Opinion
Civ. No. 98-3337 SECTION: "R" (2).
March 14, 2000.
ORDER AND REASONS
Before the Court is defendant Hickory's motion for attorneys' fees, expert witness fees and litigation costs. For the following reasons, Hickory's motion is granted, however, the Court reduces the amount of Hickory's award.
I. Background
This case involves the expropriation by Illinois Central Railroad Company of an approximately 16-acre tract of land in Jefferson Parish, Louisiana, owned by Hickory Avenue, L.L.C. The parties agreed to have this Court try the issue of expropriation on a written record, and on December 22, 1999, the Court issued written findings of fact and conclusions of law in which it determined that the railroad was entitled to expropriate Hickory's land. It also dismissed Hickory's counterclaim against the railroad for tortious interference with contract.
Prior to the bench trial, Illinois Central filed a motion to dismiss defendants John Cutrera and Keith Bourgeois, on the grounds that they had no compensable property interest in the land at issue. On September 23, 1999, this Court granted that motion and dismissed those parties from the case, as well as their counterclaim against the railroad for tortious interference. It also denied the motion to reconsider this ruling.
Because the parties could not agree on the value of the property and were thus unable to reach a settlement, the Court held a jury trial on the compensation issue, which resulted in an award to Hickory of $2.9 million. At the end of the jury trial, Hickory moved for reasonable attorneys' fees pursuant to LA. REV. STAT. § 19:8. Hickory asserts that it is entitled to reasonable attorneys' fees, expert witness fees and litigation costs for all claims pursued, even those on which it was unsuccessful. Illinois Central responds that this Court should limit any award of attorneys' fees and costs to the compensation issue, the only claim on which Hickory prevailed. It also claims that Hickory is seeking excessive expert witness fees and litigation costs.
II. Discussion
A. Standard for Awarding Attorneys' Fees Under La. Rev. Stat. § 19:8
Louisiana law governs a defendant landowner's right to be reimbursed for reasonable attorneys' fees, expert witness fees and litigation costs. See Marston v. Red River Levee and Drainage Dist., 632 F.2d 466, 468 (5th Cir. 1980) (attorneys' fees); Henning v. Lake Charles Harbor and Terminal Dist., 387 F.2d 264, 267 (5th Cir. 1968) (expert witness fees and costs). Under Louisiana law, the Court may award reasonable attorneys' fees to a landowner if the amount awarded in order to compensate him for the loss of his land is greater than the highest amount offered by the expropriating authority. See LA. REV. STAT. § 19:8 (West 2000). Section 19:8 provides in pertinent part:
Expropriation suits shall be tried in term time or in vacation and shall be conducted with preference and with the greatest possible dispatch. Judgments may be signed in term time or in vacation. All issues shall be decided by the trial judge. However, when a jury trial has been demanded, the judge shall hear the evidence on all issues, other than the measure of compensation and shall render a decision within five days. If the trial judge decides in favor of the expropriating authority, then within thirty days after such decision, a jury shall be impaneled to determine the measure of compensation. Immediately after compensation has been determined, the plaintiff shall, upon motion of the defendant, present evidence as to the highest amount it offered the defendant for the property prior to trial on the merits. After hearing evidence on the issue, the court shall determine the highest amount offered. If the highest amount offered is less than the compensation awarded, the court may award reasonable attorney fees. The expropriating authority shall not be entitled to possession or ownership of the property until a final judgment has been rendered and payment has been made to the owner or paid into the registry of the court, except as may otherwise be stipulated by the parties.
