Free Order on Motion for Attorney Fees - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

NOT FOR PUBLICATION

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

) ) ) Plaintiff, ) ) ) vs. ) ) 192.019 Acres of Land, et al. ) ) Defendants. ) United States of America, ) ) ) Plaintiff, ) ) vs. ) ) 33.854 Acres of Land, et al. ) ) Defendants. ) _________________________________ ) )

United States of America,

No. CIV. 03-2006-PHX-SRB No. CIV. 03-2007-PHX-SRB ORDER

These cases were tried together to a jury in August 2006. In the case of the 192 Acres, the jury returned its verdict in the amount of $4,327,468.80. Cha Cha L.L.C., owner of a one-half interest in the 192 Acres, seeks the attorneys' fees and non-taxable costs which it paid. In the case of the 33 Acres, the jury's verdict awarded just compensation of $1,353,800.00. The land owner, G-12-L.L.C., seeks recovery of its attorneys' fees and non-taxable costs incurred.
Case 2:03-cv-02006-SRB Document 181 Filed 04/04/2007 Page 1 of 4

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

The same lawyer represented the landowners in both cases and for the most part attorneys' fees and costs were split 50-50 between the cases. A review of the separate dockets reflects that the cases proceeded on parallel tracks and with limited exceptions time was appropriately allocated equally for each case. The United States does not contest the allocation. Under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. §2412, attorneys' fees are awardable against the United States unless the Court finds that the position of the United States was substantially justified or that special circumstances make an award unjust. There is no contention by the United States that such special circumstances exist. The United States opposes attorneys' fees only on the basis that its position was substantially justified. 28 U.S.C. § 2412(d)(2)(H) defines prevailing party in a case of eminent domain and the United States does not dispute that the landowners prevailed under the formula set out in the statute. The Court finds that the evidence before it is sufficient to show that the landowners are not financially disqualified from seeking an award of attorneys' fees and costs. The only issues in dispute on the fee application are whether the position of the United States was substantially justified and, if not, the amount of the hourly rate that should be allowed. The Court agrees with the landowners that the position of the United States was not substantially justified. The United States's appraiser, Don Dorchester, had extensive qualifications as a real estate appraiser in Arizona and in other parts of the United States. But Mr. Dorchester had limited experience in the valuation of the type of land at issue in these cases and had no experience in the Yuma, Arizona market. The testimony revealed that Mr. Dorchester failed to take into account in his valuation the fact that these properties and some of his comparables had been under a threat of condemnation for approximately 10 years prior to the actual condemnation. As the landowners point out, there were also questionable comparables used by Mr. Dorchester in his appraisals. Finally, by the jury's verdicts it is apparent that the fact finders flatly rejected Mr.

-2Case 2:03-cv-02006-SRB Document 181 Filed 04/04/2007 Page 2 of 4

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Dorchester's valuations by awarding in one case the identical amount of the landowners' expert's valuation and in the other case more than the landowners' expert's valuation. In opposition to the application for fees and expenses the United States suggests that it made reasonable efforts to resolve the case prior to litigation. The United States cites that its pre-filing offer to the landowners in the case of the 33 Acres was $400,000.00 and in the case of the 192 Acres was 2.2 million dollars. These offers, the United States states "was met with a response that the landowners would take 5 million dollars for both related cases." In hindsight, the United States should have accepted this offer as the verdicts entered by the jury for both cases exceeded 5 million dollars. Moreover, the Government does not contest that it engaged in no settlement activity postfiling and never increased its offers even though its own appraiser in the case of the 33 Acres valued the property higher than the pre-filing offer. The United States also admits that it did not participate in the scheduled settlement conference. While there is a dispute about the message that was communicated to landowners' counsel, the United States admits that no funds were available to engage in any meaningful settlement negotiations. While the United States says this should not be held against the acquiring agency as a reason to award attorneys' fees, the Court finds that it is a factor that weighs in favor of an attorneys' fees award. The EAJA sets a maximum hourly rate for attorneys subject to cost of living adjustments. The parties agree that for 2003, the maximum rate $150.70 per hour, for 2004, $154.25 per hour, for 2005, $158.96 per hour and for 2006, $164.40 an hour. Despite these statutory maximums, the applications for fees and expenses requested an award for lead counsel at hourly rates which exceeded those allowable under the EAJA without acknowledging that the hourly rate exceeded the statutory maximums and without setting out the special circumstances that might justify a higher hourly rate award. This acknowledgment and claimed special circumstances were only addressed in the reply to which the Government had no opportunity to respond. The party seeking fees has the obligation to justify the hourly rate that it seeks. In seeking a fee under the EAJA, a party -3Case 2:03-cv-02006-SRB Document 181 Filed 04/04/2007 Page 3 of 4

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

cannot meet this obligation by showing that the rate agreed upon was the customary hourly rates charged by attorneys in the area. Rather the party must also justify rates higher than allowed under the EAJA. Because counsel failed to include this justification in its application the Court will not consider it for the first time in reply and will award fees only at the hourly rates allowable under the EAJA. In all other respects the Court finds that the time incurred by counsel who worked on this matter was reasonable in each instance. As previously indicated the allocation of the fees half to each case is also reasonable under all of the circumstances. The United States has pointed to no excessive time charged. Therefore, IT IS ORDERED that in the case of the 33 Acres, CV03-2007, judgment shall be entered in favor of G-12, L.L.C. and against the United States for attorneys' fees of $69,013.87, appraisal costs of $12,005.00 and other costs of $10,617.14. (doc. 164). IT IS FURTHER ORDERED that in the case of the 192 Acres, CV03-2006, judgment shall be entered in favor of Cha Cha, L.L.C. and against the United States for attorneys' fees of $35,773.40, appraisal costs of $7,777.50 and other costs of $4,371.72, representing one-half of the attorneys' fees, appraisal costs and other costs incurred in the case of the 192 Acres, the other half having been incurred by the Sam Perricone Trust which has not sought to recover its attorneys' fees and costs. (doc. 169).

DATED this 3rd day of April, 2007.

-4Case 2:03-cv-02006-SRB Document 181 Filed 04/04/2007 Page 4 of 4