Opinion ID: 590686
Heading Depth: 2
Heading Rank: 1

Heading: Liability for the Improvements

Text: 7 The County argues that the Judgment in Condemnation Proceeding should be reversed and remanded because it cannot be held liable for the improvements it made on the condemned property. Prior to trial, the district court ruled that the County had acted in bad faith; at trial, the court instructed the jury merely to return the value of the condemned land plus the improvements placed thereon by the County. The County contends that even if an entity with the power of eminent domain can be made to pay for its own improvements if good faith is lacking, the good faith standard is a subjective one. Since this issue and the others raised by the Hammonds solely concern the law, they are reviewable by this Court de novo. United States v. McConney, 728 F.2d 1195, 1201 (9th Cir.), cert. denied, 469 U.S. 824 (1984). 8 The County filed its counterclaim for condemnation of the Hammonds' property pursuant to 25 U.S.C. § 357. That statute provides that [l]ands allotted in severalty to Indians may be condemned for any public purpose under the laws of the State or Territory where located in the same manner as land owned in fee may be condemned, and the money awarded as damages shall be paid to the allottee. The County asserts that § 357 indicates that federal law applies and that, therefore, the federal common law rule exempting entities with the power of eminent domain from paying for their own improvements in actions for condemnation is controlling. Federal law only applies, though, to ensure exclusive federal jurisdiction. Southern California Edison Co. v. Rice, 685 F.2d 354, 357 (9th Cir.1982), cert. denied, 460 U.S. 1051 (1983). State law applies to § 357 actions to determine all other substantive matters. Nicodemus v. Washington Water Power Co., 264 F.2d 614, 617 (9th Cir.1959). 9 California law is less clear than federal law as to whether the holder of the power of eminent domain must pay for its own improvements in a condemnation action. California Code of Civil Procedure §§ 871.1 et seq. (West 1980) provide that a trespassing good faith improver is entitled to a setoff for the value of its improvements. Section 871.7, however, states that these provisions do not apply where the improver is a public entity. Neither the statutory language nor available legislative comments explain why the good faith improver provision is not applicable to public entities or how such public entities should be treated. This Court concludes that the exemption means that the statutory scheme does not apply and that the Court must refer to California common law. 10 California common law in this area is rather lacking--the most recent decisions dating from 1874 and 1890. Short of any other guidance, Albion R.R. Co. v. Heeser, 84 Cal. 435 (1890) provides the clearer and more recent statement of California law on the good faith improver with the power of eminent domain and is therefore controlling. In that case, the California Supreme Court held that a railroad company with the power to condemn was not required to pay compensation to the property owner for improvements built prior to condemnation by the railroad because the railroad had a bona fide intent to commence condemnation proceedings. Id. at 440. 11 That court does not specifically state that an entity with the power of eminent domain must have acted in good faith in constructing the improvements but implies it by finding that the railroad did not positively know who owned the land and did not act as a mere tort-feasor. Id. at 436. The court also noted that the railroad should not have to pay defendant money it had expended in good faith to establish a public use. Id. at 440. Finally, in explaining why California Pacific R. Co. v. Armstrong, 46 Cal. 85 (1873) was applicable and United States v. Land in Monterey County, 47 Cal. 515 (1874) was not, the court concluded that the court through the circumstances in the one case [California Pacific ] evinced the disposition in good faith to condemn and pay a just compensation, and the other [Monterey County ] an entry by the strong hand with no such intention. Albion 84 Cal. at 440. 12 The court in Albion does not clarify whether the good faith standard is an objective as opposed to subjective one. Since § 871.1 et seq. are analogous to the issues at bar, the definition for good faith provided there is applicable. Section 871.1 defines a good faith improver as one who makes an improvement to land in good faith and under the erroneous belief, because of a mistake of law or fact, that he is the owner of the land. Cases applying this standard have found that [n]egligence on the part of the improver does not necessarily preclude all relief. The degree of negligence is a factor which should be taken into account in determining whether the improver acted in good faith and in determining the relief that is consistent with substantial justice. Powell v. Mayo, 123 Cal.App.3d 994, 999 (1981). See also Raab v. Casper, 51 Cal.App.3d 866, 872 (1975) (holding that in applying this particular legislation, good faith becomes an artificial attribute, calling for a measure of care as well as honesty). 13 Since § 871.1 et seq and California cases have defined good faith, that definition may be applied here without deciding whether the standard is technically a subjective or objective one. Under this standard, the County did not act in good faith. In an earlier decision, this Court found that the County acted in reckless disregard of the Hammonds' property rights. Hammond v. County of Madera, 859 F.2d 797, 803 (9th Cir.1988). The County continued construction of the improvements and incorporated them after the Secretary of the Interior notified the County Board in 1969 that it had no valid right-of-way for the road across the allotment. This continued construction of the offending construction in defiance of the injured owner's opposition is inconsistent with good faith. Raab v. Casper, 51 Cal.App.3d at 873. Since the County's degree of negligence, reckless disregard, is inconsistent with good faith under California law, the County is not a good faith improver and must compensate the Hammonds for the improvements constructed.