CALIFORNIA ATTORNEY'S FEES

Eminent Domain: Winning Owner In Inverse Condemnation Battle Cannot Recoup Fees By Attorney Owner Or Reap A Fee Multiplier Request

 

CCP § 1036 Dictates Are Clear, With Any Other Revisions Being Legislative Matters.

     As we all age, I am not sure we get any wiser (older, yes; wiser, a matter of judgment at best). When you get down to it, many judicial decisions are exercises in political science lessons--recognizing the proper division of power between the legislative, judicial, and executive branches. No more, no less. This next case is within this wheel-range of wisdom, so to speak.

     Avenida San Juan Partnership v. City of San Clemente, Case Nos. G043479/G043534 (4th Dist., Div. 3 Dec. 14, 2011) (certified for publication) was (and still is, but much more narrowed in magnitude) a contentious, inverse condemnation battle going on for quite a while. Eventually, a lower court ruled that the City of San Clemente deprived owners of all economically viable uses of a parcel that owners wanted to be used for a residential development. This was, in essence, a regulatory taking, ruled the trial judge, awarding owners $1.3 million in damages on a “lowball” approach (we will get to that later). Although denying a new trial motion, the lower court did pick up on a decision indicating it should give City an option, which it did: either pay damages amounting to $1.67 million (the base judgment, plus other items inclusive of costs of $23,644.30 and attorney’s fees of $227,150) or rescind the land use restrictions.

     Everyone appealed, with owners cross-appealing the sufficiency of the attorney’s fees award.

Eminent Domain/Inverse Condemnation: Trial Court’s $421,826 Award To Prevailing Plaintiffs In Inverse Condemnation Award Stands

 

Lower Court Failed to Use Correct Lodestar Methodology, But Basing On Contingency Fee Percentage Was Not Prejudicial.

     Code of Civil Procedure section 1036 does allow an attorney’s fees award to successful inverse condemnation plaintiffs. Fee entitlement was not the basis for the challenge to a $421,826 fee award to plaintiffs obtaining several million dollars against City of Mill Valley in a nuisance, dangerous public property, and inverse condemnation case tried jointly before a jury and a trial judge. (After all, the case involved a landslide resulting in one death and damage to two residences.)

     What was at issue in Guthrie v. City of Mill Valley, Case No. A125735 (1st Dist., Div. 4 July 15, 2011) (unpublished) was the trial court’s method of arriving at the fee awawrd.

     The trial judge apparently awarded plaintiffs 40% of the total recovery, exclusive of expert costs and interest, in line with their contingency fee arrangement with their attorneys. This was error, because the lodestar method should have been used. However, the error was not prejudicial so as to require reversal: the almost 3 year matter resulted in a 26-day jury trial involving lots of expert testimony such that the 1,500 hours claimed by plaintiffs’ attorneys (even at a $300 hourly rate rather than the requested $424 rate) was reasonable--coming to a total of $450,000, just about the ultimate award by the trial court. (Imperial Cattle Co. v. Imperial Irrigation Dist., 167 Cal.App.3d 263, 279-280 (1985), disapproved in part on another ground in Bunch v. Coachella Valley Water Dist., 15 Cal.4th 432, 447-451 (1997).)

In The News . . . . Mel Gibson Asked To Reimburse A Lot Of Oksana’s Fees And City Of Laguna Wood Hit With Substantial Fee/Expert Expense Award In Eminent Domain Case

Lawyers Requesting Over $1.5 Million More in Gibson Dissolution Proceeding.

     As reported in a January 27, 2011 post by the TMZ staff, Oksana Grigorieva’s lawyers are asking Los Angeles County Superior Court Judge Scott Gordon--the same judge who heard the McCourt case--to order Mel Gibson to pay substantial attorney’s fees on top of $500,000 in fees previously awarded so that Oksana can fight it out in court. Her current lawyers are asking for $1.2 million in fees for work performed since September 2010, another firm is asking for $250,000, a third lawyer wants $163,000 for one month’s work, and other lawyers/firms are requesting hundreds of thousands more. Judge Gordon has yet to rule on the latest requests.

City of Laguna Woods Ordered to Pay Raintree Realty $851,005.94 In Eminent Domain Lawsuit.

