Med. Acquisition Co. v. Superior Court of San Diego Cnty.

228 Cal. Rptr. 3d 654, 19 Cal. App. 5th 313
CourtCalifornia Court of Appeal, 5th District
DecidedJanuary 11, 2018
DocketD072509
StatusPublished
Cited by2 cases

This text of 228 Cal. Rptr. 3d 654 (Med. Acquisition Co. v. Superior Court of San Diego Cnty.) is published on Counsel Stack Legal Research, covering California Court of Appeal, 5th District primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Med. Acquisition Co. v. Superior Court of San Diego Cnty., 228 Cal. Rptr. 3d 654, 19 Cal. App. 5th 313 (Cal. Ct. App. 2018).

Opinion

HUFFMAN, Acting P. J.

*318This eminent domain case presents a novel issue regarding a defendant's postjudgment withdrawal of an increased deposit made by the condemning agency. Below, the condemning agency, Tri-City Healthcare District (Tri-City), made a pretrial deposit of $4.7 million and sought to take immediate possession of the subject *656property, a partially completed medical building. Medical Acquisition Company, Inc. (MAC) stipulated to Tri-City's possession of the building and withdrew the $4.7 *319million deposited under the "quick-take" provision of the California Constitution (see Cal. Const., art. I, § 19, subd. (a)) and Code of Civil Procedure 1 section 1255.010.

The eminent domain case was consolidated with another case involving a lease between the parties and ultimately proceeded to trial where a jury determined just compensation for the taking was nearly $17 million. The court subsequently ordered Tri-City to increase its deposit by about $12.2 million. Among other procedural maneuvers, Tri-City filed a notice of abandonment of the eminent domain proceeding. However, the superior court granted MAC's motion to set aside the abandonment. Tri-City has appealed that order in addition to the judgment.2

Tri-City ultimately deposited the additional funds, and MAC applied for prompt release of those funds without any bond or undertaking. Tri-City opposed the application. The court allowed MAC to withdraw an additional $4.4 million, but required a bond before MAC could withdraw the remaining amount. MAC then filed the instant petition for relief.

MAC argues that after judgment, withdrawing a deposit made in an eminent domain action is governed solely by section 1268.140. Under that section, MAC contends the superior court could not impose any undertaking regarding the prompt release of a deposit to a single claimant after judgment has been entered. In addition, MAC asserts the bonding requirement here frustrates the purpose of the quick-take provision of the California Constitution, and thus, should be declared unconstitutional.

Tri-City counters that the superior court had to impose an undertaking under section 1255.250. In the alternative, Tri-City maintains that the court had discretion to impose an undertaking under section 1268.140 and did not abuse its discretion by ordering the undertaking here. Finally, Tri-City insists MAC's constitutional challenge is without merit.

In this matter of first impression, we conclude that MAC is correct that any postjudgment withdrawal of a deposit in an eminent domain case is governed by section 1268.140. However, that provision allows a court, in its discretion, to impose an undertaking upon objection by any party to the proceeding. (§ 1268.140, subd. (c).) Here, the court exercised its discretion by allowing MAC to withdraw a portion of the deposit without any bond or undertaking, but requiring an undertaking if MAC wished to withdraw the remaining amount. The court did so because Tri-City has a claim to those fees if its *320appeal on the abandonment issue is successful. On the record before us, MAC has not shown how the court abused its discretion under section 1268.140.

Additionally, we determine that MAC's contention that the bonding requirement is unconstitutional is without merit. As such, we deny the requested relief.

FACTUAL AND PROCEDURAL BACKGROUND

The case is well known to us as it has spawned two pending appeals and three previous writ petitions prior to the instant one. We thus present a more robust factual and procedural background than we *657might typically provide in considering a writ of mandate. We do so because we think the additional facts are important to add context to the issue we consider here.

In December 2010, Tri-City and MAC executed two leases: (1) a ground lease, under which Tri-City leased open land within its Oceanside campus to MAC, and MAC agreed to construct, at its own expense, a 60,000-square foot, three-story medical office building on the land; and (2) a building lease, under which MAC agreed to sublease 25,000 square feet of the completed medical office building to Tri-City.

Construction of the medical office building began in October 2011. In July 2012, a dispute arose. Tri-City contended that MAC had defaulted under the ground lease. Unable to resolve the dispute, MAC filed a complaint against Tri-City for, inter alia, breach of the ground lease. Tri-City subsequently filed a complaint against MAC alleging unlawful conflicts of interest and breach of lease, among other claims. Tri-City later amended its complaint to include a cause of action for eminent domain, seeking to condemn MAC's rights under the ground lease.

On August 11, 2014, Tri-City filed a motion to take immediate possession of the ground lease under section 1255.410, which allows a condemning agency to take possession of the condemned property before trial by depositing the probable amount of compensation as determined by appraisal. Tri-City deposited $4.7 million, the probable amount of compensation as determined by an appraiser, with the state treasurer.

On August 28, 2014, MAC applied for an order to withdraw the $4.7 million deposit. On September 2, 2014, pursuant to the parties' stipulation, the court granted Tri-City's motion to take immediate possession. Ten days later, Tri-City took possession of the partially completed medical office building.

*321The court also granted MAC's application to withdraw the deposit and signed an order directing the state treasurer to disburse the deposited funds plus interest to MAC. MAC received the deposited funds on October 23, 2014 and spent the money expanding its business and hiring additional employees. Tri-City maintains, and MAC does not dispute, that MAC cannot repay the $4.7 million if subsequently required to do so.

The consolidated actions proceeded to trial. The jury returned a verdict finding that the fair market value of the medical office building was $16.83 million. The jury also found that Tri-City breached the implied covenant of good faith and fair dealing in the ground lease or building lease. The jury awarded MAC $2,933,700 in damages for Tri-City's breach of the implied covenant of good faith and fair dealing.

The jury found no unlawful conflicts of interest on behalf of MAC.

On July 18, 2016, the court entered judgment reflecting the jury's verdict.3 About six weeks later, MAC filed a motion under section 1255.030 for an order requiring Tri-City to increase its deposit of probable compensation by about $12.2 million, which MAC calculated to be "the amount of its condemnation judgment plus prejudgment interest, less the $4.7 million deposit previously withdrawn by MAC." The superior court granted MAC's motion and signed an order requiring Tri-City to deposit $12,212,351.06 plus interest of $180.96 per day for each day after September 23, 2016 (Deposit Order).

Tri-City filed a notice of appeal from the judgment, which it amended to include an appeal of the Deposit Order.

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Cite This Page — Counsel Stack

Bluebook (online)
228 Cal. Rptr. 3d 654, 19 Cal. App. 5th 313, Counsel Stack Legal Research, https://law.counselstack.com/opinion/med-acquisition-co-v-superior-court-of-san-diego-cnty-calctapp5d-2018.