District of Columbia v. Green, 11007.

• Decision Date: 21 November 1977
• Docket Number: No. 11007.,11007.
• Parties: DISTRICT OF COLUMBIA et al., Appellants, v. Clarzell GREEN et al., Appellees.
• Court: D.C. Court of Appeals

Page 578

381 A.2d 578

DISTRICT OF COLUMBIA et al., Appellants, v. Clarzell GREEN et al., Appellees.

No. 11007.

District of Columbia Court of Appeals.

Argued December 1, 1976.

Decided November 21, 1977.

Louis P. Robbins, Principal Deputy Corp. Counsel, Washington, D. C., with whom John R. Risher, Jr., Corp. Counsel, Richard W. Barton, Deputy Corp. Counsel, Henry E. Wixon and David P. Sutton, Asst. Corp. Counsels, Washington, D. C., were on the brief, for appellants.

Gilbert Hahn, Jr., Washington, D. C., for appellees.

Before KERN, GALLAGHER and MACK, Associate Judges.

GALLAGHER, Associate Judge:

The trial court ordered the District of Columbia (the District) to pay the fees and expenses of the attorneys who represented appellees, the successful taxpayer-litigants in District of Columbia v. Green, D.C.App., 310 A.2d 848 (1973) (Green I), and District of Columbia v. Green, D.C.App., 348 A.2d 305 (1975) (Green II). The District appeals, presenting this court with the issue of whether an award of attorneys' fees¹ fits within either of the two recognized exceptions to the general American rule which, in the absence of statutory authorization, prohibits an award of attorneys' fees to a successful litigant.

In Green I the appellees successfully sued the District to prevent an illegal tax assessment as applied to certain single-family residential properties and to enforce the District's compliance with the District of Columbia Administrative Procedure Act's rulemaking provisions in changing the assessment level applicable to such residential properties. As a result of that suit, 77,485 single-family residential property taxpayers received real property tax bills for fiscal year 1974 based at a level of assessment of 55% of fair market value, rather than the illegally adopted 60%, which the District had attempted to use.²

Green II arose from the District's attempted compliance with Green I in adjusting the affected taxpayers' bills to reflect properly the 55% assessment level, rather than 60%. The same taxpayer-litigants from Green I again successfully sued the District, this time because of the District's computational method for adjusting the tax bills. As a result of this suit the trial court ordered the District to use appellees' more precise method of calculation, resulting in higher tax bills for some of the affected single-family residential taxpayers, and in lower tax bills for others in the same class. We affirmed. Green II, supra.

In this case the trial court considered the issue of whether appellees, after two such successful suits against the District, could recover an award for their attorneys' fees and expenses. After noting the general prohibition of awards of attorneys' fees to prevailing litigants under the American rule, the trial court decided that the appellees were entitled to such an award under the so-called common fund or common benefit exception.³

The common fund exception began with Trustees v. Greenough, 105 U.S. 527, 26 L.Ed. 1157 (1882), in which the Supreme Court recognized

the historic power of equity to permit the trustee of a fund or property, or a party preserving or recovering a fund for the benefit of others in addition to himself, to recover his costs, including his attorneys' fees, from the fund or property itself or directly from the other parties enjoying the benefit. That rule has been consistently followed. Central Railroad & Banking Co. v. Pettus, 113 U.S. 116, 5 S.Ct. 387, 28 L.Ed. 915 (1885); Harrison v. Peres, 168 U.S. 311, 325-26, 18 S.Ct. 129, 42 L.Ed. 478 (1897); United States v. Equitable Trust Co., 283 U.S. 738, 51 S.Ct. 639, 75 L.Ed. 1379 (1931); Sprague v. Ticonic National Bank, 307 U.S. 161, 59 S.Ct. 777, 83 L.Ed. 1184 (1939); Mills v. Electric Auto-Lite Co., 396 U.S. 375, 90 S.Ct. 616, 24 L.Ed.2d 593 (1970); Hall v. Cole, . . . [412 U.S. 1, 93 S.Ct. 1943, 36 L.Ed.2d 702 (1973)];. . . . Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240, 257-58, 95 S.Ct. 1612, 1621, 44 L.Ed.2d 141 (1975) (hereinafter cited as Alyeska). (Further citations and a footnote omitted.) In Mills v. Electric Auto-Lite Co., 396 U.S. 375, 391-97, 90 S.Ct. 616, 24 L.Ed.2d 593 (1970), the Supreme Court extended the "common fund" doctrine to include cases where a common "benefit" was derived but no fund was created. The Court there discussed fully the principle and rationale of the original exception and its extension.