     Claire Webb, in a January 26, 2011 post in the on-line version of The Orange County Register, reports that a superior court judge on January 22 ordered the City of Laguna Woods to pay $851,005.94 in attorney’s fees and expert expenses to property owner Raintree Realty in eminent domain proceedings related to the acquisition of the City Hall Building after a jury verdict in Raintree’s favor. The superior court judge found Raintree’s final demand for compensation reasonable while the city’s final offer was adjudged to be unreasonable in nature. However, the judge disallowed $49,911 in travel expenses. In our category “Eminent Domain,” we have explored two recent cases discussing the comparative final demand approach factors used in granting/denying fee/litigation expense awards. See People ex rel. Dept. of Transportation v. Acosta, 178 Cal.App.4th 762 (2009) [discussed in our October 26, 2009 post]; Tracy Jt. Unified School Dist. v. Pombo, 189 Cal.App.4th 889 (2010) [discussed in our October 30, 2010 post]. Looks like City will appeal, which may well produce another decision in the eminent domain jurisprudential arena.

Eminent Domain: Trial Court’s Denial Of Litigation Expenses To Winning Condemnees Reversed

Third District Finds Condemnor’s Final Settlement Offer Was Not In Good Faith, Not Condoning Unyielding Settlement Stances by Condemnors.

     We do not get that many eminent domain cases to report on. However, in our October 26, 2009 post, we did examine People ex rel. Dept. of Transportation v. Acosta, 178 Cal.App.4th 762 (2009), where the Third District sustained a large litigation expense award in favor of condemnee on the basis that condemnor’s final settlement offer was unreasonable in nature. The Third District obviously is attuned to this litigation expense issue, because it published a recent decision where it reversed a trial court’s refusal to award Code of Civil Procedure section 1250.410 litigation expenses to winning condemnees.

     Tracy Joint Unified School District v. Pombo, Case No. C061239 (3d Dist. Oct. 29, 2010) (certified for publication) involved a classic battle of real estate appraisers. Condemnor’s expert valued the taking at about $3 million, with no severance damages, whereas condemnees’ expert fixed total compensation at around $12.4 million ($3.1 million of which represented severance damages). The jury split the difference, awarding condemnees $7,085,150 plus $900,000 in severance damages. The jury verdict virtually matched condemnees’ pretrial settlement demand of $7,995,000, but was miserably far off from condemnor’s final settlement offer of $3,181,500 (just a notch above its expert’s valuation). The trial court denied condemnees’ request to recover section 1250.410 litigation expenses of $574,000, prompting an appeal. Condemnees obtained a reversal and remand from the Third District.

     The focal issue was the reasonableness of condemnor’s offer, because condemnee’s offer was midway between the two experts’ appraisals and within 1% of the eventual jury verdict. Three factors are considered in assessing the reasonableness of a condemnor’s offer: (1) the amount of the difference between the offer and the compensation awarded; (2) the percentage of the difference between the offer and the award; and (3) the good faith, care and accuracy in how the amount of the offer and amount of demand, respectively, are determined. (Acosta, supra, 178 Cal.App.4th at 773.)

     The first two factors were not good for condemnor. The offer was a striking $4.8 million off of the verdict, translating to only 39.8% of the compensation awarded from a differential calculation standpoint.

     That brought the appellate court to the third factor, which the trial court found persuasive in denying a litigation expense award. The lower court reasoned that both experts had their problems and condemnor reasonably made an offer based on its expert’s valuation. The Third District disagreed with this assessment, finding this case fairly straightforward, not fraught with complex issues, and one where condemnor’s expert made some conspicuous mistakes in his valuation analysis. The real rub for the appellate court was condemnor’s unwillingness to compromise and back off of its lowball perspective, with condemnee showing a different willingness to make a “midway point” demand of a more reasonable nature. The Court of Appeal did send a message to condemnors: arrogant, unyielding, take-it-or-leave it offers will not be looked at kindly when determining whether litigation expenses should be awarded under section 1250.410.

Eminent Domain: Substantial Inverse Condemnation Fee Award Reversed Because Trial Court Did Not Explain Why It Chose Contingency Fee Amount Versus Hourly Fee Amount

 

Lower Court Failed to Analyze the Factors in Yuki.

