Until recently, inverse condemnation remained a relatively arcane area of California law. A spate of wildfires, spawning litigation by homeowners and their subrogating insurers, has breathed new life into this liability theory.

Inverse condemnation is an eminent domain action initiated by the property owner, rather than the government. Essentially, it is unintended eminent domain-i.e., the defendant did not intend to condemn/damage your property, but, having done so, is now required to pay the fair market value of the damaged property. Its underpinnings are found in Article I, section 19 of the California Constitution which prohibits private property from being taken or damaged for public use without just compensation.

California law mandates that the liability issues in an inverse case be tried by the Court, reserving damages to the jury. Further, as inverse is a Constitutional remedy (as opposed to a tort theory) a finding of fault on the part of the defendant is not required in a fire case. Other than in so-called “water/flood cases” (where the rule of reasonableness applies), inverse is essentially a strict liability cause of action. Unlike a dangerous condition of public property case, an inverse condemnation case does not require the timely filing of a government claim or notice to the public entity of a dangerous condition. As an added incentive, California law statutorily permits recovery of reasonable attorney’s fees and expert costs in inverse condemnation cases.

Recognizing the Court’s role in determining inverse liability, the California legislature in 2001 enacted Code of Civil Procedure section 1260.040. That statute permits either party to move the Court for a ruling on any evidentiary or other legal issue determining the right to compensation. Procedurally, the motion must be heard no later than 60 days prior to commencement of trial on the issue of compensation and must be heard by the trial judge.

Although there is a dearth of legal authority interpreting this statute, Dina v People ex rel. Dept. of Transportation (2007) 151 Cal. App. 4th 1029 provides excellent insight into its scope. The Dina court, in affirming the granting of a motion under 1260.040, held that the Court is permitted to make a liability determination and weigh the evidence to adjudicate that issue. In so holding, the Dina court differentiated a 1260.040 motion from a summary judgment motion-i.e., a triable issue of fact will not defeat the 1260.040 motion. This distinction is, of course, extremely important as it provides the trial judge an excellent opportunity to dispose of inverse liability issues without the necessity of a bench trial with live witnesses.

Our office recently prevailed against a public utility on a 1260.040 motion in a case seeking damages in excess of $10,000,000. Now that the liability issue has been adjudicated in our client’s favor, we are in an extremely strong negotiating position at the upcoming Mediation.

In any case involving damages caused by equipment owned and maintained by a utility (power lines; transformers; water mains), an inverse condemnation cause of action should be pursued. The 1260.040 motion is an important arrow in the quiver of plaintiff attorneys in inverse condemnation cases. That arrow will likely hit the bullseye, resulting in an outstanding result for your client.

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