1. THE “ABCs” OF EMINENT DOMAIN AND INVERSE CONDEMNATION
Sima R. Salek, Esq.
Jeffrey F. Kagan, Esq.
Orbach, Huff & Suarez LLP

2. THE ABCs – An Overview Eminent Domain – Direct Condemnation
Public Entity Seeks To Acquire Property
Inverse Condemnation
Property Owner Claims Public Entity Took or Damaged Property

3. CONSTITUTIONAL BASIS United States Constitution:
“ Nor shall private property be taken for public use, without just compensation.”
California Constitution:
“Private Property may be taken or damaged for public use only when just compensation. . . has first been paid to, or into court for, the owner.”

4. Eminent Domain Pre-Condemnation Procedures
Walkthrough with Appraiser and Owner
Appraise Property
Obtain Approval to Make Offer in Closed Session
Make Offer
No less than appraised value
Good Faith Negotiations
Acquire Property Voluntarily OR
Proceed to Resolution of Necessity

5. Resolution of Necessity
An administrative determination that the statutory prerequisites for taking have been met.
A Resolution of Necessity must contain:
1. A general statement of the public use for which the property is being taken and reference to the statute authorizing eminent domain;
2. A description of the general location and extent of the property being taken; and

6. Resolution of Necessity Cont.
A declaration that the governing board of the public entity has found and determined each of the following:
The public interest and necessity require the proposed project;
The proposed project is planned or located in the manner that will be most compatible with the greatest public good and the least private injury;
The property described in the Resolution of Necessity is necessary for the proposed project; and
That the public entity made the statutory offer to the property owner or did not make the offer because “the owner cannot be located with reasonable diligence”.

7. Resolution of Necessity Cont.
Must give notice and opportunity to be heard to all owners on last tax assessor roll.
Failure by an owner to file a written request to appear and be heard within 15 days after notice mailed results in waiver.
2/3 vote of governing body

8. Conclusive Effect of Resolution
Resolution of Necessity conclusively establishes:
The public interest and necessity require the project;
The project is planned or located in the manner that will be most compatible with the greatest public good and the least private injury;
The property sought to be acquired is necessary for the project.
Resolution of Necessity does not have conclusive effect if “gross abuse of discretion” by governing body.

9. Filing Action/Pleadings
Complaint
Names of Plaintiff and Defendants
Description of Property, Map or Diagram
Allegations of Public Use, Necessity, Adoption of Resolution of Necessity, Statutory Authority for Eminent Domain
Answer
Nature and Extent of Property Interest
Challenge to Right to Take

10. Challenges to Right to Take
In Answer or Demurrer
Grounds:
Plaintiff not authorized to exercise power of eminent domain
Stated purpose is not a public use
Plaintiff does not intend to devote the property to the stated purpose
Property not subject to eminent domain for stated purpose
No reasonable probability of use in 7 years

11. Deposit of Probable Compensation
Before Deposit, Expert Prepares Summary of Basis for Appraisal
Deposit Fair Market Value in Court
Serve Notice of Deposit
Interest Holders May Apply to Withdraw Money

12. Possession Prior to Judgment
Prejudgment or Immediate Order for Possession/“IOP”
Must Have Made Deposit
Public Entity Can Obtain Possession:
3 Days if Not Occupied
90 Days if Occupied
Risk of Loss Transfers to Public Entity

13. Experts/Discovery Hire Appraiser Can Conduct Discovery
Owner can also testify
Can Conduct Discovery

14. Pre-Trial Matters Statutory Exchange of Appraisal Data Final Offer
90 Days Before Trial or Date Agreed to by Parties
Final Offer
20 Days Before Trial
Note: Failure by Public Entity to make reasonable offer, when Owner made reasonable offer, subjects Public Entity to litigation expenses (attorneys fees, expert fees and costs)

15. Trial
Prima Facie – Public Entity Burden of Proof to Establish Public Use and Necessity
Valuation – Compensation
No Burden of Proof
By Jury
Apportionment

16. The ABCs of Inverse Condemnation
When Person or Entity with Property Interest Claims that a Public Entity Took or Damaged Its Interest Without Payment of Just Compensation
The Public Entity Is Not Actively Seeking to Acquire Property
Philosophical Underpinning: Disproportionate Contribution to a Public Undertaking
Often Not Obvious Taking
Fact-Specific and Fact-Intensive

17. Elements of Inverse Condemnation Cause of Action
Plaintiff has initial burden to establish each:
Interest in Real Property
Public Project
Causation
Damage or Taking
Before a jury can even consider the amount of “just compensation”, if any, to be awarded.

