Eminent Domain Report

With the elimination of redevelopment agencies in California, we've been spending quite a bit of time lately discussing the impacts of Proposition 13 on California's budget woes as government agencies continue to fight over a slice of the shrinking property tax budget pie.  Proposition 13 has led to another interesting property valuation battle between county tax assessors and petroleum refineries, and the California Court of Appeal recently issued a published decision, Western States Petroleum Association v. State Board of Equalization, settling the dispute.

Prop 13 ...

On January 19, 2012, the California Court of Appeal issued an unpublished decision addressing this very question.  Specifically, in Flying J, Inc. v. Department of Transportation, Case No. F060545, the Court of Appeal affirmed the dismissal of plaintiff's claim for lost profits, finding that plaintiff's evidence was not sufficiently comparable in character and its calculations relied on too much conjecture about future events.      

Plaintiff Flying J operates truck stops.  In 1997, it purchased an 18.8 acre parcel adjacent to State Routes 14 and 58 in the Mojave ...

Although best known today as the voice of bumbling Mayor West on Comedy Central’s Family Guy, Adam West’s real claim to fame was playing the caped crusader in the 1960s television series Batman.  Batman and the Boy Wonder regularly matched wits with the Riddler, a villain who would deliver clues to his elaborate criminal plans by deceptively simple riddles.  A recent unpublished decision, City of Southgate v. Jauregui (Court of Appeals of California, 2nd District, Division 4, No. B228334) both poses and solves a deceptively simple riddle, worthy of the Riddler himself. 

Riddle me ...

Yesterday, we reported briefly on the Supreme Court’s decision in California Redevelopment Assn. v. Matosantos.  As many of you undoubtedly know by now, the outcome was the nightmare redevelopment agencies feared most, but that many (including us) had forecast after listening to oral argument last month. 

The Court upheld ABX1 26, allowing the dissolution of California’s redevelopment agencies to proceed, but struck down ABX1 27, the voluntary buy back program that would have allowed redevelopment to continue.  In particular:

• The Court had little difficulty upholding ABX1 ...

Today, the California Supreme Court issued its much-anticipated opinion in California Redevelopment Assn. v. Matosantos, the case challenging ABX1 26 and ABX1 27.  In a decision foreshadowed by the tone of last month's oral argument, the Court upheld ABX1 26, but struck down ABX1 27 as a violation of California's Proposition 22:

• "Assembly Bill 1X 26, the dissolution measure, is a proper exercise of the legislative power vested in the Legislature by the state Constitution."
• "A different conclusion is required with respect to Assembly Bill 1X 27, the measure conditioning further ...

Yesterday, we wrote about the Avenida San Juan Partnership v. City of San Clemente decision.  For more information on the decision, see the following:

• Man Bites Dog! California Property Owner Wins Regulatory Taking Case in the California Court of Appeal, a blog post by Gideon Kanner on Gideon's Trumpet;
• Either Reverse Your Unconstitutional Spot Zoning, Or Pay. Your Choice, by Robert Thomas on his inversecondemnation.com blog; and
• Eminent Domain: Winning Owner In Inverse Condemnation Battle Cannot Recoup Fees By Attorney Owner Or Reap A Fee Multiplier Request, a piece in ...

Last April, we reported on a bizarre case arising out of the City of San Clemente's attempt to down zone a piece of property.  The trial court had concluded that the down zoning constituted a taking and ordered the City to rescind a decision supported by that down zoning.  The City had denied an application to develop the property because the application did not conform to the current general plan and zoning ordinance (the City seems to have sidestepped the fact that the development applications included applications to amend the general plan and zoning). 

In addition to a writ of mandate ...

One of the peculiarities with California's eminent domain law lies with the way it addresses situations in which an agency makes a deposit of probable compensation in a case in which one or more of the defendants raise a right-to-take challenge. 

The issue came to a head yet again, with the California Supreme Court holding that a lender's withdrawal of a condemnation deposit does not result in a waiver of the property owner's right to take challenge.  The decision, Los Angeles County Metropolitan Transpiration Authority v. Alameda Produce Market (November 14, 2011), chronicles the long ...

