Medical Acquisition Company (MAC) v. Tri-City Healthcare District, 1/11/18, DCA4/1
Some lawyers think that they need to make every argument and allege every cause of action that they can think of. That approach can have disastrous consequences, as demonstrated by this case. Tri-City executed a ground lease of property to MAC to develop a medical office building. MAC agreed to develop the building at its own expense. Tri-City wasn’t happy about the subsequent construction process and sued MAC for breach of ground lease. Later, Tri-City amended its complaint to include eminent domain and also decided to take title to the property before trial (see below). Too clever by half—The most significant issue became how much Tri-City would have to pay MAC in just compensation. The jury ultimately answered that question: $16.83 million. It also found that Tri-City breached the implied covenant of good faith and fair dealing, and that MAC hadn’t breached the ground lease.
For the attorneys driving Tri-City’s litigation strategy, that’s a bad day at the office, or perhaps a few. Tri-City has to pay $17M , and, presumably, millions more to complete the unfinished medical office building. It should have stuck to the breach of lease case.
Note: The writ proceeding itself concerned a narrow and technical issue about whether the trial court had discretion to require MAC to post a bond before it withdrew all of the money Tri-City was required to deposit after losing at trial.
For those interested in eminent domain: In eminent domain proceedings, the government can choose to do a “quick-take” proceeding—i.e., take title to the property before trial—as long as it deposits the probable amount of just compensation. The court then has discretion to distribute that amount to the claimants. If the jury determines that more money is owed than was originally deposited—as happened in this case—the government will have to deposit the difference. Here, MAC wanted the court to distribute the additional amount without a bond, even though Tri-City appealed the jury’s verdict. The trial court ordered that MAC could have $4.4 million now, but that it would have to post a bond if it wanted all the money pending appeal. MAC challenged that order by writ. Relying on the express language of Code of Civ. Proc. 1268.140, the appellate court had no problem denying the writ.
Here’s what 1268.140, which applies after judgment in an eminent domain case, says in part:
(c) Upon objection to the withdrawal made by any party to the proceeding, the court, in its discretion, may require the applicant to file an undertaking in the same manner and upon the conditions prescribed in Section 1255.240 for withdrawal of a deposit prior to entry of judgment.