Walker v. City of Mesquite, Tx

• Decision Date: 19 November 2002
• Docket Number: No. 01-11380.,01-11380.
• Citation: 313 F.3d 246
• Parties: Debra WALKER; et al., Plaintiffs, Debra Walker; Jeanette Washington; Hazel Williams; Zelma Lang; Renita Brown; Lillie Thompson, Plaintiffs-Appellees, Tracey Smith, Intervenor, Plaintiff-Appellee, v. CITY OF MESQUITE, TX; et al., Defendants, v. Highlands of McKAMY IV and V Community Improvement Association; Ginger Lee; Preston Highlands Homeowners' Association, Inc.; David Beer, Appellants. Highlands of McKAMY IV and V Community Improvement Association; Ginger Lee; Preston Highlands Homeowners' Association, Inc.; David Beer, Plaintiffs-Appellants, v. The Housing Authority of the City of Dallas, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

313 F.3d 246

Debra WALKER; et al., Plaintiffs, Debra Walker; Jeanette Washington; Hazel Williams; Zelma Lang; Renita Brown; Lillie Thompson, Plaintiffs-Appellees, Tracey Smith, Intervenor, Plaintiff-Appellee, v. CITY OF MESQUITE, TX; et al., Defendants, v. Highlands of McKAMY IV and V Community Improvement Association; Ginger Lee; Preston Highlands Homeowners' Association, Inc.; David Beer, Appellants.

Highlands of McKAMY IV and V Community Improvement Association; Ginger Lee; Preston Highlands Homeowners' Association, Inc.; David Beer, Plaintiffs-Appellants, v. The Housing Authority of the City of Dallas, Defendant-Appellee.

No. 01-11380.

United States Court of Appeals, Fifth Circuit.

November 19, 2002.

COPYRIGHT MATERIAL OMITTED

Michael M. Daniel, Dallas, TX, for Plaintiffs-Appellees and Smith.

Michael P. Lynn, Eric Wolf Pinker, John Thomas Cox, III (argued), Russell James DePalma, Lynn, Tillotson & Pinker, Dallas, TX, for Appellants.

Joseph G. Werner (argued), Debra Janece McComas, Aimee Michelle Minick, Haynes & Boone, Dallas, TX, for Housing Authority of City of Dallas.

Appeal from the United States District Court for the Northern District of Texas.

Before EMILIO M. GARZA and CLEMENT, Circuit Judges, and HUDSPETH^*, District Judge.

EMILIO M. GARZA, Circuit Judge:

This case arises from ongoing litigation between a class of plaintiffs (the "Walker plaintiffs") and the Dallas Housing Authority (DHA), the United States Department of Housing and Urban Development (HUD), and the City of Dallas (collectively, "the defendants"). In the primary litigation, the defendants were found liable for unconstitutional racial discrimination and segregation in Dallas's public housing programs. The result was a remedial order from the district court that, in relevant part, ordered DHA to construct or acquire public housing projects in "predominantly white" neighborhoods.

Two homeowners and their homeowners' associations (collectively, the "Homeowners") then sued for declaratory and injunctive relief to prevent construction of these new projects adjacent to their neighborhoods. The Homeowners challenged the remedial order as unconstitutional. In a separate action, the Walker plaintiffs sought declaratory relief that the remedial order was constitutional. The district court found against the Homeowners and for the Walker plaintiffs in the two actions, respectively. The Homeowners appealed, and we partially vacated the remedial order, reversed the declaratory judgment, and remanded for revision of the order. A more thorough recitation of the facts and issues of this complicated case can be found in our decision, Walker v. City of Mesquite, 169 F.3d 973 (5th Cir.1999).

Upon remand, the district court modified the remedial order to comply with our instructions. The Homeowners next sought attorney's fees in excess of a quarter of a million dollars from the DHA under 42 U.S.C. § 1988. The district court denied fees, holding that (1) the Homeowners were not a "prevailing party" within the meaning of § 1988; (2) special circumstances existed which made it unjust to impose fees upon the DHA; and (3) the Homeowners' fee request had not been appropriately substantiated. See Walker v. HUD, No. 3-85-CV-1210-R, 3-96-CV-1866-R, 2001 WL 1148109 (N.D.Tex. Sept.18, 2001). The propriety of § 1988 attorney's fees for the Homeowners is the primary issue in this appeal.

Section 1988 provides in relevant part: "In any action or proceeding to enforce a provision of [§ 1983], the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs." A litigant is not eligible for attorney's fees unless it is a "prevailing party." Hewitt v. Helms, 482 U.S. 755, 759, 107 S.Ct. 2672, 96 L.Ed.2d 654 (1987). In Hewitt, the Supreme Court held that, at a minimum, a plaintiff must receive "some relief on the merits of his claim" in order to prevail. Id. at 760, 107 S.Ct. 2672. Texas State Teachers Ass'n v. Garland Independent School District, 489 U.S. 782, 109 S.Ct. 1486, 103 L.Ed.2d 866 (1989), reaffirmed the floor set in Hewitt and noted that the plaintiff must be able to point to "a resolution of the dispute which changes the legal relationship between itself and the defendant." Id. at 791-92, 107 S.Ct. 2672. In fact, Texas State Teachers characterized the "touchstone" of the prevailing party inquiry as whether there was a "material alteration of the legal relationship of the parties." Id. at 792-93, 109 S.Ct. 1486.

