Opinion
Case No. 117,457
04-07-2020
Lee NAYLES and Lana Nayles, Plaintiffs/Appellants, v. Kelvin DODSON, d/b/a Broken Arrow Motor Company, Defendant/Appellee.
Caleb M. Salmon, SALMON LAW FIRM, PLLC, Tulsa, Oklahoma, for Plaintiffs/Appellants Alexander F. King, Christopher B. Woods, KING WOODS, PLLC, Tulsa, Oklahoma, for Defendant/Appellee
Caleb M. Salmon, SALMON LAW FIRM, PLLC, Tulsa, Oklahoma, for Plaintiffs/Appellants
Alexander F. King, Christopher B. Woods, KING WOODS, PLLC, Tulsa, Oklahoma, for Defendant/Appellee
OPINION BY P. THOMAS THORNBRUGH, PRESIDING JUDGE:
¶1 Lee Nayles and Lana Nayles appeal a decision of the district court denying their application for attorney fees. On review, we reverse the decision of the district court and remand for the determination of a reasonable attorney's fee.
BACKGROUND
¶2 As the underlying case was settled by an agreed journal entry before any hearing on the merits, the district court did not pass judgment on the facts. As stated by Plaintiffs in their motion for summary judgment, they made a $1,000 deposit against the purchase of a vehicle, but, after discussing a loan with their bank, decided that the vehicle was over-priced and not to buy it. Defendant refused to refund the deposit, stating it was "non-refundable."
¶3 Defendant disputes this claim and stated in a narrative filed as his answer that Plaintiffs paid a deposit to "hold" the vehicle and fund some requested modifications, and he was entitled to retain the deposit because it was intended to be non-refundable. Defendant further states he suffered a loss by holding the vehicle for 10 days when he had an opportunity to sell it to another buyer.
¶4 Defendant, who was represented by counsel by that time, did not respond to Plaintiffs' motion for summary judgment, and the parties settled the contract claims in an agreed journal entry of judgment, leaving only the question of attorney fees open.
¶5 Plaintiffs applied for fees pursuant to 12 O.S. § 936, arguing that this was a case involving a contract for the sale of goods. Defendant responded arguing (among several theories) that, because the sale was never completed, there had been no "sale of goods," and no fees were available. The district court apparently agreed, and denied Plaintiffs' fee request. Plaintiffs now appeal.
STANDARD OF REVIEW
¶6 When the appeal raises an issue of the reasonableness of an attorney's fee awarded by the trial court, then the standard of review is whether there has been an abuse of discretion by the trial judge. State ex rel. Burk v. Oklahoma City , 1979 OK 115, ¶ 22, 598 P.2d 659. However, the question here—whether a party is entitled to an award of attorney fees and costs—presents a question of law subject to the de novo standard of review. Hastings v. Kelley , 2008 OK CIV APP 36, ¶ 8, 181 P.3d 750.
ANALYSIS
I. A CONTRACT RELATING TO THE PURCHASE OR SALE OF GOODS
¶7 Section 936 of Title 12 of the Oklahoma Statutes provides: "In any civil action to recover for ... [a] contract relating to the purchase or sale of goods ... the prevailing party shall be allowed a reasonable attorney fee to be set by the court, to be taxed and collected as costs." Defendant argues that a case in which a deposit is paid for the purchase of goods, but the transaction is not completed, does not involve a "contract relating to the purchase or sale of goods," because the case is premised on the "absence of the sale of the goods" rather than on the "sale of the goods."
A. The Limits of § 936
¶8 Oklahoma courts have limited the application of § 936 in several circumstances. Kay v. Venezuelan Sun Oil Co ., 1991 OK 16, 806 P.2d 648, provides the most comprehensive guide to the interpretation of § 936, citing four examples of the types of cases that will not support fees pursuant to § 936. The cases noted by Kay were Russell v. Flanagan , 1975 OK 173, 544 P.2d 510 (failure to honor a warranty on work that later became defective was not a "labor and services" case); Ferrell Construction Co., Inc. v. Russell Coal Co. , 1982 OK 24, 645 P.2d 1005 (damages for loss of anticipated profits do not fall under the "labor and services" provision of § 936 ); Holbert v. Echeverria , 1987 OK 99, 744 P.2d 960 (real property is not "goods, wares or merchandise" and breach of a contract to convey improved real property is not a "labor and services" case), and ABC Coating Company, Inc. v. J. Harris & Sons Limited , 1987 OK 125, 747 P.2d 271 (breach of quasi-contract for the use of a secret manufacturing process is not a "labor and services" case). Kay itself held that an assignment of an overriding royalty interest is not one of the contracts enumerated as fee-bearing in § 936. Since Kay was decided, Brisco v. State ex rel. Bd. of Regents of Agric. & Mech. Colleges, 2017 OK 35, ¶ 11, 394 P.3d 1251, has also held that an alleged breach of contract for future employment is not a "labor and services" case. The Legislature amended § 936 in 2002, and Kay discusses an earlier version of the statute. See Subsection ‘B’ below.
