Eminent Domain Report

Most people understand the basic concept of eminent domain: the government takes someone’s private property and pays the owner just compensation for the taking.  Sometimes, however, the government takes (or damages) private property without filing an eminent domain action.  These situations end up as inverse condemnation cases, where the property owner sues the government for compensation for the taking.

Assuming the court concludes that the government has indeed taken or damaged property, the end result in an inverse condemnation case is about the same as any other eminent domain action: the jury decides how much compensation the owner should receive.  (Admittedly, there are some unique twists and turns to inverse condemnation cases, such as the owner’s right to recover attorneys’ fees, but those differences aren’t really relevant to this story.)

So we all know generally how eminent domain and inverse condemnation work.  But what happens when the taking or damaging is by a private person, not the government?  Can the private person essentially invoke the equivalent of an eminent domain power simply by waiting to get sued and then paying compensation to the owner whose property is damaged?  The short answer to that question is no.  The long answer, as discussed below, is noooooo.

In Aspen Grove Condominium Association v. CNL Income Northstar LLC et al., an unpublished decision, the California Court of Appeal upheld an injunction, because not doing so would essentially give the private property owner the right to condemn his neighbor’s property.  The case resulted from a dispute over a 2004 water retention basin built in connection with a planned expansion of Northstar Village Ski Resort.  The very same year defendant CNL installed the retention basin, water began overflowing and seeping from the basin downhill onto plaintiff Aspen Grove’s property.  After several failed attempts to fix the problem, CNL gave up.  It told Aspen Grove that it was done trying to fix the problem.  (As a brief aside, one wonders what the retention basin actually did, since it obviously failed miserably at the one thing typically associated with a retention basin – actually retaining the water.)  In any event, Aspen Grove sued, and the trial court granted a permanent injunction against CNL, requiring it to remove the retention basin.

The appellate court upheld the injunction, agreeing with the trial court’s finding that Aspen Grove had no adequate remedy at law and that the only way to prevent further damage to Aspen Grove’s property was to have the retention basin removed.

But it was part of the court’s reasoning in upholding the injunction that brings the case to our attention.  The court explained that if it simply awarded damages to Aspen Grove without ordering the basin’s removal, it would essentially be giving CNL the right to inversely condemn Aspen Grove’s property.  In other words, if CNL were allowed to continue draining its water onto Aspen Grove’s property so long as it paid for the damage it caused, it would be little different from the remedy afforded owners when the government damages property.  But this pay-for-the-damage remedy works for government conduct specifically because the government possesses the power to condemn the property – a power CNL lacked.

The bottom line is that even if CNL were to offer Aspen Grove more money than the losses resulting from the flooding, it couldn’t force Aspen grove to accept that remedy.  CNL simply had no right to force an invasion of Aspen Grove’s property rights. 

In the end, an unpublished decision like this creates no new law, and this one in particular contains only passing references to eminent domain (it was largely a fairly typical nuisance case).  Even so, it serves a purpose – other than forcing the removal of CNL’s failed retention basin – because it reminds us that inverse condemnation derives from the government’s power of eminent domain, making the theory largely inapplicable to conduct by private parties.  (Now before some of you jump all over me with examples of non-governmental entities being sued successfully for inverse condemnation, realize that this is just a rule which, like so many, does have exceptions.)