When the government or a utility company takes, damages, or restricts the use of private property for a public purpose, the property owner has the right to fair compensation under both federal and California law. Yet asserting those rights is rarely straightforward.
Between complex valuation disputes, procedural hurdles, and public agencies that often underestimate damages, property owners can find themselves fighting an uphill battle. At Peterson Law, LLP, we help San Diego property owners understand their rights in eminent domain and inverse condemnation disputes, and ensure they receive full and fair compensation for any loss of property or value.
Understanding Eminent Domain in California
Eminent domain is the government’s constitutional power to seize private property for public use, provided that it pays “just compensation” to the owner. This authority stems from the Fifth Amendment of the U.S. Constitution and Article I, Section 19 of the California Constitution. In San Diego County, eminent domain is commonly exercised by state and local entities, including Caltrans, the County of San Diego, SANDAG, and public utilities such as SDG&E and local water districts.
While public projects like new highways, transit lines, or power line expansions may serve a legitimate community purpose, the law demands that affected property owners not bear an unfair financial burden. Compensation must reflect the full market value of the property, including any damages to the remaining parcel.
The Condemnation Process
When the government or a public utility seeks to acquire private property for public use, it must follow strict legal procedures designed to ensure fairness and transparency. California’s eminent domain process is governed primarily by the Code of Civil Procedure §§ 1250.010–1260.260. At each stage, from pre-condemnation negotiations to trial, owners have opportunities to challenge the taking or seek higher compensation.
Pre-Condemnation Negotiations
Before a public entity can file an eminent domain action, it must make a written offer to purchase the property at what it believes to be its fair market value. This offer must be based on an appraisal conducted by a qualified appraiser who inspects the property and provides a written report summarizing the valuation method and supporting data.
Under California Code of Civil Procedure § 1255.010 et seq., the agency must act in good faith during this negotiation phase. Property owners have the right to obtain their own independent appraisal, and the agency must reimburse reasonable costs for that appraisal (up to $5,000) when the owner provides it before the resolution of necessity hearing. This ensures that property owners are not forced to rely solely on the government’s assessment, which often undervalues the property or fails to account for consequential damages.
Suppose the parties cannot agree on a price. In that case, the government may proceed to the next step: formally declaring that the taking is necessary for public use.
Resolution of Necessity
A public agency cannot seize property simply by filing a lawsuit; it must first adopt a “Resolution of Necessity.” This is a formal declaration that:
- The project serves a public purpose.
- The property is necessary for that purpose.
- The project is planned in a way that will be most compatible with the public good and least injurious to private property.
- The agency has made a bona fide offer to purchase the property.
These findings must be approved by a supermajority vote of the agency’s governing body (typically a city council, county board, or utility commission) at a public meeting. Property owners are entitled to notice and may appear to challenge the resolution before it is adopted.
Challenges can focus on whether the project truly serves a public purpose, whether the specific property is necessary, or whether the proposed taking is overly broad. For example, in San Diego County, owners have successfully argued that public agencies sought more land than was reasonably required for a project, or that alternate routes were available that would have reduced the impact on private property.
Once adopted, the Resolution of Necessity authorizes the agency to initiate an eminent domain lawsuit in Superior Court.
Filing the Eminent Domain Action
After adopting the resolution, the public entity files a complaint in Superior Court to formally condemn the property. The property owner is then served with notice and has the right to contest the taking or challenge the valuation.
In many cases, the agency will request an order for “prejudgment possession,” allowing it to take control of the property before the case is resolved. To do so, it must deposit the “probable amount of compensation” with the court. This is essentially the amount determined by its initial appraisal. The property owner can withdraw these funds immediately without waiving the right to seek additional compensation later.
This early possession procedure can move quickly, sometimes within 90 days, underscoring the importance of early legal intervention. Owners should seek counsel as soon as they receive notice of the agency’s intent to ensure that procedural and valuation rights are preserved.
Trial and Valuation Disputes
If the parties cannot agree on an amount, the case proceeds to trial, where the only question before the jury is typically the value of the property and any remaining damages. Fair market value is defined as the price a willing buyer would pay to a willing seller in an open market, considering the property’s highest and best use.
Owners may also be entitled to severance damages if only part of their property is taken and the remainder is devalued as a result. For instance, if a highway expansion in San Diego County cuts off access to a commercial property, the loss of visibility and customer traffic can significantly diminish the property’s overall worth. Business owners may also seek compensation for loss of goodwill when a taking disrupts operations, or the intangible value associated with location, reputation, and customer relationships.
Recent cases in San Diego have demonstrated how strongly valuation disputes can hinge on expert testimony. In several SANDAG transportation projects, for example, appraisers for property owners presented evidence showing that government valuations failed to account for unique site features or redevelopment potential. Such evidence often leads to settlements or verdicts substantially higher than the government’s initial offer.
What Is Inverse Condemnation?
While eminent domain involves a formal process initiated by a public entity, inverse condemnation arises when the government or a utility damages or effectively takes private property without following proper condemnation procedures. In this scenario, the property owner becomes the plaintiff, suing the government to recover compensation for the taking or damage to their property.
Under California law, property owners are entitled to just compensation whenever their property is “taken or damaged for public use.” This protection is broader than under federal law and covers both physical damage and regulatory interference that substantially impairs the property’s use or value.
