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.
City of Visalia v. Harrah, Case No. F053851 (5th Dist. Dec. 23, 2008) (unpublished) concerned Visalia's acquisition of the Restoration Church owned by appellants/condemnees. Before the trial of the property valuation phase before jurors, City filed and served its $600,000 final offer of compensation, with each party to bear their own fees and costs (even though the City appraiser valued the property at $380,000). Condemnees served their final $868,706.15 final compensation demand, broken down as $600,000 property value, $103,706.15 interest, $160,000 in attorney's fees, and $5,000 in costs (with their appraiser valuing the theater at $650,000). After trial, the jury concluded the theater's fair market value was $600,000 at the time of the taking. The trial court denied condemnees' request for fees on the ground their final demand was unreasonable--especially given that condemnees included improper attorney's fees and excessive interest. The trial court also found the City's offer was reasonable and in good faith. Unhappy over not recouping fees, condemnees appealed to the Fifth District.
Under Code of Civil Procedure section 1250.410(b), property owner can recover litigation expenses (expressly defined as attorney's fees and expert witness fees) if the public agency's offer was unreasonable and the owner's demand is found to be reasonable. The requirement is conjunctive--both demands must be evaluated under the statute with requisite findings of unreasonableness (government) and reasonableness (property owner) being mandatory in nature. (Inglewood Redevelopment Agency v. Aklilu, 153 Cal.App.4th 1095, 1117 (2007).)
There are judicially-developed guidelines to determine the reasonableness of each side's demands/offers: (1) the amount of difference between the demand/offer and the compensation awarded; (2) the percentage of difference between the demand/offer and the award; and (3) the good faith, care and accuracy with which the demand/offer was calculated. (City of Long Beach Redevelopment Agency v. Morales, 157 Cal.App.4th 287, 291 (2007).) Although not dispositive, People ex rel. Dept. of Transportation v. Yuki, 31 Cal.App.4th 1754, 1764 (1995) formulated mathematical "rules of thumb" between public entity's offers and ultimate property awards: (1) final offers that are 60% or less of the jury's verdict are unreasonable; (2) governmental offers above 85% of the jury valuation verdict are reasonable per se; and (3) middle group governmental offers of 60-85% fall somewhere between, evaluated under the reasonableness factors articulated in Aklilu (especially factor no. 3).
The Fifth District affirmed the denial of a fee award to condemnees.
The Court of Appeal determined that the trial court did not err in considering the entirety of condemnees' demand, including the fees, interest, and costs components. "The purpose of filing a final demand under section 1250.410 is to foster settlement of the action. This purpose is not served if a multifaceted demand can be found to have been reasonable based on an analysis of the compensation element alone [namely, $600,000 property value component versus the approximate $869,000 total demand with added elements]." (Slip Opn., at p. 7.)
Condemnees improperly included attorney's fees in their final compensation demand. (County of Contra Costa v. Pinole Point Properties, Inc., 27 Cal.App.4th 1105, 1114 (1994).) They also included an excessive interest demand.
Comparative analysis, according to the Fifth District, also justified the affirmance of the trial court's denial of fees to condemnees. Condemnees were awry 44% from the jury award--$263,706. By contrast, Visalia's offer was approximately 83% of the jury's valuation award--2% off of the per se reasonableness test and $120,000 more than the amount of City's appraisal of fair market value. In a word, City's offer was a good faith offer.
BLOG "HELLO"--Co-contributor Mike Hensley, who clerked on the Fifth District in the 1979-1981 time frame, notices that Leonard C. Herr successfully represented the City of Visalia on appeal. Mr. Herr was a clerk to then-sitting Justice George Hopper of the Fifth District right before Mike clerked for that Court of Appeal. Mike sends seasons greetings and congratulations to Mr. Herr for his win on appeal.
Visalia, California. Children of Mineral King Cooperative Farm, Dec. 1940. Russell Lee, photographer. Library of Congress.
Comments