Eminent Domain: Who "Wins" When a Case Settles?
Posted in Court Decisions

As an eminent domain attorney, a litigated outcome nearly always comes with the satisfaction (or devastation) of realizing that you have won or lost.  Sure, sometimes the jury splits (in fact, that probably happens most of the time), but the result can be placed in the context of the settlement negotiations that took place leading to the trial.

A verdict much better than the settlement possibility feels like a "win" and a verdict much worse than an offered settlement understandably feels like a "loss."  It's really pretty simple.

But I have not had enough decisions to have empirical evidence of whether settling is better than trial in the long run.  And I certainly don't know whether it matters whether I represent an agency or a landowner/business owner in this respect.

The good news is that someone else had done this empirical work, and there results are pretty interesting.  The bottom line of this research seems to involve two outcomes:

  1. Agencies are more often "correct" in rejecting an offered settlement and proceeding to trial.  In other words, when the agency turns down a demand, it will do at least as well or better at trial far more often than a landowner who rejects a settlement offer.  On the other hand,
  2. When the agency makes a mistake, the costs are much higher than a landowner's mistake.  In other words, while the agency "misses" less often, when the agency does miss, it will often get killed at trial.

This research was brought to our attention by Stanley Leasure, who writes a fairly new blog, Eminent Domain ADR.  Mr. Leasure is reporting on a 2008 study published by Randall L. Kiser, Martin A. Asher, Blakeley B. McShane in the Journal of Empirical Legal Studies titled Let's Not Make a Deal: An Empirical Study of Decision Making in Unsuccessful Settlement Negotiations.

To be honest, I have not yet managed to get my hands on the actual article, so I cannot meaningfully comment on or critique Mr. Leasure's characterization of it.  I will say, however, that though I had never really thought about the issue in quite this way, the conclusions seem to make sense.

Generally speaking, I think landowners are more often guilty of having a higher opinion of the value of their property than is warranted.  This is natural, and presumably derives at least in part from the emotional attachment and value many people place on their own property -- but which the market does not recognize.  (The same concept would apply to business owners.)  For this reason, it can be difficult for an owner to accept the reality of "fair market value" in a forced transfer.

On the other hand, we have all seen that when the agency gets it wrong, it can get it really wrong.  The downside for an agency, especially in a severance damage or goodwill context, can be almost limitless, and it does not surprise me at all that the wildest misses are on the agency side.

I'm going to work on getting my hands on the article itself, and I may have more to say about it down the road.  In the meantime, it seems that Mr. Leasure is working on a series of blog posts on this topic, and if you are interested, you may want to follow along at blog.edom-adr.com.

  • Rick E. Rayl
    Partner

    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 in California. We cover all aspects of eminent domain in California, 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 California eminent domain conferences and seminars.

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