Eminent Domain Report

The California Department of Transportation (Caltrans) and the owner of Silveira Ranch are involved in an interesting valuation dispute stemming from Caltrans' acquisition of part of the ranchland needed for Highway 101 improvements.  According to an article in the Marin Independent Journal, Judge gives state a nod in Silveira ranch eminent domain case, the parties disagree on the property's highest and best use, and as a result, they are widely off on their valuation opinions.  Caltrans has offered the owner $1.8 million for the acquisition, while the owner is demanding $6 ...

California continues to move forward with more infrastructure improvement projects.  According to an article in the Daily Republic, Agency starts eminent domain proceedings for I-80/680 project, the Solano Transportation Authority and the California Department of Transportation (Caltrans) are embarking on a $100 million-plus project to improve traffic flow near the Interstates 80 and 680 interchange.  The project includes widening the freeway and constructing new on-ramps at the Green Valley Road interchange.

In order to move forward with project construction ...

For all you Southern California right-of-way folks, the next few weeks have quite a bit in store.  Here's what's going on in the local International Right of Way Association (IRWA) Chapters:

• IRWA Chapter 57 Meeting (2/6/13):  This Wednesday, February 6, IRWA Chapter 57 (Inland Empire) will be hosting its monthly luncheon at the Old Spaghetti Factory in Riverside.  The guest speaker is Mike Mason, MAI, from Overland, Pacific & Cutler.  Mike is a well-known eminent domain appraiser in Southern California, and his presentation is titled, "How Appraisers Lie Without ...

In Lost Tree Village Corporation v. United States, the Federal Circuit addressed this question head on, concluding, to the surprise of no one, that the answer will largely depend upon the unique facts in each case. 

The question arose because the Army Corps of Engineers denied Lost Tree Village Corporation (Lost Tree), a commercial and real estate developer, a permit to fill wetlands on a 4.99 acre plat.  The 4.99 acre plat (Plat 57), along with one other plat (Plat 55) and some scattered wetlands, were holdovers from various properties totaling ...

Given how much publicity the proposal to condemn underwater mortgages received when it first appeared last summer, I suppose it's not surprising that San Bernardino's decision last week not to move forward has also garnered a lot of attention.  Still, it's been hard to keep up with the many articles on the subject these past few days.

If you're trying to keep up as well, here are a number of pieces published over the last few days:

• A January 25 article by Erin Coe on Law360 entitled Calif. County's Halted Mortgage Seizure Plan May Deter Others, that focuses on the question of whether San ...

For the better part of a year, we've been writing about the controversial proposal to use the power of eminent domain to condemn underwater mortgages, allowing homeowners to have a new loan that better reflects the underlying value of the property. 

While the proposal originates from a private company, Mortgage Resolution Partners, much of the media attention focused on a single geographic location:  San Bernardino County, where (at least according to the Wall Street Journal) Mortgage Resolution Partners claims 42,000 of the County's 59,000 privately held mortgages are ...

As we previewed in our recent "year in review" piece, the U.S. Supreme Court has some takings issues before it this term.  One case, Koontz v. St. John's River Water Management District, took center stage yesterday. 

At issue in the case is whether the the "nexus" and "proportionality" tests that we have all come to know in the context of real property dedications also apply to other efforts to impose exactions relative to property-development efforts. 

The case presents a new branch on the tree that arises from cases such as 1987's Nollan v. California Coastal Commission, in which ...

As recently reported in the San Clemente Times, Caltrans is scheduled to begin construction on the Interstate 5/Ortega Highway Interchange project in mid-February.  (See Brian Park's article in the San Clemente Times, Jan. 10, 2013.)   The project, which will reconfigure the Ortega Highway bridge and a number of on-ramps and off-ramps in order to relieve congestion, has had substantial impacts on property owners and businesses.  According to the article, Caltrans anticipates having a complete project schedule by the end of the month.     

