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Schwab v. Hansen

United States District Court, E.D. Virginia, Norfolk Division

May 25, 2018

EDWARD AND REIKO SCHWAB, JR., ET AL., Plaintiffs,
v.
DAVE HANSEN, ET AL., Defendants.

          OPINION AND ORDER

          Robert G, Doumar Senior United States District Judge

         This matter comes before the Court on defendant Frank Gurdziel's Motion for Attorneys' Fees Pursuant to 42 U.S.C. § 1988(b), ECF No. 20, which he filed after prevailing on his motion to dismiss plaintiffs' Section 1983 action pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. In support of his motion, Mr. Gurdziel claims that plaintiffs' Section 1983 claim against him, a private citizen, was baseless and harassing. For the reasons stated herein, Mr. Gurdziel's Motion for Attorneys' Fees is GRANTED. ECF No. 20.

         I. PROCEDURAL BACKGROUND

         On July 26, 2017, Edward and Reiko Schwab, Jr., James and Carol Melvin, Sandra D. Harris, and Michael Aschkenas (collectively, "Plaintiffs") filed the above-captioned action pursuant to 42 U.S.C. § 1983 alleging that the defendants violated Plaintiffs' rights to due process under the Fifth and Fourteenth Amendments in connection with the creation of special taxation district by the City of Virginia Beach between 2011 and 2013. Complaint ("Compl."), ECF No. 1. Three of the four named defendants were employees of the City of Virginia Beach at the time the lawsuit was filed (hereinafter "City Defendants"). Id. ¶¶ 4, 6, 7. The remaining defendant, Mr. Gurdziel, was not an employee of the City of Virginia Beach but was alleged to be the City's "agent" at all times relevant to the complaint. Id. ¶ 5.

         On September 1, 2017, the City Defendants, by joint motion, ECF No. 6, and Mr. Gurdziel, by separate motion, ECF No. 3, moved to dismiss Plaintiffs' complaint pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. Mr. Gurdziel's motion also requested an award of costs and attorneys' fees pursuant to 42 U.S.C. § 1988(b). Id. On November 16, 2017, by written opinion, the Court granted the defendants' motions, in part, and dismissed Plaintiffs' action for lack of subject matter jurisdiction. ECF No. 18. The Court declined to reach the other grounds for dismissal raised in the defendants' motions. Id. at 9. With respect to Mr. Gurdziel's request for attorneys' fees, the Court declined to address such request absent a motion in compliance with Rule 54 of the Federal Rules of Civil Procedure and granted Mr. Gurdziel leave to file such a motion within fourteen days. Id .

         On November 29, 2017, Mr. Gurdziel filed the instant Motion for Attorneys' Fees pursuant to 42 U.S.C. § 1988(b) along with a supporting memorandum. ECF Nos. 20, 21. In support, he attached the Affidavit of Mr. Gurdziel with several supporting exhibits. ECF No. 21-2. On December 12, 2017, Plaintiffs filed a brief in opposition, which included attorney argument and one unauthenticated email exhibit. ECF No. 22. On December 17, 2017, Mr. Gurdziel filed a reply brief. ECF No. 23.

         On February 6, 2018, the Court directed Plaintiffs to supplement their brief in opposition with competent factual evidence. ECF No. 26. Pursuant to such order, on February 20, 2018, Plaintiffs filed a supplemental opposition brief, which included affidavits of three plaintiffs: Mr. Schwab, Mr. Aschkenas, and Ms. Harris. ECF Nos. 27, 27-1, 27-1, 27-3. On March 6, 2018, Mr. Gurdziel filed a rebuttal to Plaintiffs' supplemental opposition. ECF No. 28.

