California Appellate Court Remands Case for Award of Fees and Costs to Owner's Counsel

Under California law, if the Court finds that the government’s final settlement offer was unreasonable and the property owner’s demand was reasonable, the Court is permitted to award the property owner its litigation expenses.

So, after exchange of appraised valuations of $3.8M (government) and $10,875 (owner), the government offered to settle the case for $5M – subject to approval by the Federal Transit Auth.; San Francisco Municipal Transportation Agency, and the San Francisco Board of Supervisors. The owner responded with a demand of $8.6M. The case did not settle and the jury awarded the owner $7.3M.  The owner moved post-trial for award of litigation costs arguing that the government’s settlement offer was unreasonable as a matter of law because it was a contingent offer. The trial judge denied the owner’s application finding that the government’s final offer was not unreasonable.

The owner appealed, and on May 26, 2015, the Court of Appeal reversed and remanded in a published opinion found here.  The Court first explained that the purpose of the statute “is to promote settlement of valuation disputes in eminent domain proceedings and guarantee full recompense to the landowner in case of unnecessary litigation.” (Slip op. at 3).  The Court found, in short, that a contingent settlement offer is no settlement offer at all.  And further reasoned, “[k]eeping in mind the statute‘s purposes of promoting settlement and making a property owner whole for the cost of unnecessary litigation, we do not think the Legislature intended to make a condemnee choose between entering into an uncertain and contingent bargain or risk losing any chance of recovering its litigation expenses if it proceeds to trial.” (Slip op. at 4).

Again, there is no similar statutory provision here in New Jersey, but a similar concept – that every dollar a property owner spends litigating its right to just compensation is a dollar less than their constitutional due. See Rockaway v. Donofrio, 186 N.J. Super. 344 (App. Div. 1982).  A similar law was proposed back the late 1960’s when New Jersey’s Eminent Domain Act was being revamped.  One of the proposals of the Eminent Domain Revision Commission was to allow the Court to order payment of the property owner’s litigation costs if the ultimate award exceeded 25% of the offer amount.  Sounds similar to the law examined in this case.

Maybe it’s time for a new Eminent Domain Revision Commission here in New Jersey.