New decision on award of attorney’s fees

When can you recover attorney's fees?

Attorney’s Fees

On December 17, 2019, the Mississippi Court of Appeals issued its opinion in W-T Holdings, LLC d/b/a World World v. Gilchrist. The decision addressed the propriety of an award of attorney’s fees to Window World.

Facts of the case

Gilchrist hired Window World to install a number of windows in his house. The quoted price was $5,690.35. After the work was completed, Gilchrist was dissatisfied with the large picture window (the cost of which was more than 1/2 of the total contract price) and refused to pay.

Window World filed suit in county court for the contract price, attorney’s fees, collection costs, and interest.

County Court proceedings

Initially, Gilchrist filed a pro se Answer. He also filed a Counterclaim seeking $100,000 for damage to his credit, damage to his reputation, and mental fatigue.

He later hired a lawyer who amended the Counterclaim to seek only the cost of repair and proper installation of the large picture window.

At trial, the jury awarded Window World only $2,646. (A comparison of the parties’ contract reveals that this figure represented the price of the windows other than the large picture window.)

Motion for an award of attorney’s fees

After trial, Window World moved for expenses and attorney’s fees. Gilchrist did not dispute the award of expenses, but he did dispute the request for attorney’s fees.

More specifically, the parties’ contract stated:

                                         Default/Collection Policy

In the event client defaults on Contract, they will be responsible to pay all collection cost, attorney fees, court cost, and all other expenses related to enforcing [the contract].

Window World’s attorney took the case on a contingency fee agreement that stated he would receive “50% of any sums recovered.”

Notwithstanding this, Window World’s attorney submitted “billing statements” for him and his law clerk. The statements for the attorney added up to $27,450, and those for the law clerk $10,875.

Thus, having obtained a jury verdict of $2,646, Window World sought legal fees of $38,325 on top of that. Window World that such an award would be “reasonable.”

Window World’s counsel also argued that the County Court should increase this amount by a multiplier of two because he took the case on a contingency fee basis. (More about this in a moment.)

Gilchrist’s attorney responded by stating:

“To be sure, we have a detailed record of the lawyer’s time sheets, but that alone does not tell us that the client (Window World) actually paid those (or owes those by contract with its attorney). While the Attorney’s Fee Affidavit submitted by [counsel] includes an itemization of his time, it never actually says that he charged Window World $38,325 for his services.”

In rebuttal, Window World contended that “the issue regarding fees is whether they are reasonable, not how much the client actually paid.”

The county court announced its ruling from the bench and subsequently entered a written order. But, as the Court of Appeals noted, “neither the oral ruling nor the written order provided any analysis or explanation. The court simply awarded $23,400 for attorneys’ fees—$18,400 for [counsel’s] work and an additional $5,000 for [the law clerk’s] work.”

Gilchrist appeals to Circuit Court

On appeal, Gilchrist again advanced the position that Window World could only recover the fees it actually incurred, which was 50% of the $2646 awarded by the jury.

As the Court of Appeals noted, “Window World’s response brief in the circuit court did not dispute Gilchrist’s characterization of the record or the amount of fees that it had actually incurred. Instead,Window World simply asserted that the county court’s award was ‘reasonable’ and not an ‘abuse of discretion.’ ”

The Circuit Court agreed with Gilchrist. The Court reversed the county court and rendered an amended judgment, holding:

[T]he attorney fee submissions by [Window World] were not based on the actual amount of the services…. As a result, the Court finds that . . . the post-verdict award of fees and costs made by the trial court without any explanation of the accounting is not supported by the evidence. Accordingly, the Court hereby reverses the county court’s judgment and hereby renders it to include . . . the actual amount of attorney’s fees incurred by Window World as a result of the 50% attorney fees agreement ….”

Thus, the Circuit Court reduced the award of fees to $1323.

Window World moves for reconsideration

Window World filed a motion for reconsideration in the Circuit Court and argued, for the first time, that “Window World did in fact incur said fees.”

To support this new claim, Window World submitted a new affidavit from its owner stating that the company had “incurred attorney’s fees related to enforcing the terms of the contract in the amount of $45,175.00.” He also stated that during the course of the litigation, he reached a new agreement with his attorney that “the case would proceed on an hourly fee agreement.”

