The following four legal cases give some insight into the operations of Wackenhut, the private security service for Area 51 that became a large part of Danny Casolaro's research. For more information on Wackenhut and Casolaro, see The Octopus: Secret Government and the Death of Danny Casolaro by Kenn Thomas and the late Jim Keith.
Independent Guard Association of Nevada v. United States, 57 F.3d 766 (9th Cir. 06/12/1995)
[1] UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
[2] No. 93-15769
[3]
1995.C09.42154
[4]
filed: June 12, 1995.
[5]
INDEPENDENT GUARD ASSOCIATION OF NEVADA, LOCAL NO. 1,
PLAINTIFF-APPELLANT
v.
HAZEL O'LEARY,*FN1 SECRETARY OF ENERGY OF THE UNITED
STATES OF
AMERICA, ON BEHALF OF THE UNITED STATES DEPARTMENT OF
ENERGY,
AN EXECUTIVE DEPARTMENT OF THE UNITED STATES OF
AMERICA,
DEFENDANT-APPELLEE
[6]
Appeal from the United States District Court for the
District of Nevada. D.C.
No. CV-92-00204-LDG. Lloyd D. George, District Judge,
Presiding.
[7]
George A. Pappy, Pappy & Davis, Los Angeles,
California, for the
plaintiff-appellant.
[8]
L. Dow Davis and Monte N. Stewart, United States
Department of Energy,
Washington, D.C., for the defendant-appellee.
[9]
Before: Mary M. Schroeder and Pamela Ann Rymer,
Circuit Judges, and William
L. Dwyer,*fn1 District Judge. Opinion by Judge
Schroeder.
[10]
Author: Schroeder
[11]
SCHROEDER, Circuit Judge:
[12]
The Independent Guard Association of Nevada, Local
No. 1 ("IGAN"), appeals
the district court's grant of summary judgment to the
Secretary of Energy in
IGAN's suit to enjoin the application of the
Department of Energy's ("DOE" or
"agency") Nuclear Explosive Safety Order 5610.11
(Oct. 10, 1990) ("Order").
IGAN objected to the DOE's promulgation of the Order,
which is an extensive
personnel regulation, without the prior notice and
comment required by the
Administrative Procedure Act's ("APA") rulemaking
procedures, 5 U.S.C. §
553. The district court held that the "military
function" exception, 5 U.S.C. §
553(a)(1), to the APA applied. We reverse because our
law requires APA
exceptions to be construed narrowly, and the record
fails to disclose that
these guards perform any function directly related to
the manufacture or
development of military weapons by the DOE.
[13]
BACKGROUND
[14]
IGAN is a union representing the armed civilian
guards employed by
Wackenhut Services, Inc. The DOE contracted with
Wackenhut to guard its
facilities at the Nevada Test Site near Mercury,
Nevada, and its support
facilities in Las Vegas, Nevada. At these sites, the
DOE researches, produces
and tests nuclear explosive devices for use by the
military. Wackenhut, not
the DOE, hires and supervises the guards.
[15]
On October 10, 1990, the DOE issued the Order
pursuant to its statutory
authority to maintain security and safety standards
for its defense programs.
See, e.g., 42 U.S.C. §§ 2165, 2201. The Order applies
to all activities and
operations involving nuclear explosives and nuclear
weapons conducted under
the Department's nuclear program. The DOE did not
comply in full with the
APA's normal rulemaking procedures, which would have
entailed prior notice
and comment of the entire Order. See 42 U.S.C. §
7191.
[16]
The Order provides management policy guidance for the
selection and
certification of personnel; sets forth nuclear
explosive safety standards and
rules; and provides for nuclear explosive safety
studies and surveys. In the
portion relevant here, the Order establishes a
Personnel Assurance Program
("PAP") applicable to all DOE and contractor
employees assigned nuclear
explosive duties. The PAP provides detailed
certification requirements for the
DOE and its contractor personnel who are certified to
guard nuclear explosive
devices in Nevada. For example, PAP disqualifies
persons from such duties
who fail to comply with any of its provisions, which
include submission to
laboratory testing, random drug testing, and a
certification review procedure.
PAP also provides for permanent disqualification from
duty for any employee
who has ever used hallucinogens, regardless of
quantity consumed or
remoteness in time.
[17]
The Order superseded an earlier safety program
promulgated in 1980 that had
delegated more responsibility for contractor employee
qualification review to
the contractor itself. See "Program to Prevent
Accidental or Unauthorized
Nuclear Explosive Detonations," DOE Order 5610.3
(Dec. 18, 1980).*fn1
Shortly after the Order went into effect, it resulted
in the disqualification of
four employees because of prior use of an
"hallucinogen." DOE subsequently
"suspended" the hallucinogen provision, and all four
employees were certified
for nuclear explosive safety duties.
[18]
On March 10, 1992, IGAN filed a complaint seeking
declaratory and injunctive
relief, pending compliance with notice and comment
procedures.*fn2 The case
came before the district court on cross-motions for
summary judgment. The
DOE invoked the "military function" exception to the
APA's notice and comment
provisions. This exception provides:
[19]
(a) This section applies, according to the provisions
thereof, except to the
extent that there is involved -
[20]
(1) a military or foreign affairs function of the
United States;
[21]
5 U.S.C. § 553(a)(1). Because the parties agreed on
the material facts, the
case turned on a legal question: the proper scope of
this exception.
[22]
In granting the DOE's motion for summary judgment,
the district court
determined that the DOE's authorization to conduct
the research and
production of nuclear weapons constituted a military
function. The court
further found that "the proper conduct of a military
function often requires
essential, though non-military, support functions,"
and that "such military
functions cannot proceed absent full regulation and
control of the support
function." The district court did not find that the
guards themselves performed
a military function. Rather, the district court
concluded that the exception
applied because the Order deals with "an essential
integral support program
that is required for the proper conduct of the DOE's
military function of
researching and testing nuclear weapons."
[23]
Discussion
[24]
The Secretary initially stresses that DOE has
"suspended" the "hallucinogen"
provision, the only portion of the Order IGAN
protested, and that it has
certified for nuclear explosive safety duties the
four individuals who had been
temporarily disqualified pursuant to this provision.
The Secretary also advises
that DOE has committed to publish for notice and
comment the hallucinogen
rule should it ever be reimplemented. Thus, the
Secretary argues, IGAN has
sustained no legally cognizable injury from the
Order, and the district court
should have dismissed the case. We agree with the
district court that the
Secretary's suspension of the provision, and
subsequent certification of the
affected personnel, does not wholly resolve IGAN's
problem. As IGAN notes,
the APA makes no provision for "suspension" of rules.
Consequently, despite
reassurances that lack the force and effect of law,
the DOE could, at some
future date, reinstate the "hallucinogen" provision
without notice and comment
if we were not to rule on the issue. We thus conclude
that IGAN has standing to
maintain this suit.
[25]
The district court's interpretation of the scope of
the "military function"
exception is a question of law that we review de
novo. See United States v.
Yacoubian, 24 F.3d 1, 3 (9th Cir. 1994). Section
553(a)(1) provides an
exception to the APA "to the extent" that a military
function is involved. The
statute never defines the term, but its language
contemplates that "military
function" has measurable contours. The statute's text
strongly suggests that
those contours are defined by the specific function
being regulated.
[26]
Our inquiry therefore is not advanced by IGAN's
threshold contention that the
DOE's status as a "civilian" agency is dispositive.
The DOE's statutory mandate
includes responsibility for research and development
of all energy resource
applications, as well as national security functions
relating to nuclear weapons
research and development. 42 U.S.C. § 7112, 7133. The
DOE can and does
perform both "civilian" and "military" functions. The
agency's dual nature
reinforces the critical importance of the statutory
language that instructs us to
look not to whether the overall nature of the agency
promulgating a regulation
is "civilian" or "military," but to the function
being regulated. Legislative history
confirms this view. See S. Rep. No. 752, 79th Cong.,
1st Sess. 13 (1945)
(noting the suggestion that all functions of the War
and Navy Department as
well as the Army and Navy should be exempted, but
finding that "since the bill
relates to functions, rather than agencies, it would
seem better to define
functions"). The district court correctly concluded
that the DOE engages in a
military function when it researches and develops
nuclear weapons. See 42
U.S.C. § 2121 (authorizing the Atomic Energy
Commission, precursor to the
Energy Research and Development Administration, whose
functions were
subsequently assumed by the DOE, to engage in the
research and development
of nuclear weaponry).
[27]
We thus agree with the Secretary that the exception
applies to predominately
civilian agencies such as DOE when they are
performing a "military function".
The issue before us, however, is whether the civilian
guards who are the
subject of this challenged regulation fall within the
military function exception.
The Secretary does not seriously argue that the
Wackenhut guards
themselves are performing a military function.
Instead, she argues that the
military function exception logically should be seen
to encompass IGAN's
contractor support function because the DOE "could
not safely and securely
accomplish its military function" without the safety
policies embodied in the
Order. In short, the Secretary argues for a broad
interpretation of the
exception.
[28]
The legislative history of the APA is contrary to the
Secretary's view.
Congress intended the military function exception to
have a narrow scope. The
Report of the Senate Judiciary Committee emphasized
that "the exceptions
apply only 'to the extent' that the excepted subjects
are directly involved." S.
Doc. No. 248, 79th Cong., 2d Sess. 199 (1946)
(emphasis added). The
Judiciary Committee continued:
[29]
The exemption of situations of emergency or necessity
is not an "escape
clause" in the sense that any agency has discretion
to disregard its terms or
the facts. A true and supported or supportable
finding of necessity or
emergency must be made and published. "Impracticable"
means a situation in
which the due and required execution of the agency
functions would be
unavoidably prevented by its undertaking public
rule-making proceedings.
[30]
Id. at 200.
[31]
Consistent with congressional intent, this Circuit
has ruled that exceptions to
the APA must be narrowly construed:
[32]
The exceptions to section 553 will be "narrowly
construed and only reluctantly
countenanced." This is consistent, of course, with
Congress's clear intent to
preserve the statutory purpose of informal rulemaking
by making sure those
exceptions did not become "escape clauses," . . .
which an agency could utilize
at its whim.
[33]
Alcaraz v. Block, 746 F.2d 593, 612 (9th Cir. 1984)
(citations omitted).
[34]
To our knowledge, no court has ever considered
whether the military function
exception applies to civilian contractors. The dearth
of authority discussing the
applications of the military function exemption
suggests it has not been widely
invoked.
[35]
The two cases cited in the district court's decision
are, as the district court
itself correctly recognized, inapposite. In McDonald
v. McLucas, 371 F. Supp.
837 (S.D.N.Y. 1973), plaintiffs challenged as
violative of the APA the
procedures by which the armed forces declare American
servicemen missing in
action to be dead. The court summarily ruled that the
military function
exception applied to the regulation, and the APA was
thus inapplicable. Id. at
840. McDonald involves a military determination
concerning military personnel
who had participated in a military conflict, and did
not speak to contractor
support functions.
[36]
County of Seneca v. Cheney, 806 F. Supp. 387
(W.D.N.Y. 1992), vacated, 992
F.2d 320 (2d Cir.), opinion reported in 12 F.3d 8 (2d
Cir. 1993), is even less
authoritative. The vacated district court opinion
simply cited a House
Conference Report's unexceptionable statement that
the decision to close and
realign military bases is a military function.
Cheney, 806 F. Supp. at 399 n.9.
