COUNTY OF ST CLAIR V EDWARD J SKOTCHER
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STATE OF MICHIGAN
COURT OF APPEALS
COUNTY OF ST. CLAIR,
UNPUBLISHED
January 12, 2010
Plaintiff-Appellee,
v
EDWARD J. SKOTCHER, VALERIA M.
SKOTCHER, VALERIE A. SKOTCHER, and
LAKESHORE MOTEL & APARTMENTS, INC.,
No. 287225
St. Clair Circuit Court
LC No. 05-002328-CC
Defendants-Appellants.
Before: Wilder, P.J., and O’Connell and Talbot, JJ.
PER CURIAM.
Defendants appeal as of right the trial court’s award of attorney fees and denial of expert
witness fees in this easement condemnation action. We affirm in part, reverse in part and
remand to the trial court.
Defendants owned and operated the Lakeshore Motel and Apartments, Inc. and also
owned a private road and beachfront easement in Fort Gratiot Township, Michigan. The private
road easement was located between the Lakeshore Motel and the Lake Huron beachfront
easement. Defendants’ easement burdened a 16-acre property parcel of undeveloped land
located between the Lakeshore Motel and Lake Huron that was owned by The Detroit Edison
Company.
Plaintiff, through its Parks and Recreation Commission, indicated an interest in obtaining
the parcel of land owned by Detroit Edison to construct a county park. In 2002, Detroit Edison
conducted an auction to sell the property. Plaintiff purchased the 16-acre property at the auction
subject to defendants’ private road and beachfront easement. Plaintiff obtained a land
acquisition grant from the Michigan Department of Natural Resources that required, as a
condition of the grant, that plaintiff would acquire defendants’ easement. Hence, although
defendants had initially approached plaintiff regarding the sale of the motel property and
easement as a package deal, plaintiff required only acquisition of defendants’ easement to
proceed with its plans for the construction of a park. On January 12, 2005, Mark A Brochu,
Director of plaintiff’s Parks and Recreation Commission, authored a letter to Edward and Valerie
Skotcher indicating, in relevant part:
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The St. Clair County Parks and Recreation commission has directed me to make a
formal offer to purchase your current easement across the Citizens First and
Detroit Water Board properties.
***
I am authorized to offer you one hundred thousand dollars ($100,000.00) for the
purchase of your entire easement. I am prepared to give you a check for the entire
amount as soon as you signed the required documents. [Emphasis added.]
The letter also indicated that defendants would retain for themselves and their motel guests
“direct non-motorized access to the park” and suggested that plaintiff would move ahead with
plans to construct a park at the site, which required “acquisition of your easement.”
It is undisputed that defendants failed to accept this offer and retained condemnation
counsel. Defendants contend that their counsel accepted the case on the basis of the $100,000
initial offer. Subsequently, plaintiff obtained an appraisal, which valued the easement at
$240,000. On September 21, 2005, the St. Clair County Board of Commissions adopted a
resolution by the St. Clair County Parks and Recreation Commission to authorize the County
Administrator to make a “good faith offer for the easement” in the amount of the most recent
appraisal and, if the offer was not accepted, to commence condemnation proceedings.
Subsequently, on September 27, 2005, plaintiff authorized the submission of a “good faith offer”
to purchase the easement for $240,000. This offer contained a cost recovery waiver. Because
defendants did not accept this offer, plaintiff initiated condemnation proceedings on October 3,
2005.
The case was tried and resulted in a verdict of just compensation on April 4, 2008.
