BILL ANALYSIS Ó
AB 436
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Date of Hearing: April 2, 2013
ASSEMBLY COMMITTEE ON JUDICIARY
Bob Wieckowski, Chair
AB 436 (Jones-Sawyer) - As Introduced: February 15, 2013
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-settlement-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." Most often 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 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
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requires expressly applying "post-offer" cost rules to 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 held
otherwise. This bill would clarify that Section 998 applies to
inverse condemnation actions, in the manner provided in the
bill. The bill is sponsored by the Los Angeles City Attorney.
There is no known opposition to this bill.
SUMMARY : Applies two existing rules for calculating a
plaintiff's damages to actions brought in inverse condemnation.
Specifically, this bill :
1)Applies the doctrine of comparative fault to actions in
inverse condemnation and would require a court or arbitrator
to reduce compensation paid to a plaintiff in an inverse
condemnation proceeding in direct proportion to his or her
percentage of comparative fault, if any, in the damaging of
property that constitutes a taking.
2)Provides that if a defendant in an inverse condemnation
action, on or after January 1, 2014, makes an offer that the
plaintiff does not accept, and the plaintiff fails to obtain a
judgment or award, the plaintiff shall not recover his or her
post-offer costs and shall pay the defendant's post-offer
costs, which may include the costs for expert witnesses.
3)Provides that if a defendant in an inverse condemnation
action, on or after January 1, 2014, makes an offer that the
plaintiff does not accept, and the plaintiff fails to obtain a
more favorable judgment or award, the plaintiff shall not
recover his or her post-offer costs, but the plaintiff shall
not be required to pay the defendant's post-offer costs.
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.)
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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.)
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. [Blau 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 : This bill seeks to apply two legal principles that
are typically applied in civil suits between private parties to
actions in inverse condemnation. First, this bill would apply
the doctrine of comparative fault to actions in inverse
condemnation. According to the author, "the long-standing
rationale behind the rule of comparative fault 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
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enrichment for one side over the other." Second, the bill would
expressly apply the post-settlement-offer cost rules of Code of
Civil Procedure Section 988 to inverse condemnation actions.
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 recover post-offer costs and may be
required to pay the defendant's post-offer costs. This bill
would apply a somewhat modified version of that rule to inverse
condemnation actions by drawing a distinction between a
plaintiff that receives a final judgment award that is less than
the settlement offer and a plaintiff that receives no award at
all. Under existing Section 998, a plaintiff that rejects a
settlement offer that exceeds the final award may not recover
post-offer costs and may be liable for the defendant's
post-offer costs. Under this bill, in an inverse condemnation
action, the plaintiff that rejects a settlement offer that
exceeds the final award is not entitled to post-offer costs, but
that plaintiff is not liable for the defendant's post-offer
costs. Only if the plaintiff receives no award at all is the
plaintiff barred from recovering his or her own post-offer costs
and liable for the defendant's post-offer costs.
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, as courts have already applied comparative fault
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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 and related inverse condemnation 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 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 ." [Emphasis 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
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plaintiff prevailed, while in the latter two the government
entity prevailed. Therefore, one could arguably construe Goebel
and Regency as only applying Section 998 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, albeit in the modified form discussed
above.
ARGUMENTS IN SUPPORT : According to the sponsor, 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. According to the sponsor, the
comparative fault doctrine properly allocates liability
according to the degree of fault, so that "if the plaintiff's
negligence contributed to his or her own personal injury or
property damages, the jury or fact finder must apportion the
damages between the parties based on their respective fault."
Under existing law, the sponsor argues, a government agency
would be liable for 100% of the damages even if the plaintiff
had caused 99% of the damage. Similarly, the sponsor argues
that applying Section 998 to inverse condemnation actions "is
consistent with over 40 years of case law set forth by the
California Supreme Court and is good public policy that will
encourage settlements and alleviate unnecessary burdens upon our
court system." "In this time of economic challenge," the
sponsor concludes, "it is particularly important for the
Legislature to clarify these two issues so that government
agencies and the taxpayers they represent are only held
responsible for their proportionate share of the costs and
damages awarded in inverse condemnation cases." The bill is
supported by the California Association of Sanitation Agencies
and the League of California Cities for substantially the same
reasons.
REGISTERED SUPPORT / OPPOSITION :
Support
Los Angeles City Attorney (sponsor)
California Association of Sanitation Agencies
League of California Cities
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Opposition
None on file
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334