Summary
finding attorney fee awarded under consumer fraud statute is part of costs and not subject to court's monetary jurisdictional limit
Summary of this case from Lettenmaier v. Lube Connection, Inc.Opinion
No. 88CV-F56.
Decided February 10, 1992.
Carl Morgenstern Co., L.P.A., Carl Morgenstern and Barbara Morgenstern, for plaintiff.
Robbins, Kelly, Patterson Tucker Co., L.P.A., and Randy J. Blankenship, for defendant.
The above-captioned matter has been returned to the court with a mandate from the Ohio Supreme Court to make a disposition on the issue of attorney fees that is consistent with the Supreme Court's opinion. In other words, for the trial court to "state the basis for its fee determinations."
In at least one aspect, this remand appears unique. The Ohio Supreme Court in Bittner v. Tri-County Toyota, Inc. (1991), 58 Ohio St.3d 143, 146, 569 N.E.2d 464, 467, stated: "The trial court judge was in the best position to assess and review the time records submitted by Bittner's attorneys. The trial judge had been involved in the pretrial proceedings and was aware of the posture of both Bittner and Tri-County."
The above statement is true, except that the trial judge was recently elected to the court of appeals, and the remand is now before this newly elected judge. Consequently, the court held a hearing to discuss the case with counsel. The court then felt it was necessary to review the entire matter beginning with a review of the complaint, the subsequent filings, the transcript concerning attorney fees, the briefs to the court of appeals, the court of appeals' decision, the memorandums in support of jurisdiction, and briefs filed with the Supreme Court, the Supreme Court decision, plaintiff's subsequent application for attorney fees filed with this court September 13, 1991, defendant's memorandum in opposition of October 23, 1991, plaintiff's reply memorandum of November 18, 1991, defendant's reply memorandum of November 26, 1991, defendant's supplemental memorandum on the issue of jurisdiction of January 7, 1992, and, finally, plaintiff's supplemental application and request for hearing.
Upon reviewing the voluminous filings and transcript, the court conducted a conference telephone meeting with counsel. At the conclusion of that discussion, plaintiff's counsel agreed that the matter did not require another hearing.
I Jurisdictional Limit of Municipal Court
The court will first discuss the newest issue raised, i.e., is the matter of attorney fees, allowable pursuant to R.C. 1345.09(F)(2), to be considered a part of damages, or as costs? If the attorney fees are part of damages, then pursuant to R.C. 1901.17, this municipal court award is limited to the court's $10,000 jurisdictional limit.
In reviewing this question, several related issues raised orally by counsel concerning the settlement amount and the amount of attorney fees paid to plaintiff's co-counsel Ronald Burdge will be addressed. The above matter was scheduled for a jury trial on October 26, 1988. On that date, the parties, through counsel, settled the matter, and the court had counsel handwrite the basis of the settlement in the form of a "stipulation." That two-page stipulation was filed October 26, 1988. Then a handwritten "Judgment Entry" was filed on October 26, 1988, signed by counsel, which read, "Judgment is hereby entered in accord with the stipulation agreed to and filed by the parties this date." The "stipulation" read: "The parties agree that the only actual damages to Plaintiff are $3,500.00. For settlement, Defendant will pay Plaintiff $3,500.00. Plaintiff reserves for subsequent hearing by the agreement of the parties, the issue of any attorney fees and costs that the Court may or may not award under the Consumer Act."
The trial court then conducted a hearing on January 3, 1989. In its judgment entry filed January 30, 1989, the court awarded the Morgenstern firm $6,500, plus expenses of $800, and awarded the Burdge firm the sum of $1,115, plus expenses of $85. Added to the judgment of $3,500, the attorney fee awarded would create a total of $11,115. If the expenses were added and considered part of damages, the total would be $12,000. The question of attorney fees as part of damages or costs was not argued in either side's memorandums to Judge Walsh before January 3, 1989. In fact, this issue was not argued or addressed in this case, prior to this time. However, as defendant's counsel argued, the fact that this issue was not raised before now does not settle the question because questions of subject matter jurisdiction are never waived and can be raised at any time. See, e.g., State ex rel. Handley v. McCall (1939), 135 Ohio St. 63, 13 O.O. 332, 19 N.E.2d 158; Heid v. Hartline (1946), 79 Ohio App. 323, 35 O.O. 82, 73 N.E.2d 524; Bobala v. Bobala (1940), 68 Ohio App. 63, 20 O.O. 45, 33 N.E.2d 845; In re Claim of King (1980), 62 Ohio St.2d 87, 16 O.O.3d 73, 403 N.E.2d 200.
