to award appellant the only remedy held to be available for a "taking" because there were disputed factual issues to be resolved.

12. Although its initial opinion affirmed the trial court’s finding that any application by appellant to develop the property would have been rejected, it is clear that the Court of Appeal reconsidered that finding in the light of Agins. In Agins, the California Supreme Court held that landowners who had not "made application to use or improve their property" following the passage of a zoning ordinance, and had not "sought or received any definitive statement as to how many dwelling units they could build on their land," 24 Cal.3d at 271, 598 P.2d at 27, had not shown that the ordinance took their property without just compensation, since it permitted up to five residences to be built on the plaintiffs’ property. We agreed that no violation of the Fifth and Fourteenth Amendments had been shown, since the landowners were "free to pursue their reasonable investment expectations by submitting a development plan to local officials." 447 U.S. at 262.

In this case, city witnesses testified that some development of appellant’s property would be consistent with the open-space plan. App. 134-135, 140, 149-150. Indeed, the plan holds out the possibility that a nuclear power plant could be built on the site, seen. 5, supra, and the witnesses testified that other forms of industrial development might be permitted as well. App. 140, 149-150. The trial court’s opinion does not explain why it concluded in light of this evidence that any attempt to obtain the city’s permission for development of the property would be futile.

When the Court of Appeal reconsidered its decision in light of Agins, we believe that its reference to "disputed fact issues not covered by the trial court in its findings," App. 66, referred to this controversy. Its opinion states that damages would be unavailable "[e]ven assuming no use is acceptable to the City." Ibid. The Court of Appeal declined to award mandamus or declaratory relief because it could not make this "assumption" in light of the factual disputes.

13. Appellant’s counsel shares this view:

QUESTION: Mr. Goebel, your second and third cause of action in your complaint were petitions for mandate, and the relief prayed in paragraph 3 of your complaint was that the Court order the City of San Diego to set aside the rezoning and to set aside the adoption of the open space element of its general plan. As I understand it, on remand, the trial court may grant that relief, theoretically.

MR. GOEBEL: That’s correct, Your Honor.

Tr. of Oral Arg. 18.