FDIC v. Addison Airport of Texas, Inc.

• Decision Date: 02 April 1990
• Docket Number: Civ. A. No. CA3-87-2960-D.
• Citation: 733 F. Supp. 1121
• Parties: FEDERAL DEPOSIT INSURANCE CORPORATION as Manager of the FSLIC Resolution Fund as Receiver for Vernon Savings and Loan Association, FSA, and Addison Airport Association, Ltd., Plaintiffs, v. ADDISON AIRPORT OF TEXAS, INC., and City of Addison, Defendants.
• Court: U.S. District Court — Northern District of Texas

733 F. Supp. 1121

FEDERAL DEPOSIT INSURANCE CORPORATION as Manager of the FSLIC Resolution Fund as Receiver for Vernon Savings and Loan Association, FSA, and Addison Airport Association, Ltd., Plaintiffs, v. ADDISON AIRPORT OF TEXAS, INC., and City of Addison, Defendants.

Civ. A. No. CA3-87-2960-D.

United States District Court, N.D. Texas, Dallas Division.

April 2, 1990.

William G. Compton, Mark Simon, and Iwana Rademaekers of Arter & Hadden, Dallas, Tex., for the FDIC.

David T. Moran of Jackson & Walker, Dallas, Tex., for Addison Airport of Texas, Inc.

FITZWATER, District Judge:

The instant motion for an award of attorney's fees presents questions concerning the application of the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412, to litigation in which the Federal Deposit Insurance Corporation ("FDIC"), acting as receiver for a failed financial institution, has been unsuccessful on the merits. Having prevailed on its motion for summary judgment, defendant Addison Airport of Texas, Inc. ("AATI") now argues that the court should award attorney's fees, preferably under 28 U.S.C. § 2412(b), but alternatively pursuant to 28 U.S.C. § 2412(d). The court concludes sovereign immunity prevents an award under § 2412(b), but grants the application on the basis of § 2412(d).

I

A brief summary of the merits of the case is necessary to explain the disposition of the attorney's fee application. Defendants The City of Addison, Texas ("Addison") and AATI were lessors of an aircraft hangar and office complex. Through various assignments of the lease, Eagle Investment Company ("Eagle"), an entity not involved in this suit but involved in related litigation,¹ became the lessee. Vernon Savings and Loan Association ("Old Vernon") advanced the funds to Eagle that enabled Eagle to acquire the lease. In connection with this transaction, Old Vernon, Addison, and AATI executed an estoppel letter that obligated Addison and AATI to notify Old Vernon if Eagle defaulted on its obligations to Addison and AATI. When Eagle defaulted, AATI mailed Old Vernon the required notice of default via certified mail, return receipt requested. The notice sent to Old Vernon was a carbon copy of the notice mailed to Eagle. The notice was mailed to the address prescribed in the estoppel letter, with the exception that the address did not specify "Suite 100." Old Vernon filed a declaratory judgment action in state court, contending the notice was deficient because: it was a carbon copy of the notice to Eagle; AATI and Addison did not send the notice jointly; and the notice omitted "Suite 100" from the address. Old Vernon subsequently failed, the Federal Savings and Loan Insurance Corporation ("FSLIC")² was appointed receiver, and the case was properly removed³ to this court. Addison and AATI moved for summary judgment, contending the notice was proper. The summary judgment evidence showed Old Vernon had received each notice and had received its mail regardless whether "Suite 100" was included in the address. The court granted summary judgment, noting the estoppel letter did not require both Addison and AATI to sign the notice of default. In an unpublished opinion, the court also observed that it could not understand "how a carbon addressed to Old Vernon does not constitute `prompt written notice of default.'" The court characterized as "frivolous and wholly without merit" the claim that the notice was deficient because it was not addressed to "Suite 100." AATI now seeks an award of attorney's fees from the FDIC pursuant to the Equal Access to Justice Act.

II

The United States is immune from claims for attorney's fees except to the extent it has waived its immunity.⁴Ruckelshaus v. Sierra Club, 463 U.S. 680, 685, 103 S.Ct. 3274, 3277, 77 L.Ed.2d 938 (1983). Prior to the enactment of the EAJA, awards of attorney's fees were barred against the United States unless authorized by a specific statute. Knights of the K.K.K. v. East Baton Rouge Parish School Board, 679 F.2d 64, 65-66 (5th Cir.1982); Cassata v. FSLIC, 445 F.2d 122, 125-26 (7th Cir. 1971) (because United States had not waived sovereign immunity, attorney's fees could not be recovered against the FSLIC). While the EAJA retains the general prohibition of attorney's fee awards against the United States, 28 U.S.C. § 2412(a), the Act also waives sovereign immunity in two broad contexts: First, § 2412(b) permits a court to award fees to a prevailing party and provides "the United States shall be liable for such fees ... to the same extent that any other party would be liable under the common law or under the terms of any statute which specifically provides for such an award." 28 U.S.C. § 2412(b). Second, § 2412(d) requires a court to award attorney's fees to a prevailing party "unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust." 28 U.S.C. § 2412(d).⁵