[37]
The legislative history and relevant case law direct
that exceptions to the APA
be narrowly construed, and that the exception can be
invoked only where the
activities being regulated directly involve a
military function. If the Secretary's
position were adopted, and contractor support
activities held to be within the
scope of the military function exception, maintenance
staff, custodial help,
food service workers and even window washers could
find their undoubtedly
necessary support tasks swept within the exception's
ambit, and DOE
regulations affecting their employment exempt from
notice and comment.
Neither the statute, nor common sense, requires such
a result.
[38]
We do not mean to imply that the military function
exception can never apply to
a contractor's services. Indeed, at argument IGAN
conceded that contractor
employees could perform a military function within
the meaning of the APA.
For example, if they were making military weapons,
they might well be
performing such a function. The record in this case,
however, does not contain
any evidence that the military has ever exercised any
direct supervisorial
control over the activities of these civilian
contract guards. The record shows
that the guards employed and supervised by Wackenhut
were performing
duties similar to those performed by civilian
security guards everywhere. They
were no more performing a "military function" than
civilian contract guards
employed to guard judges are performing a "judicial
function." The exemption
should not be stretched to encompass civilian support
services.
[39]
Finally, we note that, as a practical matter,
compliance with the APA imposes
costs on the Secretary that are minimal in nature.
Following publication of the
proposed rule in the Federal Register, the Secretary
need only provide 30 days
for notice and comment. 42 U.S.C. § 7191(b)(1). After
this notice and
comment period, the Secretary may publish the
proposed rule or modification
of it with an accompanying "explanation responding to
the major comments,
criticisms, and alternatives offered during the
comment period." Id. § 7191(d).
[40]
We REVERSE the district court's judgment that the DOE
properly availed itself
of the military function exemption. The district
court did not consider the other
exemptions to the APA proffered by the Secretary, see
5 U.S.C. §§ 553(a)(2),
(b)(3)(A), and we REMAND for that purpose.
[41]
REVERSED and REMANDED.
General Footnotes
[42]
*fn1 Hazel O'Leary, the current Secretary of Energy,
is substituted for former
Secretary James D. Watkins. See Fed. R. App. Pro.
43(c)(1).
Judges Footnotes
[43]
*fn1 Honorable William L. Dwyer, United States
District Judge for the District
of Western Washington, sitting by designation.
Opinion Footnotes
[44]
*fn2 IGAN also sought to enjoin implementation of
"Personnel Security
Assurance Program," DOE Order 5631.6 (Jan. 19, 1989).
This claim had been
mooted, however, by the DOE's 1989 Notice of Proposed
Rulemaking on that
program, known as the PSAP.
[45]
*fn1 The Order also superseded those portions of a
1979 DOE order
addressing nuclear explosives. See "Packaging and
Transporting of Nuclear
Explosives, Nuclear Components, and Special
Assemblies," DOE Order 5610.1
(Sept. 11, 1979).
Carlsen v. Wackenhut Corp., 868 P.2d 882, 73 Wash. App. 247 (Wash.App.
03/08/1994)
[1]
Washington Court of Appeals
[2]
No. 15332-7-II
[3]
868 P.2d 882, 73 Wash. App. 247, 1994.WA.41041
[4]
Filed: March 8, 1994.
[5]
RONDA CARLSEN, APPELLANT
v.
THE WACKENHUT CORPORATION, RESPONDENT
[6]
A. Robert E. Thomson, for appellant.
[7]
Mark J. Dynan and David A. Larson, P.S., for
respondent.
[8]
Alexander, J. Morgan, C.J., and Seinfeld, J., concur.
[9]
Alexander
[10]
Ronda Carlsen appeals an order of the Pierce County
Superior Court granting
summary judgment to the Wackenhut Corporation,
dismissing Carlsen's
claims against Wackenhut for Wackenhut's alleged
negligence in hiring and
supervising an employee. We reverse.
[11]
On May 10, 1989, two 16-year-old girls, Ronda Carlsen
and her friend,
Heather, attended a rock concert at the Tacoma Dome
with some
acquaintances. The concert featured a group of
musicians known as "Bon Jovi".
During the course of the concert, Carlsen and Heather
became separated from
their companions. Consequently, they sought
assistance from someone in
authority to "help us find our friends". Toward that
end, they approached a man
who they believed was a "security guard".
[12]
The man, William Futi, indicated his willingness to
help the two girls. After
speaking with them for a short time, he asked them if
they wanted to get
closer to the stage and perhaps even meet the band
members. The two girls
were eager to meet the entertainers, so they
accompanied Futi toward the
stage of the Tacoma Dome. Their route required them
to go under the
bleachers. Carlsen indicated that "[n]either Heather
or I wanted to go under the
bleachers with him but since we were together and he
was a security guard, we
felt reasonably comfortable in proceeding." Part way
to the stage, Futi
mentioned that he could only take them one at a time.
After Futi took Heather
to the stage and returned, he told Carlsen that they
would have to travel a
different way back. As Futi led Carlsen under a set
of bleachers, he threw her
down and attempted to rape her. Carlsen screamed but
she was not heard over
the noise of the concert. Futi was eventually
frightened away when the music
ended and the lights came on.
[13]
Futi was charged in Pierce County Superior Court with
second degree
attempted rape. He later pleaded guilty to an amended
charge of indecent
liberties.*fn1
[14]
Carlsen brought suit against the Wackenhut
Corporation, the company that
had employed Futi at the Tacoma Dome. She claimed
that Wackenhut had been
negligent in its hiring of Futi in that it knew or
should have known that Futi,
who had a prior conviction for robbery, was unfit for
employment with
Wackenhut. She also claimed that Wackenhut was
negligent in its
supervision of Futi and that it was liable for Futi's
actions under the theory of
respondeat superior.
[15]
Wackenhut moved for summary judgment of dismissal.
Before the hearing on
Wackenhut's motion, Wackenhut filed the affidavit of
Monty L. Laughlin, the
assistant manager of public service for the City of
Tacoma. Laughlin, who was
also "working the Bon Jovi concert" that evening,
described the degree to which
Futi's background was checked by Wackenhut before he
was hired as what
Laughlin described as a "T-shirt employee".*fn2
Laughlin stated:
[16]
2. William A. Futi was hired by Wackenhut Corporation
on March 8, 1989. He
did not indicate any other middle initial or name on
his application. He worked
four events (30.5) hours as a T-shirt employee prior
to the Bon Jovi concert.
[17]
3. I reviewed his personnel file at the time of the
incident. No derogatory
comments or remarks were found in his personnel file.
[18]
4. No additional background checks were done because
there was no indication
that it would be necessary. Mr. Futi did not report
any criminal record or
work-related misconduct on his job application.
[19]
5. Because of the large number of part-time employees
hired who may work
only one event every two months, formal background
checks are not done
unless there is evidence of a criminal record or
problems with work habits,
demeanor, or personality. If there is evidence of any
such problem, then
additional steps are taken to investigate an
applicant.
[20]
7. During the Bon Jovi concert, he failed to follow
the instructions of his lead
supervisor, and was absent from his post without
permission. Mr. Futi
abandoned his assigned post, and evaded searches that
were being performed
to locate him.
[21]
8. Mr. Futi left the Tacoma Dome at approximately
10:20 p.m. when he checked
in his jacket and T-shirt.
[22]
Lynn Diane Lyscio, Wackenhut's lead T-shirt
supervisor at the Tacoma Dome
on May 10, also submitted her affidavit in which she
stated:
[23]
2. I supervised the taking of tickets as well as
pat-down search and metal
searches. T-shirt employees are utilized to perform
these searches as well as
ticket takers and ushers. A majority of these
employees work one event every
two months.
[24]
3. Beginning at approximately 6:00 p.m., Mr. William
A. Futi was under my
supervision. I assigned Mr. Futi to the F Door to
perform metal searches.
[25]
4. At approximately 8:30 p.m., I was instructed to
stop admitting patrons
through the Upper F Door. When I went to that door, I
found that Mr. Futi left
his assigned post at 8:30 p.m.; he was the only
person absent from the post.
He was absent without permission.
[26]
5. Between 9:00 and 9:15 p.m. I searched in the
office and breakroom for Mr.
Futi. Also, between 9:30 and 9:45 p.m. I searched
again for Mr. Futi.
[27]
6. Mr. Futi left the Tacoma Dome without following
established check-out
procedures at approximately 10:20 p.m. Mr. Futi had
been scheduled to work
until approximately 11:15 p.m. Mr. Futi did not have
permission to leave work
early.
[28]
7. Prior to the evening of the Bon Jovi concert, Mr.
Futi had been an alert
employee. He did not have problems with my explaining
what his duties [were],
and he was willing to carry out these instructions.
[29]
8. Mr. Futi did need instruction about the duration
of his assigned breaks. I
clarified break procedures with Mr. Futi. Once the
procedures were clarified,
there were no other situations which would cause me
to question his ability to
do his job or anything that would require additional
training.
[30]
Carlsen submitted her affidavit in response. She
stated that, according to court
records her attorney had obtained from King County,
Futi: has been convicted
of third degree theft, criminal trespass, no valid
operators license, third
degree theft and he was also charged with first
degree robbery but a later
review of the file showed that he plead [ sic ]
guilty to second degree robbery.
[31]
She also provided the court with documents that
revealed there were arrest
warrants outstanding for Futi's failure to appear in
court on two traffic
offenses and for first degree criminal trespass.
[32]
In addition, Carlsen also made the following
observations about the
applications Futi gave to Wackenhut in an effort to
obtain employment:*fn3
[33]
(1) First, he says that he was a college graduate on
page one but only has
completed 12 years of high school. This indicates
some sort of untruthfulness
on his part.
[34]
(2) They asked him to list all of the jobs which he
had had for the last seven
years. He did not list any jobs. Why would that not
be an indication that he did
not want to disclose his prior history and therefore
had something to hide?
[35]
(3) They did not ask him for any references related
to prior supervisors. They
did ask him for three people who are not related to
him and who are not former
employees. However, by their own admission, they did
not contact any of these
people to see what kind of history Mr. Futi had.
Presumably, one out of the
three, at least, would have told the truth. They
could have also asked his
mother or cousin who are also listed on the
application. Would all five have lied
to protect Mr. Futi?
[36]
(4) They did not ask him for his addresses for the
previous five or six years.
Had they asked him for his addresses (or had they
asked any of the references
for his previous addresses) they probably would have
found out that he
resided in King County. Armed with that information,
they could have reviewed
the juvenile court records, as my attorney did, and
found Mr. Futi's lengthy
criminal record including his history of violence
(robbery) to which he pled
guilty . . ..
[37]
(5) They did not ask him where he had graduated from
high school or what
schools he had attended. Had they done so, they might
have determined that he
had lived in King County.
[38]
(6) They asked him if he was presently employed and
he indicated that he was
but he did not answer the question about whether The
Wackenhut Corporation
could contact his present employer. That certainly
indicates that he has
something to hide. It also indicates that he is not
willing to disclose his present
employer. Of course, that might be because he doesn't
want his present
employer to know that he is looking for another job
but that seems unlikely
when he is applying for a minimum wage, part-time
position as a security guard
and most of the work would be done at night.
[39]
The trial court granted Wackenhut's motion, and
dismissed Carlsen's claims
"(a) [that] Wackenhut negligently supervised its
employee; and (b) that
Wackenhut Corporation was negligent in its hiring
practice".*fn4
[40]
[1] Summary judgment is reviewed by the appellate
court de novo. Mains Farm
Homeowners Ass'n v. Worthington, 121 Wash. 2d 810,
813, 854 P.2d 1072
(1993). Like the trial court, the appellate court
must consider all facts
submitted and all reasonable inferences from the
facts in the light most
favorable to the nonmoving party. Mason v. Kenyon
Zero Storage, 71 Wash.
