D.A. Osguthorpe Family Partner v. ASC Utah , 576 F. App'x 759 ( 2014 )

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT August 13, 2014
Elisabeth A. Shumaker
Clerk of Court
D.A. OSGUTHORPE FAMILY
PARTNERSHIP, a Utah limited
partnership,
Plaintiff-Appellant,
v. No. 13-4158
(D.C. No. 2:11-CV-00147-DS)
ASC UTAH, INC., a Maine corporation, (D. Utah)
Defendant-Appellee,
and
WOLF MOUNTAIN RESORTS, L.C.,
a Utah limited liability company;
THIRD JUDICIAL DISTRICT COURT,
an agency of the Judicial Branch of
government of the State of Utah;
ROBERT K. HILDER, in his capacity
as a Judge of the Third Judicial District
Court in and for the State of Utah,
Defendants.
ORDER AND JUDGMENT*
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of this
appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Before McHUGH, EBEL, and O’BRIEN, Circuit Judges.
D.A. Osguthorpe Family Partnership (Osguthorpe) appeals the district court’s
award of attorney’s fees to ASC Utah, Inc. (ASCU) under 42 U.S.C. § 1988. The
district court determined that Osguthorpe’s complaint was frivolous and vexatious.
We affirm the award based on the district court’s finding that the complaint was
frivolous, but we vacate the amount of the award and remand for additional findings.
I. BACKGROUND
The award of attorney’s fees to ASCU was based on a complaint Osguthorpe
filed in federal court seeking to delay or prevent an imminent trial in a Utah state
court on Osguthorpe’s disputes with various entities. Osguthorpe and ASCU entered
into contracts with each other and with others for the purpose of developing a resort
in Summit County, Utah. The contractual relationships are set out in the opinion
resolving a prior appeal in this case. D.A. Osguthorpe Family P’ship v. ASC Utah,
Inc., 705 F.3d 1223, 1226-27 (10th Cir.), cert. denied, 133 S. Ct. 2831 (2013)
(Osguthorpe I). Also described in Osguthorpe I is the lengthy litigation history in the
Utah state courts. Id. at 1227-28.
Briefly, in June 2006, ASCU filed suit against defendant Wolf Mountain in
Utah state court alleging breach of contract; Wolf Mountain countersued.
Osguthorpe sued ASCU in Utah state court and the cases were consolidated. In 2009,
Wolf Mountain filed a motion to compel arbitration based on a contract containing an
-2-
arbitration provision, which the state trial court denied. Wolf Mountain appealed.
“[T]he Utah Supreme Court upheld the state trial court’s decision, holding that Wolf
Mountain had waived its right to arbitrate by actively and substantially participating
in the litigation for years before ever asserting a contractual right of arbitration.” Id.
at 1228 (citing ASC Utah, Inc. v. Wolf Mountain Resorts, L.C., 2010 UT 65, ¶¶ 30,
40, 245 P.3d 184, 194, 197).
Before the Utah Supreme Court resolved Wolf Mountain’s appeal, Osguthorpe
filed in the state court a motion to compel arbitration between ASCU and Wolf
Mountain, and to stay the state-court proceedings. Shortly after the Utah Supreme
Court issued its mandate in the Wolf Mountain appeal, the state trial judge, the
Honorable Robert K. Hilder, a defendant in this case, denied Osguthorpe’s motion to
compel arbitration, and set the case for trial in state court on March 8, 2011.
Osguthorpe promptly appealed that ruling to the Utah Supreme Court and requested
an emergency stay of the trial. The Utah Supreme Court summarily denied the
emergency stay motion on January 20, 2011. At the time Osguthorpe filed the
underlying federal action, the Utah Supreme Court had not decided the merits
appeal.1
1
The Utah Supreme Court eventually held “that the [state] court was correct in
denying Osguthorpe’s motion to compel arbitration, and that the district court did not
violate Osguthorpe’s due process rights.” Osguthorpe v. Wolf Mountain Resorts,
L.C., 2013 UT 12, ¶ 20, 322 P.3d 620, 624, cert. denied, 134 S. Ct. 117 (2013).
