Indianapolis Colts v. Mayor and City Council of Baltimore

• Citation: 775 F.2d 177
• Decision Date: 15 October 1985
• Docket Number: No. 84-3050,84-3050
• Parties: INDIANAPOLIS COLTS, Plaintiff-Appellee, v. MAYOR AND CITY COUNCIL OF BALTIMORE, Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 177

775 F.2d 177

3 Fed.R.Serv.3d 51

INDIANAPOLIS COLTS, Plaintiff-Appellee, v. MAYOR AND CITY COUNCIL OF BALTIMORE, Defendants-Appellants.

No. 84-3050.

United States Court of Appeals Seventh Circuit.

Argued April 17, 1985.

Decided Oct. 11, 1985.

As Amended Oct. 15, 1985.

John R. Myers, Bell, Boyd & Lloyd, Chicago, Ill., for defendants-appellants.

Samuel K. Skinner, Bose, McKinney & Evans, Indianapolis, Ind., for plaintiff-appellee.

Before POSNER and COFFEY, Circuit Judges, and DUMBAULD, Senior District Judge. ^*

COFFEY, Circuit Judge.

Defendants-appellants, Mayor and City Council of Baltimore ("Baltimore"), appeal the order of the district court denying Baltimore's motion for attorneys' fees and expenses, or in the alternative for discovery related to attorneys' fees and expenses. We affirm.

I

A complete recitation of the facts leading to this litigation may be found in Indianapolis Colts v. Mayor of Baltimore, 741 F.2d 954 (7th Cir.1984), cert. denied, --- U.S. ----, 105 S.Ct. 1753, 84 L.Ed.2d 817 (1985). In that decision, the panel majority held that the district court did not have jurisdiction to hear the Indianapolis Colts' ("Indianapolis") interpleader claim. The panel majority concluded that Indianapolis failed to satisfy the pleading requirements of the interpleader statute, 28 U.S.C. Sec. 1335, for two reasons. First, the majority ruled that Baltimore and the Capitol Improvement Board of Managers of Marion County, Indiana ("CIB") did not have conflicting claims over a single stake. According to the majority, "Baltimore seeks ownership of the Colts' franchise, whereas the CIB has no claim to ownership of the franchise. Instead, the CIB has a lease with the Colts that requires them to play its games in the Hoosier Dome...." 741 F.2d at 956. The majority reasoned that because the CIB had no reasonable claim of ownership of the Colts, there was not sufficient adversity to the plaintiff to justify interpleader. Id. at 957. Second, the majority noted that a "stakeholder must have a real and reasonable fear of double liability or vexatious, conflicting claims to justify interpleader." Id. The court then stated that:

"the Colts do not have a reasonable fear of double liability or vexatious claims here. The Colts and the CIB foresaw the likelihood of legal obstacles to prevent the Colts from leaving Baltimore, among which was an eminent domain action. The Colts and the CIB thus specifically contracted that the lease obligations will terminate at the Colts' option if the Colts' franchise is acquired by eminent domain."

Id. According to the majority, the presence of this "escape" clause in the lease rendered unreasonable any claim by Indianapolis that it could face two suits over the same stake. Thus, interpleader jurisdiction was not proper. Id. at 958.

In dissent, Coffey, J., disagreed with the majority's conclusion that the suit did not involve claims to a single stake. Instead of accepting the majority's view of the distinct nature of Baltimore's eminent domain rights in the Colts franchise and the CIB's lease obligations with the Indianapolis Colts, the dissent accepted the district court's characterization of this suit as a

"struggle over a very unique stake--'the rights and privileges of the [Colts] franchise and the property rights incident to the operation thereof'--with all of the attending social and economic benefits to be derived by two major metropolitan cities competing for the rights and privileges of the Colts' National Football League franchise."

Id. at 959. The dissent reasoned that:

"The full intent of the CIB is to keep the Colts in Indianapolis and thereby enjoy the rights and privileges of [an NFL] franchise.... Baltimore also clearly desires these very same rights and privileges and thus, ... there does exist in this case a common, identifiable state--the rights and privileges of the Colts' franchise--subject to adverse claims."

Id. at 961. The dissent also asserted that the lease provisions relied upon by the majority to refute the reasonableness of the Colts' fear of conflicting claims would not necessarily prevent simultaneous adverse claims by the CIB and the city of Baltimore. "In light of the liberal construction to be accorded the federal interpleader statute," the dissent concluded that the Colts satisfied the jurisdictional requirements of 28 U.S.C. Sec. 1335. Id. at 962. Although Indianapolis' petition for rehearing with suggestion of rehearing en banc was denied, two judges on the court (including Judge Coffey) voted to rehear the case en banc.