App. 5, 8-9, 856 P.2d 410 (1993). Absent a genuine
issue as to any material
fact, the moving party is entitled to summary
judgment as a matter of law.
Condor Enters., Inc. v. Boise Cascade Corp., 71 Wash.
App. 48, 54, 856 P.2d
713 (1993). Summary judgment is proper "only if
reasonable persons could
reach only one conclusion from all of the evidence."
Hansen v. Friend, 118
Wash. 2d 476, 485, 824 P.2d 483 (1992).
[41]
[2] To prove negligent hiring in Washington, the
plaintiff must demonstrate
that (1) the employer knew or, in the exercise of
ordinary care, should have
known of its employee's unfitness at the time of
hiring, Peck v. Siau, 65 Wash.
App. 285, 288, 827 P.2d 1108, review denied, 120
Wash. 2d 1005 (1992);
Guild v. St. Martin's College, 64 Wash. App. 491,
498, 827 P.2d 286, review
denied, 119 Wash. 2d 1016 (1992); Banks v. Nordstrom,
Inc., 57 Wash. App.
251, 263, 787 P.2d 953, review denied, 115 Wash. 2d
1008 (1990); and (2)
the negligently hired employee proximately caused the
resulting injuries. Guild,
64 Wash. App. at 498-99. Here, there is no question
about the fact that Futi
caused Carlsen's injuries. Thus, we will focus on the
same record the trial
court examined to determine whether material factual
issues exist concerning
whether Wackenhut knew or should have known of Futi's
unfitness when it
hired him.
[42]
Wackenhut asserts that, at the time it hired Futi,
there were no indications in
his applications that Futi was unfit for employment
as a "T-shirt employee".
Wackenhut stresses that it had no knowledge of Futi's
criminal record,
pointing to Futi's employment applications in which
he indicated that he had
never "been convicted for the violation of any law in
a military or criminal court
which has not been sealed, annulled, or deleted from
the record" and had never
"been dismissed, or asked to resign from employment".
There is, indeed,
nothing in the record to suggest that Wackenhut's
employees knew of Futi's
prior criminal record before Futi was hired. That
fact, however, does not
justify entry of summary judgment in favor of
Wackenhut if a reasonable trier
of fact could nonetheless conclude that Wackenhut
should have known that
Futi was unfit for employment.
[43]
Wackenhut cites Peck as support for its position
that, as a matter of law, it
was not negligent in hiring Futi. In Peck, this court
determined that a trial court
did not err in determining on summary judgment that a
school district was not
negligent in hiring a high school librarian who later
wrongfully engaged in
sexual relations with a student. We concluded that,
because the school district
had checked the librarian's teaching certificate and
background when it hired
him, there was no evidence that at the time of hiring
the school district knew
or, in the exercise of ordinary care, should have
known that he was unfit for
employment as a librarian. Peck, 65 Wash. App. at
289. In our judgment, Peck
is of little help to Wackenhut. Unlike the employer
in Peck, Wackenhut did
not check into Futi's background after receiving his
applications. It did not, for
example, contact Futi's references to determine if he
had a criminal record.
These failures seem particularly significant in light
of the dearth of information
provided by Futi and the fact that there were
inconsistencies on the face of his
applications. We are satisfied that a reasonable
person might well infer that the
lack of information provided by Futi and the
inconsistencies on the applications
should have alerted Wackenhut to make further
inquiries. In particular, Futi
indicated on both of his applications that he
possessed a college degree and,
yet, in a different location on one of the
applications, he indicated that he had
only a high school diploma. He also gave different
home addresses on his two
applications, although they were completed within 5
days of each other. In
addition, Futi failed to state who his present and
previous employers were. The
latter omission, arguably, should have aroused
concern because Futi was,
according to his applications, 20 years of age. It
seems unlikely, therefore,
that this was his first employment. If it was, that
fact alone would be
significant.
[44]
Wackenhut's omissions stand in stark contrast with
the steps taken by the
employer in Scott v. Blanchet High Sch., 50 Wash.
App. 37, 747 P.2d 1124
(1987), review denied, 110 Wash. 2d 1016 (1988). In
that case, Division One
of this court determined that a high school took
reasonable steps in hiring a
teacher who was subsequently accused of becoming
sexually involved with a
student. Scott, at 43. There, the employer contacted
the teacher's previous
employers and conducted two personal interviews with
the applicant prior to
hiring him. The court determined that, "[a]lthough
certain specific questions . .
. were not asked, the process appears sufficient as a
matter of law to discover
whether an individual is fit to teach". Scott, at 43.
[45]
Unlike Scott, the procedures employed here consisted
solely of having the
applicant answer several pages of questions on two
applications. Although
Wackenhut concedes that no background check was
performed before Futi
was hired, it asserts that it had no duty to
investigate further because Futi was
merely a so-called "T-shirt" employee, not a
full-fledged security guard; Futi's
applications did not suggest he had any propensity
for assaultive behavior, and
failure to conduct a background check was not
negligence per se. Carlsen
responds by citing cases from two other jurisdictions
to support her argument
that Wackenhut had a duty to investigate Futi's
background.
[46]
In Welsh Mfg., Div. of Textron, Inc. v. Pinkerton's,
Inc., 474 A.2d 436 (R.I.
1984), a security guard helped two others rob over
$200,000 from a store he
was employed to guard. The Rhode Island Supreme Court
noted that, although
the employer had checked the employee's criminal
record prior to hiring him, it
did not contact the employee's character references.
Welsh, at 442-43. The
only phone call the employer made was to a previous
Navy superior who had
known the security guard for only 2 months. In
upholding the trial court, the
Supreme Court found that the security company's
"cursory investigation prior
to [the security guard's] employment provided it with
little current intelligence
on him and could well support an inference of
negligence in hiring for such a
sensitive assignment as the guarding of gold." Welsh,
at 442-43.
[47]
Similarly, in Easley v. Apollo Detective Agency,
Inc., 69 Ill. App. 3d 920, 387
N.E.2d 1241 (1979), an Illinois appellate court
upheld a trial court decision
finding a security company guilty of willful and
wanton misconduct in hiring an
armed security guard who used his passkey to gain
entrance to an apartment
and attempted to rape the occupant. The security
company had not checked the
security guard's prior addresses, personal
references, or criminal history
prior to hiring him, and the guard was not required
to take any intelligence or
psychological tests.
[48]
Although Futi's responsibilities were, arguably, not
so great as those
delegated to the employees in Easley or Welsh, in
that he was not guarding
valuable personal property and was not authorized to
carry a weapon, Futi was,
in a real sense, responsible for protecting young
concert goers. Viewing the
evidence most favorably to Carlsen, as we must, there
is at least an inference
that Wackenhut held Futi out as more than a mere
ticket taker. According to
Wackenhut's lead supervisor, as a T-shirt employee
Futi was responsible for
performing pat-down searches and metal searches of
incoming patrons. He was
also responsible for ushering patrons to their seats.
More importantly, he was
placed in a position where patrons could reasonably
view him as an authority
figure. This is manifested by Carlsen's statement
that "[n]either Heather or I
wanted to go under the bleachers with [Futi] but
since . . . he was a security
guard, we felt reasonably comfortable in proceeding."
[49]
Past Washington decisions tend to employ a type of
balancing test to determine
if the given employment warrants the extra burden of
a thorough background
check. See, e.g., La Lone v. Smith, 39 Wash. 2d 167,
172, 234 P.2d 893
(1951) ("One may normally assume that another who
offers to perform simple
work is competent. If, however, the work is likely to
subject third persons to
serious risk of great harm, there is a special duty
of investigation.") (quoting
Restatement of Agency § 213, at 465 (1936); see also
Welsh, 474 A.2d at 440
("[t]he greater the risk of harm, the higher the
degree of care necessary to
constitute ordinary care").
[50]
[3] Although Futi's job was not high paying, the
circumstances of his
employment put him in a position of responsibility. A
jury might well conclude
that it was reasonable for concert patrons to look
upon Futi as one authorized
to perform security functions, and that, therefore,
Wackenhut should have
more extensively examined Futi's background before
hiring him. The need for
such a determination by a jury seems especially
compelling in light of the
limited information and inconsistencies in Futi's
applications for employment.
This additional investigation might well have
disclosed Futi's prior juvenile
record.
[51]
[4] Wackenhut argues, finally, that even if it had
performed a check of Futi's
criminal record, nothing in that record indicated a
propensity for sexual
violence. Carlsen responds that robbery (only one of
Futi's four convictions)
involves the use of force or a threat of force which
is indicative of a propensity
toward violence. We agree with Carlsen that robbery
is a crime of violence.*fn5
Upon discovery of a prior robbery conviction, a
prospective employer would be
on notice that the prospective employee has a
propensity for violent behavior.
In short, we conclude that, although Wackenhut did
not have actual knowledge
that Futi was potentially dangerous, a trier of fact
could find that the
corporation breached its duty of ordinary care by not
doing more to determine
whether Futi was fit to work in the job he performed
for Wackenhut.
[52]
Finally, Wackenhut asks this court to award it costs
and attorney fees
pursuant to RAP 18 and RCW 4.28.185(5). Because of
our ruling reversing
summary judgment, Wackenhut cannot, at this time, be
said to be a party who
"prevails in the action". Wackenhut, therefore, is
not entitled to costs and
fees.
[53]
Disposition
[54]
Holding that there were genuine issues of material
fact as to the employer's
negligence in hiring the guard, the court reverses
the judgment.
Opinion Footnotes
[55]
*fn1 According to Carlsen, Futi was sentenced to
serve 30 months in prison.
[56]
*fn2 Laughlin's affidavit does not indicate why an
employee of the City of
Tacoma possessed knowledge about Wackenhut's method
of hiring its
employees. Presumably, Laughlin had this information
because the Tacoma
Dome is owned by the City of Tacoma.
[57]
*fn3 The record contains two applications by Futi for
employment with
Wackenhut. One is dated March 6, which is 2 days
before the date he was
first hired by Wackenhut. The other is dated March
11.
[58]
*fn4 The trial court's order on summary judgment did
not dismiss Carlsen's
lawsuit against Wackenhut. Neither did it indicate
that there was no just
reason to delay an appeal. Although Wackenhut's
counsel state in its brief that
Carlsen's lawsuit, insofar as it was based on
respondeat superior, had been
dismissed, it does not cite to the record to support
that statement.
Furthermore, the trial court's order belies that
assertion. Therefore, we
presume Carlsen's claim against Wackenhut based on
respondeat superior is
still pending. The order, therefore, is not
appealable pursuant to RAP 2.2(d);
see also CR 54(b); Fox v. Sunmaster Prods., Inc., 115
Wash. 2d 498, 798 P.2d
808 (1990); Pepper v. King Cy., 61 Wash. App. 339,
810 P.2d 527 (1991).
Nevertheless, we have chosen to review the trial
court's order pursuant to the
provisions of RAP 2.3.
[59]
*fn5 See RCW 9.94A.030(34) which includes second
degree robbery in the
definition of "violent offense".
County of San Diego v. Rancho Vista Del Mar Inc., 16 Cal. App. 4th 1046, 20
Cal. Rptr. 2d
675 (Cal.App.Dist.4 06/23/1993)
[1]
COURT OF APPEAL OF CALIFORNIA, FOURTH APPELLATE
DISTRICT,
DIVISION ONE
[2]
No. D014096
[3]
1993.CA.44177
[4]
Decided: June 23, 1993.
[5]
COUNTY OF SAN DIEGO, PLAINTIFF AND APPELLANT,
v.
