Take a look at an article in the Richmond-Times Dispatch by A. Barton Hinkle, entitled An Eminently Unfair Practice (Feb. 16, 2014, Sunday Commentary section). It describes the nasty practice whereby condemning agencies take property in a quick-take procedure, displace the owners, and deposit their probable “just compensation” in court. Then, if the owners don’t like the amount — they can take the matter to trial and have a judge and jury determine the proper compensation. So what’s the problem, you ask?
The problem is, folks, that in some cases when trial time comes around, the condemnor shows up with a new appraiser who offers a new opinion of value that just happens to be significantly lower than the “good faith deposit” that had been made by the condemnor in the quick-take procedure. But by then the owner (who has been evicted by the condemnor) has withdrawn the deposit and spent the money on replacement housing. So if the jury returns later with a verdict that is lower than that deposit, the owner has to refund the pertinent part of his withdrawn money — which he no longer has, having spent it on replacement property. That is known as “sandbagging” around here — it is a transparent gimmick to put pressure on the owner to settle on the condemnor’s terms and to discourage him from going to trial before a judge and jury.
The nasty twist is that the owner is not allowed by law to tell the jury about that earlier, higher, amount deposited by the condemnor as a “good faith” estimate of just compensation for the taking of the subject land. Nor is he allowed to cross examine the condemnor’s appraiser on that subject. So the condemnor can blow hot and cold on the issue of value with no danger that its inconsistent positions will be revealed to the jury. There have even been a couple cases in California in which condemnors tried to pull off that stunt by having the same appraiser testify to both the higher and the lower amounts with the owner forbidden to disclose that inconsistency to the jury.
How bad can it get? About as bad as you can imagine, and then some. The worst case of manipulating the amount of the deposit that we know of (although it was not a classic instance of “sandbagging”) involved a Caltrans taking of chunks of land from a power line corridor for a highway, which rendered the transmission corridor unfit for future high-voltage lines and seriously — and we do mean seriously — diminished its value. But the condemnor deposited a thrifty $245,000 into court. Long story short, and skipping over some skullduggery, after trial in which the jury heard appraisal testimony (which by then the condemnor upped to four or five million), it came back with a verdict of $49,500,000. That’s right folks: almost $50 mil as against a “good faith” deposit of less than a quarter of a million. Not only was that verdict affirmed on appeal, but the California Supreme Court issued and order directing the condemnor not to brief valuation issues because they would not be considered — the controversy on appeal was about interest — which is another long story that we should tell you about one of these days, but won’t get into here. If you really want to know about it, check out People ex rel. DOT v. So. Cal. Edison Co., 22 Cal.4th 791 (2000).
Of course, in this case, as Caltrans thus learned the hard way, you don’t get to push around the likes of Edison in this fashion, but these figures speak for themselves and provide an acute insight into how far these guys can go in manipulating deposits.