BILL ANALYSIS                                                                                                                                                                                                    Ó






                             SENATE JUDICIARY COMMITTEE
                             Senator Noreen Evans, Chair
                              2013-2014 Regular Session


          AB 436 (Jones-Sawyer)
          As Amended June 24, 2013
          Hearing Date: July 2, 2013
          Fiscal: No
          Urgency: No
          TH


                                        SUBJECT
                                           
                       Inverse Condemnation: Comparative Fault

                                      DESCRIPTION  

          Existing case law generally provides that comparative fault does  
          not apply in inverse condemnation actions.  This bill would,  
          instead, provide that comparative fault applies to actions in  
          inverse condemnation and would require a court or arbiter to  
          reduce the compensation to be paid to a plaintiff in direct  
          proportion to his or her percentage of fault, if any, in the  
          damaging of property that constitutes a taking for a public use.

          This bill would additionally apply the provisions of Section 998  
          of the Code of Civil Procedure to actions in inverse  
          condemnation, thus allowing a plaintiff's compensation to be  
          reduced if an earlier settlement offer that was more favorable  
          than the final judgment was rejected.

                                      BACKGROUND  

          The United States and California Constitutions require the  
          payment of "just compensation" to property owners whose property  
          has been taken or damaged for "public use."  (Cal. Const., art.  
          I, sec. 19; U.S. Const. Amend. V.)  If that taking occurs prior  
          to the payment of just compensation, the affected property owner  
          must bring suit against the government in order to recover  
          compensation owed under the Constitution in an action referred  
          to as inverse condemnation.  Regarding the payment of just  
          compensation, the California Supreme Court has noted that:


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            . . . with two exceptions, our state Constitution's just  
            compensation clause requires that an owner of real property  
            receive compensation for any actual physical injury to that  
            property, whether foreseeable or not, that a public  
            improvement, as deliberately designed and constructed,  
            proximately caused. (Albers v. County of Los Angeles (1965)  
            62 Cal.2d 250, 263-264.)  [That] strict liability test was  
            later restated in terms of "substantial" causation, so that  
            landowners could establish inverse condemnation liability if  
            the public improvement substantially caused the damage,  
            although the improvement was only one of several concurrent  
            causes.  (Bunch v. Coachella Valley Water Dist. (1997) 15  
            Cal.4th 432, 440.)

          The court has also noted that there are two exceptions to strict  
          liability in inverse condemnation "in which the urgency or  
          particular importance of the governmental conduct involved was  
          so overriding that considerations of public policy [advised]  
          against a rule rendering the acting public entity liable absent  
          fault:"

               The first exception involved damages a public entity  
               inflicted in the proper exercise of its police power.  The  
               second exception to the strict liability doctrine occurred  
               in the 'unique' context of water law and derived from upper  
               riparian private landowners' limited common law privilege  
               to defend themselves against the 'common enemy' of  
               floodwaters.  Under this traditional rule, a public or  
               private entity's liability for damage substantially caused  
               by its flood control improvement efforts depended on  
               whether its flood control system was intended to 'improve'  
               or 'divert' the water's natural flow."  (Id. at pp.  
               440-41.)

          Contrary to those historical limitations, this bill would  
          provide that comparative fault applies to actions in inverse  
          condemnation, thus, requiring a court to reduce a plaintiff's  
          compensation in direct proportion to his or her percentage of  
          fault, if any, in the damaging of the property.  This bill would  
          additionally apply the provisions of Section 998 of the Code of  
          Civil Procedure to actions in inverse condemnation for the  
          purpose of reducing compensation to be paid to a plaintiff.   
          That section generally requires a plaintiff's award to be  
          reduced if an offer by a defendant is not accepted and the  
          plaintiff fails to obtain a more favorable judgment or award.

                                                                      




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          This bill is nearly identical to AB 328 (Smyth, 2011), which  
          died in this Committee in 2011.

                                CHANGES TO EXISTING LAW
           
          1.    Existing law  prohibits the government from taking or  
            damaging private property for a public use without the payment  
            of just compensation and permits a person to maintain an  
            action in inverse condemnation for the purpose of obtaining  
            compensation for the taking or damage.  (Cal. Const., art. I,  
            sec. 19.) 