Before a public agency can exercise the power of eminent domain, it must adopt a resolution of necessity making certain findings in support of the taking of property.  The resolution defines the scope of the agency's acquisition, and the agency is typically prevented from contradicting the terms of the resolution in the eminent domain action.

There is a delicate balancing-act in drafting the scope of the taking in the resolution.  If the scope is too narrow, the agency may ultimately need to go back and acquire additional rights or property.  On the other hand, if the scope is too broad, it ...

We've covered in the past the impacts property and business owners suffer when government agencies plan for public projects.  We've also covered when agency planning crosses the line and results in precondemnation damages or a de facto taking.  A recent unpublished Court of Appeal decision, Joffe v. City of Huntington Park, highlights (1) the types of impacts owners suffer and (2) the difficulty owners face in trying to recover for such impacts.

In Joffe, a related property owner and furniture manufacturing business claimed that the city repeatedly expressed a desire to ...

As you may recall, we've been closely following an eminent domain action pending in Sacramento County Superior Court involving the Rancho Cordova Redevelopment Agency.  The case involves the RDA's efforts to acquire a 9-acre site owned by the Lily Company.  After the property owner lost its challenge to the RDA's right to take the property, the case proceeded to a jury trial with respect to the property's value.  The results are in, and it's not a happy ending (at least so far) for the RDA. 

The Sacramento Bee reports in its article, "Price tag sky rockets for Rancho Cordova in land ...

When we think of some of the most well-recognized and controversial decisions from our judicial system, cases like Roe v. Wade (abortion) and Dred Scott v. Sandford (slavery) come to mind.  Within our group of right of way professionals, we obviously think Kelo v. City of New London is a huge deal, as it allows for the use of eminent domain for purely economic purposes.  But does it rank up there with the others?  It does, according to US Supreme Court Justice Scalia.

According to an ABA Journal article, Justice Scalia was recently speaking to a group of students at Chicago-Kent School of Law ...

You may recall that last year in Ridgewater Associates LLC v. Dublin San Ramon Services District, the California Court of Appeal held that a subsequent purchaser cannot recover for inverse condemnation where (1) it knowingly purchases property impacted by a government taking, and (2) the purchase price reflects the property's condition in light of the government impacts.  See Buyer Beware: Improper Sale Documentation Results in Waiver of Inverse Condemnation Claim by Brad Kuhn and Rick Rayl.  While the decision was originally published at 184 Cal.App.4th 629, the ...

All eminent domain attorneys know the importance of getting the Final Order of Condemnation right.  After all, it's the document that gets recorded, effecting the transfer of title to the agency.  But sometimes mistakes occur, and when they do, the condemning agency typically has a remedy. 

In DFP, LTD v. Sacramento Regional County Sanitation District, an unpublished opinion issued earlier this week, the agency requested a nunc pro tunc order revising the final order to correct a "scrivener's error."  The error:  the recorded final order stated that the agency acquired an easement, when ...

A new published California court of appeal decision may be important for private utility companies with respect to the valuation of their possessory interests in public rights-of-way for property tax assessment purposes.  The case, Charter Communications Properties v. County of San Luis Obispo, provides that when assessing the fair market value of a utility's possessory interest, the County tax assessor will likely be able to disregard the utility's agreed-upon remaining term of possession and instead assume a much longer anticipated term of possession to match reality.  This ...

We'll have more soon, but I wanted to report quickly that the California Supreme Court announced today that will assert jurisdiction over the CRA's lawsuit involving the constitutionality of AB 26 X1 and AB 27 X1, the bills involving the dismantling of California's redevelopment agencies. 

The Court also announced a partial stay of the legislation while it considers the case.  A news release by the Judicial Council of California describes the scope of the Court's stay as follows:

The court allowed the first statute [the one that eliminates redevelopment agencies] to remain in effect ...

