The opinion of the court was delivered by: McAVOY, Chief Judge.
B. Procedural History
TM Park, joined by plaintiff-intervenors John Hancock Mutual
Life Insurance Company and W.E.A. Associates (collectively, the
"plaintiffs"), initiated this action seeking, inter alia, a
declaratory ruling that Chapter 312 of the Laws of 1995
("Chapter 312) violates the Contract Clause of the federal
Constitution. Thereafter, plaintiffs moved for summary judgment
asserting that Chapter 312 of the Laws is violative of the
Contract Clause because it substantially impairs TM's unexpired
lease with the SUNY. Defendants opposed plaintiffs' motion and
cross-moved for summary judgment in their own right. The Court
granted in part and denied in part each parties' motion.
Relevant here is that part of the Court's decision which
granted plaintiffs' motion for summary judgment declaring
section 4 of Chapter 312 void under the Contract Clause. It is
based upon that finding that plaintiffs now move for attorneys'
fees pursuant to 42 U.S.C. § 1988, asserting that a violation
of the Contract Clause is actionable under 42 U.S.C. § 1983.
Alternatively, plaintiffs contend that they are entitled to
summary judgment on their 42 U.S.C. § 1983 claims for
violations of procedural and substantive due process under the
Fourteenth Amendment of the federal Constitution. Defendants,
in turn, oppose plaintiffs' request for attorneys' fees and
cross-move for dismissal of plaintiffs' section 1983 claims
based upon either the Contract Clause or the Due Process
Plaintiffs seek attorneys' fees and expenses pursuant to
42 U.S.C. § 1988
that Chapter 312 violated the Contract Clause of the Federal
Constitution. Defendants oppose plaintiffs' fee application
asserting that the Court's prior ruling on the Contract Clause
does not give rise to a section 1983 claim and, therefore,
plaintiffs may not recover attorneys' fees and expenses under
section 1988. The question presented, therefore, is whether a
section 1983 claim lies for a violation of the Contract Clause.
For the reasons to follow, the Court holds that a claim
alleging violation of the Contract Clause can be brought
pursuant to 42 U.S.C. § 1983.
This issue was first addressed in Carter v. Greenhow,
114 U.S. 317, 5 S.Ct. 928, 29 L.Ed. 202 (1885). In Carter, the
State of Virginia passed legislation in 1879 "to provide a plan
of settlement of the public debt" whereby the state issued
bonds and coupons. 5 S.Ct. at 929. Carter owed taxes to the
state and, in satisfaction thereof, tendered coupons cut from
the bonds. Pursuant to an 1882 state legislative enactment that
forbade tax collectors from accepting anything other than
"gold, silver, United States treasury notes, and national bank
currency," the state refused to accept the coupons. Id. The
state thereafter entered upon, seized, and sold Carter's
property in satisfaction of the outstanding tax payments.
Carter then brought an action for trespass on the case against
the treasurer of the City of Richmond, Virginia. In his
complaint, Carter alleged that the 1882 statutory enactment was
"repugnant to the constitution of the United States, and [is]
therefore void." Id. According to Carter, his rights "derive[d]
from the contract with the state, contained in the act of March
28, 1879, and the bonds and coupons issued under its
authority." Id. The Complaint specifically stated that "in
refusing to receive said coupons and money in payment of said
taxes, and in levying on and seizing plaintiff's property for
said taxes . . . the defendant deprived the plaintiff of a
right secured to him by the constitution of the United States,
under color [of law] . . . to the damage of the plaintiff two
hundred dollars." Id. The question before the Court was whether
the federal courts had jurisdiction and, thus, whether "the
facts stated in plaintiff's declaration constitute a cause of
action within the terms of [section 1983]." Id. at 930; see
McGahey v. State of Virginia, 135 U.S. 662, 10 S.Ct. 972, 978,
34 L.Ed. 304 (1890).
In discussing the matter, the Carter Court stated:
How and in what sense are these rights secured to
him by the constitution of the United States? The
answer is, by that provision, article 1, § 10,
which forbids any state to pass laws impairing the
obligations of contracts. That constitutional
provision, so far as it can be said to confer upon
or secure to any person any individual rights, does
so indirectly and incidentally. It forbids passage
by the states of laws such as are described. If any
such are nevertheless passed by the legislature of
a state, they are unconstitutional, null, and void.