             Existing case law  states that a plaintiff may recover in an  
            inverse condemnation action if injury to private property was  
            proximately caused by public improvements, which requires a  
            convincing showing of a substantial cause-and-effect  
            relationship excluding the probability that other forces alone  
            produced the injury.  (Blau v. City of Los Angeles (1973) 32  
            Cal.App.3d 77, 84.)

             Existing law  provides that for purposes of apportioning  
            liability a plaintiff's damages may be reduced in direct  
            proportion to his or her percentage of fault.  (Li v. Yellow  
            Cab (1975) 13 Cal.3d 804.)

             Existing case law  exempts an inverse condemnation action from  
            the above comparative fault rule, except in certain actions  
            relating to damages caused by public flood control projects.   
            (Blau v. City of Los Angeles (1973) 32 Cal.App.3d 77; Locklin  
            v. City of Lafayette (1994) 7 Cal.4th 327; Bunch v. Coachella  
            Valley Water District (1997) 15 Cal.4th 432.)

             This bill  would apply the doctrine of comparative fault to  
            actions in inverse condemnation by stating that in an inverse  
            condemnation proceeding, a court or arbitrator shall reduce  
            compensation to be paid to a plaintiff in direct proportion to  
            his or her percentage of fault, if any, in the damaging of  
            property that constitutes a taking for public use.

             This bill  would also state that the act of a plaintiff in  
            applying for a permit or other entitlement for use or  
            development shall not be construed as damaging or diminishing  
            the value of the property for the purpose of calculating a  
            plaintiff's comparative fault.

                                                                      




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          2.    Existing law  provides that, in any trial or arbitration, if  
            an offer made by a defendant is not accepted and the plaintiff  
            fails to obtain a more favorable judgment or award, the  
            plaintiff shall not recover his or her post-offer costs and  
            shall pay the defendant's costs.  Existing law provides, in  
            addition, that in any action or proceeding other than an  
            eminent domain action, the court or arbitrator may require the  
            plaintiff to pay reasonable costs for expert witnesses, as  
            specified.  (Code Civ. Proc. Sec. 998(c).) 

             Existing case law  holds that the Legislature perceives a  
            difference between "eminent domain" and "inverse  
            condemnation," and therefore the Legislature does not intend  
            for its reference to eminent domain in Code of Civil Procedure  
            Section 998 to encompass inverse condemnation proceedings.   
            (Regency Outdoor Advertising, Inc. v. City of Los Angeles  
            (2006) 39 Cal.4th 507, 530.) 

             Existing law  provides that in any inverse condemnation  
            proceeding, the court rendering judgment for the plaintiff, or  
            the attorney representing the public entity who effects a  
            settlement, shall determine and award or allow to the  
            plaintiff a sum that will reimburse the plaintiff's reasonable  
            costs, disbursements and expenses, including reasonable  
            attorney, appraisal and engineering fees, as specified.  (Code  
            Civ. Proc. Sec. 1036.)

             This bill  would provide that, notwithstanding any other law,  
            Section 998 shall apply to an action in inverse condemnation  
            for the purpose of reducing compensation to be paid to a  
            plaintiff regardless of whether the plaintiff is entitled to  
            recover costs pursuant to Section 1036.
                                        COMMENT
           
          1.   Stated need for the bill  

          According to the author:

            The long standing rationale behind the rule of comparative  
            fault is to allocate responsibility and liability for damage  
            by the actual proportion of the fault of the persons whose  
            negligence caused the injury.  To do otherwise, results in a  
            situation that creates unjust enrichment for one side over  
            the other.

                                                                      




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            Similarly, [Code of Civil Procedure] Section 998 is designed  
            to encourage settlements and alleviate unnecessary burdens  
            upon our court system.  To better promote fairness and  
            efficiency in our judicial system, both rules should be  
            applied to inverse condemnation actions.  Inverse  
            condemnation cases are the taking of property by a  
            government agency which so greatly damages the use of a  
            parcel of real property that it is the equivalent of  
            condemnation of the entire property.

