Opinion ID: 890336
Heading Depth: 2
Heading Rank: 4

Heading: Workability

Text: ¶44 The City’s final contention is that the District Court’s decision is unworkable. Two of the City’s arguments in this regard reiterate matters we already have addressed, namely, the ability of governing bodies to obtain retracement surveys under § 76-3-614, MCA, and the relevance of § 1339, RCM (1907). In addition to these two points, the City claims that the parameters of its right-of-way are “unknowable” because there is no surveyed centerline in South Avenue. We note, however, that McCarthy found GLO monuments marking the locations of Section 29’s southwest corner and south quarter corner. The District Court ruled that South Avenue is a symmetrical 60-foot-wide public 26 right-of-way “divided by the section corner located at the intersection of South Avenue and Reserve Street and the quarter corner located between Kemp and Johnson Street[s].” The City presents no credible reason why the parameters of this portion of South Avenue, the only right-of-way at issue in this case, are “unknowable.” ¶45 For the foregoing reasons, we hold that the District Court did not err in determining that the South Avenue right-of-way is limited to 60 feet in width. ¶46 Issue 2. Are Landowners entitled to compensation for a taking of property? ¶47 The City contends that the District Court, in ruling that the excess land is not part of South Avenue, effectively “enlarg[ed]” Landowners’ lots. The City argues that Landowners are not entitled to compensation for a taking of “land that was never deeded to the Plaintiffs and for which the Plaintiffs have never paid taxes.” We conclude that this argument fails for three reasons. ¶48 First, as stated in the District Court’s findings of fact, the parties stipulated that the fee ownership of lots abutting South Avenue runs from the alley centerline to the South Avenue centerline—meaning that the excess land is part of Landowners’ lots regardless, the only question being whether the excess land is, or is not, encumbered by the City’s right-of-way.3 Second, the City concedes that Landowners’ lots “have been described in all past deeds by reference to the Car Line plats.” The District Court found that the Car Line plats dedicated South Avenue with a 60-foot width centered on the section line. In 3 This stipulation was based on Montana law, which states that the owner of land bounded by a road, street, or highway is presumed to own to the center thereof, although the contrary may be shown. See § 4530, RCM (1907), now codified at § 70-16-202, MCA (2011); § 4626, RCM (1907), now codified at § 70-20-307, MCA (2011); Herreid v. Hauck, 254 Mont. 496, 499, 839 P.2d 571, 573 (1992). 27 so doing, the court did not “enlarge” Landowners’ lots; the court simply determined that the excess land—which the parties had stipulated is part of Landowners’ fee ownership— is not (and has never been) encumbered by the right-of-way. We have affirmed this determination under Issue 1. Third, the District Court did not enter any findings of fact concerning Landowners’ payment or nonpayment of taxes. Moreover, the City has not presented a cogent argument, with citations to legal authority, for the proposition that a landowner is not entitled to receive compensation for a taking of property that the landowner owns but on which the landowner allegedly has not been paying taxes. A party is responsible for developing legal analysis that supports its position on appeal. In re Marriage of Damschen, 2011 MT 297, ¶ 41, 363 Mont. 19, 265 P.3d 1245. ¶49 For these reasons, we reject the City’s argument that Landowners are not entitled to compensation for a taking of property. ¶50 Issue 3. Did the District Court apply an incorrect measure of compensation? ¶51 Landowners called Kraig Kosena, an MAI certified appraiser, to testify regarding the value of bare land in the vicinity of Landowners’ properties. Kosena testified that the land fronting South Avenue between Reserve Street and Johnson Street is zoned for commercial use. He discussed the sale of a vacant parcel that he considered to be comparable (for land-valuation purposes) to other properties in the area. This parcel, located on South Avenue between Kemp Street and Johnson Street, and measuring 16,875 square feet, sold for $380,000 on April 7, 2006—which equates to $22.52 per square foot. Kosena testified that this figure is “an excellent indicator of what the market was recognizing to be the value of property in that corridor at that time” (emphasis 28 added). He acknowledged, however, that this sale occurred approximately seven months after the South Avenue Improvement Project had been completed. He also conceded that property values were generally increasing in 2006 and, thus, “if you were going earlier in time, I think you would back off of that [$22.52 per square foot] sale price in