Court Opinion

ID: 8915841
Source: CourtListenerOpinion
Date Created: 2022-11-27 04:59:56.555039+00
Date Added: 2024-06-11T17:08:58.531599
License: Public Domain

SETH, Chief Judge.
This appeal arises from a successful claim under 42 U.S.C. § 1983. Judgment was rendered for the plaintiffs on July 6, 1981. On July 13, plaintiffs filed a motion requesting attorney’s fees as permitted by 42 U.S.C. § 1988. This motion was denied on July 24. On August 3, plaintiffs filed a motion requesting the district court to reconsider and alter the order denying attorney’s fees. This motion was denied on August 18. On September 3, plaintiffs filed a notice of appeal to this court which recited that the appeal was to the original judgment, the July 24 denial of attorney’s fees and the August 18 refusal to alter that denial. The appeal from the attorney’s fee determination is the only significant issue timely raised.
The Supreme Court held in White v. New Hampshire Dept. of Employment Security, 455 U.S. 445, 102 S.Ct. 1162, 71 L.Ed.2d 325, that a motion for attorney’s fees is not a Rule 59 motion because the question of attorney’s fees is “uniquely separable” from the merits of a case. Because of this separability, the plaintiff in White was permitted to file a motion for attorney’s fees four-and-a-half months after the entry of a final judgment on the merits. Under White a motion for attorney’s fees is not tied in any way to the time for appeal of the underlying case, and will not be barred solely because that time has run. The decision in White thus changed the practice in this circuit which had been described in Gurule v. Wilson, 635 F.2d 782 (10th Cir.), and in Glass v. Pfeffer, 657 F.2d 252 (10th Cir.).
Therefore, in the present case, the finality of the July 6 judgment on the merits does not bar an appeal on the question of attorney’s fees timely taken. For purposes of an appeal on that ’ question, it is the finality of the July 24 order which is important. The time for appeal from this order was tolled by, the plaintiffs’ August 3 motion asking for a reconsideration of the denial of attorney’s fees. This motion, because it went to the essential subject of the July 24 order, operated as a Rule 59 motion with respect to that order and tolled the time for appeal. See 9 Moore’s Federal Practice ¶ 204.12(1), at 4-67 (2d ed.). (A motion which draws into question the correctness of a judgment is a Rule 59 motion, no matter what the label.) Therefore, an appeal from the July 24 order denying attorney’s fees is properly before us.
This issue raises the question whether the district court acted within its discretion in denying attorney’s fees to a prevailing party in a § 1983 action. The statute permitting an award of attorney’s fees in such cases (42 U.S.C. § 1988) reads, in part:
*931“In any action or proceeding to enforce a provision of section . . . 1983 . . ., the court, in its discretion, may allow the prevailing party ... a reasonable attorney’s fee as part of the costs.”
The discretion which this statute allows the court has been construed narrowly. Chicano Police Officer’s Ass’n. v. Stover, 624 F.2d 127 (10th Cir.). The Supreme Court has held with respect to a similar statute that a prevailing party should “ordinarily recover an attorney’s fee unless special circumstances would render such an award unjust.” Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 88 S.Ct. 964, 19 L.Ed.2d 1263, at 402, 88 S.Ct. at 966. Because of these limitations on the discretion to deny attorney’s fees, we must examine the lower court’s position to determine whether special circumstances were present.
The district court demonstrated a consideration of both the policy and the case law surrounding judicial discretion to deny attorney’s fees in civil rights actions. The order denying fees was accompanied by a memorandum stating why the court believed that a grant of attorney’s fees in this ease was unwarranted and would not serve the policies behind the statute. The important factor in the district court’s decision was the contingent fee agreement between plaintiffs and their counsel. This agreement, in the court’s opinion, made it unnecessary for any award of fees. An award was unnecessary in its view because the contingent fee arrangement itself fully served the congressional policy of enabling plaintiffs to protect their civil rights. Thus the court decided that fees awarded over and above the percentage set out in the contingent fee arrangement would constitute a windfall to the plaintiffs’ attorney at the expense of the defendants.
