Arkansas: Eminent Domain Fee Shifting Statute Only Applies To State Condemnations, Not City, Even Though State DOT Initiated The Taking

Another short one, this time from the Arkansas Supreme Court.

In City of Siloam Springs v. La-De LLC, No. CV-15-194 (Ark. Nov. 19, 2015), the court concluded that an Arkansas statute which requires the state to pay reasonable attorneys’ fees if the just compensation exceeds the deposit by more than 10%, does not apply when a city is the condemnor against whom the condemnation judgment is entered. 

The statute was clear enough, because it required the court to award fees “against the State of Arkansas and in favor of the party entitled thereto,” and here, the condemnation judgment involved the city, not the state. There is no statutory authority for an award of fees in eminent domain cases against cities. Seems simple enough, no? 

But the twist was that the condemnation in this case was actually instituted by the State Department of Transportation, after which it was granted immediate possession of the land. Only later did the city substitute in as the condemnor, and it filed an amended complaint for condemnation and immediate possession. The trial court eventually entered a judgment against the city for compensation, which exceeded the DOT’s valuation by more than the required 10%. The court also awarded fees to the property owner. 

Too bad, held the Supreme Court, the statute says what it says, and it only applies when the judgment is against the State, not a city. Even if the State instituted the condemnation. 

The result does make sense as a matter of statutory interpretation. But, as the dissenting justices pointed out, there was another way to affirmance. The dissent argued that the DOT acquired the property upon the declaration of taking, which meant that the city’s later “substitution” was ineffective to relieve it of the attorneys’ fees responsiblity, only that the former property owner (La-De) no longer owned the property, the DOT did. The DOT was acting as the city’s agent, but that didn’t change the fact that the DOT instituted the case. Dissent at 10 (“The fact that the City relieved its agent of further responsibility in the lawsuit does not change the fact that the land had already been condemned and that title to the property had already vested in [the DOT] pursuant to Arkansas Code Annotated sections 27-67-301 to -321.”).  

Another possible way of looking at this: when the city purported to “substitute” as the plaintiff for the DOT, it really didn’t, and that action instead represented an abandonment by the DOT of the taking. If that’s the case, then the entire proceeding from that point on was improper. Whether that would get the owner its fees and costs under Arkansas law, however, is another matter.