Opinion
Case No. 116,180
08-30-2019
HETRONIC INTERNATIONAL, INC., Plaintiff/Appellee, v. Kimberly CURTIS, Defendant/Appellant.
John E. Barbush, Oklahoma City, Oklahoma, for Defendant/Appellant, John N. Hermes, Sam R. Fulkerson, Oklahoma City, Oklahoma, for Plaintiff/Appellee.
John E. Barbush, Oklahoma City, Oklahoma, for Defendant/Appellant,
John N. Hermes, Sam R. Fulkerson, Oklahoma City, Oklahoma, for Plaintiff/Appellee.
Opinion by Larry Joplin, Presiding Judge:
¶1 Defendant/Appellant, Kimberly Curtis, seeks review of the trial court's order of June 15, 2017 imposing sanctions, costs and attorney fees upon finding Curtis "refused to cooperate" and engaged in "obstructive conduct," which "significantly increased the time and labor required to litigate this matter." Plaintiff/Appellee, Hetronic International Inc., was granted the following attorney fees, expert fees and costs in the form of sanctions and prevailing party attorney fees and costs: a) attorney fees sanctions $46,866.75, prevailing party attorney fees $228,380.98, total $275,247.73; b) expert fees sanctions $42,733.81, prevailing party expert fees $0, total $42,733.81; c) costs sanctions $2,384.78, prevailing party costs $16,515.35, total $18,900.13. The total awarded to Appellee/Hetronic for attorney fees, expert fees and costs was $336,881.67.
¶2 Appellant/Curtis is a former employee of Hetronic International Inc. She began her employment in 2002 as the accounting manager and when she resigned on September 6, 2013 she was vice president of accounting. On September 10, 2007, during Curtis's employment tenure, Hetronic required her to sign an Amended and Restated Confidentiality and Noncompetition Agreement. The agreement contained a provision for payment of Hetronic's attorney fees in the event the company prevailed in pursuit of its rights under the agreement. In addition, there was a provision for Curtis to receive fifty-percent of her salary for a year after her employment ceased if she did not work for a competitor. ¶3 In November 2013, after Curtis provided her notice and prior to her end of employment in January 2014, Curtis and other employees were given a notice of litigation pertaining to an unrelated lawsuit, the notice prohibited the deletion, transfer or manipulation of Hetronic electronic files. In February 2014, shortly after Curtis's employment ended, Hetronic became aware that in excess of 14,000 electronic files had been transferred to Curtis's personal Dropbox and were deleted from Curtis's computer. On March 14, 2014, Curtis and her attorney were asked to return all company information Curtis had retained, including electronic files and files that had been transferred to her Dropbox account. On April 16, 2014, Hetronic's attorney sent a letter to Curtis's attorney in which Hetronic's counsel summarized the existing understanding between itself and Curtis regarding the location and "return" of the electronic files. Curtis asked to be present with the Hetronic IT professional in order to allow access to her Dropbox account. To facilitate the request, a meeting between Curtis and a Hetronic IT professional was arranged for May 16, 2014, but Curtis did not appear for this meeting. Hetronic filed its Petition later that same month, on May 28, 2014, asserting claims for breach of the 2007 confidentiality and noncompetition agreement, breach of fiduciary duty, breach of loyalty, and unjust enrichment.
The record indicates Curtis and Hetronic agreed she would continue working through January 3, 2014. At trial, Curtis asserted she had been fired, Hetronic said she was not fired. In either event, her employment ended on January 3, 2014.
The paragraph pertaining to the 50% post employment compensation was deleted after the contract was reformed by the trial court.
¶4 On the same day the Petition was filed, May 28, 2014, Hetronic filed a motion for a temporary restraining order (TRO) and motion for temporary and permanent injunction, requesting Curtis be enjoined "from accessing, using, transferring, deleting, sharing or otherwise manipulating electronic files now or previously in Curtis's personal Dropbox account that belong to, were created by, or are otherwise related to Hetronic's business or Curtis's prior employment by Hetronic, and to require her to allow Hetronic access to, and for Curtis to relinquish control of, her personal Dropbox account to Hetronic, including all electronic files and data included therein."