As we mentioned in our recent 2012 Eminent Domain Year in Review, we've seen a boom of infrastructure projects in California -- a trend we expect to continue into the near future.  So what exactly are we talking about?  Here's just a few examples:

• California Transportation Commission's $64 Million Allocation:  According to a Caltrans press release, the California Transportation Commission (CTC) recently allocated $64 million to 43 projects that will reduce traffic congestion and repair highways, local streets, and bridges.  You can find a list of the projects ...

For our readers who do not subscribe to Nossaman's Eminent Domain & Valuation Group E-Alerts, I'd suggest you check out our 2012 Eminent Domain Year in Review & 2013 Forecast.  There have been a lot of published court decisions this year, along with some interesting stories making the headlines.  The year in review is a nice, concise summary of what's taken place, and also a look forward to what to expect in 2013. 

We hope you've enjoyed our blog over the last few years.  If you have any suggestions for other topics or materials, or if we put out too much or too little content, please let us ...

In order to construct the Silva Valley Interchange on Highway 50, the El Dorado County Board of Supervisors passed a Resolution on January 4, 2013 to acquire approximately 12 acres by eminent domain.  As reported by In El Dorado County, the county could not negotiate a deal with the owner of a 52 acre block of which the county seeks the 12 acres. The owner did not oppose the project but expressed concerns as to the impacts it would have on his remaining acreage. 

While the Board maintains that using eminent domain is not common for them and Caltrans forced its ...

This is a bit last minute, but I wanted to remind our readers to attend the International Right of Way Association (IRWA) meetings this week in Orange County and the Inland Empire.  Here's what to look out for:

• IRWA Chapter 67:  Orange County holds its monthly luncheon today, January 8.  John Ellis from Integra Realty Resources Los Angeles will provide us with an update on the 2012 real estate market and what to expect in 2013.  John and Integra are integrally tapped into the Southern California real estate market, so those in attendance should get some great insights. 

The Court has once again reminded us that it takes its role as gate keeper seriously.  This week, in an unpublished case, the Court of Appeal issued a decision that serves as a not-so-gentle reminder that business owners are entitled to loss of business goodwill only if they meet the four threshold requirements set forth in CCP § 1263.510: (1) the loss is caused by the taking, (2) the loss cannot be prevented by relocation of the business or taking steps a reasonably prudent person would take to preserve goodwill, (3) compensation was not paid through relocation funds, and (4) the ...

One of the prerequisites to instituting an eminent domain action is the governing agency's adoption of a resolution of necessity to acquire the necessary property.  At the time of adopting the resolution, the agency cannot be precommitted to moving forward with the condemnation.  In other words, the resolution hearing cannot simply be a "rubber-stamped," predetermined result.  

While it has happened, it is a very difficult, uphill battle for a property owner to prove that the government agency was precommitted to the taking at the time of the resolution hearing.  The agency can -- and ...

After passing on a number of Fifth Amendment issues in recent history, the U.S. Supreme Court is scheduled to hear three cases this term in which the takings clause plays a prominent role.  And today, the Court addressed the first of these three cases, holding that a temporary-flooding can result in a taking requiring just compensation under the Fifth Amendment.  

In Arkansas Game and Fish Commission v. United States, the Arkansas Game and Fish Commission argued that a temporary but reoccurring flooding of its property resulted in a taking requiring just compensation.  The ...

A couple of weeks ago, the California Court of Appeal issued a decision that discussed an attorney malpractice lawsuit known as a settle and sue case, where the client settles whatever litigation in which they are embroiled, then turns around and immediately sues their attorney. (Filbin v. Fitzgerald, 2012 WL 5857331). Incidentally, that malpractice action stemmed from an eminent domain case, and if you're interested in it, there's some good lessons to be learned about the Final Offer/Final Demand procedures. 

But this post isn’t about that case -- or "settle and sue" ...