In this case, Illinois Central's highest offer was $2 million, the jury awarded Hickory $2.9 million, and the parties do not dispute that this Court may award Hickory reasonable attorneys' fees. Although the award of attorneys' fees is discretionary, Louisiana courts have held that when, as here, the amount awarded for the value of the property is substantially higher than the expropriator's highest offer, courts should award attorneys' fees. See Trans Louisiana Gas Co. v. Heard, 629 So.2d 500, 506 (La.App. 3rd Cir. 1993); City of New Orleans v. Condon, 600 So.2d 78, 81 (La.App. 4th Cir. 1992). In deciding whether to award fees and the reasonableness of any fees awarded, courts should consider the following factors: (1) the ultimate result obtained; (2) the responsibility incurred; (3) the importance of the litigation; (4) the amount of money involved; (5) the extent and character of the work performed; (6) the legal knowledge, attainment and skill of the attorneys; (7) the number of appearances made; (8) the intricacies of the facts involved; (9) the diligence and skill of counsel; and (10) the court's own knowledge. See Rivet v. State, DOTD, 680 So.2d 1154, 1161 (La. 1996) (noting that these factors are derived from Rule 1.5 of the Rules of Professional Conduct); accord Gravolet v. Bd. of Com'rs for Grand Prairie Levee Dist., 676 So.2d 199, 205 (La.App. 4th Cir. 1996); Missouri Pacific R. Co. v. Nicholson, 460 So.2d 615, 628 (La.App. 1st Cir. 1984).
In this case, the award of $2.9 million was a success for Hickory, especially considering that it was $900,000 higher than the railroad's highest offer. This case clearly involved a large sum of money. In addition, "[e]xpropriation of an individual's property . . . is an important matter that places considerable responsibility on the attorney for the landowner to protect his client's contentions." Nicholson, 460 So.2d at 628. Mr. Darden was well-prepared and proved to be an effective advocate for his client. In addition, the uniqueness of the property and the length of the trial resulted in counsel's having to devote a considerable amount of work to trial preparation and trial. The uniqueness of the parcel also made its valuation more difficult. After considering the foregoing factors, this Court finds that Hickory is entitled to reasonable attorneys' fees. The next issue is whether Hickory may recover fees for work performed on issues on which it did not prevail.
B. Whether Hickory Is Entitled to Fees on Unsuccessful Claims, Application of Hensley
Hickory contends that its legal fees were $168,389.91, and seeks full recovery of this amount. This includes time spent on the expropriation phase, on its counterclaim, on whether Cutrera and Bourgeois had a compensable property interest in the parcel and on the counterclaim of Cutrera and Bourgeois.
Section 19:8(A) provides that the trial court may awardreasonable attorneys fees if the highest amount offered by the landowner is less than the amount awarded by the jury. It does not provide that, if the landowner wins the expropriation phase of the trial, he may recover fees. The statute only mentions attorneys fees after it discusses the compensation phase and the sentence providing for fees specifically discusses only the issue of compensation. Thus, the statute's plain language indicates that it was designed to reward persons who claim that they have not been offered the fair market value of their land and prevail, rather than to enrich those who contest an expropriation of their land and lose. This conclusion is bolstered by case law from the United States Supreme Court.
In Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933 (1983), the Supreme Court held that under 42 U.S.C. § 1988, which authorizes attorneys' fees to the "prevailing party" in civil rights cases, a plaintiff cannot recover attorneys' fees incurred for prosecuting unrelated, unsuccessful claims, and that when unsuccessful and successful claims are interrelated, a fee reduction may be warranted. The Hensley Court articulated a two-pronged inquiry, under which the district court must determine (1) whether the party seeking fees failed to prevail on claims that were unrelated to the claims on which he succeeded; and (2) if the claims are interrelated, whether the amount awarded should be decreased or enhanced considering the degree of success obtained in relation to the scope of the entire litigation. 461 U.S. at 440, 103 S.Ct. at 1943; see also Todd Shipyards Corp. v. Turbine Service, Inc., 592 F. Supp. 380, 394 (E.D. La. 1984) (following Hensley and declining to award attorneys fees for unsuccessful claim in maritime breach of contract action), rev'd in part on other grounds sub nom. Todd Shipyards Corp. v. Auto Transp., S.A., 763 F.2d 745 (5th Cir. 1985); George Hyman Constr. Co. v. Brooks, 963 F.2d 1532, 1535 (D.C. Cir. 1992) (applying Hensley to statutory attorneys' fees provision in Longshore and Harbor Workers' Compensation Act).
Hickory contends that because this case involves a state statute, this Court is not bound by Hensley and Todd Shipyards, which involved federal attorneys' fees statutes, and that the only Louisiana expropriation case that has considered this issue rejected the "issues won or lost" analysis. It also avers that because it was Illinois Central's decision to name Cutrera and Bourgeois in the expropriation complaint, the railroad should have to pay attorneys' fees on that claim.
