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Eminent Domain Procedure Law 701
— Continued
By M. Robert Goldstein and Michael
J. Goldstein
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 appraisers' fees.
The statute had a rocky start. The first lower court decision
held that the statute did not apply to then pending cases.
It was, however, followed by a number of Court of Claims and
other cases holding differently. (L.I. Pines Barrens Water
Corp v. State of New York., 144 Misc2d 665, 669, 544 NYS2d
939 (Ct. of Claims, Silverman, J., 1989); Spear v. State
of N.Y., (Ct of Claims, Claim No. 73272, Margolis, J.,
1989); In re Transit Authority (Gun Hill Bus Garage),
142 Misc2d 629, 538 NYS2d 161 (Sup. Ct., Bx. Co., Shapiro
J., 1989); Frisbro Enterprises Ltd. v. State of N.Y.,
145 Misc2d 397, 546 NYS2d 789 (Ct of Claims, Silverman, J.);
Town of Esopus v. Gordon, 143 Misc2d 193, 539 NYS2d
841 (Sup. Ct. Ulster Co., Connor, J., 1989), aff'd __
AD2d __ 557 NYS2d 732 (3d Dept., Sept. 1990.) This disparity
was subsequently clarified by the Appellate Division, Second
Department, which held the statute to be remedial in nature
and gave retroactive effect to cases that were not finally
determined as of the date of its enactment (Matter of N.Y.C.
Trans. Auth. (Superior Reed & Rattan Furniture Co.),
160 AD2d 705, 553 NYS2d 785 (2d Dept., 1990); Matter of
the City of New York (Long Island Sound Realty) 160 AD2d
696, 553 NYS2d 789 (2d Dept., 1990).
In Excess of Condemnor's Proof
Over that hurdle, the courts began to address the question
of at what point was the award substantially in excess of
the condemnor's proof to qualify for an additional allowance.
The courts early appreciated that the drafters of the statute
made an incorrect assumption that the initial offer to the
condemnee mandated by EDPL would necessarily be the amount
of the condemnor's proof at the trial. The amount of
that offer, when turned down, was then made as an advance
payment. What soon became apparent is that, quite often, the
condemnor would make an offer based on an existing appraisal
that was considerably lower than the amount of its appraisal
made later and subsequently submitted at the trial.
Thus we find in Frisbro, supra, that the initial offer
was $19,000 but that the appraisal submitted on the trial
was $30,000 with an award of $56,390. The court in granting
an additional allowance made the comparison, not to the proof
on the trial, but to the initial offer, citing Long Island
Pine Barrens Water Corp., supra, and the lower Court decision
in Done Holding Co. v. State of N.Y., (Ct. of Claims,
Claim No. 68231, filed Aug. 18, 1989), aff'd. 144 AD2d
528, 565 NYS2d 178 (2d Sept. 1991). In Done, supra,
the initial offer was $53,200, the State's proof at the
trial was $204,000 with an award of $344,000 and an increase
by the Appellate Division to $377,000. In Long Island Pine
Barrens, supra, the initial offer was $1,350 the trail
appraisal was $27,000 and the award was $29,650. In both cases
the comparison was to the initial offer, and an additional
allowance was granted. In Karas v. State of N.Y., __
AD2d __, 565, NYS2d 185 (2d Dept., 1991) the court did not
even mention the amount of the trial appraisal but just compared
the award of $257,000 directly to the pre-litigation offer
of $182,500. At this point, it is a given that the award will
be compared to the initial offer that brought the claimant
into court.
The reasoning for this approach was made quite clear in the
decision of Judge Silverman in Long Island Pine Barrens,
supra, where the court stated that "clearly the intent
of the statute was to correct inequities relative to the initial
offer." The court made specific reference for this statement
not only to the bill jacket, but to the Report of the Law
Revision Commission (McKinney's Session Laws —
7/87 No. 4, Page A-455), which drafted the original bill.
