Opinion
E069448
09-16-2019
THE PEOPLE EX REL. DEPARTMENT OF TRANSPORTATION, Plaintiff and Respondent, v. ASHKAN KARIMI as Executor, etc., et al., Defendants and Appellants.
Law Office of Afshin Karimi and Afshin Karimi for Defendants and Appellants. Jeanne E. Scherer, Chief Counsel, Jerald M. Montoya, Deputy Chief Counsel and Mark Berkebile, for Plaintiff and Respondent.
THE PEOPLE EX REL. DEPARTMENT OF TRANSPORTATION, Plaintiff and Respondent, v. ASHKAN KARIMI as Executor, etc., et al. Defendants and Appellants. ORDER MODIFYING CONCURRING OPINION [NO CHANGE IN JUDGMENT]
We modify the concurring opinion filed in this matter on September 16, 2019, to change the word "unreasonable" to "reasonable" on page 4, last paragraph, first sentence.
Except for this modification, which does not affect the judgment, the opinion remains unchanged.
SLOUGH
J. We concur: MILLER
Acting P. J. RAPHAEL
J.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super.Ct.No. CIVDS1408881) OPINION APPEAL from the Superior Court of San Bernardino County. Bryan Foster, Judge. Affirmed. Law Office of Afshin Karimi and Afshin Karimi for Defendants and Appellants. Jeanne E. Scherer, Chief Counsel, Jerald M. Montoya, Deputy Chief Counsel and Mark Berkebile, for Plaintiff and Respondent.
The Estate of Hooshang Karimi and Nickan Enterprises, LLC (Karimi) settled an eminent domain action with the California Department of Transportation (Caltrans) before trial, agreeing to payment of $5,500 as compensation for the condemnation of a small portion of undeveloped property. Afterward, Karimi moved for an award of litigation expenses under Code of Civil Procedure section 1250.410 (unlabeled statutory citations refer to this code). The trial court denied the motion.
Karimi's appeal requires us to apply section 1250.410, which the Legislature enacted to encourage parties in eminent domain cases to resolve disputes before trial. The statute requires "the plaintiff [to] file with the court and serve on the defendant its final offer of compensation in the proceeding and the defendant [to] file and serve on the plaintiff its final demand for compensation in the proceeding." (§ 1250.410, subd. (a).) If, after entry of judgment, the defendant property owner shows they made a reasonable final compensation demand, but the state made an unreasonable final compensation offer, the defendant may recover litigation expenses and attorney fees as part of their recoverable costs. (§ 1250.410, subd. (b).)
The trial court found Karimi was not entitled to litigation expenses because defendants accepted Caltrans's final offer of $5,500, which was only $500 less than Karimi's final demand of $6,000. We conclude the trial court's finding that Caltrans's offer was reasonable has substantial support in the record, and therefore affirm.
I
FACTS
On June 20, 2014, Caltrans filed an eminent domain lawsuit to acquire a 0.29-acre portion of a vacant property in Phelan partly owned by Karimi. The whole property covers approximately 158 acres. On July 10, 2014, Caltrans deposited $2,500 with the State Treasurer, representing its appraisal-based estimate of just compensation for the property. (§ 1255.010.)
Caltrans retained an independent expert appraiser, Bryan Riggs, who appraised the property and placed its fair market value at $1,000. On July 12, 2016, Caltrans provided Karimi with Riggs's valuation statement. (Code Civ. Proc., § 1258.260.) Karimi had Ashkan Karimi, executor of the estate and managing member of Nickan Enterprises, LLC, appraise the property for defendants, and valued the property at $11,000. (Evid. Code, § 813.) Karimi served the appraisal on July 28, 2016.
A week later, Karimi filed his final demand under section 1250.410, asking for compensation in the amount of $6,000. Caltrans filed its final offer of $5,500 on September 2, 2016. At a mandatory settlement conference on March 24, 2017, Karimi along with co-owners Renaissance Perinatal Medical Group, and Afsaneh Karimi—neither parties to this appeal—accepted Caltrans's final compensation offer and the terms of the stipulated judgment were recited on the record. The judgment awarded $5,500 plus statutory interest to these parties, including $907.50 each to the Estate of Hooshang Karimi and Nickan Enterprises, LLC. The judgment did not address whether any of the defendants could seek litigation expenses.
