| Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions |
|
|
|
| Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions |
|
|
|
|
You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Valdez Fisheries Development Association, Inc. v. Froines (10/16/2009) sp-6424
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| VALDEZ FISHERIES DEVELOPMENT | ) |
| ASSOCIATION, INC., | ) |
| ) Supreme Court No. S- 13228 | |
| Appellant, | ) |
| ) Superior Court No. 3VA-00- 080 CI | |
| v. | ) |
| ) O P I N I O N | |
| CHRIS FROINES, | ) |
| ) No. 6424 - October 16, 2009 | |
| Appellee. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District, Valdez,
Joel H. Bolger, Judge.
Appearances: Stephen McAlpine, Law Offices of
Stephen McAlpine, Anchorage, for Appellant.
Jeffrey J. Jarvi, Michael T. Stehle, Stehle &
Jarvi, L.L.C., Anchorage, for Appellee.
Before: Fabe, Chief Justice, Eastaugh,
Carpeneti, Winfree, and Christen, Justices.
CHRISTEN, Justice.
EASTAUGH, Justice, concurring.
I. INTRODUCTION
Valdez Fisheries Development Association, Inc., appeals
an award of attorneys fees. It argues that the fee award
misinterprets this courts earlier opinion reversing and remanding
the original award of attorneys fees in this case. We agree, and
remand for recalculation of the fee award.
II. FACTS AND PROCEEDINGS
In May 2000 Chris Froines filed suit against Valdez
Fisheries, seeking damages for breach of contract.1 On December
15, 2003, Froines made an Alaska Civil Rule 68 offer of judgment
to settle the dispute if Valdez Fisheries would pay him $15,000.
Valdez Fisheries refused the offer.2 After a five-day trial, the
jury entered a verdict in Froiness favor, awarding him $10,000 in
damages.3
Froines moved for attorneys fees under Alaska Civil
Rule 68(b)(2).4 The motion was supported by an affidavit and
billing records showing the number of hours Froiness attorneys
worked and their hourly rates. The affidavit calculated that the
total amount of attorneys fees incurred on Froiness behalf was
$74,394.50. Because of the date of the offer, Civil Rule 68
authorized an award of fifty percent of Froiness reasonable
actual attorneys fees.5 The motion requested an award of fifty
percent of the total fees. Noting that he had incurred fees of
$74,394.50, Froines sought an award of $37,197.25. The superior
court agreed that Froiness jury verdict entitled him to an
attorneys fee award in the amount of fifty percent of his
reasonable actual attorneys fees. But the superior court looked
in part to the factors of Alaska Professional Conduct Rule 1.5
and determined that reasonable actual fees should not have
exceeded $20,000.6 The superior court thus awarded Froines
$10,000 in attorneys fees.7
Froines appealed, and we reversed.8 Our decision in
Froines II explained that the fee award might have been
improperly based on certain factors listed in Professional
Conduct Rule 1.5 that were inapplicable or that cut both ways
under the facts of this case.9 We remanded for recalculation
because we could not say with certainty that the attorneys fee
award would have been the same had the factors been considered
properly.10
On remand, the superior court interpreted our opinion
to require that reasonable actual attorneys fees be equated to
the amount of time that an attorney honestly chooses to spend on
the case. The superior court articulated that its interpretation
of Froines II precluded it from exercising its discretion: [a]
subjective [evaluation] . . . requires this court to approve the
amount of time actually worked. The superior court awarded
$42,090.50 in Rule 68(b)(2) attorneys fees to Froines, exactly
the amount Froiness attorneys sought.11 It appears that the
reasonableness of Froiness attorneys hourly rates was not
disputed.
Valdez Fisheries appeals, arguing that the superior
court misinterpreted Froines II and that the new award of
attorneys fees should be reversed because it includes fees for
work that did not advance the litigation. We reverse and remand.
