Standrod Carmichael et al. v. John J. Stonkus et al. (2010)

RULING ON ATTORNEYS FEES

The jury found in favor of the cross complaint plaintiff, Margaret Carmichael Brushie (Brushie) under a count of fraud, and awarded statutory punitive damages.¹  In accordance with the court's order set forth in its Memorandum of Decision dated August 13, 2010, an evidentiary hearing was held in order to determine the amount of attorneys fees to be awarded Brushie.   The court requested that Brushie's attorney file an affidavit of attorneys fees in order for the court to make a determination of the amount of punitive damages.   Counsel submitted an affidavit indicating that Brushie had entered into a retainer agreement with a contingency fee arrangement.   However, because there were several matters that Brushie was involved with-the foreclosure matter, her cross complaint, as well as a separate action which had been consolidated with this action against Attorney Louis Avitabile, who represented the defendant in the transaction which gave rise to the plaintiff's claims in this case-it was unclear as to the amount of time expended on this matter alone.   The court ordered Brushie's counsel to submit an affidavit together with a breakdown of hours spent on this matter and by whom, as well as any other costs of litigation.   Stonkus was given time to file any objection.   If none was filed within that time, the court indicated it would make its determination as to the punitive damages award.

Brushie's attorney filed an extensive affidavit with the breakdown of time spent and by whom on August 4, 2010.   On August 11, 2010, Stonkus' attorney filed, “Defendant's Counter Claimant's, John J. Stonkus, Memorandum Re:  Plaintiff's Claim for Attorney (sic) Fee.” He requested an evidentiary hearing on Brushie's claim for attorneys fees.   The court granted his request for a hearing prior to any determination of an award of punitive damages by way of attorneys fees.  (Memorandum of Decision, August 13, 2010, Swienton, J.)

Brushie's attorney provided the court with a copy of the retainer agreement which provided for a contingency fee of forty (40) percent of the amount recovered.   The agreement stated that:  “[T]his law firm will work as your counsel solely with respect to your claims against John J. Stonkus and Louis S. Avitabile that concern real property located at 330 Stonegate Drive, Southington, Connecticut.”   It also provided for the potential for an award of attorneys fees either by settlement or by judgment.   It allowed the retained law firm to collect either the contingent fee calculated on the basis of a recovery OR the fee awarded under a court order.  (Contingent Fee Agreement, Exh. 1 to Plaintiff's Affidavit of Attorneys Fees dated July 2, 2010.)

In accordance with the court's order, Brushie's attorney then filed a subsequent Affidavit of Attorneys Fees dated August 4, 2010.   The affidavit was made by John M. Wolfson, the managing member of the law firm of Feiner Wolfson LLC. It set forth in detail the credentials of the attorneys and staff who performed work on this matter, as well as each person's hourly rate.   It provided that the hourly rate for Attorney Wolfson is $285 per hour, the hourly rate of co-counsel during trial, Benjamin M. Wattenmaker, of $225, as well as the hourly rates for other attorneys in the firm and staff.   As of August 4, 2010, personnel at the firm had worked in excess of 350 hours on this case, over the course of 58 months.   Attached to the affidavit as Exhibit 3 was a detailed time and billing statement for the work performed on this matter alone, and not on the foreclosure matter nor on the matter involving Attorney Avitabile.   The total amount due for professional services rendered is $89,037 based upon these hourly charges.

At the evidentiary hearing, Brushie's counsel relied on the affidavits and exhibits filed, and was subject to cross examination.   He argued that Brushie was entitled to an award of attorneys fees based upon the contingency fee arrangement of forty (40) percent, but if the court believed the percentage to be too high, would settle for the standard one-third contingency fee.   If the court was not inclined to award a contingency fee of the total amount recovered, Brushie's attorney contended that the billing statements evidencing over 350 hours of work on the file at the hourly rates indicated would be a reasonable award of attorneys fees.

