U.S. v. 1,378.65 Acres of Land, More or Less, Situate in Vernon County, State of Mo.

• Citation: 794 F.2d 1313
• Decision Date: 01 July 1986
• Docket Number: No. 85-2021,85-2021
• Parties: UNITED STATES of America, Appellant. v. 1,378.65 ACRES OF LAND, MORE OR LESS, SITUATE IN VERNON COUNTY, STATE OF MISSOURI, and Laurance Phister, et al., Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 1313

794 F.2d 1313

UNITED STATES of America, Appellant. v. 1,378.65 ACRES OF LAND, MORE OR LESS, SITUATE IN VERNON

COUNTY, STATE OF MISSOURI, and Laurance Phister,

et al., Appellees.

No. 85-2021.

United States Court of Appeals,

Eighth Circuit.

Argued April 16, 1986.

Decided July 1, 1986.

Jacques B. Gelin, Washington, D.C., for appellant.

Thomas E. Barzee, Jr., N. Kansas City, Mo., for appellees.

Before LAY, Chief Judge, and BRIGHT and ROSENN, ^* Senior Circuit Judges.

ROSENN, Circuit Judge.

The United States appeals from the district court's ¹ award of attorney's fees to defendants in this condemnation action, arguing that its position was substantially justified. The Government's various offers of compensation for the condemnation matched the estimates of its qualified appraisers. We agree that the Government showed its position with respect to land compensation to be substantially justified within the meaning of the Equal Access to Justice Act, 28 U.S.C.A. Sec. 2412 (West Supp.1986) (the Act), and reverse the district court's award.

I.

The defendants, Laurance Phister, Alice Phister, and the testamentary trust of Harriet Phister (collectively the Phisters) each own undivided partial interests in approximately 3,000 acres of land situated near Horton, Missouri. Nearly half the land, some 1,379 acres, will be subject to occasional flooding on completion of the Truman Dam and Reservoir Project. The Phisters do not reside on the property but use tenant farmers to raise grain and commercial loggers to harvest and remove timber on the land. The parties stipulate that although the Phisters had a combined net worth in excess of $2,000,000, their combined net worth was less than $5,000,000 and they had fewer than 500 employees working the land at the time of the taking, as required to qualify under the Act, 28 U.S.C.A. Sec. 2412(d)(2)(B) (West Supp.1986) (applicable maximum now $7,000,000).

In 1978, the Government sought to purchase a flowage easement over the land for $140,000, its value according to an appraisal performed by Oliver Dane, a retired Corps of Engineers employee. Some eight months later, based on Dane's revised appraisal, the Government raised its offer to $211,000. The Phisters refused the Government's second offer, stating that they believed they could secure $100,000 more through a court proceeding. See United States v. 1,378.65 Acres of Land, 614 F.Supp. 594, 595 (W.D.Mo.1985) (stipulated findings of fact) (1,378 Acres ). The Government then proceeded to file a declaration of taking in the district court, which referred the question of just compensation for the easement to a three member Commission appointed under Fed.R.Civ.P. 71A(h). The Commission received appraisal reports from Hubert A. Riebold, for the Phisters, and James L. Sawyers, for the Government.

Sawyers and Riebold are members of the American Institute of Real Estate Appraisers and recipients of the Institute's highest designation, the MAI. It is undisputed that Sawyers made his appraisal without knowing what Dane's prior appraisals had been. Dane had requested after a previous trial appearance as an expert witness that the Government not use his services as an expert witness in the future. Dane had been accepted as a qualified expert appraiser in many prior condemnation proceedings.

Sawyers and Riebold used similar appraisal methods. To evaluate the loss in value of the land caused by the greater risk of flooding following construction of the dam, they calculated separately the value of the land without and with the risk of flooding. To arrive at each value, they compared the prices similar plots of land had brought at sale, adjusting these to take account of the advantages and disadvantages of the land in question. The Commission also adopted the same method.

Riebold estimated the value of the Phisters' land at $2,660,000 before the Government's easement increased the risk of flooding. Sawyers estimated the value at $2,075,000, and the Commission found a value somewhat close to Sawyers', $2,301,000. If the Commission had averaged the two figures, it would have calculated the before-taking value at $2,362,000. Riebold estimated the after-taking value at $2,175,000. Sawyers estimated $1,960,000, and the Commission largely agreed with Sawyers, finding an after-taking value of $1,976,000. As a result of these calculations, the Commission awarded the Phisters $325,000, or $25,000 more than the average of the $115,000 amount of just compensation proposed by Sawyers and the $485,000 compensation proposed by Riebold.

