Today’s unanimous opinion in Town of Apple Valley v. Apple Valley Ranchos Water, resolves a conflict in the Courts of Appeal over what standard governs when a privately owned utility challenges a public entity’s attempt to condemn its property.
Under California’s Eminent Domain Law, a public entity that wants to take over a private utility must adopt a resolution of necessity, which creates a rebuttable presumption that the taking serves the public interest. The question presented in this case is, when the utility challenges the taking, must the trial court defer to the public entity’s findings of necessity? The court holds that the trial court must determine by a preponderance of the evidence whether the utility owner has rebutted the statutory presumptions that the taking is necessary and that public ownership would be a more necessary public use.
The Town of Apple Valley filed an eminent domain action in 2016 seeking to take over its local water utility, then newly acquired by Liberty Utilities. After a bench trial, the trial court found that Liberty rebutted the statutory presumptions and that the Town lacked the right to take the system. The Fourth Appellate District, Division Two, reversed, holding that the trial court should have applied the gross abuse of discretion standard and deferred to the Town’s resolutions of necessity. The Supreme Court now reverses the Court of Appeal.
The opinion distinguishes between a challenge to the validity of the resolution of necessity—governed by section 1245.255’s gross abuse of discretion standard—and a challenge to the public entity’s right to take under sections 1250.350–1250.370. Because the 1992 amendments designated the utility presumptions as “presumption[s] affecting the burden of proof,” the court reasons that the Legislature contemplated a factfinding proceeding governed by the default preponderance of the evidence standard (Evid. Code, § 115), not deferential mandamus-style review of the public entity’s administrative findings preceding its adoption of its resolution.
The court rejects the Town’s arguments that this approach raises separation-of-powers concerns or renders resolutions of necessity meaningless, observing that the Legislature is free to define the scope of judicial review in eminent domain proceedings and that the Town’s policy objections are “best directed to the Legislature.” And the court explains that the Town’s proposed approach is “unworkable”: layering gross abuse of discretion review onto the rebuttable evidentiary presumptions would nullify them, since a utility owner who disproved a required element by a preponderance could still lose because some substantial evidence supported the public entity’s finding.
Horvitz & Levy was counsel of record for Liberty Utilities in the Supreme Court.