Three years later, the Court returned to this issue in Farrar v. Hobby, 506 U.S. 103, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992). Farrar provided one of the clearest formulations of the prevailing party jurisprudence. To qualify as a prevailing party, the plaintiff must (1) obtain actual relief, such as an enforceable judgment or a consent decree; (2) that materially alters the legal relationship between the parties; and (3) modifies the defendant's behavior in a way that directly benefits the plaintiff at the time of the judgment or settlement. Id. at 111-12, 113 S.Ct. 566. Most recently, in Buckhannon Board and Care Home, Inc. v. West Virginia Department of Health and Human Resources, 532 U.S. 598, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001), the Court reaffirmed that both judgments on the merits and settlement agreements enforced through consent decrees were sufficient to create a prevailing party. Id. at 604, 121 S.Ct. 1835. Again, the Court stated that the awarded relief for which fees were sought must materially alter the "legal relationship of the parties." Id. (citing Texas State Teachers, 489 U.S. at 792-93, 109 S.Ct. 1486).

In this case, the Homeowners sought declaratory relief, alleging the remedial order was unconstitutional because it included race-based distinctions and was not narrowly tailored. They also sought a temporary restraining order, a preliminary injunction, and a permanent injunction to prevent the DHA from purchasing and/or constructing public housing on the disputed sites. The district court denied the Homeowners the relief they sought and, in response to the Walker plaintiffs' suit, declared the remedial order constitutional. On appeal, we partially vacated the district court's remedial order, reversed the declaratory judgment, and stayed the construction of the housing projects until the district court revised the order. Our opinion also included a detailed discussion of how the remedial order should be reformulated. Specifically, we held that the race-based portion of the order was unconstitutional because "there are promising, non-racially discriminatory ways to continue desegregating public housing in Dallas." Walker, 169 F.3d at 987. Upon remand, the Walker plaintiffs proposed detailed modifications to the remedial order, and the district court ultimately vacated the provisions of the order that contained the "predominantly white" requirement. In short, the Homeowners achieved exactly the outcome they desired. Thus, the district court erred when it held that the Homeowners were not a prevailing party.

The DHA argues that the Homeowners cannot be a prevailing party because our holding was not "judicial relief" for the purposes of § 1988. We find this argument to be without merit. Although the permanent injunction sought by the Homeowners was never granted, this court held, as a matter of law, that the remedial order was unconstitutional for precisely the reasons argued by the Homeowners in their request for declaratory relief. On its face, our ruling entitled the Homeowners to relief. Thus, the district court's ultimate vacation of the offending provisions of the order is the functional equivalent of an enforceable judgment for the Homeowners and against the DHA.¹ As to the second and third requirements of the prevailing party test, there can be no doubt that the Homeowners' suit both materially altered the legal relationship between the DHA and the Homeowners and directly benefitted the Homeowners at the time of the judgment. The Homeowners suit was not only a "substantial factor" in achieving reformation of the unconstitutional order, it was arguably the only factor. See Foreman v. Dallas County, 193 F.3d 314, 321 (5th Cir.1999) (citation omitted).

Notwithstanding the Homeowners' status as a prevailing party, attorney's fees should not be awarded if "special circumstances would render such an award unjust." Hensley v. Eckerhart, 461 U.S. 424, 429, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983) (citation omitted); Newman v. Piggie Park Enters., 390 U.S. 400, 402, 88 S.Ct. 964, 19 L.Ed.2d 1263 (1968). The district court adopted the magistrate judge's conclusions that the DHA should not be liable for fees because it was faced with the unattractive choice of either violating the district court's remedial order or obeying the order and exposing itself to potential liability for the fees and expenses of the Homeowners. Walker v. HUD, 2001 WL 1148109, at *2-3. We have repeatedly held that a state actor's good faith compliance with an official or legal requirement that is unconstitutional is not a special circumstance that justifies the denial of attorney's fees. See Espino v. Besteiro, 708 F.2d 1002, 1005-06 (5th Cir.1983); Riddell v. Nat'l Democratic Party, 624 F.2d 539, 545-46 (5th Cir.1980); Johnson v. Mississippi, 606 F.2d 635, 637 (5th Cir.1979). Additionally, the DHA did not litigate the unconstitutional terms of the remedial order; it instead chose not to contest the Walker plaintiffs' motion for summary judgment. See Walker, 169 F.3d at 977. Given the DHA's ongoing involvement in this litigation, it seems particularly inappropriate to deny the Homeowners attorney's fees because the DHA acquiesced to a remedy that infringed upon the Homeowners' rights.² Thus, the special circumstances cited by the district court in this case are insufficient to justify the denial of an award of attorney's fees.

Finally, the district court found that the...