United States v. Tobias

935 F.2d 666, 1991 WL 97499
CourtCourt of Appeals for the Fourth Circuit
DecidedJune 11, 1991
DocketNo. 90-3124
StatusPublished
Cited by9 cases

This text of 935 F.2d 666 (United States v. Tobias) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Tobias, 935 F.2d 666, 1991 WL 97499 (4th Cir. 1991).

Opinion

K.K. HALL, Circuit Judge:

Stephen and Constance Tobias appeal an order of the district court awarding over $11,000 in costs and attorney’s fees to Harry and Jolene Johnson, under the common fund doctrine, after the Johnsons vigorously, though unsuccessfully, contested the Tobias’ title to part of a tract of land condemned by the United States. We reverse.

I.

In November, 1984, the United States condemned 369 acres of land in Roanoke County, Virginia, for development of the Appalachian Trail. The complaint named [667]*667appellees Harry and Jolene Johnson (collectively “Johnson”) as the property owners. In September, 1985, appellants Stephen and Constance Tobias (“Tobias”), believing that they owned part of the tract, intervened.

Tobias asserted title to 219 of the condemned acres, while Johnson claimed all 369. Tobias held a paper title traceable to a grant senior to Johnson’s, but Johnson nonetheless maintained that he and his predecessors had established title by adverse possession.

After Tobias’ intervention, Johnson’s counsel continued to negotiate unilaterally with the government to reach a settlement price for the 369 acres. In addition, Johnson incurred over $13,000 in appraisal costs between June and November, 1986. In March, 1986, the government had offered $329,800; by November, it was up to $425,-000; Johnson paid over $5,000 for his counsel’s efforts during this period.

Tobias then got into the negotiating act. His paper title deriving from the senior grant clouded 42 other acres the government had already acquired nearby. He offered to quitclaim these 42 acres to the government for an increased settlement offer. The government raised its offer to $475,000, to which all the parties agreed.1 The government deposited the sum in court, and left the parties to fight over it.

And fight they did. After a year and a half of discovery, a four-day jury trial was held in May, 1988. The jury found that Tobias had superior paper title to 219 of the acres, and that Johnson had not defeated the Tobias title through adverse possession. However, Johnson moved for judgment notwithstanding the verdict, and the district court granted it, awarding Johnson the entire $475,000. United States v. 369.-31 Acres, 696 F.Supp. 185 (W.D.Va.1988).

Tobias appealed, and this court reversed. United States v. Tobias, 899 F.2d 1375 (4th Cir.1990). Judgment below was entered accordingly, splitting the award between Johnson and Tobias proportionally (about 41% to Johnson and 59% to Tobias).

Notwithstanding his defeat, Johnson moved for attorney’s fees and costs in the district court, asserting that he had increased the value of a common fund through his own efforts, and that Tobias, as an eventual beneficiary of those efforts, should defray part of those fees and costs. After a hearing, the district court awarded Johnson over $11,000, purportedly 59% of Johnson’s expenses attributable to raising the government’s offer from $329,800 to $425,000.

Tobias appeals.

II.

The common fund doctrine is a narrow equitable exception to the “American rule” that parties bear their own costs of litigation. The first, and archetypal, common fund case was Trustees v. Greenough, 105 U.S. 527, 26 L.Ed. 1157 (1882). In Greenough, certain trustees had collusively sold land held as security for a bond issue at prices far insufficient to assure reserves to pay off the bonds. A single bondholder, Vose, brought suit on behalf of himself and all bondholders to set aside the transfers and appoint a receiver to manage the land. Vose won the suit after eleven years of litigation. Though he had borne all of the expense of the suit, he was entitled to only part of the award. Vose sought payment of his fees and costs from the yet-undistributed trust estate. The Supreme Court held that:

He has worked for [other bondholders] as well as for himself; ... [t]hey ought to contribute their due proportion of the expenses which he has fairly incurred. To make them a charge upon the fund is the most equitable way of securing such contribution.

105 U.S. at 532.

Just four years later, the Supreme Court applied the common fund doctrine in a different context and provided the basic rule of law on which this case turns. In Hobbs v. McLean, 117 U.S. 567, 29 L.Ed. [668]*668940 (1886), Hobbs, as assignee of a bankrupt, obtained a judgment in the United States Court of Claims. McLean and Harmon, who believed that the sum Hobbs had recovered rightly belonged to them, and who feared Hobbs would distribute the money to the bankrupt’s creditors, brought suit. Hobbs denied that McLean and Harmon had any right to the money, but on final hearing, Hobbs lost. Hobbs then moved for costs and attorney’s fees for his efforts in securing the fund in the Court of Claims. The circuit court denied this motion, and the Supreme Court affirmed:

We see no reason why [McLean and Harmon] should pay [Hobbs], who, instead of aiding them in securing their rights, has been an obstacle and obstruction to their enforcement. The services for which the defendant seeks pay from the plaintiffs were not rendered in their behalf, but in hostility to their interest. When many persons have a common interest in a trust property or fund, and one of them, for the benefit of all and at his own cost and expense, brings a suit for its preservation or administration, the court of equity in which the suit is brought will order that the plaintiff be reimbursed his outlay from the property of the trust, or by proportional contribution from those who accept the benefits of his efforts. But where one brings adversary proceedings to take the possession of trust property from those entitled to it, in order that he may distribute it to those who claim adversely, and fails in his purpose, it has never been held, in any case brought to our notice, that such person had any right to demand reimbursement of his expenses out of the trust fund, or contribution from those whose property he sought to misappropriate.

117 U.S. at 581-82 (citations omitted). Though the law of “common funds” has developed in more detail over the years, those two old Supreme Court cases state the fundamental equitable considerations. Over twenty-five years ago, Judge Hayns-worth summed up the doctrine for this court:

[The common fund doctrine] is founded upon the principle that when one who, while establishing his own claim, also establishes the means by which others may collect their claims, a chancellor in equity may award counsel fees to the trail blazer out of the property made available for the satisfaction of all claims. The principle is applied so that the one who led in hewing the path to victory is not left saddled with extensive attorney’s fees, which need not be incurred by his more timid fellows who held back until the fruits of the pioneer’s success were laid before them.

Gibbs v. Blackwelder, 346 F.2d 943, 945 (4th Cir.1965); see Boeing Co. v. Van Gemert, 444 U.S.

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