Edwards v. Cascade County

July 7 2009

DA 08-0071

IN THE SUPREME COURT OF THE STATE OF MONTANA

2009 MT 229

ROBERT EDWARDS,

Plaintiff and Appellant,

v.

CASCADE COUNTY, CASCADE COUNTY SHERIFF
DEPARTMENT, UNDERSHERIFF CLYDE "BLUE"
CORNELIUSEN and CASCADE COUNTY SHERIFF
DAVID CASTLE,

Defendants and Appellees.

APPEAL FROM: District Court of the Eighth Judicial District,
In and For the County of Cascade, Cause No. DDV 06-1158
Honorable David Rice, Presiding Judge

COUNSEL OF RECORD:

For Appellant:

Elizabeth A. Best, Best Law Offices, P.C., Great Falls, Montana

For Appellees:

Robert J. Vermillion, Smith, Walsh, Clarke & Gregoire, PLLP, Great
Falls, Montana

Submitted on Briefs: November 19, 2008

Decided: July 7, 2009

Filed:

__________________________________________
Clerk
Justice John Warner delivered the Opinion of the Court.

¶1 Robert Edwards and four other plaintiffs brought actions under the Montana

Human Rights Act against Cascade County, the Cascade County Sheriff and deputy

sheriffs (hereinafter collectively called the County). Attorney Elizabeth Best represented

Edwards as well as the other claimants. Only Edwards was successful in his claim before

the Human Rights Bureau (HRB). The Human Rights Act provides that successful

claimants may recover attorney fees. Edwards, through Best, petitioned the District

Court of the Eighth Judicial District for an award of his reasonable attorney fees and

submitted calculations and affidavits justifying the amount claimed. The District Court

awarded fees. However, the District Court awarded less than the amount claimed.

Edwards appeals. We reverse in part and affirm in part.

¶2 This appeal presents the following issues:

¶3 Issue 1: Did the District Court abuse its discretion by deducting from the amount

of fees claimed payment for 74 hours of attorney time?

¶4 Issue 2: Did the District Court err in applying an “offset” of $28,062.95 to

Edwards’ fee claim?

¶5 Issue 3: Did the District Court err by not awarding interest?

FACTUAL AND PROCEDURAL BACKGROUND

¶6 Edwards and four other former employees of the Cascade County Sheriff’s

Department brought Human Rights Act claims against the County, alleging that their

termination from the Sheriff’s Department was in retaliation for supporting an

2
unsuccessful candidate for sheriff. An HRB investigator concluded that only Edwards’

claim constituted a violation of the Human Rights Act. The remaining four men, as well

as another terminated deputy sheriff, filed complaints in District Court alleging statutory,

common law and constitutional violations by the County. Edwards and the other

claimants were all represented by Best before both the HRB and in District Court.

¶7 Pursuant to the provisions of the Human Rights Act, Edwards, through his

attorney Best, filed a petition in District Court for enforcement of the favorable decision

of the HRB and for an award of attorney fees. Best claimed compensation for the time

she had expended in representing not only Edwards, but her other clients who had similar

claims based on the same basic facts. In support of the claim for attorney fees, Best filed

affidavits from two experienced civil rights attorneys. These lawyers both opined that the

total number of hours expended by Best, and the hourly rate she charged, were reasonable

and necessary to adequately represent Edwards. The County filed a response which did

not object to Best being awarded her reasonable fees for representation of Edwards.

However, the County objected to the amount of fees claimed on the basis that all of the

time Best expended was not on behalf of Edwards. The County filed no affidavits or

sought to introduce other evidence concerning the reasonable amount of Best’s fees. Best

filed two additional affidavits in support of her fee claim on December 15, 2006, and

October 26, 2007.

¶8 In June of 2007, the County requested leave to amend its response. The County

asserted it had mistakenly paid Edwards $28,062.95, and this amount must be offset

3
against attorney fees. The District Court granted the County’s motion to amend its

response.

¶9 In August of 2007, the District Court ordered Best to construct a more complete

presentation of her fee request by segregating the time she expended on Edwards’ claim

from the time she expended representing the other five plaintiffs. Best responded that she

could not do so and requested a hearing on the matter. The District Court again ordered

Best to submit a more complete accounting of the time spent on Edwards’ case.

