ROBERT C. KEETON III, Appellant,
v.
STATE OF ALASKA, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES; MATANUSKA-SUSITNA BOROUGH; CITY OF WASILLA; MATANUSKA ELECTRIC ASSOCIATION, INC.; MAT-SU TITLE INSURANCE AGENCY, INC.; and MATANUSKA VALLEY FEDERAL CREDIT UNION, Appellees.
Appeal
from the Superior Court No. 3AN-14-06557 CI of the State of
Alaska, Third Judicial District, Anchorage, Erin B. Marston,
Judge.
Jeffrey J. Jarvi, Anchorage, for Appellant. Dario Borghesan,
Assistant Attorney General, Anchorage, and Jahna Lindemuth,
Attorney General, Juneau, for Appellee State of Alaska,
Department of Transportation and Public Facilities. Notices
of nonparticipation filed by Thomas F. Klinkner, Birch Horton
Bittner & Cherot, Anchorage, for Appellee City of
Wasilla; David Pease, Matanuska Electric Association, Inc.,
Palmer, for Appellee
Matanuska Electric Association, Inc.; Dana Lyn Dalrymple,
Dalrymple Law, P.C., Palmer, for Appellee Mat-Su Title
Insurance Agency, Inc.; and Jed L. Van Loan, Jed L. Van Loan,
PC, Anchorage, for Appellee Matanuska Valley Federal Credit
Union. No appearance by Appellee Matanuska-Susitna Borough.
Before: Bolger, Chief Justice, Winfree, Stowers, Maassen, and
Carney, Justices.
OPINION
MAASSEN, JUSTICE.
I.
INTRODUCTION
The
Department of Transportation and Public Facilities (DOT or
the State) condemned a strip of property along the Parks
Highway. DOT filed a declaration of taking, allowing it to
take title immediately, and deposited approximately $15, 000
in court as estimated compensation for the taking. The
landowner challenged DOT's estimate and was eventually
awarded approximately $24, 000, as well as attorney's
fees and costs. Pursuant to AS 09.55.440, the superior court
awarded prejudgment interest to the landowner at the rate of
10.5% on the difference between the amount of DOT's
initial deposit and the amount the property was ultimately
determined to be worth.
The
landowner appeals, arguing that the prejudgment interest
should have been calculated on the difference between the
deposit and his entire judgment, including significant
amounts for attorney's fees and appraisal costs. We
conclude, however, that the landowner's argument is not
supported by the statutory language, legislative history, or
policy. We also reject the landowner's arguments that the
superior court applied the wrong postjudgment interest rate
and abused its discretion by denying discovery of the
State's attorneys' billing records. Finally, we
conclude that the superior court must state its reasons for
excluding any attorney time from its attorney's fees
award, and we therefore vacate the attorney's fees award
and remand for reconsideration on this limited issue.
II.
FACTS AND PROCEEDINGS
A.
Facts
The
property at the center of this case is approximately 6.727
acres near Wasilla, owned by Robert Keeton III. Bounded by
Jacobsen Lake on the south, the property rises to the Parks
Highway to the north. The area nearest the lake is wetlands.
Between the wetlands and the property's upland portion is
an area filled with woodchips, where there used to be a mill.
The property includes a cabin that has been turned into a
duplex, an automobile repair shop, and a used car dealership
operating out of a modular building.
In 2014
DOT began a project to widen the Parks Highway from Mileposts
44.5 to 48.3. As part of the project it sought to condemn a
portion of Keeton's property, referred to by DOT as
"Parcel 77" and described as "a narrow strip
along the current Parks Highway [], approximately 15 feet
wide and 420 feet long, for a total of approximately 6, 301
square feet." According to DOT, Parcel 77 was
"necessary for this project in order to relocate
utilities and to accommodate right-of-way maintenance
needs." The condemnation reduced Keeton's property
from approximately 6.727 acres to 6.582 acres.
To
assist with its right-of-way acquisitions, DOT retained a
consulting firm, which in turn subcontracted with an
appraisal firm. The appraiser who did the work on Parcel 77
was Steve Carlson. Before starting the appraisal, Carlson
estimated that the value of Parcel 77 would be less than $25,
000, and he thus prepared a waiver valuation, an
"abbreviated form" of an appraisal. The waiver
valuation valued Parcel 77 at $14, 800. Carlson also found
that the condemnation caused no damage to the remaining
property.
