In Regency Outdoor Advertising, Inc. v. City of Los Angeles (2006 Daily Journal D.A.R. 10,276, 06 Cal. Daily Op. Serv. 7197, Cal., Aug. 7, 2006), the Supreme Court of California considered whether a city owed compensation to a billboard owner for impairing the visibility of an owner’s outdoor advertising signs when the city planted trees along a public road. The Court held that, in the absence of physical damage or reduced physical access to the outdoor signs, the owner did not have an independent “right to be seen” from a public road entitling it to compensation.
In preparation for the 2000 Democratic National Convention, the City of Los Angeles (“City”) planted a number of palm trees on City-owned property along Century Boulevard, a primary access route to and from Los Angeles International Airport. Regency Outdoor Advertising, Inc. (“Regency”) filed a lawsuit, claiming the trees made several of its roadside billboards less visible from certain spots along the road. Regency claimed City owed compensation based on principles of inverse condemnation – i.e., that City had essentially condemned its property – and also sought recovery under a state statute restricting government interference with outdoor advertising displays. City offered to settle for $1,000 and the removal of one tree, but Regency rejected the offer and the matter went to trial.
The trial court ruled in favor of City, concluding that the planting of trees as part of a highway beautification project did not amount to a “taking” which would entitle Regency to compensation under the California Constitution. The court also awarded City a portion of its attorney fees and costs, as well as all of its expert witness fees, due to Regency’s failure to recover an amount greater than City’s settlement offer. The California Court of Appeal affirmed. Regency appealed to the California Supreme Court.
The California Supreme Court agreed with the lower courts. Inverse condemnation is a private property owner’s remedy when a government agency has taken or damaged the owner’s property without paying just compensation, as required by Article 1, Section 19 of the California Constitution. Thus, Regency’s claim for “inverse condemnation” required that the company prove, first and foremost, that City had in fact “taken” or “damaged” Regency’s property.
While an owner of property abutting a public roadway traditionally possesses certain “abutter’s rights,” those rights generally only protect the landowner from substantial impairment of access to or from the property or from having the property physically taken or damaged by a government entity. Regency, an abutting landowner, did not complain that the palm trees made it more difficult to gain access to or from, or to travel along, Century Boulevard, or that Regency’s property had been removed or physically damaged. Rather, Regency complained only that the billboards could not been seen as readily as they had prior to the landscaping. Following the majority of other jurisdictions which have considered the issue, the Court held that a property owner has no freestanding right to simply have its private property remain visible at all times, and, as such, Regency had no claim for inverse condemnation. The Court noted a plaintiff who purchases property abutting a public way cannot reasonably expect or demand “that the adjacent street be left in its original condition for all time,” and a plaintiff does not establish that its property has been taken or damaged merely by showing that government action has “somewhat decreased” the property’s value. Where the sole harm alleged is impairment of a billboard’s visibility due to a municipal landscaping project that is consistent with the fundamental purpose that a road serves, the Court said, principles of inverse condemnation and eminent domain do not require payment of compensation.
For similar reasons, the Court rejected Regency’s argument that City violated Business and Professions Code § 5412, which prohibits the government from “compelling” removal of a billboard or limiting the billboard’s customary maintenance or use. Planting trees near a billboard obviously does not “remove” the billboard, the Court said, and the statute’s legislative history did not suggest an intent to require compensation when a roadway beautification project, though it affects visibility, has not been undertaken for the purpose of blocking the billboards from view.
Finally, the Court sustained the award to City of a portion of its attorney fees and costs, as well as all of its expert witness fees, pursuant to Code of Civil Procedure § 998. Section 998 entitles a defendant to such an award if a plaintiff ultimately recovers less than the amount for which defendant offered to settle. While § 998 does not apply to “eminent domain” proceedings, its does apply to inverse condemnation actions, the Court said. The Court also rejected Regency’s claim that City’s settlement offer was in bad faith, finding instead that City’s offer, though modest, was reasonable under the circumstances.
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