An Odd Settlement

          Last year, the California Court of Appeal decided Redevelopment Agency of San Diego v. Mesdaq, 154 Cal.App. 4th  1111, 65 Cal.Rptr.3d 372 (2007). The Agency deposited $3,091,000, as the probable just compensation. At trial, the owner made a claim for loss of business under California Code of Civil Procedure § 1263.510, and the total award was $7,785,131.83, for an increase of 250% over the Agency’s deposit. However, the Court of Appeal reversed and remanded for a new trial.  We now learn that there was no new trial.

         According to a story in the San Diego Union-Tribune, the case settled, (Jeanette Steele, Deal Reached in Year-Long Eminent Domain Case, Jan. 17, 2008, p. A-1). The settlement figure? We’re gland you asked. It was $7,800,000. Which leaves us with two questions. First, why did the Agency deposit only $3,091,000? And if that deposit was in good faith, why did it settle for over twice that amount, an amount that was slightly higher than the amount awarded in the first trial? 

         We comment on cases like this from time to time, because studies going back to the 1960s, indicate that condemnors routinely do or try to undercompensate the people whose land they seek to take. Cases like this one suggest that those studies have merit. One can readily visualize a case in which the condemning agency disagrees with the owner’s claim and puts up a good albeit a losing fight in a valuation trial, and has to pay more than it intended. But why would a condemning agency settle voluntarily for the same amount (actually slightly higher) than the award it claimed to be improper, that it succeeded in overturning on appeal?