Now, the matter has gone from the trial court to the court of appeals to the Ohio Supreme Court and back to the trial court, with plaintiff requesting an award of attorney fees for litigating this question beyond the trial court.
Query: If the subject of attorney fees, pursuant to R.C. 1345.09(F)(2), was determined to be a part of damages, would there continue to be any Consumer Sales Practice Act cases filed in municipal courts, because with the possibilities of appeals the number of attorney hours reasonably expended on a case could be great, but the $10,000 jurisdictional limit would still apply? The Ohio Supreme Court in Bittner, 58 Ohio St.3d at 144, 569 N.E.2d at 465, stated: "Private attorneys may be unwilling to accept consumer protection cases if the dollar amount they are permitted to bill their adversary is limited by the dollar amount of the recovery * * *."
It is difficult to imagine that the legislature intended to allow for an award of attorney fees in such a manner that no, or at least very few, consumer protection cases could be brought in municipal courts. See Drake v. Menczer (1980), 67 Ohio App.2d 122, 21 O.O.3d 429, 425 N.E.2d 961.
White v. Kent (1988), 47 Ohio App.3d 105, 547 N.E.2d 386, is cited by the defendant for the argument that attorney fees are part of damages. White v. Kent is a Consumer Sales Practices Act case. In White, the defendants appealed and asserted three assignments of error, none of which included the issue of whether attorney fees should be considered part of damages or part of court costs. Rather, in the last paragraph of the decision, the First Appellate District noted "that the amount awarded, $10,800, exceeded the $10,000 jurisdictional limit of the municipal court." Id., 47 Ohio App.3d at 107, 547 N.E.2d at 389. The White case did not analyze the issue in its decision, nor comment other than what is quoted above.
The case of Muze v. Mayfield (1991), 61 Ohio St.3d 173, 573 N.E.2d 1078, is a case on appeal of a Bureau of Workers' Compensation claim. In that matter, the Harrison County Common Pleas Court held that in order to maintain a re-filed action, the employee was required to pay a certain figure including attorney fees. The employee appealed. The court of appeals reversed, holding that attorney fees were not "costs" of the previously dismissed action. The Ohio Supreme Court, in Muze, held that attorney fees are not "costs" of a previously dismissed action. In Muze, the issue before the Supreme Court was very narrow and it is simply not precedent for this issue to be decided here. Additionally, the case of State ex rel. Michaels v. Morse (1956), 165 Ohio St. 599, 60 O.O. 531, 138 N.E.2d 660, and the recent case of In re Election of November 6, 1990 for the Office of Attorney General of Ohio (1991), 62 Ohio St.3d 1, 577 N.E.2d 343, are not dispositive of this issue.
The case of Fay Gardens Mobile Home Park v. Newman (1983), 14 Ohio App.3d 144, 14 OBR 160, 470 N.E.2d 164, decided by the Twelfth District Court of Appeals, is precedent to be followed by this court. When Bittner was before the Twelfth District Court of Appeals, Bittner v. Tri-County Toyota, Inc. (Sept. 25, 1989), Butler App. No. CA89-03-035, unreported, 1989 WL 110841, that court stated: "The question remains as to the standard to be applied on remand. In Fay Gardens, supra, this court found a fee award of $3,600 to be excessive in a landlord-tenant case in which the prevailing party only recovered $1,500.00. * * * Although Fay Gardens involved a fee award under R.C. 3733.09(B), we find its rationale to be pertinent to a fee determination under R.C. 1345.09(F)." The Supreme Court, in Bittner, did not discuss the Mobile Home Park case which the court of appeals had relied upon. It seems the Bittner Supreme Court either disregarded the Mobile Home case because it was not a Consumer Sales Practices Act case, or the Supreme Court has tacitly limited the holding in the Mobile Home Park case. Whatever the situation, since Mobile Home Park is an interpretation of an award of attorney fees under the Mobile Home statute, R.C. 3733.10(B), and not an interpretation of R.C. 1345.09(F)(2), this court declines to follow that rationale.
