Court Opinion

ID: 187038
Source: CourtListenerOpinion
Date Created: 2011-02-05 03:12:01+00
Date Added: 2024-06-11T13:08:57.677811
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 United States Court of Appeals
           FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 11, 2007                  Decided November 2, 2007

                              No. 06-5173

                           PATRICIA L. SIMS,
                             APPELLANT

                                     v.

   STEPHEN L. JOHNSON, ADMINISTRATOR, UNITED STATES
         ENVIRONMENTAL PROTECTION AGENCY,
                       APPELLEE

          Appeal from the United States District Court
                  for the District of Columbia
                        (No. 97cv00570)

     Bruce J. Terris argued the cause for appellant. With him on
the briefs was Sameena S. Majeed.

     Peter S. Smith, Assistant U.S. Attorney, argued the cause
for appellee. With him on the brief were Jeffrey A. Taylor, U.S.
Attorney, and R. Craig Lawrence, Assistant U.S. Attorney.

    Before: ROGERS, GARLAND and KAVANAUGH, Circuit
Judges.
                               2

    Opinion for the Court filed by Circuit Judge ROGERS.

    Dissenting opinion filed by Circuit Judge KAVANAUGH.

     ROGERS, Circuit Judge: Patricia L. Sims appeals the denial
of her motion for a declaratory judgment concerning the
payment of attorneys’ fees. In 1999, the parties entered into a
settlement of Sims’ discrimination claims that left for future
resolution the amount and terms of the government’s payment
of attorneys’ fees and costs. In 2003, a Magistrate Judge found
that Sims’ former attorney and the government had reached a
compromise settlement regarding attorneys’ fees. The record,
however, does not reveal the terms of the compromise
settlement, which are disputed and underlie Sims’ request for
declaratory relief. We therefore must vacate the order denying
Sims’ motion and remand the case to the district court.

                               I.

     In 1997, Sims sued the Environmental Protection Agency
pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C.
§ 2000e et seq., as amended, and the Rehabilitation Act of 1973,
29 U.S.C. § 791 et seq., as amended. By letter agreement of
March 25, 1999, the parties resolved Sims’ substantive claims
and required the government to pay her reasonable attorneys’
fees and costs. The amount and terms of that payment were left
for future negotiations. On June 9, 2000, the district court
enforced the letter agreement at Sims’ request, finding that the
parties had reached an agreement in principle on the material
terms of a settlement and dismissing the case without prejudice.
When Sims subsequently moved to reopen the case, the district
court, on October 4, 2000, restored the case to the active docket
to address the remaining issues, including attorneys’ fees.

    On March 28, 2001, David H. Shapiro, as Sims’ former
                                 3

attorney, filed a motion for an award of reasonable attorneys’
fees of $150,269.21, not including Sims’ out-of-pocket expenses
or fees of her initial, deceased counsel (Gary Simpson). Shapiro
also filed a motion to withdraw from the case, citing a
breakdown in his relationship with Sims as she refused to let
him settle the fees issue with the government. The government,
in turn, stated that it was “impossible to respond” because the
motion appeared to have been filed by counsel alone, without
Sims’ support or consent, noting that “[t]he law is clear . . . that
an attorney fee award under Title VII is due and payable to the
plaintiff, not to the plaintiff’s counsel,” Resp. at 2, and that “it
cannot reach such an agreement without the consent of
Plaintiff,” id. at 4. On May 23, 2001, the district court referred
these and other related motions to a Magistrate Judge “for
settlement and resolution of the currently pending motions.”

     Before the Magistrate Judge, Richard L. Swick (Shapiro’s
law partner) and Bruce L. Terris, representing Sims, stated that
“a comprehensive motion” on attorneys’ fees and costs would be
filed. Tr. Mar. 27, 2002 at 3. Terris stated that there was no
objection to Shapiro’s motion to withdraw, while noting
outstanding issues regarding how the substantive provisions of
the letter agreement were being carried out. Id. at 2-3. The
Magistrate Judge observed that the latter were for the district
court judge to resolve and directed Sims to file an amended
motion for attorneys’ fees, which she did on April 24, 2002.
That motion requested the payment of three amounts: $2,018.00
“directly payable to Ms. Sims for out of pocket expenses she
incurred directly”; $150,269.12 for attorneys’ fees and costs
incurred by Swick & Shapiro; and $9,613.75 for attorneys’ fees
and costs incurred for services by Sims’ initial attorney
(Simpson).

   By memorandum order of February 28, 2003, the
Magistrate Judge granted the motion for a settlement conference
                                4

and Shapiro’s motion to withdraw and “denied as moot” Sims’
amended motion for attorneys’ fees. The memorandum order
recited that there had been a “telephonic status conference” on
February 24, 2002 during which “counsel for Defendant and
David Shapiro’s law partner [Richard L. Swick] represented that
they had agreed on a compromise settlement on the attorneys’
fees issue.” Mem. Order Feb. 28, 2003 at 2. “Counsel for
Plaintiff and . . . Defendant also represented that the issue of
reimbursement of Plaintiff’s costs is not disputed by either
party.” Id.

