While most lawsuits typically start with the filing of a complaint, eminent domain cases really start one key step earlier, with the condemning agency’s adoption of a Resolution of Necessity.  The Resolution establishes (i) the agency’s right to take the property and (ii) the scope of the acquisition.  In order to adopt a Resolution, the agency must make a set of findings, including finding that “[t]he proposed Project is planned and located in the manner that will be most compatible with the greatest public good and the least private injury.”  In Council of San Benito County Governments v. Hollister Inn, Inc., No. H036629 (Sept. 19, 2012) the Court of Appeal grappled with a trial court’s ruling that the agency’s finding on this subject constituted a gross abuse of discretion because the agency purportedly had not properly analyzed whether it should condemn substitute access for a property that was losing its key access point because of the project.

At issue was whether Code of Civil Procedure section 1240.350 provided the agency with the authority – and, potentially, the obligation – to condemn substitute access as a result of the project’s taking of the Hollister Inn property’s main access point.  At the hearing on the Resolution of Necessity, the agency declined to consider the owner’s request that it secure alternative access for the owner across an adjacent property, concluding that it had no authority to condemn access rights from one private owner in order to convey them to another private owner.  The owner argued that this decision constituted an abuse of discretion, arguing that section 1240.350 provided the agency with the authority to do the very thing it claimed it could not do.

The trial court agreed with the owner, concluding that the agency’s refusal to consider the condemnation of alternative access qualified as a gross abuse of discretion. The court explained that if the agency did not consider condemning substitute access, it could not truly weigh whether its acquisition would create the least private injury. The court issued a conditional dismissal, providing the agency with an opportunity to hold another public hearing to cure the defect in its Resolution. The court also awarded the owner more than $200,000 in attorneys’ fees. The agency held another hearing, and the case was ultimately settled, but the agency reserved its right to appeal the abuse of discretion finding.
On appeal, the court analyzed in detail the basis for condemning substitute property and the standards applicable when reviewing the findings contained in a Resolution of Necessity. In the end, the court reversed the abuse of discretion finding, wiping out the attorneys’ fees award. But the path it took to reach that conclusion contained several interesting stops along the way.

To read more, watch for our E-Alert, which will be circulated on Monday.  Have a great weekend!