NO. 88-133
IN THE SUPREME COURT OF THE STATE OF MONTANA
1988
WESTERN MEDIA, INC.,
a Montana corporation,
Plaintiff and Appellant,
-vs-
Defendant and Respondent.
APPEAL FROM: The District Court of the Eighteenth Judicial District,
In and for the County of Gallatin,
The Honorable James R . Wheelis, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Larry W. Moran, Bozeman, Montana
For Respondent:
Edmund P. Sedivy, Jr.; Morrow, Sedivy & Bennett,
Rozeman, Montana
Submitted on Briefs: June 9, 1988
Decided: July 7, 1988
Mr. Justice L. C. Gulbrandson delivered the Opinion of the
Court.
Western Media, Inc. (Western Media), plaintiff/
appellant in this case, originally brought an action against
defendant/respondent William Merrick (Merrick) for breach of
contract due to a violation of a covenant not to compete.
That action was dismissed by the lower court but upon appeal,
this Court reversed that decision which is published as
Western Media, Inc. v. Merrick (Mont. 1986), 727 P.2d 547, 43
St.Rep. 1991. This second appeal and cross-appeal is from an
order and judgment of the Eighteenth Judicial District Court,
Gallatin County, granting Western Media attorney's fees on
remand in the amount of $5,000. We affirm.
Western Media presents the following rephrased issue
for our consideration:
Did the District Court abuse its discretion in granting
$5,000 as attorney's fees in this breach of contract case
where the express agreement between the parties allows for
recovery of attorney's fees "as damages" and the losing party
stipulated to fees in the amount of $16,338.75 but argued
that the amount was unreasonable?
Merrick further cross-appeals from the same order and
judgment and presents the following issue:
Did the trial court err in failing to set off the sum
of $833.34 representing two monthly payments unpaid by
Western Media from the $3,333.36 awarded?
The underlying facts are set out in Western Media,
supra, 727 P.2d at 548-549, but will be reiterated to the
extent needed for determination of this appeal and
cross-appeal. The following facts are paraphrased from a
stipulation between the parties dated June 3, 1987.
On May 14, 1975, Western Media and Merrick entered into
an agreement for the sale of KBMN, Inc. naming Merrick as
seller and Western Media as buyer. Contained in this
agreement was a covenant not to compete for a ten-year period
signed by Merrick in consideration of $50,000 to be paid in
120 monthly installments of $416.67 commencing September 1,
1975. On September 1, 1984, Merrick breached this covenant
by taking a job with the Montana State University public
television station, KUSM.
Even though Merrick had breached the contract on
September 1, 1984, Western Media continued to make eight
payments according to the agreement from September 1, 1984
through June 1, 1985. The payments amounted to $3,333.36.
Western Media was awarded this amount after the initial
appeal. Merrick claims $833.34 should be deducted from the
amount because he quit working for KUSM on June 30, 1985 and
Western Media therefore should be liable for the amounts due
July and August of 1985.
The original agreement signed by Merrick also contained
an attorney's fees clause which states:
Attorneys Fees in Case of Breach:
"In the event either party files suit to
recover for a breachof this Agreement,
or to enforce against another party any
of the terms and provisions hereof, the
prevailing party shall be entitled to
recover as damages its reasonable
attorneys fees incurred in the
prosecution or defense of such action."
Both parties retained attorneys in this litigation.
The District Court, in its opinion and order of January 12,
1988, stated Western Media was entitled to its attorney's
fees pursuant to the agreement. Western Media submitted an
affidavit stating hourly rates charged by its attorneys
amounted to $16,338.75. The court ordered, and incorporated
into its judgment of January 26, 1988, that Western Media was
entitled to $5,000 as reasonable attorney's fees.
Although an hourly fee is claimed by Western Media's
attorney, we note that the attorney's fee agreement signed by
the president of Western Media and its counsel called for
fees to be paid either by contingency fee or by the hour,
whichever resulted in the higher fee for the attorney. The
applicable clause states:
Compensation to the attorney for
representing client will be based upon a
contingency fee of forty percent (40%)
of any amount recovered by settlement or
trial at the District Court level, and
fifty percent (50%) of any amount
recovered on or after appeal to the
Montana Supreme Court; or, an hourly
rate of eighty-five dla:
olr ($85.00) per
hour for all office time spent, and
$150.00 per hour for all Court time
spent by the undersigned attorney on
client's claim against Merrick,
whichever calculation results -
- - in the
larger compensation - - attorney.
to the
(Emphasis theirs.)
Even though attorney's compensation is provided for under
S 25-10-301, MCA, which allows the amount and manner to be
"[lleft to agreement, express or implied . .
. " this type of
clause takes away the rationality behind contingency fee
contracts.
Similar to Montana case law, Rule 1.5 of the Model
Rules of Professional Conduct states: "[a] lawyer's fee shall
be reasonable." This clause is bordering on being
unreasonable considering that the rationale for contingency
fees is based on the theory that attorneys risking their
entire fee can justify a larger recovery. Under the above
clause the attorney takes no risk and enjoys a windfall.
Western Media now claims that since the attorney's fees
clause in the agreement stated the prevailing party was to
recoup reasonable attorney's fees "as damages" that the
intent of the parties was to make the prevailing party whole.
Western Media cites § 27-1-311, MCA, for the proposition that
the measure of damages in any breach of contract case is the
amount that would compensate the aggrieved party "[flor all
the detriment which was proximately caused thereby or in the
ordinary course of things would be likely to result
therefrom." Western Media contends the express language of
the agreement controls and it should receive an amount that
would compensate it for its actual loss sustained in
employing its attorney. We disagree.
