Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division, No. IP 84 C 652-William E. Steckler, Judge.
Before POSNER and COFFEY, Circuit Judges, and DUMBAULD, Senior District Judge.*fn*
Defendants-appellants, Mayor and City Council of Baltimore ("Baltimore"), appeal the order of the district court denying Baltimore's motion for attorneys' fees and expenses, or in the alternative for discovery related to attorneys' fees and expenses. We affirm.
A complete recitation of the facts leading to this litigation may be found in Indianapolis Colts v. Mayor of Baltimore, 741 F.2d 954 (7th Cir. 1984), cert. denied, 470 U.S. 1052, 105 S. Ct. 1753, 84 L. Ed. 2d 817 (1985). In that decision, the panel majority held that the district court did not have jurisdiction to hear the Indianapolis Colts' ("Indianapolis") interpleader claim. The panel majority concluded that Indianapolis failed to satisfy the pleading requirements of the interpleader statute, 28 U.S.C. § 1335, for two reasons. First, the majority ruled that Baltimore and the Capitol Improvement Board of Managers of Marion County, Indiana ("CIB") did not have conflicting claims over a single stake. According to the majority, "Baltimore seeks ownership of the Colts' franchise, whereas the CIB has no claim to ownership of the franchise. Instead, the CIB has a lease with the Colts that requires them to play its games in the Hoosier dome . . . " 741 F.2d at 956. The majority reasoned that because the CIB had no reasonable claim of ownership of the Colts, there was not sufficient adversity to the plaintiff to justify interpleader. Id. at 957. Second, the majority noted that a "stakeholder must have a real and reasonable fear of double liability or vexatious, conflicting claims to justify interpleader." Id. The court then stated that:
"the Colts do not have a reasonable fear of double liability or vexatious claims here. The Colts and the CIB foresaw the likelihood of legal obstacles to prevent the Colts from leaving Baltimore, among which was an eminent domain action. The Colts and the CIB thus specifically contracted that the lease obligations will terminate at the Colts' option if the Colts' franchise is acquired by eminent domain."
Id. According to the majority, the presence of this "escape" clause in the lease rendered unreasonable any claim by Indianapolis that it could face two suits over the same stake. Thus, interpleader jurisdiction was not proper. Id. at 958.
In dissent, Coffey, J., disagreed with the majority's conclusion that the suit did not involve claims to a single stake. Instead of accepting the majority's view of the distinct nature of Baltimore's eminent domain rights in the Colts franchise and the CIB's lease obligations with the Indianapolis Colts, the dissent accepted the district court's characterization of this suit as a
"struggle over a very unique stake-'the rights and privileges of the [Colts] franchise and the property rights incident to the operation thereof'-with all of the attending social and economic benefits to be derived by two major metropolitan cities competing for the rights and privileges of the Colts' National Football League franchise."
Id. at 959. The dissent reasoned that:
"The full intent of the CIB is to keep the Colts in Indianapolis and thereby enjoy the rights and privileges of [an NFL] franchise... Baltimore also clearly desires these very same rights and privileges and thus, ...there does exist in this case a common, identifiable state-the rights and privileges of the Colts' franchise-subject to adverse claims."
Id. at 961. The dissent also asserted that the lease provisions relied upon by the majority to refute the reasonableness of the Colts' fear of conflicting claims would not necessarily prevent simultaneous adverse claims by the CIB and the city of Baltimore. "In light of the liberal construction to be accorded the federal interpleader statute," the dissent concluded that the Colts satisfied the jurisdictional requirements of 28 U.S.C. § 1335. Id. at 962. Although Indianapolis' petition for rehearing with suggestion of rehearing en banc was denied, two judges on the court (including Judge Coffey) voted to rehear the case en banc.
In its April 13, 1984 motion to dismiss the interpleader complaint, Baltimore had included a request for attorneys' fees pursuant to Fed. R. Civ. P. 11, and on May 10, 1984, Baltimore renewed its motion to dismiss, including its request for attorneys' fees. The district court denied Baltimore's motion for fees on October 12, 1984, concluding that neither Fed. R. Civ. P. 11 nor 28 U.S.C. § 1927 supported an award of attorneys' fees since "plaintiff had a reasonable basis in fact and in law to support the filing of the complaint ...