No Federal-Style Lodestar Presumption in Condemnation Fee Awards: City of Sioux Falls v. Johnson Properties, 2025 S.D. 66

I. Introduction

In City of Sioux Falls v. Johnson Properties, LLC, 2025 S.D. 66, the South Dakota Supreme Court addressed a narrow but consequential issue in eminent domain litigation: how to calculate “reasonable attorney fees” owed to a landowner when the condemning authority’s offer proves to be unreasonably low.

The decision arises out of the City of Sioux Falls’s condemnation of portions of property at the corner of Arrowhead Parkway and Six Mile Road, which housed the Alibi Bar & Grill. After a jury awarded substantially higher compensation than the City’s final offer, the landowner sought attorney fees under SDCL 21‑35‑23. The circuit court awarded $139,724.60 in attorney fees—more than double the “lodestar” (hours multiplied by hourly rate). The City appealed, not contesting entitlement to fees, but arguing that the amount was an abuse of discretion.

The Supreme Court affirmed. In doing so, it clarified and reinforced several important principles:

• Trial courts must begin with the lodestar calculation but may adjust it up or down under the Kelley factors.
• South Dakota condemnation fee awards under SDCL 21‑35‑23 are not governed by a federal-style “strong presumption” that the lodestar is sufficient, nor by a “rare and exceptional” standard for enhancements.
• Contingent fee arrangements and the customary fee practices in eminent domain are valid and weighty considerations in determining a reasonable fee.
• Written findings need not repeat every lodestar step if the record as a whole shows the correct methodology was followed.

The case thus refines the law at the intersection of eminent domain, fee-shifting statutes, and attorney-fee methodology in South Dakota, while reaffirming landowner-protective precedent.

II. Case Background and Procedural Posture

A. The Road Project and the Taking

The dispute began with a long-running roadway improvement plan:

• In 2005, the City and the South Dakota Department of Transportation (DOT) agreed that DOT would expand Arrowhead Parkway from Sycamore Avenue to 26th Street and then turn it over to the City.
• In 2011, DOT transferred the project to the City but continued to assist with design and construction costs.
• By 2015, the City began designing the project and decided to implement it in phases.

Phase 2A, begun in April 2022 and completed in May 2023, involved:

• Realigning the intersection of Arrowhead Parkway and Six Mile Road to the west,
• Adding turn lanes, medians, and stoplights, and
• Reorienting the intersection’s 52-degree angle for safety reasons.

At the key corner sat property owned by Johnson Properties, LLC, hosting the Alibi Bar & Grill. To execute Phase 2A, the City needed to acquire two portions of the Alibi property and obtain temporary easements. The intersection relocation also eliminated the property’s direct access from Arrowhead Parkway—a classic fact pattern that raises valuation and access issues in eminent domain.

The City first offered Johnson Properties $32,454 for the affected portions of the property. Johnson Properties did not challenge the necessity of the taking but disputed the amount of just compensation.

B. Condemnation Petition and Pretrial Offers

On October 25, 2021, the City filed a verified petition for condemnation and declaration of taking. To proceed with the taking under SDCL 31‑19‑28, the City deposited its appraised value of $51,647 with the clerk of courts.

Shortly before trial, the City increased its settlement offer to $250,000. Johnson Properties rejected the offer, and the case proceeded to a jury trial solely on the issue of just compensation.

C. Trial and Compensation Award

At the three-day jury trial:

• Johnson Properties’ appraiser testified that:
  • Before the taking, the property was worth $585,000;
  • After the taking, it was worth $180,000;
  • Resulting in damages of $405,000.
• The City’s appraiser testified that:
  • Before the taking, the property was worth $241,495;
  • After the taking, $189,784;
  • Yielding damages of $51,711.

The jury awarded Johnson Properties $382,600—more than 20% greater than the City’s final $250,000 offer, easily clearing the statutory threshold for fee-shifting under SDCL 21‑35‑23 (discussed below).

D. Post-Trial Fee Motion

On November 6, 2024, Johnson Properties sought:

• Expert witness fees: $36,814.93,
• Taxable costs: $573.13, and
• Attorney fees: $139,724.60, under SDCL 21‑35‑23.

