ACCOUNTABILITY IN INVERSE CONDEMNATION CASES (1998)

An important but unanswered question is whether comparative fault principles apply to inverse condemnation actions. Should a public entity, whose public work caused physical damage to private property, be liable for 100 percent of the damage even though other parties, including the owner of the damaged property, contributed to the damage? Few published opinions address this issue, and those that do are inconsistent.

The California Supreme Court recently examined inverse condemnation law in the context of physical damage caused by public flood control and surface drainage facilities. It held that the public entity is liable only for the proportionate amount of damage caused by its facility. Locklin v. City of Lafayette, 7 Cal.4th 327, 360, 368, 27 Cal.Rptr.2d 613, 867 P.2d 724 (1994); Bunch v. Coachella Valley Water District, 15 Cal.4th 432, 436, 447, 63 Cal.Rptr.2d 89, 935 P.2d 796 (1997). These cases mark a departure from the general rule in inverse condemnation that the public entity is liable for the full injury if its conduct or improvement was a substantial cause of the injury, regardless of whether other causes, including the private property owner's own fault or a third party's criminal acts, also contributed to the injury. Blau v. City of Los Angeles, 32 Cal.App.3d 77, 84-85, 107 Cal.Rptr.727 (1973); Marin v. City of San Rafael, 111 Cal.App.3d 591, 595, 168 Cal.Rptr. 750 (1980); McMahan's v. Santa Monica, 146 Cal.App. 3d 683, 699, 194 Cal.Rptr. 582 (1983).

The Locklin and Bunch decisions addressed damage caused by flood control and surface drainage facilities. In formulating the new rule, the California Supreme Court focused on fairness and held "it would be unjust to impose liability on an owner for the damage attributable in part to runoff from property owned by others." Locklin, 7 Cal.4th at 338. However, it remains to be seen whether the California courts will extend this concept of fairness to other types of inverse condemnation cases.

In Ellis v. State of California, 48 Cal.App.4th 1334, 51 Cal.Rptr.2d Adv. 458 (1996) (review granted and dismissed - and thus uncitable under the California Rules of Court), the California Supreme Court had an opportunity to apply comparative fault principles outside the context of flood control or surface drainage cases. In that case, a landslide damaged private hillside property, the jury allocated responsibility among two public entities, the property owners, and other unspecified persons. The court of appeal held that both public entities were jointly liable for all the damage without any offset for the owners' share of fault. The court reasoned that apportionment of fault would be inconsistent with pre-Locklin cases holding public entities strictly liable, regardless of fault, for physical damage caused by public works other than flood control and surface drainage projects. See also Clay v. Missouri Highway and Transportation Commission, _ S.W.2d _, 1997 Mo. App. Lexis 1203 (1997). That reasoning is open to question because California applies comparative fault to strict liability in other areas, such as products liability, based on fairness. Daly v. General Motors Corp., 20 Cal.3d 725, 742, 144 Cal.Rptr. 380, 575 P.2d 1162 (1978). However, in Ellis, the California Supreme Court declined to decide whether comparative fault applied under the facts of that case and dismissed the petition, without discussion, as "improvidently granted."

Ironically, a U.S. district court, applying Illinois law, relied on pre-Locklin California law to hold that comparative fault does apply in inverse condemnation cases. Warner/Elektra/Atlantic Corp. v. County of Dupage, 771 F.Supp. 911 (N.D. Ill. 1991). Although that case involved flood damage, the court did not limit its holding to any particular type or cause of damage. The district court quoted Aetna Life & Casualty Co. v. City of Los Angeles, 170 Cal.App.3d 865, 216 Cal.Rptr. 831 (1985), for the proposition that inverse condemnation "has its roots in the principles of tort and property law," and Granone v. County of Los Angeles, 231 Cal.App.2d 629, 42 Cal.Rptr. 34 (1965), which commented that "the taking or damaging of private property without compensation first being paid is in the field of tortious action." The district court also relied on County of San Mateo v. Berney, 199 Cal.App.3d 1489, 245 Cal.Rptr. 738 (1988), which held that a public entity is entitled to equitable indemnity against the contractor who defectively constructed the damage-causing public improvement. On the basis of these authorities, the district court concluded that inverse condemnation theory is consistent with apportioning fault and shifting liability to the party who is actually at fault in causing the damage.

The Seventh Circuit Court of Appeals affirmed on review in Warner v. County of Dupage, 991 F.2d 1280 (7th Cir. 1993). The Seventh Circuit noted that the Illinois Constitution, like the California Constitution, prohibits the taking or damaging of private property, thus establishing tort-like liability for accidentally caused damage. Accordingly, the Seventh Circuit reasoned that comparative fault principles apply, just as they do in other damages cases. It pointed out that the great majority of jurisdictions, including California, Albers v. County of Los Angeles, 62 Cal.2d 250, 42 Cal.Rptr. 89 (1965), impose a duty on the property owner to mitigate inverse condemnation damages, thereby precluding liability against the public entity for any increase in damages attributable to the property owner's fault. There is no reason to distinguish between the owner's fault in making the damage worse after the onset (mitigation) and the owner's fault in creating the damage in the first instance (comparative fault). Both involve an apportionment of fault and an offset against the public entity's liability.

Public entities should argue that comparative fault principles apply to all inverse condemnation actions. The opposite rule penalizes public entities, at taxpayers' expense, for the wrongful conduct of others. When property or conduct outside the public entity's ownership or control contributes to the damage, fairness requires that the public entity not be liable beyond its proportionate share. Charging public entities with liability for damage beyond that which the public undertaking caused can drain public resources and discourage them from undertaking important public works projects. How can a public entity anticipate the costs associated with a project and manage the risk if it can be liable for any other contributors beyond its control?

The notions of equity underlying American Jurisprudence militate against permitting a property owner to obtain compensation without being accountable for his or her own contribution to the problem. The costs of a public work will be distributed evenly within the community, and the owner of the damaged property will not bear more than his or her proper share if the public entity's liability is limited to the portion of the damage caused by the public undertaking. Most jurisdictions already allow an offset for a property owner's failure to mitigate the damage, and there is no reason for a different rule with respect to comparative fault.