A resolution of necessity carries powerful presumptions. But, those presumptions do not apply to right to take objections when an agency seeks to condemn a privately owned public utility. In Town of Apple Valley v. Apple Valley Ranchos Water, the California Supreme Court drew a clear line between a challenge to the resolution itself and a challenge to the agency’s underlying right to take — and held that the two are judged by very different standards.
For any public agency that assumes a valid resolution of necessity settles the question, this decision is worth a careful read.
How the Dispute Arose
The Town of Apple Valley set out to acquire a privately owned water utility. The utility had been sold to an investment fund, then sold again to Liberty Utilities, and, along the way, rates on the Town’s residents climbed significantly. To acquire the system, the Town adopted two resolutions of necessity — one covering the portion of the utility within the Town’s boundaries, and one covering portions outside them.
Liberty did not attack the resolutions themselves. Instead, it challenged the Town’s right to take on grounds that the public necessity and more necessary public use elements were not met, invoking Code of Civil Procedure sections 1250.360 and 1250.370. Liberty’s position was the resolutions did not conclusively establish the elements of necessity and only created rebuttable presumptions as they sought to condemn public utility property.
On the other hand, the Town contended the question was already decided. Because those elements appeared in the findings set out in the resolutions, the Town argued it was entitled to conclusive presumptions — and that any challenge should be reviewed only for a gross abuse of discretion, a higher standard of proof that would be difficult for Liberty to prove.
What the Court Held
The Court agreed with Liberty. The gross abuse of discretion standard, it explained, is the standard for challenges to the validity of an adopted resolution. That standard does not, however, apply to substantive challenges to the right to take in the context of proposed utility takings. Specifically, the Court declared: “To evaluate a challenge to the taking to privately owned public utility property, the trial court, sitting as trier of fact, must exercise its independent judgment to determine whether the utility owner challenging the taking has rebutted the relevant presumptions and has thus established by a preponderance of the evidence that the taking is not authorized by the Eminent Domain Law.”
Challenging the validity of a resolution and challenging whether the underlying reasons justifying the right to take are different challenges, governed by different statutory provisions — and they are not measured the same way. When a utility owner challenges an agency’s right to take, the trial court sits as the trier of fact and determines whether the utility owner has shown, by a preponderance of the evidence, that its objections to the right to take are valid.
In other words, the conclusive presumptions attached to an adopted resolution do not decide a right-to-take challenges in the context of utility condemnations. The agency does not get to treat the resolutions as the final word on public necessity and more necessary public use when those elements are put directly at issue.
Why It Matters
The practical lesson for condemning agencies is straightforward: a well-drafted resolution of necessity is essential, but it is not a shield against every objection. When a utility owner challenges the right to take, the agency should be prepared to prove public necessity and a more necessary public use before a court acting as fact-finder under a preponderance of evidence standard.