In its April 13, 1984 motion to dismiss the interpleader complaint, Baltimore had included a request for attorneys' fees pursuant to Fed.R.Civ.P. 11, and on May 10, 1984, Baltimore renewed its motion to dismiss, including its request for attorneys' fees. The district court denied Baltimore's motion for fees on October 12, 1984, concluding that neither Fed.R.Civ.P. 11 nor 28 U.S.C. Sec. 1927 supported an award of attorneys' fees since "plaintiff had a reasonable basis in fact and in law to support the filing of the complaint and ... plaintiff's conduct with regard to the filing and to discovery was not interposed for an improper purpose." This appeal followed.

II

Indianapolis initially contends that Baltimore's request for attorneys' fees was before this court when it issued its original decision in Indianapolis Colts, that this court rejected Baltimore's request for attorneys' fees, and that this court should not reconsider a prior ruling of this court. According to Indianapolis, the district court's oral denial of Baltimore's request for fees in April was an appealable collateral order under the doctrine of Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), and thus was properly before the court on appeal. The inclusion of a prayer for attorneys' fees in Baltimore's prior brief to this court, coupled with this court's failure to award such fees in its original decision leads Indianapolis to conclude that the issue of attorneys' fees was addressed and denied by this court. Indianapolis asserts, therefore, that this court should not overturn the "law of the case" and thus must deny Baltimore's claim. Baltimore counters that the issue of fees was not decided by this court on August 10, 1984, and indeed it could not have reached the fee issue because the district court's denial of the motion for fees was not an appealable collateral order as defined in Cohen and subsequent cases.

We need not decide whether Baltimore's fee request could have been considered by this court as an appealable collateral order in April 1984 when Baltimore appealed the two district court orders enjoining Baltimore from pursuing its condemnation action in the federal district court in Maryland and from pursuing a Maryland state action commenced against the NFL.

This court's opinion in Indianapolis Colts, supra, holding that the district court did not have interpleader jurisdiction and vacating the district court's orders did not address Baltimore's request for fees. Id. The United States Supreme Court held in Perkins v. Standard Oil Company of California, 399 U.S. 222, 90 S.Ct. 1989, 26 L.Ed.2d 534 (1970) (per curiam), that "[the] failure to make explicit mention in the mandate of attorneys fees simply left the matter open for consideration by the District Court, to which the mandate was directed." Id. at 223, 90 S.Ct. at 1990. Similarly, this court's failure to rule on Baltimore's fee request in Indianapolis Colts, supra, "left the matter open for consideration by the District Court." Perkins, 399 U.S. at 223, 90 S.Ct. at 1990; see Liberty Mutual Insurance Co. v. E.E.O.C., 691 F.2d 438, 441 (9th Cir.1982). Since Baltimore's fee request has not been previously considered by this court, we may do so now.

III

We turn to the issue of whether the district court properly denied Baltimore's motion for attorneys' fees. Baltimore asserts that the district court abused its discretion in denying its motion for attorneys' fees and expenses pursuant to Fed.R.Civ.P. 11 and 28 U.S.C. Sec. 1927. According to Baltimore, Indianapolis intentionally prosecuted an interpleader action when they knew or should have known that their claim lacked a factual or legal foundation. Baltimore contends that the "utter meritlessness" of Indianapolis' interpleader claim indicates that Indianapolis acted in bad faith. Baltimore notes that this court found that Indianapolis did not have reasonable fear of double liability or vexatious claims, that the CIB had no reasonable legal claim of ownership of the Colts, and that interpleader thus was not proper on these findings. Baltimore concludes that Indianapolis' interpleader action was "frivolous and lacked any plausible legal basis." Baltimore further contends that the record in this case establishes bad faith on the part of Indianapolis, and the meritlessness of the interpleader action is further evidence of bad faith. Finally, Baltimore argues that Indianapolis filed the interpleader action for an improper purpose, namely to obtain a more favorable forum in which to litigate the destiny of the Colts and to delay the condemnation action in Baltimore long enough to allow the Colts to become entrenched in Indianapolis.

When an appellate court reviews a district court's denial of attorney fees, the court's standard of review is narrow and limited. "[T]he denial of attorneys' fees in general is a matter for the sound discretion of the trial judge...." Gieringer v. Silverman, 731 F.2d 1272, 1281 (7th Cir.1984); Badillo v. Central Steel & Wire Co., 717 F.2d 1160, 1163 (7th Cir.1983). See also Suslick v. Rothschild Securities Corp., 741 F.2d 1000, 1006 (7th Cir.1984).

A. Rule 11

Rule 11 of the Federal Rules of Civil Procedure was amended effective August 1, 1983. The amended rule provides in pertinent part:

"The signature of an attorney or party constitutes a certificate by him that he...