Beyond the ultimate award of just compensation, the opportunity for/risk of landowner fee recovery in condemnation actions is an important issue to evaluate early on. Attorney fees can, and oftentimes do, exceed awards of just compensation — especially for smaller takings. Accordingly, an important question at the outset of any case is: can fees be a part of the landowners’ ultimate recovery? The answer is a typical lawyer one: it depends.
States take varied approaches to landowner fee recovery, but the general rule is that unless fees are expressly authorized by state statute, they are not recoverable. Circumstances giving rise to fee recovery by statute usually fall into three categories where the landowner successfully (1) dismisses the condemnation; (2) hits certain just compensation benchmarks; or (3) successfully pursues a claim for inverse condemnation.
Several states allow landowners to recover their fees if a court ultimately determines that the condemnor is not authorized to acquire the property subject to the condemnation action. Sometimes such fee recovery, however, is limited to circumstances where the court finds that the condemnor proceeded in bad faith.
Just Compensation Benchmarks
Several states also allow for landowners to recover their fees if specific benchmarks are reached by the landowner in his or her ultimate just compensation award. In Colorado, for example, in certain condemnation actions if a just compensation award exceeds $10,000 and is equal to or greater than 130 percent of the condemnor’s last written offer before filing the case, a landowner can recover his or her reasonable fees. Other states have similar benchmarks, usually requiring both a minimum dollar value of recovery and an ultimate award above a certain percent of the condemnor’s last written offer. On the other hand, some state statutes allow landowners to recover fees only if the landowner serves a written offer on the condemnor within a certain timeframe during the pendency of the case and the ultimate just compensation award exceeds that offer.
In many states landowners can recover their fees if they successfully pursue an inverse condemnation claim against an entity with condemnation authority. In some instances landowners are even entitled to their fees if the condemnor settles such a case.
In all three of these categories, fee recovery may be limited to certain types of condemnation actions or specific types of condemnors. And several states will allow for recovery in one or two, but not all of the categories listed above. Still other states allow for recovery under additional circumstances, for example when a condemnor abandons its condemnation.
Once a landowner or condemnor assesses the chances of fee recovery generally, they should also evaluate the likely magnitude of such recovery in any given case. Several states assess the reasonableness of fees in condemnation actions based on the federal “lodestar” approach, which evaluates fees based on the number of hours “reasonably expended on the litigation” multiplied by a “reasonable hourly rate.” Other states allow for fee recovery based on a percent of the “net benefit” the attorney achieved for his or her client (i.e. the difference between the final just compensation award and the last written offer made by the condemning authority). Still another approach is to cap fee recovery at a specific dollar amount or the just compensation award itself. As with the right to fee recovery, the amount of fees recoverable is state specific and is based on both statute and case law.
Because of the diverse approaches states take to fee recovery in condemnation actions, landowners and condemnors alike should engage experienced eminent domain counsel early on to accurately assess fee exposure in any condemnation dispute.