In determining attorney's fees, a number of general
rules have arisen over the years. Appropriately considered
by the District Court is the rule stated in Crncevich v.
Georgetown Recreation Corp. (1975), 168 Mont. 113, 119-120,
541 P.2d 56, 59, recently adhered to by this Court:
The circumstances to be considered in
determining the compensation to be
recovered are the amount and character
of the services rendered; the labor,
time, and trouble involved, the
character and importance of litigation
in which the services were rendered, the
amount of money or the value of property
to be affected, the professional skill
and experience called for, the character
and standing in the profession of the
attorneys; ... the result secured by
the services of the attorneys may be
considered as an important element in
determining their value.
Weinberg v. Farmers State Bank of Worden (Mont. 1988), 752
P.2d 719, 735, 45 St.Rep. 391, 411.
The District Court cited similar language in its
opinion and order and stated it considered the
above-enumerated factors in determining $5,000 was a
reasonable fee in this case. The court stated it also
considered the fee agreement entered into by the parties.
Merrick contends the $5,000 award was excessive because
it exceeds the amount of recovery actually received by
Western Media. Merrick relies on the "result secured"
language of Crncevich, and Weinberg, for the proposition that
the attorney's fees received in this case are unreasonable.
In Morris v. Nationwide Insurance Company (Mont. 19861, 722
P.2d 628, 43 St.Rep. 1363, cited by both parties, the
prevailing attorney presented evidence that he had expended
352 hours of time on the case amounting to $29,992.25. The
jury returned an award to the claimant in the case in the
amount of $19,994.64. An agreement which had been signed by
the attorney stated he would receive 33 1/3% of any recovery
and an addendum excepted the first $6,000. We affirmed the
district court's ruling that the attorney was entitled to
$4,664.88 based on the contract entered into by the parties
but stated "a contingent fee contract is not controlling in
demonstrating the 'reasonableness' of an attorney fee"
Morris, 722 P.2d at 631.
Although no contingent fee is claimed in this case, it
is axiomatic that, within the guidelines established in
Crncevich, and restated in Weinberg, "the amount fixed as
attorney fees is largely discretionary with the District
Court." Careek v. Ayer (1978), 188 Mont. 345, 347, 613 P.2d
1013, 1015. Merrick further cites to Johnson v. Tindall
(1981), 195 Mont. 165, 635 P.2d 266, for the proposition that
offers of settlement should be considered in determining
reasonable attorney's fees. Merrick claims he made an offer
to settle the case early in the litigation which was rejected
by Western Media. This offer was allegedly for the same
amount Western Media received. We note however, that
Johnson, supra, was not determined solely on the settlement
offer and refuse to accept Merrick's contention that it is
gravamen in this case.
Here, the District Court did not abuse its discretion
in granting $5,000 as reasonable attorney's fees. See
generally, Shors v. Branch (Mont. 1986), 720 P.2d 239, 43
St.Rep. 919; Donnes v. Orlando (Mont. 1986), 720 ~ . 2 d
233, 43
St.Rep. 890. The District Court properly considered the
contractual relationship between the parties and analyzed the
reasonableness of the fees under the Crncevich guidelines.
The statement of attorney's fees as "damages" in the
agreement is not sufficient to reverse the District Court in
this case in light of the District Court's considerations.
We also affirm the District Court's decision not to
reduce the award from $3,333.36 to $2,500.02 based on the
$833.34 claimed due for the months of July and August in
1985. The District Court stated in its opinion and order of
January 12, 1988:
It is the position of this Court that
once a contract has been breached, its
terms may not be unilaterally resumed.
A non-breaching party has no duty to
perform the terms of the contract once
it has been breached. The agreement is
then broken and regardless of whether
the breaching party ceases those
activities constituting the breach, he
has no basis upon which to demand
performance from the non-breaching
party ...
We agree with this statement. Western Media disputes
Merrick's citations to Havre Daily News v. Floren (19731, 163
Mont. 131, 515 P.2d 673; and Lieman-Scott, Inc. v. Holmes
(1963), 142 Mont. 58, 381 P.2d 489. In both cases, the
covenant not to compete was involved in the overall sale
price and separate consideration was not paid. The
Lieman-Scott Court held that a non-breaching party may affirm
the contract and seek damages or rescind the contract and
recover the sum paid, but the party could not rescind and
recover damages. In this case we previously stated: "Western
Media did not sustain any damages prior to the breach by
Merrick, but is entitled to return of payments made
subsequent to such breach plus any other losses incurred due
to Merrick's employment at KUSM." Western Media, supra, 727
P.2d at 550. The sum paid is recoverable and the contract
was rescinded. Merrick's employment or non-employment at any
time after breaching the contract is not material.
It is a maxim of jurisprudence that " [n]o one can take
advantage of his own wrong." Section 1-3-208, MCA. A party
who breaches a contract cannot claim entitlement to that
contract's benefits after such breach. Merrick's claim here
is that he should benefit from his own breach. A party to a
contract cannot take advantage of his own act or omission to
escape liability thereon. Gramrn v. Insurance Unlimited
(1963), 141 Mont. 456, 462, 378 P.2d 662, 665; see also,
Roundup Cattle Feeders v. Horpestad (1979), 184 Mont. 480,
603 P.2d 1044, (party could not recover for performance
rendered before the breach where the breaching party
completely breached an entire, nonservable contract without
justification or excuse). Merrick's breach may not have been
willful or intentional. However, the breach occurred and the
contract was severed.
The District Court is affirmed on the appeal and
cross-appeal in. this case.
We c o n c u r : /