RANCHO VISTA DEL MAR, INC., ET AL., DEFENDANTS AND
APPELLANTS.
[6]
Superior Court of San Diego County, No. 590455,
Jeffrey T. Miller, Judge.
[7]
Lloyd M. Harmon, Jr., County Counsel, Diane
Bardsley, Chief Deputy County
Counsel, Lewis P. Zollinger, Deputy County Counsel,
Matteoni, Saxe & Nanda,
Norman E. Matteoni, Peggy M. O'Laughlin, Endeman,
Lincoln, Turek & Heater,
Ronald L. Endeman, Donald R. Lincoln and David
Semelsberger for Plaintiff and
Appellant.
[8]
Daniel E. Lungren, Attorney General, Marvin
Goldsmith, Assistant Attorney
General, Robert H. Francis and Marsha S. Miller,
Deputy Attorneys General,
B.C. Barmann, County Counsel (Kern) and Mark L.
Nations as Amici Curiae on
behalf of Plaintiff and Appellant.
[9]
Thorsnes, Bartolotta, McGuire & Padilla, Michael T.
Thorsnes, Vincent J.
Bartolotta, Jr., Haskins, Nugent & Newnham, Michael
H. Fish, Crosby,
Heafey, Roach & May, Gideon Kanner, Hufstedler, Kaus
& Ettinger and Otto
M. Kaus for Defendants and Appellants.
[10]
Opinion by Kremer, P. J., with Benke and Froehlich,
JJ., concurring.
[11]
Kremer
[16 CalApp4th Page 1049]
[12]
The primary issue presented by this case is whether
a property owner whose
land is condemned for a jail may value his property
[16 CalApp4th Page 1050]
[13]
based on a highest and best use as a private
detention facility. We conclude
the answer is no and therefore reverse.
[14]
FACTS
[15]
The property here is a parcel of about 525 acres of
primarily vacant,
undeveloped property in the Otay Mesa area of San
Diego County. About 200
acres had a grade change of less than 25 percent and
were considered
"usable"; the remaining land had a grade change of
over 25 percent. The
property was zoned as a holding zone for future
residential development
requiring minimum lot sizes of two to twenty acres
depending on the
percentage of slope on the particular lot. Access to
the property was on a
graded dirt road. The property lacked a sewer
connection.
[16]
Roque De La Fuente bought the property at a
bankruptcy sale as part of a
larger parcel of about 3,900 acres bought in 1982
for $13 million.*fn1 He
believed he was purchasing the property for 20 to 30
percent of its true value.
At the time he bought the property, the State of
California was interested in
locating a state prison in the Otay Mesa area. De La
Fuente offered to sell the
property to the state. The state preferred a site
separated from the subject
property by a canyon. In 1983, De La Fuente
exchanged some of his property
for state-owned property located near the Mexican
border. Some cash was
also involved in the transaction. De La Fuente
eventually constructed an
industrial business park on the property obtained
from the state near the
Mexican border. In 1985, a border crossing opened in
Otay Mesa.
[17]
In April 1985, De La Fuente entered into an
agreement with Wackenhut
Services, Incorporated (Wackenhut) to submit a
proposal to the Immigration
and Naturalization Service (INS) for a 200-bed
facility to temporarily house
illegal immigrants on 20 acres of De La Fuente's
property. This property was
different from the land condemned in this case. De
La Fuente agreed to
construct the facility on his property and Wackenhut
agreed to manage the
facility. The parties agreed to grant each other
first right of refusal for five
years to participate in any further detention
projects located in San Diego or
California in which the other was involved. INS
rejected the De La
Fuente/Wackenhut proposal because the property did
not have sewer
facilities and De La Fuente did not anticipate a
sewer connection until after the
state prison connected to the sewer, which was about
a year away.
[16 CalApp4th Page 1051]
[18]
In late 1986, De La Fuente and Wackenhut proposed
the same 200-bed
detention facility to temporarily house parole
violators (a "Return to Custody"
or RTC facility) to the California Department of
Corrections to be built on De
La Fuente's land not involved in this case. After
the state approved the initial
proposal in early 1987, De La Fuente and Wackenhut
submitted a formal
proposal. In April 1987, the state wrote Wackenhut
that "recent political
developments in the area have dictated that we wait
until this fall to resume
our activities."
[19]
During 1987, the County of San Diego (county), state
and Wackenhut
entered negotiations for a 200-bed RTC facility to
be operated on 4 acres of
property which the county proposed to take from De
La Fuente. There was a
proposal the county charge the state $180,000 for a
ground lease if a 200-bed
facility were built and $280,000 for a ground lease
if a 400-bed facility were
built. The county also wanted the state and
Wackenhut to construct the
facility and turn over ownership of the building(s)
to the county at the end of
10 years. The state did not accept the county's
proposal because financing
was not available and because "they wanted to get
more for using the same
type of land" and had objections to the county
retaining the building at the end
of 10 years.
[20]
During the mid-1980's, the county selected the Otay
Mesa area as a possible
site for a new detention facility. In 1984 or 1985
De La Fuente approached
county officials and sought to sell some of his
property to the county for a jail
site. By 1986, the county had chosen De La Fuente's
property for a future jail.
After negotiations to purchase the property from De
La Fuente failed, the
county board of supervisors passed a resolution of
necessity to acquire De La
Fuente's property in June 1987. On September 16,
1987, the county filed this
proceeding for eminent domain and deposited $6.4
million as probable
compensation so it could obtain immediate possession
of the property.*fn2
The county's plan was to build a facility with space
for 1,040 inmates in phase
one and another 1,040 inmates in phase two. The
second phase was not yet
funded at the time of trial. The environmental
impact report (EIR) for the
facility considered a 6,000-bed facility on the site
but the county had no plans
to build a 6,000-bed facility.
[21]
In January 1988, Wackenhut wrote De La Fuente,
noting the California
Department of Corrections had rejected the proposal
and had indicated they
[16 CalApp4th Page 1052]
[22]
might "be willing to support a project involving
county owned property."
Wackenhut, citing the lack of "opportunity in this
Proposal for private land,"
suggested it was not a project De La Fuente would
want to become involved
with and asked to be released from its agreement to
participate in such a
project with De La Fuente. Since the county had
taken his land, De La Fuente
released Wackenhut from its obligation under the
contract.
[23]
In March 1990, the city and county issued a
memorandum of understanding
under which the county would lease a site at the
East Otay Mesa Detention
Facility for $1 per year to the City of San Diego
and the city would sublease
the site to a private firm to construct and operate
a 200-bed prearraignment
detention facility. The memorandum of understanding
also provided the facility
could be expanded to 400 beds.
[24]
In July 1990, De La Fuente sought to conduct
additional discovery and to add a
witness, Charles Thomas, an expert in private
detention facilities, to his
expert witness list.
[25]
Trial commenced in September 1990.
[26]
At trial, De La Fuente testified his property was
worth $79,635,925 or $3.45
per square foot based on highest and best use as a
6,000-bed private
detention facility. In particular, De La Fuente
valued the usable portion of the
property at about $6.50 per square foot.
[27]
De La Fuente testified there was a demand for
detention facilities, noting, for
example, that while "INS had had a need for 200
beds--today the need is 1000
beds" and that there was a short supply of sites for
detention facilities. He
believed he had "a unique site" for a detention
facility because it was adjacent
to a state prison and therefore there was "another
place next door so in case
of an emergency they might be able to share certain
services." The site also
had the necessary infrastructure (partially based on
the construction of the
nearby prison), contained natural barriers
(mountains, a canyon), was close
to the metropolitan area, was compatible with other
uses on the remainder of
De La Fuente's property (i.e., off-road vehicle
park, race track), would face no
opposition from nearby residents since the nearest
residence was two miles
distant, faced no political opposition and was
permitted under the current
zoning with a major use permit.
[28]
De La Fuente testified about sales of surrounding
property in the area around
the time of valuation which ranged in size from six
to two hundred forty-five
acres. These properties which were primarily vacant,
industrial or future
industrial land, sold at prices ranging from $1.06
per square foot to
[16 CalApp4th Page 1053]
[29]
$2.06 per square foot. De La Fuente also testified
about the sale of a 65-acre
property which involved improvements. The parties in
that transaction
allocated $5 per square foot to the land costs. De
La Fuente believed a
property which sold for $2.06 per square foot and a
245-acre property which
sold for $1.50 per square foot were the most
comparable to his property. He
believed his property was worth more than any of
these industrial properties
and, in particular, more than the 245-acre property
which was restricted under
an agricultural preserve agreement and would require
archaeological studies
be completed before development. He believed this
245-acre property showed
him "the floor, the bottom of the market" for his
property.
[30]
De La Fuente testified he believed his valuation was
reasonable in light of the
county's proposed land lease to the state of 4 acres
for a 200- or 400-bed RTC
facility. De La Fuente explained that using the
county's figures, the land was
worth $8.33 per square foot for a 200-bed facility
and $14.06 per square foot
for a 400-bed facility, considerably more than his
valuation of $6.50 per
square foot for the usable portion.
[31]
During cross-examination, De La Fuente admitted he
had valued the property
from September 1987 to February 1990 using a highest
and best use of
industrial or private detention facility at
$27,478,000, based on valuing the
unusable property at $.18 per square foot and the
usable property at $2.13
per square foot. He explained he changed his
valuations because he had not
done "the economics to see what that use would
bring," a deposition of the
Director of Office of Special Projects for San Diego
County, Richard Robinson,
had revealed "this particular land had the necessary
infrastructure to be able
to hold 6,000 beds, and that was a number that [he]
had not quantified
before," he learned of the county's proposed land
lease for a 200- or 400-bed
facility and he had consulted an expert in private
detention facilities, Thomas,
who "gave us the supply and demand side equation"
and "explained to us the
economics."
[32]
Thomas testified about his evaluation of the
property as a potential site for a
6,000-bed privately operated detention facility and
about private detention
facilities. Thomas testified there was a growing
demand for prison space and
De La Fuente's property was "ideal" for a private
detention facility because of
its size, terrain, proximity to the courts and state
prison, infrastructure and
[16 CalApp4th Page 1054]
[33]
its zoning. He testified about the typical operating
costs for different
detention facilities based on a per inmate per diem
basis.*fn3 Thomas also
testified about advantages of private detention
facilities, including the ability
of a private firm to bring a facility "on line" in
12 to 18 months versus 3 to 5
years for the government, the greater ability of a
private firm to delete
unnecessary components, and the ability of a private
firm to provide an
improved quality of service at a lower operating
cost.
[34]
On cross-examination, Thomas admitted there were no
6,000-bed private
detention facilities existing anywhere in the world
and that in California the
largest was a "standardized sort of cookie cutter
kind of facility called for by
the California Department of Corrections" of 200
beds.
[35]
De La Fuente's appraiser, Howard Berkson concluded
the property was worth
a total of $66,080,000: $63.8 million or $6.56 per
square foot for the usable
land and $2,280,000 or $.17 per square foot for the
unusable land. Berkson
first looked at five sales of undeveloped land which
were zoned for future
industrial use and sold at prices ranging from $1.15
to $1.63 per square foot,
plus a sale, sale No. 10, which Berkson calculated
involved an allocation of
$3.22 per square foot to the land costs.*fn4 Based
on using these industrial
comparable sales, Berkson valued the property at
$2.82 per square foot for
the entire property, but he did not believe these
sales were truly comparable
because the highest and best use of De La Fuente's
property was for a private
detention facility. Since there were no comparable
sales of private detention
facilities, Berkson used a rental income and income
value rate approach.
[36]
Berkson based his analysis on a 6,000-bed facility.
