author: CARRIGAN, District Judge.

text:
    Ardis KNUTZEN, Plaintiff, v. Melinda NELSON, et al., Plaintiffs-Intervenors, v. EBEN EZER LUTHERAN HOUSING CENTER, Defendant.
    Civ. A. No. 84-C-753.
    United States District Court, D. Colorado.
    Sept. 20, 1985.

      Glenn Meyers, Denver, Colo., Jacquelyn Higinbotham, Fort Morgan, Colo., for plaintiff.
    Neil Quigley, Denver, Colo., Helena Schultz, Brush, Colo., for defendant.
   ORDER

CARRIGAN, District Judge.

Before me are various motions to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6), for summary judgment and partial summary judgment pursuant to Fed.R. Civ.P. 56, and for class certification pursuant to Fed.R.Civ.P. 23. Jurisdiction is based on 28 U.S.C. § 1331 (1982). The parties have briefed the issues, and oral argument would not assist in resolving them.

I. Introduction.

A. Parties and Claims for Relief.

Plaintiffs, Ardis Knutzen, Melinda Nelson, Dorotea Herrera, and Dolly Wagner, are handicapped individuals who seek admission to the defendants’ housing project. Defendants are the owners, managers, and directors of the Tabor Apartments (the “project”), a thirty-three unit building located in Brush, Colorado. Construction of the Tabor Apartments was financed through a loan administered by the Department of Housing and Urban Development (“HUD”) pursuant to § 202 of the National Housing Act, 12 U.S.C. § 1701q (1982).

Plaintiffs complain that they were illegally excluded by the defendants from residing in the Tabor Apartments because of their respective handicaps. Two of the four plaintiffs, Knutzen and Nelson, were admitted as residents at the project but subsequently vacated their apartments, allegedly because of the treatment they received from certain of the defendants. All of the plaintiffs seek the opportunity to live at the project.

Plaintiffs assert claims for relief (not all of which are common to each of their complaints) based upon alleged: 1) violations of their rights to equal protection and due process under the Fifth Amendment to the United States Constitution; 2) violations of their rights to free exercise of religion under the First Amendment to the United States Constitution; 3) violations of § 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794 (1982); and 4) violations of the Fair Housing Act, 42 U.S.C. § 3601 et seq. (1982). They also assert various pendent state law theories, including breach of a covenant of quiet enjoyment, breach of contract, slander and defamation, and outrageous conduct.

Plaintiffs seek declaratory and injunctive relief: 1) enjoining the defendants from engaging in the allegedly unlawful conduct; 2) enjoining the defendants from using any practice, policy, or procedure that has the purpose or effect of discriminating against any applicant on the basis of his or her handicap or religious affiliation; 3) ordering the defendants to commence an outreach program to fill vacancies at the Tabor Apartments with non-elderly handicapped persons until such time as those persons are proportionally represented at the project; 4) ordering the defendants to revise their tenant selection rules and policies and to submit the proposed rules and policies to the court; and 5) ordering the appointment of an “impartial master” at the defendants’ expense to review tenant selection procedures and to be consulted by the defendants before they act on any application for admission. Plaintiffs also seek compensatory and punitive damages.

B. Procedural History.

Plaintiff Ardis Knutzen initially filed her complaint on April 6, 1984. On that same date, I granted a temporary restraining order ordering the defendants to hold one apartment open for her until further order of the Court. On April 16, 1984, I approved a stipulation by the parties that the defendants would continue obeying the restraining order pending a decision by this Court on Knutzen’s application for residency-

Since that time, I have allowed Melinda Nelson, Dorotea Herrera, and Dolly Wagner to intervene as plaintiffs. At a hearing on April 19, 1985, I ordered the parties to file motions for summary judgment.

Before me are the following motions: 1) motions to dismiss each of the intervenor’s complaints; 2) a motion for class certification; 3) motions to dismiss all class action claims; 4) a motion by the defendants for summary judgment; and 5) a motion by the plaintiffs for partial summary judgment. In light of my disposition of the summary judgment motions, I need not address the others.

C. Undisputed Facts.

The Eben Ezer Lutheran Housing Center was incorporated in 1982 with the intent of creating a housing project for the elderly and physically handicapped with federal funds obtained under § 202 of the National Housing Act, 12 U.S.C. § 1701q (1982). After the project was commenced, the defendants submitted to HUD their proposed tenant selection criteria, as required under 24 C.F.R. § 277.8. These criteria were initially rejected because they specified that only the elderly and the physically handicapped would be considered for residency. The local HUD office took the position that all handicapped persons, including the chronically mentally ill and the developmentally disabled, were eligible to occupy the project. Defendants did as advised by HUD and accepted tenants with handicaps that were not physical. During this period of time, the defendants admitted Knutzen and Nelson. Nelson resided in the project until August, 1984, and Knutzen stayed until September, 1984. Dorotea Herrera applied for admission in July, 1984. She never moved into the project; the parties dispute the reasons why she did not. Dolly Wagner applied for admission in February, 1984. Her application was denied, allegedly on the grounds that she had problems living in such a project and because she gave incomplete and evasive answers on her application form.

In late 1984, the local HUD office apparently reversed its position with regard to who was eligible to occupy the Tabor Apartments. By letter dated January 2, 1985, Mr. Larry Sidebottom, Chief of the Loan Management Branch of the Denver Regional Office of HUD stated:

“This Office concurs with your position that the Tabor Apartments have consistently requested that the project be permitted to serve only the elderly or physically handicapped (mobility impaired) persons in residency. We also accept your statement that the project does not have the expertise or facilities to serve the developmentally disabled and the chronically mentally ill.
In view of the project’s request and its limited expertise and facilities, we will approve changes to paragraph C of the Admissions Policies and Procedures submitted with your letter of December 3, 1984, to exclude mentally impaired and developmentally disabled persons.”

In order to apply for an apartment in the project, each plaintiff was required to fill out an application form. Under Section Five of that form, entitled “Emergency Notification,” they were asked, among other things, to answer the questions, “Member of what church” and “Pastor's name (minister, priest, rabbi.)” Completion of this section was not a prerequisite to admission, and at least two of the plaintiffs, Nelson and Herrera, left this section blank.

II. Motions for Summary Judgment and Partial Summary Judgment.

A. The Statutory Scheme of § 202. Congress initially enacted § 202 of the National Housing Act, 12 U.S.C. § 1701q (1982), in response to the need for housing for the elderly. Subsequent amendments have expanded the statute’s scope “to provide housing and related facilities for elderly or handicapped families.” 12 U.S.C. § 1701q(a)(l) (1982). The statute functions as follows:

“[Sjection 202 of the Housing Act of 1959, 12 U.S.C. § 1701q (1976) allows HUD to make 3% loans for 50 year terms to eligible developers to provide housing facilities for elderly or handicapped families with inadequate income to pay private market housing rentals. To start the program, Congress set up a revolving fund, id. at § 1701q(a)(4), which depends upon repayment of mortgages or Congressional appropriations for its continued success. Section 202 makes money available for mortgages which is otherwise unavailable. Id. at section 1701q(a)(2)(A). In order to assure that section 202 objectives are met, HUD requires an applicant to enter into a regulatory agreement providing that the Secretary of HUD shall establish rental levels and tenant eligibility.” City of Boston v. Harris, 619 F.2d 87, 89-90 (1st Cir.1980). (footnotes omitted.)

Under § 202 (d)(4):

“The term ‘elderly or handicapped families’ means families which consist of two or more persons and the head of which (or his spouse) is sixty-two years of age or over or is handicapped, and such term also means a single person who is sixty-two years of age or over or is handicapped. A person shall be considered handicapped if such person is determined, pursuant to regulations issued by the Secretary, to have an impairment which (A) is expected to be of long-continued and indefinite duration, (B) substantially impedes his ability to live independently, and (C) is of such a nature that such ability could be improved by more suitable housing conditions. A person shall also be considered handicapped if such person is a developmentally disabled individual as defined in section 102(5) of the Developmental Disabilities Services and Facilities Construction Amendments of 1950. The Secretary shall prescribe such regulations as may be necessary to prevent abuse in determining, under the definitions contained in this paragraph, the elegibility of families and persons for admission to and occupancy of housing constructed with assistance under this section.”

Pursuant to the authority granted to the Secretary under this section, HUD has interpreted the statute to delineate four separate categories of persons who are eligible to receive funding under a § 202 program: the elderly, the physically handicapped, the chronically mentally ill, and the developmentally disabled. See “Section 202 Direct Loan Program for Housing for the Elderly or Handicapped Processing Handbook” (HUD March, 1983) (“Handbook”), para. 1-5 b through e.

Section 202 is not merely a housing subsidy for eligible tenants. Rather, it is intended to provide housing and services to eligible occupants, as is made clear by § 202(f) which states:

“In carrying out the provisions of this section, the Secretary shall seek to assure, pursuant to applicable regulations, that housing and related facilities assisted under this section will be in appropriate support of, and supported by, applicable State and local plans which respond to Federal program requirements by providing an assured range of necessary services for individuals occupying such housing (which services may include, among others, health (including adult day health services), continuing education, welfare, informational, recreational, homemaker, counseling, and referral services, transportation where necessary to facilitate access to social services, and services designed to encourage and assist recipients to use the services and facilities available to them)____” 12 U.S.C. § 1701q(f) (1982).

While § 202 requires that a project provide services to its occupants, those services are not funded by HUD. Under § 202(a)(3), a loan may not exceed the “total development cost” of a project. That term is defined in § 202(d)(3) to include only costs of land, construction, and “movables” necessary to the basic operation of the project.

To receive funds under § 202, a developer must first apply to HUD. The application must contain “A narrative description of the anticipated occupancy (elderly and/or handicapped [physically handicapped or developmental^ disabled, i.e., mentally retarded, cerebral palsy, or epilipsy.])” 24 C.F.R. § 885.210(a)(5). The application must also describe the “special amenities or features” the project will provide. 24 C.F.R. § 885.210(a)(4)(iv). The regulations do not state that any particular services must be provided. However, funding is awarded on a competitive basis, and those applicants with experience in providing services for the group proposed to be served are given higher priority. See Handbook, para. 4-48.

