October 29 2008
DA 06-0733
IN THE SUPREME COURT OF THE STATE OF MONTANA
2008 MT 362
THE STATE OF MONTANA, ACTING BY AND
THROUGH THE MONTANA DEPARTMENT OF
TRANSPORTATION,
Plaintiff and Appellant,
v.
AMERICAN BANK OF MONTANA, a Montana
corporation,
Defendant and Appellee.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and For the County of Flathead, Cause No. DV 04-474B
Honorable Katherine R. Curtis, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Edward G. Beaudette, Lyle Manley, Timothy W. Reardon;
Montana Department of Transportation, Helena, Montana
For Appellee:
A. Clifford Edwards, Triel D. Culver; Frickle, Anner-Hughes &
Culver, Billings, Montana
Submitted on Briefs: August 9, 2007
Decided: October 29, 2008
Filed:
__________________________________________
Clerk
Chief Justice Karla M. Gray delivered the Opinion of the Court.
¶1 The State of Montana, acting by and through the Montana Department of
Transportation (MDOT), appeals from the post-judgment order entered by the Eleventh
Judicial District Court, Flathead County, awarding American Bank of Montana (American
Bank) $116,739.53 in “necessary expenses of litigation,” including attorney fees. We
reverse and remand.
¶2 The restated issue on appeal is whether the District Court erred by applying
jurisprudential factors, rather than the plain language of § 70-30-306(2), MCA, in
determining reasonable and necessary attorney fees in this condemnation case.
BACKGROUND
¶3 In July of 2004, MDOT initiated a condemnation action regarding a portion of
American Bank’s real property. After a hearing in 2005, the District Court dismissed
MDOT’s complaint with prejudice and awarded American Bank all necessary expenses of
litigation. It ordered American Bank to submit a request for reasonable and necessary
attorney fees, expert witness fees, exhibit costs, and court costs.
¶4 American Bank did not submit a request, but filed affidavits of two of its attorneys “in
support of award of attorney fees and necessary expenses of litigation.” Triel D. Culver’s
affidavit stated, among other things, that a reasonable hourly rate for his work and that of
attorney Cliff Edwards was $250, and a reasonable hourly rate for work performed by
attorney Lori Armstrong was $125. Edwards’ affidavit stated his hourly rate was $450, but
he lowered it to $250 to be consistent with what other lawyers were charging in eminent
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domain cases in Flathead County. Edwards attached copies of the affidavits of local
attorneys Frank B. Morrison, Jr., and Dale L. McGarvey regarding attorney fees for Wade J.
Dahood’s services in another Flathead County eminent domain case. Those affidavits
addressed the affiants’ hourly rates and Dahood’s experience, skill and background.
¶5 MDOT filed a motion to retax costs, objecting to American Bank’s requested attorney
fees. Relying on § 70-30-306(2), MCA, MDOT asserted American Bank’s requested hourly
rates exceeded the “customary hourly rates” for an attorney’s services in Flathead County,
which MDOT posited were $150 or $175. In support, MDOT submitted affidavits of local
attorneys Marshall Murray and Richard DeJana. American Bank opposed MDOT’s motion,
and submitted the affidavits of Douglas Wold and Sean Frampton—also attorneys in
Flathead County—addressing the complexity of the case and Edwards’ and Culver’s
respective experience and skill, as well as the City of Whitefish’s stipulation to a $250
hourly rate in a different condemnation case. MDOT replied.
¶6 The District Court held a hearing, at which DeJana and Murray testified in support of
a $150 hourly rate. No other witnesses testified. The District Court subsequently entered an
order stating that—absent any challenge to the number of hours at issue, the hourly rates for
Armstrong’s work or any costs—the sole issue in MDOT’s challenge to American Bank’s
requested $250 hourly rate for work by Edwards and Culver was the meaning of the phrase
“customary hourly rates” in § 70-30-306(2), MCA. Rejecting MDOT’s argument that § 70-
30-306(2), MCA, sets forth a unique standard, the District Court applied jurisprudential
factors and awarded fees based on hourly rates of $250 for Edwards, $200 for Culver, and
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$125 for Armstrong. MDOT appeals.
STANDARD OF REVIEW
¶7 We review a district court’s interpretation and application of a statute for correctness.
See Polasek v. Omura, 2006 MT 103, ¶ 8, 332 Mont. 157, ¶ 8, 136 P.3d 519, ¶ 8 (citation
omitted).