He computed an income
per inmate per day of $47, subtracted operating
costs (including personnel,
food, medical, utilities, insurance, etc.) and the
industry standard on profit
and overhead to arrive at a rental income of $4.58
per inmate per day.
Berkson then looked to "the marketplace to see what
sort of return a land
owner would want on his land, knowing that he was
going to get this sort of
income" and capitalized this income at about 10
percent.
[37]
Berkson compared his figures to the county's
proposed ground lease to the
state of four acres for $180,000 if there was a two
hundred-bed facility, and
[38]
concluded the value of the property, using the
county's figures, would be
about $77 million.
[39]
On cross-examination, Berkson admitted he had
initially valued the property in
early 1990 at $22,370,000.
[40]
The county's appraiser, David Yerke, appraised the
property at $5,129,897:
$20,700 per acre or $.48 per square foot for the
usable portion and $2,300
per acre or $.05 per square foot for the unusable
portion based on a highest
and best use as future residential, a use consistent
with the property's
zoning. Yerke testified about 6 sales of property
zoned residential or future
residential (including De La Fuente's 1982 purchase
of the property) which
ranged in size from 321 to 3,912 acres and in sales
price from $.07 per
square foot to $.34 per square foot. Yerke also
testified about sales of 3
other properties with industrial potential ranging
in size from 81 to 240
acres, which sold at $1.15, $1.22, and $1.49 per
square foot.
[41]
On cross-examination, Yerke admitted he would not
choose to live next to a
state prison.
[42]
The county also presented evidence there were
extended discussions before
De La Fuente's land was zoned for future residential
use and it was unlikely De
La Fuente would have been able to obtain a permit
for industrial development
within a reasonable time after the valuation date
because the community plan
contemplated only interim uses rather than extensive
investment in
permanent structures.
[43]
During the trial, there was also evidence brought
out that previous county
appraisers had valued De La Fuente's property based
on a highest and best
use as industrial land.
[44]
The jury returned a verdict of $55,661,480. A juror
declaration indicated the
jury had valued the usable property at $6.50 per
square foot, subtracted $2
per square foot for infrastructure and arrived at a
total of $4.50 per square
foot for the usable portion and valued the unusable
portion of the property at
$.18 per square foot.
[45]
The county moved for a new trial based on the
erroneous admission of
evidence relating to the highest and best use of the
property as a private
detention facility, juror misconduct, De La Fuente's
arguments relating to
[46]
the county's "deception,"*fn5 insufficiency of the
evidence and excessive
damages. The court rejected the county's arguments a
new trial was justified
based generally on the admission of evidence and
instructions about the
highest and best use of the land for a private
detention facility, juror
misconduct and the references to the county's
deception.
[47]
In addressing the sufficiency of the evidence and
excessive damages, grounds
which the court treated as reaching the same issue,
the court specifically
disagreed with the county's position the highest and
best use of the land was
residential. The court noted the county's own expert
stated he would not like
to live in a home overlooking the state prison and
admitted he did not
investigate whether his premise of residential use
(based on the current
zoning) was correct. The court also responded on the
basis of its viewing of
the property during the jury's visit to the site,
specifically pointing to the
view of the prison "within its barbed wire and lit
up like a facility [the court
had] never seen lit up before."
[48]
At the hearing on the new trial motion, the court
expressed skepticism about
the change in valuation of De La Fuente and Berkson
a few months before
trial, which had been $18 million to $30 million, to
$64 million to $79 million
at the time of trial. The court stated, "I must ask
myself, is this reasonable for
people as sophisticated as Mr. De La Fuente and Mr.
Berkson to apparently
have so little understanding of the fair market
value of the subject property
as of an earlier point in time, just a few months
before trial . . .." The court
indicated it required more time to reach a decision.
[49]
The court eventually concluded, in a written
statement, that the verdict was
excessive. The court believed the most relevant
market data for determining
the fair market value of the property were Berkson's
sales. The court found
Berkson's first five sales were inferior to De La
Fuente's properties as to
highest and best use because De La Fuente's property
was suitable for those
same uses as well as for a private detention
facility.
[50]
The court found Berkson's sale No. 10, which
involved a property which
Berkson calculated sold at $3.22 per square
foot,*fn6 was "clearly superior to
the subject property" because of its location,
topography, size and shape. The
court also erroneously stated sale No. 10 was
commercially zoned (the
property was industrially zoned). The court found
Berkson
[51]
had supplied no "credible reason" to support his
conclusion De La Fuente's
property "was worth at least twice as much as his
sale 10, or, for that matter,
why the subject property was worth several times the
value of the industrial
sales in the area."
[52]
The court also found Berkson's rental income or
capitalization approach was
"not believable as it lacked a proper foundation and
was highly speculative."
The court explained: "Initially, it should be noted
that the experts of the
property owners testified that because the
'privatization' of penal facilities is
such a new and developing field there exists no
market data anywhere in the
country representing fair market value of property
devoted to such a use.
Applying a reasonable rental income or
capitalization approach to value an
improved property never devoted to such a use by
deducting anticipated
operating costs, cost of construction, and land and
construction carrying
costs from anticipated rental income per inmate is
highly speculative and, in
the instant case, shed no light on the fair market
value of the subject
property. Further, Mr. Berkson's assumption of a
6,000 inmate population
predicated upon criminal inmate population increases
of 1,000 per year was
speculative."
[53]
The court, "after weighing the evidence" was
"convinced from the entire
record" that the verdict was excessive and not
supported by the evidence.
The court determined $22,886,200 represented the
fair market value of the
property. The court issued an order granting a new
trial unless De La Fuente
accepted a remittitur to $22,886,200. De La Fuente
declined the reduced
amount and elected to appeal the new trial order.
[54]
After trial, the court, on De La Fuente's motion,
ordered the county to
increase the deposit of probable compensation by
$16,486,200 plus interest.
The county deposited an additional $21,564,594.38
pursuant to the court's
order.
[55]
On appeal, De La Fuente challenges the trial court's
order of a new trial. The
county contends the judgment should be reversed
based on the improper
admission of evidence relating to valuation of the
property as a detention
center, De La Fuente's attempt to "inflame" the jury
and turn it into "a tort
case for 'deception,' " the improper refusal of its
jury instructions, the
improper restriction of Yerke's testimony and on all
the grounds raised in its
motion for a new trial. The county also contends the
court erred in increasing
the amount of probable compensation.
[56]
I VALUATION BASED ON USE AS A PRIVATE DETENTION
FACILITY
[57]
When the government takes property by exercising its
power of eminent
domain, it must pay "just compensation" to the
property owner for the
property taken. (U.S. Const., 5th Amend.; Cal.
Const., art. I, § 19.) " 'The
principle sought to be achieved by this concept [of
just compensation] "is to
reimburse the owner for the property interest taken
and to place the owner in
as good a position pecuniarily as if the property
had not been taken."
[Citation].' " (People ex rel. Dept. of Water
Resources v. Andresen (1987)
193 Cal. App. 3d 1144, 1163 [238 Cal. Rptr. 826].)
Fair market value is the
measure of just compensation for property taken in
eminent domain. (Code
Civ. Proc., § 1263.310; Redevelopment Agency v.
Tobriner (1989) 215 Cal.
App. 3d 1087, 1101 [264 Cal. Rptr. 481].) As a
general rule, the "fair market
value of the property taken is the highest price on
the date of valuation that
would be agreed to by a seller, being willing to
sell but under no particular or
urgent necessity for so doing, nor obliged to sell,
and a buyer, being ready,
willing, and able to buy but under no particular
necessity for so doing, each
dealing with the other with full knowledge of all
the uses and purposes for
which the property is reasonably adaptable and
available." (Code Civ. Proc., §
1263.320, subd. (a).)
[58]
The property taken is valued based on the highest
and best use for which it is
geographically and economically adaptable. (City of
Los Angeles v. Decker
(1977) 18 Cal. 3d 860, 867 [135 Cal. Rptr. 647, 558
P.2d 545].) A
determination of the property's highest and best use
is not necessarily limited
to the current zoning or land use restrictions
imposed on the property; the
property owner "is entitled to show a reasonable
probability of a zoning [or
other change] in the near future and thus to
establish such use as the highest
and best use of the property. [Citations.]" (Ibid. ;
People ex rel. Dept. of Public
Works v. Donovan (1962) 57 Cal. 2d 346, 352-353 [19
Cal. Rptr. 473, 369
P.2d 1]; City of Pleasant Hill v. First Baptist
Church (1969) 1 Cal. App. 3d
384, 416 [82 Cal. Rptr. 1].) The property owner has
the burden of showing a
reasonable probability of a change in the
restrictions on the property. (City of
Los Angeles v. Decker, supra, 18 Cal. 3d 860, 868.)
[59]
It is long settled that the condemned property may
not be valued based on its
special value to the property owner. (United States
v. Cors (1949) 337 U.S.
325, 333 [93 L.Ed. 1392, 1399, 69 S.Ct. 1086]; City
of Los Angeles v.
Decker, supra, 18 Cal. 3d 860, 866; San Diego Land
etc. Co. v. Neale (1888)
78 Cal. 63, 74-75 [20 P. 372]; City of Stockton v.
Vote (1926)
[60]
76 Cal. App. 369, 403 [244 P. 609].) "Mere
frustration of the owner's plans is
not generally compensable . . .." (City of Pleasant
Hill v. First Baptist Church,
supra, 1 Cal. App. 3d 384, 404.) "Evidence of the
owner's plan of development
is not admissible where its purpose is to show loss
of profit or enhanced
damages which would be suffered by being prevented
from carrying out a
particular scheme of improvement. [Citations.]" (San
Bernardino County Flood
Control Dist. v. Sweet (1967) 255 Cal. App. 2d 889,
899 [63 Cal. Rptr. 640].)
"Speculative and conjectural calculations of
prospective receipts and
expenditures and consequent profits to be derived
from a prospective
enterprise not only throw no light on the issue of
the market value of the land
to be used in the enterprise, but operate to confuse
and mislead the mind of
the jurors. [Citation.]" (East Bay Mun. Utility
Dist. v. Kieffer (1929) 99 Cal.
App. 240, 250-251 [278 P. 476], overruled on other
grounds in County of San
Diego v. Miller (1975) 13 Cal. 3d 684, 693 [119 Cal.
Rptr. 491, 532 P.2d
139].) Thus, the cases have generally held that a
property owner may not
value his property based upon its use for a
projected special purpose or for a
hypothetical business. (See City of Los Angeles v.
Retlaw Enterprises, Inc.
(1976) 16 Cal. 3d 473, 488 [128 Cal. Rptr. 436, 546
P.2d 1380]; People ex
rel. Dept. of Water Resources v. Andresen, supra,
193 Cal. App. 3d 1144,
1161; San Bernardino County Flood Control Dist. v.
Sweet, supra, 255 Cal.
App. 2d 889, 899-900; Laguna Salada etc. Dist. v.
Pac. Dev. Co. (1953) 119
Cal. App. 2d 470, 476 [259 P.2d 498]; City of
Stockton v. Vote, supra, 76 Cal.
App. 369, 403.) "The hypothetical business rule . .
. follows a line of authority
beginning with Sacramento etc. R. R. Co. v. Heilbron
(1909) 156 Cal. 408 . . .
that holds valuation of property based on
hypothetical businesses to be too
speculative to determine a realistic fair market
value for the property on
which the potential business is located. The
prohibition against capitalization
earnings for hypothetical businesses is a practical
rule applied where
property has many possible uses. Where property has
several potential uses,
condemnees could pick and choose the most profitable
hypothetical use for
their property and evaluate the property at inflated
rates." (People ex rel.
