Those of you who represent property owners on the business end of eminent domain who practice in Florida and the few other states which allow recovery of attorneys' fees, consider yourselves lucky: the rest of us poor slobs who practice in places where they are not permitted -- either as a component of a constitutional command of just compensation, or by legislative grace -- are envious.
We understand that to force a property owner to bear its own fees and costs to recover just compensation -- compensation which the condemnor should have offered in the first place -- effectively denies just compensation, and allows a condemnor to get away with an inadequate offer simply because it may make little economic sense for the property owner to fight back with a lawyer. Each dollar spent on attorneys is a dollar less the owner gets for her property.
But even if you represent owners in a non-fee-recovery jurisdiction, however, you should read the Florida Supreme Court's opinion in Joseph B. Doerr Trust v. Central Florida Expressway Auth., No. SC14-1007 (Nov. 5, 2015), because it will just warm the cockles of your heart. The court recognized that denial of attorneys fees denies full compensation. It understood that fees are necessary to make property owners whole. It realized that property owners have no choice in these matters, and have done nothing wrong. It acknowledged that the power of eminent domain is one of the highest powers of the state. If that wasn't enough, the opinion contains valuable lessons for both property owners and condemnors.
First, the bottom line: the court held that when the government is "responsible for excessive litigation," it is liable for attorneys fees under Florida statutes.
On to the details. The Expressway Authority wanted roughly 10 acres of the Trust's land. It offered $4.9 million. Trust said no and the Authority condemned. The jury determined that $5.7 million was just compensation.
Florida has a statute alluded to above that requires the payment of attorneys fees in this situation. The first part of the statute bases the fee on the "benefits achieved" by the lawyer. This is a straight-up list of percentages of the difference between the precondemnation offer and the award. For example, for benefits up for $250,000, the fee is 33%. For the benefits between $250,000 and $1 million, 25%. Under this provision, the property owners were entitled to a maximum of $227,652 in fees.
The property owners, however, asserted that the court must consider the "qualitative and quantitative" factors such as "novelty," "skill," the amount involved, and the fees charged for similar legal services, which are set out in the second part of the statute which governs fee calculations for fees incurred in "defeating an order of taking, or for apportionment, or other supplemental proceedings, when not otherwise provided for." Applying this standard, the trial court awarded the property owner $816,000 in fees.
The court of appeals reversed, and although it agreed the case had been "over-litigated," it held that the precondemnation offer "was not so indefinite that the benefits achieved by the Landowners could not be determined." Slip op. at 5. So it sent the case back down, and required the trial court to determine whether limiting the fee recovery to the $227k under the benefits achieved statute would deny the owner full compensation.
On remand, the trial court again sided with the owner, concluding that the Authority "had engaged in a 'clear pattern' of excessive litigation." Id. at 6. It litigated the case aggressively. It changed its agreed-to valuation theory and retained a new expert, an economist who "made 16 assumptions." So the owner's attorney needed to gear up to rebut all of this, and their (costly) efforts paid off: the trial court prohibited the economist from testifying. And oh yeah, the Authority spent "twice as much time deposing the Landowners' experts as the Landowners spent deposing the Authority's experts." Id. at 7. Thus, it would undercompensate the owners -- and therefore would be unconstitutional -- if the court adhered to the "benefits achieved" formula and limited fee recovery to $227k when the owner had to expend much more responding to the Authority's tactics. The trial court reaffirmed its earlier $816k fee award.
The Authority appealed and the court of appeals again reversed. The owners should have sought sanctions to address the abuse of process. The average hourly rate of $87 per hour ($227k divided by the number of hours the owner's lawyers spent responding) wasn't "patently unconstitutional." But the court of appeals certified a question to the Florida Supreme Court, which saw the issue this way:
In an eminent domain proceeding, when the condemning authority engages in tactics that cause excessive litigation, is the benefits achieved formula in section 73.092(1), Florida Statutes, unconstitutional as applied to calculate attorney's fees for the hours incurred in defending against the excessive litigation?
Slip op. at 9.
We've already told you the court said yes. Florida's constitution requires "full compensation," and to implement this requirement, the legislature adopted the fee recovery statute to make owners whole. But even though the legislature has the power to adopt rules like the benefits achieved provision which base the fee on a percentage of the benefits, that rule cannot be applied so that it ends up denying the owner a fee recovery that would make it whole.
So when a condemnor doesn't play fair and the property owner must respond, it isn't fair to limit her fee recovery to the fees set out in the benefits achieved statute. Slip op. at 12 ("We have previously emphasized the importance of fair play in eminent domain proceedings because of the inherent disadvantage to the property owner."). The government, after all, has "potentially unlimited resources to allocate to abusive litigation and legal representation," and it "places private property owners at a considerable disadvantage" to hobble them with limited fee recoveries. Slip op. at 14.
The court applied a mixed approach. It read the the benefits achieved statute to be constitutional only if the amount of time spent in opposing the excessive litigation also gets analyzed under the "quantitative and qualitative" factors part of the statute. Thus, owners can get both benefits achieved fees that are attributable to the actual award, as well as skill-and-whatnot fees for time spent responding to a condemnor's excess.
Applying that formula, the court concluded that it didn't have enough of a record to make a decision on how much the Authority owes the owner in fees. It sent the case back down for an evidentiary hearing to determine how much time was spent by the owner's attorneys responding to the Authority's excessive litigation approach. This means that the owner will recover $227k in benefits achieved fees, plus an hourly rate recovery for time spent responding to the Authority's tactics.
As for the sanctions suggested by the court of appeals as the method of dealing with the bad behavior? The Supreme Court held that the possibility of sanctions does not satisfy the constitutional requirement of full compensation. Sanctions are discretionary and punitive, while full compensation is a mandatory constitutional command. Besides, "excessive litigation" is not the bad faith behavior that is subject to sanctions, and while the Authority acted excessively here, it did not act "in bad faith or with evil intent." Slip op. at 18.
As we noted at the start of this post, this opinion warms the cockles of our heart.
Joseph B. Doerr Trust v. Central Florida Expressway Authority, No. SC14-1007 (Fla. Nov. 5, 2015)