-3-
Osguthorpe filed the underlying federal suit on February 8, 2011, claiming that
ASCU, Wolf Mountain, the Utah state court, and Judge Hilder had conspired and
acted in concert to violate its due process rights and its rights under the Federal
Arbitration Act by proceeding to trial in the state-court action. The district court
dismissed the case for lack of subject-matter jurisdiction pursuant to the
Rooker-Feldman doctrine,2 the Younger doctrine,3 and “general principles of
abstention.” Osguthorpe I, 705 F.3d at 1230 (internal quotation marks omitted). The
district court also ordered Osguthorpe to pay ASCU’s attorney’s fees in the amount
of $42,923.
On appeal, this court held that “the Colorado River doctrine control[led] the
disposition of this case and mandate[d] the dismissal of Osguthorpe’s suit.” Id. at
1231.4 The Colorado River doctrine applies in the extraordinary case to avoid
duplicative litigation in state and federal courts. Id. at 1233. After reviewing the
lengthy history of this case in the Utah state courts and the high consumption of court
2
The Rooker-Feldman doctrine “bars federal courts from reviewing the
judgments and decisions of state courts once they have become final.” Osguthorpe I,
705 F.3d at 1230 n.7.
3
“Younger instructs that federal courts not interfere with state court proceedings
by granting equitable relief—such as injunctions of important state proceedings or
declaratory judgments regarding constitutional issues in those proceedings—when
such relief could adequately be sought before the state court.” Osguthorpe I,
705 F.3d at 1230 n.8 (internal quotation marks omitted).
4
Colorado River Water Conservation Dist. v. United States, 424 U.S. 800,
800-21 (1976).
-4-
resources, the court held “that this case should live out the rest of its days in the place
where it began: the Utah state courts.” Id. at 1236.
The Osguthorpe I panel then determined that although the district court had
jurisdiction to award attorney’s fees in ASCU’s favor under § 1988, the “lack of
specific factual findings by the federal district court in support of its decision to
award those fees” required a remand. Id. at 1236-37. Accordingly, the court
remanded the attorney-fee issue to the district court and “instructed it to make
specific and detailed findings of fact to support its award.” Id. at 1237.
On remand, the district court received simultaneous briefing on the issue of
attorney’s fees under § 1988, found that Osguthorpe’s complaint was frivolous and
vexatious, and again awarded fees to ASCU in the amount of $42,923. In doing so,
the court adopted a proposed order ASCU submitted with its brief. Osguthorpe then
filed a motion under Fed. R. Civ. P. 59(e) seeking reconsideration of the adverse
order, which the district court denied.
Osguthorpe appeals, claiming the district court erred by (1) relying on the
same facts in awarding attorney’s fees on remand as for the first attorney-fee order,
(2) adopting the proposed order submitted by ASCU, (3) failing to recognize that
Osguthorpe’s complaint stated valid claims and therefore was not frivolous,
(4) failing to provide an adequate basis for the number of hours expended by ASCU’s
attorneys and the reasonableness of the rate, and (5) failing to separate and exclude
attorney’s fees incurred on matters unrelated to the § 1983 claim.
-5-
II. DISCUSSION
On remand, the district court was required to “comply strictly with the
mandate rendered by the reviewing court.” Zinna v. Congrove, No. 13-1143,
2014 WL 2523759, at *3 (10th Cir. June 5, 2014) (internal quotation marks omitted).
“We review a district court’s award of attorney’s fees for an abuse of discretion, but
we review de novo the district court’s application of the legal principles underlying
that decision.” Osguthorpe I, 705 F.3d at 1236 (internal quotation marks omitted).
