BILL ANALYSIS
AB 1770
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Date of Hearing: April 2, 2002
ASSEMBLY COMMITTEE ON JUDICIARY
Ellen M. Corbett, Chair
AB 1770 (Papan) - As Introduced: January 9, 2002
SUBJECT : EMINENT DOMAIN: PROCEEDINGS
KEY ISSUE : SHOULD EVIDENCE OF A PREJUDGMENT DEPOSIT APPRAISAL
BE PERMITTED TO BE USED TO IMPEACH THE WITNESS WHO PREPARED THE
APPRAISAL?
SYNOPSIS
This bill, sponsored by the California Law Revision Commission,
codifies case law holding that evidence of the prejudgment
deposit appraisal may be used for purposes of impeaching a
witness who prepared the appraisal. In support of the bill, the
sponsor asserts that a witness who has prepared a prejudgment
deposit appraisal and later testifies as to a different value
should not be protected from impeachment, as existing law
provides, because "a rule that prohibits a landowner from
questioning a witness about a prior inconsistent opinion
interferes with the constitutional right to compensation in a
fundamental way." Opponents of this provision argue, on the
other hand, that the bill will force public agencies to "hire a
new appraiser and contract for a new appraisal report" rather
than using the same appraiser to prepare a later report.
According to opponents, this will result in "substantial costs
to ratepayers and taxpayers."
SUMMARY : Seeks to revise the statutes relating to evidence of
the condemnor's prejudgment deposit appraisal. Specifically,
this bill :
1)Codifies case law holding that evidence of the prejudgment
deposit appraisal may be used for purposes of impeaching a
witness who prepared the appraisal.
2)Provides that evidence of the prejudgment deposit may be
considered by the court in determining the amount of
litigation expenses awarded to a defendant (property owner)
when the court finds that the offer of the plaintiff (public
entity) was unreasonable and the demand of the defendant was
reasonable.
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EXISTING LAW :
1)Permits the plaintiff to deposit the probable amount of
compensation, based on an appraisal, at any time before entry
of judgment and requires the plaintiff to prepare a written
statement of summary of the basis for the appraisal. (Code of
Civil Procedure section 1255.010. All further statutory
references are to this code.)
2)Provides that, before making a deposit, the plaintiff must
have a qualified expert make an appraisal of the property and
prepare a written statement of, or summary of the basis for,
the appraisal and requires that an appraisal contain specified
information sufficient to indicate clearly the basis for the
appraisal. (Section 1255.010(b).)
3)Provides that the amount deposited by the plaintiff or
withdrawn by the defendant shall not be given in evidence or
referred to in the trial on the issue of compensation.
(Section 1255.060(a).)
4)Provides that, in the trial on the issue of compensation, a
witness may not be impeached by reference to any appraisal
report, written statement and summary of an appraisal or other
statements made in connection with a deposit or withdrawal,
nor shall such a report or statement and summary be considered
an admission of a party. (Section 1255.060(b).)
5)Provides that, upon objection of the party at whose request an
appraisal report, written statement and summary of the
appraisal or other statement was made in connection with a
deposit or withdrawal, the person who made the report or
statement and summary or other statement may not be called at
the trial on the issue of compensation by any other party to
give an opinion as to compensation. (Section 1255.060(c).)
6)Provides that, when a condemnor calls an expert witness to
testify at trial as to the valuation of a subject property,
Section 1255.060(b), noted above, does not prohibit the
impeachment of that witness as to an appraisal he or she made
in connection with the condemnor's prejudgment deposit.
( County of Contra Costa v. Pinole Point Properties, Inc. ,
(1994) 27 Cal.App. 4th 1105.)
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7)Provides that if the court finds that the offer of the
plaintiff was unreasonable and the demand of the defendant was
reasonable, the costs awarded to the defendant shall include
the defendant's litigation expenses. In determining the
amount of those litigation expenses, the court shall consider
the offer required to be made by the plaintiff and any other
written offers and demands filed and served prior to or during
the trial. (Section 1250.410.)
FISCAL EFFECT : The bill as currently in print is not keyed
fiscal.
COMMENTS : This bill, sponsored by the Law Revision Commission,
is intended to address issues that have arisen with respect to
existing law governing evidence of the condemnor's prejudgment
deposit appraisal. In March of 2001, the California Law
Revision Commission published a preprint recommendation entitled
"Evidence of Prejudgment Deposit Appraisal in Eminent Domain,"
suggesting statutory improvements which seek to:
1) Codify case law that evidence of the prejudgment
deposit appraisal may be used for purposes of
impeaching a witness who prepared the appraisal.
2) Emphasize that the protections against use of
prejudgment deposit appraisal evidence apply equally
to the property owner and the condemnor.
3) Make clear that evidence of the prejudgment deposit
may be used in determining the amount of litigation
expenses for which a condemnor may be assessed.