The court has previously determined that an award of attorneys fees is appropriate under the jury's verdict of fraud as an award of punitive damages.   See Memorandum of Decision.   So the question before the court now is, what amount should be that award, and more specifically, should the award be based on the contingency fee agreement or an hourly rate.²

“A trial court should not depart from a reasonable fee agreement in the absence of a persuasive demonstration that enforcing the agreement would result in substantial unfairness to the defendant.”  Sorrentino v. All Seasons Services, Inc., 245 Conn. 756, 776, 717 A.2d 150 (1998).  Sorrentino was an action brought pursuant to General Statutes § 31-290a which prohibits retaliation by an employer against an employee for having brought a workers' compensation claim and requires the imposition of “reasonable attorneys fees” and costs in favor of a prevailing party.   The jury awarded the plaintiff approximately $146,000, and the contingency fee agreement would have resulted in a fee of approximately $48,600, while the hourly billing records totaled approximately $64,000.   The trial court awarded $30,000.   The plaintiff appealed, claiming that the contingency fee was reasonable and that it should control the award of fees.

The Supreme Court agreed with the plaintiff.   Where a contingency fee agreement exists, the questions for resolution are whether the fee agreement is reasonable and, if the trial court does not enforce the fee agreement, whether the trial court properly exercises discretion in departing from the terms of the agreement.  Id. 774.   The court, referring to the standards of Rule 1.5(a) of the Code of Professional Responsibility (see n. 4 below) in its assessment of reasonableness, decided that the fee agreement in this instance was reasonable.³

“[W]hen a contingency fee agreement exists, a two step analysis is required to determine whether a trial court permissibly may depart from it in awarding a reasonable fee pursuant to statute or contract.   The trial court first must analyze the terms of the agreement itself.   If the agreement is, by its terms, reasonable, the trial court may depart from its terms only when necessary to prevent ‘substantial unfairness' to the party, typically a defendant, who bears the ultimate responsibility for payment of the fee.   By contrast, if the trial court concludes that the agreement is, by its terms, unreasonable, it may exercise its discretion and award a reasonable fee in accordance with the factors enumerated in rule 1.5(a) of the Rules of Professional Conduct.”   Schoonmaker v. Lawrence Brunoli, Inc., 265 Conn. 210, 270-71, 828 A.2d 64 (2003).  Rule 1.5(a) of the Rules of Professional Conduct provides:  “A lawyer's fee shall be reasonable.   The factors to be considered in determining the reasonableness of the fee include the following:  “(1) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;  (2) The likelihood, if made known to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;  (3) The fee customarily charged in the locality for similar legal services;  (4) The amount involved and the results obtained;  (5) The time limitations imposed by the client or by the circumstances;  (6) The nature and length of the professional relationship with the client;  (7) The experience, reputation, and ability of the lawyer or lawyers performing the services;  and (8) Whether the fee is fixed or contingent.”  Rules of Professional Conduct 1.5.

Pursuant to the dictates of Schoonmaker, the court has performed a two-step analysis in evaluating the award of attorneys fees involving a contingency agreement.   First, the court has evaluated the reasonableness of the fee agreement itself, specifically a contingency fee of forty (40) percent of the recovery.   Although the court acknowledges the procedural complexity of this matter, as well as the multiple theories of liability, counter claims, and special defenses, and the extensive number of motions filed in the matter, the court finds a forty percent contingency fee to be unreasonable.⁴  Thus, having found the contingency agreement unreasonable in its percentage, the second step provides that the court should only depart from the fee agreement to prevent “substantial unfairness” to the party-the defendant as in this case-who bears the ultimate responsibility for payment of the fee.

Before the court can proceed with any further analysis, it is important to point out the amount of the award to the plaintiff.  “After deliberations, the jury returned completed jury interrogatory forms and a verdict in favor of the plaintiff on all three counts.   As to count one, fraud, the jury awarded $160,000 in compensatory damages, and awarded punitive damages to Brushie.   As to count two, conversion, the jury awarded damages in the amount of $316,800, and found that the detention of the property was wrongful.   As to count three, statutory theft, the jury awarded damages in the amount of $116,000.”   Memorandum of Decision, re post-verdict motions, page 7, August 13, 2010).   Post-verdict motions were filed by both Brushie and Stonkus.   The court determined that there had been an award of duplicative damages and ordered a remitttur.⁵  See Memorandum of Decision.   The final monetary award was $576,337.49, which represented an award of compensatory damages of $171,500, plus interest in the amount of $404,837.49.

