No. 89-273 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

-- - -- 

$2 

THE STATE OF MONTANA, ACTING BY --5 7-; 

AND THROUGH THE DEPARTMENT OF ,"" 3 

.--- , . HIGHWAYS OF THE STATE OF MONTANA, 

Plaintiff and Respondent, 

RONALD L. McGUCKIN, BETTY STEGER WICKER, 

FREDERICK C. JANDRON, COLETTE RENEE JANDRON, 

and MICHELLE A. JANDRON, all of whom claim 

some interest in this action, and BANK OF 

COLUMBIA FALLS, Mortgagee, 

Defendants and Appellants. 

APPEAL FROM: District Court of the Eleventh Judicial District, 

In and for the County of Flathead, 

The Honorable Leif Erickson, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Dale L. McGarvey, Allan McGarvey argued; McGarvey, 

Heberling, Sullivan & McGarvey, Kalispell, Montana 

For Respondent: 

James A. Lewis argued, Dept. of Highways, Helena, 

Montana 

Filed: 

Submitted: February 6, 1990 

Decided: March 16, 1990 

\ 'k& 

Clerk 
Justice R. C. McDonough delivered the Opinion of the Court. 

This appeal arises out of a condemnation action brought 

before the Eleventh Judicial District Court, Flathead County. 

Appellants are defendant landowners of commercial properties 

located in Coram, Montana condemned by the Department of 

Highways of the State of Montana (Department). A final 

settlement of the amount of just compensation was reached 

after some 24 years of negotiation and progress toward trial. 

The landowners submitted an itemized Memorandum of Litigation 

Expenses, including attorney fees, which the Department 

opposed. A hearing was held on the litigation expense issue. 

Landowners now appeal the February 1, 1989 order of the 

District Court denying them an award of attorney fees 

incurred to prove attorney fees. We affirm. 

The landowners raise a sole issue on appeal: Did the 

District Court err in denying the defendant landowners an 

award of attorney fees for time and effort expended in 

securing an award of necessary litigation expenses in the 

condemnation action, including costs and attorney fees? 

After making an initial offer of $69,800.00 which was 

rejected by the landowners, the Department filed a 

condemnation action and served a complaint upon the 

landowners. The landowners answered demanding just 

compensation in the amount of $700,000.00. To obtain 
possession the Department deposited $321,000 and the 

landowners withdrew the entire amount on March 4, 1985. 

After various discovery and other proceedings the case 

was set for jury trial. On April 6, 1987 the Department 

served and filed a copy of its final settlement offer as 

required by statute. The final settlement offer provided for 

just compensation in the amount of $227,300.00 and included 

an agreement to pay all of the landowners' litigation 

expenses up until April 6, 1987, which was accepted by the 

landowners. 

The landowners filed their Memorandum of Litigation 

Expenses, demanding a total of $145,137.62 in litigation 

expenses. The Department opposed this amount and filed a 

Motion to Retax Costs. A hearing was held to determine the 

amount of necessary expenses of litigation. After the 

evidentiary hearing the Department offered $63,000 to the 

landowners for all litigation expenses. In their proposed 

findings the landowners increased their claim for necessary 

litigation expenses to $161,972.95. 

The court entered its Findings, Conclusions and Order 

awarding the landowners $76,540.12 as necessary expenses of 

litigation. This amount included $3,359.50 as costs of 

taking depositions incurred in proving costs of necessary 

litigation expenses. The court denied the request for 

attorney fees incurred in proving the necessary costs and 
fees. Landowners moved to amend the Order to include 

additional costs including attorney fees incurred as a 

result of the dispute over litigation expenses. On February 

1, 1989 the District Court denied this motion in part and 

granted it in part. It increased the award by $4,897.00 to 

$81,437.12 to include some additional costs and expenses. 

The court again denied the request for attorney fees incurred 

in proving the litigation expense. Landowners now appeal 

the court's Order denying them attorney fees incurred in 

proving the necessary expenses of litigation. 

The State's power of eminent domain is controlled by 

Article 11, Section 29 of the Montana Constitution which 

provides : 

Section 29. Eminent Domain. Private Property 

shall not be taken or damaged for public use 

without just compensation to the full extent of the 

loss having been first made to or paid into court 

for the owner. In the event of litigation, just 

compensation shall include necessary expenses of 

litigation to be awarded by the court when the 

private property owner prevails. 

The policy underlying the constitutional provision is to make 

the landowner whole after the State takes his property. This 

constitutional mandate is further embodied in the 

condemnation statutes: 

(1) The condemnor shall, within 30 days after an 

appeal is perfected from the commissioner's award 

or report or not more than 60 days after waiver of 
appointment of condemnation commissioners, submit 

- to condemnee - a written final offer of judgment for 

the property - to - be condemned, togzher -- with- the 

necessary expenses of condemnee -- then accrued. . . . (2) . . In the event of litisation and when the 

private property owner prevails by receiving an 

award in excess of the final offer of the 

condemnor, the court shall award the necessary 

expenses of litigation to the condemnee. 

Section 70-30-305, MCA. (Emphasis added. ) Necessary 

expenses of litigation are defined as: 

. . . reasonable and necessary attorney fees, 

expert witness fees, exhibit costs, and court 

costs. 

(2) Reasonable and necessary attorney fees 

are the customary hourly rates for an attorney's 

services in the county in which the trial is held. 

Reasonable and necessary attorney fees shall be 

computed on an hourly basis and may not be computed 

on the basis of any contingent fee contract entered 

into after July 1, 1977. 

(3) Reasonable and necessary expert witness 

fees may not exceed the customary rate for the 

services of a witness of such expertise in the 

county in which trial is held. 

