HLV, LLC v. Stewart
HLV, LLC v. Stewart
Opinion of the Court
This matter is before the Court on Plaintiff HLV, LLC's motion for attorney's fees and costs as a prevailing party under Federal Rule of Civil Procedure 54(d)(2) and
I.
The history is well-worn. In December 2013, HLV and related entities filed suit against numerous Defendants including Van Buren County, the Village of Paw Paw, Kelly Page, Gary Stewart, the Page & Stewart Partnership, Judge Paul Hamre, Peggy Grote, Michael McKay, and Michael Bedford. HLV raised claims under RICO (Counts I-III), § 1983 (Counts IV-VI), and a state-law claim for tortious interference with contract. More than four years later, after three rounds of dispositive motions, innumerable discovery disputes, and extended pretrial motion practice, HLV settled with Kelly Page and proceeded to trial against Defendant Gary Stewart. After six days of trial, a jury concluded that Gary Stewart had conspired with Paul Hamre, or with Kelly Page and Paul Hamre, to deprive HLV of its property without due process of law.
However, the Court had previously found that HLV had never satisfactorily produced a method of computing compensatory damages arising from the conspiracy-HLV's principals had testified that they had been paid in full on the underlying debt collection lawsuit-, had failed to adequately respond to discovery requests relating to damages, and so it precluded HLV from seeking compensatory damages against Stewart at trial. Therefore, the jury was instructed that if it found for HLV on the cause of action against Stewart, it was to award nominal damages and could further consider punitive damages.
In closing argument, HLV urged the jury to award punitive damages and suggested that the jury begin with a figure of $300,000 "per overt act" and outlined nine overt acts that it viewed to be in furtherance of the conspiracy. Thus, HLV asked the jury to award a total of $2.7 million in punitive damages. (ECF No. 532 at PageID.8917.) The jury was not so persuaded. It awarded $1 in nominal damages but declined to award punitive damages to HLV.
Now, Plaintiff, as a prevailing party, seeks $490,797.90 in attorney's fees and costs under Rule 54(d)(2) and
*636A. Attorney's Fees Under § 1988
The Civil Rights Attorney's Fees Award Act of 1976,
Here, like in Pouillon and Farrar , HLV's technical victory "accomplished little beyond giving [it] the moral satisfaction of knowing that a federal court concluded that [its] rights had been violated ...." Farrar ,
In its motion, HLV makes only fleeting reference to Farrar and its progeny, citing it only for the proposition that a civil rights plaintiff who receives a nominal damages award is a prevailing party. (See ECF No. 519 at PageID.7670.) HLV does not address Farrar 's conclusion that, [w]hen a plaintiff recovers only nominal damages because of his failure to prove an essential element of his claim for monetary relief, the only reasonable fee is usually no fee at all." Id. at 116,
Instead, HLV ignores Farrar and asserts that an award of attorney's fees is "mandatory under § 1988 absent 'special circumstances.' " (ECF No. 519 at PageID.7670 (quoting Hescott v. City of Saginaw ,
The Hescott plaintiffs filed suit under § 1983 after their rental property was demolished by the City of Saginaw after it had fallen into disrepair while one of the owners was deployed away from Michigan. The City never notified the plaintiff before or after demolition and kept no inventory of what was left after the demolition. Ultimately, a jury found that the City violated the Fourth Amendment by seizing aluminum siding after the demolition and awarded $5,000 in damages. However, the jury rejected supplemental state-law claims for the inverse condemnation of the property, and the Court granted qualified immunity to the individual defendants as a matter of law. After judgment entered, the plaintiff and City moved the Court for taxable costs and attorney's fees. The district court denied the plaintiff's motion for attorney's fees, invoking Justice O'Connor's balancing test from Farrar . See
On appeal, the Hescott panel chided the district court for relying in part on Farrar in denying the plaintiff's motion for attorney's fees because it found Farrar to be "legally and factually distinguishable." The Court first noted that Farrar dealt with the reasonableness of an attorney's fee award, not whether special circumstances warranted an outright denial. Second, and "more importantly" the court noted that unlike the plaintiff in Farrar that had sought $17 million and received one dollar, the plaintiff had succeeded in showing an actual, compensable injury. Thus the court found that Farrar was inapplicable.
Here, the factors that led the Hescott court to find Farrar distinguishable are not present. HLV, like Farrar, sought a multi-million-dollar award of monetary damages, and came away with solely nominal damages. And Stewart does not rely on Farrar alone. He has collected several other Sixth Circuit opinions in which the Circuit has faithfully applied Farrar and declined to award attorney's fees to a technically-successful prevailing plaintiff who failed to secure compensatory or punitive damages. (ECF No. 521 at PageID.7763-64; see
B. Costs under FRCP 54(d)
Stewart urges the Court to deny both the motion for attorney's fees and costs under Farrar and the Sixth Circuits opinions which followed from it. But Farrar does not address a prevailing party's right to costs under Federal Rule of Civil Procedure 54(d). Nor do Hadix, Pouillon , Cramblit, McBurrows , or Glowacki address the taxing of costs. But the same general analysis holds.
"Costs are generally awarded to a prevailing party as a matter of course, the district court maintains discretion in choosing to tax the costs of litigation against a losing party under Rule 54(d) of the Federal Rules of Civil Procedure." Virostek v. Liberty Twp. Police Dept. ,
This case presents a classic example in which to depart from the general rule of awarding costs. "[W]here the district court has found "the prevailing party's recovery [to be] so insignificant that the judgment amount[ed] to a victory for the defendant[,]" it is within the Court's discretion to disallow costs. White & White, Inc. v. American Hosp. Supply Corp. ,
The Court also notes the history of settlement negotiations between the parties. HLV rejected numerous settlements at dollar figures significantly higher than the *638award it ultimately received from the jury. (See ECF No. 521-1.) This provides an alternative, independently-sufficient justification to disallow costs. See McKelvey v. Secretary of United States Army ,
In sum, the Court finds that Stewart has overcome the presumption favoring an award of costs in HLV's favor because HLV's success at trial was limited to a $1 award of nominal damages, although it had sought significant punitive damages. HLV's motion with respect to costs is likewise DENIED.
IT IS SO ORDERED.
Reference
- Full Case Name
- HLV, LLC v. Gary STEWART, Jr.
- Cited By
- 1 case
- Status
- Published