Eminent domain cases are unique in that the roles of the judge and the jury do not match the typical civil jury trial experience where the jury is the arbiter of fact and the judge decides the law.  In eminent domain, the judge still decides the law, but the role is larger, with the judge also deciding many issues of fact.  Drawing the line between the judge's role and the jury's has been a long-standing battle, with condemning agencies typically seeking an expansive role for the judge and condemnees seeking to place everything in the hands of the jury. 

The dispute centers around a deceptively ...

When I was a child, a long long time ago, I learned the importance of paying attention to detail.  While I will not bore you with the details of my adolescence and the shenanigans that forced my parents to drive home this message, I will tell you that I certainly learned to always cross my T's and dot my I's.  Late last week, the California Court of Appeal issued an unpublished decision in Compton Unified School District v. Hassan, Case No. B233412, prohibiting an after-the-fact challenge to a condemnation order issued almost two years prior, largely on the ...

Those don't quite sound like the lyrics to the early-90's popular Ace of Base hit, "The Sign."  But they likely describe the situation of many travelers on the I-10 freeway in Los Angeles thanks to a recent California Court of Appeal decision denying a property owner's inverse condemnation action, and upholding Caltrans' required removal of an 8,000 square foot "wallscape" advertising space on the 155 West Washington Boulevard building.  

In West Washington Properties v. California Department of Transportation, a property owner filed an action against Caltrans seeking to (1 ...

Ever since we started this blog, one of the big topics we've touched on repeatedly deals with public agencies running into issues when trying to secure possession of property for right of way projects.  Whether it's due to project funding constraints, federal oversight demands, construction contract deadlines, project timing requirements, or difficulties dealing with impacted property and business owners, agencies are routinely pressed with stressful deadlines to start building their projects.  Would you like to know what pitfalls to look out for and how to avoid them?  ...

Earlier this week, I spent a day in Los Angeles at a seminar involving regulatory takings issues. It featured a great panel of speakers on a variety of takings, eminent domain, and land use issues. (In fairness, you should view my characterization of the panel's quality with some skepticism; I was Co-Chair of the seminar and therefore played a large role in assembling the panel.)

There were a number of quality take-aways from the day, but a few stood out for me. 

• Mark Alpert of Hart, King & Coldren spoke on a number of regulatory takings issues, focusing in particular on the ...

While most lawsuits typically start with the filing of a complaint, eminent domain cases really start one key step earlier, with the condemning agency’s adoption of a Resolution of Necessity.  The Resolution establishes (i) the agency’s right to take the property and (ii) the scope of the acquisition.  In order to adopt a Resolution, the agency must make a set of findings, including finding that [t]he proposed Project is planned and located in the manner that will be most compatible with the greatest public good and the least private injury.  In Council of San Benito County ...

A few weeks ago, the California Court of Appeal issued an interesting unpublished decision detailing a long, drawn-out eminent domain battle in Riverside County.  I haven't blogged about it yet because, well to be honest, it feels like such a crazy story I couldn't figure out where to start or what to cover.  But here we go.

Background

The case, Elsinore Valley Municipal Water District v. O'Doherty, starts off rather dull.  In order to serve a residential development, the Water District planned to construct a pump station in a public right of way.  Because it was believed the planned ...

On occasion, public agencies decide to abandon or partially abandon an eminent domain proceeding.  The most typical reason is due to a revision in project design, making the property no longer necessary for the proposed project.  However, to the surprise of many, an abandonment can also occur after an agency receives an unfavorable jury verdict.  Code of Civil Procedure section 1268.510 provides that an agency "may wholly or partially abandon the proceeding" any time after filing the complaint up until 30 days after the entry of final judgment.  (The only exception is if the ...

Inverse condemnation claims can be tricky, particularly in the regulatory context.  You don't want to file your claim too soon, as that will likely result in your claim being booted out of court on ripeness grounds.  But you also don't want to file your claim too late, as that can result in your claim being barred by the applicable statute of limitations.  It is a delicate balance, and one that can often defy logic.  (For a real world example of this Catch 22, see Brad Kuhn's Blog Post.)  Last week, in Rivera v. County of Solano, Case No. A133616, the California Court of Appeal ...

