Beverly Bank v. Board of Review of Will County

Citations: 550 N.E.2d 567; 193 Ill. App. 3d 130Docket: 3-88-0557

Court: Appellate Court of Illinois; February 15, 1990; Illinois; State Appellate Court

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A class action was initiated in 1979 by taxpayers in Will County, challenging allegedly illegal discriminatory increases in property tax assessments on commercial and industrial properties. The defendants included the County of Will and its Board of Review. The case began as a civil rights action under 42 U.S.C. § 1983 in federal court before being transferred to the Will County circuit court. In 1987, the circuit court approved a settlement, and the plaintiffs' counsel requested $1.15 million in attorney fees under 42 U.S.C. § 1988. The trial court reduced this amount, awarding $433,462, leading to an appeal by the petitioners.

Key findings included: 
1. Petitioners conducted extensive investigations into Will County's 1978 property tax assessments and filed a class action complaint alleging violations of the Fourteenth Amendment's due process and equal protection clauses.
2. The federal court certified a class of all taxpayers who paid taxes on industrial and/or commercial properties for the 1978 tax levy year.
3. Defendants presented several defenses in summary judgment motions, including claims that the Tax Injunction Act and Burford abstention barred the suit, and that the complaint failed to state a cause of action.
4. The case was transferred to state court following a U.S. Supreme Court decision in 1981.
5. After the trial court granted judgment on the pleadings for the defendants, the plaintiffs appealed, during which the defendants attempted to claim costs and attorney fees due to the complaint being deemed frivolous, but the court denied this motion. 

The appellate court ultimately reversed and remanded the trial court's decision.

The Appellate Court reversed the dismissal of a complaint, determining that it presented a valid claim under 42 U.S.C. Sec. 1983 for violation of the plaintiffs' equal protection rights in Beverly Bank, et al. v. Board of Review of Will County, et al. Following this, petitioners successfully opposed the defendants' attempts to appeal to both the Illinois and United States Supreme Courts. In 1984, upon remand, petitioners initiated a class action notice process and addressed inquiries from class members while compiling opt-out requests.

Defendants presented several defenses, including claims regarding their assessment practices and the rational basis for property assessment increases. Additionally, they argued that the Board of Review was not liable for its members' actions and that individual members enjoyed immunity. Petitioners filed for summary judgment, which was denied, leading to trial preparations and subsequent settlement negotiations beginning in early 1986.

The parties reached a settlement in June 1986, which was initially outlined to the Court but faced challenges from defendants who sought to amend their defenses. After petitioners successfully opposed these motions, the Settlement Agreement was revised and preliminarily approved on March 10, 1987. Defendants later attempted to vacate the settlement due to alleged mistakes regarding payment dates, prompting further negotiations. A new settlement was finalized and preliminarily approved on August 27, 1987, with notices sent to class members.

On November 17, 1987, the Court granted final approval of the settlement, deeming it fair, reasonable, and in the best interests of the class, while dismissing a local school district's premature objection to covering settlement costs.

The Court determined that the petitioners faced unique and uncertain challenges throughout the litigation, particularly regarding the viability of a 42 U.S.C. Sec. 1983 claim against state tax practices. The petitioners operated on a contingent basis, incurring a significant risk of not being compensated for their legal services. The settlement agreement stipulates that class members will receive 85% of the claimed unconstitutionally assessed taxes, creating a fund of approximately $3.15 million, which also includes costs and attorneys' fees assessed against the defendants under 42 U.S.C. Sec. 1988. The Court found the 85% recovery to be a favorable outcome, benefiting the class and providing a deterrent effect against future illegal tax assessments.

As prevailing parties under 42 U.S.C. Sec. 1988, the petitioners are entitled to recover their costs and reasonable attorneys’ fees. The trial court calculated the fee award using a "lodestar" method, initially rejecting the petitioners' requested hourly rates due to insufficient evidence of prevailing market rates. After adjustments, the court set rates at $150 per hour for one attorney and $95 per hour for another. The court reduced the total hours claimed by the petitioners by about half, awarding compensation for 1,546 attorney hours and none for non-attorney work. It also applied a 20% reduction across the board due to inadequate itemization of time records. However, a 2.5 multiplier was applied to account for the substantial risk involved in the case, bringing the total lodestar amount to $173,385, to be paid by the County of Will.

