In re Antioch University, 81-688.

• Decision Date: 29 August 1984
• Docket Number: No. 81-688.,81-688.
• Citation: 482 A.2d 133
• Parties: In re ANTIOCH UNIVERSITY, Appellant.
• Court: D.C. Court of Appeals

482 A.2d 133

In re ANTIOCH UNIVERSITY, Appellant.

No. 81-688.

District of Columbia Court of Appeals.

Argued May 9, 1984.

Decided August 29, 1984.

J. Alan Galbraith, Washington, D.C., with whom Terrence O'Donnell, Washington, D.C., was on the brief, for Antioch University.

John W. Karr, Washington, for Edgar S. Cahn and Jean Camper Cahn, in their representative capacities for Antioch School of Law.

Philip J. Hirschkop, Alexandria, Va., for John W. Karr.

Robert D. Roadman, Washington, D.C., with whom Harold Gordon, Washington, D.C., was on the brief, for J.K. Howard.

Elkanah J. Burns, Washington, D.C., for Theresa Felton and Webster Young.

Before PRYOR and TERRY, Associate Judges, and REILLY, Chief Judge, Retired.

REILLY, Chief Judge, Retired:

This appeal—a challenge to an award against Antioch University of attorney's fees and costs incurred by the opposing parties and intervenors—is a sequel to the suit commenced by deans of Antioch Law School to prevent the officials of the University from exercising control over the administration or expenditure of law school funds. It is unnecessary to describe this litigation in any detail as our court has already done so in a previous opinion, In re Antioch University, 418 A.2d 105 (D.C. 1980). There we affirmed an order of the trial court which denied the plaintiffs (representing the law school) the preliminary injunction they had sought and granted partial affirmative relief to the University on its cross motion—thereby disposing of the major factual and legal issues in the original action.

The "Findings of Fact and Conclusion of Law" which accompanied this order also contained a paragraph not mentioned in our opinion, viz.:

While the Court has concluded that the University's Board of Trustees does possess ultimate fiscal and administrative dominion over the law school, that very fact requires that the University assume primary responsibility for the existence of conditions and misunderstandings, dating back to the establishment of the law school, that have led directly to this litigation. It necessarily follows that all costs of this action, and all legal fees incurred to date in connection therewith by any party thereto, should be borne by the University.

The order itself directed "that all costs, including transcript costs and legal fees, incurred in connection with the hearing on cross-motions for preliminary injunction shall be borne by defendant University, since it must bear primary responsibility for the necessity of this litigation."

The University noted an appeal from this portion of the order but withdrew it, recognizing that such award was not then an appealable order for the court had yet to set any precise amounts for fees or costs. See Trilon Plaza Co. v. Allstate Leasing Corp., 399 A.2d 34, 36-37 (D.C. 1979).

After our decision was published, the University, by various motions, renewed its objections to the award. The trial court then ordered that attorney fees and costs be quantified by the claimants. Upon consideration of those motions and the claims submitted by the attorneys, the court awarded (1) John W. Karr, who had represented the plaintiffs, the sum of $43,553.69 (which included $438.69 for costs); (2) Elkanah J. Burns, counsel for two intervenor clients of the school's legal aid program, $6,600.00; and (3) Harold Gordon, counsel for another intervenor (the comptroller of the school), $21,858.43 (including costs of $85.93). All of these awards were assessed against the University, the court holding that "dictates of fundamental fairness require that defendant . . . pay counsel fees and costs incurred . . . by plaintiffs and intervenors." It is from this order that the appeal now before us was taken.¹

In its appeal, the University argues that the trial court had no authority to require it to pay the fees of the lawyers representing opposing parties as it is well established under the "American Rule" that in the absence of any special statute or contract, the payment of fees to counsel is the obligation of the parties who retained them. The University contends further that as none of the claimants represented a "prevailing party" the award of costs was prohibited by Rule 54(d) of the Superior Court Civil Rules. In our opinion, the position of the appellant is correct in both respects, and accordingly, the award must be vacated.