The statute does not directly address whether each § 202 project must provide housing for all four eligible groups. The disjunctive language, however, suggests that a project may be targeted for a particular group. (“[T]he Secretary may make loans ... for the provision of ... housing ... for elderly or handicapped families....” 12 U.S.C. § 1701q(a)(l) (1982) (emphasis added)). In addition, at least two of the provisions of § 202 refer to housing for specific groups. 12 U.S.C. § 1701q(k)(2) (1982) (“The Secretary shall encourage the provision of small and scattered site group homes and independent living facilities for nonelderly handicapped persons and families”); 12 U.S.C. § 1701q(h) (1982). HUD has interpreted the statute in this manner and does not require each project to serve all eligible groups. See, e.g., 24 C.F.R. 885.210(a)(22) and (23); 24 C.F.R. § 885.225(a)(1). See also Handbook, para 4-48.

B. Statutory Claims

1. Violation of § 504 of the Rehabilitation Act.

The Rehabilitation Act of 1973 declares: “No otherwise qualified handicapped individual ... shall, solely by reason of his handicap, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance____” 29 U.S.C. § 794 (1982).

It is clear that § 504 provides a private cause of action for declaratory and injunctive relief. Pushkin v. Regents of the University of Colorado, 658 F.2d 1372 (10th Cir.1981). The elements of a § 504 claim are as follows:

“In order to make out a case based on a violation of § 504 a plaintiff must prove (1) that she is a ‘handicapped person’ under the Act, (2) that she is ‘otherwise qualified’ for the position [service or benefit] sought, (3) that she is being excluded from the position [service or benefit] solely by reason of her handicap, and (4) that the position [service or benefit] exists as part of a program or activity receiving federal financial assistance.” Doe v. New York University, 666 F.2d 761, 774-75 (2d Cir.1981).

The parties admit, for the purposes of this motion, that the plaintiffs satisfy the first and fourth elements of the above test. The issue, then, is whether they are “otherwise qualified” for occupancy at the Tabor Apartments and whether they have been excluded solely by reason of their respective handicaps. “The two factors are interrelated, since if the individual is not otherwise qualified he cannot be said to have been rejected solely because of his handicap.” Pushkin, 658 F.2d at 1385.

An “otherwise qualified” individual is “one who is able to meet all of a program’s requirements in spite of his handicap.” Southeastern Community College v. Davis, 442 U.S. 397, 406, 99 S.Ct. 2361, 2367, 60 L.Ed.2d 980 (1979). Defendants argue that the limitation of the project to only two of the four potentially eligible groups is consistent with the statute and entirely lawful. Therefore, they argue, because the project is limited to the elderly and the physically handicapped, the plaintiffs cannot meet all of the program’s requirements in spite of their respective handicaps. Specifically, they do not meet the requirement of being either elderly or physically handicapped. Therefore, argue the defendants, the plaintiffs are not “otherwise qualified” for occupancy in the project and thus they have not been excluded because of their handicaps but only because they don’t have a type of handicap that would qualify them for occupancy.

Plaintiffs argue, on the other hand, that it was not the intent of Congress to segregate the four groups into separate projects, and that § 202 does not support the defendants’ practice of excluding certain groups. No elderly or handicapped person, the plaintiffs argue, was intended to be categorically excluded from any § 202 project, and the only relevant consideration is whether the project provides services which meet the plaintiffs’ needs. Plaintiffs point to several services offered at the Tabor Apartments which they claim fulfill their needs, such as organized social functions, emergency pull cords in each unit, easy access to transportation, and the presence of a manager and assistant manager to help tenants fill out forms. Since these services improve their independent living capacities, the plaintiffs contend, they cannot be categorically excluded from this § 202 project.

As previously mentioned, the statute is not entirely clear on whether Congress intended that certain § 202 projects may be reserved exclusively for less than all of the eligible groups, although certain statutory language does support this conclusion. It is clear, however, that HUD has adopted this interpretation of the statute. Construction of a statute by the agency charged with its administration is entitled to deference. Morrison-Knudsen Construction Co. v. Director, Office of Workers’ Compensation Programs, United States Department of Labor, 461 U.S. 624, 103 S.Ct. 2045, 76 L.Ed.2d 194 (1983), United States v. Clark, 454 U.S. 555, 102 S.Ct. 805, 70 L.Ed.2d 768 (1982). I find and conclude that the limitation of § 202 projects to particular groups of eligible persons is consistent with the statute and with Congress’s intent.

Limitation of a project to selected groups clearly has a reasonable purpose and a reasonable factual basis. As a general proposition, it cannot be denied that each of the four eligible groups has different needs. The elderly may have no need for specialized on-site counseling services which might be of substantial benefit to the chronically mentally ill. On the other hand, the chronically mentally ill may have no need for certain physical health care services which might be extremely valuable to the elderly. It is perfectly rational, therefore, to target a particular group and provide those services that, in general, are useful to that group. Plaintiffs virtually admit as much in their brief when they state that, “The situation might be different if the plaintiffs were, for example, severely retarded persons who required a variety of special services such as speech and learning therapy.” Brief in Support of Plaintiffs’ Motion for Partial Summary Judgment at 19.

Plaintiffs would have me rule that if the services provided at a § 202 project are useful to any group other than those targeted, i.e., if the services would help members of any other group to live more independently, then that group is entitled to occupy that project. Consideration of the consequences of such a ruling, however, reveals that it would be unworkable and would undermine the purposes behind § 202.

If any person from any of the four eligible groups were entitled to occupy any § 202 project merely by demonstrating that the services provided would improve that person’s ability to live independently, the likely result would be that services would be underutilized. For example, a project for the developmentally disabled and the chronically mentally ill might provide specialized counseling services designed to meet the particular needs of those groups. If any elderly person were allowed to occupy space in that project, those persons who could benefit most from those services would be displaced. Such a result is far from unlikely because most § 202 projects (including this one) receive rent subsidies under § 8 of the United States Housing Act of 1937, 42 U.S.C. § 1408 (1982), making them cheaper to live in than non-federally funded projects.

Furthermore, were I to adopt the plaintiffs’ position, I would have to address the issue of how to determine whether the services provided would improve the plaintiffs’ ability to live independently. Surely a mere allegation to that effect is insufficient, because with the § 8 rent subsidies, virtually every member of an eligible group would have an incentive to so allege. Therefore, that factual determination would have to be made on a case by case basis, either by HUD or by the courts. Such a result is clearly unworkable. Neither body is equipped to supervise every tenant application to a § 202 project.

Plaintiffs have cited the case of Edge v. Pierce, No. 82-51 (D.N.J. May 22, 1984) in which the court denied summary judgment in a similar case stating, “there is a question of fact whether the needs of the plaintiffs could be served by the existing programs at the [§ 202 projects] rendering them qualified to live in those complexes.” Slip. op. at 22. For the reasons stated above, I decline to follow this analysis. T find and conclude that the plaintiffs are not entitled to have this court decide whether their needs could be served at the Tabor Apartments. HUD has the authority to limit a § 202 project to less than all eligible groups.

A further inquiry is suggested by the Supreme Court in Southeastern Community College v. Davis, 442 U.S. 397, 99 S.Ct. 2361, 60 L.Ed.2d 980 (1979). There, the Court stated, in dictum, that an individual may be “otherwise qualified” without meeting all of the program’s requirements if the refusal to modify the program to accommodate the handicapped individual would be “unreasonable and discriminatory.” Id. at 413, 99 S.Ct. at 2370. The Third Circuit has expanded this concept into the following test:

“A handicapped individual who cannot meet all of a program’s requirements is not otherwise qualified if there is a factual basis in the record reasonably demonstrating that accommodating that individual would require either a modification of the essential nature of the program, or impose an undue burden on the recipient of federal funds.” Strathie v. Department of Transportation, 716 F.2d 227, 231 (3rd Cir.1983).

In Edge v. Pierce, supra, the court stated, “if the plaintiffs are found to not meet the requirements of those programs, the court would have to consider whether the programs could be modified to accommodate the plaintiffs without affecting the essential nature of the programs or burdening HUD unduly.” Slip. Op. at 22-23.

I conclude that, in this case, ordering HUD to accommodate the plaintiffs would require a modification of the essential nature of the § 202 program. HUD has already determined that the essential nature of the § 202 program requires that different eligible groups be provided with different services. As previously explained, deference to the agency is appropriate in this case. There is no room for inquiry into whether HUD could modify the § 202 program to provide housing for all four eligible groups at each § 202 project.

For the foregoing reasons, I find and conclude that the defendants’ motion for summary judgment on the plaintiffs’ claim for violation of § 504 should be granted.

2. Violation of § 804 of the Fair Housing Act.

Section 804 of the Fair Housing Act, 42 U.S.C. § 3604 (1982), declares:

“[I]t shall be unlawful — (a) To refuse to ... rent after the making of a bona fide offer, or to refuse to negotiate for the ... rental of, or otherwise make unavailable or deny, a dwelling to any person because of ... religion.”

Plaintiffs have alleged that the section of the defendants’ application form which requests information on church affiliation amounts to a violation of this statute. Suit is authorized under § 812 of the Act, 42 U.S.C. § 3612 (1982) which states, “The rights granted by section ... 804 ... may be enforced by civil actions in appropriate United States district courts.” Exhaustion of administrative remedies is not a prerequisite to a § 812 action. Gladstone, Real tors v. Village of Bellwood, 441 U.S. 91, 99 S.Ct. 1601, 60 L.Ed.2d 66 (1979).

Plaintiffs have offered no evidence that the defendants’ refusal to rent to them was in any way affected by the plaintiffs’ religious affiliations. It is undisputed that at least two of the plaintiffs did not fill out the section of the application form that requested this information. It is likewise undisputed that one of these two plaintiffs was admitted to the project. The information on religious affiliation was sought for a reasonable, secular purpose, namely, to allow the managers of the project to notify a tenant’s clergyman in the event of death or serious illness.

Furthermore, as explained above, the defendants were entitled to exclude the plaintiffs because they were not members of the targeted group, i.e. the elderly or physically handicapped. Therefore, any discrimination based on religion was not the cause-in-fact of the plaintiffs’ exclusion from the Tabor Apartments. Defendants motion for summary judgment on this claim is granted.