The congressional policy behind § 1988 is set forth in Senate Report No. 94-1011 (Oct. 1, 1976), reprinted in [1976] U.S.Code Cong. & Ad.News 5908. The report states that civil rights laws depend heavily on private enforcement, and that the purpose of the law is to provide plaintiffs with an opportunity to enforce their rights undeterred by the possibility of large attorney’s fees. The report contains a brief discussion of how to determine reasonable rates, and approves of standards that “are adequate to attract competent counsel, but which do not produce windfalls to attorneys.” Id., at 5913. This caution against “windfalls” for attorneys shows that Congress was exclusively interested in making civil rights actions more attractive to prospective plaintiffs. Congress was not trying to get these cases into court by making them lucrative to attorneys. Therefore, an award of attorney’s fees which benefits a plaintiff’s attorneys rather than a plaintiff does not further congressional policy. Such awards may, in the discretion of the court, be denied.
A grant of attorney’s fees where a contingent fee agreement has been entered into without more may result in something of a windfall for attorneys. It relieves the attorney of part of the risk undertaken by the nature of the contingent fee contract, and preserves to the attorney the benefits of such a contract. It is apparent that if the case is lost the fee is also lost under either a contingent fee agreement or § 1988. If the case is won the attorney need not be content with the percentage for which he contracted as it remains the floor. A claim under § 1988 would provide the chance for a greater amount. Yet he would still be entitled to his percentage under the contingent fee contract, even if that percentage exceeded the reasonable value of his services. The attorneys here assert that they have the option to take the higher figure. This cannot be done. An automatic allowance of attorney’s fees despite contingent fee agreements would thus have the effect of insuring an attorney without necessarily improving the position of the prevailing party. The admonition of the Senate Report to avoid windfalls to attorneys indicates that this was not the congressional intent behind § 1988.
Plaintiffs argue that an award of attorney’s fees under § 1988 would actually improve the position of the original plaintiffs, at least indirectly. An oral modification of *932the contingent fee agreement in this case permitted a dollar for dollar setoff against the fee percentage of any § 1988 award. This consequence could have followed regardless of the change. Hamilton v. Ford Motor Co., 636 F.2d 745 (D.C.Cir.). Thus the amount that the original plaintiffs had to pay their attorneys was lessened to the extent that the fees were granted under § 1988. This increase in the original plaintiffs’ “take home” award, their attorneys contend, is a sufficient benefit to justify an award of attorney’s fees.
Under the contingent fee agreement, the original plaintiffs had agreed to pay one-third of their award, or $20,000. If attorney’s fees had been awarded in the amount requested of the court, plaintiffs’ attorneys would have obtained over $35,000. Approximately $15,000 would have passed from the defendants to the plaintiffs’ attorneys with no benefit to plaintiffs, this despite the mutually agreed upon arrangement for fees. The district court can properly avoid such a result which taxes the losing party without furthering the purposes of § 1988. Buxton v. Patel, 595 F.2d 1182 (9th Cir.); Zarcone v. Perry, 581 F.2d 1039 (2d Cir.).
However, the existence of a contingent fee contract does not of itself constitute “special circumstances” which would render an award of attorney’s fees unjust under Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 88 S.Ct. 964, 19 L.Ed.2d 1263. We find nothing in the legislative history nor in the decisions to lead to this result. Such a contract cannot, however, serve only as a floor for fees and to give the prevailing attorney two chances for fees. The contingent fee contract at the least must evidence the maximum fee which the plaintiff and the attorney felt necessary to secure the representation. This is the maximum contemplated by Congress to accomplish the result it sought.
Thus we must hold that the trial court was in error to use the existence of the contingent contract as a “special circumstance” to deny the award of fees. Fees under § 1988 are ordinarily awarded to the prevailing party and these are over and above the judgment. However, if the plaintiff and his or her attorney have agreed on a figure for fees, or a percentage, this should constitute the maximum allowable fee. If the agreed fee is above what is reasonable under § 1988 as determined by the court, only the reasonable portion may be the awarded amount.
The judgment must be REVERSED and the case is REMANDED for further proceedings.