Opinion
Civil No. A3-02-129.
November 18, 2004
MEMORANDUM AND ORDER
I. Introduction
Defendants Ray Ward, Steve Campbell, and Merlin Berg move the Court for an award of attorney's fees incurred in defending the above captioned lawsuit. The plaintiff, Earle Myers, Jr., resists this motion. As articulated below, the defendants' Motion for Attorney's Fees is DENIED.
II. Background
In November of 2002, the plaintiff initiated a lawsuit against Richland County, those serving on its Board of Commissioners as of that date, as well as those serving on its Board of Commissioners as of January 10, 2001. On March 3, 2003, the defendants filed a Motion to Dismiss the action for lack of subject matter jurisdiction and a Motion to Strike the plaintiff's prayer for relief as it pertained to punitive damages. In an Order dated October 24, 2003, this Court denied the plaintiff's Motion to Dismiss and granted the defendants' Motion to Strike the plaintiff's prayer for relief as it pertained to punitive damages.
The parties then stipulated that defendants Steve Campbell and Merlin "Mort" Berg be dismissed with prejudice (doc. #51). That stipulation left Richland County and former Richland County Commissioners Ray Ward and Dave Paulson as the only remaining defendants. The defendants filed a Motion for Summary Judgment (doc. #52) on May 17, 2004. This Court granted summary judgment and dismissed all of the plaintiff's claims on September 30, 2004 (doc. #94).
Defendants Ray Ward, Steve Campbell, and Merlin Berg bring a Motion for an Award of Attorney's Fees pursuant to Local Rule 54.1(c), Sections 28-26-01(2) and 28-26-31 of the North Dakota Century Code, Rules 11 and 56(g) of the Federal and State of North Dakota Rules of Civil Procedure, and federal law.
III. Discussion and Legal Analysis
The plaintiff argues that only federal law should apply to the defendants' Motion for Attorney's Fees. The Court need not decide that issue because as explained below, the defendants' Motion for Attorney's Fees fails under both federal and North Dakota law. The Court will address each of the defendants' contentions for attorney's fees in turn.
A. The "American Rule"
Federal courts follow the "American Rule," which prohibits the awarding of attorney fees in most cases. Chambers v. Nasco, Inc., 501 U.S. 32, 45 (1991). However, there is an exception to the rule that allows a court to award attorney's fees when a party has "acted in bad faith, vexatiously, wantonly, or for oppressive reasons. Alyeska Pipeline Serv. Co. v. Wilderness Society, 421 U.S. 240, 258-59 (1975). Courts should award attorney's fees "only when extraordinary circumstances or dominating reasons of fairness so demand." Actors' Equity Ass'n v. Am. Dinner Theater Inst., 802 F.2d 1038, 1042 (8th Cir. 1986) (citing Nepera Chemical, Inc. v. Sea-Land Serv., Inc., 794 F.2d 688, 702 (D.C. Cir. 1986)). Under the bad faith exception, a court can award attorney's fees if a claim is "frivolous, unreasonable, or groundless, or [where a party] continued to litigate after it clearly became so." Id. at 1042 (quotingChristiansburg Garment Co. v. EEOC, 434 U.S. 412, 421-22 (1978)); see also Hoover v. Armco, Inc., 915 F.2d 355, 357 (8th Cir. 1990). A court can also award attorney's fees if a party intentionally advances a frivolous contention for the purpose of harassment or delay. Actors' Equity Ass'n, 802 F.2d at 1043.
This exception is called the "Bad Faith Exception" to the "American Rule."
The defendants contend that the plaintiff's claims against Ward, Campbell, and Berg were frivolous and brought in bad faith. As evidence of bad faith, the defendants cite (1) a secret tape recording made by the plaintiff of a telephone conversation with defendant Campbell prior to commencing this lawsuit, (2) a statement by the plaintiff noted by his treating physician in a report dated March 12, 2003, and (3) a secret tape recording made by the plaintiff of a telephone conversation with The Forum reporter Steve Wagner.
The Court finds that the plaintiff's claims were not brought in bad faith. First, the defendants fail to show how the recorded telephone conversation between Myers and Steve Campbell is evidence that the plaintiff initiated this lawsuit in bad faith. Myers asked Campbell if he remembered making a statement that Myers better "watch his back," which Campbell denied. The Court does not see how this is evidence of bad faith. Second, the statement by Myers contained in the March 2003 medical report is simply a statement of Myers' emotional state more than a year after the initiation of this lawsuit. This statement is not sufficient to prove that Myers advanced this lawsuit to take "revenge" on the Commissioners of Richland County. Third, the telephone conversation between Myers and Steve Wagner is not evidence that the plaintiff initiated this lawsuit for the purpose of harassment or delay. If anything, it is evidence of how strongly Myers believed in his claim.
The Court also finds that the plaintiff's claims were not frivolous, unreasonable, or groundless. The term frivolous means more than the plaintiff ultimately lost his case. Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421 (1978). Although this Court has previously found that the plaintiff did not submit sufficient evidence to raise a genuine issue of material fact, that finding is not enough. As Justice Stewart stated inChristiansburg:
[T]he term "meritless" is to be understood as meaning groundless or without foundation, rather than simply that the plaintiff has ultimately lost his case. . . .
