James D. Truesdell v. the Philadelphia Housing Authority, a body corporate

PRECEDENTIAL
Filed May 7, 2002
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 01-1557
JAMES D. TRUESDELL,
Appellant
v.
THE PHILADELPHIA HOUSING AUTHORITY,
a body corporate and politic;
CARL GREENE; BARBARA BAYLOR; DEBORAH
FEATHERSON,
As individuals and in their official capacities
ON APPEAL FROM THE
UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF PENNSYLVANIA
(Dist. Court No. 99-CV-06121)
District Court Judge: Honorable Bruce W. Kauffman
Argued January 17, 2002
Before: ALITO and ROTH, Circuit Judges, and
SCHWARZER,1 Senior District Judge
(Filed: May 7, 2002)
_________________________________________________________________
1. The Honorable William W Schwarzer, Senior District Judge for the
Northern District of California, sitting by designation.
PAUL A. BROOKS, Esq. (Argued)
MICHAEL DONAHUE, Esq.
GEORGE GOULD, Esq.
Community Legal Services, Inc.
1424 Chestnut Street
Philadelphia, PA 19102
Counsel for Appellant
MICHAEL PILEGGI, Esq. (Argued)
Philadelphia Housing Authority
2012 Chestnut Street
Philadelphia, PA 19103
Counsel for Appellee
OPINION OF THE COURT
ALITO, Circuit Judge:
James D. Truesdell, a participant in the federal Section 8

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housing program, commenced this action under 42 U.S.C.
S 1983 to enforce federal rights under the U.S. Housing Act
of 1937, 42 U.S.C. S 1437f et seq., against the Philadelphia
Housing Authority ("PHA"), which administers the program
locally. During the preliminary injunction hearing, the
parties reached a settlement, which was memorialized in
the District Court’s Order dated January 24, 2000. On
June 12, 2000, Truesdell moved for enforcement of the
January 24th Order and for sanctions. Shortly thereafter,
PHA came into compliance, and the Court dismissed
Truesdell’s motion as moot. Truesdell then filed two
motions for attorney’s fees, both of which were denied.
Truesdell’s subsequent motion under Rule 59(e) to alter or
amend the Order denying attorney’s fees and costs was
similarly denied.
Because we find that Truesdell is a "prevailing party"
within the meaning of 42 U.S.C. S 1988, we reverse and
remand for a determination of an appropriate award of
attorney’s fees in accordance with this opinion.
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I.
In January 1998, James D. Truesdell ("Truesdell")
became a participant in the federal Section 8 project-based2
rental assistance program ("Section 8 program" or "Section
8"), established under 42 U.S.C. S 1437f et seq., which is
administered locally by the appellees -- the Philadelphia
Housing Authority, its Executive Director Carl Greene, and
others in their employ, including Barbara Baylor and
Deborah Featherson. The Section 8 program provides rent
subsidies for low- and moderate-income participants so
that they can afford to lease privately owned housing units.
Under the program, participants make rental payments
(i.e., "tenant rent") based on their income and ability to pay.
The PHA then makes "housing assistance payments" to
private landlords in an amount calculated to make up the
difference between the participant’s contribution and a
"contract rent" agreed upon by the landlord and the PHA.
If a participant’s income declines, the participant may
request that PHA re-determine and lower the "tenant rent"
and, consequently, increase PHA’s "housing assistance
payments." This will lower the participant’s overall out-of-
pocket rent obligation.
In November 1998, PHA set Truesdell’s "tenant rent" at
$62 per month, effective February 1, 1999; however, on
January 25, 1999, Truesdell’s income decreased to zero,
and, consequently, his tenant rent should have been
reduced. The parties disputed exactly when Truesdell
notified the PHA that he was receiving no income.
In August 1999, Truesdell received notice from his
landlord that it was closing the "Single Room Occupancy"
("SRO") building in which he lived. Truesdell requested that
PHA lower his "tenant rent" retroactive to February 1, 1999,
to reflect his loss of income on that date and that PHA

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2. Project-based assistance differs from tenant-based assistance in that
the former is tied to a particular unit, whereas the latter entails a
voucher entitling the participant to select a unit anywhere in PHA’s
jurisdiction. (We are told that tenant-based assistance has a waiting list
of approximately 14,000 people and that the list was closed when
Truesdell requested tenant-based assistance.)
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issue him a Section 8 voucher so that he could move to
another residence with continued Section 8 assistance.
