24-488-cv Toyota Lease Trust v. Village of Freeport
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 17th day of April, two thousand twenty-five.
PRESENT: SUSAN L. CARNEY, MICHAEL H. PARK, MARIA ARAÚJO KAHN, Circuit Judges.
_________________________________________
TOYOTA LEASE TRUST,
Plaintiff - Appellee,
v. No. 24-488-cv
VILLAGE OF FREEPORT,
Defendant - Appellant,
ALL COUNTY HOOK UP TOWING, INC., JOSEPH CALVAGNO,
Defendants. * _________________________________________
FOR APPELLANT: KEITH M. CORBETT (Brian D. Ginsberg, on the brief), Harris Beach PLLC, Uniondale, NY.
FOR APPELLEE: NICHOLAS A. DUSTON (Benjamin D. Schwartz, on the brief), Norris McLaughlin, P.A., New York, NY.
Appeal from a judgment of the United States District Court for the Eastern
District of New York (Gujarati, District Judge; Locke, Magistrate Judge).
UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment entered on February 16, 2024,
is VACATED and the case is REMANDED for further proceedings.
Defendant-Appellant Village of Freeport (“the Village”), a municipality
located in Nassau County, New York, appeals from a judgment of the United
States District Court for the Eastern District of New York (Locke, M.J.) awarding
$235,054.25 in attorneys’ fees to Plaintiff-Appellee Toyota Lease Trust (“Toyota”),
a subsidiary of Toyota Motor Credit Corporation. We assume the parties’
familiarity with the underlying facts, procedural history, and arguments on
appeal, to which we refer only as necessary to explain our decision to vacate and
remand.
* The Clerk of Court is directed to amend the caption to conform to the above.
2 Background
Toyota held title to a Camry leased to two residents of the Village. Those
residents allowed more than $1,000 in Village parking tickets to accumulate over
time. In January 2020, the outstanding parking fees triggered the Village’s
seizure of the Camry from a public road under its “scofflaw” policy (the
“Policy”). Under the Policy, the Village or its agent (a towing company) would
impound and retain an offending vehicle until the tickets and related fees were
paid.
In May 2020, Toyota––which by then had displaced the vehicle’s lessees,
who defaulted on the lease––sued the Village under 42 U.S.C. § 1983. It asserted
that the Village’s seizure of the Camry without a warrant was unreasonable, in
violation of its Fourth Amendment rights, and that the Village did not afford it
sufficient process under the Fourteenth Amendment because it provided neither
timely notice nor any opportunity to be heard. More broadly, it argued that the
Policy embodied an unconstitutional application of New York State Vehicle and
Traffic Law § 1224, the state traffic law upon which the Village relied. Finally, it
further alleged that the Policy violated other New York statutory and
constitutional laws. Naming the Village, the towing company, and the towing
company’s owner as defendants, it sought declaratory and injunctive relief,
damages of different kinds, replevin, and certain other relief.
3 In July 2022, Toyota moved for partial summary judgment. 1 It asked for a
ruling that the seizure and impoundment of the Camry, and other similarly
situated vehicles, violated the Fourth and Fourteenth Amendments; a judgment
declaring the Policy violative of the U.S. Constitution; and $3,601 in
compensatory damages. The Village, in turn, sought partial summary judgment
on its opposing legal claims defending the Policy.
Magistrate Judge Locke recommended that the district court: (1) award
summary judgment to Toyota on its Fourth and Fourteenth Amendment claims
that the Village’s impoundment of the Camry was an unreasonable seizure and
that it occurred without due process of law; (2) deny Toyota summary judgment
on its compensatory damages claim; (3) grant judgment declaring the Policy
broadly unconstitutional under the Fourth Amendment’s prohibition against
unreasonable, warrantless seizures and the Fourteenth Amendment’s prohibition
against deprivations of property without due process of law; (4) dismiss the
replevin claim as moot; and (5) permit Toyota to request an inquest on damages.
See Toyota Lease Tr. v. Vill. of Freeport, 2023 WL 4443992, at *5, 12–14 (E.D.N.Y. Jan.
24, 2023). He also recommended that the district court order the Village to submit
legislation, which the court would review, amending the Policy to provide
additional process. Id. at *12–13.
In March 2023, Judge Gujarati adopted this recommendation in part. She
granted summary judgment to Toyota on its federal constitutional claims as
1In November 2020, the Village surrendered the Camry to Toyota. Before seeking summary judgment, Toyota dismissed its claims against the towing company and its owner. Only the Village is a party to this appeal.
