I. SUMMARY

The California Supreme Court recently held¹ that the City of Oroville (“City”) was not liable in inverse condemnation when untreated sewage backed up into a dental office because the property owner failed to demonstrate the resulting damage was substantially caused by inherent risks in the design, construction, or maintenance of the sewer system. The Court noted that the property owner failed to install a legally required backwater valve that would have prevented the damage, and cities can reasonably design public improvements with the assumption that the improvement will function properly so long as users comply with all related legal requirements.

II. DISCUSSION

In 2009, root intrusion into the City’s sewer system cause untreated sewage to back up into the drains of a local dental office, causing significant damage. The plaintiff dentists sued the City for inverse condemnation, and the City filed a cross-complaint against the dentists for their failure to install a legally required backwater valve that it claimed would have prevented the damage. The trial court found the City liable in inverse condemnation, and the Court of Appeal affirmed. The Court of Appeal reasoned that the City’s sewer system, as it was deliberately designed, caused the damage to the dental office because it required the installation of backwater valves. If such valves were necessary to the proper functioning of the sewer, the court reasoned, then the City should have ensured compliance with the legal requirement that they be installed. The California Supreme Court granted review, and reversed.

The Court began its opinion by summarizing the basics of inverse condemnation law, which is grounded in the California Constitution. Applicable when private property is damaged by inherent dangers in a work of public improvement, a plaintiff can prevail if he/she demonstrates that the public improvement, as deliberately designed, constructed and maintained, caused the damage so long as the causal nexus between the risks inherent in the public improvement and the harm is sufficiently robust. Stated otherwise, a plaintiff can prevail in a claim for inverse condemnation if he/she can demonstrate that due to the inherent risk of the public facility as it was deliberately designed, the facility caused some reasonably foreseeable property damage. The dispute in this case centered on the issue of causation; the plaintiff dentists claimed that the blockage in the City’s sewer system caused the damage to their dental office, while the City countered that the dentists’ failure to install the legally required backwater valve was the cause.

In ruling for the City, the Court held that “a court assessing inverse condemnation liability must find more than just a causal connection between the public improvement and the damage to private property.” Here, there certainly was a causal connection between the blockage in the City’s sewer system and the damage to the dental office. But the Court clarified that more is required to prevail under an inverse condemnation theory: “The damage to private property must be substantially caused by an inherent risk presented by the deliberate design, construction, or maintenance of the public improvement” (emphasis added). Further, there is a presumption that “the public entity acted reasonably in reaching its decision to adopt a particular plan of design, construction or maintenance.”

The Court rejected the dentists’ argument that an inherent risk of a sewer system is a blockage caused by roots because the sewer system was intentionally designed with the presumption that all connecting properties would install the legally required backwater valves. If the required valves were installed in this case, the damage to the dentists’ property could have been averted. In rejecting the dentists’ theory of inverse condemnation liability, the Court held that the dentists’ argument would impose liability on the public entity “whenever a public improvement is a concurrent cause of damage to private property, regardless of whether private property owners acted to defeat the deliberate design of construction of the improvement.”

III. CONCLUSION

This case represents a clarification of the law of inverse condemnation that is very favorable to cities and other public agencies. It makes clear that the plaintiff must demonstrate the injury was caused by the inherent risks of a public improvement’s design, construction or maintenance and not merely that the improvement was one of several concurrent causes of the injury.

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¹City of Oroville v. Superior Court, 7 Cal. 5th 1091 (2019).