Eminent Domain Report

When the government approves a private development that diminishes neighboring property values, can a property owner maintain a takings claim?  According to a recent California court decision, the answer is no – governmental approval of a private project cannot trigger inverse condemnation liability. 

Background

In De La Cruz v. City of Los Angeles (2026 U.S. Dist. LEXIS 26413), a new six-story apartment building was being constructed next to the plaintiff’s residence.  The development was approved without a full environmental impact report based on a CEQA exemption for projects near transit.  The property owner sued the City for inverse condemnation under the federal and state takings clause, arguing the project would block all direct sunlight during afternoon hours and the owner’s property would no longer be fit as a family home.  The City sought to dismiss the lawsuit, asserting that the approval of a development project does not constitute a taking as a matter of law. 

Court Decision

With respect to the federal takings claim, the court walked through the Penn Central regulatory takings requirements (demonstration of (1) the economic impact of the regulation on the claimant, (2) the extent to which the regulation has interfered with distinct investment-backed expectations, and (3) the character of the governmental action).  The Court held that the complaint fails to allege sufficient facts to establish the basis for any alleged diminution in value, and even a 92.5% decrease in value has been found insufficient to establish a taking.  The Court also held that when one purchases a residential property, that property is subject to the zoning decisions of the local government, and there is no case in which a property owner has successfully maintained a takings claim involving the approval of a development on a neighboring parcel.

With respect to the California state takings claim for inverse condemnation, the Court explained that the “mere appearance of a lawful structure on neighboring property cannot give rise to an action in inverse condemnation.”  There is no authority for the proposition that a property owner is entitled to compensation merely because a large, unattractive structure went up next door, and generally, a landowner has no natural right to air, light or an unobstructed view.  Therefore, the plaintiff could not maintain a state inverse condemnation action.

Conclusion

The decision serves as a guideline that property owners cannot maintain state or federal takings claims (under either an inverse condemnation or regulatory takings theory) simply because a government agency approves a private development.