No. 87-047
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987
JEANNE CLOSE WAGNER,
EMPIRE DEVELOPMENT CORPORATION d/b/a
BILLINGS NEON SIGN CO.,
APPEAL FROM: District Court of the Thirteenth Judicial District
In and for the County of Yellowstone
The Honorable Diane G. Barz, Judge Presiding
COUNSEL OF RECORD:
For Appellant:
BOSCHERT and BOSCHERT; Rosemary C. Boschert,
Billings, Montana,
BABICH, BENNETT and NICHERSON; Mark W. Bennett,
Des Moines, Iowa
For Respondent :
BROWN, KALECZYC, BERRY and HOVEN; Oliver H. Goe,
Helena, Montana
Amicus Curiae:
Steven B. Ungar, ACLU, Bozeman, Montana
Janice Frankino Doggett, MHRC, Helena, Montana
Submitted on Briefs: June 25, 1987
Decided: September 15, 1987
Filed: SEPI 5 1987
Mr. Justice John Conway Harrison delivered the Opinion of the
Court.
This case is before the Court on appeal from an order
of the District Court of the Thirteenth Judicial District in
and for Yellowstone County, Montana. The District Court
denied plaintiff's request for attorney's fees and costs
because of a contingency fee agreement. Plaintiff's motion
to alter or amend judgment also was denied. We affirm.
The facts are undisputed. Plaintiff/appellant Jeanne
Wagner filed an employment discrimination charge against
defendant/respondent Empire Development d/b/a Billings Neon
Sign Company claiming Billings Neon had failed to pay her
equal pay for equal work. Because Wagner failed to comply
with orders of the hearing examiner appointed by the Human
Rights Commission, a hearing scheduled for January 14, 1983,
was not held until November 28, 1983, two years and three
months after the charge was filed. Nearly one year after the
hearing, the Human Rights Commission issued its final order
awarding Wagner $45,749.43 back pay, benefits, and interest.
By stipulation of the parties, a petition by Billings Neon
for review of the final order was dismissed and the final
settlement provided that Billings Neon would pay $48,990.20
to Wagner in two installments. These payments were timely
made.
Pursuant to the Commission's order, Wagner was the
prevailing party. A contingent fee agreement with her
attorney, Rosemary Boschert, provided that Boschert was to
receive 33 1/3% of any award received from Billings Neon.
Wagner tendered $16,329.10 to Boschert pursuant to this
agreement. Subsequently, Wagner requested attorney's fees
provided for in 5 49-2-505(4), MCA, part of the Montana Human
Rights Act. An evidentiary hearing was held and the court
denied the request. Wagner appeals.
The issue is whether it was error for the District
Court not to award attorney's fees. Section 49-2-505 (4),
MCA, provides that "[tlhe prevailing party in a hearing [in a
contested hearing case] may bring an action in District Court
for attorney's fees. The court in its discretion may allow
the prevailing party reasonable attorneys1 fees." This
statute is similar to the federal statute found at 42 U.S.C.
S 1988 which provides that, "the court, in its discretion,
may allow the prevailing party ... a reasonable attorney's
fee as part of its costs [,I" in a proceeding to enforce
certain sections of Title 42, U.S.C., and Title 20 U.S.C.
The purpose of awarding attorney's fees to prevailing
parties in civil rights litigation is to ensure "effective
access to the judicial process. I ' Hensley v. Eckerhart
(1983), 461 U.S. 424, 429, n.2, 103 S.Ct. 1933, 1937, n.2, 76
L.Ed.2d 40, 48, n. 2. Generally there is agreement that
without an attorney's fee award for successful litigants,
meritorious civil rights litigation often would not be
brought. A delicate balance must be struck between awarding
the attorney who is successful full compensation for her
efforts, and awards that are unreasonably high.
We have not previously interpreted S 49-2-505(4), MCA,
and thus are free to adopt or ignore the standard applied by
federal courts when awarding attorney's fees under 42 U.S.C.
S 1988. The Ninth Circuit applies abuse of discretion to
cases arising under 42 U.S.C. S 1988. Smiddy v. Varney (9th
Cir. 1981), 665 F. 2d 261, 268; Sethy v. Alameda County Water
District (9th Cir. 1979), 602 F.2d 894, 897. Although this
is not a 5 1988 action, there is no reason not to apply this
standard in our analysis.