     After plaintiffs won a bench award of over $3.4 million in a nuisance/inverse condemnation action, the Second District, Division Two, in Karim v. City of Pomona, Case No. B210049 (May 18, 2010) (unpublished), reversed a favorable attorney’s fees award in favor of plaintiff homeowners under Code of Civil Procedure section 1036 in the amount of $1,184,145.52, with section 1036 providing that the trial court must award prevailing plaintiffs in an inverse condemnation action their reasonable, actually incurred attorney’s fees. (This reversal apparently did not impact a hefty, additional cost award of $510,700.31.) The principal reason was the lower court’s failure to analyze the section 1036 “reasonable fee” factors listed in People ex el. Dept. of Transportation v. Yuki, 31 Cal.App.4^th 1754, 1771 (1995).

Eminent Domain: $288,537.75 Litigation Expense Award In Favor Of Condemnee Petroleum Franchisee Affirmed On Appeal

Third District Finds No Federal Preemption and Sustains Conclusion that Litigation Expense Award Was Justifiable Based on Condemnor's Final Offer.

     In our category "Eminent Domain," we have reviewed cases discussing Code of Civil Procedure section 1250.410, which allows a lower court to award condemnee its litigation expenses (including attorney's fees) upon finding that condemnor's final offer of compensation was unreasonable and that condemnee's final demand for compensation was reasonable in light of the evidence admitted and compensation award ultimately entered in the condemnation action. The next case involves affirmance of a sizable $288,537.75 litigation expense award (comprised mainly of attorney's fees) where the legal issue was "iffy" (ultimately resolved against condemnor) and the condemnor's final offer was way south of the valuation appraisal of its own appraiser.

     People ex rel. Dept. of Transportation v. Acosta, Case No. C059064 (3d Dist. Oct. 26, 2009) (certified for partial publication) involved Caltrans' condemnation battle with a petroleum franchisee claiming goodwill damages for termination of a franchise as a result of a condemnation. Caltrans lost its main argument that the Petroleum Marketing Practices Act preempted a franchisee's recovery of goodwill damages. After Caltrans lost the preemption argument in a summary adjudication motion, Caltrans submitted a final offer of compensation in the amount of $150,000, with Acosta countering with a final demand for compensation of $705,000—even though Caltrans' appraiser appraised the goodwill claim at $678,000 and Acosta's appraiser pegged it at $731,000. Later, Caltrans and Acosta entered into a judgment stipulation by which Acosta was paid $704,500 on its goodwill claim but Caltrans reserved the right to appeal the judgment on any legal issues.

     Then, Acosta moved for an award of litigation expenses under section 1250.410, broken down as $281,264 in litigation expenses and $7,237.75 in expert witness fees. The trial court granted the motion and awarded total litigation expenses and expert fees totaling $288,537.75.

     Caltrans appealed both the merits and the litigation expense award.

     The Third District affirmed across the board. It found no clear error in the trial court's conclusion that Caltrans' final offer was not in good faith and that Acosta's final demand was reasonable. The final offer was only 21% of the stipulated judgment, was 78% lower than Acosta's final demand, and was only 22% of the $678,000 appraisal figure arrived at by Caltrans' own appraiser. Although agreeing that a mere mathematical relation or numerical comparison alone would not suffice, the appellate court found that the preemption issue was much more "dicey" than complex legal issues giving rise to good faith determinations where condemnors had given low offers in other cases. Beyond that, here there was really very little dispute over the value of condemnee's goodwill claim—with each side's appraisers only being a little over $50,000 apart. Given there was a good chance the preemption argument might not prevail, condemnor's final offer was found to be way too low, justifying the assessment of litigation expenses against Caltrans.

Eminent Domain: Prevailing Defendant Landowner Entitled To Routine Costs

 

Fourth District, Division 2 Acknowledges General Rule on Appeal.

     Code of Civil Procedure section 1268.720 sets out a general rule that a defendant landowner is entitled to his costs on appeal, a rule not restricted to the situation of whether or not he prevails. The purpose of the rule is to ensure that the landowner receives a net sum at the conclusion of eminent domain proceedings that represents just compensation for the property. (Los Angeles Unified School Dist. v. Wilshire Center Marketplace, 89 Cal.App.4^th 1413, 1419 (2001).) Departures from this rule should be rare, the courts have held. (City of Los Angeles v. Ricards, 10 Cal.3d 385, 390 (1973).)