III. STANDARD OF REVIEW
We review a trial courts fact-based determinations
regarding whether attorneys fees are reasonable for an abuse of
discretion.12 We review a trial courts interpretation of Alaska
Civil Rule 68 . . . de novo.13
IV. DISCUSSION
A. Awards of Attorneys Fees Under Alaska Civil Rule 68
Trial courts have broad discretion in calculating
awards of attorneys fees, but that discretion is constrained by
the court rules that authorize such awards.14 Here,
fees were awarded under Rule 68, which authorizes awards
calculated as a percentage of a partys reasonable actual
attorneys fees.15 The purpose of the rule is to encourage
settlement and efficient litigation practices.16
In making an award of attorneys fees under Rule 68, the
trial courts primary task is to determine the amount of
reasonable actual attorneys fees. The trial court must exercise
its discretion to determine whether the fees claimed are
objectively reasonable. There is no exhaustive list of the
factors a court may or should consider in this process. Courts
often approach the question by determining whether the hourly
rate charged was reasonable and whether the number of hours
worked was reasonable.17 This approach is particularly
appropriate where the party against whom fees are awarded
requests an itemized billing affidavit and objects to specific
items in the bill as unnecessary, duplicative, or otherwise
unreasonable. In such a case, the itemized billing record
provides a starting point because it establishes what fees were
actually incurred.18 The superior courts task is then to
determine whether the hourly rate is reasonable, and how many of
the hours of work billed were reasonably incurred.
In this case, Froiness attorneys filed an itemized
billing record. Valdez Fisheries argues here, as it did before
the superior court, that certain activities Froiness attorneys
engaged in and certain strategies they pursued were unreasonable.
For example, Valdez Fisheries argues that Froines seeks payment
for two attorneys presence at trial, when one would have
sufficed. It also argued that Froiness attorneys billed far more
hours for preparing and conducting the trial than the case
required. And Valdez Fisheries argued that Froiness attorneys
filed motions seeking redetermination of legal questions already
resolved in the case, and spent time drafting jury instructions
for claims not raised in the complaint. Each of these arguments
is an allegation that certain amounts of time billed by Froiness
attorneys did not reasonably advance the litigation. It is the
task of the superior court to evaluate these claims, and claims
like them, to determine whether the hours Froiness attorneys
billed were reasonable. Hours billed for activities that are not
reasonably intended to advance the litigation, or hours billed
for completing a task in excess of those that ought to be
required to complete it, are not reasonably incurred.
The trial court has discretion to resolve such
questions and determine the amount of reasonable actual attorneys
fees because it has knowledge of the case that the reviewing
court lacks. The trial courts greater knowledge of the case
makes it uniquely suited to answer these questions quickly,
accurately, and fairly. The purpose of conferring discretion on
the trial court to determine reasonable actual attorneys fees is
to allow it to use its greater familiarity with the details of
the case to perform an objective inquiry into these questions and
their like.
B. The Superior Courts Decisions
We reversed the superior courts first award of fees
because of concerns that the trial court improperly relied on
factors listed in Professional Conduct Rule 1.5.19
We have never adopted Professional Conduct Rule 1.5 as the test
for calculating attorneys fee awards. In one case involving a
contractual provision for reasonable attorney fees, this court
noted that several factors listed in Professional Conduct Rule
1.5 were helpful in its inquiry.20 But the purpose of
Professional Conduct Rule 1.5, and its near-identical parallel,
Alaska Bar Rule 35, is to aid attorneys in determining an
appropriate rate to charge their clients. When these factors
have a place in a courts calculation of reasonable actual fees,
it is most likely in determining whether the hourly rate charged
is reasonable.
In this case, the hourly rates charged by Froiness
attorneys were not disputed. Because some factors in the
reasonable rate inquiry overlap with factors in the reasonable
hours inquiry, Froines II addressed the particular factors from
Professional Conduct Rule 1.5 relied on by the superior court.
We explained that some were inapplicable to the facts of this
case, such as the contingent nature of the fee,21 and that other
factors may require different treatment in the context of this
case.22 And we explained that factors suggesting that the
prevailing party litigated its claim in an unreasonable manner,
may need to be treated differently in the context of Civil Rule
68, if their weight stems from the premise that the case was
particularly amenable to an offer of judgment.23 The extent to
which a trial court believes that a case should have settled must
be considered in light of the fact that the very application of
Rule 68, and the enhanced fees available under it, already
penalizes the non-settling party. By definition, Rule 68 fees
are awarded only after an offer of judgment is rejected, and some
degree of continued litigation becomes necessary in order to
resolve the dispute despite the offerors attempt to resolve
the case. This is why, in the context of Rule 68, the trial
courts opinion that a case should have settled is not a valid
basis for reducing a fee award to the prevailing party. But this
does not mean that the party that issues a Rule 68 settlement
offer that is rejected has free reign to incur unnecessarily high
fees. After designating a prevailing party, the trial courts
assessment of fees under Civil Rule 82 or Civil Rule 68 begins
with the prevailing partys actual fees, but it does not end
there. The reasonableness of the actual number of hours billed,
and the rate charged for the services, must be separately
evaluated by the court.
