Court Opinion

ID: 2735683
Source: CourtListenerOpinion
Date Created: 2014-09-22 18:04:35.590054+00
Date Added: 2024-06-11T08:39:32.886150
License: Public Domain

This opinion will be unpublished and
                          may not be cited except as provided by
                          Minn. Stat. § 480A.08, subd. 3 (2012).

                               STATE OF MINNESOTA
                               IN COURT OF APPEALS
                                     A13-0429

                                   State of Minnesota,
                     by its Commissioner of Transportation, petitioner,
                                        Appellant,

                                             vs.

                                    Debra Jean Johnson,
                               a/k/a Debra J. Johnson; et al.,
                                       Respondents,

                      Great Lakes Gas Transmission Company, et al.,
                                  Respondents Below.

                                Filed September 22, 2014
                                        Affirmed
                                      Reilly, Judge

                              Beltrami County District Court
                                  File No. 04-CV-10-151

Lori Swanson, Attorney General, Stephen D. Melchionne, Natasha Karn, Assistant
Attorneys General, St. Paul, Minnesota (for appellant)

Daniel J. Biersdorf, Ryan Simatic, Biersdorf & Associates, P.A., Minneapolis, Minnesota
(for respondents)

         Considered and decided by Peterson, Presiding Judge; Reilly, Judge; and Reyes,

Judge.
                        UNPUBLISHED OPINION

REILLY, Judge

      Appellant challenges the district court’s award of attorney fees to respondents

arising out of an eminent-domain action, arguing that the district court’s award was

clearly erroneous and not supported by the evidence in the record. Because the district

court did not abuse its discretion by applying the factors enunciated by the supreme court

in State v. Paulson, 290 Minn. 371, 188 N.W.2d 424 (1971), to adjust a lodestar-based

attorney fee upwards, and because the district court did not clearly err in determining a

reasonable award of attorney fees, we affirm.

                                        FACTS

      Respondents Diane Davis, Jay Davis, and Northwoods Investments of Bemidji,

LLC, are the owners of real property located in Bemidji. The property is low-density

commercial property composed of two tracts of 2.31 acres and 16.46 acres for a total of

18.77 acres, located on the east side of Highway 197 on the north-east quadrant of the

intersection of Highway 197/71 and Highway 2. Prior to condemnation, respondents’

property had direct access from Highway 197 on its west side. Diane Davis and Jay

Davis operate the Royal Oaks RV Park campground on the largest portion of the

property. The 2.31-acre portion of the property fronting Highway 197 is known as

Northwoods Investment of Bemidji, LLC, and is held by Diane Davis and Jay Davis as

an investment property to take advantage of the road frontage and the Highway 2 exit

ramp location.

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       The Minnesota Department of Transportation (MnDOT) determined that the state

needed to exercise its eminent-domain powers to take certain lands in Beltrami County

for trunk highway purposes, including portions of respondents’ property. In August

2009, the state presented a certified offer to respondents of $48,300, which was declined.

The last written offer by MnDOT to respondents was $112,600.

       In December 2009, the state filed a condemnation petition under Minn. Stat.

§ 117.042 (2012) to obtain fee simple absolute title to the lands, including right-of-access

to the highway and temporary easements. With respect to respondents’ land in particular,

the taking consisted of 0.59 acres of fee simple interest, right-of-access to the highway

along the east edge of the new right-of-way, and a ten-inch strip of temporary easement

along the new right-of-way. As a result of the taking, respondents’ property no longer

had direct access from the highway.

       The condemnation matter came before the district court in April 2010.

Respondents objected to the granting of the petition. The district court determined that

the proposed taking “is for a public use or public purpose, and is necessary, and as such is

provided for and authorized by law,” and granted the state title and possession of the

taking through the eminent-domain process. Following issuance of the condemnation

order, the parties began settlement discussions on respondents’ damages claim.

       In September 2010, respondents retained counsel to represent them in their claim

against the state. The representation agreement between respondents and their attorney

provided that counsel would be entitled to a contingency-fee award equal to one-third of

the difference between the last written offer by the state and the final settlement,

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including interest. Respondents’ attorney engaged in protracted settlement negotiations

on their behalf and ultimately secured a settlement in the amount of $425,000 to fully and

finally settle all claims in the action, exclusive of claims arising under Minn. Stat.

§ 117.031 (2012) for statutory attorney fees, costs, and expenses.        The stipulated

settlement agreement was approved by the state in March 2012.

       In June 2012, respondents moved for attorney fees, litigation expenses, and

interest under Minnesota Statute section 117.031. Respondents sought a contingency fee

of $113,531.92, representing one-third of the difference between the last written offer of

$112,600 and the settlement of $453,195.75, including the $425,000 award and

$28,195.74 in interest. Respondents submitted affidavits from their counsel including the

representation agreement, a summary of the hours expended by the firm, and an affidavit

of attorney fees and costs. The state opposed the motion, and the parties appeared before

the district court in October 2012 on respondents’ motion. The district court issued its

order on January 8, 2013, granting respondents’ motion for an award of attorney fees as

follows: $113,531.92 for attorney fees, $8,000 in appraisal expenses, and $769.89 in

costs, for a total award of $122,301.81. The state appeals.

                                     DECISION

       We review an award of attorney fees for an abuse of discretion. Cnty. of Dakota v.

Cameron, 839 N.W.2d 700, 711 (Minn. 2013).            A district court’s factual findings

underlying an award of attorney fees will not be set aside unless clearly erroneous. Id.