¶10 The District Court scheduled a hearing on the petition for attorney fees at the

beginning of December, 2007. The day before the hearing Best filed a brief in which she

again asserted that it was impossible to segregate hours expended on Edwards’ case from

those spent working on the other cases.

¶11 At the hearing two attorneys testified that the number of hours expended by Best

and the rate she charged were reasonable and necessary. They also testified that

segregation of hours spent on Edwards’ case from those spent on the other matters was

not possible or appropriate.

¶12 The record indicates that the County sent six checks to Best on behalf of Edwards.

One of these checks was dated August 23, 2006, written by Cascade County and made

payable to Edwards for the amount of $28,062.95. After receiving this check, Best wrote

the County’s attorney and inquired if it represented a partial payment of fees and costs.

Best asserts that he did not respond so she wrote another letter. The County’s attorney

then responded that the check was meant to respond to the HRB order, which did not

4
relate to fees. While these communications were going on, Best left the money in her

trust account. On January 31, 2007, the County sent Edwards an IRS form 1099

reflecting the payment of the $28,062.95. Best then paid the money to Edwards, as he

received the form 1099 evidencing a tax liability for the payment. On March 28, 2007,

the County’s lawyer sent a letter to Edwards demanding refund of the $28,062.95.

¶13 In January 2008, the District Court issued its Order awarding attorney fees. It

reduced Edwards’ fee claim, refusing payment for a net of 74 hours of Best’s attorney

time, which it concluded she had expended working for her other clients. The order also

granted the County’s motion to deduct from the fee award the $28,062.95, and did not

order payment of interest.

STANDARD OF REVIEW

¶14 We review a district court’s grant or denial of attorney’s fees for abuse of

discretion. Kuhr v. City of Billings, 2007 MT 201, ¶ 14, 338 Mont. 402, 168 P.3d 615. A

district court abuses its discretion when it acts arbitrarily, without employment of

conscientious judgment, or in excess of the bounds of reason resulting in substantial

injustice. Kuhr, ¶ 14.

DISCUSSION

¶15 Issue 1: Did the District Court abuse its discretion by deducting from the amount

of fees claimed payment for 74 hours of attorney time?

¶16 At the hearing on attorney fees, Best called two lawyers who testified that the

hours she had billed to Edwards were reasonable and that it was impossible to segregate

5
the time spent on his case from that spent on the other cases. Best also testified in a

similar fashion. The County presented no evidence. It simply objected to the number of

hours claimed by Best.

¶17 On behalf of Edwards, Best asserts it is impossible to separate the work done for

her four clients, who were not entitled to fees, from the work done for Edwards. Best

claims that all her work was related to a single, core set of facts, and the legal theories are

the same, making any separation of the hours spent for the different clients purely

arbitrary and inappropriate. In the District Court she backed up this claim with affidavits,

expert testimony and her own testimony. The County presented no contrary evidence.

The District Court concluded that it had no choice other than to reduce the amount of the

claimed attorney fees because Best represented five clients, and only one was entitled to

fees. Therefore, after a sua sponte examination of Best’s fee statement, the District Court

attributed a net 74 hours of time to work performed for Best’s clients other than Edwards

and declined payment for these hours.

¶18 The District Court utilized the lodestar approach to determine a reasonable

attorney fee. This approach has been approved by this Court. See Laudert v. Richland

County Sherriff’s Dept., 2001 MT 287, 307 Mont. 403, 38 P.3d 790. The lodestar fee

amount is calculated by taking the number of hours reasonably expended and multiplying

it by a reasonable hourly rate. Laudert, ¶ 14.

¶19 A prevailing party in a human rights action may bring an action in district court

for attorney fees. Section 49-2-505(8), MCA. Edwards was the prevailing party in his

6
human rights action. The other four plaintiffs Best represented in front of the HRB are

not entitled to attorney fees as they were not successful in that forum. However, as noted

above, Edwards argues that the “core common facts” of the claims of all five plaintiffs

were necessarily developed so that he could be successful in his HRB case.

