THOMSEN, Senior District Judge.
The trustee in bankruptcy seeks an order awarding him, as the prevailing party in his controversy with the Internal Revenue Service herein, an attorney's fee in the amount of $20,000 as part of the costs payable by the Government. He relies upon 42 U.S.C. 1988, as amended, Act of Oct. 19, 1976, Pub.L.No.94-559, § 2, 90 Stat. 2641, which provides in pertinent part: "In any action or proceeding to enforce a provision of sections 1981, 1982, 1983, 1985, and 1986 of this title, title IX of Public Law 92-318, or in any civil action or proceeding, by or on behalf of the United States of America, to enforce, or charging a violation of, a provision of the United States Internal Revenue Code, or title VI of the Civil Rights Act of 1964, the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs."
The facts upon which the claim filed by the Government was based and the relevant statutes, legislative history and decisions are set out in the opinion of this court denying that claim, In re Joel Kline, 403 F.Supp. 974
In his motion for award of an attorney's fee the trustee alleges: that "[t]he Government knew that the private foundation excise taxes in question constituted `penalties' within the purview of section 57j of The Bankruptcy Act (11 U.S.C. 93(j)) and would be disallowed"; that the amount realized from the liquidation of the bankrupt's assets is insufficient to pay the tax claims asserted by the Government; that "the Government acted in a vexatious manner by persisting in litigating its claim before this Court and thereafter by appealing this Court's decision to the United States Court of Appeals for the Fourth Circuit, knowing that its position had little or no merit and that such litigation and appeal would require the Trustee to incur substantial attorney's fees"; and that approximately 200 hours of attorneys' time was spent on litigating this matter in the United States Tax Court, the bankruptcy court and this court.
The trustee contends that because he prevailed in this litigation, fairness and equity require that the Government, rather than the bankrupt estate, should bear the burden and expense of litigation, and that this court should therefore award an attorney's fee pursuant to § 1988. In his brief the trustee notes that the 1976 amendment to § 1988 was enacted in response to the decision in Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975), and quotes remarks of Senator Allen in the course of the floor debate on the Senate Bill;
The Government argues convincingly that the legislative history shows that other senators did not intend that the 1976 amendment to § 1988 should have such a broad sweep as the trustee, relying on Senator Allen's remarks, contends; rather, the Government argues, the statements of other senators indicate that the provision allowing prevailing taxpayers to recover an attorney's fee is to be limited to situations where the Government has acted in bad faith or has brought a suit for purposes of harassment or frivolously or vexatiously.
The 1976 amendment to § 1988 was a direct congressional response to the decision in Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975), which held that attorneys' fees could not be awarded to prevailing plaintiffs under a private attorney general theory unless there was express statutory authority for such an award. The legislative history of the 1976 amendment makes clear, however, that Congress did not intend to alter the established standards used in determining the propriety of awarding
This court concludes that the Government did not act in bad faith, for purposes of harassment, vexatiously or frivolously in this case. There was no binding precedent, and although this court and the Fourth Circuit concluded that the trustee's view was correct and supported by the reasoning of previous decisions, another district judge disagrees with our reasoning and has reached the opposite conclusion.
Exercising its discretion pursuant to the 1976 amendment to § 1988, quoted above, this court concludes that it should not award an attorney's fee under that statute to the trustee as part of the costs in this case, and his motion is hereby denied. The bankruptcy judge, however, should consider the work done in preparing and arguing this matter when he is called upon to decide what fee should be allowed to the attorneys for the trustee.