A California Court of Appeal recently held that property owners in an eminent domain action were not entitled to an award of litigation expenses after they entered into a stipulated judgment with the State Department of Transportation several days before their scheduled trial date. (The People ex rel. Department of Transportation v. The Superior Court of Sutter County (— Cal.Rptr.3d —-, Cal.App. 3 Dist., March 1, 2012).
After an eminent domain proceeding was commenced in 2009, the State Department of Transportation (“DOT”) and the property owners exchanged statements regarding valuation of the property at issue, disclosed expert witnesses, and deposed witnesses. Code of Civil Procedure section 1250.410, subdivision (a), provides that in an eminent domain action the parties must file their final offer or demand for compensation at least 20 days before the trial begins on the issue of compensation. In compliance with section 1250.410, the property owners and DOT submitted their final offer and final demand 20 days before their scheduled trial date. DOT offered property owners $159,000. The property owner demanded $189,000, but specified this amount did not include costs or interest. DOT accepted the property owners’ offer five days before trial.
The property owners and DOT entered a stipulation for judgment in condemnation. The stipulated judgment stated that the property owners would recover the interest due and “their costs of suit incurred in this proceeding consistent with statute after [they] file a memorandum of costs.” The stipulated judgment, however, did not mention litigation expenses. The property owners asked the trial court to award litigation expenses pursuant to section 1250.410. The trial court awarded property owners costs and fees, including $57,224.50 in attorney fees. DOT filed a petition for writ of mandate asserting that, because the case was resolved before trial, section 1250.410 does not permit an award of litigation expenses.
The court of appeal held that the trial court erred in awarding litigation expenses. The court concluded section 1250.410, subdivision (b), permits a trial court to award litigation expenses upon a finding “that the offer of the plaintiff [the government] was unreasonable and that the demand of the defendant [the property owner(s)] was reasonable viewed in the light of the evidence admitted and the compensation in the proceeding.” The court concluded the statute contemplates that, before litigation expenses may be awarded, evidence must have been admitted at trial and an award of compensation must have been made.
Section 1250.410, subdivision (b), provides that if the property owner files a motion within 30 days after entry of judgment and the court finds the government’s offer was unreasonable and the demand of the property owner was reasonable, when viewed in light of the evidence admitted at trial and the compensation ultimately awarded, the costs allowed by statute shall include the property owner’s attorneys fees, costs, expert witness fees, and appraiser fees. DOT asserted the statute does not allow for an award of litigation expenses in this case because DOT accepted the property owners’ final demand, thereby averting a trial in the matter. The court of appeal agreed.
A trial court’s decision on whether to award litigation expenses under section 1250.410 is not dependent upon the general reasonableness of the government’s conduct throughout the entire eminent domain proceedings. Instead, the focus must be on whether the unreasonable conduct of the government forces a trial in the matter. The statute does not always permit a property owner to recover litigation expenses. Only the final offer and final demand are examined for reasonableness against the amount ultimately awarded after trial. “[E]ven if the government’s conduct with respect to earlier compensation offers and demands is unreasonable, the government is not liable for litigation expenses if it makes a reasonable final offer.”
A mere delay between the time a final demand is made and accepted, even if the delay results in additional expenses to the property owners, will not alone support an award of litigation expenses. Section 1250.410 does not require that a party accept or decline a final demand or final offer at a specific point prior to trial. In this case, no trial had commenced and therefore no award for litigation expenses could be made by the trial court.
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