¶20 In Hensley v. Eckerhart, 461 U.S. 424, 103 S. Ct. 1933 (1983), cited with approval

by this Court in Audit Services v. Frontier-West, 252 Mont. 142, 827 P.2d 1242 (1992),

the Court recognized that where claims involve a core set of facts or are based on related

legal theories, much of a lawyer’s time is devoted generally to the litigation as a whole,

making it difficult to divide the hours on a claim by claim basis. Hensley, 461 U.S. at

435, 103 S. Ct. at 1940; Audit Services, 251 Mont. at 154, 827 P.2d at 1250. The County

does not contest that the several claims brought by Best for her several clients were

interrelated to the extent that they all involved alleged discrimination by the same people

in the Sheriff’s Department, for the same reason. The several claims, therefore, do

involve a core set of facts and are based on the same legal theory. We conclude that, at

least initially, the lodestar approach is an appropriate method to determine Best’s

reasonable fee.

¶21 In considering a claim for attorney fees, a district court must determine whether

the claimed fees were incurred for claims that were distinct or interrelated. Distinctly

different claims for relief based on different facts and legal theories which are

unsuccessful may be excluded from the lodestar fee calculation. Laudert, ¶ 19 (citing

Hensley, 461 U.S. at 434-35, 103 S. Ct. 1933). As aptly noted by the District Court, there

7
could be some facts which support the claims of Best’s several clients which differ from

those that support Edwards’ claim. Thus, in the ordinary case, Best might not recover for

one client the entirety of the time she spent in making claims for five separate clients.

However, because of the posture of this case, we conclude that the District Court was

forced to make an arbitrary decision that must be reversed.

¶22 When the loadstar approach is appropriate to determine a reasonable fee in a

human rights action, there is a strong presumption that the lodestar figure represents a

reasonable fee. Ihler v. Chisholm, 2000 MT 37, ¶ 72, 298 Mont. 254, 995 P.2d 439. Best

presented the District Court with substantial evidence that the hours she spent on her

other clients’ cases would be impossible to segregate from Edwards’ case as all claims

arose from a core set of facts and were brought under the same legal theories. Not only

did the County fail to present any evidence which contradicted Edwards’ claim, it did not

elicit any information on cross-examination about the hours that Best may have spent

working for clients other than Edwards. The County presented the District Court with

nothing to rely on to reduce the hours claimed. This lack of evidence forced the District

Court into making an arbitrary decision, not based on evidence, which under the facts of

this case constitutes an abuse of discretion. See Roe Family, LLC v. Lincoln County,

2008 MT 70, ¶ 12, 342 Mont. 108, 179 P.3d 514.

¶23 Considering the presumption that the lodestar fee calculation is correct; the

substantial evidence in support of Edwards’ claim that the hours Best expended

developed a core set of facts which are applicable to the same legal theory; the substantial

8
evidence that Best’s time could not be segregated between the several claims; along with

the complete lack of contrary evidence, we determine that the District Court erred in

deducting 74 hours from the time used to determine lodestar amount of attorney fees.

¶24 Issue 2: Did the District Court err in applying an “offset” of $28,062.95 to

Edwards’ fee claim?

¶25 The Final Agency Decision of the HRB awarded Edwards a total of $40,948.83.

The District Court, armed with that decision, determined that the award was $25,000 for

emotional distress, $12,885.88 for wages, $1,082.74 as interest, and $1,980.21 for

medical expenses. The District Court then determined that the County’s insurer paid

Edwards for the emotional distress on August 14, 2006, and that the County itself paid

the remainder of this amount, less withholding tax on wages, on August 18, 2006.

¶26 Confusion arose upon receipt, by Best, of a check for $28,062.95 written from the

County’s account. Upon receiving the check Best wrote to the County’s lawyer,

inquiring as to the intention of the check. He replied that it was in response to the HRB

order. This was a mistake. After this action was commenced to determine the amount of

a reasonable attorney fee to be paid to Edwards, the mistake was discovered and the

County moved to amend its response to claim a refund. Whether to allow an amendment

to a pleading is within the discretion of the District Court. In this instance, allowing the

County to amend its response to include a claim for a refund did not deny Edwards the

opportunity to defend against the claim and we find no abuse of discretion in the District

9
Court’s order allowing the amendment. M. R. Civ. P. 15(a); See Aldrich & Co. v. Ellis,

2002 MT 177, ¶ 27, 311 Mont. 1, 52 P.3d 388.

¶27 The District Court found, based on the evidence submitted, that the County

overpaid what it owed by adding an additional $25,000 to the award of $40,948.83.

