RR rolling over us, property owners say.

The price Atchison Topeka & Santa Fe Railway ultimately pays to acquire two Southland industrial properties - currently the subject of contentious condemnation proceedings - will most likely be decided in court.

The court battle results from condemnation actions filed by Santa Fe in Los Angeles Superior Court over the former Lever Brothers Co. soap factory in Commerce and the so-called ANR truck-yard in Vernon.

Santa Fe claims it needs the two properties to expand its Hobart Yard facility, which borders the cities of Vernon and Commerce, and thereby have the capacity to handle the increased rail traffic that has been generated on local tracks. Through its state-granted power as a public utility, it sued in Superior Court earlier this year to condemn the two sites.

The owners of the properties counter in court documents that Santa Fe is now valuing the properties far below the amounts the railway had offered for them prior to initiating the condemnation proceedings.

Santa Fe's attorney contends the properties are now not worth as much as the railroad originally offered. Various "contingencies" attached to the original sales agreements - and not involved in the condemnation actions - account for much of difference, the documents state.

Now, unless the parties are able to settle, the price Santa Fe will end up paying will be decided by Superior Court juries. No trial dates have yet been set, however.

Santa Fe filed to initiate condemnation proceedings on the 32-acre former Lever Brothers soap factory at 6500 E. Sheila St. in Commerce last February. It filed over the ANR truckyard, a 10.7-acre property owned by trucking company ANR Freight System Inc., at 3677 Bandini Blvd. in Vernon in March.

In seeking condemnation on the Lever Bros. property, Santa Fee put its initial deposit, or the "just compensation" it expects to pay the property owners, at $8 million.

Adjustment for 'credits'

But after months of pleadings in the case, Judge Bruce Mitchell last month ordered Santa Fe to increase its deposit by more than 62 percent. His order technically upped the deposit to $13.1 million, but also granted Santa Fe "credits" reducing that amount by $1.14 million.

The $13.1 million figure reflected the amount a partnership affiliated with Irvine's Sanderson-J. Ray Development paid a Lever Brothers Co. affiliate for the property in February - four days after Santa Fe had initially filed documents commencing the condemnation. The Sanderson group then sold a 10-acre portion of the site to businessman Moussa Peykar for $6.2 million.

The deductions from the increased deposit Judge Mitchell ordered represent a $1.04 million credit for demolition work already done on the site, and $100,000 for so-called "sewer credits" that Peykar transferred to a nearby property he owns.

Attorneys for Santa Fe had claimed in court documents that the transfer of the sewer credits - or "discharge capacity units" allowed by the L.A. County Sanitation District - reduced the property's value by $6 million. But Judge Mitchell's order appears to value the credits at only a small fraction of that amount.

Attorneys representing Lever Bros. property owners Sanderson and Peykar also alleged in court documents that Santa Fe had made two offers - at $14 million and $14.25 million - before initiating the eminent domain suit.

Trial likely

Santa Fe's attorneys countered in their pleadings that any alleged offers included "a number of contingencies" - including the sewer credits. They added that evidentiary rules prohibit such offers from being used as direct evidence to establish value.

A jury trial to determine the price Santa Fe will pay for the Lever Bros. site will most likely take place, but no date has yet been set, said Santa Fe attorney Benjamin Salvaty, a senior partner in the downtown L.A.-based law firm Hill, Farrer & Burrill.

In the meantime, Santa Fe has until Oct. 6 to deposit the additional $3.96 million the Judge Mitchell required, Salvaty said.

Also, a judge is expected to rule Dec. 18 whether Santa Fe can take possession of the property. That issue is currently being settled, however, and it is unlikely Santa Fe will face any opposition, Salvaty added.

In the ANR case, Santa Fe originally agreed to acquire the property for $4.85 million in mid-1994, and actually began leasing it from ANR for $39,000 a month beginning in August 1994, according to a court document filed by ANR' s attorneys.

In the meantime another party, ConWay Transportation Services Inc., agreed last February to buy the property at the same $4.85-million price if Santa Fe backed out.

Santa Fe did back out a month later "purportedly as a result of its inability to obtain permits it needed from the City of Vernon," to adopt the site for its use, the ANR document stated.

However, Salvaty said it was ANR that canceled the agreement because Santa Fe didn't get the approvals in a timely manner.

Lawsuit filed

Almost immediately afterward, Santa Fe filed its suit to condemn the property, and Con-Way withdrew its agreement to acquire the property, the ANR document states.

In its condemnation proceedings, Santa Fe pegged the "just compensation" at $3.7 million.

ANR's attorneys filed pleadings claiming the railway had earlier offered to pay 31 percent more.

Salvaty justified Santa Fe's $3.7-million valuation by stating in a court document that many of the guarantees and covenants that ANR would have provided in the event that Santa Fe bought the property would not be provided if it was taken in condemnation proceedings. All of these "very easily could" add up to $1.1 million, Salvaty said.

Santa Fe, however, voluntarily agreed to increase its deposit by some $870,000 - to about $4.5 million.

ANR also initially challenged Santa Fe's right to condemn the property under the grounds that ANR also has the power, as a public utility, of eminent domain. However, it backed off when Santa Fe agreed to increase its security deposit, Salvaty said.

Santa Fe took possession of the property May 8. A jury trial to determine the price Santa Fe will pay for the property also will probably be held, but no date has been scheduled, Salvaty said.