In any judicial proceeding necessary to vindicate
his rights under a contract affected by such
legislation, the individual has a right to have a
judicial determination declaring the nullity of the
attempt to impair its obligation. This is the only
right secured to him by that clause of the
constitution. . . . And the only mode in which that
constitutional security takes effect is by judicial
process to invalidate the unconstitutional
legislation of the state, when it is set up against
the enforcement of his rights under his contract..
. . Congress has provided no other remedy for the
enforcement of this right.
5 S.Ct. at 930 (emphasis supplied).
While, upon initial impression, Carter seemingly holds that a
claim for the violation of the Contract Clause may not be
maintained under § 1983, see Dennis v. Higgins, 498 U.S. 439,
111 S.Ct. 865, 876, 112 L.Ed.2d 969 (1991) ("In our only
previous case discussing a § 1983 claim brought for the
violation of a supposed right secured
by Article I of the Constitution, we held that violation of the
Contracts Clause does not give rise to a § 1983 cause of
action." (Kennedy and Rehnquist, J.J., dissenting) (citing
Carter, 114 U.S. 317, 5 S.Ct. 928, 29 L.Ed. 202); Andrews v.
Anne Arundel County, 931 F. Supp. 1255, 1267 (D.Md. 1996),
aff'd, 114 F.3d 1175, 1997 WL 321573, cert. denied, ___ U.S.
___, 118 S.Ct. 600, 139 L.Ed.2d 489 (1997), that is not so. The
Supreme Court affirmed the dismissal of Carter's action upon
the limited ground that Carter failed to state a claim under §
1983 because it only pleaded a breach of contract claim.
Carter, 5 S.Ct. at 931; Dennis v. Higgins, 498 U.S. 439, 111
S.Ct. 865, 872 n. 9, 112 L.Ed.2d 969 (1991); Chapman v. Houston
Welfare Rights Org., 441 U.S. 600, 99 S.Ct. 1905, 1914 n. 29,
60 L.Ed.2d 508 (1979) (Carter "held as a matter of pleading
that the particular cause of action set up in the plaintiff's
pleading was in contract and was not to redress deprivation of
the `right secured to him by that clause of the Constitution'
[the contract clause], to which he had `chosen not to
resort.'"); McGahey, 10 S.Ct. at 978. It, thus, could be argued
that the Carter Court implicitly recognized that a claim for a
violation of the Contract Clause could be brought pursuant to §
1983 assuming a properly pleaded Complaint.
A plaintiff asserting a cause of action pursuant to § 1983
must demonstrate, among other things, that he was deprived of a
right, privilege, or immunity secured by the Constitution of
the United States. City of Oklahoma City v. Tuttle,
471 U.S. 808, 105 S.Ct. 2427, 2439, 85 L.Ed.2d 791 (1985) (Brennan,
concurring); Pitchell v. Callan, 13 F.3d 545, 547 (2d Cir.
1994). This begs the question of what right, if any, is secured
by the Contract Clause. Carter answered this stating that "the
only right secured [by a violation of the Contract Clause]" is
"judicial process to invalidate the unconstitutional
legislation of the state." Carter, 5 S.Ct. at 931. Carter was
not deprived of any Constitutional right because he did not
seek a judicial declaration voiding the legislation; rather he
only sought money damages. Thus, Carter's claim sounded in a
common law breach of contract; not § 1983. See Dennis, 111
S.Ct. at 872 n. 9. In other words, because Carter failed to
plead that he was deprived of a right guaranteed to him by the
Contract Clause, he did not state a claim under § 1983.