         II. ALLEGATIONS IN PLAINTIFFS' COMPLAINT

         A summary of the allegations in Plaintiffs' complaint follows. Beginning in or around July, 2011, Mr. Gurdziel and the City Defendants allegedly "worked together" to create a special taxation district known as a "Special Service District" (hereinafter, "SSD") for waterfront property owners in the Chesopeian Colony subdivision in the City of Virginia Beach ("City"). Compl. ¶¶ 10, 25. The stated purpose of the proposed SSD was to fund a dredging project by levying additional taxes on the waterfront property owners within the SSD who stood to benefit from such project. Id. ¶¶ 11-14. For the proposed SSD to be approved by City Council, "80% of the waterfront property owners in the Chesopeian Colony [subdivision] needed to be in favor of its creation." Id. ¶ 15. Therefore, Mr. Gurdziel and the City Defendants allegedly circulated "willingness petitions" to Plaintiffs and other waterfront property owners in the Chesopeian Colony subdivision to garner support for creating the SSD. Id. ¶ 16.

         In May, 2013, when fewer than 80% of such owners approved of the SSD, Mr. Gurdziel and the City Defendants allegedly "conspired to add waterfront property owners from neighboring waterfront communities - and also subtract certain waterfront property owners from the actual Chesopeian Colony - to meet the needed 80% threshold." Id. ¶¶ 17, 19. By the end of June, 2013, Mr. Gurdziel and the City Defendants allegedly had successfully "gerrymander[ed]" the SSD to "surpass[] the required 80% threshold, " and the SSD was created. Id. ¶ 22.

         Based on the above, Plaintiffs claim that, by "creating] an illegal, non-contiguous SSD without a proper public hearing, " the defendants, "individually and collectively, deprived Plaintiffs of their respective rights to Due Process, " in violation of 42 U.S.C. § 1983. Id. ¶¶ 23, 26. As the basis for Mr. Gurdziel's liability under Section 1983, the complaint further alleges that, at all relevant times, Mr. Gurdziel was "clothed with the authority of the City of Virginia Beach as its agent in charge of securing citizen approval for the [SSD.]" Id. ¶ 5.

         III. LEGAL STANDARD

         "In any action or proceeding to enforce a provision of [42 U.S.C. § 1983], the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs[.]" 42 U.S.C. § 1988(b). Although the statutory provision does not distinguish between prevailing plaintiffs and prevailing defendants, "the Supreme Court ruled that prevailing defendants should receive attorneys' fees only when the plaintiffs claim was 'frivolous, unreasonable, or groundless, ' or when 'the plaintiff continued to litigate after it clearly became so.'" Hutchinson v. Staton. 994 F.2d 1076, 1080 (4th Cir. 1993) (quoting Christiansburg Garment Co. v. EEOC 434 U.S. 412, 422 (1980)). A plaintiff need not have brought the claim in bad faith for a defendant to be awarded fees under this provision. Id.

         IV. DISCUSSION

         In his Motion for Attorneys' Fees, Mr. Gurdziel argues that Plaintiffs had no factual basis to claim that he acted as an "agent" of the City or to support any legal theory that might render him, a private citizen, liable under Section 1983. The issue before the Court is whether Plaintiffs' Section 1983 claim against Mr. Gurdziel was "frivolous, unreasonable, or groundless" such that he should be awarded attorneys' fees under 42 U.S.C. § 1988(b).

         A. Applicable Law

         Section 1983 provides redress only for those injuries "fairly attributable to the State." DeBauche v. Trani, 191 F.3d 499, 506 (4th Cir. 1999) (quoting Lugar v. Edmondsun Oil Co,, 457 U.S. 922, 937 (1982)). "The person charged must either be a state actor or have a sufficiently close relationship with state actors such that a court would conclude that the non-state actor is engaged in the state's actions." DeBauche, 191 F.3d at 506. "Thus, the Supreme Court has held that private activity will generally not be deemed 'state action' unless the state has so dominated such activity as to convert it into state action: 'Mere approval of or acquiescence in the initiatives of a private party' is insufficient." Id. at 507 (quoting Blum v. Yaretsky, 457 U.S. 991, 1004 (1982)).

         Applying these principles, the Fourth Circuit has recognized four "exclusive circumstances" under which a private party can be deemed a state actor for purposes of § 1983:

(1) when the state has coerced the private actor to commit an act that would be unconstitutional if done by the state; (2) when the state has sought to evade a clear constitutional duty through delegation to a private actor; (3) when the state has delegated a traditionally and exclusively public function to a private actor; or (4) when the state has ...

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