U.S. Court of Appeals for the Second Circuit
Arbitrary and Capricious — Legal Fees
Guertin v. United States
Judges Walker, Cabranes and Lohier
Background: The plaintiff appealed from the refusal by the Department of Housing and Urban Development to authorize reimbursement of the plaintiff’s defense costs, who was corporation counsel for the City of Middletown, N.Y. The plaintiff incurred the costs from successfully defending criminal charges stemming from a series of transactions that involved the city’s use of funds it received from HUD.
Ruling: The Second Circuit reversed. The court held that the legal expenses did not arise out of advising a private citizen on his business dealings, of which there was no evidence. The legal expenses arose from the unproven allegations that the plaintiff had compromised his duties and obligations as corporation counsel in administering the city’s Community Block Grant program. HUD had acted arbitrarily and capriciously by incorrectly determining that the legal fees were a result of the plaintiff’s acting solely as counsel for a private citizen involved in the underlying dispute.
Robert N. Isseks for the plaintiff-appellant; Michael J. Byars, assistant United States attorney, for the defendant-appellee