Condemees Not Always Entitled to Fair Market Value?

Posted on June 21, 2010 by Rick E. Rayl

Another recent interesting court decision was somewhat lost in all the excitement last week over (1) the County of Los Angeles v. Glendora Redevelopment Project case striking down Glendora's redevelopment plan for inadequate blight findings and (2) the US Supreme Court decision in the Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection case rejecting a "judicial takings" claim. 

That recent decision was by the California Court of Appeal in City of San Jose v. Union Pacific Railroad, which came down a month ago, but received little attention as an unpublished decision on a narrow valuation issue.   But on June 11, the Court decided to publish its opinion, making it a whole lot more relevant to us eminent domain attorneys. 

In Union Pacific Railroad, the city sought to condemn an easement across a strip of land owned by the railroad company in order to widen an existing street.  The court held that the railroad was entitled to only nominal compensation for the portion of the property actually used for the rail line, explaining that a special rule applies in such circumstances pursuant to a 1925 California Supreme Court decision, City of Oakland v. Schenck (1925) 197 Cal. 456.

With some thoughtful analysis, it seems pretty clear that the Court got the decision right.  Under the facts as presented in the case, the easement did not diminish the value of the fee given its highest and best use as a rail line, meaning nominal value makes perfect sense -- and constitutes fair market value.  

But the Court apparently found the case to be more novel, concluding that it was bound to follow Schenck, but that the end result was a decision that did not afford the owner fair market value for the property taken.   In my opinion, the Court's analysis is wrong, even though its decision was right. 

For more details about the case, feel free to read my E-Alert, Court of Appeal Holds that a Condemnee is Not Always Entitled to Fair Market Value – But is That Really What the Court Means?
 

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City of Encinitas Turns to Eminent Domain for Drainage Improvement Project

Posted on May 17, 2010 by Brad Kuhn

According to a San Diego Union Tribune article that was published over the weekend, the City of Encinitas has turned to the use of eminent domain to complete a $1.3 million drainage improvement project for an area impacted by flooding.  The article, "Encinitas to seize land for drainage work," reports that the city has reached a deal with six of the seven impacted property owners.  The hold-out property owner will face having a portion of its property condemned so the city can expand an already existing easement and install a drainage pipe under a horse trail. 

The hold-out owner requested a delay in the decision to use eminent domain, but the city declined, citing the need to complete the drainage improvements during the dry season.  The city also noted that the easement will not require the demolition of any structures, and the horse trail will be rebuilt once the pipe is in place.

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American Canyon Settles Eminent Domain Lawsuit for Napa County Property

Posted on March 8, 2010 by Brad Kuhn

In February 2009, the city of American Canyon filed an eminent domain lawsuit in Napa County Superior Court to acquire vacant property on which the city intended to build two water storage tanks.  According to a Napa Valley Register article, "AmCan settles deal for water tank property," the city has now settled the lawsuit for $542,909.  In return, the city obtained 3.2 acres of unimproved land and an additional four acres for permanent and temporary easements.

It appears that the settlement was prompted by the court's recent ruling that the property owner was not entitled to severance damages to the owner's remaining 100-acres of property not being condemned by the city.  The court reasoned that "the construction and use of the water tank project did not cause the economic damages claimed by [the owner]."  As part of the settlement, the city has agreed to provide the owner with water and sewer services, potentially a major savings for the owner's planned residential development.

The city obtained prejudgment possession of the property early in the lawsuit, and construction of the first water tank is nearing completion.  The city, however, has been unable to find funds to pay for the second storage tank.  The second tank will eventually be connected to a high-pressure tank on a 313-acre preserve the Napa Valley Unified School District purchased several years ago.

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