Eminent Domain From Both Sides: What Representing Condemning Agencies And Property Owners Has Taught Me

Most eminent domain lawyers tend to develop their practices on one side of the aisle. Some primarily represent public agencies and utilities acquiring property. Others primarily represent property owners and businesses facing condemnation. My practice has developed differently. For more than two decades, I have regularly represented both. I have represented public agencies and utilities acquiring property for major infrastructure projects, and I have represented property owners and businesses seeking just compensation when their property is taken or affected by those projects. People occasionally ask whether representing both sides creates conflicting perspectives. I think the opposite is true. Understanding how the other side evaluates a case can make you a much more effective advocate for the client you represent. Here are some of the things that experience has taught me.

1. THE VALUE OF THE PROPERTY TAKEN MAY NOT BE THE MOST IMPORTANT NUMBER

One of the first things people naturally focus on in an eminent domain case is the value of the land being acquired. In a partial taking, however, that may be only one component of the case. The acquisition can affect access, parking, circulation, visibility, development potential, utility configuration, or the highest and best use of the remaining property. Depending on the circumstances, those impacts—and the resulting claim for severance damages—may become more significant than the value of the property physically acquired. Representing property owners makes it easier to recognize these issues when advising condemning agencies. Representing condemning agencies, in turn, provides perspective about which claimed impacts are likely to be compensable and which may not be.

2. AN APPRAISAL IS THE BEGINNING OF THE ANALYSIS, NOT THE END

Eminent domain cases often begin with an appraisal. But an appraisal necessarily depends on assumptions, and candidly, are somewhat subjective. What is the larger parcel? What is the highest and best use? What development is reasonably probable? What property rights are actually being acquired? What impacts does the project have on the remainder? Which impacts are legally compensable? If an important legal or factual assumption is wrong, a strong appraisal can still produce the wrong answer. Some of the largest valuation differences I have encountered did not result from appraisers disagreeing about a capitalization rate or comparable sales. They resulted from the parties starting with fundamentally different views of the property and the legal rights involved. That is why experienced eminent domain counsel should be involved in the valuation process early.

3. DEVELOPMENT POTENTIAL CAN CHANGE EVERYTHING

A property’s existing use does not necessarily tell the entire valuation story. California eminent domain valuation can require consideration of a property’s highest and best use and reasonably probable development potential. That can create substantial disagreements. Property owners may see future development value that an agency believes is speculative. Agencies may rely heavily on existing conditions while overlooking entitlements, zoning, assemblage possibilities or other evidence affecting highest and best use. I’ve encountered this issue from both directions. The important question is not which side has the more optimistic view. It is what the evidence and applicable valuation law actually support.

4. AGENCIES SOMETIMES ACQUIRE MORE THAN THEY NEED

One issue I pay particular attention to when representing public agencies is whether the project truly needs all of the property rights initially proposed. Does the agency need fee ownership? Would a permanent easement work? How broad must the easement be? What temporary construction rights are actually necessary? Could modifying the property interest reduce damages without compromising the project? Those questions can materially affect compensation and right to take challenges. Representing owners reinforces this lesson. When you see how significantly an unnecessarily broad acquisition can affect the remaining property, you become much more sensitive to defining the property rights correctly at the beginning of a public project.

5. PROPERTY OWNERS SOMETIMES OVERESTIMATE WHAT EMINENT DOMAIN COMPENSATES

The reverse is also true. A public project can unquestionably affect a property or business without every impact being compensable under eminent domain law. Owners understandably look at the practical consequences of a project, and may assume they are entitled to be paid for every impact. The legal analysis asks an additional question: which of those consequences are compensable? Issues involving project influence, access, licenses, business goodwill, temporary inconvenience, contractual rights and other claimed damages can produce very different legal results depending on the circumstances. My experience representing agencies helps me give property-owner clients a realistic assessment of those issues early rather than building a case around damages that may ultimately be excluded.

6. THE BEST EMINENT DOMAIN STRATEGY OFTEN BEGINS BEFORE LITIGATION

Some of the most important work in an eminent domain matter occurs before a complaint is filed. For agencies, that can mean identifying title problems, defining the correct property interest, evaluating potential severance damages, coordinating environmental and acquisition strategy and making sure the appraisal rests on sound assumptions.  Getting a quick, cheap appraisal that does not fully evaluate impacts just leads to getting negotiations off on the wrong foot with the owner. 

For owners, it can mean understanding the proposed acquisition, identifying impacts on the remainder, evaluating development potential, preserving business information and determining whether the agency’s appraisal has captured the property’s true characteristics. It may also be the only window to work with the agency on design changes that could minimize impacts and save both parties the time and expense of litigation.

Early analysis can narrow disagreements substantially. It can also reveal solutions that disappear once litigation positions harden.

7. NOT EVERY VICTORY REQUIRES A TRIAL

I am a trial lawyer. I enjoy trying eminent domain cases. But the objective isn’t to try cases. The objective is to obtain the best result for the client. Sometimes that requires a jury, or sometimes it means mediation or arbitration. Other times it requires a legal issues motion that fundamentally changes the valuation case, or perhaps it means modifying the property rights being acquired. Experienced eminent domain attorneys can identify a reasonable solution before the parties spend several years litigating. Knowing how the other side is likely to evaluate risk can be particularly useful in those situations.

PERSPECTIVE MAKES BETTER ADVOCACY

Representing both sides of eminent domain has reinforced something I believe strongly: understanding the other side’s case does not weaken your advocacy. It strengthens it. When I represent an agency or utility, I want to understand the strongest case the property owner can make. When I represent a property owner or business, I want to understand the strongest argument available to the condemning agency. That is usually where the real issues become clear. And once you identify those issues, you can focus the case on what actually matters: securing the best overall outcome for your client.