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Nossaman LLP

Eminent Domain and Valuation

Inverse Condemnation and Regulatory Takings

Inverse Condemnation

Inverse condemnation cases arise when the government takes or damages property without filing a condemnation action. This typically occurs in three different situations: (1) where government regulation of property rises to the level of a taking, such as through restrictive zoning, access impairment, or refusal to process development; (2) where the government causes accidental property damage to a property, such as in a flooding or landslide situation; or (3) where the government abandons plans to condemn property before filing the lawsuit, but only after the government's precondemnation conduct has already resulted in a compensable taking.

Nossaman attorneys have expertise in all three types of inverse condemnation claims. Nossaman attorneys have litigated (1) dedication and fee cases, including, for example, a multi-million dollar case involving park in lieu fees in which Nossaman saved its client $20 million, (2) a major landslide case that involved two, three-month jury trials and three appellate court proceedings, and (3) an inverse condemnation case on behalf of a lumber company damaged when it relocated in anticipation of the government's condemnation of the property it leased, only to learn after relocating that the government had decided not to acquire the property and, therefore, not to offer the company any compensation for its losses.

Regulatory Takings and Dedication or Fee Exactions

Not all takings involve condemnation. Sometimes, the government imposes restrictions on an owner's use of property that so limit its utility that the owner claims that the regulation amounts to a compensable taking of the owner's property. A key difference between condemnation and regulatory takings cases is that the latter do not start from the presumption that the government has taken something for which it must pay just compensation. In regulatory takings cases, the focus often is on whether the regulations leave the owner with an economically viable use of property or otherwise interfere with the owner's investment-backed expectations and, where the regulation or fee is triggered by the owner's plans to develop the property, whether the regulation or fee is roughly proportional to the burden the owner's planned use will have on the relevant infrastructure.

Takings can also occur during the entitlement process. For example, Nossaman represented the owner of a 454-acre property in Riverside County that the RCA sought for conservation purposes. The RCA and the County refused to process the owner's development entitlements, yet they never made an offer to purchase, instead "de facto" conserving the property.  Under threat of an inverse condemnation action, Nossaman assisted the owner in an arbitration in which the RCA presented appraisal testimony of a value below $30 million.  After completion of the arbitration, the parties reached a settlement by which the RCA paid more than $70 million.

Nossaman also has expertise in evaluating whether a proposed regulation rises to the level of a regulatory taking, and it has advised government agencies seeking to impose the regulation on ways to ensure that the regulation, if implemented, will survive any regulatory takings challenge. On the property owner side, Nossaman advises owners impacted by regulations through the administrative proceedings leading up to the regulation's enactment in an effort to effect changes in the regulation that will avoid or minimize harm to the owner. Where the government proceeds with a regulation that rises to the level of a taking, Nossaman has experience challenging such regulations. And, where a regulatory taking is shown, the case begins to resemble a condemnation case, where Nossaman's valuation expertise allows us to achieve strong results for our clients.

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