Judgment on the verdict of $375,000, plus statutory interest in accordance with MCL 213.65,
was entered on April 15, 2008. On May 13, 2008, defendants sought reimbursement of attorney
fees and costs pursuant to the Uniform Condemnation Procedures Act (UCPA), MCL 213.51 et
seq. A dispute arose regarding the proper amount or offer to be used under the UCPA for
calculation of attorney fees to be awarded and whether the fees charged by three of defendants’
experts – O. Fredrich Pertner, Dale S. Sass and Clif Seiber – should be reimbursed. The trial
court ordered the reimbursement of attorney fees based on plaintiff’s second written offer of
$240,000, resulting in an award of $52,425.63, and approved reimbursement of expert witness
fees for defendants’ appraiser, surveyor and other related costs, which were stipulated to by
plaintiff. At this time, the trial court denied defendants’ request for reimbursement of
$17,808.59 in expert witness fees for Seiber. In determining the second written offer of
$240,000 was the proper figure for use in calculation of attorney fees, the trial court stated in
relevant part:
[T]his Court does not find that it was the letter that was written by Mr.
Brochu that in essence was in response to contacts by the motel owners when they
. . . were desirous to have the County buy . . . all of their property which the
County was never really interested.
I don’t quarrel with the fact that they got . . . Counsel involved, and things
kind of went back and – between the County and Counsel, but the bottom line was
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that when negotiations broke down between the County and the motel owners as
to what just compensation for the easement would be, the County made a decision
and the decision they made was that they were going to file a lawsuit, and they
got their appraisals, they followed the statutes. They – in this Court’s opinion,
they did it correct and they – before any litigation was filed in this case they laid
the gamut [sic] down you might say, and they did that in their good faith offer of
September of ’05 of $240,000.
A separate hearing was conducted regarding defendants’ request for reimbursement of $30,000
in fees for Pertner and $6,601.23 in fees for Sass. The trial court found that Pertner’s fee of
$30,000 for the financial analysis conducted was “a little bit shocking to the conscience . . .
predicated upon the fact that Mr. Pertner admitted the Defendants’ appraiser . . . did not rely on
Mr. Partner’s conclusions in his opinion.” The trial court further opined that the analysis
provided by Pertner addressed matters, which were unrelated to the immediate issue of just
compensation for the easement. Subsequently, the trial court found Pertner’s services were “not
reasonably necessary for Defendants to prepare for trial” and denied reimbursement for his fees.
With regard to the fees sought for Sass, the trial court noted that he was precluded from
testifying at trial, other than as a possible rebuttal witness. Reimbursement for his fees were
denied by the trial court stating:
The UCPA does not allow for reimbursement of expert witnesses who are not
called to testify at trial . . . . Mr. Sass was not called as a witness because he was
stricken by the Court . . . . and again the report prepared by Mr. Sass . . . was not
relied upon by the defendants or the defendants’ expert in establishing just
compensation, and under those circumstances . . . the County should not be
responsible for his bill.
In denying reimbursement for fees incurred for Seiber to conduct a site analysis, the trial court
stated, in relevant part:
Mr. Seiber acknowledged . . . that the drawings that were provided to the
Defendants . . . were not provided to the appraiser nor were they used in the
Defendants’ appraiser’s analysis in coming to the amount that the jury was to
consider for just compensation or the basis for it. And I ruled that Seiber couldn’t
testify regarding any of the proposed subdivision layouts . . . and frankly in all
fairness I can’t see where he added one thing for the purposes of the jury in – that
would have enhanced or enlightened the jury in the testimony that he was allowed
to present, that in this Court’s opinion had any bearing per se on what the jury had
to decide in this case.
This appeal ensued.
We review an award of attorney fees and costs pursuant to the UCPA for an abuse of
discretion. Detroit v Detroit Plaza Ltd Partnership, 273 Mich App 260, 292; 730 NW2d 523
(2006). An abuse of discretion is deemed to have occurred when a trial court’s decision is
outside the range of “reasonable and principled outcome[s].” Maldonado v Ford Motor Co, 476
Mich 372, 388; 719 NW2d 809 (2006) (citation omitted). However, questions of law, which
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impact the determination, are reviewed by this Court de novo. Hines v Volkswagen of America,
Inc., 265 Mich App 432, 438; 695 NW2d 84 (2005).
