Constitutional – Landowners improperly awarded attorneys’ fees in takings case

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Where the amount proposed by the government as compensation for land near a Marine Corp Air Station was closer to the amount awarded by the court than the sum requested by the landowners, the landowners were not entitled to recover their attorneys’ fees.

Background

In 2016, the federal government filed an action to impose a permanent easement on 269.22 acres of land in Beaufort, South Carolina near a busy Marine Corps Air Station.

The district court appointed a three-member land commission that conducted a bench trial to determine how much compensation the government owed the landowners. After the commission recommended just compensation of $5,311,313, the district court reviewed the evidence de novo and awarded the landowners $4,441,410. The district court also awarded the eligible landowner attorneys’ fees and costs under the Equal Access to Justice Act, or EAJA, and split the cost of the commission equally between the government and the landowners.

The government appealed the amount of compensation and the award of attorneys’ fees, and the landowners cross appealed based on the court’s apportionment of attorneys’ fees and commission costs.

Just compensation

The government argues the valuations hinged on speculative future demand, and that speculative future demand could not rebut the presumption of its current use being the highest and best use. In making that argument, the government contends that (1) many of the district courts’ factual findings were clearly erroneous; (2) the land comparisons of the landowners’ expert appraiser, Thomas Hartnett, were inapplicable and should not have been credited and (3) the landowners presented insufficient evidence of demand for the property in the reasonably near future.

The first two arguments are intensely factual and ask this court to second guess both the land commission’s and the district court’s credibility determinations and weighing of the evidence. On this record, the court cannot find that the district court clearly erred in making its factual determinations, including its decision to credit Hartnett’s comparable sales.

The government’s third argument has more merit. The government posits an array of facts that suggest demand for industrial and residential development on the property was speculative. The court agrees the landowners’ evidence of demand in the reasonably near future for the particular property at issue is tenuous and a reasonable court could find it insufficient. But in such fact-intensive areas, it defers to resident district courts, who have both knowledge of the local community and fact-finding expertise.

Here, Hartnett opined that the property was suitable for industrial and residential development based on the growth of the area and similar sales and growth in other parts of the surrounding area. And general demand in similar areas can affect a property’s market value, even if the owners cannot produce direct evidence of current demand for their specific tract. The commission and the district court agreed with Hartnett’s assessment, and this court cannot find their reliance clearly erroneous.

Attorneys’ fees and litigation expenses

In an eminent-domain proceeding, the “prevailing party” is “the party whose highest trial valuation of the property is closest to the final judgment.” The government argues that it was the “prevailing party” because the landowners’ requested compensation of $9,680,580 is farther from the $4,441,410 award than the government’s proposed compensation of $937,800.

But the district court rejected this simple math because the landowners’ request of $9,680,580 was for the “entire property” and not just the “property involved.” As a result, it regarded the requested $9,680,580 as irrelevant. The district court instead relied on Hartnett’s valuation of $3,936,802, which was the closest valuation to the actual award. That reliance was misplaced.

“The highest valuation of the property involved that is attested to at trial” is the highest amount that the party requests for just compensation at trial. Here, $9,680,580 is the highest valuation of the property the landowners put forth at trial, which is farther from the district court’s award of $4.4 million than the government’s valuation of $937,800. The district court’s award of attorneys’ fees and costs to the landowners is reversed.

Commission costs

In their cross appeal, the landowners argue that the district court abused its discretion by dividing the cost of the commission between them and the government. Although there is very little law in this area, the district court retains great discretion in splitting commission costs. The district court did not abuse that discretion.

Affirmed in part and reversed in part.

United States v. 269 acres (Lawyers Weekly No. 001-081-21, 31 pp.) (Julius N. Richardson, J.) Case Nos. 19-2212, 20-1226, and 20-1281. April 16, 2021. From D.S.C. (Richard M. Gergel, J.) Jeffrey Steven Beelaert for Appellant/Cross-Appellee. Paul Allen Dominick for Appellees/Cross-Appellants.