     Over two years later, by letter of May 20, 2005 to
government counsel, former counsel Swick enclosed a signed
release for fees due in Sims’ case and confirmed that the
payment of $120,000 for attorneys’ fees and costs due to Swick
& Shapiro (and including any fees and costs due to Sims’ initial
attorney’s estate) should be paid directly to the law firm’s trust
account. The release stated: “This Release constitutes the
complete and full agreement between the parties as to costs and
fees accrued prior to and including February 28, 2003 and
associated with this lawsuit.” On September 22, 2005, Swick
informed Sims that the government had paid the law firm and he
enclosed a check to reimburse Sims for her expenses. On
September 27, 2005, the government sent Sims a check for
$8,600, pursuant to the 1999 letter agreement, in settlement of
her discrimination claims.

     On December 7, 2005, Sims filed a motion for a declaratory
judgment alleging that the government’s payment to her former
attorney’s law firm was contrary to her instructions, not made
pursuant to a court order or any agreement by her, and
“therefore does not constitute the payment for the attorneys’ fees
and expenses of plaintiff in this case.” Mot. for Decl. J. at 1.
The accompanying memorandum stated that “[t]he payment was
made even though plaintiff’s present counsel, Bruce J. Terris,
                                5

repeatedly informed both Swick & Shapiro and defendant’s
counsel, that plaintiff opposed any payment of attorneys’ fees
unless and until plaintiff was protected from the payment of
income tax on money which would not come to her.” Mem. at
1. Attached was Terris’ affidavit setting forth his contacts with
Swick and government counsel. The district court denied the
motion, ruling that the government’s payment was made
pursuant to its obligations under the parties’ 1999 letter
agreement, which had been enforced at Sims’ request, and the
Magistrate Judge’s 2003 memorandum order. Sims appeals.

                               II.

     As a threshold matter, the government contends that the
court lacks jurisdiction over the current dispute because Sims’
appeal is untimely and, alternatively, that even if the current
dispute is subject to judicial review, exclusive jurisdiction lies
in the United States Court of Claims. Sims appropriately
responds that her appeal is timely because it was filed within
sixty days of the denial of her motion, see FED. R. APP. P.
4(a)(1)(B). Sims’ underlying case has never been formally
dismissed either by the district court pursuant to Federal Rule of
Civil Procedure 58(a), see Bailey v. Potter, 478 F.3d 409, 411
(D.C. Cir. 2007) (citing Bankers Trust Co. v. Mallis, 435 U.S.
381, 384-85 (1978)), or by stipulation of the parties pursuant to
Federal Rule of Civil Procedure 41(a). Further, because Sims’
motion does not assert a breach of contract claim, the Court of
Claims does not have exclusive jurisdiction and the
government’s reliance on Hansson v. Norton, 411 F.3d 231
(D.C. Cir. 2005), is misplaced. Finally, given the ambiguity in
the record, to which we now turn, it is premature to characterize
Sims’ motion for declaratory relief, as the government suggests,
as a ploy to avoid the strictures of Federal Rule of Appellate
Procedure 4(a). See, e.g., Glinka v. Maytag Corp., 90 F.3d 72,
74 (2d Cir. 1996).
                                6

     In denying Sims’ motion for a declaratory judgment, the
district court concluded that Sims was trying to rewrite history
by suggesting that at the time of the government’s payment of
$120,000 the parties were still negotiating the contours of a
global settlement of the merits of her case. Observing that the
underlying merits had long been settled by the parties’ letter
agreement that had been enforced at Sims’ request, the district
court noted that the Magistrate Judge had “ruled that the parties
had reached an agreement – effectively closing the case.” Mem.
Op. Apr. 11, 2006 at 14. Inasmuch as the parties had not
reached any new settlement of the issues, the district court
viewed the government as “merely issu[ing] the payments
contemplated by, and pursuant to, the pre-existing agreements
in this case, as was ordered by both this [c]ourt and [the
Magistrate Judge].” Id. at 16. Because it deemed the case over,
the district court rejected Sims’ argument, based on Evans v. Jeff
D., 475 U.S. 717, 730-31 & n.20 (1986), that she had the right
to waive the right to seek attorneys’ fees. The district court
observed that if Sims wanted protection against potential tax
consequences of the payment of her attorneys’ fees, then she
“should have bargained for such provisions during the
settlement process or during the mediation before [the
Magistrate Judge].” Id. at 17.

     The district court’s interpretation and enforcement of its
orders is entitled to deference, for our review is limited to
determining whether there was an abuse of discretion. See Nix
v. Billington, 448 F.3d 411, 414 (D.C. Cir. 2006) (citing
Gardner v. United States, 211 F.3d 1305, 1308 (D.C. Cir.
2000)). The record supports the district court’s finding that the
merits of Sims’ discrimination claims had been settled by the
parties and enforced by the district court prior to the current
dispute. The district court also may be correct that the
compromise settlement referenced in the Magistrate Judge’s
2003 memorandum order resolved the outstanding attorneys’
                                7

fees issues. However, on appeal, the parties present differing
interpretations of the terms of the 2003 compromise settlement.
Neither the district court in denying Sims’ motion for a
declaratory judgment nor the Magistrate Judge in issuing his
memorandum order recites the terms of the compromise
settlement, and the record before this court does not reveal them.