Section 70-30-306, MCA. 

Both the statute, § 70-30-305(1), MCA, and the State's 

final offer of settlement contemplate that the Department's 

final offer will only include the landowners' necessary 

expenses of litigation accrued until the date a settlement is 

reached. The Department contends that this precludes the 

landowners from receiving any award of costs and attorney 

fees incurred in proving their litigation expense, since all 

such expenses were incurred after April 6, 1987, the date the 
Department served its final offer and allegedly terminated 

the accrual of further expenses. 

We disagree with this contention. In doing so we note 

that the situation presented here is a novel one not 

contemplated by the Constitution or the condemnation 

statutes. For us to strictly construe the terms of the 

settlement agreement as unequivocally precluding an award of 

any expenses incurred after the date of settlement could 

result in denying a landowner just compensation in direct 

contravention of Article 11, Section 29 of the Constitution. 

The question of whether to award costs and attorney fees 

on proving litigation expenses is fraught with problems. For 

example, two extreme situations can arise. First, the State 

could object to every expense item claimed, as they did here, 

even if all expenses claimed were reasonable, thereby forcing 

the landowners to incur additional expenses in securing their 

award. If they are precluded from recovering any additional 

expenses after the date the initial settlement was reached, 

there is nothing to deter the State from making such an 

unreasonable objection in all cases and hope the Court might 

agree with them. The end result could deny the landowner a 

net recovery. On the other hand, the landowner and counsel 

should not be allowed to benefit from making unreasonable 

and inflated expense claims that force the State to object 

and lead to further litigation upon which a landowner's 
counsel can claim further fees. This would create an 

incentive for a landowner's counsel to make unreasonable and 

inflated claims in order to perpetuate litigation on which 

they can claim fees and also place an additional unwarranted 

cost burden on the State in defending overstated claims. 

Here, we have a situation somewhere between the two 

extremes illustrated above. Not only did the Department 

object to each and every item listed in the landowners' 

Memorandum of Litigation Expenses, but the Department 

alleges, and the District Court agreed in part, that the 

expenses claimed in the landowners' Memorandum were inflated 

and unreasonable as shown by the court's initial award of 

$76,540.12 out of the $145,137.62 initially claimed by the 

landowners. Thus, while an award of litigation expenses may 

be required under § 70-30-305, MCA, to afford the landowner a 

net recovery, it is within the discretion of the district 

court to determine what expenses are "necessary" and 

"reasonable." - See § 70-30-306, MCA. 

With respect to attorney fees incurred in proving 

attorney fees, it is apparent that a landowner's counsel is 

acting primarily in his own interest rather than for the 

benefit of his client. The landowner's condemnation award 

already secured, the outcome of the litigation expense 

hearing becomes important to the attorney as well as the 

client, and with respect to attorney fees awarded, any result 
secured by the services of the attorney would be for his 

benefit rather than the client. - See, - e.g. Glenview Park 

District v. Redemptorists Fathers of Glenview (Ill. 1980), 

We therefore conclude that an award of attorney fees 

incurred in proving the amount of attorney fees incurred in 

the litigation is generally not a necessary and reasonable 

expense of the landowner. In this regard, we endorse the 

District Court's reliance on this Court's decision in In re 

the Marriage of Bliss (1980), 187 Mont. 331, 609 P.2d 1209, 

where we stated: 

F7e reject the notion that the court may require 

one party to pay opposing counsel for his time 

spent in seeking justification of the fees he 

desires. The practice of law has its burdens as 

well as benefits, and this is one burden that 

counsel - must -- bear without an expectation of 

compensation. (Emphasis by the District court.) 

Bliss, 609 P.2d at 1213. In applying Bliss to the case at 

bar, the District Court also concluded: 

Obviously, if it is counsel's burden to bear the 

costs of proving attorney fees then it is not the 

burden of the opposing party nor of the attorney's 

own client. Thus, the amount awarded to the 

Defendant landowners in this case will not [be] 

diminished as they may not be charged by their 

attorney for time spent by him to prove the amount 

of his fees. 

Order of February 1, 1989, p. 3. We also conclude that it 

is counsel's burden to bear this expense and not the opposing 

party in such cases. However, in order to achieve an 
equitable result in extraordinary circumstances, the District 

Court in its sound discretion may require the opposing party 

to bear this expense. This would be a rare exception and not 

the rule. Here, the State may not be charged for attorney 

fees incurred by landownerst counsel in proving their 

attorney fees. Nor may counsel charge this expense to his 

client, as this could result in depriving landowner/client of 

a net recovery. 

However, we conclude that costs and attorney fees 

incurred in proving necessary and reasonable litigation 

expenses other than attorney fees are chargeable to the 

client and to the other party, taking into consideration the 

other party's litigation expenses in defending other costs 

and attorney fees disallowed or unnecessary and unreasonable. 

The duty of determination of necessary and reasonable 

litigation expenses, is within the sound discretion of the 

district court, and will not be disturbed upon review absent 

an abuse of that discretion. Shors v. Branch (1986), 221 

Mont. 390, 402, 720 P.2d 239, 246; Talmage v. Gruss (1983), 

202 Mont. 410, 412, 658 P.2d 419, 420. 

Here, the District Court's findings of fact and 

conclusions of law contain an itemized analysis of each 

expense claimed and an allowance for each expense to the 

extent that it is "reasonable" and "necessary." The court 

did not allow attorney fees incurred in proving attorney fees 
based on our holding in Bliss, but did allow the costs of 

deposing witnesses for proving the amount of attorney fees. 

We find no abuse of discretion. 

AFFIRMED. 

Justice 

We Concur: 

" Chief Justice