Taylor Group, Inc. v. Johnson

• Decision Date: 28 February 1996
• Docket Number: CA No. 94-D-1254-S.
• Citation: 919 F. Supp. 1545
• Parties: The TAYLOR GROUP, INC., Plaintiff, v. Roger W. JOHNSON, Administrator of the General Services Administration; Thurman M. Davis, Regional Administrator for the General Services Administration; Thomas Russell, Contracting Officer; Carol M. Browner, Administrator of the Environmental Protection Agency; and Jean Mills, Contracting Officer, Defendants.
• Court: U.S. District Court — Middle District of Alabama

919 F. Supp. 1545

The TAYLOR GROUP, INC., Plaintiff, v. Roger W. JOHNSON, Administrator of the General Services Administration; Thurman M. Davis, Regional Administrator for the General Services Administration; Thomas Russell, Contracting Officer; Carol M. Browner, Administrator of the Environmental Protection Agency; and Jean Mills, Contracting Officer, Defendants.

CA No. 94-D-1254-S.

United States District Court, M.D. Alabama, Southern Division.

February 28, 1996.

COPYRIGHT MATERIAL OMITTED

James H. McLemore, Montgomery, AL and Karl Dix, Jr., Atlanta, GA, for plaintiff.

Kenneth E. Vines, Asst. U.S. Attorney, Montgomery, AL, for defendants.

MEMORANDUM OPINION AND JUDGMENT

DE MENT, District Judge.

Before the court is The Taylor Group, Inc.'s ("plaintiff") application filed November 14, 1994, for attorneys' fees, expenses and costs under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412. Under the EAJA, a "prevailing party in any civil action" may seek payment for fees, expenses and costs incurred by the attorneys in the litigation. 28 U.S.C. § 2412(a)(1) & (b). Such an award is mandatory unless the court "finds that the position of the United States was substantially justified or that special circumstances make an award unjust." Id. at § 2412(d)(1)(B).

In Taylor v. Johnson, 915 F.Supp. 295 (M.D.Ala.1995),¹ the court found that under the EAJA, the plaintiff was a "prevailing party" and that the United States had failed to sustain its burden of showing that its position was substantially justified. Based on the authority of National Treasury Employees Union v. Internal Revenue Service, 735 F.2d 1277 (11th Cir.1984), the court, however, reserved ruling on whether "special circumstances" warranted a denial of attorneys' fees, expenses and costs. In National Treasury Employees Union, the Eleventh Circuit held that where, as here, a settlement agreement is silent regarding fees and the record does not contain an adequate factual basis to conclude that the prevailing party waived attorneys' fees or that the United States assumed attorneys' fees were not wanted, the court should hold an evidentiary hearing unless the parties can stipulate to the relevant facts. Id. at 1279.

Hence, in Taylor 1, the court ordered the parties to enter into a joint stipulation of the facts regarding the intent and discussions, if any, of attorneys' fees during settlement negotiations. The parties have now done so and additionally provided several attorney affidavits and declarations. The court finds that the additional evidence provides a sufficient factual basis to rule on the plaintiff's EAJA application, thus, rendering a hearing unnecessary. For the reasons discussed herein, the court grants, in part, and denies, in part, the plaintiff's application and awards $16,323.41 in attorneys' fees, expenses and costs for work performed in connection with this case.

FACTS

Complete findings of fact are contained in Taylor 1, which the court herein incorporates by reference. The additional evidence submitted by the parties, which the court finds dispositive, is as follows:

(1) The parties have stipulated that "at no time prior to or during the settlement discussions was the subject of attorneys' fees, costs, or expenses raised by either party." Stipulation at ¶ 8.

(2) Lydia R. Hakken, counsel for the General Services Administration ("GSA"), filed a Declaration and therein states that "it was the understanding of GSA that the Settlement Agreement constituted the entire agreement between the parties and that it did not exclude attorneys' fees." Hakken's Declaration at ¶ 5.

(3) Kenneth R. Pakula, counsel for the Environmental Protection Agency ("EPA"), filed a Declaration and therein states that "the subject of attorneys' fees, costs, and expenses was not discussed prior to, or during, settlement discussions. At no point in time did counsel for the plaintiff indicate that they would seek to be reimbursed for attorneys' fees, costs or expenses." Pakula's Declaration at ¶ 4.

(4) The parties have stipulated that the plaintiff's "first request for reimbursement of its attorneys' fees ... was made in its application for Fees and Other Expenses Under the Equal Access to Justice Act. Prior to this application, the plaintiff had not requested reimbursement of its attorneys' fees." Stipulation at ¶ 9.

