California Eminent Domain Report

It’s a Friday afternoon and I decided to take a quick look at the advance sheets for any newly decided appellate cases involving eminent domain. My search revealed an unpublished decision that came out yesterday (September 7, 2017) called Sacramento Area Flood Control Agency v. Souza, 2017 Cal. App. Unpub. LEXIS 6117. I’ll provide the highlights below.

Facts:

This matter involved an acquisition by the Sacramento Area Flood Control Agency (SACFA) of approximately 2.2 acres of land for the Natomas Levee Improvement Program. The acquisition was needed to widen the levee along Garden Highway, to relocate some utility facilities, and to plant grassland.  This was a partial acquisition of a larger parcel consisting of 4.68 acres.

This case proceeded to an eight-day jury trial on valuation. The property owner’s appraiser opined to a value of $465,000 and SAFCA’s appraiser opined to a value of $195,000.  The jury ultimately rendered a verdict of $455,000 for the part taken.  Both sides agreed prior to trial that there were no severance damages.

On appeal, SAFCA claimed that: (1) the trial court erred by excluding two items of evidence; (2) the property owner’s appraisal was not substantial evidence supporting the verdict; (3) the property owner’s attorney committed prejudicial misconduct; and (4) the trial court erred by awarding the property owner its litigation expenses.

Evidentiary Exclusions:

First, SAFCA claimed the trial court erred in excluding all mention of the remainder property and its certificate of compliance in the after condition. This was not a novel issue because the parties had agreed there were no severance damages.  Thus, under California law any benefit the project had on the remainder was not relevant because project benefits may only be used to offset severance damages.  While the owner’s appraiser did conclude that the part taken was the only portion of the property capable of development, the appellate court held that SAFCA was able to challenge that assumption at trial.  Thus, there was no error.

Second, SAFCA claimed the trial court erred when it prevented SAFCA from offering testimony from its appraiser to critique the property owner’s appraisal. SAFCA had not designated its appraiser to offer such testimony and the appraiser indicated during his deposition that he had not been asked by SAFCA to offer such testimony.  This is the one aspect of this decision that really caught my eye because it struck me as contrary to California law.  The appellate court agreed and concluded the trial court erred by excluding these opinions because there is no requirement to designate a rebuttal expert.  Nonetheless, the appellate court found the error to be harmless because SAFCA had an opportunity to cross examine the property owner’s appraiser and that was deemed sufficient.  This finding was surprising.  I generally don’t see how cross examination of an expert sufficiently addresses the matters that may be called out through another expert.  For example, if an attorney asks an opposing expert during cross examination if his opinion was flawed for failing to comply with pertinent appraisal standards or for relying on a flawed methodology, the opposing expert could simply disagree.  The attorney must be permitted to offer a competing expert opinion because the attorney can hardly offer his or her own opinion as evidence.  If done well, it isn’t difficult to envision a jury being moved by an expert who capably explains why a competing expert’s opinion is flawed.  To dismiss SAFCA’s inability to offer this evidence as harmless struck me as unfair.  If nothing else, a new trial should have been permitted.

Lack of Substantial Evidence:

This is a very difficult standard to overcome if you are the appellant on appeal because the appellate court presumes the record contains evidence sufficient to support the judgment and it will review the whole record in a light most favorable to the judgment, resolving all evidentiary conflicts and drawing all reasonable inferences in favor of the judgment. (City & County of San Francisco v. Golden Heights Investments (1993) 14 Cal.App.4^th 1203, 1211.)  For this reason, SAFCA’s argument that the owner’s appraiser didn’t constitute sufficient evidence to support the verdict did not gain any traction.

Attorney Misconduct:

Once again, this argument achieved very little on appeal because SAFCA’s counsel either failed to object to the alleged instances of misconduct, or he did and the objections were sustained. The claimed misconduct also mostly related to the owner’s attorney suggesting that the taking was against his client’s will.  By definition, that is what eminent domain entails, so this too was a losing argument.

Litigation Expenses:

The body of California law governing the award of litigation expenses in eminent domain cases has evolved considerably over time. Generally speaking, a trial court evaluates the reasonableness of the property owner’s final demand and the agency’s final offer in light of the ultimate award in the case and the evidence at trial.  In particular, the trial court will look at: (1) the amount of difference between the offer and the compensation awarded; (2) the percentage difference between the offer and the award; and (3) the good faith, care and accuracy in how the amount of the offer and demand were determined.  (Los Angeles County Metropolitan Transportation Authority v. Continental Development Corp. (1997) 16 Cal.4^th 694, 720.)  In this case, the property owner’s final offer was roughly an even split between SAFCA’s appraisal of $195,000 and its appraisal of $465,000.  Conversely, SAFCA only offered $55,000 more than its appraisal.  When the jury rendered a verdict of $455,000, SAFCA really had no realistic chance of avoiding litigation expenses.  Not surprisingly, SAFCA lost this issue on appeal too.

Final Thoughts:

This case didn’t break any new ground which is undoubtedly why it wasn’t published. But it still presented a good overview of many of the issues we eminent domain practitioners regularly encounter.  With the exception of finding the exclusion of rebuttal testimony to be harmless error, the appellate court’s conclusions were unsurprising given the facts stated in the decision.