Natl Home Equity v. Face, 4th Cir. (2002)
Natl Home Equity v. Face, 4th Cir. (2002)
Natl Home Equity v. Face, 4th Cir. (2002)
PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
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NATIONAL HOME EQUITY MORTGAGE
ASSOCIATION,
Plaintiff-Appellee,
v.
E. JOSEPH FACE, JR., Commissioner
of Financial Institutions, Bureau of
Financial Institutions, Virginia State
Corporation Commission; SUSAN E.
HANCOCK, Deputy Commissioner,
Consumer Finance, Bureau of
Financial Institutions, Virginia State
Corporation Commission,
Defendants-Appellants,
No. 01-1631
and
MARK L. EARLEY,
Movant.
4444444444444444444444444444444444444444444444448
Appeal from the United States District Court
for the Eastern District of Virginia, at Richmond.
Richard L. Williams, Senior District Judge.
(CA-99-398-3)
Argued: January 25, 2002
Decided: March 8, 2002
Before NIEMEYER, LUTTIG, and KING, Circuit Judges.
_________________________________________________________
___
Affirmed by published opinion. Judge Niemeyer wrote the opinion,
in which Judge Luttig and Judge King joined.
COUNSEL
ARGUED: William Henry Hurd, Solicitor General, Richmond, Virginia, for Appellants. Earle Duncan Getchell, Jr., MCGUIRE
WOODS, L.L.P., Richmond, Virginia, for Appellee. ON BRIEF:
Randolph A. Beales, Attorney General of Virginia, Judith Williams
Jagdmann, Deputy Attorney General, Gregory E. Lucyk, Senior
Assistant Attorney General, A. Ann Berkebile, Assistant Attorney
General, Richmond, Virginia, for Appellants. Robert L. Hodges, William H. Baxter, II, MCGUIRE WOODS, L.L.P., Richmond, Virginia,
for Appellee.
_________________________________________________________
___
OPINION
NIEMEYER, Circuit Judge:
On the petition of the National Home Equity Mortgage Association
("NHEMA") for attorneys fees, costs, and expenses under 42 U.S.C.
1988, the district court awarded NHEMA $79,750. On appeal, officials of the Commonwealth of Virginia contend that the award is
barred by principles of sovereign immunity and is improper because
NHEMA did not prevail on a claim based on a right secured by federal law so as to be enforceable under 42 U.S.C. 1983. Alternatively, they argue that special circumstances make an award of
attorneys fees in this case unjust. For the reasons that follow, we
reject these arguments and affirm.
I
NHEMA commenced this action in June 1999 to obtain declaratory
and injunctive relief, pursuant to 42 U.S.C. 1983, against Virginia
officials ("Virginia") who were, under color of State law, allegedly
depriving NHEMA members of their federal rights under the Alternative Mortgage Transaction Parity Act of 1982, 12 U.S.C. 3801 et
seq. (the "Parity Act"). In its complaint, NHEMA alleged that each
of its members has, pursuant to the Parity Act, "federal rights to
charge prepayment penalties for every alternative mortgage transaction made, purchased, or enforced in the Commonwealth of Virginia
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without regard to state law" and that Virginia officials were "currently
directing and authorizing the Bureau [of Financial Institutions] to
enforce or threaten to enforce all of these punitive measures [under
Virginia law] against NHEMA members who are lawfully invoking
their federal rights to charge prepayment penalties under the Parity
Act." It also alleged that "[t]he Parity Act creates immediately
enforceable rights under 42 U.S.C. 1983 and Congress has not foreclosed the enforcement of these rights through a civil action filed
under 42 U.S.C. 1983." Finally, NHEMA alleged that, under the
Supremacy Clause, the Parity Act preempted Virginia law prohibiting
prepayment penalties. NHEMA requested a declaratory judgment that
the Virginia officials' actions were "depriving NHEMA members of
their federal rights under color of state law," an appropriate injunction, and attorneys fees pursuant to 42 U.S.C. 1988.
In its responses to NHEMA's complaint, Virginia took the position
that NHEMA members did not have a cause of action under the Parity
Act and that, in any event, the Parity Act did not preempt State regulations that prohibited prepayment penalties. In a memorandum in
support of summary judgment, Virginia stated with respect to
NHEMA's rights under the Parity Act, "The issue is thus whether the
Parity Act implicitly created a private right of enforcement under
1983 to bar States from regulating prepayment penalties. . . . Nothing in the statute purports to create a federal right not to be regulated
by States in the area of prepayment penalties." On the preemption
issue, the State took the position that "[n]othing in the Parity Act,
either expressly or in its structure and purpose, indicates that Congress intended to preempt state prepayment penalty laws."
On cross-motions for summary judgment, the district court granted
summary judgment to NHEMA and permanently enjoined Virginia
from enforcing its punitive measures, based on State law, against
NHEMA members who were charging prepayment penalties as
allowed under the Parity Act. In its memorandum opinion, the district
court, applying the standard set forth in Wilder v. Virginia Hospital
Association, 496 U.S. 498, 509 (1990), concluded that Congress had
not foreclosed private enforcement of the rights created by the Parity
Act and, therefore, "[t]he plaintiff has a federally enforceable right
under 42 U.S.C. 1983." The court also held that "state regulation of
prepayment penalties [is] preempted by the Parity Act" and, therefore,
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"sections 6.1-330.83 and 6.1-330.85 of the Code of Virginia [are] preempted by the Parity Act."
In its initial appeal to this court, Virginia did not challenge the district court's conclusion that the Parity Act created federally enforceable rights. It raised only one issue, "Whether the district court erred
in ruling that the [Parity Act] and the 1996 actions of the Office of
Thrift Supervision preempt 6.1-330.83 and 6.1-330.85 of the Code
of Virginia . . . which prescribes limits on prepayment penalties."
Addressing only that issue, a unanimous panel of this court rejected
the appeal and affirmed the district court's judgment. Nat'l Home
Equity Mortgage Ass'n v. Face, 239 F.3d 633 (4th Cir. 2001).
After prevailing on its appeal, NHEMA filed a motion for attorneys
fees, costs and expenses under 42 U.S.C. 1988. While Virginia stipulated that $79,750 would be an appropriate amount for an award of
attorneys fees, costs and expenses in this case, it opposed any award
based on its constitutional sovereign immunity arguments and on its
argument that the district court's preemption ruling did not involve a
claim under 42 U.S.C. 1983 because the Supremacy Clause was not
a source of substantive rights enforceable under 1983. By order
dated April 5, 2001, the district court rejected Virginia's defenses
and, pursuant to 42 U.S.C. 1988, awarded NHEMA $79,750 in
attorneys fees, costs and expenses. The court reasoned that its earlier
ruling that NHEMA had federally enforceable rights under the Parity
Act went unchallenged on appeal and concluded that NHEMA prevailed on the assertion of those rights. The court observed that when
Virginia elected not to appeal its ruling on NHEMA's rights under the
Parity Act, that ruling "became the law of the case and [became] binding on these proceedings." From the district court's order awarding
NHEMA attorneys fees, costs, and expenses, Virginia filed this
appeal.
II
Virginia contends first that sovereign immunity precludes an award
of attorneys fees against State officers when no violation of the Fourteenth Amendment has been alleged. It argues that, in light of recent
Supreme Court jurisprudence, such as Seminole Tribe v. Florida, 517
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For the foregoing reasons, the order of the district court awarding
attorneys fees, costs and expenses to NHEMA in the amount of
$79,750 is
AFFIRMED.
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