Colonial Plumbing & Heating Supply Co. v. Contemporary Const. Co., Inc.

Decision Date23 August 1983
Docket NumberNo. 81-94-A,81-94-A
Citation464 A.2d 741
CourtRhode Island Supreme Court
PartiesCOLONIAL PLUMBING & HEATING SUPPLY CO. v. CONTEMPORARY CONSTRUCTION CO., INC. and Robert W. Leonard, Jr. ppeal.
OPINION

SHEA, Justice.

The defendant appeals an award of an attorney's fee in a Superior Court action on a promissory note. We sustain the appeal and vacate the award of the attorney's fee.

On October 19, 1976, defendant, Contemporary Construction Co., Inc., signed a promissory note in favor of plaintiff in the face amount of $9,981.73. The note bore interest at the rate of 10.5 percent per annum. It provided also, in part:

"If this note shall be placed in the hands of any attorney for collection, through legal procedures or otherwise, the undersigned will pay to the holder thereof a reasonable attorney's fee together with the costs and expenses of collection within the limits permitted by law."

The note also contained the personal guaranty of defendant, Robert W. Leonard, Jr. (Leonard). 1

The matter was tried before a Superior Court justice sitting without a jury. The note was introduced into evidence, as was a copy of plaintiff's ledger sheet reflecting payments on the note. At the conclusion of the evidence, the trial justice determined that this note was a demand note given in satisfaction for an account payable with interest at the rate of 10.5 percent. The trial justice also found that Leonard, who had personally guaranteed the note, was absolutely liable on it. After rendering a decision that the principal sum due on the note was $8,921.94 and computing interest due at that time in the amount of $3,123.68 plus costs, the trial justice then awarded an attorney's fee in the amount of $3,071.08. The trial justice stated:

"The Court computes the reasonable attorney's fee on the basis of charges usually charged by Counsel involving proceedings in this Court involving collection matters wherein the fee is one-third of the first $500 and 25 percent of the sum in excess of $500. In making that computation, the Court determines $3,071.08 is a reasonable attorney's fee."

The defendant contends that the trial justice erred in awarding an attorney's fee on a record devoid of any evidence to support the fee request. Apparently conceding that the record is silent in this matter, plaintiff nevertheless argues that the award should stand. He asserts that the trial justice's expertise both as a lawyer and as a judge enables him to take judicial notice of the difficulty plaintiff and plaintiff's counsel encountered in obtaining the judgment below. He therefore suggests that the trial justice properly acted upon his personal knowledge of charges generally made by other attorneys in this kind of case. The plaintiff also contends that since the fee award comports with the Rhode Island Bar Association minimum-fee schedule (revised 1969), it should be allowed. We disagree.

The plaintiff's argument based on a minimum-fee schedule is inappropriate in light of the United States Supreme Court's decision in Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975). In that case the court invalidated the minimum-fee schedule published by the Fairfax County, Virginia, Bar Association on the ground that it violated the Sherman Act. We therefore could not uphold an attorney's fee based on this impermissible guideline.

We also reject the argument that the trial justice, because of his expertise as a lawyer and a judge, could take judicial notice of regularly accepted methods of computing legal fees in commercial collection matters. Basically, a court may take judicial notice of two categories of facts. One category consists of facts generally known with certainty by all reasonably intelligent people in the community, and the other consists of facts capable of accurate and ready determination by resort to sources of indisputable accuracy. McCormick's Handbook of the Law of Evidence § 329-30 (2d ed. Cleary 1972.) Because a trial justice's knowledge of an accepted method of fee computation arises from his expertise both as a lawyer and as a judge, these particular facts would by definition be eliminated from either category of which a court should take judicial notice.

This court has had occasion to consider what constitutes a proper fee for an attorney's services. In Palumbo v. United States Rubber Co., 102 R.I. 220, 229 A.2d 620 (1967), this court stated that an attorney's fee should be "consistent with the services rendered, that is to say, which is fair and reasonable." The court held that

"[w]hat is fair and reasonable depends, of course, on the facts and circumstances of each case. * * * We consider the amount in issue, the questions of law involved and whether they are unique or novel, the hours worked and the diligence displayed, the result obtained, and the experience, standing and ability of the attorney who rendered the services. * * * Each of these factors is important but no one is controlling." Id. at 223-24, 229 A.2d at 622-23.

Subsequently, the court adopted Supreme Court Rule 47, the Code of Professional Responsibility, and Disciplinary Rule 2-106--Fees for Legal Services--which provides:

"DR 2-106. Fees for Legal Services.--(A) A lawyer shall not enter into an agreement for, charge, or collect an illegal or clearly excessive fee.

"(B) A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee. Factors to be considered as guides in determining the reasonableness of a fee include the following:

(1) The time and labor required, the novelty and difficulty of the...

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