Kirchner v. Giebink

NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
as well as formal revision before publication in the Vermont Reports.
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
that corrections may be made before this opinion goes to press.


                                No. 88-450


Gerard J. Kirchner,                          Supreme Court
Franklin Kellogg, Marion Kellogg
                                             On Appeal From
     v.                                      Lamoille Superior Court

John C. Giebink and West Hill                May Term, 1989
Development Corp., and Stowe
Club Associates, et al.


Linda Levitt, J.

Harold B. Stevens, Stowe, for plaintiffs-appellants

David A. Barra of Paul, Frank & Collins, Inc., Burlington, for defendants-
  appellees


PRESENT:  Allen, C.J., Peck, Dooley and Morse, JJ., and Barney, C.J. (Ret.),
          Specially Assigned


     ALLEN, C.J.   In Kirchner v. Giebink, 150 Vt. 172, 552 A.2d 372 (1988),
we remanded this cause for a determination of whether sections 3, 4 and 8 of
the agreement between defendants were special assessments.  Prior to our
determination defendants amended their agreement by deleting section 8.
Following our determination defendants further amended their agreement by
deleting sections 3 and 4.  Defendants then moved for summary judgment in
the trial court, asserting that their deletion of the sections at issue had
rendered the cause moot.  Plaintiffs in turn also moved for summary
judgment, claiming that deletion did not make the cause moot as the damage
had been done, and in the alternative, that they were entitled to their
attorney's fees as prevailing parties under 42 U.S.C. { 1988 (1988).  The
trial court granted defendants' motion and denied plaintiffs'.  Plaintiffs
then brought this appeal.
     The trial court here struck too quickly in denying plaintiffs' request
for attorney's fees.  Plaintiffs can prevail on their request for fees only
if they can show they were the prevailing party.  42 U.S.C. { 1988.  The
trial court correctly understood that under the catalyst doctrine,
plaintiffs need not have prevailed by direct judicial action as long as they
were the catalyst for the relief.  See Hewitt v. Helms, 482 U.S. 755, 760-61
(1987); Williams v. Leatherbury, 672 F.2d 549, 551 (5th Cir. 1982).  What
the trial court misunderstood is the showing plaintiffs were required to
make to be considered a catalyst.  The trial court commented, in declining
to find plaintiffs a catalyst, that "the question remains whether these
sections [defendants' action which was the basis of plaintiffs' complaint]
are unlawful."  This comment was based on the general rule that a plaintiff
may recover as a catalyst only "if he can show both a causal connection
between the filing of the suit and the defendant's action and that the
defendant's conduct was required by law."  Williams, 672 F.2d  at 551.  Yet
it is clear that the rationale of the catalyst doctrine -- allowing recovery
where a decision on the merits was somehow avoided -- would be wholly
eviscerated if a prerequisite to a plaintiff's recovery was a judicial
determination on the merits that defendant's conduct was unlawful.
     Courts have recognized that it would be counter-productive to force
the plaintiff to litigate the unlawfulness of defendant's acts to obtain
attorney's fees, where the underlying controversy has been settled or
otherwise resolved without judicial action.  Thus, in Hennigan v. Ouachita
Parish School Bd., 749 F.2d 1148, 1152-53 (5th Cir. 1985), the court
construed the latter portion of the general rule as not "requir[ing] the
plaintiff to prove, in addition, that the defendant's conduct fulfilled a
legal obligation or otherwise to show the defendant's motivation."  Instead,
the court found that the only prerequisite was that the plaintiff have a
colorable or reasonable likelihood of success on the merits.  Id. at 1153.
It went on to hold:  "A defendant who contends that his conduct was a wholly
gratuitous response to a lawsuit that lacked colorable merit, must
demonstrate the worthlessness of the plaintiff's claims and explain why he
nonetheless voluntarily gave the plaintiffs the requested relief."  Id. The
proper standard is described more completely in Ortiz De Arroyo v. Barcelo,
765 F.2d 275, 282 (1st Cir. 1985) (citations omitted):
         To establish that they are prevailing parties entitled
         to an award of attorney's fees, however, plaintiffs who
         have obtained only informal relief must meet both a
         factual and a legal test.  The plaintiffs are prevailing
         parties as a matter of fact if "the plaintiffs' suit and
         their attorney's efforts were a necessary and important
         factor in achieving the improvements [undertaken by
         defendants on the plaintiffs' behalf]."