C. Constitutional Claims.

1. Violation of Equal Protection.

Plaintiffs argue that disparate treatment of the chronically mentally ill and the developmentally disabled violates their equal protection rights secured by the due process clause of the Fifth Amendment to the United States Constitution. The Supreme Court has recently stated that disparate treatment of the handicapped is to be reviewed under a rational relationship test, not heightened scrutiny. City of Cleburne, Texas v. Cleburne Living Center, Inc., — U.S. -, 105 S.Ct. 3249, 87 L.Ed.2d 313 (1985). The classification in this case clearly meets this standard. The- § 202 program is rationally related to the legitimate governmental interest in affording housing which is tailored to the distinct and varied needs of the elderly and the handicapped. Therefore, the defendants’ motion for summary judgment on this claim is granted.

2. Violation of Due Process.

The threshhold issue in a claim for violation of the due process clause of the fifth amendment is whether there is a deprivation of any property right. As stated above, the plaintiffs in this case have not shown that they have any right to live in the defendants’ project. Therefore, they have not been deprived of any property right. Defendants’ motion for summary judgment on this claim is granted.

3. Violation of the right to free exercise of religion.

For the reasons stated in part IIB2, supra, the plaintiffs have failed to show that the practices of the defendants infringed on their First Amendment rights to free exercise of religion. Therefore, summary judgment on this claim is granted.

III. Pendent State Claims.

For the foregoing reasons, the defendants are entitled to summary judgment on all federal claims for relief. Although under United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966) I have discretion to hear the remaining state claims, I decline to do so in this case. Therefore, it is ordered that the pendent state claims are dismissed without prejudice.

Accordingly, it is ordered that the defendants’ motion for summary judgment is granted and the plaintiffs’ motion for partial summary judgment is denied. The plaintiffs’ claims for violation of 29 U.S.C. § 794 (1982), 42 U.S.C. § 3601 et seq. (1982), the due process clause, the equal protection clause, and the first amendment are all dismissed with prejudice. All remaining state claims are dismissed without prejudice. The action and complaint in this case are dismissed.


source: Caselaw Access Project

author: BELL, District Judge.

license: Public Domain

text:
    Aronette GILMER, et al., Plaintiffs, v. CITY OF CLEVELAND, et al., Defendants.
    No. C83-3483.
    United States District Court, N.D. Ohio, E.D.
    Sept. 19, 1985.
    William M. Goldstein and William M. Crosby, Cleveland, Ohio, for plaintiffs.
    Sheryl Y. King, William P. Farrell, Salvatore J. LoPresti, Cleveland, Ohio, for defendants.
   ORDER

BELL, District Judge.

On August 22, 1983, the above-entitled civil rights action was filed under 42 U.S.C. § 1983 on behalf of nine minors against the City of Cleveland, the Hiram House Camp and Gary Long, a counselor at the camp. The plaintiffs alleged that between July 18 through July 29, 1983 they attended a summer camp operated by Hiram House Camp. The funding for their attendance at camp was provided through a program sponsored by the City of Cleveland to assist children from low income families. While at the camp, the plaintiffs asserted, Gary Long required two of the children to kiss the bare bottom of another camper.

On February 2, 1984, this court granted a motion for summary judgment filed by Hiram House Camp and dismissed this action. It was determined that since the camp was privately owned and operated there was no state action. The order specifically stated:

The Hiram House Camp is a non-profit organization which runs several summer camps in the Cleveland area. A sizable portion of its funding is obtained from public sources as demonstrated by its contract for services with the City of Cleveland. It was under the terms of this contract which enabled the plaintiffs to attend the summer camp. However, the mere fact that a non-profit organization obtains public funds for its operation is not sufficient to demonstrate that the organization was acting under color of law.
The Supreme Court has recently had the opportunity to define the requirement for state action sufficient to maintain § 1983 claim. In Rendell-Baker v. Kohn, 457 U.S. 830 [102 S.Ct. 2764, 73 L.Ed.2d 418] (1982), the court found that a private school’s receipt of public funds alone does not make its acts state action. While describing the school’s receipt of public funds the court stated:
Here the school’s fiscal relationship with the State is not different from that of many contractors performing services for the government.
Rendell-Baker v. Kohn, supra at 843 [102 S.Ct. at 2772]. The court found the requirement of color of law cannot be satisfied by showing that an organization receives state funds. Instead, color of law depends upon some demonstration that the organization is performing a state purpose or is acting in an area traditionally reserved to the state.
In this action the camp’s only relationship to the City of Cleveland is found pursuant to the contract between the parties. The undisputed facts demonstrate that this relationship is merely that of a contractor providing services for a governmental entity. Therefore, the relationship alone does not create the requisite state action necessary for a claim under 42 U.S.C. sl983. In addition, private groups have historically run summer camps throughout this country. The court finds that the running of a summer camp is not “traditionally the exclusive prerogative of the state.” Jackson v. Metropolitan Edison Co., 419 U.S. 345, 353 [95 S.Ct. 449, 454, 42 L.Ed.2d 477] (1974). Instead, summer camps have traditionally been run by a wide variety of private and public groups. Hence, there can be no claim that the summer camp performs a “public function” or that there is a “symbolic relationship” between the camp and the City of Cleveland. Rendell-Baker v. Kohn, supra, at 842 [102 S.Ct. at 2772]; Jackson v. Metropolitan Edison Co., supra; Burton v. Wilmington Parking Authority, 365 U.S. 715 [81 S.Ct. 856, 6 L.Ed.2d 45] (1961).

Presently before the court is a motion filed by Gary Long for an award of attorney fees against the plaintiffs and their counsel, William M. Goldstein and William M. Crosby. Mr. Long asserts that he should be entitled to fees as a prevailing party pursuant to 42 U.S.C. § 1988 and as a sanction against plaintiffs’ counsel pursuant to 28 U.S.C. § 1927. The plaintiffs did not respond to this motion.

On August 2, 1984, a hearing was conducted by this court wherein Mr. Long submitted evidence of his costs for defending this suit. Counsel for plaintiff did attend the hearing and were permitted to argue in response to the motion. The first issue the court must consider is the responsibility, if any, of the plaintiffs for Mr. Long’s fees and costs.

In Christiansburg Garment Co. v. E.E.O.C., 434 U.S. 412, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978), the Supreme Court discussed the awarding of attorney fees to a “prevailing party” under Title VII. The Supreme Court found that a prevailing plaintiff should normally be awarded attorney fees under the act absent extraordinary circumstance's. In reaching this conclusion, the Court examined the legislative history of Title VII and noted that a successful plaintiff is vindicating a policy that Congress has established by exposing unlawful employment discrimination. Thus, the Court concluded' that Congress intended to provide plaintiff’s counsel compensation for their private role in enforcing the civil rights statutes by requiring the defendant-employer, which engages in discriminatory practices, to pay all of the costs including attorney fees of the action.

The Christiansburg Court further stated that it was the legislative intent to also provide some protections to a defendant from unwarranted actions brought against him. This protection for defendants was set forth as follows:

The sparse legislative history of § 706(k) reveals little more than the barest outlines of a proper accommodation of the competing considerations we have discussed. The only specific reference to § 706(k) in the legislative debates indicates that the fee provision was included to “make it easier for a plaintiff of limited means to bring a meritorious suit.” During the Senate floor discussions of the almost identical attorney’s fee provision of Title II, however, several Senators explained that its allowance of awards to defendants would serve “to deter the bringing of lawsuits without foundation,” “to discourage frivolous suits,” and “to diminish the likelihood of unjustified suits being brought.” If anything can be gleaned from these fragments of legislative history, it is that while Congress wanted to clear the way for suits to be brought under the Act, it also wanted to protect defendants from burdensome litigation having no legal or factual basis. (Emphasis added, footnotes omitted.)

Id. at 420, 98 S.Ct. at 699.

Having found that Congress intended to provide some protections to prevailing defendants, the Christiansburg Court developed a standard which must be met in order to award attorney fees to a prevailing defendant. The Court stated,

In sum, a district court may in its discretion award attorney’s fees to a prevailing defendant in a Title VII case upon a finding that the plaintiffs action was frivolous, unreasonable, or without foundation, even though not brought in subjective bad faith.
In applying these criteria, it is important that a district court resist the understandable temptation to engage in post hoc reasoning by concluding that, because a plaintiff did not ultimately prevail, his action must have been unreasonable or without foundation. This kind of hindsight logic could discourage all but the most airtight claims, for seldom can a prospective plaintiff be sure of ultimate success. No matter how honest one’s belief that he has been the victim of discrimination, no matter how meritorious one’s claim may appear at the outset, the curse of litigation is rarely predictable. Decisive facts may not emerge until discovery or trial. The law may change or clarify in the midst of litigation. Even when the law or the facts appear questionable or unfavorable at the outset, a party may have an entirely reasonable ground for bringing suit. (Emphasis added.)

Id. at 421-422, 98 S.Ct. at 700. Therefore, this court must determine whether the plaintiff’s claim was “frivolous, unreasonable, or without foundation” at the outset of this litigation or “that the plaintiff continued to litigate after it clearly became so.” Id. Further, if the court should find that this action was either brought or continued in bad faith by the plaintiff or her counsel, “there will be an even stronger basis for charging him with the attorney’s fees incurred by the defense.” Id.

The Sixth Circuit Court of Appeals has recently discussed the Christiansburg standard for awarding attorney fees to a prevailing defendant in civil rights actions. In Tarter v. Raybuck, 742 F.2d 977 (6th Cir.1984), the court reversed the district court’s award of attorney’s fees to a defendant since the underlying claim was not wholly meritless or without foundation. In Tarter, the issue before the district court involved a student’s fourth amendment rights in the context of a physical search of the student by a school official. Although the district court found that the student had consented to the search, the consent issue “was reasonably in dispute given the context of the purported waiver of important constitutional rights. The exact nature and extent of a student’s fourth amendment rights are not well settled.” Id. at 988. Thus, the circuit court held that a fee award would not be justified when a factual dispute exists and the plaintiff is asserting a cause of action predicated upon the violation of constitutional rights which are not well defined under the law.

