BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 436
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          ASSEMBLY THIRD READING
          AB 436 (Jones-Sawyer)
          As Amended May 13, 2013
          Majority vote 

           JUDICIARY           7-1                                         
           
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          |Ayes:|Wieckowski, Alejo, Chau,  |     |                          |
          |     |Dickinson, Garcia,        |     |                          |
          |     |Muratsuchi, Stone         |     |                          |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Maienschein               |     |                          |
          |     |                          |     |                          |
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           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.  However actions taken by  
            the plaintiff in applying for a land use permit or entitlement  
            shall not be construed to as causing damage to the property.

          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. 

           FISCAL EFFECT  :  None








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          COMMENTS  :  Article I, Section 19 of the California Constitution  
          provides that when a public entity takes or damages property, it  
          must pay the owner just compensation.  Unlike the 5th Amendment  
          to the United States (U.S.) Constitution, which only refers to  
          the "taking" of property for a "public use," the California  
          Constitution guarantees "just compensation" whether the public  
          entity "takes" or "damages" property.  The "taking" of property  
          by eminent domain occurs when the public entity initiates a  
          "condemnation" proceeding against the property owner.  However,  
          when a project of a public entity unintentionally "damages"  
          property   - e.g., where a publicly maintained flood control  
          project fails and destroys and thereby virtually takes property  
          - the property owner may bring an action in "inverse"  
          condemnation against the public entity.  One key difference  
          therefore, in a conventional eminent domain "condemnation"  
          action the government is the plaintiff and the property owner is  
          the defendant.  Any questions concern whether the taking is for  
          a "public use" or the appropriate amount of "just compensation."  
           In an inverse condemnation action, however, the property owner  
          is the plaintiff and the government is the defendant.  Also,  
          unlike an eminent domain action, where there is unquestionably a  
          "taking," in the inverse condemnation action the plaintiff must  
          establish that the damage constitutes a taking as a threshold  
          matter before proceeding to the question of just compensation.  

          This bill seeks to apply two legal principles commonly applied  
          in civil suits 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 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 (CCP) 998 to inverse  
          condemnation actions.  Under that section, 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 modified version of  
          that rule to inverse condemnation actions by drawing a  
          distinction between a plaintiff that receives a final judgment  








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          award that is less than the settlement offer and a plaintiff  
          that receives no award at all.  Under existing CCP 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 does not  
          prevail and 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.  
           
           According to the sponsor, the Los Angeles City Attorney's  
          Office, both the comparative fault doctrine and the statute  
          governing post-offer costs serve important public purposes that  
          should be extended to inverse condemnation cases.  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 CCP 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 other cities, counties, and local government  
          associations for substantially the same reasons. 

          A number of law firms oppose this bill for two fundamental  
          reasons.  First, they contend that this bill inappropriately  
          confuses common law tort principles with constitutional  
          analysis.  Second, they argue that because "just compensation"  
          for damages to property is guaranteed by the state constitution,  
          any legislative reduction in that compensation - whether by  








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          imposing comparative fault or by applying CCP Section 998 rules  
          to diminish just compensation - is unconstitutional.  Opponents  
          contend that while the courts have reduced public entity  
          liability in a narrow range of flood cases, this should not be  
          confused with incorporating tort principles of comparative  
          fault.  When the courts speak of "reasonableness," the opponents  
          contend, they do not mean "reasonableness" in the same sense  
          that the term is used in tort law.  Instead, they argue that  
          "reasonableness in the flood control context requires a  
          balancing of public need for the project against the gravity of  
          harm suffered by the damaged landowner.  It is not an  
          application of traditional tort concepts of fault."  

          As for the application of CCP Section 998 to inverse  
          condemnation, the opposition argues that just compensation for  
          an inverse condemnation plaintiff includes cost reimbursement.   
          As such, they believe that reducing "or eliminating a cost  
          award, or imposing the burden of payment of a government  
          agency's costs or other expenses, would violate Article I,  
          Section 19," citing the Goebel case and, among others, Heimann  
          v. City of Los Angeles (1947) 30 Cal. 2d 746; City of Los  
          Angeles v. Richards (1973) 10 Cal.3d 385; and San Francisco v.  
          Collins (1893) 98 Cal. 259.  In short, the opposition insists  
          that any reduction of the plaintiff's award, including any  
          recoverable costs and expenses, "would impermissibly deny owners  
          the just compensation to which they are [constitutionally]  
          entitled." 


           Analysis Prepared by  :    Thomas Clark / JUD. / (916) 319-2334 


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