California Eminent Domain Report

On November 27, 2019, U.S. Bankruptcy Judge Dennis Montali issued a Memorandum Decision on Inverse Condemnation (“Memorandum Decision”) in PG&E Corporation and Pacific Gas & Electric’s (together, “PG&E”) Chapter 11 Bankruptcy proceeding in the U.S. Bankruptcy Court for the Northern District of California (Case No. 19-30088).  PG&E challenged the application of the doctrine of inverse condemnation in connection with the 2015, 2017, and 2018 California wildfires.  In the Memorandum Decision, Judge Montali ruled against PG&E and instead concluded that the doctrine ...

As we have written about in past posts, the issue of inverse condemnation remains on the forefront in the state given the continuing, severe wildfire risks and other climate change impacts.  Brad Kuhn was recently quoted in the Wall Street Journal in “PG&E Isn’t Alone in Facing Liability Risk Over California Fires,” addressing liability associated with inverse condemnation.  Willis Hon also commented on the current legislative situation in an E&E News EnergyWire article:  “Legal 'whipsaw' threatens PG&E's future.”  If you’re interested in potential legislative ...

As we all get into the holiday spirit, don’t forget to keep your skills and knowledge sharp for what is looking to shape up as a very active 2020 in the projects arena.  Join our Nossaman Partners for the following year-end conferences before settling in for your long winter’s nap! ...

It is commonplace for a local government agency to require a property or business owner to secure a license or permit for a particular type of operation (such as a liquor license, medical marijuana license, etc.).  If the property owner expends substantial funds developing the business or property in reliance on that license or permit, and a government regulation thereafter prohibits that use, does it trigger a taking entitling the property or business owner to just compensation?  According to a recent California district court decision, the answer is no.  In ...

We recently reported on the California Supreme Court’s decision in Oroville which provided a relaxed standard for public agencies facing inverse condemnation claims.  Since that decision, a new unpublished Court of Appeal decision provides further guidance and supports the “reasonableness” analysis considered in Oroville, although in this case the decision was not as favorable to public entities with respect to determining whether the damage is caused by a public or private improvement ...

On August 15, 2019, the California Supreme Court issued its first inverse condemnation opinion in more than 22 years in the case City of Oroville v. Superior Court of Butte County, Case No. S243247.  The Court held that to succeed on an inverse condemnation claim, a property owner must show more than just a causal link between the existence of a public improvement and damage to private property:  it must demonstrate that “the property damage was the probable result or necessary effect of an inherent risk associated with the design, construction, or maintenance of the relevant ...

We've been tracking the impacts of sea-level rise in California, and previously reported on a potential recommendation by the California Coastal Commission to utilize eminent domain for "managed retreat" -- buying or condemning threatened homes and relocating them or tearing them down, which would thereafter free the coastline and preserve the beaches.  That recommendation has been met with widespread opposition.  According to an article in the San Diego Reader, "Don't say retreat when talking about sea rise in California," some local cities in San Diego are taking that option off ...

Inverse condemnation litigation and liability has become a particularly hot topic in California over the last several years.  Not many attorneys specialize in this area, and there are a number of traps for the unwary lawyers, public agencies, and property owners involved in such litigation.  A recent Court of Appeal decision provides some important lessons for all parties involved, including the risks of settling inverse condemnation claims with insurance companies, and pitfalls in recovering attorneys' fees ...

On June 5, 2019, the California Supreme Court (Court) heard oral argument in the case City of Oroville v. Superior Court of Butte County, Case No. S243247 (Oroville Case). This case is notable because it is the first time that the Court is weighing in on a significant case concerning the doctrine of inverse condemnation since Bunch v. Coachella Valley Water District ...

In Governor Gavin Newsom’s first State of the State address, he called for the creation of a strike force charged with developing a comprehensive strategy to address the destabilizing effect of catastrophic wildfires on the State.  On April 12, 2019, Governor Newsom announced the results of that dedicated effort, in the form of a report titled Wildfires and Climate Change: California’s Energy Future (Strike Force Report).  Governor Newsom also summarized the findings of the Strike Force Report in a press conference that can be viewed here.

The Strike Force Report first sets out ...

With the recent widespread reports of sea-level rise triggered by global warming, the California Coastal Commission -- a state agency which regulates coastal development -- plans to release a proposal in early-2019 which provides guidelines to local jurisdictions on how to combat the potential impacts.  The stakes are enormous, as the Commission believes many homes along California's 1,100 miles of coastline will inevitably be wiped out by a rising ocean.  According to an article by Anne Mulkern in E&E News, Calif. prepares policy for coastal 'retreat', the suggested ...

