Eminent Domain Report

The City of Oroville (City) has petitioned the California Supreme Court for review of an unpublished Court of Appeal decision, City of Oroville v. Superior Court (2017) 2017 WL 2554447 (Third District), finding the City liable in inverse condemnation for sewage backup into private property even though the owners failed to install and maintain backwater valves on their private property as required by state and local legal authority.  While no published decisions have been issued on this subject, four unpublished decisions in different jurisdictions throughout California over the past ten years have reached widely different decisions.  If the California Supreme Court decides to hear the case, it may resolve the split in authority regarding government liability for damages caused by sewage backup.

Factual Background

Sewage from the City’s sewer main entered a property owners’ building through a private lateral service line that did not have the legally required backwater valve in place. A root growth partially blocking flow through the sewer main was later discovered and removed by the City.  The quality of design and construction of the sewer main was not challenged or at issue.  The property owners filed suit for a determination of the City’s liability in inverse condemnation pursuant to Code of Civil Procedure section 1260.040.

Procedural Background and Court of Appeal Proceedings

The court found the City liable in inverse condemnation and trial was set on the remaining tort cause of action for nuisance and for damages in inverse condemnation. The City filed a Petition for Writ of Mandate seeking reversal of the Superior Court order.  After agreeing to hear the case, the Court of Appeal later denied the City’s petition.  The City has now petitioned the California Supreme Court to challenge the finding of liability based on inverse condemnation where the property owners failed to install and maintain a legally required backwater valve on the private sewer lateral connection to their building.

The Petition to the California Supreme Court

The City claims that the Court of Appeal did not consider the fact that the property owners failed to design, install and maintain a legally required backwater valve on their property. The Court of Appeal found the City negligent in failing to enforce a building code that the property owners are responsible for complying with.  While the trial court and the Court of Appeal rely heavily on California State Auto Ass’n Inter-Insurance Bureau v. City of Palo Alto (20016) 138 Cal.App.4th 474 (CSAA) to impose strict liability against a municipality in a sewage intrusion case, the City claims that the CSAA case did not address a missing but legally required valve situation.  Instead, the CSAA decision relied on the fact that the property owner was faultless and did everything to prevent a sewer backup, including installing a new private sewer lateral shortly before the backup.  The CSAA court also found that the municipality’s main line was deficient and not laid at a sufficient slope to carry sewage away from the homeowners’ building.

The City claims that by discussing and applying flood control cases to the sewer backup cases in the CSAA case, the court has created confusion in the law between two very different types of potential harm caused by public projects. The general rule of inverse condemnation law imposes liability only when a public project that is functioning as intended causes damage.  (Albers v. County of Los Angeles (1965) 62 Cal.2d 250, 261-262.)  Flood control cases are an exception to this rule.  The City claims that flood control cases should have no application to sewer cases and the failed to function as intended test should not apply where legally required backwater valves are not installed and maintained.  As a result, a taking should not occur if the overflow on the owners’ property occurs because the system fails to function as intended as a result of the owners’ failure to comply with established state and local building codes.

We will keep an eye on whether the California Supreme Court decides to resolve the issues presented by the City of Oroville’s petition. Regardless of whether the Court affirms or reverses the lower court’s decision, the confusion presented by the current split in authority should be resolved so that municipalities will know what to do to avoid liability and private owners can know what to do to protect their private property.