In determining an award of attorney fees pursuant to the UCPA, there are two relevant
statutory provisions to be considered. MCL 213.55(1), which governs “good faith written
offers” states, in pertinent part:
Before initiating negotiations for the purchase of property, the agency
shall establish an amount that it believes to be just compensation for the property
and promptly shall submit to the owner a good faith written offer to acquire the
property for the full amount so established . . . . The good faith offer shall state
whether the agency reserves or waives its rights to bring federal or state cost
recovery actions against the present owner of the property arising out of a release
of hazardous substances at the property and the agency's appraisal of just
compensation for the property shall reflect such reservation or waiver. The
amount shall not be less than the agency's appraisal of just compensation for the
property. If the owner fails to provide documents or information as required by
subsection (2), the agency may base its good faith written offer on the information
otherwise known to the agency whether or not the agency has sought a court order
under subsection (2). The agency shall provide the owner of the property and the
owner's attorney with an opportunity to review the written appraisal, if an
appraisal has been prepared, or if an appraisal has not been prepared, the agency
shall provide the owner or the owner's attorney with a written statement and
summary, showing the basis for the amount the agency established as just
compensation for the property. If an agency is unable to agree with the owner for
the purchase of the property, after making a good faith written offer to purchase
the property, the agency may file a complaint for the acquisition of the property in
the circuit court in the county in which the property is located.
In addition, MCL 213.66, which addresses the calculation of attorney fees, provides in relevant
part:
(1) Except as provided in this section, an ordinary or expert witness in a
proceeding under this act shall receive from the agency the reasonable fees and
compensation provided by law for similar services in ordinary civil actions in
circuit court, including the reasonable expenses for preparation and trial.
***
(3) If the amount finally determined to be just compensation for the property
acquired exceeds the amount of the good faith written offer under section 5, the
court shall order reimbursement in whole or in part to the owner by the agency of
the owner's reasonable attorney's fees, but not in excess of 1/3 of the amount by
which the ultimate award exceeds the agency's written offer as defined by section
5. The reasonableness of the owner's attorney fees shall be determined by the
court.
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Defendants contend the trial court erred in failing to use plaintiff’s original $100,000 offer to
purchase the easement as the basis for the calculation of attorney fees in accordance with MCL
213.66(3). In contrast, plaintiff contends that the $100,000 offer was not a “good faith written
offer” as contemplated by MCL 213.55(1) because it did not include a waiver and was not based
on an appraisal and, therefore, was not in conformance with the statutory requirements. Plaintiff
asserts that the letter indicating an offer to purchase for $100,000 was merely in the nature of
initial negotiations.
As discussed by this Court in Dep’t of Transportation v Robinson, 193 Mich App 638,
643; 484 NW2d 777 (1992), “[t]he written offer to be used as the fee base under § 16(3) must be
made before the agency files its condemnation complaint.” Unfortunately, in this case, both
offers were made before the initiation of a condemnation action and “[t]he UCPA does not
expressly contemplate multiple precomplaint offers.” Id. at 644. Plaintiff’s contention that the
first figure of $100,00 cannot comprise a “good faith written offer” due to the omission of a
waiver and other details as contemplated by MCL 213.55(1) is misplaced based on this Court’s
ruling in City of Flint v Patel, 198 Mich App 153; 497 NW2d 542 (1993). In Patel the plaintiff
contested the use of an “original offer” based on the failure to include certain fixtures in the
amount, resulting in the offer being “incomplete.” Id. at 157-158. Addressing the omission of
required content or an incomplete offer, this Court stated, in relevant part:
Section 5 requires that a good-faith offer be made, and the city is
presumed to know the law. The city is therefore estopped from asserting that,
because it was incomplete, its original offer should not be used as the starting
point for calculating attorney fees. To hold otherwise would encourage
condemning authorities to make incomplete offers to the unwary, which
contravenes the legislative aim of placing property owners in as good a position
as they occupied before the taking. [Id. at 158 (footnotes and internal citations
omitted).]
Hence, failure of the initial $100,000 offer to strictly comply with MCL 213.55(1) is not fatal to
defendants’ assertion that it constituted the good faith written offer to be used in the calculation
of attorney fees.