A primary judge-created exception has been to award expenses where a plaintiff has successfully maintained a suit, usually on behalf of a class, that benefits a group of others in the same manner as himself. . . . To allow others to obtain full benefit from the plaintiff's efforts without contributing equally to the litigation expenses would be to enrich the others unjustly at the plaintiff's expense. . . .

The fact that this suit has not yet produced, and may never produce, a monetary recovery from which the fees would be paid does not preclude an award based on this rationale. Although the earliest cases recognizing a right to reimbursement involved litigation that had produced or preserved a "common fund" for the benefit of a group, nothing in these cases indicates that the suit must actually bring money into the court as a prerequisite to the court's power to order reimbursement of expenses. . . . [The foundation of such power] "is part of the original authority of the chancellor to do equity in a particular situation." Sprague v. Ticonic Nat. Bank, 307 U.S. 161, 166, 59 S.Ct. 777, 83 L.Ed. 1184 (1939).

Mills v. Electric Auto-Lite Co., supra at 392-93, 90 S.Ct. at 625. The most recent Supreme Court discussion of the common fund and benefit doctrine⁴ is in Alyeska, supra. The Court there related in summary fashion the characteristics of past common benefit decisions: "the classes of beneficiaries were small in number and easily identifiable. The benefits could be traced with some accuracy, and there was reason for confidence that the costs could be shifted with some exactitude to those benefitting." Alyeska, supra, 421 U.S. at 265 n. 39, 95 S.Ct. at 1625.⁵

I.

Against this background, we must first determine whether the trial court erred in its so-called "quasi-application" of the common benefit exception. The trial court ordered the fees to be paid from the District's general public funds, since, in its opinion, the results in both Green I and Green II benefitted all District taxpayers because of "the ultimate effect on the District of Columbia taxing system, . . ." and the "extraordinary benefits from `preserving . . . democracy, not only in the immediate impact of results achieved here but in their implications for the future conduct of the [Respondents']<sup>6</sup> affairs' in taxing policies and in `open-disclosure' forums." (Opinion and Order, April 30, 1976, quoting in part from Hall v. Cole, 412 U.S. 1, 8, 93 S.Ct. 1943, 36 L.Ed.2d 702 (1973)).⁷ The vindication of important public rights, a laudable purpose, to be encouraged and rewarded, was not the aim of the taxpayers in this case. Appellees stated repeatedly their purely selfish, monetary purpose (Brief for Appellees at 1, 6) and conceded, "[i]t was not a suit to vindicate anyone's rights." Id. at 17. Any public rights vindicated by their suits were too remote to justify an award whose burden would be borne by District taxpayers who, for example, own no real property. Furthermore, we do not think the benefits could be traced to the entire taxpaying population of the District nor that the costs could be shifted with any exactitude to that population.

In Hall v. Cole, supra, the successful litigant vindicated for each union member certain First Amendment rights to free speech — an intangible benefit, but common to all union members — and thus there was a direct and immediate impact upon each union member as a result of that suit. The potential benefit to each union member was precisely the same — the expanded scope of protected free speech applied to all equally, although the actual benefit realized may depend on the extent to which each union member exercised that vindicated right. The cost of that benefit was also equally apportioned amongst the beneficiaries, since the award was paid out of the union treasury to which all had contributed and from which disbursements were for the benefit of all.

In this litigation, however, the direct and immediate benefits of Green I and Green II were to 77,485 single-family residential property taxpayers and to 37,073 single-family residential property taxpayers, respectively, in the form of reduced property tax bills for fiscal year 1974. The benefits to every other taxpayer are much more difficult to gauge, or even to identify.⁸ Furthermore, by ordering the award to be paid from the general treasury of the District, the costs are not being shifted with any exactitude to those benefitting.⁹ Instead of charging costs to the beneficiaries in proportion to their benefits received, the trial court in making the award from the general treasury necessarily assumes that all taxpayers benefitted equally and the costs were borne equally. Under the facts of this case — particularly the fact that taxpayers who own no property would be bearing part of the burden of the award¹⁰ — this court cannot accept that assumption. We hold, therefore, that the common benefit exception does not authorize an award of attorneys' fees out of the District public treasury under the circumstances presented here.¹¹

Next we consider the application of the common benefit exception to Green I and to Green II. Due to differences in the nature of these two actions and in the evidence of record concerning each, the propriety of an award of attorneys' fees for each case under Alyeska's criteria is considered separately. The method and costs of administering the awards are considered subsequently.

II.

The first criterion to apply to Green I is the "small" size of the class. Unfortunately, very few...