28 Mar Inverse Condemnation, Public Utilities, and Comic Books: POW! BLAM! ZAP!

Sullivan, Workman & Dee, LLP recently settled an inverse condemnation lawsuit against a public utility that included payment of significant just compensation to our clients for such varied items as classic comic books, vinyl record albums, graffiti art, and DJ musical equipment. The firm’s clients filed the lawsuit based on an apartment building fire that originated from the public utility’s adjacent power transformer. The failing transformer generated a fireball that damaged or destroyed our clients’ apartment units and contents. Ash and smoke also permeated the complex, requiring specialized restoration cleaning and asbestos abatement.

So, why is this inverse condemnation?

The takings provision of the California Constitution has been interpreted by our Supreme Court to include any actual physical injury to real property proximately caused by a public improvement as deliberately designed and constructed whether foreseeable or not. As a result, damage caused by the public improvement as deliberately conceived, altered or maintained may be recovered under inverse condemnation and the presence or absence of fault is ordinarily irrelevant.

More specifically, liability for inverse condemnation has been extended by the courts to fires caused by a public utility’s power lines. The fact that the public utility is a privately owned company does not shield it from liability for inverse condemnation. As a result, the firm argued that the public utility was liable to our clients in inverse condemnation for the damages caused by its failing transformer. Under California law, that liability in inverse condemnation not only includes the payment of just compensation for all items damaged or destroyed, but also litigation expenses such as attorney and appraiser fees.

At mediation, the firm presented extensive appraisal evidence to establish the fair market value of the personal property damaged or destroyed by the fire including such unique items as classic comic books, vinyl record albums, graffiti art, and DJ musical equipment. The public utility initially offered $0 based on inverse condemnation liability. The case settled for over $1,257,000.