Since court is prepared to depart from the current fee agreement, the court must now determine what a reasonable fee arrangement is in order to make an award of punitive damages.   Brushie has presented two alternatives, one-reducing the contingency to one-third, or two-accepting the hourly rate and fee of $89,037.   Stonkus has argued that some of the time set forth in the billing statements may have included time spent in the companion matters and thus, should not be made part of any award of attorneys fees.

The court has examined the contingency fee agreement between Brushie and her attorney.   It has also examined the affidavit submitted by her attorney regarding the hours spent pursing this litigation and the hourly charges for those services.   Although taken separately, the legal issues involved are not overly complex, but when added together, this matter was complicated and difficult, and involved extensive research, motion practice, and discovery.   The litigation became complex with the multiple theories of liability and the multiple special defenses that were asserted by Stonkus.   A review of the pleadings in this file, as well as the supervision of the trial of this case leads the court to the conclusion that the time spent by Brushie's attorneys was reasonable and necessary.   The hourly charges were reasonable in light of the experience and qualifications of Brushie's counsel.   But the court gives a further consideration to the contingency agreement and the concern voiced by Stonkus that it would be difficult to separate this action from the companion actions.⁶  Moreover, a contingency fee is reasonable in this case because of its complexity, the risk that Brushie would not recover, and Brushie's inability to fund, on an ongoing basis, this protracted and complex litigation.

The court will apply the one-third contingency to the monetary award made in this case after the remittitur was ordered and accepted of $576,337.49, which was the resulting judgment entered by the court to prevent a multiple recovery by Brushie.⁷

The court awards punitive damages in the amount of $192,093.29.

Swienton, J.

FOOTNOTES

FN1. In addition to the finding in favor of Brushie on the count of fraud, the jury also found in her favor on two other counts for conversion and statutory theft.   The court then found in her favor on the remaining count of quiet title.   The court is not going to recite the long and complicated history of this matter, but refers to its findings and orders set forth in the Memorandum of Decision regarding post-verdict motions dated August 13, 2010 by this court..  FN1. In addition to the finding in favor of Brushie on the count of fraud, the jury also found in her favor on two other counts for conversion and statutory theft.   The court then found in her favor on the remaining count of quiet title.   The court is not going to recite the long and complicated history of this matter, but refers to its findings and orders set forth in the Memorandum of Decision regarding post-verdict motions dated August 13, 2010 by this court.

FN2. The defendant argues, citing MeKeever v. Fiore, 78 Conn.App. 783, 791, 829 A.2d 846 (2003), that in a foreclosure action the court has discretion in awarding a reasonable fee.   The court points out that Brushie's award came not in a foreclosure action but in a counterclaim filed in the foreclosure.   In any event, the purpose of the court's hearing was to determine a reasonable fee..  FN2. The defendant argues, citing MeKeever v. Fiore, 78 Conn.App. 783, 791, 829 A.2d 846 (2003), that in a foreclosure action the court has discretion in awarding a reasonable fee.   The court points out that Brushie's award came not in a foreclosure action but in a counterclaim filed in the foreclosure.   In any event, the purpose of the court's hearing was to determine a reasonable fee.

