CLARK v. OAKHILL Condo. Ass'n INC.

LAURA S. CLARK, STEPHEN R. CLARK, and SEJCO VENTURES, LLC, Plaintiffs

v.OAKHILL CONDOMINIUM ASSOCIATION, INC., et al., Defendants

CAUSE NO. 3:08-CV-283 RM

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

SOUTH BEND DIVISION

Dated: March 31, 2011

OPINION and ORDER

Laura and Stephen Clark bought a condominium in the Oakhill development in South Bend, Indiana, in June 2004 as a rental property investment. When the Oakhill Association's bylaws were amended in March 2007, the Clarks and their company, Sejco Ventures, LLC (the condominium's title holder), sued the condominium association and its individual board members in this court alleging housing discrimination. The Clarks claimed that the Association's restrictive covenants limited, and had a disparate impact on, the availability of rental housing for minorities and other protected classes in the South Bend area. The Clarks claimed, as well, that the restrictive covenants tortiously interfered with their tenant's lease and with their own reasonable expectation to receive rental income, and board members had breached their fiduciary duties and engaged in fraud by enacting the 2007 covenants.

After a three-day evidentiary hearing on the motion of the Clarks and Sejco for a preliminary injunction on their claims under the federal Fair Housing Act, § 3601 et seq., and Indiana's Fair Housing Act, Ind. Code § 22-9.5-1, et seq., the court denied the plaintiffs' request for injunctive relief based on its conclusion that

The Clarks have no probative evidence whatsoever of discriminatory effect or of discriminatory intent. They cannot prevail on their claim under the federal Fair Housing Act as understood in Metropolitan Housing Dev. Corp. v. Village of Arlington Heights, 558 F.2d 1283 (7th Cir. 1977). Because they cannot prevail under the federal Act, there is no chance of success under the corresponding Indiana act, given the Indiana Supreme Court's view of disparate impact in Villas West II of Willowridge Homeowners Assoc., Inc. v. McGlothin, 885 N.E.2d 1274 (Ind. 2008). The Clarks have not demonstrated a better than negligible chance of success on the merits of either of the claims on which they seek preliminary injunctive relief, so the court needn't balance harms: the Clarks are not entitled to an injunction.

Sept. 15, 2008 Op. and Ord. [docket # 64], at 29. In October 2009, the court granted the Clarks' motion to dismiss their federal and state housing discrimination claims with prejudice and to dismiss their state law claims without prejudice. Judgment was entered on October 29, 2009.

This cause is before the court on the defendants' motion for an award of attorney fees, costs, and sanctions under Federal Rule of Civil Procedure 54(d), 42 U.S.C. § 3613(c)(2), and 28 U.S.C. § 1927. The defendants maintain that as prevailing parties in this litigation, they are entitled to recover their fees and costs under the Federal Rules of Civil Procedure and the Fair Housing Act; the defendants argue, too, that because the plaintiffs presented no evidence of any discriminatory intent or impact, they are entitled to an award of fees and costs as a sanction for having to mount a defense against groundless housing discrimination claims. The Clarks have filed their objections to the motion and to the defendants' itemized fee request. For the reasons that follow, the court grants the defendants' motion for costs and request for fees under 42 U.S.C. § 3613(c)(2) and Federal Rule of Civil Procedure 54(d), making an analysis of the defendants' request under 28 U.S.C. § 1927 unnecessary.

I. Prevailing Party Status

The Fair Housing Act provides that "a court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee and costs." 42 U.S.C. § 3613(c)(2); see also Fed. R. Civ. P. 54(d)(1) & (d)(2); Ind. Code § 22-9.5-9-1 (court may "award reasonable attorney's fees to the prevailing party"). "[T]o be a 'prevailing party,' a litigant must have obtained a judgment on the merits, a consent decree, or some other judicially sanctioned change in the legal relationship of the parties." Palmetto Properties, Inc. v. County of DuPage, 375 F.3d 542, 548 (7th Cir. 2004) (citing Buckhannon Bd. and Care Home, Inc. v. West Va. Dep't of Health & Human Servs., 532 U.S. 598, 604-605 (2001)); see also Claiborne v. Wisdom, 414 F.3d 715, 719 (7th Cir. 2005) ("This judgment must result in a material alteration of the legal relationship of the parties.").

The dismissal with prejudice of the Clarks' federal and state housing discrimination claims is a final judgment in the defendants' favor - i.e., a "material alteration" of the parties' legal relationship - that makes the defendants the prevailing party in the litigation. Claiborne v. Wisdom, 414 F.3d 715, 719 (7th Cir. 2005); see also Mathews v. Crosby, 480 F.3d 1265, 1276 (11th Cir. 2007) ("The defendants, having obtained from [plaintiff] a voluntary dismissal with prejudice, are considered prevailing parties."); cf. Mostly Memories, Inc. v. For Your Ease Only, Inc., 526 F.3d 1093, 1099 (7th Cir. 2008) ("There is no question that a dismissal with prejudice makes the defendant the prevailing party for purposes of an award of attorney's fees under [17 U.S.C.] § 505. This is no less true when a case is dismissed because the plaintiff 'threw in the towel' - that is, where the dismissal is on the plaintiff's own motion.").

