Mcle Self Study Article: Eminent Domain & Inverse Condemnation: 2017 in Review

• Publication year: 2018
• Author: John C. Murphy and Emily L. Madueno

MCLE Self Study Article: Eminent Domain & Inverse Condemnation: 2017 in Review

John C. Murphy and Emily L. Madueno

John C. Murphy

John C. Murphy balances his eminent domain practice between owners and some of the most sophisticated public agencies in the state. His firm earned its owner clients the reportedly largest eminent domain awards in each of the past five years. He helped generate well over $200 Million for owner clients over that time. Mr. Murphy also represents two of the region's most populous county governments, one of its largest port districts, and the City of Los Angeles DWP. He has authored numerous articles, including for the Appraisal Journal, a chapter in a CEB practice guide, Ground Lease Practice, and a chapter in the ABA textbook Litigators on Experts. He has been chosen repeatedly for inclusion in the definitive legal directory, Best Lawyers in America—most recently in 2018—in two practice areas: eminent domain law and real estate law. He has consistently received Southern California Super Lawyer accolades for more than a decade.

Emily L. Madueno

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 co-authored the condemnation chapter in a CEB practice guide, Ground Lease Practice. Ms. Madueno has been selected for the last three years as a "Rising Star" in Los Angeles magazine's Southern California Super Lawyers edition.

I. INTRODUCTION

Lewis Carroll, the 19th century Oxford mathematician and author of "Through the Looking Glass" may have had some foresight into how 2017 would look to eminent domain attorneys.¹ An exchange between Carroll's Cheshire Cat and Alice boils down to this sentiment: "If you don't know where you are going, any road will get you there."²

In 2017, federal and state courts, including the United States Supreme Court and California state courts, took a variety of roads, or approaches, to deciding cases involving some long-standing, recurring issues in eminent domain. The common issues included regulatory takings, valuation of just compensation, precondemnation activities, and questions of public use. Not surprisingly, a review of these eminent domain opinions reveals no consensus on the future of eminent domain case law.

Common themes do recur in the case law, however. The cases discussed in this article demonstrate the common themes from 2017 across the country. This article covers all four California eminent domain and inverse condemnation cases decided in 2017, as well as a selection of non-California cases that reflect the year's common themes. This article does not attempt to discuss all such cases decided across the country. Non-California cases solely involving interpretation of another state's statutes without wider application to California law,³ for example, are not included as they are less likely to be applicable for California practitioners.

It is useful to consider some data regarding the 2017 eminent domain and inverse condemnation cases. First, courts throughout the nation issued at least twenty eminent domain opinions. About one-third involved inverse condemnation.⁴ Eleven cases addressed valuation,⁵ precondemnation activities,⁶ and public use.⁷ Second, California Courts of Appeal issued four published opinions,⁸ but the California Supreme Court issued none. It declined to address any new eminent domain or inverse condemnation issues this year by denying certiorari three times.⁹ No review was sought in the fourth case.¹⁰ Third, three of the four published California opinions dealt with inverse condemnation. Public agencies or public interest groups, not owners, prevailed in each of these three inverse condemnation opinions.¹¹ Fourth, California appellate courts continue to deftly use the ripeness doctrine and other procedural stratagems to avoid reaching the merits on key constitutional issues in inverse condemnation cases.¹² Other states' courts also proved adept at dodging big constitutional issues.¹³

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This article will review the four published California opinions in some detail. This article also provides a quick summary of other cases from across the country where courts have dealt with issues similar to those that California condemnation practitioners face. The non-California cases offer the California condemnation practitioner ways of arguing commonly recurring issues litigated across multiple jurisdictions, including California.¹⁴ The non-California cases also offer the California condemnation practitioner insight into new applications they may face or want to raise themselves.¹⁵

II. PUBLISHED CALIFORNIA OPINIONS

A. Surfrider Foundation v. Martins Beach 1, LLC (August 9, 2017)¹⁶ 1. Facts

The case involved access to Martins Beach located along the San Mateo County coast and nestled in a cove with high cliffs to the north and south.¹⁷ Though privately owned and with limited physical accessibility, the beach had a long history of public access.¹⁸ In July 2008, billionaire venture capitalist Vinod Khosla purchased Martins Beach, all ninety acres of it, for $32 million, and a year or two later "closed off the only public access to the coast at that site."¹⁹