The City:

• Did not dispute:
  • Expert witness fees,
  • Taxable costs, or
  • Johnson Properties’ statutory entitlement to “reasonable attorney fees.”
• Did dispute:
  • The amount of attorney fees requested, contending that the reasonable fee was the “lodestar” amount of $61,740 (137.2 hours × $450/hour).

1. Evidence Supporting the Fee Request

Johnson Properties submitted:

• An itemized invoice showing:
  • 137.2 hours expended,
  • $450 hourly rate,
  • Lodestar total (before tax): $61,740.
• An attorney fee agreement providing for a 33.33% contingent fee on the “lift.”
• An affidavit from counsel confirming that $450/hour was his then-current rate for eminent domain work.
• Four affidavits from regional eminent domain practitioners stating that:
  • Contingent fees are the normal and customary fee arrangement in condemnation cases,
  • Typical contingent percentages range from 25%–50%, and
  • $450/hour is a typical rate for an experienced eminent domain attorney.

The contingent fee was calculated off a base labeled the “lift”—defined as the total recovery above the $32,454 City offer made before counsel was retained, including compensation, interest, costs, expert fees, and attorney fees. Under this contract, if there was no recovery above that lift, counsel received no fee.

Based on the total recovery, Johnson Properties calculated an actual contingent fee obligation of $131,567.42, plus sales tax of $8,157.18, for a total of $139,724.60. The landowner would actually pay at least $202,973.99 in attorney fees overall (counting the contingent fee on the enhanced recovery, including fees themselves).

2. The City’s Objection

Crucially, the City:

• Did not challenge:
  • The reasonableness of the 137.2 hours, or
  • The $450 hourly rate.
• Argued only that:
  • The lodestar ($61,740) was the reasonable fee,
  • The court should not significantly enhance that amount using the contingent fee agreement or other factors.

E. Circuit Court’s Ruling

After a hearing, the circuit court orally ruled that Johnson Properties was entitled to $139,724.60 in attorney fees and followed up with written findings of fact and conclusions of law. The court’s findings included:

• Recognition that counsel expended 137.2 hours.
• Findings that:
  • Condemnation is a highly specialized area of law;
  • The normal and customary fee in South Dakota condemnation cases is a contingent fee;
  • Contingent fees commonly range from 33.33% to 50% of the lift;
  • The fee charged here was at the low end of that range;
  • The amounts at stake and results obtained were substantial; and
  • Counsel possessed the requisite experience, skill, and ability.
• A finding that Johnson Properties would pay at least $202,973.99 in actual fees, based on the total recovery.

The sole appellate issue: whether awarding $139,724.60 in attorney fees was an abuse of discretion.

III. Summary of the Supreme Court’s Opinion

Chief Justice Jensen, writing for a unanimous court, affirmed the fee award. The Court:

1. Reiterated that South Dakota follows the American rule but recognizes statutory exceptions, including SDCL 21‑35‑23 in condemnation cases.
2. Confirmed that Johnson Properties met the statutory trigger: its compensation award exceeded the City’s final offer by more than 20% and exceeded $700.
3. Emphasized that determination of “reasonable attorney fees” must:
   • Begin with the lodestar (reasonable hours × reasonable rate); and
   • Then be adjusted, if appropriate, using the Kelley factors.
4. Explicitly declined to adopt the federal “strong presumption” that the lodestar is sufficient or that enhancements should be limited to “rare” and “exceptional” cases.
5. Held that the circuit court did not fail to start with the lodestar; its oral ruling and written findings, read together, showed proper methodology.
6. Rejected the argument that the court relied solely on the contingency fee; instead, it carefully applied the Kelley factors—time, complexity, customary local fee, amount at stake, results obtained, experience and reputation, and contingent nature of the fee.
7. Concluded that, in light of comparable precedent (notably City of Sioux Falls v. Johnson, 2003 S.D. 115), the circuit court’s fee award was within the permissible range and not an abuse of discretion.

In short, the Supreme Court solidified a flexible, factor-based approach to fee awards in condemnation, without importing restrictive federal doctrines that would cap or tightly constrain enhancements beyond the lodestar.

