Pre-Trial Settlement Strategies in Eminent Domain Proceedings

You have already engaged in pre-suit negotiations with the condemning authorities.  However, the parties were simply too far apart to agree on the compensation for taking of your property.  Perhaps the parties came to an impasse, and the condemning authorities filed a petition in eminent domain, seeking a determination of the taking and the compensation through the courts.

Although the dynamic has become much more adversarial, you will still have time and opportunities to engage in meaningful settlement discussions with the condemning authorities.  After all, the petitioner is typically motivated to curtail the costs of extensive litigation.  That said, the case is moving toward trial, and owners and practitioners alike should be prepared to create settlement leverage throughout the proceedings, and—when the timing is right—seize the opportunity to obtain a favorable settlement for full and fair compensation.

Prepare for Trial, Not for Settlement

Preparation is everything.  Keep in mind that the ultimate decision maker will be a jury, and all of your planning, preparation, themes and evidence will be geared toward persuading the jury that the value of your property is much more than what the condemning authorities are presenting.  Blindly focusing on the expectation of settlement will result in inadequate trial preparation, and perhaps, a premature or unjust settlement.

Of course, settlement is an important consideration at all times before trial, and there are many benefits to settlement.  For instance, you have much more control over the scope, amount of compensation, and timing of payment, among other things.  However, much of the facts and evidence that you cultivate in trial preparation will be the same materials that will drive a potential settlement along the way.  By changing your paradigm—focusing on the trial, not the settlement—you will increase your chances for success, whether that is by settlement or by persuading the jury.

Plan and Execute Your Settlement Strategy

Focusing your efforts on trial preparation will put you in the best position for obtaining full compensation, but there are many non-monetary considerations—and remedies not otherwise available through a jury—that make a pre-trial settlement an attractive resolution in many cases.  Understanding the benefits of settlement and knowing how to use them to accelerate resolution is a skill that every eminent domain practitioner should seek to employ.

Pre-trial settlement gives the parties an opportunity to craft an agreement that removes the uncertainty of a jury verdict and gives the parties the greatest amount of control on the outcome of the case.  For instance, the condemning authority is motivated to reduce litigation costs, while the condemnee may be most concerned about the timing of settlement.  Employing some creativity in this regard can lead to a successful resolution for the condemnee and its counsel.  What follows are some considerations that may be explored:

• Consider how the timing of the payment can affect the condemnor. In situations where the owner may need to relocate or implement a cure, it may be most beneficial to control the timing of payments, rather than wait for a jury to render the award.  There may also be tax implications on a settlement that can be beneficial to the owner, if such payments are timed correctly.
• Consider whether the condemning authority can make project modifications to benefit the remainder of the property not taken. Such modifications can affect the zoning, variances and future use of the remainder, thereby increasing its value to the owner.
• Consider securing an extended date of possession for the owner may allow the owner of a business to earn more revenues or otherwise allow more time for relocation.

Of course, achieving non-monetary results for a condemnee will undoubtedly affect the calculation of attorneys’ fees awarded, where such fees are generally calculated on the monetary benefit achieved.  Fla. Stat. § 73.092.  However, the eminent domain practitioner should keep in mind that claims for attorneys’ fees may be recovered for “non-monetary benefits obtained for the client through the efforts of the attorney.”  Fla. Stat. § 73.092(1)(b).

Two factors that may considered by the courts in awarding fees for non-monetary benefits are: (1) whether condemning authority provided the nonmonetary benefit as part of a settlement agreement; and (2) if the nonmonetary benefit has the effect of benefitting the landowner and reducing the amount of compensation provided by the condemning authority. Dept. of Transportation v. RFT Partnership, 906 So. 2d 1161 (Fla. 2d DCA 2005).  Accordingly, practitioners should not shy away from achieving unconventional solutions, where the benefit may be deemed purely non-monetary.

Use Offers of Judgment to Prompt Settlement

An offer of judgment is a statutory mechanism designed to promote settlement by shifting the risk of attorneys’ fees and costs to the party who rejects a valid offer of judgment.  When used strategically, an offer of judgment can have significant impacts on compelling a settlement.  The concept of an offer of judgment is employed in a variety of civil proceedings.  However, Fla. Stat. § 73.032 provides the exclusive offer of judgment provisions for eminent domain proceedings.

Specifically, no sooner than 120 days after the condemnee had filed an answer, and no later than 20 days before trial, either party may submit to the other an offer of judgment to settle the case.  The offer of judgment must be in the following form:

1. Be in writing;
2. Settle all pending claims exclusive of attorneys’ fees and costs;
3. State that the offer is made pursuant to § 73.032;
4. Name the parties to whom the offer is made;
5. Briefly summarize any relevant conditions;
6. State the total amount of the offer; and
7. Include a certificate of service.

While the petitioner (condemning authority) may offer any amount, the condemnee may only serve an offer of judgment, if the amount is less than $100,000.  If the condemnee rejects the petitioner’s offer, and the condemnee obtains a judgment is less than or equal to the amount of the rejected offer, then the court cannot award the condemnee any costs incurred after the date the offer is rejected.  Fla. Stat. § 73.032(5).

On the other hand, if the petitioner rejects the condemnee’s offer of judgment, and the condemnee subsequently obtains a judgment greater than or equal to the amount of the offer, then the court must award reasonable attorneys’ fees based upon the factors set forth in § 73.092(2)–(3), rather than exclusively on the “benefits” calculated under § 73.092(1).

In other words, the parties must take an offer of judgment seriously, both in preparing a reasonable offer, and in considering whether to accept or reject the offer.  The consequences of rejecting what—in hindsight—was a good deal, is the exposure to higher fees and costs of moving forward with trial.  Accordingly, the practitioners should consider the effective use of an offer of judgment to prompt settlement.

Conclusion

Once a petition in eminent domain is filed, the ultimate determination of compensation is in the hands of a jury.  While a jury is motivated to “get it right”, there are no guarantees as to what the final verdict may be.  On the other hand, a negotiated settlement agreement for compensation gives the owner the most control over the outcomes, including the scope of the taking, amount of compensation and timing of the payment.  Through adequate trial preparation and employing an effective settlement strategy, a property owner will maximize the opportunity to obtain just compensation on the most favorable terms.