Inverse condemnation claims often arise from infrastructure projects or utility failures:
- Flooding from defective drainage systems
- Landslides triggered by grading or construction
- Damage caused by power lines or underground cables
- Vibrations and soil movement from nearby public works
California courts have long upheld the right of property owners to be compensated in such cases. In Albers v. County of Los Angeles (1965), the California Supreme Court held that a county was liable for a landslide caused by road construction, even absent negligence. The Court reasoned that the burden of public improvements should be distributed fairly across the public, rather than unfairly borne by individual property owners.
Similarly, in Pacific Bell v. City of San Diego (2000), the Court found the city liable for damages caused by the construction of a sewer line that damaged underground telephone conduits. The ruling reinforced that a public entity can be held responsible for damaging private property through public works, regardless of fault.
Common Inverse Condemnation Scenarios in San Diego County
Inverse condemnation can occur in many contexts where public projects or utilities interfere with private property rights. In San Diego County, where development, infrastructure, and coastal management projects are common, these disputes frequently arise in the following situations.
Public Infrastructure Damage
Public works projects, such as road widenings, drainage improvements, or rail expansions, can cause unintended physical damage to nearby structures. Construction vibrations may crack building foundations, while inadequate grading or drainage can lead to flooding or soil instability. Property owners affected by such impacts may have valid claims even if no land was formally taken.
Utility-Related Damage
Utilities often face inverse condemnation claims when their equipment fails or causes harm to private property. In California, electric utilities like SDG&E have been held strictly liable for wildfires ignited by power lines or transformers, even when they followed safety protocols. Similarly, water main ruptures, gas leaks, or sewer overflows can damage homes and businesses, entitling owners to compensation for repair costs, loss of use, and diminished property value.
Regulatory or Access Restrictions
Government actions that restrict access to a property or reduce its economic viability can also constitute a taking. For instance, if a public project reroutes a major road, cutting off access to a business, or imposes new setbacks that prevent development, the property owner may have grounds for an inverse condemnation claim. The key question is whether the restriction leaves the property with a reasonable and beneficial use.
Environmental and Coastal Impacts
San Diego’s coastal communities face unique property risks tied to environmental regulations and shoreline management. When public agencies impose beach access easements, deny seawall permits, or implement erosion control projects that physically damage coastal properties, affected owners may be entitled to compensation. Courts have found that even partial or temporary loss of use can trigger liability under California’s expansive definition of property “damage.”
Inverse condemnation remains one of the most powerful tools available to property owners, ensuring that the cost of public benefit is shared fairly and that private citizens are not left bearing the financial burden of government or utility activity.
Proving an Inverse Condemnation Claim
To prevail in an inverse condemnation case, a property owner must show all three of the following elements:
- Their property was taken or damaged
- The damage was caused by a public improvement or use
- The taking or damage was for a public purpose
The key distinction from negligence is that the owner does not need to prove fault, only that the public project caused the loss.
Evidence is critical. Expert appraisers, geotechnical engineers, and environmental consultants often testify about the extent and cause of property damage. Photographs, repair estimates, and property value comparisons before and after the incident can make or break a claim.
Determining Compensation and Damages
In both eminent domain and inverse condemnation, the guiding principle is “just compensation.” This typically means the fair market value of the property, or the price a willing buyer would pay a willing seller in an open market. However, compensation can go beyond the land itself.
Suppose only part of a property is taken. In that case, owners may recover severance damages for any reduction in the value of the remaining parcel. Business owners may recover loss of goodwill if the taking interferes with their operations. Inverse condemnation cases can include repair costs, diminution in value, or relocation expenses.
San Diego County has seen several substantial settlements arising from public infrastructure damage and utility-related disasters. These cases often hinge on whether the damage was permanent and directly related to a public improvement, which courts interpret broadly in favor of property owners.
The Role of Legal Counsel in Eminent Domain and Inverse Condemnation Cases
Navigating condemnation law without experienced representation can be costly. Public entities have teams of lawyers and appraisers working to minimize their payout. A knowledgeable eminent domain attorney levels the playing field by challenging lowball appraisals, exposing procedural errors, and ensuring the owner receives every dollar the law allows.
At Peterson Law, LLP, our team combines deep experience in San Diego County real estate litigation with specialized knowledge of condemnation law. We understand how local agencies operate and what it takes to hold them accountable. Whether the issue involves a Caltrans highway expansion, SDG&E easement, or city drainage failure, we pursue the evidence and expert testimony necessary to secure full compensation for our clients.
Protecting Yourself as a Property Owner
If you’ve received a right-of-way request, offer letter, or notice of intent to acquire your property, it’s essential not to sign anything before consulting an attorney. Property owners should request copies of all appraisals, document the current condition of their property, and preserve all communications. In cases involving property damage, photographic evidence and repair estimates are invaluable.
Prompt legal advice is equally important for inverse condemnation claims. California imposes strict filing deadlines, and early consultation can preserve your rights and strengthen your case.
Defending Property Rights in the Face of Public Projects
Public projects may benefit the community, but they should not come at the expense of individual property owners. Whether your land is being condemned for a highway, encumbered by a utility easement, or damaged by a public works project, you are entitled to fair and lawful treatment.
Peterson Law, LLP, represents property owners throughout San Diego County in eminent domain and inverse condemnation cases. We work to ensure that our clients are fully compensated and that their rights are protected against government and utility overreach. If your property has been taken or damaged for public use, contact us to discuss your options and safeguard your investment.