            It is particularly important in this time of economic  
            distress for the Legislature to clarify these two issues so  
            that government agencies are only made responsible for their  
            proportionate share of the costs and damages awarded in  
            inverse condemnation cases.

          2.   Costs
           
          Section 998 of the Code of Civil Procedure seeks to encourage  
          the early settlement of cases by reducing a plaintiff's recovery  
          when a plaintiff rejects a defendant's offer and then fails to  
          obtain a more favorable judgment or award.  Generally, if a  
          settlement offer made by a defendant is not accepted and the  
          plaintiff fails to obtain a more favorable judgment or award,  
          the plaintiff cannot recover his or her post-offer litigation  
          costs but rather must pay the defendant's costs that are  
          incurred after the offer.  In proceedings other than an eminent  
          domain action, existing law additionally allows a court to  
          require the plaintiff to pay a reasonable sum to cover the  
          post-offer expert witness costs of the defendant if the  
          plaintiff rejected an offer that was more favorable than the  
          judgment or award ultimately received.  Section 998 contains a  
          provision explicitly stating that it "does not apply to . . .  
          [a]n offer that is made by a plaintiff in an eminent domain  
          action."  (Code Civ. Proc. Sec. 1036(g).)

          Under existing law, a plaintiff awarded compensation in an  
          inverse condemnation proceeding is also awarded a sum that will,  
          in the opinion of the court, "reimburse the plaintiff's  
          reasonable costs, disbursements, and expenses, including  
          reasonable attorney, appraisal, and engineering fees, actually  
          incurred because of that proceeding in the trial court or in any  
          appellate proceeding in which the plaintiff prevails on any  
          issue in that proceeding."  (Code. Civ. Proc. Sec. 1036.)  The  

                                                                      




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          California Supreme Court articulated the reason for this cost  
          recovery provision as follows:

               In cases instituted by the property owner the reason for  
               allowing him costs in case of recovery is even stronger  
               than in condemnation cases, for in the former, instead of  
               an offer of compensation or suit to condemn, there has been  
               a wrongful taking and damaging of private property without  
               permission of the owner or effort to first compensate him,  
               in consequence of which the owner has been forced to  
               initiate the litigation.  If costs should be assessed  
               against him, his recovery would be diminished by that  
               amount and he would be to that extent deprived of the full  
               measure of compensation to which he is justly entitled.   
               (Heimann v. Los Angeles (1947) 30 Cal.2d 746, 753.)

          This bill would create new cost-shifting provisions for inverse  
          condemnation actions in Section 998 by providing that if an  
          offer made by a defendant (public agency) is not accepted and  
          the plaintiff (landowner) fails to obtain a judgment or award,  
          the plaintiff shall not recover his or her post-offer costs but  
          shall instead pay the defendant's costs from the time of the  
          offer, including, at the court's discretion, a reasonable sum to  
          cover the plaintiff's expert witness costs.  In cases where an  
          offer made by a defendant is not accepted and the plaintiff  
          fails to obtain a more favorable judgment or award, this bill  
          would prevent the plaintiff from recovering his or her  
          post-offer costs, but would also provide that the plaintiff  
          shall not be ordered to pay the defendant's costs from the time  
          of the offer.

          a.   Promoting settlement  

          The Los Angeles City Attorney, sponsor, asserts that the  
          proposed amendments to Section 998 extending its principles to  
          inverse condemnation actions "is good public policy that will  
          encourage settlements and alleviate unnecessary burdens upon our  
          court system."  From a practical standpoint, the application of  
          Section 998 principles to inverse condemnation cases would  
          provide plaintiffs (damaged property owners) with a strong  
          incentive to accept offers to compromise due to the risk of  
          their compensation being even further reduced as a result of a  
          lower verdict.   Those offers to compromise may also be used  
          strategically to force a settlement due to the risks to the  
          plaintiff if a potentially reasonable settlement offer is  

                                                                      




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          rejected.

