Peter Kiewit Sons' Co. v. Richmond Redevelopment Agency

In Peter Kiewit Sons' Co. v. Richmond Redevelopment Agency (1986) 178 Cal.App.3d 435, a city redevelopment agency purchased property, some of which was occupied by a lessee. After efforts to renegotiate an extension of the lease failed, lessee did not vacate the property on the lease termination date. The agency filed an unlawful detainer action. The lessee sought its moving expenses. The court held that unlike a condemnation, the agency purchase of the property did not extinguish the lease and that the lessee was not entitled to relocation benefits because the cause of its displacement was the termination of the lease. That case is favorable to defendant Redevelopment Agency's position but not dispositive. In that case, the redevelopment agency acquired the property and complied with the terms of the existing lease. The agency did not engage "in a pattern of conduct designed to evict the tenant from the site." (Id. at p. 443.) Almost five years prior to the termination of the lease, the tenant arranged for a new site for its business. The court held that the actual cause of the tenant's departure was its "unlawful possession of the premises after expiration of its lease." (Id. at p. 445.) The redevelopment agency purchased property in 1977 that was occupied in part by a tenant whose lease expiration date was in 1980. (Peter Kiewit, supra, 178 Cal.App.3d at pp. 438-439.) The agency and the tenant attempted to negotiate an extension agreement without success. When the tenant failed to vacate the premises and tendered an amount as rent, the agency declined to accept the rent and instituted unlawful detainer proceedings. The court concluded that the cause of the tenant departure was not the agency's acquisition of the property, but the tenant's unlawful possession of the premises after the expiration of the lease. (Id. at p. 445.) "Actual exercise of the power of eminent domain is not prerequisite to eligibility for relocation benefits." (Peter Kiewit, supra, 178 Cal.App.3d at p. 444.) The determination is based on whether there is "a causal connection" between the public entity's acquisition of the property and the displacement. (Ibid.) "A tenant holding under a lease which has not expired at the time property is acquired for public use and who continues lawfully in possession of the premises after termination of the lease will qualify as a 'displaced person' under section 7260, subdivision (c)." (Peter Kiewit, supra, 178 Cal.App.3d at p. 445.) A tenant in possession at the time of acquisition who remains in possession unlawfully after the expiration of its lease and is subsequently evicted is not a displaced person. (Peter Kiewit, supra, 178 Cal.App.3d at p. 445.) Similarly, if a tenant fails to pay rent, receives a three-day notice to pay or quit, and elects to quit the premises, then the departure is the result of the tenant's breach of the lease agreement and not the acquisition or a written order from a public entity to vacate the real property for public use. (Ibid.)