On August 9, 2017, Karimi and the other defendants filed a motion for litigation expenses under section 1250.410. They took the position they were entitled to litigation expenses because Caltrans's initial appraisal-based offer ($1,000) and deposit ($2,500) were unreasonably low when compared to the amount of the final judgment ($5,500) and Caltrans caused Karimi to incur significant litigation fees by putting those amounts forward. They reque sted an award of $136,592.04.
The trial court found Caltrans's final offer was reasonable since it was "the same amount as the settlement," and denied the motion. Karimi filed a timely notice of appeal.
II
ANALYSIS
Section 1250.410, subdivision (a) requires the parties to an eminent domain proceeding to exchange final settlement offers regarding just compensation before trial. "At least 20 days prior to the date of the trial on issues relating to compensation, the [government] shall file with the court and serve on the [property owner] its final offer of compensation in the proceeding and the [property owner] shall file and serve on the plaintiff its final demand for compensation in the proceeding." (§ 1250.410, subd. (a).)
Subdivision (b) allows a property owner to recover litigation expenses if the government's final compensation offer is unreasonable and the property owner's final demand is reasonable. "If the court, on motion of the [property owner] made within 30 days after entry of judgment, finds that the offer of the [government] was unreasonable and that the demand of the [property owner] was reasonable . . . the costs allowed pursuant to Section 1268.710 shall include the [property owner's] litigation expenses." (§ 1250.410, subd. (b).) Litigation expenses include reasonable attorney fees and costs, as well as expert witness and appraiser fees. (§ 1250.410, subd. (e).) Unless the court awards litigation expenses, the government's liability for additional expenses is limited to ordinary costs as described in section 1268.710. (People ex rel. Dept. of Transportation v. Superior Court (2012) 203 Cal.App.4th 1505, 1511 (Menigoz).)
The reasonableness of the parties' final compensation offers is a threshold question. The statute directs that the final settlement "offers and demands shall be the only offers and demands considered by the court in determining the entitlement, if any, to litigation expenses." (§ 1250.410, subd. (a).) It also requires the court to evaluate the parties' offer and demand "in the light of the evidence admitted and the compensation awarded in the proceeding." (§ 1250.410, subd. (b).) The proceeding in question is the trial that occurs if settlement breaks down. (Redevelopment Agency v. Gilmore (1985) 38 Cal.3d 790, 808 (Gilmore) ["Section 1250.410 requires the court to evaluate the reasonableness of the plaintiff's offer in light of the award and the evidence adduced at trial"]; Menigoz, supra, 203 Cal.App.4th at pp. 1511-1512.) If there is a trial, "'"[t]he statute calls on the trial judge to make a discretionary determination of reasonableness after weighing all the evidence and assessing witness credibility independently of the jury."'" (People ex rel. Dept. of Transportation v. Acosta (2009) 178 Cal.App.4th 762, 773-774.) In such a case, the trial court considers several factors "as general guidelines for determining the reasonableness or unreasonableness of offers. They are '"(1) the amount of the difference between the offer and the compensation awarded, (2) the percentage of the difference between the offer and award . . . and (3) the good faith, care and accuracy in how the amount of offer and the amount of demand, respectively, were determined.'" (Los Angeles County Metropolitan Transportation Authority v. Continental Development Corp. (1997) 16 Cal.4th 694, 720.)
Here, there was no trial and no award after trial, so the court was limited to considering the amounts of the final settlement offer and demand and the fact that the parties ultimately reached an agreed settlement. As we've noted, the trial court determined Caltrans's offer was reasonable in view of those facts. "The trial court's determination of that issue is a resolution of a question of fact and will not be disturbed on appeal if supported by substantial evidence." (Gilmore, supra, 38 Cal.3d at p. 808.)
Caltrans asks us to follow Menigoz, and hold that a property owner cannot establish the government's offer was unreasonable, as a matter of law, where the parties reached a settlement and avoided trial. (Menigoz, supra, 203 Cal.App.4th at pp. 1511-1512.) We recognize the appeal of that position, but don't think we need to reach so far in this case because the trial court's reasonableness determination was grounded on more than sufficient evidence. For starters, it is of course relevant that the parties settled their dispute with Karimi and co-defendants agreeing to the very settlement offer they now claim was unreasonable. It is not impossible to imagine a case where a property owner establishes they agreed to an unreasonable compensation amount, but Karimi has not done so here, where the offer and demand were separated by only $500, less than 10 percent of the agreed value of the property. We conclude these uncontested facts provide substantial evidence to support the trial court's reasonableness determination, and will affirm the order denying Karimi litigation expenses on that basis.