The Christiansburg standards have also recently been applied by the Sixth Circuit to a fair housing action. In Smith v. Smythe-Cramer Co., 754 F.2d 180 (6th Cir. 1985), the court stated:

Application of these standards requires inquiry into the plaintiffs’ basis for bringing suit. Awards to prevailing defendants will depend on the factual circumstances of each case. While a showing of bad faith is not required for an award of attorneys fees to a prevailing defendant, such a showing would justify an award of fees. Additionally, courts have awarded attorneys fees to prevailing defendants where no evidence supports the plaintiff’s position or the defects in the suit are of such magnitude that the plaintiff’s ultimate failure is clearly apparent from the beginning or at some significant point in the proceedings after which the plaintiff continues to litigate. As the Supreme Court emphasized in Hughes, however, the mere fact that allegations prove legally insufficient to require a trial does not, for that reson alone, render a complaint groundless under Christiansburg, 449 U.S. at 16, 101 S.Ct. at 179.

Id. at 183. The court further noted that awards of attorney fees have been properly granted to defendants when a plaintiff misuses the civil rights laws to collaterally challenge state judgments, Tonti v. Petropoulous, 656 F.2d 212, 215-16 (6th Cir. 1981), or when a plaintiff brings a claim that is clearly barred by unambiguous case law, Werch v. City of Berlin, 673 F.2d 192, 196 (7th Cir.1982).

In this action the court does not find that an award of attorney fees against the plaintiffs would be consistent with the standards set forth in Christiansburg. The plaintiffs in this actions are minor and as such the court finds are not capable of knowing when an action under 42 U.S.C. § 1983 would be frivolous, unreasonable or without foundation. Therefore, the court shall not award any fees or costs against the plaintiffs.

The next issue before the court involves the actions of plaintiffs’ counsel, Mr. Gold-stein and Mr. Crosby.

Rule 11 of the Federal Rules of Civil Procedure requires that every pleading, motion or other paper that is submitted to the court be signed by an attorney. In addition, the rule provides as follows:

The signature of an attorney ... constitutes a certification by him that he has read the pleading, motion, or other paper; that to the best of his knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of the litigation. (Emphasis added.)

Further, the rule states that any attorney who violates the provisions of this rule shall be subject to an appropriate sanction, “which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading, motion, or other paper, including a reasonable attorney’s fee.”

A motion for sanctions under Rule 11 should not be lightly made by a party or granted by a court. This court is very much aware of the serious effect the granting of a sanction may have upon a lawyer’s professional record and reputation in the community. In determining the appropriateness of imposing any sanctions under Rule 11 against Mr. Goldstein and Mr. Crosby in this action, the court has reviewed with approval the Advisory Committee Notes to the rule which state in pertinent part:

The rule is not intended to chill ap attorney’s enthusiasm or creativity in pursuing factual or legal theories. The court is expected to avoid using the wisdom of hindsight and should test the signer’s conduct by inquiring what was reasonable to believe at the time the pleading, motion, or other paper was submitted. Thus, what constitutes a reasonable inquiry may depend on such factors as how much time for investigation was available to the signer; whether he had to rely on a client for information as to the facts underlying the pleading, motion, or other paper; whether the pleading, motion, or other paper was based on a plausible view of the law; or whether he depended on forwarding counsel or another member of the bar.

Both Mr. Goldstein and Mr. Crosby signed the complaint in this action which alleged that the state action requirement for a section 1983 claim was satisfied because the private camp received some public fund from the City of Cleveland. This assertion was directly in conflict with the law as set forth by the Supreme Court in Rendell-Baker v. Kohn, supra, and counsel should have known this by making a reasonable inquiry into the law. Thus, counsel brought an action that was clearly barred by unambiguous case law.

The time factors which are set forth in the Advisory Committee Notes to Rule 11 can not be asserted by plaintiffs’ counsel. This complaint was filed approximately three weeks after the alleged incident at the camp involving Mr. Long. Therefore, counsel was not under any pressures caused by a possible period of limitations, nor was counsel under any approaching time deadline that would have prevented some examination or investigation of the relevant case law.

After the court dismissed this action, plaintiffs’ counsel filed a motion to reconsider the granting of the defendant’s motion. (It should be noted that no opposing memorandum or briefs were submitted in opposition to the defendant’s motion for summary judgment.) In the motion for reconsideration counsel did not argue that the court’s decision was erroneous in either fact or law. Instead, counsel asserted that any settlement possibilities had ended with the court’s granting summary judgment.

Under these facts and circumstances the court finds that sanctions should be imposed against both counsel for the plaintiffs under Rule 11. Mr. Long has argued that all of his fees incurred in the defense of this action should be imposed against counsel, and he has submitted the records and documents to support his request of $5,990.93.

In determining the amount of the sanctions to be imposed under Rule 11, the court may consider all of the circumstances involved in this action. Heuttig & Schromm v. Landscape Contractors Council, 582 F.Supp. 1519, 1522 (N.D.Cal. 1984). The facts of this case reveal that counsel for the plaintiffs could have, in good faith, filed an action under state law. They filed instead an action under section 1983 wherein the alleged state action requirement of such a claim was directly in conflict with a recent decision of the Supreme Court. It is not the desire of this court on the purpose of Rule 11 to diminish the zeal or enthusiasm of counsel’s representation of their clients. It is the purpose of Rule 11 to require counsel to research the law and the facts prior to filing an action in the federal courts. Therefore, the court awards Mr. Long $1,000.00 of his fees against Mr. Goldstein and $1,000.00 of his fees against Mr. Crosby. This award is a sanction under Rule 11 for their failure to make a reasonable inquiry into the law prior to filing an unwarranted action under federal law.

Accordingly, the motion of defendant Long is hereby granted in part as it relates to Mr. Goldstein and Mr. Crosby, and the motion is denied as it relates to the nine individual plaintiffs.

IT IS SO ORDERED.


author: JOINER, District Judge.

text:
    Donna HRIVNAK, Plaintiff, v. FIRST OF MICHIGAN CORPORATION, a Delaware corporation, Defendant.
    Civ. A. No. 84CV-07587-AA.
    United States District Court, E.D. Michigan, S.D.
    Sept. 19, 1985.
    James L. Elsman, Birmingham, Mich., for plaintiff.
    Richard J. Seryak, Michael P. Coakley, Miller, Canfield, Paddock & Stone, Detroit, Mich., for defendant.
   MEMORANDUM OPINION AND ORDER

JOINER, District Judge.

This is an employment discrimination case. Plaintiff Donna Hrivnak claims that defendant First of Michigan (“FOM”) wrongfully terminated her employment because of her illegitimate pregnancy. Count I of the complaint alleges a violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq. (1982), and the Elliott-Larsen Civil Rights Act, Mich.Comp. Laws Ann. § 37.2101 et seq. (West 1985). Count II is a claim that defendant breached an implied agreement with plaintiff that it would not fire her without just cause. Count III alleges that defendant intentionally inflicted emotional distress, in violation of Michigan law.

This case comes before the court on defendant’s motion for summary judgment on Counts I and II of the complaint, and to dismiss Count III. At the oral hearing on defendant’s motion, both sides agreed that plaintiff has not exhausted, or even pursued, the administrative remedies for her Title VII claim before filing suit in this court. Both parties were directed to file briefs discussing the issue of whether plaintiff’s failure to take her Title VII claim to the EEOC divests this court of jurisdiction over that claim. In their briefs, both sides rely on Zipes v. Trans World Airlines, Inc., 455 U.S. 385, 102 S.Ct. 1127, 71 L.Ed.2d 234 (1982). The parties argue that Zipes holds that the filing of charges with the EEOC is not a prerequisite to federal jurisdiction, but is a requirement that is subject to waiver, estoppel, and equitable tolling. Both sides then agree that defendant has waived any objection that it could have made to the jurisdiction of this court.

The “primary question” addressed in Zipes was “whether the statutory time limit for filing charges under Title VII ... is a jurisdictional prerequisite to a suit in the District Court.” Zipes, supra, 455 U.S. at 387, 102 S.Ct. at 1129 (emphasis added). Accordingly, the Court examined the relationship between 42 U.S.C. § 2000e-5(f)(3), giving district courts jurisdiction over “actions brought under this subchapter,” and 42 U.S.C. § 2000e-5(e), specifying the time limits for filing EEOC charges. The timely filing provision states that “[a] charge under this section shall be filed within one hundred and eighty days after the alleged unlawful employment practice occurred ...” The Court observed that the timely filing provision is completely separate from the jurisdiction provision, and that it does not speak in jurisdictional terms or refer in any way to jurisdiction. 455 U.S. at 394, 102 S.Ct. at 1133. The Court concluded from this examination of the relevant Title VII provisions, as well as from the underlying Congressional policy and its own prior decisions, that the timely filing provision was not a prerequisite to federal court jurisdiction. Instead, the timely filing requirement, like a statute of limitations, is subject to waiver, estoppel, and equitable tolling. Id. at 392-98, 102 S.Ct. at 1131-35.

The difference between the present case and Zipes is readily apparent. In Zipes, the Court held that claims filed with the EEOC outside of the statutory time limit were to be considered “actions brought under this subchapter” that are subject to district court jurisdiction. In the present case, plaintiff has not filed timely, untimely or late charges with the EEOC; she has filed no charges whatsoever with any agency. The parties therefore ask this court to extend Zipes, and hold that claims that have not been subjected to agency review are nonetheless “actions brought under this subchapter” that are subject to district court jurisdiction.

Almost all of the cases cited by the parties to support their extension of Zipes are irrelevant, for they address claims that had been presented to the EEOC at some point. See, e.g., Rasimas v. Michigan Dept. of Mental Health, 714 F.2d 614, 620-21 (6th Cir.1983), cert. denied, — U.S. -, 104 S.Ct. 2151, 80 L.Ed.2d 537 (1984). One judge has extended Zipes as the parties suggest. See Jones v. Cassens Transp., 538 F.Supp. 929, 932 (E.D.Mich.1982), appeals dismissed, 705 F.2d 454 (6th Cir. 1983). However, another case suggests that Zipes does not confer jurisdiction over Title VII claims that are not exhausted before the appropriate agency. In Edwards v. Department of the Army, 708 F.2d 1344 (8th Cir.1983), the court held that it lacked jurisdiction over plaintiffs Title VII claim. The court reasoned that plaintiff failed to exhaust his administrative remedies before the EEOC, because he did not give the EEOC officer the information necessary to process his charge. 708 F.2d at 1347. The court cited Zipes in discussing the timeliness of the EEOC charge, but concluded that exhaustion of administrative remedies was a jurisdictional prerequisite. Id. at 1346-47. The failure of the plaintiff in the present case to file a charge with the EEOC is analogous to the insufficient filing found in Edwards.

