Montgomery v 232511 Investments Ltd., 2011 VT 31 (mem.)
Defendant 232511 Investments Ltd., the owner of a planned unit development in the Town of Stowe, appeals from separate superior court orders invalidating certain amendments to the development’s declaration of covenants, conditions, and restrictions and awarding attorney’s fees under the Common Interest Ownership Act and denying its request for attorney’s fees under the declaration. We affirm
The attorney’s fee award was based largely on the trial court’s finding that plaintiffs had prevailed in their challenge to the Tenth and Twelfth Supplements. In light of the settlement and order voiding the disputed supplements, a question arises at the outset as to whether plaintiffs may be said to have “prevailed” on the merits.
In Kirchner v. Giebink, 155 Vt. 351, 352, 584 A.2d 1120, 1121 (1990), the plaintiffs’ claims became moot when the defendants unilaterally amended the development agreement at issue. We held, nevertheless, that the plaintiffs were entitled to attorney’s fees under 42 U.S.C. § 1988 even where they did not prevail “by direct judicial action as long as they were the catalyst for the relief.” To meet this requirement, plaintiffs must “establish that their suit was causally related to the defendants’ actions which improved their condition,” and that their claims had a “colorable or reasonable likelihood of success on the merits.” Id. at 353-54, 584 A.2d at 1122 (quotation omitted).
More recently, in Merriam v. AIG Claims Services, Inc., 2008 VT 8, ¶ 15, 183 Vt. 568, 945 A.2d 992 (mem.), we noted that the “catalyst” theory on which Kirchner relied has since been rejected by the U.S. Supreme Court in Buckhannon Board & Care Home, Inc. v. W. Va. Department of Health & Human Resources, 532 U.S. 598 (2001). In Buckhannon, the plaintiffs’ suit challenging certain state legislation was rendered moot by subsequent legislative amendment, and the Supreme Court held that the plaintiffs could not be considered the prevailing parties for purposes of obtaining attorney’s fees “without obtaining any judicial relief.” Id. at 606.
We did not ultimately decide in Merriam whether Kirchner or Buckhannon governed state law claims, nor is it necessary to do so here, as there is no doubt that plaintiffs prevailed under either approach. The Buckhannon court recognized that settlement agreements incorporated into judicial consent decrees satisfy the “judicial imprimatur” requirement and alter the “legal relationship of the parties” sufficient to permit an award of attorney’s fees. 532 U.S. at 604. Numerous courts have since interpreted and applied Buckhannon to allow attorney’s fees where—as here—the parties’ settlement has been specifically incorporated into a court order or has otherwise received judicial approval. Thus, we need not specifically hold that Buckhannon is controlling under state law to conclude that its prerequisites for an award of attorney’s fees in this case have been satisfied.
There is also no doubt that plaintiffs’ suit was “causally related” to the stipulated settlement in which Stowe Highlands agreed to void the disputed supplements, and the trial court’s subsequent ruling in favor of plaintiffs—while ultimately superfluous—demonstrates at the very least that their suit had a “colorable or reasonable likelihood of success on the merits.” Kirchner, 155 Vt. at 353, 584 A.2d at 1122.
The attorney’s fee award was based largely on the trial court’s finding that plaintiffs had prevailed in their challenge to the Tenth and Twelfth Supplements. In light of the settlement and order voiding the disputed supplements, a question arises at the outset as to whether plaintiffs may be said to have “prevailed” on the merits.
In Kirchner v. Giebink, 155 Vt. 351, 352, 584 A.2d 1120, 1121 (1990), the plaintiffs’ claims became moot when the defendants unilaterally amended the development agreement at issue. We held, nevertheless, that the plaintiffs were entitled to attorney’s fees under 42 U.S.C. § 1988 even where they did not prevail “by direct judicial action as long as they were the catalyst for the relief.” To meet this requirement, plaintiffs must “establish that their suit was causally related to the defendants’ actions which improved their condition,” and that their claims had a “colorable or reasonable likelihood of success on the merits.” Id. at 353-54, 584 A.2d at 1122 (quotation omitted).
More recently, in Merriam v. AIG Claims Services, Inc., 2008 VT 8, ¶ 15, 183 Vt. 568, 945 A.2d 992 (mem.), we noted that the “catalyst” theory on which Kirchner relied has since been rejected by the U.S. Supreme Court in Buckhannon Board & Care Home, Inc. v. W. Va. Department of Health & Human Resources, 532 U.S. 598 (2001). In Buckhannon, the plaintiffs’ suit challenging certain state legislation was rendered moot by subsequent legislative amendment, and the Supreme Court held that the plaintiffs could not be considered the prevailing parties for purposes of obtaining attorney’s fees “without obtaining any judicial relief.” Id. at 606.
We did not ultimately decide in Merriam whether Kirchner or Buckhannon governed state law claims, nor is it necessary to do so here, as there is no doubt that plaintiffs prevailed under either approach. The Buckhannon court recognized that settlement agreements incorporated into judicial consent decrees satisfy the “judicial imprimatur” requirement and alter the “legal relationship of the parties” sufficient to permit an award of attorney’s fees. 532 U.S. at 604. Numerous courts have since interpreted and applied Buckhannon to allow attorney’s fees where—as here—the parties’ settlement has been specifically incorporated into a court order or has otherwise received judicial approval. Thus, we need not specifically hold that Buckhannon is controlling under state law to conclude that its prerequisites for an award of attorney’s fees in this case have been satisfied.
There is also no doubt that plaintiffs’ suit was “causally related” to the stipulated settlement in which Stowe Highlands agreed to void the disputed supplements, and the trial court’s subsequent ruling in favor of plaintiffs—while ultimately superfluous—demonstrates at the very least that their suit had a “colorable or reasonable likelihood of success on the merits.” Kirchner, 155 Vt. at 353, 584 A.2d at 1122.
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