Hescott v. City of Saginaw

• Decision Date: 23 July 2013
• Docket Number: Case No. 10-13713
• Parties: JOHN HESCOTT, et al., Plaintiffs, v. CITY OF SAGINAW, et al., Defendants.
• Court: U.S. District Court — Eastern District of Michigan

JOHN HESCOTT, et al., Plaintiffs,

v.CITY OF SAGINAW, et al., Defendants.

Case No. 10-13713

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN NORTHERN DIVISION

Dated: July 23, 2013

Honorable Thomas L. Ludington

OPINION AND ORDER GRANTING IN PART, DENYING IN PART

PLAINTIFFS' MOTION FOR RECONSIDERATION

On May 31, 2013, the Court declined John and Benjamin Hescott's request that the City of Saginaw (the City) be ordered to reimburse their expense of litigating this case ($130,000). The Court then granted the City's request that the Hescotts be ordered to reimburse its expense of doing so ($25,000).¹ John and Benjamin have asked the Court to reconsider those decisions. The question of who is responsible for the legal expense of litigating this case is an interesting one because the unique facts implicate both the Civil Rights Attorney's Fees Award Act of 1976 (42 U.S.C. § 1988) and Federal Rule of Civil Procedure 68. Commonly referred to as simply § 1988, the Attorney's Fees Award Act was largely intended to encourage the enforcement of civil rights laws "through the use of plaintiffs as private attorneys general." Payne v. Milwaukee Cnty., 288 F.3d 1021, 1026 (7th Cir. 2002). Rule 68, on the other hand, was designed "to promote settlement, rather than litigation[.]" Delta Air Lines, Inc. v. August, 450 U.S. 346, 366 (1981) (Rehnquist, J., dissenting). That is, "Rule 68 is designed to provide a disincentive forplaintiffs from continuing to litigate a case after being presented with a reasonable offer." Payne v. Milwaukee Cnty., 288 F.3d 1021, 1024 (7th Cir. 2002).

The precise question faced is this: may the City recover its attorney's fees—as a part of its costs—after the Hescotts' eventual jury award fell below the City's previous offer of judgment? The Court has reconsidered, and now concludes that it cannot. For the reasons set forth below, the Hescotts' motion for reconsideration will be granted in part. The Court again concludes, however, that the Hescotts are not entitled to an award of attorney's fees, and their motion for reconsideration on that ground will be denied.

I

The Hescotts brought a complaint against the City, among others, after a residence they owned—an investment property—was demolished and the resulting debris was carried away without notice to them and without a court order authorizing the City's conduct. Relevant here, Count III of the Hescotts' complaint alleged that the City and the individual defendants (John Stemple, Gregory Barton, and Scott Crofoot) violated the Fourth Amendment when they "unreasonably interfered with [the Hescotts'] possessory interests in [their] House, fixtures, and personal effects." Pls.' Compl. ¶ 68, ECF No. 1. The Hescotts characterized Count III as involving two separate violations: (1) the demolition of their house without their consent or a court order; and (2) the removal of the resulting debris to a landfill two days later without consent or a court order. See Aug. 7, 2012 Order 10, ECF No. 30; Pls.' Compl. ¶¶ 68-71. Both theories arose under 42 U.S.C. § 1983.

The first of the two Fourth Amendment claims—the demolition of the house—was dismissed on summary judgment pursuant to Federal Rule of Civil Procedure 56. See Aug. 7, 2012 Order 13-19. The second claim—the carrying away of the debris—proceeded to trial(along with the Hescotts' claim against the City for inverse condemnation under the Michigan Constitution).

One month before trial, the Defendants collectively made an offer of judgment pursuant to Federal Rule of Civil Procedure 68 amounting to $15,000. The Hescotts rejected the offer. They sought $324,750 to settle the case.² When that suggested settlement was declined, the Hescotts opted to go to trial.

After a four-day trial, the Hescotts were awarded $5,000 because the City carried away the debris of their demolished residential property without notifying them first. The award resulted from the jury's conclusion that the Hescotts' Fourth Amendment right against unreasonable seizures had been violated when the city re-entered the property without the Hescotts' consent or a court order. The jury rejected, however, the Hescotts' inverse condemnation claim that the demolition of the residence was improper—they concluded that the house constituted a public safety risk which justified emergency demolition.

Because the Hescotts' eventual award fell below the Defendants' offer of judgment, the City (which was the only party held liable for the Fourth Amendment violation), moved for costs and attorney's fees pursuant to Federal Rules of Civil Procedure 54 and 68. The Hescotts also moved for costs and attorney's fees—as "prevailing parties"—requesting approximately $132,000.³

The Court concluded that although the Hescotts did prevail on one of their Fourth Amendment claims, and thus costs were appropriate,⁴ attorney's fees were not warranted. See May 31, 2013 Order 8-10. And because the Hescotts' eventual recovery was not greater than the offer of judgment, the City was awarded the costs accumulated since the offer was made. This figure included reasonable attorney's fees pursuant to the interplay of Rule 68(d) and 42 U.S.C. § 1988. See May 31, 2013 Order 11-14.

