Developer loses eminent domain fight in Idaho

BOISE – The Idaho Supreme Court last week ruled against a developer in a long-running eminent domain dispute in North Idaho, even ordering the company to pay some of the state’s legal fees.

The developer, H.J. Grathol Co., was “shooting for the moon” and seeking much more money from the state than its 16 acres were worth, Justice Jim Jones wrote.

The company had been trying to build a travel center, grocery store and hotel at the northeast corner of U.S. Highway 95 and state Highway 54 near Athol, when the Idaho Transportation Department condemned that chunk of property for a new interchange. The state offered $571,000 for the land; the company said it was worth $3.6 million. A lower court set the value at $675,000.

The state hired a private law firm, Holland and Hart, for the condemnation case, and ran up legal fees and costs of more than $1 million even before the appeal to the state Supreme Court.

The Supreme Court ruled that the developer’s appeal was “completely unreasonable and frivolous,” and therefore the private party could be ordered to pay the state’s attorney fees, at least for the appeal portion of the case.

Depending on how much Holland and Hart charges, that fee award by the high court could eat up a good portion of the $675,000 paid to the developer, leaving the company out both its money from the state and its land.

Mary York, the attorney with Holland and Hart who handled the case, estimated that the attorney fees on appeal likely will top $100,000.

“The unreasonableness of the positions taken by the other side … led to the amount of attorney fees that were incurred by the state, unnecessarily so, in our opinion,” York said. She called the court’s decision “well-reasoned.”

Alan Johnson, head of H.J. Grathol and vice president of parent company Hughes Investments, couldn’t be reached for comment Friday. He argued earlier that it was “completely unconstitutional” for a state to try to make a private company pay a big legal bill the state ran up trying to seize the company’s land.

“I’ve never encountered anything like this,” Johnson said in 2013. His company has developed more than two dozen shopping centers in 30 years in business, mostly in California, but also including the Winco center at the corner of Ramsey Road and Appleway Avenue in Coeur d’Alene.

The company paid $1.45 million for the 56.8-acre undeveloped property in 2008, got it rezoned from rural to commercial, and began moving forward with plans for the development. It maintained that the 16.3 acres sliced off by the transportation department was worth much more than the $571,000 the state originally offered, and charged that the state didn’t address questions about access to the property after the condemnation.

The interchange has been completed. The shopping center property remains vacant.