In Cobb v. City of Stockton, (— Cal.Rptr.3d —-, Cal.App. 3 Dist., January 26, 2011), a court of appeal considered whether a property owner’s claim for inverse condemnation was barred by the statute of limitations. The court of appeal held the property owner’s claim was not barred by the statute of limitations because his claim did not accrue until the city’s occupation of his property became wrongful, which did not occur until after the city’s eminent domain proceeding was dismissed.
The City of Stockton (“City”) filed an action in eminent domain on October 23, 1998, to acquire a parcel of property owned by the Andrew C. Cobb 1992 Revocable Trust (“Trust”) because City wanted to build a roadway. City deposited $90,200 with the trial court as probable just compensation for the Trust’s property. The trial court granted City prejudgment possession of the property on December 31, 1998. Michael Cobb (“Cobb”), the successor trustee of the Trust, withdrew the $90,200 deposit and City constructed the proposed roadway.
The trial court dismissed the eminent domain action on October 9, 2007, because the matter had not been brought to trial within five years. On March 14, 2008, Cobb filed an action for inverse condemnation against City. The trial court dismissed Cobb’s action on the ground that it was barred by the statute of limitations.
Cobb asserted the trial court erred in dismissing his lawsuit because his claim was timely filed. Cobb argued his claim did not accrue when City first took his property but instead when the taking became unlawful, which was when the eminent domain action was dismissed without a new eminent domain action being filed. The court of appeal agreed.
The court of appeal determined that the primary question was whether Cobb’s cause of action accrued in 1998 when City took possession of the property or in 2007 when City abandoned the eminent domain action. When City obtained possession of the property in 1998, that possession was pursuant to a court order. The court of appeal held that Cobb’s action did not accrue until the possession was no longer permissive.
If the action was one for trespass, which has a three-year statute of limitations, the property owner could not maintain an action while an eminent domain action was pending because a court order authorizes the occupancy by the City. The three-year statute of limitations could not begin to run until the occupancy was no longer permissive which occurred when the City dismissed the eminent domain action in 2007.
Cobb also could not have maintained an action to recover real property, which has a five-year statute of limitations, prior to the City’s dismissal of the eminent domain action. The City did not possess the property at issue under a claim of right, which is a required element for a claim of prescriptive easement or adverse possession, while the eminent domain action was pending. The court’s order of possession had only given the City a temporary right of occupancy. The court of appeal found that “[i]t was only after that temporary right expired, with dismissal of the eminent domain action, that the applicable statute of limitations began to run.”
Because Cobb filed the lawsuit “less than a year after the trial court dismissed the eminent domain action, the action was timely,” and the trial court erred in dismissing Cobb’s inverse condemnation action.
This case demonstrates the dangers faced by a public entity if it dismisses a pending eminent domain action especially if it has occupied or used the property. Absent a settlement with the owner, the entity could face an action for damages, and could have to pay the owner’s attorney fees and costs as a part of any inverse condemnation judgment.
If you have any questions concerning the content of this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.