The Hescotts filed a motion for reconsideration under Local Rule 7.1 and Federal Rule of Civil Procedure 59. Their argument may be summarized as follows: only a prevailing party may be awarded attorney's fees as a part of costs under § 1988. The Hescotts allege that only they prevailed on their Fourth Amendment claim, and accordingly, the City's attorney's fees are not properly considered a part of its costs under § 1988. They argue, contending this case is analogous to Chesny v. Marek, 547 F. Supp. 542 (N.D. Ill. 1982), that they "are not liable for the defendants' post offer costs and attorney fees under § 1988 because the defendants were not prevailing parties as required under § 1988." Pls.' Mot. 3. The Hescotts also assert, for a second time, that they should be awarded their attorney's fees because they did prevail on their Fourth Amendment claim.

II

The Hescotts bring their motion pursuant to Federal Rule of Civil Procedure 59(e) and Local Rule 7.1(h).⁵ Rule 59(e) provides that a party may bring a "motion to alter or amend a judgment . . . 28 days after the entry of the judgment." Local Rule 7.1(h) allows a party to bringa motion for rehearing or reconsideration "within 14 days after the entry of the judgment or order." E.D. Mich. LR 7.1(h)(1). Such a motion must demonstrate not only "a palpable defect by which the court and the parties . . . have been misled but also show that correcting the defect will result in a different disposition of the case." E.D. Mich. LR 7.1(h)(3). "[M]otions for rehearing or reconsideration that merely present the same issues ruled upon by the court, either expressly or by reasonable implication" will not be granted. Id.

But the Court did not enter a judgment after addressing the parties' motions for costs and attorney's fees. And application of Rule 59(e) requires exactly that. As noted by Wright & Miller, "Rule 59(e) covers a broad range of motions, and the only real limitation on the type of the motion permitted is that it must request a substantive alteration of the judgment." 11 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2810.1 (3d ed. 2012) (emphasis added); see also Moodie v. Fed. Reserve Bank of New York, 835 F. Supp. 751, 752 (S.D.N.Y. 1993) ("The present motion is inappropriate under Rule 59 because the Bank's earlier motion for summary judgment was denied, hence no judgment was entered on which the Bank could bring a motion to alter or amend."). The Hescotts do not want a judgment to be altered, but rather the Court's May 31, 2013 Order. Thus, Rule 59(e) motion is inapplicable.

Noted above, however, Local Rule 7.1 does permit a party to move for rehearing or reconsideration of an order as well as a judgment. Thus, the Hescotts' motion will be addressed pursuant to Local Rule 7.1(h).

III

As a preliminary matter, the Hescotts have moved for leave to file a reply brief that exceeds the applicable Local Rules. The motion will be granted, and all of the papers the parties have submitted on this issue will be considered.

In their papers, the Hescotts allege they should receive their attorney's fees and that the City should not. Each issue will be addressed in turn.

A

The Hescotts assert that because they "prevailed" on their Fourth Amendment claim under § 1983, they are entitled to recover $130,000 in attorney's fees pursuant to 42 U.S.C. § 1988. The Court disagreed before, and continues to do so now.

It is true that a prevailing plaintiff in a § 1983 action "should ordinarily recover an attorney's fee unless special circumstances would render such an award unjust." Hensley v. Eckerhart, 461 U.S. 424, 429 (1983) (internal quotation marks omitted). The Hescotts maintain that "[t]he law is clear that it is very rare to deny a fee request based on the special circumstances exception in this and other circuits." Pls.' Reply 4, ECF No. 89 (citing McQueary v. Conway, 614 F.3d 591, 604-05 (6th Cir. 2010)). Although unusual, as the Court explained in the underlying order, the circumstances here render any attorney's fee award to the Hescotts unjust.

Importantly, the Hescotts began the case with the loss of a modest residence, valued somewhere between $6,000 (as reported by the City's appraiser⁶) and $35,000 (as reported by the Hescotts' appraiser⁷). The home was located in a neighborhood where "home sales are very depressed and demand is minimal" given the area's "poor condition[.]" Defs.' Mot. Limine Ex.B, at 5. Further, the City had foregone recovering the costs of the demolition (approximately $4,000) in an effort to address the conflict with the Hescotts.

And of course, the City never disputed that the Hescotts were entitled to their day in court on the inverse condemnation theory of recovery (involving their...