City’s Final Offer Was Unreasonable, While Condemnees’ Revised Final Demand Was Reasonable Because Its Demand Was The Exact Damages Award By The Lower Court.
Code of Civil Procedure section 1250.410 allows a lower court to an eminent domain case to award defendant's costs and fees where the mandated exchange of a final demand and final offer produces a reasonable demand, but an offer which the court finds to be unreasonable and not in good faith. City of Pacifica v. Tong, Case Nos. A168115 et al. (1st Dist., Div. 1 Dec. 18, 2024) (unpublished) involved the appeal of a litigation expenses award in favor of condemnees and against the City.
As with many eminent domain cases, the pivotal issue was valuation of Pacific Coast panoramic bluff side property which was subject to erosion. The City made final offers of $76,500 (never increasing the offer), even though condemnees made a first demand of $4.75 million, lowered later to $2.2 million, and lowered still to $2 million after the lower court ruled that valuation could not be based on Transferable Development Rights. City stuck to $76,500. The lower court found City’s valuation faulty, awarding $2 million to condemnees based on their appraisal expert. Then, the lower court did award most of the litigation expenses requested by condemnees to the tune of $312,920 in attorney’s fees, $11,300 in routine costs, and $48,346 in appraisal expenses. City appealed the merits and litigation expenses rulings.
The appellate court affirmed both rulings. On the $2 million merits award, although concluding that the lower court erred in its project influence factor analysis, it still found the ultimate award was supported by substantial evidence. With the respect to the litigation expenses award, the condemnees’ final demand was reasonable because it matched the lower court’s valuation award. By contrast, City’s final offer was not reasonable, because it was less than 4% of the amount awarded—with one appellate decision indicating that a final offer which is 60% or less of a jury verdict being unreasonable and that a final offer of over 85% of the award being reasonable per se, also detailing other factors to be considered for offers in the middle range. (People ex rel. Dept. of Transp. v. Yuki, 31 Cal.App.4th 1754, 1764 (1995).) City’s offer was not in good faith because (1) it was based on valuation non-comparables; (2) its offer would provide no benefit to condemnees, which owed $200,000 in back real estate taxes; and (1) it ignored that there would be value to a land banker.
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