. . . [I]t is important that a district court resist the understandable temptation to engage in post hoc reasoning by concluding that, because a plaintiff did not ultimately prevail, his action must have been unreasonable or without foundation. This kind of hindsight logic could discourage all but the most airtight claims, for seldom can a prospective plaintiff be sure of ultimate success.Christiansburg, 434 U.S. at 421-22. This statement is especially true considering the novelty of the legal issues involved in this lawsuit. See id. at 422 (finding that even when the law or the facts seem questionable at the outset, a party may have a reasonable ground for bringing suit).
The Court also notes that it did not find the plaintiff's claims to be frivolous or in bad faith in its 38-page order granting summary judgment for the defendants.
In sum, the plaintiff did not act in bad faith, vexatiously, wantonly, or for oppressive reasons, and there are no extraordinary circumstances that require the Court to award attorney fees in this case. Therefore, the defendants' Motion for Attorney's Fees pursuant to the "Bad Faith Exception" is DENIED.
B. Rule 11 of the Federal Rules of Civil Procedure
The defendants also move for attorney's fees under Rule 11 of the Federal Rules of Civil Procedure. A court can impose sanctions against an attorney who presents a frivolous claim or a claim for an improper purpose, such as to harass or to cause delay. Fed.R.Civ.P. 11. The Court has already found the plaintiff's claims not to be frivolous or for an improper purpose, and the Court will not reconsider that contention here. Therefore, the defendants' Motion for Attorney's fees pursuant to Rule 11 is DENIED.
In addition, the defendants did not comply with the procedural requirements of Rule 11. The defendants must request sanctions under Rule 11 separately from other motions or requests and must serve a prepared motion on the plaintiff prior to making any request to the Court. Fed.R.Civ.P. 11(c)(1)(A); see also Gordon v. Unifund CCR Partners, 345 F.3d 1028, 1030 (8th Cir. 2003) (reversing and remanding decision of district court awarding sanctions because party's request was procedurally deficient).
C. Rule 56(g) of the Federal Rules of Civil Procedure
The defendants assert Rule 56(g) of the Federal Rules of Civil Procedure as yet another ground for assessing attorney's fees against the plaintiff. Rule 56(g) allows a court to assess attorney's fees against a party that presents affidavits in bad faith or solely for the purpose of delay. The defendants contend that plaintiff submitted a false affidavit dated June 25, 2004. However, the evidence submitted by the defendants does not show that the plaintiff submitted the affidavit in bad faith or for the purpose of delay. If anything, the evidence shows that there was a factual dispute as to whether the plaintiff was "consulted" as to the Kubitz and Jordheim lawsuits against Richland County. Therefore, the defendants' Motion for Attorney's Fees pursuant to Rule 56(g) is DENIED.
D. Sections 28-26-01(2) and 28-26-31 of the North Dakota Century Code.
The defendants assert that North Dakota law applies in this case and that the Court can assess attorney's fees pursuant to sections 28-26-01(2) and 28-26-31 of the North Dakota Century Code. Section 28-26-01(2) states that a court shall award attorney's fees to a prevailing party upon a finding that a claim was frivolous. To be frivolous, there must be "such a complete absence of actual facts or law that a reasonable person could not have thought a court would render judgment in their favor." N.D. Cent. Code § 28-26-01(2); see also Larson v. Baer, 418 N.W.2d 282, 290 (N.D. 1988).
Under section 28-26-31, a court may assess attorney's fees against a party that submitted pleadings not made in good faith. To find bad faith, a court must find that the party submitted the pleadings without reasonable cause and that the pleadings were subsequently found to be untrue. Peterson v. Zerr, 477 N.W.2d 230, 235 (N.D. 1991).
The Court finds, as it did under federal law, that there was not such a complete absence of facts or law that a reasonable person could not have thought a court would render judgment in the plaintiff's favor. The Court also finds that the plaintiff's claims were not brought in bad faith. As stated earlier, the Court will not use the "wisdom of hindsight" to determine the plaintiff's claims were frivolous or brought in bad faith. See Soentgen v. Quain Ramstad Clinic, P.C., 467 N.W.2d 73, 84-85 (N.D. 1991) (reversing an award of attorney's fees). The law was not so settled that the plaintiff could not have thought a court would decide in his favor. See Lang v. Bank of Steele, 415 N.W.2d 787, 792 (N.D. 1987). Therefore, the plaintiff's claims were not frivolous or brought in bad faith, and the defendants' Motion for Attorney's Fees under sections 28-26-01(2) and 28-26-31 of the North Dakota Century Code is DENIED.
Under section 28-26-01, the prevailing party must have alleged the frivolous nature of the claim in responsive pleading. The defendants have failed to show the Court where in their Answer they alleged the frivolous nature of the plaintiff's claim.
IV. Conclusion
Defendants' Motion for Attorney's Fees (doc. #96) is DENIED.