California Eminent Domain Report

For those of you involved in the transportation sector, we invite you to join us on Wednesday, June 3^rd for a discussion on planning, procurement and financing strategies that can be implemented now to support timely project delivery in the wake of the COVID-19 pandemic.  We are planning a very interactive webinar where ample time will be set aside to answer questions received from attendees both prior to and during the event.

Topics that will be covered include:

• How to prepare now to efficiently and effectively move projects forward
• Procurement and contracting strategies that enable ...

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We’ve previously reported on Senate Bill 917, which was introduced on February 3, 2020, by Senator Wiener (D-San Francisco) to establish a process for a potential government takeover of investor-owned electrical, gas and water corporations.  While the stated intention of the bill was to facilitate an eminent domain acquisition of PG&E by the state government, its wording goes much further.  Additionally, on April 3, a series of amendments were introduced that would potentially significantly change the burden of proof on a municipalization takeover effort. 

Specifically, the ...

With the recent government mandates surrounding COVID-19, many businesses are completely shut down and are legally unable to open their doors to the public.  Are those businesses -- movie theaters, gyms, retail stores, etc. -- entitled to compensation for a regulatory taking?  Similarly, landlords are experiencing massive losses as those tenants are unable to make rental payments; are those losses compensable?  Should governments worry about liability when issuing orders requiring the closure of businesses? 

While compensation arguably should be paid from a decency and “good ...

COVID-19 has undoubtedly upended the world, including the way we do business and the future of our economy. We have received a number of questions and concerns from clients in the right of way industry on how the current pandemic affects the way we do business, and what to expect going forward. Please read on for links to helpful resources...

Since the California Supreme Court’s 2019 Oroville decision, which narrowed inverse condemnation liability for public agencies, several court decisions have followed suit.  This week, the California Court of Appeal issued a published decision in Ruiz v. County of San Diego (2020 Cal. App. LEXIS 282), which further clarified and limited what constitutes a “public improvement” for purposes of inverse liability ...

While inverse condemnation liability in California originates from the California Constitution, determining when it applies -- and under what circumstances -- is based on a lengthy morass of case law that has been described by one court as “seemingly inconsistent and irreconcilable.”  If you’re interested in learning more about the subject ...

Brad Kuhn was quoted extensively in the Daily Journal article “Century-Old Doctrine  Haunts Fire Litigation.” The article provides an overview of how developments in inverse condemnation that occurred in 2019 pose numerous questions for 2020 in California. 

In the article, Brad commented on inverse condemnation—a legal provision under California state law that holds if a power company’s equipment starts a fire, it is responsible for paying property damages, even if they are not found to have been negligent.

He stated that the “inverse doctrine in and of itself is ...

Eminent domain is typically used for roads, utilities, schools, and even airports, but in California, it is quite unusual (perhaps even unheard of) to use eminent domain for space travel.  

But according to an article in the Antelope Valley Press, Eminent domain possible if airport land buy fails, that is exactly what's about to happen.  According to the article, the Mojave Air and Space Port Board of Directors agreed to move ahead with eminent domain for acquiring several vacant parcels of land if negotiations fail.  The properties are apparently necessary to expand the safety zone ...

Last year, the United States Supreme Court made headlines (at least in our eminent domain world) by issuing a ruling in Knick v. Township of Scott that property owners can bypass the state courts and directly file a Fifth Amendment takings claim in federal court (you can find our write-up on Knick here).  This was a stark shift from prior law, which held that a property owner had to first finalize their pursuit of compensation through any applicable state procedures.  We are still feeling the effects from the Supreme Court's holding, but one question that has been raised is how does the ...

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! ...

In an eminent domain proceeding, tenants of property subject to condemnation have constitutional rights to just compensation. However, those rights can be assigned to the landlord through a lease agreement. A recent unpublished Court of Appeal decision confirmed that commercial tenants can assign all claims to just compensation through the terms of a lease agreement ...

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 ...

Thanks to all of you who were able to attend Nossaman’s Coastal Law Conference last week.  If you missed the event, I provided an update on sea-level rise, managed retreat, and potential eminent domain / regulatory takings issues in California.  Specifically, I touched on: ...

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 ...

When entering into a lease agreement, parties rarely contemplate that the property may be subject to a future eminent domain proceeding.  As a result, many times the condemnation provision in the lease is given little thought.  But when a condemnation action does arise, that provision becomes critically important for purposes of determining how the eminent domain award is to be allocated among the property owner and business owner, and any ambiguities are likely to lead to a dispute as to apportionment of the award.  A recent California Court of Appeal decision, Thee Aguila v ...