Dept. of Water Resources v. Andresen, supra, 193
Cal. App. 3d 1144, 1161.)
[61]
While a property owner may not generally present
evidence of the value of his
property " 'in terms of money' " that the property
would bring for a special
purpose (see City of Stockton v. Vote, supra, 76
Cal. App. 369, 403),
evidence of a particular use may be relevant to
establishing the highest and
best use since such evidence may tend to establish
the property's adaptability
for that kind of use (see City of Los Angeles v.
Retlaw Enterprises, Inc.,
supra, 16 Cal. 3d 473, 488; Spring Valley W.W. v.
Drinkhouse (1891) 92 Cal.
528, 533-534 [28 P. 681], overruled on other grounds
in County of Los
[62]
Angeles v. Faus (1957) 48 Cal. 2d 672, 680 [312 P.2d
680]; San Bernardino
County Flood Control Dist. v. Sweet, supra, 255 Cal.
App. 2d at pp. 899-900).
[63]
The law also recognizes that when the government
takes property (either by
eminent domain or inverse condemnation) which has a
preexisting special
use, it may be required to compensate the owner for
taking or damaging the
owner's use. (See, e.g., Inyo Chemical Co. v. City
of Los Angeles (1936) 5
Cal. 2d 525 [55 P.2d 850] [inverse condemnation
action; compensation based
on damage flooding caused to preexisting mining
business held proper];
Natural Soda Prod. Co. v. City of L.A. (1943) 23
Cal. 2d 193 [143 P.2d 12],
cert. den. 322 U.S. 768 [88 L.Ed. 1594, 64 S.Ct.
942] [inverse condemnation
action; compensation based on damage flooding caused
to preexisting mining
business held proper]; People ex rel. Dept. of Water
Resources v. Andresen,
supra, 193 Cal. App. 3d 1144, 1160-1164 [eminent
domain action, valuation
based on preexisting quarry held proper]; City of
Commerce v. National
Starch & Chemical Corp. (1981) 118 Cal. App. 3d 1
[173 Cal. Rptr. 176]
[eminent domain action; severance damages based on
accelerated
depreciation of fixtures and loss of expansion
ability of existing adhesive
manufacturing facility held proper]; Ventura County
Flood Control Dist. v.
Security First Nat. Bank (1971) 15 Cal. App. 3d 996
[93 Cal. Rptr. 653]
[eminent domain action; severance damages due to
loss of productivity of
preexisting lemon grove on remainder due to taking
of trees which served as
windbreak held proper]; City of Pleasant Hill v.
First Baptist Church, supra, 1
Cal. App. 3d 384 [eminent domain action, severance
damages based on loss
for future growth of preexisting church held
proper].)
[64]
Finally, the law recognizes there are some special
purpose properties such as
schools, churches, cemeteries, parks and utilities
for which there is no
relevant market and therefore these properties may
be valued on any basis
which is " 'just and equitable.' " (Redevelopment
Agency v. Tobriner, supra,
215 Cal. App. 3d 1087, 1101-1102; Pacific Gas &
Electric Co. v. Zuckerman
(1987) 189 Cal. App. 3d 1113, 1135 [234 Cal. Rptr.
630]; Code Civ. Proc., §
1263.320, subd. (b); Evid. Code, § 823.)
[65]
As the comment to subdivision (b) of Code of Civil
Procedure section
1263.320 explains: "subdivision (b) has been added
to the definition because
there may be no relevant market for some types of
special purpose properties
such as schools, churches, cemeteries, parks,
utilities, and similar
properties. All properties, special as well as
general, are valued subject to the
limits of Article 2 (commencing with Section 810) of
Chapter 1 of Division 7
of the Evidence Code. The Evidence Code provides
that, regardless of
whether there is a relevant market for property, its
fair market value may be
determined by reference to matters of a type that
reasonably may be relied
upon
[66]
by an expert in forming an opinion as to the value
of property including where
appropriate, but not limited to, (1) the market data
(or comparable sales)
approach, (2) the income (or capitalization) method,
and (3) the cost analysis
(or reproduction less depreciation) formula."
(Legis. committee com., 19A
West's Ann. Code Civ. Proc. (1982) § 1263.320, p.
39.)
[67]
Just as the property may not be valued based on its
special value to the
owner, the property may not be valued on the basis
of its special value to the
government. (Merced Irrigation Dist. v.
Woolstenhulme (1971) 4 Cal. 3d 478,
487-491 [93 Cal. Rptr. 833, 483 P.2d 1].) "The
California Supreme Court
early stated 'it seems monstrous to say that the
benefit arising from the
proposed improvement is to be taken into
consideration as an element of the
value of the land.' (San Diego Land etc. Co. v.
Neale, supra, 78 Cal. 63, 75 . .
..)" (Pacific Gas & Electric Co. v. Zuckerman,
supra, 189 Cal. App. 3d 1113,
1127.) It has been held that the government's
purpose in condemning the land
"is wholy [ sic ] irrelevant." (People v. La Macchia
(1953) 41 Cal. 2d 738, 754
[264 P.2d 15], overruled on other grounds in County
of Los Angeles v. Faus,
supra, 48 Cal. 2d 672, 680, see also Merced
Irrigation Dist. v.
Woolstenhulme, supra, 4 Cal. 3d 478, 491.) The
general rule is designed to
prevent "[p]urchasers of property that is known to
be condemned . . . from
inflating the value of the property by conjecturing
what the condemner will
actually pay for the property. [Citation.]" (People
ex rel. Dept. of Water
Resources v. Andresen, supra, 193 Cal. App. 3d 1144,
1156.)
[68]
The courts, however, have recognized some proposed
uses of the property
may be carried out by either a public entity or by a
private individual and that
sometimes the government's proposed use of the
property is also the highest
and best use of the property in the hands of a
private property owner. In such
situations, the property owner is allowed to value
the property based on a
highest and best use which also happens to be the
use proposed by the
government entity. Thus, in some early cases,
property owners whose land
was sought to be condemned for reservoir purposes,
were permitted to
present evidence that the highest and best use of
the land was as a reservoir
site. (See, e.g., San Diego Land etc. Co. v. Neale,
supra, 78 Cal. 63, 71; City of
Stockton v. Vote, supra, 76 Cal. App. 369, 404-
405.) More recently, a
property owner whose land was condemned for a rock
quarry to provide
material to repair a dam was allowed to value the
property based on a highest
and best use as a rock quarry although the quarry
had not been used since the
original construction of the dam and the land had
been used as pasturage in
the interim. (People ex rel. Dept. of Water
Resources v. Andresen, supra, 193
Cal. App. 3d 1144, 1159-1160.)
[69]
Finally, in City of Los Angeles v. Decker, supra, 18
Cal. 3d 860, a property
owner whose residential property was condemned was
allowed to show the
[70]
highest and best use of the property was for airport
parking although the
city's intended use for the property was also
airport parking. As the Supreme
Court explained in the Decker case: "[The]
admissibility [of the property
owner's evidence that airport parking was the
highest and best use of the
land] would seem to be a natural corollary to the
well established rule that 'if,
however, the condemnor's proposed use is one of the
highest and best uses
of the property, the adaptability of the property
for that purpose may be
shown by the property owner.' [Citation.]
Woolstenhulme does not bar such
evidence, since it only precludes the valuation of
the condemned property as
part of the proposed improvement. The city's
determination as to the
adaptability of the property for airport parking
purposes was relevant to show
that the property in the hands of defendant and not
as part of the project
could have been used for airport parking. In other
words, this evidence
buttressed the testimony of defendant's witness that
there was a present
need for airport parking and that her land was in a
suitable location to fulfill
that need." (City of Los Angeles v. Decker, supra,
18 Cal. 3d 860, 869, italics
in original.)
[71]
Cases where the property owner was allowed to show
the highest and best
use of property was the same use as the condemner's
proposed use must be
distinguished from those cases where the government
provides the only
market or demand for the proposed use. In situations
where the market or
demand is created by the government, then valuing
the property on that basis
is improper; such a valuation is tantamount to a
valuation of the property in
the hands of the condemner.
[72]
Thus, in one of its earliest cases the California
Supreme Court held
inadmissible evidence valuing property as a
fortification since the government
provided the only market for that use. (Gilmer v.
Lime Point (1861) 19 Cal.
47.) On similar grounds, the court in City of
Redding v. Diestelhorst (1936)
15 Cal. App. 2d 184, 193-194 [59 P.2d 177] rejected
the property owner's
attempt to value the land as a bridge site,
explaining: "It is practically
conceded by the two witnesses called by defendant
that the demand for bridge
sites is very limited and that available sites are
numerous, and that outside of
the state or municipality they knew of no
prospective buyers for bridge sites
in the vicinity of Redding. It seems, therefore, the
witnesses were basing
their estimate of market value of the land sought to
be condemned in this
action solely upon the ground that the City of
Redding needed it to carry out
the terms of its contract with the California
Highway Commission, and that
there was no potential demand for bridge sites from
any other source. Such
testimony is inadmissible. [Citation.] This
situation is analogous to that
presented in Gilmer v. Lime Point, 19 Cal. 47, where
the owner attempted to
prove the value of the premises as a site for a
government fortification. Such
evidence was held inadmissible because there was
[73]
no market for the land for such purposes,
competition being essential to a
market and the government being of necessity without
a competitor for the
purchase of land for purposes of fortification."
[74]
The United States Supreme Court has recognized this
problem in the context
of a government-created demand for tug boats in the
time of war:
[75]
"In time of war or other national emergency the
demand of the government for
an article or commodity often causes the market to
be an unfair indication of
value. The special needs of the government create a
demand that outruns the
supply. The market, sensitive to the bullish
pressure, responds with a
spiraling of prices. The normal market price for the
commodity becomes
inflated. And so the market value of the commodity
is enhanced by the special
need which the government has for it.
[76]
"
[77]
"It is not fair that the government be required to
pay the enhanced price which
its demand alone has created. That enhancement
reflects elements of the
value that was created by the urgency of its need
for the article. It does not
reflect what 'a willing buyer would pay in cash to a
willing seller,' [citation], in
a fair market. It represents what can be exacted
from the government whose
demands in the emergency have created a sellers'
market. In this situation, as
in the case of land included in a proposed project
of the government, the
enhanced value reflects speculation as to what the
government can be
compelled to pay. That is a hold-up value, not a
fair market value. That is a
value which the government itself created and hence
in fairness should not be
required to pay." (United States v. Cors, supra, 337
U.S. 325, 333-334 [93
L.Ed. 1392, 1399-1400]; see also Merced Irrigation
Dist. v. Woolstenhulme,
supra, 4 Cal. 3d 478, 491, holding a property owner
is not entitled to "
'project enhanced value' " based on the likelihood
his property will become
part of the government's project.)
[78]
What can be gleaned from the statements of the
United States Supreme Court
and the few California cases is that the "market"
for determining "fair market
value" and just compensation is the private
marketplace, i.e., what willing,
knowledgeable nongovernmental buyers and sellers
would pay for property to
be used for a nongovernmental purpose. Thus, remote
desert property which
is essentially valueless to the private marketplace
may not be based on its
use for such strictly governmental uses as a nuclear
testing site, military
base or detention facility; it must be valued on
private uses such as
agriculture, recreation, residential, commercial or
industrial. To value
property based on a market where the government is
the only potential buyer
is
[79]
to engage in improperly valuing the property based
on its value to the
condemner rather than based on the loss suffered by
the property owner. It is
the loss suffered by the property owner which
provides the guide for just
compensation, a loss measured by the private
marketplace; the loss may not
be measured by the benefit to the condemner. (See
Merced Irrigation Dist. v.