The foregoing discussion reveals the paucity of authority on the question of whether the pursuit of administrative remedies is a jurisdictional prerequisite to a Title VII action. It is therefore necessary to examine anew the enforcement provisions of Title VII that are contained in 42 U.S.C. § 2000e-5. The statute sets up elaborate provisions for the processing of discrimination claims by the EEOC, as well as by state and local agencies, before such claims are heard in federal court. The statutory structure for the enforcement of Title VII claims strongly suggests that “actions brought under this subchapter” are those which are first presented to and considered by the EEOC, and other appropriate equal opportunity agencies.

The Supreme Court has discussed the policies and goals prompting Congress to select agency review as the first step in the Title VII enforcement process:

Congress enacted Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., to assure equality of employment opportunities by eliminating those practices and devices that discriminate on the basis of race, color, religion, sex, or national origin. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 800 [93 S.Ct. 1817, 1823, 36 L.Ed.2d 668] (1973); Griggs v. Duke Power Co., 401 U.S. 424, 429-30 [91 S.Ct. 849, 852-53, 28 L.Ed.2d 158] (1971). Cooperation and voluntary compliance were selected as the preferred means for achieving this goal. To this end, Congress created the Equal Employment Opportunity Commission and established a procedure whereby existing state and local equal employment opportunity agencies, as well as the Commission, would have an opportunity to settle disputes through conference, conciliation, and persuasion before the aggrieved party was permitted to file a lawsuit. In the Equal Employment Opportunity Act of 1972, Pub.L. 92-261, 86 Stat. 103, Congress amended Title VII to provide the Commission with further authority to investigate individual charges of discrimination, to promote voluntary compliance with the requirements of Title VII, and to institute civil actions against employers or unions named in a discrimination charge.

Alexander v. Gardner-Denver Co., 415 U.S. 36, 44, 94 S.Ct. 1011, 1017-18, 39 L.Ed.2d 147 (1974).

In addition to the statutory provisions for initial agency review and the important policies served by those provisions, another factor indicates that a Title VII plaintiff may not present her claim for the first time in federal court. For many years, the Supreme Court has held that district courts should dismiss claims brought by plaintiffs who have ignored a procedure established by Congress that calls for the initial presentation of the claims before an administrative agency. See, e.g., Far East Conference v. United States, 342 U.S. 570, 574-75, 72 S.Ct. 492, 494, 96 L.Ed. 576 (1952), where the Court, in the context of considering agency review of claims brought under the Shipping Act of 1916, discussed the “firmly established” principle

that in cases raising issues of fact not within the conventional experience of judges or cases requiring the exercise of administrative discretion, agencies created by Congress for regulating the subject matter should not be passed over.... Uniformity and consistency in the regulation of business entrusted to a particular agency are secured, and the limited functions of review by the judiciary are more rationally exercised, by preliminary resort for ascertaining and interpreting the circumstances underlying legal issues to agencies that are better equipped than courts by specialization, by insight gained through experience, and by more flexible procedure.

Far East Conference and similar cases suggest that the plaintiff in the present case should have presented her claim to the EEOC, giving the agency a chance to resolve the matter through its expertise, flexibility, and experience, before she turned for relief to the federal courts.

Accordingly, this court holds that Title VII plaintiffs must pursue their administrative remedies before filing suit in federal court. Claims that are not first presented to an appropriate administrative agency are not “actions brought under” Title VII, and a district court lacks jurisdiction over them.

The foregoing discussion reveals that this court lacks jurisdiction over plaintiffs Title VII claim, which is her sole federal cause of action. For this reason, the case must be dismissed.

SO ORDERED.


author: ROBERT D. POTTER, Chief Judge.

text:
    JOHN LEMMON FILMS, INC., Plaintiff, v. ATLANTIC RELEASING CORP., Atlantic International, Atlantic Television and Atlantic Communications Group, Defendants.
    No. C-C-85-479-P.
    United States District Court, W.D. North Carolina, Charlotte Division.
    Sept. 20, 1985.

      W. Thad Adams, III, Charlotte, N.C., for plaintiff.
    Richard A. Rosen, Los Angeles, Cal., John Wintrol, Finley, Kumble, Wagner, Heine, Underberg, Manley & Casey, Washington, D.C., John R. Wester, Robinson, Bradshaw & Hinson, Charlotte, N.C., for defendants.
   ORDER

ROBERT D. POTTER, Chief Judge.

THIS MATTER was heard before the undersigned on September 9, 1985 at Charlotte, North Carolina upon motion of the Plaintiff for a preliminary injunction pursuant to Fed.R.Civ.P. 65. The Plaintiff seeks to enjoin the Defendants from using in any unauthorized manner the service mark “STAR CHASERS,” or any mark or term confusingly similar thereto, in connection with the development, production or distribution of any film, film series, or animation. The Plaintiff was represented by W. Thad Adams, III, Attorney at Law, and the Defendants were represented by John P. Wintrol, Elliott B. Adler, and J. Dickson Phillips, III, Attorneys at Law.

After carefully considering the evidence presented, the legal memoranda and the arguments of counsel, the Court enters the following findings of fact and conclusions of law:

FINDINGS'OF FACT

(1) The Plaintiff is a corporation duly organized and existing under the laws of the State of North Carolina with its principal place of business in Charlotte, North Carolina. Its principal business is the production and distribution of films and motion pictures.

(2) The Defendant Atlantic Releasing Corp. is a corporation organized and existing under the laws of the State of Massachusetts with its principal place of business in Los Angeles, California. It is engaged in the domestic distribution of feature-length motion pictures. Of the four named Defendants, only Atlantic Releasing Corp. has had any relation to the acquisition and domestic distribution of “STARCHASER: The Legend of Orin,” which is the subject matter of this litigation. The Court will refer to this Defendant only.

(3) In May, 1982 John Lemmon, co-founder of the Plaintiff, began production of the first episode of an anticipated series of “clay-animated” three-dimensional films revolving around the adventures of a group of three characters who travel in outer space. In September, 1983 Lemmon chose the term “STAR CHASERS” as a designation for the three main characters and the series in general.

(4) In March, 1984 the Plaintiff began a campaign in North Carolina and South Carolina to market “STAR CHASERS.” It printed and distributed “STAR CHASERS” T-shirts and hundreds of flyers advertising pre-screenings of “THE STAR CHASERS IN THE TRONTIUM TUSK.” Exhibit 175. “The Trontium Tusk” was promoted as the first episode in a series of “STAR CHASERS” adventures.

(5) On July 9, 1984 a partnership and predecessor of the Plaintiff filed a federal service mark application for the “STAR CHASERS” mark. The Plaintiffs screening of “THE STAR CHASERS in the Trontium Tusk” to an audience of two hundred patrons at Charlotte's East Mecklenburg High School on May 18, 1984 was claimed as the “first use” of the mark in interstate commerce in the service mark application. On May 7, 1985 the mark was published in the Official Trademark Gazette of the United States Patent and Trademark Office for opposition. No notice of opposition to the registration of “STAR CHASERS” as a service mark was filed within the required thirty days. A certificate of registration for the mark issued on July 16, 1985.

(6) On or about October 2, 1984 the “Trontium Tusk” episode began its showing on Showtime, a nationwide cable television network, as a nine-minute filler between major features. It was aired once a month on Showtime since October, 1984 but has never been listed in a viewer’s guide or program schedule.

(7) The Defendant acquired the rights to distribute the full-length feature film “STARCHASER: The Legend of Orin” in July, 1984. The film is a three-dimensional animated motion picture about space travellers which must be viewed through special “3D” glasses.

(8) On July 31, 1984 the Defendant registered the name “STARCHASER” with the Motion Picture Association of America for objection by anyone in the industry claiming to have a similar title. After receiving two objections (neither being from the Plaintiff), the Defendant amended its registered title to “STARCHASER — 3D: The Legend of Orin” on August 13, 1984, and finally to “STARCHASER: The Legend of Orin” in May 1985 to conform to its advertisements.

(9) Upon acquiring the rights to the film, the Defendant developed a promotional campaign for the sale of the motion picture at major film markets throughout the world. The Defendant also ran print advertisements for the film in various publications beginning in October, 1984, and a short film preview consisting of “snatches” of the “STARCHASER” movie in conjunction with another feature-length film released by the Defendant throughout the United States in November, 1984. All of the promotional items for the film prominently have featured the name “STAR-CHASER: The Legend of Orin.”

(10) Plaintiff first learned of the Defendant’s use of the mark “STARCHASER” on November 26,1984; in conjunction with the Defendant’s movie “Night of the Comet,” Lemmon saw a short advertisement for a three-dimensional science fiction film entitled “STARCHASER: The Legend of Orin.” The advertisement stated that the film was scheduled for release in the summer of 1985. Subsequent research by the Plaintiff revealed a similar advertisement in Weekly Variety magazine announcing the release of “STARCHASER: The Legend of Orin” in May, 1985.

(11) The Plaintiff’s counsel sent the Defendant a letter dated January 10, 1985 stating that “STAR CHASERS” was the service mark of the Plaintiff and that a federal service mark application had been pending for some time. He informed the Defendant that the Plaintiff was in production on a second, full-length episode in the “STAR CHASERS” series. The Plaintiff insisted through its counsel that the Defendant provide written assurances within thirty days that it would cease any use of the title “STAR CHASERS” in connection with any motion picture or television production. Should the written assurances not be forthcoming, the Plaintiff warned that it would take appropriate legal steps to protect its service mark. The Defendant, in a letter dated February 27, 1985, disputed the Plaintiffs claim to any right to the mark “STAR CHASERS” and refused to abandon its use of that name for its film.

(12) After responding negatively to the Plaintiffs “cease and desist” letter, the Defendant continued to promote “STAR-CHASER: The Legend of Orin” without further objection from the Plaintiff until it filed its Complaint in this action on August 5, 1985. There was no communication between the Plaintiff and the Defendant from the time the Defendant responded to the Plaintiffs January 10, 1985 letter until Plaintiffs Complaint was filed.