Upon realizing the mistake, the County’s lawyer filed the request for the refund.

¶28 The District Court found that a careful reading of the HRB decision shows that the

County did overpay Edwards $28,062.95. Our examination of the record indicates that

the District Court is correct. $40,948.83 is the full and final award as it is the only

number included in the “order” attached in the findings of fact, conclusions of law. The

District Court correctly concluded that if Edwards were allowed to keep the $28,062.95

overpayment he would be unjustly enriched. Unjust enrichment occurs when one has and

retains money which in justice or equity belongs to another. Lawrence v. Clepper, 263

Mont. 45, 53, 865 P.2d 1150, 1156 (1993).

¶29 Edwards insists that the County is barred by the doctrines of waiver, equitable

estoppel, laches and release, from recovering the overpayment of $28,062.95.

¶30 Waiver is a voluntary and intentional relinquishment of a known right or claim. It

may be proved by express declarations or by a course of acts and conduct which induces

the belief that the intent and purpose was waiver. R.C. Hobbs Enterprises, LLC v. J.G.L.

Distributing, Inc., 2004 MT 396, ¶ 24, 325 Mont. 277, 104 P.3d 503. To establish a

waiver, the party asserting waiver must demonstrate the other party’s knowledge of the

existing right, acts inconsistent with that right, and resulting prejudice to the party

10
asserting waiver. VanDyke Const. Co. v. Stillwater Mining Co., 2003 MT 279, ¶ 15, 317

Mont. 519, 78 P.3d 844. The record is clear that the County did not know that it was not

obligated to pay the $28,062.95 in question and that it did not knowingly waive its right

to have it returned.

¶31 In order to establish its claim of estoppel, Edwards was required to prove each of

six elements of that defense to the County’s claim for reimbursement: (1) the existence of

conduct, acts, language, or silence amounting to a representation or a concealment of a

material fact; (2) these facts must be known to the party estopped at the time of his

conduct, or at least the circumstances must be such that knowledge of them is necessarily

imputed to him; (3) the truth concerning these facts must be unknown to the other party

claiming the benefit of the estoppel at the time it was acted upon by him; (4) the conduct

must be done with the intention, or at least the expectation, that it will be acted upon by

the other party, or under circumstances both natural and probable that it will be so acted

upon; (5) the conduct must be relied upon by the other party and, thus relying, he must be

led to act upon it; and (6) he must in fact act upon it in such a manner as to change his

position for the worse. Anderson v. Stokes, 2007 MT 166, ¶ 27, 338 Mont. 118, 163 P.3d

1273. All the elements of estoppel must be proven by clear and convincing evidence.

Ducham v. Tuma, 265 Mont. 436, 441, 877 P.2d 1002, 1006 (1994). Again, the record

shows that element (2) is not proven because the County made a mistake and did not

know that it had overpaid. Further, concerning element (4), the County did not have an

expectation that Edwards would act upon its mistake. Also, Edwards’ position is not

11
significantly changed for the worse as he is in a position to repay by the simple device of

the offset ordered by the District Court. And, should he choose, he could file an amended

tax return to secure a refund of any excess tax payment.

¶32 Relating to Edwards’ claim of laches, that doctrine is a concept of equity which

can apply when a person is negligent in asserting a right, and where there has been an

unexplained delay of such duration or character as to render the enforcement of the

asserted right inequitable. Kelleher v. Board of Social Work Examiners, 283 Mont. 188,

191, 939 P.2d 1003, 1005 (1997). In an action of an equitable nature, we review

independently all questions of fact as well as questions of law. We uphold the district

court’s findings of fact if they are not clearly erroneous. Section 3-2-204(5), MCA; See

Matter of Estate of Murnion, 212 Mont. 107, 111, 686 P.2d 893, 896 (1984).

Considering the record, we conclude that the District Court did not err in refusing to

apply the doctrine of laches to bar the County’s claim for reimbursement.

