Eminent Domain & Inverse Condemnation: 2019 in Review

• Publication year: 2020
• Author: Emily L. Madueno and John C. Murphy

Eminent Domain & Inverse Condemnation: 2019 in Review

Emily L. Madueno and John C. Murphy

Emily L. Madueno is a partner at Murphy & Evertz LLP. She focuses her practice on eminent domain and inverse condemnation matters. She balances her practice between landowners and public agency clients. She has written several e-alerts on the latest condemnation opinions as they are issued, and she also co-authored the condemnation chapter in a CEB practice guide, Ground Lease Practice. Ms. Madueno has been selected for the last five years as a "Rising Star" in Los Angeles magazine's Southern California Super Lawyers edition.*

John C. Murphy, managing partner of Murphy & Evertz, LLP, qualifies as one of the most recognized and accomplished eminent domain practitioners in the State. He and his firm have earned their clients over $300 million in eminent domain awards over the past six years alone. He speaks and writes frequently on eminent domain issues.*

I. INTRODUCTION

Robert Louis Stevenson, the 19th century Scottish novelist and travel writer, is said to have advised (though not appearing in any of his works), "[k]eep busy at something: a busy person never has time to be unhappy." California eminent domain and inverse condemnation practitioners had little time to be unhappy in 2019. Last year was a relatively active year for condemnation law in California courts. In 2019, the United States Supreme Court issued one opinion;¹ the California Supreme Court issued one opinion;² the California Courts of Appeal altogether issued five published opinions;³ and the Ninth Circuit Court of Appeals issued two opinions.⁴

This article will review and summarize the foregoing opinions and their effect on eminent domain and inverse condemnation law in California.

II. UNITED STATES SUPREME COURT RULING IN KNICK V. TOWNSHIP OF SCOTT

The United States Supreme Court weighed in on condemnation again in 2019 and, in doing so, the Court overruled thirty-year-old precedent.⁵

A. Facts

In Knick v. Township of Scott, the Township of Scott adopted an ordinance requiring all cemeteries to be kept open and accessible to the public during the day.⁶ Rose Mary Knick, a resident of the Township of Scott, Pennsylvania, has a small family graveyard on her 90-acre rural residential property.⁷ The Township notified Ms. Knick that she was violating the cemetery ordinance by not keeping her property open and accessible to the public.⁸ In response, Ms. Knick sued the Township in state court, seeking declaratory relief and an injunction on the ground that the Township's ordinance effected a taking of her property, but she did not bring an inverse condemnation action seeking just compensation.⁹ The Township then withdrew any enforcement action against Ms. Knick and, without such action pending, the state court denied Ms. Knick equitable relief.¹⁰

Ms. Knick then sued the Township in federal court under 42 U.S.C. § 1983, alleging that the Township's ordinance violated the takings clause of the Fifth Amendment.¹¹ The federal district court dismissed Ms. Knick's claim under Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City¹² because Ms. Knick had not sought just compensation in state court under state law before suing in federal court under Section 1983.¹³ The Third Circuit Court of Appeals affirmed the district court's dismissal.¹⁴

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B. Legal Backdrop

In Williamson County, the United States Supreme Court held that a property owner's federal takings claim was not ripe for two reasons.¹⁵ First, the Supreme Court determined that the owner "still had an opportunity to seek a variance from the appeals board, so any taking was therefore not yet final."¹⁶ The Supreme Court referred to this as the "finality requirement."¹⁷ Second, the Supreme Court held that the owner's federal takings claim was not ripe because "he had not sought compensation 'through the procedures the State ha[d] provided for doing so.'"¹⁸ In other words, "a property owner whose property has been taken by a local government has not suffered a violation of his Fifth Amendment rights—and thus cannot bring a federal takings claim in federal court—until a state court has denied his claim for just compensation under state law."¹⁹ The Supreme Court referred to this as "the state-litigation requirement."²⁰

Next, in San Remo Hotel, L.P. v. City and County of San Francisco,²¹ the United States Supreme Court held that "a state court's resolution of a claim for just compensation under state law generally has preclusive effect in any subsequent federal suit."²² In other words, if an owner first brings his or her takings claim in state court under state law as Williamson County instructs him or her to do, he or she will find his or her federal claim precluded.