In reviewing the two appraisals, the Commission repeatedly found Riebold's estimates "somewhat high" and Sawyers' "somewhat low" without ever questioning their competence or honesty. The Commission's separate calculation of before and after prices was generally less critical of Sawyers' conclusions than Riebold's. It found Riebold's estimate of damage to irrigation equipment "unsupported by the evidence," for instance, and noted that Sawyers "has slightly overvalued the timberland" but also "slightly underestimated" the value of the cropland and structural improvements after the taking.

After the district court approved the Commission's award, the Phisters applied in the district court for attorney's fees under the Act, which awards fees to private parties who prevail in a civil action against the United States in certain circumstances where the Government's position was not "substantially justified." See 28 U.S.C. Sec. 2412(d)(1)(A). The parties stipulated that $22,380 in fees are at issue. Because the applicability of the Act to condemnation actions was an unclear question then pending in this court, the district court stayed its disposition until this court's decision in United States v. 341.45 Acres of Land, 751 F.2d 924 (8th Cir.1984) (341 Acres ).

Following 341 Acres, the district court held that the Act applied to this case, that the Phisters were a prevailing party, and that the Government's position was not substantially justified. 1,378 Acres, 614 F.Supp. at 597, 603. The district court found that the Government had insufficiently explained the disparity between its last settlement offer of $211,000 based on Dane's estimate and its trial offer of $115,000 based on Sawyers' appraisal. It placed particular weight on the awards Commissions had made in 41 other taking cases handled by the Phisters' law firm, in all of which the Commission had awarded higher sums than that proposed by the Government, and in all but five cases an award closer to the landowner's proposed figure than to the Government's. 614 F.Supp. at 598 and 604-11 (appendix summarizing other awards). The court without discussion also criticized Dane's "personal record ... of particularly debased appraisals," id. at 598, and at length attacked the Government's nationwide approach to resolving condemnation disputes as producing an insufficient number of settlements. Id. at 598-603. The court did not criticize Sawyers' appraisal methods or point to any specific flaws in the appraisals the Government relied on for its settlement offers in this case or at trial.

II.

Congress passed the Act to encourage relatively impecunious private parties to challenge abusive or unreasonable governmental behavior by relieving such parties of the fear of incurring large litigation expenses. Spencer v. NLRB, 712 F.2d 539, 549 (D.C. Cir.1983), cert. denied, 466 U.S. 936, 104 S.Ct. 1908, 80 L.Ed.2d 457 (1984); see H.R.Rep. No. 1418, 96th Cong., 2d Sess. 15, reprinted in 1980 U.S. Code Cong. & Ad. News 4994. In relevant part, the Act provides

[A] court shall award to a prevailing party other than the United States fees and other expenses ... incurred by that party in any civil action ... brought by or against the United States ... unless the court finds that the position of the United States was substantially justified.

28 U.S.C. Sec. 2412(d)(1)(A). Unlike most fee-shifting schemes provided by statute, the Act relieves the Government from liability for the fees of a prevailing opponent if it shows its position to be substantially justified. See Spencer, 712 F.2d at 550-51. Cf., e.g., 29 U.S.C. Sec. 216(b) (1982) (fair labor standards actions); 42 U.S.C. Sec. 1988 (1982) (civil rights actions). Until this court's decision in 341 Acres and Congress' most recent amendments, the means for applying the Act to condemnation actions in this circuit had been in doubt.

When Congress enacted the Act in 1980, it was made applicable to all suits pending on October 1, 1981, as was this suit. Congress renewed the Act retroactively in amended form last year. Pub.L. No. 99-80, 99 Stat. 183 (1985) (the Amendments). The Amendments "apply to cases pending on ... the date of enactment of this [amending] Act." Pub.L. No. 99-80 Sec. 7(a), 99 Stat. at 186. The district court entered its final judgment in this case before the Amendments were enacted, although the Government did not file its appeal until a week later. In applying the Act's original October 1, 1981 effective date, this court interpreted "cases pending" to include cases in which the district court had entered a final judgment, but an appeal was pending. United States for Heydt v. Citizens State Bank, 668 F.2d 444, 446 (8th Cir.1982). See United States v. Kemper Money Market Fund, Inc., 781 F.2d 1268, 1270 n. 1 (7th Cir.1986) (1985 Amendments apply where appeal argued but still pending when enacted). Congress in enacting the Amendments intended to clarify the Act, not to alter it. See H.R.Rep. No. 120, 99th Cong., 1st Sess. 21 (1985), reprinted in 1985 U.S. Code Cong. & Ad. News at 149. In keeping with Citizens State Bank, we conclude that the Amendments apply to the present action.

The Government's principal grounds before the district court for opposing fees under the Act were that the Act did not provide for awards in condemnation actions, that the Phisters had not prevailed, and that the Phisters were not the...