¶9 Two clear, general rules appear from these cases: 1) the provision of goods, labor or services must be central to the case , not a peripheral matter; and 2) cases merely arising from a "contract related to" labor and services, or involving the breach of a future potential of employment or services (such as those noted in Russell and Brisco ) are not fee bearing under § 936. Defendant argues, however, that Kay went well beyond these established exceptions and held that § 936 applies only to a contract for goods actually sold and delivered. As the vehicle was never "delivered," Defendant argues that § 936 does not apply.
¶10 The reference to goods "sold and delivered" as opposed to the statutory language regarding a "contract relating to the purchase or sale of goods" comes from footnote 11 of Kay, which states in part:
These amendments indicate legislative intent to mandate, "shall be allowed", attorney fees in actions to collect money promised, whether evidenced by a promissory note, a negotiable instrument, an account whether for sale of tangible property or labor and services and a bill or a contract for goods sold and delivered.
Defendant argues that this footnote establishes precedent that § 936 applies only in "goods and services" cases where the goods were actually delivered.
¶11 Although we know of no absolute rule that a footnote, standing alone, cannot constitute precedent, footnotes are generally considered to be dicta, and are usually in the form of an "aside" that may expand on facts or principles to assist the comprehension of the reader. Footnote 11 of Kay refers back to ¶ 10 of that opinion, and ¶ 10 does not repeat the "goods delivered" versus "goods not delivered" dichotomy Defendant suggests. We do not regard footnote 11 of Kay as binding precedent. Nor do we believe that the Kay court intended to exclude any and all cases where goods were not delivered from the reach of § 936 and contradict the text of § 936, which simply states that fees are available in cases based on "a contract relating to the purchase or sale of goods."
As noted by Judge Lumpkin in White v. State , 2019 OK CR 2, ¶ 4, 437 P.3d 1061, "setting forth the law in footnotes leads to confusion as to what is controlling precedent. Such confusion can be extinguished by properly placing the holding of the Court in the body of the opinion where it belongs."
B. The 2002 Legislative Amendment of § 936
¶12 The primary goal of statutory interpretation is to ascertain and follow the intent of the Legislature. Where a statute's meaning is ambiguous or unclear, we employ rules of statutory construction to give the statute a reasonable construction that will avoid absurd consequences. It is important in construing the legislative intent behind a word to consider the whole act in light of its general purpose and objective, considering relevant portions together to give full force and effect to each. Estes v. ConocoPhillips Co. , 2008 OK 21, 184 P.3d 518.
¶13 We first note that the Legislature clearly indicated in 2002 that a different treatment for "contracts for labor and services" was warranted as compared to contracts for the "purchase or sale of goods." In Russell v. Flanagan , the "for labor and services" provisions of § 936 were strictly limited to actions brought to recover for labor and services actually rendered. The Supreme Court specifically rejected an interpretation of § 936 which would authorize the courts to award attorney fees to the prevailing party in an action alleging injury from a contract relating to labor and services. The legislative response to the Russell decision guides our decision here. The 1970 version of § 936 stated:
In any civil action to recover on an open account, a statement of account, account stated, note, bill, negotiable instrument, or contract relating to the purchase or sale of goods, wares, or merchandise, or for labor or services , unless otherwise provided by law or the contract which is the subject to the action, the prevailing party shall be allowed a reasonable attorney fee to be set by the court, to be taxed and collected as costs. (Emphasis added).
¶14 This statute as written at that time raised some confusion, settled by Russell, as to whether a matter was fee-bearing if it arose from a "contract relating to labor and services," versus the stricter interpretation that fees were only available if a case sought recovery for "labor and services actually rendered." In 2002, the Legislature amended § 936. According to the Oklahoma comments, it did so to conform the statute to Russell. The 2002 version stated:
In any civil action to recover for labor or services rendered , or on an open account, a statement of account, account stated, note, bill, negotiable instrument, or contract relating to the purchase or sale of goods, wares, or merchandise, unless otherwise provided by law or the contract which is the subject of the action, the prevailing party shall be allowed a reasonable attorney fee to be set by the court, to be taxed and collected as costs. (Emphasis added).