When the government physically takes or occupies property without first going through the rigorous procedural requirements under California eminent domain law, usually it's a clear-cut case of inverse condemnation liability.  But a recent California Court of Appeal case provides a unique exception involving property subject to dedication.

In Prout v. California Department of Transportation (Dec. 18, 2018, 2018 Cal. App. Unpub. LEXIS 8523),  Caltrans sought to use a 1.3-acre strip of land to make improvements to Highway 12 in Calveras ...

In a recent unpublished Court of Appeal decision, Downs v. City of Redding (October 30, 2018), the Court took up two distinct issues: (a) whether a contractor’s use of property for construction staging constitutes a taking when such use is not authorized by the agency, and (b) whether "just compensation" requires payment of damages for the taking of a tree.  Both of these issues are common occurrences in many of the projects we work on and while the Court’s holdings may not come as a surprise, they are a good reminder of the fairness and equity courts apply to such issues ...

The California Coastal Act establishes another layer of regulation governing development in the Coastal Zone. Development under the Coastal Act is defined to encompass essentially everything and anything.  For example, under the Coastal Act development includes such things as a lot line adjustment, releasing fireworks on the 4^th of July, or putting up a No Trespassing sign.  While there are certain limited exemptions, in most cases individuals undertaking any development in the Coastal Zone must obtain a Coastal Development Permit.  In certain instances, the local agency’s ...

When a governmental agency improperly denies a permit application for a new development, and the proposed development is thereby delayed, does this result in a regulatory taking?  As we've seen in some prior cases, such improper governmental actions can trigger liability, but it is uncommon.  A recent Court of Appeal decision, Bottini v. City of San Diego (Sept. 18, 2018), highlights just how difficult it is for a property owner to pursue a regulatory taking due to a delay caused by a city's improper denial of a development application.

Background

Bottini concerns the ...

When state and local governments impose unreasonable conditions or exactions on private property, owners pursuing a regulatory takings claim often face a maze of procedural obstacles just to have their case heard. I once described these procedural obstacles as resembling Alice's trip through Wonderland, with the parties falling in and out of state and then federal court (instead of a rabbit hole) based on procedural and substantive rules that often seem as logical as the Mad Hatter's recitals at the Tea Party. The reason for this maze stems from (i) a U.S. Supreme Court decision ...

As any experienced California eminent domain lawyer knows, there is a unique statutory mechanism that allows parties to bring a legal issues motion to secure a court’s ruling on a litany of issues that impact compensation. This statutory right is set forth in Code of Civil Procedure section 1260.040 and reads as follows:

"(a)          If there is a dispute between plaintiff and defendant over an evidentiary or other legal issue affecting the determination of compensation, either party may move the court for a ruling on the issue.  The motion shall be made not later than 60 days before ...

Infrastructure projects take years to develop:  the environmental review, funding, design, procurement, and construction of a public project is time consuming in any state, but even more so in California given the strict regulations and oversight any public agency must comply with.  During that lengthy process, private properties situated in the proposed project alignment remain in a state of flux.  When those impacted properties are slated for development, what are the parties to do?

According to an article in the Morgan Hill Times, Council OKs new housing in one of two ...

Two of the more complicated issues eminent domain attorneys face are analyzing whether government conduct rises to the level of a taking, and whether the government engaged in precondemnation conduct that gives rise to damages apart from paying just compensation.

Earlier this week, an unpublished California Court of Appeal decision, Dryden Oaks v. San Diego County Regional Airport Authority, grappled with both issues. (See update below.)

In Dryden Oaks, a developer purchased property near the Palomar Airport in Carlsbad.  The property was in an area governed by the San Diego ...

Under inverse condemnation law in California, a public agency is generally strictly liable for physical damage to private property caused by a public improvement.  This means a public agency can be held liable even if the public improvement was properly designed, constructed and maintained.  Rarely is there a question of whether a project constitutes a "public improvement," but in Mercury Casualty Co. v. City of Pasadena (Aug. 24, 2017), the Court of Appeal recently addressed this issue and held that a tree constitutes a work of public improvement for purposes of inverse ...

The City of Oroville (City) has petitioned the California Supreme Court for review of an unpublished Court of Appeal decision, City of Oroville v. Superior Court (2017) 2017 WL 2554447 (Third District), finding the City liable in inverse condemnation for sewage backup into private property even though the owners failed to install and maintain backwater valves on their private property as required by state and local legal authority.  While no published decisions have been issued on this subject, four unpublished decisions in different jurisdictions throughout California over the ...