Although the holding in Hensley directly applies only to "cases in which Congress has authorized an award of fees to a 'prevailing party,'" this Court finds the rationale behind Hensley equally applicable to this case. It would be unreasonable to award Hickory attorneys fees for its unsuccessful claims that were unrelated to the claim on which it prevailed, or, under Hensley's second prong, to award Hickory the full amount of its fees considering the results obtained in relation to the entire litigation. Id. at 433 n. 7, 103 S.Ct. at 1939 n. 7. In so concluding, the Court observes that at least one United States Court of Appeals has followed Hensley in the context of a federal attorneys' fees statute analogous to Section 19:8. See Brooks, 963 F.2d at 1536 (holding that although statute at issue did not contain words "prevailing party," Hensley applies when statute allows fees if compensation awarded is greater than amount paid or tendered by employer or carrier). Further, in the context of the Equal Access to Justice Act, which directs courts to award attorneys' fees and expenses to certain prevailing parties in actions against the United States, including condemnation cases, legal commentators have observed that a court may deny an award of fees or costs if special circumstances make an award unjust: "That would seem to be the case to the extent that attorney time was spent litigating issues on which the government [expropriator] prevailed, such as the right to take." 12 CHARLES ALAN WRIGHT, ARTHUR R. MILLER RICHARD L. MARCUS, FEDERAL PRACTICE AND PROCEDURE, § 3056, 284 (2d ed. 1997).
Hickory is correct that in Louisiana Resources Co. v. Greene, 406 So.2d 1360 (La.App. 3rd Cir. 1981), the Louisiana Third Circuit Court of Appeal found that it was within the trial court's discretion to decline to apply the issues won/lost method to an attorneys' fee award under Section 19:8. Greene stated: "whatever logic there may be to appellee's argument such should not be allowed to discourage the fundamental right of landowners to test an expropriation on all points or issues which may arise[,]" and any "inequities exposed by the results of this case . . . are more appropriate for legislative . . . attention." 406 So.2d at 1371, citing LA. CONST., art. I, § 4. Nevertheless, Greene does not change that the award of attorneys' fees is discretionary, and that any award must be reasonable, and this Court finds that the result in Greene is inconsistent with the plain meaning of § 19:8.
Because, as stated above, the Court believes that Section 19:8 was not designed to reward landowners for issues on which they failed to prevail, it declines to follow the result in Greene. Moreover, this Court does not see how limiting an award of attorneys' fees to the compensation phase on which a landowner actually prevails discourages him from contesting the expropriation, if he chooses to do so. The Court also rejects Hickory's contention that, due to the amount of fees awarded in Nicholson, that court necessarily awarded fees for the landowner's unsuccessful effort to block the expropriation. In Nicholson, the railroad did not prevail on the full extent of its expropriation claim, and Hickory has provided no evidence that attorneys' fees were awarded for the expropriation phase of the trial. Regardless of the result in Nicholson, this Court retains discretion to determine what constitutes reasonable attorneys' fees in this case.
Hickory's claim that the railroad should have to pay attorneys' fees on a counterclaim that this Court rejected as meritless is also unavailing. At the time it filed the expropriation suit, Illinois Central named Cutrera and Bourgeois because they would have been entitled to compensation as owners of the land at issue had they decided to purchase it. It was their choice to pursue their counterclaim and the unsuccessful argument that they were entitled to compensation for their expired option agreement. Thus, this Court will apply Hensley to this case, and turns to the first prong of the Hensley inquiry.
1. Whether Claims Are Unrelated
Hensley observed that "work on an unsuccessful claim cannot be deemed to have been expended in pursuit of the ultimate result achieved." 461 U.S. at 435, 103 S.Ct. at 1940, internal quotation marks and citation omitted. The Court of Appeals for the District of Columbia noted that "the factfinder is obliged to prevent claimant from 'piggybacking' fees incurred for work done on losing claims onto unrelated winning issues." Brooks, 963 F.3d at 1537, citing Sierra Club v. EPA, 769 F.2d 796, 801 (D.C. Cir. 1985).