4 applied to the Village’s seizure of the Camry. See Toyota Lease Tr. v. Vill. of
Freeport, 2023 WL 4449333, at *2 (E.D.N.Y. Mar. 30, 2023); Toyota Lease Tr., 2023
WL 4443992 at *8 (“Freeport's Scofflaw policy as applied in this case violated
Plaintiff's Fourth Amendment rights”); id. at *10. She denied summary judgment
as to compensatory damages and granted summary judgment to the Village on
the replevin claim. Toyota Lease Tr. v. Vill. of Freeport, 2023 WL 4449333, at *2. She
reserved decision on Toyota’s broad request for declaratory relief as to the
constitutionality of the Policy. Id. 2
In April 2023, the court met with the parties to discuss Toyota’s request for
declaratory relief. The parties agreed to submit a joint letter on that issue.
Two weeks later, Toyota and the Village advised the court by letter from
counsel to Toyota that they had reached agreement on the remaining merits
issues. Counsel reported Toyota’s agreement to withdraw its state constitutional
and statutory claims, and the Village’s agreement that it had “policy-makers
[working on] revising their [P]olicy” to provide more effective notice and to
avoid unreasonable, warrantless seizures. App’x 509. Toyota’s counsel further
advised, “[T]here is no need for Court supervision of the proposed alternate
legislation” because the Magistrate Judge’s “report and recommendation . . .
addressed all major constitutional issues surrounding the current policy” and
that the ruling “should be a sufficient guide” to the Village. Id. The parties later
stipulated that only two issues still required the court’s attention: the amounts
due Toyota as compensatory damages and for its attorneys’ fees and costs under
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24-488-cv Toyota Lease Trust v. Village of Freeport
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 17th day of April, two thousand twenty-five.
PRESENT: SUSAN L. CARNEY, MICHAEL H. PARK, MARIA ARAÚJO KAHN, Circuit Judges.
_________________________________________
TOYOTA LEASE TRUST,
Plaintiff - Appellee,
v. No. 24-488-cv
VILLAGE OF FREEPORT,
Defendant - Appellant,
ALL COUNTY HOOK UP TOWING, INC., JOSEPH CALVAGNO,
Defendants. * _________________________________________
FOR APPELLANT: KEITH M. CORBETT (Brian D. Ginsberg, on the brief), Harris Beach PLLC, Uniondale, NY.
FOR APPELLEE: NICHOLAS A. DUSTON (Benjamin D. Schwartz, on the brief), Norris McLaughlin, P.A., New York, NY.
Appeal from a judgment of the United States District Court for the Eastern
District of New York (Gujarati, District Judge; Locke, Magistrate Judge).
UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment entered on February 16, 2024,
is VACATED and the case is REMANDED for further proceedings.
Defendant-Appellant Village of Freeport (“the Village”), a municipality
located in Nassau County, New York, appeals from a judgment of the United
States District Court for the Eastern District of New York (Locke, M.J.) awarding
$235,054.25 in attorneys’ fees to Plaintiff-Appellee Toyota Lease Trust (“Toyota”),
a subsidiary of Toyota Motor Credit Corporation. We assume the parties’
familiarity with the underlying facts, procedural history, and arguments on
appeal, to which we refer only as necessary to explain our decision to vacate and
remand.
* The Clerk of Court is directed to amend the caption to conform to the above.
2 Background
Toyota held title to a Camry leased to two residents of the Village. Those
residents allowed more than $1,000 in Village parking tickets to accumulate over
time. In January 2020, the outstanding parking fees triggered the Village’s
seizure of the Camry from a public road under its “scofflaw” policy (the
“Policy”). Under the Policy, the Village or its agent (a towing company) would
impound and retain an offending vehicle until the tickets and related fees were
paid.
In May 2020, Toyota––which by then had displaced the vehicle’s lessees,
who defaulted on the lease––sued the Village under 42 U.S.C. § 1983. It asserted
that the Village’s seizure of the Camry without a warrant was unreasonable, in
violation of its Fourth Amendment rights, and that the Village did not afford it
sufficient process under the Fourteenth Amendment because it provided neither
timely notice nor any opportunity to be heard. More broadly, it argued that the
Policy embodied an unconstitutional application of New York State Vehicle and
Traffic Law § 1224, the state traffic law upon which the Village relied. Finally, it
further alleged that the Policy violated other New York statutory and
constitutional laws. Naming the Village, the towing company, and the towing
company’s owner as defendants, it sought declaratory and injunctive relief,
damages of different kinds, replevin, and certain other relief.
3 In July 2022, Toyota moved for partial summary judgment. 1 It asked for a
ruling that the seizure and impoundment of the Camry, and other similarly
situated vehicles, violated the Fourth and Fourteenth Amendments; a judgment
declaring the Policy violative of the U.S. Constitution; and $3,601 in
compensatory damages. The Village, in turn, sought partial summary judgment
on its opposing legal claims defending the Policy.