an adjustment for time.” Finally, Kosena agreed that the completion of improvements to South Avenue “could” have been a factor causing the values of properties along the street to increase from 2005 to 2006. ¶52 The City called Tom Stuckey, who also is an MAI certified appraiser. Stuckey testified that the same 16,875-square-foot parcel that sold for $22.52 per square foot in April 2006 had sold for $15.41 per square foot a year earlier, in March 2005, just before the City began construction of the South Avenue improvements. Stuckey further testified that another parcel in the vicinity sold in March 2005 with a value of $15.00 per square foot for the bare land. When asked whether the March 2005 sales figures better reflected the value of land at the commencement of construction than the April 2006 figure, Stuckey answered in the affirmative, explaining that sales information which does not exist as of the effective date of a valuation “would be misleading because it would not reflect information available to the marketplace during that time period. . . . The best sales are the sales that have occurred as close to the date of valuation as possible.” ¶53 The District Court nevertheless accepted Kosena’s $22.52 figure for purposes of assessing compensation. The City contends this was error because the proper measure of compensation is the value of the property “at the time of the taking.” The City cites § 70-30-302(1), MCA, which provides that “the right to compensation is considered to 29 have accrued at the date of the service of the summons, and the property’s current fair market value as of that date is the measure of compensation . . . .” The City maintains that the proper measure here is $15.00 per square foot. ¶54 We agree with the City that the District Court erred, but we do not agree that § 70-30-302(1), MCA, is controlling. That provision is one of several statutes setting out the procedures in formal condemnation proceedings. See generally Title 70, chapter 30, parts 2 and 3, MCA. The City did not initiate formal condemnation proceedings in this case, however. Rather, based on its “good faith” belief that its right-of-way included the land in question,4 the City proceeded with the South Avenue improvements without first obtaining a condemnation order. See §§ 70-30-206, -309, MCA. ¶55 Where the government does not acquire privately owned land statutorily, but instead physically enters into possession or institutes regulations that restrict the land’s use, the owner has a right to bring an “inverse condemnation” action to recover the value of the land. U.S. v. 191.07 Acres of Land, 482 F.3d 1132, 1136 (9th Cir. 2007). “Such a suit is ‘inverse’ because it is brought by the affected owner, not by the condemnor. The owner’s right to bring such a suit derives from the self-executing character of the constitutional provision with respect to condemnation.” Kirby Forest Indus. v. U.S., 467 U.S. 1, 5 n. 6, 104 S. Ct. 2187, 2191 n. 6 (1984) (citation and internal quotation marks omitted); see also U.S. Const. amend. V (“private property [shall not] be taken for public use, without just compensation”); Mont. Const. art. II, § 29 (“Private property shall not 4 The District Court found “that the City of Missoula acted in good faith based on the information provided to them by Mr. Tom McCarthy” when it seized the strips of land at issue. 30 be taken or damaged for public use without just compensation . . . .”). While the instant lawsuit was not originally filed as an inverse condemnation action—Landowners initially sought to enjoin the City’s road-improvement operations along South Avenue—the question of injunctive relief soon became moot, and the District Court thus granted relief based on inverse condemnation principles. ¶56 “Although the concept of ‘just compensation’ is the same in traditional and inverse condemnation proceedings, the actions are sufficiently different so that procedures applicable to one type of action do not necessarily apply to the other.” KLK, Inc. v. U.S. Dept. of the Interior, 35 F.3d 454, 457 (9th Cir. 1994). One difference, relevant here, is that in a traditional condemnation, the land is valued at the time the condemnation proceeding occurs (specifically, in Montana, at the date of the service of the summons, § 70-30-302(1), MCA), while in an inverse condemnation action, just compensation is based on the value of the land at the time it is seized. KLK, Inc., 35 F.3d at 457 (citing U.S. v. Clarke, 445 U.S. 253, 258, 100 S. Ct. 1127, 1130 (1980)). Here, the City commenced physical occupation of, and thus seized, the land at issue in April 2005. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 426, 102 S. Ct. 3164, 3171 (1982) (“a permanent physical occupation authorized by government is a taking”). Kosena conceded, however, that his $22.52-per-square-foot figure reflected the value of bare land in the South Avenue corridor in April 2006, not April 2005. He stated that “[i]f I were appraising something in there with an April 2005 date . . . , I think I could, with a reasonable degree of certainty, with market data, extrapolate a time adjustment.” Kosena did not provide a time-adjusted figure representing land values in April 2005. 31 ¶57 Landowners emphasize that we review an award of damages to determine whether the trial court abused its discretion. Hansen v. Granite County, 2010 MT 107, ¶ 43, 356 Mont. 269, 232 P.3d 409. “The abuse-of-discretion standard,” however, “includes review to determine that the discretion was not guided by erroneous legal conclusions.” Koon v. United States, 518 U.S. 81, 100, 116 S. Ct. 2035, 2048 (1996); see also Cooter & Gell, 496 U.S. at 405, 110 S. Ct. at 2461 (a court necessarily abuses its discretion if it bases its ruling on an erroneous view of the law). In applying a measure of compensation that did not reflect the value of Landowners’ land at the time the City seized it, the District Court based its ruling on an erroneous view of the law and thereby abused its discretion. We accordingly reverse the portion of the District Court’s judgment which specifies Landowners’ compensation for a taking of property and remand for further proceedings on this question, as detailed below in the Conclusion section. ¶58 Issue 4. May Landowners recover their costs and attorney’s fees? ¶59 The City contends that the District Court lacked authority to award Landowners their costs and attorney’s fees. The City notes that Montana follows the American Rule, under which a party in a civil action may not recover attorney’s fees absent a specific contractual or statutory provision. Hughes v. Ahlgren, 2011 MT 189, ¶ 13, 361 Mont. 319, 258 P.3d 439. The City admits that costs and attorney’s fees are recoverable in a condemnation action under § 70-30-305, MCA, but the City argues that Landowners have not met the requirements of this statute. In response, Landowners argue that they have satisfied § 70-30-305, MCA. In addition, they cite § 27-8-313, MCA, as authority for an award of fees in this case. We conclude that we need not address these statutory 32 arguments, however, because Article II, Section 29 of the Montana Constitution, upon which the District Court relied, provides the necessary authority. ¶60 Article II, Section 29 states in full: 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. Mont. Const. art. II, § 29 (emphasis added). The District Court observed in its findings of fact and conclusions of law that the City could have pursued condemnation proceedings to obtain the land needed for the planned improvements to South Avenue. Instead, although not acting in bad faith, the City nevertheless proceeded to take portions of Landowners’ properties for public use without compensation. In so doing, the City forced Landowners to commence this litigation to protect their property rights. They ultimately prevailed on their claim that the land seized by the City was not part of the City’s right-of-way. We agree with the District Court that, in these circumstances, Landowners are constitutionally entitled to the “necessary expenses of litigation,” Mont. Const. art. II, § 29, which include court costs and reasonable attorney’s fees. See Mont. Dept. of Hwys. v. Standley Bros., 215 Mont. 475, 482, 699 P.2d 60, 64 (1985); Rauser v. Toston Irrigation Dist., 172 Mont. 530, 543-45, 565 P.2d 632, 640-41 (1977). ¶61 The City further argues that it is not liable for costs and attorney’s fees unless its defense to this lawsuit was “frivolous” or “pursued in bad faith.” See § 25-10-711(1), MCA (providing, in relevant part, that in a civil action brought against a political subdivision of the State, the plaintiff is entitled to costs and attorney’s fees if the plaintiff 33 prevails and if the court finds that the political subdivision’s defense was “frivolous or pursued in bad faith”). The City notes that the District Court made no finding of frivolousness or bad faith on the part of the City. We conclude, however, that because the award of costs and fees in the present case is premised on an express provision of the Montana Constitution, § 25-10-711(1), MCA, is inapplicable. The general limitation on costs and fees in the statute does not apply in the face of the explicit constitutional directive for costs and fees in a case brought under Article II, Section 29. ¶62 The District Court awarded Landowners $115,352 in attorney’s fees, $25,132 in expert-witness fees, and $4,910 in allowable costs (all of which were incurred in the main litigation, as opposed to the “fees for fees” litigation discussed below in Issue 5). The District Court expressly found that awarding fees and costs totaling $145,394 “is a fair and reasonable award in this case.” Aside from arguing that the District