(a) Issues Relating to Purchase and Sale Agreement and Counterclaims
Here, whether Cutrera and Bourgeois had a compensable property interest, and their and Hickory's counterclaims for tortious interference with contract involved different facts and substantive law than the compensation issue, in which the central issue was the fair market value of the land expropriated. Specifically, whether an expired option agreement styled as a purchase and sale agreement afforded Cutrera and Bourgeois a compensable property interest involved contract interpretation and Louisiana law regarding the timing of the taking. See United States v. 29.16 Acres, More or Less, Valley Forge Nat'l Historical Park, 496 F. Supp. 924, 930 (E.D. Pa. 1980) (when option to buy expired before taking, defendants had no legally cognizable interest in land); Board of Education, Gadsden Indep. School Dist. No. 16 v. James Hamilton Constr. Co., 891 P.2d 556, 563 (N.M.Ct.App. 1994) (same); Hennessey v. Wilson, 83 So.2d 176, 177 (Miss. 1955) (when option to purchase expired before trial, defendant had "nothing the power company could take and no interest that could be damaged"); Board of Com'rs of New Orleans Exhib. Hall Auth. v. Missouri Pacific R. Co., 625 So.2d 1070, 1078 (La.App. 4th Cir. 1993) (taking occurs on date railroad tenders payment for property rather than on date expropriation suit filed). In addition, whether those parties stated valid counterclaims involved the narrow cause of action for tortious interference with contract under Louisiana law. See Egorov, Puchinsky, Afanasiev Juring v. Terriberry, Carroll Yancey, 183 F.3d 453, 457 (5th Cir. 1999); 9 to 5 Fashions v. Spurney, 538 So.2d 228, 234 (La. 1989). Neither issue involved the nature or value of the property in issue. Thus, whether Cutrera and Bourgeois had the right to be compensated for the taking and their and Hickory's counterclaims were issues unrelated to and discrete from the compensation issue.
Because those claims were unsuccessful, Hensley dictates that the Court should exclude time spent on them in calculating the award of attorneys' fees. See, e.g., Brooks, 963 F.2d at 1539-40 (holding that claims were not interrelated when based on different factual and legal theories). An examination of counsel's records, however, reveals that this is a difficult task, because many of the time entries that include work performed on the unrelated, unsuccessful claims also include time expended on Hickory's successful claim. In light of this difficulty, the Court has attempted to weed out these unrelated, unsuccessful claims by estimating the time spent pursuing them. The calculations appear at the end of section 2, infra, and are figured into the total reduction of Hickory's award, as explained below.
(b) Illinois Central's Right to Expropriate
Although different legal theories are involved in the issue of the railroad's right to expropriate and the issue of compensation, both issues involve the nature and value of the parcel, its location and its highest and best use. For example, before filing its expropriation petition, the railroad was required to make a good faith offer to compensate the landowner for his land, which implicates the issue of the property's value. See Calcasieu-Cameron Hospital Service Dist. v. Fontenot, 628 So.2d 75, 79 (La.App. 3rd Cir. 1993). In addition, in proving that its selection was not arbitrary and capricious, the expropriator was required to consider criteria such as environmental factors and long-range area planning, which implicate the nature and location of the parcel. See id. These issues were also involved in the compensation phase. Because the underlying facts overlap, the Court finds that these claims are interrelated. See Hensley, 461 U.S. at 434-35, 103 S.Ct. at 1940 (instructing that claims are interrelated if based on same facts or legal theories); Cobb v. Miller, 818 F.2d 1227, 1233 (5th Cir. 1987) (affirming magistrate's determination that claims were interrelated because they all stemmed from the same facts). This Court must therefore turn to the second prong of Hensley.
2. Degree of Success In Scope of Entire Litigation
The second prong of Hensley comes into play when, as here, "a lawsuit cannot be viewed as a series of discrete claims." 461 U.S. at 435, 103 S.Ct. at 1940. In such a case, courts must examine the degree of success obtained in relation to the scope of the entire litigation and determine whether decreased fees are warranted due to the limited nature of the relief obtained. See id. at 436, 103 S.Ct. at 1941. "If . . . [Hickory] has achieved only partial or limited success, the product of hours reasonably expended on the litigation as a whole times a reasonable hourly rate may be an excessive amount." Id. In such a case, the district court should explain that it has considered the relationship between the amount of fees awarded and the results obtained. See id. at 437, 103 S.Ct. at 1941. Here, Hickory lost on the expropriation issue and prevailed on the compensation issue. Both issues were complicated and required a significant amount of preparation and research by the parties and the Court. Both required the parties to present numerous exhibits and the testimony of many witnesses. Because the expropriation issue was substantial and important to the litigation, the Court finds that Hickory's failure to prevail on this claim limits its degree of success in comparison to the entire scope of the litigation and that a reduced fee award is both reasonable and appropriate.
