BILL ANALYSIS Ó
AB 328
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Date of Hearing: March 15, 2011
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 328 (Smyth) - As Introduced: February 10, 2011
SUBJECT : Inverse Condemnation: Comparative Fault
KEY ISSUES:
1)Should the doctrine of comparative fault be applied to actions
in inverse condemnation?
2)Should the statute restricting the recovery of post-offer
costs expressly apply to inverse condemnation actions?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This bill would apply both the doctrine of comparative fault and
a statute limiting recovery of a plaintiff's post-offer costs to
inverse condemnation actions. In short, under this bill, the
court would treat damage awards in an inverse condemnation
action in the same manner as a civil action between private
parties. Under the California Constitution, a government entity
must provide a property owner with "just compensation" whenever
it takes or damages private property for a "public use."
Typically, a government entity initiates a condemnation action
against a private property owner when the property is needed for
a public use. However, where a public use project proximately
damages private property, the owner may bring an action in
inverse condemnation against the relevant government entity.
Unlike parallel tort actions, courts do not generally apply the
doctrine of comparative fault in inverse condemnation actions.
Thus, even if the property owner's negligence either partly, or
even mostly, caused the property damage, the government entity
is still required to compensate the property owner for 100% of
the damages. The author and sponsor argue that exempting
inverse condemnation from the comparative fault doctrine is
unfair to financially strapped cities and counties that must
bear full responsibility for costs, even if they are only
minimally responsible for the damages. For similar reasons, the
author argues that fairness requires expressly applying
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"post-offer" cost rules in inverse condemnation actions. Under
Code of Civil Procedure Section 998 a plaintiff who rejects a
settlement offer that exceeds the final judgment cannot recover
any post-offer costs and may be required to pay the defendant's
post-offer costs. Although the California Supreme Court has
held that the post-offer statute applies to inverse condemnation
cases, some courts have construed the statute's express
exemption for "eminent domain" actions to encompass inverse
condemnation actions. This bill would clarify the issue by
expressly stating that Section 998 applies to inverse
condemnation actions. The bill is sponsored by the Los Angeles
City Attorney. There is no known opposition to this bill.
SUMMARY : Applies the doctrine of comparative fault and existing
rules governing a plaintiff's ability to recover post-offer
costs to inverse condemnation actions. Specifically, this bill :
1)Requires a court or arbiter, in an inverse condemnation
proceeding, to reduce the compensation to be paid to a
plaintiff in direct proportion to his or her percentage of
fault, if any, in the damaging of property that constitutes a
taking.
2)Extends to actions in inverse condemnation an existing statute
which provides that when a plaintiff rejects a defendant's
settlement offer and then fails to obtain a more favorable
judgment or award, then the plaintiff is prohibited from
recovering his or her post-offer costs and is required to pay
the defendant's costs from the time of the offer.
EXISTING LAW :
1)Prohibits the government from taking or damaging private
property for a public use without the payment of just
compensation and permits a person to maintain an action in
inverse condemnation for the purpose of obtaining compensation
for the taking or damage. (California Constitution Article 1,
Section 19.)
2)Provides that for purposes of apportioning liability a
plaintiff's damages may be reduced in direct proportion to his
or her percentage of fault. (Li v. Yellow Cab (1975) 13
Cal.3d 804.)
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3)Exempts from the above comparative fault rule an inverse
condemnation action, except in certain actions relating to
damages caused by public flood control projects. ÝBlau v.
City of Los Angeles (1973) 32 Cal. App. 3d 77; Locklin v. City
of Lafayette (1994) 7 Cal. 4th 327; Bunch v. Coachella Valley
Water District (1997) 15 Cal 4th 432.]
4)Provides that, in any trial or arbitration, if an offer made
by a defendant is not accepted and the plaintiff fails to
obtain a more favorable judgment or award, the plaintiff shall
not recover his or her post-offer costs and shall pay the
defendant's costs. Provides, in addition, that in any action
or proceeding other than an eminent domain action, the court
or arbitrator may require the plaintiff to pay reasonable
costs for expert witnesses, as specified. (Code of Civil
Procedure Section 998(c).)
5)Holds that the Legislature perceives a difference between
"eminent domain" and "inverse condemnation," and therefore the
Legislature does not intend for its reference to eminent
domain in Code of Civil Procedure Section 998 to encompass
inverse condemnation proceedings. (Regency Outdoor
Advertising, Inc. v. City of Los Angeles (2006) 39 Cal 4th
507, 530.)
6)Permits a prevailing plaintiff (property owner) in an inverse
condemnation action to recover reasonable litigation costs,
including reasonable attorney fees. (Code of Civil Procedure
Section 1036.)
COMMENTS : According to the author and sponsor, the failure to
apply well-established comparative fault doctrine to inverse
condemnation actions "results in a windfall to the plaintiff and
seriously burdens the governmental agency and its residents."
Whereas plaintiffs in other actions are held responsible for
their portion of the damage, the public entity in an inverse
condemnation action must foot the entire cost, even if the
plaintiff was responsible for a greater portion of the damage.
This bill would expressly provide that the doctrine of
comparative fault shall apply to actions in inverse
condemnation. In addition, the bill would expressly apply to
inverse condemnation actions the post-offer cost rules of Code
of Civil Procedure Section 988. That statute provides that if a
plaintiff rejects a settlement offer that turns out to be more
than the final judgment awarded, then the plaintiff cannot
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recover post-offer costs and may be required to pay the
defendant's post-offer costs. In short, this bill seeks, when
appropriate, to limit a plaintiff's recovery in inverse
condemnation actions in the same manner that it would be limited
in a civil action between private parties.
