Updated on May 8, 2025
Eminent domain is a complex and often contentious area of law, with cases that can have significant impacts on property owners and communities. One of the landmark cases illustrating this is the Redevelopment Agency of the City of Burbank v. Walter L. Gilmore, which unfolded in 1985. This case sheds light on eminent domain law and raises important questions about the concept of “just compensation.” Let’s delve into this case through our eminent domain attorney analysis and explore its implications for property rights and legal principles.
Eminent Domain Attorney Analysis: Redevelopment Agency v. Gilmore (1985) 38 Cal.3d 790
One of the most important cases in eminent domain came about in 1985. In this blog, our eminent domain attorneys examine this long standing case and the insight it gives regarding eminent domain law. The case was Redevelopment Agency of the City of Burbank (“Burbank”) versus Walter L. Gilmore. In this case, on November 13, 1980, Burbank filed a complaint to condemn a parcel of real property owned by George Strattan and Walter and Pamela Gilmore (parcel 9) and a separate parcel of real property owned by Howard and Frances Hudson (parcel 11) (collectively, “Defendants”).
Burbank’s Order for Possession
In the case, Burbank invoked a provision in the law that allowed Burbank to take early possession of the condemned property before trial by depositing “probable compensation” and obtaining an “order for possession.” What this means is that even before the case goes to trial, the government can get possession of the property provided it deposits enough money with the court – even if the amount of compensation is still subject to dispute. When the court grants early possession, the final award should also “legal interest” – and that interest should run from the early possession date to the extent the probable compensation does not match the ultimate compensations. In other words, this legal interest begins to accrue at the earlier of when the agency takes possession or is authorized to do so and interest continues to accrue until final payment.
Defendant’s Probable Compensation Funds
In this case, Burbank deposited a total of $325,590 for parcel 9 and $160,000 for parcel 11 as probable compensation. Defendants exercised their rights to withdraw the deposited amounts which means that interest no longer continued to accrue as to those amounts. At trial, parcel 9 was valued at $500,000 and parcel 11 was valued at $284,000. These amounts were both higher than the deposited amounts. Defendants argued that they should receive market rate interest on the balance owed to them running from the date of early possession.
California Eminent Domain Law and the Legal Rate of Interest
Defendants argued that the interest must be based on the market rate in order to constitute “just compensation” under the law. The Court noted that the Supreme Court has explained that a property owner is constitutionally entitled to the full and perfect equivalent of the property taken. The issue in this was was that California Eminent Domain Law limits interest to the “legal rate.” Accordingly, the legal rate of 7% was lower than the market rate.
What the Court Considered
The Court analyzed state and federal law in ultimately concluding that “the difference between the deposit and the final award was nothing more than an involuntary purchase-money loan from the condemnee to the condemner. The court said that it cannot see how justice is served by restricting the condemnee, during times of high interest, to a “legal” rate which may be far below the rate the agency would have to pay in its usual financial markets for the same funds.” The court noted that the condemnor can increase their deposit to more closely reflect probable value as a safeguard of its own interests. In the end, the key point in the case (and in eminent domain law) was that the condemnee, Defendants in this case, are entitled to “just compensation.” With a restricted interest rate, they are not receiving true “just compensation” since the market interest rate is higher.
In summary, when there is early possession and the amount due to the property owner is later determined the the “probable compensation” number, then the property is entitled the legal rate of interest and is not restricted to 7%.
Basis for Trial
The Court further ruled that the determination of a constitutionally proper rate of interest that will allow for “just compensation” is a task for the trial court per the California Eminent Domain Law. Since in this case the trial court did not make this determination and rather used the statutory rate, the case was remanded to the trial court for that determination.
Facing an Eminent Domain Action in California? Contact our office today and set up a consultation with our eminent domain attorneys who have extensive experience handling matters similar to this case study. The stakes are high and time is limited and we can help you get the ball rolling. Call us at 310-954-1877.