IV. Legal Framework

A. The American Rule and Statutory Fee-Shifting in Condemnation

Under the American rule, each party ordinarily pays its own attorney fees. As quoted from Eagle Ridge Estates Homeowners Ass’n v. Anderson, 2013 S.D. 21, ¶ 28, 827 N.W.2d 859, 867, there are two basic exceptions:

1. When a contract between the parties provides for fee-shifting; or
2. When a statute authorizes an award of attorney fees.

In condemnation actions, SDCL 21‑35‑23 (as applied through this opinion) requires that:

• If the compensation awarded by final judgment:
  • Is more than 20% greater than the condemnor’s final offer; and
  • Exceeds $700;
• Then the court shall allow reasonable attorney fees (and certain other litigation expenses).

The purpose of this fee-shifting scheme was reiterated from earlier cases such as State ex rel. Dep’t of Transp. v. Clark, 2011 S.D. 20, ¶ 12, 798 N.W.2d 160, 165:

The purpose of SDCL 21‑35‑23 is to encourage fair offers from a condemnor; if the final offer is found to be unfair based on a comparison with a jury’s verdict, the condemnor will also have to pay attorneys’ fees and expert witness fees.

The statute is thus designed to:

• Disincentivize lowball offers by governmental condemnors; and
• Ensure landowners can afford competent representation to contest undervaluation.

B. Lodestar Methodology

South Dakota, following In re S.D. Microsoft Antitrust Litigation, 2005 S.D. 113, ¶ 30, 707 N.W.2d 85, 99, begins fee analysis with the “lodestar”:

[T]he calculation of attorney fees must begin with the hourly fee multiplied by the attorney’s hours.

The Court again quoted its caution:

We are not under the illusion that a “just and adequate” fee can necessarily be ascertained by merely multiplying attorney’s hours and typical hourly fees. However, we are convinced that this simple mathematical exercise is the only legitimate starting point for analysis. It is only after such a calculation that other, less objective factors, can be introduced into the calculus.

Thus, lodestar is a starting point, not an automatic endpoint.

C. The Kelley Factors

Once the lodestar is computed, the court turns to the non-exclusive factors articulated in City of Sioux Falls v. Kelley, 513 N.W.2d 97, 111 (S.D. 1994), often called the “Kelley factors”:

1. Time and labor required, novelty and difficulty of the questions, and the skill needed.
2. Likelihood that accepting the case will preclude other employment.
3. Fee customarily charged in the locality for similar services.
4. Amount involved and the results obtained.
5. Time limitations imposed by the client or circumstances.
6. Nature and length of the professional relationship with the client.
7. Experience, reputation, and ability of the lawyers performing the services.
8. Whether the fee is fixed or contingent.

These factors may justify adjusting the lodestar upward or downward. No single factor is controlling; courts must consider all relevant factors to reach a “reasonable” fee. The opinion reiterates this principle and emphasizes that the ultimate purpose, particularly under SDCL 21‑35‑23, is to reasonably reimburse the landowner, not merely compensate counsel at an hourly rate.

V. Precedents and Authorities Cited

A. Crisman v. Determan Chiropractic, Inc., 2004 S.D. 103

Crisman is cited for the standard of review and the requirement of findings:

• Attorney fee awards are reviewed for abuse of discretion.
• Trial courts must enter findings of fact and conclusions of law on fee requests.

This frames the appellate inquiry: Was the circuit court’s fee award “a choice outside the range of permissible choices”?

B. In re Estate of Mack, 2025 S.D. 7

Estate of Mack is quoted to define “abuse of discretion” as:

A fundamental error of judgment, a choice outside the range of permissible choices, a decision, which, on full consideration, is arbitrary or unreasonable.

This reinforces the deference accorded to trial judges’ fee assessments when they apply the correct legal framework and make supportable factual findings.

C. Eagle Ridge Estates Homeowners Ass’n, Inc. v. Anderson, 2013 S.D. 21

This case is cited for:

• Reaffirming the American rule and its exceptions, and
• The principle that fee awards must be reasonable for the services rendered, applying the Kelley factors.