It is apparent from the various memoranda of the trial court, including its references to "dictates of fundamental fairness" and the University's "primary responsibility for the existence of conditions and misunderstandings . . . that have led directly to this litigation," that it acted on the premise that in equitable actions, courts are vested with discretion to award such attorney's fees as they deem fair and appropriate. Such premise, however, flies in the face of what the Supreme Court said in Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975), which emphasized the vitality of the "American Rule," requiring litigants to pay their own attorney's fees.

The Alyeska case was itself an equitable action. The plaintiffs—an environmental group—brought an action for declaratory and injunctive relief against the Secretary of the Interior seeking to stop the issuance of construction permits to the Alyeska Pipeline Service Company, also a defendant. Plaintiffs prevailed in the United States Court of Appeals. Wilderness Society v. Morton, 156 U.S.App.D.C. 121, 479 F.2d 842, cert. denied, 411 U.S. 917, 93 S.Ct. 1550, 36 L.Ed.2d 309 (1973). After Congress had nullified the effect of this decision by authorizing the granting of the permits, the Court of Appeals then considered a request of the prevailing party for an award of fees to counsel. While the court specifically found that none of the recognized exceptions to the American Rule were applicable, Wilderness Society v. Morton, 161 U.S.App.D.C. 446, 449, 495 F.2d 1026, 1029 (1974), it, nevertheless, entered an award of attorneys' fees assessed against Alyeska, reasoning that "the equities favor awarding fees." Id. at 456, 495 F.2d at 1036.

In reversing such award, the Supreme Court rejected the view that courts are free to assess attorney's fees as the interests of justice require. While recognizing that there are certain exceptions to the rule, the Court emphasized that courts do not have "roving authority" to allow counsel fees whenever deemed warranted. Alyeska Pipeline Service Co. v. Wilderness Society, supra, 421 U.S. at 260, 95 S.Ct. at 1623. The American Rule, stated the Court, "is deeply rooted in our history" and should not be deviated from in the absence of legislative authorization. Id. at 271, 95 S.Ct. at 1628.

In its Alyeska opinion, the Supreme Court set forth what it deemed the common law exceptions to the general rule. Thus, equity permits an award of fees where a party has brought an action as a trustee of a fund or property or to preserve or recover a fund "for the benefit of others in addition to himself." Id. at 257, 95 S.Ct. at 1621. In such a case, fees are recoverable "from the fund or property itself or directly from the other parties enjoying the benefit." Id. (footnote omitted). Legal fees may also be levied against a party who has willfully disobeyed a court order "or when the losing party has `acted in bad faith, vexatiously, wantonly/or for oppressive reasons.'" Id. at 258, 259, 95 S.Ct. at 1622 (quoting F.D. Rich Co. v. United States ex rel. Industrial Lumber Co., 417 U.S. 116, 129, 94 S.Ct. 2157, 2165, 40 L.Ed.2d 703 (1974)).

Since the Alyeska decision, we have followed it with respect to fee awards by courts in this jurisdiction. Accordingly, we have held that such courts have no discretion in the absence of statute to award attorney fees unless the case falls within one of the foregoing exceptions. See Wisconsin Avenue Associates v. 2720 Wisconsin Avenue Co-op Association, 441 A.2d 956 (D.C. 1982), cert. denied, 459 U.S. 827, 103 S.Ct. 62, 74 L.Ed.2d 64 (1982); Washington Public Interest Organization v. District of Columbia, 436 A.2d 1299 (D.C. 1981); Bay General Industries, Inc. v. Johnson, 418 A.2d 1050 (D.C. 1980); Trilon Plaza Co. v. Allstate Leasing Corp., supra.

The grounds relied upon by the court below for its award are quite different from those enumerated in Alyeska as situations in which a departure from the American Rule is authorized. It is one thing to say that if a party has been lax or ambivalent in enforcing its rights under contract, it must shoulder some blame, if the other party then sues—even unsuccessfully—to prevent belated enforcement; but quite another to hold that it is thereby liable for all the expenses incurred by the party bringing the law suit. Such a holding, if permitted to stand, would create a wholly new exception to the American Rule.

Appellees argue in the alternative that even if the trial court was without broad equitable power to award counsel fees, the challenged award fits within the "common benefit" exception to the American Rule which ...