Before closing off access, Mr. Khosla had sued for declaratory relief in 2009, seeking a declaration that he was not required to maintain beach access.²⁰ San Mateo County and the California Coastal Commission demurred; the trial court sustained the demurrers without leave to amend and concluded that Mr. Khosla was obligated to comply with the administrative process provided by the California Coastal Act before seeking a judicial determination of his rights.²¹ In 2012, an ad hoc group, "Friends of Martins Beach," sued Mr. Khosla seeking to establish a dedicated public easement for beach access.²²

This appellate opinion arises, however, from a case that another non-profit organization, Surfrider Foundation, filed. It sought (a) a declaration that Mr. Khosla's locking the gate or blocking public access to the beach constituted a "development" under the Coastal Act, thus triggering Mr. Khosla's obligation to obtain a Coastal Development Permit ("CDP"); and (b) a temporary injunction requiring Mr. Khosla to restore public beach access.²³

2. Issues

Surfrider presented three issues: (a) Whether Mr. Khosla's closure of public access amounts to a "development" triggering the need for a CDP under the Coastal Act; (b) if so, whether the CDP requirement survives constitutional challenge under the due process and takings clauses of the state and federal Constitutions; and (c) whether the trial court's temporary injunction requiring Mr. Khosla to restore public access amounts to a per se taking.²⁴

3. Holding

(a) CDP Requirement

Mr. Khosla's closure of public access is "development" under the Coastal Act requiring a CDP because it resulted in a significant decrease in access to Martins Beach.²⁵ Blocking public access to a California state beach constitutes a change in intensity of use and/or access amounting to a "development" under the Coastal Act, and hence a CDP is required.²⁶ Although Mr. Khosla argued that the access historically provided had never truly been public access because access had been at the owner's permission and/or fees were charged, nothing in the statute requires the phrase "access thereto" to mean "free access" or an "established public right of access."²⁷ Mr. Khosla also attempted to argue that this holding would lead to absurd results, such as a CDP being required for temporary events, such as parties or garage sales.²⁸ This ruling may not lead to absurd results, according to the court, because temporary events do not require a CDP and the Coastal Commission has authority to issue discretionary waivers for them.²⁹

(b) Constitutional Challenge to the CDP

The real issue in this case was whether the CDP requirement itself amounts to a taking. The court never got to that question because it found instead that Mr. Khosla's claim was not ripe. "A takings claim that challenges the application of regulations to particular property is not ripe until 'the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue.'"³⁰ Mr. Khosla had never even applied for a CDP.³¹ The appellate court, therefore, determined that the constitutional challenge to the CDP requirement was not ripe for adjudication.³²

(c) Temporary Injunction

The temporary injunction provided, in part: "Defendants are hereby ordered to cease preventing the public from accessing and using the water, beach, and coast at Martins Beach until resolution of Defendants' [CDP] application has been reached by San Mateo County and/or the Coastal Commission."³³ The court upheld the temporary injunction, finding that it did not amount to a per se taking because it was, by its nature, temporary.³⁴ The court explained that Loretto v. Teleprompter Manhattan CATV Corp.³⁵ and its progeny, including Nollan v. California Coastal Commission³⁶ and Dolan v. City of Tigard,³⁷ require permanence for a taking to have occurred.³⁸

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4. Comment

Surfrider demonstrates the nimbleness with which courts can employ the ripeness doctrine and other procedural steps to side-step constitutional issues.

In a larger sense, a question arises as to how can one square the Surfrider opinion with the undeniable fact that some effectively private beaches do exist in California. Gated residential communities, such as Orange County's Irvine Cove, Three Arch Bay, and Emerald Bay, exclude the public from reaching the beach on foot or by car via the east. As in the case of Martins Beach, high cliffs bar public access from the north and south of these coves. These gated residential communities differ from Martins Beach, however, in two important...