La Jolla Alta Master Council v. City of San Diego – $9.5M

Construction Defects

Case Summary:

This case involved an improperly maintained storm drain system in a La Jolla Canyon that threatened the homeowners living in on and in the area of Alta La Jolla Drive. In a La Jolla neighborhood near Soledad Mountain Road, the City of San Diego created and operated a storm drainage system that incorporated property owned by Plaintiff. The operation of this storm drainage system by the City over several years created a massive ravine across Plaintiff’s property, threatening citizens, homes, and Alta La Jolla Drive, a public road. The homeowners brought an inverse condemnation action against the City to force repairs and prevent a landslide. After the verdict a settlement of $4,500,000.00 plus over $5,000,000.00 in repairs was reached for damage caused by the operation of its storm drain system.

Plaintiff’s Technical Expert Witnesses:
Chuck Gilman – Civil Engineer, Director of Engineering, Land Design Consultants
199 South Los Robles Ave., Ste. 250, Pasadena, CA 91101

Dr. Howard Turner – Photogramitist, Land Design Consultants
199 S. Los Robles Ave., Suite 250, Pasadena, CA 91101

Joel Morrison – Civil Engineer, Morrison Engineering, Inc.
1927 Frankfort St., Ste. A, San Diego, CA 92110

Hasan Nouri – River Engineer, President, Rivertech, Inc.
23332 Mill Creek Drive, Suite 210, Laguna Hills, CA 92653

Les Reed / Cathy Ganze – Geotechnical Engineer, Geotechnical Exploration, Inc.
7420 Trade Street, San Diego, CA 92121

Defendant Insurance: CSAC; AIG; self-insured retention

Date, Time and Place of Incident(s):
1/6/95, approximately 10 am, Coronado Shores Cabrillo Tower, 1730 Avenida Del Mundo, Coronado, CA

Facts and Background:

This was a case of inverse condemnation brought pursuant to the California and United States Constitutions for damages caused to a privately-owned open space canyon by the operation of a public storm drain system. The City of San Diego (“City”) created and operates a storm drain system which incorporates a 100 acre canyon bisected by Alta La Jolla Drive (“Canyon”) as an integral part. The La Jolla Alta Master Council (“LJAMC”) is a homeowners association which holds legal title to the Canyon for the benefit of its members. The City’s storm drain system includes public streets, sidewalks, culverts and pipes that collect and direct storm water to the Canyon at several locations within the Upper and Lower Canyon. The System funnels storm waters under and around Alta La Jolla Drive and into the Lower Canyon. The City owns permanent easements in the Canyon at the discharge points of its pipes, which include City approved energy dissipaters. The area downstream of all of these easements in the Canyon is private property owned by the LJAMC. The Canyon carries all storm waters discharged into it from surrounding areas to a 48 inch culvert located at the southern boundary of the Lower Canyon at the northern terminus of Vickie Drive.

Due to the operation of the City’s storm drain system, as intended, the Canyon became severely eroded, in some locations with sheer-faced walls in excess of 70 feet high. The Canyon posed a dangerous condition and could have caused catastrophic loss of life and/or property had the eroded conditions not been repaired.

Plaintiff’s Contentions, Allegations:
The LJAMC contended that the City did not act reasonably in its creation and operation of its storm drain system. The City knew, or should have known, that the development of the Canyon rim and the operation of the storm drain system serving those developments would substantially increase the amount of storm drainage carried to the Canyon but failed to take any reasonable steps to mitigate damage caused by the increased discharge burden on the Canyon. This burden was not a normal risk of land ownership of LJAMC whose members, in fact, were not contributing any significant storm waters into the Canyon. 100% of the storm water delivered to the Canyon was delivered by way of public improvements which were part of the City’s storm drain system. Therefore, if uncompensated, the LJAMC and its members, would be required to contribute far more than its share to correct and repair the damage to the Canyon compared to its own use.

The trial court held, after a three week bench trial, that the City was liable for inverse condemnation because it unreasonably created and operated a storm water drainage system which utilized the Canyon as an integral part, and that the failure of the City to act in a reasonable manner was a substantial factor in causing damage to the Canyon, creating the need for emergency and permanent repairs to the Canyon.

Injuries and/or Damages:
A jury trial on the damages phase of trial was commenced in October, 2007, however, was declared a mistrial due to the delays caused by the wildfires which struck San Diego County in late October, 2007. At trial, the LJAMC presented evidence that the cost to repair the Canyon was in excess of $7.5 million and would have requested the Court award an additional $3.5 million in attorneys fees and recoverable costs.

The repair required a two-phase process due to environmental regulations and protected habitats, namely of the California coastal sage scrub and gnatcatcher bird. Temporary emergency repairs were commenced and paid for by LJAMC prior to the time of the damages phase of trial. Due to the lengthy permitting process, involving numerous local, state and federal agency approval requirements, the second phase or permanent repair could not be commenced for 18 to 24 months.

Before re-commencing trial the Court ordered the parties back to mediation where a settlement was ultimately reached. The City agreed to pay $4.5 million and to implement and pay for the second phase of repair (estimated to cost approximately $5 million). In addition, the City agreed to maintain, repair and restore any damage to the Canyon caused by the operation of its storm drain system into the future.

The City argued in its defense that (a) the storm drain system was not a public project for the purposes of inverse condemnation liability, (b) LJAMC failed to mitigate its damages thereby allowing the erosional damage to become more severe and dangerous, (c) the builders of the various projects around the rim of the Canyon were responsible for the damage, (d) the LJAMC failed to timely bring its action thereby violating the statute of limitations, and (e) the City had no duty to repair or maintain private property beyond the extent of its existing storm drainage easements, even though the use of its easements were damaging that property, (f) assuming the City was liable in inverse condemnation, the costs to repair the damage were far less than what LJAMC claimed the costs to be, among other theories and defenses.

Settlement Amounts:
Settlement involved monetary payment of $4.5 million, along with City of San Diego agreeing to repair the damage caused by the operation of its storm drain system (repair costs in excess of $5 million)

Verdict or Award:
Court ruled that the City is liable in inverse condemnation for unreasonable conduct and its conduct was the cause of Plaintiff’s damages.

Other Verdict Details:
Plaintiff entitled to over $20,000 prejudgment interest for beating the 998 demand. $8,500.00 cost award. Motion for new trial denied.

Lenth of Trial: 14 Days

Attorney for client: John F. “Mickey” McGuire, Brett J. Schreiber

Attorney for defendant:
Garrett “Sandy” Sanderson III, David S. Killoran, Carroll Burdick & McDonough LLP
44 Montgomery Street, Suite 400, San Francisco, CA 94104-4606, 415-989-5900

Michael J. Aguirre, City Attorney, Mia Severson, Deputy City Atty.
Office of the City Attorney, 1200 Third Avenue, Suite 1100, San Diego, CA 92101-4100, 619-533-5800

Individual Defendants: City of San Diego

Civil Trial Lawyers