On October 25, 1999, PHA notified Truesdell that it
would lower his rent to zero retroactively beginning on
September 1, 1999, but that it would not do so for the
period between February 1 and August 31, 1999. PHA
explained that Truesdell had not reported his loss of
income until September 1999. PHA also notified Truesdell
that because he was deficient in his "tenant rent" for the
period beginning February 1, 1999, he was in violation of
his lease and therefore could not qualify for a Section 8
voucher. Due to this deficiency in "tenant rent" for the
same period, Truesdell’s landlord began eviction
proceedings on October 1, 1999.
On December 2, 1999, Truesdell commenced this S 1983
action raising two claims: (1) that PHA had unlawfully failed
to re-determine and lower his "tenant rent" (and
correspondingly, to increase the "housing assistance
payment" to his landlord) effective February 1, 1999; and
(2) that PHA had refused to give him a Section 8 voucher.
Truesdell sought declaratory and injunctive relief and
compensatory and punitive damages.
On January 24, 2000, the District Court held a
preliminary injunction hearing, during which the parties
reached a settlement. The District Court’s January 24th
Order included the terms of the settlement: PHA was
required (1) to provide rental assistance to Truesdell for
placement in a "Single Room Occupancy" Dwelling; (2) to
recommend Truesdell’s application for admission to another
PHA project with a unit that included food preparation and
sanitary facilities; (3) to place Truesdell on the waiting list
for receipt of tenant-based rental assistance, if and when
the waiting list is reopened; and (4) to make appropriate
retroactive adjustments in the housing assistance payment
for the period from February 1, 1999, through September 1,
1999. During the hearing, Truesdell expressly reserved the
right to file an attorney’s fee petition later.
Shortly thereafter, PHA referred Truesdell to Oak Lane
Court Apartments. By mid-March, Oak Lane had approved
Truesdell’s application and had applied to PHA for its
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approval of Truesdell’s move into unit number 310. While
waiting for approximately three months for PHA to approve
the Oak Lane unit, Truesdell moved out of his previous
SRO and lived in his father’s house.
On June 12, 2000, Truesdell moved for enforcement of
the January 24th Order and for sanctions. Four days after
receiving Truesdell’s motion, PHA gave its final approval for
his move into Oak Lane unit 310. (Because unit 310
included private sanitary and kitchen facilities, this
approval fulfilled PHA’s obligations under both paragraphs
1 and 2 of the January 24th Order). On August 1, 2000,
PHA provided Truesdell with evidence that it had paid -- on
July 3, 2000 -- his former landlord in compliance with
paragraph 4 of the Order. Thereafter, the District Court
dismissed the motion to compel as moot.
On August 14, 2000, Truesdell filed two motions for
attorney’s fees under 42 U.S.C. S 1988, and these motions
were denied by the District Court. Truesdell’s subsequent
motion under Rule 59(e) to alter or amend the Order
denying attorney’s fees and costs was similarly denied.
Truesdell then filed this appeal.
II.
A.
We exercise plenary review over legal issues relating to
the appropriate standard under which to evaluate an
application for attorney’s fees, including the question
whether Truesdell was a "prevailing party." See County of
Morris v. Nationalist Movement, 273 F.3d 527, 535 (3d Cir.
2001).
Under the "American rule," parties are ordinarily
responsible for their own attorney’s fees. See Alyeska
Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 247
(1975). Thus, there is "a general practice of not awarding
fees to a prevailing party absent explicit statutory
authority." Key Tronic Corp. v. United States , 511 U.S. 809
(1994). Congress has, however, authorized the award of
attorney’s fees to a prevailing party in the Civil Rights
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Attorney’s Fees Awards Act of 1976, 90 Stat. 2641, 42
U.S.C. S 1988(b), the statute upon which Truesdell relies in
this case. Section 1988(b) states in pertinent part:"In any
action or proceeding to enforce a provision of section[ ] . . .
1983 . . . of this title . . . , the court, in its discretion, may
allow the prevailing party . . . a reasonable attorney’s fee as
part of the costs." As we have recently noted,"[a]lthough
[S 1988(b)] expressly refers to a district court’s discretion, it
is well settled that a prevailing plaintiff should recover an
award of attorney’s fees absent special circumstances."
Nationalist Movement, 273 F.3d at 535 (citing Newman v.
Piggie Park Enters., Inc., 390 U.S. 400, 402 (1968)).

