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H.I.P. (Heightened Independence and Progress, Inc.) v. K. Hovnanian at Mahwah VI

January 26, 1996


Kole, J.A.D., Retired and Temporarily Assigned on Recall.

The opinion of the court was delivered by: Kole


KOLE, J.A.D., Retired and Temporarily Assigned on Recall.


Plaintiff, Heightened Independence and Progress, a New Jersey Nonprofit Corporation (HIP), moved for attorney fees under three statutes that provide for fees for a prevailing party. These are: (1) the Fair Housing Act, 42 U.S.C. § 3613(c)(2) (FHA); (2) the Americans with Disabilities Act, 42 U.S.C.A. § 12205 (ADA); and (3) the New Jersey Law Against Discrimination, N.J.S.A. 10:5-27.1 (LAD). HIP argued that defendant, the construction official of the Township of Mahwah (Official), should be liable for fees under the ADA. HIP further asserted that co-defendant Hovnanian at Mahwah VI, Inc. (Hovnanian), should pay under the appropriate provisions of the FHA and LAD. Plaintiff sought enhancement of their fees from both defendants only under the LAD. Hovnanian cross-moved for fees, claiming HIP's original suit was frivolous.

These motions arose from a suit instituted by HIP against Hovnanian and the Official. The controversy centered around the construction of seventy-eight units in a residential condominium complex called Franklin Crossing, located on Foxwood Road in Mahwah. As the developer, Hovnanian obtained the permits for the project from the Official.

HIP asserted prior to construction that the units failed to comply with federal and state architectural barrier laws. However, HIP did not file a complaint in this matter until months later when construction was well underway and only twelve units remained to be built. The parties discussed settlement before and after the complaint date, but did not settle until shortly after the return date of HIP's motion for a temporary restraining order. The court entered a consent judgment which required Hovnanian to build the remaining twelve units in a form accessible to persons with handicaps.


Common to the three statutes under which HIP moves for fees is that only a "prevailing party" may recover. Of central importance then, is the definition of this term in light of the facts at issue. Of note here is that the three statutes are to be interpreted as having the same definition of "prevailing party." See City of Burlington v. Dague, 505 U.S. 557, 561, 112 S. Ct. 2638, 2641, 120 L. Ed. 2d 449 (1992); Hensley v. Eckerhart,461 U.S. 424, 433, n.7, 103 S. Ct. 1933, 1939, n.7, 76 L. Ed. 2d 40 (1983); Singer v. State,95 N.J. 487, 495-496, 472 A.2d 138 (1984); Rendine v. Pantzer,276 N.J. Super. 398, 458, 648 A.2d 223 (App. Div. 1994), aff'd as modified 141 N.J. 292 (1995); Robb v. Ridgewood Board of Education269 N.J. Super. 394, 400, 635 A.2d 586 (Ch. Div. 1993)(relying on Texas State Teachers v. Garland Indep. School District,489 U.S. 782, 791, 109 S. Ct. 1486, 1493, 103 L. Ed. 2d 866 (1989), which addressed "prevailing party" with respect to 42 U.S.C.A. § 1983).

Fundamentally, a prevailing party is one who achieves a substantial portion of the relief it sought. Here, HIP achieved via settlement and consent order qualitatively and as a matter of principle, a large portion of what it hoped for by way of judgment. As such, it is a prevailing party and merits attorney fees.

The first inquiry in determining prevailing party status is whether the judgment provided the movant with a sufficient degree of success on the merits of its claim. In order to be considered a prevailing party, a "plaintiff must obtain an enforceable judgment against the defendant from whom fees are sought or comparable relief through consent decree or settlement. Whatever relief the plaintiff secures must directly benefit him at the time of judgment or settlement." Farrar v. Hobby, 506 U.S. 103, 113 S. Ct. 566, 573, 121 L. Ed. 2d 494 (1992)(citations omitted).

In the present case Hovnanian built twelve units of its development to be accessible to people with disabilities. But for the consent decree Hovnanian, and the Official, would not have acted. This certainly is the sort of "enforceable judgment" which "directly benefit[s]" plaintiff under Farrar. It is of no moment that the changes, when actually implemented by Hovnanian, were minor. Plaintiff represented the interests of the physically challenged to whom issues such as the wheelchair-turning radius in a bathroom, and whether doors swing into or out of a room, are very important. These, among others, were the relief sought and obtained. Thus, plaintiff should be a prevailing party under statute.

Further, because of the consent judgment, the Official did what it otherwise would not have done: it agreed to approve the plans as amended. It is true the Official's job was to review building plans to determine their conformance with the law, and, in essence, he performed a similar function because of the consent judgment. However, the reason HIP is a prevailing party with regard to the Official, is the consent judgment bound the Official, among other things, to "grant a formal variation consistent with the terms of this Judgment." Stipulated Settlement and Consent Judgment, at 5 (emphasis supplied). But for the consent judgment the Official would have had discretion in granting the variance for the changed plans. Thus, HIP is a prevailing party with respect to the Official.