Gilchrist moved to strike the Affidavit on the grounds that (i) the appeal was on the record and a party cannot add to the record by submitting new evidence and (ii) the affidavit of Window World’s owner that he agreed to replace the contingency fee agreement with an hourly rate one was contrary to what Window World told the County Court.

Indeed, as noted above, at the County Court level, Window World asked that the fee be increased for the specific reason that its counsel took the case on a contingency fee basis.

Window World responded that “an hourly fee agreement can be contingent on the outcome of the case.”

The Circuit Court granted the motion to strike, holding that:

(i) the affidavit was improper because the appeal was solely on the record made in the County Court; and

(ii) this was the “first mention” of any claim that Window World and its attorney had converted their contingency fee contract to an hourly rate agreement.

Now, Window World appeals

Window World raised five issues on appeal:

1. The Circuit Court erred by applying a de novo standard of review instead of an abuse of discretion standard of review.

2. The Circuit Court erred by applying the law on open accounts to a breach of contract case.

3.The Circuit Court erred by striking the affidavit of Window World’s owner after it decided to review the matter de novo without a hearing.

4.The County Court did not abuse its discretion in awarding attorney’s fees.

5.The Circuit Court erred by failing to take into consideration the fact that Window World defeated a $100,000 counterclaim when determining attorney’s fees.

The Court of Appeals found it unnecessary to address first two issues because “the present appeal is primarily from the ruling of the county court rather than from the circuit court, which court had the role of an intermediate appellate court.”

“Therefore, any alleged errors in the circuit court’s legal analysis should not, in any way, impact this Court’s analysis of whether or not the county court erred in the present case. In other words, this Court reviews the decision of the county court without any deference to the analysis of the circuit court.”

“As to the third issue, we hold that the circuit court did not err by striking the new affidavit of [Window World’s owner].” An appeal from county court to circuit court must be decided “solely upon the record as made in the county court. Miss. Code Ann. §11-51-79 (Rev.2019); accord UCRCCC 5.01.”

The fourth and fifth issues raised by Window World focused upon the actual award of attorney’s fees.

The Court of Appeals began by noting that “the only basis for an award of attorneys’ fees in this case is the parties’ contract. Therefore, attorneys’ fees are recoverable only to the extent that they are permitted by the language of the contract.”

Gilchrist argued that the provision permitted Window World to recover only attorneys’ fees it actually incurred to enforce the contract.

Window World, on the other hand, argued that it is entitled to recover “reasonable” attorneys’ fees based on the hours and hourly rates claimed by its attorney and his law clerk — regardless of whether Window World actually paid or owed those amounts.

The Court noted that the parties disagreed regarding the meaning of this provision, but “[t]he mere fact that the parties disagree about the meaning of a provision of a contract does not make the contract ambiguous as a matter of law.”

In the final analysis, the Court of Appeals held that “the relevant provision of the parties’ contract permits Window World to recover only the actual attorneys’ fees that it incurred to enforce the contract. Nothing in the language of the provision suggests that it imposes liability on the customer for nonexistent ‘fees’ that Window World never actually incurred or owed to anyone.”

Finally, the Court rejected Window World’s argument that the circuit court erred by not considering Gilchrist’s “$100,000 counterclaim.”

The Court held that Window World’s agreement with its attorney did not provide for any such “reverse contingency fee,” and there was no evidence that Window World incurred $50,000 in attorneys’ fees.

“Moreover, Window World’s contract with Gilchrist did not require” Gilchrist to pay attorneys’ fees related to such a counterclaim.

Thus, the Court of Appeals affirmed the ruling of the Circuit Court and limited Window World to fees of $1323.

The reverse contingency fee

As noted, the Court of Appeals referred to such a concept. Here is a link to an ethics opinion from the District of Columbia on this subject:

https://www.dcbar.org/bar-resources/legal-ethics/opinions/opinion347.cfm

Read more about attorney’s fee awards

here https://www.craigpanterlaw.com/2017/01/16/contracts-require-losing-party-pay-winners-attorneys-fees/

here https://www.craigpanterlaw.com/2017/01/18/mississippi-laws-award-attorneys-fees/

here https://www.craigpanterlaw.com/2017/01/18/attorneys-fees-punitive-damages-appropriate/

and here https://www.craigpanterlaw.com/2016/12/11/the-other-side-to-pay-my-attorneys-fees/

Panter Law Firm, PLLC, 7736 Old Canton Road, Suite B, Madison, MS 39110

601-607-3156

www.craigpanterlaw.com