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The Supreme Court has given a "generous formulation" to
the term "prevailing party," stating that" ‘plaintiffs may be
considered "prevailing parties" for attorney’s fees purposes
if they succeed on any significant issue in litigation which
achieves some of the benefit the parties sought in bringing
suit.’ " Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)
(citation omitted). In Texas State Teachers Ass’n v. Garland
Independent School Dist., 489 U.S. 782 (1989), the Court
synthesized the definition of "prevailing party" as follows:
"[T]o be considered a prevailing party within the meaning of
S 1988, the plaintiff must be able to point to a resolution of
the dispute which changes the legal relationship between
itself and the defendant." Id. at 792 (emphasis added). "The
touchstone of the prevailing party inquiry must be the
material alteration of the legal relationship of the parties
. . . ." Id. at 792-93 (emphasis added). In Farrar v. Hobby,
506 U.S. 103 (1992), the Court concluded that a plaintiff
"must obtain [either] an enforceable judgment against the
defendant from whom fees are sought, or comparable relief
through a consent decree or settlement, [and][w]hatever
relief the plaintiff secures must directly benefit him at the
time of the judgment or settlement . . . . Only under these
circumstances can civil rights litigation effect‘the material
alteration of the legal relationship of the parties’ and
thereby transform the plaintiff into a prevailing party." Id.
at 111 (internal citations omitted) (emphasis added).
Applying these criteria, the Farrar Court held that a
plaintiff who wins only nominal damages is still a prevailing
party under S 1988. See 506 U.S. at 112.
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Finally, in Buckhannon Board & Care Home, Inc. v. West
Virginia Department of Health & Human Resources, 532
U.S. 598 (2001),3 the Supreme Court recently restated that
"settlement agreements enforced through a consent decree
may serve as the basis for an award of attorney’s fees." Id.
at 604 (citing Maher v. Gagne, 448 U.S. 122 (1980)).4 The
Court confirmed that "[a]lthough a consent decree does not
always include an admission of liability by the defendant, it
nonetheless is a court-ordered ‘chang[e][in] the legal
relationship between [the plaintiff] and the defendant.’ " Id.
(quoting Texas State Teachers Ass’n, 489 U.S. at 792 (citing
Hewitt v. Helms, 482 U.S. 755, 760-61 (1987), and Rhodes
v. Stewart, 488 U.S. 1, 3-4 (1988) (per curiam))). In a
footnote, the Court distinguished between court-approved
settlements and private settlements, stating that"private
settlements do not entail the judicial approval and oversight
involved in consent decrees. And federal jurisdiction to
enforce a private contractual settlement will often be
lacking unless the terms of the agreement are incorporated
into the order of dismissal." Id. at n.7 (citing Kokkonen v.
Guardian Life Ins. Co. of America, 511 U.S. 375 (1994)). In
a concurrence, Justice Scalia noted that at least in the
situation of court-approved settlements, "the outcome is
. . . the product of, and bears the sanction of, judicial
action in the lawsuit." Id. at 618 (Scalia, J., concurring).
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3. In Buckhannon, the Supreme Court rejected the "catalyst theory,"
holding that where a party has failed to secure a judgment on the merits
or a court-ordered consent decree, but has nonetheless achieved the
desired result because the lawsuit brought about a voluntary change in
the defendant’s conduct, the plaintiff is not a"prevailing party." 532 U.S.
at 605.
4. In Maher, the Court held that "[t]he fact that [the recipient] prevailed
through a settlement rather than through litigation does not weaken her
claim to fees." 448 U.S. at 129. The Court relied on the text of S 1988 as
well as its legislative history: "Nothing in the language of 1988 conditions
the District Court’s power to award fees on full litigation of the issues or
on a judicial determination that the plaintiff’s rights have been violated.
Moreover, the Senate Report expressly stated that‘for purposes of the
award of counsel fees, parties may be considered to have prevailed when
they vindicate rights through a consent judgement or without formally
obtaining relief.’ " Id.
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B.
On appeal, Truesdell argues that he is a prevailing party
because he sought and obtained complete relief on his first
claim (a retroactive readjustment of PHA’s rent assistance
payments on his behalf), and substantial relief on his
second claim (continued Section 8 housing). In response,
PHA primarily argues that Truesdell did not prevail because
he remains on project-based assistance, while the relief
that he really sought was a Section 8 voucher for tenant-
based assistance. PHA also maintains that, because it
never admitted liability nor consented to what counsel
termed in oral argument a "gratuitous resolution," the
January 24th Order was a stipulated settlement -- not a
court approved consent decree -- and therefore no
attorney’s fees should be awarded.5
1.
We first consider whether the January 24th Order, in
form, may support an award of attorney’s fees. In denying
Truesdell’s application, the District Court stated:"[the
court] did not view either side of the settlement to be
prevailing, it’s a settlement, it’s a resolution . . . ."