Woolstenhulme, supra, 4 Cal. 3d 478, 492 ["Almost
all courts universally
agree . . . an increase in value, based on a
purchaser's conjecture of what the
condemner may ultimately be required to pay, is not
a proper element of 'fair
market value' for 'just compensation' purposes.
[Citations.]".)
[80]
Here, not only was De La Fuente's proposed use as a
detention facility the
same as the county's proposed use of the land but it
was also a use which is
uniquely governmental, that is, only the government
provides a market for
detention facilities. De La Fuente's valuation based
on "supply and demand"
was a valuation based solely on the government's
supply of inmates and
demand for prison/jail beds. There is no equivalent
private sector "supply and
demand." Whether a detention facility is directly
constructed by the
government and operated by government employees or
is indirectly
constructed and operated by the government through a
lease payment and a
contract with a private company to operate the
facility, a detention facility
remains a governmental function with no private
sector equivalent.*fn7
[81]
The fact the market for detention facilities is
limited to the government is
demonstrated by De La Fuente's own evidence. De La
Fuente and his expert,
Berkson, rejected a comparable sales approach for
valuing the land used as a
private detention facility because of the lack of
market and sales for detention
facilities. Instead, they used an approach based on
what the government
would pay for detention facilities. They referred to
figures in negotiations
between the county and state governments for a 200-
or 400-bed facility and
to figures of what the government would pay for
inmates on a per diem basis.
De La Fuente's evidence of value and use was
premised on a government use
of the facilities.
[82]
De La Fuente's valuation based on a private
detention facility is not like the
airport parking lot in City of Los Angeles v.
Decker, supra, 18 Cal. 3d 860,
[83]
where the property owner wanted the same use in
different hands (i.e., in the
hands of the property owner rather than the city).
De La Fuente's valuation is
based on showing the same use (a detention facility)
in the same hands, that
is, he wanted to value the property based on the
government's use of the
property for detention purposes through a lease from
De La Fuente and
contract with a private company for management
purposes. This valuation was
improperly based on the value of the property to the
condemner.
[84]
We further note the property here was not "special
purpose" property like
those involving schools, cemeteries or churches or
like those properties
involving a preexisting special business. The land
here was vacant,
undeveloped land suitable for a variety of uses,
including agricultural,
residential or industrial. There was a market for
this property in the private
marketplace as demonstrated by the evidence De La
Fuente, Berkson and
Yerke presented of sales of comparable property in
the area. The
"uniqueness" of De La Fuente's property resulted
only when the property was
valued based on its value to the government for a
uniquely governmental use.
[85]
We conclude the court erred in allowing De La Fuente
to value the property
based on its highest and best use as a detention
facility. Accordingly, we must
reverse the judgment. Because we reverse the
judgment, we need not
discuss the county's various challenges to the
evidence and instructions
relating to the use of the property as a detention
facility nor do we need to
discuss De La Fuente's challenges to the trial
court's grant of a new trial;
these issues are mooted by our decision that
evidence relating to the use of
the property for a detention facility should have
been excluded.*fn8
[86]
II INCREASE IN THE DEPOSIT OF PROBABLE COMPENSATION
[87]
The county contends the court erred in ordering an
increase in its deposit of
probable compensation because the court erroneously
calculated the
[88]
probable compensation of $22,886,200 by relying on
Berkson's sale Noo. 10,
which the county contends was not comparable because
it was a sale of
improved property, and by adopting Berkson's
conclusion sale No. 10 resulted
in a sales price of $3.22 per square foot,*fn9 and
erred in requiring a deposit
of interest.
[89]
As to the county's contention the court improperly
required the county to
deposit prejudgment interest, the county cites no
authority holding such an
order is improper.
[90]
Under the Eminent Domain Law (Code Civ. Proc., §
1230.010 et seq.), "[a]t
any time before entry of judgment, the [public
entity] may deposit with the
court the probable amount of compensation, based on
an appraisal, that will be
awarded in the proceeding." (Code Civ. Proc., §
1255.010, former subd.
(a).)*fn10 The public entity must give notice of the
deposit and the basis of
the appraisal to the parties in the action. (Code
Civ. Proc., § 1255.020, subds.
(a) & (b).) "At any time after a deposit has been
made . . . the court shall,
upon motion of the [public entity] or of any party
having an interest in the
property for which the deposit was made, determine
or redetermine whether
the amount deposited is the probable amount of
compensation that will be
awarded in the proceeding." (Code Civ. Proc., §
1255.030, subd. (a).) If the
court determines the amount of probable compensation
exceeds the deposit,
the court may order the public entity to increase
the amount of the deposit.
(Code Civ. Proc., § 1255.030, subds. (b) & (c).)
[91]
Code of Civil Procedure, section 1268.110 addresses
deposits made following
the entry of judgment:
[92]
"(a) Except as provided in subdivision (b), the
plaintiff may, at any time after
entry of judgment, deposit with the court for the
persons entitled thereto the
full amount of the award, together with interest
then due thereon, less any
amounts previously paid directly to the defendants
or deposited pursuant to
Article 1 (commencing with Section 1255.010) of
Chapter 6 [addressing
deposits of probable compensation].
[93]
"(b) A deposit may be made under this section
notwithstanding an appeal, a
motion for a new trial, or a motion to vacate or set
aside the judgment but may
not be made after the judgment has been reversed,
vacated, or set aside.
[94]
"(c) Any amount deposited pursuant to this article
on a judgment that is later
reversed, vacated, or set aside shall be deemed to
be an amount deposited
pursuant to Article 1 (commencing with Section
1255.010) of Chapter 6."
[95]
Code of Civil Procedure section 1268.130 gives the
court authority to
increase the amount of the postjudgment deposit: "At
any time after the
plaintiff has made a deposit upon the award pursuant
to Section 1268.110, the
court may, upon motion of any defendant, order the
plaintiff to deposit such
additional amount as the court determines to be
necessary to secure payment
of any further compensation, costs, or interest that
may be recovered in the
proceeding. After the making of such an order, the
court may, on motion of
any party, order an increase or a decrease in such
additional amount. . . ."
[96]
While the statutory scheme mentions interest as part
of the postjudgment
deposit and not as part of a prejudgment deposit,
that does not lead to a
conclusion an increase in the deposit to include
interest before judgment or
after an order granting a new trial is improper. The
amount of the deposit is
intended to reflect the amount of probable
compensation which will be
awarded in the eminent domain proceeding. Just
compensation under the
California and federal Constitutions may require an
award of interest so that
the property owner receives the " 'full and perfect'
monetary equivalent of the
fair market value of the land" if payment of the
full amount of compensation is
not contemporaneous with the taking. (Redevelopment
Agency v. Gilmore
(1985) 38 Cal. 3d 790, 801 [214 Cal. Rptr. 904, 700
P.2d 794]; Salton Bay
Marina, Inc. v. Imperial Irrigation Dist. (1985) 172
Cal. App. 3d 914, 959
[218 Cal. Rptr. 839].) It therefore follows that a
court may order an increase
in a deposit of "probable compensation" when it
appears the original deposit
was inadequate and the passage of time indicates an
award of interest will be
necessary to provide the property owner with the "
'full and perfect' monetary
equivalent of the fair market value of the land."
(Redevelopment Agency v.
Gilmore, supra, 38 Cal. 3d at p. 801.)
[97]
We find no abuse of discretion in the court's
inclusion of interest in its order
increasing the amount of the county's deposit. The
amount of interest,
however, will have to be recalculated in light of
our conclusion the property
should not have been valued based on a highest and
best use as a detention
facility.
[98]
The judgment is reversed. The county is awarded
costs on appeal.
[99]
Benke, J., and Froehlich, J., concurred.
[100]
A petition for a rehearing was denied July 13, 1993,
and the petition of
defendants and appellants for review by the Supreme
Court was denied
September 16, 1993.
[101]
Disposition
[102]
Reversed. Appellant awarded costs on appeal.
Opinion Footnotes
[103]
*fn1 The property was actually purchased by two
corporations (Rancho Vista
Del Mar, Inc., and Rancho De La Fuente) which are
closely held by the De La
Fuente family. Roque De La Fuente is the principal
of these entities and he
testified as the property owner in giving a
valuation of the property. We refer
to De La Fuente both as an individual and to
represent the property owners.
[104]
*fn2 Named as defendants were Rancho Vista Del Mar,
Inc., Rancho De La
Fuente, Inc., Border Business Park, Inc., American
International Racing, Inc.
and D' & D', corporations all closely held by the De
La Fuente family, as well
as Home Federal Savings & Loan Association.
[105]
*fn3 Thomas testified the per diem operating costs
for an inmate were about
$30/day in a minimum security facility, about $50 to
$55/day in a medium
security facility and about $55 to $60/day in a
maximum security facility.
[106]
*fn4 As the county points out in its briefs, Berkson
may have miscalculated
the price per square foot allocated to sale No. 10.
Berkson's data indicate this
property sold for $18,038,412 and that the "Ratio of
land to total price is
19.2%%." If one multiplies $18,038,412 by 19.2
percent, the allocation to the
land was $3,463,375.10, which when divided by the
net square feet of the
property (1,644,390), equals a price of $2.11 per
square foot.
[107]
*fn5 These arguments related to the county's
negotiations with Wackenhut to
construct detention facilities on the subject
property and the county's failure
to tell its appraiser. Yerke, about previous
appraisals based on a highest and
best use as industrial property or to tell him about
the negotiations with
Wackenhut.
[108]
*fn6 See footnote, 4 ante, page 1054.
[109]
*fn7 De La Fuente contends we may not reverse the
judgment based on a
conclusion the property should not have been valued
as a private detention
facility because the county stipulated "that the
subject property is feasible,
suitable and reasonably probable for the use of a
private detention facility as
of the date of value." The stipulation is not a
concession by the county that De
La Fuente's property could be valued based on use as
a private detention
facility. In context, the stipulation is no more
than an abandonment of the
county's earlier untenable, and in this context
irrelevant, position that private
detention facilities are illegal per se.
[110]
*fn8 We note the trial court's decision to grant a
new trial based on its
conclusion Berkson's valuation opinion was based on
conjecture and
speculation was within its discretion. The county's
description of De La
Fuente's proposed 6,000-bed detention facility as a
"fantasy jail" is not inapt.
While there was evidence the property could support
such a large facility,
other evidence showed there were no 6,000-bed
facilities existing anywhere
in the world and the largest facility in California
was a "standardized sort of
cookie cutter kind of facility" of 200 beds.
Further, while there was evidence
showing a potential inmate population to fill 6,000
beds, there was no
evidence showing any governmental entity had a
reasonable probability of
financing such a facility any time in the near
future. The county itself lacked
funding for phase two of its proposed project which
was intended to add an
additional 1,040 beds to the 1,040 completed in
phase one.
[111]
*fn9 See footnote 4, ante, pages 1054.
[112]
*fn10 In 1990, the Legislature amended Code of Civil
Procedure section
1255.010, subdivision (a) to provide for deposit of
the amount of probable
compensation with the State Treasury rather than
with the court. (Stats.
1990, ch. 1491, § 9.)
11/24/64 Montague Fred RAYNE, v. The WACKENHUT
CORPORATION,
[Editor's note: footnotes (if any) trail the opinion]
[1] DISTRICT COURT OF APPEAL OF FLORIDA, THIRD DISTRICT.
[2] Montague Fred RAYNE, Appellant,
v.
