California Eminent Domain Report

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 commencement of trial on the issue of compensation.  The motion shall be heard by the judge assigned for trial of the case.

(b)          Notwithstanding any other statute or rule of court governing the date of final offers and demands of the parties and the date of trial of an eminent domain proceeding, the court may postpone those dates for a period sufficient to enable the parties to engage in further proceedings before trial in response to its ruling on the motion.

(c)           This section supplements, and does not replace any other pretrial or trial procedure otherwise available to resolve an evidentiary or other legal issue affecting the determination of compensation."

Section 1260.040 was enacted in 2001. The Law Revision Commission’s Comments state that Section 1260.404 is intended to provide a mechanism by which a party may obtain early resolution of an in limine motion or other dispute affecting valuation.

Since section 1260.040 was adopted in 2001, I’ve found it to be very useful to bring issues before the trial court that have a direct impact on compensation. For example, if there is a question about whether a larger parcel exists, it’s a good idea to file a motion under section 1260.040 to get a decision from the court before your appraiser proceeds to appraise or not appraise severance damages.  Similarly, if there is a question about whether certain evidence must be ignored under the Project Influence Rule codified by Code of Civil Procedure section 1263.330, it’s best to secure a court’s ruling on the issue before appraisals are exchanged.  Securing these types of legal rulings impacting compensation has a number of practical advantages.  First, it reduces the risk that your expert’s opinion may be impeached or excluded.  Second, it may promote settlement.  Finally, it may save both sides in legal expenses to have these issues determined earlier in the case as opposed to just prior to trial via a motion in limine.

While section 1260.040’s applicability to direct condemnation cases is not controversial, there has been disagreement about whether it should apply to inverse condemnation cases. Yesterday, the California Court of Appeal issued a decision in Weiss v. The People ex rel. Department of Transportation, et al., in which the Court held that section 1260.040 is inapplicable to inverse condemnation cases.  In Weiss, the plaintiffs sued Caltrans and the Orange County Transportation Authority (OCTA) for alleged damages resulting from the construction of a sound wall along the 5-Freeway.  The plaintiffs claimed that the sound wall had the opposite effect and increased noise and related impacts on their homes thereby diminishing their property values.

Caltrans and OCTA filed a motion under section 1260.040 to argue that the plaintiffs could not establish liability. Essentially, the agencies used section 1260.040 as a motion for summary judgment.  The court granted the motion after finding that plaintiffs could not establish liability.  The plaintiffs appealed and argued that section 1260.040 does not apply to inverse condemnation cases, and should only apply to issues impacting compensation (and not liability) in eminent domain actions.  While a prior appellate court had previously decided that section 1260.040 does apply to inverse condemnation cases (Dina v. People ex rel. Dept. of Transportation (2007) 151 Cal.App.4^th 1029), the court in Weiss disagreed.  Without getting too much into the details here, I’ll just say that the court in Weiss relied on rules of statutory construction and the legislative history to reach its decision.  The court effectively concluded that because section 1260.040 is found in the eminent domain law, it does not apply to inverse condemnation cases.  The court also concluded that issues of liability are different from issues involving compensation, and that deciding liability does little to nothing to further section 1260.040’s goal of promoting settlement.

While it is true that section 1260.040 is found within the eminent domain law, there are other statutes within the eminent domain law that expressly state that they don’t apply to inverse condemnation. For example, section 1263.530 states that the goodwill statutes are not intended to deal with compensation for inverse condemnation claims for temporary interference with or interruption of business.  There is no similar express carve out for section 1260.040.

At present, there is a clear split between two appellate courts on this issue, so it’s possible the Weiss decision will be appealed to the California Supreme Court.  We’ll have to wait and see.  Until then, practitioners in inverse condemnation cases may be wise to stay away from section 1260.040 and instead rely on one or more other procedural mechanisms to tee up liability issues (e.g., motion for judgment on the pleadings, motion for summary judgment, or motion for nonsuit.)  These are hardly equal substitutes for the lenient notice provisions that apply to section 1260.040.  And section 1260.040 also enables a court to weigh evidence while pleading motions don’t.  But the current uncertainty surrounding section 1260.040 indicates that practitioners should stay clear from it in inverse cases unless and until the appellate courts resolve the disagreement between the Weiss and Dina courts.