In finding that plaintiff’s original $100,000 offer was a good faith written offer and
comprised the basis for subsequent calculation of attorney fees, we rely on our prior reasoning in
Robinson in determining that the use of this initial, lower offer is consistent with the legislative
intent of the statute. Specifically:
Section 16 of the UCPA defines a limit on fees, not a formula that must be
followed in every case. Under the predecessor statute the limit was $100. The
Legislature liberalized the attorney fee provision in the UCPA in order to
reimburse owners for expenses incurred as a result of agency actions.
This Court has identified three purposes of the attorney fee provision.
First, awarding attorney fees will assure that the property owner receives the full
amount of the award, placing the owner in as good a position as that occupied
before the taking. Second, the fee structure penalizes agents of a condemnor for
deliberately low offers because a low offer may result in the condemnor paying
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the owner's litigation expenses as well as its own. This Court has disapproved the
practice of an agency attempting to bind an owner to a low offer and then revising
its offer just before filing suit in order to minimize attorney fees. Third, the fee
provision provides a performance incentive to the owner's attorney, because the
fee awarded is directly proportional to the results achieved by counsel. The result
generated by counsel was also central to the related question of what constitutes
the “ultimate award,” the second factor in the attorney fee calculation. The Court
held that interest on the judgment should be included in the ultimate award, “as
such was the product of the attorney's efforts.”
Using the initial offer as the base figure for computing fees was reasonable
in this case and served the legislative purposes of the statute. The owners hired
the attorneys with that offer on the table, and the court's finding that the attorneys
accepted the case on the basis of that offer is not clearly erroneous. Thus,
awarding fees based on that amount will assure the owners full compensation.
[Robinson, supra at 645-646 (citations omitted).]
This is consistent with this Court’s earlier determination in City of Bay City v Surath, 170 Mich
App 139; 428 NW2d 9 (1988), which provided, in relevant part:
If property is to be acquired by a governmental agency through the exercise of its
power of eminent domain, the agency shall commence a condemnation action by
filing a complaint for the acquisition of the property in the circuit court in the
county in which the property is located. MCL § 213.52; MSA § 8.265(2) and
MCL § 213.55; MSA § 8.265(5). Section 5 of the act, MCL § 213.55; MSA §
8.265(5), sets forth the procedural requirements for the initiation of condemnation
proceedings. Before filing the complaint for the acquisition of the property, and
before initiating negotiations for the purchase of the property, the agency must
establish an amount it believes to be just compensation for the property. After an
amount is established, the agency must submit to the owner a good faith written
offer which shall not be less than the agency's appraisal of just compensation. If
the owner rejects the agency's offer, the agency may then initiate condemnation
proceedings by filing a complaint with the circuit court in the county where the
property is located. Therefore, § 5 defines “offer” as that amount determined by
the agency to be just compensation which is thereafter submitted to the owner for
the purchase of the property. Procedurally, the written offer precedes the filing of
the complaint. [Id. at 142.]
At the outset, we recognize that cases of this type are highly fact specific and we do not
intend, by this opinion, to state a hard and fast rule regarding whether an offer made first in time
of multiple offers always constitutes the basis for calculation of attorney fees. However, in this
instance, the initial $100,000 offer was specifically designated as “authorized” and to constitute a
“formal offer.” Further, this was the initial offer solely for purchase of the easement, whereas,
any previous negotiations initiated by defendants were for the sale of the easement and all related
real properties. Hence, the $100,000 offer was “before initiating negotiations,” as required by
MCL 213.55(1), for purchase of the easement. Additionally, there is no dispute that defendants
retained counsel based on this offer. Consequently, in order to fully compensate defendants in
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accordance with the legislative intent of the statute, this initial offer should be utilized as the
basis for calculation of attorney fees.
