UNIVERSITY OF MICHIGAN THREATENING EMINENT DOMAIN TO ACQUIRE LAND FOR NEW DORMS

Defending an eminent domain acquisition is rarely “expensive” for property owners, notwithstanding an assertion to the contrary by a UM Regent.

This MLive article describes the University of Michigan’s efforts to acquire privately owned student rental houses to construct new dormitories. The University has completed most of the assemblage but a few owners are holding out.

I find this quote from University Regent Ronald Weiser bothersome. “’There’s a different process, and it takes a while and makes it expensive,’ Weiser said. ‘In my opinion, I think (the owners will) end up with a lower number, because I’m giving some fairly hefty numbers in order to prevent us from having to use (eminent domain), because it’s time consuming and costly to both sides.’” I am not privy to the negotiations and cannot comment on whether the University’s offers are actually “hefty” compared to the fair market value of the property. Eminent domain can be time consuming. It is costly to the condemning authority. But is it “costly to both sides,” including the property owner? While past results are not a promise of future performance, based upon my experience, eminent domain cases are virtually never costly to property owners. 

Two subparts to MCL 213.66, a statute in the Uniform Condemnation Procedures Act, protect property owners by shifting litigation expenses to condemning agencies.

First, owners are typically charged a contingent fee. That is how I have handled the vast majority of condemnation cases. I charge 1/3 of the just compensation and interest obtained over the agency’s offer.  This corresponds to the attorney fee reimbursement language in MCL 213.66. “If the amount finally determined to be just compensation for the property acquired exceeds the amount of the good faith written offer…, 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.” The reimbursement language in MCL 213.66 corresponds to what I understand was the typical fee arrangement when the statute was implemented (given that I was 10 years old at the time, I do not know this firsthand) and eminent domain practitioners like myself mimic the statute in our engagement agreements.  While there are complicated statutory procedures in which the agency can reduce attorney fee reimbursement, I have never actually seen those implemented. Most agencies reimburse the contingent fee as a matter of course, meaning that owners generally obtain free legal services relating to obtaining increased just compensation.

A second provision in the same statute also helps owners. Generally, expert costs are the largest litigation expense. “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….  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.” Note that this provision does not require an owner to prevail in order to obtain expert witness reimbursement. While a court could opine that an expert’s costs were excessive and order reimbursement of only a portion, a court must require reimbursement of at least a portion. And again, while past results are not a promise of future performance, in my experience expert fees are also reimbursed as a matter of course by agencies.

Litigation involves other expenses. I have successfully resolved cases where most if not all those expenses were reimbursed.

So are eminent domain lawsuits seeking increased just compensation really “costly” to owners? I say no. While the UCPA is tilted in favor of agencies in some respects, when it comes to reimbursements, it is among if not the most favorable statutory scheme for property owners in the country. Formal eminent domain lawsuits are not like other types of litigation where it may be too costly to prevail on the merits.

Please feel free to contact me if a condemning agency is trying to muscle you into selling your property by claiming that it would be too costly for you to defend your constitutional rights.