Eminent Domain Report

Join us in Riverside, CA on February 7th as we provide an overview of the eminent domain process, along with best practices for right-of-way acquisition, during the International Right of Way Association (IRWA) Chapter 57 Membership Luncheon. We’ll cover everything from identifying project alternatives to ultimately acquiring specific property.

We will provide an overview of the entire process and illustrate how all of the individual components work together. In particular, we’ll discuss how to effectively navigate the precondemnation process to position for the ...

One of the issues that comes up frequently in eminent domain is whether the proceeds a property or business owner will receive from the government is treated as ordinary income, capital gains or is exempt from federal and/or state taxes. And when eminent domain attorneys get that question, they almost always start with the largely unhelpful response of “it depends.” But it really does depend on exactly what the money is, how the property was held, how the money will be used and whether we are talking about state or federal taxes. 

Now, I could spend a lot of time trying to walk through all ...

While nobody could have anticipated the challenges of 2020, the right-of-way industry worked through difficult issues to move critical infrastructure projects forward. On February 11, 2021, our Eminent Domain & Valuation Group presented “Eminent Domain in 2020: A Year in Review,” during which we discussed decisions in key cases and trends from California and around the country that will continue to impact the right-of-way industry going forward. If you were not able to attend the live session, we invite you to watch the on-demand presentation at your convenience. 

On April 1, Nossaman’s Eminent Domain Group hosted a webinar to discuss the impacts COVID-19 is having on the Right of Way industry.  First, I’d like to thank the people who attended, many of whom added thoughtful questions to the discussion.  It’s clear a lot of people are giving these issues a lot of thought.  Second, obviously things continue to evolve at a breathtaking pace, and even by the time this post goes from being drafted to appearing on the blog, things are likely to change. 

Note that this post is not meant to recap the things we discussed at the webinar.  If you weren’t able to join us and want to review what we covered, feel free to download the COVID-19 PowerPoint we used, or watch the entire recorded webinar.  No, the purpose of this post is to provide some insights as to what other right of way professionals are thinking about a few of these issues.  During the webinar, we asked several poll questions, and since the Nossaman team found the results interesting, I’m hoping some of you will as well ...

In California, we have an admittedly odd way of determining whether the property or business owner in an eminent domain case is entitled to recover attorneys’ fees.  (Note that I’m specifically talking about an owner’s ability to recover; California law does not provide for a condemning agency’s ability to recover fees).  It’s actually fairly simple:  just before trial, the owner and the agency exchange a Final Demand and a Final Offer.  (See Code of Civil Procedure section 1250.410.)   If the case thereafter proceeds to trial, a jury will typically decide the amount of ...

In Freeport Reg’l Water Auth. v. M&H Realty Partners VI, L.P., 2019 Cal. App. Unpub. LEXIS 6126 (Sept. 16, 2019), the court walked through a complicated fact pattern involving – in its simplest form – a 40-foot easement for an underground water pipeline.  For our purposes, the key issues were valuing (1) the easement being acquired, (2) the severance damages caused to the remainder parcel, and (3) a temporary construction easement for the pipeline’s installation.  Though it was not technically a eminent domain case because the parties had reached an agreement concerning the ...

One of the unique things about eminent domain cases is that a set of specific procedural rules govern the admissibility of valuation evidence at trial.  A new unpublished opinion from the Court of Appeal, San Bernardino County Transportation Authority v. Byun, explores some of the many things that can go wrong when a party ignores those procedural rules.

At the outset, I must admit to a personal stake in this one; this was a case I handled, and which I argued at the Court of Appeal on May 17 (that the decision came out so quickly after argument gives some sense of how the Court felt about the ...

Two of the more complicated issues eminent domain attorneys face are analyzing whether government conduct rises to the level of a taking, and whether the government engaged in precondemnation conduct that gives rise to damages apart from paying just compensation.

Earlier this week, an unpublished California Court of Appeal decision, Dryden Oaks v. San Diego County Regional Airport Authority, grappled with both issues. (See update below.)

In Dryden Oaks, a developer purchased property near the Palomar Airport in Carlsbad.  The property was in an area governed by the San Diego ...

One of the hot issues in eminent domain these days involves the government's efforts to take over privately-run utility companies.  The argument typically is that the government -- which has no profit-making motive -- can run the utility at a lower cost, saving the ratepayers money.   Not surprisingly, the utility companies feel otherwise.

In California, one of the first cases to reach trial on this issue is about to wrap up.  The City of Claremont sought to condemn the Golden State Water Company's assets, and Golden State fought the City's right to take.