As the summer months come to an end, it means the International Right of Way Association monthly luncheons are set to resume -- at least in Orange County and the Inland Empire (those crazy right of way folks in Los Angeles go year-around).  Chapter 67's lunch is scheduled for September 11 at the Marriott in Santa Ana, and Chapter 57's lunch is set for September 12 at the Old Spaghetti Factory in Riverside.  So what's on tap?

In Orange County, my partner Rick Rayl will be presenting on the use of eminent domain for underwater mortgages.  We've covered this topic in detail here on the blog, but please ...

On August 30, 2012, the Second Appellate District of the California Court of Appeal held that a privately owned utility could be subject to strict liability for inverse condemnation, thereby concurring with a similar holding previously reached out of the Fourth Appellate District.

A typical inverse condemnation action is initiated when a property owner files a complaint essentially asserting that a government agency is trying to take its property without filing a formal eminent domain action.  Typical inverse condemnation claims involve ...

Below are some updates on California projects have turned to eminent domain to complete right-of-way acquisition.  They involve issues that are somewhat typical in condemnation proceedings: disputes over severance damages and a property's highest and best use.  

• Riverside County Flood Control Project:  According to an article in the North County Times, LAKE ELSINORE: Board authorizes condemnation for flood channel, the Riverside County Board of Supervisors has approved the use of eminent domain to acquire a 5-acre easement across a 33-acre property for the Arroyo Del Toro flood ...

The FHWA recently published a series of useful short videos on its website.  For those of you working on transportation projects involving federal aid, check them out below:

• Right-of-Way Coordination and Certification Requirements.  Before an agency gets to construct its project, it needs to coordinate and certify the right-of-way.  This video provides an overview of the initial coordination process when federal funds are involved, including what must be completed before putting a project out to bid, and the need to obtain physical possession of the impacted properties.

I know our blog is called the Eminent Domain Report -- implying we only cover eminent domain-related issues, but in actuality we cover anything valuation-related.  After all, our group of attorneys is known as the Eminent Domain & Valuation Practice Group.  With that said, an interesting value dispute has popped up, making its way to the California Supreme Court.  This one deals with whether intangible assets should be included in one's property tax assessments, and we're looking forward to the Court's decision.

The case, Elk Hills Power v. California State Board of Equalization, deals ...

Earlier this year in City of Livermore v. Baca, the California Court of Appeal held that as long as an expert can identify damages arising from a taking or public project, those damages likely will not qualify as speculative, and they can be presented to a jury in an eminent domain action.   Did this broad holding turn upside down traditional rules of admissibility and recovery of damages, or did it just affirm existing law?  And how will courts apply Baca in the future?  Two recently issued unpublished appellate decisions may help guide the way.

The Superior Coatings Decision

Last ...

If you're an infrastructure and right of way junkie like me, you'll be interested in a few of the updates below.  If you're not a transportation nut (and understandably so), it still doesn't hurt to get caught up on the happenings in California and at the federal level.  So read on.

MAP-21:  This Summer, Congress passed the "Moving Ahead for Progress in the 21st Century Act."  If you ever hear the acronym MAP-21 thrown around, this Act is what's being referred to.  What does it do and why do you care?  In its simplest terms, the Act reauthorizes transportation funding through the end of 2014.  But it is ...

In my recent post on City of Corona v. Liston Brick Company of Corona, 2012 Cal. App. LEXIS 873, I took a few minutes to discuss the conflict under California law concerning what happens when one side presents a valuation opinion and the other does not.  As I explained there, while I can see a basis for a rule that the jury must accept a single opinion of value OR a rule where the jury remains free to reach its own conclusion even if only one opinion is presented, I have a real problem with the current state of the law -- where sometimes the jury gets to decide and sometimes the judge directs a ...