FN3. The standards in the Code of Professional Responsibility are similar to the factors set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir.1974), which is frequently cited for its recitation of the twelve factors influencing the adjustments to the ‘lodestar’ calculation in determining attorneys fees brought pursuant to, inter alia, 42 U.S.C. § 1988 (civil rights actions) and unfair trades practices actions.   The twelve factors set forth in Johnson, include:  “(1) the time and labor required;  (2) the novelty and difficulty of the questions;  (3) the skill requisite to perform the legal service properly;  (4) the preclusion of other employment by the attorney due to acceptance of the case;  (5) the customary fee for similar work in the community;  (6) whether the fee is fixed or contingent;  (7) time limitations imposed by the client or the circumstances;  (8) the amount involved and the results obtained;  (9) the experience, reputation and ability of the attorneys;  (10) the ‘undesirability’ of the case;  (11) the nature and length of the professional relationship with the client;  and (12) awards in similar cases.”  Steiger v. J & S. Builders, 39 Conn.App. 32, 38-39 663 A.2d 32 (1995);  See also, Riggio v. Orkin Exterminating Co., 58 Conn.App. 309, 318, 753 A.2d 423 (2000)..  FN3. The standards in the Code of Professional Responsibility are similar to the factors set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir.1974), which is frequently cited for its recitation of the twelve factors influencing the adjustments to the ‘lodestar’ calculation in determining attorneys fees brought pursuant to, inter alia, 42 U.S.C. § 1988 (civil rights actions) and unfair trades practices actions.   The twelve factors set forth in Johnson, include:  “(1) the time and labor required;  (2) the novelty and difficulty of the questions;  (3) the skill requisite to perform the legal service properly;  (4) the preclusion of other employment by the attorney due to acceptance of the case;  (5) the customary fee for similar work in the community;  (6) whether the fee is fixed or contingent;  (7) time limitations imposed by the client or the circumstances;  (8) the amount involved and the results obtained;  (9) the experience, reputation and ability of the attorneys;  (10) the ‘undesirability’ of the case;  (11) the nature and length of the professional relationship with the client;  and (12) awards in similar cases.”  Steiger v. J & S. Builders, 39 Conn.App. 32, 38-39 663 A.2d 32 (1995);  See also, Riggio v. Orkin Exterminating Co., 58 Conn.App. 309, 318, 753 A.2d 423 (2000).

FN4. In determining whether a contingency fee is reasonable, it is not the rate of the fee in a vacuum that the court examines but when the rate is applied to the amount of the recovery, the court looks to see if the resulting fee is reasonable considering all the factors of Rule 1.5.   “To be reasonable, a contingency fee agreement, must, at the very least, comply with the prescriptions of subsections (c) and (d) of rule 1.5 of the Rules of Professional Conduct ․ We note that the reasonableness of the contingent fee percentage itself may also be influenced by statutory requirements;  see General Statutes § 52-251c (limiting fees to enumerated percentages in personal injury, wrongful death or damage to property actions) ․” Schoonmaker v. Lawrence Brunoli, Inc., supra, 265 Conn. 270-71, n. 76..  FN4. In determining whether a contingency fee is reasonable, it is not the rate of the fee in a vacuum that the court examines but when the rate is applied to the amount of the recovery, the court looks to see if the resulting fee is reasonable considering all the factors of Rule 1.5.   “To be reasonable, a contingency fee agreement, must, at the very least, comply with the prescriptions of subsections (c) and (d) of rule 1.5 of the Rules of Professional Conduct ․ We note that the reasonableness of the contingent fee percentage itself may also be influenced by statutory requirements;  see General Statutes § 52-251c (limiting fees to enumerated percentages in personal injury, wrongful death or damage to property actions) ․” Schoonmaker v. Lawrence Brunoli, Inc., supra, 265 Conn. 270-71, n. 76.

FN5. The remittitur was accepted by the plaintiff on August 30, 2010..  FN5. The remittitur was accepted by the plaintiff on August 30, 2010.

FN6. This action and the action against Avitabile both arose from the same set of facts;  however, this action involved additional theories of liability and recovery..  FN6. This action and the action against Avitabile both arose from the same set of facts;  however, this action involved additional theories of liability and recovery.

FN7. The court notes that in addition to the monetary award, Brushie was also awarded the property at 300 Stonegate Road, Southington, Connecticut, under the quiet title action, which the court attributed a value of $176,500.  (See Memorandum of Decision 8/13/2010.)   The court is not including the value of the property in calculating the award of attorneys fee..  FN7. The court notes that in addition to the monetary award, Brushie was also awarded the property at 300 Stonegate Road, Southington, Connecticut, under the quiet title action, which the court attributed a value of $176,500.  (See Memorandum of Decision 8/13/2010.)   The court is not including the value of the property in calculating the award of attorneys fee.

Swienton, Cynthia K., J.