B.
Proceedings
The
parties were unable to agree on the amount of compensation
due Keeton for the taking. On April 30, 2014, DOT filed a
complaint for condemnation and a declaration of taking. DOT
offered $14, 800 in just compensation and deposited $14,
905.98 with the superior court, including $105.98 as
estimated pro-rated property taxes. In his answer Keeton
disputed DOT's valuation, sought "[a]n award of just
compensation for [DOT's] taking of and damage to his
private property, including but not limited to, a fair
valuation of and payment for the private property taken by
[DOT]," and asked that he be awarded his costs and
attorney's fees.
The
superior court appointed a master to hear the matter. In
preparation for the hearing, Carlson did a full narrative
appraisal of Keeton's property and determined that the
value of Parcel 77 was $18, 300. In compliance with
Carlson's revised estimation, DOT added an additional $3,
500 to the court deposit.
Keeton
also retained a commercial appraiser, Per Bjorn-Roli, to
perform an appraisal on his behalf. Bjorn-Roli's
estimates of value were significantly higher than those
proposed by DOT: $35, 956 for the value of the property taken
and $15, 580 for damage to the remainder of Keeton's
property. Keeton also argued that the taking made it more
costly for him to install a septic tank on his property, and
he valued his total loss at $102, 456.
The
master's hearing was held in August and September 2016.
The master found that the condemned property was worth $24,
740, and neither party appealed this determination. The
amount exceeded DOT's initial deposit by approximately
$10, 000 and its supplemented deposit, following
Carlson's second appraisal, by $6, 440. Keeton moved for
entry of final judgment and an award of attorney's fees
and costs. In addition to the property's value he sought
$44, 553.12 in attorney's fees, $30, 444 in appraiser
fees, $1, 823.35 in other costs, and $25, 825.64 in
prejudgment interest. A statute provides for prejudgment
interest at the rate of 10.5% "on the amount finally
awarded that exceeds the amount paid into court under the
declaration of taking";[1] Keeton argued that his fees and
costs should be added to the property's ascertained value
to determine "the amount finally awarded" for
purposes of contrast with DOT's deposit.
DOT
partially opposed the request, asking to see Keeton's
lawyer's billing records to determine their
reasonableness and arguing that prejudgment interest could
not be applied to an award of attorney's fees and costs.
Keeton, in turn, sought the billing records of DOT's
attorneys, but DOT successfully moved to quash the request.
After inspecting Keeton's attorney's records, DOT
decided not to obj ect to his attorney's fees and costs
incurred through the May 2017 oral argument on the
prejudgment interest issue.
The
superior court awarded a final judgment of just compensation
for $24, 740 based on the master's recommendation and
calculated prejudgment interest on the amount by which it
exceeded DOT's deposits. The court also awarded Keeton
$47, 453.12 in attorney's fees and $32, 276.50 in costs,
with postjudgment interest at the rate of 4.25%.
Keeton
appeals from the superior court's refusal to include his
attorney's fees and costs in "the amount finally
awarded" for purposes of the award of prejudgment
interest under AS 09.55.440(a). He also appeals the
court's award of postjudgment interest at 4.25%; its
decision to quash his subpoena for DOT's attorneys'
billing records; and the court's decision to exclude
certain activities from the attorney's fees award.
III.
STANDARD OF REVIEW
Whether
prejudgment interest as defined in AS 09.05.440(a) applies to
an award of attorney's fees and costs in a condemnation
action presents a legal question, which we review de
novo.[2] "We apply our independent judgment to
questions of 'statutory interpretation requiring the
application and analysis of various canons of statutory
construction.' "[3] We review for abuse of discretion a
superior court's decisions to quash a
subpoena[4] and to deny certain requested
attorney's fees and costs.[5]
IV.
DISCUSSION
A.
The Superior Court Did Not Err By Denying Prejudgment
Interest On Attorney's Fees And Costs Under AS
09.55.440.
Alaska
Statute 09.55.440(a) provides for prejudgment interest at
10.5% on only a portion of a condemnation award: the amount
by which "the amount finally awarded . . . exceeds the
amount paid into court under the declaration of taking."