     In People ex rel. Dept. of Transportation v. Constant, Case Nos. E044802, E045320 & E046012 (4^th Dist., Div. 2 May 13, 2009) (unpublished), a trial court refused to award defendant landowner—who did obtain a successful verdict after losing some interim appellate writ petitions—costs totaling $10,032.47 requested under sections 1268.710 and 1268.720 as well as Revenue and Taxation Code section 50811. The trial court taxed these costs based on the State’s argument that landowner was not entitled to any “litigation expenses” under section 1250.410.

     On appeal by landowner, the Fourth District, Division 1 reversed for a simple reason: landowner was not claiming costs under section 1250.410, but under sections 1268.710 and 1268.720—with section 1268.710 codifying the principle that the property owner must be reimbursed for costs allowable under section 1033.5. No basis for departure had been established by the State, so that the matter was remanded to the lower court for redetermination of the appropriate costs under sections 1268.710 and 1268.720.

Eminent Domain: Trial Court Did Not Abuse Discretion In Denying Litigation Expenses To Defendant Awarded $214,610 Verdict After Plaintiff’s Best $45,000 Pretrial Offer

First District, Division Two Stresses that Mathematical Relation Factor Is But One Factor For Consideration.

     In our December 23, 2008 post on the unpublished opinion of City of Visalia v. Harrah, we reviewed Code of Civil Procedure section 1250.410(b) which allows the award of litigation expenses (including attorney’s fees and costs) to a winning condemnee after consideration of a multi-factored test to gauge the reasonableness of condemner’s pretrial offer, namely, (1) the amount of the difference between the [condemner’s pretrial] offer and the compensation award, (2) the percentage of the difference between the offer and award, and (3) the good faith, care and accuracy in how the amount of the offer and amount of [condemnee’s] demand, respectively, were determined. (Los Angeles County Metropolitan Transportation Authority v. Continental Development Corp. (MTA), 16 Cal.4^th 694, 720, 722 (1997).)

     Recently, the First District, Division 2 had the opportunity to review an award denying litigation expenses to a winning condemnee where the jury awarded the defendant $214,610 and condemner’s best pretrial offer was $45,000 (only 21% of the actual jury award). Condemnee’s final demand was for slightly over $220,000, which was reduced to $150,000 after an unsuccessful mediation.

     The appellate panel in State Route 4 Bypass Authority v. Pomeroy, Case No. A118442 (1^st Dist., Div. 2 May 7, 2009) (unpublished) affirmed the denial order.

Inverse Condemnation: Winning Litigant Awarded Only $45,039.10 In Fees/Costs Out Of Requested $414,103.49

Third District Sustains Fee Award Where Litigant Won Only $1,034 For a Temporary Taking.

     Code of Civil Procedure section 1036 requires a mandatory award of reasonable costs, disbursements, and expenses (including reasonable attorney, appraisal, and engineering fees) actually incurred to a prevailing party in a trial or an appellate inverse condemnation proceeding. Even under section 1036, the trial court begins with the lodestar touchstone—an examination of the time spent and reasonable hourly compensation of each attorney. (Ketchum v. Moses, 24 Cal.4^th 1122, 1131-1132, 1134-1135 (2001) [noting application of lodestar analysis in inverse condemnation cases].) The next case demonstrates that courts will not hesitate to award only a small portion of fees based on a litigant’s limited success in an inverse condemnation matter.

     In Hauselt v. County of Butte, Case No. C056502 (3d Dist. Mar. 24, 2009) (unpublished), plaintiff only recovered on one temporary taking claim to the tune of $1.034, after the trial court primarily adjudged that the County was entitled to immunity for certain storm work. Plaintiff sought $414,103.49 in fees and costs pursuant to section 1036—based on payments to five attorneys and six different expert witnesses. The trial court found that plaintiff had prevailed, but only had limited success on an “afterthought” type of claim, awarding him $10,000 in fees, $10,000 in expert witness fees, and other costs and expenses adding up to $45,039.10.

    

Eminent Domain: Condemnees Not Entitled To Award Of Litigation Expenses Where Pretrial Compensation Demand Included Fees And Condemnor's Final Offer Was Within 83% Of Jury's Valuation Award

Condemnees' Final Demand (With Fees Included) Was 44% Above Jury Award.

     We do not see that many fee award discussions in the eminent domain area, but the next post will be of interest to eminent domain practitioners.