          While Section 998 acts to promote settlement in actions between  
          private parties, the policy question raised by this bill is  
          whether to specifically apply that statutory incentive to settle  
          to inverse condemnations actions.  Courts differ regarding  
          application of Section 998 to inverse condemnation actions given  
          the constitutional requirements underlying those actions.  For  
          example, in Goebel v. City of Santa Barbara (2001) 92  
          Cal.App.4th 549, the court held that "[t]here [was] no  
          constitutional bar to assessing costs against an unsuccessful  
          inverse condemnation plaintiff, and no policy reason to excuse  
          such a plaintiff from paying expert fees under [S]ection 998."   
          (Id. at p. 560.)  The court also asserted that "[i]f the  
          Legislature had intended to restrict the use of [S]ection 998  
          offers in all inverse condemnation actions, we believe it would  
          have done so explicitly."  (Id. at p. 559.)  Alternatively, in  
          Orpheum Bldg. Co. v. San Francisco Bay Area Rapid Transit  
          District (1978) 80 Cal.App.3d 863, a court of appeal applied the  
          current exclusion for eminent domain settlement offers to those  
          made in inverse condemnation actions.  That court held:

            The question here is whether subdivision (f) [now codified  
            as subdivision (g)] of [S]ection 998 is applicable in an  
            inverse condemnation situation.  Subdivision (f) voids the  
            provisions of [S]ection 998 where the plaintiff in an  
            eminent domain proceeding makes the offer.  The plaintiff in  
            the normal eminent domain proceeding is the government  
            entity.  [Defendant] relies on cases and code provisions  
            that distinguish between eminent domain and inverse  
            condemnation, none of which are apposite here.  We can see  
            no legitimate reason why subdivision (f) should not apply to  
            the action herein.  We cannot believe that the Legislature  
            sought to distinguish between government entities when they  
            are called plaintiffs or when they are called defendants in  
            actions that are substantially identical.  Therefore, we  
            hold that subdivision (f) applies. Therefore, the award of  
            costs to [Plaintiffs] was not barred by its refusal of the  
            compromise settlement offer.  (Orpheum Bldg. Co. v. San  
            Francisco Bay Area Rapid Transit Dist. (1978) 80 Cal.App.3d  
            863, 878.)

          In each of these cases, both courts looked at the  
          Legislature's intent (as well as the Constitution), and  
          reached different results.  The issue raised by this bill is  

                                                                      




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          whether to codify, contrary to Orpheum, that Section 998 does  
          apply to inverse condemnation actions.  The resulting policy  
          question is whether the Legislature should encourage  
          settlement in these cases where an individual's property has  
          arguably been "taken" (damaged or destroyed) for public use.   
          For example, victims of the 2011 San Bruno gas pipeline  
          explosion have brought inverse condemnation actions against  
          PG&E,<1> and, if those victims reject settlement offers that  
          end up being greater than a final condemnation award, their  
          recovery could theoretically be reduced pursuant to the  
          proposed changes to Section 998 (if this bill were enacted at  
          that time).  Considering that the entire purpose of Section  
          998 is to encourage settlement by reducing recovery when a  
          plaintiff rejects an offer that is greater than a final award,  
          the Committee should consider whether it is, in fact,  
          appropriate to reduce recovery in cases of inverse  
          condemnation when offers are rejected.  The Committee should  
          also consider whether this provision would create undue  
          pressure for potential plaintiffs to settle their inverse  
          condemnation actions due to fear of a lower condemnation  
          award.

          WOULD THIS CREATE UNDUE PRESSURE FOR INJURED LANDOWNERS TO  
          SETTLE INVERSE CONDEMNATION CLAIMS, INCLUDING THOSE WHO LOST  
          THEIR HOMES IN THE 2011 SAN BRUNO GAS PIPELINE EXPLOSION?

          b.   Just compensation  

          As noted above, the United States and California Constitutions  
          require the payment of "just compensation" to property owners  
          whose property has been taken or damaged for "public use."  That  
          constitutional requirement to pay compensation applies to  
          inverse condemnation actions, thus, raising the question whether  
          the application of Section 998 to reduce the "just compensation"  
          paid to successful plaintiffs would be constitutional.  That  
          concern arises because those plaintiffs are constitutionally  
          entitled to receive "just compensation," and, if the amount paid  
          for just compensation is reduced, it is unclear whether the  
          Constitutional requirement to pay that compensation has been  
          met.  Regarding the ability to assess costs against a plaintiff  
          (landowner) in an inverse condemnation action, the California  
          Supreme Court in Locklin v. City of Lafayette (1994) 7 Cal.4th  
          ---------------------------
          <1> Private utilities may be held liable in inverse condemnation  
          actions as public entities.  (See Barham v. Southern Cal. Edison  
          Co. (1999) 74 Cal.App.4th 744, 753.)

