What Is Inverse Condemnation and How Does It Affect a Wildfire Claim?

Posted on September 1, 2021

If the government or a public entity, including a utility company, damages your property while using it for public use or governmental interests, you could be eligible for financial compensation through an inverse condemnation proceeding. This is a type of civil action that can result from the improper use of a property for public benefit. 

If a utility company starts a wildfire on your property, for example, you could have grounds for an inverse condemnation claim in pursuit of fair financial compensation for the damage to your property. If you believe you have this type of civil lawsuit after a wildfire in California, contact Panish, Shea & Boyle LLP right away for legal assistance from a qualified California wildfire lawyer.

What Is Inverse Condemnation?

Inverse condemnation is a legal doctrine that entitles a property owner to fair financial compensation if the public use of a property damages or reduces the value of that property. Article One, Section 19 of the California Constitution states that private property may only be acquired or damaged for public use when just compensation has been paid to the owner. There are also specific requirements that must be fulfilled by the party exercising eminent domain before it can take private property for public use.

If a property owner initiates a claim of inverse condemnation, he or she is arguing that the government’s taking of the property has either 1) deprived the party of the economic value of the property or 2) failed to promote substantial governmental interests. An inverse condemnation case could be brought if the government did not use the proper procedures for condemnation, did not provide an adequate amount for the value of the property or if the government’s actions damaged the property.

Eminent Domain vs. Inverse Condemnation

The law of eminent domain allows a government or public agency to take property for the purpose of economic development or public improvement. The right of eminent domain is given to the government by the Fifth Amendment of the Constitution. If an agency uses the right of eminent domain to acquire or use private property, the process is known as condemnation.

In exchange for the property used or acquired, the government must provide just compensation to the private property owner, business or local agency in an amount that equals the property’s fair market value. The property owner has the right to argue the amount given if he or she believes the property is worth more, in which case a court will determine fair value. This is referred to as the right to initiate inverse condemnation. The “inverse” part is because this type of claim is initiated by the property owner, not the condemner.

Inverse Condemnation and Wildfire Claims

If your property was damaged by a wildfire that was started by an electric or utility company in California, you may have grounds to file a claim in pursuit of financial compensation for the damage to your property. You could have the right to file an inverse condemnation claim to recover the costs of your associated losses from the agency or company with eminent domain. Even if a government agency did not physically take or purchase your property, you could be eligible for compensation if the government caused tangential harm to the property and related losses. 

According to the law, entities that are subject to inverse condemnation claims include the government, public agencies, municipally owned public utilities and investor-owned utilities. If a utility company, such as an electric company, is responsible for causing a wildfire, financial compensation (also known as damages) can be sought by the owner of the property through inverse condemnation. This is a liability risk that comes in exchange for the power of eminent domain. 

When Can You Bring an Action for Inverse Condemnation?

An inverse condemnation case invokes the doctrine of strict liability. Fire damage is a compensable loss if it was caused by the use of a property for public improvement – whether or not the fire damage was foreseeable and in the absence of fault by the public entity. In other words, the filing party does not have to prove the public entity is at fault in causing the wildfire to be eligible for financial compensation. It is only necessary to prove that the government’s use of the property resulted in property damage. 

In previous cases, the courts have also held that the strict liability doctrine can apply to cases involving privately owned utilities. In Barham v. Southern California Edison Company, the California Supreme Court held that there was no significant difference between a publicly owned and privately owned electric utility for the purpose of inverse condemnation. The Court held that both types of utility companies can be held liable for damages caused by a wildfire in California.

Recent Attempts To Change Wildfire Liability Rules

There have been multiple attempts to change the rules surrounding wildfires and inverse condemnation in California. For example, investor-owned utility companies have argued to reduce the liability rules from strict liability to the reasonableness rule. The reasonableness rule requires a plaintiff to prove that property damage was caused by unreasonable conduct on the part of the defendant. In addition, former California Gov. Jerry Brown proposed changes that would allow the courts to assign fault for a wildfire to multiple parties. 

These types of liability changes are viewed as unconstitutional for a few different reasons. First, they violate the constitutional right of an individual to receive just compensation for damage to a property that is under condemnation. Second, legislature does not have the legal authority to substitute how they interpret the constitution for how the courts interpret it. Such changes would overcomplicate the legal process and give utility companies the ability to avoid liability for their actions – including actions that cause wildfires.

Contact Panish Shea & Boyle LLP About an Inverse Condemnation Claim in California

If your property was recently damaged by a wildfire in California, consult with an attorney from Panish Shea & Boyle LLP about a potential inverse condemnation claim. You may be entitled to just compensation for the wildfire damage to your property. Our lawyers can review your case at no charge, further explain the rules of inverse condemnation and help you with the legal process. We offer free consultations at multiple offices located throughout California. Call (805) 210-8528 or contact us online today to request yours.

How Can We Help You?

If you have a legal matter you would like to discuss with an attorney from our firm, please call us at (310) 477-1700 or complete and submit the e-mail form below, and we will get back to you.

  • This field is for validation purposes and should be left unchanged.
  • This field is for validation purposes and should be left unchanged.
*Required Fields