Wohl v. City of Missoula

377 Mont. 148

339 P.3d 58

2014 MT 310

Glen and Johanna WOHL et al., Plaintiffs and Appellees

v.CITY OF MISSOULA and John Does 1–20, Defendants and Appellants.

No. DA 14–0161.

Supreme Court of Montana.

Submitted on Briefs Sept. 10, 2014.

Decided Nov. 25, 2014.

For Appellants: Martin S. King, Worden Thane P.C., Missoula, Montana, Jim Nugent, Missoula County Attorney, Missoula, Montana.

For Appellees: Thomas C. Orr, Thomas C. Orr Law Offices, Missoula, Montana.

Opinion

Justice PATRICIA COTTER delivered the Opinion of the Court.

¶ 1 Plaintiffs are a group of landowners (Landowners) who own property along South Avenue in Missoula, Montana. The City of Missoula (City) previously appealed the Fourth Judicial District Court's award compensating Landowners for the City's taking of their property to construct improvements along South Avenue. We affirmed the District Court's determination that Landowners were entitled to just compensation for the taking but reversed and remanded on other issues. In this second appeal, the City appeals the District Court's award of attorney's fees and costs incurred by Landowners during the prior appeal. We affirm.

ISSUE

¶ 2 We restate the issue as follows:

¶ 3 Did the District Court err by awarding attorney's fees and costs to Landowners incurred during the prior appeal?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 4 The original dispute in this case arose after the City decided to undertake road improvements along South Avenue in Missoula, Montana. Landowners contested the City's assessment of the width of the right-of-way on a section of South Avenue. Landowners believed the City's improvements constituted a taking of their property without just compensation.

¶ 5 After a bench trial, the District Court held that the City's improvements required the use of land beyond its right-of-way and that the City's actions constituted a taking. The court made findings of fact that calculated the amount of the final judgment at $22.52 per square foot, based on the value of a representative parcel of property on April 7, 2006.

¶ 6 The City appealed the District Court's decision. This Court affirmed in part, reversed in part, and remanded for further proceedings. Wohl v. City of Missoula, 2013 MT 46, 369 Mont. 108, 300 P.3d 1119 (Wohl I ). We remanded for redetermination of damages because the District Court relied on the value of a specific representative parcel, which had been determined by a sale that occurred approximately seven months after the City's improvement project had been completed. The same parcel had sold for $15.41 per square foot in March 2005, and another parcel in the vicinity sold around the same time for $15.00 per square foot for the bare land. We reversed the court's assessment of Landowners' damages for the City's taking of their land and remanded for a recalculation of damages that reflected the value of Landowners' property at the time the City seized it. Wohl I, ¶¶ 57, 74. We rejected Landowners' cross-appeal under 42 U.S.C. § 1983, which claimed damages and attorney's fees under §§ 1983 and 1988 for alleged violations of their rights under both state and federal law. Wohl I, ¶ 72.

¶ 7 Additionally, we affirmed the District Court's award of fees and costs incurred in the underlying litigation as authorized by Article II, Section 29. Wohl I, ¶ 62. We also considered Landowners' claim to costs and attorney's fees associated with proving the fees and costs of the underlying litigation were reasonable and necessary. Such fees are called “fees for fees” and are generally disallowed. See, e.g., Mont. Dept. of Hwys. v. McGuckin, 242 Mont. 81, 788 P.2d 926 (1990). Wohl I, ¶ 65. We noted the District Court correctly denied Landowners' claim for “fees for fees,” but erroneously prohibited Landowners' counsel from charging his clients for the fee incurred in establishing the reasonableness of litigation expenses other than fees. Wohl I, ¶ 69. We therefore vacated and remanded in part, ruling that “Landowners' counsel may not charge his clients with the expense of proving the underlying attorney's fees, but he may pass on to his clients the expense of proving the underlying litigation expenses other than attorney's fees. ” Wohl I, ¶ 69 (emphasis in original). Wohl I therefore addressed multiple issues including the award of underlying litigation fees and expenses and the unacceptable “fees for fees” practice but it did not address whether Landowners were entitled to attorney's fees incurred during the appeal.

¶ 8 Landowners filed a petition for rehearing, arguing that the Court had “overlooked the material fact that [Landowners] requested attorneys' fees and costs incurred on appeal” and that our opinion conflicted “with a controlling decision.” They asked the Court to award both attorney's fees and costs incurred for the appeal. The City opposed the petition. We denied the petition for rehearing, noting that we had not awarded appellate fees in Wohl I because Landowners had not presented appellate fees and costs as an issue on appeal nor had they presented argument or legal authority on the point. The Court's order on the petition for rehearing stated:

[I]f the Court intends for attorney's fees to be awarded on appeal, it must say so. We did not expressly award [Landowners] their attorney's fees on appeal. We decline to do so now.