On July 29, 2011, the California Court of Appeal issued an unpublished decision confirming that when condemned property is subject to a roadway easement, and the property owner fails to demonstrate that there is "something special attaching to it," regardless of how the property is ordinarily bought or sold, the landowner is only entitled to nominal value.

In People ex rel. Department of Transportation v. Bakker, No. F060030, the California Department of Transportation (Department) condemned 18.13 acres of land belonging to the Bakkers, 4.4 acres of which were subject to a ...

As originally reported by Robert Thomas at inversecondemnation.com, a petition for certiorari was filed asking the U.S. Supreme Court to address "[w]hat category of takings are subject to heightened judicial scrutiny, and when is the risk of undetected favoritism so acute that an exercise of eminent domain can be presumed invalid?"  While Justice Kennedy brought this issue to the national stage when he raised the possibility of such conduct in a recent concurrence, as of today, and likely tomorrow, the question remains unanswered. 

In Kelo v. City of New ...

When dealing with regulatory takings claims, we've covered in the past the maze of procedural landmines that await a property owner.  We've once gone so far as to describe it as resembling "Alice's trip through Wonderland, with the parties falling in and out of state and then federal court (instead of a rabbit hole) based on procedural and substantive rules that often seem as logical as the Mad Hatter's recitals at the Tea Party."  Could one of those major obstacles disappear, allowing land owners a more direct shot at a regulatory takings claim in federal court?  The US Supreme Court could ...

We've completed our analysis of the Galardi case and have some additional thoughts about the decision and its potential larger impact.

The real debate we've been having internally is whether Galardi can be read as signaling a change in the law concerning broadly worded waivers in condemnation clauses.  Many commercial leases contain broad waivers, skewed towards landowners.  Provisions such as "in the event of condemnation, tenant waives all rights to compensation" are not uncommon.  

Until now, even the broadest wavier imaginable has not affected the tenant's right ...

When a business subject to a franchise agreement is condemned, questions often arise as to the allocation of proceeds between the franchisor and franchisee.  When the question involves payment for lost business goodwill, the courts have placed strict limits on the franchisor's ability to recover. 

In particular, courts have long held that a franchisor cannot make a claim for lost business goodwill because the franchisor fails one of the key entitlement prongs:  the franchisor does not operate a business on the property.  (See Redevelopment Agency v. International House of Pancakes ...

California eminent domain law generally provides that a government agency's impairment of a property's access is not compensable unless the impairment qualifies as "substantial".  Dozens of cases have addressed access impairment claims raised by property and business owners both in the traditional eminent domain context and through inverse condemnation actions, and while there are some general guidelines that can be established, many times the determination of whether an impairment qualifies as "substantial" will depend on the particular facts of the case.

Take for ...

There's an odd story unfolding in Mendocino County's Brooktrails Township.  It dates back to when Lake Emily was originally built in 1972, where its development apparently resulted in the partial taking of a number of properties.  But the township never paid for the acquisitions.  It is unclear how or why the owners let this slide.  (My first thought was perhaps no one noticed; but the takings were rather large -- one owner alone lost 1,300 square feet of property.)

Fast forward to more than thirty years later.  In 2006, the township decided to raise Lake Emily several feet, which would further ...

We've been following the Ninth Circuit Guggenheim case for more than a year.  That Court's change in its holding between the initial decision by a three-judge panel and the subsequent en banc decision, coupled with the considerable attention the decision received, led many to think the case was ripe for Supreme Court review. 

Today, we learned that the Supreme Court denied the owner's Petition for Writ of Certiorari, meaning the en banc Court's decision will stand.  (As a reminder, that opinion held that the City of Goleta's rent control ordinance did not constitute a taking, despite the ...

I read a really interesting blog post by Robert Thomas, 10th Cir: Landowner Not "Prevailing Party" Even Though They "Won $3.8 Million -- Much More Than The Government Ever Offered Them".  It describes a recent 10th Circuit decision that denied the property owner an attorneys' fees award where (1) the property was valued at trial at $3.8 million and (2) the government's offer was a mere $186,500.  What caught my attention was the mechanism by which the federal courts award fees under the Equal Access to Justice Act (EAJA), as compared to the fee-shifting rules in California. 

