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rejecting award of attorney's fees where attorney submitted an affidavit and IAB considered Cox factors 1-7, but not 8-9, because the Board's discussion regarding the factors was not an adequate statement of its findings
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C.A. No. 01A-07-004 HDR
Submitted: December 17, 2001
Decided: February 22, 2002
Upon Claimant's Appeal from a Decision of the Industrial Accident Board. REVERSED and REMANDED.
Walt F. Schmittinger, Esq. of Schmittinger Rodriguez, P.A., Dover, Delaware, for Claimant Below-Appellant.
Susan A. List, Esq. of Tybout, Redfearn Pell, Wilmington, Delaware, for Employer Below-Appellee.
OPINION
This is an appeal of a decision of the Industrial Accident Board ("Board") which awarded compensation for a disfigurement and an ancillary award of attorneys' fees. Employee Below-Appellant, Daniel Taylor, ("Taylor"), filed a petition for disfigurement benefits with the Board against Employer Below-Appellee, Walton Corporation ("Walton"). Taylor's petition sought compensation for a work injury and resulting disfigurement to his left hand that occurred while he was operating a drilling rig. The Board held a hearing, determined that Taylor's petition should be granted and also awarded attorneys' fees. Taylor filed this limited appeal seeking only review of the Board's decision to limit the award of attorneys' fees to $1,500.00 rather than the maximum under the statute. He argues that the Board's decision amounts to an abuse of discretion and should be overturned. I find that the Board failed to consider several necessary factors in determining the award of attorneys' fees. Accordingly, the Board's decision regarding the award of attorneys' fees is REVERSED and this matter is REMANDED for further proceedings.
I. BACKGROUND
On May 19, 1999, Daniel Taylor, suffered a compensable industrial accident while working for Walton Corporation. At the time of the accident, Taylor was working as a driller for Walton, drilling such things as monitoring wells. His injury occurred when he leaned into the drilling rig and his left hand became caught between the parts of the rig as the metal shaft came up. His middle finger was cut off and his index finger was left dangling by a small piece of skin. The doctors were able to reattach the index finger. The middle finger is amputated at the second joint, leaving just a short stub. There is a scar across the middle of this stump. The index finger bears a scar that runs almost entirely around the finger at the level of the second joint. The middle joint of the index finger does not flex, causing the finger to be held stiffly.
On April 6, 2001, Taylor filed a Petition to Determine Disfigurement Benefits with the Board. The Board conducted a hearing on the petition on June 13, 2001. At the disfigurement hearing, Taylor testified about how the injury has affected him psychologically. People notice his hand and tend to stare at him or make comments, and children often react to the disfigurement. Taylor became depressed and irritable because of his appearance. He still suffers from depression and continues to have nightmares and flashbacks concerning the accident. Taylor has been taking anti-depressant medication prescribed to him by his family practitioner. Taylor displayed his injury to the Board and also presented the Board with several photographs depicting his disfigurement.
At the close of the evidence, Taylor's counsel, John J. Schmittinger, Esq. submitted his Affidavit Regarding Attorneys' Fees. The affidavit requested attorneys' fees in the amount of the statutory maximum (the lesser of $2,250 or 30% of the award) and represented that Schmittinger had spent five hours in preparation for the hearing. The Board awarded Taylor 300 weeks of compensation, for a total of nearly $60,750.00. The Board also awarded him attorneys' fees in the amount of $1,500.00.
On July 11, 2001, Taylor filed a limited appeal of the Board's decision, contesting only the award of attorneys' fees. Taylor argues that the Board abused its discretion by granting $1,500 in attorneys' fees instead of awarding the statutory maximum amount of $2,250. In General Motors Corporation v. Cox, the Delaware Supreme Court enumerated the factors that must be considered in calculating an award of reasonable attorneys' fees in a worker's compensation case. Taylor contends that the Board did not properly analyze these factors. Walton, on the other hand, maintains that the Board properly applied the Cox factors and acted within its discretion in determining the amount of the award.
304 A.2d 55, 57 (Del. 1973).
II. STANDARD OF REVIEW
On appeals from the Industrial Accident Board, the Superior Court must limit its scope of review to correcting errors of law and determining whether substantial evidence exists in the record to support the Board's findings of fact and conclusions of law. Substantial evidence means "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." It is more than a scintilla of evidence, but less than a preponderance. On appeal, this Court may neither re-weigh the evidence, determine questions of credibility, nor make its own factual findings. The Court must give deference to "the experience and specialized competence of the Board" and must take into account the purposes of the Worker's Compensation Act.
Histed v. E.I. DuPont de Nemours Co., 621 A.2d 340, 342 (Del. 1993); Johnson v. Chrysler Corp., 213 A.2d 64, 66 (Del. 1965).
Olney v. Cooch, 425 A.2d 610, 614 (Del. 1981).
Id.
ILC of Dover, Inc. v. Kelley, 1999 WL 1427805, at *1 (Del.Super.Ct.).
Histed, 621 A.2d at 342.
Absent an abuse of discretion or an error of law, the Court will not disturb an award of attorneys' fees. The Board commits an abuse of discretion when it "exceed[s] the bounds of reason" in light of the circumstances, or "so ignore[s] recognized rules of law or practice" as to produce an injustice. If the record reveals that the Board based its decision on improper or inadequate grounds, an abuse of discretion has occurred and the Court must reverse the decision.
DiGiacomo v. Board of Pub. Educ., 507 A.2d 542, 546 (Del. 1986).
Floudiotis v. State, 726 A.2d 1196, 1202 (Del. 1999) (quoting Lilly v. State, 649 A.2d 1055, 1059 (Del. 1994), and Firestone Tire Rubber Co. v. Adams, 541 A.2d 567, 570 (Del. 1988)).
