Eminent Domain and Attorney’s Fees

Impacted property and business owners often wonder if their compensation in eminent domain will include their attorney’s fees. It is settled law, however, that, while court costs are required to be paid, attorney’s fees are not. The government is required to pay attorney’s fees only where it files but then dismisses or abandons an eminent domain case, or under the limited provisions set forth in California Code of Civil Procedure section 1250.410. Under section 1250.410, the government is liable for fees only if its final offer (by law to be made at least twenty days before trial) is unreasonable in light of the evidence admitted and the compensation awarded at trial AND the impacted owners final demand (also to be made at least twenty days before trial) is reasonable. It is rare for such fees to be awarded because courts are reluctant to find that the government made an unreasonable final offer. It does happen occasionally, however.

A recent example is the case of San Diego Gas & Electric Company v. Schmidt (2014) 228 Cal.App.4th 1280. The owner contended that the highest and best use of its property was an open pit mining operation. The property was not being used for that but the evidence showed it could be and claimed compensation in excess of $8 million. The government disagreed and made a final offer of only $829,000 which it later increased to $954,000. The owner’s final demand was $5.5 million (which it later decreased to $4.5 million). After the jury awarded $8,034,000, the owner sought attorney’s fees under section 1250.410. The trial court denied the fees. Both sides appealed. The Court of Appeal upheld the jury’s verdict, but reversed the trial court’s denial of attorney’s fees; holding that the government’s position was unreasonable.

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