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.
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