(5) The parties also have stipulated that "counsel for the plaintiff drafted the Settlement Agreement, provided draft copies to counsel for GSA and EPA for comment, and coordinated the Settlement Agreement between the parties." Id. at ¶ 6.

(6) In an affidavit, counsel for the plaintiff (Karl Dix) explains his reasons for excluding a request for attorneys' fees, expenses and costs in the complaint and for failing to discuss the same during settlement negotiations. He states that he thought such a request in the complaint "would be premature," since such a request "could only be ruled upon by the Court after final adjudication of the matter." Dix's Aff. at ¶ 2. He further explains as follows:

I remember that we were rushed to finalize the settlement since the scheduled preliminary injunction hearing was driving the resolution of this matter. Accordingly, I never mentioned the recovery of attorneys' fees during the settlement of this matter since the plaintiff did not request reimbursement of attorneys' fees in its Complaint and I viewed an Equal Access to Justice Act fee application as a proceeding separate and apart from the underlying litigation which would be heard and resolved after the litigation had been concluded as required by statute. Raising and negotiating the fee application issue, I feared, would expand the scope of the negotiations and, potentially, fatally undermine the resolution of this matter since resolution would be delayed beyond the hearing date.

Id. at ¶ 4.

(7) The settlement agreement executed between the parties includes the following clause: "This Settlement Agreement contains the entire agreement and understanding between the plaintiff and Defendants relating to the subject matter contained herein, and it may not be altered, amended, or modified in any respect or particular whatsoever except by writing duly...."

DISCUSSION

I. Special Circumstances

In determining the plaintiff's right to attorneys' fees, expenses and costs under the EAJA, the only issue remaining is whether the United States has met its burden of showing that "special circumstances" make an award under the EAJA inappropriate in this case. 28 U.S.C. § 2412(d)(1)(B). The court finds that the United States has failed to sustain its burden.

The "special circumstances" exception under the EAJA functions as "`safety valve'" and serves at least two purposes. National Treasury Employees Union, 735 F.2d at 1278 (citing 1980 U.S.Code Cong. & Ad.News at 4990). First, the exception "`helps insure that the Government is not deterred from advancing in good faith the novel but credible extensions and interpretations of the law that often underlie vigorous enforcement efforts.'" Id. (brackets supplied). Second, "`it ... gives the court discretion to deny awards where equitable considerations dictate an award should not be made.'" Id.

Here, the United States asserts that the following "special circumstances" render an award under the EAJA inequitable: (1) the plaintiff's failure to discuss attorneys' fees, expenses and costs during settlement negotiations; (2) the omission of attorneys' fees, expenses and costs in the settlement agreement coupled with the so-called "merger clause" contained therein; and (3) the plaintiff's failure to make a demand in the complaint for attorneys' fees, expenses and costs. To avoid liability under the EAJA, the United States bears the burden of showing the existence of "special circumstances." Kunz Constr. Co. v. United States, 16 Cl.Ct. 431, 434 (1989), aff'd, 899 F.2d 1227 (1990). A review of the applicable case law indicates that courts seldom invoke the "special circumstances" exception. See Knights of Ku Klux Klan v. East Baton Rouge Parish School Bd., 643 F.2d 1034, 1041 (5th Cir.), rev'd on other grounds, 454 U.S. 1075, 102 S.Ct. 626, 70 L.Ed.2d 609 (1981) (decided under the Civil Rights Attorney's Fees Awards Act of 1976, 42 U.S.C. § 1988, as amended, which has been interpreted to contain a "special circumstances" exception as under the EAJA).

Here, it is undisputed that neither party raised the issue of attorneys' fees, expenses and costs throughout the settlement negotiations. Furthermore, the attorneys for the respective parties have submitted evidence setting forth their "intents" regarding the right of the plaintiff to seek attorneys' fees, expenses and costs in a separate action. Not surprisingly, the intents of opposing counsel lie on opposite ends of the spectrum. That is, counsel for the plaintiff (Karl Dix) represents that he never intended to waive such a right, while counsel representing the interests of the United States states that they assumed that the absence of any discussion thereof foreclosed a subsequent demand in an EAJA application. Based upon the circumstances presented in this case, the court finds that the reasons underlying the opposing parties' assumptions are plausible and believable. That is, the court does not question the truth or veracity of the respective attorneys' allegations.

In National Treasury Employees Union, the Eleventh Circuit suggested, without holding, that a denial of fees may be warranted where the prevailing party "remained silent on attorney's fees during settlement discussions for fear their injection would upset the settlement." 735 F.2d at 1279. The Eleventh Circuit continued by stating, however, that a waiver should not be found if counsel for the prevailing party "merely overlooked" the statutory right to fees or if the United States deliberately did not mention costs in order to "take advantage of this oversight." Id.

Here, the court finds that neither ...