When a court decides to reduce an award due to the defendant's limited success, it may identify and eliminate specific hours, or simply reduce the award to account for the limited success. See id. at 436-37, 103 S.Ct. at 1940. Because much of the discovery, research and preparation involved in the case touched upon both issues, this Court finds that although a reduced fee is warranted, Hickory should be compensated for the majority of the work performed. Specifically, the Court believes that Hickory should recover its costs in performing discovery, most of which involved both issues, and for time spent preparing for and trying the compensation phase to the jury. In order to arrive at an appropriate reduction, the Court has examined counsel's time entries and reduced the total award by the estimated time spent researching and briefing the expropriation issue, researching, preparing and drafting pleadings and motions relating to the unsuccessful counterclaims and to Cutrera and Bourgeois' alleged compensable property interest. The Court estimates as follows:
(1) Approximately $22,112.25 was assessed exclusively for work on the brief for the expropriation phase.
(2) Approximately $4111.98 was spent solely on the motion in limine regarding unrelated and unsuccessful issues (counterclaims and purchase and sale agreement).
(3) Approximately $17,890.98 was spent solely on discovery and pleadings relating to Cutrera and Bourgeois and their unavailing claim to a property interest in Parcel MY and counterclaim for tortious interference with contract, and on depositions relating to those claims and/or that were not used at trial.
The combined total of these amounts is $44,115.21. Thus, this Court will reduce the attorneys' fees claimed, $168,389.91, by$44,115.21, which yields a total fee of $124,274.70. The Court believes that this is a reasonable deduction, considering Hickory's success on the compensation issue in relation to the entire scope of the litigation.
C. Expert Fees and Costs
Under Louisiana law, a landowner is entitled to reimbursement for the following items:
(1) the cost of photographs actually introduced in evidence and the costs associated with the preparation of oversized trial and demonstrative exhibits;
(2) the cost of depositions introduced in evidence or that support or form the basis of any stipulation;
(3) the fees of all expert witnesses for testifying in court;
(4) all reasonable expenses of testifying experts in preparing for trial and development of facts on which their opinions are based in connection with the value of the property;
(5) expert fees for attending but not testifying at trial, provided that such expert subsequently actually testified, and that his attendance was during the presentation of evidence relevant to the matters upon which he later testified;
(6) court reporter charges for transcripts; and
(7) court costs except subpoenas to a party defendant.
See Nicholson, 460 So.2d at 633; LA. REV. STAT. § 13:3666 (West 2000). Louisiana law provides that the award of expert witness fees and costs is highly discretionary and each case turns on its own facts. See Heard, 629 So.2d at 505; Nicholson, 460 So.2d at 628. "[A]n agreement entered into by a party as to the fee which an expert is to receive, or the statement of the expert as to his charges or even the actual payment of such a fee to the expert, [is] not binding on the court and [is] not . . . to be used by the court in fixing the expert fees which are to be assessed as costs in the suit." Mathis v. City of DeRidder, 599 So.2d 378, 392 (La.App. 3rd Cir. 1992). Louisiana courts have identified a number of factors that courts can use in determining expert witness fees, including (1) the amount of time consumed by the expert in compiling his report; (2) the amount charged the landowner; (3) the amount of time spent preparing for trial; (4) the amount of time actually spent in court; (5) the witnesses' expertise; (6) the extent to which his testimony and expert report aided the factfinder in its decision; (7) the amount in controversy and the complexity of the problem addressed by the expert; and (8) awards to experts in similar cases. See Heard, 629 So.2d at 505; Nicholson, 460 So.2d at 628, citing LA. REV. STAT. § 13:3666; State, Through Dept. of Highways v. Bougere, 363 So.2d 228 (La.App. 4th Cir. 1978); State Dept. of Highways v. Miltenberger, 344 So.2d 705 (La.App. 1st Cir. 1977).