Keeton's primary argument on appeal is that "the
amount finally awarded" should include his awards of
attorney's fees and costs, not just the compensation
reflecting the value of the condemned property; under this
argument the gap between the amount deposited and the amount
awarded is $61, 429.12[6] rather than $6, 440. Keeton argues that
his interpretation of the statute is plausible and that the
statute must therefore be interpreted in his favor under the
principle that "a grant of power of eminent domain is to
be strictly construed against the condemning party and in
favor of the property owner."[7]
We have
strictly construed against the State its power to condemn,
[8]
which is not at issue in this case. In any event, the plain
language of AS 09.55.440(a) is not ambiguous, and therefore
strict construction of it would not help Keeton's
position. "We construe statutes according to reason,
practicality, and common sense, considering the meaning of
the statute's language, its legislative history, and its
purpose."[9] Applying these usual rules of statutory
construction, we conclude that the superior court did not err
by excluding attorney's fees and costs from its award of
prejudgment interest under AS 09.55.440(a).
1.
The plain language of the eminent domain statutes does not
contemplate that "compensation" as used in those
statutes includes attorney's fees and costs.
When
the State seeks to exercise its power of eminent domain over
private property, "it may file a declaration of taking
with the complaint or at any time after the filing of the
complaint, but before judgment."[10] The
declaration of taking must state the authority under which
the power is being exercised, the public use intended for the
property, a description of the property and the interests in
it, a statement of necessity, and - as most relevant here -
"a statement of the amount of money estimated by the
plaintiff to be just compensation for the property or the
interest in it."[11] Title to the property vests in the
State once it has filed "the declaration of taking and
the deposit with the court of the amount of the estimated
compensation stated in the declaration ...
."[12]The deposit tolls the running of interest
on the sum deposited; by use of this procedural device, the
State may "minimize the risk of an interest assessment
(and avoid the expenses of litigation) by making a reasonable
offer which the property owner is likely to accept prior to
the institution of legal proceedings."[13]
When
the State files the declaration of taking and the deposit,
"the right to just compensation for [the property] vests
in the persons entitled to it, "[14] and the court
may thereafter order that the deposit be distributed "at
any time."[15] Assuming the landowner does not accept
the amount deposited as just compensation, "[t]he
compensation shall be ascertained and awarded in the
proceeding and established by judgment."[16] The next
sentence of AS 09.55.440(a) is at the heart of this appeal:
"The judgment must include interest at the rate of
10.5 percent a year on the amount finally awarded that
exceeds the amount paid into court under the declaration of
taking. The interest runs from the date title vests to
the date of payment of the judgment."[17] Because
prejudgment interest applies only to the excess of "the
amount finally awarded" over "the amount paid into
court under the declaration of taking," including
attorney's fees and costs in "the amount finally
awarded" may-as in this case - significantly increase
the possible excess to which prejudgment interest will apply.
We
conclude, however, that the plain language of the statute,
read in context, does not support this interpretation.
"When a statute ... is part of a larger framework or
regulatory scheme, even a seemingly unambiguous statute must
be interpreted in light of the other portions of the
regulatory whole."[18] Alaska Statute 09.55.440(a) begins by
reference to "the filing of the declaration of taking
and the deposit with the court of the amount of the
estimated compensation stated in the declaration";
the next sentence of subsection (a) refers again to "the
compensation," which "shall be ascertained and
awarded in the proceeding and established by
judgment"; and the third sentence of the subsection
picks up the term "award" and contrasts it with the
"estimated compensation" referred to in the first
sentence: interest shall be included "on the amount
finally awarded that exceeds the amount paid
into court under the declaration of
taking." (Emphasis added.) In this procedural
sequence, "the estimated compensation," through
ascertainment and award, becomes "the
compensation," which is "established by
judgment" and contrasted with the State's initial
estimate of what it was likely to be.
"Compensation"
is explained in other statutes in the same chapter. Alaska
Statute 09.55.310, addressing the hearing process, provides
that "[t]he jury or master" shall "ascertain
and assess .. .the value of the property sought to be
condemned, and all improvements on it pertaining to the
realty, and of each separate estate or interest in it"
(emphasis added), as well as any collateral damage or benefit
to portions of the landowners' property that have not
been condemned. Alaska Statute 09.55.330, entitled
"Compensation and damages," reads in pertinent
part:
For the purpose of assessing compensation and damages, the
right to them accrues at the date of issuance of the summons,
and its actual value at that date is the measure of
compensation of the property to be actually taken, and
the basis of damages to property not actually taken but
injuriously affected in the cases where the damages are
allowed. . . . Improvements put upon the property after the
...