We recently reported on the California Supreme Court’s decision in Oroville which provided a relaxed standard for public agencies facing inverse condemnation claims.  Since that decision, a new unpublished Court of Appeal decision provides further guidance and supports the “reasonableness” analysis considered in Oroville, although in this case the decision was not as favorable to public entities with respect to determining whether the damage is caused by a public or private improvement.

Perks v. City of San Diego (2019 Cal. App. Unpub. LEXIS 6177 (Cal. 4th Dist. Ct. App.)) involved erosion and flood damage to a home allegedly caused by a storm drainage system that collects neighborhood surface water from the public street, then discharges to the backyard of the plaintiff’s home via an underground pipe.  The home owner brought a lawsuit against the City alleging a number of theories, including on inverse condemnation.  The Defendant City of San Diego (“City”) claimed it was not liable because although it owns the portion of pipe in the street, it does not own or directly maintain the portion of pipe that ultimately discharges surface water from the public storm drain system onto plaintiff’s property.

The Superior Court granted the City’s motion for summary judgment on the inverse condemnation claim based on the argument that the City neither owns nor maintains the portion of the pipe where the flooding occurred.

On appeal, the Court of Appeal relied on Skoumbas v. City of Orinda, 165 Cal.App.4th 783 (2008) and held that the City was not entitled to summary judgment.  That case involves similar facts, and in that case the held that “the mere fact that a portion of a storm drain system may be privately owned . . . does not immunize a public entity from liability for erosion damage caused by the remaining publicly owned portions of the storm drain system.”  The Skoumbas court had previously rejected a similar argument “for some type of whole ownership rule” requiring “that an entire drainage system must be a public improvement in order to find a government agency liable in inverse condemnation for downstream damage caused by diverted surface water.”  Instead, the court explained that “the relevant question is whether the City’s ownership, operation or control of [a portion of] the improvements . . . were unreasonable or posed an unreasonable risk of harm to plaintiffs, and whether the City’s unreasonable conduct was a substantial cause of the damage to plaintiff’s property.”

In reaching that conclusion, the Skoumbas court and the court here distinguished a similar case DiMartino v. City of Orinda, 80 Cal.App.4th 329 (2000). The DiMartino case involved similar facts, but differed in that the privately-owned portion of the pipe in that case served an exclusively private purpose, serving only the defendant’s property.  By contrast, here the private portion at issue was part of a larger system that discharged surface waters for the entire surrounding neighborhood.

Accordingly, the Perks court held that “because the City did not establish undisputed facts showing it acted reasonably with respect to the City-owned portions of the storm drain system, the City was not entitled to judgment as a matter of law on Plaintiffs’ causes of action for inverse condemnation.”

The case further supports the reasonableness analysis, which is a positive for public agencies.  However, the case leaves open further issues for public agencies on how to address improvements that jointly serve both public and private purposes.   We expect the law on inverse condemnation to continue to evolve over the next several years.