In an action brought to vindicate a party’s civil rights under 42 U.S.C. § 1983,
“the court, in its discretion, may allow the prevailing party . . . a reasonable
attorney’s fee as part of the costs.” 42 U.S.C. § 1988(b); accord Fox v. Vice,
131 S. Ct. 2205, 2211 (2011). “[A] district court may in its discretion award
attorney’s fees to a prevailing defendant . . . upon a finding that the plaintiff’s action
was frivolous, unreasonable, or without foundation, even though not brought in
subjective bad faith.” Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421
(1978); see Clajon Prod. Corp. v. Petera, 70 F.3d 1566, 1581 (10th Cir. 1995)
(applying Christiansburg Garment standard to § 1988(b) attorney’s fee claim).
“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). “A complaint is frivolous where it lacks an
arguable basis either in law or in fact.” Blakely v. USAA Cas. Ins. Co., 633 F.3d 944,
949-50 (10th Cir. 2011) (alterations and internal quotation marks omitted).
-6-
A. Bases for Award; Adoption of Proposed Order
We quickly dispose of Osguthorpe’s first two appellate arguments. Contrary
to Osguthorpe’s claim, the district court was not required to base its attorney-fee
ruling on new or different evidence. Rather, the court was required to make specific
factual findings to permit meaningful appellate review. See Osguthorpe I, 705 F.3d
at 1236-37. And the district court’s adoption of the proposed order ASCU submitted
with its brief “does not change the standard of review . . . . Though not made by the
district judge himself, the findings are formally his; they are not to be rejected
out-of-hand, and they will stand if supported by evidence.” Flying J Inc. v. Comdata
Network, Inc., 405 F.3d 821, 830 (10th Cir. 2005) (internal quotation marks omitted);
cf. Anderson v. City of Bessemer City, 470 U.S. 564, 572 (1985) (criticizing trial
court’s “verbatim adoption of findings of fact prepared by prevailing parties . . . [due
to] the potential for overreaching and exaggeration on the part of attorneys preparing
findings of fact when they have already been informed that the judge has decided in
their favor”). As discussed below, we conclude that the district court’s findings that
the complaint was frivolous are supported by the record and the relevant law.
B. Whether Osguthorpe’s Complaint Was Frivolous5
We turn to the district court’s determination that Osguthorpe’s complaint was
frivolous, which we review de novo. See Osguthorpe I, 705 F.3d at 1236.
5
As indicated above, because we conclude that the complaint was frivolous, we
do not address the district court’s finding that it was also vexatious.
-7-
Osguthorpe claimed that the defendants conspired and acted in concert to deprive it
of its due-process rights by proceeding with the state-court trial instead of requiring
ASCU and Wolf Mountain to arbitrate their disputes. The basis for federal
jurisdiction was 42 U.S.C. § 1983.6 Section 1983 provides a cause of action against a
person acting under color of state law who deprives a plaintiff of “any rights,
privileges, or immunities secured by the Constitution” or federal law. 42 U.S.C.
§ 1983.
Osguthorpe relies exclusively on Olde Discount Corp. v. Tupman, 1 F.3d 202
(3rd Cir. 1993), as authorizing a § 1983 claim based on a court’s refusal to require
arbitration. Osguthorpe cites Olde Discount as holding “that defendants Tupman and
Hubbard have acted under color of state law to deprive the plaintiff of its rights under
the Federal Arbitration Act and under the Due Process Clause in violation of
42 U.S.C. § 1983.” Aplt. Opening Br. at 32 (brackets and internal quotation marks
omitted). But the Third Circuit Court of Appeals did not so hold. Indeed, the
language on which Osguthorpe relies does not appear in the appellate decision.