D. In re S.D. Microsoft Antitrust Litigation, 2005 S.D. 113

The Court draws from Microsoft to:

• Reiterate that lodestar is the starting point of analysis.
• Note that, in the antitrust context, the Court has said:

  The lodestar amount normally provides full and reasonable compensation for counsel who produces excellent results.

However, the Court is careful to distinguish this antitrust-fee context from the condemnation context. It explicitly declines to import a similar presumption into SDCL 21‑35‑23 condemnation cases.

E. City of Sioux Falls v. Kelley, 513 N.W.2d 97 (S.D. 1994)

Kelley is central because it:

• Established the eight-factor framework still applied in this case.
• Held that circuit courts may not rely solely on a contingent fee agreement to determine a reasonable fee under SDCL 21‑35‑23.
• Required a broader factor-based analysis.

In Kelley, the Supreme Court remanded for recalculation where the circuit court had simply taken a one-third contingency fee as the fee award, without properly analyzing the other factors or starting from a lodestar.

F. City of Sioux Falls v. Johnson, 2003 S.D. 115

This prior Johnson decision (a different case, but also involving City of Sioux Falls condemnation) is directly analogous and strongly supports the outcome here. There, the Court:

• Approved an attorney-fee award of $174,900,
• Where the circuit court:
  • Used the hourly rate as one reference point and
  • Examined the actual fees paid by the landowner as another reference point,
  • Applied the Kelley factors, including the contingent nature of the fee and customary contingent percentages.
• Emphasized that the purpose of SDCL 21‑35‑23 is “not to compensate landowner's counsel, but to reasonably reimburse landowner for legal fees.”

In the present case, the Supreme Court expressly likens the circuit court’s findings to those in Johnson and finds them even more detailed, reinforcing the continuity of approach.

G. State ex rel. Dep’t of Transp. v. Clark, 2011 S.D. 20

Clark is cited for the policy rationale of SDCL 21‑35‑23: to encourage fair offers by penalizing unfairly low condemnors’ offers with liability for landowner’s litigation expenses.

H. Toft v. Toft, 2006 S.D. 91

Toft stands for the idea that written findings in fee cases, while strongly preferred, are not jurisdictional. Even in their absence, appellate review is possible if the record “sufficiently informs” the appellate court of the basis for the decision. Here, the Supreme Court uses Toft to justify looking at the circuit court’s oral ruling in tandem with its written findings to confirm that it began with the lodestar.

I. Federal Authority: Perdue v. Kenny A., 559 U.S. 542 (2010)

The City invoked Perdue to argue:

• There is a strong presumption that the lodestar figure is itself reasonable.
• Enhancements should be allowed only in “rare” and “exceptional” circumstances.
• The lodestar encompasses most or all of the relevant factors, so additional multipliers risk double counting.

The Supreme Court of South Dakota explicitly distanced itself from this federal standard in the condemnation context, noting that:

• Its own fee-shifting jurisprudence has never adopted such a presumption, particularly not under SDCL 21‑35‑23.
• In condemnation cases, the Kelley factors remain fully operative after lodestar calculation.

VI. The Court’s Legal Reasoning

A. Abuse of Discretion Framework

The Court reiterated a deferential standard of review. The question was not whether the justices would have awarded the same fee in the first instance, but whether the circuit court:

• Used the correct legal standards (lodestar + Kelley factors), and
• Made a choice within the range of reasonable outcomes, given the evidence.

Unless the decision was arbitrary, unreasonable, or based on materially incorrect legal principles, it would be upheld.

B. Did the Circuit Court Start with the Lodestar?

The City argued that the circuit court:

• Failed to begin with the lodestar calculation, and
• Did not mention the lodestar in its written findings, thereby making the award legally deficient.

The Supreme Court rejected this argument by examining the full record:

• In its oral ruling, the circuit court expressly recognized:
  • 137.2 hours × $450 hourly rate,
  • The resulting lodestar: approximately $61,740 (the City’s figure), and
  • That neither party disputed this calculation.
• In its written findings, the court noted that the City “proposed a reasonable attorney fee of $61,740,” implicitly acknowledging and using this figure as the starting point.

Under Toft, the Supreme Court was satisfied that the circuit court indeed started with the lodestar; the absence of a formal “lodestar” label in the written findings did not constitute reversible error.

