Most of you already know that under the Fifth Amendment's Takings Clause, the fees expended by a property owner to recover just compensation are not recoverable as part of just compensation. That has never made much sense to us, for how does a condemnor fulfill its obligation to put the property owner in as good a position pecuniarily as if her property had not been taken, if the property owner must bear the cost of obtaining just compensation when the condemnor has not offered it? As a practical matter, this alone keeps many property owners from challenging a condemnor's offer, which results in systematic undercompensation. Some states have deemed fee shifting a requirement of their state constitutions, while others have adopted statutes that allow fee-shifting (but those are matters of legislative grace).
South Carolina is an example of the latter, and has a statute (scroll all the way to the bottom, to § 28-2-510), which allows a "prevailing landowner" in a condemnation action to seek "reasonable litigation expenses." She must file and serve an application that shows (1) the landowner has prevailed; (2) an itemized statement from the lawyer or appraiser stating the fee charged; (3) the basis of the fee; (4) the actual time expended; and (5) all actual expenses sought to be recovered. The court has the discretion to reduce the amount if the landowner "engaged in conduct with unduly and unreasonably protracted the final resolution of the action or to the extent the court finds that the position of the condemnor was substantially justified or that special circumstances make an award unjust."
The statutory procedure seems straightforward when the property owner's lawyer charges an hourly fee: prove how much time was reasonably spent, demonstrate a reasonable hourly rate, and voila the court has the "lodestar." But what about those situations where she represents the owner on a contingency basis?
In South Carolina Dep't of Transportation v. Revels, No. 2012-213378 (Dec. 10, 2014), the South Carolina Supreme Court answered that question. In short, it's a bunch of stuff -- among them the contingency arrangement, the actual time expended, the circumstances of the case, the difficulty of the case, the professional standing of the lawyers, the results obtained, and the like -- none of which is either required to be evaluated, or determinative.
In other words, the trial court has a huge amount of discretion under the statute.
The case involved a taking of 1/3 of an acre for relocation of a highway. The jury determined just compensation to be $125,000. The property owners sought roughly $28k in expenses. Their lawyer had been retained on a contingency fee, which provided that he would recover 1/3 of the amount recovered above the DOT's original offer of $40k (125 - 40 / 3 = 28).
The owners submitted evidence of their contingency agreement, and not more. They asserted that their contingency fee was reasonable, and moreover, the trial court could require them to submit more information only if it first determined that the contingency fee was unreasonable. The DOT asserted the statute required the lodestar method. The court agreed with the DOT, and determined the reasonable hourly rate was $300 for 54 hours, resulting in an award of $16k. The court of appeals affirmed, holding that an earlier decision interpreting the state's general fee-shifting statute required the lodestar approach.
On discretionary review, the South Carolina Supreme Court agreed that the statute was "legislative grace rather than constitutional command," but that the specific eminent domain fee shifting statute applied, and not the general fee shifting statute. The court also rejected the property owners' argument that a contingency fee arrangement is presumptively reasonable. The court concluded that under the eminent domain statute, the legislature intended "a constellation of factors" to govern the award of attorneys fees in condemnation cases, and the contingency fee is but one of those factors:
Specifically, section 28-2-510(B)(1) mandates that in order for a prevailing landowner to recover reasonable attorneys' fees he or she must submit an application for fees "necessarily incurred." S.C. Code Ann. § 28-230(14) (2007) (defining "litigation expenses" for prevailing landowner). This application must contain an "itemized statement" from the landowner's attorney, which includes: (1) "the fee charged;" (2) the basis for the fee charged; (3) "the actual time expended;" and (4) "all actual expenses for which recovery is sought." Id. § 28-2-510(B)(1). Because the General Assembly used the word "actual" to modify the time expended and expenses, the award of attorneys' fees must be reflective of a consideration of the amount of time a landowner's counsel expended on the case. See S.C. Dep't of Transp. v. First Carolina Corp. of S.C., 369 S.C. 150, 153, 631 S.E.2d 533, 535 (2006) ("The cardinal rule of statutory construction is to ascertain and effectuate the intent of the legislature."). Therefore, by implication, the General Assembly precluded a landowner from recovering attorneys' fees based solely on a contingency fee agreement without regards for section 28-2-510. However, even though the contingency fee agreement is not the sole element in the calculation, it is still a significant component as it may be used to explain the basis for the fee charged by the landowner's counsel.
Slip op. at 8-9. The court outlined the factors that the trial court could have considered (but didn't, and apparently didn't have to). But because the trial court analyzed only some of those factors, the Supreme Court sent the case back for more detailed review.
South Carolina Dep't of Trans. v. Revels, No. 2012-213378 (S.C. Dec. 10, 2014)