¶33 Finally, Edwards claims that the County released its claim for refund of the

$28,062.95. As noted by Edwards in his brief on appeal, release is the abandonment of a

claim. Benson v. Diverse Computer Corp., 2004 MT 114, ¶ 27, 321 Mont. 140, 89 P.3d

981; Sperry v. Mont. State Univ., 239 Mont. 25, 30, 778 P.2d 895, 898 (1989). To be

enforceable, a release must at a minimum be unambiguous, explicit, and unequivocal.

Sperry, 239 Mont. at 30, 778 P.2d at 898. The County, through its lawyer, made a

mistake in replying to Best’s letter asking what the $28,062.95 payment was for. This

12
letter does not contain an unequivocal release of a claim to recover an overpayment the

County mistakenly made.

¶34 The District Court did not err in ordering that the County recover the $28,062.95 it

overpaid by offsetting it against the amount of attorney fees it owes Edwards.

¶35 Issue 3: Did the District Court err by not awarding interest?

¶36 Edwards claims that the District Court erred in not awarding interest on the

amount of the attorney fee award citing Barrow v. Falck, 11 F.3d 729 (7th Cir., 1993). In

Barrow, the United States 7th Circuit Court of Appeals, in deciding an action brought

under 42 USC § 1983, without citation of authority stated that interest was a part of full

compensation to be added to an award of attorney fees. Barrow, 11 F.3d at 732. In this

case, Edwards is awarded his attorney fees as a part of a Montana civil action brought to

enforce an order of the Montana Human Rights Commission. Attorney fees are awarded

under § 49-2-505(8), MCA (2007).1 Montana law applies to Edwards’ claim for interest

on the award of attorney fees.

¶37 The judgment of the District Court in this case is what established Edwards’ right

to attorney fees. Section 27-1-211, MCA, allows pre-judgment interest under some

circumstances. There are three prerequisites to recovery under this statute. First, an

underlying monetary obligation must exist. Second, the amount of recovery must be

capable of being made certain. Third, the right to recover must vest on a particular day.

1
When this action was filed, the applicable law was § 49-2-505(7), MCA (2005). The 2007
legislature did not alter the manner in which a judgment for attorney fees in a human rights
action is obtained.
13
Montana Petroleum Tank Release Compensation Bd. v. Crumley’s, Inc., 2008 MT 2, ¶

99, 341 Mont. 33, 174 P.3d 948; LHC, Inc. v. Alvarez, 2007 MT 123, ¶ 29, 337 Mont.

294, 160 P.3d 502. In this case no underlying monetary obligation existed prior to

judgment being entered in the District Court and the amount due was only made certain

on the date of that judgment. Pre-judgment interest is not available to Edwards.

¶38 The District Court entered judgment for Edwards in the amount of $61,241.47 on

January 15, 2008. The judgment is to be modified on remand to increase it. To the

extent that a discreet and identifiable portion of the original judgment is upheld on

appeal, in this case $61,241.47, that amount shall bear interest from the date the original

judgment was entered in the District Court. The amount of the increase shall bear interest

from the date the new judgment is entered on remand. Woods v. Burlington Northern

and Santa Fe Ry. Co., 2004 MT 384, ¶¶ 8-9, 325 Mont. 106, 104 P.3d 1045.

¶39 Edwards claims attorney fees incurred in prosecuting this appeal. We determine

that Edwards is the prevailing party on appeal. As the prevailing party in the underlying

civil rights action, he is entitled to reimbursement of fees reasonably incurred on appeal.

Laudert, ¶ 30. Accordingly, we hold that Edwards is entitled to costs and reasonable

attorney fees incurred on appeal, which shall be determined by the District Court on

remand.

CONCLUSION

¶40 That portion of the judgment of the District Court deducting a net 74 hours of

attorney time from Edwards’ claim for attorney fees is reversed. The remainder of the

14
judgment is affirmed. This case is remanded to the District Court for entry of a new

judgment in conformity with this Opinion.

/S/ JOHN WARNER

We Concur:

/S/ BRIAN MORRIS
/S/ PATRICIA COTTER
/S/ W. WILLIAM LEAPHART
/S/ JAMES C. NELSON
/S/ JIM RICE

15