The concurrence objects that the statute "requires a comparison of the offer to the compensation awarded, not the compensation demanded." (Conc. opn. post, of Raphael, J.,pp. 4-5; see also id. at p. 2.) This reads the statute too narrowly. The statute directs that "the offers and demands as provided in subdivision (a) shall be considered by the court on the issue of determining an entitlement to litigation expenses." (Code Civ. Proc., § 1250.410, subd. (d), italics added.)
Karimi argues we should go beyond the final offer and demand and look to Caltrans's prior offers and litigation conduct to decide whether the final agreed settlement amount was reasonable. We don't believe such evidence is relevant. The statute limits the trial court to determining whether the final offer was reasonable and directs the court to consider, in addition to the amounts of the offer and demand, evidence adduced at trial. If the trial court determines the government's offer was reasonable or the property owner's demand was unreasonable, that ends the inquiry. (Menigoz, supra, 203 Cal.App.4th at pp. 1511-1512.) The statute directs the trial court to look at prior offers only if the court gets beyond the threshold question and finds the government's final offer unreasonable. In that case, the court may look to "the offer required to be made by the plaintiff pursuant to Section 7267.2 of the Government Code . . . and any other written offers and demands filed and served before or during the trial" for the purpose of "determining the amount of litigation expenses." (§ 1250.410, subd. (c).) But where the government's offer was reasonable, the earlier offers simply don't come into play.
Karimi argues that property owners should be able to recover litigation expenses where the evidence shows the government was unreasonable in the way they conducted the entire case. Karimi says Caltrans submitted an unreasonable initial appraisal of $1,000, made an unreasonable initial offer of $2,500, failed to provide the property owners statutory notice of meeting of the California Transportation Commission which permitted Caltrans to proceed with condemning the property, filed three separate motions for an order of possession, and otherwise increased the expense of litigating the eminent domain action. However, as we have discussed, the statutory scheme which incentivizes settlement does so by requiring a reasonable final offer on the government's part and a reasonable final demand by the property owner. (§ 1250.410 ["If the court, on motion of the defendant made within 30 days after entry of judgment, finds that the offer of the plaintiff was unreasonable and that the demand of the defendant was reasonable . . . the costs allowed pursuant to Section 1268.710 shall include the defendant's litigation expenses"].) It does not require the parties to take reasonable positions at every stage of the litigation. The trial court was therefore not required to get into the morass of deciding whether Caltrans, Karimi, or both acted unreasonably in litigating the case before making their final positions on the amount of just compensation.
III
DISPOSITION
We affirm the trial court order denying appellants' motion for litigation expenses. The parties shall bear their own costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
SLOUGH
J. I concur: MILLER
Acting P. J.
RAPHAEL, J., Concurring.
In this eminent domain case, the appellant property owner accepted Caltrans's final offer of compensation for the condemnation of a piece of real property. It now seeks litigation expenses, including attorney's fees, under Code of Civil Procedure section 1250.410 (section 1250.410), which requires it to demonstrate that Caltrans's final settlement offer was unreasonable.
I join the result affirming the trial court's denial of litigation expenses. But I respectfully concur separately because I believe that we should affirm by holding that a settlement offer by a government agency is reasonable as a matter of law under section 1250.410 if it is accepted by the property owner.
The purpose of section 1250.410 "is to encourage settlement of condemnation actions by providing incentives to a party who submits a reasonable settlement offer or demand before trial." (Santa Clara Valley Water Dist. v. Gross (1988) 200 Cal.App.3d 1363, 1368.) To that end, section 1250.410 provides for the pretrial exchange of a final offer of compensation by the plaintiff and a final demand for compensation by the defendant. (§ 1250.410, subd. (a).) If the court finds the plaintiff's final offer was unreasonable and the defendant's final demand was reasonable when "viewed in the light of the evidence admitted and the compensation awarded in the proceeding, the costs allowed . . . shall include the defendant's litigation expenses." (§ 1250.410, subd. (b).). No offers or demands other than the final ones are to be considered by the court in determining the entitlement to litigation expenses. (§ 1250.410, subd. (a).)
In my view, when an agency's final offer is accepted by the defendant, that fact alone makes the final offer reasonable as a matter of law.
