Property Owner Who Successfully Challenges Finding of Public Purpose for Condemnation May Recover Attorney's Fees and Costs

The New York Court of Appeals ruled last week that a property owner who was successful in defeating an attempt to acquire her property by eminent domain may recover certain of her attorney's fees and costs. In Hargett v. Town of Ticonderoga the Court noted that in a prior action the Appellate Division had ruled that the Town's superintendent of highways had exceeded his authority in attempting to condemn property for purposes unrelated to his position. In the earlier action the property owner had challenged the initial finding by the Town that there would be a public purpose in taking her property.In the current action the property owner sought reimbursement pursuant to EDPL 702 for costs and attorney's fees incurred in the successful challenge to the finding of public purpose. The issue in the case was whether the reimbursement provisions of EDPL 702 would apply to this first stage of the condemnation process in which the Town targeted the property for acquisition or only after the Town actually commenced an acquisition/vesting procedure to condemn the property.

The Appellate Division Third Department denied the application relying upon the holding in Matter of 49 WB, LLC v. Village of Haverstraw in which the Appellate Division Second Department concluded that no reimbursement was available under similar circumstances. As previously discussed on this Blog in a June 23, 2007 post the Second Department in the Haverstraw case held that the petitioner was not entitled to attorney’s fees and costs under EDPL 702 (B) as no acquisition procedure had been commenced. EDPL has a two step process (1) determining public purpose and (2) acquisition. As Haverstraw had only identified the public purpose but no actual acquisition procedure had been commenced, the Court determined there was no right to recover fees and costs.

In reliance on the Haverstraw case the Town of Ticonderoga argued that EDPL 702 only provides for reimbursement during the vesting stage of a condemnation proceeding. The Court of Appeals, however, disagreed with that prior holding and concluded that under these circumstances the property owner is entitled to recover certain fees and costs. The Court held in the first stage of the eminent domain process, prior to an actual vesting procedure has been commenced, "reimbursement for attorney's fees and other costs incurred by a condemnee may be sought pursuant to EDPL 702 (B) after it is determined in an EDPL article 2 proceeding that the condemnor lacked authority to pursue the proposed acquisition." The Court concluded that this first stage was part of the "acquisition" process contemplated by the language in EDPL 702.

The Court qualified the extent of available reimbursement by stating reimbursement is available for "fees and costs incurred by a condemnee after a condemnor makes a determination and findings that are adverse to the condemnee pursuant to EDPL 203 and 204... However, we take no view here as to whether fees incurred before such an adverse determination may be said to be incurred "because of the acquisition procedure" within the meaning of EDPL 702 (B)." Thus, once a municipality makes a determination that a particular property would serve a public purpose, if a property owner successfully challenges that determination the property owner can seek reimbursement. Yet, whether the costs of preparing for the hearing conducted by the municipality in reaching its public purpose determination are also reimbursable is still an open question.

-Steven M. Silverberg