State, By and Through Dept. of Highways v. Burlingame, 14474

• Court: United States State Supreme Court of Montana
• Citation: 182 Mont. 298,597 P.2d 51,36 St.Rep. 603
• Docket Number: No. 14474,14474
• Parties: STATE of Montana, acting By and Through the DEPARTMENT OF HIGHWAYS of the State of Montana, Plaintiff and Appellant, v. William K. BURLINGAME et al., Defendant and Respondent.
• Decision Date: 28 March 1979

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597 P.2d 51 182 Mont. 298 STATE of Montana, acting By and Through the DEPARTMENT OF
HIGHWAYS of the State of Montana, Plaintiff and Appellant,
v.
William K. BURLINGAME et al., Defendant and Respondent. No. 14474. Supreme Court of Montana. Submitted Feb. 1, 1979.
Decided March 28, 1979.

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Terry L. J. Clausen, argued, Helena, for plaintiff and appellant.

K. M. Bridenstine, argued, Polson, Claude I. Burlingame, Plains, for defendant and respondent.

HARRISON, Justice.

The State of Montana, Department of Highways, appeals from [182 Mont. 299] that portion of a judgment awarding costs and attorney's fees in an eminent domain proceeding, entered by the Honorable E. Gardner Brownlee, Fourth Judicial District, Missoula County.

The State of Montana, Department of Highways, instituted eminent domain proceedings on January 26, 1977, after defendant refused its offer to acquire by purchase 1.32 acres of defendant's land in Missoula County. By stipulation, a preliminary order of condemnation was entered February 25, 1977. Pursuant to section 93-9910, R.C.M.1947, now section 70-30-205 MCA, defendant, on March 14, 1977, filed an answer, claiming $85,000 as fair and just compensation for the land taken and for damage to the remainder. A value commission heard the matter August 10, 1977, and thereafter awarded defendant $53,900. Both parties appealed that determination.

A jury trial in District Court resulted in a verdict, issued June 21, 1978, for defendant in the amount of $39,750, of which $31,530 was deemed the value of the land taken and $8,220 the value of damage to the remainder. On June 27, 1978, defendant filed a memorandum of costs and disbursements, which the State moved to strike. A hearing on the motion to strike was held on July 11, 1978. Two days later the District Court entered an order denying the State's motion and awarding defendant costs and attorney's fees. The substance of that order was incorporated into the judgment awarding defendant $39,750, plus interest thereon at 10 percent per annum in the sum of $5,865.51. Of the additional $6,247.93 awarded as costs, $4,711.57 represents attorney's fees. No hearing on the reasonableness of the attorney's fees had been held.

The State raises two issues:

1. In an eminent domain proceeding where the District Court found the State's final offer was $43,100 and the jury verdict was $39,750, was it error for the District Court to award attorney's fees and costs?

2. Was it error for the District Court to award attorney's fees without an evidentiary hearing to determine the reasonableness of the fees awarded?

[182 Mont. 300] We find the trial court erred in awarding attorney's fees in this case because the private property owner did not Prevail as required by law. In so holding, it is unnecessary to discuss the second issue.

Defendant argues that the offer of $43,100 was not the "final offer" made by the State. The State contends that its final offer was made in a letter dated June 8, 1978. The letter, addressed to K. M. Bridenstine, counsel for defendant, and signed by Donald A. Douglas, attorney for the Department of Highways, reads In toto :

"Dear K:

"This letter is to advise you that pursuant to the provisions of R.C.M., 1947, Section 92-9921.1, (93-9921.1) the State of Montana, Department of Highways, makes an offer in the sum of $43,100.00 plus necessary expenses of the condemnee accrued to this date and interest for all

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interests in the property which is the subject matter of the above entitled condemnation suit, being Cause No. 45474 in Missoula County, Montana."

Of significance is that the offer specifically includes "necessary expenses . . . accrued to this date." Thus, defendant's expenditures for "engineer's fees," incurred on instruction by the District Court, would have been reimbursed by the State had the offer been accepted. The other "necessary expenses," including costs and reasonable attorney's fees, likewise would have been reimbursed.

