Hescott v. City of Saginaw

• Decision Date: 02 July 2014
• Docket Number: Nos. 13–2103,13–2153.,s. 13–2103
• Parties: Benjamin HESCOTT; John Hescott, Plaintiffs–Appellants/Cross–Appellees, v. CITY OF SAGINAW, Defendant–Appellee/Cross–Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

757 F.3d 518

Benjamin HESCOTT; John Hescott, Plaintiffs–Appellants/Cross–Appellees,

v.CITY OF SAGINAW, Defendant–Appellee/Cross–Appellant.

Nos. 13–2103, 13–2153.

United States Court of Appeals, Sixth Circuit.

July 2, 2014.

ON BRIEF:Susan K. Friedlaender, Joseph M. Rogowski, II, Friedlaender Rogowski, PLC, Farmington Hills, Michigan for Appellants/Cross–Appellees. Gregory W. Mair, Brett Meyer, O'Neill, Wallace & Doyle, P.C., Saginaw, Michigan, for Appellee/Cross–Appellant.

Before: BOGGS, COLE, and McKEAGUE, Circuit Judges.

OPINION

COLE, Circuit Judge.

John and Benjamin Hescott prevailed over the City of Saginaw, Michigan in a Section 1983 action for the unconstitutional seizure and destruction of their personal effects after the City demolished the Hescotts' rental property. A jury awarded the Hescotts $5,000 in compensatory damages. In these cross-appeals, we must determine whether the district court erred by denying attorneys' fees to the Hescotts under 42 U.S.C. § 1988 and by denying fees to the City under the cost-shifting regime of Federal Rule of Civil Procedure 68. Because no special circumstances warranted denial of the Hescotts' attorneys' fees, and because attorneys' fees are not properly awardable to a losing party like the City—even one otherwise entitled to post-settlement-offer costs under Rule 68—we reverse in part and affirm in part the district court's fee determinations.

I. BACKGROUND

A. Factual Background

John Hescott is a helicopter pilot in the United States Army. Like so many members of the armed forces, he tried to manage his affairs from afar while routinely deploying to the Middle East during the past decade. One of those affairs became the subject matter of this litigation: a rental property located at 1002 Webber Street, in Saginaw, Michigan.

Hescott and his son, Benjamin, purchased the Webber Street property in 2001 and successfully rented it to tenants from 2001 to 2007. Benjamin tended to the rental property while Hescott was stationed or deployed away from Michigan. Ultimately, Hescott grew tired of managing the property and listed it for sale in March 2008. After receiving no offers, he delisted the property with the intention of remodeling it for lease or sale. Nevertheless, the property sat vacant and fell into disrepair between the spring of 2008 and summer of 2009.

Following a deployment to Afghanistan and Iraq, Hescott returned to Saginaw in July 2009 to inspect the property. While there, he discovered that the basement wall on the west side of the house had given way. Hescott arranged for a pair of local contractors to repair the foundation and then returned to his post at Fort Rucker, located in Ozark, Alabama. But before the contractors could begin their repair work, a Saginaw police officer noticed children playing in and around the vacant house, so he contacted the City's Dangerous Buildings Inspector. The Inspector, together with the City's Fire Marshal, determined that the house should be demolished immediately due to its dilapidated condition and threat to public safety. The City quickly slated the property for demolition under an emergency provision from its Dangerous Buildings Ordinance.

The City hired an excavation company to demolish the property but did not notify Hescott before or after the demolition. The excavation company demolished the house on Saturday, July 18, 2009, and returned two days later to remove all fixtures and remaining materials to a landfill. The City did not take an inventory of what was left after the demolition or consider whether any salvageable items remained. Hescott, still unaware of the demolition, returned to the property in August 2009 to assist his contractors with taking measurements and purchasing supplies for the intended repairs. Upon arrival, he realized his house was gone.

B. Procedural Background

The Hescotts filed suit under 42 U.S.C. § 1983 against the City and various city officials, alleging seven causes of action. After the district court granted summary judgment to the defendants on five claims, the Hescotts retained a viable claim under the Fourth Amendment for the unlawful seizure of their aluminum siding following demolition of the house and a supplemental state-law claim for the inverse condemnation of their house.

Before trial, the defendants served the Hescotts with an offer of judgment under Federal Rule of Civil Procedure 68 in which they proposed to settle the case for $15,000. The Hescotts rejected the settlement offer and instead proceeded to trial, where they requested an award of $7,000 in actual damages for the loss of aluminum siding; $35,000 in actual damages for the inverse condemnation of their house; and $250,000 in punitive damages against the individual defendants for their callous indifference to the Hescotts' property rights. After a four-day trial, the jury reached a unanimous verdict rejecting the Hescotts' inverse-condemnation and punitive-damages claims, after concluding that exigent circumstances justified the demolition. The jury found in favor of the Hescotts, however, on their Fourth Amendment claim and awarded them $5,000 for the fair market value of the aluminum that was hauled away and discarded.

