Long v. State, 27381

Decision Date21 November 2017
Docket Number27381
Citation904 N.W.2d 358
Parties Mark and Marilyn LONG, Arnie and Shirley Van Voorst, Tim and Sara Doyle, Timothy and Jane Griffith and Michael and Karen Taylor, Plaintiffs and Appellants, v. STATE of South Dakota, Defendant and Appellee.
CourtSouth Dakota Supreme Court

MARK V. MEIERHENRY, CHRISTOPHER HEALY, CLINT SARGENT of Meierhenry Sargent, LLP, Sioux Falls, South Dakota, Attorneys for plaintiffs and appellants.

GARY P. THIMSEN, JOEL E. ENGEL III of Woods, Fuller, Shultz & Smith, PC, Sioux Falls, South Dakota, Attorneys for defendant and appellee.

KERN, Justice

[¶1.] After Landowners prevailed against the State on a claim of inverse condemnation, Landowners requested that the State pay "reasonable attorney, appraisal and engineering fees, and other related costs" pursuant to SDCL 5–2–18 and the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, which is codified at 42 U.S.C. §§ 4601 – 4655 (2012). The circuit court denied their request. Landowners appeal. We affirm.

BACKGROUND

[¶2.] In July 2010, Landowners1 suffered significant flooding that damaged their real and personal properties. Landowners' properties are located on the west side of Highway 11, north of the intersection of Highway 11 and 85th Street. The South Dakota Department of Transportation (DOT) built Highway 11 in 1949 and the State maintains sole control of Highway 11. Highway 11 runs north and south through Lincoln and Minnehaha Counties and lies across the natural waterway known as Spring Creek.

[¶3.] Landowners filed an inverse condemnation claim against the State and the City of Sioux Falls seeking damages due to the flooding of Landowners' properties after a heavy rainfall. A court trial was held in February 2014 on the issue of liability. The circuit court found the construction of Highway 11 and the inadequate culverts beneath it caused the flooding damage to Landowners' real and personal properties. In December 2014, a jury trial was held on the issue of damages. The jury awarded each set of Landowners individualized damages.2 In August 2014, Landowners made a motion pursuant to SDCL 5–2–18 and the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 as amended by the Surface Transportation and Uniform Relocation Assistance Act of 1987 (collectively, "the URA") for payment of "reasonable attorney, appraisal and engineering fees, and other related costs." The URA is codified at 42 U.S.C. §§ 4601 – 4655 (2012). The circuit court denied Landowners' motion based on Rupert v. City of Rapid City, 2013 S.D. 13, 827 N.W.2d 55. In January 2015, the circuit court issued its order denying fees and expenses. Landowners appeal.

[¶4.] We restate Appellants' issue as follows:

Whether a party who prevails on a claim of inverse condemnation arising under South Dakota Constitution article VI, § 13 is entitled to recovery of attorney's fees and litigation expenses under SDCL 5–2–18.
STANDARD OF REVIEW

[¶5.] "Questions of statutory interpretation and application are reviewed under the de novo standard of review with no deference to the circuit court's decision." Deadwood Stage Run, LLC v. S.D. Dep't of Revenue, 2014 S.D. 90, ¶ 7, 857 N.W.2d 606, 609 (quoting Argus Leader v. Hagen, 2007 S.D. 96, ¶ 7, 739 N.W.2d 475, 478 ).

ANALYSIS

[¶6.] Landowners contend they are entitled to recovery of attorney's fees and litigation expenses under SDCL 5–2–18 as they prevailed on their claim of inverse condemnation. They assert that the South Dakota Legislature intended to adopt by reference the URA when it enacted SDCL 5–2–18. The purpose of the URA is to establish a uniform policy for the fair treatment of persons "displaced as a direct result of programs or projects undertaken by a Federal agency or with Federal financial assistance" and to ensure they do not suffer disproportionate injuries due to a program designed to benefit the public as a whole. 42 U.S.C. § 4621(b). Displaced persons are defined as "any person who moves from real property, or moves his personal property from real property" in response to "a written notice of intent to acquire or the acquisition of such real property in whole or in part for a program or project undertaken by a Federal agency or with Federal financial assistance[.]" 42 U.S.C. § 4601(6)(A)(i)(I). The URA contains a section permitting property owners to "be paid or reimbursed for necessary expenses as specified in section 4653 and 4654 of this title." 42 U.S.C. § 4655. Necessary expenses are defined, in part, in 42 U.S.C. § 4654(c) as "reasonable costs, disbursements, and expenses, including reasonable attorney, appraisal, and engineering fees[.]" Landowners further contend that 49 C.F.R. § 24.107 (2015) reinforces the State's obligation to pay the Landowners' inverse condemnation expenses.