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 ...

Two recent news articles caught my eye about a project taking place in San Diego County.  A North County Times article, ESCONDIDO: Eminent domain hearing set for Bear Valley properties, reports that the San Diego County Board of Supervisors was set to vote this week on potentially using eminent domain to acquire necessary properties for the expansion of Bear Valley Parkway.  While the project would widen the busy roadway from two to four lanes, add a center median and bicycle lanes, it would also necessitate the demolition of 18 homes and the taking of 32 slices of property -- mostly ...

This underwater mortgage / eminent domain issue does not appear to be going away any time soon.  Along with eminent domain attorneys Robert Thomas from Hawaii, Casey Pipes from Alabama, and Tom Olsen from New Jersey, I spoke last Friday at the ABA Annual Meeting in Chicago -- one of the cities apparently considering the plan.  The presentation itself did not focus on the underwater mortgage plan, but many of the questions at the end did.  Indeed, the issue generated more buzz in the room, by far, than any other.

This week, the news is that the Federal Housing Finance Agency ("FHFA") has ...

Over the past few days, I've had several conversations and have received a number of emails concerning the underwater mortgage series I posted recently.

Rick Friess, one of my former colleagues, commented on the series and provided two additional sources of concern.  Because I suspect many people missed his comment, I'm copying it here:

I agree with your analysis, and I see at least two other reasons this plan will not work. First, many, if not most, of the loans are likely refiances, not purchase-money loans, so the lenders will have recourse against the borrower. Thus, if the lender is ...

In two previous posts, I've discussed the proposed plan to condemn underwater mortgages and have analyzed the plan's legality.

Today, I want to talk briefly about whether the plan makes sense -- and whether it would work.  To assist those who don't want to spend much more time on this issue, I'll start with the bottom line:  I think this is a bad idea and that it will not accomplish its intended goal.  I also think the plan carries some potentially harmful baggage.

So why do I think the plan will fail?  Pretty simple, really.  The entire premise behind the plan is to acquire loans at less than their ...

Today I want to focus on whether the plan to seize underwater mortgages through eminent domain is legal. Getting into this topic, in my view the debate should not focus on whether this plan passes constitutional muster at the federal level.  I've seen much written on this subject, but I really think this is a red herring, and that the answer is pretty easy.   While others disagree, I believe the plan passes constitutional muster at the federal level.

The U.S. Supreme Court has issued a long line of cases that all make pretty clear that the government could constitutionally condemn ...

Anyone who follows eminent domain issues no doubt by now has heard about the plan of some government agencies to condemn underwater mortgages -- essentially as a mechanism to refinance those loans to give borrowers loans that better reflect the current fair market value of their homes.

There has been much debate on the issue, and it has included a whole lot of rhetoric that has started to look a bit like an election campaign. I've heard extreme arguments both in favor and against the plan.

My intention here is not to advocate for or against the plan. Rather, I hope to help better -- and more ...

The parade of lawsuits involved in the redevelopment dissolution process continues to grow.   Here are a few quick updates:

• Five San Diego County cities have sued the state over AB 1484.  Chula Vista, National City, Oceanside, San Marcos and Vista have joined forces to attack the law.
• In Northern California, El Cerrito has also sued, claiming the "true up" payment it purportedly owes ($1,756,794.67) is unlawful.  Read more about the El Cerrito lawsuit in the July 17 El Cerrito Patch article, City Sues State, County Over $1.76 Million "Demand for Payment".  Other cities have also reportedly ...

A new Court of Federal Claims opinion was handed down this month coming right out of our own Southern California backyard.  The case, Stueve Bros. Farms, LLC v. the United States, deals with whether a "physical taking of title" has occurred when a government agency's activities create a risk of flooding.  The answer, according to the Court, is no.

Stueve Bros. Farms owns property in San Bernardino County within the Prado Dam Flood Control Basin.  In the 1940's, the federal government condemned flowage easements over the property to an elevation of 556 feet above sea ...

