The Second Department handed down Matter of City of Long Beach v Sun NFL Limited Partnership on May 15, 2019 ___ AD3d ___, 2016-13371. The decision concerned an application for reimbursement of legal, appraisal fees and disbursements pursuant to EDPL Section 701.
The condemnor made a pre-vesting offer to the property owner of $2,080,000. After trial the Supreme Court awarded $11.8 million. Claimant sought an additional allowance totaling $2,024,412.
The trial court reduced the amount sought for attorneys’ fees and awarded $831,303. The condemnor appealed and claimant cross-appealed. The Appellate Division held that the Supreme Court improvidently exercised its discretion and increased attorneys’ fees to $1,366,250. It’s interesting to note that the court calculated the legal fee at 25% over the offer rather than 1/3 which was the actual retainer, and which presumably the clients paid. Shouldn’t that be controlling?
EDPL Section 701
In August 1987, the Eminent Domain Procedure Law (EDPL), § 701, was amended to provide that when an award in a condemnation proceeding was “substantially” in excess of the condemnor’s proof on the trial, the trial court, in its discretion, if required to afford a claimant “just compensation,” could award a claimant an additional allowance of his litigation expenses, including attorneys’, engineering and appraiser’s fees.
Specifically, EDPL §701 states:
“In instances where the order or award is substantially in excess of the amount of the condemnor’s proof and where deemed necessary by the court for the condemnee to achieve just and adequate compensation, the court, upon application, notice and an opportunity for hearing, may in its discretion, award to the condemnee an additional amount, separately computed and stated, for actual and necessary costs, disbursements and expenses, including reasonable attorney, appraiser and engineer fees actually incurred by such condemnee. The application shall include affidavits of the condemnee and all parties that have incurred expenses on the condemnee’s behalf, setting forth inter alia the amount of the expenses incurred”
Initially one must consider whether the court’ award “is substantially in excess of the amount of the condemnor’s proof.
The Second Department in Malin v State of New York, 103 AD2d 899 (2d Dept, 1992) held that the claimant need only show “more than a modest increase in value.” In the Malin case, that increase was a 79 percent increase in value over and above the State’s initial offer.
One aspect of EDPL § 701 has been well established. The standard for determining both “substantially in excess” and the computation of the contingency legal fee is the initial advance payment made under EDPL §303. The base from which the Court determines whether the claimant achieved an award “substantially in excess” is not based on the condemnor’s proof at trial. Rather, the basis utilized is the initial advance payment. General Crushed Stone v State of New York, 93 NY2d 23 (1999); First Bank & Trust Co. of Coming v State, 184 AD2d 1034 (4th Dept, 1992); Lee-Hi Fuel v State, 179 AD2d 494 (1st Dept, 1992). This is logical and consistent with the statutory intent. Only by having retained counsel and hiring experts could a claimant reach trial so as to realize the award. Matter of New York City Transit Authority, 160 AD2d 705 (2d Dept, 1990) (“…the only interpretation which would fulfill the legislative intent of the amendment, and the policy of the EDPL, is that the city’s initial offer…be utilized for comparison purposes).”
Courts have been almost unanimous in finding that contingent fee agreements are accepted practice in the field. Also approved have been fees at stated percentages of the total recovery as to real estate and as similar fee structures based on total awards depending on the type and size of the case.
However, a few courts have also expressed a reluctance to award the full amount requested, not only for experts’ fees but, in some cases, attorneys’ fees where the fees and expenses were tied to unsuccessful attempts to recover items of damage that were disallowed or for unsuccessful appeals. Some of the decisions seem to be more in the spirit of a punishment for making such a claim than an attempt to reimburse claimants for expenses to restore them to the just compensation awarded by the court that is the clear intent of the statute. The attorneys’ fees in such cases were contingent on success (such fees are almost universally contingent). Since they were not successful in those claims, no part of the fee sought to be reimbursed was for the work involved in the unsuccessful effort. To refuse to reimburse the claimant for the fee paid for the successful part of his claim does not follow the reasons for enactment of the statute as enunciated by the Law Revision Commission.
The reason for the statute is that the condemnee cannot be made whole when the award he receives is just compensation if he must deduct from that just compensation the expenses of litigation. By definition he must receive less than just compensation. The statute solely related to that and, as long as the award was substantially in excess of the initial offer that brought him into court, this enactment has nothing to do with what and how much he thereafter claimed. If the expenses for which reimbursement is sought have a logical connection to the recovery, they will be reimbursed.
EDPL Section 702
EDPL provides for reimbursement of legal fees, experts, appraisal and other necessary fees incurred to a property owner in the event that the procedure to acquire the property is abandoned by the condemnor, or a court determines that a condemnor was not legally authorized to acquire the property, or there was a de facto taking.
Abandonment of a proposed condemnation triggers the right of the Petitioners who filed a petition in this Court to recover attorneys’ fees, expert fees and costs incurred who successfully challenged a proposed acquisition. Hargett v Town of Ticonderoga, 13 NY3d 325 (2009).
It is to be noted that the Eminent Domain Procedure Law provides that the payment required by EDPL § 702(B) is mandatory. There is no discretion in the Court to deny payment as is the case in the award of an additional allowance pursuant to EDPL § 701, which applies when, after trial, a recovery is substantially in excess of the amount of the Condemnor’s proof.
The statute, EDPL § 702(B), is to be liberally construed to affect its purpose. Hargett v Town of Ticonderoga, 56 AD3d 1016, 1018 (3d Dept 208), affd 13 NY3d 325 (2009).