As the court stated: "The purpose of the amendment would
be defeated were we to use amounts for comparison which were
not available until after the condemnee has retained an attorney
and an expert and filed his own appraisal. We must base our
determination on the amount that was offered at a time when
the litigation expenses could be saved." The reasoning
and approach was adopted by the Appellate Division.
Of course, all of this is based on another assumption, that
the policy of EDPL is being followed by the condemnor and
that an initial offer is made that a condemnee could accept
in order to spare himself the expense of litigation. But what
happens when no such offer is made? We have a recent decision
just on that point where the court stated: "Here the
condemnor failed to make any initial offer to the claimant.
In comparing the initial offer of $0.00 to the final award
of $252,000, there is no question that the statutory requisite
has been satisfied (Cf. Done Holding Co. v State of N.Y.
, supra; Karas v. State of N.Y., supra; Long
Island Pine Barrens Water Corp. v. State of N.Y. 144 Misc2d
665)."
Parenthetically, the court notes that the same result would
be reached even if the court were to consider the condemnor's
$81,500 advance payment as the "Condemnor's proof."
(Matter of City of NY (Alley Pond Park Addition (Second
Taking), Index No. 9879/81 Sup. Ct. Queens Co., Kassoff,
J. decision dated Feb. 25, 1991). Earlier in his decision
the court had noted that while title vested in the condemnor
on Aug. 5, 1981, it was not until June 2, 1982, that claimant
was notified that an advance payment would be made, after
he had retained counsel and hired an appraiser. This decision
appears to be a logical extension of the earlier cases. Condemnors,
however, in response to this decision are arguing that if
no pre-vesting offer was made and an advance payment is made,
say a year later, the offer should not be treated as "0"
but rather as the later advance payment — that the same
result would have been reached if the comparison had only
been made to the advance payment.
Reasonable Reimbursement
The last question answered in the cases concerns what the
courts have found as reasonable amounts for reimbursement.
Here we find some common elements and some points of difference.
First, the courts have been almost unanimous in finding, as
did the court in Alley Pond Park, "With respect
to the contingent fee agreement, the Court notes that such
an agreement is an accepted practice in the field . . . ."
This appears to be generally accepted and except for one very
early upstate case none of the courts are looking at time
sheets. In Lee-Hi Fuel Corp. v. State of NY; (Ct of
Claims, Claim No. 69267, Orlando, J., decision filed Aug.
13, 1990) the court approved a fee of one-third more than
the initial offer/advance payment as reasonable. In Long
Island Pine Barrens, supra, the court there also approved
one-third more than the initial offer as a "reasonable
contingent fee agreement." In Pomerantz and Bedrick
v. State of NY (Ct. of Claims Nos. 69712, 69713, decision
filed Nov. 9, 1989, Blinder, J.) the court found reasonable
a fee of 40 percent in excess of the State's offer. Also
approved have been fees at 6 percent 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. Fixture
cases would no doubt command higher percentages. The fact
of the matter is that in this age of consumerism, of lawyer
solicitation and advertising, the problem of unreasonable
fees is not that they are too high, but that they are not
compensatory.
Reluctance to Award
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
(See Frisbro Enterprises Ltd., supra, Matter of
City of NY (Douglaston — Little Neck Branch Library)
(Sup. Ct. Qns. Co., Kassoff, March 7, 1991); Matter of
NY City Transit Authority/Gun Hill Bus Depot) (Bronx Co.
Index No. 1236/83, March 15, 1991, Shapiro, J.). 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 a 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
he seeks reimbursement for have a logical connection to the
recovery, then we fail to perceive what purpose is served,
in line with the statutory intent, in providing for a punishment
in making a claim exorbitant or not. This statue was not intended
as a punishment for condemnors, nor should it be reversed
to be a punishment for condemnees. Its purpose is to make
a condemnee whole, nor more, no less.
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