This seems like common sense, but a public agency cannot pursue an inverse condemnation cause of action for damages suffered from its own public improvements. Yet that is exactly what the County of Santa Cruz recently attempted against another local public agency. The Court denied leave to amend to add an inverse condemnation cause of action and left unanswered a significant policy question on whether a public agency can pursue a claim for inverse condemnation at all, or whether inverse condemnation only applies to damages to private (not public) property.
Background
In County of Santa Cruz v. City of Santa Cruz, the County sued the City for costs the County incurred for emergency repairs to a portion of Capitola Road. The repairs allegedly resulted from City water that flowed from a creek, through drainage pipes which ultimately undermined the support under the road. The road and drainage pipes were planned and constructed by the County. But the County alleged that the City was responsible for the damage to the road due to the City's failure to maintain the drainage pipes.
The County's numerous tort claims were dismissed because the County failed to timely file a government claim. However, inverse condemnation claims are not subject to the government claims requirement, so that would not be a basis to deny leave to amend. But the trial court denied leave to amend to add the inverse condemnation cause of action, concluding that such claims apply to damage to private property – not public property. The court's reasoning was that "inverse condemnation liability is based on the view that a private party 'should not be required to bear a disproportionate share of the costs of a public improvement.'"
Appellate Decision
Unfortunately, the Court of Appeal dodged the question as to whether a public entity may allege a cause of action for inverse condemnation, instead determining that the County's inverse condemnation action would have failed on other grounds. The Court explained that in order to state a cause of action for inverse condemnation, the plaintiff must allege that a public improvement was the substantial cause of damage to property.
- Public Project: With respect to a public improvement, the Court explained that the plaintiff must allege that the public agency "substantially participated in the planning, approval, construction, or operation of a public project or improvement". Where there is no deliberate action or substantial participation in a public project, such as merely owning undeveloped land, or a tree falling and damaging a home, inverse condemnation is not applicable.
- Causation: With respect to causation, the Court explained that the plaintiff must show that the damage to property was substantially caused by the inherent risks associated with the design, construction, or maintenance of the public improvement. In other words, damages must have followed in the normal course of subsequent events and been predominantly produced by the improvement, although intent or negligence are not necessary elements.
As applied to the circumstances here, the Court found that even if leave to amend was granted the County's cause of action would have failed because it was the County – not the City – that planned and constructed the road, as well as the underlying culvert and drainage pipes. The County could not identify a public improvement that the City substantially participated in that caused the County's damages; simply failing to regulate water flow from a natural creek is not sufficient. The Court found that there were no allegations in the proposed amended complaint, for example, indicating that the parties entered into an agreement in which the City agreed to assume maintenance obligations for the road and the drainage pipes, which were planned, constructed, and owned by the County. And even if the City had a maintenance obligation, general allegations of the City's maintenance failures were insufficient – there needs to be a faulty plan involving the maintenance.
Take-Aways
Unfortunately, the Court left unanswered whether inverse condemnation claims can apply to damage to public property. My sense is yes, they can, and some older California cases make such a finding. But the decision serves as a helpful reminder that public agencies designing or constructing public improvements, and then turning them over to another public agency, should be careful to document in writing how the responsibility for maintenance and control of such public improvements will be allocated among the agencies involved.
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