Under the EAJA ...

The U.S. Court of Appeals for the Federal Circuit recently issued an interesting opinion which addresses the question of whether or not a government agency's application of the Endangered Species Act can trigger a property owner's Fifth Amendment Takings Claim.

My colleague Ben Rubin has a more detailed post about the case, Klamath Irrigation District v. United States, on our firm's Endangered Species Law and Policy Blog.  More generally, the Klamath Irrigation District case analyzes whether the US Bureau of Reclamation's decision to reduce water delivery to farmers ...

The case involving a small boxing gym in National City, California, has garnered national media attention.  The owner filed suit challenging National City's redevelopment plan for, among other things, failing to follow California's post-Kelo rules on making blight determinations.

We reported on the case last month in A More Personal View of the Redevelopment Fight from National City.  The trial ended a few weeks ago, and the parties have been anxiously waiting for a decision ever since.  Late yesterday, the court issued its decision, ruling in favor of plaintiffs.  According to ...

I wanted to provide a quick update on a couple of cases we've reported on earlier. 

The first case is the dispute between the City of Seal Beach and Bay City Partners over 10.7 acres of waterfront property.  The city wanted the property preserved for the public, while the owner wanted to use it as part of a new oceanfront development.  According to a March 29 article in the Orange County Register by Roxana Kopetman, Seal Beach and developer agree on waterfront property, the parties agreed this week to a settlement that will result in leaving about 70 percent of the property open to the ...

We've covered the Guggenheim v. City of Goleta regulatory takings case pretty exhaustively, most recently noting there is a pending petition for Supreme Court review.  While we wait for the fateful decision as to whether the Supreme Court will take up the Guggenheim case, the 9th Circuit Court of Appeals recently issued another mobilehome rent control regulatory takings decision in Colony Cove Properties v. City of Carson.  Like the 9th Circuit's en banc decision in Guggenheim, the park owner's regulatory takings claim was unsuccessful.

The owner in Colony Cove

The California Court of Appeal recently issued an interesting unpublished decision addressing a property owner's claim that a government entity's regulation of asbestos constituted a regulatory taking.  The owner's unsuccessful challenge presents a nice summary of what not to do when pursuing a regulatory takings claim, and just how difficult it is for an owner to succeed.

In Butte Equipment Rentals, Inc. v. California Air Resources Board, the property owner operated a rock mining and quarrying business.  The owner alleged that two regulations adopted by the ...

Last week, we give a brief overview of the new published California Court of Appeal decision in City of Gardena v. Rikuo Corporation (Feb. 7, 2011).  For anyone interested in a more detailed explanation of the City of Gardena case, you can read our E-Alert, "Court Dismisses Appeal Arising From Stipulated Eminent Domain Judgment."

The case is probably worth a read for all of us in the right-of-way industry, as the decision serves as an important reminder for public agencies and property owners to carefully document eminent domain settlements, especially where additional actions ...

The Clean Water Act requires states to identify rivers and creeks that fall below specified water quality standards.  Those water bodies are thereafter designated as "impaired" by the Environmental Protection Agency, and certain standards are imposed to limit pollution and runoff. 

If a river or creek's designation results in a nearby property suffering a decrease in value, does the property owner have standing to seek removal of the designation?  In Barnum Timber Co. v. United States Environmental Protection Agency, the Ninth Circuit Court of Appeals held that ...

Most eminent domain cases don't proceed to a full-blown jury trial.  Rather, most get settled somewhere along the way, and those settlements often come in the form of a stipulated judgment.  In most of those cases, nothing more happens.  The agency pays the judgment, obtains a final order of condemnation, and all parties move on with their lives.

But sometimes, the judgment itself isn't the end of the story.  And in City of Gardena v. Rikuo Corporation (Feb. 7, 2011), the parties still had to deal with ongoing environmental remediation issues long after their stipulated judgment was ...

We thought it was over in 2009 when the Ninth Circuit held that the City of Goleta's rent control ordinance constituted a taking.

