In Cobb v. City of Stockton, No. C062328 (Jan. 26, 2011), the California Court of Appeal (3d District) concluded that the property owner's claim for inverse condemnation for a physical invasion of his property was not barred by California's five-year statute of limitations, even though the City took possession nine years earlier.
In 1998, the City initiated an action in eminent domain to take a portion of the Cobb's property for a road. The City deposited its estimation of just compensation into court after which the court placed the City in prejudgment possession of the land. The City built the road, and the property owner withdrew the deposit. In 2007, nine years after it was filed, the court dismissed the condemnation action because it was not brought to trial within five years as required by California law.
A few months later, Cobb instituted an inverse condemnation action. The City demurred (that's a "motion to dismiss" for you non-Californians) because the action was not filed within five years of the time when the City first acquired the property (California applies the five year adverse possession statute to physical inverse condemnation claims). The trial court agreed, and after a few attempts to amend the complaint to allege the claim so that it would not have a limitations problem (alleging trespass, for example), the trial court sustained the demurrer without leave to amend (trespass actions have a three year statute of limitations).
The appeals court reversed. The court began by distinguinshing Klopping v. City of Whittier, 8 Cal.3d 39, 500 P.2d 1345 (1972), in which the California Supreme Court held that a condemnor's unreasonable precondemnation actions caused a lowering of the value of the targeted property. Here, however,"the plaintiff does not allege the City's announcement of an intention to condemn or its promise to re-file the condemnation action somehow reduced the value of the Property. Plaintiff's claim is that the actual invasion of the Property by the construction of a roadway across it reduced the value of the Property and is a taking requiring just compensation." Slip op. at 6.
The court concluded the property owner's physical invasion did not accrue when the City took possession in 1998, but rather when the City's occupation became wrongful. The general rule in California is that the statute of limitations begins to run on a physical invasion inverse condemnation claim when the condemnor takes possession, but that the period is tolled until the property owner is aware of the encroachment. The court held this rule did not bar the claim even though the property owner was aware of the encroachment in 1998 when the City took possession, because possession was pursuant to a court order. Thus, the court concluded the invasion was permissive until the trial court dismissed the condemnation action. Slip op. at 12. Until that occurred in 2007, the property owner could not have brought a trespass suit, which requires that the entry is without permission, nor could he have instituted an adverse possession claim, which requires that the possessor not have a claim of right to the property. Because the plaintiff filed his action less than a year after the dismissal of the City's condemnation lawsuit, the action was timely.
The court rejected the trial court's conclusion that it was the physical invasion alone that should have put the property owner on notice of his claim:
Taken to its logical conclusion, the trial court's ruling would mean that every time a condemning authority takes prejudgment possession of the subject property, the owner would have to file a protective inverse condemnation claim in the event the eminent domain action is later dismissed. Such action would then remain dormant while the eminent domain action ran its course.
Slip op. at 13.
