By John Scheuring

Late in September, the Court of Appeal effectively reversed a judgment against the City of San Diego which, with interest and attorney’s fees, was on track to exceed $150 million.  Originally filed in 1995, Border Business Park sued the City on theories of inverse condemnation and breach of contract.  The trial court ruled that the City was liable for (i) publicly announcing that it was considering a proposal for to create an international airport in Otay Mesa (which interfered with sales of property within Border Business Park), and (ii) the City’s diversion of truck traffic to a new border crossing with Mexico (which allegedly interfered with access to Border Business Park). The trial court also held the City liable for breach of a development agreement with the Border Business Park (but did grant a motion for new trial on res judicata issues stemming from a previous lawsuit).

The Court of Appeal reversed the inverse condemnation claims and affirmed a trial court order granting the City a new trial on the contract claims. 

Public Announcement of Airport.  The court held that Border Business Park could not state a cause of action for the City’s airport planning due to the absence of any unique or special harm apart from other others landowners in the vicinity of the proposed airport. The court also held that the widespread impact from mere general planning is not compensable. 

Truck Traffic.  The court rejected Border Business Park’s claim for damages resulting from the diversion of truck traffic to a new border crossing with Mexico . Border Business Park failed to introduce any evidence that it suffered an impairment of access to its property resulting from the increase in traffic. At most, the evidence showed only that Border Business Park suffered inconvenience from the traffic for a few hours a day, which cannot support a claim for inverse condemnation.

Breach of Development Agreement.  The court affirmed the trial court’s order granting the City a new trial on the plaintiff’s breach of contract claim, on the ground that most of the evidence introduced by the plaintiff related to claims that were time-barred.

The stakes were high for San Diego (and its taxpayers), which may have had difficulty withstanding such a large verdict.

For more information please contact John Scheuring.  John Scheuring is an attorney in the Real Estate Practice Group in the firm’s San Francisco office.