August 24, 2019

Colorado Court of Appeals: Penalties for Government’s Undervaluing of Property in Eminent Domain Do Not Include Consideration of Prejudgment Interest

The Colorado Court of Appeals issued its opinion in City of Colorado Springs v. Andersen Mahon Enterprises, LLP on July 22, 2010.

Eminent Domain—Offer—Award—Attorney Fees—Prejudgment Interest—CRS § 38-1-122(1.5).

In this eminent domain proceeding, petitioner City of Colorado Springs (City) appealed the trial court’s order awarding attorney fees to respondent Andersen Mahon Enterprises, LLP. The order was reversed.

The City and Andersen Mahon were unsuccessful in negotiating just compensation for the taking of Anderson Mahon’s property, which was to be used by the City to widen a roadway. Andersen Mahon rejected the City’s final written offer of $1.2 million. On August 15, 2008, the City filed a Petition in Condemnation. On September 4, 2008, the City took possession and deposited into the court registry $1,024,000, a sum equal to its appraised value of the property. After the valuation trial in April 2009, a court-appointed board determined that the value of the property on September 4, 2008 was $1,542,294. This award was 28.5 percent higher than the City’s final written offer of $1.2. Andersen Mahon then moved for an award of attorney fees pursuant to CRS § 38-1-122(1.5). It argued that prejudgment interest should be added to the board’s valuation award in determining whether the City’s final written offer had been exceeded by 30 percent. The trial court agreed with Andersen Mahon and awarded attorney fees.

On appeal, the City argued that prejudgment interest is separate from the “award by the court,” within the meaning of CRS § 38-1-122(1.5). The Court of Appeals agreed. Under § 38-1-122(1.5), property owners are entitled to reimbursement for attorney fees they incur in challenging the governmental entity’s valuation of their condemned property if the court’s award exceeds the condemning entity’s last written offer by 30 percent. The phrase in this statute, “award by the court,” means only the property valuation award, and not the valuation award plus prejudgment interest. Because the award (not including prejudgment interest) did not exceed the 130 percent threshold of the last written offer by the City, Andersen Mahon was not entitled to attorney fees. Therefore, the award of attorney fees was reversed.

This summary is published here courtesy of The Colorado Lawyer. Other summaries by the Colorado Court of Appeals on July 22, 2010, can be found here.

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