Instead, the language appears in the district court’s decision, where it describes only
6
Osguthorpe also invoked 28 U.S.C. §§ 1331 (federal question
jurisdiction), 1343 (federal civil-rights jurisdiction), and 1367 (supplemental
jurisdiction). Those bases rely on the § 1983 claim. In addition, Osguthorpe cited
28 U.S.C. §§ 2201 & 2202, which authorize federal courts to grant declaratory
judgments. “However, the Declaratory Judgment Act does not confer jurisdiction
upon federal courts, so the power to issue declaratory judgments must lie in some
independent basis of jurisdiction.” Devon Energy Prod. Co., L.P. v. Mosaic Potash
Carlsbad, Inc., 693 F.3d 1195, 1202-04 (10th Cir. 2012) (internal quotation marks
omitted). Thus, this ground also relies on the § 1983 claim.
-8-
a claim made by the plaintiff. Olde Discount Corp. v. Tupman, 805 F. Supp. 1130,
1135 (D. Del. 1992). Neither the federal district court nor the Third Circuit
addressed this claim. Therefore, Olde Discount does not support Osguthorpe’s
position.
To state a claim under the Due Process Clause, a plaintiff must show, among
other things, “the deprivation of an interest in life, liberty, or property.” Elliott v.
Martinez, 675 F.3d 1241, 1244 (10th Cir. 2012) (internal quotation marks omitted).
Osguthorpe contends that a right to arbitrate is “a substantial right,” Aplt. Opening
Br. at 36, apparently equating it with a property right cognizable under § 1983 which
could support a due-process claim. Osguthorpe has provided no authority holding
that a right to arbitrate is a property interest protected by the Due Process Clause.
Accordingly, we agree with the district court that Osguthorpe failed to identify a
protected property interest.7
Osguthorpe challenges the district court’s determination that the complaint
failed to describe any conspiracy by the defendants. Osguthorpe asserts that the
following allegations in the complaint described a conspiracy:
59. [ASCU] and Wolf Mountain have acted in concert with Judge
Hilder and the [state] Court or have otherwise conspired with them or
the actions of the Court and Judge Hilder have otherwise been essential
to [ASCU] and Wolf Mountain to move forward to litigate . . . and they
7
To the extent Osguthorpe argues that its federal complaint was necessary to
enforce the Federal Arbitration Act, as explained in Osguthorpe I, “state courts rather
than federal courts are most frequently called upon to apply the Federal Arbitration
Act.” 705 F.3d at 1235 (brackets and internal quotation marks omitted).
-9-
have acted and continue to act in concert with Judge Hilder and the
Court in the violation of [Osguthorpe’s] civil rights. Without the
assistance of Judge Hilder and the Court, [ASCU] and Wolf Mountain
would not be able to commit the civil rights violations they have
committed and continue to commit.
...
64. By proceeding forward to determine and to try all issues for
which arbitration is mandatory . . . Judge Hilder and the Court, in
concert and conspiracy with [ASCU] and Wolf Mountain, have
deprived and continue to deprive [Osguthorpe] of rights guaranteed to it
under the Constitution and laws of the United States, in violation of
42 U.S.C. § 1983.
Aplt. Opening Br. at 38 (emphasis added).
These allegations fail to allege facts describing a conspiracy among the
defendants. “[A] plaintiff must allege specific facts showing an agreement and
concerted action among[] the defendants because conclusory allegations of
conspiracy are insufficient to state a valid § 1983 claim.” Brooks v. Gaenzle,
614 F.3d 1213, 1228 (10th Cir. 2010) (brackets and internal quotation marks
omitted). An allegation that a defendant’s conduct was taken in furtherance of
a conspiracy “needs some setting suggesting the agreement necessary to make out
a [conspiracy] claim.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007).
Osguthorpe has offered no facts to support its charge that Judge Hilder agreed with
ASCU and Wolf Mountain to proceed with the state-court trial, let alone that any of
the defendants sought to deprive Osguthorpe of its civil rights. Rather, the facts
indicate that upon receiving the decision of the Utah Supreme Court holding that
- 10 -
Wolf Mountain had waived its right to arbitrate, Judge Hilder discharged his judicial
responsibility by setting the case for trial.