However, this court finds the dissenting opinion of Judge Whiteside, sitting by assignment, in the Mobile Home Park case, as it analyzes the issue of attorney fees as costs rather than as damages, as a valid analysis of the issue. Judge Whiteside discussed the analysis in Drake v. Menczer, supra. This court finds that discussion valid, and has chosen to follow it. Therefore, it is herein held that attorney fees, pursuant to R.C. 1345.09(F), are part of costs, and not subject to the $10,000 municipal court jurisdictional limit.
II Attorney Fee Award to Co-counsel Burdge
As to the requested attorney fee, the prior award by Judge Walsh on January 30, 1989 to "the Burdge firm" was in the sum of $1,115, plus expenses of $85. That matter on remand has been represented to the court as having been settled, THEREFORE, IT IS HEREBY ORDERED that the previous application for attorney fees presented by plaintiff's co-counsel Ronald Burdge is withdrawn, and that issue is moot, because the parties settled the issue.
III Attorney Fee Award to Counsel
The matter before the court is on the application for fees filed by Carl Morgenstern and Barbara Morgenstern. In their most recent Supplemental Application, they are requesting an attorney fee award in the amount of $34,200 and reimbursement of expenses totally $1,327.83. The basis for that request is based upon billing statements of "Prior to Settlement" (February 5, 1987 through October 26, 1988) of 84.75 hours at $100 per hour for $8,475; "After Settlement" (November 8, 1989 through September 11, 1991) of 75 hours at $100 per hour for $7,500; and 11.25 hours at $100 per hour for $1,125 for the period September 11, 1991 through December 27, 1991. Also involved are expenses totally $1,327.83. In addition to the hours set forth by counsel at a requested rate of $100 per hour is the request for "an enhancement of the fees" by applying a multiplier of two "because of counsel's extraordinary effort in this case on behalf of a small consumer."
In determining the attorney fee award, numerous raised issues must be decided. Initially, let the court make it perfectly clear that since plaintiff's counsel, in their January 9, 1982 supplemental application call the court's attention to "the fact that they have not requested or been allowed interest on their fees," the court is not, in any manner, considering the question of interest on attorney fees. However, since the question of interest on attorney fees is not directly mentioned in DR 2-106, and since the court has ruled that fees are part of costs, and since plaintiff's counsel had an oral "contingent" fee arrangement with Cheryl Bittner to the effect that they would handle this case with her being ultimately responsible for costs expended and counsel would receive whatever fee was awarded to them by the court against the defendant, the court believes that interest on fees would not be proper in this case even had it been requested.
IV Enhancement of Fee by Multiplier
Plaintiff's counsel argues for "an enhancement" of the fee by a multiplier of two. However, the original fee application stated, "Plaintiffs are not requesting an upward adjustment in the attorney fees." At the January 3, 1989 hearing before Judge James E. Walsh on attorney fees, plaintiff's co-counsel Ronald Burdge said, "and this case has nothing whatsoever to do with an enhancement of attorney fees. We're not asking this Court to give us any."
Previous to the representation of co-counsel Burdge quoted above, Judge Walsh had stated, "Well, don't delay any more on this business of enhanced lawyer fees because I don't particularly agree with that. I think if they're * * * if they can justify the amount of time they spent on a case then they're entitled to be paid for it. If they can't, they're not, but I'm not going to enhance anybody's fees."
Plaintiff did not appeal the trial court's denial of an "enhancement" by a multiplier. Clearly, then, plaintiff's counsel is not permitted to now relitigate the issue of an "enhancement" by a multiplier. The question still rises as to whether this is a new issue that can be raised in awarding an attorney fee from the representation of the plaintiff to the court of appeals, the Supreme Court, and back again to the trial court.
Without deciding whether "enhancement" by use of a multiplier was intended by the legislature, pursuant to R.C. 1345.09(F), "[t]he court may award to the prevailing party a reasonable attorney's fee limited to the work reasonably performed"; and without ruling whether the factors set forth in DR 2-106 may, in certain cases, allow for an "enhancement," the fact remains that counsel did not initially make such a request. The trial court previously stated it would not consider such a request; and this issue was not raised on appeal. Therefore, any request for such an "enhancement" for time spent subsequent to the case proceeding to the appellate level, is also DENIED for the same reasons stated above; and, further, because counsel should not be allowed to add a new issue on the remand, even if that new issue is for the time spent on appeal, because the court cannot find any justification for a potential different result, i.e., before appeal versus on appeal and thereafter.