                                                                      




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          327 held: 

            An inverse condemnation plaintiff must establish a  
            compensable taking or damage before article I, section 19 of  
            the California Constitution, may be invoked to shield the  
            unsuccessful plaintiff from assessment of costs . . . The  
            statutory power of a court to impose costs of litigation on  
            an unsuccessful party in a civil action is limited by  
            article I, section 19 [citation omitted], but that provision  
            comes into play only when property is taken for public use  
            or damaged by a public entity . . . Neither sound public  
            policy nor protection of property owner's rights under  
            article I, section 19 of the California Constitution,  
            suggests that public funding of inverse condemnation actions  
            is necessary if the plaintiff fails to establish a  
            compensable taking or damage.  (Id. at p. 377.)

          Given that holding, it is unclear how the proposed application  
          of Section 998 to reduce recovery in successful inverse  
          condemnation actions would not be precluded (or shielded) by  
          the "just compensation" requirement of the California  
          Constitution.  The law firms in opposition argue that cost  
          shifting of the type envisioned by this bill would violate the  
          California Constitution.

          DOES THE APPLICATION OF SECTION 998 TO SUCCESSFUL INVERSE  
          CONDEMNATION ACTIONS VIOLATE CALIFORNIA'S CONSTITUTIONAL  
          REQUIREMENT TO PAY JUST COMPENSATION?

          c.   Attorney's fees  

          The general rule governing the allocation of attorney's fees in  
          the United States is that each party must bear the costs of his  
          or her own attorney's fees, regardless of who prevails in  
          litigation.  Fee shifting statutes are enacted only when society  
          considers a statutory or constitutional right important enough  
          to justify fee shifting.  (See Choate v. County of Orange (2000)  
          86 Cal.App.4th 312, 322-23; Code Civ. Proc. § 1021.)  

          In inverse condemnation actions -- which are fundamentally  
          actions that allow plaintiffs to protect a constitutional  
          property right -- the Legislature has previously acted to shift  
          payment of attorney's fees and other litigation costs away from  
          a prevailing property owner and to the condemning public entity.  
           (See Code Civ. Proc. Sec. 1036.)  By applying Section 998 to  

                                                                      




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          inverse condemnation actions for the unmistakable purpose of  
          reducing compensation to be paid to plaintiffs, it is unclear  
          whether an award so reduced would satisfy the Constitution's  
          "just compensation" requirement, as noted.  However, it may also  
          provide a disincentive for property owners to continue to pursue  
          vindication of their property rights through litigation.   
          Although undefined in the bill, restricting the ability of a  
          plaintiff to recover his or her post-offer "costs" could be  
          interpreted as including attorney's fees, which, if so  
          understood, could potentially reduce access to the courts as a  
          result of attorneys being unwilling to take cases where payment  
          for their services is less certain.

          COULD THE BILL POTENTIALLY REDUCE ATTORNEY FEE AWARDS AND LIMIT  
          ACCESS TO THE COURTS?

          3.   Comparative fault  

          Under the tort doctrine of comparative fault, a plaintiff's  
          damages may be reduced in direct proportion to his or her own  
          percentage of fault.  Although comparative fault applies in tort  
          actions, strict liability generally applies to inverse  
          condemnation actions with two exceptions - actions involving the  
                                                                            exercise of police power, and actions regarding flood control or  
          flood improvement efforts.  It is important to note that strict  
          liability applies in inverse condemnation actions only where the  
          public improvement at issue substantially caused the damage,  
          even if the improvement was only one of several causes.  The  
          author provides the following example:

            The City of Los Angeles cuts a road on a hillside in 1920.   
            Ninety years later a property owner builds alongside the  
            road.  The property owner has a leaking pool that saturates  
            the hillside with thousands of gallons of water, which  
            collects underneath the house because of the design of the  
            road.  As a result, the over saturation of water causes a  
            landslide destroying the house.  The property owner sues the  
            [c]ity for damages.  A jury finds that but for the  
            negligence of the homeowner, the landslide never would have  
            occurred.  But because the road built in the 1920's allowed  
            the water to pool, the jury found the city to also be partly  
            responsible for the damage.  Because the city was partially  
            at fault, the owner who saturated the hillside with water is  
            able to recover 100% of his damages even though that owner  
            was primarily at fault.