DISCUSSION
¶8 Did the District Court err in applying jurisprudential factors, rather than the plain
language of § 70-30-306(2), MCA, in determining reasonable and necessary attorney fees
in a condemnation case?
¶9 In various types of cases, non-exclusive factors apply in determining the amount of
“reasonable” attorney fees. These factors include the amount and character of the legal
services rendered; the labor, time and trouble involved; the character and importance of the
litigation; the amount of money or the value of the property to be affected; the professional
skill and experience called for; the attorney’s character and standing in the profession; and
the results secured. See e.g. James Talcott Constr., Inc. v. P & D, 2006 MT 188, ¶ 63, 333
Mont. 107, ¶ 63, 141 P.3d 1200, ¶ 63 (citation omitted); Chase v. Bearpaw Ranch Assn.,
2006 MT 67, ¶ 38, 331 Mont. 421, ¶ 38, 133 P.3d 190, ¶ 38 (citations omitted).
¶10 These jurisprudential factors derive from Forrester & MacGinniss v. B & M Co., 29
Mont. 397, 409, 74 P. 1088, 1093 (1904), as reflected in Crncevich v. Georgetown
Recreation Corp., 168 Mont. 113, 119-20, 541 P.2d 56, 59 (1975), and First Security Bank
of Bozeman v. Tholkes, 169 Mont. 422, 429-30, 547 P.2d 1328, 1332 (1976). Several cases
setting forth the factors cite to Crncevich, Tholkes or both. See e.g. Plath v. Schonrock, 2003
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MT 21, ¶ 36, 314 Mont. 101, ¶ 36, 64 P.3d 984, ¶ 36; Weinberg v. Farmers State Bank, 231
Mont. 10, 35, 752 P.2d 719, 735 (1988).
¶11 Article II, Section 29, of the Montana Constitution and § 70-30-305(2), MCA, provide
that a prevailing private property owner in condemnation litigation must be awarded
“necessary expenses of litigation.” “Necessary expenses of litigation . . . mean reasonable
and necessary attorney fees, expert witness fees, exhibit costs, and court costs.” Section 70-
30-306(1), MCA. “Reasonable and necessary attorney fees are the customary hourly rates
for an attorney’s services in the county in which the trial is held. Reasonable and necessary
attorney fees must be computed on an hourly basis and may not be computed on the basis of
any contingent fee contract.” Section 70-30-306(2), MCA. The 1977 Legislature enacted
the precursor to § 70-30-306(2), MCA, and the statute has been amended only once in a
manner not relevant here. Sec. 1, Ch. 48, L. 1977; Sec. 71, Ch. 125, L. 2001.
¶12 This Court cited to Crncevich or Tholkes in relation to the Forrester factors in two
eminent domain cases decided after the 1977 enactment of § 70-30-306(2), MCA. Both
State v. Schumacher, 180 Mont. 329, 590 P.2d 1110 (1979), and Rauser v. Toston Irrigation
Dist., 172 Mont. 530, 565 P.2d 632 (1977), arose prior to the July 1, 1977 effective date of
the 1977 statute. In Rauser, 172 Mont. at 543-44, 565 P.2d at 640, we merely noted the 1977
statute’s existence and applicability to future cases. In Schumacher, 180 Mont. at 338-39,
590 P.2d at 1116, we did not mention the 1977 statute in our discussion of attorney fees.
Accordingly, we conclude those cases have no bearing on the issue presently before us.
¶13 Having so concluded, we address as an issue of first impression the standard for
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determining “reasonable and necessary attorney fees” in condemnation litigation pursuant to
§ 70-30-306(2), MCA. MDOT argues this statutory provision for eminent domain cases is
unique in that it specifically defines the basis for an attorney fee award vis-à-vis its
“customary hourly rates for an attorney’s services in the county in which the trial is held”
language. Advancing dictionary definitions, MDOT further asserts that “reasonable and
necessary attorney fees” under § 70-30-306(2), MCA, are based on the usual hourly rates for
any attorney in the county. MDOT’s argument apparently is not, however, that attorney fees
in an eminent domain case must be based on one randomly-selected attorney’s rates—or, in
other words, a “pick an attorney, any attorney” approach. Nor, as mentioned above, does
MDOT challenge the number of hours at issue here. MDOT’s argument is that the District
Court erred in interpreting § 70-30-306(2), MCA, to require consideration of the
jurisprudential Forrester factors, including the character of the litigation and the skill and
reputation of the attorney.