First, both the statute and the case law require a comparison between the settlement offer and the amount of "compensation awarded" in the case. (See § 1250.410, subd. (b); Los Angeles County Metropolitan Transportation Authority v. Continental Development Corp. (1997) 16 Cal.4th 694, 720.) Where a settlement offer is accepted, as here, the difference is zero. That there is no difference between the offer and the compensation awarded demonstrates that the offer was reasonable.
My view does not go as far as People ex rel. Dept. of Transportation v. Superior Court (2012) 203 Cal.App.4th 1505, 1511-1513 (Menigoz), which held that litigation expenses may not be awarded after any settlement, absent trial commencing. In Menigoz, the agency offered $159,000 and the property owners demanded $189,000; the parties settled for the higher amount. (Id. at pp. 1508-1509.) Where the agency's offer is rejected and the parties settle for more, the agency's offer differs from the compensation awarded. Then, there is a potential that the offer was unreasonable and the demand was reasonable compared to the award. Menigoz was based on a separate view that section 1250.410, subdivision (b)'s language requires a "proceeding" that is a trial. (Menigoz, supra, at p. 1511.)
Second, an offer indisputably satisfies the statutory purpose when it actually prompts an acceptance. In a case that does not settle for the amount of the offer, whether the offer was reasonable could be arguable, as a court essentially must determine whether the offer amount reflected a good faith attempt at reaching a compromise, even though that attempt failed. But where a case settled because the offer amount was accepted, there is no need to engage in hypotheticals. The offer's reasonableness was demonstrated. The offer did what section 1250.410 encouraged the parties to do.
Third, the reasonableness of a litigation offer must be defined by reference to an amount that should actually cause a case to settle in the context of real-world litigation. Parties legitimately consider "litigation risk"—the range of possible or probable verdicts that they face from a court or jury. One cannot evaluate the reasonableness of a settlement offer only abstractly by opining on what a property "should" be worth apart from an evaluation of possible litigation outcomes. That is, an offer cannot be deemed unreasonable simply because a litigant or court believes that—in some context other than the existing litigation process—the case should have resolved for a different amount. When the agency's offer actually did settle the case because it was accepted, it thus should not be possible to show that it was unreasonable based on an analysis divorced from actual litigation. An accepted offer is reasonable by definition.
While the instant case is small, the principle is big. By engaging in the analysis appellant seeks, we allow a party to put the trial and appellate courts in a position of performing officially sanctioned second-guessing of a settlement that otherwise is the unchallenged, proper result of the justice system that we safeguard. A section 1250.410 motion asks a court to determine, first, that the agency's settlement offer was unreasonable and, second, that the property owner's settlement demand was reasonable. The idea should be repugnant: a court scrutinizing an agreement voluntarily reached by the parties and determining that—in the court's judgment—the voluntarily accepted offer was unreasonable and the rejected demand was reasonable. (And further awarding fees and costs, in this case about 25 times the value of the principal amount of the settlement.) The court is being asked to determine—in its capacity supervising the proceedings—that the parties reached an unreasonable bargain. Would it not be unprecedented in our judicial system if a court did actually grant a defendant's motion in these circumstances?
The current situation differs from those where a litigant is seeking to vacate or void a judgment following an agreement because of, for example, fraud or some type of unfairness to a third party. Where a party seeks to invalidate an agreement, it is consistent with the integrity of our judicial system for a court determine whether the judgment should in fact be set aside. That scenario casts the court in the role of a guardian of our system, not of an official critic of its result. --------
My view explains why I cannot join today's opinion. Where I think that we should squelch the idea of judges scrutinizing the reasonableness of bargained-for settlements, the opinion seems to invite further such challenges, suggesting that some may be viable even if this one is not. (Maj. opn., ante, at pp. 6-7.). In my view, our case law should inform landowners that if you accept a final offer in an eminent domain case, you cannot obtain section 1250.410 expenses by convincing the court that the judgment to which you stipulated was unreasonable.
Here, the fact that definitively convinces the majority that Caltrans's offer was unreasonable is not that the property owner accepted that offer. Rather, the dispositive fact is that the property owner's final demand (before it accepted the offer) was not all that far from the offer. (Maj. opn., ante, at p. 7.). The implication of this reasoning is that if the property owner had demanded more money, this would tend to show the offer's unreasonableness. The statute, in contrast, requires a comparison of the offer to the compensation awarded, not the compensation demanded. Thus, an agency's accepted offer is reasonable no matter what amount the defendant demanded before accepting.
RAPHAEL
J.