The typical subrogation case usually goes something like this: duty, breach, causation and damages. Once in a while, a contract with the adverse party provides a greater or better description of the duty, or a violation of a statute or code by the adverse party indicates negligence per se. Often there are issues of contributory negligence, and the subrogating insurer is almost always limited to the usual rules of tort damages. But occasionally the adverse party is a government entity, and the insured suffers damage as part of the “normal” operation of municipal business. If so, the unique claim of inverse condemnation may be available.
Inverse condemnation arises when private property is “used” as part of a public works project. While eminent domain compensates a private party for property to be taken for a project, inverse condemnation compensates a private party for property damage after the fact. They are two sides of the same coin: both the California and U.S. Constitution prohibit the taking of private property for government or public use without just compensation.
Because inverse condemnation is a Constitutional claim, it is not subject to the claims limitations period of the Government Tort Claims Act in California. The damages available are far broader than traditional tort damages. Importantly, liability is nearly strict (one needs only to prove that the property was taken or damaged for public works), and contributory negligence of the insured is not a defense.
Inverse condemnation only arises under limited circumstances, but it is a powerful tool when it is available. For a case study and complete description of one of our recent successes, click here.