Hunt v. Lee , 166 F. App'x 669 ( 2006 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 05-1016
RON HUNT,
Plaintiff - Appellee,
versus
FRANCIS LEE,
Defendant - Appellant,
and
RITZ CABARET, a/k/a Tracy, Incorporated,
Defendant.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. William D. Quarles, Jr., District Judge.
(CA-02-2523-WDQ)
Submitted: November 30, 2005 Decided: January 5, 2006
Before NIEMEYER, KING, and DUNCAN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Brenda Grantland, Mill Valley, California, for Appellant. John J.
Hathway, Thomas Mugavero, WHITEFORD, TAYLOR & PRESTON, L.L.P.,
Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Francis Lee appeals the district court’s order denying
his petition for attorney’s fees and costs pursuant to 42 U.S.C.
§ 1988 (2000) and 28 U.S.C. § 1927 (2000). We affirm.
Ron Hunt and Francis Lee were owners of adult
entertainment establishments otherwise known as “gentlemen’s
clubs.” From February to May 2002, Hunt met periodically with Lee
to discuss his interest in purchasing Lee’s club, the Ritz Cabaret.
When these discussions began, Lee owned the club. While
negotiations were ongoing, however, Lee pled guilty to conspiracy
to commit money laundering in violation of 18 U.S.C. § 1956(h)
(2000) and the Ritz Cabaret was forfeited to the Government.
Nevertheless, discussions continued between Hunt and
Joerg Eichelberger, a man Hunt believed was Lee’s real estate
agent. The discussions culminated in an offer from Hunt that
matched Eichelberger’s demands ($1.6 million and six percent
buyer’s premium). In the course of their correspondence,
Eichelberger referenced the forfeiture, but only as an explanation
why he could not provide documentation relevant to the proposed
sale. Significantly, Eichelberger’s repeated written statements
suggested that both Lee and Eichelberger retained some control over
the property, or at the very least, over the solicitation of offers
to purchase the Ritz Cabaret.
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In fact, it appears that Lee and Eichelberger did indeed
solicit such offers. Leonard Briskman, an employee of the United
States Marshal’s Service (the “Marshal’s Service”), attested that
he was assigned the task of managing the disposition of the Ritz
Cabaret. Briskman explained that the property was to be sold
through an online auction service. Briskman stated that Lee and
Eichelberger were never authorized to sell the Ritz Cabaret on
behalf of the Government; however, Briskman acknowledged that Lee
did solicit several written offers that were passed on to the
Marshal’s Service via Briskman. The property was eventually sold
to the highest online bidder for $1,075,000.
While Lee was incarcerated, he also signed a contract of
sale, ostensibly conveying the Ritz Cabaret to Philip Bast Gagne
and Dennis Alviani for $1.3 million. Lee entered into the contract
despite Hunt’s then-standing offer of $1.5 million and repeated
attempts to negotiate with Eichelberger. Hunt alleges the
purchasers of the club were Caucasian; Hunt is African-American.
A former employee of Lee’s also claimed that Lee made disparaging
remarks about Hunt, including a comment that he preferred the club
be sold to a “white man.” On this basis, Hunt filed a complaint in
the district court, claiming defamation and racial discrimination
in violation of 42 U.S.C. §§ 1981 and 1982 (2000).
Lee moved to dismiss Hunt’s complaint, asserting that he
lacked contractual capacity to sell the property due to the
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forfeiture. Because no discovery had been taken, the court was
unable to resolve the agency issue. Thus, the court denied the
motion to dismiss, ordered the parties to conduct discovery on the
issue of Lee’s capacity to contract, and further ordered that the
parties file dispositive motions by October 2003. At the
conclusion of discovery, the court granted Lee’s motion for summary
judgment. The district court nonetheless denied Lee’s motions for
attorney’s fees and costs. The instant appeal followed.
On appeal, Lee claims that the district court erred in
refusing to award attorney’s fees under 42 U.S.C. § 1988 (2000).
Under § 1988(b), a district court may award attorney’s fees to the
prevailing party in a civil rights action. A district court’s
denial of fees is reviewed for abuse of discretion. Johnson v.
City of Aiken, 278 F.3d 333, 336 (4th Cir. 2002).
The Supreme Court has held that a prevailing defendant is
entitled to recover attorney’s fees under § 1988(b) only if the
lawsuit was frivolous, unreasonable, or groundless, or if the
plaintiff continued to litigate after it clearly became so. See
Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 422 (1978).
Thus, when awarding attorney’s fees under a civil rights statute,
“prevailing defendants are to be treated differently from
prevailing plaintiffs, even though the statutory language is
neutral.” Bryant Woods Inn, Inc. v. Howard County, Md., 124 F.3d
597, 606 (4th Cir. 1997). In so ruling, the district court
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carefully analyzes plaintiffs’ legal claim, the evidence adduced in
support of that claim, and when plaintiffs should have realized
that the claim was groundless. Hutchinson v. Staton, 994 F.2d
1076, 1079 (4th Cir. 1993). We cannot conclude that Hunt’s claim
of racial animus was without legal basis or factual foundation.
Arguably, the district court referred to Hunt’s complaint
as “frivolous.” As this court stated in Arnold v. Burger King
Corp., 719 F.2d 63, 68 n.7 (4th Cir. 1983), there are “varying
degrees of frivolousness.” The district court noted that the
complaint was not demonstrably frivolous on the question of racial
animus, although the claim that Lee had the authority to convey the
property ultimately lacked a factual underpinning. The totality of
the district court’s findings indicate that the court did not
intend, by its use of the term, to connote that Hunt’s claim was so
utterly baseless as to warrant sanctions. Where, as here, a case
is not absolutely groundless, an award of attorney’s fees is not
compelled.
Moreover, a finding of bad faith is a necessary
precondition to imposition of fees on an attorney under 28 U.S.C.
§ 1927 (2000). See Brubaker v. City of Richmond, 943 F.2d 1363,
1382 n.25 (4th Cir. 1991). Section 1927 provides: “Any attorney or
other person admitted to conduct cases . . . who so multiplies the
proceedings in any case unreasonably and vexatiously may be
required by the court to satisfy personally the excess costs,
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expenses, and attorneys’ fees reasonably incurred because of such
conduct.” 28 U.S.C. § 1927. Although the litigation in this case
was contentious, we do not find Hunt or his counsel engaged in the
duplicative or unnecessary filings that would trigger sanctions
under § 1927.
“Discretion allows district courts latitude in
determining fee awards--even those that an appellate court might
initially have set in a different amount.” See Carroll v. Wolpoff
& Abramson, 53 F.3d 626, 631 (4th Cir. 1995). Clearly, Hunt’s
counsel could have conducted more comprehensive pre-filing
discovery. Nevertheless, Hunt’s claim of racial animus was not
frivolous on its face. Moreover, the threshold legal issue--not
only Lee’s capacity to contract but his agency to contract--was not
clearly determined at the outset of the litigation. Given these
facts, coupled with the district court’s discretion, we find that
the district court did not abuse its discretion when it denied
Lee’s petition.
Accordingly, we affirm the district court’s denial of
attorney’s fees and costs. We dispense with oral argument because
the facts and legal contentions are adequately presented in the
materials before the court and argument would not aid the
decisional process.
AFFIRMED
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