Magistrate Judge Locke recommended that the district court: (1) award
summary judgment to Toyota on its Fourth and Fourteenth Amendment claims
that the Village’s impoundment of the Camry was an unreasonable seizure and
that it occurred without due process of law; (2) deny Toyota summary judgment
on its compensatory damages claim; (3) grant judgment declaring the Policy
broadly unconstitutional under the Fourth Amendment’s prohibition against
unreasonable, warrantless seizures and the Fourteenth Amendment’s prohibition
against deprivations of property without due process of law; (4) dismiss the
replevin claim as moot; and (5) permit Toyota to request an inquest on damages.
See Toyota Lease Tr. v. Vill. of Freeport, 2023 WL 4443992, at *5, 12–14 (E.D.N.Y. Jan.
24, 2023). He also recommended that the district court order the Village to submit
legislation, which the court would review, amending the Policy to provide
additional process. Id. at *12–13.
In March 2023, Judge Gujarati adopted this recommendation in part. She
granted summary judgment to Toyota on its federal constitutional claims as
1In November 2020, the Village surrendered the Camry to Toyota. Before seeking summary judgment, Toyota dismissed its claims against the towing company and its owner. Only the Village is a party to this appeal.
4 applied to the Village’s seizure of the Camry. See Toyota Lease Tr. v. Vill. of
Freeport, 2023 WL 4449333, at *2 (E.D.N.Y. Mar. 30, 2023); Toyota Lease Tr., 2023
WL 4443992 at *8 (“Freeport's Scofflaw policy as applied in this case violated
Plaintiff's Fourth Amendment rights”); id. at *10. She denied summary judgment
as to compensatory damages and granted summary judgment to the Village on
the replevin claim. Toyota Lease Tr. v. Vill. of Freeport, 2023 WL 4449333, at *2. She
reserved decision on Toyota’s broad request for declaratory relief as to the
constitutionality of the Policy. Id. 2
In April 2023, the court met with the parties to discuss Toyota’s request for
declaratory relief. The parties agreed to submit a joint letter on that issue.
Two weeks later, Toyota and the Village advised the court by letter from
counsel to Toyota that they had reached agreement on the remaining merits
issues. Counsel reported Toyota’s agreement to withdraw its state constitutional
and statutory claims, and the Village’s agreement that it had “policy-makers
[working on] revising their [P]olicy” to provide more effective notice and to
avoid unreasonable, warrantless seizures. App’x 509. Toyota’s counsel further
advised, “[T]here is no need for Court supervision of the proposed alternate
legislation” because the Magistrate Judge’s “report and recommendation . . .
addressed all major constitutional issues surrounding the current policy” and
that the ruling “should be a sufficient guide” to the Village. Id. The parties later
stipulated that only two issues still required the court’s attention: the amounts
due Toyota as compensatory damages and for its attorneys’ fees and costs under
2 The judge’s reservation included any ruling as to the recommendation that the court order the Village to submit new legislation curing the Policy’s charged constitutional infirmities.
5 42 U.S.C. § 1988(b). They consented to proceed before Magistrate Judge Locke on
these issues.
In those later proceedings, the Magistrate Judge awarded Toyota $232 in
compensatory damages, a sum calculated to cover the Camry’s depreciation
during the roughly ten-month period when it was in the Village’s custody. See
Toyota Lease Tr. v. Vill. of Freeport, 2024 WL 639989, at *7–9 (E.D.N.Y. Feb. 15,
2024). He rejected Toyota’s claimed damages for loss of use of the vehicle during
those ten months. Id. at *12.
As to attorneys’ fees, Toyota requested $249,943.50. See Toyota Lease Tr.,
2024 WL 639989, at *9. The Magistrate Judge carefully considered Toyota’s
request using the lodestar method. He found reasonable most of the hours
claimed by Toyota’s attorneys, but reduced the hours claimed for work on a
reply brief “largely dedicated to fee litigation.” Id. at *10–11. Then, having found
to be reasonable the hourly rates proposed for each of the seven attorneys who
charged time to the case, he awarded Toyota $235,054.25. Id. at *8–11. 3
The Magistrate Judge further determined that a December 2021 letter and
attachments delivered to Toyota in an email sent by counsel for the Village (the
“December Documents”) did not constitute an “Offer of Judgment” under
Federal Rule of Civil Procedure 68 such as would serve to cap the fee and cost
award. Id. at *11. Judgment was entered accordingly.
The Village timely appealed.
3 He reduced the rate applied to the paralegal who worked on the case. Id. at *10.
6 Discussion
Contesting the fee award, the Village argues that Magistrate Judge Locke
erred in two ways: first, by failing to discount the claimed fees to reflect what it
describes as Toyota’s low overall degree of success in the case; and second, by
concluding that the December Documents did not satisfy Rule 68.
