What Is Inverse Condemnation In California After City of Oroville?

It is the nature of all greatness

Not to be exact.

-Edmund Burke

Twenty-two years have passed since the California Supreme Court has weighed in on the nebulous concept of inverse condemnation. That changed earlier this month.

On August 15, the Supreme Court issued City of Oroville v Superior Court of Butte County and arguably changed the landscape of inverse condemnation litigation.

Here are the facts. A group of dentists sued the City of Oroville for inverse condemnation when sewage came through city pipes and damaged their dental offices. Oroville claimed it was not responsible because the dentists didn’t install a backwater valve that, if installed, would have prevented the sewage from entering the offices. Both the trial court and the appellate court held Oroville was responsible and liable in inverse condemnation.

The Supreme Court reversed and held that an inverse condemnation claim is only successful when the property owner shows that the property damage “was the probable result or necessary effect of an inherent risk associated with the design, construction, or maintenance” of the public improvement. Causation was key for the Court. “Increased costs” to public entities also weighed heavily on the Court. Surprisingly, the Court focused on the actions of the dentists: had they installed the backwater valve, the damage would have been “eliminated or at least mitigated.” Even more surprising, the Court looked at the actions of Oroville and concluded it “acted reasonably.”

Together, these facts arguably gave the Court justification for departing from earlier inverse condemnation cases by interpreting this (and likely all) inverse condemnation cases under an analysis previously limited to inverse condemnation flooding cases: reasonableness.

City of Oroville will make inverse condemnations more difficult for property owners than they already are because arguably the focus has shifted from a more strict liability analysis to a more nuanced reasonableness analysis colored by subjectivity. Focus has also shifted toward the actions of the property owner.

Now defendants in inverse condemnation cases will likely argue their actions were “reasonable,” fault plaintiff property owners for the damage, and try move away from the strict liability, citing City of Oroville.

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