Lowball Watch – California

Remember the Campus Cruade for Christ case? Sure you do. That was a taking by eminent domain of land for an underground water transportation tunnel that was laid out across Campus Crusade’s land. The way the Southern California Metropolitan Water District laid out the tunnel, it crossed the San Andreas Fault right on the Campus Crusade land. So there was a danger that in a major earthquake — the San Andreas Fault is potentially capable of giving us the Mother of All Earthquakes — the tunnel would rupture. The MWD engineers thought of that, so they designed the underground tunnel so as to bring it close to the surface at that point (smack, dab in the middle of the Campus Crusade land) so it could be more conveniently repaired. But that meant that in case of such a tunnel rupture Campus Crusade’s land would be inundated with gazillions of cubic feet of water gushing out of the ruptured tunnel. That potential, argued Campus Crusade, would negatively affect the remainder of the subject land, and diminish its fair market value.  So Campus Crusade’s trial counsel, the late, lamented Justin McCarthy of Riverside, California, presented  a substantial claim for severance damages. There were other issues as well, such as the condemnor’s and the trial judge’s insistence that even though the California legislature had eliminated burden of proof in eminent domain cases, Campus Crusade still had such a burden. We suggest you read the California Supreme Court’s opinion, Metropolitan Water District v. Campus Crusade for Christ, 41 Cal.4th 954, 161 P.3d 1175 (2007) which inter alia provides a good discussion of which issues in an eminent domain action are decided by the jury, and which are properly resolved by the  judge.

To make a long story short, the trial judge sort of took over the case, usurped the jury’s function, and made a number of purportedly evidentiary rulings that actually decided various factual issues that should have gone to the jury. He included a ruling that Campus Crusade was not entitled to severance damages, and eventually awarded $478,278.45. When Campus Crusade appealed, a settlement conference was ordered by the appellate court, at which MWD offered (if memory serves us) some $3 million. Campus Crusade rejected that offer.

On appeal, both the California Court of Appeal and the California Supreme Court reversed the trial court’s ruling, and remanded the case for a new trial. But that trial never took place. We recently learned that the case has settled for — are you ready? — $15,500,000, or some 32 times that trial judge’s award, or five times the offer the condemnor made at the settlement conference. And keep in mind that this was not one of those cases where the condemnor fought the good fight and lost. No, this was a voluntary settlement.

And so it goes in the Golden State. For a collection of other cases like that — involving huge differences between condemnors’ offers and the eventual awards or settlements — see 40 Loyola of L.A. Law Review at pp. 1146-1148.

Disclosure: Your faithful servant was one of the lawyers representing Campus Crusade for Christ on appeal that followed the trial, but not at the trial court level before or after the appeal.

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