Article I, Section 19 of The California Constitution provides that just compensation be paid when private property is taken or damaged for public use. *STOP* Take a deep breath. It is not as tough as it sounds. In fact, after reading this blog you’ll likely find yourself asking "Why haven’t I used inverse condemnation as a cause of action in fire cases before?".
Insurance carriers have incurred more than a billion dollars in damages arising from the California wildfires over the past few years. The causes of these fires include arson, discarded cigarettes and failed utility equipment owned or operated by government entities or privately owned public utility companies. When the latter are to blame, rest assured that inverse condemnation is the preferred cause of action to champion your fire subrogation case. It’s both a shield and a sword against government entities and public utilities.
The Shield: In California, government entities require an injured party to file a claim within six (6) months of an incident to preserve a cause of action for Dangerous Condition of Public Property. Inverse condemnation does not require the filing of any claim form and has a three (3) years statute of limitations. Even assuming you win the race to file a timely notice, you will still need to prove the public entity or utility had notice of the dangerous condition in order to prevail under a Dangerous Condition of Public Property cause of action. Inverse Condemnation has no requirement to prove notice of the dangerous condition.
The Sword: A plaintiff need only prove the necessary elements of the cause of action to prevail – (1) a public entity or privately owned utility company (2) took/damaged (3) private property for (4) public use (5) without just compensation. [Note: Flood/levee cases have some different requirements.]. A plaintiff does not need to prove (1) negligent conduct; (2) fault on the part of the government entity or public utility; (3) that the loss was foreseeable; or (4) how or why the loss even occurred. Moreover, liability and causation are issues to be determined by a judge, not a jury, which eliminates potential bias against insurance companies. As if this is not enough incentive, a plaintiff that prevails under an inverse condemnation cause of action is also entitled to recover attorneys‘ fees and costs.
Inverse condemnation is a recognized cause of action in many jurisdictions, though its application varies from state to state. Still, the next time you receive a fire loss in which a government entity or privately owned public utility company is a potential defendant, look to see if the elements of inverse condemnation are met. If so, don’t be afraid to wield the sword and reap the benefits.