In a Court trial (i.e., a trial ...

Last year, my partner Ben Rubin reported on the California Supreme Court's decision in California Building Industry Association v. City of San Jose, which analyzed an inclusionary housing ordinance and held that such ordinances do not qualify as "exactions" and, consequently, are reviewed under a deferential standard that looked at whether the ordinance was "reasonably related" to the city’s interest in promoting the health, safety, and welfare of the community.

Last month, we saw the first published decision following last year's Supreme Court pronouncement ...

In January, I spoke at a conference in Austin about efforts by municipalities to condemn privately-held utility companies.  At the time, I figured it would be a one-off presentation on a pretty niche issue, even for eminent domain attorneys.  But next month, I'll be speaking on a variation of that topic at CLE International's 2016 Eminent Domain Conference in Las Vegas, a presentation that will be the third time this year I've spoken on the topic.

In fact, we've been following this issue since at least 2014, when my partner Brad Kuhn wrote about a takeover effort involving PG&E.  Those ...

There are two interesting projects in San Diego County that are moving forward, both of which involve at least some use of eminent domain.

The San Marcos Creek Specific Plan is proceeding in, not surprisingly, San Marcos.   The project involves efforts to create a new downtown area for the City.  The project has been a long time in the making, with the City adopting its initial specific plan back in July 2007.  A 2015 PowerPoint presentation describes the City's plans for the area.  And just this week, the City filed at least four eminent domain actions as part of its efforts to implement the ...

The California Supreme Court announced today that the Property Reserve case will be heard on May 3, 2016, at 9:00 a.m. in San Francisco.  (I'm assuming this is not an April Fool's joke, since eminent domain attorneys have been awaiting this for a long time now.)

The Court will decide whether California's precondemnation right of entry statutes are constitutional.  As has been discussed at length for more than a year in our industry, the decision could effect sweeping changes in how condemning agencies access properties for necessary inspections and testing.  We posted a detailed ...

Eminent domain practitioners are well versed in analyzing a property's highest and best use.  Under these principles, a property being condemned is not necessarily valued based on its current, existing use.  Where the appraiser can show that the property's actual value is based on a different use, that use can often be the foundation for the valuation (assuming that other use meets the four-part test of highest and best use, which is beyond the scope of this post; if you're really bored today, here's a link to Wikipedia's discussion of highest and best use).

In County of Santa Barbara v ...

Once again, I sit at my desk wondering how all of this happened.  For more than a decade, I worked as an eminent domain attorney in utter obscurity; I'm not even sure my family knew what eminent domain was.  But then the City of New London, Connecticut tried to take Ms. Kelo's little pink house, and everything changed.  Since the Supreme Court's 2005 Kelo decision, eminent domain has become a mainstream topic, coming up in late night talk show skits, and now, taking center stage in the Republican presidential race.

At last Saturday's debate, the use of eminent domain turned into a firestorm of ...

If you happen to be in Austin this week, stop by and see me at the ALI-ABA Eminent Domain Conference.  It starts Thursday, January 28 and runs through Saturday.  I'll be speaking Thursday afternoon on the condemnation of privately-held utility companies -- an issue that's certainly been in the press here in California recently.  I'll be speaking with Christopher Clough of Barron & Adler in Austin, and he's been "in the trenches" on a number of utility-company condemnation issues in Texas.

Aside from my session, there will be a lot of good presentations, including a national eminent domain ...

Eminent domain practitioners have been waiting for nearly two years for the Supreme Court to issue its decision in Property Reserve v. Superior Court.  At issue is the constitutionality of California's "Right of Entry" statutes, which allow an agency to enter onto private property for certain inspections and testing without filing a condemnation action.  In Property Reserve, the Court of Appeal rejected an agency's efforts to conduct precondemnation testing and inspections, finding that the statutory procedure essentially amounts to allowing a taking without payment of just ...

When the government promises to do one thing and then does another, it usually has myriad excuses.  Sometimes it claims that its staff (the people with whom the opposing side are typically interacting) cannot bind the agency.  Other times, it claims that it cannot contractually agree to things that take away key government functions (e.g., the government cannot contract away its right to condemn property).  But every once in a while, the government gets stuck, even in the absence of a formal written agreement.

In HPT IHG-2 Properties Trust v. City of Anaheim (November 20, 2015), the Court ...