Court lacked authority to make this award, the City presents no argument that the District Court abused its discretion as to the amount awarded. We accordingly affirm that award. ¶63 Issue 5. Did the District Court abuse its discretion in denying Landowners “fees for fees” and in directing counsel not to pass certain fees on to his clients? ¶64 In response to Landowners’ Bill of Fees and Costs, the City filed objections on the ground that not all of the claimed fees and costs were reasonable and necessary. The District Court held a hearing, at which time Landowners presented expert testimony from attorney Jon Beal. Thereafter, Landowners supplemented their Bill of Fees and Costs to include the expenses incurred in proving their underlying fees and costs. The City objected to this “fees for fees” request. 34 ¶65 The District Court found the City’s fees-for-fees objections “well-taken.” Citing Mont. Dept. of Hwys. v. McGuckin, 242 Mont. 81, 788 P.2d 926 (1990), Mont. Dept. of Transp. v. Slack, 2001 MT 137, 305 Mont. 488, 29 P.3d 503, and K&R Partn. v. City of Whitefish, 2008 MT 228, 344 Mont. 336, 189 P.3d 593, the District Court stated: The Court does not believe this case falls within the rare exception in which extraordinary circumstances justify an award of attorney fees expended by Plaintiffs’ counsel in proving the amount and reasonableness of his attorney fees. [Citations to McGuckin, Slack, and K&R Partnership.] It is also this Court’s opinion that recovery of attorney Jon Beal’s fees billed in the amount of $4,000.00 on the issue of the reasonableness of attorney fees claimed by Plaintiff’s counsel is not chargeable to the City as well. Furthermore, under the above cited cases, Plaintiffs’ counsel shall not pass this cost onto his clients, as attorney fees for proving the amount and reasonableness of attorney fees should be borne by the attorney and not his client or the other party. In their cross-appeal, Landowners contend that the District Court abused its discretion in rendering these rulings. ¶66 This Court has observed that the award of costs and attorney’s fees incurred in proving underlying litigation expenses in a condemnation action is “fraught with problems.” McGuckin, 242 Mont. at 85, 788 P.2d at 929. On one hand, the condemnor could object to every expense item claimed, even if all expenses claimed are reasonable, thereby forcing the landowner to incur additional expenses in securing his award and potentially denying the landowner a net recovery. This would be contrary to the policy underlying Article II, Section 29 “to make the landowner whole after the State takes his property.” McGuckin, 242 Mont. at 84, 85, 788 P.2d at 928, 929. On the other hand, the landowner and his counsel could make unreasonable and inflated expense claims that force the condemnor to object and lead to further litigation upon which a landowner’s 35 counsel can claim additional fees. This would place an unwarranted cost burden on the condemnor. McGuckin, 242 Mont. at 85-86, 788 P.2d at 929. ¶67 Given these concerns, the Court adopted two rules applicable to fees-for-fees situations in condemnation actions. First, the costs and attorney’s fees associated with proving the attorney’s fees incurred in the underlying litigation generally must be borne the landowner’s counsel. Neither the condemnor nor the landowner/client is required to pay this expense. McGuckin, 242 Mont. at 86-87, 788 P.2d at 929-30; Slack, ¶ 31. There is one “rare” exception to this rule: In order to achieve an equitable result in “extraordinary circumstances,” the district court in its sound discretion may require the condemnor to pay the expenses associated with proving the underlying attorney’s fees. McGuckin, 242 Mont. at 87, 788 P.2d at 930; see also Slack, ¶ 33 (“extraordinary circumstances” refers to “those circumstances in which the State’s objection to the condemnee’s fee claim is unreasonable”). Second, the costs and attorney’s fees associated with proving underlying litigation expenses other than attorney’s fees are chargeable to the client and to the condemnor. McGuckin, 242 Mont. at 87, 788 P.2d at 930; K&R Partn., ¶ 74. The decision to award such costs and fees is, again, within the sound discretion of the district court. McGuckin, 242 Mont. at 87, 788 P.2d at 930; K&R Partn., ¶¶ 73-75. ¶68 Landowners have not presented any persuasive argument for departing from these rules or for applying a different rule in inverse condemnation cases. Thus, with one exception discussed below, we conclude that Landowners have not demonstrated that the District Court’s fees-for-fees rulings should be reversed. The City’s objections to 36 Landowners’ underlying attorney’s fees were not unreasonable; indeed, the District Court sustained some of the City’s objections. The District Court acted within its considerable discretion, therefore, when it concluded