NY Appellate Court Finds that Condemnee was Entitled to Increased Award of Attorneys Fees

This post was authored by Amy Lavine, Esq.

A New York appellate court ruled in May that attorneys fees were properly awarded in a condemnation action due to the undervaluation of the claimant’s property, but that the amount of the award was improperly based on contingency percentages in the claimant’s retainer agreement.

In the underlying eminent domain action, the city had initially offered to pay about $2 million for the taking of the claimant’s property, but it the amount of just compensation was ultimately set at $11.8 million. In light of this discrepancy, the claimant requested attorneys fees to the tune of approximately $2 million, as well as an additional $70,000 for expert expenses, costs, and disbursements. The trial court agreed that attorneys fees were appropriate, but it awarded less than half of the claimant’s requested amount.

The court held on appeal that the amount of attorneys fees was improperly based on the percentages contained in the claimant’s contingency retainer agreement. Although contingency agreements can be a factor in determining an appropriate award of attorneys fees, the court emphasized that the “focus is upon what would be a reasonable fee.”

The retainer agreement is this case included relatively low percentages, and the court agreed with the claimant that the award of attorneys fees should have been calculated using a contingency formula more typical to similar condemnation actions. The court found that it would be reasonable to apply the same calculation used in a previous determination involving the same project, which set the award of attorneys fees at 25% of the excess of the award over the advance payment. Although there were some differences between the circumstances of this case and the previous award, the court concluded that “taking into account both the arguments made for enhancing and reducing the fee made by the parties here, a fee of $1,366,250 is reasonable in light of the City’s undervaluation of the properties and the effort required to establish the highest and best use of the properties.”

 

Matter of City of Long Beach v Sun NLF Ltd. Partnership, 2019 NY Slip Op 03784 (2d Dept. 5/15/19).