The court awarded petitioners a multiplier amount from the settlement fund, calculating it as $173,385 multiplied by 2.5, resulting in $260,077.50. On appeal, petitioners seek an increase of $190,597.50 in the lodestar amount, arguing that the trial court erroneously reduced both the compensable hours and the hourly rates without challenging the multiplier or its allocation.

Petitioners argue that the trial court erred by reducing the requested hourly rates based on the assumption that small firms charge lower rates than larger firms. They contend that the court improperly relied on a limited sample of previous hourly billings from a few clients, which does not reflect the broader community standards for reasonable attorney fees as established under Section 1988 of the Civil Rights Act. 

The legal standard for determining reasonable attorney fees involves calculating the number of hours reasonably expended multiplied by a reasonable hourly rate, with adjustments as needed. The U.S. Supreme Court's ruling in Blum v. Stenson establishes that nonprofit attorneys should be compensated at the prevailing community rates for attorneys with similar experience and skills, regardless of their firm's size. 

No supporting cases have been presented for the trial court's rationale that smaller firms should be awarded lower fees based solely on their size, which contradicts the community rate standard based on individual attorney qualifications. Illinois case law also emphasizes that an attorney's skill and qualifications are critical in fee determinations in common fund cases. 

Lastly, petitioners dispute the trial court's reliance on nonrepresentative billing data from attorneys Atkins and Schiltz to set the hourly rate, referencing that a previous ruling in Laffey was later overruled, further undermining the trial court's decision.

Attorneys representing national environmental and conservation groups in Save Our Cumberland Mountains, Inc. v. Hodel faced reduced hourly rates due to the Laffey rule, which could penalize them for past public service work during fee awards in successful class actions. The Circuit Court of Appeals found this approach inconsistent with the Supreme Court's guidance in Blum v. Stenson, which emphasized that fees should be sufficient to attract competent counsel without benefiting attorneys excessively. In contrast, the Seventh Circuit in Lightfoot v. Walker ruled that a prevailing attorney in civil rights cases should not be limited to historical billing rates, particularly if they worked in other legal areas or localities. The court reiterated the principle that attorneys should receive fully compensatory fees when plaintiffs achieve excellent results, as per Hensley and Congressional intent for reasonable fees.

In the current case, the trial court determined hourly rates based on limited evidence from Atkins and Schiltz's past billings, which represented a minor portion of their practice. Atkins had charged regular clients $125 per hour and infrequent clients $150, while other witnesses suggested rates for similar attorneys ranged from $185 to $250. The trial court ultimately set Atkins's rate at $150 and Schiltz's at $95 based on minimal billings. However, the appellate court found this approach flawed, as it did not accurately reflect the prevailing market rates. The court also upheld the trial court's discretion in rejecting supplemental affidavits regarding market rates, noting sufficient existing evidence for rate determination. Ultimately, the appellate court concluded that Atkins should be compensated at $195 per hour, Schiltz at $125 per hour, and other experienced attorneys at rates of $195, $160, and $150 per hour, respectively.

The trial court acknowledged that attorney Ross was worth $150 per hour but assigned him a lower rate of $95 per hour due to his lesser experience. In contrast, the court applied current market rates for other attorneys instead of a multiplier to account for delayed compensation, without a clear reason for treating Ross differently. The ruling mandates that attorneys Pollack, Weis, Gubbins, and Ross be compensated at their requested rates.

The trial court disallowed 150 hours from Robert F. Coleman and 67 hours from Barry J. Freeman, both senior partners, for work done before another partner's involvement, despite the reasonableness of these hours from the crucial period of 1979-1980. This decision was reversed.

Additionally, 325 hours attributed to the tax firm Pollack, Weis were excluded for work done post-filing of the complaint. The appellate court found this exclusion unjustified, asserting that expert consultation was reasonably necessary due to the case's complexity and relevant issues of real estate tax law. Consequently, the hours for Pollack, Weis were increased by 325 hours at $195 per hour.

The trial court's blanket 20% reduction of all compensable hours due to vague itemization was also deemed erroneous. The appellate court determined that the itemization provided sufficient detail to justify the hours worked, and the reasons for the reduction were inadequate. The result is an increase in the lodestar amount from $173,385 to $363,982.50 after additional fees are accounted for, leading to a total award of $909,956.25 for attorney fees. The circuit court's judgment is reversed and remanded for appropriate judgment entry.