Accordingly, it becomes apparent that the Carter Court did not
hold that § 1983 was not a proper avenue to redress a violation
of the Contract Clause, but only that the facts in Carter's
complaint failed to show a cause of action within § 1983's
terms. Carter, 5 S.Ct. at 931.
More recent Supreme Court cases also support the conclusion
that a claim alleging a violation of the Contract Clause may be
pursued under § 1983. See Dennis, 498 U.S. 439, 111 S.Ct. 865,
112 L.Ed.2d 969 (1991). Dennis presented the question whether a
claim under the dormant commerce clause, U.S. Const. Art. I, §
8, is actionable pursuant to § 1983. The Court expressly noted
that section 1983's broad language covering "any rights,
privileges, or immunities secured by the Constitution" mandates
a broad construction. Id. at 868 (quoting Golden State Transit
Corp. v. Los Angeles, 493 U.S. 103, 110 S.Ct. 444, 448, 107
L.Ed.2d 420 (1989); Monell v. New York City Dept. of Social
Services, 436 U.S. 658, 98 S.Ct. 2018, 2032, 56 L.Ed.2d 611
(1978)) (emphasis in original). The Dennis Court rejected the
notion that § 1983 claims be restricted to enforcing the
protections of the Fourteenth Amendment and laws enacted
pursuant thereto. Id. at 869. The Court then noted § 1983
covers not only personal rights, but also property rights.
Dennis, 111 S.Ct. at 870. The Dennis Court also found that the
dormant Commerce Clause does more than allocate power between
the federal and state governments, but that it confers a right,
privilege, or immunity within the meaning of § 1983 because "it
is a substantive `restriction on permissible state regulation'
of interstate commerce." Dennis,
111 S.Ct. at 870 (quoting Hughes v. Oklahoma, 441 U.S. 322, 99
S.Ct. 1727, 1731, 60 L.Ed.2d 250 (1979)). The Court also noted
that, although the Commerce Clause is a self-executing
limitation on the states, individuals injured by state action
that violate the dormant commerce clause may sue and obtain
injunctive and declaratory relief. See Dennis, 111 S.Ct. at
870. Applying these principals and the factors outlined in
Golden State, 493 U.S. 103, 110 S.Ct. 444, 107 L.Ed.2d 420
(1989), for determining whether a federal statute confers a
right within the meaning of § 1983*fn2, the Dennis Court found
that a Commerce Clause claim can be brought under § 1983.
Dennis, 111 S.Ct. at 873.
The foregoing analysis equally applies to a Contract Clause
claim. Like the Commerce Clause, the Contract Clause confers a
right, privilege, or immunity because it is a substantive
restriction on permissible state legislation that would impair
the obligation of contracts. See Dennis, 111 S.Ct. at 870, see,
e.g., Exxon Corp. v. Eagerton, 462 U.S. 176, 103 S.Ct. 2296,
2305, 76 L.Ed.2d 497 (1983); Sanitation and Recycling Ind.,
Inc. v. City of New York, 107 F.3d 985, 992 (2d Cir. 1997)
("[T]he Contract Clause is viewed as imposing `some limits upon
the power of a State to abridge existing contractual
relationships.'") (quoting Allied Structural Steel Co. v.
Spannaus, 438 U.S. 234, 98 S.Ct. 2716, 2721, 57 L.Ed.2d 727
(1978)). Further, while the Contract Clause is a self-executing
limitation on the power of the states, a person injured by
state action that violates the Contract Clause may sue and
obtain injunctive and declaratory relief. See United States
Trust Co. of New York v. State of New Jersey, 431 U.S. 1, 97
S.Ct. 1505, 52 L.Ed.2d 92 (1977); Association of Surrogates and
Supreme Court Reporters within City of New York v. State of New
York ("Surrogates"), 940 F.2d 766, 774 (2d Cir. 1991), cert.
denied, 502 U.S. 1058, 112 S.Ct. 936, 117 L.Ed.2d 107 (1992).
