Kyreakakis v. Paternoster

• Decision Date: 28 February 1990
• Docket Number: Civ. A. No. 88-2273.
• Citation: 732 F. Supp. 1287
• Parties: Andrew J. KYREAKAKIS, et al., v. Alexander PATERNOSTER, et al., Defendants.
• Court: U.S. District Court — District of New Jersey

732 F. Supp. 1287

Andrew J. KYREAKAKIS, et al., v. Alexander PATERNOSTER, et al., Defendants.

Civ. A. No. 88-2273.

United States District Court, D. New Jersey.

February 28, 1990.

Roger Lowenstein, Dickson, Creighton & Lowenstein, P.A., Hoboken, N.J., Anthony Ambrosio, Ambrosio, Kyreakakis & Di Lorenzo, Bloomfield, N.J., for plaintiff Kyreakakis.

Steven R. Maslo, and Mary Ann Murphy, Asst. Corp. Counsels, Joseph Healy, Corp. Counsel, Jersey City, N.J., for defendants City of Jersey City, and John Does # 1-25, the said names being fictitious.

John A. Moore, Jersey City, N.J., for defendant Robert Hine.

Timothy J. Hawkes, Allen & Hawkes, Jersey City, N.J., for defendant William Stetson.

Daniel A. D'Alessandro, D'Allessandro & Tutak, Jersey City, N.J., for defendant Charles Belucci.

Samuel R. De Luca, Jersey City, N.J., for defendant Alexander Paternoster.

OPINION AND ORDER

POLITAN, District Judge.

This matter comes before the Court on plaintiff Andrew J. Kyreakakis' motion for attorneys' fees and costs pursuant to the Civil Rights Attorneys' Fees Awards Act of 1976, codified at 42 U.S.C. § 1988.¹ This section allows the Court, in its discretion, to award fees to the prevailing party in an action brought to enforce one of the listed Federal Civil Rights laws. Plaintiff instituted this action on May 20, 1989 charging defendants, individual Jersey City Police officers and the City of Jersey City, with a myriad of violations of the Federal Civil Rights Act of 1871, codified at 42 U.S.C. § 1983.

Plaintiff alleged that he was battered, falsely arrested, imprisoned and maliciously prosecuted for obstructing a governmental function. Plaintiff was convicted of this offense in the Jersey City Municipal Court. The conviction was overturned on appeal. Plaintiff's Complaint also charges the Jersey City Municipal Court system with various acts of conspiracy stemming from the conviction. Plaintiff's motion seeks an award of fees incurred in the defense of the state criminal action, as well as fees incurred in the prosecution of the federal suit.

The present action ended by plaintiff's acceptance, on June 8, 1989 of defendants' Rule 68 Offer of Judgment. Judge Sarokin entered judgment on July 5, 1989. The Court heard oral argument on September 25, 1989 and reserved decision. For the reasons outlined herein, the motion is now GRANTED in part and DENIED in part.

The first issue raised by plaintiff's application concerns the proper construction of a Rule 68 Offer of Judgment. This Rule is a cost-shifting provision designed to encourage settlement and deter litigation.² See Delta Airlines, Inc. v. August, 450 U.S. 346, 352, 101 S.Ct. 1146, 1150, 67 L.Ed.2d 287 (1981). Rule 68 provides in relevant part:

At any time more than 10 days before the trial begins, a party defending against a claim may serve upon the adverse party an offer to allow judgment to be taken against the defending party for the money or property or to the effect specified in the offer, with costs then accrued. If within 10 days after the service of the offer the adverse party serves written notice that the offer is accepted, either party may then file the offer and notice of acceptance together with proof of service thereof and thereupon the clerk shall enter judgment. (Emphasis added.)

Defendants served upon plaintiff an offer of judgment on May 31, 1989. The offer provided:

The defendants, Alexander Paternoster, William Stetson, Charles Belucci, Robert Hine and the City of Jersey City, offers to allow judgment to be taken against them by the plaintiff for $50,000.00 with costs now occurred.

Plaintiff's June 8, 1989 acceptance read:

Pursuant to Federal Rule of Civil Procedure 68, plaintiff, Andrew J. Kyreakakis, hereby accepts the Offer of Judgment for $50,000.00 with costs accrued as of the date of service of the Offer of Judgment.

Defendants argue that plaintiff's motion should be denied because the $50,000.00 Offer of Judgment, by its terms, included attorneys' fees. Plaintiff maintains that because defendants' offer "tracked" the language of the Rule, they offered to "pay plaintiff a judgment in the amount of $50,000.00 and his costs, including attorneys' fees and expenses." Both parties rely on the Supreme Court's decision in Marek v. Chesny, 473 U.S. 1, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1984).

