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California Supreme Court Upholds Precondemnation Procedures

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By Patrick J. Paul

On July 21, 2016, the California Supreme Court in Property Reserve v. Superior Court upheld the state’s precondemnation entry and testing statutes provided they were reformed to allow impacted property owners the ability to have a jury trial to determine damages associated with such entry and testing.

The California Department of Water Resources (DWR) sought to construct water conveyance facilities that would require significant property condemnation. As part of this process, DWR further sought to investigate the environmental and geological suitability of more than 150 private properties considered for the conveyance route.

DWR proposed two sets of precondemnation diligence – – environmental and geological activities. The environmental activities consisted of mapping and surveys. The geological activities consisted of drilling which would leave grout in the holes bored on the landowners’ properties, and thus create a possible takings per se as a permanent physical occupation. In overturning the Court of Appeal determination that precondemnation entry and testing statutes were limited to innocuous or superficial activities, the California Supreme Court noted that because precondemnation entry and testing “statutes provide a procedure by which a property owner may recover damages for any actual injury or substantial interference with the property owner’s possession or use of its property that is caused by the continued presence of the grout on its property statutes do not on their face violate the federal takings clause”.

DWR sought precondemnation access to conduct these activities pursuant to California law Code of Civil Procedure sections 1245.010-1245.060 which authorizes a public agency to file a petition with the Superior Court permitting inspection of property contemplated for future condemnation.  In considering such a petition, the Superior Court must identify the purpose for the entry, the nature and scope of the activities to be conducted, and specify the terms of entry in an order with probable compensation for losses associated with the entry deposited with the Court.

If the entry causes actual damage to “or substantial interference” with the possession or use of the property, an owner may either seek an order allowing withdrawal of the funds on deposit, and awarding any further compensation due, or seek recovery for damages in a separate (inverse condemnation) action.  The statutes, however, provide no avenue to challenge the public necessity of proposed precondemnation activities or to otherwise obtain a jury trial on the issue of damages.

In addressing whether California’s precondemnation entry and testing statutes provided a constitutionally valid eminent domain proceeding for those activities, the court determined that the statutory procedures satisfied California’s taking clause when reformed to allow the property owner to obtain a jury determination of damages.

Although the court’s decision now provides a clearer path for certain types of precondemnation activities, it similarly expands the rights of property owners to pursue a jury determination of the damages associated with those activities.