The Martins Beach access dispute in San Mateo County continues to make headlines.  As a quick refresher, billionaire venture capitalist Vinod Khosla purchased 90 acres of beachfront property south of Half Moon Bay, and subsequently proceeded to lock the gated entry to Martins Beach, effectively preventing public access to the popular beach.  We've been covering the dispute for quite some time, including the recent introduction of legislation to potentially fund the State Lands Commission's use of eminent domain to acquire an easement for access to the popular beach.

While the ...

Last week, the United States Supreme Court in Murr v. Wisconsin issued a key regulatory takings decision which creates a new multifactor balancing test to determine whether two adjacent properties with single ownership could be considered a larger parcel.  In a 5-3 decision, the Court found that the properties were a single parcel and because the owners were not deprived of all economically viable uses of their property they could not establish a compensable regulatory taking.

The Murr Family owned two lots adjacent to a river.  A cabin was built on one of the lots, while the other lot ...

When public agencies analyze a potential public project, they often need to gain access to private property for surveys, testing, and to otherwise investigate whether a particular property is suitable for a planned project.  Often, agencies gain access by talking with the property’s owner and reaching agreement on a right of entry.  But where the owner refuses to allow access, the agency must resort to the courts.  For decades, agencies have followed a set of rules that allow them to obtain a court-ordered right of entry with minimal notice and without most of the formality of a ...

Last year, my partner Ben Rubin reported on the California Supreme Court's decision in California Building Industry Association v. City of San Jose, which analyzed an inclusionary housing ordinance and held that such ordinances do not qualify as "exactions" and, consequently, are reviewed under a deferential standard that looked at whether the ordinance was "reasonably related" to the city’s interest in promoting the health, safety, and welfare of the community.

Last month, we saw the first published decision following last year's Supreme Court pronouncement ...

We don’t often see multiple takings-related cases in one week, but last week we saw three.  The California Supreme Court’s decision in Property Reserve was obviously the most important, but the Fourth Appellate District Court of Appeal in San Diego also issued two decisions in the same week.  Although both of these opinions are unpublished and cannot be cited, they act as a reminder for property owners to be mindful of some basic principles of eminent domain law.

The first case, SANDAG v. Vanta, addresses some of the limits on the principle of just compensation and, in particular ...

In the last month, the U.S. Supreme Court has declined to hear appeals on two eminent domain-related cases.  The first case, California Building Industry Association v. City of San Jose, is one we discussed last year.  If you recall,  the California Supreme Court held that San Jose's inclusionary housing ordinance that required all new residential development projects of 20 or more units to sell at least 15 percent of the for-sale units at a price that is affordable to low or moderate income households did not impose an exaction on developers that constituted a taking.

The U.S ...

As an eminent domain attorney, when I think about a "takings" claim, I always think about a claim involving someone's real property.  Has the government trespassed onto private property, has it imposed regulations that deny the owner an economically viable use of the property, etc.?  But every once in a while, we get a reminder that "takings" do not always involve real property.  Rather, any private "property" may be taken.

Thus, we get cases like last month's U.S. Supreme Court decision in Horne v. Dept. of Agriculture.  There, the government sought to force raisin growers to turn over a ...

I wanted to provide a quick update on two recent cases from the California Court of Appeal.

The first, Golden State Water Company v. Casitas Municipal Water District (April 14, 2015), involves what appears to be an issue of first impression in California:  can Mello-Roos financing be used to fund an eminent domain action to acquire a utility company's assets?  In Golden State Water Company, the Casitas Municipal Water District wanted to acquire the assets of the Golden State Water Company for the purpose of taking over the provision of water to many residents in Ojai, California ...

It depends.  A recent decision out of the Federal Circuit tackled this very issue, and the court's decision strongly suggests that a taking could arise under the right circumstances.  (Filler v. U.S. (Fed. Cir. Mar. 10, 2015) Case No. 2014-5117.)  As you probably already guessed by my use of the phrase "strongly suggests," both the lower court and the Federal Circuit in this case found that the plaintiff's challenge did not present the "right circumstances."

After sustaining a work-related injury, an employee of the U.S. National Marine Fisheries Service visited the ...

California’s infrastructure is aging. There have been numerous reports of water line breaks and gas line leaks, and public agencies have been moving quickly to upgrade their utilities to minimize these risks and satisfy increasing demands. When incidents do occur, when do agencies face potential liability in inverse condemnation? A recent California Court of Appeal decision, Kelly v. Contra Costa Water District (Feb. 10, 2015) 2015 Cal.App.Unpub.LEXIS 924, while unpublished, provides some guidance.

In Kelly, the owners of a self-storage facility in Pittsburg, California ...