V Separation of Claims
Another issue to be addressed is one raised directly by the Defendant: "Plaintiff has failed in her burden of proof due to the refusal to delineate between the contract claim and the deposit rule claim." It is true that plaintiff's attorneys have simply lumped all pretrial time into one request. Plaintiff's counsel states, "Implicit in the Ohio Supreme Court's decision was the recognition that the High Court, as all Courts, does not require the impossible. Here, segregating the time that Morgenstern's firm spent litigating the separate claims prior to the settlement is impossible, because of the Defendant's steadfast refusal to admit a Deposit Rule violation."
In Bittner, the Supreme Court said: "Tri-County also alleges that Bittner should not be able to recover for the time spent developing her breach of contract claim, since a breach of contract, standing alone, is not unfair or deceptive under the Act. In this case, the breach of contract claim is distinct from the deposit rule claim. Where, as here, the claims can be separated into a claim for which fees are recoverable and a claim for which no fees are recoverable, the trial court must award fees only for the amount of time spent pursuing the claim for which fees may be awarded." Id., 58 Ohio St.3d at 145, 569 N.E.2d at 466.
This court has read and re-read the Supreme Court decision concerning the mandate to separate the claims. In that regard, the court agrees with plaintiff's counsel that it is extremely difficult, if not impossible, to separate deposition time, for instance, between the contract violation and the deposit rule. The other concern is the statement, "the breach of contract claim is distinct from the deposit rule claim."
The above statement is disconcerting because the Bittner court described the pleadings as follows: "On February 9, 1988, Bittner filed a complaint against Tri-County alleging that Tri-County's failure to give her a receipt for her deposit as required by Ohio Adm. Code 109:4-3-07 was a deceptive consumer sales practice under R.C. 1345.02. She also alleged Toyota breached its contract with her when it sold to another person the Toyota she intended to purchase. Tri-County denied it violated the deposit rule or that it breached its contract with Bittner." Id., 58 Ohio St.3d at 143, 569 N.E.2d at 465.
Keeping in mind that the issues were never tried, but the case was settled on the day of trial, this court has reviewed the pleadings. The "First Claim" of plaintiff's complaint, consisting of four numbered paragraphs, mentions the $1,000 deposit, the contract price of $10,500 and the allegation that the defendant breached the contract and sold the vehicle to someone else for $11,500. Finally, in paragraph four, plaintiff alleges the monetary damage for the breach of contract is $1,000.
The "Second Claim" also consists of four numbered paragraphs. Importantly, paragraph five of the complaint states, "Plaintiff re-alleges each and every allegation contained in paragraphs 1 through 4 as may be necessary for this Second Claim." Paragraph six of the complaint alleges the "above described actions constitute a deceptive consumer sales practice as defined in R.C. Sec. 1345.02 and OAC 109:4-3-07(A), the deposit rule." Paragraph seven alleges that plaintiff suffered actual damages in the sum of $1,000. In the "Second Claim," plaintiff set forth no damage amount, other than to say in paragraph seven that the actual damages were $1,000. In the prayer for relief, plaintiff requested an alternative judgment: either $1,000 plus costs on the First Claim, or $3,000 plus costs and reasonable attorney fees on the Second Claim.
From the complaint, the court believes plaintiff was stating the following:
(a) The First Claim is for an alleged breach of contract with a request for actual damages as a direct result thereof in the sum of $1,000; and plaintiff prayed for that relief.
(b) The Second Claim is for a violation of the Consumer Sales Practices Act caused by the alleged breach of contract and by allegedly violating the deposit rule.
(c) Plaintiff states that her actual damage for the deceptive consumer sales practice violation is $1,000, and prays for an award of $3,000.
The point being, plaintiff was alleging more than a violation of the deposit rule when she included allegations that the deceptive act included the breach of contract. Otherwise, if the plaintiff were only alleging a violation of the deposit rule, plaintiff would have alleged in her Second Claim that the actual damage was $200. (See Bittner, where the court states, "In challenging the amount of hours expended on the case, Tri-County alleges that the only issue in this case is whether it failed to give Bittner a receipt for her deposit, which, if proven, would subject it to payment of a $200 damage award." Id., 58 Ohio St.3d at 145, 569 N.E.2d at 466.)