¶15 We find it clear that, to reflect the Russell decision, the Legislature deliberately divorced the "labor or services" provisions of § 936 from the "contract relating to" language. In doing so, it made it clear that this "contract relating to" language did not apply to the "labor or services" provision, and a claim under that provision must be for labor and services actually provided. It is equally clear that the Legislature re-affirmed that, unlike labor and services contracts, contracts properly relating to the purchase or sale of goods were still fee-bearing pursuant to § 936.
¶16 Simply put, if the Legislature, acting in the wake of Russell , wished to exclude all claims that were "related to" the purchase or sale of goods, and instead impose a standard of "sale of goods actually received," it would have done just that. Instead, it narrowed the availability of fees in labor and services cases to those involving "labor and services actually rendered," but did not eliminate the phrase "contract related to" from the statute altogether. Instead, the Legislature retained the phrase, and separated the labor and services provision from it. ¶17 In this case, we find the transaction between the parties was centrally and primarily one relating to the purchase or sale of goods, and hence fee-bearing. Defendant cites a federal trial court opinion, Nasir v. Fischer, 11-CV-0700-CVE-PJC, 2012 WL 2505496, at *1 (N.D. Okla. June 28, 2012) as persuasive authority contrary to this conclusion. In the Nasir case, however, "The parties agree[d] that the only potentially relevant portion of § 936 is the first-described action, ‘to recover for labor or services rendered.’ " Id ., *2. This opinion was written well after the Legislature modified § 936 to separate the "goods" and "labor and services" provisions. Hence Nasir has no relevance to a "contract relating to the purchase or sale of goods" case.
Further, the interpretation of Kay proposed by Defendant would likely lead to an irrational construction and potentially absurd consequences, in that it implies that fees are available if a vendor takes money, but then delivers defective, inferior or incorrect goods, but not available if vendor takes money, but then delivers no goods at all.
Defendant devotes a substantial amount of briefing to unpublished decisions from federal trial courts. Although opinions from the federal appellate courts are considered precedential within the circuit on matters of federal law , and may be persuasive on matters of state law in the absence of adequate state precedent, we find no authority on how to weigh the recent flood of published federal trial court rulings. We note some dissonance if these may be cited as persuasive authority while the opinions and orders of our state judges may not.
¶18 We find that the Legislature has clarified § 936 since Russell and Kay were published. The Legislature chose to adopt the Russell rule that a "labor and services" claim must centrally involve labor and services actually rendered, but clearly did not adopt the "goods actually delivered" standard stated in n. 11 of Kay. The amendments made it clear that, unlike labor and services contracts, contracts relating to the purchase or sale of goods were still fee-bearing pursuant to § 936. We find Plaintiffs were entitled to a fee pursuant to § 936.
II. APPORTIONMENT
¶19 Defendant also makes an apportionment argument. Plaintiffs pled claims for breach of contract and breach of the Oklahoma Consumer Protection Act (OCPA). The agreed journal entry of judgment filed on July 31, 2018, recites that Defendant will pay $1,000 on the contract claim, and that the Consumer Protection Act claim is dismissed with prejudice. Defendant now argues that, because of this agreed dismissal, Plaintiffs were not the "prevailing party" on the OCPA claim, and any fee request has to be segregated between the contract claim and the consumer protection claim.
¶20 Apportionment usually becomes necessary when a party successfully prosecutes or defends both fee-bearing and non-fee-bearing claims. Parker v. Genson , 2017 OK CIV APP 59, ¶ 6, 406 P.3d 585. However, a damaged plaintiff may recover fees in an OCPA claim. Tibbetts v. Sight 'n Sound Appliance Centers, Inc ., 2003 OK 72, ¶ 0, 77 P.3d 1042, as corrected (Sept. 30, 2003). The contract and OCPA theories in this case were both potentially fee-bearing, and comprised a single cause of action, seeking money damages for the same act, and based on the same facts.
Usually referred to as "Tibbetts II " to distinguish the case from the earlier published case of Tibbetts v. Sight 'n Sound Appliance Centers, Inc ., 2000 OK CIV APP 47, 6 P.3d 1064, (overruled in later appeal sub nom).
¶21 Defendant cites Tsotaddle v. Absentee Shawnee Housing Authority , 2001 OK CIV APP 23, ¶ 31, 20 P.3d 153, as authority for his position that apportionment is required. Tsotaddle states that, in a case involving multiple claims where prevailing party attorney fees are authorized for only one claim, the law dictates that the court "apportion" the fees so that attorney fees are awarded only for the claim for which there is authority to make the award . Id . Defendant interprets Tsotaddle as requiring not merely apportionment between a fee-bearing and non-fee-bearing claim, but apportionment between a dismissed claim and a successful claim, even if both claims were fee-bearing.
