Owners of a Licking County Wendy’s restaurant who successfully sued to have the Ohio Department of Transportation (ODOT) compensate them for cutting off highway access to State Route 16 are not entitled to received attorney fees and court costs from the state, the Ohio Supreme Court ruled today.

In a per curiam opinion, a Supreme Court majority ruled that federal laws requiring the government to pay attorney fees when a property owner wins an eminent domain dispute apply only to federal agencies and not state or local government bodies. The Court also found state law requiring attorney fee awards do not apply when the property owner initiates the lawsuit.

Chief Justice Maureen O’Connor and Justices Sharon L. Kennedy, Judith L. French, R. Patrick DeWine, Michael P. Donnelly, and Melody J. Stewart joined the majority opinion.

Justice Patrick F. Fischer concurred with a separate written opinion, stating that state lawmakers should consider whether state law should permit the awarding of attorney fees when property owners prove the state has taken their land without fair compensation. Justice DeWine joined Justice Fischer’s opinion.

Court Sides with Owners on Takings Dispute
In January 2020, the Supreme Court ruled ODOT’s closure of Cherry Valley Road along State Route 16 in Licking County constituted a “taking” under the U.S. and Ohio constitutions, and that New Wen Inc., the owner of a Wendy’s near the intersection since 1992, must be compensated for the loss of access to the highway. (See State Must Compensate Licking County Restaurant Owner for Cutting Off Highway Access.)

The Court granted a writ of mandamus directing ODOT to begin proceedings to determine the appropriate amount of compensation the agency should pay to New Wen. The amount has not yet been determined.

The following month, New Wen applied for $191,199 in attorney fees and court costs, which ODOT opposed.

Company Urged Court to Apply Federal Law
The Court’s opinion explained that Ohio follows the “American rule,” which does not permit the prevailing party in a lawsuit to recover attorney fees from the losing party, unless there are statutes authorizing the recovery of attorney fees for specified types of lawsuits.

New Wen cited several possible laws that would entitle it to recover fees. It argued the federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 applied. This law sets guidelines requiring the federal government to pay the costs of private property it is acquiring along with “reasonable costs, disbursements, and expenses.” Attorney fees have been deemed to be part of the expenses covered by the law, the opinion noted.

The federal law also applies to “inverse condemnation,” which is when the government takes the land but fails to pay the property owner, prompting the owner to sue the government for compensation.

The Court ruled today the federal law only applies when federal agencies act. New Wen argued the law should apply because ODOT used federal funds to construct the highway improvements that cut off the restaurant’s highway access from the Cherry Valley Road exit. The decision noted that nothing in the federal law requires state or local agencies using federal funds to pay attorney fees in taking disputes.

New Wen also argued that Ohio adopted portions of the federal law, which included attorney-fee provisions. The Court noted that some portions of R.C. Chapter 163, which governs purchases of real estate, authorizes attorney-fee payments in certain situations. Those situations include when the government initiates the attempt to acquire property and then abandons the plans, or when the owner contests the acquisition and the acquisition does not occur.

However, the state has not adopted any part of the federal law dealing with an inverse condemnation lawsuit such as that filed by New Wen where the acquisition was disputed and did occur, the opinion noted.

Costs Request Also Rejected
New Wen also sought $9,300 in reimbursement for the costs of an expert witness, which ODOT claimed was unreasonable. The company based its argument on the federal land acquisition law, and for reasons similar to denying the attorney fees, the Court refused to award the expert-witness costs.

Concurrence Urges Lawmakers to Review Matter
In his concurrence, Justice Fischer stated that under the present law, the majority correctly denied the payment to New Wen. He wrote the General Assembly should examine whether an Ohio property owner who is forced to file a lawsuit when the state has taken the owner’s property without compensation should be entitled to attorney fees.

Justice Fischer stated there may be policy reasons why lawmakers have not allowed for the attorney fee payment under specific circumstances such as New Wen’s, “but more likely the legislative branch never considered this specific issue, at last as far as I can determine from my research.”

2017-0813. State ex rel. New Wen Inc. v. Marchbanks, Slip Opinion No. 2020-Ohio-4865.

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