II. Costs

The defendants seek $18,752.18 in costs and expenses incurred from July 2008 through October 1, 2009, including photocopying expenses, shipping charges, witness fees, deposition and transcript costs, and online research expenses. While the Clarks object to certain of those costs as non-recoverable and improper under 28 U.S.C. § 1920 - i.e., overnight shipping, online research, unidentified numbers of copies, and witness fees for people who didn't testify at the preliminary injunction hearing - 42 U.S.C. § 3613(c)(2), not 28 U.S.C. § 1920, governs the award of costs to the defendants.

The court in Kossman v. Calumet County, 849 F.2d 1027 (7th Cir. 1988), addressed the recovery of non-statutory costs in federal civil rights actions as follows: [E]xpenses of litigation that are distinct from either statutory costs or the costs of the lawyer's time reflected in his hourly billing rates -expenses for such things as postage, long distance calls, xeroxing, travel, paralegals, and expert witnesses - are part of the reasonable attorneys' fees allowed by [federal civil rights statutes].

849 F.2d at 1031 ( quoting Heiar v. Crawford County, 746 F.2d 1190, 1203 (7th Cir. 1984)); see also Levka v. City of Chicago, 107 F.R.D. 230, 231 (N.D. Ill. 1985) ("[The] City is correct that [Lexis charges] are not specifically authorized by 28 U.S.C. § 1920, but civil rights actions such as Levka's also entitle the plaintiff to an award of 'a reasonable attorney's fee as part of the cost' [under] 42 U.S.C. § 1988."); City of Chicago v. Matchmaker Real Estate Sales Center, Inc., No. 88-C-9695, 1991 WL 255582, at *3 (N.D. Ill. Nov. 20, 1991) (allowing recovery for photocopying, messenger service, computerized legal research, and attorney travel costs as part of "attorney's fees and costs" under 42 U.S.C. § 3613(c)(2)); cf. United States (EPA) v. Environmental Waste Control, Inc., 737 F. Supp. 1485, 1501 (N.D. Ind. 1990) (viewing "costs of litigation" under 42 U.S.C. § 6972 as including costs for travel, photocopying, and telephone, and general out-of-pocket expenses).

Recognizing the expedited nature of the proceedings before the preliminary injunction hearing, the distance between the offices of counsel (the Clarks in Missouri and Mr. Kus in Indiana), and defense counsel's inability to predict whether any or all of his potential witnesses would have to testify at that hearing, the court can't say that the costs being sought by the defendants were unnecessary or unreasonable. The court will grant the defendants' request for costs in the amount of $18,752.18.

III. Attorneys' Fees

The standards for awarding fees under 42 U.S.C. § 1988 "are generally applicable in all cases in which Congress has authorized an award of fees to a 'prevailing party.'" Hensley v. Eckerhart, 461 U.S. 424, 433 n.7 (1983); see also Palmetto Properties, Inc. v. County of DuPage, 375 F.3d 542, 547 (7th Cir. 2004). The "prevailing party" language of 42 U.S.C. § 3613(c)(2) parallels that of § 1988. Under § 1988, a prevailing plaintiff "should ordinarily recover an attorney's fee unless special circumstances would render such an award unjust," but a prevailing defendant "may recover an attorney's fee only where the suit was vexatious, frivolous, or brought to harass or embarrass the defendant." Hensley v. Eckerhart, 461 U.S. 424, 429 & n.2 (1983) (citing H.R. Rep. No. 94-1558, pp. 1, 7 (1976)); see also Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421 (1978) ("[A] district court may in its discretion award attorney's fees to a prevailing defendant in a Title VII case upon a finding that the plaintiff's action was frivolous, unreasonable, or without foundation, even though not brought in subjective bad faith."). That strict standard is imposed to prevent a chilling effect on plaintiffs trying to vindicate their civil rights:

[A]ssessing attorney's fees against plaintiffs simply because they do not finally prevail would substantially add to the risks inhering in most litigation and would undercut the efforts of Congress to promote the vigorous enforcement of the provisions of Title VII. Hence, a plaintiff should not be assessed his opponent's attorney's fees unless a court finds that his claim was frivolous, unreasonable, or groundless, or that the plaintiff continued to litigate after it clearly became so. And, needless to say, if a plaintiff is found to have brought or continued such a claim in bad faith, there will be an even stronger basis for charging him with the attorney's fees incurred by the...