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FREEMAN v. B & B ASSOCS.

September 20, 1984

PEARLINE E. FREEMAN and BAILEY A. FREEMAN, JR., Plaintiffs,
v.
B & B ASSOCIATES, et al., Defendants



The opinion of the court was delivered by: OBERDORFER

 This Truth-in-Lending case is before the Court on the plaintiff's petition for an award of attorneys' fees against defendants B & B Associates, W. Lawrence Brantley and Beatrice Brantley. *fn1" Plaintiffs' attorney, David Fox, has also requested that he be treated as an intervening party plaintiff for purposes of the attorneys' fees claims. *fn2" The underlying claim has been resolved by plaintiffs' acceptance of defendants' offer of judgment made pursuant to Rule 68, Fed. R. Civ. P. The accepted offer of judgment contemplates rescission of the note and deed of trust which imposed obligations on plaintiffs and return to defendants of the balance of the principal advanced to plaintiffs. The offer expressly provided, however, that it "includes an offer to pay costs but specifically excludes all liability for attorneys' fees." *fn3"

 Plaintiffs and Mr. Fox had agreed to a fee arrangement whereby

 
counsel fees would be paid by the defendants if plaintiffs prevailed, or if fees were not obtained from defendants, plaintiffs' recovery would be reduced by a one-third legal fee (contingent on prevailing in the litigation).

 Memorandum of Points and Authorities in Support of Plaintiffs' Application for Award of Attorneys' Fees from Defendants B & B Associates, W. Lawrence Brantley and Beatrice Brantley, Exhibit A at 2-3. *fn4"

 Plaintiffs demonstrate by affidavit, without contradiction, that at the earliest stages of the litigation Mr. Fox called defendants' counsel's attention to what appeared to be a controlling case on liability *fn5" and proposed settlement by rescission, plus the attorneys' fees that had been incurred up to that point. Plaintiffs' counsel repeated the proposal on several other occasions. Defendants nevertheless engaged in costly litigation for many months before coming forth with virtually the same offer that plaintiffs had made, except for the attorneys' fees.

 The pleadings of the parties raise three issues:

 (1) Are plaintiffs the prevailing parties?

 (2) Is a fee award barred by the terms of defendants' offer of judgment, which plaintiffs accepted?

 (3) If defendants are liable for fees, what should be the amount?

 I.

 The Truth-in-Lending Act provides that:

 
Any creditor who fails to comply with any requirement imposed under this part . . . is liable to such person in an amount equal to the sum of-
 
. . .
 
(3) in the case of any successful action to enforce the foregoing liability, . . . the costs of the action, together with a reasonable attorney's fee as determined by the court.

 15 U.S.C. ยง 1640(a)(2)(B)(3).

 On July 12, 1983, plaintiffs, by counsel, had filed a complaint alleging, among other things, defendants' failure to comply with the Truth-in-Lending Act, and praying for an injunction against foreclosure of a mortgage on their residence. Plaintiffs' counsel succeeded in obtaining, first a temporary restraining order, and then an injunction which prevented foreclosure. Thereafter, defendants moved to dismiss, and for summary judgment. Their strenuous defense required plaintiffs' counsel to seek and obtain judicial intervention to obtain discovery. *fn6" After all these litigation maneuvers, defendants made the offer of judgment which plaintiffs accepted. Plaintiffs thereby succeeded in exonerating themselves from a burdensome obligation which, but for this litigation, would have cost them their home.

 Defendants contend that even if plaintiffs may be said to have prevailed, the offer of judgment did not provide for any money damages, did not declare any violation of the Truth-in-Lending Statute, and was not a successful invocation of that statute. According to defendants, plaintiffs prevailed only on local law theories which do not provide for attorneys' fees.

  It is now well-established that a party is successful for purposes of assessing fees if he has obtained a successful result whether by judgment, settlement, or, in this case, acceptance of an offer of judgment. See Copeland v. Marshall, 205 U.S. App. D.C. 390, 641 F.2d 880, 904-05 (D.C. Cir. 1980); James v. Home Construction Co., 689 F.2d 1357, 1358 (11th Cir. 1982); see also Knighton v. Watkins, 616 F.2d 795, 798-99 (5th Cir. 1980). Moreover, recent cases reject defenses based on technical distinctions between the contentions in a complaint which prevailed and those which did not. As the Supreme Court has recently stated:

 
Litigants in good faith may raise alternative legal grounds for a desired outcome, and the court's rejection of or failure to reach certain grounds is not a sufficient reason for reducing a fee. The result is what matters.

 Hensley v. Eckerhart, 461 U.S. 424, 103 S. Ct. 1933, 1940, 76 L. Ed. 2d 40 (1983) ...


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