Update: More thoughts from Rick Rayl and Brad Kuhn (California Eminent Domain Report) here.
++++++++++++++++++++++++++++++++
Here's a decision at the intersection of eminent domain valuation and unconstitutional exactions from the California Court of Appeal (Fourth District). In City of Perris v. Stamper, No. E053395 (Aug. 9, 2013) the court held that in a condemnation action, "issues surrounding the dedication requirement are essential to the determination of 'just compensation' and therefore must be "ascertained by a jury.'" Slip op. at 1.
First, some background. The city condemned a portion of Stamper's industrially-zoned vacant land in order to realign and widen an adjacent road. Its deposit was based on the use of the land for agricultural purposes. But wait you say, the land was zoned industrial and even though it was vacant, when calculating compensaton, land is valued at its highest and best use. But get a load of the City's valuation argument:
The City appraised the take as undevelopable agricultural land. The City based this appraisal on the theory that it would not approve of any development plan for the Stamper Property unless the owners gave—or dedicated—the take[n property] to the City. Because of this dedication requirement, the City argued, the [land] would either be given to the City as a condition of development or remain vacant and usable only for growing crops, and as such should be valued on that basis.
Slip op. at 2. Just so we get this right: we're taking part your property, but since we would not not allow you to build on the rest of your property unless you donated to us the property we want to take from you, we get the property we want to take from you essentially for free. As the court explained, that theory has found some traction in California's intermediate appellate courts. See slip op. at 8-14. And ultimately, the court accepted the viability of the theory with the question being whether a judge or a jury should make the determination whether there was a reasonable probability that the City would condition Stamper's use on the dedication, and if so, whether the dedication passed the Nollan/Dolan nexus and rough proportionality requirements.
Juries determine the factors a buyer would take into consideration in arriving at fair market value, and those factors include the reasonable probability the property will undergo a change in use. Thus, the court concluded that whether it is reasonably probable the City would require the donation of the taken property as a condition of Stemper using the rest was a question for the jury. It was also for the jury to determine "whether all or any part of the 1.66-acre [taken property] could be constitutionally imposed as a dedication condition on development." Sllip op. at 34.
On remand, a jury must be allowed to determine whether, and if so to what extent, the 1.66-acre area of the take, or the 94-foot-wide swath through the Stamper Property, is roughly proportionate to the Stamper Property‟s anticipated impacts on area traffic if and when the Stamper Property is developed. Based on the evidence presented during the bench trial, reasonable jurors could differ on whether all or any part of the 1.66-acre take could be constitutionally imposed as a dedication condition on development. If on remand the jury determines that part, but not all, of the 1.66-acre area of the take could be constitutionally imposed as a dedication condition, it must value that part of the take based on its current use and the remaining portion on its highest and best use. If the jury determines that no part of the take could be constitutionally imposed as a dedication condition, it must value the entire take based on its highest and best use, which is apparently as industrial property.
Slip op. at 34-35.
More analysis here from Professor Shaun Martin, who asserts that the court is wrong to hold that even if juries make the call regarding compensation and the factual predicates that go into that determination, the ultimate question of whether the dedication requirement has Nollan/Dolan problems are reserved for the judge:
It's possible that Justice King is correct that a jury gets to make underlying predicate findings of fact. True, in a pure constitutional case, a judge (rather than a jury) gets to make those predicate factual findings as part of the constitutional analysis. But perhaps the Court of Appeal is right that valuation of eminent domain cases is assigned (at least in California) to a jury. So predicate factual questions get transferred to a jury.
But even if that's the case, the Court of Appeal errs when it holds that the dispositive legal issue -- whether an uncompensated taking would violate the Constitution -- gets decided by the jury. On that issue, a judge, not a jury, is the relevant factfinder.Yes, a jury might perhaps properly be called upon to make certain findings of fact relevant to that legal determination. For example, a jury might be asked "How much traffic will development of the Stamper Property cause?" and/or "What percentage of the traffic on the road that runs through the Stamper Property will consist of traffic generated by the Property itself, as opposed to traffic from some other source?" Those are factual questions, and indeed they're relevant to whether there's rough proportionality between the taking and the approval of the development.But whether those predicate facts satisfy the constitutional requirement of "rough proportionality" is purely a question of law. The jury decides the facts. It doesn't decide the law. Judges do that. Whether a certain set of facts suffices to satisfy the dictates of the Constitution is purely a legal issue, subject to initial determination by a trial court and, thereafter, de novo review on appeal.
But here, the question is not whether the City could impose the exaction as a matter of constitutional law, but whether it is reasonably probable that it could. And when you hear words like "reasonable" and "probability" as factors in market value, those type of questions are reserved for the jury. The right to have a jury determine compensation is expressly a constitutional right under California law, and any doubt about who makes the call should be resolved in favor of the jury and not the judge.
Will this issue be taken further? Stay tuned.
City of Perris v. Stamper, No. E053395 (Cal. App. Aug. 9, 2013)
