New Case Summary — Salt Lake County v. Butler, Crockett & Walsh Development Corp.

Utah Court of Appeals

2013 UT App 30  (Click for Full Text of Opinion)

January 31, 2013

          This case considered whether a party should be awarded attorney fees in an eminent domain action under the “bad faith fee statute,” Utah Code Ann. § 78B-5-825 or under § 78B-517 (abandonment of eminent domain proceedings).    

          The County sought to acquire a portion of defendant’s property for a turnaround.  The defendant’s fought the condemnation, and the trial court denied the County’s Motion for Immediate Occupancy, finding that the County had not met the requirements of the Eminent Domain Act, by not considering less injurious designs, and by not considering the impacts on surrounding properties.  The trial court concluded that the County had acted arbitrarily and in bad faith.  However, the court also noted that it was only denying immediate occupancy for the proposed taking, and that the County could comply with the Eminent Domain Act with a revised proposal.

          The defendants claimed attorney fees under the “bad faith fee statute” (78B-5-825)  and as provided in the abandonment of eminent domain statute (78B-6-517).   The trial court denied these claims, and the defendants appealed.   The Court of Appeals did not address the claims under § 517, possibly because the condemnation was not “abandoned,” but denied by the trial court.

          Although the Utah Court of Appeals ultimately upheld the trial court, denying the defendant’s claim for attorney fees, the court did discuss what constitutes “bad faith.”   A finding of bad faith turns on a factual determination of a party’s subjective intent.  A court may award attorney fees under 78B-5-825 if it finds that the losing party’s action or defense was both without merit and brought or asserted in bad faith. 

          To establish bad faith, courts look to a lack of good faith.  A finding of bad faith must be based on the absence of one or more of the following three factors: (1) An honest belief in the propriety of the activities in question; (2) no intent to take unconscionable advantage of others; or (3) no intent to, or knowledge of the fact that the activities in question will hinder, delay, or defraud others. 

          It should be noted that this litigation began in 2008, before the provisions of 78B-6-509 (providing awards of litigation expenses if compensation award is higher than settlement offer).  It also appears that section 509 would not apply to this situation, because the original motion for immediate occupancy was denied.

          The Court of Appeals did not address the defendant’s inverse condemnation claim, because the issue was not raised before the trial court. 

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