Lowball Watch — California

When San Francisco decided to acquire the owners’ land, negotiations ensued and at the end it offered $3,800,000. The owners asked for $10,875,000. Unable to agree, the parties went to trial, where the city formally offered $5,000,000, subject to a contingency: the settlement would have to be approved by three other government entities.

After trial, the jury came back with a net award of $7,319,000 ($7,400,000 value award minus $81,000 cleanup costs). The owners requested attorneys fees and other litigation expenses under a California statute that awards litigation expenses to owners when their demand is reasonable but the condemnor’s offer isn’t. But the trial judge refused to award any litigation expenses because he thought the city’s offer was reasonable.

The owners appealed, and the California Court of Appeal reversed, holding that such a contingent “offer” was no offer at all because its acceptance by the owner would not produce agreement on compensation, but only an invitation to further negotiations with the three government agencies who at that point had not committed themselves to any figure. Thus, the city’s “offer” was not reasonable.

Held: Reversed and remanded. San Francisco v. PCFA Acquisitionco, Docket No. A 139836, filed May 26, 2015. You can see the opinion at  http://www.courts.ca.gov/opinions/documents/A139836.PDF