C. Application of the Kelley Factors and Enhancement of the Lodestar

The core dispute was whether the circuit court properly enhanced the lodestar from $61,740 to $139,724.60. The Supreme Court methodically reviewed the lower court’s application of the relevant Kelley factors.

1. Factor (1): Time, Labor, Difficulty, and Required Skill

The circuit court found, and the Supreme Court accepted, that:

• Eminent domain is a “very specialized area of law” involving:
  • Selection and preparation of valuation experts,
  • Understanding of real estate market valuation factors, and
  • Knowledge of how to present evidence supporting the highest lawful market value.
• The wide disparity in appraised values made the outcome unpredictable and the choice of litigation strategy “crucial.”

This factor supported recognizing the sophistication and risk inherent in the representation.

2. Factors (2), (5), (6): Inapplicable or Neutral

The parties agreed that three factors were inapplicable:

• (2) Preclusion of other employment,
• (5) Time limitations imposed by the client or circumstances, and
• (6) Nature and length of the professional relationship with the client.

The circuit court appropriately gave these no weight.

3. Factor (3): Customary Fee in the Locality

The circuit court gave substantial weight to undisputed affidavits and evidence showing:

• In South Dakota condemnation cases, the customary fee arrangement is contingent.
• Typical contingent fees range between 33.33% and 50% of the lift.
• The contingent rate in this case (33.33%) is at the low end of that customary range.

The City did not present contrary evidence. Given the uncontested nature of the record, the Supreme Court accepted the circuit court’s conclusion on customary fees and the associated risks for both client and lawyer.

4. Factor (4): Amount Involved and Results Obtained

The circuit court found the financial stakes and results to be “substantial”:

• The jury’s award: $382,600 in just compensation.
• This was:
  • $177,156.25 more than the City’s final $250,000 offer, an increase of 71%;
  • Over 7 times the City’s initial appraised trial valuation of $51,647; and
  • Almost 12 times the City’s pre-counsel offer of $32,454.

Although the landowner’s appraiser had advocated an even higher number than the verdict, the Supreme Court rejected the City’s argument that this undermined the “substantial results” characterization. In fee jurisprudence, the question is not whether counsel achieved the theoretical maximum, but whether the results were strong relative to:

• The condemnor’s offers and position, and
• The inherent litigation risks.

5. Factor (7): Experience, Reputation, and Ability

The circuit court found that counsel displayed “experience, skill, and ability” in eminent domain litigation and performed at a high level. This recognition is consistent with the record evidence of counsel’s specialization and the hourly rate differential between condemnation and non-condemnation work.

6. Factor (8): Fixed or Contingent Fee

The contingent nature of the fee weighed heavily:

• The court emphasized that:

  The only certainty in a contingent fee is uncertainty. Both the client and the lawyer take significant risks under a contingent fee agreement.

• Johnson Properties’ fee agreement meant that if no lift above the early $32,454 offer was achieved, counsel would receive no fees.
• In fact, the landowner would ultimately pay over $200,000 in fees under the agreement, exceeding the fee award sought—highlighting that the statutory award did not fully indemnify the landowner.

The Supreme Court saw no error in the circuit court’s consideration of the contingency and the actual contractual obligation, consistent with Johnson (2003).

D. Response to the City’s “Double-Counting” and Federal-Law Arguments

The City contended that:

• The circuit court improperly “double-counted” factors such as:
  • Skill and expertise (already baked into the higher $450 hourly rate), and
  • Complexity or risk (already reflected in the market rate for specialized condemnation work).
• Under federal precedents like Perdue, these factors should not lead to upward enhancements because they are already assumed within the lodestar.