                                                                      




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          It should be noted that, under existing case law, a public  
          entity would be liable in the above example for inverse  
          condemnation only where there is substantial causation on the  
          part of the public entity leading to the taking - meaning that  
          the road would have to be a substantial cause of the damage  
          (arguably because of a design defect or lack of maintenance that  
          caused the pooling to occur).  Thus, the question raised by this  
          bill is whether a city should be fully liable for damages that  
          are substantially caused by a public improvement.  As discussed  
          below, the potential liability associated with a public  
          improvement is arguably calculated into a decision to construct  
          a public improvement in the first place. 

          This bill would seek to overturn 100 years of case law by  
          providing that comparative fault applies to actions in inverse  
          condemnation, and that in an inverse condemnation proceeding, a  
          court or arbitrator shall reduce the compensation paid to a  
          plaintiff in direct proportion to his or her percentage of  
          fault, if any, in damaging the property that is ultimately found  
          to have been taken for public use.  The proposed application of  
          comparative fault seeks to alter the way California's court have  
          construed the "just compensation" requirement of the California  
          Constitution, and thus, to the extent this bill seeks to modify  
          a court's interpretation of the Constitution, it is unclear  
          whether that change can be accomplished through a statutory  
          revision.

          Regarding the requirement to pay just compensation, the  
          California Supreme Court has previously noted: "[T]he  
          determination of the scope of the just compensation clause rests  
          on its construction 'as a matter of interpretation and policy.'   
          The contending policies which guide that construction have often  
          been described as follows: 'on the one hand the policy  
          underlying the eminent domain provision in the Constitution is  
          to distribute throughout the community the loss inflicted upon  
          the individual by the making of the public improvements . . . .  
          On the other hand, fears have been expressed that compensation  
          allowed too liberally will seriously impede, if not stop,  
          beneficial public improvements because of the greatly increased  
          cost.'"  (Varjabedian v. Madera (1977) 572 P.2d 43, 50-51.)  

          From a policy standpoint, application of strict liability places  
          the cost of a public improvement on the shoulders of the entire  
          community, as opposed to on a few landowners.  "The fundamental  

                                                                      




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          justification for inverse [condemnation] liability is that the  
          government, acting in furtherance of public objectives, is  
          taking a calculated risk that private property may be damaged."   
          (Yee v. City of Sausalito (1983) 141 Cal.App.3d 917, 920.)   
          Unlike private individuals, public entities can take certain  
          steps to mitigate the risk of liability for inverse condemnation  
          awards, such as by securing appropriate insurance coverage.   
          (See City of Laguna Beach v. Mead Reinsurance Corp. (1990) 226  
          Cal.App.3d 822, 829 [discussing the validity of an inverse  
          condemnation exclusion clause in a municipal liability insurance  
          policy].)  The following excerpt illustrates how costs and  
          benefits are weighed by a public entity when deciding to  
          construct a public improvement: 

