Eminent Domain Valuation: Defining the Limits of Admissible Evidence
Posted in Court Decisions

Eminent domain cases typically revolve around one issue in dispute:  the property's (or business') fair market value.  And when appraisers seek to reach their opinions of value, they typically rely on a standard body of data:  comparable sales; income and expense figures; and reproduction costs. 

But sometimes the evidence does not fit into one of these neat boxes, either because there is a lack of "classic" evidence or because one party is seeking to adduce evidence of value in a more creative way. 

A recent published decision, City of Corona v. Liston Brick Company of Corona, 2012 Cal. App. LEXIS 873, explores the use of some of these non-traditional sources of evidence.  In particular, the court focused on the property owner's efforts to use an appraisal on a large property (of which the take area at issue was a part), a purchase and sale agreement and option involved in the sale of that larger parcel, and evidence of the sale of that larger parcel itself. 

I must confess here that there are parts of the decision that leave me a bit confused as to the actual facts and arguments made in the case, but the outcome itself is pretty clear.  The court held that none of these types of evidence were admissible, which led to a stipluated judgment at the agency's appraised value. 

To understand these issues, one must delve into Evidence Code section 822, which contains a series of exclusions concerning admissible evidence in eminent domain disputes.  One of the key exclusions at issue in the Liston Brick Company case involved section 822(a)(1), which excludes "[t]he price or other terms and circumstances of an acquisition of property or a property interest if the acquisition was for a public use for which the property could have been taken by eminent domain."  The larger parcel transaction was a sale to the Riverside County Transporation Commission for several transportation projects, putting it squarely within the scope of section 822(a)(1). 

The court also examined section 822(a)(4), which excludes "[a]n opinion as to the value of any property or property interest other than that being valued."  This provision is usually pretty easy to understand:  you can't use an appraisal for property "X" in trying to determine the value of property "Y".  But in Liston Brick Company, the twist was that property "X" was actually a larger parcel that encompassed property "Y."  No matter, explained the court.  Because it was not the exact same property (and property interest), the appraisal was of some "other" property and was inadmissible.

There's more to the case, including a discussion about whether evidence indmissible for purposes of a party's case in chief can nonetheless be used in cross examination.  That analysis involves interpreting and, in the Liston Brick Company court's view, limiting, State of Cal. ex rel. State Public Works Board. v. Stevenson (1970) 5 Cal.App.3d 60.  You can read about these and other issues in the case in our E-Alert, Options, Agreements, and Prior Appraisals: Admissibility Issues in Eminent Domain Trials.

One other note about the case.  After losing all the evidentiary fights, the property owner simply stipluated to the agency's value.  While I have no idea what led to the owner's decision not to fight value, the decision may have been driven by a belief that without contrary valuation evidence to present, the jury would have no choice but to accept the agency's opinion of value. 

That might in fact be true, and it is indeed the holding of Aetna Life & Casualty Co. v. City of Los Angeles (1985) 170 Cal.App.3d 865.  However, there is also law that suggests that even without its own valuation evidence, a party is free to cross examine the opposing party's expert, hoping to convince the jury that the expert's opinion is too high (if the agency is the party without valuation evidence) or too low (if the owner is the party without valuation evidence).  (See Redevelopment Agency v. Thrifty Oil Co. (1992) 4 Cal.App.4th 469.)

We tried to frame this split of authority for the California Supreme Court a few years ago, but the Court denied our Petition for Review.  In my view, either a party with no evidence is stuck with the other party's value, or they remain entitled to a trial and a shot a cross examination.  I actually see good reason for either rule -- but I think that the rule should be applied consistenty.  Parties should not have this issue decided based on the mood or proclivities of individual trial judges (or which side's appraiser gets excluded).   I hope that at some point, the Supreme Court will step in and clarify this rule.   

  • Rick E. Rayl

    Rick Rayl is an experienced litigator on a broad range of complex civil litigation issues.  His practice is concentrated primarily on eminent domain, inverse condemnation, and other real-estate-valuation disputes.  His public ...

California Eminent Domain Report is a one-stop resource for everything new and noteworthy in eminent domain. We cover all aspects of eminent domain, including condemnation, inverse condemnation and regulatory takings. We also keep track of current cases, project announcements, budget issues, legislative reform efforts and report on all major eminent domain conferences and seminars in the Western United States.

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