Another Government Lowball Hits the Dirt

A local newspaper reports that in Baldwin Park, California, the state DOT (known aroud here as CalTrans) set out to acquire the site of an RV dealership  to widen a freeway. The initial offer was $953,000 which the owners refused, and rightly so because after CalTrans filed a condemnation action to take their property, it upped its offer to $3.86 million. This was for a business that employed 167 people and grossed $61 million last year.

But the case never went to trial. Faced with having to try the case in court, CalTrans threw in the towel and settled for $8 million, which by our calculator comes to over eight times CalTrans’ initial offer. And so it goes. You can read this story in Jennifer McLain, Caltrans to Pay $8 Million in Settlement With RV Dealer, San Gabriel Valley Tribune, June 13, 2009.

The moral of this story is not that the owners’ case was better than the state’s, or that CalTrans fought the goood fight and lost. Rather it is that the state made the lowball offer which evidently it knew was inadequate (because it raised it by four times when first faced with having to defend it in court) and eventually agreed to pay over eight times its original offer.

The smiling lawyer for the owners is John Murphy of the Orange County (California) office of Luce Forward.

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