Eminent Domain Report

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 "just compensation."  (See People v. Ricciardi (1943) 23 Cal.2d 390, 402.)

That all sounds simple enough, but it's not like there is some shining bright light that defines which factual determinations bear on "just compensation" and which ones speak to something else.  And this brings us to today's case:   City of Perris v. Stamper (August 9, 2013).  There, the key issues in dispute involved the impact of a supposed dedication requirement on the value of the part taken. 

The trial court concluded that the inquiries of (1) reasonable likelihood of the dedication requirement being imposed, and (2) the constitutionality of that dedication requirement both qualified as issues for the court.  The court ruled on those issues -- concluding that the city would have imposed the dedication requirement at issue and that it qualified as constitutional.  The ruling gutted the property owner's case, leading to a stipulated judgment at the city's appraised value, and an appeal. 

The Court of Appeal saw things differently, concluding that the issues involving the dedication requirement went directly to the determination of just compensation.  Thus, the Court held, those issues were for the jury, and the trial court erred, usurping the jury's function.  The Court reversed, and the case now heads back to the trial court. 

The opinion itself acts as a good reference tool on these issues, spanning nearly 50 pages and walking through most of California's key opinions on dedications.  It also takes me down memory lane a bit (and reminds us how long these cases can take).  The Stamper case was handled for the owner by Rick Friess, a former partner of mine at Nossaman.  I remember the case from when he was here -- and he left nearly 3 1/2 years ago.  And who knows when the case will finally end; after the decision, the remand leaves the parties getting ready to start preparing for a jury trial all over again. 

There was one other interesting issue in the Stamper case, involving the application of the "project impact" rule.  This is a rule that renders inadmissible changes in value attributable to the project itself.  In other words, if the project raises the value of the property being taken, the owner cannot get compensated at that higher value.  Conversely, if the project diminishes the value of the property, the agency cannot take advantage of that to pay the lower amount. 

In Stamper, the owner argued that the dedication requirement qualified as a project impact, meaning that the dedication could not be taken into account in determining just compensation.  The Court of Appeal disagreed, concluding that the dedication requirement existed "independent of any specific project." 

Finally, since I happen to have access to the prevailing attorney in the case, I thought I'd ask him how he feels about the Court's decision.  Here's what Rick has to say:

I give the Court high marks for really spending the time to understand these issues, as reflected in the Court’s nearly 50-page opinion and by the fact that the Court actually issued two tentative opinions and had two rounds of oral argument.  But I do think the Court simply got it wrong on the project-induced-impact issue.  The Rancho Penasquitos and Barratt American opinions are explicit that government land use decisions, including zoning, that are influenced by the project must be ignored.  Requiring an owner to dedicate property is just another government land use decision.

And here, the Court itself said: certainly there would be no requirement of a dedication of property for Indian Avenue, if the Indian Avenue project did not exist . . .. How can some types of government land use decisions be subject to the project-influence rule, but not others? The Court’s distinction that [t]he requirement of dedicating private property for public purposes has long been accepted as a proper exercise of a governmental power should not suffice because zoning and most other land use decisions are equally long accepted as a proper exercise of a governmental power.

(See, even when we win, we can still be dissatisfied with the outcome.  Rick, take a deep breath, enjoy the victory, and start getting ready for trial!)

For more on the decision, see our E-Alert, In Eminent Domain Proceedings, the Likelihood and Constitutionality of a Dedication is a Jury Determination.