Memorandum & Order, December 4, 2000, at 2 (emphasis
added). We do not agree with the District Court’s
conclusion that the parties’ settlement was an inappropriate
basis for an award of attorney’s fees. As previously noted,
under Buckhannon, attorney’s fees may be awarded based
on a settlement when it is enforced through a consent
decree. Buckhannon, 532 U.S. at 604. Although PHA
characterizes the January 24th Order as a stipulated
settlement, the Order does not bear the characteristics of a
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5. Truesdell did not waive his right to recover attorney’s fees simply
because the settlement agreement is silent in that regard. See Torres v.
Metropolitan Life Ins. Co., 189 F.3d 331 (3d Cir. 1999) ("A settlement
agreement that is silent as to attorney’s fees will not be deemed to

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constitute a waiver, regardless of the course of negotiations."). Even
though the January 24th Order does not discuss attorney’s fees, counsel
for Truesdell specifically reserved the right to file a motion for attorney’s
fees during the preliminary injunction hearing at which time the
settlement terms were negotiated.
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stipulated settlement. On its face, the January 24th Order
(1) contains mandatory language (e.g., "The [PHA] shall
provide . . ."), (2) is entitled "Order," and (3) bears the
signature of the District Court judge, not the parties’
counsel. Moreover, the January 24th Order gave Truesdell
the right to request judicial enforcement of the settlement
against PHA. See Farrar, 506 U.S. at 113 ("No material
alteration of the legal relationship between the parties
occurs until the plaintiff becomes entitled to enforce a
judgment, consent decree, or settlement against the
defendant."). For these reasons, we hold that the January
24th Order is a proper vehicle for rendering one side a
"prevailing party" under S 1988.
2.
We next consider whether the terms of the settlement
memorialized in the January 24th Order render Truesdell a
"prevailing party" by "material[ly] alter[ing] [ ] the legal
relationship" between PHA and Truesdell. Texas Teachers
Ass’n, 489 U.S. at 792-93. Under the "generous
formulation" of "prevailing party" status in the previously
noted authorities, it would be difficult to conclude that
Truesdell has not achieved a change in his legal
relationship with PHA under the terms of the January 24th
Order.
On Truesdell’s first claim -- retroactive rent readjustment
-- it is clear that Truesdell did achieve complete success.
Before the lawsuit, PHA refused to retroactively reduce
Truesdell’s "tenant rent" for the applicable time period
beginning February 1, 1999. After the January 24th Order,
Truesdell could, and did, request judicial enforcement
against PHA for the application of the retroactive rent
adjustment. Truesdell’s success on this claim is significant.
But for PHA’s payment to Truesdell’s landlord of the $464
deficiency in tenant rent, Truesdell would have been
ineligible for continued Section 8 housing. Thus, his
success on the first claim was significant, not only because
it rectified the deficiency, but also because it allowed him
continued eligibility for Section 8 housing.
Truesdell’s success on his second claim is less clear. It is
true that Truesdell, at the preliminary injunction hearing,
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initially sought a Section 8 voucher for tenant-based
assistance, and this, according to the January 24th Order,
was not ultimately granted him. Truesdell did receive,

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however, continued project-based rental assistance at a
better housing unit (with private sanitary and kitchen
facilities). These facts suggest that while Truesdell did not
achieve complete success on his second claim, the litigation
did bring about partial success in the form of continued
Section 8 assistance. We, therefore, conclude that Truesdell
enjoyed complete success on his first claim and partial
success on his second claim.
3.
We do not agree with PHA that Truesdell’s limited
success on the second claim was so de minimis as to
deprive Truesdell of his status as a "prevailing party"
altogether. See Appellees’ Br. at 10. When, as we concluded
above, a material alteration in the legal relationship of the
parties has occurred, "the degree of the plaintiff’s overall
success goes to the reasonableness of the award under
Hensley, not to the availability of a fee award vel non."
Texas State Teachers Ass’n, 489 U.S. at 793. Thus, the
District Court on remand may weigh Truesdell’s partial
success on the second claim in determining the appropriate
amount of the award. See Hensley, 461 U.S. at 440 (stating
that "where the plaintiff achieved only limited success, the
district court should award only that amount of fees that is
reasonable in relation to the results obtained"). The Hensley
Court acknowledged that there is "no precise rule or
formula" in making this determination but advised district
courts that they "may attempt to identify specific hours
that should be eliminated, or [ ] simply reduce the award to
account for the limited success." Id. at 436-37.
C.
We, therefore, reverse the District Court’s Order of
February 9, 2001, and remand this case with instructions
to award attorney’s fees to the appellant in an amount that
is reasonable in light of his complete success on his first
claim and partial success on his second claim. The District
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Court should also evaluate the appellant’s entitlement to
attorney’s fees in connection with the motion to enforce and
for contempt sanctions under 42 U.S.C. S 1988 and as a
sanction for PHA’s civil contempt of the Settlement Order.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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