A

The court turns initially to the first ground on which AATI predicates its fee request. AATI argues it is entitled to an award pursuant to § 2412(b), the permissive provision, because under Texas law it would be entitled to recover attorney's fees against a private party in a similar action. For this proposition it relies upon TEX. CIV.PRAC. & REM.CODE ANN. § 38.001(8) (Vernon 1986) (permitting awards of attorney's fees in contract cases) and a clause in the lease entered into by Addison, AATI, and Eagle. This document provides that a prevailing landlord or tenant required to hire an attorney to enforce or defend its rights or obligations is entitled to recover its attorney's fees from the other party. The FDIC argues that neither the attorney's fees provisions of Texas law nor the lease permits an award of attorney's fees under the EAJA.

The court first considers whether § 38.001(8) of the Texas Civil Practice and Remedies Code provides a basis for a fee award. This requires the court to determine, as a threshold matter, whether the phrase "any statute" in § 2412(b) includes state statutes that provide for recovery of attorney's fees.

The Eleventh Circuit has addressed this issue and concluded it does not. Relying on the House Report that accompanies the EAJA, the Eleventh Circuit held that the term "statute" in § 2412(b) refers only to federal statutes that provide for fee shifting. Joe v. United States, 772 F.2d 1535, 1537 (11th Cir.1985) (citing H.Rep. No. 96-1418, 96th Cong.2d Sess. 17, reprinted in 1980 U.S.Code Cong. & Ad.News 4953, 4984, 4996); accord Olson v. Norman, 830 F.2d 811, 822 (8th Cir.1987); Johnson v. United States, 780 F.2d 902, 910 (11th Cir. 1986); Mark v. Kanawha Banking & Trust Co., N.A., 575 F.Supp. 844, 847 (D.Or.1983). AATI takes issue with this approach by attacking the use of legislative history to interpret the plain language of a statute. It argues that if Congress had intended to limit the waiver of immunity it would have used the phrase "federal statute" rather than the more general term "statute." While the court questions whether the House Report can, in any authoritative sense, inform the court's understanding of the EAJA, cf. Pierce v. Underwood, 487 U.S. 552, 108 S.Ct. 2541, 2551, 101 L.Ed.2d 490 (1988), the court need not resort to legislative history to reach the result adopted by the Eleventh and Eighth Circuits and the Oregon district court.

Waivers of sovereign immunity must be construed strictly in favor of the sovereign. Sierra Club, 463 U.S. at 685, 103 S.Ct. at 3277 (citing McMahon v. United States, 342 U.S. 25, 27, 72 S.Ct. 17, 19, 96 L.Ed. 26 (1951)). Moreover, in the United States — especially in the federal system — there is a strong tradition and presumption against fee shifting. See generally Alyeska Pipeline Serv. Co. v. Wilderness Society, 421 U.S. 240, 247-271, 95 S.Ct. 1612, 1616-28, 44 L.Ed.2d 141 (1975). To be sure, to further interests Congress deems important it has waived the government's immunity from attorney's fee awards in several instances. It is quite unlikely, however, that Congress would expose the public exchequer to draws that are regulated, not in a manner that Congress itself can predict, but instead by the individual choices of 50 different state legislatures. Moreover, the government is a party to thousands of cases throughout the Nation. Nothing in the EAJA reflects congressional intent that the particular locale of suit should govern the government's liability for attorney's fees. The court therefore interprets the term "any statute" in § 2412(b) to mean a federal rather than state statute. The availability of fees pursuant to § 38.001(8) — a state law — is irrelevant.

The court next examines whether AATI is entitled to recovery under § 2412(b) on the basis of a clause in the applicable lease. AATI contends the lease clause triggers § 2412(b) because it exacts upon the FDIC "liability under the common law" within the meaning of § 2412(b). The court need not decide whether sovereign immunity can be waived by a contract executed by a private party who is a predecessor in interest of the FDIC. Under the terms of the lease itself, AATI is not entitled to recover.

The provision in question provides for the recovery of attorney's fees if "on account of any breach or default by Landlord or Tenant of their respective obligations under this lease, it shall become necessary for the other party to employee sic an attorney to enforce or defend any of such party's rights or remedies ..." (emphasis added). This suit is not predicated upon an alleged breach of the lease agreement. It is instead premised on the theory that Old Vernon breached its obligations to AATI under the estoppel letter. Moreover, Old Vernon was neither landlord nor tenant under the lease agreement. Hence, AATI cannot rely upon the quoted provision of the lease agreement to recover its attorney's fees "under the common law."

B

AATI argues in the alternative that it should be allowed to recover its fees under §...