City of Sioux Falls v. Johnson, 22395.
Decision Date | 17 September 2003 |
Docket Number | No. 22395.,22395. |
Citation | 670 N.W.2d 360,2003 SD 115 |
Parties | CITY OF SIOUX FALLS, a Municipality charted under the Constitution of the State of South Dakota, Plaintiff and Appellant, v. Douglas L. JOHNSON and Sherry D. Johnson, Defendants and Appellees. |
Court | South Dakota Supreme Court |
R. Shawn Tornow of Sioux Falls City Attorney's Office, Sioux Falls, South Dakota, Attorneys for plaintiff and appellant.
Mark V. Meierhenry of Danforth, Meierhenry & Meierhenry, Sioux Falls, South Dakota, Attorneys for defendant and appellee.
[¶ 1.] This case involves a challenge to an award of attorney fees and prejudgment interest in favor of Doug and Sherry Johnson (Johnsons) and against the City of Sioux Falls (City). By notice of review, Johnsons seek to challenge the constitutionality of the statutory prejudgment interest rate. We affirm the attorney fee award and remand for recalculation of prejudgment interest. We do not reach the constitutional question raised by Johnsons.
[¶ 2.] This case is before us for the third time. City commenced this action in 1995, seeking condemnation of a residence and land owned by Johnsons for highway and other public uses. The first jury awarded Johnsons damages of $1.2 million and the trial court awarded attorney fees and costs of $130,000. City appealed. In City of Sioux Falls v. Johnson, 1999 SD 16, 588 N.W.2d 904 (Johnson I), we reversed the judgment on evidentiary grounds and ordered a new trial. Upon retrial, the second jury awarded Johnsons damages of $1.1 million and the Honorable Judge Richard Bogue awarded attorney fees and costs of $175,000.
[¶ 3.] City again appealed the awards to Johnsons. In City of Sioux Falls v. Johnson, 2001 SD 108, 632 N.W.2d 849 (Johnson II), we affirmed the verdict but reversed the judgment and remanded the case to circuit court for a redetermination of attorney fees, costs, and prejudgment interest. Johnson II, 2001 SD 108 ¶ 11,632 N.W.2d at 855. We reversed the award of attorney fees because we were unable to conduct meaningful appellate review and remanded the issue to the circuit court to conduct an evidentiary hearing on appellate attorney fees, costs and prejudgment interest. On remand, the Honorable Judge William J. Srtska, Jr., after conducting a series of hearings, awarded Johnsons attorney fees of $174,900 and prejudgment interest of $86,785.09.
[¶ 4.] City now appeals claiming Judge Srtska abused his discretion in the award of attorney fees and that he erroneously calculated the prejudgment interest owing. Johnsons filed a notice of review, challenging the constitutionality of the statutory prejudgment interest rate.
[¶ 5.] Whether the award of attorney fees to Johnsons was an abuse of discretion.
[¶ 6.] Attorney fee awards are reviewed under an abuse of discretion standard. Johnson II, 2001 SD 108, ¶ 8, 632 N.W.2d at 852. "We determine that an abuse of discretion occurred only if no judicial mind, in view of the law and the circumstances of the particular case, could reasonably have reached such a conclusion." Action Mechanical, Inc. v. Deadwood Historic Preservation Com'n, 2002 SD 121, ¶ 14, 652 N.W.2d 742, 748 (internal quotations omitted).
[¶ 7.] SDCL 21-35-23 provides that if the verdict in favor of the landowner exceeds seven hundred dollars and is twenty percent greater than the condemning authority's prior offer, the trial court shall allow reasonable attorney fees, together with taxable costs and compensation for not more than two expert witnesses. The verdict in this case exceeded City's final offer of $547,955.98 by 101 percent; therefore, pursuant to SDCL 21-35-23, City is required to pay Johnsons reasonable attorney fees.
[¶ 8.] On remand, we directed the trial court to conduct a review of the attorney fees claimed in light of the following factors previously set forth in City of Sioux Falls v. Kelley, 513 N.W.2d 97, 111 (S.D. 1994) (quoting Model Rules of Professional Conduct, Rule 1.5):
On remand, the court held three evidentiary hearings and then entered findings of fact and conclusions of law applying the Kelley factors. Specifically, the court found:
[¶ 9.] While City generally objected to all of the findings of fact, it is unable to point to any finding or findings that are clearly erroneous. Instead, City asserts that a contingent fee was not reasonable in this case. As support for that proposition City cites Johnson II where this Court stated: "[W]hile such contingent fee arrangements may be perfectly valid and proper as between an attorney and his client, it does not necessarily follow that such fee is a reasonable fee to be taxed against the party taking private property for a public use, as permitted under [SDCL 21-35-23]." Johnson II, 2001 SD 108 at ¶ 21, 632 N.W.2d at 855 (quoting Kelley, 513 N.W.2d at 111 (citation omitted)). Utilizing this language, City maintains that while a contingent fee agreement may be reasonable between a landowner and his counsel, only an hourly rate of compensation is reasonable as between condemner and landowner. However, the remand court refused to place such a dominant significance on this single Kelley factor to the exclusion of the others.
[¶ 10.] The remand court carefully considered all of the Kelley factors, finding that some were more applicable than others. In reaching its determination, the remand court used an hourly rate as one reference point and the actual fees paid by landowner as another. Clearly, the purpose of SDCL 21-35-23 is not to compensate landowner's counsel, but to reasonably reimburse landowner for legal fees. Johnsons paid total compensation to their attorney of over $243,005 pursuant to a contingency fee agreement. They were awarded $174,900 by the remand court. Johnsons' reimbursement in this case was twenty-eight percent less than what they paid their counsel, an amount which even City's experts agreed was customary and reasonable in condemnation cases. Given these facts, we are unable to say that the trial court abused its discretion by awarding attorney fees in an amount that is midway between the award proposed by City and the actual fees paid to counsel by Johnsons.
[¶ 11.] City also argues the trial court erroneously allowed compensation for previous appellate work performed by Johnsons' attorney. City is incorrect. At the December 17, 2001, hearing Judge Srtska stated: There is nothing in the trial court's written findings of fact that suggests that Johnsons, as landowner, are being reimbursed for appellate attorney fees and City's assertions to the contrary are unsupported by the record.
[¶ 12.] Furthermore, City asserts error in the award because the award to Johnsons was specified by the court as constituting $165,000 for attorney fees and $9,900 for sales tax. Though City objected to the court's allowance of sales tax, City failed to mention this issue in its docketing statement and furthermore failed to brief this issue on appeal.1 Therefore, we deem the objection to the...
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