The reasonable value of an attorney’s work is a question of fact and the district court’s

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findings will be upheld unless they are clearly erroneous. Cnty. of Scott v. Johnston, 841
N.W.2d 357, 361 (Minn. App. 2013).

                                            I.

       The first question presented is whether the district court used the proper method in

awarding attorney fees under Minn. Stat. § 117.031(a). This section provides that a

property-owner is entitled to an award of “reasonable attorney fees, litigation expenses,

appraisal fees, other experts fees, and other related costs” if the final judgment or

damages award in an eminent-domain proceeding “is more than 40 percent greater than

the last written offer of compensation made by the condemning authority prior to the

filing of the petition[.]” Minn. Stat. § 117.031. The district court found that MnDOT’s

original quick-take offer for the property was $48,300 and MnDOT’s last written offer

was $112,600. Because the stipulated damages award was $425,000, the district court

correctly determined that the award exceeded the last written offer by more than 40% and

respondents were entitled to reasonable statutory attorney fees.

       On appeal, the state challenges the district court’s method of determining the

reasonableness of the attorney-fee award. The Minnesota Supreme Court’s analysis in

Cameron is instructive. 839 N.W.2d at 700. The Cameron decision directs that “the

lodestar approach governs the determination of the reasonableness of an award of

attorney fees under Minn. Stat. § 117.031(a).” Id. at 711. The lodestar method requires a

district court to determine the number of hours reasonably expended on the case and then

multiply that number by a reasonable hourly rate. Id. However, “[t]he product of

reasonable hours [times] a reasonable rate does not end the inquiry.” Id. The district

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court must consider “all relevant circumstances when evaluating the reasonableness of

the hours expended by attorneys and their hourly rates.”            Id.    Specific factual

considerations, known as the Paulson factors, include:

              the time and labor required; the nature and difficulty of the
              responsibility assumed; the amount involved and the results
              obtained; the fees customarily charged for similar legal
              services; the experience, reputation, and ability of counsel;
              and the fee arrangement existing between counsel and the
              client.

Cameron, 839 N.W.2d at 711 (quoting 290 Minn. at 373, 188 N.W.2d at 426).

       The state argues that the district court failed to properly apply the lodestar method

and instead impermissibly used a contingency rate to determine the attorney-fee award.

Contrary to the state’s assertion, however, the district court addressed both the lodestar

method and the Paulson factors in its analysis. The district court determined that the

award sought by respondents was reasonable “by computing the reasonable hourly rate

times a reasonable number of hours under lodestar and adjusting upward for various

Paulson factors.” Although the state is correct that the district court’s attorney-fee award

was not based solely on the lodestar method, Minnesota courts have long recognized that

other considerations, including the results obtained by the attorney for the prevailing

party may lead the district court to adjust the fee upward or downward. Specialized

Tours, Inc. v. Hagen, 392 N.W.2d 520, 541-42 (Minn. 1986) (citing Hensley v.

Eckerhart, 461 U.S. 424, 434, 103 S. Ct. 1933, 1940 (1983)). This is consistent with the

district court’s approach here.     The district court did not abuse its discretion in

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considering the Paulson factors in its award of attorney fees and using those factors to

adjust the attorney-fee award upward.

                                            II.

       Next, we turn to the issue of whether the district court clearly erred in determining

the reasonable amount of attorney fees. Minnesota caselaw is clear that a determination

regarding the reasonable value of legal services is a “question of fact to be determined by

the evidence submitted, the facts disclosed by the record of the proceedings, and the

court’s own knowledge of the case.” Paulson, 290 Minn. at 373, 188 N.W.2d at 426.

       The district court began its inquiry by performing a lodestar analysis. The district

court reviewed the hourly breakdown for the work performed and concluded that the

hourly rates for staff and attorney work were reasonable. The district court then reviewed

the Paulson factors and made several specific factual findings.          In determining a

reasonable amount of attorney fees, the district court found that respondents’ attorney had

“extensive experience and ability,” that the “nature and difficulty of the responsibility

assumed . . . was not insubstantial,” and that the result obtained was “considerably large.”

The district court also recognized that respondents entered into a contingency-fee

arrangement with their counsel, which is “standard within the eminent domain bar.”

Based upon the Paulson factors, the district court awarded respondent one-third of the

difference between the last written offer and the settlement.1

1
   The state argued that it offered respondents, who at that time were representing
themselves, $300,000 during settlement negotiations in September 2010 and respondents’
attorney only managed to secure an additional $125,000 for his clients. Because this
offer was not reduced to writing and the statute directs us to consider “the last written

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       The state contends that the district court misapplied the Paulson factors by

weighing certain factors more heavily than others and by not providing enough written

detail on each factor. Contrary to the state’s assertion, however, the district court plainly

stated that its determination regarding attorney fees took into consideration “all of the

applicable circumstances and factors.” The district court, being most familiar with the

pertinent aspects of respondents’ case, “is in the best position to evaluate the

reasonableness of requested attorney fees.” Anderson v. Hunter, Keith, Marshall & Co.,

Inc., 417 N.W.2d 619, 629 (Minn. 1988). The district court acted within its discretion in

calculating the attorney-fee award. Considering the factual record as a whole, the district

court’s findings are supported by reasonable evidence and are not clearly erroneous.

       Affirmed.

offer of compensation,” Minn. Stat. § 117.031, we are not persuaded by the state’s
argument that we must consider the $300,000 offer which was not reduced to writing.

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