The Supreme Court rejected these contentions for several reasons:

1. No adoption of the federal “strong presumption” doctrine. The Court explicitly noted that its prior fee-shifting cases in condemnation have not applied a presumption that the lodestar is sufficient, nor restricted enhancements to “rare” or “exceptional” cases.
2. Distinct state statutory context. The fee-shifting purpose under SDCL 21‑35‑23 is to encourage fair offers and reasonably reimburse landowners, a policy distinct from some federal civil-rights or antitrust contexts.
3. Factual gap on rate-setting. While counsel conceded that his condemnation rate was higher than his non-condemnation rate, there was no evidence showing:
   • How large that differential was; or
   • How it compared to general market rates.
   The Supreme Court held that without a clear record demonstrating what, exactly, was already “built into” the rate, it was reasonable for the circuit court to give independent weight to counsel’s skill and specialization in its Kelley analysis.
4. Historical consistency with Johnson and Kelley. The Court underscored that its role was to apply its own state-law fee framework, which has long contemplated robust use of the Kelley factors in condemnation cases.

In short, while federal law may discourage multipliers beyond the lodestar, South Dakota condemnation fee law retains greater flexibility.

E. Reliance on the Fee Agreement: Lessons from Kelley

The City, invoking Kelley, argued that the circuit court improperly used the contingent fee agreement itself as the measure of a reasonable statutory fee. The Supreme Court acknowledged Kelley’s core holding—that a contingent contract alone cannot define the statutory award—but held that:

• The circuit court in this case did not commit that error.
• Instead, it:
  • Started from the lodestar;
  • Considered the contingent fee agreement as one of multiple Kelley factors;
  • Considered the actual amount the landowner would pay under that agreement; and
  • Explained at length why an award higher than the lodestar was reasonably required to reimburse the landowner, though still less than the contractual obligation.

The Supreme Court saw this as precisely the type of nuanced, multi-factor reasoning Kelley demands, rather than a mechanical adoption of a contingency percentage.

F. Comparison to the Earlier Johnson Case

Finally, the Supreme Court drew a direct comparison to City of Sioux Falls v. Johnson, 2003 S.D. 115, where it affirmed:

• A $174,900 fee award,
• Where:
  • Counsel expended approximately 380 hours,
  • Customary fees ranged from 33%–50% of the lift,
  • The contingent fee was at the low end of that range,
  • Results were excellent relative to the amounts in controversy, and
  • The landowner had paid over $243,005 in fees.

The Supreme Court noted that the circuit court’s findings here “closely parallel, and are even more detailed than” those in Johnson. That parallel strongly supported affirmance and demonstrated continuity rather than doctrinal innovation.

VII. Complex Concepts Simplified

A. Condemnation and Just Compensation

“Condemnation” is the process by which a government takes private property for public use (such as roads), exercising its power of eminent domain. The constitutionally required safeguard is that the property owner must receive “just compensation,” usually meaning fair market value of what is taken and, in partial takings, any decrease in value to the remainder.

B. SDCL 21‑35‑23 Fee-Shifting in Plain Terms

This statute says, in essence:

• If:
  • The landowner proves at trial that the property is worth more than 120% of the government’s final offer; and
  • The total award is more than $700;
• Then:
  • The government must reimburse the landowner for reasonable attorney fees and certain litigation costs.

This encourages governments to make realistic offers early, and ensures that property owners who must litigate to get fair value are not crippled by legal expenses.

C. Lodestar Explained

The lodestar is a straightforward calculation:

1. Count the reasonable number of hours the attorney worked; then
2. Multiply those hours by a reasonable hourly rate.

This gives a baseline dollar figure. Courts then decide whether that number should be adjusted up or down, based on how difficult the case was, the results achieved, customary fees, and other factors.

D. Contingent Fee and “Lift”

A contingent fee means the lawyer gets paid only if the client recovers money, typically as a percentage of that recovery. In condemnation cases like this:

• The “lift” is the amount recovered above the government’s early offer (here, above $32,454).
• The lawyer’s percentage (here, 33.33%) applies to that lift, not to the entire property value.

Because both lawyer and client share the risk of losing (in which case the lawyer may get nothing for a substantial amount of work), courts view contingency fees as reflecting both market practice and litigation risk.

E. Abuse of Discretion Standard

When reviewing attorney-fee awards, appellate courts ask:

• Did the trial judge use the correct law (here, lodestar + Kelley factors)?
• Did the judge’s decision fall within a reasonable range of outcomes, based on the record?

The appellate court does not second-guess every detail or substitute its own preferred fee figure. Only if the decision was arbitrary, unreasonable, or clearly mistaken will it be reversed.