(13) Before receiving the Plaintiffs “cease and desist” letter, the Defendant had spent more than $150,000.00 to promote “STARCHASER: The Legend of Orin.” Since receiving the letter, the Defendant has spent more than $320,000.00 in the further promotion of its film.

(14) The Defendant’s film is scheduled for world-wide release in late October, 1985. In connection with the release, advertising space has been reserved, copies of the film with the title “STARCHASER: The Legend of Orin” have been printed, and theater bookings throughout the United States have been contracted.

(15) Although the Plaintiff is now in production on its first feature-length episode in “STAR CHASERS” series, that episode is not expected to be ready for release until late 1987. It has marketed video cassettes of “The Trontium Tusk” episode and has been successful in selling the cassette to several libraries.

CONCLUSIONS OF LAW

(1) The Court has jurisdiction of the subject matter pursuant to 28 U.S.C. § 1338 and 28 U.S.C. § 1332.

(2) A preliminary injunction is an extraordinary remedy that is to be granted only upon a substantial showing by the Plaintiff that it is entitled to such drastic relief.. Puritan Sportswear Corp. v. Shure, 307 F.Supp. 377 (W.D.Penn.1969). The Plaintiff’s burden in this case is particularly heavy since the issuance of a preliminary injunction would in effect grant it a substantial part of the relief it would obtain after a trial on the merits. See Schneider, Hill & Spangler, Inc. v. Cudmore, 325 F.Supp. 173 (D.Conn.1971).

(3) In deciding whether to issue a preliminary injunction the Court considers the Plaintiff’s likelihood of success on the merits, the likelihood of irreparable harm to the Plaintiff if an injunction is not issued, the harm to the Defendant if an injunction is granted, and where the public interest lies. Blackwelder Furniture Co. v. Seilig Manufacturing Co., Inc., 550 F.2d 189, 193 (4th Cir.1977). The Fourth Circuit has stated that the most important of these factors are the likelihood of irreparable injury to the Plaintiff if the injunction is not issued and the likely harm to the Defendant if the injunction is granted. North Carolina State Ports Authority v. Dart Containerline Co., Ltd., 592 F.2d 749, 750 (4th Cir.1979).

(4) The Plaintiff asserts four counts in its complaint: (1) service mark infringement pursuant to Section 32 of the Lanham Act, 15 U.S.C. § 1114; (2) false designation of origin of services pursuant to Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (3) unfair methods of competition pursuant to N.C.Gen.Stat. § 75-1.1; and (4) trademark infringement under the common law. The Plaintiff has focused on its service mark infringement count in its motion for a preliminary injunction.

Service marks are subject to the same protection and requirements as trademarks under the Lanham Act. 15 U.S.C. § 1053. To be successful on its service mark infringement claim, the Plaintiff must show that (1) the Defendant used in commerce a colorable imitation of the Plaintiff’s registered mark in connection with the sale, distribution, or advertisement of its services;' (2) the Defendant used the mark without the Plaintiffs consent; and (3) such use is likely to cause confusion between the Defendant’s mark and the Plaintiff’s registered mark. 15 U.S.C. § 1114(l)(a).

Since the Plaintiff’s mark is the title of an artistic work which is merely descriptive of its contents, the Plaintiff must also prove the existence of secondary meaning in its title (i.e., substantial association in the minds of buyers of symbol with source) at the time and place that the Defendant first used its mark. See Scott Paper Co. v. Scott’s Liquid Gold, Inc., 589 F.2d 1225 (3d Cir.1978); Willpat Productions, Inc. v. Sigma III Corp., 227 F.Supp. 354 (S.D.N.Y. 1964).

(5) By pointing out the statutory presumptions that accompany its certificate of registration as well as the similarity between the marks and their intended markets, the Plaintiff has made a colorable showing that it has a prima facie case of infringement against the Defendant. Even though the Plaintiff may have a chance of succeeding at trial, however, the absence of strong proof that the Plaintiff would suffer irreparable harm without a preliminary injunction and the presence of clear proof that the Defendant would suffer irreparable harm should an injunction be granted weigh decidedly against the issuance of a preliminary injunction.

(6) The Plaintiff is now in production of a feature-length movie featuring “THE STAR CHASERS,” but it was admitted during the hearing that the movie will not be ready for release for at least another two years. Its claim of irreparable harm is based primarily on its contention that the Defendant’s PG-rated “STARCHASER” movie, which contains foul language and violence, would “swamp” the Plaintiff’s use of its mark for its own G-rated movie. The Plaintiff fears that movie-goers who see the Defendant’s movie now will think that all 3D animated science fiction movies with the title “STARCHASER” contain foul language and violence and will be reluctant to send their children to the Plaintiff’s G-rated movie two years from now. If the

Plaintiff’s film were to be released at the same time as the Defendant’s film, the likelihood of this feared confusion might be less speculative. Fear of confusion between films marketed and shown two years apart, however, is insufficient evidence that irreparable harm will be suffered. As stated in Standard Brands, Inc. v. Zumpe, 264 F.Supp. 254, 267-68 (E.D.La.1967):

The issuance of an injunction is not justified by the mere fact that irreparable harm may possibly ensue if restraint is not imposed____ Injunctions will not be issued merely to allay the fears and apprehensions or to soothe the anxieties of the parties.

(7) Perhaps even more telling of the absence of convincing proof that the Plaintiff would suffer irreparable harm is the Plaintiff’s delay in seeking an injunction. The Plaintiff waited seven weeks after learning of the Defendant’s film before requesting the Defendant to refrain from using its mark. It waited another seven months after receiving an unsatisfactory response to its request before filing its lawsuit. During that time, the Plaintiff made no further attempt to communicate with the Defendant or to stop the use of its mark, even though it knew that the Defendant’s film, “STARCHASER: The Legend of Orin,” was scheduled for release in May, 1985.

The Plaintiff explained its delay by stating that it wished to have the benefit of the statutory presumptions that accompany a certificate of registration before it began any legal action. By waiting for its certificate of registration to issue, the Plaintiff may have improved its chances for a permanent injunction. In so waiting, however, it also belied its claim that there is an urgent need for speedy action to protect its rights.

(8) In contrast to the tenuous evidence of irreparable harm to the Plaintiff, the Defendant has presented strong evidence that it would suffer a substantial hardship if it were forced to abandon its use of the title “STARCHASER: The Legend of Orin” at this date.

If the Defendant were ordered to refrain from advertising and releasing its film with its present title, theaters contracted to show the film would be lost, prints of the film would have to be changed, and a new advertising campaign and strategy developed at considerable delay, expense, and embarrassment. The Defendant has already spent over $470,000.00 on its “STAR-CHASER” promotional campaign. It is true that a great deal of that amount was spent with notice of the Plaintiffs claim and without filing an opposition to the registration of the Plaintiffs mark in the Patent and Trademark Office when it had the opportunity to do so. Nonetheless, it would be inequitable to cause the Defendant to lose much of its investment and suffer injury to its good will before a final decision on the merits without a stronger showing of irreparable harm by the Plaintiff.

(9) As there is no strong public interest to be considered here, and as the balance of hardships tips decidedly in favor of the Defendant, the Plaintiffs motion for a preliminary injunction against the Defendant’s use of the mark “STARCHASER” should not be granted.

(10) Any finding of fact which is determined to be a conclusion of law is so deemed and any conclusion of law which is determined also to be a finding of fact is so deemed.

IT IS, THEREFORE, ORDERED that Plaintiff’s motion for a preliminary injunction is DENIED.


author: MERHIGE, District Judge.

text:
    Gladys C. FINNEY, Plaintiff, v. Charles E. RODDY, et al., Defendants.
    Civ. A. No. 83-0686-R.
    United States District Court, E.D. Virginia, Richmond Division.
    Sept. 20, 1985.

      William K. Grogan, Richmond, Va., for plaintiff.
    Robert W. Jaspen, Asst. U.S. Atty., D. French Slaughter, III, Atty., Tax Div., U.S. Dept, of Justice, Washington, D.C., for defendants.
   MEMORANDUM

MERHIGE, District Judge.

This matter comes before the Court on the motion of plaintiff for an award of attorneys’ fees. Plaintiff contends that she is entitled to such an award pursuant to 26 U.S.C. § 7430. Defendants, on the other hand, contend that plaintiff is not entitled to any fees whatever under that section. The motion has been briefed, and the parties have not timely sought oral argument. Accordingly, it is now ripe for disposition.

BACKGROUND

Plaintiff originally brought this suit for declaratory, injunctive, and monetary relief against defendants Roddy (the district director of the Richmond Division of the Internal Revenue Service (IRS) at all times material hereto) and the United States of America. Plaintiff primarily sought to enjoin an impending public auction sale of several of her properties upon which the IRS had placed liens.

The complaint alleged that the IRS placed nominee liens on the properties in question for taxes the IRS claimed were owed by a third person, whom the IRS believed was the true owner of the property. The IRS threatened to hold — and went so far as to schedule and advertise — a public auction sale of the properties on November 9, 1983. Yet it had never mailed to the allegedly deficient taxpayer any notice pursuant to 26 U.S.C. § 6212, thereby precluding the taxpayer from challenging the alleged deficiency under 26 U.S.C. § 6213. Apparently plaintiff, by counsel, had attempted during the four weeks prior to the scheduled sale date to persuade IRS collection division officials not to hold the sale. On November 7, 1983 — two days prior to the date scheduled for the sale — those officials nevertheless decided that the sale would go forward, prompting plaintiff to file this lawsuit and a motion for a temporary restraining order.

