BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Martha M. Escutia, Chair
2001-2002 Regular Session
AB 1770 A
Assembly Member Papan B
As Introduced
Hearing Date: June 4, 2002 1
Code of Civil Procedure 7
CJW 7
0
SUBJECT
Eminent Domain
DESCRIPTION
This bill would provide that, in determining litigation
expenses to be awarded to the defendant as costs in an
eminent domain proceeding, the court shall consider the
reasonableness of any prejudgment deposit made by the
plaintiff to cover probable compensation to the defendant.
The bill also would provide that, if an appraiser places
one value on the property for prejudgment deposit purposes
and swears to a different amount at trial, the appraiser
may be questioned about the discrepancy.
BACKGROUND
California's eminent domain law encourages settlement of
property valuation issues by tying pre-trial compensation
negotiations to post-trial cost awards. Prior to trial,
the law requires the condemning authority and the defendant
property owner to exchange their final written offer and
demand for compensation. After trial, if the court finds
that (in light of the amount of compensation awarded) the
defendant's final demand was reasonable and the condemning
authority's final offer was unreasonable, the court shall
award litigation expenses to the defendant.
In determining the amount of expenses to be awarded, the
court is required to consider the condemnor's final offer
(more)
AB 1770 (Papan)
Page 2
"and any other written offers and demands filed and served
during trial." This bill would establish that a
condemnor's prejudgment deposit of the probable
compensation to be awarded at trial should be included in
the factors considered by the court.
This bill also would codify a recent court decision
determining that, when a condemning authority's appraisal
witness at trial is the same person who made the appraisal
on which the prejudgment deposit is based, the witness may
be impeached by any difference between those appraisals.
CHANGES TO EXISTING LAW
1. Existing law provides that, after a trial establishing
the fair market value of property condemned through
eminent domain, the court, on motion of the defendant,
shall consider the final pre-trial compensation offer and
demand of the parties to determine the defendant's
entitlement, if any, to litigation expenses. [CCP Sec.
1250.410.]
Existing law further provides that, if the court finds
the offer of the plaintiff was unreasonable and that the
demand of the defendant was reasonable viewed in light of
the evidence admitted and the compensation awarded at
trial, the court shall award litigation expenses
(including reasonable attorney's fees) to the defendant.
[ Id .; CCP Sec. 1235.140.]
Existing law further provides that, prior to trial, a
plaintiff may (and in order to take pre-trial possession
of the condemned property, must) make a prejudgment
deposit of the amount of probable compensation to be
awarded to the defendant at trial. [CCP Sec. 1255.010 et
seq .]
This bill would provide that, in determining the amount
of litigation expenses to be awarded, the court shall
consider, in addition to the amount of the plaintiff's
final pre-trial offer, the amount of any prejudgment
deposit of probable compensation made by the plaintiff.
2. Existing law provides that, in a trial on the issue of
AB 1770 (Papan)
Page 3
property valuation, a witness may not be impeached by
reference to any appraisal report or other statement made
in connection with a prejudgment deposit of probable
compensation. [CCP Sec. 1255.060.]
Existing case law provides that, when the person who
prepared the appraisal on which the prejudgment deposit
was based is called as a witness to give an opinion as to
property valuation at trial, that witness may be
questioned about any discrepancies between the
prejudgment deposit appraisal and the witness' appraisal
opinion at trial. [County of Contra Costa v. Pinole
Point Properties (1994) 27 Cal. App. 4th 1105.]
This bill would codify the holding in the Pinole Point
Properties case, excepting from the general rule that a
trial witness may not be impeached by a prejudgment
deposit appraisal those circumstances where the witness
is the same person who prepared that earlier appraisal.
COMMENT
1. Stated need for legislation
The California Law Revision Commission (CLRC), sponsor of
this bill, recently issued a publication entitled
"Evidence of Prejudgment Deposit Appraisal in Eminent
Domain" that provides the basis for this proposed
legislation.