18. Interest In Property Property Owner Tenant Trustee Executor
Mortgagor/Lien Holder
Holder of an unexercised option to purchase
Insurer of merchant as its subrogee
Another public entity

19. “Public Project”
Public entity planned, approved, constructed or operated a public project.
Public entity “substantially participates” in some activity for the public use or benefit.
Note:
Mere approval of plans/issuance of permits is not, in and of itself, sufficient “substantial participation” to create inverse condemnation exposure.

20. Causation Strict liability
Any actual physical injury to real property proximately caused by the improvement as deliberately designed and constructed, irrespective of foreseeability.
Exceptions:
1. Exercise of Police Power
2. Where “state” had the right to inflict damage at common law.

21. Causation When Intervening Force: “Substantial Factor” Test
Whether governmental action, acting alone, could have produced the damage.

22. Damage or Taking
Fact-based specific inquiry

23. Types of Inverse Condemnation
Physical Intrusion
Intangible Intrusion Not Causing Physical Damage (noise, dust, fumes)
Intangible Intrusion Causing Physical Damage (vibration, land stability)
Loss of Access
“Klopping” Precondemnation Delay
Regulatory Takings

24. Physical Intrusion Water damage - Streams - Flood control
- Riparian rights
Land Stability
- Subsidence
- Lateral/subjacent support

25. Physical Intrusions Loss/Interference with Access
Good Faith Mitigation

26. Intangible Intrusion – No Physical Damage
Overflying aircraft
Highway, airport noise
Public works construction projects
Utilities
No liability for electromagnetic fields.

27. Intangible Intrusion – Causing Damage
Vibrations
Land Stability / Subsidence

28. Loss of Access Complete deprivation is actionable
No right to expect that access will be maintained indefinitely
Public policy favors public improvements, especially to traffic
As long as property remains accessible, there is no inverse condemnation liability
Unreasonable construction activity is actionable
Vehicles and equipment
time

29. “Klopping” Unreasonable precondemnation delay or other activity
Don’t announce intent to condemn before you mean it!
Also statutory basis: If Public Entity does not initiate eminent domain action within 6 months of Adoption of Resolution of Necessity (Code of Civil Procedure Section )

30. Regulatory Takings
The “facial” or “as applied” challenge to a land use restriction or ordinance.
Per Se Taking:
Ordinance takes or denies all economically viable uses of property. Lucas v. South Carolina Coastal Council (1992) 505 US 1003.
Partial Taking:
Ad hoc analysis of factors. Penn Central Transp. Co. v. New York City (1978) 438 US 104.

31. Key Penn Central Factors
The economic impact of the regulation of the claimant.
The impact of the regulation on the investment-backed expectations.
The character of the governmental action.

32. Common Regulatory Takings Contexts
Zoning
Down zoning v. open space overlays
Development Moratoria
Generally, not a taking
30 years temporary moratorium is not a taking
Weigh state interest v. burden on owner

33. Common Regulatory Takings Contexts
Permits
If total denial (=denial of all economically viable use) must compensate owner unless denial was for public safety (police power) or unless delay in issuing permit was normal in the permissible regulation of development.
Mere delay in issuing permit is generally not a taking.

34. VALUATION ISSUES
Fair Market Value (Code of Civil Procedure Section ):
“ The highest prices on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all of the uses and purposes for which the property is reasonably adaptable and available.”
Same Standard In Inverse Condemnation Except in Unusual Circumstances

35. Valuation of Special Use Property
Fair Market Value for Special Use Property (Code of Civil Procedure Section ):
“The fair market value of property taken for which there is no relevant, comparable market is its value on the date of valuation as determined by any method of valuation that is just and equitable.”

36. Mitigation
Good faith mitigation measures are compensable in inverse condemnation.

37. Date of Value Eminent Domain: Inverse Condemnation:
Date of Commencement of Action if brought to trial within 1 year
Date of Trial if after 1 year
Date of Prejudgment Deposit
Inverse Condemnation:
Date of Taking v. Date of Trial

38. Date of Value – Current Hot Issue in Eminent Domain Case Law
Saratoga Fire Protection District v. Hackett (2002) 97 Cal.App.4th 895
Mt. San Jacinto Community College District v. Superior Court (2005) 126 Cal.App.4th 619
San Diego Metropolitan Development Board v. RV Communities (2005) 127 Cal.App.4th 1201
New Case: City of Santa Clarita v. NTS Tech Sys. (2006) 2006 WL

39. Additional Considerations in Inverse Condemnation
Statute of Limitations
Three Year Statute of Limitations:
Code of Civil Procedure Section 338(j): “An action to recover for physical damage to private property under Section 19 of Article I of the California Constitution”
Note: Five Year Statute of Limitations for Adverse Possession
Date of Accrual
Constructive or Actual Knowledge
“Continuing Takings”

40. Additional Considerations - General
Furniture, Fixtures and Equipment
Fixtures Are Actionable In Inverse Condemnation
Relocation Benefits
Loss of Goodwill