Condemnation of Property in California Can Get Messy: BB&K Attorney James Wyman Details Ways Public Agencies Can Ensure a Clean Break

by Best Best & Krieger LLP
Contact

Condemning property for public projects in California is a hard reality for both government officials and the owners of property that is in the path of a new road, freeway expansion or mass transit project. There is often little that can be done to avoid having to acquire private property for these types of public projects. For major infrastructure projects, it can take years between project inception and property acquisition, leaving some property owners with the sense that they would have been better off had the property been acquired/condemned at an earlier time, especially if their property once had a higher value.

In general, property acquisition flows through a typical process without many problems: The public entity determines what property it needs, appraises it and acquires it. However, the process doesn’t come without peril and is subject to mistakes that can end up costing the public agency dearly. And in a topsy-turvy real estate market, where values may be lower in the future than the past, property owners are looking at new and untraditional ways to collect what are known as precondemnation damages.

Under California law, mistakes that occur in the property acquisition process can lead to a unique type of property-related damages known as precondemnation or Klopping damages. In the seminal case on precondemnation damages, Klopping v. City of Whittier, the California Supreme Court in 1972 set forth the basic parameters under which a property owner would be entitled to recover damages for a public agency’s unreasonable conduct or delay in condemning property.

Traditionally, property owners who seek precondemnation damages claims rely on lost rental profits as a means of measuring precondemnation damage. In a recent case involving a freeway improvement project in northern Monterey County, the property owners tried a different approach for measuring damages in a declining real estate market; they measured damages by calculating the difference in value of the property between the start and the end of the precondemnation period. One shortcoming with this approach was that the property owners were unable to distinguish between the decline caused by the general market and the decline caused by the public agency’s conduct. A state appellate court rejected the measurement of precondemnation damages, holding that the property owner’s method of calculating damages was limited to situations in which the property owner could prove a physical invasion or direct legal restraint on the property.

While avoiding paying precondemnation damages is a goal of the legal process, it is advisable to avoid precondemnation liability on all fronts. On many levels, avoiding precondemnation liability is somewhat straight forward – act reasonably in your dealings with the public and property owners in particular. There are four key points that public entities should consider during project delivery to minimize precondemnation damages claims:

  1. Be Gracious, Respectful and Professional. Condemning property is the most significant civil power that a government entity holds. Be mindful of this during the acquisition and relocation processes. Having a home or business condemned is difficult enough for property owners so treating property owners with respect and being gracious towards them is an easy way to show that the public entity understands and can sympathize with them. Likewise, being professional is a way to demonstrate the seriousness of the situation and showing respect. Following these practices will go a long way to engender goodwill throughout the process.
  2. Be Honest with Project Plans but Do Not Overstate. Government activity, including most aspects of project planning, is best practiced in the open. When discussing projects with property owners in the path of a public project, public entities need to be honest that a project is being planned but they need to be careful and circumspect in making statements about the exact parameters of a project before it is approved and right-of-way requirements are finalized. Avoid public statements that unequivocally state the need for a particular property and recognize that options may be available in the future to avoid certain impacts.
  3. Document Decisions. It is important to document decisions that may affect certain property owners. This is particularly true when a property owner requests a redesign to part of a project to avoid a specific feature of his/her property. As all project engineers know, not every redesign will meet with the approval of the project proponent or be sufficient to meet the property owner’s needs. In deciding to redesign a portion of the project, the public entity needs to ensure that the decision is documented in order to protect against precondemnation claims. One method is to prepare a memo to file explaining that the public entity is undertaking the redesign at the behest of the property owner and that such a course of action may delay the actual date of acquisition.
  4. Do Not Burden Property Owners. Property owners have a right to seek development of their property. Public entities that are not acting in a regulatory capacity should not interfere with property rights, especially for the nefarious purpose of depressing the property value. Direct interference or preventing a property owner from using the property in a manner that is otherwise permissible could be the basis for a lawsuit. While a government agency may envision using certain property in the future, it cannot take actions outside of the law to suppress the value of the property for future acquisition. For instance, one public entity cannot prevent another public entity from subdividing property to ensure that its value does not increase when the time for acquisition has arrived. For road projects, there are mechanisms for right-of-way protection that are legal so be sure to use those.

If a property owner has a valid claim for precondemnation liability, a viable defense may be found in causation. (i.e., did the public agency’s conduct cause the decline in value or is it attributable to another factor?). For instance, when a property owner claims that the property has suffered as a result of the public entity’s precondemnation conduct or delay, the public entity may be able to defend itself by arguing causation. In the Monterey County case, the property owners claimed that the delay associated with the public entity’s conduct entitled them to precondemnation damages. They were, however, unable to link the public entity’s conduct to the decline in property value. The appellate court ruled that there was no evidence that the public entity caused the decline in value and that a public entity is not responsible for a general decline in market value tied to precondemnation liability. Forcing a property owner to prove causation is a necessary defense tactic. Differentiating between market conditions and the public entity’s conduct may be even harder to prove where the market is declining during the precondemnation period.

The type of precondemnation conduct or delay that leads to precondemnation damages is relatively rare. Being in a position to prevent the issue and armed with knowledge about the developing law in this area is a simple way to avoid unnecessary project costs.

* This article was originally published in PublicCEO.com on Sept. 11, 2013. Republished here with permission.

Written by:

Best Best & Krieger LLP
Contact
more
less

Best Best & Krieger LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.