On review, we conclude that the able Magistrate Judge carefully reviewed
the claimed attorneys’ fees as to hours and rates, making some appropriate
reductions and amendments. Nonetheless, the final fee award lay outside the
range of permissible decisions because the current record gives no indication that
the Magistrate Judge took any account of the degree of actual success achieved
by Toyota. As to the court’s Rule 68 ruling, however, we identify no error.
A. Degree of Success Adjustment
We review a district court’s attorneys’ fees award for abuse of discretion.
See Lilly v. City of New York, 934 F.3d 222, 227 (2d Cir. 2019). An abuse of
discretion “occurs ‘when (1) the court's decision rests on an error of law (such as
application of the wrong legal principle) or clearly erroneous factual finding, or
(2) its decision—though not necessarily the product of a legal error or a clearly
erroneous factual finding—cannot be located within the range of permissible
decisions.’” McDaniel v. Cnty. of Schenectady, 595 F.3d 411, 416 (2d Cir. 2010)
(quoting Kickham Hanley P.C. v. Kodak Ret. Income Plan, 558 F.3d 204, 209 (2d Cir.
2009)) (alterations adopted).
In a suit brought under § 1983, a district court may award the prevailing
party “a reasonable attorney’s fee as part of the costs.” 42 U.S.C. § 1988. None
7 dispute that here, Toyota is the prevailing party. The court ultimately ruled in
Toyota’s favor on an as-applied version of two of its claims against the Village,
and Toyota obtained a damages award related to the Camry’s seizure. An award
of some amount of attorneys’ fees was certainly authorized by § 1988 in these
circumstances. See Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of Health &
Hum. Res., 532 U.S. 598, 603–04 (2001); Cabrera v. Jakabovitz, 24 F.3d 372, 393 (2d
Cir. 1994) (superseded in part by statute).
The Village nevertheless strenuously argues that the Magistrate Judge
erred by making any fees award at all to Toyota, despite the company having
prevailed. We are not persuaded. As we have described, Toyota did more than
“prevail on a technicality in a mostly frivolous lawsuit.” Millea v. Metro-North
R.R. Co., 658 F.3d 154, 168 (2d Cir. 2011). Accordingly, it was within the court’s
discretion to make some fee award to Toyota.
The Village makes a further general argument that the $235,054.25 sum
designated by Magistrate Judge Locke was unreasonable, excessive, and outside
the range of permissible decisions. It urges that the court did not take any
account of the limited degree of success achieved by Toyota in determining a
“reasonable” fee. 4
The Supreme Court has taught that “the degree of success obtained”
during a litigation is the “most critical factor” in computing an appropriate
lodestar award. Hensley v. Eckerhart, 461 U.S. 424, 436 (1983); see also Farrar v.
4 Toyota urges that the Village forfeited any argument on degree of success by failing to develop the position in its district court briefing. We disagree: the Village invoked this critical aspect sufficiently to preserve it for appeal. See Supp. App’x 19–20; App’x 592.
8 Hobby, 506 U.S. 103, 114 (1992). We, in turn, have instructed that a court should
look to “the quantity and quality of relief obtained, as compared to what the
plaintiff sought to achieve as evidenced in the complaint,” as “key factors” in
computing the degree of success. Barfield v. N.Y.C. Health & Hosps. Corp., 537 F.3d
132, 152 (2d Cir. 2008); see also Hensley, 461 U.S. at 435.
The Magistrate Judge’s opinion did not speak at all to the effect of this
“critical factor.” Because we cannot discern from the Magistrate Judge’s written
decision whether or, if so, how the degree of Toyota’s success bore on his
determination, we vacate the award and remand the case to allow the district
court, with its “superior understanding of the litigation,” Hensley, 461 U.S. at 437,
and familiarity with the facts, to make a fresh determination of an appropriate
fee.
B. The December Documents and Rule 68
The Village also challenges the Magistrate Judge’s conclusion that the
December Documents did not qualify as a Rule 68 “offer of judgment.” The
Village asserts that it made a qualifying offer that would have allowed Toyota to
take a judgment against it for $900. As a result, it says, it capped its liability for
fees and costs to those incurred by Toyota before the date of the letter.
We agree with the Magistrate Judge. The proposed “Judgment and
Order” included in the December Documents nowhere actually stated that
judgment would be entered against the Village. App’x 640, 643–51. So, the
Magistrate Judge was correct to conclude that it failed to satisfy Rule 68.
* * *
9 For the reasons set forth above, the District Court’s judgment awarding
$235,054.25 in attorneys’ fees to Toyota is VACATED and the matter is
REMANDED for further proceedings consistent with this order. 5
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk of Court
5 In its brief on appeal, Toyota requested leave to file a supplemental application in the district court for an award of attorney’s fees related to services rendered in this appeal. See Appellee’s Br. at 50. We hereby deny the request.