¶5 On July 23, 2015, the trial court issued an "Order for Sanctions" in which the court found Curtis willfully violated the court's orders of June 10, 2014, June 12, 2014 and July 23, 2014. The order found that on June 23, 2014, Curtis deleted the event logs from her personal computer and what was termed the "AZ control computer." Curtis admitted she changed the AZ control computer's name from "kcurtis" to "generic" to "laptop" on June 20, 2014. The court also found evidence establishing Curtis changed the name of her personal computer from "kimbot0282" to "kcurtis" approximately thirty minutes after the court's June 12, 2014 order was issued. The court did not find credible Curtis's testimony claiming she did not change the name of the computer. On the day Curtis was served with the instant lawsuit, she deleted three files from her Dropbox account, at least one of which contained Hetronic documents. The July 23, 2015 sanctions order decreed, "Hetronic is awarded a monetary sanction against Defendant, in an amount to be determined at a later hearing, for all attorney's fees, expert fees, and other costs incurred in obtaining this Order[.]"
¶6 The matter came on for a jury trial on November 2, 2015 for Hetronic's breach of contract claim and Curtis's counterclaim for breach of contract. The jury returned a verdict in favor of Hetronic for $180,000.00 in damages and found against Curtis on her counterclaim. Hetronic made an oral motion for remittitur, as the jury's verdict was greater than the money damages Hetronic sought; the motion was granted and the award was reduced to $34,345.00, said to represent Curtis's salary, benefits and other compensation paid from September 6, 2013 to January 4, 2014 and the costs incurred up to the time litigation was filed on May 28, 2014 for one of Hetronic's computer forensics consultants. The request for costs and attorney fees was to be determined at a later time upon Hetronic's motion as the prevailing party. ¶7 The costs and fee hearing was bifurcated, the first part of the proceeding was conducted on April 7, 2017 to determine whether Hetronic was entitled to fees and costs and the second part of the proceeding on May 2, 2017 was conducted to determine the amount to be awarded to Hetronic. Curtis appealed the resulting June 15, 2017 order for attorney fees, expert fees and costs, which awarded Hetronic a total of $336,881.67 in sanctions, fees and costs.
The trial court having previously granted Curtis's motion for summary judgment on Hetronic's claims for breach of the confidentiality agreement, breach of fiduciary duty, breach of loyalty, and unjust enrichment.
¶8 Curtis's first proposition on appeal argues the 2007 confidentiality and noncompetition agreement is unconscionable and unenforceable and the $228,380.98 prevailing party attorney fee award, given under the auspices of paragraph 8 of the 2007 noncompete agreement, is invalid. Curtis also argues the 2007 noncompete agreement fails for lack of consideration and the one-sided attorney fee provision lacked mutuality. Curtis's second proposition of error argues the total fees and costs award of $336,881.67 is unreasonable and bears no relationship to the $34,345.00 jury award. Also incorporated under Curtis's second proposition of error, she asserts the costs, attorney fees and expert fees were not appropriately limited to the actual costs of obtaining the sanctions order (July 23, 2015). And the sanctions award is not in keeping with similar sanctions awards given in other cases.
Paragraph 8, 2007 Confidentiality and Non-competition Agreement reads in part:
... Further, in the event legal action is necessary to enforce any of Employee's obligations hereunder and the Company prevails in such legal action, the Company shall be entitled to a recovery of its attorneys' fees expended in such action.
¶9 The question of a party's entitlement to an attorney fee award is a question of law subject to a de novo standard of review on appeal. Elmore v. Doenges Bros. Ford, Inc. , 2001 OK CIV APP 27, ¶6, 21 P.3d 65, 69. With respect to whether or not the fee award is reasonable, the trial court's decision will be affirmed unless the decision is marked by an abuse of discretion. Hastings v. Kelley , 2008 OK CIV APP 36, ¶8, 181 P.3d 750, 752.