The burning question, is why?  While this is not the first time the U.S. Supreme Court has ever granted a petition for review in the same case, it is certainly not common.  And, it is downright uncommon for the Supreme Court to grant a second petition for review when the central issue in the case is a takings issue.  So what is the Supreme Court planning to do?  Are they going to revisit their 2013 decision and find that they made a mistake, and that the Hornes are actually required to first bring their takings claim in the Court of Federal Claims?  Or, is the Supreme Court ...

When a public agency acquires a portion of property, under California law the property owner is entitled to "severance damages" -- or damages to the remainder portion of the property that was not acquired.  Usually, determining what constitutes the "remainder property" is relatively straight-forward.  But not always.  And, the determination could have a significant impact on the amount of compensation the public agency must pay, as a property owner is not entitled to compensation for damages to separate and independent parcels that are not touched by the condemnation.

So how is the ...

In September 2014, the Court of Appeal for the Fourth Appellate District issued a surprising decision, finding that even if an applicant maintains that it is accepting imposed permit conditions "under protest" and expressly asserts that it plans to challenge those conditions in court, it waives any such challenge by building the approved project.  (Lynch v. California Coastal Commission (2014) 229 Cal.App.4th 658.)  In reaching this conclusion, the majority found that the protest procedure provided in the Mitigation Fee Act was inapplicable because that Act does not ...

On November 4, 2014, San Benito County voters went to the poles to vote on Measure J, the measure designed to prohibit hydraulic fracturing, known as fracking, and related gas and oil extraction activities, as well as other "high-intensity petroleum operations," including acid well stimulation and cyclic steam injection. The measure also banned any new gas or oil drilling activity - even conventional, low-intensity activity - in areas the county zoned for residential or rural land use.

With 59% of the vote, supporters approved Measure J in an effort to protect the local environment ...

In a published decision, the California Court of Appeal for the Second Appellate District rejected the California Coastal Commission's ("Commission") collateral estoppel argument and found that there is no rational nexus or rough proportionality between the work proposed by an applicant on a private residence a mile from the coast and a lateral public access easement imposed by the Commission as a condition of approval.  Accordingly, the easement condition amounted to an unconstitutional taking.  (Bowman v. Cal. Coastal Com. (Oct. 23, 2014).)

In 2002, the property owner of ...

During a windstorm, a tree owned by the City of Pasadena fell on Mr. O’Halloran’s residence, causing damage to his home. Mercury Casualty Company paid Mr. O’Halloran for the damage pursuant to his homeowner’s insurance policy, and then sued the City for inverse condemnation and nuisance based on the damages caused by the City’s tree.

Inverse Condemnation

To state a cause of action for inverse condemnation, the plaintiff must allege that defendant substantially participated in the planning, approval, construction or operation of a public project or improvement which ...

Downzoning property is always a thorny issue:  on the one hand, zoning changes are typical, "police power"-type governmental activities; on the other hand, they can significantly impact property values, and in some cases can result in governmental takings liability.  When a property owner experiences a change in zoning, there are typically two theories that can be pursued:  one is so-called "spot zoning," and the other is a regulatory taking.  

Under the first theory, "spot zoning," a property owner can have a zoning designation invalidated if it can prove the government targeted the ...

I'll give you a hint, this is a bit of a trick question.  Give up?  Okay.  Whenever you name a State agency, of course. 

In Lavine v. State of California (pdf), a property owner filed a lawsuit after the Regional Water Quality Control Board adopted, and the California State Water Resources Control Board approved, a ban on on-site septic systems in Malibu.  (Case No. B238030, Aug. 20, 2013, Unpublished.)  The plaintiff owned a single-family residence in Malibu that utilized an on-site septic system; no public sewer system was available to residences in the area.  Although the ...

It appears the raisin handlers' luck in the recent U.S. Supreme Court decision Horne v. US Department of Agriculture has spawned a new federal takings challenge by another group of fruit growers.  This time it's a group of tomato growers asserting a takings challenge against the federal government, with a bit of a twist.  (And yes, I had to check, but both raisins and tomatoes are technically fruits -- see the things you learn?)

According to an article in the Packer, Tomato growers say eminent domain applies to 2008 crop, tomato growers are suing the federal government for $40 million in ...

As an eminent domain lawyer, I sometimes feel about takings claims like Justice Potter Stewart felt about obscenity:  I know it when I see it.  But every so often, a case comes along that reminds us that we might need to dig just a little bit deeper. 

In TrinCo Investment Co. v. United States, No. 2012-5130 (July 18, 2013), it all starts out seeming so simple.  The government comes onto private property without permission, takes $6.6 million worth of timber without asking, and then wanders off without offering so much as a dime in just compensation.  Hard to miss this one:  it's an obvious taking. 

