Eminent Domain: Litigation Expense Properly Denied To Condemnee Who Accepted Condemnor Caltrans’s Final Offer Of $5,500 Before Trial In Settlement, Only $500 Less Than Condemnee’s Final Settlement Demand

Small Differential Led Appellate Court Majority To Affirm Trial Court’s Litigation Expense Denial, While Concurring Justice Should Hold That Acceptance Of Caltrans’s Actual Final Offer Was Reasonable As A Matter Of Law.

            In People ex rel. Dept. of Transportation v. Karimi, Case No. E069448 (4^th Dist., Div. 2 Sept. 16, 2019, posted Sept. 17, 2019) (unpublished), condemnor Caltrans sought to acquire by eminent domain a 0.29-acre portion of a vacant property in Phelan partly owned by condemnee Karimi.  Caltrans made a $2,500 deposit and obtained an initial appraisal at $1,000.  Karimi obtained an $11,000 appraisal.  However, in line with final demand and offer procedures under California’s eminent domain statutes, Karimi filed a final demand for $6,000 and Caltrans filed its final offer of $5,500.  At a mandatory settlement conference on the eve of trial, Karimi and co-owners accepted Caltrans’s $5,500 offer (which included statutory interest to the condemnee and his co-owners).  Karimi and co-owners filed a motion for litigation expenses under CCP § 1250.410 based on the theory that Caltrans’s initial appraisal and deposit were too low when compared with the final settlement judgment amount of $5,500.  They sought to recoup $136,592.04 from Caltrans, with the trial court finding Caltrans’s final offer reasonable and denying the litigation expense request.

            The 4/2 DCA affirmed that denial, in a 3-0 decision with a qualifying concurring opinion by Justice Raphael. 

            The majority concluded that consideration of anything else except the final demand and offer was irrelevant as far as determining the reasonableness of Caltrans’s settlement offer.  This threshold reasonableness determination precluded looking to prior conduct.  (CCP § 1250.410(a).)  Because the differential between the final demand and offer was miniscule, condemnees’ acceptance precluded an award of litigation expenses; the eminent domain law “does not require the parties to take reasonable positions at every stage of the litigation” and “[t]he trial court was therefore not required to get into the morass of deciding whether [the parties] acted unreasonably in litigating the case before making their final positions on the amount of just compensation.”  (Slip Op., at p. 8.) 

            Justice Raphael concurred, but he found that condemnees’ acceptance of Caltrans’s final settlement offer means it was reasonable as a matter of law such that the acceptance was the “end game.”  “That there [was] no difference between the offer and the compensation awarded demonstrates that the offer was reasonable. . . . In my view, our case law should inform landowners that if you accept a final offer in an eminent domain case, you cannot obtain section 1250.410 expenses by convincing the court that the judgment to which you stipulated was unreasonable.”  (Slip Op., concurring opinion at pp. 2, 4.) 

            Both the majority and concurring opinions had troubles in following, outright, the reasoning of People ex rel. Dept. of Transportation v. Superior Court (Menigoz), 203 Cal.App.4^th 1505, 1511-1513 (2012), which held that litigation expenses may not be awarded after any settlement, absent trial actually commencing.  The majority believed they did not have to reach that far given the record showing the final settlement offer was reasonable.  The concurring justice, in a footnote, understood why Menigoz said a trial was required but recognized that there might be a reasonableness concern where the agency’s settlement offer is rejected and the parties settle for more.