VIII. Practical and Doctrinal Impact

A. For Condemning Authorities (Cities, DOT, etc.)

This opinion sends a clear signal:

• Making low offers in condemnation cases can be expensive. If a jury finds the property is worth significantly more than the offer, the condemnor may have to:
  • Pay the increased compensation; and
  • Reimburse substantial attorney fees and expert costs.
• The reimbursable fees are not capped at the lodestar.
• Courts may award fees that:
  • Recognize contingent fee structures,
  • Reflect the actual complexity and risk of the case, and
  • Are aligned with customary contingent percentages in condemnation practice.

Practically, this decision:

• Increases the financial incentive for condemnors to:
  • Obtain high-quality appraisals early,
  • Make realistic settlement offers, and
  • Re-evaluate offers if trial risks increase.
• May lead public entities to:
  • Budget more conservatively for eminent domain projects, and
  • Factor in potential fee liability when deciding whether to try or settle a case.

B. For Landowners and Their Counsel

For landowners:

• The case reaffirms that if they substantially beat the condemnor’s final offer at trial, they can recover robust, not minimal, attorney fees.
• Professional representation in eminent domain disputes is supported by a statutory safety net, making it more feasible to insist on just compensation.

For attorneys:

• It confirms:
  • Contingent fee arrangements between 33.33% and 50% of the lift are “normal and customary,”
  • Such arrangements can be a significant factor in fee awards, and
  • Courts will not mechanically limit recovery to hourly lodestar calculations.
• It may encourage:
  • Experienced litigators to accept condemnation cases for landowners, knowing that statutory fee awards can reasonably approximate contingent market fees where results justify them.

C. For Trial Courts

The opinion offers practical guidance:

• Methodology:
  • Calculate lodestar first (hours × rate).
  • Then explicitly walk through the Kelley factors, noting which do or do not apply.
• Findings:
  • Enter written findings and conclusions, but may rely on oral rulings to flesh out reasoning.
  • Need not adopt federal “strong presumption” doctrine; rather, follow Kelley, Johnson, and this case.
• Evidence:
  • Consider uncontested evidence on customary local practices (like contingent fee ranges) and specialized nature of the work.
  • Consider the actual contractual fee obligation of the landowner as a reference point.

This structured approach will help insulate future fee awards from appellate reversal.

D. Doctrinal Clarification: State vs. Federal Fee Law

Doctrinally, the opinion makes explicit that:

• South Dakota’s condemnation fee jurisprudence under SDCL 21‑35‑23:
  • Is distinct from federal civil-rights fee jurisprudence under Perdue and similar cases;
  • Does not adopt a strong presumption that lodestar is adequate; and
  • Allows more generous consideration of contingency, customary practices, and actual results.
• This state-law stance likely extends to other statutory fee-shifting contexts unless and until the Court indicates otherwise.

IX. Conclusion: Key Takeaways and Significance

City of Sioux Falls v. Johnson Properties, 2025 S.D. 66, is not about the substantive valuation of the condemned property; it is about who pays the price of an unreasonably low condemnation offer. The decision:

• Affirms that when a landowner substantially improves upon a condemnor’s offer at trial, SDCL 21‑35‑23 authorizes meaningful reimbursement of attorney fees.
• Confirms that trial courts must:
  • Begin with a lodestar calculation, then
  • Apply the Kelley factors to adjust that figure, up or down, to reach a reasonable fee.
• Rejects the importation of federal doctrines that would tightly constrain enhancements beyond lodestar, preserving flexibility tailored to South Dakota’s statutory and policy context.
• Endorses reliance on:
  • Customary contingent fee practices in eminent domain,
  • Actual contractual obligations of the landowner, and
  • The degree to which the jury verdict eclipses the condemnor’s offers.
• Reinforces earlier cases like Kelley, Johnson (2003), and Clark, consolidating a coherent line of condemnation fee jurisprudence.

In the broader legal landscape, the opinion strengthens the practical enforceability of the constitutional guarantee of just compensation. It assures landowners that if they must go to court to achieve fair value, South Dakota law will not leave them bearing disproportionate litigation costs—particularly where governmental offers fall far short of what a jury ultimately deems just.