In Marek, the Supreme Court reached two important conclusions concerning Rule 68. First, that "where the underlying statute defines `costs' to include attorneys' fees, ... such fees are to be included as costs for purposes of Rule 68." Id. at 9, 105 S.Ct. at 3016. The present action duplicates Marek in that plaintiff sued under § 1983 and moved for fees pursuant to § 1988 which, as indicated, includes attorneys' fees as costs. Although the plaintiff in Marek rejected defendants' Offer of Judgment, the principle that costs, within the context of Rule 68 and § 1988, includes attorneys' fees, remains directly apposite.

Second, the Supreme Court rejected plaintiff's argument that a valid Rule 68 offer had to itemize the amount tendered for settlement and the amount tendered for costs. Id. at 6, 105 S.Ct. at 3015. The Court reasoned that Rule 68's express intention of encouraging complete settlement of litigation would be furthered by this construction. The Court wrote:

If defendants are not allowed to make lump-sum offers that would, if accepted, represent their total liability, they would understandably be reluctant to make settlement offers.

Id. at 6-7, 105 S.Ct. at 3015-3016; See Evans v. Jeff D., 475 U.S. 717, 733-744, 106 S.Ct. 1531, 1540-1546, 89 L.Ed.2d 747 (1985); ("To promote both settlement and civil rights, we implicitly acknowledge in Marek v. Chesny, the possibility of a trade-off between merits relief and attorneys' fees when we upheld the defendants' lump sum offer...."). Importantly, the Court quoted the language of the Court of Appeals that "many a defendant would be unwilling to make a binding settlement offer on terms that left it exposed to liability for attorneys' fees in whatever amount the court might fix on motion of the plaintiff." Marek, 473 U.S. at 7, 105 S.Ct. at 3015; quoting Chesny v. Marek, 720 F.2d 474, 477 (7th Cir.1983).

Plaintiff distinguishes Marek by arguing that because the instant offer "quoted verbatim the language of Rule 68", unlike the Marek offer which provided "for a sum, including costs now accrued and attorneys' fees", he is entitled to fees in addition to the $50,000.00 judgment already entered. There is nothing, however, in Rule 68 or Marek which supports the contention that by quoting Rule 68, a defendant thereby forfeits the benefits of the Rule. On the contrary, Marek stands for the proposition that a valid Rule 68 offer may not exclude costs and that any judgment entered pursuant to Rule 68 will include costs and thus, when so defined by the substantive statute, attorneys' fees. The Court wrote:

The critical feature of this portion of the Rule is that the offer be one that allows judgment to be taken against the defendant for both the damages caused by the challenged conduct and the costs then accrued. In other words, the drafters' concern was not so much with the particular components of offers, but with the judgments to be allowed against defendants. If an offer recites that costs are included or specifies an amount for costs, and the plaintiff accepts the offer, the judgment will necessarily include costs; if the offer does not state that costs are included and an amount for costs is not specified, the court will be obliged by the terms of the Rule to include in its judgment an additional amount which in its discretion, see Delta Air Lines, Inc. v. August, supra, 450 U.S. at 362 101 S.Ct. at 1155 (Powell, J., concurring), it determines to be sufficient to cover the costs. In either case, however, the offer has allowed judgment to be entered against the defendant both for damages caused by the challenged conduct and for costs. Accordingly, it is immaterial whether the offer recites that costs are included, whether it specifies the amount the defendant is allowed for costs, or, for that matter, whether it refers to costs at all. As long as the offer does not implicitly or explicitly provide that the judgment not include costs, a timely offer will be valid. (Emphasis added.)

Id. at 6, 105 S.Ct. at 3015.

There is a three step method of analysis suggested by this language. First, a valid Rule 68 offer may not "implicitly or explicitly provide that the judgment not include costs." Defendants' offer did not, either implicitly or explicitly, exclude costs. Rather, it provided that the offer was for "$50,000.00 with costs now occurred." This offer was accepted "with costs accrued". The Court cannot find from this language that the offer and acceptance was invalid or that the language "with costs" can be interpreted to mean "without" or to the exclusion of costs.

Second, the Court must determine if the offer "recited that costs are included" and if it did, the judgment will necessarily be with costs and thus attorneys' fees. The third step, the discretionary award of costs by the Court, is only reached if a valid offer "does not state that costs are included and amount for costs is not specified". Id. at 6, 105 S.Ct. at 3015. Under the Marek analysis the calculation of this award should take place before judgment is entered and then should be memorialized in the judgment. The litigation is thus completely ended in accordance with the clear design of Rule 68. The judgment entered in this case contradicts this analysis because it directs the parties to brief the issue of fees and costs after a judgment has been entered. The litigation, therefore, continued.

The difficult task this Court must now perform is to reconcile Marek and Rule 68 with the facts of this case. While it is clear that both Marek and Rule 68 are designed to encourage complete settlement it is equally clear that in certain limited cases...