The Golden State factors also weight in favor of finding a
cause of action under § 1983. First, the Contract Clause does
not express a mere preference for certain kinds of treatment,
but clearly creates a binding obligation on government. That
obligation is that states not pass laws impairing the
obligations of contracts unless such laws serve a significant
public purpose and the means chosen to accomplish this purpose
are reasonable and appropriate. See United States Trust Co. of
New York v. State of New Jersey, 431 U.S. 1, 97 S.Ct. 1505,
1517-19, 52 L.Ed.2d 92 (1977); Sal Tinnerello & Sons, Inc. v.
Town of Stonington, 141 F.3d 46, 52 (2d Cir. 1998), cert.
denied, ___ U.S. ___, 119 S.Ct. 278, 142 L.Ed.2d 230 (1998).
Second, plaintiffs' asserted interest is not too vague and
amorphous to be beyond the competence of the judiciary to
enforce. Rather, plaintiffs have a concrete interest in the
contract that has been impaired. Courts certainly can grasp the
obligations created by contracts (they do it all the time in
breach of contract actions) and can enforce those interests by
declaring the offensive legislation unconstitutional. Third,
the Contract Clause was intended to benefit the plaintiffs
herein. Like the Commerce Clause, the Contract Clause "of its
own force imposes limitations on state [legislation] and is the
source of a right of action in those injured by regulations
that exceed such limitations." Dennis, 111 S.Ct. at 872;
Carter, 5 S.Ct. at 931 ("[T]he individual has a right to have a
judicial determination declaring the nullity of the attempt to
impair [the] obligation.") (emphasis supplied); Allied
Structural Steel Co. v. Spannaus, 438 U.S. 234, 98 S.Ct. 2716,
2723, 57 L.Ed.2d 727 (1978) ("The severity of an impairment of
contractual obligations can be measured by the factors that
reflect the high value the Framers placed on the protection of
private contracts."); Surrogates, 940 F.2d at 771 ("[The
Contract] [C]lause is `one of the few "rights-protecting"
provisions in the original Constitution', and has been called
by one legal historian `the bulwark of American individualism
against democratic impatience and socialistic fantasy.'"
(quoting G. Stone, L. Seidman, C. Sunstein & M. Tushnet,
CONSTITUTIONAL LAW 1428 (1986) and H. Maine, POPULAR GOVERNMENT
Finally, the Supreme Court's conclusion in Dennis that the
Commerce Clause supports a § 1983 action strongly suggests that
the Contract Clause also is redressable under that section. As
the dissent in Dennis aptly noted, unlike the Commerce Clause,
the language that "[n]o state shall . . . pass any . . . Law
impairing the Obligation of Contracts . . . would provide some
support for an argument that the Contracts Clause prohibits
States from `doing what is inconsistent with civil liberty.'"
Dennis, 111 S.Ct. at 876 (quoting U.S. Const. Art. I, § 10;
Cong. Globe 333 (Rep.Hoar) (Kennedy and Rehnquist, J.J.,
dissenting)). Thus, according to the dissent, the Contract
Clause provides a more compelling basis for a § 1983 claim than
the Commerce Clause.*fn3 Id. By logical extension, then, if
the Commerce Clause is actionable under § 1983, then so must
the Contract Clause.
The Second Circuit has not directly addressed whether a
Contract Clause action may be maintained pursuant to § 1983.
See Haley v. Pataki, 106 F.3d 478, 482 (2d Cir. 1997)
(declining to decide whether Contract Clause is actionable
under § 1983 because parties failed to raise the issue). The
only circuit to directly address this issue is the Fourth,
which affirmed the district court's decision, inter alia, not
to entertain a Contract Clause claim under section 1983. See
Andrews, 931 F. Supp. at 1267 ("I decline [ ] for the reasons
stated at the hearing, and despite the cogency of plaintiffs'
arguments to the contrary, to rule on the basis of a forecast
that the Supreme Court will at its first opportunity expressly
overrule Carter v. Greenhow."), aff'd, 114 F.3d 1175, 1997 WL
321573. It is unclear, however, from either the district court
or Fourth Circuit's opinions in Andrews whether they considered
Dennis. Furthermore, based upon the Court's above analysis of
Carter, the Court disagrees with the District of Maryland and
Fourth Circuit's belief that Carter held that a Contract Clause
claim cannot be brought pursuant to § 1983.
