California Supreme Court Grants Review in Property Reserve Case

In our June 5, 2014 posting we reported a significant California Case, Property Reserve, Inc v Superior Court, 224 Cal. App. 4th 828 (2014). In Property Reserve, the Third District California Court of Appeal ruled that entry statutes are unconstitutional when the activities for which entry is sought constitute an intentional taking of property without the full protections offered by a condemnation action.

For separate reasons, the Court of Appeal found that both the geological and environmental studies would effect a taking or intentional damage of property; thus the filing of a condemnation action would be a pre-requisite to the State’s entry upon the property for such purposes.

The Court stated that the geological studies were a per se taking because the cement compound poured into the bored holes would “permanently occupy part of the property.” Citing to Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982), the Court noted that ”[A] permanent physical occupation is a government action of such a unique character that it is a taking without regard to other factors that a court might ordinarily examine” and that  ”[W]hen the `character of the governmental action, is a permanent physical occupation of property, our cases uniformly have found a taking to the extent of the occupation, without regard to whether the action achieves an important public benefit or has only minimal economic impact on the owner.” (citations omitted).

As to the environmental studies, the Court noted that, while they would not constitute a per se taking, the following factors established by prior case law in the state in effect resulted in a taking of the property: 1) the degree to which the invasions are intended; 2) the character of the invasions; 3) the duration of the invasions; and 4) the invasions’ economic impact on the landowners. In considering these factors and the duration of the State’s activities on the property (66 days over a one year period), the court found that this substantial infringement would essential constitute a two month temporary easement for which a condemnation action was required.

The Court also found that the pre-condemnation procedure did not adequately protect landowner’s rights:

We also conclude the statutory precondemnation procedure cannot be used to accomplish these intentional takings. If an entity with the power of eminent domain intentionally seeks to take property or perform activities that will result in a taking, the California Constitution requires that entity to directly condemn the affected property interest in an authorized condemnation suit it brings and in which a landowner receives all of his constitutional protections against eminent domain. The statutory precondemnation procedure does not provide such a suit, as it fails to authorize the determination of the value of the property interest intentionally sought to be taken and to do so in a noticed hearing, and it fails to provide for a jury determination of just compensation in that hearing.

 

Because the California statute closely resembled New York’s statute, Property Reserve was the basis for a recent New York Law Journal column I wrote, titled “Is Right of Entry in Eminent Domain Law Unconstitutional?”  The article was published on June 24, 2014 and is available by clicking here.

New York has very similar pre-condemnation entry authorizations in its Eminent Domain Procedure Law. The column noted that Property Reserve did not provide a bright-line test for ascertaining whether the government can proceed under entry statutes. But it does make clear that any pre-condemnation investigation that will have significant impact on the property, or the owners ability to exclude, provides a basis for a challenge.

It was noted that since the case involves a critical issue of California’s water supply, it should be expected that further review will be made by the California Supreme Court.

Our good friend, Professor Gideon Kanner, author of Gideon’s Trumpet, advises that the California Supreme Court granted review. The Order reads as follows:

The petition for review is granted.

The issues to be briefed and argued are limited to the following: (1) Do the geological testing activities proposed by the Department of Water Resources constitute a taking? (2) Do the environmental testing activities set forth in the February 22, 2011 entry order constitute a taking? (3) If so, do the precondemnation entry statute (Code Civ. Proc., sections 1245/010-1245.060) provide a constitutionally valid eminent domain proceeding for the taking?

Stay tuned. We will keep you up to date.

Posted in Eminent Domain, Eminent Domain Abuse, Entry Statutes, Future of the law
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