BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Martha M. Escutia, Chair
2001-2002 Regular Session
AB 237 A
Assembly Member Papan B
As Amended May 31, 2001
Hearing Date: August 21, 2001 2
Code of Civil Procedure 3
CJW:sr 7
SUBJECT
Eminent Domain
DESCRIPTION
This bill would amend eminent domain law to facilitate
resolution of condemnation cases without trial.
Specifically, it would (1) allow parties to submit any
dispute in an eminent domain proceeding for mediation or
arbitration; (2) require appraisal summaries and offers of
compensation to contain detail sufficient to indicate the
basis for the appraisal or offer; and (3) require final
offers and demands to include all elements of required
compensation, including loss of goodwill.
This bill would apply to any eminent domain proceeding
commenced on or after January 1, 2002.
BACKGROUND
In October of 2000, the California Law Revision Commission
published a report entitled "Early Disclosure of Valuation
Data and Resolution of Issues in Eminent Domain,"
recommending improvements in several areas of eminent
domain law.
The report notes that in almost all condemnation cases, the
primary issue is the amount of compensation. Existing law
seeks to encourage settlement of compensation disputes
before trial in various ways, such as requiring the parties
to exchange valuation data early in the process, and to
(more)
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make their final offers and demands for compensation before
trial.
The report states that the various incentives for pretrial
settlement have been "reasonably successful," noting that
92 percent of the 3,477 California eminent domain cases
brought to conclusion between 1996 and 1999 either were
resolved before trial or were uncontested at trial.
Nevertheless, the report concludes that various provisions
could be improved to increase the number of cases settled
without trial. The Commission now sponsors this bill
incorporating most of the recommendations in its report.
CHANGES TO EXISTING LAW
1. Existing law provides that at least 20 days prior to
trial in an eminent domain proceeding, the plaintiff and
defendant shall file and serve upon each other their
final offer of, and demand for, compensation for the
subject property. [CCP Sec. 1250.410.]
This bill would provide that the offer and demand shall
include all compensation required pursuant to this title,
including compensation for loss of goodwill, if any, and
shall state whether interest and costs are included.
2. Existing law provides that issues of compensation in
eminent domain proceedings may be submitted to binding
arbitration by agreement of the parties. [CCP Sec.
1273.010 et seq .]
This bill would provide that the parties may agree to
refer a dispute that is the subject of an eminent domain
proceeding to mediation, binding arbitration, or
nonbinding arbitration.
This bill further would provide that in a nonbinding
arbitration, the arbitrator's decision would be final
unless a party timely moves the court for trial. If that
party fails to secure a more favorable judgment at trial,
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he or she shall pay the other party's specified costs
incurred from the time of election of trial (including
reasonable costs of expert witnesses) unless the court
finds the imposition of costs would create a substantial
economic hardship contrary to the interest of justice.
This bill further would provide that on motion of a
party, the court may postpone the date of trial for a
period that appears adequate to enable resolution of a
dispute pursuant to mediation or arbitration, if the
court is satisfied that the parties are actively engaged
in the resolution process, appear to be making progress,
and agree that additional time for resolution is
desirable.
3. Existing law provides that at any time before entry of
judgment, the plaintiff may deposit with the State
Treasury the probable amount of compensation, based on an
expert appraisal, that will be awarded in the proceeding.
The expert shall prepare a written statement of, or
summary of the basis for, the appraisal. [CCP Sec.
1255.010.]
Existing law further provides that, at any time after
this deposit has been made, the plaintiff or any other
party having an interest in the property may move the
court to determine or redetermine whether the amount
deposited is the probable amount of compensation that
will be awarded in the proceeding. [CCP Sec. 1255.030.]
This bill would provide that the statement or summary
accompanying the deposit shall contain detail sufficient
to indicate clearly the basis for the appraisal,
including:
(a) the date of valuation, highest and best use, and
applicable zoning;
(b) the principal transactions, reproduction or
replacement cost analysis, or capitalization analysis,
supporting the appraisal; and
(c) separate statements of compensation for the
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property and damages for the remainder, if any, and
the calculations and a narrative explanation
supporting the compensation, including any offsetting
benefits.
This bill further would provide that a motion for
redetermination made pursuant to this section shall be
supported by the same detail as the analysis accompanying
the initial deposit.
4. Existing law provides that, unless otherwise agreed to
by the parties, the date of exchange for expert witness
lists and statements of valuation data shall be 60 days
prior to trial. [CCP Sec. 1258.220.]
Existing law further provides that statements of
valuation data shall include each matter on which an
expert witness will give an opinion, what that opinion
is, and shall specify the factors used to reach the
opinion. [CCP Sec. 1258.260.]
This bill would provide that, unless otherwise agreed to
by the parties, the date of exchange for these lists and
statements shall be 90 days prior to trial.
This bill further would provide that unless otherwise
agreed to by the parties, the date of exchange shall not
be earlier than nine months after the date of
commencement of the proceeding.