In the prayer, plaintiff requested $3,000 on her Second Claim, said amount being "three times the amount of her actual damages" requested in the First Claim for breach of contract, and the same amount ($1,000) being alleged as the actual damage in the Second Claim. See R.C. 1345.09(B). Therefore, since the untried allegations include the breach of contract issues, and since the court finds it impossible to delineate time spent in depositions, as one example, from the various issues, the court will not attempt to award an attorney fee by first separating attorney time spent on those different issues. (Curiously, the matter was settled for $3,500 on the day of trial when the complaint requested a judgment of $3,000.)
VI Reasonable Attorney Fees Limited to the Work Reasonably Performed
The last issue remaining is for the court to "state the basis for the fee determination," Bittner, 58 Ohio St.3d at 146, 569 N.E.2d at 467, based upon R.C. 1345.09(F) and DR 2-106(B). In making this determination, the court has reviewed all the items previously noted above.
First is the matter of fees requested for the period of time stated as "prior to settlement" and which is set forth as 84.75 hours at $100 per hour for a total of $8,475.
Before getting into detail, the expenses first requested were $726.38 through November 16, 1988. Additional expenses were requested through April 13, 1989 of $178.35, expenses of $398.77 from June 12, 1989 through April 13, 1990, and additional expenses of $5.17 for September 12, 1991 to December 27, 1991. The matter of expenses was not addressed by the defendant; therefore, little time will be spent on this subject. However, the test is still the "reasonableness" of the request pursuant to R.C. 1345.09(F) and DR 2-106. Without assistance in testing the reasonableness or validity of postage, long distance telephone calls, subpoena fees and so forth, the court finds same to be reasonable as requested. The court does not, however, find either a charge of fifteen cents or a later charge of twenty cents per page for photocopies is reasonable. Rather, ten cents is a reasonable charge. Therefore, the court finds that the sum of $1,186.67 as a reasonable amount for expenses to be awarded plaintiff's attorneys.
Concerning the request of a rate of $100 per hour. Defense counsel has not disputed that a $100 hourly rate is that which is customarily charged in the locality for an attorney such as Carl Morgenstern who is stated to have been practicing law for forty-one years. Defense counsel does argue that the hourly rate for work performed by attorney Barbara Morgenstern should be something less than at $100 an hour because she was admitted to practice law in 1986, then was a judicial law clerk for one year and then entered the private practice. The court finds $100 an hour as a reasonable rate for attorney Carl Morgenstern and finds $75 per hour as a reasonable rate for attorney Barbara Morgenstern. See DR 2-106(B)(3) and (7).
The next issue is "the number of hours reasonably expended on the case," Bittner, 58 Ohio St.3d at 145, 569 N.E.2d at 466, and R.C. 1345.09(F). The Morgenstern office lists 84.75 hours expended from February 5, 1987 through October 26, 1988. Defendant has argued in its original memorandum, at the hearing, and, more recently, in its memorandum, "that actual time has been inflated, some items have been billed more than once, and work has been performed on numerous occasions by more than one attorney." Defense counsel also argues that time is inflated by charging a minimum of fifteen minutes and, as an example, taking fifteen minutes to review a letter on February 20, 1987 and then fifteen minutes to review an answer to a motion on April 20, 1988. It is also pointed out that some of the time sheets do not reflect time spent, but rather an amount charged based upon the $100 per hour rate.
The court finds that the hours claimed are not reasonable for the period of February 5, 1987 through November 10, 1988. See Davis v. Mut. Life Ins. Co. of New York (Aug. 10, 1990), United States District Court, Southern District of Ohio, Western Division, No. C-1-87-727, unreported, 1990 WL 375612, where Judge Spiegel stated: "[O]ur review of Plaintiff's time records is complicated by the fact that documentation is extremely sparse; frequent references to `legal research' and `trial preparation' and `conference with co-counsel/paralegals' without further explanation leave us with no guidance as to the reasonableness of the time expended. We concur in the Defendants' observation that the records * * * reveal conflicting time spent when two or more of these attorneys were * * * present for the same conference or telephone call. * * * Because there is no documentation that might explain these apparent discrepancies, we conclude that this suggests `padding' of some time entries, or at the very least, sloppy record keeping. * * * Moreover, these time records reflect some duplication of effort."
