On April 12, 2011, the Second District of the Court of Appeal issued its decision in City of Los Angeles v. Superior Court (Plotkin) (Court of Appeal Case No. B225082).
The case provides a good overview of inverse condemnation law.

“Eminent domain” is the constitutional requirement that the government must provide just compensation to a property owner when it takes his or her private property for a public use.” The California Constitution provides: “[p]rivate property may be taken or damaged for a public use and only when just compensation . . . has first been paid to, or into court for, the owner.” (Cal. Const., Art. I, § 19.)

“Inverse condemnation” is a lawsuit by a private property owner against the government that is based on a claim that the government has permanently acquired the private property for public use, but an inverse condemnation claim can only be based on: mere damage to property; for temporary invasions; and even when the public entity does not physically possess the property. Unlike an eminent domain proceeding, an inverse condemnation action does not always result in the public entity acquiring private property. It has long been established that acts by the government (a public authority) constituting a “physical invasion” or “direct legal restraint on the use of . . . property” could amount to a “de facto taking‟ of the property” for purposes of an inverse condemnation claim, even where the entity does not formally condemn or intend to condemn.

In other words, in inverse condemnation, the government is obligated to pay for private property taken or damaged for “public use” or damaged in the construction of “public improvements.”

In City of Los Angeles v. Superior Court (Plotkin), a group of property owners near LAX tried to bring an inverse condemnation claim based on the City’s conduct of purchasing nearby properties, which left their neighborhoods blighted. By the time this litigation commenced, the City had expended over $265 million acquiring properties near the plaintiffs: it had acquired 72 percent of the multi-family dwellings and apparently 94% of the single-family dwellings. Perhaps the gravamen of the property owners’ claim was that the City’s conduct “was deliberately intended and designed to result in blight, to encourage flight from these neighborhoods, and to reduce property values in the area so that the Airport could acquire the remaining parcels (including [real parties‟] lands) more cheaply,”

The court rejected the property owner’s claims because they presented no evidence that “that the City had condemned their properties, had an intent to eventually acquire their properties through condemnation, or had a plan for future use of their property that would someday require condemnation of their properties — or any [nearby] property.” Rather, the evidence merely “indicated that (1) for roughly a decade, the City had entered into voluntary agreements with owners to purchase the [nearby] properties … and (2) the City had ‘no plan’ for the properties it had so acquired.”

In other words, the City’s conduct of purchasing property near LAX was to assist residents affected by noise from airport operations was not a “public use.”