First understand what inverse condemnation is. Here’s one post about it, and here’s another one.
The loss distribution principle is a legal principle that spreads the cost of damages caused by a public improvement. If you don’t follow that principle, then the cost is borne disproportionately by people who suffer losses caused by the improvement.
Loss Distribution Principle And Southcrest Flooding
Here’s an example with the recent Southcrest flooding. Watch these interviews if you want to know more about that flooding.
San Diego is responsible for the cost of public infrastructure of storm drains, storm channels, and flood control channels like Chollas Creek. San Diego spreads the cost of upkeep, control, and maintenance through the public by taxes or fees. When, however, San Diego fails to upkeep, control, or maintain the drains and channels, then the drains and channels can be blocked and water can overflow.
That happened in January 2024 when Chollas Creek overtopped its banks and flooded Southcrest. San Diego failed to upkeep, control, or maintain the drains and channels. Now where does the cost fall?
The cost falls on the residents of Southcrest because their homes and personal property have been damaged from Chollas Creek by San Diego’s failure.
That is unfair. The loss distribution principle in the context of inverse condemnation shows that San Diego should pay for that damage, not the residents of Southcrest.
The goal of the loss distribution principle is fairness.
Loss Distribution Principle And The Utility Fires
This principle comes up a lot in wildfire litigation. Utility companies argue they cannot spread the costs because they cannot pass on higher rates without permission from the California Public Utilities Commission. Regardless, California law holds that utility companies can be liable in inverse condemnation. See the case Barham v Southern Cal. Edison Co.
Loss-Spreading And Inverse Condemnation
Inverse condemnation allows losses to be spread. It is the constitutional underpinning of inverse condemnation. See the case Gutierrez v County of San Bernardino. The fundamental policy behind inverse condemnation is to spread among the benefiting public any burden borne disproportionately by people who suffer losses caused by the improvement.
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