            The evidence here showed City [of San Diego's] water  
            delivery system was deliberately designed, constructed and  
            maintained without any method or program for monitoring the  
            inevitable deterioration of cast-iron pipes other than  
            waiting for a pipe to break.  Additionally, City received  
            the cost savings from its "replace it when it breaks" method  
            of maintenance, turning down numerous rate increases  
            necessary to fund a different, more proactive approach to  
            replacing these deteriorating pipes.  In Holtz v. Superior  
            Court (1970) 3 Cal.3d 296, the court reiterated that the  
            fundamental policy underlying inverse condemnation is to  
            distribute the costs of the public benefit among those  
            benefited by the public improvement rather than imposing a  
            disproportionate burden on the person damaged by the  
            operation of the improvement.  (Id. at p. 303.)  . . .  
            City's decisions to install a system without monitoring  
            capabilities and to use a "wait until it breaks" method for  
            detecting deterioration may well have been reasonable  
            because the costs of a prophylactic approach may have  
            outweighed its benefits.  However, the rationale of Holtz,  
            as well as its approval of the factually analogous case of  
            Lubin, convinces us that "since the undertaking of the  
            [project] at this lower cost created some risk, however  
            slight, of damage to plaintiffs' property, it is proper to  
            require the public entity to bear the loss when damage does  
            occur."  The burdens attending City's cost-saving approach  
            should be spread to the community benefiting from lower  
            water rates rather than imposing the entire cost on those  
            property owners placed in harm's way by City's program.   
            (Pac. Bell v. City of San Diego (2000) 81 Cal.App.4th 596,  
            607-608).

                                                                      




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          In the above case, the City of San Diego achieved cost savings  
          for the community by accepting a certain level of risk that  
          was arguably taken knowing the City would be held strictly  
          liable for damage.  This bill would insert the concept of  
          comparative fault into that situation, thus, potentially  
          reducing the financial exposure of a public entity if a  
          plaintiff can be proven to be at fault to some extent in an  
          inverse condemnation action.  That additional inquiry into  
          fault of the plaintiff necessarily means additional  
          litigation, which would appear contrary to that portion of the  
          bill that seeks to reduce litigation by promoting settlement.  
          Furthermore, from a policy standpoint, reducing the financial  
          exposure of a public entity would arguably encourage those  
          entities to make riskier and riskier decisions, including  
          taking a "replace it when it breaks" approach with regards to  
          essential public improvements.  While those approaches save  
          the public money, they also create risk for those individuals  
          who happen to live near the public improvement that is not  
          being maintained.  In contrast, the existing strict liability  
          framework for inverse condemnation actions incentivizes  
          caution in the planning and construction of public  
          improvements.

          IS IT APPROPRIATE TO APPLY COMPARATIVE FAULT TO INVERSE  
          CONDEMNATION ACTIONS?

          4.   Pending litigation  

          This bill does not specifically state that its comparative fault  
          provisions would apply only to actions filed after the effective  
          date of the bill.  In general, legislation is construed to be  
          prospective unless the Legislature specifically states that it  
          should be applied retroactively or is declaratory of existing  
          law.  In this case, courts interpreting this bill, including the  
          Section 998 provisions, should arguably only apply those  
          provisions to actions filed after the effective date of the  
          bill.  Applying these provisions to an already pending action  
          would appear to unduly "change the rules" in the middle of the  
          case.  Indeed, this Committee has raised concerns about bills  
          that interfere with pending litigation.  Any such interference  
          could result in a direct financial windfall to a private party,  
          prevent a court from deciding an action based upon the laws in  
          place at the time the cause of action accrued, or create a  
          situation where the Legislative branch is used to circumvent the  

                                                                      




          AB 436 (Jones-Sawyer)
          PageN of?


          discretion and independence of the Judicial branch.

          SHOULD THIS BILL BE AMENDED TO ENSURE THAT IT WOULD NOT IMPACT  
          PENDING LITIGATION?


           Support  :  California Association of Joint Powers Authorities;  
          California Association of Sanitation Agencies; California  
          Special Districts Association; City of Camarillo; City of Santa  
          Rosa; County of Los Angeles; League of California Cities

           Opposition  :  Desmond, Nolan, Lavaich, & Cunningham; Jenny &  
          Jenny, LLP; Matteoni, O'Laughlin, & Hetchman; Palmieri, Tyler,  
          Wiener, Wilhelm & Waldrone

                                        HISTORY
           
           Source  :  Los Angeles City Attorney

           Related Pending Legislation  :  None Known

           Prior Legislation  :  AB 328 (Smyth, 2011) would have applied the  
          doctrine of comparative negligence and the provisions of Section  
          998 of the Code of Civil Procedure to actions in inverse  
          condemnation.  This bill died in the Senate Judiciary Committee.

           Prior Vote  :

          Assembly Judiciary Committee (Ayes 7, Noes 1)
          Assembly Floor (Ayes 51, Noes 26)

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