The court also agrees, to a certain degree, with defense counsel's observation that plaintiff's counsel did not file a request for admissions pursuant to the Civil Rules, or request any sanctions for allegedly failing to answer interrogatories and then file a motion for summary judgment, all of which could have been done in this case. Plaintiff's counsel states it took the depositions to prove the "deposit rule" claim, which could have been answered quickly and months before trial through other tools of discovery as suggested above. There is also some validity to defense counsel's complaint that, if plaintiff's counsel did not believe they were sufficiently experienced in this area of the law, then why didn't they bring attorney Ronald Burdge into the case earlier. ("We brought in Ron Burdge, a skilled trial attorney, at the very end. Miss Bittner could not have afforded him from the beginning, she would not have gone ahead with this litigation.") Bittner and Carl Morgenstern both stated the basis upon which the case was taken was that Bittner was responsible to reimburse expenses and the attorneys would accept whatever they would be awarded by statute to be paid by the defendant. Burdge stated that he had worked with and been referred cases by Carl Morgenstern. These questions are all factors, pursuant to DR 2-106, to be considered in determining the reasonableness of the fee.
Consequently, the court has reviewed the time sheets, the transcript and the arguments, and thoughtfully taking into consideration each and every factor under DR 2-106. Pursuant to DR 2-106(B)(1) the issues in the complaint were not particularly novel and should not have been difficult. Under DR 2-106(B)(2) there is no real evidence that this case precluded other employment. Under DR 2-106(B)(7), since counsel felt it necessary to bring in "skilled co-counsel," they must have felt inexperienced in this area, and great weight is given to the fact that this lack of skill likely caused inordinate time spent which cannot be deemed reasonable. Therefore, the court has made a reduction in the fee request, to a reasonable fee for work reasonably performed in the sum of $3,100.
In plaintiff's motion for award of attorney fees filed November 23, 1988, and heard before Judge Walsh on January 3, 1989, plaintiff requested a fee of $8,575. Therefore, the court will not now consider that which was not previously requested or argued in the billing statement of November 21, 1988 for the period November 16, 1988 through November 21, 1988 in the sum of $1,115.
The court will consider the $50 billed on February 10, 1989 and has already considered the transcript expense on the bill dated July 22, 1991. Also reviewed was the bill of July 11, 1990, the bill of July 24, 1991, the bill of September 12, 1991, and the bill of January 6, 1992. Beginning with the bill of February 10, 1989 of 1/2 hour, and then May 12, 1989 through April 13, 1990, counsel request a fee of $4,300, based upon $100 per hour. For April 18, 1991 through July 23, 1991, counsel request a fee of $550. For July 21, 1991 through September 11, 1991, counsel request $2,062.50. For September 1, 1991 through December 27, 1991, counsel request $1,125. These requests total $8,037.50. The various billing statements raise numerous questions. For instance, it does appear that excessive hours were billed due to the use of both the Morgenstern firm and the Burdge firm. It would appear that over one fifth of the time set forth was spent conferring between counsel. Moreover, the billing statements reflect an inordinate period of time proofreading and preparing a table of contents. On the January 6, 1992 statement it reads, "September 1, 1992 worked on draft of fee application 10:30 P.M. to 11:15 P.M. — 3 hours." This must be incorrect. The comments of Judge Spiegel in Davis v. Mut. Life Ins. Co. of New York, previously quoted, are applicable here with an appearance of "`padding' * * * [and/or] sloppy record keeping * * * [and] duplication of effort." Consequently, upon a thorough review of the billings, arguments of counsel, the rationale used in determining a reasonable fee for the prior billing period and each factor under DR 2-106, the court finds a reasonable fee for work reasonably performed for the period of February 10, 1989, May 12, 1989, and thereafter, to be in the amount of $6,200.
Therefore, having ruled on each issue presented and having considered each factor in DR 2-106, the court hereby approves a reasonable attorney fee for work reasonably performed in the total sum of $9,300, plus expenses of $1,186.67. The defendant is HEREBY ORDERED to pay to the Morgenstern firm the sum of $10,486.67, as part of the costs of the above action.
Judgment accordingly.