that this case is not one of the “extraordinary circumstances” we were referring to in McGuckin, and it properly denied an award of costs and fees incurred in proving the amount of the underlying attorney’s fees. See Slack, ¶ 33. Furthermore, with respect to Landowners’ underlying litigation expenses other than attorney’s fees, the District Court found the City’s objections to Landowners’ costs and fees incurred in proving these expenses to be “well-taken.” This was a discretionary call by the District Court, and Landowners have not persuaded us that the court abused its discretion. ¶69 Hence, in the present case, Landowners and their counsel must bear the costs and fees incurred in proving the costs and fees of the underlying litigation. Under McGuckin, 242 Mont. at 87, 788 P.2d at 930, Landowners’ counsel may not charge his clients with the expense of proving the underlying attorney’s fees, but he may pass on to his clients the expense of proving the underlying litigation expenses other than attorney’s fees. Landowners assert that the District Court did not draw this distinction in its order. They point out that their expert, Beal, testified not only as to the reasonableness of their underlying attorney’s fees, but also as to the reasonableness of their other underlying litigation expenses. Yet, the District Court barred counsel from passing on to his clients any of Beal’s $4,000 fee. We agree with Landowners that McGuckin does not prohibit Landowners’ counsel from charging his clients for the portion of Beal’s fee that relates to Beal’s analysis and testimony regarding the underlying litigation expenses other than 37 attorney’s fees. We thus vacate the portion of the District Court’s judgment which prohibits Landowners’ counsel from passing litigation expenses on to his clients and remand for further proceedings on this issue, as detailed below in the Conclusion section. ¶70 Issue 6. Did the District Court abuse its discretion in denying Landowners damages and fees under 42 U.S.C. §§ 1983 and 1988? ¶71 In Count 4 of their Amended Complaint, Landowners asserted a claim under 42 U.S.C. § 1983 to vindicate various constitutional and statutory rights. Specifically, they alleged that the City had arbitrarily and illegally taken their property for public use without compensation and due process of law, in violation of the Fifth and Fourteenth Amendments to the United States Constitution, Article II, Sections 3, 17, and 29 of the Montana Constitution, and § 70-30-101, MCA. Landowners contend on appeal that the District Court abused its discretion by failing to award them damages and attorney’s fees under 42 U.S.C. §§ 1983 and 1988, respectively, for the City’s alleged violations “of their State and Federal Constitutional rights.” We disagree. ¶72 As an initial matter, Landowners are not entitled to damages or attorney’s fees under §§ 1983 and 1988 for violations of their rights under state law. Ybarra v. Bastian, 647 F.2d 891, 892-93 (9th Cir. 1981). Further, as to Landowners’ claims under federal law, the Fifth Amendment’s Takings Clause (made applicable to the States through the Fourteenth Amendment, Dolan v. City of Tigard, 512 U.S. 374, 383-84, 114 S. Ct. 2309, 2316 (1994)) proscribes not the taking of property, but taking without just compensation. Williamson County Regl. Plan. Commn. v. Hamilton Bank, 473 U.S. 172, 194, 105 S. Ct. 3108, 3120 (1985). Here, the District Court awarded Landowners just compensation— 38 including reasonable and necessary attorney’s fees, expert-witness fees, and court costs— for the taking of their property. Landowners fail to explain what further compensation the Fifth Amendment’s Takings Clause would provide them for the City’s physical occupation of their land. Cf. W. Linn Corp. Park LLC v. City of W. Linn, 534 F.3d 1091, 1100 (9th Cir. 2008) (if a State provides an adequate procedure for seeking just compensation, the property owner cannot claim a violation of the federal Takings Clause until the property owner has used the procedure and been denied just compensation). ¶73 Finally, regarding the manner in which the City acted, Landowners argued in the District Court that there would be no deterrence against future transgressions unless the City was forced to pay additional damages for civil rights violations. The District Court declined to award such damages, however, because the City “did not act in bad faith in relying on its expert’s opinion at the time that the City owned the strips of land at issue,” and because “public policy issues weigh against the conclusion that the taxpayers should be held accountable for § 1983 damages under the facts of this case.” Landowners have not shown that the District Court’s findings are clearly erroneous or that the court abused its discretion in declining to award damages beyond the just compensation required by Article II, Section 29.