The CLRC notes first that under existing law, a
condemning authority that takes possession of the
property prior to trial must make a sort of "security
deposit" of a sum determined by expert assessment to be
the probable amount of compensation to be awarded at
trial. In order to ensure that an adequate amount is
deposited without prejudicing the condemnor's position on
the issue of valuation at trial, the law provides that
evidence as to the amount of the security deposit is
inadmissible at trial.
The CLRC states that it is unclear whether the
inadmissibility of the deposit amount at trial actually
provides much of an incentive for condemnors to make
adequate deposits. A better incentive, it argues, would
be to allow the amount of the security deposit to be
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Page 4
taken into consideration - like the condemnor's final
offer of compensation -- in post-trial motions for
litigation expenses. Since an unduly low deposit, like a
low final offer, would be evidence of "unreasonableness"
that could result in an award of litigation expenses to a
defendant, a condemnor presumably would have a more
direct incentive to make an adequate prejudgment deposit.
The amendment would provide that "any deposit" made by
the plaintiff for prejudgment security would be
considered in assessing reasonableness, assuring that
supplemental deposits would be added to any original
deposit for purposes of the assessment. The CLRC asserts
that this proposed amendment would not prejudice
condemnors, since the amount of the security deposit
would remain inadmissible at trial. Further, the CLRC
notes that, as a practical matter, many condemning
authorities already base their prejudgment security
deposits on the amount of their final pre-trial offers of
compensation.
2. Bill also would codify court decision on impeaching
appraisal witness
Under existing law, neither the appraisal underlying the
prejudgment security deposit nor any other statement made
in connection with it is admissible to impeach any
witness testifying to the valuation of the property at
trial. At least one appellate court, however, has
determined that an exception to this rule exists when the
witness is the same person who prepared the prejudgment
deposit appraisal report. [County of Contra Costa v.
Pinole Point Properties (1994) 27 Cal. App. 4th 1105.]
In the Pinole case, the court pointed out that case law
has long emphasized that an appraiser may be impeached
with a prior inconsistent opinion at trial. The court
continued,
Since the essence of a condemnation action is to
determine the fair market value of condemned property,
a rule which prohibits a landowner from questioning a
witness about a prior inconsistent opinion interferes
with the constitutional right to compensation in a
very fundamental way.
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[Id. at p. 1112.] This bill would codify the opinion
expressed by the appellate court in Pinole by providing
that, when the person who prepared an appraisal report
(including the prejudgment deposit report) is called as a
trial appraisal witness by the party for whom the report
was prepared, that witness may be impeached with his or
her prior appraisal report.
3. Opponent argues that codifying Pinole would unduly
favor defendants
The California Association of Sanitation Agencies opposes
the bill unless it is amended to delete the provision
that would codify the Pinole ruling. The Association
argues:
AB 1770 would essentially give property owners
additional tools to negotiate property acquisition
prices that are above fair market value. . . .
[P]ublic 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.
The opponent's argument assumes that a disparity between
a prejudgment appraisal report and an appraisal at trial
necessarily would impugn the appraiser's credibility. In
fact, there are many good reasons why these appraisal
amounts may differ, such as the receipt of additional,
more reliable appraisal information between the
prejudgment deposit appraisal and the trial, or inflation
of real estate values during that six to eight month
interim.
In the Pinole case, for example, had the defendant been
allowed to question the disparity, the plaintiff's
witness would have testified that after his prejudgment
deposit appraisal, an adjacent portion of the defendant's
property was sold, allowing for a more accurate
assessment of property value and severance damages. (The
Pinole court ultimately held that the trial court's
failure to permit the defendant to elicit this testimony
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before the jury constituted harmless error.)
Support: None Known
Opposition: California Association of Sanitation Agencies
(unless amended)
HISTORY
Source: California Law Revision Commission
Related Pending Legislation: None Known
Prior Legislation: AB 237 (Papan, Ch. 428, Stats. of 2001)
Prior Vote: Assembly Judiciary Committee 11-0
Assembly Floor 74-0
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