A conference between an assistant United States attorney and counsel for plaintiff followed. The IRS decided, shortly thereafter, not to hold the scheduled sale. Some seven months later, the parties concluded most of the case by stipulation. The stipulation dismissed as moot plaintiff’s request for declaratory and injunctive relief, and dismissed with prejudice plaintiff’s demand for monetary damages. The stipulation reserved plaintiff’s claim for attorney’s fees, however. In that regard, it also provided that: (i) the United States did not act unreasonably, subsequent to the filing of the complaint; and (ii) the plaintiff had substantially prevailed with respect to the most significant issue or set of issues presented. The parties now dispute the availability of attorney’s fees to plaintiff under 26 U.S.C. § 7430, in light of these stipulations and the other facts of the case. DISCUSSION

I. Applicability of 26 U.S.C. § 7430(a).

The parties do not dispute that 26 U.S.C. § 7430(a) governs the disposition of the issue before the Court. The statute provides that:

In the case of any civil proceeding which is—
(1) brought by or against the United States in connection with the determination, collection, or refund of any tax, interest or penalty under this title, and
(2) brought in a court of the United States (including the Tax Court and the United States Claims Court),
the prevailing party may be awarded a judgment for reasonable litigation costs incurred in such proceeding.

26 U.S.C. § 7430(a). This suit was brought in federal district court against the United States in connection with the collection of an alleged federal income tax deficiency. It thereby falls within the scope of Section 7430(a).

II. Exhaustion.

The statute requires that, in order to recover litigation costs under § 7430(a), a prevailing party must have first “exhausted the administrative remedies available....” 26 U.S.C. § 7430(b)(2). Here, plaintiff by counsel apparently engaged in a series of conferences prior to filing this suit with the relevant personnel in the IRS’s collection division, unsuccessfully attempting to dissuade the IRS from holding the public auction sale. She filed this suit shortly after those officials reached an adverse administrative decision, and only days prior to the scheduled sale. The parties do not dispute that plaintiff exhausted her available administrative remedies, and the Court so finds.

III. Prevailing Party.

The statute authorizes an award of “litigation costs” — which include reasonable attorney’s fees, 26 U.S.C. § 7430(c)(l)(A)(iv), as plaintiff seeks here — only to a “prevailing party.” 26 U.S.C. § 7430(a). It then specifically defines “prevailing party” in 26 U.S.C. § 7430(e)(2)(A). In order to be a prevailing party within the meaning of the statute, a party must meet two requirements. First, it must establish that the “position of the United States in the civil proceeding was unreasonable.” 26 U.S.C. § 7430(c)(2)(A)(i). Second, the person must have “substantially prevailed” with respect either to the “amount in controversy” or “the most significant issue or set of issues” in the proceeding. 26 U.S.C. § 7430(c)(2)(A)(ii).

A. Whether plaintiff substantially prevailed.

The parties have stipulated that the plaintiff has “substantially prevailed with respect to the most significant issue or set of issues presented.” Thus, the issue remaining, in determining whether plaintiff is a “prevailing party” to whom the Court may award litigation expenses, is whether the position of the United States was unreasonable.

B. Whether position of United States was unreasonable.

In addition to stipulating that plaintiff has substantially prevailed with respect to the most significant issues, the parties have agreed that the United States did not act unreasonably subsequent to the filing of the complaint in this lawsuit. On the other hand, plaintiff vigorously argues— and the United States does not contest— that the IRS position prior to the filing of the complaint was unreasonable. The Court agrees. Thus, the relevant facts are not in dispute. The issue before the Court is, rather, a legal one involving statutory construction. Specifically, the Court must determine whether the statutory requirement that “the position of the United States in the civil proceeding [be] unreasonable,” 26 U.S.C. § 7430(c)(2)(A)(i), is satisfied by an unreasonable position taken by the United States prior to the filing of the complaint in the action wherein the party seeks to recover fees.

The same issue has arisen in other courts, and they have divided on its proper resolution. See Kaufman v. Egger, 584 F.Supp. 872, 877-80 (D.Me.1984), aff'd, 758 F.2d 1 (1st Cir.1985) (“position of the United States” includes “pre-litigation” position); see also Hallam v. Murphy, 586 F.Supp. 1, 3 (N.D.Ga.1983); Penner v. United States, 584 F.Supp. 1582, 1583-84 (S.D.Fla.1984). Contra Brazil v. United States, 84-2 U.S. Tax Cas. (CCH) ¶ 9596 (D.Ore.1984); Zielinski v. United States, 84-1 U.S. Tax Cas. (CCH) ¶ 9514 (D.Minn. 1984); Eidson v. United States, 84-1 U.S. Tax Cas. (CCH) ¶ 9182 (N.D.Ala. 1984); Baker v. Commissioner of Internal Revenue, 83 T.C. 822, 827 (1984). In addition, the Court has the benefit of Congress’s resolution of the issue in favor of considering the pre-litigation as well as the post-complaint phase of the proceedings, in a closely related statute. See Equal Access to Justice Act Amendments, Pub.L. 99-80, § 2(c)(2)(B), 99 Stat. 183, 185 (1985).

The Court concludes that the broader construction plaintiff urges is the appropriate one. At the outset, the Court observes that the phrase to be construed is ambiguous. Even in the relatively specialized vocabulary of lawyers, the term “civil proceeding” may convey both the broad and narrow constructions urged here. See Black’s Law Dictionary 1083 (rev. 5th ed. 1979) (“proceeding” refers to “administrative proceedings before agencies, tribunals, bureaus, or the like” as well as to court proceedings). And the statute itself does not expressly define the term “civil proceeding” that the Court must consider in evaluating the “position of the United States.” Furthermore, portions of Section 7430 can be read to support either view.

In light of the ambiguity in the text of the statute, extrinsic aids may properly be considered in clarifying the ambiguity. Some of the courts that have construed “position of the United States” to include the IRS’s pre-litigation position have relied on the legislative history of Section 7430 to reach their conclusion. See, e.g., Kaufman v. Egger, supra, 758 F.2d at 4. The legislative history does provide some support for that broader reading, primarily through its articulation of Congress’s goal of deterring abuses and over-reaching by the Internal Revenue Service. See H.R.Rep. No. 404, 97th Cong. 2d Sess. at 11 (1982); Senate Comm, on Finance, Technical Explanation of Committee Amendment, reprinted in 127 Cong.Rec. S 15595 (daily ed. Dec. 16, 1981). But the legislative goal of deterring IRS abuses, alone, does not persuade the Court to adopt one construction argued here over the other. Both constructions are consistent with that goal; the broader construction merely carries it further than the narrow one. The legislative history does not clarify the extent to which Congress intended to go in pursuing the goal.

It is, rather, the recent amendments to the Equal Access to Justice Act (EAJA) that persuade the Court to adopt the broader construction urged here by plaintiff. Similar statutes, as well as the legislative history of the statute in question, may appropriately be considered in construing an ambiguous statutory provision. See 2A N. Singer, Statutes and Statutory Construction § 51.01 at 449 (rev. 1984) (“... other statutes may not be resorted to if the statute is clear and unambiguous.”).

Like Section 7430, the EAJA governs attorneys’ fee awards against the Government. Initially enacted in 1980, see Equal Access to Justice Act, Pub.L. 96-481, 94 Stat. 2325 (1980), the EAJA provides generally for attorneys’ fee awards to parties who prevail against the United States “in any civil action (other than cases sounding in tort) brought by or against the United States in any court having jurisdiction of that action ____” 28 U.S.C. § 2412(d)(1)(A). The EAJA makes an exception to such an award, however, where “the position of the United States was substantially justified.” Id. As with section 7430 of title 26 — the statute at issue here— Courts have divided over whether “position of the United States” in the EAJA should be broadly read to contemplate the position of the Government in the agency proceedings prior to the court litigation, or whether it should be narrowly read to refer only to the position of the United States in the court litigation itself. Compare, e.g., Natural Resources Defense Council v. U.S. E.P.A., 703 F.2d 700, 706-07 (3d Cir.1983) (“position” includes underlying conduct of agency, not merely trial conduct), with, e.g., Amidon v. Lehman, 730 F.2d 949, 952 (4th Cir.1984) (improper to consider prelitigation events in evaluating the government’s position). Congress has very recently clarified the issue in favor of the broader reading. See EAJA Amendments, supra, § 2(c)(2)(B). The amendments, in pertinent part, unambiguously state that:

'position of the United States’ means, in addition to the position taken by the United States in the civil action, the action or failure to act by the agency upon which the civil action is based.

Id. The legislative history indicates that Congress amended the EAJA because “agencies and courts are misconstruing the Act” by interpreting “ ‘position of the United States’ ... in a narrow fashion which has helped the federal government escape liability for awards.” H.R.Rep. No. 120, 99th Cong. 1st Sess. at 9 (1985), U.S.Code Cong. & Admin.News 1985, 132, 137.

The Court believes that “position of the United States” in Section 7430(c)(2)(a)(i) of Title 26 should be read in pari materia with the same phrase in the analogous provision of the EAJA, 28 U.S.C. § 2412(d)(1)(A) (as amended). Both statutes were enacted to govern the award of attorneys’ fees against the federal government. Indeed, Section 7430 can be viewed as an extension of the goals of the EAJA to all types of federal tax cases: it expanded the principle of attorneys’ fee recovery for parties who prevail against the federal government to litigants in tax cases before the United States Tax Court. Such litigants could not recover attorneys’ fees under the EAJA, although litigants in tax cases brought in federal district courts or the U.S. Court of Claims could do so. See H.R.Rep. No. 404, supra, at 10 (1982). Congress further determined that Section 7430 should apply to all tax proceedings, regardless of the Court in which they are brought. See id. The Court has found nothing in the legislative history — or in Section 7430 itself — to suggest that “position of the United States” was intended to vary from one statute to the other. Accordingly, the Court, following the guidance of Congress in its recent amendments to the EAJA, concludes that “position of the United States” in 26 U.S.C. § 7430(c)(2)(A)(i) refers to the position of the IRS in its administrative proceedings as well as to the Government’s position following the filing of a complaint in the federal district court, tax court, or court of claims.

The result reached here is, in the Court’s view, buttressed by the conclusion that it represents basic fairness.

As discussed supra, the Government does not take issue with plaintiff’s characterization of the IRS’s conduct prior to plaintiff’s filing her complaint as “unreasonable,” and the Court agrees. Further, the IRS’s unreasonable pre-litigation conduct plainly generated this lawsuit, along with its corresponding expenses to the plaintiff. The Court concludes that the “position of the United States” in this case was unreasonable within the meaning of 26 U.S.C. § 7430(c)(2)(A)(i).

