A TRIPLE AAA DECISION – MATTER OF VILLAGE OF HAVERSTRAW v AAA ELECTRICIANS, INC.

On October 17, 2018, the Appellate Division, Second Department handed down a decision affirming the award of $1,190,582.91 for an additional allowance for legal and expert fees.  The additional allowance was awarded by the Honorable Bruce E. Tolbert.

The additional allowance was authorized by Section 701 of the Eminent Domain Procedure Law.

In August 1987, the Eminent Domain Procedure Law (EDPL), §701, was amended to provide that when an award in a condemnation proceeding was “substantially” in excess of the condemnor’s proof on the trial, the trial court, in its discretion, if required to afford a claimant “just compensation,” could award a claimant an additional allowance of his litigation expenses, including attorneys’, engineering and appraiser’s fees.

Specifically, EDPL §701 states: In instances where the order or award is substantially in excess of the amount of the condemnor’s proof and where deemed necessary by the court for the condemnee to achieve just and adequate compensation, the court, upon application, notice and an opportunity for hearing, may in its discretion, award to the condemnee an additional amount, separately computed and stated, for actual and necessary costs, disbursements and expenses, including reasonable attorney, appraiser and engineer fees actually incurred by such condemnee.  The application shall include affidavits of the condemnee and all parties that have incurred expenses on the condemnee’s behalf, setting forth inter alia the amount of the expenses incurred.

Initially one must consider whether the court’s award “is substantially in excess of the amount of the condemnor’s proof.”

The Second Department in Malin v State of New York, 103 AD2d 899 (2d Dept, 1992) held that the claimant need only show “more than a modest increase in value.”  In the Malin case, that increase was a 79 percent increase in value over and above the State’s initial offer.

One aspect of EDPL §701 has been well established.  The standard for determining both “substantially in excess” and the computation of the contingency legal fee is the initial advance payment made under EDPL §303.  The base from which the Court determines whether the claimant achieved an award “substantially in excess” is not based on the condemnor’s proof at trial.  Rather, the basis utilized is the initial advance payment.  General Crushed Stone v State of New York, 93 NY2d 23 (1999); First Bank & Trust Co. of Coming v State, 184 AD2d 1034 (4^th Dept, 1992); Lee-Hi Fuel v State, 179 AD2d 494 (1^st Dept, 1992).  This is logical and consistent with the statutory intent.  Only by having retained counsel and hiring experts could a claimant reach trial so as to realize the award.  Matter of New York City Transit Authority, 160 AD2d 705 (2d Dept, 1990) (“…the only interpretation which would fulfill the legislative intent of the amendment, and the policy of the EDPL, is that the city’s initial offer…be utilized for comparison purposes”).

In AAA Electricians, Inc., the Court stated: In this condemnation proceeding, the condemnor, the Village of Haverstraw, offered to pay the claimant the sum of $2,596,150, as compensation for the taking of its real property.  After a nonjury trial, the Supreme Court determined that the principal sum of $6,500,000 constituted just compensation for the taking, and this Court upheld that determination on a prior appeal (see Matter of Village of Haverstraw [AAA Electricians, Inc.], 114 AD3d 955).  The claimant subsequently moved for an additional allowance pursuant to EDPL 701, and the Supreme Court granted the motion to the extent of awarding an additional allowance in the principal sum of $1,190,582.91.

Here, the condemnation award was substantially in excess of the amount of the evidence submitted by the Village.  Further, the Supreme Court providently exercised its discretion in determining that an additional allowance, including for “reasonable attorney, appraiser and engineer fees actually incurred,” was necessary for the claimant to receive just and adequate compensation (EDPL 701; see generally Hakes v State of New York, 81 NY2d at 398).  The sliding scale contingency fee charged by the claimant’s attorneys as well as the experts’ fees were reasonable in light of the Village’s undervaluation of the property and the effort required to establish the inadequacy of its offer (see Matter of City of Long Beach v Sun NLF L.P., 146 AD3d at 778; Matter of New York Convention Ctr. Dev. Corp. [Recycling for Hous. Partnership], 234 AD2d 167; Matter of Hoffman v Town of Malta, 189 AD2d 968, 969).  Moreover, although the trial court ultimately decided to value the property on a per-acre basis, rather than on the basis of how many residential housing units could be developed thereon, as urged by the claimant, the claimant’s attorneys and experts’ fees were nonetheless necessarily incurred to establish the highest and best use of the property and its market value on a per-acre basis (see Matter of City of Long Beach v Sun NLF L.P., 146 AD3d at 778).  Accordingly, the court providently exercised its discretion in awarding an additional allowance in the principal sum of $1,190,582.91, representing costs, disbursements, and expenses “actually incurred” (EDPL 701).