¶14 In construing a statute, the office of the judge is simply to ascertain and declare what
is in terms or substance contained therein, not to insert what has been omitted or to omit
what has been inserted. Section 1-2-101, MCA; In re Montana License, 2008 MT 165, ¶ 32,
343 Mont. 331, ¶ 32, 184 P.3d 324, ¶ 32 (citations omitted). We conclude the plain
“customary hourly rates” language of § 70-30-306(2), MCA, means that “reasonable and
necessary attorney fees” are to be computed in a condemnation case based on hourly rates
typical or common for a non-specific attorney’s services in the county in which the trial is
held. Thus, we further conclude the District Court erred in applying the Forrester factors.
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¶15 We acknowledge, in this regard, the District Court’s extensive analysis leading to its
conclusion that the Forrester factors apply in eminent domain cases. First, construing the
“customary hourly rates” language of § 70-30-306(2), MCA, the court determined that
language was intended merely “to legislate the basis for fees to be awarded (hourly) and the
locale for the determination of those fees (the county in which the trial is held).” We must
presume the Legislature would not pass useless or meaningless legislation. Mont. Shooting
Sports Assn. v. Dept. of FWP, 2008 MT 190, ¶ 15, 344 Mont. 1, ¶ 15, 185 P.3d 1003, ¶ 15
(citation omitted). Thus, we reject the District Court’s interpretation, because it would
render the statutory term “customary” meaningless, and it would render the second sentence
of § 70-30-306(2), MCA—providing that attorney fees “must be computed on an hourly
basis”—redundant and useless.
¶16 Apparently in the alternative to its plain language analysis, the District Court also
relied on State ex rel. DOT v. Slack, 2001 MT 137, 305 Mont. 488, 29 P.3d 503, for the
proposition that this Court has adopted a “market rates” standard for attorney fee awards in
condemnation cases akin to that applied in determining “reasonable” attorney fees in federal
civil rights cases. The question before us in the portion of Slack referenced by the District
Court, however, was whether § 70-30-306, MCA, attorney fees could be enhanced for delay
between the attorney fee rate at the time the services were performed and the time the
determination was made. In that context, we concluded that neither § 70-30-306(2), MCA,
nor any jurisprudence of which we were aware precluded an enhancement for delay. We
also analogized to Missouri v. Jenkins, 491 U.S. 274, 283, 109 S. Ct. 2463, 2469 (1989), in
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which the United States Supreme Court determined that attorney fees awarded under a
federal civil rights statute were to be based on the “market rates” for services rendered, and
enhancement for delay was authorized. Slack, ¶¶ 23-25. We did not address in Slack
whether the plain language of § 70-30-306(2), MCA, sets forth a different standard for
determining attorney fees in condemnation cases from the jurisprudential Forrester factors
applied in other types of cases.
¶17 The District Court’s final relevant determination was that—given the variety of
attorneys’ services, hourly rates and levels of skill, experience and reputation—awarding
fees based on an average hourly rate for all services by all attorneys in the county “would be
illogical, unfair and, probably, impossible.” We appreciate the District Court’s practical
concerns and do not disagree. Our function here, however, is to construe a statute in
accordance with its plain language, not to insert what has been omitted or to omit what has
been inserted. Section 1-2-101, MCA; In re Montana License, ¶ 32.
¶18 Section 70-30-306(2), MCA, does not mention “average” rates, and we decline to
insert that term into the statute. As set forth above, we construe the plain language of the
phrase “customary hourly rates” in § 70-30-306(2), MCA, to require a determination of
typical or common hourly rates for a non-specific attorney’s services in the county where the
trial is held.
¶19 We need address American Bank’s arguments regarding the jurisprudential factors
very briefly. Its estoppel assertions are unsupported by authority. Its contentions regarding
Article II, § 29 of the Montana Constitution are not properly before us, because neither party
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has challenged the constitutionality of § 70-30-306(2), MCA. Finally, American Bank’s
characterization of MDOT’s statutory interpretation argument as a “backdoor” attempt to
challenge findings and re-litigate facts is simply incorrect. We decline to address these
arguments further. For reasons discussed above, we conclude the District Court erred by
applying jurisprudential factors in determining attorney fees pursuant to § 70-30-306(2),
MCA.