In Froines II, we could not tell whether the superior
courts initial fee award was influenced by a determination that
Froiness dispute with Valdez Fisheries should have been settled.24
We suggested that, on remand, the superior court should determine
the amount of reasonable actual attorneys fees by considering the
remaining factor cited in its first award: the moderate amount of
time and labor that the case should have required.25
The superior courts order on remand expressed concern
that its objective evaluation of the time required to litigate
this case would be considerably colored by the maximum likely
recovery, the actual recovery, and the contingent nature of the
fee arrangement. The trial court concluded that our opinion in
Froines II forbid it from considering these objective factors to
determine whether the plaintiffs fees are required. But in the
same order, the superior court demonstrated that it could
evaluate the reasonableness of the hours billed by determining
whether they were required to litigate the claim independent of
the possibly improper factors it claimed colored its thoughts.
The superior court stated that Froiness attorneys spent enormous
chunks of time on motions that were patently without merit and on
drafting jury instructions for claims that Froines was
procedurally barred from pursuing. The reasonableness of filing
a meritless motion or drafting unnecessary jury instructions is
unrelated to the nature of the fee agreement between the lawyer
and the client, and unrelated to the probable or actual recovery
on the claim. Similarly, the reasonableness of having two
attorneys present at trial, or of spending five days in trial
rather than three, are questions unrelated to the nature of the
fee agreement between the lawyer and the client and only somewhat
related to the probable or actual recovery on the claim. These
questions depend much more directly and substantively on the
number and complexity of the legal and factual issues in dispute.
The superior courts order awarding attorneys fees to
Froines explicitly states that the award is not based on the
superior courts objective evaluation of the amount of reasonable
actual attorneys fees. The court read Froines II as preventing
it from using its discretion to make an objective evaluation,
and compelling it to accept the amount of time that an attorney
honestly chooses to spend on the case. This was error. The task
of determining the amount of reasonable actual attorneys fees
requires an objective assessment. The trial court is uniquely
suited to make this judgment.
V. CONCLUSION
For the reasons stated above, we REVERSE and REMAND for
recalculation of the award of attorneys fees in accordance with
this decision.
EASTAUGH, Justice, concurring.
I agree with the court that the fees dispute must be
remanded for further proceedings. But I write separately to
repeat my view, expressed in my dissent when this case was last
before us, concerning the evidence relevant in Alaska Civil Rule
68 attorneys fees disputes.1 In my view, the court has unwisely
and needlessly prevented trial courts from considering some of
the most relevant evidence bearing on the reasonableness of the
incurred attorneys fees when a party seeks a Rule 68 fees award.
Because this is the same case, my continued adherence
to my dissent is not foreclosed by stare decisis.2
_______________________________
1 Froines v. Valdez Fisheries Dev. Assn, Inc., (Froines
II) 175 P.3d 1234, 1235 (Alaska 2008).
2 Id.
3 Id.
4 Rule 68 authorizes an award of attorneys fees to the
prevailing party if the prevailing party has made a timely offer
to settle that the losing party refused to accept and the
judgment is at least five percent less favorable to the offeree
than the offer. See Alaska R. Civ. P. 68. Even though the
damages the jury awarded Froines were less than the amount of his
settlement offer, the parties do not dispute that Rule 68 fees
were appropriate because the sum of Froiness damages, costs, and
prejudgment interest was at least five percent greater than the
amount of the settlement offer. See Froines II, 175 P.3d at 1235-
36.
5 See Alaska R. Civ. P. 68(b)(2) ([I]f the offer was
served more than 60 days after the date established in the
pretrial order for initial disclosures required by Civil Rule 26
but more than 90 days before the trial began, the offeree shall
pay 50 percent of the offerors reasonable actual attorneys
fees.).
6 Froines II, 175 P.3d at 1236.
7 Id.
8 We had previously reversed a grant of summary judgment
in favor of Valdez Fisheries. Froines v. Valdez Fisheries Dev.
Assn, Inc., (Froines I) 75 P.3d 83 (Alaska 2003).
9 Froines II, 175 P.3d at 1237.
10 Id.
11 This award was greater than that Froines initially
sought because it included hours Froiness attorneys billed
between the initial request for fees and the decision on remand.
12 Froines II, 175 P.3d at 1237 (citing Cook Schuhmann &
Groseclose, Inc. v. Brown & Root, Inc., 116 P.3d 592, 597 (Alaska
2005)).