Despite efforts by Congress to finally approve a long-term highway bill that would have secured funding for key infrastructure projects for the next several years, last week Congress managed only to kick the issue down the road a few more months.  It approved a three-month extension of the existing bill, meaning federal highway funds will continue through October 29.  But come October, funds will once again be at risk of drying up if Congress does not enact another bill.

Not surprisingly, neither party is particularly thrilled with the three-month extension, and for good reason.  As ...

As an eminent domain attorney, when I think about a "takings" claim, I always think about a claim involving someone's real property.  Has the government trespassed onto private property, has it imposed regulations that deny the owner an economically viable use of the property, etc.?  But every once in a while, we get a reminder that "takings" do not always involve real property.  Rather, any private "property" may be taken.

Thus, we get cases like last month's U.S. Supreme Court decision in Horne v. Dept. of Agriculture.  There, the government sought to force raisin growers to turn over a ...

Next week, Nossaman's eminent domain group will be attending the International Right of Way Association's Annual Education Conference in San Diego.  While we've been attending the conference for several years, we're excited to have it taking place in our own backyard, and we know that our friends and colleagues at Chapter 11 will do an amazing job with it.  If you're going to be there, make sure you take some time to visit with us.  There will be plenty of places to find us:

• On Sunday and Monday, we will be hosting a booth in the exhibition hall.  In addition to it being a great opportunity to seek ...

I wanted to provide a quick update on two recent cases from the California Court of Appeal.

The first, Golden State Water Company v. Casitas Municipal Water District (April 14, 2015), involves what appears to be an issue of first impression in California:  can Mello-Roos financing be used to fund an eminent domain action to acquire a utility company's assets?  In Golden State Water Company, the Casitas Municipal Water District wanted to acquire the assets of the Golden State Water Company for the purpose of taking over the provision of water to many residents in Ojai, California ...

We've been following the saga of the Keystone XL pipeline for a while now, and the battle rages on in Washington.  Yesterday, the Republican-led Senate attempted to override President Obama's veto of a bill to approve the pipeline.  For those a bit lost in all the political and legal wrangling, the recent story began with a bill in Congress designed to grant approval to the controversial pipeline project.  The bill passed the Senate on January 29 and the House in mid-February and was sent to the White House for President Obama's signature.

But just as promised, President Obama vetoed the ...

So the new Congress has been sworn in back in Washington, and the nation gears up for the first big clash between the Republican-controlled Congress and President Obama.  What will the first major battle be:  health care; taxes; immigration?  No, the first big clash appears destined to be over the controversial Keystone XL pipeline project and the potential for over 1,000 miles of right of way subject to potential eminent domain.  As reported today by Reuters,

Republican senators kicked off the new U.S. Congress with legislation to approve the hotly disputed Keystone XL oil pipeline ...

Property owners typically have a lot on their minds when they find out that the government is going to be taking their property.  For residential owners, they need to worry about where they are going to live with their families once the agency takes possession of their home.  For business owners, they have to figure out how to run a business while planning for a forced relocation -- a relocation that may be coming at a terrible time or on a terrifyingly fast schedule.

The owners must also worry about whether they are receiving the right amount of money -- i.e., the "just compensation" the agency ...

One issue that eminent domain attorneys face routinely involves helping businesses obtain the relocation benefits to which they are entitled under the law, while at the same time pursuing a claim for lost business goodwill.  To us, there is a clear difference between the two, as we are indoctrinated early in our careers into understanding that the two types of relief, while seemingly closely related, are instead largely unrelated in the eyes of the law.

But to a typical business owner facing a forced relocation due to a government acquisition, the issues can appear thorny and complex.  ...

Along with my colleagues Brad Kuhn, Ben Rubin, and Katherine Contreras, I'm here in Hartford at the IRWA Annual Education Conference.  It's been an interesting few days as we discuss eminent domain issues in the shadow of New London, Connecticut, battle ground of the infamous Kelo decision.  

I spoke yesterday on a panel moderated by Orell Anderson, alongside attorneys Jim Ray and Jeff Pollack.  Our topic involved how contamination issues are handled in litigation.  It was a great session, even though it did not go at all as we planned it.  The extremely engaged audience consumed nearly the ...

Last week, the Court of Appeal issued a decision that may be one of the ones we look back on as among the most significant of 2014 (at least in the world of eminent domain).  For years (and certainly for the entire 20 years I've been doing this), public agencies have utilized a statutory "right of entry" procedure to gain access to private property to conduct investigations and testing before deciding whether to move forward with a condemnation action.  (See Code of Civil Procedure section 1245.010 et seq.)  Often, this happens during the CEQA process, as agencies try to assess the ...

