Pekarsky v. Ariyoshi

695 F.2d 352, 30 Empl. Prac. Dec. (CCH) 33,256

Opinions

POOLE, Circuit Judge:

Appellants Ariyoshi, Minami and Chun (“Appellants”) appeal from the district court’s order awarding attorneys’ fees and costs against the State of Hawaii under the Civil Rights Attorneys’ Fees Award Act, 42 U.S.C. § 1988. We reverse and remand for further proceedings.

Appellees brought the underlying class action civil rights suit on behalf of all Caucasians and new or non-residents of Hawaii who had failed to pass the Hawaii State dental licensure examinations between 1974 and 1979. Named as defendants in both their individual and official capacities were the eight members of the Dental Board of Examiners (“Dental Board defendants”) and the Appellants, who were charged with discrimination against members of the class in the administration of the examinations.

The parties eventually entered into a Stipulation and Agreement of Settlement (“Agreement”) which provided for the payment of damages by the Dental Board defendants, the modification of examination procedures, and expungement by the State of the records of class members who had failed past examinations. The Agreement also dismissed with prejudice the eight Dental Board defendants and reserved for later hearing the appellees’ request for attorneys’ fees against the three Appellants.

After the settlement was approved by the court, appellees moved under 42 U.S.C. § 1988 for an award of attorneys’ fees against the Appellants. The court found that the Agreement had dismissed the Dental Board defendants in their individual capacities only, thus leaving open appellees’ claim for attorneys’ fees against all defendants — Appellants and Dental Board members — in their official capacities. The court then awarded fees against all defendants in their official capacities, which award was held to be the liability of the State under Hutto v. Finney, 437 U.S. 678, 98 S.Ct. 2565, 57 L.Ed.2d 522 (1978).

Appellants contend on appeal that, contrary to the district court’s finding, the effect of the Agreement was to dismiss the Dental Board defendants in both their individual and official capacities, leaving open appellees’ claim for attorneys’ fees only against the three Appellants. The- latter now argue that, because appellees did not prevail against them, attorneys’ fees against them were not justified. Further, they argue that, even if appellees did prevail against them, the fees awarded were clearly excessive.

We conclude that the district court erred in finding that the Agreement left open appellees’ claim for attorneys’ fees against the dismissed Dental Board defendants in their official capacities. The interpretation of a settlement agreement, like that of a contract, is a question of law subject to de novo review by this court. Kittitas Reclamation District v. Sunnyside Valley Irrigation District, 626 F.2d 95, 98 (9th Cir.1980).¹ In our view, the Agreement here is unambiguous and must be construed as having dismissed the Dental Board defendants in both individual and official capacities, and as having left open appellees' claim for attorneys’ fees only against Appellants.

The relevant paragraphs of the Agreement read as follows:

12. There will be dismissal, with prejudice, as to defendants Maehara, Minato, Kurashima, Yang, Shindo, Kahoe, Hirano, and Au [Dental Board defendants] following approval by the Court of the settlement.

* * * * # *

16. The matter of plaintiffs’ attorneys’ fee request against Defendants Ariyoshi, Minami and Chun [Appellants] is reserved for hearing thereon separately on December 1, 1980 by the Court.

The dismissal of the Dental Board defendants in paragraph 12 is in no way limited to dismissal in their individual capacities. The defendants were sued in their dual capacities, and reference to them by name only, without specifying one capacity or the other, is most reasonably construed as reference to both capacities. Furthermore, paragraph 16 reserves appellees’ request for attorneys’ fees against Appellants Ariyoshi, Minami and Chun only. Had the Dental Board defendants been dismissed only in their individual capacities, paragraph 16 would logically have reserved for future determination the attorneys’ fees question against such defendants in their official capacities. As to the Dental Board defendants, in both their individual and official capacities, we therefore conclude that the overall settlement figure included an attorneys’ fees component.

We next conclude that appellees did prevail against the three Appellants, thus justifying an award of attorneys’ fees against them as well.² The expungement of records and the reform of the examination procedures required by the Agreement represent relief obtained against Appellants. The implementation of these reforms will require the adoption by the Dental Board of new rules, which, to be valid, must be approved by Appellant Ariyoshi as Governor. See H.R.S. § 91-3(c); Otani v. Contractors License Board, et al, 51 Haw. 673, 466 P.2d 1009, 1011 (1970). We are unpersuaded by Appellants’ argument that the reforms will not require the adoption of “rules” within the meaning of H.R.S. § 91-3(c). The reforms will apply generally to and affect all future dental license applicants, and will involve the implementation of a new policy of examination procedures. Their implementation will therefore require agency statements falling squarely within the definition of “rule.” See H.R.S. § 91-1(4).

While we thus conclude that attorneys’ fees could be awarded against Appellants Ariyoshi, Minami and Chun, we must remand to the district court for recalculation of the amount of such award. The district court’s award covered attorneys’ fees incurred by appellees in prevailing against both the Appellants and Dental Board defendants. The Agreement, however, preserved only their claim for fees against Appellants. It was therefore improper to include in the award those fees attributable to work performed in prevailing against the Dental Board defendants, since the settlement paid by the Dental Board defendants included such fees. On remand, therefore, the district court should determine and award only such additional attorney’s fees attributable to work performed in prevailing against Appellants.³

The order awarding attorneys’ fees is REVERSED and the case REMANDED for further proceedings consistent herewith.

1 . Appellees argue that the district court’s interpretation was not confined to the four comers of the Agreement, but was based on the court’s independent knowledge of the parties’ intent. According to appellees, the court gained this knowledge- through its close and extensive involvement in the settlement negotiations between the parties. Appellees further argue that, because the court’s interpretation was thus based on extrinsic evidence of intent, it should be reviewed under the clearly erroneous standard.

We have reviewed the full record on appeal, including the transcript of the hearing on attorneys’ fees, and have found no indication that the district court based its interpretation on anything other than the Agreement itself. The court made no findings of extrinsic fact with respect to the intent of the parties, nor did it state that it was relying on knowledge gained through its involvement in the settlement process. We cannot assume that the court’s interpretation was based on undisclosed extrinsic evidence. Such evidence, if it existed, would properly have been set forth in the record in the form of findings of fact.

2 . Judge Choy in dissent concedes that the appellees did (he states “technically”) prevail, but argues that the award of attorneys’ fees nevertheless would be unjust. In support of this conclusion, the dissent incorporates materials referring to dental examination results achieved after appellants, under the compulsion of this civil rights lawsuit, changed the general examination procedures. The dissent extrapolates from these results, which do not constitute the operative facts of this case, that inferences of discrimination have disappeared. This novel approach would seem to create history, a rationale which judicial philosophy does not normally accept.

3 . Appellants’ argument that the fee award was excessive is based solely on the contention that the fees requested by appellees were not verified by the materials submitted to the court. Since we remand for determination of the proper amount of fees we need not further address this issue.