Have you ever read one of those opinions where each piece seems okay, but as a whole the result just doesn't sit well? The Idaho Supreme Court's opinion in State of Idaho, Dep't of Transportation v. Grathol, No. 40168 (Feb. 11, 2015) is just one of those.
You've no doubt heard a lot about "eminent domain abuse" in the past few years, and that's what seemed to fuel the opinion. Except here, it wasn't abuse of the property owner by the condemnor, but rather the other way around: the overall vibe of the opinion was that the court wasn't too pleased with the property owner's approach. It determined the appeal was "extreme and unlikely" and assessed the property owner the attorneys' fees and costs the government incurred on appeal.
It also concluded that the property owner may have interposed "extreme and unlikely" defenses in the trial court, even though that court had already concluded that the defenses were not unreasonable; the supreme court reversed the trial court's refusal to assess fees and costs. It also affirmed the valuation for the taken property made by the trial judge over the objections of the property owner. Pretty bad all around for the property owner, we'd say.
But that's not what is fueling our dissonance. For sure, we don't appreciate it when our clients have to eat their own fees and costs when the other side plays fast and loose with facts and law, or drags out the case unnecessarily with the old "pound the table" strategy. So generally, we like it when courts are able to award fees. We especially like it when a court can award fees to a property owner in an eminent domain case.
But a condemnor?
What bothers us is that the Idaho Supreme Court gave short shrift to the property owner's argument that "an award to a condemnor would unconstitutionally reduce the landowner’s award merely because the landowner puts the government to its proof." Slip op. at 16. Instead, the court treated this eminent domain case as if it was ordinary civil litigation. However, as we've recently noted, condemnation cases are not your typical Plaintiff v. Defendant civil litigation, where the plaintiff claims the defendant breached a duty, broke a contract, or committed some wrong. Eminent domain cases should be considered differently because the only reason the defendant is being sued is that she owns property that is purportedly needed for the public's use. There is no culpability involved.
Those not bothered by the result might say that the rule allowing an owner to be assessed fees and costs adopted by the Idaho court only applies to what the court calls "extreme and unlikely" cases of property owner abuse; that the court adopted standards -- and thus safeguards -- which would prevent condemnors from leveraging the power to seek fees to put even more pressure on property owners to take whatever is offered and forego theories of valuation that may seem novel or aggressive. But let's take a look at the factors (judges love "factor" tests) the court required to be met before a condemnor can be awarded fees and costs:
(1) whether the trial court correctly perceived the issue as one of discretion; (2) whether the trial court acted within the boundaries of this discretion and consistent with the legal standards applicable to the specific choices available to it; and (3) whether the trial court reached its decision by an exercise of reason.
Slip op. at 15. Next, the court must apply the statute which allows the award of fees and costs to the "prevailing party" in "any civil action," and determine which party "won." In a condemnation case, this isn't always straightforward. Who "wins" when the government's duty is to award the full and perfect equivalent of the property taken? This part of the opinion isn't easy to follow, but the court summed up the test this way:
First, the condemnor must have met all of Acarrequi factors that applied to the condemnor. Second, the condemnor’s case must have been brought reasonably, not frivolously, and have adequate foundation. Finally, the condemnee must meet the standard in section 12-121. Fees can be awarded under section 12-121 only when the court “finds, from the facts presented to it, that the case was brought, pursued or defended frivolously, unreasonably or without foundation.” I.R.C.P. 54(e)(1). When a district court decides in its discretion that a case meets all three of these elements, the condemnor recovers its attorney fees.
Slip op. at 17. In Ada Cnty. Highway Dist. v. Acarrequi, 673 P.2d 1067, 1071 (Idaho 1983), the court held that the standards for fee shifting are not really standards (no "rigid guidelines"), and it's really just up to the trial judge. Id. (Moreover, we're not sure how the final factor listed above squares with the trial court's finding that the property owner's arguments and conduct were not frivolous.) Our read of these factors is that, absent the trial court really going off the rails, there's virtually no chance the appellate court will reverse.
The court held the trial court did not apply these factors, and therefore sent the case back for a determination of whether the property owner would be held liable for fees and costs. The supreme court, however, assessed the owner fees and costs incurred by the government on appeal, concluding that the property owner's arguments were "unreasonable," "false and misleading," "completely unreasonable and frivolous," and "only ask the Court to re-weigh the evidence." Slip op. at 21-22.
The opinion does not discuss the lodestar, but since the government was represented by outside private counsel (a 470-lawyer firm), we imagine the amounts it is going to seek are massive. The concurring opinion notes that "the State claimed it incurred $724,136 in attorney fees, $13,079.06 in costs as a matter of right, and $167,103.59 in discretionary costs, for a total of $906,318.65." Slip op. at 23-24 (Jones, J., concurring). The concurring justice also noted that "the costs of defending would likely have been substantially less, had the Attorney General's office been properly funded and not obliged to seek the assistance of outside counsel[.]" Id. at 24 (Jones, J., concurring). It seems unfair to hang the fact that the AG's is underfunded on the property owner, and if liable for the government's fees, it should not be on the hook for more than what it would have cost the AG's office to prosecute the case.
The concurring justice also seemed even more offended by the property owner's approach than the majority was, writing that it treated "the condemnation proceeding as a gravy train." Slip op. at 23 (Jones, J., concurring). Justice Jones also castigated the property owner for not taking the settlement which was offered to it by the condemnor because the settlement offer was "reasonable." How a settlement offer was entered into the record, and why it is relevant, escapes us, however.
Our final question is whether this rule is going to be sauce for Idaho condemnors as well as Idaho property owners. Will the courts look with a similarly jaded eye when offers of just compensation end up being much lower than the final award?
More on the case here ("Idaho developer loses appeal in eminent domain fight") (Washington Times), and here ("New Eminent Domain Case From the Supreme Court of Idaho") (Idaho Land Law blog).
State of Idaho, Dep't of Transportation v. Grathol, No. 40168 (Idaho Feb. 11, 2015)