Background. In its recommendation, the Commission states the
following by way of background:
The California Constitution enables the condemnor in
an eminent domain proceeding to take immediate
possession of the property, even though valuation
issues are yet to be tried and just compensation yet
to be awarded. ? The Legislature has implemented the
constitutional authority by enactment of a detailed
procedure governing deposit and withdrawal of probable
compensation.
As a practical matter, it is routine for the condemnor
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to use the prejudgment procedure. The condemnor in
the ordinary case makes a prejudgment deposit of
probable compensation. The deposit is based on the
condemnor's appraisal of the property. The deposit
enables the condemnor to take immediate possession of
the property. ? The law protects the condemnor from
use of the prejudgment deposit appraisal against it at
trial. The intent of the law is to encourage the
condemnor to make a fully adequate prejudgment
deposit, without fear of prejudicing its position at
trial.
Need for the bill. The Commission states that certain issues
have arisen concerning several aspects of existing law that make
this bill necessary, among them:
1) Are the evidentiary rules effective in ensuring
adequacy of the deposit, and can they be improved?
2) Does protection of a valuation witness from
impeachment by a prejudgment deposit appraisal unduly
impair the property owner's ability to prove fair
market value?
Determination of Litigation Expenses. As noted above, existing
law provides that, if the court finds that the offer of the
plaintiff was unreasonable and the demand of the defendant was
reasonable, the costs awarded to the defendant shall include the
defendant's litigation expenses. Existing law further provides
that in determining the amount of those litigation expenses, the
court shall consider the offer required to be made by the
plaintiff and "any other written offers and demands filed and
served prior to or during the trial." This bill would add to
this list of considerations any deposit made by the plaintiff in
order to clarify that the condemnor's prejudgment appraisal and
deposit are considered to be "other written offers and demands
filed and served prior to or during the trial."
Impeachment of a prejudgment deposit appraisal witness: key
issue in the bill. Under existing law, an appraisal witness may
not be impeached at trial by the witness' own previously-made
prejudgment deposit appraisal. According to the sponsor, the
intent of this provision was to encourage a condemnor to make a
fully adequate prejudgment deposit without fear that this might
be held against it later at trial. This bill would codify the
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case of County of Contra Costa v. Pinole Point Properties, Inc. ,
supra., in which the court held that evidence of the prejudgment
deposit appraisal may be used for purposes of impeaching a
witness who prepared the appraisal. In explaining the need for
this change, the Commission states:
The court in Pinole Point Properties was concerned
that a literal interpretation of the statute might
violate the constitutional guarantee of just
compensation. The essence of a condemnation action is
to determine the fair market value of condemned
property, and a rule that prohibits a landowner from
questioning a witness about a prior inconsistent
opinion interferes with the constitutional right to
compensation in a fundamental way. ?
[T]he statute should be revised to allow expressly for
impeachment of an appraiser who later testifies as to
a different value. An appraiser who testifies under
oath at an eminent domain trial should be held to
explain why that valuation differs from the valuation
of the same property made by the same appraiser
earlier in the proceeding.
ARGUMENTS IN SUPPORT : Attorney Norman Matteoni wrote in support
of the bill, stating, with respect to the bill's provision
regarding the impeachment of a valuation witness:
It is only logical that an appraiser can be examined
on his investigation and any previous opinions
relating to value as long as the time of that value is
near the valuation date in the condemnation case.
Moreover, Government Code sections 7260-7277
(California Relocation Assistance Act) provide
directives to public agencies as follows: The
condemnors are to obtain an appraisal before
negotiations are undertaken. Then, it must offer the
amount of that appraisal and negotiate in good faith
to bring about a resolution without the necessity of
filing a condemnation action. Code of Civil Procedure
Section 1245.230 requires a precondemnation offer
prior to the adoption of a resolution of condemnation.
Obviously, the condemnor needs to put its best
position forth based on a fair and honest appraisal.
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ARGUMENTS IN OPPOSITION : The California Association of
Sanitation Agencies opposes the bill, unless amended to "delete
the provision allowing for impeachment of appraisers based on
the appraisal report, statement, and summary," stating:
We are concerned that AB 1770 would allow the
impeachment of the public entity's appraiser based on
the contents of the appraisal report, written
statement and summary of an appraisal or other
statements made in connection with a deposit or
withdrawal of deposit. This change in the law would
shift the balance in an eminent domain proceeding
unfairly toward the property owner. AB 1770 would
essentially give property owners additional tools to
negotiate property acquisition prices that are above
fair market value. If AB 1770 becomes law, public
agencies may have no recourse but to hire a new
appraiser and contract for a new appraisal report,
resulting in substantial costs to ratepayers and
taxpayers, rather than face a loss on the issue of
compensation in court due to the impeached credibility
of the appraiser.
REGISTERED SUPPORT / OPPOSITION :
Support
California Law Revision Commission
Opposition
California Association of Sanitation Agencies (unless amended)
Analysis Prepared by : Saskia Kim / JUD. / (916) 319-2334