IV. Fee Award.

As discussed above, plaintiff has satisfied the requirements of 26 U.S.C. § 7430(c)(2)(A)(i) and (ii) and is therefore a “prevailing party” eligible for litigation costs pursuant to 26 U.S.C. § 7430(a). She seeks a total award of $3,040. The Government argues that the statute does not allow fee recovery for attorneys’ services expended prior to the preparation and filing of the complaint; but it does not contend that any of the hours expended or rates claimed are unreasonable.

A. General principles.

The United States Supreme Court, speaking through Justice Powell, in Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), recently summarized the basic principles governing attorneys’ fee awards pursuant to statutes authorizing awards to “prevailing parties.” Although the statute under consideration in that case was the Civil Rights Attorneys’ Fees Awards Act of 1976, 42 U.S.C. § 1988, Justice Powell noted that “the standards set forth in this opinion are generally applicable in all cases in which Congress has authorized an award of fees to a ‘prevailing party.’ ” Id. at 433, 103 S.Ct. at 1939. The statute pursuant to which plaintiff seeks her fee award, 26 U.S.C. § 7430, appears to be such a statute. See 26 U.S.C. § 7430(a) (“the prevailing party may be awarded a judgment for reasonable litigation costs ... ”). Accordingly, the Court shall apply the general principles governing fee awards articulated in Hensley to the instant case.

The basic approach summarized in Hensley to arriving at a reasonable fee award, in cases such as the instant one, is straightforward. It involves multiplying the “number of hours reasonably expended on the litigation” by a “reasonable hourly rate.” Hensley, supra, 461 U.S. at 433, 103 S.Ct. at 1939. The burden is on the party seeking an award of fees to submit evidence supporting the hours worked and rates claimed. Id. The Court should then adjust the award, if necessary, in light of the “results obtained,” considering (i) whether the party failed to prevail on unrelated claims, and (ii) whether the party achieved a level of success that makes hours reasonably expended a satisfactory basis for making a fee award. Id. at 434, 103 S.Ct. at 1940. A number of other factors may also be considered, such as any of the twelve factors originally enumerated in Johnson v. Georgia Highway Express, 488 F.2d 714, 717-19 (5th Cir.1974). As the United States Supreme Court has noted, however, many of these factors usually are subsumed within the initial calculation of hours reasonably expended at a reasonable hourly rate. Hensley, supra, 461 U.S. at 434 n. 9, 103 S.Ct. at 1940 n. 9.

B. Reasonable hourly rate.

Plaintiff attempts to establish a reasonable hourly rate from between $60 to $100, depending on the activity. She reliés on her attorney’s affidavit describing his professional background and indicating that such a fee range is customary in the Richmond area for similar services. The Court finds such hourly rates for the services rendered to be reasonable, and it discerns no reason to adjust the hourly rate sought.

C. Hours reasonably expended.

Upon review of the description of the services rendered, the Court finds that the hours claimed were reasonable for the tasks involved. It also finds that the tasks involved were reasonable for the requirements of the case. Nevertheless, plaintiff is not entitled to attorneys’ fees for all of the hours submitted, because the hours include some that were submitted prior to the preparation and filing of the complaint. As the Government points out, the statute does not authorize a fee award for such services.

The language of Section 7430, in itself, suggests that costs incurred prior to the filing of the court proceeding are unrecoverable. It limits the litigation costs for which a prevailing party is entitled to an award of those costs incurred in the civil proceeding “brought in a court of the United States.” 26 U.S.C. § 7430(a)(2). (emphasis added) The legislative history confirms this reading, indicating that:

The Committee intends that the costs of preparing and filing the petition or complaint which commences a civil tax action be the first of any recoverable attorneys’ fees. Fees paid or incurred for the services of an attorney during the administrative stages of the case could not be recovered under an award of litigation costs.

H.R.Rep. No. 404, 97th Cong.2d Sess. at 14 (1982). Accordingly, plaintiff is not entitled to recover fees incurred prior to the preparation and filing of the petition.

Upon review of plaintiff’s itemized list of services, the Court concludes that the bulk of the amount plaintiff seeks in attorney’s fees may properly be awarded under the statute. However, among the services rendered to her from October 21 to November 7, 1983, as the Court has heretofore stated, a portion cannot be the basis of a fee award. Of the 7.4 hours expended by her attorney during that period, 3.4 hours appear to be purely related to the prior administrative proceedings, and cannot be included. One hour is related in its entirety to researching the law underlying the complaint, and is includible. The remaining three hours appear to be at least partly related to preparing the complaint; and in light of the tasks involved, the Court shall presume that one of those three hours was so expended, and is includible. The Court shall therefore deduct 5.4 of the 7.4 hours in question from the hours for which plaintiff may receive an award for attorney’s fees. Her attorney billed those hours at a total of $540, and plaintiff seeks the same amount in her proposed fee award. Accordingly, the amount sought must be reduced by $540.

D. Results obtained, and other factors.

As discussed supra, under Hensley there are two distinct inquiries in which a court should engage, in analyzing whether the “results obtained” warrant an attorneys’ fee award based on reasonable hourly rates multiplied by hours reasonably expended. The first is whether the party seeking the award failed to prevail on any unrelated claims. The Court discerns no unrelated claims that plaintiff brought in this case, and therefore concludes that the hours reasonably expended need not be adjusted on account of this consideration.

The second inquiry is whether the party achieved a “level of success” that makes the hours expended a satisfactory basis for making a fee award. Here, plaintiff by counsel prevented the IRS from selling real property she owned at a public auction, which the IRS threatened to do up until the eleventh hour. She further succeeded in having the IRS release a tax lien against that same property, which was worth $25,-000-$30,000 at the time, according to her counsel’s unrefuted affidavit. Given these results, the Court concludes that the hours her attorney expended and the rates sought for these hours are indeed a satisfactory basis for making a fee award.

Neither plaintiff nor defendants have argued that any of the other twelve Johnson factors warrant adjustment of the fee award from the amount arrived at by the basic “reasonable hourly rate times reasonable hourly amount” determination. Nor does the Court, upon review of those factors and the facts of this case, discern any basis for such adjustment.

E. Amount of award.

Subtracting the $540 for the non-includible hours expended by her attorney at the administrative stage, the Court finds that plaintiff is entitled to an award that includes $2,390 in attorneys’ fees. In addition, she seeks $60 for her filing fee and $50 for fees for service of process. Because the statute authorizes recovery of “reasonable court costs,” 26 U.S.C. § 7430(c)(l)(A)(i), plaintiff is entitled to recover these costs as well. Thus, her total award shall be $2,500.

An appropriate order shall issue.

      . The statute reads, in pertinent part, as follows:
      Prevailing party.
      (A) In general. — The term "prevailing party” means any party to any proceeding described in subsection (a) (other than the United States or any creditor of the taxpayer involved) which—
      (i) establishes that the position of the United States in the civil proceeding was unreasonable, and
      (ii) (I) has substantially prevailed with respect to the amount in controversy, or
      (II) has substantially prevailed with respect to the most significant issue or set of issues presented.
      (B) Determination as to prevailing party.— Any determination under subparagraph (a) as to whether a party is a prevailing party shall be made—
      (i) by the court, or
      (ii) by agreement of the parties.
      26 U.S.C. § 7430(c)(2).

      . Such stipulations are expressly permitted by the statute. See 26 U.S.C. § 7430(c)(2)(B)(ii).

      . See note 2, supra.

      . In support of the narrower reading, the statute expressly limits "civil proceeding^]” for which a party may recover litigation costs to "those brought in a court of the United States (including the Tax Court and the United States Claims Court).” 26 U.S.C. § 7430(a)(2). When the statute thereafter refers to the "position of the United States in the civil proceeding," in 26 U.S.C. § 7430(c)(2)(A)(i), it is reasonable to presume that the relevant "civil proceeding” is one in the same with the civil proceeding for which litigation costs may be awarded: that is, the proceeding that was brought in a court of the United States. But, while reasonable, this is not a necessary conclusion. The statute could authorize recover of only those litigation costs incurred after a suit is filed, but nevertheless allow for consideration of the United States’ position pri- or to the commencement of litigation in evaluating whether the "position of the United States” was unreasonable.
      In support of a broader reading, on the other hand, is Subdivision Three of the “Definitions” subsection, which states that “the term ‘civil proceeding’ includes a civil action.” 26 U.S.C. § 7430(c)(3). This implies that Congress understood the term “civil proceeding” to encompass more than civil actions, which in turn suggests that “civil proceeding” includes prelitigation action by the IRS as well as proceedings in U.S. district court or tax court. This too is not dispositive of the issue, however. Congress may have used the term “civil proceeding” to refer to a larger set of proceedings than "civil actions,” but nevertheless may have applied the term only to matters invoking the jurisdiction of a court, not to those transpiring before an agency. See H.R.Rep. No. 404, 97th Cong. 2d Sess. at 12 ("civil actions and proceedings include proceedings to enforce a summons, jeopardy, assessments, wrongful levies, and interpleaders.").

      . Section 7430 of Title 26, however, is the exclusive provision for recovering attorneys’ fees from the Government in federal tax proceedings. See H.R.Rep. No. 404, infra, at 1003.

      . The most recent amendments to the EAJA have modified the quoted portion of the statute to insert the words "including proceedings for judicial review of agency action” after "in tort." EAJA Amendments, supra, § 2(a)(2).

      . Those twelve often-recited factors are:
      (1) the time and labor expended; (2) the novelty and difficulty of the questions raised; (3) the skill required to properly perform the legal services rendered; (4) the attorneys’ opportunity costs in pressing the instant litigation; (5) the customary fee for like work; (6) the attorney’s expectations at the outset of the litigation; (7) the time limitations imposed by the client or circumstances; (8) the amount in controversy and the results obtained; (9) the experience, reputation and ability of the attorney; (10) the undesirability of the case within the legal community in which the suit arose; (11) the nature and length of the professional relationship between attorney and client; and (12) attorneys’ fees awards in similar cases.

        Johnson, supra, 488 F.2d at 717-19.
      The Court of Appeals for the Fourth Circuit has approved the determination of a fee award in light of those factors. Barber v. Kimbrell, 577 F.2d 216, 226, n. 226 n. 28 (4th Cir.), cert. denied, 439 U.S. 934, 99 S.Ct. 329, 58 L.Ed.2d 330 (1978).