[¶7.] The URA places several requirements on the receipt of federal funding related to the acquisition of land. It is within the power of Congress to "attach conditions on the receipt of federal funds ... ‘by conditioning receipt of federal moneys upon compliance by the recipient with federal statutory and administrative directives.’ " South Dakota v. Dole, 483 U.S. 203, 206, 107 S.Ct. 2793, 2795–96, 97 L.Ed.2d 171 (1987) (quoting Fullilove v. Klutznick, 448 U.S. 448, 474, 100 S.Ct. 2758, 2772, 65 L.Ed.2d 902 (1980) (plurality opinion)). In certain instances, South Dakota has complied with federal directives in order to receive federal funding. See SDCL 35–9–4.1 (noting adoption of laws "under the duress of a funding sanction imposed by the United States Department of Transportation").

[¶8.] 42 U.S.C. § 4655 provides, in part:

(a) Notwithstanding any other law, the head of a Federal agency shall not approve any program or project or any grant to, or contract or agreement with, an acquiring agency under which Federal financial assistance will be available to pay all or part of the cost of any program or project which will result in the acquisition of real property on and after January 2, 1971, unless he receives satisfactory assurances from such acquiring agency that—
...
(2) property owners will be paid or reimbursed for necessary expenses as specified in sections 4653 and 4654 of this title.

The relevant "necessary expenses" are defined in 42 U.S.C. § 4654(c) which provides:

The court rendering a judgment for the plaintiff in a proceeding brought under section 1346(a)(2) or 1491 of title 28, awarding compensation for the taking of property by a Federal agency, or the Attorney General effecting a settlement of any such proceeding, shall determine and award or allow to such plaintiff, as a part of such judgment or settlement, such sum as will in the opinion of the court or the Attorney General reimburse such plaintiff for his reasonable costs, disbursements, and expenses, including reasonable attorney, appraisal, and engineering fees, actually incurred because of such proceeding.

(Emphases added.) Additionally, 49 C.F.R. § 24 contains the federal regulations implementing the URA. 49 C.F.R. § 24.107 addresses entitlement to certain litigation expenses. It provides:

The owner of the real property shall be reimbursed for any reasonable expenses, including reasonable attorney, appraisal, and engineering fees, which the owner actually incurred because of a condemnation proceeding, if:
...
(c) The court having jurisdiction renders a judgment in favor of the owner in an inverse condemnation proceeding or the Agency effects a settlement of such proceeding.

[¶9.] The State argues our state statutes and case law do not authorize an award of attorney's fees and, consequently, Landowners have no relief under state law. The State further contends that the application of the URA in state law is permissive rather than mandatory. The State submits that Landowners are attempting to read into SDCL 5–2–18 the authority to assess attorney's fees. Lastly, the State argues that the primary purpose of the URA is to provide relocation assistance to persons displaced by condemnation actions instituted by federal agencies as set forth in 42 U.S.C. § 4621(b). In the State's view, the "most relevant portion of the URA for purposes of this appeal is 42 U.S.C. § 4654(c)," which it argues authorizes an award of attorney's fees in federal court for federal inverse condemnation claims. Further, the State submits that the federal regulations implementing the URA, specifically 49 C.F.R. § 24.107, cannot provide more rights or remedies than the URA itself. Relying on City of Austin v. Travis County Landfill Co., 25 S.W.3d 191, 207 (Tex. App. 1999), rev'd on other grounds, 73 S.W.3d 234 (Tex. 2002), the State contends that § 24.107"[a]t most ... clarifies that section 4654 applies to governmental entities facing claims in federal court or the Court of Federal Claims."

[¶10.] South Dakota adheres to the "American Rule" for awarding attorney's fees. Rupert, 2013 S.D. 13, ¶ 32, 827 N.W.2d at 67. The "American Rule" provides "that each party bears the burden" of paying their own attorney's fees. Eagle RidgeEstates Homeowners Ass'n, Inc. v. Anderson, 2013 S.D. 21, ¶ 28, 827 N.W.2d 859, 867 (quoting In re S.D. Microsoft Antitrust Litig., 2005 S.D. 113, ¶ 29, 707 N.W.2d 85, 98 ). However, exceptions to this rule exist. Id. One exception is that attorney's fees may be awarded to a prevailing party pursuant to a contractual agreement between the parties. Id. Another exception is that fees may be ordered "when an award of attorney fees is authorized by statute." Id. In determining whether a statute authorizes the award of attorney's fees, "[t]his Court has rigorously followed the rule that authority to assess attorney fees may not be implied, but must rest upon a clear legislative grant of power."

Rupert, 2013 S.D. 13, ¶ 32, 827 N.W.2d at 67 (quoting In re Estate of O'Keefe, 1998 S.D. 92, ¶ 17, 583 N.W.2d 138, 142 ). Similarly, a party may recover costs only as specifically authorized by statute. DeHaven v....

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