City of Oroville v. Superior Court of Butte Cnty.

• Decision Date: 15 August 2019
• Docket Number: S243247
• Citation: 446 P.3d 304,250 Cal.Rptr.3d 803,7 Cal.5th 1091
• Court: California Supreme Court
• Parties: CITY OF OROVILLE, Petitioner, v. The SUPERIOR COURT OF BUTTE COUNTY, Respondent; California Joint Powers Risk Management Authority et al., Real Parties in Interest.

7 Cal.5th 1091

446 P.3d 304

250 Cal.Rptr.3d 803

CITY OF OROVILLE, Petitioner,

v. The SUPERIOR COURT OF BUTTE COUNTY, Respondent;California Joint Powers Risk Management Authority et al., Real Parties in Interest.

S243247

Supreme Court of California.

August 15, 2019

Peters, Habib, McKenna & Juhl-Rhodes, Mark A. Habib, Lia M. Juhl-Rhodes, Chico; Colantuono, Highsmith & Whatley, Michael G. Colantuono, Jennifer L. Pancake, Pasadena; Cota Cole & Huber, Cole Huber and Scott E. Huber, Roseville, for Petitioner.

Michael N. Feuer, City Attorney (Los Angeles), Blithe Smith Bock and Timothy McWilliams, Assistant City Attorneys, for League of California Cities, California Joint Powers Insurance Authority, Public Entity Risk Management Authority, California Special Districts Association, California Association of Joint Powers Authorities and California Sanitation Risk Management Authority as Amici Curiae on behalf of Petitioner.

No appearance for Respondent Superior Court.

Gibbons & Conley, A. Byrne Conley and Peter A. Urhausen, Pleasant Hill, for Real Party Interest California Joint Powers Risk Management Authority.

Berding Weil, Jordan M. Rojas and James O. Devereaux, Walnut Creek, for Real Parties in Interest Timothy G. Wall, Sims W. Lowry and William A. Gilbert.

Meyers, Nave, Riback Silver & Wilson, John Bakker, Oakland, and Kenton L. Alm for California Association of Sanitation Agencies as Amicus Curiae on behalf of Petitioner and Real Party in Interest.

Opinion of the Court by Cuéllar, J.

A dental practice suffered damage when raw sewage began spewing from the toilets, sinks, and drains of its building. The resulting damage triggered the inverse condemnation claim — an action to recover damages for injuries to private property caused by a public improvement — at the heart of this case. The dentists contend the City of Oroville (the City) is legally responsible for the property damage, because it was caused by the sewer system’s failure to function as intended. According to the dentists, the failure was manifest when the system allowed sewage to back up into their building instead of siphoning the waste away from their private property. The City maintains the damage occurred because the dentists failed to install a legally-required backwater valve that would have prevented sewage from entering their building in the event of a sewer main backup.

What we conclude is that the Court of Appeal erred in finding the City liable in inverse condemnation. The appellate court reached this decision without addressing a fundamental question: whether the inherent risks associated with the sewer system — as deliberately designed, constructed, or maintained — were the substantial cause of the damage to the private property.

Public entities are not strictly or otherwise automatically liable for any conceivable damage bearing some kind of connection, however remote, to a public improvement. To succeed on an inverse condemnation action, a plaintiff must ordinarily show — assuming the public entity made reasonable assumptions about the public improvement in question — that the damage to private property was substantially caused by inherent risks associated with the design, construction, or maintenance of the public improvement. That’s certainly not something the dentists were able to show in this case, where installation of a backwater valve on their premises not only would have prevented or drastically mitigated the risk of damage, according to experts, but was legally required. Under the circumstances, the City is not liable in inverse condemnation, so we reverse the judgment of the Court of Appeal.

I.

Raw, untreated sewage from the City of Oroville’s sewer main backed up into a private sewer lateral in December 2009, invading the sinks, toilets, and drains of a local office building. Located at 3579 Oro Dam Boulevard, the building was owned by three dentists doing business as WGS Dental Complex. The dentists, individually and doing business as WGS Dental Complex (collectively WGS), filed claims against their insurer, The Dentists Insurance Company (TDIC). WGS sued the City for inverse condemnation ( Cal. Const., art. I, § 19 ) and nuisance for losses it claimed were not covered by insurance. And TDIC filed a complaint in intervention for negligence, nuisance, trespass, and inverse condemnation. The City filed a cross complaint against WGS for its failure to ensure a backwater valve was properly installed on their private sewer lateral, alleging violation of the Oroville Municipal Code, public nuisance, strict liability, and negligence.