Ever since the Supreme Court issued its decision in the Matosantos case last December, facilitating the dismantling of California's redevelopment agencies, there has been talk of new legislation -- either in the "clean up" variety or in the substantive overhaul variety. 

Today, the Legislature passed AB1484 as a budget trailer bill (the Senate approved the bill at around 1:30 p.m., and the Assembly followed about an hour later).  

AB1484 probably qualifies as too substantive to be characterized as mere "clean up," though it falls short of a major overhaul of the system.  And it ...

A few odds and ends for our readers:

• New Federal Eminent Domain Legislation:  According to the Eminent Domain Law Blog, two Senators have introduced a new bill, Protection of Homes, Small Businesses, and Private Property Act of 2012.  This, again, you may ask?  What ever happened with HR 1433, the Private Property Rights Protection Act of 2011?  HR 1433 appears to be dying a slow death, but the new 2012 bill seeks to pick up the slack.  In particular, it is targeted at the same issue:  preventing the federal government from using its eminent domain power and state and local ...

The International Right of Way Association's (IRWA) International Education Conference in Seattle has just wrapped up, and boy was it a great event.  Over 1,200 right of way professionals from across the United States and Canada (along with some visitors from Japan, Uganda, Saudi Arabia, Thailand, and the UK) all in one location for four days.  What could be better?  If you weren't able to make it, let me tell you that Alaska and Canada -- two chapters vying for hosting the 2017 event -- sure know how to have a good time. 

As I travel home on my flight back to Orange County ...

One of the trickiest circumstances to deal with in an eminent domain case occurs when the property being condemned suffers from a contamination issue.  This presents a number of thorny issues and, quite frankly, is an area of law which is shockingly undeveloped in most jurisdictions. 

• Should the cost of the remediation be offset from the value of the property? 
• Should the contamination be ignored since the owner is being compelled to "sell" the property, often against his or her will? 
• Should the appraisers treat the contamination as they would any other circumstance affecting the ...

 Here are a few updates for right of way professionals:

• IRWA International Conference:  The International Right of Way Association's (IRWA) 58th Annual International Education Conference will be taking place starting this weekend in Seattle.  Nossaman's eminent domain attorneys will be there in full force:  I know at least seven of us are attending, and we'll have representatives from our Orange County, Los Angeles, and San Francisco offices.  For the first time ever, we'll also be hosting a booth at the Conference, and we have a number of great give-aways, so plan to stop by ...

The opening skirmish in the next phase of the battle between cities and the state over control of property taxes played out in Sacramento Superior court yesterday afternoon.  At issue was property taxes formerly controlled by redevelopment agencies.  While the court ruled against the petitioning cities, as with every other aspect of the California’s budget battles, it is difficult to say that there were any real winners.   

In City of Palmdale, et al. v. Ana Matosantos, Palmdale and eleven other cities sued the Department of Finances and various county auditor-controllers ...

One of the issues that arises with some frequency in eminent domain cases involves a debate over which parties may seek compensation for lost business goodwill.  In many cases, this is an easy discussion:  any business operating on the property at the time it is condemned generally has the right to seek compensation for lost goodwill. 

But sometimes, the situation becomes murky, and a decision this week by the Court of Appeals, Los Angeles Unified School Dist. v. Recovery Resource LLC, presents an interesting, twisted set of facts.  In Recovery Resource, LAUSD filed a condemnation action ...

This Friday, May 11, International Right of Way Association Chapter 11 (San Diego) will be hosting a great program titled "Eminent Domain Seminar:  The Acquisition Process and Litigation Case Study."  If you want an update on recent developments in eminent domain, or if you've ever wondered what a relocation appeal hearing or a condemnation trial looks like, this seminar is for you.  There are a number of great speakers lined up for the full-day class.  

My colleague Rick Rayl and I will be going toe-to-toe in a mock trial on the valuation of a gas station and the loss of business ...