Like the vast majority of general civil litigation, eminent domain matters usually settle before going to trial.  The resolution is typically documented in either a stipulated judgment or a settlement agreement.  What is unique to eminent domain, however, is that the settlements oftentimes take place before the public project is fully constructed, meaning the parties are resolving their claims based on the "project as proposed," without seeing the actual finished product or fully understanding its impacts on the property.  In documenting a settlement, property owners can ...

Many public agencies and utilities have easements for water or gas pipelines or electric transmission lines.  Those easements typically contain express rights to construct, operate, and maintain the facilities, including rights of access; but oftentimes the easements are silent on what rights are reserved to the private property owner, including whether the owner can place trees or other improvements within the easement area.  As utilities and public agencies are undertaking more thorough efforts to protect and maintain their rights-of-way, they are commonly seeking to remove ...

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 ...

More than 50 years ago, Caltrans purchased roughly 500 homes under threat of eminent domain within the planned right-of-way for the anticipated construction of the I-710 freeway (linking Monterey Park to Pasadena).  As we reported a number of years ago, Caltrans finally decided to sell those homes once it became clear the alignment would not be utilized.  We haven't heard much on how that sales process was going, but the Pasadena Star reported recently that it has been the subject of litigation, which has now reached an outcome.

In Steve Scauzillo's April San Gabriel Valley Tribune ...

As we have seen far too many times in California, eminent domain becomes a key tool for public agencies in order to keep public works construction on schedule and avoid jeopardizing state or federal funding.  According to an article in the Santa Cruz Sentinel, Santa Cruz council approves eminent domain for road widening, situation is playing out in Santa Cruz, where the City Council recently approved the adoption of a resolution of necessity to acquire two properties by eminent domain in order to satisfy a July deadline for a $2.8 million construction grant.

The properties in question ...

A few months ago, we reported on a Court of Appeal decision, Bottini v. City of San Diego, where the Court held that delays resulting from a governmental agency's improper denial of a permit application for a new development did not result in a regulatory taking.  The case involved a local agency's improper application of CEQA to a proposed residential development, and the property owner successfully securing a decision by the court to overturn the City's requirement to comply with CEQA where there was a clear exemption.  The owner also sought damages due to a lengthy delay in ...

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 ...

Ever since the demise of redevelopment agencies in 2012, there have been a variety of legislative efforts to revive, incrementally or in whole, some form of redevelopment in California.  We have seen enhanced infrastructure financing districts, community revitalization and investment authorities, and more traditional affordable housing authorities and joint powers authorities.  But we have yet to truly see a funding source that would revive the use of redevelopment tools.  The political climate is much different now than in was in 2012:  California has a surplus budget, there is an ...

On August 31, 2018, the California Legislature passed Senate Bill (SB) 901, which addresses a number of wildfire-related items relating to public utilities.  Governor Brown signed the Bill into law on September 21, 2018.

While the bill introduces a series of new changes, it is particularly noteworthy for what it does not include from Governor Brown’s initial June 2018 proposal for wildfire liability reform.  At least for the time being, lawmakers abandoned the most controversial aspect of Governor Brown’s proposal for the bill: modifying California's strict liability ...

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 ...

For those of you who have followed Nossaman’s eminent domain blog since the very early days, you’ll recall our coverage of a significant regulatory takings case, Monks v. City of Rancho Palos Verdes.  The 2008 California decision received much press coverage in that it was one of the very few instances where property owners overcame the myriad substantive and procedural obstacles and succeeded under a regulatory takings theory.  Now, ten years later, another group of property owners in Rancho Palos Verdes attempted to pursue a similar regulatory takings claim on the back of ...

We wanted to provide some timely articles for those of you in the eminent domain and valuation arena.

First, Brad Kuhn, the Chair of Nossaman’s Eminent Domain and Valuation Practice Group, was recently featured on the cover of the July/August 2018 issue of Right Of Way magazine—a publication of the International Right of Way Association.  Brad participated in an Industry Roundtable in the issue on leveraging the right of way professional in today’s fast-paced design-build world.  The  Roundtable examined the critical right of way component in infrastructure projects and how ...

The Federal Energy Regulatory Commission (FERC) recently issued a Notice of Inquiry seeking input on whether to adjust its policies and procedures for reviewing and issuing authorizations for natural gas transportation facilities.  FERC is specifically considering whether it should modify (i) its methodology for determining whether there is a need for a proposed project, (ii) its consideration of the use of eminent domain and landowner interests, and (iii) its evaluation of environmental impacts.  FERC is also considering whether there are ways to improve the efficiency ...

Many states have enacted eminent domain reform since the U.S. Supreme Court's 2005 decision in Kelo v. City of New London, which broadly defined "public use" to include the government's acquiring property for another private owner to realize an economic benefit (such as increasing tax revenues).  However, as reported by the Institute for Justice in its 50 States Report Card, many of those reform efforts have been insignificant.  And, despite repeated efforts over the last 13 years, Congress has yet to pass legislation limiting the use of eminent domain for truly ...

