California Civil Jury Instructions (CACI)

3507. Personal Property and Inventory

Just compensation also includes the loss of any inventory or personal property caused by the taking. [Name of property owner] may be entitled to the retail value of the inventory or personal property if the property is unique and not readily replaceable. Otherwise, [name of property owner] is entitled to wholesale value.

Sources and Authority

"The Fifth Amendment of the United States Constitution, as applied to the states by the Fourteenth Amendment, conditions the power of eminent domain upon the payment of 'just compensation.' That constitutional requirement makes no distinction between real property and personal property. If personal property is taken by the government in the exercise of its eminent domain power, it must compensate the owner." (City of Needles v. Griswold (1992) 6 Cal.App.4th 1881, 1891 [8 Cal.Rptr.2d 753].)

"We further acknowledge that where a condemner takes certain real property and the removal or relocation of either tangible or intangible personal property is impossible due to the condemnatory act, the owner is entitled to be justly compensated for the loss of property, regardless of its nature." (San Diego Metropolitan Transit Development Bd. v. Handlery Hotel, Inc. (1999) 73 Cal.App.4th 517, 533 [86 Cal.Rptr.2d 473], internal citations omitted.)

"The general rule is that the Constitution does not require compensation for personal property not affixed to the condemned realty. Movable items of personal property are not 'taken' by the public entity when it condemns real property or a business; instead, under the Relocation Assistance Act, the public entity compensates the owner for the cost of moving the personal property to a new site." (County of San Diego v. Cabrillo Lanes, Inc. (1992) 10 Cal.App.4th 576, 583 [12 Cal.Rptr.2d 613].)

"Business inventory may be compensable under limited circumstances, i.e., where the loss results from the condemnatory act itself (e.g., the inventory cannot be relocated) rather than the personal circumstances of the condemnee (e.g., the owner has decided that he will not relocate)." (Chhour v. Community Redevelopment Agency of Buena Park (1996) 46 Cal.App.4th 273, 283 [53 Cal.Rptr.2d 585].)

"The goal of the eminent domain trial [is] 'to determine just compensation,' to wit, to put [condemnee] in 'as good a position' as if its business inventory had 'not been taken.' However, [condemnee] was only 'entitled to be reimbursed for the actual value of what [it] lost—no more and no less.' " (People ex rel. Dept. of Transportation v. Clauser/Wells Partnership (2002) 95 Cal.App.4th 1066, 1072-1073 [116 Cal.Rptr.2d 240], internal citations omitted.)

"To award [condemnee] retail value instead of wholesale value would result in a windfall to [condemnee]—an award in excess of just compensation sufficient to make [condemnee] whole. Here, the proper standard of fair market value is the wholesale value. This is what a retailer, whose inventory of nonunique, fungible, and readily replaceable goods is damaged as a result of an act of inverse condemnation, should receive." (McMahan's of Santa Monica v. City of Santa Monica (1983) 146 Cal.App.3d 683, 700 [194 Cal.Rptr. 582].)

In Clauser/Wells Partnership, supra, the court held that a jury should have been allowed to consider expert witnesses' testimony on valuation of inventory based both on retail and wholesale value: "[A]lthough any 'just and equitable' method could be proper, the jury would remain 'free to accept or reject' [an expert's] valuation." (Clauser/Wells Partnership, supra, (2002) 95 Cal.App.4th at p. 1083, internal citation omitted.)

Secondary Sources

8 Witkin, Summary of California Law (9th ed. 1988) Constitutional Law, § 1032

1 Condemnation Practice in California (Cont.Ed.Bar 2005) § 4.56

4 Nichols on Eminent Domain, Ch. 13, Fair Market Value—Physical Character, §§ 13.11, 13.18[8] (Matthew Bender)

20 California Forms of Pleading and Practice, Chapter 247, Eminent Domain (Matthew Bender)

(New September 2003)