As to appellate costs, we pointed out that the District Court was authorized by the Montana Rules of Appellate Procedure to determine which party prevailed on appeal to this Court, and to determine the amount of costs recoverable for the appeal on remand. M.R.App. P. 19(3) (Rule 19(3) ).

¶ 9 On remand, Landowners agreed to reduce their “taken property” value to $15.41 per square foot. Landowners moved for a final judgment based on the lower per square foot value. They also asked the District Court to assess both attorney's fees and costs against the City for the appeal. The City opposed the motion, arguing that Landowners' request for attorney's fees already had been denied by this Court in its order on the petition for rehearing.

¶ 10 On November 15, 2013, the District Court issued an order determining that Landowners were the prevailing party on appeal. The court awarded Landowners' appellate attorney's fees and costs. The City objected again that this Court's order on the petition for rehearing precluded the award of appellate attorney's fees to Landowners. The City argued further that Landowners were not entitled to their appellate costs because the District Court incorrectly determined that Landowners were the “prevailing party” on appeal. The District Court entered a final judgment on March 5, 2014, awarding appellate attorney's fees of $33,406.11 and appellate costs of $1,697.37.

¶ 11 The City appeals the District Court's decision to award attorney's fees and costs incurred during the prior appeal.

STANDARDS OF REVIEW

¶ 12 We review a district court's determination of which party prevailed for an abuse of discretion. Whipps, L.L.C. v. Kaufman, Vidal, Hileman & Ramlow, P.C., 2007 MT 66, ¶ 6, 336 Mont. 386, 156 P.3d 11. A district court abuses its discretion when it acts arbitrarily, without employment of conscientious judgment, or in excess of the bounds of reason, resulting in substantial injustice. Whipps, ¶ 6.

¶ 13 In an eminent domain case, as this one, a district court's award of “necessary expenses of litigation” to a prevailing private property owner is mandated by Article II, Section 29 of the Montana Constitution and § 70–30–305(2), MCA. We review a district court's decisions on constitutional issues and the interpretation and application of a statute for correctness. Bryan v. Yellowstone Cty. Elem. Sch. Dist. No. 2, 2002 MT 264, ¶ 16, 312 Mont. 257, 60 P.3d 381 (“A district court's resolution of an issue involving a question of constitutional law is a conclusion of law which we review to determine whether the conclusion is correct.”); State v. Am. Bank, 2008 MT 362, ¶ 7, 346 Mont. 405, 195 P.3d 844 (“We review a district court's interpretation and application of a statute for correctness.”).

¶ 14 We acknowledge the numerous cases in which we have applied a two-step standard of review as it applies to a grant or denial of attorney fees. We have stated that a district court's determination of whether legal authority exists to award attorney's fees is a conclusion of law we review for correctness. We then have applied the second step to review the district court's grant or denial of fees based upon the existing authority for an abuse of discretion. See, e.g., Kuhr v. City of Billings, 2007 MT 201, ¶ 14, 338 Mont. 402, 168 P.3d 615. This two-step standard of review remains applicable in cases where attorney fees are not mandated by the Montana Constitution or a statute but rather, for example, are governed by a discretionary statute such as § 2–3–221, MCA. (“A plaintiff who prevails in an action brought in district court to enforce the plaintiff's rights under Article II, section 9, of the Montana constitutionmay be awarded costs and reasonable attorney fees.”) (Emphasis added.)

DISCUSSION

¶ 15 Did the District Court err by awarding attorney's fees and costs to Landowners incurred during a prior appeal?

¶ 16 The City argues that the District Court erred in awarding attorney's fees for the prior appeal because this Court already had considered and denied Landowners' claim for appellate attorney's fees before remanding the case to the District Court. It argues that our refusal to award fees in our Order on Rehearing constitutes “law of the case.” We reject this argument.

¶ 17 The doctrine of “law of the case” provides that “[w]hen this Court, in deciding a case presented, states a principle or rule of law necessary to the decision, such pronouncement becomes the law of the case and must be adhered to throughout its subsequent progress, both in the trial court and upon subsequent appeal.”Winslow v. Mont. Rail Link, Inc., 2005 MT 217, ¶ 30, 328 Mont. 260, 121 P.3d 506 (citation...