Appeal from the United States District Court for the Eastern District of California. D.C. No. CV-89-0020-MDC. M.D. Crocker, District Judge, Presiding
Before; Alarcon, Brunetti, and Kozinski, Circuit Judges
In a diversity action for injunctive relief, Pacific Power & Light Company ("Pacific") appeals a judgment of condemnation entered against it in favor of the City of Alturas ("the City"), and the denial of injunctive relief requested against the City and Surprise Valley Electrification Corporation ("Surprise Valley"). The City cross-appeals the district court's award of attorney and expert fees to Pacific. We consider in this appeal: whether, when a public entity attempts to condemn public utility property for public use, and plans to achieve that public use through the participation of a third party public utility, whose participation requires approval of the California Public Utilities Commission, there can be a valid public use enunciated prior to the Public Utilities Commission's granting of approval. We have jurisdiction pursuant to 28 U.S.C. § 1291, and now vacate and remand the district court's judgment of condemnation.
Appellant Pacific is an investor-owned public utility incorporated in Oregon. Appellee City is a municipal corporation located in the state of California. Appellee Surprise Valley is a nonprofit electrical distribution corporation organized to distribute electricity to its member-consumers. Pacific currently owns and operates the electrical distribution system serving the City and its surrounding areas.
In 1985, the City began investigating the feasibility of using its eminent domain powers to condemn Pacific's facilities and have them operated by Surprise Valley. Pacific filed an action seeking injunctive relief against Surprise Valley in the Eastern District of California in September 1986. A similar action was filed against the City in January 1987. The City filed a condemnation action against Pacific in February 1987 in the Modoc County Superior Court; the case was removed to the district court on the basis of diversity. Pacific's claims for injunctive relief were consolidated with the condemnation action.
On February 2, 1989, Pacific filed a complaint with the California Public Utilities Commission ("PUC") seeking an order restraining Surprise Valley from acquiring control over, operating or maintaining the facilities then owned by Pacific. On August 10, 1989, the PUC filed an order requiring Surprise Valley to file an application for PUC consent.
At trial in February 1989, the district court determined that the City had the right to exercise its powers of eminent domain over Pacific's property, and denied Pacific's request for injunctive relief. A jury was impaneled to determine the proper valuation of the property, and awarded Pacific $6,000,000 as just compensation.
The district court entered final judgment in the case on March 27, 1989, and corrected that judgment on May 1, 1989. Pacific timely appealed both judgments.
Pacific sought attorney's fees and expert fees for costs incurred with respect to property which was later dismissed from the action. Pacific also sought expert fees relating to the calculation of severance damages to be incurred by Pacific due to the City's retention of "underbuild."*fn1 Pacific claims that it did not know that the City intended to retain the underbuild until its cost analysis was complete, and that a new analysis was therefore required.
On June 28, 1989, the district court entered a supplemental judgment awarding Pacific attorneys fees in the sum of $30,398.65, and expert witness fees in the sum of $37,123.75. The City filed a timely notice of appeal from that judgment on July 10.
The exercise of eminent domain under California law requires that the condemnation be for a public use, that the body condemning the property be authorized to do so, and that the property to be condemned be necessary to carry out a project required by public interest or necessity. See Cal. Civ. P. Code §§ 1240.010 -- 1240.030. We consider these requirements in slightly different order.
The City has statutory authority to condemn property for use as a public utility. "The legislative body may acquire private property by condemnation or otherwise when it is necessary to take or damage such property for: . . . (f) any other purposes authorized by law." Cal. Gov't Code § 40404 (emphasis added). "Any municipal corporation may acquire, ...