We conclude that the complaint was frivolous. As we have explained, the
complaint has no basis in law or fact. And as noted in Osguthorpe I, “Osguthorpe
came to the federal courts for relief only after receiving an unfavorable state-court
ruling on arbitrability several years after litigation had begun in Utah’s state-court
system.” 705 F.3d at 1235. Furthermore, in the face of Osguthorpe’s complete
failure to produce facts to support a conspiracy, “the existence of a conspiracy
between [Judge Hilder] and defendant[s] seems preposterous.” Crabtree ex rel.
Crabtree v. Muchmore, 904 F.2d 1475, 1479 (10th Cir. 1990). We further conclude
that ASCU has met its burden to show that Osguthorpe “has misused [its] statutory
privilege and distorted the intent of the [civil-rights] legislation.” United States
ex rel. Grynberg v. Praxair, Inc., 389 F.3d 1038, 1058 n.22 (10th Cir. 2004)
(construing attorney-fee provision of False Claims Act under standards applicable
to § 1988).
C. Amount of Attorney’s Fees Awarded
Osguthorpe contends that the district court’s order failed to provide an
adequate basis for the number of hours expended by ASCU’s attorneys and the
reasonableness of the rate, and failed to separate and exclude attorney’s fees incurred
on matters unrelated to the § 1983 claim. “To determine a reasonable attorneys fee
[to be awarded pursuant to § 1988(b)], the district court must arrive at a ‘lodestar’
- 11 -
figure by multiplying the hours [the prevailing party’s] counsel reasonably spent on
the litigation by a reasonable hourly rate.” Jane L. v. Bangerter, 61 F.3d 1505, 1509
(10th Cir. 1995).
The district court did not calculate a lodestar or provide any analysis
concerning the amount of the attorney’s fee to be awarded to ASCU, either in the
original grant of attorney’s fees or the order entered after remand. See Aplt. App.
at 1917 (original order stating “that ASCU is entitled to the full amount sought,
$42,923.00”); id. at 2132 (order on remand “find[ing] that the amount of the fees
requested is reasonable, and that ASCU is entitled to the full amount sought,
$42,923.00”). Consequently, we are unable to review the reasonableness of the
attorney’s fees awarded to ASCU. Although we recognize that “[a] request for
attorney’s fees should not result in a second major litigation,” we must remand for
further findings because the district court has not provided “a concise but clear
explanation of its reasons for the fee award.” Hensley, 461 U.S. at 437. “When
recalculating the award, the court must calculate the hours reasonably expended in
light of the results achieved and use that as the lodestar for the final award.” Sinajini
v. Bd. of Educ. of San Juan Sch. Dist., 233 F.3d 1236, 1242 (10th Cir. 2000).
“Ideally, of course, litigants will settle the amount of a fee.” Hensley, 461 U.S.
at 437.
- 12 -
III. ASCU’S REQUEST FOR ATTORNEY’S FEES ON APPEAL
ASCU included in its appellate brief a request that this court award attorney’s
fees for work defending this appeal. “We must deny this request because [ASCU]
failed to file a separate motion or notice requesting sanctions.” Abeyta v. City of
Albuquerque, 664 F.3d 792, 797 (10th Cir. 2011); Fed. R. App. P. 38. “‘Rule 38
requires that before a court of appeals may impose sanctions, the person to be
sanctioned must have notice and an opportunity to respond. A separately filed
motion requesting sanctions constitutes notice. A statement inserted in a party’s brief
that the party moves for sanctions is not sufficient notice.’” Abeyta, 664 F.3d at 797
(brackets and ellipsis omitted) (quoting Rule 38 advisory committee’s note (1994
Amendment)).
IV. CONCLUSION
The district court’s determination that Osguthorpe’s complaint was frivolous,
thus entitling ASCU to an award of attorney’s fees, is affirmed. The amount of
attorney’s fees awarded is vacated and remanded for a calculation of the lodestar
and the hours reasonably expended. ASCU’s request for attorney’s fees on appeal
is denied.
Entered for the Court
Carolyn B. McHugh
Circuit Judge
- 13 -