After the jury announced its verdict, the district court granted judgment as a matter of law to the individual defendants on qualified-immunity grounds. The district court denied judgment as a matter of law to the City, however, thus leaving intact the jury award of $5,000. Several weeks later, both parties moved the court for taxable costs and attorneys' fees.

The district court awarded costs to the Hescotts because they were “prevailing parties” on their Fourth Amendment claim. Hescott v. City of Saginaw, No. 10–13713, 2013 WL 2395054, at *3 (E.D.Mich. May 31, 2013). But the court denied the Hescotts' motion for attorneys' fees under 42 U.S.C. § 1988(b) after concluding that “special circumstances” warranted such a result. Id. at *4–5. The court based its fee denial on “the degree of success obtained,” which the court labeled as a “modest jury award,” and the fact that the constitutional violation “was of little effect.” Id. The court later affirmed its denial of attorneys' fees in response to the Hescotts' motion for reconsideration. Hescott v. City of Saginaw, No. 10–13713, 2013 WL 3817347, at *3 (E.D.Mich. July 23, 2013). There, the court acknowledged that denying fees to a prevailing civil-rights plaintiff is “unusual” but reiterated its view that awarding fees to the Hescotts would be “unjust” under the circumstances. Id. The court noted that this suit involved only “the loss of a modest residence” in a neighborhood of “poor condition,” and that the Hescotts lost on their primary claim that the demolition was unjustified. Id. at *3–4. After considering the results obtained, the legal significance of the issues presented, and the public purpose of the litigants, the court “arrive[d] at the same conclusion” as before and again denied fees to the Hescotts. Id. at *4.

On the other side of the ledger, the district court initially awarded the City over $25,000 in costs and attorneys' fees as a sanction under Federal Rule of Civil Procedure 68 because the Hescotts' jury award fell below the defendants' settlement offer. Hescott, 2013 WL 2395054, at *7. But the court reversed itself and denied the City its fees following the Hescotts' motion for reconsideration. Hescott, 2013 WL 3817347, at *5. The court determined that attorneys' fees were not “properly awardable” to the City because the Hescotts' Fourth Amendment claim was not “wholly frivolous.” Id.

Both parties timely appealed the court's final attorneys'-fee determinations. The district court had subject-matter jurisdiction over this case under 28 U.S.C. §§ 1331 and 1367. We have jurisdiction over the parties' cross-appeals under 28 U.S.C. § 1291.

II. ANALYSIS

We review a district court's award or denial of attorneys' fees under 42 U.S.C. § 1988 for an abuse of discretion. Dubuc v. Green Oak Twp., 312 F.3d 736, 744 (6th Cir.2002). We review de novo a district court's legal interpretations of Federal Rule of Civil Procedure 68 and review for clear error the factual findings concerning the circumstances under which Rule 68 offers were made. Andretti v. Borla Performance Indus., Inc., 426 F.3d 824, 837 (6th Cir.2005).

A. The District Court Improperly Denied the Hescotts' Motion for Attorneys' Fees

The Hescotts argue that the district court abused its discretion by denying their motion for attorneys' fees under the Civil Rights Attorney's Fees Awards Act of 1976, 42 U.S.C. § 1988. They contend that, as prevailing civil-rights plaintiffs, they were presumptively entitled to attorneys' fees, and that no special circumstances would render such an award unjust. We agree.

Congress enacted 42 U.S.C. § 1988 to encourage the private enforcement of civil rights. Hensley v. Eckerhart, 461 U.S. 424, 429, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). Section 1988 provides that when a party files suit under § 1983, as the Hescotts did here, “the [district] court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs.” 42 U.S.C. § 1988(b). Although § 1988 uses permissive language regarding fee awards, “the Supreme Court has read [§ 1988] as mandatory where the plaintiff prevails and special circumstances are absent.” Déjà Vu v. Metro. Gov't of Nashville & Davidson Cnty., Tenn., 421 F.3d 417, 420 (6th Cir.2005) (citing Indep. Fed'n of Flight Attendants v. Zipes, 491 U.S. 754, 761, 109 S.Ct. 2732, 105 L.Ed.2d 639 (1989)); Berger v. City of Mayfield Heights, 265 F.3d 399, 406–07 (6th Cir.2001).

The City does not dispute that the Hescotts were “prevailing parties” within the meaning of § 1988. Thus, the only issue on appeal is whether the district court abused its discretion by finding special circumstances that would render a fee award unjust. See Déjà Vu, 421 F.3d at 421–22....