In determining whether the trial court
abused its discretion, the question is
not whether the reviewing court agrees
with the trial court, but, rather, did
the trial court in the exercise of its
discretion act arbitrarily without the
employment of conscientious judgment or
exceed the bounds of reason, in view of
all the circumstances, ignoring
recognized principles resulting in
substantial injustice.
Carkeek v. Ayer (1980), 188 Mont. 345, 348, 613 P.2d 1013,
The circuit courts are not in agreement on the issue of
contingent fee agreements vis-a-vis statutory awards as it
relates to adequate and reasonable compensation. We reject
the argument that a contingent fee agreement automatically
precludes award of the statutory fees. " [A] prevailing
plaintiff should ordinarily recover an attorney's fee unless
special circumstances would render such an award unjust."
Hensley v. Eckerhard, supra at 429, 103 S.Ct. at 1937, 76
L.Ed.2d at 48. "A private fee agreement is not itself
'special circumstances' which would render an award of fees
unjust. Sargeant v. Sharp (1st Cir. 1978), 579 F.2d 645,
649." Hammer v. Rios (9th Cir. 1985), 769 ~ . 2 d1404, 1408.
Such a limitation can result in an overemphasis of the
importance of damages and exert an upward pressure on
attorney's fees, thus reducing the litigant's opportunity for
full compensation for his civil rights injury. See Cooper v.
Singer (10th Cir. 1983), (en banc), 719 F.2d 1496, 1503. The
Cooper Court said that while a contingent fee agreement does
not preclude award of attorney's fees, "the actual fee
obligation must reside within the confines of the term
'reasonableness.'" Cooper, at 1504. Additionally, the Ninth
Circuit has said that "fee awards should be the rule rather
than the exception." Teitelbaum v. Sorenson (9th Cir. 19811,
648 F.2d 1248, 1251; Ackerley Communications v. City of
Salem, Or. (9th Cir. 1985), 752 F.2d 1394, 1396.
The Tenth Circuit requires a lawyer to reduce his
contingency fee if it is greater than the statutory fee.
Cooper, supra. The Eleventh Circuit does not treat the
statutory fee as a ceiling. Pharr v. Housing Authority (11th
Cir. 1983) 704 F.2d 1216, 1218. It appears the defendant in
Pharr was required to pay the difference between the
statutory fee and the contingency fee. The Third Circuit
allows counsel to receive the greater of the statutory fee or
the contingency fee. If the contingency fee is greater,
however, plaintiff must pay the difference between the two
fees. Sullivan v. Crown Paper Board Co. (3rd. Cir. 19831,
719 F.2d 667, 668-69. The Fifth Circuit does not permit
plaintiff's counsel to receive a fee award in excess of the
contingency fee arrangement. Johnson v. Georgia Highway
Express (5th Cir. 1974), 488 F.2d 714, 718. The Second
Circuit holds that a claim for services rendered under a
contingency fee agreement must be deemed satisfied to the
extent counsel receives an award under S 1988. The court
reasoned this result allows "citizens the opportunity to
recover what it costs them to vindicate [their] rights in
court." Wheatley v. Ford (2nd Cir. 1982), 679 F.2d 1037,
1041.
In the instant case, counsel has received payment for
her services under the contingency fee agreement with Wagner.
Although the contingency fee per se is not a special
circumstance warranting denial of the statutory fee, Wagner
freely contracted with her counsel for an amount each party
considered to be a reasonable figure. Further, it appears
Wagner recovered the cost of vindicating her rights in court.
The circumstances in this case indicate that to grant
Boschert more than that for which she contracted would be a
grave injustice to Billings Neon, resulting in a windfall to
Boschert. " [Tlhe civil rights statues should not be
construed to provide windfall recoveries for successful
attorneys." Wheatley v. Ford, supra, at 1041.
The District Court found that Boschert caused a hearing
continuance from January 14, 1983 until March 4, 1983 by her
failure to provide discovery documents relating to damages
and wages claimed by Wagner. The hearing was continued again
because of the Human Rights Commission's budget difficulties.
The matter ultimately came on for hearing November 28, 1983,
and subsequently the Human Rights Commission ordered Billings
Neon to pay to Wagner $45,749.43 in back pay, benefits, and
interest for the period of February 18, 1981 though Nov. 28,
1983. Had the hearing been held January 14, 1983, damages
awarded to Wagner would have been $28,005.31. Thus Wagner
realized more than $17,000 because of the delay, and her
attorney benefited to the extent of $7,000. Boschert would
benefit further by receiving one-third of the statutory fee.