This bill further would provide that if an opinion in a
statement of valuation data concerns loss of goodwill,
the statement shall include the method used to determine
the loss, and a summary of the data supporting the
opinion.
5. Existing law provides for the resolution by the court
of disputes on matters of law, such as the plaintiff's
right to take the subject property, prior to jury trial
on the issue of just compensation. [CCP Sec. 1260.110.]
This bill would provide that, if the parties dispute an
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evidentiary or other legal issue affecting the
determination of compensation, either party may move the
court for a ruling on the issue no later than 60 days
before trial. A court that issues a ruling on such a
motion may postpone other statutory deadlines in the
action for a period sufficient to enable the parties to
engage in further proceedings in response to the court's
ruling on the motion.
6. Existing law provides that, prior to adopting a
resolution of necessity to initiate condemnation
proceedings, a public entity considering acquisition of
property shall offer the property owner an amount it
believes to be just compensation therefor, and shall
provide the owner with a written statement of, and
summary of the basis for, the amount offered as just
compensation. [Govt. Code Sec. 7267.2.]
Existing law further provides that, where the property
involved is owner- occupied residential property and
contains no more than four residential units, the
homeowner shall, upon request, be allowed to review a
copy of the appraisal upon which the offer is based.
[ Id .]
This bill would provide that the written statement and
summary provided to the property owner shall contain
detail sufficient to indicate clearly the basis for the
offer, including but not limited to the data set forth in
the proposed amendment to CCP Section 1255.010, above.
This bill further would provide that the public entity
may, but is not required to, satisfy the written
statement, summary, and review requirements of this
section by providing the owner a copy of the appraisal on
which the offer is based.
This bill further would provide that this act in its
entirety shall apply to any eminent domain proceeding
commenced on or after January 1, 2002.
COMMENT
1. Stated need for legislation
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Unlike most other civil cases, the discovery process in
eminent domain actions usually involves only one subject
area - the amount of compensation the plaintiff must pay
for the defendant's property. Although existing law
facilitates discovery by mandating the exchange of expert
valuation data and of compensation offers and demands
within specified time frames, the current process does
not require the opinions, offers, or demands to be
supported in any detail. As a result, further
interrogatories are sent out by each party, neither of
whom have much incentive to settle because they have not
been provided with the basis for their opponents'
opinions and offers.
Accordingly, one of the Commission's main recommendations
is to increase the amount of detail required in the
information exchanged by the parties before trial. The
bill would require that offers and demands include all
forms of compensation required, including loss of
goodwill; that deposits of "probable compensation" based
on expert appraisal to be supported by data sufficient to
indicate the basis for the appraisal; and that
prelitigation offers include statements supported by data
sufficient to indicate the basis for the offers.
The Commission's other main recommendation is to
encourage parties of condemnation actions to use
alternative dispute resolution methods to resolve some or
all of their disputes. Although eminent domain law
already provides for the use of binding arbitration, this
bill would permit the parties to use mediation or
nonbinding arbitration as well, and would encourage
acceptance of a decision in nonbinding arbitration by
providing that a party who subsequently seeks trial but
fails to obtain a more favorable result may be ordered by
the court to pay the opposing party's post-arbitration
costs unless to do so would be contrary to the interests
of justice. (The proposed process is similar to that
used in judicial arbitrations in this state.)
Finally, the bill would set an earlier deadline for
required information exchanges (unless otherwise agreed
to by the parties), and would allow the parties to bring
pre-trial motions on legal issues relating to
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compensation prior to jury trial.
2. Prior opposition to provision awarding costs may be
resolved
The only letter received in opposition to a provision of
the bill was sent prior to the most recent amendments,
and generally supported the bill except for the
nonbinding arbitration provision. The writer opined that
this provision would never be used because it was too
harsh in imposing costs on a party who opted for trial
but failed to achieve a better result. In apparent
response to this concern, the most recent amendments have
modified this provision to allow the court to decline to
impose such costs if they would pose an economic hardship
contrary to the interests of justice.
3. Suggested clarifying amendment: Exchange of data (CCP
Sec. 1258.220)
In order to give parties more time to analyze their
opponents' evidence as a basis for settlement, the bill
would move up the deadline for exchange of expert witness
lists and valuation data from 60 to 90 days before trial.
To protect parties against having to provide this
information before they have had sufficient time to
compile it, however, the bill also would provide that the
date of exchange shall not be earlier than nine months
after proceedings commenced.
In order to clarify that the latter provision controls
the former, the author may wish to amend this provision
to read, "(b) Unless otherwise agreed to by the parties,
and notwithstanding subdivision (a), the date of exchange
shall not be earlier than nine months after the date of
commencement of the proceeding."
Support: California Chamber of Commerce; Civil Justice
Association of California (CJAC)
Opposition: None Known
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HISTORY
Source: California Law Revision Commission
Related Pending Legislation: None Known
Prior Legislation: None Known
Prior Vote: Assembly Judiciary Committee 10-0
Assembly Floor 76-0
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