            If the plaintiffs can establish that their suit "was
         causally related to the defendants' actions which
         improved their condition", they must then prove that
         they have prevailed in a legal sense.  The plaintiffs
         cannot meet this test if it has been judicially
         determined that the defendants' conduct was not required
         by law.  Where, as here, there has been no such judicial
         determination on the merits, the district judge should
         not grant attorney's fees if he determines that the
         plaintiffs' action "could be considered 'frivolous,
         unreasonable, or groundless or that plaintiff continued
         to litigate after it clearly became so'."

     There has been no judicial determination that defendants' conduct, in
amending the contract, was not required by law.  We cannot say plaintiffs'
claims are frivolous, unreasonable or groundless as a matter of law --
indeed, we remanded this case in the first instance because we could not say
so.  Accordingly, we cannot deny fees as a matter of law on the contention
that plaintiffs fail to meet the requirements of a catalyst.
     We also cannot uphold the trial court's decision on the further
rationale it used.  The trial court denied fees because it considered
plaintiffs' remaining claim for damages "too speculative."  In order to be
considered prevailing parties, plaintiffs must succeed on any significant
issue in litigation which achieves some benefit the parties sought in
bringing the suit.  See Texas State Teachers Assoc. v. Garland Independent
School Dist., 109 S. Ct. 1486, 1493 (1989).  In this case, plaintiffs sought
primarily the voiding of the contract between Stowe Club Associates and the
Town of Stowe unless there was a vote of the town authorizing it.  In their
complaint, plaintiffs raised the fact that they and others faced special
assessments as a result of the contract and this monetary "damage" was one
of the reasons to reject the contract.  The amendment to the contract to
strike the possibility of a special assessment may give plaintiffs
sufficient benefit to be considered a prevailing party.  The court could
find that "defendant[s], under pressure of the lawsuit, alter[ed their]
conduct (or threatened conduct) towards the plaintiff[s] that was the basis
for the suit."  Hewitt, 482 U.S.  at 761.  The fact that plaintiffs did not
prevail on all their claims is not determinative.  Nor can it be
determinative that plaintiffs were not awarded damages where they also
sought cancellation of the agreement.
     Although we believe the issue of fees must be remanded to the trial
court for reconsideration under the proper standard, there is one part of
plaintiffs' burden that deserves special emphasis, in part because it has
not been raised in the proceedings to date.  42 U.S.C. { 1988 is an
authorization for the courts to award attorney's fees to plaintiffs seeking
to vindicate federal constitutional and statutory rights.  See Maine v.
Thiboutot, 448 U.S. 1, 9 (1980).  Where relief is obtained on state grounds,
fees cannot be awarded unless the unaddressed federal ground is
"substantial," see Maher v. Gagne, 448 U.S. 122, 132 & n.15 (1980), and is
"reasonably related to the plaintiff's ultimate success."  Smith v.
Robinson, 468 U.S. 992, 1007 (1984); see also Seaway Drive-In, Inc. v.
Township of Clay, 791 F.2d 447, 450-55 (6th Cir. 1986) (analyzing these two
requirements), cert. denied, 479 U.S. 884 (1986).  The decision of this
Court that apparently resulted in the amendment to the contract was based
primarily on 24 V.S.A. { 3254, a state law ground.  Kirchner, 150 Vt. at
180-84, 552 A.2d  at 377-80.  To prevail in the instant suit plaintiffs must
show on remand, in addition to what is required under Ortiz De Arroyo v.
Barcelo, that their civil rights act claim was substantial and was related
to what success they achieved.
     Accordingly, we reverse and remand for proceedings not inconsistent
with this opinion.
     Reversed and remanded.


                                        FOR THE COURT:




                                        Chief Justice