We thought it was over in late 2010 when an en banc Ninth Circuit panel ruled the other way, holding that the property owner failed to establish the "investment-backed expectations" necessary to establish a takings claim under Penn Central.

Now, we're not sure if it's ever going to be over.  Apparently, Dan Guggenheim has decided to seek review by the U.S. Supreme Court, so there may yet be more drama for the long-playing battle between the Guggenheims and the ...

The California Court of Appeal has issued a new published decision involving an unusual set of circumstances surrounding an eminent domain and inverse condemnation case.  In Cobb v. City of Stockton, the City filed an eminent domain action to acquire the owner's property; shortly thereafter, the City obtained prejudgment possession and constructed a public roadway on the property.  So far, seems typical.

Here's where things get unusual.  After nine years, the matter had not made its way to trial, and the court dismised the action for "lack of prosecution."  (I'm not entirely sure how ...

One of the cases we've been following the entire year is Guggenheim v. City of Goleta.  The case involves a challenge to the City of Goleta's rent control ordinance for mobile homes.  The owner claimed that the ordinance had the effect of transferring the vast majority (as much as 90 percent) of the property's value to the tenants, constituting a taking. 

Last September, the Ninth Circuit Court of Appeals reversed an earlier District Court decision, holding that Goleta's ordinance constituted a taking, and it remanded the case for a trial on the amount of compensation the owner should be ...

Both California and federal eminent domain laws set forth obligations on "public entities" or the "government."   When these specific terms are used, do the statutes also apply to public or private utility companies exercising the power of eminent domain?

One example is found in the Uniform Relocation Assistance and Real Property Acquisition Policies Act, which allows a landowner to seek reimbursement for costs and attorneys' fees when a condemnation action instituted by a "federal agency" is abandoned by the "United States."  (42 U.S.C. 4654.)  If a utility company ...

Ever since the Supreme Court issued its infamous 2005 Kelo decision, people have been anxiously awaiting the Court's next opportunity to weigh in on the extent of the government's eminent domain authority and, in particular, the limits (if any) created by the "public use" requirement. 

One of the cases that has been watched closely involves efforts to expand Columbia University in New York.  In Tuck-It-Away, Inc. v. New York State Urban Development Corporation, dba Empire State Development Corporation, the New York State Urban Development Corporation sought to condemn ...

I wanted to provide a quick update on some things about which we've reported over the past few months:

1.  Los Angeles Unified School District v. Casasola (2010) 187 Cal.App.4th 189

In Court Blurs Line Between Goodwill and Relocation Benefits, we reported on the Casasola decision, which expanded upon the earlier decision in Redevelopment Agency of the City of Emeryville v. Arvery Corporation (1992) 3 Cal.App.4th 1357 to hold that business owners cannot recover as lost business goodwill anything that falls within the scope of the Relocation Act, whether or not the losses are actually ...

Earlier this year, we reported on the decision in Ridgewater Associates, Inc. v. Dublin San Ramon Services District.  There, the Court of Appeal rejected an inverse condemnation claim by a purchaser of a property that suffered water intrusion damage caused by an adjacent waste water treatment facility. 

The court held that the seller's failure to assign the inverse condemnation claim to the buyer, coupled with the fact that the buyer was "compensated" for any damages through payment of a reduced purchase price, left the buyer with no standing to sue in inverse condemnation. 

The buyer ...

This never would have happened five years ago.  A small game company is advertising its latest offering, Eminent Domain, a card game based on the colonization of various planets.

It's hard to imagine a game called "Eminent Domain" before the 2005 Kelo decision made the phrase ubiquitous in American conversation.  Heck, I'm an eminent domain attorney and I'm not convinced I had a clear understanding of what eminent domain was when I graduated from law school.

More interestingly, the title has generated a somewhat heated debate among gamers as to whether the game's true purpose is ...

In response to my earlier post on the Pombo decision, I was asked whether complying with the decision to avoid an award of litigation expenses would expose the agency to an illegal gift of public funds claim. 

