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California Supreme Court Rules in Favor of City in Inverse Condemnation Case

August 26, 2019
Last week, the California Supreme Court issued a decision rejecting an inverse condemnation claim against the City of Oroville stemming from a sewage backup into a dental office that occurred in 2009.
 
The dental office asserted that the backup was caused by a partial blockage in the city’s main sewer line, which forced sewage down their private lateral and into the toilets, drains and sinks of their office, causing damage. The city acknowledged the partial blockage, but maintained that the damage to the dental office would not have occurred if the office had installed a backwater valve on their private lateral, as required by the city’s municipal code. 
 
Claims for inverse condemnation arise from article I, section 19 of the California Constitution, which provides that a public entity must fairly compensate private property owners when it “condemns” private property for a public use. Thus, private property owners can file a claim seeking compensation for damages to their property resulting from a public improvement. 
 
The policy underlying this doctrine is to distribute the loss to the damaged property owner throughout the community that enjoys the benefit of the public improvement that caused the damage. However, courts have acknowledged that this policy must be balanced against the concern that “compensation allowed too liberally will seriously impede, if not stop, beneficial public improvements because of the greatly increased cost.”
 
To accomplish that balance, the California Supreme Court held that inverse condemnation liability will arise only where the private property damage is substantially caused by an inherent risk in the design, construction, or maintenance of a public improvement. 
 
The Court found that was not the case here, where the damage could have been avoided had the dental office complied with the “ordinary planning code requirement” in the city’s municipal code. Had the backwater valve been installed, the Court noted, the sewage would have escaped through the manhole immediately upstream of the blockage, as it was designed to do.
 
The Court’s conclusions are consistent with those urged by the League in its friend-of-the-court brief, drafted by Timothy McWilliams and Blithe Bock of the Los Angeles City Attorney’s Office. Several other organizations joined in the League’s brief, including the California Joint Powers Insurance Authority, the Public Entity Risk Management Authority, the California Special Districts Association, the California Association of Joint Powers Authorities and the California Sanitation Risk Management Authority.
 
The Court’s decision is a positive development for cities and other public agencies as it confines inverse condemnation liability to the “inherent” risks associated with public improvements, and affirms the ability of cities and other public agencies to rely on private property owners to comply with reasonable requirements in order to reduce those risks.


 
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