There is no evidence to support Boschert's claim for
additional attorney's fees. She did not present competent
evidence as to the hours she spent in pursuit of the claim.
She did not provide guidance to the court as to proper fee
calculation from which a fee could be determined. Boschert
did not testify as to the exact nature of the work performed.
The logical starting point for any trier of fact in
determining a reasonable attorney's fee is "the amount and
character of the services rendered" and "the labor, time and
trouble involved." Talmage v. Gruss (1983), 202 Mont. 410,
412, 658 P.2d 419, 421; Johnson v. Tindall (1981), 195 Mont.
165, 168, 635 P.2d 266, 268; and First Security Bank of
Bozeman v. Tholkes (1976), 169 Mont. 422, 429, 547 P.2d 1328,
1332.
Other factors to be considered by the court in
establishing a reasonable fee include:
[tlhe character and importance of the
litigation in which the services were
rendered, the amount of money or the
value of the property to be affected, the
professional skill and experience called
for, the character and standing in their
profession of the attorneys . .
. The
result secured by the services of the
attorneys may be considered as an
important element in determining their
value.
Johnson v. Tindall, supra at 168, 635 P.2d at 268.
Although the court is required to look at all these
factors "within these guidelines, the amount fixed as
attorney fees is largely discretionary with the District
Court." Carkeek v. Ayer, supra at 347, 613 P.2d at 1015.
Section 49-2-505(4), MCA, clearly gives the District
Court discretion to award attorney's fees. There is
sufficient evidence Wagner's counsel was adequately and
reasonably compensated for her efforts, whether or not
reference is made to federal fee shifting statutes. We do
not find the District Court abused its discretion in failing
to award statutory attorney's fees.
The order of the District Court is affirmed.
Justices
I dissent.
Wagner's counsel has been adequately and reasonably
compensated for her efforts. Who has not been reimbursed for
her reasonable attorney fees is Wagner. She is the loser by
the majority opinion.
No one disputes that Wagner is the prevailing party in
the discrimination action. Wagner has brought this separate
action for her attorney fees pursuant to 5 49-2-505(4), MCA,
of the Montana Human Rights Act. Such section allows the
prevailing party (Wagner) reasonable attorney fees in the
District Court's discretion payable by the other party. The
question here is, did the District Court, in not awarding any
reimbursement for attorney fees, simply abuse its discretion?
It did, and its order should be reversed and the cause
remanded.
The District Court's main reason in its order for not
awarding fees is that Wagner was adequately compensated in
the settlement amount and not entitled to additional fees.
This is, in effect, a determination that Wagner received
enough in the settlement to cover her actual damages and
attorney fees. It must be remembered the settlement of the
discrimination action was voluntarily stipulated to by the
parties after negotiations and the action dismissed with
prejudice pursuant thereto. Wagner gave Empire a release of
all her damages in consideration of the money. The parties
determined what all the damages were worth; past, present and
future. They specifically excluded from the settlement
Wagner' s claim for attorney fees. The order of the District
Court arbitrarily included such fees back in the settlement.
I am aware that the agreement between Wagner and her
attorney was a contingent fee agreement and Wagner has paid
her attorney on the basis of that agreement, but the
attorney-client agreement should have no bearing in this case
as to whether or not Wagner should recover reasonable fees
from Empire. It might under certain circumstances be rele-
vant to determine the amount of such fees or what amount is
reasonable.
What Wagner has asked for here is reimbursement for a
reasonable amount of hours expended by her attorney multi-
plied by a reasonable hourly compensation rate which is less
than she, Wagner, paid under the contingent fee agreement.
Great import is made by the Court and Empire of the
fact that Wagner's attorney did not supply to Empire's attor-
ney a statement of damages and wages lost, prior to an admin-
istrative hearing in its discrimination action. Such failure
to supply allegedly postponed the hearing and thereby in-
creased the damages. Empire stipulated to the settlement and
agreed to the amount of damages as negotiated. It should not
be allowed to reargue such amount in this action for fees.
If this failure on the part of Wagner's attorney to supply
such information had an effect on the amount of time spent by
her in the discrimination case, it can be considered, but not
otherwise.
Fee awards in these types of cases should be the rule
and not the exception. Failure to award attorney fees to the
prevailing party, Wagner, on the basis of the reasons given
is unjust and an abuse of discretion.
Justice William E. Hunt and Justice John C. Sheehy concur in
the foregoing dissent. fc\
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