BILL ANALYSIS
AB 237
Page 1
Date of Hearing: May 2, 2001
ASSEMBLY COMMITTEE ON JUDICIARY
Darrell Steinberg, Chair
AB 237 (Papan) - As Amended: April 2, 2001
SUBJECT : EMINENT DOMAIN
KEY ISSUE : SHOULD THE USE OF MEDIATION AND ARBITRATION BE
SPECIFICALLY AUTHORIZED IN EMINENT DOMAIN PROCEEDINGS?
SYNOPSIS
This Bill Seeks To Facilitate Resolution Of Eminent Domain Cases
Through The Authorization Of ADR And Revises Procedures In
Eminent Domain Proceedings. In Response To Concerns Raised By
Public Entities, The Author And Sponsor Have Agreed To Amend The
Bill, As Noted In The Analysis.
SUMMARY : Seeks to facilitate resolution of eminent domain
cases through the authorization of ADR and revise procedures in
eminent domain proceedings. Specifically, this bill :
1)Requires the final offer of the plaintiff (public entity) and
final demand of the defendant (property owner) in eminent
domain proceedings relating to compensation to include all
elements of required compensation, including compensation for
the loss of goodwill, and to indicate whether or not interest
and costs are included.
2)Provides that the parties to such proceedings may by agreement
refer the dispute to resolution by mediation or binding or
non-binding arbitration, and provides that the arbitrator's
decision in a non-binding arbitration is final unless within
30 days after service of the arbitrator's decision a party
moves the court for a trial of the eminent domain proceeding.
3)Provides that, upon motion of a party, the court may postpone
the date of such trial for a period that appears adequate to
enable resolution of a dispute pursuant to alternative
resolution procedures provided that the court is satisfied
that certain conditions are met.
4)Changes the date of exchange of valuation data in eminent
domain proceedings to 90 days before trial from 60 days.
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5)Requires, pertaining to statements of valuation required under
existing law, to have included in an exchange of the valuation
of data the method used to determine a loss of goodwill and a
summary of the data supporting the opinion as to the value of
the property.
EXISTING LAW :
1)Requires that, at least 20 days prior to trial on issues
relating to compensation, the plaintiff serve on the defendant
a final offer of compensation. (Code of Civil Procedure
section 1250.410. All further statutory references are to
this code.)
2)Requires that just compensation in an eminent domain
proceeding be determined by a jury unless waived. (Cal.
Const. Art. I, sec. 19.)
3)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. (Section
1255.010.)
4)Requires parties to exchange valuation data 60 days prior to
commencement of trial on the issue of compensation. (Section
1258.220.)
FISCAL EFFECT : The bill as currently in print is not keyed
fiscal.
COMMENTS : This bill, sponsored by the Law Revision Commission,
is intended to facilitate resolution of eminent domain cases
through the authorization of ADR and revise procedures in
eminent domain proceedings. In its Recommendation on the
measure, the Commission states:
In almost all condemnation cases, the primary issue is the
amount of compensation. Evidence is introduced in support
of each party's contention of the value of the property
taken and damages to the remainder. Valuation disputes may
arise from such matters as differing interpretations of
sales data and differing opinions of highest and best use,
probability of changes in zoning, probability of
AB 237
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dedication, feasibility of development, and legal
compensability of loss.
Existing law seeks to encourage settlement of eminent
domain valuation disputes by requiring the parties to make
their final offers and demands before the commencement of
trial. Attorney fees and other litigation expenses may be
awarded to the property owner if the final pretrial demand
of the property owner was reasonable and the final pretrial
offer of the condemnor was unreasonable.
Other settlement inducements include special provisions for
exchange of valuation data by the parties. As a general
rule, conventional discovery techniques have been of little
value in generating useful information concerning the key
points of disagreement between the parties. This is
because the critical evidence in eminent domain proceedings
is expert opinion testimony, and valuation experts who may
be called to testify at trial resist formulating an opinion
for that purpose until the time of trial. For this reason,
California has adopted special discovery rules for eminent
domain proceedings, which provide for an early exchange of
valuation data on demand of a party.
While the parties do not always take advantage of the
exchange procedure for various tactical reasons, there is a
strong incentive to use it due to the operation of the
litigation expense statute. Because an award of litigation
expenses is predicated on the reasonableness of the
parties' valuation determinations, each party must make a
good faith effort to understand and respond to the other's
case. A party who does not seek to review the opponent's
case in advance of trial is at risk of being determined not
to have acted reasonably in the proceeding.
The various incentives for the parties to resolve the
eminent domain dispute without the need for a lengthy and
expensive trial have been reasonably successful. During
the three-year period from July 1, 1996, to June 30, 1999,
for example, there were 3,783 eminent domain cases filed
statewide. Of the 3,477 pending eminent domain cases
disposed of statewide during that period, 3,200 (92%) were
either disposed of before trial or after trial as
uncontested matters. Only 277 (8%) were disposed of after
trial as contested matters.
AB 237
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The governing statutes, while salutary, are not free of
problems. In particular, the provisions applicable to the
exchange of valuation data could be improved, as well as
pretrial procedures for resolving legal disputes affecting
valuation. The Law Revision Commission proposes in this
recommendation a number of revisions of the law intended to
facilitate resolution of eminent domain cases without the
need for trial.
Author's Amendments. In order to address the concerns of
public entities, the author and sponsor agreed to amend the bill
as noted below:
1)Require the written statement or summary of the appraisal of
property by the plaintiff to contain detail sufficient to
clearly indicate the basis for the appraisal, including the
date of valuation, highest and best use, and applicable zoning
of the property, the principal transactions, reproduction or
replacement cost analysis, or capitalization analysis
supporting the appraisal, and if the appraisal includes
compensation for damages to the remainder, the compensation
for the property and for damages to the remainder separately
stated, and the calculations and a narrative explanation
supporting the compensation, including any offsetting
benefits.
2)Provide that, at any time after a deposit has been made, the
motion of a plaintiff or any party having an interest in the
property shall be supported with detail sufficient to indicate
clearly the basis for the motion, including, but not limited
to the information noted above.
3)On page 8, delete lines 32-40 and on page 9, delete lines
1-17.
4)On page 9, delete lines 39-40 and on page 10, delete lines 1-5
and insert language providing that the public entity shall
provide the property owner with a written statement and
summary of the basis for the amount established as just
compensation. The amendments also require that the written
statement and summary shall contain detail sufficient to
indicate clearly the basis for the offer and include specified
information.
AB 237
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REGISTERED SUPPORT / OPPOSITION :
Support
California Law Revision Commission (sponsor)
Civil Justice Association of California
California Chamber of Commerce
Opposition
None on file
Analysis Prepared by : Saskia Kim / JUD. / (916) 319-2334