This week, the Supreme Court issued the second of its three takings decision for this term.  In Horne v. Department of Agriculture, No. 12-123 (June 10, 2013), the Court reversed an earlier decision by the Ninth Circuit Court of Appeals, holding that California raisin handlers could assert a takings claim as a defense to an enforcement action over alleged non-compliance with a raisin regulatory scheme.  

At first glance, the case appears to be of little consquence.  The factual background is quite unique, and the holding is pretty narrowly drawn to those specific ...

We have two big IRWA events coming up. 

IRWA Annual Education Conference

The biggest conference of the year, the IRWA Education Conference, starts June 23 in Charleston, West Virginia.  As always, there will be many great education sessions with strong panels of speakers.  There are also some fun social events and -- on Sunday and Monday -- an exhibition hall. 

Nossaman will be holding down the fort in Booth 305A, trying to keep the troublemakers next to us in line.  Yes, OPC, I'm talking about you. 

I will be there with my colleagues Ben Rubin, the incoming President for Chapter 67 in Orange ...

We've talked in the past about just how hard it is to state a regulatory takings claim under the Supreme Court's decision in Penn Central Transportation Co. v. New York City, 438 U.S. 104.  I'd go through the test and how hard it is again, but it's complicated, a lot of work and, quite frankly, I'm a bit tired today.  So here's my lazy approach.  Read one of our earlier posts on the subject: 

• Sometimes Regulatory Takings Do Exist Under Penn Central;
• Takings Claims and the Morass that Surrounds Them; or
• Major Regulatory Takings Case Reversed by Ninth Circuit. 

The bottom line is that the courts have ...

As we previewed in our recent "year in review" piece, the U.S. Supreme Court has some takings issues before it this term.  One case, Koontz v. St. John's River Water Management District, took center stage yesterday. 

At issue in the case is whether the the "nexus" and "proportionality" tests that we have all come to know in the context of real property dedications also apply to other efforts to impose exactions relative to property-development efforts. 

The case presents a new branch on the tree that arises from cases such as 1987's Nollan v. California Coastal Commission, in which ...

Earlier this week, I spent a day in Los Angeles at a seminar involving regulatory takings issues.  It featured a great panel of speakers on a variety of takings, eminent domain, and land use issues.  (In fairness, you should view my characterization of the panel's quality with some skepticism; I was Co-Chair of the seminar and therefore played a large role in assembling the panel.)

There were a number of quality take-aways from the day, but a few stood out for me. 

1. Mark Alpert of Hart, King & Coldren spoke on a number of regulatory takings issues, focusing in particular on the ...

A new Court of Federal Claims opinion was handed down this month coming right out of our own Southern California backyard.  The case, Stueve Bros. Farms, LLC v. the United States, deals with whether a "physical taking of title" has occurred when a government agency's activities create a risk of flooding.  The answer, according to the Court, is no.

Stueve Bros. Farms owns property in San Bernardino County within the Prado Dam Flood Control Basin.  In the 1940's, the federal government condemned flowage easements over the property to an elevation of 556 feet above sea ...

The California Court of Appeal recently issued an unpublished decision, Ridge Properties v. County of Riverside Flood Control and Water Conservation District, which addresses whether a government agency's failure to pay an agreed amount of compensation gives rise to a claim for inverse condemnation.  The answer is "no."

In Ridge Properties, a property owner planned to develop an industrial park in Riverside County.  The conditions of approval for the project required the owner to dedicate some of its property and construct a drainage or flood control facility to protect ...

Yesterday, we wrote about the Avenida San Juan Partnership v. City of San Clemente decision.  For more information on the decision, see the following:

• Man Bites Dog! California Property Owner Wins Regulatory Taking Case in the California Court of Appeal, a blog post by Gideon Kanner on Gideon's Trumpet;
• Either Reverse Your Unconstitutional Spot Zoning, Or Pay. Your Choice, by Robert Thomas on his inversecondemnation.com blog; and
• Eminent Domain: Winning Owner In Inverse Condemnation Battle Cannot Recoup Fees By Attorney Owner Or Reap A Fee Multiplier Request, a piece in ...

Last April, we reported on a bizarre case arising out of the City of San Clemente's attempt to down zone a piece of property.  The trial court had concluded that the down zoning constituted a taking and ordered the City to rescind a decision supported by that down zoning.  The City had denied an application to develop the property because the application did not conform to the current general plan and zoning ordinance (the City seems to have sidestepped the fact that the development applications included applications to amend the general plan and zoning). 

In addition to a writ of mandate ...