On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Civil No. 86-1510).
Sloviter and Becker, Circuit Judges, and Fullam, District Judge.*fn*
Defendants Allegheny County, Pennsylvania, The Allegheny County Institution District, and Charles R. Stowell*fn1 (collectively referred to as County) appeal from the order of the district court awarding attorney's fees to plaintiff Stanley Phillips after the parties had settled Phillips' civil rights action with an express waiver of such fees. We must decide the question presented in light of Evans v. Jeff D., 475 U.S. 717, 89 L. Ed. 2d 747, 106 S. Ct. 1531 (1986).
Although the merits of the underlying action are not before us, the circumstances leading to the settlement are directly relevant to the issue on appeal. Phillips is a paraplegic suffering from a deep-rooted incubitis, or pressure sore, a condition requiring specialized medical care. After Phillips was advised in September, 1985 that he required inpatient care because of his inability to treat himself, Phillips applied for admission to the Kane Regional Center in Allegheny County, a nursing facility operated by the County for treatment of indigents. Phillips was unable to gain admission to the facility until July, 1986, after he had filed suit against the County under federal and state law to compel his admission and to change the facility's admissions procedures. In October, 1986 Phillips moved for class certification.
While he was an inpatient, Phillips allegedly violated a rule prohibiting temporary departures from the facility without a physician's permission. Because of this, Phillips was involuntarily discharged from the facility in the late afternoon on Friday, December 12, 1986. His wallet, identification, money and medical assistance card were all locked in the business office and were unavailable to him until Monday morning. Although a maintenance employee permitted Phillips to remain in the lobby of the Kane Regional Center from Friday evening until Monday morning, Phillips was without necessary medical treatment, food or bathroom facilities for that period.
On Monday, December 15, 1986, Phillips amended his previously filed complaint and obtained a temporary restraining order which required the hospital to readmit him and resume treatment of his condition. Phillips' amended complaint also sought injunctive relief requiring the Kane Center to give notice and an informal hearing before denying patients treatment and leaves of absences.
The parties engaged in settlement negotiations during December, 1986 and into January, 1987. They were able to agree on changes in the facility's procedures to provide for an explanation for admission and discharge decisions and an opportunity to object before an impartial observer. Although there is some dispute regarding the history of their negotiations over the amount of money to be paid to Phillips and the attorney's fees to be paid to Phillips' counsel, Neighborhood Legal Services Association, it is clear that initially during the negotiations the County asked for a fee waiver, which was rejected by Phillips; that Phillips made a counteroffer of $4,700 for counsel fees, which was rejected by the County; and that the County then offered $500 in counsel fees, which was in turn rejected by Phillips without continuing the negotiations over counsel fees. Instead, the parties agreed to a settlement of $3000 for Phillips which contained the following provision: "The Plaintiff and their counsel agree to waive any and all claims for attorneys fees for which a claim could be made as a result of the filing and settlement of this case or otherwise connected with the above captioned case." App. at 17. The settlement agreement with the fee waiver was signed by counsel for Phillips and the County, and Phillips signed the release. On March 16, 1987, the district court, without holding a hearing, entered an order approving the settlement agreement pursuant to Fed. R. Civ. P. 23(e).
Ten days later, on March 26, 1987, Phillips and his counsel, Neighborhood Legal Services Association, moved for attorney's fees in the amount of $13,385.41 notwithstanding the fee waiver. The motion alleged that the County acted improperly by insisting that plaintiff waive any claim for counsel fees, injecting the condition after the settlement terms were largely worked out, and informing plaintiff that the County does not pay counsel fees. The County promptly responded by denying these allegations. Dennis Biondo, an Assistant Allegheny County Solicitor, filed a supporting affidavit which averred that the issue of attorney's fees was discussed simultaneously with the discussion of other issues of a monetary nature; that after the County offered $500 in counsel fees, plaintiff's counsel "abruptly broke off negotiations of this issue and agreed to a waiver of all counsel fees"; that the County was prepared to continue negotiating the counsel fee issue; and that it does not have a policy against payment of counsel fees in civil rights cases.
Shortly thereafter, Phillips submitted an affidavit stating that by February, 1987 his condition had improved so that he could manage with outpatient nursing care, and that he accepted the settlement "since at the time I needed the money to set up a household and move." Supp. App. at 4. He stated that he "had to give up a claim for attorneys' fees" to get the settlement money and that he was told by an administrator at the facility "that the County does not pay attorney fees." Id. Phillips' attorney, Donald Driscoll, presented an affidavit stating that the County "insisted" on a waiver of attorney's fees but admitting that plaintiff's counsel rejected the offer of "a nominal amount ($500) for fees." Id. at 7. Driscoll also stated that Phillips insisted on the settlement for the reasons set forth in his affidavit.
Over one year later, on June 29, 1988, the district court, without conducting a hearing, awarded Phillips and his counsel $9,615.49 in counsel fees pursuant to the Civil Rights Attorney's Fees Awards Act of 1976, 42 U.S.C. § 1988 (1982). The district court stated that the fee waiver was obtained by the County "through bad faith negotiations" and that the County's behavior throughout the case was "repugnant and shocking to the conscience." App. at 50. The court concluded that its "desire for justice and equity will not permit ...