Bannum, Inc. v. 2210 Adams Place, N.E., LLC

SCHWELB, Senior Judge,

concurring in part and dissenting in part:

I agree with, and I am pleased to join, all of Judge Kramer’s persuasive opinion except Part III C, in which the court affirms the trial judge’s award of counsel fees to the landlord. As to that issue, I agree that the landlord was entitled to recover some of its counsel fees,1 but I would vacate the award and remand for a more practical assessment of the degree to which the landlord prevailed and of the amount that should be awarded.

I recognize that “a request for attorney’s fees should not result in a second major litigation.” Fleming v. Carroll Pub. Co., 581 A.2d 1219, 1229 (D.C.1990) (Fleming I) (quoting Pierce v. Underwood, 487 U.S. 552, 563, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988)). I also agree that the amount to be awarded is “firmly committed to the informed discretion of the trial court.” Maj. op. at p. 439; Steadman v. Steadman, 514 A.2d 1196, 1200 (D.C.1986). Nevertheless, appellate courts have a role to play in the process, and our review is not toothless.

As the trial judge appropriately recognized in awarding the landlord counsel fees in the amount of $18,240.60 (a sum which represented two-thirds of the landlord’s documented fees, after subtracting certain relatively minor deductions),

[t]he degree of success in litigation is a relevant factor in the award of attorney’s fees. Statutes awarding attorney’s fees normally limit such a right to the ‘successful’ or ‘prevailing’ party.... The same general concept seems to be applied ordinarily in the interpretation of contractual provisions for attorney’s fees. [Fleming I], 581 A.2d at 1228, “[I]n such cases where a party is only partially successful, the trial court must exercise its discretion to determine what amount of fees, if any, should be awarded.” Id. at 1229 (citing Hensley v. Eckerhart, 461 U.S. 424, 436-37 [103 S.Ct. 1933, 76 L.Ed.2d 40] (1983)).

Order of July 3, 2008, at p. 4.

Relying on our decision in Fleming v. Carroll Pub. Co., 621 A.2d 829 (D.C.1993) (Fleming II),2 the trial judge concluded that the landlord was the “prevailing party.” Although this conclusion might plausibly be disputed where, as in this case, the landlord recovered less than one-fifth of the amount it sought,31 will not quarrel with it here, especially since the tenant did not file a counterclaim. I do, however, question the affirmance by my colleagues in the majority of the quantum of the landlord’s victory.

*440In this case, the landlord was awarded damages in the amounts of $7,870 for repair of its air conditioning unit and $22,778.15 for rent owed by Bannum as a holdover tenant. However, the landlord’s request for $141,500 in estimated restoration costs was denied in its entirety. Thus, although the landlord won two comparatively minor battles, the tenant prevailed with respect to what one might call the “Big Enchilada,” i.e., the issue that, on its face, appeared to matter the most. Common sense tells us that, at least in the absence of considerations not articulated by the trial court, the landlord would have become richer and happier with recovery of the claimed restoration costs, even if such a win had been coupled with a loss on each of the smaller claims.

“[T]he degree of the plaintiffs success in relation to the other goals of the lawsuit is a factor critical to the determination of the size of a reasonable fee.” Texas State Teachers Ass’n v. Garland Indep. School Dist. 489 U.S. 782, 790-91, 109 S.Ct. 1486, 103 L.Ed.2d 866 (1989) (emphasis added).4 It is noteworthy that the word “goals” is in the plural; success must be judged on the basis of the outcome of the ease as a whole. Put another way, “the amount of the award should be proportionate to the extent to which the plaintiff prevails in the suit.” Marr v. Rife, 508 F.2d 735, 744 (6th Cir.1974) (Marr I) (quoting Schaeffer v. San Diego Yellow Cabs, Inc., 462 F.2d 1002, 1008 (9th Cir.1972)). Success on a majority of the claims is not equivalent to overall victory if the party seeking to recover counsel fees lost on the one which it wanted most and for which it presumably fought the hardest. In this case, the claim for restoration costs not only involved a far larger potential recovery than the other two claims, but it also required expert testimony for both parties and was therefore likely to have resulted in the commitment of a very substantial amount of attorney time.

The trial judge, however, did not analyze the case in that way. She held that because the landlord was successful with respect to two of the three claims, the award of counsel fees should be reduced by “one third, which represents a reasonable calculation of the measure by which plaintiff prevailed in this action.” Order of July 3, 2008, at p. 5.1 am unable to agree with the notion that, for counsel fee purposes, it makes no difference whether the plaintiff prevailed on a claim for $7,870 or one for $141,500.00. Under the trial judge’s analysis, affirmed by this court, each such award supposedly represents success with respect to one-third of a lawsuit. As I understand the trial judge’s order, affirmed by my colleagues, the exercise was essentially a mechanical one — if a party prevails on two of three claims, whatever those claims are, then under a lease provision authorizing an award of counsel fees, that party recovers two-thirds of its fees.