¶20 We now turn to the appropriate resolution of this case. In this regard, we agree with
the District Court’s determinations to the effect that American Bank’s prehearing affidavits
and Murray’s testimony were largely based on the jurisprudential Forrester factors—which,
as discussed above, are inapplicable to a § 70-30-306(2), MCA, determination. We also
observe MDOT’s assertion, in the alternative to its statutory argument addressed above, that
American Bank’s prehearing affidavits are not competent evidence on which an attorney fee
award could be based, in light of cases such as Pumphrey v. Empire Lath and Plaster, 2006
MT 255, ¶ 19, 334 Mont. 102, ¶ 19, 144 P.3d 813, ¶ 19. On the other hand, we note
American Bank’s factually accurate response that MDOT failed to raise this argument in the
District Court, as well as its assertion without citation to authority that this failure constitutes
waiver.
¶21 Instead of trying to fashion a remedy based on these appellate arguments and an
arguably inadequate record, we conclude the best way forward is to remand to the District
Court for further proceedings to determine attorney fees pursuant to § 70-30-306(2), MCA.
We are confident, in this regard, that the District Court will—as it has to this point—fully
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address any arguments presented on remand.
¶22 Reversed and remanded for further proceedings consistent with this Opinion.
/S/ KARLA M. GRAY
We concur:
/S/ JOHN WARNER
/S/ W. WILLIAM LEAPHART
/S/ JAMES C. NELSON
/S/ JIM RICE
/S/ BRIAN MORRIS
Justice Patricia O. Cotter dissents.
¶23 I respectfully dissent. I think the Court over-parses the issue before us, and deprives
the district courts of the latitude needed to arrive at a “customary hourly rate” in this type of
case. I would conclude that the District Court reached the correct result and therefore would
affirm.
¶24 As noted above at ¶ 11, § 70-30-306, MCA, defines “reasonable and necessary
attorney fees” as “the customary hourly rates for an attorney’s services in the county in
which the trial is held.” The majority concludes that this language limits a district court to
considering only “hourly rates typical or common for a non-specific attorney’s services in
the county in which the trial is held.” Opinion, ¶ 14. I disagree. However, assuming for the
sake of argument that the Forrester factors should not have been considered, there was, in
my judgment, sufficient evidence presented to support the court’s ruling even without
consideration of these factors.
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¶25 The evidence included multiple affidavits from attorneys practicing in Flathead
County for many years. In fact, together with the affidavits of the two attorneys representing
American Bank, affidavits of four local attorneys were presented, all of which supported a
rate of $250 as fair, reasonable and customary. Additionally, the court received a stipulation
by the City of Whitefish that a local attorney’s hourly rate in a condemnation case was $250.
Had the court simply considered this evidence alone, it was enough to support a
determination that the charged fees were customary, and “reasonable and necessary.”
¶26 However, I disagree that it was error for the District Court to consider the Forrester
factors. The words “reasonable and necessary” in § 70-30-306(1), MCA, are not displaced
by the requirement of “customary fees” in § 70-30-306(2), MCA. A determination of
“reasonable and necessary” mandates considering the circumstances involved. The
circumstances of the case before us illustrate this necessity. Notably, the District Court
concluded that the affidavits supported an hourly fee of $250 for attorney Edwards after
considering, among other things, Edwards’ area of expertise and the length of his legal
career. Conversely, relying on the same factors, the court determined that attorney Culver’s
length of experience did not warrant the “customary hourly rate” appropriate to a more
senior attorney and therefore awarded a lesser fee for Culver’s services. Without
explanation, but presumably based on the same considerations, the court awarded a still
lesser hourly fee to attorney Armstrong. I would conclude the court did so properly, based
upon the circumstances before it. Had the court instead determined that “reasonable and
necessary” required only the consideration of the customary hourly fees in the county, it
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could have conceivably—based upon the affidavits presented—awarded $250 per hour for
all three attorneys, regardless of their levels of experience, expertise or skill. This would not
be reasonable or just.
¶27 The “customary hourly rate” for a second-year Flathead County attorney in a
condemnation case would be markedly lower than the “customary hourly rate” for an
attorney with thirty years experience practicing in the same case and county. Because this is
so, a determination of what is “customary” should not be made in a vacuum. Context is
needed. In our ruling today, we effectively deprive the district courts of resort to that
context, and in so doing, assure an arbitrary result rather than one grounded in the realities of
the particular case.
¶28 For the foregoing reasons, I would affirm the decision of the District Court. I
therefore dissent.
/S/ PATRICIA COTTER
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