Court Sides With Butte County In Flood Control Suit

A Butte county landowner who claimed that flood control measures undertaken and approved by Butte County amounted to inverse condemnation had all of his arguments rejected by the Third District Court of Appeal.

The court ruled that the strict liability standard that applies in most inverse condemnation cases does not apply in the flood control context. Instead, the court determined a rule of reasonableness applied to the claims, and the landowner did not prove that the county acted unreasonably.

Developer William Hauselt purchased a 94-acre almond orchard along Highway 99 about one mile north of the Chico city limits in 1988 with the intent of developing a housing subdivision. Ten years later, Hauselt sued Butte County, arguing that actions of the county had caused flooding of his property and that the county had prevented him developing his land. He sought compensation for inverse condemnation.

Hauselt argued that the county had converted Keefer Slough, which forms the northern boundary of his property, into a major drainage facility. He pointed out that the county allowed drainage systems for the nearby Carriage Estates and Wildflower Estates subdivisions to pipe runoff into Keefer Slough. He said the county permitted the developers of those subdivision in 1992 to raise the slough's north bank above the level of the south bank, which lies on his property. He said a bridge the county built over Keefer Slough in the early 1990s increased flows because the old bridge acted as a plug. He cited the 1995 North Chico specific plan, which identified Keefer Slough as the area's primary drainage channel even though it had inadequate flood capacity. And he said the county altered the flow of storm-damaged Rock Creek in a way that increased Keefer Slough flood flows. He further argued the county had improperly prevented him from developing his land, although apparently the county rejected only one subdivision proposal.

Butte County Superior Court Judge Steven Howell ruled the county's activities were not unreasonable conduct that would result in inverse condemnation liability. Howell also found that Keefer Slough is a private watercourse and that the statute of limitations had expired for the contentions regarding the neighboring subdivisions' drainage systems. The judge did award Hauselt $1,034 for a temporary taking because the county placed material on his property to prevent flooding on a nearby street.

On appeal, Hauselt argued the trial court judge failed to decide the "central issue" of whether the county had implemented a 1979 master storm drainage plan that converted Keefer Slough and his property into a public drainage hub. The Third District said Judge Howell had in fact decided the issue and specifically stated in his ruling that the county did not adopt the plan or construct the facilities in the plan. The trial court determined the county had instead implemented a drainage system employing on-site detention ponds, such as those in the Carriage Estates and Wildflower Estates subdivisions, to slow drainage into Keefer Slough.

Hauselt further argued that the rule of strict liability applied because the matter involved flood damage resulting from a public flood control project. The Third District disagreed with this reading of the law and instead cited the state Supreme Court's ruling in Locklin v. City of Lafayette, (1994) 7 Cal.4th 327, 366: "[W]ith respect to flood control projects, the public agency is liable only if its conduct posed an unreasonable risk of harm to the plaintiff, and that unreasonable conduct is a substantial cause of the damage to the plaintiff's property. The rule of strict liability generally followed in inverse condemnation is not applicable in this context."

Hauselt contended there was no evidence for the trial court's rulings that the county was not responsible for Keefer Slough's maintenance, that the county played no role in raising Keefer Slough's north bank, and that the county's projects did not increase water flow or volume in Keefer Slough or on Hauselt's property. The appellate court would have none of this.

"First, even assuming for the sake of argument that these findings are unsupported and that the county did engage in these actions, for plaintiff to prevail under the applicable law here the reasonableness rule he must still show that the county acted unreasonably and that he took reasonable measures to protect his own property," the court ruled. "Plaintiff has not argued that the county acted unreasonably."

Moreover, the court said, Hauselt forfeited his arguments because he failed to cite evidence unfavorable to him. The court pointed to evidence that the slough is privately owned, that a private berm existed on the north bank before either neighboring subdivision was built, and that the county had not permitted an increase in the height of that berm.

The court also upheld the statute of limitations ruling regarding drainage from Carriage Estates and Wildflower Estates. Hauselt contended that because the damage was ongoing, the five-year statute of limitations did not apply. The court disagreed and said the five-year deadline for a possessory action involving real property applied. The drainage ditch in question was shown on a 1976 subdivision map, the county accepted the subdivisions' drainage improvements in 1989 and 1991, and Hauselt testified he discovered the ditch and pipes in 1992. All of those dates were more than five years before Hauselt filed his inverse condemnation suit in March 1998.

The Case:
Hauselt v. County of Butte, No. 054927, 09 C.D.O.S. 3705. Filed March 23, 2009.

The Lawyers:
For Hauselt: Gary Livaich, Desmond, Nolan, Livaich & Cunningham, (916) 443-2051.
For the county: Stephen Horan, Porter Scott, (916) 929-1481.