This is an issue that arises with some frequency with public agencies, where people are understandably -- and appropriately -- sensitive to claims that they have misused taxpayer money.  In particular, people worry about making an "illegal gift of public funds."  This principle arises from the idea that taxpayer money must be used for public purposes; the government cannot simply ...

In California eminent domain cases (this is an area in which the law varies dramatically from state to state), the property / business owner is entitled to an award of litigation expenses (including attorneys' fees) if (1) it makes a reasonable final demand for compensation and (2) the agency makes an unreasonable final offer of compensation.  (See Code Civ. Proc. § 1250.410.)

How one analyzes "reasonableness" once the jury issues its verdict has been the subject of a number of court opinions.  Tracy Joint Unified School Distract v. Pombo (Oct. 29, 2010) adds to that body of law. 

In ...

Business goodwill appears to be a hot topic for the California Court of Appeal, as it was the primary issue in the recent LAUSD v. Casasola opinion, and is again the focus of an unpublished decision that came down last week, People Ex Rel. Department of Transportation v. Ahn.

In Ahn, Caltrans condemned a shopping center where Ahn owned and operated a framing store and art gallery.  After Caltrans took possession, the owner transferred to a relocation site.  At trial, Caltrans' goodwill expert determined the business had $26,000 of goodwill in the "before condition," and ...

For those who didn't get enough of littoral property rights, accretion, and avulsion in reading about this summer's Supreme Court decision in Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection, there is a new case making its way through the system. 

In Maunalua Bay Beach Ohana 28 v. State of Hawaii, the court analyzed a 2003 Hawaii law that had the effect of transferring ownership of property created by accretion to the state.   In a split decision, the Hawaii Court of Appeal held in 2009 that with respect to property that existed at the time the law went ...

We reported several months ago about the property owner impacted by the expansion of the Everglades National Park petitioning the US Supreme Court to determine how to treat the government's enactment of tougher zoning standards that decrease the value of property which the government may want to acquire in the future.  The issue presented was whether the government's actions must be the primary cause of the precondemnation depression of the property's market value, or whether there must only be a nexus between the government's actions and the depressed market value.

This is an ...

In Los Angeles Unified School District v. Casasola (Aug. 5, 2010), the Court of Appeal examined the interrelationship between recovery of lost business goodwill pursuant to Code of Civil Procedure section 1263.510 and recovery of relocation expenses pursuant to Government Code section 7267 et seq. 

My colleague, Gale Conner, prepared a good summary of the Casasola case detailing the facts and the Court's reasoning.  The bottom line is that the Court held that items that might be recoverable under the Relocation Act cannot be included in a claim for loss of business ...

The California Court of Appeal issued an interesting unpublished decision yesterday addressing a number of eminent domain issues, ranging from right to take challenges, entitlement to goodwill, severance damages, and jury instructions.  The case, City of San Luis Obispo v. Hanson, garnered enough attention that several third parties filed Amicus briefs with the Court.

By way of background, the City of San Luis Obispo decided to realign a road partly in order to accommodate a newly approved Costco development.  The realignment required right-of-way acquisition from a property ...

The City of Laguna Woods had been leasing the building it used for City Hall on El Toro Road for a number of years.  In 2005, the City -- apparently tired of leasing the space -- decided to acquire the property by using its power of eminent domain.  After proceeding to trial, a jury determined this week that the fair market value the City is required to pay for the building was $6.43 million -- $2.78 million more than the City had initially offered.

According to an Orange County Register article, "Laguna Woods must pay $6.4 million to take City Hall," the issues that resulted in the ...

Last fall, we told you about a key rent control / takings decision, Guggenheim v. City of Goleta, in which the Ninth Circuit held that a rent control ordinance consituted a taking.  In March, we reported that the Ninth Circuit had ordered an en banc hearing of the Guggenheim case. 

Yesterday, the Court held the en banc hearing, and while it may be some time before the Court issues its opinion, the hearing itself may provide some good insights about what may happen (and what it may mean in the larger context of regulatory takings claims).  

Very generally speaking, the Court was critical of ...