The statute at the focal point of this dispute is section 93-9921.1, R.C.M.1947, now section 70-30-305 MCA:

"The condemnor, shall within thirty (30) days after an appeal is perfected from the commissioner's award or report, submit to condemnee a written final offer of judgment for the property to be condemned, together with necessary expenses of condemnee then accrued.

"If at any time prior to ten (10) days before trial, the condemnee serves written notice that the offer is accepted, either party may then file the offer and notice of acceptance together with proof of service thereof and thereupon judgment shall be entered. An offer not accepted shall be deemed withdrawn and evidence thereof is not admissible at the trial except in a proceeding to determine [182 Mont. 301] costs. The fact that an offer is made but not accepted does not preclude a subsequent offer. In the event of litigation, and when the private property owner prevails, by receiving an award in excess of the final offer of the condemnor, the court shall award necessary expenses of litigation to the condemnee." (Emphasis added.)

This statute implements Article II, Section 29 of the Montana Constitution, which in part provides that "(i)n the event of litigation (in an eminent domain proceeding), Just compensation shall include necessary expenses of litigation to be awarded by the court when the private property owner prevails." (Emphasis added.)

Section 93-9921.1 was interpreted by this Court in State Department of Highways v. Olsen (1975), 166 Mont. 139, 531 P.2d 1330. There the Court quoted language from the Constitutional Convention notes:

" 'Retains provision in 1889 constitution (Art. III, sec. 14) on eminent domain and expands its protection by guaranteeing that a property owner who goes to court and is awarded more money than offered for his property being condemned will be reimbursed for the necessary expenses of the lawsuit (such as appraiser and attorneys fees).' " 166 Mont. at 145, 531 P.2d at 1333.

At issue in Olsen was whether the new statutory provision applied to an action pending at the time the right to costs, including attorney's fees, came into being. Although the issue differs from that in the instant case, certain Dictum from Olsen is helpful, e. g., "The right to necessary costs of litigation provided by section 93-9921.1, R.C.M.1947, does not arise when the suit is filed, but vests Only when the private property owner prevails, securing a verdict higher than the State's final offer." 166 Mont. at 146, 531 P.2d at 1334. (Emphasis added.) It is clear that a private property owner, to be entitled to "necessary expenses of litigation," must prevail. To prevail, he must receive "an award in excess of the final offer of the condemnor," the State. Section 93-9921.1, R.C.M.1947.

The following excerpt from the record of the Constitutional Convention debates, Vol. VII, pp. 5638-40, confirms this:

[182 Mont. 302] "DELEGATE HABEDANK: Mr. Dahood, for the purpose of the journal in future litigation over the interpretation of this term, will you please state into the record, what is meant by the words, prevailing party?

"DELEGATE DAHOOD: By prevailing party I mean, for the record, the property owner, in the event that he is the prevailing party. The only person intended by this particular section and the sentence that has been added just compensation shall be awarded by the court only just compensation shall include expenses of

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litigation only when the prevailing party is the private property owner.

"CHAIRMAN GRAYBILL: Mr. Habedank.

"DELEGATE HABEDANK: Mr. Dahood, I failed to ask the question properly. If the highway department offered the owner five thousand dollars for his property and the owner refused it and went into court and secured a judgment from the jury for less than five thousand dollars, would he then be a prevailing party?

"DELEGATE DAHOOD: He would Not be a prevailing party.

"DELEGATE HABEDANK: If he obtained five thousand and one dollars, would he be a prevailing

"DELEGATE DAHOOD: He would be a prevailing party.

"DELEGATE HABEDANK: Thank you, Mr. Dahood.

"CHAIRMAN GRAYBILL: Is there any other discussion of section twenty-nine? Mr. Harlow.

"DELEGATE HARLOW: I merely wish to rise in support of this section. I want to ask Mr. Dahood the one question in between what Mr. Habedank had and the party received only the five thousand dollars. Would he be prevailing?

"DELEGATE DAHOOD: He is not the prevailing party in that instance.

"DELEGATE HARLOW: He's got to get one dollar more.

"DELEGATE DAHOOD: He has to exceed the offer made by the State of Montana."

To determine if the award of costs and attorney's fees was...