Eminent Domain Report

California provides a special procedural remedy whenever a lawsuit implicates a defendant's First Amendment right to petition or free speech.  The procedure is commonly referred to as the "anti-SLAPP."  (SLAPP is an acronym for Strategic Lawsuit Against Public Participation.)  Under this procedure, the trial court evaluates the merits of the lawsuit using a summary judgment like process, often at an early stage of the litigation.  In a recent unpublished decision, the California Court  of Appeal affirmed the propriety of applying this procedure when a plaintiff is seeking Klopping damages in an inverse condemnation action.  (Jones v. People ex rel. Department of Transportation (March 8, 2012), No. B226430.)

In 1998, CalTrans finalized a Major Investment Study regarding the proposed widening of Interstate 5 between State Route 91 and Interstate 710.  Shortly thereafter, the project received funding, and Caltrans drafted the necessary environmental documents.  Following the finalization of the environmental documents, Caltrans initiated eminent domain proceedings to acquire properties in the first segment; the project was divided into multiple segments. 

Jones, the plaintiff, owned a commercial property in the second segment of the project with a single business tenant, TuneUp Masters.  Jones and TuneUp Masters received notifications regarding the project throughout the planning phase.  These notifications described the potential project alignments and impacts.  In 2009, TuneUp Masters and Jones contacted CalTrans to discuss the project and its impacts to the property and business.  During these discussions, a CalTrans representative repeatedly explained that the project would impact the front of the property, resulting in a take of approximately 24 feet.  This impact was also depicted on the design plans for the project.  As a result of this information, TuneUp Masters refused to sign a new lease with Jones.  Instead, whereas the prior lease was for a term of ten years with a base monthly rent of $4,800, TuneUp Masters and Jones executed a lease addendum creating a month-to-month tenancy with a monthly rent of only $2,500. 

After executing the addendum, Jones requested that CalTrans compensate him for the loss of rent.  CalTrans refused to do so, claiming any compensation would be premature and that the addendum was likely the result of the economic downturn.  Jones filed an inverse condemnation action shortly thereafter, including a claim for unreasonable pre-condemnation conduct.  CalTrans filed a demurrer to the complaint, but the trial court overruled the demurrer finding that the complaint adequately alleged a cause of action against CalTrans.  Undaunted, CalTrans then filed the anti-SLAPP motion.  Although the trial court had overruled the demurrer, it granted the special motion to strike finding that the complaint was based on CalTrans' protected speech, and that Jones had failed to establish a probability that he would prevail on the merits.  Because the California anti-SLAPP statute provides for an award of fees, in addition to striking the complaint, the trial court awarded CalTrans $11,418.75 in attorneys' fees.

On appeal, the Court of Appeal reversed the dismissal and award of fees, but affirmed that "[a] governmental entity can file an anti-SLAPP motion," and that the claim for Klopping damages was based on protected speech.  Addressing whether Jones had demonstrated a probability of success on the merits, the Court of Appeal explained that Jones need only demonstrate that his claims have "minimal merit."  CalTrans argued that Jones could not satisfy even this lowly burden, because CalTrans had only designated the property for condemnation, and as such it did not go beyond the planning stage.  The Court of Appeal rejected this argument, however, finding that the initiation of eminent domain proceedings for the first segment and the history of communications between the parties "support the conclusion that [CalTrans] will acquire a portion of Jones' property."  And, "so far as Jones is concerned, CalTran's actions have taken it beyond mere planning and created potential liability for inverse condemnation based upon its unreasonable conduct."

Even though this decision is unpublished, and therefore cannot be cited as precedent, as a result of this decision, and the Court of Appeal's express affirmation of the anti-SLAPP motion in the inverse condemnation context, inverse plaintiffs should expect government agencies to employ similar tactics whenever Klopping damages are claimed.  This procedure may be particularly appealing to government agencies because of the potential for attorneys' fees, which the agency can then use as leverage for settlement.