If the federal government uses its power of eminent domain to take private land for public use, the government is required to pay "just compensation" for the land that is taken. Just compensation is generally defined as the fair market value of the land. Landowners have the legal right to challenge whether the government has paid the fair market value. But, of course, litigating whether the government has met its constitutional obligation can be expensive. So, landowners often ask whether they can recover their attorneys' fees if they litigate with the government. The answer is "maybe."
Recovering attorneys' fees is NOT allowed as part of the "just compensation" constitutional requirement. In other words, the United States government is not liable for attorneys' fees under the Constitution. However, Congress passed a statute allowing some landowners to recover attorneys' fees under some circumstances. The statute in question is the Equal Access to Justice Act ("EAJA"), codified at 28 U.S.C. § 2412(d). Under the EAJA, the US government MUST pay attorneys' fees (and other litigation costs) if:
Most court decisions with respect to attorneys' fees under the EAJA involve the question of what is the "prevailing party." The EAJA defines "prevailing party" as:
"... a party who obtains a final judgment (other than by settlement), exclusive of interest, the amount of which is at least as close to the highest valuation of the property involved that is attested to at trial on behalf of the property owner as it is to the highest valuation of the property involved that is attested to at trial on behalf of the Government." 28 U.S.C. § 2412(d)(2)(H).
That is a complicated legal way of saying that, to be awarded attorneys' fees, the court's determination of the fair market value of the land must be closer to the landowner's proposed value than the government's. As an example, we can look at the recent case of United States v. 269 Acres Located in Beaufort, South Carolina, 995 F. 3d 152 (US Court of Appeals, 4th Cir. 2021). In that case, the US Department of Defense took private land and its experts, at trial, valued the land taken at $937,800. By contrast, the landowners had experts testify that the value of the land taken was $9,680,580. The ultimate value determined by the court was $4,441,410. Since $4,441,410 was closer to the government's testified valuation, it was held that the landowners were NOT entitled to attorneys' fees.
What About the Exception Where the Government's Valuation Is "Substantially Justified?"As listed above, it is not enough to be the "prevailing party" under the EAJA. Courts will also evaluate whether or not the government's testified valuation was "substantially justified." If a court concludes that a landowner is the "prevailing party," then the government can try and show that its position in the case was "substantially justified." Courts have defined this to mean that the government's valuation stance was "justified to a degree that could satisfy a reasonable person."
In practice, this has been interpreted in eminent domain cases to mean that a landowner's testified valuation must be substantially closer to the court's determination of the fair market value of the land. For example, in United States v. 1,378.65 Acres of Land Situate in Vernon County, 794 F.2d 1313 (US Court of Appeals, 8th Cir. 1986), the midpoint between the testified valuations was $300,000. The amount determined by the court was $325,000. Thus, the landowners were the "prevailing party." But the court held that the government's valuation was reasonable (only about 8% lower than the court's determination). As such, the government's position was "substantially justified" and the landowners were denied recovery of attorneys' fees.
However, it is not just the government's position on valuation. The whole of the government's position in the litigation is considered when evaluating whether the government's position was "substantially justified." Thus, in the case of US v. 515 GRANBY, LLC, 736 F. 3d 309 (US Court of Appeals, 4th Circuit 2013), the Court of Appeals returned the case to the trial court because it felt that the government's position on the method of valuation may not have been substantially justified.
Contact Experienced Mecklenburg County Land Use / Eminent Domain Attorneys TodayFor more information, and to schedule a confidential consultation with experienced and dedicated eminent domain and condemnation attorneys in Charlotte, contact Arnold & Smith, PLLC. Use our “Contact” page or give us a call at 704-370-2828. We handle land use, zoning and condemnation legal matters in federal court, in Mecklenburg County and elsewhere in North Carolina. We have offices in Charlotte, Lake Norman, and Union County.