13 Id. at 1236 (citing Marron v. Stromstad, 123 P.3d 992,
998 (Alaska 2005)).
14 See United Servs. Auto. Assn v. Pruitt ex rel. Pruitt,
38 P.3d 528, 531 (Alaska 2001) (The trial court has broad
discretion in awarding attorneys fees . . . .).
15 Alaska R. Civ. P. 68.
16 See Cook Schuhmann, 116 P.3d at 598 (Rule 68 has the
purpose of encouraging settlements and avoiding protracted
litigation. (citing Fernandes v. Portwine, 56 P.3d 1, 8 (Alaska
2002))).
17 The factors listed in Alaska Civil Rule 82(b)(3) may be
helpful in assessing whether the number of hours claimed is
reasonable. The factors listed in Alaska Bar Rule 35(a) may be
helpful to assess the reasonableness of counsels requested hourly
rate.
18 Marron v. Stromstad, 123 P.3d 992, 1013-14 (Alaska
2005) (holding that an attorneys fee award must be based on an
itemized billing record where the party paying the attorneys fee
award requests itemization).
19 Froines II, 175 P.3d at 1237-38. In its second order,
the superior court explained that its first award was also based
on its determination that it would not be reasonable for any
party to expend attorney fees in excess of the maximum likely
recovery. That assumption was incorrect. We have never adopted
such a bright-line rule. Some cases involve important matters of
principle, or personal liberty, yet offer only a modest monetary
recovery. It may be reasonable for attorneys fees in such a case
to exceed the maximum likely recovery. In cases in which the
representation is pro bono or under a contingency fee agreement,
the logic of the assumption falls apart entirely, as it is
impossible for the attorneys fees actually charged to the client
to exceed the amount recovered. Even where a matter of principle
is not at stake and the client pays his or her attorney by the
hour, the superior courts determination of the maximum likely
recovery should not become a hard upper limit on the amount of
reasonable actual attorneys fees. Cf. Magill v. Nelbro Packing
Co., 43 P.3d 140, 144-45 (Alaska 2001) (reviewing an award of
attorneys fees under Rule 68 and explaining that such an award is
not improper solely because the amount of actual fees upon which
the award is based exceeds . . . the amount in controversy
(citing Joseph v. Jones, 639 P.2d 1014, 1019 (Alaska 1982)));
Joseph, 639 P.2d at 1019 (affirming a Rule 82 attorneys fee award
of $8,000 to a party who had recovered only $5,000 in damages).
20 Gamble v. Northstore Pship, 28 P.3d 286, 293 (Alaska
2001).
21 Froines II, 175 P.3d at 1237 (explaining that the
contingent nature of the attorneys fee agreement has little
relation to the reasonableness of [the] attorneys fees
requested). In past cases addressing the calculation of
reasonable actual attorneys fees, [w]e have rejected arguments
that . . . awards based on [the] attorneys time multiplied by a
reasonable hourly rate are impermissible because the attorneys
services were free to the client or because the client actually
paid a fee different from the fee as so calculated. United
Servs. Auto. Assn v. Pruitt ex rel. Pruitt, 38 P.3d 528, 534
(Alaska 2001) (describing Gregory v. Sauser, 574 P.2d 445 (Alaska
1978), and Fairbanks Corr. Ctr. Inmates v. Williamson, 600 P.2d
743 (Alaska 1979)); see also City of Anchorage v. Gentile, 922
P.2d 248, 263 n.20 (Alaska 1996) (explaining that where a
prevailing party was represented under an agreement that would
have resulted in the attorney being paid a lower than usual fee .
. . the proper approach [to calculating reasonable actual fees]
is to value the attorneys services).
22 Froines II, 175 P.3d at 1237.
23 Id.
24 Froines II, 175 P.3d at 1237.
25 Id.
1 Froines v. Valdez Fisheries Dev. Assn, 175 P.3d 1234,
1238 (Alaska 2008) (Eastaugh, J., dissenting).
2 Cf. Diggins v. Jackson, 164 P.3d 647, 649 (Alaska 2007)
(Matthews, J., concurring) (joining in the courts result because
the court relied on a recently decided case that now stands as a
decision of this court and as such . . . has precedential effect.
Todays opinion is right in holding that it controls the outcome
of this case. Based on the principle of stare decisis I join in
the result that todays opinion reaches even though I remain
convinced that [the recently decided case] was wrongly decided.).
 |
| Case Law Statutes, Regs & Rules Constitutions Miscellaneous |
|