[3] The WACKENHUT CORPORATION, a Florida corporation, and
[4] George R. Wackenhut, Appellees.
[5] No. 64-146.
[6] November 24, 1964
[7] Rehearing Denied December 16, 1964.
BLUE BOOK CITATION FORM: 1964.FL.885
[8] APPELLATE PANEL:
[9] Before BARKDULL, C.J., and CARROLL and TILLMAN PEARSON, JJ.
[10] DECISION OF THE COURT DELIVERED BY THE HONORABLE
JUDGE PEARSON
[11] Montague Fred Rayne, who is the appellant here, was an employee
of the defendant, The Wackenhut Corporation. The defendant, George
R. Wackenhut, is the founder and president of the defendant
corporation. Rayne, who had previously been the resident manager of
The Wackenhut Corporation in the territory of Puerto Rico, entered into
a contract with the corporation by which he agreed to become a vice
president of the corporation for a period of three years.
[12] Rayne's compensation was set in the agreement with the provision
that, for the period ending December 31, 1961, he was to receive 50%
of the net profits of the Puerto Rican Corporation, and for the periods
commencing January 1, 1962, he was to receive a certain salary but not
less than the compensation received for the period ending December
31, 1961.
[13] Eighteen months prior to the expiration of the contract of
employment, Rayne was discharged. The contract provided that he
could be discharged only under certain circumstances, one of which
was "just cause." Shortly after his discharge Rayne instituted the suit,
with which we are concerned, in equity. In so doing, he elected not to
proceed at common law for the balance of his salary claimed but added
this claim to his suit in equity in which he alleged that he was entitled to
an accounting to determine whether or not the compensation he had
received, and to which he claimed to be entitled, was actually as much
as 50% of the net profits from the business in Puerto Rico in 1961. His
complaint not only alleged that the plaintiff was discharged prior to the
expiration of his contract but that he was wrongfully discharged. The
defendants answered denying that the plaintiff was wrongfully
discharged.
[14] The chancellor took testimony and received evidence of the
plaintiff and at the conclusion thereof, granted a motion of the
defendants in the nature of a motion for directed verdict and entered a
final decree and final judgment in which he found as follows:
[15] 1. The plaintiff has failed to prove by competent evidence the
material allegations of his complaint.
[16] 2. Under the contract between the Plaintiff and the Defendant The
Wackenhut Corporation, the Plaintiff is entitled to salary to and
including July 25, 1963, which the court finds to be in the sum of
$2,300.00.
[17] 3. The Defendant The Wackenhut Corporation has proved by
competent evidence the material allegations of Count I of its
counterclaim (seeking an order requiring Plaintiff to return to
Defendant all documents or copies thereof, or other properties
belonging to the Defendant which the Plaintiff has in his possession or
control).
[18] 4. The Defendant The Wackenhut Corporation has failed to prove
by competent evidence the material allegations of Count II of its
counterclaim (seeking the return of the sum of $4,885.88), the court
finding that the payment of said sum to the Plaintiff was not a loan but
was in the nature of an advance against future profits which cannot be
recovered by the Wackenhut Corporation.
[19] 5. The Defendant The Wackenhut Corporation orally moved for an
order authorizing it to hold in abeyance proof on Counts III (seeking the
return of $13,000.00 paid by the Defendant to the Plaintiff), Count IV
(seeking any sums due the Defendant if an accounting was ordered),
Count V (seeking an order enjoining Plaintiff from making false and
derogatory [20] statements about the Defendant corporation and
otherwise interfering with its peaceful operations in Puerto Rico, and
awarding compensatory damages), Count VI (seeking an order
enjoining the Plaintiff from making false, defamatory, libelous and
slanderous statements about the Defendant and awarding
compensatory damages), of its counterclaim, or in the alternative to
enter an order authorizing a voluntary dismissal as to said Counts
without prejudice. The Defendant George R. Wackenhut similarly moved
as to its counterclaim (seeking an order enjoining the Plaintiff from
uttering false, defamatory, slanderous and libelous statements about
the said Defendant). The court finds that these motions should be
denied and that Counts III, IV, V and VI of the corporate Defendant's
counterclaim and the counterclaim of George R Wackenhut should be
dismissed with prejudice.
[20] 6. The court finds that the Defendant The Wackenhut Corporation
has voluntarily dismissed Count VII of its counterclaim (seeking an
order enjoining the Plaintiff from engaging in business competitive with
that engaged in by the Defendant) and the court finds that the
Defendant should be permitted to do so.
[21] 7. Each of the parties should bear his or its own cost.
[22] Based upon these findings the court made the following decree:
[23] "IT IS ORDERED, ADJUDGED AND DECREED that
[24] "A. Defendants' motion for Judgment in their favor be and the
same is hereby granted; and Final Judgment be and the same is hereby
entered in favor of the Defendants The Wackenhut Corporation, a
Florida corporation, and George R. Wackenhut, sine die, and against the
Plaintiff Montague Fred Rayne with prejudice.
[25] "B. Final Judgment be and the same is hereby entered in favor of
the Plaintiff Montague Fred Rayne against the Defendant The
Wackenhut Corporation, in the sum of $2,300.00 for which sum let
execution issue.
[26] "C. JUDGMENT be and the same is hereby entered in favor of the
Defendant The Wackenhut Corporation and against the Plaintiff
Montague Fred Rayne on Count I of Defendant's counterclaim, and
Plaintiff Montague Fred Rayne be and he is hereby ordered and required
to deposit with the court to be marked for identification and
subsequently delivered to the Defendant The Wackenhut Corporation,
all documents and other items in his possession or under his control
which belong to The Wackenhut Corporation as business records. The
Court reserves jurisdiction of this matter for the purpose of entering
any subsequent order or orders pertaining to said documents it deems
proper.
[27] "D. Final Judgment be and the same is hereby entered in favor of
the Plaintiff Montague Fred Rayne, sine die, and against the Defendant
The Wackenhut Corporation with prejudice on Count II of the Defendant
The Wackenhut Corporation's counterclaim.
[28] "E. The motion of the Defendants to hold in abeyance Counts III,
IV, V and VI of the corporate Defendant's counterclaim, and the
counterclaim of George R. Wackenhut be and the same is hereby denied;
and Final Judgment be and the same is hereby entered in favor of the
Plaintiff Montague Fred Rayne, sine die, and against the Defendants
The Wackenhut Corporation, a Florida corporation and George R.
Wackenhut with prejudice as to Counts III, IV, V and VI of the corporate
Defendant's counterclaim and the counterclaim of George R. Wackenhut.
[29] "F. The motion of The Wackenhut Corporation to voluntarily
dismiss without prejudice Count VII of its counterclaim be and the same
is hereby granted.
[30] "G. The parties hereto shall each bear his or its own costs."
[31] The appellant Rayne has appealed the final decree and urges the
reversal thereof and the return of the cause to the trial court for the
completion of the trial upon two points: first, that the chancellor
entered the decree upon an erroneous rule of law in that the chancellor
held that under the pleadings in this case the burden of proving
discharge for other than a good cause was upon the plaintiff, appellant;
second, that the chancellor erroneously held that the plaintiff was not
entitled to an accounting upon the question of the true profits of the
business in Puerto Rico subsequent to 1958.
[32] Inasmuch as neither of the points presented by the appellant claim
error as to certain portions of the decree, the portions not contested
will stand affirmed upon this appeal. See 2 Fla.Jur., Appeals § 382; Cf.
Grand Union Super Markets, Inc. v. De Aquinos, Fla.App.1961, 135
So.2d 754. Under this provision we must affirm the decree insofar as it
granted a final judgment in favor of the defendant George R.
Wackenhut, individually. In addition paragraph "B" of the final decree
which provided for a judgment in favor of the plaintiff Rayne against the
defendant, The Wackenhut Corporation, in the sum of $2300 is
affirmed. By way of clarification it may be stated that this judgment
represents 30 day severance pay which the corporation concedes is
due.
[33] In addition, paragraph "C" of the final decree is affirmed upon the
same basis. This paragraph provides for the return to the defendant,
The Wackenhut Corporation, all documents and other items in the
possession or under his control which belonged to The Wackenhut
Corporation as business records.
[34] Paragraphs "D" and "F" concern counterclaims brought against the
plaintiff by the defendants. Inasmuch as no cross assignments of error
have been filed, these paragraphs are affirmed.
[35] Inasmuch as it affirmatively appears that appellant's complaint
claiming wrongful discharge was dismissed because the chancellor
found that all of the evidence before him demonstrated that the plaintiff
was discharged for good cause and inasmuch as this conclusion is
supported by the record, the chancellor's dismissal of this portion of
the complaint is affirmed. We find that appellant's contention that the
decree of the chancellor was based on an erroneous rule of law, is not
well-taken. It is apparent that the plaintiff having alleged absence of
good cause proceeded to attempt to prove this claimed absence of a
basis for his discharge. He produced many witnesses and a great deal
of documentary evidence. The examination and cross examination of
the witnesses consumed over 500 pages of transcript. The evidence
was to a large extent upon this determinative issue. At the conclusion
of the evidence of the plaintiff, the chancellor was of the opinion that
good cause for the discharge had been shown. Under these
circumstances it would be a waste of judicial labor to take further
testimony from the defendant on this issue. Routh v. Richards, 103 Fla.
757, 138 So. 72.
[36] Appellant's second point presents a question as to whether, under
the testimony presented and the allegations of his complaint, he was
entitled to an accounting from the corporation as to the business done
in his former territory of Puerto Rico during the years 1960, 1961 and
1962. His claim is that he is entitled to additional compensation
because of the provision in the employment contract which provides
that this compensation shall not in any year commencing after January
1, 1962, be less than the compensation received for the period ending
December 31, 1961.
[37] The evidence shows that the appellant was furnished an annual
statement by the accounting firm retained by the corporation. If this
statement is accepted as correct, there are no additional sums due to
the plaintiff, appellant, for the period that he worked.
[38] The plaintiff has attacked the financial statement furnished him in
several particulars. He presented some evidence from an expert
witness that certain items were improperly included as expenses in the
annual statement for the year 1961. This testimony was not refuted
inasmuch as the defendants produced no witnesses. Under this
condition of the record, we think that the plaintiff appellant is entitled
to a determination of the question as to whether a proper method of
accounting was used in the preparation of the annual statement which
the corporation used in determining his compensation. We therefore
conclude that this issue must be tried and that the decree must be
reversed insofar as it denies at this stage to the plaintiff his prayer for
an accounting.
[39] A reference to paragraph designated "E" of the final decree will
reveal that the chancellor denied the motion of the defendant, The
Wackenhut Corporation, to hold in abeyance Count IV of its
counterclaim. This counterclaim was for any sums due The Wackenhut
Corporation if an accounting was ordered. The chancellor denied the
motion and found for the plaintiff on the counterclaim. It is apparent
that the basis of this action was the chancellor's previous finding that
the plaintiff, appellant, was not entitled to an accounting. Because we
hold this last finding to be error, we must, in order to allow the
chancellor to do equity, also reverse the ruling on the designated
counterclaim. Therefore, we affirm paragraph "E" of the final decree
except as to the ruling on Count IV of the counterclaim of the
defendant, The Wackenhut Corporation, and reverse the ruling on
Count IV.
[40] The final decree is therefore affirmed in part and reversed in part,
and the cause remanded with directions to proceed with the trial of the
issue of the entitlement of the plaintiff to an accounting, and, if proper,
to a determination of said accounting.
[41] Affirmed in part, reversed in part and remanded.
Wackenhut Meets Bon Jovi
Wackenhut Prison Property Grab
Puerto Rico, 1964