In the latest in a string of recent U.S. Supreme Court cases that impact right of way issues, on Monday the Court issued its opinion in Marvin M. Brandt Revocable Trust v. United States (Case No. 12-1173, March 10, 2014).  The issue in Brandt involved whether the U.S. Government retained a reversionary interest in the easements it granted to railroads pursuant to the General Railroad Right-of-Way Act of 1875. 

The decision would impact, in particular, the "rails-to-trails" program, designed to convert old, abandoned railroad rights of way to bike trails.  Under the program, the ...

I saw a couple of California redevelopment-related stories over the past week that seemed worthy of at least a brief comment.

First, a court decision involving a rather bold argument by a public agency.

The City of Loma Linda, like so many California cities, used to have a redevelopment agency.  That redevelopment agency acquired property and embarked on various efforts to, well, redevelop things.  When Governor Brown eliminated California's redevelopment agencies, many projects were left in mid-stream.

In the case of Loma Linda, the redevelopment agency purchased some ...

You know how sometimes you go to one of those educational seminars, and it sounds interesting, but then it turns out that a lot of it doesn't really apply to what you actually do?  We hate it when that happens, and so we are constantly trying to find that perfect seminar that covers exactly what we want it to cover. 

After months of careful searching, we didn't find what we were seeking, so we came up with a different plan.  We're going to host our own seminar and fill it full of exactly what we want to cover. 

On March 20, Nossaman will be hosting its first ever Eminent Domain Seminar.  It's going to be ...

In August, I reported on the decision in City of Perris v. Stamper, in which the Court of Appeal weighed in on the ever-shifting line dividing the judge and jury's roles in eminent domain cases. At the time, I poked a bit of fun at a former colleague,Rick Friess, who won the appeal but was still complaining that the Court didn't see everything exactly his way.

Well, it appears that my good friend hasn't quite given up yet. Last week, the California Supreme Court decided to hear the case, meaning Rick will have one more crack at his dedication argument. The Supreme Court is limiting its review to ...

When Governor Brown eliminated California’s redevelopment agencies with one swipe of his pen (OK, fine, he had a bit of help from the California Supreme Court as well), one of the things that got a bit lost in the ensuing chaos is the fact that California’s redevelopment law had evolved over the decades, becoming hopelessly intertwined with any number of other laws.

One such law is the Polanco Act, Health and Safety Code sections 33459 et seq.  The Polanco Act provided the government with tools to clean up contaminated property.  More specifically, it allowed the government either to ...

Earlier this week, Governor Brown vetoed AB 374, a bill to amend Code of Civil Procedure section 1263.510, the statute governing recovery of loss of business goodwill in an eminent domain case.  But it's not the veto that caught my eye so much as the veto message, which really left me scratching my head until I looked more carefully at what was going on (or at least what appeared to be going on).

Some history:  last year, the Court of Appeal issued the decision in People ex rel. Department of Transportation v. Dry Canyon Enterprises 211 Cal.App.4th 486 (2012).  The case purported to make some ...

The Supreme Court is apparently not done with its recent interest in takings decisions.  Following the decisions in Arkansas Game and Fish Commission v. United States,  Horne v. Department of Agriculture, and Koontz v. St. Johns River Water Mgmt District, the Supreme Court announced today that it will hear another takings case, Marvin M. Brandt Irrevocable Trust v. United States.  The Supreme Court's blog describes the issue in Brandt as follows:

Whether the United States retained an implied reversionary interest in rights-of-way created by the General Railroad Right-of-Way Act of ...

On October 2, my partner Brad Kuhn and I will be speaking at the International Right of Way Association, Chapter 57, lunch meeting.  The meeting takes place at the Old Spaghetti Factory in Riverside -- and who doesn't like old spaghetti? 

We're going to talk about a little of everything, updating people on a few of the more interesting eminent domain cases decided recently, talking about the progress in the dissolution of California's redevelopment agencies, and taking a look at Richmond, California's plan to condemn underwater mortgages. 

If you're in the area -- or just want to hear ...

OK, I'll admit it.  A year ago I thought this whole condemnation-of-underwater-mortgages thing would die off pretty quickly.  I predicted we'd never see any large-scale condemnation effort.  So far, I've missed badly on the first prediction -- but it remains to be seen whether I'm right on the second one.

To date (unless I've missed something), not a single condemnation action has been filed anywhere in the U.S. to condemn an underwater mortgage.  But the concept certainly has not disappeared quietly into the night.  Instead, some cities continue to pursue the idea.