The most important factor in determining an expert witness fee is that the award be reasonable. See Nicholson, 460 So.2d at 628, citing Town of Krotz Springs v. Weinstein, 401 So.2d 664 (La.App. 3rd Cir. 1981). An expert appraiser may also recover fees for his reasonably necessary preparatory work, after considering whether that work actually tended to show the value of the property, whether it was useful in determining the award made, and the value of the land at issue. See id.
Hickory seeks an expert witness award of $34,305.50 for Mr. Truax, its expert appraiser. Illinois Central does not dispute Mr. Truax's expertise, or that his testimony and preparation were useful to the jury in determining the award, which was $1,680, 000 greater than the highest appraisal given by the railroad's own appraisers. Mr. Truax spent a considerable amount of time preparing for trial and compiling his report, which he updated twice. He also attended the entire three-day trial and testified extensively regarding the nature and value of the land at issue. Considering the foregoing factors, this Court finds that Hickory is entitled to a reasonable expert witness fee.
Illinois Central contends that an award of $34,305.50 is excessive, because it includes time Mr. Truax spent consulting with defense counsel prior to trial. The railroad cites Nicholson for the proposition that time spent consulting with counsel before trial preparation began should not be taxed in assessing expert fees. 460 So.2d at 634. Nicholson, however, held that experts should be awarded all reasonable expenses in preparing for trialand development of facts on which their opinions are based. Mr. Truax's records indicate that his time was related to either of these endeavors. Accordingly, the Court finds that $34,305.50 is a reasonable expert witness fee and awards Hickory that amount.
Hickory also seeks $7,488.65 in litigation costs, including $3,380.05 for the stenographic costs of six depositions, $3,770.52 for copying costs of trial exhibits and demonstrative aids and $338.08 for service of trial subpoenas and witness fees. Illinois Central objects to the amounts for the depositions and the copying costs. It claims that because only one of the six depositions (that of Arthur Spiros) was actually introduced in the compensation phase of the trial, it should only be required to pay for that deposition, which cost $558.20. See Nicholson, 460 So.2d at 629 (stating that landowner is entitled to recover for the costs of depositions that are actually introduced in evidence at trial); cf. 10 CHARLES ALAN WRIGHT, ARTHUR R. MILLER MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE, § 2676, 428 (3rd ed. 1998) (same rule under federal law). Because Hickory failed to prevail on the expropriation phase of the trial, the Court limits the award of deposition costs to $558.20, the cost of the deposition of Arthur Spiros, the only deposition actually introduced at the compensation phase.
Illinois Central also claims that Hickory should recover only $500.00 for the cost of copying trial exhibits, because not all of the exhibits listed in Mr. Darden's records were actually used in the compensation trial. In Nicholson, the court limited the award of copying costs of trial exhibits to those exhibits actually introduced in evidence or that formed the basis of any stipulation. The railroad has not demonstrated which exhibits it claims were not used and this claim is rejected. Accordingly, the Court awards Hickory $3,770.52 for the costs of trial exhibits and demonstrative aids.
Last, Hickory is entitled to the cost of serving subpoenas on witnesses other than party defendants. Thus, the Court awards Hickory $200.00 for the costs associated with serving subpoenas on Richard Spangenberg, Michael Truax, Keith Bourgeois and John Cutrera. The Court also awards Hickory $138.00 for the cost of mileage and witness fees paid to Max Derbes, III, in connection with the testimony of Hickory's expert appraiser.
III. Conclusion
For the foregoing reasons, Hickory's motion for attorneys' fees, expert fees and litigation costs is granted. The Court awards Hickory fees and costs for the following items in the following amounts:
Attorneys' fees: $124,274.70
Expert witness fees: $34,305.50
Litigation costs:
(1) Depositions: $558.20
(2) Trial exhibits and demonstrative aids: $3,770.52
(3) Subpoenas: $200.00
(4) Mileage: $138.08
New Orleans, Louisiana, this 14th day of March, 2000.
MINUTE ENTRY McNAMARA, CHIEF JUDGE MARCH 10, 2000