Background : In 1975 California adopted the doctrine of
"comparative fault" in Li v. Yellow Cab (1975) 13 Cal.3d 804.
Under this tort doctrine, a plaintiff's damages may be reduced
in direct proportion to his or her percentage of fault.
Although the principle of comparative fault is well-established
in tort law, it has not generally been applied to other kinds of
actions, including actions in inverse condemnation against a
government entity for damage to private property. Indeed,
California courts developed a general rule that a public entity
is liable for the full injury if a public use project or
improvement was a "substantial cause" of the injury, even if the
plaintiff property owner substantially contributed to the injury
through his or her own fault. (Blau v. City of Los Angeles
(1973) 32 Cal. App. 3d 77.) Significantly, since the 1990s the
California Supreme Court has carved out an exception to the
exception, so to speak, in the case of damages caused by a
public flood control project. In those cases, comparative fault
applies and the public entity is only liable for that portion of
damages that it caused. (Locklin v. City of Lafayette (1994) 7
Cal 4th 327; Bunch v. Coachella Valley Water District (1997) 15
Cal 4th 432.) Applying comparative fault to inverse
condemnation actions, therefore, would not be completely
unprecedented where a government entity contributed to property
damage, as courts have already applied comparative fault in
cases arising out of the failure of a public flood control
project.
Does the Reference to "Eminent Domain" in CCP Section 998
Include "Inverse Condemnation" Actions? Enacted as an effort to
encourage early settlement, Section 998 of the Code of Civil
Procedure (CCP) governs the manner in which parties may make a
written settlement offer prior to the commencement of trial or
arbitration. However, the precise wording of the statute has
given rise to some confusion as to its application to eminent
domain proceedings. Subdivision (c) of Section 998 provides
that if a plaintiff rejects a defendant's offer and then fails
to obtain a more favorable judgment or award, the plaintiff
shall not recover his or her post-offer costs and shall pay the
defendant's costs from the time of the offer. This subdivision
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then states that, "in addition," a plaintiff who rejects an
offer may be required to pay expert witness fees "in any action
or proceeding other than an eminent domain action ." ÝEmphasis
added.] Subdivision (f) then adds that the entire chapter on
offers to compromise does not apply to "an offer that is made by
a plaintiff in an eminent domain action." If inverse
condemnation is included within the meaning of eminent domain,
then the post-offer cost restrictions would not, under existing
law, apply to actions in inverse condemnation. If, on the other
hand, inverse condemnation is not included within the meaning of
eminent domain, then post-offer cost restrictions arguably
already apply to actions in inverse condemnation.
Case Law on Applicability of CCP Section 998 to Inverse
Condemnation Actions : There is no case law that definitively
applies Section 998 to actions in inverse condemnation.
Although at least one appellate court has held that CCP Section
998 treats "eminent domain" and "inverse condemnation"
synonymously (Orpheum v. BART (1978) 80 Cal. App.3d 863, 878),
more recent decisions by the California Supreme Court and
another appellate court hold that the references to "eminent
domain" actions in Section 998 were not intended to include
actions in inverse condemnation. (Goebel v. City of Santa
Barbara (2001) 92 Cal. App. 4th 549, 558-559; Regency Outdoor
Advertising, Inc. v. City of Los Angeles (2006) 39 Cal 4th 507,
530.) However, these latter cases did not completely resolve
the issue because, although at least one of the opinions
expressed disagreement with the earlier Orpheum opinion in
dictum, it also distinguished Orpheum because in that case the
plaintiff prevailed, while in the latter two the government
entity prevailed. Therefore, one could arguably construe Goebel
and Regency as only applying the post-offer cost statute to
cases in which the government entity prevails and is seeking its
post-offer costs, but not to cases in which the plaintiff
prevails but wins a judgment that is less than the settlement
offer. This bill would clarify the potential confusion arising
out of these cases by stating expressly that Section 998 applies
to an action in inverse condemnation for the purpose of reducing
the compensation paid to a prevailing plaintiff in appropriate
cases. Code of Civil Procedure Section 1036, in general,
guarantees a plaintiff's right to recover costs in an inverse
condemnation, but this bill would clarify that, like any other
plaintiff, that recovery may be reduced if the plaintiff has
rejected a settlement offer that is more than the final award.
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ARGUMENTS IN SUPPORT : According to the Los Angeles City
Attorney's Office, the rationale for both the comparative fault
doctrine and the statute governing post-offer costs serve
important public purposes. "The long-standing rationale behind
the rule of comparative fault," the author states, "is to
allocate responsibility and liability for damage by the actual
proportion of the fault of the persons whose negligence caused
the injury. To do otherwise, results in a situation that
creates unjust enrichment for one side over the other."
Similarly, CCP Section 998, the author notes, "is designed to
encourage settlements and alleviate unnecessary burdens upon our
court system." In order to better promote "fairness and
efficiency" the author believes that "both rules should be
applied to inverse condemnation actions, particularly in this
time of economic distress. Government agencies should only be
made responsible for their proportionate share of the costs and
damages awarded in inverse condemnation cases."
REGISTERED SUPPORT / OPPOSITION :
Support
Los Angeles City Attorney's Office (sponsor)
Opposition
None on file
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334