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Border Business Park, Inc. v. City of San Diego (2006)

September 19, 2006

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Horvitz & Levy LLP obtained a reversal of a $91.7 million inverse condemnation verdict against the City of San Diego in this inverse condemnation and breach of contract case. The court reversed the inverse condemnation claims with directions to enter a new judgment in favor of the City, and affirmed a trial court order granting the City a new trial on the contract claims. With interest and attorney’s fees, the total judgment would have exceeded $150 million if affirmed.

Plaintiff Border Business Park sued the City on theories of inverse condemnation and breach of contract. The trial court ruled that the City was liable for (1) publicly announcing that it was considering a proposal for an international airport in the vicinity of the plaintiff’s property, and (2) temporarily establishing a designated route for commercial trucks on the streets adjacent to the plaintiff’s property. The trial court also held the City liable for breach of a development agreement with the plaintiff.

The Court of Appeal reversed and ordered entry of judgment in favor of the City on both of the plaintiff’s inverse condemnation theories. The court held the plaintiff could not state a cause of action for the City’s airport planning because the plaintiff had not suffered any unique or special harm apart from the many others who owned land in the vicinity of the proposed airport. The court held that the widespread impact from mere general planning is not compensable.

The court also rejected the plaintiff’s attempt to hold the City liable for its routing of truck traffic. The plaintiff failed to introduce any evidence that it suffered an impairment of access to its property. At most, the evidence showed only that the plaintiff suffered inconvenience from the traffic for a few hours a day, which cannot support a claim for inverse condemnation.

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

The opinion was widely reported in the California press as a critical victory for San Diego in its effort to recover from severe fiscal woes. San Diego City Attorney Michael Aguirre explained the significance of the case to the Voice of San Diego newspaper: “If the city had been hit with that exposure, the city would have been looking at bankruptcy. . . . Now we’re looking at nothing.” (Donohue, City’s De La Fuente Appeal Prevails, Voice of S.D. (Sept. 20, 2006).)