LA Appeals Court Says Hear It Again

In March 2001, building owner, CUNA Mutual Life Insurance Co. of Waverly, IA, appealed a Nov. 20, 2000, ruling by Superior Court that rejected reimbursement for underpinning set in place to guard against further damage from the construction, according to attorney Dean E. Dennis of Hill, Farrer & Burrill in Los Angeles. He and partner Kevin Brogan have been representing CUNA in its battle for repayment.

Dennis tells GlobeSt.com that CUNA paid to shore up the foundation of the historic building to protect it from anticipated damage by excavation and construction of the Hollywood/Highland Metro Rail Station. The MTA has contended that CUNA's work was unnecessary.

Dennis says the appellate court "agreed with the El Capitan that a private owner has the right to protect its property against a public improvement which threatens the property, provided the owner acts reasonably and in good faith."

Steve Carnevale, the MTA's chief legal counsel, tells GlobeSt.com the agency has not decided whether to appeal the latest decision. The next appeal level is the California Supreme Court, which reviews only a small percentage of cases so there is no certainty that it would hear the MTA's petition.

The decision by the appellate court "doesn't necessarily mean a loss," Carnevale says. "There is still a long way to go in this case."

According to the El Capitan's inverse condemnation lawsuit, the 1994 subway tunneling caused the building to settle about a quarter of an inch. CUNA's geotechnical consultants recommended strengthening the foundation to guard against additional damage from the subway construction. CUNA ended up paying the bill because the MTA declined to do so and then refused to reimburse the owner's expense request.

Dennis says the building was not damaged beyond the quarter-inch of settling, evidence that the underpinning served its purpose. But, the MTA's stance is CUNA wasted its money on the preventative measure.

The now-overturned Superior Court ruling said the El Capitan owner had to prove the foundation-strengthening system was necessary and the structure would have sustained additional damage without it.

Dennis says a CUNA win could result in a $1.5-million award. In addition to the reimbursement, CUNA is seeking $700,000 for interest and legal fees.