In my view, this analysis — counting the number of claims won or lost, without explicitly considering the content of each— impermissibly exalts form over substance. As the Supreme Court explained almost a century ago in a different but relevant context, “the courts will not permit themselves to be blinded by mere forms ... but will deal with the substance of the transaction ... as the justice of the case may require.” Chicago, M. & St. P. Ry. Co. v. Minneapolis Civic & Commerce Ass’n, 247 U.S. 490, 501, 38 S.Ct. 553, 62 L.Ed. 1229 (1918). More recently, we have reiterated that “[cjourts deal with the substance rather than the form of a transaction,” and *441that they must assess “the practical consequences of the existing situation.” EDM Assocs. Inc. v. GEM Cellular, 597 A.2d 384, 389 (D.C.1991) (citation omitted). If we were to look only to the “form” of what occurred here — the landlord prevailed on two of three claims — -then the result reached by the trial judge would be correct. If we consider substance, however, then, so far as we can determine from what the judge has written, the landlord won a far less impressive victory with respect to the case as a whole. Thus, in the absence of a more persuasive justification for the result reached, it logically follows that the counsel fee award should have been considerably smaller.

I do not mean to suggest that the measure of a party’s victory should necessarily be determined by the dollar amounts of the successful claims, as compared to the sums sought but not recovered,5 though this approach might represent a sound starting point. I agree with the statement of the court in Marr v. Rife, 545 F.2d 554 (6th Cir.1976) (Marr II), addressing a different but somewhat analogous issue, that

the proportionate share concept is only a rule of thumb to guide the district court’s discretion, ... and that an evaluation by the trial court should be made to determine the effort expended against each defendant and accordingly the pro rata division of attorney fees.

Id at 556. In my view, however, an award reached by simply comparing the number of claims won with those lost, and basing the fee on that comparison, without any consideration of the importance of each claim in the litigation as a whole,6 or of the amount of attorney time devoted to each, cannot be sustained even when we are reviewing the trial court’s decision pursuant to a deferential abuse of discretion standard. Accordingly, I would vacate the award of counsel fees and remand the case with directions to reconsider the issue in conformity with the principles articulated in this opinion. However, in light of the sound policy against turning disputes over counsel fees into a second major litigation, Pierce, 487 U.S. at 563, 108 S.Ct. 2541, I would encourage the trial court to make the proceedings on remand as uncomplicated as possible, or better still, explore what might be done to help the parties to reach a negotiated settlement, and thus to avoid “second round” expenditures which could nullify or drastically reduce any recovery ultimately obtained.

.The lease agreement between the parties contained two provisions, each of which arguably entitled the landlord to an award:

¶ 5.06H: Tenant shall pay to Landlord “all court costs, legal fees, and expenses incurred by Landlord in effecting the collection of the rent from the Tenant, the curing of any default on the part of the tenant in performance of any of its obligations hereunder, and/or obtaining possession of the Premises.”
¶ 8.5: "In the event of any dispute under this Lease, the prevailing party shall be entitled to recover, in addition to any other remedy or relief to which it is entitled, reasonable attorney's fees, expert witness and consultant fees, and the costs of litigation or arbitration.”

. "To be deemed a 'prevailing party,' it is necessary only that the plaintiff succeed on any significant issue in litigation which achieves most of the benefit the parties sought in bringing the suit.” Fleming II, 621 A.2d at 837 n. 14 (emphasis in original).

. See Chang v. Louis & Alexander, Inc., 645 A.2d 1110, 1115-16 (D.C. 1994), holding that, at least where the tenant has filed a counterclaim, the landlord and the tenant may both be prevailing parties for counsel fee purposes with respect to individual claims or issues.

. The court added that this consideration is not a proper factor in the determination whether any award should be made.

. E.g., if a plaintiff sues for $ 1,000,000 in pain and suffering and the jury only awards him $50,000, this does not mean that the amount of attorney time devoted to the issue was only one twentieth of what it would have been if the plaintiff had recovered the full amount prayed for.

. It is conceivable, I suppose, that the landlord's attorneys devoted more time and effort to the damage to the air-conditioning and to the rent owed than they did to restoration costs, because these two issues involved money out of the landlord’s pocket rather than merely an additional hoped for recovery. If that was the basis for the trial judge's approach, however, there is no indication of it in the record before us.