One in particular ...

Eminent domain attorneys struggle with a concept foreign to most civil litigators:  figuring out the roles of the judge and jury.  Even most non-attorneys know the basic rule of trial:  the jury is the "fact-finder."  But in eminent domain cases, things are a bit different. 

The jury still acts as fact-finder, but only in one arena:  the quest to determine the amount of just compensation to which the owner is entitled.  This narrow scope means that the judge ends up ruling on all issues of law, plus mixed issues of fact and law, plus pure issues of fact to the extent those issues don't go to the issue of ...

As an eminent domain lawyer, I sometimes feel about takings claims like Justice Potter Stewart felt about obscenity:  I know it when I see it.  But every so often, a case comes along that reminds us that we might need to dig just a little bit deeper. 

In TrinCo Investment Co. v. United States, No. 2012-5130 (July 18, 2013), it all starts out seeming so simple.  The government comes onto private property without permission, takes $6.6 million worth of timber without asking, and then wanders off without offering so much as a dime in just compensation.  Hard to miss this one:  it's an obvious taking. 

The City of Agoura Hills is moving forward with its plans for the U.S. 101/Palo Comado Canyon Road Interchange at Chesebro Road.  According to the City,

The City has received approval from the California Department of Transportation (CalTrans) and the Federal Highway Administration (FHWA) on the Project Study Report (PSR), which is the document that identifies the deficiencies of the interchange and future issues while identifying the most likely construction improvements that will resolve existing and future traffic issues.

Though the project is still in the design phase, it has ...

The City of Santee's Prospect Avenue Widening Project is moving forward, and because the City has not been able to secure all the necessary right of way voluntarily, the City is now poised to condemn the remaining interests it needs for the project. 

On July 10, the City adopted a resolution of necessity which allows the City to proceed with the eminent domain actions on as many as 43 property interests, including several full take acquisitions, along with many partial takes and temporary construction easements.  

A July 23 article in the Santee Patch, Santee Council OKs Property Seizures ...

This week, the Supreme Court issued the second of its three takings decision for this term.  In Horne v. Department of Agriculture, No. 12-123 (June 10, 2013), the Court reversed an earlier decision by the Ninth Circuit Court of Appeals, holding that California raisin handlers could assert a takings claim as a defense to an enforcement action over alleged non-compliance with a raisin regulatory scheme.  

At first glance, the case appears to be of little consquence.  The factual background is quite unique, and the holding is pretty narrowly drawn to those specific ...

We have two big IRWA events coming up. 

IRWA Annual Education Conference

The biggest conference of the year, the IRWA Education Conference, starts June 23 in Charleston, West Virginia.  As always, there will be many great education sessions with strong panels of speakers.  There are also some fun social events and -- on Sunday and Monday -- an exhibition hall. 

Nossaman will be holding down the fort in Booth 305A, trying to keep the troublemakers next to us in line.  Yes, OPC, I'm talking about you. 

I will be there with my colleagues Ben Rubin, the incoming President for Chapter 67 in Orange ...

We've talked in the past about just how hard it is to state a regulatory takings claim under the Supreme Court's decision in Penn Central Transportation Co. v. New York City, 438 U.S. 104.  I'd go through the test and how hard it is again, but it's complicated, a lot of work and, quite frankly, I'm a bit tired today.  So here's my lazy approach.  Read one of our earlier posts on the subject: 

• Sometimes Regulatory Takings Do Exist Under Penn Central;
• Takings Claims and the Morass that Surrounds Them; or
• Major Regulatory Takings Case Reversed by Ninth Circuit. 

The bottom line is that the courts have ...

Following the 2005 Kelo decision, California enacted a number of modest eminent domain reforms.  For eminent domain attorneys, the most significant changes arguably came in the procedures for obtaining prejudgment possession.  This can be a major issue on large public improvement projects, as construction schedules and funding commitments are often tied to the date on which the condemning agency secures possession of the property needed for the project.

The new laws both (1) shift the balance of power somewhat away from the agency and towards the property owner, and (2) extend the ...

For those of you who attended the joint meeting today between Chapter 1 of the International Right of Way Association and the Appraisal Institute, we promised to post a cheat sheet that reminds you about the cases associated with our cleverly crafted slides.  (For those of you who did not attend, you missed a great event, and will be punished by likely having no idea what we're talking about below.)

As promised, here is the recap of our case slides, each of which started with:

Where We Learned . . .

1. "That the Court can’t exclude appraisers simply because the judge thinks they are full of crap":  ...

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 ...