Under Williamson County and San Remo, "[t]he takings plaintiff thus finds himself in a Catch-22: He cannot go to federal court without going to state court first; but if he goes to state court and loses, his claim will be barred in federal court."²³

C. Issue

Knick presented one issue: whether the Court would reconsider Williamson County's "state-litigation requirement"—i.e., the requirement that an owner exhaust state court remedies to ripen his or her federal takings claim.²⁴ Knick did not address the validity of Williamson County's "finality requirement"—i.e., the requirement that the owner cannot sue for a taking until the regulatory agency has made a final decision of what uses are allowed under the challenged regulation.²⁵ In fact, Ms. Knick herself had not challenged the finality requirement.²⁶

D. Holding

In Knick, the Supreme Court "overruled" Williamson County's state-litigation requirement.²⁷ The Court held, "[a] property owner may bring a takings claim [in federal court] under § 1983 upon the taking of his property without just compensation by a local government."²⁸ "If a local government takes private property without paying for it, that government has violated the Fifth Amendment—just as the Takings Clause says—without regard to subsequent state court proceedings. And the property owner may sue the government at that time in federal court for the 'deprivation' of a right 'secured by the Constitution.'"²⁹

Knick represents a long over-due victory for property owners who have been barred from litigating their takings claims in federal court for over thirty years—since 1985. Yet, in jurisdictions like California, will owners actually turn to the federal court system when the state's valuation rules arguably are more favorable than valuation rules in federal court?

III. CALIFORNIA SUPREME COURT RULING IN CITY OF OROVILLE V. SUPERIOR COURT

For the first time in three years,³⁰ the California Supreme Court weighed in on condemnation law in 2019.³¹ California condemnation lawyers anticipated a second California Supreme Court condemnation opinion in 2019, but as of the end of the year, the Court had not issued its opinion. Practitioners can look forward to that opinion, concerning the scope of Code of Civil Procedure section 1260.040, in 2020.³²

A. Facts

In City of Oroville v. Superior Court,³³ raw sewage from the City of Oroville's sewer system backed up into a dental office.³⁴ The dentists claimed the back-up and damage resulted from the sewer system's failure to function as intended.³⁵ The City disagreed and claimed the damage occurred because the dentists had failed to install a legally required backwater valve at their building's sewer connection and if they had, it would have prevented the back-up and damage.³⁶ The dentists sued the City in inverse condemnation and nuisance.³⁷

B. Legal Backdrop

In Albers v. Los Angeles County,³⁸ the California Supreme Court held that 'any actual physical injury to real property proximately caused by [a public] improvement as deliberately designed and constructed is compensable under [the California Constitution] whether foreseeable or not."³⁹ In Holtz v. Superior Court,⁴⁰ the California Supreme Court "recognized the potential confusion presented in Albers by [its] use of the term 'proximate cause'—which in tort law is often defined largely in terms of foreseeability—in a case where the damage was not foreseeable, yet [the California Supreme Court] still imposed inverse condemnation liability."⁴¹ To lessen the confusion, the Supreme Court substituted "substantial causation" in place of "proximate."⁴²

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C. Issue

The California Supreme Court granted review to determine whether the City was liable in inverse condemnation where sewage backed up onto private property due to a combination of a blockage in the City's sewer system and the owners' failure to install a legally required backwater valve.⁴³

D. Holding

The California Supreme Court held that "[p]ublic entities are not strictly or otherwise automatically liable for any conceivable damage bearing some kind of connection, however remote, to a public improvement."⁴⁴ Instead, "[t]o succeed on an inverse condemnation action, a plaintiff must ordinarily show—assuming the public entity made reasonable assumptions about the public improvement in question—that the damage to private property was substantially caused by inherent risks associated with the design, construction, or maintenance of the public improvement."⁴⁵ To establish "substantial causation," the public improvement as deliberately designed, constructed, and maintained need not be the sole cause, provided "the causal nexus between the risks inherent in the public improvement and the harm in question was substantially robust to create a pronounced likelihood of damage."⁴⁶ The nexus is substantially robust when "the damages to private property were the direct and necessary effect of the inherent risks posed by the public improvement as deliberately designed, constructed, or maintained."⁴⁷ The substantial causation test "permits courts to consider a plaintiff's act or omission in the chain of causation, for example, a property owner's own failure to follow reasonable requirements imposed by...