On remand of this issue to the trial court, we note that the trial court failed to undertake a
determination regarding the reasonableness of the attorney fees based, we assume, on plaintiff’s
stipulation to fees if calculated on the basis of the $240,000 offer. As noted in Detroit Plaza,
citing Randolph:
[O]ur Supreme Court held that the plain and unambiguous language of
“[s]ubsection 16(3) mandates reimbursement ‘in whole or in part’ of the ‘owner's
reasonable attorney fees.’” (Emphasis added). Thus, the Court held that when
confronted with a request for attorney fees under the UCPA, a trial court must
first determine whether the owner's fees are reasonable, and that
[i]n making this reasonableness determination, the trial court should
consider the eight factors listed in MRPC 1.5. If the trial court determines
that the owner's attorney fees are unreasonable, it should utilize its
discretion to determine what amount of the owner's requested attorney
fees should be reimbursed by the agency.
In those cases in which the trial court finds the owner's attorney fees to be
reasonable, subsection 16(3) gives the trial court additional discretion to order
reimbursement of those fees “in whole or in part.” Once the trial court has
determined the owner's attorney fees to be reasonable utilizing the factors in
MRPC 1.5(1), the trial court should consider, for fee-shifting purposes and in its
discretion, whether the condemning agency should be required to reimburse the
entire amount of the owner's reasonable attorney fees. The court must articulate
the reasons for its decision in order to facilitate appellate review. Finally, any
order of reimbursement is, of course, subject to the statutory maximum: one-third
of the amount by which the ultimate award exceeds the agency's written offer.
[Detroit Plaza, supra at 293-294 (citations omitted).]
Defendants further assert that the trial court erred in denying their request for expert
witness fees for Pertner, Sass and Seiber. The award of expert witness fees is governed by MCL
213.66, which provides in relevant part:
(1) Except as provided in this section, an ordinary or expert witness in a
proceeding under this act shall receive from the agency the reasonable fees and
compensation provided by law for similar services in ordinary civil actions in
circuit court, including the reasonable expenses for preparation and trial.
***
(5) Expert witness fees provided for in this section shall be allowed with
respect to an expert whose services were reasonably necessary to allow the owner
to prepare for trial. For the purpose of this section, for each element of
compensation, each party is limited to 1 expert witness to testify on that element
of compensation unless, upon showing of good cause, the court permits additional
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experts. The agency's liability for expert witness fees shall not be diminished or
affected by the failure of the owner to call an expert as a witness if the failure is
caused by settlement or other disposition of the case or issue with which the
expert is concerned.
At the outset we find the trial court did not abuse its discretion in denying reimbursement of
expert witness fees for Pertner based on the trial court’s determination that his services were not
“reasonably necessary to allow the owner to prepare for trial.” This determination was based on
the trial court’s recognition that other experts provided the same or similar facts and conclusions,
precluding the necessity of duplication by Pertner.
With regard to expert witness fees for Sass and Seiber, to the extent the trial court’s
ruling depended on its overly broad interpretation of the relevant statutory language to preclude
reimbursement of fees for witnesses who fail to testify, we vacate that portion of the ruling based
on its inconsistency with the actual statutory language of MCL 213.66(5). However, we affirm
the trial court’s ruling regarding the denial of fees for Sass based on the trial court’s finding that
the work of this individual did not relate to the issue of just compensation, which was the only
issue before the trial court. In a similar vein, the preclusion of fees for Seiber, for work that was
never provided to defendants, was not subject to reimbursement because it could not have been
used at or in preparation for trial. While not specifically articulated by the trial court, it is our
understanding that the remainder of these fees were denied because they were not reasonably
incurred in preparation for trial because they were either duplicative of work or fees incurred by
other experts or were ultimately unrelated to the issue designated for trial. As such, we cannot
discern an abuse of discretion by the trial court in the denial of these fees.
Affirmed in part, reversed in part and remanded to the trial court for further proceedings
consistent with this opinion. We do not retain jurisdiction.
/s/ Kurtis T. Wilder
/s/ Peter D. O’Connell
/s/ Michael J. Talbot
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