¶10 Curtis's first argument on appeal asserts the 2007 confidentiality and noncompetition agreement fails for lack of consideration. Consideration is an essential part of any contract. 15 O.S. 2001 § 2. Curtis did not, however, appeal the underlying judgment in this case which found in favor of Hetronic and against Curtis's counterclaim. Curtis attempts to appeal the failed consideration for the underlying agreement here by appealing the attorney fee proceedings order. Hetronic argues she is out of time to do so having not appealed the underlying judgment after the jury verdict.
The journal entry of judgment was entered on January 8, 2016.
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¶11 Timely commencement of an appeal is jurisdictional. Stites v. DUIT Constr. Co. , 1995 OK 69, 903 P.2d 293, 303. Curtis failed to appeal the underlying decision which reached a merits issue regarding the validity of the 2007 agreement, which found a contract had been formed. It was at the merits stage, after the jury's verdict on the underlying issues, that Curtis needed to bring her appeal regarding the presence of or lack of consideration. The record reveals Curtis's appeal of the attorney fee decision is not effective in extending an appeal for the underlying issues decided by the jury. The attorney fee order and its corresponding appeal do not "extend or affect the time to appeal" the underlying judgment. 12 O.S. Supp.2004 § 990.2(D). We find no relief is warranted on this proposition of error.
¶12 Similarly, the second component of Curtis's first proposition of error argues paragraph eight (8) of the 2007 agreement is unconscionable and unenforceable due to its one-sided and unfair lack of mutuality, as it only provides for attorney fees to Hetronic. This proposition also attacks the validity of the underlying contract decision and attempts to reach the merits of the contract case which was decided by the jury in 2015. As with the proposition addressing the failure of consideration, this issue too is not ripe for appeal in the context of the attorney fees and costs proceedings and resulting order. 12 O.S. § 990.2(D). No relief is warranted on this proposition of error. ¶13 Curtis's second proposition of error asserts the $336,881.67 in awarded attorney fees, expert fees and costs does not bear a reasonable relationship to the result obtained, a $180,000.00 jury award remitted to $34,345.00. Curtis breaks this proposition into three subparts. First, Curtis argues the attorney fee award ignores Oklahoma authority requiring the fee to bear a reasonable relationship to the amount in controversy and the result obtained. Second, the sanction award for attorney fees, expert fees and costs was not limited to the cost of obtaining the sanction order itself. Third, the trial court improperly ignored sanctions awarded in a similar case.
¶14 The Oklahoma Supreme Court, quoting a Texas Court of Appeals case, said the following in Southwestern Bell Telephone Co. v. Parker Pest Control, Inc. , 1987 OK 16, 737 P.2d 1186, 1189.
"Attorney's fees, where recoverable by law, must be reasonable under the particular circumstances of the case and must bear some reasonable relationship to the amount in controversy." ...
See also Lytle v. Lytle , 266 Ark. 124, 583 S.W.2d 1 (1979).
We make these observations and quote from the other jurisdictions with approval to demonstrate that not in Burk [v. City of Oklahoma City , 1979 OK 115, 598 P.2d 659 ] nor anywhere else have we rejected the notion that an attorneys' fee must bear some reasonable relationship to the amount in controversy. It does, and that relationship must be considered in each case where an attorneys' fee is awarded.
Southwestern Bell , 737 P.2d at 1189.
¶15 Based on the authority recounted in Southwestern Bell , we agree the attorney fee must bear a "reasonable relationship to the amount in controversy." Id . However, as Hetronic explained throughout these proceedings, Curtis's unwillingness to cooperate in the retrieval and return of Hetronic's electronic information is what made this case balloon in the first place. Curtis failed to be forthcoming with respect to renaming her computer, she deleted computer documents and information making the computer forensics work more difficult, and violated multiple court orders. As the trial court explained in its appealed from order, enforcement of the confidentiality agreement to "insure [Hetronic's] confidential information [was not] misappropriated" was a primary goal in this suit and made the end result difficult to monetize. It should also be noted Hetronic reduced the requested fees across the board by 15% and did not request recovery for any fees by coordinating counsel.