¶22 Tsotaddle is, however, a conventional apportionment case involving fee-bearing and non-fee-bearing claims. The law has required apportionment in those circumstances since Green Bay Packaging, Inc. v. Preferred Packaging, Inc. , 1996 OK 121, 932 P.2d 1091. Tsotaddle does not, however, comment on Defendant's theory that a plaintiff must segregate time spent on a voluntarily dismissed fee-bearing claim that sought the same relief as a successful fee-bearing claim. Nor does Sisney v. Smalley, 1984 OK 70, 690 P.2d 1048, the case relied on by Tsotaddle , which involved a fee-bearing property damage claim, and a non-fee-bearing personal injury claim. Id ., ¶ 1.
The case involved two claims, a § 1983 claim "for which a fee is authorized" (Id ., ¶ 35 ), and a breach of employment contract claim that did not statutorily support fees.
¶23 Defendant also cites C-P Integrated Servs., Inc. v. Muskogee City-Cty. Port Auth. , 2009 OK CIV APP 57, 215 P.3d 835, but that is also a conventional apportionment case involving a fee-bearing breach of contract and a non-fee-bearing tort claim. Id. ¶¶ 33, 34. In short, the parties cite no case in which an Oklahoma court has discussed a question of apportionment between concluded and dismissed fee-bearing claims in this scenario. We find only four published cases apparently dealing with apportionment between "successful", and "unsuccessful" claims, and all four of those cases involve a conventional question of apportionment between fee-bearing and non-fee-bearing claims. The theory raised by Defendant that a court is required to apportion between a successful fee-bearing claim and a voluntarily dismissed fee-bearing claim appears to be one of first impression.
See Parker v. Genson, 2017 OK CIV APP 59, 406 P.3d 585 (intermixed tort claim and surface damage claim); Beavers v. Byers , 2010 OK CIV APP 79, 239 P.3d 484 (breach of contract and willful damage to property) and RJB Gas Pipeline Co. v. Colorado Interstate Gas Co . (two cases, 1989 OK CIV APP 100, 813 P.2d 1 & 1990 OK CIV APP 47, 813 P.2d 14 )(tort and contract claims).
¶24 The reason why this scenario has not generally arisen is clear. If a case involves two fee-bearing claims, and a plaintiff is successful in only one, this will normally lead to two fee awards (as plaintiff and defendant are both prevailing parties). Only in the situation where a fee-bearing claim is dismissed before judgment (and hence there is no prevailing party on that claim) does the current question arise.
C. The "Inextricably Intertwined" Rule
¶25 Before attempting to fashion new law on this question, we must first determine if apportionment would otherwise be required, or if the "inextricably intertwined" rule applies. The "inextricably intertwined" rule holds that time spent in establishing the common elements necessary to both a fee-bearing and a non-fee-bearing claim need not be apportioned. Defendant argued to the district court that the "inextricably intertwined" theory is not recognized in Oklahoma, citing the Tenth Circuit case of Combs v. Shelter Mut. Ins. Co ., 551 F.3d 991, 1001 (10th Cir. 2008) as authority. COCA has, in fact, recognized this theory on several occasions. See Beavers v. Byers, 2010 OK CIV APP 79, ¶ 18, 239 P.3d 484 ; Bank of Am., N.A. v. Unknown Successors of Lewis , 2014 OK CIV APP 78, ¶ 47, 336 P.3d 1034 ; Margaret Blair Tr. v. Blair, 2016 OK CIV APP 47, ¶ 51, 378 P.3d 65.
And not, as is sometimes argued, that the time is inextricable because the claimant's time sheets failed to segregate time spent on fee-bearing and non-fee-bearing claims.
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¶26 In this case, the two theories (contract and OCPA) were premised on the same act—the refusal to refund the deposit. The two theories also sought the same remedy of money damages. There appear to be no required elements that are unique to one theory as opposed to the other. This is the exact situation that the "inextricably intertwined" rule addresses. We see no reason at law or equity why a party should receive less that a full fee for proving a necessary element of a fee-bearing claim simply because the same elements would support a dismissed or non-fee-bearing claim. We find no need for any apportionment.
III. SUFFICIENCY OF THE FEE EVIDENCE
¶27 Defendant finally complains of the adequacy of the various proofs of fees, the absence of Burk findings, and whether certain activities were properly chargeable as fees. The district court, having denied Plaintiffs' entitlement to fees, did not address these issues below, and we will not make an initial determination of them here.
CONCLUSION
¶28 We find that Plaintiffs were statutorily entitled to a reasonable attorney fee in this matter. We further find that no form of apportionment is necessary. We remand this matter for hearing regarding the proper amount of the fee to be awarded.
¶29 REVERSED AND REMANDED FOR FEE DETERMINATION.
REIF, S.J. (sitting by designation), and WISEMAN, C.J., concur.