California Partition Law Blog
Yes. But it is a complex affair. Eminent Domain proceedings take on a unique structure with expert testimony as the backbone for the determination of fair market value. Neither side of the litigation has the burden of proof on this issue of just compensation, and unlike the traditional civil court case, the Defendant presents their evidence first. (Code. Civ. Proc. § 1260.210.)
Additionally, judges will often place limits on what a homeowner may testify to and can screen the witness beforehand to ensure that they’ll be employing a valid methodology on the stand. Taken as a whole, the process can be quite daunting to the layperson. This post will therefore look at the common issues and questions which arise regarding testimony in eminent domain.
The Importance of Testimony in Eminent Domain Proceedings
Special rules of evidence apply to any action in which the value of the property is to be ascertained. (Evid. Code § 810(a).) This includes eminent domain proceedings. (City of Corona v. Liston Brick Co. (2012) 208 Cal.App.4th 536, 541.)
By statute, one may establish the value of the property to be taken only through expert testimony. (Evid. Code § 813(a).) And in addition, only three types of individuals can present testimonial evidence: (1) witnesses qualified to express opinions on valuation; (2) the owner or the spouse of the owner of the property or property interest being valued; (3) an officer or employee of the business entity which owns the property, provided they are knowledgeable as to the value of the property. (Id.)
Thus, it is of critical importance that those individuals selected to testify present testimonial evidence which is admissible in a court of law. Just because testimony in eminent domain proceedings follows a unique procedure does not mean the rules of evidence do not apply. In fact, “in stating an opinion as to the value of the property, an owner is bound by the same rules of admissibility as any other witness.” (Contra Costa Water Dist. v. Bar-C Properties (1992) 5 Cal.App.4th 652, 661.)
What are the Limits on a Property Owner’s Right to Testify?
There are many limitations on what an owner may and may not testify to regarding the value of the property. To begin, it has been long acknowledged through the principles of equity that the value of a property to a homeowner cannot be adequately measured through some dollar amount. But though that may be the case, “a condemned property may not be valued based on its special value to the property owner.” (County of San Diego v. Rancho Vista Del Mar, Inc. (1993) 16 Cal.App.4th 1046, 1058.)
Plans of development, too, are rarely admissible. “Evidence of the owner’s plan of development is not admissible where its purpose is to show the loss of profit or enhanced damages which would be suffered by being prevented from carrying out a particular scheme of improvement.” (San Bernadino County Flood Control Dist. v. Sweet (1967) 255 Cal.App.2d 889, 899.)
Along those same lines, “speculative and conjectural calculations of prospective receipts and expenditures and consequent profits to be derived from a prospective enterprise throw no light on the issue of market value… and operate to confuse and mislead the mind of the jurors.” (East Bay Mun. Utility Dist. v. Kieffer (1929) 99 Cal.App. 240, 250-251.)
These restrictions represent only a small portion of the limits placed on fair value testimony, but they share a common theme. If there exists a general rule regarding eminent domain testimony, it is that “evidence that is remote, speculative, hypothetical, or conjectural is not allowed as proof of land value.” (29 Cal. Jur. 3d Eminent Domain § 240, citing People By and Through Dept. of Public Works v. Dunn (1956) 46 Cal.2d 639, 641.)
What is the Appraisal Methodologies?
Given the number of limits on valuation testimony, it is up to the courts to decide what gets through. As a general rule, an expert in a condemnation action must employ a methodology sanctioned by California law, or else their opinion will be excluded. (Inglewood Redevelopment Agency v. Aklilu (2007) 153 Cal.App.4th 1095, 1107.)
By statute, the opinion of a witness as to the value of a property is limited to such an opinion as is based on a matter… of a type that reasonably may be relied upon by an expert in forming an opinion as to the value of the property and which a willing purchaser and a willing seller… would take into consideration in determining the price at which to purchase and sell the property.” (Evid. Code § 814.) And as an additional guideline, the “property taken is valued based on the highest and best use for which it is geographically and economically adaptable.” (Rancho Vista Del Mar, 16 Cal.App.4th at 1058.)
From these general boundaries, a number of approved methodologies have arisen. The evidence code makes clear that the prior price paid for the subject property may be taken into account as a basis for an opinion, provided the purchase was in good faith and a reasonable time before or after the valuation. (Evid. Code § 815.) The code also allows for the contemplation of purchase contracts for “comparable property,” provided that comparable property is sufficiently close to the subject property and alike in character, size, situation, usability, and improvements. (Evid. Code § 816.)
But by that same token, a number of methodologies are forbidden as the basis for an expert opinion. For instance, the “developer’s approach” or “residual land value approach” as an appraisal method “has been repeatedly held inadmissible by California courts.” (Contra Costa Water Dist., 5 Cal.App.4th at 1058.)
How can the Attorneys at Underwood Law Firm, P.C. Assist You?
Eminent Domain is an immensely complicated field. Introducing evidence of fair market value is subject to so many restrictions that it can often feel overwhelming to litigants. The process is also expensive, requiring appraisers and other expert witnesses to testify and offer counter-testimony.
As each case is unique, property owners would be well-served to seek experienced eminent domain counsel. At Underwood Law Firm, P.C., our knowledgeable attorneys are here to help. If you are concerned that a public entity’s offer is too low, or if you just have questions, please do not hesitate to contact our office.
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