Update: Rick Rayl adds his thoughts about the case and how California state courts might approach the issue here.
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What does a property owner have to do in order to qualify as a "prevailing party" in a federal condemnation action, such that it triggers fee shifting under the Equal Access to Justice Act (EAJA)?
According to the Tenth Circuit in United States v. Harrell, No. 10-2153 (Apr. 29, 2011), it's not enough that "the defendant landowners won the judgment, and even though they won $3.8 million — much more than the government ever offered them for their property." Slip op. at 1. No, in order to "prevail," the property owner's valuation must be closer to the eventual judgment than the government's, and that valuation must be the valuation you asserted during the proceedings, not some other figure you'd be willing to accept.
The eminent domain provision in EAJA defines "prevailing party" as follows:
[A] "prevailing party”, in the case of eminent domain proceedings, means a party who obtains a final judgment (other than by settlement), exclusive of interest, the amount of which is at least as close to the highest valuation of the property involved that is attested to at trial on behalf of the property owner as it is to the highest valuation of the property involved that is attested to at trial on behalf of the Government[.]
28 U.S.C. § 2412(d)(2)(H).
Here, the court awarded $3.8 million in just compensation. The government valued the property at $186,500 (Professor Kanner "lowball watch" alert). The landowner's appraiser's valuation was $33 million. With those numbers, how could the landowners claim that their valuation was closer to the eventual award?
Here's how: "They argue, rather, that they should not be bound by the highest valuations in the evidence they presented at trial because they moved to adopt the $6.1 million valuation proposed by the special commission the parties had agreed to appoint under Fed. R. Civ. P. 71.1(h) for the very purpose of determining the value of their property." Slip op. at 6.
After the government filed the condemnation complaint, and "[u]nable to reach a settlement during discovery," the parties allowed the district court to appoint a three-member commission to determine value. In the commission proceedings, the government argued for $186,000, and the landowners argued for $30 million, but the commission concluded just compensation was $6.1 million, and the property owners moved the court to adopt that valuation. The landowners also asserted that the government withheld critical information, and sought discovery sanctions. In response, the court reopened discovery and requested updated appraisals. That's when each party submitted its valuation numbers noted above. The District Court entered judgment for $6.1 million, and denied EAJA fees.
The Tenth Circuit rejected the landowners' argument that they had reduced their valuation to the $6.1 million Commission valuation when they argued during the final hearing:
First of all, I think, from a trying-a-damages-case perspective, they’re taking an absurd position to argue that there’s no evidence for the $6.1 million, of the Commission’s position, because nobody testified to $6.1 million. Nobody testified to less than 6 megawatts per well. Your Honor, this is a damages case. We put on our damages case. We didn’t say, It’s this or nothing. It’s 6.1.
Slip op. at 12. Applying a strict reading of the EAJA statute, the court concluded:
A strict construction of § 2412(d)(2)(H) leaves no room for appellants' argument that the district court should have used the Commission’s $6.1 million as their highest “attested to” valuation because they moved to adopt it, despite the fact that their expert’s testimony valued their property as high as $30.6 million at the trial before the Commission and as high as $33 million at the hearing before the district court. And even if we were to accept appellants’ argument that they should not be bound by the valuation testimony they put on at the October 13 hearing to prove prejudice arising from the government’s untimely disclosure of a relevant appraisal, the highest valuation in their testimony would still be $30.6 million, much more than the $7.4 million value at which they would lose "prevailing party" status, in light of the language of § 2412(d)(2)(H) and the government’s highest "attested to" valuation in this case.
Slip op. at 19-20.
The court acknowleged that the result might be "manifest injustice" since it puts the landowner in a spot: in order to put on evidence of a high value, she might have to lose a chance at recovering attorneys fees. See slip op. at 23. Tough luck, this is a matter of statutory interpretation of a waiver of soveriegn immunity, so it must be construed strictly; if injustice results, that is a matter for Congress.