¶16 "The reasonableness of attorney fees depends on the facts and circumstances of each individual case and is a question for the trier of fact. The standard of review for considering the trial court's award of an attorney fee is abuse of discretion." Hess v. Volkswagen Group of America, Inc. , 2014 OK 111, ¶14, 341 P.3d 662, 666. Originally, the trial court in Hess awarded a seven million dollar attorney fee upon a class action recovery of $45,780.00. Id. at 664. The Oklahoma Supreme Court reversed and remanded the multi-million dollar attorney fee award. On remand, the court awarded an attorney fee of $983,616.75; this award was affirmed on appeal. Hess v. Volkswagen Group of America, Inc. , 2017 OK CIV APP 35, 398 P.3d 27. The appellate court found no abuse of discretion in the reduced fee award, even though it far outpaced the underlying settlement by more than twenty times. In the present case, the $336,881.67 fees, sanctions, and costs award is roughly ten times the underlying verdict. The instant fee/cost/sanction award is within the parameters permitted in the 2017 Hess decision and is in keeping with the lodestar method, which calculates the number of hours worked multiplied by a reasonable hourly rate. The lodestar method carries with it a "strong presumption" that it results in a reasonable attorney fee. Id . at 32. Based on several factors in this case, a) wherein Curtis was remarkably uncooperative and not forthcoming with Hetronic's information, b) the ratio of fees awarded to results obtained, including the results that were not easily monetized, c) the trial court's decision is in keeping with previous Oklahoma authority, d) Hetronic's preemptive reduction of fees (by 15%) before submitting its request and e) the presumption in favor of the lodestar method used, we do not find the fee/sanctions/cost award in this case to be unreasonable.
¶17 The second component of Curtis's second proposition asserts the sanctions award total of $91,985.34 in fees, expert fees and costs (attorney fee sanctions $46,866.75, expert fees sanctions $42,733.81, and costs sanctions $2,384.78) was not appropriately limited to the cost of obtaining the sanction order itself. Extant authority provides:
When considering an application for attorney fees, the Oklahoma Supreme Court has given special guidance to the lower courts, stating that "recovery for counsel fee allowance must be set upon and supported by evidence presented in an adversary proceeding in which the facts and computation upon which the trial court rests its determination are set forth in the record with a high degree of specificity." Payne v. DeWitt , 1999 OK 93, ¶ 18, 995 P.2d 1088, 1096. (Footnotes omitted.) During the hearing, "(l)awyers are obligated to provide the trial court with the data necessary to document the work performed together with the method used to arrive at a counsel-fee allowance." Id .
Garage Storage Cabinets, L.L.C. v. Mitchell , 2007 OK CIV APP 84, ¶21, 169 P.3d 1211, 1217.
¶18 Hetronic provided detailed billing entries for both time and descriptions of the work done in support of its sanctions request. The billing demonstrated the requested fees and costs were targeted at Hetronic's IT forensics work to determine the extent of the Hetronic files Curtis had obtained and what needed to be returned, whether and to what extent Curtis violated the confidentiality agreement, which devices and accounts contained Hetronic information, and the extent to which Curtis was required to comply with court orders, particularly with respect to the computer information. The billing provided was specific and gave the trial court the necessary documentation for the work performed and the price for which it was done. The record shows the fee proceedings were done in accordance with the guidelines provided in Garage Storage Cabinets , we find no relief is warranted on this proposition of error.
¶19 Curtis's final argument in her second proposition of error argues the trial court did not properly consider a similar case in which a relatively nominal $500.00 sanction was imposed for an adverse party's "cleaning" (erasing) a computer disk drive, just prior to having to produce discovery materials. Food Serv. of America, Inc. v. Carrington , 2013 WL 4507593 (D.Ariz. 2013). This case was presented to the trial court below, argued by Curtis as being on-point and by Hetronic as distinguishable. On the record presented, we find the trial court was within its discretion to consider both parties' arguments and give the unpublished, out of state, opinion the consideration the trial court deemed necessary. Okla.Sup.Ct.R. 1.200, 12 O.S. Ch.15, App.1. The record does not reveal the trial court abused its discretion in its consideration of the Carrington case, no relief is warranted on this proposition of error.
¶20 The decision of the trial court is AFFIRMED.
GOREE, C.J., and BELL, J. (sitting by designation), concur.