St. Joseph State Hosp. v. Soliday

• Decision Date: 10 August 1993
• Docket Number: No. WD,WD
• Citation: St. Joseph State Hosp. v. Soliday, 861 S.W.2d 145 (Mo. App. 1993)
• Parties: ST. JOSEPH STATE HOSPITAL, Appellant, v. Stanley SOLIDAY, Respondent. 47052.
• Court: Missouri Court of Appeals

Page 145

861 S.W.2d 145

ST. JOSEPH STATE HOSPITAL, Appellant, v. Stanley SOLIDAY, Respondent.

No. WD 47052.

Missouri Court of Appeals Western District.

Aug. 10, 1993.

Motion for Rehearing and/or Transfer to

Supreme Court Denied Sept. 28, 1993.

Mary Stewart Tansey, Gen. Counsel, Dept. of Mental Health, Jefferson City, for appellants.

Martin M. Bauman, St. Joseph, for respondent.

Before BRECKENRIDGE, P.J., and KENNEDY and LOWENSTEIN, JJ.

LOWENSTEIN, Judge.

This appeal involves an administrative decision of the Missouri Personnel Advisory Board (Board) that denied the Respondent Stanley Soliday's request for attorney's fees under § 536.087, RSMo Cum.Supp.1992. The circuit court reversed the Board's decision and awarded attorney's fees to Soliday. The appellant, St. Joseph State Hospital (Hospital), appeals.

The case developed because the Hospital discharged Soliday from employment. Soliday challenged the dismissal. In his hearing before the Board, Soliday prevailed on the issue of the discharge, but the Board did not allow him attorney fees under § 536.087. Under the statute, "[a] party who prevails in an agency proceeding or civil action arising therefrom, brought by or against the state, shall be awarded those reasonable fees and expenses incurred by that party in the civil action or agency proceeding, unless the court or agency finds that the position of the state was substantially justified or that special circumstances make an award unjust." (emphasis added). Under subsection 3 of the statute, to receive an award of attorney's fees, the prevailing party must show the State's action was not "substantially justified." The mere fact the State lost does not create a presumption of lack of substantial justification on behalf of the State. In subsection 7, a party who is dissatisfied with the agency (here the Board) determination of fees may appeal to the appropriate circuit court. Soliday did just that and the court ruled in his favor. The Hospital, as appointing authority, appeals the decision of the circuit court.

The Hospital is a state institution controlled by the Department of Mental Health. Soliday started working at the Hospital in 1986. In March 1990, Hospital officials discharged Soliday from his position as Coordinator of Treatment Services. The officials cited as reasons for the discharge repeated failure to carry out work, tardiness, absence from duty station, insubordination, willful violation of policy and reporting to work while under the influence of alcohol. Because of tardiness on February 28, 1990, which followed several reprimands for tardiness, the Hospital notified Soliday he could resign or receive a demotion. Soliday chose to resign effective October 1, 1990, with administrative leave during the interim. On the same day, February 28, a co-worker noticed the odor of alcohol on Soliday's breath. Despite his resignation on February 28, the Hospital terminated Soliday effective March 9. In November 1990, the Board disapproved the dismissal. The Board ordered the Hospital reinstate Soliday to his former position until October 1, 1990, "the effective date of his resignation." Soliday and the Hospital appealed to circuit court. The court affirmed the reinstatement, reversed the finding of a resignation, and remanded the case back to the Board to determine Soliday's lost salary. No appeal arose from this judgment.

On remand, Soliday made a § 536.087 application for attorney fees. The Board found Soliday had incurred fees and expenses of $21,512.22 in connection with the action. In addition, the Board found the sum reasonable for the time and services rendered. The Board also found the Hospital had properly investigated the charges leading to dismissal. Although the Hospital presented evidence that would support the Board finding the dismissal was substantially justified in the attorney fee action, during the dismissal portion of the hearing, the Board instead believed Soliday's evidence. Because the Board concluded during the attorney fees portion of the hearing the Hospital was substantially justified in taking the disciplinary action, it denied Soliday's application for attorney fees.

The circuit court judgment found in favor of Soliday and noted that the Board had made an erroneous application of the law and the Board's decision on fees contradicted its earlier opinion.

In the sole point on appeal, the Hospital asks this court to reinstate the Board's decision on fees as being supported by competent and substantial evidence, not arbitrary, and not contrary to the law. § 536.087.7. The matter under review regards a decision on attorney fees and costs. This court may only reverse the decision if the failure to make such an award was arbitrary and capricious, unreasonable, unsupported by competent and substantial evidence or was made contrary to law or in excess of agency jurisdiction. § 536.087.7 Subsection 7 provides for the standard of judicial review of an agency decision, and is similar to the statutes pertaining to judicial review of all other contested agency decisions. Section 536.087 provides a prevailing party may recover reasonable fees and expenses in certain types of cases from a state appointing authority, unless the state's position was substantially justified or special circumstances exist, to make such an award unjust. This statute is patterned after the Federal Equal Access to Justice Act, 28 U.S.C. § 2412 (1982), and our law "has as its purpose to require the state agencies to carefully scrutinize agency and court proceedings. It is designed to increase the accountability of the administrative agencies." State Bd. of Registration for the Healing Arts v. Warren, 820 S.W.2d 564, 565 (Mo.App.1991); Melahn v. Otto, 836 S.W.2d 525, 527 (Mo.App.1992). "Congress passed the Act to encourage relatively impecunious private parties to challenge abusive or unreasonable government behavior by relieving such parties of the fear of incurring large litigation expenses. United States v. 1,378.65 Acres of Land, 794 F.2d 1313, 1314-15 (8th Cir.1986). The term substantially justified, "... is not 'justified to a high degree,' but rather, 'justified in substance or in the main'--that is justified to a degree that could satisfy a reasonable person." Pierce v. Underwood, 487 U.S. 552, 565, 108 S.Ct. 2541, 2550, 101 L.Ed.2d 490 (1988). In other words, there must be a "reasonable basis both in law and fact," for the government's action. Id. Under federal law, the government must bear the burden to defeat the claim for fees and costs "not merely that its position was marginally reasonable; its position must be clearly reasonable, well founded in law and fact, solid though not necessarily correct." United States v. 1378.65 Acres, 794 F.2d at 1318; Foley Constr. Co. v. U.S. Army Corps of Engr's, 716 F.2d 1202, 1204 (8th Cir.1983) cert. denied 466 U.S. 936, 104 S.Ct. 1908, 80 L.Ed.2d 457 (1984), reh'g denied 467 U.S. 1246, 104 S.Ct. 3525, 82 L.Ed.2d 832 (1984). There must be an indication the defendant "lacked good faith in taking its position in this litigation." Savage v. Toan, 636 F.Supp. 156, 157 (W.D.Mo.1986). As is the case in the Missouri statute, the...