When Does an Access Impairment Result in a Compensable Taking?

There is no questioning California's dire need for public infrastructure and street improvement projects.  But the construction activities required to implement those projects often cause headaches and disruptions for neighboring property owners and businesses.  Generally, there is a light at the end of the proverbial tunnel, as the completed projects provide safety benefits and traffic reductions.  Sometimes, however, the impacts are permanent.  Properties experience declines in value and businesses suffer reduced sales.  For example, traffic may be re-routed away from a property, access may become more circuitous, center medians may eliminate left-turn lanes, or on-street parking may be prevented.  Government agencies, and property and business owners alike, routinely ask when these impacts result in liability. 

While there is no bright-line rule that easily answers the question, California eminent domain law generally provides that a government agency's impairment of a property's access is not compensable unless the impairment qualifies as "substantial."  Dozens of cases have addressed access impairment claims raised by property and business owners both in the traditional eminent domain context and through inverse condemnation actions, and while some general guidelines exist, the determination of whether an impairment qualifies as "substantial" largely depends on the particular facts of the case.One recent court decision, Wardany v. City of San Jacinto (May 27, 2011, 5:09-cv-00299), provides an example of what agencies and owners can expect to encounter when public projects result in access impairments.  In Wardany, the City installed a center median in the street, preventing left turns in and out of the owner's property.  The owner claimed the business lost over half its business as a result.  Despite this impact, the court concluded that there was no compensable taking because (1) the property retained an economically viable use and (2) the impairment did not qualify as substantial, as a matter of law.

Background

In Wardany, the City of San Jacinto decided to place a mile-long center median down Ramona Boulevard.  One property owner on Ramona Boulevard who operated a general convenience store, "One Stop Market," was faced with elimination of left-turn access in and out of the property.  Vehicles traveling north could still make right turns in and out, but vehicles traveling south were now required to go up to the next break in the median and turn around, or take side streets to access the property. 

The owner claimed that the center median diverted business and that One Stop Market suffered a 55% decline in sales.  The owner filed an inverse condemnation action against the City, alleging the center median resulted in a regulatory taking and a substantial impairment of access.  The City moved for summary judgment, alleging that even if the owner was correct, and the project cost him over half his sales, the project did not give rise to a compensable taking.

No Substantial Access Impairment

The Court agreed with the City, concluding the property owner did not state a viable takings claim. 

With respect to the regulatory taking allegation, the Court held that despite the decline in sales, the owner could still make an economically viable use of his property.  (See Buckles v. King County (9th Cir. 1999 ["a land use regulation does not constitute a taking if the regulation does not deny a landowner all economically viable use of the property and if the regulation substantially advances a legitimate government interest."].)

With respect to the substantial impairment of access claim, the Court explained that California law recognizes that "[n]ot every interference with the property owner's access to the street upon which his property abuts and not every impairment of access, as such, to the general system of public streets constitutes a taking which entitles him to compensation." (See Border Business Park, Inc. v. City of San Diego (2006) 142 Cal. App. 4th 1538, 1557.)  The Court then concluded that because the evidence fails to establish that ingress or egress from [the owner's] property has been completely obstructed," the owner had not stated a "cognizable taking claim under either the Fifth Amendment or the California Constitution."

Lessons Learned 

The Wardany Court's conclusion implies a total and complete obstruction of access is necessary to state an inverse condemnation claim.  While other courts have allowed compensation for less than a total prevention of access, the threshold for liability is nonetheless "substantially" high.  And the measure of "substantial" depends on the physical impairment, not the impact that impairment has on the property.  In other words, even though a 55% decline in sales likely qualifies as "substantial" by any reasonable measure, the correct focus is on whether the physical impairment qualifies as "substantial."  The mere loss of left turn in, left turn out access falls short, regardless of the impact that impairment has on the property. 

The reasoning for such a high standard of impairment takes us back full circle to the dire need for public infrastructure projects.  As explained long ago by the California Supreme Court, it would "unduly hinder and delay or even prevent the construction of public improvements to hold compensable" every interference that resulted in a decline in a property's value or a business' sales.  (People v. Ayon (1960) 54 Cal.2d 217, 228.)  Modern transportation requires continual street and traffic improvements, and the impacts from such improvements are "simply a risk the property owner assumes when he lives in a modern society under modern traffic conditions."  (Id. at pp. 223-224.)

Bradford B. Kuhn is a member of Nossaman's Eminent Domain and Valuation Practice Group and specializes in real estate and business litigation with an emphasis on eminent domain, inverse condemnation, and other real estate disputes.  He can be reached at bkuhn@nossaman.com or 949.833.7800.

Rick E. Rayl is the Chair of Nossaman's Eminent Domain and Valuation Practice Group and a member of the Firm's Real Estate Practice Group.  Mr. Rayl is an experienced trial attorney dealing with eminent domain, inverse condemnation, and other real estate and business disputes.  Mr. Rayl can be reached at rrayl@nossaman.com or 949.833.7800.