Defendants also assert that the settlement applied only to twelve of the seventy-eight units and therefore, again, the relief was insignificant enough to remove HIP from the statutory embodiment of a prevailing party. This argument is without merit. At the date of filing the complaint, only twelve units reasonably could have been affected by any judgment. This is so because the remaining units had been constructed and or sold by the time of settlement. Once sold to innocent purchasers for value, the units were beyond the court's power to remedy. See 42 U.S.C.A. § 3613(d). Further, as plaintiff's certifications indicate, construction had progressed to a point were only the twelve units feasibly could have been modified. Thus, the prospective relief obtained affected the maximum amount of units possible. Accordingly, plaintiff received a substantial portion of the remedy it intended in a qualitative--but not quantitative--sense. The essential principle it endeavored to enforce was recognized. This is sufficient under the facts here to warrant a finding that it is prevailing party.

Defendants counter the above finding with assertions of "special circumstances" which cause the award of attorney fees to be unjust. See Newman v. Piggie Park Enterprises Inc.,390 U.S. 400, 402, 88 S. Ct. 964, 966, 19 L. Ed. 2d 1263 (1968). Defendants argue the judgment resulted from a "nuisance settlement," see Texas Teachers v. Garland School District,489 U.S. 782, 792, 109 S. Ct. 1486, 1493-1494, 103 L. Ed. 2d 866 (1989). They also contend HIP purposely waited to file its complaint until Hovnanian had constructed most of the units, causing the threat of an injunction to force it to settle quickly. These argument are without substance.

The fact the consent decree did not result from a nuisance settlement can be seen in the substantial relief plaintiff obtained from the standpoint of those the statutes were intended to benefit. Hovnanian and the Official agreed to settle by having the remaining units built by Hovnanian and approved by the Official in conformance with HIP's interpretation of accessibility laws. Further, any delay in filing by HIP enured to the benefit of defendants, who, as time passed, were assured that fewer units would be subject to the prospective relief sought. Thus the judgment at issue was not accomplished through a "nuisance settlement." Hence, no "special circumstances" exist.

Hovnanian alleges HIP purposely avoided settlement conferences with its attorneys until after filing the complaint in a surreptitious effort to become entitled to fees under statute. See Naprstek v. Norwich, 433 F. Supp. 1369, 1371 (N.D.N.Y. 1977)(court indicates the refusal to meet to settle can be a "special circumstance" negating entitlement to a shifted fee). However, this court finds this assertion is baseless. In his certification, plaintiff's counsel David Popiel included several letters he sent to defendant's former counsel apprizing it of the claimed violations. The original correspondence was dated May 17, 1994, and the last, July 5, 1994. The letters stated HIP intended to take the matter on as a case in August, 1994, and not sooner because the attorneys' workload mandated such delay. The parties then met on September 28, 1994, but could not agree to a settlement. HIP then filed suit on October 5, 1994. Hovnanian's current counsel will not be heard to say HIP did not meet with Hovnanian's attorneys when HIP clearly notified Hovnanian of the grievance, and later met its in-house legal staff. This argument therefore, is unpersuasive.

However, the inquiry into prevailing party status does not end here. The final step is to ascertain whether the relief obtained was causally connected to that sought. Ashley v. Atlantic Richfield Co., 794 F.2d 128, 131 (3rd Cir. 1986). This issue too yields a result favoring HIP, since plaintiff obtained the relief for which it strived, namely, accessibility. Thus the causal connection is clearly established.

Having determined HIP is a statutory prevailing party, the issue remaining before the court is the amount due from defendants.

The court in Robb v. Ridgewood, 269 N.J. Super. 394, 635 A.2d 586 (Ch. Div. 1993), considered, in detail, the appropriate method for calculating an award of attorney fees. "The most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate." Id. at 404 (citations omitted). In computing this "lodestar" amount, the most important inquiry is into the reasonableness of the time expended. Rendine v. Pantzer, 141 N.J. 292, 334-335, 661 A.2d 1202 (1995). "Courts reviewing fee allowances should assess what legal services reasonably competent counsel would consider as required to vindicate the protected legal or constitutional rights. Neither the tortoise nor the hare should be the model for compensation." Szczepanski v. Newcomb Medical Center,141 N.J. 346, 366, 661 A.2d 1232 (1995); see also Blum v. Stenson, 465 U.S. 886, 894, 104 S. Ct. 1511, 1547, 79 L. Ed. 2d 891 (1984)(nonprofit legal service organization is entitled to a reasonable attorney fee); Blanchard v. Bergeron, 489 U.S. 87, 94-95, 109 S. Ct. 939, 945, 103 L. Ed. 2d 67 (1989); Miller v. Apartments and Homes of N.J., Inc., 646 F.2d 101, 112 (1981). Once the lodestar figure is determined, the court has discretion to adjust it upward or downward. Robb, supra, 269 N.J. Super. at 404. One reason to reduce the fee is "if the level of success achieved in the litigation is limited compared to the relief sought." Rendine, supra, 141 N.J. at 336; Robb, supra, 269 N.J. Super. at 404-405.

In this case, HIP's attorneys, the Community Health Law Project (Project), claim fees and costs totalling $37,405.49. The Project arrived at this figure by multiplying hours spent on preparation for the underlying case and then in this fee application by a rate of $225 per attorney-hour. The Project added to these totals their costs. The computation ran as listed:

-charge for the underlying settlement:

1. 82.6 hours at $225.00 per hour = $18,585.00.

2. costs = $3,143.59.

TOTAL = 21.728.59.

-charge for the fee petition:

3. 67.9 hours at $225.00 per hour = $15,277.50.

4. costs = ...

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