The City moved for summary judgment on WGS’s claims, citing WGS’s failure to install the backwater valve. WGS opposed the City’s motion, asserting it had no role in constructing the building and was unaware of any issue with the backwater valve until the sewage backed up into the building and alleging the City’s intentional plan of maintenance of the sewer main allowed a blockage to form. The trial court denied the City’s motion, and stated, "[I]t appears that either prevention of the blockage or installation of the backflow prevention device could have prevented the damage. The relative importance of these two factors in causing the damage will be something for the trier of fact to decide."

WGS then sought judicial determination of the City’s liability for inverse condemnation under Code of Civil Procedure section 1260.040 ( section 1260.040 ), deferring the issue of damages.¹ After WGS and the City reasserted the positions advanced at summary judgment, the trial court took judicial notice of most of the documents submitted in the summary judgment proceedings. On July 25, 2014, the trial court found the City liable in inverse condemnation.

The City presented evidence that the sewer on Oro Dam Boulevard was built and operates as a gravity-driven system, in which sewage flows downhill to a sewage treatment plant. Manholes provide points of access to the sewer main for maintenance and the sewer system is designed for sewage to escape through the manhole immediately upstream of a sewer main line blockage. WGS’s private lateral sewage line connects to the main sewer line between manhole numbers JJ10 and JJ11. The City found evidence of a partial blockage in the sewer line between manholes JJ10 and JJ11 on December 29, 2009, the date of the sewage backup into the WGS building.

The City also submitted evidence that it enacted Oroville Ordinance No. 1450 in 1984, which adopted the 1982 Uniform Plumbing Code. This ordinance required property owners to install backwater valves on private sewer laterals where the fixtures on the property are lower than the elevation of the next upstream manhole of the public sewer. Backwater valves are installed to prevent sewage from entering buildings during sewer main line backups. WGS acquired its building when it was under construction in 1985, after the City enacted Oroville Ordinance No. 1450. In 1986, the City inspected the construction and issued a "Certificate of Occupancies" to the dentists. At the time of the sewage backup, WGS had no backwater valve installed on its private sewer lateral. According to the City’s experts, the sewage that backed up in the sewer line between manholes JJ10 and JJ11 would have ordinarily spilled out of the next upstream manhole. Instead, on December 29, 2009, the sewage exited through the sink and toilet fixtures at WGS’s offices because WGS had no backwater valve on its private sewer lateral.

WGS offered its own expert testimony. Its expert conceded that the sewage backup incident could have been averted if a fully functional backwater valve had been installed on WGS’s building. This expert further testified that backwater valves don’t always work to perfection, because certain backwater valves can be inadvertently damaged during routine sewer cleaning, diminishing the valve’s capacity.

After considering the evidence, the trial court found that WGS submitted sufficient evidence to establish the following facts: there was a blockage in the City’s sewer main; the blockage was most likely caused by roots; the blockage resulted in sewage backup in WGS’s offices; and the backup caused damage to WGS’s property. The trial court stated these basic facts were not in dispute, and the only issue for determination on the section 1260.040 motion was the legal responsibility for the damage that resulted from the sewage backup.

The court then concluded that an inverse condemnation had occurred even though the City shared causal responsibility for the damage with WGS. The "primary cause of the blockage," the court found, was root intrusion in the sewer main and "a significant secondary cause of the damage" was WGS’s failure to install a backwater valve on their private sewer lateral, "a necessary part of the sewer design and plan." Citing California State Automobile Assn. v. City of Palo Alto (2006) 138 Cal.App.4th 474, 41 Cal.Rptr.3d 503 ( City of Palo Alto ), the trial court held it was constrained to find the City liable in inverse condemnation because one of the causes of damage was root blockage, which was described in City of Palo Alto as an inherent risk of sewer operation.

Petitioning the Court of Appeal for a peremptory writ of mandate, the City presented three arguments. First, the deliberate design and construction of the sewer system was not the cause of the damages. Second, WGS’s failure to install and maintain the legally required backwater valve defeated the deliberate design and construction of the sewer system. And third, the City claimed to have acted reasonably in operating and maintaining its sewer system.

WGS argued that the trial court was correct in finding the City liable in inverse condemnation. TDIC assigned its intervention rights to the California Joint Powers Risk Management Authority (the Authority), a risk-sharing pool comprised of public entities, including the City of Oroville. Appearing as a real party in interest, the Authority...