Moreover, a number of courts, while not specifically
addressing whether a Contract Clause claim is actionable
pursuant to § 1983, impliedly accepted the position that it is
by allowing Contract Claims to proceed under § 1983. See Smith
v. City of Enid, 149 F.3d 1151, 1154 (10th Cir. 1998) (applying
§ 1983 statute of limitations to Contract Clause action); Heart
of America Grain Inspection Serv., Inc. v. Missouri Dept. of
Agriculture, 123 F.3d 1098, 1106 (8th Cir. 1997); Edwards v.
City of Manchester, 121 F.3d 695, 1997 WL 446785 (1st Cir.
The Court, therefore, finds that alleged violations of the
Contract Clause can be brought pursuant to § 1983.
B. Whether Plaintiffs Properly Maintained a § 1983 Claim
"In order to maintain a section 1983 action, two essential
d. Debevoise Firm
Applying the 15% reduction discussed above (10% for billing
inconsistencies and 5% for improperly calculated travel time),
the following calculations apply to the Debevoise Firm's
55.2 hours of partner time at $275/hour*fn8 =
486 hours of associate time at $200/hour*fn9 =
$97,200 — 15%.*fn10
0.3 hours of managing attorney time at
$196/hour*fn11 = $58.80.
69 hours of associate time at $195/hour*fn12 =
29.9 hours of associate time at $160/hour*fn13 =
Thus, we get the following totals:
$15,180 ($97,200 — 15%) $58.80 $13,455.00
$4,784.00 = $116,097.8.
The Debevoise Firm also lists expenses in the amount of
$23,162.16 for a final total of $139,259.96.
e. The Lodestar Grand Total
Adding the lodestar fees for each firm, we get a lodestar
grand total of:
$291,048.15 (Sinzheimer) $20,534.25 (Strook)
$30,499.33 (Rosenman) $139,259.96 (Debevoise) =
The Court finds that this amount is reasonable in light of
the facts that this case has been ongoing since 1995, there has
been considerable discovery, the legal issues involved novel
and difficult questions of law, and the plaintiffs obtained the
exact relief sought. The Court, therefore, finds no reason to
further reduce the lodestar amount.
Finally, the Court rejects the Sinzheimer Firm's request for
a "public policy multiplier of 50%." The facts simply do not
warrant such an augmentation to the lodestar. The judicial
declaration that the subject legislation is repugnant to the
United States Constitution in addition to the award of
reasonable attorneys' fees adequately apprises the State of New
York that it undertook unconstitutional action. Contrary to
plaintiff's suggestion, it is not for this Court to
"demonstrate to state government that this practice can no
longer continue." If plaintiffs are unhappy with the actions
taken by the state legislature and governor, their proper
remedy is at the voting booth.
D. Due Process Claims
Having found in favor of plaintiffs on the § 1983 cause of
action claiming a violation of the Contract Clause, the Court
need not decide whether plaintiffs' Fourteenth Amendment rights
have also been violated.
For the foregoing reasons, plaintiffs' motion for summary
judgment is GRANTED IN PART insofar as they seek a
determination that: (1) a Contract Clause claim may be brought
pursuant to 42 U.S.C. § 1983; (2) they successfully maintained
a § 1983 claim for a violation of their rights under the
Contract Clause; and (3) they are entitled to an award of
attorneys' fees pursuant to 42 U.S.C. § 1988 in the amount of
$481,341.69. Defendants' cross-motion for summary judgment is
IT IS SO ORDERED