     Whether the compromise settlement contemplated further
negotiations or represented a final resolution of the attorneys’
fees issues is dispositive of Sims’ request for declaratory relief.
If the attorneys’ fees issues were resolved in that compromise
settlement, Sims agreed to it at that time and she cannot obtain
declaratory relief on the basis of her present argument. If, on the
other hand, the fees issues were still under discussion when the
government paid the law firm $120,000 in 2005, then Swick was
not authorized to finalize the fees payment without Sims’
consent. Although Sims authorized her former attorney
(Shapiro) to submit an attorneys’ fees motion, she did not
thereby abdicate her role in the final resolution of the fees
issues; the law draws a distinction between the power to conduct
negotiations and the power to end a dispute. See Makins v.
District of Columbia, 861 A.2d 590, 595 (D.C. 2004);
RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 22
cmt. c (2000).

     Neither the record nor the parties’ briefs shed much light on
the terms of the compromise settlement. For example, Sims
asserts that “[t]he reason that [her present attorney, Terris]
agreed [to the compromise settlement] was that Mr. Smith [the
government counsel], Mr. Shapiro [Sims’ former attorney], and
appellant [i.e., Sims through Terris] were in ongoing
negotiations over fees and other settlement issues.” Appellant’s
Reply Br. at 10. The government offers that the Magistrate
Judge’s memorandum order “resolved that issue” and that “the
amount was agreed upon between the parties and so represented
                                8

to [the Magistrate Judge].” Appellee’s Br. at 22 (emphasis
added). The record’s silence between the 2003 compromise
settlement and the government’s 2005 payment of $120,000 to
Swick & Shapiro could support either party’s account: the delay
in payment is consistent with Sims’ view that terms remained
unresolved, while the lack of communication between the
parties for several years could indicate that negotiations had
ended on February 28, 2003, supporting the government’s view
that all attorneys’ fees issues were resolved and perhaps
suggesting that Sims’ attempt to undo the compromise
settlement arose only when she realized that tax protection was
a possibility under the American Jobs Creation Act, Pub. L. No.
108-357, 118 Stat. 1546 (2004). Government counsel’s
response to Terris, by letter of June 23, 2005, does not clarify
the matter, for it references only the 1999 letter agreement as the
source of the government’s obligation to pay the fees, implying
that the 2003 compromise settlement offered no additional
clarification on the terms of payment.

     Because the record does not resolve the parties’ dispute
whether the compromise settlement referenced in the Magistrate
Judge’s 2003 memorandum order finally resolved the terms of
the government’s payment of Sims’ attorneys’ fees, we must
vacate the order denying declaratory relief and remand the case
to the district court for an evidentiary hearing. See United States
v. Mahoney, 247 F.3d 279, 285 (D.C. Cir. 2001) (citing Autera
v. Robinson, 419 F.2d 1197, 1202-03 (D.C. Cir. 1969)). Given
the age of this case and the efforts by the district court and the
Magistrate Judge to resolve it, we do so reluctantly. However,
the issue Sims presents is not frivolous or trivial, see Autera,
419 F.2d at 1203, although the court has no occasion to express
an opinion on whether the parties would be able to reach a tax
indemnification agreement.
     KAVANAUGH, Circuit Judge, dissenting: I respectfully
dissent. I agree with District Court Judge Kollar-Kotelly’s
thorough and persuasive opinion denying Sims’ motion for
declaratory judgment. See Sims v. Johnson, No. 97-570, 2006
WL 949917 (D.D.C. Apr. 11, 2006).

     Sims settled her discrimination suit with the Government
in 1999, and she settled the attorney’s fees issue with the
Government in 2003, as reflected in a contemporaneous order
issued by Magistrate Judge Kay. Consistent with the 2003
agreement, the Government then paid the attorney’s fees as
required. Realizing after the fact that the fees agreement
would have less-than-ideal tax consequences – in part because
it would not allow her to take advantage of a 2004 change in
the tax law – Sims is now trying to say, in effect, that there
was never a fees agreement. The District Court correctly
rejected Sims’ claim as a blatant attempt to rewrite history.
The District Court added that if Sims wanted to “create certain
protections vis-á-vis tax liability,” she should have “bargained
for such provisions during the settlement process or during the
mediation before Magistrate Judge Kay.” Id. at *10.

     Parties may not wriggle out of a contract simply because
of subsequent tax law developments or because they failed to
anticipate tax consequences when forming the agreement.
Sims may have a problem with how her former or current
attorneys advised her. But her settlement and fees agreements
with the Government are binding, and her case against the
Government is over. In my judgment, we do neither the
parties nor our overburdened district courts any favors by
further prolonging this decade-old case.