City of Wilmington v. Clark, 1991 WL 53441, at *3 (Del.Super.Ct.) (Mem. Op.).
III. DISCUSSION
At the time of the Board's decision 19 Del. C. § 2320(g)(1) required the Board to award "[a] reasonable attorney's fee in an amount not to exceed 30 percent of the award or $2,250, whichever is smaller, . . . to any employee awarded compensation . . . ." The purpose of this provision is to reduce the depleting effect of attorneys' fees on worker's compensation benefits by decreasing or eliminating the amount of attorneys' fees that employees must pay from the proceeds of their awards.The Board has discretion in determining the amount of attorneys' fees it awards. However, the Board must exercise this discretion in a manner consistent with the purposes of the Worker's Compensation Act.
See Simmons v. Delaware State Hosp., 660 A.2d 384, 389 (Del. 1995).
Histed, 621 A.2d at 342.
General Motors Corp v. Cox sets forth the factors that the Board must consider in calculating an award of attorneys' fees. These factors are:
(1) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) The fees customarily charged in the locality for similar legal services;
(4) The amount involved and the results obtained;
(5) The time limitations imposed by the client or by the circumstances;
(6) The nature and length of the professional relationship with the client;
(7) The experience, reputation, and ability of the lawyer or lawyers performing the services;
(8) Whether the fee is fixed or contingent;
(9) The employer's ability to pay; and
(10) Whether the employee's counsel has received, or expects to receive, compensation from any other source.
Id.; DiGiacomo, 507 A.2d at 546.
In its decision in the present case, the Board provided the following analysis regarding the issue of attorneys' fees:
Claimant's counsel submitted an affidavit stating that five hours were spent in preparing the case. The hearing itself took less than half an hour. Disfigurement cases are not difficult, and require little more than displaying the disfigurement to the Board and asking a few basic questions of the Claimant. No complicated legal or factual issues were involved. No special time limit appears to have been imposed by either Claimant or the circumstances in presenting this petition. These factors would indicate a lower attorney's fee award.
On the other hand, Claimant's counsel is extremely experienced in workers' compensation law. His initial contact with Claimant was in May of 1999, so he has been representing Claimant for over two years. The total amount of the award ($60,750.00) is large. These factors support a higher attorney's fee award. No evidence was provided to the Board pertaining to the remaining Cox factors and the Board shall not speculate concerning them.
Taking into consideration the fees customarily charged in this locality for such services as were rendered by Claimant's counsel and the factors set forth above, the Board awards an attorney's fee in the amount of $1,500.00.
Board Decision, Hearing # 1145228, at 5.
The Board referred to some, but not all, of the Cox factors in its decision. It made reference to the first factor (the time and labor required) when it stated that Claimant's attorney spent five hours preparing for the hearing, which lasted less than half an hour. The Board noted that most disfigurement cases are not difficult, and require little more than displaying the disfigurement to the Board and asking a few basic questions of the Claimant. The Board also noted that no complicated legal or factual issues were involved. The Board did not make any mention of the second factor (the likelihood that other employment will be precluded). However, Taylor's attorney has acknowledged that any failure to analyze this factor is harmless error, as worker's compensation cases usually do not affect counsel's ability to engage in the representation of other clients. The Board noted the third factor (the fees customarily charged for similar services) by acknowledging the consideration of the fees customarily charged in this locality for services as were rendered by Claimant's counsel. The Board identified the fourth factor (the amount involved and the results obtained) when it declared that it had based its decision, in part, on the results obtained. The Board considered the fifth factor (the time limitations imposed by the case), when it stated that no special time limit appears to have been imposed by either Claimant or the circumstances in presenting this petition. The Board alluded to the sixth factor (the nature and length of the professional relationship) when it stated that counsel's first contact with Claimant was in May of 1999. Finally, in reference to the seventh factor (the experience, reputation, and ability of the lawyer) the Board remarked that Claimant's attorney is extremely experienced in workers' compensation law.
The Board's decision omits any discussion of the eighth, ninth and tenth factors (whether the fee is fixed or contingent, the employer's ability to pay and the fees counsel may receive from other sources, respectively). The only inclination that the Board considered these factors was the statement that "[n]o evidence was provided to the Board pertaining to the remaining Cox factors and the Board shall not speculate concerning them." This Court has previously stated that if the Board's decision makes no reference to these three factors, the Court is unable to ascertain whether the Board applied them in calculating the award of attorneys' fees. "The Court cannot properly exercise its function on appeal without an adequate statement of findings by the Board." It "should not be compelled to speculate or make assumptions" as to what factors the Board considered in making its determination.
See Robinson v. Metal Masters, 2000 WL 1211508, *4 (Del.Super.Ct.).
City of Wilmington v. Clark, 1991 WL 53441, at *8.
Id.
Despite the Board's wide discretion, it must act in accordance with the purposes of the Worker's Compensation Act. The purpose of 19 Del. C. § 2320(g)(1) is to reduce or eliminate the depleting effect of attorneys' fees on worker's compensation benefits.
Histed, 621 A.2d at 342.
ILC of Dover, Inc. v. Kelley, 1999 WL 1427805, at *2; see DiGiacomo, 507 A.2d at 547.
IV. CONCLUSION
In calculating the award of attorneys' fees in the present case, the Board failed to address the eighth, ninth and tenth Cox factors. Because the Board based its decision on inadequate grounds, there has been abuse of discretion which requires reversal. On remand, the Board should reassess the award of attorneys' fees on the basis of all ten of the factors enumerated in Cox. The Board should specifically address the eighth, ninth and tenth Cox factors in its decision. The Board's decision regarding the award of attorneys' fees is REVERSED and this matter is REMANDED for further proceedings consistent with this opinion.IT IS SO ORDERED.