For years, the College of the Desert has been seeking to acquire the former Palm Springs mall in order to expand its campus to the west valley.  It has been quite a lengthy battle, as the property owner had repeatedly objected to the College's use of eminent domain for the site.  However, last week, the parties finally reached a settlement of the condemnation action, with the College agreeing to pay $22 million for the property -- dramatically more than the $9.6 million the College originally offered to pay.

According to an article in the Desert Sun, the 29-acre property will allow the College ...

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 we’ve seen all too many times in California, when local municipalities delay development approvals -- even improperly -- courts are reluctant to find liability under an inverse condemnation cause of action and award temporary damages. While there have been some successful cases (see Lockaway Storage v. County of Alameda (2013) 216 Cal.App.4th 161), those results are the exception, not the rule.  A recent court of appeal opinion, Mahon v. County of San Mateo 2018 Cal. App. Unpub. LEXIS 1483, provides an example of the uphill battle a property owner faces in successfully ...

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 ...

With the passing of California's new gas tax (SB1) earlier this year, local government agencies have come across a new source of funding to complete public infrastructure projects.  According to an article in the Ceres Courier, Caltrans Seeks Comments on Service Road Interchange, the City of Ceres hopes its Service/Mitchell/Highway 99 Interchange project can benefit from the new funds.  As part of the project, Caltrans and the City are planning one of the State's first "diverging diamond" designs, which would add a new interchange at Service Road and modify the Mitchell ...

In the vast majority of cases, when a public agency exercises eminent domain, the only issue in dispute is the amount of just compensation the agency must pay for the property being acquired.  Even in situations where a property owner challenges the agency's right to take, it is typically for procedural reasons that can ultimately be corrected.  However, where a property owner successfully challenges the agency's right to take, the consequences can be significant, as the agency is required to pay the property owner's litigation expenses -- including attorneys' fees, expert fees, and ...

Acquiring a fee interest in property seems to be so out-of-style.  Nearly every linear infrastructure project I work on now involves the acquisition of various types of easements, whether its a typical temporary construction easement, access easement, street/highway easement, or transmission line easement, or a more complicated aerial easement, parking structure easement, or floating easement.  The scope and terms of these easements can have massive ramifications on compensation, and particularly severance damages to impacted properties.  If you're interested ...

Having recently worked on a number of pipeline and transmission line projects, I find the issue of proximity damages to be fascinating.  Does being adjacent to gas pipelines or electrical transmission lines diminish the value of an owner's remaining property?  I have seen studies suggesting nearly every possible conclusion.  If you're interested in this subject, there's a great article that was recently published in the Appraisal Institute's Appraisal Journal, Summer 2017 edition, titled The Effect of High-Voltage Overhead Transmission Lines on Property Values:  A Review of ...

According to an article in the Los Angeles Times, California lawmakers pitch a break from a key environmental law to help L.A. Olympic Bid, Clippers Arena, California lawmakers introduced Senate Bill 789 last week in an effort to exempt from CEQA any rail, bus, or transit project connected to the 2028 Olympics, along with expediting environmental challenges to construction of the Clippers arena in Inglewood.  If passed, SB 789 would streamline such projects as the environmental review process is typically a multi-year undertaking.  The Bill was introduced by Senator Bradford ...

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 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 ...

We've previously reported on the recent passage of Senate Bill 1 (SB 1), The Road Repair and Accountability Act of 2017, which will raise approximately $52 billion in funding over the next 10 years specifically for transportation.  SB1 is now in full swing, and Caltrans is on a fast track to release new grant funding provided under the legislation.

On August 3, Caltrans released for public review and comment the final drafts of the SB 1 Sustainable Communities and Adaptation Planning Grant guides, which will provide more than $270 million in planning grants for local communities ...

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 ...

Public agencies own significant amounts of property throughout California and the United States.  Sometimes, those properties are not being put to a public use, and the government acts as a landlord, leasing out property to private entities.  But when the government is ready to put the property to a public use, and it terminates the lease, is there a "taking" of private property triggering the need to pay just compensation?  A recent unpublished Court of Appeal decision, California Cartage Company v. City of Los Angeles, addressed this issue and held that the government's termination ...

In California eminent domain proceedings, a property owner is entitled to the "fair market value" of the property being acquired.  Typically, fair market value is determined by analyzing comparable sales or by utilizing an income capitalization approach.  But every once in a while, there is no relevant market data, in which case the law permits determining compensation "by any method of valuation that is just and equitable."  (Code Civ. Proc., sec. 1263.320.)  A recent court of appeal decision, Central Valley Gas Storage v. Southam, explains when this "just and equitable" valuation ...