Attorney’s Fees in Eminent Domain Cases: Would a Failed Bill have Leveled the Playing Field?

    A bill that would have drastically changed condemnation law in Texas, failed to become law as the 84th Texas Legislature came to a close on June 1, 2015. Senate Bill 474 was passed by the Senate by a 25-6 vote, but the House of Representatives failed to take any action, and the bill died without ever coming up for a House vote.

The Bill

    SB 474, by Senator Lois Kokhorst, R-Brenham, would have required condemning authorities, who sought land through eminent domain proceedings, to reimburse landowners for their attorney’s fees and other expenses if the amount awarded in the preliminary administrative proceeding exceeded the condemnor’s offer for the property by at least 20 percent. The bill would have also required reimbursement for attorney’s fees and other expenses if the case moved beyond the special commissioners’ hearing and into litigation where the final judgment exceeded the condemnor’s offer by at least 20 percent.

How the Bill Would Have Worked

    Imagine if a person purchased a piece of land and built a house. Suppose the appraised value of the land and the house is $250,000. Then, a condemning authority decides it needs that land for a project and offers the landowner $200,000. Knowing that its house and land is worth $50,000 more than the offer, the landowner hires an attorney to fight the case. During the litigation, the landowner is saddled with fees to pay for the experts and appraisers. Eventually, the attorney secures payment from the condemnor of $250,000. Although the landowner gets paid the fair market value for this property, it is now out the money for attorney’s and expert fees. Under SB 474, the landowner would be able to recoup that money because the final award exceeded the $200,000 offer by the condemning authority by more than 20%.

Arguments For and Against

    The rationale behind the bill was that disputed eminent domain cases can often end up in court and can stretch out for long periods of time. During that time, attorneys and expert fees can pile up. While a property owner may eventually receive payment for the fair market value of its land, it can find itself well short of that amount after these fees are paid.

    Proponents of the bill said that it is unfair for landowners to be paid adequate compensation and then subtract the cost it takes to achieve that compensation. Additionally, property owners are often forced to accept diminished compensation for their land because they cannot afford the legal costs to challenge the offer through litigation. Registered supporters of SB 474 included representatives from the League of Independent Voters of Texas, the Texas Public Policy Foundation, the Texas Farm Bureau, the Texas and Southwestern Cattle Raisers Association, the Texas Wildlife Association, and various landowners.

    Opponents of the bill argued that if landowners see eminent domain litigation as essentially free, there is will be a lot more cases progressing to trial and less cases being settled earlier. Additionally, opponents believed that the law requiring condemning authorities to make a good-faith offer is sufficient and already gives enough protection to property owners. Registered opponents of the bill included representatives from the Texas Conference of Urban Counties, the Association of Electric Companies of Texas, the Texas Pipeline Association, the Tarrant Regional Water District, the Gas Processors Association, the Texas Municipal League, and representatives from various Texas counties and cities.

    As the Texas Legislature will not convene again until January of 2017, landowners believe they will not be given a chance to level the playing field in eminent domain for at least two more years.